<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20459
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ to _____________.
Commission file number 0-20713
-------
ENTREMED, INC.
--------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 58-1959440
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
</TABLE>
Suite 200
9610 Medical Center Drive
Rockville, Maryland
-------------------
(Address of principal executive offices)
20850
-----
(Zip code)
(301) 217-9858
--------------
(Registrant's telephone number, including area code)
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
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the most recent practicable date.
Class Outstanding at October 26, 1998
- ---------------------------- -------------------------------
Common Stock $.01 Par Value 12,970,589
<PAGE> 2
ENTREMED, INC.
Table of Contents
<TABLE>
PART I. FINANCIAL INFORMATION PAGE
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Item 1 -- Financial Statements
Consolidated Balance Sheets
as of September 30, 1998 and December 31, 1997 3
Consolidated Statements of
Operations for the Three Months Ended
September 30, 1998 and 1997, and the Nine Months
Ended September 30, 1998 and 1997 4
Consolidated Statements of Cash
Flows for the Nine Months Ended September 30, 1998
and 1997 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
Item 1 -- Legal Proceedings 11
Item 2 -- Changes in Securities 11
Item 3 -- Defaults upon Senior Securities 11
Item 4 -- Submission of Matters to Vote of
Security Holders 11
Item 5 -- Other Information 11
Item 6 -- Exhibits and Reports on Form 8-K 11
SIGNATURES 12
</TABLE>
2
<PAGE> 3
ENTREMED, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------------- -------------------
ASSETS (unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 34,351,922 $ 18,232,491
Short term investments 3,834,646 27,012,580
Interest receivable 291,657 520,457
Accounts receivable 66,974 84,151
Prepaid expenses and other 195,920 86,095
------------------ ------------------
Total current assets 38,741,119 45,935,774
Furniture and equipment, net 1,606,224 1,498,781
Other assets 652,957 404,108
------------------ ------------------
Total assets $ 41,000,300 $ 47,838,663
================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,092,294 $ 683,201
Accrued liabilities 916,773 1,265,905
Deferred revenue 1,748,131 2,532,297
------------------ ------------------
Total current liabilities 3,757,198 4,481,403
Deferred revenue, less current portion 758,333 1,341,666
Minority interest 67,401 62,500
Stockholders' equity:
Convertible preferred stock, $1.00 par and $1.50
Liquidation value:
5,000,000 shares authorized, none issued and
outstanding at September 30, 1998 (unaudited)
and December 31, 1997 - -
Common stock, $.01 par value:
35,000,000 shares authorized, 12,970,339 (unaudited)
and 12,253,768 shares issued and outstanding at
September 30, 1998 and December 31, 1997, respectively 129,703 122,538
Additional paid-in capital 76,965,263 73,624,088
Accumulated deficit (40,677,598) (31,793,532)
------------------ ------------------
Total stockholders' equity 36,417,368 41,953,094
------------------ ------------------
Total liabilities and stockholders' equity $ 41,000,300 $ 47,838,663
================== ==================
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 4
ENTREMED, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
------------------------------- ---------------------------
<S> <C> <C> <C> <C>
Revenues:
Collaborative research and development $ 1,042,500 $ 1,042,500 $ 3,127,500 $ 3,127,500
Licensing 50,000 50,000 150,000 150,000
Grant revenues 241,262 148,540 376,718 148,540
Other revenues 9,675 - 9,675 -
------------- -------------- ------------- -------------
Total revenues 1,343,437 1,241,040 3,663,893 3,426,040
------------- -------------- ------------- -------------
Expenses:
Research & development 4,481,485 2,825,840 10,326,215 6,988,235
General & administrative 1,380,387 900,129 3,907,287 2,862,145
------------- -------------- ------------- -------------
5,861,872 3,725,969 14,233,502 9,850,380
Interest expense - - - (1,418)
Interest income 559,126 663,966 1,685,543 2,000,795
------------- -------------- ------------- -------------
Net loss $ (3,959,309) $ (1,820,963) $ (8,884,066) $ (4,424,963)
============== =============== ============== ==============
Net loss per share (basic and diluted) $ (0.31) $ (0.15) $ (0.71) $ (0.36)
============== =============== ============== ==============
Weighted average number of shares
outstanding 12,934,183 12,219,288 12,557,496 12,132,660
============== =============== ============== ==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 5
ENTREMED, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1998 1997
---------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(8,884,066) $ (4,424,963)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation 559,760 227,624
Warrants issued for consulting services - 291,000
Minority Interest 4,901 10,906
Changes in assets and liabilities:
Accounts receivable 17,177 (28,586)
Interest receivable 228,800 70,781
Prepaid expenses and other (108,674) (40,998)
Accounts payable 409,093 (103,943)
Accrued liabilities (349,132) (540,540)
Deferred revenue (1,367,499) (1,442,500)
---------------- ----------------
Net cash used by operating activities (9,489,640) (5,981,219)
---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Maturities of short-term investments 42,757,660 14,874,723
Purchases of short-term investments (19,579,726) (15,216,950)
Other investments (250,000) (300,000)
Purchases of furniture & equipment (667,203) (845,747)
--------------- ----------------
Net cash provided (used) by investing activities 22,260,731 (1,487,974)
--------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of lease obligation - (104,152)
Proceeds from option and warrant exercise 3,348,340 468,631
--------------- ---------------
Net cash provided by financing activities 3,348,340 364,479
--------------- ---------------
Net increase (decrease) in cash and cash equivalents 16,119,431 (7,104,714)
Cash and cash equivalents at beginning of period 18,232,491 33,051,206
--------------- ---------------
Cash and cash equivalents at end of period $ 34,351,922 $ 25,946,492
=============== ===============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $ - $ 1,418
=============== ===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 6
ENTREMED, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998 (UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial information of
EntreMed, Inc. (the "Company") includes the accounts of its 85% owned
subsidiary, Cytokine Sciences, Inc. Cytokine Sciences was formed in
June 1996 and was capitalized with $250,000 by EntreMed for the purpose
of acquiring the assets of Innovative Therapeutics, Inc., which
acquisition was completed in July 1996 in exchange for 15% of the
common stock of Cytokine Sciences, Inc.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information and in accordance with the
instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, such consolidated financial statements do not include all
of the information and disclosures 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 nine month period ended September
30, 1998 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1998. For further
information, refer to the Company's audited financial statements and
footnotes thereto included in the Company's Form 10-K for the year
ended December 31, 1997.
2. NET LOSS PER SHARE
In February 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 128, "Earnings
per Share" ("Statement 128"). Statement 128 replaced the previously
reported primary and fully diluted earnings per share with basic and
diluted earnings per share. Unlike primary earnings per share, basic
earnings per share excludes any dilutive effect of options, warrants
and convertible securities. Diluted earnings per share is very similar
to the previously reported fully diluted earnings per share. All
earnings per share amounts for all periods have been presented, and
where appropriate, restated to conform to the Statement 128
requirements.
3. COMPREHENSIVE INCOME
In June 1997, the FASB issued Statement No. 130, "Reporting
Comprehensive Income" ("Statement 130"), which establishes standards
for reporting and display of comprehensive income and its components
(revenues, expenses, gains and losses) in financial statements.
Statement 130 is effective for fiscal years beginning after December
15, 1997. The Company adopted Statement 130 in 1998 and has not
presented a statement of comprehensive income because the effect of the
components of comprehensive income is not material to its consolidated
financial statements.
6
<PAGE> 7
4. CONTINGENCIES
The Company is a defendant in a lawsuit initiated in August 1995 in the
United States District Court for the Eastern District of Tennessee by
Bolling, McCool & Twist ("BMT"), a consulting firm. In the suit, BMT
asserts that the Company breached an agreement between BMT and the
Company by failing to pay BMT certain fees it asserts are owed under
the agreement. More specifically, BMT has asserted a claim for the
payment of services rendered in the approximate amount of $50,000 and
seeks a success fee in an unspecified amount in connection with the BMS
Collaboration. The judge in the case bifurcated the proceeding into two
phases: an adjudication of whether the Company breached its agreement
with BMT and then a damage phase. After a trial on the merits the jury
found in favor of BMT on the breach of contract claim. A trial to
determine damages had been scheduled for April 14, 1998. However, on
April 6, 1998, the court issued an Order pursuant to which damages were
limited to those arising during the term of the Agreement, which
terminated on November 1, 1995. Damages for this period amount to
approximately $50,000 plus a possible charge for interest. The damage
portion of the trial has been postponed while the parties present
arguments with respect to certain offers of proof requested by the
court. Despite the jury verdict on the breach of contract claim and the
court's limitation with respect to damages, the Company is unable to
predict with certainty the eventual outcome of the lawsuit. The Company
intends to continue to contest the action vigorously and believes that
this proceeding will not have a material adverse effect on the Company
or on its financial condition, although there can be no assurance that
this will be the case.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
GENERAL
Since its inception in September 1991, the Company has devoted
substantially all of its efforts and resources to sponsoring and conducting
research and development on its own behalf and through collaborations with
corporate partners and academic research and clinical institutions, and
establishing its facilities and hiring personnel. In December 1995, the Company
entered into a collaboration agreement with Bristol-Myers Squibb Company ("BMS")
in which BMS made an equity investment in the Company and agreed to pay certain
research and development fees and expenses, license fees, milestone payments,
and royalties on net sales, if any. Through September 30, 1998, with the
exception of license fees and research and development funding from BMS as well
as certain research grants, the Company had not generated any revenue from
operations. The Company anticipates its revenue sources for the next several
years will be limited to research grants and future collaboration payments from
BMS and from other collaborators under arrangements that may be entered into in
the future. The timing and amounts of such revenues, if any, will likely
fluctuate and depend upon the achievement of specified milestones.
RESULTS OF OPERATIONS
Three and Nine Months Ended September 30, 1998 and September 30, 1997
Revenues increased approximately 8% from approximately $1,241,000 for the
three months ended September 30, 1997 ("1997 Three Months") to approximately
$1,343,000 for the three months ended September 30, 1998 ("1998 Three Months").
For the nine months ended September 30, 1998 ("1998 Nine Months"), revenues were
approximately $3,664,000 as compared to $3,426,000 the nine months ended
September 30, 1997 ("1997 Nine Months"), a 7% increase. These increases are due
to grant revenue earned under a Small Business Innovative Research (SBIR)
program from the National Institutes of Health (NIH) as well as a training grant
from the State of Maryland earned in July 1998. Grant revenues during the 1997
Three Months and the 1997 Nine Months were also from the SBIR program from the
NIH. The BMS collaborative research and development fees relate to the
amortization over five years of a one-time payment of $2,500,000 received in
December 1995 and the amortization of semi-annual payments of $1,835,000 under
the BMS collaboration agreement. The license fee represents the amortization
over five years of a one-time $1,000,000 license fee received in December 1995
under the BMS collaboration agreement.
Research and development expenses increased by approximately 59% from
approximately $2,826,000 in the 1997 Three Months to approximately $4,481,000 in
the 1998 Three Months and by approximately 48% from approximately $6,988,000 in
the 1997 Nine Months to approximately $10,326,000 in the 1998 Nine Months.
Research and development expenditures include sponsored research payments to
academic collaborators, including a $2,000,000 payment to Children's Hospital in
both 1998 and 1997; and expenses related to the Company's internal research
programs. The increase in research and development costs reflects increased
efforts in the Company's internal and sponsored research and product development
programs related to its antiangiogenesis and blood cell permeation technologies.
Overall, research personnel increased from 34 as of September 30, 1997 to 42 as
of September 30, 1998. Research and development expenses are expected to
continue to increase as the Company continues to expand its research and
development efforts.
8
<PAGE> 9
General and administrative expenses increased 56% from approximately
$882,000 in the 1997 Three Months, to approximately $1,380,000 in the 1998 Three
Months. For the 1998 Nine Months general and administration expenses were
approximately $3,907,000 as compared to approximately $2,851,000 for the 1997
Nine Months, a 37% increase. The overall increase in general and administrative
expenses during the 1998 periods compared to comparable periods of 1997 resulted
primarily from the increase in administrative costs associated with adding
administrative staff to support the research scientists and collaborative
efforts the Company is conducting, investigating potential strategic
relationships, and obtaining professional services. Interest income decreased
approximately 16% from approximately $664,000 in the 1997 Three Months to
approximately $559,000 in the 1998 Three Months and decreased approximately 16%
from approximately $2,001,000 in the 1997 Nine Months to approximately
$1,686,000 in the 1998 Nine Months. This overall decrease in interest income
during the 1998 periods compared to comparable periods of 1997 is due to the
reduction of the Company's cash and short term investments as such working
capital components are used to fund the Company's operations.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1998, the Company had cash and cash equivalents of
approximately $34,352,000 and short-term investments of approximately $3,835,000
with working capital of approximately $34,984,000, primarily representing the
remaining net proceeds of the Company's initial public offering and concurrent
private placement with BMS in June 1996 together with funds received under the
BMS agreement entered into in December 1995.
The Company's cash resources have been used to finance research and
development, including sponsored research, capital expenditures, including
leasehold improvements to the Company's laboratory facility, and general and
administrative expenses. Over the next several years, the Company expects to
incur substantial additional research and development costs, including costs
related to early-stage research in areas not reimbursed by Bristol-Myers Squibb
Company, preclinical and clinical trials, increased administrative expenses to
support its research and development operations and increased capital
expenditures for various equipment needs and facility improvements.
The Company is a party to sponsored research agreements and clinical
trials requiring the Company to fund an aggregate of approximately $2,187,000
through 1999 (including $1,000,000 to Children's Hospital) and license
agreements requiring milestone payments of up to $4,260,000 and additional
payments upon attainment of regulatory milestones.
BMS is obligated to make additional semi-annual payments to the Company of
$1,835,000 in each of June and December through June 2000 as well as additional
payments in the event certain mostly late-stage regulatory milestones are
achieved. BMS may terminate the collaboration agreement and return the licensed
technology to the Company at any time upon six months notice, in which event it
would have no further funding obligation to the Company. BMS has recently
returned to the Company the rights to thalidomide analogs. BMS has retained its
rights to Angiostatin under the collaboration agreement.
YEAR 2000 COMPLIANCE
The Year 2000 Issue is the result of computer programs being written using
two digits rather than four to define the applicable year. As a result, those
computer programs having time-sensitive software would recognize a date using
"00" as the year 1900 rather than the year 2000.
9
<PAGE> 10
Based on a recent assessment, the Company determined that its accounting
software will need to be updated or modified. This should be accomplished
through updates from the software manufacturer. The Company does not expect any
material costs associated with this modification or any disruptions to its
primary operations.
The Company has queried its significant supplier that does not share
information systems with the Company (external agent). To date, the Company is
not aware of any external agent with a Year 2000 issue that would materially
impact the Company's results of operations, liquidity, or capital resources.
However, the Company has no means of ensuring that external agents will be Year
2000 ready. The inability of external agents to complete the Year 2000
resolution process in a timely fashion could materially impact the Company. The
effect of non-compliance by external agents is not determinable.
The Company anticipates no other year 2000 problems which are reasonably
likely to have a material adverse effect on the Company's operations. There
can be no assurance, however, that such problems will not arise.
Statements herein that are not descriptions of historical facts are
forward-looking and subject to risk and uncertainties. Actual results could
differ materially from those currently anticipated due to a number of factors,
including those set forth in the Company's Securities and Exchange Commission
filings under "Risk Factors", including risks relating to the early stage of
products under development; uncertainties relating to clinical trials'
dependence on third parties' future capital needs; and risks relating to the
commercialization, if any, of the Company's proposed products (such as
marketing, safety, regulatory, patent, product liability, supply, competition
and other risks).
10
<PAGE> 11
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
This information as set forth in Note 4 of "Notes to Consolidated
Financial Statements" appearing in Item 1 of Part I of this report is
incorporated herein by reference.
Item 2. CHANGES IN SECURITIES
Not applicable.
Item 3. DEFAULT UPON SENIOR SECURITIES
Not applicable.
Item 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
Not applicable.
Item 5. OTHER INFORMATION
Not applicable.
Item 6. EXHIBIT AND REPORTS ON FORM 8-K
(a) The following exhibits are filed with this report:
3.1(b) Certificate of Amendment to Amended and Restated
Certificate of Incorporation of EntreMed, Inc. filed
with the Delaware Secretary of State on September 4, 1998
(corrected by Certificates of Correction filed to correct
certain errors in the Certificates of Amendment to
Amended and Restated Certificate of Incorporation filed
with the Delaware Secretary of State on April 22, 1996
and September 4, 1998, respectively)
27.1 Financial Data Schedule
(b) No reports on Form 8-K were filed by Registrant during the
quarter ended September 30, 1998.
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.
<TABLE>
<CAPTION>
ENTREMED, INC.
(Registrant)
<S> <C>
Date: October 30, 1998 /s/ John W. Holaday
----------------------------------------
John W. Holaday, Ph.D.
President and Chief Executive Officer
Date: October 30, 1998 /s/ R. Nelson Campbell
----------------------------------------
R. Nelson Campbell
Chief Financial Officer
</TABLE>
12
<PAGE> 1
EntreMed, Inc.
Exhibit 3.1(b)
CERTIFICATE OF AMENDMENT TO
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
ENTREMED, INC.
This Certificate of Amendment to the Amended and Restated
Certificate of Incorporation of ENTREMED, INC. (the "Corporation") is
being executed and filed in accordance with Section 242 of the
Delaware General Corporation Law.
1. The name of the Corporation is ENTREMED, INC.
2. The first paragraph of Article IV of the Corporation's
Amended and Restated Certificate of Incorporation is amended to read as
follows:
"IV.
The total number of shares of capital stock which the
Corporation is authorized to issue is Forty Million
(40,000,000) divided into two classes as follows:"
3. Paragraph (A) of Article IV of the Corporation's Amended
and Restated Certificate of Incorporation is amended to read as follows:
"(A) Common Stock. Thirty-Five Million (35,000,000)
shares of common stock, $.01 par value per share ("Common
Stock"), the holder of which shall be entitled to one vote for
each share on all matters required or permitted to be voted on
by stockholders of the Corporation, and".
4. This Certificate of Amendment to Amended and Restated
Certificate of Incorporation and the amendments set forth herein have been
duly adopted by the directors and stockholders of the Corporation in
accordance with the provisions of Section 242 of the Delaware General
Corporation Law.
<PAGE> 2
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to Amended and Restated Certificate of Incorporation to be
executed by the undersigned duly authorized officer of the
Corporation this 31st day of August, 1998.
ENTREMED, INC.
BY: /s/ John Holaday
---------------------
John W. Holaday
President / CEO
/s/ John C. Thomas, Jr.
- ----------------------------
John C. Thomas, Jr.
Secretary / Treasurer
<PAGE> 3
EntreMed, Inc.
Exhibit 3.1(b)
CERTIFICATE OF CORRECTION
FILED TO CORRECT CERTAIN ERRORS IN
THE CERTIFICATE OF AMENDMENT TO AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
ENTREMED, INC.
FILED IN THE OFFICE OF
THE SECRETARY OF STATE OF DELAWARE
ON APRIL 22, 1996
ENTREMED, INC., a corporation organized and existing under and by virtue
of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY AS FOLLOWS:
1. The name of the corporation is ENTREMED, INC. (the "Corporation").
2. A Certificate of Amendment to Amended and Restated Certificate of
Incorporation was filed by the Corporation with the Secretary of State of the
State of Delaware on April 22, 1996 and said Certificate requires correction as
permitted by Section 103(f) of the General Corporation Law of the State of
Delaware.
3. The inaccuracy or defect of said Certificate to be corrected is as
follows: typographic error in Article D Section (4) of said Certificate.
4. Article D, Section (4) of said Certificate hereby is corrected to read
as follows:
"(4) Each and every reference to 'Preferred Stock' as appears in
Section (B)(X) of Article IV is hereby replaced by the term 'Series
A Convertible Preferred Stock.'"
<PAGE> 4
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Correction to be executed by the undersigned duly authorized officer of the
Corporation this 26th day of October 1998.
ENTREMED, INC.
By /s/ R. Nelson Campbell
-----------------------------
R. Nelson Campbell
Chief Financial Officer
<PAGE> 5
EntreMed, Inc.
Exhibit 3.1(b)
CERTIFICATE OF CORRECTION
FILED TO CORRECT CERTAIN ERRORS IN
THE CERTIFICATE OF AMENDMENT TO AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
ENTREMED, INC.
FILED IN THE OFFICE OF
THE SECRETARY OF STATE OF DELAWARE
ON SEPTEMBER 4, 1998
ENTREMED, INC., a corporation organized and existing under and by virtue
of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY AS FOLLOWS:
1. The name of the corporation is ENTREMED, INC. (the "Corporation").
2. A Certificate of Amendment to Amended and Restated Certificate of
Incorporation was filed by the Corporation with the Secretary of State of the
State of Delaware on September 4, 1998 and said Certificate requires correction
as permitted by Section 103(f) of the General Corporation Law of the State of
Delaware.
3. The inaccuracies or defects of said Certificate to be corrected are as
follows: various typographical errors in Article 3 of said Certificate.
4. Article 3 of said Certificate hereby is corrected to read as follows:
"3. Paragraph (A) and the first sentence of Paragraph (B) of
Article IV of the Corporation's Amended and Restated Certificate of
Incorporation are amended to read as follows:
"(A) Common Stock. - Thirty-Five Million (35,000,000)
shares of common stock, $.01 par value per share ("Common Stock"),
the holder of which shall be entitled to one vote for each share on
all matters
<PAGE> 6
required or permitted to be voted on by stockholders of the
Corporation, and
"(B) Preferred Stock. - Five Million (5,000,000) shares
of preferred stock, $1.00 par value per share ("Preferred Stock")."
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Correction to be executed by the undersigned duly authorized officer of the
Corporation this 27th day of October 1998.
ENTREMED, INC.
By /s/ R. Nelson Campbell
------------------------------
R. Nelson Campbell
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEETS AND THE CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 34,351,922
<SECURITIES> 3,834,646
<RECEIVABLES> 66,974
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 38,741,119
<PP&E> 2,878,466
<DEPRECIATION> 1,272,242
<TOTAL-ASSETS> 41,000,300
<CURRENT-LIABILITIES> 3,757,198
<BONDS> 0
0
0
<COMMON> 129,703
<OTHER-SE> 36,287,665
<TOTAL-LIABILITY-AND-EQUITY> 41,000,300
<SALES> 0
<TOTAL-REVENUES> 3,663,893
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 14,233,502
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (8,884,066)
<INCOME-TAX> 0
<INCOME-CONTINUING> (8,884,066)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,884,066)
<EPS-PRIMARY> (0.71)
<EPS-DILUTED> (0.71)
</TABLE>
