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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-QSB
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1996
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-27914
RIBOZYME PHARMACEUTICALS, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
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Delaware 34-1697351
(State of incorporation) (I.R.S. Employer Identification No.)
2950 Wilderness Place
Boulder, Colorado 80301
(Address of principal executive offices)
Registrant's telephone number: (303) 449-6500
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Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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
The number of shares of the registrant's common stock, par value $0.01 per
share, outstanding as of May 13, 1996 was 6,829,530.
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RIBOZYME PHARMACEUTICALS, INC.
INDEX TO FORM 10-QSB
<TABLE>
<CAPTION>
PART 1 - FINANCIAL INFORMATION PAGE
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<S> <C>
Item 1. Financial Statements
Condensed Balance Sheet - March 31, 1996 ................................................................. 3
Condensed Statement of Operations - Three Months Ended
March 31, 1996 and 1995................................................................................... 4
Condensed Statements of Cash Flows - Three Months Ended
March 31, 1996 and 1995................................................................................... 5
Notes to Condensed Financial Statements .................................................................. 6
Item 2. Management's Discussion and Analysis or Plan of Operation ................................................ 7
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K .........................................................................10
SIGNATURES.........................................................................................................11
</TABLE>
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PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
RIBOZYME PHARMACEUTICALS, INC.
CONDENSED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
March 31,
1996
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<S> <C>
ASSETS
Current assets
Cash and cash equivalents $ 1,707,017
Securities available-for-sale 987,190
Restricted cash 530,034
Accounts receivable 5,885
Notes receivable, employees 147,466
Prepaid expenses and other 458,964
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Total current assets 3,836,556
Equipment and leasehold improvements at cost, net of accumulated
depreciation and amortization 4,798,053
Restricted cash 679,896
Notes receivable, other 137,398
Deferred patents, net 1,571,344
Other assets, net 133,712
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Total assets $ 11,156,959
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable, trade $ 661,643
Accrued liabilities 66,144
Current portion of long-term debt and capital lease obligations 1,912,687
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Total current liabilities 2,640,474
Long-term debt and capital lease obligations 3,094,410
Deferred gain 23,257
Stockholders' equity
Preferred Stock 22,321
Common Stock 10,603
Additional paid-in capital 40,760,473
Deferred compensation (163,989)
Accumulated deficit (35,230,590)
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Total stockholders' equity 5,398,818
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Total liabilities and stockholders' equity $ 11,156,959
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See notes to condensed financial statements.
</TABLE>
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RIBOZYME PHARMACEUTICALS, INC.
CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
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1996 1995
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<S> <C> <C>
Revenues:
Collaborative agreements $ 559,122 $ 255,824
Grant and other income 800 33,891
Interest income 59,048 74,097
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Total revenues 618,970 363,812
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Expenses:
Research and development 3,029,104 3,414,965
General and administrative 470,598 377,399
Interest expense 221,694 87,730
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Total expenses 3,721,396 3,880,094
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Net loss $(3,102,426) $(3,516,282)
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Net loss per share $ (0.95) $ (1.26)
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Shares used in computing net loss per share 3,272,489 2,786,262
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See notes to condensed financial statements.
</TABLE>
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RIBOZYME PHARMACEUTICALS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
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1996 1995
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<S> <C> <C>
OPERATING ACTIVITIES
Net loss $(3,102,426) $(3,516,282)
Adjustments to reconcile net loss to net cash:
Depreciation and amortization 445,132 319,716
Noncash compensation 62,466 50,000
Loss on sale of securities 8,577 --
Changes in assets and liabilities:
Accounts receivable 12,175 18,134
Prepaid expenses and other (301,130) (13,325)
Other assets 162 (904)
Accounts payable 112,606 903,750
Accrued liabilities (20,246) (312,828)
Deferred contract revenue -- (117,743)
Deferred gain (9,388) (9,309)
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Net cash used in operating activities (2,792,072) (2,678,791)
INVESTING ACTIVITIES
Additions to property, plant and equipment (714,594) (239,600)
Additions to patents and other intangible assets (89,652) (133,603)
Loans to officers and employees (75,000) --
Loan repayments from employees -- 6,000
Net (purchases) sales of securities available-for-sale 2,498,552 (1,341,840)
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Net cash provided by (used in) investing activities 1,619,306 (1,709,043)
FINANCING ACTIVITIES
Net proceeds from sale of preferred and common stock 36,189 (5,444)
Proceeds from issuance of long-term debt 411,238 194,061
Principal payments on debt and capital lease obligations (480,653) (261,353)
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Net cash used in financing activities (33,226) (72,736)
Net decrease in cash and cash equivalents (1,205,992) (4,460,570)
Cash and cash equivalents at beginning of period 2,913,009 5,727,122
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Cash and cash equivalents at end of period $ 1,707,017 $ 1,266,552
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</TABLE>
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RIBOZYME PHARMACEUTICALS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
March 31, 1996
(Unaudited)
Note 1: Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared 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
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 of a fair presentation have
been included. Operating results for the three-month period ending 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 financial
statements and footnotes thereto for the year ended December 31, 1995, included
in the Company's registration statement on Form SB-2, file no. 333-1908-D.
Note 2: Net loss per share
Pursuant to the Securities and Exchange Commission Staff Accounting Bulletins,
common and common equivalent shares issued during the 12-month period prior to
the Company's initial public offering on April 11, 1996, at prices below the
public offer price have been included in the calculation as if they were
outstanding for all periods presented (using the treasury stock method and the
initial public offering price of $10.00 per share). Furthermore, pursuant to
Staff policy, common equivalent shares from convertible preferred shares that
converted upon completion of the Company's initial public offering are included
(using the if-converted method) even when antidilutive.
Had net loss per share been presented on the historical basis, average shares
outstanding would have equaled 1,040,529 and 981,186, and net loss per share
would have been $2.98 and $3.58 for the three months ended March 31, 1996 and
1995, respectively.
Note 3: Public Offering
On April 17, 1996 the Company completed an initial public offering of 2,000,000
shares of its common stock to the public at a price of $10.00 per share. In
addition, the Company granted the Underwriters an option to purchase up to
300,000 additional shares of common stock, which the Underwriters exercised in
full. The proceeds to the Company from the sale of 2,300,000 shares, net of
Underwriters discount of $1,610,000, totaled $21,390,000. Concurrent with the
closing of this offering, Chiron Corporation ("Chiron") purchased from the
Company 377,202 shares of common stock for an aggregate purchase price of
$3,640,000, and paid the Company an additional $1,800,000 to complete the
purchase of a warrant for 444,444 shares of common stock.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
OVERVIEW
RPI was incorporated in January 1992 and has devoted substantially all
of its resources since that time to develop ribozyme technology and products in
human therapeutics, agricultural, animal health and diagnostic applications. The
Company has incurred losses since inception and, as of March 31, 1996, had an
accumulated deficit of $35.2 million. The Company anticipates incurring
additional losses over at least the next several years as it expands its
research and development programs, including pre-clinical studies and clinical
trials. Such expansion will result in increases in research and development, and
general and administrative expenses.
The Company completed an initial public offering in April 1996
resulting in net proceeds of approximately $21.4 million. Concurrently with the
closing of the offering, Chiron Corporation purchased common stock at an
aggregate purchase price of $3.6 million and paid the Company an additional $1.8
million to complete the purchase of a warrant issued to Chiron upon the closing.
RESULTS OF OPERATIONS
Three Months Ended March 31, 1996
Collaborative agreement revenue increased 119% to $559,000 for the
three month period ended March 31, 1996, from $256,000 for the corresponding
period in 1995. Collaborative agreement and contract revenue fluctuations are
generally the result of changes in the number of funded research projects as
well as the timing and performance of contract milestones. The increase in 1996
from the corresponding period in 1995 is the result of a one-time payment from
Pharmacia Biotech in a collaboration on the development of improved synthesis
and purification methods for the preparation of modified amidites and chimeric
oligonucleotides.
Grant and other income decreased to $800 for the three months ended
March 31, 1996, compared to $34,000 for the corresponding period in 1995. The
decrease is due to the expiration of certain grant funding.
Interest income decreased to $59,000 for the three months ended March
31, 1996 compared to $74,000 for the corresponding period in 1995. The decrease
is due to lower average balances in the Company's cash and cash equivalents and
marketable securities.
Research and development expenses decreased 12% to $3.0 million for the
three months ended March 31, 1996, compared to $3.4 million for the
corresponding period in 1995. The decrease is attributable to large purchases of
amidites made in the first quarter of 1995 in anticipation of manufacturing.
Other expenses in research and development have increased slightly in the three
month period ended March 31, 1996, compared to the corresponding period in 1995.
The Company expects research and development expenses to continue to increase as
it expands its research and development programs, including pre-clinical studies
and clinical trials.
General and administrative expenses increased 25% to $471,000 for the
three months ended March 31, 1996, compared to $377,000 for the corresponding
period in 1995. The increase in general and administrative expenses is primarily
due to the hiring of additional management and administrative
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personnel and the incurring of legal and other professional fees in connection
with the overall scale-up of the Company's operations and business development
efforts.
Interest expense increased to $222,000 for the period ended March 31,
1996 compared to $88,000 for the period ended March 31, 1995. The increase is
attributable to increased borrowings on capital lease obligations and long-term
debt during 1995 which were used in part to fund the Company's expansion into
its current laboratory facilities.
The Company reported a net loss of $3.1 million or $0.95 per share for
the three months ended March 31, 1996, compared to a net loss of $3.5 million
and $1.26 per share, for the corresponding period in 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations since inception primarily
through private placements of preferred stock and funds received under the
Company's collaborative agreements with Parke-Davis, DowElanco, Chiron and
Pharmacia Biotech. From inception through March 31, 1996, the Company has
received approximately $29.0 million in net proceeds from such private
placements and approximately $14.5 from its collaborations.
The Company's cash, cash equivalents and securities available-for-sale
were $2.7 million at March 31, 1996, compared with $4.6 million at March 31,
1995. The $1.9 million decrease in cash, cash equivalents and securities
available-for-sale was primarily the result of the following:
<TABLE>
<S> <C>
Net cash used in operating activities $(10,963,000)
Investment in equipment and leasehold improvement (3,818,000)
Additions to patents (572,000)
Addition to restricted cash (710,000)
Borrowings under loan facilities 3,558,000
Payments under loan facilities and capital lease obligations (1,715,000)
Net proceeds from sale of stock and warrants 12,373,000
Other, net (53,000)
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$ (1,900,000)
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</TABLE>
The Company invests its cash in interest-bearing high quality
investment grade securities.
Total additions for equipment and leasehold improvements for the three
months ended March 31, 1996, were $715,000, which included $411,000 of additions
financed through the Company's existing equipment loan facilities. As of March
31, 1996, the Company had approximately $1.6 million available for additional
equipment under a loan agreement with Silicon Valley Bank. The facility
commitment terminates on June 30, 1997.
The Company estimates that its existing capital resources, the
aggregate net proceeds of the public offering completed in April and the
concurrent sale of common stock and warrant to Chiron and interest thereon,
together with facility and equipment financing and expected revenues from its
collaborative agreements, will be sufficient to fund its current and planned
operations at least through the end of 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
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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. Such capital may be raised through public or private financing,
as well as collaborative relationships, borrowing and other available sources.
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3(i) Amended and Restated Certificate of Incorporation*
3(ii) Restated Bylaws*
11 Statement re: computation of net loss per share
27 Financial Data Schedule
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the
quarter for which this report on Form 10-QSB is filed.
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*Previously filed with the Company's Registration Statement on Form SB-2, file
no. 333-1908-D.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
RIBOZYME PHARMACEUTICALS, INC.
Dated: May 15, 1996 By: /s/ RALPH E. CHRISTOFFERSEN
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Ralph E. Christoffersen
President and Chief
Executive Officer
Dated: May 15, 1996 By: /s/ LAWRENCE E. BULLOCK
----------------------------
Lawrence E. Bullock
Vice President and Chief Financial Officer
(Principal Financial Officer and
Principle Accounting Officer)
11
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Exhibit Index
Exhibit Exhibit
No. Description
- - ------ --------------
3(i) Amended and Restated Certificate of Incorporation*
3(ii) Restated Bylaws*
11 Statement re: computation of net loss per share
27 Financial Data Schedule
_____
* Previously filed with the Company's Registration Statement on Form SB-2, File
No. 333-1908-D.
<PAGE> 1
EXHIBIT 11.0
Ribozyme Pharmaceuticals, Inc.
Computation of Pro Forma Net Loss Per Share
<TABLE>
<CAPTION>
Quarter Quarter
ending ending
03/31/96 03/31/95
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<S> <C> <C>
Weighted average common shares
outstanding ............................................................................ 1,040,529 981,186
Net effect of dilutive common stock
options and warrants pursuant to
Staff Accounting Bulletin No. 83 ....................................................... 99,877 99,877
Assumed conversion of preferred stock
from original date of issuance,
pursuant to staff policy ............................................................... 2,231,960 1,705,199
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Total .................................................................................. 3,372,366 2,786,262
Net loss ............................................................................... $(3,102,426) $(3,516,282)
=========== ===========
Pro forma net loss per share ........................................................... $ (0.92) $ (1.26)
=========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF RIBOZYME PHARMACEUTICALS, INC. FOR THE THREE MONTHS
ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIREY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,707,017
<SECURITIES> 987,190
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,836,556
<PP&E> 8,179,820
<DEPRECIATION> 3,381,767
<TOTAL-ASSETS> 11,156,959
<CURRENT-LIABILITIES> 2,640,474
<BONDS> 3,094,410
<COMMON> 10,603
0
22,321
<OTHER-SE> 5,365,894
<TOTAL-LIABILITY-AND-EQUITY> 11,156,959
<SALES> 0
<TOTAL-REVENUES> 618,970
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,029,104
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 221,694
<INCOME-PRETAX> (3,102,426)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,102,426)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,102,426)
<EPS-PRIMARY> (0.95)
<EPS-DILUTED> 0
</TABLE>
