UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
UNITED STATES
SECURITIES & EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934.
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000
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 33-35938
PAINEWEBBER R&D PARTNERS III, L.P.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3588219
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
1285 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK 10019
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (212) 713-2000
---------------------
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 -
--- ---
---------------------
<PAGE>
SPECIAL NOTE REGARDING
FORWARD LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Except for the historical information
contained herein, the matters discussed herein are forward-looking statements.
Such forward-looking statements involve known and unknown risks, uncertainties
and other factors that may cause the actual results, performance or achievements
of PaineWebber R&D Partners III, L.P. or industry results to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. Such factors include, among others,
the following: general economic and business conditions; fluctuations in the
value of securities for which only a limited, or no, public market exists;
dependence on the development of new technologies; dependence on timely
development and introduction of new and competitively priced products; the need
for regulatory approvals; the Sponsor Companies (hereinafter defined) having
insufficient funds to commercialize products to their maximum potential; the
restructuring of Sponsor Companies; the dependence of PaineWebber R&D Partners
III, L.P. on the skills of certain scientific personnel; and the dependence of
PaineWebber R&D Partners III, L.P. on the General Partner (hereinafter defined).
<PAGE>
PAINEWEBBER R&D PARTNERS III, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
FORM 10-Q
SEPTEMBER 30, 2000
Table of Contents
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Statements of Financial Condition (unaudited) at
September 30, 2000 and December 31, 1999 2
Statements of Operations
(unaudited) for the three months and nine months
ended September 30, 2000 and 1999 3
Statement of Changes in Partners' Capital (Deficit)
(unaudited) for the nine months ended
September 30, 2000 4
Statements of Cash Flows
(unaudited) for the nine months ended
September 30, 2000 and 1999 5
Notes to Financial Statements
(unaudited) 6-10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11-12
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
All schedules are omitted either because they are not applicable or the
information required to be submitted has been included in the financial
statements or notes thereto.
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
------- --------------------
PAINEWEBBER R&D PARTNERS III, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
STATEMENTS OF FINANCIAL CONDITION
(unaudited)
September 30, December 31,
2000 1999
--------------------------------------------------------------------------------
Assets:
Marketable securities, at market value $ 8,933,809 $ 6,846,730
Advances to product development projects 19,399 19,399
----------- -----------
Total assets $ 8,953,208 $ 6,866,129
=========== ===========
Liabilities and partners' capital:
Accrued liabilities $ 51,216 $ 79,844
Partners' capital 8,901,992 6,786,285
----------- -----------
Total liabilities and partners' capital $ 8,953,208 $ 6,866,129
=========== ===========
--------------------------------------------------------------------------------
See notes to financial statements.
2
<PAGE>
PAINEWEBBER R&D PARTNERS III, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
(unaudited)
For the three months ended September 30, 2000 1999
--------------------------------------------------------------------------------
Revenues:
Interest income $ 8,684 $ 49,240
Unrealized appreciation of marketable securities 241,059 2,197,460
Realized gain on sale of marketable securities -- 1,322,042
----------- ----------
249,743 3,568,742
----------- ----------
Expenses:
General and administrative costs 42,558 45,247
----------- ----------
Net income $ 207,185 $3,523,495
=========== ==========
Net income per partnership unit:
Limited partners (based on 50,000 units) $ 4.10 $ 69.77
General partner $ 2,071.85 $35,234.95
================================================================================
For the nine months ended September 30, 2000 1999
--------------------------------------------------------------------------------
Revenues:
Interest income $ 203,608 $ 94,653
Unrealized appreciation of marketable securities 4,242,607 1,840,915
Realized gain on sale of marketable securities 9,465,802 1,697,867
----------- ----------
13,912,017 3,633,435
----------- ----------
Expenses:
General and administrative costs 123,482 136,781
----------- ----------
Net income $13,788,535 $3,496,654
=========== ==========
Net income per partnership unit:
Limited partners (based on 50,000 units) $ 273.01 $ 69.23
General partner $137,885.35 $34,966.54
--------------------------------------------------------------------------------
See notes to financial statements.
3
<PAGE>
PAINEWEBBER R&D PARTNERS III, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(unaudited)
<TABLE>
<CAPTION>
Limited General
For the nine months ended September 30, 2000 Partners Partner Total
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at January 1, 2000 $ 6,716,887 $ 69,398 $ 6,786,285
Net income 13,650,650 137,885 13,788,535
Cash distributions (10,000,000) (1,672,828) (11,672,828)
------------- ----------- -------------
Balance at September 30, 2000 $ 10,367,537 $(1,465,545) $ 8,901,992
============= =========== =============
---------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
4
<PAGE>
PAINEWEBBER R&D PARTNERS III, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
(unaudited)
For the nine months ended September 30, 2000 1999
--------------------------------------------------------------------------------
Cash flows from operating activities:
Net income $ 13,788,535 $ 3,496,654
Adjustments to reconcile net income to
cash provided by operating activities:
Unrealized appreciation of marketable securities (4,242,607) (1,840,915)
Decrease (increase) in operating assets:
Marketable securities 2,155,528 (1,652,789)
Decrease in operating liabilities:
Accrued liabilities (28,628) (2,950)
------------ ------------
Cash provided by operating activities 11,672,828 --
------------ ------------
Cash flows from financing activities:
Distributions to partners (11,672,828) --
------------ ------------
Cash at beginning of period -- --
------------ ------------
Cash at end of period $ -- $ --
============ ============
--------------------------------------------------------------------------------
Supplemental disclosure of cash flow information:
The Partnership paid no cash for interest or taxes during the nine months ended
September 30, 2000 and 1999.
--------------------------------------------------------------------------------
See notes to financial statements.
5
<PAGE>
PAINEWEBBER R&D PARTNERS III, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION AND BUSINESS
The financial information as of and for the periods ended September 30,
2000 and 1999 is unaudited. However, in the opinion of management of PaineWebber
R&D Partners III, L.P. (the "Partnership"), such information includes all
adjustments, consisting only of normal recurring accruals, necessary for a fair
presentation. The results of operations reported for the interim periods ended
September 30, 2000, are not necessarily indicative of results to be expected for
the year ended December 31, 2000. These financial statements should be read in
conjunction with the most recent annual report of the Partnership on Form 10-K
for the year ended December 31, 1999 and the previously issued quarterly reports
on Forms 10-Q for the quarters ended March 31, 2000 and June 30, 2000.
The Partnership is a Delaware limited partnership that commenced
operations on June 3, 1991. Paine Webber Development Corporation ("PWDC" or the
"General Partner"), an indirect, wholly-owned subsidiary of Paine Webber Group
Inc., ("PWG" - see Note 7) is the general partner and manager of the
Partnership. The Partnership will terminate on December 15, 2015, unless its
term is extended or reduced by the General Partner.
The principal objective of the Partnership has been to provide
long-term capital appreciation to investors through investing in the development
and commercialization of new products with technology and biotechnology
companies ("Sponsor Companies"), which have been expected to address significant
market opportunities. The Partnership has been engaged in diverse product
development projects (the "Projects") including product development contracts,
participation in other partnerships and investments in securities of Sponsor
Companies. Once the product development phase has been completed, the Sponsor
Companies have had the option to license and commercialize the products
resulting from the product development project, and the Partnership has had the
right to receive payments based upon the sale of such products. The Partnership
obtained warrants to purchase the common stock of Sponsor Companies to provide
additional capital appreciation to the Partnership which was not directly
dependent upon the outcome of the Projects (see Note 5).
6
<PAGE>
PAINEWEBBER R&D PARTNERS III, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(NOTE 1 CONTINUED)
All distributions from the Partnership to the General Partner and the
limited partners of the Partnership (the "Limited Partners"; collectively, the
"Partners") have been made pro rata in accordance with their respective capital
contributions. The table below sets forth the proportion of each distribution to
be received by the Limited Partners and the General Partner, respectively:
<TABLE>
<CAPTION>
LIMITED GENERAL
PARTNERS PARTNER
-------- -------
<S> <C> <C>
I. Until the value of the aggregate distributions for each limited
partnership unit ("Unit") equals $1,000 plus simple interest on such
amount accrued at 5% per annum ("Contribution Payout"); At September
30, 2000, Contribution Payout was $1,462 per
Unit..................................................................... 99% 1%
II. After Contribution Payout and until the value of the aggregate
distributions for each Unit equals $5,000 ("Final Payout")............... 80% 20%
III. After Final Payout....................................................... 75% 25%
</TABLE>
During the quarter ended September 30, 2000, the Partnership made no
cash distributions. During the three months ended June 30, 2000, the Partnership
made a cash distribution which resulted in aggregate distributions per Unit to
reach Contribution Payout as of this date. As a result the General Partner was
allocated 20% of the total cash distribution over Contribution Payout. The total
distribution amounted to $11,672,828 ($200 per Unit; $1,672,828 to the General
Partner). At September 30, 2000, the Partnership has made cash and security
distributions, as valued on the dates of distribution, since inception of $1,483
and $98 per Unit, respectively.
Profits and losses of the Partnership are allocated as follows: (i)
until cumulative profits and losses for each Unit equals Contribution Payout,
99% to Limited Partners and 1% to the General Partner, (ii) after Contribution
Payout and until cumulative profits and losses for each unit equals Final
Payout, 80% to Limited Partners and 20% to the General Partner, and (iii) after
Final Payout, 75% to Limited Partners and 25% to the General Partner. As of
September 30, 2000, the cumulative profits of the Partnership were $926 per
Unit.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements are prepared in conformity with accounting
principles generally accepted in the United States which require management to
make certain estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could differ from
those estimates.
Marketable securities consist of a money market fund and common stock
which are recorded at market value. Marketable securities are not considered
cash equivalents for the Statements of Cash Flows.
Realized and unrealized gains or losses are generally determined on a
specific identification method and are reflected in the Statements of Operations
during the period in which the change in value occurs.
7
<PAGE>
PAINEWEBBER R&D PARTNERS III, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(NOTE 2 CONTINUED)
The Partnership invests in product development contracts with Sponsor
Companies either directly or through product development limited partnerships.
The Partnership expenses product development costs when incurred by the Sponsor
Companies and such costs are reflected as expenditures under product development
projects in the accompanying Statements of Operations. Income received and/or
accrued from investments in Projects is reflected in the Statements of
Operations for the period in which the income is earned.
Since the Partnership's warrants were currently exercisable and the
Sponsor Company's stock was publicly traded, the warrants were carried at
intrinsic value (the excess of market price per share over the exercise price
per share), which approximated fair value.
3. MARKETABLE SECURITIES
The Partnership held the following marketable securities at:
<TABLE>
<CAPTION>
SEPTEMBER 30, 2000 DECEMBER 31, 1999
------------------ -----------------
CARRYING CARRYING
VALUE COST VALUE COST
----- ---- ----- ----
<S> <C> <C> <C> <C>
Money market fund $ 500,559 $ 500,559 $ 1,450,164 $ 1,450,164
Genzyme Molecular Oncology
(461,091 and 713,091 common
shares at September 30, 2000 and
December 31, 1999, respectively) 6,397,638 646,609 4,991,638 1,000,000
Alkermes, Inc.
(Warrant to purchase 7,293 shares) ---- ---- 321,804 ----
Repligen Corporation
(285,700 common shares at
September 30, 2000 and a warrant to
purchase 133,000 common shares at
December 31, 1999) 2,035,612 901,433 83,124 ----
----------- ----------- ----------- -----------
$ 8,933,809 $ 2,048,601 $ 6,846,730 $ 2,450,164
============= =========== =========== ===========
</TABLE>
During the nine months ended September 30, 2000 the Partnership sold
252,000 shares of Genzyme Molecular Oncology ("GMO") for proceeds of $8,968,599
(average price per share of $35.59). The shares had a carrying value as of
December 31, 1999 of $1,764,000 ($7.00 per share) and, accordingly, the
Partnership recognized a gain from the sale of $7,204,599. As of September 30,
2000 and June 30, 2000 the Partnership recorded its remaining investment of
461,091 shares at the market value of $13.875 as compared to $7.00 per share at
December 31, 1999. Accordingly, the Partnership recognized unrealized
appreciation of $3,170,001 for the nine months then ended. At June 30, 1999 and
December 31, 1998 the Partnership recorded its investment of 713,091 shares at
market values of $1,961,001 ($2.75 per share) and $2,317,546 ($3.25 per share),
respectively. At September 30, 1999, the market value was $4,100,274 ($5.75 per
share) resulting in unrealized appreciation of $2,139,273 and $1,782,728 for the
three months and nine months then ended.
8
<PAGE>
PAINEWEBBER R&D PARTNERS III, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(NOTE 3 CONTINUED)
At December 31, 1999 the Partnership owned warrants to purchase 133,000
and 252,700 shares of Repligen Corporation ("Repligen") at exercise prices of
$2.50 per share and $3.50 per share, respectively. The market value of Repligen
as of that date was $3.125 per share. The Partnership recorded its warrant to
purchase 133,000 shares at the intrinsic value of $83,124. During the nine
months ended September 30, 2000, the Partnership exercised the warrants at an
aggregate exercise price of $1,216,950. The Partnership sold 100,000 shares for
aggregate proceeds of $1,584,026 (average price per share of $15.84). The
Partnership recognized a gain from the sale for the nine months ended September
30, 2000 of $1,246,957. The market value of the remaining 285,700 shares as of
September 30, 2000 was $7.125 as compared to $6.28125 per share at June 30, 2000
resulting in recognition of unrealized appreciation of $241,059 and $1,072,606
for the three months and nine months then ended.
During the nine months ended September 30, 2000 the Partnership
exercised its warrant for 7,293 shares of Alkermes, Inc. ("Alkermes") at an
aggregate exercise price of $36,465 ($5.00 per share). At December 31, 1999 the
market value of Alkermes was $49.125 per share and the Partnership recorded the
warrant at its intrinsic value of $321,804. The Partnership sold the Alkermes
shares for aggregate net proceeds of $1,372,515 ($188.20 per share) and
recognized a gain from the sale of $1,014,246 for the nine months ended
September 30, 2000.
During the quarter ended September 30, 1999, the Partnership sold its
shares of Medarex, Inc. ("Medarex") for aggregate proceeds of $4,304,067
(average price of $5.9538 per share). The carrying value of the shares was
$2,982,025 ($4.125 per share) and $2,191,336 ($3.03125 per share) at June 30,
1999 and December 31, 1998, respectively. Accordingly, the Partnership
recognized a gain upon the sale for the three months and nine months ended
September 30, 1999 of $1,322,042 and $2,112,731, respectively. During the nine
months ended September 30, 1999, the Partnership sold its investments in
Biocompatibles International plc ("Biocompatibles"), Gensia Sicor, Inc.
("Gensia") and Pharming Group N.V. ("Pharming"). Upon the sale of Biocompatibles
the Partnership received aggregate proceeds of $1,302,967 (average price of
$1.60 per share) and recognized a gain for the nine months ended September 30,
1999 of $140,010. Aggregate proceeds from the sale of Gensia were $558,564
(average price of $4.05 per share) resulting in a loss for the nine months ended
September 30, 1999 of $65,716. The sale of Pharming generated proceeds of
$796,804 ($6.15 per share) which resulted in a loss of $489,159 for this same
period.
4. RELATED PARTY TRANSACTIONS
The General Partner is entitled to receive an annual management fee for
management and administrative services provided to the Partnership. As of
January 1, 1997, the General Partner elected to discontinue the management fee
charged to the Partnership.
The money market fund invested in by the Partnership is managed by an
affiliate of PaineWebber Incorporated ("PWI").
PWDC and PWI, and its affiliates, have acted in an investment banking
capacity for several of the Sponsor Companies. In addition, PWDC and its
affiliates have direct limited partnership interests in some of the same product
development limited partnerships as the Partnership.
9
<PAGE>
PAINEWEBBER R&D PARTNERS III, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
5. PRODUCT DEVELOPMENT PROJECTS
Of the Partnership's seven original Projects, the following two
Projects are currently active: a $6.0 million investment in Alkermes Clinical
Partners, L.P., a $46.0 million limited partnership formed to fund the
development, clinical testing, manufacturing and marketing of Receptor-Mediated
Permeabilizers for use in the treatment of diseases of the brain and central
nervous system by enabling the delivery of drugs across the blood brain barrier;
and a $6.0 million investment in Cephalon Clinical Partners, L.P., a $45.0
million limited partnership formed to fund the development, clinical testing,
manufacturing and marketing of Myotrophin(TM) for use in the treatment of
amyotrophic lateral sclerosis and certain other peripheral neuropathies.
If the Projects produce any product for commercial sale, the Sponsor
Companies have the option to license the Partnership's technology to manufacture
and market the products developed. In addition, the Sponsor Companies have the
option to purchase the Partnership's interest in the technology. In
consideration for granting such purchase options, the Partnership has received
warrants to purchase shares of common stock of certain of the Sponsor Companies.
As of September 30, 2000, the Partnership held no warrants.
6. INCOME TAXES
The Partnership is not subject to federal, state or local income taxes.
Accordingly, the individual partners are required to report their distributive
share of realized income or loss on their individual federal and state income
tax returns.
7. SUBSEQUENT EVENT
On October 23, 2000, the stockholders of PWG adopted the Agreement and
Plan of Merger dated as of July 12, 2000, by an among PWG, UBS AG and a
subsidiary of UBS AG pursuant to which PWG will merge with and into that
subsidiary. The transaction closed on November 3, 2000.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
------- -----------------------------------------------------------------------
OF OPERATIONS.
--------------
LIQUIDITY AND CAPITAL RESOURCES
Partners' capital increased from $6.8 million at December 31, 1999 to
$8.9 million at September 30, 2000. The change of $2.1 million was due to the
recognition of net income of $13.8 million for the nine months ended September
30, 2000 (as discussed in the Results of Operations below) offset by a cash
distribution to the Partners of $11.7 million.
The Partnership's funds are invested in a money market fund and
marketable securities until cash is needed for the payment of ongoing management
and administrative expenses incurred or remittance of cash distributions to
Partners. Liquid assets increased from $6.8 million at December 31, 1999 to $8.9
million at September 30, 2000. The change of $2.1 million resulted primarily
from (i) increases in the market values of marketable securities held as of
these dates of $4.2 million, (ii) the sale of marketable securities during the
nine months ended September 30, 2000 for cash proceeds in excess of their
carrying values at December 31, 1999 of $9.5 million offset by (iii) cash
distributions to the Partners of $11.7 million.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO
-------------------------------------------------
THE THREE MONTHS ENDED SEPTEMBER 30, 1999:
------------------------------------------
Net income for the three months ended September 30, 2000 and 1999 was
$0.2 million and $3.5 million, respectively. The decrease in net income resulted
primarily from an unfavorable change in revenues of $3.3 million.
Net revenues for the three months ended September 30, 2000 and 1999
were $0.3 million and $3.6 million, respectively. The variance was due to an
unfavorable change in unrealized appreciation of marketable securities of $2.0
million and a decrease in realized gain on sale of marketable securities of $1.3
million. Unrealized appreciation of marketable securities for the three months
ended September 30, 2000 and 1999 was $0.2 million and $2.2 million,
respectively. At September 30, 2000, the market value of Repligen was $7.125 per
share as compared to $6.28125 per share at June 30, 2000. The Partnership
recognized unrealized appreciation of $0.2 million on its investment of 0.285
million shares. At September 30, 1999, the market value of GMO increased from
$2.75 per share at June 30, 1999 to $5.75 per share. Accordingly, the
Partnership recognized unrealized appreciation on its investment of 0.713 shares
of $2.2 million. The market value of GMO as of June 30, 2000 and September 30,
2000 was constant at $13.875 per share. During the quarter ended September 30,
1999, the Partnership sold its investment in Medarex for aggregate proceeds of
$4.3 million. The carrying value of the investment as of June 30, 1999 was $3.0
million, and, accordingly the Partnership recognized a gain of $1.3 million.
There were no material variances in expenses for the three months ended
September 30, 2000 as compared to the same period in 1999.
11
<PAGE>
(ITEM 2 CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO
------------------------------------------------
THE NINE MONTHS ENDED SEPTEMBER 30, 1999:
-----------------------------------------
Net income for the nine months ended September 30, 2000 and 1999 was
$13.8 million and $3.5 million, respectively. The increase of $10.3 million
resulted from a change in revenues of this amount.
Net revenues for the nine months ended September 30, 2000 and 1999 were
$13.9 million and $3.6 million, respectively. Revenues increased as a result of
a favorable change in unrealized appreciation of marketable securities of $2.4
million and increases in realized gain on sale of marketable securities of $7.8
million and interest income of $0.1 million. Unrealized appreciation of
marketable securities for the nine months ended September 30, 2000 was $4.2
million resulting from the Partnership's investments of 0.461 shares of GMO and
0.286 shares of Repligen. The market value of GMO increased from $7.00 per share
as of December 31, 1999 to $13.875 per share as of September 30, 2000.
Repligen's market value increased from $3.125 per share at December 31, 1999 to
$7.125 per share as of September 30, 2000. For the nine months ended September
30, 1999, unrealized appreciation was $1.8 million resulting from the
Partnership's investment of 0.713 shares of GMO. The market value per share as
of September 30, 1999 and December 31, 1998 was $5.75 and $3.25, respectively.
Realized gain on sale of marketable securities for the nine months ended
September 30, 2000 and 1999 was $9.5 million and $1.7 million, respectively.
During the nine months ended September 30, 2000, the Partnership sold 0.252
million shares of GMO for proceeds of $9.0 million (average price per share of
$35.59) with a carrying value of $1.8 million ($7.00 per share) at December 31,
1999 and recognized a gain of $7.2 million. Also, the Partnership sold 0.1
million shares of Repligen for proceeds of $1.6 million (average price per share
of $15.84) and recognized a gain of $1.3 million. The Partnership exercised its
warrant for 7,293 shares of Alkermes (recorded at its intrinsic value as of
December 31, 1999 of $44.125 per share) at $5.00 per share and sold the shares
for $188.20 per share recognizing a gain of $1.0 million for the nine months
ended September 30, 2000. During the nine months ended September 30, 1999, the
Partnership recognized a net gain from the sale of marketable securities
resulting primarily from its investments in Pharming and Medarex. The sale of
Pharming shares (with a carrying value of $1.3 million) for proceeds of $0.8
million resulted in a loss of $0.5 million for this period. In addition, the
Partnership recognized a gain of $2.1 million from its sale of Medarex for
proceeds of $4.3 million as compared to a carrying value at December 31, 1998 of
$2.2 million.
There were no material variances in expenses for the nine months ended
September 30, 2000 as compared to the same period in 1999.
12
<PAGE>
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a) EXHIBITS:
None
b) REPORTS ON FORM 8-K:
None
13
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on this 14th day of
November 2000.
PAINEWEBBER R&D PARTNERS III, L.P.
By: PaineWebber Development Corporation
(General Partner)
By: /s/ Dhananjay M. Pai
----------------------------------------------------
Dhananjay M. Pai
President
By: /s/ Robert J. Chersi
----------------------------------------------------
Robert J. Chersi
Principal Financial and Accounting Officer
14
