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
For the Quarter Ended March 31, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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 April 30, 1997
----- -----------------------------
Common Stock, $0.01 par value 39,529,568
<PAGE>
ICOS CORPORATION
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Statements of Operations for the three months ended March 31, 1997
and 1996 and the period from September 21, 1989 (incorporation)
through March 31, 1997...............................................1
Balance Sheets as of March 31, 1997 and December 31,1996.............2
Statements of Stockholders' Equity for the period from September 21,
1989(incorporation) through March 31, 1997...........................3
Statements of Cash Flows for the three months ended March 31, 1997
and 1996, and the period from September 21, 1989 (incorporation)
through March 31, 1997...............................................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............................10
SIGNATURE...................................................................11
EXHIBITS....................................................................12
*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 (incorporation)
March 31, through March 31,
--------------------------- ------------------
1997 1996 1997
------------- ------------- ------------------
<S> <C> <C> <C>
Revenue:
Collaborative research and
development [Note 2] $ 2,216,987 $ 500,000 $ 7,716,987
Research grants - - 1,451,409
------------- ------------- -------------
Total revenue 2,216,987 500,000 9,168,396
Operating expenses:
Research and development [Note 2] 9,129,280 6,708,257 124,832,301
General and administrative 749,824 685,887 18,702,685
------------- ------------- -------------
Total operating expenses 9,879,104 7,394,144 143,534,986
------------- ------------- -------------
Operating loss (7,662,117) (6,894,144) (134,366,590)
------------- ------------- -------------
Other income (expense):
Investment income 526,462 223,617 17,814,939
Interest expense - - (887,899)
Other, net (5,757) 969 (112,102)
------------- ------------- -------------
520,705 224,586 16,814,938
------------- ------------- -------------
Net loss $ (7,141,412) $ (6,669,558) $(117,551,652)
============= ============= =============
Net loss per common share $ (0.18) $ (0.21)
============= =============
Weighted average common shares
outstanding 39,444,079 32,264,787
============= =============
<FN>
See accompanying notes to financial statements.
Page 1
</TABLE>
<PAGE>
<TABLE>
ICOS CORPORATION
(A Development Stage Company)
BALANCE SHEETS
ASSETS
<CAPTION>
March 31, December 31,
1997 1996
------------- -------------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 7,894,008 $ 2,159,008
Investment securities available for sale, at market value 25,895,457 39,511,820
Interest receivable 87,469 149,404
Nontrade receivables 1,788,328 92,969
Prepaid expenses 654,344 599,752
------------ ------------
Total current assets 36,319,606 42,512,953
Property and equipment, at cost:
Land 2,309,979 2,309,979
Leasehold improvements 13,657,909 13,659,272
Furniture and equipment 13,990,751 13,631,566
------------ ------------
29,958,639 29,600,817
Less accumulated depreciation and amortization 15,078,366 13,997,511
------------ ------------
14,880,273 15,603,306
------------ ------------
Construction in progress 11,524 23,600
------------ ------------
Net property and equipment 14,891,797 15,626,906
------------ ------------
Other assets 65,318 65,318
------------ ------------
$ 51,276,721 $ 58,205,177
============ ============
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Accounts payable $ 1,040,266 $ 1,183,623
Accrued payroll and benefits 802,139 649,562
Other accrued expenses 986,283 1,104,711
------------ ------------
Total current liabilities 2,828,688 2,937,896
------------ ------------
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, 39,485,249 at March 31, 1997 and 39,417,753 at
December 31, 1996 394,852 394,177
Additional paid-in capital 165,617,436 165,273,054
Net unrealized gain (loss) on investment securities available for sale (12,603) 10,290
Deficit accumulated during the development stage (117,551,652) (110,410,240)
------------- -------------
Total stockholders' equity 48,448,033 55,267,281
------------- -------------
$ 51,276,721 $ 58,205,177
<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
-------- ------------ ----------- ---------- ------------ -------------
<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 of 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 of 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
exercise of options at $3.00 per share 189 56,466 - - - 56,655
Issuance of 86,772 shares of Common Stock from
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
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
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
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
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
exercise of options at prices ranging from $3.00 to
$8.00 per share 130 43,549 - - - 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 320,531 114,700,044 (485,625) (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
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 322,336 115,163,010 (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
$3,506,485 69,000 49,037,015 - - - 49,106,015
Vesting of 11,500 shares of restricted Common Stock - - 208,125 - - 208,125
Issuance of 284,145 shares of Common Stock from
exercise of options at prices ranging from $3.00 to
$8.00 per share 2,841 1,073,029 - - - 1,075,870
Net unrealized gain on investment securities available
for sale - - - 80,477 - 80,477
Net loss for the year ended December 31, 1996 - - - - (28,495,564) (28,495,564)
-------- ------------ ----------- --------- ------------- ------------
Balances at December 31, 1996 394,177 165,273,054 - 10,290 (110,410,240) 55,267,281
Issuance of 67,496 shares of Common Stock from
exercise of options at prices ranging from $3.00 to
$8.609 per share 675 344,382 - - - 345,057
Net unrealized loss on investment securities available
for sale - - - (22,893) - (22,893)
Net loss for the three months ended March 31, 1997 - - - - (7,141,412) (7,141,412)
-------- ------------ ---------- ---------- ------------- ------------
Balances at March 31, 1997 $394,852 $165,617,436 $ - $ (12,603)$(117,551,652) $48,448,033
======== ============ ========== ========== ============= ===========
<FN>
See accompanying notes to financial statements.
Page 4
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<PAGE>
<TABLE>
ICOS CORPORATION
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(unaudited)
<CAPTION>
Period from
September 21,
1989
(incorporation)
Three Months Ended through
March 31, March 31,
--------------------------
1997 1996 1997
------------ ------------- -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (7,141,412) $ (6,669,558) $(117,551,652)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization 1,080,855 780,604 15,078,366
Amortization of deferred rent - - (475,000)
Amortization of investment premiums/discounts 268,349 29,759 951,045
Gain on sale of investment securities (2,190) - (1,375,096)
Amortization of restricted stock - 69,375 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 operating assets and liabilities:
Deferred research and development revenue - (500,000) -
Interest receivable 61,935 (149,554) (87,469)
Nontrade receivables (1,695,359) (25,610) (1,788,328)
Prepaid expenses (54,592) 91,652 (654,344)
Other assets - (125) -
Accounts payable (143,357) (994,466) 1,040,266
Accrued payroll, benefits and other expenses 34,149 (112,313) 1,788,422
------------ -------------- -------------
Net cash used in operating activities (7,591,622) (7,480,236) (100,472,986)
------------ -------------- -------------
Cash flows from investing activities:
Purchases of investment securities (9,930,546) (1,986,875) (420,600,136)
Maturities of investment securities 11,700,000 5,000,000 104,607,775
Sales of investment securities 11,557,857 1,977,041 290,508,353
Acquisitions of property and equipment (345,746) (1,343,175) (26,380,962)
Increase in other assets - - (65,318)
------------ -------------- -------------
Net cash provided by (used in) investing activities 12,981,565 3,646,991 (51,930,288)
------------ -------------- -------------
Cash flows from financing activities:
Proceeds from issuance of Common Stock - - 159,691,609
Proceeds from exercise of options and warrants 345,057 303,464 2,822,984
Principal payments on obligations under capital lease - (44,633) (3,589,201)
Proceeds from note payable to stockholders - - 900,000
Deferred rent payment received - - 475,000
Common Stock retired - - (3,110)
------------ -------------- -------------
Net cash provided by financing activities 345,057 258,831 160,297,282
------------ -------------- -------------
Net (decrease) increase in cash and cash equivalents 5,735,000 (3,574,414) 7,894,008
Cash and cash equivalents at beginning of period 2,159,008 4,256,366 -
------------ -------------- -------------
Cash and cash equivalents at end of period $ 7,894,008 $ 681,952 $ 7,894,008
============ ============== =============
Supplemental disclosure of cash flow information:
Cash paid for interest $ - $ 364 $ 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
March 31, 1997 (unaudited) and December 31, 1996
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 of ICOS Corporation
(the "Company"), 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, 1996, included in
the Company's Annual Report on Form 10-K.
2. Research and Development Arrangements
-------------------------------------
The Company owns a 50% interest in Suncos, Inc., a corporation formed for
the development and commercialization of rPAF-AH. Pursuant to the terms of
agreements entered into with Suncos, the Company conducts certain research and
development activities on behalf of Suncos and is paid for such services at a
negotiated rate. For the quarter ended March 31, 1997, the Company recognized
revenue of $1,716,987 related to these agreements.
Page 6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
- ---------------------
Overview
The Company has discovered important mechanisms underlying directed cell
movement, inhibition of proinflammatory mediators, and intracellular signal
transduction that may provide broad opportunities in the treatment of
inflammatory diseases and other serious conditions.
Financial results for the first quarter of 1997 reflect planned increases
in operating expenses necessary for advancing multiple product candidates
through the therapeutic development process. Development activities include
product development, process development and the establishment and management of
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 March 31, 1997 of $117,551,652. 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, joint ventures and other business
relationships, as well as the progress of the Company's own research and
development efforts. The Company expects increased expenditures over the next
several quarters as it continues to expand the size and number of clinical
trials of its product candidates, continues to expand preclinical research and
development activities in support of additional potential products, and
initiates clinical trials of those product candidates deemed most promising.
When used in this discussion, the words "believes," "intends,"
"anticipates," "plans to" and "expects" and similar expressions are intended to
identify forward-looking statements. Such statements are subject to certain
risks and uncertainties such as those associated with preclinical and clinical
testing, governmental regulation, third party reimbursement and manufacturing,
all of which could cause actual results to differ materially from those
projected. These and other factors which could affect the Company's financial
results are described in the Company's Annual Report on Form 10-K for the year
ended December 31, 1996, 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 results 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 for the quarter ended March 31, 1997 totaled $2.2 million and
consisted of $500,000 of cost reimbursed under the Company's research and
development agreement with Abbott Laboratories and $1.7 million of cost
reimbursed from Suncos Corporation, the Company's 50% owned joint venture with
Suntory Limited of Japan. Revenue for the first quarter ended March 31, 1996
was $500,000 and consisted entirely of payments received under the Company's
agreement with Abbott Laboratories.
Operating Expenses
Total operating expenses for the quarter ended March 31, 1997 increased 34%
to $9,879,104 from $7,394,144 for the quarter ended March 31, 1996. Research
and development expenses for the first quarter of 1997 increased 36% to
$9,129,280 from $6,708,257 for the first quarter of 1996. This increase was due
to the activities relating to the increased number of clinical trials of Hu23F2G
and rPAF-AH, the commencement of clinical trials of ICM3, and the expansion of
other product development efforts. General and administrative expenses for the
first quarter of 1997 increased 9% to $749,824 from $685,887 for the same period
in 1996 due primarily to increased personnel costs and other business expenses.
Other Income and Expense
Other income primarily represents investment income earned on the Company's
investment securities. Investment income increased 135% to $526,462 for the
first quarter of 1997 from $223,617 for the first quarter of 1996 due primarily
to higher average cash and investment balances in the first quarter of 1997
compared to the first quarter of 1996.
Net Loss
The net loss for the quarter ended March 31, 1997 increased 7% to
$7,141,412 from $6,669,558 for the quarter ended March 31, 1996 due primarily to
the planned increases in research and development expenses, as previously noted.
Liquidity and 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 March 31, 1997, the
Company has raised $107,094,723 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
stockholders, and $5,220,116 from the exercise of stock options and warrants.
Through March 31, 1997, the Company has earned $17,814,939 in investment income
and $9,168,396 in research-related revenue.
At March 31, 1997, the Company had $33,876,934 in cash and cash
equivalents, investment securities, and interest receivable. Through
March 31, 1997, the Company has invested a total of $27,660,184 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 1997 and subsequent
years as it adds the personnel and facilities associated with advancing several
potential product candidates 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 costs under its joint venture agreement with Suntory Limited
of Japan ("Suntory") related to its obligations to develop rPAF-AH. Under
provisions of the development agreement with Suncos Corporation, the entity
formed in connection with the joint venture with Suntory, the Company will be
reimbursed for certain of these costs, however, there can be no assurance that
all such costs will be reimbursed.
The Company has been successful in negotiating collaborations and joint
development agreements with other parties where the work and strategies of the
other parties complements those of the Company. In some instances, these
relationships may involve commitments by the Company to fund some or all of
certain development programs. Although corporate collaborations and joint
ventures have provided cost reimbursement 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 intends to expand and hire the additional
personnel as necessary to continue development of its current portfolio of
product candidates in clinical trials, as well as continuing discovery and
preclinical research to identify additional potential drug candidates. The
Company anticipates that expansion of these activities will increase operating
expenses in future quarters. Further, incremental expenditures will be required
for additional laboratory, production and office facilities to accommodate
activities and the personnel associated with this increased development
activity. All of these activities will require substantial financial resources.
Additional capital resources will be required to fund the Company's operations
through commercialization of its first product. As such, the Company will need
to raise substantial additional funds for its programs. There can be no
assurance that the Company will be able to obtain additional resources on
acceptable terms or in time to fund any necessary or desirable expenditures.
The Company is currently evaluating several financing alternatives, some of
which may involve the sale of additional stock, commencement of additional
corporate partnerships and other methods of raising operating capital from
public, private and corporate sources. The Company anticipates completion of
one or more of these financing events in 1997. Among the financing alternatives
being pursued by the Company is the proposed offering to private investors by
the Company's affiliate, ICOS Clinical Partners, L.P. (the "Partnership"), of
up to $100 million of interests in the Partnership and the issuance by the
Company in connection therewith of warrants to purchase up to 17.5 million
shares of Common Stock. The purpose of the offering is to provide funding for
the continued development, clinical testing and commercialization of certain
therapeutic products currently under development by the Company.
The amounts and timing of operating expenditures will depend on the
progress of ongoing research and development of the Company's potential products
as well as the activities of corporate collaborators and joint venture partners
related to the collaborative research and development activities, the Food and
Drug Administration ("FDA") regulatory process and other factors, many of which
are beyond the Company's control.
New Accounting Standard
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, Earnings Per Share (Statement 128).
This statement establishes standards for the computation, presentation, and
disclosure of earnings per share (EPS), replacing the presentation of currently
required Primary EPS with a presentation of Basic EPS. It also requires dual
presentation of Basic EPS and Diluted EPS on the face of the income statement
for entities with complex capital structures. Basic EPS, unlike Primary EPS,
excludes all dilution while Diluted EPS, like the current Fully Diluted EPS,
reflects the potential dilution that could occur from the exercise or conversion
of securities into Common Stock or from other contracts to issue Common Stock.
Statement 128 is effective for financial statements for periods ending after
December 15, 1997, including interim periods, and earlier application is not
permitted. When adopted, the Company will be required to restate its EPS data
for all prior periods presented. The Company does not expect the impact of the
adoption of this statement to be material to previously reported EPS amounts.
Page 9
<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 first quarter
ended March 31, 1997.
INDEX TO EXHIBITS
Page
27.1 Financial Data Schedule #
________________
# Filed with this document
Page 10
<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: May 14, 1997 By:/S/ GEORGE B. RATHMANN
---------------- ----------------------
George B. Rathmann
Chairman of the Board of
Directors, Chief Executive
Officer and President
Date: May 14, 1997 By:/S/ HOWARD S. MENDELSOHN
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Howard S. Mendelsohn
Chief Accounting Officer
Page 11
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