-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OMNOmKMAdn6p7wfs7riG39iq0g/cYH4OlFzYFCCkrqExIl2bkyvSg7bK3SCPdqv4 p6ZWjOJ2hxwuDjTw8M5bRw== 0000950133-96-000108.txt : 19960216 0000950133-96-000108.hdr.sgml : 19960216 ACCESSION NUMBER: 0000950133-96-000108 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960213 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NASTECH PHARMACEUTICAL CO INC CENTRAL INDEX KEY: 0000737207 STANDARD INDUSTRIAL CLASSIFICATION: PATENT OWNERS & LESSORS [6794] IRS NUMBER: 112658569 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-13789 FILM NUMBER: 96516708 BUSINESS ADDRESS: STREET 1: 129 OSER AVE CITY: HAUPPAUGE STATE: NY ZIP: 11788 BUSINESS PHONE: 5162730101 MAIL ADDRESS: STREET 1: 45 DAVIDS DRIVE CITY: HAUPPAUGE STATE: NY ZIP: 11788 10QSB 1 NASTECH PHARMACEUTICAL FORM 10-QSB FOR 12/31/95. 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION FORM 10-QSB Quarterly or Transitional Report / X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended December 31, 1995 ---------------------------------------------------------- or / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 0-13789 NASTECH PHARMACEUTICAL COMPANY INC. (Exact name of registrant as specified in its charter) Delaware 11-2658569 -------- ---------- (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 45 Davids Drive, Hauppauge, New York 11788 - ------------------------------------- ----- (Address of principal executive offices) (Zip Code) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (516) 273-0101 SECURITIES REGISTERED UNDER SECTION 12(b) OF THE EXCHANGE ACT: NONE SECURITIES REGISTERED UNDER SECTION 12(g) OF THE EXCHANGE ACT:
Name of each exchange on Title of each class which registered ------------------- ---------------- Common Stock, $.002 par value Nasdaq Small-Cap Market
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 common stock, as of the latest practicable date:
DATE CLASS SHARES OUTSTANDING ---- ----- ------------------ 12/31/95 Common stock - $.006 par value 3,221,447
2 NASTECH PHARMACEUTICAL COMPANY INC. DECEMBER 31, 1995 TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION: PAGE NO. ITEM 1. Balance Sheets as of December 31, 1995 and June 30, 1995 1 Statements of Operations Six Months and Three Months Ended December 31, 1995 and 1994 2 Statement of Stockholders' Equity Years Ended June 30, 1995 and 1994 and the Six Months ended December 31, 1995 3 Statement of Cash Flows Six Months Ended December 31, 1995 and 1994 4 Notes to Financial Statements 5 - 6 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 - 9 PART II - OTHER INFORMATION: ITEM 1. Legal Proceedings 10 ITEM 2. Changes in Securities 10 ITEM 3. Defaults Upon Senior Securities 10 ITEM 4. Submission of Matters to a Vote 10 of Security Holders ITEM 5. Other Information 10 ITEM 6. Exhibits and Reports on Form 8-K 10 Signatures 11
3 NASTECH PHARMACEUTICAL COMPANY INC. BALANCE SHEET (UNAUDITED)
DECEMBER 31, JUNE 30, 1995 1995 (UNAUDITED) (*) ------------ ------------ CURRENT ASSETS: Cash and cash equivalents $420,415 $819,985 Short-Term investments 4,214,708 4,198,869 Royalties receivable 707,604 759,349 Prepaid expenses and sundry 28,132 63,670 ------------ ------------ 5,370,859 5,841,873 ------------ ------------ PROPERTY AND EQUIPMENT 306,428 219,283 Less: Accumulated depreciation and amortization 75,583 45,857 ------------ ------------ 230,845 173,426 ------------ ------------ OTHER ASSETS: Security deposits 14,500 19,613 ------------ ------------ $5,616,204 $6,034,912 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $541,366 565,185 Royalties payable 346,575 368,630 Notes payable 5,852 40,942 Accrued interest payable 18,635 42,966 Accrued expenses and sundry liabilities 229,956 218,856 Current maturities of long-term debt 183,820 161,186 ------------ ------------ 1,326,204 1,397,765 ------------ ------------ LONG-TERM DEBT - NET OF CURRENT MATURITIES 181,791 348,965 ------------ ------------ STOCKHOLDERS' EQUITY Common stock - par value $.006 per share, authorized 6,000,000 shares, issued and outstanding 3,221,447 shares at September 30, 1995 and June 30, 1995, respectively 19,329 19,329 Additional paid-in capital 10,575,159 10,575,159 Accumulated deficit (6,486,279) (6,306,306) ------------ ------------ 4,108,209 4,288,182 ------------ ------------ $5,616,204 $6,034,912 ============ ============
*The Balance Sheet as of June 30, 1995 has been summarized from the Company's audited Balance Sheet as of that date. 1 4 NASTECH PHARMACEUTICAL COMPANY INC. STATEMENT OF OPERATIONS (UNAUDITED)
Six Months Ended Three Months Ended December 31, December 31, 1995 1994 1995 1994 ------------ ------------ ------------ ------------ REVENUES License Fee, Royalty and Research Income $1,521,621 $1,212,448 $703,162 $558,260 Interest Income 125,552 112,839 62,501 58,791 ------------ ------------ ------------ ------------ 1,647,173 1,325,287 765,663 617,051 ------------ ------------ ------------ ------------ COSTS AND EXPENSES Research and Development 705,384 298,241 422,125 158,259 Royalties 737,773 561,609 346,582 264,640 ------------ ------------ ------------ ------------ 1,443,157 859,850 768,707 422,899 General and Administrative 361,544 356,070 189,942 197,339 Interest Expense 22,445 19,705 9,339 8,473 ------------ ------------ ------------ ------------ 1,827,146 1,235,625 967,988 628,711 ------------ ------------ ------------ ------------ INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES (179,973) 89,662 (202,325) (11,660) PROVISION FOR INCOME TAXES 5,000 ------------ ------------ ------------ ------------ NET INCOME (LOSS) ($179,973) $84,662 ($202,325) ($11,660) ============ ============ ============ ============ NET INCOME (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE ($0.06) $0.03 ($0.06) $0.00 ============ ============ ============ ============ AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT SHARES 3,221,447 3,268,077 3,221,447 3,114,366 ============ ============ ============ ============
See accompanying notes to financial statements. 2 5 NASTECH PHARMACEUTICAL COMPANY INC. STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) FOR THE YEARS ENDED JUNE 30, 1995 AND 1994 and the Six Months Ended December 31, 1995 (UNAUDITED)
Common Stock Additional ------------------------- Paid-In Accumulated Shares Amount Capital Deficit Total ------ ------ ------------ ------- ----- BALANCE - June 30, 1993 1,428,723 $8,572 $5,691,150 ($6,434,508) ($734,786) Stock issued in connection with private placement at $1.20 per share 200,000 1,200 203,814 205,014 Additional shares issued in connection with public offering at $3.75 per share 1,485,000 8,910 4,627,242 4,636,152 Fractional shares redeemed in connection with reverse stock split (2,038) (12) (4,988) (5,000) Net income 207,647 207,647 ---------- ---------- ----------- ------------ ---------- BALANCE JUNE 30, 1994 3,111,685 18,670 10,517,218 (6,226,861) 4,309,027 Stock issued in connection with exercise of stock options 109,999 660 57,940 58,600 Fractional shares redeemed in connection with reverse stock split (237) (1) 1 Net loss (79,445) (79,445) ---------- ---------- ----------- ------------ ---------- BALANCE JUNE 30, 1995 3,221,447 19,329 10,575,159 (6,306,306) 4,288,182 Net Loss- Six Months Ended December 31, 1995 (179,973) (179,973) ---------- ---------- ----------- ------------ ---------- 3,221,447 $19,329 $10,575,159 ($6,486,279) $4,108,209 ========== ========== =========== ============ ==========
See accompanying notes to Financial Statements 3 6 NASTECH PHARMACEUTICAL COMPANY INC. STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED DECEMBER 31, (UNAUDITED)
1995 1994 ------ ------- OPERATING ACTIVITIES: Net income (loss) ($179,973) $84,662 Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation and amortization 29,726 11,362 Changes in assets and liabilities: Royalties receivable 51,745 168,252 Prepaid expenses and sundry 35,538 13,816 Accounts payable (23,819) (9,882) Royalties payable (22,055) (83,430) Accrued interest payable (24,331) (10,823) Accrued expenses and sundry liabilities 11,100 (24,830) ------------ ------------ Net cash provided (used) by operating activities (122,069) 149,127 ------------ ------------ INVESTING ACTIVITIES: Short-term investments - aquisitions (4,150,442) (5,654,553) Short-term investments - redemptions 4,134,603 4,408,651 Property, plant and equipment (87,145) (12,017) Other Assets 5,113 ---- ------------ ------------ Net cash provided (used) by investing activities 97,871 (1,257,919) ------------ ------------ FINANCING ACTIVITIES: Repayment of debt (179,630) (111,696) Proceeds from sale of common stock ---- 1,699 ------------ ------------ Net cash provided (used) by financing activities (179,630) (109,997) ------------ ------------ NET DECREASE IN CASH (399,570) (1,218,789) CASH - BEGINNING 819,985 3,214,929 ------------ ------------ CASH - ENDING $420,415 $1,996,140 ============ ============ Supplemental Cash Flow Information: Interest paid $46,796 $29,925 ============ ============
See accompanying notes to financial statements 4 7 NASTECH PHARMACEUTICAL COMPANY INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) DECEMBER 31, 1995 (1) General The accompanying financial information should be read in conjunction with the financial statements, including the notes thereto, for the year ended June 30, 1995. The information furnished in this report reflects all adjustments (consisting of only normal recurring accruals) which are, in the opinion of management, necessary for a fair statement of the results for the interim periods. (2) Reverse Stock Split and Increase in Authorized Shares On November 8, 1993 shareholders approved a one for three reverse split of the common stock of the Company and an increase in the newly authorized shares to 6,000,000. Numbers of shares and per share data disclosed herein have been retroactively adjusted to reflect the stock split for all periods presented. (3) Public Offering and Private Placement The Company completed a Public Offering of 742,500 units of common stock and warrants in Fiscal 1994. The units in the aggregate consisted of 1,485,000 shares of common stock and 1,485,000 common stock warrants. Each Warrant entitles the holder to purchase one share of Common Stock at a price of $5.50 at any time through December 7, 1996. The Warrants are subject to redemption by the Company at $.05 per Warrant on 30 days' prior written notice if the closing bid price for the Common Stock, as reported on NASDAQ is in excess of $5.63 for 20 consecutive trading days ending within 10 days of the notice of redemption of the Warrants. The Company sold to the representative of the underwriter for the offering at a price of $67.50, warrants to purchase one unit for every ten units sold in the offering up to an aggregate of 67,500 units at an exercise price per warrant of $8.25 per Unit (110% of the initial public offering price per unit), exercisable for a period of four years commencing December 7, 1994. The Company had a private placement of 200,000 shares of common stock on September 14, 1993 resulting in net proceeds to the Company of $205,000. The proceeds were used to provide funding for the costs incurred related to the public offering. 5 8 The Company is authorized to issue up to 100,000 shares of Preferred Stock the designations, powers, preferences and rights of which may be determined, from time to time, by the Company's Board of Directors. In accordance with its agreement with Basil, the Company may not declare or pay any dividends. (4) Net Income Per Common and Common Equivalent Share Net income per common and common equivalent share are calculated using the weighted average number of common shares outstanding during the period and the net additional number of shares which would be issuable upon the exercise of stock options and warrants, assuming that the Company used the proceeds received to purchase additional shares at market value. For the six and three months ended December 31, 1995 and the three months ended December 31, 1994 the effect of stock options and warrants is not included because it would be antidilutive. (5) Income Taxes At December 31, 1995, the Company has net operating loss carryforwards of approximately $4,600,000 for income tax purposes, available to reduce future taxable income, expiring from 1998 through 2011. Federal income taxes normally provided for the income have been offset by the effect of the use of the loss carryforwards at December 31, 1994. The income tax provision for the six months ended December 31, 1994 represents the New York State minimum tax on income which does not allow a deduction for the net operating loss carryforward. 6 9 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis provides information which the Company's management believes is relevant to an assessment and understanding of the Company's results of operations and financial condition. This discussion should be read in conjunction with the financial statements and notes thereto included elsewhere herein. RESULTS OF OPERATIONS SIX MONTHS ENDED DECEMBER 31, 1995 COMPARED WITH SIX MONTHS ENDED DECEMBER 31, 1994 During the six months ended December 31, 1995, the Company continued to conduct the pharmaceutical and pharmacological research and/or assemble the technical and reference data required to gain marketing approval from the appropriate regulatory agencies for four new drug products. The Company conducted bioavailability and toxicity studies in animals with respect to its nasal formulation of doxylamine succinate. The company also has been generating preclinical data in preparation for the submission of an IND for its nasal formulation of chlorpheniramine maleate. In the six months ended December 31, 1995, the Company has expended $705,384 for its preclinical and clinical research and development. This compares with $298,241 expended in the corresponding prior year period. This increase in research and development activity reflects the Company's commitment to accelerate its efforts to develop its nasal pharmaceutical formulations and should be expected to continue. Proceeds from the sale of the Company's research, and licensing of its proprietary technology, have significantly increased in the current fiscal year compared to the prior year. Revenue of $1,521,621 was earned by the Company in the current six month period as a result of licensing, royalty and research income. This revenue level reflects a 25.5% increase from revenues of $1,212,448 in the corresponding prior year period. Interest income earned in the six months ended December 31, 1995 was $125,552 compared to $112,839 earned in the six months ended December 31, 1994. The increase is attributable to changes in interest rates and amounts of excess funds invested. Total revenue was $1,647,173 and $1,325,287 for the six months ended December 31, 1995 and 1994, respectively. The Company earned revenues of $1,502,000 from royalties received from the Bristol-Myers Squibb Company ("BMS") for the six months ended December 31, 1995 ($1,123,000 in the corresponding period in fiscal 1995) pursuant to a sublicense agreement (the "BMS Agreement") for a nasal formulation of butorphanol, a narcotic analgesic. BMS received marketing approval from the FDA for butorphanol tartrate, which its markets as Stadol(R)NS(TM), in December, 1991. Management anticipates that a significant portion of its revenues for the current fiscal year and some additional periods will be derived from expected royalties from the BMS Agreement. Royalties from the BMS Agreement commenced in the quarter ended December 31, 1992 and have increased since that time 7 10 based upon sales by BMS of Stadol(R) NS(TM). However, there is no assurance that such sales will continue to increase or be maintained and therefore, there is no assurance of any future minimum royalties. The Company has recognized no earnings as a result of the discontinued marketing of the Company's non-prescription vitamin B-12 nasal gel by Nature's Bounty, Inc. ("NB"). This compares to revenues of $67,000 earned from this product in the comparable period of the prior fiscal year. The Company does not expect any future royalties from NB. Royalties expense increased in the six months ended December 31, 1995 to $737,773 from $561,609 in the corresponding period in fiscal 1995 as the royalties received from BMS are also subject to a separate license agreement between the Company and a third party. As a result, royalties expense in connection with Stadol(R)NS(TM) will increase approximately in proportion to royalty income. General and administrative expenses increased slightly in the current six month period to $361,544 as compared to $356,070 in the corresponding period of the prior fiscal year. As a result of the availability of funds provided by increased revenue as well as the liquidity provided by the December 1993 public offering, the company has budgeted an increase in its research and development efforts and related general and administrative support. It is anticipated that as expenditures for research and development and supporting functions increase, the Company's net income will be negatively affected. THREE MONTHS ENDED DECEMBER 31, 1995 COMPARED WITH THREE MONTHS ENDED DECEMBER 31, 1994 The Company has expended $422,125 for its preclinical and clinical research and development in the current three month period. This compares with $158,259 expended in the comparable period of the prior fiscal year. This increase in research and development activity reflects the Company's commitment to accelerate its efforts to develop its nasal pharmaceutical formulations and should be expected to continue. Proceeds from the sale of the Company's research, and licensing of its proprietary technology, have significantly increased in the three months ended December 31, 1995 compared to the prior year. Revenue of $703,162 was earned by the Company in the current three month period as a result of licensing, royalty and research income. This revenue level reflects a 26.0% increase from revenues of $558,260 in the comparable period of the prior fiscal year. Interest income earned in the three months ended December 31, 1995 was $62,501, compared to $58,791 earned in the comparable period of the prior fiscal year. Total revenue was $765,663 and $617,051 for three months ended December 31, 1995 and 1994 respectively. The Company earned revenues of $708,000 from royalties received from BMS for the three months ended December 31, 1995 ($529,000 in fiscal 1995) pursuant to the BMS agreement. 8 11 The Company has recognized no earnings as a result of the discontinued marketing of the Company's non-prescription vitamin B-12 nasal gel by NB. This compares to revenues of $32,000 earned from this product in the comparable period of the prior fiscal year. Royalties expense increased in the three months ended December 31, 1995 to $346,582 from $264,640 in fiscal 1995 as the royalties received from BMS are also subject to a separate license agreement between the Company and a third party. As a result, royalties expense in connection with Stadol(R)NS(TM) will increase in proportion to royalty income. General and administrative expenses slightly decreased in the three months ended December 31, 1995 to $189,942 as compared to $197,339 in the comparable period of the prior fiscal year. LIQUIDITY AND CAPITAL RESOURCES At December 31, 1995, the Company had cash and cash equivalents of $420,415 as compared to $819,985 at June 30, 1995. The Company also had short-term investments of $4,214,708 at December 31, 1995, (compared with $4,198,869 at June 30, 1995). The combined cash and short-term investments primarily consisted of the net proceeds of the Company's December, 1993 public offering. In addition, the Company had royalties receivable of $707,604 at December 31, 1995 compared to $759,349 at June 30, 1995. The royalties receivable are principally royalty income from the BMS Agreement. As of December 31, 1995, the Company had working capital of $4,044,655. Management believes that the Company has adequate resources to meet expected needs and to fund its anticipated research and development efforts for the next eighteen months. The Company has been able to maintain its operations and its continued liquidity is dependent on its ability to control its operating costs and the receipt of revenue from Bristol-Myers Squibb Company as set forth above. 9 12 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None ITEM 2. CHANGES IN SECURITIES None ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K None 10 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, duly authorized at Hauppauge, New York on the 9th day of February, 1996. NASTECH PHARMACEUTICAL COMPANY INC. BY: /s/ ------------------------------------ Dr. VINCENT D. ROMEO, President and Chief Executive Officer BY: /s/ ------------------------------------- CAROL WENIG, Assistant Secretary, Treasurer & Assistant Principal Financial Officer 11 EX-27 2 FINANCIAL DATA SCHEDULE.
5 6-MOS JUN-30-1996 JUL-01-1995 DEC-31-1995 420415 4214708 707604 0 0 5370859 306428 75583 5616204 1326204 181791 0 0 19329 4088880 5616204 0 1647173 0 0 1443157 0 22445 (179973) 0 0 0 0 0 (179973) (.06) 0
-----END PRIVACY-ENHANCED MESSAGE-----