<PAGE> 1
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 quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File number 0-19472
CELLPRO, INCORPORATED
(exact name of registrant as specified in its charter)
Delaware 94-3087971
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
22215 - 26th Avenue, S.E., Bothell, Washington 98021
(Address of registrant's principal executive offices)
(Zip Code)
(206) 485-7644
(Registrant's telephone number, including area code)
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 [ ]
Outstanding at
July 31, 1996
Common Stock, $0.001 par value 14,387,671
Page 1 of 14
<PAGE> 2
<TABLE>
<CAPTION>
INDEX
PART I: FINANCIAL INFORMATION PAGE
<S> <C> <C>
Item 1. Financial Statements:
Consolidated Balance Sheets - June 30, 1996
and March 31, 1996.................................................... 3
Consolidated Statements of Operations - Three months ended
June 30, 1996 and 1995 and the period from
inception to June 30, 1996....................................... 4
Consolidated Statements of Stockholders' Equity -
Period from inception to March 31, 1996 and for the
three-month period ended June 30, 1996........................... 5-6
Consolidated Statements of Cash Flows - Three months ended
June 30, 1996 and 1995 and the period from
inception to June 30, 1996......................................... 7
Notes to Consolidated Financial Statements............................ 8-9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations......................... 9-12
PART II: OTHER INFORMATION
Item 1. Legal Proceedings..................................................... 13
Item 6. Exhibits and Reports on Form 8-K...................................... 13
All other items under Part II are inapplicable or have a
negative response and are therefore omitted.
SIGNATURES........................................................................ 14
</TABLE>
Page 2 of 14
<PAGE> 3
<TABLE>
<CAPTION>
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
CELLPRO, INCORPORATED AND SUBSIDIARIES
(A Company in the Development Stage)
CONSOLIDATED BALANCE SHEETS
June 30, 1996 and March 31, 1996
ASSETS
June 30, March 31,
1996 1996
------------ ------------
Current Assets: (Unaudited)
<S> <C> <C>
Cash and cash equivalents $ 18,247,394 $ 17,076,098
Marketable securities 51,745,421 57,067,753
Trade receivables 2,065,464 2,283,624
Inventories 5,062,260 4,384,452
Other current assets 464,012 555,904
------------ ------------
Total current assets 77,584,551 81,367,831
Property and equipment, net 15,603,862 16,504,305
Other assets 67,700 69,213
------------ ------------
Total assets $ 93,256,113 $ 97,941,349
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 216,042 $ 269,275
Accounts payable 992,018 1,104,467
Accrued liabilities 2,606,838 4,146,373
------------ ------------
Total current liabilities 3,814,898 5,520,115
Long-term debt, net of current portion 1,380,170 208,001
------------ ------------
Total liabilities 5,195,068 5,728,116
------------ ------------
Stockholders' equity:
Common stock 14,388 14,349
Additional paid-in capital 168,399,977 167,971,991
Foreign currency translation (86,696) (50,014)
Net unrealized loss on securities
available for sale (37,465) (102,127)
Deficit accumulated during the
development stage (80,229,159) (75,620,966)
------------ ------------
Total stockholders' equity 88,061,045 92,213,233
------------ ------------
Total liabilities and stockholders'
equity $ 93,256,113 $ 97.941,349
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
Page 3 of 14
<PAGE> 4
<TABLE>
<CAPTION>
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements (Continued)
CELLPRO, INCORPORATED AND SUBSIDIARIES
(A Company in the Development Stage)
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended June 30, 1996 and 1995
and the Period From Inception to June 30, 1996
(Unaudited)
For the period
from inception to
Three months ended June 30,
June 30,
-------------------------------------------
1996 1995 1996
---- ---- ----
<S> <C> <C> <C>
Product sales $ 1,997,960 $ 1,256,382 $14,734,779
Related party revenue - - 6,000,000
Contract and other revenue 7,853 - 2,982,453
Interest income 942,631 999,580 14,329,841
----------- ----------- -----------
2,948,444 2,255,962 38,047,073
----------- ----------- -----------
Costs and expenses:
Cost of product sales 1,220,616 662,641 8,976,322
Research and development 3,673,027 4,473,465 63,765,530
Selling, general and administrative 2,649,191 3,034,699 37,679,676
Interest 13,803 33,515 928,174
Litigation provision - - 6,926,530
----------- ----------- -----------
Total costs and expenses 7,556,637 8,204,320 118,276,232
----------- ----------- -----------
Net loss $(4,608,193) $(5,948,358) $(80,229,159)
=========== =========== ============
Net loss per share $ (0.32) $ (0.45) $ (8.34)
=========== =========== ============
Weighted average number of
shares outstanding during period 14,374,543 13,100,500 9,622,615
=========== =========== ============
</TABLE>
See accompanying notes to consolidated financial statements.
Page 4 of 14
<PAGE> 5
<TABLE>
<CAPTION>
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements (Continued)
CELLPRO, INCORPORATED AND SUBSIDIARIES
(A Company in the Development Stage)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Period From Inception to March 31, 1996 and
for the Three-Month Period Ended June 30, 1996
(Unaudited)
Common stock Preferred stock Foreign
--------------------- --------------------- Additional currency
Par Par paid-in translation
Shares value Shares value capital adjustment
------ ----- ------ ----- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Issuance of Common
Stock to Founders
for cash and
notes receivable 655,000 $655 $ $ 18,995 $
Issuance of Series A
Preferred Stock
for cash 2,175,000 2,175 2,162,325
Issuance of Series B
Preferred Stock
for cash 2,503,332 2,503 7,482,704
Initial public sale
of Common Stock
for cash 3,450,000 3,450 34,725,220
Amortization of stock
options 360,000
Exercise of warrant 7,273 7 (7)
Exercise of stock
options 878,002 878 4,343,732
Conversion of Preferred
Stock to Common 4,678,332 4,678 (4,678,332) (4,678)
Public sale of Common
Stock for cash 2,500,000 2,500 38,607,192
Employee stock
purchase plan 48,089 48 549,551
Sale of Common Stock
for cash, net 2,160,362 2,161 79,723,095
Foreign currency
translation (50,014)
Shares retired (28,125) (28) (816)
Net unrealized loss on
securities
available for sale
Net loss from inception
to March 31, 1996 __________ __________ __________ __________ ____________ __________
Balance at
March 31, 1996
14,348,933 $14,349 - $ - $167,971,991 $(50,014)
</TABLE>
<TABLE>
<CAPTION>
Net
unrealized Deficit
loss on accumulated
securities during the
available for development
sale stage Total
-------------- ----------- -----
<S> <C> <C> <C>
Issuance of Common
Stock to Founders
for cash and
notes receivable $ $ $ 19,650
Issuance of Series A
Preferred Stock
for cash 2,164,500
Issuance of Series B
Preferred Stock
for cash 7,485,207
Initial public sale
of Common Stock
for cash 34,728,670
Amortization of Stock
options 360,000
Exercise of warrant
Exercise of stock
options 4,344,610
Conversion of Preferred
Stock to Common
Public sale of Common
Stock for cash 38,609,692
Employee stock
purchase plan 549,599
Sale of Common Stock
for cash, net 79,725,256
Foreign currency
translation (50,014)
Shares retired (844)
Net unrealized loss on
securities
available for sale (102,127) (102,127)
Net loss from inception
to March 31, 1996 (75,620,966) (75,620,966)
--------- ------------ ------------
Balance at
March 31, 1996
$(102,127) $(75,620,966) $92,213,233
</TABLE>
See accompanying notes to consolidated financial statements.
Page 5 of 14
<PAGE> 6
<TABLE>
<CAPTION>
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements (Continued)
CELLPRO, INCORPORATED AND SUBSIDIARIES
(A Company in the Development Stage)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Period From Inception to March 31, 1996 and
for the Three-Month Period Ended June 30, 1996
(Unaudited)
Net
Common stock Preferred stock unrealized
------------ --------------- Foreign loss on
Additional currency securities
Par Par paid-in translation available for
Shares value Shares value capital adjustment sale
------ ----- ------ ----- ------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
March 31, 1996
(brought forward) 14,348,933 $ 14,349 $ $167,971,991 $ (50,014) $ (102,127)
Exercise of stock
options 31,611 32 346,175
Foreign currency
translation (36,682)
Employee stock
purchase plan 7,127 7 81,811
Net unrealized gain on
securities
available for sale 64,662
Net loss for the three
months ended
June 30, 1996
-----------------------------------------------------------------------------------------------------
Balance at
June 30, 1996 14,387,671 $ 14,388 $ $168,399,977 $ (86,696) $ (37,465)
========== ========= =========== ========= ============ ========== ===========
</TABLE>
<TABLE>
<CAPTION>
Deficit
accumulated
during the
development
stage Total
----- -----
<S> <C> <C>
Balance at
March 31, 1996
(brought forward) $ 75,620,966) $ 92,213,233
Exercise of stock
options 346,207
Foreign currency
translation (36,682)
Employee stock
purchase plan 81,818
Net unrealized gain on
securities
available for sale 64,662
Net loss for the three
months ended
June 30, 1996
(4,608,193) (4,608,193)
-------------------------------
Balance at
June 30, 1996 $(80,229,159) $ 88,061,045
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
Page 6 of 14
<PAGE> 7
<TABLE>
<CAPTION>
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements (Continued)
CELLPRO, INCORPORATED AND SUBSIDIARIES
(A Company in the Development Stage)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended June 30, 1996 and 1995
and the Period from Inception to June 30, 1996
Period from
Three months ended inception to
June 30, June 30,
-------- --------
1996 1995 1996
---- ---- ----
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Net cash used in operating $ (4,484,915) $ (6,543,444) $ (71,357,730)
activities
--------------- ------------- --------------
Investing activities:
Purchase of property and equipment (82,557) (625,809) (26,948,153)
Change in marketable securities - - (55,583,061)
Proceeds from sales and maturities
of securities available for sale 8,803,561 10,406,458 95,065,995
Purchase of securities available
for sale (3,416,567) (8,293,011) (91,265,820)
Change in other assets 1,513 148,537 (67,700)
--------------- ------------- --------------
Net cash provided (used) by 5,305,950 1,636,175 (78,798,739)
investing activities
--------------- ------------- --------------
Financing activities:
Proceeds from long-term debt - - 3,568,600
Principal payments on long-term debt (77,764) (143,474) (3,169,088)
Issuance of Common Stock, net
of issuance costs 428,025 206,854 158,354,644
Issuance of Preferred Stock, net
of issuance costs - - 9,649,707
--------------- ------------- ---------------
Net cash provided by financing activities 350,261 63,380 168,403,863
--------------- ------------- --------------
Net increase (decrease) in cash
and cash equivalents 1,171,296 (4,843,889) 18,247,394
Cash and cash equivalents:
Beginning of period 17,076,098 17,184,026 -
--------------- ------------- --------------
End of period $ 18,247,394 $ 12,340,137 $ 18,247,394
=============== ============= ==============
</TABLE>
See accompanying notes to consolidated financial statements.
Page 7 of 14
<PAGE> 8
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements (Continued)
CELLPRO, INCORPORATED AND SUBSIDIARIES
(A Company in the Development Stage)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended June 30, 1996
(Unaudited)
1. Basis of Presentation - The accompanying unaudited financial statements
should be read in conjunction with the audited financial statements and
notes thereto contained in the Company's Annual Report on Form 10-K for
the year ended March 31, 1996. In the opinion of management, all
adjustments necessary for a fair presentation of the interim operating
results are reflected herein. All such adjustments are normal and
recurring in nature.
2. Principles of Consolidation - The consolidated financial statements
include the accounts of CellPro, Incorporated (the Company) and its
wholly owned subsidiaries. Intercompany transactions and balances have
been eliminated in consolidation.
3. Inventories - Inventories consist of the following:
<TABLE>
<CAPTION>
June 30, 1996 March 31, 1996
------------- --------------
<S> <C> <C>
Raw materials $1,763,598 $1,241,599
Work in process 743,949 1,407,472
Finished goods 2,554,713 1,735,381
--------- ---------
$5,062,260 $4,384,452
========== ==========
</TABLE>
4. Long-term Debt- During the current quarter, a payment schedule was
finalized relating to $1.2 million in state sales taxes incurred on
facilities construction which had been deferred under a Washington state
tax provision. The debt will be due in five annual installments of 10%,
15%, 20%, 25%, and 30% of the balance, beginning December 31, 1998 with
final payment due December 31, 2002. Previously, the debt had been
included in accrued liabilities. The debt is non-interest bearing.
5. Supplemental Disclosures of Cash Flow Information - Cash paid for
interest was $13,803 for the three months ended June 30, 1996 and
$33,515 for the three months ended June 30, 1995. Cash paid for interest
was $928,174 for the period from inception to June 30, 1996. Unrealized
loss on securities available for sale decreased by $64,662 for the three
months ended June 30, 1996. For the period from inception to June 30,
1996 unrealized loss on securities available for sale totaled $37,465.
6. Earnings Per Share - In accordance with rules of the Securities and
Exchange Commission, earnings per share are based upon the weighted
average number of shares of Common Stock outstanding after giving effect
to the conversion of all outstanding shares of Preferred Stock into
shares of Common Stock. In addition, for periods prior to the Company's
initial public offering, common share equivalents for all stock options
granted by the Company during the 12 months preceding the Company's
initial public offering, determined by the treasury stock method, have
been included in
Page 8 of 14
<PAGE> 9
the calculation of weighted average number of common shares outstanding
as if they were outstanding for all periods prior to the Company's
initial public offering. Except for the foregoing, common stock
equivalents have not been included because the effect would be
anti-dilutive.
7. Reclassifications - Certain prior period amounts have been reclassified
to conform to the current year presentation.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Except for disclosures that report the Company's historical results, the
statements set forth in this section are forward-looking statements. Actual
results could differ materially from those projected in such forward-looking
statements. Additional information concerning factors that could cause actual
results to differ materially from those in the forward-looking statements are
set forth in the section entitled "Investment Considerations" beginning on page
12 of this quarterly report on Form 10Q, in the section entitled "Investment
Considerations" in the Company's Annual Report on Form 10K for the year ended
March 31, 1996 and in the Company's other filings 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.
Since the commencement of operations in 1989, the Company has been a development
stage company, primarily engaged in developing, manufacturing and marketing
proprietary continuous-flow, cell- selection systems. These systems may be used
for a variety of therapeutic, diagnostic and research applications. The Company
has completed a Phase III clinical trial of its technology for concentration of
stem cells utilized in autologous bone marrow transplantation for the treatment
of cancer and filed a premarketing approval application (PMA) based on this
trial. In April 1996, the Company was notified by the US Food and Drug
Administration (FDA) that its PMA was approvable subject to submission of
limited additional data, final approval of product labeling, and completion of
GMP certification of its manufacturing facilities. The Company intends to move
rapidly to complete the remaining requirements for commercialization in the
United States. The CEPRATE(R) SC Stem Cell Concentration System (the "CEPRATE(R)
SC System") already has received marketing approval throughout the 18-nation
European Economic Area and Canada.
The Company's activities have been funded primarily by raising approximately
$153 million through the sale of Common Stock, including two public offerings
and two private sales to Corange International Limited ("Corange"), and $9.7
million through private sales of Preferred Stock prior to the Company's initial
public offering. The Company has been unprofitable since inception and expects
to incur substantial additional operating losses for at least the next few
years. For the period from inception to June 30, 1996, the Company incurred a
cumulative net loss of approximately $80.2 million. The Company expects to
continue to incur substantial expenses to support its operations, including the
costs of preclinical and clinical studies, manufacturing scale-up costs and the
expansion of its sales and marketing organization. The Company's results of
operations may vary significantly from quarter to quarter during this period of
Page 9 of 14
<PAGE> 10
development and the Company expects to continue to incur net operating losses
during this period.
Results of Operations
Three Months Ended June 30, 1996 and 1995
Product sales increased to $2.0 million for the quarter ended June 30, 1996.
This represents a 59% increase from the $1.3 million in sales reported in the
quarter ended June 30, 1995. Increased sales of the CEPRATE(R) SC System
accounted for the improvement. The CEPRATE(R) SC System is approved for use in
the 18-member European Economic Area and Canada and commercially available in
other European countries and in Asia Pacific and Latin America. In addition, the
Company is selling the CEPRATE(R) SC System, on a limited basis, for
investigational use in the United States under a cost recovery program. The
CEPRATE(R) SC System is used to provide stem cells to repopulate the bone marrow
of patients being treated for diseases such as breast and ovarian cancer,
lymphoma, multiple myeloma and acute hematological malignancies.
Interest income totaled $943,000 for the quarter ended June 30, 1996. This was
comparable to the $1.0 million earned in the quarter ended June 30, 1995. At
June 30, 1996, the Company's cash, cash equivalents, and marketable securities
totaled $70 million.
Cost of product sales was $1.2 million and $663,000 for the three months ended
June 30, 1996 and 1995, respectively. As noted above, this increase for the
quarter ended June 30, 1996 was primarily related to higher sales volumes. The
gross margin percentage is lower in the current year's first quarter compared to
the prior year's first quarter primarily due to the unfavorable impact of
changes in foreign exchange rates on average selling prices. The majority of the
Company's sales have been in Europe. These sales are denominated in various
European currencies which were significantly weaker, against the US dollar, in
the quarter ended June 30, 1996 than in the quarter ended June 30, 1995.
Research and development expense totaled $3.7 million for the quarter ended June
30, 1996 and $4.5 million in the quarter ended June 30, 1995. This reduction in
research and development expense is the result of a refocusing of company
resources on a reduced number of programs which was implemented during the first
quarter of the prior fiscal year. The Company has completed patient enrollment
in a second Phase III trial designed to demonstrate the CEPRATE(R) SC System's
ability to deplete tumor cells from peripheral blood stem cell transplants in
patients being treated for multiple myeloma. The CEPRATE(R) SC System is being
used in over 60 additional clinical trials including applications in
dose-intensified, multicycle chemotherapy to treat solid-tissue tumors and
allogeneic matched- and mismatched-donor trials to treat leukemias.
Additionally, the Company is participating in various gene therapy trials in
which the CEPRATE(R) SC System is used to concentrate stem cells to enhance the
efficiency of gene insertion to treat genetic disorders and diseases such as
cancer and AIDS. Also, CellPro recently announced the initiation of a new trial
using the CEPRATE(R) SC System to deplete T cells from the stem cell products to
repopulate the marrow of patients receiving marrow-killing chemotherapy to treat
multiple sclerosis.
Page 10 of 14
<PAGE> 11
Selling, general and administrative expenses were $2.6 million and $3.0 million
for the quarters ended June 30, 1996 and 1995, respectively. The Company intends
to increase sales and marketing activities in the United States in anticipation
of a possible FDA approval expected later this fiscal year. Administrative costs
will also increase as the Company's activities expand.
The above factors resulted in net operating losses of $4.6 million for the three
months ended June 30, 1996 compared to $5.9 million for the three months ended
June 30, 1995.
Liquidity and Capital Resources
The Company has financed its operations since inception primarily through the
sale of Common Stock and Preferred Stock, generation of interest income and
arrangements for equipment financing. Through June 30, 1996, the Company has
raised $73.3 million through two public offerings and $79.7 million through two
private sales of Common Stock, and $9.7 million from the sale of Preferred
Stock. It has generated $14.3 million in interest income, $14.7 million in
product sales and $9.0 million in contract and related party revenues.
Since inception, the Company has used $71.4 million of cash in operating
activities and has invested $26.9 million in equipment and leasehold
improvements. The Company has financed $3.6 million of these investments with
secured lending arrangements.
The Company expects to incur substantial expenses in support of additional
research and development activities, including the costs of preclinical and
clinical studies, expansion of manufacturing activities and new product
development. Selling, general and administrative expenses are also expected to
increase as the Company builds its sales and marketing organization and expands
administrative activities in support of the Company's anticipated expansion of
commercial sales.
At June 30, 1996, the Company had $70 million in cash and marketable securities
available to meet its future working capital needs. The Company anticipates that
its capital resources should be sufficient to fund its cash requirements through
approximately the fiscal year ending March 31, 1999. The preceding
forward-looking statement is subject to certain risks and uncertainties that
could cause actual results to differ materially from those projected. The amount
and timing of net expenditures of capital resources will depend on the Company's
ability to increase product sales, the timing and extent of sales and marketing
expenditures, including those incurred in support of product launches, 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 collaborative research and development agreements, product
marketing or licensing agreements, or other corporate partner arrangements, the
FDA regulatory process, the outcome of patent litigation and other factors, many
of which are beyond the Company's control.
Paeg 11 of 14
<PAGE> 12
INVESTMENT CONSIDERATIONS:
The Company desires to take advantage of certain provisions of the Private
Securities Litigation Reform Act of 1995, enacted in December 1995 (the
"Reform Act") that provided a "safe harbor" for forward-looking statement made
by or on behalf of the Company. The Company hereby cautions stockholders,
prospective investors in the Company and other readers that the following
important factors, among others, in some cases have affected, and in the future
could affect, the Company's stock price or cause the Company's actual results
for the fiscal year ending March 31, 1997, for the fiscal quarter ending
September 30, 1996, and for future fiscal years and quarters to differ
materially from those expressed in any forward-looking statements, oral or
written, made by or on behalf of the Company. Stockholders, prospective
investors and other readers should also refer to the more extensive discussion
of investment considerations set forth in the Company's Annual Report on Form
10K for the year ended March 31, 1996 in the section titled "Investment
Considerations".
Legal Proceedings:
On August 4, 1995, a jury found in favor of CellPro regarding a three year-old
patent dispute between CellPro and Baxter Healthcare Corporation, Becton
Dickinson and Company and The Johns Hopkins University (collectively
"plaintiffs"). The verdict stated that the four patents in question were not
infringed by CellPro's manufacture, use and sale of the CEPRATE(R) SC System or
the CEPRATE(R) LC System. Additionally, the jury found that the claims of the
patents asserted against CellPro were invalid and unenforceable. Post-trial
motions were filed by both parties.
On July 1, 1996, the United States District Court for the District of Delaware
ordered a new trial in response to a motion made by the plaintiffs. In addition,
the Court partially granted plaintiffs' motion for judgment as a matter of law
as to the issues of infringement, inducement of infringement and enablement with
respect to US Patent No. 4,965,680, as well as the issue of induced infringement
with respect to US Patent No. 5,130,144. The Court's order did not rule on the
issue of validity of any of the patents.
The Court's order does not hold any claim of any of the four patents both valid
and infringed. Therefore, the disposition of this case at the trial court level,
with regard to all patents at issue, will not be completed until a new trial
takes place. A tentative new trial date of October 21, 1996 has been scheduled.
The claims of antitrust and unfair competition filed by CellPro in this case
against the plaintiffs will be delayed until completion of this new jury trial.
The Court did not make any ruling on CellPro's motion that the patents in suit
were obtained through inequitable conduct and, therefore, unenforceable.
The Company expects to continue to incur substantial expenses in connection with
this litigation for the foreseeable future. These expenses could have a material
effect on the Company's results of operations and financial position in future
periods.
Page 12 of 14
<PAGE> 13
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See discussion under "Investment Considerations - Legal Proceedings" in Part I,
Item 2, above.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedule
Page 13 of 14
<PAGE> 14
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.
CELLPRO, INCORPORATED
(Registrant)
Date: August 9, 1996
/s/ Richard D. Murdock
---------------------------------------------
Richard D. Murdock
President
Chief Executive Officer and
Director
/s/ Larry G. Culver
---------------------------------------------
Larry G. Culver
Executive Vice President,
Chief Operating Officer,
Chief Financial Officer
and Director
(Chief Accounting Officer)
Page 14 of 14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from (a) the
consolidated balance sheet as of June 30, 1996 and the consolidated statement of
operations for the three months ended June 30, 1996 and is qualified in its
entirety by reference to such (b) financial statements
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-1-1996
<PERIOD-END> JUN-30-1996
<CASH> 18,247
<SECURITIES> 51,745
<RECEIVABLES> 2,065
<ALLOWANCES> 0
<INVENTORY> 5,062
<CURRENT-ASSETS> 77,585
<PP&E> 25,044
<DEPRECIATION> 9,440
<TOTAL-ASSETS> 93,256
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0
0
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<EPS-PRIMARY> (0.32)
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</TABLE>
