SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) or
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 30, 1998
INTERCARDIA, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware
- --------------------------------------------------------------------------------
(State or other jurisdiction of incorporation)
0-27410 56-1924222
- ------------------------ ------------------------
(Commission file number) (IRS Employer ID Number)
3200 East Highway 54, Cape Fear Building, Suite 300
Research Triangle Park, North Carolina 27709
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (919) 558-8688
--------------
NA
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report).
<PAGE>
Item 5. Other Events.
On September 30, 1998, Intercardia, Inc. ("Intercardia"), CPEC, Inc.
("CPEC") and Astra Pharmaceuticals, L.P. ("Astra Pharmaceuticals"; formerly
Astra Merck, Inc.) announced termination of an agreement for the U.S.
development and commercialization of BEXTRA(R) (bucindolol HCl), a
cardiovascular drug under investigation for the treatment of congestive heart
failure. Due to a non-compete clause in the original agreement between the
companies, Intercardia and CPEC will now assume responsibility for the U.S.
development and commercialization for BEXTRA.
On July 1, 1998, Astra AB ("Astra") and Merck & Co., Inc. signed an
agreement to restructure Astra Merck's, Inc.'s business and combine it with
Astra's wholly-owned subsidiary, Astra USA Inc., in a new limited partnership in
which Astra has management control as the general partner. The new company,
Astra Pharmaceuticals, L.P., now has an expanded product line which includes the
beta blocker Toprol-XL(R) (metroprolol succinate), which is indicated for
treating hypertension and angina and is also being investigated for treatment of
heart failure. Because metoprolol and bucindolol are both beta blockers being
investigated for heart failure, Astra Pharmaceuticals and Intercardia agreed to
terminate the collaboration in light of a non-compete clause in their original
agreement. Astra Pharmaceuticals will be returning to Intercardia all rights,
material and information relating to bucindolol and will pay a termination fee
in the amount of $4 million. The agreement also represents settlement of the
companies' dispute concerning responsibility for bucindolol related expenses in
excess of $15,000,000.
The Termination and Settlement Agreement between the companies is filed
as an exhibit to this Report and incorporated by reference herein.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
10.33 Termination and Settlement Agreement dated September 29, 1998,
between Astra Pharmaceuticals, L.P., Intercardia, Inc. and
CPEC, Inc.
99.1 Press release issued September 30, 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.
INTERCARDIA, INC.
Date: September 30, 1998 /s/ Richard W. Reichow
-----------------------
Richard W. Reichow
Executive Vice President and
Chief Financial Officer
<PAGE>
INDEX TO EXHIBITS
10.33 Termination and Settlement Agreement dated September 29, 1998, between
Astra Pharmaceuticals, L.P., Intercardia, Inc. and CPEC, Inc.
99.1 Press release dated September 30, 1998.
TERMINATION AND SETTLEMENT AGREEMENT
This Termination and Settlement Agreement (this "Agreement"), dated this
29th day of September, 1998, is made by Astra Pharmaceuticals, L.P., a Delaware
limited partnership ("APLP"), on the one hand, and Intercardia, Inc., a Delaware
corporation ("Intercardia"), and CPEC, Inc., a Nevada corporation ("CPEC"), on
the other hand. Intercardia and CPEC are hereinafter collectively referred to as
"INTERCARDIA/CPEC."
W I T N E S S E T H:
WHEREAS, substantially all of the assets of Astra Merck Inc. ("AMI") were
transferred to APLP pursuant to a corporate restructuring of AMI and a related
asset contribution agreement ("Asset Contribution Agreement");
WHEREAS, AMI and INTERCARDIA/CPEC, are parties to that certain Development
and Marketing Collaboration and License Agreement, dated as of December 4, 1995
(the "Bucindolol Agreement"), and all capitalized terms not otherwise defined
herein are used as defined in the Bucindolol Agreement;
WHEREAS, AMI assigned its rights and obligations under the Bucindolol
Agreement to APLP pursuant to the Asset Contribution Agreement and pursuant to
Section 10.2 of the Bucindolol Agreement, and INTERCARDIA/CPEC acknowledges that
APLP is the lawful successor to AMI's rights and obligations under the
Bucindolol Agreement;
WHEREAS, Section 2.1 of the Bucindolol Agreement provides for a
termination procedure in the event that APLP desires to pursue development and
commercialization of a Competing Product (as defined therein), pursuant to which
APLP is required to make a termination payment to INTERCARDIA, and APLP wishes
to terminate the Bucindolol Agreement pursuant to such procedure so that APLP
may develop and potentially commercialize metoprolol without violating the
Bucindolol Agreement;
WHEREAS, a dispute is pending between APLP and INTERCARDIA/CPEC regarding
the respective rights and obligations of APLP and INTERCARDIA/CPEC under the
Bucindolol Agreement to fund bucindolol development costs in excess of Fifteen
Million Dollars ($15,000,000) in the aggregate; and
WHEREAS, the parties hereto wish to clarify their respective rights and
obligations in connection with the termination of the Bucindolol Agreement and
to provide for a final resolution of their dispute regarding the payment of
excess development costs with respect to bucindolol, including the provision of
mutual releases of claims relating thereto;
<PAGE>
NOW, THEREFORE, in consideration of the above mentioned premises, the
mutual covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Termination of the Bucindolol Agreement. The parties hereby agree to
terminate the Bucindolol Agreement and any and all licenses granted by
INTERCARDIA/CPEC to APLP thereunder, effective as of September 25, 1998 (the
"Effective Date"). Notwithstanding any provisions of the Bucindolol Agreement to
the contrary, the only rights and obligations thereunder that shall survive
termination shall be those set forth in Section 2.6 and the third sentence of
Section 2.8 of the Bucindolol Agreement except that any APLP rights to
Collaboration Information and Inventions shall terminate on the Effective Date.
APLP agrees to maintain the confidentiality of all Proprietary Information (as
defined in the Bucindolol Agreement) in accordance with Section 5.1 thereof for
a period of ten (10) years from the date hereof, and APLP shall not use any such
Proprietary Information at any time in the future for commercial purposes or in
connection in any manner with the development, commercialization, marketing or
sale of metoprolol. INTERCARDIA/CPEC shall be free to use or disclose the
Proprietary Information in its sole discretion.
2. Return of Materials. Within thirty (30) days after the date hereof,
APLP shall provide INTERCARDIA/CPEC access to, and one copy of, all materials in
its possession relating in any manner to the development and commercialization
of bucindolol, and APLP shall return to INTERCARDIA/CPEC all written
confidential information provided by INTERCARDIA/CPEC to APLP pursuant to or in
connection with the Bucindolol Agreement; provided, however, that the general
counsel for APLP may retain one copy thereof in such counsel's possession solely
for archival purposes to evidence the scope of APLP's confidentiality
obligation. APLP shall devote sufficient administrative resources (including
personnel) during the aforementioned thirty-day period to ensure a smooth and
businesslike transfer of any and all such materials. APLP represents and
warrants that, as of the date hereof, no disclosure relating to Collaboration
Information and Inventions is due to INTERCARDIA/CPEC under the provisions of
Section 2.6 of the Bucindolol Agreement. Following the date hereof, APLP shall
forward to INTERCARDIA/CPEC any materials, in the nature of those set forth
above or otherwise relating to bucindolol, subsequently received by APLP
pursuant to the Bucindolol Agreement.
3. Payments. Immediately after the execution hereof, APLP shall pay CPEC,
by wire transfer of immediately available funds to the bank account set forth on
Schedule 3.1 the sum of Four Million Dollars (US $4,000,000), plus an amount
equal to $124,602.21, which is comprised of bucindolol expenses owed to
INTERCARDIA/CPEC as set forth on Schedule 3.2. In addition, APLP shall pay the
amounts set forth on Schedule 3.3 to the respective vendors within ten (10) days
of the date hereof. The payments set forth in this Section 3, together with any
amounts paid by APLP pursuant to Section 4 hereof, shall be in full satisfaction
of all payment and other obligations of APLP to INTERCARDIA/CPEC relating to or
arising out of, under, or in connection
-2-
<PAGE>
with the Bucindolol Agreement or its termination (except to the extent that such
other obligations survive pursuant to this Agreement).
4. Bucindolol Related Expenses and Claims. All expenses relating to the
development or commercialization of bucindolol of any kind whatsoever incurred
or accruing under the Bucindolol Agreement in connection with activities
conducted on or prior to the Effective Date, including all payments made to date
by APLP, arising under the Bucindolol Agreement for the period on or prior to
the Effective Date, shall be the sole responsibility of APLP ("APLP Expenses"),
except for the expense items set forth on Schedule 4.1, which expenses the
parties have previously agreed to share, and which expenses will continue to be
shared by the parties through the Effective Date. Schedule 4.2 sets forth all
contracts in effect with third parties relating to bucindolol into which APLP
has entered and to which INTERCARDIA/CPEC is not a party (the "APLP Contracts").
APLP will terminate all the APLP Contracts, and will be responsible for any
cancellation or other charges under all terminated APLP Contracts. APLP will use
its commercially reasonable efforts to (i) obtain and transfer to
INTERCARDIA/CPEC any deliverables owed to APLP under the APLP Contracts, and
(ii) preserve and transfer to INTERCARDIA/CPEC, subject to Section 11 hereof and
the terms of the APLP Contracts, the intellectual property rights of APLP under
the APLP Contracts. Upon the written request of INTERCARDIA/CPEC, APLP shall
notify the counterparties to the APLP Contracts that APLP has granted its
consent for such counterparties to share with INTERCARDIA/CPEC any data
developed under such contracts. INTERCARDIA/CPEC will be responsible for all
expenses relating to the development or commercialization of bucindolol of any
kind whatsoever incurred or accruing under the Bucindolol Agreement in
connection with activities conducted after the Effective Date, as well as its
share of the expense items set forth in Schedule 4.1 incurred through the
Effective Date (after which date such expenses shall be borne entirely by
INTERCARDIA/CPEC) (collectively, the "INTERCARDIA/CPEC Expenses").
INTERCARDIA/CPEC shall be solely responsible for any cancellation or other
charges relating to all contracts or obligations into which INTERCARDIA/CPEC has
entered relating to bucindolol, including without limitation those to which APLP
is a party (the "INTERCARDIA/CPEC Contracts"). INTERCARDIA/CPEC and APLP shall
use their commercially reasonable efforts promptly to amend the INTERCARDIA/CPEC
Contracts so as to remove APLP as a party thereto; provided, however, that, in
the event that such amendment cannot be effected with respect to any such
contract, INTERCARDIA/CPEC shall defend, indemnify and hold harmless APLP from
and against any and all liability or damages arising out of any suit, action,
legal proceeding, claim or demand of whatever kind or character based upon or
arising out of, under, or in connection with, such contract involving an event
occurring after the Effective Date.
INTERCARDIA/CPEC shall promptly provide to APLP copies of all unpaid
invoices relating, in whole or in part, to APLP Expenses as and when such
invoices are received by INTERCARDIA/CPEC and APLP shall promptly provide to
INTERCARDIA/CPEC copies of all unpaid invoices relating, in whole or in part, to
INTERCARDIA/CPEC Expenses as and when such invoices are received by APLP. Within
fifteen (15) days after receipt by APLP of any invoice relating solely to APLP
Expenses, APLP shall pay any such invoice directly to the vendor, and APLP shall
send a
-3-
<PAGE>
copy of the payment information relating to APLP Expenses to INTERCARDIA/CPEC.
INTERCARDIA/CPEC shall pay directly to the vendors any invoices relating solely
to INTERCARDIA/CPEC Expenses. Any invoices which include items relating to
expenses for periods on or prior to and subsequent to the Effective Date will be
pro rated. APLP Expenses shall include the pro rata portion of such expenses
which relate to periods on or prior to the Effective Date, and INTERCARDIA/CPEC
Expenses shall include the pro rata portion of such expenses which relate to
periods subsequent to the Effective Date. The method to be used for allocation
of expenses shall be appropriate for the nature of the expense (e.g. number of
days in the period; number of patients enrolled; actual expenses during the pro
rated periods). Any party receiving an invoice which includes both APLP Expenses
and INTERCARDIA/CPEC Expenses shall pay such invoice within fifteen (15) days of
receiving such invoice and shall be entitled to reimbursement from the other
party within fifteen (15) days of notice, pursuant to the provisions of this
Section 4.
5. Right to Compete. Notwithstanding any other provision of this Agreement
or the Bucindolol Agreement, the parties hereby acknowledge and agree that,
effective as of July 1, 1998, each party shall have the right to compete with
the other party in the Field and, without limiting the generality of the
foregoing, to pursue any and all activities in connection with the development
and/or commercialization of a Competing Product; provided, however, that each
party agrees not to identify the other party (or its predecessors-in-interest)
as the source of any comparative claims relating to bucindolol and any Competing
Product (including without limitation metoprolol) in connection with any such
comparative claims.
6. Mutual Release of Claims. Each party hereby releases each other party,
its predecessors, successors, assigns, and its present and former officers,
directors, shareholders, employees, agents, affiliates and subsidiaries from any
and all past, present and future claims, demands, obligations, liabilities and
causes of action of any nature ("Claims") whatsoever relating to or arising
under, out of, or in connection with the Bucindolol Agreement or its
termination; provided, however, that neither party hereby releases the other
from any Claims arising under this Agreement.
7. Covenant Not to Sue. Each party to this Agreement covenants and agrees
not to commence, aid, prosecute or cause to be commenced or prosecuted any
action or other proceeding, based upon any claims, demands, obligations, or
causes of action relating to, arising under, out of, or in connection with the
matters subject to mutual release as set forth in Section 6, and each party
further covenants and agrees to hold harmless and indemnify the other party in
respect of all losses, claims, damages, liabilities, fees, penalties or related
costs or expenses (including, but not limited to, court costs and attorneys'
fees), suffered, sustained, incurred, or required to be paid by such other party
from or in connection with any such action or proceeding.
8. Compromise Agreement. This Termination and Settlement Agreement is, in
part, a compromise and settlement of claims and is not intended to be, nor shall
be construed as, any admission of liability or wrongdoing by any party hereto or
any other person or entity.
-4-
<PAGE>
9. Nonsolicitation; No Hiring Without Consent. Each party hereto shall
not, either directly or indirectly, actively solicit or hire any employee of the
other party until one (1) year after the termination of such employee's
employment with such other party, without the prior written approval of such
other party. In the event that a party hereto shall hire any employee of the
other party prior to the first anniversary of the termination of such employee's
employment with such other party, without the prior written approval of the
other party, the party hiring such employee shall promptly pay to the other
party as liquidated damages and not as a penalty, an amount equal to fifty
percent (50%) of the total first year compensation that the party hiring such
employee pays to such person.
10. Press Release. Promptly following the execution hereof, APLP and
INTERCARDIA/CPEC shall issue to major newswires a joint press release
substantially in the form of Annex A hereto, announcing the termination of the
Bucindolol Agreement.
11. Transfers. APLP shall in connection with this Agreement and in the
future execute any agreements or instruments of assignment or transfer
reasonably requested by INTERCARDIA/CPEC relating to the transfer to
INTERCARDIA/CPEC of intellectual property developed by APLP, or its assigns, in
connection with the Bucindolol Agreement which is or was transferable to
INTERCARDIA/CPEC under the terms of the Bucindolol Agreement.
12. Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
13. Entire Agreement. This Agreement embodies the entire agreement of the
parties hereto with respect to the subject matter hereof, and supersedes all
prior agreements with respect thereto.
14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of North Carolina, without regard to the
conflict of laws rules thereof.
15. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
16. No Waiver. Failure to insist on compliance with any term, covenant or
condition contained in this Agreement shall not be deemed a waiver of that term,
covenant or condition, nor shall any waiver or relinquishment of any right or
power contained in this Agreement at any one time or more times be deemed a
waiver or relinquishment of any right or power at any other time or times.
17. Amendment. This Agreement may not be modified or terminated orally and
no modification, termination or waiver shall be valid unless in writing and
signed by all of the parties hereto.
-5-
<PAGE>
18. Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered personally,
sent by telecopies (and promptly confirmed by personal delivery, registered or
certified mail or overnight courier), sent by nationally recognized overnight
courier or sent by registered or certified mail, postage prepaid, return receipt
requested, addressed as follows:
If to INTERCARDIA, to: Intercardia, Inc.
3200 East Highway 54
Cape Fear Building, Suite 300
P.O. Box 14287
Research Triangle Park,
North Carolina 27709
Telecopier No.: 919-544-1245
ATTN: President
With a copy to: Wyrick Robbins Yates & Ponton LLP
Suite 300
4101 Lake Boone Trail
Raleigh, North Carolina 27607
ATTN: Larry E. Robbins, Esq.
Telecopier No.: 919-781-4865
If to APLP, to: Astra Pharmaceuticals, L.P.
725 Chesterbrook Boulevard
Wayne, PA 19087-5677
ATTN: Executive Director of Licensing
and Business Development
Telecopier No.: 610-644-0418
With a copy to: Astra Pharmaceuticals, L.P.
725 Chesterbrook Boulveard
Wayne, PA 19087-5677
ATTN: General Counsel
Telecopier No.: 610-889-1290
Or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. Any such
communication shall be deemed to have been given when delivered if personally
delivered or sent by telecopier on a business day, on the business day after
dispatch if sent by nationally-recognized overnight courier and on the third
business day following the date of mailing if sent by mail.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the date first set forth above.
INTERCARDIA, INC.
By: /s/ Clayton I. Duncan
_______________________________
Name: Clayton I. Duncan
Title President & C.E.O.
CPEC, INC.
By: /s/ Clayton I. Duncan
_______________________________
Name: Clayton I. Duncan
Title President & C.E.O.
ASTRA PHARMACEUTICALS, L.P.
By: /s/ David R. Brennan
______________________________
Name: David R. Brennan
Title Sr. Vice President
Business Planning & Development
-7-
[Intercardia logo appears here]
Intercardia
P.O. Box 14287
3200 East Highway 54
Cape Fear Building, Suite 300
Research Triangle Park, NC 27709-4287
919/558-8688
919/558-8686 fax
Contact:
Intercardia:
W. Bennett Love
919-558-1907
Astra Pharmaceuticals
Gary M. Bruell
610-695-1554
For Immediate Release:
INTERCARDIA AND ASTRA PHARMACEUTICALS END AGREEMENT FOR COLLABORATION ON
BEXTRA(R)
Competing product arises from corporate restructuring of Astra Merck
Research Triangle Park, N.C., USA, and Wayne, PA. September 30, 1998
- -- Intercardia, Inc. (Nasdaq:ITRC) and Astra Pharmaceuticals, L.P. (formerly
Astra Merck, Inc.) announced today termination of an agreement for the U.S.
development and commercialization of BEXTRA(R) (bucindolol HCl), a
cardiovascular drug presently under investigation for the treatment of
congestive heart failure. Due to a non-compete clause in the original
agreement between the two companies, Intercardia will now assume
responsibility for the U.S. development and commercialization for BEXTRA.
On July 1, 1998, Astra AB and Merck & Co., Inc. signed an agreement to
restructure Astra Merck's business and combine it with Astra's wholly-owned
subsidiary, Astra USA, Inc., in a new limited partnership in which Astra has
management control as the general partner. The new company, Astra
Pharmaceuticals, L.P. now has an expanded product line which includes the
once-daily beta blocker Toprol-XL(R) (metoprolol succinate) which is indicated
for treating hypertension and angina and is also being investigated for
treatment of heart failure. Since metoprolol and bucindolol are both beta
blockers being investigated for heart failure, Astra Pharmaceuticals and
Intercardia agreed to terminate the collaboration in light of a non-compete
clause in their original agreement. Astra will be returning to Intercardia all
rights, material and information relating to bucindolol as well as a termination
fee.
"Astra Merck has been a good partner and very professional throughout our
relationship. Nevertheless, we believe termination of the BEXTRA Collaboration
presents an unexpected opportunity for Intercardia," stated Clayton I. Duncan,
<PAGE>
President and CEO of Intercardia. "We regain the U.S. rights for the product and
also receive a payment to help fund development. BEXTRA is in late-stage Phase
III clinical trials for heart failure, the most common reason for
hospitalization in patients over the age of 65, and as a result has attracted
the interest of other pharmaceutical companies. Regaining the rights to BEXTRA
opens new partnering possibilities."
BEXTRA (bucindolol HCl) is a non-selective beta-blocker with vasodilating
properties in Phase III clinical development for the treatment of congestive
heart failure. The product is currently being evaluated in the Beta-blocker
Evaluation of Survival Trial (BEST), a NIH/VA sponsored Phase III mortality
study initiated in June 1995. The BEST Study is designed to test the hypothesis
that the addition of the beta-adrenergic blocking agent bucindolol to standard
therapy will reduce mortality in patients with moderate to severe congestive
heart failure. To date, the BEST study has enrolled over 2,500 patients in 90
medical centers throughout the U.S. and Canada.
Congestive heart failure is a condition in which the heart progressively
loses the ability to pump sufficient quantities of blood to meet the metabolic
needs of the body. It is estimated that 5.0 million people in Europe and 4.7
million people in the United States are afflicted. CHF is the most common reason
for hospitalization in patients over the age of 65 in the U.S. and Europe.
Intercardia, a majority-owned subsidiary of Interneuron Pharmaceuticals,
Inc. (Nasdaq:IPIC), focuses on drug discovery and clinical drug development. The
Company's strategy is to develop and add value to in-licensed products and
research programs and to enter into collaborations and licensing agreements with
corporate partners for final product development, manufacturing and marketing.
Intercardia and BASF Pharma/Knoll AG of Ludwigshafen, Germany, have an agreement
that provides for sharing development expenses and operating profits for the
commercialization of BEXTRA outside the United States and Japan.
Astra Pharmaceuticals, L.P. is responsible for marketing all Astra
prescription products, including gastrointestinal, cardiovascular, respiratory,
pain control medications and several other hospital products. In addition to
Toprol-XL(R), other major products include the anti-secretory agent Prilosec(R)
(omeprazole), the cardiovascular agents Atacand(R) (candesartan cilexetil),
Plendil(R) (felodipine) and Lexxel(R) (enalapril maleate-felodipine ER), the
respiratory agents Pulmicort Turbuhaler(R) (budesonide
<PAGE>
inhilation powder) and Rhinocort(R) Nasal Inhaler (budesonide) and the topical
anesthetic Xlylocaine(R) (lidocaine HCl).
The statements in this press release that are not purely statements of
historical fact are forward-looking statements, and actual results may differ
materially from those anticipated. With respect to Intercardia, important
factors that could cause results to differ include risks associated with funding
of operations, results of the BEST study, product development activities and
regulatory decisions which are described in Intercardia's reports on Form 10-K,
Form 10-Q and Form 8-K filed with the Securities and Exchange Commission.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. Intercardia assumes no
obligation to update the information in this release.
