10-Q 1 isrp10q01a.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [x] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarter ended March 31, 2001 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: 2-89332 INTERFERON SCIENCES RESEARCH PARTNERS, LTD. (Exact Name of Registrant as Specified in its Charter) New Jersey 22-2502556 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 783 Jersey Avenue, New Brunswick, New Jersey 08901 (Address of principal executive offices) (Zip code) (732) 249-3250 (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 ___

The accompanying notes are an integral part of these condensed financial statements.

The accompanying notes are an integral part of these condensed financial statements.

The accompanying notes are an integral part of these condensed financial statements. INTERFERON SCIENCES RESEARCH PARTNERS, LTD. NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) Note 1. Basis of Presentation The financial information included herein is unaudited. Such information, however, reflects all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of the General Partner necessary for a fair statement of the results for the interim periods. The results for interim periods are not necessarily indicative of results to be expected for the year. Note 2. Related Party Transactions During 1984, the Partnership and Interferon Sciences, Inc. (ISI) entered into several agreements including a Development Contract whereby substantially all of the net proceeds of the 1984 sale of Partnership Units were paid to ISI in periodic payments over the term of the Partnership's development program. Such payments were used to fund research and development and clinical trials necessary for obtaining regulatory approval with respect to a topical formulation containing recombinant alpha interferon for the treatment of herpes genitalis (Alferon(R) Gel). Through 1986, the Partnership paid ISI $4,555,000, under this agreement. Through 1990, the General Partner, Interferon Sciences Development Corporation (ISD), contributed $1,997,000, to the Partnership, which used such funds to pay for additional research and development for the benefit of the Partnership. Beginning in 1992, ISI commenced further development of Alferon Gel using ISI's natural source multi-species alpha interferon (Alferon N Gel) in place of recombinant interferon. Note 3. Interferon Sciences Development Corporation and Interferon Sciences, Inc. ISD, the General Partner, is a wholly owned subsidiary of ISI. From September 1986 through October 1990, ISD's total capitalization was used to fund Partnership expenses. ISD was totally dependent upon ISI for capital to be able to fund the Partnership during this period and is totally dependent on ISI for future capital. Beginning in 1992, ISI commenced development of ALFERON N Gel using its own funds. ISI has had continuing losses from operations, has an accumulated deficit, and has limited liquid resources which raise substantial doubt about its ability to continue as a going concern and therefore there is substantial doubt about the partnership's ability to continue as a going concern. The Partnership is dependent on the General Partner for on-going financial support to cover incidental costs of retaining the Partnership. Such costs are paid by ISI and, as they are de minimis, are not reflected on the accompanying financial statements. INTERFERON SCIENCES RESEARCH PARTNERS, LTD. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Financial Condition and Liquidity As of September 30, 1986, the Partnership had exhausted all of its available funds for the funding of research and development of Alferon Gel. The General Partner agreed to contribute up to an additional $433,000, under certain conditions, to continue the research. Such amount was based on the number of units sold in the offering. Notwithstanding that commitment, from September 1986 to October 1990, the General Partner contributed $1,997,000 towards the cost of such research. During May 1987, ISI filed a Product License Application with the Food and Drug Administration (FDA) for approval to market Alferon Gel. This filing was supplemented in 1989 with an updated clinical summary and a comprehensive statistical analysis of the completed trials. At a meeting with the FDA in February 1990, the FDA indicated that additional process development and clinical trials would be necessary prior to approval of Alferon Gel. ISI believed, at that time, that the costs to complete the required process development and clinical trials would be substantial, and there could be no assurance that the clinical trials would be successful. As a result of the above events, in March 1992, ISI withdrew its FDA Product License Application for Alferon Gel containing recombinant interferon. The General Partner does not anticipate that the Partnership will receive any revenues in 2001. In addition, the Partnership is not in a position to incur additional expenses since it has exhausted all its available funds. The independent auditors' report, dated March 9, 2001, on the Partnership's financial statements as of and for the year ended December 31, 2000 contained an explanatory paragraph indicating that ISI has suffered recurring losses from operations, has an accumulated deficit and has limited liquid resources that raise substantial doubt about the Partnership's ability to continue as a going concern. ISI does not presently intend to exploit ALFERON Gel (the Partnership Product). ISI had focused its clinical efforts on ALFERON N Gel, a formulation containing ISI's natural alpha interferon (interferon alfa-n3) which was developed for the topical treatment of viral diseases and cancers affecting the skin and mucosal tissues. A Phase 2 pilot clinical trial utilizing its reformulated ALFERON N Gel has been completed for the treatment of cervical dysplasia. Under the terms of the Partnership Agreement, a royalty may be payable to the Partnership by reason of the commercial exploitation of ALFERON N Gel to the extent that it utilizes any of the Partnership Technology, which royalty will be adjusted based upon the proportional funding contributions to the development of ALFERON N Gel by the Partnership and ISI. ISI currently does not plan to continue the development of ALFERON N Gel. However, if ISI obtains substantial additional financing in the future, or a sponsor can be secured, ISI may exploit ALFERON N Gel for herpes genitalis that may entitle the Partnership to a royalty in respect to a product that competes with the Partnership Product. This royalty will be adjusted based upon the proportional funding contributions to the development of ALFERON N Gel by the Partnership and ISI. Results of Operations The Partnership was inactive during the three months ended March 31, 2001 and 2000, and has generated no revenue nor incurred any expense during these periods. The Partnership is dependent on the General Partner for on-going financial support to cover incidental costs of retaining the Partnership. INTERFERON SCIENCES RESEARCH PARTNERS, LTD. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (b) Reports on Form 8-K There were no reports on Form 8-K filed during the three months ended March 31, 2001. INTERFERON SCIENCES RESEARCH PARTNERS, LTD. March 31, 2001 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed in its behalf by the undersigned thereunto duly authorized. Interferon Sciences Research Partners, Ltd., A Limited Partnership (Registrant) By: Interferon Sciences Development Corporation - General Partner DATE: May 15, 2001 By: /s/ Samuel H. Ronel, Ph.D. --------------------------- Samuel H. Ronel, Ph.D. President DATE: May 15, 2001 By: /s/ Donald W. Anderson --------------------------- Donald W. Anderson Controller

INTERFERON SCIENCES RESEARCH PARTNERS LTD 10-Q