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UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
[X] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission File Number 0-20815
AVIRON
(Exact name of registrant as specified in its charter)
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<CAPTION>
DELAWARE 77-0309686
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(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
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297 North Bernardo Avenue, Mountain View, California 94043
(Address of principal executive offices including zip code)
(650) 919-6500
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
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<CAPTION>
Common Stock $.001 par value 20,630,270 shares
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(Class) (Outstanding at May 5, 2000)
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AVIRON
TABLE OF CONTENTS
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PAGE
NUMBER
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PART I. FINANCIAL INFORMATION 3
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS AND NOTES
(UNAUDITED). 3
Condensed Consolidated Balance Sheets as of March 31, 2000 and
December 31, 1999 3
Condensed Consolidated Statements of Operations for the three-month
periods ended March 31, 2000 and 1999 4
Condensed Consolidated Statements of Cash Flows for the three-month
periods ended March 31, 2000 and 1999 5
Notes to Condensed Consolidated Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS. 9
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 14
PART II. OTHER INFORMATION 15
ITEM 1. LEGAL PROCEEDINGS. 15
ITEM 2. CHANGES IN SECURITIES. 15
ITEM 3. DEFAULTS UPON SENIOR SECURITIES. 16
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. 16
ITEM 5. OTHER INFORMATION. 16
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. 16
SIGNATURES 17
EXHIBIT INDEX 18
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PART I - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
AVIRON
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
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<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
--------- ---------
(UNAUDITED) (NOTE 1)
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ASSETS
Current Assets:
Cash and cash equivalents ................................................. $ 33,290 $ 28,081
Short-term investments .................................................... 19,699 24,235
Accounts receivable ....................................................... 1,701 3,241
Inventory ................................................................. 2,082 2,082
Prepaid expenses and other current assets ................................. 1,661 1,009
--------- ---------
Total current assets .................................................... 58,433 58,648
Property and equipment, net ................................................. 24,796 25,635
Deposits and other assets ................................................... 6,999 7,411
--------- ---------
TOTAL ASSETS ................................................................ $ 90,228 $ 91,694
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts payable .......................................................... $ 1,269 $ 3,038
Accrued compensation ...................................................... 1,107 1,739
Accrued clinical trial costs .............................................. 904 846
Accrued interest .......................................................... 2,875 1,438
Accrued expenses and other liabilities .................................... 5,773 6,591
Current portion of capital lease obligations .............................. 66 101
Current portion of long term debt ......................................... 2,762 2,680
--------- ---------
Total current liabilities ............................................... 14,756 16,433
Deferred rent ............................................................... 1,765 2,214
Capital lease obligations, noncurrent ....................................... 4 9
Long-term debt, net of current portion ...................................... 111,935 112,657
Commitments and contingencies
Stockholders' Equity (Deficit):
Preferred stock, $0.001 par value; 5,000,000 shares authorized, issuable in
series; none outstanding at March 31, 2000 and
December 31, 1999 ....................................................... -- --
Common stock, $0.001 par value; 30,000,000 shares authorized;
17,586,292 and 16,669,018 shares issued and outstanding at
March 31, 2000 and December 31, 1999, respectively ...................... 18 17
Additional paid-in capital ................................................ 174,920 143,822
Notes receivable from stockholders ........................................ (50) (83)
Deferred compensation ..................................................... (94) (96)
Accumulated deficit ....................................................... (213,026) (183,279)
--------- ---------
Total stockholders' equity (deficit) ........................................ (38,232) (39,619)
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) ........................ $ 90,228 $ 91,694
========= =========
</TABLE>
See accompanying notes
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AVIRON
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
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THREE MONTHS ENDED
MARCH 31,
---------------------------
2000 1999
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REVENUES:
Contract revenues and grants .................................... $ 2,657 $ 15,531
-------- --------
OPERATING EXPENSES:
Research and development ............................................ 17,594 14,005
Acquisition of in-process research
and development ................................................. 10,904 --
General, administrative and marketing ............................... 2,568 2,682
-------- --------
TOTAL OPERATING EXPENSE ............................................... 31,066 16,687
-------- --------
LOSS FROM OPERATIONS .................................................. (28,409) (1,156)
-------- --------
OTHER INCOME (EXPENSE):
Interest income ..................................................... 722 1,211
Interest expense .................................................... (2,088) (1,574)
-------- --------
TOTAL OTHER INCOME (EXPENSE), net ..................................... (1,366) (363)
-------- --------
NET LOSS .............................................................. $(29,775) $ (1,519)
======== ========
Basic and diluted net loss per share .................................. $ (1.74) $ (0.10)
======== ========
Shares used in computing basic and diluted net loss per share ......... 17,095 15,703
======== ========
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See accompanying notes
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AVIRON
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
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THREE MONTHS ENDED
MARCH 31,
---------------------------
2000 1999
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ........................................................................... $(29,775) $ (1,519)
Adjustment to reconcile net loss to net cash used in operating activities:
Depreciation and amortization ............................................... 1,350 1,107
Amortization of convertible debt offering costs ............................. 141 141
Amortization of deferred compensation ....................................... 2 44
Issuance of warrant for acquisition of in-process research
and development .......................................................... 10,904 --
Changes in assets and liabilities:
Accounts receivable ......................................................... 1,540 --
Prepaid expenses and other current assets ................................... (651) (84)
Deposits and other assets ................................................... 272 (858)
Accounts payable ............................................................ (1,769) (731)
Accrued expenses and other liabilities ...................................... 45 1,735
Deferred rent ............................................................... (449) 262
-------- --------
Net cash provided by (used in) operating activities ................................ (18,390) 97
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investments .................................................... (27,306) (8,168)
Maturities of investments ................................................... 31,869 20,076
Expenditures for property and equipment ..................................... (512) (1,758)
-------- --------
Net cash provided by investing activities .......................................... 4,051 10,150
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on capital lease obligation .............................. (40) (94)
Principal payments on long-term debt ........................................ (640) --
Proceeds from issuance of Common Stock, net ................................. 20,228 111
-------- --------
Net cash provided by financing activities .......................................... 19,548 17
-------- --------
Net increase in cash and cash equivalents .......................................... 5,209 10,264
CASH AND CASH EQUIVALENTS, at beginning of period .................................. 28,081 28,164
-------- --------
CASH AND CASH EQUIVALENTS, at end of period ........................................ $ 33,290 $ 38,428
======== ========
</TABLE>
See accompanying notes
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AVIRON
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
(UNAUDITED)
1. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X.
The condensed consolidated financial statements include the accounts of Aviron
and its wholly owned subsidiary, Aviron UK Limited. All significant
inter-company accounts and transactions have been eliminated.
The financial information as of March 31, 2000 and for the three month periods
ended March 31, 2000 and 1999 is unaudited, but includes all adjustments
(consisting only of normal recurring adjustments) which Aviron considers
necessary for a fair presentation of the financial position at such date and the
operating results and cash flows for those periods. The balance sheet data at
December 31, 1999 is derived from the audited financial statements at that date,
but does not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. The
accompanying condensed consolidated financial statements should be read in
conjunction with the financial statements and notes thereto included in our
Annual Report on Form 10-K, as amended, for the year ended December 31, 1999.
The results of our operations for any interim period are not necessarily
indicative of the results of our operations for a full fiscal year.
Comprehensive Income (Loss)
Comprehensive income (loss) is not presented separately as it approximates the
net loss presented in the statement of operations for the three month periods
ended March 31, 2000 and 1999.
Net Loss Per Share
We calculate net loss per share in accordance with Statement of Financial
Accounting Standards No. 128, Earnings Per Share, or SFAS 128. SFAS 128 requires
the presentation of basic earnings (loss) per share and diluted earnings per
share, if more dilutive, for all periods presented. Basic net loss per share is
computed using the weighted average number of common shares outstanding during
the period. Diluted net loss per share has not been presented separately as,
given our net loss position, the result would be anti-dilutive.
New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement No. 133,
"Accounting for Derivative Instruments and Hedging Activities," or SFAS 133,
which is required to be adopted for the year ending December 31, 2001.
Management does not anticipate that the adoption of SFAS 133 will have a
significant effect on the results of operations or the financial position of
Aviron.
In December 1999, the Securities and Exchange Commission, or SEC, issued Staff
Accounting Bulletin No. 101, Revenue Recognition in Financial Statements, or SAB
101, which includes the SEC staff's view on accounting for non-refundable
up-front fees received in connection with collaboration agreements. We have
determined that a change in accounting policy is necessary for the $15.0 million
up-front license fee received from Wyeth Lederle Vaccines, or Wyeth, a business
unit of American Home Products Corporation, or AHP, recognized as revenue in the
first quarter of 1999. However, we are currently evaluating the period over
which the license fee should be recognized as revenue. We will make this change
in our accounting policy in the second quarter of 2000, which will result in a
charge to operations
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for the cumulative effect of the change as of January 1, 2000. This amount will
be recorded as deferred revenue and recognized as revenue in future periods.
Prior financial statements will not be restated.
2. Financing Transactions during the quarter ended March 31, 2000.
On January 10, 2000, we received a commitment for up to $48.0 million in equity
financing from Acqua Wellington North America Equities Fund, Ltd., or Acqua
Wellington, in amounts of up to $4.0 million per month, at our discretion,
through January 2001. The commitment is reduced by $4.0 million each month
whether we draw on the commitment or not. As of March 31, 2000, $40.0 million of
these funds were available. The price at which this equity is issued is based on
the volume weighted average market price for the 18 trading days ending two days
prior to sale. In addition to the above commitment, on March 6, 2000, we sold
253,935 shares of common stock to Acqua Wellington for total proceeds of $8.0
million, or $31.50 per share. This price was based on the weighted average
market price for the 18 trading days period ending on March 2, 2000.
On February 3, 2000, we sold 309,995 shares of common stock to Ridgeway
Investment Ltd., or Ridgeway, for total proceeds of $6.0 million, or $19.36 per
share. This share price was based on the volume weighted average market price
for the 18 trading days ending two days prior to sale.
On February 3, 2000, we sold 103,332 shares of common stock to AHP for total
proceeds of $2.0 million at the same share price and terms as those for the
Ridgeway investment described above. On March 6, 2000, we sold 121,212 shares of
common stock to AHP for total proceeds of $2.0 million, or $16.50 per share,
which were sold pursuant to a December 30, 1999 agreement with AHP.
3. Michigan Warrants
In February 2000, we amended our licensing agreement for cold adapted influenza
virus vaccine technology with the University of Michigan to accelerate the
issuance of a warrant to the university. As a result of this amendment, we
granted the university a warrant to purchase 340,000 shares of our common stock
at an exercise price of $10.00 per share and we recorded a one-time (non-cash)
charge of approximately $10.9 million in the first quarter of 2000. Upon the
date of the first commercial sale of FluMist(TM), if 1.25 percent of the common
stock then outstanding exceeds 340,000 shares, we will issue an additional
warrant on the same terms, allowing the university to purchase a number of
shares equal to the difference between 340,000 and 1.25 percent.
4. Stock Options
To motivate our employees and align their interests with stockholders, on
February 9, 2000, we granted options for the purchase of a total of 1,264,900
shares of common stock at an exercise price of $24.00, the closing price of our
common stock on February 8, 2000. Approximately 27 percent of the options become
exercisable upon the acceptance by the U.S. Food and Drug Administration, or
FDA, of our Biologics License Application, or BLA, submission for FluMist and
another 40 percent become exercisable when FluMist is approved for marketing in
the United States. These options will become exercisable in February 2005 unless
these events related to FluMist occur earlier. The final 33 percent of these
options will become exercisable when FluMist is approved for marketing in the
United States, but only if this event occurs in 2001. If FDA approval for
FluMist is not obtained by December 31, 2001, these options will be cancelled.
If the final 33 percent of these options become exercisable, we will incur
compensation expense in the period in which they become exercisable in an amount
equal to the difference between the exercise price of the options and the then
current fair market value of our common stock.
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5. Related Party Transaction
In January 2000, we made a non-interest bearing loan to C. Boyd Clarke, our
President and Chief Executive Officer, in the amount of $500,000. The loan,
which is secured by real property, is repayable in equal annual installments
over a five year period.
6. Subsequent Events
In April 2000, we completed a public offering of 2,000,000 shares of common
stock at $22.50 per share. The underwriters fully exercised their option to
purchase 300,000 additional shares (100,000 from a selling stockholder and
200,000 from Aviron) to cover over-allotments. Concurrent with this public
offering, AHP purchased 686,160 shares of common stock at $21.38 per share, the
price equal to the net proceeds per share to Aviron in the public offering.
Aggregate net proceeds from both the public offering and the AHP transaction,
after estimated expenses and underwriters' discounts and commissions, were
approximately $60.7 million.
On April 13, 2000, we sold 144,185 shares of common stock to Acqua Wellington
for total proceeds of $4.0 million, or $27.74 per share. This share price was
based on the weighted average market price for the 18 trading days ending on
April 11, 2000.
On May 12, 2000, we sold 348,983 shares of common stock to Acqua Wellington for
total proceeds of $8.0 million, or $22.92 per share. This share price was based
on the weighted average market price for the 18 trading days ending on May 10,
2000.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following Management's Discussion and Analysis of Financial Condition and
Results of Operations contains, in addition to historical information,
forward-looking statements which involve risks and uncertainties. Our actual
results could differ materially from those anticipated in these forward-looking
statements as a result of certain factors, including those set forth in our
Annual Report on Form 10-K, as amended, in the section entitled "Business
Risks."
OVERVIEW
We are a biopharmaceutical company focused on the prevention of disease through
innovative vaccine technology. We are currently focusing our product development
and commercialization efforts on our lead product candidate, FluMist(TM), an
investigational live virus vaccine for influenza delivered as a nasal spray. Our
goal is to become a leader in the discovery, development, manufacture and
marketing of innovative vaccines which are safe, effective and economical enough
to merit their use in immunization programs targeting the general population.
Our vaccine programs are based both on techniques for producing weakened live
virus vaccines and on our proprietary genetic engineering technologies. Live
virus vaccines, including those for smallpox, polio, measles, mumps, rubella and
chicken pox, have had a long record of preventing disease.
FluMist
According to the Centers for Disease Control and Prevention, or CDC, epidemics
of influenza occur during the winter months nearly every year and are
responsible for an average of approximately 20,000 deaths per year in the United
States. Influenza viruses also can cause global epidemics of disease during
which rates of illness and death from influenza-related complications can
increase dramatically. Influenza viruses cause disease in all age groups. Rates
of infection are highest among children, but rates of serious illness and death
are highest among persons age 65 or older, and persons of any age who have
medical conditions that place them at high risk for complications from
influenza.
FluMist is designed to prevent influenza. We are developing and intend to
commercialize FluMist primarily in collaboration with our partner Wyeth Lederle
Vaccines, or Wyeth, a business unit of the pharmaceutical division of American
Home Products Corporation, or AHP. FluMist has been shown to provide a high
protection rate against influenza in Phase 3 clinical trials in children and
healthy adults. In a separate trial conducted in healthy working adults,
reductions in days of illness, antibiotic use, health resource use and missed
work because of illness were observed across several illness definitions.
FluMist BLA Submission
We are in the process of completing the requirements we believe necessary to
support a Biologics License Application, or BLA, submission for FluMist to the
U.S. Food and Drug Administration, or FDA, during the fourth quarter of 2000.
This process includes validating the tests needed to characterize and release
our product and ensuring that all our manufacturing processes, facilities and
equipment, including those at our contract manufacturing partner, Celltech
Medeva, or Medeva, the international pharmaceutical marketing arm of the
Celltech Group, plc, comply with FDA standards.
On March 7, 2000, we announced that we had completed investigations into issues
that arose in routine tests during manufacturing process validation. Our
investigations concluded that the inconsistencies were only associated with
certain assays or tests and not associated with FluMist or the manufacturing
process. We also noted that we believe our contract manufacturer, Medeva, has
taken the necessary steps to bring relevant general utility systems into
compliance. However, we have also begun to implement plans to eliminate our
dependence on these utilities. Those plans involve the use of disposable
supplies instead of relying on the shared utility systems at Medeva.
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Phase 2 Bridging Study with Liquid FluMist
The current formulation of FluMist requires freezer storage throughout
distribution. Because many international markets do not have distribution
channels well suited to the sale of frozen vaccines, Wyeth, in conjunction with
us, initiated a Phase 2 clinical trial in March 2000 in the Southern Hemisphere
for our second generation refrigerator stable, or liquid, formulation of
FluMist.
This trial is intended to demonstrate clinical equivalence between frozen and
liquid FluMist. The trial of more than 1,300 children aged one to three years
was fully enrolled in less than two months. Participants in this randomized,
single-blind study received either frozen or liquid FluMist.
Other Products in Development
We also have a number of other vaccines in various stages of development:
- a parainfluenza virus type 3, or PIV, vaccine to prevent the
most common cause of croup, a respiratory infection in children,
for which we have completed a successful Phase 2 clinical trial;
- an Epstein-Barr virus, or EBV, vaccine to prevent infectious
mononucleosis for which our collaborative partner, SmithKline
Beecham Biologicals S.A., has completed a successful Phase 1
clinical trial; and
- a vaccine for cytomegalovirus, the leading infectious cause of
birth defects, for which we plan to start a Phase 1 clinical
trial during the second quarter of 2000.
We are using our proprietary technologies to discover new vaccine candidates,
including vaccines for herpes simplex virus type 2, or HSV, the virus
responsible for genital herpes, and respiratory syncytial virus, or RSV, a virus
responsible for severe lower respiratory infection in infants and young
children.
Personnel Announcements
On March 6, 2000, we announced that Dennis M. Fenton, Ph.D., Executive Vice
President of Amgen, and Wayne T. Hockmeyer, Ph.D., Chairman and Chief Executive
Officer of MedImmune, Inc. were appointed to our Board of Directors. Their
appointments increased the size of Aviron's board to eight.
On April 14, 2000, we announced that Charlene A. Friedman had been appointed
Vice President and General Counsel.
On May 11, 2000, we announced that Alan C. Mendelson had been appointed to our
Board of Directors, that Jane E. Shaw, Ph.D., had resigned from our Board of
Directors and that Charlene A. Friedman had been named our Corporate Secretary.
On May 11, 2000, we also announced that Edward J. Arcuri, Ph.D., had been
promoted to the newly created position of Senior Vice President, Operations.
Cumulative Losses
Since our inception in April 1992, we have devoted nearly all of our resources
to our research and development programs. To date, we have not generated any
revenues from the sale of products and do not expect to generate any revenues
from the sale of products until 2001 at the earliest. We have incurred
cumulative net losses of approximately $213.0 million as of March 31, 2000, and
expect to incur substantial operating losses over at least the next several
years.
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Business Risks
Our business is subject to significant risks, including but not limited to
manufacturing uncertainties; the risks inherent in our research and development
efforts, including preclinical testing and clinical trials; uncertainties
associated both with obtaining and enforcing our patents and with the patent
rights of others; the lengthy, expensive and uncertain process of seeking
regulatory approvals; uncertainties regarding government reforms and product
pricing and reimbursement levels; technological change and competition and
dependence on third parties. Even if our product candidates appear promising at
early stages of development, they may not reach the market for numerous reasons.
Such reasons include the possibilities that the products will be found unsafe or
ineffective during clinical trials, will fail to receive necessary regulatory
approvals, will be difficult to manufacture on a commercial scale, will be
uneconomical to market or will be precluded from commercialization by
proprietary rights of third parties. See also section entitled "Business Risks"
in our Annual Report on Form 10-K, as amended.
This Form 10-Q contains, in addition to historical information, forward-looking
statements that involve risks and uncertainties. When used herein, the words
"expects," "anticipates," "estimates," "intends," "plans" and similar
expressions are intended to identify such forward-looking statements. Our actual
results could differ materially from the results discussed in the
forward-looking statements.
RESULTS OF OPERATIONS
Three Months Ended March 31, 2000 and 1999
Revenues
We earned $2.7 million in revenue for the three months ended March 31, 2000,
compared to $15.5 million for the three months ended March 31, 1999. In the
first quarter of 2000, revenues were comprised principally of expense
reimbursement from Wyeth for clinical and commercialization expenses, under the
FluMist collaboration agreement. Revenues during the first quarter of 1999 were
comprised principally of a non-refundable initial $15.0 million payment from
Wyeth. Aviron and Wyeth are collaborating on the development and marketing of
FluMist.
Operating Expenses
Research and development expenses increased to $17.6 million in the three months
ended March 31, 2000 from $14.0 million for the three months ended March 31,
1999. The increase was due primarily to an increase in development activities,
documentation, validation and other expenses associated with the commercial
scale-up of the manufacturing facilities associated with FluMist. These
increases were partially offset by reductions in spending on clinical trials. We
expect these expenses to increase in the future as development and manufacturing
activities expand in preparation for potential commercialization of FluMist. In
addition, we recognized a one-time, non-cash charge for the acquisition of
in-process research and development in the amount of $10.9 million due to the
amendment of our agreement with the University of Michigan to accelerate the
issuance of a warrant to the university.
General, administrative and marketing expenses fell slightly to $2.6 million in
the three months ended March 31, 2000 from $2.7 million for the three months
ended March 31, 1999 due to a modest decrease in infrastructure and support
activities. These expenses are expected to increase in the future in support of
the potential commercialization of FluMist.
Net Interest Income (Expense)
Net interest expense increased to $1.4 million in the three months ended March
31, 2000, as compared to $363,000 for the three months ended March 31, 1999. The
increase in net interest expense reflects the decrease in interest income due to
lower average balances of cash, cash equivalents, and investments as funds have
been used to meet operating expenses and capital requirements and the increase
in interest expense in connection with debt financing in December 1999.
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Recent Accounting Pronouncement
In December 1999, the Securities and Exchange Commission, or SEC, issued Staff
Accounting Bulletin No. 101, Revenue Recognition in Financial Statements, or SAB
101, which includes the SEC staff's view on accounting for non-refundable
up-front fees received in connection with collaboration agreements. We have
determined that a change in accounting policy is necessary for the $15.0 million
up-front license fee received from Wyeth which was recognized as revenue in the
first quarter of 1999. However, we are currently evaluating the period over
which the license fee should be recognized as revenue. We will make this change
in our accounting policy in the second quarter of 2000, which will result in a
charge to operations for the cumulative effect of the change as of January 1,
2000. This amount will be recorded as deferred revenue and recognized as revenue
in future periods. Prior financial statements will not be restated.
LIQUIDITY AND CAPITAL RESOURCES
We had cash, cash equivalents and marketable securities at March 31, 2000 of
approximately $53.0 million. In order to preserve principal and maintain
liquidity, our funds are invested in United States Treasury and agency
obligations, highly rated corporate obligations and other liquid investments.
We have financed our operations since inception primarily through sales of
equity and convertible debt securities, and debt financing. Through December 31,
1999, we had raised approximately $263.0 million from such activities, net of
offering expenses. During the first quarter of 2000, we raised $18.0 million
through the sale of common stock, bringing the total raised through financing
activities since inception to $281.0 million. On January 10, 2000, we received a
commitment for up to $48.0 million in equity financing from Acqua Wellington in
amounts of up to $4.0 million per month, at our discretion, through January
2001. The commitment is reduced by $4.0 million each month whether we draw on
the commitment or not. As of March 31, 2000, $40.0 million of these funds were
available.
For the first three months of 2000, $18.4 million of cash was used in operations
as compared with the first three months of 1999, during which period $97,000 of
cash was provided by operations. The increase in cash used in operating
activities was primarily due to an increase in the net loss of $29.8 million,
offset by a $10.9 million non-cash charge related to the issuance of a warrant
to the University of Michigan for the acquisition of in-process research and
development. We expect expenditures for research and development and general,
administrative and marketing expenses to continue to increase in 2000 as we
develop our products and prepare for the potential commercial launch of FluMist.
Cash expended for capital additions amounted to approximately $512,000 and $1.8
million for the first three months of 2000 and 1999, respectively. Capital
expenditures decreased in 2000 primarily due to a decrease in the level of
expenditures for facilities and equipment at Medeva and at our facilities in
Pennsylvania and Santa Clara. Capital expenditures are expected to increase
during 2000, primarily in connection with building additions at our Pennsylvania
facility and equipment additions at all facilities. Principal payments in the
amount of $640,000 were made during the first three months of 2000 on debt
incurred in December 1999. Such payments will continue over the life of the debt
and will increase slightly in the future as a greater portion of the payments
are allocated to principal reduction.
In April and early May 2000, we generated an additional $72.7 million of equity
financing, net of expenses, in a series of public and private transactions. We
anticipate that our existing cash, cash equivalents and short-term investments,
and proceeds from existing collaborations and recent financings will enable us
to maintain our current and planned operations into 2001. Our future cash
requirements will depend on numerous factors, including the time and costs
involved in obtaining regulatory approvals; the ability to successfully launch
FluMist in the United States; continued scientific progress in the research and
development of our technology and vaccine programs; the size and complexity of
these programs; our ability to establish and maintain collaborative
arrangements; progress with preclinical testing and clinical trials; the cost
involved in preparing, filing, prosecuting, maintaining and enforcing patent
claims; the cost of constructing additional manufacturing facilities, should
they be deemed necessary; and product
12
<PAGE> 13
commercialization activities. In particular, if we were to construct and equip
an additional manufacturing facility during this period, we anticipate that we
would likely begin to make substantial additional capital expenditures in 2000
and beyond, which may require us to seek additional funding. In addition, there
can be no assurance that, should we require outside funding through additional
debt or equity financings, such funds will be available on favorable terms, if
at all. If adequate funds are not available, we may be required to delay, reduce
the scope of, or eliminate one or more of our research or development programs
or to obtain funds through collaborative agreements with others that may require
us to relinquish rights to certain of our technologies, product candidates or
products we would otherwise seek to develop or commercialize ourselves, which
could harm our business, financial condition and results of operations.
13
<PAGE> 14
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risk, including changes to interest rates and foreign
currency exchange rates.
Interest Rates -- Our investments and interest income are sensitive to changes
in the general level of interest rates, primarily U.S. interest rates. In this
regard, changes in U.S. interest rates primarily affect the interest earned on
our cash equivalents and investments. To mitigate the impact of fluctuations in
U.S. interest rates, we place our cash in investments that meet high credit
standards, as specified in our investment policy. The policy also limits the
amount of credit exposure to any one issue, issuer, or type of investment and
does not permit derivative financial instruments in our investment portfolio. As
a result, we do not expect any material loss with respect to our investment
portfolio.
Foreign Currency Exchange Rates -- We pay for the costs of manufacturing and
development activities, equipment, and facilities modifications at Medeva, which
is located in the United Kingdom (U.K.) in British Pounds Sterling. As a result,
our financial results could be affected by factors such as changes in foreign
currency exchange rates or weak economic conditions in the U.K. We are exposed
to changes in exchange rates in the United Kingdom. When the U.S. dollar
strengthens against the British Pound Sterling, the U.S. dollar value of British
Pound Sterling-based expenses decreases; when the U.S. dollar weakens, the U.S.
dollar value of British Pound Sterling-based expenses increases. Accordingly,
changes in exchange rates, and in particular a weakening of the U.S. dollar, may
adversely affect our financial position as expressed in U.S. dollars. We
currently do not hedge our obligations in British Pounds Sterling.
Cash, Cash Equivalents and Investments -- At March 31, 2000, we had cash and
cash equivalents of $33.3 million, with a weighted average interest rate of 4.93
percent per year, and short-term investments with a basis of $19.6 million and a
fair value of $19.7 million, with a weighted average interest rate of 5.43
percent.
14
<PAGE> 15
AVIRON
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
On June 30, 1999, the European Patent Office held oral proceedings in an
Opposition filed by American Cyanamid against Aviron's granted European Patent
No. 0490972 relating to methods and compositions of recombinant negative-strand
RNA viruses. At the oral proceedings, the Opposition Division of the European
Patent Office informed us of its intent to issue a written opinion which upholds
claims limited to recombinant influenza and denies claims generically
encompassing negative-strand RNA viruses. This decision will not affect our
FluMist cold-adapted influenza product. We intend to appeal the decision insofar
as it relates to the denied claims; the appeal will request the Technical Board
of Appeals to reverse the decision with respect to the denial of the claims
encompassing recombinant negative-strand RNA viruses. There can be no assurance
that we will be successful in obtaining claims as originally granted as a result
of the appeal. If we do not succeed in the appeal of the claims which encompass
negative-strand RNA viruses, in particular non-segmented RNA viruses, it could
negatively impact our ability to exclude others from commercializing an RSV or
PIV vaccine based on genetically engineered candidates in Europe.
On July 8, 1999, a lawsuit entitled Joany Chou v. The University of Chicago,
ARCH Development Corp., Bernard Roizman and Aviron Company, was filed in the
U.S. District Court for the Northern District of Illinois, Eastern Division, or
Court, by an individual formerly associated with the University of Chicago. On
September 30, 1999, this individual filed an amended complaint against the same
defendants. This amended complaint appeared to purport to assert claims of
inventorship relating to the United States Patent Nos. 5,328,688; 5,795,713;
5,922,328; their foreign counterparts; and potentially other patents and
applications, unjust enrichment, fraud, conversion, breach of fiduciary duty,
breach of contract and breach of implied contract. The amended complaint seeks,
among other things, money damages, an order correcting the inventorship and
ownership of the patents referenced above, disgorgement, a constructive trust,
possible injunctive and equitable relief, punitive damages, attorneys' fees,
costs, and interest. All of the claims appear to relate to patents and patent
applications for HSV, and none appear to relate to Aviron's cold-adapted
influenza product or technology or any other pipeline products in research or
development. On February 18, 2000, the Court granted Aviron's motion to dismiss,
thereby dismissing all pending claims made by the plaintiff against Aviron. On
April 19, 2000, the plaintiff appealed the Court's ruling. We cannot be sure
that we will prevail in the defense of this lawsuit in the event that the
plaintiff is successful in reinstating her claims, or in bringing new claims
against Aviron.
In July 1992, we entered into a license agreement with ARCH Development
Corporation, or ARCH, pursuant to which we obtained an exclusive, worldwide
commercialization license, with the right to sublicense, to patent rights and
related intellectual property and materials pertaining to the herpes simplex
viruses, EBV and various recombinant methods and materials. In return for the
rights granted to us under this agreement, we agreed to make payments to ARCH
upon the achievement of certain milestones in the development of products
covered by the license and to pay royalties to ARCH on net sales of such
products. ARCH also granted us rights to improvements and additional related
technology. The term of this agreement extends until the expiration of the
last-to-expire patent rights covered under the license. ARCH had asserted an
interpretation of the financial terms of this agreement, relating to the license
by us of its EBV technology to SmithKline Beecham and to our sublicense of
certain HSV technology to NeuroVir Therapeutics, both of which would have
required us to pay ARCH a portion of any future or past payments, including
sublicense fees and milestone payments we received under the SmithKline Beecham
and NeuroVir Therapeutics agreements.
On May 8, 2000, we executed a Settlement Agreement and Release, or Settlement
Agreement, with ARCH whereby, among other provisions, we will make a settlement
payment to ARCH in the form of cash and a warrant. We also agreed on the
percentage amount owed to ARCH of certain future milestone and royalty payments
received from SmithKline Beecham and the percentage of future royalty payments
received from NeuroVir Therapeutics. In addition, the Settlement Agreement
provides for the termination of Aviron's option rights to obtain future
improvements and later developments from ARCH. A separate agreement with
NeuroVir Therapeutics sets the amount of the royalty to be paid pursuant to the
NeuroVir license agreement. The Settlement Agreement also provides for ARCH to
receive a percentage of Aviron's current ownership interest in NeuroVir
Therapeutics stock and in a warrant for NeuroVir stock issued to Aviron as part
of the original NeuroVir license agreement.
ITEM 2. CHANGES IN SECURITIES.
On February 3, 2000, we sold and issued to American Home Products Corporation
103,332 shares of our common stock for a purchase price of $19.36 per share, in
a private placement. The aggregate proceeds from this transaction were $2.0
million. We are obligated to register the shares within 180 days of the purchase
date. No underwriter or placement agent was involved in the transaction. The
sale of the shares was made in reliance on Section 4(2) of the Securities Act of
1933, as amended. The common stock purchase agreement is attached as Exhibit
4.13 to our Annual Report on Form 10-K, as amended.
On February 16, 2000, we amended our stock transfer agreement with the
University of Michigan to accelerate the issuance of a warrant to the
university. As a result of this amendment, we issued to the university a warrant
to purchase 340,000 shares of our common stock at an exercise price of $10.00
per share. Prior to the first commercial sale of any of our products, we are
obligated to register the shares issuable upon exercise of the warrant within
180 days of the exercise date, if the university cannot sell the shares pursuant
to Rule 144, of the Securities Act of 1933, as amended. No underwriter or
placement agent was involved in the transaction. The issuance of the warrant was
made in reliance on Section 4(2) of the Securities Act of 1933, as amended. The
amendment to the stock transfer agreement is attached as Exhibit 10.33 to our
Annual Report on Form 10-K, as amended. The warrant is attached as Exhibit 4.14
to our Annual Report on Form 10-K, as amended.
On March 6, 2000, we sold and issued to American Home Products Corporation
121,212 shares of our common stock for a purchase price of $16.50 per share, in
a private placement, pursuant to a December 30, 1999 agreement. The aggregate
proceeds from this transaction were $2.0 million. We are obligated to register
the shares within 180 days of the purchase date. No underwriter or placement
agent was involved in the transaction. The sale of the shares was made in
reliance on Section 4(2) of the Securities Act of 1933,
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<PAGE> 16
as amended. The common stock purchase agreement is attached as Exhibit 4.12 to
our Annual Report on Form 10-K, as amended.
On April 13, 2000, we sold and issued to American Home Products Corporation
686,160 shares of our common stock for a purchase price of $21.38 per share, in
a private placement. The aggregate proceeds from this transaction were $14.7
million. We are obligated to register the shares within 180 days of the purchase
date. No underwriter or placement agent was involved in the transaction. The
sale of the shares was made in reliance on Section 4(2) of the Securities Act of
1933, as amended. The common stock purchase agreement is attached as Exhibit
4.15 hereto.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
ITEM 5. OTHER INFORMATION.
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS
<TABLE>
<CAPTION>
ITEM DESCRIPTION
---- -----------
<S> <C>
4.15 Common Stock Purchase Agreement between the
Registrant and American Home Products
Corporation, dated as of April 5, 2000.
27.1 Financial Data Schedules.
</TABLE>
(b) REPORTS ON FORM 8-K
On January 14, 2000, we filed a Current Report on From 8-K, dated
January 11, 2000, filing a common stock purchase agreement between Acqua
Wellington North American Equities Fund Ltd. and Aviron as Exhibit 4.11
and the related press release as Exhibit 99.1.
16
<PAGE> 17
AVIRON
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed in its behalf by the
undersigned thereunto duly authorized.
AVIRON
Date: May 12, 2000 By: /s/ C. Boyd Clarke
-------------------------- -------------------------------
C. Boyd Clarke
President and
Chief Executive Officer
Date: May 12, 2000 By: /s/ Fred Kurland
-------------------------- -------------------------------
Fred Kurland
Senior Vice President and
Chief Financial Officer
17
<PAGE> 18
EXHIBIT INDEX
<TABLE>
<CAPTION>
NO. OF EXHIBIT DESCRIPTION
- -------------- -----------
<S> <C>
4.15 Common Stock Purchase Agreement between the Registrant
and American Home Products Corporation, dated as of April
5, 2000.
27.1 Financial Data Schedules.
</TABLE>
18
<PAGE> 1
EXHIBIT 4.15
AVIRON
COMMON STOCK PURCHASE AGREEMENT
APRIL 5, 2000
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C> <C>
Section 1. Purchase and Sale of Common Stock.............................................1
Section 2. Closing Date; Delivery........................................................1
2.1 Closing Date.........................................................................1
2.2 Delivery.............................................................................1
Section 3. Representations, Warranties and Covenants of Purchaser........................1
3.1 Authorization........................................................................2
3.2 Investment Experience................................................................2
3.3 Investment Intent....................................................................2
3.4 Registration or Exemption Requirements...............................................2
3.5 Restriction on Short Sales...........................................................2
Section 4. Representations, Warranties and Covenants of Company..........................3
4.1 Organization, Good Standing and Qualification.................................3
4.2 Authorization and Rights......................................................3
4.3 Listing of Shares.............................................................3
4.4 Maintaining Listing of Shares.................................................3
4.5 Publicity.....................................................................3
4.6 Filings.......................................................................3
Section 5. Registration Rights...........................................................4
5.1 Registration Requirements............................................................4
5.2 Indemnification and Contribution.....................................................6
Section 6. Restrictions on Transferability of Shares: Compliance with Securities Act.....8
6.1 Restrictions on Transferability......................................................8
6.2 Restrictive Legend...................................................................8
6.3 Transfer of Shares after Registration................................................9
6.4 Purchaser Information................................................................9
Section 7. Miscellaneous.................................................................9
7.1 Waivers and Amendments...............................................................9
7.2 Governing Law........................................................................9
7.3 Survival.............................................................................9
7.4 Successors and Assigns...............................................................9
7.5 Entire Agreement....................................................................10
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
7.6 Notices, etc........................................................................10
7.7 Severability of this Agreement......................................................11
7.8 Counterparts........................................................................11
7.9 Further Assurances..................................................................11
7.10 Expenses............................................................................11
</TABLE>
2
<PAGE> 4
AVIRON
COMMON STOCK PURCHASE AGREEMENT
This COMMON STOCK PURCHASE AGREEMENT (the "Agreement") is made as of
April 5, 2000 (the "Effective Date"), by and between AVIRON, a Delaware
corporation (the "Company") and AMERICAN HOME PRODUCTS CORPORATION, a Delaware
corporation (the "Purchaser").
SECTION 1. PURCHASE AND SALE OF COMMON STOCK
Subject to the terms and conditions of this Agreement, the Company
agrees to issue and sell to Purchaser and Purchaser agrees to purchase from the
Company 686,160 shares of the Company's Common Stock, $0.001 par value (the
"Shares"), for a purchase price of $21.375 per share for an aggregate purchase
price of $14,666,670.00.
SECTION 2. CLOSING DATE; DELIVERY
2.1 CLOSING DATE. The closing of the purchase and sale of the Shares
hereunder (the "Closing") shall be held at the offices of Cooley Godward LLP,
Five Palo Alto Square, 3000 El Camino Real, Palo Alto, California, 94306 on the
earlier of: (i) 7:00 a.m. on April 10, 2000, or (ii) the first business day
following the expiration or termination of any statutory waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or (iii)
at such other time and place upon which the Company and Purchaser shall agree.
The date of the Closing is hereinafter referred to as the "Closing Date."
2.2 DELIVERY.
(a) At the Closing, the Company will deliver to Purchaser a
certificate, registered in Purchaser's name, representing the number of shares
of Common Stock to be purchased by Purchaser. Such delivery shall be against
payment of the purchase price therefor by wire transfer to the Company's bank
account.
(b) At or prior to the Closing, the Company shall deliver to
Purchaser, a true and correct prospectus filed pursuant to Rule 424(b)(4) of the
rules and regulations under the Securities Act of 1933, as amended.
(c) At the Closing, the Company will deliver to Purchaser an
Officer's Certificate certifying the price per share to be paid by the Purchaser
and number of shares purchased by Purchaser based upon Purchaser's obligation to
purchase such stock calculated pursuant to the terms of Section 11.3(a) of the
International FluMist(TM) License Agreement between the Company and Purchaser
and shall certify that the Registration Statement has been declared effective by
the U.S. Securities and Exchange Commission ("SEC").
SECTION 3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER
Purchaser hereby represents and warrants to the Company, effective as of
the Closing Date, as follows:
<PAGE> 5
3.1 AUTHORIZATION. Purchaser represents and warrants to the Company
that: (i) Purchaser has all requisite legal and corporate or other power and
capacity and has taken all requisite corporate or other action to execute and
deliver this Agreement, to purchase the Shares and to carry out and perform all
of its obligations under this Agreement; and (ii) this Agreement constitutes the
legal, valid and binding obligation of the Purchaser, enforceable in accordance
with its terms, except (a) as limited by applicable bankruptcy, insolvency,
reorganization, or similar laws relating to or affecting the enforcement of
creditors' rights generally and (b) as limited by equitable principles
generally.
3.2 INVESTMENT EXPERIENCE. Purchaser is an "accredited investor" as
defined in Rule 501(a) under the Securities Act of 1933, as amended (the
"Securities Act"). Purchaser is aware of the Company's business affairs and
financial condition and has had access to and has acquired sufficient
information about the Company to reach an informed and knowledgeable decision to
acquire the Shares. Purchaser has such business and financial experience as is
required to give it the capacity to protect its own interests in connection with
the purchase of the Shares.
3.3 INVESTMENT INTENT. Purchaser is purchasing the Shares for its own
account as principal, for investment purposes only, and not with a view to, or
for, resale, distribution or fractionalization thereof, in whole or in part,
within the meaning of the Securities Act. Purchaser understands that its
acquisition of the Shares has not been registered under the Securities Act or
registered or qualified under any state securities law in reliance on specific
exemptions therefrom, which exemptions may depend upon, among other things, the
bona fide nature of Purchaser's investment intent as expressed herein. Purchaser
has completed or caused to be completed the Purchaser Certificates/Questionnaire
attached hereto as Exhibits A-1 and A-2 for use in connection with the sale of
Shares and in preparation of the Registration Statement (as defined below), will
deliver the such Certificates/Questionnaires to the Company on or prior to the
Closing Date, and the responses provided therein shall be true and correct as of
the Closing Date.
3.4 REGISTRATION OR EXEMPTION REQUIREMENTS. Purchaser further
acknowledges and understands that the Shares must be held for investment
purposes, and they may not be resold or otherwise transferred except in a
transaction registered under the Securities Act or an exemption from such
registration is available. Purchaser understands that the certificate(s)
evidencing the Shares will be imprinted with a legend that prohibits the
transfer of the Shares unless (i) they are registered or such registration is
not required, and (ii) if the transfer is pursuant to an exemption from
registration other than Rule 144 under the Securities Act ("Rule 144") and, if
the Company shall so request in writing, an opinion of counsel reasonably
satisfactory to the Company is obtained to the effect that the transaction is so
exempt and in compliance with applicable state law.
3.5 RESTRICTION ON SHORT SALES. Purchaser represents and warrants to and
covenants with the Company that Purchaser has not engaged and will not engage in
any short sales of the Company's Common Stock prior to the effectiveness of the
Registration Statement, except to the extent that any such short sale is fully
covered by shares of Common Stock of the Company other than the Shares.
2
<PAGE> 6
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF COMPANY
4.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of Delaware and has the requisite corporate power to own, lease and operate
its properties and assets and to conduct its business as it is now being
conducted. The Company has the requisite corporate power and authority to enter
into and perform this Agreement and to issue and sell the Shares in accordance
with the terms hereof. The execution, delivery and performance of this Agreement
by the Company and the consummation by it of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate action.
This Agreement has been duly executed and delivered on behalf of the Company by
a duly authorized officer. This Agreement constitutes, or shall constitute when
executed and delivered by such authorized officer, a valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms.
4.2 AUTHORIZATION AND RIGHTS. The Shares to be issued under this
Agreement have been duly authorized by all necessary corporate action and, when
paid for or issued in accordance with the terms hereof, the Shares shall be
validly issued and outstanding, fully paid and nonassessable, and the Purchaser
shall be entitled to all rights accorded to a holder of Common Stock.
4.3 LISTING OF SHARES. The Company will take all action necessary on its
part to list the Shares of Common Stock for trading on the NASDAQ system or any
relevant market of system, if applicable.
4.4 MAINTAINING LISTING OF SHARES. The Company will continue to take all
action necessary to continue the listing of trading of its Common Stock on the
NASDAQ National Market or any relevant market or system, if applicable, and will
comply in all respects with the Company's reporting, listing (including, without
limitation, the listing of the Shares purchased by the Purchaser) or other
obligations under the rules of the NASDAQ National Market or any relevant market
or system.
4.5 PUBLICITY. Except as required by law or applicable legal process,
the Company may not issue a press release or otherwise make a public statement
or announcement with respect to the transactions contemplated hereby without the
prior written consent of Purchaser.
4.6 FILINGS. The Company will deliver and make available at the
Purchaser's request all filings filed with the SEC made after the execution
hereof (collectively, the "Commission Filings"). The Company has not provided to
the Purchaser any information which, according to applicable law, rule or
regulation, should have been disclosed publicly by the Company but which has not
been so disclosed, other than with respect to the transactions contemplated by
this Agreement. As of their respective dates, each of the Commission Filings
complied in all material respects with the requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and the rules and regulations of the
Commission promulgated thereunder and other federal, state, and local laws,
rules and regulations applicable to such documents, and, as of their respective
dates, none of the Commission Filings referred to above contained any untrue
statement of material fact or omitted to state a material fact required to be
stated therein or
3
<PAGE> 7
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The financial statements of the
Company included in the Commission Filings comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the Commission or other applicable rules and regulations with
respect thereto. No event or circumstance has occurred or exists with respect to
the Company or its subsidiaries or their respective businesses, properties,
prospects, operations, or financial condition, which, under applicable law, rule
or regulation, requires public disclosure or announcement by the Company but
which has not been so publicly announced or disclosed.
SECTION 5. REGISTRATION RIGHTS
5.1 REGISTRATION REQUIREMENTS
(a) Except as provided in paragraph (d) below, the Company shall
use its best efforts to prepare and file a registration statement on Form S-3
with the SEC under the Securities Act within 180 days from the date of this
Agreement to register the resale of the Shares by Purchaser (the "Registration
Statement") and to use its best efforts to cause the Registration Statement to
be declared effective as soon as practicable. In the event that at any time the
filing of such Registration Statement is undertaken or is required to be
undertaken the Company fails to qualify for use of Form S-3 (or other available
form for similar type securities registration) for purposes of registering for
resale the Shares, the Company shall cause a registration statement on Form S-1
(or other available form for similar type securities registration) to be filed
as soon as practicable thereunder. The Purchaser agrees to furnish promptly to
the Company in writing all information reasonably required by the Company to
file such Registration Statement.
(b) The Company shall pay all Registration Expenses (as defined
below) in connection with any registration, qualification or compliance
hereunder, and Purchaser shall pay all Selling Expenses (as defined below).
"Registration Expenses" shall mean all expenses, except for Selling Expenses,
incurred by the Company in complying with the registration provisions herein
described, including, without limitation, all registration, qualification and
filing fees, printing expenses, escrow fees, fees and disbursements of counsel
and independent public accountants for the Company, blue sky fees, transfer
agent fees and expenses and the expense of any special audits incident to or
required by any such registration. "Selling Expenses" shall mean selling
commissions, underwriting fees and stock transfer taxes applicable to the
Shares.
(c) In the case of the registration effected by the Company
pursuant to these registration provisions, the Company will use its best efforts
to: (i) keep such registration effective until the earliest of (A) the second
anniversary of the Closing Date, (B) such date as all of the Shares have been
resold or (C) such time as all of the Shares held by Purchaser can be sold
without restriction pursuant to Rule 144 under the Securities Act; (ii) prepare
and file with the SEC such amendments and supplements to the Registration
Statement and the prospectus used in connection with the Registration Statement
as may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by the Registration
Statement; (iii) furnish such number of prospectuses and other documents
incident thereto, including any amendment of or supplement to the prospectus, as
Purchaser from time to time may reasonably request in order to facilitate the
public sale or other disposition of all or any of
4
<PAGE> 8
the Shares held by Purchaser; (iv) cause all Shares registered as described
herein to be listed on each securities exchange and quoted on each quotation
service on which similar securities issued by the Company are then listed or
quoted; (v) provide a transfer agent and registrar for all Shares registered
pursuant to the Registration Statement and a CUSIP number for all such Shares;
(vi) otherwise use its best efforts promptly to comply with all applicable rules
and regulations of the SEC; and (vii) file the documents required of the Company
and otherwise use its best efforts promptly to obtain, if applicable, and
maintain requisite blue sky clearance in (A) all jurisdictions in which any of
the Shares are originally sold and (B) all other states specified in writing by
Purchaser, provided as to clause (B), however, that the Company shall not be
required to qualify to do business or consent to service of process in any state
in which it is not now so qualified or has not so consented. The Company shall
use its best efforts to qualify for use of Form S-3 or other similar form then
available under the Securities Act to register the resale of the Shares and to
maintain such qualification during the periods described in paragraph (i).
(d) The Company may delay the filing of the Registration
Statement for up to forty-five (45) days by giving written notice to Purchaser
if the Board of Directors of the Company shall have determined in good faith
that the Company may be required to disclose any material corporate development
which disclosure may have a material effect on the Company.
(e) Following the effectiveness of the Registration Statement,
the Company may, at any time, but not more than once in any six-month period,
suspend the effectiveness of such registration statement for up to 30 days, as
appropriate (a "Suspension Period"), by giving notice to Purchaser, if the
Company shall have determined that the Company may be required to disclose any
material corporate development which disclosure may have a material effect on
the Company. The Company agrees to use commercially reasonable efforts to
minimize the length of any such suspension. The duration of any Suspension
Period shall be added to the period of time that the Company agrees to keep the
Registration Statement effective. Purchaser agrees that, upon receipt of any
notice from the Company of a Suspension Period, Purchaser shall forthwith
discontinue disposition of shares covered by such Registration Statement or
prospectus until Purchaser (i) is advised in writing by the Company that the use
of the applicable prospectus may be resumed, (ii) has received copies of a
supplemental or amended prospectus, if applicable, and (iii) has received copies
of any additional or supplemental filings which are incorporated or deemed to be
incorporated by reference in such prospectus.
(f) The Company will, as expeditiously as possible, notify
Purchaser (i) of the effective date of the Registration Statement and the date
when any post-effective amendment the Registration Statement becomes effective;
(ii) of any stop order or notification from Securities and Exchange Commission
or any other jurisdiction as to the suspension of the effectiveness of the
Registration Statement; and (iii) of the end of any suspension hereunder.
(g) With a view to making available to Purchaser the benefits of
Rule 144 and any other rule or regulation of the SEC that may at any time permit
Purchaser to sell Shares to the public without registration or pursuant to
registration, the Company covenants and agrees to: (i) make and keep public
information available, as those terms are understood and defined in Rule 144,
until the earlier of (A) the second anniversary of the Closing Date or (B) such
date as all of the Shares shall have been resold; (ii) file with the SEC in a
timely manner all reports and other documents required of the Company under the
Exchange Act and maintain registration of
5
<PAGE> 9
its Common Stock under Section 12 of the Exchange Act; and (iii) furnish to
Purchaser upon request, as long as Purchaser owns any Shares, (A) a written
statement by the Company that it has complied with the reporting requirements of
the Exchange Act, (B) a copy of the most recent annual or quarterly report of
the Company, and (C) such other information as may be reasonably requested in
order to avail Purchaser of any rule or regulation of the SEC that permits the
selling of any such Shares without registration.
5.2 INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify Purchaser and hold Purchaser
harmless from and against any losses, claims, damages or liabilities (or actions
or proceedings in respect thereof) to which Purchaser may become subject (under
the Securities Act, Exchange Act, state securities laws or otherwise) insofar as
such losses, claims, damages or liabilities (or actions proceedings or
settlements in respect thereof) arise out of, or are based upon, (i) any untrue
statement (or alleged untrue statement) of a material fact contained in the
Registration Statement, on the effective date thereof or any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereto, (ii) the omission or the alleged omission of a material fact required
to be stated therein or necessary to make the statements therein not misleading
or (iii) any failure by the Company (or its agents) to fulfill any undertaking
included in the Registration Statement, and the Company will, as incurred,
reimburse Purchaser for any legal or other expenses reasonably incurred in
investigating, defending or preparing to defend any such action, loss, damage,
proceeding or claim; provided, however, that the Company shall not be liable in
any such case to the extent that such loss, claim, damage or liability arises
out of, or is based upon (i) an untrue statement (or omission) made in such
Registration Statement in reliance upon and in conformity with written
information furnished to the Company by or on behalf of Purchaser specifically
for use in preparation of the Registration Statement, (ii) the failure of
Purchaser to comply with the covenants and agreements contained in Section 3.1
or 6.3 hereof, or (iii) any untrue statement (or omission) in any Prospectus
that is corrected in any subsequent Prospectus that was delivered to Purchaser
by the Company prior to the pertinent sale or sales by Purchaser. The Company
will reimburse Purchaser for any legal or other expenses reasonably incurred in
investigating, defending or preparing to defend any such action, proceeding or
claim notwithstanding the absence of a judicial determination as to the
propriety and enforceability of the obligations under this section and the
possibility that such payments might later be held to be improper, provided,
that (i) to the extent any such payment is ultimately held to be improper, the
persons receiving such payments shall promptly refund them and (ii) such persons
shall provide to the Company, upon request, reasonable assurances of their
ability to effect any refund, when and if due.
(b) Purchaser agrees to indemnify and hold harmless the Company
from and against any losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) to which the Company may become subject (under
the Securities Act or otherwise) insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of, or are
based upon (i) an untrue statement made in such Registration Statement in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of Purchaser specifically for use in preparation of the
Registration Statement, provided, however, that Purchaser shall not be liable in
any such case for any untrue statement included in any Prospectus which
statement has been corrected, in writing, by Purchaser and delivered to the
6
<PAGE> 10
Company before the sale from which such loss occurred, (ii) the failure of
Purchaser to comply with the covenants and agreements contained in Section 3.1
or 6.3 hereof, or (iii) any untrue statement in any Prospectus that is corrected
in any subsequent Prospectus that was delivered to the Purchaser prior to the
pertinent sale or sales by Purchaser, provided, further, however, that the
liability of Purchaser hereunder shall be limited to the proceeds received by
Purchaser from the sale of the Shares covered by such Registration Statement;
and provided, further, however, that the obligations of Purchaser hereunder
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability, or action settlement is effected without the consent of Purchaser.
Purchaser will reimburse the Company for any legal or other expenses reasonably
incurred in investigating, defending or preparing to defend any such action,
proceeding or claim up to the limits set forth herein notwithstanding the
absence of a judicial determination as to the propriety and enforceability of
the obligations under this section and the possibility that such payments might
later be held to be improper, provided, that (i) to the extent any such payment
is ultimately held to be improper, the persons receiving such payments shall
promptly refund them and (ii) such persons shall provide to Purchaser, upon
request, reasonable assurances of their ability to effect any refund, when and
if due.
(c) Promptly after receipt by any indemnified person of a notice
of a claim or the commencement of any action in respect of which indemnity is to
be sought against an indemnifying person pursuant to this Section 5.2, such
indemnified person shall notify the indemnifying person in writing of such claim
or of the commencement of such action, and, subject to the provisions
hereinafter stated, in case any such action shall be brought against an
indemnified person and the indemnifying person shall have been notified thereof,
the indemnifying person shall be entitled to participate therein, and, to the
extent that it shall wish, to assume and undertake the defense thereof, with
counsel reasonably satisfactory to the indemnified person. After notice from the
indemnifying person to such indemnified person of the indemnifying person's
election to assume and undertake the defense thereof, the indemnifying person
shall not be liable to such indemnified person for any legal expenses
subsequently incurred by such indemnified person in connection with the defense
thereof; provided, however, that if there exists or shall exist a conflict of
interest that would make it inappropriate in the reasonable judgment of the
indemnified person for the same counsel to represent both the indemnified person
and such indemnifying person or any affiliate or associate thereof, the
indemnified person shall be entitled to retain its own counsel at the expense of
such indemnifying person.
(d) If the indemnification provided for in this Section 5.2 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions proceedings or settlements in respect
thereof) referred to therein, then the indemnifying party shall contribute to
the amount paid or payable by such indemnified party as result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative fault of the Company on the
one hand and the Purchaser on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company on the one hand or Purchaser on the other
and the parties'
7
<PAGE> 11
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and Purchaser agree that it
would not be just and equitable if contribution pursuant to this subsection (d)
were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to above in
this subsection (d). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, or liabilities (or actions in respect
thereof) referred to above in this subsection (d) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), Purchaser shall not be
required to contribute any amount in excess of the amount by which the amount
received by Purchaser (net of Selling Expenses) from the sale of the Shares to
which such loss relates exceeds the amount of any damages which Purchaser has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) The obligations of the Company and Purchaser under this
Section 5.2 shall be in addition to any liability which the Company and
Purchaser may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls the Company or Purchaser within
the meaning of the Securities Act.
SECTION 6. RESTRICTIONS ON TRANSFERABILITY OF SHARES: COMPLIANCE WITH SECURITIES
ACT
6.1 RESTRICTIONS ON TRANSFERABILITY. The Shares shall not be
transferable in the absence of a registration under the Securities Act or an
exemption therefrom or in the absence of compliance with any term of this
Agreement. The Company shall be entitled to give stop transfer instructions to
its transfer agent with respect to the Shares in order to enforce the foregoing
restrictions.
6.2 RESTRICTIVE LEGEND. Each certificate representing Shares shall bear
substantially the following legends (in addition to any legends required under
applicable securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT PURPOSES ONLY AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS. THE SHARES MAY NOT
BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM.
ADDITIONALLY, THE TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE
IS SUBJECT TO CERTAIN RESTRICTIONS SPECIFIED IN THE COMMON STOCK
PURCHASE AGREEMENT DATED APRIL 5, 2000 BETWEEN THE COMPANY AND THE
ORIGINAL PURCHASER, AND NO TRANSFER OF SHARES SHALL BE VALID OR
EFFECTIVE ABSENT COMPLIANCE WITH SUCH RESTRICTIONS. ALL SUBSEQUENT
HOLDERS OF THIS CERTIFICATE WILL HAVE AGREED TO BE BOUND BY CERTAIN OF
THE TERMS OF THE AGREEMENT, INCLUDING SECTIONS 5.1 AND 6.3 OF THE
AGREEMENT.
8
<PAGE> 12
COPIES OF THE AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST
MADE BY THE REGISTERED HOLDER OF THIS CERTIFICATE TO THE SECRETARY OF
THE COMPANY.
Upon the request of Purchaser, the Company shall remove the foregoing
legend from the certificates evidencing the Shares and issue to Purchaser new
certificates free of any transfer legend if with such request, and at the
request of the Company, the Company shall have received an opinion of counsel
reasonably satisfactory to the Company, to the effect that any transfers by
Purchaser of such Shares may be made to the public without compliance with
either Section 5 of the Securities Act or Rule 144 thereunder and applicable
state securities laws.
6.3 TRANSFER OF SHARES AFTER REGISTRATION. Purchaser hereby covenants
with the Company not to make any sale of the Shares except either (i) in
accordance with the Registration Statement, in which case Purchaser covenants to
comply with the requirement of delivering a current prospectus, (ii) in a
private sale transaction permitted under the Securities Act, or (iii) in
accordance with Rule 144, in which case Purchaser covenants to comply with Rule
144. Purchaser further acknowledges and agrees that such Shares are not
transferable on the books of the Company unless the certificate submitted to the
Company's transfer agent evidencing such Shares is accompanied by a separate
certificate executed by an officer of, or other person duly authorized by, the
Purchaser in the form attached hereto as Exhibit B.
6.4 PURCHASER INFORMATION. Purchaser covenants that it will promptly
notify the Company in writing of any changes in the information set forth in the
Registration Statement regarding Purchaser.
SECTION 7. MISCELLANEOUS
7.1 WAIVERS AND AMENDMENTS. The terms of this Agreement may be waived or
amended with the written consent of the Company and Purchaser.
7.2 GOVERNING LAW. This Agreement shall be governed in all respects by
and construed in accordance with the laws of the State of New York without any
regard to conflicts of laws principles.
7.3 SURVIVAL. The representations, warranties, covenants and agreements
made in this Agreement shall survive any investigation made by the Company or
Purchaser and the Closing. With respect to any registration made pursuant to
this Agreement, the covenants and agreements set forth in section 4.1 shall
continue in effect until all obligations hereunder with respect thereto are
fulfilled, and provided that the indemnification and contribution obligations as
set forth in Section 4.2 shall survive for the period of the statute of
limitations with respect thereto.
7.4 SUCCESSORS AND ASSIGNS. The provisions hereof shall inure to the
benefit of, and be binding upon, the successors, assigns, heirs, executors and
administrators of the parties to this Agreement. Notwithstanding the foregoing,
Purchaser shall not assign this Agreement without the prior written consent of
the Company, which shall not be unreasonably withheld or delayed.
9
<PAGE> 13
7.5 ENTIRE AGREEMENT. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subjects
thereof.
7.6 NOTICES, ETC. All notices and other communications required or
permitted under this Agreement shall be effective upon receipt and shall be in
writing and may be delivered in person, by telecopy, overnight delivery service
or registered or certified United States mail, addressed to the Company or
Purchaser, as the case may be, at their respective addresses set forth below:
If to the Company:
Aviron
297 North Bernardo Avenue
Mountain View, CA 94043
Attn: C. Boyd Clarke
President and Chief Executive Officer
Telephone: (650) 919-6500
Facsimile: (650) 919-6610
With a copy to:
Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306-2155
Attn: Robert J. Brigham, Esq.
Telephone: (650) 843-5000
Facsimile: (650) 857-0663
If to Purchaser:
American Home Products Corporation
5 Giralda Farms
Madison, New Jersey 07940
Attn: Chief Financial Officer
Telephone: (973) 660-5000
Facsimile: (973) 660-7156
With copies to:
American Home Products Corporation
5 Giralda Farms
Madison, New Jersey 07940
Attn: Senior Vice President and General Counsel
Telephone: (973) 660-5000
Facsimile: (973) 660-7156
10
<PAGE> 14
All notices and other communications shall be effective upon the earlier
of actual receipt thereof by the person to whom notice is directed or (i) in the
case of notices and communications sent by personal delivery or telecopy, one
business day after such notice or communication arrives at the applicable
address or was successfully sent to the applicable telecopy number, (ii) in the
case of notices and communications sent by overnight delivery service, at noon
(local time) on the second business day following the day such notice or
communication was sent, and (iii) in the case of notices and communications sent
by United States mail, seven days after such notice or communication shall have
been deposited in the United States mail. Any notice delivered to a party
hereunder shall be sent simultaneously, by the same means, to such party's
counsel as set forth above.
7.7 SEVERABILITY OF THIS AGREEMENT. If any provision of this Agreement
shall be judicially determined to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
7.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
7.9 FURTHER ASSURANCES. Each party to this Agreement shall do and
perform or cause to be done and performed all such further acts and things and
shall execute and deliver all such other agreements, certificates, instruments
and documents as the other party hereto may reasonably request in order to carry
out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
7.10 EXPENSES. Except as set forth herein, the Company and the Purchaser
each agree to bear their own cost of fees and expenses in connection with the
transactions contemplated herein.
11
<PAGE> 15
The foregoing agreement is hereby executed as of the date first above
written.
AVIRON AMERICAN HOME PRODUCTS
CORPORATION
By: /s/ Fred Kurland By: /s/ Jack M. O'Connor
--------------------------------- ----------------------
Fred Kurland
Chief Financial Officer Name: Jack M. O'Connor
-------------------
Title: Vice President and Treasurer
-----------------------------
12
<PAGE> 16
EXHIBIT A
INSTRUCTION SHEET FOR PURCHASER
(to be read in conjunction with the entire
Common Stock Purchase Agreement)
A. Complete the following items in the Common Stock Purchase Agreement:
1. Provide the information regarding the Purchaser requested on the
signature page. The Agreement must be executed by an individual
authorized to bind the Purchaser.
2. Exhibit A-1 - Stock Certificate Questionnaire: Provide the
information requested by the Stock Certificate Questionnaire;
3. Exhibit A-2 - Registration Statement Questionnaire: Provide the
information requested by the Registration Statement
Questionnaire.
4. Return the signed Purchase Agreement including the properly
completed Exhibit A to:
Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306
Attn: Robert J. Brigham, Esq.
Fax: (650) 857-0663
B. Instructions regarding the transfer of funds for the purchase of Shares
will be telecopied to Purchaser by the Company at a later date.
C. Upon the resale of the Shares by Purchaser after the Registration
Statement covering the Shares is effective, as described in the Purchase
Agreement, Purchaser:
(i) must deliver a current prospectus, and annual and
quarterly reports of the Company to the buyer (prospectuses, and
annual and quarterly reports may be obtained from the Company at
the Purchaser's request); and
(ii) must send a letter in the form of Exhibit B to the
Company so that the Shares may be properly transferred.
13
<PAGE> 17
EXHIBIT A-1
AVIRON
STOCK CERTIFICATE QUESTIONNAIRE
Please provide us with the following information:
1. The exact name that the Shares are to be
registered in (this is the name that will
appear on the stock certificate(s)). You
may use a nominee name if appropriate:
American Home Products
Corporation
2. The relationship between the Purchaser of
the Shares and the Registered Holder
listed in response to item 1 above:
------------------------
3. The mailing address of the Registered
Holder listed in response to item 1 above:
5 Giralda Farms
Madison, New Jersey 07940
4. The Tax Identification Number of the
Registered Holder listed in response to
item 1 above: 13-2526821
<PAGE> 18
EXHIBIT A-2
AVIRON
REGISTRATION STATEMENT QUESTIONNAIRE
In connection with the preparation of the Registration Statement, please
provide us with the following information regarding the Purchaser.
1. Please state your organization's name exactly as it should appear in
the Registration Statement:
American Home Products Corporation
2. Have you or your organization had any position, office or other
material relationship within the past three years with the Company?
[X] Yes [ ] No
If yes, please indicate the nature of any such relationships below:
See documents relating to transactions by and between American Home
Products Corporation, its divisions and affiliates with Aviron.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 19
EXHIBIT B
PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE
To: Aviron
297 N. Bernardo Avenue
Mountain View, CA 94043
The undersigned, the Purchaser or an officer of, or other person duly
authorized by the Purchaser, hereby certifies that American Home Products
Corporation was the Purchaser of the shares evidenced by the attached
certificate, and as such, proposes to transfer such shares on or about_______
either (check the applicable box): (i) in accordance with the registration
statement, file number__________in which case the Purchaser certifies that the
requirement of delivering a current prospectus has been complied with or will be
complied with in connection with such sale, or (ii) in a private sale
transaction permitted under the Securities Act, or: (iii) in accordance with
Rule 144 under the Securities Act of 1933 ("Rule 144"), in which case the
Purchaser certifies that it has complied with or will comply with the
requirements of Rule 144.
Print or type:
Name of Purchaser:
-----------------------------------------------------
Name of Individual
representing Purchaser:
------------------------------------------------
Title of Individual
representing Purchaser:
-------------------------------------------------
Signature by:
Individual representing
Purchaser:
-------------------------------------------------------------
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<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
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<SECURITIES> 19,699
<RECEIVABLES> 1,701
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<PP&E> 35,874
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<CURRENT-LIABILITIES> 14,756
<BONDS> 114,767
0
0
<COMMON> 18
<OTHER-SE> (38,250)
<TOTAL-LIABILITY-AND-EQUITY> 90,228
<SALES> 0
<TOTAL-REVENUES> 2,657
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<OTHER-EXPENSES> 31,066
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<INTEREST-EXPENSE> 2,088
<INCOME-PRETAX> (29,775)
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