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):
October 29, 2003
DYAX CORP.
(Exact name of registrant as specified in its charter)
Delaware | | 000-24537 | | 04-3053198 |
(State or other jurisdiction of
incorporation) | | (Commission File Number) | | (IRS Employer Identification No.) |
300 Technology Square, Cambridge, MA 02139
(Address of principal executive offices and zip code)
(617) 225-2500
(Registrant’s telephone number, including area code)
Item 2. ACQUISITION OR DISPOSITION OF ASSETS
On October 29, 2003, Dyax Corp (“Dyax”) completed the sale of 100% of the limited liability interests of Dyax’s wholly owned separations subsidiary, Biotage, LLC, formerly known as Biotage, Inc. (“Biotage”) to Pyrosequencing AB (“Pyrosequencing”), which is headquartered in Uppsala, Sweden, through its U.S. subsidiary Pyrosequencing Inc. pursuant to a Purchase Agreement dated as of October 13, 2003 between Dyax, Biotage and Pyrosequencing (the “Purchase Agreement”). Pyrosequencing received all of the assets of Biotage, including all accounts receivable, equipment, intellectual property and goodwill of the business. The purchase price was $35.0 million before transaction expenses and a deduction for approximately $4.6 million of Biotage debt. Dyax received $25.4 million of cash at closing and incurred approximately $3.0 million of transaction costs, of which approximately $2.4 million is payable in cash and $519,000 is an increase to shareholders' equity. An additional $5.0 million is being held in an indemnity escrow to cover the representations, warranties and covenants of Dyax contained in the Purchase Agreement, which will be payable to Dyax within one year from the closing to the extent there are no claims against the escrow. The nature and amount of the consideration paid in the disposition were determined by negotiation between Dyax and Pyrosequencing following a bidding process in which Dyax solicited proposals from potential acquirers.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) Pro Forma Financial Information.
The following unaudited pro forma financial information reflects the sale of the assets, liabilities and the operations of Biotage, LLC to a subsidiary of Pyrosequencing in accordance with the Purchase Agreement. The following unaudited pro forma balance sheet as of September 30, 2003 is based on the historical financial statements of Dyax as of September 30, 2003 after giving effect to the divestiture transaction as if it had occurred on September 30, 2003. The following unaudited pro forma statements of income for the nine months ended September 30, 2003 and the fiscal years ended December 31, 2002, 2001 and 2000 are based on the historical financial statements of Dyax for such periods after giving effect to the divestiture transaction as if it had occurred on January 1, 2000. You should read the information presented bel ow in conjunction with Dyax’s financial statements and the notes to the financial statements included in Dyax’s Annual Report on Form 10-K for the year ended December 31, 2002 and Dyax’s Quarterly Report on Form 10-Q for the period ended September 30, 2003. The unaudited pro forma information below illustrates the financial characteristics of Dyax’s business under one set of assumptions giving effect to the divestiture, but does not attempt to predict or suggest future results of the remaining biopharmaceutical business. Moreover, the unaudited pro forma information does not attempt to show what the financial condition or results of operations of Dyax would have been if the divestiture transaction had occurred at September 30, 2003 or at the commencement of the periods indicated below.
Unaudited pro forma condensed consolidated statements of operations for the periods ended December 31, 2002, 2001 and 2000 and September 30, 2003 are as follows:
DYAX CORP.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
| | Year Ended December 31, 2002 | |
| | Historical | | Biotage, LLC | | Pro forma | |
Revenues: | | | | | | | |
Separations product revenues | | $ | 23,158,000 | | $ | 23,158,000 | | $ | — | |
Biopharmaceutical product development and license fee revenues | | 17,750,000 | | — | | 17,750,000 | |
Total revenues | | 40,908,000 | | 23,158,000 | | 17,750,000 | |
| | | | | | | |
Costs and expenses: | | | | | | | |
Cost of products sold | | 10,038,000 | | 10,038,000 | | — | |
Research and development | | 31,801,000 | | 3,088,000 | | 28,713,000 | |
Selling, general and administrative | | 25,134,000 | | 10,252,000 | | 14,882,000 | |
Total costs and expenses | | 66,973,000 | | 23,378,000 | | 43,595,000 | |
| | | | | | | |
Loss from operations | | (26,065,000 | ) | (220,000 | ) | (25,845,000 | ) |
| | | | | | | |
Other (expense) income: | | | | | | | |
Interest income | | 526,000 | | 69,000 | | 457,000 | |
Interest expense | | (1,279,000 | ) | (27,000 | ) | (1,252,000 | ) |
Total other (expense) income | | (753,000 | ) | 42,000 | | (795,000 | ) |
| | | | | | | |
Net loss | | $ | (26,818,000 | ) | $ | (178,000 | ) | $ | (26,640,000 | ) |
| | | | | | | |
Basic and diluted net loss per share | | $ | (1.36 | ) | $ | (0.01 | ) | $ | (1.35 | ) |
Shares used in computing basic and diluted net loss per share | | 19,652,474 | | 19,652,474 | | 19,652,474 | |
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DYAX CORP.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
| | Year Ended December 31, 2001 | |
| | Historical | | Biotage, LLC | | Pro forma | |
Revenues: | | | | | | | |
Separations product revenues | | $ | 18,803,000 | | $ | 18,803,000 | | $ | — | |
Biopharmaceutical product development and license fee revenues | | 14,237,000 | | — | | 14,237,000 | |
Total revenues | | 33,040,000 | | 18,803,000 | | 14,237,000 | |
| | | | | | | |
Costs and expenses: | | | | | | | |
Cost of products sold | | 8,805,000 | | 8,805,000 | | — | |
Research and development | | 19,432,000 | | 2,637,000 | | 16,795,000 | |
Selling, general and administrative | | 24,121,000 | | 9,935,000 | | 14,186,000 | |
Total costs and expenses | | 52,358,000 | | 21,377,000 | | 30,981,000 | |
| | | | | | | |
Loss from operations | | (19,318,000 | ) | (2,574,000 | ) | (16,744,000 | ) |
| | | | | | | |
Other (expense) income: | | | | | | | |
Interest income | | 2,315,000 | | 17,000 | | 2,298,000 | |
Interest expense | | (162,000 | ) | — | | (162,000 | ) |
Total other (expense) income | | 2,153,000 | | 17,000 | | 2,136,000 | |
| | | | | | | |
Net loss | | $ | (17,165,000 | ) | $ | (2,557,000 | ) | $ | (14,608,000 | ) |
| | | | | | | |
Basic and diluted net loss per share | | $ | (0.89 | ) | $ | (0.13 | ) | $ | (0.76 | ) |
Shares used in computing basic and diluted net loss per share | | 19,244,809 | | 19,244,809 | | 19,244,809 | |
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DYAX CORP.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
| | Year Ended December 31, 2000 | |
| | Historical | | Biotage, LLC | | Pro forma | |
Revenues: | | | | | | | |
Separations product revenues | | $ | 15,782,000 | | $ | 15,782,000 | | $ | — | |
Biopharmaceutical product development and license fee revenues | | 9,434,000 | | — | | 9,434,000 | |
Total revenues | | 25,216,000 | | 15,782,000 | | 9,434,000 | |
| | | | | | | |
Costs and expenses: | | | | | | | |
Cost of products sold | | 7,495,000 | | 7,495,000 | | — | |
Research and development | | 15,480,000 | | 3,376,000 | | 12,104,000 | |
Selling, general and administrative | | 19,421,000 | | 8,113,000 | | 11,308,000 | |
Total costs and expenses | | 42,396,000 | | 18,984,000 | | 23,412,000 | |
| | | | | | | |
Loss from operations | | (17,180,000 | ) | (3,202,000 | ) | (13,978,000 | ) |
| | | | | | | |
Other (expense) income: | | | | | | | |
Interest income | | 2,188,000 | | 13,000 | | 2,175,000 | |
Interest expense | | (197,000 | ) | (5,000 | ) | (192,000 | ) |
Total other (expense) income | | 1,991,000 | | 8,000 | | 1,983,000 | |
| | | | | | | |
Net loss | | $ | (15,189,000 | ) | $ | (3,194,000 | ) | $ | (11,995,000 | ) |
| | | | | | | |
Basic and diluted net loss per share | | $ | (1.77 | ) | $ | (0.37 | ) | $ | (1.40 | ) |
Shares used in computing basic and diluted net loss per share | | 8,577,912 | | 8,577,912 | | 8,577,912 | |
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The unaudited pro forma condensed consolidated balance sheet as of September 30, 2003 is as follows:
DYAX CORP.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
| | September 30, 2003 | |
| | Historical | | Transaction and Balance Sheet Adjustments | | Pro forma | |
| | | (i) | | (ii) | | (iii) | | |
ASSETS | | | | | | | | | | | |
Current assets: | | | | | | | | | | | |
Cash and cash equivalents | | $ | 18,394,000 | | $ | 25,427,000 | | $ | (340,000 | ) | $ | 639,000 | | $ | 44,120,000 | |
Accounts receivable, net | | 3,073,000 | | — | | — | | — | | 3,073,000 | |
Other current assets | | 900,000 | | — | | — | | — | | 900,000 | |
| | | | | | | | | | | |
Total current assets | | 22,367,000 | | 25,427,000 | | (340,000 | ) | 639,000 | | 48,093,000 | |
| | | | | | | | | | | |
Assets of Discontinued Operations | | 16,755,000 | | (16,755,000 | ) | | | — | | | |
Fixed assets, net of accumulated depreciation | | 11,258,000 | | — | | — | | — | | 11,258,000 | |
Capitalized license rights, net | | 3,042,000 | | — | | — | | — | | 3,042,000 | |
Restricted cash | | 5,904,000 | | 5,000,000 | | — | | (639,000 | ) | 10,265,000 | |
Other assets | | 203,000 | | — | | — | | — | | 203,000 | |
| | | | | | | | | | | |
Total assets | | $ | 59,529,000 | | $ | 13,672,000 | | $ | (340,000 | ) | $ | — | | $ | 72,861,000 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | |
Accounts payable and accrued expenses | | $ | 8,228,000 | | $ | 2,188,000 | | $ | — | | $ | — | | $ | 10,416,000 | |
Current portion of deferred revenue | | 5,120,000 | | — | | — | | — | | 5,120,000 | |
Current portion of long-term obligations | | 3,320,000 | | — | | (340,000 | ) | — | | 2,980,000 | |
Total current liabilities | | 16,668,000 | | 2,188,000 | | (340,000 | ) | — | | 18,516,000 | |
| | | | | | | | | | | |
Liabilities of Discontinued Operations | | 8,450,000 | | (8,450,000 | ) | — | | — | | — | |
Deferred revenue | | 264,000 | | — | | — | | — | | 264,000 | |
Long-term obligations | | 11,797,000 | | — | | — | | — | | 11,797,000 | |
Other long-term liabilities | | 1,219,000 | | — | | — | | — | | 1,219,000 | |
| | | | | | | | | | | |
Total liabilities | | 38,398,000 | | (6,262,000 | ) | (340,000 | ) | — | | 31,796,000 | |
| | | | | | | | | | | |
Total stockholders’ equity | | 21,131,000 | | 19,934,000 | | — | | — | | 41,065,000 | |
| | | | | | | | | | | |
Total liabilities and stockholders’ equity | | $ | 59,529,000 | | $ | 13,672,000 | | $ | (340,000 | ) | $ | — | | $ | 72,861,000 | |
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Notes to Unaudited Pro Forma Condensed Financial Information
1. Basis of Presentation
The accompanying financial statements have been presente d to show the impact of classifying the results of Biotage, LLC as a discontinued operation. For purposes of presentation, the balance sheet has been adjusted as discussed below.
2. Transaction and Balance Sheet Adjustments
The balance sheet presented as historical reflects the balance sheet filed by Dyax in its Form 10-Q for the period ended September 30, 2003. Adjustments have been made as follows:
(i) Dyax sold Biotage, LLC for $35.0 million as follows: a) $25.4 million of cash received at the closing b) an additional $5.0 million in cash is being held in an indemnity escrow to cover Dyax’s representations, warranties and covenants contained in the Purchase Agreement, which will be payable to Dyax within one year after the closing of the transaction to the extent there are no claims against the escrow, and c) $4.6 million (primarily mortgage d ebt) was assumed by the acquiring company
Dyax estimates that a $19.1 million gain would have been recorded to recognize the sale of Biotage if the transaction would have occurred at September 30, 2003. This gain is calculated as follows:
Purchase price | | $ | 35,000,000 | |
Plus Liabilities of Discontinued Operations assumed by purchaser | | 8,450,000 | |
Less debt assumed by the acquiring company; included in Liabilities of Discontinued Operations on the Balance Sheet | | (4,568,000 | ) |
Less Assets of Discontinued Operation disposed of | | (16,755,000 | ) |
Less estimated expenses of the transaction | | (2,967,000 | ) |
| | | |
Estimated gain | | $ | 19,160,000 | |
Estimated expenses of the transaction are $3.0 million and include fees payable to our financial advisors and lawyers and bonuses payable and expenses relating to revaluing stock options for certain members of Biotage’s management. Of these costs $255,000 was recorded in the historical financial statements in Accounts Payable and Accrued Expenses at September 30, 2003 and $5,000 was paid at closing. Additionally, the $519,000 cost of revaluing stock options is recorded as an increase to stockholders’ equity.
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The following table reconciles the estimated gain to the net change in stockholders’ equity:
Estimated gain | | $ | 19,160,000 | |
Plus transaction expenses recorded in Accounts Payable and Accrued Expenses on the Historical Balance Sheet | | 255,000 | |
Plus expense for stock options that is included as an increase to Stockholders’ Equity | | 519,000 | |
| | | |
Net change in Stockholders’ Equity | | $ | 19,934,000 | |
(ii) On October 24, 2003, Dyax paid $340,000 to release liens on certain assets sold to Pyrosequencing that were held under capital lease agreements.
(iii) As a result of the transaction, $639,000 of restricted cash that previously secured certain loans paid prior to the closing of the transaction has been released from restriction, and therefore, reclassified into cash and cash equivalents.
(c) Exhibits.
2.1 | | Purchase Agreement dated October 13, 2003 by and among Pyrosequencing AB, Dyax Corp. and Biotage, LLC. Filed herewith. |
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DYAX CORP.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| DYAX CORP. |
| |
| |
Date: November 7, 2003 | |
| /s/ Stephen S. Galliker | |
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EXHIBIT INDEX
Exhibit No. | | Description |
| | |
2.1 | | Purchase Agreement dated October 13, 2003 by and among Pyrosequencing AB, Dyax Corp. and Biotage, LLC. Filed herewith. |
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