SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For Quarter Ended March 31, 1996 Commission file number 0-3390
UNIMED PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 22-1685346
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2150 E. Lake Cook Rd., 60089
Buffalo Grove, Illinois (Zip Code)
(Address of principal executive
offices)
Registrant's telephone number (847) 541-2525
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 close of the
period covered by this report:
Title of each class Number of shares outstanding
Common Stock 8,620,886
($.25 par value)
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UNIMED PHARMACEUTICALS, INC. AND SUBSIDIARIES
Page
Number
PART I. Financial Information
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of 5
Operations
Condensed Consolidated Statements of Cash 6
Flows
Notes to Condensed Consolidated Financial 7
Statements
Management's Discussion and Analysis of 8
ITEM 2. Results of Operations and Financial
Condition
PART II. Other Information 10
SIGNATURE PAGE 11
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PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
UNIMED PHARMACEUTICALS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
March 31, December 31,
1996 1995
ASSETS (unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 20,205,946 $ 7,011,843
Short-term investments - - - 1,388,756
Receivables:
Trade 934,378 1,548,148
Other 49,434 535,104
Total receivables 983,812 2,083,252
Inventories 2,748,203 3,327,939
Prepaid expenses 274,301 276,043
Total current assets 24,212,262 14,087,833
Leasehold improvements and
equipment 1,930,264 1,922,006
Less accumulated depreciation and
amortization 1,092,641 1,050,866
Net 837,623 871,140
Investment, at cost 600,000 600,000
Other assets 725,189 746,208
Total assets $ 26,375,074 $ 16,305,181
See accompanying notes to consolidated financial statements.
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<TABLE>
Item 1 - Financial Statements
UNIMED PHARMACEUTICALS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
March 31, December 31,
1996 1995
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
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Current liabilities:
Accounts payable $ 166,891 $ 416,705
Accrued liabilities 477,045 511,446
Income taxes payable 14,231 20,000
Due to Roxane 3,190,324 3,716,633
Deferred research and development revenues 2,036,035 1,000,000
Total current liabilities 5,884,526 5,664,784
Stockholders' equity:
Common stock, $.25 par value; authorized
12,000,000 shares; issued and outstanding:
8,620,886 and 6,270,886 2,155,222 1,567,722
Additional paid-in capital 26,602,939 17,559,861
Accumulated deficit (8,308,430) (8,527,869)
Accumulated foreign currency translation
adjustment 40,817 40,683
Total stockholders' equity 20,490,548 10,640,397
Total liabilities and stockholders'
equity $26,375,074 $ 16,305,181
See accompanying notes to consolidated financial statements.
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UNIMED PHARMACEUTICALS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
Three Months Ended March 31, 1996 and 1995
(Unaudited)
March 31, March 31,
1996 1995
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Net sales $ 1,556,247 $ 1,672,382
Research and development revenue 172,180 - - -
Total revenue 1,728,427 1,672,382
Cost of sales 678,551 708,657
Gross profit 1,049,876 963,725
Operating and administrative expenses 559,336 579,551
Sales and marketing expenses 218,779 270,463
Research and development expenses 431,071 113,988
Loss from operations (159,310) (277)
Other income (expense):
Gain on sale of trademark 200,000 - - -
Interest income 193,837 102,218
Other expense (21,019) - - -
Income before income taxes 213,508 101,941
Income tax benefit 5,931 8,300
Net income $ 219,439 $ 110,241
Net income per share:
Primary $ .03 $ .02
Fully diluted $ .03 $ .02
Weighted average number of common and
common equivalent shares outstanding:
Primary 7,836,824 6,509,002
Fully diluted 8,236,090 6,660,178
See accompanying notes to consolidated financial statements.
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UNIMED PHARMACEUTICALS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
Three Months Ended March 31, 1996 and 1995
(Unaudited)
March 31, March 31,
1996 1995
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Cash flows provided by operations:
Net income $ 219,439 $ 110,241
Adjustments to reconcile net income to
net cash provided by operations:
Depreciation and amortization 45,000 45,055
Write-off of Investment in Medisperse 21,019 - - -
Other 134 2,026
Decrease in current receivables 1,099,440 103,310
Decrease (Increase) in inventories 579,736 (2,503,989)
Decrease in prepaid expenses 1,742 45,539
Decrease in payables and accrued
liabilities (289,984) (55,772)
(Decrease) Increase in due to Roxane (526,309) 2,561,737
Net cash provided by operating
activities 1,150,217 308,147
Cash flows provided by investing
activities:
(Purchase) sale of equipment, net (11,483) 10,609
Sale of short-term investments 1,388,756 3,099
Net cash provided by investing
activities 1,377,273 13,708
Cash flows provided by (used in)
financing activities:
Issuance of note receivable - - - (132,252)
Proceeds from issuance of common stock 9,630,578 - - -
Deferred research and development
revenues-net 1,036,035 - - -
Net cash provided by (used in)
financing activities 10,666,613 (132,252)
Increase in cash and cash equivalents 13,194,103 189,603
Cash and cash equivalents at beginning
of period 7,011,843 6,101,093
Cash and cash equivalents at end of
period $ 20,205,946 $6,290,696
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Income taxes $ 5,769 $ 1,663
See accompanying notes to consolidated financial statements.
</TABLE>
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UNIMED PHARMACEUTICALS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
March 31, 1996
(Unaudited)
NOTE 1
The condensed consolidated financial information herein
is unaudited, other than the Condensed Consolidated
Balance Sheet at December 31, 1995, which is derived
from the audited financial statements. The unaudited
interim financial statements include the accounts of
UNIMED Pharmaceuticals, Inc. (the ``Company''), its
wholly-owned subsidiaries, Unimed Canada, Inc. and
Unimed Technology Management, Inc.
In the opinion of the Company, the accompanying
unaudited interim consolidated financial statements
contain all adjustments (consisting of normal recurring
adjustments) necessary to present fairly the Company's
consolidated financial position as of March 31, 1996,
the results of operations for the three months ended
March 31, 1996 and 1995 and changes in cash flows for
the three month periods ended March 31, 1996 and 1995.
While the Company believes that the disclosures
presented are adequate to make the information not
misleading, it is suggested that these condensed
consolidated financial statements be read in
conjunction with the financial statements and notes
included in the Company's 1995 annual report on Form
10-K filed with the Securities and Exchange Commission.
<PAGE>
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
Results of Operations
Three Months Ended March 31, 1996 vs. Three Months
Ended March 31, 1995
Total revenue for the three months ended March 31, 1996
(the ``Fiscal 1996 Period'') increased three percent
over total revenue for the three months ended March 31,
1995 (the ``Fiscal 1995 Period''). Total revenue
consists of net sales and research and development
revenue. Net income was $219,439 or three cents per
share for the Fiscal 1996 Period. Net income for the
Fiscal 1995 Period was $110,241 or two cents per share.
Net sales for the Fiscal 1996 Period declined by seven
percent or $116,135 to $1,556,247 compared to net sales
of $1,672,382 for the Fiscal 1995 Period. The decline
in net sales was attributable to the sale of the
Company's property rights in and regulatory approvals
of Serc[R] (betahistine HCl) to Solvay-Duphar as of
December 31, 1995. Accordingly, no sales of Serc were
recorded during the Fiscal 1996 Period, whereas, net
sales from Serc were $228,760 for the Fiscal 1995
Period. Net sales were further reduced by terminating
distribution of the Company's over-the-counter
products, as of December 31, 1995. Net sales of over-
the-counter products were $106,395 for the Fiscal 1995
Period. The discontinuation of Serc and the over-the-
counter products was off-set by a 16% sales increase in
Marinol[R] (dronabinol). Marinol is currently the sole
remaining source of product sales to the Company.
Marinol sales increased due to higher unit volume.
Total revenue, in addition to net sales, included
$172,180 in research and development revenue in the
Fiscal 1996 Period from foreign licensors' partial
support of clinical development programs on in-licensed
products. Approximately $2 million of future research
and development expenditures will be offset by deferred
research and development revenues paid to the Company
by foreign licensors.
<PAGE>
Cost of sales decreased by $30,106 or four percent for
the three month period ended March 31, 1996 compared to
the three month period ended March 31, 1995. This
decrease is due to the above mentioned sale of Serc and
the discontinuation of the Company's over-the-counter
products. The decrease in cost of sales was off-set by
a provision for obsolete inventory. Cost of sales
expressed as a percent of net sales increased to 44%
from 42% for the same period in 1995.
Operating and administrative expenses decreased in the
Fiscal 1996 Period by $20,215 or three percent.
Operating and administrative expenses as a percentage
of net sales were 36% in the Fiscal 1996 Period
compared to 35% in the Fiscal 1995 Period.
Sales and marketing expenses decreased $51,684 or 19%
in the Fiscal 1996 Period. Sales and marketing expenses
were 14% of net sales in the Fiscal 1996 Period
compared to 16% in the Fiscal 1995 Period.
Research and development expenses in the Fiscal 1996
Period were $431,071, compared to $113,988 in the
Fiscal 1995 Period. Research and development expenses
were 28% of net sales for the Fiscal 1996 Period, and
four percent of net sales for the Fiscal 1995 Period.
The increase is due to clinical development of NTZ,
Androgel[TM] and Androgel[TM]-DHT. The Company has
added clinical and regulatory staff to manage its
products' clinical development. Research and
development expenses of $172,180 were offset by
research and development revenue in the Fiscal 1996
Period.
The Company expects research and development expenses
to increase as planned product development continues.
Liquidity
At March 31, 1996, the Company had cash and cash
equivalents of $20,205,946, compared to $7,011,843 at
December 31, 1995, an increase of $13,194,103. The
Company generated $1,388,756 from maturing short-
investments during the Fiscal 1996 Period.
The Company generated net cash from operations totaling
$1,150,217 for the quarter ended March 31, 1996.
Current receivables decreased by $1,099,440 due to
receipt of cash payments due under a foreign license
agreement and royalty payments from the Company's
distributor of Marinol[R]. Inventories decreased
$579,736 due to ongoing sales of Marinol[R] and the
timing of new inventory deliveries.
<PAGE>
The Company generated $9,630,578 from the issuance of
common stock during the Fiscal 1996 period.
Approximately $7,600,000 was received from a private
placement of the Company's common stock. Approximately
$1,700,000 was received from exercised stock warrants
owned by the Company's Chairman. Approximately
$320,000 was received in connection with stock option
exercises.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings None
Item 2. Changes in Securities None
Item 3. Defaults Upon Senior Securities None
Item 4. Submission of Matters to Vote None
of Security Holders
Item 5. Other Information None
Item 6. Exhibits and Reports on Form
8-K
(a) Exhibits None
(b) Reports on Form 8-K None
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SIGNATURE PAGE
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.
UNIMED PHARMACEUTICALS, INC.
Date: May 8, 1996 By: /s/ Stephen M. Simes
Stephen M. Simes
President and Chief Executive Officer
Date: May 8, 1996 By: /s/ David E. Riggs
David E. Riggs
Senior Vice President, Chief Financial
Officer, Secretary and Treasurer
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<ARTICLE> 5
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 20,206
<SECURITIES> 0
<RECEIVABLES> 984
<ALLOWANCES> 0
<INVENTORY> 2,748
<CURRENT-ASSETS> 24,212
<PP&E> 1,930
<DEPRECIATION> 1,093
<TOTAL-ASSETS> 26,375
<CURRENT-LIABILITIES> 5,885
<BONDS> 0
<COMMON> 2,155
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<OTHER-SE> 18,335
<TOTAL-LIABILITY-AND-EQUITY> 26,375
<SALES> 1,556
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