<PAGE>
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 June 30, 1997
-------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________.
Commission file number 0-28674.
CADUS PHARMACEUTICAL CORPORATION
- -------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 13-3660391
- -------------------------------- ------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
777 Old Saw Mill River Road, Tarrytown, New York 10591-6705
- ------------------------------------------------ ----------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (914) 345-3344
----------------------
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
----- -----
The number of shares of registrant's common stock, $.01 par value, outstanding
as of July 16, 1997 was 12,416,119.
<PAGE>
CADUS PHARMACEUTICAL CORPORATION
INDEX
<TABLE>
<CAPTION>
Page No.
<S> <C>
PART I -- CONDENSED FINANCIAL INFORMATION
Item 1. Condensed Financial Statements
Condensed Balance Sheets - June 30, 1997 and December 31, 1996 3
Condensed Statements of Operations - Three and six months
ended June 30, 1997 and 1996 4
Condensed Statements of Cash Flows - Six months ended
June 30, 1997 and 1996 5
Notes to Condensed Financial Statements 6-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-11
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
EXHIBIT INDEX 15
</TABLE>
2
<PAGE>
Cadus Pharmaceutical Corporation
Condensed Balance Sheets
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
------------ ------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 38,054,350 $ 43,152,677
Prepaid and other current assets 158,887 263,052
------------ ------------
Total current assets 38,213,237 43,415,729
Restricted cash 40,000 118,000
Fixed assets, net of accumulated depreciation and amortization of
$2,005,778 at June 30, 1997 and $1,488,015 at December 31, 1996 3,297,396 2,955,530
Investments in other ventures 2,010,643 310,660
Other assets, net 713,759 486,939
------------ ------------
Total assets $ 44,275,035 $ 47,286,858
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Deferred revenue $ -- $ 1,000,000
Accounts payable, accrued expenses and other current liabilities 927,405 926,454
Line of credit and loans payable to bank-current portion -- 12,601
------------ ------------
Total current liabilities 927,405 1,939,055
Loans payable to bank -- 16,474
Note payable to partnership 150,000 150,000
------------ ------------
Total liabilities 1,077,405 2,105,529
Commitments and contingencies
Stockholders' equity:
Common stock 124,143 122,029
Additional paid-in capital 54,238,980 53,790,704
Accumulated deficit (10,865,418) (8,431,329)
Treasury stock (300,075) (300,075)
------------ ------------
Total stockholders' equity 43,197,630 45,181,329
------------ ------------
Total liabilities and stockholders' equity $ 44,275,035 $ 47,286,858
============ ============
</TABLE>
See accompanying notes to the condensed financial statements
3
<PAGE>
Cadus Pharmaceutical Corporation
Condensed Statements of Operations
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues, principally from
related parties $ 2,271,865 $ 1,625,001 $4,161,786 $ 3,250,002
------------ ------------ ------------ ------------
Costs and expenses:
Research and development costs 3,128,962 1,783,294 5,368,530 3,437,685
General and administrative expenses 1,106,192 302,839 1,988,600 620,516
------------ ------------ ------------ ------------
Total costs and expenses 4,235,154 2,086,133 7,357,130 4,058,201
------------ ------------ ------------ ------------
Operating loss (1,963,289) (461,132) (3,195,344) (808,199)
------------ ------------ ------------ ------------
Interest income 541,782 364,610 1,087,143 723,945
Interest expense 1,351 31,004 2,754 68,859
------------ ------------ ------------ ------------
Interest income, net 540,431 333,606 1,084,389 655,086
Equity in other ventures (note 2) (283,905) -- (300,017) --
------------ ------------ ------------ ------------
Loss before income taxes (1,706,763) (127,526) (2,410,972) (153,113)
State and local taxes 23,117 6,000 23,117 23,580
------------ ------------ ------------ ------------
Net loss $ (1,729,880) $ (133,526) $ (2,434,089) $ (176,693)
============ ============ ============ ============
Net loss per share (note 3) $ (0.14) $ (0.10) $ (0.20) $ (0.03)
Shares used in calculation of net loss
per share (note 3) 12,174,009 1,331,676 12,131,003 5,204,317
</TABLE>
See accompanying notes to the condensed financial statements
4
<PAGE>
Cadus Pharmaceutical Corporation
Condensed Statements of Cash Flows
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (2,434,089) $ (176,693)
Equity in other ventures 300,017 --
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 627,667 347,897
Changes in assets and liabilities:
Decrease (increase) in prepaid and other current assets 104,165 (541,510)
Decrease (increase) in other assets 4,355 (148,099)
Decrease in deferred revenue (1,000,000) --
Increase (decrease) in accounts payable,accrued expenses and other
current liabilities 951 (402,081)
------------ ------------
Net cash used in operating activities (2,396,934) (920,486)
------------ ------------
Cash flows from investing activities:
Acquisition of fixed assets (950,050) (461,323)
Decrease in restricted cash 78,000 --
Stockholder borrowing 3,881 3,881
Investment in other ventures (2,000,000) --
Patent costs (254,539) (57,729)
------------ ------------
Net cash used in investing activities (3,122,708) (515,171)
------------ ------------
Cash flows from financing activities:
Payments on bank loans (29,075) (8,508)
Proceeds from issuance of common stock upon exercise of stock options 450,390 11,425
------------ ------------
Net cash provided by financing activities 421,315 2,917
------------ ------------
Net decrease in cash and cash equivalents (5,098,327) (1,432,740)
Cash and cash equivalents at beginning of period 43,152,677 25,682,920
------------ ------------
Cash and cash equivalents at end of period $ 38,054,350 $ 24,250,180
============ ============
</TABLE>
See accompanying notes to the condensed financial statements
5
<PAGE>
Cadus Pharmaceutical Corporation
Notes to Condensed Financial Statements
(1) Organization and Basis of Preparation
The information presented as of June 30, 1997 and for the three and six
month periods 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 periods 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 no longer reports as
a development stage enterprise.
The results of operations for the six-month period ended June 30, 1997 are
not necessarily indicative of the results to be expected for the year
ending December 31, 1997.
(2) Investments in Other Ventures
Partnership Interest
In December 1996, the Company contributed a $310,660 in exchange for a 89%
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 three and six month periods ended June 30, 1997,
the Company recognized $126,092 and $142,204, respectively in losses
related to the investment.
Investment in Axiom Biotechnologies
In May 1997, the Company purchased $2.0 million of convertible preferred
stock in Axiom Biotechnologies Inc. ("Axiom"), representing approximately
26% of the outstanding shares of Axiom on an as converted basis. As part
of the arrangement, Axiom has agreed to deliver and license to Cadus its
first High Throughput Pharmacological Screening (HT-PSTM) System. The
Company has agreed to purchase an additional $2.0 million of convertible
preferred stock in Axiom if the Company receives and accepts Axiom's
HT-PSTM System on or prior to May 29, 1998. This would increase the
Company's equity interest in Axiom to approximately 38% of Axiom's then
outstanding shares on an as converted basis. The investment is accounted
for under the equity method with the Company recognizing 100% of Axiom's
net losses to the extent that the Company's investment is funding those
losses. For the three and six month periods ended June 30, 1997, the
Company recognized $157,813 in losses generated by Axiom.
6
<PAGE>
(3) Net Loss Per Share
Net loss per share for the three and six month periods ended June 30, 1997
and the three month period ended June 30, 1996, 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.
For the three-month period ended June 30, 1996, common equivalent shares
from stock options and convertible preferred stock are excluded from the
computation as their effect is anti-dilutive.
(4) Supplemental Cash Flow Information
Six Months
ended June 30,
1997 1996
-------------------------------
Cash payments for:
Interest............................. $2,754 $68,859
====== =======
Income taxes......................... $23,117 $23,580
======= =======
(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 an amount
of up to $4.0 million 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.
7
<PAGE>
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.
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) Subsequent Event
On July 14, 1997, the Company announced plans to relocate its Lakewood,
Colorado operations to New York. Currently, eleven scientists and one
administrative person are employed at the Colorado facility. The Company
expects to complete the relocation by September 30, 1997 at an estimated
cost of $400,000 to $800,000.
(7) Recently Issued Accounting Standards
In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share" which
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. 128 is effective for financial statements for both interim and
annual periods ending after December 15, 1997. It is not expected that the
adoption of this statement will have a material impact on the Company's
financial position or operating results.
8
<PAGE>
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 $2.4 million during the six months ended
June 30, 1997. At June 30, 1997, the Company had an accumulated deficit of
approximately $10.9 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
Six Months Ended June 30, 1997 and June 30, 1996
Revenues
Revenues for the six months ended June 30, 1997 increased to $4.2 million
from $3.3 million for the same period in 1996. This increase was
attributable to the commencement in February 1997 of research funding from
SmithKline Beecham ("Smithkline"), one of the Company's collaborative
partners.
Operating Expenses
The Company's research and development expenses for the six months ended
June 30, 1997 increased to $5.4 million from $3.4 million for the same
period in 1996. This increase was attributable primarily to increases in
staffing and supplies for the SmithKline collaboration and the Company's
internal programs, including expansion of its chemistry and bioinformatics
capabilities, as well as facilities expenses in connection with the
Company's occupancy of additional laboratory space.
General and administrative expenses for the six months ended June 30, 1997
increased to $2.0 million from $621,000 for the same period in 1996. This
increase was attributable primarily to increased legal expenses, the
hiring of management personnel, and the increase in the Company's
directors and officers liability insurance premium and other
administrative expenses resulting from the regulatory requirements of
being a public company.
Equity in Other Ventures
Equity in other ventures decreased as a result of losses associated with
the Company's two equity investments. The Company recognized losses of
$142,204 and $157,813 for the six months ended June 30, 1997 in connection
with its investments in Laurel Partners Limited Partnership and Axiom
Biotechnologies Inc., respectively.
9
<PAGE>
Interest Income
Net interest income for the six months ended June 30, 1997 increased to
$1.1 million from $655,000 for the same period in 1996. This increase
related primarily to interest earned on the net proceeds from the
Company's initial public offering as well as the reduction in interest
expense on the line of credit, which was repaid in September 1996.
Net Loss
The net loss for the six months ended June 30, 1997 increased to $2.4
million from $177,000 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.
Three Months Ended June 30, 1997 and June 30, 1996
Revenues
Revenues for the three months ended June 30, 1997 increased to $2.3
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, one of the Company's collaborative partners.
Operating Expenses
The Company's research and development expenses for the three months ended
June 30, 1997 increased to $3.1 million from $1.8 million for the same
period in 1996. This increase was attributable primarily to increases in
staffing and supplies for the SmithKline collaboration and the Company's
internal programs, including expansion of its chemistry and bioinformatics
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 June 30,
1997 increased to $1.1 million from $303,000 for the same period in 1996.
This increase was attributable primarily to increased legal expenses, the
hiring of management personnel, and the increase in the Company's
directors and officers liability insurance premium and other
administrative expenses resulting from the regulatory requirements of
being a public company.
Interest Income
Net interest income for the three months ended June 30, 1997 increased to
$540,000 from $334,000 for the same period in 1996. This increase related
primarily to interest earned on the net proceeds from the Company's
initial public offering as well as the reduction in interest expense on
the line of credit, which was repaid in September 1996.
Equity in Other Ventures
Equity in other ventures decreased as a result of losses associated with
the Company's two equity investments. The Company recognized losses of
$126,092 and $157,813 for the three months ended June 30, 1997 in
connection with its investments in Laurel Partners Limited Partnership and
Axiom Biotechnologies Inc., respectively.
Net Loss
The net loss for the three months ended June 30, 1997 increased to $1.7
million from $134,000 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.
10
<PAGE>
Liquidity and Capital Resources
At June 30, 1997, the Company's cash and cash equivalents totaled $38.1
million. The Company's working capital at June 30, 1997 was $37.3 million.
In May 1997, the Company purchased $2.0 million of convertible preferred
stock in Axiom Biotechnologies Inc. ("Axiom"). The Company has agreed to
purchase an additional $2.0 million of convertible preferred stock in
Axiom if the Company receives and accepts Axiom's High Throughput
Pharmacological Screening System on or prior to May 29, 1998.
The Company invested $950,000 in property and equipment during the six
months ended June 30, 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.
11
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Nothing to report.
Item 2. Changes in Securities
Nothing to report.
Item 3. Defaults Upon Senior Securities
Nothing to report.
Item 4. Submission of Matters to a Vote of Security Holders
On June 19, 1997, the Company held its annual meeting of
stockholders in Tarrytown, New York. The holders of 11,237,323
shares of Common Stock were present or represented by proxy
and, accordingly, a quorum was present and matters were voted
on as follows:
(a) The following persons were re-elected directors of the
Company:
Votes For Votes Withheld
--------- --------------
Theodore Altman 11,080,539 156,784
Harold First 11,073,239 164,084
Carl C. Icahn 11,080,699 156,624
Jeremy M. Levin 11,229,306 8,017
Peter S. Liebert 11,081,939 155,384
Robert J. Mitchell 11,072,439 164,884
Lawrence D. Muschek 11,229,606 7,717
Mark H. Rachesky 10,339,011 898,312
Leon E. Rosenberg 11,229,566 7,757
Nicole Vitullo 11,229,566 7,757
Samuel D. Waksal 11,223,606 13,717
Jack G. Wasserman 11,081,139 156,184
(b) The proposal to approve the amendment to the Company's
1996 Incentive Plan (the "Plan") that (i) increases the
maximum number of shares of Common Stock that may be the
subject of awards under the Plan by 500,000 from 333,334
shares to 833,334 shares and (ii) provides that directors will
be eligible to receive awards under the Plan was approved by
the stockholders. 8,735,947 shares of Common Stock voted for
the proposal, 940,057 shares voted against the proposal and
3,540 shares abstained. There were 1,557,779 broker non-votes
with respect to the proposal.
(c) The proposal to ratify the grant of stock options to nine
non-employee directors to purchase an aggregate of 108,000
shares of Common Stock was approved by the stockholders.
8,711,446 shares of Common Stock voted for the proposal,
964,168 shares voted against the proposal and 3,930 shares
abstained. There were 1,557,779 broker non-votes with respect
to the proposal.
12
<PAGE>
Item 5. Other Information
Nothing to report.
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
None
13
<PAGE>
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: August 14, 1997 By
----------------------------------------------------
James S. Rielly
Director of Finance, Controller and Treasurer
(Authorized Officer and Principal Financial Officer)
14
<PAGE>
EXHIBIT INDEX
The following exhibits are filed as part of this Quarterly Report on Form 10-Q:
Exhibit No. Description
----------- -----------
11 Computation of Net Loss Per Share
27 Financial Data Schedule
15
<PAGE>
Exhibit 11
Computation of Net Loss Per Share
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
(unaudited) (unaudited) (unaudited) (unaudited)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net loss $ (1,729,880) $ (133,526) $ (2,434,089) $ (176,693)
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 in July 1996 12,174,009 1,331,676 12,131,003 1,329,106
Common equivalent shares from stock options issued
during the 12-month period prior to the registration
statement filing using the treasury stock method -- -- -- 99,462
Conversion of the Series A Convertible Preferred Stock
using the if-converted method -- -- -- 2,479,942
Conversion of the Series B Convertible Preferred Stock
using the if-converted method -- -- -- 1,295,807
------------ ------------ ------------ ------------
Shares used in calculation of net loss per share 12,174,009 1,331,676 12,131,003 5,204,317
Net loss per common and common equivalent share $ (0.14) $ (0.10) $ (0.20) $ (0.03)
============ ============ ============ ============
</TABLE>
<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> 6-mos
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-END> Jun-30-1997
<CASH> 38,054,350
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 38,213,237
<PP&E> 5,303,174
<DEPRECIATION> 2,005,778
<TOTAL-ASSETS> 44,275,035
<CURRENT-LIABILITIES> 927,405
<BONDS> 150,000
0
0
<COMMON> 124,143
<OTHER-SE> 43,073,487
<TOTAL-LIABILITY-AND-EQUITY> 44,275,035
<SALES> 0
<TOTAL-REVENUES> 4,161,786
<CGS> 0
<TOTAL-COSTS> 7,357,130
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,754
<INCOME-PRETAX> (2,410,972)
<INCOME-TAX> 23,117
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