SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 September 30, 2000.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File number 000-19809
DURA PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-3645543
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
7475 LUSK BLVD., SAN DIEGO, CALIFORNIA 92121
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE IS (858) 457-2553
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.
[ X ] Yes [ ] No
The number of shares of the Registrant's Common Stock outstanding as of October
31, 2000 was 45,808,519.
================================================================================
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
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DURA PHARMACEUTICALS, INC.
CONSOLIDATED BALANCE SHEETS
IN THOUSANDS, EXCEPT SHARE AMOUNTS
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SEPTEMBER 30, DECEMBER 31,
2000 1999
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ASSETS (UNAUDITED)
Current assets:
Cash and cash equivalents $ 80,332 $ 63,631
Short-term investments 169,914 210,782
Accounts and other receivables 32,702 44,632
Inventory 18,082 12,938
Other current assets 4,285 11,523
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Total current assets 305,315 343,506
License agreements and product rights 416,118 389,631
Property 83,413 93,333
Other assets 57,068 57,004
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Total $ 861,914 $ 883,474
================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 22,330 $ 11,411
Accrued liabilities 81,426 74,305
Current portion of long-term obligations 1,965 1,865
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Total current liabilities 105,721 87,581
Convertible subordinated notes 287,500 287,500
Other long-term obligations 69,697 66,654
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Total liabilities 462,918 441,735
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Stockholders' equity:
Preferred stock, par value $.001, shares authorized - 5,000,000; no
shares issued or outstanding
Common stock, par value $.001, shares authorized - 200,000,000;
issued and outstanding - 45,623,796 and 44,239,660, respectively 46 44
Additional paid-in capital 607,161 579,929
Accumulated other comprehensive loss (463) (1,230)
Warrant subscriptions receivable (6,057)
Accumulated deficit (207,748) (130,947)
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Total stockholders' equity 398,996 441,739
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Total $ 861,914 $ 883,474
================================
See accompanying notes to consolidated financial statements.
2
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DURA PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
(UNAUDITED)
- --------------------------------------------------------------------------------
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------------------------------------------
2000 1999 2000 1999
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Revenues:
Sales $ 58,000 $ 54,271 $ 186,207 $ 160,673
Contract 12,127 17,289 51,230 50,140
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Total revenues 70,127 71,560 237,437 210,813
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Operating costs and expenses:
Cost of sales 13,539 10,467 39,615 31,337
Clinical, development and regulatory 13,155 13,000 43,967 36,966
Selling, general and administrative 42,726 34,077 115,682 95,145
Product rights amortization 5,864 5,166 16,779 14,975
Charges for acquired in-process technology,
restructuring and merger expenses 103,170 103,170
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Total operating costs and expenses 178,454 62,710 319,213 178,423
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Operating income (loss) (108,327) 8,850 (81,776) 32,390
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Other:
Interest income 5,055 4,220 14,950 12,771
Interest expense (4,391) (4,370) (13,015) (12,742)
Other - net (10) (3,500) 3,440 (3,746)
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Total other 654 (3,650) 5,375 (3,717)
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Income (loss) before income taxes (107,673) 5,200 (76,401) 28,673
Provision (benefit) for income taxes (8,973) 1,664 400 9,789
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Net income (loss) $ (98,700) $ 3,536 $ (76,801) $ 18,884
===============================================================
Net income (loss) per share:
Basic $ (2.20) $ 0.08 $ (1.73) $ 0.43
Diluted $ (2.20) $ 0.08 $ (1.73) $ 0.41
Weighted average number of common shares:
Basic 44,767 44,138 44,478 44,107
Diluted 44,767 45,462 44,478 45,655
See accompanying notes to consolidated financial statements.
3
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DURA PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
IN THOUSANDS
(UNAUDITED)
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NINE MONTHS ENDED
SEPTEMBER 30,
----------------------------
2000 1999
----------------------------
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Net cash provided by operating activities $ 13,387 $ 49,680
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Investing activities:
Sales and maturities of short-term investments 118,406 240,241
Purchases of short-term investments (76,772) (235,817)
Company and product acquisitions (43,123) (32,135)
Capital expenditures (8,956) (14,079)
Proceeds from the sale of long-term investment 4,949
Other 306 (4,250)
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Net cash used for investing activities (5,190) (46,040)
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Financing activities:
Issuance of common stock and warrants - net 8,504 3,378
Principal payments on long-term obligations (3,000)
Repurchase of common stock (831)
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Net cash provided by (used for) financing activities 8,504 (453)
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Net increase in cash and cash equivalents 16,701 3,187
Cash and cash equivalents at beginning of period 63,631 31,113
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Cash and cash equivalents at end of period $ 80,332 $ 34,300
===========================
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest (net of amounts capitalized) $ 10,461 $ 10,160
Income taxes $ 295 $ 1,687
See accompanying notes to consolidated financial statements.
4
DURA PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
We have prepared the accompanying unaudited consolidated financial statements in
accordance with the instructions to Form 10-Q. The consolidated financial
statements reflect all adjustments, consisting of only normal recurring
accruals, which are, in our opinion, necessary for a fair statement of the
results of the interim periods presented. These consolidated financial
statements and related notes should be read in conjunction with the audited
financial statements and related notes included in our annual report on Form
10-K/A for the year ended December 31, 1999. The results of operations for the
interim periods are not necessarily indicative of results to be expected for any
other interim period or for the year as a whole.
The consolidated financial statements include our accounts and the accounts of
our wholly owned subsidiaries. All intercompany transactions and balances are
eliminated in consolidation. Certain reclassifications have been made to amounts
included in the prior year's financial statements to conform to the financial
statement presentation for the three and nine months ended September 30, 2000.
The preparation of financial statements in conformity with generally accepted
accounting principles requires us to make estimates and assumptions that affect
amounts reported in the consolidated financial statements and related notes.
Changes in those estimates may affect amounts reported in future periods.
In December 1999, the SEC issued Staff Accounting Bulleting (SAB) No. 101,
"Revenue Recognition in Financial Statements." SAB 101 provides the SEC staff's
views in applying generally accepted accounting principles to selected revenue
recognition issues. We will be required to adopt SAB 101 in the fourth quarter
of the 2000 fiscal year. We do not expect the adoption of SAB 101 will have a
material effect on our financial position or results of operation.
2. MERGER AGREEMENT WITH ELAN CORPORATION, PLC
On September 10, 2000, we entered into a definitive merger agreement with
Elan Corporation, plc ("Elan") under which Elan will acquire all of our
outstanding common stock in a tax-free, stock for stock transaction. Pursuant
to the agreement, each Dura stockholder will receive 0.6715 of an Elan ADS
for each share of Dura common stock. Based upon Elan's closing stock price on
September 8, 2000 of $52.125, the transaction has a value of $35.00 per Dura
share and a total transaction value of approximately $1.8 billion. This
transaction will be accounted for as a pooling of interests. The merger was
approved by our stockholders and became effective on November 9, 2000.
3. ACQUISITION OF SPIROS DEVELOPMENT CORPORATION II, INC.
On August 31, 2000, we acquired Spiros Development Corporation II, Inc.
("Spiros Corp. II"), a company that was developing Spiros-Registered
Trademark-, a dry powder pulmonary drug delivery system, for use with certain
specified leading asthma and chronic obstructive pulmonary disease drugs.
5
The purchase price totaled $108.9 million, consisting of cash of $88.5
million and five-year warrants to purchase approximately 1.2 million shares
of our common stock at a price of $17.94 per share. The cash portion of the
consideration was funded from our existing cash and short-term investments.
The acquisition has been accounted for as a purchase and, accordingly, the
operating results of Spiros Corp. II have been included in our consolidated
financial statements since the date of acquisition. Net assets of Spiros
Corp. II consisted primarily of cash and short-term investments totaling $30
million and in-process research and development relating to the development
of Spiros for use with specified respiratory disease drugs. We are obtaining
an independent valuation of the net assets of Spiros Corp. II for purposes of
allocating the purchase price. Based on the preliminary results of this
valuation, $87.9 million of the purchase price has been allocated to
in-process technology and recorded as a charge to third quarter earnings (see
Note 4). This purchase price allocation is subject to change based on the
final results of the independent valuation.
The following unaudited pro forma financial information assumes the acquisition
of Spiros Corp. II had occurred on January 1 of each year. The charge to
earnings for acquired in-process research and development is not reflected in
the pro forma financial information, as it is nonrecurring. These pro forma
results do not necessarily represent results that would have occurred if the
acquisition had taken place on the dates assumed, nor are they indicative of the
results of future combined operations.
PRO FORMA RESULTS OF OPERATIONS:
NINE MONTHS ENDED
SEPTEMBER 30,
2000 1999
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(in thousands)
Total revenues $ 201,288 $ 171,988
Net loss $ (26,878) $ (7,109)
Net loss per share $ (0.60) $ (0.16)
4. CHARGES FOR ACQUIRED IN-PROCESS TECHNOLOGY, RESTRUCTURING AND MERGER
EXPENSES
During the third quarter of 2000, we recorded pre-tax charges for acquired
in-process technology, restructuring and merger expenses. The components of
this charge are discussed below.
ACQUIRED IN-PROCESS TECHNOLOGY - As discussed in Note 3 above, we acquired
Spiros Corp. II in August 2000. Based on the preliminary results of an
independent valuation of the net assets acquired, we recorded a $87.9 million
charge for acquired in-process technology. The amount of the charge is
subject to change based on the final results of the independent valuation.
The in-process technology acquired from Spiros Corp. II is the right to use
our Spiros dry powder pulmonary drug delivery system with specified drugs
used for the treatment of asthma and chronic obstructive pulmonary disease.
We previously licensed the rights to develop and commercialize these drugs
for use with Spiros to Sprios Corp. II.
RESTRUCTURING - In July 2000, we announced the implementation of a refocused
strategy. As part of this strategy, we took steps to immediately reduce
internally-funded development programs, including discontinuing the development
of all motorized Spiros cassette programs. This
6
decision was based on advancements in the new, next generation Spiros technology
platform, the substantial costs to complete the Spiros cassette programs, and
the normal clinical and regulatory risks associated with pharmaceutical product
development. In connection with the discontinuation of the development of all
motorized Spiros cassette programs, we recorded a restructuring charge of $14.2
million comprised of severance costs for terminated employees, impairment of
research and manufacturing equipment utilized solely for these programs, and
costs to satisfy contractual commitments associated with these programs. A
summary of these costs is as follows (in thousands):
Employee severance costs $ 1,287
Write down of property, plant and equipment 9,633
Accrual for contractual commitments 3,137
Other 143
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Total restructuring costs 14,200
Non-cash expenses (9,730)
Cash payments through September 30, 2000 (1,574)
-------------
Restructuring liability as of September 30, 2000 $ 2,896
=============
The decision to discontinue these programs resulted in the plan to
involuntarily terminate 45 employees who were associated with the motorized
Spiros cassette programs, most of whom were terminated as of September 30,
2000. Employee severance costs paid in the third quarter of 2000 totaled
approximately $700,000. Approximately $463,000 in unpaid employee severance
costs is accrued as of September 30, 2000.
A significant amount of specialized machinery and equipment was utilized in the
development of the motorized Spiros cassette programs. These assets consisted
primarily of clinical manufacturing equipment and related molds and tooling. In
accordance with SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of," we assessed whether the
carrying value of these assets was recoverable in light of the decision to
terminate these development programs. Because of the specialized nature of these
assets, they have no alternative uses outside of the motorized cassette
programs. As a result of this analysis, we determined that the assets had only a
nominal fair market value and recorded an impairment loss of $9.6 million.
Finally, there were several contractual commitments related to the
discontinued Spiros programs which we were obligated to fulfill, including
close out costs for clinical studies and equipment, inventory and other
third-party purchase commitments. Of the total contractual commitments and
other miscellaneous expenses incurred, $847,000 was paid in the third quarter
of 2000 and approximately $2.4 million is accrued as of September 30, 2000.
We expect that all exit plan activities and payments associated with the
restructuring will be completed by December 31, 2000.
MERGER EXPENSES - As discussed in Note 2 above, we entered into a definitive
merger agreement with Elan under which Elan will acquire all of our outstanding
common stock in a transaction to be accounted for as a pooling of interests. In
conjunction with the merger, we incurred expenses totaling $1.1 million for
outside services rendered in the third quarter of 2000.
7
We expect to incur additional merger-related expenses totaling approximately
$15 million upon consummation of the merger in the fourth quarter of 2000.
5. COMMITMENT AND CONTINGENCIES
STOCKHOLDER CLASS ACTION LITIGATION - Commencing on January 27, 1999, several
class action suits were filed against us and a number of our current or former
officers and directors in the United States District Court for the Southern
District of California. The lawsuits, which have been consolidated into one
action, allege violations of the federal securities laws, and purport to seek
damages on behalf of a class of stockholders who purchased our common stock
during a defined period. We believe that the claims in the lawsuit are without
merit and intend to defend against them vigorously.
6. REPORTING COMPREHENSIVE INCOME (LOSS)
Comprehensive income (loss) includes net income (loss) and unrealized gains and
losses on investments. The accumulated balance of other comprehensive income
(loss) is disclosed as a separate component of stockholders' equity.
The following table summarizes information about our comprehensive income (loss)
for the three months and nine months ended September 30, 2000 and 1999, in
thousands:
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2000 1999 2000 1999
Net income (loss) $ (98,700) $ 3,536 $ (76,801) $ 18,884
Other comprehensive income (loss):
Unrealized income (loss) on
investments 593 (360) 767 (1,456)
------------ ------- ----------- ----------
Comprehensive income (loss) $ (98,107) $ 3,176 $ (76,034) $ 17,428
=========== ======== =========== ==========
7. SEGMENT INFORMATION
We operate in two business segments: (1) pharmaceutical products and (2)
research and development. The pharmaceutical products segment markets
prescription pharmaceutical products for the treatment of infectious diseases
and respiratory conditions. The research and development segment manages the
development of Spiros. Each of our segments operates solely within the United
States. Three wholesale customers accounted for 15%, 14% and 12% of
pharmaceutical product sales, respectively, for the nine months ended September
30, 2000, and three wholesale customers accounted for 16%, 13% and 12% of
pharmaceutical product sales, respectively, for the same period in 1999.
8
The following table summarizes information about our operating segments for the
three months and nine months ended September 30, 2000 and 1999, in thousands:
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------------------------------- -------------------------------------------------
PHARMACEUTICAL RESEARCH AND PHARMACEUTICAL RESEARCH AND
PRODUCTS DEVELOPMENT CONSOLIDATED PRODUCTS DEVELOPMENT CONSOLIDATED
Total revenues 2000 $ 58,000 $ 12,127 $ 70,127 $ 186,493 $ 50,944 $ 237,437
1999 $ 54,271 $ 17,289 $ 71,560 $ 161,526 $ 49,287 $ 210,813
Operating income 2000 $ (1,926) $ (106,401) $ (108,327) $ 18,889 $ (100,665) $ (81,776)
1999 $ 5,566 $ 3,284 $ 8,850 $ 23,374 $ 9,016 $ 32,390
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following information should be read in conjunction with the consolidated
financial statements and the accompanying notes included in Item 1 of this
quarterly report, as well as the audited financial statements and accompanying
notes and Management's Discussion and Analysis of Financial Condition and
Results of Operations for the year ended December 31, 1999 contained in our 1999
annual report on Form 10-K/A. See "Risks and Uncertainties" below for trends and
uncertainties known to us that could cause reported financial information not to
be indicative of future results.
OVERVIEW
We are engaged in marketing and selling prescription products that treat
infectious, respiratory and dermatological diseases. We execute our business
strategy by (1) acquiring currently-marketed pharmaceutical products to
support our presence in high-prescribing physicians' offices and the hospital
market, and (2) developing Spiros-Registered Trademark-, a pulmonary drug
delivery system for both topical and systemic delivery of medications. We
currently market 17 patent protected and/or branded prescription products.
Our operations are divided into two business segments: (1) pharmaceutical
products and (2) research and development. The pharmaceutical products
segment markets prescription pharmaceutical products for the treatment of
infectious, respiratory and dermatological diseases. The research and
development segment manages the development of Spiros. Each of our segments
operates solely within the United States.
RECENT DEVELOPMENTS
On October 2, 2000, we entered into an agreement with Glaxo Wellcome, Inc.
("Glaxo") granting us exclusive U.S distribution rights to Glaxo's line of five
dermatology products. Under the agreement, Dura will make payments to Glaxo
through 2002 for the purchase of product
9
supply, distribution fees, and an option fee. At the end of 2002, we can
exercise an option to acquire all of the products at a predetermined multiple of
2002 sales, subject to specified minimum and maximum amounts. This agreement
will result in increased pharmaceutical sales and sales, general and
administrative expenses beginning in the fourth quarter of 2000. During the
fourth quarter we will establish a separate sales organization to commence
promotion of the products.
On September 10, 2000, we entered into a definitive merger agreement with
Elan Corporation, plc ("Elan") under which Elan will acquire all of our
outstanding common stock. Pursuant to the agreement, each Dura stockholder
will receive 0.6715 of an Elan ADS for each share of Dura common stock. Based
upon Elan's closing stock price on September 8, 2000 of $52.125, the
transaction has a value of $35.00 per Dura share and a total transaction
value of approximately $1.8 billion. This transaction will be accounted for
as a pooling of interests. The merger was approved by our stockholders and
became effective on November 9, 2000.
On August 31, 2000, we acquired Spiros Corp. II. The purchase price totaled
$108.9 million, consisting of cash of $88.5 million and five-year warrants to
purchase approximately 1.2 million shares of our stock at a price of $17.94
per share. The cash portion of the consideration was paid from our existing
cash and short-term investments. The principal assets acquired through the
merger include the right to use our proprietary Spiros dry powder drug
delivery systems with specified compounds that had previously been licensed
to Spiros Corp. II as well as its cash and short-term investments of
approximately $30 million. In conjunction with this acquisition, we recorded
a one-time charge for acquired in-process technology totaling approximately
$87.9 million. The portion of the purchase price allocated to in-process
technology was based on the preliminary results of an independent valuation
of the net assets acquired. This allocation is subject to change based on the
final results of the independent valuation.
On July 24, 2000 we announced the implementation of a refocused strategy by
which we began substantially reducing our overall development spending while
increasing both our commitment to our collaboration with Eli Lilly & Company
on the inhaled insulin program and our effort to establish collaborative
relationships to develop next generation, motorless Spiros systems. As part
of our strategy, we discontinued the development of all motorized Spiros
cassette programs, including Beclomethasone Spiros-TM- and Budesonide
Spiros-TM-. The decision to terminate these programs was based on the
significant advancements in the new next generation Spiros technology
platform, the substantial costs to complete the cassette programs and the
normal clinical and regulatory risks associated with pharmaceutical product
development, all weighed against our assessment of the U.S. oral inhaled
steroid market in 2002 and beyond, when these product candidates were
targeted to reach the market. In connection with the termination of the
motorized Spiros cassette development programs, we recorded a restructuring
charge in the third quarter of 2000 of approximately $14.2 million. The
components of this charge include severance costs for terminated employees,
impairment of research and manufacturing equipment utilized solely for
motorized Spiros cassette programs, and costs to satisfy contractual
commitments associated with these programs. A summary of these costs is as
follows (in thousands):
10
Employee severance costs $ 1,287
Write down of property, plant and equipment 9,633
Accrual for contractual commitments 3,137
Other 143
-------------
Total restructuring costs 14,200
Non-cash expenses (9,730)
Cash payments through September 30, 2000 (1,574)
-------------
Restructuring liability as of September 30, 2000 $ 2,896
=============
Because the motorized Spiros cassette development programs were funded by
Spiros Corp. II under the related development agreement, the termination of
these programs will not significantly affect our results of operations.
However, the write-off of property, plant and equipment will reduce our
depreciation by approximately $1.5 million per year, and the reduction in our
workforce will reduce our salaries and benefits by approximately $3.5 million
per year. We expect to pay the remaining $2.9 million of exit costs by
December 31, 2000.
RESULTS OF OPERATIONS
The following table summarizes our results of operations, in thousands, except
per share amounts:
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2000 1999 2000 1999
Total revenues $ 70,127 $ 71,560 $ 237,437 $ 210,813
Operating income (loss) $ (108,327) $ 8,850 $ (81,776) $ 32,390
Net income (loss) $ (98,700) $ 3,536 $ (76,801) $ 18,884
Earnings (loss) per share - diluted $ (2.20) $ 0.08 $ (1.73) $ 0.41
NET INCOME (LOSS)
Net loss for the three months ended September 30, 2000 was $98.7 million, or
$2.20 per diluted share, which included pre-tax charges totaling $103.2 million
for acquired in-process technology, restructuring and merger expenses. Excluding
the net of tax impact of these charges, we would have reported net income of
$4.5 million, or $0.09 per diluted share, compared to net income of $3.5
million, or $0.08 per diluted share, for the same period in 1999. Net loss for
the nine months ended September 30, 2000 was $76.8 million, or $1.73 per diluted
share, which included a $3.5 million pre-tax gain in other income from the sale
of a long-term investment in the first quarter and a pre-tax charge totaling
$103.2 million for acquired in-process technology, restructuring and merger
expenses in the third quarter. Net income for the nine months ended September
30, 1999 includes pre-tax charges totaling $3.5 million in other expense that we
incurred for settling all litigation with Scandipharm, Inc in the third quarter
of 1999. Excluding
11
the net of tax impact of these nonrecurring gains and charges, we would have
reported net income of $24.2 million, or $0.51 per diluted share, for the nine
months ended September 30, 2000 compared to $21.3 million, or $0.47 per diluted
share, for the same period in 1999. Factors that affected our operating results
are discussed below.
SALES AND GROSS PROFIT
Sales for the three months ended September 30, 2000 increased $3.7 million,
or 7%, over the same period in 1999. This increase is primarily due to an
increase in sales of one of our hospital products, Maxipime-Registered
Trademark-, and sales of Alocril-TM- and Ocuflox-Registered Trademark-, two
products that we began promoting in the second quarter of 2000. Gross profit,
or sales less cost of sales, for the three months ended September 30, 2000
increased $657,000, or 1%, over 1999. Gross profit as a percentage of sales
decreased from 81% for the three months ended September 30, 1999 to 77% for
the same period in 2000 due to a higher percentage of sales for the quarter
coming from products with lower margins. Sales for the nine months ended
September 30, 2000 increased $25.5 million, or 16%, over the same period in
1999. This increase is due to increased sales of each of our promoted
products, Maxipime, Azactam-Registered Trademark-, Ceclor-Registered
Trademark- CD and Nasarel-Registered Trademark-, as well as sales of Alocril
and Ocuflox. Gross profit for the nine months ended September 30, 2000
increased $17.3 million, or 13%, over 1999 as a result of the increase in
sales during the period. Gross profit as a percentage of sales decreased from
80% for the nine months ended September 30, 1999 to 79% for the same period in
2000.
CONTRACT REVENUE
Contract revenue relates primarily to amounts received by us for development
work we perform on our Spiros pulmonary drug delivery system, as well as
milestone and technology access payments, under agreements with Spiros Corp. II
and Eli Lilly & Company. Contract revenues for the three months ended September
30, 2000 were $12.1 million, of which $6.9 million was from Spiros Corp. II, as
compared to $17.3 million for 1999, of which $14 million was from Spiros Corp.
II. Contract revenues for the nine months ended September 30, 2000 were $51.2
million, of which $36.1 million was from Spiros Corp. II, as compared to $50.1
million for 1999, of which $38.8 million was from Spiros Corp. II. Contract
revenues may fluctuate from period to period based on the level of research
funding received as well as the achievement of milestones and receipt of
technology access payments from our partners. As a result of our acquisition of
Spiros Corp. II on August 31, 2000, we no longer receive contract revenue from
Spiros Corp. II.
CLINICAL, DEVELOPMENT AND REGULATORY EXPENSES
Clinical, development and regulatory expenses for the three months ended
September 30, 2000 remained consistent at $13 million compared to the same
period in 1999, and increased $7 million, or 19%, for the nine months ended
September 30, 2000 over 1999. This increase is due to increased development
activity conducted under the agreements covering the use of various compounds
with Spiros as discussed above. As previously announced, clinical, development
and regulatory expenses have declined since the second quarter of 2000 as we
began implementing the refocused strategy described above in "Recent
Developments."
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
12
Selling, general and administrative expenses for the three months ended
September 30, 2000 increased $8.6 million, or 25%, over 1999 and increased as a
percentage of total revenues from 48% in 1999 to 61% in 2000. The dollar and
percentage increases relate primarily to an increase in sales and marketing
costs to promote our hospital products. Selling, general and administrative
expenses for the nine months ended September 30, 2000 increased $20.5 million,
or 22%, over 1999 and increased as a percentage of total revenues from 45% to
49%. These increases also relate primarily to an increase in sales and marketing
costs to promote our hospital products.
PRODUCT RIGHTS AMORTIZATION
Product rights amortization for the three months ended September 30, 2000
increased $698,000, or 14%, over 1999 and increased $1.8 million, or 12%, for
the nine months ended September 30, 2000 over 1999. These increases are due
to the amortization of specific product rights that increased due to
additional contingent product acquisition payments being made after September
30, 1999.
CHARGES FOR ACQUIRED IN-PROCESS TECHNOLOGY, RESTRUCTURING AND MERGER EXPENSES
As discussed above in "Recent Developments," we incurred charges during the
third quarter of 2000 related to unusual or nonrecurring events. In
connection with the acquisition of Spiros Corp. II, we recorded a charge of
$87.9 million for the portion of the purchase price allocated to in-process
technology.
We also recorded restructuring charges totaling $14.2 million relating to our
decision to discontinue all motorized Spiros cassette development programs.
The restructuring charges are for employee severance costs, the write-down
for the impairment of property and equipment, and contract termination costs.
Finally, we incurred $1.1 million of expenses relating to our merger with
Elan. Additional expenses totaling approximately $15 million will be incurred
in the fourth quarter of 2000 upon consummation of the merger.
OTHER INCOME
Other income increased approximately $4.3 million for the three months ended
September 30, 2000 over 1999 due primarily to the $3.5 million charge to other
expense for the settlement of Scandipharm litigation in the third quarter of
1999. Other income increased $9.1 million for the nine months ended September
30, 2000 over 1999 due primarily to a $3.5 million pre-tax gain on the sale of a
long-term investment recognized in the first quarter of 2000 as well as the $3.5
million litigation settlement in the third quarter of 1999.
PROVISION (BENEFIT) FOR INCOME TAXES
The company recorded a $400,000 expense for income taxes for the nine months
ended September 30, 2000 as compared to an effective tax rate of 34% or $9.8
million expense for the same period in 1999. The decrease is attributable to the
tax loss position of the company for the nine months ending September 30, 2000
resulting primarily from tax deductions arising as a result of our acquisition
of Spiros Corp. II.
LIQUIDITY AND CAPITAL RESOURCES
Cash, cash equivalents and short-term investments decreased by $24.2 million
from $274.4 million at December 31, 1999 to $250.2 million at September 30,
2000. This decrease is due to cash paid in conjunction with our merger with
Spiros Corp. II and cash used for capital expenditures, offset by cash provided
by operating activities and proceeds from the sale of a long-term investment.
Working capital decreased by $56.3 million from $255.9 million at December 31,
1999 to $199.6 million at September 30, 2000.
We have outstanding $287.5 million principal amount of notes due July 15, 2002
with interest payable semiannually at a coupon rate of 3.5%. The notes are
convertible, at the option of the holder, into shares of common stock at any
time prior to maturity or redemption at a conversion price of $50.635 per share.
The notes contain a change in control provision that became effective upon
our merger with Elan. Under this provision, holders of the notes have the
right, for a limited period of time, to require us to repurchase their notes
for their face value plus accrued interest. The holders of the notes must
exercise this right within 40 days from the consummation of the merger, which
occurrred on November 9, 2000.
13
In addition to the notes, as of September 30, 2000, we had outstanding an
aggregate of $62.6 million in current and other long-term obligations related to
our product acquisitions, of which $2 million is to be paid during the next 12
months. As of September 30, 2000, additional payments totaling approximately
$155 million, estimated based on historical sales levels of the related
products, are contingent upon the levels of future sales of specified products,
and approximately $55 million are contingent upon the continued absence of
competing formulations of specified products as defined in the respective
acquisition and licensing agreements. These contingent amounts are payable
through 2004, including approximately $60 million contingently due within the
next 12 months.
We anticipate that our existing capital resources and cash generated from
operations will be sufficient to finance our operations through at least the
next 12 months. Product or company acquisitions or in-licensing opportunities,
however, may require significant additional capital resources. Such additional
capital resources may not be available when needed or on terms acceptable to us.
We are actively pursuing the acquisition of rights to products and/or companies
that may require the use of substantial capital resources; however, there are no
present agreements or commitments for any such acquisitions.
RISKS AND UNCERTAINTIES
FORWARD-LOOKING STATEMENTS. We caution readers that the statements in this
quarterly report that are not descriptions of historical facts may be
forward-looking statements that are subject to risks and uncertainties. Actual
results could differ materially from those currently anticipated due to a number
of factors, including those identified below.
WE INTEND TO CONTINUE TO PURSUE OUR STRATEGY OF ACQUIRING COMPLEMENTARY PRODUCTS
WHICH COULD REQUIRE THE USE OF SIGNIFICANT CAPITAL RESOURCES AND DIVERT OUR
MANAGEMENT'S ATTENTION.
As part of our business strategy, we intend to continue to pursue the
acquisition of complementary products. These acquisitions could require the use
of a large amount of our available capital resources. For example, in December
1998, we acquired Maxipime and Azactam from Bristol-Myers Squibb Company for an
initial payment of $60 million, a payment of $70 million due in 2003 and
additional contingent payment amounts. We may not be
14
successful in identifying appropriate acquisition candidates in the future. If
an appropriate acquisition candidate is identified, we may be unable to
successfully negotiate the terms of any acquisition. Negotiation of potential
acquisition targets could also divert our management's time and resources.
Further, depending on the acquisition opportunities available and our use of
existing funds to satisfy existing capital and operating needs, we may need to
raise additional funds to finance these transactions. If adequate funds are not
available when needed on terms acceptable to us, our ability to complete
acquisitions could be limited. Our sales force may not be able to successfully
market and sell any new products for any number of reasons. These include the
refusal of third-party medical payors to agree to provide reimbursement for the
products at a level sufficient for us to achieve market acceptance of the
products, or our inability to maintain sufficient price levels for the products
to enable us to realize an appropriate return on our investment.
IF SALES OF ANY ONE OR MORE OF OUR KEY PRODUCTS DECREASE, OUR RESULTS OF
OPERATIONS COULD BE ADVERSELY AFFECTED.
Our revenues and earnings are primarily attributable to a limited number of
key products. We believe that revenues from our key products will continue to
constitute the majority of our revenues for the foreseeable future.
Accordingly, any factor adversely affecting either the availability of or
demand for these promoted products, or the market or pricing for these
products, would adversely affect our business and our results of operations.
For example, each of our promoted products could be rendered obsolete or
uneconomical by regulatory or competitive changes. Also, the marketing and
sale of our promoted products could be adversely affected by other factors,
including:
- - manufacturing or supply interruptions;
- - the development of new competitive pharmaceuticals to treat the conditions
addressed by our promoted products;
- - factors affecting the cost of production, marketing or pricing actions by
one or more of our competitors;
- - changes in the prescribing practices of our target physicians;
- - changes in the reimbursement policies of third-party payors;
- - product liability claims; or
- - suspension of regulatory approvals required to manufacture and market our
products.
SEASONALITY AND THE TIMING AND SEVERITY OF THE WINTER COLD AND FLU SEASON CAN
HAVE AN ADVERSE EFFECT ON OUR OPERATING RESULTS.
Historically, as a result of variations in the timing and severity of the winter
cold and flu season, industry-wide demand for our respiratory products has been
stronger in the first and fourth quarters than in the second and third quarters
of the year. In addition, variations in the timing and severity of the winter
cold and flu season have influenced our results of operations in the past and
may influence them again in the future. For example, the short flu season during
the first quarter of 2000 negatively impacted sales of Ceclor CD.
15
WE NEED TO BUILD A DERMATOLOGICAL SALES FORCE TO MARKET OUR NEWLY ACQUIRED
DERMATOLOGICAL PRODUCTS AND TO COMPETE SUCCESSFULLY IN THE SPECIALIZED
DERMATOLOGICAL MARKET.
In September 2000, we signed an agreement with Glaxo Wellcome Inc. to become
Glaxo's exclusive U.S. distributor of Cutivate-Registered Trademark-,
Temovate-Registered Trademark-, Aclovate-Registered Trademark-,
Oxistat-Registered Trademark-, and Emgel-Registered Trademark-, our first
acquisition of dermatological products. By early 2001, we intend to build a
sales force of approximately 75 sales and marketing professionals focused on
approximately 5,000 dermatologists responsible for the majority of the
prescriptions in this specialized market. The dermatology market is a new
specialized market for us and we have had no previous sales experience in this
market. We may not be successful in our efforts to hire qualified field sales
representatives with the necessary experience selling to dermatologists. Our
success with these products in this new specialized market is dependent upon
effectively building this sales and marketing capability. If we are not able to
effectively promote these products our pharmaceutical sales could be reduced.
OUR RECENT ACQUISITION OF SPIROS DEVELOPMENT CORPORATION II, INC. WILL
SIGNIFICANTLY REDUCE OUR CONTRACT REVENUES AND RESULTED IN A MATERIAL CHARGE TO
OUR EARNINGS IN THE THIRD QUARTER OF 2000, THE PERIOD IN WHICH THE MERGER WAS
COMPLETED.
We recorded contract revenue for payments Spiros Corp. II made for
development costs that we incurred on its behalf and for technology access
fees. Our contract revenues from Spiros Corp. II totaled $55.5 million for
the year ended December 31, 1999 and $36.1 million for the nine months ended
September 30, 2000. The merger will result in a significant reduction of
contract revenue to us. In addition, we recorded a $87.9 million charge for
acquired in-process technology in the third quarter of 2000, the period in
which the merger was completed.
COMPETITION FOR THE ACQUISITION OF RIGHTS TO NEW PRODUCTS AND TECHNOLOGIES MAY
PREVENT US FROM ACHIEVING TARGETED GROWTH RATES.
Our strategy for growth is dependent, in part, on our ability to continue to
acquire or in-license new products and technologies on acceptable terms, such as
our October 2000 acquisition of exclusive U.S. distribution rights to five
dermatology products from Glaxo Wellcome, Inc. The failure to successfully
acquire or market new products would limit the future growth of our business.
Other companies, including some with substantially greater resources, are
competing with us for the rights to such products. We may not be able to acquire
additional products on acceptable terms, or at all.
WE MAY NOT BE SUCCESSFUL IN ATTRACTING COLLABORATORS TO DEVELOP OUR SPIROS
SYSTEM.
In connection with our refocused business strategy, we intend to commit a
targeted level of funding to the development of our Spiros pulmonary drug
delivery system and, following exhaustion of those funds, to pursue further
development of Spiros solely in collaboration with third parties. We may not be
successful in attracting third-party collaborators on acceptable terms, or at
all. Further, any third party collaborator we do attract may pursue other
initiatives which compete with the Spiros development program. If we are not
successful in attracting collaborative partners or establishing collaborations
in the near future on acceptable terms, we could terminate the development of
our Spiros systems.
16
ALTERNATIVE SUPPLIERS TO OUR THIRD-PARTY MANUFACTURERS MAY NOT BE AVAILABLE ON A
TIMELY BASIS, WHICH COULD IMPAIR OUR ABILITY TO MEET OUR SHIPPING REQUIREMENTS
AND RESULT IN REDUCED PHARMACEUTICAL SALES.
We do not have the capability to manufacture the products we currently sell. As
a result, we are dependent on third-party contract manufacturers for the supply
of all of our products. These products are supplied under short-term and
long-term supply agreements. If these manufacturers were unable to supply
product, it could be difficult for us to secure alternative sources of supply in
a timely manner. If we were unable to obtain quality products from any of our
third-party manufacturers in a timely fashion, we would be required to form
relationships with new manufacturers. The process may involve delays as a result
of the need for us to negotiate and enter into contracts with the manufacturers,
as well as the regulatory process involved in obtaining approval for manufacture
of these products by the new manufacturer. This would impair our ability to ship
product to our customers and would result in reduced pharmaceutical sales and
increased expenses associated with identifying and qualifying alternate
manufacturers.
IF WE LOSE KEY PERSONNEL OR ARE UNABLE TO ATTRACT AND RETAIN QUALIFIED PERSONNEL
AS NECESSARY, IT COULD IMPAIR OUR OPERATIONS AND DELAY OUR SPIROS PROGRAM.
Our success depends on the principal members of our scientific and management
staff. If we lose the services of one or more of these people, we may be unable
to achieve our development objectives. None of our employees, other than Cam L.
Garner, our chairman and chief executive officer, and Robert S. Whitehead, our
president and chief operating officer, are currently employed under an
employment contract. Both Mr. Garner and Mr. Whitehead are employed under
separate letter agreements with expiration dates of May 31, 2001 and July 1,
2001. Each contract automatically renews for successive one-year periods.
We may not be able to recruit and retain management and qualified scientific
personnel to perform research and development work in the future due to intense
competition for personnel among pharmaceutical and other technology-based
businesses, universities and research institutions, particularly in the San
Diego area. Recruiting and retaining experienced sales personnel is equally
difficult but essential to the success of our operations. As of September 30,
2000, we had approximately 1,000 employees, of whom 224 were in research and
development and 575 were in sales and marketing.
WE MAY HAVE TO REFINANCE OUR $287.5 MILLION OF OUTSTANDING NOTES ON TERMS THAT
MAY NOT BE ATTRACTIVE.
We issued $287.5 million principal amount of 3-1/2% convertible subordinated
notes due July 2002. We may desire to refinance the notes at a time when we
are not able to do so or on terms that are not attractive to us. Any
inability to refinance the notes on attractive terms would increase our
borrowing costs and reduce our earnings, or result in significant dilution to
our stockholders and decrease the market value of our common stock. The notes
contain a change in control provision that became effective upon our merger
with Elan. Under this provision, holders of the notes have the right, for a
limited period of time, to require us to repurchase their notes for the face
value plus accrued interest. The holders of the notes must exercise this
right within 40 days from the consummation of the merger, which occurred on
November 9, 2000.
GROSS MARGINS ON PHARMACEUTICAL PRODUCTS MAY DECREASE AS A RESULT OF COMPETITIVE
PRESSURES OR HEALTHCARE REFORM EFFORTS.
17
We do not have proprietary protection for several of the products we sell, and
other pharmaceutical companies sell substitutes for such products. In addition,
the average selling prices for many of our products may decline over time due to
competitive and reimbursement pressures. We may not be successful in any efforts
we take to mitigate the effect of a decline in average selling prices. Our
commercial success will depend in part on the price that third-party healthcare
payors, such as government and private health insurers and managed-care
organizations, are willing to pay for our products. These third-party payors
continually challenge the pricing of medical products and services. Further,
many managed-care organizations limit the number of pharmaceutical products they
approve for reimbursement. The competition between pharmaceutical companies to
get products approved for reimbursement may also result in downward pricing
pressure in the industry. In addition, the trend toward managed health care in
the United States, as well as legislative proposals to reform health care and
government insurance programs could significantly influence the purchase of
pharmaceutical products, resulting in lower prices and a reduction in product
demand. A decline in the average selling prices would reduce our gross margins
and negatively impact our business.
OUR INABILITY TO OBTAIN PATENTS AND PROTECT OUR PROPRIETARY RIGHTS COULD HAVE A
DETRIMENTAL EFFECT ON OUR COMMERCIAL SUCCESS.
Our ability to obtain patents on current or future products or technologies,
defend our patents, maintain trade secrets and operate without infringing upon
the proprietary rights of others, both in the United States and abroad, is
uncertain. Patents may never issue from the applications we have filed. Even if
issued or licensed to us, patents may not be enforceable, provide substantial
protection from competition or be of commercial benefit to us. Further, we may
not possess the financial resources necessary to enforce or defend any patent
rights we obtain. Our success will also depend upon avoiding the infringement of
patents issued to competitors and upon maintaining the technology licenses upon
which some of our products are based. Litigation, which is costly and may
distract our management's attention, may be necessary to enforce our patent and
license rights or to determine the scope and validity of proprietary rights of
third parties. If any of our products or technologies are found to infringe upon
patents or other rights owned by third parties, we could be required to obtain a
license to continue to manufacture or market these products or technologies.
Licenses to these patent rights may not be available to us on commercially
reasonable terms, or at all. If we do not obtain these licenses, we could
encounter delays in marketing affected products or technologies or we could find
that the development, manufacture or sale of products requiring these licenses
is not possible.
WE ARE INVOLVED IN A SECURITIES CLASS ACTION LAWSUIT AND CANNOT PREDICT THE
ULTIMATE OUTCOME OR POSSIBLE LOSS THAT COULD RESULT FROM THAT LAWSUIT.
In January 1999, several securities class action suits were filed against us and
a number of our current or former officers and directors in the U. S. District
Court for the Southern District of California. These lawsuits, which have been
consolidated, allege violations of the federal securities laws, and purport to
seek damages on behalf of a class of stockholders who purchased our common stock
during a defined period. The ultimate outcome of this lawsuit and any other
litigation in which we may become involved cannot be predicted. An adverse
outcome in any of these actions could require us to make a significant cash
payment and could reduce our earnings.
18
PRODUCT LIABILITY CLAIMS MAY REDUCE DEMAND FOR OUR PRODUCTS OR SUBJECT US TO
DAMAGE CLAIMS THAT EXCEED OUR INSURANCE COVERAGE.
We face an inherent business risk of exposure to product liability claims in the
event that the use of our products or technologies is alleged to have resulted
in adverse effects. Such liability might result from claims made directly by
healthcare institutions, contract laboratories or others selling or using our
products. We currently maintain product liability insurance coverage of $30
million; however, any product liability claim in excess of our insurance
coverage would have to be paid out of our cash reserves which would reduce our
capital resources. The level or breadth of any insurance coverage that we
currently maintain may not be sufficient to cover potential claims. We currently
have no plans to expand or increase our product liability insurance coverage.
Adequate insurance coverage may not be available in the future at acceptable
costs, if at all, or in sufficient amounts to protect us against any such
liability.
MANY POTENTIAL COMPETITORS WHO HAVE GREATER RESOURCES AND EXPERIENCE THAN US MAY
DEVELOP PRODUCTS AND TECHNOLOGIES THAT MAKE OUR PRODUCTS AND TECHNOLOGIES
OBSOLETE.
Many companies, including large pharmaceutical firms with financial and
marketing resources and development capabilities substantially greater than
ours, are developing, marketing and selling products that compete with those
that we offer. Our current competitors include Bristol-Myers Squibb Company,
Schering Plough, Hoffman LaRoche, American Home Products and Glaxo Wellcome. Our
failure to effectively respond to the competitive pressures of our industry
would have an adverse effect on our business and results of operations. The
selling prices of pharmaceutical products typically decline as competition
increases. Further, other products now in use or under development by others may
be more effective than our current or future products. The industry is
characterized by rapid technological change, and competitors may develop their
products more rapidly than we do. Competitors may also be able to complete the
regulatory process sooner, and therefore, may begin to market their products in
advance of our products.
BEFORE ANY SPIROS PRODUCT CAN BE MARKETED, THE FDA MUST APPROVE EACH PRODUCT,
WHICH IS A DIFFICULT AND TIME-CONSUMING PROCESS AND IS NOT ASSURED.
The development, testing, manufacturing and marketing of pharmaceutical products
are subject to extensive regulation by governmental authorities, including the
FDA. The FDA must approve each Spiros product before that product can be
manufactured or marketed for commercial sale. The review and approval process
mandated by the FDA is very rigorous, requiring extensive preclinical and
clinical testing as well as determining manufacturing capability and product
performance. The FDA may never approve any of the Spiros products, which may be
developed in collaboration with third parties, and this may negatively affect
our revenues.
WE COULD HAVE DIFFICULTY COMMERCIALIZING SPIROS PRODUCTS IF EITHER WE, OR ANY
THIRD-PARTY MANUFACTURER UPON WHOM WE RELY, DO NOT SUCCESSFULLY EXPAND
MANUFACTURING CAPABILITY AND COMPLY WITH GOVERNMENTAL REGULATIONS.
We will need to significantly expand our current manufacturing operations and
comply with regulations prescribed by various regulatory agencies to achieve the
quality and required levels of production of Spiros products to be commercially
successful. In addition, our manufacturing
19
facility must be registered with and licensed by various regulatory authorities
and must comply with current good manufacturing practice requirements prescribed
by the FDA and other governmental authorities. We intend to utilize third
parties to produce components of and to assemble the Spiros inhaler. Those third
parties have only produced limited quantities of components and assembled
limited numbers of inhalers. The third parties will be required to significantly
scale up their activities and to produce components which meet applicable
specifications on a timely and consistent basis. Those third parties may not be
successful in attaining acceptable service levels or meeting regulatory
requirements which would have an adverse effect on our ability to commercialize
the Spiros products.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We invest our excess cash and short-term investments in U.S. government and
corporate debt securities with high quality credit ratings and maturities of
less than two years. These investments are not held for trading or other
speculative purposes. Changes in interest rates affect the investment income we
earn on our investments and, therefore, impact our cash flows and results of
operations. At September 30, 2000, we had outstanding subordinated notes
totaling $287.5 million that mature in July 2002. The notes have a fixed
interest rate of 3 1/2 percent. Accordingly, while changes in interest rates may
affect the fair market value of the notes, they do not impact our cash flows or
results of operations. As of September 30, 2000, the notes had a fair market
value of $278.2 million. We are not exposed to risks for changes in foreign
currency exchange rates, commodity prices, or any other market rates.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See note 5 to the consolidated financial statements.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
1) 2.1 Agreement and Plan of Merger (the "Merger Agreement"), dated
as of September 10, 2000, by and among Elan Corporation, plc,
a public limited company organized under the laws of Ireland
("Elan"), Carbon Acquisition Corp., a Delaware corporation and
a wholly owned subsidiary of Elan, and Dura Pharmaceuticals,
Inc., a Delaware corporation ("Dura"). (Exhibits to the Merger
Agreement have been omitted and will be supplementally
provided to the SEC upon request.)
1) 4.1 Second Amendment to the Rights Agreement dated September 10,
2000 between Dura and ChaseMellon Shareholder Services, L.L.C.
11 Statements re Computations of Net Income Per Share
27 Financial Data Schedule
1) Incorporated by reference to the Company's current report on Form
8-K filed September 11, 2000.
(b) Reports on Form 8-K
On July 25, 2000, we filed a current report on Form 8-K dated July 24, 2000,
reporting the implementation of the refocused strategy to enhance stockholder
value.
On July 27, 2000, we filed a current report on Form 8-K dated July 27, 2000,
reporting that we announced our earnings for the second quarter of 2000.
On September 11, 2000, we filed a current report on Form 8-K dated September 10,
2000, reporting that we entered into an agreement and plan of merger between
Elan Corporation, plc and Carbon Acquisition Corp., a Delaware corporation and a
wholly owned subsidiary of Elan.
On September 15, 2000, we filed a current report on Form 8-K dated August 31,
2000, reporting that we completed the acquisition of Spiros Development
Corporation II, Inc.
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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 THEREUNTO DULY AUTHORIZED.
DURA PHARMACEUTICALS, INC.
DATE NOVEMBER 13, 2000 /s/ MICHAEL T. BORER
- ----------------------- ---------------------
(MICHAEL T. BORER)
----------------
Senior Vice President and Chief
Financial Officer
(Principal Financial and Accounting
Officer)
22