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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997.
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[ ] 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 0-28674 .
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CADUS PHARMACEUTICAL CORPORATION
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(Exact Name of Registrant as Specified in its Charter)
Delaware 13-3660391
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(State or Other Jurisdiction (I.R.S. Employer Identification No.)
of Incorporation or Organization)
777 Old Saw Mill River Road, Tarrytown, New York 10591-6705
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (914) 345-3344
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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The number of shares of registrant's common stock, $.01 par value, outstanding
as of April 14, 1997 was 12,122,314.
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CADUS PHARMACEUTICAL CORPORATION
INDEX
Page No.
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PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets - March 31, 1997 and December 31, 1996 3
Statements of Operations - Three months ended March 31, 1997
and 1996 4
Statements of Cash Flows - Three months ended March 31, 1997
and 1996 5
Notes to Financial Statements 6-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-10
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
EXHIBIT INDEX 13
2
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Cadus Pharmaceutical Corporation
Balance Sheets
March 31, December 31,
1997 1996
-------------- --------------
Assets
Current assets:
Cash and cash equivalents $ 41,022,519 $ 43,152,677
Research support receivable 243,056 -
Prepaid and other current assets 289,394 263,052
-------------- --------------
Total current assets 41,554,969 43,415,729
Restricted cash 100,000 118,000
Fixed assets, net of accumulated
depreciation and amortization of
$1,680,010 at March 31, 1997 and
$1,488,015 at December 31, 1996 3,292,778 2,955,530
Deferred tax asset, less valuation
allowance of $4,091,774 at
March 31, 1997 and $3,787,000 at
December 31, 1996 - -
Due from stockholder 4,033 5,974
Other assets, net 845,966 791,625
-------------- --------------
Total assets $ 45,797,746 $ 47,286,858
============== ==============
Liabilities and Stockholders' Equity
Current liabilities:
Deferred revenue $ - $ 1,000,000
Accounts payable 685,852 455,794
Accrued expenses and other
current liabilities 309,977 470,660
Line of credit and loans
payable to bank-current
portion 11,206 12,601
-------------- --------------
Total current liabilities 1,007,035 1,939,055
Loans payable to bank 14,371 16,474
Note payable to partnership 150,000 150,000
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Total liabilities 1,171,406 2,105,529
Commitments and contingencies
Stockholders' equity:
Common Stock, $.01 par value.
Authorized 35,000,000 shares at
March 31, 1997 and December 31,
1996; issued 12,263,454 shares at
March 31, 1997 and 12,202,900
shares at December 31, 1996;
outstanding 12,121,787 shares at
March 31, 1997 and 12,061,233
shares at December 31, 1996 122,634 122,029
Additional paid-in capital 53,939,319 53,790,704
Accumulated deficit (9,135,538) (8,431,329)
Treasury stock, 141,667 shares of
common stock at March 31, 1997
and December 31, 1996
respectively, at cost; (300,075) (300,075)
-------------- --------------
Total stockholders' equity 44,626,340 45,181,329
-------------- --------------
Total liabilities and
stockholders' equity $ 45,797,746 $ 47,286,858
============== ==============
See accompanying notes to the financial statements
3
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Cadus Pharmaceutical Corporation
Statements of Operations
Three Months Ended
March 31,
1997 1996
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Revenues, principally from
related parties $ 1,889,921 $ 1,625,001
-------------- --------------
Costs and expenses:
Research and development costs 2,239,568 1,654,391
General and administrative expenses 882,408 317,677
-------------- --------------
Total costs and expenses 3,121,976 1,972,068
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Operating loss (1,232,055) (347,067)
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Interest income 545,361 359,335
Interest expense 1,403 37,855
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Interest income, net 543,958 321,480
Equity in partnership investment (note 2) (16,112) -
-------------- --------------
Loss before income taxes (704,209) (25,587)
State and local taxes - 17,580
-------------- --------------
Net loss $ (704,209) $ (43,167)
============== ==============
Net loss per share (note 3) $ (0.06) $ (0.00)
Shares used in calculation of net loss
per share (note 3) 12,087,997 9,076,960
See accompanying notes to the financial statements
4
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Cadus Pharmaceutical Corporation
Statements of Cash Flows
Three Months Ended
March 31,
1997 1996
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Cash flows from operating activities:
Net loss $ (704,209) $ (43,167)
Equity in partnership investment 16,112 -
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 291,460 157,198
Changes in assets and liabilities:
Increase in prepaid and other
current assets (26,342) (329,122)
Increase in research support
receivable (243,056) -
Decrease (increase) in other assets 42,501 (97,895)
Decrease in deferred revenue (1,000,000) -
Increase in accounts payable 230,058 57,465
Decrease in accrued expenses and
other current liabilities (160,683) (161,662)
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Net cash used in operating
activities (1,554,159) (417,183)
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Cash flows from investing activities:
Acquisition of fixed assets (619,666) (197,957)
Decrease in restricted cash 18,000 -
Stockholder borrowing 1,941 1,940
Patent costs (121,996) 9,045
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Net cash used in investing
activities (721,721) (186,972)
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Cash flows from financing activities:
Payments on bank loans (3,498) (4,212)
Proceeds from issuance of common
stock upon exercise of stock options 149,220 11,425
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Net cash provided by financing
activities 145,722 7,213
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Net increase in cash and cash
equivalents (2,130,158) (596,942)
Cash and cash equivalents at beginning
of period 43,152,677 25,682,920
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Cash and cash equivalents at end
of period $ 41,022,519 $ 25,085,978
================ ================
See accompanying notes to the financial statements
5
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Cadus Pharmaceutical Corporation
Notes to Financial Statements
(1) Organization and Basis of Preparation
The information presented as of March 31, 1997 and for the three-month
period then ended, is unaudited, but includes all adjustments (consisting
only of normal recurring accruals) that the Company's management believes
to be necessary for the fair presentation of results for the period
presented. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to the requirements of
the Securities and Exchange Commission, although the Company believes that
the disclosures included in these financial statements are adequate to
make the information not misleading. The December 31, 1996 balance sheet
was derived from audited financial statements. These financial statements
should be read in conjunction with the Company's annual report on Form
10-K for the year ended December 31, 1996.
Through December 31, 1996, the Company reported as a development stage
enterprise in accordance with the Financial Accounting Standards Board's
("FASB") Statement of Financial Accounting Standards ("SFAS") No. 7,
"Accounting and Reporting by Development Stage Enterprises". Management
believes it has commenced its principal operations and these operations
have generated significant revenues and, therefore, beginning with the
three-month period ended March 31, 1997, the Company will no longer report
as a development stage enterprise.
The results of operations for the three-month period ended March 31, 1997
are not necessarily indicative of the results to be expected for the year
ending December 31, 1997.
(2) Investment in Partnership
In December 1996, the Company contributed a $150,000 promissory note
bearing interest at 7% per annum in exchange for a 42% limited partnership
interest in Laurel Partners Limited Partnership ("Laurel"), a limited
partnership of which a stockholder of the Company is the general partner.
The investment is accounted for under the equity method with the
recognition of losses limited to the Company's capital contributions. For
the period ended March 31, 1997, the Company recognized $16,112 in losses
related to the investment.
(3) Net Loss Per Share
Net loss per share for the three months ended March 31, 1997 is computed
on the basis of the net loss for the period divided by the weighted
average number of shares of common stock outstanding during the period.
Common stock issuable upon exercise of outstanding stock options is
excluded from the calculation as such inclusion would be anti-dilutive.
Net loss per share for the three months ended March 31, 1996 is computed
using the weighted average number of shares of common stock outstanding.
Pursuant to Securities and Exchange Commission Staff Accounting Bulletin
No. 83, the Series B Convertible Preferred Stock (using the if-converted
method) and stock options (using the treasury stock method and the initial
public offering price) issued at prices substantially below the public
offering price during the 12-month period prior to the offering have been
included in the calculation. Furthermore, common equivalent shares from
convertible preferred stock issued prior to the 12-month period preceding
the offering that converted upon the completion of the Company's initial
public offering are included in the calculation (using the if-converted
method) from the original date of issuance. Common equivalent shares from
stock options issued prior to the 12-month period preceding the offering
are excluded from the computation as their effect is anti-dilutive.
6
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Cadus Pharmaceutical Corporation
Notes to Financial Statements
(4) Supplemental Cash Flow Information
Three Months
ended March 31,
---------------
1997 1996
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Cash payments for:
Interest......................... $ 1,403 $37,855
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Income taxes..................... $39,000 $17,580
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(5) Research Collaborations
Bristol- Myers Squibb
In accordance with its Research Collaboration and License Agreement dated
July 26, 1994, Bristol-Myers Squibb Company ("BMS") has agreed to provide
funding to the Company for the conduct of research programs in the amount
of up to $4,000,000 each year during the term of the research programs
which was due to expire in July 1997. In January 1997, BMS exercised its
option to extend its collaboration with the Company for an additional two
years through July 1999.
SmithKline Beecham
In February 1997, the Company entered into a research collaboration and
license agreement with SmithKline Beecham ("SmithKline"). During the term
of the research collaboration, which expires in February 2002, the Company
will seek to identify ligands and to elucidate the function of orphan G
protein-coupled receptors included within the collaboration and create
high-throughput screens to discover small molecular agonists and
antagonists to these receptors.
During the term of the research collaboration, SmithKline is required to
provide the Company with research funding of $3.0 million each year,
adjusted for inflation, and certain other payments, including a $2.0
million payment in February 1998. SmithKline is also required to make
payments to the Company upon the achievement of certain research
milestones and upon the achievement by SmithKline of certain drug
development milestones. SmithKline is also required to pay the Company
royalties on the sale of drugs developed through the use of the Company's
drug discovery technologies. The Company has co-promotion rights in North
America for certain products that may result from the collaboration and
rights to certain potential products that SmithKline may choose not to
develop.
SmithKline has the right to extend the term of the research collaboration
for between two and five years by notice to the Company given prior to
February 25, 2001. SmithKline has the right to terminate the research
collaboration after February 25, 1999 (or later under certain
circumstances) ("Evaluation Date") if (i) the Company fails to meet
certain scientific objectives in connection with the conduct of the
research collaboration or (ii) fails to perform its obligations in the
conduct of the research collaboration in any material respect and does not
cure such failure within a period of 60 days after receiving notice
thereof. In the event of such termination, SmithKline has no further
obligation to provide the Company with funding for the research
collaboration.
7
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Cadus Pharmaceutical Corporation
Notes to Financial Statements
In February 1997, the Company and SmithKline Beecham Corporation entered
into a stock purchase agreement pursuant to which the Company has the
option to sell to SmithKline Beecham Corporation (i) shares of the
Company's common stock having a then fair market value of $5.0 million
during a 90-day period commencing on February 25, 1998 and (ii) shares of
the Company's common stock having a then fair value of $5.0 million,
during a 90-day period commencing on the date certain scientific
objectives are achieved (subject to the Company achieving such objectives
prior to the Evaluation Date and meeting certain financial requirements).
In addition, SmithKline Beecham Corporation has the right, at its option,
to purchase up to $5.0 million worth of shares of the Company's common
stock at 150% of the then fair market value in lieu of making certain
research milestone payments. The Company granted SmithKline Beecham
Corporation certain registration rights with respect to shares of the
Company's Common Stock which SmithKline Beecham Corporation may purchase
pursuant to the stock purchase agreement.
(6) Recently Issued Accounting Standards
In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share" and
SFAS No. 129, "Disclosure of Information about Capital Structure". SFAS
No. 128 specifies the computation, presentation, and disclosure
requirements for earnings per share (EPS) for entities with publicly held
common stock or potential common stock. SFAS No. 128 replaces the
presentation of primary EPS and fully diluted EPS with basic EPS and
diluted EPS. It also requires dual presentation of basic and diluted EPS
on the face of the income statement for all entities with complex capital
structures and requires reconciliation of the numerator and denominator of
the basic EPS computation to the numerator and denominator of the diluted
EPS computation.
SFAS No. 129 was issued in connection with SFAS No. 128 and specifies the
required disclosures about capital structure. Both SFAS No. 128 and No.
129 are effective for financial statements for both interim and annual
periods ending after December 31, 1997. It is not expected that the
adoption of either of these statements will have a material impact on the
Company's financial position or operating results.
8
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
The Company was incorporated in 1992 and has devoted substantially all of
its resources to the development and application of novel yeast-based and
signal transduction drug discovery technologies. To date, all of the
Company's revenues have resulted from research funding provided by its
collaborative partners.
The Company has incurred operating losses in each year since its inception
and net losses of approximately $704,000 during the three months ended
March 31, 1997. At March 31, 1997, the Company had an accumulated deficit
of approximately $9.1 million. The Company's losses have resulted
principally from costs incurred in research and development and from
general and administrative costs associated with the Company's operations.
These costs have exceeded the Company's revenues and interest income. The
Company expects to incur substantial additional operating losses over the
next several years as a result of increases in its expenses for research
and product development.
Results of Operations
Three Months Ended March 31, 1997 and March 31, 1996
Revenues
Revenues for the three months ended March 31, 1997 increased to $1.9
million from $1.6 million for the same period in 1996. This increase was
attributable to the commencement in February 1997 of research funding from
SmithKline Beecham, one of the Company's collaborative partners.
Operating Expenses
The Company's research and development expenses for the three months ended
March 31, 1997 increased to $2.2 million from $1.7 million for the same
period in 1996. This increase was attributable primarily to increases in
staffing and supplies for the Company's internal programs, including
expansion of its chemistry capabilities, as well as facilities expenses in
connection with the Company's occupancy of additional laboratory space.
General and administrative expenses for the three months ended March 31,
1997 increased to $882,000 from $318,000 for the same period in 1996. This
increase was attributable primarily to expenses in connection with the
Company's ongoing patent infringement litigation, and the hiring of
management personnel, as well as an increase in the Company's directors
and officers liability insurance premium resulting from the Company's
initial public offering.
Interest Income
Net interest income for the three months ended March 31, 1997 increased to
$544,000 from $321,000 for the same period in 1996. This increase related
primarily to interest earned on the net proceeds from Company's initial
public offering as well as the reduction in interest expense on the line
of credit, which was repaid in September 1996.
9
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Net Loss
The net loss for the three months ended March 31, 1997 increased to
$704,000 from $43,000 for the same period in 1996. The increase can be
attributed to an increase in the operating expenses of the Company as
described above, which was partially offset by increases in revenues and
interest income.
Liquidity and Capital Resources
At March 31, 1997, the Company's cash and cash equivalents totaled $41.0
million. The Company's working capital at March 31, 1997 was $40.5
million.
The Company invested $620,000 in property and equipment during the
three months ended March 31, 1997. The Company expects capital
expenditures to increase over the next several years as it expands
facilities to support the planned expansion of research and development
efforts.
The Company intends to increase its expenditures substantially over the
next several years to enhance its technologies and pursue internal
proprietary drug discovery programs. The Company believes that its
existing capital resources, together with interest income and future
payments due under its research collaborations, will be sufficient to
support its current and projected funding requirements through the end of
2000. The Company's capital requirements may vary as a result of a number
of factors, including the progress of its drug discovery programs,
competitive and technological developments, the continuation of its
existing collaborative agreements and the establishment of additional
collaborative agreements, and the progress of the development efforts of
the Company's corporate partners. The Company expects that it will require
significant additional financing in the future, which it may seek to raise
through public or private equity offerings, debt financing or additional
corporate partnerships. No assurance can be given that such additional
financing will be available when needed or that, if available, such
financing will be obtained on terms favorable to the Company. To the
extent that additional capital is raised through the sale of equity or
convertible debt securities, the issuance of such securities could result
in dilution to the Company's stockholders. The Company's forecast of the
period of time through which its financial resources will be adequate to
support its operations is forward-looking information, and, as such,
actual results may vary.
10
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Nothing to report.
Item 2. Changes in Securities
(c) In February 1997, the Company granted an option to acquire
200,000 shares of its Common Stock and an option to acquire 100,000 shares of
its Common Stock to its Chief Executive Officer pursuant to the Company's 1996
Incentive Plan, which options were not registered under the Securities Act of
1933, as amended (the "Act"), at the time of grant in reliance on an exemption
from required registration pursuant to section 4(2) of the Act. The option to
acquire 200,000 shares of the Company's Common Stock is exercisable at $13.375
per share, has a ten-year term and vests in equal monthly installments over a
three-year period. The option to acquire 100,000 shares of the Company's Common
Stock is exercisable at $20.00 per share, has a ten year term and vests on
February 5, 2000.
Item 3. Defaults Upon Senior Securities
Nothing to report.
Item 4. Submission of Matters to a Vote of Security-Holders
Nothing to report.
Item 5. Other Information
(a) On April 1, 1997, the Company amended its License
Agreement, dated November 1, 1994, with the National Jewish Center for
Immunology and Respiratory Medicine ("NJC") to obtain the right to license any
and all technologies useful in identifying compounds that regulate cellular
transduction pathways invented by Drs. Gary L. Johnson and/or John C. Cambier
from November 1, 1994, to the end of an option period. Once licensed, such
technologies will be subject to the terms of the License Agreement. The Company
obtained this right in return for certain payments to NJC.
Item 6. Exhibits and Reports on Form 8-K.
(a) The exhibits listed in the Exhibit Index are included in
this report.
(b) Reports on Form 8-K
On March 11, 1997, the Company filed a report on Form 8-K to
report that it had entered into a research collaboration and license agreement
with SmithKline Beecham Corporation and SmithKline Beecham p.l.c. (collectively,
"SmithKline") on February 25, 1997, pursuant to which (i) the Company will seek
to elucidate the function of orphan G protein-coupled receptors included within
the collaboration and to create high-throughput screens to discover chemical
compounds (i.e. potential drugs) that interact with these receptors and (ii)
SmithKline will provide the Company with research funding, payments upon the
achievement of certain research milestones and upon the achievement by
SmithKline of certain drug development milestones, and royalties upon the sale
of drugs developed through the use of the Company's drug discovery technologies.
The Report on Form 8-K also reports that, on February 25, 1997, the Company and
SmithKline Beecham Corporation entered into a stock purchase agreement pursuant
to which the Company has the option to sell to SmithKline Beecham Corporation
(i) shares of the Company's Common Stock valued at $5.0 million during a 90-day
period commencing on February 25, 1998 and (ii) shares of the Company's Common
Stock valued at $5.0 million if it achieves certain scientific objectives prior
to February 25, 1999 (or later under certain circumstances).
11
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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.
CADUS PHARMACEUTICAL CORPORATION
(Registrant)
Date: May 14, 1997 By /s/ JAMES S. RIELLY
----------------------------------------------------
James S. Rielly
Director of Finance, Controller and Treasurer
(Authorized Officer and Principal Financial Officer)
12
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EXHIBIT INDEX
The following exhibits are filed as part of this Quarterly Report on
Form 10-Q:
Exhibit No. Description
10.1* First Amendment to License Agreement dated
April 1, 1997 between National Jewish Center
for Immunology and Respiratory Medicine and
the Company.
11 Computation of Net Loss Per Share
27 Financial Data Schedule
* Certain information in this exhibit is subject to an application for
confidential treatment.
13
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Exhibit 10.1
[Note: Certain portions of this document have been marked with "[c.i.]" to
indicate confidential information for which confidentiality has been requested.
The confidential portions have been omitted and filed separately with the
Securities and Exchange Commission.]
FIRST AMENDMENT TO LICENSE AGREEMENT
Amendatory Agreement, dated April 1, 1997 between National Jewish
Center for Immunology and Respiratory Medicine ("NJC"), a non-profit educational
research organization organized under the laws of Colorado and having its
principal office at 1400 Jackson Street, Denver, Colorado 80206, and Cadus
Pharmaceutical Corporation ("CADUS"), a corporation organized under the laws of
Delaware, and having its principal place of business at 777 Old Saw Mill River
Road, Tarrytown, New York 10591-6705.
W I T N E S S E T H:
WHEREAS, NJC and CADUS are parties to a License Agreement dated
November 1, 1994 (the "License Agreement");
WHEREAS, NJC and CADUS wish to amend the License Agreement in certain
respects;
NOW THEREFORE, in consideration of the premises and the mutual
covenants set forth herein, the parties hereto hereby agree as follows:
1. Section 1.7 of the License Agreement is hereby amended in its
entirety to read as follows:
"1.7. "Cambier Future Technologies" shall mean all
proprietary information
<PAGE>
owned or possessed by NJC (without restriction from any third party which would
preclude a license to CADUS) relating to products, processes, know-how and
inventions that relate to mammalian cell and/or enzyme-based assays useful in
identifying compounds that regulate cellular transduction pathways, that is
conceived of or reduced to practice during the term of this Agreement and that
is either solely invented by Dr. John Cambier or jointly invented by Dr. Cambier
and any third party or parties (including Dr. Gary Johnson), and further that
does not infringe one or more claims, as they may be amended and as they may
issue, as set forth in any of the [c.i.] U.S. patent applications listed in
Exhibit A."
2. Section 1.10 of the License Agreement is hereby amended in its
entirety to read as follows:
"1.10. "Johnson Future Technologies" shall mean all
proprietary information owned or possessed by NJC (without restriction from any
third party which would preclude a license to CADUS) relating to products,
processes, know-how and inventions that relate to mammalian cell and/or
enzyme-based assays useful in identifying compounds that regulate cellular
transduction pathways, that is conceived of or reduced to practice during the
term of this Agreement and that is either solely invented by Dr. Gary Johnson or
jointly invented by Dr. Johnson and any third party or parties (including Dr.
John Cambier), and further that does not infringe one or more claims, as they
may be amended and as they may issue, as set forth in any of the [c.i.] U.S.
patent applications listed in Exhibit A."
3. Sections 1.12 through 1.18 are hereby added to the License
Agreement, which read as follows:
"1.12 "Exclusive Cambier Future Technologies" shall mean
Cambier Future
2
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Technologies with respect to which no employees of NJC (other than Drs. Cambier
and Johnson) were co-inventors.
1.13. "Non-Exclusive Cambier Future Technologies" shall mean
Cambier Future Technologies with respect to which employees of NJC (other than
Drs. Cambier and Johnson) were co-inventors.
1.14. "Exclusive Johnson Future Technologies" shall mean
Johnson Future Technologies with respect to which no employees of NJC (other
than Drs. Cambier and Johnson) were co-inventors.
1.15. "Non-Exclusive Johnson Future Technologies" shall mean
Johnson Future Technologies with respect to which employees of NJC (other than
Drs. Cambier and Johnson) were co-inventors.
1.16. "Cambier Option Period" shall mean the period commencing
on the Effective Date and ending on [c.i.].
1.17. "Johnson Option Period" shall mean the period commencing
on the Effective Date and ending on [c.i.].
1.18. "Future Technologies" shall mean Cambier Future
Technologies and Johnson Future Technologies."
4. ARTICLE 5 of the License Agreement is hereby amended in its entirety
to read as follows:
"ARTICLE 5 - FUTURE TECHNOLOGIES
5.1 Notice of Future Technologies. NJC shall provide to CADUS
notice of (i) each Cambier Future Technology conceived of or reduced to practice
during the Cambier Option
3
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Period and (ii) each Johnson Future Technology conceived of or reduced to
practice during the Johnson Option Period, together with an invention disclosure
relating thereto, within fifteen (15) days after receiving an invention
disclosure with respect thereto. Within thirty (30) days after the date hereof,
NJC shall provide to CADUS notice of each Future Technology conceived of or
reduced to practice prior to the date hereof, together with an invention
disclosure relating thereto.
5.2 Option to License Future Technologies. NJC hereby grants
to CADUS an option to acquire an exclusive, worldwide license to each (i)
Exclusive Cambier Future Technology conceived of or reduced to practice during
the Cambier Option Period and (ii) Exclusive Johnson Future Technology conceived
of or reduced to practice during the Johnson Option Period. NJC hereby grants to
CADUS an option to acquire a non-exclusive, worldwide license to each (i)
NonExclusive Cambier Future Technology conceived of or reduced to practice
during the Cambier Option Period and (ii) each Non-Exclusive Johnson Future
Technology conceived of or reduced to practice during the Johnson Option Period.
The term of each such option grant shall be for a period of [c.i.] commencing on
the date NJC provides CADUS with a notice pursuant to Section 5.1 with respect
to the particular Future Technology, together with an invention disclosure
relating thereto. CADUS shall be deemed to have effectively exercised any such
option if CADUS sends written notice of its exercise of such option to NJC
within the [c.i.] option period. Upon the exercise by CADUS of such an option
with respect to a particular Future Technology, such Future Technology shall be
deemed NJC Technical Information for purposes of this Agreement.
5.3. Patent Administration Expenses. CADUS shall reimburse NJC
for (i) all patent administration expenses ("Patent Costs"), including legal
expenses, incurred through March 31, 1997, for all patent applications for
Future Technologies licensed by CADUS hereunder and (ii)
4
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the costs associated with the transfer of patent files related to Future
Technologies licensed by CADUS hereunder. NJC hereby represents that the total
patent administration expenses for all patent applications for all Future
Technologies incurred through January 31, 1997 was $44,711.50. If NJC enters
into an agreement with a third party pursuant to which NJC licenses a
Non-Exclusive Cambier Future Technology or a Non-Exclusive Johnson Future
Technology to such third party, NJC shall promptly notify CADUS and shall, at
NJC's option, either (a) pay to CADUS within thirty (30) days of the effective
date of such license agreement the new licensee's proportional share of all
Patent Costs paid by CADUS up to that date, or (b) grant CADUS a credit
applicable to any payments due from CADUS to NJC after such date equal to the
new licensee's proportional share of all Patent Costs paid by CADUS up to that
date. In addition, NJC shall ensure that the new licensee shall be obligated,
under its license agreement with NJC, to pay, from and after the effective date
of such license agreement, its proportional share of all Patent Costs for the
licensed NonExclusive Cambier Future Technology or Non-Exclusive Johnson Future
Technology, as the case may be. For purposes of this Section 5.3, a licensee's
"proportional share" shall be calculated by multiplying the Patent Costs
incurred by NJC or CADUS by a fraction, the numerator of which is one and the
denominator of which is the number of licensees of NJC with respect to the
licensed Non-Exclusive Cambier Future Technology or Non-Exclusive Johnson Future
Technology, as the case may be.
5.4. Patent Administration. After March 31, 1997, NJC shall
not prepare or file patent applications with respect to any Future Technology
until the [c.i.] option period with respect to such Future Technology has
expired without CADUS exercising its option with respect thereto. If a patent
application must be filed on an expedited basis to preserve intellectual
property rights
5
<PAGE>
with respect to a Future Technology, NJC shall notify CADUS thereof as soon as
practicable after it becomes aware of the need to file the same. Notwithstanding
anything to the contrary in this Section 5.4, if CADUS does not exercise its
option to license any such Future Technology at least [c.i.] prior to the date
such patent application must be filed, NJC shall have the right to file a patent
application with respect to such Future Technology to preserve intellectual
property rights relating thereto and CADUS shall pay the Patent Costs with
respect thereto if CADUS exercises its option to license such Future Technology;
provided, however, that Section 9.1 hereof shall apply with respect to such
Future Technology if CADUS exercises its option to license such Future
Technology.
5.5. Publication. If NJC intends to publish or present its
work relating to a Future Technology, it shall so notify CADUS as soon as
practicable after it becomes aware of such proposed publication or presentation.
If CADUS exercises its option to license such Future Technology, such Future
Technology shall be deemed NJC Technical Information and its publication or
presentation shall be governed by Section 23.2 hereof."
5. Section 6.2 of the License Agreement is hereby amended in its
entirety to read as follows:
"6.2. Payments Credited Against Royalties. Payments made by
CADUS to NJC pursuant to Sections 6.1, 8.1(c) and 8.1(e) shall be credited
against amounts payable pursuant to Section 8.1(a) hereof, except that the first
[c.i.] paid under Section 8.1(c) shall not be credited."
6. A Section 8.1(e) is hereby added to the License Agreement, which
reads as follows:
"8.1(e) On April 1, 1997 and on April 1, 1998, CADUS shall pay
to NJC (i) [c.i.] if both Gary Johnson and John Cambier are then consultants to
CADUS and also employed by
6
<PAGE>
NJC and both of their laboratories at NJC are operating or (ii) [c.i.] if only
one of Gary Johnson or John Cambier is then a consultant to CADUS and also
employed by NJC and his laboratory at NJC is operating."
7. Section 22.1 of the License Agreement is hereby amended by replacing
the phrase "NJC Technical Information" in the caption and in the text thereof
with the phrase "NJC Technical Information and Future Technologies."
8. Except as amended hereby, the terms and conditions of the License
Agreement are confirmed. The License Agreement, as so amended, shall continue in
full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
NATIONAL JEWISH CENTER FOR
IMMUNOLOGY AND RESPIRATORY MEDICINE
By: /s/ Judith A. Baskett
---------------------------------
Judith A. Baskett,
Director Research Administration
and Technology Transfer
CADUS PHARMACEUTICAL CORPORATION
BY: /s/ Philip N. Sussman
---------------------------------
Philip N. Sussman,
Vice President, Corporate Development
7
<PAGE>
Exhibit 11
Computation of Net Loss Per Share
Three Months Ended
March 31,
1997 1996
(unaudited) (unaudited)
Net loss $ (704,209) $ (43,167)
Loss per common and common equivalent share:
Weighted average number of shares of
common stock outstanding during the
periods after giving effect to the
one-for-three reverse stock split 12,087,997 1,326,522
Common equivalent shares from stock
options issued during the 12-month period
prior to the registration statement filing
using the treasury stock method - 198,924
Conversion of the Series A Convertible
Preferred Stock using the if-converted method - 4,959,901
Conversion of the Series B Convertible
Preferred Stock using the if-converted method - 2,591,613
------------- -----------
Shares used in calculation of net loss
per share 12,087,997 9,076,960
Net loss per common and common equivalent share $ (0.06) $ (0.00)
============= ===========
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Balance Sheet, and Statement of Operations and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 41,022,519
<SECURITIES> 0
<RECEIVABLES> 243,056
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 41,554,969
<PP&E> 4,972,788
<DEPRECIATION> 1,680,010
<TOTAL-ASSETS> 45,797,746
<CURRENT-LIABILITIES> 1,007,035
<BONDS> 164,371
0
0
<COMMON> 122,634
<OTHER-SE> 44,503,706
<TOTAL-LIABILITY-AND-EQUITY> 45,797,746
<SALES> 0
<TOTAL-REVENUES> 1,889,921
<CGS> 0
<TOTAL-COSTS> 3,121,976
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,403
<INCOME-PRETAX> (704,209)
<INCOME-TAX> 0
<INCOME-CONTINUING> (704,209)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (704,209)
<EPS-PRIMARY> (0.06)
<EPS-DILUTED> 0
</TABLE>
