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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 21, 2000
Date of Report (Date of earliest event reported)
ESPERION THERAPEUTICS, INC.
(Exact name of registrant as specified in its charter)
Delaware 001-16033 38-3419139
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation) Identification No.)
3621 S. State Street, 695 KMS Place
Ann Arbor, MI 48108
(734) 332-0506
(Address of principal executive offices, including zip
code, and registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets
On October 5, 2000, Esperion Therapeutics, Inc. ("Esperion" or the "Company")
announced that it acquired Talaria Therapeutics, Inc., or Talaria, a
biotechnology company dedicated to the development of large unilamellar
vesicles, or LUV, technology, in settlement of claims against the Company and
one of its current employees in a lawsuit filed on March 22, 2000 by Talaria and
Dr. Kevin J. Williams. The Company entered into a definitive Agreement and
Plan of Merger and Reorganization with Talaria and Esperion Mergerco, Inc., a
wholly-owned subsidiary of the Company, on September 21, 2000 (the "Merger
Agreement"), and the merger was consummated on the same date. The merger
documents contain substantially the same terms as disclosed in the Company's
Registration Statement on Form S-1, as amended (File No. 333-31032).
The Merger Agreement provides for the issuance of 813,008 shares of restricted
Esperion common stock to Talaria stockholders in exchange for all the
outstanding shares of Talaria. The Merger Agreement also provides for the
following additional consideration to Talaria stockholders: (i) payment by the
Company of up to $6.25 million in cash and/or common stock based on the
achievement of four future development milestones ("Milestone Payments"), of
which $750,000 may become due within the next twelve months; and (ii) payment by
the Company of royalties in cash and/or common stock based on net annual sales
of LUVs in North America, as defined in the Merger Agreement (together, the
"Additional Consideration"). Initially, a portion of the Additional
Consideration must be paid in stock in order to maintain the overall stock/cash
ratio required by the terms of the Merger Agreement. Thereafter, the Company
may pay the Additional Consideration in stock and/or cash so long as the ratio
is maintained for the overall consideration. The Milestone Payments are due
upon the enrollment of the first patient in certain future clinical trials and
upon each of the filing and approval of a new drug application in the United
States, and will increase the amount of the purchase price in the period when
the milestone is achieved. The royalties would be included in cost of sales in
the period when the respective sales are recognized. The Additional
Consideration is limited by an aggregate ceiling amount (the "Ceiling"). The
Milestone Payments are creditable against royalties otherwise due under the
Merger Agreement, subject to a floor of 50% of the royalties otherwise payable
under the Merger Agreement in a particular calendar year; and unused credits may
be carried forward until exhausted. The Company has the right, by making a
one-time payment to the Talaria stockholders in cash and/or common stock, to
reduce the royalty rate by one-third and to decrease the Ceiling by one-tenth.
Under the terms of the Merger Agreement, the Talaria stockholders are entitled
to certain registration rights with regard to the shares of Esperion common
stock issued as consideration.
An Indemnification, Escrow and Participation Agreement was also executed in
connection with the Merger Agreement, which agreement provides for certain
indemnification obligations of the Company and the Talaria stockholders and for
the two-year escrow of certain of the consideration received and to be received
pursuant to the Merger Agreement as security for the indemnification obligations
of the Talaria stockholders.
The merger transaction and related documents resolve claims in the lawsuit
against the Company and its employee. Additionally, the Company has entered into
a binding letter of intent with Inex Pharmaceuticals Corp., or Inex, that
provides for an amendment to the Inex License Agreement granting more control to
the Company over the patent application prosecution related to LUVs, mutual
releases of claims in connection with the litigation and the Inex License
Agreement, dismissal of Inex, the University of British Columbia and the other
individual defendant from the lawsuit and withdrawal/dismissal of a demand for
arbitration that was filed on September 23, 2000 seeking resolution of matters
under the Inex License Agreement. Under the terms of the letter of intent, the
parties will finalize definitive documents by October 13, 2000, unless otherwise
mutually agreed by the parties.
Together with the license from Inex of LUV technology, the acquisition of
Talaria provides the Company with more comprehensive intellectual property
assets and rights in regard to LUVs. These transactions also provide the Company
with product inventory and Phase I clinical data that advance the development of
the Company's LUV product candidate.
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The Merger Agreement is filed herewith as Exhibit 2.1 and is hereby incorporated
herein by reference. The Indemnification, Escrow and Participation Agreement is
filed herewith as Exhibit 2.2 and is hereby incorporated herein by reference.
The Non-Competition Agreement is filed herewith as Exhibit 2.3 and is hereby
incorporated herein by reference. The press release issued by Esperion with
respect to the transaction is attached hereto as Exhibit 99.1 and is hereby
incorporated herein by reference.
Item 7. Financial Statements and Exhibits
(a) Financial statements of businesses acquired
Financial statements for the year ended December 31, 1999 and for the period
from October 2, 1998 (inception) to December 31, 1998 are hereby incorporated
herein by reference from the Company's Registration Statement on Form S-1, as
amended (File No. 333-31032). Pursuant to the instructions to Item 7 of Form 8-
K, unaudited financial statements for the six months ended June 30, 2000 and
1999 will be filed by Amendment within 60 days of the date of this filing.
(b) Pro forma financial information
Pursuant to the instructions to Item 7 of Form 8-K, pro forma financial
statements for the year ended December 31, 1999 and the six months ended June
30, 2000 will be filed by Amendment within 60 days of this filing.
(c) Exhibits
Number Exhibit
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2.1*@ Agreement and Plan of Merger and Reorganization by and among
Esperion Therapeutics, Inc., Esperion Mergerco, Inc. and Talaria
Therapeutics, Inc. dated as of September 21, 2000.
2.2@ Indemnification, Escrow and Participation Agreement by and among
Esperion Therapeutics, Inc., the stockholders of Talaria
Therapeutics, Inc., Rock Hill Ventures, Inc. and Sills Cummis
Radin Tischman Epstein & Gross dated as of September 21, 2000.
2.3 Non-Competition Agreement by and among Esperion Therapeutics,
Inc., Esperion Mergerco, Inc. and certain Talaria Parties dated as
of September 21, 2000.
23.3 Consent of Goldenberg Rosenthal, LLP
99.1 Press release dated October 5, 2000 of Esperion Therapeutics, Inc.
@ Confidential Treatment Requested
*The disclosure schedules to this document have been omitted. The disclosure
schedules include exceptions and disclosures made by Talaria Therapeutics, Inc.
in connection with the following: corporate existence and power; government
authorization; non-contravention of organizational documents, laws and other
obligations; capitalization of Talaria; absence of undisclosed liabilities;
title to properties and assets; rights and absence of claims and encumbrances
regarding intellectual property; absence of certain changes in business;
litigation; material contracts; tax compliance and liabilities; employees;
transactions with affiliates; insurance coverage; compliance with laws and
absence of defaults; environmental matters; confidentiality and non-competition
agreements signed by consultants and agents of Talaria; certain negative
covenants; and status of agreements among Talaria and any of its securityholders
or optionholders, or among any of the Talaria securityholders or option holders.
Registrant agrees to furnish supplementally a copy of any of the omitted
schedules to the Securities and Exchange Commission upon request.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: October 6, 2000 ESPERION THERAPEUTICS, INC.
(Registrant)
By: /s/ Roger S. Newton
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Roger S. Newton
President and Chief Executive Officer
(Principal Executive Officer)
By: /s/ Timothy M. Mayleben
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Timothy M. Mayleben
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
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INDEX TO EXHIBITS
Number Exhibit
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2.1* Agreement and Plan of Merger and Reorganization by and among
Esperion Therapeutics, Inc., Esperion Mergerco, Inc. and Talaria
Therapeutics, Inc. dated as of September 21, 2000.
2.2 Indemnification, Escrow and Participation Agreement by and among
Esperion Therapeutics, Inc., the stockholders of Talaria
Therapeutics, Inc., Rock Hill Ventures, Inc. and Sills Cummis
Radin Tischman Epstein & Gross dated as of September 21, 2000.
2.3 Non-Competition Agreement by and among Esperion Therapeutics,
Inc., Esperion Mergerco, Inc. and certain Talaria Parties dated as
of September 21, 2000.
23.3 Consent of Goldenberg Rosenthal, LLP
99.1 Press release dated October 5, 2000 of Esperion Therapeutics, Inc.
*The disclosure schedules to this document have been omitted. The disclosure
schedules include exceptions and disclosures made by Talaria Therapeutics, Inc.
in connection with the following: corporate existence and power; government
authorization; non-contravention of organizational documents, laws and other
obligations; capitalization of Talaria; absence of undisclosed liabilities;
title to properties and assets; rights and absence of claims and encumbrances
regarding intellectual property; absence of certain changes in business;
litigation; material contracts; tax compliance and liabilities; employees;
transactions with affiliates; insurance coverage; compliance with laws and
absence of defaults; environmental matters; confidentiality and non-competition
agreements signed by consultants and agents of Talaria; certain negative
covenants; and status of agreements among Talaria and any of its securityholders
or optionholders, or among any of the Talaria securityholders or optionholders.
Registrant agrees to furnish supplementally a copy of any of the omitted
schedules to the Securities and Exchange Commission upon request.
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