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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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Check the appropriate box:
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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)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required
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and 0-11
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(4) Date Filed:
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[SCIOS LETTERHEAD]
January 10, 2000
DEAR STOCKHOLDER:
You may shortly receive proxy materials from Randal J. Kirk seeking your
vote to elect his slate of hand picked nominees to the Scios Board at our
upcoming February 28 annual meeting. Please do not return any proxy cards from
Mr. Kirk. In the next few weeks Scios will be mailing its own proxy materials
with a GOLD proxy card that you may use to vote to support your Board's
nominees.
DO NOT LET KIRK DERAIL OUR NEW BUSINESS PLAN
SCIOS IS BACK ON TRACK TO DELIVER VALUE FOR STOCKHOLDERS
Despite the obvious distractions of Kirk's proxy contest, Scios' management
will remain focused on our new business plan announced in March 1999 and
developed under the guidance of the Board and Scios' new Chairman, new Chief
Executive Officer and new Chief Financial Officer, each of whom assumed their
respective role in the fall of 1998.
The top priority of our plan in 2000 is to take all necessary steps to best
ensure the success of the key product in our pipeline, Natrecor (R)
(nesiritide).
Scios, together with McKinsey & Co., a leading international consulting
firm, completed a detailed study last august analyzing the potential market
for Natrecor. Based on this study Scios estimates that Natrecor may achieve
$200 to $300 million in annual sales in the U.S. within three to five
years, once FDA approval is received. Our goal is to obtain FDA approval
and introduce this product to the U.S. Market in 2001.
We have begun a new Phase III clinical trial for Natrecor, designed with
the assistance of a blue ribbon Steering Committee of leading heart
failure physicians, to specifically address the issues raised by the
FDA last April. Patient enrollment and the training of additional
qualified sites are proceeding on schedule.
In the last six months, Scios management studied the best means to
commercialize Natrecor for the short-term management of acute
decompensated Congestive Heart Failure (aCHF). One million people each
year are hospitalized in the U.S. with aCHF. We determined that our optimum
strategy would be to seek a partner to co-promote the product and
discussions with several new potential partners are already underway.
<PAGE>
Scios' other key product is our p38-kinase inhibitor, which we have
targeted for the treatment of rheumatoid arthritis. The Arthritis Foundation
estimates that 2.1 million Americans suffer from rheumatoid arthritis. In 1999
we moved aggressively forward with our p38-kinase inhibitor program and our goal
remains to commence Phase I clinical trials in the second half of this year.
BUILDING VALUE THROUGH FOCUSED R&D
Our business plan also calls for building value through a more focused
Research and Development effort by concentrating on a limited number of
discovery research programs which have the best market potential and by taking
advantage of licensing and royalty opportunities. Recently, we added
capabilities in functional genomics, high-throughput screening and
state-of-the-art medicinal chemistry to our traditional strengths in molecular
biology.
With $100 million of cash-on-hand and our streamlined operations, we
believe we have the financial resources to continue to develop new compounds
with strong potential, both on our own and in conjunction with commercial
partners. Activities in these areas include:
The completion of a licensing agreement for basic Fibroblast Growth Factor
(FGF) with Chiron Corporation, which includes $25 million in license
fees and milestone payments. Scios will also receive royalties from any
form of FGF that Chiron markets. Chiron is currently in a Phase II trial of
FGF for the treatment of coronary artery disease, which represents a
significant revenue opportunity.
Besides Chiron, we are active partners with Eli Lilly and DuPont on
Alzheimer's disease therapies, with Novo Nordisk, which is now
conducting Phase I clinical trials of GLP-1 for diabetes, and Kaken
Pharmaceutical (NDA approval pending in Japan on the use of Fiblast(R) in
wound healing).
MAJOR INSTITUTIONAL SHAREHOLDER DECLARES
SUPPORT FOR SCIOS BOARD AND MANAGEMENT
John Nelson, Investment Director of The State of Wisconsin Investment Board
(SWIB), sent a letter to the Board dated December 29, which states, "SWIB
continues to support Scios Board's and management's efforts to realize the
potential of the company's strong product pipeline. We urge the Board to
continue their focus on the current strategy to maximize long-term shareholder
value. We believe the current Board and management are the right team to
-----
accomplish this."
SWIB intends to vote for the existing Board slate and to reject the Kirk
nominees at our February 28 annual meeting. We are gratified to have received
the support of the 1.6 million shares (4.3% of Scios) owned by one of our
largest, long-term institutional shareholders. We urge you to join with SWIB in
supporting your Board and management by voting the GOLD proxy you will receive
later this month. A copy of the Company's press release and the entire SWIB
letter follows.
<PAGE>
SCIOS DOES NOT NEED KIRK, HIS NOMINEES OR HIS COMPANY
We believe Mr. Kirk's motives in this contest are clear. Kirk started this
proxy contest after he failed last fall to get your Board to agree to purchase
his private company, Lotus Biochemical -- which would have given him and his
co-investors a combined stake in Scios of about 22%.
Now Kirk, along with his group of hand picked nominees, seeks to seize
control of your Board and thereby your Company, without paying you even a penny
for your shares -- much less paying you a fair premium. Don't let Kirk gain
control of Scios' valuable scientific assets and its $100 million in cash.
Remember -- Kirk owns 5.3% of Scios' shares, accumulated just last summer
at an average price of about $4 per share. We think Kirk is merely a
"Johnny-come-lately" opportunist with nothing to offer Scios and its
stockholders.
YOU WILL RECEIVE SCIOS' PROXY MATERIALS SOON
You do not have to take any action with respect to Kirk at this time.
Please wait for Scios' proxy materials and GOLD proxy card that will be mailed
about mid-January.
We will keep you informed as to further developments about our business
plan and our clinical trials. We encourage you to visit the Company's website at
www.sciosinc.com. For information about the Year 2000 Annual Meeting, please
access the page www.sciosinc.com/election.
We appreciate your continuing support of Scios. If you have questions or
comments, please call our investor relations department at (408) 616-8325 or
call MacKenzie Partners, Inc., toll-free at (800) 322-2885.
On Behalf of the Board of Directors
Sincerely,
DONALD B. RICE RICHARD B. BREWER
Chairman of the Board President and Chief Executive Officer
<PAGE>
The statements in this document that are not historical facts are
forward-looking statements that involve risks and uncertainties, and include the
risk of achieving approval and successful launch of Natrecor, and the timeliness
and success of Scios and its partners in developing other therapies, including a
p38-kinase inhibitor, 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.
CERTAIN INFORMATION CONCERNING PARTICIPANTS
Scios Inc. has scheduled its annual meeting of stockholders for February
28, 2000. The following information is provided concerning the participants on
behalf of Scios Inc. in the solicitation of proxies for this meeting.
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
Sales & Marketing); 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 1,654,411 shares of
the Company's Common Stock, including 1,290,476 shares subject to stock options
exercisable within 60 days of December 31, 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."
<PAGE>
[SCIOS LETTERHEAD]
CONTACT:
Wendy Carhart
Scios Inc.
408/616-8325
or
Stanley J. Kay
MacKenzie Partners, Inc.
212/929-5940
FOR IMMEDIATE RELEASE:
MAJOR INSTITUTIONAL SHAREHOLDER DECLARES SUPPORT FOR
SCIOS BOARD AND MANAGEMENT IN PROXY CONTEST
SUNNYVALE, CA, January 6, 2000 - Scios Inc. (NASDAQ: SCIO) announced today that
the State of Wisconsin Investment Board (SWIB), owner of 1.6 million shares of
Scios common stock, has declared its continued support for the existing Scios
Board of Directors and their intention to reject the slate proposed by Randal
J. Kirk at the Company's Year 2000 Annual Meeting scheduled for February 28,
2000.
In a letter to the Scios Board of Directors, John Nelson, SWIB's Investment
Director, stated "SWIB continues to support Scios Board's and management's
efforts to realize the potential of the Company's strong product pipeline. We
urge the Board to continue their focus on the current strategy to maximize
long-term shareholder value. We believe the current Board and management are the
right team to accomplish this."
- -----
Richard B. Brewer, Scios' President and Chief Executive Officer, stated "We are
gratified to receive the strong endorsement of one of the Company's largest
long-term institutional shareholders."
Mr. Brewer continued: "In March of 1999 we announced a focused new business plan
and initiated steps to dramatically cut costs. Much has been accomplished
despite the setback for Scios and all its shareholders, including SWIB,
resulting from the FDA's decision on Natrecor (R) (nesiritide). We believe Scios
is now firmly back on track with the new Natrecor clinical trial, guided by a
distinguished Steering Committee of leading physicians. We believe the steps we
have taken in 1999 will contribute to our goal of maximizing Scios' long-term
value for the benefit of all shareholders."
A copy of the letter sent from SWIB to the Scios Board of Directors is attached.
<PAGE>
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(R)
(risperidone) and SmithKline Beecham's Paxil(R) (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. For information about the Year 2000 Annual Meeting, visit
www.sciosinc.com/election_information.
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.
<PAGE>
CERTAIN INFORMATION CONCERNING PARTICIPANTS
Scios Inc. has scheduled its annual meeting of stockholders for February 28,
2000. The following information is provided concerning the participants on
behalf of Scios Inc. in the solicitation of proxies for this meeting.
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
Sales & Marketing); 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 1,654,411 shares of the
Company's Common Stock, including 1,290,476 shares subject to stock options
exercisable within 60 days of December 31, 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."
<PAGE>
[STATE OF WISCONSIN INVESTMENT BOARD LETTERHEAD]
29 December 1999
Board of Directors
Scios, Inc.
820 West Maude Avenue
Sunnyvale, CA 94086
Re: Intention to vote for existing Board of Directors and reject The Kirk
Stockholders' alternative slate of Directors.
Dear Board of Directors' Members:
The State of Wisconsin Investment Board (SWIB) intends to vote for the existing
Board of Directors slate for the 2000 Scios annual meeting. In addition, SWIB
intends to reject The Kirk Stockholders' alternative slate of Board members
being proposed. SWIB owns 1,590,500 shares or 4.2% of Scios outstanding shares.
SWIB continues to support Scios Board's and management's efforts to realize the
potential of the company's strong product pipeline. We urge the Board to
continue their focus on the current strategy to maximize long-term shareholder
value. We believe the current Board and management are the right team to
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accomplish this.
Sincerely,
/s/
John F. Nelson
Investment Director
