UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 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
608-274-7533
(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 October 31, 1996, 4,353,691 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 September 30, 1996
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION Page
Item 1. Financial statements
Consolidated Balance Sheets
September 30, 1996, and June 30, 1996. . . . . . . . . . 3
Consolidated Statements of Operations
Three Months Ended September 30, 1996
and 1995 . . . . . . . . . . . . . . . . . . . . . . . . 5
Consolidated Statements of Cash Flows
Three Months Ended September 30, 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
- ---------------------------------------------------------------------------
September 30, June 30,
1996 1996
(Unaudited) (Audited)
- ---------------------------------------------------------------------------
Current assets:
Cash and cash equivalents $10,755,612 $11,060,843
Receivables 1,997 1,619
Prepaid expenses 18,000 20,695
- ---------------------------------------------------------------------------
Total current assets 10,775,609 11,083,157
Property, plant and equipment--at cost:
Lab improvements 21,092 21,092
Furniture and fixtures 21,180 20,390
Machinery and other equipment 225,453 215,979
- ---------------------------------------------------------------------------
267,725 257,461
Less accumulated depreciation 199,637 192,677
- ---------------------------------------------------------------------------
68,088 64,784
Excess of cost over fair value of net assets
acquired, net of accumulated amortization
of $575,874 at September 30, 1996 and
$553,512 at June 30, 1996 784,043 806,405
Patent fees, net of accumulated amortization
of $278,462 at September 30, 1996 and $251,462
at June 30, 1996 336,110 306,979
- ---------------------------------------------------------------------------
$11,963,850 $12,261,325
===========================================================================
See accompanying notes to consolidated financial statements.
BONE CARE INTERNATIONAL, INC., AND SUBSIDIARY
Consolidated Balance Sheets
Liabilities and Shareholders' Equity
- ---------------------------------------------------------------------------
September 30, June 30,
1996 1996
(Unaudited) (Audited)
- ---------------------------------------------------------------------------
Current liabilities:
Accounts payable $ 63,963 $ 73,236
Accrued liabilities:
Compensation payable 12,635 4,133
Property, payroll, and other taxes 1,048 1,750
- ---------------------------------------------------------------------------
Total current liabilities 77,646 79,119
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
4,353,691 shares at September 30, 1996
and 4,353,691 at June 30, 1996 11,393,883 11,393,883
Additional paid-in capital 3,524,275 3,524,275
- ---------------------------------------------------------------------------
14,918,158 14,918,158
Accumulated deficit (3,031,954) (2,735,952)
- ---------------------------------------------------------------------------
11,886,204 12,182,206
- ---------------------------------------------------------------------------
$11,963,850 $12,261,325
===========================================================================
See accompanying notes to consolidated financial statements.
BONE CARE INTERNATIONAL, INC., AND SUBSIDIARY
Consolidated Statements of Operations
(Unaudited)
- ------------------------------------------------------------------------------
Three months ended
September 30, September 30
1996 1995
- ------------------------------------------------------------------------------
REVENUES $ 525 $ -
OPERATING EXPENSES
Cost of sales 3,785 -
Research and development 369,364 125,727
General and administrative 67,893 40,273
- ------------------------------------------------------------------------------
441,042 166,000
- ------------------------------------------------------------------------------
Loss from operations (440,517) (166,000)
- ------------------------------------------------------------------------------
OTHER INCOME (EXPENSE):
Interest income 144,515 333
Interest expense - Lunar
Corporation - (10,339)
- ------------------------------------------------------------------------------
144,515 (10,006)
- ------------------------------------------------------------------------------
NET LOSS $ (296,002) $(176,006)
==============================================================================
Net loss per common share $(0.07) $(0.21)
==============================================================================
Weighted average number of
common shares 4,353,691 848,942
==============================================================================
BONE CARE INTERNATIONAL, INC., AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
- ---------------------------------------------------------------------------
Three months ended
September 30, September 30,
1996 1995
- ---------------------------------------------------------------------------
Cash flows from operating activities:
Net loss $ (296,002) $ (176,006)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization 56,322 28,451
Changes in assets and liabilities:
Receivables (378) 1,748
Prepaid expenses 2,695 -
Accounts payable (9,273) (4,875)
Accrued liabilities 7,800 7,419
- ---------------------------------------------------------------------------
Net cash used in operating activities (238,836) (143,263)
- ---------------------------------------------------------------------------
Cash flows from investing activities:
Additions to property,
plant and equipment (10,264) -
Patent fees (56,131) (534)
- ---------------------------------------------------------------------------
Net cash used in investing activities $ (66,395) $ (534)
- ---------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from Lunar Corporation advances - 130,339
Net cash provided by financing activities - 130,339
- ---------------------------------------------------------------------------
Net decrease in cash and cash
equivalents (305,231) (13,458)
Cash and cash equivalents at
beginning of period 11,060,843 22,595
- ---------------------------------------------------------------------------
Cash and cash equivalents at end of period $10,755,612 $ 9,137
===========================================================================
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, 1996, 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,
1996, included in the Company's Form 10-K as filed with the Securities and
Exchange Commission on September 27, 1996.
The consolidated balance sheet as of September 30, 1996, the consolidated
statements of income for the three months ended September 30, 1996 and 1995, and
the consolidated statements of cash flows for the three months ended September
30, 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 months ended September 30, 1996,
are not necessarily indicative of the results to be expected for the entire
fiscal year ending June 30, 1997.
Item 2. Management Discussion and Analysis of Financial Condition and Results
of
Operations
Results of Operations
Revenue of $525 in the three months ended September 30, 1996 relate to
contract services performed by Continental Assays Corporation, a subsidiary of
the Company.
Research and development expenses increased to $369,364 in the three months
ended September 30, 1996 from $125,727 in the three months ended September 30,
1995. These increases are primarily due to higher expenditures for clinical
trials of one-alpha D2 for treating secondary hyperparathyroidism associated
with end-stage renal disease.
Interest income increased to $144,515 in the three months ended September
30, 1996 from $333 in the three months ended September 30, 1995. These
increases are due to higher cash balances which resulted from capital
contributions made in fiscal year 1996 by Lunar Corporation ("Lunar") and Draxis
Health, Inc., the Company's shareholders at the time of the contributions. On
May 8, 1996, Lunar distributed its ownership of the Company to its shareholders.
There was no interest expense in the three months ended September 30, 1996
compared to $10,339 in the three months ended September 30, 1995. Interest
expense in the three months ended September 30, 1995 relates exclusively to
loans made by Lunar to the Company. Lunar canceled 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
Cash and cash equivalents decreased $305,231 to $10,755,612 in the three
months ended September 30, 1996. The decrease is primarily due to increased
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 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 $3.8 million will be used for the development of other products.
Management believes current levels of cash and cash equivalents are
adequate to finance the Company's operations through the end of fiscal 1998.
The Company may require additional funds for research and development activities
after that time. Additional funds also could be required before that time if
the Company were to expand the scope of its activities. There is no assurance
additional financing will be available 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 September 30, 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)
Date: November 13, 1996 Charles W. Bishop
- ----------------------------- ------------------------------------------
Charles W. Bishop
President
(Principal Executive Officer)
Date: November 13, 1996 Robert A. Beckman
- ----------------------------- ------------------------------------------
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 September 30, 1996
No. Description Page
11 Statement Regarding Computation of Earnings Per Share . . . . . .12
27 Financial Data Schedule . . . . . . . . . . . . . . . . . . . . .13