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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
Commission File Number 0-15313
BIO-TECHNOLOGY GENERAL CORP.
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(Exact name of registrant as specified in its charter)
DELAWARE 13-3033811
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
70 WOOD AVENUE SOUTH, ISELIN, NEW JERSEY 08830
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(Address of principal executive offices)
(732) 632-8800
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(Registrant's telephone number, including area code)
Former address: Not Applicable
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(Former name, former address and former fiscal year,
if changed since last report)
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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.
Common Stock, par value $.01 per share,
outstanding as of April 24, 1998 48,250,768
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<PAGE>
INDEX
Page
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS:
Consolidated Balance Sheets at
March 31, 1998 and December 31, 1997......................... 3
Consolidated Statements of Operations
for the three months ended
March 31, 1998 and 1997...................................... 4
Consolidated Statement of Changes in
Stockholders' Equity for the three
months ended March 31, 1998.................................. 5
Consolidated Statements of Cash Flows
for the three 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 6. EXHIBITS AND REPORTS ON FORM 8-K............................... 15
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<PAGE>
BIO-TECHNOLOGY GENERAL CORP. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, December 31,
1998 1997
----------- ------------
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents .......................... $ 3,290 $ 9,329
Short-term investments ............................. 36,319 26,178
Accounts receivable and other ...................... 33,184 27,540
Inventories ........................................ 5,972 5,401
Deferred income taxes .............................. 6,573 8,000
Prepaid expenses and other current assets .......... 478 403
-------- -------
Total current assets ............................. 85,816 76,851
Deferred income taxes ................................ 2,148 2,148
Severance pay funded ................................. 2,445 2,435
Property and equipment, net .......................... 7,412 7,545
Intangibles, net ..................................... 2,374 2,590
Patents, net ......................................... 495 551
Other assets ......................................... 3,302 3,293
-------- -------
Total assets ..................................... $103,992 $95,413
======== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Short-term bank loans .............................. $ 320 $ 362
Accounts payable ................................... 1,258 1,645
Other current liabilities .......................... 7,798 6,573
-------- -------
Total current liabilities ........................ 9,376 8,580
-------- -------
Long-term liabilities ................................ 3,977 3,975
-------- -------
Stockholders' equity:
Preferred stock -- $.01 par value; 4,000,000
shares authorized; no shares issued .............. -- --
Common stock -- $.01 par value; 150,000,000 shares
authorized; issued: 48,231,000 (47,304,000 at
December 31, 1997) ............................... 482 473
Capital in excess of par value ..................... 141,005 136,662
Deficit ............................................ (50,770) (54,135)
Less -- treasury stock at cost, 83,000 shares ...... (340) (340)
Accumulated other comprehensive income ............. 262 198
-------- -------
Total stockholders' equity ....................... 90,639 82,858
-------- -------
Total liabilities and stockholders' equity ....... $103,992 $95,413
======== =======
The accompanying notes are an integral part of these
consolidated balance sheets.
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<PAGE>
BIO-TECHNOLOGY GENERAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands except per share data)
Three Months Ended
March 31,
---------------------
1998 1997
------- -------
Revenues:
Product sales .................................... $15,736 $14,379
Contract fees .................................... 1,004 116
Other revenues ................................... 150 --
Interest income .................................. 550 270
------- -------
17,440 14,765
------- -------
Expenses:
Research and development ......................... 5,256 3,940
Cost of product sales ............................ 2,518 2,269
General and administrative ....................... 2,052 1,936
Marketing and sales .............................. 2,647 1,886
Commissions and royalties ........................ 126 53
Interest and finance ............................. 21 94
------- -------
12,620 10,178
------- -------
Income before income taxes ......................... 4,820 4,587
Income taxes ....................................... 1,455 1,192
------- -------
Net income ......................................... $ 3,365 $ 3,395
======= =======
Earnings per common share:
Basic ............................................ $ 0.07 $ 0.07
======= =======
Diluted .......................................... $ 0.07 $ 0.07
======= =======
Weighted average number of common and
common equivalent shares:
Basic ............................................ 47,318 46,284
======= =======
Diluted .......................................... 50,941 52,138
======= =======
The accompanying notes are an integral part of these
consolidated statements.
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<PAGE>
<TABLE>
BIO-TECHNOLOGY GENERAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
(in thousands)
<CAPTION>
Common Stock Accumulated
------------------ Capital in Other Total
Par Excess of Treasury Comprehensive Stockholders'
Shares Value Par Value Deficit Stock Income Equity
------ ---------- --------- --------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1997 ............ 47,304 $ 473 $136,662 $(54,135) $(340) $198 $82,858
Issuance of common stock .............. 2 15 15
Exercise of stock options ............. 160 2 574 576
Exercise of warrants .................. 765 7 3,754 3,761
Unrealized gain on marketable
securities, net ...................... 64 64
Net income for three months
ended March 31, 1998 ................ 3,365 3,365
------ ------ -------- -------- ----- ---- -------
Balance, March 31, 1998 ............... 48,231 $ 482 $141,005 $(50,770) $(340) $262 $90,639
====== ====== ======== ======== ===== ==== =======
The accompanying notes are an integral part of this consolidated statement.
</TABLE>
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<PAGE>
<TABLE>
BIO-TECHNOLOGY GENERAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<CAPTION>
Three Months
Ended March 31,
---------------------
1998 1997
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income ................................................. $ 3,365 $ 3,395
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization ........................... 714 776
Provision for severance pay ............................. 2 7
Gain on sales of short-term investments ................. (35) (2)
Deferred income taxes ................................... 1,427 1,192
Common stock as payment for services .................... 15 15
Changes in: receivables ................................. (5,644) (2,308)
inventories ................................. (571) 606
prepaid expenses and other current assets ... (75) (322)
accounts payable ............................ (387) (2,163)
other assets ................................ (9) (240)
other current liabilities ................... 1,184 604
-------- --------
Net cash (used in) provided by operating activities ........ (14) 1,560
-------- --------
Cash flows from investing activities:
Short-term investments ..................................... (11,417) (514)
Capital expenditures ....................................... (310) (669)
Severance pay funded ....................................... (10) (37)
Proceeds from sales of short-
term investments ......................................... 1,375 497
-------- --------
Net cash used in investing activities ...................... (10,362) (723)
-------- --------
Cash flows from financing activities:
Proceeds from issuance of common stock ..................... 4,337 4,191
-------- --------
Net (decrease) increase in cash and cash equivalents ......... (6,039) 5,028
Cash and cash equivalents at beginning of year ............... 9,329 7,005
-------- --------
Cash and cash equivalents at end of period ................... $ 3,290 $ 12,033
======== ========
SUPPLEMENTARY INFORMATION
Non-cash investing and financing activities:
Conversions of convertible debt ............................ $ -- $ 138
Other information:
Interest paid .............................................. $ -- $ 6
Income tax paid ............................................ $ 25 $ --
The accompanying notes are an integral part of these consolidated statements.
</TABLE>
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<PAGE>
BIO-TECHNOLOGY GENERAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: STATEMENT ON ADJUSTMENTS
In the opinion of management, the condensed consolidated financial
statements include all adjustments, consisting of only normal recurring
accruals, considered necessary for a fair presentation. Due to fluctuations
in quarterly revenues earned, operating results for interim periods are not
necessarily indicative of the results that may be expected for the full
year. The accounting policies continue unchanged from December 31, 1997.
For further information, refer to the Consolidated Financial Statements and
footnotes thereto included in the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1997.
NOTE 2: COMPREHENSIVE INCOME
Effective March 31, 1998, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 130 "Reporting Comprehensive Income,"
which establishes standards for reporting and display of comprehensive
income and its components (revenue, expenses, gains, and losses) in a full
set of general-purpose financial statements. For the quarters ended March
31, 1998 and 1997, total comprehensive income was approximately $3,429,000
and $3,395,000, respectively. Other comprehensive income consists of
unrealized gains on marketable securities.
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<PAGE>
BIO-TECHNOLOGY GENERAL CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Three months ended March 31, 1998
compared with three months ended March 31, 1997
Statements in this Quarterly Report on Form 10-Q concerning the Company's
business outlook or future economic performance; anticipated profitability,
revenues, expenses or other financial items; introductions and advancements in
development of products, and plans and objectives related thereto; and
statements concerning assumptions made or expectations as to any future events,
conditions, performance or other matters, are "forward-looking statements" as
that term is defined under the Federal Securities Laws. Forward-looking
statements are subject to risks, uncertainties and other factors which could
cause actual results to differ materially from those stated in such statements.
Such risks, uncertainties and factors include, but are not limited to, changes
and delays in product development plans and schedules, changes and delays in
product approval and introduction, customer acceptance of new products, changes
in pricing or other actions by competitors, patents owned by the Company and its
competitors, changes in healthcare reimbursement, risk of operations in Israel,
risk of product liability, governmental regulation, dependence on third parties
to manufacture products and commercialize products, general economic conditions,
as well as other risks detailed in the Company's filings with the Securities and
Exchange Commission, including the Company's Annual Report on Form 10-K for the
year ended December 31, 1997.
OVERVIEW
The Company is engaged in the research, development, manufacture and
marketing of biopharmaceutical products. Through a combination of internal
research and development, acquisitions, collaborative relationships and
licensing arrangements, BTG has developed a portfolio of therapeutic products,
including five products that have received regulatory approval for sale, of
which four are currently being marketed. The Company seeks both broad markets
for its products as well as specialized markets where it can seek Orphan Drug
status and potential marketing exclusivity.
The Company was founded in 1980 to develop, manufacture and market novel
therapeutic products. The Company's overall administration, licensing, human
clinical studies, marketing activities, quality assurance and regulatory affairs
are primarily coordinated at the Company's headquarters in Iselin, New Jersey.
Pre-clinical studies, research and development activities and manufacturing of
the Company's genetically engineered products are primarily carried out through
its wholly owned subsidiary in Rehovot, Israel.
RESULTS OF OPERATIONS
Overview
The following tables set forth for the fiscal periods indicated the
percentage of revenues represented by certain items reflected on the Company's
statement of operations.
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<PAGE>
BIO-TECHNOLOGY GENERAL CORP. AND SUBSIDIARIES
Three Months Ended
March 31,
--------------------
1998 1997
------ ------
Revenues:
Product sales ....................................... 90.2% 97.4%
Contract fees ....................................... 5.8 0.8
Other revenues ...................................... 0.9 --
Interest income ..................................... 3.1 1.8
----- -----
Total ........................................ 100.0% 100.0%
===== =====
Expenses:
Research and development ............................ 30.1 26.7
Cost of product sales ............................... 14.5 15.4
General and administrative .......................... 11.8 13.1
Marketing and sales ................................. 15.2 12.8
Commissions and royalties ........................... 0.7 0.3
Interest and finance ................................ 0.1 0.6
----- -----
Total ........................................ 72.4 68.9
----- -----
Income before income taxes ............................ 27.6 31.1
Income taxes .......................................... 8.3 8.1
----- -----
Net income ............................................ 19.3% 23.0%
===== =====
The Company has historically derived its revenues from product sales as
well as from collaborative arrangements with third parties, under which the
Company may earn up-front contract fees, may receive funding for additional
research (including funding from the Chief Scientist of the State of Israel), is
reimbursed for producing certain experimental materials, may be entitled to
certain milestone payments, may sell product at specified prices, and may
receive royalties on sales of product. The Company anticipates that product
sales will constitute the majority of its revenues in the future. Revenues have
in the past displayed and will in the immediate future continue to display
significant variations due to changes in demand for its products, new product
introductions by the Company and its competitors, the obtaining of new research
and development contracts and licensing arrangements, the completion or
termination of such contracts and arrangements, the timing and amounts of
milestone payments, and the timing of regulatory approvals of products.
The following table summarizes the Company's sales of its commercialized
products as a percentage of total product sales for the periods indicated:
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<PAGE>
BIO-TECHNOLOGY GENERAL CORP. AND SUBSIDIARIES
Three Months Ended
March 31,
--------------------
1998 1997
------ ------
Oxandrin............................................ 59.3% 38.0%
Bio-Tropin.......................................... 27.4 47.1
BioLon.............................................. 9.5 13.4
Other............................................... 3.8 1.5
------ ------
Total........................................ 100.0% 100.0%
====== ======
The Company believes that its product mix will change significantly as it
continues to focus on: (i) increasing market penetration of its existing
products; (ii) expanding into new markets; and (iii) commercializing additional
products.
The following table summarizes the Company's U.S. and international product
sales as a percentage of total product sales for the period indicated:
Three Months Ended
March 31,
--------------------
1998 1997
------ ------
United States...................................... 60.5% 36.9%
International...................................... 39.5 63.1
------ ------
Total....................................... 100.0% 100.0%
====== ======
Comparison of Three Months Ended March 31, 1998 and March 31, 1997
Revenues. Total revenues increased 18% in the first quarter of 1998 to
$17,440,000 from $14,765,000 in the first quarter of 1997. Product sales
increased $1,357,000, or 9%, in the first quarter of 1998 from the comparable
prior period, primarily driven by increased sales of Oxandrin in the United
States partially offset by decreased sales of human growth hormone ("hGH") and
BioLon to BTG's distributors. Oxandrin sales increased $3,876,000, or 71%,
primarily as a result of the Company's increased marketing efforts and growing
awareness of the product. Product sales of hGH and BioLon decreased $2,462,000
and $427,000, or 36% and 22%, respectively. The decrease in sales of hGH and
BioLon reflect quarterly variations in purchasing based on the operational needs
of the Company's customers. Contract fees and other revenues are primarily
generated from licensing and distribution arrangements and partial research and
development funding by the Chief Scientist of the State of Israel. Contract fees
represented approximately 6% of total revenues in the first quarter of 1998
compared to 1% in the first quarter of 1997. Of the contract fees earned in the
three months ended March 31, 1998, $500,000, or 50% of total contract fees, was
earned in respect of the license of distribution rights for BioLon in the United
States and $400,000, or 40% of total contract fees, was earned in respect of the
Company's hepatitis-B vaccine. Of the contract fees earned in the three months
ended March 31, 1997, $66,000, or 57% of total contract fees, was earned in
respect of BioLon. Interest income increased $280,000, or 104%, over the
comparable prior period primarily as a result of increased cash balances
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<PAGE>
BIO-TECHNOLOGY GENERAL CORP. AND SUBSIDIARIES
(including short-term investments) resulting mainly from cash flow from
operations subsequent to March 31, 1997 and higher yield achieved on the
Company's short-term investments.
Research and Development Expense. Research and development expense
increased 33% in the first quarter of 1998 to $5,256,000 from $3,940,000 in the
first quarter of 1997. The increase was primarily attributable to expenses
associated with the Company's Phase III clinical trials, principally for its
superoxide dismutase product and new dosage formulations for Oxandrin, and
post-approval Phase IV clinical studies to provide additional clinical support
for the use of Oxandrin to treat disease- related weight loss conditions other
than AIDS-related weight loss.
Cost of Product Sales. Cost of product sales increased $249,000, or 11%, in
the first quarter of 1998 to $2,518,000 from $2,269,000 in the first quarter of
1997. Cost of product sales as a percentage of product sales for the first
quarter of 1998 remained approximately the same as the comparable period last
year - 16%. Oxandrin has a relatively low cost of manufacture as a percentage of
product sales, while BioLon has the highest cost to manufacture as a percentage
of product sales. Cost of product sales as a percentage of product sales varies
from year to year and quarter to quarter depending on the quantity and mix of
products sold.
General and Administrative Expense. General and administrative expense
increased 6% in the first quarter of 1998 to $2,052,000 versus $1,936,000 in the
comparable prior period. As a percentage of revenues, general and administrative
expense decreased to approximately 12% of revenues in the first quarter of 1998
versus 13% of revenues in the comparable prior year period as a result of the
growth in revenues.
Marketing and Sales Expense. Marketing and sales expense increased 40% in
the first quarter of 1998 to $2,647,000 from $1,886,000 for the prior year
period. As a percentage of revenues, marketing and sales expense increased to
approximately 15% from 13% for the first quarter of 1997. These expenses
primarily related to the sales and marketing force in the United States that the
Company established to promote distribution of Oxandrin in the United States.
The increase was primarily due to additional marketing and sales expenses,
primarily resulting from increased personnel and increased advertising,
promotional and market research activities, arising from the growth of the
Company's product sales.
Commissions and Royalties. Commissions and royalties were $126,000 in the
first quarter of 1998, as compared to $53,000 in the first quarter of 1997.
These expenses consist primarily of royalties to entities from which the Company
licensed certain of its products and to the Chief Scientist.
Income Taxes. Provision for income taxes for the three months ended March
31, 1998 was $1,455,000, representing approximately 30% of income before income
taxes as compared to $1,192,000, or 26% of income before income taxes, in the
first quarter of 1997. The Company's consolidated tax rate differs from the
statutory rate because of Israeli tax benefits, research and experimental tax
credits and similar items which reduce the tax rate.
Net Income. The Company had approximately 1,034,000 million additional
basic weighted average shares outstanding for the three month period ended March
31, 1998, as compared to the same period in 1997. The Company had approximately
1,197,000 less diluted weighted average shares outstanding, primarily as a
result of the decrease in the price of the Common Stock (which resulted in less
outstanding options being considered common equivalent shares because their
exercise price was above the average fair market value of the Common Stock for
the first quarter of 1998).
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<PAGE>
BIO-TECHNOLOGY GENERAL CORP. AND SUBSIDIARIES
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital at March 31, 1998 was $76,440,000 as compared
to $68,271,000 at December 31, 1997.
The major portion of the Company's revenues is derived from product sales.
In addition, the Company derives revenue from collaborative arrangements, under
which the Company may earn up-front contract fees, may receive funding for
additional research, is reimbursed for producing certain experimental materials,
may be entitled to certain milestone payments, may sell product at specified
prices and may receive royalties on sales of product. Revenues have in the past
displayed and will in the immediate future continue to display variations due to
changes in demand for its products, introductions of new products by
competitors, the obtaining of new research and development contracts and
licensing arrangements, the completion or termination of such contracts and
arrangements, the timing and amounts of milestone payments and the timing of
regulatory approvals of products.
The cash flows of the Company have fluctuated significantly due to the
impact of net income and losses, capital spending, working capital requirements,
the issuance of Common Stock and other financing activities. The Company expects
that cash flow in the near future will be primarily determined by the levels of
net income and financings, if any, undertaken by the Company. Net cash increased
(decreased) by $5,028,000 and $(6,039,000) in the three months ended March 31,
1997 and 1998, respectively, primarily as a result of increased short-term
investments in 1998.
Net cash provided by (used in) operating activities was $1,560,000 and
$(14,000) in the three months ended March 31, 1997 and 1998, respectively. Net
income was $3,395,000 and $3,365,000 in the same periods, respectively. In the
three months ended March 31, 1997, net cash provided by operating activities was
less than net income primarily because of an increase in accounts receivables
and other of $2,308,000 and decrease in accounts payable of $2,163,000,
partially offset by an increase in other current liabilities of $604,000, a
decrease in inventory of $606,000, deferred income taxes of $1,192,000 and
depreciation and amortization of $776,000. In the three months ended March 31,
1998, net cash provided by operating activities was less than net income,
primarily because of an increase in accounts receivable and other and inventory
of $5,644,000 and $571,000, respectively, and a decrease in accounts payable of
$387,000, partially offset by an increase in other current liabilities of
$1,184,000, deferred income taxes of $1,427,000 and depreciation and
amortization of $714,000.
Net cash used in investing activities was $723,000 and $10,362,000 in the
three months ended March 31, 1997 and 1998, respectively. Net cash used in
investing activities included capital expenditures of $669,000 and $310,000 in
these periods, respectively, primarily for laboratory and manufacturing
equipment. The remainder of the net cash used in investing activities was
primarily for purchases and sales of short-term investments.
Net cash provided by financing activities was $4,191,000 and $580,000 in
the three months ended March 31, 1997 and 1998, respectively, which are net
proceeds from issuances of Common Stock, primarily as a result of exercise of
stock options.
In the three months ended March 31, 1998, warrants to purchase 763,800
shares were excercised, resulting in net proceeds of $3,761,000. Because the
warrants were exercised on March 31, 1998 (their expiration date) by the
delivery of cash to the warrant agent for the Company, the Company did not
receive the proceeds until April 1998. Accordingly, the net proceeds are
reflected in accounts receivable at March 31, 1998.
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<PAGE>
BIO-TECHNOLOGY GENERAL CORP. AND SUBSIDIARIES
BTG does not currently have any material commitments for capital
expenditures.
The Company maintains its funds in money market funds, commercial paper and
other liquid debt instruments.
The Company manages its Israeli operations with the object of protecting
against any material net financial loss in U.S. dollars from the impact of
Israeli inflation and currency devaluation on its non- U.S. dollar assets and
liabilities. The Bank of Israel's monetary policy is to manage the exchange rate
while allowing the Consumer Price Index to rise by approximately 11% in 1996, 7%
in 1997 and 0.1% in the three month period ended March 31, 1998. In 1996 and
1997 the Shekel was devalued by approximately 4% and 7% against the U.S. dollar,
respectively, and was devalued by approximately 2% in the three months ended
March 31, 1998. As a result, for those expenses linked to the Israeli Shekel,
such as salaries and rent, this resulted in corresponding increases in these
costs in U.S. dollars in 1996 and 1997, but a decrease in these costs in U.S.
dollars in the three months ended March 31, 1998. To the extent that expenses in
Shekels exceed the Company's income in Shekels (which to date have consisted
primarily of research and development funding from the Chief Scientist and
product sales in Israel), the devaluations of Israeli currency have been and
will continue to be a benefit to the Company's financial condition. However,
should the Company's income in Shekels exceed its expenses in Shekels in any
material respect, the devaluation of the Shekel will adversely affect the
Company's financial condition. Further, to the extent the devaluation of the
Shekel with respect to the U.S. dollar does not substantially offset the
increase in the cost of local goods and services in Israel, the Company's
financial results will be adversely affected as local expenses expressed in U.S.
dollar terms will increase. There can be no assurance that the government of
Israel will continue to devalue the Shekel from time to time to offset the
effects of inflation in Israel.
At March 31, 1998, intangibles, net consist of (i) $1,624,000 (net of
amortization) relating to the repurchase of all rights to hGH previously
licensed to The DuPont Merck Pharmaceutical Company, together with all rights to
all data generated in pharmacological, toxicological and clinical studies and
encompassed in the Investigational New Drug Application and New Drug Application
files then pending with the U.S. Food and Drug Administration for the treatment
of human growth hormone-deficient children and (ii) $750,000 (net of
amortization) relating to the reacquisition of all rights to human growth
hormone licensed to Smithkline Beecham.
The Company is party to several proceedings relating to patents owned by it
or others. The Company cannot predict the costs of such proceedings, and there
can be no assurance that such costs will not be significant. Should the Company
be unsuccessful in any of these proceedings, it may be unable to commercialize
the products which are the subject of such proceedings in certain countries, and
may be unable to produce the products in Israel, which could have a material
adverse effect on the Company's revenues and results of operations.
The Company believes that its remaining cash resources as of March 31,
1998, together with anticipated product sales, scheduled payments to be made to
BTG under its current agreements with pharmaceutical partners, the proceeds from
sales of equity and continued funding from the Chief Scientist at current
levels, will be sufficient to fund the Company's current operations for the
foreseeable future. There can, however, be no assurance that product sales will
occur as anticipated, that scheduled payments will be made by third parties,
that current agreements will not be canceled, that the Chief Scientist will
continue to provide funding at current levels, or that unanticipated events
requiring the expenditure of funds will not occur. The satisfaction of the
Company's future cash requirements will depend in large part on the status of
commercialization of the Company's products, the Company's ability to enter into
additional research and development and licensing arrangements, and the
Company's ability
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<PAGE>
BIO-TECHNOLOGY GENERAL CORP. AND SUBSIDIARIES
to obtain additional equity investments, if necessary. There can be no assurance
that the Company will be able to obtain additional funds or, if such funds are
available, that such funding will be on favorable terms.
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<PAGE>
BIO-TECHNOLOGY GENERAL CORP. AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS:
None
(b) REPORTS ON FORM 8-K:
None
-15-
<PAGE>
BIO-TECHNOLOGY GENERAL CORP. AND SUBSIDIARIES
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.
BIO-TECHNOLOGY GENERAL CORP.
(Registrant)
By: /s/ SIM FASS
--------------------------------
Sim Fass
Chairman, President and
Chief Executive Officer,
Principal Executive Officer
/s/ YEHUDA STERNLICHT
--------------------------------
Yehuda Sternlicht
Vice President-Finance and
Chief Financial Officer,
Principal Financial and
Accounting Officer
Dated: May 13, 1998
-16-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF OPERATIONS 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> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 3,290
<SECURITIES> 36,319
<RECEIVABLES> 33,184
<ALLOWANCES> 0
<INVENTORY> 5,972
<CURRENT-ASSETS> 85,816
<PP&E> 24,747
<DEPRECIATION> 17,335
<TOTAL-ASSETS> 103,992
<CURRENT-LIABILITIES> 9,376
<BONDS> 0
0
0
<COMMON> 482
<OTHER-SE> 90,157
<TOTAL-LIABILITY-AND-EQUITY> 103,992
<SALES> 15,736
<TOTAL-REVENUES> 17,440
<CGS> 2,518
<TOTAL-COSTS> 12,599
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21
<INCOME-PRETAX> 4,820
<INCOME-TAX> 1,455
<INCOME-CONTINUING> 3,365
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,365
<EPS-PRIMARY> 0.07
<EPS-DILUTED> 0.07
</TABLE>
