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 June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number: 0-22890
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SANGSTAT MEDICAL CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 94-3076-069
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(State of incorporation) (IRS Employer Identification No.)
1505 Adams Drive
Menlo Park, CA 94025
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(Address of principal executive office, Zip Code)
Registrant's telephone number, including area code: 650-328-0300
None
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(Former name, former address and former fiscal year,
if changed since last report)
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Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
[ x ] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of June 30, 1998.
CLASS NUMBER OF SHARES
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Common Stock 16,079,155
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SANGSTAT MEDICAL CORPORATION
FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
ITEM 1. FINANCIAL STATEMENTS PAGE
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<S> <C>
CONDENSED CONSOLIDATED BALANCE SHEETS............................3
June 30, 1998 and December 31, 1997
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS..................4
Three and Six Months Ended June 30, 1998 and 1997
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS..................5
Six Months Ended June 30, 1998 and 1997
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS...........6-8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.....................................9-12
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.............13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K................................14
SIGNATURES.................................................................14
</TABLE>
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Part 1. Financial Information
Item 1. Financial Statements
SANGSTAT MEDICAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
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(unaudited) (1)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $48,289,487 $50,630,819
Short-term investments 23,923,006 41,404,955
Accounts receivable (net of allowance for doubt 1,992,190 1,012,631
accounts of $282,599 in 1998 and $139,297 in 1997)
Other receivables 718,181 581,420
Inventories 7,942,848 3,757,451
Prepaid expenses 630,720 1,752,036
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Total current assets 83,496,432 99,139,312
PROPERTY AND EQUIPMENT -- Net 2,390,291 2,015,373
OTHER ASSETS 4,211,856 3,199,785
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TOTAL $90,098,579 $104,354,470
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $5,544,542 $3,486,726
Accrued liabilities 1,282,269 1,222,607
Capital lease obligations -- current portion 392,944 327,222
Notes payable -- current portion 95,908 290,855
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Total current liabilities 7,315,663 5,327,410
CAPITAL LEASE OBLIGATIONS 928,883 1,020,361
NOTES PAYABLE 478,509 536,507
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value, 5,000,000 shares
authorized; none outstanding -- --
Common stock, $.001 par value,
25,000,000 shares authorized;
outstanding: 1998, 16,079,155 shares;
1997, 16,009,531 shares 159,549,740 159,265,454
Accumulated deficit (77,430,044) (61,806,012)
Accumulated translation adjustment (1,280) (14,014)
Unrealized gain (loss) on investments (742,892) 24,764
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Total stockholders' equity 81,375,524 97,470,192
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TOTAL $90,098,579 $104,354,470
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</TABLE>
(1) Derived from the Company's audited consolidated financial statements.
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SANGSTAT MEDICAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- ---------------------------
1998 1997 1998 1997
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<S> <C> <C> <C> <C>
REVENUES
Net product sales $2,579,304 $711,550 $4,122,360 $1,402,049
Revenue from collaborative agreements 310,398 - 310,398 -
------------- ------------- ------------- -------------
Total revenues 2,889,702 711,550 4,432,758 1,402,049
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COSTS AND OPERATING EXPENSES
Cost of sales and manufacturing expense 2,373,737 790,508 3,936,780 1,492,856
Research and development 4,226,894 4,285,923 7,308,974 7,669,430
Selling, general & administrative 6,163,303 2,646,359 10,794,549 4,472,136
------------- ------------- ------------- -------------
Total costs and operating expenses 12,763,934 7,722,790 22,040,303 13,634,422
------------- ------------- ------------- -------------
Loss from operations (9,874,232) (7,011,240) (17,607,545) (12,232,373)
INTEREST INCOME -- NET 890,500 1,566,831 1,983,513 2,255,635
------------- ------------- ------------- -------------
NET LOSS ($8,983,732) ($5,444,409) ($15,624,032) ($9,976,738)
============= ============= ============= =============
NET LOSS PER SHARE -- Basic and diluted (Note 2) ($0.56) ($0.34) ($0.97) ($0.67)
============= ============= ============= =============
WEIGHTED AVERAGE COMMON SHARES 16,054,195 15,882,305 16,034,473 14,788,078
============= ============= ============= =============
</TABLE>
<PAGE>
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SANGSTAT MEDICAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended June 30,
----------------------------
1998 1997
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($15,624,032) ($9,976,738)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 503,325 247,956
Changes in assets and liabilities:
Accounts receivable (984,246) (118,657)
Other receivables (137,917) (587,934)
Inventories (4,189,138) (711,725)
Prepaid expenses 1,120,925 55,140
Accounts payable 2,064,914 1,789,865
Accrued liabilites 61,812 (76,569)
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Net cash used in operating activities (17,184,357) (9,378,662)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of common stock 284,286 76,795,960
Repayment of notes payable (251,653) (275,955)
Repayment of capital lease obligations (184,521) (176,116)
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Net cash provided by (used in) financing activities (151,888) 76,343,889
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (720,950) (244,490)
Maturities of short-term investments 18,664,563 6,397,316
Purchase of short-term investments (1,950,270) (18,470,133)
Other assets (1,013,824) (230,367)
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Net cash provided by (used in) investing activities 14,979,519 (12,547,674)
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EFFECT OF EXCHANGE RATE CHANGES ON CASH 15,394 (29,162)
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NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS (2,341,332) 54,388,391
CASH AND EQUIVALENTS, Beginning of period 50,630,819 19,818,940
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CASH AND EQUIVALENTS, End of period $48,289,487 $74,207,331
============= =============
NONCASH INVESTING AND FINANCING ACTIVITIES:
Property acquired under capital leases $158,765 $402,941
Unrealized loss on investments (767,656) (114,140)
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest $131,807 $91,076
============= =============
</TABLE>
<PAGE>
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SANGSTAT MEDICAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The consolidated financial statements include the accounts of SangStat
Medical Corporation and its wholly owned subsidiaries. Intercompany
accounts and transactions have been eliminated.
While the quarterly financial information in this filing is unaudited, the
financial statements presented reflect all adjustments (consisting only of
normal recurring adjustments) which the Company considers necessary for a
fair presentation of the results of operations for the interim periods
covered and of the financial condition of the Company at the dates of the
interim balance sheets. These results for interim periods are not
necessarily indicative of the results for the entire year. The
information included in this report should be read in conjunction with the
Company's audited financial statements and notes thereto included in the
Company's 1997 Annual Report to Shareholders.
2. Loss Per Share
The Company adopted Statement of Financial Accounting Standards No. 128,
Earnings Per Share ("SFAS 128") in the fourth quarter of 1997. SFAS 128
requires a dual presentation of basic and diluted EPS. Basic EPS excludes
dilution and is computed by dividing net loss by the weighted average of
common shares outstanding for the period. Diluted EPS reflects the
potential dilution that would occur if securities or other contracts to
issue common stock were exercised or converted into common stock. Common
share equivalents including stock options, warrants and redeemable
convertible preferred stock have been excluded as their effect would be
antidilutive. All net loss per share amounts for all periods have been
presented, and where necessary, restated to conform to the SFAS 128
requirement.
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<PAGE> 7
3. Comprehensive Earnings (Loss)
Effective January 1, 1998, the Company adopted SFAS 130, Reporting
Comprehensive Income. This statement requires that all items recognized
under accounting standards as components of comprehensive earnings be
reported in an annual statement and displayed with the same prominence as
other annual financial statements. This statement also requires that an
entity classify items of other comprehensive earnings by their nature in
an annual financial statement. The Company's total comprehensive earnings
(loss) were as follows:
<TABLE>
<CAPTION>
Three months ended Six Months Ended
June 30 June 30
------------------- -----------------
1998 1997 1998 1997
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<S> <C> <C> <C> <C>
Net loss ($8,983,732) ($5,444,409) ($15,624,032) ($9,976,738)
Unrealized gains and losses on
marketable securities classified as
available-for-sale (370,725) 36,104 (767,656) (114,140)
Foreign currency translation
adjustments 3,360 (31,795) 12,734 (30,951)
------------ ------------ ------------ ------------
Total comprehensive loss ($9,351,097) ($5,440,100) ($16,378,954) ($10,121,829)
============ ============ ============= ============
</TABLE>
4. Inventories
Inventories, valued at the lower of cost (first-in, first-out) or market
consist of:
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
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<S> <C> <C>
Raw materials $3,362,974 $1,929,954
Work-in-progress 269,962 144,389
Finished goods 4,309,912 1,683,108
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Total $7,942,848 $3,757,451
============ ============
</TABLE>
5. Recently Issued Accounting Standards
In June 1997, the Financial Accounting Standards Board (FASB) issued SFAS
No. 131, Disclosures About Segments of an Enterprise and Related
Information, which establishes annual and interim reporting standards for
an enterprise's business segments and related disclosures about its
products, services, geographic areas, and major customers. Adoption of
this statement will not impact the Company's consolidated financial
position, results of operations, or cash flows and will be effective for
the Company's fiscal year 1998.
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<PAGE> 8
In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. This statement requires companies to
record derivatives on the balance sheet as assets or liabilities, measured
at fair value. Gains or losses resulting from changes in the values of
those derivatives would be accounted for depending on the use of the
derivative and whether it qualifies for hedge accounting. SFAS No. 133
will be effective for the Company's fiscal year 2000. Management believes
that this Statement will not have a significant impact on the Company.
6. Year 2000 Issue
The Company utilizes various computer software packages in the conduct of
its business activities. The Company believes, that with appropriate
modification to existing software and implementation of new software, that
the Year 2000 issue will not pose significant operational problems and is
not anticipated to be material to its financial position or results of
operations. There can be no assurance, however, that there will not be
delays in, or increased costs associated with, the implementation of such
changes, and the Company's inability to implement such changes could have
a material adverse effect on the Company's business, operating results,
and financial condition. The Company has not yet fully assessed the
extent of its exposure, or investigated the plans of its suppliers and
vendors to address their exposures to these year 2000 problems, and thus
the Company may be adversely impacted should these organizations not
successfully address this issue.
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<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations - Three and Six Months Ended June 30, 1998 and 1997
SangStat is a specialty pharmaceutical company, applying a disease
management approach to improve the outcome of organ transplantation. The
Company has a total of 12 monitoring and therapeutic product and product
candidates to address the pre-transplant, acute care and chronic phases of
transplantation. During the first half of the year, the Company continued
to prepare for the launch of its two lead products, including running
additional clinical studies, building a sales and marketing sales team and
developing THE TRANSPLANT PHARMACY.
Total revenues. Net product sales in the second quarter 1998 increased to
$2,579,000 from $712,000 in the same quarter of 1997 and were $4,122,000
in the first half of 1998 as compared to $1,402,000 in the same period in
1997. Both the increase for the second quarter of $1,867,000 or 262% and
the increase for the first half of the year of $2,720,000 or 194%, were
primarily due to a nearly ten-fold increase in sales of THE TRANSPLANT
PHARMACY and an increase in the sales of THYMOGLOBULIN in Canada under
that country's Emergency Drug Release (EDR) Program. This increase was
partially offset by a decrease in sales of the Company's monitoring
products. In the second quarter of 1998, three additional transplant
centers became participants in THE TRANSPLANT PHARMACY, which brought the
number of participating centers in the United States to fourteen and
further expanded the number of patients enrolled in THE TRANSPLANT
PHARMACY. Revenue from collaborative agreements was $310,000 for the three
and six months ended June 30, 1998.
Cost of sales and manufacturing. Cost of sales and manufacturing expenses
were $2,374,000 in the second quarter of 1998 as compared with $791,000 in
the corresponding quarter of 1997 and were $3,937,000 in the first half of
1998 as compared to $1,493,000 in the same period in 1997. Both the
increase for the second quarter of $1,583,000 or 200% and the increase for
the first half of the year of $2,444,000 or 164%, were substantially due
to additional costs associated with increased sales of THE TRANSPLANT
PHARMACY and the increase in therapeutic product sales in Canada under
that country's EDR program.
Research and development. Research and development expenses decreased
slightly to $4,227,000 in the second quarter of 1998 from $4,286,000 in
the same period in 1997 and decreased to $7,309,000 for the first half of
1998 from $7,669,000 in the same period in 1997. These decreases
primarily reflect a decline in research and development expenses for
monitoring products as well as regulatory and clinical development
expenses for CYCLOSPORINE, partially offset by increases in expenses for
THYMOGLOBULIN, AZATHIOPRINE and XENOJECT. The Company continues to
conduct both ongoing and newly initiated clinical trials with several
cyclosporine dosage forms, the CycloTech dosing device, THYMOGLOBULIN,
monitoring devices, CELSIOR, AZATHIOPRINE, ALLOTRAP peptides and
XENOJECT.
Sang-35, the Company's first CYCLOSPORINE product candidate, is currently
in late stage review at the U.S. Food and Drug Administration (FDA) as a
bioequivalent formulation to Neoralr for the prevention of rejection in
organ transplant recipients. Sang-35 has also been filed in Europe under
the mutual recognition process. The Company has now completed more than
30 human trials with Sang-35 and more than 500 healthy volunteers and
kidney, liver and heart recipients have received Sang-35 to date.
Further, in regard to CYCLOSPORINE, SangStat received notice in June that
the United States Patent Trademark Office issued Patent No. 5,766,629
covering the Company's proprietary CYCLOSPORINE formulation technology.
The allowed claims under this patent cover multiple combinations of families
of excipients (non-active ingredients), that when combined with the active
ingredient, cyclosporine, result in multiple absorption profiles. These
profiles include, but are not limited to, SangStat's lead CYCLOSPORINE
product candidate, Sang-35.
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<PAGE> 10
In regard to THYMOGLOBULIN, the Company's application for market clearance
for the treatment of acute rejection in kidney transplantation is
currently in late stage review at the FDA. New data from the first U.S.
double blinded trial evaluating THYMOGLOBULIN vs. ATGAM for induction
therapy at the time of transplant, to prevent acute graft rejection in
kidney transplant patients, were also presented at the annual meeting in
May of the American Society of Transplant Physicians. Based on the results
of this induction trial, the Company intends to conduct further studies
with THYMOGLOBULIN for the prevention of rejection as part of its
development program for this new indication in the United States.
Selling, general and administrative. Selling, general and administrative
expenses increased to $6,163,000 in the second quarter of 1998 from
$2,646,000 in the same quarter of the previous year. This increase of
$3,517,000 or 133% primarily reflects the Company's successful expansion
of its commercial infrastructure and pre-launch activities to help support
the future potential U.S. launches, subject to regulatory approvals, of
the Company's first two therapeutic product candidates, THYMOGLOBULIN and
CYCLOSPORINE, and the growth of The Transplant Pharmacy. Selling, general
and administrative expenses increased to $10,795,000 in the first half of
1998 from $4,472,000 in the first half of 1997. This increase of
$6,323,000 or 141% from the first half of 1997 to the first half of 1998
is attributable to an increase of $3,864,000 in sales and marketing for
monitoring and therapeutic products and an increase of $2,459,000 in
general administrative expenses, including THE TRANSPLANT PHARMACY. The
Company has expanded its North American marketing, sales and customer
service departments and continues to make personnel additions to support
the growing number of patients and centers in THE TRANSPLANT PHARMACY.
Other income and expenses. Interest income decreased by $674,000 or 42%
to $935,000 in the second quarter of 1998 from $1,609,000 in the second
quarter of the previous year and also decreased by $252,000 or 11% to
$2,079,000 in the first half of 1998 from $2,331,000 in the first half of
1997. These decreases are due to the decrease in the average cash balance
available for investment as a result of the Company's use of cash for
operating activities. Interest and other expense for capital lease
obligations and long term notes increased by $19,000 or 25% to $95,000 in
the first half of 1998 from $76,000 in the first half of 1997.
Net loss. The Company's net loss increased to $8,984,000 or $0.56 per
share in the second quarter of 1998, compared with a net loss of
$5,444,000 or $0.34 per share in the second quarter of 1997. For the
first half of 1998, the Company's net loss increased to $15,624,000 or
$0.97 per share compared with a net loss of $9,977,000 or $0.67 per share
in the first half of 1997.
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<PAGE> 11
Liquidity and Capital Resources
During the first six months of 1998 and 1997, the net cash used in
operating activities was approximately $17,184,000 and $9,379,000,
respectively. The increase in net cash used in operating activities in
these periods is due substantially to the increased amount of net loss
incurred in each of these periods. As of June 30, 1998, the Company had
cash, cash equivalents and short-term investments of $72,212,000 and total
assets of $90,099,000.
Net cash used by financing activities was $152,000 for the six months
ended June 30, 1998, compared to net cash provided of $76,344,000 for the
same period in 1997. The amount in 1997 was substantially comprised of
proceeds received from the sale of Common Stock in the Company's public
offering in March 1997, offset in part by net repayments of notes payable
and capital lease obligations.
Net cash provided by investing activities for the six months ended June
30, 1998 was $14,980,000 compared to net cash used of $12,548,000 for the
same period in 1997. The amount in 1998 is primarily the result of the
maturity of short-term investments compared to the Company's net purchases
of short-term investments in 1997.
SangStat has developed its plan to address the European transplantation
market. As such, in June, the Company and Pasteur Merieux Connaught
(Rhone-Poulenc Group) announced that they had signed a binding agreement
for the acquisition by the Company of Pasteur Merieux Connaught's organ
transplant business known as IMTIX. Currently operated as a separate
division of Pasteur Merieux Connaught, IMTIX is dedicated to the
development, manufacture and sale of transplantation products in more than
60 countries outside of North America and is expected to generate sales of
approximately $22-28 million in 1998. The transaction is an acquistion of
IMTIX by the Company for cash, involving an up-front payment at closing
and deferred cash payments over five years. In addition, the Company will
pay Pasteur Merieux Connaught royalties on IMTIX product sales, which are
variable and contingent upon the sales of certain IMTIX products. The
Company expects that its current cash position will be sufficient to fund
the acquisition. Closing of the transaction is subject to certain
regulatory and due diligence requirements. Subject to these requirements,
the companies anticipate closing before year-end. The transaction will be
accounted for using the purchase method.
The Company expects to incur significant costs related to, among other
things, continued clinical and pre-clinical testing, regulatory approval
activities and research and development programs in the future and
establishment of larger sales staffs in the United States and Europe. If
and when the Company receives FDA approval of its therapeutic drug
candidates, the Company expects to have additional working capital
requirements for expansion of sales, increased inventory levels and
payment of certain license obligations. If the Company receives FDA
approval for THYMOGLOBULIN, it may be obligated to make a final milestone
payment under a related license agreement totaling $1.5 million. The
Company believes that its existing capital resources, together with
product sales and interest income will be sufficient to meet the Company's
operating and capital requirements through at least 1999. Although the
Company has no current contractual obligations relating to capital
expenditures, it anticipates that capital expenditures, primarily for its
United States operations, will aggregate approximately $1.0 million during
1998. The Company's future capital requirements will depend on many
factors, including its research and development programs, the scope and
results of clinical trials, the time and costs involved in obtaining
regulatory approvals, the costs involved in obtaining and enforcing
patents or any litigation by third parties regarding intellectual
property, the status of competitive products, the establishment of sales
and marketing capacity or third-party manufacturing arrangements, the
establishment of collaborative relationships with other parties, and the
costs of manufacturing scale-up and working capital requirements for
inventory and financing of accounts receivable. If adequate funds are not
available, the Company may be required to delay, scale back or eliminate
one or more of its development programs or obtain funds through
arrangements with collaborative partners or others that may require the
Company to relinquish rights to certain technologies, product candidates
or products that the Company would not otherwise relinquish.
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<PAGE> 12
This document contains forward-looking statements that involve risks and
uncertainties. Forward-looking statements may reflect the Company's
current views with respect to future events. Actual results may vary
materially and adversely from those anticipated, believed, estimated, or
otherwise indicated. Important factors common to the regulatory review
and approval process could cause actual results to differ materially with
regard to the approvability and possible market acceptance of the
Company's CYCLOSPORINE drug product, CycloTech device and THYMOGLOBULIN.
These factors include, without limitation: (1) that data obtained from
clinical trials are subject to varying interpretations, and there can be
no assurance that the regulatory agencies (or the agencies' panel of
experts) will agree with the Company's assessment of clinical trial
results or proposed labels; (2) that there can be no assurance that the
agencies will not issue new guidelines, guidance documents, policies, or
regulations or otherwise have new, different or previously unknown
requirements that may materially affect the approvability of the product;
(3) that there can be no assurance that CycloTech will be accepted under a
510 (k) review process; (4) that there can be no assurance that final
labeling can be agreed upon in a timely manner; (5) that there can be no
assurance that any manufacturing or control issues will be adequately
resolved to the agencies' satisfaction; (6) that there can be no assurance
that any current or future questions relating to the FDA's review of the
ANDA, PLA or ELA applications or to the inspection of the THYMOGLOBULIN
manufacturing facility can be adequately answered to the FDA's
satisfaction; (7) that there can be no assurance of regulatory approval
of either CYCLOSPORINE, CycloTech, (in the US or in Europe) or
THYMOGLOBULIN (in the US); and (8) that there can be no assurance of a
closing of the transaction with Pasteur Merieux Connaught.
Other factors that could cause actual results to differ materially
include, without limitation, uncertainty related to the current or future
manufacturing of commercial quantities of CYCLOSPORINE, CycloTech and
THYMOGLOBULIN on commercially favorable terms, adequate and continuous
supply of bulk CYCLOSPORINE drug substance and CycloTech devices, market
acceptance, profitability, competition and potential litigation. For a
discussion of other factors that might result in different outcomes, see
the Company's annual report on Form 10-K, in particular, "Risks Associated
with CYCLOSPORINE" set forth therein, filed with the Securities and
Exchange Commission.
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<PAGE> 13
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
The Company distributed its Definitive Proxy Statement, Proxy and Annual
Report to Shareholders on or about June 22, 1998 to each stockholder of
record as of June 5, 1998, for its Annual Meeting of Stockholders held
July 22, 1998. At the Company's Annual Meeting, the stockholders were
asked to consider three proposals.
The first proposal involved the election of directors. The existing Board
of Directors selected seven nominees, all of whom ran unopposed and all of
whom were then serving as directors of the Company. The nominees of the
Board, and the voting results with respect thereto, were:
Name Votes For Against
Philippe Pouletty 12,940,517 114,537
Fredric J. Feldman 12,941,817 113,237
Elizabeth Greetham 12,941,817 113,237
Richard D. Murdock 12,941,817 113,237
Andrew J. Perlman 12,941,817 113,237
Gordon Russell 12,941,817 113,237
Vincent R. Worms 12,941,817 113,237
The second proposal was a series of amendments to the Company's 1993 Stock
Option Plan, including: an increase in the number of shares of Common
Stock reserved for issuance thereunder by 700,000 shares; provide for an
automatic annual increase in the number of shares available for grant on
the first day of each calendar year during the term of the 1993 Plan,
beginning in 1999, by 400,000 shares; and provide that for any option
granted under the 1993 Plan the exercise price per share of Common Stock
shall be not less than 100% of the fair market value of the Company's
Common Stock at the grant date. The number of shares cast for, against and
abstentions were 8,652,012; 4,278,703; 124,339, respectively. The percent
of shares voted in favor of this proposal was 66%.
The third and final proposal was the ratification of the Company's
independent auditors, Deloitte & Touche LLP, for the fiscal year ending
December 31, 1998. The number of shares cast for, against, and the number
of abstentions were 13,043,270; 8,520 and 3,264, respectively. The
percent of shares voted in favor of this proposal was over 99%.
All the proposals above were approved by the stockholders at the Company's
Annual Meeting of Stockholders.
-13-
<PAGE> 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EDGAR Financial Data Schedule 27.1
(b) There were no reports on Form 8-K filed during the period
covered by this report.
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.
SANGSTAT MEDICAL CORPORATION
----------------------------
(REGISTRANT)
DATE: August 13, 1998 BY: /S/ PHILIPPE POULETTY, M.D.
------------------------------------
PHILIPPE POULETTY, M.D.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
DATE: August 13, 1998 BY: /S/ JAMES F. HINRICHS, CFA
------------------------------------
JAMES F. HINRICHS, CFA
CHIEF FINANCIAL OFFICER
-14-
<PAGE> 15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM CONDENSED CONSOLIDATED BALANCE SHEET OF JUNE 30,
1998 AND DECEMBER 31, 1997 AND THE CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS, JUNE 30, 1998/1997.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 48,289,487
<SECURITIES> 23,923,006
<RECEIVABLES> 2,710,371
<ALLOWANCES> 0
<INVENTORY> 7,942,848
<CURRENT-ASSETS> 83,496,432
<PP&E> 2,390,291
<DEPRECIATION> 0
<TOTAL-ASSETS> 90,098,579
<CURRENT-LIABILITIES> 7,315,663
<BONDS> 0
0
0
<COMMON> 159,549,740
<OTHER-SE> (78,174,216)
<TOTAL-LIABILITY-AND-EQUITY> 90,098,579
<SALES> 4,122,360
<TOTAL-REVENUES> 4,432,758
<CGS> 3,936,780
<TOTAL-COSTS> 3,936,780
<OTHER-EXPENSES> 18,103,523
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,983,513
<INCOME-PRETAX> (15,624,032)
<INCOME-TAX> 0
<INCOME-CONTINUING> (15,624,032)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (15,624,032)
<EPS-PRIMARY> ($0.97)
<EPS-DILUTED> ($0.97)
</TABLE>
