-----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, FWrcqW0oylZQUNhZDLozvoEhOwaz7DI681mtcKWLuK7KtNRUVWgY6KYD72xMKKom cGZEA4QX20HqWiqgOR5Yrg== 0000950123-98-001561.txt : 19980218 0000950123-98-001561.hdr.sgml : 19980218 ACCESSION NUMBER: 0000950123-98-001561 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980217 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: OSI PHARMACEUTICALS INC CENTRAL INDEX KEY: 0000729922 STANDARD INDUSTRIAL CLASSIFICATION: IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES [2835] IRS NUMBER: 133159796 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-15190 FILM NUMBER: 98541561 BUSINESS ADDRESS: STREET 1: 106 CHARLES LINDBERGH BLVD CITY: UNIONDALE STATE: NY ZIP: 11553 BUSINESS PHONE: 5162220023 MAIL ADDRESS: STREET 1: 106 CHARLES LINDBERGH BLVD CITY: UNIONDALE STATE: NY ZIP: 11553-3649 FORMER COMPANY: FORMER CONFORMED NAME: ONCOGENE SCIENCE INC DATE OF NAME CHANGE: 19920703 10-Q 1 FORM 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 1997. 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 0-15190 OSI Pharmaceuticals, Inc. (Exact name of registrant as specified in its charter) Delaware 13-3159796 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 106 Charles Lindbergh Boulevard, Uniondale, New York 11553 (Address of principal executive offices) (Zip Code) 516-222-0023 (Registrant's telephone number, including area code) (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. Yes X No___ APPLICABLE ONLY TO CORPORATE ISSUERS: At January 31, 1998 the registrant had outstanding 21,369,283 shares of common stock $.01 par value. 2 OSI PHARMACEUTICALS, INC. AND SUBSIDIARIES CONTENTS Page No. -------- PART I - FINANCIAL INFORMATION........................................... 3 Item 1. Financial Statements Consolidated Balance Sheets - December 31, 1997 and September 30, 1997...................... 3 Consolidated Statements of Operations - Three months ended December 31, 1997 and 1996................. 5 Consolidated Statements of Cash Flows - Three months ended December 31, 1997 and 1996................. 6 Notes to Consolidated Financial Statements...................... 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............................. 9 Item 3. Quantitative and Qualitative Disclosures About Market Risk...... 12 PART II - OTHER INFORMATION.............................................. 13 Item 1. Legal Proceedings............................................... 13 Item 2. Changes in Securities........................................... 13 Item 3. Defaults Upon Senior Securities................................. 13 Item 4. Submission of Matters to a Vote of Security Holders............. 13 Item 5. Other Information............................................... 13 Item 6. Exhibits and Reports on Form 8-K................................ 13 SIGNATURES............................................................... 15 EXHIBIT INDEX............................................................ 16 -2- 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS OSI PHARMACEUTICALS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
December 31, September 30, Assets 1997 1997 ----------- ----------- (unaudited) Current assets: Cash and cash equivalents $ 7,988,035 $ 8,636,634 Short-term investments 20,974,690 23,198,035 Receivables, including trade receivables of $257,626 and $350,100 at December 31, 1997 and September 30, 1997, respectively 1,857,264 1,215,672 Interest receivable 351,852 475,800 Grants receivable 260,994 179,740 Prepaid expenses and other 798,894 820,151 ----------- ----------- Total current assets 32,231,729 34,526,032 ----------- ----------- Property, equipment and leasehold improvements - net 7,762,339 7,752,286 Compound library assets - net 6,496,902 6,800,406 Loans to officers and employees 34,317 34,317 Other assets 1,434,352 1,287,782 Intangible assets - net 8,819,556 9,184,742 ----------- ----------- $56,779,195 $59,585,565 =========== =========== Liabilities and Stockholders' Equity Current liabilities: Accounts payable and accrued expenses $ 3,256,159 $ 4,180,039 Current portion of unearned revenue 1,207,884 733,377 ----------- ----------- Total current liabilities 4,464,043 4,913,416 ----------- ----------- Other liabilities: Loan payable 134,263 151,985 Deferred acquisition costs 640,826 630,796 Accrued postretirement benefits cost 994,796 944,500 ----------- ----------- Total liabilities 6,233,928 6,640,697 ----------- -----------
(continued) -3- 4 OSI PHARMACEUTICALS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (CONTINUED)
December 31, September 30, Liabilities and Stockholders' Equity (cont'd) 1997 1997 ------------- ------------- (unaudited) Stockholders' equity: Common stock, $.01 par value; 50,000,000 shares authorized, 22,267,121 and 22,262,220 issued and outstanding at December 31, 1997 and September 30, 1997, respectively 222,671 222,622 Additional paid-in capital 104,885,283 104,864,056 Treasury stock, at cost 897,838 shares at December 31, 1997 and September 30, 1997 (6,284,866) (6,284,866) Accumulated deficit (48,126,443) (45,657,713) Cumulative translation adjustments (67,478) (101,531) Unrealized holding loss on short-term investments (83,900) (97,700) ------------- ------------- Total stockholders' equity 50,545,267 52,944,868 ------------- ------------- Commitments and contingencies $ 56,779,195 $ 59,585,565 ============= =============
See accompanying notes to consolidated financial statements. -4- 5 OSI PHARMACEUTICALS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended December 31, ------------------------------ 1997 1996 ------------ ------------ Revenues: Collaborative program revenues, principally from related parties $ 3,507,426 $ 1,833,182 Sales 198,766 276,710 Other research revenue 480,431 204,897 ------------ ------------ 4,186,623 2,314,789 ------------ ------------ Expenses: Research and development 4,881,891 3,474,333 Selling, general and administrative 1,784,263 1,768,856 Amortization of intangibles 365,186 365,185 ------------ ------------ 7,031,340 5,608,374 ------------ ------------ Loss from operations (2,844,717) (3,293,585) Other income (expense): Net investment income 401,237 603,458 Other (25,250) (6,327) ------------ ------------ Net loss $ (2,468,730) $ (2,696,454) ============ ============ Weighted average number of shares of common stock outstanding 21,366,603 22,176,112 ============ ============ Basic net loss per share $ (.12) $ (.12) ============ ============
See accompanying notes to consolidated financial statements. -5- 6 OSI PHARMACEUTICALS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended December 31, --------------------------- 1997 1996 ----------- ----------- Cash flows from operating activities: Net loss $(2,468,730) $(2,696,454) Adjustments to reconcile net loss to net cash used by operating activities: Gain (loss) on sale of investments (4,764) (6,411) Depreciation and amortization 450,243 404,804 Amortization of library assets 450,739 275,376 Amortization of intangibles 365,186 365,185 Amortization of warrants 10,030 -- Foreign exchange (gain) loss 34,053 14,309 Changes in assets and liabilities: Receivables (641,592) (601,991) Interest receivable 123,948 (5,870) Grants receivable (81,254) (204,897) Prepaid expenses and other 21,257 (37,307) Other assets (146,570) (225,060) Accounts payable and accrued expenses (923,880) (664,679) Unearned revenue 474,507 (49,227) Accrued postretirement benefits cost 50,296 10,896 ----------- ----------- Net cash used by operating activities $(2,286,531) $(3,421,326) ----------- ----------- Cash flows from investing activities: Additions to short-term investments $(2,907,127) $(2,269,650) Maturities and sales of short-term investments 5,149,036 5,851,675 Additions to library assets (147,235) -- Additions to property, equipment and leasehold improvements (460,296) (476,411) ----------- ----------- Net cash provided by investing activities $ 1,634,378 $ 3,105,614 ----------- -----------
(continued) -6- 7 OSI PHARMACEUTICALS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (UNAUDITED)
Three Months Ended December 31, ------------------------------- 1997 1996 ------------ ------------ Cash flows from financing activities: Proceeds from exercise of stock options and employee stock purchase plan $ 21,276 $ 50,210 Net change in loans payable (17,722) 148,899 ------------ ------------ Net cash provided by financing activities $ 3,554 $ 199,109 ------------ ------------ Net decrease in cash and cash equivalents (648,599) (116,603) Cash and cash equivalents at beginning of period $ 8,636,634 $ 13,409,866 ------------ ------------ Cash and cash equivalents at end of period $ 7,988,035 $ 13,293,263 ============ ============
See accompanying notes to consolidated financial statements. -7- 8 OSI PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (1) Basis of Presentation In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position of OSI Pharmaceuticals, Inc. and its subsidiaries (the "Company") as of December 31, 1997 and September 30, 1997, and its results of operations and cash flows for the three months ended December 31, 1997 and 1996. Certain reclassifications have been made to the prior period financial statements to conform them to the current presentation. It is recommended that these consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto in the Company's 1997 Annual Report on Form 10-K. Results for interim periods are not necessarily indicative of results for the entire year. (2) Net Loss Per Share Effective December 31, 1997, the Company adopted the provisions of Statement of Financial Accounting Standards No. 128, "Earnings Per Share," which replaced the calculation of primary and fully diluted earnings per share with basic and diluted earnings per share. Basic loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding during the period. Diluted loss per share is not presented as the inclusion of potential common shares (stock options and warrants) would be antidilutive. -8- 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THREE MONTHS ENDED DECEMBER 31, 1997 AND 1996 REVENUES Revenues for the three months ended December 31, 1997 were approximately $4.2 million, an increase of $1.9 million or 81%, compared to revenues of $2.3 million for the three months ended December 31, 1996. Collaborative program revenues increased approximately $1.7 million or 91%. This was largely due to new collaborative research and license agreements with each of: (1) Hoechst Marion Roussel, Inc. ("HMRI"), to develop orally active, small molecule drugs for the treatment of chronic anemia; (2) Sankyo Company, Ltd.("Sankyo") to discover and develop novel pharmaceutical products to treat influenza; (3) Bayer Corporation ("Bayer") for the continuing development of serum-based cancer diagnostics; and (4) Anaderm Research Corp. ("Anaderm") for the commencement on October 1, 1997, of the funded phase of the research agreement among the Company, Anaderm and Pfizer Inc. ("Pfizer"). The increase in revenues was partially offset by a decrease in revenues related to the completion on December 31, 1996 of the funded discovery phase of the Company's collaborative program with Wyeth-Ayerst Laboratories relating to the discovery and development of drugs for the treatment of diabetes and osteoporosis. Sales revenue, representing primarily service revenue from the pharmaceutical division of the Company's Aston Molecules Ltd. ("Aston") subsidiary, which the Company acquired in September 1996, decreased approximately $78,000 or 28%. The decrease was primarily due to the Company's decision to devote certain of Aston's resources to internal programs as opposed to sales outside the Company. Other research revenues, representing primarily government and other research grants, increased approximately $276,000 or 134%. The increase was primarily related to new government grants and to the inclusion of a Muscular Dystrophy grant from the Association Francaise Contre Les Myopathies. EXPENSES The Company's operating expenses increased by approximately $1.4 million or 25% for the three months ended December 31, 1997, compared to the three months ended December 31, 1996. Research and development expenses increased approximately $1.4 million or 41%. The increase was due to the expansion of the Company's joint venture with Anaderm for the discovery and development of novel compounds to treat baldness, wrinkles and pigmentation disorders; the new joint venture with Sepracor, Inc. ("Sepracor") for the discovery of certain anti-infective and anti-inflammatory agents, and the new collaborative agreement with Sankyo for the discovery and development of novel pharmaceutical products to treat influenza. Although the Company incurred expenses in connection with its chronic anemia program with HMRI, these expenses generally were offset (relative to the comparable periods in the prior fiscal year) by the elimination of expenditures with respect to the Company's former proprietary program in this area. Also contributing to the increase in expenses were costs associated with the expansion of the Company's natural products discovery and medicinal -9- 10 chemistry operations at its MYCOsearch, Inc. ("MYCOsearch") and Aston subsidiaries as well as amortization of MYCOsearch's library of fungal cultures. The Company acquired MYCOsearch in April 1996. OTHER INCOME AND EXPENSE Investment income decreased approximately $202,000 or 34% for the three months ended December 31, 1997 compared to the three months ended December 31, 1996. The decrease relates to the decrease in the principal balance invested. LIQUIDITY AND CAPITAL RESOURCES At December 31, 1997, working capital (representing primarily cash, cash equivalents and short-term investments) aggregated approximately $27.8 million. The Company is dependent upon collaborative research revenues, government research grants, interest income and cash balances, and will remain so until products developed from its technology are successfully commercialized. In connection with the formation of Helicon Therapeutics, Inc. ("Helicon") in July 1997, the Company agreed to perform $1 million of molecular screening services for Helicon through approximately July 1998 (and grant to Helicon a non-exclusive license with respect to certain screening technology) in exchange for its shares of Helicon's capital stock. Helicon is to provide research funding to the Company for the second and third years of the initial three-year term of this program. In addition, pursuant to its agreement with Pfizer and Anaderm, the Company will contribute approximately $800,000 in drug discovery resources (including assay biology, high throughput screening, lead optimization and chemistry) to Anaderm in fiscal 1998 and, assuming Anaderm achieves certain milestones, approximately an additional $1 million in such resources through fiscal 1999. The Company believes that with the funding from its collaborative research programs, government research grants, interest income, and cash balances, its financial resources are adequate for its operations for approximately the next three to four years based on its current business plan even if no milestone payments or royalties are received during this period. However, the Company's capital requirements may vary as a result of a number of factors, including, but not limited to, competitive and technological developments, funds required for further expansion or enhancement of the Company's technology platform, (including possible additional joint ventures, collaborations and acquisitions), potential milestone payments, and the time and expense required to obtain governmental approval of products, some of which factors are beyond the Company's control. One of the Company's strategic objectives is to manage its financial resources and the growth of its drug discovery and development programs so as to balance its proprietary efforts and co-ventures with its funded collaborations. In pursuing this objective, the Company has expanded the scope of its discovery and development activities without significantly increasing its rate of cash consumption. An example of this was the conversion of the Company's chronic anemia -10- 11 program from an exclusively proprietary effort to a funded collaboration with HMRI in the second quarter of fiscal 1997. This made additional resources formerly allocated to the proprietary chronic anemia program available for other proprietary programs and co-ventures without requiring an increase in the rate of cash consumption. The Company expects to continue its current level of expenditures and capital investment over the next several years to enhance its drug discovery technologies, pursue internal proprietary drug discovery programs, and to commit resources to co-ventures with pharmaceutical companies. Examples of the Company's co-ventures with pharmaceutical companies include the formation of Helicon in July 1997 with Cold Spring Harbor Laboratory and Hoffman-La Roche Inc., the formation of Anaderm in April 1996 with Pfizer and New York University, and the Company's co-ventures with BioChem Pharma (International) Inc., which commenced in May 1996, and with Sepracor, which commenced in March 1997. Generally the Company expects to commit greater resources to such programs in exchange for greater commercialization rights, as compared to its traditional collaborative research programs in which the Company receives research funding and royalties on sales of commercialized products. If the developmental activities on which one or more of these ventures are focused are successful, then the Company will be required to make substantial additional capital investment in such venture(s) in order to maintain its percentage participation. There can be no assurance that scheduled payments will be made by third parties, that current agreements will not be canceled, that government research grants will continue to be received at current levels, that milestone payments will be made, or that unanticipated events requiring the expenditure of funds will not occur. Further, there can be no assurance that the Company will be able to obtain any additional required funds on acceptable terms, if at all. Failure to obtain additional funds when required would have a material adverse effect on the Company's business, financial condition and results of operations. YEAR 2000 COMPLIANCE The Company is currently working to resolve the potential impact of the Year 2000 on the processing of date-sensitive information by the Company's computerized information systems. The Year 2000 problem is the result of computer programs being written using two digits (rather than four) to define an applicable year. Substantially all of the Company's biology and chemistry databases are stored on Oracle tables and ISIS chemical structure databases, which are Year 2000 compliant, as are its Novell network servers. The Company currently plans to convert its financial records to an Oracle based system and is in the process of implementing a new planning and budgeting package both of which are Year 2000 compliant. Based on current information, costs of addressing remaining potential problems are not expected to have a material adverse impact on the Company's financial position, results of operations, or cash flows in future periods. -11- 12 NEW ACCOUNTING PRONOUNCEMENTS In 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income," SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," and SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits." SFAS No. 130 establishes standards for reporting and display of comprehensive income and its components. SFAS No. 131 establishes standards for reporting information about operating segments and related disclosures about products and services, geographic areas and major customers. SFAS No. 132 revises current disclosure requirements for employers' pensions and other retiree benefits. These standards are effective for years beginning after December 15, 1997. These standards expand or modify current disclosures and, accordingly, will have no impact on the Company's reported financial position, results of operations and cash flows. FORWARD LOOKING STATEMENTS A number of the matters and subject areas discussed in this report that are not historical or factual deal with potential future circumstances and developments. The discussion of such matters and subject areas is qualified by the inherent risks and uncertainties surrounding future expectations generally, and such discussion may materially differ from the Company's actual future experience involving any one or more of such matters and subject areas. Various factors that may cause the Company's actual future experience to differ materially from the descriptions contained in future looking statements herein are discussed in Exhibit 99 to the Company's annual report on Form 10-K for the fiscal year ended September 30, 1997. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable. -12- 13 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Not applicable. ITEM 2. CHANGES IN SECURITIES Not applicable. ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. ITEM 5. OTHER INFORMATION Not applicable. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS 3.1 Certificate of Incorporation, as amended 3.2 By-Laws, as amended (1) 27 Financial Data Schedule ------------------------------- (1) Included as an exhibit to the Company's registration statement on Form S-3 (File No. 333-937) initially filed on February 14, 1996, and incorporated herein by reference. -13- 14 (b) REPORTS ON FORM 8-K The Company filed a Current Report on Form 8-K on October 6, 1997. The earliest event covered by such report occurred on October 1, 1997. The item included on this report consisted of: Item 5. Other Events Effective October 1, 1997, the Company changed its name and Nasdaq National Market Symbol to OSI Pharmaceuticals, Inc. and "OSIP," respectively. -14- 15 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. OSI PHARMACEUTICALS, INC. Date: February 13, 1998 /s/ Gary E. Frashier -------------------------------- Gary E. Frashier Chairman and Chief Executive Officer Date: February 13, 1998 /s/ Robert L. Van Nostrand -------------------------------- Robert L. Van Nostrand Vice President and Chief Financial Officer -15- 16 EXHIBIT INDEX Exhibit No. Description ----------- ----------- 3.1 Certificate of Incorporation, as amended 3.2 By-Laws, as amended (1) 27 Financial Data Schedule - ---------- (1) Included as an exhibit to the Company's registration statement on Form S-3 (File No. 333-937) initially filed on February 14, 1996, and incorporated herein by reference. -16- EX-3.1 2 CERTIFICATE OF INCORPORATION 1 CERTIFICATE OF OWNERSHIP AND MERGER MERGING OSI Pharmaceuticals, Inc. INTO Oncogene Science, Inc. (Pursuant to Section 253 of the General Corporation Law of Delaware) Oncogene Science, Inc., a Delaware corporation (the "Corporation"), does hereby certify: FIRST: That the Corporation is incorporated pursuant to the General Corporation Law of the State of Delaware. SECOND: That the Corporation owns all of the outstanding shares of each class of the capital stock of OSI Pharmaceuticals, Inc., a Delaware corporation. THIRD: That the Corporation, by the following resolutions of its Board of Directors, duly adopted at a meeting thereof held on June 11, 1997, determined to merge OSI Pharmaceuticals, Inc. into itself on the conditions set forth in such resolutions: RESOLVED, that the Corporation authorizes the formation of a subsidiary under the Delaware General Corporation Law to be named OSI Pharmaceuticals, Inc. and to be wholly-owned by the Corporation; and further RESOLVED, that effective October 1, 1997, the subsidiary shall be merged with and into the Corporation, with the Corporation to be the surviving corporation, and, upon the effective date of the merger, the name of the surviving corporation shall be changed to OSI Pharmaceuticals, Inc.; and further RESOLVED, that the officers of the Corporation be, and they hereby are, authorized, empowered and directed to take such actions as 2 shall be necessary or appropriate to effectuate the foregoing resolutions. FOURTH: That this certificate of ownership and merger shall not become effective until 12:01 a.m. Eastern Time on October 1, 1997. IN WITNESS WHEREOF, Oncogene Science, Inc. has caused its corporate seal to be affixed hereto and this certificate to be signed by Robert L. Van Nostrand, its authorized officer, this 26th day of September, 1997. [SEAL] ONCOGENE SCIENCE, INC. By: /s/ Robert L. Van Nostrand ------------------------------- Robert L. Van Nostrand Vice President and Chief Financial Officer 2 3 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF ONCOGENE SCIENCE, INC. I, the President of Oncogene Science, Inc., a corporation organized and existing under the laws of the State of Delaware (the "Corporation"), do hereby certify that (i) Article Fourth of the Corporation's Certificate of Incorporation has been amended in its entirety to read as set forth below, and (ii) such amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. FOURTH. The total number of shares of stock that the Corporation shall have authority to issue is 50,000,000 shares of common stock, having a par value of $.01 per share, all of the same class. IN WITNESS WHEREOF, I have hereunto set my hand and seal as of the 31st day of March, 1993. (Corporate Seal) Attest: /s/ Theresa R. Dragone /s/ Gary E. Frashier (SEAL) - ---------------------------- ---------------------------- Theresa R. Dragone Gary E. Frashier, President Secretary 4 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF ONCOGENE SCIENCE, INC. Adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware We, the President and Secretary of ONCOGENE SCIENCE, INC., a corporation existing under the laws of the State of Delaware, do hereby certify as follows: FIRST: That Article IX of the Certificate of Incorporation of said corporation has been amended in its entirety to read as follows: ARTICLE IX INDEMNIFICATION AND INSURANCE SECTION 1. Right to Indemnification. Each person who was or is made a party or is threatened to be made a party to or is involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative ("Proceeding"), by reason of the fact that he, or a person of whom he is the legal representative, is or was the director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such Proceeding is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity -1- 5 while serving as a director, officer, employee or agent, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended (out, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such amendment), against all expenses, liability and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith; provided, however, that the Corporation shall indemnify any such person seeking indemnity in connection with a Proceeding (or part thereof) initiated by such person only if the proceeding (or part thereof) was authorized by the Board of Directors of the Corporation. The right to indemnification conferred in this Section 1 shall be a contract right and shall include the right to be paid by the Corporation expenses incurred in defending any such Proceeding in advance of its final disposition; provided, however, that if the Delaware General Corporation Law requires, the payment of such expenses incurred by a director or officer in his capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of such Proceeding, shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it should be determined ultimately that such director of officer is not entitled to be indemnified under this Section or otherwise. SECTION 2. Non-Exclusivity of Rights. The rights conferred on any person by Section 1 shall not be exclusive of any other right which such person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, by-laws, agreement, vote of stockholders or disinterested directors, or otherwise. SECTION 3. Limitation of Liability of Directors. A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach -2- 6 of fiduciary duty as a director except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. SECTION 4. Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any such director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any such expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law. SECOND: That such amendment has been duly adopted in accordance with the provisions of the General Corporation Law of the State of Delaware by the affirmative vote of the holders of not less than a majority of the outstanding stock entitled to vote thereon. IN WITNESS WHEREOF, we have signed this certificate this 9th day of April, 1987. /s/ Robert E.Ivy -------------------------- Robert E. Ivy, President ATTEST: /s/ Gary Takata -------------------------- Gary Takata, Secretary -3- 7 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF ONCOGENE SCIENCE, INC. Adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware We, the President and Secretary of ONCOGENE SCIENCE, INC., a corporation existing under the laws of the State of Delaware, do hereby certify as follows: FIRST: That Article FOURTH of the Certificate of Incorporation of said corporation has been amended in its entirety to read as follows: "FOURTH. The total number of shares of stock which the Corporation shall have authority to issue is 20,000,000 shares of common stock, of the par value of $.01 per share, all of the same class." SECOND: That such amendment has been duly adopted in accordance with the provisions of the General Corporation Law of the State of Delaware by the written consent of the holders of not less than a majority of the outstanding stock entitled to vote thereon and that written notice of the corporation action has been given to those stockholders who have not consented in writing, all in accordance with the provisions of Section 228 of the General Corporation Law. 8 IN WITNESS WHEREOF, we have signed this certificate this 18th day of January, 1986. /s/ Robert E. Ivy -------------------------- Robert E. Ivy, President ATTEST: /s/ Gary Takata -------------------------- Gary Takata, Secretary -2- 9 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF ONCOGENE SCIENCE, INC. (a Delaware corporation) Adopted in accordance with the provisions of Section 241 of the General Corporation Law of the State of Delaware THE UNDERSIGNED, Steven Gelles, sole incorporator of ONCOGENE SCIENCE, INC., does hereby certify: FIRST: That the Certificate of Incorporation of ONCOGENE SCIENCE, INC. (the "Corporation") was filed in the office of the Secretary of State of Delaware on March 6, 1983 and a certified copy thereof was recorded in the office of the Recorder of Kent County, Delaware on March 16, 1983. SECOND: That the Corporation has not received payment for its stock. THIRD: That the Certificate of Incorporation of the Corporation is amended as follows: (i) By striking out paragraph FIRST thereof as it now exists and inserting in lieu thereof ARTICLE I, reading as follows: ARTICLE I NAME The name of the corporation is ONCOGENE SCIENCE, INC. 10 (ii) By striking out paragraph SECOND thereof as it now exists and inserting in lieu thereof ARTICLE II, reading as follows: ARTICLE II REGISTERED OFFICE AND REGISTERED AGENT The registered office of the Corporation in the State of Delaware is located at 229 South State Street, City of Dover, County of Kent. The name and the address of the registered agent of the Corporation in the State of Delaware is The Prentice-Hall Corporation System, Inc., 229 South State Street, Dover, Delaware. (iii) By striking out paragraph THIRD thereof as it now exists and inserting in lieu thereof ARTICLE III, reading as follows: ARTICLE III CORPORATE PURPOSES AND POWERS The nature of the business of the Corporation, or the objects or purposes to be transacted, promoted or carried on by the Corporation are any and all lawful acts or activities for which corporations may be organized under the General Corporation Law of Delaware, including but not limited to research and development, manufacture, production, purchase or acquisition, and sale, licensing, leasing, or disposition of materials, supplies, substances, chemicals or equipment used or useful in the field of biotechnology or in any other field in which such materials, supplies, substances, chemicals or equipment may profitably be used. (iv) By striking out paragraph FOURTH thereof as it now exists and inserting in lieu thereof ARTICLE IV, reading as follows: ARTICLE IV CAPITAL STOCK The amount of the total authorized capital stock of this Corporation is One Hundred Thousand Dollars ($100,000) consisting of Ten Million (10,000,000) common shares, with a par value of one cent ($.01) each. (v) By striking out paragraph FIFTH thereof as it now exists and inserting in lieu thereof ARTICLE V, reading as follows: -2- 11 ARTICLE V INCORPORATOR The name and mailing address of the sole incorporator of the Corporation is: Name Address Steven Gelles 122 East 42nd Street Suite 606 New York, New York 10168 (vi) By adding thereto additional ARTICLES VI - XI, reading as follows: ARTICLE VI POWERS OF BOARD OF DIRECTORS In addition to and not in limitation of the powers conferred by statute, the board of directors of the Corporation expressly is authorized: (a) To make, adopt, alter, amend or repeal the by-laws, except as otherwise expressly provided in any by-law adopted by the holders of Capital Stock of the Corporation entitled to vote thereon. Any by-law may be altered, amended or repealed by the holders of Capital Stock of the Corporation entitled to vote thereon at any annual meeting or at any special meeting called for that purpose; (b) To authorize and cause to be executed mortgages, liens, and other security interests upon the real and personal property of the Corporation; (c) To determine the use and disposition of any surplus and net profits of the Corporation including, without limitation by specification, the determination of the amount of working capital required by the Corporation, to set apart out of any of the funds of the Corporation, whether or not available for dividends, a reserve or reserves for any proper purpose and to abolish any such reserve in the manner in which it was created; (d) To designate, by resolution passed by a majority of the members of the board of directors, one or more committees, each consisting of two or more directors of the Corporation which, to the extent provided in the resolution designating -3- 12 the committee or provided in the by-laws of the Corporation, have and may exercise, subject to the provisions of the General Corporation Law of Delaware, all the powers and authority of the board of directors in the management of the business and affairs of the Corporation. Such committee or committees may authorize the seal of the Corporation to be affixed to all papers which may require it. Such committee or committees shall have such name or names as may be provided in the by-laws of the Corporation or as may be determined from time to time by resolution adopted by the board of directors; (e) To grant rights or options entitling the holders thereof to purchase from the Corporation shares of its Capital Stock evidenced by or in such instrument or instruments as shall be approved by the board of directors. The terms upon which, the time or times at or within which, the persons to whom, and the price or prices at which any such rights or options may be issued and any shares of Capital Stock may be purchased from the Corporation upon the exercise of any such right or option shall be such as shall be fixed in a resolution or resolutions adopted by the board of directors providing for the creation and issuance of such rights or options. In the absence of actual fraud in the transaction, the judgment of the board of directors as to the consideration for the issuance of such rights or options and the sufficiency thereof shall be conclusive. No such rights or options shall be invalidated or in any way affected by the fact that any director shall be a grantee thereof or shall vote for the issuance of such rights or options to himself or for any plan pursuant to which he may receive any such rights or options; (f) To adopt such plans as from time to time may be approved by the board of directors for the purchase by officers or employees of the Corporation and of any corporation either affiliated with or a subsidiary of the Corporation of shares of Capital Stock of the Corporation. The terms upon which, the time or times at or within which and the price or prices at which shares of Capital Stock may be purchased from the Corporation pursuant to such plan shall be fixed in the plan by the board of directors. No such plan which is not at the time of adoption unreasonable or unfair shall be invalid or in any way affected because any director shall be entitled to purchase shares of Capital Stock of the Corporation thereunder and shall vote for such plan; (g) To adopt or assume and carry out such plans as from time to time may be approved by the board of directors for the distribution among the officers or employees of the Corporation and of any corporation which is affiliated with or a subsidiary of the Corporation, or any of them, in addition to their regular salaries, of part of the earnings of the Corporation, in consideration for or in recognition of services rendered by such officers or employees or as an inducement to future efforts. No such -4- 13 plan which is not at the time of adoption or assumption unreasonable or unfair shall be invalidated or in any way affected because any director shall be a beneficiary thereunder or shall vote for any plan under which he may benefit or for any distribution thereunder in which he may participate; (h) To adopt such pension, profit sharing, retirement, deferred compensation or other employee benefit plans or provisions as may, from time to time, be approved by the board of directors, providing for pensions, profit sharing, retirement income, deferred compensation or other benefits for officers or employees of the Corporation and of any corporation which is affiliated with or a subsidiary of the Corporation, or any of them, in consideration for or in recognition of the services rendered by such officers or employees or as an inducement to future efforts. No such plan or provision, which is not at the time of adoption unreasonable or unfair shall be invalidated or in any way affected because any director shall be a beneficiary thereunder or shall vote for any plan or provision under which he may benefit; and (i) To exercise, in addition to the powers and authorities herein or by law conferred upon the board of directors, any such powers and authorities and do all such acts and things as may be exercised or done by the Corporation subject, nevertheless, to the provisions of the General Corporation Law of Delaware, this certificate of incorporation and any by-laws from time to time adopted by the holders of Capital Stock of the Corporation entitled to vote thereon. ARTICLE VII MEETINGS AND CONSENTS OF STOCKHOLDERS AND DIRECTORS; CORPORATION BOOKS; ELECTIONS OF DIRECTORS; AND NOTICES Meetings of holders of Capital Stock of the Corporation and of the board of directors and of any committee thereof may be held outside the State of Delaware if the by-laws so provide. Except as otherwise provided by law or by this certificate of incorporation, any action required to be taken at any annual, or special meeting of stockholders of the Corporation or any action which may be taken at any annual or special meeting of such stockholders may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding Capital Stock having not less than the minimum number of votes that would be necessary to authorize or to take such action at a meeting at which all shares of Capital Stock entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. Any action required or permitted to be taken -5- 14 at any meeting of the board of directors or of any committee thereof may be taken without a meeting as provided by statute if the by-laws of the Corporation so provide. Except as otherwise provided by law, the books of the Corporation may be kept outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the by-laws of the Corporation. The elections of directors need not be by ballot unless the by-laws of the Corporation so provide. Any notice permitted or required by this certificate of incorporation shall be written, signed by the sender and mailed, postage prepaid, in the United States by certified or registered mail. ARTICLE VIII TRANSACTIONS WITH DIRECTORS AND OFFICERS No contract or transaction between the Corporation and one or more of its directors or officers or between the Corporation and any other corporation, partnership, association or other organization, in which one or more of its directors or officers are directors or officers or have a financial interest, shall be void or voidable solely for such reason or solely because the director or officer is present at or participates in the meeting of the board of directors or committee thereof which authorizes the contract or transaction or solely because his or their votes are counted for such purpose if: (a) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the board of directors or the committee and the board of directors or the committee in good faith authorizes the contract or transaction by the affirmative vote of a majority of the disinterested directors even though the disinterested directors may be less than a quorum; or (b) the material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (c) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified by the board of directors, a committee thereof or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the stockholders or the board of directors or of a committee which authorizes the contract or transaction. ARTICLE IX INDEMNIFICATION AND INSURANCE SECTION 1. Indemnification by Corporation. (a) Any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than action by or in the right of the -6- 15 Corporation) by reason of the fact that he is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall be indemnified by the Corporation, unless similar indemnification is provided by such other corporation or organization which may be involved (any funds received by any person as a result of the provisions of this Article shall be deemed an advance against his receipt of any such other indemnification from any such other corporation or organization), against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. Any such person who could be indemnified pursuant to the preceding sentence except for the fact that the subject action or suit is or was by or in the right of the Corporation shall be indemnified by the Corporation against expenses (including attorneys' fees) actually and reasonably incurred by him, in connection with the defense or settlement of such action or suit except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duties to the Corporation unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper; (b) To the extent that a director, officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in paragraph (a) of this Section 1 or in defense of any claim, issue or matter therein, he shall be indemnified by the Corporation against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith without the necessity of any action being taken by the Corporation other than the determination, in good faith, that such defense has been successful. In all other cases wherein indemnification is provided by this Article, unless ordered by a court, indemnification shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct specified in this Article. Such determination shall be made: (1) By the board of directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding; or (2) if such a quorum is not obtainable or, even if obtainable, a quorum of disinterested directors so directs, by independent -7- 16 legal counsel in a written opinion; or (3) by the holders of a majority of the Capital Stock outstanding; (c) The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent shall not create, of itself, a presumption that the person seeking indemnification did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. Entry of a judgment by consent as part of a settlement shall not be deemed final adjudication of liability for negligence or misconduct in the performance of duty or of any other issue or matter; (d) Expenses incurred in defending a civil or criminal action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding as authorized by the board of directors in the specific case upon receipt of an undertaking by the director, officer, employee or agent involved to repay such amount unless it ultimately shall be determined that he is entitled to be indemnified by the Corporation; and (e) The indemnification provided in this Article shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in an official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such person. SECTION 2. Insurance. By action of the board of directors, notwithstanding any interest of the directors in the action, the Corporation may purchase and maintain insurance, in such amounts as the board of directors deems appropriate, on behalf of any person who is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity or arising out of his status as such, whether or not the Corporation shall have the power to indemnify him against such liability under the provisions of this Article. -8- 17 ARTICLE X COMPROMISE OR ARRANGEMENT BETWEEN CORPORATION AND ITS CREDITORS OR STOCKHOLDERS Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and/or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this Corporation under the provisions of Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this Corporation under the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this Corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this Corporation, as the case may be, and also on this Corporation. ARTICLE XI RESERVATION OF RIGHT TO AMEND CERTIFICATE OF INCORPORATION The Corporation reserves the right to amend, alter, change or repeal any provisions contained in this certificate of incorporation in the manner now or hereafter prescribed by law and by this certificate of incorporation. All the provisions of this certificate of incorporation and all rights and powers conferred in this certificate of incorporation on stockholders, directors and officers are subject to such reserved power. FOURTH: That such amendment has been duly adopted in accordance with the provision of Section 241 of the General Corporation Law of the State of Delaware. -9- 18 IN WITNESS WHEREOF, I have signed this certificate this 15th day of April, 1983. /s/ Steven Gelles -------------------- STEVEN GELLES -10- 19 CERTIFICATE OF INCORPORATION OF ONCOGENE SCIENCE, INC. FIRST: The name of this Corporation is ONCOGENE SCIENCE, INC. SECOND: Its Registered Office in the State of Delaware is to be located at 600 Bay Road, in the City of Dover, Zip Code 19901. The Registered Agent in charge thereof is Ms. Pam Goldsborough. THIRD: The purpose of the Corporation is to perform research and to develop, manufacture, produce, purchase or otherwise acquire, and to sell, license, lease or otherwise dispose of materials, supplies, substances, chemicals or equipment used or useful in the field of Biotechnology or in any other field in which such materials, supplies, substances, chemicals or equipment may be profitably used and to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. FOURTH: The amount of the total authorized capital stock of this Corporation is One Hundred Thousand Dollars ($100,000) divided into Ten Million (10,000,000) shares, of One Cent ($.01) each. FIFTH: The name and mailing address of the incorporator are as follows: Name: Steven Gelles Mailing Address: 122 East 42nd Street, Suite 606 Zip Code: New York, New York 10168 I, THE UNDERSIGNED, for the purpose of forming a Corporation under the laws of the State of Delaware, do make, file and record this Certificate, and do certify that the facts herein stated are true, and I have accordingly hereto set my hand this Tenth day of March, 1983. /s/ Steven Gelles - ---------------------------- ---------------------------- - ---------------------------- EX-27.1 3 FINANCIAL DATA SCHEDULE
5 3-MOS SEP-30-1997 OCT-01-1997 DEC-31-1997 7,988,035 20,974,690 1,966,785 109,521 0 32,231,729 18,588,772 10,826,433 56,779,195 4,464,043 0 0 0 222,671 50,322,596 56,779,195 480,431 4,186,623 0 7,031,340 25,250 0 3,583 (2,468,730) 0 0 0 0 0 (2,468,730) (0.12) (0.12)
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