FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 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: 0-19825
SCICLONE PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
California 94-3116852
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
901 Mariners Island Blvd., Suite 315, San Mateo, California 94404
(Address of principal executive offices) (Zip code)
(415) 358-3456
(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
----------------- ----------------
As of October 31, 1996, 17,610,195 shares of the registrant's Common
Stock, no par value, were issued and outstanding.
<PAGE>
SCICLONE PHARMACEUTICALS, INC.
INDEX
PAGE
PART I. FINANCIAL INFORMATION NO.
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets
September 30, 1996 and December 31, 1995 3
Consolidated Statements of Operations
Three and nine months ended September 30, 1996 and 1995 4
Consolidated Statements of Cash Flows
Nine months ended September 30, 1996 and 1995 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
SCICLONE PHARMACEUTICALS, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
September 30, December 31,
1996 1995
------------- -------------
(unaudited)
Current assets:
Cash and cash equivalents $ 4,243,540 $ 3,986,307
Short-term investments 8,723,312 15,467,685
Accounts receivable, net 133,106 108,410
Inventory 2,465,363 2,360,479
Prepaid expenses and other current assets 2,076,860 1,955,930
------------- -------------
Total current assets 17,642,181 23,878,811
Property and equipment, net 298,630 313,703
Other assets 36,032 58,381
Long-term investments 25,068,593 27,935,835
Notes receivable from officers 2,653,014 1,964,065
------------- -------------
Total assets $ 45,698,450 $ 54,150,795
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 345,451 $ 472,477
Accrued compensation and benefits 798,874 1,086,904
Accrued clinical trial expense 1,190,048 2,054,741
Accrued professional fees 1,501,501 765,000
Other accrued expenses 374,473 216,411
------------- -------------
Total current liabilities 4,210,347 4,595,533
------------- -------------
Shareholders' equity:
Preferred stock, no par value; 10,000,000
shares authorized; no shares issued
and outstanding -- --
Common stock, no par value; 75,000,000
shares authorized; 17,600,492 and
16,807,257 shares issued and outstanding 109,580,480 105,915,548
Net unrealized (loss) gain on
available-for-sale securities (246,532) 450,086
Accumulated deficit (67,845,845) (56,605,519)
Deferred compensation -- (204,853)
------------- -------------
Total shareholders' equity 41,488,103 49,555,262
------------- -------------
Total liabilities and shareholders' equity $ 45,698,450 $ 54,150,795
============= =============
See notes to consolidated financial statements
3
<PAGE>
SCICLONE PHARMACEUTICALS, INC.
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Product sales $ 152,258 $ 116,575 $ 400,603 $ 161,773
Cost of product sales 151,696 274,234 555,156 477,527
------------ ------------ ------------ ------------
Gross profit 562 (157,659) (154,553) (315,754)
Operating expenses:
Research and development 2,535,828 2,876,734 7,612,902 7,837,265
Marketing 1,046,904 939,724 3,148,017 2,979,625
General and administrative 777,604 692,966 2,340,938 2,190,869
------------ ------------ ------------ ------------
Total operating expenses 4,360,336 4,509,424 13,101,857 13,007,759
------------ ------------ ------------ ------------
Loss from operations (4,359,774) (4,667,083) (13,256,410) (13,323,513)
Interest and investment income, net 588,407 954,595 2,016,084 2,359,019
------------ ------------ ------------ ------------
Net loss $ (3,771,367) $ (3,712,488) $(11,240,326) $(10,964,494)
============ ============ ============ ============
Net loss per share $ (0.21) $ (0.22) $ (0.65) $ (0.65
============ ============ ============ ============
Weighted average shares used in
computing per share amounts 17,579,717 16,781,285 17,359,726 16,913,767
============ ============ ============ ============
<FN>
See notes to consolidated financial statements
</FN>
</TABLE>
4
<PAGE>
SCICLONE PHARMACEUTICALS, INC.
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<CAPTION>
Nine months ended
September 30,
1996 1995
------------ ------------
Operating activities:
<S> <C> <C>
Net loss $(11,240,326) $(10,964,494)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 276,854 381,839
Changes in operating assets and liabilities:
Accounts receivable (24,696) (100,201)
Inventory (104,884) (1,495,513)
Prepaid expenses and other assets (787,530) (1,932,055)
Accounts payable and other accrued expenses 31,036 182,183
Accrued clinical trial expense (864,693) 93,456
Accrued professional fees 736,501 203,750
Accrued compensation and benefits (288,030) (505,419)
------------ ------------
Net cash used in operating activities (12,265,768) (14,136,454)
------------ ------------
Investing activities:
Purchase of property and equipment (56,928) (146,434)
Sale of short and long term investments, net 8,914,997 16,154,075
------------ ------------
Net cash provided by investing activities 8,858,069 16,007,641
------------ ------------
Financing activities:
Proceeds from issuance of common stock, net 3,664,932 161,687
Repurchase of common stock -- (1,924,897)
------------ ------------
Net cash provided by (used in) financing activities 3,664,932 (1,763,210)
------------ ------------
Net increase in cash and cash equivalents 257,233 107,977
Cash and cash equivalents, beginning of period 3,986,307 8,292,888
------------ ------------
Cash and cash equivalents, end of period $ 4,243,540 $ 8,400,865
============ ============
Supplemental disclosures of noncash financing activities:
Net unrealized (loss) gain on available-for-sale securities (696,618) 3,196,269
<FN>
See notes to consolidated financial statements
</FN>
</TABLE>
5
<PAGE>
SCICLONE PHARMACEUTICALS, INC.
Notes to Consolidated Financial Statements
1. The accompanying unaudited consolidated financial statements have been
prepared in conformity with generally accepted accounting principles
consistent with those applied in, and should be read in conjunction with,
the audited financial statements for the year ended December 31, 1995. The
interim financial information reflects all normal recurring adjustments
which are, in the opinion of management, necessary for a fair presentation
of the results for the interim and commencement to date periods presented.
The interim results are not necessarily indicative of results for the full
year.
2. Net loss per share has been computed using the weighted average number of
common shares outstanding during each period presented. Common equivalent
shares for outstanding options and warrants were not included in the
weighted average shares outstanding because the effect of including them is
antidilutive.
3. The following is a summary of available-for sale securities at September
30, 1996:
<TABLE>
Available-for-Sale Securities
-----------------------------------------
<CAPTION>
Gross Gross Estimated
Unrealized Unrealized Fair
Cost Gains Losses Value
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
U.S. Government &
Agency obligations $ 22,428,753 $ 15,125 $ (272,634) $ 22,171,244
Corporate obligations 11,409,684 16,383 (37,456) 11,388,611
Corporate securities 200,000 32,050 -- 232,050
------------ ------------ ------------ ------------
$ 34,038,437 $ 63,558 $ (310,090) $ 33,791,905
============ ============ ============ ============
</TABLE>
The amortized cost and estimated fair value of debt and marketable securities
at September 30, 1996 by contractual maturity are shown below.
Estimated
Fair
Cost Value
----------- -----------
Due in one year or less $ 8,492,846 $ 8,491,262
Due after one year through three years 17,560,517 17,382,475
Due after three years 7,785,074 7,686,118
----------- -----------
33,838,437 33,559,855
Corporate securities 200,000 232,050
----------- -----------
$34,038,437 $33,791,905
=========== ===========
4. The following is a summary of inventories at September 30, 1996:
Raw materials $2,447,028
Finished goods 18,335
----------
$2,465,363
==========
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Except for historical information contained herein, the following material
includes forward-looking statements, including statements regarding expected
revenues and anticipated expense levels. Such forward looking statements are
subject to certain risks and uncertainties and actual results could vary
materially. These risks and uncertainties include the Company's current reliance
on a single product, ZADAXIN(R) thymosin alpha 1, for its revenues, the absence
of regulatory approval for ZADAXIN in significant markets, uncertainties
regarding prospects for regulatory approvals based on existing clinical data,
risks associated with the manufacture and supply of ZADAXIN and relationships
with collaborative partners, and competition from competing therapies, as well
as other risks and uncertainties described herein and in the Company's Annual
Report on Form 10-K and its other reports filed with the Securities Exchange
Commission.
The Company is an international biopharmaceutical company involved in the
acquisition, development and commercialization of pharmaceuticals worldwide. The
Company's focus is on therapeutics for diseases that are chronic and
life-threatening, including hepatitis B and C, cancer and immune system
disorders. To date, the Company's principal focus has been the development and
commercialization of ZADAXIN.
From commencement of operations through September 30, 1996, the Company
incurred a cumulative net loss of approximately $67.8 million. The Company
expects its operating expenses to increase over the next several years as it
expands its research and development, clinical testing and marketing
capabilities. The Company's ability to achieve a profitable level of operations
currently is dependent in large part on securing regulatory approvals for
ZADAXIN in additional countries, successfully launching ZADAXIN once approved,
meeting increased demand for ZADAXIN, if it arises, acquiring rights to
additional drugs, and entering into and extending agreements for product
development and commercialization, where appropriate. There can be no assurance
that the Company will be able to attain these objectives or that the Company
will ever achieve a profitable level of operations.
The Company's operating results may fluctuate from period to period as a
result of, among other things, the timing and costs associated with clinical
trials and the regulatory approval process, and the acquisition of additional
product rights. The Company participates in a highly dynamic industry, which
often results in significant volatility of the Company's common stock price. Any
setbacks in clinical trials, in the regulatory approval process or in
relationships with collaborative partners, and any shortfalls in revenue or
earnings from levels expected by securities analysts, among other developments,
have in the past had and could in the future have an immediate and significant
adverse effect on the trading price of the Company's common stock in any given
period.
7
<PAGE>
Results of Operations
Product sales reached approximately $152,000 and $401,000 for the three
and nine month periods ended September 30, 1996, respectively, as compared to
approximately $117,000 and $162,000 for the corresponding periods in 1995. The
Company commenced shipment of ZADAXIN in the second quarter of 1995 and has been
recording product sales under a named patient registration program. Currently,
the Company has received approval to market ZADAXIN in the Peoples Republic of
China, the Republic of the Phillipines and Singapore. In addition, the Company
has filed for approval to market ZADAXIN in several countries and anticipates
additional filings in other countries. As a result, the Company expects product
sales to increase starting in the fourth quarter of 1996 upon the commencement
of the commercial launch of ZADAXIN in its approved markets. The level of such
product sales increase is dependent upon successfully launching ZADAXIN and
receipt of additional ZADAXIN marketing approvals. Although the Company remains
optimistic regarding the prospects of ZADAXIN, there can be no assurance that
the Company will achieve significant levels of product sales.
Cost of product sales was approximately $152,000 and $555,000 for the
three and nine month periods ended September 30, 1996, respectively, as compared
to approximately $274,000 and $478,000 for the corresponding periods in 1995.
The decrease in the three month period is primarily attributable to decreased
fixed inventoriable costs offset by increased product sales. The change in the
nine month period is primarily due to increased product sales and fixed costs
associated with acquiring and warehousing inventory offset by decreased payroll
costs. The Company expects cost of product sales to vary from quarter to
quarter, dependent upon the level of product sales and the absorption of fixed
product-related costs.
Research and development expenses were approximately $2,536,000 and
$7,613,000 for the three and nine month periods ended September 30, 1996,
respectively, as compared to approximately $2,877,000 and $7,837,000 for the
corresponding periods in 1995. These decreases are primarily attributable to
decreased clinical trials and regulatory expenses offset by increased
pre-clinical development expenses. In April 1996, the Company acquired an
exclusive license for CPX, a synthetic compound developed by the National
Institutes of Health as a potential treatment for cystic fibrosis. The Company
has incurred additional pre-clinical development expenses to initiate the
development of this compound. The decrease in clinical trial expenses was
primarily a result of completion of the ZADAXIN Taiwan Phase III Hepatitis B
trial during the first half of 1996. The Company is currently reviewing its U.S.
and European ZADAXIN clinical trial strategy and the results of this review will
have a significant effect on the Company's research and development expenses. In
general,the Company expects research and development expenses to increase over
the next several years and to vary quarter to quarter as the Company initiates
additional clinical trials and testing, acquires product rights, initiates
additional trials, and expands regulatory activities.
Marketing expenses were approximately $1,047,000 and $3,148,000 for the
three and nine month periods ended September 30, 1996, respectively, as compared
to $940,000 and $2,980,000 for the corresponding periods in the prior year.
These increases are primarily attributable to increased professional services,
primarily consulting services expenses regarding the launch of ZADAXIN in its
approved markets later this year, offset by decreased payroll costs related to
an executive officer who left the Company in 1995. The Company expects marketing
expenses to increase significantly in the next several quarters and years as it
anticipates expanding its commercialization and marketing efforts and pursuing
other strategic relationships.
8
<PAGE>
General and administrative expenses were approximately $778,000 and
$2,341,000 for the three and nine month periods ended September 30, 1996,
respectively, as compared to approximately $693,000 and $2,191,000 for the
corresponding periods in the prior year. These increases are primarily
attributable to increased payroll costs offset by decreased expenses for
professional services, primarily legal services and consulting fees. In the near
term, the Company expects general and administrative expenses to vary quarter to
quarter as the Company augments its general and administrative activities to
support increased expenditures on clinical trials and testing, and regulatory,
pre-commercialization and marketing activities.
Net interest and investment income was approximately $588,000 and
$2,016,000 for the three and nine month periods ended September 30, 1996,
respectively, as compared to approximately $955,000 and $2,359,000 in the same
periods in 1995. The changes primarily resulted from decreased interest and
investment income due to lower average invested cash balances.
Liquidity and Capital Resources
At September 30, 1996, the Company had approximately $38,035,000 in cash,
cash equivalents and highly liquid short and long term investments.
Net cash used by the Company in operating activities amounted to
approximately $12,266,000 for the nine month period ended September 30, 1996.
Net cash used in operating activities in the 1996 period is greater than the
Company's net loss for such period primarily due to cash used for inventory
purchases, increases in and prepayments of certain future period expenses and
decreases in amounts owed to third parties for goods and services related to
clinical trial expenses and compensation and benefits. These uses were offset by
noncash charges associated with depreciation and amortization and increases in
amounts owed for accounts payable and accrued professional fees. Net cash used
in operating activities amounted to approximately $14,136,000 for the nine month
period ended September 30, 1995. Net cash used in operating activities in the
1995 period is greater than the Company's net loss for such period primarily due
to cash used for inventory purchases, the prepayment of certain future period
expenses and payments reducing accrued compensation and benefits. These uses
were partially offset by increases in amounts owed to third parties for goods
and services related to clinical trial expenses and professional fees, in
addition to noncash charges associated with depreciation and amortization.
Net cash provided by investing activities for the nine month period ended
September 30, 1996 related to the net sale of approximately $8,915,000 of
marketable securities offset by the purchase of $57,000 in equipment and
furniture. Net cash provided in investing activities for the comparable 1995
period primarily resulted from the net sale of $16,154,000 of marketable
securities offset by the purchase of $146,000 of equipment and furniture.
Net cash provided by financing activities for the nine month period ending
September 30, 1996 primarily consisted of approximately $3,665,000 in proceeds
received for the issuance of common stock under the Company's stock option plan.
Net cash used in financing activities for the nine month period ending September
30, 1995 related to repurchases of the Company's common stock of approximately
$1,925,000 offset by approximately $162,000 in proceeds received from issuance
of common stock under the Company's stock option plan.
9
<PAGE>
Management believes its existing capital resources and interest on funds
available are adequate to maintain its current and planned operations at least
through 1997. However, the Company's capital requirements may change depending
upon numerous factors, including the availability of complementary products,
technologies and businesses, the results of clinical trials and testing, the
timing of regulatory approvals, developments in relationships with collaborative
partners and the status of competitive products. If the Company cannot
eventually generate sufficient funds from operations, it will need to raise
additional financing. There can be no assurance that such financing will be
available on acceptable terms, or at all.
10
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Shareholders on July 25, 1996 to
elect five (5) directors, to approve the adoption of the Company's 1996 Employee
Stock Purchase Plan, and to ratify the appointment of the independent auditors
of the Company.
At the Annual Meeting, all of the nominees were elected as follows:
Votes
-----
For Withheld
--- --------
Thomas E. Moore 15,775,283 42,775
Donald R. Sellers 15,772,983 45,075
John D. Baxter, M.D 12,812,006 3,006,052
Edwin C. Cadman, M.D 12,821,956 2,996,102
Jere E. Goyan, Ph.D 12,823,956 2,994,102
The shareholders also approved the adoption of the Company's 1996 Employee
Stock Purchase Plan with voting as follows: 14,958,697 for; 194,402 against;
310,591 abstaining; and 354,368 non-votes.
The shareholders also ratified the selection of Ernst & Young LLP as
independent auditors for the Company for the fiscal year ending December 31,
1996 with voting as follows: 15,758,477 for; 17,851 against; and 41,730
abstaining.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit
Number Description
------- -----------
10.1 Form of Promissory Note secured by Deed of Trust between
Registrant and Donald R. Sellers
10.2 Amendment No. 8 to Spieker Lease, dated August 26, 1996
27 Financial Data Schedule
(b) Reports on Form 8-K
None
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SCICLONE PHARMACEUTICALS, INC.
(Registrant)
Date: November 13, 1996 Donald R. Sellers
-----------------------------
Donald R. Sellers
Chief Executive Officer
(Principal Executive Officer)
Date: November 13, 1996 Mark A. Culhane
-----------------------------
Mark A. Culhane
Vice President, Finance and Administration
and Chief Financial Officer
(Principal Financial & Accounting Officer)
12
PROMISSORY NOTE SECURED BY DEED OF TRUST
$1,000,000 San Mateo, California
August 1, 1996
In installments as stated in this Note, for value received, Donald R.
Sellers and Jolice K. Sellers, husband and wife (together, "Borrowers"), hereby
promise to pay to SciClone Pharmaceuticals, Inc., a California corporation
("Lender") or order, at its offices at 901 Mariners Island Boulevard, San Mateo,
California, or at such other place as Lender may from time to time designate in
writing, the principal sum of one Million Dollars ($1,000,000), with interest on
the unpaid balance of principal from the date of this Note until paid at the
rate of eight percent (8.00%) per annum (the "Note Rate"), on the following
terms:
I. Payment: The principal and interest due pursuant to this Note shall be
paid as follows:
A. On September 1, 1996 and on the first day of each calendar
month thereafter, Borrowers shall pay to Lender equal monthly payments in the
amount of Seven Thousand Three Hundred Thirty Seven and 65/100 Dollars
($7,337.65).
B. The entire principal balance with all then unpaid accrued
interest shall be due and payable on or before July 31, 2001, unless the term
hereof is renewed as set forth herein. At the election of the Lender, the Lender
may extend the term of this Note, which extension shall be deemed effective upon
written notice from Lender to Borrowers delivered at any time before the initial
maturity date hereof, which notice shall state the extended maturity date
selected by Lender. As of the effective date of such notice, this Note shall be
extended on all the same terms and conditions as are set forth herein, except
for the extended maturity date.
C. Principal and interest shall be payable in lawful money of
the United States. Interest shall be calculated on the basis of a 360-day year
consisting of 12 thirty day months. Each payment shall be applied first to
interest then due and the balance of said installment shall be applied to the
principal sum.
D. This Note may be prepaid at any time, without penalty.
II. Security: This Note is secured by a deed of trust of even date herewith
made by Borrowers, as trustor, to North American Title Company, as trustee, for
Lender, as beneficiary (the "Deed of Trust"), encumbering certain real property
commonly known as 8 Acorn, Portola Valley, California (the "Property"), which
Borrowers occupy as their principal place of residence.
<PAGE>
III. Default and Acceleration:
A. Unless otherwise prohibited by law, upon the occurrence of any of the
following events, the Holder of this Note shall have the option, without demand
or notice, to declare the entire balance of principal of this Note together with
all accrued interest to be immediately due and payable:
1. Borrowers default in the payment of principal or interest
when due pursuant to the terms hereof or default in the performance of any
obligation of Borrowers contained in the Deed of Trust or any other deed of
trust, security agreement or other agreement (including any amendment,
modification or extension thereof) which may hereafter be executed by Borrowers
for the purpose of securing this Note;
2. Borrowers voluntarily or by operation of law sell, convey,
assign, further encumber or otherwise transfer or agree to sell, convey or
otherwise transfer, all or substantially all, or any portion of, or Borrowers'
interest in the Property;
3. Ninety (90) days after the voluntary termination by Donald R.
Sellers of his employment with SciClone Pharmaceuticals, Inc.;
4. One hundred eighty (180) days after the termination of Donald
R. Sellers' employment by SciClone Pharmaceuticals, Inc. for Cause, as defined
below;
5. Three hundred sixty (360) days after the termination of
Donald R. Sellers' employment by SciClone Pharmaceuticals, Inc. without Cause.
As used herein, the employment of Donald R. Sellers shall be deemed terminated
for Cause if a primary factor in the termination of his employment is the
failure by Mr. Sellers to comply with the instructions of the Board of Directors
of SciClone Pharmaceuticals, Inc., gross negligence, willful misconduct, fraud
or conviction of any crime.
IV. Default Interest Rate: If Borrowers fail to make any payment within
fifteen (15) days after any such payment becomes due and payable, Borrowers
agree to pay interest on the late payment, including that portion of the late
payment which consists of past-due interest, at an annual rate (the "Default
Rate") of three (3) percent in excess of the Note Rate, from the date the
payment was due until Borrowers pays in full all sums due under this Note.
<PAGE>
V. Attorneys' Fees: In the event of any default hereunder, Borrowers
hereby promise to pay all costs of collection, including reasonable attorney's
fees incurred by Lender hereof on account of such collection, whether or not
suit is filed hereon.
VI. Waiver: The waiver by Lender hereof of any breach of or default
under any term, covenant or condition contained herein or in any of the
agreements referred to above shall not be deemed to be a waiver or such term,
covenant or condition or any subsequent breach of or default under the same or
any other such term, covenant or condition.
VII. No Usury: It is the intent of Borrowers and Holder that the rate
of interest on the indebtedness evidenced hereby shall not exceed the maximum
rate permitted by applicable law and accordingly, if the rate of interest
specified herein, or any other payments specified herein or otherwise required
to be made by Borrowers or received by Holder in connection with the
indebtedness evidenced hereby and deemed to be interest, shall exceed the
maximum rate of interest permitted by applicable law then such payments, to the
extent they exceed such maximum rate, shall be deemed to have been made and
received inadvertently, and shall for all purposes be deemed to be a payment of
and on account of the principal balance of the indebtedness evidenced hereby and
shall be applied accordingly or, at Holder's option, returned to Borrowers.
VIII. General Provisions: This Note shall be governed by and construed
in accordance with the laws of the State of California. The makers, guarantors
and endorsers of this Note hereby severally waive presentment for payment,
protest and demand, notice of protest, demand and dishonor and nonpayment of
this Note, and consent that Lender may extend the time for payment or otherwise
modify the terms of payment of any part or the whole of the debt evidenced by
this Note, at the request of any person liable hereon, and such consent shall
not alter nor diminish the liability of any person. Borrowers hereby waive the
defense of the statute of limitations in any action on this Note to the extent
permitted by law.
Borrowers:
Donald R. Sellers
------------------------------------
Donald R. Sellers
Jolice K. Sellers
------------------------------------
Jolice K. Sellers
REVISED LEASE AMENDMENT #8
ORIGINAL LEASE DATE: September 10, 1991
LEASE AMENDMENT DATE: August 26, 1996
LANDLORD: SPIEKER-SINGLETON #68 LIMITED PARTNERSHIP
A California Limited Partnership
TENANT: SCICLONE PHARMACEUTICALS, INC
A California Corporation
Landlord and Tenant, by executing this Lease Amendment as provided do hereby
amend the Original Lease referred to above as follows:
1. TERM
11/01/96 - 04/30/2000
2. PREMISES
Effective November 1, 1996 approximately 1,155 square feet of rentable
space on the second floor (Suite #265) of San Mateo BayCenter, Phase
II, shall be incorporated into the Original Lease Agreement. Total
square footage shall increase from 15,227 to 16,382 rentable square
feet.
<TABLE>
3. RENTAL
<CAPTION>
AMOUNT
DUE:
Additional Existing
11/01/96 - 11/30/96 1,155 rsf. 15,227 rsf. 16,382 rsf.
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Base Rent $1,686.00 $17,236.00 $18,922.00
Op. Exp. (est. '96) $693.00 $9,137.00 $9,830.00
------- --------- ---------
Total Rent $2,379.00 $26,373.00 $28,752.00
Additional Existing
12/01/96 - 12/31/96 1,155 rsf. 15,227 rsf. 16,382 rsf.
-------------------------------------------------------------------------------
Base Rent $1,496.26 $17,236.00 $18,732.26
Op. Exp. (est. '96) $693.00 $ 9,137.00 $ 9,830.00
------- ---------- ----------
Total Rent $2,189.26 $26,373.00 $28,562.26
Additional Existing
01/01/97 - 04/30/97 1,155 rsf. 15,227 rsf. 16.382 rsf.
-------------------------------------------------------------------------------
Base Rent $1,340.00 $17,354.00 $18,694.00
Op. Exp. (est. '96) $693.00 $9,137.00 $9,830.00
------- --------- ---------
Total Rent $2,033.00 $26,491.00 $28,524.00
Additional Existing
05/01/97 - 12/31/97 1,155 rsf. 15,227 rsf. 16,382 rsf.
------------------------------------------------------------------------------
Base Rent $1,397.00 $18,018.00 $19,415.00
Op. Exp. (est. '96) $693.00 $9,137.00 $9,830.00
------- --------- ---------
Total Rent $2,090.00 $27,155.00 $29,245.00
<PAGE>
SciCione Phanylaccuticals, Inc.
Lease Amendment #8
8/26/96
Page 2
Additional Existing
01/01/98 - 04/30/98 1,155 rsf. 15,227 rsf. 16,382 rsf.
----------------------------------------------------------------------------------
Base Rent $1,397.00 $18,136.00 $19,533.00
Op. Exp. (est. '96) $693.00 $9,137.00 $9,830.00
------- --------- ---------
Total Rent $2,090.00 $27,273.00 $29,363.00
Additional Existing
05/01/98 - 12/31/98 1,155 rsf. 15,227 rsf. 16.382 rsf.
--------------------------------------------------------------------------------
Base Rent $1,455.00 $18,799.00 $20,254.00
Op. Exp. (est. '96) $693.00 $ 9,137.00 $9,830.00
------- ---------- ---------
Total Rent $2,148.00 $27,936.00 $30,084.00
Additional Existing
01/01/99 - 04/30/99 1,155 rsf. 15,227 rsf. 16.382 rsf.
---------------------------------------------------------------------------------
Base Rent $1,455.00 $18,937.00 $20,392.00
Op. Exp. (est. '96) $693.00 $ 9,137,00 $9,830.00
------- ---------- ---------
Total Rent $2,148.00 $28,074.00 $30,222.00
Additional Existing
05/01/99 - 04/30/2000 1,155 rsf. 15,227 rsf. 16,382 rsf.
---------------------------------------------------------------------------------
Base Rent $1,513.00 $19,600.00 $21,113.00
Op. Exp. (est. '96) $693.00 $9,137.00 $9,830.00
------- --------- ---------
Total Rent $2,206.00 $28,737.00 $30,943.00
</TABLE>
4. TENANT PROPORTIONATE SHARE
Effective November 1, 1996, Tenant's proportionate share shall increase
from 12.79% to 13.76%.
All other terms and conditions of the original Lease Agreement and Lease
Amendaments #1 through #7 shall apply to this Lease Amendment #8, as agreed to
this 26th day of August, 1996.
LANDLORD:
SPIEKER-SINGLETON #68 LIMITED PARTERSHIP
A California Limited Partnership
By: Peter H. Schnugg
Its: Agent for Owner
Date: 8/26/96
TENANT:
SCICLONE PHARMACEUTICALS, INC.
A California Corporation
By: Mark A. Culhane
Its: Vice President Finance & Administration, CFO
Date: August 26, 1996
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<ARTICLE> 5
<CIK> 0000880771
<NAME> SciClone
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 4,243,540
<SECURITIES> 33,791,905
<RECEIVABLES> 2,786,120
<ALLOWANCES> 0
<INVENTORY> 2,465,363
<CURRENT-ASSETS> 17,642,181
<PP&E> 861,597
<DEPRECIATION> (562,967)
<TOTAL-ASSETS> 45,698,450
<CURRENT-LIABILITIES> 4,210,347
<BONDS> 0
<COMMON> 0
0
109,580,480
<OTHER-SE> (68,092,377)
<TOTAL-LIABILITY-AND-EQUITY> 45,698,450
<SALES> 400,603
<TOTAL-REVENUES> 400,603
<CGS> 555,156
<TOTAL-COSTS> 555,156
<OTHER-EXPENSES> 13,101,857
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (11,239,467)
<INCOME-TAX> (859)
<INCOME-CONTINUING> (11,240,326)
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (11,240,326)
<EPS-PRIMARY> (0.65)
<EPS-DILUTED> 0
</TABLE>
