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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 EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) SEPTEMBER 22, 1999
CYGNUS, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 0-18962 94-2978092
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(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
400 PENOBSCOT DRIVE, REDWOOD CITY, CALIFORNIA 94063-4719
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (650) 369-4300
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NOT APPLICABLE
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
On September 22, 1999, Cygnus, Inc. issued a press release, the text
of which is attached hereto as Exhibit 99.1, announcing that its 7-day
17B-Estradiol transdermal hormone replacement therapy patch was cleared for
marketing by the United States Food and Drug Administration (FDA).
On September 28, 1999, Cygnus, Inc. issued a press release, the text
of which is attached hereto as Exhibit 99.2, announcing that it has been
awarded a Phase I Small Business Innovative Research (SBIR) grant for "High
Performance Biosensor Electrode Materials" from the National Institute of
Diabetes and Digestive and Kidney Diseases division of the National
Institutes of Health (NIH).
On September 29, 1999, Cygnus, Inc. issued 361,174 shares of its
common stock for $4 million to Cripple Creek Securities, LLC ("Cripple
Creek"), pursuant to its Structured Equity Line Flexible Financing Agreement
with Cripple Creek, dated as of June 30, 1999, as amended by Amendment No. 1
to Structured Equity Line Flexible Financing Agreement dated as of September
29, 1999, attached hereto as Exhibit 1.1, the contents of which are
incorporated herein by reference. The number of shares issued to Cripple
Creek may be increased in accordance with the terms of such agreement.
Also on September 29, 1999, Cygnus, Inc. received $3 million for the
issuance of $3 million aggregate principal amount of its convertible
debentures and five-year warrants to purchase approximately 135,624 shares of
its common stock (subject to adjustment).
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
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<CAPTION>
EXHIBIT NUMBER
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<S> <C>
1.1 Amendment No. 1 to Structured Equity Line Flexible
Financing Agreement dated as of September 29, 1999,
by and between Cygnus, Inc. and Cripple Creek
Securites, LLC.
99.1 Press Release by Cygnus, Inc. dated September 22,
1999 referred to in Item 5 above.
99.2 Press Release by Cygnus, Inc. dated September 28,
1999 referred to in Item 5 above.
</TABLE>
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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.
CYGNUS, INC.
Date: October 7, 1999 By: /s/ Barbara G. McClung
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Barbara G. McClung
Senior Vice President
and General Counsel
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EXHIBIT INDEX
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<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION: NUMBERED PAGE
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<S> <C> <C>
1.1 Amendment No. 1 to Structured Equity Line Flexible Financing Agreement dated 5
as of September 29, 1999, by and between Cygnus, Inc. and Cripple Creek
Securites, LLC.
99.1 Press Release by Cygnus, Inc. dated September 22, 1999 referred to in Item 5 9
above.
99.2 Press Release by Cygnus, Inc. dated September 28, 1999 referred to in Item 5 11
above.
</TABLE>
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EXHIBIT 1.1
AMENDMENT NO. 1
TO
STRUCTURED EQUITY LINE FLEXIBLE FINANCING-SM- AGREEMENT
THIS AMENDMENT NO. 1 to STRUCTURED EQUITY LINE FLEXIBLE
FINANCING-SM- AGREEMENT ("Amendment") is dated as of September 29, 1999
between Cripple Creek Securities, LLC (the "Investor"), and Cygnus, Inc., a
corporation organized and existing under the laws of the State of Delaware
(the "Company"). Capitalized terms not defined herein shall have the meanings
assigned to them in that certain Structured Equity Line Flexible
Financing-SM- Agreement dated as of June 30, 1999 (the "Agreement"), between
the Company and the Investor.
W I T N E S S E T H :
WHEREAS, the Company and the Investor entered into the
Agreement, pursuant to which the Company may issue to the Investor, and the
Investor shall purchase from the Company, from time to time as provided
therein, shares of the Company's common stock, par value $0.001 per share
(the "Common Stock"), for a maximum aggregate Purchase Price of $30,000,000
(the "Maximum Offering Amount"); and
WHEREAS, the Company and the Investor desire to amend the
Agreement as provided herein, and to set forth certain terms with respect to
the issuance and sale by the Company to the Investor of shares of Common
Stock for the Supplemental Investment Amount (as defined below).
NOW, THEREFORE, in consideration of the foregoing premises and
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
AGREEMENT
Section 1.1 The definition of the term "Investment Period" contained
in Section 1.1 of the Agreement is hereby amended and restated in its
entirety as follows:
""INVESTMENT PERIOD" shall mean each successive one-month period
commencing on (a) in the case of the first Investment Period, the first
Trading Day of the calendar month following the end of the Supplemental
Investment Period, PROVIDED that the first Investment Period may start
as of a different date upon the mutual written consent of the Company
and Investor, and (b) in the of subsequent Investment Periods,
commencing on the first Trading Day subsequent to the expiration of the
immediately preceding Investment Period."
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Section 1.2 Section 1.1 of the Agreement is hereby amended to include the
additional definitions as follows:
""Supplemental Investment Amount" shall mean $4,000,000."
""Supplemental Investment Date" shall mean such date as the Company
and the Investor shall mutually agree."
""Supplemental Investment Period" shall mean the period commencing
on the Supplemental Investment Date and ending on the earlier of (a) the date
the Investor has delivered to the Company Investor Notices pursuant to
Section 2.1(a)(ii) for an aggregate Purchase Price equal to the Supplemental
Investment Amount, and (b) the 110th Trading Day after the Supplemental
Investment Date."
""Supplemental Investment Purchase Price" shall mean the average of
the closing bid price per share of the Common Stock for the ten (10) Trading
Days prior to the Supplemental Investment Date."
Section 1.3 Section 2.1(a) of the Agreement is hereby redesignated
as "Section 2.1(a)(i) INITIAL INVESTMENT", and Section 2.1 of the Agreement
is hereby amended to include the additional new Section 2.1(a)(ii) as follows:
"2.1(a)(ii) SUPPLEMENTAL INVESTMENT. On the Supplemental Investment
Date, the Company shall deliver against payment by the Investor of $4,000,000
by federal fund wire transfer or transfer of New York Clearing House Funds to
the Company's account, the number of shares of Common Stock (rounded down to
the nearest whole share) determined by dividing the Supplemental Investment
Amount by the Supplemental Investment Purchase Price. During the Supplemental
Investment Period, the Investor shall deliver to the Company Investor Notices
as if the Investor were obligated during the Supplemental Investment Period
to purchase shares of Common Stock for an aggregate Purchase Price equal to
the Supplemental Investment Amount; PROVIDED, HOWEVER, that in no event may
the Investor deliver, without the written consent of the Company, an Investor
Notice during such Supplemental Investment Period with respect to a dollar
amount, which, together with the aggregate dollar amount covered by Investor
Notices previously delivered, would exceed the greater of (i) $3,000,000, or
(ii) 8% of the average daily Value of Open Market Trading of the Common Stock
on the Principal Market for all prior Trading Days in the Supplemental
Investment Period. In the event that the amount determined pursuant to clause
(ii) is less than $4,000,000 at the end of the Supplemental Investment
Period, the Supplemental Investment Period shall be extended (and no other
Investment Period shall commence) until ten (10) Trading Days after the
amount determined pursuant to clause (ii) is at least $4,000,000. If the
aggregate number of shares of Common Stock the Investor would have received
pursuant to all Investor Notices delivered pursuant to this paragraph is
greater than the number of shares of Common Stock the Investor received on
the Supplemental Investment Date, then the Company shall deliver to the
Investor within two (2) days after the end of the Supplemental Investment
Period that number of shares of Common Stock equal to such difference."
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ARTICLE II
CONDITIONS TO CLOSING ADDITIONAL INVESTMENT
Section 2.1 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY
TO ISSUE AND SELL COMMON Stock. The obligation of the Company to issue and
sell Common Stock to the Investor as contemplated hereby is subject to the
satisfaction, as of the Supplemental Purchase Date (as if the Supplemental
Purchase Date were a Closing Date for purposes of the Agreement), of each of
the conditions set forth in Section 3.1 of the Agreement.
Section 2.2 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE INVESTOR
TO PURCHASE COMMON STOCK. The obligation of the Investor to purchase Common
Stock as contemplated hereby is subject to the satisfaction, as of the
Supplemental Purchase Date (as if the Supplemental Purchase Date were a
Closing Date for purposes of the Agreement), of each of the conditions,
obligations and deliveries set forth in Section 3.2 of the Agreement,
including but not limited to the comfort letter required pursuant to Section
3.2(i) thereof.
ARTICLE III
MISCELLANEOUS
Section 3.1 NO THIRD PARTY BENEFICIARIES. This Amendment is intended
for the benefit of the parties hereto and their respective permitted
successors and assigns and is not for the benefit of, nor may any provision
hereof be enforced by, any other person.
Section 3.2 GOVERNING LAW. This Amendment shall be governed by and
construed and enforced in accordance with the internal laws of the State of
New York without regard to such state's principles of conflict of laws.
Section 3.3 EXECUTION. This Amendment may be executed in two or more
counterparts, all of which shall be considered one and the same agreement, it
being understood that all parties need not sign the same counterpart.
Section 3.4 Except as amended hereby, the Agreement shall remain
unchanged and in full force and effect.
[REST OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment No.
1 to Structured Equity Line Flexible Financing-SM- Agreement to be duly
executed by their respective authorized officers as of the date hereof.
CRIPPLE CREEK SECURITIES, LLC CYGNUS, INC.
By: /S/ ROBERT L. CHENDER By: /S/ CRAIG W. CARLSON
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Name: Robert L. Chender Name: Craig W. Carlson
Title: Principal Title: Senior Vice President, Finance
Chief Financial Officer
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EXHIBIT 99.1
FOR ADDITIONAL INFORMATION:
Corporate Communications, Cygnus
(650) 369-4300 WWW.CYGN.COM
BURNS MCCLELLAN (212) 213-0006
JUSTIN JACKSON - MEDIA
FOR IMMEDIATE RELEASE
FDA APPROVES 7-DAY ESTROGEN PATCH DEVELOPED BY CYGNUS, INC.
Redwood City, CA - September 22, 1999 - Cygnus, Inc (Nasdaq: CYGN) today
announced that its 7-day 17B-Estradiol transdermal hormone replacement
therapy patch was cleared for marketing by the United States Food and Drug
Administration (FDA). Cygnus developed and has manufacturing rights for the
7-day transdermal patch, which the Company refers to as E(2)III. Cygnus also
has marketing rights to this product, and is in the process of assessing
potential sales and distribution alternatives.
"We're very pleased that the E(2)III product was approved. The fact that this
product and two previous Cygnus developed products that have been submitted to
the FDA have been approved is a testament to the Company's ability to formulate
and produce products that are shown to be safe and effective," stated John C.
Hodgman, Chairman, President and Chief Executive Officer of Cygnus. "This
approval also represents the high quality of work and successful team efforts of
the many people involved in this project, including the research and
development, quality assurance, engineering and production groups."
The NDA provides for the use of estradiol transdermal system 0.05, 0.075, and
0.1 mg per day for treatment of moderate to severe vasomotor symptoms
associated with menopause and treatment of vulvar and vaginal atrophy.
Estrogens should not be used by patients with known or suspected pregnancy,
breast cancer, estrogen-dependent neoplasia, undiagnosed abnormal genital
bleeding, active thrombophlebitis or thromboembolic disorders. Estrogens have
been reported to increase the risk of endometrial carcinoma.
The Wyeth-Ayerst division of American Home Products provided most of the
funding for the development of E(2)III and was responsible for the clinical
trials as well as the submission of the NDA. In June 1999, Wyeth-Ayerst did
not exercise its option to reacquire the rights to the two hormone
replacement patches it had been funding with Cygnus.
The hormone replacement therapy market is large, with $2.5 billion in sales
worldwide, and is expected to grow as more women reach menopause. The
transdermal segment of this market in the U.S. accounts for approximately 10% of
total sales.
Cygnus is engaged in the development and manufacture of diagnostic and drug
delivery systems utilizing its proprietary technologies to satisfy unmet medical
needs cost effectively. Cygnus' current efforts are primarily focused on two
core areas: a frequent, automatic and non-invasive monitoring device (the
GlucoWatch(R) Monitor) and transdermal drug delivery systems.
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This news release contains forward-looking statements regarding future events
and the future performance of the Company that involve risks and uncertainties
that may cause the Company's actual results to differ materially. Such factors
include the ability to manufacture Cygnus' estradiol transdermal system, E2III,
in commercial quantities at reasonable cost and to be able to successfully
market the product. The Company refers you to the documents the Company files
from time to time with the Securities and Exchange Commission, including the
Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K, which contain descriptions of certain factors that could
cause the Company's actual results to differ from the Company's current
expectations and any forward-looking statements contained in this news release.
END
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EXHIBIT 99.2
FOR ADDITIONAL INFORMATION:
Corporate Communications, Cygnus
(650) 369-4300 WWW.CYGN.COM
BURNS MCCLELLAN (212) 213-0006
JUSTIN JACKSON - MEDIA
FOR IMMEDIATE RELEASE
Cygnus, Inc. Receives Research Grant from the National Institute of Diabetes
and Digestive and Kidney Diseases
REDWOOD CITY, CA - SEPTEMBER 28, 1999 - CYGNUS, INC. (NASDAQ: CYGN) TODAY
ANNOUNCED THAT IT HAS BEEN AWARDED A PHASE I SMALL BUSINESS INNOVATIVE
RESEARCH (SBIR) GRANT FOR "HIGH PERFORMANCE BIOSENSOR ELECTRODE MATERIALS"
FROM THE NATIONAL INSTITUTE OF DIABETES AND DIGESTIVE AND
KIDNEY DISEASES DIVISION OF THE NATIONAL INSTITUTES OF HEALTH (NIH).
"This Phase I grant funding will be used to investigate advancements in
biosensor materials used for glucose detection and measurement. These
advanced biosensor materials are expected to be included in future
generations of the GlucoWatch-Register Trademark- monitor," stated John C.
Hodgman, Chairman, President and Chief ExecutivE Officer of Cygnus. "We hope
to receive official notification soon from the FDA regarding a date for an
Advisory Panel meeting to review our pre-market approval application (PMA)
for the first version of the GlucoWatch-Register Trademark- monitor, which is
currently under FDA expedited review."
This Phase I NIH grant has a term of six months, and Cygnus will receive
approximately $100,000. The focus of the activity will be exploring
advancements in the catalytic surface of the electrode. In the
GlucoWatch-Register Trademark- monitor the electrode is part of the
AutoSensor, which is the consumable component that provides 12 hours' worth
of readings.
Cygnus' GlucoWatch-Register Trademark- monitor represents a potential advance
in diabetes care technology as compared to thE currently prevailing "finger
stick" blood monitoring method. The GlucoWatch-Register Trademark- monitor is
designed to measure glucose frequently, automatically and non-invasively
through the ease and convenience of a device worn like a wristwatch. The
GlucoWatch-Register Trademark- monitor provides automatic readings every 20
minutes for 12 hours with just one finger-stick for calibration, allowing for
measurements to be taken even when patients would otherwise be unable to
test. An alert system notifies patients of hypoglycemia, hyperglycemia, and
rapid declines in glucose levels. The GlucoWatch-Register Trademark- monitor
stores 4,000 readings, providing long-term trend data that can be downloaded
and analyzed. Due to the frequency of measurement, the GlucoWatch-Register
Trademark- monitor has the potential to identify opportunities for improving
glucose control without frequent finger-sticks.
Cygnus is engaged in the development and manufacture of diagnostic and drug
delivery systems utilizing its proprietary technologies to satisfy unmet
medical needs cost effectively. Cygnus' current efforts are primarily focused
on two core areas: a frequent, automatic and non-invasive monitoring device
(the GlucoWatch-Register Trademark- monitor) and transdermal drug delivery
systems.
10
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This news release contains forward-looking statements regarding future events
and the future performance of the Company that involve risks and
uncertainties that may cause the Company's actual results to differ
materially. There can be no assurances that the FDA will clear this device
for market approval. Also, there can be no assurance that if the Company
receives clearance from the FDA to market the device that the product could
be successfully marketed or manufactured. The Company refers you to the
documents the Company files from time to time with the Securities and
Exchange Commission, including the Company's Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, which contain
descriptions of certain factors that could cause the Company's actual results
to differ from the Company's current expectations and any forward-looking
statements contained in this news release.
END
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