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 June 30, 2002
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from ____ to ____
Commission file number 0-13634
MACROCHEM CORPORATION
---------------------
(Exact name of registrant as specified in its charter)
Delaware 04-2744744
- ----------------------------------- ---------------------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
110 Hartwell Avenue, Lexington, Massachusetts 02421-3134
--------------------------------------------------------
(Address of principal executive offices, Zip Code)
781-862-4003
------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
------- -------
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at July 31, 2002:
- ---------------------------- -----------------------------
Common Stock, $.01 par value 27,932,804
MACROCHEM CORPORATION
INDEX TO FORM 10-Q
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Page Number
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PART I FINANCIAL INFORMATION
Item 1 Unaudited Financial Statements
Condensed Balance Sheets
June 30, 2002 and December 31, 2001 3
Condensed Statements of Operations for the
Three and Six months Ended June 30, 2002 and 2001 4
Condensed Statements of Cash Flows for the
Six Months Ended June 30, 2002 and 2001 5
Notes to Unaudited Condensed Financial
Statements 6-8
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-12
Item 3 Quantitative and Qualitative Disclosures About Market Risk 12-13
PART II OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security Holders 14
Item 6 Exhibits and Reports on Form 8-K 14
SIGNATURES 15
EXHIBIT INDEX 16
2
ITEM 1. FINANCIAL STATEMENTS
MACROCHEM CORPORATION
CONDENSED BALANCE SHEETS
(Unaudited)
(Amounts in thousands except share data)
June 30, December 31,
2002 2001
--------------- ---------------
ASSETS
Current assets:
Cash and cash equivalents $ 1,040 $ 697
Short-term investments 11,050 15,833
Accounts receivable --- 375
Receivable due from related party 25 24
Prepaid expenses and other current assets 353 171
--------------- ---------------
Total current assets 12,468 17,100
--------------- ---------------
Property and equipment, net 465 530
--------------- ---------------
Other assets:
Patents, net 622 599
Deposits 29 29
--------------- ---------------
Total other assets 651 628
--------------- ---------------
Total assets $ 13,584 $ 18,258
=============== ===============
LIABILITIES
Current liabilities:
Accounts payable $ 27 $ 5
Accrued expenses 770 1,355
--------------- ---------------
Total current liabilities 797 1,360
Deferred rent 50 49
--------------- ---------------
Total liabilities 847 1,409
--------------- ---------------
Commitments and contingencies
STOCKHOLDERS' EQUITY
Preferred stock, authorized and unissued, 6,000,000 shares --- ---
Common stock, $.01 par value, 60,000,000 shares authorized;
28,163,054 and 28,158,054 shares issued at June 30,
2002 and December 31, 2001, respectively 282 282
Additional paid-in capital 73,083 73,020
Accumulated deficit (59,726) (55,374)
Unearned compensation (4) (71)
Less treasury stock, at cost, 230,250 and 253,346
shares at June 30, 2002 and December 31, 2001,
respectively (898) (1,008)
--------------- ---------------
Total stockholders' equity 12,737 16,849
--------------- ---------------
Total liabilities and stockholders' equity $ 13,584 $ 18,258
=============== ===============
The accompanying notes are an integral part of these unaudited condensed
financial statements.
3
MACROCHEM CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
For the three and six months ended June 30, 2002 and 2001
(Unaudited)
(Amounts in thousands except share and per share data)
For the three months ended June 30, For the six months ended June 30,
----------------------------------- ---------------------------------
2002 2001 2002 2001
---- ---- ---- ----
Research contract revenues $ --- $ --- $ 43 $ ---
----------- ----------- ----------- -----------
Operating expenses:
Research and development 964 2,481 2,199 5,025
Marketing, general and administrative 1,222 1,145 2,286 1,921
Consulting fees with related parties 15 15 30 31
----------- ----------- ----------- -----------
Total operating expenses 2,201 3,641 4,515 6,977
----------- ----------- ----------- -----------
Loss from operations (2,201) (3,641) (4,472) (6,977)
---------- ---------- ----------- -----------
Other income (expense):
Interest income 53 191 120 345
----------- ----------- ----------- -----------
Total other income 53 191 120 345
----------- ----------- ----------- -----------
Net loss $ (2,148) $ (3,450) $ (4,352) $ (6,632)
=========== =========== =========== ===========
Net loss per share -
basic and diluted $ (0.08) $ (0.13) $ (0.16) $ (0.28)
=========== =========== =========== ===========
Weighted average shares 27,920,000 25,862,000 27,914,000 23,332,000
outstanding (basic and diluted)
The accompanying notes are an integral part of these unaudited condensed
financial statements.
4
MACROCHEM CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
For the six months ended June 30, 2002 and 2001
(Unaudited)
(Amounts in thousands)
For the six months ended June 30,
---------------------------------
2002 2001
---- ----
Cash flows from operating activities:
Net loss $ (4,352) $ (6,632)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization 109 81
Stock-based compensation 185 329
401(k) contribution in Company common stock 55 47
Deferred rent 1 7
Changes in assets and liabilities:
Accounts receivable 375 31
Prepaid expenses and other current assets (182) (64)
Accounts payable and accrued expenses (562) 522
------------ -----------
Net cash used by operating activities (4,371) (5,679)
------------ -----------
Cash flows from investing activities:
Sales of short-term investments 4,783 4,333
Expenditures for property and equipment (28) (190)
Additions to patents (39) (18)
------------ -----------
Net cash provided by investing activities 4,716 4,125
------------ -----------
Cash flows from financing activities:
Proceeds from exercise of common stock options --- 1,854
Proceeds from exercise of warrants --- 372
------------ -----------
Net cash provided by financing activities --- 2,226
------------ -----------
Net change in cash and cash equivalents 343 672
Cash and cash equivalents at beginning of period 697 589
------------ -----------
Cash and cash equivalents at end of period $ 1,040 $ 1,261
============ ===========
The accompanying notes are an integral part of these unaudited condensed
financial statements.
5
MACROCHEM CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(1) Basis of Presentation
---------------------
The financial statements included herein have been prepared by
MacroChem Corporation ("MacroChem" or the "Company") without audit,
pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been
condensed or omitted pursuant to such rules and regulations. In the
opinion of management, the accompanying unaudited financial statements
include all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the financial position,
results of operations and cash flows of the Company at the dates and
for the periods indicated. The unaudited financial statements included
herein should be read in conjunction with the audited financial
statements and the notes thereto included in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 2001.
The results disclosed in the Statement of Operations for the six months
ended June 30, 2002 are not necessarily indicative of the results to be
expected for the full year.
MacroChem is a biopharmaceutical company engaged in the development and
commercialization of a portfolio of products through the application of
SEPA(R) (Soft Enhancer of Percutaneous Absorption), its patented
topical drug delivery technology.
(2) Revenue Recognition
-------------------
Research contract revenues consist of non-refundable research and
development funding under collaborative agreements with various
corporate or government organizations. Research and development funding
is generally recognized as revenue at the time the research and
development activities are performed under the terms of the related
agreements, when the corporate partner is obligated to pay and when no
future performance obligations exist. Payments received in advance of
services provided result in the deferral of revenue recognition to
future periods.
6
(3) Basic and Diluted Loss Per Share
--------------------------------
The following table sets forth the computation of basic and diluted
loss per share:
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2002 2001 2002 2001
---- ---- ---- ----
Numerator for basic and diluted
loss per share:
Net loss $ (2,148,000) $(3,450,000) $(4,352,000) $(6,632,000)
============= ============ ============ ============
Denominator for basic and diluted
loss per share:
Weighted average shares
outstanding 27,920,000 25,862,000 27,914,000 23,332,000
============= ============ ============ ============
Net loss per share - basic and
diluted $ (0.08) $ (0.13) $ (0.16) $ (0.28)
============= ============ ============ ============
Potential common shares are not included in the per share calculations
for diluted EPS, because the effect of their inclusion would be
anti-dilutive. Anti-dilutive potential shares not included in per share
calculations for the six months ended June 30, 2002 and 2001 were
5,075,485 and 4,399,966 respectively.
(4) Stockholders' Equity
--------------------
During the six months ended June 30, 2002, 493,000 options were granted
under the 2001 Incentive Plan (the "Plan"). No options were exercised
during the same period. Also during the same period, 46,100 options
were canceled under the Plan.
Under the 1994 Equity Incentive Plan (the "1994 Plan"), no shares were
exercised during the six-month period ended June 30, 2002. During the
same period, 144,000 options were canceled under the 1994 Plan.
During the six months ended June 30, 2002, no options were exercised or
canceled under the 1984 Non Qualified Plan.
Warrants to purchase common stock were issued in connection with an
October 2000 private placement to two institutional investors. The
warrants issued consist of warrants to purchase an aggregate of 363,322
shares of common stock at a purchase price of $5.90 per share for five
years. Through June 30, 2002, none of the $5.90 warrants had been
exercised. Additionally, each investor received a warrant to purchase
additional shares of common stock at a purchase price of $.01 per share
exercisable only upon certain conditions relating to the trading price
of common stock during the period following the effectiveness of the
related registration statement. A total of 880,314 of the $.01 warrants
were exercised through June 30, 2001, and there are no further
exercises available under these $.01 warrants. The placement agent
received a warrant to purchase 108,999 shares of common stock at a
7
purchase price of $7.43 for five years. Through June 30, 2002, 50,000
of the $7.43 warrants had been exercised. None were exercised in the
six months ended June 30, 2002.
In July 2001, the Company sold 1,566,047 shares of its common stock for
approximately $10,148,000 in gross proceeds ($9,406,000 net of issuance
costs) in a private placement to institutional investors.
The investors in the July 2001 transaction also received warrants to
purchase an aggregate of 313,209 shares of common stock at a purchase
price of $8.995 per share. These warrants expire five years from the
closing date and are callable by the Company if the closing price of
the stock is higher than $17.99 for 15 consecutive trading days at any
time before expiration. As of June 30, 2002, none of the $8.995
warrants had been exercised.
(5) Comprehensive Income
--------------------
The Company reports comprehensive income in accordance with Statement
of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income", which requires businesses to disclose
comprehensive income and its components in their general-purpose
financial statements. Comprehensive income (loss) is equal to the
Company's net loss for the six months ended June 30, 2002 and 2001.
(6) Recent Accounting Pronouncements
--------------------------------
In June 2001, the Financial Accounting Standards Board ("FASB") issued
two new pronouncements: Statement of Financial Accounting Standards
("SFAS") No. 141, Business Combinations ("SFAS No. 141"), and SFAS No.
142, Goodwill and Other Intangible Assets ("SFAS No. 142"). SFAS No.
141 is effective as follows: a) use of the pooling-of-interest method
is prohibited for business combinations initiated after June 30, 2001;
and b) the provisions of SFAS No. 141 also apply to all business
combinations accounted for by the purchase method that are completed
after June 30, 2001 (that is, the date of acquisition is July 2001 or
later). SFAS No. 142 is effective for fiscal years beginning after
December 15, 2001 to all goodwill and other intangible assets
recognized in an entity's statement of financial position at that date,
regardless of when those assets were initially recognized. SFAS No. 142
requires that upon adoption, amortization of goodwill and other
intangible assets with indefinite useful lives will cease and instead,
the carrying value of these assets will be evaluated for impairment on
an annual basis. On January 1, 2002, the Company adopted these
statements, which had no effect on the Company's financial position or
results of operations.
In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" ("SFAS No. 144"), which
addresses financial accounting and reporting for the impairment or
disposal of long-lived assets. This Statement supercedes SFAS No. 121,
and the accounting and reporting provisions of APB 30, for the disposal
of a segment of a business. The provisions of SFAS No. 144 were
required to be adopted by the Company effective January 1, 2002. On
January 1, 2002, the Company adopted this statement, which had no
effect on the Company's financial position or results of operations.
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
General
- -------
MacroChem's primary business is the development of pharmaceutical products for
commercialization by employing SEPA(R) (Soft Enhancer of Percutaneous
Absorption), its patented drug delivery technology. SEPA compounds, when
properly combined with drugs, provide pharmaceutical formulations (creams, gels,
lacquers, solutions, etc.) that enhance the transdermal delivery of drugs into
the skin or into the bloodstream. The Company currently derives no significant
revenue from product sales, royalties or license fees. The Company is developing
specific SEPA formulations for use with proprietary and non-proprietary drugs
manufactured by other pharmaceutical companies, and to commercialize these
products through the formation of partnerships, strategic alliances and
licensing arrangements with those companies. In order to attract strategic,
development or marketing partners, the Company is conducting clinical testing of
certain SEPA-enhanced drugs.
The Company's results of operations can vary significantly from year to year and
quarter to quarter, and depend, among other factors, on the signing of new
licenses and product development agreements, the timing of revenues recognized
pursuant to license agreements, the achievement of milestones by licensees, the
progress of clinical trials conducted by licensees and the Company, and the
degree of research, marketing and administrative effort. The timing of the
Company's revenues may not match the timing of the Company's associated product
development expenses. To date, research and development expenses have generally
exceeded revenues in any particular period and/or fiscal year.
Critical Accounting Policies
- ----------------------------
Note 1 of the consolidated financial statements included within the Company's
Form 10-K for the year ended December 31, 2001, includes a summary of the
significant accounting policies and methods used in the preparation of our
consolidated financial statements. The following is a brief discussion of the
more significant accounting policies and methods used by us.
The Company's discussion and analysis of its financial condition and results of
operations are based upon our financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States of
America. The preparation of these financial statements requires the Company to
make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses.
The Company believes the following critical accounting policies affect its more
significant judgments and estimates used in the preparation of its financial
statements. As more fully described in the notes to the consolidated financial
statements included in the Form 10-K for the year ended December 31, 2001, we
derive revenue from research and co-development programs. Research and
development funding is generally recognized as revenue at the time the research
and development activities are performed under the terms of the related
agreements, when the counter-party is obligated to pay, and when no future
performance obligation exists. Research and co-development revenue is billed on
9
a cost reimbursement basis, which includes direct costs incurred in connection
with research activities and an allocation of certain other costs incurred by
the Company.
Costs and expenses incurred in connection with pending patent applications are
deferred. Costs related to successful patent applications are amortized over the
estimated useful lives of the patents using the straight-line method.
Accumulated costs related to patents or deferred patent application costs that
are considered to have limited future value are charged to operations.
Results of Operations
- ---------------------
Revenues, consisting of research contract revenues, were zero in the three-month
period ended June 30, 2002 and increased to $43,000, in the six-month period
ended June 30, 2002. The increase in revenues during the six-month period ended
June 30, 2002 is the result of the Company obtaining a small business grant in
September of 2001, funded by the Department of Health and Human Services.
Research and development expenses decreased $1,517,000, or 61%, to $964,000 in
the three-month period ended June 30, 2002 from $2,481,000 in the three-month
period ended June 30, 2001 and decreased $2,826,000, or 56%, to $2,199,000 in
the six-month period ended June 30, 2002. The decrease in the three and
six-month period is primarily attributable to the funding of Topiglan Phase III
clinical trial studies being performed during the first and second quarters of
2001. The level of research and development expenses is highly dependent on the
timing and extent of new and ongoing clinical trials.
Marketing, general and administrative expenses increased $77,000, or 7%, to
$1,222,000 in the three months ended June 30, 2002 from $1,145,000 in the
three-month period ended June 30, 2001 and increased $365,000, or 19%, to
$2,286,000 in the six months ended June 30, 2002 from $1,921,000 in the six
months ended June 30, 2001. The increase in the three and six-month periods is
primarily attributable to normal yearly salary increases, additional personnel,
including an in-house legal counsel and administrative assistant, and an
increase in related personnel expenses, offset by a decrease in stock
compensation expense and legal fees. We anticipate no significant incremental
increases in marketing, general and administrative expenses for the next two
quarters.
Other income decreased $138,000, or 72%, to $53,000 in the three-month period
ended June 30, 2002 from $191,000 in the three-month period ended June 30, 2001
and decreased $225,000, or 65%, to $120,000 in the six-month period ended June
30, 2002 from $345,000 in the six months ended June 30, 2001. The decrease in
the three and six-month periods were due to an average lower invested balance of
cash and cash equivalents resulting from funds used in Company operations and a
decrease in overall return rates.
For the reasons described above, net loss decreased $1,302,000, or 38%, to
$2,148,000 in the three-month period ended June 30, 2002 from $3,450,000 in the
three-month period ended June 30, 2001 and decreased $2,280,000, or 34%, to
$4,352,000 in the six-month period ended June 30, 2002 from $6,632,000 in the
six months ended June 30, 2001.
10
Liquidity and Capital Resources
- -------------------------------
Since inception, the primary source of funding for the Company's operations has
been the private and public sale of its securities, and to a lesser extent, the
licensing of its proprietary technology and products, government grants and the
limited sales of products and test materials. During the first six months of
2002, the Company did not receive any net proceeds from the exercise of stock
options and warrants compared to approximately $2,226,000 from the exercise of
stock options for the six months ended June 30, 2001.
At June 30, 2002, working capital was approximately $11,700,000, compared to
$15,700,000 at December 31, 2001. The decrease in the Company's working capital
was due primarily to funds used for operations and resulted in a lower balance
of cash and equivalents and short term investments. Until such time as the
Company obtains agreements with third-party licensees or partners to provide
funding for the Company's anticipated business activities or the Company is able
to obtain additional funds through the private or public sale of its securities,
the Company's working capital will be utilized primarily to fund its operating
activities.
Capital expenditures and additional patent development costs for the six months
ended June 30, 2002 were approximately $67,000. The Company anticipates
additional capital expenditures of approximately $190,000 for the remainder of
the current year.
The Company's long term capital requirements will depend upon numerous factors,
including the progress of the Company's research and development programs; the
resources that the Company devotes to self-funded clinical testing of
SEPA-enhanced compounds, proprietary manufacturing methods and advanced
technologies; the ability of the Company to enter into licensing arrangements or
other strategic alliances; the ability of the Company to manufacture products
under those arrangements and the demand for its products or the products of its
licensees or strategic partners if and when approved for sale by regulatory
authorities. In any event, substantial additional funds may be required before
the Company is able to generate revenues sufficient to support its operations.
There is no assurance that the Company will be able to obtain such additional
funds on favorable terms, if at all. The Company's inability to raise sufficient
funds could require it to delay, scale back or eliminate certain research and
development programs. The Company believes that its existing cash, cash
equivalents and short term investments will be sufficient to meet its operating
expenses and capital expenditure requirements for at least the next twelve
months. The Company's cash requirements may vary materially from those now
planned because of changes in focus and direction of the Company's research and
development programs, competitive and technical advances, patent developments or
other developments. It is not believed that inflation will have any significant
effect on the results of the Company's operations.
Recent Accounting Pronouncements
- --------------------------------
In June 2001, the Financial Accounting Standards Board ("FASB") issued two new
pronouncements: Statement of Financial Accounting Standards ("SFAS") No. 141,
Business Combinations ("SFAS No. 141"), and SFAS No. 142, Goodwill and Other
Intangible Assets ("SFAS No. 142"). SFAS No. 141 is effective as follows: a) use
of the pooling-of-interest method is prohibited for business combinations
initiated after June 30, 2001; and b) the provisions of SFAS No. 141 also apply
11
to all business combinations accounted for by the purchase method that are
completed after June 30, 2001 (that is, the date of acquisition is July 2001 or
later). SFAS No. 142 is effective for fiscal years beginning after December 15,
2001 to all goodwill and other intangible assets recognized in an entity's
statement of financial position at that date, regardless of when those assets
were initially recognized. SFAS No. 142 requires that upon adoption,
amortization of goodwill and other intangible assets with indefinite useful
lives will cease and instead, the carrying value of these assets will be
evaluated for impairment on an annual basis. On January 1, 2002, the Company
adopted these statements, which had no effect on the Company's financial
position or results of operations.
In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" ("SFAS No. 144"), which addresses financial
accounting and reporting for the impairment or disposal of long-lived assets.
This Statement supercedes SFAS No. 121, and the accounting and reporting
provisions of APB 30, for the disposal of a segment of a business. The
provisions of SFAS No. 144 were required to be adopted by the Company effective
January 1, 2002. On January 1, 2002, the Company adopted this statement, which
had no effect on the Company's financial position or results of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
As of June 30, 2002, the Company is exposed to market risks which relate
primarily to changes in U.S. interest rates. The Company's cash equivalents and
short term investments are subject to interest rate risk and will decline in
value if interest rates increase. Due to the short duration of these financial
instruments, generally one year or less, changes to interest rates would not
have a material effect upon the Company's financial position. A hypothetical 10%
change in interest rates would not have a material effect on our Statement of
Operations or Cash Flows for the six months ending June 30, 2002.
THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM THE
RESULTS DISCUSSED IN THE FORWARD-LOOKING STATEMENTS IN THIS REPORT AND IN
FORWARD-LOOKING STATEMENTS MADE FROM TIME TO TIME BY THE COMPANY ON THE BASIS OF
MANAGEMENT'S THEN-CURRENT EXPECTATIONS. FACTORS THAT MIGHT CAUSE SUCH A
DIFFERENCE INCLUDE, BUT ARE NOT LIMITED TO THE FOLLOWING: THE COMPANY'S HISTORY
OF OPERATING LOSSES AND NEED FOR CONTINUED WORKING CAPITAL; TECHNOLOGICAL
UNCERTAINTY RELATING TO TRANSDERMAL DRUG DELIVERY SYSTEMS AND THE EARLY STAGE OF
DEVELOPMENT OF THE COMPANY'S PROPOSED PRODUCTS; THE COMPANY'S NEED FOR
SIGNIFICANT ADDITIONAL PRODUCT DEVELOPMENT EFFORTS AND ADDITIONAL FINANCING;
UNCERTAINTIES RELATED TO CLINICAL TRIALS OF THE COMPANY'S PROPOSED PRODUCTS; THE
COMPANY'S DEPENDENCE ON THIRD PARTIES FOR COMMERCIALIZATION; NO ASSURANCE OF
LICENSE ARRANGEMENTS; THE LACK OF SUCCESS OF THE COMPANY'S PRIOR DEVELOPMENT
EFFORTS; UNCERTAINTIES RELATING TO GOVERNMENT REGULATION AND REGULATORY
APPROVALS; THE COMPANY'S DEPENDENCE ON THIRD PARTIES FOR THE FDA APPLICATION
PROCESS; THE COMPANY'S LACK OF EXPERIENCED MARKETING PERSONNEL AND DEPENDENCE ON
THIRD PARTIES FOR MARKETING AND DISTRIBUTION; THE COMPANY'S DEPENDENCE ON THIRD
PARTIES FOR MANUFACTURING; THE COMPANY'S RELIANCE ON KEY EMPLOYEES, THE LIMITED
PERSONNEL OF THE COMPANY AND ITS DEPENDENCE ON ACCESS TO SCIENTIFIC TALENT;
UNCERTAINTIES RELATING TO COMPETITION, PATENTS AND PROPRIETARY TECHNOLOGY;
UNCERTAINTIES RELATING TO RISKS OF PRODUCT LIABILITY CLAIMS, LACK OF PRODUCT
12
LIABILITY INSURANCE, AND EXPENSE AND DIFFICULTY OF OBTAINING ADEQUATE INSURANCE
COVERAGE; UNCERTAINTY OF PHARMACEUTICAL PRICING AND RELATED MATTERS; AND OTHER
FACTORS. ADDITIONAL INFORMATION ON THESE AND OTHER FACTORS WHICH COULD AFFECT
THE COMPANY'S ACTUAL RESULTS AND EXPERIENCE ARE INCLUDED IN THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2001 AND, IN PARTICULAR, THE
SECTION ENTITLED "RISK FACTORS".
13
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting of Stockholders was held on June 27, 2002. At the
meeting (i) all six director nominees were elected and (ii) the appointment of
Deloitte & Touche LLP as the independent auditors was ratified.
(i) The following directors were elected for one-year terms by the votes
indicated:
Robert J. Palmisano, 25,733,270 for, 390,550 against or withheld;
John L. Zabriskie, 25,766,045 for, 357,775 against or withheld; Peter
G. Martin, 25,765,945 for, 357,875 against or withheld; Michael A.
Davis, 25,765,800 for, 358,020 against or withheld; Robert J.
DeLuccia, 25,766,045 for, 357,775 against or withheld; and Paul S.
Echenberg, 25,765,945 for, 357,875 against or withheld.
(ii) The appointment of Deloitte & Touche LLP was ratified by a vote of
25,949,930 for, 107,252 against and 66,638 abstaining.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) The following exhibits are filed herewith:
10.1 Form of Employment Agreement between the Company and
Dennis R. Fowler, M.D., Ph.D.
99.1 Certification Pursuant to Section 1350, Chapter 63 of
Title 18, United States Code, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
(b) No reports on Form 8-K were filed during the quarter for which
this report is filed.
14
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MacroChem Corporation
---------------------
(Registrant)
August 14, 2002 /s/ Robert Palmisano
---------------------------------------
Robert Palmisano
President and Chief Executive Officer
(Principal Executive Officer)
/s/ Bernard Patriacca
--------------------------------------
Bernard Patriacca
Chief Financial Officer
(Principal Financial Officer)
15
EXHIBIT INDEX
The following designated exhibits are filed herewith:
10.1 Form of Employment Agreement between the Company and Dennis R. Fowler,
M.D., Ph.D.
99.1 Certification Pursuant to Section 1350, Chapter 63 of Title 18, United
States Code, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
16