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 June 30, 1997
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 1-10546
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 July 31, 1997 was 17,765,397 shares.
<PAGE>
INDEX PAGE
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
1. Consolidated Balance Sheets 3
March 31, 1997 and June 30, 1997
2. Consolidated Statements of Operations 4
Three Months Ended June 30, 1996 and 1997
3. Consolidated Statements of Cash Flows 5
Three Months Ended June 30, 1996 and 1997
4. Notes to Financial Statements 6
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II -OTHER INFORMATION
Item 1 - Legal Proceedings 12
Item 2 - Changes in Securities 12
Item 3 - Defaults Upon Senior Securities 12
Item 4 - Submission of Matters to a Vote of Securities Holders 12
Item 5 - Other Information 12
Item 6 - Exhibits and Reports on Form 8-K 12
(a) Exhibits
(b) Reports on Form 8-K
Signatures 13
<PAGE>
<TABLE>
<CAPTION>
MOLECULAR BIOSYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
June 30,
March 31, 1997
1997 (Unaudited)
----------- --------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 587 $ 409
Marketable securities, available-for-sale 40,827 36,488
Accounts and notes receivable 902 784
License rights 8,500 8,500
Inventories 342 459
Prepaid expenses and other assets 249 157
----------- ------------
Total current assets 51,407 46,797
----------- ------------
Property and equipment, at cost:
Building and improvements 14,544 14,544
Equipment, furniture and fixtures 4,567 4,615
Construction in progress 511 673
----------- ------------
19,622 19,832
Less: Accumulated depreciation and amortization 6,434 6,714
----------- ------------
Total property and equipment 13,188 13,118
----------- ------------
Other assets:
Patents and license rights, net of amortization
$1,114 and $1,153, respectively 341 302
Certificate of deposit, pledged 3,000 3,000
Other assets, net 2,223 2,223
----------- ------------
Total other assets 5,564 5,525
----------- ------------
$ 70,159 $ 65,440
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 1,267 $ 1,267
Accounts payable and accrued liabilities 4,684 5,625
Compensation accruals 1,613 947
----------- ------------
Total current liabilities 7,564 7,839
----------- ------------
Long-term debt, net of current portion 7,349 7,034
----------- ------------
Other noncurrent liabilities 3,500 3,500
Commitments and contingencies (Note 2)
Stockholders' equity:
Common Stock, $.01 par value, 40,000,000 shares
authorized, 17,745,897 and 17,759,397 shares
issued and outstanding, respectively 177 178
Additional paid-in capital 127,483 127,566
Accumulated deficit (75,469) (80,268)
Unrealized loss on available-for-sale securities (82) (46)
Less 40,470 shares of treasury stock, at cost (363) (363)
----------- ------------
Total stockholders' equity 51,746 47,067
----------- ------------
$ 70,159 $ 65,440
=========== ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MOLECULAR BIOSYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
Three Months Ended
June 30,
1996 1997
------------ -------------
(Unaudited)
<S> <C> <C>
Revenues:
Revenues under collaborative agreements $ 1,000 $ 1,250
Product and royalty revenues 178 224
------------ -------------
1,178 1,474
------------ -------------
Operating expenses:
Research and development costs 2,636 2,185
Costs of products sold 1,290 1,511
Selling, general and administrative expenses 1,765 3,040
------------ -------------
5,691 6,736
------------ -------------
Loss from operations (4,513) (5,262)
Interest expense (199) (191)
Interest income 328 654
------------ -------------
Net loss $ (4,384) $ (4,799)
============ =============
Loss per common share $ (0.30) $ (0.27)
============ =============
Weighted average common shares outstanding 14,787 17,752
============ =============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MOLECULAR BIOSYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Three Months Ended
June 30,
1996 1997
------------ -------------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (4,384) $ (4,799)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 346 318
Changes in operating assets and liabilities:
Receivables (53) (25)
Inventories 143 (117)
Prepaid expenses and other assets 139 236
Accounts payable and accrued liabilities (1,481) 941
Compensation accruals (507) (666)
------------ -------------
Cash used in operating activities (5,797) (4,112)
------------ -------------
Cash flows from investing activities:
Purchases of property and equipment (173) (210)
Additions to patents and license rights (15) -
Decrease in other assets 11 -
Decrease in marketable securities 7,757 4,376
------------ -------------
Cash provided by (used in) investing activities 7,580 4,166
------------ -------------
Cash flows from financing activities:
Net proceeds from public offering of Common Stock 34,124 -
Net proceeds from stock options exercised 892 83
Principal payments on long-term debt (314) (315)
------------ -------------
Cash provided by financing activities 34,702 (232)
------------ -------------
Increase (decrease) in cash and cash equivalents 36,485 (178)
Cash and cash equivalents, beginning of period 12,542 587
------------ -------------
Cash and cash equivalents, end of period $ 49,027 $ 409
============ =============
Supplemental cash flow disclosures:
Interest income received $ 328 $ 798
============ =============
Interest paid $ 198 $ 190
============ =============
</TABLE>
<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, 1997 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 June 30, 1997, and the results of
its operations for the three-months ended June 30, 1996 and 1997, and its
cash flows for the three-months ended June 30, 1996 and 1997, have been
made. The results of operations for these interim periods are not
necessarily indicative of the operating results for the full year.
(2) Commitments and Contingencies-
In April 1997, separate lawsuits were filed by Bracco Diagnostics, Inc.
("Bracco"), DuPont Merck Pharmaceutical Co. ("DuPont Merck"), ImaRx
Pharmaceutical Corp. ("ImaRx") and Sonus Pharmaceuticals, Inc. ("Sonus")
against the United States Food and Drug Administration (the "FDA") seeking
a preliminary and permanent injunction to keep the FDA from approving the
Company's pre-market approval application ("PMA") for OPTISON(TM) until the
FDA resolved the merits of citizen petitions previously filed with the FDA
by the plaintiffs. These citizen petitions requested the FDA to regulate
all ultrasound imaging contrast agents either as drugs (as the plaintiffs'
contrast agents under development are currently classified) or as medical
devices (as the Company's ALBUNEX(R) and OPTISON(TM) are currently
classified.) The lawsuits alleged that the FDA acted in an arbitrary and
capricious manner in its review of the parties' ultrasound contrast agents
and requested the FDA to review all ultrasound contrast agents in a
consistent manner.
In response, the United States District Court entered an order enjoining
the FDA from continuing any approval or review procedures relating to the
Company's PMA for OPTISON(TM), until ten days after the FDA ruled. In
February 1997, the FDA's advisory Radiological Devices Panel had
recommended approval of the Company's PMA for OPTISON(TM).
On July 29, 1997, the FDA ruled that OPTISON(TM) is properly classifiable
as a drug under the applicable sections of the Food and Drug Act and FDA
regulations. It will transfer review of the Company's PMA for OPTISON(TM)
from the Center for Devices and Radiological Health ("CDRH") to the Center
for Drug Evaluation and Research ("CDER"). However, the FDA further ruled
that (1) the PMA will "immediately be deemed a submitted and filed NDA [New
Drug Application]"; (2) CDER will not repeat the review of those portions
of the PMA on which CDER has already completed substantial work; (3) CDER
will rely, as appropriate, on the "extensive analyses" already done by
CDRH, the advisory panel's comments and recommendations, and "any
conclusions already reached by CDRH officials regarding the data and
information in the PMA." The ruling notes that the Company will be expected
to supplement the NDA with patent information, drug labeling, and "other
information needed to support the approval of an NDA," but it further notes
that the FDA expects "that the redesignation of [OPTISON(TM)] can be
accomplished without a significant interruption in the pre-market review
process." On August 5, 1997, the United States District Court lifted its
stay on the FDA approval process for OPTISON(TM). The Company does not
know, however, when FDA approval will be obtained (if at all).
In July 1997, the Company received notices from the U.S. Patent and
Trademark Office ("PTO") that the PTO had granted the Company's petitions
seeking reexamination of the patentability of a patent issued to Sonus
Pharmaceuticals in September 1996 and a second patent issued to Sonus
Pharmaceuticals in November 1996. These two patents are among the patents
for which the Company has filed suit to obtain a declaration of invalidity
as described in the next paragraph.
In July 1997, the Company and its marketing partner Mallinckrodt Medical
Inc., ("Mallinckrodt") filed suit in United States District Court for the
District of Columbia against four potential competitors - Sonus
Pharmaceuticals, Inc., Nycomed Imaging AS, ImaRx Pharmaceutical Corp. and
its marketing partner DuPont Merck, and Bracco International BV - seeking
declarations that certain of their ultrasound contrast agent patents are
invalid.
The complaint filed by the Company and Mallinckrodt alleges that each of
the defendants' patents are invalid on a variety of independent grounds
under the U.S. patent laws. In addition to requesting that all of the
patents in question be declared invalid, the complaint requests a
declaration that, contrary to defendants' contentions, MBI and Mallinckrodt
do not infringe the patents, and asks that defendants be enjoined from
proceeding against MBI and Mallinckrodt for infringement until the status
of defendants' patents has been determined by the court or the PTO. The
complaint alleges that each defendant has claimed that its patent or
patents cover OPTISON(TM) and that each defendant will attempt
to prevent its commercialization.
The Company has obtained a copy of, but has not yet been served with, a
complaint filed by Sonus Pharmaceuticals alleging that the manufacture and
sale of OPTISON(TM) by the Company and Mallinckrodt will infringe two
patents owned by Sonus Pharmaceuticals. These patents are the same patents
for which the PTO has granted the Company's petitions for reexamination, as
previously described, and are among the patents for which the Company is
seeking a declaration of invalidity as described in the preceding two
paragraphs. The complaint by Sonus Pharmaceuticals was filed in the United
States District Court for the Western District of Washington after the
Company and Mallinckrodt filed their lawsuit in the United States District
Court for the District of Columbia.
Litigation or administrative proceedings relating to these matters could
result in a substantial cost to the Company; and given the complexity of
the legal and factual issues, the inherent vicissitudes and uncertainty of
litigation, and other factors, there can be no assurance of a favorable
outcome. An unfavorable outcome could have a material adverse effect on the
Company's business, financial condition and results of operations.
Moreover, there can be no assurance that, in the event of an unfavorable
outcome, the Company would be able to obtain a license to any proprietary
rights that may be necessary to commercialize OPTISON(TM), either on
acceptable terms or at all. If the Company were required to obtain a
license necessary to commercialize OPTISON(TM), the Company's failure or
inability to do so would have a material adverse effect on the Company's
business, financial condition and results of operations.
<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, 1997.
From time to time, the Company may publish forward-looking statements
relating to such matters as anticipated financial performance, business
prospects, technological developments, new products, research and development
activities and similar matters. A variety of factors could cause the Company's
actual results and experience to differ materially from the anticipated results
or other expectations expressed in the Company's forward-looking statements. The
risks and uncertainties that may affect the operations, performance, development
and results of the Company's business include the expense and uncertain outcome
of the litigation described under the caption "Recent Events"; difficulties and
delays with respect to the performance of clinical trials; delays by regulatory
authorities; manufacturing problems; difficulties and delays with respect to
marketing and sales activities; and general uncertainties accompanying the
development and introduction of new products.
Recent Events
In April 1997, separate lawsuits were filed by Bracco Diagnostics, Inc.
("Bracco"), DuPont Merck Pharmaceutical Co. ("DuPont Merck"), ImaRx
Pharmaceutical Corp. ("ImaRx") and Sonus Pharmaceuticals, Inc. ("Sonus") against
the United States Food and Drug Administration (the "FDA") seeking a preliminary
and permanent injunction to keep the FDA from approving the Company's pre-market
approval application ("PMA") for OPTISON(TM) until the FDA resolved the merits
of citizen petitions previously filed with the FDA by the plaintiffs. These
citizen petitions requested the FDA to regulate all ultrasound imaging contrast
agents either as drugs (as the plaintiffs' contrast agents under development are
currently classified) or as medical devices (as the Company's ALBUNEX(R) and
OPTISON(TM) are currently classified.) The lawsuits alleged that the FDA acted
in an arbitrary and capricious manner in its review of the parties' ultrasound
contrast agents and requested the FDA to review all ultrasound contrast agents
in a consistent manner.
In response, the United States District Court entered an order
enjoining the FDA from continuing any approval or review procedures relating to
the Company's PMA for OPTISON(TM), until ten days after the FDA ruled. In
February 1997, the FDA's advisory Radiological Devices Panel had recommended
approval of the Company's PMA for OPTISON(TM).
On July 29, 1997, the FDA ruled that OPTISON(TM) is properly
classifiable as a drug under the applicable sections of the Food and Drug Act
and FDA regulations. It will transfer review of the Company's PMA for
OPTISON(TM) from the Center for Devices and Radiological Health ("CDRH") to the
Center for Drug Evaluation and Research ("CDER"). However, the FDA further ruled
that (1) the PMA will "immediately be deemed a submitted and filed NDA [New Drug
Application]"; (2) CDER will not repeat the review of those portions of the PMA
on which CDER has already completed substantial work; (3) CDER will rely, as
appropriate, on the "extensive analyses" already done by CDRH, the advisory
panel's comments and recommendations, and "any conclusions already reached by
CDRH officials regarding the data and information in the PMA." The ruling notes
that the Company will be expected to supplement the NDA with patent information,
drug labeling, and "other information needed to support the approval of an NDA,"
but it further notes that the FDA expects "that the redesignation of
[OPTISON(TM)] can be accomplished without a significant interruption in the
pre-market review process." On August 5, 1997, the United States District Court
lifted its stay onthe FDA approval process for OPTISON(TM). The Company does not
know, however, when FDA approval will be obtained (if at all).
In July 1997, the Company received notices from the U.S. Patent and
Trademark Office ("PTO") that the PTO had granted the Company's petitions
seeking reexamination of the patentability of a patent issued to Sonus
Pharmaceuticals in September 1996 and a second patent issued to Sonus
Pharmaceuticals in November 1996. These two patents are among the patents for
which the Company has filed suit to obtain a declaration of invalidity as
described in the next paragraph.
In July 1997, the Company and its marketing partner Mallinckrodt
Medical Inc., ("Mallinckrodt") filed suit in United States District Court for
the District of Columbia against four potential competitors - Sonus
Pharmaceuticals, Inc., Nycomed Imaging AS, ImaRx Pharmaceutical Corp. and its
marketing partner DuPont Merck, and Bracco International BV - seeking
declarations that certain of their ultrasound contrast agent patents are
invalid.
The complaint filed by the Company and Mallinckrodt alleges that each
of the defendants' patents are invalid on a variety of independent grounds under
the U.S. patent laws. In addition to requesting that all of the patents in
question be declared invalid, the complaint requests a declaration that,
contrary to defendants' contentions, MBI and Mallinckrodt do not infringe the
patents, and asks that defendants be enjoined from proceeding against MBI and
Mallinckrodt for infringement until the status of defendants' patents has been
determined by the court or the PTO. The complaint alleges that each defendant
has claimed that its patent or patents cover OPTISON(TM) and that each
defendant will attempt to prevent its commercialization.
The Company has obtained a copy of, but has not yet been served with, a
complaint filed by Sonus Pharmaceuticals alleging that the manufacture and sale
of OPTISON(TM) by the Company and Mallinckrodt will infringe two patents owned
by Sonus Pharmaceuticals. These patents are the same patents for which the PTO
has granted the Company's petitions for reexamination, as previously described,
and are among the patents for which the Company is seeking a declaration of
invalidity as described in the preceding two paragraphs. The complaint by Sonus
Pharmaceuticals was filed in the United States District Court for the Western
District of Washington after the Company and Mallinckrodt filed their lawsuit in
the United States District Court for the District of Columbia.
Litigation or administrative proceedings relating to these matters
could result in a substantial cost to the Company; and given the complexity of
the legal and factual issues, the inherent vicissitudes and uncertainty of
litigation, and other factors, there can be no assurance of a favorable outcome.
An unfavorable outcome could have a material adverse effect on the Company's
business, financial condition and results of operations. Moreover, there can be
no assurance that, in the event of an unfavorable outcome, the Company would be
able to obtain a license to any proprietary rights that may be necessary to
commercialize OPTISON(TM), either on acceptable terms or at all. If the Company
were required to obtain a license necessary to commercialize OPTISON(TM), the
Company's failure or inability to do so would have a material adverse effect on
the Company's business, financial condition and results of operations.
On May 12, 1997, the Board of Directors of the Company implemented its
previously adopted plan of management succession. As part of the transition
plan, Kenneth J. Widder, M.D. relinquished the office of Chief Executive Officer
but will remain Chairman of the Board. Dr. Widder will continue to be
responsible for the Company's strategic planning and corporate development
activities. The Company's Board elected Bobba Venkatadri, currently President
and Chief Operating Officer, to the additional office of Chief Executive
Officer.
Liquidity and Capital Resources
At June 30, 1997, the Company had net working capital of $39.0 million
compared to $43.8 million at March 31, 1997. Cash, cash equivalents, marketable
securities and certificates of deposit pledged were $39.9 million at June 30,
1997 compared to $44.4 million at March 31, 1997. In June 1997, the Company
entered into an equipment leasing agreement with Mellon US Leasing ("Mellon")
for a lease line of $1.6 million with a term of 48 months. The Company has not
yet drawn down on this lease line.
For the next several years, the Company expects to incur substantial
additional expenditures associated with product development. The Company
anticipates that its existing resources, including the proceeds of the public
offering in May 1996 and interest thereon, plus payments under its collaborative
agreement with Mallinckrodt, will enable the Company to fund its operations for
at least the next two years. The Company continually reviews its product
development activities in an effort to allocate its resources to those products
that the Company believes have the greatest commercial potential. Factors
considered by the Company in determining the products to pursue may include, but
are not limited to, the projected markets, potential for regulatory approval,
technical feasibility and estimated costs to bring the product to the market.
Based upon these factors, the Company may from time to time reallocate its
resources among its product development activities.
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 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, or at all.
Results of Operations
Revenues Under Collaborative Agreements. Revenues under collaborative
agreements were $1.3 million for the three-month period ended June 30, 1997
compared to $1.0 million for the same period in the prior year. These revenues
in the both years consist solely of quarterly payments to support clinical
trials, regulatory submissions and product development received from
Mallinckrodt under the Company's amended agreement with Mallinckrodt which the
Company entered into in September 1995.
Product and Royalty Revenues. Revenues from product sales and royalties
were $224,000 for the three-month period ended June 30, 1997, compared to
$178,000 for the same period in the prior year. Product revenues come from the
Company's sales of ALBUNEX(R) to Mallinckrodt, in the case of the three-month
period ended June 30, 1997, and to Mallinckrodt and Shionogi & Co., Ltd.
("Shionogi"), in the case of the three-month period ended June 30, 1996, and
were recognized upon shipment of the product. The transfer prices for the
Company's sales were determined under the Company's respective agreements with
Mallinckrodt and Shionogi (the latter of which was terminated in September 1996)
and were equal to 40% of Mallinckrodt's net sales price to its end users of the
product and 30% of Shionogi's sales price to its end users. Royalty revenues
were received under a licensing agreement between the Company and Abbott
Laboratories.
Costs of Products Sold. Cost of products sold totaled $1.5 million for
the three-month period ended June 30, 1997, resulting in a negative gross profit
margin. This negative gross profit margin was due to the fact that the current
low levels of production are insufficient to cover the Company's fixed
manufacturing overhead expenses. For the same period in the prior year, cost of
products sold totaled $1.3 million. The Company anticipates an increase in its
gross profit margins if and when ALBUNEX(R) sales volume increases and if and
when OPTISON(TM), the Company's second generation ultrasound imaging agent,
receives regulatory approval and obtains market acceptance. The increase in
sales volume would permit the fixed costs included in manufacturing overhead to
be allocated over a larger number of vials produced. Manufacturing fixed costs
are currently running at an annual rate of approximately $5 million. The amount
of any increase in the Company's margins and the time required by the Company to
achieve higher margins are highly dependent on the market acceptance of
ALBUNEX(R) and OPTISON(TM) and are therefore uncertain.
Research and Development Costs. For the three-month period ended June
30, 1997, the Company's research and development costs totaled $2.2 million, as
compared to $2.6 million for the same period in 1996. This current decrease of
approximately 17% is due to the fact that the Company has completed clinical
trials for the cardiac function indication for the Company's second-generation
product, OPTISON(TM).
Selling, General and Administrative Expenses. For the three-month
period ended June 30, 1997, the Company's selling, general and administrative
expenses totaled $3.0 million, as compared to $1.8 million for the same period
in 1996. This increase in the current year is primarily attributable to legal
expenses related to the FDA lawsuit and patent matters. See the discussion under
"Recent Events".
Interest Expense and Interest Income. Interest expense for the
three-month period ended June 30, 1997 amounted to $191,000, and consisted of
mortgage interest on the Company's manufacturing building and interest on a
second note payable which is secured by the tangible assets of the Company. The
interest rate on the mortgage was 8% in June 1997. The second note payable
mentioned above, in the amount of $6.0 million, bears interest at prime plus 1%
and is payable in monthly installments of principal plus interest over five
years. The interest rate on the note was 9.50% in June 1997.
The increase in interest income in the current year is due to higher
average cash and marketable securities balances as a result of the public
offering in May 1996.
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
The Company is involved in several legal and administrative proceedings
which could result in a substantial cost to the Company. Given the complexity of
the legal and factual issues and the uncertainty of litigation, there can be no
assurance of a favorable outcome. An unfavorable outcome could have a material
adverse effect on the Company's business, financial condition and results of
operations. For a detailed discussion of these matters, see "Recent Events".
PART II - OTHER INFORMATION
Item 1 - LEGAL PROCEEDINGS
See "Recent Events" in Part I, Item 2, which is incorporated by
reference in this response.
Item 2-5 - The Company has nothing to report with respect to these items during
the quarter ended June 30, 1997.
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 April 21,1997, was filed on May 9, 1997,
reporting (1) the stay of review of OPTISON(TM) by the FDA, (2) the brand name
announced for FS069, and (3) certain patent matters.
<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 Wills
Gerard A. Wills
Vice President Finance and
Chief Financial Officer
8/14/97
Date
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from the consolidated financial statements of Molecular
Biosystems, Inc. dated June 30, 1997 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> JUN-30-1997
<CASH> 409
<SECURITIES> 36,488
<RECEIVABLES> 784
<ALLOWANCES> 0
<INVENTORY> 459
<CURRENT-ASSETS> 46,797
<PP&E> 19,832
<DEPRECIATION> 6,714
<TOTAL-ASSETS> 65,440
<CURRENT-LIABILITIES> 7,839
<BONDS> 0
0
0
<COMMON> 178
<OTHER-SE> 46,889
<TOTAL-LIABILITY-AND-EQUITY> 65,440
<SALES> 224
<TOTAL-REVENUES> 1,474
<CGS> 1,511
<TOTAL-COSTS> 6,736
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 191
<INCOME-PRETAX> (4,799)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,799)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,799)
<EPS-PRIMARY> (0.27)
<EPS-DILUTED> 0
</TABLE>
