--------------------------------------------
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 June 30, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from____________to____________
Commission File No. 0-19153
---------------------
VIMRX PHARMACEUTICALS INC.
(Exact name of Registrant as specified in its Charter)
---------------------
Delaware 06-1192468
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
2751 Centerville Road, Suite 210,Wilmington,Delaware 19808
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (302) 998-1734
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 [ ]
The aggregate number of Registrant's shares outstanding on August 11, 1997
was 55,358,676 shares of Common Stock, $.001 par value.
-------------------------------
<PAGE>
VIMRX PHARMACEUTICALS INC.
INDEX
PART I - FINANCIAL INFORMATION Page
Item 1. Financial Statements:
Consolidated Balance Sheets as of June 30, 1997
(unaudited) and December 31, 1996.................. 3
Consolidated Statements of Operations (unaudited) for the
Three and Six Months Ended June 30, 1997 and 1996,
and for the Period from Inception through
June 30, 1997...................................... 4
Consolidated Statements of Cash Flows (unaudited) for the
Six Months Ended June 30, 1997 and 1996,
and for the Period from Inception through
June 30, 1997...................................... 5
Notes to Financial Statements (unaudited).............. 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................ 8
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.......................................... 10
Item 2. Changes in Securities...................................... 10
Item 3. Defaults upon Senior Securities............................ 10
Item 4. Submission of Matters to a Vote of Security Holders........ 10
Item 5. Other Information.......................................... 12
Item 6. Exhibits and Reports on Form 8-K........................... 12
SIGNATURES............................................................... 14
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
VIMRX PHARMACEUTICALS INC. and Subsidiaries
(a development stage enterprise)
(In thousands except share data)
CONSOLIDATED BALANCE SHEETS
June 30,
1997 December 31,
(unaudited) 1996
------------ -------------
ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 2,445 $ 8,611
Short-term investments 34,372 38,300
Other current assets 246 348
-------- --------
Total current assets 37,063 47,259
Equipment - net 3,096 2,650
Marketable equity securities 286 286
Other assets 292 261
Goodwill 1,030 1,236
-------- --------
T O T A L $ 41,767 $ 51,692
======== ========
LIABILITIES
Current liabilities:
Accounts payable and accrued $ 1,845 $ 1,903
expenses
Term note payable - warrantholder 36 36
Capital leases 472 472
-------- -------
Total current liabilities 2,353 2,411
Term note payable - warrantholder 227 227
Capital leases 292 463
-------- -------
Total liabilities 2,872 3,101
-------- -------
Minority interest in subsidiary 1,035 2,381
-------- -------
SHAREHOLDERS' EQUITY
Common stock; $0.001 par value, 120,000,000 shares
authorized, 55,187,387 and 54,429,887 shares
issued and outstanding at June 30, 1997
and December 31, 1996, respectively 55 54
Additional paid-in capital 90,649 89,478
Unearned compensation (534) (800)
Unrealized (loss) on investment (167) (143)
Cumulative translation adjustment (65) (8)
Deficit accumulated during the development
stage (52,078) (42,371)
-------- -------
Total shareholders' equity . 37,860 46,210
-------- -------
T O T A L $ 41,767 $ 51,692
======== =========
</TABLE>
<PAGE>
3
<TABLE>
<CAPTION>
VIMRX PHARMACEUTICALS INC. and Subsidiaries
(a development stage enterprise)
(In thousands except per share data)
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30, December 30, 1986
------------------------ ---------------------- (inception) to
1997 1996 1997 1996 June 30, 1997
--------- ---------- ----------- --------- -----------------
Operating expenses:
<S> <C> <C> <C> <C> <C>
Research and development $ 3,497 $ 606 $ 6,714 $ 976 $ 22,653
Purchased research and development 600 2,942 1,800 2,942 16,284
Termination of Agreement - - - (464) -
General and administrative 2,528 1,156 4,128 2,124 17,910
--------- -------- --------- -------- -------
6,525 4,704 12,642 5,578 56,847
--------- -------- --------- -------- --------
Other (income) expenses:
Royalty payments 50 - 100 100 400
Interest (income) (601) (77) (1,282) (95) (4,233)
Interest expense 46 213 83 319 496
Provision for losses
on notes receivable - - - - 135
Investment in and advances to
research and development entities
charged to expense - - - - 700
Minority interest in net loss of
consolidated subsidiary (929) - (1,876) - (1,992)
Other - net (64) - 40 - (275)
--------- -------- --------- -------- --------
(1,498) 136 (2,935) 324 (4,769)
--------- -------- --------- -------- --------
NET LOSS $ 5,027 $ 4,840 $ 9,707 $ 5,902 $ 52,078
========== ======== ========== ======== =========
NET LOSS PER SHARE $ .09 $ .11 $ .18 $ .18
--------- -------- --------- --------
WEIGHTED AVERAGE NUMBER OF SHARES
OF COMMON STOCK OUTSTANDING 54,770,848 43,157,768 54,626,741 32,336,359
=========== =========== =========== ==========
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
VIMRX PHARMACEUTICALS INC. and Subsidiaries
(a development stage enterprise)
(In thousands)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Six months ended June 30, December 30, 1986
------------------------------------ (Inception) to
1997 1996 June 30, 1997
-------------- ------------- --------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (9,707) $ (5,902) $ (52,078)
Adjustments to reconcile net (loss) to net cash
(used in) operating activities:
Depreciation and amortization 514 10 768
Amortization of debt discount 198 200
Interest expense settled through
issuance of stock 72
Consulting fees settled through
issuance of stock 41 75
Research and development expenses to be
settled through the issuance of stock (464)
Provision for losses on notes receivable 135
Investment in and advances to research and
development entities charged to expense 700
(Gain) on sale of subsidiaries (2,889)
Noncash compensation 266 845
Purchased in process research and
development 1,200 1,787 18,574
Loss from disposal of equipment 20
Deferred financing cost 310 310
Minority interest in net loss (1,846) (1,962)
Changes in operating assets and liabilities:
(Increase) in organization costs (3)
(Increase) decrease in other
current assets and other assets 70 42 (129)
Increase (decrease) in accounts
payable and accrued expenses (58) 74 58
-------------- ------------- -------------
Net cash (used in) operating
activities (9,561) (3,904) (35,304)
-------------- ------------- -------------
Cash flows from investing activities:
Net (purchases) sales of short-term
investments 3,904 (34,375)
Payment for acquisition, net of cash acquired (2,011)
Purchase of marketable securities (450)
Purchases of equipment (754) (385) (1,794)
Proceeds from sale of equipment 39
Loans to DNA Pharmaceuticals, Inc. (296)
Repayment of DNA Pharmaceuticals, Inc. loans 161
Loans to Ribonetics GmbH (600)
Investment in and loan to CambES, Ltd. (325)
-------------- ------------- --------------------
Net cash provided by (used in) investing
activities 3,150 (385) (39,651)
-------------- ------------- --------------------
Cash flows from financing activities:
Proceeds from sales of preferred and
common stock, net 4,200 24,836
Proceeds from issuance of common stock in
connection with the exercise of
warrants/options 472 51,873 51,583
Purchase of treasury stock (8)
Proceeds from bridge loans 3,141
Repayment of bridge loans (2,000) (2,500)
Repayment of leased obligations (171) (171)
Issuance of convertible demand notes
payable 600
Return of capital (14)
-------------- ------------- --------------------
Net cash provided by financing activities 301 54,073 77,467
-------------- ------------- --------------------
Effect of exchange rate used in changes on cash (56) (67)
-------------- ------------- --------------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (6,166) 49,784 2,445
Cash and cash equivalents at beginning of 8,611 2,219
period
-------------- ------------- --------------------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $ 2,445 $ 52,003 $ 2,445
============== ============= ====================
</TABLE>
5
<PAGE>
VIMRX PHARMACEUTICALS INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1997
(unaudited)
(1) Financial Statement Presentation
The unaudited financial statements of VIMRX Pharmaceuticals Inc. and
subsidiaries (the "Company") herein have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission (SEC) and,
in the opinion of management, reflect all adjustments (consisting only of
normal recurring accruals) necessary to present fairly the results of
operations for the interim periods presented. 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. However,
management believes that the disclosures are adequate to make the
information presented not misleading. These financial statements and the
notes thereto should be read in conjunction with the financial statements
and the notes thereto included in the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1996. The results for the interim
periods are not necessarily indicative of the results for the full fiscal
year.
(2 Principle of Consolidation
Consolidated Financial Statements include the accounts of VIMRX
Pharmaceuticals Inc., Innovir Laboratories, Inc., and all subsidiaries
which are at least majority owned. All significant inter-company
transactions and balances have been eliminated.
(3) Cash Flows and Supplemental Cash Flow Disclosures
For purposes of the statements of cash flows, the Company considers
investments with original maturities of up to 90 days to be cash
equivalents.
(4) Royalty Payments
Royalty payments represents the annual $100,000 minimum royalty payment
under the Company's license agreement with New York University Medical
Center and the Weizmann Institute of Science in Israel.
(5) Research Agreements
On March 7, 1997, the Company entered into a research agreement with
Columbia University whereby the Company, through a newly established
subsidiary, VIMRX Genomics, Inc., will provide $30 million in funding to
Columbia over the next five years at approximately $6 million per year in
exchange for the right to exclusively license technology developed by
Columbia. Columbia has a 10% interest in VIMRX Genomics, Inc. (valued at
$500,000), and has received 200,000 common shares of the Company (valued
at $700,000), which collectively ($1.2 million) have been allocated to
purchased research and development.
On March 28, 1997, the Company entered into a research agreement with
Columbia University whereby the Company will provide $2.7 million in
funding over 3 years to research and develop Blood Factor IXai.
6
<PAGE>
During the second quarter of 1997, the Company acquired the rights to two
compounds, Blood Factor IXai (VM201) and a wound healing compounds (VM301)
for cash payments aggregating $400,000. These payments and fees paid in
relation to the agreement between Columbia and VGI ($200,000) were
allocated to purchased research and development ($600,000).
(6) Letter of Intent
On June 12, 1997, the Company signed a letter of intent with Baxter
Healthcare Corporation to form a new company to acquire the assets and
licenses of Baxter's Immunotherapy Division.
Pursuant to the letter of intent, the Company and Baxter will form a new
company, yet to be named, into which the assets of Baxter's Immunotherapy
Division will be transferred. VIMRX will hold a majority ownership (80%)
position in the new company and Baxter will hold a minority ownership
(20%) position. VIMRX will issue to Baxter 11 million shares of common
stock and convertible preferred shares with a nominal value of $40
million. To the extent the 11 million shares of common stock are worth
less than $50 million at the time of closing, Baxter will receive
additional convertible preferred shares. The conversion price for the
preferred shares will be determined according to the closing prices of
VIMRX's common stock within an 18 month period following the closing of
the transaction, subject to a floor of $5.50 per share and a ceiling of
$7.50 per share. Baxter will provide $20 million and VIMRX will provide
$10 million to the new company as initial operating funds. The new company
will pay Baxter milestone payments, related to regulatory approvals, of up
to $21 million over several years. Baxter will retain its exclusive
license to the CD34 antibody used in selection technology and sublicense
it to the new company. Baxter will have one representative on the new
company's board of directors and one representative on VIMRX's board of
directors. The terms included in the letter of intent are subject to the
signing of a definitive agreement between VIMRX and Baxter and the
approval by the boards of directors of VIMRX and Baxter and the
stockholders of VIMRX, which is anticipated to occur in the third quarter
of 1997.
(7) New Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 128, "Earnings Per Share." This Statement establishes standards
for computing and presenting earnings per share (EPS) and applies to
entities with publicly held common stock or potential common stock. This
Statement simplifies the standards for computing earnings per share
previously found in APB Opinion No. 15, "Earnings Per Share," and makes
them comparable to international EPS standards. It replaces the
presentation of primary EPS with a presentation of basic EPS. It also
requires dual presentation of basic and diluted EPS on the face of the
income statement for all entities with complex capital structures and
requires a reconciliation of the numerator and denominator of the basic
EPS computation to the numerator and denominator of the diluted EPS
computation. This Statement is effective for financial statements issued
for periods ending after December 15, 1997, including interim periods;
earlier application is not permitted. This Statement requires restatement
of all prior-period EPS data presented. The adoption of this Statement
will not have any impact on the Company's EPS disclosure, as the Company's
stock options and warrants are anti-dilutive and will be excluded from the
denominator of earnings per share; thus, earnings per common share is
equal to basic earnings per share as computed under SFAS No.128.
7
<PAGE>
VIMRX PHARMACEUTICALS INC.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The following discussion and analysis should be read in conjunction with the
financial statements and notes thereto included elsewhere in this Quarterly
Report on Form 10-Q and with the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996. The Company is in the development stage and
has had no operating revenues since its organization in December 1986.
Three Months Ended June 30, 1997 and 1996
Total operating expenses increased by $1,821,000, or 39%, due to a $2,891,000
increase in research and development expenses, a $2,342,000 decrease in
purchased research and development, a $1,169,000 increase in general and
administrative expenses and $103,000 amortization of goodwill.
Research and development expenses increased $2,891,000 due to the inclusion of
the New York operations of Innovir Laboratories, Inc. ("Innovir"), a majority
interest of which was acquired by the Company on December 23, 1996 ($1,050,000),
increased operations in Europe ($447,000), funding paid under the collaboration
agreement with Columbia University by VIMRX Genomics Inc. ($1,175,000) and
increases in expenses related to clinical trials and other expenses.
The purchased research and development incurred for the three months ended June
30, 1997 ($600,000) relates to payments made to acquire rights to two compounds
and fees paid in relation to ongoing research and development made available to
VIMRX Genomics, Inc. by Columbia University. In 1996, the purchased research and
development expense related to the acquisition of Ribonetics GmbH ($2,942,000).
General and administrative expenses increased $1,169,000 (101%) principally due
to the inclusion of Innovir's operations ($609,000) and increased compensation
expenses net of decreases in director's consulting fees and legal fees
($560,000).
Goodwill, which was recorded in the acquisition of Innovir, will be amortized
over three years.
Interest income increased $524,000 (680%), due to an increase in funds available
for investment (see "Liquidity and Capital Resources") and a higher effective
interest rate. Interest expense decreased $167,000 (78%) due principally to the
repayment of a bridge loan in June 1996.
The minority interest in the net loss of consolidated subsidiaries ($929,000)
results from the interest of minority stockholders in Innovir and VIMRX
Genomics, Inc., two of the Company's subsidiaries.
Other income expenses increased $64,000 due to capital losses on short-term
investments.
The foregoing resulted in a $187,000 (4%) increase in the net loss for the
three month period ended June 30, 1997.
8
<PAGE>
Six Months Ended June 30, 1997 and 1996
Operating expenses for the six months ended June 30, 1997 increased $7,064,000
(127%) from the same period in 1996, due principally to acquisitions of
companies and technologies made at various times during 1996 and 1997. During
that period, research and development expenses increased $5,738,000 (588%),
general and administrative expenses increased $1,798,000 (85%) and amortization
of goodwill was recorded at $206,000. These increases were offset by a
$1,142,000 (39%) decrease in purchased research and development. In addition,
the 1996 period experienced a one-time $464,000 credit for termination of
agreement.
The $5,738,000 increase in research and development expense resulted from the
acquisition of Innovir Laboratories, Inc. which was included in the financial
statements from the date of acquisition, December 23, 1996 ($2,096,000),
increased operations in Europe ($952,000), funding paid under the collaboration
agreement with Columbia University by VIMRX Genomics, Inc. ($2,350,000) and
increases in expenses related to clinical trials and other expenses.
General and administrative expenses increased $1,798,000 principally due to the
inclusion of Innovir's operations ($1,327,000) and increased compensation
expense, net of decreased legal, financing and other costs.
Goodwill, which was recorded in the acquisition of Innovir, is being amortized
over three years.
The purchased research and development expense recorded for the six months ended
June 30, 1997 ($1,800,000) relates to the issuance of common stock of the
Company to Columbia University, the purchase of compound VM 201 from Columbia
University and the purchase of compound VM 301. The purchased research and
development expense recorded for the six months ended June 30, 1996 relates to
the acquisition of Ribonetics GmbH ($2,942,000).
Interest income increased $1,187,000, due to an increase in funds available for
investment and a higher effective interest rate. Interest expenses decreased
$236,000 (74%) due to the bridge loan that was repaid in June 1996.
The minority interest in the net loss of consolidated subsidiaries ($1,876,000)
results from the interest of minority stockholders in Innovir and VIMRX
Genomics, two of the Company's subsidiaries.
Other expenses of $40,000 is due to capital losses on short-term investments.
The foregoing resulted in a $3,805,000 increase in the net loss for the six
months ended June 30, 1997.
9
<PAGE>
Liquidity and Capital Resources
The Company is in the development stage, has realized no operating revenues and
has financed its operations through the sale of its securities.
The Company had $36,817,000 in cash, cash equivalents and marketable securities
held for sale at June 30, 1997, as compared to $46,911,000 at December 31, 1996
and working capital of $34,710,000 at June 30, 1997, as compared to $44,848,000
at December 31, 1996. The decrease in cash and working capital position results
from the funds expended in operations and the expansion and upgrade of Innovir's
laboratory facilities.
The Company expects to incur substantial expenditures in the foreseeable future
for the research and development and commercialization of its proposed products.
Based on current projections, which are subject to change, the Company's
management believes that the present balance of cash, cash equivalents and
marketable securities held for sale is sufficient to fund its operations for
about two years, assuming no capital infusions or revenues are received (it is
management's belief, however, that such capital infusions and revenues will
occur). Thereafter, the Company will require additional funds, which it may seek
to raise through public or private equity or debt financings, collaborative or
other arrangements with corporate sources, or through other sources of
financing.
Part II - OTHER INFORMATION
Item 1. Legal Proceedings.
Not Applicable.
Item 2. Changes in Securities.
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
10
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders.
On June 24, 1997, the stockholders of VIMRX Pharmaceuticals
Inc. ("VIMRX" or the "Company") held their Annual Meeting in New York City. The
holders of 45,298,248 shares of Common Stock were present or represented by
proxy, out of 54,642,437 shares of Common Stock issued and outstanding on May 9,
1997, the record date for the Annual Meeting and, accordingly, a quorum was
present and matters were voted on as follows:
a. By plurality vote, the following persons were elected directors of the
Company:
For Withheld
Donald G. Drapkin 45,069,625 228,623
Richard L. Dunning 45,083,765 214,488
Eric A. Rose, M.D. 45,083,765 214,488
Laurence D. Fink 45,083,765 214,488
Jerome Groopman, M.D. 45,083,765 214,488
Linda G. Robinson 45,083,765 214,488
Lindsay A. Rosenwald, M.D. 45,082,765 215,483
Michael Weiner, M.D. 45,083,765 214,488
b. Certain amendments to the Company's 1990 Incentive and Non-Incentive
Stock Option Plan to conform the plan to certain statutory and
regulatory developments and to provide the Board of Directors and the
Compensation Committee with greater flexibility in determining the
terms and conditions of options, were approved. Votes totaling
34,081,376 were in favor of the amendments, 4,084,847 were against
them, 458,824 abstained, and there were no broker non-votes.
c. Approval of the Company's 1997 Stock Option Plan was approved. Votes
totaling 44,922,919 were in favor of the plan, 190,179 were against
it, 185,150 abstained, and there were no broker non-votes.
d. Ratification of the appointment of KPMG Peat Marwick, LLP as
independent auditors for the year ending December 31, 1997 also passed.
Votes totaling 44,922,919 were in favor of the ratification, 190,179
were against it, 185,150 abstained, and there were no broker non-votes.
11
<PAGE>
Item 5. Other Information.
In June 1997, the Company entered into a letter of intent with Baxter Healthcare
Corporation ("Baxter"), the principal U.S. operating subsidiary of Baxter
International Inc. (NYSE: BAX) to form a new cell therapy company to develop
innovative treatments for cancer and other life-threatening diseases. The
proposed alliance would combine Baxter's ex vivo cellular selection and storage
business with the Company's access to genomics technology to create a leading
comprehensive ex vivo and gene therapy enterprise.
Pursuant to the letter of intent, the Company and Baxter will form a new
company, yet to be named, into which the assets of Baxter's Immunotherapy
Division will be transferred. VIMRX will hold a majority ownership (80%)
position in the new company and Baxter will hold a minority ownership (20%)
position. VIMRX will issue to Baxter 11 million shares of common stock and
convertible preferred shares with a nominal value of $40 million. To the extent
the 11 million shares of common stock are worth less than $50 million at the
time of closing, Baxter will receive additional convertible preferred shares.
The conversion price for the preferred shares will be determined according to
the closing prices of VIMRX's common stock within an 18 month period following
the closing of the transaction, subject to a floor of $5.50 per share and a
ceiling of $7.50 per share. Baxter will provide $20 million and VIMRX will
provide $10 million to the new company as initial operating funds. The new
company will pay Baxter milestone payments, related to regulatory approvals, of
up to $21 million over several years. Baxter will retain its exclusive license
to the CD34 antibody used in selection technology and sublicense it to the new
company. Baxter will have one representative on the new company's board of
directors and one representative on VIMRX's board of directors. The terms
included in the letter of intent are subject to the signing of a definitive
agreement between VIMRX and Baxter and the approval by the boards of directors
of VIMRX and Baxter and the stockholders of VIMRX, which is anticipated to occur
in the third quarter of 1997.
In July 1997, the Company's 2,399,993 outstanding Common Stock Purchase Warrants
(the "Warrants") commenced trading on The Nasdaq National Market. Each Warrant
entitles the registered holder to purchase one shares of Common Stock at an
exercise price of $1.50 per share at any time through January 20, 2006.
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits:
None.
b) Reports on Form 8-K:
Pursuant to a Report on Form 8-K filed on May 21, 1997, the Company reported
that Richard A. Eisner & Company LLP, who previously served as the independent
auditors of the Company, were dismissed upon recommendation of the Audit
Committee effective May 16, 1997, and replaced by KPMG Peat Marwick, LLP. The
Company reported that at no time did any report on the financial statements of
the Company by Richard A. Eisner & Company, LLP contain an adverse opinion or a
disclaimer of opinion, or a qualification or modification as to uncertainty,
audit scope or accounting principles. The decision to change accountants was
occasioned by the developments of the past year, and not by any disagreement or
advice given on any matter of accounting principles or practices, financial
12
<PAGE>
statement disclosure, or auditing scope or procedure. In particular, in light of
the acquisition by the Company of a controlling interest in Innovir
Laboratories, Inc. the Audit Committee concluded that it would be most efficient
and in the best interests of both Innovir and the Company for the same auditors
to audit both companies. The Company solicited proposals from four auditing
firms, including Richard A. Eisner & Company, LLP. KPMG Peat Marwick LLP was
chosen as a result of this process, and was engaged by the Company as its
principal auditors on May 16, 1997.
13
<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.
Dated: August 13, 1997
VIMRX PHARMACEUTICALS INC.
a Delaware Corporation
(Registrant)
By: __/s/ Richard L. Dunning
Richard L. Dunning
President and
Chief Executive Officer
By: __/s/ Francis M. O'Connell
Francis M. O'Connell
Chief Accounting Officer
14
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-END> Jun-30-1997
<CASH> 2,445
<SECURITIES> 34,372
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 37,063
<PP&E> 4,726
<DEPRECIATION> 1,630
<TOTAL-ASSETS> 41,767
<CURRENT-LIABILITIES> 2,353
<BONDS> 0
0
0
<COMMON> 55
<OTHER-SE> 37,805
<TOTAL-LIABILITY-AND-EQUITY> 41,767
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,653
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,282
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,707)
<EPS-PRIMARY> (0.18)
<EPS-DILUTED> (0.18)
</TABLE>
