<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995
Commission File Number 0-18044
PROCYTE CORPORATION
(Exact name of the registrant as specified in its charter)
Washington 91-1307460
---------- ----------
(State of incorporation) (I.R.S. Employer Identification No.)
12040 115th Avenue N.E., Suite 210, Kirkland, WA 98034-6900
- ------------------------------------------------ ----------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (206)820-4548
-------------
Securities registered pursuant to Section 12(b) of the Act: None
----
Indicate by check mark 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 period that the registrant was
required to file such reports), and (2) has been subject to the filing
requirements for 90 days.
Yes /X/ No / /
As of November 10, 1995, there were issued and outstanding 13,118,495 shares of
common stock, par value $.01 per share.
<PAGE>
PROCYTE CORPORATION
INDEX
PART I FINANCIAL INFORMATION PAGE NO.
Item 1.Financial Statements (unaudited)
Balance Sheets 3
Statements of Operations 4
Statements of Cash Flows 5
Statements of Stockholders' Equity 6
Notes to Financial Statements 7
Item 2.Management's Discussion and
Analysis of Financial Condition and
Results of Operations 9
PART II OTHER INFORMATION
Item 1.Legal Proceedings 12
Item 4.Submission of Matters
to a Vote of Security Holders 13
Item 6.Exhibits and Reports on Form 8-K 13
SIGNATURES 13
2
<PAGE>
Part I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PROCYTE CORPORATION
(a development stage company)
BALANCE SHEETS
<TABLE>
<CAPTION>
September 30,
1995 December 31,
(unaudited) 1994
-------------- --------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents.............................. $ 11,889,104 $ 26,243,922
Securities available for sale ......................... 26,648,494 16,770,215
Other.................................................. 503,804 460,223
-------------- --------------
Total current assets................................. 39,041,402 43,474,360
PROPERTY AND EQUIPMENT, at cost
Equipment.............................................. 3,343,944 3,328,829
Leasehold improvements................................. 5,046,508 5,097,833
Improvements in progress...............................
Less accumulated depreciation and amortization......... (3,049,438) (2,463,354)
-------------- --------------
Property and equipment, net.......................... 5,341,014 5,963,308
PATENTS, at cost....................................... 556,680 527,329
Less accumulated amortization.......................... (156,310) (111,310)
-------------- --------------
Patents, net......................................... 400,370 416,019
DEFERRED OFFERING COSTS................................
OTHER.................................................. 159,399 159,399
-------------- --------------
TOTAL ASSETS........................................... $ 44,942,185 $ 50,013,086
-------------- --------------
-------------- --------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable....................................... $ 260,478 $293,466
Accrued liabilities.................................... 576,942 1,093,954
Deferred income........................................ 0 340,344
-------------- --------------
Total current liabilities............................ 837,420 1,727,764
DEFERRED LEASE PAYMENTS................................ 74,111 83,003
DEFERRED STATE SALES TAXES............................. 52,544 52,544
COMMITMENTS
STOCKHOLDERS' EQUITY
Preferred stock $.01 par value: 2,000,000 shares
authorized; no shares issued or outstanding..........
Common stock $.01 par value: 30,000,000 shares
authorized; shares issued and outstanding
13,118,495 - September 30, 1995 and 12,920,296 -
1994................................................. 131,185 129,203
Additional paid-in capital............................. 82,318,354 82,292,913
Deficit accumulated during the development stage....... (38,372,630) (34,118,285)
Unearned compensation.................................. (98,799) (154,056)
-------------- --------------
Total stockholders' equity........................... 43,978,110 48,149,775
-------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY............. $ 44,942,185 $ 50,013,086
-------------- --------------
-------------- --------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
3
<PAGE>
PROCYTE CORPORATION
(a development stage company)
STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
January 1,
1985
(Predecessor
Three months ended September 30, Nine months ended September 30, inception) to
-------------------------------- -------------------------------- September 30,
1995 1994 1995 1994 1995
---------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
REVENUES
Research and development
revenues under collaborative
agreements................................. $ 250,000 $ 806,005 $ 1,536,315 $ 1,955,338 $ 7,754,710
License fees................................. 600,000
Interest income.............................. 434,382 526,088 1,898,529 1,270,646 6,302,426
Other ....................................... 697,764
--------------- --------------- --------------- --------------- ---------------
Total revenues............................... 684,382 1,332,093 3,434,844 3,225,984 15,354,900
--------------- --------------- --------------- --------------- ---------------
COSTS AND EXPENSES
Research and
development................................ 1,095,982 4,046,514 4,819,351 10,234,982 40,724,411
General and
administrative............................. 968,930 769,218 2,869,838 2,203,537 13,005,907
--------------- --------------- --------------- --------------- ---------------
Total costs and expenses.................... 2,064,912 4,815,732 7,689,189 12,438,519 53,730,318
--------------- --------------- --------------- --------------- ---------------
NET LOSS..................................... $(1,380,530) $(3,483,639) $(4,254,345) $(9,212,535) $(38,375,418)
--------------- --------------- --------------- --------------- ---------------
--------------- --------------- --------------- --------------- ---------------
NET LOSS PER
COMMON SHARE............................... $(0.11) $(0.27) $(0.32) $(0.74) $(5.56)
--------------- --------------- --------------- --------------- ---------------
--------------- --------------- --------------- --------------- ---------------
Weighted average number of
common shares used in computing
net loss per common share.................. 13,118,495 12,918,303 13,083,800 12,482,928 6,729,054
--------------- --------------- --------------- --------------- ---------------
--------------- --------------- --------------- --------------- ---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
4
<PAGE>
PROCYTE CORPORATION
(a development stage company)
STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
January 1,
1985
(predecessor
Nine months ended September 30, inception) to
--------------------------------------- September 30,
OPERATING ACTIVITIES 1995 1994 1995
------------------- ------------------ ------------------
<S> <C> <C> <C>
Net Loss $ (4,254,345) $ (9,212,535) $ (38,375,418)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation........................................................ 586,084 513,545 3,300,108
Patent expense...................................................... 45,000 18,000 602,571
Amortization of discount on marketable securities................... (15,625)
Gain on sale of securities available for sale....................... (238,010) (101,100)
Stock grants........................................................ 41,087
Compensation expense on stock options............................... 55,257 103,990 641,339
Changes in assets and liabilities: 0
Increase in other current assets.................................. (43,581) (366,676) (503,808)
Decrease in deferred offering expenses............................ 99,112 0
Increase in other assets.......................................... (2,341) (9,399)
Increase (decrease) in accounts payable........................... (32,988) 122,431 175,359
Increase (decrease) in accrued liabilities........................ (517,012) 773,922 522,034
Increase (decrease) in deferred income............................ (340,344) (229,364) 0
Increase (decrease) in deferred lease payments.................... (8,892) 3,953 74,111
Decrease in deferred use tax...................................... (42,169)
------------------ ----------------- -----------------
Net cash used in operating activities.................................. (4,748,831) (8,175,963) (33,690,910)
------------------ ----------------- -----------------
FINANCING ACTIVITIES
Proceeds from issuance of stock - net................................ 27,423 35,659,689 81,294,896
Proceeds from borrowings............................................. 500,000
------------------ ----------------- -----------------
Net cash provided by financing activities.............................. 27,423 35,659,689 81,794,896
------------------ ----------------- -----------------
INVESTING ACTIVITIES
(Purchase) disposal of property and equipment......................... 36,210 (3,740,240) (8,545,191)
Interest-bearing lease deposit........................................ (150,000)
Purchase of securities available-for-sale............................. (127,464,452) (24,256,000) (193,466,827)
Proceeds from sale or redemption of securities available for sale..... 117,824,183 13,327,060 166,935,058
Patents:
Expenditures......................................................... (29,351) (113,832) (1,047,468)
Reimbursements....................................................... 5,894 59,546
------------------ ----------------- -----------------
Net cash used in investing activities.................................. (9,633,410) (14,777,118) (36,214,882)
------------------ ----------------- -----------------
NET INCREASE IN CASH AND CASH EQUIVALENTS.............................. (14,354,818) 12,706,608 11,889,104
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD............................................. 26,243,922 22,653,578
------------------ -----------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD............................. $ 11,889,104 $ 35,360,186 $ 11,889,104
------------------ ----------------- -----------------
------------------ ----------------- -----------------
SUPPLEMENTAL SCHEDULE OF NON-CASH
FINANCING AND INVESTING ACTIVITIES
Conversion of debt to common stock.................................. $ 500,000
-----------------
-----------------
Issuance of stock for patents....................................... $ 27,790
-----------------
-----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE>
PROCYTE CORPORATION
(a development stage company)
STATEMENTS OF STOCKHOLDERS' EQUITY
(unaudited)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional During the
----------------------------- Paid-in Development Unearned
Shares Par Value Capital Stage Compensation Total
------------- -------------- ------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994................ 12,920,296 129,203 82,292,913 (34,118,285) (154,056) 48,149,775
Exercise of stock options:
($2.16 per share) January 23............ 9,000 90 19,350 19,440
($.09 per share) in exchange for
5,681 issued shares February 3........ 179,919 1,799 (1,797) 2
($0.86 per share) February 14........... 9,280 93 7,888 7,981
Amortization of unearned compensation..... 55,257 55,257
Net loss.................................. (4,254,345) (4,254,345)
------------- -------------- ------------- ------------- ------------- -------------
Balance, September 30, 1995............... 13,118,495 $ 131,185 $ 82,318,354 $ (38,372,630) $ (98,799) $ 43,978,110
------------- -------------- ------------- ------------- ------------- -------------
------------- -------------- ------------- ------------- ------------- -------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
PROCYTE CORPORATION
(a development stage company)
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited Financial Statements of ProCyte Corporation (the
"Company") for the three and nine-month periods ended September 30, 1995 and
1994, have been prepared by the Company in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Pursuant to such
rules and regulations, the Financial Statements do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. Accordingly, this financial information
should be read in conjunction with the complete Financial Statements, including
the notes thereto and the auditors' opinion, which are included in the Company's
Annual Report, incorporated by reference to Form 10-K, for the year ended
December 31, 1994. In the opinion of management, all material adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Interim results are not necessarily indicative
of the results that may be expected for the year ending December 31, 1995.
2. INVESTMENTS
At September 30, 1995, the Company's investments consist primarily of U.S.
Treasury bills and notes and notes secured by U.S. federal agencies. These
investments are classified as "available for sale." The amortized cost and
estimated market value for investments maturing in one year or less is
$15,203,251, and those maturing in one through five years is $11,445,243.
Unrealized gains or losses at September 30, 1995 were insignificant, and
realized gains or (losses) from sales of investments in the three and nine-month
periods ended September 30, 1995 were $(24,420) and $238,010, respectively.
3. COLLABORATIVE AGREEMENTS
KISSEI PHARMACEUTICAL CO., LTD.
For the three and nine-month periods ended September 30, 1995, the Company
earned revenue of $250,000 and $750,000 respectively, under the agreement with
Kissei Pharmaceutical Co., Ltd. As of June 30, 1995, all research and
development funds, payable under the terms of the contract, have been received
by the Company. The agreement with Kissei obligates Kissei to make certain
future payments based upon achievement of specified milestones and product
royalties, subject to the terms of the agreement.
7
<PAGE>
PROCYTE CORPORATION
(a development stage company)
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
KAKEN PHARMACEUTICAL CO., LTD.
The Company earned revenue under the agreement with Kaken Pharmaceutical
Co., Ltd. for the three and nine-month periods ended September 30, 1995 of $0
and $693,371, respectively. As of first quarter 1995, Kaken satisfied its
payment obligations under its agreement with the Company regarding research and
development fees.
Kaken and Kissei may terminate their license agreements with the Company at
any time subject to notice provisions in their respective agreements.
4. STOCKHOLDERS' EQUITY
Information relating to stock options granted, exercised, canceled and
currently exercisable is as follows:
<TABLE>
<CAPTION>
Shares subject Option price
to option range
--------- -----
<S> <C> <C>
Balance, January 1, 1994 1,019,808 $.09 - $16.56
Granted 133,000 $9.69 - $13.88
Exercised 13,756 $2.16 - $9.44
Canceled 12,820 $2.16 - $16.56
----------
Balance, September 30, 1994 1,126,232 $0.09 - $16.56
----------
----------
Balance, January 1, 1995 1,412,710 $.09 - $11.88
Granted 428,500 $2.94
Exercised 203,880 $0.09 - $2.16
Canceled 98,812 $0.86 - $11.25
----------
Balance, September 30, 1995 1,538,518 $2.16 - $11.88
----------
----------
Currently exercisable 551,438
</TABLE>
8
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Company relies primarily on equity financings and corporate
partnerships to fund its operations and capital expenditures. At September 30,
1995, the Company had cash, cash equivalents and short-term investments of
approximately $38.5 million, and working capital of approximately $38.2 million.
The Company believes that its present capital resources and expected
revenues from existing license agreements should be sufficient to fund the
Company's currently planned operations and capital needs for up to two years.
The Company's future cash requirements, however, may vary materially from those
now expected because of a number of factors. The Company may be required to
raise additional capital through equity offerings, strategic alliances or other
sources. There can be no assurance that such funds will be available to the
Company on acceptable terms, if at all.
The Company is presently pursuing a three-fold corporate strategy in an
effort to build long-term shareholder value. This strategy involves: (1)
continuing to develop the Company's family of proprietary copper-based
compounds; (2) actively seeking a suitable merger, acquisition or technology in-
licensing opportunity that could enhance the Company's ability to provide
nearer-term product introductions; and (3) fully utilizing the Company's
existing manufacturing facility by providing contract manufacturing services.
In August, ProCyte filed a 510(k) pre-market notification with the U.S.
Food and Drug Administration (FDA) for clearance to market the Company's Iamin-
Registered Trademark- gel wound dressing as a Class I medical device. Class I
devices, which include such products as ointments, gels and wound dressings, are
products for which safety and effectiveness may be assured by general regulatory
controls. Pre-market notifications contain a summary of a product's safety and
show substantial equivalency with products that have already been cleared to
market.
Iamin-Registered Trademark- gel wound dressing, if cleared to market by the
FDA, is intended to be used for the dressing and management of various types of
wounds, including chronic and acute wounds and burns. Products cleared to
market under the 510(k) regulations are typically sold as over-the-counter
products.
There can be no assurance as to when or if the FDA will clear Iamin-
Registered Trademark- gel wound dressing for the Company to market it in the
U.S., and, if clearance is granted, when or if ProCyte will be able to
successfully market the product by itself or enter into satisfactory
distribution agreements for sale of the product. At present, ProCyte has no
sales staff or distribution agreement in place for the U.S. The wound care
market is highly competitive, particularly among products that are cleared to
market as Class I devices. While ProCyte
9
<PAGE>
believes that the significant body of scientific and medical knowledge that has
been gained from studies with Iamin-Registered Trademark- gel supports the
Company's continued interest in it as a potential wound care product, and it is
investigating the guidelines for registration of Iamin-Registered Trademark- gel
in Europe as well, there can be no assurance that the Company has the ability to
compete effectively in this marketplace, or that its product would be well-
received.
ProCyte's partner for the development of Iamin-Registered Trademark- gel
for wound care in Japan, China, Taiwan and Korea is Kissei Pharmaceutical Co.,
Ltd. Kissei is presently conducting a Phase I safety study of Iamin-Registered
Trademark- gel in Japan.
Patient enrollment in the Phase I/II study of investigational Iamin-IB-
Registered Trademark- solution, for the treatment of mild to moderate ulcerative
colitis, reached the half-way mark during the quarter. This placebo-controlled,
dose ranging, multi-center study is expected to enroll approximately 50
patients. The study is expected to provide further data regarding patient drug
tolerance, and to provide further assessment of the drug's potential clinical
utility in the treatment of IBD.
In October, ProCyte initiated a Phase II hair loss study with PC1358,
tradenamed Tricomin-TM- solution. The study is expected to enroll 36 men
experiencing early stage androgenetic alopecia, commonly known as male pattern
baldness. The study's primary endpoint is the effect of PC1358 versus placebo
on total hair mass in the target treatment area. Additional endpoints will
include analyses such as total hair count and general cosmetic results.
ProCyte and Kaken Pharmaceutical Co., Ltd., its Japanese partner, have been
in discussions regarding ProCyte's desire to reacquire ProCyte's hair growth
technology licensed to Kaken for the Asian market. It appears that the Japanese
regulatory agency will not currently approve compounds as "drugs" for treating
male pattern baldness in Japan. ProCyte is interested in exploring with others
alternative registrations for the technology in the Asian market, which requires
certain expertise and resources that neither Kaken nor ProCyte have.
In other developments, ProCyte scientists have been invited to speak at
several conferences regarding the Company's technology. In August, senior
scientist Dr. Alex Pallenberg presented data at the annual meeting of the
American Chemical Society regarding certain of the inorganic chemistry advances
made by Company scientists in the field of copper(I) compounds. The results of
the collaborative research efforts between ProCyte and virology laboratories at
the National Institutes of Health were published in October in the peer-reviewed
journal, ARCHIVES IN BIOCHEMISTRY AND BIOPHYSICS. This data addressed studies
conducted with ProCyte's antiviral compound, PC1250, and its ability IN VITRO to
inhibit the HIV protease and replication of the virus itself.
The Company's efforts to seek a suitable merger, acquisition or technology
in-licensing opportunity are continuing. These discussions are of paramount
importance and a priority for the Company, but there can be no assurance as to
when or if such discussions will
10
<PAGE>
be successfully concluded. The Company also cannot predict what impact, if any,
the outcome of such discussions may have on the Company's existing product
pipeline, assets and overall strategic direction.
ProCyte has been actively promoting its contract manufacturing services,
and is presently providing services to several industry clients. Due to the
timelines involved in drug development, the Company anticipates that it will
take some time to build its contract manufacturing reputation and client base
before the facility would become cash positive.
OPERATING LOSSES
The Company is engaged in the research and development of products for
human health care utilizing copper-based compounds. Such research and
development has been funded from the Company's equity-derived working capital
and through corporate partnerships. The Company has incurred operating losses
since its inception due to research, development and clinical studies of its
proprietary technology. In particular, the Company has pursued and continues to
pursue the evaluation or development of investigational Iamin-Registered
Trademark- gel for potential care and management of acute and chronic dermal
wounds, investigational Iamin-IB-Registered Trademark- solution for potential
treatment of inflammatory bowel disease, investigational Tricomin-TM- solution
for potential treatment of certain hair loss conditions, and PC1250 for certain
antiviral indications.
The Company expects to incur additional operating losses for a number of
years. At September 30, 1995, the Company's accumulated deficit was
approximately $38.4 million.
REVENUES
For the three and nine-month periods ended September 30, 1995, ProCyte
earned revenues totaling $684,382 and $3,434,844, respectively, consisting of
$250,000 and $1,536,315 from collaborative agreements, and $434,382 and
$1,898,529 of interest income for the periods. Collaborative agreement revenue
for the three-month period ending September 30, 1995 represents payment made
under the Company's license agreement with Kissei in second quarter 1995 earned
during the third quarter.
The Company received the final research and development funding due under
its license with Kaken Pharmaceutical Co., Ltd., ProCyte's partner in Asia for
development of the Company's hair loss technology, during first quarter 1995.
ProCyte and Kaken have been in discussions regarding the possibility of ProCyte
reacquiring from Kaken all rights to the Company's technology in Asia. The
Company received the final research and development funding due under its
license with Kissei Pharmaceutical Co., Ltd., ProCyte's partner in certain Asian
countries for development of the Iamin-Registered Trademark- technology, in June
1995. The Company's agreements with Kissei obligates Kissei to make certain
future payments based on milestones and royalties, subject to the terms of its
agreement with the Company. However, Kissei may terminate its agreement with
the Company at any time, subject to notice provisions in its agreement with the
Company.
11
<PAGE>
EXPENSES
Research and development expenses for the three and nine-month periods
ended September 30, 1995 were $1,095,982 and $4,819,351, respectively, compared
to $4,046,514 and $10,234,982 for the same periods in 1994. Expenditures during
the current periods conform with the Company's planned expenses, primarily as
they relate to early-stage development of the Company's compounds.
General and administrative expenses for the three and nine-month periods
ended September 30, 1995 were $968,930 and $2,869,838, respectively, compared to
$769,218 and $2,203,537 for the same periods in 1994. The increase was
primarily related to ongoing legal fees incurred as a result of the Company's
defense of the class action securities lawsuit and to the Company's
investigation of merger, acquisition and in-licensing opportunities.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company and two of its officers are defendants in a purported class
action lawsuit pending in the United States District Court for the Western
District of Washington (the "Lawsuit"). The Lawsuit was initiated on October
18, 1994, immediately after the Company announced on October 17, 1994 the
preliminary analysis of its Phase III clinical trial of investigational Iamin-
Registered Trademark- gel for the treatment of diabetic plantar ulcers.
Plaintiffs purport to represent a class of purchasers of the Company's
securities between February 2, 1994 and October 17, 1994. Plaintiffs allege
that the defendants misrepresented and/or omitted material information in public
statements concerning the Company's investigational Iamin-Registered Trademark-
gel. Plaintiffs allege violations of federal and state securities laws and
other laws and seek recovery of monetary damages in an unspecified amount. The
Lawsuit is now in the discovery phase and the Court has set a trial date of June
4, 1996.
The Company believes the claims to be without merit and has and will
continue to defend the Lawsuit vigorously. There can be no assurance, however,
that the Company's defense will be successful, or that the Lawsuit will not have
an adverse affect on the Company or its financial condition.
12
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - None.
(b) Reports on Form 8-K - None.
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.
PROCYTE CORPORATION
(REGISTRANT)
Date: November 10, 1995 By /s/ Joseph Ashley
--------------------------------
Joseph Ashley
Chairman, President and C.E.O.
Date: November 10, 1995 By: /s/ David H. Fulle
--------------------------------
David H. Fulle
Principal Accounting Officer
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JUL-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 11,889,104
<SECURITIES> 26,648,494
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 39,041,402
<PP&E> 8,390,452
<DEPRECIATION> 3,049,438
<TOTAL-ASSETS> 44,942,185
<CURRENT-LIABILITIES> 837,420
<BONDS> 0
<COMMON> 82,449,539
0
0
<OTHER-SE> 38,471,429<F1>
<TOTAL-LIABILITY-AND-EQUITY> 44,942,185
<SALES> 0
<TOTAL-REVENUES> 684,382
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,064,912
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,380,530)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,380,530)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,380,530)
<EPS-PRIMARY> (0.11)
<EPS-DILUTED> 13,118,495
<FN>
<F1>This represents deficit accumulated during development stage and unearned
compensation
</FN>
</TABLE>
