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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
____________________
[x] QUARTERLY REPORT PURSUANT SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarter ended March 31, 1996
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ to _____________
Commission File No. 0-18728
INTERNEURON PHARMACEUTICALS, INC.
(exact name of registrant as specified in its charter)
Delaware 04-3047911
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
One Ledgemont Center, 99 Hayden Avenue 02173
Lexington, Massachusetts (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code (617) 861-8444
(Former name, former address and former fiscal year, if changed since last
report): Not Applicable
Indicate by check whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter periods that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's class of
common stock, as of the latest practicable date.
Class Outstanding at April 30, 1996:
Common Stock $.001 par value 37,510,811 shares
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INTERNEURON PHARMACEUTICALS, INC.
INDEX TO FORM 10-Q
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 1996
and September 30, 1995 . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Operations for the Three and Six Months
ended March 31, 1996 and 1995. . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows for the Six Months ended
March 31, 1996 and 1995. . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Unaudited Consolidated Financial Statements . . . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . 9
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . . . . . . . . .15
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . .16
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
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INTERNEURON PHARMACEUTICALS, INC.
CONSOLIDATED
BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
March 31, September 30,
1996 1995
--------- ---------------
ASSETS
Current assets:
Cash and cash equivalents $ 38,459 $ 16,781
Marketable securities 31,597 18,208
Inventory 3,629 -
Accounts receivable and other current assets 1,616 427
-------- --------
Total current assets 75,301 35,416
Marketable securities 1,054 --
Property and equipment, net 1,442 1,671
Notes receivable and other assets 332 429
-------- --------
$ 78,129 $ 37,516
-------- --------
-------- --------
LIABILITIES
Current liabilities:
Accounts payable $ 2,098 $ 1,161
Accrued expenses 7,374 7,994
Deferred revenue 1,942 --
Current portion of capital lease obligations 564 506
-------- --------
Total current liabilities 11,978 9,661
Long-term portion of capital lease obligations 656 782
Other long-term liabilities 15 44
Minority interest 19,999 5,638
STOCKHOLDERS' EQUITY
Preferred stock; $.001 par value, authorized 5,000,000
shares:
Series B, 239,425 shares issued and outstanding at
March 31, 1996 and September 30, 1995, respectively
(liquidation preference at March 31, 1996 $3,041); 3,000 3,000
Series C, 5,000 shares issued and outstanding at
March 31, 1996 and September 30, 1995, respectively
(liquidation preference at March 31, 1996 $503); 500 500
Common stock, par value $.001; 60,000,000 shares
authorized; 37,300,798 and 33,284,006 shares issued
and outstanding at March 31, 1996 and September 30,
1995, respectively 37 33
Additional paid-in capital 135,881 96,650
Accumulated deficit (93,937) (78,792)
-------- --------
Total stockholders' equity 45,481 21,391
-------- --------
$ 78,129 $ 37,516
-------- --------
-------- --------
The accompanying notes are an integral part of these unaudited consolidated
financial statements.
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INTERNEURON PHARMACEUTICALS, INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
For the three and six months ended March 31, 1996 and 1995
(Unaudited)
(Amounts in thousands except per share data)
FOR THE THREE MONTHS ENDED MARCH 31, FOR THE SIX MONTHS
ENDED MARCH 31,
1996 1995 1996 1995
Revenues:
Contract and license fees $ 905 $ 70 $ 6,249 $ 103
Investment income 661 227 1,132 401
Other - 14 - 26
------- ------- -------- --------
Total revenues 1,566 311 7,381 530
Costs and expenses:
Research and development 3,599 3,568 6,726 7,278
Selling, general and administrative 4,276 1,780 7,024 3,502
Purchase of in-process research
and development 6,084 - 8,234 -
------- ------- -------- --------
Total costs and expenses 13,959 5,348 21,984 10,780
Net loss from operations (12,393) (5,037) (14,603) (10,250)
Minority interest 432 86 (542) 86
------- ------- -------- --------
Net loss $(11,961) $ (4,951) $(15,145) $(10,164)
------- ------- -------- --------
------- ------- -------- --------
Net loss per common share $ ( 0.34) $ ( 0.16) $ ( 0.44) $ (0.34)
------- ------- -------- --------
------- ------- -------- --------
Weighted average common
shares outstanding 35,308 30,407 34,411 29,719
------- ------- -------- --------
------- ------- -------- --------
The accompanying notes are an integral part of these unaudited consolidated
financial statements.
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INTERNEURON PHARMACEUTICALS, INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
For the six months ended March 31, 1996 and 1995
(Unaudited)
(Dollars in thousands)
SIX MONTHS ENDED MARCH 31,
1996 1995
Cash flows from operating activities:
Net loss $(15,145) $(10,164)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization 381 388
(Gain) on disposal of fixed assets (6) --
Minority interest in net income/loss of
consolidated subsidiaries 542 (86)
Purchase of in-process research and development 8,098 --
Noncash compensation 896 --
Change in assets and liabilities:
Receivables and other current assets (1,189) (69)
Notes receivable and other assets 97 (76)
Inventory (3,629) --
Accounts payable 937 (416)
Deferred revenue 1,942 --
Accrued expenses and other liabilities (559) 819
-------- --------
Net cash (used) by operating activities (7,635) (9,604)
-------- --------
Cash flows from investing activities:
Capital expenditures (141) (249)
Purchase of marketable securities (36,233) (3,320)
Proceeds from maturities and sales of
marketable securities 21,789 5,395
Proceeds from disposal of fixed assets 40 41
-------- --------
Net cash (used) provided by investing activities (14,545) 1,867
-------- --------
Cash flows from financing activities:
Net proceeds from issuance of stock and other equity 13,608 4,409
transactions
Net proceeds from issuance of stock by subsidiaries 30,362 4,880
Proceeds from sale/leaseback 132 140
Principal payments of capital lease obligations (244) (187)
-------- --------
Net cash provided by financing activities 43,858 9,242
-------- --------
Net change in cash and cash equivalents 21,678 1,505
Cash and cash equivalents at beginning of period 16,781 11,263
-------- --------
Cash and cash equivalents at end of period $ 38,459 $ 12,768
-------- --------
-------- --------
The accompanying notes are an integral part of these unaudited
consolidated financial statements.
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INTERNEURON PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
A. BASIS OF PRESENTATION:
The consolidated financial statements included herein have been prepared by
Interneuron Pharmaceuticals, Inc. without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. In the opinion of management,
the accompanying unaudited consolidated financial statements include all
adjustments (consisting only of normal recurring adjustments) necessary to
present fairly the consolidated financial position, results of operations and
cash flows of the Company. The consolidated financial statements included
herein should be read in conjunction with the audited consolidated financial
statements and the notes thereto included in the Company's Form 10K for the
fiscal year ended September 30, 1995.
The consolidated financial statements include the accounts of Interneuron
Pharmaceuticals, Inc. ("Interneuron" or the "Company") and its subsidiaries,
Progenitor, Inc. ("Progenitor"), Transcell Technologies, Inc. ("Transcell"),
Intercardia, Inc. ("Intercardia"), and InterNutria, Inc. ("InterNutria"). All
significant intercompany activity has been eliminated.
B. SIGNIFICANT ACCOUNTING POLICIES:
REVENUE RECOGNITION: Revenue is recognized under agreements when services
are performed or when contractual obligations are met. Revenues from product
sales are recognized at the later of shipment or satisfaction of performance
obligations.
INVENTORIES: Inventories are valued at the lower of cost (first-in,
first-out method) or market. Costs for drug substance used to manufacture
product for sale were capitalized beginning at the time such product was
recommended for approval by an Advisory Committee of the U.S. Food and Drug
Administration ("FDA").
C. INVENTORY AND DEFERRED REVENUE:
Inventory of $3,629,000 at March 31, 1996 consists of dexfenfluramine drug
substance. American Home Products Corp. ("AHP") has agreed to purchase certain
dexfenfluramine drug substance to be contained in finished Redux
("Dexfenfluramine Capsules") prior to the capsule production process. Payments
received from AHP for such dexfenfluramine drug substance are reflected as
deferred revenue until the time of sale of Dexfenfluramine Capsules containing
pre-paid dexfenfluramine drug substance to AHP, at which time the Company will
recognize and include the appropriate proportionate share of such deferred
revenue in product sales. As of March 31, 1996, deferred revenue was
$1,942,000, and there were no sales of Dexfenfluramine Capsules to AHP.
D. INCOME TAXES:
At March 31, 1996, the Company and its subsidiaries had net operating loss
carryforwards, for tax reporting purposes, of approximately $94 million
available to reduce future federal income
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taxes. The use of these net operating loss carry forwards may be subject to
limitation under the change in stock ownership rules of the Internal Revenue
Code and may not be fully available for use on a consolidated basis.
E. STOCKHOLDERS' EQUITY:
The Company's Class B Warrants expired on March 15, 1996. Each Class B
Warrant entitled the holder to purchase one share of Interneuron Common Stock at
a price of $4.75. During the six month period ended March 31, 1996,
approximately 2,402,000 Class B Warrants were exercised (including 165,000 that
were exercised on a cashless basis by an affiliate of the Company resulting in
the issuance of 138,432 shares of Interneuron Common Stock) resulting in net
proceeds to the Company of approximately $10,625,000 and the issuance of
approximately 2,375,000 shares of Interneuron Common Stock.
During the six month period ended March 31, 1996, a warrantholder exercised
700,000 warrants pursuant to a cashless exercise provision, resulting in a net
issuance of 574,984 shares of Common Stock.
In January 1996, the Company issued 342,792 shares of Common Stock for the
purchase of 20% of the remaining outstanding capital stock of CPEC, Inc.,
("CPEC") not owned by Intercardia (also, see Note F).
In March 1996, a Registration Statement on Form S-3 was declared effective
relating to the resale of an aggregate of approximately 3,533,000 shares of
Common Stock held by or issuable to certain selling stockholders primarily in
connection with financing transactions completed during fiscal 1995. Of these
shares, 399,079 shares were issuable upon the exercise of warrants other than
Class B Warrants.
In addition to the 37,301,000 shares of Common Stock outstanding at
March 31, 1996, there were approximately 14,000,000 shares issuable (i) under
the Company's stock option and stock purchase plans, (ii) upon conversion of
all authorized, both issued and unissued, shares of preferred stock, (iii) in
the event the maximum amount of shares are issued upon exercise of put
protection rights, (iv) pursuant to the various technology acquisition
transactions, and (v) upon exercise of outstanding warrants.
The Company and its subsidiaries continue to seek additional financing
(including private placements and initial and follow-on public offerings) and/or
collaborative arrangements.
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F. SUBSIDIARIES:
In December 1995, InterNutria, a wholly-owned subsidiary, acquired from
Walden Laboratories, Inc. ("Walden"), the technology and know-how to produce a
specially formulated dietary supplement for women's use during their pre-
menstrual period called PMS Escape in exchange for $2,400,000, payable in two
installments of Interneuron Common Stock, the first in late 1996 and the second
in late 1997, at the then-prevailing market price. The Company's Chairman and
certain other parties related to the Company are also stockholders of Walden but
will not receive shares of Interneuron Common Stock from this transaction. The
Company recorded a charge of approximately $2,150,000 in the three month period
ended December 31, 1995 in connection with this transaction.
In December 1995, Intercardia, Inc., a majority-owned subsidiary
("Intercardia"), executed a Development and Marketing Collaboration and License
Agreement with Astra Merck, Inc. ("Astra Merck") (the "Astra Merck
Collaboration") to provide for the development and commercialization and
marketing in the U.S. of a twice-daily formulation of bucindolol for the
treatment of congestive heart failure. Intercardia received $5,000,000 upon
execution of the Astra Merck Collaboration, which was recognized as Contract
Revenue in the first quarter of fiscal 1996, and may receive additional
payments based upon achievement of certain milestones and royalties based on net
sales of bucindolol in the U.S. Intercardia has agreed to pay Astra Merck
$10,000,000 in December 1997 and to reimburse Astra Merck for one-third of
certain product launch costs, up to a total of $11,000,000. In the event
Intercardia elects not to make these payments, royalties payable by Astra Merck
to Intercardia will be substantially reduced.
In January 1996, Interneuron acquired the remaining 20% of the
outstanding capital stock of CPEC not owned by Intercardia by issuing an
aggregate of 342,792 shares of Interneuron's Common Stock to the former CPEC
minority stockholders. As a result of this transaction, the Company recorded
a charge for the purchase of in-process research and development of
approximately $6,084,000 in the three month period ended March 31, 1996.
In February 1996, Intercardia completed an initial public offering of
2,530,000 shares of Intercardia common stock at $15.00 per share resulting in
net proceeds of approximately $35,000,000 (the "Intercardia IPO"). Interneuron
purchased 333,333 shares of the Intercardia IPO for a total of approximately
$5,000,000. Interneuron's ownership in Intercardia's outstanding capital stock
decreased from approximately 88% at September 30, 1995 to approximately 60% as a
result of the Intercardia IPO. In certain circumstances, Interneuron has the
right to purchase additional shares of Intercardia common stock at fair market
value to provide that Interneuron's equity ownership in Intercardia does not
fall below 51%. As a result of the Intercardia IPO, put protection rights that
could have caused the Company to issue in June 1998 up to approximately
1,914,000 shares of Interneuron Common Stock expired. As a result of the
Intercardia IPO and Interneuron's purchase of 333,333 shares thereof,
Interneuron recognized in the three month period ended March 31, 1996, a gain on
its investment in Intercardia of approximately $16,350,000 which has been
recorded in the Company's Additional paid-in capital but not in the Company's
Consolidated Statement of Operations. The Company also recorded an addition to
minority interest of approximately $13,650,000 as Intercardia continues to be
principally involved in research and development.
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Statements in this form 10-Q that are not descriptions of historical facts
are forward-looking statements that are subject to risks and uncertainties.
Actual results could differ materially from those currently anticipated due to
a number of factors, including those set forth in the Company's SEC filings
under "Risk Factors."
The following discussion should be read in conjunction with the unaudited
Consolidated Financial Statements and Notes thereto appearing elsewhere in this
report. Unless the context indicates otherwise, all references to the Company
include Interneuron and its subsidiaries.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1996, the Company had cash, cash equivalents and marketable
securities of $71,110,000, which represents an increase of $36,121,000 from
$34,989,000 at September 30, 1995. This increase in cash, cash equivalent and
marketable securities is primarily the result of the receipt of approximately
$30,000,000 of net proceeds to Intercardia, excluding $5,000,000 received from
Interneuron, from the February 1996 Intercardia IPO and approximately
$14,000,000 of net proceeds to Interneuron from the exercise of the Class B
Warrants, options and other warrants, less cash consumed by operations and
other activities of approximately $8,000,000, including $5,000,000 received by
Intercardia pursuant to the Astra Merck Collaboration
On May 3, 1996, the Company filed a registration statement with the
Securities and Exchange Commission on Form S-3 relating to a proposed public
offering (the "Proposed Offering") by the Company of 2,500,000 shares of its
Common Stock at a public offering price to be based on the market price of the
Company's Common Stock at the time of the Proposed Offering. Certain officers
and directors of the Company have granted the underwriters of the Proposed
Offering an option to purchase an aggregate of 375,000 of their shares to cover
over-allotments, if any. A registration statement relating to these securities
has been filed with the Securities and Exchange Commission but has not yet
become effective. These securities may not be sold nor may offers to buy be
accepted prior to the time the registration statement becomes effective. This
report shall not constitute an offer to sell or the solicitation of an offer to
buy nor shall there be any sale of these securities in any state in which such
offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such state.
On April 29, 1996, Redux received FDA clearance for marketing as a
prescription drug for the treatment of obesity including weight loss and
maintenance in patients on a reduced calorie diet who have a body mass index
("BMI") of greater than or equal to 30 kg/m2 or greater than or equal to 27
kg/m2 in the presence of other risk factors (e.g., hypertension, diabetes, or
hyperlipidemia). Redux is expected to be marketed by the Wyeth-Ayerst division
of AHP. To supplement AHP's marketing efforts, the Company is developing an
approximately 30-person sales force to co-promote Redux to certain
endocrinologists, diabetologists, bariatricians and weight management
specialists. Although a portion of the Company's co-promotion costs are
expected to be funded by AHP, the Company will likely incur substantial costs
to develop the Company's sales force and in connection with the launch of
Redux, prior to receipt of any revenues. These costs include build-up of
Redux inventories, which are being manufactured for the Company on a contract
basis by Boehringer Ingelheim Pharmaceuticals, Inc. ("Boehringer"). The
Company's agreement with Servier requires launch to occur within six months
of approval and the Company is
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purchasing inventories of Redux in preparation for launch. Inventory levels
depend to a large extent on forecasts provided by AHP. The Company's contract
manufacturing agreement with Boehringer requires the Company to purchase a
specified annual minimum quantity of capsules at a cost of approximately
$423,000 per year. At March 31, 1996, the Company had inventory of
dexfenfluramine drug substance totaling $3,629,000 and deferred revenue from
AHP for their purchase from the Company of such dexfenfluramine drug substance
of $1,942,000.
The Company is highly dependent upon AHP to market Redux. The Company's
agreements with AHP provide for base royalties to the Company of 11.5% of AHP's
net sales (equal to the royalty required to be paid by the Company to Les
Laboratories Servier ("Servier"), and for additional royalties, ranging from a
minimum of 5% of the first $50 million of net sales if dexfenfluramine is not
descheduled to a maximum of 12% of net sales over $200 million if
dexfenfluramine is descheduled and the Company does not manufacture Redux
(subject to a 50% reduction if generic drug competition exceeds a 10% market
share percentage in two consecutive quarters). There can be no assurance that
these sales levels will be achieved. In connection with the receipt of FDA
marketing clearance, the Company is entitled to a $500,000 milestone payment
from AHP and is entitled to an additional $6,000,000 payment and a $3,500,000
equity investment if dexfenfluramine is descheduled within 12 months from the
FDA approval date.
Included in the FDA-approved labeling for Redux are references to certain
risks which may be associated with dexfenfluramine and which were highlighted
during the FDA's review of the drug. One issue relates to whether there is an
association between anorectic drugs, including dexfenfluramine, and the
development of PPH, a rare but serious lung disorder. In the general
population, the yearly occurrence of PPH is estimated to be about 1-2 cases
per million persons. An epidemiologic study conducted in Europe examining
risk factors for PPH showed that among other factors, weight reduction drugs
including dexfenfluramine, systematic hypertension, and obesity itself were
associated with a higher risk of PPH. The study estimated the yearly
occurrence to be approximately 18 cases per million for patients taking
anorexigen (anti-obesity) drugs for greater than three months duration. In the
study, obesity itself was associated with double the risk of developing PPH.
Although the Company believes that the benefits of weight loss by obese patients
meeting the labeling criteria for Redux outweigh the risk of developing PPH, the
occurrence or the perceived likelihood of occurrence of PPH by patients taking
Redux may adversely affect the market for the drug as well as the Company's
business, financial condition and results of operations. A second issue raised
by the FDA was whether dexfenfluramine is associated with certain neurochemical
changes in the brain. Certain studies related to this issue, conducted by third
parties, purport to show that very high doses of dexfenfluramine cause prolonged
serotonin depletion in certain animals, which some researchers believe is an
indication of neurotoxicity. The Company presented data relating to the lack of
neurocognitive effects in patients taking Redux and believes that, as
demonstrated in human trials, these animal studies are clinically irrelevant to
humans because of pharmacokinetic differences between animals and humans
(resulting in much higher brain concentrations of dexfenfluramine and its active
metabolite in certain animals than in humans) and because of the high dosages
used in animal studies. The Company has agreed with the FDA to conduct a
Phase 4, or post marketing, study of Redux. Although the precise nature of this
study has not been determined, Interneuron expects the Phase 4 study to include
a double-blind placebo-controlled trial involving approximately 200 patients
intended to further evaluate long-term neurocognitive function, using
standardized neuro-psychological tests, in patients taking Redux. Approximately
50% of the costs of the Phase 4 study, which is expected to be conducted over an
approximately two to three-year period, is expected to be paid by AHP. Adverse
results, if any, of this study may adversely affect the market of the drug and
the Company.
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In February 1996, Intercardia completed the Intercardia IPO, an initial
public offering of 2,530,000 shares of Intercardia common stock at $15.00 per
share resulting in net proceeds of approximately $35,000,000. Interneuron
purchased 333,333 shares of the Intercardia IPO for a total of approximately
$5,000,000. Interneuron's ownership in Intercardia's outstanding capital
stock decreased from approximately 88% at September 30, 1995 to approximately
60% as a result of the Intercardia IPO. In certain circumstances,
Interneuron has the right to purchase additional shares of Intercardia common
stock at fair market value to provide that Interneuron's equity ownership in
Intercardia does not fall below 51%. As a result of the Intercardia IPO, put
protection rights that could have caused the Company to issue in June 1998 up
to approximately 1,914,000 shares of Interneuron Common Stock expired. As a
result of the Intercardia IPO and Interneuron's purchase of 333,333 shares
thereof, Interneuron recognized in the three month period ending March 31,
1996, a gain on its investment in Intercardia of approximately $16,350,000
which has been recorded directly in the Company's Additional paid-in capital
but not in the Company's Consolidated Statement of Operations. The Company
also recorded an addition to minority interest of approximately $13,650,000.
Intercardia's funds are not generally available to Interneuron.
Intercardia is contractually committed to provide certain support to the
BEST Study for bucindolol, which commenced in June 1995 and which is sponsored
by the NIH and the VA. The NIH and VA have committed up to $15,750,000 primary
funding for the BEST study, with specific levels of NIH and VA funding to be
based upon patient enrollment milestones. Intercardia is committed to provide
up to $2,000,000 during the course of the BEST Study, of which $750,000 had been
paid as of March 31, 1996, as well as drug supplies and monitoring costs of the
study expected to aggregate an additional $2,500,000. In December 1995,
Intercardia received $5,000,000 upon execution of the Astra Merck Collaboration,
which obligates Astra Merck to fund certain future U.S. development, marketing
and manufacturing costs and to assume Intercardia's funding obligation for the
BEST Study, including the drug supplies and monitoring costs, and royalty
obligation to Bristol-Myers Squibb Company. Intercardia will be entitled to
royalties based on net sales by Astra Merck. Intercardia has agreed to pay
Astra Merck $10,000,000 in December 1997 and to reimburse Astra Merck for one-
third of certain product launch costs, up to a total of $11,000,000. In the
event Intercardia elects not to make these payments, royalties payable by Astra
Merck to Intercardia will be substantially reduced.
As additional consideration in connection with Intercardia's acquisition of
80% of CPEC in September, 1994, Intercardia agreed to make two additional
purchase price payments, each equal to 75,000 shares of Interneuron Common
Stock, subject to adjustment based upon the fair market value at the time of
issuance, upon the achievement of milestones relating to the filing and approval
of an NDA for bucindolol. The Company may incur noncash charges in connection
with these issuances, based upon their fair market value at the time of
issuances, of a minimum of $750,000 and a maximum of $1,875,000.
The Company's principal expenditures are for product development and
clinical trials, including expenses required under collaborative agreements. In
particular, the Company is performing a Phase 3 clinical trial to confirm
whether treatment of stroke with citicoline limits infarct size. The Company
also intends to commence a second pivotal Phase 3 clinical trial and related
studies for citicoline in 1996. The two Phase 3 clinical trials are expected to
proceed into fiscal 1997. The costs of the clinical trials and the preparation
of the NDA are estimated to aggregate approximately $13,000,000. The Company is
unable to predict with certainty the costs
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of related studies which will depend upon FDA requirements. Further, as the
Company currently intends to market citicoline directly, additional funds will
be required for manufacturing, distribution and selling efforts. The Company
will also incur substantial development costs in connection with Phase 2/3
clinical trials on pagoclone expected to commence in 1996, and on other products
under development including those which may be acquired by the Company in the
future.
In December 1995, the Company acquired from Walden technology and know-how
subsequently resulting in the PMS Escape product in exchange for $2,400,000,
payable in two installments of Interneuron Common Stock, the first in late 1996
and the second in late 1997, at the then-prevailing market price. InterNutria
commenced a test-launch of PMS Escape in a regional market in March 1996 while
continuing the clinical evaluation of the product. The costs related to this
test-launch are estimated to be approximately $2,000,000 in fiscal 1996.
As of March 31, 1996, the Company and its subsidiaries were party to
various consulting agreements and employment agreements with officers and
directors containing minimum aggregate annual payments of approximately
$1,700,000. Certain employment agreements are subject to additional bonuses and
annual increases as may be determined by the Company's Board of Directors.
Interneuron is currently funding operations of Progenitor, Transcell and
InterNutria. Expenses of the Subsidiaries, including those required under
collaboration agreements, constitute a significant part of the Company's overall
expenses.
The Company's strategy includes evaluation of various technology or product
acquisition and/or financing opportunities (including private placements and
initial and follow-on equity offerings) and the Company and certain of its
subsidiaries are currently engaged in discussions relating to such
opportunities, although it has no agreements or commitments relating to any
particular acquisition. Any such initiatives may involve the issuance of
securities of Interneuron or its subsidiaries and/or financial commitments to
fund product development.
The Company believes it has sufficient cash for currently planned
expenditures in fiscal 1996. While the Company is seeking additional equity
funding through the Proposed Offering, it may seek additional funds through
other equity and/or debt financings and corporate collaborations to provide
working capital financing and funding for new business opportunities and future
growth. In addition, certain subsidiaries are exploring various financings
(including issuances of securities in public offerings or private placements),
collaborations or business combinations in order to enable these subsidiaries to
pursue development of their technologies. If such efforts are not successful,
certain activities at these subsidiaries may be reduced. Although Interneuron
may acquire additional equity in subsidiaries through participation in
financings or conversion of inter-company debt, equity financings by a
subsidiary will likely reduce Interneuron's percentage ownership of that
subsidiary and funds held by the subsidiaries will generally not be available
to Interneuron. The Company's goal is for its subsidiaries to establish
independent operations and financing through corporate alliances, third-party
financings, mergers or other business combinations, with Interneuron generally
retaining an ongoing equity interest. The nature of any such transaction is
expected to vary depending on the business and capital needs of each subsidiary
and the state of development of their respective technologies or products.
-12-
<PAGE>
RESULTS OF OPERATIONS
Total revenues increased by $1,255,000 to $1,566,000 during the three month
period ended March 31, 1996 from $311,000 in the three month period ended March
31, 1995 and increased by $6,851,000 to $7,381,000 in the six month period ended
March 31, 1996 from $530,000 in six month period ended March 31, 1995. The
increase in contract revenue in the fiscal 1996 three and six month periods
reflects a $500,000 milestone payment received by Progenitor in January 1996
from Chiron, grant revenue received by Progenitor and $5,000,000 received by
Intercardia in December 1995 pursuant to the Astra Merck Collaboration.
Increased investment income in the three and six month periods resulted from
higher invested cash balances resulting primarily from Intercardia's net
proceeds from the February 1996 Intercardia IPO and the December 1995 payment
from Astra Merck and Interneuron's net proceeds from the exercise of the Class B
Warrants and other options and warrants.
Total costs and expenses increased by $8,611,000, or 161%, to $13,959,000
during the three month period ended March 31, 1996 from $5,438,000 during the
three month period ended March 31, 1995 and increased by $11,204,000, or 104%,
to $21,984,000 during the six month period ended March 31, 1996 from $10,780,000
during the six month period ended March 31, 1995. During the six month period
ended March 31, 1996, the Company incurred charges aggregating $8,234,000,
equal to 73% of the increased costs and expenses (of which $6,084,000 was
incurred in the three month period ended March 31, 1996), for the purchase of
in-process research and development. These charges (of which $8,098,000 were
non-cash) related to (i) the Company's January 1996 acquisition of the remaining
20% of CPEC not owned by Intercardia in exchange for the issuance of 342,792
shares of Interneuron common stock and (ii) the Company's November 1995
acquisition of assets and technology relating to a dietary supplement for use
by women during their pre-menstrual period in exchange for the issuance of
$2,400,000 of Interneuron Common Stock, payable in equal installments in late
1996 and 1997.
Research and development expenses increased by $31,000, or 1%, to $3,599,000
in the three month period ended March 31, 1996 from $3,568,000 during the
three month period ended March 31, 1995 and decreased by $552,000, or 8%, to
$6,726,000 in the six month period ended March 31, 1996 from $7,278,000 during
the six month period ended March 31,1995. During the 1996 three and six month
periods, research and development expenses relating to the citicoline Phase 3
clinical trial, which completed patient enrollment prior to the beginning of
fiscal 1996, as well as various adjunct studies relating to citicoline during
the first fiscal quarter of 1995, decreased compared to citicoline-related
expenses incurred in the fiscal 1995 periods. Offsetting these decreases were
costs incurred by Intercardia related to research on catalytic antioxidant small
molecules and the establishment of a development staff to manage the development
of bucindolol and other technologies, and costs incurred by InterNutria
relating to the development of its products. Costs relating to certain
dexfenfluramine clinical activities incurred during the fiscal 1995 periods were
replaced by fiscal 1996 costs incurred to support the Company's preparation for
the November 1995 Advisory Committee meeting and subsequent efforts to secure
-13-
<PAGE>
FDA marketing clearance for Redux. The Company has begun to incur expenses
relating to the commencement of a second Phase 3 clinical trial for citicoline
which is expected to continue through fiscal 1997.
Selling, general and administrative expenses increased by $2,496,000, or
140%, to $4,276,000 in the three month period ended March 31, 1996 from
$1,780,000 during the three month period ended March 31, 1995 and increased
by $3,522,000, or 101%, to $7,024,000 during the six month period ended March
31, 1996 from $3,502,000 during the six month period ended March 31,1995.
These increases reflect the addition of management personnel by Intercardia
and InterNutria subsequent to the end of the fiscal 1995 periods, and costs
relating to the commencement by InterNutria of a regional test launch of PMS
Escape in the three month period ended March 31, 1996 and related sales,
marketing and public relations expenses. Selling, general and administrative
expenses during the three month period ended March 31, 1996 included
severance and related charges incurred by Transcell relating to certain
management changes. In preparation for the launch of Redux, the Company has
incurred costs related to the establishment of a sales force to co-promote
Redux, including recruiting costs. The Company has also incurred additional
general and administrative costs including increased wages and benefits and
insurance premiums. Selling, general and administrative expenses will
increase as the Company hires sales representatives to co-promote and sell
Redux, although a portion of such sales force costs is expected to be paid by
AHP, and for the test launch of PMS Escape.
As a result of the foregoing, the Company incurred net losses of ($11,961,000)
and ($15,145,000), or ($.34) and ($.44) per share, for the three and six month
periods ended March 31, 1996, respectively, compared to net losses of
($4,951,000) and ($10,164,000), or ($.16) and ($.34) per share, for the three
and six month periods ended March 31, 1995. Weighted average common shares
increased in the fiscal 1996 periods reflecting additional equity issuances.
Activities of the subsidiaries continue to represent a significant percentage
of the Company's consolidated expenses and represented 48% (including
$2,150,000 for the purchase of in-process research and development by
InterNutria) and 46% of the consolidated expenses in the six month periods
ended March 31, 1996 and 1995, respectively. While the rate of spending by
Progenitor and Transcell (except for the severance and related charges
relating to the Transcell management changes incurred in the three month
period ended March 31, 1996) was essentially unchanged in the fiscal 1996
periods, increased spending by the subsidiaries is expected to increase the
total amount of expenses pertaining to the subsidiaries in fiscal 1996.
The Company's strategy includes evaluation of various technology or product
acquisition and/or financing opportunities and the Company is currently
engaged in discussions relating to such opportunities. Any such initiatives
may involve the issuance of shares of Interneuron's Common Stock and/or
financial commitments to fund product development, either of which may
adversely affect the Company's consolidated financial condition or results of
operations.
-14-
<PAGE>
PART II - OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's annual meeting of stockholders was held on
February 21, 1996. At the meeting (I) all ten director nominees were elected;
and (ii) the appointment of Coopers & Lybrand L.L.P. as the independent auditors
was ratified.
(I) The following Directors were elected for a one-year term by the votes
indicated:
Lindsay A. Rosenwald, M.D., 26,413,407 for, 117,688 against; Glenn L. Cooper,
M.D., 26,413,407 for, 117,688 against; Harry J. Gray, 26,298,337 for, 232,758
against; Alexander M. Haig, Jr., 26,508,557 for, 22,538 against; Peter Barton
Hutt, 26,519,107 for, 11,988 against; Malcolm Morville, Ph.D., 26,519,107 for,
11,988 against; Robert K. Mueller, 26,518,307 for, 12,788 against; Lee J.
Schroeder, 26,518,997 for, 12,088 against; David B. Sharrock, 26,413,407 for,
117,688 against; Richard Wurtman, M.D., 26,413,407 for, 117,688 against.
(ii) The appointment of Coopers & Lybrand L.L.P. was ratified by a vote of
26,496,345 for, 15,799 against, and 18,951 abstain.
15
<PAGE>
PART II
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.4 - Restated Certificate of Incorporation of Registrant (17)
3.5 - By-Laws of Registrant (1)
4.4 - Certificate of Designation establishing Series C Preferred
Stock (17)
4.6 - Form of Registrant Warrant issued in subsidiary private
placement (25)
4.7 - Form of Registrant Warrant to be issued to Paramount Capital,
Inc., D.H. Blair & Co., Inc. or designees (25)
10.5 (a) - Consultant and Non-competition Agreement between the
Registrant, Richard Wurtman, M.D. (34)
10.5 (b) - Consultant and Non-competition Agreement between InterNutria,
Inc. and Judith Wurtman, Ph.D. (34)
10.6 - Assignment of Invention and Agreement between Richard
Wurtman, M.D., Judith Wurtman and the Registrant (1)
10.7 - Management Agreement between the Registrant
and Lindsay Rosenwald, M.D. (1)
10.9(a) - Restated and Amended 1989 Stock Option Plan (7)
10.10 - Form of Indemnification Agreement (1)
10.11 - Restated Amendment to MIT Option Agreement (1)
10.12(a) - Patent and Know-How License Agreement between the
Registrant and Les Laboratoires Servier ("Servier") dated
February 7, 1990 ("License Agreement") (1)
10.12(b) - Revised Appendix A to License Agreement (1)
10.12(c) - Amendment Agreement between Registrant and Servier, Orsem and
Oril, Produits Chimiques dated November 19,1992(3)(12)
10.12(d) - Amendment Agreement dated April 28, 1993 between Registrant
and Servier (16)
10.12 (e) - Consent and Amendment Agreement among Servier, American Home
Products Corp. and Registrant. (34)
10.13 - Trademark License Agreement between the Registrant and Orsem
dated February 7, 1990 (1)
10.14 - Supply Agreement between the Registrant and Oril Products
Chimiques dated February 7, 1990 (1)(3)
10.15(a) - Form of Indemnification Agreement between the Registrant and
Alexander M. Haig, Jr. (1)
10.16 - Assignment of Invention by Richard Wurtman, M.D. (1)
-16-
<PAGE>
10.22(a) - License Agreement dated January 15, 1993, as amended, between
the Registrant and Grupo Ferrer (3)(16)
10.25 - License Agreement between the Registrant and the
Massachusetts Institute of Technology (4)
10.28 - Letter Agreement between the Registrant and Bobby W.
Sandage, Jr., Ph.D. (7)
10.29 - Amended Lease dated December 12, 1991 for Registrant's
offices in Lexington, Massachusetts (7)
10.29(a) - First Amendment to Lease dated as of October 14, 1994 between
Registrant and Ledgemont Realty Trust (25)
10.30 - License Agreement dated January 1, 1992 between the Trustees
of Princeton University and the Registrant (3)(8)
10.31 - Research Agreement dated as of July 1, 1991 between the
Registrant and the Trustees of Princeton University (3)(8)
10.32 - Consulting Agreement dated as of July 1, 1991 between the
Registrant and Daniel Kahne, Ph.D. (3)(8)
10.33 - License Agreement dated January 28, 1992 between Ohio
University, The Castle Group, Inc. and Scimark Corporation
(assigned to Progenitor, Inc.) (3)(8)
10.34 - Sponsored Research Agreement between Scimark Corporation
(assigned to Progenitor, Inc.) and Ohio University (3)(8)
10.34(a) - Letter Amendment between Progenitor, Inc. and Ohio
University (18)
10.35 - Technology License Contract dated December 18, 1991 between
the Registrant and the Mayo Foundation for Medical Education
and Research (3) (8)
10.36 - Exclusive License Agreement dated February 24, 1992 between
the Registrant and Purdue Research Foundation (9)
10.37 - License Agreement dated as of February 15, 1992 between the
Registrant and Massachusetts Institute of Technology (9)
10.39 - Employment Agreement between Transcell Technologies, Inc. and
Elizabeth Tallet dated November 11, 1992 and Guarantee by
Registrant (13)
10.40 - Patent and Know-How Sublicense and Supply Agreement between
Registrant and American Cyanamid Company dated November 19,
1992 (3)(12)
10.41 - Equity Investment Agreement between Registrant and American
Cyanamid Company dated November 19, 1992 (12)
10.42 - Trademark License Agreement between Registrant and American
Cyanamid Company dated November 19, 1992 (12)
10.43 - Consent Agreement between Registrant and Servier dated
November 19,1992 (12)
10.44(a) - Termination Letter to Registrant from Veryfine Products,
Inc., dated October 30, 1995 (34)
10.45 - Agreement between Registrant and Parexel International
Corporation dated October 22, 1992 (as of July 21, 1992) (3)
(14)
10.46 - License Agreement dated February 9, 1993 between the
Registrant and Massachusetts Institute of Technology (3)(15)
10.47 - Sublease between Enichem America and Transcell Technologies,
Inc. including guarantee by the Registrant (15)
10.49 - License Agreement between Registrant and Elan Corporation,
plc dated September 9, 1993 (3)(18)
10.50 - License Agreement between Transcell Technologies, Inc. and
Princeton University dated October 14, 1993 (3)(18)
-17-
<PAGE>
10.51 - Letter Agreement between the Registrant and Mark S. Butler
(18)
10.52 - License Agreement dated February 18, 1994 between
Registrant and Rhone-Poulenc Rorer, S.A. (20)
10.54 - Form of Purchase Agreement dated as of February 24, 1994
(20)
10.54(a) - Form of Amendment to Purchase Agreement (20)
10.55 - Patent License Agreement between Registrant and
Massachusetts Institute of Technology dated March 1, 1994
(20)
10.56 - License Agreement between Progenitor, Inc. and Albert
Einstein College of Medicine of Yeshiva University dated
as of February 1,1994 (20)
10.57 - Employment Letter dated February 28, 1994 between the
Registrant and Thomas F. Farb (21)
10.58 - Master Equipment Lease including Schedules and Exhibits
between Phoenix Leasing and Registrant (agreements for
Transcell and Progenitor are substantially identical),
with form of continuing guarantee for each of Transcell
and Progenitor (22)
10.59 - Exhibit D to Agreement between Registrant and Parexel
International Corporation dated as of March 15, 1994.
(3)(22)
10.60(a) - Acquisition Agreement dated as of May 13, 1994 among the
Registrant, Intercardia, Inc., Cardiovascular Pharmacology
Engineering Consultants, Inc. (CPEC), Myocor, Inc. and the
sellers named therein (23)
10.60(b) - Amendment dated June 15, 1994 to the Acquisition Agreement
(23)
10.60-C- - Form of Consulting Agreement between Intercardia, Inc.,
CPEC and Myocor, Inc.(23)
10.61 - License Agreement dated December 6, 1991 between Bristol-
Myers Squibb and CPEC, as amended (3)(23)
10.61(a) - Letter Agreement dated November 18, 1994 between CPEC and
Bristol-Myers Squibb (25)
10.62 - Lease Agreement between Thomas R. Eggers and Progenitor,
Inc. dated as of November 1994 with Registrant guaranty
(25)
10.63 - Form of Stock Purchase Agreement dated December 15, 1994
(25)
10.64 - Form of Investor Rights Agreement among Progenitor,
Transcell, Registrant and each investor in the subsidiary
private placement (25)
10.64(a) - Form of Investor Rights Agreement among Intercardia, the
Registrant and each investor in the Intercardia private
placement (25)
10.65 - 1994 Long-Term Incentive Plan (25)
10.67 - Employment Agreement between Intercardia and Clayton I.
Duncan with Registrant guarantee (25)
10.67(a) - Amendment to Employment Agreement between Intercardia,
Inc. and Clayton I. Duncan (27)
10.68 - Interneuron Pharmaceuticals, Inc. 1995 Employee Stock
Purchase Plan, as amended (27)
10.69 - Office Lease, dated April 24, 1995 between Intercardia,
Inc. and Highwoods/Forsyth Limited Partnership, with
Registrant Guaranty (27)
10.70 (a) - License and Collaboration Agreement by and between
Progenitor, Inc., and Chiron Corporation dated March 31,
1995 (3) (30)
10.71 - Securities Purchase Agreement dated June 2, 1995 between
the Registrant and Reliance Insurance Company, including
Warrant and exhibits (29)
-18-
<PAGE>
10.72 - Sponsored Research and License Agreement dated as of May
1, 1995 between Progenitor and Novo Nordisk (3) (30)
10.73 - Form of Stock Purchase Agreement dated as of June 28, 1995
(31)
10.74 - Securities Purchase Agreement dated as of August 16, 1995
between the Registrant and BT Holdings (New York), Inc.,
including Warrant issued to Momint (nominee of BT
Holdings) (32)
10.75 - Stock Purchase Agreement dated as August 23, 1995 between
the Registrant and Paresco, Inc. (32)
10.76 - Stock Purchase Agreement dated as of September 15, 1995
between the Registrant and Silverton International Fund
Limited (32)
10.77 - Subscription Agreement dated September 21, 1995, as of
August 31, 1995, including Registration Rights Agreement
between Registrant and GFL Advantage Fund Limited. (32)
10.78 - Contract Manufacturing Agreement dated November 20,1995
between Registrant and Boehringer Ingelheim
Pharmaceuticals, Inc. (3)(34)
10.79 - Development and Marketing Collaboration and License
Agreement between Astra Merck, Inc., Intercardia, Inc.
and CPEC, Inc., dated December 4, 1995. (33)
10.80 - InterCompany Services Agreement between Registrant and
Intercardia, Inc. (33)
10.81 - Asset Purchase Agreement dated November 14, 1995 among
Registrant, InterNutria, Inc., and Walden Laboratories,
Inc. (34)
10.82 - Employment Agreement between Registrant and Glenn L.
Cooper, M.D. dated April 30, 1996 effective as of May 13,
1996 (37)
23 - Consent of Coopers & Lybrand L.L.P. (34)
27 - Financial Data Schedule
- ---------------------------
(1) Incorporated by reference to the Registrant's registration statement on
Form S-1 (File No. 33-32408) declared effective on March 8, 1990.
(3) Confidential Treatment requested for a portion of this Exhibit.
(4) Incorporated by reference to the Registrant's Annual Report on Form 10-K
for the year ended September 30, 1990.
(7) Incorporated by reference to Post-Effective Amendment No. 2 to the
Registrant's registration statement on Form S-1 (File No. 33-32408) filed
December 18, 1991.
(8) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the three months ended December 31, 1991.
(9) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the three months ended March 31, 1992.
(12) Incorporated by reference to the Registrant's Form 8-K dated November 30,
1992.
(13) Incorporated by reference to Post-Effective Amendment No. 5 to the
Registrant's Registration Statement on Form S-1 (File No. 33-32408) filed
on December 21, 1992.
(14) Incorporated by reference to the Registrant's Annual Report on Form 10-K
for the fiscal year ended September 30, 1992.
(15) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the three months ended December 31, 1992
(16) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the six months ended March 31, 1993
(17) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the nine months ended June 30, 1993
-19-
<PAGE>
(18) Incorporated by reference to the Registrant's Annual Report on Form 10-K
for the fiscal year ended September 30, 1993
(20) Incorporated by reference to the Registrant's Registration Statement on
Form S-3 or Amendment No. 1 (File no. 33-75826)
(21) Incorporated by reference to the Registrant's Form 8-K dated March 31,
1994
(22) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the six months ended March 31, 1994
(23) Incorporated by reference to the Registrant's Form 8-K dated June 20,
1994
(25) Incorporated by reference to the Registrant's Annual Report on Form 10-K
for the fiscal year ended September 30, 1994
(27) Incorporated by reference to the Registrant's Quarterly Report on From
10-Q for the six months ended March 31, 1995
(29) Incorporated by reference to the Registrant's Quarterly Report on Form 8-
K dated June 2, 1995
(30) Incorporated by reference to the Registrant's Quarterly Report on Form 8-
K dated May 16, 1995; Exhibit 10.70 (a) supersedes Exhibit 10.70.
(31) Incorporated by reference to Registrant's Quarterly Report on Form 10-Q
for the nine months ended June 30, 1995.
(32) Incorporated by referring to Registrant's Report on Form 8-K dated August
16, 1995.
(33) Incorporated by reference to Registration Statement filed on Form S-1
(No. 33-80219) by Intercardia, Inc. on December 8, 1995.
(34) Incorporated by reference to Registrant's Annual Report on Form 10-K for
the fiscal year ended September 30, 1995.
(36) Incorporated by reference to Amendment No. 1 to Registrant's Registration
Statement on Form S-3 (File No. 333-1273) filed March 15, 1996.
(37) Incorporated by reference to Registrant's Registration Statement on Form
S-3 (File No. 333-03131) filed May 3, 1996
(b) Reports on Form 8-K
During the three month period ended March 31, 1996, the Company filed
reports on Form 8-K dated January 18, 1996, February 7, 1996 and March
22, 1996, and a report on Form 8-K/A dated February 20, 1996.
-20-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INTERNEURON PHARMACEUTICALS, INC.
By: /s/Glenn L. Cooper
-------------------------------------
Glenn L. Cooper, M.D., President
and Chief Executive Officer
(Principal Executive Officer)
Date: May 10, 1996
By: /s/Thomas Farb
-------------------------------------
Thomas F. Farb,
Executive Vice President, Finance
Chief Financial Officer and Treasurer
(Principal Financial and Accounting
Officer)
-21-
<PAGE>
EXHIBIT INDEX
3.4 - Restated Certificate of Incorporation of Registrant (17)
3.5 - By-Laws of Registrant (1)
4.4 - Certificate of Designation establishing Series C Preferred
Stock (17)
4.6 - Form of Registrant Warrant issued in subsidiary private
placement (25)
4.7 - Form of Registrant Warrant to be issued to Paramount
Capital, Inc., D.H. Blair & Co., Inc. or designees (25)
10.5 (a) - Consultant and Non-competition Agreement between the
Registrant, Richard Wurtman, M.D. (34)
10.5 (b) - Consultant and Non-competition Agreement between
InterNutria, Inc. and Judith Wurtman, Ph.D. (34)
10.6 - Assignment of Invention and Agreement between Richard
Wurtman, M.D., Judith Wurtman and the Registrant (1)
10.7 - Management Agreement between the Registrant and Lindsay
Rosenwald, M.D. (1)
10.9(a) - Restated and Amended 1989 Stock Option Plan (7)
10.10 - Form of Indemnification Agreement (1)
10.11 - Restated Amendment to MIT Option Agreement (1)
10.12(a) - Patent and Know-How License Agreement between the
Registrant and Les Laboratoires Servier ("Servier") dated
February 7, 1990 ("License Agreement") (1)
10.12(b) - Revised Appendix A to License Agreement (1)
10.12(c) - Amendment Agreement between Registrant and Servier, Orsem
and Oril, Produits Chimiques dated November 19,1992(3)(12)
10.12(d) - Amendment Agreement dated April 28, 1993 between
Registrant and Servier (16)
10.12(e) - Consent and Amendment Agreement among Servier, American
Home Products Corp. and Registrant. (34)
10.13 - Trademark License Agreement between the Registrant and
Orsem dated February 7, 1990 (1)
10.14 - Supply Agreement between the Registrant and Oril Products
Chimiques dated February 7, 1990 (1)(3)
10.15(a) - Form of Indemnification Agreement between the Registrant
and Alexander M. Haig, Jr. (1)
10.16 - Assignment of Invention by Richard Wurtman, M.D. (1)
10.22(a) - License Agreement dated January 15, 1993, as amended,
between the Registrant and Grupo Ferrer (3)(16)
10.25 - License Agreement between the Registrant and the
Massachusetts Institute of Technology (4)
10.28 - Letter Agreement between the Registrant and Bobby W.
Sandage, Jr., Ph.D. (7)
10.29 - Amended Lease dated December 12, 1991 for Registrant's
offices in Lexington, Massachusetts (7)
10.29(a) - First Amendment to Lease dated as of October 14, 1994
between Registrant and Ledgemont Realty Trust (25)
10.30 - License Agreement dated January 1, 1992 between the
Trustees of Princeton University and the Registrant (3)(8)
10.31 - Research Agreement dated as of July 1, 1991 between the
Registrant and the Trustees of Princeton University (3)(8)
<PAGE>
10.32 - Consulting Agreement dated as of July 1, 1991 between the
Registrant and Daniel Kahne, Ph.D. (3)(8)
10.33 - License Agreement dated January 28, 1992 between Ohio
University, The Castle Group, Inc. and Scimark Corporation
(assigned to Progenitor, Inc.) (3)(8)
10.34 - Sponsored Research Agreement between Scimark Corporation
(assigned to Progenitor, Inc.) and Ohio University (3)(8)
10.34(a) - Letter Amendment between Progenitor, Inc. and Ohio
University (18)
10.35 - Technology License Contract dated December 18, 1991
between the Registrant and the Mayo Foundation for
Medical Education and Research (3)(8)
10.36 - Exclusive License Agreement dated February 24, 1992
between the Registrant and Purdue Research Foundation (9)
10.37 - License Agreement dated as of February 15, 1992 between
the Registrant and Massachusetts Institute of Technology
(9)
10.39 - Employment Agreement between Transcell Technologies, Inc.
and Elizabeth Tallet dated November 11, 1992 and Guarantee
by Registrant (13)
10.40 - Patent and Know-How Sublicense and Supply Agreement
between Registrant and American Cyanamid Company dated
November 19, 1992 (3)(12)
10.41 - Equity Investment Agreement between Registrant and
American Cyanamid Company dated November 19, 1992 (12)
10.42 - Trademark License Agreement between Registrant and
American Cyanamid Company dated November 19, 1992 (12)
10.43 - Consent Agreement between Registrant and Servier dated
November 19,1992 (12)
10.44(a) - Termination Letter to Registrant from Veryfine Products,
Inc., dated October 30, 1995 (34)
10.45 - Agreement between Registrant and Parexel International
Corporation dated October 22, 1992 (as of July 21, 1992)
(3) (14)
10.46 - License Agreement dated February 9, 1993 between the
Registrant and Massachusetts Institute of Technology
(3)(15)
10.47 - Sublease between Enichem America and Transcell
Technologies, Inc. including guarantee by the Registrant
(15)
10.49 - License Agreement between Registrant and Elan Corporation,
plc dated September 9, 1993 (3)(18)
10.50 - License Agreement between Transcell Technologies, Inc. and
Princeton University dated October 14, 1993 (3)(18)
10.51 - Letter Agreement between the Registrant and Mark S. Butler
(18)
10.52 - License Agreement dated February 18, 1994 between
Registrant and Rhone-Poulenc Rorer, S.A. (20)
10.54 - Form of Purchase Agreement dated as of February 24, 1994
(20)
10.54(a) - Form of Amendment to Purchase Agreement (20)
10.55 - Patent License Agreement between Registrant and
Massachusetts Institute of Technology dated March 1, 1994
(20)
10.56 - License Agreement between Progenitor, Inc. and Albert
Einstein College of Medicine of Yeshiva University dated
as of February 1,1994 (20)
<PAGE>
10.57 - Employment Letter dated February 28, 1994 between the
Registrant and Thomas F. Farb (21)
10.58 - Master Equipment Lease including Schedules and Exhibits
between Phoenix Leasing and Registrant (agreements for
Transcell and Progenitor are substantially identical),
with form of continuing guarantee for each of Transcell
and Progenitor (22)
10.59 - Exhibit D to Agreement between Registrant and Parexel
International Corporation dated as of March 15, 1994.
(3)(22)
10.60(a) - Acquisition Agreement dated as of May 13, 1994 among the
Registrant, Intercardia, Inc., Cardiovascular Pharmacology
Engineering Consultants, Inc. (CPEC), Myocor, Inc. and the
sellers named therein (23)
10.60(b) - Amendment dated June 15, 1994 to the Acquisition Agreement
(23)
10.60 (c) - Form of Consulting Agreement between Intercardia, Inc.,
CPEC and Myocor, Inc.(23)
10.61 - License Agreement dated December 6, 1991 between Bristol-
Myers Squibb and CPEC, as amended (3)(23)
10.61(a) - Letter Agreement dated November 18, 1994 between CPEC and
Bristol-Myers Squibb (25)
10.62 - Lease Agreement between Thomas R. Eggers and Progenitor,
Inc. dated as of November 1994 with Registrant guaranty
(25)
10.63 - Form of Stock Purchase Agreement dated December 15, 1994
(25)
10.64 - Form of Investor Rights Agreement among Progenitor,
Transcell, Registrant and each investor in the subsidiary
private placement (25)
10.64(a) - Form of Investor Rights Agreement among Intercardia, the
Registrant and each investor in the Intercardia private
placement (25)
10.65 - 1994 Long-Term Incentive Plan (25)
10.67 - Employment Agreement between Intercardia and Clayton I.
Duncan with Registrant guarantee (25)
10.67(a) - Amendment to Employment Agreement between Intercardia,
Inc. and Clayton I. Duncan (27)
10.68 - Interneuron Pharmaceuticals, Inc. 1995 Employee Stock
Purchase Plan, as amended (27)
10.69 - Office Lease, dated April 24, 1995 between Intercardia,
Inc. and Highwoods/Forsyth Limited Partnership, with
Registrant Guaranty (27)
10.70 (a) - License and Collaboration Agreement by and between
Progenitor, Inc., and Chiron Corporation dated March 31,
1995 (3) (30)
10.71 - Securities Purchase Agreement dated June 2, 1995 between
the Registrant and Reliance Insurance Company, including
Warrant and exhibits (29)
10.72 - Sponsored Research and License Agreement dated as of May
1, 1995 between Progenitor and Novo Nordisk (3) (30)
10.73 - Form of Stock Purchase Agreement dated as of June 28, 1995
(31)
<PAGE>
10.74 - Securities Purchase Agreement dated as of August 16, 1995
between the Registrant and BT Holdings (New York), Inc.,
including Warrant issued to Momint (nominee of BT
Holdings) (32)
10.75 - Stock Purchase Agreement dated as August 23, 1995 between
the Registrant and Paresco, Inc. (32)
10.76 - Stock Purchase Agreement dated as of September 15, 1995
between the Registrant and Silverton International Fund
Limited (32)
10.77 - Subscription Agreement dated September 21, 1995, as of
August 31, 1995, including Registration Rights Agreement
between Registrant and GFL Advantage Fund Limited. (32)
10.78 - Contract Manufacturing Agreement dated November 20,1995
between Registrant and Boehringer Ingelheim
Pharmaceuticals, Inc. (3) (34)
10.79 - Development and Marketing Collaboration and License
Agreement between Astra Merck, Inc., Intercardia, Inc.
and CPEC, Inc., dated December 4, 1995. (33)
10.80 - InterCompany Services Agreement between Registrant and
Intercardia, Inc. (33)
10.81 - Asset Purchase Agreement dated November 14, 1995 among
Registrant, InterNutria, Inc., and Walden Laboratories,
Inc. (34)
10.82 - Employment Agreement between Registrant and Glenn L.
Cooper, M.D. dated April 30, 1996 effective as of May 13,
1996 (37)
23 - Consent of Coopers & Lybrand L.L.P. (34)
27 - Financial Data Schedule
- ---------------------------
(1) Incorporated by reference to the Registrant's registration statement on
Form S-1 (File No. 33-32408) declared effective on March 8, 1990.
(3) Confidential Treatment requested for a portion of this Exhibit.
(4) Incorporated by reference to the Registrant's Annual Report on Form 10-K
for the year ended September 30, 1990.
(7) Incorporated by reference to Post-Effective Amendment No. 2 to the
Registrant's registration statement on Form S-1 (File No. 33-32408) filed
December 18, 1991.
(8) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the three months ended December 31, 1991.
(9) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the three months ended March 31, 1992.
(12) Incorporated by reference to the Registrant's Form 8-K dated November 30,
1992.
(13) Incorporated by reference to Post-Effective Amendment No. 5 to the
Registrant's Registration Statement on Form S-1 (File No. 33-32408) filed
on December 21, 1992.
(14) Incorporated by reference to the Registrant's Annual Report on Form 10-K
for the fiscal year ended September 30, 1992.
(15) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the three months ended December 31, 1992
(16) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the six months ended March 31, 1993
<PAGE>
(17) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the nine months ended June 30, 1993
(18) Incorporated by reference to the Registrant's Annual Report on Form 10-K
for the fiscal year ended September 30, 1993
(20) Incorporated by reference to the Registrant's Registration Statement on
Form S-3 or Amendment No. 1 (File no. 33-75826)
(21) Incorporated by reference to the Registrant's Form 8-K dated March 31,
1994
(22) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the six months ended March 31, 1994
(23) Incorporated by reference to the Registrant's Form 8-K dated June 20,
1994
(25) Incorporated by reference to the Registrant's Annual Report on Form 10-K
for the fiscal year ended September 30, 1994
(27) Incorporated by reference to the Registrant's Quarterly Report on From
10-Q for the six months ended March 31, 1995
(29) Incorporated by reference to the Registrant's Quarterly Report on Form 8-
K dated June 2, 1995
(30) Incorporated by reference to the Registrant's Quarterly Report on Form 8-
K dated May 16, 1995; Exhibit 10.70 (a) supersedes Exhibit 10.70.
(31) Incorporated by reference to Registrant's Quarterly Report on Form 10-Q
for the nine months ended June 30, 1995.
(32) Incorporated by referring to Registrant's Report on Form 8-K dated August
16, 1995.
(33) Incorporated by reference to Registration Statement filed on Form S-1
(No. 33-80219) by Intercardia, Inc. on December 8, 1995.
(34) Incorporated by reference to Registrant's Annual Report on Form 10-K for
the fiscal year ended September 30, 1995.
(36) Incorporated by reference to Amendment No. 1 to Registrant's Registration
Statement on Form S-3 (File No. 333-1273) filed March 15, 1996.
(37) Incorporated by reference to Registrant's Registration Statement on Form
S-3 (File No. 333-03131) filed May 3, 1996
(b) Reports on Form 8-K
During the three month period ended March 31, 1996, the Company filed
reports on Form 8-K dated January 18, 1996, February 7, 1996 and March
22, 1996, and a report on Form 8-K/A dated February 27, 1996.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND STATEMENT OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 38,459,000
<SECURITIES> 32,651,000
<RECEIVABLES> 1,145,000
<ALLOWANCES> 0
<INVENTORY> 3,629,000
<CURRENT-ASSETS> 75,301,000
<PP&E> 3,204,000
<DEPRECIATION> (1,763,000)
<TOTAL-ASSETS> 78,129,000
<CURRENT-LIABILITIES> 11,978,000
<BONDS> 0
0
3,500,000
<COMMON> 37,000
<OTHER-SE> 41,944,000<F1>
<TOTAL-LIABILITY-AND-EQUITY> 78,129,000
<SALES> 0
<TOTAL-REVENUES> 7,381,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 21,984,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 144,000
<INCOME-PRETAX> (15,145,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (15,145,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (15,145,000)
<EPS-PRIMARY> (.44)
<EPS-DILUTED> 0
<FN>
<F1>ADDITIONAL PAID - IN CAPITAL - $135,881,000
ACCUMULATED DEFICIT - $ (93,937,000)
</FN>
</TABLE>
