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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 period ended June 30, 2000
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)
12 Alfred Street, Suite 300, Woburn, MA 01810
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (781) 933-1772
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 July
14, 2000 - 20,550,773
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IMMULOGIC PHARMACEUTICAL CORPORATION
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page No.
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<S> <C> <C>
Item 1. Unaudited, Condensed Consolidated Financial Statements
and Notes
Unaudited, Condensed Consolidated Statements of Net Assets in
Liquidation As of June 30, 2000 and December 31, 1999 3
Unaudited, Condensed Consolidated Statements of Changes in
Assets in Liquidation for the Three and Six Months Ended
June 30, 2000 4
Unaudited, Condensed Consolidated Statement of Operations
(Going Concern Basis) for the Three and Six Months Ended
June 30, 1999 5
Unaudited, Condensed Consolidated Statement of Cash Flows
(Going Concern Basis) for the Six Months Ended June 30, 1999 6
Notes to Unaudited, Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial 10
Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosure About Market Risk 14
PART II. OTHER INFORMATION
Item 6. Exhibits 15
Reports on Form 8-K 15
SIGNATURES 16
</TABLE>
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PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
IMMULOGIC PHARMACEUTICAL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF NET ASSETS IN LIQUIDATION (UNAUDITED)
(in thousands)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
----------- -----------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 10,452 $ 2,168
Cantab stock 5,070 12,000
Milestones and royalties 3,000 3,000
Landlord receivable 1,074 1,400
Other assets 74 53
---------- ----------
Total assets $ 19,670 $ 18,621
----------- ----------
LIABILITIES
Estimated costs to be incurred during liquidation period $ 774 $ 1,215
Accounts payable and accrued expenses 310 505
----------- ----------
Total liabilities 1,084 1,720
----------- ----------
NET ASSETS IN LIQUIDATION $ 18,586 $ 16,901
=========== ==========
</TABLE>
The accompanying notes are an integral part of the unaudited condensed
consolidated financial statements.
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IMMULOGIC PHARMACEUTICAL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF
CHANGES IN NET ASSETS IN LIQUIDATION
(UNAUDITED)
(in thousands)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
2000 2000
------------ ----------
<S> <C> <C>
Net assets in liquidation, beginning of period $ 16,901 $ 16,901
Investment income (4) (23)
Change in cash and cash equivalents (8,255) (8,284)
Payment of estimated costs to be incurred during
liquidation period 128 251
Cash received from landlord (163) (326)
Cash received upon the sale of Cantab stock (8,345) (8,345)
Other cash receipts (15) (36)
Net changes in accounts payable and accrued expenses
144 195
Changes in liquidation basis accounting estimates:
Increase in estimated net realizable value of Cantab 1,415 1,415
stock
Decrease in estimated costs to be incurred during the
liquidation period 190 190
Increase in investment income receivable 80 80
-------- --------
Net assets in liquidation June 30, 2000 $ 18,586 $ 18,586
======== ========
</TABLE>
The accompanying notes are an integral part of the unaudited condensed
consolidated financial statements.
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IMMULOGIC PHARMACEUTICAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED - GOING CONCERN BASIS)
(in thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------- -----------------------
1999 1998 1999 1998
------- ------- -------- -------
<S> <C> <C> <C> <C>
Revenues:
Sponsored research revenues $ 348 $432 $ 1,088 $ 962
------- ------- -------- -------
Total revenues 348 432 1,088 962
Operating expenses:
Research and development 348 1,321 1,088 2,808
General and administrative 632 513 2,178 1,380
Loss on leasehold improvements, net 966 -- 966 --
------- ------- -------- -------
Total operating expenses 1,946 1,834 4,232 4,188
------- ------- -------- -------
Operating loss (1,598) (1,402) (3,144) (3,226)
Interest income 526 630 1,085 1,333
------- ------- -------- -------
Net loss $(1,072) $ (772) $(2,059) $(1,893)
======= ======= ======== =======
Basic and diluted net loss per
common share $(0.05) $ (0.04) $(0.10) $ (0.09)
======= ======= ======== =======
Weighted average number of
common shares outstanding 20,377 20,359 20,376 20,357
======= ======= ======== =======
Comprehensive loss:
Net loss $(1,072) $ (772) $ (2,059) $(1,893)
Other comprehensive loss: (699) -- (872) --
------- ------- -------- -------
Comprehensive loss: $(1,171) $ (772) $ (2,931) $(1,893)
======= ======= ======== =======
</TABLE>
The accompanying notes are an integral part of the unaudited condensed
consolidated financial statements.
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IMMULOGIC PHARMACEUTICAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED - GOING CONCERN BASIS)
(in thousands)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30,
---------------------
1999 1998
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<S> <C> <C>
Cash flows for operating activities:
Net loss $ (2,059) $ (1,893)
Adjustments used to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization 72 976
Write-down of leasehold improvements 1,446 --
Gain on sale of equipment (14) --
Reduction of MIT liability (275) --
Shares issued for 401(k) employer match 12 34
Change in assets and liabilities:
Prepaid and other current assets 170 (40)
Other assets 49 --
Accounts payable 462 (255)
Sublease deposit -- 500
Reduction in lease obligation (616) --
Accrued expenses and other current liabilities (182) (2,641)
-------- --------
Total adjustments 1,124 (1,426)
-------- --------
Net cash used in operating activities (935) (3,319)
Cash flows from investing activities:
Purchase of Cantab stock (6,000) --
Leasehold improvement sublease payments 463 --
Proceeds from sale of equipment 133 --
Purchase of short term investments -- (13,320)
Redemption of short term investments 8,219 20,716
Redemption of long term investments 4,142 2,119
-------- --------
Net cash provided by investing activities 6,957 9,515
Net increase in cash and cash equivalents 6,022 6,196
Cash and cash equivalents, beginning of period 18,856 8,437
-------- --------
Cash and cash equivalents, end of period $ 24,878 $ 14,633
======== ========
</TABLE>
The accompanying notes are an integral part of the unaudited condensed
consolidated financial statements.
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IMMULOGIC PHARMACEUTICAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000
(unaudited)
NOTE A - ORGANIZATION AND ACCOUNTING POLICIES
On March 23 1999, the Board of Directors of ImmuLogic Pharmaceutical Corporation
(the "Company") approved a plan to liquidate and dissolve the Company (the
"Plan"). The Plan was approved by the stockholders of the Company on August 25,
1999. The key features of the Plan are (1) the conclusion of all business
activities, other than those in execution of the Plan; (2) the sale or
disposition of all of the Company's assets; (3) the satisfaction of all
outstanding liabilities; (4) the payment of liquidating distributions to
stockholders in complete redemption of the Common Stock; and (5) the
authorization of the filing of Certificate of Dissolution with the State of
Delaware. As a result of the adoption of the Plan and the imminent nature of the
liquidation, the Company adopted the liquidation basis of accounting effective
July 1, 1999, whereby assets are valued at their estimated net realizable values
and liabilities are valued at their estimated settlement amounts. The valuation
of assets and liabilities requires many estimates and assumptions by management
and there are substantial uncertainties in carrying out the provisions of the
Plan. The amount and timing of future liquidating distributions will depend upon
a variety of factors including, but not limited to, the actual proceeds from the
sale of any of the Company's assets, the ultimate settlement amounts of the
Company's liabilities and obligations, actual costs incurred in connection with
carrying out the Plan, including management fees and administrative costs during
the remaining liquidation period, and the timing of the liquidation and
dissolution.
The accompanying financial statements, notes and discussions should be read in
conjunction with the consolidated financial statements, related notes and
discussions contained in the Company's annual report on Form 10-K for the year
ended December 31, 1999.
The interim financial information contained herein is unaudited; however, in the
opinion of management, all adjustments necessary for the fair presentation of
such financial information have been included.
The results for the interim period are not necessarily indicative of the results
to be expected for the year ending December 31, 2000.
NOTE B - LIQUIDATION BASIS OF ACCOUNTING
CANTAB STOCK
In December 1998, the Company signed an agreement with Cantab for the sale of
the Company's assets and the transfer of control over the programs related to
its drugs of addiction vaccine programs for the treatment of nicotine and
cocaine addiction (the "Nicotine and Cocaine Programs"). The assets sold
consisted primarily of patents and other intellectual property, as well
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as certain equipment and materials used in these programs. In connection with
this sale, the Company remitted $6,000,000 in cash to Cantab in 1999 and
received 2,566,845 Cantab ordinary shares in the form of 855,615 American
Depository Shares ("ADSs"). One ADS is equal to approximately three ordinary
shares. Under the terms of the Company's agreement with Cantab, the Company
could not sell any of the ADSs or Cantab ordinary shares represented by the ADSs
prior to August 2, 1999. Thereafter, the Company may immediately sell up to 25%
of the ADSs, and then may sell an additional 25% every 90 days thereafter. In
addition, the Company is obligated to sell such shares through a broker or
brokers designated by Cantab and approved by the Company, and in a manner to be
agreed upon by the Company and Cantab that is mutually advantageous to the
Company and Cantab, considering the desire for the Company to sell and the
desire of Cantab to avoid undue disruption of the market for such securities.
On June 16, 2000, the Company converted 785,615 of its total 855,615 ADSs of
Cantab Pharmaceuticals Plc ("Cantab") into 2,356,845 Ordinary Shares of Cantab
and sold 1,300,000 of such Ordinary Shares on the London Stock Exchange for
aggregate gross proceeds of approximately $7,215,000. In addition, ImmuLogic
sold the remaining 70,000 ADSs to a private buyer in the United States for
aggregate gross proceeds of approximately $1,165,000.
On July 7, 2000, the Company sold 100,000 Ordinary Shares of Cantab on the
London Stock Exchange for aggregate gross proceeds of approximately $580,000.
The Company's remaining holdings of in Cantab consist of 956,845 Ordinary Shares
as of July 8, 2000.
The determination of when to sell the remaining Cantab stock will be based on
the judgement of the Board of Directors as to whether the sale of the Cantab
stock at any particular time will result in realization of the highest possible
value to the Company's stockholders and will be based upon several factors,
including without limitation, (i) the Company's contractual obligations to
Cantab regarding the sale of the shares; (ii) the anticipated effect on the
market price of Cantab stock; (iii) whether a sale of Cantab stock would require
registration under the Securities Act or the Exchange Act; (iv) whether an
orderly public market for Cantab stock exists; and (v) the availability of one
or more purchasers of the stock in a private sale. The valuation of this
investment is based upon subjective judgements due to the inherent uncertainty
of Cantab's volatile stock price, low trading volume, the large quantity of
shares the Company holds in Cantab, and restrictions in place under the
Company's agreement with Cantab as outlined above. Accordingly, based upon its
90 day trading history, applying a discount factor and taking into consideration
the contractual restrictions to which it is subject, the Company recorded the
estimated net realizable value of the remaining 1,056,845 ordinary shares of
Cantab common stock as of June 30, 2000 at approximately $5.1 million for the
purpose of the liquidation basis accounting.
MILESTONES & ROYALTIES
The Company could receive up to a maximum of $11 million in milestone payments
contingent upon Cantab's successful development to the end of Phase II clinical
trials of the Nicotine and Cocaine Programs sold to Cantab. These payments may
be made in cash or in additional ADSs or a combination thereof at Cantab's
discretion. The Company would receive the following for successful completion of
the Phases (as defined in the agreement) as follows:
Cocaine............................ Phase II $2 million
Nicotine........................... Phase I $3 million
Nicotine........................... Phase II $6 million
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Upon receipt of the Phase II Cocaine or Phase I Nicotine milestones in the form
of Cantab stock or ADSs, the Company may sell up to 25% of such shares in each
of the four quarters following the expiration of an initial six-month period.
Any shares paid in respect of any additional milestones would not be subject to
these lock-up provisions.
The Company could potentially also receive a share of the net royalties Cantab
may receive from vaccine sales proportionate to the level of worldwide product
sales achieved. While the Company will attempt to monetize these potential
royalty streams, the Company does not anticipate receiving significant value for
them and thus has not recorded any net realizable value for the royalty stream.
The Company estimates that the range of value to be received from these
milestones and royalties to be $0 to $11 million based on the contract terms.
The Company recorded $3.0 million at December 31, 1999 as the estimated net
realizable value for the purpose of liquidation basis accounting, which assumes
the realization of one of these milestones. The estimate recorded for the
milestones has not changed since December 31, 1999 because no factors have
indicated a change in their net realizable value.
LANDLORD RECEIVABLE
In February 1998, the Company entered into a phased sublease agreement with
Scriptgen Pharmaceticals, Inc. ("Scriptgen") for the Company's 85,000 square
foot headquarters and research and development facility located in Waltham,
Massachusetts. The entire facility was subleased to Scriptgen effective August
1, 1999. Under the terms of the sublease, Scriptgen has assumed the Company's
obligations under the lease in addition to reimbursing the Company for a portion
of the Company's leasehold improvements. The Company negotiated an arrangement
with the landlord and Scriptgen eliminating the Company's liability for the
lease in the event that Scriptgen were to default on its sublease obligations.
In consideration for this arrangement, the Company expects to receive $55,000
per month from Scriptgen through August 2002, or an aggregate of approximately
$1.76 million. If Scriptgen were to default on its lease agreement or if the
Company sold its interest in the lease, the Company would receive less than the
$1.76 million. As of June 30, 2000, the Company has recorded $1.1 million
(estimated total payments of $1.4 million as of December 31, 1999, less $0.3
million in payments actually received during the first half of 2000) as the
remaining estimated net realizable value for the purpose of liquidation basis
accounting.
LIABILITIES
At June 30, 2000, the Company estimates that there are $.8 million of costs to
be incurred during the remaining liquidation period through August 26, 2002 as
compared to $1.2 million of costs remaining as of December 31, 1999. The
decrease of $0.4 million resulted from payments made during the first half of
2000 consisting of management compensation ($127,000), insurance ($102,000)
professional fees ($70,000), and facility/miscellaneous costs ($50,000), and a
decrease in the estimate of costs to be incurred during the liquidation period
($190,000).
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ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
OVERVIEW
Since inception, the Company had focused on the research and clinical
development of products to treat allergies, autoimmune diseases, and vaccines
for the management of drugs of abuse.
On February 5, 1999, the Company announced that its Board of Directors had
decided to conclude the business activities of the Company as soon as
practicable. On March 23 1999, the Board of Directors approved a plan to
liquidate and dissolve the Company (the "Plan"). The Plan was approved by the
stockholders of the Company on August 25, 1999. The key features of the Plan are
(1) the conclusion of all business activities, other than those in execution of
the Plan; (2) the sale or disposition of all of the Company's assets; (3) the
satisfaction of all outstanding liabilities; (4) the payment of liquidating
distributions to stockholders in complete redemption of the Common Stock; and
(5) the authorization of the filing of Certificate of Dissolution with the State
of Delaware. As a result of the adoption of the Plan and the imminent nature of
the liquidation, the Company adopted the liquidation basis of accounting
effective July 1, 1999, whereby assets are valued at their estimated net
realizable values and liabilities are valued at their estimated settlement
amounts. The valuation of assets and liabilities requires many estimates and
assumptions by management and there are substantial uncertainties in carrying
out the provisions of the Plan. The amount and timing of future liquidating
distributions will depend upon a variety of factors including, but not limited
to, the actual proceeds from the sale of any of the Company's assets, the
ultimate settlement amounts of the Company's liabilities and obligations, actual
costs incurred in connection with carrying out the Plan, including management
fees and administrative costs during the liquidation period, and the timing of
the liquidation and dissolution.
The Company is a Delaware corporation and Delaware law requires that the Company
stay in existence as a non-operating entity for three years from August 27,
1999, the date the Company filed a certificate of dissolution in Delaware.
During the dissolution period, the Company will attempt to convert its remaining
net assets to cash as expeditiously as possible.
On September 1, 1999, the Company returned to its stockholders the sum of $39.9
million (or $1.94 per share, based on 20,550,773 shares of Common Stock
currently outstanding) to stockholders of record as of August 25, 1999. Future
distributions to stockholders would be made by the Board of Directors of the
Company as the Company's net assets are converted to cash. The actual amount and
timing of future distributions cannot be predicted at this time. The Company
intends to distribute pro rata to its stockholders, in cash or in-kind, or sell
or otherwise dispose of, all of its property and net assets. The liquidation
should be concluded prior to August 27, 2002 by a final liquidating distribution
either directly to the stockholders or to one or more liquidating trusts.
Details regarding the plan to liquidate and dissolve the Company can be found in
the Company's 1999 Proxy Statement filed with the Securities and Exchange
Commission and mailed to stockholders on July 15, 1999.
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LIQUIDITY AND CAPITAL RESOURCES
The Company's primary objectives are to liquidate its net assets in an efficient
manner that optimizes the values for such assets and to reduce operating costs.
The period of time to liquidate the assets and distribute the proceeds of the
Company's assets is subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond the Company's control.
As of June 30, 2000, the Company had cash and cash equivalents of $10,452,000
invested primarily in high-grade commercial paper and money market funds.
The Company currently owns 956,845 Cantab ordinary shares. The Company is
obligated to sell such shares through a broker or brokers designated by Cantab
and approved by the Company, and in a manner to be agreed upon by the Company
and Cantab that is mutually advantageous to the Company and Cantab, considering
the desire for the Company to sell and the desire of Cantab to avoid undue
disruption of the market for such securities. The valuation of this investment
is based upon subjective judgments due to the inherent uncertainty of Cantab's
volatile stock price, low trading volume, the large quantity of shares the
Company holds in Cantab, and restrictions in place under the Company's agreement
with Cantab as outlined above. Accordingly, based upon its 90 day trading
history, applying a discount factor and taking into consideration the
contractual restrictions to which it is subject, the Company recorded an asset
of approximately $5.1 million at June 30, 2000 in respect of the remaining
Ordinary Shares of Cantab held by the Company, the estimated net realizable
value of these shares for the purpose of the liquidation basis accounting.
The Company could receive up to a maximum of $11 million in milestone payments
contingent upon Cantab's successful development to the end of Phase II clinical
trials of the Nicotine and Cocaine Programs sold to Cantab. These payments may
be made in cash or in additional ADSs or a combination thereof at Cantab's
discretion. The Company would receive the following for successful completion of
the Phases as defined in the agreement as follows:
Cocaine............................ Phase II $2 million
Nicotine........................... Phase I $3 million
Nicotine........................... Phase II $6 million
Upon receipt of the Phase II Cocaine or Phase I Nicotine milestones in the form
of Cantab stock or ADSs, the Company may sell up to 25% of such shares in each
of the four quarters following the expiration of an initial six-month period.
Any shares paid in respect of any additional milestones would not be subject to
these lock-up provisions.
The Company could potentially also receive a share of net royalties Cantab may
receive from vaccine sales proportionate to the level of worldwide product sales
achieved. While the Company will attempt to monetize these potential royalty
streams, the Company does not anticipate receiving significant value for them
and thus has not recorded any net realizable value for the royalty streams.
The Company estimates that the range of value to be received from these
milestones and royalties to be $0 to $11 million based on the contract terms.
The Company recorded $3.0 million at
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December 31, 1999 as the estimated net realizable value for the purpose of
liquidation basis accounting, which assumes the realization of one of these
milestones. The estimate recorded for the milestones has not changed since
December 31, 1999 because no factors have indicated a change in the net
realizable value.
In February 1998, the Company entered into a phased sublease agreement with
Scriptgen for the Company's 85,000 square foot headquarters and research and
development facility located in Waltham, Massachusetts. The entire facility was
subleased to Scriptgen effective August 1, 1999. Under the terms of the
sublease, Scriptgen has assumed the Company's obligation under the lease in
addition to reimbursing the Company for a portion of the Company's leasehold
improvements. The Company negotiated with the landlord and Scriptgen an
arrangement eliminating the Company's liability for the lease in the event that
Scriptgen were to default on its sublease obligations. In consideration for such
arrangement, the Company expects to receive $55,000 per month from Scriptgen
through August of 2002, or an aggregate of approximately $1.76 million. If
Scriptgen were to default on its lease agreement or if the Company sold its
interest in the lease, the Company would receive less than the $1.76 million. As
of June 30, 2000, the Company has recorded $1.1 million (estimated total
payments of $1.4 million as of December 31, 1999, less $0.3 million in payments
actually received during the first half of 2000) as the remaining estimated net
realizable value for the purpose of liquidation basis accounting.
At June 30, 2000, the Company estimates that there are $.8 million of costs to
be incurred during the remaining liquidation period through August 26, 2002 as
compared to $1.2 million of costs remaining as of December 31, 1999. The
decrease of $0.4 million resulted from payments made during the first half of
2000 consisting of management compensation ($127,000), insurance ($102,000)
professional fees ($70,000), and facility/miscellaneous costs ($50,000), and a
decrease in the estimate of costs to be incurred during the liquidation period
($190,000).
Accounts Payable and Accrued expenses consist primarily of costs incurred
through June 30, 1999, including severance costs and other operating costs
incurred prior to the liquidation of the Company. The severance costs will be
paid over the next nine months ending in the first quarter of 2001.
FORWARD LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements. For this
purpose, any statements contained herein that are not statements of historical
fact may be deemed to be forward-looking statements. Without limiting the
foregoing, the words "believes," "anticipates," "plans," expects," "intends",
"estimates", and similar expressions are intended to identify forward-looking
statements. There are a number of important factors that could affect the future
activities of the Company, including, without limitation, the factors set forth
below and those set forth under the heading "Future Results" and elsewhere in
the Company's Annual Report on Form 10-K for the year ended December 31, 1999,
as filed with the Securities and Exchange Commission, and the information
contained in this Quarterly Report on Form 10-Q should be read in light of such
factors.
The Company no longer satisfies the requirements for continued listing of its
common stock on the Nasdaq National Market ("NASDAQ"). The Company received a
notice from NASDAQ on
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October 19, 1999, indicating that the company would be delisted as of January
22, 2000. The delisting of the company's common stock in fact occurred on that
date. Because NASDAQ has delisted the Company's common stock, the ability of
stockholders to buy and sell shares may be materially impaired. The Company's
common stock is now traded on the NASDAQ over-the-counter bulletin board.
Any future payments the Company may receive under its agreement with Cantab,
and, therefore, any future value which may be returned to the Company's
stockholders with respect to that agreement, is dependent upon the successful
development and commercialization of the products licensed or sold to such
companies, as the case may be. The ability of Cantab to develop and
commercialize its products is subject to all of the risks and uncertainties
inherent in the biotechnology industry, including those associated with the
early stage of development of such products, government regulation, competition,
patents and proprietary rights, manufacturing and marketing, additional
financing requirements and access to capital, product liability and third-party
reimbursement. There can be no assurance that any of these products will be
successfully developed or commercialized or that the Company will receive any
value with respect to them during the liquidation period.
The Company sold certain assets related to its drugs of addiction vaccine
programs for the treatment of nicotine and cocaine addiction to Cantab. In
exchange for these assets and cash totaling $6,000,000, the Company received
2,566,845 new Cantab Ordinary Shares of 2p each, which were represented by
855,615 American Depository Shares ("ADSs"). On June 16, 2000, the Company
converted 785,615 of its total 855,615 ADSs of Cantab Pharmaceuticals Plc
("Cantab") into 2,356,845 Ordinary Shares of Cantab and sold 1,300,000 of these
shares on the London Stock Exchange for aggregate gross proceeds of
approximately $7,215,000. In addition, ImmuLogic sold the remaining 70,000 ADSs
to a private buyer in the United States for aggregate gross proceeds of
approximately $1,165,000. On July 7, 2000, the Company sold an additional
100,000 Ordinary Shares of Cantab on the London Stock Exchange for aggregate
gross proceeds of approximately $580,000. The Company's remaining holdings in
Cantab consist of 956,845 Ordinary Shares as of July 8, 2000. In addition,
ImmuLogic is entitled to receive additional payments if Cantab achieves certain
milestones in its cocaine and nicotine clinical development. These payments may,
at the option of Cantab, be paid in ADSs. The ADSs and Ordinary Shares of Cantab
held by the Company are subject to certain contractual limitations with respect
to their disposition. In addition, the Cantab shares currently held by the
Company, and which may be issued to the Company in the future, are subject to
extreme price and volume fluctuations. Accordingly, the net realizable value of
approximately $5.1 million, which the Company recorded to be received upon
disposition of such remaining Cantab shares and to be distributed to the
stockholders with respect thereto, cannot be assured.
The actual timing of future distributions cannot be predicted at this time. The
Company intends to distribute pro rata to its stockholders, in cash or in-kind,
or sell or otherwise dispose of, all of its property and net assets. The
liquidation should be concluded prior to the third anniversary thereof by a
final liquidating distribution either directly to the stockholders or to one or
more liquidating trusts. Details regarding the plan to liquidate and dissolve
the Company can be found in the Company's 1999 Proxy Statement filed with the
Securities and Exchange Commission and mailed to stockholders on July 15, 1999.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company's investment policy specifies credit quality standards for the
Company's investments and limits the amount of credit exposure to any single
issue, issuer or type of investment. The Company does not believe that it has
any material exposure to market risk with respect to derivative or other
financial instruments requiring disclosure under this item.
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit:
Exhibit
Number Exhibit
------- -------
27 Financial Data Schedule
(b) Reports on Form 8-K: None.
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<PAGE> 16
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: 7/28/00 /s/ J. Richard Crowley
----------- -------------------------------------
J. Richard Crowley
President, Secretary and Treasurer
(Principal Financial and
Accounting Officer)
16
