As filed with the Securities and Exchange Commission on May 15, 2000
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000, or
--------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For transition period from _________________.
Commission File Number 0-27352
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HYBRIDON, INC.
--------------
(Exact name of registrant as specified in its charter)
Delaware 04-3072298
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
155 Fortune Blvd.
Milford, Massachusetts 07157
----------------------------
(Address of principal executive offices)
(508) 482-7500
--------------
(Registrant's telephone number, including area code)
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 such filing
requirements for the past 90 days.
Yes |X| No |_|
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, par value $.001 per share 17,376,436
Class Outstanding as of May 10, 2000
<PAGE>
HYBRIDON, INC.
FORM 10-Q
INDEX
PART I - FINANCIAL STATEMENTS
Item 1- Financial Statements
Consolidated Condensed Balance Sheets as of March 31, 2000 and
December 31,1999.
Consolidated Condensed Statements of Operations for the Three
Months and ended March 31, 2000 and 1999.
Consolidated Condensed Statements of Cash Flows for the Three
Months ended March 31, 2000 and 1999.
Notes to Consolidated Condensed Financial Statements.
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Item 3 - Quantitative and Qualitative Disclosure About Market Risk.
PART II - OTHER INFORMATION
Items 1-3 - None
Item 4 - None
Item 5 - None
Item 6 - Exhibits and Reports on Form 8-K
Signatures
<PAGE>
HYBRIDON, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,795,124 $ 2,551,671
Accounts receivable 1,003,052 1,218,142
Prepaid expenses and other current assets 100,158 101,914
------------- -------------
Total current assets 2,898,334 3,871,727
------------- -------------
PROPERTY AND EQUIPMENT, AT COST:
Leasehold improvements 11,127,035 11,127,035
Laboratory and other equipment 9,943,170 9,943,170
------------- -------------
21,070,205 21,070,205
Less--Accumulated depreciation and amortization 15,168,917 14,691,883
------------- -------------
5,901,288 6,378,322
------------- -------------
OTHER ASSETS:
Deferred financing costs and other assets 1,408,499 1,415,149
Notes receivable from officers 272,900 270,050
------------- -------------
1,681,399 1,685,199
------------- -------------
$ 10,481,021 $ 11,935,248
============= =============
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Current portion of long-term debt $ 13,662,853 $ 6,080,746
Accounts payable 1,395,963 1,622,694
Accrued expenses 2,254,684 2,505,988
------------- -------------
Total current liabilities 17,313,500 10,209,428
LONG-TERM DEBT, NET OF CURRENT PORTION 363,931 392,348
------------- -------------
9% CONVERTIBLE SUBORDINATED NOTES PAYABLE 1,306,000 1,306,000
------------- -------------
8% CONVERTIBLE SUBORDINATED NOTES PAYABLE -- 6,099,775
------------- -------------
STOCKHOLDERS' EQUITY(DEFICIT):
Preferred stock, $.01 par value-
Authorized--5,000,000 shares
Series A convertible preferred stock-
Designated - 1,500,000 shares
Issued and outstanding--661,856 shares at March 31, 2000 and
December 31, 1999, respectively
(Liquidation preference of $67,256,400 at March 31, 2000) 6,618 6,618
Common stock, $.001 par value-
Authorized--100,000,000 shares
Issued and outstanding - 16,260,722 shares at March 31, 2000 and
December 31, 1999, respectively 16,261 16,261
Additional paid-in capital 248,884,132 247,813,331
Accumulated deficit (256,957,892) (253,183,130)
Deferred compensation (451,529) (725,383)
------------- -------------
Total stockholders' deficit (8,502,410) (6,072,303)
------------- -------------
$ 10,481,021 $ 11,935,248
============= =============
</TABLE>
The accompanying notes are an integral part of these consolidated
condensed financial statements.
<PAGE>
HYBRIDON, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
2000 1999
<S> <C> <C>
REVENUES:
Product and service revenue $ 1,564,675 $ 1,529,854
Research and development -- 150,000
Interest 34,641 52,801
Royalty and other income 32,448 40,225
------------ ------------
1,631,764 1,772,880
OPERATING EXPENSES:
Research and development 3,066,370 3,447,278
General and administrative 903,195 1,121,468
Interest 366,161 170,326
------------ ------------
Total operating expenses 4,335,726 4,739,072
------------ ------------
Net loss (2,703,962) (2,966,192)
ACCRETION OF PREFERRED STOCK DIVIDENDS 1,070,800 1,042,052
------------ ------------
Net loss applicable to common stockholders $ (3,774,762) $ (4,008,244)
============ ============
BASIC AND DILUTED NET LOSS PER COMMON SHARE
(Note 2):
Net loss per share $ (0.17) $ (0.19)
Accretion of preferred stock dividends (0.06) (0.07)
------------ ------------
Net loss per share applicable to common stockholders $ (0.23) $ (0.26)
============ ============
SHARES USED IN COMPUTING BASIC AND DILUTED NET LOSS PER
COMMON SHARE (Note 2) 16,260,722 15,304,825
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated
condensed financial statements
<PAGE>
HYBRIDON, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
2000 1999
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(2,703,962) $(2,966,192)
Adjustments to reconcile net loss to net cash used in
operating activities-
Depreciation and amortization 477,035 690,831
Amortization of deferred compensation 273,854 61,611
Amortization of deferred financing costs 105,045 26,984
Changes in operating assets and liabilities-
Accounts receivable 215,090 (103,051)
Prepaid and other current assets 1,756 5,406
Notes receivable from officers (2,850) (2,850)
Accounts payable (226,731) (529,180)
Accrued expenses (251,304) (315,550)
----------- -----------
Net cash used in operating activities (2,112,067) (3,131,991)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of fixed assets -- 2,180
----------- -----------
Net cash provided by investing activities -- 2,180
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of convertible notes payable and
warrants 1,479,679 --
Payments on long-term debt and capital leases (25,764) (16,887)
Increase in deferred financing costs (98,395) --
----------- -----------
Net cash provided by (used in) financing activities 1,355,520 (16,887)
----------- -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (756,547) (3,146,698)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 2,551,671 5,607,882
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,795,124 $ 2,461,184
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $ 240,578 $ 186,695
=========== ===========
Accretion of Series A convertible preferred stock dividend $ 1,070,800 $ 1,042,052
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated
condensed financial statements.
<PAGE>
HYBRIDON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
(1) ORGANIZATION
Hybridon, Inc. (the Company) was incorporated in the State of Delaware on
May 25, 1989. The Company is engaged in the discovery and development of
novel genetic medicines based primarily on antisense technology.
Since inception, the Company has been engaged primarily in research and
development efforts, development of its manufacturing capabilities and
organizational efforts, including recruiting of scientific and management
personnel and raising capital. To date, the Company has not received
revenue from the sale of biopharmaceutical products developed by it based
on antisense technology. In order to commercialize its own products, the
Company will need to address a number of technological challenges and
comply with comprehensive regulatory requirements. Accordingly, it is not
possible to predict the amount of funds that will be required or the
length of time that will pass before the Company receives revenues from
sales of any of these products. All revenues received by the Company to
date have been derived from collaboration agreements, interest on
investment funds and revenues from the custom contract manufacturing of
synthetic DNA and reagent products by the Company's Hybridon Specialty
Products Division. As a result, although the Company has begun to
generate revenues from its contract manufacturing business, the Company
is dependent on the proceeds from possible future sales of equity
securities, debt financings and research and development collaborations
in order to fund future operations.
The Company is currently seeking debt or equity financing in an amount
sufficient to support its operations through the end of 2000 and has
considered the licensing of technology and the sale of assets. If the
Company is unable to obtain this sufficient amount of additional funding
by June 2000 and is not able to sell assets for sufficient consideration,
it will be forced to terminate its operations or seek relief under
applicable bankruptcy law by the end of June 2000.
On December 3, 1997, the Company was delisted from the Nasdaq Stock
Market, Inc. (NASDAQ) because the Company was not in compliance with the
continued listing requirements of the NASDAQ National Market. The Company
is currently trading on the NASD OTC as a result of the delisting.
(2) UNAUDITED INTERIM FINANCIAL STATEMENTS
The unaudited consolidated condensed financial statements included herein
have been prepared by the Company, without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission and include, in
the opinion of management, all adjustments, consisting of normal,
<PAGE>
HYBRIDON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
recurring adjustments, necessary for a fair presentation of interim
period results. 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. The Company believes, however, that its
disclosures are adequate to make the information presented not
misleading. The results for the interim periods presented are not
necessarily indicative of results to be expected for the full fiscal
year. It is suggested that these financial statements be read in
conjunction with the audited consolidated financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1999, as filed with the Securities and Exchange
Commission.
(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Net Loss per Common Share
The Company follows the provisions of Statement of Financial Accounting
Standards (SFAS) No. 128, Earnings per Share. Under SFAS No. 128, basic
net loss per share applicable to common shareholders is computed using
the weighted average number of shares of common stock outstanding during
the period. Diluted net loss per common share is the same as basic net
loss per common as the effects of the Company's potential common stock
equivalents are antidilutive.
Comprehensive Loss
The Company follows the provisions of SFAS No. 130, Reporting
Comprehensive Income. Comprehensive loss is defined as the change in
equity of a business enterprise during a period from transactions and
other events and circumstances from nonowner sources. The Company's
comprehensive loss is the same as the reported net loss for all periods
presented.
Segment Reporting
The Company follows the provisions of SFAS No. 131, Disclosures About
Segments of an Enterprise and Related Information. SFAS No. 131
establishes standards for reporting information regarding operating
segments in annual financial statements and requires selected information
for those segments to be reported in interim financial reports issued to
stockholders. SFAS No. 131 also establishes standards for related
disclosures about products and services and geographic areas. To date,
the Company has viewed its operations and manages its business as
principally one operating segment. As a result, the financial information
disclosed herein, represents all of the material financial information
related to the Company's principal operating segment. All of the
Company's revenues are generated in the United States and substantially
all assets are located in the United States.
(4) CASH EQUIVALENTS
The Company considers all highly liquid investments with maturities of
ninety days or less when purchased to be cash equivalents. Cash and cash
equivalents at March 31, 2000 and December 31, 1999 consisted of the
following (at amortized cost, which approximates fair market value):
<PAGE>
HYBRIDON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
March 31, 2000 December 31, 1999
Cash and cash equivalents-
Cash and money market funds $ 219,625 $ 505,794
Corporate bond 1,575,499 2,045,877
---------------- ----------------
$ 1,795,124 $ 2,551,671
================= =================
(5) 9.0% CONVERTIBLE SUBORDINATED NOTES
On April 2, 1997, the Company issued $50,000,000 of 9.0% convertible
subordinated notes (the 9% Notes). On May 5, 1998 noteholders holding
$48.6 million of principal value of the 9% Notes tendered such notes in
exchange for Series A convertible preferred stock, approximately
$2,355,000 of accrued interest thereon was converted into shares of
Series A convertible preferred stock and warrants to purchase common
stock. As of March 31, 1999, there is $1.3 million of 9% Notes
outstanding. Under the terms of the 9% Notes, the Company must make
semi-annual interest payments on the outstanding principal balance
through the maturity date of April 1, 2004. The 9% Notes are convertible
at any time prior to the maturity date at a conversion price equal to
$35.0625 per share, subject to adjustment under certain circumstances, as
defined.
Beginning April 1, 2000, the Company may redeem the 9% Notes at its
option for a 4.5% premium over the original issuance price, provided that
from April 1, 2000 to March 31, 2001, the 9% Notes may not be redeemed
unless the closing price of the common stock equals or exceeds 150% of
the conversion price for a period of at least 20 out of 30 consecutive
trading days and the 9% Notes redeemed within 60 days after such trading
period. The premium decreases by 1.5% each year through March 31, 2003.
Upon a change of control of the Company, as defined, the Company will be
required to offer to repurchase the 9% Notes at 150% of the original
issuance price.
(6) NOTE PAYABLE TO LENDERS
During November 1998, the Company entered into a $6,000,000 note payable
with Forum Capital Markets, LLC (Forum) and certain investors associated
with Pecks Management Partners Ltd. (collectively, the Lenders). The
terms of the note payable are as follows: (i) the maturity is November
30, 2003; (ii) the interest rate is 8%; (iii) interest is payable monthly
in arrears, with the principal due in full at maturity of the loan; (iv)
the note payable is convertible, at the Lender's option, in whole or in
part, into shares of common stock at a rate equal to $2.40 per share; (v)
the note includes a minimum liquidity covenant of $2,000,000; and (vi)
the note payable may not be prepaid, in whole or in part, at any time
prior to December 1, 2000. The Company has received a waiver of
noncompliance with the minimum tangible net worth and minimum liquidity
covenants through June 30, 2000. The Company has classified the
outstanding balance of $6,000,000 at March 31, 2000 as a current
liability in the accompanying consolidated balance sheet at it does not
expect to remain in compliance with the
<PAGE>
HYBRIDON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
financial covenants. In connection with refinancing the note payable to a
bank, Forum received $400,000, which was reinvested by Forum to purchase
160,000 shares of common stock with 40,000 attached warrants at an
exercise price of $3.00 per share. The Company has recorded the $400,000
as a deferred financing cost, which will be amortized to interest expense
over the term of the note. In addition, Forum received warrants to
purchase 133,333 shares of common stock of the Company $3.00 per share.
The Company computed the value of the warrants to be $85,433, by using
the Black-Scholes option pricing model. The Company has recorded this
$85,433 as a deferred financing cost, which will be amortized to interest
expense over the term of the note.
(7) 8% CONVERTIBLE NOTES PAYABLE
In March 2000, the Company completed the offering of the 8% Convertible
Notes Payable (8% Notes). As of March 31, 2000, the Company had received
approximately $7.6 million in principal with respect to the 8% Notes.
Under the terms of the 8% Notes, the Company must make semiannual
interest payments on the outstanding principal balance through the
maturity date of November 30, 2002. The 8% Notes are convertible at any
time prior to the maturity date at a conversion price equal to $0.60 per
share of common stock (the Conversion Ratio), subject to adjustment under
certain circumstances, as defined. If the 8% Notes are prepaid before the
maturity date, all noteholders are entitled to receive a warrant to
purchase the number of shares of common stock equal to the number of
shares of common stock that would be issued using the Conversion Ratio.
In connection with the 8% Notes, the Company must maintain certain
defined covenants of compliance, including, making all payments of
interest when due and maintaining consolidated cash balances of at least
$1.5 million as of the last day of any calendar month. The Company is in
compliance with the $1.5 million covenant as of March 31, 2000. Since the
Company may not remain in compliance with this covenant in the
future, the outstanding balance on the 8% Notes has been classified as a
current liability in the accompanying consolidated balance sheet as of
March 31, 2000. If an event of default occurs, as defined, the
noteholders may declare the unpaid principal and interest due and payable
immediately. If the Company defaults with respect to payment of interest,
the Company will be required to pay interest at a defaulted rate equal to
12%.
In addition, in connection with the issuance of the 8% Notes, the holders
of the note payable to Lenders (see Note 6) received a warrant to
purchase 2,750,000 shares of the Company's common stock at $.60 per
share. The warrant was granted as consideration to the Lenders for
relinquishing their seniority upon liquidation of the Company to the
holders of the 8% Notes. The Company computed the value of the warrants
to be $547,328, by using the Black-Scholes option pricing model. The
Company has recorded the $547,328 as a deferred financing cost, which
will be amortized to interest expense over the term of the 8% Notes.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
Hybridon is involved in the discovery and development of genetic
medicines based on antisense technology. Hybridon began operations in February
1990 and since that time has been involved primarily in research and development
efforts, developing its manufacturing capabilities, and raising capital. In
order to commercialize its therapeutic products, Hybridon will need to address a
number of technological challenges and comply with comprehensive regulatory
requirements. All revenues received by Hybridon to date have been from
collaborative agreements, interest on invested funds and revenues from the
custom contract manufacturing of synthetic DNA and reagent products by its
wholly owned subsidiary, Hybridon Specialty Products ("HSP").
Hybridon has incurred total losses of approximately $257.0 million
through March 31, 2000. Hybridon expects that its research and development and
general and administrative expenses will be significant in 2000 and future years
as it pursues its core drug development programs and expects to continue to
incur operating losses and significant capital needs beyond its internally
generated funds.
Hybridon's existing cash resources are expected to be sufficient to
fund operations only through June 2000. However, if the noteholders force
default proceedings due to events of non-compliance, Hybridon's existing cash
resources will not be sufficient to fund operations through June 2000.
Hybridon's ability to continue operations time will depend on its success in
obtaining new funding, either through additional financing or new partnerships
or collaborations with third parties, that may require it to relinquish rights
to certain of its technologies, product candidates or products which it would
otherwise pursue on its own, through the sale of assets of Hybridon or through
the licensing of technology. If Hybridon is unable to obtain substantial
additional new funding by June 2000, Hybridon will have to terminate operations
or seek relief under applicable bankruptcy laws. As of May 10, 2000, Hybridon
had 44 full-time employees.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
Hybridon had total revenues of $1.6 million and $1.8 million for the
three months ended March 31, 2000 and 1999, respectively. Revenues from products
and services were $1.6 million and $1.5 million for the three months ended March
31, 2000 and 1999, respectively.
Substantially all of Hybridon's product and service revenue is
generated by HSP. The increase in revenues in 2000 was primarily the result of
increased sales to HSP customers. Receipt of service revenues from MethylGene,
Inc. and OriGenix Technologies, Inc., entities in which Hybridon has an equity
interest, decreased slightly in 2000 to $45,000 from $110,000 in 1999.
Revenues from research and development collaborations were $0.0 and
$0.2 million for the three months ended March 31, 2000 and 1999 respectively.
This decrease was primarily due to the termination by Searle, a collaborative
partner of Hybridon, of its collaboration agreement with Hybridon.
Hybridon's research and development expenses were $3.1 million and $3.4
million for the three months ended March 31, 2000 and 1999, respectively. This
decrease reflects Hybridon's lower levels of
<PAGE>
cash available for expenditures in 2000. Research and development salaries and
related costs remained at approximately the same level in 2000 as 1999.
Hybridon's patent expenses remained at approximately the same level in 2000 as
1999.
Hybridon's general and administrative expenses were $0.9 million and
$1.1 million for the three months ended March 31, 2000 and 1999, respectively.
This decrease reflects Hybridon's lower levels of cash available for
expenditures in 2000. General and administrative expenses related to business
development, public relations and legal and accounting expenses remained at
approximately the same level in 2000 as 1999.
Hybridon's interest expense was $0.4 million and $0.2 million for the
three months ended March 31, 2000 and 1999, respectively. This increase is
attributable to the issuance of the 8% convertible subordinated notes in
December 1999.
As a result of the above factors, Hybridon incurred net losses from
operations of $2.7 million and $3.0 million for the three months ended March 31,
2000 and 1999, respectively. Hybridon recorded preferred stock dividends on the
Series A convertible preferred stock of $1.1 million and $1.0 million in 2000
and 1999, respectively, resulting in a net loss applicable to common
stockholders of $3.8 million and $4.0 million for 2000 and 1999, respectively.
LIQUIDITY AND CAPITAL RESOURCES
During the three months ended March 31, 2000, Hybridon utilized
approximately $2.1 million to fund operating activities and did not incur any
new capital expenditures. The primary use of cash for operating activities was
to fund Hybridon's loss of $2.7 million. Hybridon expects to purchase a minimal
amount of capital equipment in 2000 as part of its effort to conserve cash
resources.
Hybridon had cash and cash equivalents of $1.8 million at March 31,
2000. However, since that date, Hybridon has spent a portion of such cash
resources and continues to have substantial obligations to lenders, real estate
landlords, trade creditors and others. On May 10, 2000, Hybridon's obligations
included $1.3 million principal amount of 9% notes, a $6.0 million loan with
Forum Capital Markets, LLC and others (collectively, the "Lenders"),
approximately $7.6 million in 8% convertible notes and accrued interest as
described below, and approximately $1.1 million of accounts payable. Because of
Hybridon's financial condition, many trade creditors are only willing to provide
Hybridon with products and services on a cash on delivery basis. The note to the
Lenders contains certain financial covenants that require Hybridon to maintain
minimum tangible net worth and minimum liquidity requirements. Hybridon
currently meets the minimum liquidity requirements, but is not in compliance
with the minimum tangible net worth requirement. However, the Lenders have
granted Hybridon a waiver of compliance with the minimum tangible net worth and
the minimum liquidity requirements at March 31, 2000 and have agreed not to
require that Hybridon comply with those requirements for any periods commencing
April 1, 2000 through June 30, 2000.
HISTORY OF OPERATING LOSSES; UNCERTAINTY OF FUTURE PROFITABILITY
Since inception, Hybridon has incurred significant losses, which it has
funded through the issuance of equity securities, debt issuances, sales by HSP,
and through research and development collaborations and licensing arrangements.
FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING
<PAGE>
Hybridon's existing cash resources are expected to be sufficient to
fund operations through June 2000. However, if the noteholders force default
proceedings due to events of non-compliance, Hybridon's existing cash resources
will not be sufficient to fund operations through June 2000. Hybridon's ability
to continue operations will depend on its success in obtaining new funding,
either through additional financing or new partnerships or collaborations with
third parties, the sale of assets or the licensing of technology. In any new
parternship or collaboration, Hybridon may be required to relinquish rights to
certain of its technologies, product candidates or products that it would
otherwise pursue on its own. If Hybridon is unable to obtain substantial
additional new funding by June 2000 or sell sufficient assets, Hybridon will
have to terminate operations or seek relief under applicable bankruptcy laws.
Even though Hybridon has obtained sufficient cash to fund its
operations through June 2000, it will be required to raise substantial
additional funds from external sources to support its operations from June 2000
on. Hybridon has no committed external sources of capital, and, as discussed
above, expects no product revenues for several years from sales of the
therapeutic products that it is developing. No guarantee can be given that
additional funds will be available to fund operations for the balance of 2000 or
in future years, or, if available, that such funds will be available on
acceptable terms. Raising additional funds by issuing equity securities will
dilute existing stockholders and may have other adverse effects on their
holdings or rights.
Hybridon's future capital requirements will depend on many factors,
including the following:
o continued scientific progress in its research
o drug discovery and development programs
o the magnitude of these programs
o progress with preclinical and clinical trials
o sales of DNA products and reagents to third parties by HSP
o the margins on such sales
o the time and costs involved in obtaining regulatory approvals
o the costs involved in filing, prosecuting and enforcing patent claims
o competing technological and market developments
o Hybridon's ability to establish and maintain collaborative academic and
commercial research, development and marketing relationships
o its ability to obtain third-party financing for leasehold improvements
and other capital expenditures
o the costs of manufacturing scale-up and commercialization activities
and arrangements
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
The statements contained in this Report on Form 10-Q that are not historical are
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended, including statements regarding the expectations, beliefs, intentions
or strategies regarding the future. Hybridon intends that all forward-looking
statements be subject to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements reflect
Hybridon's views as of the date they are made with respect to future
<PAGE>
events and financial performance, but are subject to many risks and
uncertainties, which could cause actual results to differ materially from any
future results expressed or implied by such forward-looking statements. Examples
of such risks and uncertainties include the risks detailed in the Risk Factors
section of Hybridon's Annual Report on Form 10-K for the year ended December 31,
1999, which information is incorporated herein by reference.
<PAGE>
HYBRIDON, INC.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27.1 Financial Data Schedule (EDGAR)
(b) On February 15, 2000, Hybridon filed a Current Report on Form
8-K dated February 15, 2000, reporting the following
management changes: James B. Wyngaarden, Chairman, Sudhir
Agrawal, President and Acting CEO and Robert G. Andersen, CFO.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
Hybridon, Inc.
May 15, 2000 /s/ Sudhir Agrawal
- ----------------- ------------------------------
Date Sudhir Agrawal, D. Phil.
President and Acting Chief Executive Officer
May 15, 2000 /s/ Robert G. Andersen
- ----------------- -------------------------------------
Date Robert G. Andersen
Chief Financial Officer and Vice President
of Operations and Planning
<PAGE>
HYBRIDON, INC.
EXHIBIT INDEX
27.1 Financial Data Schedule (EDGAR)
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000861838
<NAME> HYBRIDON INC
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 1,795,124
<SECURITIES> 0
<RECEIVABLES> 1,003,052
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,898,334
<PP&E> 21,070,205
<DEPRECIATION> 15,168,917
<TOTAL-ASSETS> 10,481,021
<CURRENT-LIABILITIES> 17,313,500
<BONDS> 1,669,931
16,261
0
<COMMON> 6,618
<OTHER-SE> (8,525,289)
<TOTAL-LIABILITY-AND-EQUITY> 10,481,021
<SALES> 1,564,675
<TOTAL-REVENUES> 1,631,764
<CGS> 0
<TOTAL-COSTS> 3,969,565
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 366,161
<INCOME-PRETAX> (2,703,962)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,703,962)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,703,962)
<EPS-BASIC> (0.23)
<EPS-DILUTED> (0.23)
</TABLE>
