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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 (Date of earliest event reported) December 29, 1999
INCARA PHARMACEUTICALS CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
0-27410 56-1924222
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(Commission File Number) (IRS Employer ID Number)
P.O. Box 14287
3200 East Highway 54
Cape Fear Building, Suite 300
Research Triangle Park, North Carolina 27709
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (919) 558-8688
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Item 2. Acquisition or Disposition of Assets
Sale of IRL
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On December 29, 1999, the Company sold its anti-infective division, known
as Incara Research Laboratories ("IRL"), to a private pharmaceutical company for
$11,000,000 in cash and the right to receive up to an additional $4,000,000 if a
compound originating from a collaboration between the Company and Merck & Co.,
Inc. reaches preclinical and clinical trial milestones. The transaction involved
the sale of assets associated with Incara's anti-infective division, including
rights under a collaboration with Merck and the assumption of related
liabilities by the purchaser.
The IRL transaction was reported in the Company's Annual Report on
Form 10-K405 for the year ended September 30, 1999. This Form 8-K is being
filed to provide pro forma financial statements for the transaction.
Acquisitions
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As reported in the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2000, on March 31, 2000, Incara purchased all of the
minority interests of Renaissance Cell Technologies, Inc. and Aeolus
Pharmaceuticals, Inc. Prior to the acquisitions, Incara owned 78.0% of
Renaissance and 65.8% of Aeolus. Incara issued shares of its common stock in
exchange for the subsidiaries' minority ownership.
Item 7. Financial Statement and Exhibits
(b) Pro Forma Financial Statements
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INCARA PHARMACEUTICALS CORPORATION
PRO FORMA CONSOLIDATED BALANCE SHEET
(Unaudited)
September 30, 1999
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Pro Forma
Consolidated Adjustments - Pro Forma
Actual IRL As Adjusted
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<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,407 $ 11,000 $ 13,407
Marketable securities 2,553 - 2,553
Accounts receivable 282 - 282
Prepaids and other current assets 237 (9) 228
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Total current assets 5,479 10,991 16,470
Property and equipment, net 2,483 (2,346) 137
Other assets 82 (81) 1
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$ 8,044 $ 8,564 $ 16,608
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 654 $ (293) $ 361
Accrued expenses 1,933 (73) 1,860
Current portion of capital lease obligations 488 (478) 10
Current portion of notes payable 197 (168) 29
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Total current liabilities 3,272 (1,012) 2,260
Long-term portion of capital lease obligations 399 (399) -
Long-term portion of notes payable 582 (557) 25
Stockholders' equity:
Common stock, $.001 par value per share, 40,000,000
shares authorized, 5,226,969 shares issued and
outstanding 5 - 5
Additional paid-in capital 81,772 - 81,772
Restricted stock (744) - (744)
Accumulated deficit (77,242) 10,532 (66,710)
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Total stockholders' equity 3,791 10,532 14,323
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$ 8,044 $ 8,564 $ 16,608
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</TABLE>
The pro forma adjustments to the balance sheet reflect the $11,000,000 cash
received upon the sale of the Company's IRL division in December 1999 and the
elimination of the September 30, 1999 balances of the IRL-related assets and
liabilities that were sold with IRL. The adjustment to accumulated deficit of
$10,532,000 as of September 30, 1999 reflects the difference between the actual
$11,000,000 proceeds for IRL's net assets transferred using the September 30,
1999 net asset balances. The unaudited pro forma consolidated balance sheet is
provided for informational purposes and is not necessarily indicative of what
the actual financial position would have been had the IRL sale been completed as
of September 30, 1999 and is not indicative of future financial position.
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INCARA PHARMACEUTICALS CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
For the Fiscal Year Ended September 30, 1999
(In thousands, except per share data)
<TABLE>
<CAPTION>
Pro Forma
Consolidated Adjustments - Pro Forma
Actual IRL As Adjusted
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<S> <C> <C> <C>
Revenue:
Contract and license fee revenue $ 2,088 $ 2,063 $ 25
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Costs and expenses:
Research and development 18,996 8,245 10,751
General and administrative 3,045 - 3,045
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Total costs and expenses 22,041 8,245 13,796
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Loss from operations (19,953) (6,182) (13,771)
Investment income, net 355 (343) 698
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Net loss $ (19,598) $ (6,525) $ (13,073)
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Net loss per common share:
Basic $ (2.98) $ (1.99)
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Diluted $ (2.98) $ (1.99)
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Weighted average common shares
outstanding 6,583 6,583
================ ===============
</TABLE>
The pro forma adjustments reflect the elimination of revenue and expenses
related to IRL for the fiscal year ended September 30, 1999, as if the IRL sale
had occurred at the beginning of the fiscal year. The unaudited pro forma
consolidated statement of operations is provided for informational purposes and
is not necessarily indicative of what the actual results of operations would
have been had the IRL sale been completed at the beginning of the year ended
September 30, 1999 and is not indicative of future results.
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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 thereunto duly authorized.
INCARA PHARMACEUTICALS CORPORATION
Date: July 21, 2000 /s/ Richard W. Reichow
Richard W. Reichow, Executive Vice President and
Chief Financial Officer
