SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
May 7, 1997
(Date of Report - earliest event reported)
DURA PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
CALIFORNIA 000-19809 95-3645543
(State or other jurisdiction (Commission (I.R.S.Employer
of incorporation) File Number) Identification No.)
5880 PACIFIC CENTER BLVD., SAN DIEGO, CALIFORNIA 92121
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE IS (619) 457-2553
Page 1
Exhibit Index on Page 10
Item 2. Acquisition or Disposition of Assets
a. On May 7, 1997, Dura Pharmaceuticals, Inc. (the "Company") acquired from
Syntex (USA) Inc., and other members of the Roche Group ("Syntex"), U.S.
rights to the intranasal steroid products Nasarel-Registered Trademark- and
Nasalide-Registered Trademark- (flunisolide). The purchase price consisted
of $70.0 million paid in cash at closing. Additional future contingent
payments totaling $15.0 million are due from December 1997 through December
1998, subject to the products remaining without a competing nasal formulation
of flunisolide.
The Nasalide-Registered Trademark- and Nasarel-Registered Trademark- products
generated combined U.S. sales for Syntex in 1994, 1995, and 1996 of
approximately $22.3 million, $16.9 and $20.5 million, respectively, and direct
product cost of sales in 1994, 1995, and 1996 of approximately $1.6 million,
$863,000, and $944,000, respectively.
Nasalide-Registered Trademark- and Nasarel-Registered Trademark- products will
be marketed by the Company's national sales force to respiratory physicians. The
Company expects to increase the number of its field sales force personnel to
support the addition of Nasalide-Registered Trademark- and Nasarel-Registered
Trademark- to its product line.
The Company has entered into agreements with third parties for their
manufacture and supply of the active ingredient and finished dosage forms
related to both products. The Company does not expect these manufacturing and
supply agreements to significantly impact the products' future cost of sales
as a percent of sales as compared to historical percentages.
Item 7. Financial Statements and Exhibits
b. Pro Forma Financial Information:
The following pro forma balance sheet of the Company as of March 31, 1997
adjusts the financial position of the Company as if the acquisition of the
U.S. rights to Nasalide-Registered Trademark- and Nasarel-Registered
Trademark- had taken place as of that date. The pro forma statements of
operations for the year ended December 31, 1996 and for the three months
ended March 31, 1997 combine the operations of the Company and the current
acquisition of the U.S. rights to Nasalide-Registered Trademark- and
Nasarel-Registered Trademark- and the previously reported acquisitions of
certain Entex-Registered Trademark-products in July 1996 and of the patented
antibiotics Ceclor-Registered Trademark- CD and Keftab-Registered Trademark-
in September 1996, as if the acquisitions had taken place on January 1, 1996.
The Company's financial information included in the pro forma statement of
operations for the year ended December 31, 1996 was previously reported in
the Company's annual report on Form 10-K for the year ended December 31,
1996. The Company's historical financial information included in the pro
forma balance sheet and the pro forma statement of operations as of and for
the three months ended March 31, 1997 was previously reported in the
Company's quarterly report on Form 10-Q for the three months ended March 31,
1997. In the opinion of management, all pro forma adjustments necessary to
state fairly such pro forma financial information have been made.
2
The pro forma balance sheet and statements of operations should be read in
conjunction with the notes included in this report. The pro forma financial
information is not necessarily indicative of what the actual financial
results would have been had the acquisitions occurred on January 1, 1996 or
March 31, 1997. In addition, the pro forma financial information does not
purport to indicate the results of future operations or financial position of
the Company from the acquisition date forward.
c. Exhibits:
2.1 Syntex Asset Purchase Agreement dated March 27, 1997 (the "Syntex
Agreement") between the Company and Syntex. The schedules
referenced in the Syntex Agreement have not been included because
they contain information that is not material to an investment
decision and is otherwise discussed in the agreement; they will
be provided supplementally to the Commission upon request.
2.2 SPIL Asset Purchase Agreement dated March 27, 1997 (the "SPIL
Agreement") between the Company and Syntex Pharmaceuticals
International Limited. The schedules referenced in the SPIL
Agreement have not been included because they contain
information that is not material to an investment
decision and is otherwise discussed in the agreement; they will
be provided supplementally to the Commission upon request.
99.1 Press Release dated May 7, 1997 issued by the Company.
3
DURA PHARMACEUTICALS, INC. ITEM 7B.
PRO FORMA BALANCE SHEET (UNAUDITED)
MARCH 31, 1997
IN THOUSANDS
- --------------------------------------------------------------------------------
Pro Forma
Adjustments
Increase
ASSETS Actual (Decrease) Pro Forma
------ ---------- ---------
Current Assets:
Cash and cash equivalents $ 63,059 $ 63,059
Short-term investments 193,789 (70,000) a. 123,789
Accounts and other receivables 19,027 19,027
Inventory 8,305 8,305
--------- -------- ---------
Total current assets 284,180 (70,000) 214,180
Property 30,765 30,765
License Agreements and Product Rights 184,485 70,000 a. 254,485
Goodwill 6,517 6,517
Other 12,200 12,200
--------- -------- ---------
Total $ 518,147 $ 0 $ 518,147
--------- -------- ---------
--------- -------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and acrrued liabilities $ 27,269 $ 27,269
Current portion of long-term obligations 26,346 26,346
--------- -------- ---------
Total current liabilities 53,615 53,615
Long-Term Obligations: 6,789 6,789
Other Non-Current Liabilities 2,710 2,710
--------- -------- ---------
Total liabilities 63,114 63,114
--------- -------- ---------
Shareholders' Equity:
Common stock 528,069 528,069
Accumulated deficit (70,205) (70,205)
Unrealized loss on investments (503) (503)
Warrant subscriptions receivable (2,328) (2,328)
--------- -------- ---------
Total shareholders' equity 455,033 455,033
--------- -------- ---------
Total $ 518,147 $ 0 $ 518,147
--------- -------- ---------
--------- -------- ---------
See notes to pro forma financial statements for description of pro forma
adjustments.
4
DURA PHARMACEUTICALS, INC.
PRO FORMA STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1997
IN THOUSANDS, EXCEPT PER SHARE DATA
- --------------------------------------------------------------------------------
Pro Forma Adjustments
Increase (Decrease)
-------------------
Other Syntex
Actual Acquisitions Acquisition Pro Forma
------ ------------ ----------- ---------
REVENUES:
Sales $ 33,935 $ 4,860 b. $ 38,795
Contract 6,958 6,958
--------- -------- ---------
Total revenues 40,893 4,860 45,753
--------- -------- ---------
OPERATING COSTS AND EXPENSES:
Cost of sales 7,970 243 b. 8,213
Clinical, development and regulatory 5,761 5,761
Selling, general and administrative 15,992 1,915 b.,c. 17,907
--------- -------- ---------
Total operating costs and expenses 29,723 2,158 31,881
--------- -------- ---------
OPERATING INCOME 11,170 2,702 13,872
--------- -------- ---------
OTHER :
Interest income 3,387 (962) d. 2,425
Other (net) (153) (153)
--------- -------- ---------
Total other 3,234 (962) 2,272
--------- -------- ---------
INCOME BEFORE INCOME TAXES 14,404 1,740 16,144
PROVISION FOR INCOME TAXES 5,617 696 e. 6,313
--------- -------- ---------
NET INCOME $ 8,787 $ 1,044 $ 9,831
--------- -------- ---------
--------- -------- ---------
NET INCOME PER SHARE $0.19 $0.21
WEIGHTED AVERAGE COMMON AND
COMMON EQUIVALENT SHARES 47,240 47,240
See notes to pro forma financial statements for description of pro forma
adjustments.
5
DURA PHARMACEUTICALS, INC.
PRO FORMA STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1996
IN THOUSANDS, EXCEPT PER SHARE DATA
- --------------------------------------------------------------------------------
Pro Forma Adjustments
Increase (Decrease)
-------------------
Actual Other Syntex Pro Forma
------
Acquisitions Acquisition Results
------------ ----------- -------
REVENUES:
Sales $ 79,563 $ 30,537 f. $ 20,510 b. $ 130,610
Contract 24,556 24,556
-------- --------- -------- ---------
Total revenues 104,119 30,537 20,510 155,166
-------- --------- -------- ---------
OPERATING COSTS AND EXPENSES:
Cost of sales 21,301 4,168 f. 944 b. 26,413
Clinical, development and regulatory 18,540 18,540
Selling, general and administrative 42,631 9,527 f.,g. 8,008 b.,c. 60,166
-------- --------- -------- ---------
Total operating costs and expenses 82,472 13,695 8,952 105,119
-------- --------- -------- ---------
OPERATING INCOME 21,647 16,842 11,558 50,047
-------- --------- -------- ---------
OTHER :
Interest income 6,897 (1,238) h. (3,850) d. 1,809
Other (net) (677) (677)
------ --------- --------- -----
Total other 6,220 (1,238) (3,850) 1,132
------ --------- --------- -----
INCOME BEFORE INCOME TAXES 27,867 15,604 7,708 51,179
PROVISION FOR INCOME TAXES 3,539 6,242 i. 3,083 e. 12,864
-------- --------- -------- ---------
NET INCOME $ 24,328 $ 9,362 $ 4,625 $ 38,315
-------- --------- -------- ---------
-------- --------- -------- ---------
NET INCOME PER SHARE $ 0.60 $ 0.95
WEIGHTED AVERAGE COMMON AND
COMMON EQUIVALENT SHARES 40,479 40,479
See notes to pro forma financial statements for description of pro forma adjustments.
6
DURA PHARMACEUTICALS, INC.
NOTES TO PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
IN THOUSANDS
On May 7, 1997, Dura Pharmaceuticals, Inc. ("Dura" or the "Company")
acquired from Syntex (U.S.A.), Inc. and other members of the Rouche Group U.S.
rights to the intranasal steroid products Nasarel-Registered Trademark- and
Nasalide-Registered Trademark- (flunisolide). The following pro forma
adjustments reflect the acquisition as if it had occurred on January 1, 1996
for the pro forma statements of operations and on March 31, 1997 for the pro
forma balance sheet (all amounts in thousands).
a. Adjustment to record the acquisition of product rights.
License agreements and product rights $70,000
Short-term investments $70,000
b. Adjustments to record product sales, cost of sales and related product
activities.
Three Months Ended March 31, 1997
---------------------------------
Cash - net $3,402
Cost of sales $ 243
Selling, general and administrative expenses $1,215
Sales revenues $ 4,860
Year Ended December 31, 1996
----------------------------
Cash - net $14,358
Cost of sales $ 944
Selling, general and administrative expenses $ 5,208
Sales revenues $ 20,510
c. Adjustment to amortize acquired product rights.
Three Months Ended March 31, 1997
---------------------------------
Amortization expense (SG&A) $700
Product rights $700
Year Ended December 31, 1996
----------------------------
Amortization expense (SG&A) $ 2,800
Product rights $ 2,800
d. Adjustment to record reduction in interest income for liquidation of short
term investments
Three Months Ended March 31, 1997
---------------------------------
Interest income $ 962
Short term investments $ 962
Year Ended December 31, 1996
----------------------------
Interest income $ 3,850
Short term investments $ 3,850
7
e. Adjustment to record provision for income taxes.
Three Months Ended March 31,1997
--------------------------------
Provision for income taxes $696
Cash $ 696
Year Ended December 31, 1996
----------------------------
Provision for income taxes $3,083
Cash $ 3,083
On September 5, 1996, the Company acquired from Eli Lilly and Company
("Lilly") the U.S. marketing rights to the patented antibiotics
Keftab-Registered Trademark- and Ceclor-Registered Trademark- CD for $100
million cash plus additional future contingent payments. On July 3, 1996,
the Company acquired from Procter & Gamble Pharmaceuticals, Inc. certain
Entex-Registered Trademark-products for $45 million in cash. The following
pro forma adjustments reflect the impact from these acquisitions as if they
had occurred on January 1, 1996. These pro forma adjustments do not reflect
any revenues or expenses for Ceclor-Registered Trademark- CD as this product
was launched after it was acquired by the Company (all amounts in thousands).
f. Adjustments to record product sales, cost of sales and related product
activities.
Year Ended December 31, 1996
----------------------------
Cash - net $18,735
Cost of sales $ 4,168
Selling, general and administrative expenses $ 7,634
Sales revenues $ 30,537
g. Adjustment to record amortization of acquired product rights.
Year Ended December 31, 1996
----------------------------
Amortization expense (SG&A) $1,893
Product rights $1,893
h. Adjustment to record reduction in interest income
for liquidation of short term investments used to
fund the acquisition of Entex products.
Year Ended December 31, 1996
----------------------------
Interest income $1,238
Short term investments $1,238
i. Adjustment to record provision for income taxes.
Year Ended December 31, 1996
----------------------------
Provision for income taxes $6,242
Cash $6,242
8
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report on Form 8-K to be signed on its behalf by
the undersigned hereunto duly authorized.
DURA PHARMACEUTICALS, INC.
Date: May 22, 1997 /S/ JAMES W. NEWMAN
------------- ------------------------
James W. Newman
Sr. Vice President, Finance and Administration
Chief Financial Officer
9
DURA PHARMACEUTICALS, INC.
FORM 8-K
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- ------------
2.1 Syntex Asset Purchase Agreement dated March 27, 1997 (the "Syntex
Agreement") between the Company and Syntex. The schedules
referenced in the Syntex Agreement have not been included because
they contain information that is not material to an investment
decision and is otherwise discussed in the agreement; they will
be provided supplementally to the Commission upon request.
2.2 SPIL Asset Purchase Agreement dated March 27, 1997 (the "SPIL
Agreement") between the Company and Syntex Pharmaceuticals
International Limited. The schedules referenced in the SPIL
Agreement have not been included because they contain
information that is not material to an investment
decision and is otherwise discussed in the agreement; they will
be provided supplementally to the Commission upon request.
99.1 Press Release dated May 7, 1997 issued by the Company.
10