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 March 31, 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 0-23280
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
or organization) Identification No.)
3260 Blume Drive, Suite 500
Richmond, California 94806
(Address of principal executive offices)
(510) 262-1730
(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
the common stock, as of the latest practical date.
Common Stock, $.001 Par Value -15,102,415- shares outstanding
as of April 30, 2000
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 - - March 31, 2000 and June 30, 1999
Condensed Statements of Operations - - Three and nine months ended
March 31, 2000 and 1999; Period from August 27, 1987 (inception)
through March 31, 2000
Condensed Statements of Cash Flows - - Nine months ended March 31, 2000
and 1999; Period from August 27, 1987 (inception) through March 31,
2000
Notes to Condensed Financial Statements - - March 31, 2000
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF THE SECURITY HOLDERS
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES
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<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (Unaudited)
NEUROBIOLOGICAL TECHNOLOGIES, INC.
(A development stage company)
<TABLE>
CONDENSED BALANCE SHEETS
<CAPTION>
March 31, June 30,
2000 1999
------------ ------------
ASSETS (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 3,146,702 $ 201,202
Prepaid expenses and other 56,651 43,833
------------ ------------
Total current assets 3,203,353 245,035
Property and equipment, net 2,811 3,796
------------ ------------
$ 3,206,164 $ 248,831
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses $ 880,563 $ 934,839
Note payable to shareholder -- 200,000
------------ ------------
Total current liabilities 880,563 1,134,839
Stockholders' equity (deficit):
Convertible preferred stock, $.001 par value,
5,000,000 shares authorized,
2,332,000 outstanding at March 31, 2000
and June 30, 1999 1,166,000 1,166,000
Common stock, $.001 par value, 25,000,000 shares authorized,
13,899,027 and 7,563,575 outstanding at March 31, 2000 and
June 30, 1999, respectively 35,520,195 29,985,352
Deficit accumulated during development stage (34,360,594) (32,037,360)
------------ ------------
Total stockholders' equity (deficit) 2,325,601 (886,008)
------------ ------------
$ 3,206,164 $ 248,831
============ ============
<FN>
See accompanying notes
</FN>
</TABLE>
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<PAGE>
NEUROBIOLOGICAL TECHNOLOGIES, INC.
(A development stage company)
<TABLE>
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Period from
Three months ended Nine months ended August 27, 1987
March 31, March 31, (inception)
---------------------------- ---------------------------- through
2000 1999 2000 1999 March 31, 2000
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
REVENUES
License $ -- $ -- $ -- $ -- $ 2,100,000
Grant -- 99,544 -- 99,544 149,444
------------ ------------ ------------ ------------ ------------
Total revenues -- 99,544 -- 99,544 2,249,444
EXPENSES
Research and development 401,975 815,197 1,563,382 1,874,874 26,632,068
General and administrative 328,318 274,786 820,052 829,992 12,216,624
------------ ------------ ------------ ------------ ------------
Total expenses 730,293 1,089,983 2,383,434 2,704,866 38,848,692
Operating loss (730,293) (990,439) (2,383,434) (2,605,322) (36,599,248)
Interest income 36,984 5,041 60,200 39,763 2,238,654
------------ ------------ ------------ ------------ ------------
NET LOSS $ (693,309) $ (985,398) $ (2,323,234) $ (2,565,559) $(34,360,594)
============ ============ ============ ============ ============
BASIC & DILUTED
NET LOSS PER SHARE $ (0.05) $ (0.12) $ (0.21) $ (0.33)
============ ============ ============ ============
Shares used in basic & diluted
net loss per share calculation 13,563,345 8,133,032 10,917,995 7,746,810
============ ============ ============ ============
<FN>
See accompanying notes.
</FN>
</TABLE>
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<PAGE>
NEUROBIOLOGICAL TECHNOLOGIES, INC.
(A development stage company)
<TABLE>
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Period from
Nine months ended August 27, 1987
March 31, (inception)
---------------------------- through
2000 1999 March 31, 2000
------------ ------------ ------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (2,323,234) $ (2,565,559) $(34,360,594)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 985 45,176 639,191
Issuance of common stock and warrants
for license rights and services -- -- 139,775
Changes in assets and liabilities:
Prepaid expenses and other (12,818) (8,637) (56,651)
Accounts payable and accrued expenses (54,276) 109,971 880,563
------------ ------------ ------------
Net cash used in operating activities (2,389,343) (2,419,049) (32,757,716)
------------ ------------ ------------
INVESTING ACTIVITIES:
Purchase of investments -- -- (33,839,678)
Sale of investments -- -- 33,839,678
Purchases of property and equipment -- -- (358,940)
Additions to patents and licenses -- -- (283,062)
------------ ------------ ------------
Net cash used in
investing activities -- -- (642,002)
FINANCING ACTIVITIES:
Proceeds from note payable (200,000) 200,000 --
Proceeds from (payment of) short-term borrowings -- -- 235,000
Advances from stockholders -- 869,000 --
Issuance of common stock 5,534,843 -- 28,153,338
Issuance of preferred stock -- -- 8,158,082
------------ ------------ ------------
Net cash provided by financing activities 5,334,843 1,069,000 36,546,420
Increase (decrease) in cash and
cash equivalents 2,945,500 (1,350,049) 3,146,702
Cash and equivalents at beginning of period 201,202 2,020,886 --
------------ ------------ ------------
Cash and equivalents at end of period $ 3,146,702 $ 670,837 $ 3,146,702
============ ============ ============
<FN>
See accompanying notes.
</FN>
</TABLE>
5
<PAGE>
NEUROBIOLOGICAL TECHNOLOGIES, INC.
(A development stage company)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
March 31, 2000
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 March 31,
2000 are not necessarily indicative of the results that may be expected for the
year ended June 30, 2000. For further information, refer to the financial
statements and footnotes included in our Form 10-KSB for the fiscal year ended
June 30, 1999.
The Company believes its available cash and cash equivalents of $3.1
million as of March 31, 2000, along with net proceeds of approximately $5.7
million raised in a private placement subsequent to the quarter ending, will be
adequate to fund operations through the next fiscal year ending June 30, 2001.
The Company will need to raise additional capital to fund subsequent operations
beyond the fiscal year ending June 30, 2001. NTI intends to seek funding through
public or private financings, collaborative or other arrangements with corporate
partners, or from other sources. However, there can be no assurance that funding
will be available on favorable terms from any of these sources, if at all. If
such funding is unavailable, the Company may be required to delay, scale back,
or eliminate one or more of its research, discovery, or development projects,
including clinical trials, and to make future reductions in workforce. NTI will
also need to consider obtaining funds through entering into arrangements with
collaborative partners or others which may require the Company to relinquish
rights to certain of its technologies, product candidates or products that the
Company would not otherwise relinquish, and other restructuring alternatives,
including the license or sale of certain of its assets and technology,
discontinuing operations or liquidation.
BASIC AND DILUTED NET LOSS PER SHARE
Net loss per share is presented under the requirements of Financial
Accounting Standards Board ("FAS") No. 128, "Earnings per Share". Basic loss per
share is computed based on the average shares of common stock outstanding and
excludes any options, warrants, and convertible securities. Potentially dilutive
securities, such as options, warrants, and convertible preferred stock, have
also been excluded from the computation of diluted net loss per share as their
effect is antidilutive.
NOTE 2-NOTES SUBSEQUENT EVENTS
In April 2000, we raised approximately $6.4 million in gross proceeds
from a private placement to accredited investors of 1.2 million shares of common
stock at $5.30 per share. The proceeds will be used to continue clinical
development of our two neuroprotective drug candidates.
Subsequent to the quarter end, we entered into a new lease for our
corporate offices effective May 1, 2000 through July 31, 2002. Our new offices
are located at 3260 Blume Drive, Suite 500, Richmond, California, 94806, (510)
262-1730 telephone, (510) 262-0204 facsimile.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Statements in this "Management's Discussion and Analysis of Financial
Condition and Results of Operations," and elsewhere in this Form 10-QSB that are
not historical are forward-looking statements and are subject to a number of
risks and uncertainties which could cause actual results to differ materially
from those discussed in the forward-looking statements. Factors that might cause
such a difference include, but are not limited to, those set forth under "Other
Factors That May Affect Our Operations." These forward looking statements
represent NTI's judgment as of the date hereof. We disclaim, however, any intent
or obligation to update these forward looking statements.
OVERVIEW
Neurobiological Technologies, Inc. ("NTI," "we," "us," "our" or the
"Company") is an emerging drug development company focused on the clinical
development and regulatory approval of neuroscience drugs. We develop
neuroprotective and neuromodulatory agents to treat progressive neurological
impairments characteristic of various nervous system disorders, including
diabetic neuropathy, brain cancer, and AIDS dementia syndrome.
Our strategy is to in-license and develop early stage drug candidates
that target major medical needs and which can be rapidly commercialized. Our
experienced management team oversees the human clinical trials necessary to
establish preliminary evidence of efficacy and seeks partnerships with
pharmaceutical and biotechnology companies for late-stage development and
marketing of our product candidates.
In January 2000, we announced preliminary results of our
placebo-controlled Phase IIB, dose ranging human clinical trial of Memantine, an
orally available compound which appears to restore the function of impaired
neurons by modulation activity of the N-methyl-d-aspartate ("NMDA") receptor,
integral to the membranes of such cells. Such restoration of function appears to
inhibit injured or damaged neurons from firing abnormally, a pathological
process associated with many neurological conditions, including dementia,
Alzheimer's disease, neuropathic pain (persistent pain resulting from abnormal
signals to the brain) and AIDS dementia. Results of the 421 patient Phase IIB
clinical trial of Memantine as a treatment for painful diabetic neuropathy
showed that 44 percent of the patients receiving 40 mg dosages experienced a 50
percent pain reduction, compared to 29 percent in the placebo group at the end
of eight weeks. Although positive trends were seen in the groups treated with 20
mg of Memantine compared to placebo, no statistical significance was observed.
Trial results were presented May 2, 2000 at the 52nd Annual Meeting of the
American Academy of Neurology in San Diego. NTI expects to work with the FDA to
design a Phase III study for this indication.
In January 2000, NTI also announced completion of patient enrollment in
a double-blind, placebo-controlled Phase II human clinical trial to evaluate
Memantine's ability to reduce symptoms of dementia and neuropathic pain in
patients with AIDS. This trial is funded by the National Institute of Allergy
and Infectious Diseases (NIAID) of the National Institutes of Health and
conducted by the AIDS Clinical Trials Group (ACTG), a clinical trials consortium
funded by the NIAID. We are supplying the Memantine for the trial and will have
the right to use the resulting data for the commercial development of Memantine
for that indication. We expect results of this trial to be reported by the end
of 2000.
In February 2000, we announced that our alliance partner, Merz + Co.
GmbH & Co. ("Merz") of Frankfurt, Germany, has reported significant positive
results from a U.S. Phase III trial of Memantine in patients with advanced
Alzheimer's disease. This randomized, 6-month placebo-controlled, double-blind
multicenter trial aimed at functional improvement of patients with moderate to
severe Alzheimer's disease enrolled 252 patients in the United States and was
jointly managed by Quintiles CNS Therapeutics. These
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clinical trial results confirm the findings of the previously conducted Phase
III clinical studies Merz conducted for registration requirements in Europe and
the United States.
In April 2000, Merz announced promising results in patients suffering
from mild to moderate vascular dementia. Of a total of 900 patients investigated
in two studies, the Memantine treated patients showed significant improvements
in cognitive abilities compared to the patients who received a placebo as
demonstrated by two independent performance-based assessments. Patients who had
more severe disease showed the most improvement, according to Gordon Wilcock,
M.D., of Frenchay Hospital in Bristol, England, lead investigator for the U.K.
trial.
Memantine has been marketed by Merz in Germany since 1989 with the
labeling "dementia syndrome." NTI and Merz are currently assisting each other to
advance our respective clinical development programs by sharing scientific
information and clinical trial data. We are also seeking a marketing agreement
for Memantine with a large pharmaceutical company.
We are also developing XERECEPT(TM), a synthetic preparation of the
natural human peptide Corticotropin-Releasing Factor, as a treatment for brain
swelling due to brain tumors (peritumoral brain edema). XERECEPT received orphan
drug designation for this indication by the FDA.
Since 1987 when NTI was founded, we have applied a substantial portion
of our resources to our research and development programs. We are a development
stage company, have not received any revenue from the sale of products, and do
not anticipate receiving revenue from the sale of products in the near future.
We have incurred losses since our inception and expects to incur substantial,
increasing losses due to ongoing and planned research and development efforts.
RESULTS OF OPERATIONS
Our research and development expenses decreased to approximately
$402,000 in the three months ended March 31, 2000 from approximately $815,000 in
the three months ended March 31, 1999. Expenses were lower in the three months
ended March 31, 2000 primarily due to the completion of the Phase IIB human
clinical trials to evaluate Memantine as a treatment for peripheral diabetic
neuropathy, which were initiated in the quarter ending March 31, 1999. General
and administrative expenses increased to approximately $328,000 in the three
months ended March 31, 2000 from $275,000 in the same period of the prior year.
The increase was primarily due to increased expenditures in activities relating
to seeking financing and corporate partnerships. Interest income increased to
approximately $37,000 in the three months ended March 31, 2000 from $5,000 in
the same period of the prior year due to higher average cash balances as a
result of shares sold in the private placement completed in November 1999.
We expect to incur substantial ongoing costs primarily for Phase II and
Phase III clinical trials for our development programs and related
administrative support. We expect that our expenditures will continue to
increase as our products move through Phase II and Phase III clinical trials.
LIQUIDITY AND CAPITAL RESOURCES
From inception through March 31, 2000, we have raised a total of $36.7
million in net proceeds from the sale of common and preferred stock.
We believe our available cash and cash equivalents of $3.1 million as
of March 31, 2000, along with net proceeds of approximately $5.7 million raised
in the April 2000 private placement, will be adequate to fund operations through
the next fiscal year ending June 30, 2001. We will need to raise additional
capital to fund subsequent operations beyond the fiscal year ending June 30,
2001. NTI intends to seek funding through public or private financings,
collaborative or other arrangements with corporate partners, or from other
sources. However, there can be no assurance that funding will be available on
favorable terms from any of these sources, if at all. In addition, we may seek
to raise additional funds whenever market conditions
8
<PAGE>
permit. Raising additional funds through issuing equity securities may result in
significant dilution to our existing stockholders.
If we are not able to raise adequate funds, we may be required to
delay, scale back, or terminate our clinical trials, or to obtain funds through
entering into arrangements with collaborative partners or others. Such
arrangements may require us to give up additional rights to our technology,
product candidates or products.
Our future capital requirements will depend on a number of factors,
including:
o the amount of royalties received from Merz for future sales of
Memantine;
o the amount of front-end and milestone payments received from a
marketing agreement for Memantine;
o the progress of our clinical development programs;
o the time and cost involved in obtaining regulatory approvals;
o the cost of filing, prosecuting, defending, and enforcing patent claims
and other intellectual property rights;
o competing technological and market developments;
o our ability to establish collaborative relationships;
o the development of commercialization activities and arrangements; and
o the purchase of additional capital equipment.
OTHER FACTORS THAT MAY AFFECT OUR OPERATIONS
Because all of our potential products are in clinical development, we may not
develop a candidate product that will receive required regulatory approval or be
successfully commercialized.
We are still in the development stage and have no marketable products.
As a result, there is no revenue from product sales, and most of our resources
are dedicated to the development of selected candidate pharmaceutical products.
The results of our preclinical studies and early stage clinical trials are not
necessarily indicative of those that will be obtained upon further clinical
testing in later stage clinical trials. It is possible that none of our
candidate products will receive regulatory approval or be successfully
commercialized.
Our potential products are subject to the risks of failure inherent in the
development of products based on new technologies.
Our potential products are subject to the risks of failure inherent in
the development of products based on new technologies. These risks include the
possibility that the potential products may:
o be found to be unsafe, ineffective or toxic;
o fail to receive necessary regulatory clearances; and
o if approved, be difficult to manufacture on a large scale or
uneconomical to market;
o be precluded from marketing by us due to the proprietary rights of
third parties; and
o not be successful because third parties market or may market superior
or equivalent products.
Our development activities may not result in any commercially viable
products. We do not expect to be able to commercialize any products for a number
of years, if at all.
We have only limited internal resources and thus have relied and will continue
to rely heavily on others for research, development, manufacture and
commercialization of our potential products.
We have entered into various contractual arrangements (many of which
are non-exclusive) with consultants, academic collaborators, licensors,
licensees and others, and it is dependent upon the level of commitment and
subsequent success of these outside parties in performing their
responsibilities. Certain of
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these agreements place significant responsibility for preclinical testing and
human clinical trials and for preparing and submitting submissions for
regulatory approval for potential products on the collaborator, licensor or
contractor. If the collaborator, licensor or contractor fails to perform, our
business may be adversely affected.
We have also relied on scientific, technical, clinical, commercial and
other data supplied and disclosed by others in entering into these agreements.
We have relied on this data in support of applications to enter human clinical
trials for our potential products. Although we have no reason to believe that
this information contains errors or omissions of fact, it is possible that there
are errors or omissions of fact that would change materially our view of the
future likelihood of FDA approval or commercial viability of these potential
products.
A number of our agreements and licenses with third parties require us
to pay royalties and make other payments to such parties. Failure by NTI to make
such payments could cause us to lose rights to technology or data under these
agreements.
With respect to Memantine, NTI is dependent on Merz for:
o the manufacturing and supply of drug for these and any future human
clinical trials; and
o the successful commercialization of the product to treat neuropathic
pain and AIDS-related dementia.
The only revenues that we will receive in the future for Memantine are
royalties received on product sales by Merz or its marketing partner or partners
and front-end and milestone payments. Under certain circumstances, Merz can
terminate its agreement with us upon six months notice. The termination of our
agreement with Merz or any failure by Merz or its partners to successfully
commercialize Memantine after its development would have a materiel adverse
effect on our business, financial conditions and results of operations.
The FDA and state and local agencies, and comparable agencies and entities in
foreign countries impose substantial requirements on the manufacturing and
marketing of human therapeutics through lengthy and detailed laboratory and
clinical testing procedures, sampling activities and other costly and time
consuming procedures.
Fulfillment of regulatory requirements for marketing human therapeutics
typically takes many years and varies substantially based on the type,
complexity, and novelty of the drug for which approval is sought. Government
regulation may:
o delay for a considerable period of time or prevent marketing of any
product that we may develop; and/or
o impose costly procedures upon our activities.
Either of these effects of government regulation may provide an
advantage to our competitors.
There can be no assurance that FDA or other regulatory approval for any
products developed by NTI will be granted on a timely basis or at all. Any delay
in obtaining, or failure to obtain, required approvals would adversely affect
the marketing of our proposed products and our ability to earn product revenues
or royalties.
In addition, success in preclinical or early stage clinical trials does
not assure success in later stage clinical trials. As with any regulated
product, additional government regulations may be instituted which could delay
regulatory approval of our potential products. Additional government regulations
that might result from future legislation or administrative action cannot be
predicted.
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<PAGE>
Our success will depend, in large part, on our ability to obtain or license
patents, protect trade secrets and operate without infringing upon the
proprietary rights of others.
The patent position of biotechnology firms generally is highly
uncertain because:
o patents involve complex legal and factual issues that have recently
been the subject of much litigation;
o no consistent policy has emerged from the United States Patent and
Trademark Office regarding the breadth of claims allowed or the degree
of protection afforded under biotechnology patents; and
o others may independently develop similar products, duplicate any of the
Company's potential products, or design around the claims of any
potential patented products of NTI.
In addition, because of the time delay in patent approval and the
secrecy afforded United States patent applications, we do not know if other
applications, that might have priority over our applications, have been filed.
As a result of all of these factors, there can be no assurance that
patent applications relating to our potential products or processes will result
in patents being issued, or that patents, if issued, will provide protection
against competitors who successfully challenge our patents, obtain patents that
may have an adverse effect on our ability to conduct business, or be able to
circumvent our patent position.
A number of pharmaceutical and biotechnology companies and research and
academic institutions have developed technologies, filed patent applications or
received patents on various technologies that may be related to our business.
Some of these technologies, applications or patents may conflict with NTI's or
any of our licensors' technologies or patent applications. Such conflict could
limit the scope of the patents, if any, that we may be able to obtain or to
which it has a license or result in the denial of our patent applications or the
patent applications for which we have licenses. In addition, if patents that
cover our activities have been or are issued to other companies, there can be no
assurance that we would be able to obtain licenses to these patents, or at a
reasonable cost, or be able to develop alternative technology.
Because we do not have our own manufacturing facilities, we face risks from
outsourcing.
We have established arrangements with our corporate collaborator, Merz,
and with contract manufacturers to supply potential products for preclinical and
clinical trials. We intend to establish similar arrangements for the
manufacture, packaging, labeling and distribution of our products if they are
approved for marketing.
We faces certain risks by outsourcing manufacturing, including:
o the delay of our preclinical and human clinical testing if our
contractors are unable to supply sufficient quantities of product
candidates manufactured in accordance with cGMP on acceptable terms;
o the delay of market introduction and subsequent sales of such products
if we should encounter difficulties in establishing relationships with
manufacturers to produce, package and distribute our products; and
o adverse effects on the FDA pre-market approval of the products if our
collaborators and contract manufacturers do not adhere to cGMP
regulations enforced by the FDA through its facilities inspection
program and if these facilities cannot pass a pre-approval plant
inspection.
Therefore, our dependence on third parties for the manufacture of
products may adversely affect our results of operations and our ability to
develop and deliver products on a timely and competitive basis.
Clinical trials or marketing of any of our potential products may expose us to
liability claims from the use of such products which our insurance may not
cover.
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We have a limited amount of product liability insurance to cover
liabilities arising from clinical trials. It is possible that our current
insurance may not be adequate to cover any liabilities arising from our clinical
trials.
Our current product liability insurance does not cover commercial sales
of products. We can not be sure that we will be able to obtain product liability
insurance covering commercial sales or, if such insurance is obtained, that
sufficient coverage can be acquired at a reasonable cost. An inability to obtain
insurance at acceptable cost or otherwise protect against potential product
liability claims could prevent or inhibit commercialization of any products we
develop.
Further reductions in our staff might significantly delay the achievement of
planned development objectives.
Each person currently employed by NTI serves an essential function. Any
reductions in force could impair our ability to manage ongoing human clinical
trials and have a material adverse effect on our operations.
Our continuing losses raise a going concern issue in the auditor's report.
The report of our independent auditors with respect to our financial
statements included in Form 10-KSB for the year ended June 30, 1999 includes a
paragraph indicating that, as more fully described in the financial statements,
our recurring losses during the development stage raise substantial doubt about
our ability to continue as a going concern.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 27: Financial Data Schedule for the period ended March 31, 2000.
Reports: On January 19, 2000, we filed a report on Form 8-K to announce
preliminary results of our Memantine clinical trials for painful
diabetic neuropathy.
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: May 15, 2000 /s/ Paul E. Freiman
-------------------
Paul E. Freiman
President, Chief Executive Officer
(Principal Executive and Accounting Officer)
and Director
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BALANCE
SHEET AND INCOME STATEMENTS DATED 3/31/00 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-1-1999
<PERIOD-END> MAR-31-2000
<CASH> 3,146,702
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,203,353
<PP&E> 292,182
<DEPRECIATION> 289,371
<TOTAL-ASSETS> 3,206,164
<CURRENT-LIABILITIES> 880,563
<BONDS> 0
0
1,166,000
<COMMON> 35,520,195
<OTHER-SE> (34,360,594)
<TOTAL-LIABILITY-AND-EQUITY> 3,206,164
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 730,293
<LOSS-PROVISION> 0
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