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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended September 30, 1997
Commission File Number: 0-27072
HEMISPHERx BIOPHARMA, INC.
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 52-0845822
- ------------------------------ -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1617 JFK Boulevard, Suite 660, Philadelphia, PA 19103
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(Address of principal executive offices) (Zip Code)
(215) 988-0080
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
/X/ Yes / / No
16,693,659 shares of common stock issued and outstanding as of
September 30, 1997.
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PART I - FINANCIAL INFORMATION
ITEM 1: Financial Statements
HEMISPHERx BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited)
December 31, September 30,
1996 1997
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 5,279,429 $ 1,780,469
Prepaid expenses and other current assets 105,341 69,613
----------- ----------
Total current assets 5,384,770 1,850,082
Property and equipment, net 83,475 68,526
Patent and trademark rights, net 1,502,816 1,578,386
Security deposits 28,323 18,323
----------- ----------
Total assets $ 6,999,384 $ 3,515,317
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 598,078 $ 889,379
Accrued expenses 548,312 524,775
----------- ----------
Total current liabilities 1,146,390 1,414,154
Commitments and contingencies
Stockholders' equity:
Preferred stock 50 44
Common stock 16,160 16,693
Additional paid-in capital 54,080,171 55,394,595
Accumulated deficit (48,243,387) (53,310,169)
----------- ----------
Total stockholders' equity 5,852,994 2,101,163
----------- ----------
Total liabilities and stockholders' equity $ 6,999,384 $ 3,515,317
=========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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HEMISPHERx BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
(Unaudited)
For the Three months ended
September 30
--------------------------
1996 1997
---------- ----------
<S> <C> <C>
Revenues:
Cost recovery - clinical trials $ 10,082 $ 93,457
---------- ----------
Total revenues 10,082 93,457
---------- ----------
Costs and expenses:
Research and development 343,523 917,123
General and administrative 1,279,414 678,721
---------- ----------
Total cost and expenses 1,622,937 1,595,844
Interest income 92,047 31,758
---------- ----------
Net loss $(1,520,808) $(1,470,629)
========== ==========
Weighted average shares outstanding 15,589,835 16,554,333
Net loss per share $ (0.10) $ (0.09)
========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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HEMISPHERx BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
(Unaudited)
For the Nine months ended
September 30,
--------------------------
1996 1997
---------- ----------
<S> <C> <C>
Revenues:
Cost recovery - clinical trials $ 28,451 $ 155,282
---------- ----------
Total revenues 28,451 155,282
---------- ----------
Costs and expenses:
Research and development 1,038,028 2,244,056
General and administrative 2,514,980 1,705,124
Preferred stock conversion expense - 1,227,864
---------- ----------
Total cost and expenses 3,553,008 5,177,044
Interest income 257,612 142,476
---------- ----------
Net loss $(3,266,945) $(4,879,286)
========== ==========
Weighted average shares outstanding 15,584,405 16,395,817
Net loss per share $ (0.21) $ (0.30)
========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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HEMISPHERx BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(Unaudited)
For the Nine months ended
September 30,
-------------------------
1996 1997
----------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(3,266,945) $(4,879,286)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation of property and equipment 42,719 20,610
Amortization of patents rights 62,592 91,491
Write-off of patent rights - 59,985
Preferred stock conversion expense - 1,227,864
Stock option compensation expense 617,911 24,108
Changes in assets and liabilities:
Prepaid expenses and other current assets (123,422) 35,728
Accounts payable (448,842) 346,301
Accrued expenses (1,831,242) (39,259)
Security deposits 28,241 10,000
--------- ---------
Net cash used in operating activities (4,918,988) (3,102,458)
--------- ---------
Cash flows from investing activities:
Purchase of property and equipment ( 86,480) (5,661)
Additions to patent rights (211,691) (227,046)
--------- ---------
Net cash used in investing activities (298,171) (232,707)
--------- ---------
Cash flows from financing activities:
Proceeds from issuance of preferred stock 5,395,885 4,834,923
Preferred stock redeemed - (5000,000)
Payments on stockholder notes (4,920,000) -
Common stock issued 94,792 1,282
Dividends paid on preferred stock (8,654) -
--------- ---------
Net cash used in financing activities 562,023 (163,795)
--------- ---------
Net decrease in cash and cash equivalents (4,655,136) (3,498,960)
Cash and cash equivalents at beginning of period 11,291,167 5,279,429
--------- ---------
Cash and cash equivalents at end of period $6,636,031 $1,780,469
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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HEMISPHERx BIOPHARMA, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of
Hemispherx BioPharma, Inc. (the "Company"), a Delaware corporation and all
its wholly owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated. The Company's interim consolidated
financial statements are unaudited.
In the opinion of management, all adjustments necessary for a fair
presentation of such consolidated financial statements have been included.
Such adjustments consist of normal recurring items. Interim results are
not necessarily indicative of results for a full year.
The interim consolidated financial statements and notes thereto are presented
as permitted by the Securities and Exchange Commission (SEC), and do not
contain certain information which will be included in the Company's annual
consolidated financial statements and notes thereto.
These consolidated financial statements should be read in conjunction with
the Company's 1996 consolidated financial statements included in the Company's
Form 10K statement filed with the SEC on March 26, 1997.
NOTE 2: SERIES D CONVERTIBLE PREFERRED STOCK
On July 3, 1996 the Company issued and sold 6,000 shares of Series D
Convertible Preferred Stock ("the Preferred Stock") at $1,000 per share for
an aggregate total of $6,000,000. The proceeds, net of issuance costs,
realized by the Company were $5,395,885. In addition to the issuance of the
Preferred Stock, the Company issued to the buyer Warrants ("the Warrants")
to purchase 100,000 shares of Common Stock at the strike price of $4 per
share.
The Preferred Stock earned dividends at the rate of $50 per annum per share.
The dividends were cumulative and payable quarterly commencing October 1,
1996 as declared by the Board of Directors of the Corporation.
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On September 16, 1996 the Company's registration statement registering the
common stock underlying the Preferred Stock and the Warrants was declared
effective by the SEC.
In October,1996, the Preferred Shareholder converted 1,381 shares of Series
D Convertible Preferred Stock into 576,527 shares of common stock.
On March 7, 1997, the Company retired all the outstanding Series D Convertible
Preferred Stock.(See note 3).
NOTE 3: SERIES E CONVERTIBLE PREFERRED STOCK
On March 7, 1997, the Company used the services of an investment banking
firm to privately place $5 million of Series E Convertible Preferred Stock.
The proceeds from placement were used to retire the $5 million balance of
Series D Convertible Stock issued on July 3, 1996. In conjunction with this
transaction, the Company issued 200,000 shares of common stock with a
guaranteed value of $6.00 per share within the subsequent ten months of
issuance. Consequently, the Company incurred a $1.2 million charge which
had no effect on the total stockholders' equity as it was offset by an
increase in additional paid-in capital.
NOTE 4: STOCK COMPENSATION:
The Company recorded stock/warrant compensation expense of $24,108 during
the quarter ended September 30, 1997 on the basis of granting 50,000 warrants
to purchase Common stock to non-employees of the Company.
NOTE 5: NEW ACCOUNTING PRONOUNCEMENTS:
In February, 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 128, "Earnings Per Share." This statement establishes standards
for computing and presenting earnings per share (EPS) and applies to entities
with publicly held common stock or potential common stock. This Statement
simplifies the standards for computing earnings per share previously found
in APB Opinion NO. 15, "Earnings Per Share," and makes them comparable to
international EPS standards. It replaces the presentation of primary EPS
with a presentation of basic EPS. It also requires dual presentation of basic
and diluted EPS on the face of the income statement for all entities with
complex capital structures and requires a reconciliation of the numerator
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and denominator of the basic EPS computation to the numerator and denominator
of the diluted EPS computation. This Statement is effective for financial
statements issued for periods ending after December 15, 1997, including
interim periods; earlier application in not permitted. This Statement requires
restatement of all prior-period EPS data presented. The adoption of this
Statement will not have any impact on the Company's EPS disclosure, as the
Company's stock options and warrants are anti-dilutive and will be excluded
from the denominator of earnings per share; thus, earnings per common share
is equal to basic earnings per share as computed under SFAS No. 128.
ITEM 2: Managements Discussion and Analysis of Financial Condition and
Results of Operations.
GENERAL
The Company was incorporated in Maryland in 1966 under the name HEM
Research, Inc. and originally served as a supplier of research support
products. The Company's business was redirected in the early 1980's to the
development of nucleic acid pharmaceutical technology and the
commercialization of RNA drugs. The Company was reincorporated in Delaware and
changed its name to HEM Pharmaceuticals Corp. in 1991 and to Hemispherx
BioPharma, Inc. in June 1995. The Company has three subsidiaries--BioPro
Corp., BioAegean Corp. and Core BioTech Corp., all of which were incorporated
in Delaware in 1994. The Company has reported net profit only from 1985
through 1987. Since 1987, the Company has incurred substantial operating
losses. Prior to completing an Initial Public Offering (IPO) in November 1995,
the Company financed operations primarily through the private placement of
equity and debt securities, equipment lease financing, interest income and
revenues from licensing and royalty agreements.
The Company's drug technology utilizes specifically-configured
ribonucleic acid("RNA"). One of the Company's double stranded RNA drug
products, trademarked Ampligen, a parental drug product, is in advanced human
clinical development for various therapeutic indications. Based on the results
of pre-clinical studies and clinical trials, the Company believes that
Ampligen may have broad-spectrum anti-viral and anti-cancer activities. The
Company's policy is to file or license patent applications on a worldwide
basis to protect technology, inventories and improvements that are considered
important to the development of its business. More than 400 patent
applications have been filed worldwide of which more than 300 have been
issued.
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The development of the Company's products has required and will continue
to require the commitment of substantial resources to conduct the
time-consuming research, preclinical development, and clinical trials
necessary to bring pharmaceutical products to market and establish commercial
production and marketing capabilities. Accordingly, the Company may need to
raise additional funds through additional equity or debt financing,
collaborative arrangements with corporate partners, off balance sheet
financing or from other sources in order to complete the necessary clinical
trials and the regulatory approval processes and begin commercializing its
products.
During fiscal 1994 and 1995, the Company focused on negotiating and
executing the SAB/BIOCLONES Agreement, exploring potential partnerships to
pursue additional clinical trials with special emphasis on the CFS and HBV
disease indication, restructuring certain of its outstanding debt, conducting
the 1994 Common Stock Financing and the Bridge Financing and completing its
IPO. In 1996, the Company reviewed and restructured the Ampligen manufacturing
process. Secondary sources were established to procure raw materials,
lyophilization services and drug release testing. In the areas of research
and clinical efforts, the Company established with the FDA a comprehensive
roadmap of research and clinical studies. These studies include animal
toxicity and clinical studies in HIV and CFS. One HIV clinical study was
approved by the FDA and started in early 1997. The comprehensive animal
toxicity studies began in 1996 and are expected to be completed by year end
1997 on time to support various other regulatory initiatives of the Company in
North America and Europe.
The Company expects to continue its research and clinical efforts for
the next several years with significant benefit occurring as a result of
certain revenues from cost various recovery programs, notably in Canada,
Belgium, and the U.S. However, the Company may continue to incur losses over
the next several years due to clinical costs incurred in the continued
development of Ampligen for commercial application. Possibly losses may
fluctuate from quarter to quarter as a result of differences in the timing
of significant expenses incurred and receipt of licensing fees and/or revenues
sales in Belgium, Canada and the United States. The Company is also pursuing
similar programs in other countries, especially within the European Union.
Recent Developments
In October, 1997 the Company raised an aggregate of $10,005,000 in
gross proceeds through two private offerings pursuant to Regulation D of
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the Securities Act of 1933, as amended ("Act"), and Rule 506 promulgated
thereunder. All investors represented that they were accredited pursuant
to Rule 501 of the Act. The Company intends to use the proceeds from the
offering for general working capital and operating funds and to advance its
various clinical initiatives, including build-up of inventory and streamlining
various aspects of the over all manufacturing process. The offerings were
as follows:
Pursuant to a Term Sheet dated September 2, 1997, the Company offered
2,840,000 shares of Common Stock at $2.50 per share, through Hermitage
Capital, Inc., the Company's placement agent ("Placement Agent") on a
"best-efforts" basis. The Placement Agent received as compensation 6% of the
gross proceeds and 200,000 warrants exercisable at $4.00 per share and
expiring on December 31, 2000. The Company raised gross proceeds of $7,100,000
pursuant to this offering.
Pursuant to a Term Sheet dated September 22, 1997, the Company offered
2,000,000 shares of Common Stock at $3.00 per share, and one warrant for
every ten shares purchased. Each warrant is exercisable at $4.00 per share
and expires on december 31, 2000 ("Warrant"). The Company offered its
securities through finders and broker/dealers, and paid commissions of 6%
of gross proceeds, and one Warrant for every ten shares of Common Stock sold.
the warrants are exercisable at $4.00 per share and expire on December 31,
2000. Pursuant to the offering, the Company sold 968,333 shares of Common
Stock and raised gross proceeds of $2,905,000.
As of September 30, 1997 the Company had 8 patents enrolled in the
HIV clinical study. Also, the Company had 26 CFS patients enrolled in the
cost recovery clinical treatment programs being conducted in Belgium, Canada,
and the U.S.
During the quarter ended September 30, 1997, the production facility
located in the Republic of South Africa and owned jointly by the Company
(24.9%) and by our affiliate Bioclones (PTY) Limited (75.1%) continued
production of the raw materials, Poly I and C12U, needed to formulate Ampligen
(the final product). During the current quarter the Company received two
significantly sized shipments of Poly I and C12U which met all product
specifications and will be processed to increase the Ampligen inventory.
The Company is presently exploring distribution relationships for the
European and U.S. markets, and signed a letter of intent regarding a novel
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treatment regimen for hepatitis B infection with a France-based multinational
pharmaceutical company termed Beaufour Ipsen. The Company retained in
November, 1997, regulatory consultants to assist in preparing a marketing
application for the European Union.
There are about 300 million carriers of hepatitis B (HBV) virus
worldwide. About one half of those who are chronic carriers will die of
cirrhosis or liver cancer. Although the disease is most prevalent in Asia
and third world countries, there are an estimated 1.25 million carriers in
the U.S. The only approved treatment for HBV is interferon-a (mostly Intron-A
from Schering Plough). Less than 40% of patients treated with interferon-a
respond and the side effects are severe. Furthermore, Asian patients are
less responsive to this treatment than Western patients.
In June, 1997, the Company received notification of acceptance of four
new patents in New Zealand covering various medical indications for its
double- stranded RNAs, including Ampligen.
On May 1, 1997, the Company received permission from the U.S. Food
and Drug Administration (FDA) to recover costs from Chronic Fatigue Syndrome
(CFS) patients in the Company's AMP-511 open-label treatment protocol. In
June, 1997, five (5) clinical sites across the United States had been approved
to participate in this protocol. The cost of Ampligen to the patient is $2,100
for the first eight weeks of treatment and $2,400 for each additional eight-
week period thereafter. This treatment protocol has begun to enroll CFS
patients at these centers in the U.S. The Company has been in discussion
with the FDA on the design of a controlled CFS clinical trial (AMP-516).
CFS, which is also known as chronic fatigue and immune dysfunctional
syndrome (CFIDS) or myalgic encephalomyelitis (ME), is a complex illness
characterized by disabling fatigue, flu-like symptoms, joint and muscle pain,
cognitive problems, and sleep disorders. Its cause is unknown. However. herpes
virus type 6 (HHV-6) has been associated with the disease process. The Center
for Disease Control (CDC) has assigned CFS to its priority one list of "new
and reemerging infectious diseases" in the United States. Estimates of annual
incidences given by the company are 0.5 to 2.0 million people in the United
States and about 100,000 in Canada. An incidence of 0.2% of the U.S.
population or 520,000 persons was cited in a recent article in the American
Psychologist. There are no other specific treatments for CFS.
In March, 1997, the Company sold 5,000 shares of Series E Convertible
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Preferred Stock at $1,000 per share in a private offering pursuant to
Regulation D of the Securities Act of 1933, as amended, and Rule 506
promulgated thereunder. The proceeds of this placement were used to retire
the convertible preferred stock (Series D), which was placed under Regulation
D filing with the SEC during 1996. As a result of this transaction in 1997,
the Company incurred a $1.2 million charge which had no effect on total
stockholders' equity as it was offset by an increase in additional paid-in
capital. As of September 30, 1997, three holders of 650 shares of series
E preferred stock have elected to convert their shares into 325,000 shares
of common stock.
In January 1997, the Company began a Phase II clinical trial in Texas
treating HIV infected patients with Ampligen. The trial, approved by the
FDA, is studying the effect of Ampligen on viral load, or burden, in HIV
patients with CD4 levels over 400 cells/mm who are not being treated with
any other HIV medications. The principal investigator in the trial, Dr.
Patricia Salvato, specializes in the treatment of individuals with HIV
infection. Dr. Salvato is a Clinical Associate Professor at the University
of Texas Health Science Center, and has participated in prior clinical trials
of Ampligen for various chronic viral diseases including HIV and CFS.
Five earlier HIV clinical studies have been carried out with Ampligen.
Three were open label studies that showed stabilization of CD4 cell count,
and return of delayed hypersensitivity. The fourth study was a Phase II
double- blind, multi center study carried out in combination with zivovudine
(AZT). The fifth was a crossover study where placebo patients from the fourth
study were given Ampligen. The latter two studies showed decreased progression
to AIDS, as well as CD4 cell count stabilization and return of delayed
hypersensitivity. The Company believes that the data may justify a potential
indication for combination treatment of adult HIV patients with CD4 counts
of less than or equal to 300 cells/mm3 who show clinical or immulogic
deterioration.
In December, 1996 the Company and Temple University settled their legal
disputes regarding the license agreement between the parties covering the
Oragen drugs. The parties signed the documents required to consummate their
settlement, which includes a worldwide license for the commercial sale of
all Oragen products based on patents and related technology held by Temple.
This agreement was originally executed in 1988. In 1994, Temple terminated
the agreement, which caused the company to file legal action to re-instate
the 1988 agreement.
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On October 15, 1996, results of a Belgium clinical study were presented
at the annual scientific meeting of the American Association for Chronic
Fatigue Syndrome (AACFS) evidencing that Ampligen produced significant
physical and cognitive improvements among patients suffering from Chronic
Fatigue Syndrome. The study was presented by Kenny De Meirleir, M.D., Ph.D.
from the University of Brussels, and by David S. Strayer, M.D., Professor of
Medicine at Allegheny University, PA, and Medical Director for the Company.
RESULTS OF OPERATIONS
- ---------------------
Nine months ended September 30, 1997 versus nine months ended September 30,
- ---------------------------------------------------------------------------
1996
- ----
The Company reported a net loss of $4,879,286 for the nine months ended
September 30, 1997 versus a net loss of $3,266,945 for the same period in
1996. Several factors contributed to the increased loss of $1,612,341 in
1997, primarily a non-operating preferred stock conversion expense (described
below) of $1,227,864.
Revenues were up $126,831 for the nine months of 1997 due to the
increased enrollment of patients in the cost recovery clinical trials being
conducted in Belgium, Canada and the United States.
Research and development costs increased $1,206,028 in the nine months
ended September 30, 1997 due primarily to increased efforts in conducting
the pre-clinical toxicity studies, cost associated with the Canadian, Belgium
and U.S. clinical cost recovery programs and the HIV clinical trials being
conducted in the U.S. These costs were part of an overall plan to enhance
the clinical data bases to support an eventual full marketing application.
General and administrative expenses in the first nine months of 1997
decreased by $809,856. General and administrative expenses in the first nine
months of 1996 included a one time gain in the amount of $318,757 resulting
from the forgiveness of certain lease obligations in connection with the
restructuring of the Company's principal office lease. Excluding this one
time gain general and administrative expenses in the first nine months of
1997 decreased by $1,128,613. This decrease is primarily due to lower legal
and consulting fees, and various other administrative expenses.
Preferred stock conversion expense of $1,227,864 primarily resulted
from the issuance of Series E Convertible Preferred Stock in March, 1997.
(See notes 2 and 3 to unaudited condensed consolidated financial statements).
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Interest income decreased $115,136 in the nine months ended September
30, 1997 compared to the same period in 1996 is due to lower cash and cash
equivalents available for short term investments.
Three months ended September 30, 1997 versus three months ended September
- -------------------------------------------------------------------------
30, 1997
- --------
The Company reported a net loss of $1,470,629 for the three months
ended September 30, 1997 versus a net loss of $1,520,808 for the same period
in 1996. Several factors contributed to the decreased loss of $50,179.
Revenues were up for the three months ended September 30, 1997 due
to increased cost recovery proceeds from the clinical trials in Belgium,
Canada and the United States.
Research and development costs increased $573,600 in the three months
ended September 30, 1997 due primarily to increased efforts in conducting
the toxicity studies, cost associated with the Canadian, Belgium and U.S.
clinical cost recovery programs and the HIV clinical trials.
General and administrative expenses decreased by $600,693 in the three
months ended September 30, 1997. This decrease is primarily due to lower
legal and consulting fees, and reduction in various other administrative
expenses.
Interest income decreased in the three months ended September 30, 1997
compared to 1996 due to lower cash and cash equivalents available for short
term investments.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Cash and cash equivalents at September 30, 1997 was $1,780,469 compared
to $5,279,429 at December 31, 1996, reflecting a net cash use of $3,498,960
to support operations. In October, 1997 the Company received net proceeds
of $9.4 million from two separate private placements of equity. Because
of the Company's long-term capital requirements, it may seek to access the
public equity market whenever conditions are favorable, even if it does not
have an immediate need for additional capital at that time. Any additional
funding may result in significant dilution and could involve the issuance
of securities with rights which are senior to those of existing stockholders.
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(PAGE) 15
The Company may also need additional funding earlier than anticipated, and
the Company's cash requirements in general may vary materially from those
now planned, for reasons including, but not limited to, changes in the
Company's research and development programs, clinical trials, competitive
and technological advances, the regulatory process, and higher than
anticipated expenses and lower than anticipated revenues from certain of the
Company's clinical trials for which cost recovery from participants has been
approved.
In October, 1997 the Company's common stock and Class A warrants
commenced trading on the American Stock Exchange. These public securities
were delisted from NASDAQ at that time. The securities had traded on NASDAQ
since the IPO in November, 1995.
In October, 1997 the Company completed two (2) private offerings of
4,840,000 shares of Common stock for and aggregate of $10,005,000 in gross
proceeds. Both transactions were handled by placement agents, who earned
6% commissions.
On March 7, 1997, the Company used the services of an investment banking
firm to privately place $5 million of Series E Convertible Preferred Stock.
The proceeds from placement were used to retire the $5 million balance of
Series D Convertible Stock issued on July 3, 1996. (see notes 2 and 3 to
unaudited condensed consolidated financial statements).
On July 3, 1996 the Company issued and sold 6,000 of Series D Convertible
Preferred Stock.The net proceeds realized by the Company were $5,395,885.
On March 7, 1997, the company retired Series D Convertible Preferred Stock.
(see notes 2 and 3 to unaudited condensed consolidated financial statements).
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PART II - OTHER INFORMATION
ITEM 1: Legal Proceedings
None
ITEM 2: Changes in Securities
In July 1996, the Company separated it's public stock unit (consisting
of one share of Common Stock and one Class A Redeemable Warrant to purchase
Common Stock). The Common shares (HEMX), and Warrants (HEMXW) were separately
traded on NASDAQ. In conjunction, the public units were delisted in July,
1996.
On July 3, 1996, the Company completed a $6 million private placement
with a single institutional investor in the form of a newly issued Series
D Preferred Stock which is convertible into Common Stock. The proceeds from
this private placement were used to expand drug inventory.
On March 7, 1997, the Company used the services of an investment banking
firm to privately place $5 million of Series E Convertible Preferred Stock.
The proceeds from placement were used to retire the $5 million balance of
Series D Convertible Stock issued on July 3, 1996.
In October, 1997, the Company's shares of common stock and Class A
warrants were listed with the American Stock Exchange and will trade under
the symbols HEB and HEBW respectively. Accordingly, the shares were delisted
from the Nasdaq SmallCap Market.
ITEM 3: Defaults in Senior Securities
None
ITEM 4: Submission of Matters to a Vote of Security Holders
None
ITEM 5:Other Information
At the Company's annual meeting in October, 1997 the shareholders voted
by proxy to retain William A. Carter, Cedric Philipp, Peter Rodino III and
Richard Piani as the directors of the Company, and to retained KPMG Peat
Marwick as the Company's auditors.
ITEM 6: Exhibits and Reports on Form 8K
Reports on Form 8K - None
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(PAGE) 17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HEMISPHERx BIOPHARMA, INC.
/s/ William a. Carter
---------------------------
Date: November 12, 1997 William A. Carter, M.D.
Chief Executive Officer & President
/s/ Robert Peterson
--------------------------
Date: November 12, 1997 Robert E. Peterson
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,780,469
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
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0
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