<PAGE>
UNITED STATES
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 PERIOD ENDED JUNE 30, 2000
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 0-28324
BIOTRANSPLANT INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 04-3119555
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
CHARLESTOWN NAVY YARD, BUILDING 75, THIRD AVENUE
CHARLESTOWN, MASSACHUSETTS 02129
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(617) 241-5200
(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 / /
As of August 4, 2000 there were 11,695,149 shares of the Registrant's
Common Stock outstanding.
<PAGE>
BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
Condensed Consolidated Balance Sheets as of December 31, 1999 and June 30, 2000.......................... 3
Condensed Consolidated Statements of Operations for the three and six months ended June 30, 1999
and 2000, and for the period from inception (March 20, 1990) to June 30, 2000.................... 4
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 1999 and 2000,
and for the period from inception (March 20, 1990) to June 30, 2000.............................. 5
Notes to Condensed Consolidated Financial Statements..................................................... 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS................................................................................ 8
ITEM 3. QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS................................................ 11
PART II. OTHER INFORMATION
ITEM 1. - 6....................................................................................................... 12
SIGNATURES............................................................................................... 13
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
(A Development Stage Company)
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30,
December 31, 2000
1999 (Unaudited)
--------------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 17,648,789 20,117,978
Short-term investments 3,718,033 3,109,675
Accounts receivable 400,500 227,000
Prepaid expenses and other current assets 169,733 394,602
------------ ------------
Total current assets 21,937,055 23,849,255
------------ ------------
Property and equipment - net 1,482,000 1,364,211
------------ ------------
TOTAL ASSETS $ 23,419,055 $ 25,213,466
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 233,333 $ 233,333
Accounts payable 433,067 441,661
Accrued expenses 2,516,173 2,424,896
Deferred revenue 4,125,000 1,375,000
------------ ------------
Total current liabilities 7,307,573 4,474,890
------------ ------------
Long-term debt, net of current portion 466,667 344,191
------------ ------------
Stockholders' equity:
Preferred stock, $.01 par value, authorized - 2,000,000 shares; issued and
outstanding - no shares -- --
Common stock, $.01 par value, authorized - 25,000,000 shares at
December 31, 1999 and 50,000,000 at June 30, 2000; issued and
outstanding - 10,300,890 shares at December 31, 1999 and 11,683,428
shares at June 30, 2000 103,010 116,826
Additional paid-in capital 72,688,036 82,330,995
Accumulated deficit (57,146,231) (62,053,436)
------------ ------------
Total stockholders' equity 15,644,815 20,394,385
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 23,419,055 $ 25,213,466
============ ============
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
3
<PAGE>
BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended Cumulative
June 30, June 30, Since
1999 2000 1999 2000 Inception
-------------- --------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Revenues:
License fees $ -- $ -- $ -- $ -- $ 18,500,000
Research and development 1,238,500 1,488,500 2,477,000 2,977,000 35,228,975
Interest income 173,748 370,619 398,906 700,031 6,352,870
------------- ------------- ------------- ------------- -------------
Total revenues 1,412,248 1,859,119 2,875,906 3,677,031 60,081,845
------------- ------------- ------------- ------------- -------------
Expenses:
Research and development 3,812,423 3,633,849 7,620,232 7,325,031 100,266,589
General and administrative 566,885 617,457 1,113,737 1,228,035 20,060,030
Interest 671 16,090 1,330 31,170 1,808,662
------------- ------------- ------------- ------------- -------------
Total expenses 4,379,979 4,267,396 8,735,299 8,584,236 122,135,281
------------- ------------- ------------- ------------- -------------
Net loss $ (2,967,731) $(2,408,277) $(5,859,393) $(4,907,205) $(62,053,436)
============= ============= ============= ============= =============
Basic and diluted net loss
per common share $ (0.35) $ (0.21) $ (0.68) $ (0.43)
============= ============= ============= =============
Weighted average common shares
outstanding 8,583,338 11,679,739 8,583,101 11,356,351
============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
4
<PAGE>
BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended Cumulative
June 30, Since
1999 2000 Inception
-------------- ------------- ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (5,859,393) $ (4,907,205) $(62,053,436)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 194,846 206,323 4,083,467
Noncash interest expense -- -- 465,477
Noncash expenses related to options and warrants -- -- 1,186,787
Changes in current assets and liabilities:
Accounts receivable (227,025) (195,312) (206,650)
Deposits and prepaid expenses 520,761 155,281 (426,290)
Accounts payable 73,205 8,594 441,661
Accrued expenses 498,452 (91,276) 2,424,896
Deferred revenue (2,250,000) (2,750,000) 1,375,000
------------ ------------ ------------
Net cash used in operating activities (7,049,154) (7,584,933) (52,697,750)
------------ ------------ ------------
Cash flows from investing activities:
Purchases of property and equipment (277,422) (88,534) (4,824,482)
Disposal of property and equipment, net -- -- 28,040
Purchases of investments (404,136) (3,123,356) (73,347,752)
Proceeds from investments 6,597,029 3,731,713 70,238,076
------------ ------------ ------------
Net cash provided by (used in) investing activities 5,915,471 519,824 (7,906,118)
------------ ------------ ------------
Cash flows from financing activities:
Proceeds from convertible notes payable to stockholders -- -- 9,400,000
Payments of long-term debt -- (122,476) (122,476)
Payments of obligations under capital leases (5,873) (5,873) (2,194,210)
Proceeds from sale/leaseback of equipment -- -- 771,968
Net proceeds from equipment leases -- -- 1,422,240
Net proceeds from sale of redeemable convertible preferred stock -- -- 25,661,526
Proceeds from sale of common stock 75 9,656,774 45,082,798
------------ ------------ ------------
Net cash provided by (used in) financing activities (5,798) 80,721,846 9,534,298
------------ ------------ ------------
Net increase (decrease) in cash and cash equivalents (1,139,481) 2,469,189 20,117,978
Cash and cash equivalents, beginning of period 13,168,496 17,648,789 --
------------ ------------ ------------
Cash and cash equivalents, end of period $ 12,029,015 $ 20,117,978 $ 20,117,978
============ ============ ============
Supplemental disclosures and noncash transactions:
Equipment acquired under capital leases $ -- $ -- $ 2,210,270
============ ============ ============
Conversion of convertible notes payable to stockholders and
accrued interest into redeemable convertible preferred stock $ -- $ -- $ 9,905,710
============ ============ ============
Conversion of preferred stock into common stock $ -- $ -- $ 36,202,290
============ ============ ============
Issuance of warrants $ -- $ -- $ 741,737
============ ============ ============
Interest paid during the period $ 1,260 $ 29,143 $ 1,439,648
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
5
<PAGE>
BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. OPERATIONS AND BASIS OF PRESENTATION
BioTransplant Incorporated and subsidiary (the "Company") was incorporated on
March 20, 1990. The Company utilizes its proprietary technologies in
re-educating the body's immune responses to allow tolerance of foreign cells,
tissues and organs. Based on this technology, which the Company refers to as
ImmunoCognanceTM, the Company is developing a portfolio of products designed to
treat a range of medical conditions for which current therapies are inadequate,
including organ and tissue transplantation, cancer and autoimmune disease.
BioTransplant's products under development are intended to induce long-term
functional transplantation tolerance in humans, increase the therapeutic benefit
of bone marrow transplants, and reduce or eliminate the need for lifelong
immunosuppresive therapy.
The Company is in the development stage and is devoting substantially all of its
efforts toward product research and development and raising capital. The Company
is subject to a number of risks similar to those of other development stage
companies, including dependence on key individuals and collaborative partners,
competition from larger companies, the Company's ability to develop commercially
usable products, and to obtain and maintain regulatory approval for products
under development, and the Company's ability to obtain adequate additional
financing necessary to fund the development of its products.
The interim financial statements herein have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission ("SEC") and include, in the opinion of management, all
adjustments, consisting of normal, recurring adjustments, necessary for a fair
representation of interim period results. 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. The results for the interim periods
presented are not necessarily indicative of results to be expected for the
fiscal year or any future period. These condensed consolidated financial
statements should be read in conjunction with the audited consolidated financial
statements and the notes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 1999, as filed with the SEC.
2. CASH EQUIVALENTS AND INVESTMENTS
Cash equivalents include short-term, highly liquid investments with original
maturities of less than ninety days from the date of purchase. Short-term
investments consist primarily of corporate notes and securities issued by the
United States Treasury or other United States government agencies with original
maturities of greater than three months and remaining maturities of less than
one year. In accordance with Financial Accounting Standards Board Statement No.
115, "Accounting for Certain Investments in Debt and Equity Securities", the
Company's investments are classified as held-to-maturity and are stated at
amortized cost, which approximates market value.
The Company held the following investments at December 31, 1999 and June 30,
2000:
<TABLE>
<CAPTION>
December 31, June 30,
1999 2000
------------ -----------
<S> <C> <C>
Cash and cash equivalents $17,648,789 $20,117,978
------------ -----------
Short-term Investments
Corporate Bonds (average maturity of 4 months) -- $ 3,109,675
Commercial Paper (average maturity of 2 months) $ 3,718,033 --
------------ -----------
Total cash and cash equivalents and investments $21,366,822 $23,227,653
------------ -----------
------------ -----------
</TABLE>
6
<PAGE>
BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
3. NET LOSS PER COMMON SHARE
Net loss per common share is based on the weighted average number of common
shares outstanding during the periods presented, in accordance with Financial
Accounting Standards Board Statement No. 128, "Earnings Per Share". Diluted net
loss per common share is the same as basic net loss per common share as the
inclusion of common stock issuable pursuant to options and warrants would be
antidilutive. Antidilutive securities not included consist of 814,062 shares
issuable pursuant to common stock options and 288,766 shares issuable pursuant
to common stock warrants.
4. REVENUE RECOGNITION
Substantially all of the Company's license and research and development revenues
are derived from two collaborative research arrangements. Annual research and
development payments are recognized on a straight-line basis over the period of
the contract, which approximates when work is performed and costs are incurred.
License fee revenue represents technology transfer fees received for rights to
certain technology of the Company. License fees are recognized as revenue when
earned. Deferred revenue represents amounts received in advance of revenue
recognition for research and development. Research and development expenses in
the accompanying consolidated statements of operations include funded and
unfunded expenses.
Staff Accounting Bulletin No. 101 (SAB 101), "Revenue Recognition", was issued
in December 1999. SAB 101 will require companies to recognize certain upfront
non-refundable fees and milestone payments over the life of the related alliance
when such fees are received in conjunction with alliances which have multiple
elements. The Company is required to adopt this new accounting principle through
a cumulative charge to the statement of operations, in accordance with
Accounting Principles Board Opinion (APB) No. 20, "Accounting Changes", no later
than December 31, 2000. The Company believes that the adoption of SAB 101 will
have an impact on its future operating results as it relates to the upfront
non-refundable payments and milestone payments received in connection with
alliances. The historical financial statements reflect payments of
approximately $18.5 million received through December 31, 1999. Based on
guidance currently available, upon adoption of SAB 101, the Company will be
required to record these fees as revenue over the life of the related
agreement, as defined.
5. TERM NOTE
In September 1997, the Company entered into a term note with a bank, whereby
the Company could borrow up to $500,000 for certain equipment and fixtures
during a specified drawdown period, after which time the outstanding balance
will become payable in 36 equal monthly principal installments plus interest.
During 1999, the Company amended the term note to extend the drawdown period and
increase its availability to $1.0 million under the same conditions of the
original term note. Borrowings under the term note bear annual floating interest
at the bank's Prime Rate (9.5% at June 30, 2000) during the drawdown period with
an option to convert during the repayment period to an annual fixed rate at the
three-month London Interbank Offered Rate ("LIBOR") (6.35% at June 30, 2000)
plus 2.25%. Borrowings under the term note are secured by equipment and fixtures
purchased using the proceeds of the note. There were $ 577,524 in borrowings
outstanding under this term note at June 30, 2000.
6. SEGMENT REPORTING
The Company has adopted Statement of Financial Accounting Standards Board (SFAS)
No. 131, "Disclosures about Segments of an Enterprise and Related Information"
("SFAS 131") which establishes standards for reporting information about
operating segments. In accordance with SFAS 131, the Company believes that it
operates in one operating segment.
7. COMPREHENSIVE INCOME
SFAS No. 130, "Reporting Comprehensive Income" establishes standards for
reporting and display of comprehensive income and its components (revenues,
expenses, gains and losses) in a full set of general-purpose financial
statements. There are no material differences between the Company's reported
income and comprehensive income for all periods presented.
7
<PAGE>
BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
(A Development Stage Company)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This Quarterly Report on Form 10-Q contains forward-looking statements. For this
purpose, any statements contained herein that are not statements of historical
fact may be deemed to be forward-looking statements. Without limiting the
foregoing, the words "believes," "anticipates," "plans," "expects," "intends,"
and similar expressions are intended to identify forward-looking statements.
There are a number of important factors that could cause the Company's actual
results to differ materially from those indicated by such forward-looking
statements. These factors include, without limitation, those set forth below and
elsewhere in this Quarterly Report on Form 10-Q and in the Section titled
"Business - Factors That May Affect Results" in the Company's Annual Report on
Form 10-K for the year ended December 31, 1999, as filed with the SEC, which
Section is incorporated herein by reference.
OVERVIEW
Since commencement of operations in 1990, the Company has been engaged
primarily in the research and development of pharmaceutical products and systems
to enable the body's immune system to better tolerate the transplantation of
foreign cells, tissues and organs. The major sources of the Company's working
capital have been the proceeds from sales of equity securities, sponsored
research funding and license fees and capital lease financings. The Company has
not generated any revenues from the sale of products to date, and does not
expect to receive any product revenues for several years, if ever. The Company
will be required to conduct significant additional research, development,
testing and regulatory compliance activities that, together with general and
administrative expenses, are expected to result in significant and increasing
operating losses for at least the next several years.
In 1993, and as amended and restated in September 1995, the Company and
Novartis entered into a collaboration agreement for the development and
commercialization of xenotransplantation products utilizing gene transduction.
Under the agreement, Novartis committed research funding and license fees
through March 1998 of $30.0 million, all of which had been received as of
December 31, 1997. Novartis has also agreed to fund certain development and
premarketing costs and products which may be developed as a result of the
collaboration, portions of which, under certain circumstances, may be repayable
from the Company's operating profits from sales of any such products.
In October 1997, the Company and Novartis expanded their relationship by
entering into a collaboration and license agreement to develop and commercialize
xenotransplantation products utilizing the Company's proprietary mixed bone
marrow chimerism technology. Under the agreement, the Company may receive from
Novartis research funding, license fees, and milestone payments of up to $36.0
million assuming the agreement continues for its full term and certain research
objectives are met. As of June 30, 2000, research funding of $13.5 million,
license fees of $4.0 million and milestone payments of $2.5 million had been
received. In addition to research funding, Novartis will also fund certain
development and premarketing costs of such products, portions of which may be
repayable under certain circumstances.
In October 1995, the Company and MedImmune entered into a collaborative
research agreement for the development of products to treat and prevent organ
rejection. MedImmune paid the Company a $2.0 million license fee at the time of
execution of the agreement, and agreed to fund and assume responsibility for
clinical testing and commercialization of BTI-322 and other related products.
MedImmune has provided $2.0 million of non-refundable research support and has
agreed to make milestone payments which could total up to an additional $11.0
million. Any milestone payments which are received are repayable from royalties
on such products.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2000 AND 1999
Revenues increased to $1.9 million for the three months ended June 30, 2000 from
$1.4 million for the three months ended June 30, 1999. The increase in revenues
was primarily due to $1.5 million in sponsored research funding from Novartis
during the three months ended June 30, 2000, compared to $1.2 million in
sponsored research funding from Novartis during the three months ended June 30,
1999. Additionally, interest income increased to $371,000 for the three months
ended June 30, 2000 from $174,000 for the three months ended June 30, 1999. The
increase was due primarily to higher cash balances available for investment
purposes as well as rising interest rates.
Research and development expenses decreased to $3.6 million for the three months
ended June 30, 2000 from $3.8 million for the three months ended June 30, 1999.
This decrease was primarily due to decreased levels of external research
support.
General and administrative expenses increased to $617,000 for the three months
ended June 30, 2000 from $567,000 for the three months ended June 30, 1999. This
increase was primarily due to increases in the Company's general corporate
expenditures in the three months ended June 30, 2000 compared to the three
months ended June 30, 1999.
As a result of the above factors, the Company generated a net loss for the three
months ended June 30, 2000 of $2.4 million, or $0.21 per share, compared to a
net loss of $3.0 million, or $0.35 per share for the three months ended June 30,
1999.
8
<PAGE>
BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
(A Development Stage Company)
SIX MONTHS ENDED JUNE 30, 2000 AND 1999
Revenues increased to $3.7 million for the six months ended June 30, 2000 from
$2.9 million for the six months ended June 30, 1999. The increase in revenues
was primarily due to $3.0 million in sponsored research funding from Novartis
during the six months ended June 30, 2000, compared to $2.5 million in sponsored
research funding from Novartis during the six months ended June 30, 1999.
Additionally, interest income increased to $700,000 for the six months ended
June 30, 2000 from $399,000 for the six months ended June 30, 1999. The increase
was due primarily to higher cash balances available for investment purposes as
well as rising interest rates.
Research and development expenses decreased to $7.3 million for the six months
ended June 30, 2000 from $7.6 million for the six months ended June 30, 1999.
This decrease was primarily due to decreased levels of external research
support.
General and administrative expenses increased to $1.2 million for the six months
ended June 30, 2000 from $1.1 million for the six months ended June 30, 1999.
This increase was primarily due to increases in the Company's general corporate
expenditures in the six months ended June 30, 2000 compared to the six months
ended June 30, 1999.
As a result of the above factors the Company generated a net loss for the six
months ended June 30, 2000 of $4.9 million, or $0.43 per share, compared to a
net loss of $5.9 million, or $0.68 per share for the three months ended June 30,
1999.
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, the Company's operations have been funded principally
through the net proceeds of an aggregate of $80.1 million from sales of equity
securities. The Company has also received $50.9 million from research and
development and collaboration agreements with Novartis, $4.0 million from an
alliance agreement with MedImmune and $2.9 million in equipment financing. The
proceeds of the sales of equity securities, equipment financing, and cash
generated from the corporate collaborations with Novartis and MedImmune have
been used to fund operating losses of approximately $62.1 million and the
investment of approximately $5.4 million in equipment and leasehold improvements
through June 30, 2000. During 1999, the Company extended and increased its term
note with a bank from $500,000 to $1.0 million for certain equipment and
fixtures borrowing. There were $577,000 in borrowings outstanding under this
term note June 30, 2000. The Company had no significant commitments as of June
30, 2000 for capital expenditures.
On February 11, 2000, the Company issued and sold to a group of investors an
aggregate of 1,215,000 shares of its common stock, $.01 par value per share, at
a purchase price of $8.00 per share, for net proceeds to the Company of
approximately $9.0 million.
The Company has entered into sponsored research and consulting agreements
with certain hospitals, academic institutions and consultants, requiring
periodic payments by the Company. Aggregate minimum funding obligations under
these agreements, which include certain cancellation provisions, total
approximately $4.4 million, which includes approximately $4.1 million in 2000.
The Company had cash, cash equivalents and short-term investments of $23.2
million as of June 30, 2000.
The Company anticipates that its existing funds should be sufficient to fund
its operating and capital requirements as currently planned through 2001.
However, the Company's cash requirements may vary materially from those now
planned due to many factors, including, but not limited to, the progress of the
Company's research and development programs, the scope and results of
preclinical and clinical testing, changes in existing and potential
relationships with corporate collaborators, the time and cost in obtaining
regulatory approvals, the costs involved in obtaining and enforcing patents,
proprietary rights and any necessary licenses, the ability of the Company to
establish development and commercialization capacities or relationships, the
costs of manufacturing and other factors.
The Company expects to incur substantial additional costs, including costs
related to research and development activities, preclinical studies, clinical
trials, obtaining regulatory approvals, manufacturing and the expansion of its
facilities. The Company will need to raise substantial additional funds, through
additional financings including public or private equity offerings and
collaborative arrangements with corporate partners. There can be no assurance
that funds will be available on terms acceptable to the Company, if at all. If
adequate funds are not available, the Company may be required to delay, scale
back or eliminate certain of its product development programs or to license to
others the right to commercialize products or technologies that the Company
would otherwise seek to develop and commercialize itself, any of which would
have a material and adverse effect on the Company.
9
<PAGE>
BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
(A Development Stage Company)
ITEM 3. QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
The Company owns financial instruments that are sensitive to market risks as
part of its investment portfolio. The investment portfolio is used to preserve
the Company's capital until it is required to fund operations, including the
Company's research and development activities. All of these market-risk
sensitive instruments are classified as held-to-maturity and are not held for
trading purposes. The Company does not own derivative financial instruments in
its investment portfolio. The investment portfolio contains instruments that are
subject to the risk of a decline in interest rates.
INTEREST RATE RISK: The Company's investment portfolio includes investment grade
debt instruments. These bonds are subject to interest rate risk, and could
decline in value if interest rates fluctuate. Due to the short duration and
conservative nature of these instruments, the Company does not believe that it
has a material exposure to interest rate risk.
10
<PAGE>
BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
(A Development Stage Company)
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Response: None
Item 2. Changes in Securities
Response: None
Item 3. Defaults upon Senior Securities
Response: None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its Annual Meeting of Stockholders on Monday, May 24, 1999. The
following represents the results of the voting on proposals submitted to a vote
of stockholders at such meeting:
1. To elect the following persons to serve as Directors of the Company for the
ensuing year.
<TABLE>
<CAPTION>
Number of Votes
For Abstaining
---------------- -------------
<S> <C> <C>
Elliot Lebowitz, Ph.D. 8,522,029 9,440
Donald R. Conklin 8,525,779 5,690
William W. Crouse 8,525,779 5,690
James C. Foster, J.D. 8,525,779 5,690
Daniel O. Hauser, Ph.D. 8,525,779 5,690
Michael S. Perry, D.V.M., Ph.D. 8,525,779 5,690
Robert A. Vukovich, Ph.D. 8,525,779 5,690
</TABLE>
2. To approve the amendment to the Company's Restated Certificate of
Incorporation increasing from 25,000,000 to 50,000,000 the number of
authorized shares of Common Stock.
<TABLE>
<CAPTION>
Number of Votes
For Against Abstaining Unvoted
------------------ ----------------- ---------------------- ---------------------------
<S> <C> <C> <C>
8,017,332 511,537 2,600 0
</TABLE>
3. To ratify the selection of Arthur Andersen LLP as the Company's independent
accountants for 2000.
<TABLE>
Number of Votes
For Against Abstaining Unvoted
------------------ ----------------- ---------------------- ---------------------------
<S> <C> <C> <C>
8,520,604 8,550 2,315 0
</TABLE>
Item 5. Other Information
Response: None
11
<PAGE>
BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
(A Development Stage Company)
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
27 Financial Data Schedule.
99.1 Pages 14 to 24 of the Company's Annual Report on Form 10-K for the
year ended December 31, 1999, as filed with the Securities and
Exchange Commission, which are deemed to be filed except to the
extent that any such portions are not expressly incorporated
herein by reference.
b) Reports on Form 8-K
July 18, 2000
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BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
(A Development Stage Company)
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.
BioTransplant Incorporated
(Registrant)
Date: August 11, 1999 /S/ ELLIOT LEBOWITZ
-------------------
Elliot Lebowitz
President and Chief Executive Officer
(Principal Executive Officer)
/S/ RICHARD V. CAPASSO
Richard V. Capasso
Vice President, Finance and Treasurer
(Principal Financial and Accounting Officer)
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