UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 26, 2004
OR
| ¨ | 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: 000-04829
Nabi Biopharmaceuticals
(Exact name of registrant as specified in its charter)
| Delaware | 59-1212264 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
5800 Park of Commerce Boulevard N.W., Boca Raton, FL 33487
(Address of principal executive offices, including zip code)
(561) 989-5800
(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 twelve 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. x Yes ¨ No
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). x Yes ¨ No
The number of shares outstanding of the registrant’s common stock, par value $0.10 per share, at July 27, 2004 was 58,333,378 shares.
INDEX
| Page No. | ||||
| PART I. |
||||
| Item 1. |
3 | |||
| - Condensed Consolidated Balance Sheets, as of June 26, 2004 (unaudited) and December 27, 2003 |
3 | |||
| 4 | ||||
| 5 | ||||
| - Notes to Condensed Consolidated Financial Statements (unaudited) |
6 | |||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
17 | ||
| Item 3. |
28 | |||
| Item 4. |
29 | |||
| PART II. |
||||
| Item 1. |
30 | |||
| Item 2. |
Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities |
30 | ||
| Item 3. |
30 | |||
| Item 4. |
31 | |||
| Item 5. |
31 | |||
| Item 6. |
31 | |||
| 32 | ||||
2
CONDENSED CONSOLIDATED BALANCE SHEETS
| (UNAUDITED) | ||||||||
| (In thousands, except for share and per share amounts) |
June 26, 2004 |
December 27, 2003 |
||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 117,002 | $ | 115,756 | ||||
| Trade accounts receivable, net |
45,045 | 37,062 | ||||||
| Inventories, net |
22,326 | 23,483 | ||||||
| Prepaid expenses and other current assets |
7,658 | 10,284 | ||||||
| Total current assets |
192,031 | 186,585 | ||||||
| Property, plant and equipment, net |
102,690 | 101,831 | ||||||
| Other assets: |
||||||||
| Intangible assets, net |
93,313 | 94,991 | ||||||
| Other, net |
1,930 | 3,894 | ||||||
| Total assets |
$ | 389,964 | $ | 387,301 | ||||
| Liabilities and stockholders’ equity |
||||||||
| Current liabilities: |
||||||||
| Trade accounts payable |
$ | 16,429 | $ | 10,874 | ||||
| Accrued expenses |
31,676 | 23,956 | ||||||
| Current portion of notes payable, PhosLo acquisition, net |
8,280 | 4,226 | ||||||
| Total current liabilities |
56,385 | 39,056 | ||||||
| Notes payable, PhosLo acquisition, less current portion, net |
15,614 | 23,167 | ||||||
| Other liabilities |
8,569 | 5,762 | ||||||
| Total liabilities |
80,568 | 67,985 | ||||||
| Stockholders’ equity: |
||||||||
| Convertible preferred stock, par value $.10 per share: 5,000,000 shares authorized; no shares outstanding |
— | — | ||||||
| Common stock, par value $.10 per share: 125,000,000 and 75,000,000 shares authorized; and, 59,133,213 and 57,772,302 shares issued as of June 26, 2004 and December 27, 2003, respectively |
5,913 | 5,773 | ||||||
| Capital in excess of par value |
310,320 | 297,909 | ||||||
| Treasury stock, 803,811 and 800,315 shares as of June 26, 2004 and December 27, 2003, respectively, at cost |
(5,296 | ) | (5,240 | ) | ||||
| (Accumulated deficit) retained earnings |
(1,542 | ) | 20,874 | |||||
| Other accumulated comprehensive income |
1 | — | ||||||
| Total stockholders’ equity |
309,396 | 319,316 | ||||||
| Total liabilities and stockholders’ equity |
$ | 389,964 | $ | 387,301 | ||||
See accompanying notes to condensed consolidated financial statements.
3
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| (UNAUDITED) | ||||||||||||||||
| (In thousands, Except Per Share Data) |
For the Three Months Ended |
For the Six Months Ended |
||||||||||||||
| June 26, 2004 |
June 28, 2003 |
June 26, 2004 |
June 28, 2003 |
|||||||||||||
| Sales |
$ | 47,992 | $ | 34,649 | $ | 94,341 | $ | 86,160 | ||||||||
| Costs and expenses: |
||||||||||||||||
| Costs of products sold |
17,339 | 15,726 | 37,539 | 46,680 | ||||||||||||
| Royalty expense |
6,018 | 4,384 | 9,593 | 8,299 | ||||||||||||
| Gross Margin |
24,635 | 14,539 | 47,209 | 31,181 | ||||||||||||
| Selling, general and administrative expense |
14,481 | 12,698 | 26,837 | 22,837 | ||||||||||||
| Research and development expense |
16,903 | 5,936 | 28,331 | 11,730 | ||||||||||||
| Amortization of intangible assets |
2,167 | 87 | 4,320 | 168 | ||||||||||||
| Other operating expense, principally freight |
130 | 88 | 193 | 197 | ||||||||||||
| Operating loss |
(9,046 | ) | (4,270 | ) | (12,472 | ) | (3,751 | ) | ||||||||
| Interest income |
347 | 164 | 683 | 370 | ||||||||||||
| Interest expense |
(318 | ) | (62 | ) | (1,808 | ) | (63 | ) | ||||||||
| Other income, net |
12 | 9 | 10 | 18 | ||||||||||||
| Loss before (provision) benefit for income taxes |
(9,005 | ) | (4,159 | ) | (13,587 | ) | (3,426 | ) | ||||||||
| (Provision) benefit for income taxes |
(8,573 | ) | 1,160 | (8,830 | ) | 976 | ||||||||||
| Net loss |
$ | (17,578 | ) | $ | (2,999 | ) | $ | (22,417 | ) | $ | (2,450 | ) | ||||
| Basic and diluted loss per share |
$ | (0.30 | ) | $ | (0.08 | ) | $ | (0.38 | ) | $ | (0.06 | ) | ||||
| Basic and diluted weighted average shares outstanding |
58,835 | 39,138 | 58,398 | 39,050 | ||||||||||||
See accompanying notes to condensed consolidated financial statements.
4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| (UNAUDITED) | ||||||||
| (In thousands) |
For the Six Months Ended |
|||||||
| June 26, 2004 |
June 28, 2003 |
|||||||
| Cash flow from operating activities: |
||||||||
| Net loss |
$ | (22,417 | ) | $ | (2,450 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
9,569 | 5,319 | ||||||
| Provision for doubtful accounts |
378 | (3 | ) | |||||
| Provision for slow moving or obsolete inventory |
517 | 707 | ||||||
| Write-off of loan origination fees |
539 | — | ||||||
| Gain on sale of assets |
(119 | ) | — | |||||
| Non-cash compensation |
578 | 640 | ||||||
| Write-off of obsolete fixed assets |
146 | 21 | ||||||
| Deferred income taxes |
5,052 | — | ||||||
| Tax benefit from stock options exercised |
3,777 | — | ||||||
| Changes in assets and liabilities: |
||||||||
| Trade accounts receivable |
(8,360 | ) | 13,861 | |||||
| Inventories |
596 | (5,625 | ) | |||||
| Prepaid expenses and other current assets |
2,238 | 324 | ||||||
| Other assets |
(31 | ) | (1,027 | ) | ||||
| Accounts payable and accrued liabilities |
12,755 | (11,062 | ) | |||||
| Total adjustments |
27,635 | 3,155 | ||||||
| Net cash provided by operating activities |
5,218 | 705 | ||||||
| Cash flow from investing activities: |
||||||||
| Proceeds from sales of assets |
179 | — | ||||||
| Capital expenditures |
(5,579 | ) | (1,512 | ) | ||||
| Expenditures for Manufacturing Rights |
(2,642 | ) | (2,886 | ) | ||||
| Net cash used in investing activities |
(8,042 | ) | (4,398 | ) | ||||
| Cash flow from financing activities: |
||||||||
| Payment of notes payable, PhosLo acquisition |
(4,083 | ) | — | |||||
| Borrowings under debt agreement |
— | 10,000 | ||||||
| Proceeds from exercise of employee stock options |
8,153 | 567 | ||||||
| Net cash provided by financing activities |
4,070 | 10,567 | ||||||
| Net increase in cash and cash equivalents |
1,246 | 6,874 | ||||||
| Cash and cash equivalents at beginning of period |
115,756 | 51,737 | ||||||
| Cash and cash equivalents at end of period |
$ | 117,002 | $ | 58,611 | ||||
See accompanying notes to condensed consolidated financial statements.
5
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 OVERVIEW
We apply our knowledge of the human immune system to develop and commercialize products that address serious, unmet medical needs. Our focus is in the areas of infectious, autoimmune and addictive diseases. In addition to four marketed products (PhosLo®, Nabi-HB®, WinRho SDF® and Aloprim™), we have four products in clinical trials. We expect to file a Marketing Authorization Approval, or MAA, for StaphVAX® in the European Union, or EU, in the fourth quarter of 2004 based on existing clinical data. For U.S. licensure, we have advanced StaphVAX to a confirmatory Phase III clinical trial and anticipate completing enrollment in this trial in the third quarter of 2004. We anticipate filing a Biologics License Application, or BLA, for StaphVAX in the fourth quarter of 2005. StaphVAX is designed to prevent the most dangerous and prevalent strains of Staph aureus bacterial infections, which are a major cause of hospital and community-acquired infections. Staph aureus bacteria are becoming increasingly resistant to antibiotics. Our other products in development are Altastaph™, an antibody based product for prevention and treatment of Staph aureus infections, Civacir™, an antibody based product for preventing hepatitis C re-infection in liver transplant patients and NicVAX™, a vaccine for nicotine addiction. Altastaph and NicVAX are currently in Phase II clinical trials. Civacir has completed a Phase I/II clinical trial. We have a state-of-the-art fractionation facility for the manufacture of Nabi-HB and our investigational antibody products, Altastaph and Civacir, and for contract manufacturing. In addition, we have commenced construction of an internal vaccine manufacturing facility within our Boca Raton, Florida plant for the manufacture of StaphVAX, NicVAX and our other vaccines in pre-clinical development. We are also developing contract manufacturing capacity at Cambrex Bio Science Baltimore, Inc., or Cambrex Bio Science, so that Cambrex Bio Science can manufacture StaphVAX for us. Our supply contract with the manufacturer of Autoplex T ended on May 11, 2004. Future sales of Autoplex T will be limited to inventory on hand at June 26, 2004. We also collect specialty and non-specific antibodies for use in our products and supply pharmaceutical and diagnostic customers our excess production for the subsequent manufacture of their products.
Our corporate headquarters is i