<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1997
/ / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 0-19267
ALKERMES, INC.
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 23-2472830
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
64 Sidney Street, Cambridge, MA 02139-4136
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (617) 494-0171
Not Applicable
Former name, former address, and former fiscal year,if changed since last report
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. Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Class Shares Outstanding as of February 2, 1998
----- -----------------------------------------
<S> <C>
Common Stock, par value $.01 20,911,103
</TABLE>
<PAGE> 2
ALKERMES, INC. AND SUBSIDIARIES
INDEX
Page No.
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets 3
- December 31, 1997 and March 31, 1997
Consolidated Statements of Operations 4
- Three months ended December 31, 1997 and 1996
Nine months ended December 31, 1997 and 1996
Consolidated Statement of Shareholders' Equity 5
- Nine months ended December 31, 1997
Consolidated Statements of Cash Flows 6
- Nine months December 31, 1997 and 1996
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of 8
Financial Condition and Results of Operations
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 13
EXHIBIT INDEX 14
(2)
<PAGE> 3
Item 1. Consolidated Financial Statements:
ALKERMES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
December 31, March 31,
1997 1997
------------- -------------
<S> <C> <C>
A S S E T S
Current Assets:
Cash and cash equivalents $ 4,325,882 $ 2,799,012
Short-term investments 75,480,696 82,497,939
Prepaid expenses and other current assets 5,839,410 4,571,089
------------- -------------
Total current assets 85,645,988 89,868,040
------------- -------------
Property, Plant and Equipment:
Land 235,000 225,000
Building 1,275,000 1,275,000
Furniture, fixtures and equipment 15,271,851 11,963,945
Leasehold improvements 2,342,122 2,183,280
Construction in progress 1,812,949 90,000
------------- -------------
20,936,922 15,737,225
Less accumulated depreciation and amortization (9,301,863) (7,289,446)
------------- -------------
11,635,059 8,447,779
------------- -------------
Investments 6,398,697 5,366,291
------------- -------------
Other Assets 487,549 582,732
------------- -------------
Other Investments 225,900 432,176
------------- -------------
$ 104,393,193 $ 104,697,018
============= =============
L I A B I L I T I E S A N D S H A R E H O L D E R S' E Q U I T Y
Current Liabilities:
Accounts payable and accrued expenses $ 4,003,459 $ 4,653,081
Deferred revenue 7,699,416 --
Long-term obligations--current portion 3,308,857 3,547,542
------------- -------------
Total current liabilities 15,011,732 8,200,623
------------- -------------
Long-Term Obligations 10,558,333 10,914,127
------------- -------------
Other Long-Term Liabilities 1,921,500 1,430,832
------------- -------------
Deferred Revenue 5,000,000 5,000,000
------------- -------------
Shareholders' Equity:
Capital stock, par value $.01 per share:
Authorized, 5,000,000 shares; none issued
Common stock, par value $.01 per share:
Authorized 40,000,000 shares; issued 20,869,998 shares at
December 31, 1997 and 20,718,790 shares at March 31, 1997 208,700 207,188
Additional paid-in capital 199,726,938 198,844,191
Deferred compensation (104,084) (109,901)
Cumulative foreign currency translation adjustments (14,477) (16,869)
Unrealized gain (loss) on marketable securities (75,000) 71,250
Accumulated deficit (127,840,449) (119,844,423)
------------- -------------
Total shareholders' equity 71,901,628 79,151,436
------------- -------------
$ 104,393,193 $ 104,697,018
============= =============
</TABLE>
See notes to consolidated financial statements.
(3)
<PAGE> 4
ALKERMES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
December 31, December 31, December 31, December 31,
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Research and development revenue under
collaborative arrangements $ 6,437,761 $ 4,913,099 $ 18,550,227 $ 10,827,964
Research and development revenue under
collaborative arrangement with related party -- -- -- 1,415,313
Interest income 1,367,319 591,945 3,619,436 1,763,905
------------ ------------ ------------ ------------
7,805,080 5,505,044 22,169,663 14,007,182
------------ ------------ ------------ ------------
Expenses:
Research and development 8,154,705 7,657,829 22,857,229 21,213,773
General and administrative 2,266,691 1,683,749 6,066,354 5,753,367
Interest expense 392,424 400,157 1,242,106 1,010,108
------------ ------------ ------------ ------------
10,813,820 9,741,735 30,165,689 27,977,248
------------ ------------ ------------ ------------
Net loss ($ 3,008,740) ($ 4,236,691) ($ 7,996,026) ($13,970,066)
============ ============ ============ ============
Basic and diluted loss per common share ($ 0.14) ($ 0.23) ($ 0.38) ($ 0.77)
============ ============ ============ ============
Weighted average number of common shares
outstanding 20,831,339 18,479,498 20,792,230 18,076,420
============ ============ ============ ============
</TABLE>
See notes to consolidated financial statements.
(4)
<PAGE> 5
ALKERMES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Deferred
Shares Amount Capital Compensation
---------- -------- ------------ ---------
<S> <C> <C> <C> <C>
Balance, April 1, 1997 20,718,790 $207,188 $198,844,191 ($109,901)
Issuance of common stock 4/97 through 6/97 57,050 571 261,661 --
Amortization of compensation relating to grant
of stock options and awards made -- -- -- 15,614
Unrealized gain on marketable securities -- -- -- --
Cumulative foreign currency translation adjustments -- -- -- --
Net loss for period -- -- -- --
---------- -------- ------------ ---------
Balance, June 30, 1997 20,775,840 207,759 199,105,852 (94,287)
Issuance of common stock 7/97 through 9/97 26,816 268 111,406 --
Amortization of compensation relating to grant
of stock options and awards made -- -- -- 15,614
Unrealized loss on marketable securities -- -- -- --
Cumulative foreign currency translation adjustments -- -- -- --
Net loss for period -- -- -- --
---------- -------- ------------ ---------
Balance, September 30, 1997 20,802,656 208,027 199,217,258 (78,673)
Issuance of common stock 10/97 through 12/97 67,342 673 460,450 --
Compensation relating to award made -- -- 49,230 (49,230)
Amortization of compensation relating to grant
of stock options and awards made -- -- -- 23,819
Unrealized loss on marketable securities -- -- -- --
Cumulative foreign currency translation adjustments -- -- -- --
Net loss for period -- -- -- --
---------- -------- ------------ ---------
Balance, December 31, 1997 20,869,998 $208,700 $199,726,938 ($104,084)
========== ======== ============ =========
</TABLE>
<TABLE>
<CAPTION>
Cumulative Unrealized
Foreign Currency Gain (Loss)
Translation on Marketable Accumulated
Adjustments Securities Deficit Total
-------- --------- ------------- ------------
<S> <C> <C> <C> <C>
Balance, April 1, 1997 ($16,869) $ 71,250 ($119,844,423) $ 79,151,436
Issuance of common stock 4/97 through 6/97 -- -- -- 262,232
Amortization of compensation relating to grant
of stock options and awards made -- -- -- 15,614
Unrealized gain on marketable securities -- 37,500 -- 37,500
Cumulative foreign currency translation adjustments 9,053 -- -- 9,053
Net loss for period -- -- (4,027,732) (4,027,732)
-------- --------- ------------- ------------
Balance, June 30, 1997 (7,816) 108,750 (123,872,155) 75,448,103
Issuance of common stock 7/97 through 9/97 -- -- -- 111,674
Amortization of compensation relating to grant
of stock options and awards made -- -- -- 15,614
Unrealized loss on marketable securities -- (23,437) -- (23,437)
Cumulative foreign currency translation adjustments (17,565) -- -- (17,565)
Net loss for period -- -- (959,554) (959,554)
-------- --------- ------------- ------------
Balance, September 30, 1997 (25,381) 85,313 (124,831,709) 74,574,835
Issuance of common stock 10/97 through 12/97 -- -- -- 461,123
Compensation relating to award made -- -- -- --
Amortization of compensation relating to grant
of stock options and awards made -- -- -- 23,819
Unrealized loss on marketable securities -- (160,313) -- (160,313)
Cumulative foreign currency translation adjustments 10,904 -- -- 10,904
Net loss for period -- -- (3,008,740) (3,008,740)
-------- --------- ------------- ------------
Balance, December 31, 1997 ($14,477) ($ 75,000) ($127,840,449) $ 71,901,628
======== ========= ============= ============
</TABLE>
See notes to consolidated financial statements.
(5)
<PAGE> 6
ALKERMES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
December 31, December 31,
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss ($ 7,996,026) ($13,970,066)
Adjustments to reconcile net loss to net cash provided by (used by)
operating activities:
Depreciation and amortization 2,178,093 1,734,763
Amortization of compensation relating to grant of stock options
and awards made 55,047 164,507
Loss on sale of equipment 8,527 --
Adjustments to other investments 60,026 14,483
Changes in assets and liabilities:
Prepaid expenses and other current assets (1,268,648) (2,309,389)
Accounts payable and accrued expenses (648,903) (1,134,615)
Deferred revenue 7,699,416 --
Other long-term liabilities 490,668 387,842
------------ ------------
Net cash provided by (used by) operating activities 578,200 (15,112,475)
------------ ------------
Cash flows from investing activities:
Additions to property, plant and equipment, net (5,262,914) (1,349,023)
Sales (purchases) of short-term investments, net 7,017,243 (10,535,121)
(Purchases) sales of investments, net (1,032,406) 1,597
Other assets (17,320) 10,500
------------ ------------
Net cash provided by (used by) investing activities 704,603 (11,872,047)
------------ ------------
Cash flows from financing activities:
Proceeds from issuance of common stock, net 835,029 24,059,636
Proceeds from issuance of long-term debt 2,500,000 5,000,000
Payment of long-term obligations (3,094,433) (2,346,535)
------------ ------------
Net cash provided by financing activities 240,596 26,713,101
------------ ------------
Effect of exchange rate changes on cash 3,471 37,054
------------ ------------
Net increase (decrease) in cash and cash equivalents 1,526,870 (234,367)
Cash and cash equivalents, beginning of period 2,799,012 445,150
------------ ------------
Cash and cash equivalents, end of period $ 4,325,882 $ 210,783
============ ============
Supplementary information:
Interest paid $ 702,600 $ 541,876
============ ============
</TABLE>
See notes to consolidated financial statements.
(6)
<PAGE> 7
ALKERMES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The consolidated financial statements for the three and nine month periods ended
December 31, 1997 and 1996, are unaudited and include all adjustments which, in
the opinion of management, are necessary to present fairly the results of
operations for the periods then ended. All such adjustments are of a normal
recurring nature. These financial statements should be read in conjunction with
the Company's Annual Report on Form 10-K for the year ended March 31, 1997,
which includes consolidated financial statements and notes thereto for the years
ended March 31, 1997, 1996 and 1995. In addition, the financial statements
include the accounts of Alkermes Controlled Therapeutics, Inc., Alkermes
Controlled Therapeutics Inc. II, Alkermes Investments, Inc., Alkermes Europe,
Ltd. and Alkermes Development Corporation II ("ADC II"), wholly owned
subsidiaries of the Company.
The results of the Company's operations for any interim period are not
necessarily indicative of the results of the Company's operations for any other
interim period or for a full fiscal year.
The preparation of the Company's financial statements in conformity with
generally accepted accounting principles necessarily requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
2. NEW ACCOUNTING PRONOUNCEMENT
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share," which the
Company adopted in the quarter ending December 31, 1997. SFAS No. 128 requires
companies to change the method currently used to compute earnings per share and
to restate all prior periods for comparability. The adoption of SFAS No. 128 did
not have any impact on the Company's consolidated financial statements because
the Company continues to be in a net loss position and, consequently, common
equivalent shares from stock options and warrants are excluded as their effect
is antidilutive.
3. LONG-TERM DEBT
In June 1997, the Company amended its loan agreement with a bank to increase the
principal amount of the loan thereunder by $2,500,000 and to grant a security
interest in certain equipment as security for the entire principal of, and
interest on, the loan. The additional principal amount of the loan is payable
over five years in equal monthly installments of $41,667, which commenced July
1, 1997, and bears interest at the fixed rate of 8.58% per annum.
4. RECLASSIFICATIONS
Certain reclassifications have been made to the fiscal 1997 amounts to conform
to the presentation used in fiscal 1998.
(7)
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
INTRODUCTION
Alkermes is developing innovative pharmaceutical products based on three
proprietary drug delivery systems: ProLease(R), RMP-7(TM) and Medisorb(R). Since
its inception in 1987, the Company has devoted substantially all of its
resources to its research and development programs. Alkermes has not received
any revenue from the sales of products. The Company has been unprofitable since
inception and expects to incur substantial additional operating losses over the
next several years. At December 31, 1997, the Company had an accumulated deficit
of approximately $127.8 million.
The Company has funded its operations primarily through public offerings and
private placements of equity securities, bank loans and payments under research
and development agreements with collaborators, including Alkermes Clinical
Partners, L.P. ("Clinical Partners"), a research and development limited
partnership of which ADC II serves as the one percent general partner. The
Company intends to develop its product candidates in collaboration with others
on whom the Company will rely for funding, development, manufacturing and/or
marketing.
FORWARD-LOOKING STATEMENTS
Any statements set forth below or otherwise made in writing or orally by the
Company with regard to its expectations as to financial results and other
aspects of its business may constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Although the
Company makes such statements based on assumptions which it believes to be
reasonable, the Company's business is subject to significant risks and there can
be no assurance that actual results will not differ materially from the
Company's expectations. Accordingly, the Company hereby identifies the following
important factors, among others, which could cause its results to differ from
any results which might be projected, forecasted or estimated by the Company in
any such forward-looking statements: (i) the Company and its collaborators could
not be permitted by regulatory authorities to undertake additional clinical
trials for ProLease, RMP-7 or Medisorb product candidates; (ii) product
candidates could be ineffective or unsafe during clinical trials; (iii) the
Company could incur difficulties or set-backs in obtaining the substantial
additional funding required to continue research and development programs and
clinical trials; (iv) even if product candidates appear promising at an early
stage of development, product candidates could fail to receive necessary
regulatory approvals, be difficult to manufacture on a large scale, be
uneconomical, fail to achieve market acceptance, be precluded from
commercialization by proprietary rights of third parties or experience
substantial competition in the marketplace; (v) technological change in the
biotechnology or pharmaceutical industries could render the Company's product
candidates obsolete or noncompetitive; (vi) disputes with collaborators,
termination of collaborations or failure to negotiate acceptable new
collaborative arrangements for ProLease and Medisorb technologies, which are not
independently commercializable, or for RMP-7, could occur; (vii) disputes with
Clinical Partners over rights to the RMP-7 and related technology could occur,
or the Company could fail to purchase this technology from the Limited Partners
of Clinical Partners pursuant to the purchase option (the "Purchase Option"),
or, if the Company did purchase RMP(TM) technology from the Limited Partners (a)
in shares of the Company's common stock, the Company's shareholders would be
substantially diluted or (b) in cash, the Company's capital resources would be
significantly depleted; and (viii) difficulties or set-backs in obtaining and
enforcing Alkermes' patents and difficulties with the patent rights of others
could occur.
RESULTS OF OPERATIONS
The Company's research and development revenue under collaborative arrangements
for the three and nine months ended December 31, 1997 was $6,437,761 and
$18,550,227 compared to $4,913,099 and $10,827,964 for the corresponding periods
of the prior year. The increase in such
(8)
<PAGE> 9
revenue for the three and nine months ended December 31, 1997 as compared to the
corresponding periods of the prior year was mainly a result of the increased
funding earned under collaborative agreements related to the Company's ProLease,
Medisorb and RMP-7 technologies. There has been no research and development
revenue under collaborative arrangement with related party since the quarter
ended June 30, 1996. At that time, the development funding under the product
development agreement with Clinical Partners was completed.
Interest income for the three and nine months ended December 31, 1997 was
$1,367,319 and $3,619,436 compared to $591,945 and $1,763,905 for the
corresponding periods of the prior year. The increase in such revenue for the
three and nine months ended December 31, 1997 as compared to the corresponding
periods of the prior year was primarily a result of the interest income earned
on $49.7 million in net proceeds from the sale of 2,000,000 shares of the
Company's common stock to ALZA Corporation ("ALZA") in March 1997 as well as $10
million received from a development and commercialization agreement with ALZA in
October 1997 (see "Liquidity and Capital Resources" below).
The Company's total operating expenses were $10,813,820 and $30,165,689 for the
three and nine months ended December 31, 1997 as compared to $9,741,735 and
$27,977,248 for the three and nine months ended December 31, 1996. Research and
development expenses for the three and nine months ended December 31, 1997 were
$8,154,705 and $22,857,229 compared to $7,657,829 and $21,213,773 for the
corresponding periods of the prior year. The increase in research and
development expenses for the three and nine months ended December 31, 1997 as
compared to the three and nine months ended December 31, 1996 was mainly the
result of an increase in salary and related benefits and other costs as the
Company advances its product candidates through development and clinical trials
and prepares for process development and commercial scale manufacturing.
General and administrative expenses for the three and nine months ended December
31, 1997 were $2,266,691 and $6,066,354 as compared to $1,683,749 and $5,753,367
for the corresponding periods of the prior year. The increase in the three and
nine months ended December 31, 1997 as compared to the three and nine months
ended December 31, 1996 was mainly the result of an increase in salary and
related benefits, patent legal costs and consulting costs. The amount of the
increase in the nine months ended December 31, 1997 as compared to the nine
months ended December 31, 1996 was reduced by one-time, non-cash charges related
to the write-down of the Company's investment in Clinical Partners which were
recorded in the three months ended June 30, 1996.
The Company does not believe that inflation and changing prices have had a
material impact on its results of operations.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents and short-term investments were approximately $79.8
million at December 31, 1997 as compared to $85.3 million at March 31, 1997. The
primary uses of cash and investments were to finance the Company's operations
and for capital expenditures. Cash increased during the nine months ended
December 31, 1997, principally as a result of the $10 million received from ALZA
in October 1997. In addition to cash, cash equivalents and U.S. Government
obligations, the Company now invests in high grade corporate notes and
commercial paper which totaled approximately $19.9 million at December 31, 1997.
The Company's short-term investment objectives are, first, to assure
conservation of principal, and second, to obtain investment income.
In January 1998, The Company entered into an agreement with R. W. Johnson
Pharmaceutical Research Institute (PRI), a Johnson & Johnson company, for the
development of ProLease injectable sustained release formulations of
erythropoietin. Assuming the development of the
(9)
<PAGE> 10
product candidate proceeds as planned, milestone payments and development
funding to Alkermes are expected to be in excess of $30 million.
The Company's research and development costs to date have been financed
primarily by sales of equity securities and funding from research and
development collaborative arrangements. The Company expects to incur significant
research and development and other costs, including costs related to preclinical
studies, clinical trials and facilities expansion. Therefore, the Company
expects that its costs, including research and development costs for all of its
product candidates, will exceed revenues significantly for the next several
years, which will result in continuing losses from operations.
Since the research and development revenue from Clinical Partners ended during
the quarter ended June 30, 1996, Alkermes has been using its own resources to
continue to develop RMP-7. The Company is required to fund the development of
RMP-7 to maintain its option to purchase the Limited Partners' interests in
Clinical Partners. Effective September 30, 1997, the Company entered into an
agreement with ALZA relating to the development and commercialization of RMP-7.
ALZA made a $10 million upfront payment to Alkermes to fund clinical
development, of which $7.7 million has been recorded as deferred revenue at
December 31, 1997. In return, ALZA will have the option to acquire exclusive
worldwide commercialization rights to RMP-7. If ALZA exercises its option, ALZA
will make additional payments to cover costs associated with advanced clinical
development. If RMP-7 is commercialized successfully by ALZA, ALZA will pay the
Company certain milestone payments. Alkermes would be responsible for the
manufacturing of RMP-7, and the two companies would share approximately equally
in profits from sales of the product.
Capital expenditures were approximately $5.3 million in the nine months ended
December 31, 1997, principally reflecting equipment purchases and construction
in progress for the expansion of the Wilmington, Ohio facility and for
preconstruction costs relating to the new ProLease manufacturing facility in
Cambridge, Massachusetts. The Company began construction of the new commercial
scale ProLease manufacturing facility in Cambridge in February 1998. The Company
began an expansion of its Medisorb manufacturing facility in Wilmington during
the quarter ended September 30, 1997. The total cost for both facilities is
expected to be approximately $15 to $20 million. The Company's capital
expenditures for equipment, facilities and building improvements have been
financed to date primarily with proceeds from bank loans and the sales of equity
securities. The Company will continue to pursue opportunities to obtain
additional financing in the future. Such financing may be sought through various
sources, including equity offerings, bank borrowings, lease arrangements
relating to fixed assets or other financing methods. The source, timing and
availability of any financings will depend on market conditions, interest rates
and other factors.
The Company's future capital requirements will depend on many factors, including
continued scientific progress in its research and development programs, the
magnitude of these programs, progress with preclinical testing and clinical
trials, the time and costs involved in obtaining regulatory approvals, the costs
involved in filing, prosecuting and enforcing patent claims, competing
technological and market developments, the establishment of additional
collaborative arrangements, the cost of manufacturing facilities and of
commercialization activities and arrangements and the cost of product
in-licensing and any possible acquisitions.
The Company will need to raise substantial additional funds for longer-term
product development, regulatory approvals and manufacturing or marketing
activities that it might undertake in the future. There can be no assurance that
additional funds will be available on favorable terms, if at all. If adequate
funds are not available, the Company may be required to curtail significantly
one or more of its research and development programs and/or obtain funds through
arrangements with collaborative partners or others that may require the Company
to relinquish rights to certain of its technologies, product candidates or
future products.
(10)
<PAGE> 11
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Number Exhibit
3.1(a) Second Amended and Restated Articles of
Incorporation, as filed with the
Pennsylvania Secretary of State on July 23,
1991 (Incorporated by reference to Exhibit
4.1(a) to the Company's Report on Form 10-Q
for the quarter ended June 30, 1991).
3.1(b) Statement of Change of Registered Office, as
filed with the Pennsylvania Secretary of
State on July 23, 1991 (Incorporated by
reference to Exhibit 4.1(b) to the Company's
Report on Form 10-Q for the quarter ended
June 30, 1991).
3.1(c) Amendment to the Second Amended and Restated
Articles of Incorporation, as filed with the
Pennsylvania Secretary of State on November
1, 1991. (Incorporated by reference to
Exhibit 4.1(c) to the Company's Report on
Form 10-Q for the quarter ended September
30, 1991).
3.1(d) Amendment to the Second Amended and Restated
Articles of Incorporation, as filed with the
Pennsylvania Secretary of State on February
12, 1993. (Incorporated by reference to
Exhibit 4.1(d) to the Company's Report on
Form 10-Q for the quarter ended December 31,
1992).
3.2 Amended and Restated By-Laws of Alkermes,
Inc., effective as of July 1, 1994.
(Incorporated by reference to Exhibit 4.2 to
the Company's Report on Form 10-Q for the
quarter ended June 30, 1994).
4.1 Specimen of Common Stock Certificate of
Alkermes, Inc. (Incorporated by reference to
Exhibit 4 to the Company's Registration
Statement on Form S-1, as amended (File No.
33-40250)).
4.2 Form of 1992 Warrant to purchase 2,800
shares of the Company's Common Stock.
(Incorporated by reference to Exhibit 4.2 to
the Company's Report on Form 10-K for the
fiscal year ended March 31, 1992).
4.3 Form of 1995 Warrant to purchase 300 shares
of the Company's Common Stock. (Incorporated
by reference to Exhibit 4.3 to the Company's
Report on Form 10-K for the fiscal year
ended March 31, 1992).
(11)
<PAGE> 12
Number Exhibit
4.4 Form of Global Warrant Certificate for 1994
Class A Warrants. (Incorporated by reference
to Exhibit 4.6 to the Company's Report on
Form 10-Q for the quarter ended December 31,
1994).
4.5 Form of Global Warrant Certificate for 1994
Class B Warrants. (Incorporated by reference
to Exhibit 4.7 to the Company's Report on
Form 10-Q for the quarter ended December 31,
1994).
4.6 Form of Global Warrant Certificate for 1994
Affiliate Warrants. (Incorporated by
reference to Exhibit 4.8 to the Company's
Report on Form 10-Q for the quarter ended
December 31, 1994).
4.7 Form of Global Warrant Certificate for 1994
Incentive Warrants. (Incorporated by
reference to Exhibit 4.9 to the Company's
Report on Form 10-Q for the quarter ended
December 31, 1994).
4.8 Warrant Agreement, dated as of November 18,
1994, by and between the Company and The
First National Bank of Boston. (Incorporated
by reference to Exhibit 4.10 to the
Company's Report on Form 10-Q for the
quarter ended December 31, 1994).
11 Statement regarding computation of per share
loss.
27 Financial Data Schedule.
(b) The Registrant filed a report on Form 8-K dated September 30, 1997
under Item 5 on October 24, 1997.
(12)
<PAGE> 13
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.
ALKERMES, INC.
(Registrant)
Date: February 13, 1998 By: /s/ Richard F. Pops
----------------------
Richard F. Pops
Chief Executive Officer and
Director
(Principal Executive Officer)
Date: February 13, 1998 By: /s/ Michael J. Landine
-------------------------
Michael J. Landine
Senior Vice President, Chief
Financial Officer and Treasurer
(Principal Financial and
Accounting Officer)
(13)
<PAGE> 14
EXHIBIT INDEX
Exhibit
Number Description
3.1(a) Second Amended and Restated Articles of Incorporation, as filed with
the Pennsylvania Secretary of State on July 23, 1991 (Incorporated by
reference to Exhibit 4.1(a) to the Company's Report on Form 10-Q for
the quarter ended June 30, 1991).
3.1(b) Statement of Change of Registered Office, as filed with the
Pennsylvania Secretary of State on July 23, 1991 (Incorporated by
reference to Exhibit 4.1(b) to the Company's Report on Form 10-Q for
the quarter ended June 30, 1991).
3.1(c) Amendment to the Second Amended and Restated Articles of Incorporation,
as filed with the Pennsylvania Secretary of State on November 1, 1991.
(Incorporated by reference to Exhibit 4.1(c) to the Company's Report on
Form 10-Q for the quarter ended September 30, 1991).
3.1(d) Amendment to the Second Amended and Restated Articles of Incorporation,
as filed with the Pennsylvania Secretary of State on February 12, 1993.
(Incorporated by reference to Exhibit 4.1(d) to the Company's Report on
Form 10-Q for the quarter ended December 31, 1992).
3.2 Amended and Restated By-Laws of Alkermes, Inc., effective as of July 1,
1994. (Incorporated by reference to Exhibit 4.2 to the Company's Report
on Form 10-Q for the quarter ended June 30, 1994).
4.1 Specimen of Common Stock Certificate of Alkermes, Inc. (Incorporated by
reference to Exhibit 4 to the Company's Registration Statement on Form
S-1, as amended (File No. 33-40250)).
4.2 Form of 1992 Warrant to purchase 2,800 shares of the Company's Common
Stock. (Incorporated by reference to Exhibit 4.2 to the Company's
Report on Form 10-K for the fiscal year ended March 31, 1992).
4.3 Form of 1995 Warrant to purchase 300 shares of the Company's Common
Stock. (Incorporated by reference to Exhibit 4.3 to the Company's
Report on Form 10-K for the fiscal year ended March 31, 1992).
(14)
<PAGE> 15
Exhibit
Number Description
4.4 Form of Global Warrant Certificate for 1994 Class A Warrants.
(Incorporated by reference to Exhibit 4.6 to the Company's Report on
Form 10-Q for the quarter ended December 31, 1994).
4.5 Form of Global Warrant Certificate for 1994 Class B Warrants.
(Incorporated by reference to Exhibit 4.7 to the Company's Report on
Form 10-Q for the quarter ended December 31, 1994).
4.6 Form of Global Warrant Certificate for 1994 Affiliate Warrants.
(Incorporated by reference to Exhibit 4.8 to the Company's Report on
Form 10-Q for the quarter ended December 31, 1994).
4.7 Form of Global Warrant Certificate for 1994 Incentive Warrants.
(Incorporated by reference to Exhibit 4.9 to the Company's Report on
Form 10-Q for the quarter ended December 31, 1994).
4.8 Warrant Agreement, dated as of November 18, 1994, by and between the
Company and The First National Bank of Boston. (Incorporated by
reference to Exhibit 4.10 to the Company's Report on Form 10-Q for the
quarter ended December 31, 1994).
11 Statement regarding computation of per share loss.
27 Financial Data Schedule.
(15)
<PAGE> 1
EXHIBIT 11
EXHIBIT 11
STATEMENT REGARDING COMPUTATION OF PER SHARE LOSS
<TABLE>
<CAPTION>
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
December 31, 1997 December 31, 1996 December 31, 1997 December 31, 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net loss ($ 3,008,740) ($ 4,236,691) ($ 7,996,026) ($13,970,066)
============ ============ ============ ============
Calculation of shares outstanding:
Weighted average common shares
outstanding used in calculating net
loss per share in accordance with
generally accepted accounting
principles 20,831,339 18,479,498 20,792,230 18,076,420
------------ ------------ ------------ ------------
Total 20,831,339 18,479,498 20,792,230 18,076,420
============ ============ ============ ============
Basic and diluted loss per common share ($ 0.14) ($ 0.23) ($ 0.38) ($ 0.77)
============ ============ ============ ============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 10-Q FOR
THE NINE MONTHS ENDED DECEMBER 31, 1997 AND IS QULIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANICAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 4,326
<SECURITIES> 75,481
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 85,646
<PP&E> 20,937
<DEPRECIATION> (9,302)
<TOTAL-ASSETS> 104,393
<CURRENT-LIABILITIES> 15,012
<BONDS> 10,558
0
0
<COMMON> 209
<OTHER-SE> 71,693
<TOTAL-LIABILITY-AND-EQUITY> 104,393
<SALES> 0
<TOTAL-REVENUES> 22,170
<CGS> 0
<TOTAL-COSTS> 22,857
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,242
<INCOME-PRETAX> (7,996)
<INCOME-TAX> 0
<INCOME-CONTINUING> (7,996)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,996)
<EPS-PRIMARY> (0.38)
<EPS-DILUTED> (0.38)
</TABLE>
