<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
----------------
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
OR
[ ] TRANSITIONAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to _________.
Commission File Number: 0-27972
TREGA BIOSCIENCES, INC.
------------------------------------------------------
(Exact Name of Registrant as Specified in its charter)
DELAWARE 51-0336233
------------------------------- -------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
9880 CAMPUS POINT DRIVE, SAN DIEGO, CA 92121
(858) 410-6500
(Address, including zip code, and telephone, including area code, of
registrant's principal executive offices)
Indicate by check mark whether the Registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
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 June 30, 2000
------------------------------ ----------------------------
Common Stock, $0.001 par value 23,298,836
<PAGE>
TREGA BIOSCIENCES, INC.
INDEX TO FORM 10-Q
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (unaudited):
Consolidated Balance Sheets at June 30, 2000 and December 31, 1999
Consolidated Statements of Operations for the three and six
months ended June 30, 2000 and 1999
Consolidated Statements of Cash Flows for the three and six
months ended June 30, 2000 and 1999
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits
SIGNATURE
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PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Trega Biosciences, Inc.
Consolidated Balance Sheets
(in thousands, except share data)
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
----------- ------------
(Unaudited) (Note)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 6,018 $ 5,393
Short-term investments 3,700 1,041
Accounts receivable and other current assets 2,612 2,541
-------- --------
Total current assets 12,330 8,975
Property and equipment, net 4,245 4,179
Investment in affiliate, net of amortization 2,050 2,581
Other assets 6,814 6,926
-------- --------
$ 25,439 $ 22,661
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 774 $ 696
Accrued compensation and other accrued liabilities 2,178 2,867
Line of credit 1,500 1,500
Current portion of debt obligations 1,516 1,272
Deferred revenue 1,379 1,820
-------- --------
Total current liabilities 7,347 8,155
Long-term debt obligations, net of current portion 2,274 2,484
Deferred rent 634 512
Stockholders' equity:
Common stock, $.001 par value:
Authorized shares - 40,000,000
Issued and outstanding shares of 23,298,836 and
19,101,437 at June 30, 2000 and December 31, 1999,
respectively 23 19
Additional paid-in capital 100,083 89,067
Common stock issuable 16 16
Deferred compensation (387) (489)
Accumulated deficit (84,551) (77,103)
-------- --------
Total stockholders' equity 15,184 11,510
-------- --------
$ 25,439 $ 22,661
======== ========
</TABLE>
Note: The balance sheet at December 31, 1999 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.
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Trega Biosciences, Inc.
Consolidated Statements of Operations
(in thousands, except net loss per share)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended, June 30,
---------------------------- ---------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenues:
Compound revenues $ 861 $ 1,196 $ 2,310 $ 1,561
Related party contract research 825 825 1,650 1,650
Contract research and license fees 355 540 633 1,381
Net sales 6 84 44 189
------------ ----------- ---------- ---------
2,047 2,645 4,637 4,781
Costs and expenses:
Cost of sales 72 99 107 158
Research and development 4,151 4,353 8,599 8,941
Selling, general and administrative 2,131 1,709 4,297 3,505
------------ ----------- ---------- ---------
6,354 6,161 13,003 12,604
------------ ----------- ---------- ---------
Loss from operations before equity
in losses of affiliate (4,307) (3,516) (8,366) (7,823)
Equity in losses of affiliate (154) - (340) -
------------ ----------- ---------- ---------
Loss from operations (4,461) (3,516) (8,706) (7,823)
Other income:
Interest income, net 313 27 258 141
Gain on sale of ChromaXome 1,000 - 1,000 1,513
------------ ----------- ---------- ---------
Net loss $ (3,148) $ (3,489) $ (7,448) $ (6,169)
============ =========== ========== =========
Basic and diluted net loss per share $ (.14) $ (.19) $ (.35) $ (.34)
============ =========== ========== =========
Shares used in computing basic and diluted
net loss per share 23,191 18,053 21,302 17,953
============ =========== ========== =========
</TABLE>
See accompanying notes.
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Trega Biosciences, Inc.
Consolidated Statements of Cash Flows
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-----------------------------
2000 1999
----------- ---------
(Unaudited)
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $ (7,448) $ (6,169)
Adjustments to reconcile net loss to net cash flows
used in operating activities:
Depreciation and amortization 1,227 1,007
Amortization of note receivable discount -- (25)
Amortization of deferred compensation 313 326
Equity in losses of affiliate 340 --
Gain on sale of CXC (1,000) (1,513)
Changes in operating assets and liabilities, net of
effects from the transfer of assets from sale of CXC in 1999:
Accounts receivable and other current assets (71) (1,070)
Accounts payable 77 (528)
Accrued compensation and other accrued liabilities (688) 134
Deferred rent 122 156
Deferred revenue (441) (1,018)
--------- ---------
Net cash (used in) operating activities (7,569) (8,700)
INVESTING ACTIVITIES
Purchase of short-term investments (3,708) --
Maturities of short-term investments 1,050 5,453
Purchase of property and equipment (755) (630)
Net proceeds from sale of CXC 1,000 1,705
Other assets (236) 143
--------- ---------
Net cash (used in) provided by investing activities (2,649) 6,671
FINANCING ACTIVITIES
Principal payments under debt obligations (750) (684)
Issuance of equipment notes and notes payable 783 442
Issuance of common stock 10,810 55
--------- ---------
Net cash provided by (used in) financing activities 10,843 (187)
--------- ---------
Net increase (decrease) in cash and cash equivalents 625 (2,216)
Cash and cash equivalents at beginning of period 5,393 9,755
--------- ---------
Cash and cash equivalents at end of period $ 6,018 $ 7,539
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for interest $ 254 $ 170
========= =========
SUPPLEMENTAL DISCLOSURES OF NONCASH FINANCING ACTIVITIES
Deferred compensation $ 210 $ --
========= =========
</TABLE>
See accompanying notes.
5
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Trega Biosciences, Inc.
Notes to Consolidated Financial Statements
June 30, 2000
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of
Trega Biosciences, Inc. (the "Company"), 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 and six
month periods ended June 30, 2000 are not necessarily indicative of the
results that may be expected for the year ended December 31, 2000. For more
complete information, these financial statements should be read in
conjunction with the audited consolidated financial statements and footnotes
thereto for the year ended December 31, 1999, included in the Company's Form
10-K filed with the Securities and Exchange Commission.
2. SIGNIFICANT ACCOUNTING POLICIES
Use Of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the consolidated financial
statements and disclosures made in the accompanying notes to the consolidated
financial statements. Actual results could differ from those estimates.
Net Loss Per Share
Statement of Financial Accounting Standards No. 128 ("SFAS No.
128"), "Earnings Per Share" requires the presentation of basic and diluted
earnings per share amounts. Basic earnings per share is calculated based upon
the weighted average number of common shares outstanding during the period,
while diluted earnings per share also gives effect to all potential diluted
common shares outstanding during the period such as those underlying
outstanding options, warrants and convertible securities and contingently
issuable shares. All common shares, outstanding options, warrants and
convertible securities and contingently issuable shares have been excluded
from the calculation of diluted earnings per share, as their inclusion would
be anti-dilutive.
Comprehensive Income (Loss)
Statement of Financial Accounting Standard No. 130 ("SFAS No. 130"),
"Reporting Comprehensive Income" requires that all components of
comprehensive income, including net income, be reported in the financial
statements in the period in which they are recognized. Comprehensive income
is defined as the change in equity during a period from transactions and
other events and circumstances from non-owner sources. Net income and other
comprehensive income, including foreign currency translation adjustments and
unrealized gains and losses on investments, are required to be reported, net
of their related tax effect, to arrive at comprehensive income. For the three
and six months ended June 30, 2000 and 1999, comprehensive loss is the same
as net loss.
3. DEBT
LINE OF CREDIT
In August 1999, the Company entered into a line of credit in the
amount of $1.5 million that provided funds to be used primarily for working
capital purposes. The line of credit, which is secured by the general assets
of the Company, bears interest at prime plus .75% (10.25% at June 30, 2000)
per annum and is for a term of one year. The line of credit contains
covenants relating to cash flow coverage and minimum cash balances. As of
June 30, 2000, the Company is in compliance with all debt covenants. In
August 1999, the entire line of credit of $1.5 million was accessed and $1.5
million remains outstanding at June 30, 2000. In connection with the receipt
of the line of credit, the Company issued a warrant to the lender to purchase
up to 20,000 shares of the Company's common stock at $1.75 per share. The
warrant expires on August 5, 2004. In July 2000, the Company entered into an
agreement that extended the term of the line of credit by one month to
September 2000, and the Company is currently in negotiations with the lender
to extend the term for an additional 12 months.
6
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LONG-TERM DEBT
In March 2000, the Company obtained an equipment financing line in
the amount of $600,000, of which the Company had accessed approximately
$578,000 by June 30, 2000. The loan, which is secured by certain of the
Company's equipment, bears interest of 13.337% per annum and is to be repaid
monthly over a four-year term.
In addition, Trega obtained an additional equipment financing line
of $1.4 million in April 2000. To date, the Company has not accessed any of
this additional line of financing. Once the financing line is accessed, the
loan will be secured by certain equipment and will be repaid over a four-year
term.
In connection with certain equipment financing lines, the Company
must meet certain financial covenants pertaining to the amount of its cash
and marketable securities to be maintained during the terms of the financing
lines. Due to certain covenant violations, the Company has provided required
security deposits and therefore has fulfilled its obligations related to the
covenants. The security deposits are included in the other assets line item
in the consolidated balance sheet.
4. COMMON STOCK
During the three and six months ended June 30, 2000, the Company
issued 27,791 and 530,731 shares of common stock, respectively, upon the
exercise of options and warrants and as a result of participation in the
Company's employee stock purchase plan, which shares are included in common
stock outstanding at June 30, 2000.
In April 2000, the Company sold 3.7 million newly issued shares of
its common stock to selected institutional and other accredited investors for
net cash proceeds of approximately $10.1 million ("the Equity Financing"). In
addition, the Company agreed to grant a warrant to the placement agent for
the Equity Financing to purchase up to 220,000 additional shares of common
stock at an exercise price of $5.375 per share.
5. LOAN TO AFFILIATE
In June 2000, the Company made a short term secured loan of $250,000
to ChemNavigator.com, Inc., an affiliate of the Company. The note bears
interest at a rate of 12% per year and is secured by Company stock owned by
ChemNavigator. All unpaid principal together with all accrued but unpaid
interest are due and payable to the Company on September 1, 2000.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
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. SUCH FORWARD-LOOKING
STATEMENTS INCLUDE, WITHOUT LIMITATION, STATEMENTS USING WORDS SUCH AS "MAY,"
"POTENTIAL," "EXPECTS," "BELIEVES," "ESTIMATES," "PLANS," "INTENDS,"
"ANTICIPATES" AND SIMILAR EXPRESSIONS. THESE FORWARD-LOOKING STATEMENTS ARE
SUBJECT TO RISKS AND UNCERTAINTIES (INCLUDING THOSE SET FORTH BELOW IN THE
SECTION OF THIS ITEM 2 OF THIS QUARTERLY REPORT ON FORM 10-Q UNDER THE
CAPTION "RISK FACTORS" AND IN OUR ANNUAL REPORT ON FORM 10-K FOR THE YEAR
ENDED DECEMBER 31, 1999) THAT COULD CAUSE ACTUAL RESULTS TO VARY MATERIALLY
FROM THOSE PROJECTED. THESE FORWARD-LOOKING STATEMENTS SPEAK ONLY AS OF THE
DATE HEREOF. WE EXPRESSLY DISCLAIM ANY OBLIGATION OR UNDERTAKING TO RELEASE
PUBLICLY ANY UPDATES OR REVISIONS TO ANY FORWARD-LOOKING STATEMENTS CONTAINED
HEREIN TO REFLECT ANY CHANGE IN OUR EXPECTATIONS WITH REGARD THERETO OR ANY
CHANGE IN EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH ANY SUCH STATEMENTS
ARE BASED.
OVERVIEW
We primarily develop and market products designed to assist
pharmaceutical and biotechnology companies in the identification of drug
candidates and to accelerate the traditional drug discovery process. These
products include our proprietary iDiscovery-TM- technologies, comprised of
our Chem.Folio-Registered Trademark- chemical compounds and our IDEA-TM-
software. We also conduct an internal drug discovery program in the areas of
obesity, diabetes and syndrome X, a syndrome associated with obesity and
diabetes, involving the human body's resistance to insulin.
The Opportunity
Traditional drug discovery involves several sequential steps,
creating a time-consuming process with a high attrition rate. In order to
discover a drug, scientists first must identify targets in the human body.
Targets are biological molecules that cause medical conditions or diseases.
Most drugs work by binding to a target and changing the target's function or
activity. Thus, after selecting a target, scientists then must identify those
chemical compounds that change the target's function. These compounds are
known as "hits." Scientists often identify hits by first acquiring hundreds
of thousands of chemical compounds. This large quantity of compounds,
otherwise known as a compound library, may be generated by a technology
called combinatory chemistry. Combinatorial chemistry permits the rapid
creation of hundreds of thousands of chemical compounds through automated
techniques. Prior to the advent of combinatorial chemistry, chemists had to
create new compounds one at a time.
The generated compounds are then tested, or screened, against the
selected target. Such screening may identify hundreds of hits. Then, in a
series of labor intensive and time consuming steps, scientists determine how
the human body absorbs, distributes, metabolizes and excretes these hits and
whether they are toxic. The pharmaceutical industry refers to these
characteristics as ADMET (absorption, distribution, metabolism, excretion and
toxicity). Scientists then chemically modify the hits to identify those with
the appropriate activity and ADMET characteristics for potentially safe and
effective use in humans. This entire process of determination and
modification is called "lead optimization" and results in the identification
of drug candidates. Traditionally, lead optimization involves the use of
animal models, which is slow and inefficient and poorly predicts successful
human drug candidates. It takes approximately three to five years for
scientists to complete this initial phase of drug discovery. A drug candidate
then undergoes preclinical development and three phases of human clinical
development before receiving marketing approval from the U.S. Food and Drug
Administration. The entire process from target selection to FDA approval of a
drug typically ranges from 12-16 years, and the failure rate is high.
Our Solution
We believe that our iDiscovery-TM- technologies increase the
likelihood of clinical success by identifying those hits with essential
drug-like characteristics at the early stages of the drug discovery process.
Therefore, we believe our products and services will improve the probability
of success and result in a shorter drug discovery process.
CHEM.FOLIO-Registered Trademark- COMPOUNDS LIBRARIES AND SERVICES.
These include:
- off-the-shelf chemical compounds available for immediate
screening against a selected target, and rapid manufacture of
closely related compounds, or analogues, if requested by a
customer;
8
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- chemical compounds made to a customer's specifications;
- information that will enable a customer to make additional
quantities of the chemical compounds; and
- information on the solubility, or the ability of the compound
to dissolve, and cytotoxity, the toxic effect of the compound
on cells, of the Chem.Folio-Registered Trademark- compounds.
We believe that the information provided to our customers will help
them determine whether the compounds would be appropriate drug
candidates at a much earlier stage of the drug development process than
under traditional methods of discovery. In addition to a direct sales
effort, we offer our compounds over the Internet through an electronic
commerce company, ChemNavigator.com, Inc. and through screening
companies, including EVOTEC BioSystems AG.
IDEA-TM- PREDICTIVE MODELS. IDEA-TM- predictive models are computer
simulation programs. We commercially launched one predictive model, the
IDEA-TM- absorption module, designed to predict the absorption
characteristics of chemical compounds in humans. We based the
development of this absorption module on human clinical data provided
by a consortium of major pharmaceutical companies. In addition, we plan
to develop other models to predict the other ADMET characteristics and
offer our predictive models over the Internet. We believe that our
IDEA-TM- predictive models will reduce the time and effort required in
the lead optimization process by reducing or eliminating the
traditional drug discovery process' reliance on animal testing.
Internal Drug Discovery
We discovered a group of chemical compounds that appear to influence
the production and activity of particular cytokines, or proteins that act as
messengers between cells, through interaction with melanocortin receptors,
which are protein molecules that bind to hormones produced by the pituitary
gland called melanocortins. We completed a Phase II clinical trial of one of
these compounds, HP-228, in the treatment of post-operative pain in hip and
knee replacements. In the past, we conducted a number of internal drug
discovery programs in this area with collaborators, including Ono
Pharmaceuticals, Co., Ltd. On February 11, 2000, we announced that we will
only conduct internal drug discovery programs if collaborators are available
to fully fund them. Currently, we are carrying out a collaborative program,
fully funded by Novartis Pharma AG, in the area of diabetes, obesity and
syndrome X. Additionally, we are seeking collaborators for our HP-228
compound and our compounds for the treatment of sexual dysfunction.
RESULTS OF OPERATIONS
The timing and amounts of revenues from our iDiscovery-TM-
technologies, if any, may be subject to significant fluctuations and
therefore our results of operations for any period may not be comparable to
the results of operations for any other period and may not be indicative of
future operating results. We will be required to conduct significant research
and development during the next several years for the development of our
predictive models and through the middle of next year to fulfill our
obligations to Novartis. We have been unprofitable since our inception and,
while we have set as an objective reaching positive quarterly cash flow by
the end of 2000, it is unlikely that this goal will be met. While our
expenses have been within our expectations, revenues related to the sale of
Chem.Folio-Registered Trademark- libraries and IDEA-TM- models have not met
our expectations. We are unable to predict when, if ever, we will become
profitable or give assurances as to when our positive cash flow objective
will be met. As of June 30, 2000, our accumulated deficit was approximately
$84.6 million.
Second Quarter 2000 Compared With Second Quarter 1999
We recorded revenues of approximately $2.0 million for the three
months ended June 30, 2000 compared with approximately $2.6 million for the
same period in 1999. Revenues decreased approximately $598,000, or 23%, from
the same quarter in the prior year. This decrease was due primarily to a
$335,000 decrease in revenues from the sale of our Chem.Folio-Registered
Trademark-combinatorial libraries and a decrease in revenues from research
conducted under collaborative research agreements due to the completion of
certain of those agreements.
As of June 30, 2000, our financial statements reflect a liability
for deferred revenue in the amount of approximately $1.4 million. This
primarily represents the excess of payments received from research
collaborators over the revenue from work performed, and will be recognized
when the correlative services are performed.
9
<PAGE>
The cost of sales of $72,000 in the second quarter of 2000 was
primarily related to revenues from the sale of our Chem.Folio-Registered
Trademark- combinatorial libraries, Caco-2 cells to a lesser extent, and
royalty costs associated with certain license fee revenues, compared to the
cost of sales in the second quarter of 1999 of $99,000, which were primarily
related to diffusion chamber sales. The diffusion chamber business was sold
in the fourth quarter of 1999.
Our research and development expenses total approximately $4.2
million and $4.4 million for the three months ended June 30, 2000 and 1999,
respectively. The decrease of approximately 5% was primarily related to a
decrease in expenses from research carried out to support internal drug
discovery programs, partially offset by increased activity in our
Chem.Folio-Registered Trademark- program and continued development of our
IDEA-TM- predictive models.
Our selling, general and administrative expenses total approximately
$2.1 million and $1.7 million for the three months ended June 30, 2000 and
1999, respectively. The increase of approximately 25%, was due primarily to
the commencement of efforts in June 1999 to establish a sales and marketing
organization to support the distribution of our products and services. In
addition, we recognized non-cash amortization expenses during the quarter
ended June 30, 2000 as a result of an investment in ChemNavigator.com, Inc.,
which was not in place during the comparative quarter last year.
Our interest income increased to approximately $457,000 for the
quarter ended June 30, 2000, compared to $119,000 for the same quarter in
1999. The increase was a result of higher cash balances and higher interest
rates in the quarter ended June 30, 2000.
Interest expense for the three months ended June 30, 2000 and 1999
was approximately $144,000 and $92,000, respectively. The increase in
interest expense results from obligations related to a line of credit and
additional equipment financing, neither of which were in place during the
comparative quarter last year.
In April 2000, we recorded a gain, which did not occur in the
quarter ended June 30, 1999, of approximately $1.0 million in connection with
the sale of the assets of ChromaXome Corp. ("ChromaXome") in the first
quarter of 1999. This portion of the gain was deferred and recognized when
the related receivable was collected.
Six Months Ended June 30, 2000 Compared With Six Months Ended June 30, 1999
We recorded revenues of approximately $4.6 million for the six
months ended June 30, 2000 compared with approximately $4.8 million for the
same period in 1999. Revenues decreased approximately $144,000, or 3%, from
the same period in the prior year. This decrease was due primarily to a
decrease in revenues from research conducted under collaborative research
agreements due to the completion of certain of those agreements.
The cost of sales of $107,000 in the six months ended June 30, 2000
was primarily related to revenues from the sale our Chem.Folio-Registered
Trademark-combinatorial libraries, Caco-2 cells to a lesser extent, and
royalty costs associated with certain license fee revenues, compared to the
cost of sales in the six months ended June 30, 1999 of $158,000, which was
primarily related to diffusion chamber sales. The diffusion chamber business
was sold in the fourth quarter of 1999.
Our research and development expenses total approximately $8.6
million and $8.9 million for the six months ended June 30, 2000 and 1999,
respectively. The decrease of approximately 4% was primarily related to a
decrease in expenses from research carried out to support internal drug
discovery programs, partially offset by increased activity in the our
Chem.Folio-Registered Trademark- program and continued development of our
IDEA-TM- predictive models.
Our selling, general and administrative expenses total approximately
$4.3 million and $3.5 million for the six months ended June 30, 2000 and
1999, respectively. The increase of approximately 23%, was due primarily to
the commencement of efforts in June 1999 to establish a sales and marketing
organization to support the distribution of our products and services. In
addition, we recognized non-cash amortization expenses during the six months
ended June 30, 2000 as a result of an investment in ChemNavigator.com, Inc.,
which was not in place during the comparative period last year.
Our interest income increased to approximately $523,000 for the six
months ended June 30, 2000, compared to $300,000 for the same period in 1999.
The increase was a result of higher cash balances and higher interest rates
in the six months ended June 30, 2000.
Interest expense for the six months ended June 30, 2000 and 1999 was
approximately $265,000 and $159,000, respectively. The increase in interest
expense for the period results from obligations related to a line of credit
and additional equipment financing, neither of which were in place during the
comparative period last year.
10
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We recorded gains of approximately $1.0 million and $1.5 million in
the six months ended June 30, 2000 and 1999, respectively, in connection with
the sale of the assets of ChromaXome Corp.
LIQUIDITY AND CAPITAL RESOURCES
Since our inception through June 30, 2000, we have financed our
activities primarily from public and private sales of equity, funding from
collaborations with corporate partners, sales derived from shipments of
combinatorial libraries or individual compounds, sales of custom peptides and
combinatorial peptide libraries (through our former subsidiary, Multiple
Peptide Systems, Inc. "MPS"), sales of our businesses believed to be no
longer strategic to us and interest income. At June 30, 2000, we had cash,
cash equivalents and short-term investments aggregating $9.7 million compared
to $6.4 million on December 31, 1999. We have invested a significant portion
of our excess funds in cash equivalents and short-term investments primarily
of highly-rated debt instruments of financial institutions and corporations.
(See "Item 3 - Qualitative and Quantitative Disclosure About Market Risk"
below.)
We intend to fund a significant portion of our business with
revenues derived from our iDiscovery-TM- technologies that include
Chem.Folio-Registered Trademark- libraries and services and IDEA-TM-
predictive models. The timing and amounts of revenues from our iDiscovery-TM-
technologies, if any, may be subject to significant fluctuations and
therefore our results of operations for any period may not be comparable to
the results of operations for any other period and may not be indicative of
future operating results. For example, in September 1998, we entered into a
$7.5 million agreement with a single customer to supply compounds over a
two-year period. The contract calls for 50% of the compounds to be shipped in
the first contract year and 50% to be shipped in the second contract year.
Our revenues under this contract are recognized as compounds are shipped with
cash payment to be made 30 days following shipment. This agreement will be
completed in September 2000. As of June 30, 2000, we still had approximately
one-half of the second year's compounds to manufacture and ship under this
agreement. To date, we have not been able to offset this anticipated loss of
revenues and may not be able to sell a sufficient number of compounds after
the completion of this contract to replace these revenues in the near future.
We have been unprofitable since our inception and we are unable to predict
when, if ever, we will become profitable.
In April 2000, we sold approximately 3.7 million newly issued shares
of our common stock to selected institutional and other accredited investors
for approximately $10.1 million in net proceeds. Additionally, in the six
month period ended June 30, 2000, we received approximately $1.0 million in
connection with the sale of the assets of ChromaXome, approximately $783,000
from the issuance of equipment notes and notes payable, and $702,000 from the
issuance of the our common stock upon the exercise of options and warrants
and as a result of participation in our employee stock purchase plan. During
the six months ended June 30, 2000, cash used to fund operating activities
was approximately $7.6 million. In addition, we purchased $755,000 of
property and equipment as well as made $750,000 in principal payments under
debt obligations. The amounts invested in property and equipment were funded,
in part, by equipment financing lines. (See "Notes 3 and 4 to our
Consolidated Financial Statements".)
In August 1999, we entered into a line of credit in the amount of
$1.5 million that provides funds to be used primarily for working capital
purposes. The line of credit, which is secured by our general assets, bears
interest at prime plus .75% (10.25% at June 30, 2000) per annum and is for a
term of one year. The line of credit contains covenants relating to cash flow
coverage and minimum cash balances. As of June 30, 2000, we are in compliance
with all debt covenants. In August 1999, the entire line of credit of $1.5
million was accessed and $1.5 million remains outstanding at June 30, 2000.
In connection with the receipt of the line of credit, we issued a warrant to
the lender to purchase up to 20,000 shares of our common stock at $1.75 per
share. The warrant expires on August 5, 2004. In July 2000, we entered into
an agreement that extended the term of the line of credit by one month to
September 2000, and we are currently in negotiations with the lender to
extend the term for an additional 12 months.
In March 2000, we obtained an equipment financing line of $600,000,
of which we had accessed approximately $578,000 by June 30, 2000. The loan,
which is secured by certain equipment, bears interest of 13.337% per annum
and is to be repaid monthly over a four-year term. In addition, we obtained
an additional equipment financing line of $1.4 million in April 2000. To
date, we have not accessed any of this additional line of financing. Once the
financing line is accessed, the loan will be secured by certain equipment and
will be repaid over a four-year term.
In connection with certain other equipment financing lines, we must
meet certain financial covenants pertaining to the amount of our cash and
marketable securities to be maintained during the terms of the financing. Due
to certain covenant violations, we have provided required security deposits
and therefore have fulfilled our obligations related to the covenants. The
security deposits are included in the other assets line item in the
consolidated balance sheet.
11
<PAGE>
During 1998, we moved into a combined research and development
facility and corporate headquarters in San Diego, California. The ten-year
lease covering the facility requires annual rent payments of approximately
$2.0 million and is subject to a 3.5% annual escalation clause.
In June 1999, we signed a Mutual Release with Dura Pharmaceuticals
("Dura") which terminates a research agreement entered into in February 1996,
other than in certain limited regards. Under the original research agreement,
we were committed to fund $6 million over four years in a drug discovery and
development collaboration using Dura's proprietary drug delivery technology
and our compounds (such as HP 228). As of March 31, 2000, our obligation
under the Mutual Release with Dura had been paid.
We intend to use our financial resources primarily to fund research
and development relating to the expansion of our Chem.Folio-Registered
Trademark-combinatorial chemistry library inventories and our IDEA-TM-
predictive models. The amounts actually expended for each purpose may vary
significantly from time to time as well as with respect to each other.
Assuming a level of Chem.Folio-Registered Trademark- compound
library revenues for the next twelve months that is comparable to
Chem.Folio-Registered Trademark- compound library revenues for the twelve
months ended June 30, 2000 ($2.1 million of which is covered by existing
product sales agreements) and assuming our $1.5 million credit line is
extended for an additional twelve months, we anticipate that our existing
capital resources, funding under an existing research and development
collaboration, the potential sale of nonessential assets, and our currently
available property and equipment financing and line of credit, will be
sufficient to fund our current and planned operations through the next 12
months. The failure to materialize of any one or more of our anticipated
sources of revenue could have a material adverse impact on us and could
necessitate the discontinuation of certain of our activities and the sale of
assets.
We intend to consider the acquisition or licensing of technologies
that will add value to our iDiscovery-TM- technologies. We anticipate that we
will be required to raise additional capital over a period of several years
in order to acquire such complementary technologies. Such capital may be
raised through additional public or private financings, as well as
collaborative arrangements, borrowings and other available sources. There can
be no assurance that additional financing will be available on acceptable
terms, if at all. If adequate funds are not available, whether through the
generation of revenue, the sale of assets, or resulting from raising
additional capital, we may be required to delay, reduce the scope of, or
eliminate our acquisition or other activities, which could have a material
adverse effect on us.
In June 2000, our Stockholders approved a 2.5 million increase in
the number of shares reserved for issuance under our 1996 Stock Incentive
Plan.
RISK FACTORS
WE WISH TO CAUTION READERS THAT THE FOLLOWING IMPORTANT FACTORS,
AMONG OTHERS (INCLUDING THOSE NOTED IN OUR ANNUAL REPORT ON FORM 10-K FOR THE
YEAR ENDED DECEMBER 31, 1999 AND OUR REGISTRATION STATEMENT ON FOR S-3), IN
SOME CASES HAVE AFFECTED, AND IN THE FUTURE COULD AFFECT, OUR ACTUAL
CONSOLIDATED RESULTS AND COULD CAUSE OUR ACTUAL CONSOLIDATED RESULTS FOR
FUTURE PERIODS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN ANY
FORWARD-LOOKING STATEMENTS MADE BY US OR ON OUR BEHALF.
WE EXPECT TO CONTINUE TO INCUR LOSSES AND MAY NEVER ACHIEVE PROFITABILITY,
WHICH MAY HARM OUR FUTURE OPERATING PERFORMANCE AND CAUSE OUR STOCK PRICE TO
DECLINE.
We have experienced significant operating losses since our inception
in 1991. For the years ended December 31, 1999, 1998 and 1997, we had net
losses of approximately $8.7 million, $12.8 million and $9.4 million,
respectively. As of June 30, 2000, we had an accumulated deficit of
approximately $84.6 million.
Throughout 2000, we intend to continue to spend additional amounts
on developing, marketing and selling our iDiscovery-TM- products and
services. These amounts include investments in marketing our IDEA-TM-
absorption software module, developing additional IDEA-TM- predictive
modules, expanding our Chem.Folio-Registered Trademark- chemical compound
inventory, acquiring and licensing complementary technologies and expanding
our use of the Internet and intranet to market and disseminate our products
and services.
If revenues do not correspondingly increase, our operating results
and financial condition could be negatively affected. Should we continue to
incur net losses in future periods, we may not be able to increase our
investment in the development of our products and services under our present
plans. Although we have set an objective to reach positive quarterly cash
flow by the end of
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<PAGE>
2000, we may never obtain sufficient revenues to achieve profitability. If we
do achieve profitability, we may not sustain or increase profitability in the
future. This in turn may cause our stock price to decline.
OUR OPERATING RESULTS ARE UNPREDICTABLE, WHICH MAY CAUSE OUR STOCK PRICE TO
DECLINE AND RESULT IN LOSSES TO OUR INVESTORS.
Our operating results are unpredictable and may fluctuate
significantly from period to period, which may cause our stock price to
decline and result in losses to investors. Some of the factors that could
cause our operating results to fluctuate include:
- changes in the demand for our iDiscovery-TM- products and
services;
- the introduction of competitive products or services;
- the nature, pricing and timing of other products and services
provided to our customers;
- acquisition, licensing and other costs related to the expansion
of our operations;
- changes in the research and development budgets of our customers
and collaborators; and
- payments of milestones, license fees or royalty payments under
the terms of our external alliances or future collaborations.
Moreover, the nature of our revenues underwent a significant shift
due to the change in our strategic focus. For example, in 1999, revenues from
our compound libraries accounted for approximately 56% of our total revenues
as compared to only 21% in 1998. In 1999, revenues from research conducted
under collaborative research agreements accounted for only 42% of our total
revenues versus 79% in 1998. As a result of these changes, we believe that
period-to-period comparisons of our financial results will not necessarily be
meaningful. You should not rely on these comparisons as an indication of our
future performance. If our operating results in any future period fall below
the expectations of securities analysts and investors, our stock price will
likely fall, possibly by a significant amount.
OUR NEW BUSINESS STRATEGY OF FOCUSING ON OUR IDISCOVERY-TM- TECHNOLOGIES AND
UNPREDICTABLE FUTURE REVENUES MAKES EVALUATION OF OUR BUSINESS AND PROSPECTS
DIFFICULT.
Our new business strategy of focusing on iDiscovery-TM-
technologies, that we believe will allow our customers to identify drug
candidates more efficiently, is unproven. Because of this recent strategic
shift in focus, we cannot accurately predict our future revenues. We
currently have only one customer for our first predictive model, the IDEA-TM-
absorption module. We generated only limited revenues of approximately $7.5
million for the fiscal year ended 1999 from our Chem.Folio-Registered
Trademark- compound customers. In addition, we still depend in part on
revenues received from a collaborator, Novartis, for one of our internal drug
discovery programs. Our success will depend in large part upon:
- the performance of our iDiscovery-TM- technologies in
accelerating the drug discovery process;
- the acceptance of our iDiscovery-TM- technologies by our
customers;
- our ability to enter into collaboration, licensing and other
agreements for iDiscovery-TM- technologies on favorable terms;
and
- our ability to generate revenues with existing and potential
collaborators in our internal drug discovery programs.
Moreover, we have limited experience marketing our IDEA-TM-
absorption module, which we launched in December 1999. Additionally, the
sales cycle of the IDEA-TM- predictive models is unknown. Furthermore, the
plans for our future predictive modules, such as a metabolism module, are
unproven, and we cannot be sure that we will ever develop these products or
that any product that we develop will be commercially successful. As a result
of these factors, it is difficult to predict our future revenues and evaluate
our business prospects.
13
<PAGE>
OUR IDISCOVERY-TM- TECHNOLOGIES AND PRODUCTS MAY NOT BE COMMERCIALLY VIABLE
OR SUCCESSFUL, WHICH COULD CAUSE US TO GENERATE INSUFFICIENT REVENUES TO
BECOME PROFITABLE.
Our ability to succeed depends upon the acceptance by potential
customers of our iDiscovery-TM- technologies, in place of more traditional
methods, as effective tools in the discovery of new drugs. Drug discovery
methods based upon our iDiscovery-TM- technologies may not lead to the
discovery or development of commercial pharmaceutical products. Moreover, we
have not yet completed or commenced most of our IDEA-TM- predictive model
development programs. These technology programs may not be developed,
employed or commercialized successfully, work efficiently or otherwise
enhance our ability to engage in the acceleration of the drug discovery
process. Some of the factors that will determine the demand for our
iDiscovery-TM- technologies include:
- the efficacy of our predictive models;
- the development of predictive models in addition to the
absorption module; and
- the novelty and diversity of our compound libraries.
In order for us to achieve our business objectives, we must convince
these companies that our predictive models and compound libraries will reduce
both the cost and length of the drug discovery process. If we cannot convince
companies in the pharmaceutical industry of the effectiveness of our
iDiscovery-TM- technologies, we may be unable to keep our existing customers
or attract additional customers on acceptable terms or develop a sustainable,
profitable business.
IF WE FAIL TO SECURE NEW COLLABORATORS, OR LOSE OUR EXISTING COLLABORATORS,
OR IF OUR COLLABORATORS DO NOT APPLY ADEQUATE RESOURCES TO THEIR
COLLABORATIONS WITH US, OUR PRODUCT DEVELOPMENT ACTIVITIES AND OUR POTENTIAL
FOR PROFITABILITY MAY SUFFER.
Our strategy for the utilization and development of our
iDiscovery-TM-technologies and internal drug discovery programs requires us
to enter into contractual arrangements with corporate collaborators,
licensors, licensees and others. In fact, we intend to proceed with our
internal drug discovery programs only if collaborators are available to fully
fund such programs. There may only be a limited number of pharmaceutical or
biotechnology companies that would potentially collaborate with us. Thus, we
may not be successful in negotiating additional commercially and
scientifically sound collaborations.
Our success depends in part upon the performance by these
collaborators under these arrangements. We will have little or no control
over the resources that any collaborator may devote to its collaboration with
us. If any collaborator breaches or terminates its agreement with us to
develop an iDiscovery-TM- product or service, or fails to conduct its
collaborative activities in a timely manner, the commercialization of our
products could be delayed or prevented completely. In the case of our
internal drug discovery programs, the failure to conduct a collaborative
program in a timely manner would prevent us from receiving potential
milestones and royalties. Furthermore, our collaborators may resist sharing
revenue derived from the successful commercialization of a drug through
royalty payments, or others may have competing claims to all or a portion of
such revenue.
In addition, disputes may arise over ownership rights to
intellectual property, know-how or technologies developed with our
collaborators. Our arrangements with our collaborators involving our
Chem.Folio-Registered Trademark- chemical compounds may require us to provide
identical or similar chemical compounds, or chemical compound technologies or
information to multiple parties. Disputes may arise between collaborators as
to proprietary rights to particular compounds in our libraries. If disputes
arise, our existing customers could stop using our chemical compounds; we
could lose existing and potential customers; we could have difficulty in
attracting future collaborators to assist with our product development
efforts; and we could incur litigation costs, which would affect our
financial position.
WE MAY NEED TO RAISE ADDITIONAL CAPITAL THAT MAY BE UNAVAILABLE, WHICH COULD
ADVERSELY AFFECT OUR OPERATIONS AND STOCK PRICE.
We may need to raise more money to continue the research and
development necessary to bring our products to market and to establish or
expand manufacturing and marketing capabilities. Additionally, we intend to
consider acquisitions and licensing of technologies that will add value to
our iDiscovery-TM- technologies. We may seek additional funds through public
and private stock offerings, arrangements with corporate partners, borrowings
under lease lines of credit or other sources. The amount of money needed will
depend on many factors, including among others:
- expenses in connection with the development of our iDiscovery-TM-
technologies or other products or services;
14
<PAGE>
- expenses in connection with maintaining our intellectual
property, including preparing, filing, and prosecuting patent
claims and enforcing patents;
- our current and potential collaborative relationships; and
- the need to increase research and development spending to keep up
with competing technologies and market developments.
Additional capital may not be available on terms acceptable to us,
or at all. In the event that we do not reach our goal of reaching positive
quarterly cash flow by the end of 2000, assuming a level of
Chem.Folio-Registered Trademark- compound library revenues for the next
twelve months that is comparable to Chem.Folio-Registered Trademark- compound
library revenues for the twelve months ended June 30, 2000 ($2.1 million of
which is covered by existing product sales agreements) and assuming our $1.5
million credit line is extended for an additional twelve months, we
anticipate that our existing capital resources, funding under an existing
research and development collaboration, the potential sale of nonessential
assets, and our currently available property and equipment financing and line
of credit, will be sufficient to fund our current and planned operations
through the next 12 months. If we cannot raise more money we may have to
reduce our capital expenditures, scale back our development of new products,
delay, reduce the scope of or eliminate our acquisition activities, or
curtail operations significantly. Any additional equity financing may be
dilutive to stockholders, and debt financing, if available, may include
restrictive covenants.
15
<PAGE>
WE DEPEND ON KEY EMPLOYEES IN A COMPETITIVE MARKET FOR SKILLED PERSONNEL, AND
THE LOSS OF THEIR SERVICES WOULD AFFECT OUR ABILITY TO ACHIEVE OUR OBJECTIVES.
Our products and services are highly technical. Our key personnel
must have specialized training or advanced degrees in order to develop and
refine these products and services. There is a shortage of qualified
scientific, management and software development personnel who possess the
technical background necessary to adequately understand and improve our
products and services. We compete for these personnel with other
pharmaceutical and biotechnology companies, software firms, academic
institutions and government entities. If we are unable to attract and retain
scientific and management personnel with the appropriate credentials and
experience, our products and services could become noncompetitive and
obsolete. Our product development, operations and marketing efforts would be
delayed or curtailed if we lose the services of any of these people. Further
development of our products, including our IDEA-TM- predictive models and
Chem.Folio-Registered Trademark- compound libraries, requires us to hire
additional qualified scientific personnel to perform research and
development, as well as personnel with software development expertise. If we
are unable to continue to attract, train and retain these personnel, we may
be unable to expand our business.
BECAUSE OUR REVENUES ARE DERIVED PRIMARILY FROM THE PHARMACEUTICAL AND
BIOTECHNOLOGY INDUSTRIES, OUR REVENUES MAY FLUCTUATE SUBSTANTIALLY DUE TO
REDUCTIONS AND DELAYS IN RESEARCH AND DEVELOPMENT EXPENDITURES.
We expect to derive revenues primarily from products and services
provided to the pharmaceutical and biotechnology industries. Accordingly, our
success will depend in large part upon the success of the companies within
those industries and their demand for our products and services. Our
operating results may fluctuate substantially due to reductions and delays in
research and development expenditures by companies in those industries. These
reductions and delays may result from factors such as:
- changes in economic conditions;
- consolidation in the pharmaceutical and biotechnology industries;
- changes in the regulatory environment affecting health care and
health care providers;
- pricing pressures;
- market-driven pressures on companies to consolidate and reduce
costs; and
- other factors affecting research and development spending.
We have no control over these factors.
16
<PAGE>
ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT MARKET RISK
We are exposed to changes in interest rates primarily from our
long-term debt arrangements and, secondarily, our investments in certain
available for sale securities. We invest our excess cash in highly liquid
short-term investments that are typically held for the duration of the term
of the respective instrument. We do not utilize derivative financial
instruments, derivative commodity instruments or other market risk sensitive
instruments, positions or transactions to manage exposure to interest rate
changes. Accordingly, we believe that, while the securities we hold are
subject to changes in the financial standing of the issuer of such
securities, we are not subject to any material risks arising from changes in
interest rates, foreign currency exchange rates, commodity prices, equity
prices or other market changes that affect market risk sensitive instruments.
17
<PAGE>
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
In April 2000, the Company sold 3,666,668 shares of the Company's
common stock to selected institutional and other accredited investors for
aggregate proceeds of $11.0 million (yielding net proceeds of $10.1 million
after deducting placement fees of $660,000 and expenses of $207,000) (the
"Equity Financing"). In addition, the Company agreed to grant a warrant to
the placement agent for the Equity Financing (First Security Van Kasper) to
purchase up to 220,000 additional shares of the Company's common stock at an
exercise price of $5.375 per share. The issuances of the Company's securities
in connection with the Equity Financing were deemed to be exempt from
registration under the Securities Act of 1933, as amended (the "1933 Act"),
by virtue of Section 4(2) thereof and Rule 506 of Regulation D thereunder
("Rule 506"), as a transaction not involving any public offering. An
appropriate filing on Form D was made. The recipients of the securities
represented to the Company their investment intent with respect thereto, and
each such recipient had adequate access to information about the Company.
Appropriate legends were affixed to the certificates representing the
securities.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of the Company's Stockholders (the "Annual Meeting")
was held on June 9, 2000 in San Diego, California.
ITEM 1. - Election of Directors
Each of the nominees listed was duly elected to the Board of
Directors of the Company at the Annual Meeting by the tally indicated:
<TABLE>
<CAPTION>
Votes
Class III Nominees Votes For Withheld Abstentions
------------------ --------------- -------- -----------
<S> <C> <C> <C>
James C. Blair, Ph.D. 18,378,143 400,909 0
Ronald R. Tuttle, Ph.D. 18,371,685 407,367 0
</TABLE>
ITEM 2. - To Increase the Shares Available under the 1996 Stock Incentive
Plan and to Approve Such Plan as Amended and Restated
<TABLE>
<CAPTION>
Brokers Without
Votes For Votes Against Abstentions Discretionary Authority(1)
-------------- ------------- ----------- --------------------------
<S> <C> <C> <C>
10,866,767 1,997,730 28,571 5,885,984
</TABLE>
ITEM 3. - Ratification of the Company's Independent Auditors
<TABLE>
<CAPTION>
Votes For Votes Against Abstentions
-------------- ------------- -----------
<S> <C> <C>
18,743,138 15,880 20,034
</TABLE>
--------
(1) These non-voted shares are counted for quorum purposes but are not
deemed to be present or represented for purposes of determining whether
stockholder approval of a particular matter has been obtained.
18
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
4.1 Subscription Agreement by and among Trega and Certain
Investors, dated April 4, 2000 (1)
4.2 Warrant, dated April 11, 2000, for common stock of
Trega issued to First Security Van Kasper (1)
10.1 Credit Agreement dated August 6, 1999 between Trega
and Imperial Bank
10.2 Loan Extension Agreement dated July 14, 2000 between
Trega and Imperial Bank
10.3 First Amendment to Loan and Security Agreement dated
March 31, 2000 between Trega and Transamerica
Business Credit Corporation
10.4 Second Amendment to Loan and Security Agreement dated
May 12, 2000 between Trega and Transamerica Business
Credit Corporation
27.1 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter ended June 30,
2000.
-----------------
(1) Incorporated by reference to the Company's Registration Statement Form
S-3 (File No. 333-36612), which was filed on May 8, 2000 (to the Exhibits of
the same numbers in such Registration Statement).
19
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Trega Biosciences, Inc.
Date: August 14, 2000 /s/ Michael G. Grey
---------------------------------
Michael G. Grey
President and Chief Executive Officer
(Principal Executive Officer)
/s/ Gerard A. Wills
---------------------------------
Gerard A. Wills
Vice President, Finance and Chief
Financial Officer (Principal
Financial and Accounting Officer)
21
