<PAGE>
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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
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997.
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from_______to_________.
Commission File Number: 0-21643
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CV THERAPEUTICS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 43-1570294
(State of Incorporation) (I.R.S. Employer Identification No.)
3172 PORTER DRIVE, PALO ALTO, CA 94304
(Address of principal executive offices)
Registrant's telephone number, including area code: (650) 812-0585
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Indicate by check whether the Registrant (1) has filed all reports 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
----- -----
As of August 5, 1997, there were 7,017,210 shares of the issuer's Common
Stock, $0.001 par value, outstanding.
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<PAGE>
CV THERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets as of June 30, 1997
and December 31, 1996 3
Condensed Consolidated Statements of Operations for the three
months and the six months ended June 30, 1997 and 1996 and for
the period from inception (December 11, 1990) through June 30, 1997 4
Condensed Consolidated Statements of Cash Flows for the six months
ended June 30, 1997 and 1996 and for the period from inception
(December 11,1990) through June 30, 1997 5
Notes to Condensed Consolidated Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 8
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS 11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 11
SIGNATURES 12
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CV THERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
JUNE 30, 1997 DECEMBER 31, 1996
------------- -----------------
(Unaudited) (Note 1)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 14,740 $ 19,575
Short-term investments 12,111 1,993
Other current assets 969 454
--------- ---------
Total current assets 27,820 22,022
Long-term investments 5,030 --
Notes receivable from officers and employees 400 475
Property and equipment, net 2,666 3,072
Intangible and other assets 457 570
--------- ---------
Total assets $ 36,373 $ 26,139
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 313 $ 405
Accrued liabilities 2,082 1,304
Current portion of long-term debt 333 15
Current portion of capital lease obligation 655 20
Deferred revenue, short-term portion 2,000 --
--------- ---------
Total current liabilities 5,383 1,744
Long-term portion of capital lease obligation 899 --
Long-term portion of long-term debt 5,667 5,000
Accrued rent 636 719
Deferred revenue, long-term portion 4,500 --
Commitments
Stockholders' equity:
Common stock 70,861 65,414
Warrants to purchase common stock 1,225 1,225
Notes receivable issued for stock (171) (171)
Deferred compensation (1,876) (2,166)
Deficit accumulated during the development stage (50,751) (45,626)
--------- ---------
Total stockholders' equity 19,288 18,676
--------- ---------
Total liabilities and stockholders' equity $ 36,373 $ 26,139
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
3
<PAGE>
CV THERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended Inception
June 30, June 30, (December 11,
------------------------ ----------------------- 1990) to
1997 1996 1997 1996 June 30, 1997
--------- --------- --------- --------- -------------
<S> <C> <C> <C> <C> <C>
Revenues:
Contract revenues $ 811 $ 250 $ 1,631 $ 250 $ 1,881
Operating expenses:
Research and development 3,120 1,485 4,910 4,009 39,628
General and administrative 1,195 717 2,216 1,408 12,713
--------- --------- --------- --------- ----------
Total operating expenses 4,315 2,202 7,126 5,417 52,341
Loss from operations (3,504) (1,952) (5,495) (5,167) (50,460)
Interest income (expense), net 264 (65) 370 (229) (268)
--------- --------- --------- --------- ----------
Net loss $ (3,240) $ (2,017) $ (5,125) $ (5,396) $ (50,728)
--------- --------- --------- --------- ----------
--------- --------- --------- --------- ----------
Net loss per share (1) $ (0.47) $ (0.41) $ (0.77) $ (1.18)
--------- --------- --------- ---------
--------- --------- --------- ---------
Shares used in computing
net loss per share (1) 6,909 4,925 6,628 4,587
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
(1) Net loss per share for the three-month and six-month periods ended June
30, 1996 is calculated on a pro forma basis. See accompanying notes for
methodology of calculation.
The accompanying notes are an integral part of these
condensed consolidated financial statements.
4
<PAGE>
CV THERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended Inception
June 30, (December 11, 1990) to
1997 1996 June 30, 1997
--------- --------- ----------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (5,125) $ (5,396) $ (50,728)
Adjustments to reconcile net loss to net cash used in
operating activities:
Amortization of deferred compensation 290 -- 446
Depreciation and amortization 543 539 3,652
Write off of warrant issued under capital lease -- -- 160
Forgiveness of notes receivable -- -- 200
Issuance of stock warrant for legal services received -- -- 49
Issuance of preferred stock and warrant for
payment of license fee -- 750 750
Deferred revenue 6,500 -- 6,500
Change in assets and liabilities:
Other current assets (515) (234) (180)
Intangible and other assets 27 35 (1,407)
Accounts payable (92) 394 313
Accrued liabilities 728 (384) 2,032
Accrued rent (33) -- 686
--------- --------- ---------
Net cash provided by (used in) operating activities 2,323 (4,296) (37,527)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of short-term investments (16,573) (2,023) (71,668)
Purchase of long-term investments (5,030) -- (5,030)
Maturity of short-term investments 6,455 -- 59,557
Capital expenditures (51) (2) (5,401)
Notes receivable from officers and employees 75 -- (646)
--------- --------- ---------
Net cash provided by (used in) investing activities: (15,124) (2,025) (23,188)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on capital lease obligations (466) (104) (1,202)
Borrowings under long-term debt 3,000 -- 16,219
Repayments of long-term debt (15) (1,670) (8,218)
Proceeds from issuance of common stock (and bridge loans
subsequently converted into common stock), net of repurchase 5,447 18 17,941
Proceeds from issuance of warrant -- -- 1,359
Proceeds from bridge loans -- -- 1,198
Proceeds from issuance of convertible preferred stock -- 12,992 48,182
Payments to stockholders to repurchase the Company's
common stock -- -- (24)
--------- --------- ---------
Net cash provided by financing activities 7,966 11,236 75,455
--------- --------- ---------
Net (decrease) increase in cash and cash equivalents (4,835) 4,915 14,740
Cash and cash equivalents at beginning of period 19,575 5,569 --
--------- --------- ---------
Cash and cash equivalents at end of period $ 14,740 $ 10,484 $ 14,740
--------- --------- ---------
--------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
5
<PAGE>
CV THERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
-----------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
(UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements of CV
Therapeutics, Inc. have been prepared in accordance with generally accepted
accounting principles, are unaudited, except as specifically noted and
reflect all adjustments (consisting solely of normal recurring adjustments)
which are, in the opinion of management, necessary to present fairly the
financial position and results of operations for the interim periods
presented. The results of operations for the three- and six-month periods
ended June 30, 1997 are not necessarily indicative of the results to be
expected for the entire year ending December 31, 1997. The financial
information included herein should be read in conjunction with the Company's
Annual Report on Form 10K/A for 1996 which includes the audited consolidated
financial statements and the notes thereto for the year ended December 31,
1996.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiary, CV Therapeutics International, which was
incorporated in December 1993 in the Cayman Islands. All significant
intercompany balances have been eliminated.
REVENUE RECOGNITION
Contract revenues related to research agreements with noncancelable,
nonrefundable terms and no significant future obligations are recognized upon
execution of the agreements. Milestone payments will be recognized pursuant
to collaborative agreements upon the achievement of specified milestones.
NET LOSS PER SHARE
Except as noted below, net loss per share is computed using the weighted
average number of common shares outstanding. Common equivalent shares are
excluded from the computation as their effect is antidilutive, except that,
pursuant to the Securities and Exchange Commission ("SEC") Staff Accounting
Bulletins, common and common equivalent shares issued during the 12-month
period prior to the initial filing of the Company's Registration Statement on
Form S-1 at prices below the assumed public offering price have been included
in the calculation as if they were outstanding for all periods presented
through September 30, 1996 (using the treasury stock method for stock
options).
Net loss per share information is as follows:
<TABLE>
<CAPTION>
(In thousands, except per share amounts) Three Months Ended Six months ended
June 30, 1996 June 30, 1996
------------------- ----------------
<S> <C> <C>
Net loss per share $ (1.20) $ (3.21)
Shares used in computing net loss per share 1,687 1,681
</TABLE>
Pro forma per share data is provided to show the calculation on a
consistent basis for the periods presented. It has been computed as
described above, and also gives retroactive effect from the date of issuance
to the conversion of preferred stock, which automatically converted to common
stock upon closing of the Company's initial public offering.
6
<PAGE>
CV THERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
-----------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
(UNAUDITED)
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, EARNINGS PER SHARE, which is required to be adopted on
December 31, 1997. At that time, the Company will be required to change the
method currently used to compute earnings per share and to restate all prior
periods. The impact is expected to result in no change to loss per share for
all prior periods.
SUBSEQUENT EVENT.
Effective July 3, 1997 the Company and Syntex (U.S.A.), Inc. ("Syntex"),
an indirect subsidiary of Roche Holding Limited, amended a license agreement
dated March 27, 1996 (the "Prior Agreement") between CVT and Syntex. Under
the amended agreement, the Company has agreed to issue shares of the
Company's common stock to Syntex during the third quarter of 1997. No
further milestone payments will be due to Syntex until certain regulatory
approvals have been received by the Company.
7
<PAGE>
CV THERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THIS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS AND OTHER PARTS OF THIS FORM 10-Q CONTAIN FORWARD
LOOKING STATEMENTS WHICH INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S
ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE DISCUSSED HEREIN. FACTORS
THAT MIGHT CAUSE SUCH A DIFFERENCE INCLUDE, BUT ARE NOT LIMITED TO, THOSE
LISTED BELOW AND THOSE LISTED IN "RISK FACTORS" IN THE COMPANY'S ANNUAL
REPORT ON FORM 10-K/A FOR THE YEAR ENDED DECEMBER 31, 1996.
OVERVIEW
CV Therapeutics, Inc. ("CVT" or the "Company") is a development stage
biopharmaceutical company focused exclusively on the application of molecular
cardiology to the discovery, development and commercialization of novel small
molecule drugs for the treatment of cardiovascular disease. Since its
inception in December 1990, substantially all of the Company's resources have
been dedicated to research and development. To date, CVT has not generated
any product revenue and does not expect to generate any such revenues for at
least several years. As of June 30, 1997, the Company had an accumulated
deficit of approximately $50.8 million. The Company expects its sources of
revenue, if any, for the next several years to consist of payments under
existing and future corporate partnerships. The process of developing the
Company's products will require significant additional research and
development, preclinical testing and clinical trials, as well as regulatory
approval. These activities, together with the Company's general and
administrative expenses, are expected to result in operating losses for the
foreseeable future. The Company will not receive product revenue unless it
or its collaborative partners complete clinical trials and successfully
commercialize one or more of its products.
CVT is subject to risks common to biopharmaceutical companies, including
risks inherent in its research and development efforts and clinical trials,
reliance on collaborative partners, enforcement of patent and proprietary
rights, the need for future capital, potential competition and uncertainty of
regulatory approval. In order for a product to be commercialized, it will be
necessary for CVT and its collaborators to conduct preclinical tests and
clinical trials, demonstrate efficacy and safety of the Company's product
candidates, obtain regulatory clearances and enter into manufacturing,
distribution and marketing arrangements, as well as obtain market acceptance.
There can be no assurance that the Company will generate revenues or achieve
and sustain profitability in the future.
RESULTS OF OPERATIONS
REVENUES. The Company recognized revenues of $811,000 for the quarter
ended June 30, 1997, as compared to $250,000 for the quarter ended June 30,
1996. Revenue for the six-month period ended June 30, 1997 was $1,631,000
compared to $250,000 during the six months period ended June 30, 1996.
Revenue for both the three- and six-month periods ended June 30, 1997 was
earned in connection with the research collaboration and license agreements
with Biogen, Inc. ("Biogen") and its wholly-owned subsidiary, Biotech
Manufacturing Limited ("Biotech Manufacturing" and together with Biogen the
"Biogen Entities").
RESEARCH AND DEVELOPMENT EXPENSES. The Company's research and development
expenses increased to $3,120,000 for the quarter ended June 30, 1997,
compared to $1,485,000 for the quarter ended June 30, 1996. Research and
development expenses increased to $4,910,000 for the six-month period ended
June 30, 1997, compared to $4,009,000 for the six-month period ended June 30,
1996. The increase for the quarter ended June 30, 1997, over the quarter
ended June 30, 1996 was primarily due to a $1.0 million accrual for a
milestone payment due to Syntex (U.S.A.), Inc. ("Syntex"), an indirect
subsidiary of Roche Holding Limited and increased research and development
activities. The milestone payment is payable under an agreement with Syntex
for the license of ranolazine. The license agreement with Syntex was amended
in July 1997. Under the amended agreement, the Company has agreed to issue
shares of the Company's common stock to Syntex during the third quarter of
1997. No further milestone payments will be due to Syntex until certain
regulatory approvals have been received by the Company. The increase in
research and development expenses for the six-month period ended June 30,
1997, over the six-month period ended June 30, 1996 was primarily due to
increased research and development activities. The Company expects research
and development expenses to increase significantly over the next several
years as the Company expands research and product development efforts.
8
<PAGE>
CV THERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased to $1,195,000 for the quarter ended June 30, 1997, compared to
$717,000 for the quarter ended June 30, 1996. General and administrative
expenses increased to $2,216,000 for the six-month period ended June 30,
1997, compared to $1,408,000 for the six-month period ended June 30, 1996.
The increases for both the three-month and six-month periods ended June 30,
1997 over the same periods in 1996 were primarily due to increases in outside
consulting fees, legal fees and personnel recruiting expenses, the
amortization of deferred compensation expense and new administrative expenses
associated with becoming a public company. The Company expects general and
administrative expense to increase in the future due to an increase in the
level of the Company's activities and additional expenses associated with
being a public company.
INTEREST INCOME (EXPENSE), NET. Interest income (expense), net increased
to $264,000 for the quarter ended June 30, 1997, compared to $(65,000) for
the quarter ended June 30 1996. Interest income (expense), net increased to
$370,000 for the six-month period ended June 30, 1997, compared to $(229,000)
for the six-month period ended June 30, 1996. The increase for both the
three-month and six-month periods ended June 30, 1997 over the same periods
in 1996 was a result of higher average investment balances resulting from the
proceeds of the Company's initial public offering and payments received in
connection with the Company's collaboration and license agreements with the
Biogen Entities. The Company expects that interest income (expense), net
will decrease as investment balances decrease due to the consumption of cash
in operations.
The Company records and amortizes over the related vesting periods deferred
compensation representing the difference between the exercise price of
options granted and the deemed fair value of its common stock at the time of
grant. Options generally vest over four years. Deferred compensation of
approximately $2.3 million has been recorded and is being amortized to both
research and development expenses as well as general and administrative
expenses over the related vesting periods (generally four years) of the
options granted.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations since inception primarily through
private placements of preferred equity securities, equipment and leasehold
improvement financing, other debt financing and payments under corporate
collaborations. In November 1996, the Company completed an initial public
offering and raised net proceeds of approximately $13.0 million. On March 7,
1997, the Company entered into two research collaboration and license
agreements with the Biogen Entities which together resulted in an upfront
payment of $16.0 million, including $5.0 million in cash, a $7.0 million
equity investment consisting of the purchase of 669,857 shares of the
Company's common stock at $10.45 per share, and advanced funding of a
milestone payment and funding under a credit facility totaling $4.0 million.
In addition, CVT may receive development milestones, equity investments,
funding under a general purpose loan facility and royalties from any future
product sales. As of June 30, 1997 the Company received approximately $66.7
million in net proceeds from the sale of equity securities, and approximately
$16.9 million, before repayment, from loans and equipment financings.
Cash, cash equivalents and short- and long-term investments at June 30,
1997 totaled $31.9 million compared to $21.6 million at December 31, 1996.
The increase in 1997 was due to the receipt of the upfront payment of $16.0
million associated with the Company's collaborations with the Biogen
Entities. The Company's funds are currently invested in short- and
medium-term, investment grade, interest-bearing debt obligations.
Net cash provided by operations for the six-month period ended June 30,
1997 was $2.3 million, compared to $4.3 million used in operations for the
six-month period ended June 30, 1996. The increase in cash provided by
operating activities in 1997 was primarily the result of deferred revenue of
$6.5 million recorded in conjunction with the upfront payment under the
collaboration with the Biogen Entities. The deferred revenue was partially
offset by the net loss for the six-month period ended June 30, 1997 of $5.1
million.
Through June 30, 1997, the Company had invested approximately, $6.1 million
in property and equipment, of which approximately $4.4 million was financed
through equipment and leasehold financings.
9
<PAGE>
CV THERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
The Company will require substantial additional funding in order to
complete its research and development activities and commercialize any
potential products. The Company currently estimates that its existing
resources, including the net proceeds from the Company's initial public
offering, payments from the Biogen Entities and projected interest income,
will enable the Company to maintain its current and planned operations
through 1998. However, there can be no assurance that the Company will not
require additional funding prior to such time. The Company's forecast of the
period of time through which its financial resources will be adequate to
support its operations is a forward-looking statement that involves risks and
uncertainties, and actual results could vary as a result of a number of
factors. The Company's future capital requirements will depend on many
factors, including scientific progress in its research and development
programs, the size and complexity of such programs, the scope and results of
preclinical studies and clinical trials, the ability of the Company to
establish and maintain corporate partnerships, the time and costs involved in
obtaining regulatory approvals, the costs involved in filing, prosecuting and
enforcing patent claims, competing technological and market developments, the
cost of manufacturing preclinical and clinical material and other factors not
within the Company's control. There can be no assurance that such additional
financing to meet the Company's capital requirements will be available on
acceptable terms or at all. Insufficient funds may require the Company to
delay, scale back or eliminate some or all of its research or development
programs, to lose rights under existing licenses or to relinquish greater or
all rights to product candidates at an earlier stage of development or on
less favorable terms than the Company would otherwise choose or may adversely
affect the Company's ability to operate as a going concern. If additional
funds are raised by issuing equity securities, substantial dilution to
existing stockholders may result.
ADDITIONAL FACTORS THAT MAY AFFECT FUTURE RESULTS
The Company's business, financial condition and results of operations are
subject to various risks, including those described below and elsewhere in
the Report.
The Company is an early stage company and must be evaluated in light of the
uncertainties and complications present in an early stage biopharmaceutical
company. All of the Company products are at an early stage of development,
and the Company has not generated any product revenue. In addition, the
Company has only two products in clinical development, CVT-124 and
Ranolazine. There can be no assurance that clinical trials conducted by the
Company will demonstrate sufficient safety and efficacy to obtain the
requisite approvals or that marketable products will result. In addition,
the rate of completion of clinical trials may be delayed by many factors.
The Company's product candidates will require significant additional
development, preclinical studies, clinical trials and regulatory approval
prior to commercialization. These activities may take several years and
require the expenditure of substantial resources. In addition, these
activities, together with the Company's general and administrative expense,
are expected to result in operation losses for the foreseeable future.
The Company's strategy for the research, development and commercialization
of its product candidates has required, and will continue to require, the
Company to enter into various arrangements with corporate and academic
collaborators, licensers, licensees and others, and the Company is dependent
upon the success of these parties in performing their responsibilities.
There can be no assurance that the Company will be able to enter into
additional collaborative arrangements or license agreements on acceptable
terms, or at all, or that the contemplated benefits from any of these
agreements will be realized.
The Company's business is affected by other factors, including: uncertainty
of market acceptance, intense competition and rapid technological change,
uncertainty of patent position and proprietary rights, dependence on key
personnel and the need to attract and retain key employees and consultants,
limited manufacturing, marketing and sales experience, significant government
regulation, uncertainty of product pricing and reimbursement, and product
liability exposure and the availability of insurance.
10
<PAGE>
CV THERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Annual Meeting of Stockholders of CV Therapeutics, Inc. was held
on June 25, 1997.
(b) All of the directors set forth below were elected to the Board of
Directors.
(c) The matters voted upon at the meeting and the voting of stockholders
with respect thereto was as follows:
Election of Directors:
Nominee For Withheld
------- --- --------
Louis G, Lange, M.D., Ph.D. 4,011,754 743
Samuel D. Colella 4,011,754 743
Thomas L. Gutshall 4,011,754 743
Barbara J. McNeil, M.D., Ph.D. 3,949,254 63,243
J. Leighton Read, M.D. 4,011,754 743
Costa G. Sevastopoulos, Ph.D. 4,011,754 743
Isaac Stein 4,011,754 743
Proposal to ratify the selection of Ernst & Young LLP as independent auditors
of the Company for its fiscal year ending December 31, 1997:
For Against Abstain
--- ------- -------
4,007,147 4,350 1,000
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required by Item 601 of Regulation S-K
Exhibit Description
Number
------- -----------------------------------------------------------
10.43* Letter Agreement, dated March 7, 1997, between the
Registrant and the University of Florida Research
Foundation, Inc.
10.44* Amendment to License Agreement, effective as of July 3, 1997,
between the Registrant and Syntex (U.S.A.), Inc.
11.1 Statement of computation of net loss per share
27.1 Financial Data Schedule
--------------------------
* Confidential treatment is being sought for portions of this
exhibit. Brackets indicate portions of the text that have been
omitted. A separate filing of such omitted text has been made with
the Commission as part of the Company's application for confidential
treatment.
(b) Reports on Form 8-K
None.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
CV THERAPEUTICS, INC.
Date: August 13, 1997
/s/ LOUIS G. LANGE, M.D., Ph.D.
--------------------------------------------
Louis G. Lange, M.D., Ph.D.
Chairman of the Board & Chief
Executive Officer
(Principal Executive Officer)
/s/ KATHLEEN A. STAFFORD
--------------------------------------------
Kathleen A. Stafford
Chief Financial Officer
(Principal Financial and Accounting Officer)
12
<PAGE>
CV THERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
EXHIBIT INDEX
Sequentially
Exhibit Numbered
Number Description Page
- ------------------------------------------------------------------------------
10.43* Letter Agreement, dated March 7, 1997, between the
Registrant and the University of Florida Research
Foundation, Inc.
10.44* Amendment to License Agreement, effective as of
July 3, 1997, between the Registrant and Syntex
(U.S.A.), Inc.
11.1 Statement of computation of net loss per share
27.1 Financial Data Schedule
- --------------------------
* Confidential treatment is being sought for portions of this exhibit.
Brackets indicate portions of the text that have been omitted. A separate
filing of such omitted text has been made with the Commission as part of the
Company's application for confidential treatment.
13
<PAGE>
Confidential treatment has been requested for portions of this document.
Brackets indicate portions of text that have been omitted. A separate filing
of such omitted text has been made with the Commission as part of the
Company's application for confidential treatment.
Exhibit 10.43
[CV THERAPEUTICS LETTERHEAD]
March 7, 1997
Dr. Ron Kudla
Director of Technology and Licensing
University of Florida
182 Grinter Hall
Gainesville, Florida 32611-2037
RE: AMENDMENT OF LICENSE AGREEMENT
Dear Ron:
As you know, CVT has been involved in extensive negotiations with a
pharmaceutical company (the "Pharma") regarding a collaboration agreement
(the "Collaboration") under which, among other things, CVT would license
Pharma the rights to complete development of and commercially market CVT-124
(or any related adenosine A, antagonist), which is covered by the terms of
the License Agreement between CVT and UFRFI dated June 27, 1994 (the "License
Agreement"). We are pleased to inform UFRFI that CVT and Pharma are extremely
close to completing the Collaboration negotiations and entering into the
agreement, which we believe is a very significant step towards the successful
commercialization of CVT-124.
As is typical of such transactions, Pharma has certain accounting and
patented-related policies that are required provisions in its collaboration,
some of which are inconsistent with the terms of the License Agreement. To
enter into the Collaboration, thus, Pharma has insisted on resolution of
these inconsistencies between the License Agreement and the terms of the
Collaboration agreement, and on obtaining confirmation from UFRFI regarding
certain terms. We agree that it is in the interest of all parties to do so.
We proposed that the most efficient way to achieve this is to amend the terms
of the License Agreement, so that such terms are inconsistent with the terms
that Pharma is insisting be present in the Collaboration agreement, and to
provide the needed confirmation.
If it is agreeable with UFRFI, this letter agreement will serve to amend the
terms of the License Agreement as set forth below, and to provide certain
confirmation from UFRFI regarding the License Agreement and the sublicenses
granted by CVT to Pharma under the Collaboration. We will forward to you on
Friday applicable portions of the latest draft of the Collaboration agreement
(redacted for confidentiality), for your review in conjunction with the
modifications and confirmations set forth below.
1. The parties agree to modify Section 1.6 of the License Agreement regarding
the definition of "Licensed Product", to read in its entirety as follows:
"1.6 A `Licensed Product' shall mean any product or part thereof which:
(a) is covered by a Valid Claim in the Patent Rights in the
country in which such product or part thereof is made, used
or sold; or
<PAGE>
(b) is manufactured using a process which is covered in whole or
in part by a Valid Claim contained in the Patent Rights in the
country in which such process is used; or
(c) includes any of the Know-How not otherwise includable in the
Patent Rights."
2. The parties agree to modify Section 1.7 of the License Agreement regarding
the definition of "Net Sales", to read in its entirety as follows:
"1.7 `Net Sales' shall mean Licensee's billings and its sublicensees'
receipts (except as provided below) for Licensed Products sold
hereunder less the sum of the following:
(a) trade, quantity, cash or other discounts and brokers' or
agents' commissions, if any, allowed in amounts not
exceeding amounts customary in the trade, including, without
limitation, governmental program discounts and rebates
(e.g., Medicaid, Medicare, VA, etc.);
(b) sales taxes, tariff duties and/or use taxes directly imposed
on and with reference to particular sales;
(c) packing, transportation and insurance prepaid or allowed; and
(d) amounts allowed or credited on rejects, returns or
retroactive price reductions.
If Licensee receives royalties from any sublicensee on the basis of such
sublicensee's billings for Licensed Products, it shall pay royalties to
UFRFI on the basis of such sublicensee's billings. A sale or transfer of
a Licensed Product by Licensee or is sublicensee to an affiliate for re-
sale of the Licensed Product by such affiliate shall not be considered a
sale for the purpose of this provision, but the resale of the Licensed
Product by such affiliate to a third party shall be a sale for such
purposes.
In the event that a Licensed Product is sold in the form of a combination
product containing an active ingredient that meets the definition of
"Licensed Product" above and one or more other active ingredients, Net
Sales shall be determined by multiplying Net Sales of the combination
product (as defined above) by the fraction A/A+B where A is the fair
market value of the active ingredient that meets the definition of
"Licensed Product" and B is the sum of the fair market values of all
other active ingredients included in the combination product. If either
A or B or both are sole independently of the combination product as a
stand-alone product, the `fair market value' for purposes hereof will be
the gross sales price of such independent sale."
3. The parties agree to add a new Section 1.14 to the License Agreement to
define the term Valid Claim, as follows:
2.
<PAGE>
"1.14 `Valid Claim' shall mean (i) a claim of a pending patent
application which claim shall not have been canceled, withdrawn
or rejected by an administrative agency from which no appeal can
be taken and which application shall not have been pending for
more than four (4) years, or (ii) a claim in an issued and
unexpired patent which has not lapsed or become abandoned or
been declared invalid or unenforceable by a court of competent
jurisdiction or an administrative agency from which no appeal
can be or is taken."
4. UFRFI hereby confirms that the [ * ] has no right, title or interest in,
or any license rights under, the Patent Rights, as defined in the
License Agreement.
5. UFRFI hereby confirms that, with respect to the Collaboration agreement to
be entered into with Pharma, CVT has satisfied the requirements of Section
2.6 and the second sentence of Section 2.7 of the License Agreement by
providing Pharma a copy of the License Agreement.
6. UFRFI confirms that CVT may satisfy the requirements of Section 3.2(a) of
the License Agreement, with respect to the activities of Pharma as CVT's
sublicensee, by delivery to URFRI of an annual report from Pharma
summarizing Pharma's planned development activities for the coming year
and results with respect to CVT-124 during the prior year.
7. UFRFI agrees that Section 3.2(b) of the License Agreement shall not apply
to any sublicensees of CVT.
8. UFRFI hereby confirms that [ * ] consistent with Section 6.1 of the
License Agreement, permit [ * ] to undertake, on [ * ] under the
License Agreement, responsible for [ * ] with respect to the Patent
Rights.
9. The parties hereby agree to modify Section 6.5 of the License Agreement to
read in its entirety as follows:
"6.5 For so long as [ * ] under this Agreement, [ * ] shall have the
first right and opportunity, solely at its expense, for defending
and enforcing the Patent Rights. However, [ * ] shall receive
notice of and shall have the right, at its expense, to participate
in the protection and defense of the Patent Rights, and [ * ]
agrees to be joined as a party plaintiff in any such suit if
necessary or appropriate. [ * ] agrees to cooperate reasonably
in any such litigation initiated by [ * ] including participating
as a necessary party, supplying essential documentary evidence and
making essential witnesses in [ * ] employment available. [ * ]
shall have the right to settle and compromise any dispute with
third parties, with the prior written consent of [ * ] which
* Confidential Treatment Requested.
3.
<PAGE>
consent shall not be unreasonably withheld. All costs, fees and
expenses incurred by [ * ] in connection with the defense and
enforcement of the Patent Rights shall be borne by [ * ] provided,
however, that [ * ] and [ * ] in connection therewith. Said [ * ]
shall begin no earlier than the [ * ]. Any [ * ] pursuant to this
Article VI. The balance remaining from any such recovery shall be
deemed to [ * ]. To the extent that [ * ] shall be entitled to
[ * ] under this Agreement.
10. The parties hereby agree to modify Section 6.6 of the License Agreement
to read in its entirety as follows:
"6.6 If [ * ] elects not to take action to address such third party
infringement, then [ * ] may, if it so desires, request that
[ * ] to do so. If [ * ] consents in writing, then [ * ] may
take such legally permissible action as it deems necessary or
appropriate to enforce the Patent Rights and restrain such
infringement. In such event, all costs, fees and expenses
incurred in connection with the defense and enforcement of the
Patent Rights shall be borne by [ * ] agrees to cooperate
reasonably in any such litigation initiated by [ * ] as permitted
hereunder, including participating as a necessary party, supplying
essential documentary evidence and making essential witnesses in
[ * ] employment available. If [ * ] shall prevail in such
proceeding, either by way of judgment or settlement or compromise,
any amounts recovered by [ * ] shall be retained by [ * ].
11. UFRFI hereby confirms that CVT may disclose to Pharma in confidence under
the terms of the Collaboration the Know-How and other Confidential
Information of UFRFI disclosed to CVT pursuant to the License Agreement,
without violating the provisions of the Article VIII of the License
Agreement.
A full copy of the collaboration agreement will be forwarded to you on the date
of signing. Within ten (10) days thereafter, CV Therapeutics will provide a
full accounting of UFRFI, including payment to UFRFI under the terms of the
License Agreement.
* Confidential Treatment Requested.
4.
<PAGE>
If you agree with the provisions of this letter agreement, please indicate
your agreement by signing the enclosed copy of this letter agreement on the
line below, telecopy a copy to me at CV Therapeutics and return the signed
copy to me in the enclosed envelope. We look forward to proceeding to enter
the Collaboration and to the successful commercialization of CVT-124 in
collaboration with Pharma.
Yours sincerely,
CV THERAPEUTICS, INC.
/s/ MICHAEL J. STERNS, D.V.M.
Michael J. Sterns, D.V.M.
Director, Business Development
ACCEPTED AND AGREED:
THE UNIVERSITY OF FLORIDA RESEARCH FOUNDATION, INC.
By: /s/ RONALD M. KUDLA
----------------------------------------
Dr. Ron Kudla, Ph.D., duly authorized
Date: March 7, 1997
--------------------------------------
5.
<PAGE>
Confidential treatment has been requested for portions of this document.
Brackets indicate portions of text that have been omitted. A separate filing
of such omitted text has been made with the Commission as part of the
Company's application for confidential treatment.
Exhibit 10.44
AMENDMENT TO LICENSE AGREEMENT
THIS AMENDMENT TO LICENSE AGREEMENT (the "Amendment") is made and
entered into effective as of July 3, 1997 (the "Amendment Date"), by and
between CV THERAPEUTICS, INC., a Delaware corporation having its principal
place of business at 3172 Porter Drive, Palo Alto, California 94304 ("CVT"),
and SYNTEX (U.S.A.), INC., a Panamanian corporation whose address is 3401
Hillview Avenue, Palo Alto, California 94304 ("Syntex"). Capitalized terms
used in this Amendment that are not otherwise defined herein shall have the
same meanings as such terms are defined in the Prior Agreement (as defined
below).
RECITALS
A. CVT and Syntex entered into a License Agreement dated March 27,
1996 (the "Prior Agreement"), under which Syntex granted to CVT an exclusive
license in the CVT Territory to develop, register, make or have made, use,
offer for sale, sell, or import the Compound.
B. The parties desire to amend the terms of the Prior Agreement to set
forth new milestone payments to replace those in the Agreement, to provide
for CVT to issue to Syntex a certain number of shares of CVT registered
common stock and to establish royalty rates on Net Sales of Licensed Products
marketed [ * ]. The Prior Agreement, as amended by this Amendment, shall
constitute the "Agreement."
NOW, THEREFORE, the parties agree as follows:
1. AMENDMENT OF THE PRIOR AGREEMENT
The parties hereby agree to amend the terms of the Prior Agreement as of
the Amendment Date as provided below.
1.1 AMENDMENT OF SECTION 5.1(b). Section 5.1(b) of the Prior Agreement
is hereby amended and restated to read in its entirety as follows:
"b) CVT will pay Syntex the following additional amounts in
milestone payments upon the first occurrence of each of the
following milestones in the CVT Territory as follows:
1) Subject to 5.1(c) below, [ * ] upon the [ * ] but in no
event later than [ * ];
2) [ * ] upon the approval of the [ * ].
* Confidential Treatment Requested.
<PAGE>
For the purposes of this Section 5.1(b), [ * ] shall mean
any of the following [ * ] and [ * ] shall mean [ * ].
3) [ * ] upon the [ * ]. In the event that [ * ] then a
[ * ] milestone payment shall be due from CVT to Syntex at
the [ * ] milestone payment in the event that such [ * ]
milestone payment is subsequently made by CVT to Syntex.
In the event [ * ].
1.2 EQUITY. The parties hereby agree to amend Section 5.1 of the Prior
Agreement to add new subsections 5.1(d) and 5.1(e) which will read in their
entirety as follows:
"EQUITY
d) Upon the Amendment Date, CVT shall issue to Syntex [ * ]
shares of CVT's common stock (the "Shares"). As soon as
practicable after November 22, 1997, CVT shall file a
registration statement with the Securities and Exchange
Commission under the Securities Act of 1933, as amended
(the "Securities Act") covering the registration of the
Shares. CVT shall use all reasonable efforts to cause such
registration statement to be declared effective, and to
keep such registration statement effective until the earlier
of three hundred sixty five (365) days following the
effective date or the date that Syntex has completed the
distribution related thereto.
e) Syntex understands that the Shares have not been registered
under the Securities Act. Syntex understands that the
Shares are being offered and sold pursuant to an exception
from registration contained in the Securities Act based on
Syntex's representations contained in this Amendment.
Syntex hereby represents and warrants as follows:
* Confidential Treatment Requested.
2.
<PAGE>
(1) Syntex has substantial experience in evaluating and
investing in private placement transactions of
securities in companies similar to CVT so that it is
capable of evaluating the merits and risks of its
investment in CVT and has the capacity to protect
its own interests. Syntex must bear the economic
risk of this investment indefinitely unless the
Shares are registered pursuant to the Securities Act
or an exemption from registration is available.
(2) Syntex is acquiring the Shares for its own account
for investment only, and not with a view towards
their distribution.
(3) Syntex represents that by reason of its management's
business or financial experience, Syntex has the
capacity to protect its interests in connection with
the transactions contemplated by this Amendment.
Syntex is not aware of any publication or
advertisement in connection with the transactions
contemplated in the Amendment.
(4) Syntex represents that it is an accredited investor
within the meaning of Regulation D under the
Securities Act.
(5) Syntex has received: (i) CVT's Annual Report on Form
10-K for the year ended December 31, 1996, including
the audited financial statements contained therein;
(ii) CVT's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1997, including the unaudited
financial statements contained therein; (iii) CVT's
Annual Report to Stockholders; and (iv) CVT's Annual
Proxy Statement for the 1997 Annual Meeting of
Stockholders. Syntex has had an opportunity to
discuss CVT's business, management and financial
affairs with CVT's directors, officers and management
and has had the opportunity to ask questions of and
receive answers from CVT and its management regarding
the terms and conditions of this investment.
(6) Syntex understands that the Shares may not be sold,
transferred or otherwise disposed of without
registration under the Securities Act or an exemption
therefrom, and that in the absence of an effective
registration statement covering the Shares or an
available exemption from registration under the
Securities Act, the Shares must be held indefinitely.
In particular, Syntex is aware that the Shares many
not be sold pursuant to Rule 144 promulgated
3.
<PAGE>
under the Securities Act unless all of the conditions
of that Rule are met.
(7) The certificate evidencing the Shares shall be
endorsed with the following legend:
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED,
PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED
UNDER SUCH ACT, OR UNLESS THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL OR OTHER EVIDENCE, SATISFACTORY TO
THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS
NOT REQUIRED."
1.3 AMENDMENT OF SECTION 5.2. Section 5.2 of the Prior Agreement is
hereby amended and restated to read in its entirety as follows:
"5.2 CVT shall pay the following royalties to Syntex on Net Sales of the
Licensed Products. Such royalties shall be paid on a product-by-
product and country-by-country basis according to the following
rates:
a) For Net Sales of a Licensed Product as to which Syntex Patents
and Know-How cover the manufacture, use, sale, offer for sale,
or import of the Licensed Product, and which Licensed Product
is [ * ] a rate of [ * ].
b) For Net Sales of a Licensed Product as to which Syntex Patents
and Know-How cover the manufacture, use, sale, offer for sale,
or import of the Licensed Product and which Licensed Product is
[ * ] the royalty rate shall be determined under the following
schedule for the applicable amount of world-wide Net Sales on an
annual basis, incrementally applied.
ANNUAL NET SALES OF LICENSED APPLICABLE ROYALTY RATE
PRODUCT [ * ]
Up to [ * ] million [ * ]
Greater than [ * ] million but [ * ]
less than [ * ] million
* Confidential Treatment Requested.
4.
<PAGE>
Greater than [ * ] million [ * ]
For example, in the event that Net Sales of Licensed Products
during a particular calendar year under Section 5.2 b) are
[ * ] million, the royalty rate on the first [ * ] million of
Net Sales will be [ * ] and the royalty rate on the subsequent
[ * ] million of Net Sales will be [ * ].
c) For sales of a Licensed Product in a country of the CVT
Territory in which competition by products having the same
active compound as the Licensed Product exceeds [ * ] in terms
of unit sales, based on IMS data or equivalent independent
survey, a royalty reduced to [ * ] of the rates shown in
Section 5.2 a) or 5.2 b) above for as long as such competition
continues to exceed [ * ]."
2. MISCELLANEOUS
2.1 FULL FORCE AND EFFECT. This Amendment amends the terms of the
Prior Agreement and is deemed incorporated into, and governed by all the
other terms of, the Prior Agreement. The provisions of the Agreement, as
amended by this Amendment, remain in full force and effect.
* Confidential Treatment Requested.
5.
<PAGE>
2.2 COUNTERPARTS. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, but both of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Amendment in
duplicate originals by their authorized officers as of the date and year
first above written.
SYNTEX (U.S.A.), INC.
By: /s/ David R. Austin
-----------------------------------
Name: David R. Austin
---------------------------------
Title: V.P.
--------------------------------
Date: 8/4/97
---------------------------------
CV THERAPEUTICS, INC.
By: /s/ Louis Lange
-----------------------------------
Name: Louis Lange
---------------------------------
Title: CEO
--------------------------------
Date: 7/23/97
---------------------------------
6.
<PAGE>
Exhibit 11.1
CV THERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
Statement of Computation of Net Loss Per Share
(In thousands, except net loss per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------- -------------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net loss $ (3,240) $ (2,017) $ (5,125) $ (5,396)
Historical:
Weighted average common stock outstanding 6,909 382 6,628 376
Shares related to Staff Accounting Bulletin Nos. 55, 64 and 83:
Stock options - 340 - 340
Warrants - 965 - 965
--------- --------- --------- ---------
Total shares used in calculating net loss per share 6,909 1,687 6,628 1,681
--------- --------- --------- ---------
--------- --------- --------- ---------
Net loss per share $ (0.47) $ (1.20) $ (0.77) $ (3.21)
--------- --------- --------- ---------
--------- --------- --------- ---------
Pro forma:
Shares used in calculating net loss per share (per above) 1,687 1,681
Preferred stock if-converted 3,238 2,906
--------- ---------
Total shares used in calculating pro forma net loss per share 4,925 4,587
--------- ---------
--------- ---------
Pro forma net loss per share $ (0.41) $ (1.18)
--------- ---------
--------- ---------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1997 AND THE CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTH PERIOD ENDED JUNE 30,
1997.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 24,851
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 27,820
<PP&E> 6,034
<DEPRECIATION> (3,368)
<TOTAL-ASSETS> 36,373
<CURRENT-LIABILITIES> 5,383
<BONDS> 0
0
0
<COMMON> 70,861
<OTHER-SE> (51,573)
<TOTAL-LIABILITY-AND-EQUITY> 36,373
<SALES> 0
<TOTAL-REVENUES> 1,631
<CGS> 0
<TOTAL-COSTS> 7,126
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (5,125)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,125)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,125)
<EPS-PRIMARY> (0.77)
<EPS-DILUTED> (0.77)
</TABLE>
