SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
- - Act of 1934: For the quarterly period ended April 30, 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: 0-27756
ALEXION PHARMACEUTICALS, INC.
-----------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 13-3648318
--------------- ----------------
(State or other (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or
organization)
25 SCIENCE PARK, SUITE 360, NEW HAVEN, CONNECTICUT 06511
--------------------------------------------------------
(Address of principal executive offices) (Zip Code)
203-776-1790
------------
(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 ___
---
CLASS OUTSTANDING AT JUNE 9, 1997
------------------------------- ----------------------------
Common Stock, $0.0001 par value 7,389,537
Page 1 of 15
ALEXION PHARMACEUTICALS, INC.
(A Development Stage Company)
INDEX
Page
----
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets as of April 30, 1997 and July 31, 1996 3
Statements of Operations for the three and nine months
ended April 30, 1997 and 1996 and for the period from
inception January 28, 1992 to April 30, 1997 4
Statements of Cash Flows for the nine months ended
April 30, 1997 and 1996 and for the period from inception
January 28, 1992 to April 30, 1997 5
Notes to Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 10
PART II. OTHER INFORMATION 14
SIGNATURES 15
Page 2 of 15
ALEXION PHARMACEUTICALS, INC.
(A Development Stage Company)
BALANCE SHEETS
April 30, 1997 July 31, 1996
-------------- -------------
ASSETS (UNAUDITED)
Current Assets:
Cash and cash equivalents $ 7,442,566 $ 9,491,217
Marketable securities 6,251,927 9,106,534
Prepaid expenses 433,041 466,731
----------- -----------
Total current assets 14,127,534 19,064,482
----------- -----------
Equipment, net of accumulated
depreciation and amortization 738,293 592,271
----------- -----------
Other Assets:
License technology rights, net 264,366 330,365
Patent application costs, net 178,559 194,004
Organization costs, net 0 5,280
Security deposits and other assets 264,162 267,578
----------- -----------
Total other assets 707,087 797,227
----------- -----------
TOTAL ASSETS $15,572,914 $20,453,980
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of notes payable $205,665 $322,508
Current obligations under capital leases 14,547 28,593
Accounts payable 335,483 280,913
Accrued expenses 364,962 400,577
Deferred revenue 665,300 1,000,000
----------- -----------
Total current liabilities 1,585,957 2,032,591
----------- -----------
Notes Payable, less current portion included above 0 128,264
----------- -----------
Obligations under Capital Leases, less
current portion included above 398 8,200
----------- -----------
Stockholders' Equity:
Series A convertible preferred stock $.0001 par value; 0 0
5,000,000 shares authorized; no shares issued and
outstanding at January 31, 1997 and July 31, 1996
Common stock $.0001 par value; 25,000,000 shares 738 733
authorized; 7,382,412 and 7,334,909 shares issued
at April 30, 1997 and July 31, 1996
Additional paid-in capital 43,080,238 42,858,975
Deficit accumulated during development stage (29,094,315) (24,574,681)
Deferred offering costs 0 0
Treasury stock, at cost; 11,875 shares (102) (102)
----------- -----------
Total stockholders' equity 13,986,559 18,284,925
----------- -----------
TOTAL LIABILITIES AND NET EQUITY $15,572,914 $20,453,980
=========== ===========
See accompanying notes to financial statements.
Page 3 of 15
ALEXION PHARMACEUTICALS, INC.
(A Development Stage Company)
Statements of Operations
(UNAUDITED)
January 28, 1992
Three months ended April 30, Nine months ended April 30, (inception)
--------------------------- --------------------------- through
1997 1996 1997 1996 April 30, 1997
----------- ----------- ----------- ----------- ----------------
CONTRACT RESEARCH REVENUES $ 621,027 $ 767,885 $2,869,766 $1,837,798 $ 5,646,096
---------- ---------- ---------- ---------- -----------
OPERATING EXPENSES:
Research and Development 2,013,321 1,685,270 5,908,372 $4,456,806 27,063,200
General and Administrative 700,169 440,297 2,107,530 1,190,142 8,798,396
---------- ---------- ---------- ---------- -----------
Total Operating Expenses 2,713,490 2,125,567 8,015,902 5,646,948 35,861,596
---------- ---------- ---------- ---------- -----------
OPERATING LOSS (2,092,463) (1,357,682) (5,146,136) (3,809,150) (30,215,500)
---------- ---------- ---------- ---------- -----------
OTHER INCOME (EXPENSE), Net 186,643 144,839 626,502 177,226 1,121,185
---------- ---------- ---------- ---------- -----------
NET LOSS ($1,905,820) ($1,212,843) ($4,519,634) ($3,631,924) ($29,094,315)
========== ========== ========== ========== ===========
NET LOSS PER COMMON SHARE (Note 3) ($0.26) ($0.18) ($0.62) ($0.70)
========== ========== ========== ==========
SHARES USED IN COMPUTING NET
LOSS PER COMMON SHARE 7,366,687 6,652,398 7,345,582 5,216,377
========== ========== ========== ==========
See accompanying notes to financial statements.
Page 4 of 15
ALEXION PHARMACEUTICALS, INC.
(A Development Stage Company)
Statements of Cash Flows
(UNAUDITED)
January 28, 1992
Nine months ended April 30 (inception)
----------------------------- through
1997 1996 April 30, 1997
-------------- ------------ ----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss ($4,519,634) ($3,631,924) ($29,094,315)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 532,395 653,086 2,929,971
Compensation expense related to grant of stock 0 0 122,500
options
Net realized loss (gain) on marketable securities 0 0 45,390
Change in assets and liabilities:
Prepaid expenses 33,690 (218,582) (433,041)
Accounts payable 54,570 (38,048) 335,483
Accrued expenses (35,615) (184,931) 364,962
Deferred revenue (334,700) (665,700) 665,300
---------- ---------- -----------
Net cash used in operating activities (4,269,294) (4,086,099) (25,063,750)
CASH FLOWS FROM INVESTING ACTIVITIES:
(Purchases of) Proceeds from marketable securities, net 2,854,612 0 (6,263,153)
Purchases of equipment (569,220) (226,921) (2,741,963)
Licensed technology costs 0 0 (615,989)
Patent application costs (22,473) (30,494) (358,277)
Organization costs 0 0 (63,530)
---------- ---------- -----------
Net cash (used in) provided by investing activities 2,262,919 (257,415) (10,042,912)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of preferred and common stock 221,263 18,473,883 41,770,946
Advances from stockholder 0 0 1,200,000
Repayments of capital lease obligations (21,848) (76,635) (363,119)
Borrowings under notes payable 0 0 1,179,135
Repayments of notes payable (245,107) (238,165) (973,470)
Security deposits and other assets 3,416 183,638 (264,162)
Repurchase of common stock 0 0 (102)
---------- ---------- -----------
Net cash provided by (used in) financing activities (42,276) 18,342,721 42,549,228
---------- ---------- -----------
NET INCREASE (DECREASE) IN CASH (2,048,651) 13,999,207 7,442,566
CASH at beginning of period 9,491,217 5,079,212 0
---------- ---------- -----------
CASH AT END OF PERIOD $7,442,566 $19,078,419 $ 7,442,566
========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid (refunded) for income taxes ($7,950) $0 $22,734
========== =========== ===========
Cash paid for interest expense $41,299 $86,563 $447,264
========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITIES
Conversion of advances from stockholder into common stock $0 $0 $1,200,000
========== =========== ===========
Equipment acquired pursuant to capital lease obligations $0 $0 $378,064
========== =========== ===========
Deferred offering costs accrued $0 $0 $0
========== =========== ===========
See accompanying notes to financial statements.
Page 5 of 15
ALEXION PHARMACEUTICALS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Operations and Basis of Presentation -
Alexion Pharmaceuticals, Inc. ("Alexion" or the "Company") was organized in
January 1992 and is engaged in the research and development of proprietary
immunoregulatory compounds for the treatment of cardiovascular disorders
(perioperative bleeding and inflammation associated with cardiopulmonary bypass,
myocardial infarction, and stroke) and autoimmune diseases (multiple sclerosis,
lupus nephritis, rheumatoid arthritis). As an outgrowth of its core
technologies, the Company is developing, in collaboration with third parties
(see Note 5), non-human organ ("xenograft" organs) products designed for
transplantation into humans without clinical rejection and immunoprotected
retroviral vectors and producer cells for gene therapy.
The Company is in the development stage and is devoting substantially all of its
efforts toward product research and development. The Company has incurred losses
since inception and has cumulative net losses of approximately $29.1 million
through April 30, 1997. The Company has made no product sales to date and has
recognized cumulative revenues from research support funding and licensing
aggregating $5.6 million through April 30, 1997. During 1996, the Company
completed an initial public offering ("IPO") of 2,530,000 shares of common stock
resulting in net proceeds of approximately $18.4 million (see Note 6). In
addition, the Company has received various grants to fund certain research
activities (see Note 5).
The Company will need additional financing to obtain regulatory approvals, fund
early operating losses, and, if deemed appropriate, establish a manufacturing,
sales, and marketing capability. In addition to normal risks associated with
development stage companies, there can be no assurance that the Company's
research and development will be successfully completed, that the results of the
Company's preclinical studies and early clinical trials will be indicative of
future large-scale clinical trial results and predict or prove safety or
efficacy in humans, that the rate of patient enrollment in the Company's
clinical trials will be sufficient to enable clinical trials of the Company's
product candidates to be completed in a timely manner, that adequate patent
protection for the Company's technology will be obtained, that any products
developed will obtain necessary government regulatory approval or that any
approved products will be commercially viable. In addition, the Company operates
in an environment of rapid change in technology, substantial competition from
pharmaceutical and biotechnology companies and is dependent upon the services of
its employees and its consultants.
The Company expects to incur substantial expenditures in the foreseeable future
for the research and development and commercialization of its products. The
Company will require funds in addition to those previously described, which it
will seek to raise through public or private equity or debt financings,
collaborative or other arrangements with corporate sources, or through other
sources of financing. The Company has no banking or other capital sources and no
arrangements or commitments with regards to obtaining any further funds.
The financial statements included herein have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission ("SEC") and include, in the opinion of management, all
adjustments, consisting of normal, recurring
Page 6 of 15
ALEXION PHARMACEUTICALS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
adjustments, necessary for a fair presentation of interim period results.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. The
results for the interim periods presented are not necessarily indicative of
results to be expected for any future period. It is suggested that these
condensed financial statements be read in conjunction with the audited financial
statements and notes thereto included in the Company's Form 10-K Annual Report
for the fiscal year ended July 31, 1996.
2. Cash and Cash Equivalents and Marketable Securities -
Cash and cash equivalents are stated at cost, which approximates market, and
include short-term highly liquid investments with original maturities of less
than three months.
The Company invests in marketable securities of highly rated financial
institutions and investment-grade debt instruments and limits the amount of
credit exposure with any one entity. The Company follows Statement of Financial
Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt
and Equity Securities." Pursuant to this Statement, the Company has classified
its marketable securities as "available for sale" and, accordingly, carries such
securities at aggregate fair value. Unrealized gains or losses are included in
stockholders' equity as a component of additional paid-in capital.
3. Net Loss Per Share -
Net loss per common share is computed using the weighted average number of
common shares outstanding during the period. Common equivalent shares from stock
options and warrants are excluded from the computation as their effect is
antidilutive, except pursuant to the requirements of the SEC. Pursuant to these
requirements, common stock issued by the Company during the 12 months
immediately preceding the initial public offering, plus shares of common stock
which became issuable during the same period pursuant to the grant of common
stock options and warrants, have been included in the calculation of weighted
average number of common shares outstanding for the period from August 1, 1995
to April 30, 1996 using the treasury stock method. The inclusion of additional
shares assuming the conversion of Series A convertible preferred stock into
common stock would have been antidilutive for all periods presented and,
accordingly, has been excluded from the computation of net loss per common
share.
4. Revenue Recognition -
Contract research revenues are recognized as the related work is performed under
the terms of the contracts and expenses for development activities are incurred.
License fee payments are recognized as revenue upon receipt. Any revenue
contingent upon future funding by the Company is deferred and recognized as the
future funding is expended. Any revenues resulting from the achievement of
milestones would be recognized when the milestone is achieved.
Page 7 of 15
ALEXION PHARMACEUTICALS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
5. Contract Research and License Fee Revenues -
Contract research revenues recorded by the Company consist of: (1) research and
development support under separate collaborations with United States Surgical
Corporation ("US Surgical") and Genetics Therapy Inc. ("GTI/Novartis"), a wholly
owned subsidiary of Novartis; (2) Small Business Innovation Research ("SBIR")
grants awarded in July 1995, September 1995, and January 1997 from the National
Institutes of Health ("NIH"), and (3) funding from the Commerce Department's
National Institute of Standards and Technology ("NIST").
License fee revenues represent non-refundable payments received in accordance to
contractual agreements for various access and rights to the Company's
technologies, research, potential products and markets.
In January 1997, the Company announced that it had entered into an agreement
with GTI/Novartis. The Company granted to GTI/Novartis exclusive worldwide
rights to use the Company's technology to develop and market immunoprotected
retroviral gene therapy products for direct in vivo gene therapy. Terms of the
agreement call for the Company to receive upfront license fees, research
payments and milestone payments totaling up to $10 million. In addition, the
Company would also receive royalties on net sales of such products.
In January 1997, the Company was awarded a Phase I SBIR grant for approximately
$100,000 from the National Heart, Lung, and Blood Institute of the NIH to
support preclinical efficacy of the Company's C5 complement inhibitors in the
treatment of myocardial infarction.
In September 1995, the Company was awarded a Phase II SBIR grant for
approximately $750,000 over two years from the NIH to support research and
clinical development of the Company's product to treat complications of
cardiovascular surgery.
In August 1995, the Company was awarded funding from NIST under its Advanced
Technology Program ("ATP"). Through the ATP, the Company may receive up to
approximately $2 million over three years to support the Company's UniGraft
program in universal donor organs for transplantation.
In July 1995, the Company entered into a research and development agreement with
US Surgical. US Surgical agreed to fund preclinical development of the Company's
xenotransplant products in return for exclusive worldwide manufacturing,
marketing and distribution rights of such products by paying the Company up to
$7.5 million allocated as follows: (1) up to $4.0 million of the cost of
preclinical development in four semi-annual installments of up to $1.0 million
(the first installment of which was paid on July 31, 1995), and (2) $3.5 million
upon achieving certain milestones. In furtherance of this joint collaboration,
US Surgical also purchased $4.0 million of the Company's common stock.
Page 8 of 15
ALEXION PHARMACEUTICALS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
6. Initial Public Offering -
During fiscal year 1996, the Company completed an initial public offering of
2,530,000 shares of common stock at a price of $8.25 per share of common stock,
par value of $0.0001, resulting in net proceeds of approximately $18.4 million.
In connection with the Company's IPO, the preferred stockholders converted all
of their shares into 794,554 shares of common stock.
In connection with the Company's public offering, the Company sold to its
underwriter for nominal consideration, warrants to purchase from the Company
220,000 shares of common stock. These warrants are initially exercisable at a
price of $9.90 per share for a period of forty-two (42) months commencing on
August 27, 1997.
Page 9 of 15
ALEXION PHARMACEUTICALS, INC.
(A Development Stage Company)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This report contains forward looking statements which involve risks and
uncertainties. Such statements are subject to certain factors and uncertainties
which may cause the Company's plans to differ. Factors and uncertainties that
may cause such differences include, but are not limited to, the rate of
progress, if any, of the Company's research and development programs, the
Company's ability to compete successfully, the Company's ability to attract and
retain qualified personnel, the Company's ability to successfully enter into
collaborations with third parties, the Company's ability to enter into and
progress in clinical trials, the time and costs involved in obtaining regulatory
approvals, the costs involved in obtaining and enforcing patents and any
necessary licenses, the ability of the Company to establish development and
commercialization relationships and strategic alliances with third parties, the
cost of manufacturing, the Company's ability to obtain additional funds, and
those other risks discussed in the Company's Registration Statement
(Registration No. 333-19905 filed April 4, 1997) and Annual Report or Form 10-K
for the fiscal year ended July 31, 1996.
OVERVIEW
Since its inception in January 1992, Alexion has devoted substantially all of
its resources to its drug discovery, research and product development programs.
To date, the Company has not received any revenues from the sale of products.
The Company has been unprofitable since inception, and expects to incur
substantial and increasing operating losses for the next several years due to
expenses associated with product research and development, preclinical and
clinical testing, regulatory activities and manufacturing development and
scale-up. For the period from inception to April 30, 1997, the Company incurred
a cumulative net loss of approximately $29.1 million.
The Company's plan is to develop and commercialize on its own those product
candidates for which the clinical trial and marketing requirements can be funded
by the Company. For certain of the Company's C5 Inhibitor and Apogen products
for which greater resources will be required, Alexion's strategy is to form
corporate partnerships with major pharmaceutical companies for product
development and commercialization. While there can be no assurance as to the
terms of future corporate partnerships, if any, for licensed applications, a
corporate partner would likely be expected to bear the substantial cost and much
of the manpower-intensive effort of clinical development, scale-up production,
seeking U.S. Food and Drug Administration ("FDA") approval and marketing.
Alexion has entered into strategic alliances with United States Surgical
Corporation ("US Surgical") with respect to the Company's UniGraft program and
with Genetics Therapy Inc. ("GTI/Novartis"), a wholly-owned subsidiary of
Novartis, with respect to the Company's immunoresistant retroviral vector
program. The Company intends to seek additional strategic alliances with major
pharmaceutical companies.
The Company recognizes research and development revenues when the development
expenses are incurred and the related work is performed under the terms of the
contracts. Any revenue contingent upon future funding by the Company is deferred
and recognized as the future funding is
Page 10 of 15
ALEXION PHARMACEUTICALS, INC.
(A Development Stage Company)
expended. Any revenues resulting from the achievement of milestones would be
recognized when the milestone is achieved.
RESULTS OF OPERATIONS
Three Months Ended April 30, 1997
Compared with Three Months Ended April 30, 1996
The Company's contract research and license revenues decreased to $621,000 for
the three months ended April 30, 1997 from $768,000 for the same period ended
April 30, 1996. The decrease of $147,000 was due primarily to lower recognized
grant revenues due to decreased reimbursable research expenses. Contract
research revenues for the three months ended April 30, 1997 represent primarily
the Company's collaborative research and development agreements with US Surgical
and GTI/Novartis, pursuant to which the Company recognized revenues of $484,000
and $100,000, respectively. The balance of $37,000 of revenues represented
funding received from the National Institute of Health ("NIH") and from the
Commerce Department's National Institute of Standards and Technology ("NIST").
Research and development expenses increased to $2,013,000 for the three months
ended April 30, 1997 from $1,685,000 for the three months ended April 30, 1996.
The increase of $328,000 resulted principally from incurred costs related to the
clinical trials of the Company's lead C5 Inhibitor, 5G1.1-SC, expanded
preclinical development and manufacturing process development costs for the
Company's recombinant product candidates, and increased external research
related to preclinical development of the Company's xenotransplant products.
General and administrative related expenses increased to $700,000 for the three
months ended April 30, 1997 from $440,000 for the same period ended April 30,
1996. The increase of $260,000 was due primarily to external professional fees
which accounted for approximately $155,000, representing patent and legal fees,
investor and shareholder relations fees, business development fees and
recruiting fees. The approximately $105,000 balance of the increase was
attributable principally to facilities expansion and to increased travel and
administrative expenses related to the Company's increased clinical and
regulatory activities and presentations at scientific conferences.
The Company earned other income, net, of $187,000 for the three months ended
April 30, 1997 as compared to other income, net, of $145,000 for the three
months ended April 30, 1996. This other income, net, resulted principally from
greater interest income from higher cash balances available for investment and
decreased interest expense associated with maturing notes payable and maturing
capital equipment leases used to finance the purchase of certain equipment.
As a result of the above factors, the Company incurred a net loss of $1,906,000
for the three months ended April 30, 1997 as compared to a net loss of
$1,213,000 for the same three month period in 1996.
Page 11 of 15
ALEXION PHARMACEUTICALS, INC.
(A Development Stage Company)
Nine Months Ended April 30, 1997
Compared with Nine Months Ended April 30, 1996
The Company's earned contract research and license revenues increased to
$2,870,000 for the nine months ended April 30, 1997 from $1,838,000 for the nine
months ended April 30, 1996. The increase of $1,032,000 was due primarily to the
receipt of an upfront license fee received from GTI/Novartis in the amount of
$850,000. Contract research revenues for the nine months ended April 30, 1997
represent principally the Company's collaborative research and development
agreements with US Surgical and GTI/Novartis, $1,420,000 and $983,000,
respectively, and the Company's research funding from the NIH and the Commerce
Department's NIST, $197,000 and $270,000, respectively.
During the nine months ended April 30, 1997 and 1996, the Company expended
$5,908,000 and $4,457,000, respectively, on research and development activities.
The increase of 33% or $1,451,000 resulted principally from costs incurred
related to the clinical trials of the Company's lead C5 Inhibitor, 5G1.1-SC,
manufacturing validation costs, expanded preclinical development and
manufacturing process development costs for the Company's recombinant product
candidates, and increased external research related to preclinical development
of the Company's xenotransplant products.
General and administrative expenses increased to $2,108,000 for the nine months
ended April 30, 1997 from $1,190,000 for the nine months ended April 30, 1996.
The increase of $918,000 was due principally to external professional fees which
accounted for approximately $590,000, representing patent and legal fees,
investor and shareholder relation fees, business development fees and recruiting
fees. The approximately $328,000 balance of the increase was attributable
principally to facilities expansion, to increased travel and administrative
expenses related to the Company's increased clinical and regulatory activities
and presentations at scientific conferences, and to increased insurance costs as
public company.
Other income, net was $627,000 for the nine months ended April 30, 1997 as
compared to other income, net of $177,000 for same period a year ago. This other
income, net was due primarily to greater interest income from higher cash
balances available for investment.
As a result of the above factors, the Company's net loss increased to $4,520,000
from $3,632,000 for the nine months ended April 30, 1997 and 1996, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, the Company has financed its operations and capital
expenditures primarily through private placements and its initial public
offering of equity securities resulting in aggregate net proceeds of
approximately $41.8 million. The Company has financed the purchase of certain
equipment through $1.2 million of secured notes payable to a financing
institution and $378,000 of capital lease obligations. Through April 1997, the
Company has received approximately $5.0 million in research and development
support and license fees under its collaborations with US Surgical and
GTI/Novartis. The Company has also received $748,000 from its SBIR grants from
the NIH and $516,000 under the ATP from NIST, respectively, through April 1997.
Page 12 of 15
ALEXION PHARMACEUTICALS, INC.
(A Development Stage Company)
The proceeds of the Company's initial public offering, private placements, notes
payable and capital leases, and the cash generated from the corporate
collaborations and SBIR and ATP grants have been used to fund operating
activities of approximately $25.1 million and investments of approximately $2.7
million in equipment and $974,000 in licensed technology rights and patents
through April 30, 1997. As of April 30, 1997, the Company had cash, cash
equivalents and marketable securities of approximately $13.7 million.
Primarily as a result of approximately $4.5 million of operating losses, the
Company used approximately $4.3 million of cash in its operating activities
during the nine months ended April 30, 1997. These funds were provided by (i)
cash flows from investing activities generated primarily from net proceeds of
maturing marketable securities of approximately $2.9 million which were offset
by purchases of equipment of $569,000, (ii) cash flows from financing activities
generated from the net proceeds from issuance of common stock resulting from
warrant and stock option exercises, aggregating $221,000, offset by repayments
of notes payable and capital lease obligations, aggregating $267,000, used to
finance the purchase of equipment, and (iii) the use of approximately $2.0
million of cash balances which were on hand at July 31, 1996. At April 30, 1997,
approximately $7.4 million of cash is held in short-term highly liquid
investments with original maturities of less than three months.
The Company leases its administrative and research and development facilities
under three operating leases expiring in December 1997, June 1998, and March
1999, respectively, each with an option for up to an additional three years.
The Company anticipates that its existing available capital resources and
interest earned on available cash and marketable securities should be sufficient
to fund its operating expenses and capital requirements as currently planned for
at least the next twelve months. While the Company currently has no material
commitments for capital expenditures, the Company's future capital requirements
will depend on many factors, including the progress of the Company's research
and development programs, progress in clinical trials - including safety,
efficacy and timely completion, the time and costs involved in obtaining
regulatory approvals, the costs involved in obtaining and enforcing patents and
any necessary licenses, the ability of the Company to establish development and
commercialization relationships, and the costs of manufacturing scale-up.
The Company expects to incur substantial additional costs, including costs
associated with research, preclinical and clinical testing, manufacturing
process development, contract manufacturing, and additional capital expenditures
associated with facility expansion and manufacturing requirements in order to
commercialize its products currently under development. The Company will need to
raise substantial additional funds through additional financings including
public or private equity or debt offerings and collaborative research and
development arrangements with corporate partners. There can be no assurance that
funds will be available on terms acceptable to the Company, if at all, or that
discussions with potential collaborative partners will result in any agreements.
The unavailability of additional financing could require the Company to delay,
scale back or eliminate certain of its research and product development programs
or to license third parties to commercialize products or technologies that the
Company would otherwise undertake itself, any of which could have a material
adverse effect on the Company.
Page 13 of 15
ALEXION PHARMACEUTICALS, INC.
(A Development Stage Company)
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
10.1 Employment Agreement, dated April 1, 1997, between the Company
and Dr. Leonard Bell (Incorporated by reference from the Company's
Registration Statement on Form S-1 (File No. 333-19905) filed on
April 4, 1997).
Page 14 of 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.
ALEXION PHARMACEUTICALS, INC.
Date: June 12, 1997 By: /s/ LEONARD BELL, M.D.
---------------------------------------
Leonard Bell, M.D.
President and Chief Executive Officer,
Secretary and Treasurer (principal
executive officer)
Date: June 12, 1997 By: /s/ DAVID W. KEISER
---------------------------------------
David W. Keiser
Executive Vice President and Chief
Operating Officer (principal
financial officer)
Date: June 12, 1997 By: /s/ BARRY P. LUKE
---------------------------------------
Barry P. Luke
Senior Director of Finance and
Administration (principal accounting
officer)
Page 15 of 15
5
1,000
9-MOS
AUG-01-1996
JUL-31-1997
APR-30-1997
7,443
6,252
0
0
0
14,128
3,120
(2,382)
15,573
1,586
0
0
0
1
13,987
15,573
0
2,870
0
8,016
0
0
(627)
(4,528)
(8)
(4,520)
0
0
0
(4,520)
(0.62)
(0.62)
