Scios 8-K Scios Announces Proposed $125 Million Convertible

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): July 25, 2002

SCIOS INC.

(Exact Name of Registrant as Specified in Charter)

Delaware	0-11749	95-3701481
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

820 West Maude Avenue, Sunnyvale, CA 94085

(Address of Principal Executive Offices) (Zip Code)

(408) 616-8200

(Registrant’s telephone number, including area code)

N/A

(Former Name or Former Address, if Changed Since Last Report)

Item 5.    Other Events.

On July 26, 2002, Scios, Inc. issued a press release which is attached hereto as Exhibit 99.1 and is incorporated by reference herein.

On July 25, 2002, Scios Inc. (NASDAQ: SCIO) announced its financial results for the second quarter and six months ended June 30, 2002.

Second quarter 2002 net revenues were $23.0 million compared to $5.2 million in the second quarter of 2001. This increase was primarily due to Natrecor sales.

Total operating costs and expenses for the second quarter of 2002 were $44.3 million compared to $23.4 million in the second quarter of 2001. The increase in costs and expenses was largely attributable to building a marketing and sales infrastructure for Natrecor, clinical development of the p38 kinase inhibitor program and preclinical development of the TGF-beta program.

Net loss for the quarter was $22.5 million, or $0.48 per diluted share, compared to a net loss of $18.3 million, or $0.46 per diluted share, for the same period last year. Per share amounts were based on 46.5 million weighted average diluted shares in the second quarter of 2002, compared to 40.1 million weighted average diluted shares in the same quarter last year.

Cash, cash equivalents and marketable securities (both current and non-current) balances at June 30, 2002 were $101.3 million.

Net revenues for the first six months of 2002 were $39.5 million compared to $17.2 million in the same period last year. The increase was primarily due to Natrecor sales of $37.9 million. Total operating costs and expenses in the six-month period were $84.8 million, compared to $39.3 million for the year-ago period. The six months period ended June 30, 2001 included $12.5 million of revenues, inclusive of a $9.4 million gain on the sale of marketing rights from the Psychiatric Sales and Marketing Division that was discontinued in March 2001. The company reported a net loss of $47.7 million in the first six months of 2002, or $1.03 per diluted share, compared to a $22.5 million net loss, or $0.57 per diluted share, in the same period last year.

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SCIOS INC.

Consolidated Balance Sheets

(in thousands, except share data and per share data)

	June 30, 2002			December 31, 2001
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	39,212		$	58,296
Marketable securities		13,396			7,351
Accounts receivable, net		11,081			6,943
Inventory		2,613			1,158
Prepaid expenses and other assets		5,070			4,214
Total current assets		71,372			77,962
Marketable securities, non-current		48,673			63,669
Property and equipment, net		10,252			10,424
Other assets		758			4,123
Total assets	$	131,055		$	156,178
Liabilities and stockholder’s equity
Current liabilities:
Accounts payable	$	7,727		$	9,625
Accrued employee compensation		10,697			9,685
Other accrued liabilities		9,531			7,206
Deferred contract revenue		1,102			—
Current portion of long-term debt		41,313			33,035
Total current liabilities		70,370			59,551
Deferred contract revenue		3,493			—
Long-term debt		15,396			15,479
Total liabilities		89,259			75,030
Stockholders’ equity:
Preferred stock; $.001 par value; 20,000,000 shares authorized; 4,991 issued and outstanding		—			—
Common stock; $.001 par value; 150,000,000 shares authorized; issued and outstanding 46,654,473 and 46,015,167, respectively		47			46
Additional paid-in capital		567,958			561,352
Treasury stock; shares of 40,000 at June 30, 2002 and 30,000 at December 31, 2001, respectively		(644	)		(445	)
Deferred warrant costs		(4,389	)		(6,794	)
Deferred compensation		(106	)		(106	)
Accumulated other comprehensive income		564			999
Accumulated deficit		(521,634	)		(473,904	)
Total stockholders’ equity		41,796			81,148
Total liabilities and stockholders’ equity	$	131,055		$	156,178

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SCIOS INC.

Consolidated Statements of Operations

(in thousands, except share and per share data)

	Three months ended June 30,						Six months ended June 30,
	2002			2001			2002			2001
	(Unaudited)						(Unaudited)
Revenues:
Product sales	$	22,510		$	2,098		$	37,883		$	2,098
Research and development contracts and royalties		517			1,484			1,588			2,581
Psychiatric product sales and co-promotion commissions, net of expenses		—			1,659			—			3,142
Gain on sale of marketing rights		—			—			—			9,363
		23,027			5,241			39,471			17,184
Costs and expenses:
Cost of product sales		1,381			—			2,392			—
Research and development		16,808			13,084			31,663			22,564
Selling, general and administration		26,075			10,278			50,789			16,758
		44,264			23,362			84,844			39,322
Loss from operations		(21,237	)		(18,121	)		(45,373	)		(22,138	)
Other income (expense):
Interest income		913			742			1,721			1,554
Interest expense		(2,498	)		(754	)		(4,442	)		(1,603	)
Realized gains on securities		370			135			293			389
Other income (expense)		(56	)		(275	)		71			(698	)
		(1,271	)		(152	)		(2,357	)		(358	)
Net loss	$	(22,508	)	$	(18,273	)	$	(47,730	)	$	(22,496	)
Loss per common share:
Basic and diluted	$	(0.48	)	$	(0.46	)	$	(1.03	)	$	(0.57	)
Weighted average number of common shares outstanding used in calculation of:
Basic and diluted		46,478,885			40,087,161			46,290,276			39,653,959

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Item 7.    Financial Statements, Pro Forma Financial Information and Exhibits.

(c)  Exhibits

The following exhibits are filed as part of this Report:

No.	Exhibit
99.1	Press Release dated July 26, 2002

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

SCIOS INC.
By:	/s/    DAVID W. GRYSKA
	David W. Gryska         Senior Vice President and Chief Financial Officer

Date: July 26, 2002        

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