<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 DECEMBER 31, 1997
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: 0-28272
AVIGEN, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 13-3647113
(STATE OR OTHER JURISDICTION OF INCORPORATION OR (I.R.S. EMPLOYER IDENTIFICATION
ORGANIZATION) NO.)
</TABLE>
1201 HARBOR BAY PARKWAY, SUITE 1000, ALAMEDA, CALIFORNIA 94502
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE)
(510) 748-7150
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NOT APPLICABLE
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
REPORT)
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 [ ]
As of February 3, 1998, 7,300,252 shares of the registrant's Common Stock,
$.001 par value, were issued and outstanding.
================================================================================
<PAGE> 2
AVIGEN, INC.
FORM 10-Q
QUARTER ENDED DECEMBER 31, 1997
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Condensed Financial Statements (Unaudited).................................. 3
Condensed Balance Sheets
June 30, 1997 and December 31, 1997......................................... 3
Condensed Statements of Operations
Three and six months ended December 31, 1996 and 1997 and for the period
from October 22, 1992 (inception) through December 31, 1997............... 4
Condensed Statements of Cash Flows
Six months ended December 31, 1996 and 1997 and for the period from
October 22, 1992 (inception) through December 31, 1997.................... 5
Notes to Condensed Financial Statements..................................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations................................................................ 6
PART II. OTHER INFORMATION
Item 1. Legal Proceedings........................................................... 8
Item 2. Changes in Securities....................................................... 8
Item 3. Defaults upon Senior Securities............................................. 8
Item 4. Submission of Matters to a Vote of Security Holders......................... 9
Item 5. Other Information........................................................... 9
Item 6. Exhibits and Reports on Form 8-K............................................ 10
Signatures ............................................................................ 11
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
AVIGEN, INC.
(A DEVELOPMENT STAGE COMPANY)
ITEM 1. FINANCIAL STATEMENTS
CONDENSED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
JUNE 30, 1997 DECEMBER 31, 1997
------------- -----------------
(NOTE) (UNAUDITED)
<S> <C> <C>
Current Assets:
Cash and cash equivalents................................... $ 3,407,057 $ 1,771,804
Investment in marketable securities......................... 9,631,979 7,065,028
------------ ------------
Total current assets..................................... 13,039,036 8,836,832
Property and equipment, net................................... 1,651,205 1,499,543
Deposits and other assets..................................... 70,112 150,779
------------ ------------
Total assets........................................ $ 14,760,353 $ 10,487,154
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable............................................ $ 434,422 $ 173,460
Accrued compensation and related expenses................... 116,973 115,058
Other accrued liabilities................................... 156,026 151,089
Capital lease obligations -- current portion................ 395,736 229,884
------------ ------------
Total current liabilities................................ 1,103,157 669,491
Accrued rent................................................ 231,680 211,964
Capital lease obligations (less current portion)............ 1,084,207 1,285,044
Stockholders' equity:
Common Stock, $.001 par value, 30,000,000 shares authorized,
7,300,252 shares issued and outstanding at December 31,
1997 7,288,580 shares issued and outstanding at June 30,
1997..................................................... 7,288 7,300
Additional paid-in capital.................................. 30,704,202 30,711,701
Deferred compensation....................................... (86,849) (66,547)
Deficit accumulated during the development stage............ (18,283,332) (22,331,799)
------------ ------------
Total stockholders' equity............................... 12,341,309 8,320,655
------------ ------------
Total liabilities and stockholders' equity.......... $ 14,760,353 $ 10,487,154
============ ============
</TABLE>
Note: The balance sheet at June 30, 1997 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. See notes to condensed financial statements.
See accompanying notes.
3
<PAGE> 4
AVIGEN, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
PERIOD FROM
THREE MONTHS ENDED SIX MONTHS ENDED OCTOBER 22, 1992
DECEMBER 31, DECEMBER 31, (INCEPTION)
------------------------- ------------------------- THROUGH
1996 1997 1996 1997 DECEMBER 31, 1997
----------- ----------- ----------- ----------- ------------------
<S> <C> <C> <C> <C> <C>
Grant revenue............... $ -- $ -- $ -- $ -- $ 363,190
Expenses:
Research and
development............ 922,810 1,435,295 1,554,394 2,869,718 15,233,038
General and
administrative......... 551,698 606,431 897,332 1,298,185 7,906,722
----------- ----------- ----------- ----------- ------------
Total expenses............ 1,474,508 2,041,726 2,451,726 4,167,903 23,139,760
----------- ----------- ----------- ----------- ------------
Loss from operations........ (1,474,508) (2,041,726) (2,451,726) (4,167,903) (22,776,570)
Interest expense............ (6,203) (59,008) (40,236) (117,107) (847,226)
Interest income............. 227,274 58,007 366,711 243,432 1,112,889
Other income (expense)...... (800) -- (800) (6,889) 179,108
----------- ----------- ----------- ----------- ------------
Net loss.................... $(1,254,237) $(2,042,727) $(2,126,051) $(4,048,467) $(22,331,799)
=========== =========== =========== =========== ============
Net loss per share.......... (0.17) (0.28) (0.29) (0.56)
=========== =========== =========== ===========
Shares used in per share
calculation basic and
diluted................... 7,285,640 7,298,996 7,285,417 7,293,791
=========== =========== =========== ===========
</TABLE>
See accompanying notes.
4
<PAGE> 5
AVIGEN, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
PERIOD FROM
SIX MONTHS ENDED OCTOBER 22, 1992
DECEMBER 31, (INCEPTION)
--------------------------- THROUGH
1996 1997 DECEMBER 31, 1997
----------- ----------- -----------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss....................................... $(2,126,051) $(4,048,467) $ (22,331,799)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization............... 251,456 333,619 2,008,669
Amortization of deferred compensation....... 20,302 20,302 96,057
Write-off of organization costs............. -- -- 145,741
Noncash interest expense.................... -- -- 509,652
Common stock issued for services............ -- -- 11,250
Changes in operating assets and liabilities:
Prepaids, deposits and other assets....... 6,195 (80,667) (150,779)
Accounts payable, other accrued
liabilities and accrued compensation
and related expenses................... (188,450) (267,816) 737,051
Accrued rent.............................. (5,916) (19,716) 211,964
----------- ----------- ------------
Net cash used in operating activities.......... (2,042,464) (4,062,745) (18,762,194)
INVESTING ACTIVITIES
Purchases of property and equipment............ (811,850) (181,957) (3,256,104)
Disposal of property and equipment............. -- -- 47,033
Organization costs............................. -- -- (218,601)
Purchase of marketable securities.............. (12,712,478) (2,915,875) (33,780,978)
Sale of marketable securities.................. 7,795,497 4,023,103 21,314,047
Maturities of marketable securities............ -- 1,459,725 5,401,905
----------- ----------- ------------
Net cash provided by (used in) investing
activities.................................. (5,728,831) 2,384,996 (10,492,698)
FINANCING ACTIVITIES
Proceeds from notes payable.................... -- -- 2,132,800
Repayment of notes payable..................... -- -- (1,709,800)
Proceeds form 1996 bridge financing............ -- -- 1,937,500
Payment of bridge financing costs.............. -- -- (193,750)
Repayment of 1996 bridge financing............. -- -- (1,937,500)
Proceeds from a sale-leaseback of equipment.... -- 284,196 1,721,482
Payments on capital lease obligations.......... (21,108) (249,211) (432,835)
Proceeds from issuance of preferred stock, net
of issuance costs........................... -- -- 9,884,477
Proceeds from issuance of common stock, net of
issuance costs and repurchases.............. 1,850,595 7,511 19,624,322
----------- ----------- ------------
Net cash provided by financing activities...... 1,829,487 42,496 31,026,696
Net (decrease) increase in cash and cash
equivalents................................. (5,941,808) (1,635,253) 1,771,804
Cash and cash equivalents, beginning of
period...................................... 8,091,645 3,407,057 --
----------- ----------- ------------
Cash and cash equivalents, end of period....... $ 2,149,837 $ 1,771,804 $ 1,771,804
=========== =========== ============
</TABLE>
See accompanying notes.
5
<PAGE> 6
AVIGEN, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD FROM
SIX MONTHS ENDED OCTOBER 22, 1992
DECEMBER 31, (INCEPTION)
--------------------------- THROUGH
1996 1997 DECEMBER 31, 1997
----------- ----------- -----------------
<S> <C> <C> <C>
SUPPLEMENTAL DISCLOSURE
Issuance of preferred stock for cancellation of
accounts payable, notes payable and accrued
interest.................................... $ -- $ -- $ 598,952
Issuance of stock options for repayment of
certain accrued liabilities................. -- -- 137,396
Issuance of warrants in connection with bridge
financing................................... -- -- 300,000
Deferred compensation related to stock option
grants...................................... -- -- 162,204
Purchase of property and equipment under
capital lease financing..................... -- -- 226,281
Cash paid for interest......................... 40,236 117,107 353,476
</TABLE>
6
<PAGE> 7
AVIGEN, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. INTERIM FINANCIAL STATEMENTS
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, the accompanying financial
statements include all adjustments, consisting only of normal recurring
adjustments and accruals, that Avigen, Inc. (the "Company") considers necessary
for a fair presentation of its financial position as of December 31, 1997 and
its results of operations and cash flows for the three months ended December 31,
1996 and 1997. These unaudited interim financial statements should be read in
conjunction with the audited financial statements of the Company and the notes
thereto included in the Company's annual report on Form 10-K for the fiscal year
ended June 30, 1997, filed with the Securities and Exchange Commission.
Operating results for the interim period ended December 31, 1997, are not
necessarily indicative of the results to be achieved for the full fiscal year
ending June 30, 1998.
Certain balances have been reclassified to conform to the 1998
presentations.
2. GRANT REVENUE
Revenue consists of revenue from grants which are recognized in accordance
with the terms of the related agreements.
3. BASIC AND DILUTED NET LOSS PER SHARE
In 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, Earnings per Share. Statement 128
replaced the previously reported primary and fully diluted earnings per share
with basic and diluted earnings per share. Unlike primary earnings per share,
basic earnings per share excludes any dilutive effects of options, warrants, and
convertible securities. Basic net loss per share is computed using the weighted
average number of common shares outstanding. Diluted earnings per share is very
similar to the previously reported fully diluted earnings per share. The
potential shares to be issued upon the assumed exercise of the options and
warrants using the treasury stock method are not added to the denominator for
the diluted net loss per share computation because the inclusion of the such
shares would be antidilutive due to the loss for the period. All net loss per
share amounts for all periods have been presented, and where necessary, restated
to conform to the Statement 128 requirements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion may be understood more fully by reference to the
financial statements, notes to the financial statements, and management's
discussion and analysis contained in the Company's Annual Report on Form 10-K/A
for the year ended June 30, 1997, filed with the Securities and Exchange
Commission.
The following Management's Discussion and Analysis of Financial Condition
and Results of Operations contains forward-looking statements that involve risks
and uncertainties. The Company's actual results could differ materially from the
results discussed in the forward-looking statements. Factors that might cause or
contribute to such differences include, but are not limited to, those discussed
herein and under the caption "Risk Factors" in the Company's Annual Report on
Form 10-K/A.
7
<PAGE> 8
OVERVIEW
Avigen is a leader in the development of gene therapy products derived from
adeno-associated virus ("AAV") for the treatment of inherited and acquired
diseases. The Company's proposed gene therapy products are designed for in vivo
administration to achieve the production of therapeutic proteins within the
body. The Company is developing two broad-based proprietary gene delivery
technologies: AAV vectors and the Targeted Vector Integration ("TVI") system.
The Company believes AAV vectors can be used to deliver genes for the treatment
of brain, liver and prostate cancer, anemia, hemophilia, hyperlipidemia and
metabolic storage diseases. The Company also believes its TVI system will allow
it to pursue more effective treatments for blood cell-related diseases,
including sickle cell anemia, beta-thalassemia and human immunodeficiency virus
("HIV") infection.
Since its inception, the Company has devoted substantially all of its
resources to research and development activities. The Company is a development
stage company and has not received any revenue from the sale of products. The
Company does not anticipate generating revenue from the sale of products in the
foreseeable future. The Company expects its source of revenue, if any, for the
next several years to consist of government grants and payments under
collaborative arrangements. The Company has incurred losses since its inception
and expects to incur substantial losses over the next several years due to
ongoing and planned research and development efforts, including preclinical
studies and clinical trials. At December 31, 1997, the Company had an
accumulated deficit of $22.3 million.
RESULTS OF OPERATION
Three Months Ended December 31, 1996 and 1997
The Company's research and development expenses increased from $922,810 for
the period ended December 31, 1996 to $1,435,295 for the period ended December
31, 1997. The increase from 1996 to 1997 was due primarily to the increased
number of personnel and development costs related to vector production and
patent expenditures.
General and administrative expenses increased from $551,698 for the period
ended December 31, 1996 to $606,431 for the period ended December 31, 1997. The
increase from 1996 to 1997 was primarily due to the hiring of key personnel and
increased use of consultants.
Interest income decreased from $227,274 for the period ended December 31,
1996 to $58,007 for the period ended December 31, 1997, primarily as a result of
a reduction of average investment balances.
Interest expense increased from $6,203 for the period ended December 31,
1996 to $59,008 for the period ended December 31, 1997, primarily as a result of
the Company's equipment lease with Transamerica Business Credit.
Six Months Ended December 31, 1996 and 1997
The Company's research and development expenses increased from $1,554,394
for the period ended December 31, 1996 to $2,869,718 for the period ended
December 31, 1997. The increase from 1996 to 1997 was due primarily to the
increased number of personnel and development costs related to vector production
and patent expenditures.
General and administrative expenses increased from $897,332 for the period
ended December 31, 1996 to $1,298,185 for the period ended December 31, 1997.
The increase from 1996 to 1997 was primarily due to the hiring of key personnel
and increased use of consultants.
Interest income decreased from $366,711 for the period ended December 31,
1996 to $243,432 for the period ended December 31, 1997, primarily as a result
of a reduction of average investment balances.
Interest expense increased from $40,236 for the period ended December 31,
1996 to $117,107 for the period ended December 31, 1997, primarily as a result
of the Company's equipment lease with Transamerica Business Credit.
8
<PAGE> 9
LIQUIDITY AND CAPITAL RESOURCES
In May 1996, the Company consummated an initial public offering (the
"Offering") of 2,500,000 shares of Common Stock with net proceeds to the Company
of approximately $17.7 million, net of expenses. In July 1996, the Company
issued 250,000 additional shares of Common Stock in connection with the exercise
of the underwriters' over-allotment option. Net proceeds from such sale were
approximately $1,850,000.
Prior to May 1996, the Company financed its operations primarily through
private placements of Common Stock and Preferred Stock and a bridge financing
which was completed on March 29, 1996, in which the Company issued promissory
notes which were fully paid with the proceeds from the offering and warrants,
including placement agent warrants, which expire in May 2001. Through March 31,
1996, the Company had raised approximately $11.0 million, net of financing
costs, from the sale of Common Stock and Preferred Stock and approximately $1.9
million from the 1996 Bridge Financing.
Cash used in operations was $2,042,464 during the period ended December 31,
1996, compared to $4,062,745 million during the period ended December 31, 1997.
The change was due primarily to the expansion of the Company's facilities and
hiring of additional personnel.
At December 31, 1997, the Company had cash, cash equivalents and
investments in marketable securities of approximately $9 million. The Company
expects its cash requirements to increase significantly in future periods. The
Company believes that the available cash and cash equivalents and short-term
investments will be sufficient to meet the Company's operating expenses and
capital requirements for at least the next 12 months. The Company will require
substantial funds to conduct the research and development activities and
preclinical studies and clinical testing of its potential products and to
manufacture and market any products that are developed.
The Company will be required to seek additional funds through public or
private financings or collaborative arrangements with corporate partners.
Issuances of additional equity securities could result in substantial dilution
to existing stockholders. There can be no assurances that additional funding
will be available on terms acceptable to the Company, if at all. The failure to
fund its capital requirements would have a material adverse effect on the
Company's business.
The Company's facility is approximately 23,000 square feet leased through
May 2003. Although the Company presently anticipates that it will either be able
to renew the lease of this facility or find suitable alternate facilities in the
same general area without a material disruption of its operations, there can be
no assurance that the Company can find suitable alternative facilities on terms
acceptable to the Company. To the extent the Company decides to develop its own
manufacturing facilities, it would require substantial additional capital.
The Company's cash requirements may vary materially from those now planned
because of the results of research, development and clinical trials, the time
and costs involved in obtaining regulatory approvals, the cost of filing,
prosecuting, defending and enforcing patent claims and other intellectual
property rights, competing technological and market developments, changes in the
Company's existing research relationships, the ability of the Company to
establish collaborative arrangements, the development of commercialization
activities and arrangements and the purchase or lease of additional capital
equipment.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
The effective date of the company's registration statement, filed on Form
S-1 filed under the Securities Act of 1933 (No. 333-3220), was May 22, 1996 (the
"Registration Statement"). The class of securities
9
<PAGE> 10
registered was Common Stock. The offering commenced on May 22, 1996 and all
securities were sold in the offering. The managing underwriters for the offering
were:
Pursuant to the Registration Statement, the Company sold shares of its
Common Stock for an aggregate offering price of $20,000,000.
The Company incurred expenses of approximately $2,300,000 million of which
$1,500,000 million represented underwriting discounts and commissions and
$800,000 represented other expenses. All such expenses were direct or indirect
payments to others. The net offering proceeds to the Company after total
expenses was $17,700,000 million.
The Company has used $8,863,168 of the net proceeds from the offering. The
remaining net proceeds in the amount of $8,836,832 have been invested in cash,
cash equivalents and short-term investments. The use of the proceeds from the
offering does not represent a material change in the use of the proceeds
described in the prospectus.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Annual Meeting of Stockholders of Avigen, Inc. was held on November
22, 1996.
(b) The matters voted upon at the meeting and the voting of stockholders
with respect thereto are as follows:
The election of Philip J. Whitcome, Ph.D., Richard T. Pratt, D.B.A., and
John K. A. Prendergast, Ph.D., to the Board of Directors to hold office until
the 2000 Annual Meeting of Stockholders and until his successor is elected and
has qualified, or until such directors' earlier death, resignation or removal.
The voting results, with approximately 80% of the shares voting, was as follows:
<TABLE>
<S> <C> <C>
Whitcome For: 5,280,403
Against: none
Abstain: 555,200
Pratt For: 5,280,403
Against: none
Abstain: 555,200
Prendergast For: 5,280,403
Against: none
Abstain: 555,200
</TABLE>
In addition, Lindsay Rosenwald, M.D., and Leonard Shaykin will continue to
serve on the Board of Directors until the 1998 Annual Meeting of Stockholders
and until his successor is elected and has qualified, or until such directors'
earlier death, resignation or removal. In addition, John Monahan, Ph.D., Zola
Horovitz, Ph.D., and Yuichi Iwaki, M.D., Ph.D. will continue to serve on the
Board of Directors until the 1999 Annual Meeting of Stockholders and until his
successor is elected and has qualified, or until such directors' earlier death,
resignation or removal.
The voting results to approve an amendment to the Company's 1996 Equity
Incentive Plan to increase the aggregate number of shares of Common Stock
authorized for issuance under such plan from 600,000 shares to 1,300,000 shares
are as follows:
<TABLE>
<S> <C> <C>
For: 3,302,208
Against: 671,078
Abstain: 16,985
</TABLE>
10
<PAGE> 11
The voting results to approve the Company's 1997 Employee Stock Purchase
Plan are as follows:
<TABLE>
<S> <C> <C>
For: 3,907,075
Against: 68,911
Abstain: 14,285
</TABLE>
The voting results to approve the selection of Ernst & young LLP as the
Company's Auditors are as follows:
<TABLE>
<S> <C> <C>
For: 5,806,393
Against: 17,100
Abstain: 12,110
</TABLE>
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are included herein:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- ------------------------------------------------------------------------
<C> <S>
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K
None.
11
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AVIGEN, INC.
(Registrant)
<TABLE>
<S> <C>
Date: February 12, 1998 /s/ JOHN MONAHAN
-----------------------------------------------
John Monahan
Chief Executive Officer and President
Date: February 12, 1998 /s/ THOMAS J. PAULSON
-----------------------------------------------
Thomas J. Paulson
Vice President Finance,
Chief Financial Officer, and Secretary
</TABLE>
12
<PAGE> 13
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ----------- ----
<S> <C> <C>
27 Financial Data Schedule.......................
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 1,771,804
<SECURITIES> 7,065,028
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8,836,832
<PP&E> 3,431,077
<DEPRECIATION> 1,931,534
<TOTAL-ASSETS> 10,487,154
<CURRENT-LIABILITIES> 669,491
<BONDS> 229,884
0
0
<COMMON> 7,300
<OTHER-SE> 8,320,655
<TOTAL-LIABILITY-AND-EQUITY> 10,487,154
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 4,167,903
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 126,325
<INCOME-PRETAX> (4,041,578)
<INCOME-TAX> 6,889
<INCOME-CONTINUING> (4,048,467)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,048,467)
<EPS-PRIMARY> (0.56)
<EPS-DILUTED> (0.56)
</TABLE>
