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 December 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
From the transition period from to
Commission File Number: 0-27854
BONE CARE INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Wisconsin 39-1527471
(State of (IRS Employer
Incorporation) Identification No.)
1600 Aspen Commons, Suite 300
Middleton, Wisconsin 53562
(Address, including zip code of
Registrant's principal executive offices)
608-662-7800
(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 [X] No [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes [X] No
As of February 11, 2003, 14,157,772 shares of the registrant's common stock, no
par value, were outstanding.
BONE CARE INTERNATIONAL, INC.
FORM 10-Q
For the quarterly period ended December 31, 2002
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION Page
Item 1 Financial Statements
Condensed Balance Sheets
December 31, 2002 and June 30, 2002 3
Condensed Statements of Operations
Quarters and Six Months Ended
December 31, 2002 and 2001 5
Condensed Statements of Cash Flows
Quarters and Six Months Ended
December 31, 2002 and 2001 6
Notes to Financial Statements 7
Item 2 Management's Discussion and Analysis of Financial 9
Condition and Results of Operations
Item 3 Quantitative and Qualitative Disclosures About Market Risk 12
Item 4 Controls and Procedures
12
PART II -- OTHER INFORMATION
Item 1 Legal Proceedings 13
Item 2 Changes in Securities and Use of Proceeds 13
Item 3 Defaults Upon Senior Securities 13
Item 4 Submission of Matters to a Vote of Security Holders 13
Item 5 Other Information 13
Item 6 Exhibits and Reports on Form 8-K 14
SIGNATURES
15
SARBANES-OXLEY Certifications
16
EXHIBIT INDEX
18
PART 1. FINANCIAL INFORMATION
ITEM 1. Financial Statements
BONE CARE INTERNATIONAL, INC.
Unaudited Condensed Balance Sheets
ASSETS
December 31, June 30,
2002 2002
----------- -----------
Current Assets:
Cash and cash equivalents $ 2,252,745 $ 2,023,969
Marketable securities 16,685,097 18,436,896
Accounts receivable, net of allowance for
doubtful accounts of $152,819 and $152,960
at December 31, 2002 and June 30, 2002, 3,233,158 4,285,569
respectively
Inventories 1,756,831 2,099,469
Other current assets 1,261,260 775,596
----------- -----------
Total current assets 25,189,091 27,621,499
----------- -----------
Long-term securities 1,939,232 3,719,796
Other long-term assets 110,300 -
Property, plant and equipment-at cost:
Leasehold improvements 588,632 588,632
Furniture and fixtures 479,600 452,345
Machinery and other equipment 2,703,822 2,317,405
----------- -----------
3,772,054 3,358,382
Less accumulated depreciation and amortization 1,909,257 1,573,497
----------- -----------
1,862,797 1,784,885
Patent fees net of accumulated amortization
of $1,070,827 at December 31, 2002 and
$998,027 at June 30, 2002 1,246,339 1,198,249
Goodwill 359,165 359,165
----------- -----------
$30,706,924 $34,683,594
=========== ===========
See the accompanying notes to financial statements.
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BONE CARE INTERNATIONAL, INC.
Unaudited Condensed Balance Sheets
Liabilities and Shareholders' Equity
December 31, June 30,
2002 2002
------------ ------------
Current liabilities:
Accounts payable $ 2,218,715 $ 1,769,665
Accrued liabilities:
Accrued clinical study and research costs 363,273 152,352
Compensation payable 1,155,930 509,677
Other current liabilities 613 1,924
Allowance for sales returns 299,520 226,100
------------ ------------
Total current liabilities 4,038,051 2,659,718
437,691 -
Long-term liabilities
Shareholders' equity:
Preferred stock-authorized 2,000,000 0 0
shares of $.001 par value; none issued
Common stock-authorized 28,000,000 shares of no par value; issued and
outstanding 14,157,722 shares at December 31, 2002
and 14,156,722 at June 30, 2002 11,393,883 11,393,883
Additional paid-in capital 62,098,382 62,096,272
Accumulated deficit (47,279,069) (41,520,236)
Accumulated other comprehensive income 17,986 53,957
------------ ------------
Total shareholders' equity 26,231,182 32,023,876
------------ ------------
$ 30,706,924 $ 34,683,594
============ ============
See the accompanying notes to financial statements.
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BONE CARE INTERNATIONAL, INC.
Condensed Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
-------------------------------- --------------------------------
December 31, December 31, December 31, December 31,
2002 2001 2002 2001
------------ ------------ ------------ ------------
Revenues $ 3,743,013 $ 3,831,997 $ 9,160,413 $ 6,484,137
Operating expenses
Cost of sales 1,459,838 793,812 2,969,444 1,386,718
Research and development 1,527,725 1,200,031 2,976,160 2,591,748
Sales and marketing 3,775,761 2,546,782 6,800,711 4,796,617
General and administrative 1,259,696 893,294 2,540,022 1,808,228
------------ ------------ ------------ ------------
8,023,020 5,433,919 15,286,337 10,583,311
------------ ------------ ------------ ------------
Loss from operations (4,280,007) (1,601,922) (6,125,924) (4,099,174)
Interest income 152,312 348,019 367,091 709,072
------------ ------------ ------------ ------------
Net loss $ (4,127,695) $ (1,253,903) $ (5,758,833) $ (3,390,102)
------------ ------------ ------------ ------------
Net loss per common share
- basic and diluted $ (0.29) $ (0.09) $ (0.41) $ (0.24)
------------ ------------ ------------ ------------
Weighted average number of common shares 14,157,425 14,072,551 14,157,099 14,030,063
See the accompanying notes to financial statements.
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BONE CARE INTERNATIONAL, INC.
Condensed Statements of Cash Flows
(Unaudited)
Six Months Ended
December 31, December 31,
2002 2001
----------- -----------
Cash flows from operating activities
Net loss $(5,758,833) $(3,390,102)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation of fixed assets 335,760 307,085
Amortization of patents 80,814 63,330
Loss on disposal of patents 29,106 9,883
Changes in assets and liabilities:
Accounts receivable 1,052,411 896,240
Inventories 342,638 (1,715,441)
Other current assets (485,664) 365,752
Other long-term assets (110,300) -
Accounts payable 449,050 291,170
Accrued liabilities 855,863 287,607
Long-term liabilities 437,691 -
Allowance for sales returns 73,420 -
----------- -----------
Net cash used in operating activities (2,698,044) (2,884,476)
----------- -----------
Cash flows from investing activities:
Maturity of marketable securities 3,496,392 4,405,117
Additions to property, plant and equipment (413,672) (467,627)
Patent fees (158,010) (151,733)
----------- -----------
Net cash provided by investing activities 2,924,710 3,785,757
----------- -----------
Cash flow from financing activities:
Proceeds from stock option exercises 2,110 570,601
----------- -----------
Net cash provided by financing activities 2,110 570,601
----------- -----------
Net increase in cash and cash equivalents 228,776 1,471,822
Cash and cash equivalents at beginning of period 2,023,969 1,842,838
----------- -----------
Cash and cash equivalents at end of period $ 2,252,745 $ 3,314,720
=========== ===========
See the accompanying notes to financial statements.
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BONE CARE INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
(1) BASIS OF PRESENTATION
The financial statements in this report have been prepared by Bone Care
International, Inc. without audit, 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 accounting principles generally
accepted in the United States of America for annual financial statements. These
financial statements should be read in conjunction with the financial statements
and notes thereto for the year ended June 30, 2002, included in the Company's
Form 10-K as filed with the Securities and Exchange Commission on September 30,
2002.
In the opinion of management, information included in this report reflects
all adjustments, consisting of normal, recurring adjustments, necessary for a
fair presentation of results for these interim periods.
The results of operations for the interim period ended December 31, 2002,
are not necessarily indicative of the results to be expected for the entire
fiscal year ending June 30, 2003.
(2) REVENUE RECOGNITION POLICY
Bone Care records sales and the related costs of Hectorol Capsules and
Hectorol Injection based on shipments to its customers reduced by the estimated
future returns. The terms of sale for all product sales are F.O.B. shipping
point. Revenue is recognized at the time of shipment as risk of loss has
transferred to the customer, delivery has occurred, and collectibility is
reasonably certain. Customers have a right to return product if they are unable
to sell it prior to the expiration date. In accordance with Statement of
Financial Accounting Standard (SFAS) No. 48, "Revenue Recognition When Right of
Return Exists", Bone Care's December 31, 2002 balance sheet includes a $299,520
accrual for the estimated amount of future returns related to Hectorol Capsules
and Hectorol Injection.
(3) INVENTORIES
Inventories are stated at the lower of cost or market; cost is determined
principally by the first-in, first-out method. Inventories are comprised of:
December 31, June 30,
2002 2002
------------ ------------
Raw materials $ 1,304,393 $ 456,548
Work in process 47,073 610,171
Finished goods 405,365 1,032,750
------------ ------------
$ 1,756,831 $ 2,099,469
============ ============
(4) PATENTS
Effective October 1, 2002, the Company revised its estimated useful lives
for amortizing patents from 10 years to 17 years. This change in estimated lives
was based on the average term patents are enforceable. The impact of this change
on the quarter ended December 31, 2002 was to decrease the net loss by $13,000.
-7-
(5) NET LOSS PER SHARE
Net loss per share is computed by dividing net loss by the weighted average
number of shares of common stock outstanding during the period. Options to
purchase common stock have been excluded from the calculations of diluted
earnings per share as the impact of these options on diluted earnings per share
would be anti-dilutive. As of December 31, 2002 and 2001, 1,468,033 and 909,483
options respectively, have been excluded as the impact would have been
anti-dilutive.
(6) COMPREHENSIVE INCOME
Total comprehensive loss was $4,145,680 and $1,228,285 for the three months
ended December 31, 2002 and 2001, respectively. Total comprehensive loss was
$5,794,804 and $3,332,194 for the six months ended December 31, 2002 and 2001,
respectively. Comprehensive income is comprised of operating results and
unrealized gains and losses on available-for-sale securities.
(7) NEW ACCOUNTING PRONOUNCEMENTS
In November 2002, the Financial Accounting Standards Board ("FASB") issued
Interpretation ("FIN") No. 45, "Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others." FIN No. 45 requires that a guarantor must recognize, at the inception
of a guarantee, a liability for the fair value of the obligation that it has
undertaken in issuing a guarantee. FIN No. 45 also addresses the disclosure
requirements that a guarantor must include in its financial statements for
guarantees issued. The disclosure requirements in this interpretation are
effective for financial statements ending after December 15, 2002. The initial
recognition and measurement provisions of this interpretation are applicable on
a prospective basis to guarantees issued or modified after December 31, 2002.
Bone Care has not issued guarantees of indebtedness as of December 31, 2002.
On December 31, 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation-Transition and Disclosure." SFAS No. 148 amends SFAS
No. 123, "Accounting for Stock-Based Compensation" and provides alternative
methods of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition, SFAS 148 amends
the disclosure requirements of SFAS 123 to require more prominent and more
frequent disclosures in financial statements of the effects of stock-based
compensation. The interim disclosure requirements of SFAS No. 148 are effective
for interim periods beginning after December 15, 2002. Bone Care's stock-based
compensation related to employees and non-employee directors is recognized using
the intrinsic value method in accordance with Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees," and thus there is no
compensation expense for options granted with exercise prices equal to the fair
value of Bone Care's common stock on the date of the grant.
-8-
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Total revenues for the quarter ended December 31, 2002 decreased to
$3,743,013 from $3,831,997 in the quarter ended December 31, 2001. The decrease
was the result of a $709,572 decline in sales of Hectorol Capsules, offset by a
$620,588 increase in sales of Hectorol Injection. Sales of Hectorol Injection
were constrained in the quarter ended December 31, 2002 by an inventory
shortage. Bone Care cannot resume shipments of Hectorol Injection until one of
its suppliers gains FDA clearance. On December 16, 2002, the Company announced
that it is temporarily unable to fill customer orders for Hectorol Injection
because of the manufacturing issues described below. Total revenues for the six
months ended December 31, 2002 increased to $9,160,413 from $6,484,137 in the
six months ended December 31, 2001. The increase was the result of a $3,783,391
increase in sales of Hectorol Injection , offset by a $1,107,115 decline in
sales of Hectorol Capsules. Hectorol Capsule revenues were adversely impacted by
the introduction of a generic form of oral calcitriol, a vitamin D3, in 2002.
Hectorol Injection, launched in August 2000, generated revenues of $2,765,870
and $2,145,282 during the quarters ended December 31, 2002 and 2001,
respectively and $6,951,729 and $3,168,338 during the six months ended December
31, 2002 and 2001, respectively. Hectorol Capsules generated revenues of
$977,143 and $1,686,715 during the quarters ended December 31, 2002 and 2001,
respectively and $2,208,684 and $3,315,799 during the six months ended December
31, 2002 and 2001, respectively.
Gross margins for the quarter ended December 31, 2002 were $2,283,175, or
61% of revenues, compared to $3,038,185, or 79% of revenues, in the quarter
ended December 31, 2001. Gross margins for the six months ended December 31,
2002 were $6,190,969, or 68% of revenues, compared to $5,097,419, or 79% of
revenues, in the six months ended December 31, 2001. Margins were lower as a
percentage of sales due to increased spending for quality assurance overhead and
costs associated with validating Hectorol Injection manufacturing at our
contract manufacturers. Validation costs were $455,000 for the quarter ended
December 31, 2002 and $551,000 for the six months ended December 31, 2002.
Research and development expenses were $1,527,724 in the quarter ended
December 31, 2002, and $1,200,031 in the quarter ended December 31, 2001.
Research and development expenses were $2,976,160 in the six months ended
December 31, 2002, and $2,591,748 in the six months ended December 31, 2001.
These increases are attributable to consulting expenses related to validating
computer network systems, and internal costs to file the SNDA for 0.5mcg
Hectorol Capsules.
Sales and marketing expenses increased $1,228,979 to $3,775,761 in the
quarter ended December 31, 2002, from $2,546,782 in the quarter ended December
31, 2001 and increased $2,004,094 to $6,800,711 in the six months ended December
31, 2002, from $4,796,617 in the six months ended December 31, 2001. These
increases are attributable to the addition of senior level positions within the
sales and marketing departments and increased market research and promotional
spending related to the peritoneal dialysis and chronic kidney disease markets.
General and administrative expenses increased $366,402 to $1,259,696 in the
quarter ended December 31, 2002, from $893,294 in the quarter ended December 31,
2001. General and administrative expenses increased $731,794 to $2,540,022 in
the six months ended December 31, 2002, from $1,808,228 in the quarter ended
December 31, 2001. The increase was attributable to costs associated with hiring
the President and CEO and to increases in insurance premiums for property,
casualty, and liability policies.
Interest income decreased $195,707 to $152,312 in the quarter ended
December 31, 2002, from $348,019 in the quarter ended December 31, 2001.
Interest income decreased $341,981 to $367,091 in the six months ended December
31, 2002, from $709,072 in the six months ended December 31, 2001. The decreases
were due to lower average cash and marketable security balances for the current
year, as well as a decline in yield on our investments.
-9-
Manufacturing
Akorn, Inc., currently the sole manufacturer of Hectorol Injection,
received a warning letter from the FDA in September 2000 identifying general
deviations from the FDA's current Good Manufacturing Practices (c-GMP) regarding
manufacturing procedures, records and training. They received another letter
from the FDA in December 2001 identifying additional deviations from c-GMP
pursuant to a follow-up inspection of their facility. In response to this second
FDA letter, Akorn agreed to halt production of Hectorol Injection until such
time as these deviations could be remediated. Akorn has completed production of
the validation lots, which could ultimately be used as commercial product. If
the FDA's site inspection of Akorn determines that Akorn is in acceptable
compliance with c-GMP, the Company intends to submit a CBE-30 (changes being
effective in 30 days) with respect to the manufacture and process improvements
at Akorn.
In addition, we have entered into a manufacturing agreement with Draxis
Pharma Inc., a subsidiary of Draxis Health Inc., to serve as an additional
manufacturer of Hectorol Injection. Draxis has completed production of the
validation lots, which could ultimately be used as commercial product. On
February 6, 2003, the Company submitted to the FDA a CBE-30 to add Draxis as an
additional manufacturing site for Hectorol Injection. If the FDA accepts our
submission for Draxis under an accelerated review process, commercial shipments
of Hectorol Injection could commence in approximately 30 days after filing.
Liquidity and Capital Resources
Net cash used in operating activities was $2,698,044 for the six months
ended December 31, 2002 and $2,884,476 for the six months ended December 31,
2001. The cash used by operating activities was used primarily to fund marketing
and commercialization efforts for Hectorol Capsules and Hectorol Injection as
well as research and development.
We have experienced negative cash flows from operations since our inception
and do not anticipate generating sufficient positive cash flows to fund our
operations until we achieve, if ever, significant revenues from the sale of
Hectorol Capsules and Hectorol Injection. We have expended, and expect to
continue to expend in the future, substantial funds for our:
- research and development programs;
- pre-clinical and clinical testing;
- regulatory processes, including completion of FDA post-approval Phase IV
commitments for Hectorol Capsules and Hectorol Injection;
- manufacturing expenses; including validation costs for Hectorol IV at
our contract manufacturers
- sales and marketing programs; and
- other operating expenses.
Cash, cash equivalents and short- and long-term marketable securities were
$20,877,074 at December 31, 2002 and $24,180,661 at June 30, 2002. Cash and cash
equivalents are currently invested primarily in short-term investment grade
United States government, municipal and corporate debt securities.
Bone Care's capital requirements will depend on numerous factors, including
the timing of the resumption of sales of Hectorol Injection; the progress of
commercialization and marketing activities; the progress of its research and
development programs; the progress of preclinical and clinical testing; the time
and cost involved in obtaining regulatory approvals; the cost of filing,
prosecuting, defending and enforcing any patent claims and other intellectual
property rights; competing technological and market developments; changes and
developments in Bone Care's existing licensing relationships and the terms of
any new collaborative, licensing, co-promotion or distribution arrangements that
Bone Care may establish; the cost of manufacturing preclinical and clinical
products;
-10-
and other factors not within our control.
Based upon our current plans, we believe that we will have sufficient
funds to meet our operating expenses and capital requirements for at least the
next year assuming remediation and validation of Hectorol Injection
manufacturing by March 31, 2003. If Hectorol Injection manufacturing has not
resumed by this date, cost reduction initiatives will be implemented. Additional
capital to fund our operations may be sought through equity or debt offerings or
other financings. There is no assurance that such additional funds will be
available on acceptable terms, if at all. Should our plans not be consummated,
we may have to seek alternative sources of capital.
At June 30, 2002, we had state tax net operating loss carryforwards of
approximately $38,010,000 and state research and development tax credit
carryforwards of approximately $449,000, which will begin expiring in 2006. We
also had federal net operating loss carryforwards of approximately $39,352,000
and research and development tax credit carryforwards of approximately
$1,741,000, which will begin expiring in 2011.
Critical Accounting Policies and Estimates
Our significant accounting policies are described in Note 1 to the
Notes to the Financial Statements for the year ended June 30, 2002 included in
the Company's Form 10-K as filed with the Securities and Exchange Commission on
September 30, 2002. Those financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America.
The preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses, and related disclosure of contingent liabilities. On an on-going
basis, we evaluate our estimates, including those related to our provision for
sales returns and allowances, allowance for doubtful accounts, and our estimate
of excess and obsolete inventory. We base our estimates on historical experience
and on various other assumptions that we believe to be reasonable under the
circumstances, the results of which form the basis of judgments regarding the
carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions.
Sales Returns and Allowances
When revenue is recognized, Bone Care simultaneously records an
estimate of various costs, which reduce product sales. These costs include
estimates for product returns, chargebacks, rebates, and discounts. Estimates
are based on a variety of factors including historical return experience, rebate
and chargeback agreements, inventory levels at our wholesale customers, and
estimated sales by our wholesale customers to other third parties who have
contracts with us, respectively. Actual experience associated with any of these
items may differ materially from our estimates. Factors are reviewed that
influence our estimates and, if necessary, adjustments are made when we believe
that actual product returns, chargebacks, rebates, and discounts may differ from
established reserves.
Allowance for Doubtful Accounts
An allowance is maintained for estimated losses resulting from the
inability of customers to make required payments. Credit terms are extended on
an uncollateralized basis primarily to wholesale drug distributors and
independent clinics throughout the United States. Management specifically
analyzes accounts receivable, historical bad debts, customer credit-worthiness,
percentage of accounts receivable by aging category, and changes in customer
payment terms when evaluating the adequacy of the allowance for doubtful
accounts. If the financial condition of our customers were to deteriorate,
resulting in an impairment of
-11-
their ability to make payments, additional allowances may be required.
Historically, our actual losses from uncollectible accounts have been
insignificant.
Excess and Obsolete Inventory
Inventories are stated at the lower of cost or market, with cost
determined at standard cost which approximates actual cost. In evaluating
whether inventory is stated at the lower of cost or market, management considers
such factors as the amount of inventory on hand, expiration dates, and the
estimated time to sell such inventory. As appropriate, provisions are made to
reduce inventories to their net realizable value. Historically, cost of
inventories that potentially may not sell prior to expiration or are deemed of
no commercial value have been written-off when identified.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Our sales from inception to date have been made to U.S. customers and,
as a result, we have not had any exposure to factors such as changes in foreign
currency exchange rates or weak economic conditions in foreign markets. However,
in future periods, we expect to sell in foreign markets, including Europe and
Asia. Because our sales are made in U.S. dollars, a strengthening of the U.S.
dollar could make our products less competitive in foreign markets. At December
31, 2002, we did not hold any short- or long-term investments other than
high-grade investment securities planned to be held to maturity and, therefore,
we do not believe that short-term fluctuations of interest rates would
materially affect the value of our investments.
Item 4. Controls and Procedures
Within the last 90 days, the Company's management, including its chief
executive officer and chief financial officer, have conducted an evaluation of
effectiveness of disclosure controls and procedures pursuant to Rule 13a-14 of
the Securities Exchange Act of 1934. Based on that evaluation, the chief
executive officer and chief financial officer concluded that the disclosure
controls and procedures are effective in ensuring that all material information
required to be filed in this quarterly report has been made known to them in a
timely fashion. There have been no significant changes in internal controls, or
in factors that could significantly affect internal controls, subsequent to the
date the chief executive officer and chief financial officer completed their
evaluation.
-12-
PART II - OTHER INFORMATION
BONE CARE INTERNATIONAL, INC.
Item 1. Legal Proceedings
Bone Care may be a defendant from time to time in actions arising
out of our ordinary course of business operations. In the opinion of
management, the outcome of pending claims is not likely to have a
material adverse effect on our financial statements.
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
The 2002 Annual Meeting of Shareholders of Bone Care was held on
November 15, 2002. The total number of shares of Bone Care's common
stock, no par value per share, outstanding as of October 11, 2002, the
record date of the annual meeting, was 14,156,772. Management of Bone
Care solicited proxies for the annual meeting pursuant to Section 14
of the Securities Exchange Act of 1934, as amended, and Regulation 14A
promulgated thereunder. Two directors, Martin Barkin, M.D. and Charles
R. Klimkowksi, were elected to serve until the 2005 Annual Meeting of
Shareholders. Both nominees were elected by a vote of 13,627,719 votes
"FOR"; 300 votes "AGAINST"; and 54,598 "ABSTAIN".
In addition, at the Annual Meeting, the Bone Care International,
Inc. Stock Incentive Plan was approved by a vote of 9,530,898 votes
"FOR"; 480,607 votes "AGAINST"; 14,672 votes "ABSTAIN"; and 3,656,440
"BROKER NON VOTE".
In addition, at the Annual Meeting, the selection of Deloitte &
Touche LLP as independent auditors for the fiscal year ended June 30,
2003 was ratified by a vote of 13,644,190 votes "FOR"; 36,125 votes
"AGAINST"; and 2,302 votes "ABSTAIN".
Item 5. Other Information
This Quarterly Report on Form 10-Q includes forward-looking
statements within the meaning of Section 27A of the Securities Act and
Section 21E of the Exchange Act. We have based these forward-looking
statements largely on our current expectations and projections about
future events and financial trends affecting the financial condition
of our business. These forward-looking statements are subject to a
number of risks, uncertainties and assumptions about us, including,
among other things:
- general economic and business conditions, both nationally and
in our markets;
- our expectations and estimates concerning future financial
performance, financing plans and the impact of competition;
- anticipated trends in our business;
- existing and future regulations affecting our business;
- our early stage of development;
-13-
- the uncertainty of our future profitability;
- our ability to satisfy the FDA's conditions for marketing
approval for Hectorol;
- other risk factors
In addition, in this Quarterly Report, the words "believe,"
"may," "will," "estimate," "continue," "anticipate," "intend,"
"expect" and similar expressions, as they relate to us, our business
or our management, are intended to identify forward-looking
statements.
Unless otherwise required by law, we undertake no obligation to
publicly update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise after the date
of this Quarterly Report. However, we acknowledge our obligation to
disclose material developments related to previously disclosed
information. In light of these risks and uncertainties, the
forward-looking events and circumstances discussed in the Quarterly
Report may not occur and actual results could differ materially from
those anticipated or implied in the forward-looking statements.
Hectorol(R) is a registered trademark of Bone Care International,
Inc., in the United States, European communities, Japan, and several
other countries. Bone Care(R) is a registered trademark of Bone Care
International in the United States. Hectorol(TM) is the brand name for
the active drug substance of our first product, doxercalciferol. This
Quarterly Report also includes trademarks of other companies.
Item 6. Exhibits and Reports on Form 8-K
(a)Exhibits furnished:
(11) Statement Regarding Computation of Loss Per Share
(99.1) Certification Pursuant to Section 1350 of Chapter 63 of
Title 18 of the United States Code
(99.2) Certification Pursuant to Section 1350 of Chapter 63 of
Title 18 of the United States Code
(b)Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the
quarter ended December 31, 2002.
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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: February 13, 2003 /S/ PAUL L. BERNS
--------------------------------------
Paul L. Berns
President and Chief Executive Officer
(Principal Executive Officer)
Date: February 13, 2003 /S/ ROBERT A. BECKMAN
--------------------------------------
Robert A. Beckman
Vice President - Finance
(Principal Financial and Accounting Officer)
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CERTIFICATIONS
I, Paul L. Berns, the President and Chief executive Officer of Bone
Care International, Inc. (the "registrant"), certify that:
1. I have reviewed this quarterly report or Form 10-Q of the registrant;
2. based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. the registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. the registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. the registrant's other certifying officer and I have indicated in this
quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: February 13, 2003
/S/ PAUL L. BERNS
----------------------------------------
Paul L. Berns
President and Chief Executive Officer
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CERTIFICATIONS
I, Robert A. Beckman, the Vice President-Finance of Bone Care
International, Inc. (the "registrant"), certify that:
1. I have reviewed this quarterly report or Form 10-Q of the registrant;
2. based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. the registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date; and
5. the registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. the registrant's other certifying officer and I have indicated in this
quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: February 13, 2003
/S/ ROBERT A. BECKMAN
----------------------------------------
Robert A. Beckman
Vice President-Finance
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BONE CARE INTERNATIONAL, INC.
Exhibit Index
For the Quarterly Period Ended December 31, 2002
No. Description Page
99.1 Certification Pursuant to 18 U.S.C. Section 1350, as enacted
by section 906 of the Sarbanes-Oxley Act of 2002..................19
99.2 Certification Pursuant to 18 U.S.C. Section 1350, as enacted
by section 906 of the Sarbanes-Oxley Act of 2002..................20
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