<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended June 30, 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 0-26862
DEPOTECH CORPORATION
(Exact name of Registrant as specified in its charter)
California 33-0387911
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Identification No.)
Organization)
10450 Science Center Drive
San Diego, California 92121
(Address of principal executive offices, zip code)
(619) 625-2424
(Registrant's telephone number)
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
-------- --------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock: No par value, 11,508,420 shares as of July 31, 1996
<PAGE> 2
DEPOTECH CORPORATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
Condensed Balance Sheets as of
June 30, 1996 and December 31, 1995............................... 1
Condensed Statements of Operations
for the Three Months and Six Months ended
June 30, 1996 and 1995............................................ 2
Condensed Statements of Cash Flows
for the Six Months ended
June 30, 1996 and 1995............................................ 3
Notes to Condensed Financial Statements........................... 4
Item 2 Management's Discussion and Analysis
of Financial Condition and Results of Operations.................. 6
PART II OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Securities Holders............. 14
Item 6 Exhibits and Reports on Form 8-K.................................. 15
Signatures .................................................................. 16
</TABLE>
<PAGE> 3
PART I-FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DEPOTECH CORPORATION
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
------------ ------------
(Unaudited) (Note)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 5,258,035 $ 5,883,911
Short-term investments 24,148,184 32,777,623
Accounts receivable from Chiron collaboration 696,445 400,000
Other current assets 905,724 566,924
------------ ------------
Total current assets 31,008,388 39,628,458
Property and equipment, net 13,591,761 8,610,978
Other assets 756,618 738,137
============ ============
Total assets $ 45,356,767 $ 48,977,573
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and other accrued liabilities $ 1,480,736 $ 2,447,592
Current portion of obligations under capital leases and loans 1,952,334 1,805,494
Notes payable, short-term 109,442 --
------------ ------------
Total current liabilities 3,542,512 4,253,086
Deferred rent 867,463 387,947
Obligations under capital leases, less current portion 5,181,930 2,831,010
Notes payable, long-term 177,036 --
Shareholders' equity:
Common stock, no par value; 30,000,000 shares authorized,
11,504,560 and 11,285,630 shares issued and outstanding at June 30, 1996
and December 31, 1995, respectively 67,482,897 67,133,738
Deferred compensation (188,204) (214,448)
Unrealized gain (loss) on investments (39,814) 206,172
Accumulated deficit (31,667,053) (25,619,932)
------------ ------------
Total shareholders' equity 35,587,826 41,505,530
------------ ------------
Total liabilities and shareholders' equity $ 45,356,767 $ 48,977,573
============ ============
</TABLE>
See accompanying notes to condensed financial statements.
Note: The balance sheet at December 31, 1995 has been derived from the
audited financial statements at that date, but does not include all of
the disclosures required by generally accepted accounting principles.
1
<PAGE> 4
PART I-FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DEPOTECH CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
-------------------------------- --------------------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Contract revenue $ 1,464,301 $ 650,714 $ 2,664,955 $ 3,805,254
Marketing rights fee -- -- -- 1,000,000
------------ ------------ ------------ ------------
Total revenue 1,464,301 650,714 2,664,955 4,805,254
Costs and expenses:
Research and development 4,449,094 2,963,111 7,720,498 5,374,700
General and administrative 818,767 562,582 1,605,028 1,026,013
------------ ------------ ------------ ------------
Total costs and expenses 5,267,861 3,525,693 9,325,526 6,400,713
------------ ------------ ------------ ------------
Loss from operations (3,803,560) (2,874,979) (6,660,571) (1,595,459)
Interest income 424,412 152,683 935,771 360,058
Interest expense (177,743) (71,354) (322,326) (123,771)
------------ ------------ ------------ ------------
Net loss $ (3,556,891) $ (2,793,650) $ (6,047,126) $ (1,359,172)
============ ============ ============ ============
Net loss per share $ (0.31) $ (0.36) $ (0.53) $ (0.17)
============ ============ ============ ============
Shares used in computing
net loss per share 11,456,702 7,817,347 11,388,639 7,812,863
============ ============ ============ ============
</TABLE>
See accompanying notes to condensed financial statements.
2
<PAGE> 5
PART I-FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DEPOTECH CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1996 1995
------------------------------
(Unaudited)
<S> <C> <C>
OPERATING ACTIVITIES
Net cash used by operating activities $(6,382,413) $(2,963,344)
INVESTING ACTIVITIES
Purchases of short-term investments (9,214,545) (7,059,862)
Proceeds from sale of short-term investments 17,597,998 5,826,420
Purchases of property and equipment (2,336,019) (187,770)
----------- -----------
Net cash provided (used) by investing activities 6,047,434 (1,421,212)
FINANCING ACTIVITIES
Repayments on capital lease obligations (842,955) (293,375)
Reimbursement for assets refinanced as capital leases 3,254 173,130
Proceeds from issuance of common stock 349,159 4,656
Proceeds from notes payable 199,645 (16,794)
----------- -----------
Net cash used by financing activities (290,897) (132,383)
----------- -----------
Net decrease in cash and cash equivalents (625,876) (4,516,939)
Cash and cash equivalents at beginning of period 5,883,911 4,624,340
----------- -----------
Cash and cash equivalents at end of period 5,258,035 107,401
Short-term investments at end of period 24,148,184 6,654,880
----------- -----------
Cash, cash equivalents and short-term investments at end of period $29,406,219 $ 6,762,281
=========== ===========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Property and equipment acquired through capital leases and loans $ 3,337,461 $ 615,309
=========== ===========
Property and equipment acquired through short-term notes payable $ -- $ 344,832
=========== ===========
Other current assets financed through short-term notes payable $ -- $ 68,547
=========== ===========
Facilities payable incurred for leasehold improvements $ -- $ 318,377
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid $ 322,327 $ 123,771
=========== ===========
</TABLE>
See accompanying notes to condensed financial statements.
3
<PAGE> 6
DEPOTECH CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. Basis of Presentation and Significant Accounting Policies
The interim unaudited condensed financial statements contained herein
have been prepared in accordance with generally accepted accounting principles
for interim financial information. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. These interim unaudited condensed financial
statements should be read in conjunction with the Company's December 31, 1995
audited financial statements. In management's opinion, the unaudited information
includes all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of the financial position, results of
operations and cash flows for the periods presented. Interim results are not
necessarily indicative of results to be expected for the full year. Certain
prior year amounts have been reclassified to conform with current year
presentation.
Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standard (SFAS) No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of". The adoption of the new
standard had no effect on the financial statements.
Effective January 1, 1996, the Company adopted SFAS No. 123,
"Accounting and Disclosure of Stock-Based Compensation". As allowed under the
SFAS, the Company has elected to continue to follow Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25) in
accounting for its employee stock options. The adoption of the standard had no
effect on the financial statements.
2. Net Loss Per Share
For the three and six months ended June 30, 1996, net loss per share is
computed using the weighted average number of common shares outstanding during
the period. Common share equivalents have not been included in the computation,
since their effect would have been anti-dilutive.
For the three and six months ended June 30, 1995, net loss per share is
computed pursuant to the requirements of the Securities and Exchange Commission
("SEC"), which require that common stock issued and common stock equivalent
shares granted during the twelve months immediately preceding the initial public
offering ("IPO") be included in the calculation as if these shares were
outstanding for the period using the treasury stock method. In addition,
pursuant to SEC policy, the calculation includes convertible
4
<PAGE> 7
DEPOTECH CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)
preferred shares which converted into common shares immediately prior to the
closing of the IPO as if they were converted into common shares as of the
original dates of issuance. Common share equivalents have been included in the
computation using the treasury stock method.
The following supplemental net loss per share data includes weighted
average common and preferred shares outstanding but excludes all common stock
equivalents and the effects of certain rules of the SEC for the periods prior to
the Company's IPO in October 1995 as the effect would be anti-dilutive.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Shares used in computing supple-
mental net loss per share 11,456,702 7,516,929 11,388,639 7,514,254
Supplemental net loss per share $ (0.31) $ (0.37) $ (0.53) $ (0.18)
</TABLE>
3. Chiron Collaboration
In March 1994, the Company entered into a collaborative agreement with
Chiron Corporation ("Chiron") to develop and commercialize sustained-release
formulations of DepoCyt(TM) and certain Chiron proprietary products using the
Company's drug delivery technology.
Cumulative reimbursable costs incurred by the Company under the Chiron
agreement totaled $3.8 million through June 30, 1995 and $7.7 million through
June 30, 1996. Reimbursable costs of $2.5 million due through December 31, 1994
became billable and was recognized as contract revenue upon the achievement of a
development milestone in January 1995.
4. Commitments
During April 1996, the Company entered into an agreement to expand an
existing lease line from $2.6 million to $5.1 million. The incremental borrowing
amount of $2.5 million has been used to finance certain tenant improvement and
equipment costs incurred in the first quarter of 1996. In May 1996, the Company
signed a bank credit facility for $9.0 million to finance future capital
equipment purchases of which $0.2 million has been utilized through June 30,
1996.
5
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
Since its inception in October 1989, DepoTech Corporation ("DepoTech"
or the "Company") has devoted substantially all of its resources to the
development of its potential products. To date, the Company has not received any
revenues from the sale of products. The Company has funded its development
programs primarily from equity-derived working capital and through strategic
alliances with other companies. The Company has been unprofitable since its
inception and expects to incur substantial losses over at least the next two
years. As of June 30, 1996, the Company's accumulated deficit was approximately
$31.7 million.
RESULTS OF OPERATIONS
The Company had total revenues of $1.5 million for the three months
ended June 30, 1996 compared to $0.7 million for the same period in 1995. Total
revenues for the six month period ended June 30, 1996 decreased to $2.7 million
from $4.8 million for the comparable period in 1995. Total revenues in 1996 were
primarily derived from reimbursement of 50% of the clinical trial and
manufacturing scale-up expenses for the Company's lead product, DepoCyt, under a
collaborative agreement with Chiron. In addition, Chiron reimbursed DepoTech for
100% of feasibility studies performed on their behalf. 1995 total revenues
included a one-time marketing fee and reimbursement of prior year clinical trial
expenses for DepoCyt totaling $3.5 million earned by the Company in January 1995
upon achievement of a development milestone under the Chiron collaboration.
Revenues derived from this milestone will not re-occur in future periods.
Revenues may fluctuate from period to period depending on the level of clinical
and process development activity for projects under collaboration agreements and
the achievement of milestones.
Research and development expenses for the second quarter ended June 30,
1996 increased to $4.4 million compared to $3.0 million for the same period in
1995. Research and development expenses for the six months ended June 30, 1996
increased to $7.7 million from $ 5.4 million in 1995. Factors contributing to
this increase include expanded efforts in Phase III clinical trials and
manufacturing scale-up for DepoCyt, and preclinical development of other
potential DepoFoam(TM) products. In April 1996, DepoTech completed a Phase I
clinical trial of DepoAmikacin(TM), a sustained-release antibiotic. In June
1996, the Company began
6
<PAGE> 9
a Phase IV clinical trial for DepoCyt. Research and development expenses are
expected to continue to increase during 1996.
Under the collaborative agreement with Chiron, the Company is obligated
to fund 50% of the sales and marketing expenses incurred for DepoCyt. DepoTech
is recognizing such expenses incurred in 1996 prior to the onset of any product
revenue.
General and administrative expenses for the second quarter of 1996
increased to $0.8 million from $0.6 million for the same period in 1995. General
and administrative expenses for the six months ended June 30, 1996 increased to
$1.6 million from $1.0 million for the comparable period in the prior year. The
increase was primarily due to expansion in administrative staffing, higher
facility expenses and costs associated with being a public company. General and
administrative expenses are expected to continue to increase during 1996.
Interest income increased to $424,000 and $936,000 for the three and
six ended June 30, 1996 from $153,000 and $360,000 for the same periods in 1995,
respectively. The increase was principally due to higher average cash investment
balances following the Company's initial public offering in October 1995 and
increases in available market interest rates. Interest expense increased to
$178,000 and $322,000 for the three and six months ended June 30, 1996 from
$71,000 and $124,000 for the comparable periods in 1995, respectively. The
increase in interest expense was due to higher balances outstanding for
obligations under capital leases and loans.
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, DepoTech has financed its operations primarily
through public and private placements of equity securities, which provided
aggregate net proceeds of approximately $67.2 million through June 30, 1996, and
through capital equipment leases. In October 1995, the Company completed its
initial public offering of common stock with net proceeds of $38.1 million.
As of June 30, 1996, the Company had cash, cash equivalents and
short-term investments of $29.4 million as compared to $38.7 million at December
31, 1995. The decrease of $9.3 million in cash, cash equivalents and short-term
investments was due primarily to net cash used to fund operations of $6.4
million and payments totaling $2.3 million for capital expenditures. In April
1996, the Company expanded an existing lease line from $2.6 million to $5.1
million. The incremental borrowing amount of $2.5 million was used to finance
certain tenant
7
<PAGE> 10
improvement costs incurred for the build-out of the Company's main manufacturing
space and equipment purchases. In May 1996, the Company signed a bank credit
facility for $9.0 million to finance future capital equipment purchases of which
$0.2 million has been utilized through June 30, 1996. Working capital decreased
to $27.5 million as of June 30, 1996 compared to $35.4 million as of December
31, 1995.
For the six months ended June 30, 1996, the Company financed an
aggregate of $3.3 million for property and equipment through capital equipment
leases. The Company intends to continue to fund capital expenditures through
external financing supplemented by internal cash resources where appropriate. In
September 1995, the Company occupied the initial phase (50,000 square feet) of a
build-to-suit facility housing its administrative, research and clinical
activities. DepoTech began paying rent in mid-March 1996 for the remaining space
(32,000 square feet) which is intended to provide future multi-line
manufacturing capability. This will result in increased facility expenses in
future periods. The minimum rental commitment for this facility ranges from $2.1
million to $4.5 million per year, over 20 years, based upon pre-established
annual rent increases.
The Company's operations to date have consumed substantial amounts of
cash, which is expected to continue over the foreseeable future. The amount of
net losses and the time required for the Company to achieve profitability are
highly uncertain. There can be no assurance that the Company will be able to
achieve profitability at all or on a sustained basis. It is the Company's
intention to fund product research and development costs through additional
collaborative relationships with suitable corporate partners. There can be no
assurance that any agreements resulting from these discussions will successfully
reduce the Company's funding requirements. Additional equity or debt financing
will be required, and there can be no assurance that these funds will be
available on favorable terms, if at all. If adequate funds are not available,
the Company may be required to delay, scale back or eliminate one or more of its
product development programs or obtain funds through arrangements with
collaborative partners or others that may require the Company to relinquish
rights to certain of its technologies, product candidates or products that the
Company would not otherwise relinquish.
DepoTech anticipates that its existing available cash, cash equivalents
and short-term investments, committed future contract revenue, projected funding
from equipment financing and interest income will be adequate to satisfy its
capital requirements and fund operating losses through 1997. The Company's
future capital requirements will depend on many factors, including continued
scientific
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<PAGE> 11
progress in its products and process development programs, progress with
preclinical testing and clinical trials, the time and costs involved in
obtaining regulatory approvals, the costs involved in filing patents, competing
technological and market developments, changes in existing collaborative
relationships, the ability of the Company to establish development arrangements,
the cost of manufacturing scale-up, and the establishment of effective sales and
marketing arrangements.
9
<PAGE> 12
RISK AND UNCERTAINTIES
EARLY STAGE COMPANY. DepoTech's products are at an early stage of
development, and, to date, two of the Company's DepoFoam formulations have been
subject to human clinical testing. Although many of the drug compounds which the
Company has encapsulated in DepoFoam have been tested in humans by others using
alternate delivery routes, the Company's potential products will require
extensive research, formulation, development, preclinical and clinical testing,
and may involve a lengthy regulatory approval process prior to
commercialization. In June 1996, DepoTech reported data from the solid tumor arm
of the Phase III clinical trials which showed an increased response rate for
DepoCyt versus standard therapy. There can be no assurance that the data
reported to date regarding DepoCyt will be sufficient to gain FDA approval, that
additional results from the pivotal phase III trial will confirm earlier results
or that the Phase IV and other clinical trials of DepoCyt will generate positive
results. There can be no assurance that the Company's other potential products
will prove safe and effective in clinical trials, meet applicable regulatory
standards, be capable of being produced in commercial quantities at acceptable
cost or be successfully commercialized. In addition, there can be no assurance
that preclinical or clinical testing will accurately predict safety or efficacy
in broader human use, or that delays in the regulatory approval process will not
result in longer clinical trial schedules than those currently expected by the
Company. Even if all of the Company's products prove to be safe and effective
and are approved for marketing by the United States Food and Drug Administration
("FDA") and other regulatory authorities, there can be no assurance that health
care providers, payers and patients will accept the Company's products. Any
failure of the Company to achieve technical feasibility, demonstrate safety,
achieve clinical efficacy, obtain regulatory approval or, together with its
partners, successfully market products would have a material adverse effect on
the Company.
GOVERNMENT REGULATION; UNCERTAINTY OF OBTAINING REGULATORY APPROVAL.
DepoTech's research and development activities are, and its future business will
be, subject to significant regulation by governmental authorities in the United
States, primarily by the FDA, and internationally. The clinical testing and the
regulatory review process for new drugs or biologics requires substantial time,
effort and expense. There can be no assurance that any approval will be granted
to the Company on a timely basis, if at all. The FDA or its international
equivalent may refuse to approve a drug or biological product for commercial
sale or shipment of a drug for noninvestigational uses if applicable statutory
and/or regulatory criteria are not satisfied, or may require additional testing
or
10
<PAGE> 13
information. There can be no assurance that such additional testing or the
provision of such information, if required, will not have a material adverse
effect on the Company. Also, the regulatory process can be modified by
legislatures, the FDA, or international regulators in a manner that could
materially affect the Company.
LIMITED MANUFACTURING EXPERIENCE; RISK OF SCALE-UP; RELIANCE ON
MANUFACTURING PROCESS. Although DepoTech is currently manufacturing materials
for human clinical trials, the Company has no experience manufacturing products
for commercial purposes. The Company will need to scale-up its current
manufacturing processes and comply with current Good Manufacturing Practices
("cGMPs") and other regulations prescribed by various regulatory agencies in the
United States and other countries to achieve the required levels of production
of such products and to obtain marketing approval. Failure by the Company to
successfully scale-up its manufacturing processes or to comply with cGMPs and
other regulations would have a material adverse effect on the Company, including
the loss of manufacturing rights under the Chiron agreement. To date, the
Company has relied on a particular proprietary method of manufacture. There can
be no assurance that this method will be applicable to all pharmaceuticals or
biologics the Company desires to commercialize. Further, the yield of product
incorporated into the delivery system may be highly variable for different
therapeutic agents. Finally, the Company will need to successfully meet any
manufacturing challenges associated with the characteristics of the drug to be
encapsulated.
DEPENDENCE UPON PARTNERS FOR DEVELOPMENT AND COMMERCIALIZATION. The
Company does not currently possess all of the resources necessary to develop,
complete the FDA approval process for and commercialize all of its potential
therapeutic products. The Company hopes to enter into collaborative arrangements
with other companies to fund research, development and clinical trials, to
assist in obtaining regulatory approvals in the United States and
internationally and to commercialize its products. In addition, the Company's
ability to apply its drug delivery technology to a broad range of
pharmaceuticals will depend upon its ability to establish and maintain
collaborative arrangements because the rights to many of the pharmaceuticals
most suited to the Company's drug delivery technology are currently owned by
third parties. While the Company has entered into preliminary collaborations to
test feasibility of its delivery technology with certain pharmaceuticals and has
entered into a more extensive collaboration with Chiron, there can be no
assurance that the Company will be able to enter into additional collaborations
to develop commercial applications of its drug delivery technology. In addition,
there can be no assurance that the Company will be able to enter into or
maintain existing or
11
<PAGE> 14
future collaborations or that such collaborations will be successful. The
failure of the Company to enter into a collaboration with the owner of rights to
a particular formulation or pharmaceutical would preclude the Company from
developing its drug delivery technology with respect to such formulation or
pharmaceutical. The failure to enter into or maintain existing or future
collaborations would have a material adverse effect on the Company.
POSSIBLE VOLATILITY OF STOCK PRICE. Factors such as the announcements
of technological innovations or new products by the Company, its competitors and
other third parties, as well as variations in the Company's results of
operations, market conditions, analysts' estimates and the stock market may
cause the market price of the Company's common stock to fluctuate significantly.
Also, future sales of shares by existing shareholders pursuant to Rule 144 of
the Securities Act of 1933, as amended, or through the exercise of outstanding
registration rights, could have an adverse effect on the price of the Company's
common stock.
12
<PAGE> 15
PART II - OTHER INFORMATION
Item 1 Legal Proceedings. None
Item 2 Change in Securities. None
Item 3 Defaults Upon Senior Securities. None
Item 4 Submission of Matters to a Vote of Security Holders.
Item 5 Other Information. None
Item 6 Exhibits and Reports on Form 8-K.
13
<PAGE> 16
PART II OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Securities Holders
The Company's 1996 Annual Meeting of Shareholders ("Annual
Meeting") was held on May 14, 1996. The matters voted on at the Annual Meeting
were:
1. To elect a Board of Directors.
2. To approve amendments to the Company's stock option plan to,
among other things, increase the number of shares authorized
for issuance under the plan by 250,000 to a total of 2,000,000
shares.
3. To ratify the appointment of Ernst & Young LLP as the
Company's independent auditors for the year ending December
31, 1996.
The results of the shareholders' vote on each matter are set forth
below:
1. Elect a Board of Directors
<TABLE>
<CAPTION>
Nominees For Withheld
-------- --- --------
<S> <C> <C>
Roger C. Davisson 8,554,845 12,800
Jean Deleage 8,554,845 12,800
Edward L. Erickson 8,554,845 12,800
Stephen B. Howell 8,554,845 12,800
Fred A. Middleton 8,554,845 12,800
Peter Preuss 8,554,845 12,800
</TABLE>
2. Approve amendments to stock option plan
<TABLE>
<CAPTION>
Votes
-----
<S> <C>
For 8,070,517
Against 250,554
Abstain 204,700
Broker Non-Votes 41,874
<CAPTION>
3. Ratify auditors
Votes
-----
<S> <C>
For 8,567,124
Against 100
Abstain 421
</TABLE>
14
<PAGE> 17
Item 6 Exhibits and Reports on Form 8-K
Exhibit
Number
10.1 (1) The Company's 1995 Stock Option/Stock Issuance
Plan, as amended (Exhibit 10.53).
10.2 (1) Loan & Security Agreement dated June 18, 1996
between the Company and Silicon Valley Bank
(Exhibit 10.66).
27.1 Financial Data Schedule
(1) Incorporated by reference to the same numbered
exhibit to the Company's Registration Statement on
Form S-1 (No. 333-07907), as amended.
15
<PAGE> 18
DEPOTECH CORPORATION
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.
DEPOTECH CORPORATION
/s/ Edward L. Erickson
--------------------------------------------
Date: August 13, 1996 Edward L. Erickson
President and Chief Executive Officer
(Principal Executive Officer)
/s/ Dana S. McGowan
--------------------------------------------
Date: August 13, 1996 Dana S. McGowan
Director of Finance and Administration
Chief Financial Officer
(Principal Financial and Accounting Officer)
16
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C> <C>
<PERIOD-TYPE> YEAR 6-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1996
<PERIOD-START> JAN-01-1995 JAN-01-1996
<PERIOD-END> DEC-31-1995 JUN-30-1996
<EXCHANGE-RATE> 1 1
<CASH> 5,884 5,258
<SECURITIES> 32,778 24,148
<RECEIVABLES> 400 696
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 39,628 31,008
<PP&E> 10,114 15,788
<DEPRECIATION> 1,503 2,196
<TOTAL-ASSETS> 48,978 45,357
<CURRENT-LIABILITIES> 4,253 3,543
<BONDS> 0 0
0 0
0 0
<COMMON> 67,134 67,483
<OTHER-SE> 25,620 31,667
<TOTAL-LIABILITY-AND-EQUITY> 48,978 45,357
<SALES> 0 0
<TOTAL-REVENUES> 6,826 2,665
<CGS> 0 0
<TOTAL-COSTS> 12,699 7,720
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 405 322
<INCOME-PRETAX> (8,021) (6,047)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (8,021) (6,047)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (8,021) (6,047)
<EPS-PRIMARY> (.92) (0.53)
<EPS-DILUTED> 0 0
</TABLE>
