FORM 10-QSB
UNITED STATES
SECURITY AND EXCHANGE COMMISSION
Washington, D.C. 20549
(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, 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 0-23280
NEUROBIOLOGICAL TECHNOLOGIES, INC.
(exact name of small business issuer as specified in its charter)
Delaware 94-3049219
(State or other jurisdiction of incorporation (IRS Employer Identification No.)
or organization)
1387 Marina Way South
Richmond, California 94804
(Address of principal executive offices)
(510) 215-8000
(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 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 the common stock, as of the latest practical date.
Common Stock, $.001 Par Value -6,515,483- shares as of September 30, 1996
Transitional Small Business Disclosure format Yes [ ] No [X]
<PAGE>
INDEX
NEUROBIOLOGICAL TECHNOLOGIES, INC.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (Unaudited)
Condensed Balance Sheets - - September 30, 1996 and June 30, 1996
Condensed Statements of Operations - - Three months ended September 30,
1996 and 1995; Period from August 27, 1987 (inception) through
September 30, 1996
Condensed Statements of Cash Flows - - Three months ended September 30,
1996 and 1995; Period from August 27, 1987 (inception) through
September 30, 1996
Notes to Condensed Financial Statements - - September 30, 1996
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES
<PAGE>
NEUROBIOLOGICAL TECHNOLOGIES, INC.
(A development stage company)
CONDENSED BALANCE SHEETS
(Unaudited)
September 30, June 30,
1996 1996
----------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 4,411,386 $ 4,602,815
Short-term investments 2,055,212 4,642,153
Prepaid expenses and other 167,328 337,422
----------------------------------
Total current assets 6,633,926 9,582,390
Long-term investments 2,515,330 1,515,490
Property and equipment, net 217,458 229,267
Patents and licenses 48,911 65,216
----------------------------------
$ 9,415,625 $ 11,392,363
==================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 639,996 $ 893,152
Stockholders equity:
Common stock, $.001 par value, 25,000,000
shares authorized, 6,515,483 outstanding
at September 30, 1996 and 6,512,485 at
June 30, 1996 6,515 6,512
Paid-in capital 29,306,362 29,296,034
Deficit accmulated during development
stage (20,537,248) (18,803,335)
----------------------------------
Total Stockholders' equity 8,775,629 10,499,211
----------------------------------
$ 9,415,625 $ 11,392,363
==================================
See accompanying notes
<PAGE>
NEUROBIOLOGICAL TECHNOLOGIES, INC.
(A development stage company)
<TABLE>
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Period from
Three months ended August 27, 1987
September 30, (inception) through
----------------------------------------
1996 1995 September 30,1996
-----------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Interest income $ 138,406 $ 126,586 $ 1,763,269
Grant income -- -- 49,900
-----------------------------------------------------------------
Total revenue 138,406 126,586 1,813,169
EXPENSES
Research and development 1,431,842 824,824 16,217,073
General and administrative 440,477 274,037 6,133,344
-----------------------------------------------------------------
Total expenses 1,872,319 1,098,861 22,350,417
-----------------------------------------------------------------
NET LOSS $ (1,733,913) $ (972,275) $ (20,537,248)
=================================================================
NET LOSS PER SHARE $ (0.27) $ (0.25)
=========================================
Shares used in net loss per share calculation 6,515,483 3,948,132
=========================================
<FN>
See accompanying notes
</FN>
</TABLE>
<PAGE>
NEUROBIOLOGICAL TECHNOLOGIES, INC.
(A development stage company)
<TABLE>
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Period from
Three months ended August 27, 1987
September 30, (inception) through
--------------------------------
1996 1995 September 30, 1996
-----------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (1,733,913) $ (972,275) $ (20,537,248)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 32,632 30,980 377,871
Issuance of common stock and warrants
for license rights and services -- -- 99,275
Changes in assets and liabilities:
Prepaid expenses and other 170,094 87,987 (167,328)
Accounts payable and accrued
liabilities (253,156) (177,507) 639,996
-----------------------------------------------------
Net cash used in operating activites (1,784,343) (1,030,815) (19,587,434)
INVESTING ACTIVITIES:
Purchase of investments (930,854) (999,290) (33,307,809)
Sale of investments 2,517,955 2,000,400 28,737,267
Purchases of property and equipment (4,518) (25,730) (361,178)
Additions to patents and licenses -- -- (283,062)
-----------------------------------------------------
Net cash (used in) provided by
investing activities 1,582,583 975,380 (5,214,782)
FINANCING ACTIVITIES:
Proceeds of short-term borrowings -- -- 235,000
Issuance of common stock 10,331 -- 21,986,520
Issuance of preferred stock -- -- 6,992,082
-----------------------------------------------------
Net cash provided by financing activities 10,331 -- 29,213,602
Increase (decrease) in cash and cash
equivalents (191,429) (55,435) 4,411,386
Cash and equivalents at beginning of period 4,602,815 2,181,880 --
Cash and equivalents at end of period $ 4,411,386 $ 2,126,445 $ 4,411,386
<FN>
See accompanying notes
</FN>
</TABLE>
<PAGE>
NEUROBIOLOGICAL TECHNOLOGIES, INC.
( A development stage company)
NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited)
September 30, 1996
NOTE 1-BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Item 310(b) of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring adjustments) considered necessary for a fair presentation
have been included. Operating results for the three month period ended September
30, 1996 are not necessarily indicative of the results that may be expected for
the year ended June 30, 1997. For further information, refer to the financial
statements and footnotes thereto included in the Company's Form 10-KSB for the
fiscal year ended June 30, 1996.
NET LOSS PER SHARE
Net loss per share is computed using the weighted average number of common stock
outstanding. Common equivalent shares from stock options and warrants are
excluded from the computation because their effect is antidilutive.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Neurobiological Technologies, Inc. ("NTI" or the "Company") is a
biopharmaceutical Company identifying and developing potential therapeutic
products based on advances in neuroscience research. NTI's strategy is to
in-license drug candidates that target major medical needs, have shown clear
evidence of preclinical efficacy and safety, and appear to have a clear path
through clinical testing and regulatory approval. NTI's experienced management
team then focuses on the drug development and clinical testing necessary to
bring its drug candidates to commercialization.
The Company is currently advancing three product candidates through
human clinical trials. NTI is developing Corticotropin-Releasing Factor ("CRF"),
a human peptide for reduction of edema and inflammation in patients with brain
tumors and rheumatoid arthritis. NTI has also licensed and is developing
Dynorphin A, a natural analgesic peptide, for use with morphine in managing
severe pain. NTI is also developing Memantine, an orally available NMDA receptor
antagonist, which has potential as a neuroprotective agent. Memantine is
initially being developed for treatment of neuropathic pain and AIDS dementia.
Significant additional preclinical testing and clinical testing will be required
prior to submission of any regulatory application for the commercial use of
these products. There can be no assurance that future clinical trials will
demonstrate an adequate level of safety or efficacy for commercialization.
Since 1987 when the Company was founded, NTI has applied substantially
all of its resources to its research and development programs. The Company is a
development stage company, has not received any revenue from the sale of
products, and does not anticipate receiving revenue from the sale of products in
the near future. The Company has incurred losses since its inception and expects
to incur substantial, increasing losses over the next several years due to
ongoing and planned research and development efforts.
RESULTS OF OPERATIONS
The Company's research and development expenses increased to $1,432,000
in the first fiscal quarter ended September 30, 1996 from $825,000 in the same
quarter of the prior year. The increase was primarily due to higher clinical
trial expenses and supporting activities, including toxicology studies, during
the first quarter of the current year. General and administrative expenses
increased to $440,000 in the first fiscal quarter ended September 30, 1996 from
$274,000 in the quarter ended September 30, 1995. The increase was primarily due
to higher expenditures on professional services and public reporting in the
quarter ended September 30, 1996 as compared to the same quarter of the prior
year. Investment income increased to $138,000 in the quarter ended September 30,
1996 from $127,000 in the same quarter of the prior year primarily due to
changes in average cash balances.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company expects its cash requirements to increase significantly in
future periods. Future cash requirements will depend on numerous factors,
including: the in-licensing of potential drug candidates; the progress on
development programs; the time and costs involved in seeking to obtain
regulatory approval, the ability of the Company to establish collaborative
arrangements; product commercialization activities; and the acquisition of
manufacturing or laboratory facilities. Since the Company uses qualified
third-party contractors to conduct preclinical studies and clinical trials, the
Company does not anticipate incurring significant capital expenditures during
fiscal 1997. Over the same period, the number of employees of the Company is not
expected to grow significantly from current levels.
From inception through September 30, 1996, the Company has raised a
total of $29.2 million in net proceeds from the sale of common and preferred
stock.
The Company believes that its available cash, cash equivalents and
investments of $9.0 million as of September 30, 1996 are adequate to fund its
operations through the quarterly period ending September 30, 1997. The Company
will need to raise substantial additional capital to fund subsequent operations.
The Company intends to seek such funding through public or private financings,
arrangements with corporate partners, or from other sources. The Company may
seek to raise additional funds whenever market conditions permit. However there
can be no assurance that funding will be available on favorable terms from any
of these sources, if at all.
Note: Except for the historical information contained herein, the matters
discussed in this quarterly report are forward looking statements that involve
risks and uncertainties. including the ability to properly design, implement,
and complete planned trials, meet regulatory requirements, demonstrate safety
and efficacy for its products, manage third party contractors, and avoid
infringement of third party proprietary rights, as well as other risks detailed
from time to time in the Company's Securities and Exchange Commission filings.
Actual results may differ materially from those projected. These forward looking
statements represent the Company's judgment as of the date of this release. The
Company disclaims, however, any intent or obligation to update these forward
looking statements.
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit A: Financial Data Schedule for the period ended September 30, 1996.
Reports:The Company did not file any reports on Form 8-K during the three months
ended September 30, 1996.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
NEUROBIOLOGICAL TECHNOLOGIES,
INC.
Dated: November 8, 1996 /s/ Jeffrey S. Price
---------------------------------------------------
Jeffrey S. Price, Ph.D.
President and Chief Executive Officer
Dated: November 8, 1996 /s/ Shawn K. Johnson
---------------------------------------------------
Shawn K. Johnson
Principal Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THE SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM BALANCE SHEET
AND INCOME STATEMENTS DATED 9/30/96
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<CIK> 0000918112
<NAME> Neurobiological Technologies, Inc.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-1-1996
<PERIOD-END> SEP-30-1996
<CASH> 4,411,386
<SECURITIES> 4,570,542
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,633,926
<PP&E> 361,177
<DEPRECIATION> 143,719
<TOTAL-ASSETS> 9,415,625
<CURRENT-LIABILITIES> 639,996
<BONDS> 0
<COMMON> 29,312,877
0
0
<OTHER-SE> (20,537,248)
<TOTAL-LIABILITY-AND-EQUITY> 9,415,625
<SALES> 0
<TOTAL-REVENUES> 138,406
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,872,319
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,733,913)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,733,913)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,733,913)
<EPS-PRIMARY> (0.27)
<EPS-DILUTED> (0.27)
</TABLE>
