SCHEDULE 14A
(RULE 14A-101)
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF
1934
(AMENDMENT NO. )
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Rule 14a-6(e)(2))
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{X} Definitive Additional Materials
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SCIOS INC.
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(Name of Registrant as specified in its charter)
RANDAL J. KIRK
RJK, L.L.C.
KIRKFIELD, L.L.C.
THE KIRK FAMILY INVESTMENT PLAN
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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.
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.
* 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.
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
