UNITED STATES
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, 1998
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 Number 33-35938
PAINEWEBBER R&D PARTNERS III, L.P.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3588219
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1285 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK 10019
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (212) 713-2000
----------------------
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 [ ]
----------------------
<PAGE>
SPECIAL NOTE REGARDING
FORWARD LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Except for the historical information
contained herein, the matters discussed herein are forward-looking statements.
Such forward-looking statements involve known and unknown risks, uncertainties
and other factors that may cause the actual results, performance or achievements
of PaineWebber R&D Partners III, L.P. or industry results to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. Such factors include, among others,
the following: general economic and business conditions; fluctuations in the
value of securities for which only a limited, or no, public market exists;
dependence on the development of new technologies; dependence on timely
development and introduction of new and competitively priced products; the need
for regulatory approvals; the Sponsor Companies (hereinafter defined) having
insufficient funds to commercialize products to their maximum potential; the
restructuring of Sponsor Companies; the dependence of PaineWebber R&D Partners
III, L.P. on the skills of certain scientific personnel; and the dependence of
PaineWebber R&D Partners III, L.P. on the General Partner (hereinafter defined).
<PAGE>
PAINEWEBBER R&D PARTNERS III, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
FORM 10-Q
MARCH 31, 1998
Table of Contents
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements
Statements of Financial Condition (unaudited) at
March 31, 1998 and December 31, 1997 2
Statements of Operations
(unaudited) for the three months ended
March 31, 1998 and 1997 3
Statement of Changes in Partners' Capital
(unaudited) for the three months ended
March 31, 1998 3
Statements of Cash Flows
(unaudited) for the three months ended
March 31, 1998 and 1997 4
Notes to Financial Statements
(unaudited) 5-10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
PART II. OTHER INFORMATION
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
All schedules are omitted either because they are not applicable or the
information required to be submitted has been included in the financial
statements or notes thereto.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PAINEWEBBER R&D PARTNERS III, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
STATEMENTS OF FINANCIAL CONDITION
(unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets:
Marketable securities, at market value $ 5,408,935 $ 8,479,372
Investments, at fair value 2,150,000 2,150,000
Advances to product development projects 35,972 35,972
Royalty income receivable 9,928 9,928
Prepaid expenses 3,609 -
================= =================
Total assets $ 7,608,444 $ 10,675,272
================= =================
Liabilities and partners' capital:
Payable to PaineWebber Development Corp. $ 3,613 $ 3,613
Accrued liabilities 58,906 76,052
----------------- -----------------
62,519 79,665
Partners' capital 7,545,925 10,595,607
================= =================
Total liabilities and partners' capital $ 7,608,444 $ 10,675,272
================= =================
- ------------------------------------------------------------------------------------------------------
See notes to financial statements.
</TABLE>
2
<PAGE>
PAINEWEBBER R&D PARTNERS III, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
For the three months ended March 31, 1998 1997
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Revenues:
Interest income $ 13,478 $ 11,651
Unrealized (depreciation) appreciation of
investments and marketable securities (3,025,421) 10,676,400
----------------- -----------------
(3,011,943) 10,688,051
----------------- -----------------
Expenses:
General and administrative costs 37,739 41,977
----------------- -----------------
Net income (loss) $ (3,049,682) $ 10,646,074
================= =================
Net income (loss) per partnership unit:
Limited partners (based on 50,000 units) $ (60.38) $ 210.79
General partner $ (30,496.82) $ 106,460.74
- ------------------------------------------------------------------------------------------------------
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
(unaudited)
Limited General
For the three months ended March 31, 1998 Partners Partner Total
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at January 1, 1998 $ 10,488,115 $ 107,492 $ 10,595,607
Net loss (3,019,185) (30,497) (3,049,682)
================= ================= ================
Balance at March 31, 1998 $ 7,468,930 $ 76,995 $ 7,545,925
================= ================= ================
- ---------------------------------------------------------------------------------------------------------------------------
See notes to financial statements.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
PAINEWEBBER R&D PARTNERS III, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
(unaudited)
For the three months ended March 31, 1998 1997
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (3,049,682) $ 10,646,074
Adjustments to reconcile net income (loss) to
cash provided by operating activities:
Unrealized depreciation (appreciation) of investments
and marketable securities 3,025,421 (10,676,400)
Decrease (increase) in operating assets:
Marketable securities 45,016 153,425
Prepaid expense (3,609) -
Decrease in operating liabilities:
Other liability - (87,267)
Accrued liabilities (17,146) (35,832)
----------------- -----------------
Cash provided by operating activities - -
----------------- -----------------
Increase in cash - -
Cash at beginning of period - -
----------------- -----------------
Cash at end of period $ - $ -
================= =================
- ------------------------------------------------------------------------------------------------------
Supplemental disclosure of cash flow information:
The Partnership paid no cash for interest or taxes during the three months ended
March 31, 1998 and 1997.
- ------------------------------------------------------------------------------------------------------
See notes to financial statements.
</TABLE>
4
<PAGE>
PAINEWEBBER R&D PARTNERS III, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION AND BUSINESS
The financial information as of and for the periods ended March 31, 1998
and 1997 is unaudited. However, in the opinion of management of PaineWebber R&D
Partners III, L.P. ( the "Partnership"), such information includes all
adjustments, consisting only of normal recurring accruals, necessary for a fair
presentation. The results of operations reported for the interim period ended
March 31, 1998, are not necessarily indicative of results to be expected for the
year ended December 31, 1998. These financial statements should be read in
conjunction with the most recent annual report of the Partnership on Form 10-K
for the year ended December 31, 1997.
The Partnership is a Delaware limited partnership that commenced
operations on June 3, 1991. Paine Webber Development Corporation ("PWDC" or the
"General Partner"), an indirect, wholly-owned subsidiary of Paine Webber Group
Inc., is the general partner and manager of the Partnership. The Partnership
will terminate on December 15, 2015, unless its term is extended or reduced by
the General Partner.
The principal objective of the Partnership has been to provide long-term
capital appreciation to investors through investing in the development and
commercialization of new products with technology and biotechnology companies
("Sponsor Companies"), which have been expected to address significant market
opportunities. The Partnership has been engaged in diverse product development
projects (the "Projects") including product development contracts, participation
in other partnerships and investments in securities of Sponsor Companies. Once
the product development phase has been completed, the Sponsor Companies have the
option to license and commercialize the products resulting from the product
development project, and the Partnership has the right to receive payments based
upon the sale of such products. The Partnership obtained warrants to purchase
the common stock of Sponsor Companies to provide additional capital appreciation
to the Partnership which was not directly dependent upon the outcome of the
Projects (see Note 5).
5
<PAGE>
PAINEWEBBER R&D PARTNERS III, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(NOTE 1 CONTINUED)
All distributions from the Partnership to the General Partner and the
limited partners of the Partnership (the "Limited Partners"; collectively, the
"Partners") have been made pro rata in accordance with their respective capital
contributions. The table below sets forth the proportion of each distribution to
be received by the Limited Partners and the General Partner, respectively:
<TABLE>
<CAPTION>
LIMITED GENERAL
PARTNERS PARTNER
---------- ---------
<S> <C> <C>
I. Until the value of the aggregate distributions for each limited
partnership unit ("Unit") equals $1,000 plus simple interest on such
amount accrued at 5% per annum ("Contribution Payout"); At March 31,
1998, Contribution Payout was $1,338 per Unit ........................... 99% 1%
II. After Contribution Payout and until the value of the aggregate
distributions for each Unit equals $5,000 ("Final Payout")............... 80% 20%
III. After Final Payout....................................................... 75% 25%
</TABLE>
During the three months ended March 31, 1998, the Partnership made no cash
or security distributions. At March 31, 1998, the Partnership has made cash and
security distributions, as valued on the dates of distribution, since inception
of $1,143 and $98 per Unit, respectively.
Profits and losses of the Partnership are allocated as follows: (i) until
cumulative profits and losses for each Unit equals Contribution Payout, 99% to
Limited Partners and 1% to the General Partner, (ii) after Contribution Payout
and until cumulative profits and losses for each unit equals Final Payout, 80%
to Limited Partners and 20% to the General Partner, and (iii) after Final
Payout, 75% to Limited Partners and 25% to the General Partner. As of March 31,
1998, the cumulative profits of the Partnership were $528 per Unit.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements are prepared in conformity with generally
accepted accounting principles which require management to make certain
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Such estimates and assumptions include the
carrying value of non-marketable securities. Actual results could differ from
those estimates.
In accordance with the provisions of Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" ("Statement No. 115"), the Partnership accounts for its investments
in restricted common stock (where the restriction period expires in one year or
less) at market value with unrealized gains and losses reflected in the
Statements of Operations during the period in which the change in value occurs.
Investments in restricted common stock, whereby the restriction period exceeds
one year, are accounted for at the lower of cost or fair value.
Marketable securities consist of a money market fund that is valued at
market value. Marketable securities are not considered cash equivalents for the
Statements of Cash Flows.
6
<PAGE>
PAINEWEBBER R&D PARTNERS III, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(NOTE 2 CONTINUED)
The Partnership's investments in stock of non-public companies are subject
to fluctuations in value dependent on the underlying value of the issuing
company. Non-publicly traded securities are valued at cost, except when a
decrease is required based on the General Partner's evaluations of the project
technology or Sponsor Company. These evaluations of value are made based on
currently available information and may not necessarily represent the amount, if
any, which may ultimately be realized.
Realized and unrealized gains or losses are determined on a specific
identification method and are reflected in the Statements of Operations during
the period in which the change in value occurs.
The Partnership invests in product development contracts with Sponsor
Companies either directly or through product development limited partnerships.
The Partnership expenses product development costs when incurred by the Sponsor
Companies and such costs are reflected as expenditures under product development
projects in the accompanying Statements of Operations. Income received and/or
accrued from investments in Projects is reflected in the Statements of
Operations for the period in which the income is earned.
The Partnership carries warrants at a zero value in cases where the
Sponsor Company's stock is not publicly traded or the exercise period has not
been attained. To the extent that the Partnership's warrants are currently
exercisable and the Sponsor Company's stock is publicly traded, the warrants are
carried at intrinsic value (the excess of market price per share over the
exercise price per share), which approximates fair value.
7
<PAGE>
PAINEWEBBER R&D PARTNERS III, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
3. MARKETABLE SECURITIES AND INVESTMENTS
MARKETABLE SECURITIES
The Partnership held the following marketable securities at:
<TABLE>
<CAPTION>
MARCH 31, 1998 DECEMBER 31, 1997
-------------------------------------- --------------------------------------
MARKET COST MARKET COST
-------------------------------------- --------------------------------------
<S> <C> <C> <C> <C>
Money market fund $ 1,012,891 $ 1,012,891 $ 1,057,907 $ 1,057,907
Biocompatibles International plc
(815,000 common shares) 2,342,661 815,000 6,620,596 815,000
Gensia Sicor, Inc.
(137,772 common shares) 688,860 936,850 800,869 936,850
Medarex, Inc.
(281,708 restricted common shares) 1,364,523 0 ---- ----
----------- ----------- ----------- -----------
$ 5,408,935 $ 2,764,741 $ 8,479,372 $ 2,809,757
=========== =========== =========== ===========
</TABLE>
Biocompatibles International plc ("Biocompatibles") is a development stage
company engaged in the research, development and commercialization of coatings
and new materials which reduce compatibility problems associated with certain
medical devices. The market value of the shares at March 31, 1998, was $2.875
per share as compared to $8.124 per share at December 31, 1997. Accordingly, the
Partnership recognized unrealized depreciation for the three months ended March
31, 1998, of $4,277,935. At March 31, 1997, the Partnership's investment of
2,100,000 shares of Biocompatibles had a market value of $39,950,154 ($19.024
per share) as compared to $29,273,754 ($13.94 per share) as of December 31,
1996. The Partnership recognized unrealized appreciation of $10,676,400 for the
three months ended March 31, 1997.
During 1997, the Partnership received 137,772 common shares of Gensia
Sicor, Inc. ("Gensia") with a market value on the date of distribution of $6.80
per share as a distribution from its limited partnership investment in Gensia
Clinical Partners, L.P. ("GCP"). As of March 31, 1998, the market value of
Gensia shares decreased to $5.00 per share as compared to $5.813 per share as of
December 31, 1997. Accordingly, the Partnership recognized unrealized
depreciation of $112,009 for the three months ended March 31, 1998.
Upon the acquisition of GenPharm International, Inc. ("GenPharm") by
Medarex, Inc. ("Medarex") in 1997, the Partnership's investment of 1,000,000
GenPharm convertible preferred shares was converted to 281,708 restricted shares
of Medarex. The Medarex shares are saleable on or after January 1, 1999. In
accordance with Statement No. 115, at March 31, 1998, the Partnership reclassed
the securities from investments to marketable securities since the restriction
period was less than one year and recorded its investment in the Medarex shares
at a market value of $1,364,523 ($4.84375 per share). Accordingly, the
Partnership recognized unrealized appreciation of this amount for the quarter
ended March 31, 1998.
8
<PAGE>
PAINEWEBBER R&D PARTNERS III, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
INVESTMENTS
The Partnership held the following investments at:
<TABLE>
<CAPTION>
March 31, 1998 December 31, 1997
-------------------------------------- --------------------------------------
Carrying Value Cost Carrying Value Cost
-------------------------------------- --------------------------------------
<S> <C> <C> <C> <C>
Genzyme Molecular Oncology $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000
Division
713,091 restricted common shares
Medarex, Inc. ---- ---- 0 ----
281,708 restricted common shares
Pharming BV
14,395 restricted shares of Class A 1,150,000 3,500,000 1,150,000 3,500,000
stock --------- --------- --------- ---------
$ 2,150,000 $ 4,500,000 $ 2,150,000 $ 4,500,000
========= ========= ========= =========
</TABLE>
A restructuring by GenPharm in 1995 resulted in the spin-off of its
European subsidiary, Pharming BV. In connection with this spin-off, the
Partnership (as a shareholder of GenPharm) received 14,395 shares of Pharming BV
Class A restricted stock which the General Partner valued at $1,150,000 based on
the current and future financial prospects on Pharming BV at that time.
Upon the acquisition by Genzyme Corporation ("Genzyme") of PharmaGenics,
Inc. ("PharmaGenics") to form Genzyme Molecular Oncology ("GMO"), the
Partnership's total investment in PharmaGenics preferred shares was converted
into 713,091 restricted common shares of GMO, subject to certain adjustments.
GMO common stock is not publicly traded; therefore, the Partnership recorded its
investment in GMO stock at the carrying value attributable to its original
investment in PharmaGenics preferred stock of $1,000,000. Pursuant to the terms
of the acquisition, the Partnership will be entitled to sell its GMO stock
approximately nine months following the completion of an initial public offering
by GMO.
4. RELATED PARTY TRANSACTIONS
The General Partner is entitled to receive an annual management fee for
management and administrative services provided to the Partnership. As of
January 1, 1997, the General Partner elected to discontinue the management fee
charged to the Partnership.
The money market fund invested in by the Partnership is managed by an
affiliate of PaineWebber Incorporated ("PWI").
PWDC and PWI, and its affiliates, have acted in an investment banking
capacity for several of the Sponsor Companies. In addition, PWDC and its
affiliates have direct limited partnership interests in some of the same product
development limited partnerships as the Partnership.
9
<PAGE>
PAINEWEBBER R&D PARTNERS III, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
5. PRODUCT DEVELOPMENT PROJECTS
Of the Partnership's seven original Projects, the following two Projects
are currently active: a $6.0 million investment in Alkermes Clinical Partners,
L.P., a $46.0 million limited partnership formed to fund the development,
clinical testing, manufacturing and marketing of Receptor-Mediated
Permeabilizers for use in the treatment of diseases of the brain and central
nervous system by enabling the delivery of drugs across the blood brain barrier
and a $6.0 million investment in Cephalon Clinical Partners, L.P., a $45.0
million limited partnership formed to fund the development, clinical testing,
manufacturing and marketing of Myotrophin(TM) for uSe in the treatment of
amyotrophic lateral sclerosis and certain other peripheral neuropathies.
If the Projects produce any product for commercial sale, the Sponsor
Companies have the option to license the Partnership's technology to manufacture
and market the products developed. In addition, the Sponsor Companies have the
option to purchase the Partnership's interest in the technology. In
consideration for granting such purchase options, the Partnership has received
warrants to purchase shares of common stock of certain of the Sponsor Companies.
At March 31, 1998, the Partnership owned the following warrants:
<TABLE>
<CAPTION>
Number of Exercise 3/31/98
Shares that can Price Exercise Market Price
be Purchased per Share Period Per Share*
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cayenne Software, Inc. 35,512 $ 25.91 Current to 7/98 $2.90625
Repligen Corporation 133,000 $ 2.50 Current to 3/01 $1.18750
252,700 $ 3.50 Current to 3/01
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
* The share prices of these technology companies are generally highly
volatile and the shares are often thinly traded. The market prices
listed above may have changed significantly subsequent to March 31,
1998, and/or may change significantly in the future. The market prices
above may not, therefore, be indicative of the ultimate values, if
any, that may be realized by the Partnership.
Upon the exercise by the Partnership of its exchange option with
PharmaGenics in 1997, the Partnership's warrant to purchase 1,000,000 shares of
PharmaGenics at an exercise price of $2.15 per share was terminated. In
addition, the Partnership's purchase option warrant to purchase 666,667
PharmaGenics' shares was cancelled upon the closing of the acquisition of
PharmaGenics by Genzyme.
6. INCOME TAXES
The Partnership is not subject to federal, state or local income taxes.
Accordingly, the individual partners are required to report their distributive
share of realized income or loss on their individual federal and state income
tax returns.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
LIQUIDITY AND CAPITAL RESOURCES
Partners' capital decreased from $10.6 million at December 31, 1997, to
$7.5 million at March 31, 1998, resulting from the recognition of net loss for
the three months ended March 31, 1998, of $3.1 million (as discussed in Results
of Operations below).
The Partnership's funds are invested in marketable securities until cash
is needed to pay for the ongoing management and administrative expenses of the
Partnership or upon the remittance of cash distributions to the Partners. Liquid
assets decreased from $8.5 million at December 31, 1997 to $5.4 million at March
31, 1998 resulting primarily from a decrease in the market values of securities
held as of these dates (as discussed in Results of Operations below).
RESULTS OF OPERATIONS
Three months ended March 31, 1998 compared to the three months ended March 31,
1997:
Net loss for the three months ended March 31, 1998, was $3.1 million
compared to net income of $10.6 million for the three months ended March 31,
1997. The unfavorable variance of $13.7 million was due to a decrease in
revenues of this amount.
Revenues for the quarters ended March 31, 1998 and 1997, consisting
primarily of unrealized (depreciation) appreciation of investments and
marketable securities, were $(3.0) million and $10.7 million, respectively. For
the three months ended March 31, 1998, the Partnership recognized net unrealized
depreciation of $3.0 million resulting from its investments of 0.815 million
shares of Biocompatibles, 0.138 shares of Gensia and 0.282 shares of Medarex.
The market value of Biocompatibles decreased from $8.124 per share at December
31, 1997 to $2.875 per share as of March 31, 1998, resulting in unrealized
depreciation of the three months ended March 31, 1998 of $4.3 million. Likewise,
the market value per share of Gensia decreased as of these dates from $5.813 to
$5.00 resulting in unrealized depreciation for the quarter ended March 31, 1998
of $0.1 million. In accordance with Statement No. 115, at March 31, 1998, the
Partnership recorded its investment in Medarex common stock at a market value of
$4.84375 per share recognizing appreciation of $1.4 million for the quarter then
ended. For the quarter ended March 31, 1997, the Partnership recorded unrealized
appreciation of $10.7 million on its investment of 2.1 million shares of
Biocompatibles. The market value of the shares increased from $29.3 million
($13.94 per share) at December 31, 1996, to $40.0 million ($19.04 per share) as
of March 31, 1997.
There were no material variances in expenses for the quarter ended March
31, 1998 as compared to the same period in 1997.
11
<PAGE>
PART II OTHER INFORMATION
ITEM 5. OTHER INFORMATION.
On April 27, 1998, Gensia and Gensia Automedics, Inc. announced
their decision not to exercise the Purchase Option Agreement granted by
GCP (of which the Partnership is a limited partner) to repurchase the
technology associated with the GenESA(TM) System.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
A) EXHIBITS:
None
B) REPORTS ON FORM 8-K:
None
12
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on this 15th day of May
1998.
PAINEWEBBER R&D PARTNERS III, L.P.
By: PaineWebber Development Corporation
(General Partner)
By: /s/ Dhananjay M. Pai
------------------------
Dhananjay M. Pai
President
By: /s/ Anthony M. DiIorio
--------------------------
Anthony M. DiIorio
Principal Financial and Accounting Officer
13
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000865936
<NAME> PAINEWEBBER R&D PARTNERS III, L.P.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 0
<SECURITIES> 7,558,935
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,422,472
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 7,608,444
<CURRENT-LIABILITIES> 62,519
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 7,545,925
<TOTAL-LIABILITY-AND-EQUITY> 7,608,444
<SALES> 0
<TOTAL-REVENUES> (3,011,943)
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 37,739
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,049,682)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,049,682)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
