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 quarterly period ended June 30, 1998
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 No. 000-20139
Diacrin, Inc.
(Exact name of registrant as specified in its charter)
Delaware 22-3016912
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Building 96 13th Street, Charlestown Navy Yard,
Charlestown, MA 02129 (Address of principal
executive offices, including zip code)
(617) 242-9100
(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
----- ------
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
As of July 31, 1998, 14,321,925 shares of the registrant's Common Stock
were outstanding.
<PAGE>
Diacrin, Inc.
Index
Page
PART I. - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets as of
December 31, 1997 and June 30, 1998..........................3
Statements of Operations for the Three and Six Month
Periods Ended June 30, 1997 and 1998.........................4
Statements of Cash Flows for the Six Month Periods
Ended June 30, 1997 and 1998.................................5
Notes to Financial Statements................................6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..........................8
PART II. - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds....................12
Item 4. Submission of Matters to a Vote of Security Holders..........12
Item 5. Other Matters................................................13
SIGNATURES..............................................................14
- 2 -
<PAGE>
Diacrin, Inc.
Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
December 31, June 30,
1997 1998
------------- ---------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 5,015,777 $ 4,070,485
Short-term investments 6,000,098 15,011,177
Interest receivable and other current assets 438,756 467,869
------------------ ------------------
Total current assets 11,454,631 19,549,531
---------------- ---------------
Property and equipment, at cost:
Laboratory and manufacturing equipment 839,856 856,168
Equipment under capital lease 675,262 675,262
Furniture and office equipment 277,109 282,788
Leasehold improvements 55,557 76,827
------------------- -------------------
1,847,784 1,891,045
Less- Accumulated depreciation and amortization 853,911 1,022,114
----------------- -----------------
993,873 868,931
----------------- ------------------
Long-term investments 10,331,289 9,566,507
Investment in joint venture - 101,122
------------ -----------------
10,331,289 9,667,629
--------------- ----------------
$ 22,779,793 $ 30,086,091
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 185,306 $ 176,996
Accrued expenses 994,166 1,065,527
Deferred revenue 387,056 386,922
Current portion of long-term debt 337,171 355,670
----------------- ------------------
Total current liabilities 1,903,699 1,985,115
----------------- -----------------
Long-term debt 672,426 489,060
----------------- ------------------
Stockholders' equity:
Preferred stock, $.01 par value, Authorized--
5,000,000 shares; none issued and outstanding - -
Common stock, $.01 par value; Authorized-- 30,000,000
shares; issued and outstanding-- 13,268,256 shares
and 14,321,925 shares at December 31, 1997
and June 30, 1998, respectively 132,683 143,219
Additional paid-in capital 54,730,773 64,187,050
Accumulated deficit (34,659,788) (36,718,353)
---------------- ----------------
Total stockholders' equity 20,203,668 27,611,916
---------------- ----------------
$ 22,779,793 $ 30,086,091
================ ===============
See Accompanying Notes to Financial Statements
</TABLE>
- 3 -
<PAGE>
Diacrin, Inc.
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
1997 1998 1997 1998
---------- --------- -------- ----------
<S> <C> <C> <C> <C>
REVENUES:
Research and development $ 1,255,760 $ 906,971 $ 2,447,086 $ 2,049,718
Interest income 330,261 429,156 661,657 780,340
---------- ---------- --------- ---------
Total revenues 1,586,021 1,336,127 3,108,743 2,830,058
---------- ---------- --------- ---------
OPERATING EXPENSES:
Research and development 1,692,223 1,921,122 3,303,492 3,760,565
General and administrative 394,886 371,385 806,367 773,562
Interest expense 17,274 23,819 36,119 50,257
---------- ---------- --------- ----------
Total operating expenses 2,104,383 2,316,326 4,145,978 4,584,384
---------- ---------- --------- ----------
EQUITY IN OPERATIONS
OF JOINT VENTURE - (249,250) - (304,239)
---------- ---------- --------- ----------
NET LOSS $ (518,362) $ (1,229,449) $ (1,037,235) $ (2,058,565)
============== ================ ============= =============
BASIC AND DILUTED
NET LOSS PER COMMON SHARE $ (.04) $ (.09) $ (.08) $ (.15)
============== =============== ============== ==============
SHARES USED IN COMPUTING
BASIC AND DILUTED NET LOSS
PER COMMON SHARE 13,233,258 14,313,172 13,212,977 13,987,082
========== ========== ========== ==========
See Accompanying Notes to Financial Statements
</TABLE>
- 4 -
<PAGE>
Diacrin, Inc.
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended June 30,
1997 1998
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,037,235) $ (2,058,565)
Adjustments to reconcile net loss to net
cash used in operating activities-
Depreciation and amortization 107,640 168,203
Equity in operations of joint venture - 304,239
Changes in assets and liabilities-
Interest receivable and other current assets (178,589) (29,113)
Accounts payable 27,120 (8,310)
Accrued expenses 249,449 (42,082)
Deferred revenue 28,486 (134)
----------- -----------
Net cash used in operating activities (803,129) (1,665,762)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in short-term investments (1,482,957) (9,011,079)
Purchases of property and equipment, net (69,532) (43,261)
(Increase) decrease in long-term investments (373,624) 764,782
Investment in joint venture - (680,250)
Return of capital for services provided on behalf of joint venture - 388,332
----------- -----------
Net cash used in investing activities (1,926,113) (8,581,476)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from sale of common stock 80,049 9,466,813
Principal payments on long-term debt (86,506) (164,867)
----------- -----------
Net cash provided by (used in) financing activities (6,457) 9,301,946
----------- -----------
NET DECREASE IN CASH
AND CASH EQUIVALENTS (2,735,699) (945,292)
CASH AND CASH EQUIVALENTS, beginning of period 7,308,710 5,015,777
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 4,573,011 $ 4,070,485
============ =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid during the period $ 36,119 $ 50,257
============= ==============
See Accompanying Notes to Financial Statements
</TABLE>
- 5 -
<PAGE>
Diacrin, Inc.
Notes to Financial Statements
(Unaudited)
1. Operations and Basis of Presentation
Diacrin, Inc. (the Company) was incorporated on October 10, 1989 and is
developing transplantable cells for the treatment of human diseases which are
characterized by cell dysfunction or cell death and for which current therapies
are either inadequate or nonexistent.
The unaudited financial statements included herein have been prepared
by the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission and include, in the opinion of management,
all adjustments, consisting of normal, recurring adjustments, necessary for a
fair presentation 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 Company believes, however, that its
disclosures are adequate to make the information presented not misleading. The
results for the interim periods presented are not necessarily indicative of
results to be expected for the full fiscal year. These financial statements
should be read in conjunction with the audited consolidated financial statements
and notes thereto included in the Company's latest Annual Report on Form 10-K
filed with the Securities and Exchange Commission.
2. Summary of Significant Accounting Policies
(a) Research and Development
In September 1996, the Company and Genzyme Corporation ("Genzyme")
formed a joint venture (the "Joint Venture") to develop and commercialize
NeuroCell(TM)-PD for Parkinson's disease and NeuroCell(TM)-HD for Huntington's
disease (the "Joint Venture Products"). The Joint Venture is funded by Genzyme
and the Company in accordance with the terms of the joint venture agreement.
Collaborative revenue under the joint venture agreement with Genzyme is
recognized as revenue to the extent that the Company's research and development
costs are funded by Genzyme through the Joint Venture. The Company receives
non-refundable monthly advances from the Joint Venture. Deferred revenue
represents amounts received prior to recognition of revenue. Research and
development costs are expensed as incurred.
(b) Net Loss per Common Share
In 1997, the Company adopted SFAS No. 128, "Earnings Per Share." Basic
net loss per common share is based on the weighted average number of common
shares outstanding. Diluted net loss per common share is the same as basic net
loss per common share as the inclusion of other shares of stock issuable
pursuant to stock options and warrants would be antidilutive.
- 6 -
<PAGE>
Diacrin, Inc.
Notes to Financial Statements
(Unaudited)
3. Cash Equivalents and Investments
The Company's cash equivalents and investments are classified as
held-to-maturity and are carried at amortized cost, which approximates market
value. Cash equivalents, short-term investments and long-term investments have
maturities of less than three months, less than one year and greater than one
year, respectively. Cash and cash equivalents, short-term investments and
long-term investments at December 31, 1997 and June 30, 1998 consisted of the
following:
<TABLE>
<CAPTION>
December 31, June 30,
1997 1998
------------ -----------
<S> <C> <C>
Cash and cash equivalents-
Cash $ 381 $ 377
Money market mutual fund 2,513,759 4,070,108
Commercial paper 2,501,637 -
----------- -----------
$ 5,015,777 $ 4,070,485
============== ==============
Short-term investments-
Corporate notes (remaining avg. mat. of 7 mos.) $ 3,000,429 $ 12,963,548
Certificate of deposit (remaining maturity of 2 months) 999,669 999,907
Municipal bond (remaining maturity of 2 months) - 1,047,722
U.S. government agency obligation 2,000,000 -
----------- -----------
$ 6,000,098 $ 15,011,177
============== =============
Long-term investments-
Corporate notes (remaining avg. mat. of 15 months) $ 10,331,289 $ 9,566,507
============= =============
</TABLE>
4. Private Placement of Common Stock
In February 1998, the Company completed a private placement of 1,027,027
shares of its common stock for $9.25 per share, for net proceeds of
approximately $9.45 million.
- 7 -
<PAGE>
Diacrin, Inc.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Overview
Since its inception, the Company has principally focused its
efforts and resources on research and development of cell transplantation
products to treat neurodegenerative and other human diseases. The Company's
primary source of working capital to fund such activities has been proceeds from
the sale of equity and debt securities. In addition, commencing October 1, 1996,
the Company has received funding from the Joint Venture with Genzyme in support
of the NeuroCell(TM)-PD and NeuroCell(TM)-HD product development programs. The
Company has not received any revenues from the sale of products to date and does
not expect to generate product revenues for at least the next several years. The
Company has experienced fluctuating operating losses since its inception and
expects that the additional activities required to develop and commercialize the
Company's products will result in increasing operating losses for at least the
next several years. At June 30, 1998, the Company had an accumulated deficit of
$36.7 million.
In September 1996, the Company and Genzyme formed the Joint
Venture to develop and commercialize NeuroCell(TM)-PD and NeuroCell(TM)-HD. In
connection with the formation of the Joint Venture, the Company granted an
exclusive right and license to the patent rights and technology relating to the
Joint Venture Products. This right and license was considered to be the
Company's initial capital contribution to the Joint Venture. The Company has a
50% ownership interest in the Joint Venture. Under the terms, and subject to
certain conditions, of the joint venture agreement, which was effective October
1 1996, Genzyme has agreed to provide 100% of the first $10 million in funding
and 75% of the following $40 million in funding for the development and
commercialization of the Joint Venture Products. The Company agreed to provide
the remaining 25% of the following $40 million in funding. All costs incurred in
excess of $50 million are to be shared equally between Genzyme and the Company
in accordance with the terms of the agreement. The Joint Venture plans that
Diacrin and Genzyme will perform, on behalf of the Joint Venture, the
development activities in connection with the Joint Venture Products and that
Genzyme will market and sell the Joint Venture Products on a cost reimbursement
basis on behalf of the Joint Venture.
For 1996 and 1997, the Company expensed all research and
development costs related to the Joint Venture Products incurred by it on behalf
of the Joint Venture and recognized an equal amount of research and development
revenue due to the fact that costs incurred were funded by the Joint Venture
exclusively out of contributions made to it by Genzyme. Through December 31,
1997, Genzyme made 100% of the total cash contributions to the Joint Venture on
a monthly basis, in advance. During the first quarter of 1998, the Joint
Venture's cumulative funding requirements since its inception exceeded $10
million. As such, the Company, as required by the joint venture agreement, began
making cash contributions to the Joint Venture equal to 25% of the Joint
Venture's monthly funding requirements. The Joint Venture's funding requirements
are determined on a monthly basis by the Company and Genzyme and are met by
monthly contributions from both parties in percentages prescribed by the terms
of the joint venture agreement. To the extent the Company's contributed funds
are used to fund expenses incurred by Genzyme on behalf of the Joint Venture,
the Company recognizes an expense in its statement of operations captioned
"equity in operations of the Joint Venture." Furthermore, to the extent the
Company's contributed funds are used to fund expenses incurred by the Company on
behalf of the Joint Venture, the Company reduces the research and development
revenue recognized by it from the Joint Venture by an amount equal to the
Company-funded portion of such expenses.
Any profits of the Joint Venture are to be shared equally by Genzyme
and the Company. Losses of the Joint Venture are allocated to each party in
proportion to the funding provided by each party.
- 8 -
<PAGE>
Results of Operations
Three Months Ended June 30, 1998 Versus Three Months Ended June 30, 1997
Research and development revenues were approximately $907,000 for the
three months ended June 30, 1998 versus $1.3 million for the three months ended
June 30, 1997 and were derived exclusively from the Joint Venture. The current
period research and development revenues were reduced by approximately $302,000
representing funding received by the Company from the Joint Venture out of
Company-funded contributions to the Joint Venture.
Interest income was $429,000 and $330,000 for the three month periods
ended June 30, 1998 and 1997, respectively. The 30% increase in interest income
was due to higher cash balances available for investment in the 1998 period as a
result of the Company's private placement of common stock in February 1998.
Research and development expenses were $1.9 million for the three
months ended June 30, 1998 versus $1.7 million for the three months ended June
30, 1997. The 14% increase was primarily due to the production costs of clinical
grade antibody produced during the current year period for use in certain of the
Joint Venture's planned phase 2/3 clinical trials of NeuroCell(TM)-PD. The
increase was, to a lessor extent, due to increased costs related to the
operation of clinical production facilities completed in the second half of
1997.
General and administrative expenses of $371,000 and $395,000 for the
three months ended June 30, 1998 and 1997, respectively, were relatively
unchanged between periods.
Interest expense was $24,000 and $17,000 for the three months ended
June 30, 1998 and 1997, respectively. The increase in interest expense is due to
the $650,000 term loan obtained by the Company in November 1997 to finance the
purchase of production equipment.
For the three months ended June 30, 1998, the Company recorded $249,000
related to its equity in operations of the joint venture. This expense is due to
funds contributed by the Company to the Joint Venture that were used to fund
expenses incurred by Genzyme on behalf of the Joint Venture. This expense did
not occur in the prior year as the Company was not required to make
contributions to the Joint Venture until the quarter ended March 31, 1998.
The Company incurred a net loss of approximately $1.2 million for the
three months ended June 30, 1998 versus approximately $518,000 for the three
months ended June 30, 1997.
Six Months Ended June 30, 1998 Versus Six Months Ended June 30, 1997
Research and development revenues were approximately $2.0 million for
the six months ended June 30, 1998 versus $2.4 million for the six months ended
June 30, 1997 and were derived exclusively from the Joint Venture. The current
period research and development revenues were reduced by approximately $388,000
representing funding received by the Company from the Joint Venture out of
Company-funded contributions to the Joint Venture.
Interest income was $780,000 and $662,000 for the six month periods
ended June 30, 1998 and 1997, respectively. The 18% increase in interest income
was due to higher cash balances available for investment in the 1998 period as a
result of the Company's private placement of common stock in February 1998.
Research and development expenses were $3.8 million for the six months
ended June 30, 1998 versus $3.3 million for the six months ended June 30, 1997.
The 14% increase was primarily due to the production costs of clinical grade
antibody produced during the current year period for use in certain of the Joint
Venture's planned phase 2/3 clinical trials of NeuroCell(TM)-PD. The increase
was, to a lessor extent, due to increased costs related to the operation of
clinical production facilities completed in the second half of 1997.
- 9 -
<PAGE>
General and administrative expenses of $774,000 and $806,000 for the
six months ended June 30, 1998 and 1997, respectively, were relatively unchanged
between periods.
Interest expense was $50,000 and $36,000 for the six month periods
ended June 30, 1998 and 1997, respectively. The increase in interest expense is
due to the $650,000 term loan obtained by the Company in November 1997 to
finance the purchase of production equipment.
For the six months ended June 30, 1998, the Company recorded $304,000
related to its equity in operations of the joint venture. This expense is due to
funds contributed by the Company to the Joint Venture that were used to fund
expenses incurred by Genzyme on behalf of the Joint Venture. This expense did
not occur in the prior year as the Company was not required to make
contributions to the Joint Venture until the quarter ended March 31, 1998.
The Company incurred a net loss of approximately $2.1 million for the
six months ended June 30, 1998 versus a net loss of approximately $1.0 million
for the six months ended June 30, 1997.
Liquidity and Capital Resources
The Company has financed its activities primarily with the net proceeds
from its pre-1998 equity offerings aggregating $53.6 million; with the net
proceeds of approximately $9.45 million from the Company's private placement of
common stock completed in February 1998; and with interest earned thereon. In
addition, the Company has recorded approximately $7.9 million in revenue from
the Joint Venture since it commenced October 1, 1996. At June 30, 1998, the
Company had cash and cash equivalents, short-term investments and long-term
investments aggregating approximately $28.6 million.
In November 1997, the Company borrowed $650,000 at the Prime Rate + .5%
under an unsecured five-year term loan with a bank to finance production
equipment acquired during 1997. As of June 30, 1998 the Company had
approximately $845,000 outstanding under the term loan with the bank and under a
master lease agreement for capital equipment. The Company had no material
commitments for capital expenditures as of June 30, 1998.
Under the joint venture agreement with Genzyme, the Company's two lead
product development programs, NeuroCell(TM)-PD for the treatment of Parkinson's
disease and NeuroCell(TM)-HD for the treatment of Huntington's disease, are
being developed by the Joint Venture. Both Genzyme and Diacrin are responsible
for funding the Joint Venture in accordance with the terms, and subject to the
conditions, of the joint venture agreement. Genzyme agreed to fund 100% of the
first $10 million of development and commercialization costs incurred after
October 1, 1996, 75% of the next $40 million and 50% of all remaining
development and commercialization costs in excess of $50 million. After Genzyme
funds the first $10 million, the Company is responsible for funding 25% of the
next $40 million and 50% of all development and commercialization costs in
excess of $50 million. As of June 30, 1998, approximately $12.0 million and
$680,000 has been contributed to the Joint Venture by Genzyme and Diacrin,
respectively. The Company's obligation to fund 25% of the program costs
commenced in the first quarter of 1998. The Company expects that the Joint
Venture's 1998 product development plans together with the Company's
commencement of funding of the Joint Venture will significantly increase the
Company's net loss and cash and investments used in 1998 as compared with 1997.
- 10 -
<PAGE>
The Company believes that its existing funds, together with expected
future funding under the joint venture agreement with Genzyme, will be
sufficient to fund its operating expenses and capital requirements as currently
planned through at least mid-2000. However, the Company's cash requirements may
vary materially from those now planned because of results of research and
development, the scope and results of preclinical and clinical testing, any
termination of the Joint Venture, relationships with strategic partners, changes
in the focus and direction of the Company's research and development programs,
competitive and technological advances, the FDA's regulatory process, the market
acceptance of any approved Company products and other factors. For a more
detailed discussion of these and other factors that may affect the Company's
future operating results, see the Company's Annual Report on Form 10-K for the
year ended December 31, 1997, as amended, as filed with the Securities and
Exchange Commission.
The Company expects to incur substantial additional costs, including
costs related to ongoing research and development activities, preclinical
studies, clinical trials, establishing pig production capabilities and the
expansion of its laboratory and administrative activities. Therefore, in order
to achieve commercialization of its potential products, the Company will need
substantial additional funds. There can be no assurance that the Company will be
able to obtain the additional funding that it will require on acceptable terms,
if at all.
The Company is in the process of completing its assessment of Year 2000
issues and their potential impact on its information systems and computer
technologies. Based on its assessment to date, expenses related to Year 2000
issues are expected to be immaterial. Year 2000 issues are not expected to have
a significant impact on the Company's ongoing results of operations.
- 11 -
<PAGE>
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
(c) The Company did not sell any equity securities during the quarter
ended June 30, 1998 that were not registered under the Securities Act.
(d) The following information updates and supplements the information
regarding use of proceeds originally filed by Diacrin on Form SR for the period
ended May 12, 1996, as amended to date and relates to securities sold by the
Company pursuant to the Registration Statement on Form S-2 (Registration No:
33-80773) which was declared effective on February 12, 1996: Through June 30,
1998, the Company has used approximately $5,446,000 of the total net proceeds
from its initial public offering of $20,911,755. Of the $5,446,000 used,
approximately $238,000 was used for the purchase of machinery and equipment;
approximately $354,000 was used for repayment of indebtedness; and approximately
$4,854,000 was used for working capital. The unused proceeds of approximately
$15,466,000 are in temporary investments consisting of corporate notes, a money
market mutual fund, a bank certificate of deposit and a municipal bond. All
proceeds used or invested were direct or indirect payments to others.
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's Annual Meeting of Stockholders held on June 16, 1998,
the following proposals were adopted by the vote specified below:
Proposal For Withheld
1. Election of Directors:
Thomas H. Fraser 13,707,965 15,336
Zola P. Horovitz 13,708,000 15,301
John W. Littlechild 13,708,000 15,301
Stelios Papadopoulos 13,708,000 15,301
Joshua Ruch 13,708,000 15,301
Henri A. Termeer 13,708,000 15,301
Christopher T. Walsh 13,708,000 15,301
For Against Abstain
-------- ------- -------
2. To ratify the selection of Arthur
Andersen LLP, as the Company's
independent auditors for fiscal 1998: 13,709,493 8,625 5,183
- 12 -
<PAGE>
Item 5. Other Matters
Stockholder Proposals for 1999 Annual Meeting
As set forth in the Company's Proxy Statement for its 1998 Annual
Meeting of Stockholders, stockholder proposals submitted pursuant to Rule 14a-8
under the Exchange Act for inclusion in the Company's proxy materials for its
1999 Annual Meeting of Stockholders must be received by the Secretary of the
Company at the principal offices of the Company no later than January 1, 1999.
In addition, in accordance with recent amendments to Rule 14a-4, 14a-5
and 14a-8 under the Exchange Act, written notice of stockholder proposals
submitted outside the processes of Rule 14a-8 for consideration at the 1999
Annual Meeting of Stockholders must be received by the Company on or before
March 31, 1999 in order to be considered timely for purposes of Rule 14a-4. The
persons designated in the Company's proxy statement and management proxy card
will be granted discretionary authority with respect to any shareholder proposal
with respect to which the Company does not receive timely notice.
- 13 -
<PAGE>
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.
Diacrin, Inc.
August 14, 1998 /s/ Thomas H. Fraser
---------------------------
Thomas H. Fraser
President and Chief
Executive Officer
/s/ Mark J. Fitzpatrick
----------------------------
Mark J. Fitzpatrick
Vice President of Finance and
Administration; CFO & Treasurer
- 14 -
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 4,070,485
<SECURITIES> 15,011,177
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 19,549,531
<PP&E> 1,891,045
<DEPRECIATION> 1,022,114
<TOTAL-ASSETS> 30,086,091
<CURRENT-LIABILITIES> 1,985,115
<BONDS> 489,060
<COMMON> 143,219
0
0
<OTHER-SE> 27,468,697
<TOTAL-LIABILITY-AND-EQUITY> 30,086,091
<SALES> 0
<TOTAL-REVENUES> 2,049,718
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,760,565
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 50,257
<INCOME-PRETAX> (2,058,565)
<INCOME-TAX> 0
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<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,058,565)
<EPS-PRIMARY> (.15)
<EPS-DILUTED> (.15)
</TABLE>
