UNITED STATES
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, 1998
--------------
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.)
One Science Court
Madison, Wisconsin 53711
608-236-2500
(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, 1998, 8,779,317 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, 1998
TABLE OF CONTENTS
-----------------
PART I - FINANCIAL INFORMATION Page
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Item 1. Financial statements
Consolidated Balance Sheets
March 31, 1998, and June 30, 1997. . . . . . . . . . . . . . . 3
Consolidated Statements of Operations
Three and Nine Months Ended March 31, 1998
and 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Consolidated Statements of Cash Flows
Nine Months Ended March 31, 1998
and 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . 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
Item 5. Other Information. . . . . . . . . . . . . . . . . . . . . . .10
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . .10
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
EXHIBIT INDEX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
--------------------
BONE CARE INTERNATIONAL, INC., AND SUBSIDIARY
Consolidated Balance Sheets
- -------------------------------------------------------------------------------
Assets
- -------------------------------------------------------------------------------
March 31, June 30,
1998 1997
(Unaudited) (Audited)
- -------------------------------------------------------------------------------
Current assets:
Cash and cash equivalents $5,009,088 $8,531,714
Inventory 34,392 52,565
Other current assets 49,639 -
- -------------------------------------------------------------------------------
Total current assets 5,093,119 8,584,279
Property, plant and equipment--at cost:
Leasehold improvements 64,237 21,092
Furniture and fixtures 66,954 24,625
Equipment 380,275 263,970
- -------------------------------------------------------------------------------
511,466 309,687
Less accumulated depreciation and amortization 258,105 226,737
- -------------------------------------------------------------------------------
253,361 82,950
Excess of cost over fair value of net assets
acquired, net of accumulated amortization
of $710,046 at March 31, 1998, and
$642,960 at June 30, 1997 649,871 716,957
Patent fees, net of accumulated amortization
of $458,462 at March 31, 1998, and $359,462
at June 30, 1997 686,776 516,270
Other non-current assets 287,828 -
- -------------------------------------------------------------------------------
$6,970,955 $9,900,456
===============================================================================
See accompanying notes to consolidated financial statements.
BONE CARE INTERNATIONAL, INC., AND SUBSIDIARY
Consolidated Balance Sheets
- -------------------------------------------------------------------------------
Liabilities and Shareholders' Equity
- -------------------------------------------------------------------------------
March 31, June 30,
1998 1997
(Unaudited) (Audited)
- -------------------------------------------------------------------------------
Current liabilities:
Accounts payable $ 400,592 $ 141,445
Accrued liabilities:
Accrued clinical study and
research costs 330,994 291,165
Compensation payable 31,121 15,447
Property, payroll, and other taxes - 8,388
Other 33,896 24,500
- -------------------------------------------------------------------------------
Total current liabilities 796,603 480,945
Shareholders' equity:
Preferred stock--authorized 2,000,000
shares of $.001 par value; none issued - -
Common stock--authorized 28,000,000 shares
of no par value; issued and outstanding
8,779,317 shares at March 31, 1998
and 8,722,382 at June 30, 1997 11,393,883 11,393,883
Additional paid-in capital 3,675,742 3,555,925
- -------------------------------------------------------------------------------
15,069,625 14,949,808
Accumulated deficit (8,895,273) (5,530,297)
- -------------------------------------------------------------------------------
6,174,352 9,419,511
- -------------------------------------------------------------------------------
$ 6,970,955 $9,900,456
===============================================================================
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,
1998 1997 1998 1997
- -------------------------------------------------------------------------------
REVENUES $ - $ 3,900 $ - $ 39,425
- -------------------------------------------------------------------------------
OPERATING EXPENSES
Cost of sales - 3,572 - 38,304
Research and development 1,085,993 818,120 3,061,783 1,993,485
General and administrative 237,377 132,675 588,376 312,836
- -------------------------------------------------------------------------------
1,323,370 954,367 3,650,159 2,344,625
- -------------------------------------------------------------------------------
LOSS FROM OPERATIONS (1,323,370) (950,467) (3,650,159) (2,305,200)
INTEREST INCOME 75,990 125,431 285,183 407,804
- -------------------------------------------------------------------------------
NET LOSS $ (1,247,380) $(825,036) $(3,364,976) $(1,897,396)
===============================================================================
Net loss per common
share - basic $(0.14) $(0.09) $(0.39) $(0.22)
===============================================================================
Weighted average number of
common shares 8,759,724 8,716,394 8,734,845 8,710,364
===============================================================================
See accompanying notes to consolidated financial statements.
BONE CARE INTERNATIONAL, INC., AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
- -------------------------------------------------------------------------------
Nine months ended
March 31, March 31,
1998 1997
- -------------------------------------------------------------------------------
Cash flows from operating activities:
Net loss $(3,364,976) $ (1,897,396)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization 202,525 168,966
Changes in assets and liabilities:
Receivables - 1,619
Inventory 18,173 (51,708)
Accounts payable 259,147 42,784
Accrued liabilities 56,511 334,138
Other (134,312) 20,695
- -------------------------------------------------------------------------------
Net cash used in operating activities (2,962,932) (1,380,902)
- -------------------------------------------------------------------------------
Cash flows from investing activities:
Additions to property,
plant and equipment, net (206,850) (52,912)
Patent fees (269,506) (174,631)
- -------------------------------------------------------------------------------
Net cash used in investing activities (476,356) (227,543)
- -------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from exercise of stock options 119,817 31,650
Offering costs (203,155) -
- -------------------------------------------------------------------------------
Net cash provided by (used in) financing
activities (83,338) 31,650
- -------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (3,522,626) (1,576,795)
Cash and cash equivalents at beginning
of period 8,531,714 11,060,843
- -------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 5,009,088 $ 9,484,048
===============================================================================
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, 1997, 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 for annual financial statements. These
statements should be read in conjunction with the consolidated financial
statements and notes thereto for the year ended June 30, 1997, included in
the Company's Form 10-K as filed with the Securities and Exchange Commission
on September 30, 1997.
The consolidated balance sheet as of March 31, 1998, the consolidated
statements of operations for the three and nine months ended March 31, 1998,
and 1997, and the consolidated statements of cash flows for the nine months
ended March 31, 1998 and 1997, 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 interim periods ended March 31, 1998,
are not necessarily indicative of the results to be expected for the entire
fiscal year ending June 30, 1998.
(2) CAPITAL STRUCTURE
On October 10, 1997, the Company declared a 2-for-1 stock split in the
form of a stock dividend to shareholders of record on October 27, 1997. The
dividend was paid November 14, 1997. Accordingly, all common share and per
share data in the accompanying financial statements have been adjusted to
give effect to the stock split.
(3) NET LOSS PER SHARE
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 128 "Earnings per Share" (SFAS No. 128), in February
1997. The Company adopted SFAS No. 128 effective with financial statements
issued for periods ended December 31, 1997. Although SFAS No.128 requires
restatement of prior period per share data, such restatement resulted in no
effect to the Company's previously reported per share data. Diluted per
share data is not presented as the effect of potentially issuable common
shares would be antidilutive.
Item 2. Management Discussion and Analysis of Financial Condition and
-------------------------------------------------------------
Results of Operations
---------------------
Results of Operations
- ---------------------
Research and development expenses increased to $1,085,993 in the three
months ended March 31, 1998, from $818,120 in the three months ended March
31, 1997, and to $3,061,783 in the nine months ended March 31, 1998, from
$1,993,485 in the nine months ended March 31, 1997. The increases were due
primarily to higher expenditures related to the anticipated
commercialization of one-alpha D(subscript 2).
General and administrative expenses increased by $104,702 to $237,377
in the three months ended March 31, 1998, from $132,675 in the three months
ended March 31, 1997. General and administrative expenses increased $275,540
to $588,376 in the nine months ended March 31, 1998, from $312,836 in the
nine months ended March 31, 1997. Such increases were incurred to support
expanded research and development activities.
Interest income decreased to $75,990 in the three months ended March 31,
1998, from $125,431 in the three months ended March 31, 1997, and to $285,183
in the nine months ended March 31, 1998, from $407,804 in the nine months
ended March 31, 1997. These decreases were due to lower invested cash
balances.
The Company reported a net loss of $1,247,380 and $825,036 for the three
months ended March 31, 1998 and 1997, respectively. The reported net loss
for the nine months ended March 31, 1998 and 1997 was $3,364,976 and
$1,897,396, respectively. The increases in net losses are attributable to
increased expenses associated with expanded research and development
activities.
Liquidity and Capital Resources
- -------------------------------
Cash and cash equivalents were $5,009,088 and $8,531,714 at March 31,
1998, and June 30, 1997, respectively. The decrease is primarily due to
expenditures related to research and development activities, including
clinical trials of one-alpha D(subscript 2), pre-clinical development of other
D-hormones, and activities associated with the anticipated commercialization of
one-alpha D(subscript 2).
The Company believes current levels of cash and cash equivalents are
adequate to finance the Company's operations through the end of calendar
1998. After that time, the Company will require substantial funds for its
research and development programs, preclinical and clinical testing,
operating expenses, regulatory processes and manufacturing and marketing
programs. The Company's capital requirements will depend on numerous
factors, including the progress of its research and development programs; the
progress of preclinical and clinical testing; the time and cost involved in
obtaining regulatory approvals; the cost of filing, prosecuting, defending
and enforcing any patent claims and other intellectual property rights;
competing technological and market developments; changes and developments in
the Company's existing licensing relationships and the terms of any new
collaborative, licensing, co-promotion or distribution arrangements that the
Company may establish; the progress of commercialization and marketing
activities; the cost of manufacturing preclinical and clinical products; and
other factors not within the Company's control.
The Company filed a registration statement on January 8, 1998, with the
Securities and Exchange Commission relating to a proposed public offering of
3,000,000 shares of common stock (3,450,000 if the proposed underwriters'
over-allotment option is exercised). There is no assurance that the proposed
public offering will be completed or additional financing will be available
on acceptable terms.
Year 2000 Compliance
- --------------------
Many currently installed computer systems and software products are
coded to accept only two digit entries in the date code field. To
distinguish 21st century from 20th century dates, these date code fields must
be able to accept four-digit entries. The Company has reviewed its existing
financial and other business information systems and believes that its
computer systems will be able to manage and manipulate all material data
involving the transition from 1999 to 2000 without functional or data
abnormality and without inaccurate results related to such data.
Item 3. Quantitative and Qualitative Disclosure About Market Risk
---------------------------------------------------------
Not applicable.
BONE CARE INTERNATIONAL, INC., AND SUBSIDIARY
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 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 (the "Litigation Reform Act"). 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 others, the Company's early
stage of development, the Company's dependence on its ability to obtain
regulatory approval of one-alpha D(subscript 2), the uncertainty of the
Company's future profitability, the uncertainty of regulatory approvals of any
drugs developed by the Company, the uncertainty of the Company's patent
positions and proprietary rights, the uncertainty related to pricing and
reimbursement of the Company's products, the intense competition in
pharmaceutical and biotechnology industries, the Company's potential need for
additional partners or collaborators, the Company's future capital needs and
uncertainty of additional financing, the Company's lack of manufacturing
capabilities, and limited sales and marketing experience.
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, 1998.
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, 1998 /s/ Charles W. Bishop
Charles W. Bishop
President and Chief Executive Officer
(Principal Executive Officer)
Date: May 14, 1998 /s/ Dale W. Gutman
Dale W. Gutman
Vice President - Finance
(Principal Financial and
Accounting Officer)
BONE CARE INTERNATIONAL, INC., AND SUBSIDIARY
Exhibit Index
For the Quarterly Period Ended March 31, 1998
No. Description Page
- --- ----------- ----
11 Statement Regarding Computation of Loss Per Share . . . . . . . . . 13
27 Financial Data Schedule . . . . . . . . . . . . . . . . . . . . . . 14
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,
1998 1997 1998 1997
--------- --------- --------- ---------
Net loss $ (1,247,380) $ (825,036) $ (3,364,976) $(1,897,396)
=========== ========= =========== ==========
Weighted average number
of common shares 8,759,724 8,716,394 8,734,845 8,710,364
========= ========= ========= =========
Net loss per common
share - basic $ (0.14) $ (0.09) $ (0.39) $ (0.22)
====== ====== ====== ======
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<LEGEND> This schedule contains summary financial information
extracted from Form 10-Q for the nine months ended
March 31, 1998, and is qualified in its entirety by
reference to such financial statements.
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<PERIOD-END> MAR-31-1998
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0
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