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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
(AMENDMENT NO. 2)
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SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
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COMBICHEM, INC.
(Name of Subject Company)
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COMBICHEM, INC.
(Name of Person(s) Filing Statement)
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Common Stock, $.001 Par Value
(Title of Class of Securities)
20009P 10 3
(CUSIP Number of Class of Securities)
Dr. Vicente Anido, Jr.
President and Chief Executive Officer
CombiChem, Inc.
9050 Camino Santa Fe
San Diego, California 92121
(858) 530-0484
(Name, Address, and Telephone Number of Person Authorized to Receive Notice and
Communications on Behalf of Person(s) Filing Statement)
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Copies To:
Faye H. Russell, Esq.
Carey J. Fox, Esq.
Brobeck, Phleger & Harrison, LLP
550 West C Street, Suite 1300
San Diego, California 92101
(619) 234-1966
Justin P. Klein, Esq.
Ballard Spahr Andrews & Ingersoll LLP
1735 Market Street
Philadelphia, Pennsylvania 19103
(215) 864-8606
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This Amendment No. 2 to the Solicitation/Recommendation Statement on
Schedule 14D-9 (the "Schedule 14D-9") relates to the tender offer of DPC
Newco, Inc., a Delaware corporation ("Offeror") and wholly owned subsidiary of
DuPont Pharma, Inc., a Delaware corporation ("Purchaser") and a wholly owned
subsidiary of E.I. du Pont de Nemours and Company, a Delaware corporation
("Parent") disclosed in a Tender Offer Statement on Schedule 14D-1 (the
"Schedule 14D-1") dated October 12, 1999, as amended on October 22, 1999, to
purchase all of the outstanding shares (the "Shares") of Common Stock, $.001
par value (the "Common Stock"), of CombiChem, Inc., a Delaware corporation
(the "Company"), at a price of $6.75 per Share, net to the seller in cash
without interest, upon the terms and subject to the conditions set forth in
the Offer to Purchase dated October 12, 1999 (the "Offer to Purchase") and the
related Letter of Transmittal (which together shall constitute the "Offer").
The purpose of this Amendment No. 2 is to amend and supplement Items 5, 8 and
9 of the Schedule 14D-9 as described below. Defined terms used herein and not
previously defined have the meanings given them in the Schedule 14D-9
previously filed.
Item 5. Persons Retained, Employed or to be Compensated
Item 5 is hereby amended and supplemented as set forth below. The text of
Item 5 as previously filed on October 12, 1999 is incorporated herein by
reference.
Since January 1996, DLJ has acted as co-manager of a public offering for
DuPont Photomasks, Inc. in March 1999 for which DLJ received customary
compensation. DuPont Photomasks, Inc. is majority owned by Parent. In
addition, as of September 30, 1999, Sprout Capital VII, L.P. and affiliated
entities beneficially owned approximately 11.3% of the Company's outstanding
Common Stock, or 1,501,729 outstanding shares and 25,000 shares issuable upon
exercise of options exercisable within sixty (60) days of September 30, 1999.
The average daily trading volume of the Shares on the Nasdaq National Market
for the period from January 1, 1999 through October 22, 1999 was approximately
47,000 shares. DLJ Capital Corporation is the managing general partner of
Sprout Capital VII, L.P. Philippe O. Chambon, M.D., Ph.D., a member of the
Company's Board of Directors, is a general partner of Sprout Capital VII, L.P.
and Divisional Vice President of DLJ Capital Corporation. Each of DLJ Capital
Corporation and DLJ are wholly owned subsidiaries of Donaldson, Lufkin &
Jenrette, Inc.
Item 8. Additional Information to be Furnished
Item 8 is hereby amended and supplemented as set forth below. The text of
Item 8 as previously filed on October 12, 1999 is incorporated herein by
reference.
The Company announced on October 26, 1999, in a press release which is
attached hereto as Exhibit 11, financial results for the quarter ended
September 30, 1999. During the quarter, the Company reported revenues of
$2,634,000, down from $3,892,000 for the same period in 1998. The Company
reported a net loss for the quarter of $4,067,000, or $0.31 per share,
compared to a net loss of $643,000, or $0.05 per share, in 1998.
For the nine months ended September 30, 1999, the Company reported revenues
of $8,771,000, down from $10,896,000 for the same period in 1998. For the nine
months ended September 30, 1999, the Company reported a net loss of
$10,742,000, or $0.82 per share, compared to a net loss of $2,375,000, or
$0.30 per share, in 1998. Based on these financial results and other events
disclosed through October 26, 1999, the Company expects to report comparable
losses in the relevant periods through 1999.
The Company also announced on October 26, 1999, in the same press release,
that following its October 5, 1999 announcement that the Company had entered
into the Merger Agreement with Parent and Offeror, the Company received
notification from Elan Pharmaceuticals, successor to Athena Neurosciences,
Inc., that Elan Pharmaceuticals intends to terminate its collaborative
agreement with the Company effective December 31, 1999.
Item 9. Material to be Filed as Exhibits
Item 9 is hereby amended and restated as follows:
1
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<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<C> <S>
Exhibit 1 Offer to Purchase dated October 12, 1999 (incorporated by reference
to Exhibit (a)(1) of the Schedule 14D-1 of E.I. du Pont de Nemours
and Company, DuPont Pharma, Inc. and DPC Newco, Inc. filed with the
Securities and Exchange Commission on October 12, 1999 (the
"Schedule 14D-1")).** (1)
Exhibit 2 Letter of Transmittal (incorporated by reference to Exhibit (a)(2)
of the Schedule 14D-1).** (1)
Exhibit 3 Joint Press Release issued by the Company and the Parent, dated
October 5, 1999.(1)
Exhibit 4 Opinion Letter of Donaldson Lufkin & Jenrette Securities
Corporation dated October 4, 1999.* (1)
Exhibit 5 Mutual Non-Disclosure Agreement dated March 10, 1999 between the
Company and DuPont Pharmaceuticals Company. (1)
Exhibit 6 Agreement and Plan of Merger, dated as of October 5, 1999 between
the Company, the Parent and Offeror (incorporated by reference to
Exhibit (c)(1) of the Schedule 14D-1). (1)
Exhibit 7 Stock Option Agreement dated as of October 5, 1999 among the
Parent, Offeror and the Company (incorporated by reference to
Exhibit (c)(3) of the Schedule 14D-1). (1)
Exhibit 8 Shareholders Agreement dated as of October 5, 1999 between the
Parent, Offeror and certain stockholders of the Company
(incorporated by reference to Exhibit (c)(2) of the Schedule 14D-
1). (1)
Exhibit 9 Letter to Stockholders of the Company dated October 12, 1999.* (1)
Exhibit 10 Complaint--Alfred Ivers on behalf of himself and all others
similarly situated v. CombiChem, Inc., Phillipe O. Chambon, William
Scott, Vicente Anido, Jr., Arthur Reidel, Peter L. Myers, Michael
J. Pazzani, E.I. du Pont de Nemours and Company, DPC Newco, Inc.,
Donaldson Lufkin & Jenrette Securities Corporation and Does 1-25,
inclusive, Case No. GIC 737125 (Superior Court, San Diego, CA,
filed October 15, 1999). (1)
Exhibit 11 Press Release issued by the Company, dated October 26, 1999.* (2)
Exhibit 12 Letter to Stockholders of the Company dated October 29, 1999.* (2)
</TABLE>
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* Included in copies of Schedule 14D-9 mailed to stockholders of the Company.
** Included in the Offer to Purchase materials mailed to stockholders of the
Company.
(1) Previously filed.
(2) Filed herewith.
2
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SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Date: October 29, 1999 COMBICHEM, INC.
/s/ Dr. Vicente Anido, Jr.
---------------------------
Dr. Vicente Anido, Jr.
President & Chief Executive Officer
4
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<C> <S>
Exhibit 1 Offer to Purchase dated October 12, 1999 (incorporated by reference
to Exhibit (a)(1) of the Schedule 14D-1 of E.I. du Pont de Nemours
and Company, Dupont Pharma, Inc. and DPC Newco, Inc. filed with the
Securities and Exchange Commission on October 12, 1999 (the
"Schedule 14D-1")).** (1)
Exhibit 2 Letter of Transmittal (incorporated by reference to Exhibit (a)(2)
of the Schedule 14D-1).** (1)
Exhibit 3 Joint Press Release issued by the Company and the Parent, dated
October 5, 1999. (1)
Exhibit 4 Opinion Letter of Donaldson Lufkin & Jenrette Securities
Corporation dated October 4, 1999.* (1)
Exhibit 5 Mutual Non-Disclosure Agreement dated March 10, 1999 between the
Company and DuPont Pharmaceuticals Company. (1)
Exhibit 6 Agreement and Plan of Merger, dated as of October 5, 1999 between
the Company, the Parent and Offeror (incorporated by reference to
Exhibit (c)(1) of the Schedule 14D-1). (1)
Exhibit 7 Stock Option Agreement dated as of October 5, 1999 among the
Parent, Offeror and the Company (incorporated by reference to
Exhibit (c)(3) of the Schedule 14D-1). (1)
Exhibit 8 Shareholders Agreement dated as of October 5, 1999 between the
Parent, Offeror and certain stockholders of the Company
(incorporated by reference to Exhibit (c)(2) of the Schedule 14D-
1). (1)
Exhibit 9 Letter to Stockholders of the Company dated October 12, 1999.* (1)
Exhibit 10 Complaint--Alfred Ivers on behalf of himself and all others
similarly situated v. CombiChem, Inc., Phillipe O. Chambon, William
Scott, Vicente Anido, Jr., Arthur Reidel, Peter L. Myers, Michael
J. Pazzani, E.I. du Pont de Nemours and Company, DPC Newco, Inc.,
Donaldson Lufkin & Jenrette Securities Corporation and Does 1-25,
inclusive, Case No. GIC 737125 (Superior Court, San Diego, CA,
filed October 15, 1999). (1)
Exhibit 11 Press Release issued by the Company, dated October 26, 1999.* (2)
Exhibit 12 Letter to Stockholders of the Company dated October 29, 1999.*(2)
</TABLE>
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* Included in copies of Schedule 14D-9 mailed to stockholders of the Company.
** Included in the Offer to Purchase materials mailed to stockholders of the
Company.
(1) Previously filed
(2) Filed herewith
<PAGE>
[COMBICHEM LOGO APPEARS HERE]
News Release
CombiChem Reports Third Quarter 1999 Financial Results Termination of Elan
Pharmaceuticals Collaboration Also Announced
SAN DIEGO, CA, OCTOBER 26, 1999--CombiChem, Inc. (Nasdaq NMS: CCHM) today
reported financial results for the quarter ended September 30, 1999. During
the quarter, the Company reported revenues of $2,634,000, down from $3,892,000
for the same period in 1998. The Company reported a net loss for the quarter
of $4,067,000, or $0.31 per share, compared to a net loss of $643,000, or
$0.05 per share, in 1998.
For the nine months ended September 30, 1999, the Company reported revenues
of $8,771,000, down from $10,896,000 for the same period in 1998. For the nine
months ended September 30, 1999, the Company reported a net loss of
$10,742,000, or $0.82 per share, compared to a net loss of $2,375,000, or
$0.30 per share, in 1998. Based on these financial results and other events
disclosed through today, the Company expects to report comparable losses in
the relevant periods through 1999.
The Company also announced that following its October 5, 1999 announcement
that the Company had entered into an agreement to be acquired by E.I. du Pont
de Nemours (DuPont), the Company received notification from Elan
Pharmaceuticals, successor to Athena Neurosciences, Inc., that Elan
Pharmaceuticals intends to terminate its collaborative agreement with the
Company effective December 31, 1999.
CombiChem, Inc., based in San Diego, California, is a computational
discovery company that is applying its proprietary design technology and rapid
synthesis capabilities to accelerate the discovery process for new drugs and
chemical products. The Company believes its approach offers the pharmaceutical
and chemical industries the opportunity to conduct their discovery efforts in
a more productive and cost effective manner. Using its proprietary Discovery
Engine(TM) process, CombiChem focuses on the generation, evolution, and
optimization of new lead candidates for its collaborative partners, who will
then develop, manufacture, market, and sell the resulting products. CombiChem
has established collaborative agreements with Athena Neurosciences, Inc., a
wholly owned subsidiary of Elan Corporation, plc., ICOS Corporation, ImClone
Systems Incorporated, Novartis Crop Protection AG, Ono Pharmaceutical, Co.
Ltd., Roche Bioscience, Sumitomo Pharmaceuticals Co. Ltd. and Teijin Limited.
Additionally, CombiChem has established two 50%-owned joint ventures.
ChiroChem Discovery Services LLC was created with Chirotech Technology
Limited, a member of the Chiroscience Group of companies, to develop and
market computationally designed libraries of single-isomer, chiral compounds
to the pharmaceutical industry. Aperion LLC was created with Catalytica
Advanced Technologies, Inc. to provide catalytic-based combinatorial discovery
services to the materials and process.
Except for the historical and financial information contained herein, the
matters discussed in this news release may contain forward-looking statements
which involve risks and uncertainties, including inability to enter into new
collaborations, consummation of the on-going tender offer and proposed merger
with DuPont, significant fluctuations in quarterly financial performance
depending on factors such as timing of revenues recognized and achievement of
milestone, timing of expenses incurred in establishing new applications or
<PAGE>
programs, a dependence on the efforts of third parties, a new and uncertain
technology employed by CombiChem and its uncertain application to new business
ventures, dependence on intellectual property rights, the competitive nature
of the Company's industry and risks of obsolescence of certain technology.
Actual results may differ materially from those projected. Forward-looking
statements represent the judgment of the Company as of the date of this
release. CombiChem disclaims, however, any intent or obligation to update any
forward-looking statements.
CombiChem's press releases are on the web at www.combichem.com.
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CONTACT INFORMATION
Company Investor Relations
CombiChem, Inc. Burns McClellan, Inc.
619-530-0484 TEL 212-213-0006 TEL
619-530-9998 FAX 212-213-4447 FAX
Vince Anido, President and CEO Lisa Burns, President and CEO
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9050 CAMINO SANTA FE SAN DIEGO, CA 92121 TEL 619/530.0484 FAX 619/530.9998
http://www.combichem.com
<PAGE>
CombiChem News Release page 2
COMBICHEM, INC.
STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
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1999 1998 1999 1998
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<S> <C> <C> <C> <C>
Revenue:
Project initiation fees and
milestone payments............... $ 0 $ 1,850 $ 375 $ 4,900
Research and development funding.. 2,044 2,042 6,541 5,996
Joint venture service revenue..... 590 0 1,855 0
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Total revenue................... 2,634 3,892 8,771 10,896
Expenses:
Research and development
Collaborative................... 2,751 2,424 7,983 6,674
Proprietary..................... 1,670 1,449 4,906 4,164
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4,421 3,873 12,889 10,838
General and administrative........ 1,559 1,011 4,228 3,020
Joint venture service expense..... 590 0 1,855 0
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Total operating expenses........ 6,570 4,884 18,972 13,858
Loss from operations................ (3,936) (992) (10,201) (2,962)
Interest income..................... 263 479 928 1,004
Interest expense.................... (126) (130) (401) (387)
Foreign tax expense................. 0 0 0 (30)
Equity in net loss of 50% owned
joint ventures..................... (268) 0 (1,068) 0
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Net loss............................ $ (4,067) $ (643) $ (10,742) $ (2,375)
========= ========= ========= ========
Net loss per share.................. $ (0.31) $ (0.05) $ (0.82) $ (0.30)
========= ========= ========= ========
Shares used in calculating net loss
per share.......................... 13,202 12,758 13,154 7,870
========= ========= ========= ========
</TABLE>
SELECTED BALANCE SHEET INFORMATION
(In Thousands)
<TABLE>
<CAPTION>
September 30,
1999 December 31,
(Unaudited) 1998
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<S> <C> <C>
Cash, cash equivalents and short-term
investments................................... $19,035 $29,359
Amounts due from collaborators................. 0 2,825
Working capital................................ 14,097 26,146
Total assets................................... 30,234 41,980
Stockholders' equity........................... 20,206 30,177
</TABLE>
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[COMBICHEM LOGO APPEARS HERE]
October 29, 1999
Dear Stockholders:
Enclosed for your information are additional disclosures and recent
information pertaining to the cash tender offer for all outstanding shares of
CombiChem's common stock pursuant to the Agreement and Plan of Merger with
E.I. du Pont de Nemours and Company and DPC Newco, Inc.
Very truly yours,
/s/ Dr. Vicente Anido, Jr.
Dr. Vicente Anido, Jr.
President and Chief Executive
Officer
