<PAGE>
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
Date of Report (Date of earliest event reported): OCTOBER 26, 1998
GENEMEDICINE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
0-24572 76-0355802
(Commission File No.) (IRS Employer Identification No.)
8301 NEW TRAILS DRIVE
THE WOODLANDS, TEXAS 77381-4248
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (281) 364-1150
<PAGE>
ITEM 5. OTHER EVENTS
A. GENEMEDICINE, INC. announces merger with Megabios Corp.
On October 26, 1998, GeneMedicine, Inc. announced an agreement to
merge with Megabios Corp. in a transaction intended to qualify as a
tax-free reorganization. A press release relating to the proposed
transaction is attached hereto as Exhibit 99.1
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(C) EXHIBITS
EXHIBIT NO. DESCRIPTION
99.1 Press Release, dated October 26, 1998
<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 hereunto duly authorized.
GENEMEDICINE, INC.
Dated: October 28, 1998 By: /s/ Richard A. Waldron
-----------------------------
Richard A. Waldron
Chief Financial Officer
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
99.1 Press Release, dated October 26, 1998
<PAGE>
EXHIBIT 99.1
NEWS RELEASE
-- IMMEDIATE --
MEGABIOS CORP. GENEMEDICINE, INC.
Bennet Weintraub Richard Waldron
CFO and Vice President Finance CFO and Vice President Finance
(650) 697-1900 x214 (281) 364-1150
[email protected] [email protected]
BURNS MCCLELLAN, INC. BRIDGE TECHNOLOGY GROUP LLC
John Nugent (Investors) Jennifer La Vin (Investors)
(212) 213-0006 (212) 554-4158
Michelle Corral (Media)
(415) 352-6262
GENEMEDICINE AND MEGABIOS AGREE TO MERGE
----------------------------------------
TO CREATE INDUSTRY LEADER IN PLASMID-BASED GENE THERAPY
-------------------------------------------------------
BURLINGAME, CALIF. AND THE WOODLANDS, TEXAS, OCTOBER 26, 1998 -- Megabios Corp.
(Nasdaq: MBIO - news) and GeneMedicine Inc. (Nasdaq: GMED - news) today
announced the signing of a definitive merger agreement, creating the industry
leader for gene-based therapeutics using plasmid, or non-viral, technology. At
the close of the merger, the combined company will have seven products in
clinical development, four ongoing corporate partnerships with Eli Lilly, Glaxo
Wellcome, Corange International, a subsidiary of Roche Holdings Ltd. and DSM
Biologics, and approximately $57 million in cash and investments. The management
of both companies believes this business combination should enable the combined
company to leverage its collective scientific expertise, intellectual property
and product development efforts into additional corporate partnerships and
successful products more readily than either company alone.
Under the terms of the agreement, which was unanimously approved by the boards
of both companies, each outstanding share of GeneMedicine common stock will be
exchanged, at a fixed exchange ratio of 0.571, for newly issued shares of common
stock of Megabios Corp. This will result in the issuance of approximately 9.1
million additional Megabios Corp. shares, valued at about $38 million based on
Megabios Corp.'s closing price of Friday, October 23, 1998. In addition, all
outstanding employee stock options of GeneMedicine will convert into Megabios
options at the same exchange ratio. The Board of Directors of the combined
company will consist of eight directors, three of whom will be current directors
of GeneMedicine, and Benjamin F. McGraw III will remain as chairman, president
and CEO of the combined entity.
The proposed transaction will be accounted for as a purchase. A significant
portion of the excess purchase price is expected to be charged to in-process
research and development and will result in a charge to earnings to the combined
company that will be reflected in the company's financial statements for the
<PAGE>
quarter in which the transaction is completed. The merger is subject to the
approval of shareholders of both companies and appropriate governmental
agencies. The transaction is expected to close in the first calendar quarter of
1999. Hambrecht & Quist LLC served as advisors to Megabios and PaineWebber
Incorporated served as advisors to GeneMedicine for this transaction.
"We believe this transaction creates the obvious partnering choice for
biotechnology and pharmaceutical companies who want to pursue plasmid-based
therapeutics," stated Benjamin F. McGraw III, chairman, president, and CEO of
Megabios Corp. "By leveraging the strength of the core science, the combined
patent portfolio and the similarity of business strategies, the combined
business will have an improved ability to serve the interests of our current
collaborators and attract new corporate sponsorship of plasmid-based product
development. This transaction also allows us to eliminate any duplication of
research efforts by combining the development goals each company might have
pursued individually, enabling operations to be streamlined. We will continue to
operate at facilities in both California and Texas, but expect to achieve
operational synergies through rationalization."
"The revolution in medical science brought about by genomics research has
greatly enhanced the opportunity for using gene-based therapeutics to become a
treatment method for a broad range of diseases," said Stanley T. Crooke,
chairman of the Board of Directors of GeneMedicine. "GeneMedicine and Megabios
each have developed significant technology platforms to control the delivery to,
and function of, therapeutic genes in a variety of tissues. This business
combination brings together these complementary technology platforms and creates
a strong research knowledge base and intellectual property position that is
foremost in the field. Because both companies have complementary scientific
strengths and similar business strategies, I believe the combination of research
efforts and product development capabilities will leverage each company's
expertise into an organization that can more effectively develop gene-based
therapeutics as solutions for a wide variety of diseases with unmet medical
needs."
Megabios has corporate partnerships with Glaxo Wellcome plc to develop a
treatment for cystic fibrosis using the CFTR gene and with Eli Lilly & Co. to
develop treatments for breast and ovarian cancer using the BRCA1 gene.
GeneMedicine recently expanded its corporate alliance with the Corange
International Limited subsidiary of Roche Holdings Ltd to cover all human cancer
indications for gene medicines utilizing the genes for Interleukin-2 (IL-2),
Interferon-alpha (IFN-a) and Interleukin-12 (IL-12). In addition, Megabios has a
manufacturing partnership with DSM Biologics based on its proprietary methods
for the manufacture of DNA plasmids and DNA:lipid complexes, creating the first
contract facilities that can produce high-quality, ultrapure material for
plasmid-based therapeutics on every scale, from preclinical toxicology studies
to commercial products.
Megabios Corp. develops proprietary gene delivery systems and applies its
preclinical and early clinical development expertise to create gene-based
therapeutics designed for the treatment or prevention of genetic and acquired
diseases. Megabios has developed several in vivo gene delivery systems to
address a number of potential therapeutic applications including cystic
fibrosis, metastatic melanoma, non-small cell lung cancer, peripheral vascular
disease and rheumatoid and osteoarthritis using a variety of therapeutic genes.
The Company's commercial strategy is to enter into corporate partnerships for
full-scale clinical development and marketing and sales of products. Additional
information about Megabios can be found at www.megabios.com.
GeneMedicine, Inc. links proprietary gene delivery and expression technology and
genomics to create gene medicines for treating certain cancers, neuromuscular
disorders, cardiovascular diseases, and pulmonary diseases, as well as the
development of genetic vaccines for treatment or prevention of infectious
diseases. Gene medicines deliver instructions to targeted cells in the body to
produce therapeutic proteins or desired immune responses. GeneMedicine's core
technology includes lipid-,
<PAGE>
polymer-, and peptide-based gene delivery systems, each able to be applied to
specific clinical targets and gene expression systems to regulate the production
of multiple genes. Additional information about GeneMedicine can be found at
www.gmed.com.
###
Statements in this press release that are not strictly historical are "forward
looking" statements as defined in the Private Securities Litigation Reform Act
of 1995. There can be no assurance that Megabios or GeneMedicine, individually
or jointly, will be able to develop a commercially viable gene-based
therapeutic, that any of the programs will be partnered with a pharmaceutical
partner, that necessary regulatory approvals will be obtained, that any clinical
trials will be successful, or that the merger between GeneMedicine and Megabios
will be successful. Actual results may differ from those projected in the
forward looking statements due to risks and uncertainties that exist in both
Company's operations and business environments, described more fully in the
Megabios annual report on Form 10-K for the period ended June 30, 1998, and the
GeneMedicine annual report on Form 10-K for the period ended December 31, 1997,
filed with the Securities and Exchange Commission.
