Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(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, 1995
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 0-12648
MOLECULAR BIOSYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 36-3078632
(State of Incorporation) (I.R.S. Identification No.)
10030 Barnes Canyon Road
San Diego, California 92121
(619) 452-0681
(Address, including zip code, and telephone number,
including area code, of 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.
X Yes No
The number of shares outstanding of the issuer's common stock, $.01 par value,
as of February 9, 1996 was 13,290,736 shares.
<PAGE>
INDEX PAGE
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
1. Consolidated Balance Sheets 3
December 31, 1995
March 31, 1995
2. Consolidated Statements of Operations 5
Three Months Ended December 31, 1995 and 1994
Nine Months Ended December 31, 1995 and 1994
3. Consolidated Statements of Cash Flows 6
Nine Months Ended December 31, 1995 and 1994
4. Notes to Financial Statements 7
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II -OTHER INFORMATION
Item 1 - Legal Proceedings 13
Item 2 - Changes in Securities 13
Item 3 - Defaults Upon Senior Securities 13
Item 4 - Submission of Matters to a Vote of Securities Holders 13
Item 5 - Other Information 13
Item 6 - Exhibits and Reports on Form 8-K 13
(a) Exhibits
(b) Reports on Form 8-K
Signatures 14
<PAGE>
<TABLE>
<CAPTION>
MOLECULAR BIOSYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(Dollars in thousands)
December 31,
1995 March 31,
(Unaudited) 1995
----------------- ----------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $2,231 $3,882
Marketable securities, available-for-sale 18,889 15,836
Accounts and notes receivable 376 5,180
Inventories 697 1,394
Accrued interest receivable 59 51
Prepaid expenses and other assets 464 391
----------------- ----------------
Total current assets 22,716 26,734
----------------- ----------------
PROPERTY AND EQUIPMENT, at cost:
Building and improvements 20,577 18,125
Equipment, furniture and fixtures 5,378 5,216
Construction in progress 886 2,253
----------------- ----------------
26,841 25,594
Less: Accumulated depreciation and amortization 6,773 5,947
----------------- ----------------
20,068 19,647
----------------- ----------------
OTHER ASSETS:
Patents and license rights, net 341 1,724
Other assets, net 2,603 2,534
----------------- ----------------
2,944 4,258
----------------- ----------------
$45,728 $50,639
================= ================
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
MOLECULAR BIOSYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
(Dollars in thousands)
December 31,
1995 March 31,
(Unaudited) 1995
----------------- ----------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $3,238 $5,089
Current portion of long-term debt 307 307
Compensation accruals 658 411
----------------- ----------------
Total current liabilities 4,203 5,807
----------------- ----------------
LONG-TERM DEBT, net of current portion 8,183 8,408
----------------- ----------------
COMMITMENTS AND CONTINGENCIES (Note 2)
SHAREHOLDERS' EQUITY:
Common stock, $.01 par value,
20,000,000 shares authorized,
13,290,736 and 11,999,561 shares
issued and outstanding, respectively 133 120
Additional paid-in capital 91,432 78,422
Retained deficit (57,769) (41,472)
Unrealized loss on available-for-sale securities (6) (118)
Less notes receivable from sale of common stock (281) (469)
Less treasury stock, at cost (167) (59)
----------------- ----------------
Total shareholders' equity 33,342 36,424
----------------- ----------------
$45,728 $50,639
================= ================
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
MOLECULAR BIOSYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in thousands, except per share amounts)
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1995 1994 1995 1994
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
REVENUES:
Revenues under collaborative agreements $ 1,013 $ 6,188 $ 1,412 $ 14,921
Product revenues 232 720 506 1,267
License fees - - 25 40
-------------- -------------- -------------- --------------
1,245 6,908 1,943 16,228
-------------- -------------- -------------- --------------
RESEARCH AND DEVELOPMENT COSTS:
Compensation 1,499 1,519 4,111 5,404
Equipment and supplies 545 1,384 1,549 3,312
Outside research, preclinical and clinical trials 75 345 564 1,512
Legal, professional and consulting 355 275 1,022 1,093
Occupancy costs 359 237 1,128 1,011
Other 443 492 1,483 1,779
-------------- -------------- -------------- --------------
3,276 4,252 9,857 14,111
COST OF PRODUCTS SOLD 587 643 1,311 988
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 1,066 1,338 4,178 4,628
LITIGATION AND OTHER 3,110 3,000 3,110 3,000
-------------- -------------- -------------- --------------
Total operating costs and expenses 8,039 9,233 18,456 22,727
-------------- -------------- -------------- --------------
LOSS FROM OPERATIONS (6,794) (2,325) (16,513) (6,499)
INTEREST EXPENSE (195) (193) (596) (496)
INTEREST INCOME 344 283 812 930
-------------- -------------- -------------- --------------
NET LOSS $ (6,645) $ (2,235) $ (16,297) $ (6,065)
============== ============== ============== ==============
NET LOSS PER COMMON SHARE $ (0.50) $ (0.19) $ (1.30) $ (0.51)
============== ============== ============== ==============
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 13,291 12,000 12,535 11,999
============== ============== ============== ==============
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
MOLECULAR BIOSYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED DECEMBER 31, 1995 AND 1994
(Unaudited; in thousands)
1995 1994
-------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($16,297) ($6,065)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 1,868 2,455
Write-down of property to be sold 667 -
Loss on write-off of license fees related to discontinued products 1,025 -
Forgiveness of note receivable from sale of common stock 56 -
Changes in operating assets and liabilities:
Receivables 4,740 (10,216)
Inventories 697 49
Prepaid expenses and other assets (73) (242)
Accounts payable and accrued liabilities (351) 3,185
Compensation accruals 247 50
-------------- -------------
Cash used in operating activities (7,421) (10,784)
-------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (1,945) (882)
Additions to patents and license rights (45) (500)
Increase in other assets (677) -
(Increase) decrease in marketable securities (2,941) 6,502
-------------- -------------
Cash provided by (used in) investing activities (5,608) 5,120
-------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common shares 11,603 183
Long-term debt proceeds - 5,000
Principal payments on long-term debt (225) (180)
-------------- -------------
Cash provided by financing activities 11,378 5,003
-------------- -------------
DECREASE IN CASH AND CASH
EQUIVALENTS (1,651) (661)
CASH AND CASH EQUIVALENTS, beginning of period 3,882 1,557
-------------- -------------
CASH AND CASH EQUIVALENTS, end of period $2,231 $896
============== =============
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest income received $804 $1,063
============== =============
Interest paid $592 $492
============== =============
</TABLE>
See accompanying notes.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- -----------------------------
(1) Basis of Presentation-
----------------------
The Notes to the Consolidated Financial Statements of Molecular
Biosystems, Inc. (the "Company") were submitted with the Company's Form
10-K for the year ended March 31, 1995 and should be read in
conjunction with this Form 10-Q.
These interim Consolidated Financial Statements of the Company have
not been audited by independent public accountants. However, in the
opinion of the Company, all adjustments required for a fair
presentation of the financial position of the Company as of December
31, 1995, and the results of its operations for the three- and nine-
months ended December 31, 1995 and 1994, and its cash flows for
the nine-month periods ended December 31, 1995 and 1994, have been
made. The results of operations for these interim periods are not
necessarily indicative of the operating results for the full year.
(2) Contingencies-
--------------
In May 1993 the Company entered into an exclusive license agreement
with Bracco S.p.A. of Milan, Italy, for the distribution rights in
Europe and the former Soviet Union to the Company's proprietary oral
ultrasound agent for imaging the gastrointestinal tract. At that time
Bracco paid the Company a license fee of $2 million and undertook
certain developmental obligations in the territory. In March 1994,
Bracco notified the Company that it desired to rescind the agreement
and demanded that the Company return the license fee. The Company
denied that Bracco was entitled to rescind the agreement or to the
return of any portion of the license fee. In January 1995, Bracco filed
a demand for arbitration claiming return of the $2 million license fee,
in addition to other monetary relief. The Company filed a response
denying the material allegations of Bracco's demand. On November 22,
1995, the arbitrator ruled in favor of MBI on two counts of Bracco's
claim; however, he also awarded Bracco $1.7 million plus statutory
interest on a legal theory not advanced by Bracco. MBI is appealing the
award. As a result of the arbitrator's ruling, the Company has
recognized a charge to operations of approximately $2.4 million to
reflect the amount of the award, interest accrued thereon and related
attorneys' fees. Of this charge, approximately $1.4 million was
recorded during the quarter ended December 31, 1995. Included in
accounts payable and accrued liabilities at December 31, 1995 is a
reserve of $2 million for the possible payment of this award.
(3) Stock Settlement-
-----------------
In June 1994, the United States District Court for the Southern
District of California granted final approval to an agreement settling
a class action complaint against the Company, certain of its officers
and all of the members of its Board of Directors (Sherman v. Widder, et
al., No. TS 92-1827-IEG (M)) alleging violations of the Securities
Exchange Act of 1934 and California securities laws. Part of the
settlement agreement provided for the Company to issue shares of MBI's
common stock worth $1.5 million to qualifying class members. In May
1995, the stock was transferred to the qualifying class members.
<PAGE>
(4) Litigation and Other-
---------------------
During the quarters ended December 31, 1995 and December 31, 1994, the
Company recorded the following charges:
<TABLE>
Three Months Ended Nine Months Ended
December 31, December 31,
1995 1994 1995 1994
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Arbitration award and related costs $ 1,418 $ - $ 1,418 $ -
Write-off of license fees related to discontinued products 1,025 1,025
Write-down of real estate to be sold 667 - 667 -
Approval bonus paid by U.S. marketing partner - 3,000 - 3,000
---------- ---------- ---------- -----------
Total litigation and other $ 3,110 $ 3,000 $ 3,110 $ 3,000
========== ========== ========== ===========
</TABLE>
The arbitration award and related costs are discussed in note (2) on
page 7.
As a result of the Company's decision to focus its research and
development activities on its ultrasound contrast agents, the Company
wrote-off approximately $1 million of license fees related to
discontinued products which previously had been capitalized.
Additionally, in November 1995, the Company entered into a contract for
the sale of the two buildings and underlying land that the Company
purchased in December 1993. The sale of the buildings is expected to be
completed in March 1996. As a result, the Company has written-down the
carrying value of the buildings by $667,000 to the net amount it
expects to receive from this sale.
Finally, during the quarter ended December 31, 1994, the Company
received a bonus from Mallinckrodt Medical, its U.S. marketing partner
of approximately $3 million related to the approval of ALBUNEX(R) for
marketing in the United States. Under the terms of the marketing and
distribution agreement with Mallinckrodt, this bonus was paid to MBI's
employees. As a result, the Company accrued a liability for the payment
of these bonuses in the quarter ended December 31, 1994 of $3 million.
The bonus was paid to employees in the quarter ended March 31, 1995.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following management discussion and analysis should be read in
conjunction with (1) the current consolidated financial statements and (2) the
Company's consolidated financial statements and management's discussion and
analysis of financial condition and results of operations in its Annual Report
on Form 10-K for the year ended March 31, 1995.
Liquidity and Capital Resources
On September 7, 1995, the Company entered into an amended and restated
distribution agreement and a related investment agreement with Mallinckrodt
Medical, Inc. ("Mallinckrodt") which will provide the Company with between $33
million and $47.5 million in new financing (includes the $13 million common
stock investment discussed below). Under the terms of the agreement,
Mallinckrodt will pay the Company $20 million over four years to support
clinical trials of FS069 (the Company's second-generation cardiac perfusion
product), related regulatory submissions and associated product development.
These payments will be made in 16 quarterly installments starting at $1 million
for the first four quarters, $1.25 million for the following eight quarters and
$1.5 million for the final four quarters. The first and second quarterly
payments were paid on October 1, 1995 and January 2, 1996.
The amended distribution agreement requires the Company to spend at
least $10 million of this $20 million on clinical trials to support regulatory
filings with the FDA for cardiac indications of FS069. After the Company has
spent this $10 million, the amended distribution agreement requires the Company
and Mallinckrodt to share equally in the cost of any additional clinical trials
of FS069 in the United States, up to a maximum total of $5 million ($2.5 million
each).
The amended distribution agreement also provides for potential payments
to the Company of up to $12 million upon the satisfaction of certain milestones.
(There can be no assurance, however, that all or any of these milestones will be
satisfied.)
In connection with the amended distribution agreement, the Company also
entered into an investment agreement whereby the Company sold 1,118,761
unregistered shares of its common stock to Mallinckrodt for $13 million, or a
price of $11.62 per share before related costs. With the 181,818 shares of the
Company's common stock that Mallinckrodt acquired in December 1988 (under an
investment agreement which the Company and Mallinckrodt entered into at the same
time as they entered into the original distribution agreement), Mallinckrodt
owns approximately 9.8% of the Company's issued and outstanding shares.
The Company expects that the funding provided under the amended
distribution agreement to be its major source of funds for Company operations
over the next several years. At December 31, 1995, the Company had net working
capital of $18.5 million compared to $20.9 million at March 31, 1995. Cash and
current marketable securities were $21.1 million at December 31, 1995 compared
to $19.7 million at March 31, 1995.
For the next several years, the Company expects to incur substantial
additional expenditures associated with product development. As discussed above,
funding provided under the amended distribution agreement will be the major
source to fund the Company's operating costs and expenses. The Company will also
continue to utilize product revenues from sales of ALBUNEX(R) and its existing
cash and marketable securities and the interest earned thereon to fund its
operations and capital spending needs. The Company may pursue a number of
options to raise additional funds, including borrowings; lease arrangements;
collaborative research and development arrangements with pharmaceutical
companies; the licensing of product rights to third parties; or additional
public and private financing, as anticipated capital requirements change as a
result of strategic, competitive, technological and regulatory factors. There
can be no assurance that funds from these sources will be available on favorable
terms, if at all.
Results of Operations
Revenues. During the first year after the Company received clearance
for the marketing and sale of ALBUNEX(R) in the United States, the Company
recognized revenues both on its sales to Mallinckrodt (see "Product Revenues and
License Fees," below) and on Mallinckrodt's subsequent sales to the end users of
ALBUNEX(R) (see "Revenues Under Collaborative Agreements," below).
Revenues Under Collaborative Agreements. Revenues under collaborative
agreements, which have been the primary source of revenues for the Company in
the past, were $1 million and $1.4 million for the three-month and nine-month
periods ended December 31, 1995, compared to $6.2 million and $14.9 million for
both of the same periods in the prior year.
For both the three-month and nine-month periods ended December 31,
1995, $1 million of the revenues under collaborative agreements was attributable
to the receipt of the first quarterly payment from Mallinckrodt to support
clinical trials (discussed above under "Liquidity and Capital Resources"). The
remaining $13,000 and $412,000 for the same periods were based on Mallinckrodt's
sales to its customers. Under the original Mallinckrodt contract, for the first
twelve months after the Company received clearance for ALBUNEX(R) in the United
States, Mallinckrodt agreed to pay a bonus to MBI equivalent to Mallinckrodt's
first year product sales at its sales price to the end users of the product. The
Company earned $757,000 based upon the first-year product sales of ALBUNEX(R) by
Mallinckrodt. The bonus payment was received in December 1995. Prior year
revenues consisted of milestone revenues recognized as a result of the Company
receiving approval to market ALBUNEX(R) in the United States and the release of
ALBUNEX(R) to Mallinckrodt's sales force.
Product Revenues and License Fees. Revenues, excluding revenues under
collaborative agreements, were $232,000 and $531,000 for the three-month and
nine-month periods ended December 31, 1995, compared to $720,000 and $1.3
million for the same periods in the prior year. Product sales are based upon
MBI's sales to Mallinckrodt and Shionogi and are recognized upon shipment of the
product. The transfer price for MBI's sales of ALBUNEX(R) to Mallinckrodt is
equal to 40% of Mallinckrodt's net sales price to its end users of the product
and the transfer price for MBI's sales of ALBUNEX(R) to Shionogi is equal to 30%
of Shionogi's net sales price to its end users of the product.
Cost of Products Sold. Cost of products sold totaled $587,000 and $1.3
million for the three-month and nine-month periods ending December 31, 1995,
resulting in a negative gross profit margin due to the current low levels of
production. Cost of products sold totaled $988,000 for the period ended December
31, 1994, resulting in a gross profit margin of 22%. The higher gross profit
margin percentage in the prior year was due to then greater levels of
production.
Research and Development Costs. For the three-month and nine-month
periods ended December 31, 1995, the Company's research and development costs
totaled $3.3 million and $9.9 million, as compared to $4.3 million and $14.1
million, respectively, for the same periods in 1994. This decrease of 30% in the
current year is due in large part to the decision the Company made in February
1995 to focus its research and development efforts primarily on its ultrasound
contrast agents and reduce its staffing by approximately twenty five percent.
Selling, General and Administrative Expenses. For the three-month and
nine-month periods ended December 31, 1995, the Company's selling, general and
administrative expenses totaled $1.1 million and $4.2 million, as compared to
$1.3 million and $4.6 million, respectively, for the same periods in 1994. This
decrease of 10% in the current year is also due to the decision to reduce the
Company's staffing made in February 1995.
Interest Expense and Interest Income. Interest expense for the
three-month and nine-month periods ended December 31, 1995 and 1994 consists of
mortgage interest on the Company's buildings. Interest expense is higher in the
current year due to a note payable which the Company entered into in May 1994 to
finance the purchase of two unimproved buildings and underlying land in December
1993.
The decrease in interest income in the current year is due to lower
average cash and marketable securities balances.
The Company's cash is invested primarily in short-term, fixed principal
investments, such as U.S. Government agency issues, corporate bonds,
certificates of deposit and commercial paper.
Prospective Information
As noted above, on September 7, 1995, the Company entered into an
amended and restated distribution agreement and a related investment agreement
with Mallinckrodt. This amended distribution agreement modifies the original
December 1988 distribution agreement between the Company and Mallinckrodt in a
number of respects. Under the amended distribution agreement, the geographical
scope of Mallinckrodt's exclusive right to market the Company's proprietary
contrast agent for transpulmonary cardiac ultrasound imaging, ALBUNEX(R), the
Company's second generation ultrasound contrast agent, FS069 (currently under
development), and related products was expanded to include all of the countries
of the world other than those covered by the Company's license agreements with
Shionogi & Co., Ltd. and Nycomed AS. The duration of Mallinckrodt's exclusive
right was also extended from October 1999 until the later of July 1, 2003 or
three years after the date that Company obtains approval from the U.S. Food and
Drug Administration ("FDA") to market FS069 for an intravenous myocardial
perfusion indication (use).
The amended distribution agreement requires the Company to spend at
least $10 million of the $20 million it receives over four years on clinical
trials to support regulatory filings with the FDA for cardiac indications of
FS069. The Company's expenditure of this $10 million will be made in accordance
with the directions of a joint steering committee which the Company and
Mallinckrodt will establish in order to expedite the development and regulatory
approval of FS069 by enabling the parties to share their expertise relating to
clinical trials and the regulatory approval process. The Company and
Mallinckrodt will each appoint two of the four members of the joint steering
committee.
After the Company has spent this $10 million, the amended distribution
agreement requires the Company and Mallinckrodt to share equally in the cost of
any additional clinical trials of FS069 in the United States which the joint
steering committee may direct to be performed, up to a maximum of $5 million on
a combined basis.
In addition, the amended distribution agreement grants the Company the
option (at its own discretion) to repurchase all of the shares of the Company's
common stock that Mallinckrodt purchased under the investment agreement for $45
million, subject to various price adjustments. This option is exercisable
beginning the later of July 1, 2000 or the date that the Company obtains
approval from the FDA to market FS069 for an intravenous myocardial perfusion
indication and ending on the later of June 30, 2003 or three years after the
date that the Company obtains approval from the FDA to market FS069 for an
intravenous myocardial perfusion. If the Company exercises this option, the
Company may co-market ALBUNEX(R), FS069 and related products in all of the
countries covered by the amended distribution agreement.
Shares sold to Mallinckrodt under the related investment agreement are
subject to certain anti-dilution and registration rights of Mallinckrodt and
certain first refusal and "standstill" rights of MBI.
In October 1995, the Company entered into an agreement whereby it
reaquired all rights to INFOSON (the European designation for ALBUNEX(R)), FS069
and related products from Nycomed, the Company's European licensee. Nycomed has
received approval to market ALBUNEX(R) in Sweden, Finland and the United Kingdom
and has filed applications in several other European countries, but has not yet
begun to market the product. The Company is currently in discussions with
another potential licensee for Nycomed's territory, which includes Europe,
Africa, parts of Asia and India. Financial terms will be disclosed at a later
date.
Sales of ALBUNEX(R) . In October 1993, ALBUNEX(R) was approved for
marketing in Japan and became the first ultrasound contrast agent available in
that country. As initial sales were below the Company's expectations, Shionogi
and the Company engaged in an intensive cooperative study of the situation.
However, to increase the likelihood of improved sales performance in the future,
Shionogi, with the Company's concurrence, decided during the first quarter of
fiscal 1995 to curtail promotional efforts and limit current Japanese sales to
selected accounts until these issues have been resolved. The Company has had
limited sales to Shionogi since the second quarter of fiscal 1995. The Company
and Shionogi have recently discussed the possibility of terminating the
agreement between the companies. The Company believes that it is likely that the
relationship with Shionogi will be terminated within the next twelve months on
terms to be determined.
In August 1994, the Company received clearance for the marketing and
sale of ALBUNEX(R) in the United States. Product sales from the Company to
Mallinckrodt, the Company's distributor in the United States, totaled $1.4
million for the first 15 months the product has been marketed in the United
States.
President and Chief Operating Officer. In October 1995 the Company
appointed Mr. Bobba Venkatadri as President and Chief Operating Officer. Mr.
Venkatadri most recently served as Executive Vice President of the
Pharmaceutical Division of Centocor, Inc., in Malvern, Pennsylvania. He was
instrumental in restructuring Centocor which included building strategic
alliances, management of R&D, product approvals and scale-up of new products.
Mr. Venkatadri was appointed to fill the vacancy created by the
resignation of Vincent A. Frank. Mr. Frank, who served as MBI's President and
Chief Operating Officer for 10 years, passed away in August 1995 after a lengthy
illness.
PART II - OTHER INFORMATION
Item 1-5 - The Company has nothing to report with respect to these items during
the quarter ended December 31, 1995.
Item 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a)Exhibits - None
(b)Reports on Form 8-K
A Current Report on Form 8-K dated September 7, 1995, was filed
on September 25, 1995, reporting a restated distribution agreement and
a related investment agreement with Mallinckrodt Medical, Inc.
A Current Report on Form 8-K dated November 22, 1995, was filed on
December 13, 1995, reporting that the arbitrator in arbitration proceedings
between Molecular Biosystems, Inc. (the "Company") and Bracco S.p.A.
("Bracco") entered an award refunding a portion of the license fee that
Bracco paid to MBI in May 1993 in connection with the Company's license to
Bracco of MBI's oral ultrasound agent technology.
<PAGE>
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.
MOLECULAR BIOSYSTEMS, INC.
/s/ Gerard A. Wills
- -------------------
Gerard A. Wills
Vice President Finance and
Chief Financial Officer
2/14/96
- -----------
Date
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated financial statements of Molecular Biosystems, Inc. dated December
31, 1995 and is qualifed in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> DEC-31-1995
<CASH> 2,231
<SECURITIES> 18,889
<RECEIVABLES> 435
<ALLOWANCES> 0
<INVENTORY> 697
<CURRENT-ASSETS> 22,716
<PP&E> 26,841
<DEPRECIATION> 6,773
<TOTAL-ASSETS> 45,728
<CURRENT-LIABILITIES> 4,203
<BONDS> 8,183
<COMMON> 133
0
0
<OTHER-SE> 33,209
<TOTAL-LIABILITY-AND-EQUITY> 45,728
<SALES> 506
<TOTAL-REVENUES> 1,943
<CGS> 1,311
<TOTAL-COSTS> 18,456
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 596
<INCOME-PRETAX> (16,297)
<INCOME-TAX> 0
<INCOME-CONTINUING> (16,297)
<DISCONTINUED> 0
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