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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/x/ Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Scios Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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SCIOS INC. NEWS RELEASE
CONTACTS:
Wendy Carhart
Scios Inc.
408/616-8325
or
Daniel H. Burch
212/929-5748
Stanley J. Kay
212/929-5940
MacKenzie Partners, Inc.
FOR IMMEDIATE RELEASE:
SCIOS BOARD TO OPPOSE PROXY CONTEST BY RANDAL J. KIRK
SCHEDULES EARLY YEAR 2000 ANNUAL MEETING TO PROMPTLY RESOLVE CONFLICT
SUNNYVALE, CA, December 8, 1999 - Scios Inc. (NASDAQ: SCIO) announced today that
its Board of Directors has unanimously determined to oppose the attempt by
Randal J. Kirk of Radford, Virginia to elect himself and his slate of seven
hand-picked nominees to the Scios Board at the Company's Year 2000 annual
meeting.
The Company also announced that in order to promptly resolve this conflict, the
Board has moved the Year 2000 annual meeting date forward to February 28, 2000
from its typical May time period.
Donald B. Rice, Chairman of the Board, and Richard B. Brewer, President and
Chief Executive Officer of Scios stated, "We strongly believe Mr. Kirk's actions
are not in the best interests of the Company and its stockholders, particularly
in light of the significant restructuring plan already undertaken over the last
nine months by the Scios Board and new management team. The Company will not be
distracted by Mr. Kirk from pursuing to completion the additional Natrecor Phase
III clinical trial and our new business plan for Scios. We will vigorously
oppose Mr. Kirk's attempt to seize control of the Company."
-- more --
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The Company is sending a letter to all stockholders detailing the circumstances
behind Mr. Kirk's proposed contest and the Board's opposition to it. As
previously announced, Mr. Kirk sent the Company a notice of his intention to
nominate a slate of eight candidates on December 2, 1999. A complete copy of the
Scios stockholder letter follows.
SCIOS INC. Scios is a biopharmaceutical company engaged in the discovery,
development, and commercialization of novel human therapeutics. Scios has
commercial or research and development relationships with Chiron Corporation,
The DuPont Pharmaceuticals Company, Eli Lilly and Company, GenVec Inc., Kaken
Pharmaceutical Co., Ltd., and Novo Nordisk A/S of Denmark. Scios' Psychiatric
Sales and Marketing Division successfully markets seven psychiatric products,
including co-promotion arrangements with Janssen Pharmaceutica's
Risperdal-Registered Trademark-(risperidone) and SmithKline Beecham's
Paxil-Registered Trademark- (paroxetine hydrochloride). Additional
information on Scios is available at its web site located at www.sciosinc.com
and in the Company's various filings with the Securities and Exchange
Commission.
The statements in this press release that are not historical facts are
forward-looking statements that involve risks and uncertainties, and include the
risk of timely and successful completion of the current clinical trial for
Natrecor and achieving approval of Natrecor, the risks associated with
development and commercialization of the Company's other products and the risks
associated with the other strategies comprising the Company's new business plan,
as well as other risks detailed from time to time in the reports filed by Scios
with the SEC, including the Company's annual report on Form 10-K for the year
ended December 31, 1998 and subsequent reports on Form 10-Q.
# # #
The letter is reprinted on the following four pages.
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SCIOS LETTERHEAD
December 8, 1999
Dear Stockholder:
We are writing to inform you that Randal J. Kirk of Radford, Virginia
intends to commence a proxy contest to seize control of your Company. Mr. Kirk
has notified Scios that he will seek your vote to elect himself and his slate of
seven hand-picked candidates to the Scios Board at the Year 2000 annual meeting.
We strongly believe Mr. Kirk's actions are not in the best interests of
the Company and all its stockholders, particularly in light of the significant
restructuring plan already undertaken over the last nine months by the Scios
Board and management. The Board is unanimously committed to aggressively
pursuing to completion the additional Natrecor Phase III clinical trial and our
new business plan for Scios. We will vigorously oppose Mr. Kirk's attempt to
gain control of your Company.
It is important that you know the facts concerning Mr. Kirk's approach
last summer and his proposal that Scios buy Lotus Biochemical, one of his
privately held companies. We believe that Scios' rejection of the proposal as
described below directly led to Mr. Kirk's current attempt to replace your Board
of Directors.
1. In June and July of 1999, Mr. Kirk accumulated 2,000,000 shares, or 5.3% of
Scios' outstanding stock at an average cost of $4.15 per share. Mr. Kirk's
13D filing on July 29 with the SEC disclosed his purchases and stated his
reasons for investing in Scios. Mr. Kirk's filing indicated an interest in
developing business opportunities between a private company he controls and
Scios.
2. Shortly after filing, Mr. Kirk requested a meeting with Scios management to
present privately his proposal that Scios buy his company, Lotus
Biochemical.
3. Scios management gave Mr. Kirk and five of his representatives the
opportunity to present Lotus' business plan and operations on August 13,
1999.
4. At this meeting Mr. Kirk proposed that Scios buy Lotus Biochemical in an
exchange of shares. This transaction was designed to give Kirk and his
co-investors approximately 17% of Scios in addition to the 5.3% Kirk
currently controls. Kirk clearly wanted a quick deal for himself without
any vote by Scios stockholders on a transaction that would greatly increase
his ownership of Scios.
5. During September and early October, Scios management reviewed Lotus and its
business, specifically its preclinical endocrine hormone development
project and its three older generic products. Following this review, Scios'
President and Chief Executive Officer, Mr. Richard B. Brewer, informed Mr.
Kirk on October 14 that Scios was not interested in a merger with Lotus but
that it would consider whether one of Lotus' products would fit within the
framework for new marketing opportunities for Scios' Psychiatric Sales and
Marketing Division.
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6. Two weeks after receiving Scios' rejection, Mr. Kirk decided to formally
withdraw his Lotus proposal. In his withdrawal letter to Richard Brewer
dated October 27 and in a different letter on the same date to all
non-management Scios directors, Mr. Kirk suddenly changed his tactics and
started to openly criticize management. He failed to tell the public about
his change of intent until he filed an amended 13D with the SEC one month
later.
7. On November 2, the Board advised Mr. Kirk that it actively supported
management's actions to transform Scios into a better performing company.
The Board also responded to Mr. Kirk by indicating that the directors
intended to discuss the Lotus proposal at an upcoming board meeting and
invited Kirk to provide any information he felt useful for the Board to
consider. Kirk did not respond to this invitation.
8. On November 9, the Board did review Scios management's analysis of Lotus
and its products with Mr. Brewer. The Board agreed with management's
conclusions that Kirk's Lotus proposal should not be further pursued.
9. Later in November, Scios became aware that Kirk was probably planning an
actual proxy contest. Then on December 3, Mr. Kirk announced his contest to
replace the entire Scios Board of Directors.
10. In Mr. Kirk's public filing he claimed to want his new Board, if elected,
to evaluate management and claimed that he currently did not have any
interest in developing business opportunities, even if his nominees were
elected. In his amended 13D, he failed to discuss the specifics of his past
Lotus proposal but simply noted that any proposals previously made to Scios
had been withdrawn.
11. At a special meeting of the Scios Board of Directors on December 5, the
Board decided to oppose Mr. Kirk's attempt to seize control of Scios
through a proxy contest.
We are disappointed that Mr. Kirk has chosen to start a costly and
disruptive proxy contest. We think you should seriously question his motives in
light of his failed attempt to get Scios to buy Lotus Biochemical.
We recognize fully that Scios and its stockholders suffered a serious
setback in April, when the FDA issued its non-approval letter for Natrecor. We
are nevertheless convinced that it is in the best interest of all Scios
stockholders that your Company continue implementing the new business plan
developed by the Scios management team under the leadership of its new President
and Chief Executive Officer, Richard Brewer, and its new Chief Financial
Officer, David Gryska.
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The restructuring plan and new business focus have resulted in a number
of significant accomplishments during 1999, including:
- - Management's completion of the restructuring, first announced on March
1, 1999, which will save Scios approximately $14 million annually. This
plan included a 30% employee reduction, the closing of Scios' protein
manufacturing facility, the sale of its Mountain View campus and other
property for $21 million, and a consolidation into less expensive
facilities in Sunnyvale, California.
- - The accelerated development of our p38-Kinase Inhibitor program, with a
target of starting Phase I clinical trials by the second half of 2000,
the December 1 completion of a $25 million licensing agreement on
Fiblast with Chiron Corporation and the elimination of an early stage
product development program.
- - The careful design and rapid initiation, in concert with leading U.S.
heart failure specialists, of a new Phase III clinical trial for
Natrecor that directly addresses the issues raised by FDA in April.
Patients are currently being enrolled and Scios' team is actively
training additional clinical sites across the nation.
- - Management's recruitment of Dr. James B. Young, Head, Section of Heart
Failure and Cardiac Transplant Medicine at the Cleveland Clinic
Foundation, to chair a distinguished panel of outside experts serving
on a Steering Committee that is now managing with Scios the new
Natrecor clinical trial.
The Board strongly supports the initiatives of the Scios management
team. At this important juncture in the Company's transformation, it is vital
that management and employees remain focused on accomplishing its business
objectives. Therefore, promptly resolving this proxy contest is in the paramount
interest of Scios shareholders. Accordingly, the Board has decided to move the
Annual Meeting from the typical May time period to February 28, 2000. We have
also established January 11, 2000 as the record date for voting.
We are not asking to you take any action at this time regarding Mr. Kirk's
proxy contest. We will keep you informed on a timely basis. In the meantime,
if you have any questions, please call our investor relations department at
(408) 616-8325 or call Mackenzie Partners, Inc., which is assisting Scios in
this matter, at (800) 322- 2885 Toll-Free or at (212) 929-5500 Collect.
On Behalf of the Board of Directors
Sincerely,
/s/ Donald B. Rice /s/ Richard B. Brewer
Donald B. Rice Richard B. Brewer
Chairman of the Board President and
Chief Executive Officer
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CERTAIN INFORMATION CONCERNING PARTICIPANTS
The following individuals, all of whom are directors of Scios Inc., may be
deemed participants in the solicitation of proxies on behalf of the Company's
Board of Directors: Donald B. Rice, Ph.D. (Chairman of the Board of the Company;
President and Chief Executive Officer of Urogenesys, Inc.); Richard B. Brewer
(Chief Executive Officer and President of the Company); Samuel H. Armacost
(Chairman, SRI International); Myron Du Bain (Chairman and Chief Executive
Officer (Retired), Fireman's Fund Corporation); Charles A. Sanders, M.D.
(Chairman and Chief Executive Officer (Retired), Glaxo Inc.); Solomon H. Snyder,
M.D. (Director, Department of Neuroscience, and Distinguished Service Professor
of Neuroscience, Pharmacology and Molecular Sciences and Psychiatry, The Johns
Hopkins University); Burton E. Sobel, M.D. (E.L. Amidon Professor and Chair,
Department of Medicine, The University of Vermont College of Medicine); and
Eugene L. Step (Executive Vice President, President of the Pharmaceutical
Division (Retired), Eli Lilly and Company). The following executives of the
Company may also be deemed participants: Thomas L.Feldman (Vice President of
Commercial Operations); Elliott B. Grossbard, M.D. (Senior Vice President of
Development); David W. Gryska (Vice President of Finance and Chief Financial
Officer); John A. Lewicki, Ph.D. (Vice President of Research); John H. Newman
(Senior Vice President, General Counsel & Secretary); George F. Schreiner, M.D.,
Ph.D. (Vice President, Cardiorenal Research) and Wendy Carhart (Senior Manager
of Investor Relations).
In the aggregate, these individuals beneficially own 1,622,257 shares of the
Company's Common Stock, including 1,267,332 shares subject to stock options
exercisable within 60 days of December 6, 1999. None of these individuals
beneficially owns more than 1% of the Company's Common Stock. In addition to
customary cash compensation payable to non-employee directors, under the
Company's Equity Incentive Plan each non-employee director receives an automatic
grant of a stock option to acquire 10,000 shares of the Company's Common Stock
at each annual meeting where the director is elected to the Company's Board of
Directors. Mr. Brewer's employment agreement with the Company provides for,
among other things, severance payments to Mr. Brewer in the event of termination
of his employment "without cause" or "for good reason."
