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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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SCHEDULE 13E-3
(RULE 13e-100)
TRANSACTION STATEMENT UNDER SECTION 13(e) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 13e-3 THEREUNDER
RULE 13e-3 TRANSACTION STATEMENT UNDER SECTION 13(e) OF THE
SECURITIES EXCHANGE ACT OF 1934
CRESCENDO PHARMACEUTICALS CORPORATION
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(Name of the Issuer)
ALZA CORPORATION
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(Name of Person(s) Filing Statement)
CLASS A COMMON STOCK, PAR VALUE $0.01
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(Title of Class of Securities)
225637 10 7
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(CUSIP Number of Class of Securities)
Peter D. Staple, 1900 Charleston Road, P.O. Box 7210,
Mountain View, CA 94039-7210, (650) 564-5000
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(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of Person(s) Filing Statement)
This statement is filed in connection with (check the appropriate box):
(a) [_] The filing of solicitation materials or an information
statement subject to Regulation 14A, Regulation 14C, or
Rule 13e-3(c) under the information statement subject to
Regulation Securities Exchange Act of 1934.
(b) [_] The filing of a registration statement under the
Securities Act of 1933.
(c) [_] A tender offer.
(d) [X] None of the above.
Check the following box if the soliciting materials or information statement
referred to in checking box (a) are preliminary copies: [ ]
Check the following box if the filing is a final amendment reporting the results
of the transaction: [_]
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<TABLE>
<CAPTION>
Calculation of Filing Fee
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<S> <C>
Transaction Valuation/1/: $100 million Amount of Filing Fee/2/: $20,000
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</TABLE>
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
Amount Previously Paid: ______________________ Filing Party: _______________
Form or Registration No.: ____________________ Date Filed: _________________
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/1/ For purposes of calculating the filing fee only. This calculation is
based upon the purchase price of $100 million for all issued and outstanding
shares of Class A Common Stock acquired pursuant to this transaction.
/2/ The amount of the filing fee, calculated in accordance with Section
13 of the Securities Exchange Act of 1934, as amended, equals 1/50th of one
percent of the aggregate value of cash to be paid by ALZA Corporation for such
Class A Common Stock.
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Introduction.
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This Schedule 13E-3 Transaction Statement (the "Statement") relates to ALZA
Corporation's exercise of an option to purchase all issued and outstanding
shares of Class A Common Stock of Crescendo Pharmaceuticals Corporation, a
Delaware corporation ("Crescendo").
This Statement is being filed by ALZA Corporation, a Delaware corporation
("ALZA"). Notwithstanding this Statement, ALZA disclaims application of Rule
13e-3 under the Securities Exchange Act of 1934, as amended, to the transaction
reported herein.
Item 1
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The information set forth under the caption "Summary of Terms" in the
Notice to Stockholders of Crescendo attached hereto as Exhibit (A)(1) is hereby
incorporated by reference.
Item 2
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(a) The issuer of the class of equity security which is the subject of
this filing and the address of its principal executive offices is:
Crescendo Pharmaceuticals Corporation
2000 Charleston Road, Suite 300
Mountain View, CA 94043
(650) 564-5600
(b) The exact title of the class of security which is the subject of this
filing is Class A Common Stock, par value $0.01, of Crescendo. The
amount of Class A Common Stock outstanding as of September 29, 2000,
the most recent practicable date hereof, is 4,853,509. The approximate
number of holders of record of the Class A Common Stock as of
September 29, 2000, the most recent practicable date, is 4,676.
(c) The principal market in which the Class A Common Stock is being traded
is the Nasdaq National Market. The range of high and low bid
quotations for the Class A Common Stock for each quarterly period
during the past two years is:
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<TABLE>
<CAPTION>
Period High Low
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<S> <C> <C>
September 30, 1998 13.188 12.250
December 31, 1998 13.875 12.250
March 31, 1999 16.313 13.500
June 30, 1999 17.500 14.188
September 30, 1999 18.500 17.125
December 31, 1999 18.750 17.438
March 31, 2000 20.000 17.625
June 30, 2000 20.625 18.250
</TABLE>
(d) On August 23, 2000, Crescendo announced a cash dividend on all
Crescendo Class A and Class B Common Stock in the amount of $0.49 per
share payable on September 20, 2000 to stockholders of record at the
close of business on September 5, 2000.
To the best of ALZA's knowledge, after making reasonable inquiry,
Crescendo has paid no other dividends in the past two years.
Crescendo is restricted from paying any dividends on the Class A
Common Stock (i) unless the same per share dividend is declared on the
Class B Common Stock; and (ii) if, after payment of such dividend, the
amount of Crescendo's cash, cash equivalents and short-term and long-
term investments would be less than the amount of Available Funds as
such phrase is defined in the Restated Certificate of Incorporation of
Crescendo as filed with the Secretary of State of the State of
Delaware on September 4, 1997, attached hereto as Exhibit (D)(1) (the
"Restated Certificate"), remaining after expenditures pursuant to the
Development Agreement between ALZA and Crescendo dated September 5,
1997, as amended (the "Development Agreement"), as of the date of such
dividend.
(e) Not applicable.
(f) Not applicable.
Item 3
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(a) This filing is being made by ALZA. ALZA's business address and
telephone number are:
ALZA Corporation
1900 Charleston Road, P.O. Box 7210
Mountain View, CA 94039-7210
(650) 564-5000
ALZA exercised its option to purchase all of Crescendo's Class A
Common Stock on September 29, 2000 pursuant to ALZA's purchase option
(the "Purchase Option"), the terms of which are set forth in the
Restated Certificate. Under the Purchase Option, ALZA is entitled to
purchase all, but not less than all, of the issued and outstanding
Class A Common Stock at any time prior to the earlier of: (i) 60 days
after Crescendo provides ALZA with a statement that, as of the end of
any calendar month, there are less than $2.5 million of Available
Funds remaining after all of Crescendo's expenditures pursuant to the
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Development Agreement, accompanied by a report of Crescendo's
independent auditors stating that nothing has come to their attention
indicating that there are $2.5 million or more of Available Funds
remaining at that date; or (ii) January 31, 2002 (subject to certain
extension rights).
(b) ALZA's principal business is pharmaceutical research and development
and the commercialization of pharmaceutical products. During the last
five years, ALZA has not been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors). During the
last five years, ALZA has not been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction which
resulted in a judgment, decree or final order enjoining further
violations of, or prohibiting activities subject to, federal or state
securities laws or finding any violation of such laws.
(c) Information regarding ALZA's officers and directors.
Dr. Ernest Mario
1900 Charleston Road, P.O. Box 7210
Mountain View, California 94039-7210
Dr. Ernest Mario is the Chairman and Chief Executive Officer of ALZA.
Prior to joining ALZA, Dr. Mario served as Chief Executive of Glaxo
Holdings plc, a pharmaceutical company, from 1989 to 1993, and as Deputy
Chairman from 1992 to 1993. Prior to that time, Dr. Mario served as
Chairman and Chief Executive Officer of Glaxo, Inc., a subsidiary of Glaxo
Holdings, from 1988 to 1989 and as President and Chief Operating Officer of
Glaxo, Inc. from 1986 to 1988. Prior to joining Glaxo, Dr. Mario held
various executive positions at Squibb Corporation and served as a director
of that company. Dr. Mario is a citizen of the United States of America.
James R. Butler
1900 Charleston Road, P.O. Box 7210
Mountain View, California 94039-7210
James R. Butler is the Group Vice President of ALZA International.
Previously, Mr. Butler served as Group Vice President of ALZA
Pharmaceuticals in 1999, Senior Vice President, Sales and Marketing, of
ALZA from 1997 to 1999, and Vice President, Sales and Marketing, of ALZA
from 1993 to 1996. Prior to joining ALZA, Mr. Butler served as Vice
President and General Manager of the corporate division of Glaxo, Inc., a
pharmaceutical company, from 1987 to 1993. Mr. Butler is a citizen of the
United States of America.
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Bruce C. Cozadd
1900 Charleston Road, P.O. Box 7210
Mountain View, California 94039-7210
Bruce C. Cozadd is the Executive Vice President and Chief Operating
Officer of ALZA. Previously, Mr. Cozadd served as Senior Vice President and
Chief Financial Officer of ALZA from 1997 to 1999, and as Vice President
and Chief Financial Officer of ALZA from 1994 to 1996. Mr. Cozadd is a
citizen of the United States of America.
Harold E. Fethe
1900 Charleston Road, P.O. Box 7210
Mountain View, California 94039-7210
Harold E. Fethe is the Senior Vice President, Human Resources, of
ALZA. Previously, Mr. Fethe was Vice President, Human Resources, of ALZA
from 1991 to 1998. Mr. Fethe is a citizen of the United States of America.
Matthew K. Fust
1900 Charleston Road, P.O. Box 7210
Mountain View, California 94039-7210
Matthew K. Fust is the Senior Vice President and Chief Financial
Officer of ALZA. Previously, Mr. Fust served as Vice President, Finance and
Controller of ALZA from 1998 to 1999 and Executive Director (Accounting and
Financial Reporting) of ALZA from 1996 to 1998. Prior to joining ALZA, Mr.
Fust served as a Manager of Strategic Consulting for Andersen Consulting
from 1991 to 1996. Mr. Fust is a citizen of the United States of America.
Dr. Ronald P. Haak
1900 Charleston Road, P.O. Box 7210
Mountain View, California 94039-7210
Dr. Ronald P. Haak is the Senior Vice President, Technology
Development and Principal Scientist, of ALZA. Mr. Haak previously served as
Vice President, Technical Development, for ALZA from 1994 to 1998 and as
Executive Director, Electrotransport Products, for ALZA from 1991 to
1993. Dr. Haak is a citizen of the United States of America.
Robert M. Myers
1900 Charleston Road, P.O. Box 7210
Mountain View, California 94039-7210
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Robert M. Myers is the Senior Vice President, Commercial Development,
of ALZA. Previously, Mr. Myers served as Vice President, Commercial
Development, of ALZA from 1997 to 1999, Senior Director, Commercial
Development, of ALZA from 1996 to 1997, Director, Commercial Development,
of ALZA from 1995 to 1996 and as Director, Development Programs, of ALZA
from 1994 to 1995. Mr. Myers is a citizen of the United States of America.
Dr. Samuel R. Saks
1900 Charleston Road, P.O. Box 7210
Mountain View, California 94039-7210
Dr. Samuel R. Saks is the Group Vice President, ALZA Pharmaceuticals,
for ALZA. Previously, Mr. Saks served as Senior Vice President, Medical
Affairs, of ALZA from 1994 to 1999 and as Vice President, Medical Affairs,
of ALZA from 1992 to 1994. Dr. Saks is a citizen of the United States of
America.
Peter D. Staple
1900 Charleston Road, P.O. Box 7210
Mountain View, California 94039-7210
Peter D. Staple is the Executive Vice President, Chief Administrative
Officer and General Counsel of ALZA. Previously, Mr. Staple served as
Senior Vice President and General Counsel of ALZA from 1997 to 1999 and as
Vice President and General Counsel of ALZA from 1994 to 1996. Prior to
joining ALZA, Mr. Staple was Vice President and Associate General Counsel
of Chiron Corporation, a biotechnology company, from 1992 to 1994. Mr.
Staple is a citizen of the United States of America.
Daniel N. Swisher, Jr.
1900 Charleston Road, P.O. Box 7210
Mountain View, California 94039-7210
Daniel N. Swisher, Jr. is the Senior Vice President, Sales and
Marketing, of ALZA. Previously, Mr. Swisher served as Vice President,
Marketing, of ALZA from 1997 to 1999, Executive Director, New Product
Planning, of ALZA from 1995 to 1997, Executive Director, International
Pharmaceuticals, of ALZA from 1993 to 1995 and as Manager, Strategic
Planning, of ALZA from 1992 to 1993. Mr. Swisher is a citizen of the United
States of America.
Janne Wissel
1900 Charleston Road, P.O. Box 7210
Mountain View, California 94039-7210
Janne Wissel is the Senior Vice President, Operations, of ALZA.
Previously, Ms. Wissel served as Vice President, Regulatory and Quality
Management, of ALZA from 1995 to 1997, Vice President, Quality Management,
of ALZA from 1994 to 1995 and
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as Senior Director, Regulatory Affairs, of ALZA from 1993 to 1994. Ms.
Wissel is a citizen of the United States of America.
William R. Brody, M.D., Ph.D.
1900 Charleston Road, P.O. Box 7210
Mountain View, California 94039-7210
Dr. William R. Brody is a member of the Board of Directors of ALZA.
Dr. Brody has been the President of The Johns Hopkins University since
1996. Prior to assuming that position, Dr. Brody was provost of the
University of Minnesota Academic Health Center from 1994 to 1996 and the
Martin Donner Professor and Director of the Department of Radiology at The
Johns Hopkins University from 1987 to 1994. Dr. Brody is a citizen of the
United States of America.
Robert J. Glaser, M.D.
1900 Charleston Road, P.O. Box 7210
Mountain View, California 94039-7210
Dr. Robert J. Glaser is a member of the Board of Directors of ALZA.
Mr. Glaser was the Director for Medical Science of the Lucille P. Markey
Charitable Trust, a philanthropic foundation supporting basic biomedical
research, from 1984 to June 1997, and a trustee from 1988 to June 1997. In
accordance with the donor's will, the Trust ceased operations in June 1997.
Prior to 1984, Dr. Glaser was President, Chief Executive Officer and a
trustee of the Henry J. Kaiser Family Foundation. Dr. Glaser is a citizen
of the United States of America.
Dean O. Morton
1900 Charleston Road, P.O. Box 7210
Mountain View, California 94039-7210
Dean O. Morton is a member of the Board of Directors of ALZA. Mr.
Morton retired in 1992 as Executive Vice President, Chief Operating Officer
and a director of the Hewlett-Packard Company, where he held various
positions since 1960. Mr. Morton is a citizen of the United States of
America.
Denise M. O'Leary
1900 Charleston Road, P.O. Box 7210
Mountain View, California 94039-7210
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Denise M. O'Leary is a member of the Board of Directors of ALZA. Ms.
O'Leary is a private investor, investing her own capital in a variety of
early stage companies. Ms. O'Leary was with Menlo Ventures, a venture
capital investment company, from 1983 to 1996 and she served as a General
Partner of that company from 1987 to 1996. Ms. O'Leary is a citizen of the
United States of America.
Isaac Stein
1900 Charleston Road, P.O. Box 7210
Moutain View, California 94039-7210
Isaac Stein is a member of the Board of Directors of ALZA. Mr. Stein
has been President of Waverley Associates, Inc., a private investment firm,
since 1983 and a Managing Director of Technogen Associates, a venture
capital investment company, since 1997. Mr. Stein is Chairman of Maxygen,
Inc. Mr. Stein is a citizen of the United States of America.
Julian N. Stern
1900 Charleston Road, P.O. Box 7210
Moutain View, California 94039-7210
Julian N. Stern is a member of the Board of Directors of ALZA. Mr.
Stern has been Secretary of ALZA since 1968. He is the sole employee of a
professional corporation that is a partner of the law firm of Heller Ehrman
White & McAuliffe LLP. Mr. Stern is a citizen of the United States of
America.
Dr. I. Craig Henderson
1900 Charleston Road, P.O. Box 7210
Mountain View, California 94039-7210
Dr. I. Craig Henderson is a member of the Board of Directors of ALZA.
Dr. Henderson is also the Senior Medical Adviser of ALZA. Previously, Dr.
Henderson was the Chief Executive Officer and Chairman of the Board of
Directors of SEQUUS Pharmaceuticals, Inc. from 1995 to 1999. He served as a
director of SEQUUS from 1993 to 1999. Dr. Henderson is an Adjunct Professor
of Medicine at the University of California, San Francisco. Dr. Henderson
is a citizen of the United States of America.
During the past five years, none of the foregoing individuals has been
convicted in a criminal proceeding (excluding traffic violations and
similar misdemeanors). During
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the last five years, none of the foregoing individuals has been a party to
a civil proceeding of a judicial or administrative body of competent
jurisdiction which resulted in a judgment, decree or final order enjoining
further violations of, or prohibiting activities subject to, federal or
state securities laws or finding any violation of such laws.
Item 4
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(a) ALZA exercised its option to purchase all of Crescendo's Class A
Common Stock on September 29, 2000 by delivering an exercise notice to
Crescendo. The terms of the Purchase Option are set forth in
Crescendo's Restated Certificate. Pursuant to the Restated
Certificate, as of September 29, 2000, the exercise price of the
Purchase Option is $100 million, subject to final purchase
adjustments. The closing date for the purchase is November 13, 2000
(the "Closing Date"). The Closing Date can be extended if necessary to
obtain any required governmental consent. ALZA will deposit the
exercise price with Fleet National Bank, as payment agent (the
"Payment Agent"), on or prior to the Closing Date. Promptly following
the Closing Date, the Payment Agent will distribute the exercise price
pro rata to each person or entity who was a holder of Class A Common
Stock at the close of business on the Closing Date. In accordance with
the terms of the Restated Certificate, the stockholders of the Class A
Common Stock do not need to take any steps to approve the purchase.
Title to the Class A Common Stock will automatically vest in ALZA on
the Closing Date and the exercise price will be paid to such
stockholders in accordance with their respective interests.
(b) Not applicable.
(c) The terms of the transaction would be the same for all stockholders;
provided, however, that registered stockholders who hold physical
stock certificates must submit their certificates to the Payment Agent
in order to receive the pro rata exercise price, whereas registered
stockholders who hold their shares in book entry form will
automatically receive payment by check. Stockholders who hold their
shares in a brokerage account will have the relevant account
automatically credited by the broker.
(d) Appraisal rights are not afforded under either applicable law or the
Restated Certificate to Crescendo stockholders in respect of the
exercise of the Purchase Option and none will be afforded by either of
ALZA or Crescendo. ALZA is not aware of any rights available to
objecting holders of Class A Common Stock under applicable law.
(e) ALZA is unaware, after making reasonable inquiry of Crescendo, of any
grant of access to unaffiliated security holders to the corporate
files of either Crescendo or ALZA or the appointment of counsel or
appraisal services for unaffiliated security holders at the expense of
either Crescendo or ALZA.
(f) Not applicable.
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Item 5
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(a) (1) The nature and approximate amount in dollars of any transaction
between ALZA and Crescendo which has occurred during the past two
years are as follows:
(i) From July 1, 1998 through June 30, 2000, Crescendo paid
approximately $182.5 million to ALZA pursuant to the
Development Agreement whereby ALZA was retained by Crescendo
to perform certain research and development activities
directed toward the selection and development of
pharmaceutical products.
(ii) From July 1, 1998 through June 30, 2000, Crescendo paid
approximately $400,000 to ALZA pursuant to a Services
Agreement dated September 5, 1997 between ALZA and Crescendo
(the "Services Agreement") whereby ALZA was retained by
Crescendo to supply certain administrative services to
Crescendo in exchange for payment of ALZA's costs in the
provision of such services.
(iii) From July 1, 1998 through June 30, 2000, Crescendo paid
approximately $13.4 million to ALZA pursuant to a Technology
License Agreement (the "Technology License Agreement") dated
September 5, 1997 between ALZA and Crescendo, whereby ALZA
licensed certain proprietary technology to Crescendo.
(iv) ALZA and Crescendo entered into a License Option Agreement
(the "License Option Agreement") dated September 5, 1997
whereby Crescendo granted ALZA an option to license certain
products from Crescendo. No amounts have been paid by either
of ALZA or Crescendo to the other party pursuant to this
agreement in the past two years except as set forth in
sections (v)-(vii) below.
(v) In December of 1998, ALZA exercised its option to obtain a
worldwide license to OROS(R) oxybutynin (Ditropan XL(R))
from Crescendo. ALZA launched the product in the United
States on February 1, 1999. Under the terms of the license
agreement between Crescendo and ALZA, Crescendo will receive
payments from ALZA based on worldwide net sales of the
product. Since the option exercise, ALZA has paid Crescendo
approximately $4.8 million under such license agreement.
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(vi) On March 3, 2000, ALZA exercised its option to obtain a
worldwide license to DUROS(R) leuprolide (Viadur(TM)) from
Crescendo. Under the terms of the license agreement between
Crescendo and ALZA, Crescendo will receive payments from
ALZA based on worldwide net sales of the product. On April
5, 2000, ALZA announced that it had entered into a U.S.
commercialization agreement for Viadur with Bayer
Corporation ("Bayer"). Under the terms of its license
agreement with ALZA, Crescendo will receive payments from
ALZA based on Bayer's net sales of the product.
(vii) On August 1, 2000, ALZA exercised its option to obtain a
worldwide license to OROS(R) methylphenidate (Concerta(R)).
Under the terms of the license agreement between Crescendo
and ALZA, Crescendo will receive payments from ALZA based on
worldwide net sales of the product. On April 18, 2000, ALZA
announced that it had entered into an agreement with McNeil
Consumer Healthcare, a Johnson & Johnson company, to co-
promote the product in the United States. The product was
launched in the third quarter of 2000.
(2) Not applicable.
(b) See sections (a)(iv) - (a)(vii) above.
(c) Not applicable.
(d) Not applicable.
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(e) Article FIFTH of the Restated Certificate provides ALZA with the
Purchase Option. The Purchase Option provides that ALZA may purchase
all, but not less than all, of the issued and outstanding Class A
Common Stock at any time prior to the earlier of: (i) 60 days after
Crescendo provides ALZA with a statement that, as of the end of any
calendar month, there are less than $2.5 million of Available Funds
remaining after expenditures pursuant to the Development Agreement,
accompanied by a report of Crescendo's independent auditors stating
that nothing has come to their attention indicating that there are
$2.5 million or more of Available Funds remaining at that date; or
(ii) January 31, 2002 (subject to certain extension rights). ALZA may
exercise the Purchase Option at any time prior to such expiration date
by mailing an exercise notice to Crescendo. This exercise notice must
identify certain information, including a closing date for the
purchase and the exercise price and form of consideration to be paid
to Crescendo stockholders. The closing date must be within 60 days of
the exercise date but may be extended by ALZA as necessary to obtain
governmental consents. ALZA exercised the Purchase Option by providing
the foregoing exercise notice to Crescendo on September 29, 2000. The
Closing Date has been set for November 13, 2000.
From the date of exercise of the Purchase Option until the Closing
Date, Crescendo is prohibited by the terms of the Restated Certificate
from engaging in any extraordinary corporate activity without the
prior written consent of ALZA.
Article FOURTH of the Restated Certificate provides that as soon as
ALZA exercises the Purchase Option, Crescendo's board shall cease to
be classified, the number of authorized Crescendo directors shall be
increased in accordance with a formula set forth in the Restated
Certificate and the holders of Crescendo's Class B Common Stock
(currently ALZA) shall have the sole right to appoint the directors
thereafter.
Within 15 business days after the mailing of the exercise notice to
Crescendo, Crescendo must provide ALZA with a status statement
containing certain financial information. This financial information
includes all actual and contingent liabilities of Crescendo. ALZA then
may reduce the exercise price by the amount of such liabilities. It is
not anticipated that any reduction will occur in the current
circumstances of this transaction.
ALZA must designate a payment agent who will distribute the exercise
price to the Crescendo stockholders. ALZA must also deposit both the
exercise price and irrevocable instructions to pay the exercise price
to Crescendo stockholders of record as of the close of business on the
Closing Date, with the payment agent on or prior to the Closing Date.
ALZA has designated Fleet National Bank as Payment Agent.
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On the Closing Date, title to the Class A Common Stock will
automatically transfer to and vest in ALZA without further act of any
person. The Payment Agent will then disburse the exercise price to the
holders of Crescendo Class A Common Stock as set forth in Item 4(c)
above.
Item 6
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(b) Subsequent to the purchase of the Class A Common Stock by ALZA,
Crescendo will be a wholly-owned subsidiary of ALZA. ALZA currently
has no plans to retire or otherwise dispose of the Class A Common
Stock after the Closing Date.
(c) Subsequent to the purchase of the Class A Common Stock by ALZA,
Crescendo will be a wholly-owned subsidiary of ALZA. ALZA anticipates
de-listing Crescendo from the Nasdaq National Market and filing a Form
15 with the Securities and Exchange Commission (the "Commission") to
suspend Crecendo's reporting requirements under the Exchange Act and
terminate registration of the Class A Common Stock. ALZA intends to
replace Crescendo's officers and directors with ALZA employees.
Item 7
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(a) The purpose of this transaction is to acquire the rights to all
products and product candidates developed or under development by ALZA
and Crescendo pursuant to the Development Agreement, without ongoing
royalty obligations to Crescendo. ALZA believes that it is in the best
interests of ALZA and ALZA's stockholders to exercise the Purchase
Option at this time.
(b) ALZA holds an option to license each of the individual products being
developed by ALZA on behalf of Crescendo and has exercised its option
with respect to three of these products. However, such licenses
obligated (and such future licenses likely would obligate) ALZA to
make significant product payments to Crescendo. Therefore, maintaining
the existing licenses in place and potentially exercising the license
option with respect to individual products in the future were not
considered by ALZA to be the most effective and comprehensive means to
acquire all of Crescendo's products and product candidates.
(c) The transaction was structured pursuant to the terms of the Purchase
Option set forth in Crescendo's Restated Certificate. This transaction
is being undertaken at this time because ALZA expects that Crescendo's
Available Funds may drop below $2.5 million by the end of the year
2000, thereby triggering the deadline for exercise of the Purchase
Option. Therefore, for the reasons described in Items 7(a) and (b)
above, ALZA's directors determined that exercise of the Purchase
Option at this time was in the best interests of ALZA and its
stockholders.
(d) The transaction reported herein will cause Crescendo to become a
wholly-owned subsidiary of ALZA. Crescendo will be de-listed from the
Nasdaq National Market and will have its public reporting obligations
suspended. As a result ALZA will indirectly own all of the assets of
Crescendo.
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The transaction reported herein will cause each stockholder of Class A
Common Stock to dispose of his or her Class A Common Stock for
consideration equal to that stockholder's pro rata share of the
exercise price identified in Item 4(a) above.
The federal income tax consequences to Crescendo stockholders under
the Internal Revenue Code of 1986, as amended (the "Code"), with
respect to the cash received for their Class A Common Stock are
generally as described below. This discussion is intended only to
provide general information to stockholders that are subject to United
States federal income tax; it may not address all relevant federal
income tax consequences to such persons or to other categories of
stockholders, e.g., foreign persons, dealers in securities,
stockholders that are exempt from federal income tax, stockholders who
received their Crescendo stock by the exercise of an option, or as
compensation or stockholders who do not hold their Class A Common
Stock as capital assets. This discussion is based upon present
federal income tax laws and does not attempt to anticipate changes of
law. This discussion does not address state, local or foreign tax
considerations. ALL HOLDERS OF CLASS A COMMON STOCK ARE URGED TO
CONSULT THEIR OWN TAX ADVISORS.
Holders of Class A Common Stock will have a capital gain or loss, due
to ALZA's exercise of the Purchase Option, equal to the difference
between (a) the amount of the cash received for the Class A Common
Stock, and (b) their basis in the Class A Common Stock surrendered.
Gain or loss due to the exercise of the Purchase Option should be
long-term if the Class A Common Stock has been held for more than one
year at the time of exercise of the Purchase Option. The Internal
Revenue Service ("IRS") may assert, however, that the holding period
of the Class A Common Stock does not begin until the date the Purchase
Option is exercised and that capital gain or loss upon exercise of the
Purchase Option is therefore short-term. Limitations may apply to
deduction of capital loss.
To the extent that a holder of Class A Common Stock has not provided
or does not provide a correct taxpayer identification number on IRS
Form W-9 or a substitute therefor, such holder may be subject to
backup withholding by ALZA.
Item 8
------
(a) ALZA reasonably believes that the transaction reported herein is fair
to the holders of Crescendo Class A Common Stock. None of ALZA's
directors dissented to the transaction. Julian N. Stern abstained from
voting on such transaction because he owns shares of Class A Common
Stock. Two additional ALZA directors who own shares of Crescendo Class
A Common Stock, Isaac Stein and Dean O. Morton, did not participate in
the ALZA board meeting at which the transaction was approved.
(b) The material factor upon which the belief stated in Item 8(a) is
based is set forth below.
15
<PAGE>
Stockholder Awareness of Purchase Option
Initial public holders of the Class A Common Stock received such stock
as a dividend from ALZA in 1997. The Purchase Option was a feature of
the Class A Common Stock at that time and was described in the
prospectus dated September 5, 1997, distributed in connection with the
distribution of the Class A Common Stock. The Purchase Option was also
set forth in the Restated Certificate, which was publicly filed both
with the Delaware Secretary of State and the Commission prior to the
distribution. Pursuant to the Restated Certificate, the stock
certificates for the Class A Common Stock were legended to put the
holders thereof on further notice about the Purchase Option.
Stockholders were also advised of the Purchase Option in each Form 10-
K and Form 10-Q public filing made by Crescendo and in each Form 10-K
filing made by ALZA with the Commission since Crescendo's formation.
Accordingly, the Purchase Option was present in the initial public
distribution of the Class A Common Stock, was disseminated in
Crescendo's charter documents, was discussed in each of Crescendo's
periodic filings and in ALZA's annual periodic filings and was
legended on each physical stock certificate issued for the Class A
Common Stock. As a result, every holder of Crescendo Class A Common
Stock received substantial notice as to the terms of the Purchase
Option prior to making any investment decision with respect to the
Class A Common Stock.
ALZA decided to pay the exercise price to holders of Crescendo Class A
Common Stock in cash, instead of stock, because ALZA had sufficient
cash available, and the payment of cash would not be dilutive to the
stockholders of ALZA. ALZA reasonably believes the form of such
payment to be fair to holders of Crescendo Class A Common Stock.
(c) The Restated Certificate does not require any approval of the
stockholders of Crescendo for the exercise of the Purchase Option.
(d) After making reasonable inquiry of management of Crescendo, ALZA
believes that no directors of Crescendo have retained an unaffiliated
representative to act solely on behalf of any security holders of
Crescendo as no action is required by either of Crescendo's directors
or Crescendo's security holders to effect the Purchase Option.
(e) Not applicable.
(f) Not applicable.
Item 9
------
[CAPTION]
(a) Neither ALZA nor, to the best of ALZA's knowledge after reasonable
inquiry of Crescendo, Crescendo, has received any report, opinion
(other than an opinion of counsel) or appraisal from an outside party
which is materially related to the transaction described herein.
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<PAGE>
(b) Not applicable.
(c) Not applicable.
Item 10
-------
(a) The total consideration for the purchase by ALZA of the Class A Common
Stock shall be determined according to Article FIFTH of the Restated
Certificate attached hereto as Exhibit (D)(1). The source of these
funds is ALZA's cash, cash equivalents and marketable securities.
(b) None.
(c) ALZA's reasonably itemized statement of expenses for the transaction
includes filing fees of $20,000, printer fees of approximately $5,000,
accounting fees of approximately $5,000 and legal fees of
approximately $50,000. Crescendo will not be responsible for paying
any or all of such expenses.
(d) Not applicable.
Item 11
-------
(a) As of September 29, 2000, no shares of Class A Common Stock of
Crescendo are beneficially owned by ALZA, by any pension, profit
sharing or similar plan of ALZA or, to ALZA's knowledge after
reasonable inquiry, by any executive officer and director of ALZA, any
person controlling ALZA or any executive officer of any corporation
ultimately in control of ALZA or by any associate or majority owned
subsidiary of ALZA except as set forth below. Each of the persons
listed below holds less than 0.1 percent of the shares of Crescendo
Class A Common Stock outstanding on such date.
<TABLE>
<CAPTION>
Immediately
Direct Indirect Exercisable
Name Ownership Ownership Options
---- --------- --------- -----------
<S> <C> <C> <C>
James R. Butler 100 -0- -0-
Bruce C. Cozadd 135 -0- -0-
Harold E. Fethe 200 -0- -0-
Matthew K. Fust 31 -0- -0-
Ronald P. Haak 79 -0- -0-
Dean O. Morton 1000 -0- -0-
Robert M. Myers 10 -0- -0-
Dr. Samuel R. Saks 312(1) -0- -0-
Peter D. Staple 86 -0- -0-
Isaac Stein 580 -0- -0-
Julian N. Stern 4696 -0- -0-
Daniel N. Swisher, Jr. 36 -0- -0-
Janne Wissel 336 -0- -0-
</TABLE>
(1) Shares listed are subject to restrictions on dispostion which lapse on
January 17, 2001.
17
<PAGE>
As of September 29, 2000, ALZA's 401(k) tax deferral investment plan owned
37,006 shares of Class A Common Stock for the accounts of certain ALZA
employees. The employees direct the investment of these accounts. Some of the
shares reported as indirectly owned by ALZA employees in the table above are
included in the foregoing amount.
(b) None.
Item 12
-------
(d) Not applicable.
(e) Not applicable.
Item 13
-------
(a) Crescendo's financial information is incorporated herein by reference
from Crescendo's Form 10-K and Form 10-K/A for the year ended December
31, 1999 and the Crescendo Form 10-Q for the quarter ended June 30,
2000. Crescendo had no material fixed charges for its two most recent
fiscal years and the interim period. Book value per share of Crescendo
Class A Common Stock was $17.62 and $9.57 at December 31, 1999 and
June 30, 2000 respectively.
(b) Not applicable.
18
<PAGE>
Item 14
-------
(a) Not applicable.
(b) Not applicable.
Item 15
-------
(a) Not applicable.
Item 16
-------
Exhibit No. Description
----------- -----------
99.(A)(1) Notice to Stockholders of Crescendo Pharmaceuticals Corporation.
99.(D)(1) Restated Certificate of Incorporation of Crescendo, as corrected,
filed as Exhibit 3.1 to Crescendo Form 10-K/A for the year ended
December 31, 1999.
19
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
October 4, 2000 ALZA CORPORATION
By: /s/ Peter D. Staple
-------------------------------------
Peter D. Staple
Executive Vice President,
Chief Administrative Officer
and General Counsel
20
