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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
July 3, 1996
(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
(Total of 40 pages)
Exhibit Index located on page 10
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Item 2. Acquisition or Disposition of Assets
On June 17, 1996, Dura Pharmaceuticals, Inc. ("Dura" or the "Company")
signed an agreement with Procter & Gamble Pharmaceuticals, Inc. ("P&G") to
acquire the rights to the Entex(R) products, consisting of four prescription
upper respiratory drugs (the "Entex Products"). The acquisition closed on July
3, 1996. The purchase price of $45.0 million in cash consisted of $25.0 million
paid at closing and $20.0 million due on July 3, 1997.
The Entex Products generated U.S. and Canadian sales for P&G in 1993,
1994 and 1995 of approximately $64.8 million, $58.7 million and $42.4 million,
respectively, and direct product cost of sales in 1993, 1994 and 1995 of
approximately $4.4 million, $3.0 million and $3.1 million, respectively. P&G
will manufacture the Entex Products for the Company under a separate supply
agreement. The Company expects the supply agreement with P&G to increase the
Entex products' future cost of sales as a percent of sales revenue by
approximately six percent as compared to its historical percentages. The Entex
Products, which represent an extension of the Company's existing line of
prescription pharmaceuticals, will be promoted primarily through the
distribution of samples to the same respiratory physician specialists currently
targeted by the Company's existing national pharmaceutical sales force. The
Company does not expect future selling, general and administrative expenses,
exclusive of the sample costs and amortization of the acquired rights to the
Entex Products, to be impacted significantly from the selling of the Entex
Products.
P&G, located in Cincinnati, Ohio, is a manufacturer and marketer of
pharmaceutical products.
Item 7. Financial Statements and Exhibits
b. Pro Forma Financial Information:
The following pro forma balance sheet and statements of operations
combine Dura, the current acquisition of the Entex Products, the acquisition of
the Furadantin(R) product rights in May 1996, and the previously reported 1995
acquisitions of Health Script, Dura Delivery Systems, Inc., and the Rondec(R)
products (as reported in prior Current Reports on Form 8-K) as of March 31, 1996
and the results of their operations for the three months ended March 31, 1996
and the year ended December 31, 1995 as if the acquisitions had taken place on
January 1, 1995. The Dura financial information included in the pro forma
balance sheet as of March 31, 1996 and the pro forma statement of operations for
the three months ended March 31, 1996 was previously reported in Dura's Form
10-Q for the quarter ended March 31, 1996. The Dura financial information
included in the pro forma statement of operations for the year ended December
31, 1995 was previously reported in Dura's Form 10-K, as amended, for the year
ended December 31, 1995. In the opinion of management, all pro forma adjustments
necessary to state fairly such pro forma financial information have been made.
The per share data and weighted average number of common and common equivalent
shares have been adjusted to reflect the stock in the form of a 100% stock
dividend effective July 1, 1996. The computations of net income (loss) per share
are unchanged on a fully-diluted basis for all periods presented.
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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, 1995. 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 Agreement for Purchase and Sale of Entex Assets dated June 17,
1996 between Dura and P&G (the "Purchase Agreement"). The Exhibits and Schedules
referenced in the Purchase Agreement have not been included because they are
either disclosed in such agreement or would not be material to an investment
decision. They will be provided to the Commission upon request.
99.1 Press Release dated June 17, 1996 issued by Dura.
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DURA PHARMACEUTICALS, INC. ITEM 7b.
PRO FORMA BALANCE SHEET (UNAUDITED)
MARCH 31, 1996
IN THOUSANDS
Pro Forma
Adjustments
Increase Pro Forma
ASSETS Dura (Decrease) Results
Current Assets:
Cash and cash equivalents $ 21,008 $ 21,008
Short-term investments 40,972 (28,500) a.,d. 12,472
Accounts and other receivables 9,227 9,227
Inventory 3,540 3,540
Prepaid and other 527 527
---------- ----------- -----------
Total current assets 75,274 (28,500) 46,774
Property 17,623 17,623
License Agreements and Product Rights 38,639 52,000 a.,d. 90,639
Goodwill 6,970 6,970
Other 8,467 8,467
---------- ----------- -----------
TOTAL $ 146,973 $ 23,500 $ 170,473
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 8,717 $ 8,717
Accrued wages, taxes and benefits 1,540 1,540
Current portion of long-term obligations 6,311 $ 23,500 a.,d. 29,811
---------- ----------- -----------
Total current liabilities 16,568 23,500 40,068
---------- ----------- -----------
Long-Term Obligations:
Notes payable - bank 6,471 6,471
Other long-term obligations 8,974 8,974
---------- ----------- -----------
Total long-term obligations 15,445 15,445
Other Non-Current Liabilities 828 828
---------- ----------- -----------
Total liabilities 32,841 23,500 40,068
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Shareholders' Equity:
Common stock 217,354 217,354
Accumulated deficit (99,263) (99,263)
Unrealized loss on investments (38) (38)
Warrant subscriptions receivable (3,921) (3,921)
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Total shareholders' equity 114,132 114,132
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TOTAL $ 146,973 $ 23,500 $ 170,473
=========== ========== ==========
See notes to pro forma financial statements for description of pro forma
adjustments.
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DURA PHARMACEUTICALS, INC.
PRO FORMA STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1996
IN THOUSANDS, EXCEPT PER SHARE DATA
Pro Forma
Adjustments
Increase Pro Forma
Dura (Decrease) Results
REVENUES:
Sales $ 14,055 $ 8,785 b.,e. $ 22,840
Contract 4,532 4,532
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Total revenues 18,587 8,785 27,372
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OPERATING COSTS AND
EXPENSES:
Cost of sales 3,623 984 b.,e. 4,607
Clinical, development and regulatory 3,399 3,399
Selling, general and administrative 7,740 3,326 b.,c.,f. 11,066
Goodwill amortization 113 113
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Total operating costs and
expenses 14,875 4,310 19,185
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OPERATING INCOME 3,712 4,475 8,187
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OTHER :
Interest income 909 909
Interest expense (294) (294)
-------- -------- ---------
Total other 615 -0- 615
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INCOME BEFORE INCOME TAXES 4,327 4,475 8,802
PROVISION FOR INCOME TAXES 270 433 b.,e. 703
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NET INCOME $ 4,057 $ 4,042 $ 8,099
======== ======== ========
NET INCOME PER SHARE $ 0.11 $ 0.23
WEIGHTED AVERAGE COMMON
AND COMMON EQUIVALENT
SHARES 35,700 35,700
See notes to pro forma financial statements for description of pro forma
adjustments.
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DURA PHARMACEUTICALS, INC.
PRO FORMA STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1995
IN THOUSANDS, EXCEPT PER SHARE DATA
Pro Forma
Adjustments
Increase Pro Forma
Dura (Decrease) Results
REVENUES:
Sales $ 39,308 $51,871 b.,e. $91,179
Contract 12,194 (7,762) e. 4,432
------- -------- -------
Total revenues 51,502 44,109 95,611
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OPERATING COSTS AND
EXPENSES:
Cost of sales 10,618 5,374 b.,e. 15,992
Clinical, development and regulatory 8,408 311 e. 8,719
Selling, general and administrative 25,580 21,422 b.,c.,e.,f. 47,002
Goodwill amortization 375 86 h. 461
Charge for acquired in-process
technology and purchase options 43,773 (30,773) e. 13,000
------- -------- -------
Total operating costs and
expenses 88,754 (3,580) 85,174
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OPERATING INCOME (LOSS) (37,252) 47,689 10,437
------- -------- -------
OTHER :
Interest income 2,768 345 i. 3,113
Interest expense (906) (1,131) e.,g. (2,037)
Other income 18 18
------- -------- -------
Total other 1,880 (786) 1,094
------- -------- -------
INCOME (LOSS) BEFORE (35,372) 46,903 11,531
INCOME TAXES
PROVISION FOR INCOME TAXES 406 1,574 b.,e. 1,980
------- -------- -------
NET INCOME (LOSS) $(35,778) $ 45,329 $9,551
======== ======== ======
NET INCOME (LOSS) PER SHARE $ (1.53) $ 0.31
WEIGHTED AVERAGE COMMON
AND COMMON EQUIVALENT
SHARES 23,440 7,711 j.,k. 31,151
See notes to pro forma financial statements for description of pro forma
adjustments.
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DURA PHARMACEUTICALS, INC.
NOTES TO PRO FORMA FINANCIAL STATEMENTS (UNAUDITED) IN THOUSANDS
On June 17, 1996, Dura Pharmaceuticals, Inc. ("Dura" or the "Company") signed an
agreement with Procter & Gamble Pharmaceuticals, Inc. ("P&G") to acquire the
rights to the Entex(R) Products, consisting of four prescription upper
respiratory drugs (the "Entex products"). The acquisition closed on July 3,
1996. The following pro forma adjustments reflect the impact from the
acquisition as if it had occurred on January 1, 1995.
a. Adjustment to record acquired product rights.
Product rights $ 45,000
Short-term investments $ 25,000
Other obligations $ 20,000
b. Adjustments to record Entex product sales, cost
of sales and related product activities.
Three Months Ended March 31, 1996
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Cash - net $ 6,300
Cost of sales $ 830
Marketing expenses (SG&A) $ 590
Provision for income taxes $ 402
Sales revenues $ 8,122
Year Ended December 31, 1995
----------------------------
Cash - net $32,791
Cost of sales $ 3,138
Marketing expenses (SG&A) $ 5,104
Provision for income taxes $ 1,366
Sales revenues $ 42,397
c. Adjustments to amortize acquired product rights.
Three Months Ended March 31, 1996
---------------------------------
Amortization expense (SG&A) $ 2,648
Product rights $ 2,648
Year Ended December 31, 1995
----------------------------
Amortization expense (SG&A) $ 13,821
Product rights $ 13,821
On May 7, 1996, Dura acquired the Furadatin(R) product rights from P&G for $7.0
million. On December 29, 1995, the Company acquired Dura Delivery Systems, Inc.
("DDSI"), and as a result of the acquisition, DDSI is now a wholly-owned
subsidiary of Dura. On June 14, 1995, Dura signed an agreement with the Ross
Products Division of Abbott Laboratories to acquire the U.S. rights to the
Rondec(R) products, consisting of six prescription cough/cold drugs. On March
22, 1995, Dura acquired the common stock of Health Script Pharmacy Services,
Inc. and certain assets of Quintex, Ltd. (collectively "Health Script"). The
following pro forma adjustments reflect the impact from these acquisitions as if
they had occurred on January 1, 1995.
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d. Adjustment to record acquired product rights.
Product rights $ 7,000
Short-term investments $ 3,500
Other obligations $ 3,500
e. Adjustments to record operating activities of acquired companies and product
rights, and to eliminate the non- recurring charges resulting from the
acquisition of DDSI.
Three Months Ended March 31, 1996
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Cash - net $ 478
Cost of sales $ 154
Provision for income taxes $ 31
Sales revenues $ 663
Year Ended December 31, 1995
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Cash $ 5,967
Cost of sales $ 2,236
Clinical, development & regulatory $ 311
Marketing expenses (SG&A) $ 1,497
Interest Expense $ 671
Provision for income taxes $ 208
Contract revenue $ 7,762
Accumulated deficit $21,595
Charge for acquired in-process options $ 30,773
Sales revenues $ 9,474
f. Adjustments to amortize acquired product rights.
Three Months Ended March 31, 1996
---------------------------------
Amortization expenses (SG&A) $ 88
Product Rights $ 88
Year Ended December 31, 1995
----------------------------
Amortization expenses (SG&A) $ 1,000
Product Rights $ 1,000
g. Adjustments to amortize discount on long-term
obligations.
Year Ended December 31, 1995
----------------------------
Interest expense $ 460
Discount on long-term obligations $ 460
h. Adjustment to record amortization of acquired
intangibles.
Year Ended December 31, 1995
----------------------------
Goodwill amortization expense $ 86
Goodwill $ 86
i. Adjustment to record interest income on
short-term investments.
Year Ended December 31, 1995
----------------------------
Cash and cash equivalents $ 345
Interest income $ 345
j. Shares of Dura common stock issued to acquire DDSI.
k. Dilutive effect of common stock equivalents resulting from pro forma net
income versus Dura net loss.
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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: July 17, 1996 /S/ MITCHELL R. WOODBURY
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Mitchell R. Woodbury
Vice President and General Counsel
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DURA PHARMACEUTICALS, INC.
FORM 8-K
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
2.1 Agreement for Purchase and Sale of Entex Assets dated
June 17, 1996 between Dura and Procter & Gamble (the
"Purchase Agreement").
99.1 Press Release dated June 17, 1996 issued by Dura.