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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1999
/ / 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 0-26758
ALKERMES CLINICAL PARTNERS, L.P.
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(Exact name of registrant as specified in its charter)
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DELAWARE 043-145043
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(State or other jurisdiction of organization) (I.R.S. Employer Identification No.)
64 SIDNEY STREET, CAMBRIDGE, MA 02139-4136
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (617) 494-0171
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Securities registered pursuant to Section 12(b) of the Act: NONE
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Securities registered pursuant to Section 12(g) of the Act: CLASS A LIMITED PARTNERSHIP INTEREST
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(Title of Class)
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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 if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of Registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. /X/
State the aggregate market value of voting stock held by non-affiliates
of the Registrant: There is no voting equity security of the Registrant and
there is no market, public or private, for the equity securities of the
Registrant.
NO DOCUMENTS ARE INCORPORATED BY REFERENCE IN THIS REPORT ON
FORM 10-K.
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ITEM 1. BUSINESS
The following Business section contains forward-looking statements
which involve risks and uncertainties. The Partnership's and the Company's
actual results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Important Factors Regarding Forward-Looking Statements."
GENERAL
Alkermes Clinical Partners, L.P. (the "Partnership") was formed in
February 1992 under the laws of the State of Delaware. The Partnership operates
pursuant to an Agreement of Limited Partnership, dated as of February 7, 1992,
as amended. The sole general partner of the Partnership, Alkermes Development
Corporation II, a Delaware corporation (the "General Partner"), is a wholly
owned subsidiary of Alkermes, Inc. ("Alkermes" or the "Company"). The limited
partners of the Partnership are investors who purchased Class A and Class B
limited partnership interests in the Partnership in a private placement that
closed in April 1992 and their transferees.
The principal objective of the Partnership is to develop and derive
income from the sale or license of a family of molecules designated by Alkermes
as Receptor-Mediated Permeabilizers-TM- ("RMPs-TM-") for human pharmaceutical
use in the United States and Canada. The principal technology is Cereport-TM-,
formerly known as RMP-7-TM-, a product candidate designed to facilitate drug
delivery to the central nervous system.
Cereport, a member of the family of RMPs, is a nine amino acid peptide
based on bradykinin, a compound occurring naturally in the body and known to
affect vascular permeability. Cereport is a proprietary, synthetic analog of
bradykinin developed to increase transiently the permeability of the blood-brain
barrier. Following injection, Cereport increases permeability by triggering a
brief relaxation of the tight cellular junctions of the blood-brain barrier.
During the time the tight junctions are relaxed, permeability is increased and
drug molecules in the bloodstream can diffuse into the brain in concentrations
greater than can usually be achieved without Cereport. Preclinical and clinical
data also suggest that Cereport can be administered at doses that selectively
increase permeability in the region of brain tumors and other pathology while
not significantly affecting permeability in healthy brain tissue.
Cereport exerts a pharmacologic effect on the vasculature of the brain
and does not itself bind to or serve as a carrier for the drug of which it is
facilitating delivery. The Partnership, through a product development agreement
with Alkermes described below, is developing Cereport to be manufactured,
packaged and dispensed as a standalone product. In the clinical setting,
Cereport is administered in conjunction with a therapeutic or diagnostic agent.
Timing of Cereport administration relative to that of the therapeutic or
diagnostic agent is determined on
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a drug by drug basis to optimize barrier permeability during the time of peak
drug plasma concentrations.
Cereport is intended to be marketed as an independent agent to increase
the utility of other therapeutic and diagnostic compounds given with it. The
General Partner believes Cereport may be administered along with cancer
chemotherapeutic and anti-infective agents not currently used in the treatment
of central nervous system disorders because of their limited ability to
penetrate the blood-brain barrier.
THE PRODUCT DEVELOPMENT AGREEMENT
The Partnership entered into a product development agreement, dated as
of March 6, 1992, with Alkermes (the "Product Development Agreement") pursuant
to which Alkermes granted to the Partnership an exclusive, royalty-free license
to certain patent rights and other technology owned or controlled by the Company
related to RMPs (the "Background Technology"). The license granted to the
Partnership is limited to Background Technology necessary or materially useful
for the development and commercialization of products based on RMPs (each a
"Product") for human pharmaceutical use in the United States and Canada (the
"Field of Activity").
Under the Product Development Agreement, the Partnership granted to
Alkermes an exclusive, royalty-free license to all patent rights and other
technology arising from research and development conducted under the Product
Development Agreement (the "Program Technology" which, taken together with the
Background Technology, comprises the "Technology") for exploitation outside the
Field of Activity.
Alkermes has agreed, pursuant to the Product Development Agreement, to
the extent permitted by Partnership funds (including any funds which the Company
may, in its discretion, elect to contribute to the Partnership) to use its best
efforts to perform the research and development necessary to engage in the Field
of Activity (the "Research Program"). Through June 30, 1996, the Partnership
reimbursed Alkermes for its research and development expenses on behalf of the
Partnership and paid a management fee equal to ten percent (10%) of such
expenses.
The Partnership's funds have been expended and no United States Food
and Drug Administration ("FDA") marketing approval has been received for the
sale by or on behalf of the Partnership of any Product in the Field of Activity.
In such an event, the Product Development Agreement provides that the General
Partner is to determine the amount of additional funds required by the
Partnership in the upcoming year, and the Company will have the right, in its
sole discretion, to contribute such funds to the Partnership or to pay such
funds in any manner to which the Company and the General Partner agree
(including the direct payment of research and
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development expenses). The Company is paying and intends to continue to pay
research and development expenses directly.
The Company has agreed to use its best efforts to manufacture and
market the Products in the Field of Activity directly or through third parties
in the United States and Canada in accordance with the marketing program
approved by the Board of Directors of the General Partner (the "Marketing
Program"). If at any time the Board of Directors of the General Partner shall
determine to discontinue the Marketing Program with respect to any Product or
Products, the Company's obligation to market such Product or Products will
cease.
Prior to the end of each quarter of each year, the General Partner
reviews the progress of the Research Program during the preceding three-month
period to determine whether the continuation of all or any part thereof is in
the best interests of the Limited Partners. The General Partner is to begin
similar reviews of the Marketing Program after the beginning of Phase II/III
clinical trials for RMPs. If at any time the Board of Directors of the General
Partner determines that the Research Program is infeasible or uneconomic and
should be discontinued with respect to one or more products, or if the Board of
Directors of the General Partner determines to discontinue the Marketing Program
with respect to all Products, or if the Company decides not to contribute the
additional funds to the Partnership which are determined by the General Partner
to be required when all Partnership funds have been expended and no FDA
marketing approval has been received for the sale of any product in the Field of
Activity, the Product Development Agreement and the Purchase Option (as defined
below under "The Purchase Agreement") will terminate.
The Partnership granted to the Company a royalty-bearing right and
license to make, use, modify and improve the Technology within the Field of
Activity (the "Interim License"). The Company has agreed to pay to the
Partnership within 60 days after the end of each calendar quarter until the
Interim License terminates a payment equal to twelve percent (12%) of revenues
on sales of RMPs in the United States and Canada. The Company has also agreed to
pay to the Partnership, to the extent necessary to allow the Partnership to pay
projected distributions in any calendar year, quarterly payments equal to ten
percent (10%) of revenues on sales of RMPs in Europe. The Company will be
required, under certain circumstances, to make payments to the Partnership in an
amount equal to a percentage of the revenues of the Company from the sale of
certain products which are competitive with any of the Partnership's products,
which percentage of revenues will be no greater than one-half of the applicable
percentage of revenues on sales of products. Any payments based on sales of RMPs
in Europe may be reduced if such sales are made through sublicensees or other
third parties. All such payments are referred to as "Interim License Payments."
In addition, the Company has agreed to pay to the Partnership a milestone
payment (the "Milestone Payment") equal to twenty percent (20%) of the aggregate
capital contributions of all Partners, payable, at the Company's option, in cash
or shares of Common Stock, upon the receipt of the first approval from the FDA
to market any product in the Field of
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Activity. The Partnership Agreement provides for the allocation of such payments
among the Partners.
Upon termination of the Interim License (which will occur upon exercise
or termination of the Purchase Option), any royalties on sales of certain
competitive products will be payable until the fifth anniversary of such
termination. Upon termination of the Interim License, the Company has also
agreed to pay to the Partnership, to the extent necessary to pay projected
distributions to the partners in any year, payments of ten percent (10%) of the
Company's revenues on sales of RMPs in Europe, and after each Class A Limited
Partner has received payments under the Partnership Agreement aggregating eight
hundred percent (800%) of its capital contribution, such payments will be
reduced to nine percent (9%) of the Company's revenues on sales of RMPs in
Europe, and after each Class A Limited Partner has received payments under the
Partnership Agreement aggregating one thousand percent (1,000%) of its capital
contribution, such payments will be reduced to four percent (4%) of the
Company's revenues on sales of RMPs in Europe. Any payments based on European
sales of certain competitive products and RMPs may be reduced if such sales are
made through sublicensees or other third parties. Any payments based on European
sales of RMPs will terminate on the last day of the calendar quarter in which
the eleventh anniversary of the exercise or termination of the Purchase Option
occurs.
The Company has agreed to file patent and similar applications that
it or the Partnership believes in its reasonable business judgment are
necessary or useful to protect the Partnership's interest in the Technology
and has agreed to use reasonable diligence to prosecute and maintain in force
such applications and any resultant patents or similar rights.
The Company will have the right but not the obligation to bring patent
infringement actions against third parties that infringe any of the
Partnership's rights with respect to the Technology. The Company has agreed to
pay all expenses (including attorneys' fees) incurred in connection with such
infringement action, subject to reimbursement to the extent described below. If
as a result of any such infringement action, a judgment is executed in favor of
the Company or a settlement is reached with the infringing party, the Company
has agreed to divide the proceeds thereof between itself and the Partnership in
proportion to their respective relative economic interests in the Technology
affected by such judgment or settlement giving consideration to the countries
and Products involved. Expenses incurred by the Company in bringing such action
are to be allocated between the Partnership and the Company in the same
proportions as the proceeds thereof. The Partnership's allocation of such
expenses is to be reimbursed by the Partnership to the Company out of the
proceeds received by the Partnership. In addition, the Partnership will retain
the right to maintain such patent infringement actions, at its own expense,
should the Company fail to do so.
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THE PURCHASE AGREEMENT
The Company entered into a purchase agreement dated as of March 6, 1992
(the "Purchase Agreement") with each investor in the Private Placement and the
Class B Limited Partner. Under the terms of the Purchase Agreement, each Class A
Limited Partner and the Class B Limited Partner granted to the Company an
irrevocable option (the "Purchase Option") to purchase his, her or its interest
in the Partnership (a "Class A Partnership Interest" or "Class B Partnership
Interest" as applicable). The Purchase Option is exercisable only if all Class A
and Class B Partnership Interests (collectively, the "Partnership Interests")
are to be purchased and such option is exercised by sending a notice to all
Class A and Class B Limited Partners on a date during the 45-day period
commencing on the date which is the earlier of (a) the date which is the last
day of the first month in which the Partnership shall have received Interim
License Payments equal to fifteen percent (15%) of the Limited Partner's Capital
Contributions (excluding the Milestone Payment) and the last day of the
twenty-fourth full month after the date of the Company's first commercial sale
of any Product within the Field of Activity and (b) the last day of the
forty-eighth full month after the date of such first commercial sale. The date
of purchase (if any) of the Partnership Interests (the "Purchase Date") pursuant
to the Purchase Agreement must take place within 60 days after the Purchase
Option is exercised.
The Purchase Option will terminate upon the occurrence of any of the
following termination events: (i) the bankruptcy of the Company, (ii) the
cessation of operations by the Company, (iii) the seizure or attachment of all
or a substantial part of the Company's assets or (iv) the termination of the
Research Program or the Marketing Program. In addition, the Purchase Option will
terminate upon the earlier of (a) the Company's notice to the Partnership and
the Limited Partners that it does not intend to exercise the Purchase Option or
(b) the expiration unexercised of the Purchase Option. Upon any such
termination, the Partnership will be free to license or sell the Technology. The
Purchase Option will also terminate on the Purchase Date.
If the Company exercises the Purchase Option, the Company has agreed to
pay to each Class A Limited Partner an advance payment of $40,000 per Class A
Partnership Interest plus certain royalty payments, both of which are payable in
the manner described below. The advance payment may be paid, at the Company's
option, in (i) cash, or (ii) Common Stock in an amount equal to the number of
shares of Common Stock obtained by dividing $40,000 by ninety-five percent (95%)
of the average closing price per share of Common Stock for the 15 trading days
immediately preceding the fifth trading day prior to the date the Purchase
Option is exercised (subject to adjustments as aforesaid).
Under the terms of the Purchase Agreement, the Company agreed that it
will, on or prior to the date that it exercises the Purchase Option, register
under the Securities Act of 1933, as amended, all shares of Common Stock to be
delivered to partners under the Purchase Agreement.
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Shares of Common Stock may be used to make the advance payment only if they are
then listed on a national securities exchange or quoted on the Nasdaq National
Market.
In addition to the advance payment described above, but subject to the
limitations stated below, each Class A Limited Partner is to receive quarterly
payments equal to such Class A Limited Partner's pro rata portion (based on the
ratio that such Class A Limited Partner's capital contribution to the
Partnership bears to the aggregate capital contributions of (i) all Limited
Partners or (ii) after the Class B Threshold Date (as defined below), all Class
A Limited Partners) of (i) twelve percent (12%) of revenues on sales of RMPs in
the United States and Canada and (ii) ten percent (10%) of revenues on sales of
RMPs in Europe, and after each such Class A Limited Partner has received
payments pursuant to the Purchase Agreement aggregating eight hundred percent
(800%) of his capital contribution, such royalties will be reduced to nine
percent (9%) in the United States, Canada and Europe and after each such Class A
Limited Partner has received payments pursuant to the Purchase Agreement
aggregating one thousand percent (1,000%) of his capital contribution, such
royalties will be reduced to four percent (4%) in the United States, Canada and
Europe, in each case provided that royalties on sales of RMPs in Europe will be
payable only to the extent necessary to pay projected distributions in any
calendar year; and provided further, that royalties on sales of RMPs in Europe
may be reduced if such sales are made through sublicensees or other third
parties. Beginning with the first day (the "Class B Threshold Date") of the
calendar quarter following the calendar quarter by the end of which each Class A
Limited Partner will have received distributions pursuant to the Partnership
Agreement and the Purchase Agreement in an aggregate amount equal to or greater
than $50,000 for each Unit (or $25,000 for each half Unit owned by such Class A
Limited Partner), the Class A Limited Partners will receive only ninety-five
percent (95%) of the above royalties. Such royalties will terminate on the last
day of the calendar quarter in which the eleventh anniversary of the Purchase
Date occurs (the "Cut-Off Date"). Under certain circumstances, Limited Partners
will also receive royalties in an amount equal to a percentage of the revenues
of the Company from the sale of certain products which are competitive with any
Product, which percentage of revenues will be no greater than one half of the
applicable percentage of revenues on sales of Products.
If Alkermes exercises the Purchase Option, the Class B Limited Partner
is to receive, in addition to an advance payment of $80,000, payable in cash or
stock in the same manner as described above for Class A Limited Partners,
quarterly payments equal to (i) prior to the date on which the Class B Threshold
occurs, the Class B Limited Partner's pro rata portion (based upon the ratio
that the Class B Limited Partner's capital contribution bears to the aggregate
capital contributions of all Limited Partners) of the royalties described in the
previous paragraph and (ii) beginning with the date the Class B Threshold occurs
and ending with the Cut-Off Date, five percent (5%) of all such royalties.
The Purchase Agreement provides that, at any time after the Company has
purchased the Partnership Interests, the Company will have the right to make
offers to pay cash or other
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consideration in satisfaction of its outstanding royalty payment obligations
under the Purchase Agreement. If at any time holders of at least sixty-six and
two-thirds percent (66-2/3%) in value of the Partnership Interests of all former
Class A Limited Partners ("Class A Royalty Payment Recipients") shall have
accepted the terms of any such offer, the Company will have the right, for 60
days after the date on which such Class A Royalty Payment Recipients have
indicated acceptance, to prepay its obligations to all such Class A Royalty
Payment Recipients. Such prepayment will be on the terms of the most recent
offer accepted by such Class A Royalty Payment Recipients.
The Company also agreed to use its best efforts to manufacture Products
and to sell the products for use in the Field of Activity. If the Company
determines that such manufacture and sale is not commercially practicable, it
has agreed to use its best efforts to license or sell the Technology to a third
party.
The Company is not permitted to assign, delegate or transfer its rights
under the Purchase Agreement (with certain exceptions) without the prior written
consent of (i) sixty-six and two thirds percent (66-2/3%) in interest of the
Class A Royalty Payment Recipients for which the Company shall not have made all
payments required to be made pursuant to the Purchase Agreement and (ii) the
Class B Limited Partner, which consent shall not be unreasonably withheld. The
Partnership Agreement provides for the allocation among the Limited Partners of
any proceeds resulting from the assignment, delegation or transfer of the
Company's rights under the Purchase Agreement. The Limited Partners are not
permitted to assign, transfer, or sell their rights under the Purchase Agreement
without the prior written consent of the Company, which consent may be withheld
in the Company's absolute discretion, except that (i) the Limited Partners may
assign the Common Stock delivered to them pursuant to the Purchase Agreement and
(ii) the Class B Limited Partner may assign its rights to any present or former
officer(s) or director(s) of PaineWebber Development Corporation.
CEREPORT
Cereport is a nine amino acid peptide based on bradykinin, a compound
occurring naturally in the body and known to affect vascular permeability.
Cereport is a proprietary, synthetic analog of bradykinin developed by Alkermes
on behalf of the Partnership pursuant to the Product Development Agreement, to
increase transiently the permeability of the blood-brain barrier. Following
injection, Cereport increases permeability by triggering a brief relaxation of
the tight cellular junctions of the blood-brain barrier. During the time the
tight junctions are relaxed, permeability is increased and drug molecules in the
bloodstream can diffuse into the brain in concentrations greater than can
usually be achieved without Cereport. Preclinical and clinical data also suggest
that Cereport increases the uptake of pharmaceuticals in the region of brain
tumors and other pathology.
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Cereport exerts a pharmacologic effect on the vasculature of the brain
and does not itself bind to or serve as a carrier for the drug of which it is
facilitating delivery. In the clinical setting, Cereport is administered in
conjunction with the therapeutic or diagnostic agent. Timing of Cereport
administration relative to that of the therapeutic or diagnostic agent is
determined on a drug-by-drug basis to optimize barrier permeability during the
time of peak drug plasma concentrations.
Cereport is intended to be marketed as an independent agent to increase
the utility of other therapeutic and diagnostic compounds given with it. The
General Partner believes Cereport may be administered along with cancer
chemotherapeutic and anti-infective agents not currently used in the treatment
of central nervous system disorders because of their limited ability to
penetrate the blood-brain barrier.
Cereport has the potential to be used in combination with a variety of
agents in various disease settings. The goal of the General Partner is to
develop Cereport through its own development activities, the Product Development
Agreement and, when appropriate, collaborations with pharmaceutical companies.
Alkermes may collaborate with companies having drugs whose uses could be
expanded to include central nervous system indications. In such cases, Alkermes
and its partner could collaborate in the clinical development of the combination
without any exchange of product rights.
BRAIN TUMOR
Cereport is being tested for the treatment of primary brain tumor,
recurrent malignant glioma, metastatic brain tumor and pediatric brain tumor.
Brain tumors can be classified into two major groups: primary brain tumors,
which originate and recur in the brain, and metastatic brain tumors, which are
tumors that have spread to the brain from other parts of the body. Each year in
the United States and Europe a total of 40,000 patients are diagnosed with
primary brain tumors, of which approximately 60%-70% are malignant glioma, and
150,000 patients are diagnosed with metastatic brain tumors.
Current treatment for brain tumor is limited and inadequate. Standard
treatment typically involves surgery to remove cancerous tissue, followed by
radiation therapy. After initial treatment with surgery and/or radiotherapy,
brain tumors often recur. Upon recurrence, tumors typically progress rapidly,
neurological function and quality of life deteriorate and patients die within
months. Chemotherapy has played only a limited role in treatment, in part due to
the limited access of many chemotherapeutic agents to the brain because of the
normally restrictive blood-brain barrier. Carboplatin is a chemotherapeutic
approved for use by the FDA and other regulatory authorities worldwide for use
in the treatment of various tumor types outside of the brain, but is limited in
its ability to penetrate into the brain. Cereport is designed to enable more
effective use of chemotherapeutic agents like carboplatin in the treatment of
brain tumors by transiently increasing the permeability of the blood-brain
barrier.
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RECURRENT MALIGNANT GLIOMA CLINICAL TRIALS
The General Partner's clinical strategy for Cereport has been to
establish a foundation of safety and pharmacologic effect of increasing
blood-brain barrier permeability prior to entering Phase III clinical trials of
Cereport administered in combination with carboplatin. To date, over 700 human
subjects have received Cereport in a series of clinical trials in all
indications studied. Through the Phase I, Phase I/II and Phase III clinical
trials, Cereport was shown to have a good safety profile in volunteers and
patients. Transient flushing was the most consistent adverse event noted and
nausea and vomiting were determined to be the dose limiting toxicity. There was
no evidence of increased toxicity associated with the combination of Cereport
and carboplatin, and the drug combination was generally well tolerated by
patients.
Based on the successful completion of Phase I and Phase I/II clinical
trials, Alkermes initiated multiple Phase II clinical trials both of intravenous
and intra-arterial Cereport and carboplatin in patients with recurrent malignant
glioma. Three multi-center Phase II clinical trials of intravenous Cereport and
carboplatin and one multi-center Phase II clinical trial of intra-arterial
Cereport and carboplatin were completed. The results of the three Phase II
intravenous Cereport clinical trials provided the basis for the Company's
decision to proceed in the United States and Europe into a Phase III clinical
trial of intravenous Cereport and carboplatin in patients with newly diagnosed
brain tumors.
NEWLY DIAGNOSED BRAIN TUMOR
In April 1999, we announced our plans to discontinue study ALK01-040,
which was a Phase III clinical trial of Cereport and carboplatin for the
treatment of newly-diagnosed brain tumor patients. The study began enrollment in
March 1998, and was designed to enroll patients with high grade primary brain
tumors following surgical resection of the tumor and prior to the initiation of
radiotherapy. The discontinuation of the study was not based on any issues
related to the safety or potential efficacy of Cereport in this indication, but,
based on our experience with the trial, we determined that elements of the study
design were inappropriate and that the probability of successful completion was
low. We are not planning to initiate another clinical trial in this indication
in the near future.
METASTATIC BRAIN TUMOR
We are conducting a Phase I/II clinical trial of Cereport and
carboplatin in patients with metastatic brain tumors, or tumors that have
spread to the brain from other sites in the body. The study also includes a
dose escalation component, in which progressively larger doses of Cereport
are being investigated in this patient population. The clinical trial phase
of this study was completed in 1999 and analysis of data is ongoing. The
results are expected to provide information useful for determining whether to
proceed with further clinical trials in this indication.
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PEDIATRIC BRAIN TUMOR
The Pediatric Branch of the National Cancer Institute ("NCI") is
conducting two separate studies of Cereport and carboplatin in pediatric
patients with primary brain tumors. The first study began in August 1996 and
enrolled 25 patients. The study is a non-controlled, open label Phase I/II
clinical trial of intravenous Cereport and carboplatin in pediatric brain tumor
patients who have failed other therapies. The second study began in June 1998,
and is a Phase II multi-center study, in pediatric brain tumor patients. Ten
centers will enroll up to a total of 146 children over two to four years. An
investigator sponsored investigational new drug application to study the
radiosensitization effect of Cereport and Carboplatin given with radiation
therapy in pediatric brain stem gliomas is scheduled to begin in 2000. This
study will be managed by the Children's Cancer Group in coordination with the
NCI.
COLLABORATION WITH ALZA CORPORATION
As of September 30, 1997, Alkermes and ALZA Corporation ("ALZA")
entered into an agreement relating to the development and commercialization of
Cereport. Under the terms of the agreement, ALZA made a $10.0 million upfront
payment to Alkermes to fund clinical development; in return, ALZA has the option
to acquire exclusive worldwide commercialization rights to Cereport, subject to
the rights and obligations of the Partnership. We are currently compiling the
data from various clinical trials and will present a final report to ALZA in the
coming months. ALZA will then make a decision whether to continue clinical
development of Cereport. If ALZA decides not to exercise their option we will
consider whether to fund the continued development of Cereport on our own or to
seek another partner. If ALZA chooses to exercise its option, ALZA will make
additional payments to cover costs associated with advanced clinical
development. If Cereport is commercialized successfully by ALZA, ALZA will pay
Alkermes certain milestone payments. Alkermes would be responsible for the
manufacturing of Cereport, and the two companies would share approximately
equally in profits from sales of the product. If ALZA does not exercise its
option, funding for the further development of Cereport would have to be
obtained from Alkermes or a third party. There can be no assurance that such
funding could be obtained and that development of Cereport would not suffer a
material set back in its development.
PATENTS AND PROPRIETARY RIGHTS
The Partnership's success will be dependent, in part, on Alkermes'
ability to obtain patent protection for its and the Partnership's products, to
maintain trade secret protection and to operate without infringing upon the
proprietary rights of others.
Alkermes has a proprietary portfolio of patent rights and exclusive
licenses to patents and patent applications. Alkermes has filed numerous United
States and foreign patent applications directed to composition of matter as well
as processes of preparation and methods of use,
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including applications relating to: permeabilizers, certain rights to which have
been licensed to the Partnership, of which one United States patent was issued
in each of May 1992, December 1993, April 1996, December 1996 and November 1997.
In the future, the Company plans to file further United States and foreign
patent applications directed to new or improved products and processes. No
United States patent issued to the Company is expected to expire prior to 2010.
Alkermes intends to file additional patent applications when appropriate and
intends to defend its and the Partnership's patent positions aggressively.
Alkermes has exclusive rights through a licensing agreement to two
issued United States patents and corresponding foreign patent applications in
many countries relating to RMPs. The United States patents that have been
licensed to the Company will expire in the year 2013. Under this licensing
agreement, the Company currently pays minimum annual royalties. During the
fiscal year ended March 31, 1999, such fees were $50,000. In addition, under all
licensing agreements, Alkermes is obligated to pay royalties on future sales of
products, if any, covered by the licensed patents.
Two applications for patents were filed by a third party in the United
States and in Europe that contain claims covering certain analogs and uses
thereof of the same naturally occurring molecule on which Cereport is based. Two
United States patents have issued from these applications. There can be no
assurance that the claims of the issued United States patents are not infringed
and the claims of future patents issuing from these applications, if any, will
not be infringed by the Partnership's or the Company's proposed manufacture, use
or sale of Cereport. There can be no assurance that Alkermes or the Partnership
would prevail in any legal action seeking damages or injunctive relief for
infringement of any patent that might issue under such applications or that any
license required under any such patents would be made available or, if
available, would be available on acceptable terms. There can be no assurance
that the cost of defending an infringement action would not be substantial and
would not have a material adverse effect on the Company's business, financial
condition and results of operations. Furthermore, there can be no assurance that
any licenses under any patents would be made available on commercially viable
terms, if at all. Failure to obtain a required license could result in the
inability to proceed with RMP-based products.
The patent positions of pharmaceutical, biopharmaceutical and
biotechnology firms, including the Partnership and Alkermes, are generally
uncertain and involve complex legal and factual questions. In addition, there
can be no assurance that the Company's or its licensors' current patent
applications will be allowed or that the claims of any patents issued to
Alkermes or its licensors (in connection with either the Company's product
candidates or the Partnership's product candidate, or both) will be sufficiently
broad to protect the Company's or the Partnership's technology or to provide
Alkermes or the Partnership with any competitive advantages. Moreover, no
assurance can be given that patents issued to Alkermes (in connection with
either the Company's product candidates or the Partnership's product candidate,
or both), or its respective licensors, if any, will not be contested, narrowed,
invalidated or circumvented. In
12
<PAGE>
addition, if Alkermes or the Partnership brings a patent infringement action or
otherwise brings an action to protect its own proprietary rights against third
parties or is required to defend against a charge of patent infringement,
substantial costs could be incurred.
In the future, the Partnership and the Company may be required to
obtain additional licenses to patents or other proprietary rights of third
parties. There can be no assurance that any such licenses will be available on
acceptable terms, if at all, and failure to obtain such licenses could result in
delays in marketing the Partnership's products or the inability to proceed with
the development, manufacture or sale of product candidates requiring such
licenses.
The Company also relies upon unpatented trade secrets and improvements,
unpatented know-how and continuing technological innovation to develop and
maintain its competitive position which it seeks to protect, in part, by
confidentiality agreements with its corporate partners, collaborators, employees
and consultants. There can be no assurance that these agreements will not be
breached, that the Company would have adequate remedies for any breach, or that
the Company's trade secrets will not otherwise become known or be independently
discovered by competitors.
The Company's practice is to require its employees, consultants and
advisors to execute a confidentiality agreement upon the commencement of an
employment or consulting relationship with the Company. The agreements provide
that all confidential information developed or made known to an individual
during the course of the employment or consulting relationship shall be kept
confidential and not disclosed to third parties except in specified
circumstances. In the case of employees, the agreements provide that all
inventions conceived by the individual while employed by the Company shall be
the exclusive property of the Company. There can be no assurance, however, that
these agreements will provide meaningful protection for the Company's or the
Partnership's trade secrets in the event of unauthorized use or disclosure of
such information.
COMPETITION
The biotechnology and pharmaceutical industries are subject to rapid
and substantial technological change. The Partnership and Alkermes face, and
will continue to face, intense competition in the development, manufacturing,
marketing and commercialization of RMP product candidates from academic
institutions, government agencies, research institutions, biotechnology and
pharmaceutical companies, including its collaborators, and drug delivery
companies. The General Partner believes that there are currently no products
approved by the FDA for increasing the permeability of the blood-brain barrier.
There are, however, many novel experimental therapies for the treatment of brain
tumors and central nervous system infections being tested in the United States
and Europe. There can be no assurance that developments by others will not
render RMP product candidates or technologies obsolete or noncompetitive or that
the Company's collaborators will not choose to use competing drug delivery
methods. At
13
<PAGE>
the present time, Alkermes has no sales force, commercial manufacturing
capability or marketing experience. In addition, many of the competitors and
potential competitors of the Partnership and Alkermes have substantially greater
capital resources, manufacturing and marketing experience, research and
development resources and production facilities than does Alkermes. Many of
these competitors also have significantly greater experience than Alkermes in
undertaking preclinical testing and clinical trials of new pharmaceutical
products and obtaining FDA and other regulatory approvals. There can be no
assurance that the Company will be able to compete successfully with such
companies. The existence of products developed by the Company's competitors, or
other products or treatments of which the Company is not aware, or products or
treatments that may be developed in the future, may adversely affect the
marketability of products developed by the Company.
MANUFACTURING AND MARKETING
Cereport is a small peptide manufactured using standard synthetic
techniques. Alkermes relies on an independent European pharmaceutical company
for the manufacture and supply of Cereport. Scale up of Cereport manufacturing
process to support international clinical trials and commercial launch has been
completed. The Partnership and Alkermes believe that, if necessary, there are
other companies which could manufacture and supply the requirements for
Cereport. Nevertheless, there can be no assurance that any manufacturer of
Cereport will continue to meet demands for quality, quantity, cost and
timeliness of delivery.
As of September 30, 1997, Alkermes and ALZA entered into an agreement
relating to the development and commercialization of Cereport under which ALZA
has the option to acquire exclusive worldwide commercialization rights to
Cereport, subject to the rights and obligations of the Partnership. If Cereport
is commercialized successfully by ALZA, ALZA will pay Alkermes certain milestone
payments. Alkermes would be responsible for the manufacturing of Cereport, and
the two companies would share approximately equally in profits from sales of the
product. See "Collaboration with ALZA Corporation."
Alkermes currently has no experience in marketing or selling
pharmaceutical products. In order to achieve commercial success for any product
candidate approved by the FDA, Alkermes must either develop a marketing and
sales force or enter into arrangements with third parties to market and sell its
products. There can be no assurance that Alkermes will successfully develop such
experience or that it will be able to enter into marketing and sales agreements
with others on acceptable terms, if at all. If the Company develops its own
marketing and sales capability, it will compete with other companies that
currently have experienced and well-funded marketing and sales operations. To
the extent that the Company enters into co-promotion or other sales and
marketing arrangements with other companies, any revenues received by Alkermes
(and consequent payments to the Partnership or the Limited Partners, as
applicable) will be dependent on the efforts of others, and there can be no
assurance that such efforts will be successful.
14
<PAGE>
GOVERNMENT REGULATION
The manufacture and marketing of pharmaceutical products in the United
States require the approval of the FDA under the Federal Food, Drug and Cosmetic
Act. Similar approvals by comparable agencies are required in most foreign
countries. The FDA has established mandatory procedures and safety standards
which apply to the preclinical testing and clinical trials, manufacture and
marketing of pharmaceutical products. Pharmaceutical manufacturing facilities
are also regulated by state, local and other authorities.
As an initial step in the FDA regulatory approval process, preclinical
studies are typically conducted in animal models to assess the drug's efficacy
and to identify potential safety problems. The results of these studies must be
submitted to the FDA as part of an Investigational New Drug application ("IND"),
which must be reviewed by the FDA before proposed clinical testing can begin.
Typically, clinical testing involves a three-phase process. Phase I trials are
conducted with a small number of subjects and are designed to provide
information about both product safety and the expected dose of the drug. Phase
II trials are designed to provide additional information on dosing and
preliminary evidence of product efficacy. Phase III trials are large scale
studies designed to provide statistical evidence of efficacy and safety in
humans. The results of the preclinical testing and clinical trials of a
pharmaceutical product are then submitted to the FDA in the form of a New Drug
Application ("NDA"), or for a biological product in the form of a Product
License Application ("PLA"), for approval to commence commercial sales.
Preparing such applications involves considerable data collection, verification,
analysis and expense. In responding to an NDA or PLA, the FDA may grant
marketing approval, request additional information or deny the application if it
determines that the application does not satisfy its regulatory approval
criteria.
Prior to marketing, any product developed by Alkermes for the
Partnership must undergo an extensive regulatory approval process, which
includes preclinical testing and clinical trials of such product candidate to
demonstrate safety and efficacy. This regulatory process can require many years
and the expenditure of substantial resources. Data obtained from preclinical
testing and clinical trials are subject to varying interpretations, which can
delay, limit or prevent FDA approval. In addition, changes in FDA approval
policies or requirements may occur or new regulations may be promulgated which
may result in delay or failure to receive FDA approval. Similar delays or
failures may be encountered in foreign countries. Delays and costs in obtaining
regulatory approvals would have a material adverse effect on the Company's
business, financial condition and results of operations.
Among the conditions for NDA or PLA approval is the requirement that
the prospective manufacturer's quality control and manufacturing procedures
conform on an ongoing basis with Good Manufacturing Process ("GMP"). Before
approval of an NDA or PLA, the FDA will perform a prelicensing inspection of the
facility to determine its compliance with GMP and other rules and regulations.
In complying with GMP, manufacturers must continue to expend time,
15
<PAGE>
money and effort in the area of production and quality control to ensure full
technical compliance. After the establishment is licensed, it is subject to
periodic inspections by the FDA.
The requirements which the Company must satisfy to obtain regulatory
approval by governmental agencies in other countries prior to commercialization
of its or the Partnership's products in such countries can be as rigorous and
costly as those described above.
The Company is also subject to various laws and regulations relating to
safe working conditions, laboratory and manufacturing practices, the
experimental use of animals and the use and disposal of hazardous or potentially
hazardous substances, including radioactive compounds and infectious disease
agents, used in connection with the Company's research. Compliance with laws and
regulations relating to the protection of the environment has not had a material
effect on capital expenditures, earnings or the competitive position of the
Company. However, the extent of government regulation which might result from
any legislative or administrative action cannot be accurately predicted.
EMPLOYEES
The Partnership and the General Partner do not have any full-time
employees. As of March 7, 2000, Alkermes had approximately 320 full-time
employees. A significant number of the Company's management and professional
employees have had prior experience with pharmaceutical, biotechnology or
medical product companies. Alkermes believes that it has been highly successful
in attracting skilled and experienced scientific personnel; however, competition
for such personnel is intense. None of the Company's employees are covered by a
collective bargaining agreement. The Company considers its relations with
employees to be good.
ITEM 2. PROPERTIES
The Registrant and the General Partner do not own or lease any
property. Alkermes leases and occupies approximately 72,000 square feet at its
corporate headquarters in Cambridge, Massachusetts, a portion of which is used
by Alkermes in the performance of its obligations to the Partnership, under four
leases expiring in the years 2000 to 2005. The leases contain provisions
permitting Alkermes to extend the term of such leases for up to ten years.
Alkermes believes that its Massachusetts facility is adequate for its
preclinical and clinical operations. Alkermes does not manufacture and does not
expect to manufacture Cereport for clinical trials. Alkermes has engaged a third
party to manufacture preclinical, clinical and commercial supplies of Cereport.
16
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
There is no trading market for the Limited Partnership Interests,
public or otherwise. Any transfer of a limited partnership interest is severely
restricted by certain conditions outlined in the Partnership Agreement, and
requires the consent of the General Partner which can be withheld in its sole
discretion.
As of March 7, 2000, there was one holder of a General Partnership
Interest, one holder of a Class B Partnership Interest and 1,105 holders of
Class A Partnership Interests.
There have been no cash distributions to the partners to date.
Distributions in the future, if any, will be made by the General Partner to the
partners as soon as practicable after the end of any fiscal quarter, in
proportion to the partners' respective capital accounts as of the end of such
quarter. Distributable cash, which must be distributed to the partners, is
generally defined as the excess of cash revenues over certain expenditures and
other amounts determined by the General Partner to be necessary for the proper
operation of the Partnership's business. The capital account of each partner
will be increased by such partner's cash contributions (net of selling
commissions, investment banking fees, warrant valuation fees and financial
advisory fees allocated to the Partner) to the Partnership decreased by the
amount of any cash distribution and the fair market value of other property from
the Partnership to such partner, and increased or decreased by such partner's
allocation of the net gain or loss of the Partnership for Federal income tax
purposes ("Profits" and "Losses", respectively). Partnership profits and losses
are allocated 99% to the Limited Partners (pro rata to their capital accounts)
and 1% to the General Partner.
17
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
STATEMENTS OF
OPERATIONS DATA (1):
- ---------------------
Total Revenues $ 270,050 $ 11,481 $ 232 $ -- $ --
Total Expenses 11,298,870 4,920,997 4,764 29,348 44,112
Net Loss (11,028,820) (4,909,516) (4,532) (29,348) (44,112)
Net Loss Per Class A
and B Unit $ (11,855) $ (5,238) $ (--) $ (--) $ (--)
============ ============ ============ ============ ============
Average Class A and
B Units Outstanding 921 921 921 921 921
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
1995 1996 1997 1998 1999
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEETS DATA:
- ---------------------
Total Assets $ 2,882,239 $ 32,804 $ -- $ -- $ --
Long-term Obligations -- -- -- -- --
</TABLE>
(1) The Partnership did not make any cash distributions to its partners during
any of the periods presented.
18
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
INTRODUCTION
The Partnership was formed on February 7, 1992, and is managed by its
general partner, Alkermes Development Corporation II (the "General Partner"), a
wholly owned subsidiary of Alkermes. The Partnership was organized to fund the
further development and clinical testing of a family of molecules, designated by
Alkermes as RMPs, for human pharmaceutical use in the United States and Canada.
IMPORTANT FACTORS REGARDING FORWARD-LOOKING STATEMENTS
Any statements set forth below or otherwise made in writing or orally
by the Partnership or the General Partner with regard to its expectations as to
financial results and other aspects of its business may constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements can be identified by
forward-looking words such as "may", "will", "expect", "anticipate", "believe",
"estimate", "continue" or similar words. Although the General Partner believes
that its expectations are based on reasonable assumptions within the bounds of
its knowledge of its business and operations, there can be no assurance that
actual results of the Partnership's or the Company's development activities and
its results of operations will not differ materially from its expectations.
Factors which could cause actual results to differ from expectations include,
among others:
(i) the Partnership and the Company could not be permitted by
regulatory authorities to undertake additional clinical trials for Cereport-TM-
or clinical trials could be delayed or regulatory authorities could require
additional clinical trials before approving Cereport;
(ii) clinical trials for Cereport may not proceed as planned, the
trials may require more time to enroll patients than anticipated, and even if
they are completed Cereport could prove to be ineffective or unsafe;
(iii) the Company could incur difficulties or set-backs in obtaining
the substantial additional funding required to continue research and development
programs and clinical trials;
(iv) the Company could reduce or discontinue funding of Cereport;
(v) even if Cereport appears promising at an early stage of
development, it could fail to receive necessary regulatory approvals, be
difficult to manufacture on a large scale, be uneconomical, fail to achieve
market acceptance, be precluded from commercialization by proprietary rights of
third parties or experience substantial competition in the marketplace; and
19
<PAGE>
(vi) technological change in the biotechnology or pharmaceutical
industries and the approval of other drugs or therapies to treat brain tumors
could render Cereport obsolete or noncompetitive.
RESULTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1999 AND 1998
REVENUE
The Partnership had no revenue for the years ended December 31, 1999
and 1998. The Partnership anticipates that it will have no revenues in the
foreseeable future.
EXPENSES
Research and development expenses for the years ended December 31, 1999
and 1998 were both zero. The research and development expenses were zero because
of the completion of the development funding to Alkermes pursuant to the product
development agreement between Alkermes and the Partnership (the "Product
Development Agreement").
General and administrative expenses for the year ended December 31,
1999 were $44,112 as compared to $29,348 for the year ended December 31, 1998.
The increase was mainly a result of increased professional service fees.
Alkermes is obligated through the General Partner to perform general and
administrative services for the Partnership at its expense, unless Alkermes
exercises its Purchase Option and thereby acquires all limited partnership
interests in the Partnership (see Liquidity and Capital Resources).
YEARS ENDED DECEMBER 31, 1998 AND 1997
REVENUE
The Partnership's sole source of revenue for the year ended December
31, 1997 was the interest earned on the investments made with the capital
contributions made by the General Partner and the limited partners (the "Limited
Partners") of the Partnership prior to their disbursement to Alkermes for
research and development and/or other Partnership expenses. Interest income for
the year ended December 31, 1998 was zero compared to $232 for the corresponding
period of the prior year. Interest income for the year ended December 31, 1998
as compared to 1997 decreased as a result of the decrease in cash. The
Partnership anticipates that it will have no interest income in the foreseeable
future as the Partnership's assets were depleted during the quarter ended
September 30, 1997. The decrease in the cash of the Partnership is
20
<PAGE>
a result of the completion of the payment of the development funding to Alkermes
during the quarter ended June 30, 1996.
EXPENSES
Research and development expenses for the years ended December 31, 1998
and 1997 were both zero. The research and development expenses were zero because
of the completion of the development funding to Alkermes pursuant to the Product
Development Agreement.
General and administrative expenses for the year ended December 31,
1998 were $29,348 as compared to $4,764 for the year ended December 31, 1997.
The increase was mainly a result of increased professional service fees.
Alkermes is obligated through the General Partner to perform general and
administrative services for the Partnership at its expense, unless Alkermes
exercises its Purchase Option (see Liquidity and Capital Resources).
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1999, the Partnership had no remaining assets or
liabilities.
The Partnership's primary source of funding and capital resources had
been the annual capital contributions by the Limited Partners and the General
Partner. The Limited Partners' capital contributions were remitted to the
Partnership in four annual installments, the fourth and final payment of which
was due on April 15, 1995. There have been and will be no additional capital
contributions received by the Partnership from the Limited Partners after the
quarter ended June 30, 1996.
The Partnership was funding research and development expenses for
Cereport from capital contributions received from Partners. Such development was
and continues to be conducted for the Partnership by Alkermes pursuant to the
Product Development Agreement. The research and development funding to Alkermes
ended during the quarter ended June 30, 1996 when such capital contributions
were substantially depleted. None of the Partners is obligated to make any
further capital contributions. Because the funding was not sufficient for
Alkermes to complete clinical trials and seek regulatory approval of Cereport,
Alkermes has used its own resources, and intends to continue to obtain such
resources through equity offerings, bank borrowings and its collaborative
arrangements. Effective September 30, 1997, Alkermes entered into an agreement
with ALZA Corporation related to the development and commercialization of
Cereport. Alkermes is required to fund the development of Cereport to maintain
its Purchase Option with the Limited Partners.
The Partnership used its remaining cash and cash equivalents during the
quarter ended September 30, 1997 to pay for administrative services for the
Partnership. Alkermes is obligated, through the General Partner, to perform
administrative services for the Partnership,
21
<PAGE>
such as preparing financial statements, tax returns and reports to the Limited
Partners. Alkermes intends to continue to cause the General Partner to perform
such services at its expense since the Partnership's current assets are depleted
to maintain its Purchase Option with the Limited Partners, unless it exercises
its Purchase Option and thereby acquires all limited partnership interests in
the Partnership. The activities performed by Alkermes and the General Partner
constitute all of the activities undertaken by or on behalf of the Partnership.
After December 31, 1999, the Partnership is expected to have no future
liquidity or capital resource requirements other than those funded by Alkermes.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
22
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA:
ALKERMES CLINICAL PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
Financial Statements as of December 31, 1999 and 1998 and for
Each of the Three Years in the Period
Ended December 31, 1999 and Independent Auditors' Report
23
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners of
Alkermes Clinical Partners, L.P.
Cambridge, Massachusetts
We have audited the accompanying balance sheets of Alkermes Clinical Partners,
L.P. (a Limited Partnership) as of December 31, 1999 and 1998, and the related
statements of operations, changes in partners' capital, and cash flows for each
of the three years in the period ended December 31, 1999. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Partnership as of December 31, 1999 and
1998, and the results of its operations, changes in its partners' capital and
its cash flows for each of the three years in the period ended December 31, 1999
in conformity with accounting principles generally accepted in the United States
of America.
As discussed in Note 7 to the financial statements, the Partnership completed
its development funding to Alkermes, Inc. (an affiliate) and none of the
partners are obligated to make any further capital contributions to the
Partnership. Alkermes, Inc., through the General Partner, is obligated to
continue to provide administrative services at its expense after the
Partnership's assets are depleted to maintain its purchase option with the
limited partners and has indicated that it intends to cause the General Partner
to perform such administrative services at its expense, unless it exercises its
purchase option and acquires all the interests.
/s/ DELOITTE & TOUCHE LLP
Boston, Massachusetts
March 24, 2000
24
<PAGE>
ALKERMES CLINICAL PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
ASSETS
TOTAL ASSETS $ - $ -
===== =====
LIABILITIES AND PARTNERS' CAPITAL
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ - $ -
===== =====
</TABLE>
See notes to financial statements.
25
<PAGE>
ALKERMES CLINICAL PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
REVENUE - Interest income $ -- $ -- $ 232
-------- -------- --------
EXPENSES:
Research and development -- -- --
General and administrative 44,112 29,348 4,764
-------- -------- --------
44,112 29,348 4,764
-------- -------- --------
NET LOSS $(44,112) $(29,348) $ (4,532)
======== ======== ========
NET LOSS PER CLASS A AND B UNIT $ -- $ -- $ --
======== ======== ========
AVERAGE CLASS A AND B UNITS OUTSTANDING 921 921 921
======== ======== ========
</TABLE>
See notes to financial statements.
26
<PAGE>
ALKERMES CLINICAL PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GENERAL
PARTNER TOTAL
<S> <C> <C>
BALANCE, JANUARY 1, 1997 $ 4,532 $ 4,532
Net loss for year (4,532) (4,532)
-------- --------
BALANCE, DECEMBER 31, 1997 -- --
Partner contributions 29,348 29,348
Net loss for year (29,348) (29,348)
-------- --------
BALANCE, DECEMBER 31, 1998 -- --
Partner contributions 44,112 44,112
Net loss for year (44,112) (44,112)
-------- --------
BALANCE, DECEMBER 31, 1999 $ -- $ --
======== ========
</TABLE>
See notes to financial statements.
27
<PAGE>
ALKERMES CLINICAL PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(44,112) $(29,348) $ (4,532)
Adjustment to reconcile net loss to net cash used for
operating activities:
Changes in assets and liabilities:
Accrued expenses -- -- (28,272)
-------- -------- --------
Net cash used by operating activities (44,112) (29,348) (32,804)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
General Partner's capital contributions 44,112 29,348 --
-------- -------- --------
Net cash provided by financing activities 44,112 29,348 --
-------- -------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS -- -- (32,804)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR -- -- 32,804
-------- -------- --------
CASH AND CASH EQUIVALENTS, END OF YEAR $ -- $ -- $ --
======== ======== ========
</TABLE>
See notes to financial statements.
28
<PAGE>
ALKERMES CLINICAL PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
- --------------------------------------------------------------------------------
1. ORGANIZATION AND BUSINESS OPERATIONS
Alkermes Clinical Partners, L.P. (the "Partnership") was formed on February 7,
1992 and is managed by its general partner, Alkermes Development Corporation II
(the "General Partner"), a wholly owned subsidiary of Alkermes, Inc.
("Alkermes"). The Partnership was organized to fund the further development and
clinical testing of a family of molecules, designated by Alkermes as
Receptor-Mediated Permeabilizers ("RMPs"), for human pharmaceutical use in the
United States and Canada.
On April 10, 1992, the Partnership and Alkermes sold in a private placement (i)
920 Class A units, each unit (a "Class A Unit") consisting of one Class A
limited partnership interest in the Partnership, a Class A 1992 warrant (a
"Class A 1992 Warrant") to purchase 2,800 shares of Alkermes' common stock, and
a Class A 1995 warrant (a "Class A 1995 Warrant") to purchase 300 shares of
Alkermes' common stock, and (ii) one Class B unit (the "Class B Unit")
consisting of one Class B limited partnership interest (the "Class B Interest")
in the Partnership, a Class B 1992 warrant (the "Class B 1992 Warrant") to
purchase 5,600 shares of Alkermes' common stock, and a Class B 1995 warrant (the
"Class B 1995 Warrant") to purchase 600 shares of Alkermes' common stock. The
purchase price was $50,000 for each Class A Unit, $10,718 of which was paid at
the time of subscription, and the balance of which was evidenced by an investor
note (each, an "Investor Note" and collectively, the "Investor Notes"), $12,372
of which was paid during 1993, $14,166 of which was paid during 1994 and the
remainder of which was paid in April 1995. The purchase price for the Class B
Unit was $100,000, $21,000 of which was paid at the time of subscription, and
the balance of which was evidenced by a promissory note, $24,744 of which was
paid during 1993, $28,332 of which was paid during 1994 and the remainder of
which was paid in April 1995.
The net proceeds from the sale of the units were used primarily to fund the
further development and clinical testing of RMPs, which testing is being
conducted for the Partnership by Alkermes pursuant to a product development
agreement by and between Alkermes and the Partnership (the "Product Development
Agreement") (see Note 3).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION - The Partnership prepares its financial statements on the
accrual basis of accounting.
USE OF ESTIMATES - The preparation of the Partnership's financial statements in
conformity with generally accepted accounting principles necessarily requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of
29
<PAGE>
contingent assets and liabilities at the date of the financial statements and
the reported amount of revenues and expenses during each of the reporting
periods. Actual results could differ from those estimates.
NET LOSS PER CLASS A AND B LIMITED PARTNERSHIP INTEREST - Net loss per Class A
and B limited partnership interest is calculated with the net loss attributable
only to the limited partners of the partnership (each, a "Limited Partner" and
collectively, the "Limited Partners") and excludes the loss attributable to the
General Partner. There were no losses attributable to the Limited Partners for
the years ended December 31, 1999, 1998 and 1997.
INCOME TAXES - Federal and state income taxes are the responsibility of the
General Partner and each of the Limited Partners of the Partnership.
Accordingly, no provision for income taxes has been recorded.
COMPREHENSIVE INCOME - There are no elements of other comprehensive income in
the financial statements.
3. PRODUCT DEVELOPMENT AGREEMENT
In March 1992, the Partnership entered into the Product Development Agreement
with Alkermes, pursuant to which Alkermes licensed to the Partnership certain
technologies of Alkermes relating to RMPs. The Partnership paid Alkermes a
nonrefundable fee of $1,750,000 under the Product Development Agreement for
prior research and costs incurred by Alkermes relating to RMPs and recorded such
fee as research and development expense in the period ended December 31, 1992.
The Partnership granted to Alkermes an exclusive interim license to manufacture
and market RMPs for human pharmaceutical use in the United States and Canada
(the "Interim License"). Pursuant to this Interim License, upon the first
marketing approval of an RMP product by the United States Food and Drug
Administration, the Partnership is to receive a payment from Alkermes equal to
20% of the aggregate capital contributions of all partners (the "Milestone
Payment"). Additionally, the Partnership is to receive royalty payments from
Alkermes equal to 12% of United States and Canadian revenues and 10% of European
revenues, in certain circumstances, from any sales of RMPs by Alkermes. The
Interim License will terminate if Alkermes does not exercise its purchase option
to acquire all of the Limited Partners' interests in the Partnership, as
discussed below.
Alkermes, Inc. has been issued five patents, U.S. Patent No. 5,112,596 in May
1992, U.S. Patent No. 5,268,164 in December 1993, U.S. Patent No. 5,506,206 in
April 1996, U.S. Patent No. 5,585,355 in December 1996 and U.S. Patent No.
5,686,416 in November 1997, the rights to which have been licensed to the
Partnership pursuant to the Product Development Agreement.
30
<PAGE>
4. PARTNERSHIP PURCHASE OPTION
In consideration for the Class A 1992 Warrants, the Class A 1995 Warrants, the
Class B 1992 Warrant and the Class B 1995 Warrant, each Limited Partner has
granted to Alkermes an option to purchase (the "Purchase Option"), under certain
circumstances, the limited partnership interest in the Partnership held by such
Limited Partner. Upon the exercise of the Purchase Option, each owner of a Class
A limited partnership interest (a "Class A Limited Partner") will be entitled to
receive an initial payment of, at the option of Alkermes, $40,000 in cash or
approximately $42,100 in Alkermes' common stock, as well as certain additional
payments (which are subject to certain limitations) based on Alkermes' net
revenues from sales of RMPs in the United States, Canada and Europe (the
"royalty stream") as follows:
- - 12% of net revenues to Alkermes on sales of RMPs in the United States and
Canada and 10% of net revenues to Alkermes on sales of RMPs in Europe,
until each Class A Limited Partner has received an aggregate of $400,000
per interest from the initial payment and the royalty stream; and
thereafter,
- - 9% of net revenues to Alkermes on sales of RMPs in the United States,
Canada and Europe, until each Class A Limited Partner has received an
aggregate of $500,000 per interest from the initial payment and the royalty
stream; and thereafter,
- - 4% of net revenues to Alkermes on sales of RMPs in the United States,
Canada and Europe.
If Alkermes exercises the Purchase Option, the holder of the Class B Interest
(the "Class B Limited Partner") will receive, in addition to an advance payment
of $80,000, payable in cash or stock in the same manner as described above for
the Class A Limited Partners, quarterly payments equal to (i) prior to the date
on which the Class B Threshold (as described below) occurs, the Class B Limited
Partner's pro rata portion (based upon the ratio that the Class B Limited
Partner's capital contribution bears to the aggregate capital contributions of
all Limited Partners) of the royalties described in the previous paragraph, and
(ii) beginning on the date on which the Class B Threshold occurs, the Class A
Limited Partners will receive only 95% of the above royalties. The Class B
Threshold will occur on the first day of the calendar quarter that follows the
calendar quarter in which each Class A Limited Partner will have received
distributions in an aggregate amount equal to its capital contribution.
Royalties on sales of RMPs in Europe will be payable only in certain
circumstances. The royalties described above will terminate on the last day of
the calendar quarter eleven years after Alkermes exercises the Purchase Option.
Alkermes may exercise the Purchase Option to purchase all of the limited
partnership interests in the Partnership upon the earlier of: (i) the date that
is the later of the last day of the first month in which the Partnership shall
have received payments under the Interim License (excluding the Milestone
Payment) equal to 15% of the Limited Partners' capital contributions and the
expiration of 24 months after the first commercial sale of an RMP product under
the Interim License and (ii) the expiration of 48 months after the first
commercial sale of an RMP product under the Interim License. None of the
above-mentioned events have occurred; accordingly, the Purchase Option still
remains outstanding.
31
<PAGE>
5. PARTNERS' CAPITAL
The Partnership allocates its profits or losses for each fiscal year 1% to the
General Partner and 99% to the Limited Partners. The Partnership then allocates
the profits and losses allocated to the Limited Partners pro rata in accordance
with the Limited Partners' capital contributions, as adjusted for certain
allocations and returns to each Limited Partner. The capital contributions made
by each Class A Limited Partner and the Class B Limited Partner are discussed in
Note 1. Losses in excess of the Limited Partners' capital contributions are
allocated to the General Partner. If and when the Class B Threshold occurs (see
Note 4), the Partnership will allocate to the Class B Limited Partner 5% of
profits and losses allocated to the Limited Partners and will allocate to the
Class A Limited Partners 95% of profits and losses allocated to the Limited
Partners. Such allocation to the Class A Limited Partners will be made pro rata
based on such Limited Partners' capital contributions, as adjusted for certain
allocations and returns to such Limited Partners.
6. WARRANT EXCHANGE
Alkermes completed an exchange offer on January 27, 1995, with respect to the
warrants issued in connection with the formation of the Partnership. Pursuant to
the exchange offer, each Class A Limited Partner had the option to exchange both
its Class A 1992 Warrant and Class A 1995 Warrant for a new 1994 Class A Warrant
("1994 Class A Warrant") to purchase at $5.00 per share, 1,700 shares of
Alkermes' common stock for every 3,100 shares of common stock issuable upon
exercise of the Class A 1992 Warrant and Class A 1995 Warrant exchanged
therefore. The Class B Limited Partner had the option to exchange both the Class
B 1992 Warrant and Class B 1995 Warrant for a new 1994 Class B Warrant ("1994
Class B Warrant") to purchase 3,400 shares of Alkermes' common stock at $5.00
per share.
Of the Class A 1992 Warrants and Class A 1995 Warrants originally issued,
approximately 92% were exchanged in response to the exchange offer. The Class B
1992 Warrant and Class B 1995 Warrant were also exchanged in the exchange offer.
Certain other warrants issued in connection with the formation of the
Partnership were also exchanged for new 1994 warrants. The exchange offer
resulted in a decrease of a total of 1,225,927 shares of Alkermes' common stock
which would be issuable upon exercise of the outstanding warrants.
Each 1994 Class A Warrant and the 1994 Class B Warrant may be exercised during
the period beginning on April 1, 1995 and ending on March 31, 2000.
7. COMPLETION OF SCHEDULED FUNDING
For the years ended December 31, 1999, 1998 and 1997, the Partnership incurred
no research and development expenses related to the RMP program, notwithstanding
the continuing development of such product candidate. The Partnership was
providing funding to Alkermes for research and development expenses for Cereport
from capital contributions received from Partners. Funding to Alkermes ended
during the quarter ended June 30, 1996 when such capital contributions were
substantially depleted. None of the Partners of the Partnership is obligated to
make any further capital contributions. Since the funding was not sufficient for
Alkermes to complete clinical trials and seek regulatory approval of Cereport,
Alkermes has used its own resources, and intends to continue to use its own
resources, to develop Cereport. Alkermes has obtained and intends to continue to
obtain such resources through equity offerings, bank borrowings and its
collaborative
32
<PAGE>
arrangements. Alkermes is required to fund the development of Cereport to
maintain its purchase option with the Limited Partners.
Alkermes is also obligated, through the General Partner, to perform
administrative services for the Partnership, such as preparing financial
statements, tax returns and reports to Partners. During 1999, 1998 and 1997,
Alkermes provided such services to the Partnership and has confirmed its
intention to provide such services through at least March 31, 2001. Alkermes
intends to continue to cause the General Partner to perform such services at its
expense since the Partnership's current assets are depleted, unless it exercises
its Purchase Option and thereby acquires all the interests in the Partnership.
The services performed by Alkermes and the General Partner constitute all of the
activities undertaken by or on behalf of the Partnership.
After December 31, 1999, the Partnership is expected to have no future liquidity
or capital resource requirements other than those funded by Alkermes.
33
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) DIRECTORS OF THE GENERAL PARTNER.
Richard F. Pops, age 37, has been a director of the General Partner
since its inception in 1992. Mr. Pops has also been Chief Executive Officer and
a director of Alkermes since February 1991. From February 1991 to June 1994, Mr.
Pops was also President of Alkermes. Mr. Pops is also a director of Neurocrine
Biosciences, Inc.
James M. Frates, age 32, has been a director of the General Partner
since June 1998. Mr. Frates has also been the Chief Financial Officer, Vice
President, Treasurer and Assistant Secretary of Alkermes since June 1998. From
June 1996 to July 1998, he was a Vice President and Senior Associate of
Robertson Stephens & Company. In June 1996, he obtained his M.B.A. from Harvard
Business School. From July 1992 through September 1994, he was a Senior
Associate of Robertson Stephens.
Dhan Pai, age 37, has been a director of the General Partner since
March 2000. Mr Pai has been a Managing Director of PaineWebber Incorporated
since 1990. Mr. Pai is also a director of Repligen Development Corporation,
the general partner of Repligen Clinical Partners, L.P.
Robin Stanley, age 39, has been a director of the General Partner
since March 2000. Ms. Stanley has been a Vice President of PaineWebber
Developmet Corporation since 1989. Ms. Stanley is also a director of Repligen
Development Corporation, the general partner of Repligen Clinical Partners,
L.P.
(b) EXECUTIVE OFFICERS OF THE GENERAL PARTNER.
Mr. Pops has been the President of the General Partner since its
inception and the Chief Executive Officer of the General Partner since 1993.
Mr. Frates has been the Chief Financial Officer, Vice President,
Treasurer and Assistant Secretary of the General Partner since June 1998.
34
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
The General Partner receives no compensation for performing its duties
under the Partnership Agreement. It will receive only its pro rata share of
Partnership distributions and distributions upon liquidation of the Partnership
and reimbursement for its expenditures for the payment of properly incurred
obligations of the Partnership. Furthermore, the officers and directors of the
General Partner receive no compensation other than reimbursement for appropriate
expenses incurred while conducting the business of the General Partner.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information regarding security ownership of all directors who own
any class of the Partnership's securities and all persons known to the
Partnership to be the beneficial owners of more than 5% of any class of the
Partnership's securities as of March 7, 2000 is as follows:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF PERCENT OF
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- -------------- ------------------- -------------------- ----------
<S> <C> <C> <C>
General Partner Alkermes Development One General Partner 100.0%
Interest Corporation II Interest
64 Sidney Street
Cambridge, MA 02139
Class A Limited PaineWebber R&D Partners 133 Class A Limited 14.5%
Partnership Interests III, L.P. Partnership Interests
1285 Avenue of the
Americas
New York, NY 10019
Alkermes, Inc. 74 Class A Limited 8.0%
64 Sidney Street Partnership Interests
Cambridge, MA 02139
Robin Stanley 1/2 Class A Limited Less than 1%
c/o PaineWebber Inc. Partnership Interest
703 Trancas Street
Napa, CA 94588
Class B Limited PaineWebber Development One Class B Limited 100.0%
Partnership Interest Corporation Partnership Interest
1285 Avenue of the
Americas
New York, NY 10019
</TABLE>
35
<PAGE>
Exclusive management and control of the Partnership's business is
vested in the General Partner. As of March 7, 2000 none of the directors or
officers of the General Partner have any security ownership in the
Partnership other than as described above.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Pops and Mr. Frates are officers of Alkermes and Mr. Pops is also a
director of Alkermes. In March 1992, the Partnership entered into certain
agreements with Alkermes, which are described above in Item 1. In the year ended
December 31, 1999, Alkermes made capital contributions to the Partnership,
through the General Partner, of $44,112 to cover all of the Partnership's
expenses.
The purchase price for Class A Units was paid in four annual
installments. The final payment was due on April 15, 1995. The holders of 74
Class A Units failed to pay all of such payments and the Partnership foreclosed
on such units. In February and April 1996, Alkermes subsequently purchased these
Class A Units for approximately $2,052,000, the amount of the uncollected
payments. Such amount was recorded as equity inflows in 1996.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Documents filed as part of the Report:
(1) Financial Statements of the Registrant and Independent Auditors'
Report thereon:
Independent Auditors' Report.
Balance Sheets, December 31, 1999 and 1998.
Statements of Operations for the Years Ended December 31, 1999,
1998 and 1997.
Statements of Changes in Partners' Capital for the Years Ended
December 31, 1999, 1998 and 1997.
Statements of Cash Flows for the Years Ended December 31, 1999,
1998 and 1997.
Notes to Financial Statements.
36
<PAGE>
(2) Financial Statement Schedules:
Schedules have been omitted because of the absence of conditions
under which they are required or because the required information
is included in the financial statements or the notes thereto.
(3) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
<S> <C>
3.1 Alkermes Clinical Partners, L.P. Agreement of Limited Partnership, dated as of
February 7, 1992.*
3.1(a) Amendment No. 1 to Alkermes Clinical Partners, L.P. Agreement of Limited
Partnership, dated as of September 29, 1992.*
3.1(b) Amendment No. 2 to Alkermes Clinical Partners, L.P. Agreement of Limited
Partnership, dated as of March 30, 1993.*
4.1 Alkermes Clinical Partners, L.P. Agreement of Limited Partnership, dated as of
February 7, 1992.*
4.1(a) Amendment No. 1 to Alkermes Clinical Partners, L.P. Agreement of Limited
Partnership, dated as of September 29, 1992.*
4.1(b) Amendment No. 2 to Alkermes Clinical Partners, L.P. Agreement of Limited
Partnership, dated as of March 30, 1993.*
10.1 Product Development Agreement, dated as of March 6, 1992, between the
Partnership and Alkermes.*
10.2 Purchase Agreement, dated as of March 6, 1992, by and among
Alkermes and each of the Limited Partners, from time to time,
of the Partnership.*
27 Financial Data Schedule.
</TABLE>
* Incorporated by reference to Exhibits to the Registrant's Registration
Statement on Form 10 filed September 13, 1995.
(b) The Registrant has not filed any reports on Form 8-K.
37
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
ALKERMES CLINICAL PARTNERS, L.P.
(Registrant)
By its General Partner
ALKERMES DEVELOPMENT CORPORATION II
Date: March 30, 2000 By: /s/ RICHARD F. POPS
---------------------------------------
Richard F. Pops
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the General Partner of the
Registrant on behalf of the Registrant and in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ RICHARD F. POPS Director, President and Chief March 30, 2000
- ------------------------------------ Executive Officer (Principal
Richard F. Pops Executive Officer)
/s/ JAMES M. FRATES Director, Vice President, March 30, 2000
- ------------------------------------ Chief Financial Officer,
James M. Frates Treasurer and Assistant
Secretary (Principal Financial
and Accounting Officer)
/s/ DHAN PAI Director March 30, 2000
- ------------------------------------
Dhan Pai
/s/ ROBIN STANLEY Director March 30, 2000
- ------------------------------------
Robin Stanley
</TABLE>
38
<PAGE>
ALKERMES CLINICAL PARTNERS, L.P.
ANNUAL REPORT ON FORM 10-K
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------- -------
<S> <C>
3.1 Alkermes Clinical Partners, L.P. Agreement of Limited Partnership, dated as of
February 7, 1992.*
3.1(a) Amendment No. 1 to Alkermes Clinical Partners, L.P. Agreement of Limited
Partnership, dated as of September 29, 1992.*
3.1(b) Amendment No. 2 to Alkermes Clinical Partners, L.P. Agreement of Limited
Partnership, dated as of March 30, 1993.*
4.1 Alkermes Clinical Partners, L.P. Agreement of Limited Partnership, dated as of
February 7, 1992.*
4.1(a) Amendment No. 1 to Alkermes Clinical Partners, L.P. Agreement of Limited
Partnership, dated as of September 29, 1992.*
4.1(b) Amendment No. 2 to Alkermes Clinical Partners, L.P. Agreement of Limited
Partnership, dated as of March 30, 1993.*
10.1 Product Development Agreement, dated as of March 6, 1992, between the
Partnership and Alkermes.*
10.2 Purchase Agreement, dated as of March 6, 1992, by and among
Alkermes and each of the Limited Partners, from time to time,
of the Partnership.*
27 Financial Data Schedule.
</TABLE>
* Incorporated by reference to Exhibits to the Registrant's Registration
Statement on Form 10 filed September 13, 1995.
39
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 10-K FOR
THE YEAR ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 44
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (44)
<INCOME-TAX> 0
<INCOME-CONTINUING> (44)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (44)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
