Back to GetFilings.com

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

for the quarterly period ended June 30, 2004

or

for the transition period from                      to                     

Commission File Number: 000-19122

APHTON CORPORATION

(Exact name of registrant as specified in its charter)

(305) 374-7338

(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.

x Yes     ¨ No

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

x Yes     ¨ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Table of Contents

APHTON CORPORATION

Index

i

Table of Contents

Part I - Financial Information

The interim financial statements included herein have been prepared by us, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the financial statements include all adjustments (consisting of normal recurring entries) necessary to present fairly our financial position as of June 30, 2004 and December 31, 2003 and the results of our operations for the three and six months ended June 30, 2004 and 2003; and our cash flows for the six months ended June 30, 2004 and 2003. It is suggested that these financial statements be read in conjunction with the financial statements and the notes thereto included in our latest annual report on Form 10-K.

1

Table of Contents

APHTON CORPORATION

Balance Sheets

The accompanying notes are an integral part of the financial statements.

2

Table of Contents

APHTON CORPORATION

Statements of Operations (Unaudited)

For the three and six months ended June 30, 2004 and 2003

3

Table of Contents

APHTON CORPORATION

Statements of Cash Flows (Unaudited)

For the six months ended June 30, 2004 and 2003

4

Table of Contents

Notes to the Financial Statements (unaudited)

1. Organization and Operations

Aphton is a clinical stage biopharmaceutical company developing targeted immunotherapies for cancer and other diseases. Aphton’s products neutralize hormones involved in the growth and proliferation of cancers of the gastrointestinal system and reproductive system, as well as other diseases. Aphton’s most advanced product candidate is Insegia^TM, an anti-gastrin product, which has completed a Phase III monotherapy pancreatic cancer trial and is in a Phase III combination therapy pancreatic cancer trial, and a Phase II combination therapy trial against advanced gastric cancer.

2. Summary of Significant Accounting Policies

Comprehensive Loss

The net loss for the three and six months ended June 30, 2004 and 2003 was the comprehensive loss for those periods.

Earnings (loss) per share

At June 30, 2004, shares of our common stock issuable upon the exercise of approximately 1.7 million warrants and 3.9 million options were excluded from the computation of net loss per share because their effect was anti-dilutive. At June 30, 2003, shares of our common stock issuable upon the exercise of approximately 2.1 million warrants and 3.7 million options were excluded from the computation of net loss per share because their effect was anti-dilutive.

Stock-Based Compensation

On December 31, 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (“SFAS”) No. 148, Accounting for Stock-Based Compensation — Transition and Disclosure. This Statement amends SFAS No. 123, Accounting for Stock-Based Compensation, to provide alternative methods of transition for an entity that voluntarily changes to the fair value based method of accounting for stock-based employee compensation. It also amends the disclosure provisions of that Statement to require prominent disclosure about the effects on reported net income of an entity’s accounting policy decisions with respect to stock-based employee compensation. Finally, this Statement amends APB Opinion No. 28, Interim Financial Reporting, to require disclosure about those effects in interim financial information. We intend to continue to account for stock-based compensation based on the provisions of APB Opinion No. 25.

The following table summarizes our results as if we had recorded stock-based employee compensation expense for the three and six months ended June 30, 2004 and 2003, based on the provisions of SFAS 123, as amended by SFAS 148: