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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
February 6, 1997
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Date of Report (Date of earliest event reported)
INHALE THERAPEUTIC SYSTEMS
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(Exact name of registrant as specified in its charter)
California 0-23556 94-3134940
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
1060 East Meadow Circle
Palo Alto, CA 94303
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(Address of principal executive offices)
(415) 354-0700
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(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS.
THE FOLLOWING DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT
INVOLVE RISK AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER
MATERIALLY FROM THOSE DISCUSSED HERE. FACTORS THAT COULD CAUSE OR CONTRIBUTE
TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO THOSE DISCUSSED UNDER THE
HEADING "RISK FACTORS" IN THE COMPANY'S REGISTRATION STATEMENT ON FORM S-3
(NO. 333-20787). READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE
FORWARD-LOOKING STATEMENTS, WHICH REFLECT MANAGEMENT'S ANALYSIS ONLY AS OF
THE DATE HEREOF. THE COMPANY UNDERTAKES NO OBLIGATION TO RELEASE THE RESULTS
OF ANY REVISION TO THESE FORWARD-LOOKING STATEMENTS WHICH MAY BE MADE TO
REFLECT EVENTS OR CIRCUMSTANCES OCCURRING AFTER THE DATE HEREOF OR TO REFLECT
THE OCCURRENCE OF UNANTICIPATED EVENTS.
RECENT DEVELOPMENTS
During the past 12 months, Inhale has entered into strategic
relationships with four new collaborative partners, moved the pulmonary
insulin product development program into a Phase IIb clinical trial and two
additional product development programs into Phase I testing, strengthened
its balance sheet by adding $25 million of equity financing from corporate
partners and expanded its technology and manufacturing development activities
as well as its management team.
COLLABORATIVE PARTNERS
In March 1996, Inhale and Baxter Healthcare Corporation (a subsidiary of
Baxter International) ("Baxter") entered into a broad strategic partnership
to use Inhale's dry powder pulmonary delivery system as a technology platform
for developing and launching therapeutic products. In April 1996, Baxter made
a $20 million equity investment in Inhale at a 25% market premium based on
the average market price prior to the signing of the agreement. Baxter will
receive worldwide commercialization rights in exchange for research and
development funding and milestone payments for the first four molecules,
estimated at up to $60 million. Baxter also has an option to add molecules to
the collaboration that could result in additional funding and milestone
payments to Inhale. Inhale will receive royalties and manufacturing revenue
on sales of products that are successfully commercialized as a result of this
collaboration.
In July 1996, the Company entered into an agreement with Genzyme
Corporation to examine the feasibility of developing dry powder formulations
of gene vectors for pulmonary applications.
In January 1997, Inhale and Centeon (a company of Armour and Behring)
entered into a collaboration to develop a pulmonary formulation of alpha-1
proteinase inhibitor to treat patients with alpha-1 antitrypsin deficiency, a
genetic disorder which can lead to emphysema. Centeon will receive
commercialization rights worldwide with the exception of Japan, and Inhale
will receive royalties and manufacturing revenue on product sales, an
up-front signing fee and up to an estimated $15 million in research and
development funding and milestone payments. Inhale and Centeon completed
preclinical work indicating that Inhale's dry powder formulation of Centeon's
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alpha-1 proteinase inhibitor has the potential to significantly improve the
efficiency of delivery compared to current infusion therapy.
Also in January 1997, Inhale and Eli Lilly and Company ("Lilly")
entered into a development and license agreement to develop a pulmonary
delivered product for an osteoporosis drug. Inhale will receive up to an
estimated $20 million in initial fees, research funding and milestone
payments. Lilly will receive global commercialization rights for the
pulmonary delivery of the products with Inhale receiving royalties and
manufacturing revenue on any marketed products. Inhale successfully completed
the Phase I clinical trial of this drug conducted with ALZA that indicated
that the drug was systematically absorbed when delivered with Inhale's system.
Each of the foregoing collaborative arrangements are terminable by the
partner. Therefore, there can be no assurance that the Company will receive
additional payments as described.
CLINICAL TRIALS
In March 1996, Pfizer Inc. ("Pfizer") began Phase II clinical trials of
pulmonary insulin using Inhale's pulmonary delivery system. Pfizer advanced
these trials to the next step in late October 1996 by initiating a multi-site
outpatient trial that may include up to 240 patients. At that time, Pfizer
made an additional $5 million equity investment in Inhale at a 25% premium to
the market price of Inhale stock at the time. Pfizer had made an initial $5
million equity investment in February 1995, also at a 25% premium to
market price.
In May 1996, Inhale announced the start of a Phase I clinical trial of an
aerosolized form of a drug to treat osteoporosis using Inhale's pulmonary
delivery system as part of a collaboration with ALZA. In early January 1997,
Inhale announced the completion of that trial.
In July 1996, Inhale initiated a Phase I clinical trial of an
aerosolized form of salmon calcitonin as a potential treatment for
osteoporosis, Paget's disease, hypercalcemia, and other bone diseases.
TECHNOLOGY DEVELOPMENT AND MANUFACTURING SCALE-UP
Inhale continued to advance the development of its core technologies
and manufacturing capabilities in 1996. The Company developed a prototype
device suitable for the home clinical trials and also scaled-up its powder
processing and automated powder filling systems for production of later stage
clinical supplies. In late 1996, the Company entered into a 15-year lease
agreement on a third facility. The Company intends to consolidate its
operations into this facility over the next eighteen months and intends to
use the facility as its early commercial manufacturing site.
MANAGEMENT TEAM
Inhale expanded its management team in 1996. Judi R. Lum joined the
Company in the fourth quarter to become Inhale's Chief Financial Officer.
Judi most recently served as Vice President of Finance and Administration for
an ophthalmic start-up company and previously was Director of Corporate
Development for GenPharm International. She also served as Director of
Finance for the Industrial Sector of Raychem Corporation, Pilot Operations
Manager for
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Advanced Cardiovascular Systems, and an Assistant Vice President of Crocker
National Bank. She received her B.A. and M.B.A. degrees from Stanford
University.
Lynn Van Campen, Ph.D., joined the Company as Vice President,
Pharmaceutical Development. She previously was Director of Pharmaceutics for
Boehringer Ingelheim Pharmaceuticals, Inc. Christopher L. Searcy, Pharm. D.,
joined the company as Vice President, New Business Opportunities. Prior to
joining Inhale, Dr. Searcy was Vice President of Business Development at
GalaGen, Inc., and served as Director, Licensing and Development for Pfizer.
Promotions and changes of responsibilities in the executive staff
during the past year included: Ajit Gill, former CFO, became Executive Vice
President of Technical Operations. Mr. Gill, who has a vast amount of
experience in building new businesses, will focus on managing Inhale's
growth. Stephen L. Hurst, J.D., Vice President of Intellectual Property and
Licensing, took on additional responsibility for Business Development
following the departure of Jack Anthony. Mr. Michael Glembourtt was recently
promoted to Vice President, Project Management. Mr. Glembourtt has held a
variety of project management and research positions at Syntex Development
Research (now Roche Biosciences), California Biotechnology (now Scios
Corporation), Cetus Corporation (now Chiron Corporation), and the Stanford
University School of Medicine.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
INHALE THERAPEUTIC SYSTEMS
Dated: February 6, 1997 By: /s/ Robert B. Chess
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Robert B. Chess
President and Chief Executive
Officer
