<PAGE> 1
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, 1996.
[ ] 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
0-23160
ANESTA CORP.
(Exact name of registrant as specified in its charter)
Delaware 87-0424798
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4745 Wiley Post Way
Plaza 6, Suite 650
Salt Lake City, UT 84116
(801) 595-1405
(Address, including zip code, and telephone number,
including area code, of principal executive offices)
Securities registered pursuant to Section 12(g) of the Act:
Common Stock $.001 par value
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Sections 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
-------- ---------
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date .
Common Stock $.001 par value 9,402,100
Class Outstanding at August 5, 1996
<PAGE> 2
ANESTA CORP.
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE NO.
--------
<S> <C>
Balance Sheets -
June 30, 1996 (unaudited) and December 31, 1995 2
Statements of Operations -
for the three and six months ended June 30, 1996 and 1995
(unaudited) and the period from August 1, 1985 (inception)
to June 30, 1996 (unaudited) 3
Statements of Cash Flows -
for the six months ended June 30, 1996 and 1995 (unaudited)
and the period from August 1, 1985 (inception) to
June 30, 1996 (unaudited) 4
Notes to Financial Statements (unaudited) 6
Management's Discussion and Analysis of
Financial Condition and Results
of Operations 9
PART II. OTHER INFORMATION 12
SIGNATURES 13
</TABLE>
1
<PAGE> 3
ANESTA CORP.
(A Development Stage Company)
BALANCE SHEETS
---------
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 1996 1995
------------ ------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 30,641,033 $ 3,540,147
Current portion of certificate of deposit 153,000 153,000
Marketable debt securities,
available-for-sale 13,653,067 16,773,547
Accounts receivable 458,911 410,432
Prepaid expenses and other current assets 416,882 77,134
------------ ------------
Total current assets 45,322,893 20,954,260
------------ ------------
Property and equipment, at cost:
Furniture and equipment 892,845 870,042
Leasehold improvements 1,509,430 1,509,430
Accumulated depreciation (598,517) (480,372)
------------ ------------
1,803,758 1,899,100
------------ ------------
Other assets:
Certificate of deposit 1,377,000 1,377,000
Other assets 10,339 11,568
------------ ------------
1,387,339 1,388,568
------------ ------------
Total assets $ 48,513,990 $ 24,241,928
============ ============
<CAPTION>
June 30, December 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1995
------------ ------------
(Unaudited)
<S> <C> <C>
Current liabilities:
Accounts payable $ 424,980 $ 231,288
Accrued liabilities
Accrued compensation 193,033 247,741
Other 184,849 219,131
Current portion of notes payable 150,000 150,000
Current portion of obligations under capital leases 3,380 16,363
------------ ------------
Total current liabilities 956,242 864,523
Unearned advance royalty revenues 350,000 350,000
Notes payable 1,350,000 1,350,000
------------ ------------
Total liabilities 2,656,242 2,564,523
------------ ------------
Stockholders' equity:
Common stock, par value, $.001 per share; Authorized:
15,000,000 shares; Issued:
9,402,445 in 1996 and 7,207,716 in 1995 9,402 7,208
Additional paid-in capital 61,532,512 33,270,848
Deficit accumulated during the development stage (15,657,014) (11,723,314)
Treasury stock (345 shares), at cost (4,226) (4,226)
Notes receivable from issuance of common stock (7,000) (7,000)
Unrealized gain (loss) on marketable debt securities,
available-for-sale (15,926) 133,889
------------ ------------
Total stockholders' equity 45,857,748 21,677,405
------------ ------------
Total liabilities and stockholders' equity $ 48,513,990 $ 24,241,928
============ ============
</TABLE>
The accompanying notes are an integral
part of the financial statements
2
<PAGE> 4
ANESTA CORP.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
-------
<TABLE>
<CAPTION>
Three months ended Six months ended
-------------------------- --------------------------- Period from inception
June 30, June 30, June 30, June 30, (August 1, 1985) to
1996 1995 1996 1995 June 30, 1996
------------ ----------- ------------ ------------ ---------------------
<S> <C> <C> <C> <C> <C>
Revenues:
Product sales $ 30,366 $ 12,269 $ 49,950 $ 29,267 $ 147,951
Royalty revenue 887 389 1,458 857 104,349
Revenues from contract research 375,000 375,000 750,000 759,000 9,225,931
------------ ----------- ------------ ------------ --------------
Total revenues 406,253 387,658 801,408 789,124 9,478,231
------------ ----------- ------------ ------------ --------------
Operating costs and expenses:
Cost of goods sold 9,387 4,124 15,440 9,047 55,839
Royalties 938 412 1,542 904 6,542
Research and development 1,961,339 1,114,426 3,755,914 2,122,971 18,297,920
Depreciation and amortization 60,210 22,360 120,198 45,304 710,133
Selling, general and administrative 951,307 319,740 1,562,785 674,792 7,383,503
------------ ----------- ------------ ------------ --------------
Total costs and expenses 2,983,181 1,461,062 5,455,879 2,853,018 26,453,937
------------ ----------- ------------ ------------ --------------
Loss from operations (2,576,928) (1,073,404) (4,654,471) (2,063,894) (16,975,706)
Non operating income (expense):
Interest income 461,686 430,205 769,739 867,973 3,156,023
Interest expense (31,248) (33,019) (57,261) (40,608) (298,731)
Other 8,387 (9,695) 8,393 (9,695) (4,560)
------------ ----------- ------------ ------------ --------------
Loss before provision for income
taxes, extraordinary item and cumulative
effect of accounting change (2,138,103) (685,913) (3,933,600) (1,246,224) (14,122,974)
Provision for income taxes (100) (100) (23,405)
------------ ----------- ------------ ------------ --------------
Loss before extraordinary item and
cumulative effect of change in accounting (2,138,103) (685,913) (3,933,700) (1,246,324) (14,146,379)
Extraordinary item - reduction of income
taxes arising from carryforward of prior
years' operating losses 22,296
Cumulative effect of change in accounting (1,041,047) (1,041,047)
------------ ----------- ------------ ------------ --------------
Net loss $ (2,138,103) $ (685,913) $ (3,933,700) $ (2,287,371) $ (15,165,130)
============ =========== ============ ============ ==============
Loss per common share amounts--
Loss before extraordinary item and cumulative
effect of change in accounting $ (0.27) $ (0.10) $ (0.52) $ (0.17)
Cumulative effect of change in accounting (0.15)
------------ ----------- ------------ ------------
Net loss per common share $ (0.27) $ (0.10) $ (0.52) $ (0.32)
============ =========== ============ ============
Shares used in computing net
loss per common share 7,951,101 7,179,067 7,586,005 7,162,746
============ =========== ============ ============
</TABLE>
The accompanying notes are an integral
part of the financial statements
3
<PAGE> 5
ANESTA CORP.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
--------
<TABLE>
<CAPTION>
Six months ended
---------------------------- Period from inception
June 30, June 30, (August 1, 1985) to
1996 1995 June 30, 1996
------------ ------------ ---------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (3,933,700) $ (2,287,371) $(15,165,130)
Adjustments to reconcile net loss to net cash
used in operating activities
Cumulative effect of change in accounting 1,041,047 1,041,047
Depreciation and amortization 120,198 45,304 710,133
Debt conversion expense 101,330
Interest converted to equity 94,104
Compensatory stock options and stock 3,539
(Gain) loss on retirement of assets (8,387) 9,695 28,227
Increase (decrease) due to changes in:
Accounts receivable (48,479) 3,985 (458,911)
Prepaid expenses and other current assets (339,748) (688,081) (416,882)
Other assets 1,229 (827) (12,916)
Accounts payable 193,692 (445,093) 424,980
Accrued liabilities (88,990) (8,764) 377,882
Unearned advance royalty revenues 350,000
------------ ------------ ------------
Net cash used in operating activities (4,104,185) (2,330,105) (12,922,597)
------------ ------------ ------------
Cash flows from investing activities:
Capital expenditures (24,856) (1,167,949) (2,292,106)
Proceeds from sale of assets 150 1,500 10,125
Costs associated with license agreements (1,109,533)
Advances to employees (1,650)
Purchase of marketable debt securities,
available-for-sale (5,384,626) (6,565,840) (34,903,512)
Proceeds from maturities of marketable debt securities,
available-for-sale 8,363,528 5,400,219 21,242,756
Purchase of treasury bills (1,174,419)
Proceeds from maturity of treasury bills 1,174,419
Purchase of certificate of deposit (1,530,000) (1,530,000)
------------ ------------ ------------
Net cash provided by (used in) investing activities 2,954,196 (3,862,070) (18,583,920)
------------ ------------ ------------
Cash flows from financing activities:
Principal payments on notes payable (37,500)
Proceeds from issuance of notes payable 1,500,000 2,537,700
Principal payments on obligations under capital leases (12,983) (23,444) (191,109)
Proceeds from issuance of common stock 28,263,858 63,268 59,793,224
Collections on notes receivable from
issuance of common stock 58,000
Proceeds from issuance of preferred stock 756,222
Deferred offering costs (277,103)
Dividends paid on preferred stock (491,884)
------------ ------------ ------------
Net cash provided by financing activities 28,250,875 1,539,824 62,147,550
------------ ------------ ------------
Net increase (decrease) in cash and cash equivalents 27,100,886 (4,652,351) 30,641,033
Cash and cash equivalents at beginning of period 3,540,147 11,489,097
------------ ------------ ------------
Cash and cash equivalents at end of period $ 30,641,033 $ 6,836,746 $ 30,641,033
============ ============ ============
</TABLE>
- Continued -
The accompanying notes are an integral
part of the financial statements
4
<PAGE> 6
ANESTA CORP.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS, Continued
(Unaudited)
--------
<TABLE>
<CAPTION>
Six months ended
----------------------------- Period from inception
June 30, June 30, (August 1, 1985) to
1996 1995 June 30, 1996
--------- --------- --------------------
<S> <C> <C> <C>
SUPPLEMENTAL SCHEDULE OF NONCASH ACTIVITIES:
The Company issued stock and stock options for:
Purchase of additional license agreement $ 5,400
Notes receivable 71,000
The Company purchased leasehold improvements
using accounts payable 251,507
The Company entered into various capital lease
arrangements 204,610
The Company received stock as payment of a
note receivable 4,226
</TABLE>
The accompanying notes are an integral
part of the financial statements
5
<PAGE> 7
ANESTA CORP.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
--------
1. Significant Accounting Policies:
In the opinion of management, the accompanying financial statements
contain all adjustments (consisting only of normal recurring items)
necessary to present fairly the financial position of Anesta Corp. (a
development stage company) (the Company) as of June 30, 1996, and the
results of its operations for the three and six months ended June 30,
1996 and 1995 and for the period from inception (August 1, 1985) to
June 30, 1996, and its cash flows for the six months ended June 30,
1996 and 1995 and for the period from inception (August 1, 1985) to
June 30, 1996. The results of operations for the periods presented
are not necessarily indicative of the results to be expected for the
full year period.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested
that these financial statements be read in conjunction with the
Company's Annual Report on Form 10-K for the period ended December 31,
1995.
Net Loss Per Share
Net loss per common share is computed using the weighted average
number of common and common equivalent shares outstanding during each
period. Common stock equivalents consist of convertible preferred
stock, common stock options and warrants. Common equivalent shares
are excluded from the computation when their effect is antidilutive.
Net loss per common share for the period from inception to June 30,
1996 has not been presented as such information is not considered to
be relevant or meaningful.
Reclassifications
Certain balances in the June 30, 1995 financial statements have been
reclassified to conform to the current year presentation. These
changes had an immaterial effect on the previously reported net loss.
2. Cash and Cash Equivalents and Marketable Debt Securities:
At June 30, 1996, the Company maintained a majority of its cash and
cash equivalents and marketable debt securities in a bank in San
Francisco, California.
3. Income Taxes:
The provision for income taxes for the six months ended June 30, 1996
and 1995 is related solely to state income taxes.
6
<PAGE> 8
ANESTA CORP.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS, Continued
(Unaudited)
--------
4. Revolving/Term Promissory Note Agreement:
On January 11, 1995, the Company entered into a revolving/term
promissory note in the amount of $1.5 million. The agreement provides
for an interest rate of "160 basis points" above the financial
institution's certificate of deposit rate (6.40% at June 30, 1996).
On May 15, 1995, the term of the revolving promissory note ended and
the Company entered into a 10 year term note in the amount of $1.5
million. The interest rate remains the same and the Company will make
annual payments on the note on approximately July 15 of each of the
next ten years. Borrowings under the agreement are collateralized by
a certificate of deposit in the amount of $1,530,000, which is
maintained in a bank in Salt Lake City, Utah.
5. Funding Agreements:
Effective September 8, 1995, the Company entered into a 1996 funding
agreement with Abbott Laboratories Hospital Products Division
(Abbott), under which Abbott will provide up to $1,500,000 of funding
to further the clinical development of Actiq(TM) to treat
cancer-related pain (the "Actiq Cancer Pain Program"). The funding
will be provided in equal quarterly payments of $375,000 for
qualifying work performed and expenses incurred during the year ended
December 31, 1996 in connection with the Actiq Cancer Pain Program.
Under the agreement, the Company will provide the additional funding
required for this program during the year ended December 31, 1996 and
will complete certain program milestones. Through June 30, 1996, the
Company had recognized revenue of $750,000 which represents the
funding for qualifying expenses incurred. As of June 30, 1996,
$375,000 of such revenue was included in accounts receivable.
7
<PAGE> 9
ANESTA CORP.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS, Continued
(Unaudited)
--------
6. Stockholders' Equity:
The table below presents the activity in stockholders' equity
from January 1, 1996 to June 30, 1996:
<TABLE>
<CAPTION>
Deficit Notes
Common Stock Accumulated Receivable
--------------------------------- During the Treasury Stock from Issuance
Paid-in Development ------------------- of Common
Shares Amount Capital Stage Shares Amount Stock
----------- --------- ------------ ------------- -------- --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1996 7,207,716 $ 7,208 $33,270,848 $(11,723,314) 345 $(4,226) $ (7,000)
Exercise of stock options in Jan. 1996
(at $.80 per share) 2,500 2 1,998
Exercise of stock options in Jan. 1996
(at $5.25 per share) 2,574 3 13,511
Exercise of stock options in Feb. 1996
(at $.80 per share) 10,133 10 8,096
Exercise of stock options in Feb. 1996
(at $1.00 per share) 83 0 83
Exercise of stock options in Feb. 1996
(at $6.75 per share) 2,291 2 15,462
Exercise of stock options in Mar. 1996
(at $.80 per share) 63 0 50
Exercise of stock options in Mar. 1996
(at $1.00 per share) 50 0 50
Exercise of stock options in Mar. 1996
(at $6.75 per share) 266 0 1,795
Issuance of common stock for cash
on June 7, 1996 (at $15.00
per share) net of offering costs
of $1,941,427 2,000,000 2,000 28,056,573
Exercise of stock options in June 1996
(at $.80 per share) 172,696 173 137,984
Exercise of stock options in June 1996
(at $1.00 per share) 641 1 640
Exercise of stock options in June 1996
(at $5.00 per share) 1,041 1 5,204
Exercise of stock options in June 1996
(at $6.75 per share) 125 0 844
Exercise of stock options in June 1996
(at $8.00 per share) 1,850 2 14,798
Exercise of stock options in June 1996
(at $11.00 per share) 416 0 4,576
Net change in unrealized gain (loss) on
marketable debt securities, available-
for-sale
Net loss (3,933,700)
--------- ------- ----------- ------------ ---- ------- --------
Balance at June 30, 1996 9,402,445 $ 9,402 $61,532,512 $(15,657,014) 345 $(4,226) $ (7,000)
========= ======= =========== ============ ==== ======= ========
<CAPTION>
Unrealized
gain (loss) on
Marketable Debt
Securities,
Available-for-
Sale Total
---------------- -----------
<S> <C> <C>
Balance at January 1, 1996 $ 133,889 $21,677,405
Exercise of stock options in Jan. 1996
(at $.80 per share) 2,000
Exercise of stock options in Jan. 1996
(at $5.25 per share) 13,514
Exercise of stock options in Feb. 1996
(at $.80 per share) 8,106
Exercise of stock options in Feb. 1996
(at $1.00 per share) 83
Exercise of stock options in Feb. 1996
(at $6.75 per share) 15,464
Exercise of stock options in Mar. 1996
(at $.80 per share) 50
Exercise of stock options in Mar. 1996
(at $1.00 per share) 50
Exercise of stock options in Mar. 1996
(at $6.75 per share) 1,795
Issuance of common stock for cash
on June 7, 1996 (at $15.00
per share) net of offering costs
of $1,941,427 28,058,573
Exercise of stock options in June 1996
(at $.80 per share) 138,157
Exercise of stock options in June 1996
(at $1.00 per share) 641
Exercise of stock options in June 1996
(at $5.00 per share) 5,205
Exercise of stock options in June 1996
(at $6.75 per share) 844
Exercise of stock options in June 1996
(at $8.00 per share) 14,800
Exercise of stock options in June 1996
(at $11.00 per share) 4,576
Net change in unrealized gain (loss) on
marketable debt securities, available-
for-sale (149,815) (149,815)
Net loss (3,933,700)
--------- -----------
Balance at June 30, 1996 $ (15,926) $45,857,748
========= ===========
</TABLE>
8
<PAGE> 10
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 contains forward-looking statements which involve risks
and uncertainties. The Company's actual results could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors discussed in this section.
RESULTS OF OPERATIONS
Revenues.
Total revenues increased by $18,600 or 4.8% for the three months ended June 30,
1996 as compared to the corresponding period in 1995 and by $12,300 or 1.6% for
the six months ended June 30, 1996 as compared to the corresponding period in
1995. The increase is primarily a result of revenues from product sales.
Substantially all revenues in both years were from development funding and
milestone payments under collaborative agreements with Abbott Laboratories
(Abbott) relating to the Actiq cancer pain program (See Note 5 to Financial
Statements). Amounts earned under the collaborative agreements with Abbott may
vary substantially in the future.
Initial orders for the Company's first product, Fentanyl Oralet(R), were placed
beginning in July 1994. The FDA-approved marketing plan for Fentanyl Oralet
contemplated a controlled product introduction, under which the product would
be sold only to institutions that have received extensive training in the
proper use of the product by Abbott anesthesia specialists. As a result of the
controlled introduction, only limited sales of Fentanyl Oralet occurred during
the first six months of 1996 and 1995. Because Fentanyl Oralet has been used
safely during this controlled roll-out period, as determined by the FDA's
Anesthesia Advisory Committee in December 1995, in March 1996 the FDA eased the
initial constraints on advertising, promotion and distribution. Fentanyl
Oralet can now be used by clinical personnel in hospitals and surgical centers
who have been trained by Abbott's salesforce.
Under the Company's agreement with Abbott, Abbott manufactures Fentanyl Oralet
and sells it to the Company at a price which reflects Abbott's cost of
manufacturing. The Company resells the product to Abbott at a price which
results in a gross profit to the Company ranging from approximately 40% to 70%.
In addition, the Company is entitled to receive a royalty on product sales by
Abbott.
Operating Expenses.
Research and development expenses increased by $846,900 or 76% for the three
months ended June 30, 1996 as compared to the corresponding period in 1995 and
by $1,632,900 or 77% for the six months ended June 30, 1996 as compared to the
corresponding period in 1995. The increase in research and development expenses
is due primarily to higher expenditures for the Actiq cancer pain clinical
development program (See Note 5 to Financial Statements), new product
development and other expenditures for product development, including clinical
trials. The Company expects that its research and development expenses will
grow significantly during the remainder of 1996 as a result of increased
expenses related to the hiring of additional personnel, preclinical studies,
clinical trials, product development and process development activities.
Depreciation and amortization expense increased by $37,800 or 169% for the
three months ended June 30, 1996 as compared to the corresponding period in
1995 and by $74,900 or 165% for the six months ended June 30, 1996 as compared
to the corresponding period in 1995. The increase is primarily due to a
decrease in the estimated useful life of specific leasehold improvements.
9
<PAGE> 11
Selling, general and administrative expenses increased by $631,600 or 198% for
the three months ended June 30, 1996 as compared to the corresponding period in
1995 and by $888,000 or 132% for the six months ended June 30, 1996 as compared
to the corresponding period in 1996. The increase in selling, general and
administrative expenses is due primarily to higher expenditures for corporate
development activities, market research, rent on new facilities, patent
activities and equipment leasing. The Company expects that its selling,
general and administrative expenses will increase during the remainder of 1996
as a result of the increased support required for research and development,
patent and corporate development activities.
Non Operating Income (Expense).
Interest income increased by $31,500 for the three months ended June 30, 1996
as compared to the corresponding period in 1995 and decreased by $98,200 for
the six months ended June 30, 1996 as compared to the corresponding period in
1995. The increase for the three months is primarily due to invested net
proceeds of $28,056,573 from the Company's secondary offering in June 1996.
The decrease for the six months is primarily due to lower average balances
invested for the period.
Interest expense decreased by $1,800 for the three months ended June 30, 1996
as compared to the corresponding period in 1995 and increased by $16,700 for
the six months ended June 30, 1996 as compared to the corresponding period in
1995. The decrease for the three months is primarily due to a lower balance of
capital lease obligations. The increase for the six months is primarily due to
interest expense related to borrowings on the Company's revolving/term loan in
1995.
Accounting Change.
Effective January 1, 1995, the Company changed its method of accounting for
external legal costs related to patents. Prior to the change, the Company
capitalized these costs and amortized them over the term of the related patent.
Under the new method, these costs are expensed as incurred.
Net Loss.
As a result of the increase in research and development, selling, general and
administrative activities and other factors discussed above, the net loss for
the three months ended June 30, 1996 was $2,138,100 or $0.27 per share as
compared to $685,900 or $0.10 per share for the same period in 1995. The net
loss for the six months ended June 30, 1996 was $3,933,700 or $0.52 per share
as compared to $2,287,400 or $0.32 per share for the same period in 1995. The
net loss for the six months ended June 30, 1995 includes the cumulative effect
of a change in accounting for patent costs of $1,041,000 or $0.15 per share.
LIQUIDITY AND CAPITAL RESOURCES
In June 1996 the Company realized net proceeds of $28,056,573 through the
issuance of common stock in a secondary offering. As of June 30, 1996, the
Company had cash and cash equivalents totaling $30,641,000, $1,530,000 in a
certificate of deposit used as collateral for a revolving/term loan as
described below and $13,653,000 in marketable debt securities which are
available for sale. Thus cash, cash equivalents, certificate of deposit and
marketable debt securities totaled $45,824,100 as of June 30, 1996. Cash in
excess of immediate requirements is invested according to the Company's
investment policy, which provides guidelines with regard to liquidity and
return, and, wherever possible, seeks to minimize the potential effects of
concentration of credit risk.
The Company used cash in operating activities of $4,104,200 for the six months
ended June 30, 1996 compared to $2,330,100 for the corresponding period in
1995. The increase in cash used in the period is a direct result of the
increase in research and development and selling, general and administrative
activities discussed above.
10
<PAGE> 12
During the six months ended June 30, 1996, the Company made capital
expenditures of approximately $24,900, as compared to capital expenditures of
$1,167,900 during the corresponding period in 1995. The decrease in capital
expenditures is due to the Company's remodeling of new facilities which were
completed in May 1995. In order to help finance the remodeling of new
facilities, the Company, in January 1995, secured a revolving/term loan in the
amount of $1,500,000 (See Note 4 to Financial Statements), of which $1,500,000
was funded during the six months ended June 30, 1995.
During the six months ended June 30, 1996, the Company realized cash proceeds
of $207,300 relating to the exercise of stock options as compared to $63,300
during the corresponding period in 1995.
During the six months ended June 30, 1996, the Company made principal payments
on capital lease obligations of $13,000 as compared to $23,400 for the
corresponding period in 1995.
The Company expects to continue to incur substantial expenses related to the
continuation and expansion of research and development, including clinical
trials, and increased selling, general and administrative activities over at
least the next several years. The Company anticipates that its existing cash,
cash equivalents and marketable debt securities, interest earned thereon, and
funding under the 1996 agreement with Abbott will enable it to maintain its
current and planned operations at least through 1999.
However, the Company's working capital requirements may change depending on
numerous factors, including, but not limited to, the progress of the Company's
research and development programs, the results of clinical studies, the number
and nature of the indications the Company pursues in clinical studies, the
timing of regulatory approvals, technological advances, determinations as to
the commercial potential of the Company's products, the status of competitive
products, the establishment of collaborative relationships with other companies
and other factors.
In June 1996, the Financial Accounting Standards Board issued SFAS No. 125,
Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities. SFAS No. 125 covers transactions that include:
securitizations, sales of partial interests in financial assets, repurchase
agreements, securities lending, pledges of collateral, loan syndications and
participations, sales of receivables with recourse, servicing of mortgages and
other loans, and in- substance defeasances. SFAS No. 125 uses a Ofinancial
componentsO approach for financial asset transfers. Under that approach, after
financial assets are transferred, an entity would recognize on the balance
sheet all assets it controls and liabilities it has incurred. It would remove
from the balance sheet those assets it no longer controls and liabilities is
has satisfied. SFAS No. 125 becomes effective at the beginning of 1997. The
Company is in the process of evaluating the implications of SFAS No. 125.
11
<PAGE> 13
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders was held on June 28, 1996, at which the
stockholders elected seven directors to each serve until the next annual
meeting of stockholders and until his successor is elected and has qualified or
until such directorGs death, resignation or removal, and the ratification of
the selection of Coopers & Lybrand L.L.P. as independent auditors of the
Company for its fiscal year ending December 31, 1996. Votes were cast as
follows:
<TABLE>
<CAPTION>
Votes Against
Votes For Or Withheld Votes Abstained Broker Non-Votes
--------- ----------- --------------- ----------------
<S> <C> <C> <C> <C>
Election of Directors:
Edwin M. Kania, Jr. 6,086,867 80,928 Not Applicable Not Applicable
Thomas B. King 6,096,340 71,455 Not Applicable Not Applicable
Richard H. Leazer 6,086,867 80,928 Not Applicable Not Applicable
William C. Moeller 6,086,867 80,928 Not Applicable Not Applicable
Emanuel M. Papper 6,096,340 71,455 Not Applicable Not Applicable
Daniel L. Kisner 6,094,840 72,955 Not Applicable Not Applicable
Theodore H. Stanley 6,096,340 71,455 Not Applicable Not Applicable
Ratification of Coopers &
Lybrand L.L.P. as independent
auditors for the fiscal year
ending December 31, 1996 6,146,745 21,000 50 None
</TABLE>
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits.
(27) Financial Data Schedule
b) Reports on Form 8-K.
None.
12
<PAGE> 14
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.
Date: August 14, 1996 ANESTA CORP.
By: /s/ William C. Moeller
-----------------------------------
William C. Moeller, President,
Chief Executive Officer and
Treasurer
(Authorized Signatory and
Principal Financial Officer)
By: /s/ Roger P. Evans
-----------------------------------
Roger P. Evans, Controller
(Principal Accounting Officer)
13
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 30,641
<SECURITIES> 13,653
<RECEIVABLES> 459
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 45,323
<PP&E> 2,402
<DEPRECIATION> 599
<TOTAL-ASSETS> 48,514
<CURRENT-LIABILITIES> 956
<BONDS> 1,350
<COMMON> 9
0
0
<OTHER-SE> 45,848
<TOTAL-LIABILITY-AND-EQUITY> 48,514
<SALES> 50
<TOTAL-REVENUES> 801
<CGS> 17
<TOTAL-COSTS> 5,456
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 57
<INCOME-PRETAX> (3,934)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,934)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,934)
<EPS-PRIMARY> (.52)
<EPS-DILUTED> (.52)
</TABLE>
