SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 0-27854
BONE CARE INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Wisconsin 2830 39-1527471
(State of (Primary Standard Industry (IRS Employer
Incorporation) Classification Code Number Identification No.)
313 West Beltline Highway
Madison, Wisconsin 53713
608-274-2663
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
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 April 30, 1997, 4,361,191 shares of the registrant's Common Stock, no par
value, were outstanding.
BONE CARE INTERNATIONAL, INC., AND SUBSIDIARY
FORM 10-Q
For the quarterly period ended March 31, 1997
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION Page
Item 1. Financial statements
Consolidated Balance Sheets
March 31, 1997, and June 30, 1996. . . . . . . . . . . . 3
Consolidated Statements of Operations
Three and Nine Months Ended March 31, 1997
and 1996 . . . . . . . . . . . . . . . . . . . . . . . . 5
Consolidated Statements of Cash Flows
Nine Months Ended March 31, 1997
and 1996 . . . . . . . . . . . . . . . . . . . . . . . . 6
Notes to Consolidated Financial Statements . . . . . . . 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . 8
PART II - OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . 9
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
EXHIBIT INDEX. . . . . . . . . . . . . . . . . . . . . . . . . . .11
PART 1. FINANCIAL INFORMATION
ITEM 1. Financial Statements
BONE CARE INTERNATIONAL, INC., AND SUBSIDIARY
Consolidated Balance Sheets
- - -----------------------------------------------------------------------------
Assets
- - -----------------------------------------------------------------------------
March 31, June 30,
1997 1996
(Unaudited) (Audited)
- - -----------------------------------------------------------------------------
Current assets:
Cash and cash equivalents $9,484,048 $11,060,843
Receivables - 1,619
Inventory 51,708
Other Current Assets - 20,695
- - -----------------------------------------------------------------------------
Total current assets 9,535,756 11,083,157
Plant and equipment--at cost:
Lab improvements 21,092 21,092
Furniture and fixtures 24,890 20,390
Machinery and other equipment 264,391 215,979
- - -----------------------------------------------------------------------------
310,373 257,461
Less accumulated depreciation and amortization 213,557 192,677
- - -----------------------------------------------------------------------------
96,816 64,784
Excess of cost over fair value of net assets
acquired, net of accumulated amortization
of $620,598 at March 31, 1997 and $553,512
at June 30, 1996 739,319 806,405
Patent fees, net of accumulated amortization
of $332,462 at March 31, 1997 and $251,462
at June 30, 1996 400,610 306,979
- - -----------------------------------------------------------------------------
$10,772,501 $12,261,325
=============================================================================
See accompanying notes to consolidated financial statements.
BONE CARE INTERNATIONAL, INC., AND SUBSIDIARY
Consolidated Balance Sheets
- - -----------------------------------------------------------------------------
Liabilities and Shareholders' Equity
- - -----------------------------------------------------------------------------
March 31, June 30,
1997 1996
(Unaudited) (Audited)
- - -----------------------------------------------------------------------------
Current liabilities:
Accounts payable $ 116,020 $ 73,236
Accrued liabilities:
Compensation payable 15,717 4,133
Property, payroll, and other taxes 937 1,750
Other accrued liabilities 323,367 -
- - -----------------------------------------------------------------------------
Total current liabilities 456,041 79,119
Shareholders' equity:
Preferred stock--authorized 1,000,000
shares of $.001 par value; none issued - -
Common stock--authorized 14,000,000 shares
of no par value; issued and outstanding
4,361,191 shares at March 31, 1997
and 4,353,691 shares at June 30, 1996 11,393,883 11,393,883
Additional paid-in capital 3,555,850 3,524,275
- - -----------------------------------------------------------------------------
14,949,808 14,918,158
Accumulated deficit (4,633,348) (2,735,952)
- - -----------------------------------------------------------------------------
10,316,460 12,182,206
$10,772,501 $12,261,325
==============================================================================
See accompanying notes to consolidated financial statements.
BONE CARE INTERNATIONAL, INC., AND SUBSIDIARY
Consolidated Statements of Operations
(Unaudited)
- - -------------------------------------------------------------------------------
Three months ended Nine months ended
March 31, March 31, March 31, March 31,
1997 1996 1997 1996
- - -------------------------------------------------------------------------------
REVENUES $ 3,900 $ 12,255 $ 39,425 $ 18,769
- - -------------------------------------------------------------------------------
OPERATING EXPENSES
Cost of sales 3,572 6,499 38,304 11,834
Research and development 818,120 230,205 1,993,485 642,741
General and administrative 132,675 48,362 312,836 125,997
- - -------------------------------------------------------------------------------
954,367 285,066 2,344,625 780,572
- - -------------------------------------------------------------------------------
Loss from operations (950,467) (272,811) (2,305,200) (761,803)
- - -------------------------------------------------------------------------------
OTHER INCOME (EXPENSE):
Interest income 125,431 12,252 407,804 13,048
Interest expense - Lunar
Corporation - - - (13,495)
- - -------------------------------------------------------------------------------
125,431 12,252 407,804 (447)
- - -------------------------------------------------------------------------------
NET LOSS $ (825,036) $(260,559) $(1,897,396) $(762,250)
===============================================================================
Net loss per common share $(0.19) $(0.10) $(0.44) $(0.37)
===============================================================================
Weighted average number of
common shares 4,358,197 2,655,017 4,355,182 2,052,992
===============================================================================
BONE CARE INTERNATIONAL, INC., AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
- - -------------------------------------------------------------------------------
Nine months ended
March 31, March 31,
1997 1996
- - -------------------------------------------------------------------------------
Cash flows from operating activities:
Net loss $(1,897,396) $(762,250)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization 168,966 120,056
Changes in assets and liabilities:
Receivables 1,619 15,507
Inventory (51,708)
Other current assets 20,695 -
Accounts payable 42,784 (97,991)
Accrued liabilities 334,138 13,460
- - --------------------------------------------------------------------------------
Net cash used in operating activities (1,380,902) (711,218)
- - --------------------------------------------------------------------------------
Cash flows from investing activities:
Disposal of (additions to) plant
and equipment (52,912) 264
Patent fees (174,631) (48,773)
Continental Assays cash contribution - 6,832
- - --------------------------------------------------------------------------------
Net cash used in investing activities $ (227,543) $ (41,677)
- - --------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from Lunar Corporation advances - 190,339
Proceeds from capital contributions - 1,300,291
Proceeds from exercise of stock options 31,650 -
- - --------------------------------------------------------------------------------
Net cash provided by financing activities 31,650 1,490,630
- - --------------------------------------------------------------------------------
Net increase (decrease) in cash and
cash equivalents (1,576,795) 737,735
Cash and cash equivalents at
beginning of period 11,060,843 22,595
- - --------------------------------------------------------------------------------
Cash and cash equivalents at end of period $9,484,048 $ 760,330
================================================================================
See accompanying notes to consolidated financial statements.
BONE CARE INTERNATIONAL, INC., AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) BASIS OF PRESENTATION
The consolidated financial statements of Bone Care International, Inc. (the
"Company") presented herein, without audit except for balance sheet information
at June 30, 1996, have been prepared pursuant to the rules of the Securities and
Exchange Commission for quarterly reports on Form 10-Q and do not include all of
the information and note disclosures required by generally accepted accounting
principles. These statements should be read in conjunction with the
consolidated financial statements and notes thereto for the year ended June 30,
1996, included in the Company's Form 10-K as filed with the Securities and
Exchange Commission on September 27, 1996.
The consolidated balance sheet as of March 31, 1997, the consolidated
statements of operations for the three and nine months ended March 31, 1997 and
1996, and the consolidated statements of cash flows for the nine months ended
March 31, 1997 and 1996 are unaudited but, in the opinion of management, include
all adjustments (consisting of normal, recurring adjustments) necessary for a
fair presentation of results for these interim periods. The Company has
reclassified the presentation of certain prior year information to conform with
the current presentation format.
The results of operations for the three and nine months ended March 31,
1997, are not necessarily indicative of the results to be expected for the
entire fiscal year ending June 30, 1997.
Item 2. Management Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Revenue of $3,900 and $39,425 in the three and nine months ended March 31,
1997, respectively, relate to contract services performed by Continental Assays
Corporation, a subsidiary of the Company.
Research and development expenses increased to $818,120 in the three months
ended March 31, 1997 from $230,205 in the three months ended March 31, 1996, and
to $1,993,485 in the nine months ended March 31, 1997 from $642,741 in the nine
months ended March 31, 1996. These increases are primarily attributable to
higher expenditures for clinical trials of one-alpha D2 for treating secondary
hyperparathyroidism associated with end-stage renal disease. These increases
are also due in part to Bone Care assuming the research and development expenses
for Vitamin D analogs contributed by Lunar Corporation in October 1995.
Interest income increased to $125,431 in the three months ended March 31,
1997 from $12,252 in the three months ended March 31, 1996 and to $407,804 in
the nine months ended March 31, 1997 from $13,048 in the nine months ended March
31, 1996. These increases are due to higher cash balances during fiscal 1997
which resulted from capital contributions made in fiscal 1996 by Lunar
Corporation ("Lunar") and Draxis Health Care, Inc., the Company's shareholders
at the time of the contributions. On May 8, 1996, Lunar distributed its
ownership of the Company to its shareholders.
There was no interest expense in the nine months ended March 31, 1997
compared to $13,495 in the nine months ended March 31, 1996. Interest expense
during those periods related exclusively to loans made by Lunar to the Company.
Lunar canceled outstanding loans in the amount of $634,683 in October 1995 in
exchange for additional shares of the Company's common stock.
Liquidity and Capital Resources
The Company has historically financed its operations through a combination
of capital contributions, license agreements and sales of contract services.
All third party collaborative research and licensing agreements have either
expired or terminated.
Cash and cash equivalents decreased $1,576,795 to $9,484,048 in the nine
months ended March 31, 1997. The decrease is primarily due to increased
research and development activities, including clinical trials of one-alpha D2
as a therapy for secondary hyperparathyroidism in end-stage renal disease. The
Company currently estimates that approximately $3 million will be needed to
complete clinical trials and commence retail production of one-alpha D2 for the
initial indication being pursued. At least $4 million will be needed to fund
clinical studies for additional indications, research, and administrative
expenses over the next two years.
Management believes current levels of cash and cash equivalents are
adequate to finance the Company's operations through the fiscal year ended June,
1999. The Company may require additional funds for research and development
activities after that time. Additional funds also could be required before that
time if the Company were to expand the scope of its activities. There is no
assurance additional financing will be available on acceptable terms.
PART II - OTHER INFORMATION
BONE CARE INTERNATIONAL, INC., AND SUBSIDIARY
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
Safe Harbor Statement Under the Private Securities Litigation
Reform Act of 1995: Certain statements in this filing, and
elsewhere (such as in other filings by the Company with the
Securities and Exchange Commission, press releases, presentations by
the Company or its management and oral statements) constitute
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties, and other
factors which may cause the actual results, performance, or
achievements of the Company to be materially different from any
future results, performance, or achievements expressed or implied by
such forward-looking statements. Such factors include, among other
things, no assurance of successful product development,
technological risks, uncertainty of regulatory approvals, regulatory
policies in the United States and other countries, availability of
additional financing, reimbursement policies of public and private
health care payors, developments in patents and other proprietary
rights, competition from existing therapies and from new therapies,
and market and general economic factors.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits furnished:
(11) Statement Re: Computation of Loss Per Share
(27) Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the
quarter ended March 31, 1997.
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.
BONE CARE INTERNATIONAL, INC.
(Registrant)
Date: May 14, 1997 /s/ Charles W. Bishop
- - -------------------------- ---------------------------------
Charles W. Bishop
President
(Principal Executive Officer)
Date: May 14, 1997 /s/ Dale W. Gutman
- - --------------------------- ----------------------------------
Dale W. Gutman
Vice President of Finance
(Principal Financial and
Accounting Officer)
BONE CARE INTERNATIONAL, INC., AND SUBSIDIARY
Exhibit Index
For the Quarterly Period Ended March 31, 1996
No. Description Page
11 Statement Regarding Computation of Loss Per Share . . . . . 12
27 Financial Data Schedule . . . . . . . . . . . . . . . . . . 13
Exhibit 11
BONE CARE INTERNATIONAL, INC., AND SUBSIDIARY
Statement Regarding Computation of Loss Per Share
(Unaudited)
Three months ended Nine months ended
March 31, March 31, March 31, March 31,
1997 1996 1997 1996
Net loss $ (825,036) $ (260,559) $(1,897,396) $ (762,250)
========== ========== =========== ==========
Weighted average number of common
shares 4,358,197 2,655,017 4,355,182 2,052,992
========== ========== =========== ==========
Net loss per common share $(0.19) $(0.10) $(0.44) $(0.37)
====== ====== ====== ======
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<ARTICLE> 5
<LEGEND> This schedule contains summary financial information
extracted from Form 10-Q for the nine months ended
March 31, 1997, and is qualified in its entirety by
reference to such financial statements.
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<PERIOD-TYPE> 9-MOS
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<PERIOD-END> MAR-31-1997
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<TOTAL-ASSETS> 10,773
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<COMMON> 11,394
0
0
<OTHER-SE> 3,524
<TOTAL-LIABILITY-AND-EQUITY> 10,773
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