UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
AMENDMENT NO. 1
(Mark one)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1999
-----------------
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 2834 39-1527471
(State of (Primary Standard Industry) (IRS Employer
Incorporation) Classification Code Number Identification No.)
One Science Court
Madison, Wisconsin 53711
(Address, including zip code of
Registrant's principal executive offices)
608-236-2500
(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
----- -----
As of January 31, 2000, 11,410,254 shares of the registrant's Common Stock, no
par value, were outstanding.
BONE CARE INTERNATIONAL, INC., AND SUBSIDIARY
FORM 10-Q/A
AMENDMENT NO. 1
For the quarterly period ended December 31, 1999
TABLE OF CONTENTS
-----------------
PART I - FINANCIAL INFORMATION Page
----
Item 1. Financial statements
Consolidated Balance Sheets
December 31, 1999, and June 30, 1999 . . . . . . . . . . . . . . .3
Consolidated Statements of Operations
Three and Six Months Ended December 31, 1999
and 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Consolidated Statements of Cash Flows
Six Months Ended December 31, 1999
and 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Notes to Consolidated Financial Statements . . . . . . . . . . . .7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . . . . .9
PART II - OTHER INFORMATION
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
- -------------------------------------------------------------------------------
December 31, June 30,
1999 1999
(Unaudited) (Audited)
- -------------------------------------------------------------------------------
Current assets:
Cash and cash equivalents $6,572,375 $7,313,551
Marketable securities 6,989,458 _
Trade receivables 543,688 _
Inventory 1,113,805 1,119,262
Other current assets 519,892 110,017
- -------------------------------------------------------------------------------
Total current assets 15,739,218 8,542,830
Property, plant and equipment--at cost:
Leasehold improvements 97,319 97,319
Furniture and fixtures 103,851 101,144
Machinery and other equipment 723,143 579,008
- -------------------------------------------------------------------------------
924,313 777,471
Less accumulated depreciation 540,209 467,879
- -------------------------------------------------------------------------------
Property, plant and equipment, net 384,104 309,592
Patent fees, net of accumulated
amortization of $733,669 at
December 31, 1999, and $645,013
at June 30, 1999 1,036,427 862,645
Excess of cost over fair value of
net assets acquired, net of
accumulated amortization of
$866,580 at December 31, 1999, and
$821,856 at June 30, 1999 493,337 538,061
Other non-current assets 18,817 50,133
- -------------------------------------------------------------------------------
Total assets $17,671,903 $10,303,261
===============================================================================
See accompanying notes to consolidated financial statements.
BONE CARE INTERNATIONAL, INC., AND SUBSIDIARY
Consolidated Balance Sheets
- -------------------------------------------------------------------------------
Liabilities and Shareholders' Equity
- -------------------------------------------------------------------------------
December 31, June 30,
1999 1999
(Unaudited) (Audited)
- -------------------------------------------------------------------------------
Current liabilities:
Accounts payable $ 353,648 $ 202,686
Accrued liabilities:
Accrued clinical study and
research costs 213,838 171,988
Compensation payable 125,768 43,311
Deferred income 421,152 125,000
Other 313,366 43,477
- -------------------------------------------------------------------------------
Total current liabilities 1,427,772 586,462
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 11,407,454 shares at
December 31, 1999 and 10,173,396
at June 30, 1999 11,393,883 11,393,883
Additional paid-in capital 25,132,872 14,119,761
- -------------------------------------------------------------------------------
36,526,755 25,513,644
Accumulated deficit (20,271,154) (15,796,845)
Accumulated other comprehensive loss (11,470) _
- -------------------------------------------------------------------------------
16,244,131 9,716,799
- -------------------------------------------------------------------------------
Total liabilities and shareholders'
equity $17,671,903 $10,303,261
===============================================================================
See accompanying notes to consolidated financial statements.
BONE CARE INTERNATIONAL, INC., AND SUBSIDIARY
Consolidated Statements of Operations
(Unaudited)
- -----------------------------------------------------------------------------
Three months ended Six months ended
------------------ ----------------
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
- -----------------------------------------------------------------------------
REVENUES $ 206,077 $ _ $ 206,077 $ _
COST OF SALES 10,568 _ 10,568 _
- -----------------------------------------------------------------------------
GROSS MARGIN 195,509 $ _ 195,509 _
- -----------------------------------------------------------------------------
OPERATING EXPENSES
Research & development 1,090,015 788,236 2,083,023 1,673,943
Sales and marketing 1,337,810 562,877 2,118,148 930,793
General and
administrative 448,696 217,732 747,504 571,353
- -----------------------------------------------------------------------------
2,876,521 1,568,845 4,948,675 3,176,089
- -----------------------------------------------------------------------------
Loss from operations (2,681,012) (1,568,845) (4,753,166) (3,176,089)
- -----------------------------------------------------------------------------
Interest Income 202,184 128,031 291,358 313,820
- -----------------------------------------------------------------------------
Loss before income
tax (2,478,828) (1,440,814) (4,461,808) (2,862,269)
Income tax expense 12,500 _ 12,500 _
- -----------------------------------------------------------------------------
NET LOSS $(2,491,328) $(1,440,814) $(4,474,308) $(2,862,269)
=============================================================================
Net loss per common
share - basic $(0.22) $(0.14) $(0.41) $(0.29)
=============================================================================
Weighted average number
of common shares 11,245,295 10,136,213 10,709,346 9,963,020
=============================================================================
See accompanying notes to consolidated financial statements.
BONE CARE INTERNATIONAL, INC., AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
- --------------------------------------------------------------------------
Six months ended
-----------------
December 31, December 31,
1999 1998
- --------------------------------------------------------------------------
Cash flows from operating activities:
Net loss $(4,474,308) $ (2,862,269)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization 237,092 213,774
Changes in assets and liabilities:
Trade receivables (543,688) _
Inventory 5,457 (698,769)
Other current assets (409,875) (90,723)
Accounts payable 150,962 315,705
Accrued liabilities 690,348 3,825
Other 31,316 18,816
- --------------------------------------------------------------------------
Net cash used in operating
activities $(4,312,696) $ (3,099,641)
- --------------------------------------------------------------------------
Cash flows from investing activities:
Purchases of marketable securities (7,000,928) _
Additions to property,
plant and equipment (146,842) (105,264)
Additions to patent fees (293,820) (118,443)
- --------------------------------------------------------------------------
Net cash used in investing
activities $(7,441,590) $ (223,707)
- --------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from exercise of
stock options 37,500 29,170
Net proceeds from issuance of
common stock 10,975,610 10,567,504
- --------------------------------------------------------------------------
Net cash provided by (used in)
financing activities $11,013,110 $ 10,596,674
- --------------------------------------------------------------------------
Net increase (decrease) in cash
and cash equivalents (741,176) 7,273,326
Cash and cash equivalents at
beginning of period 7,313,551 3,484,374
- --------------------------------------------------------------------------
Cash and cash equivalents at
end of period $6,572,375 $10,757,700
==========================================================================
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 presented herein have been prepared
by Bone Care International, Inc., without audit, except for balance sheet
information at June 30, 1999, 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, 1999, included in Bone Care's
Form 10-K as filed with the Securities and Exchange Commission on September
20, 1999.
In the opinion of management the information included herein reflects
all adjustments (consisting of normal, recurring adjustments) necessary for
a fair presentation of results for these interim periods. The results of
operations for the interim periods ended December 31, 1999, are not
necessarily indicative of the results to be expected for the entire fiscal
year ending June 30, 2000.
(2) REVENUE RECOGNITION POLICY
Bone Care began shipping Hectorol capsules in October, 1999. Because
Hectorol is Bone Care's first product, Bone Care does not have historical data
to estimate returns and exchanges in accordance with SFAS No.48, "Revenue
Recognition When Right of Return Exists". As such, revenues from shipments of
Hectorol and the related costs are deferred at the time of shipment to
wholesale distributors and are included in the Consolidated Statements of
Operations at the time the product is sold by these wholesalers to retail users
of the product. For the three months ended December 31, 1999, the total sales
value and cost of Hectorol shipped was $571,208 and 100,647, respectively.
Bone Care's December 31, 1999 balance sheet includes deferred income of
$421,152 related to Hectorol.
Bone Care's standard sales terms do not allow customers to return products
for refunds; however, product may be exchanged. Bone Care continues to
evaluate data related to sales exchanges, distributor inventories, and retail
sales. Bone Care believes it will have enough data to reasonably estimate
future returns when retail customers have purchased a high percentage of the
initial shipments or the product begins to reach its expiration date. Bone
Care intends to recognize future revenues and related costs upon shipment of
the Hectorol product once a reasonable estimate of future returns can be
calculated.
(3) COMMON STOCK
In October 1999, Bone Care completed a directed public offering of
1,229,058 shares of common stock at a price of $9.02 per share. Bone Care
received proceeds of $10,975,610 from the sale, net of offering expenses.
In July 1998, Bone Care completed a directed public offering of
1,326,000 shares of common stock at a price of $8.00 per share. Bone Care
received proceeds of $10,567,504 from the sale, net of offering expenses.
Certain directors of Bone Care purchased 276,000 of the shares sold.
(4) NET LOSS PER SHARE
Basic loss per share is computed by dividing net loss by the weighted
average number of shares of common stock outstanding during the period.
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
- ---------------------
Revenues for the quarter ended December 31, 1999 include $59,977 related to
initial sales of Hectorol Capsules, $125,000 from a licensing agreement which
expired in December and $21,100 from assay sales. Margins on product sales
were $49,409 or 82% of sales, which is in line with management expectations.
Bone Care had no revenues in the six months ended December 31, 1998 or three
months ended September 30, 1999.
Research and development expenses increased to $1,090,015 in the three
months ended December 31, 1999, from $788,236 in the three months ended
December 31, 1998 and to $2,083,023 in the six months ended December 31,
1999 from $1,673,943 in the six months ended December 31, 1998. Research
and development expenses increased from prior year levels due to the following:
(1) research on Hectorol Injection, (2) development of a lower strength
formulation of Hectorol Capsules, (3) continuation of Phase 3 clinical trials
in pre-dialysis patients suffering from secondary hyperparathyroidism (SHP),
(4) continuation of a Phase 2 clinical trial with Hectorol Capsules in patients
with advanced metastatic prostate cancer, and (5) manufacture of LR-103 for use
in planned Phase 1 clinical tests.
Sales and marketing expenses increased $774,933 to $1,337,810 in the three
months ended December 31, 1999, from $562,877 in the three months ended
December 31, 1998. In the six months ended December 31, 1999, sales and
marketing expenses increased $1,187,355 to $2,118,148 from $930,793 in the six
months ended December 31, 1998. The increase in sales and marketing expenses
are related to the establishment of a 17 person sales force and related
marketing expenditures in connection with the October 1999 U.S. launch of
Hectorol Capsules.
General and administrative expenses increased $230,964 to $448,696 in the
three months ended December 31, 1999, from $217,732 in the three months ended
December 31, 1998. In the six months ended December 31, 1999, general and
administrative expenses increased $176,151 to $747,504 from $571,353 in the six
months ended December 31, 1998. Bone Care contracted with an independent
company in October 1999 to warehouse and distribute Hectorol Capsules and also
invoice and collect customer receivables. The increase in general and
administrative expenses are primarily attributable to this contract.
Interest income increased $74,153 to $202,184 in the three months ended
December 31, 1999 from $128,031 in the three months ended December 31, 1998.
Interest income decreased $22,462 to $291,358 in the six months ended December
31, 1999 from $313,820 in the six months ended December 31, 1998. The increase
in interest income in the three months ended December 31, 1999 was due to the
higher average cash balances during the periods subsequent to the October 1999
common stock offering. The decrease in interest income in the six months ended
December 31, 1999 was due to lower average cash balances during that period.
Liquidity and Capital Resources
- -------------------------------
In October 1999, Bone Care completed a directed public offering of 1,229,058
shares of common stock at a price of $9.02 per share. Bone Care received
proceeds of approximately $10,975,610 from the sale, net of offering expenses.
Prior to October 1999, approximately $110,500 of offering expenses were
incurred.
In July 1998, Bone Care completed a directed public offering of 1,326,000
shares of common stock at a price of $8.00 per share. Bone Care received
proceeds of approximately $10,567,504 from the sale, net of offering expenses.
Prior to June 30, 1998, approximately $298,000 of offering expenses were
incurred. Certain directors of Bone Care purchased 276,000 of the shares sold.
Bone Care will require substantial funds for its research and development
programs, preclinical and clinical testing, operating expenses, regulatory
processes and manufacturing and marketing programs. Bone Care'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 development in Bone Care's existing licensing relationships and the
terms of any new collaborative, licensing, co-promotion or distribution
arrangements that Bone Care may establish; the progress of commercialization
and marketing activities; the cost of manufacturing preclinical and clinical
products; and other factors not within Bone Care's control. Bone Care believes
that the current level of cash and cash equivalents should be sufficient to
fund its operations through December 2000.
Cash, cash equivalents, and marketable securities were $13,561,833 at
December 31, 1999 and $7,313,551 at June 30, 1999. The increase was primarily
due to the investment of $7,000,928 in marketable securities after the receipt
of net proceeds of $10,975,610 from the October 1999 common stock offering,
offset by the net loss of $4,474,308. Bone Care invested these proceeds in
U.S. government agency and corporate debt. During the six months ended
December 31, 1999 and 1998, cash used in operating activities aggregated
$4,312,696 and $3,099,641, respectively. The increase in cash used is
attributable to the increased net loss due to marketing activities related to
the launch of Hectorol and the increase in trade receivables resulting from the
first commercial sales of Hectorol capsules in the second quarter ended
December 31, 1999. Cash flows used in investing activities increased to
$7,441,590 in the six months ended December 31, 1999, from $223,707 in the
comparable 1998 period primarily due to the investment of $6,989,458 in
marketable securities.
PART II - OTHER INFORMATION
BONE CARE INTERNATIONAL, INC., AND SUBSIDIARY
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 December 31, 1999.
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: March 17, 2000 /s/ Charles W. Bishop
- ------------------------ --------------------------------
Charles W. Bishop
President and Chief
Executive Officer
(Principal Executive Officer)
Date: March 17, 2000 /s/ Robert A. Beckman
- ------------------------ --------------------------------
Robert A. Beckman
Acting Vice President - Finance
(Principal Financial and
Accounting Officer)
BONE CARE INTERNATIONAL, INC., AND SUBSIDIARY
Exhibit Index
For the Quarterly Period Ended December 31, 1999
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 Six Months ended
------------------ ----------------
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
------------ ------------ ------------- -----------
Net loss $(2,491,328) $(1,440,814) $(4,474,308) $(2,862,269)
============ ============ =========== ===========
Weighted average
number of common
shares 11,245,295 10,136,213 10,709,346 9,963,020
============ ============ =========== ===========
Net loss per common
share - basic $ (0.22) $ (0.14) $ (0.41) $ (0.29)
====== ====== ====== ======
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information
extracted from Form 10-Q for the six months ended
December 31, 1999, and is qualified in its entirety
by reference to such financial statements.
<MULTIPLIER> 1,000
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> DEC-31-1999
<CASH> 6,572
<SECURITIES> 6,989
<RECEIVABLES> 544
<ALLOWANCES> 0
<INVENTORY> 1,114
<CURRENT-ASSETS> 15,739
<PP&E> 924
<DEPRECIATION> 540
<TOTAL-ASSETS> 17,672
<CURRENT-LIABILITIES> 1,428
<BONDS> 0
<COMMON> 11,394
0
0
<OTHER-SE> 4,850
<TOTAL-LIABILITY-AND-EQUITY> 17,672
<SALES> 206
<TOTAL-REVENUES> 206
<CGS> 11
<TOTAL-COSTS> 4,959
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (4,462)
<INCOME-TAX> 13
<INCOME-CONTINUING> (4,475)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,475)
<EPS-BASIC> (0.41)
<EPS-DILUTED> (0.41)
</TABLE>
