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 December 31, 1999
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 (IRS Employer
incorporation or organization) Identification No.)
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 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 -13,344,053- shares outstanding
as of January 25, 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 -- December 31, 1999 and June 30, 1999
Condensed Statements of Operations -- Three and six months ended
December 31, 1999 and 1998; Period from August 27, 1987 (inception)
through December 31, 1999
Condensed Statements of Cash Flows -- Six months ended December 31,
1999 and 1998; Period from August 27, 1987 (inception) through December
31, 1999
Notes to Condensed Financial Statements -- December 31, 1999
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
2
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (Unaudited)
NEUROBIOLOGICAL TECHNOLOGIES, INC.
(A development stage company)
CONDENSED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
December 31, June 30,
1999 1999
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,306,980 $ 201,202
Prepaid expenses and other 31,399 43,833
------------ ------------
Total current assets 2,338,379 245,035
Property and equipment, net 3,139 3,796
------------ ------------
$ 2,341,518 $ 248,831
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 796,825 $ 934,839
Note payable to shareholder -- 200,000
------------ ------------
Total current liabilities 796,825 1,134,839
Stockholders' equity:
Convertible preferred stock, $.001 par value,
25,000,000 shares authorized, 2,332,000 outstanding at
December 31, 1999 and June 30, 1999 1,166,000 1,166,000
Common stock, $.001 par value, 25,000,000 shares
authorized, 13,275,501 and 7,563,575 outstanding at
December 31, 1999 and June 30, 1999, respectively 34,045,978 29,985,352
Deficit accumulated during development stage (33,667,285) (32,037,360)
------------ ------------
Total stockholders' equity 1,544,693 (886,008)
------------ ------------
$ 2,341,518 $ 248,831
============ ============
</TABLE>
See accompanying notes
3
<PAGE>
NEUROBIOLOGICAL TECHNOLOGIES, INC.
(A development stage company)
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended Period from
December 31, December 31, August 27, 1987
---------------------------- ---------------------------- (inception) through
1999 1998 1999 1998 December 31, 1999
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
REVENUES
License $ -- $ -- $ -- $ -- $ 2,100,000
Grant -- -- -- -- 149,444
------------ ------------ ------------ ------------ ------------
Total revenue -- -- -- -- 2,249,444
EXPENSES
Research and development 625,469 619,104 1,161,407 1,059,677 26,230,093
General and administrative 245,027 333,170 491,734 555,206 11,888,306
------------ ------------ ------------ ------------ ------------
Total expenses 870,496 952,274 1,653,141 1,614,883 38,118,399
Operating loss (870,496) (952,274) (1,653,141) (1,614,883) (35,868,955)
Interest income 21,695 11,714 23,216 34,722 2,201,670
------------ ------------ ------------ ------------ ------------
NET LOSS $ (848,801) $ (940,560) $ (1,629,925) $ (1,580,161) $(33,667,285)
============ ============ ============ ============ ============
BASIC & DILUTED
NET LOSS PER SHARE $ (0.07) $ (0.12) $ (0.17) $ (0.21)
============ ============ ============ ============
Shares used in basic & diluted
net loss per share calculation 11,518,777 7,553,699 9,604,432 7,553,699
============ ============ ============ ============
</TABLE>
See accompanying notes.
4
<PAGE>
NEUROBIOLOGICAL TECHNOLOGIES, INC.
(A development stage company)
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six months ended Period from
December 31, August 27, 1987
---------------------------- (inception) through
1999 1998 December 31, 1999
------------ ------------ ------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (1,629,925) $ (1,580,161) $(33,667,285)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 657 32,619 638,863
Issuance of common stock and warrants
for license rights and services -- -- 139,775
Changes in assets and liabilities:
Prepaid expenses and other 12,434 11,530 (31,399)
Accounts payable and accrued expenses (138,014) 34,649 796,825
------------ ------------ ------------
Net cash used in operating activities (1,754,848) (1,501,363) (32,123,221)
------------ ------------ ------------
INVESTING ACTIVITIES:
Purchase of investments -- -- (33,839,678)
Sale of investments -- -- 33,839,678
Purchases of property and equipment, net -- -- (358,940)
Additions to patents and licenses -- -- (283,062)
------------ ------------ ------------
Net cash (used in) provided by
investing activities -- -- (642,002)
FINANCING ACTIVITIES:
Proceeds of short-term borrowings (200,000) -- 235,000
Issuance of common stock, net 4,060,626 -- 26,679,121
Issuance of preferred stock, net -- -- 8,158,082
------------ ------------ ------------
Net cash provided by financing activities 3,860,626 -- 35,072,203
Increase (decrease) in cash and
cash equivalents 2,105,778 (1,501,363) 2,306,980
Cash and equivalents at beginning of period 201,202 2,020,886 --
------------ ------------ ------------
Cash and equivalents at end of period $ 2,306,980 $ 519,523 $ 2,306,980
============ ============ ============
</TABLE>
See accompanying notes.
5
<PAGE>
NEUROBIOLOGICAL TECHNOLOGIES, INC.
(A development stage company)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
December 31, 1999
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 December
31, 1999 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 the Company's Form 10-KSB for the fiscal
year ended June 30, 1999.
The Company raised approximately $4.2 million in gross proceeds from a
private placement of its securities at $4.00 per unit completed in November
1999. Each unit consisted of five shares of common stock and a five-year warrant
to purchase two shares of common stock exercisable at $1.75 per share. In
November 1999, the Company repaid the outstanding principal and interest on loan
from Merz + Co. GmbH & Co. ("Merz") in the aggregate amount of approximately
$1.2 million.
The Company believes that its available cash and cash equivalents of $2.3
million as of December 31, 1999 will be adequate to fund its operations through
this fiscal year ending June 30, 2000. The Company will need to raise
substantial additional capital to fund subsequent operations beyond the fiscal
year ending June 30, 2000. The Company 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 will 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. The
Company 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.
6
<PAGE>
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 the Company's judgment as of the date hereof. The Company disclaims,
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 develops
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.
During the quarter ending December 31, 1999, we completed a Phase II human
clinical testing for 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. In January 2000, we announced that the preliminary results of our 421
patient Phase IIB clinical trial of Memantine as a treatment for painful
diabetic neuropathy showed that subjects receiving 40 mg dosages of Memantine
had a statistically significant reduction in nighttime pain intensity compared
to subjects receiving placebo 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. We are currently completing
analysis of the trial data. We expect to present further trial results at the
52nd Annual Meeting of the American Academy of Neurology in San Diego, April 29
- - May 6, 2000.
In October 1999, we announced that our alliance partner, Merz + Co. GmbH &
Co., had concluded two major Phase III trials in vascular dementia with
Memantine and that the initial results look promising. A total of 900 patients
were enrolled in multiple sites in the UK and France. The trial was designed to
investigate improvements in cognition, a major focus of drug therapy for
dementia. Merz plans to disclose data from the trials at the International
Stockholm/Springfield Symposium on Advances in Alzheimer's Therapy Conference to
be held in Stockholm in April 2000. Merz's Phase III program for Memantine as a
treatment for Alzheimer's disease in the United States is continuing.
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.
7
<PAGE>
Memantine is also currently being evaluated as a treatment for AIDS-related
dementia in a Phase II human clinical trial funded by the National Institutes of
Health ("NIH"). The trial is being conducted by AIDS Clinical Trials Group
("ACTG"), and is designed to evaluate Memantine's ability to reduce symptoms of
dementia and neuropathic pain in patients with AIDS. The ACTG has also
implemented a protocol permitting open-label dosing for up to 60 weeks following
the double blinded phase of the trial. This open-label phase will provide data
on the long-term safety of Memantine. We are supplying Memantine for the trial
and will have the right to use the resulting data for the commercial development
of Memantine for that indication.
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.
We raised approximately $4.2 million in gross proceeds from a private
placement of our securities at $4.00 per unit completed in November 1999. Each
unit consisted of five shares of common stock and a five-year warrant to
purchase two shares of common stock exercisable at $1.75 per share.
Approximately $1.2 million of the proceeds were used to repay the outstanding
principal and interest on loan from Merz; the remainder is being used to fund
our operations including late-stage clinical development of Memantine.
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 increased to approximately $625,000
in the three months ended December 31, 1999 from approximately $619,000 in the
same period of the prior year. General and administrative expenses decreased to
approximately $245,000 in the three months ended December 31, 1999 from $333,000
in the three months ended December 31, 1998. The decrease was primarily due to
lower facility, investor relations and employee related costs. Interest income
increased to $22,000 in the three months ended December 31, 1999 from $12,000 in
the same period of the prior year primarily 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. If we obtain financing to continue operations beyond the
current fiscal year, 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 December 31, 1999, we have raised a total of $35.1
million in net proceeds from the sale of common and preferred stock.
We believe our available cash and cash equivalents of $ 2.3 million as of
December 31, 1999 will be adequate to fund our operations through the fiscal
year ending June 30, 2000. We will need to raise
8
<PAGE>
substantial additional capital to fund subsequent operations beyond June 30,
2000. We intend to seek funding through public or private financings,
collaborative or other arrangements with corporate partners, or from other
sources. There is a risk that we may not be able to obtain the additional
financing from any of these sources, or, if financing is available, that it will
be available on acceptable terms. In addition, we may seek to raise additional
funds whenever market conditions 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:
* the amount of royalties received from Merz for future sales of
Memantine;
* the progress of our clinical development programs;
* the time and cost involved in obtaining regulatory approvals;
* the cost of filing, prosecuting, defending, and enforcing patent
claims and other intellectual property rights;
* competing technological and market developments;
* our ability to establish collaborative relationships;
* the development of commercialization activities and arrangements; and
* the purchase of additional capital equipment.
IMPACT OF YEAR 2000 ISSUE
Year 2000 ("Y2K") exposure is the result of computer programs using two
instead of four digits to represent the year. These computer programs may
erroneously interpret dates beyond the year 1999, which could cause system
failures or other computer errors, leading to disruptions in operations. Our
computer systems have so far functioned properly with regard to Y2K.
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:
* be found to be unsafe, ineffective or toxic;
* fail to receive necessary regulatory clearances; and
* if approved, be difficult to manufacture on a large scale or
uneconomical to market;
* be precluded from marketing by us due to the proprietary rights of
third parties; and
* 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.
9
<PAGE>
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 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 to 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:
* the manufacturing and supply of drug for these and any future human
clinical trials; and
* 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. 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 material 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:
* delay for a considerable period of time or prevent marketing of any
product that we may develop; and/or
* 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.
10
<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:
* patents involve complex legal and factual issues that have recently
been the subject of much litigation;
* 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
* 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 which 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:
* 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;
* 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
* 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.
11
<PAGE>
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.
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.
12
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PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On November 11, 1999, the Company held its Annual Meeting of Stockholders. The
following matters were voted on at the Annual Meeting of Stockholders.
(1) The following six directors were elected:
Votes For Withheld
--------- --------
Paul E. Freiman 5,748,112 37,064
Abraham E. Cohen 5,748,612 36,564
Enoch Callaway, M.D. 5,747,712 37,464
Theodore L. Eliot, Jr. 5,747,712 37,464
Abraham D. Sofaer 5,747,612 37,564
John B. Stuppin 5,748,712 36,464
(2) An amendment to the 1993 Stock Plan of Neurobiological Technologies, Inc.
to increase the number of shares authorized for issuance thereunder to
2,500,000 was approved: For 5,682,813; Against 79,488; Abstain 22,875.
(3) An amendment to the Employee Stock Purchase Plan of Neurobiological
Technologies, Inc. to increase the number of shares authorized for issuance
thereunder to 150,000 was approved: For 5,698,665; Against 51,236; Abstain
35,275.
(4) The selection of Ernst & Young LLP as the independent auditors of the
Company for the current year was ratified: For 5,775,638; Against 3,838;
Abstain 5,700.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 27: Financial Data Schedule for the period ended December 31, 1999.
Reports: The Company did not file any reports on Form 8-K during the three
months ended December 31, 1999.
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: February 14, 2000 /s/ Paul E. Freiman
----------------------------------------
Paul E. Freiman
President, Chief Executive Officer
(Principal Executive and Accounting
Officer) and Director
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND INCOME STATEMENTS DATED 12/13/99 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000918112
<NAME> PACIFIC FINANCIAL PRINTING
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
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0
1,166,000
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