<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM 10-Q
--------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the period ended June 30, 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 No. 0-21905
COULTER PHARMACEUTICAL, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 94-3219075
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
600 Gateway Boulevard
South San Francisco, California 94080
Address of principal executive offices (Zip Code)
</TABLE>
Registrant's telephone number, including area code: 650-553-2000
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 [ ]
Number of shares outstanding of the issuer's Common Stock, par value $.001
per share, as of July 31, 1999: 16,836,703.
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<PAGE> 2
COULTER PHARMACEUTICAL, INC.
INDEX
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
Item 1. Consolidated Financial Statements and Notes............................ 3
Consolidated Balance Sheets -- June 30, 1999 and December 31, 1998.... 3
Consolidated Statements of Operations -- for the three months and
six months ended June 30, 1999 and 1998 and for the period from
inception (February 16, 1995) to June 30, 1999......................... 4
Consolidated Statements of Cash Flows -- for the six months ended
June 30, 1999 and 1998 and for the period from inception
(February 16, 1995) to June 30, 1999................................... 5
Notes to Consolidated Financial Statements............................. 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.................................................. 8
Item 3. Quantitative and Qualitative Disclosures about Market Risk............. 11
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.................... 12
Item 5. Other Information...................................................... 12
Item 6. Exhibits and Reports on Form 8-K....................................... 12
SIGNATURES....................................................................... 13
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements and Notes
COULTER PHARMACEUTICAL, INC.
(a development stage company)
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
--------- --------
(Unaudited) (Note 1)
<S> <C> <C>
Current assets:
Cash and cash equivalents................................ $ 15,282 $ 89,808
Short-term investments................................... 90,248 49,970
Prepaid expenses and other current assets................ 6,073 3,063
--------- --------
Total current assets............................. 111,603 142,841
Property and equipment, net................................ 15,313 9,449
Employee loans receivable.................................. 1,049 907
Other assets............................................... 502 233
--------- --------
$ 128,467 $153,430
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable......................................... $ 4,415 $ 4,068
Accrued liabilities...................................... 5,098 6,353
Current portion of equipment financing
obligations and debt facility......................... 1,649 1,157
--------- --------
Total current liabilities........................ 11,162 11,578
Non current portion of equipment financing
obligations and debt facility............................ 5,788 6,659
Commitments
Stockholders' equity:
Preferred stock, issuable in series, $.001 par value:
20,000,000 shares authorized; none outstanding at
June 30, 1999 and December 31, 1998................... -- --
Common stock, $.001 par value: 30,000,000 shares
authorized; 16,821,430 shares and 16,704,103 shares
issued and outstanding at June 30, 1999 and
December 31, 1998, respectively....................... 17 17
Additional paid-in capital............................... 183,430 182,390
Accumulated other comprehensive income................... (166) (32)
Deferred compensation.................................... (346) (565)
Deficit accumulated during the development stage......... (71,418) (46,617)
--------- --------
Total stockholders' equity....................... 111,517 135,193
--------- --------
$ 128,467 $153,430
========= ========
</TABLE>
See accompanying notes.
3
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COULTER PHARMACEUTICAL, INC.
(a development stage company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended Six months ended For the period
June 30, June 30, from inception
----------------------- ----------------------- (February 16, 1995)
1999 1998 1999 1998 to June 30, 1999
--------- --------- --------- --------- -------------------
<S> <C> <C> <C> <C> <C>
Corporate partner revenues ............... $ -- $ -- $ -- $ -- $ 34,250
Operating expenses:
Research and development ............ 10,303 6,217 19,316 15,234 85,279
Selling, general and administrative . 4,107 2,918 7,378 5,078 29,736
--------- --------- --------- --------- ---------
Total operating expenses ............ 14,410 9,135 26,694 20,312 115,015
Interest income and other, net ........... 1,014 787 1,893 1,699 9,347
--------- --------- --------- --------- ---------
Net loss ................................. $ (13,396) $ (8,348) $ (24,801) $ (18,613) $ (71,418)
========= ========= ========= ========= =========
Basic and diluted net loss per share ..... $ (0.80) $ (0.62) $ (1.49) $ (1.39)
========= ========= ========= =========
Shares used in computing basic and
diluted net loss per share ............. 16,652 13,444 16,621 13,411
========= ========= ========= =========
</TABLE>
See accompanying notes.
4
<PAGE> 5
COULTER PHARMACEUTICAL, INC.
(a development stage company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (decrease) in cash and cash equivalents
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
For the period
Six months from inception
ended June 30, (Feb. 16, 1995)
1999 1998 to June 30, 1999
--------- --------- ----------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss.............................................. $(24,801) $(18,613) $ (71,418)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization...................... 963 226 1,986
Amortization of deferred compensation.............. 219 214 2,310
Loss on sale of equipment.......................... 38 -- 38
Changes in operating assets and liabilities:
Prepaid expenses and other current assets.......... (3,010) (155) (6,073)
Employee loans receivable.......................... (142) 5 (1,049)
Other assets....................................... (269) (34) (502)
Accounts payable................................... 347 622 4,415
Accrued liabilities................................ (1,255) (441) 5,098
--------- --------- ---------
Net cash used in operating activities......... (27,910) (18,176) (65,195)
-------- -------- ---------
Cash flows from investing activities:
Purchases of short-term investments................... (101,573) (39,673) (256,313)
Maturities of short-term investments.................. 53,250 45,737 150,641
Sales of short-term investments....................... 7,911 5,074 15,254
Purchases of property and equipment................... (6,870) (1,866) (17,339)
Proceeds from sale of equipment....................... 5 -- 5
-------- -------- ---------
Net cash provided by (used in)
investing activities.......................... (47,277) 9,272 (107,752)
-------- -------- ---------
Cash flows from financing activities:
Payments of equipment financing obligations and
debt facility....................................... (379) (354) (1,682)
Borrowings under equipment financing obligations
and debt facility................................... -- 33 9,120
Proceeds from issuance of convertible preferred
stock, net.......................................... -- -- 28,355
Proceeds from issuance of common stock, net........... 1,040 656 152,436
-------- -------- ---------
Net cash provided by financing activities..... 661 335 188,229
-------- -------- ---------
Net increase (decrease) in cash and cash
equivalents........................................... (74,526) (8,569) 15,282
Cash and cash equivalents at beginning of period........ 89,808 20,451 --
-------- -------- ---------
Cash and cash equivalents at end of period.............. $ 15,282 $ 11,882 $ 15,282
======== ======== =========
Supplemental Schedule of Cash Flow Information:
Interest Paid........................................... $ 353 $ 165 $ 1,021
Schedule of non-cash investing and
financing activities:
Net exercise of warrants to purchase
common stock........................................ $ -- $ 512 $ 965
Acquisition of equipment pursuant to
supplemental lease obligation....................... $ -- $ -- $ 78
Deferred compensation related to grant
of certain stock options............................ $ -- $ 156 $ 2,656
</TABLE>
See accompanying notes.
5
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COULTER PHARMACEUTICAL, INC.
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1999
(unaudited)
1. Summary of Significant Accounting Policies
Basis of Presentation
The information at June 30, 1999, for the three and six month periods ended
June 30, 1999 and 1998 and for the period from inception (February 16, 1995) to
June 30, 1999 is unaudited but includes all adjustments (consisting only of
normal recurring adjustments) which, in the opinion of management, are necessary
to state fairly the financial information set forth therein in accordance with
generally accepted accounting principles. The June 30, 1999 interim results are
not necessarily indicative of results to be expected for the full fiscal year.
These financial statements should be read in conjunction with the audited
financial statements for the fiscal year ended December 31, 1998 included in the
Company's annual report to security holders furnished to the Securities and
Exchange Commission pursuant to Rule 14a-3(b) in connection with the Company's
1999 Annual Meeting of Stockholders.
The consolidated balance sheet at December 31, 1998 has been derived from
audited consolidated financial statements at that date but does not include all
of the information and footnotes required by generally accepted accounting
principles for complete financial statements.
2. Investments
Management determines the appropriate classification of debt securities at
the time of purchase and re-evaluates such designation as of each balance sheet
date. The Company's debt securities are classified as available-for-sale and are
carried at estimated fair value in cash equivalents and short-term investments.
Unrealized gains and losses are reported as accumulated other comprehensive
income in stockholders' equity. The amortized cost of debt securities in this
category is adjusted for amortization of premiums and accretion of discounts to
maturity. Such amortization is included in interest income. Realized gains and
losses on available-for-sale securities are included in interest income and
expense. The cost of securities sold is based on the specific identification
method. Interest and dividends on securities classified as available-for-sale
are included in interest income. The Company's cash equivalents and short-term
investments as of June 30, 1999 are as follows (in thousands):
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Money market funds........................... $ 3,140 $ -- $ -- $ 3,140
Commercial paper............................. 19,330 -- (2) 19,328
Corporate bonds.............................. 18,920 -- (69) 18,851
Government bonds............................. 44,693 -- (96) 44,597
Certificate of deposits...................... 19,370 6 (5) 19,371
--------- ---- ----- ---------
Total.............................. 105,453 6 (172) 105,287
Less amounts classified as cash equivalents.. (15,039) -- -- (15,039)
--------- ---- ----- ---------
Total short-term investments................. $ 90,414 $ 6 $(172) $ 90,248
========= ==== ===== =========
</TABLE>
Realized gains or losses on the sale of available-for-sale securities for
the quarters ended June 30, 1999 and June 30, 1998 were not material.
6
<PAGE> 7
At June 30, 1999 the contractual maturities of short term investments were
as follows (in thousands):
<TABLE>
<CAPTION>
Estimated Fair
Amortized Cost Value
-------------- --------------
<S> <C> <C>
Due in one year or less............ $ 64,863 $ 64,811
Due after one year................. 25,551 25,437
--------- ---------
$ 90,414 $ 90,248
========= =========
</TABLE>
3. Net Loss Per Share
Basic earnings per share is computed by dividing income or loss applicable
to common stockholders by the weighted-average number of common shares
outstanding for the period net of certain common shares outstanding which are
subject to continued vesting and the Company's right of repurchase. Basic
earnings per share excludes any dilutive effects of options.
Diluted net loss per share has not been presented separately as, given the
Company's net loss position, the result would be anti-dilutive.
Options to purchase approximately 3,256,000 shares of common stock at a
weighted average price of $17.50 per share have been excluded from the
calculation of loss per share because the effect of inclusion would be
antidilutive.
4. Collaborative Development and Commercialization Agreement
In December 1998, the Company and SmithKline Beecham Corporation ("SB")
entered into a collaborative agreement for the development and commercialization
of Bexxar(TM), which is in late-stage development for the treatment of
non-Hodgkin's lymphoma. Under the terms of the agreement, Coulter may receive
milestone payments, shared profits, if any and royalties. The agreement also
provides for the sharing of certain costs related to clinical development,
manufacturing development, and sales and marketing costs. The Company and SB
will prepare a joint profit and loss statement to account for the sharing of
sales, cost of goods sold, and costs related to selling, marketing, distribution
and certain other Bexxar-related activities.
The agreement provides for an upfront, non-refundable license fee of $34.25
million and the purchase of $7.25 million of the Company's common stock. The
license fee was recognized as corporate partner revenues in fiscal year 1998. In
addition, the agreement provides for a $15.0 million credit line. The Company
may receive additional payments based upon completion of certain milestones.
Future development expenses for Bexxar will generally be shared by both
companies, with the Company retaining responsibility for funding certain
predetermined development costs. In addition, the companies will jointly explore
the potential of other indications for the product. If approved, the Company and
SB will jointly market Bexxar in the United States and share profits and losses
equally. Outside the United States, excluding Japan, the Company has granted SB
exclusive marketing and distribution rights in return for product royalties. SB
may also have access to second generation anti-CD20 compounds.
5. Comprehensive Income
As of January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income". For the six
months ended June 30, 1999 and 1998 total comprehensive loss amounted to $25.0
million and $18.6 million, respectively. For the three months ended June 30,
1999 and 1998 total comprehensive loss amounted to $13.6 million and $8.3
million, respectively.
7
<PAGE> 8
Item 2. Management's Discussion and Analysis of Financial Condition and Results
Of Operations
The following discussion contains, in addition to historical information,
forward-looking statements that involve risks and uncertainties. Actual results
may differ significantly from the results discussed in the forward-looking
statements. Factors that could cause or contribute to such differences include,
but are not limited to, those discussed below and in the Annual Report on Form
10-K for the year ended December 31, 1998, filed on March 29, 1999.
Overview
Coulter Pharmaceutical is engaged in the development of novel drugs and
therapies for the treatment of people with cancer. The Company currently is
developing cancer therapeutics based upon two drug discovery programs:
therapeutic antibodies and targeted oncologics. Within these broad drug
discovery programs, the Company is currently concentrating on two distinct
platform technologies: therapeutic antibodies based on conjugated antibody
technology and targeted oncologics based on tumor activated peptide pro-drug
technology.
The Company's most advanced product candidate, BexxarTM (tositumomab,
iodine I 131 tositumomab) consists of a monoclonal antibody conjugated with a
radioisotope. In June 1999, the Company announced that it had submitted a
Biologics License Application to the United States Food and Drug Administration
("FDA") to seek initial approval of Bexxar for the treatment of low-grade and
transformed low-grade non-Hodgkin's lymphoma in patients who have relapsed
after, or are refractory to, chemotherapy. The Company announced in July 1999
that Bexxar has been assigned priority review status by the FDA. Priority review
status indicates that the license application for Bexxar will be reviewed and
action taken by the agency within six months. While seeking expedited review and
marketing approval for Bexxar, the Company intends to simultaneously pursue
clinical trials to expand the potential use of Bexxar to other indications. In
December 1998, the Company announced a joint collaboration agreement with SB
granting SB joint marketing rights in the United States and exclusive commercial
rights internationally, except Japan, in return for a non-refundable license fee
of $34.3 million, potential product royalties, development milestone payments
and other shared development payments.
To date, the Company has devoted substantially all of its resources to
research and development programs, as well as selling, general and
administrative activities needed to support product development and potential
product sales. No revenues have been generated from product sales, and product
revenues resulting from the Company's research and development efforts, if any,
will not occur until commercial availability of such product. The Company has a
limited history of operations and has experienced significant operating losses
to date. The Company may continue to incur significant additional operating
losses in future periods and expects cumulative losses to increase substantially
if anticipated product sales do not offset the projected costs associated with
expanded research and development efforts, preclinical studies and clinical
trials and development of manufacturing, marketing and sales capabilities. The
Company expects that losses will fluctuate from quarter to quarter and that such
fluctuations may be substantial. There can be no assurance that the Company will
successfully develop, manufacture and commercialize its products or ever achieve
or sustain product revenues or profitability. As of June 30, 1999, the Company's
accumulated deficit was approximately $71.4 million.
Results of Operations
Operating Costs and Expenses
Research and development expenses were $10.3 million for the three-month
period ended June 30, 1999 compared to $6.2 million for the same period in 1998.
For the six months ended June 30, 1999, research and development expenses were
$19.3 million compared to $15.2 million for the same period in 1998. The
increases in both 1999 periods were primarily due to higher personnel and
facilities costs as well as a $1.5 million payment in the second quarter,
related to the acquisition of rights to 64G12, an interferon receptor antagonist
for the potential treatment of autoimmune diseases and transplant rejection. The
Company expects its research and development expenses to grow during the
remainder of 1999, reflecting anticipated increased costs related to additions
to staffing, preclinical studies, clinical trials and manufacturing.
Selling, general and administrative expenses were $4.1 million for the
quarter ended June 30, 1999, compared to $2.9 million for the same period in
1998. For the six months ended June 30, 1999, selling, general and
administrative expenses were $7.4 million compared to $5.1 million for the same
period in 1998. The increases in both 1999 periods were incurred to support the
Company's
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<PAGE> 9
facilities and staffing expansion, sales and marketing efforts, increased
pre-commercialization activities, increased corporate development activities and
related legal and patent activities. The Company expects its selling, general
and administrative expenses to continue to increase during the remainder of 1999
in continued support of these activities.
Interest Income and Other, Net
Interest income and other, net was $1.0 million for the quarter ended June
30, 1999, compared to $0.8 million for the same period in 1998. For the six
months ended June 30, 1999, interest income and other, net was $1.9 million
compared to $1.7 million for the same period in 1998. The increases in both 1999
periods were due to higher average cash, cash equivalents and short-term
investment balances as a result of the completion of the Company's public
offering of common stock in July 1998 and amounts received from SB in connection
with the joint collaboration agreement partially offset by approximately $0.8
million of expenses related to the unconsolidated joint venture with SB.
Interest expense is not material for any period presented.
Liquidity and Capital Resources
Since its inception through June 30, 1999, the Company has financed its
operations primarily through private placements and public offerings of equity
securities totaling $180.8 million. Cash, cash equivalents and short-term
investments totaled $105.5 million at June 30, 1999.
The negative cash flow from operations results primarily from the Company's
net operating losses and is expected to continue and to accelerate in future
periods. The Company expects to incur substantial and increasing research and
development expenses, including expenses related to additions to personnel,
preclinical studies, clinical trials, manufacturing and commercialization
efforts. The Company may need to raise substantial additional capital to fund
its operations. The Company may seek such additional funding through public or
private equity or debt financings from time to time, as market conditions
permit. There can be no assurance that additional financing will be available on
acceptable terms, if at all. If adequate funds are not available, the Company
may be required to delay, reduce the scope of, or eliminate one or more of its
research and development programs or obtain funds through arrangements with
collaborative partners or others that may require the Company to relinquish
rights to certain of its technologies, product candidates or products that the
Company would otherwise seek to develop or commercialize.
Net cash used in operations was $27.9 million for the six months ended June
30, 1999, compared to $18.2 million for the same period in 1998. This $9.7
million increase is primarily the result of the increased net loss for the 1999
period and an increase in other current assets which relates to receivables from
activities under the SB collaboration agreement. Net cash used in investing
activities was $47.3 million for the six months ended June 30, 1999 compared to
cash provided of $9.3 million for the same period in 1998. This use of cash in
the 1999 period primarily resulted from the purchase of approximately $62
million more short-term investments than purchased in the 1998 period, partially
offset by an increase in maturities. Property and equipment purchases of $6.9
million in the six months ended June 30, 1999 were in support of the Company's
facilities expansion and staffing growth. Net cash provided by financing
activities increased to $661,000 for the six months ended June 30, 1999 from
$335,000 for the same period in 1998 primarily resulting from higher proceeds
from issuance of common stock.
The Company expects that its existing capital resources, including the net
proceeds of its public offerings and interest thereon, will be adequate to
satisfy the requirements of its current and planned operations through 2000. The
Company has entered into a long-term lease obligation for office and laboratory
space that will require material commitments for capital expenditures. The
Company's future capital requirements will depend on a number of factors,
including: the scope and results of preclinical studies and clinical trials;
continued progress of the Company's research and development of potential
products; the cost, timing and outcome of regulatory approvals; the expenses of
establishing a sales and marketing force; the timing and cost of establishment
or procurement of requisite production, radiolabeling and other capacities; the
cost involved in preparing, filing, prosecuting, maintaining, defending and
enforcing patent claims; the need to acquire licenses to new technology; the
status of competitive products; the availability of other financing and the
ability to achieve profitability.
Year 2000 Readiness
The Company uses and relies on a wide variety of information technologies,
computer systems and scientific equipment containing computer related
components. Some of the Company's older computer software programs and equipment
use two digit fields rather than four digit fields to define the applicable year
(i.e., "98" in the computer code refers to the year "1998"). As a result,
9
<PAGE> 10
time-sensitive functions of those software programs and equipment may
misinterpret dates after January 1, 2000, to refer to the twentieth century
rather than the twenty-first century (i.e., "02" could be interpreted as "1902"
rather than "2002"). This could cause system or equipment shutdowns, failures or
miscalculations resulting in inaccuracies in computer output or disruptions of
operations, including, among other things, inaccurate processing of financial
information and/or temporary inability to process transactions or engage in
other normal business activities.
The Company has developed a strategy to address the potential exposures
related to the impact on its computer systems for the Year 2000 and beyond. An
inventory of key financial, informational and operational systems has been
completed. Detailed plans for testing key computer systems and equipment to
ensure they are Year 2000 compliant have been developed by a cross functional
team and will address problems identified, as required, by December 31, 1999.
The Company believes that with these plans and completed tests, the Year 2000
issue will not pose significant operational problems for its computer systems
and equipment. However, if modifications and conversions are not made, or are
not completed in a timely fashion, the Year 2000 issue could have a material
impact on the operations of the Company, the precise degree of which cannot be
known at this time. The Company currently has not identified any need for
specific contingency plans to deal with major Year 2000 failures, though such
plans, if necessary, will be developed by September 30, 1999. The Company does
not expect the resources required to be devoted to Year 2000 compliance to cause
significant delay in other projects. The Company is currently considering the
need for external verification of its Year 2000 readiness and that of its
partners.
In addition to risks associated with the Company's own computer systems and
equipment, the Company has relationships with, and is to varying degrees
dependent upon, a large number of third parties that provide information, goods
and services to the Company. These include financial institutions, suppliers,
vendors, research partners and governmental entities. The Company is in the
process of obtaining information from, and conducting interviews with, key
suppliers to determine their Year 2000 readiness. If a significant number of
these third parties experience failures in their computer systems or equipment
due to Year 2000 non-compliance, it could affect the Company's ability to
process transactions, develop, manufacture and distribute products, or engage in
similar normal business activities. While some of these risks are outside the
control of the Company, the Company has instituted programs, including internal
records review and use of external questionnaires, to identify key third
parties, assess their level of Year 2000 compliance, update contracts and
address any non-compliance issues.
The total cost of the Year 2000 systems assessments and conversions is
funded through operating cash flows, and the Company is expensing these costs.
The financial impact of making the required systems changes and ensuring that
key third-parties are Year 2000 compliant is not known precisely at this time,
but it is currently expected to be less than $1.0 million. The cost incurred to
date is less than $100,000. The actual financial impact could, however, exceed
this estimate. These costs are not expected to be material to the Company's
financial position, results of operations or cash flows.
Business Risks
Except for the historical information contained herein, the matters
discussed in this filing are forward-looking statements that involve risks and
uncertainties, including uncertainties related to product development,
uncertainties related to the need for regulatory and other government approvals,
dependence on proprietary technology, uncertainty of market acceptance of Bexxar
or the Company's other product candidates and other risks, including those
detailed in the Company's other filings with the Securities and Exchange
Commission. In particular, see "Risk Factors," referenced in the Company's
Annual Report on Form 10-K for the year ended December 31, 1998, filed on March
29, 1999.
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Item 3. Quantitative And Qualitative Disclosures About Market Risk
In the normal course of business, the financial position of the Company is
routinely subjected to a variety of risks, including market risk associated with
interest rate movements and currency rate movements on non-United States dollar
denominated assets and liabilities. The Company regularly assesses these risks
and has established policies and business practices to protect against the
adverse effects of these and other potential exposures. As a result, the Company
does not anticipate material losses in these areas.
Interest Rates -- The Company's interest income is sensitive to changes in
the general level of interest rates, primarily United States interest rates. In
this regard, changes in United States interest rates affect the interest earned
on the Company's cash equivalents and short-term investments. Based on the
Company's overall interest rate exposure at June 30, 1999, a near-term change in
interest rates, based on historical movements, would not materially affect the
fair value of interest rate sensitive instruments.
Foreign Currency Exchange Rates -- The Company has certain liabilities
which are denominated in several European currencies. As a result, the Company's
financial results could be significantly affected by factors such as changes in
foreign currency exchange rates or economic conditions in the foreign markets in
which the Company's suppliers are located. To mitigate this risk, the Company
may enter into foreign currency forward contracts as is deemed necessary by
management. Based on the Company's overall currency rate exposure at June 30,
1999, a near-term change in currency rates, based on historical currency rate
movements, would not materially affect the value of foreign currency sensitive
liabilities.
The Company invests cash which is not currently being used for operational
purposes in accordance with its investment policy. This policy allows for the
purchase of low risk securities issued by the government agencies and very
highly rated banks and corporations subject to certain concentration limits. The
maturities of these securities are maintained at less than two years. The
following table presents the amounts and related weighted average interest rates
by year of maturity for the Company's investment portfolio and long term debt
obligations at June 30, 1999.
<TABLE>
<CAPTION>
1999 2000 2001 2002 2003 Thereafter Total
-------- ------ ------ ---- ----- ---------- --------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Cash Equivalent Investments:
Fixed Rate...................... $ 15,282 -- -- -- -- -- $ 15,282
Average Interest Rate........... 4.6% -- -- -- -- -- --
Short Term Investments:
Fixed Rate...................... 43,472 33,053 13,723 -- -- -- 90,248
Average Interest Rate........... 5.6% 5.2% 5.5% -- -- -- --
Long-term debt,
including current portion:
Variable Rate................... 119 714 714 714 2,739 -- 5,000
Average Interest Rate........... 9.0% 9.0% 9.0% 9.0% 9.0% -- --
</TABLE>
11
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PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
At the Annual Meeting of Stockholders of the Company held on May 21, 1999,
the stockholders elected eight directors, approved the Company's 1996 Equity
Incentive Plan, as amended, to increase the aggregate number of shares of Common
Stock authorized for issuance under such plan by 2,000,000 shares (the "Plan
Amendment") and ratified the selection of Ernst & Young LLP as independent
auditors of the Company for its fiscal year ending December 31, 1999 (the
"Selection of Auditors").
Of the 16,746,397 shares of Common Stock of the Company outstanding as of
March 24, 1999, the record date for the Annual Meeting (the "Outstanding
Shares"), the votes regarding the election of directors were as follows:
<TABLE>
<CAPTION>
Votes For Votes Against or Withheld
---------- -------------------------
<S> <C> <C>
Brian G. Atwood 15,312,863 15,512
Michael F. Bigham 15,310,650 17,725
Joseph R. Coulter, III 15,309,462 18,913
Donald L. Lucas 15,312,163 16,212
Robert Momsen 15,312,863 15,512
Arnold Oronsky, Ph.D. 15,302,963 25,412
George Sella, Jr. 15,312,163 16,212
Sue Van 15,308,075 20,300
</TABLE>
Of the Outstanding Shares, 7,952,138 shares were voted for the approval of
the Plan Amendment; 4,325,296 shares were voted against with respect to the
approval of the Plan Amendment; 25,102 shares abstained and 3,025,839 shares
were broker non-votes.
Of the Outstanding Shares, 15,307,692 shares were voted for the
ratification of the Selection of Auditors; 6,933 shares were voted against with
respect to the ratification of the Selection of Auditors; 13,750 shares
abstained.
Item 5. Other Information
Pursuant to the Company's bylaws, stockholders who wish to bring matters or
propose nominees for director at the Company's 2000 annual meeting of
stockholders must provide specified information to the Company not less than one
hundred twenty (120) calendar days in advance of the anniversary date of the
Company's 1999 proxy statement (unless such matters are included in the
Company's proxy statement pursuant to Rule 14a-8 under the Securities Exchange
Act of 1934, as amended).
Item 6. Exhibits And Reports On Form 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
------- -----------------------
<S> <C>
27.1 Financial data Schedule
</TABLE>
(b) Reports on Form 8-K
There were no reports on Form 8-K during the quarter ended June 30, 1999.
12
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COULTER PHARMACEUTICAL, INC.
Date: August 13, 1999 /s/ Michael F. Bigham
------------------------------------------
Michael F. Bigham
President and Chief Executive Officer
Date: August 13, 1999 /s/ William G. Harris
------------------------------------------
William G. Harris
Vice President and Chief Financial Officer
13
<PAGE> 14
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
- ------- -----------------------
<S> <C>
27.1 Financial data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 15,282
<SECURITIES> 90,248
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 111,603
<PP&E> 17,243
<DEPRECIATION> 1,931
<TOTAL-ASSETS> 128,467
<CURRENT-LIABILITIES> 11,162
<BONDS> 5,788
0
0
<COMMON> 17
<OTHER-SE> 111,500
<TOTAL-LIABILITY-AND-EQUITY> 128,467
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 26,694
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 353
<INCOME-PRETAX> (24,801)
<INCOME-TAX> 0
<INCOME-CONTINUING> (24,801)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (24,801)
<EPS-BASIC> (1.49)
<EPS-DILUTED> (1.49)
</TABLE>
