<PAGE> 1
===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED SEPTEMBER 30, 1999
COMMISSION FILE NUMBER 0-13789
NASTECH PHARMACEUTICAL COMPANY INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 11-2658569
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
45 DAVIDS DRIVE, HAUPPAUGE, NEW YORK 11788
(Address of principal executive offices) (Zip Code)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (516) 273-0101
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
<TABLE>
<CAPTION>
Name of each exchange
Title of each class on which registered
------------------- ---------------------
<S> <C>
Common Stock, $.006 par value Nasdaq National Market
</TABLE>
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:
<TABLE>
<CAPTION>
DATE CLASS SHARES OUTSTANDING
<S> <C> <C>
09/30/99 Common stock - $.006 par value 6,273,885
</TABLE>
===============================================================================
<PAGE> 2
NASTECH PHARMACEUTICAL COMPANY INC.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
ITEM 1 - FINANCIAL STATEMENTS
Page
<S> <C>
Balance Sheets as of September 30, 1999 (unaudited) and December 31,1998.............................1
Statements of Operations for the nine months ended September 30, 1999
(unaudited) and 1998 (unaudited) and the three months ended September
30, 1999 (unaudited) and 1998 (unaudited)............................................................2
Statements of Stockholders' Equity for the nine months ended September 30, 1999
(unaudited) and the year ended December 31,1998......................................................3
Statements of Cash Flows for the nine months ended September 30, 1999 (unaudited)
and 1998 (unaudited).................................................................................4
Notes to Financial Statements........................................................................5
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS..........................................................................6-8
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.......................................8
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS................................................................................9
ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS........................................................9
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES..................................................................9
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..............................................9
ITEM 5 - OTHER INFORMATION................................................................................9
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K.................................................................9
SIGNATURES......................................................................................10
</TABLE>
- i -
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
NASTECH PHARMACEUTICAL COMPANY INC.
BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
--------------- ---------------
(UNAUDITED)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents.......................................... $ 17,964 $ 23,515
Account receivable................................................. 83 20
Royalties and fees receivable...................................... 963 2,265
Inventories........................................................ 316 390
Prepaid expenses and sundry assets................................. 184 248
Due from related party............................................. 34 32
------------------ ----------------
Total current assets........................................ 19,544 26,470
------------------ ----------------
Property and equipment................................................ 3,402 1,635
Less: Accumulated depreciation and amortization.................... 905 602
------------------ ----------------
Property and equipment, net................................. 2,497 1,033
------------------ ----------------
Other assets.......................................................... 17 15
------------------ ----------------
Total assets $ 22,058 $ 27,518
================== ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................................... $ 1,627 $ 625
Royalties payable.................................................. 273 597
Accrued expenses and sundry liabilities............................ 619 794
------------------ ----------------
Total current liabilities................................... 2,519 2,016
------------------ ----------------
Stockholders' equity:
Preferred stock, $.01 par value; authorized: 100,000 shares;
issued and outstanding: none
Common stock, $0.006 par value; authorized: 25,000,000 shares;
issued and outstanding: 6,273,885 and 6,376,915 shares at
September 30, 1999 and December 31, 1998, respectively......... 38 38
Additional paid-in capital......................................... 37,061 37,426
Accumulated deficit................................................ (17,560) (11,962)
------------------ ----------------
Total stockholders' equity.................................. 19,539 25,502
------------------ ----------------
Total liabilities and stockholders' equity.................. $ 22,058 $ 27,518
================== ================
</TABLE>
-1-
<PAGE> 4
NASTECH PHARMACEUTICAL COMPANY INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------------------- ----------------------------------
1999 1998 1999 1998
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Revenues:
Product sales........................... $ 256 $ 506 $ 86 $ 69
License fee and royalty income.......... 3,281 6,493 942 2,062
Interest income.......................... 838 1,095 263 385
---------------- ---------------- ---------------- ----------------
Total revenues.................. 4,375 8,094 1,291 2,516
---------------- ---------------- ---------------- ----------------
Costs and expenses:
Cost of product sales.................... 210 587 71 84
Research and development................. 6,853 4,213 2,306 1,790
Royalties................................ 1,045 941 273 278
Sales and marketing...................... 741 623 294 161
General and administrative............... 1,124 1,440 292 386
---------------- ---------------- ---------------- ----------------
Total costs and expenses........... 9,973 7,804 3,236 2,699
---------------- ---------------- ---------------- ----------------
Net income (loss)............................. $ (5,598) $ 290 $ (1,945) $ (183)
================ ================ ================ ================
Net income (loss) per common share-basic...... $ (.88) $ .05 $ (.31) $ (.03)
================ ================ ================ ================
Net income (loss) per common share-diluted.... $ (.88) $ .04 $ (.31) $ (.03)
---------------- ---------------- ---------------- ----------------
Average shares outstanding-basic.............. 6,364 6,271 6,330 6,378
================ ================ ================ ================
Average shares outstanding-diluted............ 6,364 6,493 6,330 6,378
================ ================ ================ ================
</TABLE>
See accompanying notes to financial statements.
-2-
<PAGE> 5
NASTECH PHARMACEUTICAL COMPANY INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED) AND
FOR THE YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
-------------------------- PAID-IN ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT CAPITAL DEFICIT EQUITY
------------- ---------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1997.............................. 6,101,020 $ 37 $ 35,978 $ (11,086) $ 24,929
Shares issued in connection with exercise of
underwriter's warrants................................ 270,000 1 1,402 --- 1,403
Shares issued in connection with exercise of stock
options............................................... 6,000 --- 46 --- 46
Fractional shares redeemed in connection with reverse
stock split........................................... (105) --- --- --- ---
Net loss year ended December 31, 1998 --- --- --- (876) (876)
------------- ---------- ----------- ------------- -------------
BALANCE, DECEMBER 31, 1998.............................. 6,376,915 38 37,426 (11,962) 25,502
Shares issued in connection with exercise of stock
options............................................... 5,000 --- 19 --- 19
Redemption of shares in connection with reverse/
forward stock split................................... (107,570) --- (384) --- (384)
Fractional shares redeemed in connection with reverse
stock split ........................................... (460) --- --- --- ---
Net loss nine months ended September 30, 1999........... --- --- --- (5,598) (5,598)
------------- ---------- ----------- ------------- -------------
BALANCE, SEPTEMBER 30, 1999 (UNAUDITED)................. 6,273,885 $ 38 $ 37,061 $ (17,560) $ 19,539
============= ========== =========== ============= =============
</TABLE>
See accompanying notes to financial statements.
-3-
<PAGE> 6
NASTECH PHARMACEUTICAL COMPANY INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
------------------------------
1999 1998
------------ --------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)............................................................. $ (5,598) $ 290
Adjustments to reconcile net income (loss) to net cash used in operating
activities:
Depreciation and amortization............................................... 303 222
Changes in assets and liabilities:
Accounts and other receivables............................................. 1,239 (1,936)
Inventories................................................................ 74 17
Prepaid expenses and sundry assets......................................... 60 (186)
Accounts payable........................................................... 1,002 (324)
Royalties payable.......................................................... (324) 95
Accrued expenses and sundry liabilities.................................... (175) (125)
-------------- ------------
Net cash used in operating activities............................................. (3,419) (1,947)
-------------- ------------
INVESTING ACTIVITIES:
Property, plant and equipment................................................. (1,767) (539)
-------------- ------------
Net cash used in investing activities............................................. (1,767) (539)
-------------- ------------
FINANCING ACTIVITIES:
Proceeds from exercise of warrants............................................ --- 1,403
Redemption of common shares................................................... (384) ---
Exercise of stock options..................................................... 19 46
-------------- ------------
Net cash (used in) provided by financing activities............................... (365) 1,449
-------------- ------------
Net decrease in cash and cash equivalents......................................... (5,551) (1,037)
Cash and cash equivalents--beginning.............................................. 23,515 25,294
-------------- ------------
Cash and cash equivalents--ending................................................. $ 17,964 $ 24,257
============== ============
</TABLE>
See accompanying notes to financial statements.
-4-
<PAGE> 7
NASTECH PHARMACEUTICAL COMPANY INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 -- GENERAL
The accompanying financial information should be read in conjunction
with the audited financial statements, including the notes thereto, as of and
for the year ended December 31, 1998, included in the Company's 1998 annual
report filed on Form 10-K.
The information furnished in this report reflects all adjustments
(consisting of only normal recurring accruals) which are, in the opinion of
management, necessary for a fair statement of the results for the interim
periods.
NOTE 2 -- NET INCOME (LOSS) PER COMMON SHARE
Basic net income (loss) per common share is calculated using the
weighted average number of common shares outstanding during the periods.
Diluted income (loss) per share is calculated by including all dilutive
potential common shares such as stock options and warrants. A reconciliation
between the numerators and denominators of the basic and diluted net income per
common share is as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Nine Months Ended Three Months Ended
September 30, September 30,
------------------------- ----------------------
1999 1998 1999 1998
----------- ----------- --------- ----------
<S> <C> <C> <C> <C>
Net income (loss) (numerator for basic and
diluted net income (loss) per common share)............ $ (5,598) $ 290 $ (1,945) $ (183)
=========== =========== ========== ==========
Weighted average common shares outstanding
(denominator for basic net income (loss) per common
share)................................................. 6,364 6,271 6,330 6,378
Effect of dilutive securities-employee stock options and
warrants............................................... --- 222 --- ---
----------- ----------- ---------- ----------
Adjusted weighted average common shares outstanding
(denominator for diluted income (loss) per common
share)................................................. 6,364 6,493 6,330 6,378
=========== =========== ========== ==========
Net income (loss) per common share-basic................... $ (.88) $ .05 $ (.31) $ (.03)
=========== =========== ========== ==========
Net income (loss) per common share-diluted................. $ (.88) $ .04 $ (.31) $ (.03)
=========== =========== ========== ==========
</TABLE>
Employee stock options totaling 1,248,050 at September 30, 1999 were
not included in the net loss per share calculation because their effect would
have been anti-dilutive.
NOTE 3 -- INCOME TAXES
At September 30, 1999, the Company has available net operating loss
carryforwards for federal and state income tax reporting purposes of
approximately $17.1 million and has available research and development credit
carryforwards for federal income tax reporting purposes of approximately
$744,000, which are available to offset future taxable income, if any. These
carryforwards expire beginning in 2000 through 2019. A valuation allowance has
been applied to offset the respective deferred tax assets in recognition of the
uncertainty that such tax benefits will be realized. In addition, Company's
ability to use such net operating loss and research and development credit
carryforwards is limited by change of control provisions under Section 382 of
the Internal Revenue Code.
NOTE 4 -- CONTRACTUAL MILESTONES - SCHWARZ PHARMA
Pursuant to the terms of a licensing agreement between the Company and
Schwarz Pharma for the development and U.S. marketing rights to intranasal
scopolamine, there are several milestone objectives that the Company must meet
in order to be eligible for certain payments. The agreement provides that in
the event a milestone objective is not
-5-
<PAGE> 8
achieved within six months of its required completion date, Schwarz Pharma may
elect to either pay 50% of the scheduled milestone payment or, in its
discretion, terminate the agreement. The contract also permits either party to
terminate the contract upon the other party's failure to comply in any material
respect with its terms.
The filing of the New Drug Application ("NDA") is a stated milestone
objective which has been delayed (in excess of six months) as a result of
additional safety studies requested by the Food and Drug Administration
("FDA"). The Company plans to file the NDA in late 1999. At that time, Schwarz
Pharma may elect to either pay 50% of the scheduled milestone or terminate the
agreement. If payment is made then the Company will receive $250,000 within a
defined time period after filing. In addition, the delay in filing the NDA has
affected the Company's ability to earn future milestones totaling $1.1 million.
The 50% penalty provision reduces the availability of these milestones to
$550,000 contingent upon favorable product approval actions by the FDA.
NOTE 5 -- REVERSE/FORWARD STOCK SPLIT
In July 1999, the shareholders of the Company approved a 1:100 reverse
split of its Common Stock followed immediately by a 100:1 forward split. The
Company effectuated these transactions on August 17, 1999. The purpose of these
transactions, as set forth in the Company's proxy statement to shareholders, is
to enable a redemption of odd-lot shares and reduce certain related
administrative costs incurred annually by the Company.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
Except for historical information contained herein, the statements in
this Item are forward-looking statements that are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve known and unknown risks and uncertainties
that reflect the Company's intentions, expectations or beliefs concerning
future events, including, but not limited to, expectations with respect to FDA
approval of new products, technology and product development milestones, the
ability of the Company to manufacture and meet market demand for its products,
the market acceptance of products under control of the Company's licensees, the
ability of the Company to negotiate favorable collaborative agreements, the
commencement of sales of new products, and the sufficiency of the Company's
cash flow for future liquidity and capital resource needs. These factors, among
others, could cause results to differ materially from those in the
forward-looking statements. In addition, significant fluctuations in quarterly
and fiscal operating results may occur as a result of varying milestone
payments and the timing of costs and expenses related to the Company's research
and development programs.
The Company is engaged in the research, development, manufacturing and
commercialization of nasally administered forms of prescription and
over-the-counter pharmaceuticals that are currently delivered in oral,
injectable or other dosage forms. The nasal delivery of certain pharmaceuticals
may enable more rapid systemic absorption, lower required dosages, quicker
onset of desired effect, and painless, convenient patient self-administration,
resulting in improved patient compliance and pharmacoeconomics. The Company
focuses its research primarily on drugs with demonstrated safety and efficacy,
which, through current delivery forms, have certain bioavailability,
therapeutic or patient compliance limitations that may be improved with a
preferred delivery system.
The Company receives licensing revenues on two commercial products -
Stadol(R)NS(TM) and Nascobal(R). Stadol NS, an opioid analgesic which is
classified as a Schedule IV substance, is used for the treatment of moderate to
severe pain and the acute pain of migraine. The product is currently marketed
by Bristol-Myers Squibb Co. (BMS) under an agreement that generates quarterly
royalties to the Company. Royalties from BMS are scheduled to terminate at time
of patent expiry in August 2001. In July 1997, the Company entered into an
exclusive licensing agreement for Nascobal(R) in the U.S. with Schwarz Pharma
and commercially launched the product in October 1997. Under the agreement, the
Company received minimum royalties of $2 million in 1998 and retains global
manufacturing rights. The minimum royalty expired in December 1998. Sales
re-orders of Nascobal(R) in early 1999 and 1998 were below expectations as a
result of a marketing issue which required a change in the packaging
configuration of the product. The Company shipped the new package configuration
to Schwarz Pharma in the second quarter of 1999. Schwarz Pharma has reported an
increase in units sold to distributors during the third quarter of 1999.
-6-
<PAGE> 9
In December 1997, the Company entered into an agreement with Schwarz
Pharma for U.S. marketing rights with respect to the Company's planned
intranasal compound, scopolamine, for the prevention and treatment of motion
sickness. As disclosed in Note 4 to the financial statements, the Company plans
to file the NDA in 1999.
The Company intends to commit significant financial resources in the
future to internally fund concurrent research and development projects with the
goal of achieving greater economic benefit from product sales. In addition, the
Company's future profitability is primarily affected by, among others, the
success of product sales by its licensees, its investment and achievement of
milestones in research and development programs, regulatory uncertainties with
respect to its filings with the FDA, and the success of its financing
activities. As a result of the uncertainties associated with these factors and
the increased investment in research and development, the Company anticipates a
loss in calendar 1999.
RESULTS OF OPERATIONS
Nine Months Ended September 30, 1999 Compared to Nine Months Ended
September 30, 1998
Revenues decreased by $3.7 million, or 46%, to $4.4 million primarily
as a result of a decline in product sales and royalty income of Nascobal(R) and
milestone payments on intranasal scopolamine. Total revenues from Schwarz Pharma
on Nascobal(R) were $542,000 compared to $2 million in 1998. Sales re-orders of
Nascobal(R) were below expectation as a result of the marketing issue noted
above. The revenue for the nine months ended September 30, 1998 included $1.5
million as a minimum royalty from Schwarz Pharma on Nascobal(R). Accordingly,
royalty income on sales of Nascobal(R) decreased $1.2 million, or 81%, to
$286,000. Total milestone payments on scopolamine decreased $2.2 million or 75%
to $750,000. Royalty income received from BMS on sales of Stadol NS increased
$210,000, or 11%, to $2.1 million. The Company anticipates a decline in total
revenues in 1999 primarily as a result of the non-recurrence of the $2 million
minimum royalty on Nascobal(R) and a substantially lower amount of milestone
payments available from Schwarz Pharma on intranasal scopolamine.
Total costs and expenses increased by $2.2 million or 28%, to $10
million in 1999. The details of the increase follow:
Research and development expense increased by $2.6 million, or 63%, to
$6.9 million primarily as a result of the Company's clinical programs for
intranasal scopolamine, morphine and apomorphine. In September 1998, the
Company also entered into an operating lease for a larger R&D facility and
intends to pursue additional internally funded projects in the future.
Royalties expense increased by $104,000, or 11%, to $1 million as a
result of the increase in sales of Stadol NS by BMS and the related royalty
payable to the University of Kentucky Research Foundation (UKRF) under a
separate agreement between the Company and UKRF. Royalties expense increases or
decreases approximately in proportion to royalty income associated with Stadol
NS.
As a percentage of total revenues, sales and marketing and general and
administrative expenses increased to 43% in 1999 as compared to 25% in 1998 as
a result of the decline in revenues.
Three Months Ended September 30, 1999 Compared to Three Months Ended
September 30, 1998
Revenues decreased by $1.2 million, or 49%, to $1.3 million primarily
as a result of a decline in royalty income of Nascobal(R) and milestone
payments on intranasal scopolamine. Total revenues from Schwarz Pharma on
Nascobal(R) were $204,000 compared to $569,000 in 1998. The revenue for the
third quarter of 1998 included $500,000 as a minimum royalty from Schwarz
Pharma on Nascobal(R). Accordingly, royalty income on sales of Nascobal(R)
decreased $383,000, or 77%, to $117,000. Milestone payments in the current
quarter were $250,000 as compared to $950,000 in the comparable quarter of
1998. Royalty income received from BMS on sales of Stadol NS decreased $24,000,
or 4%, to $566,000.
Total costs and expenses increased by $537,000 or 20% to $3.2 million.
Research and development expenses increased by $516,000, or 29% to $2.3 million
primarily as a result of the Company's clinical program for intranasal morphine
and apomorphine. The Company has entered into an operating lease for a larger
R&D facility and intends to pursue internally funded projects. The Company
anticipates that expenditures for research and development may continue to
increase in the foreseeable future.
-7-
<PAGE> 10
Royalties expense decreased by $5,000, or 2%, to $273,000 as a result
of the decrease in sales of Stadol NS by BMS and the related royalty payable to
the UKRF.
As a percentage of total revenues, sales and marketing and general and
administrative expenses increased to 45% in 1999 as compared to 22% in 1998
primarily as a result of the decline in revenues.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1999, the Company's liquidity included cash and cash
equivalents of $18 million compared to $23.5 million at December 31, 1998.
Account, royalties and fee receivables at September 30, 1999 consist
principally of receivables pursuant to the BMS and Schwarz Pharma agreements.
In July 1999, the shareholders of the Company approved a 1:100 reverse
split of its Common Stock followed immediately by a 100:1 forward split. The
Company effectuated these transactions on August 17, 1999. The purpose of these
transactions, as set forth in the Company's proxy statement to shareholders, is
to enable a redemption of odd-lot shares and reduce certain related
administrative costs incurred annually by the Company. As of September 30, 1999
the Company has redeemed 107,570 of such shares at a cost of $384,000. In
addition, on October 29, 1999, the Company's Board of Directors authorized the
Company to effect open market purchases of up to 500,000 shares of its common
stock.
At September 30, 1999, the Company had working capital of $17 million.
Management anticipates that its current cash position will provide adequate
funds for the Company's anticipated needs, including working capital, through
2000. As of September 30, 1999 the Company has invested approximately $1.3
million in equipment and leasehold improvements in connection with its new R&D
facility and expects to invest an additional $1.9 million to complete the
facility. Based upon the anticipated future financing requirements of the
Company, management expects that the Company may, from time to time, engage in
additional financings of a character and in amounts to be determined.
YEAR 2000 COMPLIANCE
The Company has conducted a review of its computer systems to identify
the systems that could be affected by the Year 2000 issue and has made
modifications to its computer systems so that the Year 2000 will not pose a
significant operational problem for the Company. The Company has also contacted
all significant suppliers, licensees and financial institutions in order to
identify potential areas of concern. Although improper or inadequate
remediation of Year 2000 problems by suppliers, licensees and financial
institutions could adversely affect the Company's operations, liquidity or
financial condition, all significant third parties have indicated Year 2000
compliance.
The above comments on the Year 2000 issue contain forward-looking
statements relating to the Company's plans, strategies, expectations,
intentions, and resources that should be read in conjunction with the Company's
disclosures on forward-looking statements above.
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable.
-8-
<PAGE> 11
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
The Company knows of no material litigation or proceedings, pending or
threatened, to which the Company is or may become a party.
ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS
See Notes to Financial Statements
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
In July 1999, the shareholders of the Company approved a 1:100 reverse
split of its Common Stock followed immediately by a 100:1 forward
split.
ITEM 5 - OTHER INFORMATION
None
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
None
-9-
<PAGE> 12
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, duly authorized, in Hauppauge, State of New York, on November 12 ,
1999.
NASTECH PHARMACEUTICAL COMPANY INC.
By: /s/ Vincent D. Romeo, Ph.D.
--------------------------------
Vincent D. Romeo, Ph.D.
President and Chief Executive Officer
(Principal Executive Officer)
By: /s/ Andrew Zinzi
-----------------------------
Andrew Zinzi
Chief Financial Officer
(Principal Financial and Accounting Officer)
-10-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 17,964
<SECURITIES> 0
<RECEIVABLES> 1,046
<ALLOWANCES> 0
<INVENTORY> 316
<CURRENT-ASSETS> 19,544
<PP&E> 3,402
<DEPRECIATION> 905
<TOTAL-ASSETS> 22,058
<CURRENT-LIABILITIES> 2,519
<BONDS> 0
0
0
<COMMON> 38
<OTHER-SE> 19,501
<TOTAL-LIABILITY-AND-EQUITY> 22,058
<SALES> 256
<TOTAL-REVENUES> 4,375
<CGS> 210
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 9,763
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (5,598)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,598)
<EPS-BASIC> (.88)
<EPS-DILUTED> (.88)
</TABLE>
