SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Fiscal Year Ended December 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-15681
WESTMED VENTURE PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 13-3443230
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Oppenheimer Tower, World Financial Center
New York, New York 10281
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 667-7000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None None
</TABLE>
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
(Title of class)
<PAGE>
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
At March 27, 1995, 66,919 units of limited partnership interest ("Units") were
held by non-affiliates of the registrant. There is no established public trading
market for such Units.
<PAGE>
PART I
Item 1. Business.
Formation
WestMed Venture Partners, L.P., formerly known as Integrated Medical Venture
Partners, L.P. (the "Partnership" or the "Registrant"), is a Delaware limited
partnership organized in February 1987. In May 1987, the Partnership elected to
operate as a business development company under the Investment Company Act of
1940, as amended (the "1940 Act"). The Partnership's investment objective is to
achieve long-term capital appreciation from its portfolio of venture capital
investments, consisting of companies engaged in the health-care industry. The
Partnership considers this activity to constitute the single industry segment of
venture capital investing.
The general partners of the Partnership consist of three individuals (the
"Independent General Partners") and WestMed Venture Management, L.P., a Delaware
limited partnership (the "Managing General Partner"), the general partner of
which is Medical Venture Holdings, Inc. ("MVH"), a Delaware corporation and an
affiliate of Oppenheimer & Co., Inc. ("Opco").
In 1987, the Partnership publicly offered 100,000 units of limited partnership
interest (the "Units") at $500 per Unit. The Units were registered under the
Securities Act of 1933, pursuant to a Registration Statement on Form N-2 (File
No. 33-11926), which was declared effective on July 2, 1987. The Partnership
held its initial closing on September 1, 1987 and completed the offering on
April 1, 1988, at which time it had accepted subscriptions for a total of 66,929
Units. Gross capital contributions to the Partnership from the public offering
total $33,802,529; $33,464,500 from the limited partners (the "Limited Partners"
and collectively with the Managing General Partner, the "Partners") and $338,029
from the Managing General Partner.
The Venture Capital Investments
From its inception through December 31, 1994, the Partnership had invested $28.1
million in 23 portfolio companies (including venture capital fees and other
acquisition costs totaling $1.9 million). At December 31, 1994, the
Partnership's investment portfolio consisted of investments in 13 companies.
Such investments had an aggregate cost of $11.7 million and a fair value of $12
million. From its inception through December 31, 1994, the Partnership had
liquidated 10 portfolio investments with a cost of $16.45 million. These
liquidated investments returned $6.69 million to the Partnership for a net
realized loss of $9.76 million. During 1994, the Partnership invested $693,000
in two existing portfolio companies. These investments and other events
affecting the Partnership's portfolio investments during 1994 are listed below.
In March and April 1994, the Partnership sold 20,000 shares of common stock of
CliniCom Incorporated ("CliniCom") for $422,000, realizing a loss of $944,000.
Additionally, at December 31, 1994, the Partnership wrote-off $166,000 of cost
on its remaining 4,908 shares of common stock of CliniCom.
In March 1994, Cortex Pharmaceuticals, Inc. ("Cortex") extended the expiration
date of the Partnership's warrant to purchase 32,500 shares of Cortex's common
stock from April 30, 1994 to April 30, 1995.
<PAGE>
On March 30, 1994, the Partnership purchased 58,000 shares of preferred stock
and a warrant to purchase 8,995 common shares of CytoDiagnostics, Inc. ("Cyto")
for $249,400. In connection with this financing, the Partnership converted its
$71,738 promissory note of Cyto and accrued interest of $2,579 into 17,283
preferred shares. The Partnership paid a $15,270 venture capital fee to the
Managing General Partner relating to this investment. In October 1994, Cyto
changed its name to UroCor, Inc.
In May and September 1994, the Partnership purchased 10% promissory notes of
Corvita Corporation ("Corvita") totaling $201,392. Such notes were repaid in
October 1994 with interest. In June 1994, Corvita effected a 3-for-4 reverse
split of its common stock. In October 1994, Corvita completed its initial public
offering of common stock at $5 per share. As a result of the reverse stock split
and the offering, the Partnership exchanged its 432,090 preferred shares and
99,592 preferred stock warrants for 370,765 common shares of common stock and a
warrant to purchase 36,916 shares of common stock. Also in connection with the
offering, the Partnership purchased an additional 40,000 shares of common stock
at $5 per share. The Partnership paid the Managing General Partner venture
capital fees in 1994 totaling $24,324 relating to these transactions.
On July 8, 1994, Xenova Group plc ("Xenova") completed its initial public
offering of American Depository Shares. In connection with the offering, Xenova
effected a 1-for-2 reverse stock split. As a result, the Partnership exchanged
its 608,806 ordinary shares for 304,403 ordinary shares of Xenova.
During the year, the Partnership received cash distributions totaling $64,000
from Nimbus Medical, L.P.
At December 31, 1994, the Partnership wrote-off its $323,031 investment in Vaso
Products Inc. and wrote-off $801,000 and $576,000 of the cost of its investments
in Ultramed, Inc. and Bellara Medical Products Ltd., respectively.
Additionally on December 31, 1994, the Partnership's warrant to purchase 18,750
common shares of Exocell, Inc. expired unexercised.
Competition
The Partnership encounters competition from other entities having similar
investment objectives. Primary competition for venture capital investments has
been from venture capital partnerships, venture capital affiliates of large
industrial and financial companies, small business investment companies and
wealthy individuals. Competition has also been from foreign investors and from
large industrial and financial companies investing directly rather than through
venture capital affiliates. The Partnership has frequently been a co-investor
with other professional venture capital investors and these relationships have
expanded the Partnership's access to investment opportunities.
Employees
The Partnership has no employees. The Managing General Partner, under the
supervision of the Independent General Partners, manages and controls the
Partnership's venture capital investments. The Managing General Partner
performs, or arranges for others to perform, the management and administrative
services necessary for the operation of the Partnership and is responsible for
managing the Partnership's short-term investments.
Item 2. Properties.
The Partnership does not own or lease physical properties.
Item 3. Legal Proceedings.
The Partnership is not a party to any material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of security holders during the fourth quarter
of the fiscal year covered by this report.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
There is no established public trading market for the Units and it is not
anticipated that any public market for the Units will develop. The number of
individual holders of Units at December 31, 1994 was approximately 6,500.
The Partnership did not make any cash distributions to Partners during the years
ended December 31, 1994 and 1993. On June 30, 1992, the Partnership made a cash
distribution to Partners totaling $5 million; $4.9 million, or approximately $74
per Unit, to the Limited Partners and $50,000 to the Managing General Partner.
Cumulative cash distributions to Partners from inception to December 31, 1994,
total $5.7 million; $5.65 million to the Limited Partners, or approximately $85
per Unit, and $57,000 to the Managing General Partner.
Pursuant to the Partnership's agreement of limited partnership (the "Partnership
Agreement"), the Partnership's net income and net realized gains from all
sources are allocated to all Partners, in proportion to their capital
contributions, until all Partners have been allocated an amount equal to 6% per
annum, simple interest, on their total Adjusted Invested Capital; i.e., original
capital contributions reduced by previous distributions (the "Priority Return").
Thereafter, net income and net realized gains from venture capital investments
in excess of the amount used to cover the Priority Return are allocated 20% to
the Managing General Partner and 80% to all Partners in proportion to their
capital contributions. Any net income from non-venture capital investments in
excess of the amount used to cover the Priority Return is allocated to all
Partners in proportion to their capital contributions. Realized losses are
allocated to all Partners in proportion to their capital contributions. However,
if realized gains had been previously allocated in the 80-20 ratio, then losses
are allocated in the reverse order in which profits were allocated.
<PAGE>
Item 6. Selected Financial Data.
($ In Thousands, Except For Per Unit Information)
<TABLE>
Years Ended December 31,
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net assets $ 14,533 $ 18,394 $ 19,402 $ 25,961 $ 25,278
Net investment income (loss) (421) (540) (479) (253) 153
Net realized gain (loss) from investments (2,823) (4,043) 2,313 (4,377) (917)
Net unrealized appreciation (depreciation)
of investments 345 964 (2,612) 793 (4,521)
Cost of portfolio investments purchased 693 177 1,791 948 3,391
Cumulative cost of portfolio investments 28,115 27,422 27,245 25,454 24,506
Cash distributions to Partners - - 4,989 - 317
Cumulative cash distributions to Partners 5,711 5,711 5,711 723 723
PER UNIT OF LIMITED PARTNERSHIP INTEREST:*
Net asset value, including net unrealized
appreciation (depreciation) of investments $ 215 $ 272 $ 287 $ 384 $ 374
Net investment income (loss) (6) (8) (7) (4) 2
Net realized gain (loss) on investments (42) (60) 34 (65) (14)
Net unrealized appreciation (depreciation)
of investments 5 14 (39) (12) (67)
Cash distributions - - 74 - 5
Cumulative cash distributions 85 85 85 11 11
</TABLE>
* Limited Partners were admitted to the Partnership in eight separate closings
from September 1, 1987 to April 1, 1988. Per Unit amounts shown above are
based on average allocations to all Limited Partners and do not reflect
specific Limited Partner allocations, which are determined by the original
closing date associated with the Units held by each Limited Partner.
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Liquidity and Capital Resources
During the year ended December 31, 1994, the Partnership invested $693,000
(including venture capital fees totaling $40,000) in two existing portfolio
companies. At December 31, 1994, the Partnership had invested an aggregate of
$28.1 million in 23 portfolio companies (including acquisition costs and venture
capital fees totaling $1.9 million). The Partnership has invested approximately
94% of its original $30 million of net proceeds received from the offering of
Units.
At December 31, 1994, the Partnership held $2.6 million in cash and short-term
investments as follows: $2 million in short-term securities with maturities of
less than one year and $619,000 in an interest-bearing cash account. For the
years ended December 31, 1994, 1993 and 1992, the Partnership earned interest
from such investments totaling $105,000, $96,000 and $247,000, respectively.
Interest earned from short-term investments in future periods is subject to
fluctuations in short-term interest rates and changes in funds available for
investment. It is anticipated that funds needed to cover the Partnership's
future follow-on investments and operating expenses will be obtained from
existing cash reserves, interest earned from the short-term investment portfolio
and proceeds from the sale of portfolio investments.
Results of Operations
For the years ended December 31, 1994 and 1993, the Partnership had a net
realized loss from operations of $3.2 million and $4.6 million, respectively.
For the year ended December 31, 1992, the Partnership had a net realized gain
from operations of $1.8 million. Net realized gain or loss from operations is
comprised of (i) net realized gains or losses from the sale or write-off of
portfolio investments and (ii) net investment income or loss (interest and
dividends less operating expenses).
Realized Gains and Losses from Portfolio Investments - For the year ended
December 31, 1994, the Partnership had a net realized loss of $2.8 million from
portfolio investments. During March and April 1994, the Partnership sold 20,000
common shares of CliniCom in the public market for $422,000, realizing a loss of
$944,000. Additionally at December 31, 1994, the Partnership wrote-off $166,000
of cost relating to its remaining 4,908 shares of common stock of CliniCom due
to the continued depressed public market price of such shares. In December 1994,
the Partnership wrote-off its $323,000 investment in Vaso Products Inc. and
wrote-off $576,000 of its $826,000 investment in Bellara Medical Products Inc.
and $801,000 of its $1.3 million investment in Ultramed, Inc. due to continued
business and financial difficulties at these companies.
For the year ended December 31, 1993, the Partnership had a $4 million realized
loss from portfolio investments. In March 1993, the Partnership sold 40,000
common shares of Somatogen, Inc. ("Somatogen") in the public market for
$440,000, realizing a gain of $319,000. On December 31, 1993, the Partnership
wrote-off its investments in LMA, Ltd., Oncodiagnostics, Inc. and Advanced
Medical Technologies ("AMT") totaling $4.3 million due to financial difficulties
at these companies.
For the year ended December 31, 1992, the Partnership had a $2.3 million net
realized gain from portfolio investments. In January and February 1992, the
Partnership sold 96,500 common shares of Somatogen for $3.3 million, realizing a
gain of $3 million. Also during the year, the Partnership sold its equity
interest in Omnicare Group Limited for a $325,000 cash payment and a note
receivable from Abbey Health-care Services, Ltd. valued at $89,000. Such
transaction resulted in a realized loss of $718,000.
Investment Income and Expenses - Net investment loss for the years ended
December 31, 1994, 1993 and 1992 was $421,000, $540,000 and $479,000,
respectively. The decrease in net investment loss for the 1994 period compared
to the 1993 period is attributable to a decrease in operating expenses for the
1994 period, primarily professional fees and general and administrative
expenses. Operating expenses declined $118,000 from $625,000 in 1993 to $507,000
in 1994. Professional fees declined $71,000 and general and administrative
expenses declined $29,000 for the 1994 period compared to the 1993 period due to
certain cost control measures implemented by the Managing General Partner during
the fourth quarter of 1993.
The increase in net investment loss for the 1993 period compared to the 1992
period primarily is attributable to a $151,000 decrease in interest earned from
short-term investments and a $27,000 decrease in interest and dividend income
from portfolio investments. These decreases were partially offset by a $98,000
decrease in professional fees and a $19,000 decrease in other operating expenses
for the 1993 period. Interest earned from short-term investments for the years
ended December 31, 1993 and 1992 was $96,000 and $247,000, respectively. This
decrease primarily was due to a reduction in interest rates during the 1993
period and a reduction in funds available for investment in such securities
during the 1993 period. In March 1992, the Partnership sold shares of Somatogen
for $3.3 million. These funds were invested in short-term securities until a
distribution was made to Partners on June 30, 1992. Interest and dividend income
decreased for the 1994 period compared to the 1993 period due to the write-off
of $29,000 of accrued interest receivable from Ultramed, Inc. during the 1993
period.
The management fee paid to the Managing General Partner pursuant to a management
agreement between the Partnership and the Managing General Partner (the
"Management Agreement") for the years ended December 31, 1994, 1993 and 1992 was
$361,000, $379,000 and $396,000, respectively. The decrease in the management
fee for each period is a result of a decline in the Partnership's net assets for
each consecutive year. To the extent possible, the management fee and other
operating expenses are paid with funds provided from operations. Funds provided
from operations are obtained from interest received from short-term investments,
interest and dividend income from portfolio investments and proceeds received
from the sale of portfolio investments.
Unrealized Gains and Losses and Changes in Unrealized Appreciation or
Depreciation of Portfolio Investments - For the year ended December 31, 1994,
the Partnership had a $3.5 million net unrealized loss from its portfolio
investments, primarily resulting from the net downward revaluation of its
publicly-held portfolio investments. Additionally during the year, $2.9 million
was transferred from unrealized loss to realized loss relating to the write-off
of certain portfolio investments, as discussed above. The $3.5 million
unrealized loss less the $2.9 million transfer to realized loss resulted in a
$618,000 decrease to net unrealized appreciation of investments for 1994.
For the year ended December 31, 1993, the Partnership had a $276,000 net
unrealized loss from its portfolio investments, primarily related to the net
downward revaluation of its publicly-held portfolio investments. Additionally
during the year, the Partnership transferred a net $3.9 million from unrealized
loss to realized loss related to the sale of Somatogen common shares and the
write-off of LMA, Ltd., Oncodiagnostics, Inc. and AMT, as discussed above. The
$3.9 million transfer to realized loss less the $276,000 net unrealized loss
resulted in a $3.6 million increase to net unrealized appreciation of
investments for 1993.
For the year ended December 31, 1992, the Partnership had a net unrealized loss
from its portfolio investments of $1.5 million, primarily related to the
downward revaluation of its investment in Somatogen. Additionally during the
year, the Partnership transferred a net $1.9 million from unrealized gain to
realized gain related to the Omnicare Group Limited and Somatogen sales, as
discussed above. The $1.5 million unrealized loss and the $1.9 million net
transfer to realized gain resulted in a $3.4 million decrease to net unrealized
appreciation of investments for 1992.
Net Assets - Changes to net assets resulting from operations is comprised of (i)
net realized gains and losses from operations and (ii) changes to net unrealized
appreciation or depreciation of portfolio investments. For the years ended
December 31, 1994, 1993 and 1992, the Partnership had a net decrease in net
assets resulting from operations of $3.9 million, $1 million and $1.6 million,
respectively.
At December 31, 1994, the Partnership's net assets were $14.5 million, down $3.9
million from $18.4 million at December 31, 1993. This decrease resulted from the
$3.2 million net realized loss from operations and the $618,000 decrease in net
unrealized appreciation of investments for 1994.
At December 31, 1993, the Partnership's net assets were $18.4 million, down $1
million from $19.4 million at December 31, 1992. This decrease resulted from the
$4.6 million net realized loss from operations offset by the $3.6 million
increase in net unrealized appreciation of investments for 1993.
At December 31, 1992, the Partnership's net assets were $19.4 million, down $6.6
million from $26 million at December 31, 1991. This decrease resulted from the
$3.4 million decrease in net unrealized appreciation of investments and the $5
million cash distribution paid to Partners in June 1992 offset by the $1.8
million net realized gain from operations for 1992.
At December 31, 1994, 1993 and 1992, the net asset value per $500 Unit,
including an allocation of net unrealized appreciation or depreciation of
investments, was $215, $272 and $287, respectively. Such per Unit amounts are
based on average allocations to all Limited Partners and do not reflect specific
Limited Partner allocations, which are determined by the original closing date
associated with the Units held by each Limited Partner.
<PAGE>
Item 8. Financial Statements and Supplementary Data.
WESTMED VENTURE PARTNERS, L.P.
INDEX
Independent Auditors' Report
Balance Sheets as of December 31, 1994 and 1993
Schedule of Portfolio Investments as of December 31, 1994 Schedule of Portfolio
Investments as of December 31, 1993
Statements of Operations for the years ended December 31, 1994, 1993 and 1992
Statements of Cash Flows for the years ended December 31, 1994, 1993 and 1992
Statements of Changes in Partners' Capital for the years ended December 31,
1992, 1993 and 1994
Notes to Financial Statements
NOTE - All other schedules are omitted because of the absence of conditions
under which they are required or because the required information is included in
the financial statements or the notes thereto.
<PAGE>
INDEPENDENT AUDITORS' REPORT
WestMed Venture Partners, L.P.:
We have audited the accompanying balance sheets of WestMed Venture Partners,
L.P. (the "Partnership"), including the schedules of portfolio investments, as
of December 31, 1994 and 1993, and the related statements of operations, cash
flows, and changes in partners' capital for each of the three years in the
period ended December 31, 1994. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned at December 31, 1994 and 1993 by correspondence
with the custodian; where confirmation was not possible, we performed other
audit procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of WestMed Venture Partners, L.P. at December
31, 1994 and 1993, and the results of its operations, its cash flows and the
changes in its partners' capital for each of the three years in the period ended
December 31, 1994 in conformity with generally accepted accounting principles.
As explained in Note 2, the financial statements include securities valued at
$11,953,915 and $14,940,130 at December 31, 1994 and 1993, respectively,
representing 82% and 81% of net assets, respectively, whose values have been
estimated by the Managing General Partner in the absence of readily
ascertainable market values. We have reviewed the procedures used by the
Managing General Partner in arriving at its estimate of value of such securities
and have inspected underlying documentation, and, in the circumstances, we
believe the procedures are reasonable and the documentation appropriate.
However, because of the inherent uncertainty of valuation, those estimated
values may differ significantly from the values that would have been used had a
ready market for the securities existed, and the differences could be material.
Deloitte & Touche LLP
New York, New York
February 22, 1995
<PAGE>
WESTMED VENTURE PARTNERS, L.P.
BALANCE SHEETS
December 31,
<TABLE>
1994 1993
---- ----
<S> <C> <C>
ASSETS
Portfolio investments, at fair value
(cost $11,667,193 at December 31, 1994 and
$14,482,235 at December 31, 1993) - Notes 2 and 4 $ 12,012,688 $ 15,445,762
Cash and cash equivalents - Note 2 2,609,028 3,063,851
Accrued interest receivable and other assets 49,016 42,363
------ ------
TOTAL ASSETS $ 14,670,732 $ 18,551,976
= ========== = ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued expenses $ 38,059 $ 45,833
Due to Managing General Partner - Note 4 85,148 96,781
Due to Independent General Partners - Note 4 15,000 15,000
------ ------
Total liabilities 138,207 157,614
------- -------
Partners' Capital:
Managing General Partner 145,329 183,947
Limited Partners (66,929 Units) 14,387,196 18,210,415
---------- ----------
Total Partners' capital 14,532,525 18,394,362
---------- ----------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 14,670,732 $ 18,551,976
= ========== = ==========
</TABLE>
See notes to financial statements.
<PAGE>
WESTMED VENTURE PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS
December 31, 1994
Active Portfolio Investments:
<TABLE>
Initial Investment
Company / Position Date Cost Fair Value
Aprogenex, Inc.*(A)
<C> <C> <C> <C>
527,739 shares of Common Stock Jan. 1989 $ 1,682,187 $ 2,849,791
Warrant to purchase 15,446 shares of Common Stock
at $7.88 per share, expiring 10/15/98 0 0
------------------------------------- - -
Bellara Medical Products Ltd.(A)(B)
442,430 shares of Common Stock Sept. 1987 250,000 40,704
------------------------------ ---------- ------- ------
CliniCom Incorporated(A)(C)
4,908 shares of Common Stock Dec. 1987 165,934 58,773
---------------------------- --------- ------- ------
Cortex Pharmaceuticals, Inc.(A)(D)
704,167 shares of Common Stock May 1988 504,038 347,753
75,000 shares of Preferred Stock 53,030 18,171
Warrants to purchase 32,500 shares of Common Stock
at $1.84 per share, expiring on 4/30/95 0 0
- -
557,068 365,924
------- -------
Corvita Corporation*(A)(E)
410,765 shares of Common Stock Aug. 1988 2,394,797 1,340,121
Warrant to purchase 36,916 shares of Common Stock
at $7 per share, expiring 11/1/99 0 0
--------------------------------- - -
Exocell, Inc.*(F)
598,083 shares of Preferred Stock Feb. 1988 714,266 714,266
--------------------------------- --------- ------- -------
MNI Group Inc.(A)
211,973 shares of Common Stock Sept. 1987 451,457 37,477
------------------------------ ---------- ------- ------
Nimbus Medical, Inc.
200,709 shares of Common Stock Apr. 1988 380,431 192,374
Nimbus Medical, L.P. (G)
38,340 units of limited partnership interest 88,868 76,316
------ ------
469,299 268,690
------- -------
Oclassen Pharmaceuticals, Inc.
292,955 shares of Preferred Stock Jan. 1989 1,351,405 2,705,842
--------------------------------- --------- --------- ---------
Somatogen, Inc.(A)
125,404 shares of Common Stock Dec. 1988 657,194 740,824
------------------------------ --------- ------- -------
</TABLE>
<PAGE>
WESTMED VENTURE PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS - continued
December 31, 1994
Active Portfolio Investments:
<TABLE>
Initial Investment
Company / Position Date Cost Fair Value
Ultramed, Inc.(H)
<C> <C> <C> <C>
954,545 shares of Preferred Stock Oct. 1987 $ 333,410 $ 0
18% Convertible Promissory Notes 159,090 150,000
12% Promissory Note 7,500 7,500
Warrant to purchase 7,500 shares of Common Stock
at $.05 per share, expiring 2/1/97 0 0
Warrants to purchase 46,535 shares of Common Stock
at $.55 per share, expiring 7/31/95 0 0
- -
500,000 157,500
------- -------
UroCor, Inc.*(I)
323,930 shares of Preferred Stock May 1991 858,623 1,408,623
Warrant to purchase 8,000 shares of Common Stock
at $1.25 per share, expiring 2/13/01 0 0
Warrant to purchase 8,995 shares of Common Stock
at $4.30 per share, expiring 10/18/98 0 0
------------------------------------- - -
Xenova Group plc*(A)(J)
304,403 Ordinary shares Aug. 1988 1,614,963 1,324,153
----------------------- --------- --------- ---------
Totals From Active Portfolio Investments $ 11,667,193 $ 12,012,688
= ========== = ==========
SUPPLEMENTAL INFORMATION: LIQUIDATED PORTFOLIO INVESTMENTS(K)
Cost Realized Loss Return
Totals From Liquidated Portfolio Investments $ 16,447,936 $ (9,759,442) $ 6,688,494
= ========== = =========== = =========
Combined Combined
Unrealized and Fair Value
Cost Realized Loss and Return
Totals From Active and Liquidated Portfolio Investments $ 28,115,129 $ (9,413,947) $ 18,701,182
= ========== = =========== = ==========
</TABLE>
<PAGE>
WESTMED VENTURE PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS - continued
December 31, 1994
(A) Public company
(B) At December 31, 1994, the Partnership wrote-off its $323,000 investment in
Vaso Products Inc. Additionally, the Partnership wrote-off $576,000 of its
$826,000 investment in Bellara Medical Products Ltd.
(C) In March and April 1994, the Partnership sold 20,000 shares of common stock
of CliniCom for $422,000, realizing a loss of $944,000. Additionally, at
December 31, 1994, the Partnership wrote-off $166,000 of cost on its
remaining 4,908 shares of common stock of CliniCom.
(D) In March 1994, Cortex extended the expiration date of the Partnership's
warrant to purchase 32,500 shares of Cortex's common stock from April 30,
1994 to April 30, 1995.
(E) In May and September 1994, the Partnership purchased 10% promissory notes
of Corvita totaling $201,392. Such notes were repaid in October 1994 with
interest. In June 1994, Corvita effected a 3-for-4 reverse split of its
common stock. In October 1994, Corvita completed its initial public
offering of common stock at $5 per share. As a result of the reverse stock
split and the offering, the Partnership exchanged its 432,090 preferred
shares and 99,592 preferred stock warrants for 370,765 shares of common
stock and a warrant to purchase 36,916 shares of common stock. Also in
connection with the offering, the Partnership purchased an additional
40,000 shares of common stock at $5 per share. The Partnership paid the
Managing General Partner venture capital fees in 1994 totaling $24,324
relating to these transactions.
(F) On December 31, 1994, the Partnership's warrant to purchase 18,750 shares
of Exocell, Inc. common stock expired unexercised.
(G) During the year, the Partnership received cash distributions totaling
$64,403 from Nimbus Medical, L.P. which included $2,351 of interest income.
(H) At December 31, 1994, the Partnership wrote-off $801,000 of its $1.3
million investment in Ultramed, Inc.
(I) On March 30, 1994, the Partnership purchased 58,000 shares of preferred
stock and a warrant to purchase 8,995 common shares of Cyto for $249,400.
In connection with this financing, the Partnership converted its $71,738
promissory note of Cyto and accrued interest of $2,579 into 17,283
preferred shares. The Partnership paid a $15,270 venture capital fee to the
Managing General Partner relating to this investment. In October 1994, Cyto
changed its name to UroCor, Inc.
(J) On July 8, 1994, Xenova completed its initial public offering of American
Depository Shares. In connection with the offering, Xenova effected a
1-for-2 reverse stock split. As a result, the Partnership exchanged its
608,806 ordinary shares for 304,403 ordinary shares of Xenova.
(K) Amounts provided for "Supplemental Information: Liquidated Portfolio
Investments" are cumulative from inception through December 31, 1994.
* Company may be deemed an affiliated person of the Partnership as such term is
defined in the Investment Company Act of 1940.
<PAGE>
WESTMED VENTURE PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS
December 31, 1993
Active Portfolio Investments:
<TABLE>
Initial Investment
Company / Position Date Cost Fair Value
Aprogenex, Inc.*(A)
<C> <C> <C> <C>
527,739 shares of Common Stock Jan. 1989 $ 1,682,187 $ 2,186,818
Warrant to purchase 15,446 shares of Common Stock
at $7.88 per share, expiring 10/15/98 0 0
------------------------------------- - -
Bellara Medical Products Ltd.(A)
442,430 shares of Common Stock Sept. 1987 825,862 283,155
Vaso Products Inc.
110 shares of Common Stock Sept. 1987 323,031 0
-------------------------- ---------- ------- -
CliniCom Incorporated(A)
24,908 shares of Common Stock Dec. 1987 1,697,975 505,632
----------------------------- --------- --------- -------
Cortex Pharmaceuticals, Inc.(A)
704,167 shares of Common Stock May 1988 504,038 1,047,448
75,000 shares of Preferred Stock 53,030 54,733
Warrants to purchase 32,500 shares of Common Stock
at $1.84 per share, expiring on 4/30/94 0 0
- -
557,068 1,102,181
------- ---------
Corvita Corporation*
432,090 shares of Preferred Stock Aug. 1988 2,182,677 2,257,677
Warrant to purchase 40,553 shares of Preferred Stock
at $5 per share, expiring 5/31/97 0 0
Warrant to purchase 48,969 shares of Preferred Stock
at $5.50 per share, expiring 11/5/99 0 0
------------------------------------ - -
CytoDiagnostics, Inc.*
248,647 shares of Preferred Stock May 1991 515,289 515,289
8% Convertible Promissory Note due 10/18/94 76,085 76,085
Warrant to purchase 8,000 shares of Common Stock
at $1.25 per share, expiring 2/13/01 0 0
- -
591,374 591,374
------- -------
Exocell, Inc.*
598,083 shares of Preferred Stock Feb. 1988 714,266 714,266
Warrant to purchase 18,750 shares of Preferred Stock
at $1.40 per share, expiring 12/31/94 0 0
------------------------------------- - -
MNI Group Inc.(A)
211,973 shares of Common Stock Sept. 1987 451,457 99,998
------------------------------ ---------- ------- ------
Nimbus Medical, Inc.
200,709 shares of Common Stock Apr. 1988 380,431 192,374
Nimbus Medical, L.P.
38,340 units of limited partnership interest 150,920 76,316
------- ------
531,351 268,690
------- -------
</TABLE>
<PAGE>
WESTMED VENTURE PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS - continued
December 31, 1993
Active Portfolio Investments:
<TABLE>
Initial Investment
Company / Position Date Cost Fair Value
Oclassen Pharmaceuticals, Inc.
<C> <C> <C> <C>
292,955 shares of Preferred Stock Jan. 1989 $ 1,351,405 $ 2,705,842
--------------------------------- --------- - --------- - ---------
Somatogen, Inc.(A)
125,404 shares of Common Stock Dec. 1988 657,194 1,031,291
------------------------------ --------- ------- ---------
Ultramed, Inc.
954,545 shares of Preferred Stock Oct. 1987 1,134,835 570,655
18% Convertible Promissory Note 159,090 79,999
12% Promissory Note 7,500 3,771
Warrant to purchase 7,500 shares of Common
Stock at $.05 per share, expiring 2/1/97 0 0
Warrants to purchase 46,535 shares of Common
Stock at $.55 per share, expiring 7/31/95 0 0
- -
1,301,425 654,425
--------- -------
Xenova Group plc*
598,806 Ordinary shares Aug. 1988 1,561,933 2,994,407
10,000 `A' Ordinary shares 53,030 50,006
------ ------
1,614,963 3,044,413
--------- ---------
Totals From Active Portfolio Investments $ 14,482,235 $ 15,445,762
= ========== = ==========
SUPPLEMENTAL INFORMATION: LIQUIDATED PORTFOLIO INVESTMENTS(B)
Cost Realized Loss Return
Totals From Liquidated Portfolio Investments $ 12,937,578 $ (6,936,754) $ 6,000,824
= ========== = =========== = =========
Combined Combined
Unrealized and Fair Value
Cost Realized Loss and Return
Totals From Active and Liquidated Portfolio Investments $ 27,419,813 $ (5,973,227) $ 21,446,586
= ========== = =========== = ==========
</TABLE>
(A) Public company
(B) Amounts provided for "Supplemental Information: Liquidated Portfolio
Investments" are cumulative from inception through December 31, 1993.
* Company may be deemed an affiliated person of the Partnership as such term is
defined in the Investment Company Act of 1940. See notes to financial
statements.
<PAGE>
WESTMED VENTURE PARTNERS, L.P.
STATEMENTS OF OPERATIONS
For the Years Ended December 31,
<TABLE>
1994 1993 1992
---- ---- ----
INVESTMENT INCOME AND EXPENSES
Income:
<S> <C> <C> <C>
Interest from short-term investments $ 104,856 $ 95,611 $ 246,954
Interest and dividend income from portfolio
investments - net (19,032) (10,508) 16,542
------- ------- ------
Total 85,824 85,103 263,496
------ ------ -------
Expenses:
Management fee - Note 4 361,029 379,383 395,952
Professional fees 47,170 118,184 216,282
General and administrative expenses 83,742 112,546 115,051
Independent General Partners' fees - Note 4 15,000 15,000 15,000
------ ------ ------
Total 506,941 625,113 742,285
------- ------- -------
NET INVESTMENT LOSS (421,117) (540,010) (478,789)
Net realized gain (loss) from investments (2,822,688) (4,043,045) 2,312,779
---------- ---------- ---------
NET REALIZED GAIN (LOSS) FROM OPERATIONS (3,243,805) (4,583,055) 1,833,990
Net change in unrealized appreciation or depreciation
of investments (618,032) 3,575,791 (3,404,815)
-------- --------- ----------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS (allocable to Partners) - Note 3 $ (3,861,837) $ (1,007,264) $ (1,570,825)
= ========== = ========== = ==========
</TABLE>
See notes to financial statements.
<PAGE>
WESTMED VENTURE PARTNERS, L.P.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
<TABLE>
1994 1993 1992
---- ---- ----
CASH FLOWS USED FOR OPERATING ACTIVITIES
<S> <C> <C> <C>
Net investment loss $ (421,117) $ (540,010) $ (478,789)
Adjustments to reconcile net investment loss to cash used for operating
activities:
Decrease in accrued interest receivable 37,364 33,383 43,982
Decrease in payables (19,407) (67,207) (16,273)
(Increase) decrease in other assets (44,017) 1,562 85,149
------- ----- ------
Cash used for operating activities (447,177) (572,272) (365,931)
-------- -------- --------
CASH FLOWS PROVIDED FROM (USED FOR)
INVESTING ACTIVITIES
Purchase of portfolio investments (692,965) (177,244) (1,790,798)
Proceeds from the sale of portfolio investments 421,875 443,816 3,646,857
Cash distribution from investment in Limited Partnership 62,052 - -
Repayment of notes due from portfolio companies 201,392 165,632 58,974
------- ------- ------
Cash provided from (used for) investing activities (7,646) 432,204 1,915,033
------ ------- ---------
CASH USED FOR FINANCING ACTIVITIES
Cash distribution to Partners - - (4,988,572)
- - ----------
Decrease in cash and cash equivalents (454,823) (140,068) (3,439,470)
Cash and cash equivalents at beginning of period 3,063,851 3,203,919 6,643,389
--------- --------- ---------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 2,609,028 $ 3,063,851 $ 3,203,919
= ========= = ========= = =========
</TABLE>
See notes to financial statements.
<PAGE>
WESTMED VENTURE PARTNERS, L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the Years Ended December 31, 1992, 1993 and 1994
<TABLE>
Managing
General Limited
Partner Partners Total
<S> <C> <C> <C>
Balance at December 31, 1991 $ 259,614 $ 25,701,409 $ 25,961,023
Cash distribution paid June 30, 1992
- Note 5 (49,886) (4,938,686) (4,988,572)
Net decrease in net assets resulting
from operations - Note 3 (15,708) (1,555,117) (1,570,825)
------- ---------- ----------
Balance at December 31, 1992 194,020 19,207,606(A) 19,401,626
Net decrease in net assets resulting from
operations - Note 3 (10,073) (997,191) (1,007,264)
------- -------- ----------
Balance at December 31, 1993 183,947 18,210,415(A) 18,394,362
Net decrease in net assets resulting from
operations - Note 3 (38,618) (3,823,219) (3,861,837)
------- ---------- ----------
Balance at December 31, 1994 $ 145,329 $ 14,387,196(A) $ 14,532,525
= ======= = ========== = ==========
</TABLE>
(A) The net asset value per unit of limited partnership interest, including an
allocation of net unrealized appreciation or depreciation of investments,
was $287, $272 and $215 at December 31, 1992, 1993 and 1994, respectively.
Such per unit amounts are based on average allocations to all limited
partners and do not reflect specific limited partner allocations, which are
determined by the original closing date associated with the units of
limited partnership interest held by each limited partner.
See notes to financial statements.
<PAGE>
WESTMED VENTURE PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
1. Organization and Purpose
WestMed Venture Partners, L.P. (the "Partnership") was formed under Delaware law
on February 5, 1987. The Partnership operates as a business development company
under the Investment Company Act of 1940, as amended. The Partnership is a
closed-end investment fund and accordingly its units of limited partnership
interest ("Units") are not redeemable. A total of 66,929 Units were sold to
limited partners ("Limited Partners" and together with the Managing General
Partner (as hereinafter defined), the "Partners") at $500 per Unit.
The general partners of the Partnership include three individuals (the
"Independent General Partners") and the managing general partner, WestMed
Venture Management, L.P., a Delaware limited partnership (the "Managing General
Partner" and collectively with the Independent General Partners, the "General
Partners"). The general partner of the Managing General Partner is Medical
Venture Holdings, Inc., a Delaware corporation affiliated with Oppenheimer &
Co., Inc. ("Opco"). The limited partners of the Managing General Partner are
Oppenheimer Holdings, Inc., MVP Holdings, Inc. and BSW, Inc., a Delaware
corporation owned by John A. Balkoski, Philippe L. Sommer and Howard S.
Wachtler. Messrs. Sommer and Wachtler are principally responsible for managing
the investments of the Partnership.
Opco, a member firm of the New York Stock Exchange, the National Association of
Securities Dealers, Inc., and all principal United States securities exchanges,
is a diversified investment banking and securities firm, a registered investment
advisor and Futures Commission Merchant providing a broad range of services to
individual, corporate, and institutional clients. Opco operates in the capacity
of broker and dealer for its customers, as well as trader for its own account.
The services provided by Opco and its subsidiaries, and the activities in which
it is engaged, include securities brokerage, securities research, customer
financing, securities trading, corporate finance, mergers and acquisitions,
underwriting and investment advisory services.
The Partnership's objective is to achieve long-term capital appreciation from
its portfolio of venture capital investments, consisting of companies engaged in
the health care industry. The Partnership is scheduled to terminate on December
31, 1997. However, the General Partners can extend the term for up to two
additional two-year periods, if they determine that such extensions are in the
best interest of the Partnership.
2. Summary of Significant Accounting Policies
Valuation of Investments - Portfolio investments are carried at fair value as
determined quarterly by the Managing General Partner under the supervision of
the Independent General Partners. The fair value of publicly-held portfolio
securities is adjusted to the average closing public market price for the last
five trading days of each quarter discounted for sales restrictions. Factors
considered in the determination of an
<PAGE>
WESTMED VENTURE PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
appropriate discount include underwriter lock-up or Rule 144 trading
restrictions, insider status where the Partnership either has a representative
serving on the board of directors of the portfolio company under consideration
or is greater than a 5% shareholder thereof, and other liquidity factors such as
the size of the Partnership's position in a given company compared to the
trading history of the public security. Privately-held portfolio securities are
carried at cost until significant developments affecting the portfolio company
provide a basis for change in valuation. The fair value of private securities is
adjusted (i) to reflect meaningful third-party transactions in the private
market and (ii) to reflect significant progress or slippage in the development
of the company's business such that cost no longer reflects fair value. As a
venture capital investment fund, the Partnership's portfolio investments involve
a high degree of business and financial risk that can result in substantial
losses. The Managing General Partner considers such risks in determining the
fair value of the Partnership's portfolio investments.
Investment Transactions - Investment transactions are recorded on the accrual
method. For portfolio investments, transactions are recorded on the date which
the Partnership obtains an enforceable right to demand the securities or payment
thereof. Realized gains and losses on investments sold are computed on a
specific identification basis.
Statements of Cash Flows - Cash and cash equivalents include short-term
interest-bearing investments in commercial paper and other money market
investments. The Partnership considers its interest bearing cash account to be
cash equivalents.
Income Taxes - No provision for income taxes has been made since all income and
losses are allocable to the partners for inclusion in their respective tax
returns. The Partnership's net assets for financial reporting purposes differ
from its net assets for tax purposes. Net unrealized appreciation of $345,495 at
December 31, 1994, which was recorded for financial statement purposes, was not
recognized for tax purposes. Additionally, from inception to December 31, 1994,
other timing differences totaling $10.1 million, relating to net realized
losses, original sales commissions paid and other costs of selling the Units,
have been recorded on the Partnership's financial statements but have not yet
been deducted for tax purposes.
3. Allocations of Partnership Profits and Losses
Pursuant to the Partnership's agreement of limited partnership (the "Partnership
Agreement"), the Partnership's net income and net realized gains from all
sources are allocated to all Partners, in proportion to their capital
contributions, until all Partners have been allocated an amount equal to 6% per
annum, simple interest, on their total Adjusted Invested Capital; i.e., original
capital contributions reduced by previous distributions (the "Priority Return").
Thereafter, net income and net realized gains from venture capital investments
in excess of the amount used to cover the Priority Return are allocated 20% to
the Managing General Partner and 80% to all Partners in proportion to their
capital contributions. Any net income from
<PAGE>
WESTMED VENTURE PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
non-venture capital investments in excess of the amount used to cover the
Priority Return is allocated to all Partners in proportion to their capital
contributions. Realized losses are allocated to all Partners in proportion to
their capital contributions. However, if realized gains had been previously
allocated in the 80-20 ratio, then losses are allocated in the reverse order in
which profits were allocated. From its inception to December 31, 1994, the
Partnership had a $9.3 million net realized loss from its venture capital
investments.
4. Related Party Transactions
Pursuant to the Partnership Agreement, the Managing General Partner is entitled
to receive a one-time venture capital fee equal to 5% of the gross proceeds from
the sale of Units. Such fee is incurred as portfolio investments are made in the
proportion of the cost of each portfolio investment to the net proceeds from the
sale of Units. Venture capital fees incurred are recorded as a cost of acquiring
the portfolio investments. For the years ended December 31, 1994, 1993 and 1992,
the Partnership incurred venture capital fees of $40,000, $10,000 and $104,000,
respectively. Cumulative venture capital fees incurred from inception to
December 31, 1994 totaled $1.6 million.
Pursuant to a management agreement between the Partnership and the Managing
General Partner, the Managing General Partner performs, or arranges for others
to perform, the management, administrative and certain investment advisory
services necessary for the operation of the Partnership. For such services, the
Managing General Partner receives a management fee at the annual rate of 2% of
the lesser of the net assets of the Partnership or the net contributed capital
of the Partnership; i.e., gross capital contributions to the Partnership (net of
selling commissions and organizational expenses) reduced by capital distributed.
Such fee is determined and payable quarterly.
For services rendered to the Partnership, each of the three Independent General
Partners receives a $5,000 annual fee and reimbursement for all out-of-pocket
expenses relating to attendance at meetings of the General Partners.
5. Cash Distributions
No cash distributions were paid to Partners in 1994 or 1993. In June 1992, the
Partnership made a cash distribution to Limited Partners of record on March 31,
1992, totaling $4.9 million, or approximately $74 per $500 Unit. The Partnership
also made a cash distribution to the Managing General Partner of $49,900.
Cumulative cash distributions paid to Limited Partners from inception through
December 31, 1994 total $5.7 million, or approximately $85 per $500 Unit.
<PAGE>
Item 9. Disagreements on Accounting and Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers.
The Independent General Partners
The Independent General Partners have full authority over the management of the
Partnership and provide overall guidance and supervision with respect to the
operations of the Partnership and perform the various duties imposed on the
general partners of business development companies under the 1940 Act. In
addition to general fiduciary duties, the Independent General Partners, among
other things, supervise the management arrangements of the Partnership, the
custody arrangement with respect to portfolio securities, the selection of
accountants, fidelity bonding and the activities of the Managing General
Partner. As required by the 1940 Act, a majority of the general partners must be
individuals who are not "interested persons" of the Partnership as defined in
the 1940 Act. In 1987, the Securities and Exchange Commission issued an
exemptive order declaring that Messrs. Elliott, Taylor and White, the
Independent General Partners of the Partnership, are not "interested persons" of
the Partnership as defined in the 1940 Act solely by reason of their being
general partners of the Partnership. Such individuals also comprise the Audit
Committee of the Partnership.
Presented below is information concerning the Independent General Partners of
the Partnership as of March 27, 1995:
Thomas E. White, Age 61, Independent General Partner since 1987
485 Madison Avenue
New York, New York 10022
Mr. White is an attorney in private practice in New York City. He is also an
independent general partner of WestMed Venture Partners 2, L.P. ("WVP2").
From 1974 to 1983, Mr. White was Senior Vice President and Director of
Howmedica, Inc. with responsibility for various health-care operations in
the United States, Europe and Latin America.
Robert A. Elliott, Age 55, Independent General Partner since 1987
Elliott Investment Co.
5000 Birch Street, Suite 6200
Newport Beach, California 92660
Mr. Elliott, currently a private investor, was the Chairman and Chief Executive
Officer of VLI Corporation from 1983 to 1987. Mr. Elliott is also an
independent general partner of WVP2, a member of the Board of Trustees of
Chapman University and a member of the Board of Directors of two
privately-held medical device companies. He is a former Director of the
Health Industries Manufacturers Association. From 1979 until 1983, Mr.
Elliott was Vice President and Director of Howmedica, Inc. with
responsibility for the Medical Specialty Products Division, including
domestic and international manufacturing and distribution.
Dr. Alan F. Taylor, Age 65, Independent General Partner since 1987
2421 Island Drive
Gainesville, GA 30501
Dr. Taylor is presently Managing Director of Development Southeast, Inc., a
management and marketing consulting firm. Dr. Taylor is also an independent
general partner of WVP2. Dr. Taylor has thirty years experience in the
international pharmaceutical industry. From 1985 to 1988, he was President
and Director of CytRx Corporation. From November 1981 until January 1984,
he was President and a director of Elan Pharmaceutical Research Corporation
and was President of Elan Corporation from January 1984 until January 1985.
The Managing General Partner
The Managing General Partner, subject to the supervision of the Independent
General Partners, has exclusive power and authority to manage and control the
Partnership's venture capital investments. Subject to the supervision of the
Independent General Partners, the Managing General Partner is authorized to make
all decisions regarding the Partnership's venture capital investment portfolio,
including, among other things, to find, evaluate, structure, monitor and
liquidate such investments and to provide, or arrange for the provision of,
managerial assistance to the portfolio companies in which the Partnership
invests.
The general partner of the Managing General Partner is MVH, a Delaware
corporation affiliated with Opco. The limited partners of the Managing General
Partner are (i) Oppenheimer Holdings, Inc. ("OHI"), a Delaware corporation and
the parent of Opco, (ii) MVP Holdings, Inc., a Delaware corporation and
wholly-owned subsidiary of Integrated Resources, Inc. ("MVP"), and (iii) BSW,
Inc., a Delaware corporation wholly-owned by John A. Balkoski, Philippe L.
Sommer and Howard S. Wachtler ("BSW"). On July 19, 1991, Mr. Balkoski
voluntarily resigned from all offices he held with MVH to pursue other
interests. Prior to his resignation, Mr. Balkoski shared with Messrs. Sommer and
Wachtler the primary responsibility for managing the venture capital investments
of the Partnership. Messrs. Sommer and Wachtler currently are officers of MVH.
Presented below, as of March 27, 1995, is information concerning the directors
and officers of MVH that are principally involved with the operations of the
Partnership. Messrs. Sommer, Wachtler and McGrath have been directors and/or
officers of MVH since June 1990. The address of each such person is Oppenheimer
Tower, World Financial Center, New York, New York 10281.
Howard S. Wachtler, Age 46, Executive Vice President and Managing Director
Mr. Wachtler is a Managing Director of BSW and a member of the Board of
Directors of BSW, three portfolio companies of the Partnership and one
portfolio company of WVP2. He has been involved in health-care industry
management for the past 21 years. From April 1988 to June 1990, he was a
general partner of WVP2 and a Managing Director of MVP from April 1987 to
June 1990. From November 1982 to October 1986, he was a Director of
Business Planning and Development for Pfizer Hospital Products Group
("HPG") and as such was responsible for all activities associated with
HPG's small acquisition program, licensing and technology program and
venture program. In addition, Mr. Wachtler directed business and strategic
planning projects for HPG worldwide.
Philippe L. Sommer, Age 43, Executive Vice President and Managing Director
Mr. Sommer is a Managing Director of BSW and a member of the Board of
Directors of BSW and one portfolio company of WVP2. He has been involved in
health-care industry management for the past 15 years. He was a Managing
Director of MVP from April 1987 to June 1990. From January 1982 to
September 1986, he was a Director of Business Development for HPG and as
such was responsible for directing HPG's merger and acquisition activities
for medium to larger acquisitions and for the financial evaluation and
valuation of all of HPG's acquisition, venture and licensing projects.
Stephen M. McGrath, Sr., Age 59, Vice President and Director Mr. McGrath has
been Executive Vice President of Opco and director of its Investment
Banking Group since July 1985. He also served as President of Oppenheimer
Strategic Investments, Inc. between May 1983 and April 1985. Mr. McGrath
was Senior Vice President of Planning and Development at Warner-Lambert
until 1985 and has been a director of Alliance Pharmaceutical Corp. since
June 1989. He also serves as an executive officer and director of certain
current and/or former affiliates of Opco.
There are no family relationships among any of the Independent General Partners
and the officers and directors of MVH. MVH is owned 100% by OHI.
Opco, a member firm of the New York Stock Exchange, Inc., the National
Association of Securities Dealers, Inc. and all principal U.S. securities
exchanges, is a diversified investment banking and securities firm, providing a
broad range of services to individual, corporate and institutional clients. Opco
is registered as a broker-dealer and investment adviser with the Commission, and
also is registered as a broker-dealer in all of the states of the United States
and with the Securities Association in the United Kingdom and with the Commodity
Futures Trading Commission as a futures commission merchant. Opco operates in
the capacity of broker and dealer for its customers, as well as trader for its
own account.
The services provided by Opco and its subsidiaries, and the activities in which
it is engaged, include investment banking, securities brokerage, securities
research, customer financing, securities trading and arbitrage, corporate
finance, real estate financing and investment advisory services. Opco's
investment banking activities include an active engagement in the health-care
area. Opco provides public equity and debt financing to clients in the
biotechnology, instrumentation and pharmaceutical products and services sectors
in the health-care field. Opco also provides private financing, and merger,
acquisition and divestiture assistance to health-care companies. Opco's
Health-care Investment Banking Group is supported by Opco's securities research
team which reports on public companies in the human health-care sector.
Item 11. Executive Compensation.
Each Independent General Partner receives an annual fee from the Partnership of
$5,000 together with all out-of-pocket expenses relating to attendance at
meetings of the General Partners.
For a description of the allocation and distribution of the Partnership's
profits and losses to the Managing General Partner, see Item 5. Market for
Registrant's Common Equity and Related Stockholder Matters.
For the years ended December 31, 1994, 1993 and 1992, the Managing General
Partner was allocated $39,000, $10,000 and $16,000 of the Partnership's net
decrease in net assets from operations, respectively.
Pursuant to the Management Agreement, the Managing General Partner performs, or
arranges for others to perform, the management, administrative and certain
investment advisory services necessary for the operation of the Partnership. For
such services, the Managing General Partner received a management fee at the
annual rate of 2% of the lesser of the net assets of the Partnership or the net
contributed capital of the Partnership; i.e., gross capital contributions to the
Partnership (net of selling commissions and organizational expenses) reduced by
capital distributed. Such fee is determined and payable quarterly. For the years
ended December 31, 1994, 1993 and 1992, the Managing General Partner received
management fees of $361,000, $379,000 and $396,000, respectively.
Pursuant to the Partnership Agreement, the Managing General Partner is entitled
to receive a one-time venture capital fee equal to 5% of the gross proceeds from
the sale of Units. Such fee is incurred as portfolio investments are made in the
proportion of the cost of each portfolio investment to the net proceeds from the
sale of Units. Venture capital fees incurred are recorded as a cost of acquiring
the portfolio investments. For the years ended December 31, 1994, 1993 and 1992,
the Managing General Partner received venture capital fees of $40,000, $10,000
and $104,000, respectively.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Security Ownership
As of March 27, 1995, no person or group is known by the Partnership to be the
beneficial owner of more than 5% of the Units. The Independent General Partners
and the directors, officers and employees of MVH own as a group ten Units, or
less than one-tenth of one percent of the total Units outstanding.
Item 13. Certain Relationships and Related Transactions.
The description of the management fee and the venture capital fee set forth in
Item 11. Executive Compensation is incorporated herein by reference.
The description of the allocation and distribution of the Partnership's profits
and losses to the Managing General Partner set forth in Item 5. Market for
Registrant's Common Equity and Related Stockholder Matters is incorporated
herein by reference.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K.
(a) 1. Financial Statements
Independent Auditors' Report
Balance Sheets as of December 31, 1994 and 1993
Schedule of Portfolio Investments as of December 31, 1994
Schedule of Portfolio Investments as of December 31, 1993
Statements of Operations for the years ended December 31,
1994, 1993 and 1992
Statements of Cash Flows for the years ended December 31,
1994, 1993 and 1992
Statements of Changes in Partners' Capital for the years
ended December 31, 1992, 1993 and 1994
Notes to Financial Statements
2. Exhibits - See Exhibit Index page.
(b) No reports on Form 8-K were filed during the quarter for which this report
is filed.
(c) Exhibits - See Exhibit Index page.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be singed on its behalf by the
undersigned, thereunto duly authorized on the 27th day of March 1995.
WESTMED VENTURE PARTNERS, L.P.
By: WestMed Venture Management, L.P.,
Managing General Partner
By: Medical Venture Holdings, Inc.,
General Partner
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<S> <C> <C> <C>
By: /s/ Philippe L. Sommer By: /s/ Howard S. Wachtler
Philippe L. Sommer Howard S. Wachtler
Executive Vice President and Managing Director Executive Vice President and Managing Director
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this report has been signed by the following persons on behalf of the registrant
and in the capacities and on the dates indicated on the 27th day of March 1995.
WESTMED VENTURE
MANAGEMENT, L.P. Managing General Partner of WestMed Venture Partners, L.P.
By: Medical Venture Holdings, Inc. General Partner of WestMed Venture Management, L.P.
By: /s/ Philippe L. Sommer Executive Vice President and Managing Director
Philippe L. Sommer (principal executive officer) of Medical Venture Holdings, Inc.
By: /s/ Howard S. Wachtler Executive Vice President and Managing Director
Howard S. Wachtler (principal executive officer) of Medical Venture Holdings, Inc.
By: /s/ Thomas E. White General Partner of WestMed Venture Partners, L.P.
Thomas E. White
By: /s/ Robert A. Elliott General Partner of WestMed Venture Partners, L.P.
Robert A. Elliott
By: /s/ Dr. Alan F. Taylor General Partner of WestMed Venture Partners, L.P.
Dr. Alan F. Taylor
</TABLE>
<PAGE>
Exhibit Index
Exhibits Page
The following are the Exhibits as required by Item 14(c):
3.1 Amended and Restated Certificate of Limited Partnership***
3.2 Amendment to Amended and Restated Certificate of Limited Partnership***
3.3 Partnership Agreement*
3.4 Amendment No. 1 to the Partnership Agreement**
4 Articles Five through Eleven of the Partnership Agreement*
10.1 Management Agreement between the Partnership and the Managing General
Partner**
27 Financial Data Schedule
28.1 Custodian Agreement between the Partnership and Investors Fiduciary Trust
Company*
-------------------------------
* Filed as an exhibit to the Partnership's Registration Statement on Form N-2
(33-11926), and incorporated herein by reference.
** Filed as an exhibit to the Partnership's Report on Form 8-K dated July 10,
1990 and incorporated herein by reference.
*** Filed as an exhibit to the Partnership's Report on Form 10-K for the year
ended December 31, 1990.
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<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM WESTMED
VENTURE PARTNERS, L.P.'S ANNUAL REPORT ON FORM 10-K FOR THE PERIOD ENDED
DECEMBER 31, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-1-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 11,667,193
<INVESTMENTS-AT-VALUE> 12,012,688
<RECEIVABLES> 820
<ASSETS-OTHER> 48,196
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<AVG-DEBT-PER-SHARE> 0
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