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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
Date of Report (Date of earliest event reported): December 6, 1999
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CHIREX INC.
(Exact name of registrant as specified in its charter)
Delaware 0-27698 04-3296309
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
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300 Atlantic Street
Suite 402
Stamford, Connecticut 06901
(Address of principal executive offices, including zip code)
(203) 351-2300
(Registrant's telephone number, including area code)
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Item 5. Other Events.
On December 6, 1999, ChiRex Inc. (the "Registrant") issued a press
release announcing that revised 2000 demand for two pharmaceutical ingredients
under a 1997 supply agreement with Glaxo Wellcome will fall short of contract
expectation. The impact of this revision for the year 2000 is expected to be a
reduction of $28.0 million in revenues, with a resulting reduction of $0.80
per share in net earnings, primarily to be reflected in the first quarter of
2000. The Registrant's press release dated December 6, 1999 containing further
detail is attached hereto as Exhibit 99 and is incorporated herein by
reference.
This report includes or incorporates by reference information which
may constitute forward-looking statements within the meaning of the federal
securities laws including, but not limited to: statements concerning
projections of revenues, earnings and other financial items, plans or
objectives of management for future operations or future economic performance.
Although the Registrant believes the expectations contained in such
forward-looking statements are reasonable, it can give no assurances that such
expectations will prove correct. Such forward-looking statements are based
upon management's current plans or expectations and are subject to a number of
risks and uncertainties, including, but not limited to: risks and
uncertainties relating to conducting operations in a competitive environment
and a changing industry; delays, difficulties, management transitions and
employment issues associated with consolidation of, and/or changes in business
operations; managing the integration of existing and acquired companies; risks
and uncertainties associated with existing or future vendor relationships; and
general economic conditions. Certain additional risks and uncertainties are
set forth in the Registrant's 1998 Annual Report on Form 10-K405 filed with
the Securities and Exchange Commission. As a consequence of these and other
risks and uncertainties, current plans, anticipated actions and future
financial condition and results may differ materially from those expressed in
any forward-looking statements made by or on behalf of the Registrant.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
c. The following exhibits are furnished in accordance with the provisions
of Item 601 of Regulation S-K:
(99) Press Release dated December 6, 1999
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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.
Chirex, Inc.
By: /s/ JON E. TROPSA
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Jon E. Tropsa
Vice President,
Finance
Dated: December 10, 1999
EXHIBIT 99
Contact:
Michael A. Griffith
Chairman and Chief Executive Officer
Jon E. Tropsa
Vice President, Finance
ChiRex Inc.
(203) 351-2300
FOR IMMEDIATE RELEASE
CHIREX ANNOUNCES SHORTFALL IN 2000 DEMAND FROM GLAXO WELLCOME
RESULTING IN THE NEED TO REPHASE SUPPLY UNDER THE 1997 AGREEMENT
Reduction in Near-Term Demand for Two Intermediates Will Negatively Affect
ChiRex FY2000 Financial Performance
STAMFORD, Conn. -- December 6, 1999 - ChiRex Inc. (Nasdaq: CHRX) announced
today that revised 2000 demand for two pharmaceutical ingrediants under a
1997 supply agreement with Glaxo Wellcome will fall short of contract
expectation. The impact of this revision for the year 2000 is expected to be
a reduction of $28.0 million in revenues, with a resulting reduction of $0.80
per share in net earnings, primarily to be reflected in the first quarter of
2000. The companies have agreed jointly to identify alternative business
targeted to offset the value of the lost 2000 production over the remaining
three years of the supply agreement.
Glaxo Wellcome indicated that demand for these two intermediates from ChiRex
in 2000 has declined from previously forecast levels. The reduction in
volumes is due to two factors. Firstly, extra stock has been manufactured to
minimise the risk of potential disruption to supply over the millenium.
Secondly, additional manufacture was carried out to ensure supply continuity
over product launches in markets around the world. Volumes in the launch
period are very difficult to predict accurately due to the timing of
regulatory approvals and a conservative view is therefore taken of stock
requirements based on the best case scenario of early regulatory approvals.
Glaxo Wellcome commented that "The long leadtime to re-allocate product to
ChiRex makes it difficult at this time to nominate replacement products for
the intended quantities that will not be purchased in 2000. Glaxo Wellcome
agrees to undertake with ChiRex a Strategic Product and Asset Review and to
use our joint best endeavours to identify opportunities to purchase products
in 2000 to compensate ChiRex in accordance with contractual obligations. It
is intended to complete this review as soon as possible, and in any event
before 30 June 2000."
Dr. Alan Bell, Director of International Actives Supply, Glaxo Wellcome
stated "We have worked closely with ChiRex for many years to our mutual
benefit. ChiRex is, and will remain, an important partner in our future
operations."
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Mr. Michael A. Griffith, Chairman and Chief Executive Officer of ChiRex Inc.
stated "While we regret the short-term negative impact of this variation, we
are committed to Glaxo Wellcome for the long-term. Our supply agreement had
always contemplated potential variations in the forecast requirement for
these two products. Consistent with the terms of the agreement, we will be
working with Glaxo Wellcome to identify and introduce replactment products to
offset the value of the lost 2000 production during the remaining three years
of the supply agreement."
ChiRex Company Description
ChiRex Inc. is an integrated pharmaceutical outsourcing company that provides
an extensive range of services to pharmaceutical and life science companies,
primarily contract process research and development and contract
manufacturing of active pharmaceutical ingredients. The Company operates
through two operating divisions, the development division and the
manufacturing division. The Company's development division is engaged in
every aspect of substance development from discovery support at submission of
IND (Investigational New Drug) including development and manufacture of
material for clinical trials. The Company's manufacturing division produces
bulk Active Pharmaceutical Ingredients. Together, the two divisions span all
of the steps needed to prepare the Drug Substance subsection of a New Drug
Application. The range of services provided by the company include:
o proprietary process research to create and produce previously
unaffordable chiral materials using the Company's patented process
chemistry technologies, and production of unique proprietary
building blocks that aid in the drug discovery process,
o customer-sponsored innovative process research to solve process
chemistry challenges using either traditional process chemistry
techniques or proprietary techniques,
o process research and development including discovery support, route
design, route development and synthesis of pre-clinical molecules,
o scale-up of clinical quantities of active pharmaceutical
ingredients including laboratory synthesis, validated process
demonstration, analytical methods development, hazard evaluation,
and pilot plant production of clinical trial active ingredients,
and
o production of commercial-scale active ingredients for launch and
later for sale in all markets globally.
ChiRex conducts its operations in four FDS cGMP facilities in Boston,
Massachussetts; Malvern, Pennsylvania; Dudley, England; and Annan, Scotland.
The Company's common stock is publicly traded in the United States on the
Nasdaq Stock Market's National Market ("NASDAQ") under the symbol "CHRX". The
Common Stock of Chirex Inc. is a component of the Russell 2000 Stock Index
and Russell 3000 Stock Index.
Any statements contained in this release that relate to projections of
revenues, earnings or other financial items, plans or objectives of
management for future operations or future economic performance are
forward-looking statements that involve risks and uncertainties, many of
which are beyond ChiRex's control.
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Actual results could differ materially from those contemplated by these
forward-looking statements as a result of factors, such as product
development and marketing acceptance risks, product manufacturing risks, the
impact of competitive products and pricing, the results of current and future
licensing and other collaborative relationships, the results of financing
efforts, developments regarding intellectual property rights and litigation,
risks of product non-approval or delays or post-approval reviews of the U.S.
Food and Drug Administration or foreign regulatory authorities. These factors
and other factors that could affect these forward-looking statements are
described in more detail under "Risk Factors" in our annual report on Form
10-K for the year ended December 31, 1998.
Readers are cautioned not to place undo reliance on these forward-looking
statements, which speak only as of the date hereof. ChiRex undertakes no
obligation to publicly release the results of any revisions to these forward-
looking statements that may be made to reflect events or circumstances after
the date hereof or to reflect the occurrence of unanticipated events.