<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 September 30, 1996
- ------------------------------------------------------------------
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
- --------------------------------------------------------------------------
Commission File number 0-20711
- --------------------------------------------------------------------------------
VIRUS RESEARCH INSTITUTE, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-3098869
- --------------------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
61 Moulton Street, Cambridge, MA 02138
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
(617) 864-6232
(Registrant's telephone number, including area code)
Not Applicable
(Former name, address and fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
(X) Yes ( ) No
As of November 5, 1996, there were 8,819,451 shares of Common Stock outstanding.
<PAGE> 2
VIRUS RESEARCH INSTITUTE, INC.
INDEX
PART I - FINANCIAL INFORMATION Page
Item 1. Financial Statements:
Balance Sheets as of December 31, 1995 and
September 30, 1996..............................................3
Statements of Operations for the Three Months Ended September
30, 1995 and 1996, for the Nine Months Ended September 30,
1995 and 1996, and for the Period from Inception through
September 30, 1996..............................................4
Statements of Cash Flows for the Nine Months Ended September
30, 1995 and 1996 and for the period from
Inception through September 30, 1996............................5
Notes to 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................................................14
Item 2. Changes in Securities............................................14
Item 3. Defaults upon Senior Securities..................................14
Item 4. Submission of Matters to a Vote of Security Holders..............14
Item 5. Other Information................................................14
Item 6. Exhibits and Reports on Form 8-K.................................14
SIGNATURES ...................................................................15
(2)
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VIRUS RESEARCH INSTITUTE, INC.
(A DEVELOPMENT STAGE COMPANY)
<TABLE>
BALANCE SHEETS
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,180,176 $ 16,893,340
Marketable securities 0 10,733,808
Prepaid expenses 199,097 297,181
Other current assets 34,845 178,738
------------ ------------
Total current assets 1,414,118 28,103,067
Leasehold improvements and equipment (net
of accumulated depreciation and amortization
of $1,342,046 at December 31, 1995 and
$1,860,098 at September 30, 1996) 1,205,487 1,013,782
Other assets 108,300 76,409
------------ ------------
Total assets $ 2,727,905 $ 29,193,258
============ ============
Current liabilities:
Notes payable 923,315 0
Accounts payable 372,577 220,420
Accrued rent 50,417 9,167
Accrued consulting and research fees 457,712 726,916
Other accrued expenses 259,219 315,988
Deferred revenue 0 312,500
Current portion of lease obligation payable 175,090 132,502
------------ ------------
Total current liabilities 2,238,330 1,717,493
Lease obligation payable, less current portion 210,842 121,260
Redeemable convertible preferred stock 24,527,073 0
Stockholders' equity (deficit):
Common stock -- $.001 par value; 30,000,000 shares
authorized; 690,004 shares issued at December 31,
1995 and 8,819,451 shares issued at September 30, 1996 690 8,819
Additional paid-in capital 134,202 51,885,232
Deficit accumulated during the development stage (24,383,232) (24,539,546)
------------ ------------
Total stockholders' equity (deficit) (24,248,340) 27,354,505
------------ ------------
Total liabilities and stockholders' equity $ 2,727,905 $ 29,193,258
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
(3)
<PAGE> 4
VIRUS RESEARCH INSTITUTE, INC.
(A DEVELOPMENT STAGE COMPANY)
<TABLE>
STATEMENT OF OPERATIONS
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED CUMULATIVE
SEPTEMBER 30, SEPTEMBER 30, SINCE INCEPTION
1995 1996 1995 1996 (1991)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
REVENUE:
Licensing & option revenue $ 30,000 $2,000,000 $ 30,000 $ 4,520,000 $ 5,990,000
Research & development revenue 450,000 312,500 607,480 1,150,000 2,238,749
Interest income 17,340 373,548 114,746 485,440 858,890
--------------------------------------------------------------------------
TOTAL REVENUE 497,340 2,686,048 752,226 6,155,440 9,087,639
EXPENSES:
Research and development 1,449,286 1,322,673 4,512,537 3,956,307 22,703,280
General & administrative 328,063 781,530 1,467,942 1,698,006 8,334,161
Depreciation 142,820 174,390 433,700 518,052 1,962,447
Other expense 21,146 16,271 33,129 139,389 627,297
--------------------------------------------------------------------------
TOTAL EXPENSES 1,941,315 2,294,864 6,447,308 6,311,754 33,627,185
--------------------------------------------------------------------------
NET INCOME (LOSS) $(1,443,975) $ 391,184 $(5,695,082) $ (156,314) $(24,539,546)
==========================================================================
Net income (loss) per share $ (0.23) $ 0.04 $ (0.89) $ (0.02)
=========================================================
Weighted average common shares
outstanding 6,391,816 9,539,457 6,391,027 7,237,833
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
(4)
<PAGE> 5
VIRUS RESEARCH INSTITUTE, INC.
(A DEVELOPMENT STAGE COMPANY)
<TABLE>
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
NINE MONTHS ENDED CUMULATIVE
SEPTEMBER 30 SINCE INCEPTION
1995 1996 (1991)
------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net Loss $(5,695,082) $ (156,314) $(24,539,546)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation & amortization 433,700 542,803 2,002,980
Conversion of accrued interest to preferred stock 0 46,026 58,373
Changes in operating assets and liabilities:
(Increase) decrease in prepaid expenses
and other assets 71,835 (210,084) (429,200)
Increase (decrease) in accounts payable and
accrued expenses 57,273 127,566 1,267,490
Increase in deferred revenue 312,500 312,500 312,500
---------------------------------------------
Net cash provided by (used in) operating activities (4,819,774) 662,497 (21,327,403)
Cash flows from investing activities:
Purchases of marketable securities, net 0 (10,733,808) (10,733,808)
Capital expenditures (125,573) (326,346) (2,891,326)
Other 0 0 (46,182)
---------------------------------------------
Net cash (used in) investing activities (125,573) (11,060,154) (13,671,316)
Cash flows from financing activities:
Proceeds from notes payable 3,587 0 7,973,668
Sale & leaseback related to capital acquisitions 250,000 0 751,311
Principal payments on lease obligations (132,587) (138,171) (647,863)
Sale of common stock 162 27,618,385 27,667,278
Sale of preferred stock 0 1,500,140 19,258,613
Offering costs (1,477) (2,869,533) (3,107,334)
Founder's shares reacquired 0 0 (846)
Purchase of treasury stock 0 0 (2,768)
---------------------------------------------
Net cash provided by (used in) financing activities 119,685 26,110,821 51,892,059
Net increase (decrease) in cash (4,825,662) 15,713,164 16,893,340
Cash and cash equivalents, beginning of period 5,669,490 1,180,176 0
---------------------------------------------
Cash and cash equivalents, end of period $ 843,828 $ 16,893,340 $ 16,893,340
=============================================
Supplemental disclosure of cash flow information:
Interest paid during the period $ 33,129 $ 42,007 $ 209,197
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
(5)
<PAGE> 6
VIRUS RESEARCH INSTITUTE, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(1) FINANCIAL STATEMENT PRESENTATION
The unaudited financial statements of Virus Research Institute, Inc. (the
"Company") herein have been prepared pursuant to the rules and regulations of
the Securities and Exchange Commission (SEC) and, in the opinion of management,
reflect all adjustments (consisting of normal recurring accruals) necessary to
present fairly the results of operations for the interim periods presented.
Certain information and footnote disclosure normally included in financial
statements prepared in accordance with generally accepted accounting principals
have been condensed or omitted pursuant to such rules and regulations; however,
management believes that the disclosures are adequate to make the information
presented not misleading. These financial statements and the notes thereto
should be read in conjunction with the financial statements and the notes
thereto included in the Company's Registration Statement on Form S-1 (Commission
File No. 333-3378). The results for the interim periods are not necessarily
indicative of the results for the full fiscal year.
(2) CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with original maturities of
three months or less to be cash equivalents. Cash equivalents are recorded at
cost,which approximates fair value.
(3) NET INCOME/(LOSS) PER SHARE
Net income/(loss) per common share is based on the weighted average number of
common shares (and common stock equivalents, where applicable) outstanding
during the periods presented, assuming, where applicable, the automatic
conversion of all shares of Series A, B, C, and D redeemable convertible
preferred stock then outstanding into 5,415,942 and 5,553,578 shares of common
stock at September 30, 1995 and 1996, respectively. Pursuant to the requirements
of the SEC, common stock and preferred stock issued during the 12 months
immediately preceding the initial public offering, plus shares of common stock
that became issuable during the same period pursuant to the grant of common
stock options and warrants, have been included in the calculation of weighted
average common shares outstanding for the periods prior to those ended September
30, 1996 using the treasury stock method.
During June 1996, all shares of Series A, B, C, and D redeemable convertible
preferred stock then outstanding were converted to common stock upon the closing
of the initial public offering.
(4) CONVERSION OF NOTES PAYABLE TO STOCKHOLDERS
During June 1996, the Company converted the $1,000,000 notes payable to
stockholders and $46,026 of accrued interest into 653,769 shares of Series C
redeemable convertible preferred stock which automatically converted into
217,923 shares of common stock upon the closing of the initial public offering
discussed in Note 6.
(5) SALE OF SERIES D PREFERRED STOCK
(6)
<PAGE> 7
During April 1996, The Company sold an aggregate of 294,844 shares of Series D
redeemable convertible preferred stock for net proceeds of approximately
$1,000,000. These preferred shares automatically converted into 98,282 shares of
common stock upon the closing of the initial public offering discussed in Note
6.
(6) INITIAL PUBLIC OFFERING
In June 1996, the company completed an initial public offering of 2,300,000
shares of common stock for $12.00 per share, resulting in net proceeds of
approximately $24.7 million. In addition, all outstanding shares of Series A, B,
C, and D redeemable convertible preferred stock were automatically converted
into 5,553,578 shares of common stock upon the closing of the initial public
offering.
(7)
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion of the financial condition and results of
operations of the Company for the three and nine months ended September 30, 1995
and 1996 should be read in conjunction with the accompanying unaudited financial
statements and the related notes thereto.
This report may contain certain forward looking statements which involve
risks and uncertainties. Such statements are subject to certain factors which
may cause the Company's plans and results to differ significantly from the plans
and results discussed in forward looking statements. Factors that may cause such
differences include, but are not limited to, the progress of the Company's
research and development programs, the Company's ability to compete successfully
with larger companies, risks of failure inherent in product development based on
new technologies and novel delivery systems, the Company's ability to attract
and retain qualified personnel, the Company's ability to enter into and maintain
collaborations with third parties, the Company's ability to enter into and
progress in clinical trials, the time and costs involved in obtaining regulatory
approvals, the costs involved in obtaining and enforcing patents, proprietary
rights and any necessary licenses, the ability of the Company to establish
development and commercialization capacities or relationships, the costs of
manufacturing, the Company's ability to obtain additional funds, and those other
risks discussed under the heading "Risk Factors" in the Prospectus dated June 5,
1996 included in the Company's Registration Statement on Form S-1, as amended
(File No. 333-3378).
OVERVIEW
Virus Research Institute, Inc. (the "Company") is engaged in the discovery
and development of vaccine delivery systems and improved and novel vaccines for
adults and children. The Company is developing a portfolio of proprietary
vaccine delivery systems designed to improve the efficacy, lower the cost of
administration and improve patient compliance for a variety of vaccine products.
The Company and its collaborators currently are applying the Company's vaccine
delivery systems to develop vaccines for the prevention of influenza, Lyme
disease, and H. pylori infections. The Company has entered into long-term
collaboration agreements with Pasteur Merieux Serums & Vaccins S.A. (Pasteur
Merieux), pursuant to which Pasteur Merieux may utilize the Company's vaccine
delivery systems in developing a number of vaccines. The
(8)
<PAGE> 9
Company is also developing its own proprietary vaccines utilizing antigens
licensed exclusively by the Company, including an oral vaccine for rotavirus
infection, a gastrointestinal disease of infants, and a vaccine for HSV2, the
virus causing genital herpes.
The Company is in the development stage and has devoted substantially all
of its resources to the research and development of its vaccine delivery systems
and vaccine candidates and general and administrative expenses. Through
September 30, 1996 the Company has not generated any revenue from product sales,
but has received an aggregate of $9,088,000 in revenues from licensing and
option agreements, research and development agreements and grants, and interest
income. There can be no assurance that the Company will receive any such revenue
in the future.
The Company has incurred losses since inception principally as a result of
expenditures under its research and development programs. The Company expects to
continue to incur significant operating losses over the next several years due
primarily to expanded research and development efforts, preclinical and clinical
testing of its product candidates, investment in new technologies, investment in
production capabilities for certain product candidates and the performance of
commercialization activities. The Company's results of operations may vary
significantly from quarter to quarter due to timing of license and milestone
payments and other factors.
NEW DEVELOPMENTS
The Company completed its initial public offering on June 11, 1996 in which
it sold 2,300,000 shares of Common Stock at a price of $12.00 per share. The net
proceeds to the Company from such sale totaled approximately $24.7 million, a
portion of which was used to repay indebtedness and the balance of which will be
devoted to research and development activities and for working capital and other
general corporate purposes.
In July 1996 the Company commenced a Phase I/II clinical trial of its
rotavirus vaccine candidate. The clinical trial is a double-blinded, placebo
controlled study designed to define the optimal vaccine dose and optimal age for
immunization. The Company plans that 120 infants will be enrolled in the study,
which is being conducted at Children's Hospital, Cincinnati, Ohio and Johns
Hopkins University, Baltimore, Maryland.
(9)
<PAGE> 10
In September 1996 Pasteur Merieux initiated a Phase I clinical trial of an
Adjumer[Trademark] formulated influenza vaccine in France. The study is the
first occasion in which Adjumer[Trademark] has been administered to human
volunteers and is designed to evaluate the safety of the Adjumer[Trademark]
formulated influenza vaccine. The initiation of this first clinical evaluation
of Adjumer[Trademark] resulted in a $2,000,000 milestone payment from Pasteur
Merieux.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995
The Company's total revenue increased by $2,189,000 to $2,686,000 in the
three months ended September 30, 1996 from $497,000 for the same period in 1995.
Licensing and option revenue in the 1996 quarter consisted of $2,000,000 for the
achievement of milestones pursuant to an agreement with Pasteur Merieux. The
Company reported licensing and option revenue of $30,000 for the 1995 quarter.
Revenue from research and development support agreements fell by $138,000 to
$312,000 for the 1996 quarter from $450,000 for the prior year quarter due to
reduced funding received pursuant to an agreement with SmithKline Beecham plc.
Interest income increased by $357,000 to $374,000 for the three months ended
September 30, 1996 compared with $17,000 for the 1995 quarter, principally due
to an increase in cash and cash equivalents, including the proceeds from the
company's initial public offering.
The Company's total expenses increased by $354,000 to $2,295,000 in the
three months ended September 30, 1996 from $1,941,000 in the 1995 quarter.
Research and development expenses decreased by $126,000 to $1,323,000 in the
three months ended September 30, 1996 from $1,449,000 in the prior year quarter
as a result of savings in polymer manufacturing and sponsored research expenses
offset by increases in operating expenses. General and administrative expenses
increased by $454,000 to $782,000 in the three months ended September 30, 1996
from $328,000 in the 1995 quarter which was principally the result of increases
in legal and patent costs and the payment of foreign withholding taxes
associated with milestone payments from Pasteur Merieux. Depreciation increased
$31,000 to $174,000 in the three months ended September 30, 1996 from $143,000
in the 1995 quarter principally due to the Company's increased investment in
laboratory equipment and improvements.
(10)
<PAGE> 11
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995
The Company's total revenue increased by $5,403,000 to $6,155,000 in the
nine months ended September 30, 1996 from $752,000 for the same period in 1995.
Licensing and option revenue in the 1996 period included $4,500,000 for the
achievement of milestones pursuant to an agreement with Pasteur Merieux.
Licensing and option revenue for the 1995 period amounted to $30,000. Research
and development revenue increased by $543,000 to $1,150,000 in the current
period from $607,000 for the same period last year. The increase was primarily
due to funding received pursuant to an agreement with Pasteur Merieux. Interest
income increased by $370,000 to $485,000 for the nine months ended September 30,
1996 compared with $115,000 for the 1995 period, principally due to an increase
in cash and cash equivalents, including the proceeds from the Company's initial
public offering.
The Company's total expenses decreased by $136,000 to $6,311,000 in the
nine months ended September 30, 1996 from $6,447,000 in the 1995 period.
Research and development expenses decreased by $556,000 to $3,956,000 in the
nine months ended September 30, 1996 from $4,512,000 in the prior year period
principally due to a reduction in outside consulting costs, the conclusion of
certain sponsored research agreements and a savings in polymer manufacturing
costs. General and administrative expenses increased by $230,000 to $1,698,000
in the nine months ended September 30, 1996 from $1,468,000 in the 1995 period
principally as a result of increased operating expenses and foreign tax
withholdings offset in part by lower legal expenses. Depreciation increased by
$84,000 to $518,000 in the nine months ended September 30, 1996 from $434,000 in
the 1995 period principally due to the Company's increased investment in
laboratory equipment and improvements. Other expenses increased by $106,000 to
$139,000 compared with $33,000 for the 1995 period, due to increased interest
costs associated with certain equipment leases entered into in 1995 and short
term loans entered into in 1996.
LIQUIDITY AND CAPITAL RESOURCES
From inception (February 11, 1991) through September 30, 1996, the
Company's cash expenditures have exceeded revenues. The Company's operations
have been funded principally through the sale of equity, loans from
stockholders, equipment lease financing and payments under licensing, options
and research and development agreements. Net cash used by the Company's
operations since inception was $21,327,000, primarily to fund research and
development efforts
(11)
<PAGE> 12
and general and administrative expenses. During the nine months ended September
30, 1996 , net cash of $662,000 was provided by operations, primarily as a
result of the $4,500,000 received from Pasteur Merieux for the achievement of
milestones. No significant milestone payments are anticipated in the near
future, which may result in negative cash flows in succeeding periods.
Since inception the Company has incurred $2,891,000 in capital
expenditures, primarily for leasehold improvements and equipment for the
Company's laboratories. During the nine months ended September 30, 1996 the
Company incurred $326,000 in capital expenditures primarily for improvements to
its polymer chemistry laboratory and related facilities. In total, the Company
anticipates incurring approximately $450,000 in capital expenditures during 1996
primarily on equipment necessary for the scale up of polyphosphazene
manufacturing.
From inception through September 30, 1996, the Company raised net proceeds
of approximately $51,789,000 through the sale of equity securities, including
net proceeds of $24,743,000 from the Company's initial public offering in 1996.
During the period, the Company borrowed an aggregate of $7,974,000 from certain
stockholders. Of the amount borrowed, an aggregate of $7,676,000 plus accrued
interest has been converted into common stock. In addition, from inception the
Company has funded $751,000 of capital expenditures through capital leases, of
which $648,000 in principal has been repaid through September 30, 1996. In April
1996, the Company entered into a loan agreement with a bank pursuant to which it
borrowed $1,000,000. The principal plus accrued interest on the loan was repaid
from the proceeds of the Company's initial public offering.
The Company expects to incur substantial additional costs, including those
related to research and development activities, preclinical studies, clinical
trials, obtaining regulatory approvals, process scale up and manufacture, and
the expansion of its facilities. The Company anticipates that its existing
funds, together with the proceeds from its initial public offering, and interest
earned thereon should be sufficient to fund its operating and capital
requirements as currently planned for the next twenty four months. However, the
Company's cash requirements may vary materially from those now planned, due to
many factors, including, but not limited to, the progress of the Company's
research and development programs, the scope and results of preclinical and
clinical testing, changes in existing and potential relationships with corporate
collaborators, the time and cost in obtaining regulatory approvals, the costs
involved in obtaining and enforcing patents, proprietary rights and any
necessary licenses, the ability of the Company to
(12)
<PAGE> 13
establish development and commercialization capacities or relationships, the
costs of manufacturing and other factors. The Company may need to raise
substantial additional funds through additional financing, including public or
private equity offerings and collaborations with corporate partners. There can
be no assurance that funds will be available on terms acceptable to the Company,
if at all. If adequate funds are not available, the Company may be required to
delay, scale back, or eliminate certain of its product development programs or
to license to others the right to commercialize products or technologies the
Company would otherwise seek to develop and commercialize itself, any of which
would have a material adverse effect on the Company.
(13)
<PAGE> 14
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
Not applicable
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on from 8-K
(a) Exhibits:
11.1 Statement regarding computation of earnings per share
27.1 Financial Data Schedule
(14)
<PAGE> 15
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.
Dated: November 5, 1996
VIRUS RESEARCH INSTITUTE, INC.
a Delaware Corporation
(Registrant)
By: /S/ J. Barrie Ward
- ---------------------------------------------------------------
J. Barrie Ward
Chief Executive Officer
By: /S/ William A. Packer
- ---------------------------------------------------------------
William A. Packer
President, Chief Financial Officer
(15)
<PAGE> 1
ITEM 6
EXHIBIT 11.1 STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE
VIRUS RESEARCH INSTITUTE, INC.
(A DEVELOPMENT STAGE COMPANY)
<TABLE>
COMPUTATION OF NET INCOME (LOSS) PER COMMON SHARE
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1995 1996 1995 1996
----------------------------------------------------------
<S> <C> <C> <C> <C>
Net income (loss) $(1,443,975) $ 391,184 $(5,695,082) $ (156,314)
Shares used in computing net
income (loss) per common share:
Weighted average common stock
outstanding during the period 689,091 3,256,948 688,302 1,726,851
Conversion of redeemable
convertible preferred stock (1) 5,415,942 5,553,578 5,415,942 5,510,982
Dilutive effect of common
equivalent shares -- "cheap stock" (2) 286,783 N/A 286,783 N/A
Common stock equivalents (3) N/A 728,931 N/A N/A
Weighted average common shares
---------------------------------------------------------
outstanding 6,391,816 9,539,457 6,391,027 7,237,833
Net income (loss) per common
share $ (0.23) $ 0.04 $ (0.89) $ (0.02)
<FN>
(1) Effective with the closing of the Company's initial public offering of common stock, redeemable
convertible preferred stock converted into shares of common stock. Accordingly, the equivalent
number of weighted average common shares that would have been outstanding during each period
presented have been included as outstanding.
(2) Pursuant to Securities and Exchange Commission Staff Accounting Bulletin No. 83, common stock,
preferred stock, stock options and warrants issued at prices below the initial public offering price
per share ("cheap stock") during the twelve month period immediately preceding the filing of the
Company's Registration Statement for its initial public offering have been included as common
equivalents for periods prior to the initial public offering.
(3) No common stock equivalents have been included in the nine month period ended September 30, 1996 as
their effect would be antidilutive.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THIRD
QUARTER 1996 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
PROSPECTUS FILED ON FROM S-1 DATED JUNE 5, 1996.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 16,893,340
<SECURITIES> 10,733,808
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 28,103,067
<PP&E> 2,873,880
<DEPRECIATION> (1,860,098)
<TOTAL-ASSETS> 29,193,258
<CURRENT-LIABILITIES> 1,717,493
<BONDS> 0
<COMMON> 8,819
0
0
<OTHER-SE> 27,347,686
<TOTAL-LIABILITY-AND-EQUITY> 29,193,258
<SALES> 6,155,440
<TOTAL-REVENUES> 6,155,440
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 6,172,365
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 139,389
<INCOME-PRETAX> (156,314)
<INCOME-TAX> 0
<INCOME-CONTINUING> (156,314)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (156,314)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
