NEOPHARM INC - 10-Q Quarterly Report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

ý	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For Quarterly Period Ended September 30, 2004

Or

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 33-90516

NEOPHARM, INC.

(Exact name of Registrant as specified in its charter)

Delaware		51-0327886
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

150 Field Drive Suite 195 Lake Forest, Illinois 60045
(Address of principal executive offices) (Zip Code)

(847) 295-8678
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ý No o

As of October 31, 2004 the number of shares outstanding of each of the issuer’s classes of common stock was as follows:

Title of each class		Number of shares outstanding
Common Stock ($.0002145 par value)		23,294,165

PART I - FINANCIAL INFORMATION

Item 1 - - Financial Statements

NEOPHARM, INC.
Consolidated Balance Sheets

	September 30, 2004			December 31, 2003
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	75,756,502		$	36,958,941
Investments in marketable securities	—			4,166,351
Trade accounts receivable	13,072			—
Inventories	2,931			—
Prepaid expenses	1,632,184			909,833
Other receivables	314,741			284,750
Total current assets	77,719,430			42,319,875
Fixed assets, net of accumulated depreciation	3,191,671			3,760,705
Total assets	$	80,911,101		$	46,080,580

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	542,023		$	499,682
Accrued clinical trial expense	4,624,131			1,658,293
Accrued legal expenses	550,894			1,076,228
Accrued compensation	2,569,897			2,144,163
Other accrued expenses	616,504			684,859
Unearned revenue	14,400			—
Total current liabilities	8,917,849			6,063,225

Stockholders’ equity:
Preferred stock, $0.01 par value; 15,000,000 shares authorized: 0 shares issued and outstanding	—			—
Common stock, $0.0002145 par value; 50,000,000 shares authorized: 23,294,165 and 18,862,906 shares issued and outstanding, respectively	4,998			4,046
Additional paid-in capital	246,640,814			171,704,628
Accumulated deficit	(174,652,560		)	(131,691,319		)
Total stockholders’ equity	71,993,252			40,017,355
Total liabilities and stockholders’ equity	$	80,911,101		$	46,080,580

The accompanying notes are an integral part of these financial statements.

NEOPHARM, INC.

Consolidated Statements of Operations
Three- and Nine-Month Periods Ended September 30, 2004 and 2003
(Unaudited)

	Three-Month Periods Ended						Nine-Month Periods Ended
	September 30, 2004			September 30, 2003			September 30, 2004			September 30, 2003
Revenues	$	84,740		$	—		$	116,020		$	—
Cost of revenues	3,466			—			4,008			—
Gross margin	81,274			—			112,012			—

Expenses:
Research and development	10,621,195			9,164,262			33,878,801			25,040,104
Selling, general, and administrative	3,712,207			3,168,363			9,896,836			15,453,434
Related-party expenses	—			35,587			69,370			110,188
Total expenses	14,333,402			12,368,212			43,845,007			40,603,726
Loss from operations	(14,252,128		)	(12,368,212		)	(43,732,995		)	(40,603,726		)

Interest income	297,558			148,615			771,754			688,062
Net loss	$	(13,954,570	)	$	(12,219,597	)	$	(42,961,241	)	$	(39,915,664	)
Net loss per share —

PART I. FINANCIAL INFORMATION
	Item 1.	Financial Statements
		Consolidated Balance Sheets as of September 30, 2004 (Unaudited) and December 31, 2003
		Consolidated Statements of Operations for the three- and nine-month periods ended September 30, 2004 and 2003 (Unaudited)
		Consolidated Statements of Cash Flows for the nine-month periods ended September 30, 2004 and 2003 (Unaudited)
		Notes to Consolidated Financial Statements (Unaudited)
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk
	Item 4	Controls and Procedures
PART II. OTHER INFORMATION
	Item 1.	Legal Proceedings
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds
	Item 3.	Defaults Upon Senior Securities
	Item 4.	Submission of Matters to a Vote of Security Holders
	Item 5.	Other Information
	Item 6.	Exhibits
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