-----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, BoFYtO3uZoCZF5dR7wNmVpkQsfNQS3SNGjVklQV2cKk7/k3R8yz2/lXb6MBsqyx4 HEf1xSQvnSYbW0vntenXOQ== 0000950133-96-002347.txt : 19961104 0000950133-96-002347.hdr.sgml : 19961104 ACCESSION NUMBER: 0000950133-96-002347 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961101 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NASTECH PHARMACEUTICAL CO INC CENTRAL INDEX KEY: 0000737207 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] 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: 96652021 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 COMPANY INC. FORM 10-QSB 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 September 30, 1996 ------------------------------------------------------ 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, $.006 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 ---- ----- ------------------ 9/30/96 Common stock - $.006 par value 3,868,005
2 NASTECH PHARMACEUTICAL COMPANY INC. SEPTEMBER 30, 1996 TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION: PAGE NO. ITEM 1. Balance Sheets as of September 30, 1996 and June 30, 1996 3 Statements of Operations Three Months Ended September 30, 1996 and September 30, 1995 4 Statement of Stockholders' Equity Year Ended June 30, 1996 and the Three Months ended September 30, 1996 5 Statement of Cash Flows Three Months Ended September 30, 1996 and September 30, 1995 6 Notes to Financial Statements 7 - 8 ITEM 2. Management's Discussion and 9 - 11 Analysis of Financial Condition and Results of Operations PART II - OTHER INFORMATION: ITEM 1. Legal Proceedings 12 ITEM 2. Changes in Securities 12 ITEM 3. Defaults Upon Senior Securities 12 ITEM 4. Submission of Matters to a Vote 12 of Security Holders ITEM 5. Other Information 12 ITEM 6. Exhibits and Reports on Form 8-K 12 Signatures 13
3 NASTECH PHARMACEUTICAL COMPANY INC. BALANCE SHEET (UNAUDITED) ASSETS
SEPTEMBER 30, JUNE 30, 1996 1996 ------------ ------------ CURRENT ASSETS: Cash and cash equivalents $1,327,143 $4,031,252 Short-term investments 5,958,156 3,954,945 Royalties receivable 1,049,031 1,089,966 Prepaid expenses and sundry 102,592 55,370 ------------ ------------ 8,436,922 9,131,533 ------------ ------------ PROPERTY AND EQUIPMENT 397,683 321,154 Less: Accumulated depreciation and amortization 115,614 100,391 ------------ ------------ 282,069 220,763 ------------ ------------ OTHER ASSETS: Security deposits 14,500 14,500 ------------ ------------ $8,733,491 $9,366,796 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $212,215 $499,815 Royalties payable 474,294 521,127 Notes payable 20,109 32,000 Accrued interest payable - - - 33,216 Accrued expenses and sundry liabilities 119,888 359,389 Current maturities of long-term debt 23,625 216,608 ------------ ------------ 850,131 1,662,155 ------------ ------------ LONG-TERM DEBT - NET OF CURRENT MATURITIES 20,881 135,907 ------------ ------------ STOCKHOLDERS' EQUITY Common stock - par value $.006 per share, authorized 6,000,000 shares, issued and outstanding 3,868,005 shares and 3,826,433 shares at September 30, 1996 and June 30, 1996 respectively 23,208 22,959 Additional paid-in capital 13,947,516 13,733,556 Accumulated deficit (6,108,245) (6,187,781) ------------ ------------ 7,862,479 7,568,734 ------------ ------------ $8,733,491 $9,366,796 ============ ============
See accompanying notes to financial statements. 3 4 NASTECH PHARMACEUTICAL COMPANY INC. STATEMENT OF OPERATIONS (UNAUDITED)
Three Months Ended September 30, 1996 1995 ----------- --------- REVENUES License Fee, Royalty and Research Income $1,059,213 $818,459 Interest Income 102,447 63,051 ----------- --------- 1,161,660 881,510 ----------- --------- COSTS AND EXPENSES Research and Development 340,613 283,259 Royalties 474,294 391,191 ----------- --------- 814,907 674,450 General and Administrative 258,673 168,602 Interest Expense 8,544 13,106 ----------- --------- 1,082,124 856,158 ----------- --------- INCOME BEFORE PROVISION FOR INCOME TAXES 79,536 25,352 PROVISION FOR INCOME TAXES - - - 3000 ----------- --------- NET INCOME $79,536 $22,352 =========== ========= NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE $.02 $.01 =========== ========= AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT SHARES 4,628,238 3,849,776 =========== =========
See accompanying notes to financial statements. 4 5 NASTECH PHARMACEUTICAL COMPANY INC. STATEMENT OF STOCKHOLDER'S EQUITY FOR THE YEAR ENDED JUNE 30, 1996 AND THE THREE MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED)
Common Stock Additional -------------------------- Paid-In Accumulated Shares Amount Capital Deficit Total ----------- -------- ------------ ------------ ---------- BALANCE JUNE 30, 1995 3,221,447 $19,329 $10,575,159 ($6,306,306) $4,288,182 Stock issued in connection with exercise of warrants 605,173 3,631 3,158,396 3,162,027 Fractional shares redeemed in connection with reverse stock split (187) (1) 1 Net income 118,525 118,525 ----------- -------- ------------ ------------ ---------- BALANCE JUNE 30, 1996 3,826,433 22,959 13,733,556 (6,187,781) 7,568,734 Stock issued in connection with exercise of warrants 41,572 249 213,960 214,209 Net Income 79,536 79,536 ----------- -------- ------------ ------------ ---------- BALANCE SEPTEMBER 30, 1996 3,868,005 $23,208 $13,947,516 ($6,108,245) $7,862,479 =========== ======== ============ ============ ==========
See accompanying notes to financial statements 5 6 NASTECH PHARMACEUTICAL COMPANY INC. STATEMENT OF CASH FLOWS FOR THE THREE MONTHS ENDED SEPTEMBER 30 (UNAUDITED)
1996 1995 ------------ ------------ OPERATING ACTIVITIES: Net income $79,536 $22,352 Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation and amortization 15,223 14,863 Changes in assets and liabilities: Royalties receivable 40,935 (55,528) Prepaid expenses and sundry (47,222) 29,720 Accounts payable (287,600) 161,955 Royalties payable (46,833) 22,355 Note payable (11,891) - - - Accrued interest payable (33,216) (31,703) Accrued expenses and sundry liabilities (239,501) (39,570) ------------ ------------ Net cash provided (used) by operating activities (530,569) 124,444 ------------ ------------ INVESTING ACTIVITIES: Property, plant and equipment (76,529) (82,721) Short-term investments - aquisitions (5,958,156) (2,236,590) Short-term investments - redemptions 3,954,945 2,239,249 ------------ ------------ Net cash used by investing activities (2,079,740) (80,062) ------------ ------------ FINANCING ACTIVITIES: Repayment of debt (308,009) (158,091) Exercise of warrants 214,209 - - - ------------ ------------ Net cash used by financing activities (93,800) (158,091) ------------ ------------ NET DECREASE (2,704,109) (113,709) CASH AND CASH EQUIVALENTS - BEGINNING 4,031,252 819,985 ------------ ------------ CASH AND CASH EQUIVALENTS - ENDING $1,327,143 $706,276 ============ ============ Supplemental Cash Flow Information: Interest paid $41,713 $42,946 ============ ============
See accompanying notes to financial statements 6 7 NASTECH PHARMACEUTICAL COMPANY INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) SEPTEMBER 30, 1996 (1) General The accompanying financial information should be read in conjunction with the audited financial statements, including the notes thereto, for the year ended June 30, 1996. 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) Public Offering 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 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. (3) 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. 7 8 (4) Income Taxes At September 30, 1996, the Company has net operating loss carryforwards of approximately $4,200,000 for income tax purposes, available to reduce future taxable income, expiring from 1998 through 2010. Federal income taxes normally provided for the income have been offset by the effects of the reduction of the valuation allowance at September 30, 1996 and 1995. The income tax provision for the three months ended September 30, 1995 represents the New York State minimum tax on income which formerly did not allow a deduction for the net operating loss carryforward. 8 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 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. FORWARD-LOOKING STATEMENTS Some of the statements made in this form 10-QSB are forward-looking in nature, including but not limited to the Company's business strategy, product development, plans concerning the commercialization of products, certain financial information and other statements that are not subject to the future occurrence of certain events and scientific results, some or all of which are not predictable or within the Company's control; therefore, actual results may differ materially from those anticipated in any forward-looking statements. OVERVIEW The company is engaged in research and clinical testing activities in an effort to develop nasally administered forms of phamaceuticals that are currently available only in oral, injectable or other dosage forms. The Company's objective is to expand the applications of nasal drug delivery in the over-the-counter ("OTC") and prescription markets and otherwise become a leading drug delivery specialist. The Company believes that advantages associated with the nasal delivery of certain pharmaceuticals include rapid systemic absorption, lower required dosages and quicker onset of desired effect. Prior to the marketing of any nasally administered form of a pharmaceutical agent in the United States, Food and Drug Administration ("FDA") approval must be obtained. A research and development program is currently in progress with respect to six pharmaceuticals for which the Company has patent rights for nasal administration. RESULTS OF OPERATIONS Three Months Ended September 30, 1996 Compared to Three Months Ended September 30, 1995 Revenues Revenues for the three months ended September 30, 1996 increased by $280,000 to $1,162,000, or 31.8% over such revenues for the similar period in fiscal 1996. This increase was due to increases in license fee, royalty and research income which for the three months ended September 30, 1996 increased by $241,000 to $1,059,000, or 29.5% , over such income for the similar period in fiscal 1996. The license fee, royalty and research income increase primarily was due to royalty income received from Bristol-Myers Squibb Company ("BMS"), pursuant to a sublicense agreement (the "BMS" Agreement") for a nasal formulation of Stadol(R)NS(TM), a narcotic analgesic. The increased revenue associated with the BMS Agreement primarily was due to increased sales of Stadol NS and improved wholesale pricing of that product. Royalty income received from the BMS 9 10 Agreement for the current three month period increased by $171,000 to $966,000, or 21.5% over such income for the similar period in fiscal 1996. Interest income for the current three month period increased by $39,000 to $102,000, or 62.5%, compared to such income for the similar period in fiscal 1996 due to increased funds invested. Research and development expense. In the first quarter of fiscal 1997, the Company continued to conduct the pharmaceutical and pharmacological research and assemble the technical and reference data required to gain marketing approval from the appropriate regulatory agencies for six new drug products. Preclinical and clinical research and development expense for the current three month period increased by $57,000 to $341,000, or 20.1%, over such expense for the similar period in fiscal 1996. Such increase was due to the execution of the Company's strategy to accelerate development of its nasal pharmaceutical formulations. Royalties Expense Royalties expense for the three months ended September 30, 1996 increased by $83,000 to $474,000, or 21.2% over such expense for the similar period in fiscal 1996. Such increase was due to the increase in royalties paid by the Company to the University of Kentucky Research Foundation ("UKRF") in connection with the BMS Agreement. Pursuant to a separate license agreement between the Company and UKRF, the Company pays UKRF royalties based on royalty income received by the Company under the BMS Agreement. Accordingly, royalties expense in connection with the BMS Agreement increases approximately in proportion to royalty income. General and administrative expense. General and administrative expense for the three months ended September 30, 1996 increased by $90,000 to $259,000, or 53.6% over such expense for the three months ended September 30, 1995. As a percentage of revenues, general and administrative expense increased to 22.3% for current three month period from 19.1% for the similar period in fiscal 1996. LIQUIDITY AND CAPITAL RESOURCES At September 30, 1996, the Company's primary sources of liquidity included cash and cash equivalents and short-term investments of $7.3 million compared to $8 million at June 30, 1996. These consist primarily of the funds received from the recent exercise of warrants outstanding and the net proceeds of the Company's December, 1993 public offering. Royalty income receivable at June 30, 1996, totaled $1.0 million, principally royalty income pursuant to the BMS agreement. As a result of the availability of funds provided by increased revenue as well as the liquidity provided by the Company's December 1993 public offering and the exercise of the related warrants, the Company has budgeted an increase in its research and development efforts and related general and administrative support. 10 11 At September 30, 1996, the Company had working capital of $7.6 million. Management anticipates that the net proceeds of the 1993 Offering, including exercise of warrants, together with cash generated from operations will provide adequate funds for the Company's anticipated needs, including working capital, for at least 12 months. Management also believes that cash provided from operations will be sufficient to satisfy all existing debt obligations as they mature. Based upon the anticipated future financing requirements of the Company, management expects that the Company will, from time to time, engage in additional financings of a character and in amounts to be determined. 11 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 12 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 30th day of October, 1996. NASTECH PHARMACEUTICAL COMPANY INC. BY: /s/ Dr. Vincent D. Romeo ------------------------------------------ Dr. VINCENT D. ROMEO, President and Chief Executive Officer BY: /s/ Joel Girsky ------------------------------------------ JOEL GIRSKY, Secretary, Treasurer 13 EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS JUN-30-1997 JUL-01-1996 SEP-30-1996 1327143 5958156 1049031 0 0 8436922 397683 115614 8733491 850131 20881 0 0 23208 7839271 8733491 0 1161660 0 0 814907 0 8544 79536 0 0 0 0 0 79536 0 0
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