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 quarter ended March 31, 1996
OR
( ) 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 1-13768
ONCORMED, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 52-1842781
(State of Incorporation) (I.R.S Employer Identification No.)
205 PERRY PARKWAY
GAITHERSBURG, MARYLAND 20877
(Address of principal executive offices)
(Zip code)
(301) 208-1888
(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 _____
At May 6, 1996, there were 6,969,808 shares of Common Stock outstanding at a
par value of $.01.
<PAGE>
ONCORMED, INC.
TABLE OF CONTENTS
Page No.
PART I FINANCIAL INFORMATION
ITEM 1 Financial Statements ...................................3
Balance Sheets as of March 31, 1996 and
December 31, 1995 ......................................4
Statements of Operations for the Three Months Ended
March 31, 1996 and 1995 and for the Period from
Inception (July 12, 1993) Through March 31, 1996 .......5
Statements of Cash Flow for the Three Months Ended
March 31, 1996 and 1995 and for the Period from
Inception (July 12, 1993) Through March 31, 1996 .......6
Notes to Financial Statements ..........................7
ITEM 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations ...................11
PART II OTHER INFORMATION
ITEM 1 Legal Proceedings .....................................23
ITEM 2 Changes in Securities .................................23
ITEM 3 Defaults Upon Senior Securities .......................23
ITEM 4 Submission of Matters To A Vote of Security Holders ...23
ITEM 5 Other Information .....................................23
ITEM 6 Exhibit and Reports of Form 8-K ........................23
Signatures .............................................................24
Exhibit Index ..........................................................25
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1 Financial Statements
The balance sheet as of March 31, 1996, the statements of operations
for the three months ended March 31, 1996 and 1995 and for the period
from inception (July 12, 1993) through March 31, 1996 and the
statements of cash flow for the three months ended March 31, 1996 and
1995 and for the period from inception (July 12, 1993) through March
31, 1996, have been prepared by the Company without audit. In the
opinion of management, all adjustments (consisting of normal recurring
adjustments) necessary to present fairly the financial position,
results of operations and cash flows for all periods presented have
been made. The results for the quarter ended March 31, 1996 presented
in the accompanying financial statements are not necessarily indicative
of the results for the entire year or any other period. The balance
sheet at December 31, 1995 has been taken from the audited financial
statements.
The unaudited financial statements included herein have been prepared
pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted. While
the Company believes that the disclosures made are adequate to make the
information presented therein not misleading, these financial
statements should be read in conjunction with the audited financial
statements and related notes included in the Company's Annual Report
for the year ended December 31, 1995 on Form 10-K filed with the
Securities and Exchange Commission.
<PAGE>
ONCORMED, INC.
(A Development Stage Company)
BALANCE SHEETS
<TABLE>
<CAPTION>
As of As of
March 31, December 31,
1996 1995
(Unaudited)
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ................... $ 13,352,314 $ 718,844
Accounts receivable, net allowance for doubtful
accounts of $9,700 and $7,000 .............. 75,007 86,154
Other current assets ........................ 163,843 123,254
----------- -----------
Total current assets .................... 13,591,164 928,252
----------- -----------
Non-current assets:
Property and equipment, net ................. 1,250,367 1,220,937
Deferred offering costs ..................... -- 299,815
Other assets ................................ 2,870 2,870
----------- -----------
Total non-current assets ................ 1,253,237 1,523,622
----------- -----------
TOTAL ASSETS ............................. $ 14,844,401 $ 2,451,874
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ............................ $ 545,482 $ 123,443
Accrued expenses and other liabilities ...... 812,583 889,052
Payable to Oncor, Inc. ...................... 104,043 137,909
Deferred revenue ............................ 180,566 181,402
---------- -----------
Total current liabilities .............. 1,642,674 1,331,806
---------- -----------
Non-current liabilities:
Note payable to Oncor Finance, Inc. ......... 715,751 715,751
Deferred revenue ............................ 8,439 10,510
---------- -----------
Total non-current liabilities .......... 724,190 726,261
---------- -----------
TOTAL LIABILITIES ...................... 2,366,864 2,058,067
---------- -----------
Commitments And Contingencies (Notes 1 and 6)
Stockholders' Equity:
Preferred stock, $.01 par value, 2,000,000
shares authorized, none outstanding ....... -- --
Common stock, $.01 par value, 40,000,000
shares authorized, 6,961,050 and 4,950,050
shares issued and outstanding ............. 69,611 49,501
Additional paid-in capital ................. 25,686,532 11,782,817
Deferred compensation ...................... (93,166) (108,239)
Deficit accumulated during the development
stage ..................................... (13,185,440) (11,330,272)
---------- -----------
TOTAL STOCKHOLDERS' EQUITY ............ 12,477,537 393,807
---------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY ............................ $ 14,844,401 $ 2,451,874
========== ===========
</TABLE>
<PAGE>
ONCORMED, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Period From
Inception
(July 12, 1993)
Through
Three Months Ended March 31, March 31,
1996 1995 1996
------------ ------------ -------------
<C> <S> <S> <S>
REVENUES:
Sales to customers .......... $ 78,233 $ 16,889 $ 381,743
Sales to related party ...... -- -- 42,180
------------ ------------ -------------
Total revenues ............. 78,233 16,889 423,923
------------ ------------ -------------
EXPENSES:
Cost of sales - direct ...... 29,161 10,142 207,883
Laboratory operations
Non-related party expense .. 579,914 437,184 3,690,290
Related party expense ...... 68,000 50,000 560,000
Selling, general and administrative
Non-related party expense .. 1,219,747 899,844 7,185,188
Related party expense ...... 2,061 113,088 975,563
Research and development
Non-related party expense .. 128,778 156,375 1,280,948
Related party expense ...... 8,571 -- 107,069
------------ ------------ -------------
Total expenses .......... 2,036,232 1,666,633 14,006,941
------------ ------------ -------------
OPERATING LOSS ............... (1,957,999) (1,649,744) (13,583,018)
Interest income .............. 116,003 88,950 492,012
Interest expense ............. (13,172) (12,525) (94,434)
------------ ------------ -------------
NET LOSS ..................... $ (1,855,168) $ (1,573,319) $ (13,185,440)
============ ============ =============
NET LOSS PER SHARE
(unaudited) ................ $ (0.30) $ (0.32) $ (2.78)
============ ============ =============
SHARES USED IN COMPUTING NET
LOSS PER COMMON SHARE
(unaudited) ............... 6,267,606 4,947,117 4,748,812
============ ============ =============
</TABLE>
<PAGE>
ONCORMED, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOW
(Unaudited)
<TABLE>
<CAPTION>
Period From
Inception
(July 12, 1993)
Three Months Ended Through
March 31, March 31,
1996 1995 1996
---------- ---------- -------------
<C> <S> <S> <S>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss .......................... $ (1,855,168) $(1,573,319) $(13,185,440)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization .... 116,877 72,029 642,889
Amortization of deferred compensation 15,073 15,173 158,648
Changes in operating assets and liabilities:
Accounts receivable ............. 11,147 59,327 (75,007)
Other assets .................... (40,589) (27,286) (166,713)
Accounts payable ................ 422,038 31,295 545,482
Accrued expenses and other liabilities (76,468) 10,669 812,583
Deferred revenue ................ (2,907) 112,835 189,005
Payable to Oncor, Inc. .......... (33,866) 7,528 104,043
---------- --------- ----------
Net cash used in operating activities(1,443,863) (1,291,749) (10,974,510)
---------- --------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (146,307) (189,824) (1,838,256)
---------- --------- ----------
Net cash used in investing activities (146,307) (189,824) (1,838,256)
---------- --------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from sale of common stock 13,912,825 -- 22,420,490
Net proceeds from sale of preferred stock -- -- 2,990,439
Net proceeds from exercise of stock
options ........................... 11,000 1,000 38,400
Net proceeds from Note payable to
Oncor Finance, Inc. ............... -- -- 715,751
Decrease in deferred offering costs 299,815 -- --
---------- --------- ----------
Net cash provided by financing
activities ....................... 14,223,640 1,000 26,165,080
---------- --------- ----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ............... 12,633,470 (1,480,573) 13,352,314
CASH AND CASH EQUIVALENTS, beginning
of period .......................... 718,844 7,262,010 --
---------- --------- ----------
CASH AND CASH EQUIVALENTS, end of
period ............................. $ 13,352,314 $ 5,781,437 $ 13,352,314
========== ========= ==========
SUPPLEMENTAL DISCLOSURE OF NONCASH
INVESTING AND FINANCING ACTIVITIES
Issuance of common stock in exchange
for software and technology ...... $ -- $ -- $ 55,000
========== ========= ==========
Issuance of common stock in exchange
for stock subscription receivable $ -- $ -- $ 25,000
========== ========= ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for
interest ......................... $ 13,172 $ 12,525 $ 94,434
========== ========= ==========
</TABLE>
<PAGE>
ONCORMED, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
As of March 31, 1996
(Unaudited)
1. BUSINESS DESCRIPTION:
OncorMed, Inc. (the "Company") was incorporated on July 12, 1993, in the
State of Delaware as a subsidiary of Oncor, Inc. ("Oncor"). The Company was
formed to develop genetic testing and information services for the early
detection and management of cancer. The Company is in the development stage and
has a limited operating history, has incurred operating losses since its
inception and expects losses to continue and increase. Since its inception,
the Company has been engaged in research and development programs and
organizational efforts, including the development of its initial services,
recruiting its scientific and management personnel, establishing marketing
capabilities, engaging its Scientific Advisory Board and raising capital. The
Company's services are currently offered principally in the United States.
There can be no assurance that the Company will be successful in the
development or commercialization of its services.
Public Offering
On February 2, 1996, the Company completed the sale of 2,000,000 shares of
common stock in a public offering ("Offering") resulting in gross proceeds to
the Company of approximately $15.5 million. Net proceeds to the Company for
the Offering, after transaction costs, were approximately $13.9 million. As a
result of the Offering, Oncor's ownership of the Company's outstanding common
stock was reduced from approximately 40 percent to approximately 29 percent.
2. SIGNIFICANT ACCOUNTING POLICIES:
Use of Estimates
The preparation of these financial statements required the use of certain
estimates by management in determining the entity's assets, liabilities,
revenue and expenses. Actual results could differ from those estimates.
Cash and Cash Equivalents
Investments in securities with original maturities of less than three
months are considered cash equivalents. Cash equivalents at March 31, 1996
consisted of approximately $120,000 invested in overnight reverse
repurchase agreements collateralized by U.S. treasury securities, with the
remainder of approximately $13.2 million invested in money market instruments.
Cash equivalents at December 31, 1995 consisted of approximately $185,000
invested in overnight reversed repurchase agreements, with the remainder of
approximately $534,000 invested in money market instruments.
Other Current Assets
At March 31, 1996, included in other current assets is approximately
$68,000 for prepaid insurance.
<PAGE>
ONCORMED, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS--(Continued)
2. SIGNIFICANT ACCOUNTING POLICIES: (Continued)
Property and Equipment
Property and equipment are recorded at cost. Depreciation and amortization
expense is calculated using the straight-line method over estimated useful
lives of three to five years. Leasehold improvements are amortized over the
shorter of the lease terms or useful lives.
Accrued Expenses
At March 31, 1996, accrued expenses consisted of approximately $433,000
for payroll and related expenses, $308,000 in professional/legal fees, $42,000
for marketing/operations costs and $29,000 in other expenses.
Revenue Recognition
Revenues are derived from providing genetic testing and information
services and, in certain circumstances, software licensing associated with the
Company's risk assessment service. Revenues from the Company's services are
recognized as those services are provided. Revenues from its risk assessment
service are recognized over the license period.
Research and Development
Research and development costs are charged to expense as incurred.
Net Loss Per Share
Net loss per share is based on the weighted-average number of shares
outstanding during the periods presented. Pursuant to Securities and Exchange
Commission Staff Accounting Bulletin No. 83, all shares (including common
shares issuable upon conversion of convertible preferred stock) and options to
purchase shares were treated as if they were outstanding for all periods prior
to the initial public offering. In the periods after the initial public
offering, the effects of options, warrants, and the outstanding convertible
note have not been considered, since the effect would be antidilutive.
Reclassification
Certain 1995 balances have been reclassified to conform with 1996
financial statement presentation.
<PAGE>
ONCORMED, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS--(Continued)
3. RELATED-PARTY TRANSACTIONS:
License Agreement
Under the license agreement with Oncor (the "Oncor License"), the Company
is obligated to pay royalties on a semi-annual basis to Oncor for Oncor
technologies existing as of the date of the Oncor License, equal to the greater
of (i) six percent of the Company's net sales revenues from certain services,
as defined in the agreement, or (ii)$100,000. Fees payable to Oncor under the
Oncor License of approximately $50,000, $50,000, and $542,000 are included in
laboratory operations expense for the three months ended March 31, 1996 and
1995, and the period from inception (July 12, 1993) to March 31, 1996,
respectively.
Payable to Oncor, Inc. and Affiliate
As of March 31, 1996, the Company owed Oncor $104,043 for charges which
include fees payable under the Oncor License, insurance, consulting and
equipment. In addition, the Company converted $715,751 owed to Oncor for
license fees previously incurred and for prior services rendered into a
Convertible Subordinated Promissory Note (the "Note"), which principal is due
in June 1999. The Note bears interest at 7 percent and is convertible into
common stock at Oncor's option at a conversion price of $20 per share of common
stock. During the fourth quarter of 1994, Oncor assigned the Note to its
wholly-owned subsidiary Oncor Finance, Inc. Interest expense recorded by the
Company relating to the Note was $12,665 for the three months ended
March 31, 1996.
4. DEFERRED REVENUES:
Deferred revenues consist of prepaid fees related to various risk
assessment service agreements as well as an advanced payment from Preferred
Oncology Networks of America ("PONA"), a cancer disease management company.
5. STOCKHOLDERS' EQUITY:
Stock Option Plan
As of March 31, 1996, 2,250,000 shares of the Company's common stock
had been reserved for issuance, of which options to purchase 1,523,000 shares
had been issued. Compensation expense is recognized for the difference between
the exercise price of the options granted and the fair market value of the
Company's common stock. Compensation expense of $15,073, $15,173, and $158,648
has been recognized for the three months ended March 31, 1996 and 1995 and for
the period from inception (July 12, 1993) to March 31, 1996, respectively.
<PAGE>
ONCORMED, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS--(Continued)
6. COMMITMENTS:
The Company's total minimum commitments due under leases as of March 31,
1996 were $502,036 through 1998. The Company's total minimum commitments due
under license, research, and consulting agreements, other than the Oncor
License, as of March 31, 1996 were $320,375 through 1996.
<PAGE>
Item 2 Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion and analysis provides information which
management believes is relevant to an assessment and understanding of the
Company's results of operations and financial condition. The discussion should
be read in conjunction with the audited financial statements of the Company and
notes thereto, included in the Company's Annual Report for the year ended
December 31, 1995 on Form 10-K filed with the Securities and Exchange
Commission. This report contains certain statements of a forward-looking
nature relating to future events of the future financial performance of the
Company. Investors are cautioned that such statements areonly predictions and
that actual events or results may differ materially. In evaluating such
statements, investors should carefully consider the various factors identified
in this report which could cause actual results to differ materially from
those indicated by such forward-looking statements, including the matters set
forth under Certain Factors Affecting Operations and Market Price of
Securities.
OVERVIEW
The Company, which commenced operations in July 1993, has a limited
operating history and is a development stage company. Since its inception,
the Company has been engaged in the development of its services, the hiring of
its scientific and marketing staff, and its initial marketing efforts. The
Company has incurred operating losses since its inception. As of March 31,
1996, the Company's accumulated deficit was approximately $13.2 million. The
losses resulted principally from selling, general and administrative expenses,
laboratory operations, and research and development expenses. The Company has
yet to generate any significant revenues and the Company cannot anticipate when
or if, it will be able to generate significant revenues in the future. The
Company expects its operating losses to continue as its sales and marketing
efforts, research and development programs and laboratory operations continue
and increase. The Company's ability to achieve profitability depends on its
ability to successfully market and sell its services. There can be no
assurance when, or if, the Company will become profitable. (See Note 1 to the
Financial Statements.)
RESULTS OF OPERATIONS
Revenues for the three months ended March 31, 1996 were $78,233 compared
to $16,889 for the same period in 1995. The increase in revenues is primarily
due to an increase in hereditary cancer consulting services. The Company is in
the development stage and cannot anticipate when, or if, it will be able to
generate any significant revenues.
Cost of sales - direct was $29,161 and $10,142 for the three months ended
March 31, 1996 and 1995, respectively. Cost of sales - direct includes costs
for supplies, direct labor, shipping, and royalties (other than those under the
Oncor License) for testing services and computer hardware costs associated with
the Company's risk assessment services. The increase in cost of sales - direct
reflected the corresponding increase in the Company's revenues.
Laboratory operations expenses were $647,914 and $487,184 for the three
months ended March 31, 1996 and 1995, respectively. The increase in laboratory
operations expenses was due to the hiring of additional personnel to perform
certain commercial testing services initiated during 1995. As sales of the
Company's services increase, a greater portion of the expenses associated with
laboratory operations will be included in cost of sales - direct. Related
party expenses incurred during these periods consisted of technology license
fees paid to Oncor. In addition, the cost of renting laboratory equipment
from Oncor is included in the three months ended March 31, 1996.
Selling, general and administrative expenses were $1,221,808 and
$1,012,932 for the three months ended March 31, 1996 and 1995, respectively.
General and administrative expenses were $908,165 for the three months ended
March 31, 1996, compared with $707,580 for the three months ended March 31,
1995. The increase in general and administrative expenses was due to the
addition of personnel and related costs, and increased professional fees,
depreciation expense and occupancy costs. Selling expenses were $313,643 for
the three months ended March 31, 1996, compared with $305,352 for the three
months ended March 31, 1995. Selling expenses remained constant between the
two periods. The Company anticipates that its selling, general and
administrative expenses will increase as it continues to market and sell its
portfolio of services. For the three months ended March 31, 1996, related
party selling, general and administrative expenses decreased to $2,061 as
compared to $113,088 for the corresponding period in 1995.
Research and development expenses were $137,349 and $156,375 for the three
months ended March 31, 1996 and 1995, respectively. The 12% decrease in
research and development expenses was due to the Company's reduced obligations
to fund various clinical correlation studies. Related party expenses for the
three months ended March 31, 1996 consisted of the cost of consulting services.
Related party expenses, other than the Oncor License, will continue to
decrease and remain nominal in the future.
Interest income was $116,003 and $88,950 for the three months ended March
31, 1996 and 1995, respectively. The increase in interest income during the
first quarter of 1996 was due to the increased amounts available for investment
from the consummation of the follow-on offering completed in February 1996.
Interest expense was $13,172 and $12,525 for the three months ended March 31,
1996 and 1995, respectively.
For the reasons set forth above, net operating losses were $1,855,168 and
$1,573,319 for the three months ended March 31, 1996 and 1995, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Cash expenditures have exceeded revenues since the Company's inception.
The Company's operations have been funded through a $1.0 million capital
infusion by Oncor, a $3.0 million private placement of equity securities,
approximately $716,000 in advances from Oncor, and approximately $7.4 million
of net proceeds from the Company's initial public offering. In addition, the
Company raised approximately $13.9 million of net proceeds from the Company's
follow-on offering completed in February 1996. The Company expects its
operating losses to continue as its sales and marketing efforts, research and
development programs and laboratory operations continue and increase. The
Company also intends to make additional laboratory equipment purchases and
other capital expenditures in the future, although currently it has no specific
material commitments to do so.
Cash used in operating activities was approximately $1.4 million for the
three months ended March 31, 1996 compared with approximately $1.3 million for
the same period in 1995. The increase was attributable to an increase in the
net operating loss for the three months ended March 31, 1996.
Cash used in investing activities was $146,307 for the three months ended
March 31, 1996 compared to $189,824 for the same period in 1995. The 23%
decrease was due to the completion of the installation of the Company's Local
Area Network (LAN) in 1995.
Cash provided by financing activities was $14.2 million for the three
months ended March 31, 1996 compared with $1,000 for the same period in 1995.
In the first quarter of 1996, the Company completed the follow-on offering
which resulted in net proceeds of approximately $13.9 million.
Minimum payments due under lease commitments and various research, license
and consulting agreements, excluding the Oncor License, will be approximately
$543,000 through 1996.
The Company has incurred negative cash flows from operations since its
inception. The Company has expended, and will continue to expend substantial
funds to continue its sales and marketing efforts, research and development
programs and laboratory operations. The Company expects that its existing
capital resources and the interest earned thereon, will be adequate to fund
its capital requirements through 1997. However, no assurance can be given
that there will be no change in the Company's business, financial condition or
results of operations that would consume available resources significantly
before such time. The Company's future capital requirements will depend on
many factors, including the progress and scope of its research and development
programs, the extent of its marketing and sales efforts, the size and timing
of any acquisitions of technology or business and the market acceptance of its
services. To the extent that funds generated from the Company's operations,
together with its existing capital resources and the interest earned thereon,
are insufficient to meet the Company's operating requirements, it is likely
that the Company will seek to obtain additional funds through equity or debt
financing and collaborative or other arrangements with corporate partners and
others; however, these sources may not be available when needed or on terms
acceptable to the Company. Insufficient funds may require the Company to
delay, scale-back or eliminate certain of its research and development
activities, its sales and marketing efforts, or certain other aspects of its
business or to license to third parties the rights to commercialize services
or technologies that the Company would otherwise undertake itself.
CERTAIN FACTORS AFFECTING OPERATIONS AND MARKET PRICE OF SECURITIES
The Company's future business, financial condition, and results of operations,
and the market price for its securities are dependent on the Company's ability
to successfully manage the following business considerations. No assurance can
be given that the Company will be able to manage such considerations
successfully. The failure to manage such considerations could have a material
adverse effect on the Company's business, financial conditions, and results of
operations, and on the market price of its securities.
Development Stage Company; History of Operating Losses; Uncertainty of Future
Profitability--
The Company commenced operations in July 1993, has a limited operating history
and is a development stage company. Since its inception, the Company has been
engaged in research and development activities, organizational efforts and
sales and marketing activities, including the development of its services, the
hiring of its scientific and marketing staff and its initial sales and
marketing efforts. The Company has incurred operating losses since its
inception. As of March 31, 1996, the Company's accumulated deficit was
approximately $13.2 million. The Company's losses have resulted principally
from selling, general and administrative expenses, laboratory operations and
research and development expenses. The Company has yet to generate any
significant revenues and the Company cannot anticipate when, or if, it will
be able to generate significant revenues in the future. The Company expects its
operating losses to continue as its sales and marketing efforts, research and
development programs and laboratory operations continue and increase. The
Company's ability to achieve profitability depends on its ability to
successfully market and sell its services. There can be no assurance when, or
if, the Company will become profitable.
Relationship with Oncor--
Pursuant to the Restated Technology License Agreement between the Company and
Oncor entered into in June 1994 (the "Oncor License"), Oncor is providing the
Company with an exclusive worldwide license to Oncor's existing and future human
genome technologies that are useful for the purposes of developing and
commercializing certain of the Company's services, including:(i) testing,
detection and/or analysis of cancer-predisposing genes; (ii) genetic assessment
of the risk of an individual to develop cancer; and (iii) testing and analysis
for the purposes of cancer management. The Company is heavily reliant on the
technologies licensed directly from Oncor and from third parties through Oncor
which form the basis for most of the Company's services. The Company's rights
under the Oncor License are subject to certain rights retained by Oncor, which
include Oncor's right to use the licensed technologies for internal,
non-commercial research and development purposes and for development and
commercialization of Oncor's products. Oncor intends to develop its
technologies into diagnostic products for sale to third parties. These third
parties may then use these products to provide services that compete directly
with the Company's services, which could have a material adverse effect on the
Company's business, financial condition and results of operations. The initial
term of the Oncor License expires in June 2004 and is automatically renewable
for additional one-year periods, unless either party objects. There can be no
assurance that the Oncor License will be renewed at the end of its initial term
or that it will not be terminated earlier pursuant to its terms. There also can
be no assurance that conflicts of interest between Oncor and the Company will
not arise with respect to the Oncor License, any services that might be
provided by Oncor to the Company in the future or other aspects of the
Company's relationship with Oncor.
The Company's rights to technologies licensed to the Company from third parties
through Oncor are subject to various provisions in the license agreements
between such third parties and Oncor. No assurance can be given that Oncor will
perform its obligations under such agreements, that such agreements will not be
terminated or that such agreements can be renewed upon termination or
expiration. If Oncor breaches such agreements or otherwise fails to comply with
such agreements, or if such agreements are terminated or otherwise expire, the
development or commercialization of certain of the Company's services may be
delayed or terminated, or the Company would have to expend substantial
additional resources on development and commercialization, which would have a
material adverse effect on the Company's business, financial condition and
results of operations. Oncor owns approximately 29% of the Company's
outstanding common stock. Accordingly, Oncor may be able to effectively
control or influence certain actions such as the election of directors and the
authorization of certain transactions that require stockholder approval and be
able to otherwise effectively control the Company's policies without
concurrence of the Company's other stockholders. In addition, Stephen Turner,
Chief Executive Officer and Chairman of the Board of Directors of Oncor, is a
director of the Company, and Timothy J. Triche, M.D., Ph.D., a director of
Oncor, is the Chief Executive Officer and Chairman of the Board of Directors of
the Company.
Limited Patient Populations For Certain Services--
Certain of the Company's services currently address subtypes of broader types
of cancers. Patients with such subtypes typically represent only a small
percentage of those patients who are under treatment or have a history of the
broader types of cancer. Accordingly, the market for such services may be
limited and such services may not generate significant revenues.
New and Uncertain Business; Uncertainty of Clinical Utility--
The Company's genetic testing and information services represent a new approach
to cancer management for which there is little precedent and for which the
market is evolving. The Company's business is to commercialize recent genetic
discoveries and mutation detection technologies for the early detection and
management of cancer. The Company's ability to successfully develop its
business is unproven and is dependent on its ability to establish its services
as the standard of care in cancer management and obtain third party
reimbursement for its services; expand the distribution of its services both
domestically and internationally; develop strategic alliances and
collaborations with academic medical centers, research institutions, managed
care organizations, clinical laboratories, health care providers and corporate
partners; identify, license and develop emerging genetic discoveries and
mutation detection technologies; and continue to expand its portfolio of
services. The Company's ability to succeed is also dependent upon the
acceptance by potential customers and patients of the Company's services as
effective tools for cancer management. There can be no assurance that the
market for the Company's services will continue to evolve or that the Company's
business strategy will be successful. The discoveries and technologies which
form the basis for the Company's services have not been widely adopted by the
medical community. Accordingly, the Company is pursuing clinical correlation
studies at academic medical centers and research institutions that are designed
to determine the clinical utility, reliability and accuracy of the Company's
services. There can be no assurance that these studies will confirm the
clinical utility, reliability and accuracy of the Company's services. The
failure of these studies to do so could have a material adverse effect on the
Company's business, financial condition and results of operations.
Uncertain Availability of Health Care Reimbursement and Market Acceptance of
Services--
The successful commercialization of genetic testing and information services
depends in part on the ability of its customers to obtain adequate
reimbursement for such services and related treatments from governmental
agencies, private health care insurers and other third party payors. Government
and private third party payors are increasingly attempting to contain health
care costs by limiting both the extent of coverage and the reimbursement rate
for new diagnostic and therapeutic products and services. The United States
Health Care Financing Administration ("HCFA"), which administers Medicare, and
most private insurance companies do not cover services that they determine to
be investigational in nature or that are not considered "reasonable and
necessary" for diagnosis or treatment. Many private insurers are influenced by
HCFA actions in making their own coverage decisions on new products or
services. The Company is seeking reimbursement approval for its services from
various third party payors, including HCFA. There can be no assurance that
third party reimbursement for the Company's services will be available to its
customers or that any such reimbursement will be adequate. Disapproval of, or
limitations in, coverage by HCFA or other third party payors could materially
and adversely affect market acceptance of the Company's services which would
have a material adverse effect on the Company's business, financial condition
and results of operations.
Dependence on Collaborations and Licenses with Others--
The Company's strategy for the research, development and commercialization of
certain of its services is to rely in part on various collaborative and license
arrangements with academic medical centers, research institutions and
commercial entities. Accordingly, the Company is dependent in part upon such
third parties performing their obligations. The Company has entered into
certain collaborative and license arrangements, including an arrangement with
HCI, and is continually seeking to enter into additional arrangements with
other collaborators and licensors. There can be no assurance that the Company
will be able to enter into acceptable collaborative and license arrangements in
the future or that the parties with which the Company has established or will
establish arrangements will perform their obligations under such arrangements.
There also can be no assurance that its current arrangements or any future
arrangements will lead to the development of additional services with
commercial potential, that the Company will be able to obtain or license
proprietary rights with respect to any technology developed in connection with
these arrangements and that the Company will be able to ensure the
confidentiality of any proprietary rights and information developed in such
arrangements or prevent the public disclosure thereof. In general, the
Company's collaborative and license arrangements provide that they may be
terminated under certain circumstances. There can be no assurance that such
arrangements will not be terminated or that the Company will be able to extend
any of its collaborative and license arrangements upon their expiration. The
Company currently has certain licenses from third parties, either directly or
indirectly through the Oncor License, and in the future may require additional
licenses from these or other parties to develop and market commercially viable
services. There can be no assurance that such licenses will be obtainable on
commercially reasonable terms, if at all, or renewable, that the patents
underlying such licenses, if any, will be valid and enforceable or that the
nature of the technology underlying such licenses will remain proprietary.
The Company's rights to technologies licensed to the Company from third parties
through the Oncor License are subject to the license agreements between such
third parties and Oncor. No assurance can be given that the third parties to
these agreements will perform their obligations under such agreements on a
timely basis or at all. If such third parties breach or terminate their
agreements with Oncor or otherwise fail to, or are unable to, comply with the
provisions of their agreements with Oncor for whatever reason, the Company
would have no direct recourse and would be dependent on Oncor to enforce such
agreements. The agreements between Oncor and the third parties expire at
various times. There can be no assurance that these agreements will be
renewed at the end of their initial terms or that such agreements will not be
terminated or cancelled prior to their expiration. The Company has no rights
under these third party agreements and is reliant upon Oncor to negotiate
renewals of such agreements and resolve disputes under such agreements. If the
third parties to the agreements that the Company licenses from Oncor through
the Oncor License breach such agreements or otherwise fail to comply with such
agreements, or such agreements are terminated or otherwise expire, the
development or commercialization of certain of the Company's services may be
delayed or terminated, or the Company would have to expend substantial
additional resources on development and commercialization, which could have a
material adverse effect on the Company's business, financial condition and
results of operations.
Competition--
The Company is engaged in the biotechnology and medical services industries
which are characterized by extensive research and development efforts, rapid
technological progress and intense competition. There are many public and
private companies, including well-known pharmaceutical companies, biotechnology
companies and academic institutions, engaged in developing medical services and
the technology underlying such services. Although there are relatively few
direct competitors of the Company, it is anticipated that the number of direct
competitors will increase significantly in the future. Many of the Company's
current and potential competitors have substantially greater financial and
technological resources, sales and marketing capabilities and experience, and
research and development experience than the Company. Accordingly, the
Company's competitors may succeed in developing services and the underlying
technology more rapidly than the Company and in developing services that are
more accurate and useful and less costly than any of the Company's services.
The Company's competitors also may be more successful than the Company in
marketing and selling such services. In addition, other technologies are, or in
the future may become, the basis for competitive products and services. The
Company has agreed under the Oncor License to assign to Oncor rights to certain
of the Company's technologies. It is likely that Oncor will develop the
technologies that are assigned to Oncor by OncorMed under the Oncor License
into products that Oncor will sell to third parties. These third parties may
then use these products to provide services that compete directly with the
Company's services, which could have a material adverse effect on theCompany's
business, financial condition and results of operations.
The Company relies on certain technologies that are not patentable or
proprietary and consequently may be available to the Company's competitors.
Competition may increase further as a result of the potential advances in the
technology underlying the services developed by the Company. The Company also
is aware that other companies may be developing genetic testing and information
technologies, services and products that may be competitive with the Company's
services. There can be no assurance that the Company's competitors will not
succeed in developing technologies, services and products that are more
accurate and useful than any being developed by the Company or that would
render the Company's technology and services obsolete or noncompetitive.
The Company requires all employees and consultants (including certain
scientific advisors) to enter into confidentiality agreements that prohibit
the disclosure of confidential information to anyone outside the Company and
require disclosure and assignment to the Company of their ideas, developments,
discoveries or inventions developed during the course of their service to the
Company. However, no assurance can be given that competitors of the Company
will not gain access to trade secrets and other proprietary information
developed by the Company and disclosed to employees, consultants and/or
scientific advisors.
Given the early stage of the market for the Company's services, the important
competitive factors are availability, accuracy and utility. The Company
anticipates that other competitive factors, such as price, availability of
reimbursement and response time, will become important as the market matures.
Patents and Proprietary Rights--
The Company relies on a combination of trade secret and copyright laws and
confidentiality agreements to protect its proprietary technology, rights and
know-how. The Company's success will depend in part on its ability or the
ability of its licensors or sublicensors to obtain patents, defend patents,
maintain trade secrets, defend copyrights and operate without infringing upon
the proprietary rights of others, both in the United States and in foreign
countries. The patent position of companies relying upon biotechnology is
highly uncertain in general and involves complex legal and factual issues, and
no consistent policy has emerged regarding the breadth of claims allowed in
biotechnology patents. To date, none of the Company, its licensors or its
sublicensors has been granted any patents related to the technology or genetic
discoveries underlying the Company's services. Although the Company and certain
of the Company's licensors and sublicensors have patent applications pending
relating to such technologies and discoveries, there can be no assurance that
patents will be issued as a result of such patent applications or that, if
issued, such patents will be sufficiently broad to afford protection against
competitors with similar technologies or discoveries. There can also be no
assurance that patents, if any, issued to the Company, or for which the Company
has license or sublicense rights, will not be challenged, invalidated or
circumvented, or that the rights granted thereunder will provide competitive
advantages to the Company. The commercial success of the Company also will
depend upon avoiding the infringement of patents issued to third parties,
obtaining licenses to third parties' technologies and genetic discoveries and
maintaining licenses upon which certain of the Company's services are, or
might be, based. In particular, third parties, including potential competitors,
have filed patent applications relating to certain genes and genetic mutations,
including the BRCA1 and p16 genes and related mutations, underlying certain of
the Company's services, and may in the future file additional patent
applications relating to genes and genetic mutations. In the event that any
such patents are issued to such parties, such patents may preclude the Company,
its licensors and sublicensors from obtaining patent protection for their
technologies and discoveries, may hinder or prevent the Company from providing
related genetic testing services and could require the Company to enter into
licenses with such parties or cease such activities. There can be no
assurance that any required licenses would be available on acceptable terms,
or at all. Litigation, which could result in substantial cost to the Company,
may be necessary to determine the scope and validity of others' proprietary
rights or to enforce the Company's patent, copyright, trade secret and
license and sublicense rights. The failure by the Company to obtain any such
licenses, if required, and the Company's involvement in such litigation, could
have a material adverse effect on the Company's business, financial condition
and results of operations.
Oncor has the primary right and obligation to obtain, maintain and enforce
proprietary rights in relation to its own technologies covered by the Oncor
License and the Company's technologies assigned to Oncor. The Company has
certain rights to take over these responsibilities in relation to specific
technologies if Oncor elects not to do so. Apart from these rights of
substitution, the Company has no rights to obtain, maintain or enforce
proprietary rights in relation to any of the technologies that it develops or
acquires through the Oncor License and, accordingly, the Company is
substantially reliant on Oncor to obtain, maintain and enforce such proprietary
rights. The amount and timing of resources devoted to such activities are
beyond the Company's control. There can be no assurance that Oncor will
perform such obligations on a timely basis or at all, or that it will expend
sufficient resources on such activities.
The Company relies on certain technologies, trade secrets and know-how that
are not patentable or proprietary and are available to the Company's
competitors. Although the Company has taken steps to protect its unpatented
technologies, trade secrets and know-how, in part through the use of
confidentiality agreements with its employees, consultants and certain of its
contractors, there can be no assurance that these agreements will not be
breached, that the Company would have adequate remedies for any breach or that
the Company's trade secrets will not otherwise become known or be independently
developed or discovered by competitors.
Government Regulation--
The Clinical Laboratory Improvement Act ("CLIA"), as amended in 1988, provides
for regulation of clinical laboratories by the United States Department of
Health and Human Services ("HHS"). These regulations mandate that all clinical
laboratories be certified to perform testing on human specimens and provide
specific conditions for certification. These regulations also contain
guidelines for the qualifications, responsibilities, training, working
conditions and oversight of clinical laboratory employees. In addition,
specific standards are imposed for each type of test that is performed in a
laboratory. The Company's laboratory is certified under these regulations and
the Company believes that it is in substantial compliance with these
guidelines. CLIA and the regulations promulgated thereunder are enforced
through continuous quality inspections of test methods, equipment,
instrumentation, materials and supplies on a bi-annual and "spot" basis. While
the United States Food and Drug Administration (the "FDA") does not currently
regulate the genetic tests underlying the Company's services if they are
performed in the Company's CLIA certified clinical laboratory, there can be no
assurance that the FDA will not seek to regulate such tests in the future. If,
in the future, the FDA should determine that the tests underlying the Company's
services should receive FDA approval prior to their provision in the Company's
laboratory, there can be no assurance that such approval would be received on
a timely basis or at all. Any change in CLIA or related regulations, or in the
interpretation thereof, or in the FDA's position on regulating the tests
underlying the Company's services, could have a material adverse effect on
the Company's business, financial condition and results of operations. The
Company's laboratory is licensed and regulated by the State of Maryland, in
which it is located. The Company's laboratory is also regulated by certain
other states from which the Company may accept specimens. The Company has
received approval for a license from the State of New York and intends to
seek approval from other states as required. No assurance can be given that
the Company will be able to obtain such approvals on a timely basis or at all.
The loss of, or the failure to obtain, any required state license could have a
material adverse effect on the Company's business, financial condition and
results of operations.
The Company is subject to extensive federal, state and local regulation,
including regulation under the Occupational Safety and Health Act, the
Environmental Protection Act, the Toxic Substances Control Act, the Resource
Conservation and Recovery Act and other laws, rules and regulations governing
health care, clinical laboratory activities, waste disposal, handling of
toxic, dangerous or radioactive materials and other matters. Although the
Company does not currently directly bill Medicare, Medicaid or other
governmental payors, the Company intends to seek reimbursement from such payors
in the future, in which event the Company will be subject to laws, rules and
regulations governing reimbursement and fraud and abuses and prohibiting the
filing of false claims. These laws, rules and regulations include
"anti-kickback" and "Stark" laws, which contain extremely broad proscriptions,
the violation of which may result in exclusion from Medicare and Medicaid and
criminal and civil penalties. In addition, the Company is subject to state
laws, rules and regulations limiting certain financial relationships between
health care service providers and physicians and other referral sources.
Although the Company believes that it is in substantial compliance with all
applicable laws, rules and regulations, there can be no assurance that the
Company will remain in compliance with applicable laws, rules and regulations
or that changes in, or new interpretations of, existing laws, rules and
regulations would not have a material adverse effect on the Company's
business, financial condition and results of operations.
Risk of Discrimination Against Customers; Potential Adverse Impact on
Insurability; Confidentiality--
The availability of genetic predisposition testing has raised certain ethical,
legal and social issues regarding the appropriate utilization and
confidentiality of information provided by such testing. The medical
information obtained or determined about an individual from the Company's
services is of an extremely sensitive nature. In providing its services, the
Company is subject to certain statutory, regulatory and common law requirements
regarding the confidentiality of such medical information. The Company
maintains an internal regulatory compliance review program to monitor
compliance with applicable confidentiality requirements, and believes that it
is in substantial compliance with such requirements. Failure to comply with
such confidentiality requirements could result in material liability to the
Company. It is possible that discrimination by insurance companies could occur
through the raising of premiums by insurers to prohibitive levels, the
cancellation of insurance or the unwillingness to provide coverage to patients
shown to have a genetic predisposition to a particular disease. The
Company could experience a delay in market acceptance or a reduction in the
size of its potential serviceable market if insurance discrimination were to
become a significant factor, which would have a material adverse effect on the
Company's business, financial condition and results of operations. Similarly,
governmental authorities could, for social or other purposes, limit the use of
or prohibit genetic predisposition testing. If efforts by the Company and
others to mitigate potential discrimination are not successful or if the use
of genetic testing is limited, the Company could experience a delay or
reduction in market acceptance of its services, which would have a material
adverse effect on the Company's business, financial condition and results of
operations.
Additional Financing Requirements; Access to Capital--
The Company has incurred negative cash flows from operations since its
inception. The Company has expended, and will continue to expend, substantial
funds to continue its sales and marketing efforts, research and development
programs and laboratory operations. The Company expects that its existing
capital resources will be adequate to fund its capital requirements
through 1997. However, no assurance can be given that there will be no change
in the Company's business, financial condition or results of operations that
would consume available resources significantly before such time. The Company's
future capital requirements will depend on many factors, including the progress
and scope of its research and development programs, the extent of its sales and
marketing efforts and laboratory operations, the size and timing of any
acquisitions of technology or businesses and the market acceptance of its
services. To the extent that funds generated from the Company's operations,
together with its existing capital resources, are insufficient to meet the
Company's operating requirements, it is likely that the Company will seek to
obtain additional funds through equity or debt financing and collaborative or
other arrangements with corporate partners and others. The terms and prices of
any such financings may be significantly more favorable to investors than to
the Company's existing stockholders. No assurance can be given that any
required additional financing will be available when needed or on terms
acceptable to the Company. If adequate additional funds are not available, the
Company may be required to delay, scale back or eliminate certain of its
research and development programs, its sales and marketing efforts or certain
other aspects of its business or to license to third parties the rights to
commercialize services or technologies that the Company would otherwise
undertake itself. The unavailability of adequate funds in the future would
have a material adverse effect on the Company's business, financial condition
and results of operations.
Limited Sales and Marketing Capacity--
The Company has limited experience in selling and marketing genetic testing
and information services and will have to further develop its sales force
and/or rely on collaborators, licensees or others to provide for the sales and
marketing of its services. There can be no assurance that the Company will be
able to establish adequate sales and marketing capacity or make
arrangements with collaborators, licensees or others to perform such activities
on acceptable terms or at all.
Risk of Liability; Adequacy of Insurance Coverage--
The marketing and sale of genetic testing and information services could
expose the Company to the risk of certain types of litigation, including
medical malpractice or negligence claims or contract disputes. The Company
currently maintains $10.0 million in medical malpractice insurance coverage.
There can be no assurance, however, that this coverage will be adequate to
protect the Company against future claims or that insurance will be available
to the Company in the future on acceptable terms, if at all. A medical
malpractice or other claim for which the Company was not adequately insured
could have a material adverse effect on the Company's business, financial
condition and results of operations.
Dependence on Key Management and Qualified Personnel--
The Company is highly dependent upon the efforts of its senior management,
scientific advisory board and consultants. The loss of the services of one or
more members of senior management could have a material adverse effect on the
Company's business, financial condition and results of operations. In addition,
the loss of the services of certain members of the Company's scientific
advisory board and certain consultants could materially and adversely affect
the Company to the extent that the Company is pursuing research and development
in areas of such scientific advisors' or consultants' expertise. Although the
Company is the beneficiary of $1 million key-man life insurance policies on
each of its Chief Executive Officer, Timothy J. Triche, M.D., Ph.D., and its
President and Chief Operating Officer, Douglas Dolginow, M.D., the Company does
not believe such amounts would be adequate to compensate for the loss of
either executive. Due to the specialized scientific nature of the Company's
business, the Company is also highly dependent upon its ability to attract
and retain qualified scientific, technical and key management personnel. There
is intense competition for qualified personnel in the areas of the Company's
activities and there can be no assurance that the Company will be able to
continue to attract and retain the qualified personnel necessary for the
development of its existing business and its expansion into areas and
activities requiring additional expertise. The loss of, or failure to recruit,
scientific, technical, sales and marketing and managerial personnel could have
a material adverse effect on the Company's business, financial condition and
results of operations.
The Company's scientific advisors and consultants may be employed by or have
consulting agreements with entities other than the Company, some of which may
compete with the Company. To the extent that members of the Company's
scientific advisory board or consultants have consulting arrangements with or
become employed by any competitor of the Company, the Company could be
materially and adversely affected. Any inventions or processes independently
discovered by the scientific advisors or the consultants will not, unless
otherwise agreed, become the property of the Company and will remain the
property of such persons or their full-time employers. In addition, the
institutions with which the scientific advisors and consultants are affiliated
may make available the research services of their scientific and other
skilled personnel, including the scientific advisors and consultants, to
competitors of the Company pursuant to sponsored research agreements. Under
such sponsored research agreements, such institutions may be obligated to
assign or license to a competitor of the Company patents and other proprietary
information that may result from research sponsored by an entity other than
the Company, including research performed by a scientific advisor or consultant
for a competitor of the Company.
Certain Anti-Takeover Provisions--
The Company's Certificate of Incorporation grants the Board of Directors the
authority to issue up to 2,000,000 shares of preferred stock of the Company,
par value $0.01 per share (the "Preferred Stock"), in the future in one or more
series and to fix the rights, preferences, privileges and restrictions thereof,
including dividend rights, dividend rates, conversion rights, voting rights,
terms of redemption, redemption prices, liquidation preferences and the number
of shares constituting any series or the designation of such series, without
further vote or action by the stockholders. The rights of the holders of Common
Stock will be subject to, and may be materially and adversely affected by, the
rights of the holders of any Preferred Stock that may be issued in the future.
Although the Company has no present plans to issue any shares of Preferred
Stock, it may do so in the future. The issuance of Preferred Stock could have
the effect of discouraging a third party from acquiring a majority of the
outstanding Common Stock of the Company and preventing stockholders from
realizing a premium on their shares. In addition, the Company is subject to
Section 203 of the Delaware General Corporation Law (the "DGCL"), which
prohibits a Delaware corporation from engaging in any business combination
with any interested stockholder for a period of three years unless certain
conditions are met.
OTHER MATTERS
During the first quarter of 1996, the Company signed agreements to provide
hereditary cancer risk assessment services to three hospitals and three cancer
centers. These agreements represent at least $51,000 in revenues over initial
terms of one to two years. All of the agreements anticipate the Company will
provide genetic testing services.
During the first quarter of 1996, the Medical Advisory Panel of Blue Cross
of California approved the Company's BRCA1 predisposition testing service for
reimbursement for individuals at high risk for breast and ovarian cancer.
In February 1996, the Company was awarded a $150,000, two-year grant from
the United States Army to perform certain services.<PAGE>
PART II - OTHER INFORMATION
Item 1 Legal Proceedings
None.
Item 2 Changes in Securities
None.
Item 3 Defaults Upon Senior Securities
None.
Item 4 Submission of Matters to a Vote of Security Holders
None.
Item 5 Other Information
None.
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits filed as part of this Form 10-Q
Exhibit 11 Calculation of Earnings Per Share.
Exhibit 27 Financial Data Schedule.
(b) Reports on Form 8-K
None.<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.
OncorMed, Inc.
<TABLE>
<S> <C>
Date: May 13, 1996 /s/ DR. TIMOTHY J. TRICHE
------------------------------
Dr. Timothy J. Triche, Chairman and
Chief Executive Officer
Date: May 13, 1996 /s/ DR. DOUGLAS DOLGINOW
------------------------------
Dr. Douglas Dolginow, President and
Chief Operating Officer
Date: May 13, 1996 /s/ L. ROBERT JOHNSTON, JR.
------------------------------
L. Robert Johnston, Jr., Vice
President and Chief Financial
Officer
</TABLE>
OncorMed, Inc.
EXHIBIT INDEX
Exhibit No. Description Page No.
- - ----------- ----------- --------
EX-11 Earnings Per Share Calculation 26
EX-27 Financial Data Schedule 27
<PAGE>
ONCORMED, INC.
EARNINGS PER SHARE
CALCULATION OF SHARES USED IN COMPUTING
NET LOSS PER SHARE
<TABLE>
<CAPTION>
Period From
Inception
(July 12, 1993)
Through
Three Months Ended March 31, March 31,
1996 1995 1996
------------ ------------ -------------
<S> <C> <C> <C>
Common Stock ................. 6,267,606 4,947,117 4,372,641
Treasury Stock effect to acquire
Common Stock granted in the
twelve months prior to the
Company's initial public
offering .................... -- -- 376,171
------------ ------------ -------------
Shares used in computing net loss
per share ................... 6,267,606 4,947,117 4,748,812
============ ============ =============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Balance
Sheet and the Statement of Operations filed as part of the annual report on Form
10-Q and is qualified in its entirety by reference to such annual report on Form
10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 13,352,314
<SECURITIES> 0
<RECEIVABLES> 84,707
<ALLOWANCES> 9,700
<INVENTORY> 0
<CURRENT-ASSETS> 13,591,164
<PP&E> 1,893,256
<DEPRECIATION> 642,889
<TOTAL-ASSETS> 14,844,401
<CURRENT-LIABILITIES> 1,635,365
<BONDS> 0
0
0
<COMMON> 69,611
<OTHER-SE> 25,686,532
<TOTAL-LIABILITY-AND-EQUITY> 14,844,401
<SALES> 78,233
<TOTAL-REVENUES> 78,233
<CGS> 29,161
<TOTAL-COSTS> 2,036,232
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,172
<INCOME-PRETAX> (1,855,168)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,855,168)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,855,168)
<EPS-PRIMARY> (0.30)
<EPS-DILUTED> 0
</TABLE>
