FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the quarterly period ended September 30, 1999
OR
|_| 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: 0-11749
Scios Inc.
(Exact name of Registrant as specified in its charter)
Delaware 95-3701481
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Scios Inc.
820 West Maude Ave.
Sunnyvale, CA 94086
(Address of principal executive offices) (Zip code)
(408) 616-8200
(Registrant's telephone number including area code)
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 registrant's
classes of common stock, as of October 12, 1999.
Title Outstanding
Common Stock, $.001 par value 38,468,652
SCIOS INC.
AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
SCIOS INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share data)
ASSETS September 30, December 31,
1999 1998
------------- -------------
(Unaudited)
Current assets:
Cash and cash equivalents $4,815 $6,683
Marketable securities 17,237 23,394
Accounts receivable 5,171 6,768
Prepaid expenses 860 568
------------- -------------
Total current assets 28,083 37,413
Marketable securities, non-current 74,267 67,234
Property and equipment, net 12,258 32,214
Other assets 1,929 1,968
------------- -------------
TOTAL ASSETS $116,537 $138,829
------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,060 $2,327
Other accrued liabilities 11,635 10,087
Deferred contract revenue 22,198 16,896
------------- -------------
Total current liabilities 34,893 29,310
Long-term debt 36,626 34,573
Minority interests -- 20
------------- -------------
Total liabilities 71,519 63,903
Stockholders' equity:
Preferred stock; $.001 par value; 20,000,000
shares authorized; none issued and outstanding -- --
Common stock; $.001 par value; 150,000,000
shares authorized; issued and outstanding
38,468,652 and 38,468,652 shares, respectively 38 38
Additional paid-in capital 416,597 416,428
Treasury stock; 735,036 and 754,199
shares, respectively (3,458) (3,481)
Notes receivable from stockholders (108) (145)
Deferred compensation, net (424) (505)
Accumulated other comprehensive income (loss) (436) 11,412
Accumulated deficit (367,191) (348,821)
------------- -------------
Total stockholders' equity 45,018 74,926
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $116,537 $138,829
------------- -------------
The accompanying notes are an integral part of these consolidated
financial statements.
SCIOS INC.
AND SUBSIDIARIES
Consolidated Statements of Operations and Comprehensive Income (Loss)
(In thousands, except share data)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
1999 1998 1999 1998
------------- ------------- ------------- -------------
Revenues:
Product sales $10,633 $7,407 $27,927 $20,566
Co-promotion commissions 2,025 1,436 6,639 4,691
Research & development contracts 2,067 4,747 7,129 32,220
------------- ------------- ------------- -------------
14,725 13,590 41,695 57,477
------------- ------------- ------------- -------------
Costs and expenses:
Cost of goods sold 5,638 4,167 14,836 11,957
Research and development 7,042 10,071 25,714 32,535
Marketing, general and administration 5,556 4,985 15,111 14,051
Profit distribution to third parties 1,718 711 4,363 1,909
Restructuring charges -- -- 6,670 --
------------- ------------- ------------- -------------
19,954 19,934 66,694 60,452
------------- ------------- ------------- -------------
Loss from operations (5,229) (6,344) (24,999) (2,975)
------------- ------------- ------------- -------------
Other income and expense:
Investment income 1,300 1,202 3,426 3,151
Interest expense (713) (657) (2,053) (1,951)
Realized gains (losses) on securities (92) 169 4,999 8,246
Other income, net -- 382 272 860
------------- ------------- ------------- -------------
495 1,096 6,644 10,306
------------- ------------- ------------- -------------
Equity in net loss of affiliates -- (518) -- (1,343)
------------- ------------- ------------- -------------
Income (loss) before provision for income taxes (4,734) (5,766) (18,355) 5,988
Provision for income taxes (1) -- (14) (127)
------------- ------------- ------------- -------------
Net income (loss) (4,735) (5,766) (18,369) 5,861
------------- ------------- ------------- -------------
Other comprehensive income (loss):
Change in unrealized gains (losses) on securities (40) 971 (11,848) 967
------------- ------------- ------------- -------------
Comprehensive income (loss) ($4,775) ($4,795) ($30,217) $6,828
------------- ------------- ------------- -------------
Earnings (loss) per common share:
Basic ($0.13) ($0.15) ($0.49) $0.16
------------- ------------- ------------- -------------
Diluted ($0.13) ($0.15) ($0.49) $0.15
------------- ------------- ------------- -------------
Weighted average number of common shares outstanding
used in calculation of:
Basic 37,708,060 37,907,160 37,726,253 37,677,168
------------- ------------- ------------- -------------
Diluted 37,708,060 37,907,160 37,726,253 38,495,891
------------- ------------- ------------- -------------
The accompanying notes are an integral part of these
consolidated financial statements.
SCIOS INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
Nine months ended
September 30,
1999 1998
------------ -----------
(Unaudited)
Cash flows from operating activities:
Net income (loss) ($18,369) $ 5,861
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization 2,085 2,819
Accrued long-term interest payable 2,053 1,913
Equity in net loss of affiliates -- 1,343
Gain on sale of securities (4,999) --
Minority interest (20) --
Amortization of deferred compensation 233 --
Change in assets and liabilities:
Accounts receivable 1,597 1,773
Accounts payable (1,267) 1,018
Other accrued liabilities (2,103) (4,230)
Other (252) 212
Deferred contract revenue 5,302 910
Restructuring charges 3,263 --
------------ -----------
Net cash provided by (used in) operating activities (12,477) 11,619
------------ -----------
Cash flows from investing activities:
Purchases of property and equipment (3,486) (1,645)
Proceeds from sale of investment in affiliate -- 144
Proceeds from sale of assets 21,744 --
Sales/maturities of marketable securities 80,529 212,029
Purchases of marketable securities (88,254) (227,855)
------------ -----------
Net cash provided by (used in) investing activities 10,533 (17,327)
------------ -----------
Cash flows from financing activities:
Issuance of common stock and collection of notes receivable from
stockholders, net 1,124 7,448
Purchase of treasury stock (1,048) (580)
Payment of notes payable and capital leases -- (323)
------------ -----------
Net cash provided by financing activities 76 6,545
------------ -----------
Net increase (decrease) in cash and cash equivalents (1,868) 837
Cash and cash equivalents at beginning of period 6,683 10,197
------------ -----------
Cash and cash equivalents at end of period $ 4,815 $ 11,034
------------ -----------
The accompanying notes are an integral part of these consolidated
financial statements.
SCIOS INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(unaudited)
1. Basis of Presentation and Accounting Policies
The unaudited consolidated financial statements of Scios Inc. ("Scios"
or the "Company") reflect, in the opinion of management, all
adjustments, consisting only of normal and recurring adjustments,
necessary to present fairly the Company's consolidated financial
position at September 30, 1999 and the Company's consolidated results
of operations and cashflows for the three-month and nine-month periods
ended September 30, 1999 and 1998. Interim-period results are not
necessarily indicative of results of operations or cash flows for a
full-year period.
These financial statements and the notes accompanying them should be
read in conjunction with the Company's annual report on Form 10-K for
the year ended December 31, 1998. Investors are encouraged to review
the Form 10-K for a broader discussion of the Company's business and
the opportunities and risks inherent in the Company's business. Copies
of the 10-K are available from the Company on request and from the
Securities and Exchange Commission's Edgar database at web site
www.sec.gov.
The year-end balance sheet data was derived from audited financial
statements, but do not include all disclosures required by generally
accepted accounting principles.
2. Restructuring Charges and Expenses
On March 1, 1999, the Company announced a restructuring plan that
included a reduction of the Company's full-time workforce by
approximately 30% and the consolidation of its headquarters,
development and research staff into currently leased facilities in
Sunnyvale, California. In the quarter ended March 31, 1999, the Company
recorded a one-time restructuring charge of approximately $6.7 million
for the disposal of certain excess assets and severance costs. The
provision for the restructure and the activity through September 30,
1999 are summarized in the following table:
Accrued
Restructure Restructure
Provision at Cash Provisions at
March 1, Non-Cash (Payments) September 30,
1999 Items Receipts 1999
------------ --------- --------- -------------
(in thousands)
Facilities $360 $(304) $56
Workforce reductions 2,819 (2,200) 619
Contractual Commitments 1,110 (312) 798
Write off of assets 1,800 $(21,262) 21,336 1,874
Lease exit costs 581 (278) 303
------------ --------- --------- -------------
$6,670 $(21,262) $18,242 $3,650
------------ --------- --------- -------------
3. Computation of Earnings (Loss) Per Share
The following table sets forth the computation of the Company's basic
and diluted earnings (loss) per share (in thousands, except per share
amounts):
Three months ended Nine months ended
September 30, September 30,
1999 1998 1999 1998
--------------- --------------- --------------- ---------------
Numerator
Basic
Net income (loss) ($ 4,735) ($ 5,766) ($ 18,369) $ 5,861
Diluted
Net income (loss) ($ 4,735) ($ 5,766) ($ 18,369) $ 5,861
Denominator
Basic
Weighted average shares 37,708 37,907 37,726 37,677
Effect of dilutive securities:
Employee stock options --- --- --- 819
--------------- --------------- --------------- ---------------
Weighted average shares and
assumed conversions 37,708 37,907 37,726 38,496
--------------- --------------- --------------- ---------------
Basic earnings (loss) per share ($ 0.13) ($ 0.15) ($ 0.49) $ 0.16
--------------- --------------- --------------- ---------------
Diluted earnings (loss) per share ($ 0.13) ($ 0.15) ($ 0.49) $ 0.15
--------------- --------------- --------------- ---------------
<FN>
The potentially dilutive effect of outstanding options to purchase
common stock would have been anti-dilutive in both periods of 1999 and
in the three months ended September 30, 1998, and they were therefore
excluded from the diluted earnings calculations for these periods.
Although potentially dilutive, the payoff of the Genentech loan through
the issuance of common stock would have been anti-dilutive in 1998 and
1999 and was, therefore, excluded from the calculations.
At September 30, 1999, stock options at prices ranging from $3.688 to
$7.125 per share would have increased the number of weighted average
common shares outstanding by 172 and 473,257 shares for the three- and
nine-month periods of 1999, respectively, but were not included in the
computation of diluted income per share because they were antidilutive.
</FN>
4. Industry and Geographic Segment Information
Management uses one measurement of profitability for its business. The
Company receives revenue from product sales and from licensing and
development of products. The Company markets its products in the U.S.
and receives licensing revenue from partners in the U.S., Canada,
Europe and Asia Pacific and operates in one business segment.
All long-lived assets are located in the United States and revenues by
geographic area are as follows for 1999 and 1998, respectively:
Three Months Ended Nine Months Ended
September 30, September 30,
(in thousands) 1999 1998 1999 1998
-------------- ---- ---- ---- ----
Revenues - U.S. $14,345 $10,134 $ 40,091 $ 30,661
Revenues - International 380 3,458 1,604 26,816
------- ------- ------- -------
Total $14,725 $13,592 $41,695 $57,477
------- ------- ------- -------
5. Subsequent Event
On October 8, 1999 the Company announced that its collaboration with
Wyeth-Ayerst Laboratories division of American Home Products
Corporation for Fiblast(R) (trafermin) in the treatment of neurological
and cardiovascular disorders had been dissolved. All rights for Fiblast
in these indications revert to Scios. Scios and Wyeth-Ayerst have been
collaborating on Fiblast development from 1996 and shared expenses.
Dissolution of the agreement also terminated the $12 million letter of
credit provided to the Company by Wyeth-Ayerst to fund expansion of
Fiblast manufacturing capacity. No funds had been drawn down against
this letter of credit. The Company plans to out-license Fiblast and
does not expect to incur further costs to develop these indications
internally.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
In accordance with Federal laws, the Company reminds readers that the
following discussion contains forward-looking statements about plans,
objectives, future results and intentions of the Company. These forward-looking
statements are based on the current expectations of the Company, and the Company
assumes no obligation to update this information. Realization of these plans and
results involves risks and uncertainties, and the Company's actual results could
differ materially from the historical results or future plans discussed here.
Factors that could cause or contribute to such differences include, but are not
limited to, those items discussed below, as well as the considerations discussed
in the Company's Form 10-K for the year ended December 31, 1998 and the
Company's Forms 10-Q for the quarters ended March 31, 1999 and June 30, 1999.
Results of Operations
Three Months Ended September 30, 1999 and 1998
Revenues in the third quarter of 1999 were $14.7 million and included
$10.6 million in product sales, $2.0 million in co-promotion commissions and
$2.1 million in contract revenues. Revenues for the corresponding period in 1998
were $13.6 million, including $7.4 million generated by product sales, $1.4
million in co-promotion commissions and $4.7 million from contract revenue.
Product sales from psychiatric products under license from SmithKline Beecham
Corporation ("SB Products") continued to outperform sales in the corresponding
period of the prior year. Co-promotion commissions increased from 1998 to 1999
due to a change in the products co-promoted by the Company that occurred in
1998. The decrease in contract revenue was mainly due to lower development
funding from Bayer AG ("Bayer") as a result of Bayer's termination of the
agreement for the commercialization of Natrecor(R)(nesiritide) in the second
quarter of 1999.
The Company incurred total operating expenses of $20.0 million in the
third quarter of 1999 versus $19.9 million in the same period in 1998. A $3.0
million decline in research and development expenses from 1998 to 1999 was
offset by increases of $1.4 million in cost of goods sold, $1.0 million in
profit distribution and $0.6 million in marketing, general and administration
expenses. The decrease in research and development expenses was mainly the
result of lower headcount due to the restructuring plan announced in March 1999.
The increases in both cost of goods sold and profit distribution were the result
of higher SB Product sales in the current quarter as compared to the year ago
quarter. Marketing, general and administration expenses increased due to
spending on Natrecor pre-marketing studies.
The net loss for the quarter was $4.7 million compared to a net loss of
$5.8 million in 1998. The $1.1 million decrease in the net loss was primarily
due to the revenue increase in 1999.
Nine Months Ended September 30, 1999 and 1998
Revenues in the first nine months totaled $41.7 million in 1999 and
$57.5 million in 1998. SB Product sales increased from $20.6 million in 1998 to
$27.9 million in 1999. Co-promotion commissions increased by $1.9 million from
1998 to 1999 because of the change in product lines promoted by the Company. The
Company currently co-promotes Risperdal(R) (risperidone) with Janssen
Pharmaceutica and Paxil(R) (paroxetine HCl) with SmithKline Beecham Corporation.
The decline of $25.1 million in research and development contract revenue from
1998 to 1999 was mainly due to receipt of a $20.0 million up front payment from
Bayer for the commercialization of Natrecor and from milestone payments received
from Novo Nordisk in 1998.
For the nine-month period, costs and expenses increased from $60.5
million in 1998 to $66.7 million in 1999. The increase in expenses was primarily
due to the higher cost of goods sold and profit distribution to third parties
resulting from the higher product sales and from a one-time $6.7 million
restructure expense recognized in the first quarter of 1999.
The restructure expense resulted from the closure of the Company's Mountain View
facilities and from a 30% reduction in the Company's workforce, and is expected
to reduce annual operating expenses by $14.0 million per year. In the third
quarter, the Company completed the sale of the Mountain View facility. The
Company expects to complete the move of personnel from Mountain View to two
leased facilities in Sunnyvale, California by the end of October 1999. A portion
of the Mountain View facility will continue to be leased back through the second
quarter of 2000 to fulfill an obligation to Kaken Pharmaceutical associated with
their drug approval application for Fiblast in Japan.
Other income and expense declined from $10.3 million for the nine-month
period in 1998 to $6.6 million for the same period in 1999. The decrease was
mainly due to a reduction in realized gains on the sale of the Company's
securities from period to period. For the nine-month period in 1998, realized
gains on securities were $8.2 million which was primarily the result of the sale
of the Company's entire interest in its subsidiary, Karo Bio, through a public
stock offering. For the same period in 1999, realized gains were $5.0 million,
which were mainly due to the sales of the Company's holdings in Guilford
Pharmaceuticals Inc.
The Company had a net loss of $18.4 million for the first nine months
of 1999 versus net income of $5.9 million for the same period in 1998. The $24.3
million change in income is primarily due to the $20.0 million up front payment
received from Bayer for commercialization of Natrecor in 1998, coupled with the
$6.7 million recorded for restructuring in 1999.
The ability of the Company to achieve profitability depends principally
on the Company's success in developing and commercializing its own products and
on its ability to complete agreements with third parties that result in
additional revenue. Among the factors that will determine the Company's success
in commercializing its products are: the demonstrated safety and efficacy of
products in development; the cost of and the time taken to complete clinical
trials and regulatory submissions; the timing and scope of regulatory approvals,
particularly with respect to the Company's lead product Natrecor(R)
(nesiritide); the Company's success in managing third party manufacturers to
ensure a cost-effective drug supply; the Company's ability to develop and
implement cost effective sales and marketing strategies either on its own behalf
or in partnership with other companies; and the level of market acceptance if
products are approved, both at product launch and over time. The Company's
ability to raise additional
revenue through third parties will be dependent on the factors described above,
as well as other factors such as: its success in marketing and selling the
third-party products which it may acquire the right to co-promote; the
disposition of various patent proceedings related to the protection of the
Company's potential products; the perceived value of the Company's current
product portfolio and research programs to outside parties; and the success of
third parties, such as Kaken Pharmaceutical Co., Ltd. on Fiblast(R) (trafermin)
and Novo Nordisk A/S on GLP-1, in developing and commercializing the Company's
products.
Liquidity and Capital Resources
Combined cash, cash equivalents and marketable securities (both current
and non-current) totaled $96.3 million at September 30, 1999, a decrease of $1.0
million from December 31, 1998. For the nine-month period, cash received from
the sale of the Company's equity holdings in Guilford Pharmaceuticals and from
the sale of the Company's Mountain View, California facility offset cash used to
fund the Company's operations. At the end of the third quarter, the Company
received a $4 million milestone payment due October 1st, from Novo Nordisk
associated with the development of GLP-1. The payment was recorded as deferred
revenue and will be recognized as revenue in the fourth quarter.
The Company is striving to achieve profitability over the next several
years. The timing of the Company's success in reaching its objectives to achieve
and sustain profitability, in the short term, depends principally on the success
of the Company in achieving regulatory approvals and generating sales from
Natrecor. The Company has recently determined with the FDA the nature of the
additional clinical trials that the agency will require before it will consider
approval of Natrecor for marketing. The Company expects to initiate enrollment
in the trial in October 1999, with enrollment in the study to be approximately
500 patients at an estimated cost of $10.0 million. Profitability will also
depend on a number of other factors including the Company's success and
timeliness of its product development, clinical trial, regulatory approval and
product introduction efforts. Other contributing factors will be the Company's
ability to develop new revenue sources to support research and development
programs and its success in marketing and promoting the products of third
parties that may be licensed by the Company.
The Company's resources of $96.3 million in cash, cash equivalents and
marketable securities at September 30, 1999, together with revenues from product
sales, collaborative agreements, interest income and any funding from existing
or future debt or equity arrangements, will be used to support current and new
clinical trials for proprietary products under development, to support
development and commercialization efforts for prospective products and for other
general purposes. The Company believes its cash resources will be sufficient to
meet its operating and capital requirements for at least the next several years.
Key factors that will affect future cash use and the timing of the Company's
need to seek additional financing include the Company's decisions concerning the
degree to which it will incur expenses to launch its products in the United
States market following the necessary regulatory approvals, the results of the
Company's partnering efforts, the timing and amounts realized from licensing and
partnering activities, the rate of spending required to develop the Company's
products and respond to changing business conditions, and the net contribution
produced by the Company's ability to co-promote and market products for third
parties.
Over the long-term, the Company may need to arrange additional
financing for the future operation of its business, including the
commercialization of products currently under development, and it will consider
collaborative arrangements and additional public or private financings,
including additional equity financings. Factors influencing the availability of
additional funding include, but are not limited to, the Company's progress in
product development, investor perception of the Company's prospects and the
general conditions of the financial markets.
Impact of Year 2000
The Year 2000 Issue is the result of computer programs being written
using two digits rather than four to define the applicable year. Any of the
Company's computer programs or hardware that have date-sensitive software or
embedded chips may recognize a date using "00" as the year 1900 rather than the
year 2000. This could result in a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices, or engage in similar normal business
activities.
Based on recent assessments, the Company has determined that it will
not be required to modify or replace significant portions of hardware or
software to ensure that those systems will properly utilize dates beyond
December 31, 1999. The Company presently believes that with achievable
modifications and modest replacement of existing hardware and software, the Year
2000 Issue can be mitigated. However, if such modifications and replacements are
not made, or are not completed on a timely basis, the Year 2000 Issue could have
an impact on the operations of the Company.
The Company's plan to resolve the Year 2000 Issue involves the
following four phases: assessment, remediation, testing, and implementation. To
date the Company has fully completed its assessment of all internal systems that
could be significantly affected by the Year 2000. The completed assessment
indicated that most of the Company's significant information technology systems
are Year 2000 compliant. That assessment did, however, indicate that certain
systems were at risk. Affected systems include chromatography, clinical case
report forms tracking, and statistical analysis software. The Company is
currently assessing cost comparisons on whether to remediate or replace this
equipment and expects to have the equipment corrected and re-tested by October
31, 1999. For its information technology exposures, to date the Company is 80%
complete on the remediation phase and expects to complete software reprogramming
and replacement no later than November 30, 1999.
The Company is in the process of querying its important suppliers and
contractors (external agents) regarding their Year 2000 remediation activities.
To date, the Company is not aware of any external agent Year 2000 issue that
would materially impact the company's results of operations, liquidity, or
capital resources. However, the Company has no means of ensuring that external
agents will be Year 2000 ready. The inability of external agents to complete
their Year 2000 resolution process in a timely fashion could materially impact
the Company. The effect of non-compliance by external agents is not
determinable. The Company will update its analysis of external agent systems in
subsequent reports.
The Company will utilize both internal and external resources to
reprogram, or replace, test and implement the software and scientific equipment
for Year 2000 modifications. The total cost of the Year 2000 project is
estimated at approximately $75,000 and is being funded through operating
cash flows. To date, the Company has incurred approximately $31,000 related to
all phases of the Year 2000 project. Of the total remaining project costs,
approximately $28,000 is attributable to the purchase of new software, $10,000
for new hardware, both of which will be capitalized, and $6,000 for the repair
of hardware and software.
The Company's plans to complete the Year 2000 modifications are based
on management's best estimates, which were derived utilizing numerous
assumptions of future events including continued availability of certain
resources, and other factors. Estimates on the status of completion and the
expected completion dates are based on costs incurred to date compared to total
expected costs. However, there can be no guarantee that these estimates will be
achieved and actual results could differ materially from those plans. Specific
factors that might cause such material differences include, but are not limited
to, the availability and cost of personnel trained in this area, the ability to
locate and correct all relevant computer codes, and similar uncertainties.
The Company has not completed a formal contingency plan for
non-compliance, but it is developing a plan based on the information obtained
from third parties and an on-going evaluation of the Company's own systems. The
Company anticipates having a contingency plan in place by November 30, 1999,
which will include development of backup procedures, identification of alternate
suppliers and possible increases in supplies inventory levels. The Company has
not identified its most reasonably likely worst case scenario with respect to
possible losses in connection with Year 2000 related problems. The Company plans
on completing this analysis by November 30, 1999.
The information above contains forward-looking statements including,
without limitation, statements relating to the Company's plans, strategies,
objectives, expectations, intentions, and adequate resources that are made
pursuant to the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995. Readers are cautioned that forward-looking statements about
the Year 2000 should be read in conjunction with the Company's disclosures in
its Annual Report or Form 10-K as filed with the Securities and Exchange
Commission.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
No significant change in market risk has occurred since the filing by
the Company on Form 10-K for the year ended December 31, 1998. Reference is made
to Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk,
in the Company's Annual Report on Form 10-K for the year ended December 31,
1998.
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders
(a) Exhibits
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Description
10.39 Purchase and Sale Agreement and Joint Escrow Instructions
(Mountain View Real Estate Sale), dated May 24, 1999 between
Alexandria Real Estate Equities, Inc. and Registrant and
Registrant's wholly owned Subsidiary Bio-Shore Holdings, Ltd.
Portions of the exhibit has been omitted pursuant to a request for
confidential treatment.
(b) Reports on Form 8-K
None
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, thereunto duly authorized.
SCIOS INC.
October 12, 1999 By: /s/Richard B. Brewer
-------------------------------------------
Richard B. Brewer, President and CEO
October 12, 1999 By: /s/David W. Gryska
-------------------------------------------
David W. Gryska, Vice President and CFO