<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 12, 1998
PHARMACOPEIA, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 0-27188 33-0557266
(State or other jurisdiction (Commission File Number) (IRS Employer Identification No.)
of incorporation)
</TABLE>
101 College Road East, Princeton, New Jersey 08540
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 452-3600
Not Applicable
(Former name or former address, if changed from last report)
1
<PAGE>
Item 2. Acquisition or Disposition of Assets
------------------------------------
(a) On June 12, 1998, Pharmacopeia, Inc. ("Pharmacopeia") completed its
acquisition of Molecular Simulations Incorporated ("MSI") by merging Micro
Acquisition Corporation, a wholly-owned subsidiary of Pharmacopeia ("Micro"),
with and into MSI, pursuant to the previously announced Agreement and Plan of
Merger and Reorganization dated as of February 4, 1998 by and among
Pharmacopeia, MSI and Micro (the "Merger Agreement").
Upon the merger of Micro with and into MSI (the "Merger"), each outstanding
share of Common Stock, par value $.001 per share, of MSI ("MSI Common Stock"),
Class B Common Stock, par value $.001 per share, of MSI, and Series A
Convertible Preferred Stock, par value $.01 per share, of MSI (except for any
shares held by MSI or any subsidiary of MSI (or held by MSI as treasury stock)
and any such shares held by Pharmacopeia or any subsidiary of Pharmacopeia) was
converted into the right to receive 0.5292 of a share of Pharmacopeia Common
Stock, par value $.0001 per share ("Pharmacopeia Common Stock"). In addition,
upon the Merger, each outstanding option to purchase shares of MSI Common Stock
was converted into an option to purchase that number of shares of Pharmacopeia
Common Stock determined by multiplying the number of shares of MSI Common Stock
subject to such option immediately prior to the Merger by 0.5292 (rounded down
to the nearest whole share), at an exercise price equal to the exercise price of
such option prior to the Merger divided by 0.5292 (rounded up to the nearest
hundredth of a cent).
The foregoing description of the Merger Agreement is qualified in its
entirety by reference to the Merger Agreement, together with the respective
exhibits thereto, listed as Exhibit 2 hereto, which was filed as Exhibit 2 to
Pharmacopeia's Current Report on Form 8-K filed with the Securities and Exchange
Commission on February 5, 1998, and is incorporated herein by reference.
Fees, expenses and other costs related to the Merger are expected to be
funded by Pharmacopeia from a combination of available cash and cash
equivalents.
A copy of the press release of Pharmacopeia announcing completion of the
Merger is filed as an exhibit hereto and is incorporated herein by reference.
(b) Assets constituting plant, equipment or other physical property
acquired by Pharmacopeia in the Merger were used by MSI in the design,
development, marketing and sale of software products that facilitate the
discovery and development of new products and processes in the pharmaceutical,
biotechnology, chemical and materials industries. Pharmacopeia currently
intends to use these assets in the same manner in which they were used prior to
the Merger.
2
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
------------------------------------------------------------------
(a) Financial Statements of Business Acquired - The financial statements
required to be filed are incorporated herein by reference.
(b) Pro Forma Financial Information - The pro forma financial statements
required to be filed are filed as an exhibit hereto and are incorporated herein
by reference.
(c) Exhibits:
Exhibit Number Description
- -------------- -------------
2 Agreement and Plan of Merger and Reorganization, dated as of
February 4, 1998, by and among Pharmacopeia, MSI and Micro.
(1)
23 Consent of Arthur Andersen LLP.
99.1 Text of Press Release, dated June 12, 1998, issued by
Pharmacopeia.
99.2 Certificate of Merger of Micro Acquisition Corporation and
Molecular Simulations Incorporated as filed with the
Secretary of State of the State of Delaware on June 12,
1998.
99.3 MSI Audited (i) Consolidated Balance Sheets as of December
31, 1996 and 1997; (ii) Consolidated Statements of Income
for the years ended December 31, 1995, 1996 and 1997; (iii)
Consolidated Statements of Stockholders' Equity for the
years ended December 31, 1995, 1996 and 1997; (iv)
Consolidated Statements of Cash Flows for the years ended
December 31, 1995, 1996 and 1997; and (v) related Notes to
Consolidated Financial Statements.(2)
3
<PAGE>
99.4 Pharmacopeia Unaudited Pro Forma (i) Combined Condensed
Balance Sheet as of December 31, 1997; (ii) Combined
Condensed Statements of Operations for the years ended
December 31, 1995, 1996 and 1997; and (iii) related Notes to
Combined Condensed Financial Statements.
99.5 Pharmacopeia Unaudited Pro Forma (i) Combined Condensed
Balance Sheet as of March 31, 1998; (ii) Combined Condensed
Statements of Operations for the three months ended March
31, 1998 and 1997; and (iii) related Notes to Combined
Condensed Financial Statements.
____________________
(1) Filed as an Exhibit to Pharmacopeia's Current Report on Form 8-K filed with
the Securities and Exchange Commission on February 5, 1998, and
incorporated herein by reference.
(2) Incorporated by reference to Pharmacopeia's Registration Statement on Form
S-4 (Registration No. 333-47475).
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PHARMACOPEIA, INC.
By: /s/ Lewis J. Shuster
_________________________
Lewis J. Shuster, Executive Vice
President, Corporate Development and Chief
Financial Officer
(Duly Authorized Officer and Chief
Accounting Officer)
Date: June 19, 1998
5
<PAGE>
EXHIBIT INDEX
Exhibit
- --------------------------------------------------------------------------------
2 Agreement and Plan of Merger and Reorganization, dated as of
February 4, 1998 by and among Pharmacopeia, MSI and
Micro.(1)
23 Consent of Arthur Andersen LLP.
99.1 Text of Press Release, dated June 12, 1998, issued by
Pharmacopeia.
99.2 Certificate of Merger of Micro Acquisition Corporation and
Molecular Simulations Incorporated as filed with the
Secretary of State of the State of Delaware on June 12,
1998.
99.3 MSI Audited (i) Consolidated Balance Sheets as of December
31, 1996 and 1997; (ii) Consolidated Statements of Income
for the years ended December 31, 1995, 1996 and 1997; (iii)
Consolidated Statements of Stockholders' Equity for the
years ended December 31, 1995, 1996 and 1997; (iv)
Consolidated Statements of Cash Flows for the years ended
December 31, 1995, 1996 and 1997; and (v) related Notes to
Consolidated Financial Statements.(2)
99.4 Pharmacopeia Unaudited Pro Forma (i) Combined Condensed
Balance Sheet as of December 31, 1997; (ii) Combined
Condensed Statements of Operations for the years ended
December 31, 1995, 1996 and 1997; and (iii) related Notes to
Combined Condensed Financial Statements.
99.5 Pharmacopeia Unaudited Pro Forma (i) Combined Condensed
Balance Sheet as of March 31, 1998; (ii) Combined Condensed
Statements of Operations for the three months ended March
31, 1998 and 1997; and (iii) related Notes to Combined
Condensed Financial Statements.
____________________
(1) Filed as an Exhibit to Pharmacopeia's Current Report on Form 8-K filed with
the Securities and Exchange Commission on February 5, 1998, and
incorporated herein by reference.
(2) Incorporated by reference to Pharmacopeia's Registration Statement on Form
S-4 (Registration No. 333-47475).
6
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Form 8-K of our report dated February 4, 1998 included in
Pharmacopeia, Inc.'s Registration Statement on Form S-4 (File No. 333-47475). It
should be noted that we have not audited any financial statements of the company
subsequent to December 31, 1997 or performed any audit procedures subsequent to
the date of our report.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
June 18, 1998
San Diego, California
<PAGE>
Exhibit 99.1
[On the letterhead of Pharmacopeia, Inc.]
FOR IMMEDIATE RELEASE
- ----------------------
CONTACTS:
- ---------
Sue Rodney David Hiatt
Manager, Investor Relations Chief Financial Officer
Pharmacopeia, Inc. Molecular Simulations Inc.
(609) 452-3600 (619) 597-9747
[email protected] [email protected]
PHARMACOPEIA COMPLETES ACQUISITION OF
MOLECULAR SIMULATIONS INC.
Princeton, New Jersey, June 12, 1998 Pharmacopeia, Inc. (Nasdaq: PCOP) today
announced that it has completed its acquisition of Molecular Simulations Inc.
(MSI). Stockholders of both companies have approved the acquisition and all
associated proposals.
Joseph A. Mollica, Chairman, President and CEO of Pharmacopeia says, "We are
excited to move forward with the multitude of opportunities this acquisition
brings to the combined company. Our technology platform is significantly
enhanced by adding MSI's expertise in molecular modeling, simulation, and
informatics software. Furthermore, the collection of products and services we
can now offer our customer base is broadened with the addition of an established
software sales and services business. With more than 500 employees,
headquarters in Princeton, NJ and major regional operations in San Diego, CA,
Cambridge, England, and Tokyo, Japan, the `new' Pharmacopeia is poised to help
its customers improve chemical research and development productivity throughout
the world."
Pharmacopeia originally announced its intention to acquire MSI on February 4,
1998. Pharmacopeia has acquired all of the outstanding stock of MSI for
approximately 7.1 million newly-issued shares of Pharmacopeia common stock.
Pharmacopeia will also convert the outstanding MSI options into Pharmacopeia
options, potentially resulting in the net issuance of an additional 1.4 million
new Pharmacopeia shares. The transaction has been structured as a tax-free
stock-for-stock exchange and will be accounted for as a pooling of interests.
The name of the company will remain Pharmacopeia and the stock will continue to
trade on the Nasdaq National Market under the symbol "PCOP".
Pharmacopeia is a leader in drug discovery combining three platform
technologies: informatics, small molecule combinatorial chemistry, and high-
throughput screening. Through its wholly-owned subsidiary, Molecular
Simulations Inc. (MSI), Pharmacopeia develops and commercializes molecular
modeling, simulation, and informatics software and services. Using ECLiPS/TM/,
its proprietary combinatorial chemistry technology, Pharmacopeia has generated
more than 3.9
1
<PAGE>
million diverse, easily identifiable, small molecules. Pharmacopeia tests these
molecules using state-of-the-art high-throughput screening. These technologies
are integrated to support the following businesses: 1) selling predictive
modeling, information management, and structure-based design software to the
life and materials science marketplace, 2) licensing collections of compounds to
pharmaceutical companies for evaluation in multiple drug discovery programs, 3)
identifying and optimizing lead compounds for specific targets provided by
customers, and 4) licensing drug development candidates developed in
Pharmacopeia's internal drug discovery programs to pharmaceutical companies.
###
This press release is available on Pharmacopeia's Website at http://www.pcop.com
Except for the historical information contained herein, this statement may
contain projections or other forward-looking statements regarding future events
or the future financial performance of the Company. We wish to caution you that
such statements are just predictions and that actual events or results may
differ materially. We refer you to the documents that the Company files from
time to time with the Securities and Exchange Commission, specifically the
Company's last filed Annual Report on Form 10-K and subsequent Quarterly Reports
on Form 10-Q. These documents contain and identify important factors that could
cause the actual results to differ materially from those contained in our
projections or forward-looking statements.
2
<PAGE>
Exhibit 99.2
CERTIFICATE OF MERGER OF
MICRO ACQUISITION CORPORATION
WITH AND INTO
MOLECULAR SIMULATIONS INCORPORATED
Molecular Simulations Incorporated ("MSI"), organized and existing
under the General Corporation Law of the State of Delaware, does hereby certify
as follows:
FIRST: The name and state of incorporation of each of the
constituent corporations (the "Constituent Corporations") to the merger are:
Name State
---- -----
Molecular Simulations Incorporated Delaware
Micro Acquisition Corporation Delaware
SECOND: An Agreement and Plan of Merger and Reorganization, dated as
of February 4, 1998 (the "Merger Agreement"), by and among Pharmacopeia, Inc.,
MSI and Micro Acquisition Corporation ("Merger Subsidiary"), providing for the
merger of Merger Subsidiary with and into MSI, has been approved, adopted,
certified, executed and acknowledged in accordance with the requirements of
Section 251(c) of the General Corporation Law of the State of Delaware.
THIRD: The name of the surviving corporation is Molecular Simulations
Incorporated (the "Surviving Corporation").
FOURTH: As a result of the Merger, the Restated Certificate of
Incorporation of MSI shall be amended in its entirety to read as set forth in
Exhibit A attached hereto and, as amended, shall be the Amended and Restated
Certificate of Incorporation of the Surviving Corporation.
FIFTH: The executed Merger Agreement is on file at the office of the
Surviving Corporation located at 9685 Scranton Road, San Diego, California
92121.
SIXTH: A copy of the Merger Agreement will be furnished by the
Surviving Corporation, on request and without cost, to any stockholder of either
of the Constituent Corporations.
IN WITNESS WHEREOF, MSI has caused this Certificate of Merger to be
duly executed in its corporate name this 12th day of June, 1998.
MOLECULAR SIMULATIONS INCORPORATED
By: /s/ David B. Hiatt
--------------------
Name: David B. Hiatt
Title: Chief Financial Officer
1
<PAGE>
Exhibit A
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
MOLECULAR SIMULATIONS INCORPORATED
1. Name. The name of the Corporation is Molecular Simulations
----
Incorporated.
2. Registered Office and Agent. The address of the Corporation's
---------------------------
registered office in the State of Delaware is 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of the Corporation's registered agent
at such address is The Corporation Trust Company.
3. Purpose. The purposes for which the Corporation is formed are to
-------
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware and to possess and exercise all of
the powers and privileges granted by such law and any other law of Delaware.
4. Authorized Capital. The aggregate number of shares of stock which the
------------------
Corporation shall have authority to issue is One Thousand (1,000) shares, all of
which are of one class and are designated as Common Stock and each of which has
a par value of One Cent ($.01).
5. Bylaws. The board of directors of the Corporation is authorized to
------
adopt, amend or repeal the bylaws of the Corporation, except as otherwise
specifically provided therein.
6. Elections of Directors. Elections of directors need not be by written
----------------------
ballot unless the bylaws of the Corporation shall so provide.
7. Right to Amend. The Corporation reserves the right to amend any
--------------
provision contained in this Certificate as the same may from time to time be in
effect in the manner now or hereafter prescribed by law, and all rights
conferred on stockholders or others hereunder are subject to such reservation.
8. Limitation on Liability. The directors of the Corporation shall be
-----------------------
entitled to the benefits of all limitations on the liability of directors
generally that are now or hereafter become available under the General
Corporation Law of Delaware. Without limiting the generality of the foregoing,
no director of the Corporation shall be liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of Law, (iii) under
Section 174 of the Delaware General Corporation Law, or (iv) for any transaction
from which the director derived an improper personal benefit. Any repeal or
modification of this Section 8 shall be prospective only, and shall not affect,
to the detriment of any director, any limitation on the personal liability of a
director of the Corporation existing at the time of such repeal or modification.
2
<PAGE>
Exhibit 99.4
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma combined condensed financial statements
give effect to the merger (the "Merger") of Pharmacopeia's wholly-owned
subsidiary, Micro Acquisition Corporation, with and into Molecular Simulations
Incorporated ("MSI") under the pooling of interests accounting basis. The pro
forma combined condensed financial statements are derived from and should be
read in conjunction with the respective historical financial statements and the
notes thereto of Pharmacopeia and MSI. The pro forma combined condensed balance
sheet combines Pharmacopeia's December 31, 1997 audited balance sheet with MSI's
December 31, 1997 audited balance sheet as if the Merger occurred as of December
31, 1997. The pro forma combined condensed statements of operations combine
Pharmacopeia's historical condensed statements of operations for the fiscal
years ended December 31, 1995, 1996 and 1997 with the corresponding MSI
historical condensed statements of operations for the fiscal years ended
December 31, 1995, 1996 and 1997, respectively, and assume that the Merger was
consummated on January 1, 1995. The unaudited pro forma combined financial
statements presented herein are not necessarily indicative of the combined
results of operations or the combined financial position that would have
resulted had the Merger been consummated at the beginning of the applicable
periods indicated, nor are they necessarily indicative of the results of
operations in future periods or the future financial position of the combined
entity.
1
<PAGE>
PHARMACOPEIA, INC. AND MOLECULAR SIMULATIONS INCORPORATED
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
MERGER PRO FORMA
PRO FORMA PHARMACOPEIA
PHARMACOPEIA MSI ADJUSTMENTS(3) AND MSI MERGER
------------ -------- -------------- --------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash
equivalents............ $ 9,590 $ 15,019 $ $ 24,609
Marketable securities... 60,166 60,166
Trade receivables, net
of allowance for doubt-
ful accounts of $466... 19,424 19,424
Deferred tax asset...... 2,100 (2,100)(4)
Prepaid expenses and
other current assets... 1,890 2,781 4,671
-------- -------- ------- --------
Total current assets.. 71,646 39,324 (2,100) 108,870
-------- -------- ------- --------
Non-current investments in
marketable securities.... 12,865 12,865
Property and equipment,
net...................... 10,874 2,267 13,141
Software development
costs, net of accumulated
amortization of $5,813... 3,437 3,437
Investment in joint
venture.................. 1,013 1,013
Other assets.............. 302 423 725
-------- -------- ------- --------
$ 95,687 $ 46,464 $(2,100) $140,051
======== ======== ======= ========
LIABILITIES AND
STOCKHOLDERS EQUITY
Current liabilities:
Accounts payable........ $ 1,756 $ 2,476 $ 4,232
Accrued liabilities..... 2,726 15,568 18,294
Notes payable, current
portion................ 690 700 1,390
Deferred revenue,
current portion........ 16,091 13,254 29,345
-------- -------- ------- --------
Total current
liabilities.......... 21,263 31,998 53,261
-------- -------- ------- --------
Notes payable, long-term
portion.................. 712 700 1,412
Other long-term
liabilities.............. 440 440
Deferred revenue, long
term..................... 3,275 1,067 4,342
Commitments
Stockholders equity:
Preferred stock......... 22 (22)(1)
Common stock............ 1 11 (11)(1) 1
Additional paid in
capital................ 104,909 39,498 33 (1) 144,440
Accumulated deficit..... (34,473) (26,084) (2,100)(4) (62,657)
Cumulative translation
adjustment............. (1,188) (1,188)
-------- -------- ------- --------
Total stockholders
equity............... 70,437 12,259 (2,100) 80,596
-------- -------- ------- --------
$ 95,687 $ 46,464 $(2,100) $140,051
======== ======== ======= ========
</TABLE>
See Notes to Unaudited Pro Forma Combined Condensed Financial Statements.
2
<PAGE>
PHARMACOPEIA, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
PHARMACOPEIA
HISTORICAL HISTORICAL AND MSI
PHARMACOPEIA MSI MERGER
------------ ---------- ------------
<S> <C> <C> <C>
Revenue:
Contract............................. $ 5,151 $ $ 5,151
Software license, service and
hardware............................ 30,120 30,120
------- -------- --------
Total revenue.................... 5,151 30,120 35,271
Operating Expenses:
Research and development
Collaborative...................... 5,563 5,563
Proprietary........................ 5,468 7,603 13,071
Software licenses and hardware....... 6,609 6,609
Sales, general and administrative.... 3,781 15,386 19,167
Acquisition related charges.......... 12,161 12,161
------- -------- --------
Total operating expenses......... 14,812 41,759 56,571
------- -------- --------
Operating loss......................... (9,661) (11,639) (21,300)
Interest and other income, net......... 705 319 1,024
------- -------- --------
Loss before provision for income
taxes................................. (8,956) (11,320) (20,276)
Provision for income taxes............. 560 560
------- -------- --------
Net loss............................... $(8,956) $(11,880) $(20,836)
======= ======== ========
Basic net loss per share............... $ (2.77) $ (2.28) $ (3.48)(2)
======= ======== ========
Weighted average number of common stock
outstanding--basic.................... 3,231 5,206 5,986
</TABLE>
See Notes to Unaudited Pro Forma Combined Condensed Financial Statements.
3
<PAGE>
PHARMACOPEIA, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
MERGER PHARMACOPEIA
HISTORICAL HISTORICAL PRO FORMA AND MSI
PHARMACOPEIA MSI ADJUSTMENTS(3) MERGER
------------ ---------- -------------- ------------
<S> <C> <C> <C> <C>
Revenue:
Contract................ $ 14,799 $ $ $14,799
Software license,
service and hardware... 47,261 47,261
-------- ------- ------- -------
Total revenue....... 14,799 47,261 62,060
Operating expenses:
Research and development
Collaborative......... 13,129 13,129
Proprietary........... 8,111 12,834 20,945
Software license and
hardware............... 7,759 7,759
Sales, general and
administrative......... 5,617 22,968 28,585
-------- ------- ------- -------
Total operating
expenses........... 26,857 43,561 70,418
-------- ------- ------- -------
Operating income (loss)... (12,058) 3,700 (8,358)
Interest and other income,
net...................... 3,675 368 4,043
-------- ------- ------- -------
Income (loss) before
provision for income
taxes.................... (8,383) 4,068 (4,315)
Provision for income
taxes.................... 1,471 1,600 (4) 3,071
-------- ------- ------- -------
Net income (loss)......... $ (8,383) $ 2,597 $(1,600) $(7,386)
======== ======= ======= =======
Basic net income (loss)
per share................ $ (.77) $ .27 $ (.47)(2)
Diluted net income (loss)
per share................ $ (.77) $ .17 $ (.47)(2)
Weighted average number of
common stock,
outstanding--basic....... 10,834 9,531 15,878
Weighted average number of
common stock, and common
stock equivalents
outstanding--diluted..... 10,834 15,160 15,878
</TABLE>
See Notes to Unaudited Pro Forma Combined Condensed Financial Statements.
4
<PAGE>
PHARMACOPEIA, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
MERGER PHARMACOPEIA
HISTORICAL HISTORICAL PRO FORMA AND MSI
PHARMACOPEIA MSI ADJUSTMENTS(3) MERGER
------------ ---------- -------------- ------------
<S> <C> <C> <C> <C>
Revenue:
Contract revenue........ $ 24,523 $ $ $24,523
Software license,
service and hardware... 56,674 56,674
-------- ------- ----- -------
Total revenue....... 24,523 56,674 81,197
Operating expenses:
Research and development
Collaborative......... 16,931 16,931
Proprietary........... 12,588 12,663 25,251
Software license and
hardware............... 10,232 10,232
Sales, general and
administrative......... 5,848 25,959 31,807
-------- ------- ----- -------
Total operating
expenses........... 35,367 48,854 84,221
-------- ------- ----- -------
Operating income (loss)... (10,844) 7,820 (3,024)
Interest and other income,
net...................... 4,166 126 4,292
-------- ------- ----- -------
Income (loss) before
provision for income
taxes.................... (6,678) 7,946 1,268
Provision for income
taxes.................... 2,496 500 (4) 2,996
-------- ------- ----- -------
Net income (loss)......... $ (6,678) $ 5,450 $(500) $(1,728)
======== ======= ===== =======
Basic net income (loss)
per share................ $ (.58) $ .56 $ (.10)(2)
Diluted net income per
share.................... $ (.58) $ .35 $ (.10)(2)
Weighted average number of
common stock
outstanding--basic....... 11,454 9,709 16,592
Weighted average number of
common stock, and common
stock equivalents
outstanding--diluted..... 11,454 15,567 16,592
</TABLE>
See Notes to Unaudited Pro Forma Combined Condensed Financial Statements.
5
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL STATEMENTS
(1) The Merger, which was completed on June 12, 1998, is being accounted for as
a pooling of interests, and accordingly, the related pro forma adjustments
herein reflect, where applicable, an Exchange Ratio of 0.5292 of a share of
Pharmacopeia Common Stock for each outstanding share of MSI Common Stock,
each outstanding share of MSI Class B Common Stock and each outstanding
share of MSI Preferred Stock.
As a result, information was adjusted for the Merger by the (i) addition of
7,017,583 shares of Pharmacopeia Common Stock, (ii) elimination of
9,791,633 shares of MSI Common Stock, elimination of 1,246,882 shares of
MSI Class B Common Stock, and elimination of 2,222,223 shares of MSI
Preferred Stock, and (iii) recording of approximately $33,000 as an
increase to additional paid in capital at December 31, 1997.
(2) Pro forma loss per share data has been computed based on the combined
historical net loss applicable to common stockholders of Pharmacopeia
using the historical weighted average shares outstanding of Pharmacopeia
Common Stock and the weighted average outstanding shares of MSI, adjusted
to equivalent shares of Pharmacopeia Common Stock.
(3) The unaudited pro forma combined condensed financial statements do not
include any material expenses related to the Merger, which are currently
estimated to be $6,700,000 and are expected to be incurred in the second and
third quarter of 1998.
(4) Reflects the reversal of a reduction to a valuation allowance for deferred
tax assets during 1996 and 1997 of $1,600,000 and $500,000, respectively,
which would not be expected to be realized given the combined tax position
of the merged entity.
6
<PAGE>
Exhibit 99.5
UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma combined condensed financial statements give
effect to the merger (the "Merger") of Pharmacopeia's wholly-owned subsidiary,
Micro Acquisition Corporation, with and into Molecular Simulations Incorporated
("MSI") under the pooling of interests accounting basis. The pro forma combined
condensed financial statements are derived from and should be read in
conjunction with the respective historical financial statements and the notes
thereto of Pharmacopeia and MSI. The pro forma combined condensed balance sheet
combines Pharmacopeia's March 31, 1998 unaudited balance sheet with MSI's March
1998 unaudited balance sheet as if the Merger occurred as of March 31, 1998. The
pro forma combined condensed statements of operations combine Pharmacopeia's
historical condensed statements of operations for the unaudited three month
periods ended March 31, 1998 and 1997 with the corresponding MSI historical
condensed statements of operations for the unaudited three month periods ended
March 31, 1998 and 1997, respectively, and assume that the Merger was
consummated on January 1, 1997. The unaudited pro forma combined financial
statements presented herein are not necessarily indicative of the combined
results of operations or the combined financial position that would have
resulted had the Merger been consummated at the beginning of the applicable
periods indicated, nor are they necessarily indicative of the results of
operations in future periods or the future financial position of the combined
entity.
1
<PAGE>
PHARMACOPEIA, INC. AND MOLECULAR SIMULATIONS INCORPORATED
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
MARCH 31, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
MERGER PRO FORMA
PRO FORMA PHARMACOPEIA
PHARMACOPEIA MSI ADJUSTMENTS(3) AND MSI MERGER
------------ -------- -------------- --------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash
equivalents............ $ 3,492 $ 18,054 $ $ 21,546
Marketable securities... 64,244 64,244
Trade receivables, net
of allowance for doubt-
ful accounts of $396... 11,158 11,158
Deferred tax asset...... 2,100 (2,100)(4)
Prepaid expenses and
other current assets... 2,458 3,223 5,681
-------- -------- ------- --------
Total current assets.. 70,194 34,535 (2,100) 102,629
-------- -------- ------- --------
Non-current investments in
marketable securities.... 8,719 8,719
Property and equipment,
net...................... 10,528 2,637 13,165
Software development
costs, net of accumulated
amortization of $6,141... 3,483 3,483
Other assets.............. 329 795 1,124
-------- -------- ------- --------
$ 89,770 $ 41,450 $(2,100) $129,120
======== ======== ======= ========
LIABILITIES AND
STOCKHOLDERS EQUITY
Current liabilities:
Accounts payable........ $ 993 $ 1,739 $ 2,732
Accrued liabilities..... 1,818 11,265 13,083
Notes payable, current
portion................ 680 700 1,380
Deferred revenue,
current portion........ 15,322 11,788 27,110
-------- -------- ------- --------
Total current
liabilities.......... 18,813 25,492 44,305
-------- -------- ------- --------
Notes payable, long-term
portion.................. 558 558
Minority Interest......... 976 976
Other long-term
liabilities.............. 363 363
Deferred revenue, long
term..................... 1,993 988 2,981
Commitments
Stockholders equity:
Preferred stock......... 22 (22)(1)
Common stock............ 1 11 (11)(1) 1
Additional paid in
capital................ 105,103 39,596 33 (1) 144,732
Accumulated deficit..... (36,698) (24,643) (2,100)(4) (63,441)
Cumulative translation
adjustment............. (1,355) (1,355)
-------- -------- ------- --------
Total stockholders
equity............... 68,406 13,631 (2,100) 79,937
-------- -------- ------- --------
$ 89,770 $ 41,450 $(2,100) $129,120
======== ======== ======= ========
</TABLE>
See Notes to Unaudited Pro Forma Combined Condensed Financial Statements.
2
<PAGE>
PHARMACOPEIA, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
QUARTER ENDED MARCH 31, 1998
(In thousands, except per share data)
<TABLE>
<CAPTION>
MERGER PRO FORMA
PRO FORMA PHARMACOPEIA
PHARMACOPEIA MSI ADJUSTMENTS(3) AND MSI MERGER
------------ -------- -------------- --------------
<S> <C> <C> <C> <C>
Revenue:
Contract $ 6,432 $ $ $ 6,432
Software license,
and other 13,054 13,054
Hardware 1,066 1,066
----------- -------- -------------- --------------
Total Revenue 6,432 14,120 20,552
Cost and expenses:
Software, license
and other 769 769
Hardware 871 871
Research and development
Collaborative 4,420 4,420
Proprietary 3,724 3,033 6,757
Sales, general
and administrative 1,587 7,054 8,641
----------- -------- -------------- --------------
Total cost and expenses 9,731 11,727 21,458
----------- -------- -------------- --------------
Operating income/(loss) (3,299) 2,393 (906)
Interest and other income, net 1,073 (31) 1,042
----------- -------- -------------- --------------
Income/(loss) before provision
for income taxes (2,226) 2,362 136
Provision for income taxes 838 90(4) 928
----------- -------- -------------- --------------
Net income/(loss) $ (2,226) 1,524 $ (90) $ (792)
=========== ======== ============== ==============
Basic net income/(loss)
per share $ (.19) $ .15 $ (.05)(2)
Diluted net income per share $ (.19) $ .10 $ (.05)(2)
Weighted average number of
common stock, outstanding
basic 11,798 9,836 17,003
Weighted average number of
common stock, and common
stock equivalents
outstanding-diluted 11,798 16,039 17,033
</TABLE>
See Notes to Unaudited Pro Forma Combined Condensed Financial Statements.
3
<PAGE>
PHARMACOPEIA, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
QUARTER ENDED MARCH 31, 1997
(In thousands, except per share data)
<TABLE>
<CAPTION>
MERGER PRO FORMA
PRO FORMA PHARMACOPEIA
PHARMACOPEIA MSI ADJUSTMENTS(3) AND MSI MERGER
------------ -------- -------------- --------------
<S> <C> <C> <C> <C>
Revenue:
Contract $ 5,932 $ $ $ 5,932
Software license,
and other 11,304 11,304
Hardware 1,410 1,410
----------- -------- -------------- --------------
Total Revenue 5,932 12,714 18,646
Cost and expenses:
Software, license
and other 799 799
Hardware 1,238 1,238
Research and development
Collaborative 4,151 4,151
Proprietary 2,729 3,404 6,133
Sales, general
and administrative 1,458 5,462 6,920
----------- -------- -------------- --------------
Total cost and expenses 8,338 10,903 19,241
----------- -------- -------------- --------------
Operating income/(loss) (2,406) 1,811 (595)
Interest and other income, net 997 (80) 917
----------- -------- -------------- --------------
Income/(loss) before provision
for income taxes (1,409) 1,731 322
Provision for income taxes 544 109 (4) 653
----------- -------- -------------- --------------
Net income/(loss) $ (1,409) 1,187 $ (109) $ (331)
=========== ======== ============== ==============
Basic net income/(loss)
per share $ (.13) $ .12 $ (.02)(2)
Diluted net income per share $ (.13) $ .08 $ (.02)(2)
Weighted average number of
common stock, outstanding
basic 11,270 9,695 16,400
Weighted average number of
common stock, and common
stock equivalents
outstanding-diluted 11,270 15,461 16,400
</TABLE>
See Notes to Unaudited Pro Forma Combined Condensed Financial Statements.
4
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL STATEMENTS
(1) The Merger, which was completed on June 12, 1998, is being accounted for
as a pooling of interests, and accordingly, the related pro forma
adjustments herein reflect, where applicable, an exchange ratio of
0.5292 of a share of Pharmacopeia Common Stock for each outstanding
share of MSI Common Stock, each outstanding share of MSI Class B Common
Stock and each outstanding share of MSI Preferred Stock.
As a result, information was adjusted for the Merger by the (i) addition
of 7,069,365 shares of Pharmacopeia Common Stock, (ii) elimination of
9,889,483 shares of MSI Common Stock, elimination of 1,246,882 shares of
MSI Class B Common Stock, and elimination of 2,222,223 shares of MSI
Preferred Stock, and (iii) recording of approximately $33,000 as an
increase to additional paid in capital at March 31, 1998.
(2) Pro forma loss per share data has been computed based on the combined
historical net loss applicable to common stockholders of Pharmacopeia
using the historical weighted average shares outstanding of Pharmacopeia
Common Stock and the weighted average outstanding shares of MSI,
adjusted to equivalent shares of Pharmacopeia Common Stock.
(3) The unaudited pro forma combined condensed financial statements do not
include any material expenses related to the Merger, which are currently
estimated to be $6,700,000 and are expected to be incurred in the
second and third quarter of 1998.
(4) Reflects the reversal of a reduction to a valuation allowance for
deferred tax assets during the three month periods ended March 31, 1998
and 1997 of $90,000 and $109,000, respectively, which would not be
expected to be realized given the combined tax position of the merger
entity.
