<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number: 0-27972
HOUGHTEN PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 51-0336233
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
3550 GENERAL ATOMICS COURT, SAN DIEGO, CA 92121
(619) 455-3814
(Address, including zip code, and telephone, including
area code, of registrant's principal executive offices)
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes No x
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at April 8, 1996
----- ----------------------------
Common stock, $0.001 par value 13,120,941
<PAGE> 2
HOUGHTEN PHARMACEUTICALS, INC.
FORM 10-Q
TABLE OF CONTENTS
<TABLE>
<S> <C>
COVER PAGE ................................................................................... 1
TABLE OF CONTENTS ............................................................................ 2
PART I. FINANCIAL INFORMATION
ITEM 1. Consolidated Financial Statements (unaudited)
Consolidated Balance Sheets at March 31, 1996 and December 31, 1995 ................. 3
Consolidated Statements of Operations for the three months ended March
31, 1996 and 1995 ................................................................. 4
Consolidated Statements of Cash Flows for the three months ended March
31, 1996 and 1995 ................................................................. 5
Notes to Consolidated Financial Statements .......................................... 6
ITEM 2.
Management's Discussion and Analysis of Financial Condition and
Results of Operations ............................................................... 8
PART II. OTHER INFORMATION .................................................................. 11
ITEM 4. Submission of Matters to a Vote of Security Holders
ITEM 6. Exhibits and Reports on Form 8-K
SIGNATURE .................................................................................... 12
</TABLE>
2
<PAGE> 3
HOUGHTEN PHARMACEUTICALS, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31,
1996 DECEMBER 31,
(UNAUDITED) 1995
----------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 10,218,152 $ 1,160,776
Accounts receivables 310,633 241,076
Stock subscription receivable 23,776,220 --
Other current assets 162,666 131,921
------------ ------------
Total current assets 34,467,671 1,533,773
Property and equipment, net 861,816 934,586
Other assets 1,062,598 277,097
------------ ------------
$ 36,392,085 $ 2,745,456
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (net capital deficiency)
Current liabilities:
Accounts payable $ 544,461 $ 216,307
Accrued compensation 368,456 340,948
Other accrued liabilities 1,141,591 956,959
Current portion of obligations under capital lease 364,131 361,151
Deferred revenue 3,049,352 2,003,532
------------ ------------
Total current liabilities 5,467,991 3,878,897
Obligations under capital leases 377,096 470,301
Series One redeemable preferred stock, $.001 par value
2,100,000 shares authorized, issued and outstanding;
stated at redemption value, plus accrued dividends of
$672,000 and $714,000 at December 31, 1995 and
March 31, 1996, respectively. 2,814,000 2,772,000
Stockholders' equity (net capital deficiency):
Convertible preferred stock, $.001 par value:
Authorized shares = 23,125,138
Issued and outstanding shares = 15,931,493 at
December 31, 1995 and 19,298,163 at March 31, 1996 19,298 15,931
Common stock, $.001 par value:
Authorized shares = 25,486,638
Issued and outstanding shares = 310,374 and 351,400 at
December 31, 1995 and March 31, 1996, respectively. 351 310
Common stock subscribed, 3,300,000 shares 23,776,220 --
Additional paid-in capital 42,320,699 30,366,418
Deferred compensation, net (2,008,588) (236,000)
Accumulated deficit (36,374,982) (34,522,401)
------------ ------------
Total stockholders' equity (net capital deficiency) 27,732,998 (4,375,742)
------------ ------------
$ 36,392,085 $ 2,745,456
============ ============
</TABLE>
Note: The balance sheet at December 31, 1995, has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
See accompanying notes.
3
<PAGE> 4
HOUGHTEN PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
--------------------------------
1996 1995
------------ ------------
<S> <C> <C>
REVENUES:
Net sales $ 1,565,052 $ 13,000
----------- -----------
1,565,052 13,000
Costs and expenses:
Cost of sales 466,851 6,000
Research and development 2,166,172 1,537,682
Selling, general and administrative 795,090 490,944
----------- -----------
3,428,113 2,034,626
----------- -----------
Loss from operations (1,863,061) (2,021,626)
Other income (expense):
Interest income 78,516 13,165
Interest expense (26,036) (22,050)
Corporate joint venture -- 414,063
----------- -----------
Net loss $(1,810,581) $(1,616,448)
=========== ===========
Net loss per share $ (0.19) $ (0.17)
=========== ===========
Shares used in computing net loss per share 9,697,817 9,604,252
=========== ===========
</TABLE>
See accompanying notes.
4
<PAGE> 5
HOUGHTEN PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
------------------------------
1996 1995
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $(1,810,581) $(1,616,448)
Adjustments to reconcile net loss to net cash flows
used for operating activities:
Depreciation and amortization 118,787 104,417
Corporate joint venture (414,063)
Amortization of deferred compensation 74,412
Changes in operating assets and liabilities, net of effects
from the transfer of assets from corporate joint venture in 1995:
Accounts receivable (69,556) 32,053
Other current assets (30,745) 83,191
Accounts payable 328,153 (38,074)
Other accrued liabilities 212,139 (98,125)
Deferred revenue 1,045,820 1,000,001
----------- -----------
Net cash flows used for operating activities (131,571) (947,048)
INVESTING ACTIVITIES:
Additions to property and equipment, net (46,017) (20,666)
Other assets (785,501) (4,422)
----------- -----------
Net cash flows used for investing activities (831,518) (25,088)
FINANCING ACTIVITIES:
Principal payments under capital lease obligations (90,225) (69,277)
Issuance of convertible preferred stock, net of issuance costs 10,059,858 982,225
Issuance of common stock 50,832 9,309
----------- -----------
Net cash flows provided by financing activities 10,020,465 922,257
----------- -----------
Net increase (decrease) in cash and cash equivalents 9,057,376 (49,879)
Cash and cash equivalents at beginning of period 1,160,776 516,429
----------- -----------
Cash and cash equivalents at end of period $10,218,152 $ 466,550
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for interest $ 23,139 $ 22,050
=========== ===========
</TABLE>
See accompanying notes.
5
<PAGE> 6
HOUGHTEN PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated 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 include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period ended March 31,
1996, are not necessarily indicative of the results that may be expected for the
year ended December 31, 1996. For further information, refer to the consolidated
financial statements and footnotes thereto for the year ended December 31, 1995,
included in Houghten Pharmaceuticals, Inc.'s prospectus dated March 29, 1996,
filed with the Securities and Exchange Commission pursuant to Rule 424 (b) under
the Securities Act of 1933, as amended, with reference to Registration No.
333-1376 and Registration No. 333-2982.
Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standard (SFAS) No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of." The adoption of the new
standard had no effect on the financial statements.
Effective January 1, 1996, the Company adopted SFAS No. 123,
"Accounting and Disclosure of Stock-Based Compensation." As allowed under the
SFAS, the Company has elected to continue to follow Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25) in
accounting for its employee stock options. The adoption of the standard had no
effect on the financial statements.
2. CORPORATE JOINT VENTURE
Effective January 1, 1994, the Company transferred substantially all
tangible assets and certain liabilities having a net carrying value of $497,242
from its wholly-owned subsidiary, Multiple Peptide Systems, Inc. ("MPS"), to a
newly formed entity, Chiron Mimotopes Peptide Systems, LLC ("CMPS"), a Delaware
limited liability company. Chiron Corporation ("Chiron") also transferred
certain tangible assets of its peptide product line to CMPS. As of January 1,
1994, CMPS was 25% owned by MPS and 75% owned by Chiron. CMPS engaged in the
manufacture and sale of peptides and peptide libraries to the research
community.
Effective March 31, 1995, Chiron and the Company determined to cease
the operations of CMPS and return the previously contributed technology and
certain assets back to the stockholders. In connection with the dissolution, the
Company agreed to provide Chiron certain products at no cost and Chiron provided
the Company with a $145,000 note payable which was subsequently repaid.
The effect of the transaction on the Company is as follows:
<TABLE>
<S> <C>
Assets received:
Cash ....................... $ 130,000
Accounts receivable, net ... 448,913
Other, net ................. 71,150
Cost of products to be provided (236,000)
---------
Gain on dissolution ........ $ 414,063
=========
</TABLE>
The Company also received property and equipment for which no value has
been assigned. The net monetary assets received over the cost to provide product
to Chiron of approximately $414,000 is reported as other income from corporate
joint venture.
6
<PAGE> 7
HOUGHTEN PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(unaudited)
During the three months ended March 31, 1995, there were no operations
in MPS, as these operations were conducted through CMPS. The consolidated
statements of operations and consolidated statements of cash flows for the three
months ended March 31, 1996 include the subsidiary's operations.
3. NET LOSS PER SHARE
Net loss per share is computed using the weighted average number of
common shares outstanding during the periods as adjusted for the effects of
certain rules of the Securities and Exchange Commission for the periods prior to
the Company's initial public offering which closed April 3, 1996. The
calculation of the shares used in computing net loss per share also includes the
Series A, B, C, D, E, F and G Preferred Stock, which converted into shares of
common stock upon the closing of the initial public offering, as if they were
converted into common stock as of the original dates of issuance.
4. COLLABORATIVE ARRANGEMENTS
In connection with the sale of the Company's Series G Preferred Stock,
the Company entered into an agreement with Dura Pharmaceuticals, Inc. ("Dura").
The Company's chairman of the board of directors is a member of the board of
directors of Dura and Dura's chairman and chief executive officer is a member of
the Company's board of directors. Under the contract, Dura will perform research
to apply Dura's drug delivery technology to compounds developed by the Company.
The Company is required to make minimum contract payments of $6 million over
four years. Payments are due quarterly and must aggregate $2 million in each of
the first two years of the contract and $1 million in each of the last two years
of the contract. Concurrent with the execution of this contract, Dura purchased
$5 million of the Company's Series G Preferred Stock.
In February 1996, the Company entered into a collaborative arrangement
with Novo Nordisk A/S whereby the Company received $2 million for library access
fees and will receive additional fees in February 1997. The Company will also
receive milestone and royalty payments on products discovered and subsequently
developed and marketed by Novo Nordisk A/S.
5. STOCKHOLDERS' EQUITY
In January and February 1996, the Company issued 3,366,670 shares of
its Series G Preferred Stock for net cash proceeds of $10.1 million.
In February 1996, the Board of Directors approved a one-for-2.15
reverse stock split of the Company's outstanding common stock. All share and per
share amounts in the accompanying consolidated financial statements have been
retroactively restated to reflect the reverse stock split.
In the first quarter of 1996, the Company recorded $1.8 million in
deferred compensation relating to options granted under its Stock Incentive
Plan which will be expensed over the vesting period of these options.
On April 3, 1996, the Company closed its initial public offering of
3,300,000 shares of common stock at $8.00 per share for total gross proceeds of
$26,400,000 and net cash proceeds of $23,776,220. Accordingly, a receivable from
stock subscription has been recorded in the accompanying consolidated balance
sheets at March 31, 1996. Upon closing of the initial public offering, the
Series A, B, C, D, E, F and G Preferred Stock automatically converted into
8,975,845 shares of common stock. Also in connection with the closing of the
initial public offering, in April 1996, the 2,100,000 shares of the Company's
Series One Preferred Stock were redeemed for $2,818,820 (including cumulative
dividends of $718,820) in cash.
In April 1996, the Company's underwriters exercised an over-allotment
option to purchase 495,000 shares of common stock at $8.00 per share for net
cash proceeds of $3,682,800.
7
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Company is engaged primarily in the development of combinatorial
chemistry libraries for use by corporate collaborators and for internal research
and development programs. The Company has devoted substantially all of its
resources since its founding to developing methods to synthesize and screen
large libraries of chemicals for new drug discovery and optimization, and to
developing a select number of chemical compounds as potential pharmaceutical
products.
The Company expects that its revenue sources for at least the next
several years will be limited to licensing fees and milestone payments from
existing corporate partners and possible future corporate partners. The timing
and amounts of such revenues, if any, will be subject to significant
fluctuations and therefore the Company's results of operations for any period
may not be comparable to the results of operations for any other period. The
Company will be required to conduct significant research, development and
production activities during the next several years to fulfill its obligations
to corporate partners and for the development of its own compounds. HPI has been
unprofitable since its inception and does not anticipate having net income in
the next several years. As of March 31, 1996, the Company's accumulated deficit
was approximately $36,375,000.
HPI's wholly-owned subsidiary, Multiple Peptide Systems, Inc., a
California corporation ("MPS"), was founded in 1986 and manufactures and markets
peptides to government entities, universities, research institutions and private
companies. Effective as of January 1, 1994, MPS entered into a Limited Liability
Company Agreement with Chiron Mimotopes U.S. ("CMUS"), pursuant to which MPS
agreed to contribute substantially all of its assets and certain of its
liabilities to Chiron Mimotopes Peptide Systems, LLC, a Delaware limited
liability company ("CMPS"), in exchange for a 25% ownership interest in CMPS.
CMUS and MPS agreed to form CMPS for the purpose of engaging in the business of
synthesizing and producing peptides and peptide libraries for commercial sale on
a joint basis. Pursuant to the terms of an agreement entered into as of March
31, 1995, among Chiron Corporation ("Chiron"), CMPS, CMUS, the Company and MPS,
CMPS was dissolved and the remaining net assets were transferred to MPS and
CMUS. The Company does not anticipate substantial revenue growth from, or the
investment by the Company of material amounts of resources in, MPS. The Company
is exploring strategic options regarding MPS.
Except for the historical information contained herein, the matters
discussed in this Quarterly Report on Form 10-Q are forward-looking statements
that involve risks and uncertainties, including whether existing collaborations
will be successful, any new collaborations can be entered into on favorable
terms, any potential products can be timely developed, receive necessary
regulatory approvals and be successfully marketed, the Company's combinatorial
chemistry technology can be successfully developed and applied, competitors'
technology will eclipse or render obsolete or uncompetitive the Company's
technology and other risks detailed throughout this Form 10-Q. Actual results
may differ materially from those projected. These forward-looking statements
represent the Company's judgment as of the date of the filing of this Form 10-Q.
The Company disclaims, however, any intent or obligation to update these
forward-looking statements.
RESULTS OF OPERATIONS
The Company recorded revenues of $1,565,000 in the quarter ended March
31, 1996, as compared to $13,000 in the first quarter of 1995. The first quarter
revenues for 1996 include $561,000 derived from the sale of custom peptides by
the Company's subsidiary, MPS. The 1995 first quarter operating results do not
include revenues from MPS as explained above. The remaining $1,004,000 in first
8
<PAGE> 9
quarter 1996 revenues was generated from the shipment of combinatorial libraries
under collaborative agreements that were either not in place during the first
quarter of 1995 or for which libraries had not yet been shipped. Although the
Company typically receives a payment at the initiation of a collaboration
agreement, the Company does not recognize revenue from those payments until the
associated libraries are shipped to the collaboration partner. As of March 31,
1996, the Company's balance sheet reflects a liability of approximately
$3,000,000 for deferred revenue relating to these agreements. The liability
balance reflects cash payments received in excess of revenue recognized for
libraries shipped.
Cost of sales increased from $6,000 in the first quarter of 1995 to
approximately $467,000 in the three months ending March 31, 1996. The increased
cost of sales is mainly reflective of the absence of MPS' results throughout the
first quarter of 1995 and the inclusion of such results in the first quarter of
1996. Also included in cost of sales is an accrual for royalty payments due to
Torrey Pines Institute for Molecular Studies ("TPIMS") as a result of certain
library shipments. The Company's scientific founder, who is a director and an
officer of the Company, is a founder, director and president of TPIMS.
Research and development expenses increased to approximately $2,166,000
for the three months ending March 31, 1996, as compared to $1,538,000 for the
same period in 1995. The higher spending in research and development results
primarily from increased funding for the Company's combinatorial chemistry
program, including increased funding to TPIMS. Funding to TPIMS for the three
months ending March 31, 1996 and March 31, 1995 was $744,000 and $497,000,
respectively. Increased research and development spending is also attributable
to the Company's drug discovery and development collaboration with Dura
Pharmaceuticals, Inc. ("Dura"). Research and development expense for the three
months ended March 31, 1996 include $178,000 of funding to Dura; this
collaboration was initiated in February 1996. The chairman of the board of
directors of the Company is a member of the board of directors of Dura and
Dura's chairman and chief executive officer is member of the Company's board of
directors. The Company expects to incur continued and substantial increases in
research and development expenses relating to product development, clinical
trials and combinatorial chemistry development.
The Company's selling, general and administrative expenses total
approximately $795,000 for the three months ending March 31, 1996 as compared to
$491,000 for the first quarter of 1995. The increased selling, general and
administrative expenses are primarily attributable to amortization of deferred
compensation resulting from stock options issued prior to the Company's initial
public offering along with higher legal costs incurred for patents and corporate
development activities. Selling, general and administrative costs are expected
to increase as a result of various costs associated with being a public company.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company has funded its operations primarily through
private placements of preferred stock, raising approximately $39,359,000 in net
proceeds from such issuances. In January and February 1996, the Company issued
3,366,670 shares of its Series G Preferred Stock for net cash proceeds of $10.1
million of which $5 million (1,666,667 shares) was purchased by Dura.
At March 31, 1996, the Company had cash and cash equivalents totaling
approximately $10,220,000 compared with $1,160,000 at March 31, 1995. A stock
subscription receivable is included on the balance sheet in the amount of
$23,776,220 reflecting the cash, net of underwriting discounts, commissions and
estimated offering expenses, received by the Company in April 1996 for its
initial public offering.
9
<PAGE> 10
On April 3, 1996, the company closed its initial public offering of
3,300,000 shares of its common stock raising approximately $23,776,220, net of
underwriting discounts and commissions and estimated offering expenses. In
April 1996, the Company issued an additional 495,000 shares of its common stock
in accordance with the underwriters' option exercise to cover over-allotments.
The sale of these additional shares resulted in net proceeds to the Company of
$3,682,800.
As required by the terms of the Company's Series One Redeemable
Preferred Stock, in April 1996, the Company redeemed all outstanding shares of
Series One Redeemable Preferred Stock resulting in a cash disbursement of
$2,818,820.
The Company has financed a significant amount of its equipment
purchases through a master lease line of credit. As of March 31, 1996, the
Company had approximately $394,000 available through the existing master lease
line of credit for acquisitions of additional equipment and furnishings. This
available lease line of credit is expected to fund property, plant and equipment
needs through June 1996, at which time the line of credit converts to a term
lease.
The Company's research and development commitments include the research
agreement with TPIMS which expires in June 1997 under which the Company is
committed to spend approximately $2,500,000. In addition, the Company's research
agreement with Dura commits HPI to fund $6,000,000 over four years in a drug
discovery and development collaboration using Dura's proprietary drug delivery
technology and HPI's cytokine regulating agents.
The Company has an option to acquire certain technology from TPIMS
which expires in June 1997. HPI intends to exercise this option, which will
require a cash payment of approximately $1,300,000 from HPI to TPIMS. The
Company also has an option to acquire ChromaXome Corporation, an early stage
combinatorial biology company. HPI acquired this option in exchange for a
$500,000 loan to ChromaXome which would be forgiven in the event of an
acquisition. If the Company exercises its option to acquire ChromaXome, the
Company would expend a minimum of $600,000 plus additional non-cash
consideration.
Pursuant to a drug discovery collaboration with Novo Nordisk A/S ("Novo
Nordisk"), HPI received $2,000,000 in February 1996 as an advance payment of
library access fees and will receive a further $2,000,000 in February 1997. The
initial upfront payment has been treated as deferred revenue and is being
recognized as revenue as libraries are shipped.
The Company's future cash requirements will depend on many factors,
including continued scientific progress in its research and development
programs, the scope and results of clinical trials, the time and costs involved
in obtaining regulatory approvals, the costs involved in filing, prosecuting and
enforcing patents, competing technological and market developments and the cost
of product commercialization. It is probable, however, that for the foreseeable
future, the Company's cash requirements will exceed its revenues. The Company
intends to seek additional funding through research and development agreements
with suitable corporate collaborators and through public or private financing.
The Company also intends to seek equipment lease financing to fund future
capital expenditures. The Company expects that its primary potential revenue
source for the foreseeable future will be additional collaborative agreements.
There are no assurances that such collaboration arrangements, or any public,
private or equipment lease financing, will be available on acceptable terms, or
at all. If adequate funds are not available, the Company may be required to
delay, reduce the scope of, or eliminate one or more of its research or
development programs.
The Company estimates that its existing capital resources, including
the net proceeds of its initial public offering, together with facility and
equipment financing, will be sufficient to fund its current and planned
operations through 1997. There can be no assurance, however, that changes in the
Company's research and development plans or other changes affecting the
Company's operating expenses will not result in the expenditure of such
resources before such time, and in any event the Company will need to raise
substantial additional capital to fund its operations in future periods.
10
<PAGE> 11
PART II. OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders.
During February and March of 1996, the actions indicated below
were approved by the written consent of the Company's stockholders.
Adjacent to each action is the percentage of the Company's voting power
consenting in writing to such action as of March 12, 1996 (at which
time the actions were deemed approved).
<TABLE>
<CAPTION>
==========================================================================================
Percentage
----------
Action Consenting
------ ----------
<S> <C>
1. Amendment of the Company's charter effecting 96.67%
a one-for-2.15 reverse split of the Company's common stock.
2. Amendment of the Company's charter to modify 96.67%
preferred stock conversion provisions in the event of an
initial public offering consummated before July 1, 1996.
3. Restatement of the Company's charter following an 96.67%
initial public offering to (i) authorize 40,000,000 shares of common
stock and 5,000,000 shares of blank check preferred stock, (ii)
eliminate stockholder action by written consent, (iii) eliminate
cumulative voting provisions and (iv) provide for certain
supermajority voting requirements.
4. Modification of the Company's 1995 Stock Plan to, 96.67%
among other things, provide that outside directors are eligible
for grants and to increase the number of shares available for grant.
5. Establishment of the Company's 1996 Stock Incentive 96.67%
Plan (to combine and replace the Company's 1992 and 1995 Stock Plans
upon an initial public offering).
6. Approval of a form of Indemnification Agreement for 96.67%
use between the Company and its Directors and certain officers
and employees.
7. Approval of the Company's Employee Stock Purchase 60.30%
Plan (upon an initial public offering).
==========================================================================================
</TABLE>
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Description
----------- -----------
27 Financial Data Schedule
(b) The Company did not file any reports on Form 8-K during
the three months ended March 31, 1996.
11
<PAGE> 12
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.
Houghten Pharmaceuticals, Inc.
Date: May 15, 1996 /s/ ROBERT S. WHITEHEAD
--------------------- -------------------------------------
Robert S. Whitehead
President and Chief Executive Officer
(Principal Executive Officer)
Date: May 15, 1996 /s/ TERENCE E. McMORROW
--------------------- -------------------------------------
Terence E. McMorrow
Vice President, Finance and Corporate Development
(Principal Financial and Accounting Officer)
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED BALANCE
SHEETS AT DECEMBER 31, 1995 AND MARCH 31, 1996 AND CONSOLIDATED STATEMENTS OF
OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996, AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 10,218,152
<SECURITIES> 0
<RECEIVABLES> 310,633
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 34,467,671
<PP&E> 861,816
<DEPRECIATION> 0
<TOTAL-ASSETS> 36,392,085
<CURRENT-LIABILITIES> 5,467,991
<BONDS> 0
2,814,000
19,298
<COMMON> 351
<OTHER-SE> 66,096,919
<TOTAL-LIABILITY-AND-EQUITY> 36,392,085
<SALES> 1,565,052
<TOTAL-REVENUES> 1,565,052
<CGS> 466,851
<TOTAL-COSTS> 3,428,113
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
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