<PAGE> 1
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: September 30, 1996
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 0-19117
IMMULOGIC PHARMACEUTICAL CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3397957
- ------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
610 Lincoln Street, Waltham, MA 02154
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 466-6000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 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 requirement for the past 90 days.
Yes X No
----- -----
Number of shares of $.01 par value common stock outstanding as of
September 30, 1996 20,232,566
----------
- -------------------------------------------------------------------------------
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IMMULOGIC PHARMACEUTICAL CORPORATION
INDEX TO FORM 10-Q
------------------
Page No.
--------
PART I. FINANCIAL INFORMATION
---------------------
Item 1. Financial Statements 3
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Condensed Consolidated Balance Sheets 3
September 30, 1996 and December 31, 1995
Condensed Consolidated Statements of Operations 4
Three and Nine Months Ended September 30,1996
and 1995
Condensed Consolidated Statements of Cash Flows 5
Nine Months Ended September 30, 1996 and 1995
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial 7
- ------- Condition and Results of Operations
PART II. OTHER INFORMATION
-----------------
Item 6. Exhibits 10
- -------
Reports on Form 8-K 10
SIGNATURES 11
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
- -------
IMMULOGIC PHARMACEUTICAL CORPORATION
<TABLE>
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(dollars in thousands)
<CAPTION>
September 30, 1996 December 31, 1995
------------------ -----------------
<S> <C> <C>
ASSETS
------
Current assets:
Cash and cash equivalents $ 12,328 $ 19,067
Short-term investments 29,281 41,921
Prepaid expenses and other current assets 1,632 732
--------- --------
Total current assets 43,241 61,720
Property and equipment, net 9,445 10,834
Long-term investments 27,318 24,972
Other assets 49 53
--------- --------
Total assets $ 80,053 $ 97,579
========= ========
LIABILITIES
-----------
Current liabilities:
Accounts payable $ 1,124 $ 895
Accrued expenses and other current liabilities 6,690 6,724
--------- --------
Total current liabilities 7,814 7,619
Other long-term liabilities 375 425
--------- --------
Total liabilities 8,189 8,044
--------- --------
STOCKHOLDERS' EQUITY
--------------------
Preferred stock - $.01 par value;
1,000,000 shares authorized; no shares issued
or outstanding
Common stock - $.01 par value; 40,000,000 shares -- --
authorized; 20,232,566 and 19,924,471 shares
issued and outstanding at September 30, 1996
and December 31, 1995, respectively 202 199
Additional paid-in capital 184,914 183,796
Less deferred compensation (38) (14)
Accumulated deficit (113,214) (94,446)
--------- --------
Total stockholders' equity 71,864 89,535
--------- --------
Total liabilities and stockholders' equity $ 80,053 $ 97,579
========= ========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
3
<PAGE> 4
IMMULOGIC PHARMACEUTICAL CORPORATION
<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share data)
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
License fees -- -- -- $ 5,000
Sponsored research evenues $ 762 $ 727 $ 2,012 2,133
------- ------- -------- --------
Total revenues 762 727 2,012 7,133
Operating expenses:
Research and development 7,447 5,687 19,532 18,391
General and administrative 1,785 1,394 4,770 4,535
------- ------- -------- --------
Total operating expenses 9,232 7,081 24,302 22,926
------- ------- -------- --------
Operating loss (8,470) (6,354) (22,290) (15,793)
Interest income 974 1,122 3,522 2,847
------- ------- -------- --------
Net loss $(7,496) $(5,232) $(18,768) $(12,946)
======= ======= ======== ========
Net loss per common share $ (0.37) $ (0.31) $ (0.93) $ (0.81)
======= ======= ======== ========
Weighted average number of
common shares outstanding 20,232 16,913 20,207 16,074
======= ======= ======== ========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
4
<PAGE> 5
IMMULOGIC PHARMACEUTICAL CORPORATION
<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
<CAPTION>
Nine Months Ended September 30,
1996 1995
-------- --------
<S> <C> <C>
Operating activities:
Net loss $(18,768) $(12,946)
Depreciation and amortization 1,960 2,297
Write-down of leasehold improvements -- 345
Net change in other assets and liabilities (751) 1,294
-------- --------
Net cash used in operating activities (17,559) (9,010)
-------- --------
Investing activities:
Purchase of equipment and leasehold improvements (550) (1,675)
Proceeds from sale of equipment -- 600
Net change in short-term investments 12,640 (9,203)
Net change in long-term investments (2,346) (2,832)
-------- --------
Net cash provided by (used in) investing activities 9,744 (13,110)
-------- --------
Financing activities:
Issuance of common stock -- 45,700
Exercise of stock options 908 97
Other 168 --
-------- --------
Net cash provided by financing activities 1,076 45,797
-------- --------
Net increase (decrease) in cash and cash equivalents (6,739) 23,677
Cash and cash equivalents, beginning of period 19,067 13,608
-------- --------
Cash and cash equivalents, end of period $ 12,328 $ 37,285
======== ========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
5
<PAGE> 6
IMMULOGIC PHARMACEUTICAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note A - Basis of Presentation
- ------------------------------
The accompanying unaudited condensed consolidated financial statements reflect
all adjustments which are necessary, in the opinion of management, for a fair
presentation of results of the interim periods presented. The statements do not
include all information and footnote disclosures required by generally accepted
accounting principles and therefore should be read in conjunction with the
consolidated financial statements and footnotes included in the Company's 1995
Annual Report. The results of operations for the interim periods presented are
not necessarily indicative of the results of operations for the full fiscal
year.
Note B- Subsequent Event
- ------------------------
On October 25, 1996, the Company and Hoechst Marion Roussel, Inc. (HMRI)
amicably resolved all obligations relating to their prior joint collaboration
resulting in the Company receiving $7,000,000 from HMRI as well as the transfer
of ALLERVAX[Registered Trademark] CEDAR and ALLERVAX[Registered Trademark] MITE
peptide inventories to be used by the Company in future product development
activities. Upon termination of the collaboration the Company reacquired all
ownership rights to the ALLERVAX[Registered Trademark] program.
6
<PAGE> 7
IMMULOGIC PHARMACEUTICAL CORPORATION
Item 2.
- -------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
- ---------------------
Revenues for the third quarter of 1996 were $762,000 compared to $727,000 for
the third quarter of 1995. For the first nine months of 1996, revenues were
$2,012,000 consisting primarily of research funding from Schering AG, Germany
(SAG) related to a joint development and collaboration agreement in the
Company's multiple sclerosis program. In the comparable 1995 period, revenues
were $7,133,000, which included research funding from SAG and the last of three
scheduled annual $5,000,000 license payments from HMRI.
Total operating expenses for the third quarter of 1996 increased $2,151,000 or
30.4% to $9,232,000 as compared to the third quarter of 1995. On a year-to-date
basis, total expenses increased by $1,376,000 or 6.0% to $24,302,000 as compared
to the corresponding nine-month 1995 period. The increase in operating expenses
in both the three and nine-month periods was primarily due to costs incurred in
the clinical trial program with for the Company's ALLERVAX[Registered Trademark]
CAT and ALLERVAX[Registered Trademark] RAGWEED products and the addition of new
employees to support the development, clinical and regulatory requirements of
these products. Offsetting somewhat the increase in operating expenses was the
elimination of costs associated with the Company's closing of its Palo Alto,
California research facility during the second quarter of 1995.
Interest income for the third quarter of 1996 was $974,000 compared to
$1,122,000 for the third quarter of 1995, a decrease of $148,000 or 13.2%
resulting primarily from lower interest rates earned on investments offset in
part by a higher available investable balance. For the first nine months of
1996, interest income was $3,522,000 compared to $2,847,000 for the comparable
1995 period, an increase of $675,000 or 23.7%. The increase in interest income
year-to-date resulted from a higher available investment balance as compared to
the prior year and interest payments received from HMRI relating to capital
expenditures made by the Company to manufacture the ALLERVAX[Registered
Trademark] family of therapeutics. These increases in interest income were
offset in part by a lower interest rate earned on investments.
The Company reported a net loss of $7,496,000 ($(0.37) per share) for the third
quarter of 1996 compared to a net loss of $5,232,000 ($(0.31) per share) for the
comparable 1995 period. For the first nine months of 1996, the Company reported
a net loss of $18,768,000 ($(0.93) per share) compared to a net loss of
$12,946,000 ($(0.81) per share) for the comparable 1995 period. The increased
net loss for the nine-month period was due primarily to the receipt in 1995 of
the last of three scheduled annual $5,000,000 license payments from HMRI and
increased clinical trial and related costs for the Company's ALLERVAX[Registered
Trademark] CAT and RAGWEED products, offset in part by cost reductions realized
from the consolidation of the Company's research operations to Waltham,
Massachusetts during the second quarter of 1995.
7
<PAGE> 8
IMMULOGIC PHARMACEUTICAL CORPORATION
Item 2. - Continued
- ------- ---------
Liquidity and Capital Resources
- -------------------------------
At September 30, 1996, the Company had $35,427,000 of working capital consisting
primarily of cash and cash equivalents and short-term investments, as compared
to $54,101,000 at December 31, 1995. In addition, the Company had $27,318,000 in
long-term investments compared to $24,972,000 at December 31, 1995. The decrease
of $18,674,000 in working capital was primarily attributable to cash used in
operations of $17,559,000 and capital purchases of $550,000 offset in part by
the proceeds received upon the exercise of employee stock options in amount of
$908,000.
The Company expects to incur losses for at least a number of years as the
Company's research, development, and clinical trial programs continue. ImmuLogic
has funded its operations to date primarily through the sale of equity
securities, sponsored research revenues, license payments, and earnings on
invested capital. The Company has expended substantial funds for the research
and development of its products, and will in the future expend substantial funds
for further research and development, establishment of commercial-scale
manufacturing capabilities, and the marketing of its products. The Company will
seek to obtain additional funds for these purposes through equity or debt
financings, collaborative arrangements with corporate partners, or from other
sources. No assurance can be given that such additional funds will be available
to the Company for such purposes on acceptable terms, if at all. Insufficient
funds could require the Company to delay, scale back, or eliminate certain of
its research and development programs or to license third parties to
commercialize products or technologies that the Company would otherwise develop
or commercialize itself.
8
<PAGE> 9
Item 6. Exhibits and Reports on Form 8-K
- ------- --------------------------------
(a) EXHIBITS:
Exhibit
Number Exhibit Page No.
------ ------- --------
27 Financial Data Schedule 11
(b) REPORTS ON FORM 8-K
No Current Reports on Form 8-K were filed during the quarter ended
September 30, 1996.
9
<PAGE> 10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
IMMULOGIC PHARMACEUTICAL CORPORATION
------------------------------------
(Registrant)
Date: November 5, 1996 /s/ Robert J. Gerety
---------------- -------------------------------------------
Robert J. Gerety, M.D., Ph.D.
President and Chief Executive Officer
Date: November 5, 1996 /s/ Richard N. Small
---------------- -------------------------------------------
Richard N. Small
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FILED IN Q3 1996 QUARTERLY REPORT ON FORM 10-Q, CONDENSED
CONSOLIDATED BALANCE SHEET, STATEMENT OF OPERATIONS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FORM 10-Q, SEPTEMBER 30, 1996.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 12,328
<SECURITIES> 56,599
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 43,241
<PP&E> 19,235
<DEPRECIATION> 9,790
<TOTAL-ASSETS> 80,053
<CURRENT-LIABILITIES> 7,814
<BONDS> 0
<COMMON> 202
0
0
<OTHER-SE> 71,662
<TOTAL-LIABILITY-AND-EQUITY> 80,053
<SALES> 0
<TOTAL-REVENUES> 762
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 9,232
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (7,496)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,496)
<EPS-PRIMARY> (0.37)
<EPS-DILUTED> (0.37)
</TABLE>
