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Relates to Form SB-2
Registration No. 333-93859
Filed under Rule 424(b)(3) and (c)
SUPPLEMENT TO PROSPECTUS OF
NEUROBIOLOGICAL TECHNOLOGIES, INC.
The following information supplements the prospectus, dated January 21,
2000, of Neurobiological Technologies, Inc. related to 5,434,700 shares of its
Common Stock and 2,604,880 shares of its Common Stock issuable upon exercise of
warrants. This statement should be read in conjunction with the prospectus.
THE DATE OF THIS SUPPLEMENT IS MAY 18, 2000
<PAGE>
I. UNAUDITED FINANCIAL INFORMATION
The financial data presented below for the three and nine months ended, and
as of, March 31, 2000 and for the three and nine months ended March 31, 1999,
and for the period from August 27, 1987 (inception) through March 31, 2000 is
derived from our unaudited consolidated financial statements. Such unaudited
consolidated financial statements reflect all adjustments which are, in the
opinion of management, necessary and of a normal recurring nature to present
fairly the operating results for the interim periods reported. The results of
operations for the three months ended March 31, 2000 are not necessarily
indicative of the results to be expected for the fiscal year ending June 30,
2000. Our balance sheet data as of March 31, 2000 is derived from our unaudited
consolidated financial statements. This information should be read in
conjunction with the consolidated financial statements and notes thereto
included elsewhere in the prospectus.
The following information was included in our quarterly report on Form 10-Q
for the three months ended March 31, 1999, as filed with the Securities and
Exchange Commission on May 15, 2000.
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NEUROBIOLOGICAL TECHNOLOGIES, INC.
(A development stage company)
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, June 30,
2000 1999
------------ ------------
(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
============ ============
</TABLE>
See accompanying notes.
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NEUROBIOLOGICAL TECHNOLOGIES, INC.
(A development stage company)
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<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
============ ============ ============ ============
</TABLE>
See accompanying notes.
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NEUROBIOLOGICAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine months ended Period from
March 31, August 27, 1987
---------------------------- (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
============ ============ ============
</TABLE>
See accompanying notes.
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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 424B3 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 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
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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 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 amount of front-end and milestone payments received from a marketing
agreement for Memantine;
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- - 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.
9
