<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[x] QUARTERLY REPORT PURSUANT SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 for the quarter ended September 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 No. 0-26422
ANSAN PHARMACEUTICALS, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
DELAWARE 94-3171943
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
400 OYSTER POINT BLVD. SUITE 435
SOUTH SAN FRANCISCO, CALIFORNIA 94080
(Address of Principal Executive Offices)
(415) 635-0200
(Issuer's Telephone Number, Including Area Code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes __X__ No _____
State the number of shares outstanding of each of the issuer's classes of common
equity, as of September 30, 1996: 2,826,798 shares of Common Stock oustanding,
$0.001 par value.
Transitional Small Business Disclosure Format Yes _____ No __X__
<PAGE>
INDEX TO FORM 10-QSB
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Financial Statements:
Condensed Balance Sheets as of September 30, 1996
and December 31, 1995 ............................................. 3
Condensed Statements of Operations for the Three- and Nine-
Months ended September 30, 1996 and 1995 and period from
incorporation (November 6, 1992) to September 30, 1996 ............ 4
Condensed Statements of Cash Flows for the Nine
Months ended September 30, 1996 and 1995 and period from
incorporation (November 6, 1992) to September 30, 1996 ............ 5
Notes to Condensed Financial Statements ............................. 6
Item 2. Management's Discussion and Analysis
or Plan of Operation ............................................... 9
PART II. OTHER INFORMATION
Item 5. Recent Developments, Business
Environment & Risk Factors .......................................... 12
Item 6. Exhibits and Reports on Form 8-K .......................... 15
SIGNATURES ............................................................. 16
2
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PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED FINANCIAL STATEMENTS
ANSAN PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31,
1996 1995
---------- ----------
(UNAUDITED) (NOTE A)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 51,387 $ 45,202
Short-term investments 2,413,777 3,809,110
Prepaid expenses and other current assets 9,718 108,089
---------- ----------
Total current assets 2,474,882 3,962,401
Furniture and equipment, net 76,035 18,244
---------- ----------
$2,550,917 $3,980,645
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 97,085 $ 80,276
Payable to Titan Pharmaceuticals, Inc. 99,459 57,791
Accrued sponsored research expense - 32,890
Accrued legal expense 50,730 50,000
Other accrued liabilities 53,120 117,006
---------- ----------
Total current liabilities 300,394 337,963
STOCKHOLDERS' EQUITY
Common stock, at amounts paid in, $0.001 par value;
20,000,000 shares authorized, 2,826,798 and
2,768,164 shares issued and outstanding at
September 30, 1996 and December 31, 1995,
respectively 10,842,037 10,678,061
Deferred compensation (194,450) (236,118)
Deficit accumulated during the development stage (8,397,064) (6,799,261)
---------- ----------
Total stockholders' equity 2,250,523 3,642,682
---------- ----------
$2,550,917 $3,980,645
---------- ----------
---------- ----------
Note A: The balance sheet at December 31, 1995 has been derived from the
audited financial statements at that date, but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS.
3
<PAGE>
ANSAN PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Period from
Incorporation
Three Months Ended Nine Months Ended (November 6,
September 30, September 30, 1992) to
--------------------------- --------------------------- September 30,
1996 1995 1996 1995 1996
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
COSTS AND EXPENSES:
Research and development $ 471,737 $ 248,561 $ 934,713 $ 1,082,997 $ 5,734,166
General and administrative 350,830 168,258 792,756 831,275 2,449,588
----------- ----------- ----------- ----------- -----------
Loss from operations (822,567) (416,819) (1,727,469) (1,914,272) (8,183,754)
Other income/(expenses)
Interest income 36,383 32,689 129,666 32,689 221,839
Interest expense - (416,444) - (429,694) (435,149)
----------- ----------- ----------- ----------- -----------
Net loss $ (786,184) $ (800,574) $(1,597,803) $(2,311,277) $(8,397,064)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Net loss per share $ (0.32) $ (0.56) $ (0.66) $ (2.70)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Shares used in computation 2,431,299 1,433,264 2,414,530 857,536
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Pro forma net loss per share $ (0.50) $ (1.99)
----------- -----------
----------- -----------
Shares used in calculating
pro forma net loss per share 1,590,413 1,163,562
----------- -----------
----------- -----------
</TABLE>
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS.
4
<PAGE>
ANSAN PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
PERIOD FROM
INCORPORATION
(NOVEMBER 6,
NINE MONTHS ENDED 1992) TO
SEPTEMBER 30, MARCH 31,
1996 1995 1996
----------- ----------- -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(1,597,803) $(2,311,277) $(8,397,064)
Adjustments to reconcile net loss to net cash used
by operating activities
Depreciation expense 15,193 532 16,852
Amortization of debt discount - 400,000 400,000
Amortization of deferred compensation 41,668 27,778 83,334
Forgiveness of stockholder receivable - - 205
Issuance of common stock in exchange for consulting
services - - 19,984
Issuance of common stock to employee 155,000 - 155,000
Changes in operating assets and liabilities:
Prepaid expenses and sponsored research 98,371 - (9,718)
Accounts payable 16,809 (15,398) 97,085
Accrued legal 730 - 50,730
Accrued sponsored research (32,890) - -
Other accrued liabilities (63,886) (35,634) 53,120
----------- ----------- -----------
Net cash used in operating activities (1,366,808) (1,933,999) (7,530,472)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of furniture and equipment (72,984) (15,248) (92,887)
Purchases of short-term investments (129,667) - (3,938,777)
Proceeds from sale of short-term investments 1,525,000 - 1,525,000
----------- ----------- -----------
Net cash provided by (used in) investing activities 1,322,349 (15,248) (2,506,664)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of series A preferred stock - - 992,592
Proceeds from issuance of common stock, net 8,976 5,955,151 5,964,256
Proceeds from related party notes - - 220,000
Payment on note from related party - - (190,000)
Issuance of notes payable - 1,025,000 1,025,000
Repayment of note payable - (1,425,000) (1,425,000)
Issuance of warrants to purchase common stock - 400,000 400,000
Proceeds from stockholder receivable - - 1,900
Payable to Titan Pharmaceuticals, Inc. 41,668 316,804 3,099,775
----------- ----------- -----------
Net cash provided by financing activities 50,644 6,271,955 10,088,523
----------- ----------- -----------
Net increase in cash and cash equivalents 6,185 4,322,708 51,387
Cash and cash equivalents, beginning of period 45,202 96,704 -
----------- ----------- -----------
Cash and cash equivalents, end of period $ 51,387 $ 4,419,412 $ 51,387
----------- ----------- -----------
----------- ----------- -----------
SUPPLEMENTAL CASH FLOW DISCLOSURE AND NONCASH
FINANCING ACTIVITIES
Forgiveness of note payable to related party $ - $ - $ 30,000
----------- ----------- -----------
----------- ----------- -----------
Interest paid on related party notes $ - $ - $ 4,409
----------- ----------- -----------
----------- ----------- -----------
Conversion of payable to parent into Series A
Preferred Stock $ - $ - $ 1,449,064
----------- ----------- -----------
----------- ----------- -----------
Conversion of payable to parent into Common Stock $ - $ - $ 1,551,252
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS.
5
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ANSAN PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
THE COMPANY
Ansan Pharmaceuticals, Inc. ("Ansan" or the "Company") was incorporated in
the State of Delaware on November 6, 1992 to engage in the development of
analogs of butyric acid for the treatment of cancer, blood disorders and other
serious diseases. The Company is in the development stage.
RELATIONSHIP WITH TITAN PHARMACEUTICALS, INC
Titan Pharmaceuticals, Inc. ("Titan"), a biopharmaceutical company engaged,
through the operations of its subsidiaries and affiliates, in the development of
new proprietary therapeutic products for use in the fields of cancer,
immunology, viral diseases, and disorders of the central nervous system, was the
Company's parent until the Company's initial public offering (the "IPO") in
August 1995. Subsequent to the IPO, Titan's ownership interest was reduced to
44%. In August 1995, the company granted Titan a one-year option to purchase up
to 400,000 shares of Common Stock. In July 1996, the Company extended the
option through September 8, 1996. While Ansan has not extended this option, the
companies continue to negotiate the terms of an additional investment from
Titan. However, there is no guarantee such investment will take place. The
Company had previously contracted with Titan for facilities and equipment, and
certain executive, administrative, financial, regulatory, business development
and human resource services. Subsequent to December 31, 1995, the Company has
contracted with Titan only for limited financial and administrative services.
Titan has previously supplied working capital financing to the Company and may
in the future provide such financing. As part of its affiliation with Titan,
the Company and Titan have a number of members in common of their respective
boards of directors.
BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principals for interim
financial information and with the instructions to form 10-QSB and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principals for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered for fair presentation have been
included. Operating results for the three- and nine-month periods ended
September 30, 1996 are not necessarily indicative of the results that may
expected for the year ending December 31, 1996. For further information, refer
to the consolidated financial statements and footnotes thereto included in the
Company's 1995 Annual Report on Form 10-KSB.
The Company's activities since incorporation have consisted primarily of
conducting research and development, performing business and financial
planning and raising capital. Accordingly, the Company is considered to be
in the development stage and expects to incur increasing losses and require
additional financial resources to achieve commercialization of its
6
<PAGE>
ANSAN PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
products. The Company also depends on third parties to conduct certain
research on the Company's behalf through various research arrangements. All
of the Company's current products under development are the subject of
license agreements that may require the payment of future royalties.
NET LOSS PER SHARE
Net loss per share for the three- and nine-month periods ended September
30, 1996 and the three-month period ended September 1995 is computed using
the weighted average number of common shares outstanding, reduced by the
number of shares held in escrow (see Release of Escrowed Shares and Options
below). Common equivalent shares are excluded from the calculation as their
effect is antidilutive.
Pursuant to the SEC Staff Accounting Bulletins, common and common
equivalent shares issued during the 12-month period prior to the Company's IPO
have been included in the calculation of net loss per share for the nine-month
period ended September 30, 1995 using the treasury stock method for stock
options and the if-converted method for convertible preferred stock. Net loss
per share and pro forma net loss per share is adjusted for the effect of escrow
shares (see Relase of Escrowed Shares and Options below).
Pro forma net loss per share for the three- and nine-month periods ended
September 30, 1995 is computed using the weighted average number of common
shares outstanding, common equivalent shares from convertible preferred stock
which automatically converted upon the closing of the Company's IPO, and certain
other common equivalent shares as mandated by SEC Staff Accounting Bulletins.
RELEASE OF ESCROWED SHARES AND OPTIONS
In connection with the IPO, certain stockholders of the Company placed an
aggregate of 363,760 shares of Common Stock (the "Escrow Shares"), and the
current holders of certain options which are exercisable at less than the
initial public offering price of $5.00 placed options to purchase 36,260 shares
(the "Escrow Options"), into escrow pending the Company's attainment of certain
revenue or share price goals. The Securities and Exchange Commission has taken
the position with respect to the release of securities from escrow that in the
event any of the Escrow Shares or Escrow Options are released from escrow to
directors, officers, employees or consultants of the Company, the release will
be treated, for financial reporting purposes, as a compensation expense to the
Company. Accordingly, the Company will, in the event of the release of the
Escrow Shares and Escrow Options, recognize during the period in which the
earnings or market price targets are met what could be a substantial one-time
charge which would substantially increase the Company's loss or reduce or
eliminate earnings, if any, at such time. The amount of compensation expense
recognized by the Company will not affect the Company's total stockholders'
equity.
7
<PAGE>
ANSAN PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
COLLABORATIVE AGREEMENTS
In May of 1996, the Company signed a licensing agreement with Boehringer
Ingelheim GmbH to acquire the rights in the United States and the European Union
to develop a new intravenous formulation of the drug Apafant for all clinical
indications. The Company intends to proceed with the further development and,
if possible, clinical testing of the drug. Pursuant to the agreement, the
Company may be obligated to make future milestone and royalty payments to
Boehringer Ingelheim GmbH. However, under certain circumstances, Boehringer
Ingelheim GmbH may participate in the further development and commercialization
of Apafant and, in such circumstances, would be obligated to make milestone and
royalty payments to Ansan.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
This Form 10-QSB contains forward-looking statements. These
forward-looking statements are subject to risks and uncertainties which may
cause actual results to differ materially from stated expectations. These
risks and uncertainties include but are not limited to: timeliness of
completion, if at all, of IND filings; FDA approval of IND's if filed;
timeliness of commencement, if ever, of clinical trials; timeliness of
completion, if ever, of clinical trials; changing requirements for regulatory
approval; technological uncertainties; the impact of competitive products and
pricing; future availability of capital; uncertainties arising from patents;
and a number of other risks, including those described above, those set forth
in the Company's 1995 annual report on form 10-KSB and other reports filed
with the Securities and Exchange Commission; and those which may not be
identifiable as yet.
RESULTS OF OPERATIONS
The Company is in the development stage. Since its inception in November
1992, the Company's efforts have been principally devoted to research and
development, securing patent protection and raising capital. From inception
through September 30, 1996, the Company has sustained cumulative losses of
approximately $8,397,000. These losses have resulted from expenditures in
connection with research and development and general and administrative
activities, including legal and professional activities.
Through September 30, 1996, research and development expenses since
inception have been approximately $5,734,000 and general and administrative
expenses since inception have been approximately $2,450,000. Research and
development expenses for the three months ended September 30, 1996 ("1996
quarter") were approximately $472,000 compared with $249,000 for the three
months ended September 30, 1995 ("1995 quarter"), an increase of 90%. The
increase can be attributed to an issuance of stock to a member of management, a
portion of which was allocated to research and development. The increase is
also due to expenditures associated with the development of Ansan's newly
acquired drug, Apafant, and the establishment of new development initiatives for
AN9 topical and AN10 topical. Such expenditures include, but are not limited
to, formulation development, chemistry, manufacturing and controls,
pharmacology, and toxicology. For the nine months ended September 30, 1996
("1996 nine months"), research and development expenses were $935,000 as
compared to $1,083,000 for the nine months ended September 30, 1995 ("1995 nine
months"), a decrease of 14%. The higher level of expenditures in 1995 is
attributed to costs incurred in anticipation of the Company's clinical trial
that commenced in the first quarter of 1996. These costs included expenditures
for preparation and compilation of investigational new drug applications (IND),
toxicology studies and manufacturing. Also, during the second half of 1995, the
Company reorganized much of its research and development activities that are
performed by outside vendors by establishing new vendor relationships, and
moving certain functions in-house. This reorganization has produced a cost
savings to the Company.
9
<PAGE>
General and administrative expenses for the 1996 quarter were approximately
$351,000 compared with approximately $168,000 for the 1995 quarter, an increase
of 109%. As noted above, the increase can be attributed to a charge to
operations relating to the issuance of stock to a member of management, a
portion of which was allocated to general and administrative expenses. In
addition the 1996 quarter expenses reflect post-IPO expenditures such as
investor relations and directors and officers insurance. For the 1996 nine
months, general and administrative expenses were approximately $793,000 as
compared to $831,000, a decrease of 5%. The decrease was due primarily to
certain costs associated with a private placement of debt in 1995.
Interest income was approximately $36,000 during the 1996 quarter as
compared to approximately $33,000 during the 1995 quarter. For the 1996 nine
months, interest income was approximately $130,000 compared with $33,000 for the
1995 nine months. This increase was a result of a substantial increase in the
amount of cash and short-term investments subsequent to the Company's IPO in
August 1995.
The Company expects to continue to incur substantial research and
development costs in the future due to ongoing and new research and development
programs, manufacturing of products for use in clinical trials, patent and
regulatory activities, and preclinical and clinical testing of the Company's
products. In May of 1996, the Company signed a licensing agreement with
Boehringer Ingelheim GmbH to acquire the rights in the United States and the
European Union to develop a new intravenous formulation of the drug Apafant for
all clinical indications. The Company expects to incur substantial research and
development costs related to this acquisition. The Company also expects that
general and administrative costs necessary to support clinical trials, research
and development, manufacturing and the creation of a marketing and sales
organization, if warranted, will increase in the future. Accordingly, the
Company expects to incur increasing operating losses for the foreseeable future.
There can be no assurance that the Company will ever achieve profitable
operations.
LIQUIDITY AND CAPITAL RESOURCES
In August and September 1995, the Company completed an IPO which resulted
in net proceeds to the Company, after deduction of underwriting discounts and
commissions and other expenses of the IPO, of approximately $5,950,000. As of
September 30, 1996, the Company had working capital of approximately $2,174,000.
In August 1995, the Company granted Titan, the Company's principal
stockholder, a one-year option to purchase up to 400,000 shares of Common Stock.
In July 1996, the Company extended the option through September 8, 1996. While
Ansan has not extended this option, the companies continue to negotiate the
terms of an additional investment from Titan. However, there is no guarantee
such investment will take place.
10
<PAGE>
Titan is a party to a master capital equipment lease, and the Company and
three other majority-owned subsidiaries of Titan have entered into a sublease
and assignment with Titan under such lease for which the Company is jointly and
severally liable. At September 30, 1996, the amount outstanding under the
equipment lease was $807,211 with current monthly payments of $30,459.
The Company believes that the proceeds from the IPO will provide the
necessary liquidity and capital resources to sustain planned operations through
the September 1997. In the event that the Company's internal estimates relating
to its planned expenditures prove materially inaccurate, the Company may be
required to reallocate funds among its planned activities or to curtail certain
planned expenditures. In any event, the Company anticipates that it will
require substantial additional financing after such time in order to continue
its research and development capabilities, fund operating expenses, pursue
regulatory approval, and build production, sales, and marketing activities, as
necessary. There can be no assurance as to the availability or terms of any
additional financing, when and if needed. In the event that the Company fails
to raise any funds it requires, it may be necessary for the Company to curtail
its activities significantly or to cease operations altogether.
11
<PAGE>
PART II. OTHER INFORMATION
ITEM 5. RECENT DEVELOPMENTS, BUSINESS ENVIRONMENT & RISK FACTORS
There have been a number of potentially significant developments relating
to the progress and focus of the Company's programs.
PIVANEX INJECTION
The Company is currently conducting a phase Ib safety and tolerability
study of Pivanex-TM- Injection ("Pivanex") in patients with various cancers.
Pivanex is a formulation of a patented analog of butyric acid (AN9). Nine
patients have been enrolled to date and no serious adverse events have been
reported. Recent animal data have suggested that when Pivanex is administered
by vein the highest concentrations of drug may be available to treat tumors that
are located in the lungs. Substantially less drug is available after
intravenous administration to treat tumors located outside of the lung. As a
consequence of these findings, an effort has been made recently to enroll
patients with lung cancer in the current phase Ib study. Three patients with
lung cancer have been enrolled to date. The other six patients enrolled
previously had cancers located in sites other than the lungs (such as the colon
or liver), and there was no objective evidence of response to treatment in these
six patients.
Of the three patients with lung cancer, one had squamous cell carcinoma.
This patient was enrolled in August 1996. This patient subsequently received
two courses of therapy with Pivanex. Following the first course, there was
approximately a 50% reduction in the tumor volume as measured by an x-ray
technique known as computerized tomography. A repeat x-ray after the second
course showed no further decrease in tumor size. The patient remains under
observation, and there are currently no plans for further treatment with
Pivanex.
The Company and the principal investigator of the clinical trial find this
reported result encouraging. There can be no assurance, however, that the
observed shrinkage of the tumor resulted from the administration of Pivanex, can
be maintained for any meaningful duration or can be reproduced in other
patients. Substantial additional clinical testing will be required to establish
and verify the safety and efficacy of Pivanex. These trials will require at
least two or more years to complete, and there can be no assurance that such
trials will result in the regulatory approval required for the commercialization
of Pivanex.
Because of the animal findings regarding the availability of drug to treat
tumors located in various tissues, the company is currently evaluating
additional routes of administration for AN9 Injection, including the following:
1) intraperitoneal administration for treatment of malignancies such as
ovarian cancer (The Company has recently shown in laboratory testing that a
solution of AN9 given by intraperitoneal administration improves the
survival of animals having human ovarian cancers implanted in the
peritoneal cavity.)
2) intra-arterial infusions for the treatment of primary or metastatic
livers cancers
13
<PAGE>
AN9 TOPICAL
It has been previously shown in laboratory testing that direct application
of a solution of AN9 to human melanoma cells can inhibit growth of this type of
cancer. Pursuant to this observation, the Company has been performing certain
experiments to enable the filing of an Investigational New Drug Application
("IND") for a newly developed topical formulation of AN9 ("AN9 Topical"). The
Company has recently met with the United State Food and Drug Administration
("FDA") regarding such an effort. As a result, the Company expects to file an
IND in the first half of 1997. However, the Company must complete certain
additional pharmacology and toxicology studies before an IND can be submitted,
and there can be no assurance that these studies can be concluded successfully
or in a timely manner. Accordingly, there can be no assurance that the IND will
be filed in a timely manner or at all and no assurance that the FDA will
ultimately approve the IND if one is filed.
AN10 TOPICAL
In another new development, the Company is also pursuing a development
program with a topical formulation of AN10 ("AN10 Topical"). Recent animal
studies suggest that AN10 Topical may prove to have potential utility in
reducing chemotherapy-induced alopecia, or hair loss, in patients with cancer.
The Company expects to complete certain animal and laboratory testing and plans
to file an IND for AN10 Topical during the first half of 1997. There can be no
assurance that the ongoing animal and laboratory testing will be successful or
will be completed in a timely manner. Accordingly, there can be no assurance
that the IND will be filed in a timely manner or at all and no assurance that
the FDA will approve the IND if one is filed.
NOVAHEME INJECTION
The Company was recently awarded U. S. Patent No. 5,569,675 covering the
use of the product Novaheme-TM- Injection ("AN10 Injection") for the treatment
of serious blood disorders such as sickle cell disease or beta thalassemia. The
Company is currently seeking a development partner for this product. There can
be no assurance that the Company will be successful in identifying a suitable
partner.
APAFANT INJECTION
The Company is now conducting supplemental pharmacology testing of Apafant
Injection, the compound recently licensed from Boehringer Ingelheim ("BI").
Apafant was originally developed by BI as an oral treatment for asthma. BI has
previously conducted extensive clinical trials in the US and in other countries
using the oral form of the drug. The Company is developing its own injectable
form of the drug and intends to file an IND for Apafant Injection for acute
pancreatitis in the first half of 1997. There can be no assurance that the IND
will be filed in a timely manner or at all and no assurance that the FDA will
approve the IND if one is filed.
13
<PAGE>
SUMMARY
These advances are encouraging and represent a significant expansion of the
Company's programs under development. Additional research, development,
preclinical and clinical testing will be required, however, in order to obtain
regulatory approval for any of the Company's current product candidates. There
can be no assurance that any products from the Company's expanded portfolio will
be successfully developed, prove to be safe or efficacious, receive the
requisite regulatory approvals, demonstrate substantial therapeutic benefits in
the treatment of any disease or condition, be capable of being produced in
commercial quantities at reasonable costs, or be successfully marketed. The
Company intends to proceed with additional testing on each of the drug
candidates, which may lead to the successful filing of IND's and the subsequent
conduct of clinical trials. In addition, the company is actively seeking to
acquire the rights to other compounds that will also require additional testing
and clinical trials.
The Company's current resources will not be sufficient to support all of
these activities, and the Company will need to raise additional capital to
pursue the planned development and commercialization of its portfolio of product
candidates. The Company anticipates that existing capital resources will
support operations through September 1997, but this period of time could be
reduced if the Company more aggressively pursues the proposed laboratory and
clinical testing of the existing product candidates. The Company is actively
considering a number of alternatives in order to raise capital. Failure to
raise sufficient capital would cause the Company to reduce development
activities, to postpone development of one or more products or to sell or
license one or more of its products to other companies or potentially to cease
operations altogether. There can be no assurance that the Company will be
successful in any of aforementioned fundraising efforts.
This Form 10-QSB contains forward-looking statements. These forward-
looking statements are subject to risks and uncertainties which may cause actual
results to differ materially from stated expectations. These risks and
uncertainties include but are not limited to: timeliness of completion, if at
all, of IND filings, FDA approval of IND's if filed, timeliness of commencement,
if ever, of clinical trials, timeliness of completion, if ever, of clinical
trials, changing requirements for regulatory approval, technological
uncertainties, the impact of competitive products and pricing, future
availability of capital, uncertainties arising from patents, and a number of
other risks, including those described above, those set forth in the Company's
1995 annual report on form 10-KSB and other reports file with the Securities and
Exchange Commission, and those which may not be identifiable as yet.
14
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) 4.1 Form of Unit Purchase Option *
4.2 Form of Warrant Agreement (including forms of Class A and
Class B Warrant Certificates).*
4.3 Escrow Agreement *
10.11 License Agreement dated May 31, 1996, between
Boehringer Ingelheim GmbH and the Registrant **
11.0 Statement re Computation of Earnings of Per Share
27.0 Financial Data Schedule
*Incorporated by reference to the Company's Registration Statement
on Form SB-2 (file no. 33-92886)
**Confidential treatment has been requested with respect to
portions of this exhibit.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the nine months ended
September 30, 1996.
15
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the
undersigned, thereunder duly authorized.
ANSAN PHARMACEUTICALS, INC.
November 12, 1996 By: /s/ S. Mark Moran
-----------------------------------------
S. Mark Moran
President and Chief Executive Officer
(Principal Executive Officer and
Principal Financial Officer)
16
<PAGE>
EXHIBIT (11) -- STATEMENT RE: COMPUTATION OF NET LOSS PER SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------ -------------------------
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net Loss $ (786,184) $ (800,574) $(1,597,803) $(2,311,277)
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
Weighted average shares of
Common Stock outstanding 2,795,059 1,734,165 2,778,290 836,692
Shares related to staff accounting
bulletin topic 4D:
Stock Options 38,008
Conversion of payable to parent 235,038
Escrow Shares (363,760) (300,901) (363,760) (252,202)
---------- ---------- ----------- -----------
Shares used in calculating net loss per share 2,431,299 1,433,264 2,414,530 857,536
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
Net loss per share $ (0.32) $ (0.56) $ (0.66) $ (2.70)
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
Pro forma net loss per share information:
Shares used in calculating net loss per share 1,433,264 857,536
---------- -----------
Adjusted to reflect the effect of the assumed
conversion of Preferred Stock 220,008 428,437
Escrow Shares (62,859) (122,410)
---------- -----------
Shares used in computing pro forma
net loss per share 1,590,413 1,163,562
---------- -----------
---------- -----------
Pro forma net loss per share $ (0.50) $ (1.99)
---------- -----------
---------- -----------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND STATEMENT OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 51,387
<SECURITIES> 2,413,777
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,474,882
<PP&E> 92,887
<DEPRECIATION> 16,852
<TOTAL-ASSETS> 2,550,917
<CURRENT-LIABILITIES> 300,394
<BONDS> 0
0
0
<COMMON> 10,842,037
<OTHER-SE> (8,397,064)
<TOTAL-LIABILITY-AND-EQUITY> 2,550,917
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,727,469
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,597,803)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,597,803)
<EPS-PRIMARY> (0.66)
<EPS-DILUTED> (0.66)
</TABLE>
