<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998
COMMISSION FILE NO. 0-24972
INKINE PHARMACEUTICAL COMPANY, INC.
(Exact name of small business issuer in its charter)
NEW YORK 13-3754005
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
SENTRY PARK EAST
1720 WALTON ROAD
BLUE BELL, PA 19422
(Address of Principal executive offices)
610-260-9350
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 November 12, 1998, the registrant had outstanding 22,703,175 shares of
common stock, par value $.0001 per share.
Transitional Small Business disclosure format: Yes No X
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INKINE PHARMACEUTICAL COMPANY, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BALANCE SHEETS - as of September 30, 1998 (unaudited)
and June 30, 1998.................................................................... 3
STATEMENTS OF OPERATIONS (unaudited) -- For the Three
Month Periods Ended September 30, 1998 and 1997, and the
Period from July 1, 1993 (Commencement of Operations) through
September 30, 1998................................................................... 4
STATEMENTS OF CASH FLOWS (unaudited) -- For the Three Month
Periods Ended September 30, 1998 and 1997, and the Period from
July 1, 1993 (Commencement of Operations) through
September 30, 1998................................................................... 5
NOTES TO UNAUDITED FINANCIAL STATEMENTS.............................................. 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION................................................... 8
PART II - OTHER INFORMATION............................................................................ 11
SIGNATURES............................................................................................. 12
EXHIBIT INDEX.......................................................................................... 13
</TABLE>
<PAGE> 3
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INKINE PHARMACEUTICAL COMPANY, INC.
(a development stage company)
BALANCE SHEETS
(In thousands, except share amounts)
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998 JUNE 30, 1998
------------------ -------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ................................... $ 2,962 $ 1,115
Short term investments ...................................... 8,713 11,847
Prepaid expenses and other current assets ................... 185 214
-------- --------
Total current assets .................................... 11,860 13,176
Fixed assets, net ................................................ 178 190
-------- --------
Total assets ............................................ $ 12,038 $ 13,366
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and other accrued expenses ................. $ 444 $ 246
-------- --------
Stockholders' equity:
Common stock, $.0001 par value; authorized 50,000,000
shares; issued 22,719,690 and 22,719,690 shares respectively 2 2
Less common stock held in treasury (16,515 shares) ............... (37) (37)
Additional paid-in capital ....................................... 30,998 30,954
Deferred compensation ............................................ (3,939) (4,320)
Unrealized gain on investments ................................... 3 3
Deficit accumulated during the development stage ................. (15,433) (13,482)
-------- --------
Total stockholders' equity .............................. 11,594 13,120
-------- --------
Total liabilities and stockholders' equity .............. $ 12,038 $ 13,366
======== ========
</TABLE>
See accompanying notes to unaudited financial statements.
3
<PAGE> 4
INKINE PHARMACEUTICAL COMPANY, INC.
(a development stage company)
STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
PERIOD FROM
JULY 1, 1993
(COMMENCEMENT OF
OPERATIONS)
THREE MONTHS ENDED THROUGH
SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1998
-------- -------- ----------------
<S> <C> <C> <C>
Costs and Expenses:
Research and development ............ $ 1,267 $ 67 $ 5,445
Purchased research &
development ........................ -- -- 3,952
General and administrative .......... 854 285 7,067
Write-off debt discount ............. -- -- 75
-------- -------- --------
2,121 352 16,539
-------- -------- --------
Loss from operations ..................... (2,121) (352) (16,539)
Interest income .......................... 170 8 1,113
Interest expense ......................... -- -- (7)
-------- -------- --------
Basic and diluted net loss ............... $ (1,951) $ (344) $(15,433)
======== ======== ========
Basic and diluted net loss per share ..... $ (.09) $ (.10)
Weighted average shares outstanding ...... 22,703 3,357
</TABLE>
See accompanying notes to unaudited financial statements.
4
<PAGE> 5
INKINE PHARMACEUTICAL COMPANY, INC.
(a development stage company)
STATEMENTS OF CASH FLOWS
(unaudited)
(In thousands)
<TABLE>
<CAPTION>
PERIOD FROM
JULY 1, 1993
THREE MONTHS ENDED (COMMENCEMENT OF
SEPTEMBER 30, OPERATIONS) THROUGH
1998 1997 SEPTEMBER 30, 1998
-------- -------- -------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss .............................................. $ (1,951) $ (344) $(15,433)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation ...................................... 12 6 166
Write-off of debt discount ........................ -- -- 75
Value of services paid by options and warrants .... -- -- 80
Amortization of deferred compensation ............. 426 29 3,085
Purchased research and development ................ -- -- 2,742
(Increase) decrease in prepaid expenses
and other assets ................................. 29 2 (185)
Increase (decrease) in accounts payable
and accrued expenses ............................. 198 (29) 470
Expenses paid by affiliate ........................ -- -- 97
Increase in management fees payable ............... -- -- 113
-------- -------- --------
Net cash used in operating activities ............... (1,286) (336) (8,790)
Cash flows from investing activities:
Purchases of investments .............................. (2,095) -- (24,538)
Proceeds from maturities and sales of investments ..... 5,229 790 15,833
Capital expenditures .................................. (1) (4) (347)
Deferred acquisition cost
-- (77) --
-------- -------- --------
Net cash provided by (used in) investing activities 3,133 709 (9,052)
Cash flows from financing activities:
Issuance of common stock - net of expenses ............ -- -- 20,841
Cost of shares - acquired ............................. -- -- (37)
Proceeds from notes payable - affiliates .............. -- -- 14
Proceeds from notes payable - stockholders ............ -- -- 96
Proceeds from notes payable - other ................... -- -- 300
Deferred offering cost ................................ -- (83) --
Repayment of notes payable - stockholders and other ... -- -- (410)
-------- -------- --------
Net cash provided by (used in) financing activities . -- (83) 20,804
-------- -------- --------
Net increase in cash and cash equivalents ................ 1,847 290 2,962
Cash and cash equivalents - beginning of period .......... 1,115 101 --
-------- -------- --------
Cash and cash equivalents - end of period ................ $ 2,962 $ 391 $ 2,962
======== ======== ========
</TABLE>
See accompanying notes to unaudited financial statements.
5
<PAGE> 6
INKINE PHARMACEUTICAL COMPANY, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
(unaudited)
1. BASIS OF PRESENTATION
The accompanying financial statements are unaudited and have been
prepared by InKine Pharmaceutical Company, Inc. (the "Company") in accordance
with generally accepted accounting principles.
Certain information and footnote disclosures normally included in the
Company's audited annual financial statements have been condensed or omitted in
the Company's interim financial statements. In the opinion of management, the
interim financial statements reflect all adjustments (consisting of normal
recurring adjustments) necessary for a fair representation of the results for
the interim periods presented.
The results of operations for the interim periods may not necessarily
be indicative of the results of operations expected for the full year, although
the Company expects to incur a significant loss for the year ending June 30,
1999. These interim financial statements should be read in conjunction with the
audited financial statements for the year ended June 30, 1998, which are
contained in the Company's most recent Annual Report on Form 10-KSB.
2. USE OF ESTIMATES
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date(s) of the financial
statements and the reported amounts of revenues and expenses during the
reporting period(s). Actual results could differ from those estimates.
3. PRO FORMA FINANCIAL INFORMATION
As previously reported in the Company's reports filed under the
Exchange Act, as of November 6, 1997, the Company acquired all the outstanding
capital stock of CorBec Pharmaceuticals, Inc. ("CorBec"), a privately owned,
development-stage, bio-pharmaceutical company founded in 1993 to discover and
develop drugs to treat autoimmune disease, serious infections and
asthma/allergy, and Sangen Pharmaceutical Company ("Sangen"), a privately owned,
development-stage, bio-pharmaceutical company formed in early 1997 and focused
on the development of a potential cancer treatment technology. CorBec's
technology, which consists of compounds designed to modulate the immune system,
is licensed from the University of Pennsylvania and has been developed in the
laboratory of Alan D. Schreiber, M.D., Professor of Medicine and Assistant Dean
for Research at the University of Pennsylvania School of Medicine (the "Fc
Receptor Technology"). The most advanced product within this family of
compounds, CBP-1011, is in Phase III clinical trials for the treatment of
idiopathic thrombocytopenic purpura ("ITP"). Sangen's technology consists of
specific peptide molecules and a polyclonal antibody developed by Dr. George
Tuszynski, Professor of Surgery, Medicine and Pathology at Allegheny University
of the Health Sciences ("AUHS"), based on a specific thrombospondin receptor,
which Dr. Tuszyuski discovered (the "Thrombospondin Technology"). In addition,
in early 1997, the Company acquired an exclusive, worldwide license to a tablet
form of the aqueous sodium phosphate purgative formula used to clean the colon
for any medical purpose and for use as a laxative (the "Purgative Product"),
which is currently in Phase III clinical trials for colonoscopies. The Company
licensed this technology from a partnership of physicians ("ALW Partnership"),
including Craig Aronchik, M.D., an attending gastroenterologist and Head of the
Endoscopy Unit at Pennsylvania Hospital in Philadelphia and a Clinical Associate
Professor of Medicine at the University of Pennsylvania School of Medicine. The
acquisitions of CorBec, Sangen and the Purgative Product license are referred to
collectively herein as the "Acquisitions."
Simultaneous with the Acquisitions, Dr. Leonard S. Jacob became
Chairman of the Board and Chief Executive Officer of the Company under a
long-term employment agreement and was issued a ten-year option entitling him to
purchase the number of shares of Common Stock equal to 7 1/2% of the fully
diluted capitalization of
6
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the Company. The exercise price of Dr. Jacob's option is (i) $0.61 per share for
1,200,000 shares and (ii) $1.00 per share for approximately 1,200,000 shares.
Dr. Taffy J. Williams, formerly the Company's President and Chief Executive
Officer, became President and Chief Operating Officer of the Company following
the Acquisitions. In January 1997, Dr. Williams received an option to purchase
5% of the fully diluted capitalization of the Company. The exercise price of Dr.
Williams' option is (i) $0.61 per share for 500,000 shares and (ii) $1.00 per
share for approximately 1,000,000 shares. The exercise prices of Dr. Jacob's and
Dr. Williams' options were below market value of the Common Stock of the Company
at the time of grant. Therefore, the Company has incurred, and will continue to
incur, a significant non-cash charge to operations as a result of the option
grants.
The Sangen acquisition included the grant to Dr. Tuszynski and AUHS of
125,000 shares of Common Stock of the Company and options to purchase an
aggregate of 375,000 shares, of which options for 250,000 shares will be
exercisable upon achievement of specified milestones in the development of a new
drug candidate. In addition, Dr. Tuszynski and AUHS will be entitled to cash
royalties based on net sales and licensing fees derived from the technology. The
Company has agreed to fund additional research in Dr. Tuszynski's laboratory in
an amount ranging from $150,000 (in the first year) to $1,350,000 (over seven
years, inclusive). Dr. Tuszynski is to be engaged as a consultant to the Company
for a two-year period at a fee of $50,000 per year.
The acquisition of CorBec resulted in the payment of $750,000 and the
issuance of 750,000 shares of Common Stock of the Company with provisions for
additional cash payments and stock issuances based upon the achievement of
certain milestones for CBP-1011. In addition, the Company has agreed to enter
into three-year consulting agreements with Dr. Alan Schreiber, the inventor of
the Fc Receptor Technology, and with the former chief executive officer of
CorBec, providing for aggregate consulting fees over three years equal to
$510,000, and for the grant of options with respect to an aggregate of 170,000
shares of Common Stock. The Company is also to fund up to $240,000 of sponsored
research in Dr. Schreiber's laboratory over the course of three years.
The following unaudited pro forma information is presented for the
Acquisitions, as if the Acquisitions had occurred on July 1, 1996. The pro forma
information does not purport to be indicative of the results that would have
been attained if the Acquisitions had actually been effective during the periods
presented, excludes the non-recurring purchased research and development charge
of $3,952,000, and is not necessarily indicative of operating results to be
expected in the future.
PRO FORMA INFORMATION AS IF THE ACQUISITIONS OCCURRED ON JULY 1, 1996
<TABLE>
<CAPTION>
For the three months ended
September 30,
1997
----
<S> <C>
Costs and expenses................................... $ 974,000
Net loss............................................. (966,000)
Shares used in computing loss per share.............. 4,232,000
Net loss per share................................... $ (0.23)
</TABLE>
4. ACCOUNTING PRINCIPLES
Effective July 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income". This Statement
requires that all items recognized under accounting standards as components of
comprehensive earnings be reported in an annual financial statement that is
displayed with the same prominence as other annual financial statements. This
Statement also requires that an entity classifiy items of other comprehensive
earnings by their nature in an annual financial statement. For example, other
comprehensive earnings may include foreign currency translation adjustments,
minimum pension liability adjustments and unrealized gains and losses on
marketable securities classified as available-for-sale. Annual financial
statements for prior periods will be reclassified as required. The Company's
total comprehensive earnings equaled its net income for the quarter ending
September 30, 1998.
7
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ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This report contains, in addition to historical information, statements
by the Company with regard to its expectations as to financial results and other
aspects of its business that involve risks and uncertainties and may constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements reflect management's current
views and are based on certain assumptions. Actual results could differ
materially from those currently anticipated as a result of a number of factors,
including, but not limited to, the risks and uncertainties discussed in this
report as well as those discussed under Item 1 "Other Factors to be Considered"
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" of the Company's Annual Report on Form 10-KSB for the fiscal year
ended June 30, 1998 as filed with the Securities and Exchange Commission.
GENERAL
The Company is a biopharmaceutical company engaged in the diagnosis and
treatment of cancer and autoimmune diseases. The Company pursues these
objectives through a technology platform consisting of the Fc Receptor
Technology, the Thrombospondin Technology and the Purgative Product. The Company
acquired these technologies in 1997. See Note 3 of the Notes to Unaudited
Financial Statements.
Since commencing operations in 1993, the Company has not generated any
sales revenue. The Company has funded operations primarily from the proceeds of
public and private placements of securities. The Company has incurred net losses
in each year since its inception, and expects to incur additional losses for the
next several years. The Company expects that losses will fluctuate from quarter
to quarter, and that such fluctuations may be substantial. At September 30,
1998, the Company's accumulated deficit was approximately $15,433,000.
RESULTS OF OPERATIONS
The Company incurred losses of $1,951,000 and $344,000 for the three
month periods ended September 30, 1998 and 1997, respectively. The Company
expects to incur additional losses in the foreseeable future. The diluted per
share loss was $0.09 and $0.10 for the three month periods ended September 30,
1998 and 1997, respectively. Losses are expected to continue in the remainder of
the fiscal year as the Company develops the Purgative Product, Thrombospondin
Technology and Fc Receptor Technology.
Research and development expenses amounted to $1,267,000 and $67,000
for the three month periods ended September 30, 1998 and 1997, respectively. The
increase in research and development expenses is the result of conducting a
Phase III clinical trial for the Company's drug candidate, CBP-1011, and a Phase
IIb clinical trial of INKP-100, the Purgative Product. Research and development
expenses are expected to continue to increase in future quarters as the Company
undertakes a Phase III clinical trial of the Purgative Product.
General and administrative expenses amounted to $854,000 and $285,000
for the three month periods ended September 30, 1998 and 1997, respectively. The
substantial increase of $569,000 includes $404,000 of amortization for options
issued to certain executives of the Company in connection with the restructuring
of the Company in 1997. General and administrative expenses will continue to
increase with the addition of other administrative personnel and an expanded
scale of operations associated with the development of multiple technologies.
Interest income amounted to $170,000 and $8,000 for the three months
ended September 30, 1998 and 1997, respectively. The increase in interest income
reflects the proceeds of the Company's Private Placement in November 1997.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1998, the Company had cash, cash equivalents and
investments of $11,675,000. Cash and cash equivalents is comprised primarily of
the proceeds from the Company's Private Placement in November 1997.
8
<PAGE> 9
The Company believes that with its current cash position, its financial
resources are adequate for its operations for at least the next 21 months. The
Company's future capital requirements will depend on numerous factors which
cannot be quantified and many of which the Company cannot control, including
continued progress in its research and development activities, progress with
pre-clinical studies and clinical trials, prosecuting and enforcing patent
claims, technological and market developments, the ability of the Company to
establish product development arrangements, the cost of manufacturing scaleup,
effective marketing activities and arrangements, and licensing or acquisition
activity. The Company may seek to obtain additional funds through equity or debt
financing, collaborative or other arrangements with corporate partners and
others, and from other sources. No assurance can be given that necessary
additional financing will be available on terms acceptable to the Company, if at
all. If adequate additional funds are not available when required, the Company
may have to delay, scale back or eliminate certain of its research, drug
discovery or development activities or certain other aspects of its operations
and its business will be materially and adversely affected.
The Company plans to invest significant resources in its research and
development activities and continue to add new personnel due to increased
business activities. The Company anticipates incurring additional losses over at
least the next several years, and such losses are expected to increase as the
Company expands its research and development activities relating to the
Purgative Product, Thrombospondin Technology and Fc Receptor Technology. To
achieve profitability, the Company, alone or with others, must successfully
develop and commercialize its technologies and products, conduct pre-clinical
studies and clinical trials, obtain required regulatory approvals and
successfully manufacture, introduce and market such technologies and products.
The time required to reach profitability is highly uncertain, and there can be
no assurance that the Company will be able to achieve profitability on a
sustained basis, if at all.
IMPACT OF YEAR 2000
Many existing computer programs and systems, including certain of those
used by the Company for its own internal purposes and those used by its
financial institutions, suppliers, vendors and others, use only two digits to
identify the year in the date field. These programs were designed and developed
without considering the impact of the upcoming change in the century. If not
corrected, computer applications that utilize this two-digit format could fail
or create erroneous results by or at the year 2000 ("Y2K").
The Company has identified three main areas of Y2K risk:
1. The Company's internal computer systems could be disrupted or
fail, causing an interruption or decrease in productivity in
the Company's operations;
2. The computer systems of third parties with whom the Company
regularly deals, including but not limited to its financial
institutions, suppliers, vendors, utilities, and others
("Material Third Parties") could be disrupted or fail, causing
an interruption or decrease in the Company's ability to
continue its operations;
3. The Company's university-based research programs could be
disrupted, delayed or harmed due to the reliance on computer
based scientific instruments and scientific databases which
the Company has no control over.
The Company is currently evaluating the nature and extent of the Y2K
issues related to its internal systems. An initial evaluation indicates that the
process of making the Company's internal systems (which consists of a financial
system for the accounting office and a network system for internal and external
communications) Y2K compliant should be substantially completed with respect to
these systems before June 30, 1999.
If any of the Company's Material Third Parties are not Y2K compliant
and their noncompliance causes a material disruption to any of their businesses,
the business of the Company could be materially adversely impacted. These
disruptions could include, among other things: a financial institution's
inability to process checks drawn on the Company's bank accounts, accept
deposits or process wire transfers; a supplier's, vendor's or financial
institution's business failure; an interruption in deliveries of supplies from
vendors; a loss of voice and data
9
<PAGE> 10
connections the Company uses to share information; a loss of electric power to
the Company's facilities; and other interruptions to the normal conduct of
business by the Company, the nature and extent of which the Company cannot
foresee. The Company will continue to evaluate the nature and extent of this
risk, but at this time is unable to determine the probability that any of such
risks will be realized, or if they are, the nature or length thereof, or effect,
if any, they may have on the Company.
The Company is in the process of evaluating the extent to which Y2K
impacts its university-based sponsored research programs. General discussions
with university employees indicate that Y2K disruptions could include loss of
scientific data, inability to obtain supplies for scientific experiments, the
university's inability to process deposits to support research and all other
risks disclosed above for the university's suppliers, and vendors. The
universities are in the process of addressing their own Y2K issues and the
Company has no control as to the outcome of these matters.
The Company has not incurred any cost to date to remediate the Y2K
impact. The Company anticipates spending nominal amounts for computer consulting
to fix any potential issues in its internal systems.
While the Company believes that it is addressing the Y2K issue, there
can be no assurance that the Company's Y2K analyses will be completed on a
timely basis, or that the costs and liabilities associated with the Y2K issue
will not materially adversely impact the business, prospects, revenues or
financial position of the Company. The Company is uncertain as to the worst case
Y2K scenario and has not yet developed a contingency plan to handle this worst
case scenario.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
and Hedging Activities," which establishes accounting and reporting standards
for derivative instruments, including certain derivative instruments imbedded in
other contracts (collectively referred to as derivative's) and for hedging
activities. Statement No. 133 is effective for all fiscal quarters of fiscal
years beginning after June 15, 1999. As the Company does not currently engage or
plan to engage in derivative or hedging activities, there will be no impact to
the Company's results of operations, financial position or cash flow upon the
adoption of this standard.
10
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PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Not applicable.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 5. OTHER INFORMATION.
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
27 Financial Data Schedule
(b) Reports on Form 8-K
None
11
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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 hereunto duly authorized.
INKINE PHARMACEUTICAL
COMPANY, INC.
Date: November 13, 1998 /s/ ROBERT F. APPLE
-----------------------------------
Robert F. Apple
Chief Financial Officer
12
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EXHIBITS
27 Financial Data Schedule
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
ACCOMPANYING FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000929547
<NAME> INKINE PHARMACEUTICAL
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<CASH> 2,962
<SECURITIES> 8,713
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 11,860
<PP&E> 214
<DEPRECIATION> 36
<TOTAL-ASSETS> 12,038
<CURRENT-LIABILITIES> 444
<BONDS> 0
0
0
<COMMON> 2
<OTHER-SE> 11,594
<TOTAL-LIABILITY-AND-EQUITY> 12,038
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,121
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,951)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,951)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,951)
<EPS-PRIMARY> (.09)
<EPS-DILUTED> (.09)
</TABLE>
