<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 1)
PAINEWEBBER R&D PARTNERS II, L.P.
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(Name of subject company)
PHARMAINVEST, L.L.C.
PHARMACEUTICAL ROYALTIES, L.L.C.
PHARMACEUTICAL ROYALTY INVESTMENTS LTD.
PHARMACEUTICAL PARTNERS, L.L.C.
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(Bidders)
UNITS OF LIMITED PARTNERSHIP INTEREST
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(Title of class of securities)
695922 20 3
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(CUSIP Number)
PABLO LEGORRETA, DAVE MADDEN
PHARMAINVEST, L.L.C.
70 E. 55th St., 23rd Floor
New York, NY 10022
(800) 600-1450
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COPIES TO:
F. GEORGE DAVITT, ESQ.
TESTA, HURWITZ & THIBEAULT, LLP
HIGH STREET TOWER
125 HIGH STREET
BOSTON, MA 02110
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This Amendment No. 1 amends and supplements the Tender Offer Statement
on Schedule 14D-1 filed by PharmaInvest, L.L.C., a Delaware limited liability
company (the "Purchaser"), on behalf of Pharmaceutical Royalties, L.L.C., a
Delaware limited liability company, and Pharmaceutical Royalty Investments Ltd.,
a Bermuda company (collectively the "Funds"), and on behalf of Pharmaceutical
Partners, L.L.C., a Delaware limited liability company and the sole member of
the Purchaser, relating to the offer by Purchaser to purchase outstanding units
of limited partnership (the "Units") of PaineWebber R&D Partners II, L.P. (the
"Partnership"), a Delaware limited partnership, at $6,000 per Unit, net to the
seller in cash, without interest thereon, on the terms and subject to the
conditions set forth in the Offer to Purchase, dated March 3, 1999 (the "Offer
to Purchase"), and in the related Letter of Transmittal and any amendments or
supplements thereto, copies of which are attached hereto as Exhibits (a) (1) and
(a) (2), respectively (which collectively constitute the "Offer"). Those
sections of the Offer amended and supplemented by the Supplement dated March 24,
1999 are hereby incorporated by reference in the Items of the Schedule in which
such sections are referred to.
As of 5:00 p.m. New York City time, on Tuesday, March 23, 1999,
approximately 367 Units had been tendered in the Offer.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
Item 11 is hereby amended as follows:
(a) (5) Supplement to Offer to Purchase dated March 24, 1999.
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SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: March 24, 1999
PHARMAINVEST, L.L.C.
By: /s/ DAVID MADDEN
-----------------------------
Name: David Madden
Title: Managing Member of Pharmaceutical
Partners, L.L.C., the Manager
PHARMACEUTICAL ROYALTIES, L.L.C.
By: /s/ DAVID MADDEN
-----------------------------
Name: David Madden
Title: Managing Member of Pharmaceutical
Partners, L.L.C., the Manager
PHARMACEUTICAL ROYALTY INVESTMENTS LTD.
By: /s/ PABLO LEGORRETA
------------------------------
Name: Pablo Legorreta
Title: Managing Member of Pharmaceutical
Partners, L.L.C., the Manager
PHARMACEUTICAL PARTNERS, L.L.C.
By: /s/ PABLO LEGORRETA
-------------------------------
Name: Pablo Legorreta
Title: Managing Member
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EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
(a)(5) Supplement to Offer to Purchase dated March 24, 1999
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EXHIBIT a(5)
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SUPPLEMENT, DATED MARCH 24, 1999,
TO THE OFFER TO PURCHASE FOR CASH
UP TO 3,000 OUTSTANDING UNITS OF LIMITED PARTNERSHIP INTEREST
OF
PAINEWEBBER R&D PARTNERS II, L.P.
AT
$6,000 PER UNIT
BY
PHARMAINVEST, L.L.C.
The following information amends and supplements the Offer to Purchase
(the "Offer to Purchase") dated March 3, 1999 of PharmaInvest, L.L.C., a
Delaware limited liability company (the "Purchaser"), on behalf of
Pharmaceutical Royalties, L.L.C., a Delaware limited liability company, and
Pharmaceutical Royalty Investments Ltd., a Bermuda company (collectively, the
"Funds"), and on behalf of Pharmaceutical Partners, L.L.C., a Delaware limited
liability company and the sole member of the Purchaser, of up to 3,000
outstanding units of limited partnership interest (the "Units") in PaineWebber
R&D Partners II, L.P., a Delaware limited partnership (the "Partnership"), for
cash consideration per Unit of $6,000 (the "Purchase Price"), upon the terms and
subject to the conditions set forth in the Offer to Purchase, as amended and
supplemented by this Supplement, and in the related Letter of Transmittal
(which, together with the Offer to Purchase and this Supplement with any
amendments or supplements hereto or thereto, collectively constitute the
"Offer"). The Purchase Price will be automatically reduced by the aggregate
amount of the value of any cash or asset distributions made or declared by the
Partnership on or after March 3, 1999 and prior to the date on which the
Purchaser pays the Purchase Price for the tendered Units.
Except as set forth in this Supplement, the terms and conditions
previously set forth in the Offer to Purchase remain applicable in all respects
to the Offer, and this Supplement should be read in conjunction with the Offer
to Purchase. Capitalized terms used but not defined in this Supplement have the
meanings assigned to them in the Offer to Purchase.
RISK FACTORS
- - Although the Purchaser cannot predict the future value of the Partnership's
assets or future selling prices of the Units, the Purchase Price could be
significantly less than the proceeds that would be realized by holding the
Units for the entire life of the expected payment stream of the
Partnership's main asset. The General Partner of the Partnership has stated
that it anticipates "that the winding-up of the Partnership's operations
will be substantially completed within the next several years, and that the
Limited Partners should receive substantial value in connection therewith,
including pro rata distributions of the proceeds of the settlement of the
Centocor Litigation." There can be no assurance that the Purchase Price
will be more or less than what a Holder would receive by holding the Units
until the winding-up of the Partnership's operations is completed.
- - The Purchaser is making the Offer with a view to making a profit.
Accordingly, there may be a conflict between the desire of the Purchaser to
acquire the Units at the Purchase Price and the value of the expected
payment stream of the Partnership's main asset. There can be no assurance
that the Purchase Price will be more or less than such value. Each of
Messrs. Stephen Evans-Freke, Rory Riggs and David Madden are members of
Pharmaceutical Partners, L.L.C., the manager of the Purchaser, and each of
such persons has been employed by PaineWebber Inc. or PaineWebber
Development Corporation in the past. Mr. Evans-Freke was President of
PaineWebber Development Corporation until May 1990; Mr. Riggs was a
Managing Director of PaineWebber Inc. until November 1990; and Mr. Madden
was a Vice President at PaineWebber Development Corporation
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until February 1992. Messrs. Evans-Freke and Madden were directly involved
and responsible for identifying and selecting the investments in which the
Partnership invested. Messrs. Evans-Freke and Madden were directly involved
in structuring, negotiating and managing the Partnership and its assets.
- - The actual value of the Partnership's assets may exceed the aggregate
Purchase Price. The actual value that a Limited Partner may realize by
retaining Units and not tendering in the Offer may exceed the Purchase
Price. The Purchase Price may not fully reflect the present value of future
sales of ReoPro. The Purchaser's determination of the Purchase Price is in
part based on assumptions that may or may not prove to be true.
- - No independent person has been retained by the Purchaser or any of its
affiliates to value or make any appraisal of the Units or to render any
opinion with respect to the fairness of the Purchase Price and no
representation is made with respect to the fairness of the Purchase Price.
- - Although there are limited resale mechanisms available to Holders through
partnership matching services, there is no formal trading market for the
Units. According to the General Partner, in response to the August 1997
tender offer, "[t]he Units are illiquid, so there is no efficient trading
market for the Units [and] the prices that may be realized by a seller in
such market . . . have historically been and may be lower than the price
[the Purchaser] is offering."
- - The Purchaser and its affiliates could acquire operating control of the
Partnership through the Offer. The Partnership's Agreement of Limited
Partnership provides that the holders of a majority of the outstanding
Units can (i) cause the sale of all the Partnership's assets, (ii) amend
any provision of the Partnership's Agreement of Limited Partnership, and
(iii) remove the General Partner. If the Purchaser and its affiliates
obtain approximately 31.52% of the outstanding Units in the Offer, the
Purchaser and its affiliates would have over 50% of the outstanding Units
and would effectively control the management, policies and affairs of the
Partnership. In such event the Purchaser and its affiliates could seek to
remove the General Partner, could effect business combinations or other
extraordinary transactions regarding the Partnership and could amend the
Partnership Agreement, without the vote of any of the limited partners not
affiliated with the Purchaser. The interests of the Purchaser could
conflict with the interests of the other limited partners.
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EACH HOLDER IS URGED TO READ CAREFULLY THE ENTIRE OFFER TO PURCHASE, THIS
SUPPLEMENT, THE LETTER OF TRANSMITTAL AND RELATED DOCUMENTS.
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To Holders of Units of Limited Partnership Interest in PaineWebber R&D Partners
II, L.P.:
INTRODUCTION
The following information amends and supplements the Offer to Purchase
(the "Offer to Purchase") dated March 3, 1999 of PharmaInvest, L.L.C., a
Delaware limited liability company (the "Purchaser"), on behalf of
Pharmaceutical Royalties, L.L.C., a Delaware limited liability company, and
Pharmaceutical Royalty Investments Ltd., a Bermuda company (collectively, the
"Funds"), and on behalf of Pharmaceutical Partners, L.L.C., a Delaware limited
liability company and the sole member of the Purchaser, of up to 3,000
outstanding units of limited partnership interest (the "Units") in PaineWebber
R&D Partners, II, L.P., a Delaware limited partnership (the "Partnership"), for
cash consideration per Unit of $6,000 (the "Purchase Price"), upon the terms and
subject to the conditions set forth in the Offer to Purchase, as amended and
supplemented by this Supplement, and in the related Letter of Transmittal
(which, together with the Offer to Purchase and this Supplement with any
amendments or supplements hereto or thereto, collectively constitute the
"Offer"). The Purchase Price will be automatically reduced by the aggregate
amount of the value of any cash or asset distributions made or declared by the
Partnership on or after March 3, 1999 and prior to the date on which the
Purchaser pays the Purchase Price for the tendered Units.
Except as set forth in this Supplement, the terms and conditions
previously set forth in the Offer to Purchase remain applicable in all respects
to the Offer, and this Supplement should be read in conjunction with the Offer
to Purchase. Capitalized terms used but not defined in this Supplement have the
meanings assigned to them in the Offer to Purchase.
The following information should be considered in evaluating the Offer:
INTRODUCTION
The section entitled VALUATION is hereby amended by inserted the
following paragraph in place of the current third paragraph:
The Purchaser believes the most valuable asset of the Partnership is
its right to receive payments through 2007 based on sales of ReoPro, a product
developed by Centocor Inc. and marketed by Eli Lilly & Co. To determine possible
future sales levels of ReoPro, the Purchasers utilized the median of sales
projections for ReoPro prepared by selected Wall Street analysts not affiliated
with the Purchaser or any of its affiliates (for the accuracy of which neither
the Purchaser nor any of its affiliates assumes responsibility). In addition to
the expected future payments derived from the sale of ReoPro, the Purchaser
estimated the amount of payments that may be paid to the Partnership pursuant to
a proposed settlement of litigation between the Partnership and Centocor
regarding the basis of calculating payments owed to the Partnership. Purchaser
also considered the risks inherent in these future cash flows, including (i) the
dependence on the sales of a single product and (ii) the absence of any market
for the asset or for the Partnership units. The resulting cash flows were
discounted at rates of approximately 20% per year. Based on this analysis, the
Purchaser estimated the value of the Partnership's interest in ReoPro to be
approximately $45.6 million.
6. PRICE RANGE OF THE UNITS
Section 6 of the Offer to Purchase is hereby amended by inserting the
following sentence to the end of the current second paragraph:
Holders are also advised that the sales prices received by sellers of
Units in secondary market transactions may not reflect the actual value of the
Units in light of the limited trading in the market and that such prices are
often significantly discounted from the values of the assets underlying limited
partnership units.
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Section 6 of the Offer to Purchase is hereby amended by inserting the
following sentences in place of the current third sentence in the last paragraph
of that Section:
The Purchaser did not attempt to obtain current independent valuations
or appraisals of the underlying assets owned by the Partnership. The Purchaser
made its own determination of the Purchase Price based on publicly-available
information. The Purchaser did not obtain any third party appraisal or valuation
in determining the Purchase Price because the Purchaser's business is
identifying and acquiring royalty interests that derive cash flow from the sales
of biotechnology and pharmaceutical products. Accordingly, the Purchaser
believes it has sufficient knowledge to make its own determination of the
Purchase Price without the assistance or opinion of any third party.
8. CERTAIN INFORMATION CONCERNING THE PARTNERSHIP
Section 8 of the Offer to Purchase is hereby amended by inserting the
following paragraph in place of the current second and third paragraphs under
the paragraph entitled LEGAL PROCEEDINGS:
In June 1997, CPIII and Centocor entered into an agreement to settle
the litigation brought by PWR&DII, subject to final approval of the settlement
by the Court. On March 15, 1999, the Court approved the settlement agreement.
The Court's approval of the settlement becomes effective when the Court's order
and final judgment are either fully affirmed on appeal by the Supreme Court of
the State of Delaware or, by lapse of time or otherwise, shall no longer be
subject to appeal to the Supreme Court of Delaware. The terms of the settlement
provide that Centocor will pay to CPIII investors:
A) $10.8 million, net of attorneys fees and expenses as may be
awarded by the Court, which are not to exceed $1.5 million. After
deducting from such $10.8 million attorneys' fees and expenses,
63.382% shall be allocated to the Class A CPRs, 0.245% to the
Class B CPRs and 36.373% to the Class C CPRs.
B) An additional $5.0 million, if and when cumulative world-wide
sales of ReoPro exceed $600 million. Such amount, shall be
allocated 61.198% to the Class A CPRs, 0.236% to the Class B CPRs
and 38.566% to the Class C CPRs.
C) A one-time make-up payment that represents the difference between
the quarterly payments based on the revised royalty rates under
the settlement agreement and the actual payments made by Centocor
over the last six quarters.
D) Possible additional payments totaling $2.2 million, depending upon
regulatory approval and launch of ReoPro in Japan. Such amounts,
shall be allocated 69.691% to the Class A CPRs, 0.269% to the
Class B CPRs and 30.040% to the Class C CPRs.
E) A revision to the royalties payable by Centocor to CPR Holders
with respect to ReoPro through 2007, as follows:
i) for each quarter of the calendar years 1997 and 1998, 6.5% of
the first $175 million of end sales revenues and 3.25% of any
end-sales revenues above $175 million for sales made within
the United States and 3.25% of any end-sales revenues for
foreign sales,
ii) for each quarter of the calendar years 1999 through 2007, 6.5%
of the first $250 million of end sales revenues and 4.00% of
any end-sales revenues above $250 million for sales made
within the United States and 3.25% of any end-sales revenues
for foreign sales.
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Upon request, a copy of the settlement agreement will be provided by
the Purchaser or the Information Agent.
12. PURPOSE OF THE OFFER; PLANS FOR THE PARTNERSHIP
Section 12 of the Offer to Purchase is hereby amended by inserting the
following sentence to replace the current fifth sentence of the first paragraph:
Although the Purchaser and its affiliates do not have any current plans
to make additional tender offers or purchases from limited partners of the
Partnership at this time, the Purchaser and its affiliates may acquire
additional Units following completion of the Offer.
Section 12 of the Offer to Purchase is hereby amended by inserting the
following paragraph in place of the current second paragraph:
The Purchaser and its affiliates could acquire operating control of the
Partnership through the Offer. If the Purchaser and its affiliates obtain
approximately 31.52% of the outstanding Units in the Offer the Purchaser and its
affiliates would have over 50% of the outstanding Units and would effectively
control the management, policies and affairs of the Partnership. The
Partnership's Agreement of Limited Partnership provides that the holders of a
majority of the outstanding Units can (i) cause the sale of all the
Partnership's assets, (ii) amend any provision of the Partnership's Agreement of
Limited Partnership, and (iii) remove the General Partner. In such event the
Purchaser and its affiliates could seek to remove the General Partner, could
effect business combinations or other extraordinary transactions regarding the
Partnership and could amend the Partnership Agreement, without the vote of any
of the limited partners not affiliated with the Purchasers. Except as noted in
this Offer to Purchase, Purchaser has no present plans or proposals that would
result in an extraordinary corporate transaction, such as a merger,
reorganization, liquidation or sale or transfer of a material amount of assets
involving the Partnership or any subsidiary, or any other material changes in
the Partnership's capitalization, composition, distribution policy, structure or
business. However, the Purchaser may change its plans at any time after
completion of the Offer.
March 24, 1999 PHARMAINVEST, L.L.C.
PHARMACEUTICAL ROYALTIES, L.L.C.
PHARMACEUTICAL ROYALTY INVESTMENTS LTD.
PHARMACEUTICAL PARTNERS, L.L.C.
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