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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 10-Q
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE PERIOD ENDED MARCH 31, 2000
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)
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)
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 April 30, 2000: 17,055,511.
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COULTER PHARMACEUTICAL, INC.
INDEX
PART I. FINANCIAL INFORMATION
PAGE NO.
--------
Item 1. Consolidated Financial Statements and Notes......................................................... 3
Consolidated Balance Sheets -- March 31, 2000 and December 31, 1999................................ 3
Consolidated Statements of Operations -- for the three months ended March 31, 2000
and 1999 and for the period from inception (February 16, 1995) to March 31, 2000.................... 4
Consolidated Statements of Cash Flows - for the three months
ended March 31, 2000 and 1999 and for the period from inception
(February 16, 1995) to March 31, 2000............................................................... 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 6. Exhibits and Reports on Form 8-K.................................................................... 12
SIGNATURES....................................................................................................... 13
2
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
MARCH 31, DECEMBER 31,
2000 1999
------------- -------------
(UNAUDITED) (NOTE 1)
Current assets:
Cash and cash equivalents ...................................................... $ 46,250 $ 22,168
Short-term investments ......................................................... 21,976 60,257
Prepaid expenses and other current assets ...................................... 10,374 5,279
------------- -------------
Total current assets ................................................... 78,600 87,704
Property and equipment, net ...................................................... 20,590 21,029
Employee loans receivable ........................................................ 1,227 1,274
Other assets ..................................................................... 273 198
------------- -------------
$ 100,690 $ 110,205
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ............................................................... $ 5,984 $ 6,504
Accrued liabilities ............................................................ 5,670 5,208
Current portion of equipment financing obligations and debt facility ........... 2,253 2,258
------------- -------------
Total current liabilities .............................................. 13,907 13,970
Non-current portion of equipment financing obligations and debt facility ......... 8,825 9,428
Commitments
Stockholders' equity:
Preferred stock, issuable in series, $.001 par value:
3,000,000 shares authorized; none outstanding at March 31, 2000
and December 31, 1999 ........................................................ -- --
Common stock, $.001 par value: 30,000,000 shares authorized;
17,054,597 shares and 16,896,438 shares issued and outstanding at
March 31, 2000 and December 31, 1999, respectively .......................... 17 17
Additional paid-in capital ..................................................... 186,688 184,524
Accumulated other comprehensive income (loss)................................... (219) (215)
Deferred compensation .......................................................... (368) (296)
Deficit accumulated during the development stage ............................... (108,160) (97,223)
------------- -------------
Total stockholders' equity ............................................. 77,958 86,807
------------- -------------
$ 100,690 $ 110,205
============= =============
See accompanying notes.
3
4
COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
FOR THE PERIOD
THREE MONTHS ENDED FROM INCEPTION
MARCH 31, (FEBRUARY 16, 1995)
2000 1999 TO MARCH 31, 2000
-------------------------------------------------------
Revenues:
Corporate partner revenues ............................. $ -- $ -- $ 34,250
Revenues from unconsolidated joint business ............ 4,155 (508) 11,354
------------ ------------ ------------
Total revenues ..................................... 4,155 (508) 45,604
Operating expenses:
Research and development ............................... $ 11,753 $ 9,064 $ 124,670
Selling, general and administrative .................... 4,125 3,264 42,030
------------ ------------ ------------
Total operating expenses ............................... 15,878 12,328 166,700
Interest income and other, net ......................... 786 1,431 12,936
------------ ------------ ------------
Net loss ............................................... $ (10,937) $ (11,405) $ (108,160)
============ ============ ============
Basic and diluted net loss per
share ................................................ $ (0.65) $ (0.69)
============ ============
Shares used in computing basic and
diluted net loss per share ........................... 16,940 16,590
============ ============
See accompanying notes.
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COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(UNAUDITED)
(IN THOUSANDS)
THREE MONTHS FOR THE PERIOD
ENDED MARCH 31, FROM INCEPTION
----------- ----------- (FEB. 16, 1995)
2000 1999 TO MAR. 31, 2000
----------- ----------- ----------------
Cash flows from operating activities:
Net loss ............................................................... $ (10,937) $ (11,405) $ (108,160)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization ....................................... 931 380 4,454
Amortization of deferred compensation ............................... 64 113 2,531
Loss on sale of equipment ........................................... -- 38 40
Changes in operating assets and liabilities:
Prepaid expenses and other current assets ........................... (5,095) (1,705) (10,374)
Employee loans receivable ........................................... 47 41 (1,227)
Other assets ........................................................ (75) (266) (273)
Accounts payable .................................................... (520) 439 5,984
Accrued liabilities ................................................. 462 838 5,670
----------- ----------- -----------
Net cash used in operating activities .......................... (15,123) (11,527) (101,355)
----------- ----------- -----------
Cash flows from investing activities:
Purchases of short-term investments .................................... -- (95,108) (271,359)
Maturities of short-term investments ................................... 38,278 32,852 232,444
Sales of short-term investments ........................................ -- 2,999 16,717
Purchases of property and equipment .................................... (492) (3,765) (25,086)
Proceeds from sale of equipment ........................................ -- 5 5
----------- ----------- -----------
Net cash used in investing activities .......................... 37,786 (63,017) (47,279)
----------- ----------- -----------
Cash flows from financing activities:
Payments of equipment financing obligations and debt facility .......... (609) (95) (3,042)
Borrowings under equipment financing obligations and debt facility ..... -- -- 14,120
Proceeds from issuance of convertible preferred stock, net ............. -- -- 28,355
Proceeds from issuance of common stock, net ............................ 2,028 287 155,451
----------- ----------- -----------
Net cash provided by financing activities ...................... 1,419 192 194,884
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents ..................... 24,082 (74,352) 46,250
Cash and cash equivalents at beginning of period ......................... 22,168 89,808 --
----------- ----------- -----------
Cash and cash equivalents at end of period ............................... $ 46,250 $ 15,456 $ 46,250
=========== =========== ===========
Supplemental schedule of cash flow information:
Interest paid ............................................................ $ 282 $ 178 $ 1,771
Schedule of non-cash investing and financing activities:
Net exercise of warrants to purchase common stock ...................... $ -- $ -- $ 965
Acquisition of equipment pursuant to supplemental lease obligation ..... $ -- $ -- $ 78
Deferred compensation related to grant of certain stock options ........ $ 137 $ -- $ 2,899
See accompanying notes.
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COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
(UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The information at March 31, 2000, for the three month periods ended March
31, 2000 and 1999 and for the period from inception (February 16, 1995) to March
31, 2000 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 March 31, 2000 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, 1999 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
2000 Annual Meeting of Stockholders.
The consolidated balance sheet at December 31, 1999 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 (loss) 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 March 31, 2000 are as follows (in
thousands):
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
---------- ---------- ---------- ----------
Money market funds ................................... $ 7,303 $ -- $ -- $ 7,303
Commercial paper ..................................... 36,829 -- (5) 36,824
Corporate bonds ...................................... 2,092 -- (1) 2,091
Government bonds ..................................... 19,679 -- (213) 19,466
Certificate of deposits .............................. 2,510 -- -- 2,510
---------- ---------- ---------- ----------
Total ...................................... 68,413 -- (219) 68,194
Less amounts classified as cash equivalents .......... (46,224) -- 6 (46,218)
---------- ---------- ---------- ----------
Total short-term investments ......................... $ 22,189 $ -- $ (213) $ 21,976
========== ========== ========== ==========
Realized gains or losses on the sale of available-for-sale securities for
the three months ended March 31, 2000 and 1999 were insignificant.
At March 31, 2000 the contractual maturities of short term investments were
as follows (in thousands):
ESTIMATED FAIR
AMORTIZED COST VALUE
-------------- --------------
Due in one year or less .......... $ 2,010 $ 2,010
Due after one year ............... 20,179 19,966
------- -------
$22,189 $21,976
======= =======
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3. 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 ("NHL"). Under the terms of the agreement, the Company
and SB will jointly market and sell Bexxar in the United States following
regulatory approval and the two companies will share profits and losses equally.
Outside the United States, excluding Japan, the Company granted SB exclusive
marketing and distributing rights in return for milestone payments and product
royalties. The agreement provides for the sharing of certain costs related to
clinical and manufacturing development activities as well as a $15.0 million
credit line, all of which is available at March 31, 2000.
Upon signing of the agreement, the Company received a $34.25 million,
non-refundable license fee, all of which was recognized as corporate partner
revenues in fiscal 1998, as well as $7.25 million from the sale of the Company's
common stock. The Company may receive additional payments upon the achievement
of certain clinical development and regulatory milestones. As of March 31, 2000,
no milestone payments have been earned or received. Commencing with the year
ended December 31, 1999, the Company and SB prepared a joint profit and loss
statement to account for the sharing of sales, costs of goods sold and costs
relating to selling, marketing, distribution and certain other Bexxar related
activities. To date, such activities have principally consisted of
pre-commercializtion activities in anticipation of the potential launch of
Bexxar. The Company's share of the pretax operating results is included as a
component of revenues from unconsolidated joint business. Development expenses
for Bexxar will generally be shared by both companies, with the Company
retaining responsibility for funding certain predetermined development costs.
All such development expenses and the reimbursement is included as a component
of revenues from unconsolidated joint business.
The following is a summary of revenues from unconsolidated joint business
(in thousands):
FOR THE PERIOD FROM
INCEPTION
THREE MONTHS ENDED MARCH 31, (FEBRUARY 16, 1995)
2000 1999 TO MARCH 31, 2000
------------ ------------ -------------------
Co-promotion operating loss ....................................... $ (452) $ (558) $ (3,796)
Reimbursement of development expenses ............................. 4,607 50 15,150
------- ------ --------
Revenues from unconsolidated joint business ....................... $ 4,155 $ 508 $ 11,354
Reimbursement of development expenses for the period ended March 31, 2000
includes approximately $3.0 million related to the finalization of the 1999
manufacturing development activities. Revenue from unconsolidated joint business
earned in excess of payments received are classified as other current assets.
Reimbursements owed to SB are classified as accounts payable. Amounts receivable
from SB were approximately $9.5 million and $3.4 million at March 31, 2000 and
1999, respectively. Amounts payable to SB were $1.8 million and $0 at March 31,
2000 and 1999, respectively.
4. COMPREHENSIVE INCOME
As of January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income". For the three
months ended March 31, 2000 and 1999 total comprehensive loss amounted to $11.2
million and $11.4 million, respectively.
5. RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 133, Accounting for Derivative Instruments and Hedging Activities, which
establishes accounting and reporting standards for derivative instruments,
including forward exchange contracts, and hedging activities. In June 1999, the
FASB issued SFAS No. 137, Accounting for Derivative Instruments and Hedging
Activities -- Deferral of the Effective Date of FASB Statement No. 133. SFAS No.
133 is now effective for fiscal years beginning after June 15, 2000 and,
therefore, the Company will adopt this accounting standard effective January 1,
2001. Management has not yet determined the impact of SFAS No. 133 on its
financial position or results of operations.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial
Statements." Among other things, SAB No. 101 requires that license and other
upfront fees from research collaborators be recognized over the term of the
agreement unless the fee is in exchange for products delivered or services
performed
6. SUBSEQUENT EVENT
In April 2000, the Company and SB announced an amendment to their
collaboration for Bexxar. Under the amended agreement, the Company will
reacquire from SB rights outside of the U.S. for the development and
commercialization of Bexxar effective June 30, 2000. The Company continues to
retain all rights in Japan.
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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, 1999, filed on March 27, 2000.
OVERVIEW
Coulter Pharmaceutical is engaged in the development of novel drugs and
therapies for the treatment of cancer and autoimmune diseases. The Company
currently is developing a family of potential therapeutics based upon two drug
discovery programs; therapeutic antibodies and targeted oncologies. Within these
broad drug discovery programs, the Company is currently concentrating on several
distinct platform technologies; therapeutic antibodies consisting of both
conjugated and unconjugated antibody technology, and targeted oncologics based
on tumor activated pro-drug ("TAP") technology and tumor specific targeting
("TST") technology. The Company also is developing a portfolio of proprietary
ultra potent compounds which it believes will be suitable payloads for both its
TAP and TST platforms. Ultra potent compounds generally are at least 1,000 times
more potent than standard chemotherapeutic agents and are active against
resistant tumor cells.
The Company's most advanced product candidate, Bexxar(TM) (tositumomab,
iodine I 131 tositumomab) consists of a monoclonal antibody conjugated with a
radioisotope. The Company intends to seek initial approval of Bexxar for the
treatment of low-grade and transformed low-grade non-Hodgkin's lymphoma ("NHL")
in patients who have relapsed after, or are refractory to, chemotherapy. The
Company intends to seek expedited Biologics License Application ("BLA") review
and marketing approval for Bexxar, while simultaneously pursuing clinical trials
to expand the potential use of Bexxar to other indications. Bexxar is based upon
the antibody therapeutics program which originated at Coulter Corporation. In
1995, Coulter Pharmaceutical was incorporated and acquired worldwide rights to
Bexxar and related intellectual property, know-how and other assets from Coulter
Corporation. In 1997, Beckman Instruments, Inc. acquired Coulter Corporation,
and is now known as Beckman Coulter. In December 1998, the Company announced a
joint collaboration agreement with SmithKline Beecham Corporation ("SB")
granting SB joint marketing rights to Bexxar in the United States and exclusive
commercial rights internationally, except Japan. In April 2000, the Company and
SB announced that the Company will reacquire rights outside the U.S. for the
development and commercialization of Bexxar effective June 30, 2000.
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
due to expanded research and development efforts, preclinical studies and
clinical trials and development of manufacturing, marketing and sales
capabilities, if anticipated product sales revenues do not offset these costs.
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 March 31, 2000, the
Company's accumulated deficit was approximately $108.2 million.
RESULTS OF OPERATIONS
Revenues
Revenues from unconsolidated joint business represents the Company's share
of the pre-tax Bexxar operating losses generated from its joint business
arrangement with SB to co-promote Bexxar and the reimbursement from SB of its
share of the Company's Bexxar-related manufacturing development expenses.
Revenues from unconsolidated joint business in the three months ended March 31,
2000 was $4.2 million. This is comprised of SB reimbursement of Bexxar
manufacturing development expenses of $4.6 million, partially offset by a
co-promotion pre-tax operating loss of $452,000. The SB reimbursement in this
period includes approximately $3.0 million related to finalization of 1999
manufacturing development activities. In the 1999 period, reimbursement from SB
of Bexxar manufacturing development expenses of $50,000 did not offset the
co-promotion operating loss of $558,000. The Company did not record any
corporate partner revenues in the three-month periods ended March 31, 2000 and
1999. Revenue in future periods will depend on the achievement of contract
milestones, the timing and scope of reimbursable development activities and
commercial sales of Bexxar.
Operating Costs and Expenses
Research and development expenses were $11.8 million for the three-month
period ended March 31, 2000 compared to $9.1 million for the same period in
1999. Research and development expenses increased for the three month period
ended March 31, 2000 primarily due to increased Bexxar related clinical and
manufacturing development activities. The Company expects its research and
development expenses to grow during the remainder of 2000, 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 March 31, 2000, compared to $3.3 million for the same period in
1999. The increase for the period was incurred to support the Company's
facilities and staffing expansion, sales and marketing efforts, increased
pre-commercialization activities, increased corporate development activities and
related legal and patent
8
9
activities. The Company expects its selling, general and administrative expenses
to continue to increase during the remainder of 2000 in continued support of
these activities.
Interest Income and Other, Net
Interest income and other, net was $786,000 for the quarter ended March 31,
2000, compared to $1.4 million for the same period in 1999. This decrease was
due to lower average cash, cash equivalents and short-term investment balances.
Interest expense is not material for any period presented.
LIQUIDITY AND CAPITAL RESOURCES
Since its inception through March 31, 2000, the Company has financed its
operations primarily through private placements and public offerings of equity
securities totaling $179.8 million. Cash, cash equivalents and short-term
investments totaled $68.2 million at March 31, 2000. The agreement between the
Company and SB provides for the sharing of certain costs related to clinical and
manufacturing development activities as well as a $15.0 million credit line, all
of which is available at March 31, 2000. In 1999, the Company obtained a credit
line with GE Capital Leasing for $1.4 million relating to capital equipment
leasing. Total available under this leasing credit line at the end of March
31, 2000 is $561,400.
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, and manufacturing. In addition, the
Company expects to incur increasing selling, general and administrative expenses
in support of its 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 financing 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 $15.1 million for the three months ended
March 31, 2000, compared to $11.5 million for the same period in 1999. This $3.6
million increase is primarily the result of the increased net loss for the 2000
period and an increase in other current assets which relates to receivables from
activities under the SB collaboration agreement. Net cash provided by investing
activities was $37.8 million for the three months ended March 31, 2000 compared
to $63.0 million net cash used in investing activities for the same period in
1999. The cash provided in the 2000 period primarily resulted from the maturing
of short-term investments. Net cash provided by financing activities increased
to $1.4 million for the three months ended March 31, 2000 from $192,000 for the
same period in 1999 primarily resulting from maturing short-term investments and
the proceeds from the issuance of $2 million of common stock, offset by payments
in equipment financing obligations.
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 the third
quarter of 2001. 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.
9
10
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, 1999, filed on March
27, 2000.
10
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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 March 31, 2000, 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 March 31,
2000, 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 March 31, 2000.
2000 2001 2002 2003 2004 THEREAFTER TOTAL 1999
------- ------- ------- ------- ------- ---------- ------- -------
(dollars in thousands)
Cash Equivalent Investments:
Fixed Rate ................... $46,218 -- -- -- -- -- $46,218 $22,135
Average Interest Rate ........ 6.0% -- -- -- -- -- -- --
Short Term Investments:
Fixed Rate ................... 2,010 19,966 -- -- -- -- 21,976 60,257
Average Interest Rate ........ 5.7% 5.8% -- -- -- -- -- --
Long-term debt,
including current portion:
Variable Rate ................ 2,253 1,500 1,390 5,935 -- -- 11,078 11,686
Average Interest Rate ........ 10.6% 9.9% 9.5% 9.4% -- -- -- --
11
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------ -----------------------
27.1 Financial data Schedule
(b) Reports on Form 8-K
There were no reports on Form 8-K during the quarter ended March 31, 2000.
12
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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: May 15, 2000 /s/ Michael F. Bigham
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Michael F. Bigham
President and Chief Executive Officer
Date: May 15, 2000 /s/ William G. Harris
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William G. Harris
Vice President and Chief Financial Officer
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
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27.1 Financial data Schedule
(b) Reports on Form 8-K
There were no reports on Form 8-K during the quarter ended March 31, 2000.