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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the transition period from ______________________ to ____________________
Commission file number 0-28150
NEUROCRINE BIOSCIENCES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 33-0525145
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
10555 SCIENCE CENTER DRIVE
SAN DIEGO, CALIFORNIA 92121
(Address of principal executive offices)
(858) 658-7600
(Registrant's telephone number, including area code)
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 [ ]
The number of outstanding shares of the registrant's common stock, par value
of $0.001, was 22,023,336 as of July 31, 2000.
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NEUROCRINE BIOSCIENCES, INC.
FORM 10-Q INDEX
PAGE
PART I. FINANCIAL INFORMATION
ITEM 1: Financial Statements .......................................... 3
Condensed Balance Sheets as of June 30, 2000
and December 31, 1999 .................................... 3
Condensed Statements of Operations for the three and six months
ended June 30, 2000 and 1999 ............................. 4
Condensed Statements of Cash Flows for six months
ended June 30, 2000 and 1999 ............................. 5
Notes to the Condensed Financial Statements ................... 6
ITEM 2: Management's Discussion and Analysis of Financial Condition
and Results of Operations ................................ 7
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 ........... 11
ITEM 5: Other Information ............................................. 12
ITEM 6: Exhibits and Reports on Form 8-K .............................. 12
SIGNATURES .................................................... 13
Page 2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
NEUROCRINE BIOSCIENCES, INC.
CONDENSED BALANCE SHEETS
(in thousands)
June 30, December 31,
2000 1999
--------- ---------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents ......................... $ 2,472 $ 21,265
Short-term investments, available-for-sale ........ 77,346 69,833
Receivables under collaborative agreements ........ 869 1,458
Other current assets .............................. 2,415 2,257
--------- ---------
Total current assets ............................ 83,102 94,813
Property and equipment, net ....................... 11,371 11,181
Other assets ...................................... 3,435 3,228
--------- ---------
Total assets .................................... $ 97,908 $ 109,222
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable .................................. $ 700 $ 2,447
Accrued liabilities ............................... 5,315 5,069
Deferred revenues ................................. 53 155
Current portion of long-term debt ................. 149 149
Current portion of capital lease obligations ...... 857 825
--------- ---------
Total current liabilities ....................... 7,074 8,645
Long-term debt .................................... 237 312
Capital lease obligations ......................... 1,390 1,827
Deferred rent ..................................... 1,338 1,005
Other liabilities ................................. 1,016 1,079
--------- ---------
Total liabilities ............................... 11,055 12,868
Stockholders' equity:
Preferred stock, $0.001 par value; 5,000,000 shares
authorized; no shares issued and outstanding .... -- --
Common stock, $0.001 par value; 100,000,000 shares
authorized; issued and outstanding shares were
21,927,727 in 2000 and 21,608,011 in 1999 ....... 22 22
Additional paid in capital ........................ 140,753 138,798
Deferred compensation and shareholder notes ....... (188) (530)
Accumulated other comprehensive loss .............. (823) (264)
Accumulated deficit ............................... (52,911) (41,672)
--------- ---------
Total stockholders' equity ...................... 86,853 96,354
--------- ---------
Total liabilities and stockholders' equity ...... $ 97,908 $ 109,222
========= =========
See accompanying notes to the condensed financial statements.
Page 3
NEUROCRINE BIOSCIENCES, INC.
CONDENSED STATEMENTS OF OPERATIONS
(unaudited; in thousands except loss per share data)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2000 1999 2000 1999
-------- -------- -------- --------
Revenues:
Sponsored research and development $ 1,534 $ 2,762 $ 3,056 $ 5,551
Sponsored research and development
from related party -- -- -- 494
Option Fees ........................ 1,000 -- 2,000 --
Milestones ......................... -- 750 -- 750
Grant income and other revenues .... 408 298 664 566
-------- -------- -------- --------
Total revenues .................. 2,942 3,810 5,720 7,361
Operating expenses:
Research and development ........... 8,134 7,182 15,905 13,562
General and administrative ......... 2,188 2,008 4,421 3,705
-------- -------- -------- --------
Total operating expenses ........ 10,322 9,190 20,326 17,267
Loss from operations ................... (7,380) (5,380) (14,606) (9,906)
Other income and (expenses):
Interest income .................... 1,463 694 3,035 1,586
Interest expense ................... (54) (64) (112) (110)
Other income and expenses, net ..... 779 113 644 (296)
-------- -------- -------- --------
Loss before income taxes ............... (5,192) (4,637) (11,039) (8,726)
Income taxes ........................... -- -- 200 --
-------- -------- -------- --------
Net loss ............................... $ (5,192) $ (4,637) $(11,239) $ (8,726)
======== ======== ======== ========
Loss per common share:
Basic and diluted $ (0.24) $ (0.24) $ (0.51) $ (0.46)
Shares used in the calculation of
loss per common share:
Basic and diluted 21,897 18,961 21,834 18,958
See accompanying notes to condensed financial statements.
Page 4
NEUROCRINE BIOSCIENCES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited; in thousands)
Six Months Ended
June 30,
--------------------
2000 1999
-------- --------
CASH FLOW FROM OPERATING ACTIVITIES
Net loss ................................................ $(11,239) $ (8,726)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Equity in NPI losses and other adjustments ........ -- 890
Depreciation and amortization ..................... 1,055 959
Deferred revenues ................................. (102) 43
Deferred rent ..................................... 333 351
Non-cash stock compensation expenses .............. 1,579 153
Change in operating assets and liabilities:
Accounts receivable and other current assets . 431 (458)
Other non-current assets ..................... (158) 33
Accounts payable and accrued liabilities ..... (2,668) (1,850)
-------- --------
Net cash flows used in operating activities ............. (10,769) (8,605)
CASH FLOW FROM INVESTING ACTIVITIES
Purchases of short-term investments ..................... (25,072) (5,890)
Sales/maturities of short-term investments .............. 17,000 15,504
Purchases of property and equipment ..................... (1,294) (1,050)
-------- --------
Net cash flows (used in) provided by investing activities (9,366) 8,564
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock .................. 1,822 261
Proceeds from capital lease financing ................... -- 437
Principal payments on long-term obligations ............. (480) (465)
-------- --------
Net cash flows provided by financing activities ......... 1,342 233
-------- --------
Net (decrease) increase in cash and cash equivalents .... (18,793) 192
Cash and cash equivalents at beginning of the period .... 21,265 11,708
-------- --------
Cash and cash equivalents at end of the period .......... $ 2,472 $ 11,900
======== ========
See accompanying notes to the condensed financial statements.
Page 5
NEUROCRINE BIOSCIENCES, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
(unaudited)
1. ORGANIZATION
Neurocrine Biosciences, Inc. ("Neurocrine" or the "Company") was
incorporated in California on January 17, 1992 and was reincorporated in
Delaware in March 1996. In May 1998, the Company acquired Northwest NeuroLogic,
Inc. ("NNL"), an Oregon-based research corporation. In December 1999, the NNL
corporate structure was merged with and into the Company. Between March 1996 and
December 1999, the Company owned a minority interest in Neuroscience Pharma,
Inc. ("NPI"), a Canadian based research and development company.
Neurocrine is a neuroscience-based company focused on the discovery and
development of novel therapeutics for neuropsychiatric, neuroinflammatory and
neurodegenerative diseases and disorders. The Company's neuroscience, endocrine
and immunology disciplines provide a unique biological understanding of the
molecular interaction between central nervous, immune and endocrine systems for
the development of therapeutic interventions for anxiety, depression, insomnia,
stroke, malignant brain tumors, multiple sclerosis, obesity and diabetes.
2. BASIS OF PRESENTATION
The condensed financial statements included herein are unaudited. Current
year financial statements include the accounts of the Company. Prior year
financial statements include the Company and its wholly owned subsidiary, NNL.
All significant intercompany transactions were eliminated in consolidation. The
Company's minority ownership interest in NPI was accounted for under the equity
method. Certain reclassifications have been made to prior year amounts to
conform to the presentation for the three and six months ended June 30, 2000.
The condensed financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions of the Securities and Exchange Commission ("SEC") on Form
10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
these financial statements include all adjustments (consisting of normal
recurring adjustments) necessary for a fair presentation of the financial
position, results of operations, and cash flows for the periods presented.
The results of operations for the interim periods shown in this report are
not necessarily indicative of results expected for the full year. The financial
statements should be read in conjunction with the audited financial statements
and notes for the year ended December 31, 1999, included in the Company's Annual
Report on Form 10-K filed with the Securities and Exchange Commission.
3. USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the period. Actual results could differ from those estimates.
4. LOSS PER COMMON SHARE
Basic net loss per common share is calculated using the weighted
average number of common shares outstanding during the period. Diluted net loss
per common share is calculated by adding the total incremental number of common
share equivalents and the weighted average number of common shares outstanding
during the period. For the periods presented, incremental shares of the common
share equivalents were excluded from the calculation of diluted net loss per
share as their effects were antidilutive.
Page 6
5. COMPREHENSIVE INCOME
Comprehensive loss for the Company consists of net loss and unrealized
gains and losses on investments. The accumulated balances of these components
are disclosed as a separate component of stockholders' equity.
6. NEW ACCOUNTING PRONOUNCEMENTS
In December 1999, the SEC issued Staff Accounting Bulletin No. 101 ("SAB
101"), "Revenue Recognition in Financial Statements". SAB 101 provides guidance
in applying generally accepted accounting principles to revenue recognition in
financial statements, including the recognition of nonrefundable up-front fees
received in conjunction with a research and development arrangement. The Company
is required to adopt the pronouncement during the fourth quarter of 2000.
Management does not expect SAB 101 to have a material effect on its financial
statements.
In March 2000, the Financial Accounting Standards Board issued
Interpretation No. 44 ("FIN 44"), "Accounting for Certain Transactions Involving
Stock Compensation". This interpretation clarifies the application of Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, with
respect to certain issues in accounting for employee stock compensation and is
generally effective as of July 1, 2000. Management does not expect FIN 44 to
have a material effect on its financial statements.
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following Management's Discussion and Analysis of Financial Condition
and Results of Operations of the Company contain forward-looking statements
which involve risks and uncertainties, pertaining generally to the expected
continuation of the Company's collaborative agreements, the receipt of research
payments thereunder, the future achievement of various milestones in product
development and the receipt of payments related thereto, the potential receipt
of royalty payments, pre-clinical testing and clinical trials of potential
products, the period of time the Company's existing capital resources will meet
its funding requirements, and financial results and operations. Actual results
could differ materially from those anticipated in these forward-looking
statements as a result of various factors, including those set forth below and
those outlined in the Company's 1999 Annual Report on Form 10-K filed with the
Securities and Exchange Commission.
OVERVIEW
Since the founding of the Company in January 1992, Neurocrine has been
engaged in the discovery and development of novel pharmaceutical products for
diseases and disorders of the central nervous and immune systems. To date,
Neurocrine has not generated any revenues from the sale of products, and does
not expect to generate any product revenues in the foreseeable future. The
Company has funded its operations primarily through public offering and payments
under research and development agreements. The Company is developing a number of
products with corporate collaborators and will rely on those collaborators and
new collaborators to meet funding requirements. Revenues are expected to come
from the Company's strategic alliances. The Company expects to generate future
net losses in anticipation of significant increases in operating expenses as
products are advanced through the various stages of clinical development. As of
June 30, 2000, Neurocrine has incurred a cumulative deficit of $52.9 million and
expects to incur operating losses in the future, which may be greater than
losses in prior years.
Page 7
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2000 AND 1999
Revenues for the second quarter of 2000 were $2.9 million compared with
$3.8 million for the same period last year. The decline in revenues resulted
primarily from the completion of the sponsored research portion of the Eli Lilly
and Company ("Lilly") Collaboration in October 1999 and the reacquisition of the
Multiple Sclerosis compound in January 2000. This compound was previously
licensed to Novartis in connection with a 1996 collaboration agreement. Absence
of revenues from these collaborations during 2000 was partially off-set by
option fees received from Taisho Pharmaceutical Co., LTD ("Taisho"). Taisho paid
the Company $2.0 million for an exclusive six-month option to negotiate a
collaborative agreement on the Company's altered peptide ligand for diabetes.
This fee was deferred and recognized as revenue over the six-month option
period.
Research and development expenses increased to $8.1 million for the second
quarter 2000 compared with $7.2 million for the respective period in 1999. The
increase in expenses primarily reflects higher costs associated with expanding
development activities, adding scientific personnel and non-cash charges
associated with stock compensation for employees and consultants.
General and administration expenses increased to $2.2 million for the
second quarter 2000 compared with $2.0 million for the same period last year.
The increase in expenses is primarily related to non-cash charges associated
with stock compensation for employees and consultants.
Interest income increased to $1.5 million during the second quarter of 2000
compared to $694,000 for the same period last year. The increase was primarily
due to higher investment balances generated by the Company's private placement
of its common stock in December 1999. This transaction generated net proceeds of
$39.3 million.
Net loss for the second quarter of 2000 was $5.2 million or $0.24 per share
compared to $4.6 million or $0.24 per share for the same period in 1999. The
increase in net loss resulted from a decline in revenues of $868,000 and an
increase in operating expenses of $1.1 million, partially off-set by an increase
in net interest income of $769,000. Net losses are expected to increase this
year due to higher operating costs associated with the advancement of the
Company's compounds through progressive clinical development.
SIX MONTHS ENDED JUNE 30, 2000 AND 1999
Revenues for the six-months ended June 30, 2000 were $5.7 million compared
with $7.4 million in 1999. The decline in revenues resulted primarily from the
completion of the sponsored research portion of the LillyCollaboration in
October 1999 and the reacquisition of the Multiple Sclerosis compound in January
2000. This compound was previously licensed to Novartis in connection with a
1996 collaboration agreement. Absence of revenues from these collaborations
during 2000 was partially off-set by option fees received from Taisho. Taisho
paid the Company $2.0 million for an exclusive six-month option to negotiate a
collaborative agreement on the Company's altered peptide ligand for diabetes.
This fee was deferred and recognized as revenue over the six-month option
period. Revenues for the remainder of 2000 are expected to increase slightly
over the first half of the year in connection with the Taisho collaboration
signed on July 21, 2000.
For the six-months ended June 30, 2000 and 1999, research and development
expenses were $15.9 million and $13.6 million, respectively. The increase in
expenses reflects higher costs associated with expanding development activities,
adding scientific personnel and non-cash charges associated with stock
compensation for employees and consultants. These expenses are expected to rise
significantly over the balance of 2000 as clinical studies are expanded on
current compounds and new compounds advance to the clinical development stages.
Page 8
For the six-months ended June 30, 2000 and 1999, general and administrative
expenditures totaled $4.4 million and $3.7 million, respectively. Business
development consulting and non-cash charges associated with stock compensation
for employees and consultants were primarily responsible for the increase in
expenses. These expenses are expected to continue to rise over the last half of
2000.
Interest income increased to $3.0 million during the six-months ended June
30, 2000 compared to $1.6 million for the same period last year. The increase
was primarily due to higher investment balances generated by the Company's
private placement of its common stock. The private placement was completed in
December 1999 and generated net proceeds of $39.3 million. The Company
anticipates interest earnings for the remainder of the 2000 to decline from
quarter-to-quarter as cash reserves will be needed to fund progressive clinical
trials.
Net loss for the first six months of 2000 was $11.2 million or $0.51 per
share compared to $8.7 million or $0.46 per share for the same period in 1999.
The increase in net loss resulted from a decline in revenues of $1.6 million and
an increase in operating expenses of $3.0 million, partially off-set by an
increase in interest income of $1.4 million. Net losses are expected to increase
this year due to higher operating costs associated with the advancement of the
Company's compounds through progressive clinical development.
To date, the Company's revenues have come from funded research and
achievements of milestones under corporate collaborations. The nature and amount
of these revenues from period to period may lead to substantial fluctuations in
the results of quarterly revenues and earnings. Accordingly, results and
earnings of one period are not predictive of future periods.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2000, the Company's cash, cash equivalents, and short-term
investments totaled $79.8 million compared with $91.1 million at December 31,
1999. The decline in cash balances during 2000 reflects the funding of
progressive clinical development programs and the addition of scientific
personnel.
Net cash used in operating activities during the first six months of 2000
was $10.8 million compared with $8.6 million for the same period last year. The
increase in net cash used resulted primarily from the funding of operating
activities. The Company expects cash usage to continue during the year as
clinical trial efforts are expanded.
Net cash used in investing activities during the first six months of 2000
was $9.4 million compared with net cash provided of $8.6 million during the same
period in 1999. The increase in cash used resulted primarily from the timing
differences in the investment purchases and sales/maturities and the
fluctuations in the Company's portfolio mix between cash equivalents and
short-term investment holdings. The Company expects similar fluctuations to
continue throughout the year.
Net cash provided by financing activities during 2000 was $1.3 million
compared to $233,000 during 1999. Proceeds from the issuance of common stock
provided cash during 2000, while proceeds from capital leases and issuance of
common stock provided cash during 1999. Management anticipates an increase in
proceeds from capital leasing during the last half of 2000.
The Company believes that its existing capital resources, together with
interest income and future payments due under the strategic alliances, will be
sufficient to satisfy its current and projected funding requirements at least
for the next twelve months. However, no assurance can be given that such capital
resources and payments will be sufficient to conduct its research and
development programs as planned. The amount and timing of expenditures will vary
depending upon a number of factors, including progress of the Company's research
and development programs.
Page 9
Neurocrine will require additional funding for the continuation of its
research and product development programs, for progress with preclinical testing
and clinical trials, for operating expenses, for the pursuit of regulatory
approvals for its product candidates, for the costs involved in filing and
prosecuting patent applications and enforcing or defending patent claims, if
any, the cost of product in-licensing and any possible acquisitions, and may
require additional funding for establishing manufacturing and marketing
capabilities in the future. The Company may seek to access the public or private
equity markets whenever conditions are favorable. The Company may also seek
additional funding through strategic alliances and other financing mechanisms,
potentially including off-balance sheet financing. There can be no assurance
that adequate funding will be available on terms acceptable to the Company, if
at all. If adequate funds are not available, the Company may be required to
curtail significantly one or more of its research or development programs or
obtain funds through arrangements with collaborative partners or others. This
may require the Company to relinquish rights to certain of its technologies or
product candidates.
Neurocrine expects to incur operating losses over the next several years as
its research, development, preclinical testing and clinical trial activities
increase. To the extent that the Company is unable to obtain third party funding
for such expenses, the Company expects that increased expenses will result in
increased losses from operations. There can be no assurance that the Company's
products under development will be successfully developed or that its products,
if successfully developed, will generate revenues sufficient to enable the
Company to earn a profit.
INTEREST RATE RISK
The Company is exposed to interest rate risk on its short-term investments
and on its long-term debt. The primary objective of the Company's investment
activities is to preserve principal while at the same time maximizing yields
without significantly increasing risk. To achieve this objective, the Company
invests in highly liquid and high quality government and other debt securities.
To minimize the exposure due to adverse shifts in interest rates, the Company
invests in short-term securities with maturities of less than forty-four months.
If a 10% change in interest rates were to have occurred on June 30, 2000, such a
change would not have had a material effect on the fair value of the Company's
investment portfolio as of that date. Due to the short holding period of the
Company's investments, the Company has concluded that it does not have a
material financial market risk exposure.
Interest risk exposure on long-term debt relates to the Company's note
payable, which bears a floating interest rate of prime plus one quarter percent
(9.75% at June 30, 2000 and 8.75% at December 31, 1999). At June 30, 2000 and
December 31, 1999, the note balance was $386,000 and $461,000, respectively.
This note is payable in equal monthly installments through January 2003. Based
on the balance of its long-term debt, the Company has concluded that it does not
have a material financial market risk exposure.
CAUTION ON FORWARD-LOOKING STATEMENTS
The Company's business is subject to significant risks, including but not
limited to, the risks inherent in its research and development activities,
including the successful continuation of the Company's strategic collaborations,
the successful completion of clinical trials, the lengthy, expensive and
uncertain process of seeking regulatory approvals, uncertainties associated both
with the potential infringement of patents and other intellectual property
rights of third parties, and with obtaining and enforcing its own patents and
patent rights, uncertainties regarding government reforms and of product pricing
and reimbursement levels, technological change and competition, manufacturing
uncertainties and dependence on third parties. Even if the Company's product
candidates appear promising at an early stage of development, they may not reach
the market for numerous reasons. Such reasons include the possibilities that the
product will be ineffective or unsafe during clinical trials, will fail to
receive necessary regulatory approvals, will be difficult to manufacture on a
large scale, will be uneconomical to market or will be precluded from
commercialization by proprietary rights of third parties.
For a further discussion of the risks associated with an investment in the
Company, please see the section entitled "Risk Factors" in the Company's Annual
Report on Form 10-K filed with the Securities and Exchange Commission for the
year ended December 31, 1999.
Page 10
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
A discussion of the Company's exposure to, and management of, market risk
appears in Part 1, Item 2 of this Quarterly Report on Form 10-Q under the
heading "Interest Rate Risk".
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(A) The Company's Annual Meeting of Stockholders was held on May 24, 2000
(the "Annual Meeting").
(B) The following Class I Directors were elected at the Annual Meeting:
Name Position Term Expires
---- -------- ------------
Joseph A. Mollica Class I Director 2003
Wylie W. Vale Class I Director 2003
The following Class II and III Directors continue to serve their respective
terms which expire on the Company's Annual Meeting of Stockholders in the year
as noted:
Name Position Term Expires
---- -------- ------------
Stephen A. Sherwin Class II Director 2001
Richard F. Pops Class II Director 2001
Gary A. Lyons Class III Director 2002
(C) At the Annual Meeting, stockholders voted on five matters: (i) the
election of two Class I Directors for a term of three years expiring in 2003,
(ii) the amendment of the 1992 Incentive Stock Plan to increase the number of
shares of common stock reserved for issuance thereunder from 5,300,000 to
6,050,000 shares, (iii) the amendment of the 1996 Employee Stock Purchase Plan
to increase the number of shares of common stock reserved for issuance from
125,000 to 425,000 shares, (iv) the amendment of the 1996 Director Option Plan
to increase the number of shares of common stock reserved for issuance
thereunder from 200,000 to 300,000 shares, and (v) the ratification of the
appointment of Ernst & Young LLP as the Company's independent auditors. The
voting results were as follows:
(i) The election of Joseph A. Mollica and Wylie W. Vale as Class I Directors
for a term of three years:
For 16,511,938 Withhold 581,295
(ii) Approval to amend the Company's 1992 Incentive Stock Plan, increasing the
number of shares of common stock reserved for issuance from 5,300,000 to
6,050,000 Shares:
For 10,156,319 Against 2,185,010 Abstain 5,300
(iii)Approval to amend the Company's 1996 Employee Stock Purchase Plan,
increasing the number of shares of common stock reserved for issuance from
125,000 to 425,000 Shares:
For 11,842,244 Against 494,605 Abstain 9,780
(iv) Approval to amend the Company's 1996 Director Option Plan, increasing the
number of shares of common stock reserved for issuance from 200,000 to
300,000 Shares:
For 11,187,898 Against 1,148,573 Abstain 10,158
(v) Ratification of the appointment of Ernst & Young LLP as independent
auditors for the fiscal year ending December 31, 2000:
For 17,060,524 Against 22,445 Abstain 10,264
Page 11
ITEM 5. OTHER INFORMATION
On July 21, 2000, Neurocrine Biosciences, Inc. signed an exclusive
agreement with Taisho Pharmaceutical Co., LTD (Taisho). The agreement provides
Taisho the exclusive rights to NBI-6024, Neurocrine's altered peptide ligand
(APL) for diabetes in Europe and Asia. Neurocrine will retain all rights in the
rest of the world, including North America. The collaboration, valued at up to
$45 million, includes licensing and option fees, payments for certain
development and regulatory milestones, and significant reimbursement of the
worldwide development expenses. In addition, Neurocrine will receive royalties
on product sales in Europe and Japan.
Neurocrine also completed a Phase I clinical study with APL compound
NBI-6024 in patients with Type I Diabetes or insulin-dependent diabetes mellitus
(IDDM). The Phase I study included twenty patients in a single dose, dose
escalation study. Preliminary safety data from this study indicated that
NBI-6024 was safe and well tolerated. Two additional clinical studies are
planned to start in Q3, 2000. These studies will assess the safety and
biological activity of multiple doses of NBI-6024 in both adult and pediatric
patients with Type 1 Diabetes.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits. The following exhibits are filed as part of this report:
*10.1 License Agreement between the Registrant and Taisho Pharmaceutical
Co., Ltd. dated July 21, 2000
10.2 Amended employment agreement between the Registrant and Gary A. Lyons,
dated May 24, 2000
10.3 Amended employment agreement between the Registrant and Paul W.
Hawran, dated May 24, 2000
10.4 Amended employment agreement between the Registrant and D. Bruce
Campbell, dated May 24, 2000
10.5 Amended employment agreement between the Registrant and Margaret E.
Valeur-Jensen, dated May 24, 2000
27 Financial Data Schedule
------------------
*Confidential treatment has been requested with regard to certain
portions of this exhibit.
(B) Reports on Form 8-K. Form 8-K was filed on April 6, 2000 reporting Janssen
Pharmaceutica's replacement of R121919 with a back-up compound.
Page 12
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: 08/11/00 /s/ Paul W. Hawran
-------- ------------------
Paul W. Hawran
Executive Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)
Page 13
EXHIBIT INDEX
*10.1 License Agreement between the Registrant and Taisho Pharmaceutical
Co., Ltd. dated July 21, 2000
10.2 Amended employment agreement between the Registrant and Gary A. Lyons,
dated May 24, 2000
10.3 Amended employment agreement between the Registrant and Paul W.
Hawran, dated May 24, 2000
10.4 Amended employment agreement between the Registrant and D. Bruce
Campbell, dated May 24, 2000
10.5 Amended employment agreement between the Registrant and Margaret E.
Valeur-Jensen, dated May 24, 2000
27 Financial Data Schedule
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*Confidential treatment has been requested with regard to certain
portions of this exhibit.