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 September 30, 1999
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 October 31, 1999, 14,376,058 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, 1998 and September 30, 1999............... 3
Statements of Operations for each of the three and nine month
periods ended September 30, 1998 and 1999.............. 4
Statements of Cash Flows for each of the nine month periods
ended September 30, 1998 and 1999...................... 5
Notes to Financial Statements.......................... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................... 8
Item 3. Quantitative and Qualitative Disclosure About
Market Risk........................................... 12
PART II. - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds....... 13
SIGNATURES........................................................ 14
- 2 -
<PAGE>
Diacrin, Inc.
Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
December 31, September 30,
1998 1999
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 4,995,054 $ 4,055,719
Short-term investments 18,670,392 13,470,574
Interest receivable and other current assets 394,413 535,387
------------------ ------------------
Total current assets 24,059,859 18,061,680
---------------- ----------------
Property and equipment, at cost:
Laboratory and manufacturing equipment 878,208 891,753
Equipment under capital lease 675,262 675,262
Furniture and office equipment 293,873 302,078
Leasehold improvements 76,827 77,529
------------------- -------------------
1,924,170 1,946,622
Less- Accumulated depreciation and amortization 1,199,673 1,382,904
---------------- -----------------
724,497 563,718
----------------- ------------------
Long-term investments 2,605,010 4,743,445
Investment in joint venture 94,508 -
------------------ -----------------
2,699,518 4,743,445
---------------- ----------------
$ 27,483,874 $ 23,368,843
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 268,002 $ 121,694
Accrued expenses 1,359,982 1,440,379
Deferred revenue 338,855 -
Current portion of long-term debt 280,724 159,005
------------------ ------------------
Total current liabilities 2,247,563 1,721,078
----------------- -----------------
Long-term debt 391,702 281,667
----------------- ------------------
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--14,327,218 shares
and 14,369,018 shares at December 31, 1998
and September 30, 1999, respectively 143,272 143,690
Additional paid-in capital 64,191,075 64,234,279
Accumulated deficit (39,489,738) (43,011,871)
---------------- ----------------
Total stockholders' equity 24,844,609 21,366,098
---------------- ----------------
$ 27,483,874 $ 23,368,843
================ ===============
See Accompanying Notes to Financial Statements
- 3 -
</TABLE>
<PAGE>
Diacrin, Inc.
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
1998 1999 1998 1999
---------- --------- -------- ---------
<S> <C> <C> <C> <C>
REVENUES:
Research and development $ 790,867 $ 712,185 $ 2,840,585 $ 2,389,523
Interest income 408,299 319,429 1,188,639 1,012,491
---------- ---------- --------- ---------
Total revenues 1,199,166 1,031,614 4,029,224 3,402,014
---------- ---------- --------- ---------
OPERATING EXPENSES:
Research and development 1,812,228 1,454,553 5,572,793 4,652,802
General and administrative 377,855 300,221 1,151,417 953,810
Interest expense 20,951 8,977 71,208 36,931
---------- ---------- --------- ----------
Total operating expenses 2,211,034 1,763,751 6,795,418 5,643,543
---------- ---------- --------- ----------
EQUITY IN OPERATIONS
OF JOINT VENTURE (290,658) (441,936) (594,897) (1,280,604)
---------- ---------- --------- ----------
NET LOSS $ (1,302,526) $ (1,174,073) $ (3,361,091) $ (3,522,133)
============= ============== ============= =============
NET LOSS PER COMMON SHARE $ (.09) $ (.08) $ (.24) $ (.25)
========== ========== ============ ============
SHARES USED IN COMPUTING
NET LOSS PER COMMON SHARE 14,322,066 14,367,608 14,099,970 14,359,082
========== ========== ========== ==========
See Accompanying Notes to Financial Statements
- 4 -
</TABLE>
<PAGE>
Diacrin, Inc.
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months
Ended September 30,
1998 1999
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (3,361,091) $ (3,522,133)
Adjustments to reconcile net loss to net
cash used in operating activities-
Depreciation and amortization 261,830 183,231
Equity in operations of joint venture 594,897 1,280,604
Changes in assets and liabilities-
Interest receivable and other current assets (97,926) (140,974)
Accounts payable (11,234) (146,308)
Accrued expenses 119,033 (98,256)
Deferred revenue (144,439) (338,855)
----------- -----------
Net cash used in operating activities (2,638,930) (2,782,691)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
(Increase) decrease in short-term investments (10,808,278) 5,199,818
Purchases of property and equipment, net (65,790) (22,452)
Decrease (increase) in long-term investments 4,913,160 (2,138,435)
Investment in joint venture (1,204,572) (1,803,950)
Return of capital for services provided on behalf of joint venture 651,954 796,508
----------- -----------
Net cash (used in) provided by investing activities (6,513,526) 2,031,489
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from sale of common stock 9,469,312 43,622
Principal payments on long-term debt (250,056) (231,755)
----------- -----------
Net cash provided by (used in) financing activities 9,219,256 (188,133)
----------- -----------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 66,800 (939,335)
CASH AND CASH EQUIVALENTS, beginning of period 5,015,777 4,995,054
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 5,082,577 $ 4,055,719
============= =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid during the period $ 71,208 $ 36,931
============= ==============
See Accompanying Notes to Financial Statements
- 5 -
</TABLE>
<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 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 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 accordance with Statement of Financial Accounting Standards
("SFAS") No. 128, Earnings per Share, basic net loss per share is calculated by
dividing the net loss applicable to common stockholders by the weighted average
number of common shares outstanding for all periods presented. Diluted net loss
is the same as basic net loss because the inclusion of potential common stock
from the issuance of stock options and warrants of 406,969 and 473,225 at
September 30, 1999 and 1998, respectively, would be antidilutive.
- 6 -
<PAGE>
Diacrin, Inc.
Notes to Financial Statements
(Unaudited)
(c) New Accounting Standards
In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. The statement is effective for the year
ended December 31, 2000. SFAS No. 133 establishes accounting and reporting
standards for derivative instruments including certain derivative instruments
embedded in other contracts (collectively referred to as derivatives) and for
hedging activities. The Company does not expect adoption of this statement to
have a material impact on the Company's financial statements.
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 equivalents consisted primarily of a money market
mutual fund at December 31, 1998 and September 30, 1999. Short-term investments
and long-term investments consisted of corporate notes at December 31, 1998 and
September 30, 1999. At September 30, 1999, short-term investments and long-term
investments had a remaining average maturity of 4 months and 13 months,
respectively.
- 7 -
<PAGE>
Item 2. 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 its 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 September 30, 1999, the Company had an accumulated
deficit of $43.0 million.
In September 1996, the Company and Genzyme formed a 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 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.
- 8 -
<PAGE>
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.
Results of Operations
Three Months Ended September 30, 1999 Versus Three Months Ended
September 30, 1998
Research and development revenues of approximately $712,000
for the three months ended September 30, 1999 and $791,000 for the three months
ended September 30, 1998 were derived exclusively from the Joint Venture and was
relatively unchanged between periods.
Interest income was $319,000 and $408,000 for the three month periods
ended September 30, 1999 and 1998, respectively. This 22% decrease was due to a
decrease in the cash and investments on hand between the periods.
Research and development expenses were $1.5 million for the three
months ended September 30, 1999 versus $1.8 million for the three months ended
September 30, 1998. This 20% decrease was primarily due to a reduction in
preclinical related research as most of the Company's product candidates have
begun clinical testing.
General and administrative expenses were $300,000 and $378,000 for the
three months ended September 30, 1999 and 1998, respectively. This 21% decrease
was primarily due to decreased salary costs.
For the three months ended September 30, 1999 and 1998, the Company
recorded an expense of $442,000 and $291,000, respectively, related to its
equity in operations of the joint venture. This expense was 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.
The Company incurred a net loss of approximately $1.2 million for the
three months ended September 30, 1999 versus approximately $1.3 million for the
three months ended September 30, 1998.
Nine Months Ended September 30, 1999 Versus Nine Months Ended September 30, 1998
Research and development revenues were approximately $2.4
million for the nine months ended September 30, 1999 versus $2.8 million for the
nine months ended September 30, 1998 and were derived exclusively from the Joint
Venture. This reduction in research and development revenues was primarily
attributable to the reduction from 100% to 75% in the percentage of funding for
the Joint Venture provided by Genzyme which took effect in the first quarter of
1998.
Interest income was $1.0 million and $1.2 million for the nine month
periods ended September 30, 1999 and 1998, respectively. This 15% decrease was
due to a decrease in cash and investments on hand between the periods.
Research and development expenses were $4.7 million for the nine months
ended September 30, 1999 versus $5.6 million for the nine months ended September
30, 1998. This 17% decrease was primarily due to the production costs of
clinical grade antibody produced during the prior year period for use in certain
of the Joint Venture's planned clinical trials of NeuroCell(TM)-PD.
General and administrative expenses were $954,000 and $1.2 million for
the nine months ended September 30, 1999 and 1998, respectively. This 17%
decrease was primarily due to decreased salary costs.
- 9 -
<PAGE>
For the nine months ended September 30, 1999 and 1998, the Company
recorded an expense of $1.3 million and $595,000, respectively, related to its
equity in operations of the joint venture. This expense was 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. The Company was not required
to make contributions to the Joint Venture prior to the quarter ended March 31,
1998. The increased charge in the current year period was primarily a result of
the timing of the commencement of contributions by the Company to the Joint
Venture in the prior year period.
The Company incurred a net loss of approximately $3.5 million for the
nine months ended September 30, 1999 versus approximately $3.4 million for the
nine months ended September 30, 1998.
Liquidity and Capital Resources
The Company has financed its activities primarily with the net proceeds
from equity offerings aggregating $64 million and with interest earned thereon.
In addition, the Company has recorded approximately $11.8 million in revenue
from the Joint Venture since it commenced on October 1, 1996. At September 30,
1999, the Company had cash and cash equivalents, short-term investments and
long-term investments aggregating approximately $22.3 million.
In November 1997, the Company borrowed $650,000 at the Prime Rate plus
.5% under an unsecured five-year term loan with a bank to finance production
equipment acquired during 1997. As of September 30, 1999 the Company had
approximately $441,000 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 September 30, 1999.
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 September 30, 1999, approximately $20.7 million and
$3.6 million 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 1999 product development plans, which are 25% funded by Diacrin, will
significantly increase the Company's net loss and cash and investments used in
1999 as compared with 1998.
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-2001. 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, 1998, as filed with the Securities and Exchange
Commission.
- 10 -
<PAGE>
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.
Impact of the Year 2000 Issue
The Company is in the process of completing its assessment of Year 2000
issues and their potential impact on its information systems and business.
Generally, the Company has potential Year 2000 exposure in four areas: (i)
financial and management operating computer systems used to manage the Company's
business, (ii) operating computer systems used in the Company's research and
product development laboratories, (iii) microprocessors and other electronic
equipment used by the Company ("embedded chips") and (iv) computer systems used
by third parties, in particular financial institutions and suppliers of the
Company.
At September 30, 1999, the Company had completed its assessment of its
financial and management operating computer systems, had identified software
that is not Year 2000 compliant and had updated this software, through the
purchase of an off-the-shelf software package, together with hardware and
network server software. The Company spent approximately $5,000 in this effort.
At September 30, 1999, the Company had also completed its assessment of
its Year 2000 exposure to operating computer systems used in the Company's
research and development laboratories and embedded chips in its facilities and
equipment used in its facilities. The Company has not identified any
non-compliant systems that play a significant role in the Company's research,
product development or facilities management.
The Company continues to interview financial institutions and vendors
to determine their exposure to year 2000 issues, their anticipated risks and
responses to those risks. To date, the Company has not obtained information
suggesting any critical vendors or financial institutions will not be able to
service or supply the Company on or after January 1, 2000.
The Company does not separately track the internal costs incurred
related to its year 2000 compliance efforts and, therefore, these costs are
unknown. To date, costs incurred principally relate to employee payroll costs.
Although the aggregate additional costs of the Company's year 2000 program
cannot be known at this time, it is not currently expected to be material.
If the Company is unsuccessful in completing remediation of
non-compliant systems, or if any of the Company's third party suppliers and
partners do not timely complete their remediation programs, additional costs may
be incurred to develop alternative methods of managing the effected aspects of
the Company's business. In addition, the Company's clinical and preclinical
trials for all of its product candidates could be delayed. Based on the
information currently available to the Company, Year 2000 issues are not
expected to have a significant impact on the Company's ongoing results of
operations. Accordingly, the Company has not identified a most reasonably likely
worst case scenario and has not developed contingency plans.
- 11 -
<PAGE>
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company owns financial instruments that are sensitive to market
risks as part of its investment portfolio. The investment portfolio is used to
preserve the Company's capital until it is required to fund operations,
including the Company's research and development activities. None of these
market-risk sensitive instruments are held for trading purposes. The investment
portfolio contains instruments that are subject to the risk of decline in
interest rates.
Interest Rate Risk - The Company's investment portfolio includes
investment grade debt instruments. These bonds are subject to interest rate
risk, and could decline in value if interest rates fluctuation. Due to the short
duration and conservative nature of these instruments, the Company does not
believe that it has a material exposure to interest rate risk.
- 12 -
<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, 1999 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 September
30, 1999, the Company has used approximately $12,400,000 of the total net
proceeds from its initial public offering of $20,911,755. Of the $12,400,000
used, approximately $288,000 was used for the purchase of machinery and
equipment; approximately $814,000 was used for repayment of indebtedness; and
approximately $11,298,000 was used for working capital. The unused proceeds of
approximately $8,512,000 are in temporary investments consisting of corporate
notes and a money market mutual fund. All proceeds used or invested were direct
or indirect payments to others.
- 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.
November 12, 1999 /s/ Thomas H. Fraser
--------------------------
Thomas H. Fraser
President and Chief
Executive Officer
/s/ Kevin Kerrigan
--------------------------
Kevin Kerrigan
Controller
- 14 -
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<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<EXCHANGE-RATE> 1
<CASH> 4,055,719
<SECURITIES> 13,470,574
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 18,061,680
<PP&E> 1,946,622
<DEPRECIATION> 1,382,904
<TOTAL-ASSETS> 23,368,843
<CURRENT-LIABILITIES> 1,721,078
<BONDS> 281,667
<COMMON> 143,690
0
0
<OTHER-SE> 21,366,098
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<SALES> 0
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