<PAGE>
- --------------------------------------------------------------------------------
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
September 16, 1998
------------------
Date of Report
BAXTER INTERNATIONAL INC.
-------------------------
(Exact name of registrant as specified in its charter)
Delaware
--------
(State or other jurisdiction of incorporation)
1-4448 36-0781620
- ------------------------ ---------------------------------
(Commission file number) (IRS Employer Identification No.)
One Baxter Parkway, Deerfield, Illinois 60015
- --------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (847) 948-2000
- --------------------------------------------------------------------------------
(Page 1 of 7 pages)
<PAGE>
Item 5. Other Events.
On September 16, 1998, the attached press release was issued.
<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 thereunto duly authorized.
BAXTER INTERNATIONAL INC.
-----------------------------
(Registrant)
/S/ Jan S. Reed
By: __________________________
Jan S. Reed
Secretary
Date: September 16, 1998
<PAGE>
FOR IMMEDIATE RELEASE
- ---------------------
Media contact: Mary Thomas, (847) 948-2815
Investor contacts: Neville Jeharajah, (847) 948-2875
Mary Kay Ladone, (847) 948-3371
BAXTER TO FOCUS ON NEXT-GENERATION OXYGEN-CARRYING THERAPEUTICS;
DECISION WILL END CLINICAL DEVELOPMENT OF FIRST-GENERATION
PROGRAM
* * * * *
BAXTER ALSO WILL INCUR SPECIAL CHARGES
AGAINST THIRD-QUARTER EARNINGS
DEERFIELD, Ill., September 16, 1998 -- Baxter Healthcare Corporation announced
today that it has decided to focus its research-and-development efforts in
oxygen-carrying therapeutics, or "blood substitutes," on its second-generation
program, which is based on genetically engineered hemoglobin molecules. The
decision ends the company's clinical development of its first-generation
product, called HemAssist/TM/ (DCLHb), which is derived from human hemoglobin.
The decision will result in a charge of $75 million against third-quarter net
earnings.
The special charge consists primarily of the write-off of assets used solely in
the manufacture of HemAssist (DCLHb), production start-up costs, and employee
severance and relocation costs. Baxter will modify its manufacturing facility
in Neuchatel, Switzerland, which was designed to manufacture a human hemoglobin
product, to produce other Baxter biopharmaceutical products. Baxter also
announced that it will take a net $178 million special charge against third-
quarter net earnings relating to litigation reserves involving mammary implants,
plasma-based therapies and other litigation.
<PAGE>
Specifically, Baxter will accrue $250 million for mammary implant litigation and
record a receivable for insurance coverage of $121 million, resulting in a net
charge of $129 million. The company noted that substantially more women have
both participated in, and opted out of, the global class action settlement than
originally anticipated, thereby increasing the total estimated costs of this
litigation. Baxter believes that its successful trial strategy is enabling the
prompt settlement of more cases at costs that the company considers reasonable.
Baxter never manufactured nor marketed mammary implants; its involvement is
contractual, resulting from the merger in 1985 with American Hospital Supply
Corporation, which at one time had owned breast implant manufacturer Heyer-
Schulte. American Hospital Supply divested Heyer-Schulte in 1984, and the
company no longer exists.
For plasma-based therapies and other litigation, Baxter will accrue $180 million
and record a $131 million receivable for insurance coverage, resulting in a net
charge of $49 million.
In addition, Baxter anticipates taking a third-quarter charge against net
earnings of approximately $40 million, primarily for the write down of certain
minority investments and the dissolution of certain joint ventures.
DATA ANALYSIS OF HEMASSIST
YIELDS INCONCLUSIVE RESULTS
During 1998, Baxter suspended enrolling patients in its Phase III clinical
trials for HemAssist (DCLHb), its first-generation hemoglobin therapeutic.
Clinical results had indicated it was unlikely that these clinical trials would
meet the company's established endpoints for efficacy and safety. After
analyzing the clinical data from the patients that were enrolled, Baxter
determined that the resources necessary to re-enter clinical trials with
HemAssist (DCLHb) are better spent on a focused, second-generation recombinant
program.
<PAGE>
"While we're disappointed, delays are sometimes part of the process of
developing breakthrough medical therapies such as oxygen-carrying therapeutics.
We remain committed to developing the second-generation products based on
recombinant technology. We believe that by genetically engineering the
hemoglobin molecule we can tailor products to better meet the needs of a variety
of critically ill patients," said Harry M. Jansen Kraemer, Jr., Baxter
president.
"This is a difficult decision, but one that is necessary because it is not clear
that the potential market opportunity for our first-generation product outweighs
the necessary investments required to commercialize HemAssist," Kraemer added.
Baxter's decision to end its first-generation program will result in a net loss
of approximately 100 jobs worldwide. Some employees will have the option of
pursuing opportunities with the second-generation program, which is based in
Boulder, Colorado, or with other Baxter businesses. For those employees who
cannot find opportunities within Baxter, the company will provide extensive
support services including severance pay and a range of career counseling and
job search services.
"We will do everything possible to support our employees through this difficult
transition. They are talented, dedicated individuals, and our goal is to help
them find rewarding positions, either within Baxter or with other companies,"
Kraemer said.
COMPANY TO FOCUS ON
RECOMBINANT HEMOGLOBIN TECHNOLOGY
Baxter's second-generation research-and-development program is based on an
extensive database and scientific capabilities, including recombinant
technology. Recombinant means that the genetic information for making a
therapeutic protein is inserted into the DNA of a cell. The DNA then instructs
the cell to produce the desired protein, in this case a new form of hemoglobin.
<PAGE>
"We believe there is a great clinical need for an oxygen-carrying therapeutic,"
said Thomas Schmitz, general manager of Baxter's hemoglobin therapeutics
business. "We feel that the future generations of a product such as this are
dependent upon the ability to tailor the hemoglobin molecule to meet the
specific needs of a variety of critically ill patients."
"We have gained an invaluable amount of knowledge and experience in the field
based on our work to date. Equally important is our ability to bring both
chemical and genetic sciences to the development of a second-generation oxygen-
carrier, enhancing our position in the field," Kraemer added. "By deciding to
focus on future-generation products, we are hopeful that we can more quickly and
more effectively bring to market an oxygen-carrying therapeutic that best meets
the needs of patients."
Baxter Healthcare Corporation is the principal U.S. operating subsidiary of
Baxter International Inc. (NYSE:BAX). Through its subsidiaries, Baxter is a
global medical products and services company that focuses on critical therapies
for life-threatening conditions. Baxter's products and services in blood
therapies (biopharmaceuticals and blood collection, separation and storage
devices), cardiovascular medicine, medication delivery and renal therapy are
used by health-care providers and their critically ill patients in 112
countries. Baxter generated 1997 sales of $6.1 billion, and employs
approximately 41,000 people worldwide.
* * * * *
This news release includes forward-looking statements that involve risks and
uncertainties, including technological advances in the medical field, product
demand and market acceptance, the effect of economic conditions, the impact of
competitive products and pricing, foreign currency exchange rates and other
risks detailed in the company's filings with the Securities and Exchange
Commission. These forward-looking statements are based on estimates and
assumptions made by management of the company and are believed to be reasonable,
though are inherently uncertain and difficult to predict. Actual results or
experience could differ materially from the forward-looking statements.
