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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
TRANSKARYOTIC THERAPIES, INC.
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(Name of Issuer)
Common Shares, $0.01 Par Value
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(Title of Class of Securities)
893735-10-0
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(CUSIP Number of Class of Securities)
Stephen Distler
E.M. Warburg, Pincus & Co., LLC
466 Lexington Avenue
New York, New York 10017
(212) 878-0600
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
Copies to:
Peter H. Jakes, Esq.
Willkie Farr & Gallagher
787 Seventh Avenue
New York, NY 10019-6099
(212) 728-8000
June 9, 2000
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(Date of Event which Requires
Filing of this Schedule)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following: [ ]
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SCHEDULE 13D
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CUSIP No. 893735-10-0 Page 2 of 23 Pages
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1 NAME OF REPORT PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Warburg, Pincus Equity Partners, L.P. I.D. #13-3986317
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
3,037,500
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NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY
OWNED BY EACH --------- ------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
3,037,500
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10 SHARED DISPOSITIVE POWER
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
3,037,500
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.8%
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14 TYPE OF REPORTING PERSON*
PN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
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SCHEDULE 13D
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CUSIP No. 893735-10-0 Page 3 of 23 Pages
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1 NAME OF REPORT PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Warburg, Pincus & Co. I.D. #13-6358475
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
N/A
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
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7 SOLE VOTING POWER
38,667
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NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 3,214,476
OWNED BY EACH --------- ------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
38,667
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10 SHARED DISPOSITIVE POWER
3,214,476
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
3,253,083
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
12.6%
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14 TYPE OF REPORTING PERSON*
PN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
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SCHEDULE 13D
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CUSIP No. 893735-10-0 Page 4 of 23 Pages
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1 NAME OF REPORT PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
E.M. Warburg, Pincus & Co., LLC I.D. #13-3536050
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
N/A
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
--------------------- --------- ------------------------------------------------
7 SOLE VOTING POWER
0
--------- ------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 3,253,083
OWNED BY EACH --------- ------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
0
--------- ------------------------------------------------
10 SHARED DISPOSITIVE POWER
3,253,083
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
3,253,083
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
----------- --------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
12.6%
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14 TYPE OF REPORTING PERSON*
OO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
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This Schedule 13D is being filed on behalf of Warburg, Pincus Equity
Partners, L.P., a Delaware limited partnership ("WPEP"), Warburg, Pincus & Co.,
a New York general partnership ("WP"), and E.M. Warburg, Pincus & Co., LLC, a
New York limited liability company ("EMW" and, together with WPEP and WP, the
"Reporting Entities"). This Schedule 13D relates to the common shares, par value
$0.01, of Transkaryotic Therapies, Inc., a Delaware corporation (the "Company").
Unless the context otherwise requires, references herein to the "Common Stock"
are to the shares of common stock of the Company, par value $0.01 per share. The
holdings of Common Stock of WP and EMW in this Schedule 13D include certain
shares of Common Stock which may be deemed to be beneficially owned by Warburg,
Pincus Netherlands Equity Partners I, C.V. ("WPNEPI"), Warburg, Pincus
Netherlands Equity Partners II, C.V. ("WPNEPII") and Warburg, Pincus Netherlands
Equity Partners III, C.V. ("WPNEPIII" and, together with WPNEPI, WPNEPII and
WPEP, the "Investors"). WP, EMW and the Investors are referred to herein as the
"Group Members."
Item 1. Security and Issuer.
This statement on Schedule 13D relates to the Common Stock of the Company,
and is being filed pursuant to Rule 13d-1 under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). The address of the principal executive
offices of the Company is 195 Albany Street, Cambridge, MA 02139.
Item 2. Identity and Background.
(a) This statement is filed by the Reporting Entities. The Group Members
are deemed to be a group within the meaning of Rule 13d-5. The sole general
partner of each of the Investors is WP. EMW manages each of the Investors.
Lionel I. Pincus is the
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managing partner of WP and the managing member of EMW and may be deemed to
control both WP and EMW. The general partners of WP and the members of EMW are
described in Schedule I hereto.
(b) The address of the principal business and principal office of each of
the Reporting Entities is 466 Lexington Avenue, New York, New York 10017.
(c) The principal business of each of the Investors is that of a
partnership engaged in making venture capital and related investments. The
principal business of WP is acting as general partner of each of the Investors,
Warburg, Pincus Ventures, L.P., Warburg, Pincus Investors, L.P., Warburg, Pincus
Ventures International, L.P. and Warburg, Pincus Capital Company, L.P. The
principal business of EMW is acting as manager of each of the Investors,
Warburg, Pincus Ventures, L.P., Warburg, Pincus Investors, L.P., Warburg, Pincus
Ventures International, L.P. and Warburg, Pincus Capital Company, L.P.
(d) None of the Reporting Entities, nor, to the best of their knowledge,
any of the directors, executive officers, general partners or members referred
to in paragraph (a) has, during the last five years, been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors).
(e) None of the Reporting Entities nor, to the best of their knowledge, any
of the directors, executive officers, general partners or members referred to in
paragraph (a) above has, during the last five years, been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting
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or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
(f) Except for WPNEPI, WPNEPII, WPNEPIII, which are organized under the
laws of The Netherlands and except as otherwise indicated on Schedule I hereto,
each of the individuals referred to in paragraph (a) above is a United States
citizen.
Item 3. Source and Amount of Funds or Other Consideration.
The total amount of funds required by the Investors to purchase the
securities of the Company as described herein was US$90,000,000, and was
furnished from the working capital of the Investors.
Item 4. Purpose of Transaction.
The purchases by the Investors of the securities of the Company as
described herein were effected because of the Reporting Entities' belief that
the Company represents an attractive investment based on the Company's business
prospects and strategy. Subject to the terms of the Standstill Provision (as
defined below) and depending on prevailing market, economic and other
conditions, the Reporting Entities may from time to time acquire additional
shares of the Company or engage in discussions with the Company concerning
further acquisitions of shares of the Company or further investments by them in
the Company. The Reporting Entities intend to review their investment in the
Company on a continuing basis and, depending upon the price and availability of
shares of Common Stock, subsequent developments affecting the Company, the
Company's business and prospects, other investment and business opportunities
available to the Reporting Entities, general stock market and economic
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conditions, tax considerations and other factors considered relevant, and
subject to the Standstill Provision (as defined below) may decide at any time to
increase or to decrease the size of their investment in the Company.
AGREEMENT TO PURCHASE
SERIES A PREFERRED SHARES AND WARRANTS
On May 18, 2000, the Investors entered into a Stock Purchase Agreement with
the Company (the "Purchase Agreement"), attached hereto as Exhibit 2, pursuant
to which the Company agreed to issue and sell and the Investors agreed to
purchase an aggregate of 10,000 shares of Series A Convertible Preferred Shares
(the "Series A Preferred Shares")1 at $10,000 for each Series A Preferred Share.
On June 9, 2000, pursuant to the terms of the Purchase Agreement, the first
9,000 of such Shares were sold to the Investors. Each Series A Preferred Share
is convertible into Common Stock at a conversion price of $28.00 per share and
at a conversion rate of 357.142857 shares of Common Stock for each Series A
Preferred Share converted. The conversion price and conversion rate are subject
to certain adjustments as set forth in the Certificate of Designations, Number,
Voting Powers, Preferences and Rights of Series A Convertible Preferred Stock of
Transkaryotic Therapies, Inc. (the "Certificate of Designations"), attached
hereto as Exhibit 3.
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1 The Purchase Agreement provides for 9,000 Series A Preferred Shares to be
purchased within three days after the expiration of the waiting period
under the Hart Scott Radino Antitrust Improvements Act of 1976, as amended.
The additional 1,000 Series A Preferred Shares will be purchased within
three days after the Company's Annual Meeting of Stockholders scheduled for
June 15, 2000.
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The Company may, at its option, redeem all (but not less than all) of the
Series A Shares any time after December 15, 2000, if the average closing price
of the Common Stock for any twenty consecutive trading days ending within twenty
business days of the date on which notice of redemption is given is at least
$35.00. The Company must provide thirty days written notice of such redemption
to the holders of the Series A Preferred Shares.
As set forth in the Certificate of Designations, Holders of Series A
Preferred Shares are entitled to vote such Shares, together with the holders of
Common Stock as a single class, on an as converted basis with respect to all
matters. In addition, the Company will not, without the affirmative vote of the
holders of a majority of the outstanding Series A Preferred Shares, authorize
additional Series A Preferred Shares or any other series of shares that would
materially and adversely affect the Series A Preferred Shares.
Standstill Provision. Under the Purchase Agreement, each of the Investors
has agreed that it will not, for a period of five years, acquire beneficial
ownership of any Common Stock if, after giving effect to such acquisition or
substantially contemporaneous acquisitions by any affiliates, the aggregate
beneficial ownership of all the Investors and their affiliates would exceed 30%
of the then outstanding Common Stock (assuming full conversion of all Series A
Preferred Shares). This provision, referred to herein as the "Standstill
Provision," does not restrict the ability of any Investor or any affiliate of
any Investor to convert the Series A Preferred Shares.
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Board Representation. The terms of the Series A Preferred Shares, as set
forth in the Certificate of Designations, provide for the holders of such shares
to elect one member to the Board, voting separately as a class. This provision
shall remain in effect for so long as at least 90% of the Series A Preferred
Shares issued pursuant to the Purchase Agreement remain outstanding. The
Purchase Agreement provides that the Company will use its best efforts to
nominate and effect the election as directors of two individuals designated by
the Investors and acceptable to the Company's Board acting in good faith for so
long as the Investors own at least 20% of the outstanding shares of Common Stock
(including stock issuable upon conversion of the Series A Preferred Shares) and
one such director for so long as the Investors own at least (a) 10% of the
outstanding Common Stock or (b) 90% of the Series A Preferred Shares or shares
of Common Stock issued on conversion of the Series A Preferred Shares. A
director elected separately by the holders of the Series A Preferred Shares
voting as a class will be deemed a director satisfying this provision of the
Purchase Agreement.
The foregoing summary of the Purchase Agreement is qualified in its
entirety by reference to the Stock Purchase Agreement, a copy of which is set
forth as Exhibit 2 and is incorporated herein by reference.
Except as set forth above, none of the Reporting Entities nor, to the best
of their knowledge, any person listed in Schedule I hereto, has any plans or
proposals which relate to or would result in: (a) the acquisition by any person
of additional securities of the Company, or the disposition of securities of the
Company; (b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Company or any of its subsidiaries;
(c) a sale or transfer of a material amount of assets of
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the Company or any of its subsidiaries; (d) any change in the present Board of
Directors or management of the Company, including any plans or proposals to
change the number or term of directors or to fill any existing vacancies on the
board; (e) any material change in the present capitalization or dividend policy
of the Company; (f) any other material change in the Company's business or
corporate structure; (g) changes in the Company's charter, By-laws or
instruments corresponding thereto or other actions which may impede the
acquisition of control of the Company by any person; (h) causing a class of
securities of the Company to be delisted from a national securities exchange or
to cease to be authorized to be quoted in an inter-dealer quotation system of a
registered national securities association; (i) a class of equity securities of
the Company becoming eligible for termination of registration pursuant to
Section 12(g)(4) of the Exchange Act; or (j) any action similar to any of those
enumerated above.
Item 5. Interest in Securities of the Issuer.
(a) The Reporting Entities beneficially own shares of Common Stock of the
Company by virtue of their ownership of shares of Common Stock and Series A
Preferred Shares, which are convertible into shares of Common Stock. As of June
9, 2000, WP and EMW each beneficially owned 3,253,083 shares of Common Stock.
Also as of this date, WPEP beneficially owned 3,037,500 shares of Common Stock.
Of the shares beneficially owned by WP and EMW, 176,786 shares represent the
aggregate shares of Common Stock beneficially held by WPNEPI, WPNEPII and
WPNEPIII and 191 shares represent the shares of Common Stock held by Warburg,
Pincus Capital Company, L.P. ("WPCC"). By reason of WP's and EMW's respective
relationships with the Investors and WPCC, under Rule 13d-3 under the Exchange
Act, WP and EMW may
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be deemed to own beneficially all of the shares of Common Stock which are
beneficially owned by these entities.
Assuming full conversion of the corresponding Series A Preferred Shares, as
of June 9, 2000, the 3,253,083 shares of Common Stock beneficially held by the
Reporting Entities represented approximately 12.6% of the sum of the outstanding
shares of Common Stock (based on the 22,683,306 shares of Common Stock
outstanding as of April 21, 2000, as set forth in the Company's definitive Proxy
Statement for its Annual Meeting of Stockholders on June 15, 2000) together with
the 3,214,285 shares of Common Stock issuable upon conversion of the Series A
Preferred Shares held by the Reporting Entities. Assuming full conversion of the
corresponding Series A Preferred Shares, as of June 9, 2000, the 3,037,500
shares of Common Stock beneficially held by WPEP represented approximately 11.8%
of the sum of 3,057,500 and the 22,683,306 outstanding shares of Common Stock.
As of June 9, 2000, assuming full conversion of the Series A Preferred
Shares, WPNEPI, WPNEPII and WPNEPIII held beneficial ownership of an aggregate
of 176,786 shares of Common Stock, which is 0.7% of the sum of 176,786 and
22,683,306.
(b) WPEP has beneficial ownership over 3,037,500 shares of Common Stock.
WPNEPI, WPNEPII and WPNEPIII have beneficial ownership of an aggregate of
176,786 shares of Common Stock. WPEP, WPNEPI, WPNEPII and WPNEPIII each share
voting power and dispositive power over their holdings of such shares with EMW
and WP.
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(c) Except for securities acquired pursuant to the Purchase Agreement,
during the last sixty days there were no transactions effected by the Reporting
Entities or by any of the persons set forth on Schedule I hereto.
(d) Except as set forth in this Item 5, no person other than each
respective record owner referred to herein of securities is known to have the
right to receive or the power to direct the receipt of dividends from, or the
proceeds from the sale of, such securities.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to
Securities of the Issuer.
Pursuant to Rule 13d-1(k) promulgated under the Exchange Act, the Reporting
Entities have entered into an agreement with respect to the joint filing of this
statement, and any amendment or amendments hereto.
A Stock Purchase Agreement by and among the Investors and the Company was
entered into on May 18, 2000 and is described herein in Item 4, supra. In
connection with this transaction, a Registration Rights Agreement was also
entered into by these parties on that date. This Agreement contains standard
provisions found in agreements of such type, including "demand" and "piggyback"
registration rights. It requires the Company to effect two registrations of the
Common Stock received upon conversion of the Shares (or three registrations upon
Form S-3).
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The foregoing summary of the Registration Rights Agreement is qualified in
its entirety by reference to the Registration Rights Agreement, a copy of which
is set forth as Exhibit 4.
Except as referred to above, there are no contracts, arrangements,
understandings or relationships among the persons named in Item 2 or between
such persons and any other person with respect to any securities of the Company.
By virtue of the relationships among the Reporting Entities as described in
Item 2, the Reporting Entities may be deemed to be a "group" under the Federal
securities laws. Lionel I. Pincus disclaims any beneficial ownership of the
shares of Common Stock reported herein as being beneficially owned by the
Reporting Entities.
Item 7. Material to be Filed as Exhibits.
1. Joint Filing Agreement, dated as of July 22, 1999, by and among the
Reporting Entities.
2. Stock Purchase Agreement, dated as of May 18, 2000, by and among the
Investors and the Company.
3. Certificate of Designations, Number, Voting Powers, Preferences and
Rights of Series A Convertible Preferred Shares of Transkaryotic Therapies, Inc.
4. Registration Rights Agreement, dated as of June 9, 2000, by and among
the Investors and the Company.
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SIGNATURES
After reasonable inquiry and to the best of our knowledge and belief, the
undersigned certify that the information set forth in this statement is true,
complete and correct.
Dated: June 16, 2000 WARBURG, PINCUS EQUITY
PARTNERS, L.P.
By: Warburg, Pincus & Co.,
General Partner
By: /s/ Stephen Distler
------------------------------
Stephen Distler
Partner
Dated: June 16, 2000 WARBURG, PINCUS & CO.
By: /s/ Stephen Distler
------------------------------
Stephen Distler
Partner
Dated: June 16, 2000 E.M. WARBURG, PINCUS & CO., LLC
By: /s/ Stephen Distler
--------------------------
Stephen Distler
Member
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