UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1997
-----------------
[_] 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: 0-26642
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MYRIAD GENETICS, INC.
(Exact name of registrant as specified in its charter)
Delaware 87-0494517
-------- ----------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
320 Wakara Way, Salt Lake City, UT 84108
---------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (801) 584-3600
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 [_]
As of February 10, 1998, the registrant had 9,320,182 shares of common stock
outstanding.
MYRIAD GENETICS, INC.
INDEX TO FORM 10-Q
Page
----
PART I - Financial Information
Item 1. Financial Statements.
Condensed Consolidated Balance Sheet as of December 31, 1997 and June 30, 1997 3
Condensed Consolidated Statements of Operations for the three months and six months
ended December 31, 1997 and 1996 4
Condensed Consolidated Statements of Cash Flows for the three months and six months
ended December 31, 1997 and 1996 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 7
PART II - Other Information
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURE(S) 15
2
MYRIAD GENETICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
Dec. 31, 1997
(Unaudited) June 30, 1997
--------------- ---------------
Assets
------
Current assets:
Cash and cash equivalents $ 17,008,757 $ 15,675,763
Marketable investment securities 26,796,871 31,952,315
Prepaid expenses 272,942 446,260
Trade receivables 312,163 183,166
Non-trade receivables 342,243 294,967
--------------- ---------------
Total current assets 44,732,976 48,552,471
--------------- ---------------
Equipment and leasehold improvements:
Equipment 14,394,572 13,124,937
Leasehold improvements 2,245,427 2,075,308
--------------- ---------------
16,639,999 15,200,245
Less accumulated depreciation and amortization 4,497,067 3,189,724
--------------- ---------------
Net equipment and leasehold improvements 12,142,932 12,010,521
Long-term marketable investment securities 15,679,843 15,449,360
Other assets 50,979 50,979
--------------- ---------------
$ 72,606,730 $ 76,063,331
=============== ===============
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Accounts payable $ 2,965,052 $ 2,559,035
Accrued liabilities 1,508,927 1,154,254
Deferred revenue 5,075,700 5,699,427
Current portion of notes payable 304,736 342,796
--------------- ---------------
Total current liabilities 9,854,415 9,755,512
--------------- ---------------
Notes payable, less current portion - 128,844
Stockholders' equity
Common stock, $0.01 par value, 15,000,000 shares authorized;
issued and outstanding 9,297,877 shares December 31, 1997, 9,222,552
shares June 30, 1997 92,979 92,226
Additional paid-in capital 91,976,600 91,605,739
Fair value adjustment on available-for-sale marketable investment 2,262 5,382
securities
Deferred compensation (1,111,713) (1,376,980)
Accumulated deficit (28,207,813) (24,147,392)
--------------- ---------------
Net stockholders' equity 62,752,315 66,178,975
--------------- ---------------
$ 72,606,730 $ 76,063,331
=============== ===============
See accompanying notes to condensed consolidated financial statements.
3
MYRIAD GENETICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Six Months Ended
------------------------------------- --------------------------------
Dec. 31, 1997 Dec. 31, 1996 Dec. 31, 1997 Dec. 31, 1996
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
------------ ------------ ------------ ------------
Revenues:
Research revenue $ 4,563,890 $ 2,717,740 $ 10,078,932 $ 4,913,521
Genetic testing revenue 524,918 34,060 934,463 34,060
------------ ------------ ------------ ------------
Total revenues 5,088,808 2,751,800 11,013,395 4,947,581
------------ ------------ ------------ ------------
Expenses:
Research and development expense 5,005,520 5,045,154 11,206,159 9,139,897
Selling, general and
administrative expense 2,869,428 1,997,108 5,006,656 3,757,067
Genetic testing cost of revenue 305,587 24,283 541,585 24,283
------------ ------------ ------------ ------------
Total costs and expenses 8,180,535 7,066,545 16,754,400 12,921,247
------------ ------------ ------------ ------------
Operating loss (3,091,727) (4,314,745) (5,741,005) (7,973,666)
Other income (expense):
Interest income 836,555 886,783 1,701,359 1,735,277
Interest expense (9,449) (17,739) (20,897) (37,391)
Gain/(loss) on sale of fixed
assets - (7,992) 121 (7,992)
------------ ------------ ------------ ------------
827,106 861,052 1,680,583 1,689,894
------------ ------------ ------------ ------------
Net loss ($2,264,621) ($3,453,693) ($4,060,422) ($6,283,772)
============ ============ ============ ============
Net loss per share (Note 3) ($0.24) ($0.39) ($0.44) ($0.72)
============ ============ ============ ============
Weighted average shares outstanding 9,279,892 8,743,530 9,259,025 8,728,177
See accompanying notes to condensed consolidated financial statements.
4
MYRIAD GENETICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended Six Months Ended
----------------------------------- -----------------------------------
Dec. 31, 1997 Dec. 31, 1996 Dec. 31, 1997 Dec. 31, 1996
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
-------------- ------------- ------------- -------------
Cash flows from operating activities:
Net loss ($2,264,621) ($3,453,693) ($4,060,422) ($6,283,772)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 804,825 612,413 1,573,941 1,109,180
Increase in trade receivables (125,687) - (128,997) -
Loss (gain) on sale of equipment - 7,992 (121) 7,992
Decrease (increase) in non-trade
receivables (12,579) (106,909) 85,797 (44,830)
Decrease (increase) in prepaid expenses (115,844) (239,018) 173,318 (247,045)
Increase (decrease) in accounts payable
and accrued expenses 301,124 (149,832) 627,618 312,007
Increase (decrease) in deferred revenue (349,230) (205,860) (623,727) 38,359
-------------- ------------- ------------- -------------
Net cash used in operating activities (1,762,012) (3,534,907) (2,352,593) (5,108,109)
-------------- ------------- ------------- -------------
Cash flows from investing activities:
Capital expenditures (715,454) (945,666) (1,441,865) (2,560,864)
Proceeds from sale of equipment - 7,500 901 7,500
Net change in marketable investment
securities (1,122,564) 4,966,190 4,921,840 9,811,717
-------------- ------------- ------------- -------------
Net cash provided by (used in)
investing activities (1,838,018) 4,028,024 3,480,876 7,258,353
-------------- ------------- ------------- -------------
Cash flows from financing activities:
Net payments of notes payable (84,388) (76,099) (166,904) (150,285)
Net proceeds from issuance of common stock 245,948 (1,872) 371,615 24,087
-------------- ------------- ------------- -------------
Net cash provided by (used in)
financing activities 161,560 (77,971) 204,711 (126,198)
-------------- ------------- ------------- -------------
Net increase (decrease) in cash and cash
equivalents (3,438,470) 415,146 1,332,994 2,024,046
Cash and cash equivalents at beginning of
period 20,447,227 14,844,580 15,675,763 13,235,680
-------------- ------------- ------------- -------------
Cash and cash equivalents at end of period $ 17,008,757 $ 15,259,726 $ 17,008,757 $ 15,259,726
============== ============= ============= =============
See accompanying notes to condensed consolidated financial statements.
5
MYRIAD GENETICS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(1) Basis of Presentation
---------------------
The accompanying condensed unaudited consolidated financial statements
have been prepared by Myriad Genetics, Inc. (the "Company") in
accordance with generally accepted accounting principles for interim
financial information and pursuant to the applicable rules and
regulations of the Securities and Exchange Commission. The condensed
unaudited consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries. All material
intercompany accounts and transactions have been eliminated in
consolidation. In the opinion of management, the accompanying
financial statements contain all adjustments (consisting of normal and
recurring accruals) necessary to present fairly all financial
statements. The financial statements herein should be read in
conjunction with the Company's audited consolidated financial
statements and notes thereto for the fiscal year ended June 30, 1997,
included in the Company's Annual Report on Form 10-K for the year
ended June 30, 1997. Operating results for the three and six month
periods ended December 31, 1997 may not necessarily be indicative of
the results to be expected for any other interim period or for the
full year.
(2) Common Stock
------------
In October 1997, the Company entered into an arrangement with Swiss
Bank Corporation, London Branch ("SBC") under which the Company
simultaneously purchased and sold call options on its own Common Stock
resulting in a payment of $100,000 to the Company. The capped call
option purchased by the Company ("Contract A") gives the Company the
right, at option expiration, to (i) purchase 400,000 shares of its own
stock at a strike price of $32.25 or (ii) receive a cash settlement in
an amount equal to the difference between the strike price and the
lesser of the market price at the exercise date or the cap price of
$40.50.
The call option sold by the Company ("Contract B") gives SBC the
right, at option expiration, to purchase 400,000 shares of newly
issued Myriad Common Stock, subject to the effectiveness of a
registration statement, at a strike price of $40.50. Alternatively,
the Company may elect to cash settle, or net share settle the option.
It is management's intent to cash settle contract A, and if the market
price exceeds $40.50 at the option expiration date, to settle Contract
B through the issuance of Myriad stock. If both contracts are
exercised, the Company may receive up to $19,500,000, or $48.75 per
share. Both call options will expire in December 1998.
SBC has advised that it has engaged, and may engage, in transactions,
including buying and selling shares of the Company's Common Stock, to
offset its risk relating to the options. Purchases and sales could
affect the market price of the Company's Common Stock.
(3) Earnings per Share
------------------
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, Earnings per
Share ("SFAS 128"). SFAS 128 became effective for the consolidated
financial statements for interim and annual periods ending after
December 15, 1997. Accordingly, the Company has adopted SFAS 128 for
the quarter ended December 31, 1997.
SFAS 128 establishes a different method of computing earnings (loss)
per share than was required under the provisions of Accounting
Principles Board Opinion No. 15. Under SFAS 128, entities with
publicly held common stock are required to present both basic earnings
(loss) per share and diluted earnings (loss) per share. Given the
Company's current loss position, basic and diluted loss per share are
equal and consistent with net loss per share presented in prior
quarters.
6
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
Since inception, the Company has devoted substantially all of its resources to
maintaining its research and development programs, establishing and operating a
genetic testing laboratory, and supporting collaborative research agreements.
Revenues received by the Company primarily have been payments pursuant to
collaborative research agreements and sales of genetic tests. The Company has
been unprofitable since its inception and, for the quarter ended December 31,
1997, the Company had a net loss of $2,264,621 and as of December 31, 1997 had
an accumulated deficit of $28,207,813.
In April 1995, the Company commenced a five-year collaborative research and
development arrangement with Novartis Corporation ("Novartis"). This
collaboration provides the Company with an equity investment, research funding
and potential milestone payments of up to $60,000,000. The Company is entitled
to receive royalties from sales of therapeutic products sold by Novartis. The
Company recognized $1,370,967 in revenue under this agreement for the quarter
ended December 31, 1997.
In September 1995, the Company commenced a five-year collaborative research and
development arrangement with Bayer Corporation ("Bayer"). This collaboration
provides the Company with an equity investment, research funding and potential
milestone payments of up to $71,000,000. In November 1997, the Company
announced an expansion of its collaborative research and development arrangement
with Bayer. The expanded collaboration provides the Company with additional
research funding and potential milestone payments of up to $54,000,000 or a
total potential of up to $125,000,000. The Company is entitled to receive
royalties from sales of therapeutic products sold by Bayer. The Company
recognized $2,442,923 in revenue under this agreement for the quarter ended
December 31, 1997.
In October 1996, the Company announced the introduction of BRACAnalysis(TM), a
comprehensive BRCA1 and BRCA2 gene sequence analysis for susceptibility to
breast and ovarian cancer. The Company, through its wholly owned subsidiary
Myriad Genetic Laboratories, Inc., began accepting testing samples on a
commercial basis on October 30, 1996. Genetic testing revenues of $524,918 were
recognized for the quarter ended December 31, 1997.
In April 1997, the Company commenced a three-year collaborative research and
development arrangement with Schering Corporation ("Schering"). The three-year
term may be extended for two additional one-year periods. This collaboration
provides the Company with an equity investment, license fees, research funding
and potential milestone payments totalling up to $60,000,000. The Company is
entitled to receive royalties from sales of therapeutic products sold by
Schering. The Company recognized $750,000 in revenue under this agreement for
the quarter ended December 31, 1997.
In October 1997, the Company announced that Schering has licensed the
therapeutic rights to the MMAC1 gene. The MMAC1 gene has been associated with
advanced cancers of the brain, prostate, breast, kidney, and skin. The
licensing of this gene triggered a milestone payment of $2,000,000 from Schering
to the Company. The Company may receive additional drug development milestone
payments and royalties on therapeutic products based on the MMAC1 gene and its
pathway. Myriad has retained the rights to the molecular diagnostic potential
of the MMAC1 gene.
In January 1998, the Company announced the introduction of a new genetic test,
CardiaRisk(TM), to be performed by its wholly owned subsidiary, Myriad Genetic
Laboratories, Inc. CardiaRisk(TM), which identifies a mutation in the AGT gene,
will assist physicians both in (i) identifying which hypertensive patients are
at a significantly increased risk of developing cardiovascular disease and (ii)
identifying which patients are likely to respond to low salt diet therapy and
antihypertensive drug therapy.
Additionally, in January 1998 the Company announced the successful use of its
ProNet(TM) protein interaction technology in discovering three new genes. The
MMSC1 gene appears to interact directly with the MMAC1 brain and prostate cancer
gene. The CtIP gene was linked to the pathway of the BRCA1 breast and ovarian
cancer gene,
7
and the MKK3 gene acts as a tumor suppressor in lung cancer. These genes are
believed to provide new avenues for developing cancer therapies.
The Company intends to enter into additional collaborative relationships to
locate and sequence genes associated with other common diseases as well as
continuing to fund internal research projects. There can be no assurance that
the Company will be able to enter into additional collaborative relationships on
terms acceptable to the Company. The Company expects to incur losses for at
least the next several years, primarily due to expansion of its research and
development programs, increased staffing costs and expansion of its facilities.
Additionally, the Company expects to incur substantial sales, marketing and
other expenses in connection with building its genetic testing business. The
Company expects that losses will fluctuate from quarter to quarter and that such
fluctuations may be substantial.
Results of Operations for the Three Months Ended December 31, 1997 and 1996
Research revenues for the quarter ended December 31, 1997 increased $1,846,150
from the same quarter of 1996. The increase was attributable primarily to the
Company's new and expanded corporate research collaboration agreements,
consisting of Schering, initiated in April 1997, and Bayer, expanded in November
1997, respectively. The Company recognized $750,000 from Schering and $950,000
from Bayer during the quarter ending December 31, 1997 as a result of the new
and expanded agreements. Research revenue from the corporate collaboration
agreements is recognized as related costs are incurred. Consequently, as these
programs progress and costs increase, revenues increase proportionately.
Genetic testing revenues of $524,918 were recognized in the quarter ended
December 31, 1997, an increase of $490,858 over the same quarter of 1996.
Genetic testing revenue is comprised of sales of diagnostic tests resulting from
the Company's discovery of the BRCA1 and BRCA2 breast and ovarian cancer genes.
The tests for genetic predisposition to breast and ovarian cancer were launched
by the Company in October 1996 with the first commercial test received in
November 1996. Sales and marketing efforts since that time have given rise to
the increased revenues in 1997.
Research and development expenses for the quarter ended December 31, 1997
decreased to $5,005,520 from $5,045,154 for the same quarter of 1996. During
the quarter ended December 31, 1996, the Company devoted substantial efforts to
the development of its breast and ovarian cancer susceptibility test,
BRACAnalysis(TM). With the successful launch of BRACAnalysis(TM), efforts
during the quarter ended December 31, 1997 were focused on processing the test,
resulting in increased charges to genetic testing cost of revenue and decreased
research and development charges. Additionally, the Company paid a significant
one-time license fee to one of its collaborators in the quarter ended December
31, 1996.
Selling, general and administrative expenses for the quarter ended December 31,
1997 increased $872,320 from the same quarter of 1996. The increase was
primarily attributable to costs associated with the ongoing promotion of
BRACAnalysis(TM), including the hiring of an outside sales force consisting of
50 sales representatives. The increase is also a result of additional internal
sales and marketing personnel, market research activities, educational material
development, and facilities-related costs. The Company expects its general and
administrative expenses will continue to increase in support of its genetic
predisposition testing business and its research and development efforts.
Interest income for the quarter ended December 31, 1997 decreased to $836,555
from $886,783 or 5.6% for the same quarter of 1996. This decrease was primarily
due to the decreased funds available for investment, which were spent in the
ordinary course of business. The Company has been able to maintain its cash
reserves at a relatively constant level as a result of its ongoing collaborative
research agreements, entering new collaborative agreements, achieving research
milestones, and sales of its genetic tests. As a result, interest income has
not changed significantly from the prior year. Interest expense for the quarter
ended December 31, 1997, amounting to $9,449, was due entirely to borrowings
under the Company's equipment financing facility.
Results of Operations for the Six Months Ended December 31, 1997 and 1996
Research revenues increased to $10,078,932 in the first six months of fiscal
year 1998 from $4,913,521 in the first six months of fiscal year 1997. The
increase was attributable primarily to the Company's new and expanded
8
corporate research collaboration agreements, consisting of Schering, initiated
in April 1997, and Bayer, expanded in November 1997, respectively, and a
milestone payment. The Company recognized $1,500,000 from Schering and $950,000
from Bayer during the six months December 31, 1997 as a result of the new and
expanded agreements, as well as a $2,000,000 milestone payment from Schering.
Genetic testing revenues of $934,463 were recognized in the six months ended
December 31, 1997, an increase of $900,403 over the same six month period of
1996. Genetic testing revenue is comprised of sales of BRACAnalysis(TM) and
related diagnostic tests resulting from the Company's discovery of the BRCA1 and
BRCA2 breast and ovarian cancer genes. The tests for genetic predisposition to
breast and ovarian cancer were launched by the Company in October 1996 with the
first commercial test received by the Company in November 1996. Sales and
marketing efforts since that time have given rise to the increased revenues in
1997.
Research and development expenses for the six months ended December 31, 1997
increased to $11,206,159 from $9,139,897 for the prior year. This increase was
primarily due to an increase in research activities as a result of the Company's
collaborations with Novartis, Bayer, and Schering, as well as those programs
funded by the Company. The increased level of research spending includes third
party research programs, increased depreciation charges related to purchasing
additional equipment, the hiring of additional research personnel and the
associated increase in use of laboratory supplies and reagents. The Company
also made a payment for a milestone achieved by an academic collaborator during
the six month period ended December 31, 1997.
Selling, general and administrative expenses for the six months ended December
31, 1997 increased $1,249,589 from the six month period in the prior year. The
increase was primarily attributable to costs associated with the ongoing
promotion of BRACAnalysis(TM) as well as additional administrative, sales,
marketing and education personnel, market research activities, educational
material development, and facilities-related costs. The Company expects its
general and administrative expenses will continue to increase in support of its
genetic predisposition testing business and its research and development
efforts.
Interest income for the first six months of fiscal year 1998 decreased to
$1,701,359 from $1,735,277 for the first six months of fiscal year 1997. This
decrease was primarily due to less funds being available for investment which
funds were spent in the ordinary course of business. The Company has been able
to maintain its cash reserves at a relatively constant level as a result of its
ongoing collaborative research agreements, entering new collaborative
agreements, achieving research milestones, and sales of its genetic tests. As a
result, interest income has not changed significantly from the prior year.
Interest expense for the six months ended December 31, 1997, amounting to
$20,897, was due entirely to borrowings under the Company's equipment financing
facility. The gain on sale of fixed assets of $121 in the six months ended
December 31, 1997 and loss on sale of fixed assets of $7,992 in the six months
ended December 31, 1996 are the result of the sale of out-dated equipment.
Liquidity and Capital Resources
Net cash used in operating activities was $1,762,012 during the quarter ended
December 31, 1997 as compared to net cash used of $3,534,907 during the same
quarter of the prior fiscal year. Trade receivables were established during
1997 as a result of the Company allowing terms for payment for its
BRACAnalysis(TM) breast and ovarian cancer predisposition tests. In the prior
year, all tests were prepaid by the customer. Non-trade receivables increased
$12,579 between September 30, 1997 and December 31, 1997, primarily as a result
of certain patent legal fees which the Company has incurred and which will be
reimbursed by one of the Company's collaborative partners. Prepaid expenses
increased $115,844 during the quarter ended December 31, 1997. The increase is
primarily due to annual insurance payments made at year end for 1998 coverage.
Accounts payable and accrued expenses increased between September 30, 1997 and
December 31, 1997 as a result of increased accruals for unbilled work provided
by the Company's research collaborators. Deferred revenue, representing the
difference in collaborative payments received and research revenue recognized,
decreased $349,230 during the quarter ended December 31, 1997.
The Company's investing activities used cash in the amount of $1,838,018 in the
three months ended December 31, 1997 and provided cash of $4,028,024 in the
three months ended December 31, 1996. Investing activities were comprised
primarily of capital expenditures for research equipment, office furniture, and
facility improvements and marketable investment securities. During the quarter
ended December 31, 1997, the Company shifted a portion of its
9
investment in marketable securities from cash and cash equivalents to longer
term investments in order to take advantage of more favorable interest rates.
Financing activities provided $161,560 during the quarter ended December 31,
1997. The Company reduced the amount of principal owing on its equipment
financing facility by $84,388. This use of cash was more than offset by cash
proceeds from the exercise of options and warrants. Financing activities used
$77,971 during the quarter ended December 31, 1996 primarily as a result of
payments to reduce the principal on its equipment financing facility in the
amount of $76,099.
In October 1997, the Company entered into an arrangement with SBC under which
the Company simultaneously purchased and sold call options on its own Common
Stock resulting in a payment of $100,000 to the Company. The capped call option
purchased by the Company ("Contract A") gives the Company the right, at option
expiration, to (i) purchase 400,000 shares of its own stock at a strike price of
$32.25 or (ii) receive a cash settlement in an amount equal to the difference
between the strike price and the lesser of the market price at the exercise date
or the cap price of $40.50.
The call option sold by the Company ("Contract B") gives SBC the right, at
option expiration, to purchase 400,000 shares of newly issued Myriad Common
Stock, subject to the effectiveness of a registration statement, at a strike
price of $40.50. Alternatively, the Company may elect to cash settle, or net
share settle the option. It is managements intent to cash settle contract A,
and if the market price exceeds $40.50 at the option expiration date, to settle
Contract B through the issuance of Myriad stock. If both contracts are
exercised, the Company may receive up to $19,500,000 or $48.75 per share. Both
call options will expire in December 1998.
SBC has advised that it has engaged, and may engage, in transactions, including
buying and selling shares of the Company's Common Stock, to offset its risk
relating to the options. Purchases and sales could affect the market price of
the Company's Common Stock.
The Company anticipates that its existing capital resources, including the net
proceeds of its October 1995 initial public offering and interest earned
thereon, will be adequate to maintain its current and planned operations for at
least the next two years, although no assurance can be given that changes will
not occur that would consume available capital resources before such time. The
Company's future capital requirements will be substantial and will depend on
many factors, including progress of the Company's research and development
programs, the results and cost of clinical correlation testing of the Company's
genetic tests, the costs of filing, prosecuting and enforcing patent claims,
competing technological and market developments, payments received under
collaborative agreements, changes in collaborative research relationships, the
costs associated with potential commercialization of its gene discoveries, if
any, including the development of manufacturing, marketing and sales
capabilities, the cost and availability of third-party financing for capital
expenditures and administrative and legal expenses. Because of the Company's
significant long-term capital requirements, the Company intends to raise funds
when conditions are favorable, even if it does not have an immediate need for
additional capital at such time.
Impact of the Year 200 Issue
The Company has completed a review of its existing and planned computer software
and hardware and has determined that the costs and/or consequences associated
with the Year 2000 issue are not expected to have a material effect on the
Company's business, operations or future financial results or future financial
condition.
Certain Factors That May Affect Future Results of Operations
The Company believes that this report on Form 10-Q contains certain forward-
looking statements as that term is defined in the Private Securities Litigation
Reform Act of 1995. Such statements are based on management's current
expectations and are subject to a number of factors and uncertainties which
could cause actual results to differ materially from those described in the
forward-looking statements. The Company cautions investors that there can be no
assurance that actual results or business conditions will not differ materially
from those projected or suggested in such forward-looking statements as a result
of various factors, including, but not limited to, the following: intense
competition related to the discovery of disease-related genes and the
possibility that others may discover, and
10
the Company may not be able to gain rights with respect to, genes important to
the establishment and operation of a successful genetic testing business;
difficulties inherent in developing genetic tests once genes have been
discovered; the Company's limited experience in operating a genetic testing
laboratory; the Company's limited marketing and sales experience and the risk
that tests which the Company has or may develop may not be able to be marketed
at acceptable prices or receive commercial acceptance in the markets that the
Company is targeting or expects to target; uncertainty as to whether there will
exist adequate reimbursement for the Company's services from government, private
health care insurers and third-party payors; and uncertainties as to the extent
of future government regulation of the Company's business. As a result, the
Company's future development efforts involve a high degree of risk. For further
information, refer to the more specific risks and uncertainties disclosed
throughout this Quarterly Report on Form 10-Q.
11
PART II - Other Information
Item 1. Legal Proceedings.
On November 17, 1997, OncorMed, Inc. ("OncorMed") filed an action in the United
States District Court of the District of Columbia alleging infringement by the
Company of patent number 5,654,155 entitled "Consensus Sequence of the Human
BRCA1 Gene" issued to OncorMed by the U.S. Patent and Trademark Office
("USPTO"). The action is seeking a permanent injunction and unspecified damages.
On December 8, 1997, the Company filed an answer and counterclaim.
On December 2, 1997, the Company filed an action against OncorMed in the United
States District Court for the District of Utah alleging infringement of patent
number 5,693,473 entitled "Linked Breast and Ovarian Cancer Susceptibility Gene"
issued to the Company on December 2, 1997 by the USPTO. The action is seeking a
preliminary and permanent injunction and unspecified damages. OncorMed has filed
an answer and counterclaim.
On January 20, 1998, the Company filed an action against OncorMed in the United
States District Court for the District of Utah alleging infringement of patent
number 5,709,999 entitled "Linked Breast and Ovarian Cancer Susceptibility Gene"
issued to the Company on January 20, 1998 by the USPTO. The action is seeking a
preliminary and permanent injunction and unspecified damages. OncorMed has filed
an answer and counterclaim.
On January 20, 1998, OncorMed filed an action against the Company in the United
States District Court for the District of Columbia alleging incorrect
inventorship of patent numbers 5,093,473 and 5,709,999. The action is seeking to
correct inventorship and seeks unspecified damages. The Company moved to
dismiss the action on February 9, 1998.
The Company believes that it has valid defenses to the OncorMed actions listed
above, and all cases are, and will continue to be vigorously defended.
Management is unable to make a meaningful estimate of the amount or range of
loss that could result from an unfavorable outcome of any of these cases.
Management believes, however, that the ultimate outcome of all of these cases
should not have a material effect on the Company's financial position.
Item 2. Changes in Securities.
(c) Sales of Unregistered Securities
--------------------------------
During the three months ended December 31, 1997, the Company issued a total of
15,000 shares of Common Stock to an employee of the Company pursuant to the
exercise of stock options at a weighted average price of $.028 per share. During
the same period, the Company issued a total of 3,559 shares of Common Stock to
various holders of warrants issued to Spencer Trask Securities Incorporated, the
placement agent for the Company's 1993 private placement of Series A Convertible
Preferred Stock, at a weighted average exercise price of $7.00 per share.
In October 1997, the Company sold to SBC a call option entitling SBC to purchase
from the Company at a strike price of $40.50 per share, an aggregate of 400,000
shares of the Company's Common Stock. In exchange, the Company purchased from
SBC a capped call option giving the Company the right to purchase from SBC up to
a total of 400,000 shares of Myriad Common Stock at a strike price of $32.25 on
a specified date. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
No person acted as an underwriter with respect to the transactions set forth
above. In each of the foregoing instances, the Company relied on Section 4(2) of
the Securities Act of 1933, as amended (the "Securities Act") or Rule 701
promulgated under the Securities Act for the exemption from the registration
requirements of the Securities Act, since no public offerings were involved.
(d) Use of Proceeds
---------------
The Company filed its initial Form SR with the Securities and Exchange
Commission on January 15, 1996 reporting for the period from October 5, 1995
(the effective date of the Company's registration statement for its initial
public offering) through January 5, 1996. The Company filed through July 1997
amendments to its Form
12
SR covering each subsequent six month period on a timely basis. Since November
1997, the Company has included information concerning use of proceeds in its
Forms 10-Q, the most recent of which was filed November 14, 1997 for the quarter
ended September 30, 1997 ("September 30, 1997 Form 10-Q"). The following
schedule reflects as of December 31, 1997 an estimate of the amount of net
offering proceeds received by the Company from its initial public offering used
for each of the purposes listed below (and reflects only the changes to the
information provided by the Company in its September 30, 1997 Form 10-Q).
Direct or indirect payments to anyone other than
directors, officers, persons owning ten percent or
more of any class of equity securities of the Company,
and affiliates of the Company (of which there were no
such payments).
- ----------------------------------------------------------------------------------------------------------------
Construction of plant, building and facilities $1,397,554
- ----------------------------------------------------------------------------------------------------------------
Purchase and installation of machinery and equipment $11,054,027
- ----------------------------------------------------------------------------------------------------------------
Cash and investments $7,341,205
- ----------------------------------------------------------------------------------------------------------------
Genetic discovery research expenses $7,743,876
- ----------------------------------------------------------------------------------------------------------------
Diagnostic test development and operation expenses $13,209,666
- ----------------------------------------------------------------------------------------------------------------
General and administrative expenses $8,516,864
- ----------------------------------------------------------------------------------------------------------------
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
On November 13, 1997, the Company held its Annual Meeting of Shareholders (the
"Annual Meeting"). A quorum of 5,065,996 shares of Common Stock of the Company
(of a total 9,265,101 outstanding shares, or approximately 55%) was represented
at the Annual Meeting in person or by proxy, which was held to vote on the
following proposals:
1. To elect three members to the Board of Directors. Nominees for Directors
were Michael J. Berendt, Ph.D., Alan J. Main, Ph.D., and Dale A.
Stringfellow, Ph.D.
2. To consider and act upon a proposal to amend the Company's 1992 Employee,
Director and Consultant Stock Option Plan to increase, from 1,500,000 to
2,000,000, the aggregate number of shares of Common Stock authorized for
issuance thereunder.
3. To consider and act upon a proposal to ratify the appointment of KPMG Peat
Marwick LLP as the Company's independent public accountants for the fiscal
year ending June 30, 1998.
Each of the proposals was adopted, with the vote totals as follows:
Proposal 1:
- -----------
FOR WITHHELD
--- --------
Michael J. Berendt, Ph.D. 5,052,533 13,463
Alan J. Main, Ph.D. 4,965,976 100,020
Dale A. Stringfellow, Ph.D. 5,052,973 13,023
13
Peter D. Meldrum and Mark H. Skolnick, Ph.D. continue to serve as Directors for
terms which expire in 1998 and Walter Gilbert, Ph.D., Arthur H. Hayes, Jr., M.D.
and John J. Horan continue to serve as Directors for terms which expire in 1999
and until their successors are duly elected and qualified.
Proposal 2:
- -----------
For 2,182,321
---------
Against 430,654
---------
Abstain 14,796
---------
Broker Non-Vote 2,438,225
---------
Proposal 3:
- -----------
For 4,818,127
---------
Against 9,315
---------
Abstain 238,554
---------
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
--------
The following is a list of exhibits filed as part of this Quarterly Report on
Form 10-Q.
Exhibit
Number Description
- ------ -----------
10.1 Amendment and Supplement to Collaborative Research and License
Agreement dated November 19, 1997 between Bayer Corporation and the
Company. The Company has excluded from this Exhibit 10.1 portions of
the Amendment and Supplement to Collaborative Research and License
Agreement for which the Company has requested confidential treatment
from the Securities and Exchange Commission. The portions of the
Amendment and Supplement to Collaborative Research and License
Agreement for which confidential treatment has been requested are
marked "[ ]" and such confidential portions have been filed
separately with the Securities and Exchange Commission.
10.2 Myriad Genetics, Inc. 1992 Employee, Director and Consultant Stock
Option Plan (as amended and restated September 11, 1997, filed as
Exhibit 10.1 to the Company's Registration Statement on Form S-8,
File No. 333-40961, effective November 25, 1997), and incorporated
herein by reference.
11.1 Statement Regarding Computation of Net Loss Per Share
27.1 Financial Date Schedule
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the quarter ended December 31, 1997.
14
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.
MYRIAD GENETICS, INC.
Date: February 12, 1998 By: /s/ Peter D. Meldrum
----------------- -------------------------------------
Peter D. Meldrum
President and Chief Executive Officer
Date: February 12, 1998 /s/ Jay M. Moyes
----------------- -------------------------------------
Jay M. Moyes
Vice President of Finance
(principal financial and accounting officer)
15
MYRIAD GENETICS, INC.
EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
10.1 Amendment and Supplement to Collaborative Research and License
Agreement dated November 19, 1997 between Bayer Corporation and the
Company. The Company has excluded from this Exhibit 10.1 portions of
the Amendment and Supplement to Collaborative Research and License
Agreement for which the Company has requested confidential treatment
from the Securities and Exchange Commission. The portions of the
Amendment and Supplement to Collaborative Research and License
Agreement for which confidential treatment has been requested are
marked "[ ]" and such confidential portions have been filed
separately with the Securities and Exchange Commission.
10.2 Myriad Genetics, Inc. 1992 Employee, Director and Consultant Stock
Option Plan (as amended and restated September 11, 1997, filed as
Exhibit 10.1 to the Company's Registration Statement on Form S-8,
File No. 333-40961, effective November 25, 1997), and incorporated
herein by reference.
11.1 Statement Regarding Computation of Net Loss Per Share
27.1 Financial Data Schedule
16
Exhibit 10.1
Amendment and Supplement to
Collaborative Research and License Agreement
This Amendment and Supplement dated as of the 19 of November, 1997, made between
Bayer Corporation ("Bayer") an Indiana corporation, having an office at 400
Morgan Lane, West Haven, Connecticut 06516-4175, and Myriad Genetics, Inc.
("Myriad") a Delaware corporation having an office at 320 Wakara Way, Salt Lake
City, Utah 84108.
WHEREAS, the parties have entered into a Collaborative Research and License
Agreement dated as of September 11, 1995 (the "1995 Agreement"); and
WHEREAS, the parties mutually agree to an amendment and supplement of the
1995 Agreement to add the Depression Field and the Dementia Field (as
hereinafter defined) and to provide for additional funding and an additional
period of time in which to conduct the Research Program relative to the
Depression Field; and additional funding for the Dementia Field.
Now, therefore, in consideration of the premises and for other good and
valuable consideration the receipt of which is hereby acknowledged, the parties
hereby agree as follows:
1. The following amendments are made to Section I of the 1995 Agreement:
(i) Section 1.11 is revised to read as follows:
"Field" means all human therapeutic and prophylactic uses, including but
-----
not limited to, [ ] and [ ] (including [ ]) for any clinical
indication of the genes Discovered under the Research Program involved in
or associated with obesity, asthma, depression (including unipolar major
depressive disorder, and bipolar disorder), dementia and osteoporosis, but
excluding any Discontinued Gene Targets.
1
(ii) The introductory paragraph of Section 1.16 is revised to read
as follows:
"Human Therapeutic Product" means any product for prophylactic or
-------------------------
therapeutic use in the prevention or treatment of any clinical indications
in humans, whether or not for the treatment or prevention of asthma,
obesity, depression, (including unipolar major depressive disorder, and
bipolar disorder), dementia, or osteoporosis, which is, or comprises:
The remainder of Section 1.16 remains unchanged.
(iii) Section 1.22, subparagraph (b) is revised as follows:
(b) any Myriad, University of Utah or other Myriad
collaboration databases of information concerning family
pedigrees and clinical data on such families;
(iv) Section 1.32 is revised as follows:
"Research Term" means the period beginning on the Effective
---------------
Date and ending on the date on which the Research Program
terminates or expires as set forth in Section 2.3 below. The
Research Term shall consist of the "Original Research Term" and
the "Additional Research Term" as defined in Section 2.3.1
below and shall include, for all or any portion of the Research
Program which is extended pursuant to Section 2.3.2, the period
that the Research Term is extended with respect thereto.
(v) Section 1.33 is revised as follows:
"Subfield" means the Asthma Field, the Obesity Field, the
--------
Depression Field, the Dementia Field, or the Osteoporosis
Field.
2
(vi) A new Section 1.36 is added as follows:
1.36 "Depression Field" means that portion of the Field relating to
----------------
the genes Discovered under the Research Program involved with or
associated with depression, including unipolar major depressive
disorder, and bipolar disorder.
(vii) A new Section 1.37 is added as follows:
1.37 "Original Research Field" means that portion of the Field
-------------------------
consisting of the Asthma Field, the Obesity Field and the Osteoporosis
Field.
(viii) New Sections 1.38, 1.39, 1.40, 1.41 and 1.42 are added
as follows:
1.38 "Dementia Field" means that portion of the Field relating to
--------------
genes Discovered under the Research Program involved in or associated
with dementia utilizing the ProNet Technology.
1.39 "Interactive Protein" shall mean a human protein or portion of
-------------------
a human protein which has been identified by means of the ProNet/(TM)/
Technology as a protein which directly, or indirectly through a series
of interactions, interacts with a protein or portion of a protein in
the Dementia Field which was used as a bait in Myriad's high-
throughput yeast two hybrid screen.
1.39(a) "Interactions" means contact between proteins that is
------------
sufficiently stable to allow the yeast two hybrid system to function
resulting in the identification of Interactive Proteins.
1.40 "Pathway" shall mean a series comprising up to ten (10) genes
-------
that interact with one another as defined by the ProNet
3
Technology and interact directly with an Interactive Protein as
defined by the ProNet Technology and includes the related
Interactions.
1.41 "ProNet Database" shall mean Myriad's proprietary compilation of
---------------
protein-protein interaction data for the human genome which is
generally accessible to Myriad's ProNet collaborators.
1.42 "ProNet(TM) Technology" shall mean the proprietary tools
---------------------
(robotics, plastics, software, etc.), proprietary methods (protocols,
processes, etc.) and proprietary reagents (vectors, strains, buffers
and solutions, etc.) used by Myriad to carry out the yeast two hybrid
protein-protein interaction studies.
1.43 "Selection Period" shall mean a period during which the
----------------
expression profile of an Interactive Protein is studied to gain an
understanding of its potential function.
2. Section 2.1.3 is revised as follows:
"Staffing and Resources." For the Original Research Term, Myriad will
----------------------
provide for use in the Research Program at least [ ] full-time
equivalent employees (FTEs) per year. For the Additional Research
Term, Myriad will provide [ ] FTEs for years 1, 4 and 5 for the
Depression Field and [ ] FTEs for year 1 and [ ] FTEs for years
2 & 3 for the Dementia Field. Appendix I attached hereto sets forth
the average staffing levels to be provided by Myriad for the Original
Research Term (as defined in Section 2.3.1) and the Additional
Research Term (as defined in Section 2.3.1). Should the Research
Program terminate for any reason prior to completion of the Original
Research Term or the Additional Research Term, as the case may be,
Myriad will not be in default if it shall have provided less than
[ ] full time equivalent employees per
4
year for the Original Research Term or less than [ ] full time
equivalent employees per year for research in the Depression Field or
Dementia Field through the date of termination.
The remainder of Section 2.1.3 remains unchanged, except that the
words "Research Term" in the third sentence of such section shall be
replaced with the words "Original Research Term".
3. The following sentence shall be added at the end of Section 2.1.4:
The parties shall mutually agree upon a schedule for completing the
Annual Research Plan related to the Depression Field and the Dementia
Field, with the goal of efficient incorporation of such planning
process into the ongoing work of the RSC.
4. The following sentence shall be added at the end of Section 2.1.5.
Myriad and its Affiliates will not, except under the Research Program,
perform sponsored research for any other company or other institution
with respect to genes within the Dementia Field, however nothing
herein will prevent Myriad from entering into non-exclusive licenses
for access to its ProNet Database or the licensing of rights with
respect to intellectual property therein.
5. The final sentence of Section 2.2.1 is replaced with the following
sentence:
If the Annual Research Plans for any Subfield in the Original Research
Field allocate less than [ ] to the Research Program for such
Subfield for more than one year, then Myriad may, at its option, elect
to cause all genes in such Subfield to be Discontinued Target Genes
under Section 2.28 hereof.
5
6. Section 2.3.1 is revised as follows:
2.3.1 The Research Term with respect to that portion of the Research
Program related to the Original Research Field ("the Original Research
Term") shall commence on the Effective Date and terminate five (5)
years after the Effective Date unless extended as provided below or
unless earlier terminated by either party pursuant to the termination
provisions below. [ ]. The Research Term with respect to that
portion of the Research Program related to the Depression Field (the
"Additional Research Term") shall commence as of the effective date of
this Amendment and shall terminate on September 10, 2002, unless
extended as provided below or unless earlier terminated by either
party pursuant to the termination provisions below. The term for the
Dementia Field shall commence as of the effective date of this
Amendment and terminate on December 31, 2000 unless extended by the
agreement of both parties. Bayer shall have the exclusive option, in
its discretion, to extend the term for the Dementia Field in one year
increments provided that Bayer funds the Dementia Field for each such
extension at funding levels to be negotiated in good faith by Bayer
and Myriad, but in no event less than [ ] per year during any
extension. For purposes of Section 2.3.2 below, (i) "Research Term"
shall mean the Original Research Term or the Additional Research Term,
as the case may be, and (ii) "Field" shall mean the Original Research
Field or the Depression Field, or the Dementia Field as the case may
be, such that the provisions of Section 2.3.2, governing the extension
of the Research Program, shall apply separately to the Original
Research Term and the Additional Research Term. By way of example, the
extension of the Original Research Term for an additional year beyond
September 10, 2000 will require Bayer to provide at least [ ] of
funding for ongoing research in the Original Research Field, while
Bayer shall continue to provide a total of [ ] per year for
research in the Depression Field and the Dementia Field during the
Additional Research
6
Term.
7. Add a new Section 16 as follows:
16. OPTION PERIOD FOR INTERACTIVE PROTEINS
16.1 Option for Interactive Proteins. Bayer, with Myriad's consultation,
-------------------------------
shall identify the initial baits for use in Myriad's high-throughput yeast
two hybrid screen and select the subset of Interactive Proteins for the
successive yeast two hybrid analysis. Upon the identification of an initial
Interactive Protein (P\\o\\), the Selection Period will begin for that
Interactive Protein. During the Selection Period, Bayer and Myriad will
further evaluate the Interactive Protein which has been identified. Upon
the earlier of either: (a) the identification of a second Interactive
Protein (P\\1\\) which interacts with the initial Interactive Protein
\\Po\\; or (b) the expiration of a period of [ ] from the identification of
the initial Interactive Protein P\\o\\ in the event identification of a
second Interactive Protein P\\1\\ is not underway within [ ] of
identification of the initial Interactive Protein P\\o\\, Bayer shall have
a period of [ ] (the "Exercise Period") to exercise an option for a period
of [ ] ("Option Period") to obtain an exclusive world-wide License (as
defined in Section 7.1 of the 1995 Agreement) including but not limited to
interactive proteins, Interactions, genes encoding them, the use of these
genes in research and drug screening, and transgenic cell lines and animals
containing these genes, Human Therapeutic Products which are comprised or
derived of any Interactive Protein within the Pathway. Prior to the end of
the Option Period, Bayer may exercise its right to acquire an exclusive
world-wide License to the Interactive Protein upon the payment by Bayer to
Myriad of [ ]. In addition, Bayer may extend the Option Period for any
specific Interactive Protein for an additional [ ] upon the payment of [ ]
Option Extension Fee per Interactive Protein. The License will contain a
milestone payment of [ ] at Decision Point No.1 which is defined as the
point at which a compound is considered to be characterized pursuant to the
1995 Agreement and is accepted by Bayer as a candidate for clinical
development and in addition, the milestone payment obligations numbered 3
through 6 as
7
set forth in Section 3.2 (Milestone Payments), as well as the royalty rates
and other terms and conditions contained in said Section 3.2 and Article 7
of the 1995 Agreement.
16.1.1 If Bayer has not exercised its option prior to the end of the
Exercise Period, Myriad shall retain all rights to the Interactive
Protein(s) and may place the Interactive Protein(s) into the ProNet
Database. Thereafter, Bayer will have the right to seek a license from
Myriad at any time, provided that Myriad has not licensed the rights to the
Interactive Protein(s) to another party.
16.1.2 If Bayer has not exercised its right to acquire a License prior
to the end of the Option Period, Myriad shall retain all rights to all
Interactive Proteins and may place all Interactive Protein(s) into the
ProNet Database. Thereafter, Bayer will have the right to seek a License
from Myriad at any time, provided that Myriad has not licensed the rights
to the Interactive Protein(s) to another party.
16.2 Successive Interactive Proteins. The identification of each
-------------------------------
successive Interactive Protein will begin a new Selection Period for each
successive Interactive Protein. For example, the identification of a
second Interactive Protein P\\1\\ which interacts with the initial
Interactive Protein P\\O\\ will begin the Selection Period for Interactive
Protein P\\1\\. The identification of a third Interactive Protein (P\\2\\)
which interacts with the second Interactive Protein P\\1\\ will begin a new
Selection Period for Interactive Protein P\\2\\.
16.3 Number of Option Rights. During the term of this Agreement, Bayer
-----------------------
can exercise its option on a maximum of [ ] Interactive Proteins and
their Pathways identified through the use of the ProNet Technology.
8. Funding: In accordance will Appendix II Bayer will pay Myriad [ ]
-------
in 1998 in addition to the funding in the original contract, to be used by
Myriad in carrying out research in the Depression and Dementia Fields. In
1999 and 2000, Myriad will perform research into the
8
Depression Field [ ] using the funds in the original contract, and Bayer
will pay an additional [ ] in each of these years, to be used by Myriad
in carrying out research in the Dementia Field. In the years 2001 and 2002
Bayer will pay Myriad [ ] each year, to be used by Myriad in carrying
out research in the Depression Field. During 1998, such funding shall be
payable in advance in equal installments of [ ] commencing on January 1,
1998 and continuing on April 1, 1998, July 1, 1998 and October 1, 1998.
Thereafter, during 1999, 2000, 2001 and 2002, such funding shall be payable
in advance in equal installments of [ ] commencing on January 1, 1999
and continuing on each April 1, July 1, and October 1 thereafter during the
Additional Research Term. On or about January 1, 1998, Bayer will make an
additional one time payment of [ ] to Myriad to be used exclusively in
carrying out the Research Program in the Depression Field. All funding
paid to Myriad under this Amendment and Supplement shall be used by Myriad
solely to fund the costs (including overhead) incurred by it in carrying
out the Depression Field portion and the Dementia Field portion of the
Research Program. Milestone payments and payment of Royalties under this
Amendment and Supplement shall be as provided in Sections 3.2 and 7.4,
respectively, of the 1995 Agreement.
9. Myriad and Bayer hereby agree to expand the Research Committee to
include up to six (6) members appointed by Bayer and six (6) members
appointed by Myriad. In accordance with Section 2.2.2 of the 1995
Agreement, Bayer hereby appoints the following members to the Research
Steering Committee [ ].
10. The provisions of Section 4.3 of the 1995 Agreement shall apply to the
disclosures by the parties with respect to this Amendment and Supplement.
11. All other provisions of the 1995 Agreement shall continue in full
force and effect.
IN WITNESS WHEREOF, the parties have caused this Amendment and Supplement to be
executed by their duly authorized representatives.
9
BAYER CORPORATION
By: /s/ R. Christopher Seaton
-------------------------
R. Christopher Seaton
Title: Vice President
-------------------------
Date: November 19, 1997
-------------------------
MYRIAD GENETICS, INC.
By: /s/ Peter D. Meldrum
-------------------------
Peter D. Meldrum
Title:
-------------------------
President and CEO
Date: November 19, 1997
-------------------------
November 18, 1997
10
APPENDIX I
FTE allocations
[ ]
Allocation of FTE's flexible and controlled by joint research committee
11
APPENDIX II
Overview - CNS collaboration payments
[ ]
Payments highlighted are our pre-existing obligations under current contract.
12
BAYER - MYRIAD JOINT RESEARCH PROGRAM IN CNS
DEPRESSION - [ ]
[ ]
DEMENTIA - [ ]
Goals
[ ]
Research Outline
MYRIAD
Library Construction
[ ]
ProNet Analysis
[ ]
Analysis of Selected Genes
[ ]
13
Exhibit 11.1
------------
Myriad Genetics, Inc.
Statement Regarding Computation of Net Loss Per Share
Three Months Ended Six Months Ended
Dec. 31, 1997 Dec. 31, 1996 Dec. 31, 1997 Dec. 31, 1996
------------- ------------- ------------- -------------
Net loss ($2,264,621) ($3,453,693) ($4,060,422) ($6,283,772)
Weighted average common shares
outstanding 9,279,892 8,743,530 9,259,025 8,728,177
----------------------------- -----------------------------
Shares used in computation 9,279,892 8,743,530 9,259,025 8,728,177
============================= =============================
Net loss per share ($0.24) ($0.39) ($0.44) ($0.72)
============================= =============================
5
6-MOS
JUN-30-1998
JUL-01-1997
DEC-31-1998
17,008,757
42,476,714
654,406
0
0
44,732,976
16,639,999
4,497,067
72,606,730
9,854,415
0
0
0
92,979
62,659,336
72,606,730
934,463
11,013,395
541,585
16,754,400
0
0
20,897
(4,060,422)
0
(4,060,422)
0
0
0
(4,060,422)
(.44)
(.44)
