FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 0-26372
CELLEGY PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
California 82-0429727
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1065 East Hillsdale Boulevard, Suite 418, Foster City, California 94404
(Address of principal executive offices, including zip code)
(415) 524-1600
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 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
--- ---
The number of shares outstanding of the registrant's common stock at July 24,
1997 was 7,490,761.
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CELLEGY PHARMACEUTICALS, INC.
INDEX TO FORM 10-QSB
<CAPTION>
Page
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<S> <C> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets as of June 30, 1997 (unaudited)
and December 31, 1996 3
Unaudited Condensed Statements of Operations for the three
months and six months ended June 30, 1997 and 1996, and the
period from June 26, 1989 (inception) through June 30, 1997 4
Unaudited Condensed Statements of Cash Flows for the six
months ended June 30, 1997 and 1996, and the period from
June 26, 1989 (inception) through June 30, 1997 5
Notes to Condensed Financial Statements 7
Item 2. Management's Discussion and Analysis or Plan of Operation 9
PART II OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
Signature(s) 16
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<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Cellegy Pharmaceuticals, Inc.
(a development-stage company)
Condensed Balance Sheets
(Amounts in thousands, except per share amounts)
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
June 30, 1997 December 31, 1996
------------- -----------------
(Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 2,679 $ 36
Short-term investments 3,005 5,256
Other current assets 216 351
-------- --------
Total current assets 5,900 5,643
Property and equipment, net 19 31
Long-term investments -- 2,022
-------- --------
$ 5,919 $ 7,696
======== ========
Liabilities and Shareholders' Equity
0Current liabilities:
Accounts payable and accrued liabilities $ 111 $ 270
Accrued research fees -- 21
Accrued compensation and related expenses 24 18
-------- --------
Total current liabilities 135 309
Shareholders' equity:
Preferred stock, no par value; 5,000,000 shares authorized;
Series A convertible preferred stock; 1,100 shares designated;
25 shares issued and outstanding at June 30, 1997, and 195
shares issued and outstanding at December 31, 1996 225 2,161
Common stock, no par value; 20,000,000 shares authorized;
5,879,115 shares issued and outstanding at June 30, 1997,
and 5,152,752 shares issued and outstanding at December 31,
1996 22,296 20,141
Unrealized gain on investments 5 22
Deficit accumulated during the development stage (16,742) (14,937)
-------- --------
Total shareholders' equity 5,784 7,387
-------- --------
$ 5,919 $ 7,696
======== ========
<FN>
The accompanying notes are an integral part of these condensed financial statements.
</FN>
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3
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<TABLE>
Cellegy Pharmaceuticals, Inc.
(a development-stage company)
Condensed Statements of Operations
(Unaudited)
(Amounts in thousands, except per share amounts)
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Period from
June 26, 1989
Three Months Ended Six Months Ended (inception) through
June 30, June 30, June 30, 1997
------------------------------------------------------------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Revenues:
Licensing and contract revenue from
affiliate $ -- $ -- $ -- $ 15 $ 1,145
Licensing, milestone and development
funding 123 -- 218 -- 778
Government grants 47 -- 100 -- 174
-------- -------- -------- -------- --------
Total revenues 170 -- 318 15 2,097
Operating expenses:
Research and development 803 597 1,537 1,193 10,659
General and administrative 376 432 736 783 6,918
-------- -------- -------- -------- --------
Total operating expenses 1,179 1,029 2,273 1,976 17,577
-------- -------- -------- -------- --------
Operating loss (1,009) (1,029) (1,955) (1,961) (15,480)
Interest expense -- -- -- -- (864)
Interest income and other, net 104 37 183 105 1,049
-------- -------- -------- -------- --------
Net loss (905) (992) (1,772) (1,856) (15,295)
Non-cash preferred dividends 7 1,253 33 1,253 1,447
-------- -------- -------- -------- --------
Net loss applicable to common
shareholders $ (912) $ (2,245) $ (1,805) $ (3,109) $(16,742)
======== ======== ======== ======== ========
Net loss per share applicable to
common shareholders $ (0.16) $ (0.58) $ (0.32) $ (0.81)
======== ======== ======== ========
Shares used in calculation of net loss
per share applicable to common
shareholders 5,738 3,876 5,559 3,856
======== ======== ======== ========
<FN>
The accompanying notes are an integral part of these condensed financial statements.
</FN>
</TABLE>
4
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<TABLE>
Cellegy Pharmaceuticals, Inc.
(a development-stage company)
Condensed Statements of Cash Flows
(Unaudited)
(Amounts in thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Period from
June 26, 1989
Six Months Ended (inception) through
June 30, June 30, 1997
--------------------------------------------------
1997 1996
-------- --------
<S> <C> <C> <C>
Operating activities
Net loss $ (1,772) $ (1,856) $(15,295)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 12 14 258
Compensation expense related to the
extension of option exercise periods 70 34 338
Loss on sale of property and equipment -- -- 4
Amortization of discount on notes payable
and deferred financing costs -- -- 568
Issuance of common shares for services -- -- 24
Issuance of Series A convertible preferred
stock for services rendered -- -- 73
Issuance of Series A convertible preferred
stock for interest -- -- 68
Issuance of Series A convertible preferred
stock for license agreement -- -- 100
Changes in operating assets and liabilities:
Other current assets 135 12 (216)
Accounts payable and accrued liabilities (159) (10) 111
Accrued research fees (21) -- --
Accrued compensation and related expenses 6 (143) 24
Deferred revenue -- -- --
-------- -------- --------
Net cash used in operating activities (1,729) (1,949) (13,943)
Investing activities
Purchase of property and equipment -- (8) (173)
Purchases of investments (1,000) (5,591) (17,623)
Sales and maturities of investments 5,256 -- 14,623
-------- -------- --------
Net cash provided by (used in)
investing activities 4,256 (5,599) (3,173)
<FN>
(continued on next page)
</FN>
</TABLE>
5
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<TABLE>
Cellegy Pharmaceuticals, Inc.
(a development-stage company)
Condensed Statements of Cash Flows (continued)
(Unaudited)
(Amounts in thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Period from
June 26, 1989
Six Months Ended (inception) through
June 30, June 30, 1997
------------------------------------------------
1997 1996
--------- --------
<S> <C> <C> <C>
Financing activities
Proceeds from notes payable $ -- $ -- $ 3,548
Repayment of notes payable -- -- (2,111)
Net proceeds from the issuance of common stock 116 12 6,680
Repurchase of common stock -- -- --
Issuance of convertible preferred stock, net of
issuance costs -- 6,753 11,758
Deferred financing costs
-- -- (80)
--------- -------- --------
Net cash provided by financing activities 116 6,765 19,795
Net increase (decrease) in cash and
cash equivalents 2,643 (783) 2,679
Cash and cash equivalents,
beginning of period 36 2,320 --
--------- -------- --------
Cash and cash equivalents, end of period $ 2,679 $ 1,537 $ 2,679
========= ======== ========
Supplemental disclosure of non-cash transactions:
Conversion of preferred stock to
common stock $ 1,969 $ -- $ 13,480
========= ======== ========
Issuance of common stock for notes payable $ -- $ -- $ 268
========= ======== ========
Issuance of warrants in connection with
notes payable financing $ -- $ -- $ 487
========= ======== ========
Issuance of Series A convertible preferred
stock for notes payable $ -- $ -- $ 1,153
========= ======== ========
Issuance of Series B convertible preferred
stock for notes payable $ -- $ -- $ 115
========= ======== ========
Issuance of common stock for Pacific
Pharmaceuticals, Inc. $ -- $ -- $ 9
========= ======== ========
<FN>
The accompanying notes are an integral part of these condensed financial statements.
</FN>
</TABLE>
6
<PAGE>
Cellegy Pharmaceuticals, Inc.
(a development-stage company)
Notes to Condensed Financial Statements
Note 1. - Basis of Presentation
The accompanying unaudited condensed balance sheets as of June 30, 1997 and
December 31, 1996, the unaudited condensed statements of operations for the
three months and six months ended June 30, 1997 and 1996, and the unaudited
condensed statements of cash flows for the six months ended June 30, 1997 and
1996, have been prepared by the Company in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they
do not include all of the information and footnote disclosures required by
generally accepted accounting principles for complete financial statements.
These condensed financial statements should be read in conjunction with the
Company's financial statements and notes thereto contained in the Company's
Annual Report on Form 10-KSB for the year ended December 31, 1996. In the
opinion of management, the accompanying condensed financial statements include
all adjustments (consisting of only normal recurring adjustments) considered
necessary for a fair presentation of financial position and results of
operations for the periods presented.
Operating results for the six months and three months ended June 30, 1997
may not necessarily be indicative of the results to be expected for any other
interim period or for the full year.
Note 2. - Net Loss Per Share
Net loss per share applicable to common shareholders is computed using the
weighted average number of shares of Common Stock outstanding. In February 1997,
the Financial Accounting Standards Board issued Statement No. 128, Earnings Per
Share, which is required to be adopted on December 31, 1997. At the time of the
adoption, the Company will be required to change the method currently used to
compute earnings per share and to restate all prior periods. This change will
have no impact on the net loss per share for the six months and three months
ended June 30, 1997 and June 30, 1996, respectively.
7
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Note 3. - Comprehensive Income
The Company intends to adopt Statement of Accounting Standards No. 130,
"Reporting Comprehensive Income", in its first quarter of 1998 interim financial
statements. The new standard is not expected to have a material affect on the
Company's financial position or results of operations.
Note 4. - Subsequent Events
On July 23, 1997 the Company completed a $3.8 million private placement of
approximately 1.5 million shares of Common Stock. Pursuant to the agreement
relating to the placement, the Company has agreed to file a Form S-3
registration statement to register for resale the Common Stock issued in the
placement transaction. The Company intends to use the funds raised as a result
of this private placement to support Cellegy's product development and
commercialization plans.
On July 23, 1997 the Company announced that it had reacquired rights to
skin repair technology previously licensed to Neutrogena Corporation, a
subsidiary of Johnson & Johnson, in April 1992. Cellegy may use this technology
to enhance certain products currently under development. If successfully
developed, the Company may seek to have these products marketed by
pharmaceutical companies and consumer products companies focusing on skin care.
8
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation
The Company commenced operations in 1989 to engage in the research,
development and commercialization of proprietary products. Cellegy is currently
developing prescription drugs and cosmeceutical products based upon its patented
topical and transdermal delivery technologies. The Company's first prescription
drug, Glylorin(TM), has been licensed to Glaxo Wellcome and is nearing
completion of Phase III clinical trials, the last testing phase required by the
Food and Drug Administration before marketing approval of a drug in the United
States may be sought. In addition to Glylorin, Cellegy is simultaneously testing
and developing several prescription drugs including a transdermal testosterone
gel and a line of non-prescription anti-wrinkling products.
Cellegy's knowledge of the physical and biochemical properties of the skin
has permitted development of transdermal technologies including "PERMEATE", a
patented technology which, based on preclinical studies to date, appears capable
of delivering an expanded number of drugs, including those of larger molecular
size, into or through the skin with greater precision and less irritation than
competing approaches; and "DIRMs(TM)" (Dermal Inflammatory Response Modulators),
a technology which employs dermal inflammatory response modulators that are
intended to eliminate or reduce the inflammation and allergic reactions produced
when irritating or allergenic substances come into contact with the skin.
Since its inception, the Company has engaged entirely in research and
development activities, and intends to continue research and development of its
drug delivery systems, and the preclinical and clinical testing of its
pharmaceutical and cosmeceutical products.
General
In July 1997, the Company completed a $3.8 million private placement of
approximately 1.5 million shares of Common Stock to a group of investors
including the Tisch family, the Biotechnology Value Fund, two other
sophisticated investors and Cellegy's Chief Executive Officer. The Company
intends to use the funds raised from this private placement to support Cellegy's
product development and commercialization plans.
In July 1997, the Company reacquired rights to skin repair technology
previously licensed to Neutrogena Corporation, a subsidiary of Johnson &
Johnson, in April 1992. Cellegy may use this technology to enhance certain
products currently under development. If successfully developed, the Company may
seek to
9
<PAGE>
have these products marketed by pharmaceutical companies and consumer products
companies focusing on skin care.
In June 1997, the Company announced that it had identified and isolated a
series of molecules which, when applied topically, reduce inflammation and
allergic reactions caused by a wide range of irritating and allergenic drugs.
Cellegy has labeled the isolated molecules as DIRMs. The Company is planning to
incorporate this new technology in its transdermal testosterone gel product
under development, which is expected to deliver a therapeutic dose of the male
sex hormone via a once-daily application to a small area of the skin.
In June 1997, the Company commenced clinical testing of a product designed
to reduce the appearance of fine lines and wrinkles occurring in photodamaged
and aging skin. The product being tested is formulated with certain of the
Company's proprietary DIRMs.
In November 1996, the Company entered into a licensing agreement with Glaxo
Wellcome, Inc. ("Glaxo") for Cellegy's first prescription dermatologic drug,
Glylorin. The license agreement provides for milestone payments, certain
development funding and royalty payments on net sales assuming successful
completion of product development and market launch.
In September 1996, the Company received an Orphan Drug grant from the
United States Food and Drug Administration to cover certain of the Company's
Phase III study costs for Glylorin over a two year period beginning September
30, 1996.
Results of Operations
Revenues. The Company recorded revenues of $318,000 for the six months
ended June 30, 1997, compared with revenues of $15,000 for the same period last
year. Revenues for the six months ended June 30, 1997, consisted of
approximately $218,000 associated with the Glaxo license agreement and $100,000
from the Orphan Drug grant. Revenues of $15,000 for the six months ended June
30, 1996 were associated with a license agreement with Neutrogena Corporation.
For the three months ended June 30, 1997, the Company recorded revenues of
$170,000. No revenues were recorded for the three months ended June 30, 1996.
The Company expects to receive additional funding from Glaxo over the next
several quarters and is pursuing other licensing and product supply agreements
which, if entered into, may result in additional contract revenues or product
sales in 1997. There can be no assurances regarding when, or if, such revenues
will occur.
10
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Research and Development Expenses. Research and development expenses were
$1,537,000 for the six months ended June 30, 1997, compared with $1,193,000 for
the same period last year. The Company incurred research and development
expenses of $803,000 and $597,000 for the three months ended June 30, 1997 and
1996, respectively. These increases were primarily due to personnel costs
associated with the addition of scientific personnel, as well as certain
contract research expenses related to the Company's drug delivery technologies.
Cellegy's research expenses are expected to increase during 1997 and 1998 as
preclinical and clinical trial activity associated with its testosterone and
anti-wrinkling programs increases and as it continues to focus on the
identification and testing of compounds using the Company's drug delivery
methods. The Company plans to selectively add personnel in research and
development in order to accomplish its goals.
General and Administrative Expenses. General and administrative expenses
were $736,000 for the six months ended June 30, 1997, a decrease from $783,000
for the same period last year. General and administrative expenses decreased to
$376,000 from $432,000 for the three months ended June 30, 1997 compared with
the three months ended June 30, 1996. The Company's general and administrative
expenses are expected to increase in the future in support of its research and
product commercialization efforts. However, the rate of increase in general and
administrative expenses is expected to be less than the growth rate of research
and development spending.
Interest Income and Expense. Interest income was $183,000 for the six
months ended June 30, 1997, compared with $105,000 for the same period last
year. Interest income was $104,000 and $37,000 for the three months ended June
30, 1997 and 1996, respectively. The additional interest income earned during
1997 was due to higher investment balances during the comparative periods.
Net Loss. The net loss applicable to common shareholders was $1,805,000 or
$0.32 per share for the six months ended June 30, 1997, compared with $3,109,000
or $0.81 per share for the same period last year. The Company's net loss
applicable to common shareholders was $912,000 or $0.16 per share and $2,245,000
or $0.58 per share for the three months ended June 30, 1997 and 1996,
respectively. The Company's net loss during the second quarter of 1996 was
impacted by significant non-cash preferred dividends reflecting the 15% discount
to the common stock variable conversion price of the Series A preferred stock
and the 8% per annum mandatory preferred dividends of the Series A preferred
stock associated with the issuance of convertible Series A Preferred Stock, in
accordance with SEC rules and regulations. The impact of these dividends was
$33,000 and $1,253,000 for the six months ended June 30, 1997 and 1996,
respectively.
11
<PAGE>
Liquidity and Capital Resources
The Company has experienced net losses and negative cash flow from
operations each year since its inception. Through June 30, 1997 the Company had
incurred an accumulated deficit of $16.7 million and had consumed cash from
operations of $13.9 million. The Company raised approximately $6.5 million in
net proceeds from its initial public offering in August 1995 and approximately
$6.8 million in net proceeds from a preferred stock financing in April 1996.
After the closing of the quarter, the Company raised approximately $3.8 million
in a private placement of Common Stock on July 23, 1997.
The Company's cash and investments were $5.7 million at June 30, 1997,
compared with $7.3 million at December 31, 1996. The decrease of $1.6 million
during the first six months of 1997 was principally due to net cash used in
operating activities. Including the private placement, completed in July 1997,
the Company's cash and investments were approximately $9.2 million at July 24,
1997.
The Company's future expenditures and capital requirements will depend on
numerous factors, but will mainly be affected by the progress of its research
and development programs, its preclinical and clinical testing, and its ability
to complete additional corporate partnership agreements. The Company's cash
needs are expected to continue to increase significantly over at least the next
two years in order to fund the additional expenses the Company will incur as it
expands its current research and development programs, particularly in the drug
delivery, prescription pharmaceutical, and cosmeceutical product areas, although
the level of such cash needs will be affected by many factors, including any
funding that may be received from third parties pursuant to license, development
or other agreements that the Company may enter into in the future, and the level
of revenues, if any, from commercial sales of products.
In the course of its development activities, the Company has incurred
significant losses and expects to incur substantial additional development
costs. As a result, the Company will require additional funds to finance
operations and may seek private or public equity investments and future
collaborative arrangements with third parties to meet such needs. There is no
assurance that such funding will be available for the Company to finance its
operations on acceptable terms, if at all. Insufficient funding may require the
Company to delay, reduce, or eliminate some or all of its research and
development activities, planned clinical trials, and administrative programs.
Based upon the Company's current research and development plan and including the
$3.8 million received as a result of the private
12
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placement in July 1997, the Company believes that its existing resources will
satisfy its anticipated cash requirements through at least December 31, 1998.
Factors That May Affect Future Operating Results
This Quarterly Report on Form 10-QSB, includes forward looking statements.
Words such as "believes," "anticipates," "expects," "intends" and similar
expressions are intended to identify forward looking statements, but are not the
exclusive means of identifying such statements. These forward looking statements
concern matters that involve risks and uncertainties, including, but not limited
to, those set forth below, that could cause actual results to differ materially
from those in the forward looking statements. Further, the Company undertakes no
obligation to revise any forward looking statements in order to reflect events
or circumstances that may arise after the date of this report.
The factors discussed in the Company's reports filed with the Securities
and Exchange Commission, including the Company's Annual Report on Form 10-KSB
for the year ended December 31, 1996, especially under the caption "Factors That
May Affect Future Operating Results," should be carefully considered when
evaluating the Company's business and prospects.
As of July 24, 1997, 99% of the Series A Preferred Stock was converted into
Common Stock. Based on the market price of the Common Stock at July 24, 1997,
approximately 42,600 shares of Common Stock would have been issuable if the
remaining outstanding shares of Preferred Stock had been converted on that date.
While no assurances are possible, the Company believes that such conversions
will not have a material impact on the market price of the Common Stock.
However, larger blocks of other common shares, if sold, could have a negative
impact on the market price of the Common Stock, particularly in light of the
Company's low trading volume.
13
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
As described in Note 4 above, the Company completed a $3,850,003 private
placement of 1,547,826 shares of Common Stock in July 1997. No underwriting
discounts or placement fees were paid. The securities were sold in reliance on
the exemptions provided under Paragraph 4(2) of the Securities Act of 1933, and
under Rule 505 of Regulation D, in light of the small number and sophistication
of the purchasers.
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's Annual Meeting of Shareholders, held on June 5, 1997, four
matters were submitted to vote of the shareholders: (i) the election of
directors; (ii) certain amendments to the Company's 1995 Equity Incentive Plan
(the "Plan"); (iii) certain amendments to the Company's 1995 Directors' Stock
Option Plan (the "Directors Plan"); and (iv) the ratification of the appointment
of Ernst & Young LLP as the Company's accountants for the fiscal year ending
December 31, 1997.
(i) With respect to the election of directors, the following nominees
(constituting of all nominees for election by the Company) were elected by the
votes indicated:
Nominee Votes Votes Withheld
- ------- ----- --------------
Jack L. Bowman 5,081,936 44,200
Denis R. Buger, Ph.D. 5,081,936 44,200
Peter M. Elias, M.D. 4,942,910 183,026
14
<PAGE>
K. Michael Forrest 5,081,736 44,200
Tobi B. Klar, M.D. 5,081,936 44,200
Alan A. Steigrod 5,081,936 44,200
Carl R. Thornfeldt, M.D. 4,942,910 183,026
Larry J. Wells 5,081,936 44,200
(ii) With respect to the amendment of the Plan, 2,931,046 shares voted in
favor, 215,239 shares voted against, and 1,979,651 shares were withheld or not
voted.
(iii) With respect to the amendment of the Directors Plan, 3,120,731 shares
voted in favor, 352,961 shares voted against, and 1,652,244 shares were withheld
or not voted.
(iv) With respect to the ratification of Ernst & Young LLP as the Company's
auditors, 5,084,671 shares voted in favor, 14,575 shares voted against, and
26,690 shares were withheld or not voted.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
15
<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.
CELLEGY PHARMACEUTICALS, INC.
Date: July 31, 1997 /s/ K. Michael Forrest
--------------------------------------
K. Michael Forrest
President and Chief Executive
Officer
Date: July 31, 1997 /s/ A. Richard Juelis
--------------------------------------
A. Richard Juelis
Vice President, Finance and
Chief Financial Officer
16
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 2,679
<SECURITIES> 3,005
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,900
<PP&E> 158
<DEPRECIATION> (139)
<TOTAL-ASSETS> 5,919
<CURRENT-LIABILITIES> 135
<BONDS> 0
0
225
<COMMON> 22,296
<OTHER-SE> (16,737)
<TOTAL-LIABILITY-AND-EQUITY> 5,919
<SALES> 0
<TOTAL-REVENUES> 170
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,179
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (905)
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<CHANGES> 0
<NET-INCOME> (905)
<EPS-PRIMARY> (0.16)
<EPS-DILUTED> (0.16)
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