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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
Date of Report August 15, 1998
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(Date of earliest event reported)
NeXstar Pharmaceuticals, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 0-23012 84-1173453
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
2860 Wilderness Place Boulder, CO 80301
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(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code: (303) 444-5893
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NA
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On August 15, 1998, NeXstar Pharmaceuticals, Inc. (the "Company") sold
a 51% interest (the "Interest") in its newly established subsidiary Proligo
L.L.C., a Delaware limited liability company ("Proligo"), to SKW Americas, Inc.
("SKW"). Proligo was formed in July 1998 and initially consisted of the assets
of the Company's NeXstar Technology Products division, a manufacturer of
oligonucleotides and specialty chemicals for the pharmaceuticals industry.
As payment for the Interest, the Company received $15 million and a 49%
interest in PerSeptive Biosystems GmbH, Hamburg, a company in Hamburg, Germany
(the "Hamburg Company"), which specializes in the manufacture of nucleoside
phosphoramidite monomers. In addition, SKW will pay the Company $3 million in
guaranteed payments and up to $20.5 million in performance-based milestones over
the next five years. As part of the transaction, the Company contributed $4.9
million and its 49% interest in the Hamburg Company to Proligo. SKW contributed
$5.1 million and the remaining 51% interest in the Hamburg Company to Proligo.
A copy of the press release issued by the Company in connection with
the establishment of Proligo and the sale of the Interest is set forth as
Exhibit 1 hereto and is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired.
Not Applicable.
(b) Pro Forma Financial Information.
NEXSTAR PHARMACEUTICALS, INC.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma consolidated financial statements
give effect to the transaction described in Note 1 to the pro forma consolidated
financial statements. The unaudited pro forma condensed consolidated balance
sheet at June 30, 1998 gives effect to the transaction as if it occurred on the
balance sheet date. The unaudited pro forma condensed consolidated statement of
operations for the six months ended June 30, 1998 gives effect to the
transaction as if it occurred at the beginning of the period. The unaudited pro
forma condensed consolidated statement of operations for the year ended December
31, 1997 is not presented as the pro forma adjustments are immaterial to the
Company's statement of operations for the year.
Pro forma adjustments have been made to the consolidated financial
statements to exclude the consolidation of Proligo's operations, to include a
49% equity investment in Proligo and a corresponding equity share in Proligo's
operating loss and to give effect to the events that are directly
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attributable to the transaction. Details of these adjustments are included in
the Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
The unaudited pro forma condensed consolidated financial statements
have been prepared by the Company's management based upon the historical
financial statements of the Company. These pro forma condensed consolidated
financial statements may not be indicative of the results that actually would
have occurred if the transaction had occurred on the dates indicated. The pro
forma condensed consolidated financial statements should be read in conjunction
with the historical financial statements and pro forma notes contained elsewhere
herein, and in the Company's annual report on Form 10-K and the Company's
quarterly reports on Form 10-Q.
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NEXSTAR PHARMACEUTICALS, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
JUNE 30, 1998
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<CAPTION>
Pro Forma
As Reported Adjustments Pro Forma
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<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 56,242,000 $10,100,000 (A)(C) $ 66,342,000
Marketable securities 10,101,000 -- 10,101,000
Accounts receivable 42,179,000 (40,000)(A) 42,139,000
Inventories 12,678,000 -- 12,678,000
Prepaid expenses and other 3,885,000 -- 3,885,000
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Total current assets 125,085,000 10,060,000 135,145,000
Property, plant and equipment, net of
accumulated depreciation and amortization 47,152,000 (4,435,000)(A) 42,717,000
Investment in unconsolidated subsidiary 9,349,000 (A)(B)(C) 9,349,000
Patent and trademark costs, net of
accumulated amortization 5,815,000 (349,000)(A) 5,466,000
Other noncurrent assets 3,779,000 1,425,000 (A) 5,204,000
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Total assets $ 181,831,000 $16,050,000 $ 197,881,000
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 5,760,000 $ -- $ 5,760,000
Accounts payable 5,273,000 (175,000)(A) 5,098,000
Accrued compensation and employee benefits 3,978,000 (64,000)(A) 3,914,000
Accrued litigation settlement and related
expenses due within one year 1,822,000 -- 1,822,000
Accrued interest payable 2,083,000 -- 2,083,000
Other accrued expenses 6,394,000 (1,167,000)(A) 5,227,000
Long-term obligations due within one year 4,864,000 (899,000)(A) 3,965,000
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Total current liabilities 30,174,000 (2,305,000) 27,869,000
Accrued litigation settlement expenses due
after one year 8,315,000 -- 8,315,000
Long-term obligations due after one year 12,650,000 (2,203,000)(A) 10,447,000
Convertible subordinated debentures 80,000,000 -- 80,000,000
Commitments and contingencies
Stockholders' equity:
Common stock 285,000 -- 285,000
Additional paid-in capital 226,731,000 -- 226,731,000
Deferred compensation (104,000) -- (104,000)
Cumulative translation adjustment (401,000) -- (401,000)
Accumulated deficit (175,819,000) 20,558,000 (A) (155,261,000)
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Total stockholders' equity 50,692,000 20,558,000 71,250,000
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Total liabilities and stockholders' equity $ 181,831,000 $16,050,000 $ 197,881,000
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NEXSTAR PHARMACEUTICALS, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1998
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Pro Forma
As Reported Adjustments Pro Forma
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Revenues:
Product revenues $50,047,000 $ (153,000)(A) $49,894,000
License fee 3,000,000 -- 3,000,000
Royalties 1,809,000 (69,000)(A) 1,740,000
Collaborative agreements and contracts 1,350,000 -- 1,350,000
Interest income 1,502,000 -- 1,502,000
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Total revenues 57,708,000 (222,000) 57,486,000
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Expenses:
Cost of goods sold 10,161,000 (36,000)(A) 10,125,000
Research and development 26,507,000 (3,011,000)(A) 23,496,000
Selling, general and administrative 23,288,000 -- 23,288,000
Interest expense 3,390,000 -- 3,390,000
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Total expenses 63,346,000 (3,047,000) 60,299,000
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Loss before provision for income taxes (5,638,000) 2,825,000 (A) (2,813,000)
Provision for income taxes 295,000 -- 295,000
Equity in loss of unconsolidated subsidiary -- (1,410,000)(D) (1,410,000)
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Net loss $(5,933,000) $ 1,415,000 $(4,518,000)
=========== =========== ===========
Net loss per share $ (0.21) $ (0.16)
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Shares used in computing net loss per share 27,696,000 27,696,000
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NEXSTAR PHARMACEUTICALS, INC.
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Transaction
On August 15, 1998, NeXstar Pharmaceuticals, Inc. (the "Company") sold
a 51% interest (the "Interest") in its newly established subsidiary Proligo
L.L.C., a Delaware limited liability company ("Proligo"), to SKW Americas, Inc.
("SKW"). Proligo was formed in July 1998 and initially consisted of the assets
of the Company's NeXstar Technology Products division, a manufacturer of
oligonucleotides and specialty chemicals for the pharmaceuticals industry.
As payment for the Interest, the Company received $15 million and a 49%
interest in PerSeptive Biosystems GmbH, Hamburg, a company in Hamburg, Germany
(the "Hamburg Company"), which specializes in the manufacture of nucleoside
phosphoramidite monomers. In addition, SKW will pay the Company $3 million in
guaranteed payments and up to $20.5 million in performance-based milestones over
the next five years. As part of the transaction, the Company contributed $4.9
million and its 49% interest in the Hamburg Company to Proligo. SKW contributed
$5.1 million and the remaining 51% interest in the Hamburg Company to Proligo.
The purchase price for the 51% interest in Proligo was determined pursuant to
arm's length negotiations between the parties.
2. Pro Forma Adjustments
(A) To record the sale of the Interest in the Company's subsidiary,
Proligo, and to eliminate the assets, liabilities, revenues, cost
of goods sold and expenses of Proligo.
(B) To contribute the Company's 49% interest in the Hamburg Company
to Proligo.
(C) To record the Company's $4.9 million capital contribution to
Proligo.
(D) To record equity in loss from Proligo's operations for the six
months ended June 30, 1998.
(c) Exhibits.
Exhibit 1 -- Press Release dated August 16, 1998.
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SIGNATURE
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.
NeXstar Pharmaceuticals, Inc.
By: /s/ Michael E. Hart
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Michael E. Hart
Vice President and Chief Financial
Officer
Dated: August 28, 1998
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EXHIBIT INDEX
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Sequentially
Exhibit Numbered
Number Description Page
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1 Press Release dated August 16, 1998
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EXHIBIT 1
NEXSTAR PHARMACEUTICALS, INC.
2860 WILDERNESS PL., BOULDER, CO 80301 PHONE 303.444.5893 FAX 303.544.6113
FOR IMMEDIATE RELEASE
Contact at NeXstar Pharmaceuticals: Contact at Proligo LLC:
Anna Sussman Wolfgang Pieken
Manager, Investor Relations Chief Executive Officer
303/546-7875 303/546-7675
SKW BUYS MAJORITY STAKE OF
NEXSTAR TECHNOLOGY PRODUCTS DIVISION
NEW COMPANY, PROLIGO LLC, TO FOCUS ON OLIGONUCLEOTIDE CHEMISTRY
BOULDER, Colo., August 16, 1998 - NeXstar Pharmaceuticals, Inc.
(NASDAQ-NMS: NXTR) and SKW Trostberg AG today announced the formation of a new
joint company, Proligo LLC, to focus on the emerging chemical supply market for
oligonucleotide-based products and related nucleic acid technologies. Proligo
LLC is the successor to the NeXstar Technology Products division of NeXstar
Pharmaceuticals and was established partly through the sale of 51 percent of the
new company by NeXstar Pharmaceuticals to SKW Americas, Inc. SKW Americas is a
subsidiary of SKW Trostberg AG, an international specialty chemical
manufacturing corporation based in Trostberg, Germany with annual revenues of
over $3 billion in U.S. dollars.
In exchange for its 51 percent interest in Proligo, SKW Americas paid NeXstar
Pharmaceuticals $15 million in cash at closing and will pay an additional $3
million in guaranteed payments and up to $20.5 million in performance-based
milestone payments over the next five years. SKW Americas will also transfer to
NeXstar Pharmaceuticals a 49 percent interest in Proligo Biochemie GmbH, the
former PerSeptive Biosystems GmbH, Hamburg.
To complete the formation of Proligo, SKW Americas and NeXstar Pharmaceuticals
will contribute Proligo Biochemie GmbH to the newly formed company. With the
addition of Proligo Biochemie GmbH's 58,000 square foot ISO-certified
manufacturing facility in Hamburg, Germany, Proligo will enter immediately into
the market for nucleoside phosphoramidite monomers, the basic building blocks of
oligonucleotides. The manufacture of these products is enabled by the Koster
patent and rights to the Caruthers patents, which were acquired by NeXstar
Technology Products in January 1998.
Proligo will consist of the assets of NeXstar Technology Products, a specialty
chemicals and process technologies business unit; Proligo Biochemie GmbH; and
$10 million in cash. Proligo is owned 51 percent by SKW Americas and 49 percent
by NeXstar Pharmaceuticals.
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"We are very enthusiastic about our partnership with SKW and the formation of
Proligo LLC," said Patrick J. Mahaffy, president and chief executive officer of
NeXstar Pharmaceuticals. "We originally formed NeXstar Technology Products last
December to leverage our proprietary technology and offset certain of our
research and development expenses. Through the formation of Proligo, each of
these goals will now be achieved in a more substantial and immediate manner than
NeXstar Pharmaceuticals could have achieved independently. SKW's commitment to
Proligo's business plan combined with their financial resources and expertise as
a specialty chemical manufacturer provides Proligo with significant advantages
and further allows NeXstar Pharmaceuticals to focus on our core pharmaceutical
business."
"We are very pleased to have NeXstar Pharmaceuticals as our partner as we enter
the nucleic acid chemistry marketplace," said Meinolf Pousset, the responsible
member of SKW Trostberg's board of directors. "NeXstar's scientific
contributions and business relations will be instrumental in launching and
developing Proligo as an international manufacturer of biochemical specialties."
Proligo's mission will be to serve as an integrated manufacturer and marketer of
products and manufacturing services to the growing oligonucleotide marketplace.
With the combination of Proligo Biochemie GmbH and the former NeXstar Technology
Products, Proligo LLC is committed to providing customers a full range of
nucleic acid-based products, from reagents and building blocks to bulk GMP
oligonucleotide manufacturing. Proligo's products and services include:
o custom manufacture of bulk, active oligonucleotides to GMP specifications;
o chemical building blocks for oligonucleotides;
o novel process reagents for the efficient assembly of oligonucleotides;
o new synthetic linking technologies for modulating the activity of
oligonucleotides; and,
o cost-effective processes for large quantity (scale-up) production of such
compounds, including the PASS technology.
The PASS (Product Anchored Sequential Synthesis) technology, invented by
scientists at NeXstar Pharmaceuticals, is being developed for the manufacture of
oligonucleotide-based drugs. This technology will be positioned to meet the
demand for cost-effective supply of bulk oligonucleotide supply for
pharmaceutical and diagnostic customers. Proligo intends to develop the PASS
technology to support contract manufacturing of oligonucleotide-based products.
"We are excited about the formation of Proligo, which reinforces our commitment
to providing our customers with high quality manufacturing services and chemical
products," said Wolfgang Pieken, newly appointed chief executive officer of
Proligo. "With the resources provided by SKW and NeXstar Pharmaceuticals and the
innovative proprietary technology portfolio created by our development team,
Proligo is dedicated to becoming the leader in nucleic acid chemistry supply."
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"The addition of the Hamburg manufacturing plant will enhance our ability to
provide our customers with standard and specialty monomers and reagents for
oligonucleotide synthesis," added Pieken. "The expertise and capability of the
manufacturing team in Hamburg uniquely complements the technology portfolio
created by Proligo's development team in Boulder. In this new configuration,
Proligo is the only supplier of a truly integrated line of products and
manufacturing services in nucleic acid chemistry."
As part of the transaction, Proligo and NeXstar Pharmaceuticals have entered
into a supply agreement in which Proligo will manufacture aptamers for NeXstar
Pharmaceuticals' use in its drug discovery and development programs. In
addition, NeXstar Pharmaceuticals will retain certain rights to the PASS
technology for its own internal uses.
NeXstar Pharmaceuticals has agreed to provide certain transitional services to
Proligo for a period of up to nine months. Approximately 27 employees of NeXstar
Pharmaceuticals will become Proligo employees as part of the transaction.
Proligo and NeXstar Pharmaceuticals are both based in Boulder, Colorado.
This press release contains forward-looking statements that involve risks and
uncertainties, and actual events or results may differ materially. While these
statements reflect NeXstar Pharmaceuticals' best current judgment, they are
subject to risks and uncertainties that could cause actual results to vary from
current projections. These risk factors are identified in NeXstar
Pharmaceuticals' reports to the Securities and Exchange Commission filed on
Forms 10-K and 10-Q, and in other SEC filings.
NeXstar Pharmaceuticals, Inc. is a fully integrated biopharmaceutical company
engaged in the discovery, development, manufacturing and marketing of products
to treat serious and life-threatening illnesses. The company currently markets
two drugs in the United States and around the world, AmBisome and DaunoXome.
Based in Boulder, Colo., NeXstar Pharmaceuticals maintains additional research,
development and manufacturing facilities in San Dimas, Calif., and marketing
subsidiaries worldwide.
SKW Trostberg AG is the parent company of an extensive special chemicals
corporation with almost 200 investments in subsidiaries and affiliated companies
in more than 40 countries worldwide in its three core business sectors of nature
products, chemicals and construction chemicals. In 1997, its more than 14,000
employees achieved sales of almost DM 5.5 billion. VIAG AG, in Munich, Germany,
one of the ten top industrial groups in Germany with sales of almost DM 50
billion, owns more than 50 percent of SKW Trostberg. SKW Trostberg together with
Th. Goldschmidt AG, Essen represents VIAG's chemical division.
