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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------------------
SCHEDULE 13D
(RULE 13D-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13D-1 (A) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13D-2(A)
(Amendment No. ____________)1
SHAMAN PHARMACEUTICALS, INC.
(Name of Issuer)
COMMON STOCK $0.001 PAR VALUE
(Title of Class Securities)
Jean-Noel Julliard
Head of Business & Economic Affairs
Lipha s.a.
37 rue Saint-Romain
69379 Lyon, cedex 08, France
011-33-4-72-78-29-08
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
December 3, 1998
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1 (e), 13d-1(f) or 13d-1(g), check the following
box.
(Continued on following pages)
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1 The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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CUSIP NO. 819319 10 SCHEDULE 13D
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1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Merck KGaA
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)
(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 PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
GERMANY
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- --------------------- -------- -------------------------------------------------
NUMBER OF SHARES 7 SOLE VOTING POWER
BENEFICIALLY OWNED 0
BY EACH REPORTING
PERSON WITH
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8 SHARED VOTING POWER
1,744,944
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9 SOLE DISPOSITIVE POWER
0
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- --------------------- -------- -------------------------------------------------
10 SHARED DISPOSITIVE POWER
1,744,944
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,744,944
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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)
4.28%
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14 TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
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ITEM 1. SECURITY AND ISSUER
This Statement is being filed by Merck KGaA, a Kommanditgesellschaft
auf Aktien organized under the laws of Germany ("KGaA" or the "Acquiror") and
relates to the purchase by Lipha s.a., a French corporation (collectively with
Lipha Lyonnaise Industrielle Pharmaceutique SA, its predecessor prior to an
internal reorganization, "Lipha"), of 342,231 shares (the "Shares") of Common
Stock, par value $0.001 per share (the "Common Stock") of Shaman
Pharmaceuticals, Inc., a Delaware corporation (the "Issuer" or the "Company").
Lipha is a wholly-owned subsidiary of KGaA and KGaA may be deemed to be the
beneficial owner of the shares held by Lipha. KGaA is controlled by E. Merck, a
German partnership, which holds approximately 74% of the shares of KGaA.
The class of securities to which this statement on Schedule 13D relates
is the Common Stock of the Issuer. The address of the principal executive
offices of the Issuer is 213 East Grand Avenue, South San Francisco, California
94080.
Relationship with the Company
On September 23, 1996, Lipha entered into a five-year collaborative
agreement (the "Research & Development Agreement") with the Company to jointly
develop the Company's antihyperglycemic drugs. In connection with the Research &
Development Agreement, the parties also entered into a Stock Purchase Agreement
and Registration Rights Agreement (collectively with the Research & Development
Agreement, the "Agreements") providing for Lipha's purchase of Common Stock, as
described below, and giving Lipha certain rights to require that its shares of
Common Stock be registered under the Securities Act of 1933 after September 23,
1998.
Pursuant to the Agreements, in exchange for development and marketing
rights in all countries except Japan, South Korea and Taiwan, Lipha agreed to
provide up to $9.0 million in research payments and up to $10.5 million in
periodic equity investments over four years, priced at a 20% premium to a
multi-day volume weighted average price of the Company's Common Stock at the
time of purchase. On signing the Agreements, Lipha paid the Company a $1.5
million up-front research payment and $3.0 million for the purchase of 388,918
shares of Common Stock. Lipha made additional scheduled purchases of Common
Stock, pursuant to the terms of the Agreements, on September 23, 1997 (200,787
shares) and September 23, 1998 (813,008 shares).
Pursuant to the Research & Development Agreement, the Company agreed,
among other things, to allocate between twenty and thirty full time equivalent
scientists (as such term is defined in the Research & Development Agreement) to
its pharmaceuticals development obligations under the Research & Development
Agreement. The Research & Development Agreement provided for additional
preclinical and clinical milestone payments to the Company in excess of $10.0
million per compound for each antihyperglycemic drug the Company developed and
<PAGE> 4
commercialized. Lipha was to bear all preclinical, clinical, regulatory and
other development expenses associated with the compounds selected by Lipha under
the Research & Development Agreement. In addition, as products were
commercialized by Lipha, the Company would receive royalties on all product
sales outside the United States and up to 50% of the profits (if the Company
were to exercise co-promotion rights) or royalties on all product sales in the
United States. Certain of the milestone payments were to be credited against
future royalty payments, if any, due to the Company from sales of products
developed pursuant to the Research & Development Agreement. On December 3, 1998,
the parties completed a renegotiation of the terms of the Agreements. Under the
new terms, the Company forgave $6.0 million in aggregate payments due from Lipha
over the remaining term of the original Agreements in exchange for a one-time
up-front payment from Lipha of an aggregate of $2.0 million, consisting of a $1
million research payment and a $1.0 million equity investment pursuant to which,
on December 3, 1998, Lipha purchased the 342,231 shares of Common Stock to which
this Statement relates.
On February 1, 1999, the Company unilaterally announced that it would
immediately cease operations in its pharmaceuticals business and devote most of
its efforts to its botanicals business. The parties are currently in
negotiations concerning their relationship. Lipha does not know what may result
from such negotiations and is currently examining all of its options and
remedies.
ITEM 2. IDENTITY AND BACKGROUND
The Acquiror is a Kommanditgesellschaft auf Aktien organized under the
laws of Germany with its principal offices located at Frankfurter Str. 250,
D-64293 Darmstadt, Germany. The Acquiror is part of a worldwide operating group
of companies in the business sectors of pharmaceuticals, laboratory supplies and
services and specialty chemicals. The name, business address, present principal
occupation or employment (and the name, principal business and address of any
corporation or other organization in which such employment is conducted) and
citizenship of each of the directors and executive officers of the Acquiror and
each general partner of E. Merck is set forth in Schedule A attached hereto and
incorporated herein by this reference. During the last five years, neither the
Acquiror, E. Merck nor, to the best of the Acquiror's knowledge, any of the
persons identified in Schedule A hereto has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or has 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 or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The full $1.0 million purchase price of the Common Stock to which
this Statement relates was paid out of the working capital of Lipha.
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ITEM 4. PURPOSE OF TRANSACTION
The Acquiror views the purchase of shares of Common Stock of the Issuer
primarily as an investment incident to its product research and development
activities and has no present intention to increase its proportional investment
in the Issuer, dispose of its shares of Common Stock or to effect any
transaction that would relate to or result in any of the events described in
subparagraphs (a) through (j) of this item. Nevertheless, there is substantial
uncertainty regarding Lipha's ongoing relationship with the Company and the
Acquiror reserves the right to change its investment in the Issuer based upon
the results of ongoing discussions between Lipha and the Issuer, the market
price of the Common Stock, alternative investment possibilities available to it,
its business and research and development strategy and other factors which may
emerge from time to time.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
As of the date hereof, Lipha owns of record and beneficially 1,744,944
shares of Common Stock and has the sole power to vote and dispose of such
shares. Because KGaA is controlled by E. Merck and because Lipha is a
wholly-owned subsidiary of KGaA, E. Merck and KGaA may be deemed to be the
beneficial owners of the shares held by Lipha. Such shares represented 5.86% of
the issued and outstanding shares of Common Stock of the Issuer, based on
29,793,278 shares of Common Stock outstanding as of December 18, 1998. Such
shares represent 4.28% of the issued and outstanding shares of Common Stock of
the Issuer, based on 40,745,876 shares of Common Stock outstanding as of April
15, 1999. Accordingly, the reporting person's obligation to file reports on
Schedule 13D has terminated.
Except as set forth herein, there have been no transactions in the
Common Stock of the Issuer by the Acquiror or any of the executive officers or
directors identified in Schedule A hereto during the 60 days preceding the
filing of this Statement.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDING OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
Except as set forth herein, the Acquiror (and the executive officers
and directors identified in Schedule A hereto) do not have any arrangements,
contracts, understandings or relationships (legal or otherwise) with respect to
each other or with any other person with respect to the securities of the
Issuer.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
1. Joint Research and Product Development Agreement dated as of
September 23, 1996 between the Company and Lipha (incorporated by
reference to exhibit 10.50 to the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1996, as amended).*
<PAGE> 6
2. Stock Purchase Agreement dated as of September 23, 1996 between
the Company and Lipha (incorporated by reference to exhibit 10.51
to the Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1996, as amended).*
3. Registration Rights Agreement dated as of September 23, 1996
between the Company and Lipha (attached as Exhibit A to
the preceding exhibit).
4. Letter Agreement dated December 1, 1998.
* Confidential treatment has been granted with respect to certain
portions of these agreements.
<PAGE> 7
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: May 19, 1999
Merck KGaA
By: /s/ Klaus-Peter Brandis
-----------------------------------------
Name: Klaus-Peter Brandis
Title: Departmental Director
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SCHEDULE A
DIRECTORS AND EXECUTIVE OFFICERS
OF
MERCK KGAA AND E. MERCK
The address of each of the directors, executive officers and
general partners listed below is c/o Merck KGaA at its principal offices located
at Frankfurter Str. 250, D-64293 Darmstadt, Germany. All individuals listed
below are citizens of Germany.
<TABLE>
<S> <C>
NAME POSITION AND PRINCIPAL OCCUPATION
MERCK KGAA
Dr. Heinrich Hornef Chairman, Supervisory Board (Aufsichtsrat); Member of
partners council of SAP, Walldorf, a computer
industry/software company, of Neurottstrasse 16.69190
Germany and of Friatec AG, a machine building/engineering
company, of Steinzeugstrasse 50, 68229 Mannheim, Germany
Flavio Battisti Vice Chairman, Supervisory Board (Aufsichtsrat)
Michael Fletterich Supervisory Board Member (Aufsichtsrat)
Jon Baumhauer Supervisory Board Member (Aufsichtsrat); Chief Executive
Officer, Matthias Kraus KG, a
beverage manufacturer, of
Mariastrasse 14, 80639 Munchen,
Germany.
Klaus Brauer Supervisory Board Member (Aufsichtsrat)
Prof. Dr. Christoph Clemm Supervisory Board Member (Aufsichtsrat)
Dr. Michael Kasper Supervisory Board Member (Aufsichtsrat)
Brigitte Niems Supervisory Board Member (Aufsichtsrat)
</TABLE>
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<TABLE>
<S> <C>
Dr. Arend Oetker Supervisory Board Member (Aufsichtsrat); Member of partners
councils of Cognos AG, an
education/counseling company, of
Kielortallee 1, 20144 Hamburg,
Germany, Jungheinrich AG, a
warehousing/transport/service
company of Freidrich-Ebert-Damm
129, 22047 Hamburg, Germany, VAW
Aluminum AG, an aluminum
manufacturer, of
Georg-von-Boeselager-Strasse 25,
53117 Bonn, Germany
Hans Schonhals
Supervisory Board
Member (Aufsichtsrat); Member of
partners councils of Pirelli
Deutschland AG, a tyre-industry
business, of 64741 Breuberg,
Germany, Rohm GmbH, a
plastic-industry/chemistry
company of Kirschenallee, 64293
Darmstadt, Germany
Dr. Gerhard Ziener Supervisory Board
Member (Aufsichtsrat); Member of
advisory boards of Benckiser
Holding GmbH, a machine-building
company, of
Ludwig-Bertram-Strasse 8, 67059
Ludwigshafen, Germany and Dohler
GmbH, a good stuffs company, of
Riedstrasse 9, 64295 Darmstadt,
Germany
Peter Zuhlsdorff Supervisory Board Member (Aufsichtsrat); Member of partners
councils of Deutz AG, a vehicle engineering company, of
Muhlheimer Strasse 107, 51063 Koln, Germany, GFK AG, an
opinion research company, of Nordwestring 101, 90419
Nurnberg, Germany, and Deutsche Hypothekenbank AG, a
banking company, of Taunusanlage 9, 60329 Frankfurt, Germany
Dr. Walter Bardorff Director (Direktor)
Prof. Dr. Gerd Bauer Director (Direktor)
Dr. Michael Becker Director (Direktor)
Dr. Klaus Bofinger Director (Direktor)
Rolf Peter Deutsch Director (Direktor)
Prof. Dr. Christian Flamig Director (Direktor)
Walter Galinat Director (Direktor)
</TABLE>
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<TABLE>
<S> <C>
Dr. Jurgen Gehlhaus Director (Direktor)
Dr. Hartmut Hartner Director (Direktor)
Dr. Ullrich Hanstein Director (Direktor)
Dr. Sigmar Herberg Director (Direktor)
Dr. Hans-Joachim Lohrisch Director (Direktor)
Dr. Ingeborg Lues Director (Direktor)
Prof. Dr. Hans-Eckart Radunz Director (Direktor)
Dr. Bernd Reckmann Director (Direktor)
Dr. Karl Roser Director (Direktor)
Prof. Dr. Erhard Schnurr Director (Direktor)
Joachim Szebel Director (Direktor)
Jurgen Schupp Director (Direktor)
Dr. Gregor Wehner Director (Direktor)
Ernst-Jorg Zehelein Director (Direktor)
Walter Zywottek Director (Direktor)
York Bernau Departmental Director (Abteilungsdirektor)
Rudolf Bracher Departmental Director (Abteilungsdirektor)
Klaus-Peter Brandis Departmental Director (Abteilungsdirektor)
Dr. Jurgen Eichler Departmental Director (Abteilungsdirektor)
Dr. Rolf Fohring Departmental Director (Abteilungsdirektor)
Winfried Muller Departmental Director (Abteilungsdirektor)
Friedrich Schmitt Departmental Director (Abteilungsdirektor)
Gerhard Weber Departmental Director (Abteilungsdirektor)
E. MERCK
Prof. Dr. Hans Joachim Langmann Executive Board Member (Geschaftsleitung), E. Merck;
</TABLE>
general partner, E. Merck
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<TABLE>
<S> <C>
Wolfgang Hohn Executive Board Member (Geschaftsleitung), E. Merck;
general partner, E. Merck; Director of VWR Scientific
Products Corp. ("VWR"), 49.89% of the shares of which are
owned by Merck KGaA
Dr. Michael Romer Executive Board Member (Geschaftsleitung), E. Merck;
general partner, E. Merck
Prof. Dr. Bernhard Scheuble Executive Board Member (Geschaftsleitung), E. Merck;
general partner, E. Merck
Prof. Dr. Thomas Schreckenbach Executive Board Member (Geschaftsleitung), E. Merck;
general partner, E. Merck
Dr. Harald J. Schroder Executive Board Member (Geschaftsleitung), E. Merck;
general partner, E. Merck; Chairman, Board of Directors of
EM Industries Incorporated, an indirect subsidiary of Merck
KGaA, of 7 Skyline Drive, Hawthorne, NY 10532; Director of
VWR
Dr. Johannes Sombroek Executive Board Member (Geschaftsleitung), E. Merck;
general partner, E. Merck
Jon Baumhauer Chairman, Partners Council, E. Merck; see also, entry under
Merck KGaA
Dr. Heinrich Hornef Partners Council Member, E. Merck
Karl-Heinrich Kraft Partners Council Member, E. Merck
Albrecht Merck Partners Council Member, E. Merck
Dr. Arend Oetker Partners Council Member, E. Merck
Dr. Frank Stangenberg-Haverkamp Partners Council Member, E. Merck
Dr. Gerhard Ziener Partners Council Member, E. Merck
Peter Zuhlsdorff Partners Council Member, E. Merck
Prof. Dr. Christoph Clemm Partners Council Member, E. Merck; see also, entry under
Merck KGaA
</TABLE>
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EXHIBIT INDEX
<TABLE>
<S> <C>
Exhibit Description Page.
1. Joint Research and Product Development Agreement dated as of September 23,
1996 between the Company and Lipha (incorporated by reference to
exhibit 10.50 to the Company's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1996, as amended).*
2. Stock Purchase Agreement dated as of September 23, 1996 between
the Company and Lipha (incorporated by reference to exhibit 10.51
to the Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1996, as amended).*
3. Registration Rights Agreement dated as of September 23, 1996 between the
Company and Lipha (attached as Exhibit A to the preceding exhibit).
4. Letter Agreement dated December 1, 1998.
</TABLE>
* Confidential treatment has been granted with respect to certain portions of
these agreements.
<PAGE> 1
Exhibit 4
Le President MERCK
FACSIMILE + MAIL Lipha s.a.
France
SHAMAN PHARMACEUTICALS INC
213 East Grand Avenue
South San Francisco
CA 94080-4812
USA
Lyons, December 1st, 1998
Dear Ms. Conte,
As you correctly understood, my fax to you of yesterday, November 30, went out
before I saw your fax letter of Sunday, November 28, but I now have your fax
response of yesterday to my last letter, and I believe we should now be able to
conclude all steps and formalities fairly rapidly.
Unfortunately, your new addendum 7 is not quite accurate, as Section 2.2.1(iv)
is not completely "eliminated", but rather modified so that the minimum of
twenty (20) FTEs shall apply during the first three years, as well as years 4
and 5 (your fax letter of November 18, 1998, requested elimination of "the
requirement for employing the additional FTEs in year 4 and 5").
So as to avoid confusion, but also in order to move forward without additional
delay, I have corrected addendum 7 and return herewith the second page of the
letter agreement of November 12, 1998, and have now myself initialed addendum 5
and the corrected addendum 7. I would appreciate your now returning to me this
corrected page, after you have initialed what is hopefully the final change.
We can then consider that, as requested in your fax letter of November 29, we
will have reached a signed agreement by Wednesday, December 2 (and we can
promptly make arrangement for cash funding and issuance of stock certificates in
the next few days).
Mr. Julliard is currently on a business trip, but will return to France on
Thursday, December 2, and will hopefully be able to coordinate final formalities
with Loretta Su, as you suggested. Assuming your agreement on all of the above,
we should be able to effect transfer of funds by the end of this week.
Please sign and return a copy of this letter, along with the corrected and
initialed signature page of our letter agreement, to confirm your agreement with
the above.
In turn, I convey my best wishes for the holidays and a successful 1999 for both
our companies.
Sincerely, /s/ JeanNoel
ACCEPTED AND AGREED
SHAMAN PHARMACEUTICALS, Inc.
By /s/ Lisa A. Conte
-----------------
Lisa Conte
<PAGE> 2
Le President MERCK
Lipha s.a.
France
SHAMAN PHARMACEUTICALS INC
213 East Grand Avenue
South San Francisco
CA 94080-4812
USA
Lyons, November 12th, 1998
Dear Ms. Conte,
Following our extremely productive and helpful discussions with you last week, I
am pleased to confirm our acceptance of your proposal of 9 October 1998, on the
following terms and conditions;
1. LIPHA will rapidly effect an advance of US$2 million, in exchange for a
total credit of US$6 million against continuing contractual payments,
as specified below.
2. The US$2 million advance payment will be allocated one-half (US$1
million) as Research Payments and one-half (US$1 million) as Stock
Purchases (share purchase price to be calculated in accordance with
Article 4.1.1 of our Agreement).
3. As you suggested in your letter proposal of 9 October 1998, the first
credit will be against the US$1.125 million remaining for Year Three
(elimination of the three quarterly payments of US$375,000 otherwise
due on December 23, 1998, March 23 and June 23, 1999). This then leaves
a balance of US$4.875 million in total credits, to be applied as set
forth below.
4. Of the total remaining credit, US$2.5 million will be deducted from
Year four, and the total balance due for that year of US$2 million
(US$4.5 million - US$2.5 million) will be split evenly between Share
Purchases for US$1 million (on September 23, 1999) and four quarterly
payments of US$250,000 each, beginning September 23, 1999.
5. The remaining credit, US$2.125 million (US$4.5 million - US$2.375
million of remaining credit in Year Five) will be allocated US$1.125
million in Share Purchases (on September 23, 2000) and four quarterly
payments of US$250,000 each, beginning September 23, 2000.
8. Finally, and still in accordance with your proposal, we will
"retroactively eliminate the requirement for the first pre-clinical
milestone payment in the LIPHA/SHAMAN contract".
<PAGE> 3
As soon as you can confirm your acceptance of the foregoing terms and
conditions, by signing and returning a copy of this letter, we can agree on
timing and coordination for the US$2 million advance (including the Share
Purchases for US$1 million). You can, if you and your attorneys consider it
necessary, prepare and submit to us appropriate documents to effect these
changes. Otherwise, your agreement on this letter will constitute our mutual
agreement with respect to the amendment of our Agreement, in accordance with the
terms and conditions hereof.
We are extremely pleased with the progress we have made together on this and
other proposals, and look forward to continuing a fruitful collaboration with
SHAMAN. As indicated, I would appreciate your signing and returning a copy of
this letter, to confirm your agreement with the above.
Sincerely,
/s/ JeanNoel
J.N. TRELLES
ACCEPTED AND AGREED
SHAMAN PHARMACEUTICALS, Inc.
By /s/ Lisa A. Conte
Lisa Conte
6. The accounting period for the collection and screening of plants as set
forth in Section 2.2.1 of our Agreement will be adjusted to coincide
with the Research Period (commencing on September 23 of each year
during the contract term) specifically 130 plants screened between May
24, 1998 and September 23, 1998). [/s/ LAC /s/ JN]
7. The FTE requirement as set forth in Section 2.2.1(iv) of our Agreement
will be modified to read as follows: "allocate at least twenty (20)
full time equivalent ("FTE") scientists during each year under this
Agreement, to carry out the obligations of Shaman under this Agreement"
[/s/ LAC /s/ JN] . The terms as provided in Sections 2.2.1(I), (ii),
(iii), and (v) will remain in force. [/s/ LAC /s/ JN]
