SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended March 31, 1999
or
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to ___________
Commission file number 000-26422
DISCOVERY LABORATORIES, 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 No.)
350 South Main Street, Suite 307
Doylestown, Pennsylvania 18901
(Address of principal executive offices) (Zip Code)
Registrants' telephone number, including area code: (215) 340-4699
Securities registered under Section 12 (b) of the Exchange Act: None
Securities registered under Section 12 (g) of the Exchange Act:
Common Stock, par value $.001 per share
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. |X| Yes |_| No
As of May 10, 1999, 6,382,311 shares of Common Stock, par value $.001 per share,
were outstanding.
Documents incorporated by reference: None.
Transitional Small Business Disclosure Format: |_| Yes |X| No
The undersigned registrant ereby amends to following items of its Report on Form
10-QSB for the period ended March 31, 1999 as set for the below.
Page 1
<PAGE>
DISCOVERY LABORATORIES, INC.
Table of Contents
Page
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
CONSOLIDATED BALANCE SHEETS --
As of March 31, 1999 (unaudited) and December 31, 1998 ....Page 3
CONSOLIDATED STATEMENTS OF OPERATIONS -- For the Three Months
Ended March 31, 1999 (unaudited) and March 31, 1998; and for
the Period from May 18,
1993 (Inception) through March 31, 1999 (unaudited) .......Page 4
CONSOLIDATED STATEMENTS OF CASH FLOWS -- For the Three Months
Ended March 31, 1999 (unaudited) and March 31, 1998 and for
the Period from May 18,
1993 (Inception) through March 31, 1999 (unaudited) .......Page 5
Notes to Financial Statements ...............................Page 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations .....................Page 7
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K. ......................Page 10
Signatures ......................................................Page 11
Page 2
<PAGE>
DISCOVERY LABORATORIES, INC. AND SUBSIDIARY
(a development stage company)
Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 951,000 $ 1,474,000
Marketable Securities 1,463,000 2,544,000
Stock Subscriptions and other receivables 803,000
Inventory (Note 1) 575,000 575,000
Prepaid expenses 77,000 203,000
------------ ------------
Total current assets 3,869,000 4,796,000
Property and equipment, net of deprecation 321,000 326,000
Security deposits 18,000 18,000
------------ ------------
$ 4,208,000 $ 5,140,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 1,301,000 $ 1,088,000
------------ ------------
Commitments
Stockholders' Equity:
Preferred stock, $.001 par value; 5,000,000 shares authorized: Series B
convertible; 1,712,387 and 1,946,881 shares issued and outstanding at March
31, 1999 and December 31, 1998, respectively (liquidation preference
$23,117,000 at March 31, 1999) 2,000 2,000
Series C redeemable convertible; 2,039 shares issued and
outstanding (liquidation preference $2,328,000) 2,328,000 2,277,000
Common stock, $.001 par value; 20,000,000 authorized; 6,331,829 and 5,085,281
shares issued and outstanding at March 31, 199
and December 31, 1998, respectively 6,000 5,000
Treasury stock (at cost 2,000 and 15,600 shares of common stock
at March 31, 1999 and December 31, 1998, respectively) (5,000) (39,000)
Additional paid-in capital 30,675,000 29,842,000
Unearned portion of compensatory stock options (116,000) (124,000)
Deficit accumulated during the development stage (29,999,000) (27,930,000)
Accumulated other comprehensive income: unrealized gain on
marketable securities available for sale 16,000 19,000
------------ ------------
Total stockholders' equity 2,907,000 4,052,000
------------ ------------
$ 4,208,000 $ 5,140,000
============ ============
</TABLE>
See notes to financial Statements Page 3
<PAGE>
DISCOVERY LABORATORIES, INC. AND SUBSIDIARY
(a development stage company)
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
May 18, 1993
Three Months Ended (Inception)
March 31, Through
---------------------------- March 31,
1999 1998 1999
------------ ------------ ------------
<S> <C> <C> <C>
Interest income $ 37,000 124,000 $ 1,349,000
------------ ------------ ------------
Expenses:
Write-off of acquired in-process research
and development and supplies 13,508,000
Research and development 1,419,000 1,709,000 11,392,000
General and administrative 636,000 647,000 5,970,000
Interest 11,000
------------ ------------ ------------
Total expenses 2,055,000 2,356,000 30,881,000
------------ ------------ ------------
(2,018,000) (2,232,000) (29,532,000)
Minority interest in net loss of subsidiary 24,000 26,000
------------ ------------ ------------
Net loss (2,018,000) (2,208,000) (29,506,000)
Other comprehensive income:
Unrealized gain on marketable securities available
for sale (3,000) 0 16,000
------------ ------------ ------------
Total comprehensive loss $ (2,021,000) (2,208,000) $(29,490,000)
============ ============ ============
Net loss per share - basic and diluted $ (0.36) $ (0.69)
============ ============
Weighted average number of common shares outstanding 5,613,000 3,183,000
============ ============
</TABLE>
See notes to financial Statements Page 4
<PAGE>
DISCOVERY LABORATORIES, INC. AND SUBSIDIARY
(a development stage company)
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
May 18, 1993
Three Months Ended (Inception)
March 31, Through
---------------------------- March 31,
1999 1998 1999
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (2,018,000) $ (2,208,000) $(29,506,000)
Adjustments to reconcile net loss to net cash used in
operating activities:
Write-off of acquired in-process research and
development and supplies 13,508,000
Write-off of licenses 683,000
Depreciation and amortization 19,000 8,000 148,000
Compensatory stock options 8,000 26,000
Changes in:
Accounts Receivable - Other (3,000) (3,000)
Prepaid expenses 126,000 86,000 (46,000)
Accounts payable and accrued expenses 282,000 251,000 1,164,000
Other assets (15,000) (18,000)
Expenses paid on behalf of company 18,000
Expenses paid using treasury stock 51,000
Employee stock compensation 42,000
Reduction of research and development supplies (161,000) (161,000)
------------ ------------ ------------
Net cash used in operating activities (1,586,000) (1,863,000) (14,094,000)
------------ ------------ ------------
Cash flows from investing activities:
Acquisition of furniture and equipment (14,000) (2,000) (446,000)
Proceeds from disposal of furniture and equipment 25,000 25,000
Acquisition of licenses (711,000) (711,000)
Purchase of investments (685,000) (20,745,000)
Proceeds from sale or maturity of investments 1,078,000 2,140,000 19,703,000
Net cash payments on merger 0 (1,670,000)
------------ ------------ ------------
Net cash provided by (used in) investing
activities 1,064,000 1,478,000 (3,844,000)
------------ ------------ ------------
Cash flows from financing activities:
Proceeds on private placements of units, net of
expenses 0 18,925,000
Deferred acquisition costs (54,000) 0
Purchase of treasury stock (5,000) (95,000)
Collections on stock subscriptions and proceeds
on exercise of stock options 4,000 0 59,000
------------ ------------ ------------
Net cash (used in) provided by financing
activities (1,000) (54,000) 18,889,000
------------ ------------ ------------
Net (decrease) increase in cash and cash equivalents (523,000) (439,000) 951,000
Cash and cash equivalents - beginning of period 1,474,000 6,297,000
------------ ------------ ------------
Cash and cash equivalents - end of period $ 951,000 $ 5,858,000 $ 951,000
============ ============ ============
Noncash transactions:
Accrued dividends on ATI preferred stock $ 51,000 $ 493,000
Accounts Payable settled using treasury stock 39,000 39,000
Common stock issued for subscriptions receivable 800,000 800,000
Common stock issued to settle payables 30,000 30,000
Preferred stock issued for inventory 575,000
</TABLE>
See notes to financial Statements Page 5
<PAGE>
NOTE 1 - THE COMPANY AND BASIS OF PRESENTATION
The Company
Discovery Laboratories, Inc. (the "Company"), formerly known as Ansan
Pharmaceuticals, Inc. ("Ansan"), was incorporated in Delaware on November 6,
1992 and was a wholly owned subsidiary of Titan Pharmaceuticals, Inc. ("Titan").
The Company was formed to license and develop pharmaceutical products to treat a
variety of human diseases. In August 1995, Ansan issued its securities in an
initial public offering and ceased to be a wholly owned subsidiary of Titan. In
November 1997, Ansan merged (the "Ansan Merger") with Discovery Laboratories,
Inc., a former Delaware corporation ("Old Discovery"), and was the surviving
corporate entity. Subsequent to the Ansan Merger, Ansan changed its name to
Discovery Laboratories, Inc. Pursuant to the Ansan Merger, each outstanding
share of Old Discovery's common stock was converted into 1.167471 shares of the
Company's common stock and each share of Old Discovery's Series A convertible
preferred stock was converted into one share of the Company's Series B preferred
stock (the "Ansan Exchange Ratios"). The Company also assumed all outstanding
options and warrants to purchase Old Discovery's common stock and Series A
preferred stock which became exercisable for the Company's common stock and
Series B preferred stock, respectively, based on the Ansan Exchange Ratios. In
connection with the Ansan Merger, the Company and Titan entered into
arrangements providing for the relinquishment by the Company of rights to
certain drug compounds and the transfer of such rights to Titan in exchange for
(i) a 2% net royalty payable by Titan to the Company from net sales of such drug
compounds and (ii) the cancellation of all Ansan common stock owned by Titan. On
consummation of the merger, 13,000 shares of Ansan Series A preferred stock held
by Old Discovery were cancelled.
The Ansan Merger was accounted for as a reverse acquisition with Old Discovery
as the acquirer for financial reporting purposes since Old Discovery's
stockholders owned approximately 92% of the merged entity on a diluted basis.
The consolidated financial statements include the accounts of Ansan from
November 25, 1997 (the date of acquisition). The assets and liabilities acquired
in the Ansan Merger were recorded at fair value on the date of the merger. The
difference between the fair value of the net assets acquired and value of the
common stock issued plus merger related costs was attributed to in-process
research and development and was recorded as an expense upon acquisition.
In June 1998, ATI Acquisition Corp., a wholly owned subsidiary of the Company,
merged with and into a then majority owned subsidiary of the Company, Acute
Therapeutics, Inc. ("ATI"), with ATI being the surviving entity (the "ATI
Merger"). Pursuant to the ATI Merger, each outstanding share of ATI's common
stock was exchanged for 3.90 shares of the Company's common stock (the "ATI
Exchange Ratio") and each share of ATI's Series B preferred stock was converted
into one share of the Company's Series C preferred stock. All outstanding
options to purchase ATI common stock were assumed by the Company and are
exercisable for shares of the Company's common stock on the basis of the ATI
Exchange Ratio. Pursuant to employment agreements entered into with the Company
in connection with the ATI Merger, ATI management was granted, in the aggregate,
options to purchase (i) 338,500 shares of the Company's common stock, subject to
vesting, and (ii) 335,000 shares of the Company common stock, subject to the
achievement of certain corporate milestones. As the options for the 335,000
shares are variable options, the Company will incur a charge at each reporting
date until the options are fully vested for the excess, if any of the market
price of the Company's common stock over the exercise price of the options. In
addition, pursuant to a management agreement entered into between the Company
and ATI at the time the merger agreement relating to the ATI Merger was
executed, the members of ATI management were granted options to purchase 126,500
shares of the Company's common stock.
The historical consolidated financial position of the Company includes the
accounts of ATI. The value of the common stock of the Company issued to ATI's
common stockholders plus the assumption of the outstanding ATI options and
merger related costs has been attributed to in-process research and development
upon managements evaluation and has been recorded as an expense upon
acquisition.
Basis of Presentation
The accompanying financial statements include the accounts of the Company and
its wholly owned subsidiary, ATI. All intercompany balances and transactions
have been eliminated.
The accompanying unaudited, consolidated, condensed financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information in accordance with the instructions to Form
10-QSB. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of
normally recurring accruals) considered for fair presentation have been
included. Operating results for the three-month period ended March 31, 1999 are
not necessarily indicative of the results that may be
Page 6
<PAGE>
expected for the year ended December 31, 1999. For further information, refer to
the consolidated financial statements and footnotes thereto included in the
Company's 1998 Annual Report on form 10-KSB.
The Company's activities since incorporation have primarily consisted 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 products.
The Company also depends on third parties to conduct research on the Company's
behalf through various research agreements. All of the Company's current
products under development are subject to license agreements that will require
the payment of future royalties.
Net Loss Per Share
Net loss per share is computed based on the weighted average number of common
shares outstanding for the periods and common shares issuable for little or no
cash consideration. Common shares issuable upon the exercise of options and
warrants and the conversion of convertible securities are not included in the
calculation of the net loss per share as their effect would be antidilutive.
Correction of Error and Restatement of Previously Issued Financial Statements
In October 1996, pursuant to a licensing agreement with Johnson & Johnson,
Inc.'s ("J&J") wholly owned subsidiary Ortho Pharmaceuticals, Inc., J&J
contributed manufacturing equipment and raw material inventory in exchange for
2,039 shares (originally 2,200 shares) of the Company's non-voting Series B
preferred stock which had a liquidation preference of $ 2,039,000. The equipment
and inventory was charged to operations as acquired in-process research and
development and supplies during the year ended December 31, 1996. However,
certain of this raw material inventory, valued at approximately $575,000, which
was then located at the vendor had an alternative future use in that the
inventory could be sold to other users and was in excess of the quantity
required for the Company's research and development purposes. The Company had
arranged with the vendor to defer delivery of the product. Previously issued
financial statements have been restated to reflect capitalizing such inventory
effective December 31, 1996 and a corresponding reduction in deficit accumulated
during the development stage.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
When used in this report, the words "estimate", "project", "intend", "forecast",
"anticipate" and similar expressions are intended to identify forward-looking
statements. In addition, certain other statements set forth in this report,
including, without limitation, statements concerning the Company's research and
development programs, the possibility of submitting regulatory filings for the
Company's products under development, the seeking of joint development or
licensing arrangements with pharmaceutical companies or others, the research and
development of particular compounds and technologies for particular indications
and the period of time for which the Company's existing resources will enable
the Company to fund its operations and the possibility of contracting with other
parties additional licenses to develop, manufacture and market commercially
viable products, are forward-looking and based upon the Company's current belief
as to the outcome, occurrence and timing of future events or current
expectations and plans. All such statements involve significant risks and
uncertainties. Many important factors affect the Company's ability to achieve
the stated outcomes and to successfully develop and commercialize its product
candidates, including, among other things, the ability to obtain substantial
additional funds, obtain and maintain all necessary patents or licenses, to
demonstrate the safety and efficacy of product candidates at each state of
development, to meet applicable regulatory standards and receive required
regulatory approvals, to meet obligations and required milestones under its
license agreements, to be capable of producing drug candidates in commercial
quantities at reasonable costs, to compete successfully against other products
and to market products in a profitable manner. Although the Company believes
that its assumptions underlying the forward-looking statements are reasonable,
any of the assumptions could prove inaccurate and, therefore, there also can be
no assurance that these statements included in the report will prove to be
accurate. In light of the significant uncertainties inherent in these statements
included herein, the inclusion of such information should not be regarded as a
representation by the Company or any other person that the objectives and plans
of the Company will be achieved; in fact, actual results could differ materially
from those contemplated by such forward-looking statements. The Company does not
undertake any obligation to publicly release any revisions to these
forward-looking statements or to reflect the occurrence of unanticipated events.
Page 7
<PAGE>
Plan of Operations
Since its inception, the Company has concentrated its efforts and resources in
the development and commercialization of pharmaceutical products and
technologies. The Company has been unprofitable since its founding and has
incurred a cumulative net loss of approximately $29,506,000 as of March 31,
1999. The Company expects to incur significantly increasing operating losses
over the next several years, primarily due to the expansion of its research and
development programs, including clinical trials for some or all of its existing
products and technologies and other products and technologies that it may
acquire or develop. The Company's ability to achieve profitability depends upon,
among other things, its ability to discover and develop products, obtain
regulatory approval for its proposed products, and enter into agreements for
product development, manufacturing and commercialization. None of the Company's
products currently generates revenues and the Company does not expect to achieve
revenues for the foreseeable future. Moreover, there can be no assurance that
the Company will ever achieve significant revenues or profitable operations from
the sale of any of its products or technologies.
The Company is a development stage pharmaceutical company that is focused on
developing compounds intended for neonatal use in critical care hospital
settings. The Company is also developing its lead product candidate for the
treatment of acute respiratory distress syndrome and acute lung injury
("ARDS/ALI"). The Company anticipates that during the next 12 months it will
conduct substantial research and development of its products under development.
A pivotal Phase 2/3 clinical trial of Surfaxin(TM) for the treatment of ARDS/ALI
was commenced on July 14, 1998. All of the 43 clinical sites identified by the
Company for participation in the ARDS/ALI trial have completed all internal
review board and other approvals relating to the original protocol for the
trial. The protocol was recently amended and the Company is in the process of
obtaining internal review board approvals relating to the amended protocol. The
Company anticipates that at all participating facilities will have been supplied
with drug product by June 1999. To date, 14 patients have been enrolled in the
ARDS/ALI trial.
A Phase 2A clinical trial of Surfaxin(TM) for the treatment of meconium
aspiration syndrome ("MAS") was commenced on May 27, 1997. The MAS trial was
terminated in October 1998 upon the expiration of the life of the Surfaxin(TM)
drug product used in the trial. The Company intends to analyze the results on
the Phase 2A MAS trial and believes that such results will yield sufficient data
to support a Phase 2B or a Phase 2/3 clinical trial of Surfaxin(TM) for the
treatment of MAS.
The Company is currently planning a Phase 3 clinical trial of Surfaxin(TM) for
the treatment of respiratory distress syndrome (RDS) in premature infants during
1999. Such trial, and any other clinical trials of the Company's products in
development that have not yet commenced, will require the receipt of approvals
by the United States Food and Drug Administration (the "FDA"). There can be no
assurance as to the receipt or the timing of such approvals.
A Phase 1/2 clinical trial of SuperVent(TM) for the treatment of cystic fibrosis
("CF") was commenced on March 17, 1997. Part A of such clinical trial was
completed on March 31, 1998. The Company is in the process of revising the
design of its clinical investigation of SuperVent(TM) for the treatment of CF.
On December 5, 1997 a Phase 1 clinical study of DSC-103 (formerly known as
ST-630) as a once-daily, orally administered drug for the treatment of
postmenopausal osteoporosis in the United States was initiated. Part B of such
trial was commenced on April 2, 1998 and was successfully completed on June 29,
1998. It is the Company's present intention to seek to develop DSC-103 through a
corporate partnering arrangement rather than directly.
During October 1998, the FDA granted the Company fast track approval status for
the ARDS/ALI and MAS indications. Fast track status facilitates the development
and expedites the review of new drugs intended for treatment of life-threatening
conditions for which there is presently no medical option. The FDA Office of
Orphan Products Development (the "OOPD") has designated SurfaxinTM as an orphan
drug for the treatment of MAS and ARDS/ALI. During October 1998, the OOPD
awarded Discovery a renewable Orphan Products Development Grant, ranging from
$194,390 for the first year to $583,170 over three years, to finance the
Company's MAS trial.
Liquidity
The Company's working capital requirements will depend upon numerous factors,
including, without limitation, progress of the Company's research and
development programs, preclinical and clinical testing, timing and cost of
obtaining regulatory approvals, levels of resources that the Company devotes to
the development of manufacturing and marketing capabilities, technological
advances, status of competitors and the ability of the Company to establish
collaborative arrangements with other organizations. During March and April
1999, the Company received subscriptions for $1 million in new equity financing.
As of April 9, 1999, the
Page 8
<PAGE>
Company had received all proceeds from such subscriptions. The Company will be
required to raise additional capital in order to meet its business objectives,
and there can be no assurance that it will be successful in doing so or, in
general, that the Company will be able to achieve its business objectives. The
Company has eliminated certain positions and taken other steps to reduce its use
of cash pending the raising of additional equity capital, which the Company
intends to pursue during the first half of 1999. The Company believes that such
reduced use of cash will not interfere with the achievement of the Company's
major business objectives and, accordingly, that its current resources will
permit it to meet its business objectives until the first quarter of 2000. In
the event that the Company does not achieve certain financing and/or corporate
partnering objectives during the Summer of 1999, the Company intends to further
reduce its use of cash so that its cash resources will be sufficient to continue
operations into the second quarter of 2000.
Year 2000 Compliance
With the new millenium approaching, many institutions around the world are
reviewing and modifying their computer systems to ensure that they are Year 2000
compliant. The issue, in general terms, is that many existing computer systems
and microprocessors with data functions use only two digits to identify a year
in the date field with the assumption that the first two digits are always "19".
Consequently, on January 1, 2000, computers that are not Year 2000 compliant may
read the year as 1900. Systems that calculate, compare or sort using the
incorrect date may malfunction.
The Company is working to resolve the potential impact of the Year 2000 on the
ability of its computerized information systems to accurately process
date-sensitive information. The systems include database, networking and
accounting software licensed by the Company. The Company does not use equipment
with embedded chip technology that is date sensitive. Although the Company has
not yet completed its assessment of its internal operations, the Company has
been advised by the vendors of its office and networking software that the
Company will receive vendor certifications confirming that these systems are
Year 2000 compliant. The Company has previously been advised that its accounting
software package is Year 2000 compliant. If such software does not in fact prove
to be Year 2000 compliant, the Company would experience temporary administrative
disruptions but such disruptions would not threaten or materially interfere with
the Company's drug development activities.
The Company has made inquiries of suppliers and other third parties with whom it
has significant business relationships in order to determine whether such third
parties have undertaken measures to ensure that their information technology
systems will be Year 2000 compliant insofar as the Company is concerned. These
third parties include contract manufacturing facilities utilized by the Company
to produce Surfaxin(TM) and SuperVent(TM), contract laboratories at which
stability testing of raw drug product is performed, facilities at which the
Company's clinical trials are being undertaken and the Company's transfer agent.
The Company has confirmed Year 2000 compliant status of all contract
manufacturing and contract laboratory facilities utilized by the Company. The
status of its clinical trial sites is still under evaluation. The potential
consequences of a Year 2000 compliance failure on the part of a hospital or
other facility participating in the Company's clinical trials range from the
possible need to eliminate data points generated by specific facilities to delay
in completion and evaluation of such trials, and could also result in a need for
further dialogue with the FDA regarding clinical trial integrity if a
significant problem were to emerge.
The Company's Year 2000 project is expected to be substantially completed by
June 30, 1999. The Company believes that completing the program within the
time-frame it set for itself will avoid any adverse impact on its operating
systems. Assuming that the Company is not required to incur transfer costs as a
result of any failure of its vendors to achieve Year 2000 compliance in a timely
fashion, the Company anticipates that the cost of implementing its Year 2000
program will be limited to out-of-pocket costs related to making inquiries of,
and receiving and reviewing confirmations from, third parties. The Company
currently estimates that such costs will not exceed $10,000.
The Company has purchased back-up electrical generators to ensure that
temperature sensitive materials that are critical to the Company's drug
development efforts will not be harmed by any power outages at its Doylestown,
Pennsylvania facility. Although not purchased with a view toward Year
2000-related risks, these generators are available to address any interruptions
in electrical service related to Year 2000 compliance problems experienced by
local utilities. The Company intends to develop contingency plans to address any
other Year 2000 compliance risks that are uncovered by its continuing evaluation
efforts.
Page 9
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
27.1 Financial Data Schedule.
Page 10
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Discovery Laboratories, Inc.
(Registrant)
/s/ Robert J. Capetola
Date: August 25, 1999 ---------------------------------
Robert J. Capetola, Ph.D.
President/Chief Executive Officer
/s/ Evan Myrianthopoulos
Date: August 25, 1999 ---------------------------------
Evan Myrianthopoulos
Vice President, Finance
(Principal Financial Officer)
/s/ Cynthia Davis
Date: August 25, 1999 ---------------------------------
Cynthia Davis
Controller
(Principal Accounting Officer)
Page 11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from 10-QSB/A and
is qualified in it's entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 951,000
<SECURITIES> 1,463,000
<RECEIVABLES> 803,000
<ALLOWANCES> 0
<INVENTORY> 575,000
<CURRENT-ASSETS> 3,869,000
<PP&E> 446,000
<DEPRECIATION> 125,000
<TOTAL-ASSETS> 4,208,000
<CURRENT-LIABILITIES> 1,301,000
<BONDS> 0
2,328,000
2,000
<COMMON> 6,000
<OTHER-SE> 571,000
<TOTAL-LIABILITY-AND-EQUITY> 1,301,000
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,055,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,018,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,018,000)
<EPS-BASIC> (0.36)
<EPS-DILUTED> (0.36)
</TABLE>
