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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
September 21, 2000
Date of Report (Date of earliest event reported)
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NEOTHERAPEUTICS, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 000-28782 93-0979187
(State or other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification Number)
157 TECHNOLOGY DRIVE 92618
IRVINE, CALIFORNIA (Zip Code)
(Address of principal executive offices)
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(949) 788-6700
(Registrant's telephone number, including area code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS
On September 21, 2000, NeoTherapeutics, Inc. ("NeoTherapeutics") and NeoGene
Technologies, Inc. ("NeoGene"), a subsidiary of NeoTherapeutics, entered into a
Securities Purchase Agreement with two institutional investors ("the Purchasers"
or individually, "Purchaser") for the issuance and sale of preferred stock and
warrants for aggregate consideration of $5,000,000 (the "NeoGene Agreement").
Pursuant to the NeoGene Agreement, NeoGene issued and sold to the investors a
total of 111,110 shares of its Series A Convertible Preferred Stock, no par
value per share (the "Series A Preferred"), at a purchase price of $45 per share
(the "Purchase Price"), and issued five-year warrants ("the NeoGene Warrants")
to purchase a total of 22,676 shares of NeoGene common stock, no par value per
share (the "NeoGene Common Stock") at an exercise price of $45 per share. The
Series A Preferred is convertible into shares of NeoGene Common Stock on a
one-to-one basis, subject to certain antidilution adjustments, and automatically
converts upon the earlier to occur of September 21, 2005 or the closing of a
public offering of NeoGene Common Stock meeting certain criteria.
In addition, NeoTherapeutics issued to the Purchasers, five-year warrants (the
"NeoTherapeutics Warrants") to purchase an aggregate of 80,000 shares of its
common stock, par value $.001 per share (the "NeoTherapeutics Common Stock"), at
an exercise price of $10.47 per share. NeoTherapeutics also granted two exchange
rights to the holders of Series A Preferred which will allow such holders to
exchange their shares of Series A Preferred for preferred stock or debentures of
NeoTherapeutics.
The first exchange right ("First Exchange Right") grants each Purchaser the
right, at its option, at any time and from time to time after January 21, 2001,
to exchange all or a portion of the Series A Preferred shares then held by such
Purchaser for a number of shares of NeoTherapeutics' to be designated
convertible preferred stock, $.001 par value per share (the "NeoTherapeutics
Preferred Stock (Form A)"), equal to (i) the aggregate liquidation preference of
the Series A Preferred shares surrendered for exchange plus any accrued but
unpaid dividends thereon, divided by (ii) the stated value per share of the
NeoTherapeutics Preferred Stock (Form A). The NeoTherapeutics Preferred Stock
(Form A) will be convertible into shares of NeoTherapeutics Common Stock at a
conversion price equal to 101% of the average of the lowest ten closing bid
prices of the NeoTherapeutics Common Stock, as reported by The Nasdaq, during
the thirty trading days immediately preceding the conversion.
If (i) at the time a Purchaser delivers a written notice of an intent to
exercise the First Exchange Right, or (ii) at any time after a Purchaser has
exchanged shares of Series A Preferred for shares of NeoTherapeutics Preferred
Stock (Form A), NeoTherapeutics does not beneficially own cash, cash equivalents
and marketable securities having an aggregate fair market value of at least Five
Million Dollars ($5,000,000), such Purchaser shall have the right to exchange
the Series A Preferred shares offered for exchange, or any shares of
NeoTherapeutics Preferred Stock (Form A) then owned by Purchaser, as applicable,
for NeoTherapeutics 5% Subordinated Convertible Debentures due September 21,
2005 (the "NeoTherapeutics Debentures (Form A)"), having an aggregate principal
amount equal to the aggregate liquidation preference of the Series A preferred
shares, or the stated value of the shares of NeoTherapeutics Preferred Stock
(Form A), as applicable, surrendered for exchange, plus any accrued but unpaid
dividends thereon. NeoTherapeutics Debentures (Form A) will be convertible into
shares of NeoTherapeutics Common Stock on the same terms as the NeoTherapeutics
Preferred Stock (Form A).
The second exchange right ("Second Exchange Right") grants each Purchaser the
following right: if at any time the closing price of NeoTherapeutics Common
Stock as reported by The Nasdaq is below $5.00 for five consecutive trading
days, each Purchaser shall have the right, at its option, at any time and from
time to time after the fifth such consecutive trading day, to exchange all or a
portion of the Series A Preferred shares then held by such Purchaser for a
number of shares of NeoTherapeutics' to be designated convertible preferred
stock, $.001 par value per share (the "NeoTherapeutics Preferred Stock (Form
B)"), equal to (i) the aggregate liquidation preference of the Series A
Preferred shares surrendered for exchange plus any accrued but unpaid dividends
thereon, divided by (ii) the stated value per share of the NeoTherapeutics
Preferred Stock (Form B). The NeoTherapeutics Preferred Stock (Form B) will be
convertible into shares of NeoTherapeutics Common Stock at a conversion price
equal to the lesser of (i) 120% of the closing bid price of the NeoTherapeutics
Common Stock on the first date of issuance of any shares of NeoTherapeutics
Preferred Stock (Form B), as reported by The Nasdaq (the "Initial Conversion
Price") and (ii) 101% of the average of the lowest ten closing bid prices of the
NeoTherapeutics Common Stock, as reported by The Nasdaq, during the thirty
trading days immediately preceding the conversion, except that the conversion
price of the NeoTherapeutics Preferred Stock (Form B) will be fixed at the
Initial Conversion Price for ninety days after the first date of issuance of any
shares of NeoTherapeutics Preferred Stock (Form B).
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If (i) at the time a Purchaser delivers a written notice of an intent to
exercise the Second Exchange Right, or (ii) at any time after a Purchaser has
exchanged shares of Series A Preferred for shares of NeoTherapeutics Preferred
Stock (Form B), NeoTherapeutics does not beneficially own cash, cash equivalents
and marketable securities having an aggregate fair market value of at least Five
Million Dollars ($5,000,000), such Purchaser shall have the right to exchange
the Series A Preferred shares offered for exchange, or shares of NeoTherapeutics
Preferred Stock (Form B) then owned by the Purchaser, as applicable, for
NeoTherapeutics 5% Subordinated Convertible Debentures due September 21, 2005
(the "NeoTherapeutics Debentures (Form B)"), having an aggregate principal
amount equal to the aggregate liquidation preference of the Series A Preferred
shares, or the stated value of the shares of NeoTherapeutics Preferred Stock
(Form B), as applicable, surrendered for exchange plus any accrued but unpaid
dividends thereon. The NeoTherapeutics Debentures (Form B) will be convertible
into shares of NeoTherapeutics Common Stock on the same terms as the
NeoTherapeutics Preferred Stock (Form B); provided, that the initial conversion
price for any NeoTherapeutics Debentures (Form B) issued in exchange for shares
of NeoTherapeutics Preferred Stock (Form B) shall be determined as if such
NeoTherapeutics Debentures (Form B) had been issued on the date that such shares
of NeoTherapeutics Preferred Stock (Form B) were issued.
In a separate transaction, NeoTherapeutics entered into a Securities Purchase
Agreement dated September 29, 2000, with the Purchasers for the issuance and
sale of common stock and warrants for aggregate consideration of $8,000,000 (the
"NeoTherapeutics Agreement"). Pursuant to the NeoTherapeutics Agreement,
NeoTherapeutics issued and sold to the investors a total of 968,524 shares of
NeoTherapeutics' common stock (the "Shares") at a purchase price of $8.26 per
share (the "Purchase Price"), and issued five-year warrants ("Closing Warrants")
to purchase a total of 193,706 shares of common stock at an exercise price of
$10.13 per share. In addition, NeoTherapeutics issued warrants ("Adjustable
Warrants") to purchase a number of shares of common stock, to be determined at
two vesting dates, the first vesting date being the 30th trading day following
the effective date of a registration statement covering the resale of the Shares
and the shares of common stock issuable upon exercise of the Closing Warrants
and the Adjustable Warrants, and the second vesting date being the 30th trading
day following the first vesting date, both at an exercise price of $0.001 per
share.
The number of shares of common stock issuable at each vesting date under the
Adjustable Warrants, if any, will be determined by a formula based on the ten
(10) lowest closing bid prices of NeoTherapeutics' common stock during the
thirty (30) consecutive trading days prior to each vesting date. A greater
number of shares of common stock are issuable the lower the price of
NeoTherapeutics' common stock. However, if the average of the 10 consecutive
closing bid prices of NeoTherapeutics' common stock exceeds approximately $8.92
per share at each vesting date, then no shares are issuable pursuant to the
Adjustable Warrants for that vesting date. In addition, if at any time both (i)
the average of 10 consecutive closing bid prices of NeoTherapeutics' common
stock exceeds $12.39 and (ii) at least five (5) prices included in the average
exceed $12.39, then no shares will vest pursuant to the Adjustable Warrants for
any subsequent vesting date. The investors agreed not to convert any shares of
NeoTherapeutics' convertible preferred stock or any convertible debentures of
NeoTherapeutics during each adjustment period.
In connection with this financing, NeoTherapeutics paid a finder's fee to an
unrelated third party consisting of cash and warrants to purchase common stock
of NeoTherapeutics.
ITEM 7. EXHIBITS
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Exhibits:
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4.1 Securities Purchase Agreement dated as of September 21, 2000, by and among Registrant, NeoGene
Technologies, Inc., Strong River Investments, Inc. and Montrose Investments Ltd.
4.2 Certificate of Determination of NeoGene Technologies, Inc
4.3 Registration Rights Agreement dated as of September 21, 2000, by and among NeoGene Technologies,
Inc., Strong River Investments, Inc. and Montrose Investments Ltd.
4.4 Registration Rights Agreement dated as of September 21, 2000, by and among Registrant, Strong
River Investments, Inc. and Montrose Investments Ltd.
4.5 Warrant issued by NeoGene Technologies, Inc., to Montrose Investments Ltd., dated as of September,
21, 2000.
4.6 Warrant issued by NeoGene Technologies, Inc., to Strong River Investments, Inc., dated as of
September 21, 2000.
4.7 Warrant issued by Registrant to Montrose Investments Ltd., dated as of September 21, 2000.
4.8 Warrant issued by Registrant to Strong River Investments, Inc., dated as of September 21, 2000.
4.9 Form of Registrant Terms of Preferred.
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Exhibits:
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4.10 Form of Registrant 5% Subordinated Convertible Debenture.
4.11 Securities Purchase Agreement dated as of September 29, 2000, by and among Registrant, Strong River
Investments, Inc. and Montrose Investments Ltd.
4.12 Registration Rights Agreement dated as of September 29, 2000, by and among Registrant, Strong River
Investments, Inc. and Montrose Investments Ltd.
4.13 Closing Warrant issued by Registrant to Montrose Investments, Ltd., dated as of September, 29,
2000.
4.14 Closing Warrant issued by Registrant to Strong River Investments, Inc., dated as of September, 29,
2000.
4.15 Adjustable Warrant issued by Registrant to Montrose Investments, Ltd., dated as of September 29,
2000.
4.16 Adjustable Warrant issued by Registrant to Strong River Investments, Inc., dated as of September
29, 2000.
99.1 Press Release dated September 25, 2000.
99.2 Press Release dated October 5, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NEOTHERAPEUTICS, INC.
Date: November 10, 2000 By: /s/ Samuel Gulko
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Name: Samuel Gulko
Title: Chief Financial Officer
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EXHIBIT INDEX
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Exhibits:
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4.1 Securities Purchase Agreement dated as of September 21, 2000, by and among Registrant, NeoGene
Technologies, Inc., Strong River Investments, Inc. and Montrose Investments Ltd.
4.2 Certificate of Determination of NeoGene Technologies, Inc
4.3 Registration Rights Agreement dated as of September 21, 2000, by and among NeoGene Technologies,
Inc., Strong River Investments, Inc. and Montrose Investments Ltd.
4.4 Registration Rights Agreement dated as of September 21, 2000, by and among Registrant, Strong
River Investments, Inc. and Montrose Investments Ltd.
4.5 Warrant issued by NeoGene Technologies, Inc., to Montrose Investments Ltd., dated as of September,
21, 2000.
4.6 Warrant issued by NeoGene Technologies, Inc., to Strong River Investments, Inc., dated as of
September 21, 2000.
4.7 Warrant issued by Registrant to Montrose Investments Ltd., dated as of September 21, 2000.
4.8 Warrant issued by Registrant to Strong River Investments, Inc., dated as of September 21, 2000.
4.9 Form of Registrant Terms of Preferred.
4.10 Form of Registrant 5% Subordinated Convertible Debenture.
4.11 Securities Purchase Agreement dated as of September 29, 2000, by and among Registrant, Strong River
Investments, Inc. and Montrose Investments Ltd.
4.12 Registration Rights Agreement dated as of September 29, 2000, by and among Registrant, Strong River
Investments, Inc. and Montrose Investments Ltd.
4.13 Closing Warrant issued by Registrant to Montrose Investments, Ltd., dated as of September, 29,
2000.
4.14 Closing Warrant issued by Registrant to Strong River Investments, Inc., dated as of September, 29,
2000.
4.15 Adjustable Warrant issued by Registrant to Montrose Investments, Ltd., dated as of September 29,
2000.
4.16 Adjustable Warrant issued by Registrant to Strong River Investments, Inc., dated as of September
29, 2000.
99.1 Press Release dated September 25, 2000.
99.2 Press Release dated October 5, 2000.
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