<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
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 December 31, 1998
OR
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number 001-13835
OPHIDIAN PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its Charter)
WISCONSIN 39-1661164
--------- ----------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
5445 East Cheryl Parkway, Madison, WI 53711
-------------------------------------------
(Address of Principal Executive Offices and Zip Code)
(608) 271-0878
--------------
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant: (1) 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.
OUTSTANDING
CLASS JANUARY 19, 1999
----- ----------------
Common Stock, $0.025 par value 9,223,018
<PAGE> 2
OPHIDIAN PHARMACEUTICALS, INC.
QUARTERLY REPORT ON FORM 10-Q
QUARTER ENDED DECEMBER 31, 1998
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets - December
31, 1998 and September 30, 1998 3
Condensed Statements of Operations -
Three months ended December 31, 1998 and
1997 and the period from inception
(November 11, 1989) to December 31, 1998. 4
Condensed Statements of Cash Flows -
Three months ended December 31, 1998 and
1997 and the period from inception
(November 11, 1989) to December 31, 1998. 5
Notes to Condensed Financial Statements 6
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds 11
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 13
</TABLE>
2
<PAGE> 3
OPHIDIAN PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE CORPORATION)
BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1998
------------- -----------
ASSETS (UNAUDITED)
Current assets:
<S> <C> <C>
Cash and cash equivalents.................................... $ 8,688,162 $ 7,426,615
Accounts receivable.......................................... 81,566 12,424
Prepaid expenses and other................................... 130,046 72,933
----------- -----------
Total current assets....................................... 8,899,774 7,511,972
Other assets................................................... 12,263 40,218
Equipment and leasehold improvements
Furniture and fixtures....................................... 96,692 96,692
Manufacturing equipment...................................... 829,204 887,594
Laboratory equipment......................................... 581,295 656,161
Office equipment............................................. 54,537 54,537
Leasehold improvements....................................... 24,092 24,092
----------- -----------
1,585,820 1,719,076
Accumulated depreciation and amortization.................... 538,378 634,876
----------- -----------
Net equipment and leasehold improvements....................... 1,047,442 1,084,200
Patent costs, net of accumulated amortization of
$35,817 and $40,652, September 30, 1998, and
December 31, 1998, respectively.............................. 1,394,639 1,426,289
----------- -----------
Total assets............................................... $11,354,118 $10,062,679
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................. $ 241,142 $ 233,941
Accrued expenses and other liabilities....................... 130,468 110,792
Current portion of capital lease obligations................. 5,839 602
----------- -----------
Total current liabilities.................................. 377,449 345,335
Capital lease obligations, less current portion................ 12,069 13,296
Deferred revenue -- noncurrent................................. 346,887 354,310
Commitments and contingencies
Shareholders' equity:
Common stock, $.0025 par value, 22,400,000 shares
authorized, 9,223,018 shares issued and outstanding
at September 30, 1998, and December 31, 1998, respectively.. 23,058 23,058
Additional paid-in capital................................... 22,047,154 22,047,154
Deficit accumulated during the
development stage.......................................... (11,452,499) (12,720,474)
----------- -----------
Total shareholders' equity..................................... 10,617,713 9,349,738
----------- -----------
Total liabilities and shareholders' equity..................... $11,354,118 $10,062,679
=========== ===========
</TABLE>
See accompanying notes to condensed financial statements.
3
<PAGE> 4
OPHIDIAN PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE CORPORATION)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
PERIOD FROM INCEPTION
THREE MONTHS ENDED (NOVEMBER 11, 1989) TO
DECEMBER 31, DECEMBER 31,
------------------------------ ----------------------
1997 1998 1998
------------- ------------- ----------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Revenues $ 115,185 $ 690 $ 4,596,397
Operating expenses:
Research & development..... 666,632 856,940 11,443,769
General & administrative... 355,100 465,890 7,000,376
------------- ------------- -------------
Total operating expenses 1,021,732 1,322,830 18,444,145
Operating loss............... (906,547) (1,322,140) (13,847,748)
Other income (expense):
Investment income, net..... 46,101 54,355 1,166,770
Interest expense........... (724) (190) (40,261)
Other income............... - - 765
------------- ------------- -------------
45,377 54,165 1,127,274
------------- ------------- -------------
Net loss................. $ (861,169) $ (1,267,975) $ (12,720,474)
============= ============= =============
Net loss per share........... $ (.12) $ (.14)
</TABLE>
See accompanying notes to condensed financial statements.
4
<PAGE> 5
OPHIDIAN PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE CORPORATION)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION
(NOVEMBER 11,
1989) TO
THREE MONTHS ENDED DECEMBER 31, DECEMBER 31,
-------------------------------- -------------------
1997 1998 1998
----------- ----------- -------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
OPERATING ACTIVITIES
<S> <C> <C> <C>
Net loss...................................... $ (861,169) $(1,267,975) $(12,720,474)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization............... 36,104 100,489 725,939
Loss on sale of investments................. - - 87,394
Common stock issued for consulting services. 6,875 - 73,476
Provision for Compensation --
consulting stock options.................. - - 85,000
Assignment of intellectual property used in
research and development.................. - - 200,000
Changes in operating assets and
liabilities:
Accounts receivable....................... 74,181 69,142 (12,424)
Prepaid expenses and other assets......... 723 57,113 (72,933)
Accounts payable.......................... (98,389) (7,201) 233,941
Accrued expenses and other liabilities.... 467 (19,676) 110,792
Deferred revenue.......................... 96,733 7,423 354,310
----------- ----------- -----------
Net cash used in operating activities......... (744,475) (1,060,685) (10,934,979)
INVESTING ACTIVITIES
Purchase of available-for-sale securities... - - (4,517,181)
Proceeds from available-for-sale securities. - - 4,416,283
Purchase of equipment and leasehold
improvements, net......................... (38,576) (133,256) (1,649,013)
Expenditures for patent..................... (108,705) (35,641) (1,477,219)
Other assets................................ - (27,955) (40,218)
----------- ----------- -----------
Net cash used in investing activities......... (147,281) (196,852) (3,267,348)
FINANCING ACTIVITIES
Proceeds from issuance of common stock........ - - 21,711,736
Principal payments of capital lease
obligations................................. (4,743) (4,010) (82,794)
Advances from shareholder..................... - - 330,000
Payments to shareholder....................... - - (330,000)
Other......................................... (215,136) - -
----------- ----------- -----------
Net cash provided by financing activities..... (219,879) (4,010) 21,628,942
----------- ----------- -----------
Net increase in cash and cash equivalents..... (1,111,635) (1,261,547) 7,426,615
Cash and cash equivalents at beginning of
period...................................... 3,547,036 8,688,162 -
----------- ----------- -----------
Cash and cash equivalents at end of period.... $ 2,435,401 $ 7,426,615 $ 7,426,615
=========== =========== ===========
Supplemental disclosure of cash flows
information--
Cash paid for interest...................... $ 724 $ 190
Supplemental disclosure of non-cash
transactions--
Common stock issued for consulting
services.................................. $ 6,875 $ -
</TABLE>
See accompanying notes to condensed financial statements.
5
<PAGE> 6
OPHIDIAN PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
in accordance with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and notes required
by generally accepted accounting principles for complete financial statements
and should be read in conjunction with the Company's annual report filed on Form
10-K, containing audited financial statements for the fiscal year ended
September 30, 1998. In the opinion of management, all adjustments (consisting
only of adjustments of a normal and recurring nature) considered necessary for a
fair presentation of the results of operations have been included. Operating
results for any interim periods are not necessarily indicative of the results
that might be expected for the full year.
NOTE 2. RECLASSIFICATIONS
Certain reclassifications have been made to the September 30, 1998, financial
statements to conform to the December 31, 1998, presentation.
NOTE 3. NET LOSS PER SHARE
The following table sets forth the number of basic weighted-average shares used
in the per share calculations for the period. Dilutive earnings per share is not
shown as the impact is antidilutive.
THREE MONTHS ENDED
DECEMBER 31,
1997 1998
--------- ---------
Weighted average shares outstanding 7,287,464 9,223,018
Options and warrants that could potentially
dilute basic earnings per share in the
future that are not included in the
computation of diluted earnings per share
as their impact is antidilutive
(treasury stock method) 398,292 249,968
6
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion of the financial condition and results of operations of
the Company should be read in conjunction with the financial statements and the
related notes thereto included in this document. This document contains certain
forward-looking statements that involve risks and uncertainties. These
forward-looking statements are made in reliance upon the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. The Company cautions
readers that the Company's actual results may differ significantly from the
results anticipated in these forward-looking statements as a result of various
factors. Such factors include, but are not limited to, those in the section
titled "Risk Factors" (pages 7-18) of the Company's Prospectus, which is part of
the Company's registration statement, filed on Form S-1, as amended, effective
May 7, 1998, and summarized in its Annual Report for Fiscal 1998, filed on Form
10-K, effective December 24, 1998. The Company undertakes no obligation to
revise such forward-looking statements to reflect events or circumstances
occurring after the date hereof.
OVERVIEW
Ophidian is a development stage corporation focused on the research, development
and commercialization of therapeutic products for human and animal use. The
Company's business has been directed to numerous areas of disease but has
focused principally on products for infectious disease prevention and treatment.
The Company has not received any revenues from the sale of Food and Drug
Administration (FDA) licensed products to date and does not expect to receive
any such revenues during the next two fiscal years. Except for the fiscal year
ended September 30, 1993, the Company has been unprofitable every year since
inception. The Company expects to incur additional losses over the next several
years. At December 31, 1998, the Company had an accumulated deficit of
$12,720,474 and for the three months ended December 31, 1998, incurred a net
loss of $1,267,975.
The Company intends to continue investing in the further research and
development of its technologies and products in infectious disease and other
therapeutic areas. Depending on a variety of factors, including collaborative
arrangements, availability of personnel and financial resources, the Company
will engage in the development of its products and establish capabilities to
support regulatory submissions. The Company will need to make additional capital
investments in research and development laboratories and manufacturing
facilities, including the construction of facilities for large-scale production
of avian antibodies and supporting testing laboratories. Investments in
manufacturing and associated capabilities would be required to be made before
any regulatory agency would grant approval to market products, however, there
can be no assurance that such approval will be granted. It is expected that the
Company will need to hire additional personnel to support increased research and
development, manufacturing, quality systems, and general business requirements.
RESULTS OF OPERATIONS
Three Months Ended December 31, 1998, Compared to Three Months Ended
December 31, 1997
Revenues. Revenues decreased $114,495 or 99% to $690 for the three months ended
December 31, 1998, as compared to $115,185 for the three months ended December
31, 1997, due to the completion of a Department of Defense and a National
Institutes of Health Small Business Innovative Research Grant, which ended June
1998 and December 1997 respectively.
Research and Development Expenses. Research and development expenses increased
$190,308 or 29% to $856,940 for the three months ended December 31, 1998, as
compared to $666,632 for the three months ended December 31, 1997. The increase
in expenses in the three months ended December 31, 1998, resulted primarily from
additional laboratory supply expenses and costs associated with the clinical
development of the Clostridium difficile-associated disease (CDAD) therapeutic
antitoxin and development of certain technologies (transforming growth factor
beta or TGF-B) related to the discovery of new drug targets and drug products in
the area of infectious diseases and other disease areas such as inflammatory
bowel disease, where the Company believes business opportunities exist.
Furthering Ophidian's position in the avian antibody field, the Company received
two new U.S. patents covering the CDAD product and has obtained an exclusive
license to two U.S. patents covering general methods for the production of avian
antibodies.
General and Administrative Expenses. General and administrative expenses
increased $110,790 or 31% to $465,890 for the three months ended December 31,
1998, as compared to $355,100 for the three months ended December 31,
7
<PAGE> 8
1997. The increase in expenses in the three months ended December 31, 1998,
resulted primarily from increased insurance expense, license fees on newly
obtained technology and increased legal fees relating to Eli Lilly and Company.
Interest Income and Expenses. Interest income increased $8,254 or 18% to $54,355
for the three months ended December 31, 1998, as compared to $46,101 for the
three months ended December 31, 1997. The increase in interest income for the
three months ended December 31, 1998, resulted from higher average balances in
the current period offset in part by lower interest rates. Interest expense for
the periods was negligible.
Net Loss. Net losses increased $406,806 or 47% to $1,267,975 for the three
months ended December 31, 1998, as compared to $861,169 for the three months
ended December 31, 1997. The increased loss in the three months ended December
31, 1998, resulted primarily from increased research and development and general
and administrative expenses.
Net Operating Loss. The Company generated net operating loss carry-forwards for
federal and state income tax purposes for the three months ended December 31,
1998. A full valuation allowance has been recorded by the Company.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations since inception primarily through the
sale of equity and revenues consisting of payments received under collaborative
agreements and federal research grants. As of December 31, 1998, the Company had
received $21,711,736 in net proceeds from the sale of equity. The Company's
principal sales of equity have occurred through its initial public offering
(IPO) in May 1998, private placement stock offering activities and sales of
equity to Eli Lilly and Company.
Net cash used in operating activities was $1,060,685 for the three months ended
December 31, 1998, as compared with net cash used in operating activities of
$744,475 for the three months ended December 31, 1997. The increase in cash used
in operating activities is primarily attributable to increased research and
development funding activities and increased general and administrative
expenses. Net cash used in investing activities was $196,852 for the three
months ended December 31, 1998, as compared to $147,281 for the equivalent
period a year earlier. The increase is principally attributable to increases in
purchases of equipment, offset in part by an decrease in expenditures for
patents and a decrease in net proceeds received from available-for-sale
investment activities. Net cash used in financing activities was $4,010 for the
three months ended December 31, 1998, as compared to $219,879 for the equivalent
period a year earlier. The change is primarily attributable the absence of
offering costs relating to the IPO, which was completed May 7, 1998.
The Company believes that with the net proceeds from its IPO and its existing
capital resources (cash and short term investments of $7,426,615 as of December
31, 1998), combined with interest income and future revenues and equity
investments, if any, will be sufficient to satisfy its funding requirements for
at least the twenty-one months following the date of this document. The Company
is investigating the feasibility of leasing space for a small (+/-10,000 square
foot) pilot manufacturing facility for the avian antibody products. In addition,
the funding requirements referred to above include continued expenditures for
research and development programs (including initiating the Phase II clinical
testing for the CDAD product during the second quarter of calendar 1999), as
well as expenditures related to expanded laboratory and general corporate
facilities.
The Company anticipates that its expenses incurred in Phase II clinical testing
of the CDAD product will contribute to future increases in net operating losses.
These future increases in operating losses will result from the hiring or
contracting of additional personnel and the contracting of a Clinical Research
Organization to conduct the trials. The continuation of clinical trials will
require expenditures for manufacturing facilities. These expenditures are
initially modest and relate to the production of antigen for hyperimmunizing
laying hens. At the midpoint of the Phase III clinical trials, expected in 2001,
major capital expenditures on the order of $7-8 million will be required to
complete the now deferred manufacturing facility. In addition to this, even
larger expenditures for the clinical trials themselves will be required. If CDAD
fails to secure FDA approval, the Company's success or lack thereof in securing
other business will have a material effect on future profitability and cash
flows. The Company, as a normal part of its strategy and business practice, is
actively soliciting additional collaborative agreements and considering other
alternatives to enhance its capital resources. The search for collaborators
includes the TGF-B technology as the Company tries to narrow its focus to the
avian pathway technology.
8
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NET OPERATING LOSSES
The Company has not generated taxable income to date. At December 31, 1998, the
net operating losses available to offset future taxable income for federal
income tax purposes were approximately $12,827,000. These carry-forwards expire
beginning in 2007 if not utilized. At December 31, 1998, the Company has
research and other federal tax credit carry-forwards of approximately $671,000
and Wisconsin carry-forwards of approximately $280,000. The Company has recorded
a full valuation allowance against any deferred tax assets established for the
carry-forwards.
Utilization of the net operating losses and credits may be subject to annual
limitations due to the ownership change limitations provided by the Internal
Revenue Code and similar state provisions. The annual limitations may result in
the expiration of net operating losses and credits before full utilization.
YEAR 2000 IMPACT
The Company anticipates a complete conversion of its computer hardware, software
operating systems and application systems concurrent with the planned
commencement of manufacturing operations to meet the more sophisticated
requirements of a biopharmaceutical manufacturer. This conversion is not a
requirement, however, to become year 2000 compliant. Nor is any material impact
on operations envisioned in the absence of such conversion. The Company has
inventoried and evaluated the software application systems presently employed.
The Company has been informed that its business systems, as they presently
exist, are year 2000 compliant. There may be stand-alone scientific systems that
are not compliant. The Company does not believe remediation and testing will
entail any significant costs. The Company does not have the resources, nor has
it attempted, to survey its suppliers as to the adequacy of their year 2000
preparations. Nonetheless, the Company, in its present state as a "development
stage company," believes there are sufficient alternative sources of suppliers
and vendors to meet its limited demand for materials and services. Thus, the
risk of a total lack of supply for an extended period of time is viewed as de
minimis.
STOCK PERFORMANCE GRAPH
The following graph compares the percentage change in cumulative total
shareholder return on the Company's Common Stock with the cumulative return on
the NASDAQ (Composite) Stock Market (Broad Market) and the NASDAQ Biotechnology
Stock (Peer) during the period beginning June 12, 1998, (the date on which the
Company's Common Stock began trading separately from the warrants on the NASDAQ
SmallCap System) through December 31, 1998. The comparison assumes $100 was
invested on June 12, 1998, in the Company's Common Stock and in the foregoing
indicies and assumes the reinvestment of dividends.
[STOCK PERFORMANCE GRAPH]
NASDAQ NASDAQ
Ophidian Composite Bio-Tech
12-Jun-98 100 100 100
30-Sep-98 44.59 97.07 101.52
31-Dec-98 37.84 125.65 139.39
The Company's securities were first listed on May 7, 1998, the date of the
Company's initial public offering. The securities first traded as Units
consisting of one share of Common Stock and one Common Stock Purchase Warrant.
On June 12, 1998, the Company and its Underwriters agreed to separate the Units
into their individual components. The range of high and low bid quotations on a
quarterly basis from May 7, 1998, as supplied by NASDAQ(1) is as follows:
9
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<TABLE>
<CAPTION>
QUARTER UNITS COMMON STOCK WARRANTS
------- ----- ------------ --------
High Bid Low Bid High Bid Low Bid High Bid Low Bid
-------- ------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
04/01/98 06/30/98 $6.6250 $4.8750 $4.7500 $3.2500 $1.8750 $1.0000
07/01/98 09/30/98 N/A N/A $3.8125 $1.0000 $1.5000 $0.2500
10/01/98 12/31/98 N/A N/A $3.0625 $1.0000 $0.6250 $0.1875
</TABLE>
(1) Prices are interdealer quotations, without retail markups, markdowns or
commissions, and may not represent actual transactions.
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings - None
ITEM 2. Changes in Securities and Use of Proceeds
(a) None
(b) None
(c) None
(d) Use of Proceeds
The information in this paragraph 2(d) relates to the
Registrant's Registration Statement on Form S-1, as amended,
effective May 7, 1998, Registration No. 333-33219 (the
Registration Statement). The managing underwriters for the
offering of the securities sold pursuant to the Registration
Statement (the Offering) were Dirks & Company, Inc. and
Security Capital Trading, Inc. (the Underwriters). The
Offering commenced on May 7, 1998, and was completed on June
23, 1998, following the Underwriters' exercise of their
options to purchase additional units to cover over allotments
(the Over-Allotment Option). The following chart sets forth
the securities registered pursuant to the Offering, the
offering price, the amount sold, and the aggregate offering
price of the amount sold.
<TABLE>
<CAPTION>
AMOUNT OFFERING PRICE AGGREGATE OFFERING
SECURITY REGISTERED PER UNIT AMOUNT SOLD PRICE OF AMOUNT SOLD
-------- ---------- -------- ----------- --------------------
<S> <C> <C> <C> <C>
Unit consisting of one 2,012,500(1) $ 6.10 1,933,088(2) $11,791,855
share of Common Stock,
par value $.0025 per
share (Common Stock)
and one redeemable
Common Stock Purchase
Warrant (Warrant)
</TABLE>
(1) Includes 262,500 additional Units registered pursuant to
the Over-Allotment Option granted to the Underwriters.
Excludes (i) additional shares of Common Stock issuable
upon exercise of the Warrants, (ii) additional shares of
Common Stock issuable upon exercise of certain
Representatives' Warrants, as defined in the Registration
Statement, and (iii) additional shares of Common Stock
issuable upon exercise of Warrants issuable upon exercise
of the Representatives' Warrant.
(2) Includes 183,088 additional Units purchased by the
Underwriters on June 23, 1998, when they partially
exercised their Over-Allotment Option by purchasing 183,088
Units of the 262,500 Units originally granted in the
option.
<TABLE>
<S> <C>
Total underwriting discounts and commissions: $1,061,265
Other expenses: 1,373,365
----------
Total expenses: $2,434,630
</TABLE>
All such expenses were direct or indirect payments to
others.
The net offering proceeds to the Company, after deducting
the total expenses above, were $9,057,225. From
May 7, 1998, to December 31, 1998, the Company has placed
the net proceeds in temporary investments. The Company
expects to use the net proceeds in direct or indirect
payments to others as follows:
<TABLE>
<CAPTION>
PER OFFERING
DESCRIPTION OF USE OF PROCEEDS(3) MEMORANDUM REVISED
<S> <C> <C>
Construction of plant, building and facilities $1,100,000 -
Purchase and installation of machinery and equipment $1,750,000 $1,900,000
Purchase of real estate - -
Acquisition of other business(es) - -
Repayment of indebtedness - -
Research & development and business operations $5,500,000 $7,300,000(4)
Working capital $1,016,000 $157,000
Temporary investments -
</TABLE>
10
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(3) Each of the foregoing amounts is a reasonable estimate
based on the Company's focus on development of the CDAD
product. This use of proceeds does not represent a
material change in CDAD development focus described in
the Prospectus of the Registration Statement.
(4) This figure includes expenditures for the initial Phase
II clinical testing of the CDAD product.
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 (see exhibit list)
(3) Reports on Form 8-K - None
ITEM 6(a) EXHIBIT LIST
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
<S> <C>
3.1 Amended and Restated Articles of Incorporation of the
Registrant, filed as Exhibit 3.1 to the Registration Statement,
and hereby incorporated by reference.
3.2 Amended and Restated Bylaws of the Registrant, filed as Exhibit 3.2 to the Registration
Statement, and hereby incorporated by reference.
4.1 Specimen Common Stock Certificate, filed as Exhibit 4.1 to the Registration Statement, and hereby
incorporated by reference.
4.2 Specimen Warrant Certificate, filed as Exhibit 4.2 to the Registration Statement, and hereby
incorporated by reference.
4.3 Form of Representatives' Warrant Agreement, including Specimen
Representatives' Warrant, filed as Exhibit 4.3 to the
Registration Statement, and hereby incorporated by reference.
4.4 Form of Warrant Agreement, filed as Exhibit 4.4 to the Registration Statement and hereby
incorporated by reference.
4.5 Specimen Unit Certificate, filed as Exhibit 4.5 to the Registration Statement, and hereby
incorporated by reference.
10.1 Lease dated February 12, 1994, between the Company and Promega
Corporation, filed as Exhibit 10.1 to the Registration
Statement, and hereby incorporated by reference.
10.2 1998 Incentive Stock Option Plan.
10.3 1990 Incentive Stock Option Plan, filed as Exhibit 10.3 to the Registration Statement, and hereby
incorporated by reference.
10.4 1992 Employee Stock Option Plan, filed as Exhibit 10.4 to the Registration Statement, and hereby
incorporated by reference.
10.5 Agreement dated June 3, 1996, between the Company and Eli Lilly
and Company, filed as Exhibit 10.5 to the Registration
Statement, and hereby incorporated by reference.
10.6 Employment Agreement dated June 1, 1997, between the Company and
Douglas C. Stafford, filed as Exhibit 10.6 to the Registration
Statement, and hereby incorporated by reference.
10.7 Employment Agreement dated June 1, 1997, between the Company and
Joseph Firca, filed as Exhibit 10.7 to the Registration
Statement, and hereby incorporated by reference.
10.9 Employment Agreement dated November 6, 1997, between the Company
and Donald L. Nevins, filed as Exhibit 10.9 to the Registration
Statement, and hereby incorporated by reference.
10.10 Employment Agreements dated December 1, 1998, between the
company and F. Michael Hoffmann, filed as Exhibit 10.10 to the
Company's Form 10-K for the period ended September 30, 1998, and
hereby incorporated by reference.
27.0 Financial Data Schedule.
</TABLE>
11
<PAGE> 12
SIGNATURES
Pursuant to the requirement 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.
Ophidian Pharmaceuticals, Inc.
------------------------------
(Registrant)
February 8, 1999 By:/s/ Douglas C. Stafford
-----------------------------------------
Douglas C. Stafford
President and Chief Executive Officer
February 8, 1999 By:/s/ Donald L. Nevins
-----------------------------------------
Donald L. Nevins
Chief Financial Officer
February 8, 1999 By:/s/ Margaret B. van Boldrik
-----------------------------------------
Margaret B. van Boldrik
Secretary
12
<PAGE> 1
EXHIBIT 10.2
OPHIDIAN PHARMACEUTICALS, INC.
1998 INCENTIVE STOCK OPTION PLAN
================================================================================
1. Purpose. The purpose of the Ophidian Pharmaceuticals, Inc. 1998
Incentive Stock Option Plan (the "Plan") is to encourage certain key employees
of Ophidian Pharmaceuticals, Inc. (the "Company") to acquire or increase their
stock ownership in the Company, to provide an incentive to such employees to
promote the financial success of the Company, and to enable the Company to
attract and retain key personnel necessary for continued growth and
profitability.
2. Effective Date and Term of Plan. The Plan shall become effective on
the date adopted by the Board of Directors of the Company ("Board of Directors")
and shall continue for a period of ten years thereafter unless sooner terminated
as provided in Paragraph 17.
3. Approval of Shareholders. The Plan is subject to the approval of
holders of a majority of all of the outstanding voting shares of the Company. If
it is not so approved on or before one year after the date of adoption of the
Plan by the Board of Directors, the Plan shall not come into effect and any
options granted pursuant to the Plan shall be deemed canceled. No option may be
exercised prior to approval of the Plan by the shareholders.
4. Stock Subject to Plan. Only common stock of the Company ("Common
Stock") may be issued pursuant to options granted under this Plan. The maximum
number of shares of Common Stock that may be issued pursuant to the exercise of
options granted under the Plan ("Options") is Nine Hundred Seventy-Five
Thousand (975,000) shares, reduced by the number of shares from time to time
reserved by the Company for issuance upon exercise of then outstanding options
granted under the Company's 1990 Incentive Stock Option Plan and the Company's
1992 Employee Stock Option Plan as amended and further reduced by shares issued
upon the exercise of options granted under such plans, and subject to any
adjustments provided in Paragraph 16. If any Options expire or terminate for any
reason without having been exercised in full, the unpurchased shares subject
thereto shall again be available for further grants under the Plan.
5. Administration. The Plan shall be administered by the committee
described in Paragraph 6 (the "Committee"). Subject to the express provisions of
the Plan, the Committee shall have complete authority in its discretion, to
determine those employees ("Participants") to whom Options shall be granted, the
option price, the option periods and the number of shares to be subject to each
Option. Subject to the express provisions of the Plan, the Committee shall also
have the authority in its discretion to prescribe the time or times at which
Options may be exercised, the limitations upon the exercise of Options
1998 Incentive Stock Option Plan - Page A-1
<PAGE> 2
(including limitations effective upon the death, disability or termination of
employment of any Participant) and the restrictions, if any, to be imposed upon
the transferability of shares acquired upon exercise of Options. In making such
determinations, the Committee may take into account the nature of the services
rendered by the respective Participants, their present and potential
contributions to the success of the Company and such other factors as the
Committee in its discretion shall deem relevant. Subject to the express
provisions of the Plan, the Committee shall also have complete authority to
interpret the Plan, to prescribe, amend and rescind rules and regulations
relating to the Plan, to determine the terms and provisions of the respective
option agreements (which need not be identical), to determine whether the shares
delivered upon exercise of Options will be treasury shares or will be authorized
but previously unissued shares and to make all other determinations necessary or
advisable for the administration of the Plan. The Committee's determinations on
the matters referred to in this paragraph shall be conclusive.
6. Committee. The Committee shall consist of two or more members of the
Board of Directors who are not currently an officer or other employee of the
Company, do not receive compensation from the Company other than as a Director,
and who otherwise qualify as a "non-employee director" as that term is defined
in Rule 16b-3(b)(3) under the Securities and Exchange Act of 1934, as amended.
The Committee shall be appointed from time to time by the Board of Directors,
which may from time to time appoint members of the Committee in substitution for
members previously appointed and may fill vacancies, however caused, in the
Committee. A majority of its members shall constitute a quorum. All
determinations of the Committee shall be made by a majority of its members. Any
decision or determination reduced to writing and signed by all of the members
shall be fully as effective as if it had been made by a majority vote at a
meeting duly called and held. The Committee may hold meetings by use of
conference telephone or similar communications equipment by which all persons
participating in the meeting can hear each other.
7. Eligibility. An Option may be granted under the Plan only to an
officer or other key employee of the Company, and of its present and future
subsidiaries, as defined in Section 424(f) of the Internal Revenue Code of 1986,
as amended ("Subsidiaries"). The foregoing notwithstanding, members of the
Committee shall not, while serving as members of the Committee, be eligible to
receive Options.
8. Option Price. The option price per share will be determined by the
Committee at the time each Option is granted, but shall not be less than 100% of
the fair market value, as determined by the Committee, of a share of Common
Stock on the date of grant. If such Option is granted to a person who owns,
directly or indirectly, stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company on the date of the grant,
the option price per share shall not be less than 110% of its fair market value.
9. Option Periods. The term of each Option will be for such period not
exceeding ten years from the date of grant, as the Committee shall determine;
provided, however, that if such Option is granted to a person who owns, directly
or indirectly, stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company on the date of the grant, the term of
such Option shall not exceed five years from the date of grant.
1998 Incentive Stock Option Plan - Page A-2
<PAGE> 3
An Option shall be considered granted on the date the Committee acts to grant
the Option or such other date as the Committee shall specify. Each Option shall
be subject to earlier termination as described under Paragraphs 13 and 17.
10. Exercise of Options. Each Option may be exercised at any time
during the option period for such Option (subject to the restrictions in this
paragraph, in Paragraph 13 and in the agreements referred to in Paragraph 14) by
written notice delivered to an officer of the Company, stating the number of
shares with respect to which the Option is being exercised.
11. Payment for Option. Within five (5) business days following the
date of exercise, the Participant shall make full payment of the option price
(i) in cash; (ii) with the consent of the Committee, by tendering previously
acquired shares of Common Stock (valued at their fair market value, as
determined by the Committee, as of the date of exercise); or (iii) any
combination of (i) and (ii). Shares of Common Stock tendered shall be duly
endorsed in blank or accompanied by stock powers duly endorsed in blank. Upon
receipt of the payment of the entire option price for the shares so purchased,
certificates for such shares shall be delivered to the Participant.
12. Maximum Per Participant. The aggregate fair market value, as
determined by the Committee, of the stock for which options held by a
Participant are exercisable for the first time under the Plan or other options
granted to the Participant under any plan of the Company or any Subsidiary
during any calendar year shall not exceed $100,000. For purposes of this
paragraph, the fair market value of stock subject to an Option or other
Incentive Stock Option shall be determined as of the date the Option or other
Incentive Stock Option, as the case may be, is granted.
13. Termination of Employment. Except as hereinafter provided, no
Option may be exercised later than three months after a Participant terminates
his employment with the Company or its Subsidiaries, as the case may be. If
termination of employment results from the deliberate, willful or gross
misconduct of a Participant, then the Option may not be exercised and all of the
Participant's rights in the Option shall be forfeited upon termination. If
termination of employment results from the disability of a Participant within
the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as
amended, any Option may be exercised at any time within twelve months after such
termination of employment, but in no event beyond the option period. If
termination of employment results from the death of a Participant, the personal
representative of the Participant's estate, or a person who by bequest,
inheritance, or otherwise by reason of the Participant's death, acquired the
right to exercise the Option, may exercise any Option at any time after the
death of such Participant, but in no event beyond the option period. The
Committee may impose additional restrictions upon the exercise of Options after
termination of employment, including prohibition of such exercise.
14. Agreements. Options granted pursuant to the Plan shall be evidenced
by stock option agreements in such form as the Committee shall from time to time
adopt.
1998 Incentive Stock Option Plan - Page A-3
<PAGE> 4
15. Nontransferability of Options. Options under the Plan are not
transferable by a Participant other than by will or the laws of descent or
distribution, and may be exercised during the lifetime of a Participant only by
such Participant.
16. Adjustment of Number of Shares. In the event of any change in the
outstanding Common Stock of the Company by reason of stock dividends,
recapitalizations, reorganizations, mergers, consolidations, split-ups,
combinations or exchanges of shares and the like, the Committee shall,
consistent with such change, appropriately adjust the number and kind of shares
which thereafter may be optioned and sold under the Plan, the number and kind of
shares under option in outstanding stock option agreements and the purchase
price per share thereof. The determination of the Committee as to any such
adjustment shall be final and conclusive. No adjustment or substitution provided
for in this paragraph shall require the Company in any stock option agreement to
sell a fractional share and the total substitution or adjustment with respect to
each stock option agreement shall be limited accordingly.
17. Amendment, Suspension or Termination. The Board of Directors,
without further approval of the shareholders, may from time to time amend,
suspend or terminate the Plan in such respects as the Board may deem advisable,
provided, however, that no amendment shall become effective without prior
approval of the shareholders which would (i) increase the aggregate number of
shares which may be issued pursuant to Options granted under the Plan, except as
permitted under Paragraph 16; (ii) permit the granting of options to anyone
other than an officer or key employee of the Company or a Subsidiary or to a
member of the Committee; (iii) decrease the minimum option prices; (iv) increase
the maximum option periods; (v) increase the maximum per Participant set in
Paragraph 12; or (vi) extend the term of the Plan. No amendment shall, without
the Participant's consent, alter or impair any of the rights or obligations
under any Option theretofore granted to the Participant prior to the effective
date of such amendment.
Dated as of the 7th day of August, 1998.
OPHIDIAN PHARMACEUTICALS, INC.
By: /s/ Douglas C. Stafford
-----------------------------
Douglas C. Stafford
President and Chief Executive
Officer
Attest: /s/ Margaret B. van Boldrik
----------------------------
Margaret B. van Boldrik
Secretary
1998 Incentive Stock Option Plan - Page A-4
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<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> SEP-30-1998 SEP-30-1997
<PERIOD-END> DEC-31-1998 DEC-31-1997
<CASH> 7,426,615 2,435,401
<SECURITIES> 0 359,588
<RECEIVABLES> 12,424 140,807
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<CURRENT-ASSETS> 7,511,972 2,994,048
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<DEPRECIATION> 634,876 439,517
<TOTAL-ASSETS> 10,062,679 5,116,176
<CURRENT-LIABILITIES> 345,335 268,876
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0 0
0 0
<COMMON> 23,058 18,221
<OTHER-SE> 22,047,154 12,687,266
<TOTAL-LIABILITY-AND-EQUITY> 10,062,679 5,116,176
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<TOTAL-REVENUES> 690 115,185
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<NET-INCOME> (1,267,975) (861,169)
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