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, 2000
Commission File Number 0-9314
ACCESS PHARMACEUTICALS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 83-0221517
- ------------------------ --------------------------
(State of Incorporation) (I.R.S. Employer I.D. No.)
2600 Stemmons Frwy, Suite 176, Dallas, TX 75207
-----------------------------------------------
(Address of principal executive offices)
Telephone Number (214) 905-5100
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 requirement for the past 90 days.
Yes X No
----- -----
The number of shares outstanding of each of the issuer's classes of common
stock, as of August 14, 2000, was 12,091,469 shares of Common Stock, $0.01
par value per share.
Total No. of Pages 13
------
PART I -- FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
The response to this Item is submitted as a separate section of this report.
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
Access Pharmaceuticals, Inc. is a Delaware corporation in the development
stage. We are an emerging pharmaceutical company focused on developing both
novel low development risk product candidates and technologies with longer-
term major product opportunities. Together with our subsidiaries, we have
proprietary patents or rights to five technology platforms: synthetic
polymers, bioerodible hydrogels, ResiDerm TM, carbohydrate targeting
technology and agents for the prevention and treatment of viral disease,
including HIV. In addition, Access' partner Block Drug Company, or Block, is
marketing in the United States Aphthasol TM, the first FDA approved product
for the treatment of canker sores. We are developing new formulations and
delivery forms to evaluate this product in additional clinical indications.
We have licensed the rights to amlexanox for the treatment of canker sores
from Block for certain countries excluding the U. S. and the worldwide rights
for certain additional indications including mucositis and oral diseases.
Except for the historical information contained herein, the following
discussions and certain statements in this Form 10-Q are forward-looking
statements that involve risks and uncertainties. In addition to the risks and
uncertainties set forth in this Form 10-Q, other factors could cause actual
results to differ materially, including but not limited to our research and
development focus, uncertainties associated with research and development
activities, uncertainty associated with preclinical and clinical testing,
future capital requirements, anticipated option and licensing revenues,
dependence on others, ability to raise capital, and other risks detailed in
our reports filed under the Securities Exchange Act, including but not
limited to our Annual Report on Form 10-K for the year ended December 31, 1999.
Since our inception, we have devoted our resources primarily to fund our
research and development programs. We have been unprofitable since inception
and to date have received limited revenues from the sale of products. No
assurance can be given that we will be able to generate sufficient product
revenues to attain profitability on a sustained basis or at all. We expect
to incur losses for the next several years as we continue to invest in
product research and development, preclinical studies, clinical trials and
regulatory compliance. As of June 30, 2000, our accumulated deficit was
$28,979,000 of which $8,894,000 was the result of the write-off of purchased
research.
RECENT DEVELOPMENTS
On July 21, 2000, we initiated a voluntary odd-lot stock buy-back program
through which
2
stockholders who own 25 or fewer shares of our common stock,
or Small-lot Stockholders, may elect to tender their shares for sale to
Access. Under this program, we will repurchase the shares held by Small-lot
Stockholders who validly tender their shares to us pursuant to the terms of
the odd-lot stock buy-back program. The per share purchase price to be paid
by Access to each participating Small-lot Stockholder for each share validly
tendered by such Small-lot Stockholder pursuant to the terms of the odd-lot
stock buy-back program will be the closing price of our common stock, as
quoted on the American Stock Exchange, on the date that a completed package,
addressed to Access and containing the Small-lot Stockholder's original stock
certificate(s) and a signed and properly completed Letter of Transmittal, is
post dated. This odd-lot stock buy-back program will remain available to
Small-lot Stockholders until November 30, 2000.
On June 26, 2000 the Food and Drug Administration (FDA) cleared our
Investigational New Drug Application (IND) to commence Phase III clinical
development in the United States for OraDiscTM for the treatment of canker
sores. OraDiscTM, a polymer disc formulation which adheres to the disease
site and slowly erodes, locally releasing the drug, is potentially an
improved delivery vehicle for the oral delivery of amlexanox. Utilizing
this technology, it is anticipated that higher drug concentrations will be
achieved at the disease site, increasing the effectiveness of the product.
Previously, in April 2000, the FDA cleared our IND to commence a clinical
trial program for OraDiscTM and the initial irritation study conducted under
the IND has been successfully completed. The Phase III trial will be
conducted at 15 centers in the United States and one site in Europe. The
clinical trial will be a double-blind placebo controlled study with a no
treatment arm which will evaluate the ability of OraDiscTM to accelerate
healing and reduce pain once a canker sore has developed. This study has a
similar design to the studies conducted with the 5% amlexanox oral paste
where the product was proven effective accelerating healing and reducing pain.
Currently, a Phase III clinical study is being conducted in Northern Ireland
to evaluate OraDiscTM for the prevention of canker sores by applying the
product at the first sign or symptom of the disease.
During the second quarter we completed two self-managed private
placement sales of our common stock, pursuant to which we sold
250,000 and 507,750 shares of our common stock at per share prices
of $3.00 and $5.00. We received gross proceeds of $3.3
million from these sales. In addition, on March 1, 2000, with the
assistance of an investment bank, we completed the closing of a
separate private placement offering of 4.8 million shares of common
stock, at a per share price of $2.50, for which we received gross
proceeds of $12.0 million. In accordance with the offering terms of this
$12.0 million private placement, the placement agent for the offering
received warrants to purchase 382,315 shares of our common stock at
$2.50 per share, and elected to receive 520,905 shares of common
stock in lieu of certain sales commissions. The funds from the private
placements will be used principally to support our operations and to
fund clinical development of the Company's portfolio of product
candidates, exclusive of any funds received from strategic partners, for
approximately 30 months. We registered the shares issued in each of
the private placements on a Form S-3 registration statement that we
initially filed with the Securities and Exchange Commission on May 25, 2000.
On March 28, 2000, our application for listing on the American
Stock Exchange, or AMEX, was approved and we began trading on
AMEX on March 30, 2000 under the symbol AKC.
3
On February 25, 2000 we signed licensing agreements with
Mipharm S.p.A. Pursuant to these agreements, we granted to
Mipharm marketing and manufacturing rights for amlexanox for
numerous indications including the prevention and treatment of canker
sores and mucositis, oral lichen planus and atopic dermatitis. We also
granted manufacturing rights for Europe to Mipharm for the products covered
by the agreements. These licensing agreements cover Italy, Switzerland,
Turkey and Lebanon and relate to:
* the 5% paste formulation, approved in the United States for the
treatment of canker sores, which is in the regulatory
process in Europe;
* the OraDiscTM formulation which is in Phase III clinical
development for the prevention and treatment of canker
sores;
* OraRinseTM which has commenced Phase II clinical evaluation
for the prevention and treatment of mucositis;
* the 5% amlexanox cream formulation for the treatment for
atopic dermatitis; and
* a 5% amlexanox gel for the treatment of oral lichen planus,
both of which are planned to commence Phase II clinical
studies in the second half of this year.
Mipharm also has the option to license other Access product
developments in the fields of Dermatology and Gynecology in the
territory covered by the license agreements. In addition, under the
terms of the agreements, Mipharm will pay up-front licensing fees and
make milestone payments and Access will receive a percentage of the
product sales made in the territory. Moreover, pursuant to an
Investment Agreement with Mipharm, Mipharm will make equity
investments in Access in 2000 and 20001.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2000, our principal source of liquidity was
$13,518,000 of cash and cash equivalents, short term investments and
certificates of deposits. Working capital as of June 30, 2000 was
$12,253,000, representing an increase in working capital of
$12,165,000 as compared to the working capital as of December 31,
1999 of $88,000. The increase in working capital was due to the funds
received from our March 2000 and May 2000 private placements and
licensing revenues.
Since inception, our expenses have significantly exceeded
revenues, resulting in an accumulated deficit as of June 30, 2000 of
$28,979,000. We have funded our operations primarily through private
sales of common stock, contract research payments from corporate
alliances and mergers.
We have incurred negative cash flows from operations since
inception, and have expended, and expect to continue to expend in the
future, substantial funds to complete our planned product development
efforts. We expect that our existing capital resources will be adequate
to fund our current level of operations through the year 2002. We are
dependent on raising additional capital to fund further development of
our technology and to implement our business plan. Such
4
dependence will continue at least until we begin marketing products resulting
from our development activities.
We will require substantial funds to conduct research and
development programs, preclinical studies and clinical trials of potential
products, including research and development with respect to our newly
acquired and developed technology. Our future capital requirements
and adequacy of available funds will depend on many factors,
including:
* the successful commercialization of amlexanox;
* the ability to establish and maintain collaborative arrangements
with corporate partners for the research, development
and commercialization of products;
* continued scientific progress in our research and development
programs;
* the magnitude, scope and results of preclinical testing and
clinical trials;
* the costs involved in filing, prosecuting and enforcing patent
claims;
* competing technological developments;
* the cost of manufacturing and scale-up; and
* the ability to establish and maintain effective commercialization
arrangements and activities.
Second Quarter 2000 Compared to Second Quarter 1999.
Total research spending for the second quarter of 2000 was
$1,069,000, as compared to $316,000 for the same period in 1999, an
increase of $753,000. The increase in expenses was the result of:
* clinical development and product development costs for
amlexanox projects OraRinseTM ($185,000), OraDiscTM
($274,000) and amlexanox cream ($52,000);
* external development costs for our polymer platinate project
($226,000); and
* other net increases ($16,000).
We expect that research spending will increase and remain higher
than prior years' quarters as we intend to hire additional scientific and
clinical staff, commence additional clinical trials and accelerate
preclinical development activities as we continue to develop our
product candidates.
Total general and administrative expenses were $487,000 for the
second quarter of 2000 as compared to $529,000 for the same period
in 1999, a decrease of $42,000. The change in spending for the periods
was due primarily to the following:
* higher salary and bonus payments ($123,000);
* higher legal and accounting expenses ($98,000) due to
an adjustment in the second quarter of 1999; and
* other net increases ($25,000).
5
Those increases were partially offset by:
* lower warrant expenses ($263,000); and
* lower patent costs ($25,000).
Depreciation and amortization was $112,000 for the second
quarter 2000 as compared to $46,000 for the same period in 1999,
reflecting an increase of $66,000. The increase in amortization is due
to:
* amortization of goodwill of $61,000 recorded as a result
of the purchase of Virologix Corporation;
* amortization of licenses totaling $26,000; offset by,
* lower depreciation reflecting that some major assets have
been fully depreciated.
Interest and miscellaneous income was $223,000 for the second
quarter of 2000 as compared to $6,000 for the same period in 1999, an
increase of $217,000. The increase in interest income was due to
higher cash and short-term investment balances in 2000.
Net loss in the second quarter of 2000 was $1,446,000, or a
$0.13 basic and diluted loss per common share, compared with a loss
of $888,000, or a $0.26 basic and diluted loss per common share, for
the same period in 1999.
Six Months ended June 30, 2000 Compared to Six Months ended June 30, 1999.
Total research spending for the six months ended June 30, 2000
was $1,672,000, as compared to $693,000 for the same period in 1999,
an increase of $979,000. The increase in expenses was the result of:
* clinical development and product development costs for
amlexanox projects OraRinseTM ($325,000),
OraDiscTM ($319,000) and amlexanox cream ($48,000);
* external development costs for our polymer platinate project
($246,000);
* moving expenses for scientific personal ($50,000); and
* other hiring costs ($27,000).
The increase was partially offset by:
* lower scientific consulting expenses for general projects
($20,000); and
* other net decreases ($16,000).
Research spending is expected to increase and remain higher than
prior years' quarters as we intend to hire additional scientific and
clinical staff, commence additional clinical trials and accelerate
preclinical development activities as we continue to develop our
product candidates.
Total general and administrative expenses were $873,000 for the
six months ended June 30,
6
2000, a decrease of $39,000 as compared to the same period in 1999. The
decrease in spending was due primarily to lower warrant costs ($260,000).
This decrease were partially offset by:
* higher salary and bonus expenses ($134,000);
* higher listing fees due to listing on the American Stock
Exchange ($38,000);
* higher legal and accounting expenses ($32,000); and
* higher net other increases ($17,000).
Depreciation and amortization was $223,000 for the six months
ended June 30, 2000 as compared to $93,000 for the same period in
1999, an increase of $130,000. The increase in amortization is due to
the amortization of goodwill of $123,000 recorded as a result of the
purchase of Virologix Corporation and the amortization of licenses
totaling $52,000, offset by lower depreciation reflecting that some
major assets have been fully depreciated.
Interest and miscellaneous income was $288,000 for the six
months ended June 30, 2000 as compared to $19,000 for the same
period in 1999, an increase of $269,000. The increase in interest
income was due to higher cash balances in 2000.
Accordingly, these factors resulted in a loss for the six months
ended June 30, 2000 of $2,526,000, or a $0.26 basic and diluted loss
per common share.
7
PART II -- OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
The Company is not a party to any material legal proceedings.
ITEM 2 CHANGES IN SECURITIES
On May 24, 2000 we completed two self-managed private
placement sales of our common stock, pursuant to which
we sold 250,000 and 507,750 shares of our common stock
at per share prices of $3.00 and $5.00. We
received gross proceeds of $3.3 million from these sales.
We registered the shares issued in our May 2000 private
placements on a Form S-3 registration statement that we
initially filed with the Securities and Exchange
Commission on May 25, 2000. The Company relied on
Section 4(2) and/or 3(b) of the 1933 Securities Act and
the provisions of Regulation D as exemptions from the
registration thereunder. The proceeds From the private
placement will be used primarily to fund clinical
development of the Company's portfolio of product
candidates.
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS
The annual meeting of stockholders was held on June 26,
2000 in New York, NY. At that meeting the following
matters were submitted to a vote of the stockholders of
record. The proposals were approved by the stockholders,
as follows:
* Three directors were reelected for three year
terms with the following votes:
Stephen B. Howell, MD; 5,897,770 - For; and
207,853 - Withheld Authority
Richard B. Stone; 5,897,770 - For; and 207,853
- Withheld Authority
Preston Tsao; 5,897,767 - For; and 207,855 -
Withheld Authority
* The terms of office as a director of Access
of each of Herbert H. McDade, Jr., Kerry
P. Gray, Max Link and J. Michael Flinn
continued after the meeting.
* A proposal to amend the Company's
certificate of incorporation increasing the
number of authorized shares from
20,000,000 to 50,000,000 was approved
with 5,829,950 - For; 269,924 - Against;
and 5,748 - Abstain.
* A proposal to amend the Company's 1995
stock option plan, as amended, to increase
the number of shares issuable under this plan
to 2,000,000 shares was approved with
4,992,016 - For; 266,752 - Against; and 3,224 - Abstain.
8
* A proposal to ratify the appointment of
Grant Thornton LLP as independent certified
public accountants for the Company for the
fiscal year ending December 31, 2000 was
approved with 5,976,664 - For; 3,266 -
Against; and 125,692 - Abstain.
ITEM 5 OTHER INFORMATION
None
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
Exhibits: 27.1 Financial Data Schedule
Reports on Form 8-K:
None
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.
ACCESS PHARMACEUTICALS, INC.
Date: August 14, 2000 By: /s/ Kerry P. Gray
------------------------
Kerry P. Gray
President and Chief Executive Officer
Date: August 14, 2000 By: /s/ Stephen B. Thompson
------------------------
Stephen B. Thompson
Vice President and Chief Financial Officer
9
Access Pharmaceuticals, Inc. and Subsidiaries
(a development stage company)
Condensed Consolidated Balance Sheets
June 30, 2000 December 31, 1999
-------------- --------------
ASSETS (unaudited)
Current assets
Cash and cash equivalents $ 999,000 $ 869,000
Short term investments 8,204,000 -
Certificates of deposit 4,315,000 -
Accounts receivable 40,000 88,000
Accrued interest receivable 100,000 -
Prepaid expenses and other current assets 71,000 117,000
-------------- --------------
Total current assets 13,729,000 1,074,000
Property and equipment, at cost 1,079,000 1,016,000
Less accumulated depreciation and
amortization (956,000) (908,000)
-------------- --------------
123,000 108,000
Licenses, net 947,000 899,000
Investments 150,000 150,000
Goodwill, net 2,238,000 2,361,000
Other assets 8,000 8,000
-------------- --------------
Total assets $ 17,195,000 $ 4,600,000
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 890,000 $ 728,000
Accrued insurance premiums 3,000 77,000
Deferred revenues 583,000 155,000
Current portion of obligations
under capital leases - 26,000
-------------- --------------
Total current liabilities 1,476,000 986,000
-------------- --------------
Commitments and contingencies - -
Stockholders' equity
Preferred stock - $.01 par value;
authorized 2,000,000 shares;
none issued or outstanding - -
Common stock - $.01 par value;
authorized 50,000,000 shares;
issued, 12,265,998 at June 30, 2000
and 6,089,763 at December 31, 1999 120,000 61,000
Additional paid-in capital 43,828,000 30,006,000
Treasury stock, 250,000 shares
at June 30, 2000 750,000 -
Deficit accumulated during
the development stage (28,979,000) (26,453,000)
-------------- --------------
Total stockholders' equity 15,719,000 3,614,000
-------------- --------------
Total liabilities and stockholders' equity $ 17,195,000 $ 4,600,000
============== ==============
The accompanying notes are an integral part of these statements.
10
Access Pharmaceuticals, Inc. and Subsidiaries
(a development stage company)
Condensed Consolidated Statements of Operations
(unaudited)
Three Months ended Six Months ended February 24,
June 30, June 30, 1988
-------------------------- --------------------------- (inception) to
2000 1999 2000 1999 June 30, 2000
------------ ------------ ------------ ------------- --------------
Revenues
Research and development $ - $ - $ - $ - $ 2,711,000
Option income - - - - 2,164,000
Licensing revenues - - - - 325,000
------------ ------------ ------------ ------------- --------------
Total revenues - - - - 5,200,000
Expenses
Research and development 1,069,000 316,000 1,672,000 693,000 13,645,000
General and administrative 487,000 529,000 873,000 912,000 10,671,000
Depreciation and amortization 112,000 46,000 223,000 93,000 1,777,000
Write-off of excess purchase price - - - - 8,894,000
------------ ------------ ------------ ------------- --------------
Total expenses 1,668,000 891,000 2,768,000 1,698,000 34,987,000
------------ ------------ ------------ ------------- --------------
Loss from operations (1,668,000) (891,000) (2,768,000) (1,698,000) (29,787,000)
------------ ------------ ------------ ------------- --------------
Other income (expense)
Interest and miscellaneous income 223,000 6,000 288,000 19,000 1,173,000
Interest expense (1,000) (3,000) (3,000) (8,000) 195,000
------------ ------------ ------------ ------------- --------------
222,000 3,000 285,000 11,000 978,000
------------ ------------ ------------ ------------- --------------
Loss before income taxes (1,446,000) (888,000) (2,483,000) (1,687,000) (28,809,000)
Provision for income taxes - - 43,000 - 170,000
------------ ------------ ------------ ------------- --------------
Net loss $(1,446,000) $ (888,000) $(2,526,000) $ (1,687,000) $ (28,979,000)
============ ============ ============ ============= ==============
Basic and diluted loss per
common share $(0.13) $(0.26) $(0.26) $(0.49)
Weighted average basic and diluted
common shares outstanding 11,479,207 3,429,402 9,547,679 3,429,402
============ ============ ============ =============
The accompanying notes are an integral part of these statements.
11
Access Pharmaceuticals, Inc. and Subsidiaries
(a development stage company)
Condensed Consolidated Statements of Cash Flows
(unaudited)
February 24,
Six Months ended June 30, 1988
-------------------------- (inception) to
2000 1999 June 30, 2000
------------ ------------ -------------
Cash flows form operating activities:
Net loss $(2,526,000) $(1,687,000) $(28,979,000)
Adjustments to reconcile net loss to
cash used in operating activities:
Write-off of excess purchase price - - 8,894,000
Warrants issued in payment of
consulting expenses - 296,000 865,000
Research expenses related to
common stock granted - - 100,000
Depreciation and amortization 223,000 93,000 1,777,000
Deferred revenue 428,000 88,000 473,000
Licenses (100,000) - (525,000)
Change in operating assets and
liabilities:
Accounts receivable 48,000 (32,000) (41,000)
Accrued interest receivable (100,000) - (100,000)
Prepaid expenses and other
current assets 46,000 (74,000) (72,000)
Other assets - - (6,000)
Accounts payable and accrued expenses 88,000 134,000 131,000
------------ ------------ -------------
Net cash used in operating activities (1,893,000) (1,182,000) (17,483,000)
------------ ------------ -------------
Cash flows from investing activities:
Capital expenditures (63,000) - (1,236,000)
Sales of capital equipment - - 15,000
Purchase of short term investments
and certificates of deposit (15,576,000) - (15,576,000)
Maturities of investments 3,057,000 - 3,057,000
Purchase of treasury stock (750,000) - (750,000)
Purchase of Virologix - - (102,000)
Purchase of Tacora, net of
cash acquired - - (124,000)
Other investing activities - - (150,000)
------------ ------------ -------------
Net cash used in investing activities (13,332,000) - (14,866,000)
------------ ------------ -------------
Cash flows from financing activities:
Proceeds from notes payable - - 721,000
Payments of principal on obligations
under capital leases (26,000) (47,000) (750,000)
Cash acquired in merger with Chemex - - 1,587,000
Proceeds from stock issuances, net 15,381,000 - 31,790,000
------------ ------------ -------------
Net cash provided by (used in)
financing activities 15,355,000 (47,000) 33,348,000
------------ ------------ -------------
Net increase (decrease) in cash and
cash equivalents 130,000 (1,229,000) 999,000
Cash and cash equivalents at
beginning of period 869,000 1,487,000 -
------------ ------------ -------------
Cash and cash equivalents at
end of period $ 999,000 $ 258,000 $ 999,000
============ ============ =============
The accompanying notes are an integral part of these statements.
12
Access Pharmaceuticals, Inc. and Subsidiaries
(a development stage company)
Notes to Condensed Consolidated Financial Statements
Six Months Ended June 30, 2000 and 1999
(unaudited)
(1) Interim Financial Statements
The consolidated balance sheet as of June 30, 2000 and the consolidated
statements of operations and cash flows for the three and six
months ended June 30, 2000 and 1999 were prepared by
management without audit. In the opinion of management, all
adjustments, including only normal recurring adjustments
necessary for the fair presentation of the financial position,
results of operations, and changes in financial position for such
periods, have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is
suggested that these financial statements be read in conjunction
with the financial statements and notes thereto included in our
Annual Report on Form 10-K for the year ended December 31,
1999. The results of operations for the periods ended June 30,
2000 are not necessarily indicative of the operating results
which may be expected for a full year. The consolidated
balance sheet as of December 31, 1999 contains financial
information taken from the audited financial statements as of
that date.
(2) Private Placement
During the second quarter we completed two self-managed private
placement sales of our common stock, pursuant to which we
sold 250,000 and 507,750 shares of our common stock at per
share prices of $3.00 and $5.00. We received gross proceeds of
$3.3 million from these sales. We registered the shares issued in
our May 2000 private placements on a Form S-3 registration statement
that we initially filed with the Securities and Exchange Commission
on May 25, 2000. The funds from the private placements will be used
principally to fund clinical development of the Company's portfolio of
product candidates.
(3) Short-term Investments
Short-term investments which consist of commercial paper and
US government securities, are carried at cost.
13