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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 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 0-26866
SONUS PHARMACEUTICALS, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 95-4343413
(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
22026 20TH AVE. SE, BOTHELL, WASHINGTON 98021
(Address of Principal Executive Offices)
(425) 487-9500
(Registrant's Telephone Number, Including Area Code)
Indicate by check whether the issuer (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[ ]
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date.
Class Outstanding at April 30, 1999
----------------------------- -----------------------------
Common Stock, $.001 par value 8,639,659
Page 1 of 14 Pages
Exhibit Index appears on Page 12
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SONUS PHARMACEUTICALS, INC.
INDEX TO FORM 10-Q
Page
Number
------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets as of March 31, 1999 (unaudited) and December 31, 1998 3
Statements of Operations (unaudited) for the three months ended
March 31, 1999 and March 31, 1998 .............................. 4
Statements of Cash Flow (unaudited) for the three months ended
March 31, 1999 and March 31, 1998 .............................. 5
Notes to Financial Statements ....................................... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ................................. 8
Item 3. Market Risk ......................................................... 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings ................................................... 11
Item 4. Submission of Matters to a Vote of Security Holders ................. 11
Item 6. Exhibits and Reports on Form 8-K .................................... 12
Items 2, 3 and 5 are not applicable and therefore have been omitted.
SIGNATURES ......................................................................... 14
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SONUS PHARMACEUTICALS, INC.
BALANCE SHEETS
MARCH 31, DECEMBER 31,
1999 1998
------------ ------------
(UNAUDITED)
ASSETS
Current assets:
Cash, cash equivalents and marketable securities ....... $ 15,695,202 $ 16,954,842
Other current assets ................................... 280,129 419,018
------------ ------------
Total current assets ................................ 15,975,331 17,373,860
Equipment, furniture and leasehold improvements, net of
accumulated depreciation of $2,755,880 and $2,552,786 .. 1,266,459 1,444,090
------------ ------------
Total assets .............................................. $ 17,241,790 $ 18,817,950
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank line of credit .................................... $ 5,000,000 $ 5,000,000
Accounts payable and accrued expenses .................. 2,949,277 2,954,530
Accrued clinical trial expenses ........................ 990,393 1,226,335
Capital lease obligations .............................. 75,217 93,178
------------ ------------
Total current liabilities ........................... 9,014,887 9,274,043
Long-term debt ............................................ 2,089,925 2,049,221
Commitments and contingencies
Stockholders' equity:
Preferred stock; $.001 par value;
5,000,000 authorized; no shares issued or outstanding -- --
Common stock; $.001 par value;
20,000,000 shares authorized; 8,638,657 and 8,632,225
shares issues and outstanding at March 31, 1999 and
December 31, 1998, respectively ..................... 35,039,972 35,009,368
Accumulated deficit .................................... (28,902,994) (27,514,682)
------------ ------------
Total stockholders' equity .......................... 6,136,978 7,494,686
------------ ------------
Total liabilities and stockholders' equity ................ $ 17,241,790 $ 18,817,950
============ ============
See accompanying notes.
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SONUS PHARMACEUTICALS, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,
-------------------------------------
1999 1998
----------- -----------
Revenues:
Collaborative agreements .............................. $ 1,700,000 $ 1,700,000
Operating expenses:
Research and development .............................. 1,489,881 3,550,056
General and administrative ............................ 1,710,637 1,656,574
----------- -----------
Total operating expenses ................................. 3,200,518 5,206,630
----------- -----------
Operating loss ........................................... (1,500,518) (3,506,630)
Other income (expense):
Interest income ....................................... 168,516 294,051
Interest expense ...................................... (49,235) (54,113)
----------- -----------
Net loss ................................................. $(1,381,237) $(3,266,692)
=========== ===========
Basic and diluted net loss per share ..................... $ (0.16) $ (0.38)
Shares used in computation of basic and diluted
net loss per share .................................... 8,633,333 8,612,923
See accompanying notes.
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SONUS PHARMACEUTICALS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,
---------------------------------------
1999 1998
------------ ------------
OPERATING ACTIVITIES:
Net loss ......................................................... $ (1,381,237) $ (3,266,692)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization ................................. 203,094 204,072
Amortization of premium (discount) on marketable securities ... 954 (10,903)
Realized gain on marketable securities ........................ (2,578) (6,533)
Changes in operating assets and liabilities:
Other current assets ....................................... 138,890 54,554
Accounts payable and accrued expenses ...................... (5,253) (311,065)
Accrued clinical trial expenses ............................ (235,942) 58,880
------------ ------------
Net cash used in operating activities ............................ (1,282,072) (3,277,687)
INVESTING ACTIVITIES:
Purchases of equipment, furniture and leasehold improvements ..... (25,463) (213,979)
Purchases of marketable securities ............................... (6,416,425) (10,663,563)
Proceeds from sale of marketable securities ...................... 5,959,925 13,041,869
Proceeds from maturities of marketable securities ................ 1,249,968 486,048
------------ ------------
Net cash provided by investing activities ........................ 768,005 2,650,375
FINANCING ACTIVITIES:
Proceeds from bank line of credit ................................ 5,000,000 5,000,000
Repayment of bank line of credit ................................. (5,000,000) (5,000,000)
Increase in long-term debt ....................................... 40,704 482,872
Repayment of capitalized lease obligations ....................... (17,961) (34,240)
Proceeds from issuance of common stock and warrants .............. 30,603 79,647
------------ ------------
Net cash provided by financing activities ........................ 53,346 528,279
------------ ------------
Decrease in cash and cash equivalents for the period ............. (460,721) (99,033)
Cash and cash equivalents at beginning of period ................. 5,203,925 5,253,227
------------ ------------
Cash and cash equivalents at end of period ....................... 4,743,204 5,154,194
Marketable securities at end of period ........................... 10,951,998 18,466,433
------------ ------------
Total cash, cash equivalents and marketable securities ........... $ 15,695,202 $ 23,620,627
============ ============
Supplemental cash flow information:
Interest paid ................................................. $ 9,531 $ 17,097
Income taxes paid ............................................. $ -- $ 7,500
See accompanying notes.
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SONUS PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The unaudited financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q. Accordingly, they do not include all of the
information and footnotes required to be presented for complete financial
statements. The accompanying financial statements reflect all adjustments
(consisting only of normal recurring items) which are, in the opinion of
management, necessary for a fair presentation of the results for the interim
periods presented.
The financial statements and related disclosures have been prepared with the
assumption that users of the interim financial information have read or have
access to the audited financial statements for the preceding fiscal year.
Accordingly, these financial statements should be read in conjunction with the
audited financial statements and the related notes thereto included in the Form
10-K for the year ended December 31, 1998 and filed with the SEC on March 25,
1999.
2. CONTINGENCIES
In May 1993, the Company entered into a manufacturing and supply agreement
with Abbott Laboratories ("Abbott"). In the event that EchoGen(R) (perflenapent
injectable emulsion) is approved by the U.S. Food and Drug Administration
("FDA"), the Company is obligated to purchase certain minimum quantities of
materials from Abbott or make cash payments for the shortages from the
predetermined purchase level over a five-year period.
In March 1998, the Company entered into a commercial supply agreement for
certain medical grade raw materials for the Company's initial product in the
U.S., EchoGen. In the event that EchoGen is approved by the FDA, the Company is
obligated to purchase certain minimum quantities of the material over a
five-year period.
The Company is also party to certain litigation related to its
business. While it is not feasible to predict the outcome of such pending
litigation, management believes that ultimate resolution of these
matters will not have a material adverse impact on the Company's future
financial position and results of operations, see "Part II. Other Information;
Item 1. Legal Proceedings."
3. SUBSEQUENT EVENT
In April 1999, the Company received an "approvable letter" from the FDA for
EchoGen. The FDA letter set forth the conditions that must be satisfied before
final approval. The Company is investigating the information needed to meet the
conditions. As part of the investigation process, the Company may have
discussions with the FDA to clarify certain aspects of the letter and the
information needed to meet the conditions. Based on information currently
available, the Company believes it can provide a complete response to the
conditions set forth in the FDA letter. The time that will be required to
respond to the FDA is dependent upon the timing of discussions with the FDA and
the time required to complete the Company's investigation. The Company currently
expects to file a response by the end of the third quarter. No assurance can be
given that the response can be filed by the Company in a timely manner or that
the filing will adequately satisfy the conditions or that the FDA will
ultimately approve the New Drug Application.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
SONUS Pharmaceuticals, Inc. (the "Company") is engaged in the research,
development and commercialization of proprietary ultrasound contrast agents and
drug delivery systems based on its proprietary technology. The Company's
products are being developed for use in the diagnosis and treatment of heart
disease, cancer and other debilitating conditions. The Company has financed its
research and development and clinical trials through payments received under
agreements with its collaborative partners, private equity and debt financings,
and an initial public offering ("IPO") of common stock completed in October
1995. Clinical trials of the Company's initial ultrasound contrast product under
development, EchoGen(R) (perflenapent injectable emulsion), began in January
1994. In 1996, the Company filed a New Drug Application ("NDA") with FDA for
EchoGen as well as a Marketing Authorization Application ("MAA") with the
European Medicines Evaluation Agency ("EMEA").
In April 1999, the Company received an "approvable letter" from the FDA
for EchoGen. The FDA letter set forth the conditions that must be satisfied
before final approval. The Company is investigating the information needed to
meet the conditions. As part of the investigation process, the Company may have
discussions with the FDA to clarify certain aspects of the letter and the
information needed to meet the conditions. Based on information currently
available, the Company believes it can provide a complete response to the
conditions set forth in the FDA letter. The time that will be required to
respond to the FDA is dependent upon the timing of discussions with the FDA and
the time required to complete the Company's investigation. The Company currently
expects to file a response by the end of the third quarter. No assurance can be
given that the response can be filed by the Company in a timely manner or that
the filing will adequately satisfy the conditions or that the FDA will
ultimately approve the NDA.
In March 1998, the EMEA's Committee for Proprietary Medicinal Products
("CPMP") issued a positive opinion on EchoGen for use as a transpulmonary
echocardiographic contrast agent in patients with suspected or established
cardiovascular disease who have had previous inconclusive non-contrast studies.
In July 1998, the EMEA ratified the CPMP recommendation and granted a marketing
authorization for EchoGen in the 15 countries of the European Union ("E.U.").
The Company and its marketing partner, Abbott Laboratories ("Abbott"), are
preparing for the commercialization of EchoGen in the E.U. The Company is
seeking approval of variances to its marketing license to bring the
manufacturing process and specifications for European product in line with the
process and specifications submitted for approval with the FDA in the U.S.
No assurance can be given that the variances to its marketing license will
ultimately be approved.
In 1996, the Company formed strategic alliances with Abbott for the
marketing and selling of ultrasound contrast agents, including EchoGen, in the
U.S. and certain international territories including Europe, Latin America,
Canada, Middle East, Africa and certain Asia/Pacific countries. Under the
agreements, Abbott agreed to make certain payments to the Company, primarily
conditioned upon the achievement of milestones, of which $37.3 million has been
paid as of March 31, 1999, including $6.3 million of milestone payments
creditable against future royalties. In addition, Abbott purchased in May 1996,
for $4.0 million, warrants to acquire 500,000 shares of common stock of the
Company. The warrants are exercisable over five years at $16.00 per share.
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In January 1999, the Company amended its strategic alliance agreements with
Abbott for both the U.S. and international territories. The amendments redefine
future milestone payments under the agreements. As of March 31, 1999, under the
amended agreements there are $28.3 million of potential milestone payments
remaining, of which $7.85 million are conditioned upon the approval and first
shipment of EchoGen echocardiography indications in the U.S. and Europe; $9.55
million for approval and first shipment of EchoGen radiology indications in the
U.S. and Europe; and $10.9 million conditioned upon achievement of annual sales
targets in Abbott's international territory. The amendments allow the Company to
request prepayment of radiology milestone payments in exchange for the issuance
of common stock of the Company at the then fair market value. The amendments
also reduced the royalty rates on sales of EchoGen by Abbott in its
international territory that range, based on a combination of factors, from 24%
to 42%. The U.S. royalty rate of 47% and the aggregate amount of U.S. and
international milestone payments were not changed.
The Company's results of operations have varied and will continue to vary
significantly from quarter to quarter and depend on, among other factors, the
timing of milestone payments made by Abbott, the timing of regulatory approvals,
the entering into additional product license agreements by the Company, and the
timing and costs of the clinical trials conducted by the Company. Abbott can
terminate the strategic alliance agreements on short notice, and there can be no
assurance that the Company will receive any additional funding or milestone
payments.
RESULTS OF OPERATIONS
To date, the Company's reported revenues have been derived from payments
received under collaborative agreements with third parties. Revenue received
under collaborative agreements was $1.7 million for the first quarters of 1999
and 1998. All revenue during the first quarters of 1999 and 1998 represented
payments under the Company's strategic alliance agreements with Abbott.
Research and development expenses were $1.5 million for the first quarter of
1999 compared with $3.6 million for the same period of the prior year. The
decrease was primarily due to a reduction in clinical trial activity when
compared to the prior year period. General and administrative expenses were $1.7
million for the first quarters of 1999 and 1998.
The Company anticipates total operating expenses will increase in future
quarters due to ongoing and planned clinical trials to study additional
indications for EchoGen and future products and due to higher marketing and
administrative expenses as the Company continues to prepare for
commercialization of EchoGen. The Company may also incur significant expenses
relating to legal matters - see "Legal Proceedings." In addition, revenues in
future quarters will be primarily dependent upon the timing of certain
regulatory and commercialization milestones and associated payments under
collaborative agreements.
Interest income, net of interest expense, was $119,000 for the first quarter
of 1999 compared to $240,000 for the same period of the prior year. The decrease
was primarily due to the lower levels of invested cash during the first quarter
of 1999 compared to the prior year.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically financed its operations with payments from
collaborative agreements, proceeds from equity financings and a bank line of
credit. At March 31, 1999, the Company had cash, cash equivalents and marketable
securities of $15.7 million, compared to $17.0 million at December 31, 1998. The
decrease was primarily due to cash used in operations in the first three months
of 1999.
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The Company has a bank loan agreement which provides for a $5.0 million
revolving line of credit facility and bears interest at the prime rate plus 1.0%
per annum. At March 31, 1999 there was $5.0 million outstanding under the line
of credit. The line of credit expires August 31, 1999 and is secured by the
tangible assets of the Company. The Company is required to maintain certain
minimum balances of cash with the bank in order to borrow under the line of
credit. There can be no assurance that the line of credit will be renewed upon
expiration or that the Company will be able to maintain the minimum balances
necessary to borrow under the line.
The Company expects that its cash needs will increase significantly in
future periods due to pending and planned clinical trials and higher
administrative and marketing expenses as the Company prepares for
commercialization of EchoGen. Based on its current operating plan, the Company
estimates that existing cash and marketable securities will be sufficient to
meet its cash requirements through 1999. The Company intends to seek additional
funding in 1999 through available means, which may include debt and/or equity
financing or the licensing or sale of proprietary or marketing rights. There can
be no assurance that financing will be available on acceptable terms, if at all.
The Company's future capital requirements depend on many factors including the
ability of the Company to obtain continued funding from third parties under
collaborative agreements, the ability to maintain the Company's bank line of
credit, the time and costs required to gain regulatory approvals, the progress
of the Company's research and development programs, clinical trials, the costs
of filing, prosecuting and enforcing patents, patent applications, patent claims
and trademarks, the costs of marketing and distribution, the status of competing
products, and the market acceptance and third-party reimbursement of the
Company's products, if and when approved. There can be no assurance that
regulatory approvals will be achieved or achieved in the near-term or that, in
any event, additional financing will be available on acceptable terms, if at
all. Any equity financing would likely result in substantial dilution to
existing stockholders. If the Company is unable to raise additional financing,
the Company would be required to curtail or delay the development of its
products and new product research and development.
MARKET RISK
The market risk inherent in the Company's short-term investment portfolio
and long-term debt represents the potential loss arising from adverse changes in
interest rates. If market rates hypothetically increase immediately and
uniformly by 100 basis points from levels at March 31, 1999, the decline in the
fair value of the investment portfolio and the increase in interest expense on
the long-term debt would not be material. Because the Company has the ability to
hold its fixed income investments until maturity, it does not expect its
operating results or cash flows to be affected to any significant degree by a
sudden change in market interest rates on its securities portfolio.
YEAR 2000 COMPLIANCE
Many computer systems may experience difficulty processing dates beyond the
year 1999 and will need to be modified prior to the year 2000. Failure to make
such modifications could result in systems failures or miscalculations, causing
a disruption of operations.
The Company has undertaken an initial comprehensive review of its
information technology computer systems and believes that the Year 2000 issue
does not pose significant operational problems. The majority of the Company's
software and computer equipment has been purchased within the last five years
from third-party vendors who have already provided upgrades intended to bring
their products into Year 2000 compliance. In addition, the Company is in the
process of surveying significant vendors to determine any possible Year 2000
risks. If Year 2000 problems exist with these third parties, it could
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affect the ability of vendors to satisfy their obligations to the Company or for
the Company to electronically communicate with such parties, which could have an
adverse effect on the Company's business, financial condition and results of
operations.
The Company intends to establish a contingency plan to address "high-risk"
issues, if any, that could affect day-to-day operations or delay its efforts to
bring products to market. The Company expects to complete its review of the Year
2000 issue by the end of the third quarter of 1999.
Based upon the Company's initial review of its computer systems, the Company
estimates that the cost to replace older, non-compliant computers and software
is not material. The full cost of correcting the Year 2000 issue will be known
after the Company completes its survey of its significant vendors; however,
based on currently available information, the Company believes that the total
costs will not exceed $100,000.
FORWARD-LOOKING STATEMENTS
This Report contains certain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, and the Company intends that such
forward-looking statements be subject to the safe harbors created thereby.
Examples of these forward-looking statements include, but are not limited to,
(i) the submission of applications for and the timing or likelihood of marketing
approvals for one or more indications, (ii) market acceptance of the Company's
products, (iii) the Company's anticipated future capital requirements and the
terms of any capital financing, (iv) the progress and results of clinical
trials, (v) the timing and amount of future milestone payments, product revenues
and expenses; and (vi) the anticipated outcome or financial impact of
litigation. While these statement made by the Company are based on management's
current beliefs and judgement, they are subject to risks and uncertainties that
could cause actual results to vary.
In evaluating such statements, stockholders and investors should
specifically consider a number of factors and assumptions, including those
discussed in the text and the financial statements and their accompanying
footnotes in this Report and the risk factors detailed from time to time in the
Company's filings with the Securities and Exchange Commission. As discussed in
the Company's annual report on Form 10-K for the year ended December 31, 1998,
actual results could differ materially from those projected in the
forward-looking statements as a result of the following factors, among others:
uncertainty of governmental regulatory requirements; lengthy approval process;
unproven safety and efficacy; uncertainty of clinical trials; history of
operating losses; uncertainty of future financial results; future capital
requirements and uncertainty of additional funding; dependence on third parties
for funding, clinical development and distribution; dependence on patents and
proprietary rights; competition and risk of technological obsolescence; limited
manufacturing experience; dependence on limited contract manufacturers and
suppliers; lack of marketing and sales experience; limitations on third-party
reimbursement; uncertainty of market acceptance; continued listing on the Nasdaq
National Market; dependence on key employees; and shares eligible for future
sale. There can be no assurance that the Company can meet the conditions set
forth by the FDA in its "approvable letter" or any subsequent conditions in a
timely manner, if at all, or that EchoGen will ultimately receive FDA approval.
ITEM 3. RESPONSE TO THIS ITEM IS INCLUDED IN "ITEM 3. MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - MARKET
RISK."
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In January 1998, the Company announced that it had filed a patent
infringement action in the U.S. District Court in Seattle, Washington, against
Molecular Biosystems Inc. ("MBI") and Mallinckrodt, Inc. The suit alleges that
one of MBI's ultrasound contrast agents infringes one or more of the Company's
patents. MBI has filed counterclaims alleging that the patents asserted by the
Company are invalid and not infringed, and that the Company has made false
public statements and engaged in other actions intended to damage MBI and one of
its ultrasound contrast agents. The Company does not believe there is any merit
to these counterclaims and intends to defend its position vigorously. In October
1998, the court granted the Company's motion to stay the litigation until the
PTO had completed its re-examination of the patents in this lawsuit (see below).
The stay was lifted in January 1999. A trial date has been set for this lawsuit
in February 2000.
Four separate re-examination proceedings directed to the two SONUS patents
at issue in the patent infringement lawsuit, U.S. 5,558,094 (`094) and U.S.
5,573,751 (`751) were initiated by the PTO beginning in July 1997 at the request
of MBI. In December 1998, the Company announced it received decisions from the
PTO indicating the patentability of claims in all four re-examination
proceedings. The PTO has determined that a number of the claims included in the
original `094 and `751 patents as well as some claims that were amended will be
confirmed. Certain claims, which included reference to fluorinated chemicals
other than perfluoropropane, perfluorobutane and perfluoropentane, were
cancelled during the re-examination process.
In August and September 1998, various class action complaints were filed in
the Superior Court of Washington (the "State Action") and in the U.S. District
Court for the Western District of Washington (the "Federal Action") against the
Company and certain of its officers and directors, alleging violations of
Washington State and U.S. securities laws. In October 1998, the Company and the
individual defendants moved to dismiss and stay the State Action. The parties
have agreed to stay the State Action pending a determination by the federal
district court as to whether the state law claims may be brought in the Federal
Action. In February 1999, plaintiffs filed a consolidated and amended complaint
in the Federal Action, alleging violations of Washington State and U.S.
securities laws. In March 1999, the Company and the individual defendants filed
a motion to dismiss the consolidated amended complaint in the Federal Action.
The Company does not believe there is any merit to the claims in these actions
and intends to defend its position vigorously.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting of Stockholders was held on April 29, 1999. At
the Annual Meeting there were six matters submitted to a vote of security
holders. Proxies were solicited pursuant to Section 14(a) of the Securities and
Exchange Commission adopted pursuant thereto. There was no solicitation in
opposition to management's nominees as listed in the proxy statement. Each
director nominated and all other proposals submitted to a vote passed and the
voting outcome of each proposal is as follows:
1. Election of the following six (6) directors to serve until the next
annual meeting of stockholders or until their successors are elected and
have qualified:
Nominee For Abstain
------- --- -------
Steven C. Quay, M.D., Ph.D. 7,508,084 164,694
Michael A. Martino 7,492,065 165,574
George W. Dunbar, Jr. 7,498,775 162,274
Christopher S. Henney, Ph.D., D. Sc. 7,491,116 166,423
Robert E. Ivy 7,498,625 161,924
Dwight Winstead 7,509,254 162,824
2. Approval of an amendment to the Company's Incentive Stock Option,
Nonqualified Stock Option and Restricted Stock Purchase Plan -- 1991 to
increase the number of shares subject thereto by 300,000 to a total of
2,200,000:
For: 3,295,195 Against: 1,266,261 Abstain: 50,077 Broker Non-votes: 3,061,245
3. Approval of an amendment to the Company's Employee Stock Purchase Plan
to increase the number of shares subject thereto by 50,000 to a total of
100,000:
For: 4,377,612 Against: 207,804 Abstain: 26,117 Broker Non-votes: 3,061,245
4. Approval of an amendment to the Company's 1995 Stock Option Plan for
Directors to increase the number of shares subject thereto by 127,863 to
a total of 250,000:
For: 4,257,570 Against: 321,239 Abstain: 32,724 Broker Non-votes: 3,061,245
5. Approval of an amendment to the Company's Certificate of Incorporation
to increase the number of authorized shares of Common Stock of the
Company by 10,000,000 shares to a total of 30,000,000:
For: 7,271,983 Against: 356,913 Abstain: 43,032 Broker Non-votes: 850
6. Ratification of Ernst & Young LLP as independent auditors of the Company
for the fiscal year ending December 31, 1999:
For: 7,601,905 Against: 55,595 Abstain: 15,278
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Number Description
------ -----------
3.2 Amended and Restated Certificate of Incorporation of the
Company (Incorporated by reference to the referenced exhibit
number to the Company's Registration Statement on Form S-1,
Reg. No. 33-96112)
3.3 Certificate of Amendment of Certificate of Incorporation
10.25 Employment Agreement, effective February 11, 1999, by and
between the Company and Steven C. Quay, M.D., Ph.D.
10.7 1999 Nonqualified Stock Incentive Plan ("1999 Plan")
10.8 Form of Nonqualified Stock Option Agreement pertaining to the
1999 Plan
10.9 Form of Restricted Stock Purchase Agreement pertaining to the
1999 Plan
(b) REPORTS ON FORM 8-K
The Company filed the following report on Form 8-K during the
quarter ended March 31, 1999:
1. The Registrant filed a report on Form 8-K on February 3,
1999 in connection with the announcement of the Company's
amendments to the marketing and distribution agreements
dated January 31, 1999 that were originally entered into
on May 14, 1996 and October 1, 1996 with Abbott
Laboratories and its affiliate, Abbott International, Ltd.
ITEMS 2, 3 AND 5 ARE NOT APPLICABLE AND HAVE BEEN OMITTED.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SONUS PHARMACEUTICALS, INC.
Date: May 12, 1999 By: /s/ Gregory Sessler
---------------------------------
Gregory Sessler
Chief Financial Officer and
Assistant Secretary
(Principal Financial and
Accounting Officer)
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