UNITED STATES
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
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1996 Commission File Number 0-19171
ICOS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 91-1463450
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
22021 20th Avenue Southeast, Bothell WA 98021
(Address of principal executive offices) (Zip Code)
(206)485-1900
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or 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.
/X/Yes / /No
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.
Class Outstanding at September 30, 1996
----- ---------------------------------
Common Stock, $0.01 par value 39,409,498
<PAGE>
ICOS CORPORATION
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Statements of Operations for the three months ended September 30,
1996 and 1995, the nine months ended September 30, 1996 and 1995
and the period from September 21, 1989 (incorporation) through
September 30,1996....................................................1
Balance Sheets as of September 30, 1996 and December 31,1995.........2
Statements of Stockholders' Equity for the period from September 21,
1989(incorporation) through September 30, 1996.......................3
Statements of Cash Flows for the nine months ended September 30, 1996
and 1995, and the period from September 21, 1989 (incorporation)
through September 30, 1996...........................................5
Notes to Financial Statements........................................6
ITEM 2.
Management's Discussion and Analysis of Financial Condition and
Results of Operations................................................7
PART II. OTHER INFORMATION
ITEM 1: Legal Proceedings............................................*
ITEM 2: Changes in Securities........................................*
ITEM 3: Defaults Upon Senior Securities..............................*
ITEM 4: Submission of Matters to a Vote of Security Holders..........*
ITEM 5: Other Information............................................*
ITEM 6: Exhibits and Reports on Form 8-K............................11
SIGNATURE...................................................................12
EXHIBITS....................................................................13
*No information provided due to inapplicability of item.
<PAGE>
<TABLE>
ICOS CORPORATION
(A Development Stage Company)
STATEMENT OF OPERATIONS
(unaudited)
<CAPTION>
Period from
September 21, 1989
Three months ended Nine months ended (incorporation)
September 30, September 30, through September 30,
------------------------- --------------------------- ---------------------
1996 1995 1996 1995 1996
------------ ------------ ------------- ------------- ---------------------
<S> <C> <C> <C> <C> <C>
Revenue:
Collaborative research & development $ 500,000 $ 500,000 $ 1,500,000 $ 1,000,000 $ 5,000,000
Research grants - - - - 1,451,409
------------ ------------ ------------- ------------- -------------
Total revenue 500,000 500,000 1,500,000 1,000,000 6,451,409
Operating expenses:
Research and development 7,739,905 5,685,098 21,539,823 17,366,793 107,231,427
General and administrative 564,290 546,841 1,925,428 1,827,356 17,323,417
------------ ------------ ------------- ------------- -------------
Total operating expenses 8,304,195 6,231,939 23,465,251 19,194,149 124,554,844
------------ ------------ ------------- ------------- -------------
Operating loss (7,804,195) (5,371,939) (21,965,251) (18,194,149) (118,103,435)
------------ ------------ ------------- ------------- -------------
Other income (expense):
Investment income 716,387 404,392 1,415,146 1,430,259 16,633,226
Interest expense - (11,463) - (48,010) (887,535)
Other, net (1,103) ( 2,089) 111 (63,981) (106,926)
------------ ------------ ------------- ------------- -------------
715,284 390,840 1,415,257 1,318,268 15,638,765
------------ ------------ ------------- ------------- -------------
Net loss $(7,088,911) $(5,341,099) $(20,549,994) $(16,875,881) $(102,464,670)
============ ============ ============= ============= =============
Net loss per common share $ (0.18) $ (0.17) $ (0.57) $ (0.52)
============ ============ ============= =============
Weighted average common shares
outstanding 39,280,122 32,230,880 35,929,570 32,179,677
============ ============ ============= =============
<FN>
See accompanying notes to financial statements.
Page 1
</TABLE>
<PAGE>
<TABLE>
ICOS CORPORATION
(A Development Stage Company)
BALANCE SHEETS
ASSETS
<CAPTION>
September 30, December 31,
1996 1995
------------- -------------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 9,879,320 $ 4,256,366
Investment securities available for sale, at market value 38,429,540 17,013,514
Interest receivable 488,016 106,548
Nontrade receivables 102,582 98,396
Prepaid expenses 352,130 634,134
------------ ------------
Total current assets 49,251,588 22,108,958
Property and equipment, at cost:
Land 2,309,979 2,309,979
Leasehold improvements 13,412,171 7,082,065
Furniture and equipment 13,395,112 9,534,792
Assets acquired under capital lease obligations - 570,530
------------ ------------
29,117,262 19,497,366
Less accumulated depreciation and amortization 12,917,422 10,478,040
------------ ------------
16,199,840 9,019,326
------------ ------------
Construction in progress - 6,366,402
------------ ------------
Net property and equipment 16,199,840 15,385,728
------------ ------------
Other assets 127,197 240,844
------------ ------------
$ 65,578,625 $ 37,735,530
============ ============
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Accounts payable $ 494,299 $ 1,598,973
Accrued payroll and benefits 734,379 664,094
Other accrued expenses 1,252,637 1,635,472
Deferred research and development revenue - 500,000
Current installments of obligations under capital lease - 44,633
------------ ------------
Total current liabilities 2,481,315 4,443,172
------------ ------------
Stockholders' equity:
Preferred Stock, $.01 par value. Authorized 2,000,000 shares; none issued - -
Common Stock, $.01 par value. Authorized 100,000,000 shares; issued and
outstanding, 39,409,498 at September 30, 1996 and 32,233,608 at
December 31, 1995 394,095 322,335
Additional paid-in capital 165,162,873 115,163,011
Restricted Stock - (208,125)
Net unrealized gain (loss) on investment securities available for sale 5,012 (70,187)
Deficit accumulated during the development stage (102,464,670) (81,914,676)
------------- -------------
Total stockholders' equity 63,097,310 33,292,358
------------- -------------
$ 65,578,625 $ 37,735,530
<FN> ============= =============
See accompanying notes to financial statements.
Page 2
</TABLE>
<PAGE>
<TABLE>
ICOS CORPORATION
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY
<CAPTION>
Common Additional Restricted Unrealized Deficit Total
Stock paid-in Common gain(loss) accumulated stockholders'
capital Stock on during the equity
securities development
available stage
for sale,
net
-------- ------------ ----------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Issuance of 5,515,000 shares of Common Stock at
$.02 per share $ 55,150 $ 55,150 $ - $ - $ - $ 110,300
Net loss for the period from inception through
December 31, 1989 - - - - (359,952) (359,952)
-------- ------------ ----------- --------- ------------- -----------
Balances at December 31, 1989 55,150 55,150 - - (359,952) (249,652)
Issuance of 455,000 shares of Common Stock at
$.02 per share 4,550 4,550 - - - 9,100
Issuance of 10,752,222 shares of Common Stock at
$3.00 per share, net of issuance costs of $2,513,166 107,522 29,635,979 - - - 29,743,501
Issuance of 300,000 shares of Common Stock at $3.00
per share in payment of note to stockholders 3,000 897,000 - - - 900,000
Repurchase 60,000 shares of Common Stock at $.02
per share (600) (600) - - - (1,200)
Net loss for the year ended December 31, 1990 - - - - (2,775,090) (2,775,090)
-------- ------------ ----------- --------- ------------- -----------
Balances at December 31, 1990 169,622 30,592,079 - - (3,135,042) 27,626,659
Issuance of 4,500,000 shares of Common Stock at $8.00
per share, net of issuance costs of $3,230,856 45,000 32,724,144 - - - 32,769,144
Repurchase 74,000 shares of Common Stock at $.02 per
share (740) (740) - - - (1,480)
Issuance of 135,000 shares of Common Stock, of which
75,000 shares are restricted, to Cold Spring Harbor
Laboratories pursuant to a collaboration agreement, at
fair market value of $18.50 per share 1,350 2,496,150 (1,387,500) - - 1,110,000
Vesting of 3,750 shares of restricted Common Stock - - 69,375 - - 69,375
Issuance of 18,885 shares of Common Stock from the
exercise of options at $3.00 per share 189 56,466 - - - 56,655
Issuance of 86,772 shares of Common Stock from the
exercise of warrants at $3.00 per share 868 259,448 - - - 260,316
Compensation related to options granted - 12,599 - - - 12,599
Net loss for the year ended December 31, 1991 - - - - (6,412,786) (6,412,786)
-------- ------------ ----------- --------- ------------- -----------
Balances at December 31, 1991 216,289 66,140,146 (1,318,125) - (9,547,828) 55,490,482
Issuance of 3,000,000 shares of Common Stock at $9.00
per share, net of issuance costs of $1,780,436 30,000 25,189,564 - - - 25,219,564
Retirement of 299,561 shares of Common Stock at $8.00
per share (2,996) (2,394,226) - - - (2,397,222)
Vesting of 15,000 shares of restricted Common Stock - - 277,500 - - 277,500
Issuance of 800,012 shares of Common Stock from the
exercise of options at $3.00 per share 8,000 2,392,035 - - - 2,400,035
Issuance of 106,800 shares of Common Stock from the
exercise of warrants at $3.00 per share 1,068 319,333 - - - 320,401
Compensation related to options granted - 30,235 - - - 30,235
Net loss for the year ended December 31, 1992 - - - - (8,312,128) (8,312,128)
-------- ------------ ----------- --------- ------------- -----------
Balances at December 31, 1992 252,361 91,677,087 (1,040,625) - (17,859,956) 73,028,867
Page 3
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Repurchase of 12,500 shares of Common Stock at $.02
per share (125) (215) - - - (340)
Vesting of 15,000 shares of restricted Common Stock - - 277,500 - - 277,500
Issuance of 4,998 shares of Common Stock from the
exercise of options at prices ranging from $3.00 to
$8.00 per share 50 17,765 - - - 17,815
Issuance of 59,650 shares of Common Stock from the
exercise of warrants at $3.00 per share 596 178,354 - - - 178,950
Issuance of 326,838 shares of Common Stock from the
exercise of warrants in exchange for Common Stock at
prices ranging from $5.25 to $6.10 per share 3,269 (3,269) - - - -
Compensation related to options granted - 30,235 - - - 30,235
Net loss for the year ended December 31, 1993 - - - - (17,937,930) (17,937,930)
-------- ------------ ----------- --------- ------------- ------------
Balances at December 31, 1993 256,151 91,899,957 (763,125) - (35,797,886) 55,595,097
Issuance of 6,425,000 shares of Common Stock at $3.625
per share, net of issuance costs of $500,072 64,250 22,726,303 - - - 22,790,553
Vesting of 15,000 shares of restricted Common Stock - - 277,500 - - 277,500
Issuance of 12,998 shares of Common Stock from the
exercise of options at prices ranging from $3.00 to
$8.00 per share 129 43,550 - - - 43,679
Compensation related to options granted - 30,235 - - - 30,235
Net unrealized loss on investment securities available
for sale - - - (968,920) - (968,920)
Net loss for the year ended December 31, 1994 - - - - (22,748,200) (22,748,200)
-------- ------------ ----------- --------- ------------- ------------
Balances at December 31, 1994 320,530 114,700,045 (485,925) (968,920) (58,546,086) 55,019,944
Issuance costs related to sale of Common Stock in 1994 - (56,567) - - - (56,567)
Vesting of 15,000 shares of restricted Common Stock - - 277,500 - - 277,500
Issuance of 166,019 shares of Common Stock from the
exercise of options at prices ranging from $4.00 to
$7.625 per share 1,660 504,145 - - - 508,805
Issuance of 5,250 shares of Common Stock from exercise
of warrants at $3.00 per share 53 15,480 - - - 15,533
Issuance of 9,225 shares of Common Stock from the
exercise of warrants in exchange for Common Stock at
prices ranging from $4.95 to $5.13 per share 92 (92) - - - -
Net unrealized gain on investment securities available
for sale - - - 898,733 - 898,733
Net loss for the year ended December 31, 1995 - - - - (23,368,590) (23,368,590)
-------- ------------ ----------- --------- ------------- ------------
Balances at December 31, 1995 322,335 115,163,011 (208,125) (70,187) (81,914,676) 33,292,358
Issuance of 6,900,000 shares of Common Stock at
$7.625 per share, net of issuance costs of
$3,539,667 69,000 49,003,833 - - - 49,072,833
Vesting of 11,500 shares of restricted Common Stock - - 208,125 - - 208,125
Issuance of 275,890 shares of Common Stock from the
exercise of options at prices ranging from $3.00 to
$8.00 per share 2,760 996,029 - - - 998,789
Net unrealized gain on investment securities available
for sale - - - 75,199 - 75,199
Net loss for the nine months ended September 30, 1996 - - - - (20,549,994) (20,549,994)
-------- ------------ ----------- --------- ------------- ------------
Balances at September 30, 1996 $394,095 $165,162,873 $ - $ 5,012 $(102,464,670) $63,097,310
======== ============ =========== ========= ============= ============
<FN>
See accompanying notes to financial statements.
Page 4
</TABLE>
<PAGE>
<TABLE>
ICOS CORPORATION
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(unaudited)
<CAPTION>
Period from
September 21,
1989
(incorporation)
Nine Months Ended through
September 30, September 30,
--------------------------
1996 1995 1996
------------ ------------- -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(20,549,994) $ (16,875,881) $(102,464,670)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization 2,439,382 2,287,801 12,917,422
Amortization of deferred rent - - (475,000)
Amortization of investment premiums/discounts 75,260 96,244 1,139,127
Loss (gain) on sale of investment securities 19,359 13,669 (1,372,964)
Amortization of restricted stock 208,125 208,125 1,387,500
Compensation related to stock options granted - - 103,304
Common Stock issued in payment of research and development costs - - 1,110,000
Change in certain assets and liabilities:
Increase in interest receivable (381,468) (352,553) (488,016)
Increase in nontrade receivables (4,186) (78,801) (102,582)
Decrease (increase) in prepaid expenses 282,004 278,868 (352,130)
(Decrease) increase in accounts payable (1,104,674) 48,944 (275,701)
(Decrease) increase in accrued payroll, benefits and other
accrued expenses (312,550) 912,162 1,987,016
Decrease in deferred research and development revenue (500,000) - -
------------ ------------- -------------
Net cash used in operating activities (19,828,742) (13,461,422) (86,886,694)
------------ -------------- -------------
Cash flows from investing activities:
Purchases of investment securities (31,402,797) (11,592,490) (391,188,546)
Maturities of investment securities 5,000,000 - 83,907,775
Sales of investment securities 4,967,351 5,851,611 269,090,081
Acquisitions of property and equipment (3,253,494) (4,368,591) (24,758,061)
Decrease (increase) in other assets 113,647 (10,510) (127,197)
------------ -------------- -------------
Net cash used in investing activities (24,575,293) (10,119,980) (63,075,948)
------------ -------------- -------------
Cash flows from financing activities:
Deferred rent payment received - - 475,000
Proceeds from note payable to stockholders - - 900,000
Principal payments on obligations under capital lease (44,633) (572,866) (3,589,201)
Proceeds from issuance of Common Stock 49,072,833 (56,567) 159,714,994
Proceeds from exercise of options and warrants 998,789 521,339 2,344,279
Common Stock retired - - (3,110)
------------ -------------- -------------
Net cash provided by (used in) financing activities 50,026,989 (108,094) 159,841,962
------------ -------------- -------------
Net increase (decrease) in cash and cash equivalents 5,622,954 (23,689,496) 9,879,320
Cash and cash equivalents at beginning of period 4,256,366 24,743,465 -
------------ -------------- --------------
Cash and cash equivalents at end of period $ 9,879,320 $ 1,053,969 $ 9,879,320
============ ============== ==============
Supplemental disclosure of cash flow information:
Cash paid for interest $ 364 $ 48,010 $ 959,466
Supplemental disclosure of noncash financing and investing
activities:
Assets acquired under capital lease obligations - - 3,589,201
Exercise of stock options funded by retirement of previously
issued Common Stock - - 2,397,132
Common Stock issued in payment of note payable to stockholders - - 900,000
============ ============== ==============
<FN>
See accompanying notes to financial statements.
Page 5
</TABLE>
<PAGE>
ICOS CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 1996 (unaudited) and December 31, 1995
1. Summary of Significant Accounting Policies
------------------------------------------
Basis of Presentation
The information contained herein has been prepared in accordance with
instructions for Form 10-Q. In the opinion of management, the information
reflects all adjustments necessary to make the results of operations for the
interim period a fair statement of such operations. All such adjustments are
of a normal recurring nature. Interim results are not necessarily indicative
of results for a full year. For a presentation including all disclosures
required by generally accepted accounting principles, these financial
statements should be read in conjunction with the audited financial statements
for the year ended December 31, 1995, included in the Company's Annual Report
on Form 10-K.
Page 6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
- ---------------------
Overview
The Company's mission is to improve the quality of life and health for
people worldwide by leading in the discovery, development, and
commercialization of novel therapeutics by focusing on molecular targets in
inflammatory and other serious diseases. The Company has discovered important
mechanisms underlying directed cell movement, inhibition of pro-inflammatory
mediators, and intracellular signal transduction that may provide broad
opportunities in the treatment of chronic diseases that have inflammatory
components and in the treatment of acute inflammatory conditions.
Financial results for the first nine months of 1996 reflect a planned
increase in operating expenses for activities related to advancing potential
products through the therapeutic development process. Such activities include
product development, process development and clinical trials. The Company
expects to invest in additional clinical, regulatory, process development and
product development efforts over the remainder of the year and in future
periods.
The Company has a deficit accumulated during the development stage from
September 21, 1989 (incorporation) through September 30, 1996 of $102,464,670.
The Company's results of operations may vary significantly from quarter to
quarter and will depend, among other factors, on the timing of certain
expenses, payments received from certain collaborations, and the progress of
the Company's research and development efforts. The Company expects increased
expenditures over the next several quarters as the Company continues and
expands clinical trials of its product candidates and continues to expand pre-
clinical research and development activities for additional potential products
and begins clinical trials of those deemed most promising.
When used in this discussion, the words "expects," "believes,"
"anticipates" and similar expressions are intended to identify forward-looking
statements. Such statements are subject to certain risks and uncertainties
that could cause actual results to differ materially from those projected.
Factors which could affect the Company's financial results are described in
the Company's latest Annual Report on Form 10-K for the year ended December
31, 1995, which is filed with the Securities and Exchange Commission. Readers
are cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date hereof. The Company undertakes no obligation
to publicly release the result of any revisions to these forward-looking
statements that may be made to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
Revenue
Revenue of $500,000 earned in each of the quarters ended September 30,
1996 and 1995 represented payments received under the Company's agreement with
Abbott Laboratories which commenced in April 1995. Revenue earned under this
agreement totaled $1,500,000 for the nine months ended September 30, 1996 and
$1,000,000 for the nine months ended September 30, 1995.
Operating Expenses
Total operating expenses for the third quarter ended September 30, 1996
increased 33% to $8,304,195 from $6,231,939 for the third quarter ended
September 30, 1995. Total operating expenses for the first nine months of
1996 increased 22% to $23,465,251 from $19,194,149 for the first nine months
of 1995. Research and development expenses for the third quarter of 1996
increased 36% to $7,739,905 from $5,685,098 for the third quarter of 1995.
For the nine months ended September 30, 1996, research and development
expenses increased 24% to $21,539,823 from $17,366,793 for the nine months
ended September 30, 1995. The increase in research and development expenses
is due primarily to increased costs associated with product development,
process development, regulatory submissions and clinical trials. General and
administrative expenses for the third quarter increased 3% to $564,290 in 1996
from $546,841 for the same period in 1995. For the first nine months of 1996,
general and administrative expenses increased 5% to $1,925,428 from $1,827,356
for the nine month period ended September 30, 1995. These increases were
primarily the result of increased personnel costs and other administrative
activities.
Other Income and Expense
Other income primarily represents investment income earned on the
Company's investment securities. Investment income increased 77% to $716,387
for the third quarter of 1996 from $404,392 for the third quarter of 1995 due
to higher average cash and investment balances in the third quarter of 1996
compared to the third quarter of 1995 as a result of the Company's public
stock offering in May 1996. Investment income for the nine months ended
September 30, 1996 decreased 1% to $1,415,146 from $1,430,259 for the nine
months ended September 30, 1995 due to slightly lower average cash and
investment balances in the first nine months of 1996 compared to the first
nine months of 1995.
Net Loss
The net loss for the quarter ended September 30, 1996 increased 33% to
$7,088,911 from $5,341,099 for the quarter ended September 30, 1995. The net
loss for the nine months ended September 30, 1996 increased 22% to $20,549,994
from $16,875,881 for the nine months ended September 30, 1995. The increases
in net loss are primarily attributable to the planned increases in research
and development expenses as noted above.
Liquidity & Capital Resources
The Company has financed its operations since inception through private
and public sales of Common Stock, investment income, revenue from research
collaborations and grants, and a capital lease. Through September 30, 1996,
the Company had raised $107,061,541 in net proceeds from three public
offerings of Common Stock, $30,762,901 in net proceeds from private sales of
Common Stock, $22,733,986 in net proceeds from a Rights Offering of Common
Stock to existing shareholders, and $4,797,978 from the exercise of stock
options and warrants. Through September 30, 1996, the Company had earned
$16,633,226 in investment income and $6,451,409 in research-related revenue.
At September 30, 1996, the Company had $48,796,876 in cash and cash
equivalents, investment securities, and interest receivable. Through
September 30, 1996, the Company had invested a total of $26,807,283 in
production, laboratory and administrative facilities, laboratory and computer
equipment, furniture, and leasehold improvements. In addition, the Company
has invested $2,309,979 in land for future facilities expansion. The Company
anticipates that its operating expenses will continue to increase in 1996 and
subsequent years as the Company adds personnel and facilities associated with
advancing several potential products through development and clinical trials.
Foreseeable incremental costs may include, but are not limited to, those
associated with the Company's own product development, preclinical studies and
clinical trials, patent filings and administrative activities. In addition,
the Company may incur obligations and costs under the Glaxo Wellcome
collaboration agreement related to its portion of development costs for
potential products developed under the agreement. Under certain provisions of
the collaboration agreement, the Company is only liable for certain of these
costs if the product candidate has successfully passed certain milestones in
the development process. The Company will recognize these potentially
significant costs once its liability for them has been established.
The Company expects to continue to enter into collaborations with other
parties where the work complements that at ICOS. These relationships may
involve commitments by ICOS to fund some or all of certain research programs
over a defined period. Although corporate collaborations have provided
revenue to the Company in the past, there can be no assurance that similar
sources of funds will be available to the Company in the future. The Company
plans to hire the additional personnel necessary to continue its discovery
research, as well as continue development of its current and projected portfolio
of product candidates. Further expenditures will be required for additional
laboratory, development and office facilities to accommodate the activities and
personnel associated with discovery research, development of current and
potential products and expansion of the number of clinical trials in the future.
All these activities will require substantial financial resources. There can
be no assurance that the Company will have sufficient resources to fund the
cost of such activities or that the Company will be able to obtain additional
resources on acceptable terms or in time to fund any necessary or desirable
expenditures. Additional capital resources will be required to fund the
Company's operations through commercialization of its first product. The
Company will need to raise substantial additional funds for its programs.
The Company anticipates that its existing capital resources should be
sufficient to fund its cash requirements through 1997. The preceding forward-
looking statement is subject to certain risks and uncertainties that could
cause actual results to differ materially from those projected. The amounts
and timing of expenditures will depend on the progress of ongoing research and
development, the results of preclinical testing and clinical trials, the rate
at which operating losses are incurred, the execution of any development and
licensing agreements with corporate partners, the Company's development of
products, the U.S. Food and Drug Administration ("FDA") regulatory process and
other factors, many of which are beyond the Company's control.
Regulation by governmental authorities in the United States and foreign
countries is a significant factor in the manufacture and marketing of the
Company's proposed products and in its ongoing research and product
development activities. The Company's product candidates will require
regulatory approval by governmental agencies prior to commercialization. In
particular, human therapeutic products are subject to rigorous pre-clinical
and clinical testing and other approval procedures by the FDA and similar
regulatory authorities in foreign countries.
Given that regulatory review is an interactive and continuous process,
the Company has adopted a policy of limiting announcements concerning, or
comments upon, specific details of the ongoing regulatory review of its
product candidates, subject to its obligations under the securities laws,
until definitive action is taken.
Page 10
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
(a) See exhibits index
(b) No reports on Form 8-K were filed during the third quarter
ended September 30, 1996.
INDEX TO EXHIBITS
Page
27.1 Financial Data Schedule #
________________
# Filed with this document
Page 11
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ICOS CORPORATION
Date: November 5,1996 By:/S/ GEORGE B. RATHMANN
---------------- ----------------------
George B. Rathmann
Chairman of the Board of
Directors, Chief Executive
Officer and President
Date: November 5 ,1996 By:/S/ HOWARD S. MENDELSOHN
---------------- ------------------------
Howard S. Mendelsohn
Chief Accounting Officer
Page 12
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