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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
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Date of report (Date of earliest event reported) February 9, 1999
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ALTEON INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 0-19529 13-3304550
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(State or Other Juris- (Commission (I.R.S. Employer
diction of Incorporation) File Number) Identification No.)
170 Williams Drive, Ramsey, New Jersey 07446
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (201) 934-5000
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(Former Name or Former Address, If Changed Since Last Report)
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Item 5. Other Events.
A. On February 9, 1999, Alteon Inc. issued the following press
release:
"ALTEON TO REGAIN RIGHTS TO PIMAGEDINE AFTER GENENTECH
ANNOUNCES INTENT TO WITHDRAW SUPPORT FROM
PIMAGEDINE DEVELOPMENT PROGRAM
"--Alteon and Genentech in Negotiations as to
Future Collaboration--
"Ramsey, New Jersey, February 9, 1999 - Alteon Inc. (Nasdaq: ALTN)
announced today that Genentech, Inc. has announced its intent to
terminate its support covering the development of pimagedine and
second generation A.G.E. (Advanced Glycosylation End-products)
inhibitors. Genentech's decision on pimagedine is being made
before Alteon meets with the Food and Drug Administration to
discuss future development plans for the compound.
"Pimagedine, and future A.G.E.-formation inhibitors, were licensed
to Genentech in 1997. The agreement included funding for
pimagedine's clinical development and potentially also for second
generation A.G.E.-formation inhibitors, and marketing rights to the
compounds in North America, Europe and other countries. Alteon and
Genentech remain in negotiations for a separate collaboration.
"'Genentech is discontinuing its support for the pimagedine program
for business reasons,' said Nicholas J. Simon, Vice President of
Business & Corporate Development at Genentech. 'Although based on
the preliminary analysis, pimagedine did not show statistical
significance for its primary endpoint, the drug evidenced activity
in several key secondary endpoints.'
"'We understand the complexities of Genentech's business
endeavors,' said Kenneth I. Moch, President and Chief Executive
Officer of Alteon. 'While we are disappointed that Genentech has
chosen not to continue as our partner for pimagedine, we are
pleased that they remain interested in Alteon and its technology.'
"Mr. Moch continued, 'Alteon regains rights to its lead compound,
pimagedine, which may provide us with a significant opportunity for
the treatment of diabetic kidney disease. Our medical consultants
and clinical advisors have advised us to continue evaluation of
this compound. Based on an ongoing in-depth analysis of the Phase
III ACTION trial results, we are preparing a comprehensive pre-NDA
data package on pimagedine to bring to the U.S. Food and Drug
Administration (FDA). In addition, the FDA recently notified
Alteon that should a New Drug Application for pimagedine ever be
filed it will receive a fast track designation.'
"In November 1998, Alteon announced that a preliminary analysis of
a pivotal Phase III trial of pimagedine in diabetic patients with
kidney disease demonstrated mixed results. Although the results
showed that pimagedine reduced the risk of doubling of serum
creatinine, the study's primary endpoint, the data did not reach
statistical significance. Pimagedine therapy did, however, result
in statistically significant improvements in reducing urinary
protein, reducing LDL cholesterol and triglycerides, and reducing
diastolic blood pressure. A subsequent analysis also showed that
pimagedine therapy had an impact in the reduction of retinopathy.
"Alteon is engaged in the discovery and development of
pharmaceutical products for the treatment of the complications of
diabetes and age-related diseases. Alteon's proprietary technology
focuses on Advanced Glycosylation End-products, or A.G.E.s, formed
as a result of circulating blood glucose reacting with proteins.
A.G.E.s have been shown to be a causative factor in many of the
complications of diabetes and aging, including kidney disease,
nerve damage, atherosclerosis and retinopathy. Alteon's approach
is to inhibit or break A.G.E.s or their chemical crosslinks,
thereby potentially impacting the disease states associated with
diabetes and aging. A Phase III pivotal clinical trial evaluating
Alteon's lead A.G.E. inhibitor pimagedine in the treatment of Type
1 and Type 2 diabetic patients with end-stage renal disease (ESRD)
is ongoing. ALT-711, Alteon's lead A.G.E. crosslink breaker, has
recently competed Phase I human clinical trials and is expected to
enter Phase II trials in 1999. Alteon is also pursuing the
development of a novel series of glucose lowering agent (GLA)
compounds.
# # #
"Any statements contained in this press release that relate to
future plans, events or performance are forward-looking statements
that involve risks and uncertainties including, but not limited to,
those relating to technology and product development, regulatory
approval processes, intellectual property rights and litigation,
competitive products and other risks identified in Alteon's filings
with the Securities and Exchange Commission. Actual results,
events or performances may differ materially. Alteon undertakes no
obligation to publicly release the result of any revision to these
forward-looking statements that may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
"This press release is also available at www.alteonpharma.com."
B. Alteon Inc. and Genentech, Inc. entered into a Letter
Agreement dated February 11, 1999 (a copy of which is attached
hereto as Exhibit 10.1) relating to the Development Collaboration
and License Agreement and the Stock Purchase Agreement, each dated
as of December 1, 1997, as amended, between the two parties.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
The following Exhibit is furnished in accordance with the
provisions of Item 601 of Regulation S-K.
10.1 Letter Agreement dated February 11, 1999 between Alteon Inc.
and Genentech, Inc. relating to the Development Collaboration
and License Agreement and the Stock Purchase Agreement, each
dated as of December 1, 1997, as amended, between the two
parties.
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SIGNATURE
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.
Alteon Inc.
By: /s/ Elizabeth A. O'Dell
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Elizabeth A. O'Dell
Vice President, Finance and
Administration, Secretary and
Treasurer
Date: February 19, 1999
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EXHIBIT INDEX
Exhibit
No. Description of Exhibit
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10.1 Letter Agreement dated February 11, 1999 between Alteon
Inc. and Genentech, Inc. relating to the Development
Collaboration and License Agreement and the Stock
Purchase Agreement, each dated as of December 1, 1997, as
amended, between the two parties.
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EXHIBIT 10.1
February 11, 1999
Genentech, Inc.
Attn: Mr. Roy C. Hardiman
One DNA Way
South San Francisco, CA 94080-4990
Re: Development Collaboration and License Agreement between
Genentech, Inc. ("Genentech") and Alteon, Inc. ("Alteon"),
and Stock Purchase Agreement between Genentech and Alteon,
each dated as of December 1, 1997, as amended by Amendment
to Stock Purchase Agreement and Development Collaboration
and License Agreement, between Genentech and Alteon, dated
as of April 29, 1998 (as amended, the "License Agreement",
the "Stock Purchase Agreement", and collectively the
"Agreements")
Dear Roy:
This letter will confirm that Genentech and Alteon have agreed
as follows with respect to the Agreements and the subject matter
thereof and hereof:
1. Termination. Subject to the terms and conditions set
forth in this letter: (a) effective on June 30, 1999 (the
"Termination Date"), the License Agreement shall terminate
automatically with the effects set forth in Sections 10.07(b) and
10.10, unless prior to such Termination Date Genentech and Alteon
agree in writing to amend the License Agreement in lieu of such
termination (in which event the License Agreement as so amended
shall continue in full force and effect); and (b) effective on
December 31, 1998, Genentech's obligations to purchase additional
shares of stock of Alteon pursuant to the Stock Purchase Agreement
terminated, together with any Genentech obligations (if any) to
commit any of its own resources or efforts under the License
Agreement. Such termination (if any) shall be pursuant to Section
10.5 of the License Agreement, except that no further written
notice of termination shall be required, Genentech and Alteon have
agreed that this letter serves as effective written notice from
Genentech of such termination (unless Genentech and Alteon agree to
modify and continue the License Agreement as contemplated
hereinabove). Notwithstanding any provision in either Agreement,
but subject to the terms of this letter, unless Genentech and
Alteon agree to modify and continue the License Agreement as
contemplated hereinabove, (i) after the Termination Date, Alteon,
either alone or in collaboration with any third party(ies), shall
be entitled to pursue research, development and
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commercialization of all of the Alteon technology covered by the
License Agreement in any manner that Alteon, in its sole
discretion, shall deem appropriate, without further obligation to
Genentech, and (ii) after the date of this letter, Alteon shall be
entitled to discuss potential arrangements relating to such Alteon
technology with third parties.
2. Final Budget; Reconciliation. Unless Genentech and
Alteon agree to modify and continue the License Agreement as
contemplated under Paragraph 1 of this letter, the funding
provisions of this Paragraph 2 shall apply, notwithstanding
anything to the contrary set forth in the Agreements. In
anticipation of potential termination of the License Agreement
under Paragraph 1, this letter shall constitute written notice
under Section 3.11(c) of the License Agreement of Alteon's election
to continue the pimagedine Development Program until the
Termination Date, including, but not limited to, continuation of
enrollment and conduct of the on-going ESRD trial, continuation of
the ACTION I trial through a pre-NDA meeting with the United States
Food and Drug Administration ("FDA")(followed by continuation or
close-out as recommended by the FDA), continuation of the ACTION II
trial close-out and follow up, preparation (including support
documentation) for the pre-NDA meeting with the FDA, preparation
for NDA filing, on-going drug stability testing, and other
necessary or appropriate Development Costs as contemplated by the
License Agreement incurred in connection with continuation or wind-down of
the agreed upon pimagedine Development Program for the
Initial Indications. Promptly after the date of this letter, but
not later than March 31, 1999, Alteon and Genentech shall negotiate
in good faith and agree in writing upon the total amount of funding
(the "Funding Amount") that Genentech shall provide to Alteon
pursuant to Section 3.11(c) of the License Agreement and the budget
(the "Budget") of Alteon's "Development Costs" (as defined in the
License Agreement) to be covered thereby to support Alteon's
continuance of the pimagedine Development Program as contemplated
above; and in anticipation of such March 31 deadline, Alteon shall
provide Genentech with a reconciliation of 1998 Development Costs
within 20 (twenty) days after the date of this letter and with a
proposed Budget and Funding Amount within thirty (30) days after
the date of this letter. Notwithstanding any provision in either
Agreement, Genentech shall provide such funding hereunder as wire
transfers of cash to Alteon (to an account designated by Alteon),
rather than through the purchase of Series H Preferred Stock. On
April 5, 1999, Genentech shall provide a first cash payment to
Alteon equal to seventy five percent (75%) of the agreed-upon
Funding Amount, less any unused funds as of December 31, 1998, from
prior equity purchases by Genentech; provided, however, that if the
parties have not agreed upon all components of the Budget and the
full Funding Amount by such April 5 deadline, such cash payment
shall be in an amount equal to seventy five percent (75%) of the
amounts in the Budget and the Funding Amount that the parties have
agreed upon in writing at such time.
Not later than sixty (60) days after the Termination Date,
Alteon shall provide Genentech for its review and approval with a
detailed written reconciliation comparing Alteon's actual
expenditures to the agreed-upon Budget of Development Costs for the
period from January 1, 1999 through the Termination Date. Within
thirty (30) days after Alteon's delivery of the detailed written
reconciliation to Genentech, Genentech shall provide a second cash
payment to Alteon equal to the balance of the agreed-upon Funding
Amount, less the excess amount of any budgeted Development Costs
over any actual expenditures
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incurred by Alteon through the Termination Date; provided, however,
that Genentech shall be entitled to withhold from such payment any
amount(s) under such reconciliation that Genentech (acting in good
faith) does not agree to, in which event Genentech shall be
entitled to audit Alteon's Development Costs as provided in Section
6.4 of the License Agreement and shall only owe such amount(s) as
are definitely established as owed hereunder pursuant to such audit
(with interest thereon calculated at the rate set forth in Section
6.5 of the License Agreement for the period from the date called
for payment in this second sentence of this paragraph through the
date of payment); and provided further, however, that (i) if such
amount is zero or less, no second payment shall be owed, and (ii)
if at such time Alteon has previous funding from Genentech in
excess of the Development Costs actually incurred by Alteon for the
period from January 1, 1999 through the Termination Date, no second
payment shall be owed and Alteon promptly shall refund all such
excess unused funds to Genentech (with interest thereon calculated
at the rate set forth in Section 6.5 of the License Agreement for
the period from the Termination Date through the date of refund).
Alteon shall use funds provided by Genentech only in accordance
with the agreed-upon Budget for Alteon's continuance or wind-down
of the agreed upon Development Program, and not for any other
purpose(s) without Genentech's prior written consent.
3. Joint Steering Committee. Each Party's representatives
on the Joint Steering Committee (as defined in the License
Agreement) shall be responsible for reviewing and approving in
writing a mutually agreeable Budget and Funding Amount under
Paragraph 2 above. Thereafter, the Joint Steering Committee shall
be disbanded, but the parties must mutually agree in writing upon
any modification(s) to the Budget and/or the Funding Amount,
including as proposed by Alteon in connection with its decision (if
any) to modify and/or wind down any Development Program that it
previously elected to continue under Paragraph 2 above. Through
the Termination Date, unless Genentech and Alteon agree to modify
and continue the License Agreement as contemplated under Paragraph
1 of this letter, subject to the requirements of this letter that
Genentech and Alteon must mutually agree in writing on the Budget,
the Funding Amount and on any modification(s) to such Budget and/or
Funding Amount, Alteon shall be entitled to decide unilaterally
whether to continue, modify and/or wind down any Development
Programs, and shall not be required to obtain Genentech's prior
review and/or approval before contacting the U.S. Food and Drug
Administration or taking other actions in connection with its
decisions or development hereunder.
4. Breakers Technology. Notwithstanding the ninety (90)-day
negotiation period set forth in Section 3.12(b) of the License
Agreement, Alteon and Genentech shall continue their current
negotiations under Section 3.12 of the License Agreement concerning
a possible collaboration with respect to Alteon's AGE-breakers
technology, in good faith, until the earlier of (a) Alteon's and
Genentech's written agreement on terms relating to such AGE-breakers
technology or (b) April 15, 1999 (which shall constitute
the end of any required negotiation period under Section 3.12). On
the termination Date, Section 3.12 of the License Agreement shall
be of no further force and effect.
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5. Redemption of Preferred Stock. Following the date of
this letter, Alteon shall endeavor, but shall be under no
obligation, to repurchase, using funds Alteon may receive from its
collaborative partners or otherwise, some or all of the shares of
Preferred Stock that Genentech has purchased pursuant to the Stock
Purchase Agreement (collectively, the "Preferred Shares"), at the
price(s) paid therefor by Genentech. Genentech may, at its option,
sell some or all such Preferred Shares to Alteon, but shall be
under no obligation to do so.
6. Entire Agreement. This letter sets forth the entire
agreement of Genentech and Alteon with respect to the subject
matter hereof, and amends the Agreements as set forth herein. As
amended by this letter each Agreement remains in full force and
effect. In the event of any inconsistency between this letter and
either Agreement, this letter shall prevail. Except for Paragraph
4, the provisions of this letter shall survive termination of
either Agreement.
Alteon has provided two (2) originals of this letter, accepted
and signed by Alteon. Please indicate Genentech's acceptance by
signing both copies of this letter and returning one (1) copy to
the undersigned. The other copy should be retained for Genentech's
files.
Sincerely,
ALTEON, INC.
By: /s/ Kenneth Moch
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Its: President & CEO
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ACCEPTED AND AGREED:
GENENTECH, INC.
By: /s/ Nicholas J. Simon
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Its: Vice President
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Business and Corporate
Development
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