MYOGEN INC - 10-Q Quarterly Report

7575 West 103rd Avenue, Suite 102
Westminster, CO 80021
(303) 410-6666
(Address, including zip code, and telephone number,
including area code, of principal executive offices)

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.

Check whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

As of December 3, 2003 there were 26,457,927 shares of the Registrant’s Common Stock outstanding, par value $0.001 per share.


		Page
		Number

PART I. Financial Information			3
ITEM 1.	Consolidated Financial Statements (unaudited)		3
	Consolidated Balance Sheets— as of December 31, 2002 and September 30, 2003		3
	Consolidated Statements of Operations— for the three and nine months ended September 30, 2002 and 2003 and the cumulative period from June 10, 1996 (date of inception) through September 30, 2003		4
	Consolidated Statements of Cash Flows— for the nine months ended September 30, 2002 and 2003 and the cumulative period from June 10, 1996 (date of inception) through September 30, 2003		5
	Consolidated Statements of Stockholders’ Deficit– for the nine months ended September 30, 2003		6
	Notes to Consolidated Financial Statements		7
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		13
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk		26
ITEM 4.	Controls and Procedures		27
PART II. Other Information			28
ITEM 1.	Legal Proceedings		28
ITEM 2.	Changes in Securities and Use of Proceeds		28
ITEM 3.	Defaults Upon Senior Securities		29
ITEM 4.	Submission of Matters to a Vote of Security Holders		29
ITEM 5.	Other Information		30
ITEM 6.	Exhibits and Reports on Form 8-K		30
SIGNATURE			31
EXHIBIT INDEX			32

MYOGEN, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
CONSOLIDATED BALANCE SHEETS
(Unaudited)


				September 30,			December 31,
				2003			2002

				(Unaudited)
			ASSETS
Current assets:
	Cash and cash equivalents			$	7,239,045		$	6,993,146
	Short-term investments				43,062,015			26,804,619
	Accounts receivable				1,240,418			741,852
	Inventories, net				833,552			860,200
	Prepaid expenses and other current assets				616,144			1,018,353

		Total current assets			52,991,174			36,418,170
Property and equipment, net					1,255,298			1,691,931
Other assets					34,290			33,590

		Total assets		$	54,280,762		$	38,143,691

LIABILITIES, MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT
Current liabilities:
	Accounts payable			$	5,419,441		$	2,748,647
	Accrued liabilities				1,023,625			938,102
	Current portion of capital lease obligations				35,762			25,968
	Current portion of notes payable, net of discount				1,733,943			954,004

		Total current liabilities			8,212,771			4,666,721
Capital lease obligations, net of current portion					130,877			106,870
Notes payable, net of current portion and discount					2,287,525			3,633,152
Commitments and contingencies
Mandatorily redeemable convertible preferred stock					158,084,965			106,565,591
Stockholders’ deficit:
	Series B convertible preferred stock, $0.001 par value, 810,000 shares authorized and 803,606 shares issued and outstanding as of December 31, 2002 and September 30, 2003; aggregate liquidation preference of $1,104,958 as of December 31, 2002 and September 30, 2003				804			804
	Common stock, $0.001 par value; 17,375,000 and 24,221,913 shares authorized and 1,024,361 and 1,055,294 shares issued and outstanding as of December 31, 2002 and September 30, 2003, respectively				1,057			1,025
	Deferred stock-based compensation				(8,676,149	)		(1,726,692	)
	Other comprehensive income				23,357			225,420
	Deficit accumulated during the development stage				(105,784,445	)		(75,329,200	)

		Total stockholders’ deficit			(114,435,376	)		(76,828,643	)

		Total liabilities, mandatorily redeemable convertible preferred stock and stockholders’ deficit		$	54,280,762		$	38,143,691

The accompanying notes are an integral part of these consolidated financial statements.

MYOGEN, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)


															Cumulative
															Period from
			For the Three Months Ended						For the Nine Months Ended						June 10, 1996
			September 30,						September 30,						(Inception) to
			2002			2003			2002			2003			September 30, 2003

Sales			$	635,229		$	707,013		$	1,657,128		$	2,071,823		$	6,649,824
Cost of product sold				224,783			220,192			661,001			654,138			2,455,679

Gross profit				410,446			486,821			996,127			1,417,685			4,194,145

Operating expenses:
	Research and development (excluding stock-based compensation expense of $184,176, $501,467, $207,201, $1,243,861 and $1,726,682, respectively)			8,421,399			7,052,067			17,698,708			24,621,961			75,977,053
	Selling, general and administrative (excluding stock-based compensation expense of $106,970, $339,949, $106,970, $862,441 and $1,112,846, respectively)			1,460,212			662,738			3,706,544			2,564,309			16,016,423
	Stock-based compensation expense			291,146			841,416			314,171			2,106,302			2,839,528

		Total operating expenses		10,172,757			8,556,221			21,719,423			29,292,572			94,833,004

Loss from operations				(9,762,311	)		(8,069,400	)		(20,723,296	)		(27,874,887	)		(90,638,859	)
Interest income (expense), net				251,589			(55,125	)		744,103			(63,379	)		2,472,507

Loss before income taxes				(9,510,722	)		(8,124,525	)		(19,979,193	)		(27,938,266	)		(88,166,352	)
Income taxes				7,199			5,530			10,779			16,165			37,616

Net loss				(9,517,921	)		(8,130,055	)		(19,989,972	)		(27,954,431	)		(88,203,966	)
Accretion of mandatorily redeemable convertible preferred stock				(3,670,935	)		(4,243,618	)		(11,012,805	)		(11,583,987	)		(30,896,369	)
Deemed dividend related to beneficial conversion feature of preferred stock				—			(39,935,388	)		—			(39,935,388	)		(39,935,388	)

Net loss attributable to common stockholders			$	(13,188,856	)	$	(52,309,061	)	$	(31,002,777	)	$	(79,473,806	)	$	(159,035,723	)

Basic and diluted net loss per common share			$	(12.95	)	$	(50.29	)	$	(30.27	)	$	(76.99	)

Weighted average common shares outstanding				1,018,718			1,040,108			1,024,361			1,032,200

The accompanying notes are an integral part of these consolidated financial statements.

MYOGEN, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)


										Cumulative
				For the Nine Months Ended						Period From
				September 30,						June 10, 1996
										(Inception) to
				2002			2003			September 30, 2003

Cash Flows From Operating Activities:
Net loss				$	(19,989,972	)	$	(27,954,431	)	$	(88,203,966	)
Adjustments to reconcile net loss to net cash used in operating activities:
	Depreciation and amortization				208,573			307,013			905,726
	Amortization of deferred stock-based compensation				314,171			2,106,302			2,839,528
	Amortization of debt discount				2,939			103,211			114,026
	Amortization of investment premium				165,901			25,560			188,709
	Stock exchanged for license				—			—			1,163,229
	Loss on disposal of property and equipment				22,638			11,951			34,589
	Changes in operating assets and liabilities:
		Accounts receivable			(688,172	)		88,667			(556,735	)
		Inventories			34,533			26,648			(833,552	)
		Prepaid expenses and other assets			395,591			(191,822	)		(1,200,010	)
		Accounts payable			566,072			2,523,938			5,287,833
		Accrued liabilities			825,759			79,277			785,392

			Net cash used in operating activities		(18,141,969	)		(22,873,687	)		(79,475,231	)

Cash Flows From Investing Activities:
Acquisitions of property and equipment					(925,383	)		(144,511	)		(2,305,427	)
Proceeds from sale of property and equipment					14,272			317,921			332,193
Purchases of short-term investments					(54,808,311	)		(51,194,633	)		(259,733,257	)
Proceeds from maturities of short-term investments					56,419,984			34,945,379			216,666,424

			Net cash provided by (used in) investing activities		700,562			(16,075,844	)		(45,040,067	)

Cash Flows From Financing Activities:
Proceeds from related party note					—			—			370,275
Repayments of related party note					62,320			—			(289,887	)
Proceeds from notes payable					—			—			5,250,000
Payments on notes payable					(64,186	)		(668,899	)		(918,899	)
Proceeds from issuance of mandatorily redeemable convertible preferred stock, net of issuance costs					(35,110	)		39,935,387			127,151,603
Proceeds from issuance of common stock					100,714			27,446			170,388
Payments on capital leases					(18,916	)		(21,760	)		(47,359	)

			Net cash provided by financing activities		44,822			39,272,174			131,686,121

Effect of exchange rates on cash					203,664			(76,744	)		68,222
Net (decrease) increase in cash and cash equivalents					(17,192,920	)		245,899			7,239,045
Cash and cash equivalents, beginning of period					21,343,285			6,993,146			—

Cash and cash equivalents, end of period				$	4,150,365		$	7,239,045		$	7,239,045

Supplemental Disclosure of Non-Cash Financing Activities:
Acquisition of property and equipment under capital leases					158,438			72,609			231,046
Common stock issued in exchange for notes receivable					—			—			81,362
Convertible preferred stock issued in exchange for license					—			—			1,163,229
Mandatorily redeemable convertible preferred stock issued in lieu of cash commission on issuance of Series D mandatorily redeemable convertible preferred stock					—			—			928,961

The accompanying notes are an integral part of these consolidated financial statements.

MYOGEN, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
(Unaudited)


x		Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

		For the quarterly period ended September 30, 2003

o		Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

		For the transition period from to


PART I. FINANCIAL INFORMATION
	ITEM 1. FINANCIAL STATEMENTS
		CONSOLIDATED BALANCE SHEETS
		CONSOLIDATED STATEMENTS OF OPERATIONS
		CONSOLIDATED STATEMENTS OF CASH FLOWS
		CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
		NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
	ITEM 4. CONTROLS AND PROCEDURES
PART II. OTHER INFORMATION
	Item 1. Legal Proceedings
	Item 2. Changes in Securities and Use of Proceeds
	Item 3. Defaults Upon Senior Securities
	Item 4. Submission of Matters to a Vote of Security Holders.
	Item 5. Other Information
	Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
EXHIBIT INDEX
EX-31.1 Certification-Principal Executive Officer
EX-31.2 Certification-Principal Financial Officer
EX-32.1 Section 1350 Certification

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Delaware (State or other jurisdiction of incorporation or organization)		84-1348020 (I.R.S. Employer Identification No.)