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 the quarterly period ended March 31, 1996
--------------
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 0-27854
BONE CARE INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Wisconsin 2830 39-1527471
(State of (Primary Standard Industry (IRS Employer
Incorporation) Classification Code Number Identification No.)
313 West Beltline Highway
Madison, Wisconsin 53713
608-274-2663
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
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
--- ---
As of April 30, 1996, 2,655,017 shares of the registrant's Common Stock, no
par value, were outstanding.
BONE CARE INTERNATIONAL, INC., AND SUBSIDIARY
FORM 10-Q
For the quarterly period ended March 31, 1996
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION Page
Item 1. Financial statements
Consolidated Balance Sheets
March 31, 1996, and June 30, 1995. . . . . . . . . . . . . 3
Consolidated Statements of Operations
Three and Nine Months Ended March 31, 1996
and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . 5
Consolidated Statements of Cash Flows
Nine Months Ended March 31, 1996
and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . 6
Notes to Consolidated Financial Statements . . . . . . . . 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . 8
PART II - OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . 9
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
EXHIBIT INDEX. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
PART 1. FINANCIAL INFORMATION
ITEM 1. Financial Statements
BONE CARE INTERNATIONAL, INC., AND SUBSIDIARY
Consolidated Balance Sheets
- --------------------------------------------------------------------------
Assets
- --------------------------------------------------------------------------
March 31, June 30,
1996 1995
(Unaudited) (Audited)
- --------------------------------------------------------------------------
Current assets:
Cash and cash equivalents $ 760,330 $ 22,595
Receivables 64,280 1,897
Prepaid expenses 18,000 18,000
- -------------------------------------------------------------------------
Total current assets 842,610 42,492
Property, plant and equipment--at cost:
Lab improvements 21,091 18,858
Furniture and fixtures 20,391 5,038
Machinery and other equipment 185,633 89,756
- -------------------------------------------------------------------------
227,115 113,652
Less accumulated depreciation and amortization 179,716 77,514
- -------------------------------------------------------------------------
47,399 6,138
Excess of cost over fair value of net assets
acquired, net of accumulated amortization
of $531,150 at March 31, 1996 and $464,064
at June 30, 1995 828,767 895,853
Patent fees, net of accumulated amortization
of $224,462 at March 31, 1996 and $34,000
at June 30, 1995 295,155 54,389
- -------------------------------------------------------------------------
$2,013,931 $1,028,872
=========================================================================
See accompanying notes to consolidated financial statements.
BONE CARE INTERNATIONAL, INC., AND SUBSIDIARY
Consolidated Balance Sheets
- -----------------------------------------------------------------------------
Liabilities and Shareholders' Equity
- -----------------------------------------------------------------------------
March 31, June 30,
1996 1995
(Unaudited) (Audited)
- -----------------------------------------------------------------------------
Current liabilities:
Accounts payable $ 46,154 $ 23,802
Advances from Lunar Corporation - 444,344
Accrued liabilities:
Compensation payable 13,781 -
Property, payroll, and other taxes 1,273 1,594
- -----------------------------------------------------------------------------
Total current liabilities 61,208 469,740
Shareholders' equity:
Preferred stock--authorized 1,000,000
shares of $.001 par value; none issued - -
Common stock--authorized 14,000,000 shares
of no par value; issued and outstanding
2,655,017 shares at March 31, 1996
and 848,942 at June 30, 1995 1,393,883 583,333
Additional paid-in capital 2,799,275 1,453,984
- -----------------------------------------------------------------------------
4,193,158 2,037,317
Accumulated deficit (2,240,435) (1,478,185)
- -----------------------------------------------------------------------------
1,952,723 559,132
- -----------------------------------------------------------------------------
$2,013,931 $1,028,872
=============================================================================
See accompanying notes to consolidated financial statements.
BONE CARE INTERNATIONAL, INC., AND SUBSIDIARY
Consolidated Statements of Operations
(Unaudited)
- -----------------------------------------------------------------------------
Three months ended Nine months ended
March 31, March 31, March 31, March 31,
1996 1995 1996 1995
- -----------------------------------------------------------------------------
REVENUES $ 12,255 $ - $ 18,769 $ -
OPERATING EXPENSES
Cost of sales 6,499 - 11,834 -
Research and development 230,205 141,824 642,741 362,039
General and administrative 48,362 39,510 125,997 133,287
- -----------------------------------------------------------------------------
285,066 181,334 780,572 495,326
- -----------------------------------------------------------------------------
Loss from operations (272,811) (181,334) (761,803) (495,326)
- -----------------------------------------------------------------------------
OTHER INCOME (EXPENSE):
Interest income 12,252 411 13,048 2,322
Interest expense - Lunar
Corporation - (2,900) (13,495) (3,321)
- -----------------------------------------------------------------------------
12,252 (2,489) (447) (999)
- -----------------------------------------------------------------------------
NET LOSS $ (260,559) $(183,823) $ (762,250) $(496,325)
=============================================================================
Net loss per common share $(0.10) $(0.22) $(0.37) $(0.58)
=============================================================================
Weighted average number of
common shares 2,655,017 848,942 2,052,992 848,942
=============================================================================
See accompanying notes to consolidated financial statements.
BONE CARE INTERNATIONAL, INC., AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
- ---------------------------------------------------------------------------
Nine months ended
March 31, March 31,
1996 1995
- ---------------------------------------------------------------------------
Cash flows from operating activities:
Net loss $ (762,250) $ (496,325)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization 120,056 83,486
Changes in assets and liabilities:
Receivables 15,507 (524)
Prepaid expenses - 1,110
Accounts payable (97,991) 40,269
Accrued liabilities 13,460 (2,150)
- ---------------------------------------------------------------------------
Net cash used in operating activities (711,218) (374,134)
- ---------------------------------------------------------------------------
Cash flows from investing activities:
Disposals of (additions to) property,
plant and equipment 264 (2,279)
Patent fees (48,773) (17,664)
Continental Assays cash contribution 6,832 -
- ---------------------------------------------------------------------------
Net cash used in investing activities $ (41,677) $ (19,943)
- ---------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from Lunar Corporation advances 190,339 213,321
Proceeds from capital contributions 1,300,291 -
- ---------------------------------------------------------------------------
Net cash provided by financing activities 1,490,630 213,321
- ---------------------------------------------------------------------------
Net increase (decrease) in cash and
cash equivalents 737,735 (180,756)
Cash and cash equivalents at
beginning of period 22,595 200,065
- ---------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 760,330 $ 19,309
===========================================================================
See accompanying notes to consolidated financial statements.
BONE CARE INTERNATIONAL, INC., AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) BASIS OF PRESENTATION
The consolidated financial statements of Bone Care International, Inc.
(the "Company") presented herein, without audit except for balance sheet
information at June 30, 1995, have been prepared pursuant to the rules of the
Securities and Exchange Commission for quarterly reports on Form 10-Q and do
not include all of the information and note disclosures required
by generally accepted accounting principles. These statements should be read
in conjunction with the consolidated financial statements and notes thereto
for the year ended June 30, 1995, included in the Company's Information
Statement as filed with the Securities and Exchange Commission on April 18,
1996.
The consolidated balance sheet as of March 31, 1996, the consolidated
statements of income for the three and nine months ended March 31, 1996 and
1995, and the consolidated statements of cash flows for the nine months ended
March 31, 1996 and 1995 are unaudited but, in the opinion of management,
include all adjustments (consisting of normal, recurring adjustments)
necessary for a fair presentation of results for these interim periods. The
Company has reclassified the presentation of certain prior year information
to conform with the current presentation format.
The results of operations for the three and nine months ended March 31,
1996, are not necessarily indicative of the results to be expected for the
entire fiscal year ending June 30, 1996.
(2) STOCK DIVIDEND
The Company distributed a 789.7-for-1 stock split in the form of a stock
dividend on April 12, 1996. All share and per-share data has been adjusted
to reflect the stock dividend.
(3) NON-CASH TRANSACTIONS
In October 1995, Lunar Corporation contributed its ownership of
Continental Assays Corporation and certain assets with a book value of
$175,867 for 1,698,674 shares of the Company's common stock. In October
1995, Lunar Corporation also exchanged $634,683 of loans receivable from the
Company for 107,401 shares of common stock of the Company.
(4) SPIN-OFF OF THE COMPANY
On April 18, 1996, the Board of Directors of Lunar Corporation declared
a dividend, payable to holders of record of Lunar stock at the close of
business on April 24, 1996 (the "record date"), of one share of the Company's
common stock for every two shares of Lunar stock. The distribution occurred
on May 8, 1996 (the "distribution date"). Prior to the distribution, Lunar
made a capital contribution of $10,725,000 in exchange for additional common
stock of the Company and to pay for federal income tax benefits received from
the Company. As a result of the distribution, Lunar's 97.3% ownership of the
Company's common stock will be distributed to holders of Lunar stock as of
the record date.
Item 2. Management Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Revenue of $12,255 in the three months ended March 31, 1996 and $18,769
in the nine months ended March 31, 1996 relate to contract services performed
by Continental Assays Corporation, a subsidiary of the Company.
Research and development expenses increased to $230,205 in the three
months ended March 31, 1996 from $141,824 in the three months ended March 31,
1995, and to $642,741 in the nine months ended March 31, 1996 from $362,039
in the nine months ended March 31, 1995. These increases primarily occurred
because Bone Care assumed the research and development expenses for Vitamin
D analogs contributed by Lunar Corporation in October 1995. These increases
are also due in part to higher expenditures for clinical trials of one-alpha
D2 for treating secondary hyperparathyroidism associated with end-stage renal
disease.
Interest income increased to $12,252 in the three months ended March 31,
1996 from $411 in the three months ended March 31, 1995 and to $13,048 in the
nine months ended March 31, 1996 from $2,322 in the nine months ended March
31, 1995. These increases are due to higher cash balances which resulted
from capital contributions of $1,300,291 by the Company's shareholders.
Interest expense was $13,495 in the nine months ended March 31, 1996
compared to $3,321 in the nine months ended March 31, 1995. Interest expense
during these periods relates exclusively to loans made by Lunar to the
Company. Lunar cancelled outstanding loans in the amount of $634,683 in
October 1995 in exchange for additional shares of the Company's common stock.
Liquidity and Capital Resources
The Company has historically financed its operations through a
combination of capital contributions, license agreements and sales of
contract services. All third party collaborative research and licensing
agreements have either expired or terminated.
Cash and cash equivalents increased $737,735 to $760,330 in the nine
months ended March 31, 1996. This increase is primarily due to capital
contributions of $1,300,291. Lunar made an additional capital contribution
of $10,725,000 prior to the spin-off of the Company. The Company intends to
use the proceeds from the capital contribution for research and development
activities, including clinical trials of one-alpha D2 as a therapy for
secondary hyperparathyroidism in end-stage renal disease, and for general
corporate purposes. The Company currently estimates that approximately $5
million of the proceeds from the capital contribution will be needed to
complete clinical trials of one-alpha D2 and at least $2 million will be
needed to fund corporate and administrative expenses over the next two years.
It is currently anticipated that the remaining $3.725 million will be
used for the development of other products.
Management believes that the current level of cash and cash equivalents
and the $10,725,000 from the capital contribution are adequate to finance the
Company's current operations through the end of fiscal 1998. After that
time, the Company may require additional funds for research and development
activities. Additional funds also could be required before that time if the
Company were to expand the scope of its activities. There can be no
assurance that additional financing will be available in the future on
acceptable terms.
PART II - OTHER INFORMATION
BONE CARE INTERNATIONAL, INC., AND SUBSIDIARY
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
Safe Harbor Statement Under the Private Securities Litigation
Reform Act of 1995: Certain statements in this filing, and
elsewhere (such as in other filings by the Company with the
Securities and Exchange Commission, press releases, presentations
by the Company or its management and oral statements) constitute
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties, and
other factors which may cause the actual results, performance, or
achievements of the Company to be materially different from any
future results, performance, or achievements expressed or implied
by such forward-looking statements. Such factors include, among
other things, no assurance of successful product development,
technological risks, uncertainty of regulatory approvals,
regulatory policies in the United States and other
countries, availability of additional financing, reimbursement
policies of public and private health care payors, developments in
patents and other proprietary rights, competition from existing
therapies and from new therapies, and market and general economic
factors.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits furnished:
(11) Statement Re: Computation of Earnings Per Share
(27) Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the
quarter ended March 31, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BONE CARE INTERNATIONAL, INC.
(Registrant)
Charles W. Bishop
Date: May 13, 1996 ------------------------------------------
Charles W. Bishop
President
(Principal Executive Officer)
Robert A. Beckman
Date: May 13, 1996 ------------------------------------------
Robert A. Beckman
Vice President of Finance
and Treasurer
(Principal Financial and
Accounting Officer)
BONE CARE INTERNATIONAL, INC., AND SUBSIDIARY
Exhibit Index
For the Quarterly Period Ended March 31, 1996
No. Description Page
11 Statement Regarding Computation of Earnings Per Share . . . . . .12
27 Financial Data Schedule . . . . . . . . . . . . . . . . . . . . .13