CUSIP No. 808905103 13D
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(Amendment No. 5)
SCIOS INC.
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(Name of Issuer)
Common Stock, $.001 par value per share
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(Title of Class of Securities)
808905103
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(CUSIP Number)
Third Security, LLC
The Governor Tyler
1902 Downey Street
Radford, Virginia 24141
Attention: Marcus E. Smith, Esq.
(540) 731-3344
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
with a copy to:
Joseph J. Giunta, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071-3144
(213) 687-5000
January 20, 2000
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(Date of Event which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check
the following box:
|__|
Page 1 of 11 Pages
CUSIP No. 808905103 13D
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This Amendment No. 5 (the "Amendment") amends and supplements the
Statement on Schedule 13D, dated July 20, 1999, as amended by Amendment No.
1, dated December 2, 1999, Amendment No. 2, dated December 9, 1999,
Amendment No. 3, dated January 13, 2000, and Amendment No. 4, dated January
18, 2000 (the "Original Schedule 13D"), relating to the Common Stock, par
value $.001 per share (the "Shares"), of Scios Inc., a Delaware corporation
(the "Issuer"). Each of Randal J. Kirk, a citizen of the United States
("Mr. Kirk"), and each of the following entities that Mr. Kirk directly
controls: RJK, L.L.C., a Virginia limited liability company ("RJK"),
Kirkfield, L.L.C., a Virginia limited liability company ("Kirkfield"), and
The Kirk Family Investment Plan, a joint account ("KFIP" and, collectively
with Mr. Kirk, RJK and Kirkfield, the "Reporting Persons"), are filing this
Amendment to update the information with respect to the Reporting Persons'
purposes and intentions with respect to the Shares.
ITEM 4. PURPOSE OF TRANSACTION.
Item 4 of the Original Schedule 13D is hereby amended and
supplemented as follows:
On January 20, 2000, Mr. Kirk issued a press release in
response to the Issuer's acceptance of Mr. Kirk's offer to meet with him. A
copy of Mr. Kirk's press release is attached hereto as Exhibit 9 which is
incorporated herein by reference.
On January 24, 2000, Mr. Kirk sent an open letter to the
stockholders of the Issuer, in which Mr. Kirk commented on the Issuer's
past performance and provided an outline of the proposed program that would
be implemented if Mr. Kirk's slate of nominees is elected to the Issuer's
Board of Directors. A copy of the letter is attached hereto as Exhibit 10
which is incorporated herein by reference.
Other than as described above and as previously described in
the Original Schedule 13D, the Reporting Persons do not have any present
plans or proposals which relate to or would result in (although they
reserve the right to develop such plans or proposals) any transaction,
change or event specified in Item 4 of the form of Schedule 13D.
Page 2 of 11 Pages
CUSIP No. 808905103 13D
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Item 7 of the Original Schedule 13D is hereby amended to add the
following exhibits:
Exhibit 9: Press Release, issued on January 20, 2000
Exhibit 10: Open Letter to the Stockholders of the
Issuer, dated January 24, 2000
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CUSIP No. 808905103 13D
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SIGNATURE
After reasonable 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.
Dated: January 24, 2000
/s/ Randal J. Kirk
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Randal J. Kirk
RJK, L.L.C.
By: /s/ Randal J. Kirk
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Randal J. Kirk
Manager
KIRKFIELD, L.L.C.
By: /s/ Randal J. Kirk
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Randal J. Kirk
Manager
THE KIRK FAMILY INVESTMENT PLAN
By: /s/ Randal J. Kirk
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Randal J. Kirk, individually and as
attorney-in-fact for each of
Donna P. Kirk, Julian P. Kirk,
Martin G. Kirk and Kellie Leigh Banks
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CUSIP No. 808905103 13D
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EXHIBIT INDEX
Exhibit
Number Title Page
------ ----- ----
9 Press Release, issued January 20, 2000 6
10 Open Letter to the Stockholders of 8
the Issuer, dated January 24, 2000
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CUSIP No. 808905103 13D
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Exhibit 9
PRESS RELEASE
Media Contact: Caroline Gentile/Robert Siegfried
Kekst and Company
212-521-4800
Investor Contact: Corporate Investor Communications
877-842-2404
RANDAL J. KIRK, MAJOR SCIOS STOCKHOLDER,
PREPARED TO MEET WITH SCIOS BOARD FORTHWITH
-- URGES SCIOS TO BE CONCERNED WITH STOCKHOLDER VALUE RATHER
THAN THE HYPING OF THE 'CREDENTIALS OF ITS BOARD MEMBERS --
RADFORD, VA, JANUARY 20, 2000 -- Randal J. Kirk, a major stockholder of
Scios Inc. (NASDAQ: SCIO), today stated, "In response to my proposal to
build Scios stockholder value, both over the immediate-and-long-term, I am
pleased that the Scios Board has accepted my offer to meet and has
committed, according to its own communications to stockholders, to do so
'as soon a meeting can be arranged'. For my part, I am prepared and
available to meet immediately with the Scios Board so that, working
together, there can be in place, for a change, a bona fide feasible plan to
achieve stockholder value at Scios. There is absolutely no reason, if the
Scios Board is really sincere, that such a meeting cannot be arranged
forthwith.
"I am not surprised at the attempted public relations spin by Scios'
Chairman Donald Rice and its CEO Richard Brewer that the incumbent Scios
Board should be re-elected over the slate of nominees I am proposing
because of its 'impressive credentials', which are debatable. The fact is,
that, under this ostensibly stellar Board, Scios' stock trades in the $5.00
range, has lost approximately 58% of its market value since last May, and
has failed to commercialize a single product, including Natrecor, for which
it failed to obtain FDA approval last Spring.
"I do find it odd, however, that Scios' Board finds it necessary 'to spend
corporate assets' to 'protect' its stockholders against my actions, given
my good-faith offer to meet with them and reach a compromise. All I seek
from my compromise offer is to create stockholder value for all of Scios'
stockholders and to be assured that such a compromise will be carried out
through minority Board representation. It is a board's duty to serve its
stockholders and act in their best interest. Given this Board's treatment
of me, as Scios' largest stockholder, I question whether this Board is
fulfilling its duty.
"I hope that the meeting will be about performance and not about the
supposedly illustrious pasts of the incumbent Board and I shall attend the
meeting with the expectation that the Board is ready to talk seriously
about how to unlock the currently hidden value of Scios. The company
Page 6 of 11 Pages
CUSIP No. 808905103 13D
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has such outstanding potential but the current share price proves that that
potential is not being realized under any currently active management
plan," Mr. Kirk said.
Page 7 of 11 Pages
CUSIP No. 808905103 13D
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Exhibit 10
RANDAL J. KIRK
The Governor Tyler, 1902 Downey Street
Radford, Virginia 24141
January 24, 2000
VOTE TO UNLOCK STOCKHOLDER VALUE
VOTE FOR A NEW SCIOS BOARD OF DIRECTORS
Dear Fellow Stockholders:
Under the direction of the current Board of Directors, SCIOS' SHARES LOST
59.6% IN VALUE DURING 1999 - trading as high as $12.50 per share. On
January 21, 2000, Scios' stock closed at $5.9375 per share.
You will soon be receiving proxy material from Scios' management asking you
to re-elect the incumbent Board not on what they have done for Scios but on
their so-called 'credentials'. WHAT CREDENTIALS ARE MORE TELLING THAN THE
DECLINE IN THE SHARE PRICE AND THEIR FAILURE TO OBTAIN FDA APPROVAL FOR
NATRECOR?
STOCKHOLDERS HAVE EVERY RIGHT TO BE CONCERNED. CONSIDER THE FACTS:
SCIOS' SHARES PLUMMETED 59.6% IN VALUE IN 1999, a year in which the Nasdaq
Biotechnology Index soared approximately 101%.
NEW MANAGEMENT, brought in by the Board, FAILED TO WIN FDA APPROVAL FOR
NATRECOR, the Scios product the new management has identified as having the
best potential for commercialization.
THE BOARD, which, as a group, holds less than 1% of Scios' outstanding
shares, PAID OUT TO MANAGEMENT OVER $400,000 IN SUCCESS BONUSES at year-end
1998 only to have the Company and its stockholders adversely impacted by
the FDA's rejection of management's Natrecor application in 1999.
THE BOARD, once this proxy contest began, SIGNIFICANTLY INCREASED THE
SEVERANCE PAYMENTS OF SCIOS ' PRESIDENT AND CEO TO $1,350,000.
SCIOS SPENT MORE THAN $350,000,000 ON RESEARCH AND DEVELOPMENT since 1987
AND NEVER COMMERCIALIZED A SINGLE PRODUCT.
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CUSIP No. 808905103 13D
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MY GOAL IS TO UNLOCK VALUE FOR ALL STOCKHOLDERS:
UNLIKE MANAGEMENT'S NOMINEES for the Board, I MADE A SUBSTANTIAL INVESTMENT
IN SCIOS and own 2,000,000 common shares, or about 5.2% of the total common
shares outstanding. I bought my shares because I believe that the Company
has excellent potential, but it has become obvious to me that this
potential will not be realized without significant changes in how the
Company is run. MY GOAL IS TO REALIZE ENHANCED VALUE, BOTH NEAR- AND
LONG-TERM FOR SCIOS STOCKHOLDERS.
UNLIKE THE PRESENT BUSINESS APPROACH, which appears to me to be based
primarily on the hope that the Company can get itself in position to try
again to obtain FDA approval for Natrecor, I PROPOSE MAXIMIZING NOW THE
VALUE OF SCIOS' PSYCHIATRIC MARKETING BUSINESS, THE VALUE OF ITS
SUBSTANTIAL EXCESS CASH, THE VALUE OF ITS RESEARCH AND DEVELOPMENT
ACTIVITIES, AND THE VALUE OF ITS INTELLECTUAL PROPERTIES.
SPECIFICALLY, IF THE NOMINEES I AM PROPOSING TO FORM A NEW BOARD ARE
ELECTED, SCIOS WILL PURSUE:
1. SEPARATING THE PSYCHIATRIC MARKETING BUSINESS FROM THE REST OF SCIOS
IN A TAX EFFICIENT MANNER, IF LEGALLY AND OPERATIONALLY FEASIBLE.
* In my view, Scios' principal business of developing and
marketing biotechnology has little, if any, connection to the
Company's psychiatric marketing business as Scios' pipeline
does not include any psychiatric products.
* The demand for contractual pharmaceutical detailing services is
strong and is expected to remain so for several years. This
should mean that the psychiatric marketing business can develop
a significant plan for growth without any further connection to
the rest of Scios.
* In my view, the market currently does not sufficiently value
the positive income streams of the Company's psychiatric
marketing business, since these results are commingled with
Scios' other negative results. As a separate public company, I
believe the Company's psychiatric marketing business can
achieve an independent market valuation distinct from the value
of Scios' other valuable assets.
2. INITIATING A $50 MILLION STOCK REPURCHASE PROGRAM USING THE COMPANY'S
EXCESS CASH THROUGH ACCELERATED OPEN-MARKET PURCHASES OR A DUTCH
AUCTION TENDER OFFER.
* According to the Company's recent statements, Scios currently
has $100 million of cash-on-hand. A significant portion of this
cash should be made available to current stockholders to
improve the near-term value of their investment.
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CUSIP No. 808905103 13D
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* Because I believe strongly in the long-term potential of this
Company, I shall not participate in the stock repurchase
program.
3. ELIMINATING ALL NON-FUNDED RESEARCH AND DEVELOPMENT THAT IS NOT
LEGALLY COMMITTED, EXCEPT FOR NATRECOR AND OTHER PRODUCTS WHICH HAVE
SIGNIFICANT POTENTIAL FOR NEAR TERM COMMERCIAL VIABILITY.
* In my view, Scios is incurring significant research and
development expenditures for projects with no apparent
foreseeable revenue generating potential.
* Projects that are scientifically AND economically attractive
will continue to receive full funding.
I believe there are some other star performers among the
research at Scios. The Alzheimer's program, for example, seems
to be one of the best research programs on Alzheimer's in the
world, and it appears to be fully funded from external sources.
Why not expand this program?
* In my view, the best performing companies are those that bring
traditional business and financial models to biotechnology and
the research and development process. I believe that Scios must
rapidly transform itself into a profitable business dedicated
to increasing stockholder value.
4. AGGRESSIVELY MARKETING SCIOS' INTELLECTUAL PROPERTIES TO POSITION THE
COMPANY TO REALIZE IMMEDIATE AND LONG-TERM REVENUES FROM PROJECTS THAT
CAN BE SOLD OR LICENSED.
* A comprehensive catalog of the vast intellectual property
estate would be developed, and we would strive to get economic
value for stockholders from each and every item, whether
through out-license, partnership, spin-off, or the creation of
new profit centers within the Company.
* The Company's claimed licensing successes of 1999, in my view,
are unimpressive and suggest to me more "arm-waving" than a
genuine effort to maximize stockholder value.
STOCKHOLDERS HAVE EVERY RIGHT TO EXPECT TO MAKE MONEY FROM THEIR SCIOS
INVESTMENT.
With my program in place, I am convinced the Company will still retain more
than enough resources to pursue the development of Natrecor and the other
aspects of the plan.
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CUSIP No. 808905103 13D
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You can determine the future of your investment in Scios. VOTE THE WHITE
PROXY CARD TODAY to elect a new Scios Board of Directors. By VOTING FOR the
candidates I have nominated, you will be putting in place a Board committed
to carrying out a clear plan to create enhanced stockholder value over both
the near and long term.
Please do not send back any gold proxy card you will receive from Scios'
incumbent Board and management, even to vote against their nominees.
If you have any questions or need assistance in voting your shares, please
call our proxy solicitor, Corporate Investor Communications, Inc., toll
free at 877-842-2404.
Thank you for your support.
Respectfully,
/s/ Randal J. Kirk
Randal J. Kirk
Page 11 of 11 Pages
