SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 18, 1995
BIO-TECHNOLOGY GENERAL CORP.
(Exact name of registrant as specified in its charter)
Delaware 0-15313 13-3033811
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
70 Wood Avenue South, Iselin, New Jersey 08830
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (908) 632-8800
Not Applicable
(Former name or former address, if changed since last report)
Item 5. Other Events
A. Closing of Bio-Cardia Exchange Offer
On December 31, 1993, Bio-Technology General Corp. ("BTG") and Bio-Cardia
Corporation ("Bio-Cardia") completed a private placement (the "Private
Placement") of 375 units, each unit ("Unit") consisting of four shares of common
stock of Bio-Cardia and warrants to purchase 15,000 shares of BTG's common stock
(the "Warrants"). All of the cash proceeds of the financing were received by
Bio-Cardia. In consideration of the Warrants included in the Units, BTG received
from each purchaser of Units an option (the "Stock Purchase Option"),
exercisable at any time on or prior to December 31, 1997, to purchase the
Bio-Cardia stock at a purchase price beginning at 125% and increasing over time
to 200% of the cash portion of the price paid for such stock. Such purchase
price may be paid in cash, shares of BTG's common stock or both, at BTG's
discretion. In connection with the closing of the financing, BTG and Bio-Cardia
entered into an agreement whereby BTG licensed to Bio-Cardia the right to pursue
the development and commercialization of certain of BTG's products (the
"Technology License Agreement"). BTG and Bio-Cardia have entered into a research
and development agreement pursuant to which BTG will conduct research,
development and clinical testing of these products.
Bio-Cardia and BTG had originally budgeted approximately $32 million of the
net proceeds of the Private Placement (less if the Stock Purchase Option was
exercised prior to January 1, 1997) to fund development and commercialization of
the products licensed to Bio-Cardia over a period of four years and to reimburse
BTG for previously incurred research and development expenses. However, holders
of 218 Units failed to make the required July 1, 1994 payment of $10,000 per
Unit, which resulted in Bio-Cardia being unable to pay certain amounts due BTG
in respect of research and development conducted by BTG on behalf of Bio-Cardia
and in reimbursement of previously incurred research and development expenses.
In October 1994 Bio-Cardia reached settlements with certain of the defaulting
stockholders, holding an aggregate of 178 Units, who surrendered to Bio-Cardia
their Bio-Cardia stock and Warrants to purchase an aggregate of 2,670,000 shares
of BTG common stock (the "Surrendered Warrants") in exchange for a release from
their future funding obligations to Bio-Cardia. The net effect of this
settlement was to reduce the funding expected by Bio-Cardia by approximately
$14,240,000. In addition, Bio-Cardia commenced legal action against the
remaining defaulting stockholders, holding an aggregate of 40 Units, who owe an
aggregate of $3,200,000. Accordingly, Bio-Cardia will not be in a position to
fund the up to $32 million research and development program originally
contemplated by Bio-Cardia and BTG. As a result, BTG has the right to terminate
the Technology License Agreement and repossess all rights to the technology
licensed or sublicensed to Bio-Cardia without the payment of any amounts to
Bio-Cardia other than a royalty on all Improvements (as defined in the
Technology License Agreement) to the Products developed pursuant to the
development program conducted by BTG on behalf of Bio-Cardia. At March 31, 1995,
Bio-Cardia owed BTG approximately $3,660,000 for research and development
performed by BTG on behalf of Bio-Cardia during 1994 and
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the three months ended March 31, 1995, as well as $1,330,000 in reimbursement of
previously incurred research and development expenses.
BTG agreed not to terminate the Technology License Agreement in the fiscal
year ended December 31, 1995 as a result of the Bio-Cardia defaults in the
fiscal year ended December 31, 1994 and has further agreed to fund a revised
research and development budget for the fiscal year ended December 31, 1995
aggregating approximately $6.2 million to the extent Bio-Cardia does not have
sufficient funds and to advance to Bio-Cardia amounts required by Bio-Cardia for
general and administrative expenses. Bio-Cardia anticipates that it will receive
$900,000 in the fiscal year ended December 31, 1995 from third parties (of which
$400,000 was received in January 1995). However, because BTG has not at this
time committed to fund any research and development for Bio-Cardia in the fiscal
years ended December 31, 1996 or 1997 or to exercise the Stock Purchase Option,
and, therefore, because there can be no assurance that Bio-Cardia will have the
funds needed to fund research and development after December 31, 1995,
Bio-Cardia, with BTG's consent, offered to the non-defaulting Bio-Cardia
stockholders the ability to avoid having to make any additional payments to
Bio-Cardia under their Investor Note (defined below) (the "Exchange Offer").
Under the terms of the Exchange Offer, Bio-Cardia offered to its non-defaulting
stockholders the right to exchange each one share of its common stock, $.01 par
value per share (the "Bio-Cardia Common Stock"), and an unconditional release
for (i) $4,250 in cash (plus simple interest at the rate of 8% per annum on
$2,500 from the date the payment due Bio-Cardia on July 1, 1994 was made through
May 18, 1995), (ii) a contingent right (a "Right") to receive certain of the
Surrendered Warrants currently owned by Bio-Cardia and (iii) forgiveness of
$17,500 principal amount due under that certain promissory note, dated December
31, 1993 (the "Investor Note") delivered by each stockholder of Bio-Cardia to
Bio-Cardia in partial payment for their Bio-Cardia Common Stock. On a per Unit
basis, the Exchange Offer constituted an offer to exchange $17,000 in cash (plus
simple interest at the rate of 8% per annum on $10,000 from the date the payment
due Bio-Cardia on July 1, 1994 was made through May 18, 1995), four Rights and
forgiveness of the remaining $70,000 due under the Investor Note for each four
shares of Bio-Cardia Common Stock and an unconditional release. The Rights
provide that if by December 15, 1995 (i) the average daily price of BTG's common
stock for any 20 trading days in any 30 consecutive trading day period does not
exceed $3.50, (ii) the best closing bid price of the Warrants does not exceed
$1.10 during any 20 trading days, and (iii) the exercise price of the Warrants
was not reduced in connection with the sale of BTG, then Bio-Cardia will
distribute to the Bio-Cardia stockholders that accepted the Exchange Offer some
or all of the Surrendered Warrants such that, in the aggregate, the Warrants
issued in the Private Placement, together with the Surrendered Warrants
distributed by Bio-Cardia, have a value of $16,500 per Unit as determined using
the Black Scholes option pricing formula using an assumption of no dividends and
a volatility of 70%.
On May 18, 1995 the Exchange Offer was consummated, and all non-defaulting
Bio-Cardia stockholders, owning an aggregate of 157 Units, accepted the Exchange
Offer. In connection with the Exchange Offer, BTG advanced to Bio-Cardia an
aggregate of $2,725,850, including $1,920,000 received from Bio-Cardia in 1994
and the
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three months ended March 31, 1995 but not recognized as revenues. As a result,
BTG will recognize an expense of approximately $800,000 in the second quarter of
1995.
Upon consummation of the Exchange Offer, BTG amended the Warrants to
provide that if BTG enters into a Sale Transaction (as hereinafter defined) at a
price per share of BTG's common stock less than $6.59 (adjusted for any stock
splits, stock dividends or similar actions), the exercise price of the Warrants
will be automatically reduced to a price per share of BTG's common stock equal
to the difference between the Sale Price (as hereinafter defined) and $1.10. For
purposes hereof, the term "Sale Transaction" shall mean (i) the execution by BTG
of a definitive merger agreement pursuant to which the outstanding shares of
BTG's common stock will be converted into the right to receive cash, (ii) the
execution by BTG of a definitive asset purchase agreement pursuant to which BTG
proposes to sell substantially all its assets for cash, securities or a
combination thereof and thereafter to distribute such consideration to BTG's
stockholders, or (iii) a third party commences a cash tender offer for all of
BTG's outstanding common stock. For purposes hereof, the term Sale Price shall
mean (i) in the case of a merger, the cash offered per share of BTG's common
stock, (ii) in the case of an asset sale, the fair market value of the
consideration to be distributed to BTG's stockholders and (iii) in the case of a
cash tender offer, the amount of cash offered.
B. United States Food and Drug Administration Approval Letter for
Bio-Tropin(TM)
On May 25, 1995 BTG received an approval letter from the United States Food
and Drug Administration approving the marketing of BTG's genetically engineered
humane growth hormone product, Bio-Tropin(TM), for the long-term treatment of
children with growth failure due to growth hormone deficiency. Plans to commence
national distribution of Bio-Tropin(TM) are already well under way.
On May 30, 1995, Genentech Inc. filed a motion in the United States
District Court for the Southern District of New York for a temporary restraining
order and preliminary injunction seeking to prevent BTG from marketing and
distributing its human growth hormone in the United States pending the outcome
of its patent infringement action which it commenced in December 1994. The Court
denied the motion for the temporary restraining order, and hearings on the
motion for a preliminary injunction are scheduled to commence on June 14, 1995.
Although BTG believes that it does not infringe any valid Genentech patent,
there can be no assurance that a preliminary injunction will not be issued. If a
preliminary injunction is issued and not stayed, BTG will be precluded from
marketing and distributing its human growth hormone in the United States pending
the final outcome of the patent infringement action.
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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.
BIO-TECHNOLOGY GENERAL CORP.
Date: June 7, 1995 By /s/ SIM FASS
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Sim Fass
President and Chief
Executive Officer