<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-QSB
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______________ TO
________________.
Commission file number 0-22170
EPOCH PHARMACEUTICALS, INC.
(exact name of small business issuer as specified in its charter)
Delaware 91-1311592
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
1725 220th Street, S.E., No. 104, Bothell, Washington 98021
(Address of principal executive offices)
(425) 485-8566
(Issuer's telephone number)
NOT APPLICABLE
-------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports 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 X NO
----- -----
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date.
Class Outstanding at August 7, 1998
----- -----------------------------
Common Stock, $.01 par value 14,824,227
Page 1 of 13 Pages
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EPOCH PHARMACEUTICALS, INC.
INDEX TO FORM 10-QSB
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page Number
<S> <C>
Item 1. Financial Statements
Balance Sheets as of December 31, 1997
and June 30, 1998 (unaudited)........................................... 3
Statements of Operations (unaudited) for the three
months and six months ended June 30, 1997 and 1998...................... 4
Statements of Cash Flows (unaudited) for the six months ended
June 30, 1997 and 1998.................................................. 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 4. Submission of Matters to a Vote of Security Holders........................ 11
Item 6. Exhibits and Reports on Form 8-K........................................... 12
NOTE: Items 1-3 and 5 are omitted as they are not applicable.
SIGNATURE ............................................................................. 13
</TABLE>
<PAGE> 3
EPOCH PHARMACEUTICALS, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30, 1998
1997 (UNAUDITED)
------------ -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.............................. $ 1,485,483 $ 2,557,565
Receivables............................................ 63,287 61,972
Prepaid expenses....................................... 38,801 39,388
------------ ------------
Total current assets............................... 1,587,571 2,658,925
Equipment and leasehold improvements, net.................. 160,011 205,951
Other assets ............................................ 65,064 95,350
------------ ------------
Total assets....................................... $ 1,812,646 $ 2,960,226
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable....................................... $ 236,970 $ 257,204
Accrued liabilities.................................... 226,549 354,807
------------ ------------
Total current liabilities.......................... 463,519 612,011
------------ ------------
Note payable -- 3,000,000
Stockholders' equity:
Preferred stock, par value $.01; authorized 10,000,000
shares; no shares issued and outstanding........... -- --
Common stock, par value $.01; authorized
30,000,000 shares; issued and outstanding
14,814,793 shares at December 31, 1997
and June 30, 1998.................................. 148,148 148,242
Additional paid-in capital............................. 52,930,787 54,470,107
Deferred financing expense............................. -- (1,312,153)
Accumulated deficit.................................... (51,729,808) (53,957,981)
------------ ------------
Total stockholders' equity......................... 1,349,127 (651,785)
------------ ------------
Total liabilities and stockholders' equity......... $ 1,812,646 $ 2,960,226
============ ============
</TABLE>
See accompanying notes to financial statements.
3
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EPOCH PHARMACEUTICALS, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTH ENDED
JUNE 30, JUNE 30,
-------------------------- ---------------------------
1997 1998 1997 1998
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
Research contract revenue...................... $ 46,191 $ 43,589 $ 89,711 $ 84,372
Operating expenses:
Research and development..................... 632,342 699,040 1,280,576 1,402,187
General and administrative................... 358,678 378,537 813,669 754,022
---------- ----------- ----------- -----------
Total operating expenses................... 991,020 1,077,577 2,094,245 2,156,209
---------- ----------- ----------- -----------
Operating loss............................. (944,829) (1,033,988) (2,004,534) (2,071,837)
Other income (expense):
Interest income.............................. 45,154 39,639 97,176 66,087
Interest and financing expense............... (982) (258,047) (1,593) (305,514)
Other income................................. 40,240 3,136 71,508 23,091
---------- ----------- ----------- -----------
Loss from continuing operations............ (860,417) (1,249,260) (1,837,443) (2,288,173)
Discontinued operations -
gain on disposal of Diagnostics Division..... 50,000 30,000 70,000 60,000
---------- ----------- ----------- -----------
Net loss................................... $ (810,417) $(1,219,260) $(1,767,443) $(2,228,173)
========== =========== =========== ===========
Loss per share from continuing operations -
basic and diluted............................ $ (0.06) $ (0.06) $ (0.12) $ (0.15)
Income per share from discontinued operations -
basic and diluted............................ -- -- -- --
------------ ----------- ----------- -----------
Loss per share - basic and diluted............. $ (0.06) $ (0.06) $ (0.12) $ (0.15)
============ =========== =========== ===========
Weighted average number of common shares
outstanding - basic and diluted................ 14,743,934 14,814,793 14,736,774 14,814,793
</TABLE>
See accompanying notes to financial statements.
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EPOCH PHARMACEUTICALS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-------------------------------
1997 1998
------------ -------------
<S> <C> <C>
Cash flows from operating activities:
Net loss.............................................. $(1,767,443) $(2,228,173)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization......................... 97,130 28,017
Amortization of deferred financing expense............ -- 222,400
Changes in operating assets and liabilities:
Receivables, prepaid expenses, and other assets....... 46,006 (29,558)
Accounts payable and accrued liabilities.............. 80,382 148,492
----------- -----------
Net cash used in operating activities................. (1,543,925) (1,858,822)
----------- -----------
Cash used in investing activities - acquisition of
equipment and leasehold improvements.................... (19,275) (73,957)
----------- -----------
Cash flows from financing activities:
Proceeds from notes payable........................... -- 3,000,000
Principal payments on notes payable................... (5,427) --
Exercise of stock options............................. 11,222 4,861
----------- -----------
Net cash provided by financing activities............. 5,795 3,004,861
----------- -----------
Net increase (decrease) in cash and cash equivalents...... (1,557,408) 1,072,082
Cash and cash equivalents at beginning of period.......... 4,890,358 1,485,483
----------- -----------
Cash and cash equivalents at end of period................ $ 3,332,950 $ 2,557,565
=========== ===========
Supplemental disclosure of cash flow information-cash
payments made during the period for interest....... $ 1,593 $ --
=========== ===========
</TABLE>
See accompanying notes to financial statements.
5
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EPOCH PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
(UNAUDITED)
NOTE (1) BASIS OF PRESENTATION
Epoch Pharmaceuticals, Inc. ("Epoch" or the "Company") (formerly MicroProbe
Corporation) is a biomedical company focused on the development of
oligonucleotides (short chains of nucleotides which are the building blocks of
DNA and RNA) as new biologically useful compounds. Utilizing unique and
proprietary technology in the rational design, synthesis and chemical
modification of oligonucleotides, the Company has been developing a gene-therapy
approach to inactivate or reverse mutate disease associated genes.
Epoch's therapeutic research and development program has focused on the
modification of gene expression by altering cellular genomic DNA using
oligonucleotide targeting technology combined with chemical reactivity. The
Company's technology is based on its expertise in designing and synthesizing
oligonucleotides bearing modifications that selectively bind to and interact
with the target genes.
Epoch has recently discovered that the compounds and techniques that were being
developed for its gene modification therapeutic program can be adapted to
several gene sequencing analysis systems currently in use or being developed by
others. The Company believes that this technology has broad application
potential in the developing fields of molecular diagnostics and genomics,
including the detection of infectious diseases, inheritable diseases through
prenatal testing, screening populations to identify genetic markers that
correlate with disease risk or drug response, as well as any other genetic
analysis based on DNA sequence determination.
The unaudited financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-QSB. Accordingly, they do not include all of
the information and footnotes required to be presented for complete financial
statements. The accompanying financial statements include all adjustments
(consisting only of normal recurring accruals) which are, in the opinion of
management, necessary for a fair presentation of the results for the interim
periods presented. Certain 1997 balances have been reclassified to conform with
the 1998 presentation.
The financial statements and related disclosures have been prepared with the
presumption that users of the interim financial information have read or have
access to the audited financial statements for the preceding fiscal year.
Accordingly, these financial statements should be read in conjunction with the
audited financial statements and the related notes thereto included in the
Company's Annual Report on Form 10-KSB as filed with the Securities and Exchange
Commission on April 14, 1998.
NOTE (2) LOSS PER SHARE
In 1997, the Company adopted Statement of Financial Accounting Standards (SFAS)
No. 128, Earnings Per Share. This statement establishes standards for computing
and presenting earnings per share (EPS), replacing the presentation of primary
EPS with a presentation of Basic EPS. For
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entities with complex capital structures, the statement requires the dual
presentation of both Basic EPS and diluted EPS on the face of the statement of
operations. Under this new statement, Basic EPS is computed based on weighted
average shares outstanding and excludes any potential dilution. Diluted EPS
reflects potential dilution from the exercise or conversion of securities into
common stock or from other contracts to issue common stock and is similar to the
previously required fully diluted EPS. Basic EPS and diluted EPS have been
restated for the three and six months ended June 30, 1997. The capital structure
of the Company includes stock options and stock warrants. At June 30, 1998,
there were 1,107,016 options outstanding to purchase the common stock of the
Company with exercise prices ranging from $0.30 to $10.00. Also outstanding at
June 30, 1997 were 8,470,050 warrants to purchase the common stock of the
Company with exercise prices ranging from $0.30 to $10.40 per share. The assumed
conversion and exercise of these securities have been excluded from Diluted EPS
as their effect is anti-dilutive.
NOTE (3) NOTE PAYABLE
In February 1998, Bay City Capital Fund I LP ("BCC Fund I"), San Francisco,
California, loaned $3,000,000 to the Company as a bridge to the earlier of a
public rights offering, other financing, or February 25, 2000. The loan is
accruing interest at 8% per annum. In the event of a rights offering, BCC Fund I
has agreed, subject to certain conditions, to convert the loan into equity to
the extent that the current stockholders do not subscribe for their
proportionate share of the offering. In partial consideration for the bridge
loan and BCC Fund I's agreement to purchase excess shares, if any, in a rights
offering, BCC Fund I received a warrant to purchase 2,000,000 shares of Epoch's
Common Stock at a price of $0.90 per share. Bay City Capital LLC, which manages
BCC Fund I, is a merchant banking partnership that was formed by The Craves
Group and The Pritzker Family business interests. The founding partner of The
Craves Group, Fred Craves, Ph.D., is the Chairman and CEO of Epoch. Sanford S.
Zweifach, Epoch's President and Chief Financial Officer, is also the Chief
Financial Officer of Bay City Capital LLC.
The Company has recorded deferred financing expense of approximately $1,535,000
in connection with the issuance of these warrants to purchase 2,000,000 shares
of Epoch's Common Stock. This deferred financing expense is being amortized over
the two year term of the note. Deferred financing expense recognized in the six
months ended June 30, 1998 was approximately $222,000.
NOTE (4) NEW FACILITIES
The Company is in negotiations for a lease on approximately 21,000 square feet
in the general vicinity of its current facility. The space is on the second
floor of a three building project located within a major business park in
Bothell, Washington. A design build team has been selected and is working on
plans for the new space. Execution of the building lease and construction
contracts is anticipated in August, 1998, and occupancy of the building is
planned for October, 1998. The lease terms are for an initial term of 5 years
with an additional 5 year option period. The initial monthly lease payment will
be approximately $26,000.
The current projected cost estimates for leasehold improvements and moving costs
is $1,889,000.
The Company is presently in negotiations to secure financing for these
anticipated expenses. The Company anticipates the completion of these
transactions, but there is no guarantee the lease
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or construction documents will be on terms acceptable to the Company, if at all.
Nor can occupancy of the space as planned in October 1998 be assured.
NOTE (5) ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Standards (SFAS) No. 130, Reporting Comprehensive Income. This
statement establishes standards for the reporting and display of comprehensive
income and its components in a full set of general-purpose financial statements.
The purpose of reporting comprehensive income is to report a measure of all
changes in equity of an enterprise that result from recognized transactions and
other economic events of the period other than transactions with owners in their
capacity as owners. SFAS 130 is effective for financial statements issued for
earlier periods ending after December 15, 1997, including interim periods. Other
than net losses, the Company did not have any items of comprehensive income or
loss during the year ended December 31, 1997, or during the period ended June
30, 1998. As a result, a separate statement of comprehensive income is not
included with the financial statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS; PLAN OF OPERATIONS
At June 30, 1998, the Company had cash and cash equivalents of $2,557,565 which
provides sufficient liquidity to operate until early 1999, based on the
Company's current plan of operation, exclusive of the cost associated with the
new facility. The Company's continuing operations are research and development,
and will not generate working capital in the near term to fund future
operations.
The Company is in negotiations for a lease on approximately 21,000 square feet
in the general vicinity of its current facility. The space is on the second
floor of a three building project located within a major business park in
Bothell, Washington. A design build team has been selected and is working on
plans for the new space. Execution of the building lease and construction
contracts is anticipated in August, 1998, and occupancy of the building is
planned for October, 1998. The lease terms are for an initial term of 5 years
with an additional 5 year option period. The initial monthly lease payment will
be approximately $26,000.
The current projected cost estimates for leasehold improvements and moving costs
is $1,889,000.
The Company is presently in negotiations to secure financing for these
anticipated expenses. The Company anticipates the completion of these
transactions, but there is no guarantee the lease or construction documents will
be on terms acceptable to the Company, if at all. Nor can occupancy of the space
as planned in October 1998 be assured.
Since inception, the Company has financed its operations primarily through the
sales of its equity securities. In addition, the Company received $8,510,000
from the sale of the diagnostics division. To continue operations, the Company
will be required to sell additional equity securities, borrow additional funds,
or obtain additional financing through licensing, joint venture, or other
collaborative arrangements. The Company is pursuing such financing arrangements
but has no commitments for such financing and there can be no assurance that
such financing will be available on satisfactory terms, if at all.
8
<PAGE> 9
This Quarterly Report on Form 10-QSB contains certain forward-looking statements
that are based on current expectations. In light of the important factors that
can materially affect results, including those set forth below and elsewhere in
this Quarterly Report on Form 10-QSB, the inclusion of forward-looking
information herein should not be regarded as a representation by the Company or
any other person that the objectives or plans of the Company will be achieved.
The Company may encounter competitive, technological, financial and business
challenges making it more difficult than expected to continue to develop
therapeutic technologies and products; the market may not accept the Company's
therapeutic products; the Company may be unable to retain existing key
management personnel; and there may be other material adverse changes in the
Company's operations or business. Certain important factors affecting the
forward-looking statements made herein include, but are not limited to (i) the
successful development of viable therapeutic technologies and products, (ii)
accurately forecasting capital expenditures, and (iii) obtaining new sources of
external financing. Assumptions relating to budgeting, product development and
other management decisions are subjective in many respects and thus susceptible
to interpretations and periodic revisions based on actual experience and
business developments, the impact of which may cause the Company to alter its
operating, capital expenditure or other budgets, which may in turn affect the
Company's financial position and results of operations.
Future operating results may be impacted by a number of factors that could cause
actual results to differ materially from those stated herein, which reflect
management's current expectations. These factors include industry specific
factors, the Company's ability to maintain access to external financing sources
and its financial liquidity, the Company's ability to timely develop and produce
commercially viable therapeutic products and the Company's ability to manage
expense levels.
RESULTS OF OPERATIONS
The following discussion of results of operations reflects the Company's
diagnostics division as discontinued operations for the three and six months
ended June 30, 1997 and 1998.
Research contract revenue reflects revenue from U.S. government grants and
contracts and subcontracts.
Research and development expenses for the three and six month periods ended June
30, 1998 increased $67,000 and $122,000, respectively, over the same periods in
the prior year as a result of increased research activity. This level of
expenditures for research and development is anticipated throughout 1998.
General and administrative expenses decreased $60,000 in the six month period
ended June 30, 1998 compared to the respective prior year period. This decrease
in expenditures is primarily the result of a decrease in expenditures for the
filing of patents on new technologies. During the first six months of 1997 the
Company expended $153,000 for patent filings on new technologies, as compared to
$116,000 in the comparable period of the current year. The Company believes that
these patents, if issued, will improve the Company's proprietary position with
regard to its targeted gene mutagenesis technologies. There can be no assurance
that the Company's patent applications will result in further issued patents or
that such issued patents will offer protection against competitors with similar
technology. Additionally, there can be no assurance that any manufacture, use or
sale of the Company's technology or products will not infringe on patents or
proprietary rights of others, and the
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Company may be unable to obtain licenses or other rights to these other
technologies that may be required for commercialization of the Company's
proposed products. Further variances in the results for the three and six month
periods ended June 30, 1998 are the result of normal business fluctuations.
Interest income in the three and six month periods ended June 30, 1998 is less
than 1997 interest income during the comparable period due to lower cash
balances available for investment.
Interest and financing expense in the current periods increased from the
respective periods in the prior year due to the increase in notes payable of
$3,000,000, as well as including $222,000 of amortized financing expense
incurred during the six months ended June 30, 1998.
Other income primarily represents payments received from Saigene Corporation
("Saigene") for administrative support functions as well as for rented
laboratory and office space. As of April 1998, Saigene had secured and relocated
to separate facilities. As such, there is no further income for administrative
support functions beyond April 1998.
The income from discontinued operations relates to the disposal of the assets of
the Company's then existing diagnostics division. The Company sold the majority
of the diagnostic assets of the Company to Becton Dickinson in November 1995. In
November 1996, the Company entered into an agreement with Saigene, whereby Epoch
transferred its remaining diagnostic technologies, including SBIR grants, to
Saigene for $1,100,000. The $1,100,000 is in the form of an 8% note receivable
with terms of $50,000 down and $10,000 per month. The note is secured by the
assets and technologies transferred to Saigene in the agreement. The balance of
the note originally was due March 31, 1997, or upon Saigene completing financing
arrangements, whichever occurred first. On June 20, 1997, the note was amended
to payments of $10,000 per month up to the closing of an anticipated private
placement which is currently in process by Saigene and increasing to $20,000 per
month after completion of the anticipated private placement. If the private
placement raises $1,500,000 or more, then Epoch is to receive a payment on the
note of $500,000. Additionally, Epoch now holds a 12% equity position, acquired
as compensation for the note extensions, in Saigene. The note must be repaid in
full upon completion of any additional financing in excess of $1,000,000 or on
June 20, 1999, whichever occurs first.
The gain on disposal of diagnostic division represents only that portion of the
gain for which cash payments were received during the three and six months ended
June 30, 1997 and 1998, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Cash increased by $1,072,000 from December 31, 1997 to June 30, 1998 primarily
as a result of $3,000,000 of loan proceeds offset by $1,859,000 of cash used in
operations. In February 1998, Bay City Capital Fund I LP ("BCC Fund I"), San
Francisco, California, loaned $3,000,000 to the Company as a bridge to the
earlier of a public rights offering, other financing, or February 25, 2000. The
loan is accruing interest at 8% per annum. In the event of a rights offering,
BCC Fund I has agreed, subject to certain conditions, to convert the loan into
equity to the extent that the current stockholders do not subscribe for their
proportionate share of the offering. In partial consideration for the bridge
loan and BCC Fund I's agreement to purchase excess shares, if any, in a rights
offering, BCC Fund I received a warrant to purchase 2,000,000 shares of Epoch's
Common Stock at
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a price of $0.90 per share. Bay City Capital LLC, which manages BCC Fund I, is a
merchant banking partnership that was formed by The Craves Group and The
Pritzker Family business interests. The founding partner of The Craves Group,
Fred Craves, Ph.D., is the Chairman and CEO of Epoch. Sanford S. Zweifach,
Epoch's President and Chief Financial Officer, is also the Chief Financial
Officer of Bay City Capital LLC.
The Company's accounts payable and accrued liabilities balances increased by
$148,000 from December 31, 1997 to June 30, 1998. This increase is caused,
primarily, by the incurrence of liabilities and the resultant accounts payable
associated with the new facilities being constructed as well as normal business
fluctuations.
The Company is focused on the development of its products with the goal of
entering into corporate partnering arrangements to further commercialize the
technology. The Company's primary future needs for capital are for continued
research and development, as well as relocation expenses anticipated to be
incurred in the move to new facilities. The Company's working capital
requirements may vary depending upon numerous factors including the progress of
the Company's research and development, competitive and technological advances
and other factors.
The Company will require additional funds to continue its operations and, over
the longer term, will require substantial additional funds to maintain and
expand its research and development activities and to ultimately commercialize,
with or without the assistance of corporate partners, any of its proposed
products. The Company will seek collaborative or other arrangements with larger
pharmaceutical companies, under which such companies would provide additional
capital to the Company in exchange for exclusive or non-exclusive license or
other rights to certain of the technologies and products the Company is
developing. However, the competition for such arrangements with major
pharmaceutical companies is intense, with a large number of biopharmaceutical
companies attempting to satisfy their funding requirements through such
arrangements. There can be no assurance that an agreement or agreements will
arise from these discussions in a timely manner, or at all, or that revenues
that may be generated thereby will offset operating expenses sufficiently to
reduce the Company's short- or long-term funding requirements.
YEAR 2000 COMPLIANCE
Management of the Company believes that the software packages currently in use
and expected to be in use prior to the year 2000 are year 2000 compliant.
Management does not expect the financial impact of required modifications to
such software, if any, will be material to the Company's financial position,
cash flows or results of operations in any given year.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) An Annual Meeting of Stockholders was held on April 29, 1998, and
adjourned to May 13, 1998.
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(b) The following persons were duly elected to serve as directors of the
Company:
Fred R. Craves, Ph.D.
Sanford S. Zweifach
Kenneth L. Melmon, M.D.
Richard L. Dunning
(c) Purpose of the Annual Stockholders Meeting:
1. Election of Directors. The following is a tabulation of votes for
each of the four proposed nominees for election as directors of the Company:
For Withheld Abstain
--- -------- -------
Fred R. Craves, Ph.D. 8,079,571 37,770 --
Sanford S. Zweifach 8,079,571 37,770 --
Kenneth L. Melmon, M.D. 8,079,571 37,770 --
Richard L. Dunning 8,079,571 37,770 --
2. Approval of Amendment of the Company's Restated Certificate of
Incorporation to Increase the Authorized Number of Shares of the Company's
Common Stock from 30,000,000 to 50,000,000. The following is the tabulation of
the votes:
For Against Abstain
--- ------- -------
7,621,892 483,449 12,000
3. Approval of Amendment of the Company's Restated Certificate of
Incorporation to Include a Provision Pursuant to which the Company will be
governed by Section 203 of the General Corporation Law of the State of Delaware.
For Against Abstain
--- ------- -------
7,670,562 428,679 18,100
(d) Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
3. Amended and Restated Certificate of Incorporation filed with
the Delaware Secretary of State on June 18, 1998.
27. Financial Data Schedule.
(B) REPORTS ON FORM 8-K
None
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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.
EPOCH PHARMACEUTICALS, INC.
Date: ____________, 1998 By: /s/ Sanford S. Zweifach
-----------------------
Sanford S. Zweifach
President/Chief Financial Officer
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------- -----------
3 Amended and Restated Certificate of Incorporation
filed with the Delaware Secretary of State on June
18, 1998.
27 Financial Data Schedule.
<PAGE> 1
EXHIBIT 3
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF EPOCH PHARMACEUTICALS, INC.,
a Delaware corporation
The undersigned, Sanford S. Zweifach, hereby certifies that:
ONE: He is the President and Secretary of Epoch Pharmaceuticals,
Inc., a Delaware corporation (the "Corporation").
TWO: The Certificate of Incorporation of the Corporation was
originally filed with the Secretary of State of Delaware on August 14, 1985
under its original name, "Microprobe Corporation."
THREE: The Certificate of Incorporation of the Corporation shall
be amended and restated to read in full as follows:
"ARTICLE 1. NAME
The name of this Corporation is Epoch Pharmaceuticals, Inc.
ARTICLE 2. REGISTERED OFFICE AND AGENT
The address of the registered office of the Corporation is Corporation
Trust Center, 1209 Orange Street, Wilmington, County of New Castle, State of
Delaware 19801, and the name of its registered agent at such address is The
Corporation Trust Company.
ARTICLE 3. PURPOSES
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the Delaware General
Corporation Law.
ARTICLE 4. SHARES
The total number of shares of stock which the Corporation shall have the
authority to issue is sixty million (60,000,000) shares, consisting of a class
of ten million (10,000,000) shares of Preferred Stock, par value $.01 per share,
and a class of fifty million (50,000,000) shares of Common Stock, par value $.01
per share (the Preferred Stock, par value $.01 per share, being herein referred
to as 'Preferred Stock'; and the Common Stock, par value $.01 per share, being
herein referred to as 'Common Stock'). The Board of Directors is expressly
authorized to provide for the issuance of the shares of Preferred Stock in one
or more series and, by filing a Certificate pursuant to the applicable law of
the State of Delaware, to establish from time to time the number of shares to be
included in each series, and to fix the designations, powers, preferences and
relative, participation, optional or other special rights, if any, of the shares
of each such series and the qualifications, limitations and restrictions
thereof, if any, with respect to each such series of Preferred Stock.
<PAGE> 2
ARTICLE 5. BY-LAWS
The Board of Directors shall have the power to adopt, amend or repeal
the By-laws of the Corporation, subject to the power of the stockholders to
amend or repeal such By-laws. The stockholders shall also have the power to
adopt, amend or repeal the By-laws of the Corporation.
ARTICLE 6. ELECTION OF DIRECTORS
Written ballots are not required in the election of Directors.
ARTICLE 7. PREEMPTIVE RIGHTS
No preemptive rights shall exist with respect to shares of stock or
securities convertible into shares of stock of the Corporation
ARTICLE 8. CUMULATIVE VOTING
The right to cumulate votes in the election of Directors shall not exist
with respect to shares of stock of the Corporation.
ARTICLE 9. AMENDMENTS TO CERTIFICATE OF INCORPORATION
The Corporation reserves the right to amend or repeal, by the
affirmative vote of the holders of a majority of the shares entitled to vote
thereon, any of the provisions contained in this Certificate of Incorporation,
and the rights of the stockholders of the Corporation are granted subject to the
reservation.
ARTICLE 10. LIMITATION OF DIRECTOR LIABILITY
To the full extent that the Delaware General Corporation Law, as it
exists on the date hereof or may hereafter be amended, permits the limitation or
elimination of the liability of directors, a Director of the Corporation shall
not be liable to the Corporation or its stockholders for monetary damages. Any
amendment to or repeal of this Article 10 shall not adversely affect any right
or protection of a Director of the Corporation for or with respect to any acts
or omissions of such Director occurring prior to such amendment or repeal.
<PAGE> 3
ARTICLE 11. SECTION 203
The Corporation expressly elects to be governed by Section 203 of the
General Corporation Law of the State of Delaware."
FOUR: The foregoing Amended and Restated Certificate of
Incorporation has been duly adopted by the Corporation's Board of Directors and
stockholders in accordance with the applicable provisions of Sections 242 and
245 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the undersigned has executed this certificate
on June __, 1998.
EPOCH PHARMACEUTICALS, INC.
By:
------------------------------
Sanford S. Zweifach
President and Secretary
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