1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR QUARTER ENDED MARCH 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number: 1-12574
TEXAS BIOTECHNOLOGY CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3532643
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
7000 Fannin, 20th Floor, Houston, Texas 77030
- --------------------------------------------------------------------------------
(Address of principal executive office) (Zip code)
(713) 796-8822
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.
Class Outstanding at May 11, 2001
----- ---------------------------
common stock, $0.005 par value 43,772,855
2
TEXAS BIOTECHNOLOGY CORPORATION
TABLE OF CONTENTS
PAGE NO.
--------
PART I. FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
Consolidated Balance Sheets as of March 31, 2001 and December 31, 2000 1
Consolidated Statements of Operations for the three months ended
March 31, 2001 and 2000 2
Consolidated Statements of Cash Flows for the three months ended
March 31, 2001 and 2000 3
Notes to Consolidated Financial Statements 4
ITEM 2: Management's Discussion and Analysis of
Financial Condition and Results of Operations 12
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES 17
ABOUT MARKET RISK
PART II. OTHER INFORMATION
ITEM 1: Legal Proceedings 18
ITEM 2: Changes in Securities 18
ITEM 3: Defaults Upon Senior Securities 18
ITEM 4: Submission of Matters to a Vote of Security Holders 18
ITEM 5: Other Information 18
ITEM 6: Exhibits and Reports on Form 8-K 18
SIGNATURES 19
3
TEXAS BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, DECEMBER 31,
2001 2000
-------------- --------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 42,147,073 $ 48,469,646
Short-term investments 39,123,772 39,067,999
Accounts receivable 225,431 237,411
Other current receivables 1,488,029 626,109
Receivable from related party under collaborative arrangement 2,130,119 882,157
Prepaids 1,497,992 1,349,264
-------------- --------------
Total current assets 86,612,416 90,632,586
Long-term investments 27,509,217 4,995,000
Equipment and leasehold improvements, less
accumulated depreciation and amortization 2,413,521 2,367,965
Other assets 946,523 972,869
-------------- --------------
Total assets $ 117,481,677 $ 98,968,420
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 894,030 $ 942,013
Accrued expenses 2,606,426 3,620,517
Deferred revenue 1,029,176 1,029,176
-------------- --------------
Total current liabilities 4,529,632 5,591,706
Liability to related party 2,909,100 1,376,303
Deferred revenue from related party 1,084,365 1,209,302
Deferred revenue from unrelated parties 2,045,453 2,181,816
Deferred credit 2,620,010 2,620,010
Minority interest in Revotar 1,900,605 1,962,273
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value $.005 per share. At March 31, 2001, 5,000,000
shares authorized; none outstanding. At December 31, 2000, 5,000,000
shares authorized;
none outstanding -- --
Common stock, par value $.005 per share. At March 31, 2001
75,000,000 shares authorized; 43,768,959 shares issued and
outstanding. At December 31, 2000, 75,000,000 shares
authorized; 41,203,197 shares issued and outstanding 218,845 206,016
Additional paid-in capital 210,548,523 189,390,790
Other comprehensive loss (310,838) (15,341)
Accumulated deficit (108,064,018) (105,554,455)
-------------- --------------
Total stockholders' equity 102,392,512 84,027,010
-------------- --------------
Total liabilities and stockholders' equity $ 117,481,677 $ 98,968,420
============== ==============
See accompanying notes to financial statements
1
4
TEXAS BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,
----------------------------
2001 2000
------------ ------------
Revenues:
Research agreements $ 1,433,290 $ 522,608
Collaborative research and development from
related party 401,357 --
Royalty income, net 177,417 --
License fee and milestone income 257,293 1,183,117
------------ ------------
Total revenues 2,269,357 1,705,725
------------ ------------
Expenses:
Research and development 3,417,287 3,781,949
Equity in loss of affiliate 1,528,791 --
General and administrative 1,547,156 1,930,935
------------ ------------
Total expenses 6,493,234 5,712,884
------------ ------------
Operating loss 4,223,877 4,007,159
Investment income, net 1,652,646 203,418
Net loss before minority interest 2,571,231 3,803,741
Minority interest in loss of Revotar 61,668 --
------------ ------------
Net loss before cumulative effect of
change in accounting principle 2,509,563 3,803,741
Cumulative effect of change in accounting principle -- 2,366,234
------------ ------------
Net loss 2,509,563 6,169,975
Other comprehensive loss:
Unrealized loss on foreign currency translation 295,497 --
------------ ------------
Comprehensive loss $ 2,805,060 $ 6,169,975
============ ============
Net loss per common share-
basic and diluted before cumulative effect of change in
accounting principle $ 0.06 $ 0.11
============ ============
basic and diluted after cumulative effect of change in
accounting principle $ 0.06 $ 0.18
============ ============
Weighted average common shares used to compute
basic and diluted net loss per share 43,665,512 34,612,293
============ ============
See accompanying notes to financial statements
2
5
TEXAS BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31,
----------------------------
2001 2000
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (2,509,563) $ (6,169,975)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 222,633 250,613
Equity in loss of affiliate (1,584,791) --
Minority interest in loss of Revotar (61,668) --
Expenses paid with stock -- 43,615
Compensation expense related to stock options 63,316 --
Loss on disposition of fixed assets 6,407 --
Change in operating assets and liabilities, net of
effect of acquisition:
Decrease in accounts receivable 11,980 515,859
Increase in prepaids (148,728) (54,847)
Increase in other current receivables (861,920) --
Increase in receivable from related party under
collaborative arrangement (1,247,962) --
(Decrease) increase in current liabilities (1,062,074) 856,650
Increase in liability to related party 3,117,588 --
(Decrease) increase in deferred revenue from unrelated parties (136,363) 1,183,117
Decrease in deferred revenue from related party (124,937) --
------------ ------------
Net cash used in operating activities (4,316,082) (3,374,968)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of equipment and leasehold improvements (248,250) (21,920)
Purchase of investments (54,403,339) (3,154,148)
Maturity of investments 31,690,183 9,090,886
Decrease in interest receivable included in short-term
and long-term investments 143,166 207,044
------------ ------------
Net cash (used in) provided by investing activities (22,818,240) 6,121,862
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock and option and
warrant exercises, net 21,107,246 2,634,777
------------ ------------
Net cash provided by financing activities 21,107,246 2,634,777
------------ ------------
Effect of exchange rate changes on cash (295,497) --
Net (decrease) increase in cash and cash equivalents (6,322,573) 5,381,671
Cash and cash equivalents at beginning of year 48,469,646 2,804,270
------------ ------------
Cash and cash equivalents at end of year $ 42,147,073 $ 8,185,941
============ ============
Supplemental schedule of noncash financing activities:
issuance of Common Stock for research and development and
services $ -- $ 43,615
============ ============
See accompanying notes to financial statements
3
6
TEXAS BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001 (UNAUDITED) AND DECEMBER 31, 2000
(1) BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
of Texas Biotechnology Corporation and its subsidiaries (collectively referred
to as the "Company" or "TBC") have been prepared in accordance with accounting
principles generally accepted in the United States of America ("USA") for
interim financial information and with the instructions to Form 10-Q and Rule
10-01 of Regulation S-X. They do not include all information and notes required
by accounting principles generally accepted in the USA for complete financial
statements. It is recommended that these interim condensed consolidated
financial statements be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 2000. Except as disclosed herein, there has
been no material change in the information disclosed in the notes to the
consolidated financial statements included in the Company's Annual Report on
Form 10-K. In the opinion of management, all adjustments (consisting only of
normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three months ended March 31, 2001 are
not necessarily indicative of the results, which may be expected for any other
interim period, or for the year ended December 31, 2001. Certain prior period
amounts have been reclassified for comparative purposes. Reported revenues and
net loss for the three months ended March 31, 2000 have been restated to reflect
the Company's adoption, effective January 1, 2000, of Staff Accounting Bulletin
No. 101, Revenue Recognition in Financial Statements ("SAB101"), promulgated by
the United States Securities and Exchange Commission ("SEC") in December 1999.
See Note 2 (m).
(2) ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
(a) Organization
Texas Biotechnology Corporation, a Delaware Corporation, is a
biopharmaceutical company focused on the discovery, development and
commercialization of novel synthetic small molecule compounds for the
treatment of a variety of cardiovascular, vascular and related
inflammatory diseases. Since its formation in 1989, the Company has
been engaged principally in research and drug discovery programs and
clinical development of certain drug compounds. On July 25, 1994, the
Company acquired all of the outstanding common stock of
ImmunoPharmaceutics, Inc. ("IPI") in exchange for common stock, par
value $.005 per share (the "Common Stock"), of the Company. On June 6,
2000, TBC, through its wholly owned subsidiary, TBC-ET, Inc., a
Delaware Corporation, and ICOS Corporation, a Delaware Corporation,
("ICOS") entered into an agreement and formed ICOS-Texas Biotechnology
L.P., a Delaware limited partnership ("ICOS-TBC"), to develop and
globally commercialize endothelin-A receptor antagonists. TBC and ICOS
are both 50% owners in ICOS-TBC. During the third quarter of 2000, TBC
formed Revotar Biopharmaceuticals AG ("Revotar"), a German Corporation,
to conduct research and development for novel small molecule compounds
and to develop and commercialize TBC's selectin antagonists. The
Company retained a majority interest in Revotar. The Company is
presently working on a number of long-term development projects that
involve experimental and unproven technology, which may require many
years and substantial expenditures to complete, and which may be
unsuccessful. Sales of the Company's first product, for which it
receives royalty income, Argatroban, began during November 2000.
(b) Basis of Consolidation
The Company's consolidated financial statements include the
accounts of the Company, its wholly owned subsidiaries, IPI and TBC-ET,
Inc., and its majority controlled subsidiary, Revotar. All material
intercompany balances and transactions have been eliminated.
4
7
(c) Cash, Cash Equivalents, Short-Term Investments and Long-Term
Investments
Cash equivalents are considered to be those securities or
instruments with original maturities, when purchased, of three months
or less. At March 31, 2001, approximately $2,217,000 was invested in
demand and money market accounts. Short-term investments are those
investments which have an original maturity of less than one year and
greater than three months at the purchase date. At March 31, 2001, the
Company's short-term investments consisted of approximately $2,350,000
in government agency discount bonds and $34,115,000 in corporate
commercial paper and loan participations. Long-term investments consist
of approximately $18,795,000 in government agency discount bonds and
$8,406,000 in loan participations, all with a remaining maturity of one
year or more. Cash equivalents, short-term and long-term investments
are stated at cost plus accrued interest, which approximates market
value. Interest income is accrued as earned. The Company classifies all
short-term and long-term investments as held to maturity.
(d) Equipment and Leasehold Improvements
Equipment and leasehold improvements are stated at cost less
accumulated depreciation and amortization. Depreciation of furniture
and equipment is provided on the straight-line method over the
estimated useful lives of the respective assets (3 to 10 years).
Amortization of leasehold improvements is provided on the straight-line
method over the remaining minimum lease term.
(e) Investment in ICOS - TBC
The Company's investment in ICOS-TBC is accounted for using
the equity method, and is included in deferred revenue from related
parties on the consolidated balance sheets. Accordingly, the investment
is recorded at cost, adjusted for the Company's share of income or loss
of the entity and amortization of revenues for upfront and milestone
payments. See Note 9 below.
(f) Research and Development Costs
All research and development costs are expensed as incurred
and include salaries of research and development employees, certain
rent and related building services, research supplies and services,
clinical trial expenses and other associated costs. With respect to
research and development, salaries and benefits charged to research and
development in the three months ended March 31, 2001 and 2000 were
approximately $1,525,000 and $1,360,000, respectively. Payments related
to the acquisition of in-process research and development are expensed
as incurred until the development phase of the purchased compound is
completed.
(g) Net Loss Per Common Share
Basic net loss per common share is calculated by dividing the
net loss applicable to common shares after preferred dividend
requirements by the weighted average number of common and common
equivalent shares outstanding during the period. For the three months
ended March 31, 2001 and 2000, the weighted average common shares used
to compute basic net loss per common share totaled 43,665,512 and
34,612,293, respectively. Securities convertible into Common Stock
comprised of stock options and warrants totaling 4,313,914 and
7,887,577 shares at March 31, 2001 and 2000, respectively, were not
used in the calculation of diluted net loss per common share because
the effect would have been antidilutive.
(h) Reclassifications
Certain reclassifications have been made to prior period
financial statements to conform with the March 31, 2001 presentation
with no effect on net loss previously reported.
5
8
(i) Revenue Recognition
Revenue from service contracts is recognized as services are
performed. Royalty revenue is recognized as products are sold by a
licensee. As a result of the Company's adoption at October 1, 2000,
effective January 1, 2000, of SAB101, the Company defers the
recognition of milestone payments related to contractual agreements,
which are still in the developmental stage. Such deferred revenues are
amortized into income over the estimated remaining developmental
period. Milestone payments received under contractual agreements which
have completed the developmental stage are evaluated, and either
recognized into income when earned, or amortized over a future period,
depending upon whether or not the Company continues to have obligations
under the terms of the arrangement. License fees received under the
terms of licensing agreements for the Company's intellectual property
are similarly deferred, and amortized into income over the estimated
developmental period of the licensed item or items. Revenue from grants
is recognized as earned under the terms of the related grant
agreements. Amounts received in advance of services being performed
under contracts are recorded as deferred revenue, and recognized as
services are performed.
(j) Patent Application Costs
Costs incurred in filing for patents are expensed as incurred.
(k) Use of Estimates
Management of the Company has made a number of estimates and
assumptions relating to the reporting of assets and liabilities and the
disclosure of contingent assets and liabilities to prepare these
consolidated financial statements in conformity with generally accepted
accounting principles. Actual results could differ from these
estimates.
(l) Intangible Assets
Intangible assets consist of purchased technologies, are
capitalized because there is an alternative future use, and are
amortized on a straight-line basis over their estimated useful lives.
The Company periodically reviews the useful lives of its intangible and
long-lived assets, which may result in future adjustments to the
amortization periods. Related amortization expense for the three months
ended March 31, 2001 was $26,346. Amortization of purchased
technologies is included in amortization expense in the consolidated
statements of operations and comprehensive loss. As circumstances
dictate, the Company evaluates the recoverability of its intangible and
long-lived assets by comparing the projected undiscounted net cash
flows associated with such assets against their respective carrying
values. Impairment, if any, is based on the excess of the carrying
value over the fair value.
(m) New Accounting Pronouncements
In December 1999, the SEC issued SAB101 Revenue Recognition in
Financial Statements. SAB101 summarizes certain of the SEC staff's
views in applying generally accepted accounting principles to revenue
recognition in financial statements. The Company implemented SAB101 in
the fourth quarter of the year ended December 31, 2000, effective
January 1, 2000. Prior to its implementation of SAB101, the Company
recognized license fees and milestones as revenues when received. As a
result of the implementation of SAB101, revenues for the three months
ended March 31, 2000 include approximately $1,183,000 related to a
license fee and milestone payment, received and previously reported as
revenues in 1997. The effect on revenues in the three months ended
March 31, 2000 was offset by a loss of approximately $2,366,000 from
the cumulative effect, at
6
9
January 1, 2000, of the change in accounting principle resulting from
the deferral of certain license fees and milestone payments received in
1997.
In June 1998, the FASB issued FASB Statement No. 133 ("SFAS
133"), Accounting for Derivative Instruments and Hedging Activities, as
amended by SFAS No. 137 and SFAS No. 138. SFAS 133 standardizes the
accounting for derivative instruments, including certain derivative
instruments embedded in other contracts. Under the standard, entities
are required to carry all derivative instruments in the statement of
financial position at fair value. We adopted SFAS 133 effective January
1, 2001. The adoption of SFAS 133 did not have a material effect on our
financial condition or results of operation because we, historically,
have not entered into derivative or other financial instruments for
trading or speculative purposes nor do we use or intend to use
derivative financial instruments or derivative commodity instruments.
(3) CAPITAL STOCK
In December 1993, the Company completed an initial public offering
comprised of 4,082,500 units, each unit consisting of one share of Common Stock
(par value $.005 per share) and one warrant to purchase one share of Common
Stock. There were 2,386,645 warrants outstanding as of December 31, 2000, which
were exercised on January 2, 2001 for proceeds of approximately $20.1 million.
(4) STOCK OPTIONS
The Company applies Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees and related interpretations in
accounting for its plans and applies FASB Statement No. 123, Accounting for
Stock-Based Compensation and related interpretations in reporting for its plans.
A summary of stock options as of March 31, 2001, follows:
EXERCISE PRICE EXERCISED/ AVAILABLE
STOCK OPTION PLANS PER SHARE AUTHORIZED OUTSTANDING OTHER EXERCISABLE FOR GRANT
------------------ -------------- ---------- ----------- ---------- ----------- ----------
1990 Plan............ $1.38-$21.59 285,715 189,495 96,220 156,165 --
1992 Plan............ $1.41-$21.59 1,700,000 908,546 789,971 734,634 1,483
Director Plan........ $3.50-$ 4.54 71,429 34,242 37,187 34,242 --
1995 Plan............ $1.31-$21.59 2,000,000 1,615,772 381,697 1,324,303 2,531
1995 Director Plan... $1.38-$11.31 500,000 259,096 38,096 207,096 202,808
1999 Plan(1)......... $ 20.13 3,000,000 1,045,950 48,536 60,331 1,905,514
---------- ----------- -------- --------- ---------
TOTALS........ 7,557,144 4,053,101 1,391,707 2,516,771 2,112,336
========== =========== ========= ========= =========
(1) Includes 2,000,000 authorized shares and 100,000 outstanding but not
exercisable options which are subject to approval of stockholders at
the 2001 Annual Meeting, to be held May 30, 2001.
(5) INCOME TAXES
The Company uses the asset and liability method of accounting for
income taxes. Under the asset and liability method, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases and operating loss and tax credit
carryforwards.
Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
7
10
At March 31, 2001 and December 31, 2000, the net deferred tax asset,
representing primarily net operating loss carryforwards and start-up costs
deferred for tax purposes, totaled approximately $40,069,000 and $39,234,000,
respectively. The Company has established a valuation allowance for the full
amount of these deferred tax assets, as management believes that it is not more
likely than not that the Company will recover these assets. The Company did not
incur any tax expense in any year due to operating losses and the related
increase in the valuation allowance.
At March 31, 2001 and December 31, 2000, the Company had net operating
loss carryforwards of approximately $70,061,000 and $68,955,000, respectively,
for federal income tax return purposes. Utilization of the Company's net
operating loss carryforwards is subject to certain limitations due to specific
stock ownership changes which have occurred or may occur. To the extent not
utilized, the carryforwards will expire during the years beginning 2002 through
2020.
(6) EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Equipment and leasehold improvements consist of the following:
MARCH 31, DECEMBER 31,
2001 2000
------------ ------------
Laboratory and office equipment ................... $ 6,248,021 $ 6,069,207
Leasehold improvements ............................ 3,961,647 3,923,687
------------ ------------
10,209,668 9,992,894
Less accumulated depreciation and amortization .... 7,796,147 7,624,929
------------ ------------
$ 2,413,521 $ 2,367,965
============ ============
(7) COMMON STOCK RESERVED
The Company has reserved Common Stock for issuance as of March 31, 2001
as follows:
Stock option plans ................. 6,165,437
Other warrants outstanding ......... 260,813
----------
Total shares reserved .... 6,426,250
==========
(8) RESEARCH AGREEMENTS
On October 10, 1996, the Company signed a strategic alliance agreement
with LG Chemical, a Korean corporation, to develop and market compounds derived
from the Company's endothelin receptor antagonist and selectin antagonist
programs for certain disease indications. Upon consummation of the transaction,
LG Chemical purchased 1,250,000 shares of Common Stock for $4.00 per share for a
total of $5 million. In addition, LG Chemical has committed to pay $10.7 million
in research payments. Of this amount, $8.1 million has been paid and $1.3
million will be paid on June 30 and December 31, 2001. Effective June 6, 2000,
the Company assigned one-half of the research payment to ICOS-TBC which amounts
to $325,000, before commissions, during the three months ended March 31, 2001.
Under the terms of the Company's agreement with ICOS-TBC, the Company
will provide, and be reimbursed for, research and development activities
conducted on behalf of ICOS-TBC. During the three months ended March 31, 2001,
the Company incurred direct research and development costs of approximately
$1,556,000 and, pursuant to its agreement with ICOS-TBC, billed such costs to
ICOS-TBC. The Company's revenues for the three months ended March 31, 2001
included approximately $401,000 of TBC personnel time charged to ICOS-TBC. The
remaining $1,155,000 of such costs was recorded as a receivable from a related
party under a collaborative arrangement, which remained outstanding at March 31,
2001. Also see Note 9, License Agreements, below.
8
11
The Company also receives reimbursement for certain research costs
pursuant to its agreements with GlaxoSmithKline ("GSK") (Note 11),
Schering-Plough (Note 9) and Revotar (Note 10).
(9) LICENSE AGREEMENTS
Mitsubishi-Tokyo Pharmaceuticals Agreement
TBC has entered into an agreement with Mitsubishi-Tokyo
Pharmaceuticals ("Mitsubishi") to license Mitsubishi's rights and
technology relating to Argatroban and to license Mitsubishi's own
proprietary technology developed with respect to Argatroban (the
"Mitsubishi Agreement"). Under the Mitsubishi Agreement, the Company
has an exclusive license to use and sell Argatroban in the U.S. and
Canada for all specified indications. The Company is required to pay
Mitsubishi specified royalties on net sales of Argatroban by the
Company and its sublicensees after its commercial introduction in the
U.S. and Canada. Either party may terminate the Mitsubishi Agreement on
60 days notice if the other party defaults in its material obligations
under the agreement, declares bankruptcy or is insolvent, or if a
substantial portion of its property is subject to levy. Unless
terminated sooner pursuant to the above described termination
provisions, the Mitsubishi Agreement expires on the later of
termination of patent rights in a particular country or 20 years after
first commercial sale of products. Under the Mitsubishi Agreement, TBC
has access to an improved formulation patent granted in 1993 which
expires in 2010 and a use patent which expires in 2009. During 2000, we
signed an additional agreement with Mitsubishi that provides TBC with
royalties on sales of Argatroban in certain European countries, and up
to a total of $5.0 million in milestones for the development of
ischemic stroke and certain other provisions. In conjunction with the
Mitsubishi Agreement, a consulting firm involved in negotiations
related to the agreement will receive a percentage of net sales
received as a result of the agreement. The Company enrolled its first
patient in a clinical trial for ischemic stroke in April 2001, and
expects to receive a $2.0 million milestone payment in May, which will
be recognized in revenues over the expected development period.
In exchange for the license to Genentech, Inc, (the "Former
Licensor") of its Argatroban technology, TBC issued the Former Licensor
285,714 shares of Common Stock during 1993 and issued an additional
214,286 shares of Common Stock on October 9, 1997, after acceptance of
the filing of the first New Drug Application ("NDA") with the United
States Food and Drug Administration (the "FDA") for Argatroban. On June
30, 2000, the Company issued an additional 71,429 shares of Common
Stock to Genentech in conjunction with the approval of the NDA for
Argatroban in patients with HIT. The value of $965,970 has been
recorded as an intangible asset and is being amortized over the
estimated useful life of the asset. Amortization expense recorded in
the three months ended March 31, 2001 was $26,346 and will be
approximately $106,000 annually in future periods. Additionally, on
October 9, 1997, upon acceptance of the filing of the first NDA for
Argatroban with the FDA, the Company granted the Former Licensor a
warrant to purchase an additional 142,858 shares of Common Stock at an
exercise price of $14.00 per share, subject to adjustment, which
expires on October 9, 2004. TBC has also granted the Former Licensor
demand and piggyback registration rights with regard to shares of
Common Stock issued to the Former Licensor.
ICOS Corporation Partnership
On June 6, 2000, ICOS and the Company entered into the
ICOS-TBC limited partnership agreement. The partnership will seek to
develop and globally commercialize ET(A) receptor antagonists. As a
result of our contribution of technology, ICOS-TBC paid a license fee
to us in June 2000, and will make additional milestone payments to us
that together could be as much as $55.5 million for the development and
commercialization of products resulting from the collaboration. The
license fee is being amortized over the estimated development period of
the licensed technology and the Company recognized approximately
$121,000 of it as revenue during the three months ended March 31, 2001.
9
12
Pursuant to the terms of the limited partnership agreement,
ICOS-TBC has been initially capitalized by a cash contribution from
ICOS and the Company's contribution of intellectual property associated
with sitaxsentan sodium. The intellectual property contributed by the
Company to ICOS-TBC had no basis for financial reporting purposes and,
accordingly, the Company assigned no value to the transfer of
technology. Upon the transfer of its technology to ICOS-TBC, the
Company received a license fee, which is being amortized into revenue
over the expected developmental period of sitaxsentan sodium. See Note
1 (i), Revenue Recognition, above.
During the three months ended March 31, 2001, the Company
recognized a loss of approximately $1,529,000, representing the
Company's proportionate share of the losses of ICOS-TBC, including
amounts billed by the Company to ICOS-TBC of $1,556,000, as discussed
in Note 8, Research Agreements, above. The loss of ICOS-TBC also
includes, and is partially offset by, the assignment by the Company to
ICOS-TBC of $325,000 in research reimbursement funds from LG Chemical.
Schering-Plough Research Collaboration and License Agreement
On June 30, 2000, TBC and Schering-Plough entered into a
worldwide research collaboration and license agreement to discover,
develop and commercialize VLA-4 antagonists. VLA-4 antagonists
represent a new class of compounds that has shown promise in multiple
preclinical animal models of asthma. The primary focus of the
collaboration will be to discover orally available VLA-4 antagonists as
treatments for asthma.
Under the terms of the agreement, Schering-Plough obtains the
exclusive worldwide rights to develop, manufacture and market all
compounds from TBC's library of VLA-4 antagonists, as well as the
rights to a second integrin antagonist. TBC will be responsible for
optimizing a lead compound and additional follow-on compounds.
Schering-Plough is supporting research at TBC and will be responsible
for all costs associated with the worldwide product development program
and commercialization of the compound. In addition to reimbursing
research costs, Schering-Plough paid an upfront license fee and will
pay development milestones and royalties on product sales resulting
from the agreement. This upfront license fee is being amortized into
revenue over the expected development period. Total payments to TBC for
both programs, excluding royalties, could reach $87.0 million.
(10) FOREIGN SUBSIDIARY
During the third quarter 2000, TBC formed Revotar to conduct research
and development of novel small molecule compounds and to develop and
commercialize selectin antagonists. Upon formation, Revotar received certain
development and commercialization rights to the Company's selectin antagonist
compounds as well as rights to certain other TBC research technology. Revotar
also received approximately $5 million in funding from three German venture
capital funds. The Company retained ownership of approximately 55% of the
outstanding common stock of Revotar and has consolidated the financial results
of Revotar into TBC's consolidated financial statements. Since the developmental
and commercialization rights contributed by the Company to Revotar had no basis
for financial reporting purposes, the Company assigned no value to its
contribution of intellectual property rights. The Company's equity in the
originally contributed assets by the minority shareholders is reported as a
deferred credit of $2,620,010 on the consolidated balance sheet at March 31,
2001 and December 31, 2000. The minority interest in Revotar at March 31, 2001
and December 31, 2000, was $1,900,605 and $1,962,273, respectively. The
Company's consolidated net loss for the three months ended March 31, 2001 was
reduced by $61,668 for the Revotar minority shareholders' approximately 45%
interest in Revotar's loss.
(11) COMMERCIALIZATION AGREEMENT
In connection with TBC's development and commercialization of
Argatroban, in August 1997, TBC entered into a Product Development, License and
CoPromotion Agreement with GSK (the "SmithKline Agreement") whereby GSK was
granted exclusive rights to work with TBC in the development and
10
13
commercialization of Argatroban in the U.S. and Canada for specified
indications. GSK paid $8.5 million in upfront license fees during August 1997, a
$5 million milestone payment in October 1997, and a $7.5 million milestone
payment in June 2000. As a result of the Company's implementation of SAB101,
effective January 1, 2000, revenues in the three months ended March 31, 2000
include approximately $1,183,000 of the license fee and 1997 milestone payments.
The effect on revenues in the three months ended March 31, 2000 was offset by a
loss of approximately $2,366,000 from the cumulative effect, at January 1, 2000,
of the change in accounting principle resulting from the deferral of certain
license fees and milestone payments received in 1997.
(12) 401(k) PLAN
The Company adopted a 401(k) plan, which became effective on September
1, 1993. Under the plan, all employees with three months of service are eligible
to participate in the plan and may contribute up to 15 percent of their
compensation, with a maximum of $10,500 per employee in 2000. Effective on
January 1, 2001, the Compensation Committee of the Board of Directors approved
an employer matching contribution of $0.50 on the dollar of employee
contributions up to 6% of salaries and the 401(k) plan was amended effective
January 1, 2001, resulting in a charge to operating expense of approximately
$40,000 during the three months ended March 31, 2001.
(13) COMMITMENTS AND CONTINGENCIES
(a) Foreign Currency Exchange Risk
The Company is exposed to market risk primarily from changes
in foreign currency exchange rates.
The Company has a majority-owned subsidiary in Berlin, Germany
and consolidates the results of operations into its consolidated
financial results. Although not significant to date, the Company's
reported expenses and cash flows from this subsidiary are exposed to
changing exchange rates. Furthermore, the carrying value of the
Company's investment in its German subsidiary will fluctuate as a
result of such changing exchange rates. The Company, accordingly,
included an unrealized loss of approximately $295,000 in its
comprehensive loss for the three months ended March 31, 2001. The
Company had an intercompany receivable from our Berlin subsidiary at
March 31, 2001 and December 31, 2000; however this amount is
denominated in U.S. dollars and is not exposed to exchange risk. The
Company contracts with entities in other areas outside the U.S. and
these transactions are denominated in a foreign currency. To date, the
currencies of these other countries have not fluctuated materially. At
this time, management has not deemed it cost effective to engage in a
program of hedging the effect of foreign currency fluctuations on the
Company's operating results using derivative financial instruments.
(b) Legal proceedings
The Company is presently involved in several legal actions,
none of which are expected to have a material adverse effect upon the
results of operations or financial condition of the Company when
considered either individually or in the aggregate.
(14) SUBSEQUENT EVENT
On May 3, 2001, the Company announced that its Board of Directors has
authorized a stock repurchase program to buy up to 3 million shares, or
approximately 7 percent, of the Company's outstanding common stock over an 18
month period.
11
14
ITEM 2
TEXAS BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000
OVERVIEW
The following discussion of our financial condition and results of
operations should be read in conjunction with our consolidated financial
statements and the related notes to the financial statements included in our
Annual Report on Form 10-K for the year ended December 31, 2000, and our
condensed consolidated financial statements and the related notes to the
financial statements included in this Quarterly Report on Form 10-Q.
Since our inception in 1989, we have primarily devoted our resources to
funding drug discovery research and development. We have been unprofitable to
date and expect to incur substantial operating losses for the next several years
as we invest in product research and development, preclinical and clinical
testing and regulatory compliance. We have sustained net losses of approximately
$108.1 million from the date of our inception to March 31, 2001. We have
primarily financed our operations to date through:
o private placements of common stock, which raised an aggregate
of $34.3 million in net proceeds;
o our initial public offering, which raised an aggregate of
$24.2 million in net proceeds including the over-allotment
sold in January 1994;
o a private placement of 5% preferred stock on March 14, 1997,
which raised approximately $6.0 million in net proceeds, and;
o subsequent public offerings, one of which closed during
October 1997 and raised approximately $26.7 million and one of
which closed during April 2000 and raised approximately $65.2
million in net proceeds; and
o exercise of public warrants for an aggregate of approximately
$21.6 million in net proceeds through January 2, 2001.
Our operating results have fluctuated significantly during each
quarter, and we anticipate that such fluctuations, which are largely
attributable to varying research and development commitments and expenditures,
will continue for the next several years. Operating results for the three months
ended March 31, 2001 are not necessarily indicative of the results, which may be
expected for any other interim period, or for the year ended December 31, 2001.
RESULTS OF OPERATIONS
THREE MONTH PERIODS ENDED MARCH 31, 2001 AND 2000
Revenues were approximately $2,269,000 and $1,706,000 in the three
month periods ended March 31, 2001 and 2000, respectively. Revenues in the three
months ended March 31, 2001 and 2000 included approximately $1,433,000 and
$523,000 respectively from research agreements, commercialization agreements and
collaborations with various other companies. In mid-November, 2000, GSK began
the sale of Argatroban, for which the Company received royalties of
approximately $177,000 during the three
12
15
months ended March 31, 2001. Because the FDA first approved Argatroban in June
2000, there were no comparable sales or royalties in the prior years.
The Company implemented on October 1, 2000, effective January 1, 2000,
Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements
("SAB101"), promulgated by the United States Securities and Exchange Commission
("SEC") in December 1999. Pursuant to the requirements of SAB101, receipts of
license fees and milestone payments, which in prior years had been recognized
upon receipt, are now recognized as revenues over the developmental period. As a
result of the adoption of SAB101, revenues in the three months ended March 31,
2000 were increased by approximately $1,183,000 to reflect the amortization of a
license fee and milestone payment received from GSK in 1997. For further
discussion of SAB101 see Note 1 to the Condensed Consolidated Financial
Statements, included herein.
In addition to the research payments from LG Chemical, which are
included in the two periods presented, Research agreement revenue includes
research payments from Schering-Plough pursuant to the agreement discussed
above. Collaborative research and development from related party of
approximately $401,000 in the three months ended March 31, 2001 is comprised of
payments received from ICOS-TBC pursuant to the limited partnership agreement,
discussed above. License fee and milestone income in the three months ended
March 31, 2001 of approximately $257,000 is comprised of a portion of license
fees received from ICOS-TBC and Schering-Plough, pursuant to the agreements
discussed above. License fee and milestone income in the three months ended
March 31, 2000 is comprised of a portion of a license fee and milestone payment
received from GSK in 1997.
Research and development expense declined approximately $365,000 or
9.6% in the three months ended March 31, 2001, as compared with the three months
ended March 31, 2000. In June 2000, the Company entered into a limited
partnership agreement with ICOS Corporation to form ICOS-Texas Biotechnology,
L.P. ("ICOS-TBC"). The partnership was formed to develop and globally
commercialize endothelin-A receptor antagonists from the TBC endothelin
antagonist program. As a result, expenses associated with the endothelin
antagonist program during the three months ended March 31, 2001 are included in
the Company's share of the losses of ICOS-TBC. When the equity in loss of
affiliate of approximately $1,529,000 is taken into consideration, total
research and development expenses increased approximately $1,164,000 or 30.8%.
General and administrative expenses in the three months ended March 31,
2001 decreased approximately $384,000 or 19.9% when compared with the three
months ended March 31, 2000. General and administrative expenses in the three
months ended March 31, 2000 included premarketing and consulting costs related
to Argatroban, and patent legal fees related to the sitaxsentan program, which
did not recur in the three months ended March 31, 2001.
Investment income in the three months ended March 31, 2001 increased
approximately $1,449,000 compared to the comparable prior year period. The
increase is the result of the investment of proceeds from the Company's common
stock offering in April 2000.
The minority shareholders' share in the losses of our German
subsidiary, Revotar, was approximately $62,000 in the three months ended March
31, 2001. The expenses of Revotar are included in the Company's consolidated
expenses, reported above.
We incurred net losses before cumulative effect of change in accounting
principle of $2,509,563 and $3,803,741 in the three months ended March 31, 2001
and 2000, respectively. The decline in net loss in the current period is
primarily due to the increase in investment income, discussed above.
The net loss in the three months ended March 31, 2000 was increased by
a loss of approximately $2,366,000 from the cumulative effect, at January 1,
2000, of the change in accounting principle resulting from the deferral of
certain license fees and milestone payments received in 1997.
13
16
LIQUIDITY AND CAPITAL RESOURCES
We have financed our research and development activities to date
principally through:
o our initial public offering and subsequent public offerings of
our common stock;
o private placements of our common and preferred stock;
o issuances of common stock in conjunction with acquisitions,
research and collaboration agreements and upon exercises of
stock options and warrants, including our publicly traded
warrants;
o milestone and research payments received in conjunction with
research and collaborative agreements; and
o investment income, net of interest expense.
At March 31, 2001 we had cash, cash equivalents and short-term and
long-term investments of $108.8 million, including the cash of Revotar. The
Company enrolled its first patient in a clinical trial for ischemic stroke in
April 2001, and expects to receive, under the terms of a collaborative agreement
with Mitsubishi, a $2.0 million milestone payment in May. On May 3, 2001, the
Company announced that its Board of Directors has authorized a stock repurchase
program to buy up to 3 million shares, or approximately 7 percent, of the
Company's outstanding common stock over an 18 month period.
We expect to incur substantial research and development expenditures as
we design and develop biopharmaceutical products for the prevention and
treatment of cardiovascular and other diseases. We anticipate that our operating
expenses will increase during 2001 and subsequent years because:
o We will incur significant expenses in conjunction with the
ICOS-TBC partnership for endothelin antagonists and clinical
trial costs for sitaxsentan and TBC1269 compounds and expect
to begin to incur costs for clinical trials related to
additional compounds. These costs include:
- hiring personnel to direct and carry out all
operations related to clinical trials;
- hospital and procedural costs;
- services of a contract research organization; and
- purchasing and formulating large quantities of the
compound to be used in such trials.
o There will be additional costs in future periods related to
Argatroban in complying with ongoing FDA requirements and
possible clinical trial expenditures for additional
therapeutic indications.
o Our administrative costs and costs to commercialize our
products will increase as our products are further developed
and marketed.
We have been unprofitable to date and expect to incur operating losses
for the next several years as we invest in product research and development,
preclinical and clinical testing and regulatory compliance. We will require
substantial additional funding to complete the research and development of our
product
14
17
candidates, to establish commercial scale manufacturing facilities, if
necessary, and to market our products. We have accumulated approximately $108.1
million in net losses through March 31, 2001. Estimates of our future capital
requirements will depend on many factors, including:
o market acceptance and commercial success of Argatroban;
o expenses and risks associated with clinical trials to expand
the indications for Argatroban;
o continued scientific progress in our drug discovery programs;
o the magnitude of these programs;
o progress with preclinical testing and clinical trials;
o the time and costs involved in obtaining regulatory approvals;
o the costs involved in filing, prosecuting and enforcing patent
claims;
o competing technological and market developments and changes in
our existing research relationships;
o our ability to maintain and establish additional collaborative
arrangements; and
o effective commercialization activities and arrangements.
Subject to these factors, we anticipate that our existing capital
resources and other revenue sources, should be sufficient to fund our cash
requirements in the foreseeable future without considering the impact of
revenues from Argatroban. Notwithstanding revenues, which may be produced
through sales of potential future products if approved, we anticipate that we
will need to secure additional funds to continue the required levels of research
and development to reach our long-term goals. We intend to seek such additional
funding through collaborative arrangements and/or through public or private
financings.
We cannot assure you that additional financing will be available, or,
if available, that it will be available on acceptable terms. If additional funds
are raised by issuing securities, further dilution of the equity ownership of
existing stockholders will result. If adequate funds are not available, we may
be required to delay, scale back or eliminate one or more of our drug discovery
or development programs or obtain funds through arrangements with collaborative
partners or others that may require us to relinquish rights to certain of our
technologies, product candidates or products that we would not otherwise
relinquish.
Our ability to raise additional funding is contingent upon a number of
factors which include:
o the market acceptance and commercial success of Argatroban and
expanded use of Argatroban for other indications;
o the ongoing cost of research and development activities;
o the attainment of research and clinical goals of product
candidates;
o the timely approval of our product candidates by appropriate
governmental and regulatory agencies;
o the presence and effect of competitive products;
15
18
o our ability to manufacture and market products commercially;
and
o the retention of key personnel; and conditions in the capital
markets.
RECENT DEVELOPMENTS
On May 9, 2001, the Company and Henry Ford Health Systems announced the
presentation of positive preclinical stroke data for Texas Biotechnology's
Argatroban, at the Society for Academic Emergency Medicine ("SAEM") in Atlanta.
Results from this study demonstrated that Argatroban and tPA, when used in
combination at four hours after the onset of an embolic stroke, reduced ischemic
lesion size without increasing gross cerebral hemorrhage rates (bleeding into
the brain) in rats. This preclinical stroke model closely simulates the
pathophysiology of humans experiencing ischemic stroke.
In this study, there was a statistically significant reduction in
lesion size without any increase in bleeding in the Argatroban plus tPA treated
rats versus the tPA treated group.
HAZARDOUS MATERIALS AND ENVIRONMENTAL MATTERS
Our research and development processes involve the controlled use of
hazardous materials, chemicals and radioactive materials and produce waste
products. We are subject to federal, state and local laws and regulations
governing the use, manufacture, storage, handling and disposal of hazardous
materials and waste products. Although we believe that our safety procedures for
handling and disposing of hazardous materials comply with the standards
prescribed by laws and regulations, the risk of accidental contamination or
injury from these materials cannot be eliminated completely. In the event of an
accident, we could be held liable for any damages that result. This liability
could exceed our resources or not be covered by our insurance. Although we
believe that we are in compliance in all material respects with applicable
environmental laws and regulations, there can be no assurance that we will not
be required to incur significant costs to comply with environmental laws and
regulations in the future. There can also be no assurance that our operations,
business or assets will not be materially adversely affected by current or
future environmental laws or regulations.
IMPACT OF INFLATION AND CHANGING PRICES
The pharmaceutical research industry is labor intensive, and wages and
related expenses increase in inflationary periods. The lease of space and
related building services for the Houston facility contains a clause that
escalates rent and related services each year based on the increase in building
operating costs and the increase in the Houston Consumer Price Index,
respectively. To date, inflation has not had a significant impact on our
operations.
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
This Form 10-Q contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. All statements other than statements of historical fact
included in and incorporated by reference into this Form 10-Q are
forward-looking statements. These forward-looking statements include, without
limitation, statements regarding our estimate of the sufficiency of our existing
capital resources and our ability to raise additional capital to fund cash
requirements for future operations, and regarding the uncertainties involved in
the drug development process and the timing of regulatory approvals required to
market these drugs. Although we believe that the expectations reflected in these
forward-looking statements are reasonable, we cannot give any assurance that
such expectations reflected in these forward-looking statements will prove to
have been correct.
When used in this Form 10-Q, the words "expect," "anticipate,"
"intend," "plan," "believe," "seek," "estimate" and similar expressions are
intended to identify forward-looking statements, although not all
forward-looking statements contain these identifying words. Because these
forward-looking statements involve risks and uncertainties, actual results could
differ materially from those expressed or implied by
16
19
these forward-looking statements for a number of important reasons, including
those discussed under "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital Resources."
You should read these statements carefully because they discuss our
expectations about our future performance, contain projections of our future
operating results or our future financial condition, or state other
"forward-looking" information. Before you invest in our common stock, you should
be aware that the occurrence of any of the contingent factors described under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources" could substantially harm our
business, results of operations and financial condition and that upon the
occurrence of any of these events, the trading price of our common stock could
decline, and you could lose all or part of your investment.
We cannot guarantee any future results, levels of activity, performance
or achievements. Except as required by law, we undertake no obligation to update
any of the forward-looking statements in this Form 10-Q after the date of this
Form 10-Q.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
FOREIGN CURRENCY EXCHANGE RISK
We are exposed to market risk primarily from changes in foreign
currency exchange rates. The following describes the nature of this risk that is
not believed to be material to us.
We have a majority-owned subsidiary in Berlin, Germany and consolidate
the results of operations into our consolidated financial results. Although not
significant to date, our reported expenses and cash flows from this subsidiary
are exposed to changing exchange rates. Furthermore, the carrying value of the
Company's investment in its German subsidiary will fluctuate as a result of such
changing exchange rates. The Company, accordingly, included an unrealized loss
of approximately $295,000 in its comprehensive loss for the three months ended
March 31, 2001. We had an intercompany receivable from our Berlin subsidiary at
March 31, 2001 and December 31, 2000; however this amount is denominated in U.S.
dollars and is not exposed to exchange risk. We have contracts with entities in
other areas outside the U.S. and these transactions are denominated in a foreign
currency. To date, the currencies of these other countries have not fluctuated
materially. At this time, we have not deemed it cost effective to engage in a
program of hedging the effect of foreign currency fluctuations on our operating
results using derivative financial instruments.
17
20
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Three reports on Form 8-K (Item 5) were filed during the quarter ended
March 31, 2001. The first report was filed with the SEC on January 5, 2001, and
announced that we have received approximately $21.7 million from the exercise of
approximately 2,570,000 of our publicly traded Common Stock Warrants. The second
report was filed with the SEC on February 28, 2001, and announced our results
for the fourth quarter and year-end 2000. The third report was filed with the
SEC on March 14, 2001, and reported that we have begun enrollment of a Phase II
multi-center placebo-controlled trial to assess the safety and efficacy of
Argatroban in patients with acute ischemic stroke.
18
21
TEXAS BIOTECHNOLOGY CORPORATION
MARCH 31, 2001
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, on the 15th day of May, 2001.
TEXAS BIOTECHNOLOGY CORPORATION
By: /s/ David B. McWilliams
------------------------
David B. McWilliams
President and Chief Executive Officer
By: /s/ Stephen L. Mueller
------------------------
Stephen L. Mueller
Vice President, Finance and Administration
Secretary and Treasurer
(Principal Financial and Accounting Officer)
19