<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 September 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) 467-6200
--------------
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 October 13, 1997 was 12,327,410.
<PAGE>
CADUS PHARMACEUTICAL CORPORATION
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I -- CONDENSED FINANCIAL INFORMATION
Item 1. Condensed Financial Statements
Condensed Balance Sheets - September 30, 1997 and 3
December 31, 1996
Condensed Statements of Operations - Three and nine months
ended September 30, 1997 and 1996 4
Condensed Statements of Cash Flows - Nine months ended
September 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 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
EXHIBIT INDEX 14
</TABLE>
2
<PAGE>
Cadus Pharmaceutical Corporation
Condensed Balance Sheets
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------ ------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 36,877,143 $ 43,152,677
Prepaid and other current assets 344,014 263,052
------------ ------------
Total current assets 37,221,157 43,415,729
Restricted cash 40,000 118,000
Fixed assets, net of accumulated depreciation and amortization of
$2,346,389 at September 30, 1997 and $1,488,015 at December 31, 1996 3,100,015 2,955,530
Investments in other ventures 1,629,837 310,660
Other assets, net 780,474 486,939
------------ ------------
Total assets $ 42,771,483 $ 47,286,858
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Deferred revenue $ -- $ 1,000,000
Accounts payable, accrued expenses and other current liabilities 516,043 926,454
Line of credit and loans payable to bank-current portion -- 12,601
------------ ------------
Total current liabilities 516,043 1,939,055
Loans payable to bank -- 16,474
Note payable to partnership 150,000 150,000
------------ ------------
Total liabilities 666,043 2,105,529
Commitments and contingencies
Stockholders' equity:
Common stock 124,576 122,029
Additional paid-in capital 54,347,301 53,790,704
Accumulated deficit (12,066,362) (8,431,329)
Treasury stock (300,075) (300,075)
------------ ------------
Total stockholders' equity 42,105,440 45,181,329
------------ ------------
Total liabilities and stockholders' equity $ 42,771,483 $ 47,286,858
============ ============
</TABLE>
See accompanying notes to condensed financial statements
3
<PAGE>
Cadus Pharmaceutical Corporation
Condensed Statements of Operations
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues, principally from
related parties $ 2,402,364 $ 1,625,000 $ 6,564,150 $ 4,875,002
------------ ------------ ------------ ------------
Costs and expenses:
Research and development costs 2,962,939 2,417,111 8,331,469 5,854,796
General and administrative expenses 820,070 538,901 2,808,670 1,159,417
------------ ------------ ------------ ------------
Total costs and expenses 3,783,009 2,956,012 11,140,139 7,014,213
------------ ------------ ------------ ------------
Operating loss (1,380,645) (1,331,012) (4,575,989) (2,139,211)
------------ ------------ ------------ ------------
Interest income 501,953 544,859 1,589,096 1,268,804
Interest expense 4,611 35,988 7,365 104,847
------------ ------------ ------------ ------------
Interest income, net 497,342 508,871 1,581,731 1,163,957
Equity in other ventures (note 2) (380,806) -- (680,823) --
------------ ------------ ------------ ------------
Loss before income taxes (1,264,109) (822,141) (3,675,081) (975,254)
State and local taxes (63,165) -- (40,048) 23,580
------------ ------------ ------------ ------------
Net loss $ (1,200,944) $ (822,141) $ (3,635,033) $ (998,834)
============ ============ ============ ============
Net loss per share (note 3) $ (0.10) $ (0.08) $ (0.30) $ (0.23)
Shares used in calculation of net loss
per share (note 3) 12,295,474 10,200,160 12,185,827 4,354,145
Net loss per share assuming full dilution (note 3) $ (0.07) $ (0.10)
Shares used in calculation of net loss per share
assuming full dilution (note 3) 11,433,556 9,698,861
</TABLE>
See accompanying notes to condensed financial statements
4
<PAGE>
Cadus Pharmaceutical Corporation
Condensed Statements of Cash Flows
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (3,635,033) $ (998,834)
Equity in other ventures 680,823 --
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 980,640 578,785
Changes in assets and liabilities:
Increase in prepaid and other current assets (80,962) (303,352)
Decrease (increase) in other assets 2,993 (124,147)
(Decrease) increase in deferred revenue (1,000,000) 1,000,000
(Decrease) increase in accounts payable, accrued expenses and
other current liabilities (410,411) 77,549
------------ ------------
Net cash (used in)/provided by operating activities (3,461,950) 230,001
------------ ------------
Cash flows from investing activities:
Acquisition of fixed assets (1,093,283) (973,331)
Decrease in restricted cash 78,000 2,380,000
Stockholder borrowing 5,822 5,821
Investment in other ventures (2,000,000) --
Patent costs (334,192) (127,822)
------------ ------------
Net cash (used in)/provided by investing activities (3,343,653) 1,284,668
------------ ------------
Cash flows from financing activities:
Payments on bank loans (29,075) (2,392,897)
Proceeds from issuance of common stock and exercise of stock options 559,144 19,853,705
------------ ------------
Net cash provided by financing activities 530,069 17,460,808
------------ ------------
Net (decrease) increase in cash and cash equivalents (6,275,534) 18,975,477
Cash and cash equivalents at beginning of period 43,152,677 25,682,920
------------ ------------
Cash and cash equivalents at end of period $ 36,877,143 $ 44,658,397
============ ============
</TABLE>
See accompanying notes to condensed financial statements
5
<PAGE>
Cadus Pharmaceutical Corporation
Notes to Condensed Financial Statements
(1) Organization and Basis of Preparation
The information presented as of September 30, 1997 and for the three and
nine 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 nine-month period ended September 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 $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 nine month periods ended September 30,
1997, the Company recognized $15,973 and $158,177, 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. 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 first
High Throughput Pharmacological Screening 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 (assuming no
additional shares of common stock or securities convertible into common
stock are issued in the interim) 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 nine month periods ended September
30, 1997, the Company recognized $364,833 and $522,646, respectively in
losses generated by Axiom.
(3) Net Loss Per Share
Net loss per share for the three and nine-month periods ended September
30, 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
6
<PAGE>
during the period. Common stock issuable upon exercise of outstanding
stock options is excluded from the calculation as such inclusion would be
anti-dilutive.
For the three-month and nine-month periods ended September 30, 1996,
primary net loss per share is computed using the weighted average number
of shares of common stock outstanding. Common shares issued in connection
with the initial public offering and the conversion of the convertible
preferred stock on July 22, 1996, are included from the date of issuance.
The calculation for the nine month period ended September 30, 1996 also
includes, pursuant to Securities and Exchange Commission Staff Accounting
Bulletin No. 83, 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 as
if they were outstanding for the three months ended March 31, 1996. For
the three months ended September 30, 1996, common equivalent shares from
stock options are excluded from the computation as their effect is
anti-dilutive
(4) Supplemental Cash Flow Information
Nine Months
ended September 30,
1997 1996
-----------------------------
Cash payments for:
Interest................................. $7,365 $104,847
====== ========
Income taxes............................. $25,518 $23,580
======= =======
(5) Research Collaborations
Bristol- Myers Squibb Company
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, adjusted for inflation beginning July
1997, 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 drug discovery collaboration
with SmithKline Beecham ("SmithKline"). During the term of the
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 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 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 collaboration
after
7
<PAGE>
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 collaboration or (ii) fails to perform
its obligations in the conduct of the 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
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) Relocation of Colorado Facility
On July 14, 1997, the Company announced plans to relocate its Lakewood,
Colorado operations to New York. The Company expects to complete the
relocation by October 31, 1997 at an estimated cost of $400,000.
(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
including net losses of approximately $3.6 million during the nine months
ended September 30, 1997. At September 30, 1997, the Company had an
accumulated deficit of approximately $12.1 million. The Company's losses
have resulted principally from costs incurred in research and development
and from general and administrative expenses 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
Nine Months Ended September 30, 1997 and September 30, 1996
Revenues
Revenues for the nine months ended September 30, 1997 increased to $6.6
million from $4.9 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 nine months ended
September 30, 1997 increased to $8.3 million from $5.9 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 nine months ended September
30, 1997 increased to $2.8 million from $1.2 million 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.
Net Interest Income
Net interest income for the nine months ended September 30, 1997 increased
to $1.6 million from $1.2 million 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.
9
<PAGE>
Equity in Other Ventures
Equity in other ventures reflects losses associated with the Company's two
investments. For the nine months ended September 30, 1997, the Company
recognized losses of $158,177 related to its investment in Laurel Partners
Limited Partnership. For the nine months ended September 30, 1997, the
Company recognized $522,646 in losses generated by Axiom. The Company's
investment in Axiom 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.
Net Loss
The net loss for the nine months ended September 30, 1997 increased to
$3.6 million from $999,000 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 September 30, 1997 and September 30, 1996
Revenues
Revenues for the three months ended September 30, 1997 increased to $2.4
million from $1.6 million for the same period in 1996. This increase was
primarily 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
September 30, 1997 increased to $3.0 million from $2.4 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 additional expenditures for outside
research contracts.
General and administrative expenses for the three months ended September
30, 1997 increased to $820,000 from $539,000 for the same period in 1996.
This increase was attributable primarily to increased legal expenses and
the hiring of management personnel.
Net Interest Income
Net interest income for the three months ended September 30, 1997
decreased to $497,000 from $509,000 for the same period in 1996. This
decrease related primarily to the reduction in interest earned due to
lower cash balances than in the third quarter of the previous year. This
decline in earned interest was slightly offset by the reduction in
interest expense on the line of credit, which was repaid in September
1996.
Equity in Other Ventures
Equity in other ventures reflects losses associated with the Company's two
investments. For the three months ended September 30, 1997, the Company
recognized losses of $15,973 related to its investment in Laurel Partners
Limited Partnership. For the three months ended September 30, 1997, the
Company recognized $364,833 in losses generated by Axiom. The Company's
investment in Axiom 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.
10
<PAGE>
Net Loss
The net loss for the three months ended September 30, 1997 increased to
$1.2 million from $822,000 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 an increase in revenues.
Liquidity and Capital Resources
At September 30, 1997, the Company had cash and cash equivalents of $36.9
million. The Company's working capital at September 30, 1997 was $36.7
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 approximately $1.1 million in property and equipment
during the nine months ended September 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. This forecast of the period of time through which the Company's
financial resources will be adequate to support its operations is a
forward-looking statement that may not prove accurate and, as such, actual
results may vary. 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.
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
Nothing to report.
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
12
<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: November 13, 1997 By
---------------------------------
James S. Rielly
Director of Finance, Controller
and Treasurer
(Authorized Officer and Principal
Financial Officer)
13
<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
14
<PAGE>
Exhibit 11
Computation of Net Loss Per Share
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
(unaudited) (unaudited) (unaudited) (unaudited)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net loss $ (1,200,944) $ (822,141) $ (3,635,033) $ (998,834)
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 12,295,474 10,200,160 12,185,827 4,287,837
Common equivalent shares from stock options issued
during the 12-month period prior to the registration
statement filing using the treasury stock method -- -- -- 66,308
------------ ------------ ------------ ------------
Shares used in calculation of net loss per share 12,295,474 10,200,160 12,185,827 4,354,145
Net loss per common and common equivalent share $ (0.10) $ (0.08) $ (0.30) $ (0.23)
============ ============ ============ ============
Loss per common and common equivalent share
assuming full dilution:
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 10,200,160 4,287,837
Series A convertible preferred stock prior to conversion 826,650 3,582,149
Series B convertible preferred stock prior to conversion 406,746 1,762,567
Common equivalent shares from stock options issued
during the 12-month period prior to the registration
statement filing using the treasury stock method -- 66,308
------------ ------------
Weighted average number of common and common
equivalent shares outstanding assuming full dilution 11,433,556 9,698,861
Net loss per common and common equivalent share
assuming full dilution $ (0.07) $ (0.10)
============ ============
</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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 36,877,143
<SECURITIES> 0
<RECEIVABLES> 65,566
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 37,221,157
<PP&E> 5,446,404
<DEPRECIATION> 2,346,389
<TOTAL-ASSETS> 42,771,483
<CURRENT-LIABILITIES> 516,043
<BONDS> 150,000
0
0
<COMMON> 124,576
<OTHER-SE> 41,980,864
<TOTAL-LIABILITY-AND-EQUITY> 42,771,483
<SALES> 0
<TOTAL-REVENUES> 6,564,150
<CGS> 0
<TOTAL-COSTS> 11,140,139
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,365
<INCOME-PRETAX> (3,675,081)
<INCOME-TAX> (40,048)
<INCOME-CONTINUING> (3,635,033)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,635,033)
<EPS-PRIMARY> (0.30)
<EPS-DILUTED> 0
</TABLE>
