SECURITIES AND EXCHANGE COMMISSION
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 quarterly period ended June 30, 1996.
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
0-27410
INTERCARDIA, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 56-1924222
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
P.O. Box 14287
3200 East Highway 54
Cape Fear Bldg., Suite 300
Research Triangle Park, NC 27709
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, Including Area Code 919-558-8688
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 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.
Class Outstanding as of August 6, 1996
------------------ --------------------------------
Common Stock, par value $.001 6,726,621 Shares
<PAGE>
INTERCARDIA, INC.
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
PAGE
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 1996 (unaudited)
and September 30, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Operations for the Three Months and
Nine Months ended June 30, 1996 and 1995 (unaudited) . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows for the Nine Months ended
June 30, 1996 and 1995 (unaudited) . . . . . . . . . . . . . . . . . . . . . 5
Notes to Unaudited Consolidated Financial Statements . . . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . 10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . 14
SIGNATURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . 15
</TABLE>
2
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INTERCARDIA, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
June 30, September 30,
1996 1995
------------------ -----------------
(Unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 20,102 $ 1,122
Marketable securities 16,895 -
Accounts receivable 1,621 -
Other current assets 128 8
------------------ -----------------
Total current assets 38,746 1,130
Marketable securities 1,019 -
Property and equipment, net 285 150
Other assets 8 10
------------------ -----------------
$ 40,058 $ 1,290
================== =================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 170 $ 276
Accrued expenses 2,162 835
Current portion of capital lease obligations 35 24
Advances from Interneuron 13 172
------------------ -----------------
Total current liabilities 2,380 1,307
Long-term portion of capital lease obligations 118 115
Minority interest 632 -
Stockholders' equity (deficit):
Preferred stock, $.01 par value, authorized 3,000,000 shares: Series A
Preferred Stock, 1,500,000 designated, no shares and 692,621 shares
issued and outstanding at June 30, 1996 and
September 30, 1995, respectively - 7
Common stock, $.001 par value, 40,000,000 shares authorized,
6,726,621 and 3,500,000 shares issued and outstanding at
June 30, 1996 and September 30, 1995, respectively 7 3
Additional paid-in capital 39,556 4,345
Deferred compensation (216) -
Accumulated deficit (2,419) (4,487)
------------------ -----------------
Total stockholders' equity (deficit) 36,928 (132)
------------------ -----------------
$ 40,058 $ 1,290
================== =================
</TABLE>
The accompanying notes are an integral part of these unaudited
consolidated financial statements.
3
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INTERCARDIA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
-------------------------------- -------------------------------
1996 1995 1996 1995
------------- ------------- ------------- --------------
<S> <C> <C>
Revenue:
Contract revenue $ 5 $ 5,009
Investment income 503 $ 23 826 $ 32
-- ----------- -- ----------- -- ---------- -- ----------
Total revenue 508 23 5,835 32
--- ---------- -- ----------- -- ----------- -- ----------
Costs and expenses:
Research and development 865 510 1,770 983
General and administrative 494 218 1,365 337
-- ----------- -- ----------- -- ---------- -- ----------
Total costs and expenses 1,359 728 3,135 1,320
-- ----------- -- ----------- -- ---------- -- ----------
Income (loss) from operations (851) (705) 2,700 (1,288)
Minority interest 74 - (632) -
-- ----------- -- ----------- -- ---------- -- ----------
Net income (loss) $ (777) $ (705) $ 2,068 $ (1,288)
== =========== == =========== == =========== == ==========
Net income (loss) per common share $ (0.12) $ (0.14) $ 0.36 $ (0.26)
=== ========== == =========== == =========== == ==========
Weighted average common shares
outstanding 6,727 4,874 5,812 4,874
== =========== == =========== == ========== == ===========
</TABLE>
The accompanying notes are an integral part of these unaudited
consolidated financial statements.
4
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INTERCARDIA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Nine Months Ended
June 30,
-------------------------------------
1996 1995
--------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 2,068 $ (1,288)
Adjustments to reconcile net income (loss) to net cash from
operating activities:
Depreciation and amortization 49 2
Minority interest in net income of consolidated
subsidiary 632 -
Change in assets and liabilities:
Accounts receivable (1,621) -
Other assets (120) (9)
Accounts payable (106) 11
Accrued expenses 1,327 191
-- ------------ -- ------------
Net cash provided by (used in) operating activities 2,229 (1,093)
-- ------------ -- ------------
Cash flows from investing activities:
Purchase of marketable securities (19,914) -
Proceeds from maturities and sales of marketable securities 2,000 -
Purchases of property and equipment (145) (40)
-- ------------ -- ------------
Net cash used in investing activities (18,059) (40)
-- ------------ -- ------------
Cash flows from financing activities:
Net proceeds from issuance of stock 34,992 2,984
Advances from (payments to) Interneuron, net (159) 384
Principal payments on capital lease obligations (23) -
-- ------------ -- ------------
Net cash provided by financing activities 34,810 3,368
-- ------------ -- ------------
Net increase in cash and cash equivalents 18,980 2,235
Cash and cash equivalents at beginning of period 1,122 -
== ============ == ============
Cash and cash equivalents at end of period $ 20,102 $ 2,235
== ============ == ============
</TABLE>
The accompanying notes are an integral part of these unaudited
consolidated financial statements.
5
<PAGE>
INTERCARDIA, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
A. Basis of Presentation
Intercardia, Inc. was incorporated in Delaware on March 15, 1994, and
is a majority-owned subsidiary of Interneuron Pharmaceuticals, Inc.
("Interneuron"). The "Company" refers to Intercardia, Inc. ("Intercardia") and
its majority-owned subsidiaries, Aeolus Pharmaceuticals, Inc., a Delaware
corporation ("Aeolus"), and CPEC, Inc., a Nevada corporation ("CPEC"). Aeolus is
a 61.2% owned subsidiary of Intercardia and CPEC is an 80.0% owned subsidiary of
Intercardia. In January 1996, Interneuron acquired directly from the former CPEC
minority stockholders the remaining 20.0% of the outstanding capital stock of
CPEC not owned by Intercardia.
The Company focuses on development of therapeutics for the treatment of
cardiovascular and pulmonary disease. The Company has directed the majority of
its efforts toward the development and clinical trials of bucindolol, a compound
currently in Phase III clinical trials for the treatment of congestive heart
failure. This clinical trial, which commenced in June 1995, is known as the
Beta-blocker Evaluation of Survival Trial (the "BEST Study") and is sponsored by
the National Institutes of Health and the Department of Veterans Affairs.
The consolidated financial statements include the accounts of
Intercardia and its subsidiaries, CPEC and Aeolus. All significant intercompany
activity has been eliminated. The consolidated financial statements included
herein have been prepared by the Company without audit, 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 pursuant to such rules and regulations. In the opinion of management,
the accompanying unaudited consolidated financial statements include all
adjustments (consisting only of normal recurring adjustments) necessary to
present fairly the consolidated financial position, results of operations and
cash flows of the Company. The consolidated financial statements included herein
should be read in conjunction with the audited consolidated financial statements
and the notes thereto included in the Company's initial public offering ("IPO")
prospectus dated February 1, 1996. Results for the interim period are not
necessarily indicative of the results for any other interim period or for the
full fiscal year.
B. Cash equivalents and marketable securities:
The Company considers only those investments which are highly liquid,
readily convertible to cash and which mature within three months from date of
purchase as cash equivalents.
The Company considers its investment portfolio available-for-sale as
defined in Statement of Financial Accounting Standards ("SFAS") No. 115. There
were no material unrealized gains
6
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or losses nor any material differences between the estimated fair values and
costs of securities in the investment portfolio at June 30, 1996.
C. Income Taxes:
No income tax provision or benefit has been provided for income tax
purposes, as the Company utilized projected expenses for the remainder of the
fiscal year and net operating loss carryforwards to offset the net income
realized during the nine months ended June 30, 1996.
D. Stockholders' Equity:
In February 1996, Intercardia completed an IPO of 2,530,000 shares of
Intercardia Common Stock at $15.00 per share, resulting in net proceeds to
Intercardia of approximately $35,000,000. Interneuron purchased 333,333 of the
IPO shares at the IPO price for a total of $5,000,000. As a result of the IPO,
Interneuron's ownership of Intercardia decreased to 59.7% from 87.8% at
September 30, 1995. All outstanding shares of Series A Preferred Stock were
automatically converted into shares of Common Stock upon the closing of the IPO.
The minority interest in the June 30, 1996 Consolidated Balance Sheet
and the Consolidated Statement of Operations for the nine months ended June 30,
1996 reflects the 20% minority interest in net income earned by CPEC during the
nine months ended June 30, 1996, offset by 20% of the previous cumulative
deficit incurred by CPEC since its acquisition by Intercardia.
In November 1995, Intercardia reduced the number of shares of Common
Stock authorized from 97,000,000 to 40,000,000 shares, adopted the Intercardia,
Inc. Employee Stock Purchase Plan under which 100,000 shares of Common Stock
were reserved for issuance, and increased the number of shares of Common Stock
reserved for issuance under the 1994 Stock Option Plan ("Option Plan") from
750,000 to 1,000,000 shares.
In June 1996, Intercardia's Board of Directors amended the Option Plan
to, among other things, increase the number of shares of Common Stock reserved
for issuance under the Option Plan from 1,000,000 shares to 1,500,000 shares.
E. Agreements:
In December 1995, the Company executed a Development and Marketing
Collaboration and License Agreement (the "Astra Merck Collaboration") with Astra
Merck Inc. ("Astra Merck") to provide for the development, commercialization and
marketing in the United States of a twice-daily formulation of bucindolol for
the treatment of congestive heart failure. Astra Merck made an initial
$5,000,000 payment to the Company and assumed responsibility for certain
liabilities owed by the Company. Astra Merck will fund certain expenses and
expenditures incurred in connection with the development and commercialization
of the twice-daily formulation of bucindolol in the United States, including any
payments due under the BEST Study. Astra Merck will also pay royalties to the
Company on net sales of the twice-daily formulation in the United States, make
additional payments to the Company if certain milestones are achieved, and
7
<PAGE>
pay the royalties due to Bristol-Myers Squibb Company ("Bristol-Myers") under
its license of bucindolol with the Company. Under the terms of the Astra Merck
Collaboration, the Company has agreed to pay Astra Merck $10,000,000 in December
1997 and up to $11,000,000 for one-third of product launch costs incurred
beginning when the Company files a New Drug Application (an "NDA") for the
twice-daily formulation and continuing through the first 12 months subsequent to
the first commercial sale of the formulation. In the event the Company elects
not to make these payments, the royalties payable by Astra Merck to the Company
will be significantly reduced. The Astra Merck Collaboration continues in effect
until December 31, 2010, subject to Astra Merck's option to extend it for two
additional five-year periods. During the nine months ended June 30, 1996, Astra
Merck made payments or assumed liabilities of approximately $2,647,000 on the
Company's behalf. These amounts did not flow through the Company's Statement of
Operations, as they were offset against related expenses. Astra Merck had paid
approximately $1,044,000 of this amount by June 30, 1996, and therefore, the
remaining unpaid amount of approximately $1,537,000 was included as offsetting
accounts receivables and accrued expenses on the Company's Balance Sheet at June
30, 1996.
In December 1995, the Company and Interneuron entered into a tax
allocation agreement to provide, among other things, for the payment of tax
liabilities and entitlement to tax refunds and the allocation of responsibility
and the providing of cooperation in the filing of tax returns. Also in December
1995, Intercardia and Interneuron entered into an intercompany services
agreement which provides, among other things, for Intercardia to adopt certain
policies and procedures and for Interneuron to include Intercardia and its
employees in certain programs administered by Interneuron, at cost, such as
insurance and health care plans, and to provide research and development
services to the Company upon request, on a cost plus basis. Pursuant to the
intercompany services agreement, Intercardia has agreed to offer Interneuron the
right to purchase shares of Common Stock at fair market value, if necessary to
provide that Interneuron's equity ownership in Intercardia does not fall below
51.0%.
In March 1996, Intercardia amended its building lease agreement to
increase its leased space to approximately 6,200 square feet from approximately
2,500 square feet and to extend the end of the lease term from May 31, 2000 to
April 30, 2001. Total future minimum lease payments increased to approximately
$580,000 at March 31, 1996 from approximately $212,000 at September 30, 1995.
In April 1996, the Company entered into an Agreement for a Feasibility
Study ("Feasibility Study Agreement") and a License Agreement ("License
Agreement") with Jago Pharma AG and its affiliates ("Jago"). The study
contemplated by the Feasibility Study Agreement is designed to determine the
feasibility of developing a once-daily formulation of bucindolol. The Company
made an initial payment of $390,000 upon signing the Feasibility Study
Agreement. The Feasibility Study Agreement expires 60 days after receipt by the
Company of the Preliminary Pharmacokinetic Study from Jago, or, if earlier,
immediately upon a default or breach of confidentiality provisions or upon
another breach or default not cured within 30 days of notice thereof, upon
bankruptcy of a party or if the Company determines in its sole discretion not to
proceed with the next phase of the study. The License Agreement has a perpetual
term, but contains similar breach and bankruptcy termination provisions as the
Feasibility Study Agreement. The Company will make additional payments to Jago
if certain milestones are achieved, and will
8
<PAGE>
pay royalties to Jago on net sales of the once-daily formulation, if developed
under these agreements, until the expiration of the relevant patent on a
country-by-country basis (or 15 years, if no patent is issued in that country).
9
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Introduction
Statements in this Form 10-Q that are not descriptions of historical
facts are forward-looking statements that are subject to risks and
uncertainties. Actual results could differ materially from those currently
anticipated due to a number of factors, including those set forth in the
Company's SEC filings under "Risk Factors", including, in particular, risks
relating to uncertainties relating to clinical trials, dependence on
collaborative partners, the early stage of products under development,
dependence on one product, government regulations and competition.
The following discussion should be read in conjunction with the
unaudited Consolidated Financial Statements and Notes thereto appearing
elsewhere in this report. Unless the context indicates otherwise, all references
to the Company include Intercardia, Inc. and its subsidiaries, CPEC, Inc. and
Aeolus Pharmaceuticals, Inc.
Intercardia was incorporated in March 1994 and had no operations until
September 1994, when Intercardia acquired 80.0% of CPEC. In January 1996
Interneuron acquired directly from the former CPEC minority stockholders the
remaining 20.0% of the outstanding capital stock of CPEC not owned by
Intercardia. CPEC has a worldwide license for the development, distribution and
sale of bucindolol, a product currently in Phase III clinical trials for the
treatment of congestive heart failure. In July 1995, Intercardia acquired 61.2%
of Aeolus. Aeolus is conducting early stage development on catalytic antioxidant
small molecules as therapeutics for a variety of conditions, including neonatal
respiratory distress syndrome and resulting broncho-pulmonary dysplasia, stroke
and asthma.
The Company will incur additional charges to operations relating to the
acquisition of CPEC in the event that certain milestones are achieved in the
development and commercialization of bucindolol. Achievement of these milestones
would require two additional payments, each of 75,000 shares of Interneuron
common stock, subject to adjustment based on the price of Interneuron common
stock at the time of issuance. In exchange for Interneuron providing such
shares, the Company will pay Interneuron the value of such shares, in either
cash or Intercardia Common Stock, at Intercardia's option. Each additional
payment would have a minimum and maximum charge to the Company of $750,000 and
$1,875,000, respectively.
Results of Operations
For the three months and nine months ended June 30, 1996, revenues were
$508,000 and $5,835,000, respectively, versus $23,000 and $32,000 of revenue for
the three months and nine months ended June 30, 1995, respectively. The majority
of the revenue recognized during the three months ended June 30, 1996 resulted
from investment income earned on the IPO proceeds received in February 1996. In
addition, the revenue for the nine months ended June 30, 1996 includes an
initial payment of $5,000,000 received in December 1995 under the Astra Merck
Collaboration.
10
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Research and development ("R&D") expenses increased $355,000 (70%) to
$865,000 for the three months ended June 30, 1996 from $510,000 for the three
months ended June 30, 1995. R&D expenses increased $787,000 (80%) to $1,770,000
for the nine months ended June 30, 1996 from $983,000 for the nine months ended
June 30, 1995. These increases are primarily the result of $355,000 and $878,000
of new R&D expenses related to Aeolus incurred during the three months and nine
months ended June 30,1996, respectively. Aeolus was acquired by Intercardia in
July 1995.
Bucindolol development activities and related costs were significantly
higher during fiscal 1996 than fiscal 1995. However, as the terms of the Astra
Merck Collaboration require Astra Merck to pay for certain expenses related to
bucindolol development, the net cost to Intercardia for bucindolol development
was approximately the same during fiscal 1996 as for fiscal 1995. During the
nine months ended June 30, 1996, Astra Merck made payments or assumed
liabilities of approximately $2,647,000 on the Company's behalf. These amounts
did not flow through the Company's Statement of Operations, as they were offset
against related expenses. Astra Merck had paid approximately $1,044,000 of this
amount by June 30, 1996, and therefore, the remaining unpaid amount of
approximately $1,537,000 was included as offsetting accounts receivables and
accrued expenses on the Company's Balance Sheet at June 30, 1996.
General and administrative ("G&A") expenses increased to $494,000 and
$1,365,000 for the three months and nine months ended June 30, 1996,
respectively, from $218,000 and $337,000 for the three months and nine months
ended June 30, 1995, respectively. These increases resulted from the
installation during fiscal 1995 of a management team to oversee operations.
Payroll costs of $265,000 and $792,000 represent the majority of G&A expenses
for the three months and nine months ended June 30, 1996, respectively.
The minority interest in the June 30, 1996 Consolidated Balance Sheet
and the Consolidated Statement of Operations for the nine months ended June 30,
1996 reflects the 20% minority interest in net income earned by CPEC during the
nine months ended June 30, 1996, offset by 20% of the previous cumulative
deficit incurred by CPEC since its acquisition by Intercardia.
Liquidity and Capital Resources
In February 1996, Intercardia completed an initial public offering of
2,530,000 shares of Intercardia Common Stock at $15.00 per share, resulting in
net proceeds of approximately $35,000,000. These proceeds, along with the
$5,000,000 initial payment received from Astra Merck, increased the total of the
Company's cash, cash equivalents and marketable securities to $38,016,000 at
June 30, 1996, compared with $1,122,000 at September 30, 1995.
In connection with its acquisition of CPEC, the Company is committed to
provide certain support to the BEST Study. The Company is committed to provide
up to $2,000,000 during the course of the BEST Study, of which $750,000 had been
paid as of June 30, 1996, as well as drug supplies and monitoring costs of the
study expected to aggregate an additional $2,500,000. The Astra Merck
Collaboration provides Astra Merck with U.S. marketing rights to a twice-daily
formulation of bucindolol and obligates Astra Merck to fund future U.S.
development, marketing
11
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and manufacturing costs and to assume the Company's funding obligation for the
BEST Study and royalty obligation to Bristol-Myers for sales in the United
States. The Company will receive royalties based on net sales by Astra Merck.
The Company has agreed to pay Astra Merck $10,000,000 in December 1997 and up to
$11,000,000 for one-third of product launch costs incurred beginning when the
Company files an NDA for the twice-daily formulation and continuing through the
first 12 months subsequent to the first commercial sale of the formulation. In
the event the Company elects not to make these payments, the royalties payable
by Astra Merck to the Company will be substantially reduced.
The Company has invested approximately $338,000 in property and
equipment, which includes approximately $176,000 of equipment under capital
leases. Approximately $37,000 of equipment was acquired under capital leases
during the nine months ended June 30, 1996. As of June 30, 1996, the Company was
also a party to employment agreements with officers containing minimum aggregate
annual payments of approximately $512,000.
In March 1996, Intercardia amended its building lease agreement to
increase its leased space to approximately 6,200 square feet from approximately
2,500 square feet and to extend the end of the lease term from May 31, 2000 to
April 30, 2001. Total future minimum lease payments increased to approximately
$558,000 at June 30, 1996 from approximately $212,000 at September 30, 1995.
In April 1996, the Company entered into the Feasibility Study Agreement
and the License Agreement with Jago. The study contemplated by the Feasibility
Study Agreement is designed to determine the feasibility of developing a
once-daily formulation of bucindolol. The Company made an initial payment of
$390,000 upon signing the Feasibility Study Agreement. The Feasibility Study
Agreement expires the earlier of 60 days after receipt by the Company of the
Preliminary Pharmacokinetic Study from Jago, or immediately upon a default or
breach of confidentiality provisions or upon another breach or default not cured
within 30 days of notice thereof, upon bankruptcy of a party or if the Company
determines in its sole discretion not to proceed with the next phase of the
study. The License Agreement has a perpetual term, but contains similar breach
and bankruptcy termination provisions as the Feasibility Study Agreement. The
Company will make additional payments to Jago if certain milestones are
achieved, and will pay royalties to Jago on net sales of the once-daily
formulation, if developed under these agreements, until the expiration of the
relevant patent on a country-by-country basis (or 15 years, if no patent is
issued in that country).
The Company expects to incur substantial additional costs and losses
over the next few years. The Company's working capital and capital requirements
will depend upon numerous factors, including: the progress of the development
and clinical trials of bucindolol; the timing and cost of obtaining regulatory
approvals; the effect of competitive drugs on the BEST Study and on
commercialization of bucindolol; and the ability of the Company to establish
additional collaborative arrangements with other companies to provide research
or development funding to the Company and to conduct clinical trials, obtain
regulatory approvals, and manufacture and market certain of the Company's
products. The Company may acquire other products, technologies or businesses
that complement the Company's existing and planned products, although the
Company currently has no understanding, commitment or agreement with respect to
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any such acquisitions. During the past year, the Company has engaged in
licensing discussions with pharmaceutical companies regarding possible
relationships for the development and marketing of bucindolol outside the United
States. The Company expects to enter into such a relationship, however, there
can be no assurance that any licensing agreement will be reached with any third
party.
13
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Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.21 Intercardia, Inc. 1994 Stock Option Plan, as amended on June 13,
1996
11.1 Statement re computation of net income (loss) per share
27 Financial Data Schedule, which is submitted electronically to the
Securities and Exchange Commission for information only and
not filed.
(b) No reports on Form 8-K were filed during the period.
14
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SIGNATURE
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.
INTERCARDIA, INC.
Date: August 12, 1996 By: /s/ Richard W. Reichow
----------------------
Richard W. Reichow,
Senior Vice President,
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
15
EXHIBIT 10.21
INTERCARDIA, INC.
1994 STOCK OPTION PLAN, AS AMENDED
1. Purpose.
The purpose of this plan (the "Plan") is to secure for
INTERCARDIA, INC. (the "Company") and its shareholders the benefits arising from
capital stock ownership by employees, officers and directors of, and consultants
or advisors to, the Company, the Company's parent, Interneuron Pharmaceuticals,
Inc. ("Interneuron") and the Company's subsidiary corporations who are expected
to contribute to the Company's future growth and success. Those provisions of
the Plan which make express reference to Section 422 shall apply only to
Incentive Stock Options (as that term is defined in the Plan).
2. Type of Options and Administration.
(a) Types of Options. Options granted pursuant to the Plan
shall be authorized by action of the Board of Directors of the Company (or a
Committee designated by the Board of Directors) and may be either incentive
stock options ("Incentive Stock Options") meeting the requirements of Section
422 of the Internal Revenue Code of 1986, as amended or replaced from time to
time (the "Code") or non-statutory options which are not intended to meet the
requirements of Section 422 of the Code.
(b) Administration. The Plan will be administered by the Board
of Directors or a committee (the "Committee") appointed by the Board of
Directors of the Company, whose construction and interpretation of the terms and
provisions of the Plan shall be final and conclusive. The delegation of powers
to the Committee shall be consistent with applicable laws or regulations
(including, without limitation, applicable state law and Rule 16b-3 promulgated
under the Securities Exchange Act of 1934 (the "Exchange Act"), or any successor
rule ("Rule 16b-3")). The Committee may in its sole discretion grant options to
purchase shares of the Company's Common Stock, $.001 par value per share
("Common Stock"), and issue shares upon exercise of such options as provided in
the Plan. The Committee shall have authority, subject to the express provisions
of the Plan, to construe the respective option agreements and the Plan, to
prescribe, amend and rescind rules and regulations relating to the Plan, to
determine the terms and provisions of the respective option agreements, which
need not be identical, and to make all other determinations in the judgment of
the Committee necessary or desirable for the administration of the Plan. The
Committee may correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any option agreement in the manner and to the
extent it shall deem expedient to carry the Plan into effect and it shall be the
sole and final judge of such expediency. No director or person acting pursuant
to authority delegated by the Board of Directors shall be liable for any action
or determination under the Plan made in good faith. Subject to adjustment as
provided in Section 15 below, the aggregate number of shares of Common Stock
that may be
<PAGE>
subject to options granted to any person in a calendar year shall not exceed
300,000 shares.
(c) Applicability of Rule 16b-3. Those provisions of the Plan
which make express reference to Rule 16b-3 shall apply to the Company only at
such time as the Company's Common Stock is registered under the Exchange Act,
subject to the last sentence of Section 3(b), and then only to such persons as
are required to file reports under Section 16(a) of the Exchange Act (a
"Reporting Person").
3. Eligibility.
(a) General. Options may be granted to persons who are, at the
time of grant, employees, officers or directors of, or consultants or advisors
to, the Company, Interneuron, or any subsidiaries of the Company as defined in
Sections 424(e) and 424(f) of the Code ("Participants") provided, that Incentive
Stock Options may only be granted to individuals who are employees of the
Company (within the meaning of Section 3401(c) of the Code). A person who has
been granted an option may, if he or she is otherwise eligible, be granted
additional options if the Committee shall so determine.
(b) Grant of Options to Reporting Persons. The selection of a
director or an officer who is a Reporting Person (as the terms "director" and
"officer" are defined for purposes of Rule 16b-3) as a recipient of an option,
the timing of the option grant, the exercise price of the option and the number
of shares subject to the option shall be determined either (i) by the Board of
Directors, of which all members shall be "disinterested persons" (as hereinafter
defined), (ii) by a committee consisting of two or more directors having full
authority to act in the matter, each of whom shall be a "disinterested person"
or (iii) pursuant to provisions for automatic grants set forth in Section 3(c)
below. For the purposes of the Plan, a director shall be deemed to be a
"disinterested person" only if such person qualifies as a "disinterested person"
within the meaning of Rule 16b-3, as such term is interpreted from time to time.
If at least two of the members of the Board of Directors do not qualify as a
"disinterested person" within the meaning of Rule 16b-3, as such term is
interpreted from time to time, then the granting of options to officers and
directors who are Reporting Persons under the Plan shall not be determined in
accordance with this Section 3(b) but shall be determined in accordance with the
other provisions of the Plan.
(c) Directors' Options. On the date on which the Company's
registration statement relating to its initial public offering is declared
effective by the Securities and Exchange Commission (the "Effective Date")
directors of the Company who are not employees or beneficial owners of at least
10% of the voting power of the Company's securities ("Eligible Directors") will
receive an option ("Initial Director Option") to purchase 10,000 shares of
Common Stock. Future Eligible Directors of the Company will be granted an
Initial Director Option to purchase 5,000 shares of Common Stock on the date
that such person is first elected or appointed a director. Commencing on the day
immediately following the date of the annual meeting of stockholders for the
Company's fiscal year ending after the fiscal year in which the Effective Date
occurs, each Eligible Director will receive an automatic grant ("Automatic
Grant") of an Option
2
<PAGE>
to purchase 3,000 shares of Common Stock, other than Eligible Directors who
received an Initial Director Option since the most recent Automatic Grant, on
the day immediately following the date of each annual meeting of stockholders,
as long as such director is a member of the Board of Directors. The exercise
price for each share subject to a Director Option shall be equal to the fair
market value of the Common Stock on the date of grant. Director Options shall
become exercisable in 36 equal monthly installments commencing one month from
the date the option is granted and will expire the earlier of 10 years after the
date of grant or 90 days after the termination of the director's service on the
Board.
4. Stock Subject to Plan.
The stock subject to options granted under the Plan shall be
shares of authorized but unissued or reacquired Common Stock. Subject to
adjustment as provided in Section 15 below, the maximum number of shares of
Common Stock of the Company which may be issued and sold under the Plan is
1,500,000. If an option granted under the Plan shall expire, terminate or is
cancelled for any reason without having been exercised in full, the unpurchased
shares subject to such option shall again be available for subsequent option
grants under the Plan.
5. Forms of Option Agreements.
As a condition to the grant of an option under the Plan, each
recipient of an option shall execute an option agreement in such form not
inconsistent with the Plan as may be approved by the Board of Directors. Such
option agreements may differ among recipients.
6. Purchase Price.
(a) General. The purchase price per share of stock deliverable
upon the exercise of an option shall be determined by the Board of Directors or
the Committee at the time of grant of such option; provided, however, that in
the case of an Incentive Stock Option, the exercise price shall not be less than
100% of the Fair Market Value (as hereinafter defined) of such stock, at the
time of grant of such option, or less than 110% of such Fair Market Value in the
case of options described in Section 11(b). "Fair Market Value" of a share of
Common Stock of the Company as of a specified date for the purposes of the Plan
shall mean the closing price of a share of the Common Stock on the principal
securities exchange (including the Nasdaq National Market) on which such shares
are traded on the day immediately preceding the date as of which Fair Market
Value is being determined, or on the next preceding date on which such shares
are traded if no shares were traded on such immediately preceding day, or if the
shares are not traded on a securities exchange, Fair Market Value shall be
deemed to be the average of the high bid and low asked prices of the shares in
the over-the-counter market on the day immediately preceding the date as of
which Fair Market Value is being determined or on the next preceding date on
which such high bid and low asked prices were recorded. If the shares are not
publicly traded, Fair Market Value of a share of Common Stock (including, in the
case of any repurchase of shares, any distributions with respect thereto which
would be repurchased with the shares) shall
3
<PAGE>
be determined in good faith by the Board of Directors. In no case shall Fair
Market Value be determined with regard to restrictions other than restrictions
which, by their terms, will never lapse.
(b) Payment of Purchase Price. Options granted under the Plan
may provide for the payment of the exercise price by delivery of cash or a check
to the order of the Company in an amount equal to the exercise price of such
options, or by any other means which the Board of Directors determines are
consistent with the purpose of the Plan and with applicable laws and regulations
(including, without limitation, the provisions of Rule 16b-3 and Regulation T
promulgated by the Federal Reserve Board).
7. Option Period.
Subject to earlier termination as provided in the Plan, each
option and all rights thereunder shall expire on such date as determined by the
Board of Directors or the Committee and set forth in the applicable option
agreement, provided, that such date shall not be later than (10) ten years after
the date on which the option is granted.
8. Exercise of Options.
Each option granted under the Plan shall be exercisable either
in full or in installments at such time or times and during such period as shall
be set forth in the option agreement evidencing such option, subject to the
provisions of the Plan. No option granted to a Reporting Person for purposes of
the Exchange Act, however, shall be exercisable during the first six months
after the date of grant. Subject to the requirements in the immediately
preceding sentence, if an option is not at the time of grant immediately
exercisable, the Board of Directors may (i) in the agreement evidencing such
option, provide for the acceleration of the exercise date or dates of the
subject option upon the occurrence of specified events, and/or (ii) at any time
prior to the complete termination of an option, accelerate the exercise date or
dates of such option.
9. Nontransferability of Options.
No option granted under this Plan shall be assignable or
otherwise transferable by the optionee except by will or by the laws of descent
and distribution or pursuant to a qualified domestic relations order as defined
in the Code or Title I of the Employee Retirement Income Security Act, or the
rules thereunder. An option may be exercised during the lifetime of the optionee
only by the optionee. In the event an optionee dies during his employment by the
Company or any of its subsidiaries, or during the three-month period following
the date of termination of such employment, his option shall thereafter be
exercisable, during the period specified in the option agreement, by his
executors or administrators to the full extent to which such option was
exercisable by the optionee at the time of his death during the periods set
forth in Section 10 or 11(d).
4
<PAGE>
10. Effect of Termination of Employment or Other Relationship.
Except as provided in Section 11(d) with respect to Incentive
Stock Options and except as otherwise determined by the Committee at the date of
grant of an option, and subject to the provisions of the Plan, an optionee may
exercise an option at any time within three (3) months following the termination
of the optionee's employment or other relationship with the Company or within
one (1) year if such termination was due to the death or disability of the
optionee but, except in the case of the optionee's death, in no event later than
the expiration date of the option. If the termination of the optionee's
employment is for cause or is otherwise attributable to a breach by the optionee
of an employment or confidentiality or non-disclosure agreement, the option
shall expire immediately upon such termination. The Board of Directors shall
have the power to determine what constitutes a termination for cause or a breach
of an employment or confidentiality or non-disclosure agreement, whether an
optionee has been terminated for cause or has breached such an agreement, and
the date upon which such termination for cause or breach occurs. Any such
determinations shall be final and conclusive and binding upon the optionee.
11. Incentive Stock Options.
Options granted under the Plan which are intended to be
Incentive Stock Options shall be subject to the following additional terms and
conditions:
(a) Express Designation. All Incentive Stock Options granted
under the Plan shall, at the time of grant, be specifically designated as such
in the option agreement covering such Incentive Stock Options.
(b) 10% Stockholder. If any employee to whom an Incentive
Stock Option is to be granted under the Plan is, at the time of the grant of
such option, the owner of stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company (after taking into account
the attribution of stock ownership rules of Section 424(d) of the Code), then
the following special provisions shall be applicable to the Incentive Stock
Option granted to such individual:
(i) The purchase price per share of the Common Stock
subject to such Incentive Stock Option shall not be less than
110% of the Fair Market Value of one share of Common Stock at
the time of grant; and
(ii) the option exercise period shall not exceed five
years from the date of grant.
(c) Dollar Limitation. For so long as the Code shall so
provide, options granted to any employee under the Plan (and any other incentive
stock option plans of the Company) which are intended to constitute Incentive
Stock Options shall not constitute Incentive Stock Options to the extent that
such options, in the aggregate, become exercisable for the first
5
<PAGE>
time in any one calendar year for shares of Common Stock with an aggregate Fair
Market Value, as of the respective date or dates of grant, of more than
$100,000.
(d) Termination of Employment, Death or Disability. No
Incentive Stock Option may be exercised unless, at the time of such exercise,
the optionee is, and has been continuously since the date of grant of his or her
option, employed by the Company, except that:
(i) an Incentive Stock Option may be exercised within
the period of three months after the date the optionee ceases
to be an employee of the Company (or within such lesser period
as may be specified in the applicable option agreement),
provided, that the agreement with respect to such option may
designate a longer exercise period and that the exercise after
such three-month period shall be treated as the exercise of a
non-statutory option under the Plan;
(ii) if the optionee dies while in the employ of the
Company, or within three months after the optionee ceases to
be such an employee, the Incentive Stock Option may be
exercised by the person to whom it is transferred by will or
the laws of descent and distribution within the period of one
year after the date of death (or within such lesser period as
may be specified in the applicable option agreement); and
(iii) if the optionee becomes disabled (within the meaning
of Section 22(e)(3) of the Code or any successor provisions
thereto) while in the employ of the Company, the Incentive
Stock Option may be exercised within the period of one year
after the date the optionee ceases to be such an employee
because of such disability (or within such lesser period as
may be specified in the applicable option agreement).
For all purposes of the Plan and any option granted hereunder, "employment"
shall be defined in accordance with the provisions of Section 1.421-7(h) of the
Income Tax Regulations (or any successor regulations). Notwithstanding the
foregoing provisions, no Incentive Stock Option may be exercised after its
expiration date.
12. Additional Provisions.
(a) Additional Option Provisions. The Board of Directors or
the Committee may, in its sole discretion, include additional provisions in
option agreements covering options granted under the Plan, including without
limitation restrictions on transfer, repurchase rights, rights of first refusal,
commitments to pay cash bonuses, to make, arrange for or guaranty loans or to
transfer other property to optionees upon exercise of options, or such other
provisions as shall be determined by the Board of Directors; provided, that such
additional provisions shall not be inconsistent with any other term or condition
of the Plan and such additional provisions shall not cause any Incentive Stock
Option granted under the Plan to fail to qualify as an Incentive Stock
7
<PAGE>
Option within the meaning of Section 422 of the Code.
(b) Acceleration, Extension, Etc. The Board of Directors may,
in its sole discretion, (i) accelerate the date or dates on which all or any
particular option or options granted under the Plan may be exercised or (ii)
extend the dates during which all, or any particular, option or options granted
under the Plan may be exercised; provided, however, that no such extension shall
be permitted if it would cause the Plan to fail to comply with Section 422 of
the Code or with Rule 16b-3 (if applicable).
13. General Restrictions.
(a) Investment Representations. The Company may require any
person to whom an option is granted, as a condition of exercising such option or
award, to give written assurances in substance and form satisfactory to the
Company to the effect that such person is acquiring the Common Stock subject to
the option or award, for his or her own account for investment and not with any
present intention of selling or otherwise distributing the same, and to such
other effects as the Company deems necessary or appropriate in order to comply
with federal and applicable state securities laws, or with covenants or
representations made by the Company in connection with any public offering of
its Common Stock, including any "lock-up" or other restriction on
transferability.
(b) Compliance With Securities Law. Each option shall be
subject to the requirement that if, at any time, counsel to the Company shall
determine that the listing, registration or qualification of the shares subject
to such option or award upon any securities exchange or automated quotation
system or under any state or federal law, or the consent or approval of any
governmental or regulatory body, or that the disclosure of non-public
information or the satisfaction of any other condition is necessary as a
condition of, or in connection with the issuance or purchase of shares
thereunder, such option or award may not be exercised, in whole or in part,
unless such listing, registration, qualification, consent or approval, or
satisfaction of such condition shall have been effected or obtained on
conditions acceptable to the Board of Directors or the Committee. Nothing herein
shall be deemed to require the Company to apply for or to obtain such listing,
registration or qualification, or to satisfy such condition.
14. Rights as a Stockholder.
The holder of an option shall have no rights as a stockholder
with respect to any shares covered by the option (including, without limitation,
any rights to receive dividends or non-cash distributions with respect to such
shares) until the date of issue of a stock certificate to him or her for such
shares. No adjustment shall be made for dividends or other rights for which the
record date is prior to the date such stock certificate is issued.
15. Adjustment Provisions for Recapitalizations, Reorganizations
and Related Transactions.
7
<PAGE>
(a) Recapitalizations and Related Transactions. If, through or
as a result of any recapitalization, reclassification, stock dividend, stock
split, reverse stock split or other similar transaction, (i) the outstanding
shares of Common Stock are increased, decreased or exchanged for a different
number or kind of shares or other securities of the Company, or (ii) additional
shares or new or different shares or other non-cash assets are distributed with
respect to such shares of Common Stock or other securities, an appropriate and
proportionate adjustment shall be made in (x) the maximum number and kind of
shares reserved for issuance under or otherwise referred to in the Plan, (y) the
number and kind of shares or other securities subject to any then outstanding
options under the Plan, and (z) the price for each share subject to any then
outstanding options under the Plan, without changing the aggregate purchase
price as to which such options remain exercisable. Notwithstanding the
foregoing, no adjustment shall be made pursuant to this Section 15 if such
adjustment (i) would cause the Plan to fail to comply with Section 422 of the
Code or with Rule 16b-3 or (ii) would be considered as the adoption of a new
plan requiring stockholder approval.
(b) Reorganization, Merger and Related Transactions. All
outstanding options under the Plan shall become fully exercisable for a period
of sixty (60) days following the occurrence of any Trigger Event, whether or not
such options are then exercisable under the provisions of the applicable
agreements relating thereto. For purposes of the Plan, a "Trigger Event" is any
one of the following events :
(i) the date on which shares of Common Stock are
first purchased pursuant to a tender offer or exchange offer (other
than such an offer by the Company, any Subsidiary, Interneuron, any
employee benefit plan of the Company or of any Subsidiary or any entity
holding shares or other securities of the Company for or pursuant to
the terms of such plan), whether or not such offer is approved or
opposed by the Company and regardless of the number of shares purchased
pursuant to such offer;
(ii) the date the Company acquires knowledge that any
person or group deemed a person under Section 13(d)-3 of the Exchange
Act (other than the Company, Interneuron, any Subsidiary, any employee
benefit plan of the Company or of any Subsidiary or any entity holding
shares of Common Stock or other securities of the Company for or
pursuant to the terms of any such plan or any individual or entity or
group or affiliate thereof which acquired its beneficial ownership
interest prior to the date the Plan was adopted by the Board), in a
transaction or series of transactions, has become the beneficial owner,
directly or indirectly (with beneficial ownership determined as
provided in Rule 13d-3, or any successor rule, under the Exchange Act),
of securities of the Company entitling the person or group to 30% or
more of all votes (without consideration of the rights of any class or
stock to elect directors by a separate class vote) to which all
stockholders of the Company would be entitled in the election of the
Board of Directors were an election held on such date;
8
<PAGE>
(iii) the date, during any period of two consecutive
years, when individuals who at the beginning of such period constitute
the Board of Directors of the Company cease for any reason to
constitute at least a majority thereof, unless the election, or the
nomination for election by the stockholders of the Company, of each new
director was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of such
period; and
(iv) the date of approval by the stockholders of the
Company of an agreement (a "reorganization agreement") providing for:
(A) The merger of consolidation of the
Company with another corporation where the stockholders of the
Company, immediately prior to the merger or consolidation, do
not beneficially own, immediately after the merger or
consolidation, shares of the corporation issuing cash or
securities in the merger or consolidation entitling such
stockholders to 80% or more of all votes (without
consideration of the rights of any class of stock to elect
directors by a separate class vote) to which all stockholders
of such corporation would be entitled in the election of
directors or where the members of the Board of Directors of
the Company, immediately prior to the merger or consolidation,
do not, immediately after the merger or consolidation,
constitute a majority of the Board of Directors of the
corporation issuing cash or securities in the merger or
consolidation; or
(B) The sale or other disposition of all or
substantially all the assets of the Company.
(c) Board Authority to Make Adjustments. Any adjustments under
this Section 15 will be made by the Board of Directors or the Committee, whose
determination as to what adjustments, if any, will be made and the extent
thereof will be final, binding and conclusive. No fractional shares will be
issued under the Plan on account of any such adjustments.
16. Merger, Consolidation, Asset Sale, Liquidation, etc.
(a) General. In the event of any sale, merger, transfer or
acquisition of the Company or substantially all of the assets of the Company in
which the Company is not the surviving corporation, and provided that after the
Company shall have requested the acquiring or succeeding corporation (or an
affiliate thereof), that equivalent options shall be substituted and such
successor corporation shall have refused or failed to assume all options
outstanding under the Plan or issue substantially equivalent options, then any
or all outstanding options under the Plan shall accelerate and become
exercisable in full immediately prior to such event. The Committee will notify
holders of options under the Plan that any such options shall be fully
exercisable for a period of fifteen (15) days from the date of such notice, and
the options will terminate upon expiration of such notice.
9
<PAGE>
(b) Substitute Options. The Company may grant options under
the Plan in substitution for options held by employees of another corporation
who become employees of the Company, Interneuron, or a subsidiary of the
Company, Interneuron, as the result of a merger or consolidation of the
employing corporation with the Company or a subsidiary of the Company,
Interneuron, or as a result of the acquisition by the Company, Interneuron, or
one of its subsidiaries, of property or stock of the employing corporation. The
Company may direct that substitute options be granted on such terms and
conditions as the Board of Directors considers appropriate in the circumstances.
17. No Special Employment Rights.
Nothing contained in the Plan or in any option shall confer
upon any optionee any right with respect to the continuation of his or her
employment by the Company or interfere in any way with the right of the Company
at any time to terminate such employment or to increase or decrease the
compensation of the optionee.
18. Other Employee Benefits.
Except as to plans which by their terms include such amounts
as compensation, the amount of any compensation deemed to be received by an
employee as a result of the exercise of an option or the sale of shares received
upon such exercise will not constitute compensation with respect to which any
other employee benefits of such employee are determined, including, without
limitation, benefits under any bonus, pension, profit-sharing, life insurance or
salary continuation plan, except as otherwise specifically determined by the
Board of Directors.
19. Amendment of the Plan.
(a) The Board of Directors may at any time, and from time to
time, modify or amend the Plan in any respect; provided, however, that if at any
time the approval of the stockholders of the Company is required under Section
422 of the Code or any successor provision with respect to Incentive Stock
Options, or under Rule 16b-3, the Board of Directors may not effect such
modification or amendment without such approval; and provided, further, that the
provisions of Section 3(c) hereof shall not be amended more than once every six
months, other than to comport with changes in the Code, the Employer Retirement
Income Security Act of 1974, as amended, or the rules thereunder.
(b) The modification or amendment of the Plan shall not,
without the consent of an optionee, affect his or her rights under an option
previously granted to him or her. With the consent of the optionee affected, the
Board of Directors or the Committee may amend outstanding option agreements in a
manner not inconsistent with the Plan. The Board of Directors shall have the
right to amend or modify (i) the terms and provisions of the Plan and of any
outstanding Incentive Stock Options granted under the Plan to the extent
necessary to qualify any or all such options for such favorable federal income
tax treatment (including deferral of
10
<PAGE>
taxation upon exercise) as may be afforded incentive stock options under Section
422 of the Code and (ii) the terms and provisions of the Plan and of any
outstanding option to the extent necessary to ensure the qualification of the
Plan under Rule 16b-3.
20. Withholding.
(a) The Company shall have the right to deduct from payments
of any kind otherwise due to the optionee any federal, state or local taxes of
any kind required by law to be withheld with respect to any shares issued upon
exercise of options under the Plan. Subject to the prior approval of the
Company, which may be withheld by the Company in its sole discretion, the
optionee may elect to satisfy such obligations, in whole or in part, (i) by
causing the Company to withhold shares of Common Stock otherwise issuable
pursuant to the exercise of an option or (ii) by delivering to the Company
shares of Common Stock already owned by the optionee. The shares so delivered or
withheld shall have a Fair Market Value equal to such withholding obligation as
of the date that the amount of tax to be withheld is to be determined. An
optionee who has made an election pursuant to this Section 20(a) may only
satisfy his or her withholding obligation with shares of Common Stock which are
not subject to any repurchase, forfeiture, unfulfilled vesting or other similar
requirements.
(b) The acceptance of shares of Common Stock upon exercise of
an Incentive Stock Option shall constitute an agreement by the optionee (i) to
notify the Company if any or all of such shares are disposed of by the optionee
within two years from the date the option was granted or within one year from
the date the shares were issued to the optionee pursuant to the exercise of the
option, and (ii) if required by law, to remit to the Company, at the time of and
in the case of any such disposition, an amount sufficient to satisfy the
Company's federal, state and local withholding tax obligations with respect to
such disposition, whether or not, as to both (i) and (ii), the optionee is in
the employ of the Company at the time of such disposition.
(c) Notwithstanding the foregoing, in the case of a Reporting
Person whose options have been granted in accordance with the provisions of
Section 3(b) herein, no election to use shares for the payment of withholding
taxes shall be effective unless made in compliance with any applicable
requirements of Rule 16b-3.
21. Cancellation and New Grant of Options, Etc.
The Board of Directors or the Committee shall have the
authority to effect, at any time and from time to time, with the consent of the
affected optionees, (i) the cancellation of any or all outstanding options under
the Plan and the grant in substitution therefor of new options under the Plan
covering the same or different numbers of shares of Common Stock and having an
option exercise price per share which may be lower or higher than the exercise
price per share of the cancelled options or (ii) the amendment of the terms of
any and all outstanding options under the Plan to provide an option exercise
price per share which is higher or lower than the then-current exercise price
per share of such outstanding options.
22. Effective Date and Duration of the Plan.
11
<PAGE>
(a) Effective Date. The Plan shall become effective when
adopted by the Board of Directors, but no Incentive Stock Option granted under
the Plan shall become exercisable unless and until the Plan shall have been
approved by the Company's stockholders. If such stockholder approval is not
obtained within twelve months after the date of the Board's adoption of the
Plan, no options previously granted under the Plan shall be deemed to be
Incentive Stock Options and no Incentive Stock Options shall be granted
thereafter. Amendments to the Plan not requiring stockholder approval shall
become effective when adopted by the Board of Directors; amendments requiring
stockholder approval (as provided in Section 19) shall become effective when
adopted by the Board of Directors, but no Incentive Stock Option granted after
the date of such amendment shall become exercisable (to the extent that such
amendment to the Plan was required to enable the Company to grant such Incentive
Stock Option to a particular optionee) unless and until such amendment shall
have been approved by the Company's stockholders. If such stockholder approval
is not obtained within twelve months of the Board's adoption of such amendment,
any Incentive Stock Options granted on or after the date of such amendment shall
terminate to the extent that such amendment to the Plan was required to enable
the Company to grant such option to a particular optionee. Subject to this
limitation, options may be granted under the Plan at any time after the
effective date and before the date fixed for termination of the Plan.
(b) Termination. Unless sooner terminated in accordance with
Section 16, the Plan shall terminate upon the earlier of (i) the close of
business on the day next preceding the tenth anniversary of the date of its
adoption by the Board of Directors, or (ii) the date on which all shares
available for issuance under the Plan shall have been issued pursuant to the
exercise or cancellation of options granted under the Plan. If the date of
termination is determined under (i) above, then options outstanding on such date
shall continue to have force and effect in accordance with the provisions of the
instruments evidencing such options.
23. Governing Law.
The provisions of this Plan shall be governed and construed in
accordance with the laws of the State of Delaware without regard to the
principles of conflicts of laws.
Adopted by the Board of Directors on October 31, 1994 Amended
by the Board of Directors on October 27, 1995 and June 13,
1996.
11
<PAGE>
EXHIBIT 11.1
INTERCARDIA, INC.
STATEMENT RE COMPUTATION OF NET INCOME (LOSS) PER SHARE
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
------------------------------------- --------------------------------------
1996 1995 1996 1995
----------------- ----------------- ------------------ ------------------
<S> <C> <C> <C> <C>
Net Income (Loss) per Unaudited
Consolidated Statements of Operations $ (777) $ (705) $ 2,068 $ (1,288)
================= ================= ================= ==================
Calculation of Weighted Average
Number of Common Shares and
Common Share Equivalents:
Common Stock 6,726,621 3,500,000 5,273,114 3,500,000
Series A Preferred Stock 692,621 (1) 312,060 692,621 (1)
Stock Options and Warrants 681,826 (2) 227,275 681,826 (2)
----------------- ----------------- ----------------- ------------------
6,726,621 4,874,447 5,812,449 4,874,447
================= ================= ================= ==================
Net Income (Loss) per Common Share $ (0.12) $ (0.14) $ 0.36 $ (0.26)
================= ================= ================= ==================
</TABLE>
- --------------
(1) All of the Series A Preferred shares were issued within one year of the
initial filing date of Intercardia's initial public offering and are
therefore treated as outstanding in accordance with Staff Accounting
Bulletin Topic 4-D.
(2) Includes stock options and warrants granted within one year of the
initial filing date of Intercardia's initial public offering, which are
treated as outstanding in accordance with Staff Accounting Bulletin
Topic 4-D. The amount is net of 60,882 shares that would be repurchased
under the treasury stock method.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF INCOME FILED AS
PART OF THE QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH QUARTERLY REPORT ON FORM 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> JUN-30-1996
<CASH> 20,102
<SECURITIES> 16,895
<RECEIVABLES> 1,621
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 38,746
<PP&E> 285
<DEPRECIATION> 0
<TOTAL-ASSETS> 40,058
<CURRENT-LIABILITIES> 2,380
<BONDS> 118
0
0
<COMMON> 7
<OTHER-SE> 36,921
<TOTAL-LIABILITY-AND-EQUITY> 40,058
<SALES> 0
<TOTAL-REVENUES> 5,835
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,068
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,068
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,068
<EPS-PRIMARY> .36
<EPS-DILUTED> .36
</TABLE>
