SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from ____ to ____
Commission file number 0-13634
MACROCHEM CORPORATION
---------------------
(Exact name of registrant as specified in its charter)
DELAWARE 04-2744744
--------------------------------- -------------------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
110 Hartwell Avenue, Lexington, Massachusetts 02421-3134
--------------------------------------------------------
(Address of principal executive offices, Zip Code)
781-862-4003
------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
------- -------
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
CLASS OUTSTANDING AT OCTOBER 31, 2000:
---------------------------- --------------------------------
Common Stock, $.01 par value 24,726,783
<PAGE>
MACROCHEM CORPORATION
INDEX TO FORM 10-Q
PAGE NUMBER
PART I FINANCIAL INFORMATION
Item 1 Unaudited Financial Statements
Balance Sheets as of September 30, 2000
and December 31, 1999................................. 2
Statements of Operations for the Three and Nine Months ended
September 30, 2000 and 1999........................... 3
Statements of Cash Flows for the Nine Months ended
September 30, 2000 and 1999........................... 4
Notes to Unaudited Financial Statements................... 5-7
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations................... 7-10
Item 3 Quantitative and Qualitative Disclosures
About Market Risk....................................... 11
PART II OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K.......................... 11
SIGNATURES.......................................................... 12
1
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
MACROCHEM CORPORATION
BALANCE SHEETS
(Unaudited)
(Amounts in thousands except share data)
September 30, December 31,
2000 1999
------------ ------------
ASSETS
Current Assets:
Cash and cash equivalents $ 10,354 $ 15,183
Accounts receivable 32 67
Receivable due from related party 22 21
Prepaid expenses and other current assets 255 166
------ ------
Total current assets 10,663 15,437
------ ------
Property and equipment, net 394 375
------ ------
Other assets:
Patents, net 509 471
Deposits 29 29
------ ------
Total other assets 538 500
------ ------
Total assets $ 11,595 $ 16,312
====== ======
LIABILITIES
Current liabilities:
Accounts payable $ 26 $ 71
Accrued expenses 738 492
Deferred compensation and related
accrued interest --- 96
------ ------
Total current liabilities 764 659
Deferred revenue --- 500
Other liabilities --- ---
------ ------
Commitments and contingencies
STOCKHOLDERS' EQUITY
Preferred Stock --- ---
Common Stock, $.01 par value, 60,000,000
shares authorized; 22,808,620 and
22,597,564 shares issued at September 30,
2000 and December 31, 1999, respectively 228 226
Additional paid-in capital 52,241 49,387
Accumulated deficit (40,488) (33,295)
Unearned compensation ( 318) ( 382)
Less treasury stock, at cost, 166,581
and 160,165 shares at September 30, 2000
and December 31, 1999, respectively ( 832) ( 783)
------ ------
Total stockholders' equity 10,831 15,153
Total liabilities and stockholders' equity $ 11,595 $ 16,312
====== ======
The accompanying notes are an integral part of these unaudited financial
statements.
2
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<TABLE>
<CAPTION>
MACROCHEM CORPORATION
STATEMENTS OF OPERATIONS
For the three and nine months ended Sept 30, 2000 and 1999
(Unaudited)
(Amounts in thousands except share and per share data)
FOR THE THREE MONTHS ENDED SEPT 30, FOR THE NINE MONTHS ENDED SEPT 30,
----------------------------------- ----------------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Research contract revenues $ 29 $ 143 $ 601 $ 377
---------- ---------- ---------- ----------
Costs and expenses:
Research and development 1,187 1,230 3,316 4,387
Marketing, general and administrative 754 565 4,993 1,978
Consulting fees with related parties 13 12 37 36
---------- ---------- ---------- ----------
Total costs and expenses 1,954 1,807 8,346 6,401
---------- ---------- ---------- ----------
Loss from operations ( 1,925) ( 1,664) ( 7,745) ( 6,024)
---------- ---------- ---------- ----------
Other income (expense):
Interest income 175 204 553 632
Interest expense --- ( 1) ( 1) ( 2)
---------- ---------- ---------- ----------
Total other income 175 203 552 630
---------- ---------- ---------- ----------
Net loss $( 1,750) $( 1,461) $( 7,193) $( 5,394)
========== ========== ========== ==========
Net loss per common share -
basic and diluted $( 0.08) $( 0.07) $( 0.32) $( 0.24)
========== ========== ========== ==========
Weighted average common shares
outstanding (basic and diluted) 22,593,000 22,383,000 22,494,000 22,306,000
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these unaudited financial
statements.
3
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MACROCHEM CORPORATION
STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 2000 and 1999
(Unaudited)
(Amounts in thousands)
FOR NINE MONTHS ENDED SEPTEMBER 30,
-----------------------------------
2000 1999
---- ----
Cash flows from operating activities:
Net Loss $( 7,193) $( 5,394)
------ ------
Adjustments to reconcile net loss
to net cash used by operating activities:
Depreciation and amortization 131 163
Stock-based compensation 2,757 417
401(k) contribution in company common stock 54 58
Changes in assets and liabilities:
Accounts receivable 35 ( 51)
Prepaid expenses and other current assets ( 90) ( 23)
Accounts payable and accrued expenses and
other liabilities 201 ( 289)
Deferred compensation and related
accrued interest ( 96) 2
Deferred revenue ( 500) ---
------
Net cash used by operating activities ( 4,701) ( 5,117)
------ ------
Cash flows from investing activities:
Expenditures for property and equipment ( 135) ( 158)
Additions to patents ( 53) ( 101)
------ ------
Net cash used for investing activities ( 188) ( 259)
------ ------
Cash flows from financing activities:
Purchases of treasury stock ( 21) ---
Proceeds from exercise of common stock options 81 370
Proceeds from exercise of warrants --- 834
------ ------
Net cash provided from financing activities 60 1,204
------ ------
Net change in cash and cash equivalents ( 4,829) ( 4,172)
Cash and cash equivalents at beginning of period 15,183 20,504
------ ------
Cash and cash equivalents at end of period $ 10,354 $ 16,332
====== ======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
During the nine months ended September 30, 2000 and 1999, cash paid for interest
aggregated $1,000 and $275, respectively.
The Company did not pay any income taxes during those periods.
The accompanying notes are an integral part of these unaudited financial
statements.
4
<PAGE>
MACROCHEM CORPORATION
NOTES TO UNAUDITED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
The financial statements included herein have been prepared by
MacroChem Corporation ("MacroChem" or the "Company") without audit,
pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant
to such rules and regulations. In the opinion of management, the
accompanying unaudited financial statements include all adjustments
(consisting only of normal recurring adjustments) necessary to present
fairly the financial position, results of operations and cash flows of
the Company at the dates and for the periods indicated. The unaudited
financial statements included herein should be read in conjunction with
the audited financial statements and the notes thereto included in the
Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1999.
The results disclosed in the Statements of Operations for the nine
months ended September 30, 2000 are not necessarily indicative of the
results to be expected for the full year.
MacroChem is a biopharmaceutical company engaged in the development and
commercialization of a portfolio of products through the application of
SEPA(R) (Soft Enhancer of Percutaneous Absorption), its patented
topical drug delivery technology.
(2) BASIC AND DILUTED LOSS PER SHARE
The following table sets forth the computation of basic and diluted
loss per share:
Three Months Ended Sept 30, Nine Months Ended Sept 30,
--------------------------- --------------------------
2000 1999 2000 1999
------------ ------------ ----------- -------------
Numerator for basic and
diluted loss per share:
Net loss $ 1,750,000 $ 1,461,000 $ 7,193,000 $ 5,394,000
========== ========== ========== ==========
Denominator for basic and
diluted loss per share:
Weighted average shares
outstanding 22,593,000 22,383,000 22,494,000 22,306,000
========== ========== ========== ==========
Net loss per share -
basic $ 0.08 $ 0.07 $ 0.32 $ 0.24
========== ========== ========== ==========
Net loss per share -
diluted $ 0.08 $ 0.07 $ 0.32 $ 0.24
========== ========== ========== ==========
5
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Potential common shares are not included in the per share calculations
for diluted EPS, because the effect of their inclusion would be
anti-dilutive. Anti-dilutive potential shares not included in per share
calculations for the nine months ended September 30, 2000 and 1999 were
1,886,100 and 2,693,597 respectively. Anti-dilutive potential shares
not included in per share calculations for the three months ended
September 30, 2000 and 1999 were approximately 2,054,100 and 2,272,736
respectively.
(3) STOCKHOLDERS' EQUITY
The Company granted 970,000 Common Stock Options under the 1994 Equity
Incentive Plan (the "1994 Plan") during the nine months ended September
30, 2000. During this same period, 20,666 options under the 1994 Plan
were exercised and 174,500 options were canceled. All options were
issued with an exercise price at the fair market value of the
underlying common stock determined on the date of grant.
(4) COMPREHENSIVE INCOME
The Company reports comprehensive income in accordance with Statement
of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income", which requires businesses to disclose
comprehensive income and its components in their general-purpose
financial statements. Comprehensive income (loss) is equal to the
Company's net loss for the three and nine months ended September 30,
2000 and 1999.
(5) RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS No. 133"). SFAS No. 133 establishes accounting and
reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts (collectively
referred to as derivatives), and for hedging activities. SFAS No. 133
requires companies to recognize all derivatives as either assets or
liabilities, with the instruments measured at fair value. The
accounting for changes in fair value, gains or losses, depends on the
intended use of the derivative and its resulting designation. The
adoption of SFAS No. 133 is not expected to have a material effect on
the Company's financial position or the results of operations, as the
Company has not utilized such instruments to date. The Company will
adopt SFAS No. 133 on January 1, 2001, as required.
In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin 101, "Revenue Recognition in Financial
Statements" ("SAB 101"), which provides guidance related to revenue
recognition based on interpretations and practices followed by the SEC.
SAB 101 is effective for the Company in the quarter ending December 31,
2000, and requires companies to report any changes in revenue
recognition as a cumulative change in accounting principle at the time
of implementation in accordance with Accounting Principles Board
Opinion No. 20, "Accounting Changes." The implementation of SAB 101
will not impact past revenue recognition practices or have any effect
on the Company's financial position.
6
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(6) OPTION EXTENSION
During the period ended June 30, 2000, the Company's Board of Directors
approved a two year extension of the terms of certain stock options
expiring in March 2001 granted to a present and a former officer of the
Company. In connection with the extension of the options and in
accordance with Accounting Principles Board Opinion No. 25, "Accounting
for stock Issued to Employees," the Company recognized a compensation
charge of approximately $2,810,000.
(7) SUBSEQUENT EVENT
In October 2000, the Company sold 1,816,658 shares of its common stock
for $9,000,000 in gross proceeds ($8,402,500 net of issuance costs) in
a private placement to two institutional investors. The Company also
may require the investors to purchase an additional $7,000,000 of
common stock seven months after the effectiveness of the required SEC
registration statement, subject to certain conditions.
The investors also received warrants to purchase an aggregate of
363,322 shares of common stock at a purchase price of $5.90 per share
for five years. The placement agent received a warrant to purchase
108,999 shares of common stock at a purchase price of $7.43 for five
years. The warrants may be exercised on a "cashless" basis.
Additionally, each investor received a warrant to purchase additional
shares of common stock at a purchase price of $.01 per share
exercisable only upon certain conditions relating to the trading price
of the common stock during the period following the effectiveness of
the registration statement.
Also in October 2000, a newly-appointed director of the Company
purchased 104,577 shares of common stock, at fair market value,
resulting in $500,000 of proceeds to the Company.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
MacroChem Corporation's primary business is the development of pharmaceutical
products for commercialization by employing SEPA(R) (Soft Enhancer of
Percutaneous Absorption), its patented topical drug delivery technology. SEPA
compounds, when properly combined with drugs, provide pharmaceutical
formulations (creams, gels, solutions, etc.) that enhance the transdermal
delivery of drugs into the skin or into the bloodstream. The Company currently
derives no significant revenue from product sales, royalties or license fees.
The Company plans to develop specific SEPA formulations for use with proprietary
and non-proprietary drugs manufactured by pharmaceutical companies, and to
commercialize these products through the formation of partnerships, strategic
alliances and license agreements with those companies. In order to attract
strategic partners, the Company is conducting clinical testing of certain
SEPA-enhanced drugs.
The Company's results of operations can vary significantly from year to year and
quarter to quarter, and depend, among other factors, on the signing of new
licenses and product development agreements, the timing of revenues recognized
pursuant to license agreements, the achievement of milestones by licensees, the
progress of clinical trials conducted by the licensees and the Company and the
degree of research, marketing and administrative effort. The timing of the
Company's revenues may not match the timing of the Company's associated product
development expenses. To date, research and development expenses have generally
exceeded revenue in any particular period and/or fiscal year.
7
<PAGE>
AMERICAN HOME PRODUCTS LICENSE AGREEMENT
The Company was notified by American Home Products ("AHP"), that AHP, for
internal strategic reasons, was terminating its License and Stock Purchase
Agreement between the Company and AHP (the "AHP Agreement") related to the
development of a SEPA-based product. All rights to the subject product reverted
to the Company and the Company is continuing to develop and seek licensees for
the product.
As a result of the termination of the AHP Agreement, the Company has recognized
$500,000 in deferred revenue in the nine month period ended September 30, 2000.
TOPIGLAN(R)
On July 10, 2000, the Company, following a favorable U.S. Food and Drug
Administration ("FDA") review of its proposed trial protocol, announced that it
was beginning a pivotal Phase III clinical trial of its topical impotence drug,
Topiglan. The double-blind, randomized and placebo controlled trial will be
conducted in approximately 20 specialized centers around the U.S. and will
involve more than 400 patients with a well documented history of erectile
dysfunction and their partners. The Phase III clinical trial will begin the last
phase of Topiglan's development prior to its submission to the FDA for marketing
approval.
RESULTS OF OPERATIONS
Revenues, consisting of research contract revenues, decreased $114,000, or 80%,
to $29,000 in the three month period ended September 30, 2000 from $143,000 in
the three month period ended September 30, 1999 and increased $224,000, or 59%,
to $601,000 in the nine month period ended September 30, 2000 from $377,000 in
the nine month period ended September 30, 1999. The decrease in research
contract revenues is due to the absence of revenues generated by the AHP
contract in the three month period ended September 30, 2000. The increase in
revenues during the nine month period ended September 30, 2000 is a result of
the Company's recognition of $500,000 in revenue previously deferred upon the
termination of the AHP Agreement in the first quarter of fiscal 2000, as well as
recognition of contract income from research and development feasibilty studies
with a major pharmaceutical company.
Research and development expenses decreased $43,000, or 3%, to $1,187,000 in the
three month period ended September 30, 2000 from $1,230,000 in the three month
period ended September 30, 1999 and decreased $1,071,000, or 24%, to $3,316,000
in the nine month period ended September 30, 2000 from $4,387,000 in the nine
month period ended September 30, 1999. The change for the three month period is
primarily attributable to an increase of $108,000 due to the initiation of Phase
III clinical trials of Topiglan net of a decrease of $235,000 due to a stock
compensation market adjustment. The decrease for the nine month period is
primarily attributable to Phase I/II clinical trials in 1999.
8
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Marketing, general and administrative expenses increased $189,000, or 33%, to
$754,000 in the three month period ended September 30, 2000 from $565,000 in the
three month period ended September 30, 1999 and increased $3,015,000, or 152%,
to $4,993,000 in the nine month period ended September 30, 2000 from $1,978,000
in the nine month period ended September 30, 1999. The increase for the nine
month period is primarily attributable to a stock compensation charge of
$2,810,000 related to the extension of certain stock options to key employees
from second quarter 2000.
Other income decreased by $28,000, or 14%, in the three month period ended
September 30, 2000 and by $78,000, or 12%, in the nine month period ended
September 30, 2000. The decreases are due to lower average invested balances of
cash and cash equivalents resulting from funds used in Company operations.
For the reasons described above, net loss increased $289,000, or 20%, to
$1,750,000 in the three month period ended September 30, 2000 from $1,461,000 in
the three month period ended September 30, 1999 and increased $1,799,000, or
33%, to $7,193,000 in the nine month period ended September 30, 2000 from
$5,394,000 in the nine month period ended September 30, 1999.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the primary source of funding for the Company's operations has
been the private and public sale of its securities, and to a lesser extent, the
licensing of its proprietary technology and products, government grants and the
limited sales of products and test materials. During the first nine months of
2000, the Company received aggregate net proceeds of approximately $81,000 from
the exercise of stock options, compared to approximately $1,204,000 related to
the exercise of stock options and warrants in the nine months ended September
30, 1999.
At September 30, 2000 working capital was approximately $9,899,000, compared to
$14,778,000 at December 31, 1999. The reduction in the Company's working capital
was due primarily to the cash used by operating activities. Until such time as
the Company obtains agreements with third-party licensees or partners to provide
funding for the Company's anticipated business activities or the Company is able
to obtain funds through the private or public sale of its securities, the
Company's working capital will be utilized primarily to fund its operating
activities.
Pursuant to a plan approved by the Company's Board of Directors, the Company is
authorized to repurchase 1,000,000 shares of its Common Stock to be held as
treasury shares for future use. During the nine month period ended September 30,
2000, the Company repurchased 5,000 shares of Common Stock at a cost of $21,000.
At September 30, 2000, 154,018 repurchased shares remain available for future
use and 807,650 shares remain available for repurchase under the plan. In
addition, during the quarter ended September 30, 2000, 12,563 shares were
tendered to the Company, and are being held as treasury stock, as consideration
for the exercise of options under the Company's 1984 Non-Qualified Stock Option
Plan to receive 179,500 shares of common stock. At September 30, 2000, 166,581
shares are held as treasury stock.
Capital expenditures and additional patent development costs for the nine months
ended September 30, 2000 were approximately $188,000.
In October 2000, the Company sold 1,816,658 shares of its common stock for
$9,000,000 in gross proceeds ($8,402,500 net of issuance costs) in a private
placement to two institutional investors. The Company also may require the
investors to purchase an additional $7,000,000 of common stock seven months
after the effectiveness of the required SEC registration statement, subject to
certain conditions.
9
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The investors also received warrants to purchase an aggregate of 363,322 shares
of common stock at a purchase price of $5.90 per share for five years. The
placement agent received a warrant to purchase 108,999 shares of common stock at
a purchase price $7.43 for five years. The warrants may be exercised on a
"cashless" basis. Additionally, each investor received a warrant to purchase
additional shares of common stock at a purchase price of $.01 per share
exercisable only upon certain conditions relating to the trading price of the
common stock during the period following the effectiveness of the registration
statement.
Also in October 2000, a newly-appointed director of the Company purchased
104,577 shares of common stock, at fair market value, resulting in $500,000 of
proceeds to the Company.
The Company's long term capital requirements will depend upon numerous factors,
including the progress of the Company's research and development programs; the
resources that the Company devotes to self-funded clinical testing of
SEPA-enhanced compounds, proprietary manufacturing methods and advanced
technologies; the ability of the Company to enter into additional licensing
arrangements or other strategic alliances; the ability of the Company to
manufacture products under those arrangements and the demand for its products or
the products of its licensees or strategic partners if and when approved for
sale by regulatory authorities. In any event, substantial additional funds will
be required before the Company is able to generate revenues sufficient to
support its operations. There is no assurance that the Company will be able to
obtain such additional funds on favorable terms, if at all. The Company's
inability to raise sufficient funds could require it to delay, scale back or
eliminate certain research and development programs.
The Company believes that its existing cash and cash equivalents will be
sufficient to meet its operating expenses and capital expenditure requirements
for at least the next twelve months. The Company's cash requirements may vary
materially from those now planned because of changes in focus and direction of
the Company's research and development programs, competitive and technical
advances, patent developments or other developments. It is not believed that
inflation will have any significant effect on the results of the Company's
operations.
FUTURE ADOPTION OF ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS No.
133"). SFAS No. 133 establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts (collectively referred to as derivatives), and for hedging
activities. SFAS No. 133 requires companies to recognize all derivatives as
either assets or liabilities, with the instruments measured at fair value. The
accounting for changes in fair value, gains or losses, depends on the intended
use of the derivative and its resulting designation. The adoption of SFAS No.
133 is not expected to have a material effect on the Company's financial
position or the results of operations, as the Company has not utilized such
instruments to date. The Company will adopt SFAS No. 133 on January 1, 2001, as
required.
In December 1999, the Securities and Exchange Commission ("SEC") issued Staff
Accounting Bulletin 101, "Revenue Recognition in Financial Statements" ("SAB
101"), which provides guidance related to revenue recognition based on
interpretations and practices followed by the SEC. SAB 101 is effective in the
quarter ending December 31, 2000, and requires companies to report any changes
in revenue recognition as a cumulative change in accounting principle at the
time of implementation in accordance with Accounting Principles Board Opinion
No. 20, "Accounting Changes." The implementation of SAB 101 will not impact past
revenue recognition practices or have any effect on the Company's financial
position.
10
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
CASH AND CASH EQUIVALENTS
As of September 30, 2000, the Company is exposed to market risks which relate
primarily to changes in U.S. interest rates. The Company's cash equivalents are
subject to interest rate risk and will decline in value if interest rates
increase. Due to the short duration of these financial instruments, three months
or less, changes to interest rates would not have a material effect upon the
Company's financial position.
THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM THE
RESULTS DISCUSSED IN THE FORWARD-LOOKING STATEMENTS IN THIS REPORT AND IN
FORWARD-LOOKING STATEMENTS MADE FROM TIME TO TIME BY THE COMPANY ON THE BASIS OF
MANAGEMENT'S THEN-CURRENT EXPECTATIONS. FACTORS THAT MIGHT CAUSE SUCH A
DIFFERENCE INCLUDE, BUT ARE NOT LIMITED TO THE FOLLOWING: THE COMPANY'S HISTORY
OF OPERATING LOSSES AND NEED FOR CONTINUED WORKING CAPITAL; TECHNOLOGICAL
UNCERTAINTY RELATING TO TRANSDERMAL DRUG DELIVERY SYSTEMS AND THE EARLY STAGE OF
DEVELOPMENT OF THE COMPANY'S PROPOSED PRODUCTS; THE COMPANY'S NEED FOR
SIGNIFICANT ADDITIONAL PRODUCT DEVELOPMENT EFFORTS AND ADDITIONAL FINANCING;
UNCERTAINTIES RELATED TO CLINICAL TRIALS OF THE COMPANY'S PROPOSED PRODUCTS; THE
COMPANY'S DEPENDENCE ON THIRD PARTIES FOR COMMERCIALIZATION; NO ASSURANCE OF
LICENSE ARRANGEMENTS; THE LACK OF SUCCESS OF THE COMPANY'S PRIOR DEVELOPMENT
EFFORTS; UNCERTAINTIES RELATING TO GOVERNMENT REGULATION AND REGULATORY
APPROVALS; THE COMPANY'S DEPENDENCE ON THIRD PARTIES FOR THE FDA APPLICATION
PROCESS; THE COMPANY'S LACK OF EXPERIENCED MARKETING PERSONNEL AND DEPENDENCE ON
THIRD PARTIES FOR MARKETING AND DISTRIBUTION; THE COMPANY'S DEPENDENCE ON THIRD
PARTIES FOR MANUFACTURING; THE COMPANY'S RELIANCE ON KEY EMPLOYEES, THE LIMITED
PERSONNEL OF THE COMPANY AND ITS DEPENDENCE ON ACCESS TO SCIENTIFIC TALENT;
UNCERTAINTIES RELATING TO COMPETITION, PATENTS AND PROPRIETARY TECHNOLOGY;
UNCERTAINTIES RELATING TO RISKS OF PRODUCT LIABILITY CLAIMS, LACK OF PRODUCT
LIABILITY INSURANCE, AND EXPENSE AND DIFFICULTY OF OBTAINING ADEQUATE INSURANCE
COVERAGE; UNCERTAINTY OF PHARMACEUTICAL PRICING AND RELATED MATTERS; AND OTHER
FACTORS. ADDITIONAL INFORMATION ON THESE AND OTHER FACTORS WHICH COULD AFFECT
THE COMPANY'S ACTUAL RESULTS AND EXPERIENCE ARE INCLUDED IN THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1999 AND, IN PARTICULAR, THE
SECTION ENTITLED "RISK FACTORS."
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) The following exhibits are filed herewith:
27. Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter for which
this report is filed.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MACROCHEM CORPORATION
---------------------
(Registrant)
November 14, 2000 /S/ ALVIN J. KARLOFF
---------------------------------------
Alvin J. Karloff
Chairman, President and Chief Executive
Officer
(Principal Executive Officer)
/S/ KENNETH L. RICE, JR.
---------------------------------------
Kenneth L. Rice, Jr.
Chief Financial Officer, Treasurer,
and Secretary
(Principal Financial Officer)
12
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