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 MARCH 31, 2003
¨ 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 0-23223
CURAGEN CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware |
06-1331400 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
| 555 Long Wharf Drive, 11th Floor, New Haven, Connecticut |
06511 | |||
| (Address of principal executive office) |
(Zip Code) |
Registrant’s telephone number, including area code: (203) 401-3330
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 ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes x No ¨
The number of shares outstanding of the Registrant’s common stock as of April 30, 2003 was 49,464,121.
CURAGEN CORPORATION AND SUBSIDIARY
FORM 10-Q
INDEX
CURAGEN CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value and share data)
| March 31, 2003 |
December 31, 2002 |
|||||||
| (unaudited) |
||||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ |
67,228 |
|
$ |
68,401 |
| ||
| Short-term investments |
|
162,001 |
|
|
198,301 |
| ||
| Marketable securities |
|
165,772 |
|
|
148,107 |
| ||
| Cash and investments |
|
395,001 |
|
|
414,809 |
| ||
| Income taxes receivable |
|
1,620 |
|
|
2,359 |
| ||
| Other current assets |
|
158 |
|
|
275 |
| ||
| Prepaid expenses |
|
4,015 |
|
|
3,405 |
| ||
| Total current assets |
|
400,794 |
|
|
420,848 |
| ||
| Property and equipment, net |
|
23,474 |
|
|
24,336 |
| ||
| Other assets |
|
290 |
|
|
245 |
| ||
| Intangible assets, net |
|
3,205 |
|
|
3,100 |
| ||
| Total assets |
$ |
427,763 |
|
$ |
448,529 |
| ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ |
3,404 |
|
$ |
2,426 |
| ||
| Accrued expenses |
|
1,848 |
|
|
2,539 |
| ||
| Accrued payroll and related items |
|
791 |
|
|
2,300 |
| ||
| Interest payable, short-term |
|
1,500 |
|
|
3,750 |
| ||
| Deferred revenue |
|
2,818 |
|
|
2,610 |
| ||
| Current portion of obligations under capital leases |
|
1,192 |
|
|
1,511 |
| ||
| Other current liabilities |
|
1,187 |
|
|
1,501 |
| ||
| Total current liabilities |
|
12,740 |
|
|
16,637 |
| ||
| Long-term liabilities: |
||||||||
| Convertible subordinated debt |
|
150,000 |
|
|
150,000 |
| ||
| Obligations under capital leases, net of current portion |
|
84 |
|
|
263 |
| ||
| Total long-term liabilities |
|
150,084 |
|
|
150,263 |
| ||
| Commitments and contingencies |
||||||||
| Minority interest in subsidiary |
|
8,781 |
|
|
10,125 |
| ||
| Stockholders’ equity: |
||||||||
| Common Stock; $.01 par value, issued and outstanding 49,444,231 shares at March 31, 2003, and 49,362,463 shares at December 31, 2002 |
|
494 |
|
|
494 |
| ||
| Treasury Stock, at cost; 12,500 shares at March 31, 2003 and December 31, 2002 |
|
(49 |
) |
|
(49 |
) | ||
| Additional paid-in capital |
|
484,109 |
|
|
483,824 |
| ||
| Accumulated other comprehensive income |
|
3,637 |
|
|
3,357 |
| ||
| Accumulated deficit |
|
(231,137 |
) |
|
(214,995 |
) | ||
| Unamortized stock-based compensation |
|
(896 |
) |
|
(1,127 |
) | ||
| Total stockholders’ equity |
|
256,158 |
|
|
271,504 |
| ||
| Total liabilities and stockholders’ equity |
$ |
427,763 |
|
$ |
448,529 |
| ||
See accompanying notes to condensed consolidated financial statements
3
CURAGEN CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
| Three Months Ended |
||||||||
| 2003 |
2002 |
|||||||
| Revenue: |
||||||||
| Collaboration revenue |
$ |
1,944 |
|
$ |
4,812 |
| ||
| Total revenue |
|
1,944 |
|
|
4,812 |
| ||
| Operating expenses: |
||||||||
| Research and development |
|
14,460 |
|
|
20,134 |
| ||
| General and administrative |
|
4,950 |
|
|
5,934 |
| ||
| Total operating expenses |
|
19,410 |
|
|
26,068 |
| ||
| Loss from operations |
|
(17,466 |
) |
|
(21,256 |
) | ||
| Interest income |
|
2,333 |
|
|
2,990 |
| ||
| Interest expense |
|
(2,475 |
) |
|
(2,584 |
) | ||
| Interest income (expense), net |
|
(142 |
) |
|
406 |
| ||
| Loss before income taxes and minority interest in subsidiary loss |
|
(17,608 |
) |
|
(20,850 |
) | ||
| Income tax benefit |
|
117 |
|
|
535 |
| ||
| Minority interest in subsidiary loss |
|
1,349 |
|
|
684 |
| ||
| Net loss |
($ |
16,142 |
) |
($ |
19,631 |
) | ||
| Basic and diluted net loss per share |
$ |
(0.33 |
) |
$ |
(0.40 |
) | ||
| Weighted average number of shares used in computing basic and diluted net loss per share |
|
49,159 |
|
|
48,804 |
| ||
See accompanying notes to condensed consolidated financial statements
4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| Three Months Ended |
||||||||
| 2003 |
2002 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net loss |
($ |
16,142 |
) |
($ |
19,631 |
) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
| Depreciation and amortization |
|
2,024 |
|
|
2,451 |
| ||
| Non-monetary compensation |
|
240 |
|
|
— |
| ||
| Stock-based 401(k) employer plan match |
|
244 |
|
|
260 |
| ||
| Minority interest |
|
(1,349 |
) |
|
(684 |
) | ||
| Changes in assets and liabilities: |
||||||||
| Income taxes receivable |
|
739 |
|
|
(535 |
) | ||
| Other current assets |
|
117 |
|
|
494 |
| ||
| Prepaid expenses |
|
(610 |
) |
|
(633 |
) | ||
| Other assets |
|
(35 |
) |
|
15 |
| ||
| Accounts payable |
|
978 |
|
|
(592 |
) | ||
| Accrued expenses |
|
(691 |
) |
|
1,602 |
| ||
| Accrued payroll and related items |
|
(1,508 |
) |
|
(1,463 |
) | ||
| Interest payable |
|
(2,250 |
) |
|
(2,250 |
) | ||
| Deferred revenue |
|
208 |
|
|
379 |
| ||
| Other current liabilities |
|
(314 |
) |
|
— |
| ||
| Net cash used in operating activities |
|
(18,349 |
) |
|
(20,587 |
) | ||