<PAGE>
SECURITIES AND EXCHANGE COMMISSSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997 OR
[X] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Period From _____ to _____
Commission File Number: 0-19986
-------
CELL GENESYS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 94-3061375
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
342 Lakeside Drive, Foster City, California 94404
(Address of principal executive offices and zip 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 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
----- -----
As of May 12, 1997, the number of outstanding shares of the
Registrant's Common Stock was 16,568,848.
<PAGE>
CELL GENESYS, INC.
TABLE OF CONTENTS
ITEM PAGE
PART I. FINANCIAL INFORMATION
1. Financial Statements:
a. Condensed Balance Sheets - March 31, 1997 and
December 31, 1996 3
b. Condensed Statements of Operations - Three Months Ended
March 31, 1997 and 1996 4
c. Condensed Statements of Cash Flows - Three Months Ended
March 31, 1997 and 1996 5
d. Notes to Condensed Financial Statements 6
2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7-10
PART II. OTHER INFORMATION 10
SIGNATURE 11
2
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CELL GENESYS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
----------------------------
ASSETS (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents ......................... $ 22,111 $ 20,935
Short-term investments ............................ 54,594 64,649
Prepaid expenses and other current assets ......... 2,575 1,165
--------- ---------
Total current assets ................................. 79,280 86,749
Property and equipment at cost, net .................. 13,861 12,485
Deposits and other assets, net ....................... 554 575
--------- ---------
$ 93,695 $ 99,809
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable .................................. $ 1,260 $ 1,669
Accrued compensation and benefits ................. 951 1,414
Deferred revenue from related parties ............. 4,305 12,164
Accrued construction costs ........................ 556 2,118
Accrued legal expenses ............................ 1,630 1,986
Other accrued liabilities ......................... 668 439
Current portion of property and equipment financing 3,534 2,822
--------- ---------
Total current liabilities ............................ 12,904 22,612
Noncurrent portion of property and equipment financing 11,366 6,133
Convertible note payable ............................. 15,000 --
Stockholders' equity:
Common stock ...................................... 17 16
Additional paid-in capital ........................ 127,596 127,318
Accumulated deficit ............................... (73,188) (56,270)
--------- ---------
Total stockholders' equity ........................... 54,425 71,064
--------- ---------
$ 93,695 $ 99,809
========= =========
</TABLE>
See accompanying notes
3
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CELL GENESYS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
1997 1996
------------------------------------
(In thousands except per share data)
<S> <C> <C>
Revenue under collaborative agreements with related parties . $ 7,849 $ 4,391
Operating expenses:
Research and development ................................. 8,279 6,689
General and administrative ............................... 2,136 1,758
Charge for cross-license and settlement (includes $3,750
equity in losses of Xenotech joint venture associated
with cross-license and settlement) .................. 15,000 --
-------- --------
Total operating expenses .................................... 25,415 8,447
Interest income ............................................. 1,064 1,234
Interest expense ............................................ (288) (301)
-------- --------
Net loss .................................................... $(16,790) $ (3,123)
======== ========
Net loss per share .......................................... $ (1.01) $ (0.19)
======== ========
Shares used in computing net loss per share ................. 16,546 16,239
======== ========
</TABLE>
See accompanying notes.
4
<PAGE>
CELL GENESYS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
1997 1996
-----------------------------
(In thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss ...................................................... $(16,790) $ (3,123)
Adjustments to reconcile net loss to net cash used by
operating activities:
Depreciation and amortization ............................... 1,109 910
Equity in losses of Xenotech joint venture ................ 96 1,101
Non-cash charge for cross-license and settlement ............ 15,000 --
Changes in certain assets and liabilities:
Prepaid expenses and other current assets ................... (1,410) (33)
Deposits and other assets ................................... 8 --
Accounts payable ............................................ (409) 777
Accrued compensation and benefits ........................... (463) (424)
Deferred revenue from related parties ....................... (7,859) (323)
Accrued construction costs .................................. (1,562) (48)
Accrued legal expenses ...................................... (356) 600
Other accrued liabilities ................................... 229 (144)
-------- --------
Net cash used by operating activities ................... (12,407) (707)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of short-term investments ........................... (15,946) (38,590)
Maturities of short-term investments .......................... 2,919 11,823
Sales of short-term investments ............................... 22,954 29,846
Contributions to Xenotech joint venture ....................... (83) (424)
Capital expenditures .......................................... (998) (40)
-------- --------
Net cash provided by investing activities ............... 8,846 2,615
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from property and equipment financing ................ 5,137 --
Payments under property and equipment financing obligations.... (679) (601)
Proceeds from issuance of common stock ........................ 279 507
-------- --------
Net cash used by financing activities ................... 4,737 (94)
-------- --------
Net increase in cash and cash equivalents ........................ 1,176 1,814
Cash and cash equivalents at beginning of period ................. 20,935 8,190
-------- --------
Cash and cash equivalents at end of period ....................... $ 22,111 $ 10,004
======== ========
</TABLE>
See accompanying notes.
5
<PAGE>
CELL GENESYS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
- ---------------------
The accompanying consolidated financial statements at March 31, 1997
and for the three months ended March 31, 1997 and 1996 include the accounts of
Cell Genesys, Inc., including its subsidiary Abgenix, Inc. (collectively, the
"Company"). These statements are unaudited, but include all of the adjustments,
consisting only of normal recurring adjustments, which the management of the
Company considers necessary for a fair presentation of the Company's financial
position at such dates and the operating results and cash flows of those
periods. The results of the interim period are not necessarily indicative of the
results for the entire year.
The consolidated financial statements should be read in conjunction
with the audited financial statements and notes thereto included in the
Company's Annual Report for the year ended December 31, 1996 included in its
filing on Form 10-K on March 31, 1997 as amended on Form 10-K/A on April 30,
1997.
NET LOSS PER SHARE
- ------------------
Net loss per share is computed using the weighted average number of
common shares outstanding. Common equivalent shares from stock options are
excluded from the calculation as their effect is antidilutive. In February 1997,
the Financial Accounting Standards Board issued Statement No. 128, Earnings per
Share, which is required to be adopted on December 31, 1997. At that time, the
Company will be required to change the method currently used to compute earnings
per share. There will be no impact on the Company's loss per share calculations
for the periods presented or any prior periods.
2. CHARGE FOR CROSS LICENSE AND SETTLEMENT
On March 27, 1997, the Company announced that, along with Abgenix, Japan
Tobacco and Xenotech, L.P. ("Xenotech", an equal joint venture of Abgenix and
Japan Tobacco), it had signed a comprehensive patent cross-license and
settlement agreement with GenPharm that resolved all related litigation and
claims between the parties. The cross-license agreement includes a worldwide
royalty free cross-license to all issued and related patent applications
pertaining to the generation of fully human monoclonal antibody technologies in
genetically modified strains of mice. The Company also obtained a license to
certain technology in the field of gene therapy held by GenPharm. As
consideration for the cross-license and settlement agreement, Cell Genesys
issued a note due September 30, 1998 for $15 million, convertible into shares of
Cell Genesys common stock at $9.00 per share. The conversion price is subject to
adjustment in twelve months. Of this note, $3.75 million was contributed to,
then paid by Xenotech. The entire amount of the note is included in expense in
the first quarter of 1997 based on a preliminary valuation analysis of
technology acquired. In addition, Japan Tobacco also made a cash payment to
GenPharm. The agreement also calls for two milestone payments of $7.5 million
each based on the issuance certain patents in the future. These payments would
be made by Xenotech.
3. MERGER WITH SOMATIX
On January 13, 1997, the Company signed a merger agreement with Somatix
Therapy Corporation ("Somatix"). Under the terms of the agreement, Somatix will
become a wholly-owned subsidiary of Cell Genesys in a tax-free reorganization
and stock-for-stock merger. Subject to approval by stockholders of both
companies at meetings scheduled for May 30, 1997, Somatix stockholders will
receive 0.385 shares of Cell Genesys stock for each share of Somatix stock. The
merger is expected to be accounted for as a purchase and substantially all of
the purchase price is expected to be allocated to in-process-acquired technology
and charged as a non-cash expense item in the quarter in which the acquisition
is effective, expected to be the second quarter of 1997. Based on the number of
shares of Somatix common and preferred stock outstanding at March 31, 1997,
using recent stock prices and assuming no exercise of appraisal rights, it is
expected that the Company will issue approximately 11.1 million shares of common
stock to effect the merger.
During the pendency of the merger, Somatix has the right to borrow up to
$5 million from the Company, secured by a security interest in certain
intellectual property of Somatix. As of May 13, 1997, Somatix had borrowed $2
million under this agreement.
6
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OUTLOOK
Cell Genesys (the "Company) is focused on the development and
commercialization of gene therapies to treat major life-threatening diseases,
including AIDS and cancer. The Company's objective is to commercialize both ex
vivo gene therapy with genetically engineered human immune cells and in vivo
gene therapies. In January 1997, the Company signed a merger agreement with
Somatix Therapy Corporation ("Somatix"). Pending approval by stockholders of
both companies, the merger is expected to strengthen the Company's position in
the field of gene therapy. Since its inception in 1988, the Company has funded
its research and development activities primarily through the sale of equity,
corporate partnerships and leaseline financings. The Company has been
unprofitable since its inception and has incurred a cumulative net loss of $73
million. The following discussion constitutes forward looking statements insofar
as it relates to progress in the Company's research and development programs and
clinical trials, product expectations, in-licensing plans, expected cash
expenditures and expense levels, and the adequacy of the Company's available
resources. Actual results could differ materially from the statements made due
to a number of factors, including those set forth in "Risk Factors" below.
In the Company's lead gene therapy program, safety results for the
Company's Phase I clinical trial testing AIDS gene therapy indicated no
treatment-related safety problems. The Company is currently in Phase II clinical
testing of this therapy in an initial proof-of-principle trial in twins, in
which T cells from the healthy twin are modified and infused as therapy for the
HIV-positive twin and in a second Phase II trial of a patient-specific approach
in individuals with HIV infection. Additional clinical studies of Cell Genesys'
AIDS gene therapy will be conducted during 1997. These include an evaluation of
improved manufacturing process involving the genetic modification of both killer
T cells and helper T cells as well as a reduction in cell processing time to
less than three weeks. In addition, a new pilot study is planned by Cell Genesys
to evaluate whether the combination of AIDS gene therapy and antiviral drugs can
delay the recurrence of HIV infection, which has been generally observed in
patients who stop their antiviral drug therapy. This pilot study will help
determine whether the gene therapy can reduce the requirement for long-term
treatment with combinations of three or more antiviral drugs. The Company
anticipates efficacy data from certain of these trials at the end of 1997. The
Company also filed an Investigational New Drug application (IND) with the United
States Food and Drug Administration (FDA) in April, 1997 to initiate human
clinical testing for its initial cancer gene therapy product candidate. In
addition, the Company has ongoing research programs in stem cell gene therapy,
universal donor cells and other gene delivery technologies. The Company believes
that such programs may provide opportunities for collaborative arrangements with
third parties that could also provide additional funding to the Company.
In the Company's human monoclonal antibody program (being pursued
through its subsidiary, Abgenix), the Company has developed transgenic
technology to create strains of mice capable of producing human monoclonal
antibodies. The Company has created strains of mice which now contain the
majority of human antibody genes and could produce multiple product candidates.
The Company believes that fully human antibodies should avoid the allergic
reactions seen with antibodies containing mouse proteins, which should make them
better suited to long-term therapy and could provide a marketing advantage. In
1995, the Company initiated preclinical studies of a human antibody to
Interleukin-8 (IL-8), which potentially could be used as a treatment to inhibit
excess inflammation in certain diseases such as psoriasis, adult respiratory
disease syndrome (ARDS), rheumatoid arthritis and reperfusion injury associated
with heart attack or stroke. Based on progress of preclinical studies, Abgenix
plans to initiate human clinical trials for this antibody product candidate
during the second half of 1997. In March 1997, Abgenix announced that it had
acquired rights to ABX-CBL, an antibody product currently in Phase II clinical
trials relating to acute transplant rejection. Abgenix plans to continue Phase
II trials in graft versus host disease (GVHD) early next year after completing a
confirmatory clinical study required by a manufacturing process change. ABX-CBL
will also be further evaluated in kidney and other organ transplant rejection
indications.
The Company's net cash expenditures for 1997 in its current operations
are not expected to exceed approximately $20 million, excluding one-time merger
related expenditures, and the Company intends to manage toward this net cash
expenditure target. Pending stockholder approval, significant merger-related
costs will be incurred, including cash payments currently estimated at
approximately $10 million. Additional cash
7
<PAGE>
outlays in lieu of securities may be required should Somatix's preferred
shareholders choose to exercise their appraisal rights as allowed under Delaware
law. The Company may from time to time evaluate opportunities to acquire or in-
license other potential products and technologies. Expenses associated with in-
licensing such products may constitute unbudgeted expenses.
RESULTS OF OPERATIONS
Revenue increased from $4.4 million to $7.8 million for the three
months ended March 31, 1996 and 1997, respectively. The increase reflects
revenue recorded in February 1997 upon execution of an agreement with Hoechst
Marion Roussel, Inc. ("HMR") to license the Company's gene activation technology
for erythropoietin (EPO) and a second undisclosed protein. The agreement
provides for milestone payments and fees, in addition to royalties on any future
sales of these two potential gene-activated protein products. Other revenues
resulted from the Company's ongoing collaboration with HMR for the Company's
AIDS gene therapy program and, to a lesser extent, from the Company's joint
venture ("Xenotech") with JT Immunotech USA Inc. in its human monoclonal
antibody program.
Research and development expenses increased from $6.7 million to $8.3
million for the three months ended March 31, 1996 and 1997, respectively. The
increase reflects costs related to Abgenix facilities as well as contract
manufacturing cost related to an antibody product candidate, ABX-IL8. The
increase also reflects additional staff hired for the gene therapy business and
outside costs, including manufacturing and clinical costs, for the company's
patient-specific HIV trial which was initiated June 1996. Also contributing to
the growth were legal fees incurred in defending and maintaining the Company's
intellectual property positions. As a result of the settlement of litigation
with Genpharm International, Inc. in March 1997 certain of these legal expenses
can be expected to decrease in 1997. Research and development expenses
represented approximately 80% of total expenses for each of the three month
periods (absent the effect of the non-recurring charge for cross license and
litigation settlement.) The Company expects that its research and development
expenditures, including expansion of facilities, will continue to increase to
support additional product development activities. The rate of increase depends
on a number of factors including stockholder approval of the merger agreement
with Somatix and progress in research and development, especially clinical
trials.
General and administrative expenses increased from $1.8 million to $2.1
million for the three months ended March 31, 1996 and 1997, respectively. The
increase reflects growth in administrative staff and outside services required
to support expanded research and development programs. The Company expects these
expenses to increase as these programs expand.
Interest income remained consistent at $1.2 million and $1.1 million
for the three months ended March 31, 1996 and 1997, respectively, due to similar
average cash balances available for investment. Interest expense also remained
consistent at $301,000 and $288,000 in 1996 and 1997, respectively.
The Company's net loss increased from $3.1 million to $16.8 million for
the three months ended March 31, 1996 and 1997, respectively, primarily due to a
$15 million non-recurring, non-cash charge for cross license and settlement
costs incurred as part of the Company's agreement with GenPharm. Losses,
excluding non-recurring charges, are expected to continue and are likely to
increase in future years as operating expenses rise, particularly as the Company
incurs expenses related to manufacturing and human testing of its potential
products. In addition, pending stockholder approval of the merger with Somatix,
the Company expects to record non-recurring charges to operations consisting of
(i) a non-cash charge for acquired in-process technology estimated at $95
million and (ii) a restructuring charge estimated in the range of $5 to $10
million, including severance costs and costs associated with elimination of
redundant facilities and assets.
At December 31, 1996, the Company had available net operating loss and
research credit carryforwards for federal income tax purposes of approximately
$52 million and $2 million, respectively, which expire in the years 2003 through
2011.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations primarily through the sale of
equity securities, funding under collaborative arrangements and equipment
financing. From inception through March 31, 1997, the Company has
8
<PAGE>
received $125.4 million in net proceeds from equity financing and $75.3 million
under collaborative agreements, and utilized $21.8 million in property and
equipment financing.
At March 31, 1997, the Company's cash, cash equivalents and short-term
investments totaled $76.7 million, compared to $85.6 million at December 31,
1996. The decrease was primarily due to the use of cash in operating activities,
excluding $15 million charge for cross license and settlement with GenPharm
which was financed by a convertible note.
The Company expects its cash requirements to increase significantly in
the future. The Company's capital requirements depend on numerous factors,
including stockholder approval of the merger agreement with Somatix; possible
exercise of appraisal rights by Somatix preferred stockholders; the progress of
the Company's research and development programs; preclinical and clinical
trials; clinical and commercial scale manufacturing requirements; the attraction
and maintenance of collaborative partners; the acquisition of new products or
technologies; and the cost of litigation, patent interference proceedings or
other legal proceedings or their resolution.
In March 1997, Cell Genesys announced that, together with Abgenix,
Xenotech and Japan Tobacco, it had signed a comprehensive patent cross-license
and settlement agreement with GenPharm that resolved all related litigation and
claims between the parties. The cross-license agreement includes a worldwide
royalty free cross-license to all issued and related patent applications
pertaining to the generation of fully human monoclonal antibody technologies in
genetically modified strains of mice. Cell Genesys also obtained a license to
certain technology in the field of gene therapy held by GenPharm. As
consideration for the cross-license and settlement agreement, Cell Genesys
issued a note due September 30, 1998 for $15 million, convertible into shares of
Cell Genesys common stock at $9.00 per share. The conversion price is subject to
adjustment in twelve months. Of this note, $3.75 million was contributed to,
then paid by Xenotech. The agreement also calls for two milestone payments of
$7.5 million each based on the issuance of certain patents in the future. These
payments would be made by Xenotech, which is an equal joint venture of Abgenix
and Japan Tobacco.
Under its current collaborations, the Company is responsible for
funding a portion of its research and development efforts. Substantial capital
may be required to carry out additional product development and to commercialize
products under the current collaborations and the Company's self-funded efforts.
The Company believes that its available cash, cash equivalents and
short-term investments at March 31, 1997, together with payments to be received
under the Company's collaborative arrangements with HMR, and $6.5 million in
property and equipment financing available for tenant improvements and capital
equipment purchases will be sufficient to meet the Company's operating expenses
and capital requirements at least through 1998. Thereafter, the Company will
require substantial additional funds. Because of the Company's significant
long-term cash requirements, it will seek to raise additional capital if
conditions in the public equity markets are favorable, even if the Company does
not have an immediate need for additional cash at that time.
RISK FACTORS
There are significant risks associated with the Company's plans and
goals, including but not limited to the success of the Company's research and
development programs; the lengthy, expensive and uncertain regulatory approval
process; uncertainties and costs associated with obtaining third party licenses,
obtaining patent protection, protecting trade secrets, enforcing intellectual
property rights important to the Company's business and avoiding infringement of
others' intellectual property; competitive products; and the availability of
capital to fund the Company's operations and capital requirements. Litigation,
which could result in substantial cost to the Company, may also be necessary to
enforce any patents issued to the Company or to determine the scope and validity
of other parties' proprietary rights. Some or all of these factors may affect
the Company's goals to file INDs, advance product candidates through the
clinical trial process, to commercialize products and secure financing either
through corporate partnerships or additional equity offerings. Even if the
Company's goals are fully achieved, the Company does not anticipate
commercialization of any product for several years.
Because of the novelty of the Company's gene therapy technology,
clinical trials are more difficult than for products based on more traditional
technologies. In addition, a variety of factors could hinder or delay progress
in clinical trials of the Company's products or require their discontinuance,
including results of ongoing preclinical
9
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studies by the Company or others, technical or manufacturing difficulties,
clinical trial results for the Company's or competing products, intellectual
property disputes with third parties, and/or delays relating to the review
process by the FDA. Although preliminary results of the Company's Phase I
clinical testing of AIDS gene therapy reported to date have shown no
treatment-related safety problems, there can be no assurance that this therapy
will be tolerated over an extended period of time or that the clinical efficacy
of this therapy will be demonstrated.
The Company believes that a human antibody product such as that being
developed through its subsidiary, Abgenix, could be clinically superior to
products containing mouse protein, and that it could have marketing advantages
over such other products. However, until human testing has taken place, it is
not certain that human antibody products will demonstrate these advantages.
Countervailing marketing factors, such as relative price, undesirable side
effects, and/or relative marketing expertise, may serve to offset or outweigh
these advantages.
There is no assurance that opportunities for in-licensing products or
for third party collaborations will be available to the Company on acceptable
terms. Finding such opportunities, as well as a variety of other factors, such
as progress in the Company's research and development programs (including
clinical trials), receipt of anticipated contract revenues (some of which are
dependent on milestones), competitive factors, costs of the merger, including
any appraisal rights, and the costs associated with prosecuting and defending
the Company's intellectual property rights, may affect the Company's ability to
manage to its targeted net cash expenditures in 1997, and also may affect the
adequacy of the Company's resources to fund operations and capital requirements
at least through 1998.
Failure to achieve the Company's goals could have a material adverse
impact on the Company's results of operations and financial condition and its
ability to raise additional capital. Stockholders and potential investors should
carefully consider the risks associated with the Company and should be aware
that these risks may negatively impact the Company's stock price.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
Cross-license and settlement agreement with GenPharm
b) Reports on Form 8-K
The Company reported on Form 8-K dated January 12,
1997, the signing of a merger agreement with Somatix
Therapy Corporation. The Company reported on Form 8-K
dated April 3, 1997, the signing of a revised merger
agreement with Somatix Therapy Corporation.
10
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SIGNATURE
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:
Date: May 14, 1997 CELL GENESYS, INC.
/s/ KATHLEEN SEREDA GLAUB
-------------------------------------------------
Kathleen Sereda Glaub
Senior Vice President and Chief Financial Officer
(On Behalf of the Registrant and as Registrant's
Principal Financial and Accounting Officer)
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BALANCE
SHEET AS OF MARCH 31, 1997 AND STATEMENT OF OPERATIONS FOR THE THREE MONTHS
ENDED MARCH 31, 1997.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 22,111
<SECURITIES> 54,594
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 79,280
<PP&E> 27,200
<DEPRECIATION> (13,339)
<TOTAL-ASSETS> 93,695
<CURRENT-LIABILITIES> 12,904
<BONDS> 0
0
0
<COMMON> 17
<OTHER-SE> 127,596
<TOTAL-LIABILITY-AND-EQUITY> 93,695
<SALES> 0
<TOTAL-REVENUES> 7,849
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 25,415
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 288
<INCOME-PRETAX> (16,790)
<INCOME-TAX> 0
<INCOME-CONTINUING> (16,790)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (16,790)
<EPS-PRIMARY> (1.01)
<EPS-DILUTED> (1.01)
</TABLE>
