-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Rv3YZzQKnGXuOHC+PZ0bc4hiDnwY2V+cQXwjnQDMkUbX3qMPrB63Ivhf1l2mUNO6 GCxWW2yaFxungBMzkGyDAw== 0000950135-96-004730.txt : 19961111 0000950135-96-004730.hdr.sgml : 19961111 ACCESSION NUMBER: 0000950135-96-004730 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961108 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GELTEX PHARMACEUTICALS INC CENTRAL INDEX KEY: 0001001425 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 043136767 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-26872 FILM NUMBER: 96656635 BUSINESS ADDRESS: STREET 1: 303 BEAR HILL RD CITY: WALTHAM STATE: MA ZIP: 02154 BUSINESS PHONE: 6172905888 MAIL ADDRESS: STREET 1: 303 BEAR HILL RD CITY: WALTHAM STATE: MA ZIP: 02154 10-Q 1 GELTEX PHARMACEUTICALS 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1996 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the transition period from _______ to ______ Commission file number 0-26872 GELTEX PHARMACEUTICALS, INC. ---------------------------- (Exact name of registrant as specified in its charter) Delaware 04-3136767 - ------------------------------- -------------------------------- (State or other jurisdiction of (IRS EmployerIdentification No.) incorporation or organization) 303 Bear Hill Road Waltham, Massachusetts 02154 - ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) 617-290-5888 ---------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- The number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date: Class Outstanding at September 30, 1996 ----- --------------------------------- Common Stock, $.01 par value 13,503,404 THIS IS PAGE 1 OF 13 PAGES. THE EXHIBIT INDEX IS ON PAGE 12. 2 GELTEX PHARMACEUTICALS, INC. (A DEVELOPMENT STAGE COMPANY) TABLE OF CONTENTS PAGE NO. -------- PART I FINANCIAL INFORMATION ITEM 1 Financial Statements Condensed Balance Sheets as of September 30, 1996 and December 31, 1995...................................... 3 Condensed Statements of Operations for the three months ended September 30, 1996 and 1995................... 4 Condensed Statements of Operations for the nine months ended September 30, 1996 and 1995, and for the period November 15, 1991 (date of inception) through September 30, 1996................... 5 Condensed Statements of Cash Flows for the nine months ended September 30, 1996 and 1995, and for the period November 15, 1991 (date of inception) through September 30, 1996................... 6 Notes to Condensed Financial Statements.................... 7 ITEM 2 Management's Discussion and Analysis of Financial Condition and Results of Operation............... 8 PART II OTHER INFORMATION ITEM 6 Exhibits and Reports on Form 8-K.......................... 10 SIGNATURE................................................................ 11 EXHIBIT INDEX............................................................ 12 -2- 3 PART 1. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS GELTEX PHARMACEUTICALS, INC. (A DEVELOPMENT STAGE COMPANY) CONDENSED BALANCE SHEETS (UNAUDITED)
September 30, December 31, 1996 1995 ------------- ------------ ASSETS Current assets: Cash and cash equivalent ................................................ $ 18,127,124 $ 12,179,988 Marketable securities ................................................... 63,944,089 20,995,110 Prepaid expenses and other current assets ............................... 1,414,355 572,864 ------------ ------------ Total current assets ............................................................. 83,485,568 33,747,962 Long-term receivables ............................................................ 20,000 20,000 Property and equipment, net ...................................................... 2,208,555 1,948,788 Intangible assets, net ........................................................... 318,180 276,527 ------------ ------------ $ 86,032,303 $ 35,993,277 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses ................................... $ 2,530,899 $ 1,388,416 Current portion of long-term obligations ................................ 483,891 535,293 ------------ ------------ Total current liabilities ........................................................ 3,014,790 1,923,709 Long-term obligations, less current portion ...................................... 205,968 419,569 Stockholders' equity: Series A Junior Participating Preferred Stock, $.01 par value, 500,000 shares authorized none issued or outstanding ................. -- -- Undesignated Preferred Stock, $.01 par value, 4,500,000 shares authorized, none issued or outstanding ........................ -- -- Common Stock, $.01 par value, 50,000,000 and 20,000,000 shares authorized; 13,503,404 and 10,535,065 shares issued and outstanding at September 30, 1996 and December 31, 1995, respectively ............ 135,034 105,350 Additional paid-in capital .............................................. 105,222,173 44,000,986 Deferred compensation ................................................... (48,553) (55,825) Deficit accumulated during the development stage ........................ (22,503,591) (10,482,102) Unrealized gain on available-for-sale securities ........................ 6,482 81,590 ------------ ------------ Total stockholders' equity ....................................................... 82,811,545 33,649,999 ------------ ------------ $ 86,032,303 $ 35,993,277 ============ ============
The accompanying notes are an integral part of the financial statements. - 3 - 4 GELTEX PHARMACEUTICALS, INC. (A DEVELOPMENT STAGE COMPANY) CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)
Three Months Ended September 30, -------------------------------- 1996 1995 ---- ---- Revenue: License fee and research revenue ........ $ 113,878 $ -- Research grant .......................... 111,492 27,914 ------------ ----------- Total revenue ................................ 225,370 27,914 Costs and expenses: Research and development ................ 5,995,218 2,122,212 General and administrative .............. 650,560 462,955 ------------ ----------- Total costs and expenses ..................... 6,645,778 2,585,167 ------------ ----------- Loss from operations ......................... (6,420,408) (2,557,253) Interest income .............................. 1,087,028 150,067 Interest expense ............................. (16,027) (23,675) ------------ ----------- Net loss ..................................... $ (5,349,407) $(2,430,861) ============ =========== Net loss per share ........................... $ (.40) $ (.33) ============ =========== Shares used in computing net loss per share .. 13,502,000 7,388,000
The accompanying notes are an integral part of the financial statements. - 4 - 5 GELTEX PHARMACEUTICALS, INC. (A DEVELOPMENT STAGE COMPANY) CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)
For the Period November 15, Nine Months 1991 (date Ended September 30, of inception) ------------------- through 1996 1995 September 30, 1996 ---- ---- ------------------ Revenue: License fee and research revenue $ 161,422 $ -- $ 3,911,422 Research grant ................. 325,081 85,286 482,491 ------------ ----------- ------------ Total revenue ....................... 486,503 85,286 4,393,913 Costs and expenses: Research and development ....... 12,787,689 4,680,116 24,038,131 General and administrative ..... 1,933,789 1,249,824 5,986,844 ------------ ----------- ------------ Total costs and expenses ............ 14,721,478 5,929,940 30,024,975 ------------ ----------- ------------ Loss from operations ................ (14,234,975) (5,844,654) (25,631,062) Interest income ..................... 2,271,902 487,068 3,336,802 Interest expense .................... (58,416) (74,469) (209,331) ------------ ----------- ------------ Net loss ............................ $(12,021,489) $(5,432,055) $(22,503,591) ============ =========== ============ Net loss per share ......... $ (.99) $ (.70) ============ =========== Shares used in computing net loss per share ............. 12,178,000 7,790,000
The accompanying notes are an integral part of the financial statements. -5- 6 GELTEX PHARMACEUTICALS, INC. (A DEVELOPMENT STAGE COMPANY) CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Period November 15, Nine Months 1991 (date Ended September 30, of inception) ------------------- through 1996 1995 September 30, 1996 ---- ---- ------------------ OPERATING ACTIVITIES Net loss .............................................. $(12,021,489) $(5,432,055) $ (22,503,591) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization ....................... 531,766 343,610 1,452,235 Issuance of Common Stock as compensation ............ -- -- 5,000 Changes in operating assets and liabilities: Prepaid expenses and other current assets ......... (841,491) (120,344) (1,414,355) Long-term receivables ............................. -- -- (20,000) Accounts payable and accrued expenses ............. 1,142,483 (214,382) 2,530,899 ------------ ----------- ------------- Net cash used in operating activities ................. (11,188,731) (5,423,171) (19,949,812) INVESTING ACTIVITIES Purchase of marketable securities ..................... (73,783,760) (6,808,692) (105,996,920) Proceeds from sale and maturities of marketable securities ................................. 30,759,674 8,293,470 42,059,314 Purchase of intangible assets ......................... (166,651) (143,808) (576,409) Purchase of property and equipment, net ............... (659,264) (365,267) (2,379,527) ------------ ----------- ------------- Net cash provided by (used in) investing activities ... (43,850,001) 975,703 (66,893,542) FINANCING ACTIVITIES Sale of Common Stock and warrants, net of issuance costs ...................................... 61,193,739 49,783 87,549,509 Proceeds from employee stock purchase plan ............ 57,132 -- 57,132 Sale of Preferred Stock, net of issuance costs ........ -- -- 17,480,688 Proceeds from lease financing of assets ............... -- 263,538 735,000 Payments on notes payable and capital lease obligations (265,003) (302,367) (851,851) ------------ ----------- ------------- Net cash provided by financing activities ............. 60,985,868 10,954 104,970,478 ------------ ----------- ------------- Increase (decrease) in cash and cash equivalents ...... 5,947,136 (4,436,514) 18,127,124 Cash and cash equivalents at beginning of period ...... 12,179,988 6,560,110 -- ------------ ----------- ------------- Cash and cash equivalents at end of period ............ $ 18,127,124 $ 2,123,596 $ 18,127,124 ============ =========== ============= Schedule of noncash investing and financing activities: Purchase of intangible assets for Common Stock ................................... $ 2,700 Issuance of Preferred Stock to cancel notes payable ................................. $ 185,000 Property and equipment acquired under capital leases ........................... $ 992,000
The accompanying notes are an integral part of the financial statements. -6- 7 GELTEX PHARMACEUTICALS, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION The accompanying unaudited condensed financial statements for the three and nine months ended September 30, 1996 and 1995 and for the period November 15, 1991 (date of inception) through September 30, 1996 have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the accompanying condensed financial statements include all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the financial condition, results of operations and cash flows for the periods presented. The results of operations for the interim period ended September 30, 1996 are not necessarily indicative of the results to be expected for the year ended December 31, 1996. These financial statements should be read in conjunction with the audited financial statements and notes thereto for the fiscal year ended December 31, 1995 included in the Company's Annual Report on Form 10-K (File Number 0-26872) as filed with the Securities and Exchange Commission. 2. NET LOSS PER SHARE Net loss per share is computed using the weighted average number of outstanding shares of Common Stock and Common Stock equivalents, assuming conversion of Series A, B and C Convertible Preferred Stock into shares of Common Stock as of their original date of issuance, which occurred upon the completion of the Company's initial public offering in November 1995, and the exercise of stock options and warrants (using the treasury stock method). Common Stock equivalent shares are excluded from the computation if their effect is anti-dilutive; however, pursuant to the requirements of the Securities and Exchange Commission, common equivalent shares relating to stock options (using the treasury stock method and the initial public offering price) issued during the twelve months prior to the initial public offering are included for all periods presented prior to June 30, 1995 whether or not they are anti-dilutive. 3. ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS ACCOUNTING FOR IMPAIRMENT OF LONG-LIVED ASSETS On January 1, 1996, the Company adopted Financial Accounting Standards Board Standard No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," which established criteria for the recognition and measurement of impairment loss associated with long-lived assets. Adoption of this standard had no impact on the Company's financial position or results of operations. -7- 8 GELTEX PHARMACEUTICALS, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) 3. ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS -- (CONTINUED) STOCK BASED COMPENSATION The Company has elected to follow Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25) and related Interpretations in accounting for its stock-based compensation plans, rather than the alternative fair value accounting provided for under Financial Accounting Standards Board Statement No.123, "Accounting for Stock-Based Compensation." Under APB 25, for those options granted in which the exercise price equals or exceeds the market price of the underlying stock on the date of grant, no compensation expense is recognized. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 The Company earned revenues of $225,000 under the Company's $2.0 million grant from the United States Department of Commerce's Advanced Technology Program and under the Company's collaborative agreement during the three months ended September 30, 1996, compared with $28,000 earned under the grant during the three months ended September 30, 1995. The Company's total operating expenses for the three months ended September 30, 1996 were $6.6 million, as compared to $2.6 million during the three months ended September 30, 1995. Research and development expenses increased to $6.0 million for the three months ended September 30, 1996 from $2.1 million for the three months ended September 30, 1995 due primarily to increased third party expenses associated with the development of CholestaGel[Registered Trademark] and RenaGel[Registered Trademark] (including production of clinical trial material, toxicology studies, clinical trial expenses and process development expense) and increases in research and development personnel costs. General and administrative expenses increased to $651,000 for the three months ended September 30, 1996 from $463,000 for the three months ended September 30, 1995 due primarily to increased business development expenses and increased administrative personnel. Interest income increased to $1.1 million for the three months ended September 30, 1996 from $150,000 for the three months ended September 30, 1995 due primarily to increases in cash balances attributable to the Company's sale of equity securities through its initial public offering in November 1995 and a follow-on public offering in May 1996. -8- 9 NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 The Company earned revenues of $487,000 under the Company's $2.0 million grant from the United States Department of Commerce's Advanced Technology Program and under the Company's collaborative agreement during the nine months ended September 30, 1996, compared with $85,000 earned under the grant during the nine months ended September 30, 1995. The Company's total operating expenses for the nine months ended September 30, 1996 were $14.7 million as compared to $5.9 million during the nine months ended September 30, 1995. Research and development expenses increased to $12.8 million for the nine months ended September 30, 1996 from $4.7 million for the nine months ended September 30, 1995 due primarily to increased third party expenses associated with the development of CholestaGel[Registered Trademark] and RenaGel[Registered Trademark] (including production of clinical trial material, toxicology studies, clinical trial expenses and process development expenses) and increases in research and development personnel costs. General and administrative expenses increased to $1.9 million for the nine months ended September 30, 1996 from $1.2 million for the nine months ended September 30, 1995 due primarily to increased business development expenses and increased administrative personnel costs. Interest income increased to $2.3 million for the nine months ended September 30, 1996 from $487,000 for the nine months ended September 30, 1995 due primarily to increases in cash balances attributable to the Company's sale of equity securities through its initial public offering in November 1995 and a follow-on public offering in May 1996. LIQUIDITY AND CAPITAL RESOURCES As of September 30, 1996, the Company had $82.0 million in cash, cash equivalents and marketable securities. The Company leases its administrative and research and development facilities under a long-term operating lease expiring in 2004 and certain leasehold improvements and equipment under capital leases expiring in 1997. In October 1995, the Company obtained a line of credit with a bank for $250,000 for the purchase of new equipment, which bears interest at the prime rate. This line of credit expired on June 30, 1996. As of September 30, 1996, $107,000 was outstanding on this line. This line, which is secured by equipment, requires the Company to maintain minimum cash balances and a minimum net worth and to repay any outstanding amounts in 33 equal monthly installments. The Company has no material commitments for capital expenditures as of September 30, 1996. The Company successfully completed a public offering of 2,875,000 shares of its Common Stock in May 1996. The Company believes that the cash and marketable securities balance at September 30, 1996, which includes the net proceeds from the aforementioned offering, and the interest income thereon, should be sufficient to fund its operating expenses and capital requirements as currently planned through 1998. The foregoing forward looking statement is based on the current expectations of the Company's management. There are certain factors that could cause results to differ from those anticipated by the preceeding statement, including, but not limited to: results of research and development, results of clinical trials, new relationships with strategic partners, changes in the focus and direction of the Company's research and development programs, the FDA regulatory process and other factors. - 9 - 10 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits. See the Exhibit Index on page 12 hereto. (b) Reports on Form 8-K. None. - 10 - 11 GELTEX PHARMACEUTICALS, INC. FORM 10-Q SEPTEMBER 30, 1996 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. GELTEX PHARMACEUTICALS, INC. DATE: November 8, 1996 BY: /s/ Mark Skaletsky --------------------------- Mark Skaletsky Duly Authorized Officer and Principal Financial Officer - 11 - 12 EXHIBIT INDEX ================================================================================ Exhibit Number Description Page 11.1 Statement re: computation of per 13 share earnings 27 Financial Data Schedule (filed with electronic submission only) ================================================================================ - 12 - EX-11.1 2 STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE 1 EXHIBIT 11.1 STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
Three Months Ended Nine Months Ended September 30, September 30, ------------- ------------- 1996 1995 1996 1995 ---- ---- ---- ---- Weighted average common shares outstanding ... 13,502,000 789,000 12,178,000 658,000 Effect of Convertible Preferred Stock -- assumed converted at date of issuance . -- 6,599,000 -- 6,599,000 Effect of Common and Common equivalent Shares issued by the Company during the twelve month period immediately preceding the Company's initial public offering in November 1995, as if they were outstanding for all periods presented prior to the inital public offering (using the treasury stock method) ........ -- -- -- 533,000 ------------ ----------- ------------ ----------- Shares used in computing net loss per share ....................... 13,502,000 7,388,000 12,178,000 7,790,000 Net loss ..................................... $ (5,349,407) $(2,430,861) $(12,021,489) $(5,432,055) ============ =========== ============ =========== Net loss per share ........................... $ (.40) $ (.33) $ (.99) $ (.70) ============ =========== ============ ===========
- 13 - EX-27 3 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 18,127 63,944 237 0 0 83,485 0 0 86,032 3,015 206 135 0 0 82,676 86,032 0 486 0 0 14,721 0 58 (12,021) 0 (12,021) 0 0 0 (12,021) (.99) (.99)
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