<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------------------------------
FORM 8-K/A
AMENDMENT NO. 1 TO CURRENT REPORT ON FORM 8-K
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) DECEMBER 15, 1999
--------------------------------
CYGNUS, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 0-18962 94-2978092
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
400 PENOBSCOT DRIVE, REDWOOD CITY, CALIFORNIA 94063-4719
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (650) 369-4300
-----------------------------
NOT APPLICABLE
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
This amendment to Form 8-K is being filed to amend Item 2 to the Company's
Form 8-K filed on December 30, 1999 to expand on our discussion and Item 7
with respect to the reported gain on sale of assets to reflect the final
accounting for the transaction that is the subject of the Form 8-K.
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On December 15, 1999, Cygnus, Inc. ("Cygnus") completed the sale of
substantially all of its drug delivery business assets to Ortho-McNeil
Pharmaceutical, Inc., a Johnson & Johnson company ("Ortho-McNeil"), for up to
$75 million in cash. We sold all of the assets of our drug delivery business
to Ortho-McNeil except those relating to a nicotine patch under development
and one other early-stage project - both of which have since been terminated.
The sale was completed pursuant to the terms of an Asset Purchase Agreement
dated as of November 17, 1999, between Cygnus and Ortho-McNeil. Under the
terms of the agreement, we received $20 million in cash at closing, and
Ortho-McNeil will pay up to an additional $55 million in cash, contingent on
the achievement of certain milestones. The remaining contingent payments
relate to the achievement of certain technical, regulatory and
commercialization milestones related to the EVRA-TM- (Johnson & Johnson, New
Brunswick, New Jersey) transdermal contraceptive patch.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
Not applicable.
(b) Pro Forma Financial Information.
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of
September 30, 1999
Unaudited Pro Forma Condensed Consolidated Statements of
Income for the fiscal year ended December 31, 1998 and the
nine month period ending September 30, 1999.
Notes to Unaudited Pro Forma Condensed Consolidated Financial
statements
(c) Exhibits.
EXHIBIT NUMBER
<PAGE>
CYGNUS, INC.
Pro Forma Condensed consolidated Balance Sheet
September 30, 1999
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
As Filed
In 10-Q Pro Forma
(unaudited) Adjustments Pro Forma
---------------------------------- --------------------
<S> <C> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $ 18,125 $ 17,344 (a) $ 35,469
Restricted cash 871 ---- 871
Short-term investments 3,757 ---- 3,757
Trade accounts receivable, net of allowance 1,424 ---- 1,424
Prepaid expenses and other current assets 847 ---- 847
---------------------------------- --------------------
Total current assets 25,024 17,344 42,368
Equipment and leasehold improvements:
Equipment and leasehold improvements, at cost 21,751 (5,062) (a) 16,689
Less accumulated depreciation and amortization (14,381) 4,026 (a) (10,355)
---------------------------------- --------------------
Net equipment and improvements 7,370 (1,036) 6,334
Deferred compensation and other assets 1,011 ---- 1,011
Deferred financing cost 6,299 ---- 6,299
---------------------------------- --------------------
Total assets $ 39,704 $ 16,308 $ 56,012
================================== ====================
LIABILITIES AND NET CAPITAL DEFICIENCY:
Current liabilities:
Accounts payable $ 2,253 $ ---- $ 2,253
Accrued compensation 3,299 ---- 3,299
Accrued professional services 606 ---- 606
Other accrued liabilities 910 ---- 910
Customer advances 27 ---- 27
Current portion of arbitration obligation 320 ---- 320
Current portion of deferred revenue 2,120 ---- 2,120
Current portion of long-term debt 3,387 ---- 3,387
Current portion of capital lease obligations 442 ---- 442
---------------------------------- --------------------
Total current liabilities 13,364 ---- 13,364
Long-term portion of arbitration obligation 23,909 ---- 23,909
Long-term portion of debt 4,158 ---- 4,158
Long-term portion of capital lease obligations 254 ---- 254
Convertible Debentures 17,000 ---- 17,000
Deferred compensation and other long-term liabilities 416 ---- 416
Stockholders' net capital deficiency:
Common stock 25 ---- 25
Additional paid-in-capital 172,475 ---- 172,475
Accumulated deficit (191,885) 16,308 (a) (175,577)
Accumulated other comprehensive income/(loss) (12) ---- (12)
---------------------------------- --------------------
Net capital deficiency (19,397) 16,308 (3,089)
================================== ====================
Total liabilities and stockholders' net capital
deficiency $ 39,704 $ 16,308 $ 56,012
================================== ====================
</TABLE>
<PAGE>
CYGNUS, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Nine Months Ended September 30, 1999
(unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
AS FILED PRO FORMA PRO
IN 10-Q ADJUSTMENTS FORMA
-----
<S> <C> <C> <C>
PRODUCT REVENUES $ ---- $ ---- $ ----
- ----------------------------------
Contract revenues 10,278 (7,561) (b) 2,717
Royalty and other revenues 972 (972) (b) ----
----------- -------------- -----------
TOTAL REVENUES 11,250 (8,533) 2,717
Costs and expenses:
Costs of products sold ---- ---- ----
Research and development 19,297 (5,335) (b) 13,962
Marketing, general and
administrative 5,176 (1,147) (b) 4,029
----------- -------------- -----------
TOTAL COSTS AND EXPENSES 24,473 (6,482) 17,991
LOSS FROM OPERATIONS (13,223) (2,051) (15,274)
Interest income/(expense), net (2,707) ---- (2,707)
------------ -------------- ------------
NET LOSS $ (15,930) $ (2,051) $ (17,981)
============ ============== ============
Basic and diluted net loss per share $ (0.70) $ (0.79)
============ ============
Shares used in computation of basic and diluted
net loss per share 22,854 22,854
============ ===========
</TABLE>
(See accompanying notes to Pro Forma Condensed
Consolidated Financial Statements.)
<PAGE>
CYGNUS, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1998
(unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
AS FILED PRO FORMA PRO
IN 10-K ADJUSTMENTS FORMA
-----
<S> <C> <C> <C>
PRODUCT REVENUES $ 587 $ (587) (b) $ ----
- ---------------------------------------
Contract revenues 10,178 (7,955) (b) 2,223
Royalty and other revenues 890 (890) (b) ----
----------- -------------- -----------
TOTAL REVENUES 11,655 (9,432) 2,223
Costs and expenses:
Costs of products sold 3,478 (3,478) (b) ----
Research and development 32,149 (6,335) (b) 25,814
Marketing, general and
administrative 11,730 (2,920) (b) 8,810
----------- -------------- -----------
TOTAL COSTS AND EXPENSES 47,357 (12,733) 34,624
LOSS FROM OPERATIONS (35,702) 3,301 (32,401)
Interest income/(expense), net (3,726) (2,738) (b) (6,464)
------------ -------------- ------------
NET LOSS $ (39,428) $ 563 $ (38,865)
============ ============== ============
Basic and diluted net loss per share $ (1.95) $ (1.92)
============ ============
Shares used in computation of basic and diluted
net loss per share 20,226 20,226
============ ===========
</TABLE>
(See accompanying notes to Pro Forma Condensed
Consolidated Financial Statements.)
<PAGE>
CYGNUS, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Pro Forma Condensed Consolidated Balance Sheet Adjustments:
The pro forma condensed consolidated balance sheet assumes
that the sale of the drug delivery business to Ortho-McNeil occurred as of
September 30, 1999. Assumptions and adjustments to reflect the drug delivery
business sale in the condensed consolidated balance sheet include:
(a) To reflect the estimated net cash proceeds and gain on the sale of the
drug delivery business to J&J.:
- - $20.0 million Sales price
- - $ 2.7 million Estimated costs resulting directly from the sale
including transaction fees, sales tax, legal and
accounting fees, lease buyouts, termination benefits
and contract termination expenses
- - $17.3 million Estimated net cash proceeds
- - $ 1.0 million Net operating assets of drug delivery business as of
September 30, 1999
- - $16.3 million Estimated after-tax gain
For the purpose of these statements certain employee
termination benefits and costs for severance provisions have been included in
the estimated costs resulting directly from the sale of the drug delivery
business.
The asset purchase agreement between the two parties dated
November 17, 1999 provides for a payment of up to an additional $55.0 million
over the next seven years subject to certain conditions. As this additional
consideration is of a contingent nature, it has not been reflected in the pro
forma condensed consolidated financial statements or adjustments.
Pro Forma Condensed Consolidated Statement of Operations Adjustments:
The pro forma condensed consolidated statements of
operations assume that the sale of the drug delivery business to Ortho-McNeil
occurred as of January 1, 1998. The statements do not include any impact of
the gain on disposal or costs related to the sale. The pro forma adjustments
(b) are to eliminate results of operations of drug delivery business from
historical financial statement amounts and relate entirely to the drug
delivery business. In future public filings, historical results will be
restated from those previously filed to reflect results of the drug delivery
business as discontinued operations in accordance with Accounting Principles
Board Opinion No. 30.
<PAGE>
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: February 17, 2000 By: /s/ BARBARA G. MCCLUNG
------------------------------
Barbara G. McClung
Senior Vice President
and General Counsel
