UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITES AND EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the transition period from ______________________ to ____________________
Commission file number 0-28150
NEUROCRINE BIOSCIENCES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 33-0525145
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
10555 SCIENCE CENTER DRIVE
SAN DIEGO, CALIFORNIA 92121
(Address of principal executive offices)
(619) 658-7600
(Registrant's telephone number, including area code)
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 outstanding shares of the registrant's Common Stock, par value
of $0.001, was 18,208,786 as of October 31, 1998.
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NEUROCRINE BIOSCIENCES, INC
FORM 10-Q
INDEX
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PAGE
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PART I FINANCIAL INFORMATION
Item 1 Financial Statements ....................................... 3
Condensed Consolidated Balance Sheets as of
September 30, 1998 and December 31, 1997 .................. 3
Condensed Consolidated Statements of Operations for the
three and nine months ended September 30, 1998 and 1997 .. 4
Condensed Consolidated Statements of Cash Flows for the nine
months ended September 30, 1998 and 1997 ................. 5
Notes to Condensed Consolidated Financial Statements ....... 6
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations ................................. 6
Overview ................................................... 6
Results of Operations ...................................... 7
Liquidity and Capital Resources ............................ 8
Year 2000 .................................................. 9
PART II OTHER INFORMATION
Item 5 Deadline for Recdipt of Stockholder Proposals .............. 10
Item 6 Exhibits and Reports on Form 8-K ........................... 10
SIGNATURES ................................................. 11
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
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<CAPTION>
NEUROCRINE BIOSCIENCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
Sept 30, Dec 31,
1998 1997
---------- ----------
(Unaudited) (Note)
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ASSETS
Current assets
Cash and cash equivalents .......................... $ 18,562 $ 15,771
Short-term investments, available-for-sale ......... 47,526 59,321
Receivables under collaborative agreements ......... 1,062 194
Receivables from related parties and other ......... 338 940
Other current assets ............................... 408 152
-------- --------
Total current assets ............................ 67,896 76,378
Property and equipment, net ............................ 7,333 5,362
Investment in Neuroscience Pharma, Inc. ................ 5,044 3,343
Notes receivable ....................................... 4,286 4,089
Other assets ........................................... 2,319 2,731
======== ========
Total assets .................................... $ 86,878 $ 91,903
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable ................................... $ 1,145 $ 1,822
Accrued expenses, other current liabilities
and current portion of long-term liabilities .... 3,916 5,548
-------- --------
Total current liabilities ....................... 5,061 7,370
Long-term liabilities .................................. 3,153 1,381
-------- --------
Total liabilities .............................. 8,214 8,751
Stockholders' equity
Preferred Stock, $0.001 par value, 5,000,000 shares
authorized, no shares issued and outstanding
Common stock, $0.001 par value, 100,000,000 shares
authorized, issued and outstanding were
18,208,743 shares in 1998 and 17,686,802
shares in 1997 .................................. 18 18
Additional Paid in Capital ......................... 97,118 88,586
Unrealized gains (losses) on marketable securities . 23 2
Deferred stock compensation and shareholder notes .. (403) (559)
Accumulated deficit ................................ (18,092) (4,895)
-------- --------
Total stockholders' equity ...................... 78,664 83,152
======== ========
Total liabilities and stockholders' equity ...... $ 86,878 $ 91,903
======== ========
<FN>
Note: The balance sheet at December 31, 1997 was derived from the audited
financial statements at that date, but does not include all of the disclosures
required by generally accepted accounting principles.
</FN>
See accompanying notes to condensed consolidated financial statements.
</TABLE>
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<TABLE>
<CAPTION>
NEUROCRINE BIOSCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in thousands, except earnings per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
1998 1997 1998 1997
--------- -------- -------- ---------
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REVENUES
Sponsored research ........ $ 1,888 $ 2,988 $ 5,662 $ 8,263
Milestones ................ 750 1,750 2,000 7,750
Other revenues ............ 2,416 1,503 3,819 3,883
-------- -------- -------- --------
Total revenues ......... 5,054 6,241 11,481 19,896
OPERATING EXPENSES
Research and development .. 8,692 4,998 18,599 14,027
General and administrative 1,814 1,566 4,682 4,055
Special charges ........... -- -- 5,510 --
-------- -------- -------- --------
Total operating expenses 10,506 6,564 28,791 18,082
INCOME (LOSS) FROM OPERATIONS . (5,452) (323) (17,310) 1,814
OTHER INCOME AND EXPENSES
Interest income ........... 1,174 1,059 3,294 2,892
Interest expense .......... (23) (35) (87) (123)
Other income .............. 264 257 905 696
-------- -------- -------- --------
INCOME (LOSS) BEFORE
INCOME TAXES .............. (4,037) 958 (13,198) 5,279
Income taxes .................. -- 145 -- 222
-------- -------- -------- --------
NET INCOME (LOSS) ............. $ (4,037) $ 813 $(13,198) $ 5,057
======== ======== ======== ========
EARNINGS (LOSS) PER SHARE
Basic ..................... $ (0.22) $ 0.05 $ (0.74) $ 0.30
Diluted ................... $ (0.22) $ 0.04 $ (0.74) $ 0.26
SHARES USED IN THE CALCULATION
OF EARNINGS (LOSS) PER SHARE
Basic ..................... 18,189 16,950 17,925 16,906
Diluted ................... 18,189 19,327 17,925 19,271
See accompanying notes to condensed consolidated financial statements.
</TABLE>
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<TABLE>
<CAPTION>
NEUROCRINE BIOSCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in thousands)
Nine Months Ended
September 30, 1998
---------------------
1998 1997
---------- ---------
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CASH FLOW FROM OPERATING ACTIVITIES
Net income (loss) ...................................... $(13,198) $ 5,057
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Acquisition of Northwest NeuroLogic for Common Stock .. 4,200 --
Writedown of investment in Neuroscience Pharma ....... 1,281 --
Depreciation and amortization ........................ 1,261 890
Deferred revenues .................................... (875) 125
Deferred expenses .................................... 185 391
Changes in operating assets and liabilities:
Other current assets ............................... (522) (2,416)
Other non-current assets ........................... 924 (3,869)
Accounts payable and accrued liabilities ........... (1,249) 1,360
-------- --------
Net cash flows (used in) provided by
operating activities .................................. (7,993) 1,538
CASH FLOW FROM INVESTING ACTIVITIES
Purchases of short-term investments .................... (31,144) (85,019)
Sales/maturities of short-term investments ............. 42,961 89,932
Purchases of property and equipment, net ............... (3,069) (2,548)
-------- --------
Net cash flows provided by investing activities ........ 8,748 2,365
CASH FLOW FROM FINANCING ACTIVITIES
Issuance of Common Stock ............................... 477 452
Proceeds from capital lease financing .................. 2,334 --
Principal payments on long-term obligations ............ (776) (594)
Payments received on shareholder notes receivable ...... 1 8
-------- --------
Net cash flows provided by (used in)
financing activities .................................. 2,036 (134)
-------- --------
Net increase in cash and cash equivalents .............. 2,791 3,769
Cash and cash equivalents at beginning of the period ... 15,771 11,325
-------- --------
Cash and cash equivalents at end of the period ......... $ 18,562 $ 15,094
======== ========
SUPPLEMENTAL DISCLOSURES
Schedule of noncash investing and financing activities:
Conversion of note receivable to investment in NPI ... $ 1,401 $ --
Conversion of NPI Preferred Stock to investment in NPI 3,855 --
Sold land for note receivable ........................ 3,485 --
See accompanying notes to condensed consolidated financial statements.
</TABLE>
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NEUROCRINE BIOSCIENCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
The condensed consolidated financial statements included herein are
unaudited. These financial statements include the accounts of Neurocrine
Biosciences, Inc. (the "Company") and its wholly owned subsidiary, Northwest
NeuroLogic, Inc. ("NNL"). All significant intercompany transactions have been
eliminated in consolidation. The Company's minority ownership interest in
Neuroscience Pharma, Inc. ("NPI") has been accounted for under the equity
method. Certain reclassifications have been made to prior year amounts to
conform to the presentation for the three and nine months ended September 30,
1998.
The condensed consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions of the Securities and Exchange Commission
on Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
these financial statements include all adjustments (consisting of normal
recurring adjustments) necessary for a fair presentation of the financial
position, results of operations, and cash flows for the periods presented.
The results of operations for the interim periods shown in this report are
not necessarily indicative of results expected for the full year. The financial
statements should be read in conjunction with the audited financial statements
and notes for the year ended December 31, 1997, included in the Company's Annual
Report on Form 10-K filed with the Securities and Exchange Commission.
NOTE 2. NET INCOME PER SHARE
In accordance with Financial Accounting Standards Board Statement No. 128,
"Earnings per Share" ("SFAS 128"), basic earnings per share is calculated by
dividing net income by the weighted average number of common shares outstanding
for the period. Diluted earnings per share reflects the potential dilution of
securities that could share in the earnings of the Company such as common stock
which may be issuable upon exercise of outstanding common stock options,
warrants and preferred stock. These shares are excluded when their effects are
antidilutive. As required by SFAS 128, the Company has restated the earnings per
share presentations for the periods ended September 30, 1997.
NOTE 3. COMPREHENSIVE INCOME
On January 1, 1998, the Company adopted Statement of Financial Accounting
Standard No. 130, "Comprehensive Income" ("SFAS 130. SFAS 130 requires the
disclosure of all components of comprehensive income, including net income and
changes in equity during a period from transactions and other events and
circumstances generated from non-owner sources. Other comprehensive income
consisted of gains (losses) on short-term investments of $16,000 and $21,000 for
the three and nine months ended September 30, 1998, respectively, and $230,000
and $150,000 for the respective periods in 1997.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following Management's Discussion and Analysis of Financial Condition
and Results of Operations of Neurocrine Biosciences, Inc. ("Neurocrine" or the
"Company") contains forward-looking statements which involve risks and
uncertainties, pertaining generally to the expected continuation of the
Company's collaborative agreements, the receipt of research payments thereunder,
the future achievement of various milestones in product development and the
receipt of payments related thereto, the potential receipt of royalty payments,
pre-clinical testing and clinical trials of potential products, the period of
time the Company's existing capital resources will meet its funding
requirements, and financial results and operations. Actual results could differ
materially from those anticipated in these forward-looking statements as a
result of various factors, including those set forth below and those outlined in
the Company's 1997 Annual Report on Form 10-K filed with the Securities and
Exchange Commission.
OVERVIEW
Since the founding of the Company in January 1992, Neurocrine has been
engaged in the discovery and development of novel pharmaceutical products for
diseases and disorders of the central nervous and immune systems. To date,
Neurocrine has not generated any revenues from the sale of products, and does
not expect to generate any product revenues in the foreseeable future. Revenues
are expected to come from the Company's strategic alliances. The Company expects
to generate future net losses in anticipation of significant increases in
operating expenses as products are advanced through the various stages of
clinical development. As of September 30, 1998, Neurocrine has incurred a
cumulative deficit of approximately $18.1 million and expects to incur operating
losses in the future, which may be potentially greater than losses in prior
years.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
Revenues for the third quarter of 1998 were $5.1 million compared to $6.2
million for the comparable period in 1997. The decline of $1.1 million in
revenues resulted primarily from non-recurring 1997 revenues including $1.1
million in sponsored research payments received under the Janssen collaboration
and $1.0 million in milestone payments received under the Novartis
collaboration. Other revenues in 1998 included sponsored development
reimbursements of $2.1 million from NPI.
Research and development expenses increased to $8.7 million for the third
quarter of 1998 compared to $5.0 million for the same period in 1997. This
increase reflects higher costs associated with increased scientific personnel
and related expenditures as the Company broadens its clinical development
pipeline.
General and administrative expenses increased to $1.8 million during thrid
quarter of 1998 compared to $1.6 million for the same period in 1997. The
increase resulted primarily from additional administrative personnel, business
development and professional service expenses to support the expanded clinical
development efforts.
Interest income increased to $1.2 million during the third quarter of 1998
compared to $1.1 million for the same period last year. This increase was due to
higher effective interest yields on the Company's investment portfolio during
the third quarter of 1998 compared to the same period last year.
Net loss for the third quarter of 1998 was $4.0 million or $0.22 per share
compared to net income of $813,000 or $0.05 per share ($0.04 per share assuming
dilution) for the same period in 1997. The decrease in net earnings and earnings
per share resulted primarily from an increase in 1998 research and development
expenses of $3.7 million related to the Company's efforts to broaden its
clinical development pipeline and $1.1 million of non-recurring sponsored
research and milestone revenues received in 1997.
To date, the Company's revenues have come from funded research and
achievements of milestones under corporate collaborations. The nature and amount
of these revenues from period to period may lead to substantial fluctuations in
the results of quarterly revenues and earnings. Accordingly, results and
earnings of one period are not predictive of future periods.
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
Revenues for the nine months ended September 30, 1998 were $11.5 million
compared to $19.9 million for the comparable period in 1997. The decline in
revenues of $8.4 million resulted primarily from non-recurring 1997 revenues
including $2.6 million in sponsored research payments received under the Janssen
collaboration, $1.0 million in milestone payments received under the Novartis
collaboration and a $5.0 million research support payment received under the Eli
Lilly collaboration. Revenues in 1998 include a $250,000 milestone payment
received under the Janssen collaboration and $2.1 million of sponsored
development reimbursements from NPI.
Research and development expenses increased to $18.6 million for the nine
months ended September 30, 1998 compared with $14.0 million for the same period
in 1997. This increase reflects higher costs associated with increased
scientific personnel and related expenditures as the Company broadens its
clinical development pipeline.
General and administrative expenses increased to $4.7 million during the
nine months ended September 30, 1998 compared to $4.1 million for the same
period in 1997. The increase resulted primarily from additional administrative
personnel, business development and professional service expenses to support the
expanded clinical development efforts.
Special charges for the nine months ended September 30, 1998 of $5.5 million
consisted of $4.2 million related to the acquisition of Northwest Neurologic,
Inc. ("NNL") and $1.3 million related to the in-licensing of two chemical
compounds for insomnia and glioblastoma and non-cash charges associated with the
Company's minority-owned Canadian affiliate.
Interest income increased to $3.3 million during the nine months ended
September 30, 1998 compared to $2.9 million for the same period last year. This
increase primarily resulted from higher effective interest yields on the
Company's investment portfolio during 1998.
Net loss for the nine months ended September 30, 1998 was $13.2 million or
$0.74 per share ($0.43 per share excluding special charges) compared to net
income of $5.1 million or $0.30 per share ($0.26 per share assuming dilution)
for the same period in 1997. The decline in net earnings and earnings per share
resulted primarily from special charges of $5.5 million (of which $4.9 million
were non-cash charges), increased operating expenses of $5.2 million related to
the Company's broadened clinical development pipeline, and $8.4 million of
non-recurring 1997 revenues.
To date, the Company's revenues have come from funded research and
achievements of milestones under corporate collaborations. The nature and amount
of these revenues from period to period may lead to substantial fluctuations in
the results of year-to-date revenues and earnings. Accordingly, results and
earnings of one period are not predictive of future periods.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1998, the Company's cash, cash equivalents, and short-term
investments totaled $66.1 million. Cash held by the Company excludes
approximately $2.9 million held by NPI, which is available to fund certain of
the Company's research and development activities.
Cash used in operating activities during 1998 was $8.0 million compared to
net cash provided of $1.5 million for the same period in 1997. The increase in
cash used in operating activities during 1998 was primarily the result of
decreased earnings and payment of current liabilities.
Cash provided by investing activities during 1998 was $8.7 million compared
to $2.4 million during the same period in 1997. The increase in cash provided
was primarily the result of timing differences in investment purchases and
sales/maturities and fluctuations in the Company's portfolio mix between cash
equivalent and short-term investment holdings.
Cash provided by financing activities during 1998 was $2.0 million compared
to net cash used of $134,000 for the same period in 1997. The increase in net
cash provided was primarily due to proceeds received from capital lease
financing of $2.3 million.
The Company believes that its existing capital resources, together with
interest income and future payments due under the strategic alliances, will be
sufficient to satisfy its current and projected funding requirements at least
through the year 2000. However, no assurance can be given that such capital
resources and payments will be sufficient to conduct its research and
development programs as planned. The amount and timing of expenditures will vary
depending upon a number of factors, including progress of the Company's research
and development programs.
YEAR 2000
The "Year 2000" issue generally describes the various problems which may
result from the improper processing of dates and date-sensitive calculations.
Computers and other equipment containing computer-related components (such as
programmable logic controllers and other embedded systems) using two digits to
identify the year in a date may not be able to distinguish between dates in the
20th century versus the 21st century. This issue could cause system or equipment
malfunctions resulting in material and adverse interruptions in operations.
The Company uses and relies on a variety of information technologies,
computer systems and scientific equipment which could be affected by the "Year
2000" issue. In general, the Company has identified two areas for Year 2000
review: internal systems and operations, and external systems and services. The
Company believes it has identified and corrected all Year 2000 issues related to
its information technology ("IT") systems. The Company is currently analyzing
its non-information technology ("Non-IT") systems and expects to have identified
risks and planned for corrections within the next few months. Although the
analysis of Non-IT systems is not complete, the Company believes that costs to
correct any issues identified will be less than $100,000.
In addition to its internal systems review, the Company plans to contact all
of its significant vendors and collaborators to ascertain their Year 2000
readiness and to identify risks associated with external system failures. At
that time, the Company will determine the nature and extent of contingency plans
it may need to reduce risks of operational interruptions. The Company
anticipates that its assessments of its significant third party relationships
will be completed by mid 1999.
Although the Company believes its key financial, information and operational
systems are Year 2000 compliant, there can be no assurances that other defects
will not be discovered in the future. The Company is unable to control whether
the firms and vendors it does business with currently, and in the future, will
have systems which are Year 2000 compliant. The Company's operations could be
affected to the extent that firms and vendors would be unable to provide
services or ship products. However, management does not believe the Year 2000
changes will have a material impact on its business, financial condition or
results of operations.
CAUTION ON FORWARD-LOOKING STATEMENTS
The Company's business is subject to significant risks, including but not
limited to, the risks inherent in its research and development activities,
including the successful continuation of the Company's strategic collaborations,
the successful completion of clinical trials, the lengthy, expensive and
uncertain process of seeking regulatory approvals, uncertainties associated both
with the potential infringement of patents and other intellectual property
rights of third parties, and with obtaining and enforcing its own patents and
patent rights, uncertainties regarding government reforms and of product pricing
and reimbursement levels, technological change and competition, manufacturing
uncertainties and dependence on third parties. Even if the Company's product
candidates appear promising at an early stage of development, they may not reach
the market for numerous reasons. Such reasons include the possibilities that the
product will be ineffective or unsafe during clinical trials, will fail to
receive necessary regulatory approvals, will be difficult to manufacture on a
large scale, will be uneconomical to market or will be precluded from
commercialization by proprietary rights of third parties.
Neurocrine will require additional funding for the continuation of its
research and product development programs, for progress with preclinical testing
and clinical trials, for operating expenses, for the pursuit of regulatory
approvals for its product candidates, for the costs involved in filing and
prosecuting patent applications and enforcing or defending patent claims, if
any, the cost of product in-licensing and any possible acquisitions, and may
require additional funding for establishing manufacturing and marketing
capabilities in the future. The Company may seek to access the public or private
equity markets whenever conditions are favorable. The Company may also seek
additional funding through strategic alliances and other financing mechanisms,
potentially including off balance sheet financing. There can be no assurance
that adequate funding will be available on terms acceptable to the Company, if
at all. If adequate funds are not available, the Company may be required to
curtail significantly one or more of its research or development programs or
obtain funds through arrangements with collaborative partners or others. This
may require the Company to relinquish rights to certain of its technologies or
product candidates.
Continued profitability is not expected as the Company's operating expenses
are anticipated to rise significantly in future periods as products are advanced
through the various development and clinical stages. Neurocrine expects to incur
additional operating expenses over the next several years as its research,
development, preclinical testing and clinical trial activities increase. To the
extent that the Company is unable to obtain third party funding for such
expenses, the Company expects that increased expenses will result in increased
losses from operations. There can be no assurance that the Company's products
under development will be successfully developed or that its products, if
successfully developed, will generate revenues sufficient to enable the Company
to earn a profit.
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Stockholders are entitled to present proposals for action at a forthcoming
meeting if they comply with the requirements of the proxy rules established by
the Securities and Exchange Commissions. Proposals of stockholders of the
Company that are intended to be presented by such stockholders at the Company's
1999 Annual Meeting of Stockholders must be received by the Company no later
than December 18, 1998 in order that they may be considered for inclusion in the
proxy statement and form of proxy relating to that matter.
If a stockholder intends to submit a proposal at the Company's Annual
Meeting, which is not eligible for inclusion in the proxy statement relating to
that meeting, the stockholder must give the Company notice in accordance with
the requirements set forth in the Securities Exchange Act of 1934, as amended,
no later than February 8, 1999. If such a stockholder fails to comply with the
foregoing notice provision, the proxy holders will be allowed to use their
discretionary authority when and if the proposal is raised at the Company's
Annual Meeting in 1999.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. The following exhibits are filed as part of, or incorporated by
reference into this report:
27 Financial Data Schedule
(b) Reports on Form 8-K. During the quarter ended September 30, 1998, the
Company filed no current Reports on Form 8-K.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NEUROCRINE BIOSCIENCES, INC.
Dated: 11/13/98 /s/ Paul W. Hawran
PAUL W. HAWRAN
Senior Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Form
10-Q for the quarter ended September 30, 1998 and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 18,562
<SECURITIES> 47,526
<RECEIVABLES> 1,400
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 67,896
<PP&E> 11,446
<DEPRECIATION> 4,113
<TOTAL-ASSETS> 86,878
<CURRENT-LIABILITIES> 5,061
<BONDS> 0
0
0
<COMMON> 18
<OTHER-SE> 78,646
<TOTAL-LIABILITY-AND-EQUITY> 86,878
<SALES> 0
<TOTAL-REVENUES> 11,481
<CGS> 0
<TOTAL-COSTS> 28,791
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 87
<INCOME-PRETAX> (13,198)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (13,198)
<EPS-PRIMARY> (0.74)
<EPS-DILUTED> (0.74)
</TABLE>
