UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 0-23155
TRIMERIS, INC.
(Exact name of registrant as specified in its charter)
Delaware 56-1808663
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4727 University Drive
Durham, North Carolina 27707
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (919) 419-6050
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), [ x ] Yes [ ] No
and (2) has been subject to such filing requirements for the past 90 days.
[ ] Yes [ x ] No
The number of shares outstanding of the registrant's common stock as of November
13, 1997 was 10,542,829.
<PAGE>
TRIMERIS, INC.
(A Development Stage Company)
FORM 10-Q
For the Nine Months Ended September 30, 1997
INDEX
PART 1. FINANCIAL INFORMATION Page
Item 1. Financial Statements
Balance Sheets as of September 30, 1997 and
December 31, 1996 1
Statements of Operations for the Three and Nine Months
Ended September 30, 1997 and 1996 and Period From
Inception (January 7, 1993) Through September 30, 1997 2
Statements of Cash Flows for the Nine Months
Ended September 30, 1997 and 1996 and Period From
Inception (January 7, 1993) Through September 30, 1997 3
Notes to Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 6
PART 2. OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Securities and Use of Proceeds 10
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
Signature Page 13
Exhibit Index 14
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
TRIMERIS, INC.
(A Development Stage Company)
BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
December 31, September 30,
1996 1997
---- ----
(unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 132 $ 530
Short-term investments -- 5,606
Accounts receivable 33 64
Loans to employees 3 --
Prepaid expenses 45 465
-------- --------
Total current assets 213 6,665
Property, furniture and equipment, net 897 750
-------- --------
Other assets:
Equipment held for resale, net 54 23
Exclusive license agreement, net 32 30
Patent costs, net 413 460
Other, net 75 87
-------- --------
Total other assets 574 600
-------- --------
Total assets $ 1,684 $ 8,015
======== ========
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable $ 255 $ 500
Current installments of capital lease obligations 500 313
Accrued compensation 77 529
Accrued expenses 686 437
-------- --------
Total current liabilities 1,518 1,779
Notes payable 259 260
Capital lease obligations, less current installments 316 274
-------- --------
Total liabilities 2,093 2,313
-------- --------
Commitments and contingencies
Stockholders' equity (deficit):
Series A, B, C, and D preferred stock at $.001 par value
per share, 62,666,667 shares authorized, 33,468,899 and
52,501,266 shares issued and outstanding at December 31,
1996 and September 30, 1997, respectively 33 53
Common Stock at $.001 par value per share, 80,000,000
shares authorized, 436,688 and 1,118,710 shares issued
and outstanding at December 31, 1996 and September 30, 1997 1 1
Additional paid-in capital 17,536 32,782
Deficit accumulated during the development stage (17,965) (24,796)
Deferred compensation -- (2,103)
Unrealized gain on short-term investments -- 20
Notes receivable from stockholders (14) (255)
-------- --------
Net stockholders' equity (deficit) (409) 5,702
-------- --------
Total liabilities and stockholders' equity $ 1,684 $ 8,015
======== ========
</TABLE>
See accompanying notes to financial statements.
1
<PAGE>
TRIMERIS, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Cumulative
Three Months Nine Months From Inception
Ended September 30, Ended September 30, (January 3, 1993)
------------------ ------------------ To September 30,
1996 1997 1996 1997 1997
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenue $ -- $ 129 $ -- $ 341 $ 500
------- ------- ------- ------- --------
Operating expenses:
Research and development 1,507 2,655 3,785 5,514 18,110
General and administrative 424 875 1,226 1,661 6,521
------- ------- ------- ------- --------
Total operating
expenses 1,931 3,530 5,011 7,175 24,631
------- ------- ------- ------- --------
Operating loss (1,931) (3,401) (5,011) (6,834) (24,131)
------- ------- ------- ------- --------
Other income (expense):
Interest income 7 76 39 109 231
Interest expense (43) (28) (129) (106) (896)
------- ------- ------- ------- --------
(36) 48 (90) 3 (665)
------- ------- ------- ------- --------
Net loss $(1,967) $(3,353) $(5,101) $(6,831) $(24,796)
======= ======= ======= ======= ========
Pro forma net loss per share $ (0.41) $ (0.45) $ (1.12) $ (1.06)
======= ======= ======= =======
Pro forma weighted average
shares used in per share
computations 4,820 7,451 4,567 6,422
======= ======= ======= =======
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
TRIMERIS, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Cumulative
Nine Months Ended From Inception
September 30, (January 3, 1993)
----------------- To September 30,
1996 1997 1997
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net Loss $(5,101) $ (6,831) $(24,796)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 507 434 2,065
Other amortization 5 21 47
Amortization of deferred compensation - 233 233
Provision for equipment held for resale - 31 92
Stock issued for consulting services - - 5
Stock issued to repay interest on notes to
stockholders - - 195
Debt issued for research and development - - 193
Loss on disposal of property and equipment - - 17
Changes in operating assets and liabilities:
Accounts receivable and loans to employees (4) (28) (64)
Prepaid expenses (52) (420) (465)
Other assets 80 (12) (81)
Accounts payable 182 245 500
Accrued compensation 77 452 439
Accrued expenses 145 (249) 437
------- -------- --------
Net cash used by operating activities (4,161) (6,124) (21,183)
------- -------- --------
Cash flows from investing activities:
Purchases of short-term investments - (5,586) (5,586)
Purchases of property and equipment (334) (287) (717)
Equipment held for resale - - (115)
Organization costs - - (8)
Patent costs (102) (66) (481)
------- -------- --------
Net cash used in investing activities (436) (5,939) (6,907)
------- -------- --------
Cash flows from financing activities:
Proceeds from issuance of notes payable 101 1 6,410
Lease costs - - (13)
Principal payments under capital lease obligations (119) (229) (1,527)
Proceeds from issuance of Common Stock 29 9 38
Proceeds from issuance of Preferred Stock 3,250 12,777 23,896
Repayment of notes receivable from stockholders - 12 12
Stock issuance costs (24) (109) (196)
------- -------- --------
Net cash provided by financing activities 3,237 12,461 28,620
------- -------- --------
Net increase (decrease) in cash and cash equivalents (1,360) 398 530
Cash and cash equivalents, beginning of period 1,343 132 -
------- -------- --------
Cash and cash equivalents, end of period $ (17) $ 530 $ 530
======= ======== ========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
TRIMERIS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(unaudited)
1. BASIS OF PRESENTATION
Trimeris, Inc. (the "Company") was incorporated on January 7, 1993 to
discover and develop novel therapeutic agents that block viral infection by
inhibiting viral fusion with host cells. These financial statements have been
prepared in accordance with Statement of Financial Accounting Standards No. 7,
"Accounting and Reporting by Development Stage Enterprises," to recognize the
fact that the Company is devoting substantially all of its efforts to
establishing a new business and planned principal operations have not commenced.
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles and applicable
Securities and Exchange Commission regulations for interim financial
information. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the Securities and
Exchange Commission rules and regulations. In the opinion of management, all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of financial position and results of operations have been
made. Operating results for interim periods are not necessarily indicative of
results which may be expected for a full year. The information included in this
Form 10-Q should be read in conjunction with the Risk Factors and Management's
Discussion and Analysis of Financial Condition and Results of Operations
sections and the 1996 financial statements and notes thereto included in the
Company's Registration Statement on Form S-1 as declared effective by the
Securities and Exchange Commission on October 6, 1997 (the "S-1 Registration
Statement").
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
2. PRO FORMA NET LOSS PER SHARE
The pro forma net loss per share is computed based upon the weighted
average number of common shares and common equivalent shares (using the treasury
stock method) outstanding after certain adjustments described below. Common
equivalent shares are not included in the per share calculations where the
effect of their inclusion would be anti-dilutive, except that, in accordance
with Securities and Exchange Commission Staff Accounting Bulletin No. 83, all
common and common equivalent shares issued during the twelve-month period prior
to the initial filing of the S-1 Registration Statement, even when
anti-dilutive, have been included in the calculation as if they were outstanding
for all periods, using the treasury stock method. The pro forma net loss per
common share gives effect to the mandatory conversion of all outstanding shares
of Preferred Stock into 6,261,615 shares of Common Stock upon the completion of
the Company's initial public offering in October, 1997.
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per
Share." SFAS 128 changes the computation of net income per share from the method
currently prescribed by Accounting Principles Board Opinion No. 15. The Company
intends to adopt SFAS 128 for periods ending after December 15, 1997 and to
restate previously reported historical information at that time. Adoption of
SFAS 128 is not expected to materially affect the Company's financial
statements.
4
<PAGE>
3. STATEMENTS OF CASH FLOWS
Deferred stock compensation of $2,336,000 was recognized during the nine
months ended September 30, 1997 for stock options issued below market value.
Interest of $129,000 and $106,000 was paid during the nine months ended
September 30, 1996 and 1997, respectively.
4. INITIAL PUBLIC OFFERING OF STOCK
In October, 1997, the Company closed its initial public offering of common
stock at $12 per share. The net proceeds of the offering, including the proceeds
received in connection with the exercise of the Underwriters' over-allotment
option closed in November, 1997, were approximately $34.5 million after
deducting applicable issuance costs and expenses. In connection with the public
offering, all the outstanding Preferred Stock was converted into approximately
6,261,615 shares of the Company's Common Stock.
5. STOCK SPLIT
Effective July 11, 1997, the Company declared a one for eight and one-half
reverse stock split for common shareholders. This stock split has been
retroactively applied and all periods presented have been restated.
5
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Statements in this Form 10-Q that are not historical fact are
forward-looking statements. These forward-looking statements are based largely
on the Company's expectations and are subject to a number of known and unknown
risks and uncertainties, many of which are beyond the Company's control.
Accordingly, the Company's actual prospective results could differ materially
from those discussed herein. Factors that could cause or contribute to such
differences include, but are not limited to, in addition to those discussed
herein under the heading "Factors That May Impact Future Operations" and
elsewhere in this Form 10-Q, the following: (i) uncertainties associated with
the Company's status as a development stage company with a limited operating
history and a history of losses since inception; (ii) risks inherent in the
Company's present reliance on a single product candidate; (iii) uncertainties,
unanticipated developments or delays related to the Company's clinical trials
and clinical trial strategy and the adverse impact such events may have on the
Company's existing capital resources; (iv) the ability of the Company to
maintain existing or enter into additional collaborative and/or licensing
arrangements with third parties to assist in the commercialization, testing,
manufacturing and marketing of its product candidates; (v) the Company's ability
to obtain adequate additional funding needed to meet the substantial costs
associated with the development of existing and new product candidates; (vi) the
enactment of new or unanticipated regulatory requirements related to the testing
and FDA approval of the Company's product candidates; (vii) the possibility of
infringement of the Company's intellectual property rights and the Company's
ability to protect its product candidates, technology and other proprietary
information; (viii) the Company's ability to develop manufacturing, sales,
marketing and distribution capabilities, and (ix) the Company's ability to
effectively compete with other companies currently developing similar product
candidates, including companies with substantially greater financial and
technical resources. Further information regarding these factors, as well as
other factors that could cause actual results to differ materially from those
set forth in such forward-looking statements, is discussed under the headings
"Risk Factors" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and in the 1996 financial statements and notes
thereto included in the Company's S-1 Registration Statement, which should be
read in conjunction with this Form 10-Q. The Company undertakes no obligation to
release publicly the results of any revisions to the statements contained in
this report to reflect events or circumstances arising after the date hereof.
Overview
Trimeris commenced operations in January 1993, has a limited operating
history and is a development stage company. Since its inception, substantially
all of the Company's resources have been dedicated to the development,
patenting, preclinical testing and a Phase I/II clinical trial of T-20, the
Company's lead product candidate, the development of its proprietary technology
platform and research and development and preclinical testing of other potential
product candidates and compounds discovered by the Company. The Company has
received revenue solely from SBIR grants and an investigative contract and has
yet to generate any revenue from product sales or royalties, and there can be no
assurance that it will be able to generate any such revenues or royalties in the
future.
Product candidates and compounds discovered by the Company and developed
through the Company's product development programs will require significant
additional, time-consuming and costly research and development, preclinical
testing and extensive clinical trials prior to submission of any regulatory
application for commercial use. The Company has incurred losses since its
inception and, as of September 30, 1997, had an accumulated deficit of
approximately $24.8 million. Such losses have resulted principally from expenses
incurred in the Company's research and development activities associated with
the development, patenting, preclinical testing and a Phase I/II clinical trial
of T-20, the development of its proprietary technology platform, research and
development and preclinical testing of other potential product candidates and
compounds discovered by the Company, and from general and administrative
expenses. The Company expects to continue to incur substantial losses for the
foreseeable future. There can be no assurance that the Company will ever
generate significant revenues or achieve profitable operations.
6
<PAGE>
Results of Operations
COMPARISON OF THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
REVENUE. There was no revenue recognized for the three months ended September
30, 1996. Revenue recognized for the three months ended September 30, 1997
consisted of approximately $129,000 of income from SBIR grants.
RESEARCH AND DEVELOPMENT EXPENSES. Total research and development expenses
increased from approximately $1.5 million for the three months ended September
30, 1996 to approximately $2.7 million for the three months ended September 30,
1997. The increase is primarily due to increased costs related to additional
personnel and related laboratory research supplies to support these personnel,
the completion of a Phase I/II clinical trial for T-20 in September 1997, and
the purchase of drug product material for a Phase II clinical trial expected to
begin in the fourth quarter of 1997. Total research personnel were 25 and 28 at
September 30, 1996 and 1997, respectively. The Company expects its research and
development expenses to increase substantially in the future due to continued
expansion of product development activities, including preclinical testing and
clinical trials.
GENERAL AND ADMINISTRATIVE EXPENSES. Total general and administrative expenses
increased from approximately $424,000 for the three months ended September 30,
1996 to approximately $875,000 for the three months ended September 30, 1997.
The increase is due to costs related to additional personnel and consultants to
support the Company's growth. The Company expects its administrative expenses to
increase in the future to support the expansion of its product development
activities and to meet the requirements of operating as a public company.
OTHER INCOME (EXPENSE). Other income (expense) consists of interest income and
expense. Total other expenses changed from approximately $36,000 in expense for
the three months ended September 30, 1996 to $48,000 in income for the three
months ended September 30, 1997. This change was primarily due to increased
interest income due to larger cash balances.
COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
REVENUE. There was no revenue recognized for the nine months ended September 30,
1996. Revenue recognized for the nine months ended September 30, 1997 consisted
of approximately $241,000 of income from SBIR grants and $100,000 from an
investigative contract.
RESEARCH AND DEVELOPMENT EXPENSES. Total research and development expenses
increased from approximately $3.8 million for the nine months ended September
30, 1996 to approximately $5.5 million for the nine months ended September 30,
1997. The increase is primarily due to increased costs related to additional
personnel and related laboratory research supplies to support these personnel,
the continuation and completion of a Phase I/II clinical trial for T-20, and the
purchase of drug product material for a Phase II clinical trial expected to
begin in the fourth quarter of 1997. Total research personnel were 25 and 28 at
September 30, 1996 and 1997, respectively. The Company expects its research and
development expenses to increase substantially in the future due to continued
expansion of product development activities, including preclinical testing and
clinical trials.
GENERAL AND ADMINISTRATIVE EXPENSES. Total general and administrative expenses
increased from approximately $1.2 million for the nine months ended September
30, 1996 to approximately $1.6 million for the nine months ended September 30,
1997. The increase is due to costs related to additional personnel and
consultants to support the Company's growth. The Company expects its
administrative expenses to increase in the future to support the expansion of
its product development activities and to meet the requirements of operating as
a public company.
OTHER INCOME (EXPENSE). Other income (expense) consists of interest income and
expense. Total other expenses changed from approximately $90,000 in expense for
the nine months ended September 30, 1996 to $3,000 in income for the nine months
ended September 30, 1997. This change was primarily due to increased interest
income due to larger cash balances.
7
<PAGE>
Liquidity and Capital Resources
Since inception, the Company has financed its operations primarily through
the private placement of equity securities, the issuance of notes to
stockholders and equipment lease financing. Net cash used by operating
activities was approximately $4.2 million and approximately $6.1 million for the
nine months ended September 30, 1996 and 1997, respectively. The cash used by
operating activities was used primarily to fund research and development and
general and administrative expenses. Cash provided by financing activities was
approximately $3.2 million and approximately $12.5 million for the nine months
ended September 30, 1996 and 1997, respectively. The cash provided by financing
activities was primarily from the sale of equity securities.
As of September 30, 1997, the Company had approximately $6.1 million in
cash and cash equivalents and short-term investments. In October, 1997, the
Company closed its initial public offering of common stock at $12 per share. The
net proceeds of the offering, including the proceeds received in connection with
the exercise of the Underwriters' over-allotment option closed in November,
1997, were approximately $34.5 million after deducting applicable issuance costs
and expenses.
The Company has experienced negative cash flows from operations since its
inception and does not anticipate generating sufficient positive cash flows to
fund its operations in the foreseeable future. The Company has expended, and
expects to continue to expend in the future, substantial funds to pursue its
product candidate and compound discovery and development efforts, including
expenditures for continued clinical trials of T-20, research and development and
preclinical testing of other product candidates and compounds discovered by the
Company and the development of its proprietary technology platform. As of
September 30, 1997, the Company had commitments to purchase approximately $1.3
million of product candidate materials. These expenditures may be financed with
capital or operating leases, debt or working capital. The Company expects that
its existing capital resources, together with the net proceeds received in its
initial public offering of common stock closed in October, 1997, and the
interest earned thereon, will be adequate to fund its capital requirements
through 1998. However, the Company's future capital requirements and the
adequacy of available funds will depend on many factors, including the results
of the clinical trials relating to T-20, the progress and scope of the Company's
product development programs, the magnitude of these programs, the results of
preclinical testing and clinical trials, the need for additional facilities
based on the results of these clinical trials and other product development
programs, changes in the focus and direction of the Company's product
development programs, the costs involved in preparing, filing, processing,
maintaining, protecting and enforcing patent claims and other intellectual
property rights, competitive factors and technological advances, the cost,
timing and outcome of regulatory reviews, changes in the requirements of the
United States Food and Drug Administration, administrative and legal expenses,
evaluation of the commercial viability of potential product candidates and
compounds, the establishment of capacity, either internally or through
relationships with third parties, for manufacturing, sales, marketing and
distribution functions and other factors, many of which are outside of the
Company's control. Thus, there can be no assurance that the Company's existing
capital resources, including the proceeds from its initial public offering
closed in October, 1997, together with the interest earned thereon, will be
sufficient to fund the Company's capital requirements during the period
discussed above. The Company believes that substantial additional funds will be
required to continue to fund its operations and that the Company will be
required to obtain additional funds through equity or debt financing or
licenses, agreements or other arrangements with collaborative partners and
others, or from other sources. The terms of any such equity financings may be
dilutive to stockholders and the terms of any debt financings may contain
restrictive covenants which limit the Company's ability to pursue certain
courses of action. There can be no assurance that such funds will be available
to the Company on acceptable terms, if at all, or that such financings will be
adequate to meet the Company's future capital requirements. If adequate funds
are not available, the Company may be required to delay, scale-back or eliminate
certain aspects of its preclinical testing, clinical trials and research and
development programs or attempt to obtain funds through arrangements with
collaborative partners or others that may require the Company to relinquish
rights to certain of its technologies or product candidates or compounds, which
could have a material adverse effect on the Company's business, financial
condition and results of operations.
8
<PAGE>
Factors That May Affect Future Results
The Company expects to incur substantial losses for the foreseeable future
and expects losses to increase as the Company's research and development,
preclinical testing and clinical trial efforts expand. The amount and timing of
the Company's operating expenses will depend on several factors, many of which
are beyond the Company's control, including the status of the Company's research
and development activities, product candidate and compound discovery and
development efforts, including preclinical testing and clinical trials, the
timing of regulatory actions, the costs involved in preparing, filing,
prosecuting, maintaining, protecting and enforcing patent claims and other
proprietary rights, the ability of the Company to establish, internally or
through relationships with third parties, manufacturing, sales, marketing and
distribution capabilities, technological and other changes in the competitive
landscape, changes in the Company's existing research and development
relationships and strategic alliances, evaluation of the commercial viability of
potential product candidates and other factors, many of which are outside of the
Company's control. As a result, the Company believes that period-to-period
comparisons of financial results in the future are not necessarily meaningful
and results of operations in prior periods should not be relied upon as an
indication of future performance. Any deviations in results from operations from
levels expected by securities analysts and investors could also have a material
adverse effect on the market price of the Common Stock.
The Company's ability to achieve profitability will depend, in part, upon
its or its collaborated partners' ability to successfully develop and obtain
regulatory approval for T-20 and other product candidates and compounds
discovered by the Company, and to develop the capacity, either internally or
through relationships with third parties, to manufacture, sell, market and
distribute approved products, if any. There can be no assurance that the Company
will ever generate significant revenues or achieve profitable operations.
The Company is currently attempting to develop a novel manufacturing
process for T-20 which could be more cost-effective than currently available
methods of production. There can be no assurance of success of this process
development. Currently available manufacturing methodologies are expensive and
such costs, as well as the Company's current dependence on third parties for the
manufacture of its products, and product candidates could adversely affect the
Company's profit margins and its ability to commercialize T-20. There can be
no assurance that the Company will be able to manufacture T-20 on a
cost-effective or timely basis.
9
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
(a) Not applicable.
(b) Not applicable.
(c) Except as hereinafter set forth, there have been no securities sold
by the Company during the quarter ended September 30, 1997 that
were not registered under the Securities Act of 1933, as amended
(the "Securities Act"). Common Stock amounts and prices in this
section have been adjusted to reflect the 1-for-8.5 reverse stock
split of the Company's Common Stock effected on July 11, 1997.
(i) On July 1, 1997, the Company issued 10,589 shares of Common
Stock to a key employee of the Company at a purchase price of
$0.43 per share. From July 1, 1997 through September 30,
1997, the Company issued options to certain employees,
directors, consultants and others to purchase an aggregate of
30,500 shares of Common Stock at a weighted average exercise
price of $1.00 per share. None of such options have been
exercised and all remain outstanding.
From July 1, 1997 to September 30, 1997, previously granted
options to purchase an aggregate of 15,649 shares of Common
Stock have been exercised at a weighted average exercise
price of $.425 per share.
(ii) No underwriters were involved in connection with the
above-referenced sales of securities.
(iii) The issuances of the compensatory stock awards and stock
options, and the shares of Common Stock issued upon exercise
thereof, all as referenced above and all of which were issued
prior to the effectiveness of the S-1 Registration Statement,
were issued in reliance upon the exemption provided by
Section 3(b) of the Securities Act and Rule 701 promulgated
thereunder, as well as Section 4(2) of the Securities Act.
Appropriate legends are affixed to the aforementioned
securities.
(d) Use of Proceeds:
The effective date of the S-1 Registration Statement, registering
2,875,000 shares of Common Stock of the Company, was October 6,
1997. A subsequent registration statement on Form S-1, SEC File No.
333-37319, filed pursuant to Rule 462(b) promulgated under the
Securities Act and registering 287,500 additional shares of Common
Stock, was filed and became effective on October 7, 1997.
The date of the commencement of the offering of such registered
shares was October 7, 1997, and the offering terminated on November
12, 1997, upon the closing of the underwriters' exercise of their
over-allotment option with respect to 412,500 of the registered
shares. The managing underwriters in the offering were UBS
Securities LLC and NationsBanc Montgomery Securities, Inc.
10
<PAGE>
Information concerning the registered shares as of the date of this
report is set forth below:
Title of Security: Common stock
Amount Registered: 3,162,500
Aggregate Price of the
Offering Amount Registered: $37,950,000
Amount Sold: 3,162,500
Aggregate Offering Price of
Amount Sold: $37,950,000
A reasonable estimate of the amount of the expenses incurred to
date by the Company in connection with the issuance and
distribution of the registered shares is as follows:
Underwriting Discounts and Commissions: $ 2,656,500
Finders' Fee: $ -
Expenses Paid To or For Underwriters: $ -
Other Expenses: $ 800,000
------------
Total: $ 3,456,000
============
All of the expenses listed above were direct or indirect payments
to others and not payments to directors, officers, affiliates or
10% stockholders of the Company. The amount of net offering
proceeds to the Company after the total expenses listed above is
approximately $34,494,000.
A reasonable estimate of the amount of the net offering proceeds
used by the Company from the effective date of the S-1 Registration
Statement to the date of this report for each of the purposes
listed below is as follows:
Construction of Plant, Building and Facilities: $ -
Purchase and Installation of Machinery and
Equipment: $ -
Purchase of Real Estate: $ -
Acquisition of Other Businesses: $ -
Repayment of Indebtedness: $ -
Working Capital: $ -
Temporary Investments:
Short Term: $ 34,494,000
Long Term: $ -
Other (specify): $ -
Other Purposes for which at least 5% of the
Total Proceeds (or $100,000, whichever is less)
Has Been Used (Specify): $ -
All of the above-referenced payments were direct or indirect
payments to others and not payments to directors, officers,
affiliates or 10% stockholders of the Company. The use of proceeds
listed above does not represent a material change in the use of
proceeds described in the Company's Prospectus filed as a part of
the S-1 Registration Statement.
Item 3. Defaults Upon Senior Securities
Not applicable.
11
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders
The following matters were voted upon through the execution of written
consents from stockholders, and approved as follows:
Consent
Matter Date For Against
------ ---- --- -------
Amendment to Certificate of
Incorporation July 11, 1997 *
Amendment to Trimeris, Inc.
New Stock Option Plan July 11, 1997 *
Approval of 1997 Employee
Stock Purchase Plan August 28, 1997 *
Amendment to Certificate of
Incorporation August 28, 1997 *
* These matters were approved by a majority or greater of the
stockholders entitled to vote on such matters.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The exhibits filed as part of this Quarterly Report on Form 10-Q
are listed on the Exhibit Index immediately preceding such exhibits
and are incorporated herein by reference.
(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.
Trimeris, Inc.
----------------
(Registrant)
November 12, 1997 /s/ M. ROSS JOHNSON
- ----------------- ------------------------
M. Ross Johnson
President, Chief Executive
Officer, and Chief Scientific
Officer
November 12, 1997 /s/ MATTHEW A. MEGARO
- ----------------- ------------------------
Matthew A. Megaro
Chief Operating Officer,
Chief Financial Officer,
Executive Vice President and
Secretary (Principal Accounting
and Financial Officer)
13
<PAGE>
EXHIBIT INDEX
Number Description
- ------ -----------
11.1 Computations of Loss Per Share
27.1 Financial Data Schedule
14
Exhibit 11.1 Computations of Loss Per Share.
TRIMERIS, INC.
STATEMENTS RE: COMPUTATIONS OF LOSS PER SHARE
(in thousands except per share data)
Three Months Nine Months
Ended September 30, Ended September 30,
------------------ ------------------
1996 1997 1996 1997
---- ---- ---- ----
Common shares outstanding
(weighted average) 1,090 1,090 1,064 1,090
Common Stock equivalents
(using the treasury stock method):
Preferred Stock (1) 3,630 6,261 3,403 5,232
Stock Options and Awards
(weighted average) (2) 100 100 100 100
------- ------- ------- -------
Total pro forma weighted
average shares 4,820 7,451 4,567 6,422
======= ======= ======= =======
Net loss $(1,967) $(3,353) $(5,101) $(6,831)
======= ======= ======= =======
Pro forma net loss per share $ (0.41) $ (0.45) $ (1.12) $ (1.06)
======= ======= ======= =======
(1) Assumes the mandatory conversion of the Preferred Stock into shares of
Common Stock which occurred upon the completion of the Company's Initial
Public Offering in October, 1997.
(2) Includes all options and awards issued during the twelve-month period
prior to the initial filing of the registration statement relating to the
Company's Initial Public Offering, in accordance with Securities and
Exchange Commission Staff Accounting Bulletin No. 83.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 530
<SECURITIES> 5,606
<RECEIVABLES> 64
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,665
<PP&E> 2,795
<DEPRECIATION> 2,045
<TOTAL-ASSETS> 8,015
<CURRENT-LIABILITIES> 1,779
<BONDS> 0
0
53
<COMMON> 1
<OTHER-SE> 5,648
<TOTAL-LIABILITY-AND-EQUITY> 8,015
<SALES> 0
<TOTAL-REVENUES> 341
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7,175
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 106
<INCOME-PRETAX> (6,831)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,831)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,831)
<EPS-PRIMARY> (1.06)
<EPS-DILUTED> (1.06)
</TABLE>
