<PAGE> 1
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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 PERIOD ENDED MARCH 31, 1997
OR
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
COMMISSION FILE NUMBER: 0-28324
BIOTRANSPLANT INCORPORATED
(Exact name of registrant as specified in its charter)
DELAWARE 04-3119555
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
CHARLESTOWN NAVY YARD, BUILDING 75 THIRD AVENUE
CHARLESTOWN, MASSACHUSETTS 02129
(Address of principal executive offices)
(617) 241-5200
(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:
Yes X No
----- -----
As of May 1, 1997, there were 8,569,191 shares of the Registrant's Common Stock
outstanding.
===============================================================================+
<PAGE> 2
BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION
Page No.
--------
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
Condensed Consolidated Balance Sheets as of December 31, 1996
and March 31, 1997..................................................3
Condensed Consolidated Statement of Operations for the three
months ended March 31, 1996 and 1997, and for the period
from inception (March 20, 1990) to March 31, 1997...................4
Condensed Consolidated Statement of Cash Flows for three
months ended March 31, 1996 and 1997, and for the period
from inception (March 20, 1990) to March 31, 1997...................5
Notes to Condensed Consolidated Financial Statements..................6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.......................................8
PART II. OTHER INFORMATION
ITEMS 1.-6. ..............................................................11
SIGNATURES........................................................12
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
(A Development Stage Company)
<TABLE>
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
March 31,
December 31, 1997
1996 (Unaudited)
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 6,563,957 $ 14,275,870
Short-term investments 13,001,472 10,053,769
Deposits and other prepaid expenses 1,087,516 1,009,499
------------ ------------
Total current assets 20,652,945 25,339,138
Property and equipment - net 1,285,535 1,184,704
Long-term investments 10,310,778 11,180,584
Other assets 66,377 58,079
------------ ------------
TOTAL ASSETS $ 32,315,635 $ 37,762,505
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current obligation under capital leases $ 425,986 $ 406,123
Accounts payable 126,003 50,308
Accrued expenses 1,312,964 1,334,862
Deferred revenue 1,000,000 9,000,000
------------ ------------
Total current liabilities 2,864,953 10,791,293
------------ ------------
Long-term obligation under capital lease 188,974 100,326
------------ ------------
Stockholders' equity:
Preferred stock, $.01 par value, authorized 2,000,000
shares; issued and outstanding - no shares -- --
Common stock, $.01 par value, authorized 25,000,000 shares;
issued and outstanding 8,558,902 shares at December 31, 85,589 85,629
1996 and 8,562,941 shares at March 31, 1997
Additional paid-in capital 65,285,038 65,296,392
Accumulated deficit (36,108,919) (38,511,135)
------------ ------------
Total stockholders' equity 29,261,708 26,870,886
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 32,315,635 $ 37,762,505
============ ============
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
<PAGE> 4
BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
(A Development Stage Company)
<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Ended Cumulative
March 31, Since
1996 1997 Inception
---------- ----------- ------------
<S> <C> <C> <C>
Revenues:
License fees $ -- $ -- $ 9,000,000
Research and development 2,000,000 1,250,000 15,500,000
Interest income 75,697 404,717 2,226,337
---------- ----------- ------------
Total revenues 2,075,697 1,654,717 26,726,337
---------- ----------- ------------
Expenses:
Research and development 2,555,630 3,368,243 51,911,713
General and administrative 456,806 668,584 11,614,563
Interest 51,208 20,106 1,711,196
---------- ----------- ------------
Total expenses 3,063,644 4,056,933 65,237,472
---------- ----------- ------------
Net loss $ (987,947) $(2,402,216) $(38,511,135)
========== =========== ============
Net loss per common share $ (0.19) $ (0.28)
========== ===========
Shares used in computing
net loss per common share 5,131,346 8,561,383
========== ===========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
<PAGE> 5
BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
(A Development Stage Company)
<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Three Months Ended Cumulative
March 31, Since
1996 1997 Inception
----------- ----------- ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (987,947) $(2,402,216) $(38,511,135)
Adjustments to reconcile net loss to net cash
provided by (used) in operating activities:
Depreciation and amortization 175,050 146,924 2,691,511
Noncash interest expense 15,583 -- 465,477
Noncash expenses related to options and
warrants (57,913) 8,297 1,127,167
Changes in current assets and liabilities:
Accounts receivable 225,832 -- --
Deposits and prepaid expenses (30,218) 78,017 (1,009,499)
Accounts payable 2,185 (75,695) 50,308
Accrued expenses (9,452) 21,899 1,334,863
Deferred revenue (1,750,000) 8,000,000 9,000,000
----------- ----------- ------------
Net cash provided by (used in) operating
activities (2,416,880) 5,777,226 (24,851,308)
----------- ----------- ------------
Cash flows from investing activities:
Purchases of property and equipment (29,130) (46,092) (3,251,480)
Disposal of property and equipment, net -- -- 28,040
Purchases of investments -- (7,059,691) (45,260,383)
Proceeds from investments -- 9,137,589 24,026,030
----------- ----------- ------------
Net cash provided by (used in) investing
activities (29,130) 2,031,806 (24,457,793)
----------- ----------- ------------
Cash flows from financing activities:
Proceeds from convertible notes payable to
stockholders -- -- 9,400,000
Payments of obligations under capital leases (124,149) (108,511) (1,687,761)
Proceeds from sale/leaseback of equipment -- -- 771,968
Net proceeds from equipment leases -- -- 1,422,240
Net proceeds from sale of redeemable
convertible preferred stock 5,889,530 -- 25,661,526
Proceeds from sale of common stock -- 11,392 28,016,998
----------- ----------- ------------
Net cash provided by (used in) financing
activities 5,765,381 (97,119) 63,584,971
----------- ----------- ------------
Net increase in cash and cash equivalents 3,319,371 7,711,913 14,275,870
Cash and cash equivalents, beginning of period 2,848,549 6,563,957 --
----------- ----------- ------------
Cash and cash equivalents, end of period $ 6,167,920 $14,275,870 $ 14,275,870
=========== =========== ============
Supplemental disclosures and noncash transactions:
Increase in equipment under capital leases $ -- $ -- $ (2,210,270)
=========== =========== ============
Conversion of convertible notes payable to
stockholders and accrued interest into
redeemable convertible preferred stock $ 1,055,816 $ -- $ 9,905,710
=========== =========== ============
Issuance of warrants $ -- $ -- $ 741,737
=========== =========== ============
Interest paid during the period $ 35,611 $ 18,770 $ 1,352,599
=========== =========== ============
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
<PAGE> 6
BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. OPERATIONS AND BASIS OF PRESENTATION
BioTransplant Incorporated (the "Company") was incorporated on March 20, 1990.
The Company is developing proprietary anti-rejection pharmaceuticals and organ
transplantation systems which represent a comprehensive approach to inducing
long-term specific transplantation tolerance in humans.
The Company is in the development stage and is devoting substantially all of
its efforts toward product research and development and raising capital. The
Company is subject to a number of risks similar to those of other development
stage companies, including dependence on key individuals, competition from
larger companies, the development of commercially usable products, obtaining
regulatory approval for products under development, the development and
marketing of commercial products, and the need to obtain adequate additional
financing necessary to fund the development of its products.
The interim financial statements herein have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission ("SEC") and include, in the opinion of management, all
adjustments, consisting of normal, recurring adjustments, necessary for a fair
representation of interim period results. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. The results for the interim periods
presented are not necessarily indicative of results to be expected for the
fiscal year or any future period. These condensed consolidated financial
statements should be read in conjunction with the audited consolidated financial
statements and the notes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 1996, as filed with the Securities and
Exchange Commission.
2. CASH EQUIVALENTS AND INVESTMENTS
Cash equivalents include short-term, highly liquid investments with original
maturities of less than three months from the date of purchase. Short-term
investments consist primarily of corporate notes and securities issued by the
United States Treasury or other United States government agencies with
maturities of less than one year from the date of purchase. Long-term
investments consist primarily of corporate notes with maturities of more than
one year. In accordance with Financial Accounting Standards Board Statement No.
115, "Accounting for Certain Investments in Debt and Equity Securities", the
Company's investments are classified as held-to-maturity and are stated at
amortized cost, which approximates market value. At March 31, 1997 the weighted
average maturity of all investments was eleven months.
The Company held the following investments at December 31, 1996 and March 31,
1997:
<TABLE>
<CAPTION>
December 31, March 31,
1996 1997
----------- -----------
<S> <C> <C>
Short-term:
United States Treasury and Agency
Securities (average maturity of
12 months) $ -- $ 2,000,000
Corporate Bonds (average maturity of
seven months) 12,015,442 8,053,769
Commercial Paper (average maturity of 93
days) 986,030 --
----------- -----------
$13,001,472 $10,053,769
----------- -----------
Long-term:
Corporate Bonds (average maturity of 15
months) $10,310,778 $11,180,584
----------- -----------
Total investments $23,312,250 $21,234,353
=========== ===========
</TABLE>
<PAGE> 7
3. NET LOSS PER COMMON SHARE
Net loss per common share is based on the pro forma weighted average number of
common shares outstanding during the periods presented, assuming the automatic
conversion of all shares of Series A, B, D and E redeemable convertible
preferred stock into shares of common stock on the date of issuance. Pursuant to
the requirements of the SEC, common stock and preferred stock issued during the
12 months immediately preceding the initial public offering, plus shares of
common stock that became issuable during the same period pursuant to the grant
of common stock options and warrants, have been included in the calculation of
pro forma weighted average number of common shares outstanding for all periods
presented until the effective date of the Company's initial public offering
using the treasury stock method.
4. NEW ACCOUNTING STANDARD
In March 1997, the Financial Accounting Standards Board issued Statement No.
128, "Earnings Per Share", ("SFAS 128"). SFAS 128 establishes standards for
computing and presenting earnings per share and applies to entities with
publicly held common stock or potential common stock. This statement is
effective for fiscal years ending after December 15, 1997 and early adoption is
not permitted. When adopted, this statement will require restatement of prior
years' earnings per share. The Company will adopt this statement for its fiscal
year ended December 31, 1997. The Company believes that the adoption of SFAS 128
will not have a material effect on its financial statements.
5. REVENUE RECOGNITION
Substantially all of the Company's license and research and development revenues
are derived from two collaborative research arrangements. Annual research and
development payments are recognized on a straight-line basis over the period of
the contract, which approximates when work is performed and costs are incurred.
License fee revenue represents technology transfer fees received for rights to
certain technology of the Company. License fees are recognized as revenue as
earned. Deferred revenue represents amounts received in advance for research and
development. Research and development expenses in the accompanying consolidated
statements of operations include funded and unfunded expenses.
<PAGE> 8
BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
(A Development Stage Company)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion of the financial condition and results of operations of
the Company for the three months ended March 31, 1996 and 1997 should be read in
conjunction with the accompanying unaudited condensed consolidated financial
statements and the related notes thereto.
This report may contain certain forward looking statements which involve risks
and uncertainties. Such statements are subject to certain factors which may
cause the Company's plans and results to differ significantly from the plans and
results discussed in forward looking statements. Factors that may cause such
differences include, but are not limited to, the progress of the Company's
research and development programs, the Company's ability to compete
successfully, the Company's ability to attract and retain qualified personnel,
the Company's ability to enter into and maintain collaborations with third
parties, the Company's ability to enter into and progress in clinical trials,
the time and costs involved in obtaining regulatory approvals, the costs
involved in obtaining and enforcing patents, proprietary rights and any
necessary licenses, the ability of the Company to establish development and
commercialization capacities or relationships, the costs of manufacturing, the
Company's ability to obtain additional funds, and those other risks discussed
under the heading "Business - Factors Which May Affect Results" in the Company's
Annual Report on Form 10-K for the year ended December 31, 1996, as filed with
the Securities and Exchange Commission.
OVERVIEW
Since commencement of operations in 1990, the Company has been a development
stage company engaged primarily in the research and development of proprietary
anti-rejection pharmaceuticals and organ transplantation systems which represent
a comprehensive approach to inducing long-term specific transplantation
tolerance in humans. The major sources of the Company's working capital have
been the proceeds of equity placements, sponsored research funding and license
fees and capital lease financings. The Company has not generated any revenues
from the sales of products to date, and does not expect to receive any product
revenues for several years. The Company will be required to conduct significant
research, development, testing and regulatory compliance activities that,
together with general and administrative expenses, are expected to result in
significant and increasing operating losses for at least the next several years.
In 1993, and as amended and restated in September 1995, the Company and
Novartis Pharma Inc. ("Novartis") entered into a collaboration agreement for
the development and commercialization of xenotransplantation products
utilizing gene transduction. Under the agreement, Novartis has committed
research funding through March 1998 of $20.0 million, all of which had been
received as of March 31, 1997, and agreed to pay license fees of $10.0 million,
all of which had been received as of March 31, 1997. The $9.0 million payment
from Novartis which was received during March 1997 is comprised of $6.0 million
in research funding for the gene transduction approach to xenotransplantation,
which will be recognized as revenue on a straight-line basis over the one-year
period from April 1, 1997 to March 31, 1998, and $3.0 million in license fees
which will be recognized as revenue in April 1997. Novartis has also agreed to
fund certain development and premarketing costs of such products, portions of
which, under certain circumstances, may be repayable from the Company's
operating profits from sales of such products.
In October 1995, the Company and MedImmune, Inc. ("MedImmune") formed a
collaborative research agreement for the development of products to treat and
prevent organ rejection. MedImmune paid the Company a $2.0 million license fee
at the time of execution of the agreement, and agreed to fund and assume
responsibility for clinical testing and commercialization of BTI-322 and other
related products. MedImmune has agreed to provide research support and make
milestone payments which could total up to an additional $14.0 million, of
which $1.5 million had been received as of March 31, 1997.
<PAGE> 9
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
Revenues decreased to $1.7 million for the three months ended March 31, 1997
from $2.1 million for the three months ended March 31, 1996. The anticipated
decrease in revenues was primarily due to the recognition of $1.0 million in
sponsored research funding from Novartis during the three months ended March 31,
1997, compared to $1.8 million during the three months ended March 31, 1996, as
a result of the amendment and restatement of the collaboration agreement with
Novartis in September 1995.
Research and development expenses increased to $3.4 million for the three months
ended March 31, 1997 from $2.6 million for the three months ended March 31,
1996. This increase was primarily due to increases in sponsored research,
research and development staff and associated increases in supplies and support
services.
General and administrative expenses increased to $669,000 for the three months
ended March 31, 1997 from $457,000 for the three months ended March 31, 1996.
This increase was primarily due to increases in outside professional services in
connection with market research and business development and increased
administrative costs as a publicly-traded company.
Interest income increased to $405,000 for the three months ended March 31, 1997
from $76,000 for the three months ended March 31, 1996. The increase was due
primarily to higher cash balances available for investment.
Interest expense decreased to $20,000 for the three months ended March 31, 1997
from $51,000 for the three months ended March 31, 1996. The decrease was
primarily due to the conversion of $1.0 million of convertible notes payable,
and the accrued interest thereon, to stockholders into redeemable convertible
preferred stock in February 1996. The redeemable convertible preferred stock
was then automatically converted into common stock upon the closing of the
Company's initial public offering in May 1996. In addition, the decrease was in
part attributable to decreasing balances on existing obligations under capital
leases.
As a result of the above factors, the Company incurred a net loss for the three
months ended March 31, 1997 of $2.4 million, or $0.28 per share, compared to a
net loss of $988,000, or $0.19 per share for the three months ended March 31,
1996.
LIQUIDITY AND CAPITAL RESOURCES
In May 1996, the Company completed an initial public offering of 3,220,000
shares of common stock at a price of $9.50 per share, and received net proceeds
of approximately $28.0 million. In addition, all outstanding shares of
redeemable convertible preferred stock were automatically converted into
5,202,154 shares of common stock upon the closing of the initial public
offering.
Since its inception and prior to the completion of the Company's initial public
offering, the Company's operations have been funded principally through the net
proceeds of an aggregate of $36.2 million from private placements of equity
securities. The Company has also received $30.0 million from a research and
development and collaboration agreement with Novartis, $3.5 million from an
alliance agreement with MedImmune and $2.2 million in equipment lease financing.
The proceeds of the private placements, notes payable and capital leases and
cash generated from the corporate collaborations with Novartis and MedImmune
have been used to fund operating losses of approximately $38.5 million and the
investment of approximately $3.8 million in equipment and leasehold improvements
through March 31, 1997. The Company had no significant commitments as of March
31, 1997 for capital expenditures.
<PAGE> 10
During the three months ended March 31, 1997, the Company paid Stem Cell
Sciences Pty. Ltd. ("Stem Cell Sciences") $676,000 for research support for
calendar year 1997 and to maintain its pro rata equity interest in Stem Cell
Sciences. In addition, the Company has an option to purchase additional shares
of Stem Cell Sciences prior to December 1997, to maintain its pro rata equity
interest. If the Company does not make such further investment, its rights to
certain technologies become nonexclusive.
The increase in cash, cash equivalents and investments of $5.6 million for the
three months ended March 31, 1997 is primarily due to $5.8 million in net cash
provided by operating activities which reflects the receipt of $9.0 million from
Novartis for sponsored research and license support for the period April 1,
1997 to March 31, 1998, as discussed more fully in the preceding "Overview"
section.
The Company anticipates that its existing funds and interest earned thereon
should be sufficient to fund its operating and capital requirements as currently
planned through the end of 1998. However, the Company's cash requirements may
vary materially from those now planned due to many factors, including, but not
limited to, the progress of the Company's research and development programs, the
scope and results of preclinical and clinical testing, changes in existing and
potential relationships with corporate collaborators, the time and cost in
obtaining regulatory approvals, the costs involved in obtaining and enforcing
patents, proprietary rights and any necessary licenses, the ability of the
Company to establish development and commercialization capacities or
relationships, the costs of manufacturing and other factors.
The Company expects to incur substantial additional costs, including costs
related to research and development activities, preclinical studies, clinical
trials, obtaining regulatory approvals, manufacturing and the expansion of its
facilities. The Company will need to raise substantial additional funds, through
additional financings including public or private equity offerings and
collaborative arrangements with corporate partners. There can be no assurance
that funds will be available on terms acceptable to the Company, if at all. If
adequate funds are not available, the Company may be required to delay, scale
back or eliminate certain of its product development programs or to license to
others the right to commercialize products or technologies that the Company
would otherwise seek to develop and commercialize itself, any of which would
have a material and adverse effect on the Company.
<PAGE> 11
BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
(A Development Stage Company)
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Response: None
ITEM 2. CHANGES IN SECURITIES
Response: None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Response: None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Response: None
ITEM 5. OTHER INFORMATION
Response: None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
+10.1 Agreement to Further Vary Shareholder's Agreement between BioTransplant
Incorporated and C.R., S.S. and Stem Cell Sciences Pty. Ltd., dated
December 20, 1996.
+10.2 Agreement to Further Vary Shareholder's Agreement between BioTransplant
Incorporated and C.R., S.S. and Stem Cell Sciences Pty. Ltd., dated
March 16, 1997.
11.1 Statement: Computation of Pro Forma Net Loss Per Common Share
27 Financial Data Schedule.
b) Reports on Form 8-K
None.
+ Confidential Treatment requested as to certain portions.
<PAGE> 12
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.
BioTransplant Incorporated
(Registrant)
Date: May 8, 1997 /s/ Elliot Lebowitz
----------------------------------------------
Elliot Lebowitz
President and Chief Executive Officer
(Principal Executive Officer)
/s/ Richard V. Capasso
----------------------------------------------
Richard V. Capasso
Director of Finance
(Principal Financial and Accounting Officer)
<PAGE> 1
Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
Asterisks denote such omissions.
DATED this 20th day of December 1996
BETWEEN
BIOTRANSPLANT INC.
("BTI")
-and-
CASTELLA RESEARCH PTY LTD
("Castella")
- and-
SECURE SCIENCES PTY LTD
("Secure")
- and-
STEM CELL SCIENCES PTY LTD
("the Company")
AGREEMENT TO FURTHER VARY SHAREHOLDERS' AGREEMENT
HOLDING REDLICH
<PAGE> 2
LAWYERS AND CONSULTANTS
350 Williams Street Level 12, Chifley Tower
Melbourne VIC 3000 2 Chifley Squre
Sydney NSW 2000
Tel (03) 9321 9999 Tel (02) 234 4444
Fax (03) 9321 9900 Fax (02) 234 4400
Ref: CLSCS109.106
<PAGE> 3
CONTENTS
<TABLE>
<S> <C> <C>
1. DEFINITIONS AND INTERPRETATION 5
1.1 Definitions 5
1.2 Interpretation 5
1.3 Recitals 5
2. ISSUE OF SHARES 6
2.1 Issue of Shares to BTI 6
2.2 Issue of Shares to Castella 6
2.3 Issue of Shares to Secure 6
3. ISSUE OF OPTIONS 6
3.1 Issue of Option to BTI 6
3.2 Issue of Option to Castella 7
3.3 Issue of Option to Secure 7
4. VARIATION OF SHAREHOLDERS' AGREEMENT 7
4.1 Variation 7
4.2 Confirmation of Shareholders' Agreement 7
4.3 Acknowledgement 7
</TABLE>
<PAGE> 4
AGREEMENT TO FURTHER VARY SHAREHOLDERS' AGREEMENT dated the
day of , 1996
BETWEEN:
BIOTRANSPLANT INCORPORATED a corporation organised and
existing under the laws of the State of Delaware and having
its principal office 13 Pipp Street, Building 96, Navy Yard,
Charlestown, MA, United States of America
("BTI")
AND: CASTELLA RESEARCH PTY LTD (ACN 006 125 364) of
587 Whitehorse Road, Mont Albert, Victoria, Australia in its
own capacity and as trustee of the M.R. Brandon Family Trust
("Castella")
AND: SECURE SCIENCES PTY LTD (ACN 064 139 948) of Level 10,
420 St. Kilda Road, Melbourne, Victoria, Australia in its own
capacity and as trustee of the Secure Sciences Unit Trust
("Secure")
AND: STEM CELL SCIENCES PTY LTD (ACN 063 293 130) of Level 10,
420 St. Kilda Road, Melbourne, Victoria, Australia
("the Company")
RECITALS
A. By a Shareholders' Agreement dated 5 April, 1994 between BTI,
Castella, Secure and the Company (the "Shareholders' Agreement")
the Shareholders recorded their agreement as to how the Company
would be owned, controlled and funded by them.
B. Pursuant to Clause 2.5 of the Shareholders' Agreement the Company
issued to BTI the First BTI Option and the Second BTI Option.
C. The First BTI Option was to be exercised on or before the first
anniversary of the Effective Date.
D. Pursuant to Clause 2.5(b) of the Shareholders' Agreement if the
First BTI Option was not exercised on or before the first
anniversary of the Effective Date, the Second BTI Option would
lapse.
<PAGE> 5
Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
Asterisks denote such omissions.
E. BTI did not exercise the First BTI Option on or before the first
anniversary of the Effective Date (the anniversary occurring on 5
April, 1995) and accordingly, the Second BTI Option lapsed.
F. Each of Castella and Secure exercised the options granted to them
pursuant to Clause 2.5(a)(iii) and (v), respectively, by the
first anniversary of the Effective Date.
G. Pursuant to a Variation of the Shareholders' Agreement dated 2
February, 1996 between BTI, Castella, Secure and the Company ("the
First Variation"):
(a) BTI subscribed for and the Company issued to BTI a further
******* ****** in the capital of the Company; and
(b) the Company issued to BTI an option to subscribe for a
further ****** Shares in the capital of the Company at a
price of ****** per share at any time on or before 1 July,
1996 ("the New Option").
H. Neither Castella or Secure exercised the options granted to them
pursuant to, respectively, Clause 2.5(a)(iv) and (vi) of the
Shareholders' Agreement (respectively, "the Second Castella
Option" and "the Second Secure Option") by the second anniversary
of the Commencement Date.
I. BTI did not exercise the New Option by 1 July, 1996.
J. As a result of the exercise of the option by Castella and Secure,
the failure by BTI to exercise the First BTI Option, the failure
by Castella to exercise the Second Castella Option, the failure by
Secure to exercise the Second Secure Option and the issue of
shares to BTI pursuant to the First Variation, the issued capital
of the Company is owned in the following proportions:
BTI: 30%
Castella: ******
Secure: ******
K. BTI has agreed to provide an amount of equity capital to the
Company and prior to the date of this Agreement, has subscribed
that capital to the Company.
<PAGE> 6
L. In line with the intent of the Shareholders' Agreement that on the
provision by BTI of equity capital to the Company such shares in
the Company would be issued to maintain the shareholdings of BTI,
Castella and Secure in the Company in the ratios set out in
Recital J, the Shareholders have agreed to cause the Company to
allot to BTI a certain addition number of "A" shares in the
capital of the Company at a premium and to allot to Castella and
Secure certain additional "B" Shares in the capital of the Company
at par.
M. The Shareholders and the Company have also agreed that the Company
will allot to BTI, Castella and Secure fresh options on the terms
set out in this Agreement.
N. Clause 18.5 of the Shareholders' Agreement provides that the
Shareholders' Agreement may not be modified, amended, added to or
otherwise varied except by a document in writing signed by each of
the parties or signed on behalf of each party by a director under
hand.
O. The parties wish by this Agreement to record the matters set out
in Recitals K to M and to vary the Shareholders' Agreement to the
extent necessary to take account of those matters.
IT IS AGREED
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this Agreement (including in the Recitals), unless the contrary
intention appears, each defined word and expression has the
meaning assigned to that word or expression in the Shareholders'
Agreement.
1.2 Interpretation
Clauses 1.3 and 1.4 of the Shareholders' Agreement are
incorporated in and form part of this Agreement as if each
referenced to "this Agreement" in those clauses were a reference
to this Agreement to vary the Shareholders' Agreements.
1.3 Recitals
The parties acknowledge and agree that the Recitals are true and
correct and accurately reflect the circumstances in which this
Agreement was entered into.
<PAGE> 7
Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
Asterisks denote such omissions.
2. ISSUE OF SHARES
2.1 Issue of Shares to BTI
(a) On the date of this Agreement BTI must subscribe for, and be
issued with ****** in the capital of the Company issued at a
price of ****** per share (being $1.00 par and ****** premium
per share) for a total consideration of ******.
(b) The Company acknowledges that prior to the date of this
Agreement BTI has tendered and the Company has received
payment for the "A" Shares to be issued to it pursuant to
this Clause 2.1.
2.2 Issue of Shares to Castella
On the date of this Agreement Castella must subscribe for and be
issued with ****** in the capital of the Company issued at the par
price of $1.00 per share for a total consideration of ******
payable on the date of this Agreement.
2.3 Issue of Shares to Secure
On the date of this Agreement Secure must subscribe for and be
issued with ****** in the capital of the Company issue at the par
price of $1.00 per share for a total consideration of ******
payable on the date of this Agreement.
3. ISSUE OF OPTIONS
3.1 Issue of Options to BTI
(a) On the date of this Agreement, the Company must issue to BTI
an option (the Option Terms attaching) to subscribe for,
fully pay up and be issued with a further ****** in the
capital of the Company for a total consideration of US******
at any time on or before 31 December, 1996 ("the option").
(b) If BTI exercises the option the Company will issue BTI ******
in the capital of the Company at a price per share of A$1.00
(being the par value) plus a premium per share calculated in
A$ as at the date of the exercise of the option.
<PAGE> 8
Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
Asterisks denote such omissions.
3.2 Issue of Option to Castella
On the date of this Agreement, the Company must issue to Castella
an option (with the Option Terms attaching) to subscribe for,
fully pay up and be issued with a further ****** in the capital of
the Company issued at a price of $1.00 per share for a total
consideration of ****** at any time on or before 31 December,
1996.
3.3 Issue of Option to Secure
On the date of this Agreement, the Company must issue to Secure an
option (the Options Terms attaching) to subscribe for, fully pay
up and be issued with a further ****** in the capital of the
Company issued at a price of $1.00 per share for a total
consideration of ****** at any time on or before 31 December,
1996.
4. VARIATION OF SHAREHOLDERS' AGREEMENT
4.1 Variation
In consideration of the mutual agreements made by each party under
this Agreement, the parties agree, pursuant to cause 18.5 of the
Shareholders' Agreement, to vary clause 2.5 of the Shareholders'
Agreement to the extent necessary to give effect to the provisions
of Clauses 2 and 3 of this Agreement.
4.2 Confirmation of Shareholders' Agreement
The parties confirm that the terms and conditions of the
Shareholders' Agreement (as varied by this Agreement) remain in
full force and effect.
4.3 Acknowledgements
Without limiting Clause 4.2 but for the removal of doubt, the
parties acknowledge that:
(a) pursuant to clause 5.4(a)(i) of the Shareholders' Agreement,
all paragraphs of clause 5.3 of the Shareholders' Agreement
except paragraphs (e), (f), (p) and (v) ceased to operate on
the first anniversary of the Effective Date and nothing in
this Agreement will operate to or
<PAGE> 9
be construed as bring back into effect those paragraphs of
clause 5.3 of the Shareholders' Agreement which have ceased
to operate; and
(b) BTI did not exercise the second BTI Option and nothing in
this Agreement will be interpreted to mean that BTI did
exercise the Second BTI Option and the Shareholders'
Agreement will be construed and operate accordingly.
SIGNED AS AN AGREEMENT on the date first appearing
SIGNED by BIOTRANSPLANT INC. )
by its director ELLIOT LEBOWITZ ) /s/ Elliot Lebowitz
in the presence of: )
(Witness)
SIGNED by CASTELLA RESEARCH )
PTY LTD by its director MAL BRANDON) /s/ Mal Brandon
in the presence of: )
(Witness)
SIGNED by SECURE SCIENCES PTY LTD )
by its director PETER MOUNTFORD ) /s/ Peter Mountford
in the presence of: )
(Witness)
SIGNED by STEM CELL SCIENCES )
PTY LTD by its director MAL BRANDON) /s/ Mal Brandon
in the presence of: )
(Witness)
<PAGE> 1
Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
Asterisks denote such omissions.
DATED this 16th day of March 1997
BETWEEN
BIOTRANSPLANT INC.
("BTI")
-and-
CASTELLA RESEARCH PTY LTD
("Castella")
- and-
SECURE SCIENCES PTY LTD
("Secure")
- and-
STEM CELL SCIENCES PTY LTD
("the Company")
AGREEMENT TO FURTHER VARY SHAREHOLDERS' AGREEMENT
HOLDING REDLICH
LAWYERS AND CONSULTANTS
350 Williams Street Level 12, Chifley Tower
Melbourne VIC 3000 2 Chifley Squre
Sydney NSW 2000
Tel (03) 9321 9999 Tel (02) 234 4444
Fax (03) 9321 9900 Fax (02) 234 4400
Ref: CLSCS113.27
<PAGE> 2
AGREEMENT TO FURTHER VARY SHAREHOLDERS' AGREEMENT dated the
day of , 1997
BETWEEN:
BIOTRANSPLANT INCORPORATED a corporation organised and existing
under the laws of the State of Delaware and having its principal
office 13 Pipp Street, Building 96, Navy Yard, Charlestown, MA,
United States of America
("BTI")
AND: CASTELLA RESEARCH PTY LTD (ACN 006 125 364) of 587 Whitehorse
Road, Mont Albert, Victoria, Australia in its own capacity and as
trustee of the M.R. Brandon Family Trust
("CASTELLA")
AND: SECURE SCIENCES PTY LTD (ACN 064 139 948) of Level 10, 420 St.
Kilda Road, Melbourne, Victoria, Australia in its own capacity and
as trustee of the Secure Sciences Unit Trust
("SECURE")
AND: STEM CELL SCIENCES PTY LTD (ACN 063 293 130) of Level 10, 420 St.
Kilda Road, Melbourne, Victoria, Australia
("THE COMPANY")
RECITALS
A. By a Shareholders' Agreement dated 5 April, 1994 between BTI,
Castella, Secure and the Company (THE "SHAREHOLDERS' AGREEMENT")
the Shareholders recorded their agreement as to how the Company
would be owned, controlled and funded by them.
B. The Shareholders' Agreement was varied by Variations of the
Shareholders' Agreement made on 2 February 1996 and 20 December
1996 (the "Second Variation Agreement").
2
<PAGE> 3
Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
Asterisks denote such omissions.
C. Pursuant to the Second Variation Agreement:
(a) BIT was issued with an option to subscribe for
****** in the capital of the Company for a total
consideration of US ****** at any time on or before
31 December, 1996;
(b) Castella was issued with an option to subscribe for
****** in the capital of the Company for a total
consideration of ******at any time on or before 31
December, 1996; and
(c) Secure was issued with an opton to subscribe for
******in the capital of the Compay for a total
consideration of ****** at any time on or before 31
December, 1996
D. None of BTI, Castella and Secure have exercised the options issued
to them pursuant to the Second Variation Agreement.
E. BTI has agreed to provide an amount of equity capital to the
Company.
F. In line with the intent of the Shareholders' Agreement that on the
provision by BTI of equity capital to the Company such shares in
the Company would be issued to maintain the shareholdings of BTI,
Castella and Secure in the Company in the ratios set out in
Recital J, the Shareholders have agreed to cause the Company to
allot to BTI a certain addition number of "A" shares in the
capital of the Company at a premium and to allot to Castella and
Secure certain additional "B" Shares in the capital of the Company
at par.
G. The Shareholders and the Company have also agreed that the Company
will allot to BTI, Castella and Secure fresh options on the terms
set out in this Agreement.
H. Clause 18.5 of the Shareholders' Agreement provides that the
Shareholders' Agreement may not be modified, amended, added to or
otherwise varied except by a document in writing signed by each of
the parties or signed on behalf of each party by a director under
hand.
I. The parties wish by this Agreement to record the matters set out
in Recitals E to G and to vary the Shareholders' Agreement to the
extent necessary to take account of those matters.
3
<PAGE> 4
Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
Asterisks denote such omissions.
IT IS AGREED
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this Agreement (including in the Recitals), unless the contrary
intention appears, each defined word and expression has the
meaning assigned to that word or expression in the Shareholders'
Agreement.
1.2 Interpretation
Clauses 1.3 and 1.4 of the Shareholders' Agreement are
incorporated in and form part of this Agreement as if each
referenced to "this Agreement" in those clauses were a reference
to this Agreement to vary the Shareholders' Agreements.
1.3 Recitals
The parties acknowledge and agree that the Recitals are true and
correct and accurately reflect the circumstances in which this
Agreement was entered into.
2. ISSUE OF SHARES
2.1 Issue of Shares to BTI
On the date of this Agreement BTI must subscribe for, and be
issued with **** ****** in the capital of the Company issued at a
price of ****** per share (being $1.00 par and ****** premium per
share) for a total consideration of ******
2.2 Issue of Shares to Castella
On the date of this Agreement Castella must subscribe for and be
issued with ****** in the capital of the Company issued at the par
price of $1.00 per share for a total consideration of ******
payable on the date of this Agreement.
2.3 Issue of Shares to Secure
On the date of this Agreement Secure must subscribe for and be
issued with ****** in the capital of the Company issue at the par
price of $1.00 per share for a total consideration of ******
payable on the date of this Agreement.
4
<PAGE> 5
Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
Asterisks denote such omissions.
3. ISSUE OF OPTIONS
3.1 Issue of Options to BTI
(a) On the date of this Agreement, the Company must issue to BTI
an option (the Option Terms attaching) to subscribe for,
fully pay up and be issued with a further ****** in the
capital of the Company for a total consideration of US******
at any time on or before 31 December, 1997 ("THE OPTION").
(b) If BTI exercises the option the Company will issue BTI ******
in the capital of the Company at a price per share of A$1.00
(being the par value) plus a premium per share calculated in
A$ as at the date of the exercise of the option.
3.2 Issue of Option to Castella
On the date of this Agreement, the Company must issue to Castella
an option (with the Option Terms attaching) to subscribe for,
fully pay up and be issued with a further ****** in the capital of
the Company issued at a price of $1.00 per share for a total
consideration of ****** at any time on or before 31 December,
1997.
3.3 Issue of Option to Secure
On the date of this Agreement, the Company must issue to Secure an
option (the Options Terms attaching) to subscribe for, fully pay
up and be issued with a further ****** in the capital of the
Company issued at a price of $1.00 per share for a total
consideration of ****** at any time on or before 31 December,
1997.
4. VARIATION OF SHAREHOLDERS' AGREEMENT
4.1 Variation
In consideration of the mutual agreements made by each party under
this Agreement, the parties agree, pursuant to cause 18.5 of the
Shareholders' Agreement, to vary clause 2.5 of the Shareholders'
Agreement to the extent necessary to give effect to the provisions
of Clauses 2 and 3 of this Agreement.
5
<PAGE> 6
4.2 Confirmation of Shareholders' Agreement
The parties confirm that the terms and conditions of the
Shareholders' Agreement (as varied by this Agreement) remain in
full force and effect.
SIGNED AS AN AGREEMENT on the date first appearing
SIGNED by BIOTRANSPLANT INC. )
by its director ELLIOT LEBOWITZ ) /s/ Elliot Lebowitz
------------------------------
in the presence of: )
(Witness)
SIGNED by CASTELLA RESEARCH )
PTY LTD by its director MAL BRANDON ) /s/ Mal Brandon
------------------------------
in the presence of: )
(Witness)
SIGNED by SECURE SCIENCES PTY LTD )
by its director PETER MOUNTFORD ) /s/ Peter Mountford
------------------------------
in the presence of: )
(Witness)
SIGNED by STEM CELL SCIENCES )
PTY LTD by its director MAL BRANDON ) /s/ Mal Brandon
------------------------------
in the presence of: )
(Witness)
6
<PAGE> 7
/netuser5/whalen/op/101300.104/10Q.3.31/97amdt_s.wpf
<PAGE> 1
EXHIBIT 11.1
BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
(A Development Stage Company)
<TABLE>
COMPUTATION OF PRO FORMA NET LOSS PER COMMON SHARE (1)
<CAPTION>
Three Months Ended
March 31,
1996 1997
---------- -----------
<S> <C> <C>
Net Loss: $ (987,947) $(2,402,216)
========== ===========
Shares Used in Computing Pro Forma Net Loss Per Common
Share: Weighted Average Common Stock Outstanding
During the Period 126,594 8,561,383
Conversion of Redeemable Convertible Preferred Stock(2) 4,328,704 -
Dilutive Effect of Common Equivalent Shares Issued
Subsequent to March 1, 1995(3) 676,048 -
---------- -----------
5,131,346 8,561,383
---------- -----------
Pro Forma Net Loss Per Common Share $ (0.19) $ (0.28)
========== ===========
</TABLE>
- ---------------------------
(1) Historical net loss per common share has not been separately presented as
the amounts would not be meaningful
(2) Effective with the closing of the Company's initial public offering of
common stock, all shares of redeemable convertible preferred stock
automatically converted into shares of common stock. Accordingly the
equivalent number of weighted average common shares that would have been
outstanding during each period presented have been included as outstanding.
(3) Pursuant to Securities and Exchange Commission Staff Accounting Bulletin
No. 83, common stock, preferred stock, stock options and warrants issued
at prices below the initial public offering price per share ("cheap stock")
during the twelve month period immediately preceding the filing date of the
Company's Registration Statement for its initial public offering have been
included as outstanding for all periods presented until the effective date
of the Company's initial public offering. The dilutive effect of the
common and common stock equivalents was computed in accordance with the
treasury stock method.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
(A) CONSOLIDATED BALANCE SHEET @ MARCH 31, 1997, AND THE CONSOLIDATED STATEMENT
OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1997; AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH (B) CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 14,275,870
<SECURITIES> 10,053,769
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 25,339,138
<PP&E> 3,810,988
<DEPRECIATION> (2,626,284)
<TOTAL-ASSETS> 37,762,505
<CURRENT-LIABILITIES> 10,791,293
<BONDS> 0
0
0
<COMMON> 85,629
<OTHER-SE> 65,296,392
<TOTAL-LIABILITY-AND-EQUITY> 37,762,505
<SALES> 0
<TOTAL-REVENUES> 1,654,717
<CGS> 0
<TOTAL-COSTS> 4,036,827
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,106
<INCOME-PRETAX> (2,402,216)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,402,216)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,402,216)
<EPS-PRIMARY> (0.28)
<EPS-DILUTED> (0.28)
</TABLE>
