<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, 1997
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or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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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 October 31, 1997, there were 8,928,089 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 September 30, 1997 and
December 31, 1996..............................................3
Statements of Operations for the Three Months
Ended September 30, 1997 and 1996, for the Nine
Months Ended September 30, 1997 and 1996, and for
the Period from Inception through September 30, 1997...........4
Statements of Cash Flows for the Nine Months
Ended September 30, 1997 and 1996, and for
the period from Inception through September 30, 1997...........5
Notes to Financial Statements ..................................6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..............................7
PART II - OTHER INFORMATION
Item 1. Legal Proceedings..............................................13
Item 2. Changes in Securities..........................................13
Item 3. Defaults upon Senior Securities................................13
Item 4. Submission of Matters to a Vote of Security Holders............13
Item 5. Other Information..............................................13
Item 6. Exhibits and Reports on Form 8-K...............................13
SIGNATURES .................................................................14
(2)
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VIRUS RESEARCH INSTITUTE, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,962,727 $ 15,209,180
Marketable securities 18,427,148 10,339,985
Interest receivable 322,709 218,285
Prepaid expenses 333,117 220,534
Other current assets 343,493 659
------------ ------------
Total current assets 21,389,194 25,988,643
Noncurrent assets:
Marketable securities 0 499,891
Leasehold improvements and equipment (net of
accumulated depreciation and amortization of
$2,327,560 at September 30, 1997 and
$2,015,483 at December 31, 1996) 779,767 881,363
Other assets 44,803 67,634
------------ ------------
Total noncurrent assets 824,570 1,448,888
------------ ------------
Total assets $ 22,213,764 $ 27,437,531
============ ============
Current liabilities:
Accounts payable $ 94,765 $ 43,809
Accrued consulting and research fees 666,238 810,677
Other accrued expenses 676,440 412,759
Deferred revenue 79,445 0
Current portion of lease obligation payable 103,151 155,079
------------ ------------
Total current liabilities 1,620,039 1,422,324
Lease obligation payable, less current portion 7,493 64,351
Stockholders' equity:
Preferred stock -- $.001 par value; 5,000,000 shares
authorized, none issued
Common stock -- $.001 par value; 30,000,000 shares authorized; 8,914,327
shares issued at September 30, 1997
and 8,845,027 shares issued at December 31, 1996 8,914 8,845
Additional paid-in capital 51,929,819 51,907,179
Deficit accumulated during the development stage (31,352,501) (25,965,168)
------------ ------------
Total stockholders' equity 20,586,232 25,950,856
------------ ------------
Total liabilities and stockholders' equity $ 22,213,764 $ 27,437,531
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
(3)
<PAGE> 4
VIRUS RESEARCH INSTITUTE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED CUMULATIVE
SEPTEMBER 30, SEPTEMBER 30, SINCE INCEPTION
1997 1996 1997 1996 (1991)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
REVENUE:
Licensing and option revenue $ 2,222 $2,000,000 $ 252,222 $4,520,000 $ 6,242,222
Research and development revenue 150,000 312,500 924,982 1,150,000 3,490,180
Interest income 334,484 373,548 1,007,080 485,440 2,231,612
----------- ---------- ----------- ---------- ------------
TOTAL REVENUE 486,706 2,686,048 2,184,284 6,155,440 11,964,014
EXPENSES:
Research and development 1,947,510 1,322,673 5,320,071 3,956,307 29,329,551
General and administrative 541,617 781,530 1,888,468 1,698,006 10,852,827
Depreciation 83,330 174,390 312,077 518,052 2,429,908
Interest expense 16,006 16,271 51,001 139,389 704,229
----------- ---------- ----------- ---------- ------------
TOTAL EXPENSES 2,588,463 2,294,864 7,571,617 6,311,754 43,316,515
----------- ---------- ----------- ---------- ------------
NET INCOME (LOSS) $(2,101,757) $ 391,184 $(5,387,333) $ (156,314) $(31,352,501)
=========== ========== =========== ========== ============
Net income (loss) per share $ (0.24) $ 0.04 $ (0.61) $ (0.02)
=========== ========== =========== ==========
Weighted average common shares
outstanding 8,908,229 9,539,457 8,887,840 7,237,833
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
(4)
<PAGE> 5
VIRUS RESEARCH INSTITUTE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED CUMULATIVE
SEPTEMBER 30, SINCE INCEPTION
1997 1996 (1991)
-------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (5,387,333) $ (156,314) $(31,352,501)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 318,070 542,803 2,478,435
Conversion of accrued interest to preferred stock 0 46,026 58,373
Changes in operating assets and liabilities:
Increase in prepaid expenses
and other assets (537,009) (210,084) (920,994)
Increase in accounts payable and accrued expenses 170,199 127,566 1,437,443
Increase in deferred revenue 79,445 312,500 79,445
------------ ------------ ------------
Net cash provided by (used in) operating activities (5,356,628) 662,497 (28,219,799)
Cash flows from investing activities:
Purchases of marketable securities, net (7,587,272) (10,733,808) (18,427,148)
Capital expenditures (210,481) (326,346) (3,124,773)
Other 0 0 (46,182)
------------ ------------ ------------
Net cash used in investing activities (7,797,753) (11,060,154) (21,598,103)
Cash flows from financing activities:
Proceeds from notes payable 0 0 7,973,668
Sale and leaseback related to capital acquisitions 0 0 751,311
Principal payments on lease obligations (114,780) (138,171) (798,975)
Sale of common stock 22,708 27,618,385 27,712,567
Sale of preferred stock 0 1,500,140 19,258,613
Offering costs 0 (2,869,533) (3,112,941)
Founders' shares reacquired 0 0 (846)
Purchase of treasury stock 0 0 (2,768)
------------ ------------ ------------
Net cash provided by (used in) financing activities (92,072) 26,110,821 51,780,629
Net increase (decrease) in cash and cash equivalents (13,246,453) 15,713,164 1,962,727
Cash and cash equivalents, beginning of period 15,209,180 1,180,176 0
Cash and cash equivalents, end of period $ 1,962,727 $ 16,893,340 $ 1,962,727
============ ============ ============
Supplemental disclosure of cash flow information:
Interest paid during the period $ 22,170 $ 42,007 $ 252,833
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
(5)
<PAGE> 6
VIRUS RESEARCH INSTITUTE, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(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 Annual Report on Form 10-K for the fiscal year
ended December 31, 1996. The results for the interim period presented are not
necessarily indicative of the results for the full fiscal year.
(2) NET INCOME (LOSS) PER COMMON SHARE
The net income (loss) per common share and shares used in computing net
income (loss) per common share for the nine months ended September 30, 1996 are
presented on a pro forma basis and are based on the weighted average number of
common shares outstanding during the period presented and reflect the automatic
conversion of all preferred stock then outstanding into common stock.
(6)
<PAGE> 7
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, 1997
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 made in reliance upon safe harbor
provisions of the Private Securities Litigation Reform Act of 1995 and 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 ability of the Company's contractors to enroll infants in the
Phase II rotavirus clinical trial to meet current schedules; (ii) the scope and
results of preclinical and clinical testing, including the further review of
the Phase I and Phase II Adjumer(TM)-formulated influenza vaccine results and
further clinical or preclinical testing after evaluation of the results; (iii)
progress of the Company's research and development programs, including further
development of the Adjumer(TM) delivery system; (iv) changes in existing and
potential relationships with corporate collaborators; (v) the Company's
ability to compete successfully with larger companies; (vi) risks of failure
inherent in product development based on new technologies and novel delivery
systems; (vii) the Company's ability to attract and retain qualified personnel;
(viii) the time and costs of obtaining regulatory approvals, patents,
proprietary rights and licenses; (ix) the costs of manufacturing; and (x) the
Company's ability to obtain additional funds.
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 Connaught (PMC), Pasteur
Merieux-OraVax (PM-O) and CSL, Ltd. pursuant to which they may utilize the
Company's vaccine delivery systems in developing a number of vaccines. The
Company is also developing its own proprietary vaccines utilizing antigens
licensed exclusively by the Company. These vaccines include an oral vaccine for
rotavirus disease, which is a gastrointestinal disease of infants, and a vaccine
for the virus causing genital herpes, HSV2.
(7)
<PAGE> 8
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, 1997, the Company has not generated any revenue from product
sales, but has received an aggregate of $11,964,000 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 such
revenue in the future.
The Company has realized losses in every year since inception, principally
as a result of expenditures incurred in 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 expenditures for commercialization activities. The Company's
results of operations may vary significantly from quarter to quarter and year to
year due to the timing of license and milestone payments, development
expenditures and other factors.
NEW DEVELOPMENTS
Preliminary results from the Company's Phase I/II clinical trial of its
rotavirus vaccine candidate became available during the first quarter of 1997.
The clinical trial was a double-blinded, placebo controlled study designed to
define the optimal vaccine dose and optimal age for immunization. The results
demonstrated that the vaccine was generally well tolerated in younger infants
and elicited broad immune responses in all infants. Based on these findings and
the results of an earlier Phase I study, the Company initiated a Phase II
efficacy study during the second quarter of 1997. This trial is designed to
examine the vaccine's ability to prevent rotavirus disease and to further study
the safety of the vaccine. Approximately 240 infants will be enrolled in the
trial which is being conducted at four U.S. medical centers. Results from the
study are expected to be available during 1998. The Company cautions investors
that the presence of statistically significant results in one clinical trial
does not ensure that these results will be repeated in any subsequent trials.
(8)
<PAGE> 9
Based on the results of a Phase I clinical trial, the Company's
collaborator, PMC, initiated a Phase II safety and immunogenicity clinical
trial of an Adjumer(TM)-formulated influenza vaccine earlier in 1997.
Preliminary results of the Phase II clinical trial, which was conducted in
Peru by PMC, show that the Adjumer(TM)-formulated influenza vaccine was well
tolerated. However, results of the Phase II study appear to be inconsistent in
certain respects with Phase I results. The degree of improvement in immune
responses elicited by the Adjumer(TM) influenza vaccine was less in
comparison to the control group than was elicited in the Phase I study. At
the same time, certain control group results also appear to be significantly
higher in Phase II than in Phase I.
A total of 430 elderly adults participating in the initial Phase II study
conducted in Peru were given single injections of either the vaccine formulated
with Adjumer(TM) or the same vaccine without Adjumer(TM). A total of 48 young
and 41 elderly adults participated in the earlier Phase I study conducted
in France. The Company and PMC are currently analyzing and assessing the
results to determine the appropriate next steps to take with the clinical
development of the product. The Adjumer(TM) research and development program
with PMC, which encompasses a number of additional vaccine products, continues.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1997 AND SEPTEMBER 30, 1996
Total revenue declined by $2,199,000 to $487,000 for the three months ended
September 30, 1997 from $2,686,000 for the same period in 1996. Licensing and
option revenue in 1996 consisted of $2,000,000 for the achievement of milestones
pursuant to an agreement with PMC. During the three months ended September 30,
1997, the Company's licensing and option revenue totaled $2,000. Research and
development revenue declined $162,000 to $150,000 for the quarter ended
September 30, 1997 from $312,000 for the same period in 1996. The decrease is
attributable to the completion, at the end of the second quarter of 1997, of a
support agreement with PMC. This decline was partially offset by revenue earned
in the quarter ended September 30, 1997 from agreements with CSL and Chiron.
Interest income declined by $39,000 to $335,000 for the three months ended
September 30, 1997 from $374,000 for the 1996 quarter. The Company's cash, cash
equivalents and marketable securities balance has declined during subsequent
quarters, resulting in a reduction in interest income for the quarter ended
September 30, 1997.
Total expenses increased $294,000 to $2,589,000 for the three months ended
September 30, 1997 from $2,295,000 for the same period in 1996. The increase is
attributable to a $625,000 increase in research and development expenditures
from $1,323,000 for the three months ended September 30, 1996 to $1,948,000 for
the 1997 period principally due to an increase in
(9)
<PAGE> 10
costs associated with the polyphosphazene manufacturing process and an
increase in rotavirus clinical trial costs. General and administrative
costs declined by $240,000 from $782,000 in 1996 to $542,000 in 1997 primarily
due to a reduction in foreign withholding taxes associated with milestone
payments from PMC and reduced patent expenses. Depreciation expense declined
$91,000 to $83,000 for the second quarter of 1997 from $174,000 in 1996 due
to various leasehold improvements being fully depreciated. Interest expense
remained constant at $16,000 for the quarters ended September 30, 1996 and 1997.
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND SEPTEMBER 30, 1996
The Company's total revenue decreased $3,971,000 from $6,155,000 for the
nine months ended September 30, 1996 to $2,184,000 for the 1997 year to date
period. Licensing and option revenue declined by $4,268,000 from $4,520,000 in
1996 to $252,000 in 1997. This decrease is the result of a reduction in
milestone payments pursuant to an agreement with PMC. Research and development
revenue declined by $225,000, from $1,150,000 for the nine months ended
September 30, 1996 to $925,000 for the 1997 period. The decrease is primarily
attributable to the completion, in 1997, of a support agreement with PMC,
partially offset by revenue earned from an agreement with Chiron. Interest
income increased by $522,000 to $1,007,000 for the nine months ended September
30, 1997 from $485,000 for the 1996 period due to interest earned from the
proceeds of the Company's initial public offering in June 1996.
Total expenses for the nine months ended September 30, 1997 increased by
$1,260,000 to $7,571,000 in 1997 from $6,311,000 in 1996. Research and
development expenses increased $1,364,000 to $5,320,000 for the nine months
ended September 30, 1997 from $3,956,000 in the prior year due primarily to an
increase in costs associated with the polyphosphazene manufacturing process and
the rotavirus clinical trial studies. General and administrative expenses
increased by $190,000 to $1,888,000 for the 1997 period from $1,698,000 in 1996.
The increase is principally attributable to higher corporate investor relations
and company wide benefits costs, partially offset by a reduction in foreign
withholding taxes associated with milestone payments from PMC.
(10)
<PAGE> 11
Depreciation expense declined $206,000 to $312,000 for the nine months ended
September 30, 1997 from $518,000 for the prior year period due principally to
the full depreciation of various leasehold improvements. Interest expense
declined by $88,000 to $51,000 in 1997 from $139,000 in 1996 due to reduced
interest costs associated with certain short term loans entered into in 1995 and
1996. These short term loans were converted into common stock upon the
completion of the Company's initial public offering.
LIQUIDITY AND CAPITAL RESOURCES
From inception (February 11, 1991) through September 30, 1997, 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, option and
research and development agreements. Net cash used by the Company's operations
since inception through September 30, 1997 was $28,220,000, primarily to fund
research and development activities and general and administrative expenses.
Since inception the Company has incurred $3,125,000 in capital expenditures,
primarily for leasehold improvements and equipment for the Company's
laboratories. During the nine months ended September 30, 1997 the Company has
incurred $210,000 in capital expenditures principally for equipment necessary
for the scale up of polyphosphazene manufacturing. The Company currently
anticipates incurring approximately $300,000 in capital expenditures during
1997, primarily on equipment related to polyphosphazene manufacturing.
From inception through September 30, 1997, the Company raised net proceeds of
approximately $51,828,000 through the sale of equity securities. Included in
this amount are net proceeds of $24,743,000 from the Company's initial public
offering in 1996 and the conversion to common stock of an aggregate of
$7,974,000 in notes payable to certain stockholders.
(11)
<PAGE> 12
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
investment in its facilities. The Company anticipates that its existing funds,
which include the proceeds from its initial public offering and interest earned
thereon, should be sufficient to fund its operating and capital requirements as
currently planned through the end of 1998. 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 establish development and commercialization
capacities or relationships, the costs of manufacturing and other factors. In
the future, 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 could have a material
adverse effect on the Company.
(12)
<PAGE> 13
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 Form 8-K
(a) Exhibits:
11.1 Statement regarding computation of earnings per share
27.1 Financial Data Schedule
(b) No reports on Form 8-K were filed by the Company during the
quarter ended September 30, 1997.
(13)
<PAGE> 14
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 14, 1997
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
(14)
<PAGE> 1
ITEM 6
EXHIBIT 11.1 STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE
VIRUS RESEARCH INSTITUTE, INC.
(A DEVELOPMENT STAGE COMPANY)
COMPUTATION OF NET INCOME (LOSS) PER COMMON SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Net income (loss) $(2,101,757) $ 391,184 $(5,387,333) $ (156,314)
Shares used in computing net income (loss) per common share:
Weighted average common stock
outstanding during the period (1) 8,908,229 8,810,526 8,887,840 7,237,833
Common stock equivalents (2) N/A 728,931 N/A N/A
----------- ---------- ----------- ----------
Weighted average common shares outstanding 8,908,229 9,539,457 8,887,840 7,237,833
Net income (loss) per common share $ (0.24) $ 0.04 $ (0.61) $ (0.02)
=========== ========== =========== ==========
</TABLE>
(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 the nine months ended
September 30, 1996 have been included as outstanding.
(2) No common stock equivalents have been included in the three and nine months
ended September 30, 1997 and the nine months ended September 30, 1996 as
their effect would be antidilutive.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM VIRUS
RESEARCH INSTITUTE 1997 THIRD QUARTER 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY
REFERNCE TO SUCH ANNUAL REPORT ON FORM 10-K 12/31/96
</LEGEND>
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 1,962,727
<SECURITIES> 18,427,148
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 21,389,194
<PP&E> 3,107,327
<DEPRECIATION> (2,327,560)
<TOTAL-ASSETS> 22,213,764
<CURRENT-LIABILITIES> 1,620,039
<BONDS> 0
0
0
<COMMON> 8,914
<OTHER-SE> 20,577,318
<TOTAL-LIABILITY-AND-EQUITY> 22,213,764
<SALES> 0
<TOTAL-REVENUES> 2,184,284
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7,571,617
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (5,387,333)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,387,333)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,387,333)
<EPS-PRIMARY> (0.61)
<EPS-DILUTED> (0.61)
</TABLE>
