SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 - Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from __________ to __________
COMMISSION FILE NUMBER 1-10352
COLUMBIA LABORATORIES, INC.
(Exact name of Company as specified in its charter)
DELAWARE 59-2758596
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2665 SOUTH BAYSHORE DRIVE
MIAMI, FLORIDA 33133
(Address of principal executive offices) (Zip Code)
Company's telephone number, including area code: (305) 860-1670
Indicate by check mark whether the Company (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 Company
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No __
Number of shares of the Common Stock of Columbia Laboratories, Inc.
issued and outstanding as of April 30, 1996: 27,812,498
<PAGE>
COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following unaudited, condensed consolidated financial statements
of the Company have been prepared in accordance with the instructions to Form
10-Q and, therefore, omit or condense certain footnotes and other information
normally included in financial statements prepared in accordance with generally
accepted accounting principles. In the opinion of management, all adjustments
(consisting only of normal recurring accruals) necessary for a fair presentation
of the financial information for the interim periods reported have been made.
Results of operations for the three months ended March 31, 1996 are not
necessarily indicative of the results for the year ending December 31, 1996.
2 of 11
<PAGE>
<TABLE>
<CAPTION>
COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31,
1996 1995
---- ----
(Unaudited)
<S> <C> <C>
ASSETS:
Current assets-
Cash and cash equivalents $ 13,284,135 $ 1,628,952
Accounts receivable, net 1,431,775 1,266,964
Inventories 836,636 953,913
Prepaid expenses 183,889 213,723
------------ ------------
Total current assets 15,736,435 4,063,552
Property and equipment, net 875,396 922,093
Intangible assets, net 1,508,302 1,563,817
Other assets 1,066,118 1,137,208
------------ ------------
$ 19,186,251 $ 7,686,670
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities-
Current portion of long-term debt $ 139,510 $ 156,751
Accounts payable 2,343,099 3,423,339
Accrued expenses 953,376 956,647
Deferred revenue 1,069,470 1,081,522
Estimated liability for returns
and allowances 406,567 413,899
------------ ------------
Total current liabilities 4,912,022 6,032,158
------------ ------------
Other long-term liabilities 100,718 98,079
Stockholders' equity-
Preferred stock, $.01 par value; 1,000,000 shares
authorized;
Series A Convertible Preferred Stock, 1,323
shares issued and outstanding in 1996
and 1995 13 13
Series B Convertible Preferred Stock, 1,750
shares issued and outstanding in 1996
and 1995 18 18
Common stock, $.01 par value; 40,000,000 shares
authorized; 27,726,873 and 25,982,373 shares
issued and outstanding in 1996 and 1995,
respectively 277,269 259,824
Capital in excess of par value 87,307,068 73,067,014
Accumulated deficit (73,453,503) (71,812,828)
Cumulative translation adjustment 42,646 42,392
------------ ------------
Total stockholders' equity 14,173,511 1,556,433
------------ ------------
$ 19,186,251 $ 7,686,670
============ ============
</TABLE>
See notes to condensed consolidated financial statements
3 of 11
<PAGE>
COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended March 31,
1996 1995
---- ----
NET SALES $ 1,322,966 $ 3,205,366
COST OF GOODS SOLD 593,395 1,631,813
------------ ------------
Gross profit 729,571 1,573,553
------------ ------------
OPERATING EXPENSES:
Selling and distribution 626,170 643,775
General and administrative 880,867 652,290
Research and development 2,403,677 1,429,511
------------ ------------
Total operating expenses 3,910,714 2,725,576
------------ ------------
Loss from operations (3,181,143) (1,152,023)
------------ ------------
OTHER INCOME (EXPENSE):
License fees 1,500,000 --
Interest income 47,041 5,787
Interest expense (3,632) (71,569)
Other, net (2,941) 185,027
------------ ------------
1,540,468 119,245
------------ ------------
Net loss $ (1,640,675) $ (1,032,778)
============ ============
NET LOSS PER COMMON SHARE $ (.06) $ (.04)
============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 26,485,000 24,931,000
============ ============
See notes to condensed consolidated financial statements
4 of 11
<PAGE>
<TABLE>
<CAPTION>
COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March 31,
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,640,675) $(1,032,778)
Adjustments to reconcile net loss to net
cash used for operating activities-
Depreciation and amortization 124,847 127,636
Changes in assets and liabilities-
(Increase) decrease in:
Accounts receivable (166,432) (759,767)
Inventories 117,278 149,499
Prepaid expenses 146,320 91,406
Other assets 63,240 (3,400)
Increase (decrease) in:
Accounts payable (1,059,689) 1,259,354
Accrued expenses (109,694) (74,764)
Deferred revenue (12,052) --
Estimated liability for returns
and allowances (7,332) (10,622)
------------ -----------
Net cash used for operating activities (2,544,189) (253,436)
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (26,750) (8,052)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of notes payable and
long-term debt (17,242) --
Proceeds from issuance of common stock 12,205,950 78,147
Proceeds from exercise of options and warrants 2,054,189 --
------------ -----------
Net cash provided by financing activities 14,242,897 78,147
------------ -----------
</TABLE>
(Continued)
5 of 11
<PAGE>
COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Continued)
Three Months Ended March 31,
1996 1995
---- ----
EFFECT OF EXCHANGE RATE CHANGES ON CASH (16,774) (80,614)
------------ ---------
NET DECREASE IN CASH
AND CASH EQUIVALENTS 11,655,184 (263,955)
CASH AND CASH EQUIVALENTS,
beginning of period 1,628,951 689,749
------------ ---------
CASH AND CASH EQUIVALENTS,
end of period $ 13,284,135 $ 425,794
============ =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid during the period $ 7,835 $ 12,435
============ =========
SUPPLEMENTAL SCHEDULE OF NONCASH OPERATING AND FINANCING ACTIVITIES:
During the three months ended March 31, 1995, the Company issued
85,382 shares of Common Stock in payment of accrued interest, which totaled
$310,362. In addition, the Company issued 1,188,523 shares of Common Stock in
repayment of long-term debt which totaled $4,476,707.
As of March 31, 1996, dividends on the Series A Preferred Stock of
$100,718 ($2,639 relating to the three months ended March 31, 1996) have been
earned but have not been declared and are included in other long-term
liabilities in the March 31, 1996 condensed consolidated balance sheet.
See notes to condensed consolidated financial statements
6 of 11
<PAGE>
COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) SIGNIFICANT ACCOUNTING POLICIES:
The accounting policies followed for quarterly financial reporting
are the same as those disclosed in Note (1) of the Notes to Consolidated
Financial Statements included in the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1995.
7 of 11
<PAGE>
COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents increased from approximately $1.6 million
at December 31, 1995 to approximately $13 million at March 31, 1996, primarily
as a result of a private placement in March 1996 of 1,358,000 shares of Common
Stock which raised net proceeds of approximately $12 million, and approximately
$2 million received from the exercise of options and warrants offset by
approximately $2.5 million of net cash used in operations.
In May 1995, the Company entered into a worldwide, except for South
Africa, license and supply agreement with American Home Product Corporation
("AHP") under which the Wyeth-Ayerst division of AHP will market Crinone(R).
Under the terms of the agreement, to date the Company has received $9.5 million
in milestone payments and will continue to receive additional milestone payments
and a significant percentage of sales, which sales are expected to commence
during late 1996.
In December 1993, the Company entered into an Option and License
Agreement with a French research group based in Marseille, France, pursuant to
which it was granted an option to obtain an exclusive license to the North and
South American rights to a potential AIDS treatment. The potential product has
been granted a Clinical Trials Exemption ("CTX") in the United Kingdom and
clinical trials in humans are now underway. In addition, an Investigational New
Drug Application to start U.S. clinical trials has been approved. The purpose of
these trials is to determine the optimal dosage in late stage seropositive
patients. The option, which must be exercised upon the occurrence of certain
events, expires in December 1998. Upon exercise of the option, the Company will
be required to pay an additional $5 million. If the Company does not exercise
its option upon the occurrence of certain events, the Company's rights to the
option are terminated.
In connection with the 1989 purchase of the assets of Bio-Mimetics,
Inc., which assets consisted of the patents underlying the Company's Bioadhesive
Delivery System, other patent applications and related technology, the Company
pays Bio-Mimetics, Inc. a royalty equal to two percent of the net sales of
products based on the Bioadhesive Delivery System, to an aggregate of $7.5
million. The Company is required to prepay a portion of the remaining royalty
obligation, in cash or stock at the option of the Company, if certain conditions
are met.
As of March 31, 1996, the Company has outstanding exercisable
options and warrants that, if exercised, would result in approximately $15
million of additional capital. However, there can be no assurance that such
options or warrants will be exercised.
Significant expenditures anticipated by the Company in the near
future are concentrated on production commitments and research and development
related to new products. The Company has committed to spend an aggregate of
approximately $1.3 million on additional molding capacity at its suppliers
during 1996 and 1997.
As of March 31, 1996, the Company had available net operating
loss carryforwards of approximately $39 million to offset its future U.S.
taxable income.
In accordance with Statement of Financial Accounting Standards No.
109, as of March 31, 1996, other assets in the accompanying consolidated
balance sheet includes a deferred tax asset of approximately $14 million
(consisting primarily of a net operating loss carryforward) which has been fully
reserved as its ultimate realizability is not assured.
8 of 11
<PAGE>
RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 1996 VERSUS THREE MONTHS
ENDED MARCH 31, 1995
Sales have decreased in 1996 as compared to 1995 due to the fact
that Warner-Lambert did not order Replens(R) during the first quarter of 1996,
combined with the fact that 1995 first quarter sales included the initial
stocking of Legatrin PM(R). While the strategic alliance agreements in the
United States and abroad have not produced desired unit sales as quickly as
planned, the Company believes it has established effective working relationships
with its partners which the Company believes form a solid foundation to build
sales of Replens and the other products in the development pipeline. However,
the Company is exploring alternatives to such strategic alliances where
appropriate. In addition, upon granting of the European multistate licenses,
Replens should become a reimbursable product in certain countries. The Company
believes that sales of Replens in Europe should increase once the licenses are
granted. The Company's success is dependent to a great extent on the marketing
efforts of its strategic alliance partners, which the Company has limited
ability to influence.
Gross profit as a percentage of sales increased in 1996 as compared
to 1995 primarily as a result of a change in product mix sold.
Research and development expenditures have increased in 1996 as
compared to 1995 primarily as a result of costs incurred in connection with the
pivotal studies required for filing the New Drug Application for Crinone in the
United States.
License fees represent a milestone payment received in connection
with the licensing agreement with AHP.
As a result, the net loss for 1996 was $1,640,675 or $.06 per share
as compared to a net loss in 1995 of $1,032,778 or $.04 per common share.
9 of 11
<PAGE>
COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Certain claims and complaints have been filed or are
pending against the Company with respect to various matters. In the
opinion of management and counsel, all such matters are adequately
reserved for or covered by insurance or, if not so covered, are
without any or have little merit or involve such amounts that if
disposed of unfavorably would not have a material adverse effect on
the Company.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
As of May 13, 1996, dividends on the Series A Preferred
Stock of $101,965 have been earned but have not been declared.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None.
10 of 11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COLUMBIA LABORATORIES, INC.
/s/ MARGARET J. ROELL
----------------------------------
MARGARET J. ROELL, Vice President-
Finance and Administration,
Chief Financial Officer
DATE: MAY 14, 1996
11 of 11
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 13,284,135
<SECURITIES> 0
<RECEIVABLES> 1,537,212
<ALLOWANCES> 105,437
<INVENTORY> 836,636
<CURRENT-ASSETS> 15,736,435
<PP&E> 1,798,502
<DEPRECIATION> 923,106
<TOTAL-ASSETS> 19,186,251
<CURRENT-LIABILITIES> 4,912,022
<BONDS> 0
0
31
<COMMON> 277,269
<OTHER-SE> 13,896,211
<TOTAL-LIABILITY-AND-EQUITY> 19,186,251
<SALES> 1,322,966
<TOTAL-REVENUES> 1,322,966
<CGS> 593,395
<TOTAL-COSTS> 593,395
<OTHER-EXPENSES> 3,910,714
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,632
<INCOME-PRETAX> (1,640,675)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,640,675)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,640,675)
<EPS-PRIMARY> (.06)
<EPS-DILUTED> (.06)
</TABLE>
