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 September 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File 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)
(650) 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 November 2,
1998 was 10,165,315.
<PAGE>
CELLEGY PHARMACEUTICALS, INC.
INDEX TO FORM 10-QSB
Page
----
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Condensed Balance Sheets as of September 30, 1998
and December 31, 1997 ........................................ 3
Unaudited Condensed Statements of Operations for the three
months and nine months ended September 30, 1998 and 1997,
and the period from June 26, 1989 (inception) through
September 30, 1998 ........................................... 4
Unaudited Condensed Statements of Cash Flows for the three
months and nine months ended September 30, 1998 and 1997,
and the period from June 26, 1989 (inception) through
September 30, 1998 ........................................... 5
Notes to Condensed Financial Statements ...................... 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations .................................... 9
PART II OTHER INFORMATION
Item 1. Legal Proceedings ............................................ 12
Item 2. Changes in Securities ........................................ 12
Item 3. Defaults Upon Senior Securities .............................. 12
Item 4. Submission of Matters to a Vote of Security Holders .......... 12
Item 5. Other Information ............................................ 12
Item 6. Exhibits and Reports on Form 8-K ............................. 12
Signature(s) ............................................................... 13
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Cellegy Pharmaceuticals, Inc.
(a development stage company)
Condensed Balance Sheets
(Amounts in thousands, except share amounts)
<CAPTION>
September 30, December 31,
1998 1997
-------- --------
(Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents ................................................................... $ 782 $ 1,822
Short-term investments ...................................................................... 7,279 7,482
Other current assets ........................................................................ 755 1,011
-------- --------
Total current assets ............................................................................. 8,816 10,315
Property and equipment, net ...................................................................... 251 14
Long-term investments ............................................................................ 8,362 12,422
-------- --------
Total assets ..................................................................................... $ 17,429 $ 22,751
======== ========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities .................................................... $ 415 $ 705
Deferred revenue ............................................................................ 250 500
Accrued research fees ....................................................................... 129 155
Accrued compensation and related expenses ................................................... 58 37
Note payable ................................................................................ 421 --
-------- --------
Total current liabilities ........................................................................ 1,273 1,397
Shareholders' equity:
Common stock, no par value; 20,000,000 shares authorized: 10,165,315 shares
issued and outstanding at September 30, 1998 and 10,123,751 shares issued
and outstanding at December 31, 1997 .................................................... 44,353 44,192
Accumulated other comprehensive income (loss) ............................................... 78 (12)
Deficit accumulated during the development stage ............................................ (28,275) (22,826)
-------- --------
Total shareholders' equity .................................................................. 16,156 21,354
-------- --------
Total liabilities and shareholders' equity ....................................................... $ 17,429 $ 22,751
======== ========
<FN>
The accompanying notes are an integral part of these condensed financial statements.
</FN>
</TABLE>
3
<PAGE>
<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
(inception)
Three Months Ended Nine Months Ended through
September 30, September 30, September 30,
1998 1997 1998 1997 1998
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Revenues:
Licensing and contract revenue from
affiliate ................................. $ -- $ -- $ -- $ -- $ 1,145
Licensing, milestone, and development
funding ................................... 66 299 231 517 1,394
Government grants ............................. 16 26 102 126 400
Product sales ................................. 343 -- 343 -- 343
-------- -------- -------- -------- --------
Total revenue ...................................... 425 325 676 643 3,282
Cost of revenue ............................... (91) -- (91) -- (91)
-------- -------- -------- -------- --------
Gross Profit ....................................... 334 325 585 643 3,191
Operating expenses:
Research and development ...................... 1,886 852 4,819 2,389 17,729
General and administrative .................... 690 330 2,044 1,066 9,833
Acquired in process technology ................ -- -- -- -- 3,843
-------- -------- -------- -------- --------
Total operating expenses ........................... 2,576 1,182 6,863 3,455 31,405
-------- -------- -------- -------- --------
Operating loss ..................................... (2,242) (857) (6,278) (2,812) (28,214)
Interest income and other, net ................ 258 170 831 354 2,254
Interest expense .............................. (3) -- (3) -- (867)
-------- -------- -------- -------- --------
Net loss ........................................... (1,987) (687) (5,450) (2,458) (26,827)
Non-cash preferred dividends ....................... -- 2 -- 35 1,448
-------- -------- -------- -------- --------
Net loss applicable to common shareholders ......... $ (1,987) $ (689) $ (5,450) $ (2,493) $(28,275)
======== ======== ======== ======== ========
Basic and diluted net loss per common share ........ $ (0.20) $ (0.10) $ (0.54) $ (0.41)
======== ======== ======== ========
Weighted average common shares outstanding ......... 10,165 7,112 10,158 6,076
======== ======== ======== ========
<FN>
The accompanying notes are an integral part of these condensed financial statements.
</FN>
</TABLE>
4
<PAGE>
<TABLE>
Cellegy Pharmaceuticals, Inc.
(a development stage company)
Condensed Statements of Cash Flows
(Unaudited)
(Amounts in thousands)
<CAPTION>
Period from
June 26, 1989
(inception)
Nine Months Ended September 30, through
------------------------------- September 30,
1998 1997 1998
-------- -------- --------
<S> <C> <C> <C>
Operating activities
Net loss ..................................................................... $ (5,450) $ (2,458) $(26,827)
Adjustment to reconcile net loss to net cash used in operating
activities:
Acquired in process technology ............................................ -- -- 3,843
Depreciation and amortization ............................................. 10 15 274
Compensation expense related to the extension of option
exercise periods ........................................................ -- 70 338
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 ...................................................... 256 (97) (755)
Accounts payable and accrued liabilities .................................. (290) (88) 415
Accrued research fees ..................................................... (26) -- 129
Accrued compensation and related expenses ................................. 21 6 58
Deferred revenue .......................................................... (250) 500 250
-------- -------- --------
Net cash used in operating activities ........................................ (5,729) (2,052) (21,438)
Investing activities
Purchase of property and equipment ........................................... (247) -- (420)
Purchases of investments ..................................................... (3,000) (6,990) (38,538)
Sales and maturities of investments .......................................... 7,354 6,255 22,975
-------- -------- --------
Net cash provided by (used in) investing activities .......................... 4,107 (735) (15,983)
(continued on next page)
<FN>
The accompanying notes are an integral part of these condensed financial statements.
</FN>
</TABLE>
5
<PAGE>
<TABLE>
Cellegy Pharmaceuticals, Inc.
(a development stage company)
Condensed Statements of Cash Flows - (Continued)
(Unaudited)
(Amounts in thousands)
<CAPTION>
Period from
June 26, 1989
(inception)
Nine Months Ended September 30, through
------------------------------- September 30,
1998 1997 1998
---------- -------- --------
<S> <C> <C> <C>
Financing activities
Proceeds from notes payable .................................................. $ -- $ -- $ 3,547
Repayment of notes payable ................................................... -- -- (2,111)
Proceeds from bank note payable .............................................. 421 421
Net proceeds from issuance of common stock ................................... 161 4,089 24,668
Issuance of convertible preferred stock, net of issuance costs ............... -- -- 11,758
Deferred financing costs ..................................................... -- -- (80)
---------- -------- --------
Net cash provided by financing activities .................................... 582 4,089 38,203
---------- -------- --------
Net increase (decrease) in cash and cash equivalents ......................... (1,040) 1,302 782
Cash and cash equivalents, beginning of period ............................... 1,822 36 --
---------- -------- --------
Cash and cash equivalents, end of period ..................................... $ 782 $ 1,338 $ 782
========== ======== ========
Supplemental disclosure of non-cash transactions:
Issuance of common stock in connection with acquired in process
technology ................................................................ $ -- $ -- $ 3,843
========== ======== ========
Conversion of preferred stock to common stock ................................ $ -- $ 2,196 $ 14,715
========== ======== ========
Issuance of common stock for notes payable ................................... $ -- $ -- $ 269
========== ======== ========
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 interim condensed financial statements 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, 1997. 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 three months and nine months ended September 30,
1998 may not necessarily be indicative of the results to be expected for any
other interim period or for the full year.
Note 2. - Basic and Diluted Net Loss per Share
The financial statements are presented in accordance with Statement of
Financial Accounting Standards No. 128, "Earnings per Share." Basic net loss per
common share is computed using the weighted average number of common shares
outstanding during the period. Diluted earnings per share incorporates the
incremental shares issued upon the assumed exercise of stock options and
warrants, when dilutive. There is no difference between basic and diluted net
loss per share, as presented in the statement of operations, because all options
and warrants are anti-dilutive.
Note 3. - Comprehensive Income (Loss)
The Company has adopted Statement of Financial Accounting Standards
("SFAS") No. 130, "Reporting Comprehensive Income," as of the first quarter of
1998. SFAS No. 130 establishes new rules for the reporting and display of
comprehensive income and its components. It has no impact on net loss or
stockholders' equity.
The components of comprehensive income (loss) are as follows:
(in thousands) Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
------- ------- ------- -------
Net loss applicable to common
shareholders .................. $(1,987) $ (689) $(5,450) $(2,493)
Change in unrealized gain (loss) on
available-for-sale investments 14 43 90 26
------- ------- ------- -------
Comprehensive net loss ............. $(1,973) $ (646) $(5,360) $(2,467)
======= ======= ======= =======
Accumulated other comprehensive income (loss) presented on the accompanying
balance sheet consists of the accumulated net unrealized gain (loss) on
available-for-sale investments.
7
<PAGE>
Note 4. - Bank Note Payable
In June 1998, the Company entered into an agreement with a bank to provide
for borrowings of up to $4.5 million through December 1999 with interest at the
bank's prime rate plus one percentage point or a rate equal to four and one
quarter percentage points above the yield of the 48 month treasury bill.
Interest only payments are due during the first twelve months of the agreement.
After the initial 12-month period of the agreement, the Company is required to
repay the amount then borrowed in 48 equal monthly installments. As of September
30, 1998, a total of $421,000 has been borrowed.
Note 5. - Lease Agreement
In April 1998, the Company signed an agreement to lease a new facility,
currently under construction, in the proximity of its current facilities. The
lease term is for ten years. The facility size is approximately 65,000 square
feet, of which a significant portion will be sublet by Cellegy during its
initial years of occupancy. The Company plans to consolidate its laboratory and
administrative operations into the new facility by the end of 1998.
The lease commitments are the following as of September 30, 1998:
1999 $ 989,625
2000 $1,164,936
2001 $1,199,880
2002 $1,235,880
2003 $1,272,948
Thereafter $6,961,020
The Company expects that, at current real estate market rates,
approximately one half of the lease commitment above in 1999 and 2000 will be
offset by sublease of the facility. A letter of intent to sublease approximately
15,000 square feet in the new facility has been completed.
Note 6. - Product Revenues
Revenues related to cosmeceutical product sales are recognized upon
shipment.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
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 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. Actual events or results may differ materially from those
discussed in this Quarterly Report. See "Factors That May Affect Future
Operating Results."
Cellegy Pharmaceuticals, Inc. is a biopharmaceutical company engaged in the
development of prescription drugs and cosmeceuticals to address a variety of
diseases and conditions utilizing its patented transdermal and topical delivery
technologies. The Company was incorporated in California in 1989. Cellegy is
developing several prescription drugs, including Anogesic(R), a
nitroglycerin-based product for the treatment of anal fissures and hemorrhoids,
and a transdermal testosterone gel for the treatment of hypogonadism, a
condition that frequently results in lethargy and reduced libido in men above
the age of 40. In addition to its prescription drugs, Cellegy is testing and
developing a line of anti-wrinkling cosmeceutical products which the Company
believes will address the skin care needs of an affluent and aging population.
General
In November 1997, the Company completed a $15.1 million public offering of
approximately 2.0 million shares of Common Stock. CIBC Oppenheimer Corp. acted
as underwriter in connection with the offering. Simultaneously, the Company's
stock was approved for listing on the Nasdaq National Market.
In December 1997, the Company completed an asset purchase agreement with
Neptune Pharmaceutical Corporation ("Neptune") to acquire all patent and other
intellectual property rights relating to Anogesic, a topical product candidate
for the treatment of anal fissures and hemorrhoids. The Company's expenses
relating to product development and clinical trials are expected to increase
during the remainder of 1998 and thereafter as a result of the initiation of
Phase III clinical trials in July 1998. Although the purchase price for Anogesic
is payable in Cellegy Common Stock, the Company recorded a non-cash charge to
operations for in process technology of $3,843,000 upon completion of the
Anogesic acquisition in 1997.
In June 1998, Cellegy and 3M Drug Delivery Systems announced that a
research agreement had been signed to evaluate combining Cellegy's CELLEDIRM
anti-inflammatory technology with 3M's Latitude(TM) Transdermal Delivery System.
3M Drug Delivery Systems is a world leader in transdermal technology. The
Latitude Transdermal System and 3M's transdermal components are technologies
used for products in various therapeutic areas.
In September 1998, Cellegy completed initial shipments and product sales of
its C79 skin formulation to Gryphon Development Inc., the product development
arm of Bath & Body Works. C79 is a key ingredient in a new line of healing hand
creams launched for the 1998 holiday season at selected Bath & Body Works stores
in the United States.
9
<PAGE>
Results of Operations
Revenues. The Company had revenues of $676,000 and $643,000 for the nine
months ended September 30, 1998 and 1997, respectively. During the nine months
ended September 30, 1998, revenues consisted of $231,000 for development funding
associated with the Glaxo license agreement, $102,000 related to an Orphan Drug
grant from the FDA to cover certain of the Company's clinical trial costs for
Glylorin, and $343,000 in product sales associated with a purchase order
received from Gryphon Development Inc. During the first nine months of 1997,
revenues consisted of $517,000 associated with the Glaxo license agreement and
$126,000 from FDA Orphan Drug grant payments.
For the three months ended September 30, 1998, the Company recorded
revenues of $425,000, compared with $325,000 for the same period last year. The
Company will receive significantly lower levels of development funding from
Glaxo, but is pursuing other licensing and product supply agreements which, if
entered into, may result in additional contract revenues or product sales. There
can be no assurances regarding when, or if, such revenues will occur. Through
the end of the Orphan Drug grant period on September 30, 1998, the Company
received the full grant funding of $400,000 from the FDA.
Research and Development Expenses. Research and development expenses were
$4,819,000 for the nine months ended September 30, 1998, compared with expenses
of $2,389,000 for the same period last year. The Company incurred research and
development expenses of $1,886,000 and $852,000 for the three months ended
September 30, 1998 and 1997, respectively. These increases were primarily due to
salary costs in connection with increased scientific personnel and the
associated recruiting and relocation expenses, as well as increased contract
research and patent expenses. The increase during the last three months was
principally due to expenses related to the Anogesic Phase III clinical trial.
Cellegy's research expenses are expected to continue to increase during 1998 as
preclinical and clinical trial activity associated with its Anogesic clinical
program increases and as it continues development of its transdermal
testosterone gel.
General and Administrative Expenses. General and administrative expenses
increased to $2,044,000 for the nine months ended September 30, 1998, compared
with $1,066,000 for the same period last year. The Company incurred general and
administrative expenses of $690,000 and $330,000 for the three months ended
September 30, 1998 and 1997, respectively. These increases were primarily due to
salary costs in connection with the addition of administrative personnel and the
associated recruiting and relocation expenses, increased external reporting
expenses and marketing expenses related to the Company's cosmeceuticals. The
Company's general and administrative expenses are expected to continue to
increase in the future in support of its research and product commercialization
efforts and the planned expansion and consolidation of its office and laboratory
facilities.
Interest Income and Expense. The Company earned $831,000 in interest income
for the nine months ended September 30, 1998, compared with $354,000 for the
same period last year. For the three months ended September 30, 1998 and 1997,
the interest income earned was $258,000 and $170,000, respectively. Increases in
interest income were due to higher average investment balances during the period
resulting from proceeds principally associated with a public offering of Common
Stock in November 1997. Interest expense of $3,000 was incurred during the three
months ended September 30, 1998 in connection with a bank loan agreement.
Net Loss. The net loss applicable to common shareholders was $5,450,000 or
$0.54 per share for the nine months ended September 30, 1998 based on 10,158,000
weighted average shares outstanding, compared with a net loss of $2,493,000 or
$0.41 per share for the same period in the prior year, when 6,076,000 weighted
average shares were outstanding. For the three months ended September 30, 1998,
the net loss applicable to common shareholders was $1,987,000 or $0.20 per share
based on 10,165,000 weighted average shares outstanding, compared with $689,000
or $0.10 per share based on 7,112,000 weighted average shares outstanding for
the same period last year.
10
<PAGE>
Liquidity and Capital Resources
The Company has experienced net losses and negative cash flow from
operations each year since its inception. Through September 30, 1998, the
Company had incurred an accumulated deficit of $28.3 million and had consumed
cash from operations of $21.4 million. The Company's public financings included
$6.4 million in net proceeds from its initial public offering in August 1995,
$6.8 million in net proceeds from a preferred stock financing in April 1996,
$3.8 million in net proceeds from a private placement of Common Stock in July
1997, and $13.8 million in net proceeds from a secondary public offering in
November 1997.
The Company's cash and investments were $16.4 million at September 30,
1998, compared with $21.7 million at December 31, 1997. The decrease in cash and
investments was principally due to net cash used in operating activities. The
Company's operations have and will continue to use substantial amounts of cash.
Future expenditures and capital requirements depend on numerous factors
including, without limitation, the progress and focus of its research and
development programs, the progress and results of preclinical and clinical
testing, the time and costs involved in obtaining regulatory approvals, the
costs of filing, prosecuting, defending and enforcing any patent claims and
other intellectual property rights, the ability of the Company to establish new
collaborative arrangements, its ability to maintain existing collaborations,
particularly with Glaxo, the initiation of commercialization activities, the
purchase of capital equipment, and the availability of other financing.
In order to complete the research and development and other activities
necessary to commercialize its products, additional financing will be required.
As a result, the Company will seek private or public equity investments and
future collaborative arrangements with third parties to meet such needs. There
is no assurance that such financing, including further development funding from
Glaxo, will be available for the Company to fund 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. The Company believes that available
cash resources and the interest thereon will be adequate to satisfy its capital
needs through at least December 31, 1999.
Impact of Year 2000. The Company has established a project team to review
and make necessary modifications to its computer systems for Year 2000
compliance. The Company completed an initial assessment of its Year 2000 status
in September 1998. The majority of the hardware can be made Year 2000 compliant
through BIOS upgrades or software patches. The expected completion date for this
is December 1998. The Company currently does not expect the cost of its Year
2000 compliance program will be material to its financial condition. In
addition, the Company is developing a contingency plan in the event that a
business interruption caused by Year 2000 problems should occur. The contingency
plans also include plans to address third parties' Year 2000 issues that may
arise. Nevertheless, Year 2000 compliance is a complex project and it depends on
many factors, some of which are not completely within the Company's control.
Should either the Company's internal systems or the internal systems of one or
more significant vendors or suppliers fail to achieve Year 2000 compliance, the
Company's business and its results of operations could be adversely affected.
Factors That May Affect Future Operating Results
This Quarterly Report on Form 10-QSB contains forward-looking statements
which involve risks and uncertainties, including, but not limited to, statements
concerning the commencement and completion of clinical trials, the timing of
planned regulatory filings, the applicability of drug and cosmetic laws and
regulations to the Company's products, independent decisions made by its
collaborative partners, the Company's strategic plans, the scope and
defensibility of the Company's patent coverage, anticipated expenditures and the
need for additional funds. 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, 1997, in particular under
the caption "Factors That May Affect Future Operating Results," should be
carefully considered when evaluating the Company's business and prospects.
11
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
12
<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: November 3, 1998 /s/ K. Michael Forrest
-------------------------------------------
K. Michael Forrest
President and Chief Executive Officer
Date: November 3, 1998 /s/ A. Richard Juelis
-------------------------------------------
A. Richard Juelis
Vice President, Finance and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0000887247
<NAME> Cellegy Pharmaceuticals, Inc.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 782
<SECURITIES> 15,641
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8,816
<PP&E> 405
<DEPRECIATION> (154)
<TOTAL-ASSETS> 17,429
<CURRENT-LIABILITIES> 1,273
<BONDS> 0
0
0
<COMMON> 44,353
<OTHER-SE> (28,197)
<TOTAL-LIABILITY-AND-EQUITY> 17,429
<SALES> 0
<TOTAL-REVENUES> 676
<CGS> (91)
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 6,863
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (3)
<INCOME-PRETAX> (5,450)
<INCOME-TAX> 0
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