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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 SEPTEMBER 30, 1999
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 19,081,984 as of October 31, 1999.
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NEUROCRINE BIOSCIENCES, INC
FORM 10-Q INDEX
PAGE
PART I. FINANCIAL INFORMATION
ITEM 1: Financial Statements........................................... 3
Condensed Consolidated Balance Sheets as of September 30, 1999
and December 31, 1998......................................... 3
Condensed Consolidated Statements of Operations for the three
and nine months ended September 30, 1999 and 1998............. 4
Condensed Consolidated Statements of Cash Flows for nine months
ended September 30, 1999 and 1998............................. 5
Notes to the Condensed Consolidated 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 5: Other Information............................................. 12
ITEM 6: Exhibits and Reports on Form 8-K.............................. 12
SIGNATURES............................................................. 12
INDEX TO EXHIBITS...................................................... 13
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
NEUROCRINE BIOSCIENCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
Sep 30, Dec 31,
1999 1998
---------- ----------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents .......................... $ 7,591 $ 11,708
Short-term investments, available-for-sale ......... 40,946 50,962
Receivables under collaborative agreements ......... 3,591 863
Receivables from related parties ................... 1,045 544
Other current assets ............................... 1,059 1,556
-------- --------
Total current assets ............................ 54,232 65,633
Property and equipment, net ........................ 11,521 10,899
Other assets ....................................... 2,534 3,997
-------- --------
Total assets .................................... $ 68,287 $ 80,529
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ................................... $ 811 $ 2,481
Accrued liabilities ................................ 2,532 2,077
Deferred revenues .................................. 736 169
Current portion of long-term debt .................. 149 149
Current portion of capital lease obligations ....... 772 693
-------- --------
Total current liabilities ....................... 5,000 5,569
Long-term debt ..................................... 349 461
Capital lease obligations .......................... 1,882 1,786
Deferred rent ...................................... 834 257
Other liabilities .................................. 929 498
-------- --------
Total liabilities ............................... 8,994 8,571
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
19,080,853 in 1999 and 18,930,865 in 1998 ....... 19 19
Additional paid in capital ......................... 97,864 97,064
Deferred compensation and shareholder notes ........ (496) (306)
Accumulated other comprehensive (loss) income ...... (111) 31
Accumulated deficit ................................ (37,983) (24,850)
-------- --------
Total stockholders' equity ...................... 59,293 71,958
-------- --------
Total liabilities and stockholders' equity ...... $ 68,287 $ 80,529
======== ========
See accompanying notes to the condensed consolidated financial statements.
NEUROCRINE BIOSCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited; in thousands except loss per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- ---------------------
1999 1998 1999 1998
--------------------- ---------------------
Revenues:
Sponsored research and development ... $ 4,209 $ 2,112 $ 9,760 $ 6,749
Sponsored research and development
from related party .................. -- 2,066 501 2,066
Milestones ........................... 750 750 1,500 2,000
Grant income and other revenues ...... 272 126 831 666
-------- -------- -------- --------
Total revenues .................... 5,231 5,054 12,592 11,481
Operating expenses:
Research and development ............. 8,331 6,393 21,893 15,457
General and administrative ........... 1,882 1,814 5,587 4,681
Write-off of acquired in-process
research and development and licenses -- -- -- 4,910
-------- -------- -------- --------
Total operating expenses .......... 10,213 8,207 27,480 25,048
Loss from operations ..................... (4,982) (3,153) (14,888) (13,567)
Other income and (expenses):
Interest income ...................... 623 1,174 2,209 3,293
Interest expense ..................... (59) (23) (169) (87)
Equity in NPI loss and
other adjustments ................... (284) (2,299) (1,174) (3,742)
Other income ......................... 295 264 889 905
-------- -------- -------- --------
Loss before taxes ........................ (4,407) (4,037) (13,133) (13,198)
Income taxes ............................. -- -- -- --
-------- -------- -------- --------
Net loss ................................. $ (4,407) $ (4,037) $(13,133) $(13,198)
======== ======== ======== ========
Loss per common share:
Basic & Diluted $ (0.23) $ (0.22) $ (0.69) $ (0.74)
Shares used in the calculation
of loss per common share:
Basic & Diluted 19,006 18,189 18,975 17,925
See accompanying notes to the condensed consolidated financial statements.
NEUROCRINE BIOSCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited; in thousands)
Nine Months Ended
September 30,
-----------------------
1999 1998
---------- -----------
CASH FLOW FROM OPERATING ACTIVITIES
Net loss .............................................. $(13,133) $(13,198)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Acquisition of NNL .............................. -- 4,200
Equity in NPI losses and other adjustments ...... 1,175 1,281
Depreciation and amortization ................... 1,532 1,261
Deferred revenues ............................... 567 (875)
Deferred expenses ............................... 1,260 185
Change in operating assets and liabilities,
net of acquired business:
Accounts receivable and other current assets (2,732) (522)
Other non-current assets ................... 124 924
Accounts payable and accrued liabilities ... (1,215) (1,249)
-------- --------
Net cash flows used in operating activities ........... (12,422) (7,993)
CASH FLOW FROM INVESTING ACTIVITIES
Purchases of short-term investments ................... (26,763) (31,144)
Sales/maturities of short-term investments ............ 36,637 42,961
Purchases of property and equipment ................... (1,990) (3,069)
-------- --------
Net cash flows provided by investing activities ....... 7,884 8,748
CASH FLOW FROM FINANCING ACTIVITIES
Issuance of Common Stock .............................. 358 477
Proceeds from capital lease financing ................. 771 2,334
Principal payments on long-term obligations ........... (708) (776)
Payments received on notes receivable from stockholders -- 1
-------- --------
Net cash flows provided by financing activities ....... 421 2,036
-------- --------
Net (decrease) increase in cash and cash equivalents .. (4,117) 2,791
Cash and cash equivalents at beginning of the period .. 11,708 15,771
-------- --------
Cash and cash equivalents at end of the period ........ $ 7,591 $ 18,562
======== ========
See accompanying notes to the condensed consolidated financial statements.
NEUROCRINE BIOSCIENCES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. BASIS OF PRESENTATION
The condensed consolidated financial statements included herein are
unaudited. These financial statements include the accounts of Neurocrine
Biosciences, Inc. ("Neurocrine" or the "Company") and its wholly owned
subsidiary, Northwest NeuroLogic, Inc. ("NNL"). All significant intercompany
transactions have been eliminated in consolidation. The Company's minority
ownership interest in Neuroscience Pharma, Inc. ("NPI") has been accounted for
under the equity method. Certain reclassifications have been made to prior year
amounts to conform to the presentation for the three and nine months ended
September 30, 1999.
The condensed consolidated 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
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, 1998, included in the Company's Annual
Report on Form 10-K filed with the Securities and Exchange Commission.
2. NET INCOME PER SHARE
In accordance with Financial Accounting Standards Board Statement No. 128,
"Earnings Per Share", basic earnings per share is calculated by dividing net
income by the weighted average number of common shares outstanding for the
period. Diluted earnings per share reflects the potential dilution of securities
that could share in the earnings of the Company such as common stock which may
be issuable upon exercise of outstanding common stock options, warrants and
preferred stock. These shares are excluded when their effects are antidilutive.
For the three and nine months ended September 30, 1999 and 1998, potentially
dilutive securities were excluded from the diluted earnings per share
calculation.
3. COMPREHENSIVE INCOME
Financial Accounting Standards Board Statement No. 130, "Comprehensive
Income", requires the disclosure of all components of comprehensive income,
including net income and changes in equity during a period from transactions and
other events and circumstances generated from non-owner sources. Other
comprehensive income consisted of gains (losses) on short-term investments of
$8,000 and ($142,000) for the three and nine months ended September 30, 1999;
and $16,000 and $21,000 for the same periods in 1998, respectively.
4. SEGMENT INFORMATION
Financial Accounting Standards Board Statement No. 131, "Disclosures about
Segments of an Enterprise and Related Information", establishes standards for
reporting financial and descriptive information about an enterprise's operating
segments in its annual financial statements and selected segment information in
interim financial reports. The Company is engaged in the discovery and
development of prescription drugs and considers its operations to be a single
reportable segment. Financial results of this reportable segment are presented
in the accompanying financial statements. The Company has no foreign operations.
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 1998 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
September 30, 1999, Neurocrine has incurred a cumulative deficit of $38.0
million and expects to incur operating losses in the future, which may be
greater than losses in prior years.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
----------------------------------------------
Revenues for the third quarter of 1999 were $5.2 million compared to $5.1
million for the respective period in 1998. The increase in revenues primarily
resulted from the 1999 collaborations with Wyeth-Ayerst and Janssen
Pharmaceutica, a subsidiary of Johnson & Johnson. The Wyeth-Ayerst agreement
included a number of milestone payments, one of which was achieved during the
third quarter earning a $750,000 payment in addition to quarterly sponsored
research payments of $750,000. The Janssen agreement contributed sponsored
research and development revenues of $1.7 million to third quarter revenues.
Revenues in 1998 included $2.1 million in sponsored development from NPI and a
$750,000 milestone payment from Novartis.
Research and development expenses increased to $8.3 million for the third
quarter of 1999 compared to $6.4 million for the same period in 1998. The
increase reflects higher costs associated with increased scientific personnel
and related expenditures as the Company advances its drug candidates through
clinical testing. Currently, the Company has five compounds in clinical
development.
General and administrative expenses increased to $1.9 million during the
third quarter of 1999 compared to $1.8 million for the same period in 1998. The
increase resulted primarily from additional administrative personnel, business
development and professional service expenses to support the expanded clinical
development efforts.
Interest income decreased to $623,000 during the third quarter of 1999
compared to $1.2 million for the same period last year. The decrease was
primarily due to a decline in investment balances. The Company anticipates
further decline in interest income as cash reserves are used to fund progressive
clinical trials.
Net loss for the third quarter of 1999 was $4.4 million or $0.23 per share
compared to $4.0 million or $0.22 per share for the same period in 1998.
Increased revenues of $177,000 were used to finance the $2.0 million increase in
operating expenses primarily related to clinical development costs. Interest
income declined by $551,000 and non-cash charges relating to NPI equity
transactions decreased by $2.0 million.
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.
NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
---------------------------------------------
Revenues for the nine months ended September 30, 1999 were $12.6 million
compared to $11.5 million for the same period in 1998. The increase in revenues
primarily resulted from the 1999 collaborations with Wyeth-Ayerst and Janssen
Pharmaceutica, a subsidiary of Johnson & Johnson. The Wyeth-Ayerst agreement
included a number of milestone payments, two of which were achieved earning a
$1.5 million payment in addition to quarterly sponsored research payments of
$750,000. The Janssen agreement contributed sponsored research and development
revenues of $1.7 million to third quarter 1999 revenues. Revenues in 1998
included $2.1 million in sponsored development from NPI and a $750,000 milestone
payment from Novartis.
Research and development expenses increased to $21.9 million for the
nine months ended September 30, 1999 compared to $15.5 million for the same
period in 1998. The increase reflects higher costs associated with increased
scientific personnel and development costs as the Company advances its drug
candidates through the clinical testing. The Company currently has five
compounds in clinical development.
General and administrative expenses increased to $5.6 million during the
nine months ended September 30, 1999 compared to $4.7 million for the same
period last year. The increase is attributable to additional administrative
personnel, business development and professional service expenses to support the
expanded clinical development efforts.
During 1998, the Company wrote-off acquired in-process research and
development fees of $4.9 million. Of that total, $4.2 million were non-cash
charges relating to the acquisition of NNL. The balance is attributable to the
in-licensing of compounds for insomnia and glioblastoma. Both compounds are
currently in clinical development programs.
Interest income decreased to $2.2 million during the nine months ended
September 30, 1999 compared to $3.3 million for the same period last year. The
decline in interest income resulted from lower investment balances. The Company
anticipates further decline in interest income as cash reserves are used to fund
progressive clinical trials.
Net loss for the nine months ended September 30, 1999 was $13.1 million or
$0.69 per share compared to $13.2 million or $0.74 per share for the same period
in 1998. During 1999, increased revenues of $1.1 million were used to finance
the $7.3 million increase in operating expenses related to clinical development
and administration. Write-off of acquired in-process research and development
costs and equity transactions related to NPI decreased by $7.5 million. In
addition, the Company experienced a decline of $1.1 million in interest income.
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 year-to-date revenues and earnings. Accordingly, results and
earnings of one period are not predictive of future periods.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1999, the Company's cash, cash equivalents, and short-term
investments totaled $48.5 million compared with $62.7 million at December 31,
1998. The decline in cash balances during 1999 reflects the increased losses
associated with the progressive clinical development programs and the addition
of scientific personnel.
Net cash used in operating activities during the first nine months of 1999
was $12.4 million compared with $8.0 million for the same period last year. Net
cash used during 1999 and 1998 reflects the payment of clinical development
expenses and other accrued liabilities. The Company anticipates continued
funding of clinical trials to use cash in future periods.
Net cash provided by investing activities during 1999 was $7.9 million
compared with $8.7 million during 1998. The increase in cash provided was
primarily the result of 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, net of capital asset
purchases of $2.0 and $3.1 million during 1999 and 1998, respectively.
Net cash provided by financing activities during 1999 was $421,000 compared
to $2.0 million in 1998. Cash provided by proceeds from Common Stock issuances
and capital lease financing, net of payments on long-term obligations, resulted
in net cash provided during 1999 and 1998.
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
through the year 2001. 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. Failure of a corporate collaborator to meet its
contractual obligations could have a material adverse effect on the Company's
financial position and results of operations.
INTEREST RATE RISK
The Company is exposed to changes in interest rates primarily from its
long-term debt. The Company believes that a hypothetical 100 basis point adverse
move in interest rates along the entire interest rate yield curve would not
materially effect the fair value of interest sensitive financial instruments nor
the costs associated with the long-term debt.
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
(8.50% at September 30, 1999 and 8.00% at December 31, 1998). At September 30,
1999 and December 31, 1998, the note balance was $498,000 and $610,000,
respectively. This note is payable in equal monthly installments through January
2003.
IMPACT OF YEAR 2000
The Year 2000 Issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any of the Company's
computer programs or hardware that have date-sensitive software or embedded
chips may recognize a date using "00" as the year 1900 rather than the year
2000. This could result in a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices, or engage in similar normal business
activities.
In the normal course of business over the past two years, the Company has
made incremental modifications and improvements to all of its operational and
financial software. An integral part of this process has been to ensure that all
newly purchased software and hardware are Year 2000 compliant. The Company has
completed an evaluation of all of the existing software and hardware used in its
internal systems and operations and is now Year 2000 compliant. The Company has
also evaluated and replaced or remediated various hardware components used in
its laboratory operations and now believes it is Year 2000 compliant in this
area as well. In general, the Company management is satisfied with its efforts
to be Year2000 prepared, however, it will continue to monitor and reassess
systems through the end of the year.
Because third party failures could have a material adverse impact on the
Company's ability to conduct business, the Company has requested written
assurances from all material customers and vendors that their systems are or
will be Year 2000 compliant. The Company has received such assurances from many
of its domestic material customers and vendors as well as many of its
international customers and vendors; however, this is an on-going process. The
business interruption of any of the Company's significant customers, materials
suppliers and service providers resulting from their Year 2000 issues, could
have a material adverse impact on the Company's revenues and results of
operations.
Based on information obtained from third parties and on-going evaluations
of the Company's own systems, management believes it has identified the most
reasonably likely worst case scenario with respect to possible losses in
connection with Year 2000 related problems. Based on this scenario, the Company
has developed contingency plans for restoration of financial and scientific
data, replacement of material suppliers and service providers and the building
of safety stocks of critical materials in the event that current vendors
experience Year 2000 compliance issues.
The incremental cost to the Company of Year 2000 compliance was
approximately $175,000. The expensed costs do not include internal costs, as the
Company does not separately track the internal costs of Year 2000 compliance.
Such internal costs are principally the related payroll costs for the Company's
information technology group.
There are many factors outside the Company's control that could cause the
Year 2000 problem to seriously disrupt its operations. However, the Company has
identified certain risks and has developed contingency plans in order to reduce
its exposure in these areas. The scope of the Company's efforts regarding each
risk is limited to the Company's key products, key compounds, subsidiaries,
critical suppliers, and major customers. The most critical of these risks are: a
disruption in the supply of product with particular emphasis on failures of raw
material suppliers, commercial partners, and external distribution channels;
internal infrastructure failures such as utilities, communications, internal
information technology services and integrated information technology systems.
The information above contains forward-looking statements including,
without limitation, statements relating to the Company's plans, strategies,
objectives, expectations, intentions, and adequate resources that are made
pursuant to the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995. Readers are cautioned that forward-looking statements about
the Year 2000 should be read in conjunction with the Company's disclosures under
the heading: "Caution on forward-looking statements".
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.
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, for 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.
The Company believes that its existing capital resources will be adequate
to satisfy its current and planned operations through the year 2000. Neurocrine
expects to incur additional operating expenses 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.
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, 1998.
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".
PART II: OTHER INFORMATION
ITEM 5. OTHER INFORMATION
The Company has been advised, that due to personal commitments, Harry F.
Hixson, Jr. will be resigning from the Board of Directors effective December 31,
1999. The Company has not identified a replacement director as of the date of
this report.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits. The following exhibits are filed as part of this report:
*10.1 Agreement by and among Dupont Pharmaceuticals Company, Janssen
Pharmaceutica, N.V. and Neurocrine Biosciences, Inc.
*10.2 Amendment Number One to the Agreement between Neurocrine Biosciences,
Inc. and Janssen Pharmaceutica, N.V.
27 Financial Data Schedule.
---------------
*Certain portions of this exhibit have been omitted pursuant to a request
for confidential treatment filed with the Commission. The omitted portions
have been filed separately with the Commission.
Reports on Form 8-K. During the quarter ended September 30, 1999, the
Company filed no current reports on Form 8-K.
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: 11/12/99 /s/ Paul W. Hawran
Paul W. Hawran
Senior Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
EXHIBIT INDEX
*10.1 Agreement by and among Dupont Pharmaceuticals Company, Janssen
Pharmaceutica, N.V. and Neurocrine Biosciences, Inc.
*10.2 Amendment Number One to the Agreement between Neurocrine Biosciences, Inc.
and Janssen Pharmaceutica, N.V.
27 Financial Data Schedule.
---------------
*Certain portions of this exhibit have been omitted pursuant to a request
for confidential treatment filed with the Commission. The omitted portions
have been filed separately with the Commission.