<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED: JUNE 30, 1996 COMMISSION FILE NO.: 0-20138
- --------------------------------- ------------------------------
PHARMAGENICS, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 22-3072524
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4 PEARL COURT, ALLENDALE, NEW JERSEY 07401-1623
----------------------------------------------
(Address of Principal Executive Offices (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE - (201) 818-1000
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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 periods 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 class of
common stock, as of the latest practicable date: Common Stock, $.01 par value,
454,108 Shares at August 1, 1996.
<PAGE>
PHARMAGENICS, INC.
INDEX TO FORM 10-Q
PAGE
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PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Balance Sheets as of June 30, 1996 and
December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . 3
Statements of Operations for the Three Month and Six Month
periods ended June 30, 1996 and June 30, 1995 . . . . . . . . 4
Statements of Cash Flows for the Six Month periods ended
June 30, 1996 and June 30, 1995. . . . . . . . . . . . . . . . 5
Notes to Financial Statements . . . . . . . . . . . . . . . . 6
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . . . 9
PART II. ITEM 1. Legal Proceedings. . . . . . . . . . . . 12
ITEM 6. Exhibits and Reports on Form 8-K. . . . 12
-2-
<PAGE>
PHARMAGENICS, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, 1996 December 31, 1995
(Unaudited)
------------------ -----------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,740,867 $ 1,639,182
Prepaid expenses 45,957 22,970
------------------ -----------------
Total current assets 2,786,824 1,662,152
Property and equipment, net of $1,886,326 and
$1,705,980 of accumulated depreciation 963,424 996,048
Other assets 42,425 35,425
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Total assets $ 3,792,673 $ 2,693,625
------------------ -----------------
------------------ -----------------
LIABILITIES
Current liabilities:
Accounts payable and accrued expenses $ 897,565 $ 942,736
Deferred revenue 584,000 1,038,400
Capital lease obligations - current 201,560 321,650
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Total current liabilities 1,683,125 2,302,786
Capital lease obligations - long-term 32,392 39,280
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Total liabilities 1,715,517 2,342,066
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Commitments and contingencies
STOCKHOLDERS' EQUITY
Preferred stock - $.01 par value;
10,000,000 shares authorized;
Series A convertible preferred stock
2,160,000 shares issued and outstanding,
liquidation preference $4,017,600 21,600 21,600
Series B convertible preferred stock
2,138,399 shares issued and outstanding,
liquidation preference $16,038,000 21,384 21,384
Series C convertible preferred stock
issued and outstanding 3,076,556 in 1996
and 1,356,592 shares in 1995,
liquidation preference $6,614,595 30,765 13,566
Common stock - $.01 par value,
15,000,000 shares authorized,
issued and outstanding 451,608 shares 4,516 4,516
Additional paid-in capital 26,069,865 22,394,917
Accumulated deficit (23,987,443) (21,939,837)
Deferred compensation (83,531) (164,587)
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Total stockholders' equity 2,077,156 351,559
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Total liabilities and stockholders' equity $ 3,792,673 $ 2,693,625
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</TABLE>
The accompanying notes are an integral part of these financial statements.
-3-
<PAGE>
PHARMAGENICS, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
--------------------------- ---------------------------
1996 1995 1996 1995
------------ ---------- ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Research contracts $270,400 $870,633 $768,870 $1,395,633
License fees and royalties -- 289 -- 766
Grants 90,249 27,000 90,249 36,000
------------ ---------- ------------ ------------
Total revenues 360,649 897,922 859,119 1,432,399
------------ ---------- ------------ ------------
Costs and expenses:
Research and development 1,125,708 1,026,009 2,216,353 2,059,317
General and administrative 416,279 346,943 746,987 683,001
------------ ---------- ------------ ------------
Total costs and expenses 1,541,987 1,372,952 2,963,340 2,742,318
------------ ---------- ------------ ------------
Loss from operations (1,181,338) (475,030) (2,104,221) (1,309,919)
Interest expense (11,963) (164,645) (26,451) (257,557)
Interest income 40,905 11,049 83,066 18,258
------------ ---------- ------------ ------------
NET LOSS $(1,152,396) $(628,626) $(2,047,606) $(1,549,218)
------------ ---------- ------------ ------------
------------ ---------- ------------ ------------
Net loss per common share $(2.55) $(1.39) $(4.53) $(3.43)
------------ ---------- ------------ ------------
------------ ---------- ------------ ------------
Weighted average common
shares outstanding 451,608 451,308 451,608 451,258
------------ ---------- ------------ ------------
------------ ---------- ------------ ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE>
PHARMAGENICS, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six months ended June 30,
---------------------------
1996 1995
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $(2,047,606) $(1,549,218)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 180,345 188,604
Amortization of deferred compensation expense 75,282 87,863
Expense incurred for warrants issued below fair market value -- 165,000
Interest on loans converted into Series C preferred stock -- 46,435
Changes in operating assets and liabilities:
(Increase) in prepaid expenses (22,986) (30,503)
(Increase) decrease in other assets (7,000) 15,840
(Decrease) in accounts payable and accrued expenses (45,171) (169,110)
(Decrease) increase in deferred revenue (454,400) 184,367
------------ ------------
Net cash used in operating activities (2,321,536) (1,060,722)
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INVESTING ACTIVITIES:
Capital expenditures (147,722) (12,315)
------------ ------------
Net cash used in investing activities (147,722) (12,315)
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FINANCING ACTIVITIES:
Issuance of Series C convertible preferred stock 3,697,922 --
Payments on capital lease obligations (126,979) (119,423)
Proceeds from exercise of stock options -- 188
Proceeds from loans payable -- 2,000,000
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Net cash provided by financing activities 3,570,943 1,880,765
------------ ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 1,101,685 807,728
Cash and cash equivalents at beginning of period 1,639,182 753,038
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,740,867 $ 1,560,766
------------ ------------
------------ ------------
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 26,451 $ 46,122
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of these financial statements
-5-
<PAGE>
PHARMAGENICS, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - THE COMPANY
PharmaGenics, Inc. (the "Company"), a Delaware corporation, was
incorporated on August 11, 1989 and is an integrated drug discovery company
principally engaged in the discovery and development of therapeutics for the
treatment of cancer based upon tumor suppressor genes and other cancer-related
genes. The Company utilizes proprietary SAGE (Serial Analysis of Gene
Expression) technology to evaluate and identify genes that are abnormally
expressed in cancer and other diseases, designs assays and implements
high-throughput screens for identification of therapeutic lead compounds, and
exploits its proprietary combinatorial chemistry technology to generate drug
candidates targeting proteins relevant to cancer as well as other diseases.
The Company is subject to a number of risks similar to those of other
companies at this stage of development, including, but not limited to,
dependence on key individuals; uncertainty whether the Company's research and
development activities will result in the development of commercially usable
products and processes; competition from alternative products or processes; the
impact of research and product development activities of competitors of the
Company, many of whom have greater financial or other resources than those of
the Company; uncertainties related to clinical trials; uncertainties related to
technological improvements and advances; the need and ability to obtain adequate
additional financing necessary to fund continuing operations and product
development; uncertainties of obtaining required regulatory approvals; and
uncertainties of future profitability. The Company expects to incur substantial
additional costs before it can begin to generate revenue from product sales
sufficient to fund its operations, including costs related to ongoing research
and development activities, preclinical studies and regulatory compliance, and
for hiring additional management, manufacturing, scientific, sales and
administrative personnel.
The Company was able to obtain additional financing in the first
quarter of 1996 and believes that its current cash resources and other
available funding sources are sufficient to fund operations into January
1997. Since the Company will require additional funds before it is able to
generate revenues sufficient to fund its operations beyond such time, it is
currently seeking additional financing through a variety of strategies,
including corporate collaborations and other financing vehicles, and might
also seek to access the private and public markets. There is no assurance
that continued funding will be available to the Company or that, if
available, the amounts will be sufficient or the terms will be acceptable to
the Company.
NOTE 2 - BASIS OF PREPARATION
The information presented at June 30, 1996 and for the three month and six
month periods then ended is unaudited, but includes all adjustments (consisting
only of normal recurring adjustments) that the Company's management believes to
be necessary for the fair presentation of results for the periods presented.
These financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they
do not contain certain of the information and footnotes required by generally
accepted accounting principles for annual financial statements. These financial
statements should, therefore, be read in conjunction with the Company's audited
financial statements for the year ended December 31, 1995, which were included
as part of the Company's Annual Report on Form 10-K. The December 31, 1995
balance sheet was derived from audited financial statements.
-6-
<PAGE>
PHARMAGENICS, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 2 - BASIS OF PREPARATION (CONTINUED)
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
NOTE 3 - SERIES C CONVERTIBLE PREFERRED STOCK
In February 1996, the Company held a final closing on 1,719,964
additional shares of Series C convertible preferred stock for proceeds to the
Company of approximately $3,698,000 in a private placement offering that
commenced in December 1995. The offering was made directly by the Company to
the holders of the Company's other preferred stock and to new investors.
Including an initial closing in December 1995, total shares sold in the
private placement were 2,099,522 and proceeds to the Company were
approximately $4,514,000.
NOTE 4 - AGREEMENTS WITH PAINEWEBBER R&D PARTNERS III, L.P.
In May 1994, the Company entered into a series of agreements (the "R&D
Agreements") with PaineWebber R&D Partners III, L.P. (the "Partnership"),
pursuant to which the Partnership paid a $250,000 license fee and agreed,
subject to certain conditions, to pay the Company up to $5,750,000 to conduct
research and development on behalf of the Partnership on targets previously
identified by the Company pursuant to a development plan originally projected to
extend through March 31, 1996. The Company has continued research activities
under such development plan beyond March 31, 1996. In March 1995 the R&D
Agreements were modified to, among other things, expand the area of research
under the development plan and to provide for acceleration of $750,000 of
research funding under the R&D Agreements into 1995. In addition, in September
1995 the Company converted a $1,000,000 loan from the Partnership into Series C
convertible preferred stock of the Company in lieu of repayment in cash, and
thereby reduced by $1,000,000 research funding from the Partnership under the
R&D Agreements. As of December 31, 1995, all funding pursuant to the R&D
Agreements had been received. Furthermore, as of December 31, 1995 and June 30,
1996, $1,038,400 and $584,000, respectively, of the funding received represents
deferred revenue under the R&D Agreements, which relate to research activities
to be completed in 1996.
The R&D Agreements grant to the Company an option (the "Purchase
Option"), which in certain cases must be exercised, to purchase certain or
all of the rights owned by the Partnership as a result of activities under
the R&D Agreements ("Partnership Rights"). The Purchase Option terminates
December 31, 1998 or earlier upon the occurrence of certain events. The
Purchase Option exercise price to acquire the Partnership Rights began at
$9.4 million and increases on July 1, 1996 to $9.8 million and then quarterly
in increments up to $19.2 million. The option price may be paid in whole or
in part in shares of the Company's common stock provided that such shares are
registered under the Securities Act of 1933 and are tradable on a national
securities exchange or The Nasdaq Stock Market National Market System.
In consideration for the Purchase Option, the Company issued to the
Partnership a warrant to purchase up to 1,000,000 shares of the Company's common
stock (the "Core Warrant") and a warrant to purchase up to an additional 666,667
shares of the Company's common stock (the "Purchase Option Warrant"). With the
modification of the R&D Agreements in
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<PAGE>
PHARMAGENICS, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 5 - AGREEMENTS WITH PAINEWEBBER R&D PARTNERS III, L.P. (CONTINUED)
March 1995, the exercise price on both the Core Warrant and the Purchase Option
Warrant was fixed at $2.15 per share, subject to antidilution provisions and
other adjustments. The Core Warrant is exercisable for a period of five years
beginning 180 days following an initial public offering of the Company's common
stock (the "IPO") but beginning no later than July 1, 1996. The Purchase Option
Warrant is exercisable for a period of four years generally beginning ninety
days following the termination of the Purchase Option. If an IPO has occurred
and the Company exercises the Purchase Option, the Purchase Option Warrant is
subject to partial or full cancellation. If the Company undergoes a change in
control, as defined in the R&D Agreements, the Partnership has an option to
convert the amounts provided to the Company under the R&D Agreements into equity
of the Company. If such a conversion occurs, the Purchase Option Warrant will
be cancelled and the Company will acquire sole rights to all technology under
the R&D Agreements.
-8-
<PAGE>
PHARMAGENICS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The following discussion should be read in conjunction with the Financial
Statements and notes thereto included earlier in this report.
Some of the information presented in this report constitutes
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995, including discussions regarding the Company's
expectations of research and collaborative agreements, operating expenses,
lease financing, legal proceedings and access to capital. Although the
Company believes that its expectations are based on reasonable assumptions
within the bounds of its knowledge of its business and operations, there can
be no assurance that actual results will not vary materially from its
expectations. Meaningful factors that could cause actual results to differ
from expectations include, among others, uncertainties relating to whether
patents will issue and whether patents that issue will provide the Company
with adequate protection from other products or competitors; dependence on
key individuals, particularly Michael I. Sherman, the Company's President and
Chief Executive Officer; continued collaboration between the Company and Drs.
Bert Vogelstein and Kenneth Kinzler of The Johns Hopkins University School of
Medicine; continued collaboration between the Company and its other
corporate, governmental and academic collaborators; establishment of
additional collaborations with academia or corporations; uncertainty whether
the Company's research and development activities will result in the
development of commercially usable products and processes; competition from
alternative products or processes; uncertainties related to technological
improvements and advances; the impact of research and product development
activities of competitors of the Company, many of whom have greater financial
or other resources than those of the Company; the ability to obtain adequate
additional financing necessary to fund operations and product development;
the ability to obtain lease financing for capital equipment; uncertainties
related to legal proceedings; uncertainties related to clinical trials;
uncertainties of obtaining required regulatory approvals; advances in cancer
research, in general; the ability of the Company to arrange for the
manufacture and marketing of any new products; and uncertainties of future
profitability. For additional information concerning these and other
important factors which may cause the Company's actual results to differ
materially from expectations, please refer to the Company's Annual Report on
Form 10-K and other reports filed by the Company with the Securities and
Exchange Commission.
RESULTS OF OPERATIONS
Revenues for the three months and six months ended June 30, 1996 were
$360,649 and $859,119, respectively, decreases of $537,273 and $573,280 compared
to the same periods last year. Research contracts were the primary component of
revenues for the periods and account for the decreases for the comparable
periods.
For the second quarter of 1996, the sole source of revenues earned under
research contracts was a series of agreements (the "R&D Agreements") with
PaineWebber R&D Partners III, L.P. (the "Partnership"). For the first half of
1996, fifty-nine percent of revenues from research contracts were earned
under the R&D Agreements, thirty-four percent were from a collaborative
agreement with Boehringer Mannheim GmbH (see "Financial Condition, Liquidity
and Capital Resources"), and the balance was from a research agreement with
Genetic Therapy, Inc. ("GTI"). Furthermore, as of June 30, 1996, the Company
had received $584,000 of deferred revenue under the R&D Agreements, which
relate to research activities to be completed after June 30, 1996. See Note
4 of Notes to Financial Statements.
-9-
<PAGE>
PHARMAGENICS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS(CONTINUED)
Additionally, all funding pursuant to the research agreement with GTI had
been received and earned as of March 31, 1996. During the second quarter and
first half of 1995, eighty-six percent and ninety percent, respectively, of
research contract revenues were earned under the R&D Agreements with the
Partnership. Grant revenues in 1996 were earned under a five-year U.S.
National Cancer Institute ("NCI") grant awarded as a Cooperative Agreement in
September 1995 . Grant revenues in 1995 were earned under a NCI Small
Business Innovative Research grant that was awarded in May 1994 and concluded
in May 1995.
Research and development expenses were $1,125,708 for the second quarter
of 1996 and $2,216,353 for the first half of 1996, increases of $99,699
compared to the second quarter of 1995 and $157,036 compared to the first
half of 1995. Research expenses to support programs at collaborators
increased by approximately $117,000 in the second quarter and by
approximately $213,000 in the first half of 1996 compared to the same periods
last year. The Company incurred an increase of approximately $28,000 in the
second quarter and $22,000 for the first half of 1996 compared to the same
periods last year for scientific advisors mainly due to increases in
consulting fees and the timing of meetings of the Company's Scientific
Advisory Board. Compensation expense and costs for research supplies each
decreased by approximately $24,000 in the second quarter of 1996 compared to
the second quarter of 1995 mainly due to lower staffing during most of the
1996 quarter compared to the 1995 quarter. Although research staffing
increased to 33 at June 30, 1996 from 32 at June 30, 1995 and from 32 at
December 31, 1995, staffing was at lower levels during most of the quarter
and first half of 1996 than at June 30, 1996.
General and administrative expenses were $416,279 for the second quarter of
1996 and $746,987 for the first half of 1996, increases of approximately $69,000
compared to the second quarter of 1995 and $61,000 compared to the first half of
1995. These increases primarily are due to professional fees charged to expense
in the second quarter of 1996.
The Company's interest expense decreased to $11,963 for the second quarter
of 1996 and to $26,451 for the first half of 1996 from $164,645 for the second
quarter of 1995 and $257,557 for the first half of 1995, reflecting borrowings
of $1,000,000 under loan agreements in February 1995 and the related issuance of
warrants and borrowing of $1,000,000 upon the issuance of a convertible note to
the Partnership in June 1995. The principal and accrued interest under the loan
agreements and the convertible note were converted into Series C convertible
preferred stock as of September 30, 1995. Interest income increased in 1996 due
to higher cash and cash equivalent balances as a result of proceeds from the
private placement offering completed in February 1996.
Net losses were $1,152,396 for the quarter ended June 30, 1996 compared to
$628,626 for the same quarter last year. For the first half of 1996 net losses
were $2,047,606 compared to $1,549,218 for the first half of 1995. The
increases in net losses were primarily due to decreases in revenue earned under
research contracts, increases in research expenses to support programs at
collaborators and increases in professional fees.
-10-
<PAGE>
PHARMAGENICS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1996, the Company had cash and cash equivalents of
$2,740,867, an increase of $1,101,685 compared to December 31, 1995. In
February 1996, the Company held a final closing on 1,719,964 additional shares
of Series C convertible preferred stock for proceeds to the Company of
approximately $3,698,000 in a private placement offering that commenced in
December 1995. The offering was made directly by the Company to the holders of
the Company's other preferred stock and to new investors. Including an initial
closing in December 1995, total shares sold in the private placement were
2,099,522 and proceeds to the Company were approximately $4,514,000.
During the first half of 1996, cash used in operations increased to
$2,321,536, as compared to $1,060,722 used in operations during the same
period of 1995. The increase was primarily due to a reduction in funding
under research agreements. As of December 31, 1995, all funding pursuant to
the R&D Agreements had been received by the Company. In addition, with the
receipt of $25,000 in the first quarter of 1996, all research funding
pursuant to the research agreement with GTI has been received by the Company.
The Company has received approximately $290,000 of contract research
payments from Boehringer Mannheim GmbH ("Boehringer") in the first half of
1996, and might receive additional amounts in 1996 pursuant to the
collaborative agreement with Boehringer. However, the amount and timing of
any such payments are uncertain. Funding required for operating activities
during the first half of 1996 was primarily provided by the use of cash
reserves and proceeds received from the private placement offering. Funding
required for operating activities during the same period of 1995 was provided
by the use of cash reserves, research contract revenues and funding received
under loan agreements. The loans were converted into Series C convertible
preferred stock as of September 30, 1995.
The Company expects to continue to finance its anticipated operating
losses and its capital expenditures from existing cash reserves and
approximately $100,000 of grant funding in the second half of 1996 from NCI
as the Company's share under the Cooperative Agreement award received in
September 1995. In addition, the Company might receive additional research
payments in 1996 pursuant to the collaborative agreement with Boehringer.
The Company is also pursuing equipment lease financing arrangements.
The Company believes that its current cash resources and the
aforementioned sources of funding are sufficient to fund operations into
January 1997. The Company will require additional financing to continue its
operations beyond such time. If additional funding is not obtained, the
Company may be required to take one or more of the following actions:
significantly curtail its research activities, cease operations, or obtain
funds through arrangements with collaboration partners or others that may
require the Company to relinquish rights to certain of its technologies or
product candidates.
The Company expects to incur substantial additional costs before it might
begin to generate revenue from product sales, including costs related to
ongoing research and development activities, preclinical studies and
regulatory compliance, and for hiring additional management, manufacturing,
scientific, sales and administrative personnel. Since the Company will
require additional funds before it is able to generate revenues sufficient to
fund operations, it is currently seeking additional financing through a
variety of strategies, including corporate collaborations and other financing
vehicles, and might also seek to access the private and public markets.
There is no assurance that continued funding will be available to the Company
or that, if available, the amounts will be sufficient or the terms will be
acceptable to the Company.
-11-
<PAGE>
PHARMAGENICS, INC.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On July 19, 1996, LBC Capital Resources, Inc. ("LBC") brought an action
against the Company in the Superior Court of New Jersey in Bergen County,
alleging breach of contract and related causes of action arising out of an
agreement between the Company and LBC that obligated LBC to assist the Company
in finding new sources of capital. LBC asserts that the Company improperly
declined to pay LBC a commission in accordance with the agreement, and seeks
damages in excess of $150,000. The Company does not believe that the agreement
entitles LBC to a commission under these circumstances and will contest the
action vigorously.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit
Numbers Description and Method of Filing
------- --------------------------------
3.1. Third Restated Certificate of Incorporation.(7)
3.1(a) Amendment to Third Restated Certificate of Incorporation.(8)
3.1(b) Certificate of Designation of Series C Convertible Preferred
Stock.(9)
3.2. By-laws, as amended.(1)
4.1. Warrant Agreement dated November 14, 1991 by and between the
Company and American Stock Transfer & Trust Company, as Warrant
Agent.(1)
4.2. Form of Warrant Certificate.(1)
4.3. Form of Common Stock Certificate and Series B Preferred Stock
Certificate.(1)
10.1. Lease dated November 20, 1990, as amended, between AETNA Life
Insurance Company and the Company.(1)
10.1(a) Third Amendment to Exhibit 10.1.(2)
10.1(b) Fourth Amendment to Exhibit 10.1.(8)
10.2. Letter Agreement dated June 8, 1990 between the Company and
Michael I. Sherman.(1)
10.3. Non-Transferable, Non-Qualified Stock Option Agreement dated
March 27, 1991 between the Company and Michael I. Sherman.(1)
10.4. Restricted Stock Purchase Agreement dated April 24, 1991 between
the Company and Michael I. Sherman.(1)
10.5. Incentive Stock Option Agreement dated September 27, 1991 between
the Company and Michael I. Sherman.(1)
10.6. Letter Agreement dated February 15, 1991 between the Company and
Murray A. Goldberg.(1)
10.6(a) Letter Agreement dated November 17, 1994 between the Company and
Murray Goldberg.(1)
10.7. Non-Transferable, Non-Qualified Stock Option Agreement dated
March 27, 1991 between the Company and Murray A. Goldberg.(1)
10.8. Incentive Stock Option Agreement dated September 27, 1991 between
the Company and Murray A. Goldberg.(1)
-12-
<PAGE>
PHARMAGENICS, INC.
PART II -- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K(CONTINUED)
Exhibit
Numbers Description and Method of Filing
------- --------------------------------
10.9. Letter Agreement dated July 27, 1990 between the Company and Alan
F. Cook.(2)
10.9(a) Letter Agreement dated November 17, 1994 between the Company and
Alan F. Cook.(2)
10.10. Convertible Preferred Stock and Warrant Purchase Agreement dated
April 24, 1991 among the Company and HealthCare Ventures II, L.P.
and Everest Trust.(1)
10.11. Non-Transferable, Non-Qualified Stock Option Agreement dated
March 27, 1991 between the Company and Alan F. Cook.(2)
10.11(a) Incentive Stock Option Agreement dated September 27, 1991 between
the Company and Alan F. Cook.(2)
10.12. Stockholders' Agreement dated April 24, 1991 among the Company
and HealthCare Ventures II, L.P. and Everest Trust.(1)
10.12(a) Amendment to Stockholders' Agreement.(5)
10.12(b) Amendment to Stockholders' Agreement.(7)
10.13. Warrant to Purchase Shares of Common Stock dated September 27,
1991 issued to HealthCare Ventures II, L.P.(1)
10.14. Warrant to Purchase Shares of Common Stock dated September 27,
1991 issued to Everest Trust.(1)
10.15. Consent and Agreement to Amend dated September 27, 1991.(1)
10.15(a) Amendment to Exhibit 10.15.(2)
10.16. Sales Agency Agreement dated as of October 7, 1991, as amended
November 13, 1991, between the Company and PaineWebber
Incorporated.(1)
10.17. Subscription Agreement dated November 14, 1991 among the Company
and HealthCare Ventures II, L.P., Everest Trust and Norma
Sarofin.(1)
10.18. Registration Agreement dated November 14, 1991.(1)
10.19. Registration Agreement dated November 14, 1991.(1)
10.20. Warrant to purchase Common Stock dated November 14, 1991 issued
to PaineWebber Incorporated.(1)
10.21. 1991 Stock Option Plan, as amended.(7)
10.22. Equipment Lease Agreement, including Warrant Agreement, as
amended, between the Company and Comdisco, Inc.(1)
10.23. + Research Agreement dated March 1, 1989 among The Johns Hopkins
University, Hoffmann-La Roche Inc. and the Company.(10)
10.24.+ License Agreement dated February 5, 1992 among The Johns Hopkins
University, Hoffmann-La Roche Inc. and the Company.(10)
10.25. + Agreement dated April 30, 1991 between Hoffmann-La Roche Inc. and
the Company.(10)
-13-
<PAGE>
PHARMAGENICS, INC.
PART II -- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K(CONTINUED)
Exhibit
Numbers Description and Method of Filing
------- --------------------------------
10.26.+ Agreement dated April 1, 1990 between Georgetown University and
the Company.(1)
10.26(a) Letter Agreement dated January 25, 1993 modifying Exhibit
10.26.(2)
10.27.+ Agreement dated November 1, 1990 between Georgetown University
and the Company.(1)
10.28. Consulting Agreement dated November 24, 1990 between the Company
and Richard Schlegel.(1)
10.29. Consulting Agreement dated April 3, 1991 between the Company and
Bert Vogelstein.(1)
10.30.+ License Agreement dated January 15, 1993 between the Company and
Genetic Therapy, Inc.(2)
10.31. Incentive Stock Option Agreement dated February 17, 1993, between
the Company and Michael I. Sherman.(2)
10.32. Incentive Stock Option Agreement dated February 17, 1993, between
the Company and Murray A. Goldberg.(2)
10.32(a) Incentive Stock Option Agreement dated March 7, 1994, between the
Company and Murray A. Goldberg.(2)
10.33. Incentive Stock Option Agreement dated February 17, 1993, between
the Company and Alan F. Cook.(2)
10.33(a) Incentive Stock Option Agreement dated March 7, 1994, between the
Company and Alan F. Cook.(2)
10.34.+ Research Agreement effective April 1, 1993 between the Company
and Genetic Therapy, Inc.(2)
10.35 Form of Indemnification Agreement.(2)
10.36 1993 Stock Option Plan, as amended.(7)
10.37 Letter Agreement dated June 15, 1993, between the Company and
Michael I. Sherman.(4)
10.38 Master Equipment Lease Agreement, including Warrant Agreement,
dated September 10, 1993 between the Company and MMC/GATX
Partnership No. 1.(4)
10.39 1994 Independent Directors Stock Option Plan, as amended.(7)
10.40(a) Letter Agreement dated December 22, 1993, between the Company and
Paul P. Trotta.(5)
10.40(b) Incentive Stock Option Agreement dated March 7, 1994, between the
Company and Paul P. Trotta.(5)
10.40(c) Separation Agreement dated October 28, 1994 between the Company
and Paul P. Trotta.(10)
-14-
<PAGE>
PHARMAGENICS, INC.
PART II -- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K(CONTINUED)
Exhibit
Numbers Description and Method of Filing
------- --------------------------------
10.41(a) Letter Agreement dated May 10, 1991, between the Company and
Arthur H. Bertelsen.(5)
10.41(b) Incentive Stock Option Agreements dated September 27, 1991,
February 17, 1993, November 22, 1993 and March 7, 1994, between
the Company and Arthur H. Bertelsen.(5)
10.41(c) Non-transferable Non-Qualified Stock Option Agreement dated June
17, 1991 between the Company and Arthur H. Bertelsen.(5)
10.42 Amendment dated March 23, 1994, to Agreement of April 30, 1991
between Hoffmann-La Roche Inc. and the Company including Stock
Purchase Agreement and Warrants to purchase an aggregate of
150,000 shares of Common Stock.(5)
10.43+ Program Agreement dated as of April 1, 1994 between the Company
and PaineWebber R&D Partners III, L.P. (the "Partnership").(6)
10.43(a)+ First Amendment to Program Agreement, including Amended and
Restated Glossary.(10)
10.44+ Development Agreement dated as of April 1, 1994 between the
Company and the Partnership.(6)
10.44(a)+ Amended and Restated Development Agreement.(10)
10.45+ Purchase Option Agreement dated as of April 1, 1994 between the
Company and the Partnership.(6)
10.45(a)+ Amended and Restated Purchase Option Agreement.(10)
10.46 Technology Agreement dated as of April 1, 1994 between the
Company and the Partnership.(6)
10.46(a) Amended and Restated Technology Agreement.(10)
10.47+ Core Warrant dated as of April 1, 1994 issued by the Company to
the Fund.(6)
10.47(a) Amended and Restated Core Warrant.(10)
10.48+ Purchase Option Warrant dated as of April 1, 1994 issued by the
Company to the Partnership.(6)
10.48(a)+ Amended and Restated Purchase Option Warrant.(10)
10.49+ Stock Purchase Agreement dated as of March 15, 1995 between the
Company and the Partnership.(10)
10.50+ Loan Agreement dated as of February 13, 1995 among the Company,
HealthCare Ventures III, L.P., HealthCare Ventures IV, L.P.,
Everest Trust and Larry Abrams.(10)
10.50(a) Amendment No. 1 to Exhibit 10.50.(8)
10.51+ Letter Agreement dated September 13, 1994 between the Company and
Boehringer Mannheim GmbH, as supplemented December 7, 1994.(10)
10.52+ License Agreement dated as of September 1, 1995 between the
Company and The Johns Hopkins University.(8)
-15-
<PAGE>
PHARMAGENICS, INC.
PART II -- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K(CONTINUED)
Exhibit
Numbers Description and Method of Filing
------- --------------------------------
10.53 Letter Agreement dated June 8, 1995 between the Company and A.
Steven Franchak.(8)
10.54 Non-Qualified Stock Option Agreement dated July 6, 1995 between
the Company and A. Steven Franchak.(8)
10.55 Convertible Note dated June 8, 1995 between the Company and the
Partnership.(8)
27 Financial Data Schedule.(11)
____________
* Confidential treatment has been requested. The copy filed as an exhibit
omits the information subject to the request for Confidential Treatment.
+ Confidential treatment has been granted by the Commission. The copy filed
as an exhibit omits the information subject to the Grant of Confidential
Treatment.
(1) Incorporated by reference to the corresponding Exhibit number of
Registrant's Registration Statement on Form 10, No. 0-20138.
(2) Incorporated by reference to the corresponding Exhibit number of
Registrant's Annual Report on Form 10-K for the year ended December 31,
1992.
(3) Incorporated by reference to Exhibit A of the Registrant's definitive
Proxy Statement filed with the Securities and Exchange Commission on
August 17, 1993.
(4) Incorporated by reference to the corresponding Exhibit number of
Registrant's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1993.
(5) Incorporated by reference to the corresponding Exhibit number of
Registrant's Annual Report on Form 10-K for the year ended December
31,1993.
(6) Incorporated by reference to the corresponding Exhibit number of
Registrant's Quarterly Report on Form 10-Q or 10-Q/A for the quarter
ended March 31, 1994.
(7) Incorporated by reference to the corresponding Exhibit number of
Registrant's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1994.
(8) Incorporated by reference to the corresponding Exhibit number of
Registrant's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1995.
(9) Incorporated by reference to the corresponding Exhibit number of
Registrant's Annual Report on Form 10-K for the year ended December 31,
1995.
-16-
<PAGE>
PHARMAGENICS, INC.
PART II -- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K(CONTINUED)
(10) Incorporated by reference to the corresponding Exhibit number of
Registrant's Annual Report on Form 10-K for the year ended December 31, 1994.
(11) Filed herewith.
-17-
<PAGE>
SIGNATURE
---------
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.
PHARMAGENICS, INC.
/s/ Michael I. Sherman
----------------------
Michael I. Sherman, President
and Chief Executive Officer
/s/ A. Steven Franchak
----------------------
A. Steven Franchak, Vice President,
Chief Financial Officer and
Treasurer
Date: August 12, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED BALANCE SHEET AT JUNE 30, 1996 AND THE UNAUDITED STATEMENT OF
OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,740,867
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,786,824
<PP&E> 2,849,750
<DEPRECIATION> 1,886,326
<TOTAL-ASSETS> 3,792,673
<CURRENT-LIABILITIES> 1,683,125
<BONDS> 32,392
0
73,749
<COMMON> 4,516
<OTHER-SE> 1,998,891
<TOTAL-LIABILITY-AND-EQUITY> 3,792,673
<SALES> 0
<TOTAL-REVENUES> 859,119
<CGS> 0
<TOTAL-COSTS> (2,963,340)
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (26,451)
<INCOME-PRETAX> (2,047,606)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,047,606)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,047,606)
<EPS-PRIMARY> (4.53)
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