UNITED STATES
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 June 30, 2004
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 000-31719
POZEN Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 62-1657552 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
1414 Raleigh Road
Suite 400
Chapel Hill, North Carolina 27517
(Address of principal executive offices, including zip code)
(919) 913-1030
(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. x Yes ¨ No
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). x Yes ¨ No
The number of shares outstanding of the registrant’s common stock as of July 23, 2004 was 28,789,963.
(A Development Stage Company)
FORM 10-Q
For the Three and Six Months Ended June 30, 2004
INDEX
| Page | ||||
| PART I. |
||||
| Item 1. |
||||
| 1 | ||||
| 2 | ||||
| 3 | ||||
| 4 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
6 | ||
| Item 3. |
24 | |||
| Item 4. |
24 | |||
| PART II. |
||||
| Item 1. |
25 | |||
| Item 4. |
25 | |||
| Item 6. |
25 | |||
| 27 | ||||
| 28 | ||||
i
(A Development Stage Company)
BALANCE SHEETS
(Unaudited)
| June 30, 2004 |
December 31, 2003 |
|||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 67,510,179 | $ | 60,480,690 | ||||
| Prepaid expenses and other current assets |
414,108 | 698,209 | ||||||
| Total current assets |
67,924,287 | 61,178,899 | ||||||
| Equipment, net of accumulated depreciation |
288,891 | 334,096 | ||||||
| Total assets |
$ | 68,213,178 | $ | 61,512,995 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 253,077 | $ | 579,903 | ||||
| Accrued compensation |
503,115 | 416,053 | ||||||
| Accrued expenses |
1,658,819 | 1,103,622 | ||||||
| Total current liabilities |
2,415,011 | 2,099,578 | ||||||
| Long-term liabilities: |
||||||||
| Deferred revenue |
20,003,978 | 23,782,978 | ||||||
| Total liabilities |
22,418,989 | 25,882,556 | ||||||
| Common stock, $0.001 par value, 90,000,000 shares authorized; 28,788,272 and 28,492,201 shares issued and outstanding at June 30, 2004 and December 31, 2003, respectively |
28,788 | 28,492 | ||||||
| Additional paid-in capital |
145,994,281 | 144,821,230 | ||||||
| Deficit accumulated during the development stage |
(100,228,880 | ) | (109,219,283 | ) | ||||
| Total stockholders’ equity |
45,794,189 | 35,630,439 | ||||||
| Total liabilities and stockholders’ equity |
$ | 68,213,178 | $ | 61,512,995 | ||||
See accompanying Notes to Financial Statements.
1
(A Development Stage Company)
Statements of Operations
(Unaudited)
| Three Months Ended June 30, |
Six Months Ended June 30, |
Period From Inception (September 26, 1996) Through June 30, 2004 |
||||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||||
| Revenue: |
||||||||||||||||||
| Licensing revenue |
$ | 16,889,500 | — | $ | 18,779,000 | — | $ | 22,496,000 | ||||||||||
| Operating expenses: |
||||||||||||||||||
| General and administrative |
2,007,557 | 2,921,052 | 4,005,606 | 4,784,203 | 36,232,474 | |||||||||||||
| Research and development |
3,671,996 | 1,882,944 | 6,043,964 | 4,995,808 | 92,885,193 | |||||||||||||
| Total operating expenses |
5,679,553 | 4,803,996 | 10,049,570 | 9,780,011 | 129,117,667 | |||||||||||||
| Other Revenue: |
||||||||||||||||||
| Interest income |
134,823 | 123,292 | 260,973 | 266,561 | 7,327,265 | |||||||||||||
| Net income (loss) |
11,344,770 | (4,680,704 | ) | 8,990,403 | (9,513,450 | ) | (99,294,402 | ) | ||||||||||
| Non-cash preferred stock charge |
— | — | — | — | 27,617,105 | |||||||||||||
| Preferred stock dividends |
— | — | — | — | 934,478 | |||||||||||||
| Net income (loss) attributable to common stockholders |
$ | 11,344,770 | $ | (4,680,704 | ) | $ | 8,990,403 | $ | (9,513,450 | ) | $ | (127,845,985 | ) | |||||
| Basic net income (loss) per common share |
$ | 0.39 | $ | (0.17 | ) | $ | 0.31 | $ | (0.34 | ) | ||||||||
| Shares used in computing basic net income (loss) per common share |
28,786,486 | 28,270,902 | 28,671,070 | 28,210,610 | ||||||||||||||
| Diluted net income (loss) per common share |
$ | 0.38 | — | $ | 0.30 | — | ||||||||||||
| Shares used in computing diluted net income (loss) per common share |
29,704,675 | — | 29,776,949 | — | ||||||||||||||
See accompanying Notes to Financial Statements.
2
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
| Six Months Ended June 30, |
Period from (September 26, Through June 30, 2004 |
|||||||||||
| 2004 |
2003 |
|||||||||||
| Operating activities |
||||||||||||
| Net income (loss) |
$ | 8,990,403 | $ | (9,513,450 | ) | $ | (99,294,402 | ) | ||||
| Adjustments to reconcile net income (loss) to net |
||||||||||||
| Cash provided by (used in) operating activities: |
||||||||||||
| Depreciation |
52,152 | 66,474 | 577,481 | |||||||||
| Loss on disposal of equipment |
— | — | 27,495 | |||||||||
| Deferred compensation |
94,698 | 422,052 | 10,969,979 | |||||||||
| Noncash financing charge |
— | — | 450,000 | |||||||||
| Changes in operating assets and liabilities: |
||||||||||||
| Prepaid expenses, and other current assets |
284,101 | (744,629 | ) | (414,108 | ) | |||||||
| Accounts payable and accrued expenses |
220,735 | 1,374,780 | 2,320,313 | |||||||||
| Deferred revenue |
(3,779,000 | ) | — | 20,003,978 | ||||||||
| Net cash provided by (used in) operating activities |
5,863,088 | (8,394,773 | ) | (65,359,264 | ) | |||||||
| Investment activities |
||||||||||||
| Purchase of equipment |
(6,947 | ) | (18,052 | ) | (893,867 | ) | ||||||
| Net cash used in investing activities |
(6,947 | ) | (18,052 | ) | (893,867 | ) | ||||||
| Financing activities |
||||||||||||
| Proceeds from issuance of preferred stock |
— | — | 48,651,850 | |||||||||
| Proceeds from issuance of common stock |
1,173,347 | 294,921 | 81,269,445 | |||||||||
| Proceeds from notes payable |
— | — | 3,000,000 | |||||||||
| Proceeds from stockholders’ receivables |
— | — | 1,004,310 | |||||||||
| Payment of dividends |
— | — | (162,295 | ) | ||||||||
| Net cash provided by financing activities |
1,173,347 | 294,921 | 133,763,310 | |||||||||
| Net increase (decrease) in cash and cash equivalents |
7,029,489 | (8,117,904 | ) | 67,510,179 | ||||||||
| Cash and cash equivalents at beginning of period |
60,480,690 | 50,056,251 | — | |||||||||
| Cash and cash equivalents at end of period |
$ | 67,510,179 | $ | 41,938,347 | $ | 67,510,179 | ||||||
| Supplemental schedule of cash flow information |
||||||||||||
| Cash paid for interest |
$ | — | $ | — | $ | 191,328 | ||||||
| Supplemental schedule of noncash investing and financing activities |
||||||||||||
| Conversion of notes payable to preferred stock |
$ | — | $ | — | $ | 3,000,000 | ||||||
| Preferred stock dividend |
$ | — | $ | — | $ | 772,183 | ||||||
| Forfeiture of common stock options and warrants |
$ | — | $ | — | $ | 314,379 | ||||||