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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED JUNE 30, 2000
COMMISSION FILE NUMBER 0-21481
TRANSKARYOTIC THERAPIES, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 04-3027191
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
195 ALBANY STREET
CAMBRIDGE, MASSACHUSETTS 02139
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 349-0200
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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 | |
At July 31, 2000, there were 22,687,999 shares of Common Stock, $.01
par value.
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Transkaryotic Therapies, Inc.
INDEX
PAGE NUMBER
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (unaudited)
Condensed Consolidated Balance Sheets as of
June 30, 2000 and December 31, 1999 3
Condensed Consolidated Statements of Operations for the
Three and Six Months Ended June 30, 2000 and 1999 4
Condensed Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 2000 and 1999 5
Notes to Condensed Consolidated Financial Statements 6-8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 9-13
Item 3. Quantitative and Qualitative Disclosures about Market
Risk 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 16
EXHIBIT INDEX 17
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Part 1- Item 1- Condensed Consolidated Financial Statements
Transkaryotic Therapies, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
(in thousands, except par values) June 30, December 31,
2000 1999
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ASSETS
Current assets:
Cash and cash equivalents $193,797 $151,202
Marketable securities 73,668 41,293
Prepaid expenses and other current assets 1,793 2,054
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Total current assets 269,258 194,549
Property and equipment, net 21,766 20,384
Other assets 279 358
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Total assets $291,303 $215,291
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,801 $ 2,000
Accrued expenses 4,833 4,009
Current maturities of long-term debt 2,000 2,000
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Total current liabilities 8,634 8,009
Long-term debt, less current maturities 10,500 11,500
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19,134 19,509
Total liabilities ------------- -------------
Stockholders' equity:
Convertible preferred stock, Series A, $.01 par value,
10,000 shares authorized; 10 shares issued and outstanding at
June 30, 2000 and no shares issued and outstanding at
December 31, 1999 1 -
Common stock, $.01 par value; 100,000 shares authorized;
22,684 and 22,592 shares issued and outstanding at
June 30, 2000 and December 31, 1999, respectively 227 226
Additional paid-in capital 413,034 311,817
Accumulated deficit (139,727) (114,408)
Deferred compensation (1,225) (1,645)
Accumulated other comprehensive loss (141) (208)
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Total stockholders' equity 272,169 195,782
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Total liabilities and stockholders' equity $291,303 $215,291
============= =============
See accompanying Notes to Condensed Consolidated Financial Statements
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Part 1- Item 1- Condensed Consolidated Financial Statements
Transkaryotic Therapies, Inc.
Condensed Consolidated Statements of Operations
(unaudited)
(in thousands, except per share amounts) Three Months Ended June 30, Six Months Ended June 30,
-------------------------- --------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
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License and research revenues $1,514 $0 $1,514 $721
Operating expenses:
Research and development 13,643 11,076 26,327 21,034
General and administrative 3,012 2,634 6,049 4,198
------------ ------------ ------------ ------------
16,655 13,710 32,376 25,232
------------ ------------ ------------ ------------
Loss from operations (15,141) (13,710) (30,862) (24,511)
Interest income 2,921 1,193 5,543 2,536
============ ============ ============ ============
Net loss $(12,220) $(12,517) $(25,319) $(21,975)
============ ============ ============ ============
Basic and diluted net loss per share $(0.54) $(0.65) $(1.12) $(1.15)
============ ============ ============ ============
Shares used to compute basic and diluted
net loss per share 22,684 19,199 22,657 19,176
============ ============ ============ ============
See accompanying Notes to Condensed Consolidated Financial Statements
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Part 1- Item 1- Condensed Consolidated Financial Statements
Transkaryotic Therapies, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
(in thousands) Six Months Ended
June 30,
2000 1999
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OPERATING ACTIVITIES:
Net loss $(25,319) $(21,975)
Adjustments to reconcile net loss to net
cash used for operating activities:
Depreciation and amortization 1,166 990
Compensation expense related to
equity issuances 379 515
Changes in operating assets and liabilities 887 5,405
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Net cash used for operating (22,887) (15,065)
activities ------------- -------------
INVESTING ACTIVITIES:
Proceeds from maturities of marketable securities 58,080 51,592
Purchases of marketable securities (90,388) (56,583)
Purchases of property and equipment (2,548) (10,114)
Changes in other assets 78 (29)
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Net cash used for investing (34,778) (15,134)
activities ------------- -------------
FINANCING ACTIVITIES:
Issuance of convertible preferred stock 99,940 -
Issuance of common stock 1,320 171
Repayment of long-term debt (1,000) -
Proceeds from issuance of long-term debt - 7,391
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Net cash provided by financing activities 100,260 7,562
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Net increase (decrease) in cash and cash 42,595 (22,637)
equivalents
Cash and cash equivalents at January 1 151,202 31,760
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Cash and cash equivalents at June 30 $193,797 $9,123
============= =============
See accompanying Notes to Condensed Consolidated Financial Statements
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PART I - Item 1 - Condensed Consolidated Financial Statements
Transkaryotic Therapies, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)
June 30, 2000 and 1999
1. NATURE OF BUSINESS AND BASIS OF PRESENTATION
Transkaryotic Therapies, Inc. ("TKT" or "the Company") is a
biopharmaceutical company engaged in the development and commercialization of
products based on its three proprietary product development platforms:
Gene-Activated-TM- proteins, Niche Protein-TM- products and Gene Therapy.
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, the accompanying financial
statements include all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the financial condition,
results of operations and cash flows for the periods presented. The results of
operations for the interim period ended June 30, 2000 are not necessarily
indicative of the results to be expected for the year ending December 31, 2000.
These financial statements should be read in conjunction with the audited
financial statements and notes thereto for the year ended December 31, 1999
included in the Company's Annual Report on Form 10-K as filed with the
Securities and Exchange Commission.
2. BASIC AND DILUTED NET LOSS PER SHARE
Basic and diluted net loss per share is calculated under Statement of
Financial Accounting Standard ("SFAS") No. 128, "Earnings Per Share." Basic
earnings per share is calculated by dividing income available to common
stockholders by the weighted average common shares outstanding. Diluted earnings
per share is calculated by dividing net income by the sum of weighted average
common shares outstanding during the period plus common stock equivalents.
Common stock equivalents are shares assumed to be issued if outstanding stock
options and warrants were exercised. Basic and diluted net loss per share are
the same for the three and six months ended June 30, 2000 and 1999 since common
equivalent shares from stock options and warrants have been excluded as their
effect is antidilutive.
3. COMPREHENSIVE INCOME
The Company had total comprehensive loss of $12,178,000 and $12,701,000 for
the three months ended June 30, 2000 and 1999, respectively. For the six months
ended June 30, 2000 and 1999, total comprehensive loss was $25,252,000 and
$22,228,000, respectively.
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4. LEGAL PROCEEDINGS
In April 1997, Amgen Inc. filed a civil action in the U.S. District Court
for the District of Massachusetts against the Company and Aventis Pharma
("Aventis"), formerly Hoechst Marion Roussel, Inc., the Company's
collaborative partner. The complaint in the action, as amended, alleges that
Gene-Activated-TM-erythropoietin ("GA-EPO-TM") and the processes for
producing GA-EPO infringe five U.S. patents assigned to Amgen and requests
that TKT and Aventis be enjoined from making, using, or selling GA-EPO and
that the District Court award Amgen monetary damages.
After suspending proceedings pursuant to the Waxman-Hatch Act, TKT and
Aventis filed a motion in June 1999 in the District Court to reopen the case.
In April 2000, the Court granted Amgen's Motion for Summary Judgment of
literal infringement on Claim 1 of U.S. Patent No 5,955,422 against the
Company and Aventis. The Court left open for trial the question of whether
this claim is invalid or unenforceable. The District Court commenced trial in
May 2000.
In June 2000, the District Court ruled that Claims 4, 5, 6, 7, 8 and 9 of
U.S. Patent No. 5,618,698 were not infringed and dismissed this patent from
the suit. The District Court also ruled that Claims 2, 3 and 4 of U.S. Patent
No. 5,621,080 were not literally infringed, but left open the questions of
infringement under the doctrine of equivalents and whether the patent is
invalid or unenforceable.
In July 2000, the District Court ruled that TKT and Aventis had not met
their burden of proving by clear and convincing evidence that U.S. Patent
Nos. 5,621,080, 5,547,933 and 5,576,349 are invalid on the grounds of
obviousness and anticipation. However, the Court left open TKT and Aventis'
remaining invalidity and unenforceability defenses directed to these patents.
A final ruling from the District Court on these and the other outstanding
issues is not expected until after the close of evidence which will occur no
earlier than September, 2000.
In addition, in July 1999, the Company commenced legal proceedings in the
U.K. against Kirin-Amgen, Inc., seeking a declaration that a U.K. patent held by
Kirin-Amgen will not be infringed by the sale of GA-EPO and that numerous claims
of Kirin-Amgen's U.K. patent are invalid. The trial is scheduled to commence in
2001.
Pursuant to the Amended and Restated License Agreement, dated March 1995, by
and between Aventis and the Company, Aventis has assumed the legal cost of the
Amgen and Kirin-Amgen litigations. The Company is required to reimburse Aventis
for the Company's share of litigation expenses, as defined, from future
royalties, if any, received from the sale of GA-EPO and in certain other
circumstances.
On July 25, 2000, Genzyme Corporation ("Genzyme") brought suit against
TKT in the U. S. District Court for the District of Delaware claiming that
TKT's activities relating to Replagal-TM- (agalsidase alfa) infringe one or
more claims of U.S. Patent No. 5,356,804. Replagal
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is TKT's investigational enzyme replacement therapy for the treatment of
Fabry disease. The Company believes it has substantial defenses to the
allegations in the suit and expects its position will be vindicated in court.
The Company can provide no assurance as to the outcome of these proceedings.
A decision by a court in Amgen's, Kirin-Amgen's or Genzyme's favor, or other
conclusions of either litigation in a manner adverse to the Company, would have
a material adverse effect on the Company's business, financial condition, and
results of operations.
5. RECENT ACCOUNTING PRONOUNCEMENTS
In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin 101 ("SAB 101"), "Revenue Recognition in Financial
Statements," which provides guidance related to revenue recognition based on
interpretations and practices followed by the SEC. The effective date of SAB 101
was deferred to no later than the fourth quarter of 2000. SAB 101 requires
companies to report any changes in revenue recognition as a cumulative change in
accounting principle at the time of implementation in accordance with Accounting
Principles Board Opinion No. 20, "Accounting Changes." The Company is evaluating
the effects, if any, of this accounting bulletin.
In April 2000, the Financial Accounting Standards Board issued
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation, an Interpretation of APB No. 25." The Interpretation will be
applied prospectively to new awards, modifications to outstanding awards, and
changes in employee status on or after July 1, 2000, except in certain
circumstances. The Company is currently in the process of evaluating the impact
this interpretation will have on its financial position and results of
operations.
6. CONVERTIBLE PREFERRED STOCK
In June 2000, the Company sold 10,000 shares of Series A Convertible
Preferred Stock for an aggregate price of $100,000,000 to investment funds
affiliated with E.M. Warburg, Pincus & Co., L.L.C. pursuant to a Stock Purchase
Agreement dated as of May 18, 2000. The Convertible Preferred Stock converts, at
the option of the holder, into approximately 3,571,000 shares of the Company's
common stock based on a conversion price of $28.00 per share, subject to
adjustment under specified terms and conditions. The Company, at its option, may
redeem all, but not less than all, of the shares of the Convertible Preferred
Stock, at any time after December 15, 2000 at a price of $10,000 per share, plus
dividends thereon declared but unpaid, provided certain specified criteria are
met. In the event of any liquidation, dissolution or winding up of the Company,
the holders of the Convertible Preferred Stock are entitled to receive, prior to
and in preference to the holders of common stock, $10,000 per share (subject to
adjustments) plus any dividends thereon declared but unpaid. Each issued and
outstanding share of Convertible Preferred Stock is entitled to the number of
votes equal to the number of shares of common stock into which each share of
Convertible Preferred Stock is then convertible.
8
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PART I - Financial Information
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
OVERVIEW
Since its inception in 1988, Transkaryotic Therapies, Inc. ( "TKT" or
"the Company") has been primarily engaged in the development and
commercialization of products based on the Company's three proprietary
development platforms: Gene-Activated proteins, Niche Protein products and Gene
Therapy. No revenues have been derived from the sale of any products, and the
Company does not expect to receive revenues from product sales until late 2000,
at the earliest. The Company expects that its research and development
expenditures will increase substantially in future years as product development
efforts accelerate. With the exception of 1995, the Company has incurred
substantial annual operating losses since inception and expects to incur
substantial operating losses in the future. At June 30, 2000, the Company's
accumulated deficit was $139,727,000. As a result, the Company is dependent upon
existing cash resources, interest income, external financing from equity
offerings, debt financings or collaborative research and development
arrangements with corporate sponsors to finance its operations.
Results of operations may vary significantly from period to period
depending on, among other factors, the progress of the Company's research and
development efforts, the receipt, if any, of additional license fees and
milestone payments, the timing of certain expenses, and the establishment of
additional collaborative research agreements.
The following discussion of the financial condition and results of
operation of the Company should be read in conjunction with the accompanying
condensed consolidated financial statements and the related footnotes thereto.
RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2000 AND 1999
License and research revenues totaled $1,514,000 for the three months
ended June 30, 2000. There were no revenues earned for the three months ended
June 30, 1999. Revenues in 2000 were earned under a collaboration and license
agreement with Genetics Institute, Inc.
Research and development expenses totaled $13,643,000 in the second
quarter of 2000, as compared to $11,076,000 during the same period in 1999. The
increase in 2000 of $2,567,000, or 23%, was principally due to increases in
research and development staff as well as increases in clinical and regulatory
costs for the Company's clinical programs. At June 30, 2000, the Company has
four programs in clinical testing, two of which are funded by the Company. In
addition, the Company has three late stage preclinical programs, which
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could enter the clinic within twelve months. As a result, the Company expects
that, during the remainder of 2000, the costs related to preclinical and
clinical programs will increase significantly.
General and administrative expenses were $3,012,000 in the quarter ended
June 30, 2000, compared with $2,634,000 during the same period in 1999. The
increase in 2000 of $378,000, or 14%, was principally due to costs incurred in
building a business development and commercialization infrastructure, including
both U.S. and European sales and marketing capabilities related to the
commercialization of products in the Company's Niche Protein product platform.
During the remainder of 2000, general and administrative costs are expected to
increase significantly as product launch activities related to the Company's
Fabry disease program accelerate.
Interest income was $2,921,000 and $1,193,000 for the three months ended
June 30, 2000 and 1999, respectively. The average cash and marketable securities
balances were $198,799,000 and $96,379,000 in 2000 and 1999, respectively. The
increase in interest income of $1,728,000 resulted from higher average cash and
marketable securities balances, as well as higher interest rates in 2000.
The Company had a net loss of $12,220,000 and $12,517,000 for the three
months ended June 30, 2000 and 1999, respectively. Basic and diluted net loss
per share was $0.54 for the three months ended June 30, 2000, as compared to a
basic and diluted net loss per share of $0.65 for the corresponding period in
1999.
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
License and research revenues totaled $1,514,000 and $721,000 for the
six months ended June 30, 2000 and 1999, respectively. All revenues were earned
under collaboration and license agreements.
Research and development expenses totaled $26,327,000 in the first six
months of 2000, as compared to $21,034,000 during the same period in 1999. The
increase in 2000 of $5,293,000, or 25%, was principally due to increases in
external development services and research and development staffing in each of
the Company's product development platforms.
General and administrative expenses were $6,049,000 in the six months
ended June 30, 2000, compared with $4,198,000 during the same period in 1999.
The increase in 2000 of $1,851,000, or 44%, was principally due to costs in
building a business development and commercialization infrastructure, including
both U.S. and European sales and marketing capabilities related to the
commercialization of products in the Company's Niche Protein product platform.
Interest income was $5,543,000 and $2,536,000 for the six months ended
June 30, 2000 and 1999, respectively. The average cash and marketable securities
balances were $194,424,000 and $100,918,000 in 2000 and 1999, respectively. The
increase in interest income of $3,007,000 resulted from higher average cash and
marketable securities balances, as
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well as higher interest rates in 2000.
The Company had a net loss of $25,319,000 and $21,975,000 for the six
months ended June 30, 2000 and 1999, respectively. Basic and diluted net loss
per share was $1.12 for the six months ended June 30, 2000, as compared to a
basic and diluted net loss per share of $1.15 for the corresponding period in
1999.
LIQUIDITY AND SOURCES OF CAPITAL
Since its inception, the Company has financed its operations through the
sale of common and preferred stock, borrowings under debt agreements, revenues
from collaborative agreements, and interest income.
The Company had unrestricted cash, cash equivalents and marketable
securities totaling $267,465,000 at June 30, 2000. Cash equivalents and
marketable securities are invested in U.S. Treasury notes, agencies of the U.S.
government, and money market funds.
In June 2000, the Company sold 10,000 shares of Series A Convertible
Preferred Stock to investment funds affiliated with E. M. Warburg, Pincus & Co.,
L.L.C. resulting in net proceeds to the Company of $99,940,000.
In November 1999, the Company completed a private placement of 3,300,000
shares of Common Stock, resulting in net proceeds to the Company of
approximately $124,576,000.
The Company leased additional facilities in the fourth quarter of 1998,
which are used for research and development. In December 1998, the Company
obtained an unsecured term loan facility for up to $14,000,000 to finance the
capital costs related to the leased space. The loan is payable beginning in
December 1999 on the basis of a seven year amortization schedule over a five
year period, with a final payment for any remaining amount in September 2004.
The loan bears interest at either the prime rate or LIBOR plus 1.50% at the
Company's election. The interest rate of the loan was 7.78% as of June 30, 2000.
The note contains certain restrictive covenants, including, among other things,
minimum cash and tangible net asset requirements and limitations on the payment
of dividends. At June 30, 2000, $12,500,000 was outstanding under the loan.
In August 2000, the Company entered into a ten-year lease for a new
headquarters and research and development facility in Cambridge, MA. The lease
agreement calls for minimum annual rent of $6,700,000 for the first five years
and $7,600,000 for years six to ten. Lease payments are expected to commence in
the first quarter of 2002, at the earliest. The Company expects to spend up to
an additional $20,000,000 for leasehold improvements. The Company intends to
seek financing for all or a significant portion of the cost of the leasehold
improvements. There can be no guarantee that financing will be available on
favorable terms, if at all.
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At December 31, 1999, the Company had net operating loss carryforwards
of approximately $100,287,000, which expire at various times through 2019. Due
to the degree of uncertainty related to the ultimate use of loss carryforwards
and tax credits, the Company has fully reserved against any potential tax
benefit. The future utilization of net operating loss carryforwards and tax
credits may be subject to limitation under the changes in stock ownership rules
of the Internal Revenue Code. Because of this limitation, it is possible that
taxable income in future years, which would otherwise be offset by net operating
losses, will not be offset and, therefore, will be subject to tax.
Substantial additional funds will be required to support the Company's
research and development programs, for acquisition of technologies, for
preclinical and clinical testing of its products, pursuit of regulatory
approvals, acquisition of capital equipment, expansion of laboratory and office
facilities, establishment of production capabilities, establishment of sales and
marketing capabilities, and for general and administrative expenses. Until such
time, if any, as the Company's operations generate significant revenues from
product sales, cash resources and proceeds from equity offerings, debt
financings and funding from collaborative arrangements will be required to fund
operations.
The Company expects to pursue opportunities to obtain additional
financing in the future through equity offerings, debt financings, lease
arrangements related to facilities and capital equipment and collaborative
research agreements. The source, timing and availability of any future financing
will depend principally upon equity and debt market conditions, interest rates
and, more specifically, on the Company's continued progress in its exploratory,
preclinical and clinical development programs. There can be no assurance that
such funds will be available on favorable terms, if at all.
The Company expects that its existing capital resources, together with
revenues from collaborative agreements and interest income, will be sufficient
to fund its operations into 2003. The Company's cash requirements may vary,
however, depending on numerous factors. Lack of necessary funds may require the
Company to delay, scale back or eliminate some or all of its research and
product development programs or to license its potential products or
technologies to third parties.
The Company is engaged in litigation with Amgen Inc. and Kirin-Amgen,
Inc. with respect to the development of GA-EPO. Pursuant to TKT's agreements
with Aventis, Aventis has assumed the cost of the litigation. The Company is
required to reimburse Aventis for the Company's share of litigation expenses
from future royalties, if any, otherwise payable by Aventis as to the sale of
GA-EPO and in certain other circumstances. In addition, Genzyme has brought suit
against TKT with respect to the development and commercialization of
Replagal-TM-, TKT's investigational enzyme replacement therapy for the treatment
of Fabry disease. See Note 4 to Notes to Condensed Consolidated Financial
Statements.
FORWARD-LOOKING STATEMENTS
Statements that are not historical facts, including statements about the
Company's confidence and strategies and its expectations about future products,
technologies and
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opportunities, market demand or acceptance of future products
are forward-looking statements. Without limiting the foregoing, the words
"believes," "anticipates," "plans," "expects," "intends" and similar expressions
are intended to identify forward-looking statements. There are a number of
important factors that could cause the Company's actual results to differ
materially from those indicated by such forward-looking statements, including,
without limitation, whether any of the Company's Gene-Activated protein, Niche
Protein product, or Gene Therapy product candidates will advance in the clinical
trial process, the timing of such clinical trials, whether the clinical trial
results will warrant continued product development, the timing of making
required regulatory filings such as Investigational New Drug applications and
Biologics License Applications, whether the Company's products will receive
approval from the U.S. Food and Drug Administration or equivalent foreign
regulatory agencies, and, if such products receive approval, whether they will
be successfully marketed; the results of patent litigation in which the Company
is involved or may become involved; competition; the Company's dependence on
collaborators; and other risks set forth under the caption "Certain Factors That
May Affect Future Results" in the Company's Annual Report on Form 10-K for the
year ended December 31, 1999 which are incorporated by reference herein.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company does not believe that there is any material market risk
exposure with respect to derivative or other financial instruments that would
require disclosure under this item.
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PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
On July 25, 2000, Genzyme Corporation ("Genzyme") brought suit
against TKT in the U. S. District Court for the District of Delaware
claiming that TKT's activities relating to Replagal-TM- (agalsidase alfa)
infringe one or more claims of U.S. Patent No. 5,356,804. Replagal is TKT's
investigational enzyme replacement therapy for the treatment of Fabry
disease. The Company believes it has substantial defenses to the allegations
in the suit and expects its position will be vindicated in court.
The Company is engaged in litigation with Amgen Inc. and Kirin-Amgen,
Inc. with respect to the development and commercialization of GA-EPO. See
Note 4 to Notes to Condensed Consolidated Financial Statements, which is
incorporated by reference herein.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The following matters were submitted to a vote of security holders
at the Annual Meeting of Stockholders held on June 15, 2000:
1. The election of Walter Gilbert, William R. Miller, Rodman W. Moorhead,
III, Richard F Selden, James E. Thomas and Wayne P. Yetter to serve as
directors until the 2001 Annual Meeting of Stockholders.
NOMINEE VOTES FOR VOTES WITHHELD
------- --------- --------------
Walter Gilbert 14,289,445 24,958
William R. Miller 14,289,475 24,928
Rodman W. Moorhead, III 14,232,048 82,355
Richard F Selden 13,430,156 884,247
James E. Thomas 14,247,355 67,048
Wayne P. Yetter 14,288,945 25,458
2. The approval of the amendment to the Company's Amended and Restated
Certificate of Incorporation increasing the number of authorized shares of
the Company's Common Stock from 30,000,000 shares to 100,000,000 shares.
Votes totaling 12,264,438 were cast for this matter; 2,033,068 were cast
against this matter. There were a total of 15,917 abstentions and 980 broker
non-votes.
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Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
The Exhibits filed as part of this Form 10-Q are listed on the
Exhibit Index immediately preceding such Exhibits, which Exhibit Index
is incorporated herein by reference.
(b) Reports on Form 8-K
Current Report on Form 8-K dated May 18, 2000 regarding the
execution of Stock Purchase Agreement with investment funds affiliated
with E.M. Warburg, Pincus & Co., L.L.C.
Current Report on Form 8-K dated June 9, 2000 regarding the sale of
9,000 shares of the Company's Series A Convertible Preferred Stock,
$0.01 par value per share, for an aggregate price of $90,000,000 to
investment funds affiliated with E.M. Warburg, Pincus & Co., L.L.C.
Current Report on Form 8-K dated June 16, 2000 regarding the sale of
1,000 shares of the Company's Series A Convertible Preferred Stock,
$0.01 par value per share, for an aggregate price of $10,000,000 to
investment funds affiliated with E.M. Warburg, Pincus & Co., L.L.C.
15
<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 thereunto duly authorized.
TRANSKARYOTIC THERAPIES, INC.
Date: August 14, 2000 By: /S/ DANIEL E. GEFFKEN
-----------------------------------------
Daniel E. Geffken
Vice President, Finance and
Chief Financial Officer (Principal
Financial and Accounting Officer)
16
<PAGE>
Transkaryotic Therapies, Inc.
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<S> <C>
3.1 Amendment No. 1 to Transkaryotic Therapies, Inc.'s Amended
and Restated By-Laws
3.2 Certificate of Amendment of Amended and Restated Certificate
of Incorporation of Transkaryotic Therapies, Inc. dated
June 15, 2000
3.3 Certificate of Designation, Number, Voting Powers, Preferences
and Rights of Series A Convertible Preferred Stock of
Transkaryotic Therapies, Inc. dated June 9, 2000
10.34 Registration Rights Agreement dated June 9, 2000 by and between
the Series A Convertible Preferred Stock Investors and the
Registrant
10.35 Agreement dated April 20, 2000 by and between Dr. Walter
Gilbert and the Registrant
10.36 Agreement dated June 16, 2000 by and between James E.
Thomas and the Registrant
10.37 Employment agreement dated May 18, 2000 by and between
Michael J. Astrue and the Registrant
27 Financial Data Schedule (for EDGAR filing purposes only)
*99.1 Certain Factors That May Affect Future Results
* Incorporated herein by reference to the exhibits to the Quarterly Report on
Form 10-Q for the Quarter ended March 31, 2000
</TABLE>
17
