SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
Mark One:
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-27324
SYNAPTIC PHARMACEUTICAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 22-2859704
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
215 College Road
Paramus, NJ 07652
(Address of principal executive offices) (Zip Code)
(201) 261-1331
(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 October 31, 1996, there were 7,631,043 shares of the registrant's Common
Stock outstanding.
SYNAPTIC PHARMACEUTICAL CORPORATION
INDEX TO QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1996
PART I. FINANCIAL INFORMATION
Page
----
Item 1. Financial Statements 1
Balance Sheets at September 30, 1996 and December 31, 1995 1
Statements of Operations for the three months ended
September 30, 1996 and 1995, and for the nine months ended
September 30, 1996 and 1995 2
Statements of Cash Flows for the nine months ended
September 30, 1996 and 1995 3
Note to Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 5
PART II. OTHER INFORMATION
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
(i)
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
SYNAPTIC PHARMACEUTICAL CORPORATION
BALANCE SHEETS
ASSETS
September 30, December 31,
1996 1995
----------- -----------
(Unaudited) (Audited)
Current assets:
Cash and cash equivalents $ 1,529,989 $27,680,969
Marketable securities--current maturities 16,054,108 7,932,322
Revenue receivable under collaborative agreement 2,000,000 129,208
Restricted security 770,000 770,000
Other current assets 693,683 351,296
----------- -----------
Total current assets 21,047,780 36,863,795
Property and equipment, net 2,381,418 2,232,418
Marketable securities 16,379,937 404,375
Patent and patent application costs,
net of accumulated amortization 1,694,305 1,412,155
----------- -----------
$41,503,440 $40,912,743
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of capital lease obligations $ 124,461 $ 152,282
Accounts payable 379,262 196,750
Accrued liabilities 260,000 660,481
Accrued compensation 244,000 306,851
Unearned revenue under collaborative agreement 258,416 820,720
----------- -----------
Total current liabilities 1,266,139 2,137,084
Capital lease obligations, less current portion 32,136 106,472
Stockholders' equity:
Preferred Stock, $.01 par value; authorized--
1,000,000 shares; issued--none -- --
Common Stock, $.01 par value; authorized--
25,000,000 shares; issued--7,609,214 shares in
1996 and 7,326,368 shares in 1995; outstanding--
7,608,586 shares in 1996 and 7,325,493 shares in 1995 76,092 73,264
Additional paid-in capital 63,297,385 59,952,735
Net unrealized gains on securities 42,901 196,384
Deferred compensation (443,231) (208,952)
Note receivable from stockholder -- (6,134)
Accumulated deficit (22,766,772) (21,336,465)
----------- -----------
40,206,375 38,670,832
Less: Treasury stock, at cost (1,210) (1,645)
----------- -----------
Total stockholders' equity 40,205,165 38,669,187
----------- -----------
$41,503,440 $40,912,743
=========== ============
See notes to financial statements.
1
SYNAPTIC PHARMACEUTICAL CORPORATION
STATEMENTS OF OPERATIONS
(Unaudited)
For the three months For the nine months
ended September 30, ended September 30,
1996 1995 1996 1995
----------- ----------- ----------- -----------
Revenues:
Contract revenue $ 1,711,086 $ 2,657,500 $ 5,133,256 $ 5,972,500
License revenue 2,000,000 -- 2,000,000 --
Grant revenue 257,760 65,000 397,760 247,000
----------- ----------- ----------- -----------
Total revenues 3,968,846 2,722,500 7,531,016 6,219,500
Expenses:
Research and development 3,007,979 2,465,391 8,492,271 7,449,085
General and administrative 714,433 516,051 2,078,285 1,584,884
----------- ----------- ----------- -----------
Total expenses 3,722,412 2,981,442 10,570,556 9,033,969
----------- ----------- ----------- -----------
Income (loss) from
operations 246,434 (258,942) (3,039,540) (2,814,469)
Other income, net:
Interest income 487,163 195,402 1,413,328 534,953
Interest expense (4,553) (7,884) (16,255) (26,033)
Gain on sales
of securities -- 22,945 212,160 18,404
---------- ----------- ----------- -----------
Other income, net 482,610 210,463 1,609,233 527,324
---------- ----------- ----------- -----------
Net income (loss) $ 729,044 $ (48,479) $(1,430,307) $(2,287,145)
=========== =========== =========== ===========
Net income (loss)
per share $0.09 $(0.11) $(0.19) $(5.38)
===== ====== ====== ======
Shares used in computation
of net income (loss)
per share 7,912,061 432,587 7,559,352 425,340
========= ======= ========= =========
See notes to financial statements.
2
SYNAPTIC PHARMACEUTICAL CORPORATION
STATEMENTS OF CASH FLOWS
(Unaudited)
For the nine months
ended September 30,
1996 1995
----------- -----------
Operating activities:
Net (loss) $(1,430,307) $(2,287,145)
Adjustments to reconcile net loss to net cash
(used in) operating activities:
Depreciation and amortization 706,285 637,765
Amortization of deferred compensation 141,918 59,457
Compensation resulting from forgiveness of notes
receivable from employee -- 364
(Gain) on sales of securities (212,160) (18,404)
Changes in operating assets and liabilities:
(Increase) decrease in other current and
long-term assets (342,387) 256,927
(Decrease) in accounts payable, accrued liabilities
and accrued compensation (280,820) (249,655)
(Increase)decrease in collaborative agreement
revenue receivable (1,870,792) 49,647
(Decrease) increase in deferred revenue (562,304) 245,000
----------- -----------
Net cash (used in) operating activities (3,850,567) (1,306,044)
Investing activities:
Sale or maturity of investments 8,210,000 6,318,505
Purchase of investments (32,238,480) (3,669,006)
Purchases of property and equipment (638,259) (414,567)
Increase in patent and patent application costs (509,366) (529,035)
Principal payments made by employee/stockholder -- 365
----------- -----------
Net cash (used in) provided by investing activities (25,176,105) 1,706,262
Financing activities:
Issuance of common stock, net of repurchases 2,971,715 256,873
Payments on capital lease (102,157) (92,311)
Payments on notes receivable from stockholders 6,134 5,652
----------- -----------
Net cash provided by financing activities 2,875,692 170,214
----------- -----------
Net (decrease) increase in cash and cash
equivalents (26,150,980) 570,432
Cash and cash equivalents at beginning of period 27,680,969 2,563,902
----------- -----------
Cash and cash equivalents at end of period $ 1,529,989 $ 3,134,334
=========== ===========
See notes to financial statements.
3
SYNAPTIC PHARMACEUTICAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
September 30, 1996
Note 1. Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-Q and may not include all
information and footnotes required for a presentation in accordance with
generally accepted accounting principles. In the opinion of the management
of Synaptic Pharmaceutical Corporation (the "Company"), these financial
statements include all normal and recurring adjustments necessary for a fair
presentation of the financial position and the results of operations and cash
flows of the Company for the interim periods presented. For more complete
financial information, these financial statements should be read in conjunction
with the audited financial statements for the fiscal year ended December 31,
1995, and notes thereto included in the Company's 1995 Annual Report on Form
10-K. The results of operations for the fiscal quarter ended September 30,
1996, are not necessarily indicative of the results of operations to be expected
for the full year.
Note 2. Subsequent Events
On October 9, 1996, the Company and Merck & Co., Inc. ("Merck") amended
their research collaboration and license agreement to extend the term of their
collaborative research program for an additional one-year period expiring on
November 30, 1997. Under the terms of the amendment, Merck will continue to
provide the Company with research funding to support the Company's scientists
assigned to work on the program. The number of the Company's scientists who
will work on the program during the extension period may fluctuate based upon
the needs of the program, as determined by Merck or the joint research team.
On October 31, 1996, the Company and Eli Lilly and Company ("Lilly") signed
an amendment to their research, option and license agreement pursuant to which
the number of the Company's scientists funded by Lilly and dedicated to the
collaboration under the agreement was substantially increased. The term of the
collaboration and associated research funding is scheduled to expire on December
31, 1998. Pursuant to the amendment, Lilly has relinquished its right to
terminate the collaboration without cause earlier than the scheduled expiration
date.
4
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Overview
Synaptic Pharmaceutical Corporation ("Synaptic" or the "Company") is a
biotechnology company engaged in the development of a broad platform of enabling
technology which it calls "human receptor-targeted drug design technology." It
is utilizing this technology both to discover and clone the genes that code for
human receptor subtypes associated with specific disorders and to design
compounds that can potentially be developed as drugs for treating these
disorders. The Company is engaged in collaborations with four pharmaceutical
companies: Eli Lilly and Company ("Lilly"), Merck and Co., Inc. ("Merck"),
Ciba-Geigy Limited ("Ciba-Geigy"), and The Dupont Merck Pharmaceutical Company
("Dupont Merck"). Since inception, the Company has financed its operations
primarily through the sale of stock and through funds provided by its
collaborative partners Lilly, Merck and Ciba-Geigy under collaborative
agreements.
Under its collaborative agreements, the Company may receive one or two
types of revenue from its collaborative partners: contract revenue and license
revenue. Contract revenue includes research funding to support a specified
number of the Company's scientists and payments upon the achievement of
specified research and development milestones. Research funding revenue is
recognized ratably over the period of the agreement to which it relates and is
based upon predetermined funding requirements. Research milestone payment
revenue is recognized when the related research milestone is achieved.
License revenue represents non-refundable payments for licenses to the Company's
technology and drug discovery systems. Non-refundable payments for licenses are
recognized at such time as they become guaranteed. In addition, if a drug is
developed as a result of any of the collaborative agreements between the Company
and its collaborative partners, the Company will receive royalty payments based
upon the sale of such drugs.
The Company also receives revenues from government grants under the Small
Business Innovative Research ("SBIR") program of the National Institutes of
Health.
To date, the Company's expenditures have been for research and development
related expenses, general and administrative related expenses, fixed asset
purchases and various patent related expenditures incurred in protecting the
Company's technologies. The Company has been historically unprofitable and had
an accumulated deficit of $22,766,772 at September 30, 1996. The Company
expects to continue to incur operating losses for a significant number of years
and may not become profitable, if at all, until it begins to receive royalty
revenue. To date, the Company has not received any royalty revenue and does not
expect to receive such revenue for a significant number of years, if at all.
Results of Operations
Comparison of the Three Months Ended September 30, 1996 and 1995
Revenues. The Company recognized total revenues of $3,968,846 and
$2,722,500 for the three months ended September 30, 1996 and 1995, respectively.
The increase of $1,246,346 was attributable primarily to: the recognition of
$2,000,000 of additional license revenue under the terms of one of the Company's
license and collaboration agreements during such three-month period; an increase
of approximately $193,000 of grant revenue over the comparable period in 1995;
and an increase in contract revenue of approximately $53,000 which resulted from
annual increases in the rates charged to the Company's collaborative partners
per full time equivalent scientist, all of which amounts were partially offset
5
by the Company's receipt in July 1995 of a $1,000,000 payment from one of the
Company's collaborative partners for the achievement of a specific scientific
milestone.
Research and Development Expenses. The Company incurred research and
development expenses of $3,007,979 and $2,465,391 for the three months ended
September 30, 1996 and 1995, respectively. The increase of $542,588, or 22.0%,
in research and development expenses was attributable primarily to: an increase
of approximately $221,000 in research supply costs; an increase of approximately
$139,000 in compensation expense resulting from an increase in average headcount
year-to-year as well as annual salary and bonus increases and an associated
increase in fringe benefit expense; an increase of approximately $137,000 in
research expenses related to research funded by government grants; and an
increase of approximately $31,000 in software license fees.
General and Administrative Expenses. The Company incurred general and
administrative expenses of $714,433 and $516,051 for the three months ended
September 30, 1996 and 1995, respectively. The increase of $198,382, or 38.4%,
in general and administrative expenses was attributable primarily to: an
increase of approximately $87,000 in expenses, such as registration fees,
transfer agent fees, legal costs, printing costs and additional insurance,
relating to being a public company; an increase of approximately $72,000 in
compensation expense resulting from annual salary and bonus increases and an
associated increase in fringe benefit expense; and an increase of approximately
$45,000 in tuition reimbursement costs.
Other Income, Net. The Company recorded other income, net of interest
expense, of $482,610 and $210,463 for the three months ended September 30, 1996
and 1995, respectively. The increase of $272,147 in other income, net of
interest expense, was attributable primarily to: an increase of approximately
$292,000 in interest income resulting primarily from higher average cash, cash
equivalent and marketable security balances during the three months ended
September 30, 1996, as compared to the three months ended September 30, 1995,
offset by a decrease of approximately $23,000 in realized gain resulting from
the maturity of one of the Company's marketable securities in 1995.
Net Income (Loss). The Company had net income of $729,044 and incurred a
net loss of $48,479 for the three months ended September 30, 1996 and 1995,
respectively. The increase of $777,523 in net income was attributable to the
increase in revenue and other income, net, offset by an increase in research and
development and general and administrative expenses.
Comparison of the Nine Months Ended September 30, 1996 and 1995
Revenues. The Company recognized total revenues of $7,531,016 and
$6,219,500 for the nine months ended September 30, 1996 and 1995, respectively.
The increase of $1,311,516 was attributable primarily to: the recognition of
$2,000,000 of license revenue from one of the Company's collaborative partners
during such nine-month period; an increase of $150,760 of grant revenue over the
comparable period in 1995; and an increase in contract revenue of approximately
$161,000 which resulted from annual increases in the rates charged to the
Company's collaborative partners per full time equivalent scientist, all of
which were partially offset by the Company's receipt in July 1995 of a
$1,000,000 payment from one of the Company's collaborative partners for the
achievement of a specific scientific milestone.
Research and Development Expenses. The Company incurred research and
development expenses of $8,492,271 and $7,449,085 for the nine months ended
September 30, 1996 and 1995, respectively. The increase of $1,043,186, or
14.0%, in research and development expenses was attributable primarily to: an
increase of approximately $434,000 in compensation expense resulting from an
increase in average headcount year-to-year as well as annual salary and bonus
increases and an associated increase in fringe benefit expense; an increase of
6
approximately $318,000 in research supply costs; an increase of approximately
$137,000 in research expenses related to research funded by government grants;
an increase of approximately $109,000 related to depreciation of fixed assets
and the amortization of patents; and a one-time license fee of approximately
$44,000.
General and Administrative Expenses. The Company incurred general and
administrative expenses of $2,078,285 and $1,584,884 for the nine months ended
September 30, 1996 and 1995, respectively. The increase of $493,401, or 31.1%,
in general and administrative expenses was attributable primarily to: an
increase of approximately $245,000 in expenses, such as registration fees,
transfer agent fees, legal costs, printing costs and additional insurance,
relating to being a public company; an increase of approximately $126,000 in
compensation expense resulting from an increase in average headcount and annual
salary and bonus increases and an associated increase in fringe benefit
expense; an increase of approximately $52,000 in tuition expenses; and an
increase of approximately $56,000 in certain supply and computer related
expenses.
Other Income, Net. The Company recorded other income, net of interest
expense, of $1,609,233 and $527,324 for the nine months ended September 30, 1996
and 1995, respectively. The increase of $1,081,909 in other income, net of
interest expense, was attributable primarily to: an increase of approximately
$878,000 in interest income resulting from higher average cash, cash equivalent
and marketable security balances during the nine months ended September 30,
1996, as compared to the nine months ended September 30, 1995; and an increase
of approximately $194,000 in realized gain resulting from the maturity of one
of the Company's marketable securities.
Net Loss. The Company incurred a net loss of $1,430,307, and $2,287,145
for the nine months ended September 30, 1996 and 1995, respectively. The
decrease of $856,838 in net loss was attributable to the increase in revenue and
other income, offset by higher research and development and general and
administrative expenses.
The Company does not believe that inflation has had a material impact on
the results of its operations for either the three month period or the nine
month period which ended September 30, 1996.
Liquidity and Capital Resources
At September 30, 1996 and December 31, 1995, cash, cash equivalents and
marketable securities were in the aggregate $33,964,034 and $36,017,666,
respectively. In January of 1996 the Company sold 213,000 shares of its common
stock pursuant to the exercise of the over-allotment option granted to the
underwriters of the Company's initial public offering which closed in December
1995, raising additional capital, net of related expenses, of approximately
$2,460,000. In May of 1996 the Company sold 48,114 shares of its common stock
pursuant to the exercise of certain warrants that were sold by the Company in
1993, raising additional capital of approximately $457,000. To date, the
Company has met its cash requirements through the sale of its stock, through
licensing fees, research funding and milestone payments received under the
collaborative agreements with Lilly, Merck and Ciba-Geigy, through SBIR grants
and through interest earned on its investments. To date, the Company's
principal use of funds has been to fund research and development, to purchase
fixed assets used primarily in its research activities, to create its patent
estate and to pay general and administrative support costs.
At September 30, 1996, the Company was involved in collaborative
arrangements with Lilly, Merck, Ciba-Geigy and Dupont Merck. Lilly, Merck and
Ciba-Geigy are providing research funding to the Company during 1996. The
Company's collaborative arrangement with DuPont Merck, which began in
February 1996, does not provide for any research funding. In October 1996, the
Lilly agreement was amended to increase the aggregate number of Company
7
scientists dedicated to work on the collaboration and funded by Lilly through
the December 31, 1998 scheduled expiration date of the collaboration. In
addition, under the terms of the amendment, Lilly relinquished its right to
terminate the collaboration without cause earlier than the scheduled expiration
date. The Merck Agreement was also amended in October 1996 to extend the term
of the Company's collaborative research program with Merck for one year beyond
the November 30, 1996 scheduled expiration date. Under the terms of the
amendment, Merck will continue to provide the Company with research funding
through the extension period to support the Company's scientists assigned to
work on the program. The number of the Company's scientists who will work on
the program and, accordingly, the level of funding during the extension period
may fluctuate based upon the needs of the program, as determined by Merck or the
joint research team. Merck continues to have the right to terminate the
collaboration earlier by giving 90 days' prior written notice. However, in the
event of any such termination, Merck is nevertheless required to provide the
Company with a minimum level of funding through November 30, 1997. The
Ciba-Geigy collaboration has an expiration date of August 4, 1998.
At September 30, 1996, the Company had invested an aggregate of $5,091,847
in property and equipment. Included within the $5,091,847 is $658,077 of
equipment under capital leases. The net present value of obligations under
capital leases at September 30, 1996, was $156,597. This amount is secured by a
treasury note in the amount of $270,000 which is recorded in the balance sheet
as restricted securities. This treasury note must be renewed annually in an
amount equal to the then aggregate unpaid balances under the lease agreements.
The last of these lease agreements will expire on December 5, 1997.
The Company leases laboratory and office facilities under an agreement
expiring on December 31,1999. The minimum annual payment under the lease is
currently $691,000. A standby letter of credit for approximately $413,000 has
been issued to the Company's landlord as a security deposit and is secured by a
treasury note in the amount of $500,000 which is recorded in the balance sheet
as restricted securities.
At September 30, 1996 the Company had available funds of $33,964,034. The
Company intends to utilize these funds primarily to pay its operating expenses
(to the extent revenues and other income are insufficient to cover such
expenses), to expand its research programs and to make leasehold improvements to
its facilities beyond the level which existed on September 30, 1996. It is
anticipated that the Company will continue to incur operating losses for a
significant number of years. The Company believes that its cash on hand,
together with the funds it will receive from its collaborative partners,
interest income and funds received under SBIR grants, will be sufficient to fund
an increased operating expense level at least through 1998.
Except for the historical information contained herein, this Report on Form
10-Q contains "forward looking statements" within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Although the Company believes that the
expectations reflected in such forward looking statements are reasonable, it can
give no assurance that such expectations will prove to be correct. Certain
important factors that could cause actual results to differ materially from the
Company's expectations include the early termination of one or more of the
Company's collaborative agreements and other risk factors set forth as
"Cautionary Statements" in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995, or detailed from time to time in filings
that the Company makes with the Securities and Exchange Commission.
8
PART II. OTHER INFORMATION
Item 5. Other Information
In May 1996 and August 1996, the Company was issued United States patents
covering the genes that code for two human receptor subtypes in the neuropeptide
Y ("NPY") family of receptors -- the human neuropeptide Y2 and Y4 receptor
subtypes. In addition, in July 1996, the Company announced the discovery of the
gene that codes for the neuropeptide Y5 receptor subtype, which it believes is
the feeding "receptor" and may provide a novel mechanism for the study and
treatment of obesity and eating disorders. The Company has also filed United
States and foreign patent applications covering the Y5 receptor. All of these
receptors are being utilized in the Company's collaboration with Ciba-Geigy
Limited, which has an exclusive license to use these genes to develop and
commercialize NPY subtype-selective drugs for the treatment of obesity and
eating disorders, as well as cardiovascular disease.
In September 1996, the Company was issued a United States patent covering
the use of genetically engineered cells expressing the human alpha-1a adrenergic
receptor subtype to identify compounds that bind to the human alpha-1a
adrenergic receptor subtype. This patent is in addition to the Company's
previously issued United Sates patent covering the use of compounds that
selectively block the human alpha-1a adrenergic receptor in the treatment of
benign prostatic hyperplasia ("BPH"). The alpha-1 adrenergic receptor subtypes
are being utilized in the Company's collaboration with Merck & Co., Inc., which
has a license under the Company's patents and patent applications to use the
receptor subtypes to develop and commercialize alpha-1a antagonists for the
treatment of BPH.
9
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Description
- ----------- -----------
11 Statement Regarding Computation of Per Share Earnings (Loss)
27 Financial Data Schedule
(b) Reports on Form 8-K
The Company did not file any Current Reports on Form 8-K during the fiscal
quarter ended September 30, 1996.
10
SIGNATURE PAGE
Pursuant to the requirements of Section 13 or 15(d) 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.
SYNAPTIC PHARMACEUTICAL CORPORATION
(Registrant)
Date: November 5, 1996
By: /s/ Kathleen P. Mullinix
-----------------------------
Name: Kathleen P. Mullinix
Title: Chairman, President &
Chief Executive Officer
By:/s/ Robert L. Spence
-----------------------------
Name: Robert L. Spence
Title: Chief Financial Officer &
Treasurer
11
EXHIBIT 11
SYNAPTIC PHARMACEUTICAL CORPORATION
Computation of Primary Net Income (Loss) Per Share
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
--------- --------- --------- ---------
Weighted average
common shares outstanding 7,608,049 393,598 7,559,352 386,351
Weighted average shares
underlying common stock
options outstanding
considered exercised, based
on the treasury stock method 285,473 -- -- --
Weighted average shares
underlying 1993 common stock
warrants outstanding
considered outstanding, based
on the treasury stock method 18,539 -- -- --
Shares sold and shares
underlying options granted
within 12 months of initial
registration statement
filing, considered
outstanding for periods
prior to the initial public
offering, based on the
treasury stock method and
the initial public offering
price -- 38,989 -- 38,989
---------- --------- --------- ---------
Shares used in computation of
net income (loss) per share 7,912,061 432,587 7,559,352 425,340
========== ========= ========= =========
Net income (loss) $729,044 ($48,479) ($1,430,307)($2,287,145)
======== ========== ========== ==========
Net income (loss) per share $0.09 ($0.11) ($0.19) ($5.38)
==== ===== ===== =====
EXHIBIT 11
SYNAPTIC PHARMACEUTICAL CORPORATION
Computation of Fully Diluted Net Income (Loss) Per Share
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
--------- --------- --------- --------
Weighted average
common shares outstanding 7,608,049 393,598 7,559,352 386,351
Shares underlying common
stock options outstanding
considered exercised,
based on the treasury
stock method 288,183 256,461 302,975 252,743
Shares underlying 1990
Warrants outstanding
considered exercised,
based on the treasury
stock method -- -- -- 696
Shares underlying 1993
Warrants outstanding
considered exercised,
based on the treasury
stock method 23,792 -- 59,344 --
Shares sold and shares
underlying options granted
within 12 months of initial
registration statement filing,
considered outstanding for
periods prior to the initial
public offering, based on the
treasury stock method and the
initial public offering price -- 38,989 -- 38,989
Weighted average convertible
preferred stock
outstanding, as if converted:
Series 1 -- 1,260,214 -- 1,260,214
Series 2 -- 1,207,848 -- 1,207,848
Series 3 -- 1,924,574 -- 1,924,574
Series 4 -- 535,736 -- 535,736
--------- --------- -------- ---------
Shares used in computation of
net income (loss) per share 7,920,024 5,617,420 7,921,671 5,607,151
========= ========= ========= =========
Net income (loss) $729,044 ($48,479) ($1,430,307) ($2,287,145)
======== ========== ========== ==========
Net income (loss) per share $0.09 ($0.01) ($0.18) ($0.41)
===== ===== ===== =====
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<ARTICLE> 5
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<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,529,989
<SECURITIES> 16,054,108
<RECEIVABLES> 2,000,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 21,047,780
<PP&E> 5,091,847
<DEPRECIATION> 2,710,429
<TOTAL-ASSETS> 41,503,440
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