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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q/A
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______________ TO
____________.
Commission file number 0-26866
SONUS PHARMACEUTICALS, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 95-4343413
(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
22026 20TH AVE. SE, BOTHELL, WASHINGTON 98021
(Address of Principal Executive Offices)
(425) 487-9500
(Registrant's Telephone Number, Including Area Code)
Indicate by check whether the issuer (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. Yes [X] No [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date.
Class Outstanding at July 31, 2001
----- ----------------------------
Common Stock, $.001 par value 11,385,292
Page 1 of 15 Pages
Exhibit Index appears on Page 14
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SONUS PHARMACEUTICALS, INC.
INDEX TO FORM 10-Q
Page
Number
------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets as of June 30, 2001 (unaudited) and December 31, 2000 .. 3
Statements of Operations (unaudited) for the three and six months ended
June 30, 2001 and June 30, 2000 .................................. 4
Statements of Cash Flows (unaudited) for the six months ended
June 30, 2001 and June 30, 2000 .................................. 5
Notes to Financial Statements ......................................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations ...................................................... 8
Item 3. Market Risk ........................................................... 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings .................................................... 13
Item 2. Changes in Securities and Use of Proceeds ............................ 14
Item 4. Submission of Matters to a Vote of Security Holders .................. 14
Item 6. Exhibits and Reports on Form 8-K ..................................... 14
Items 3 and 5 are not applicable and therefore have been omitted ................
SIGNATURES .............................................................................. 15
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SONUS PHARMACEUTICALS, INC.
BALANCE SHEETS
JUNE 30, DECEMBER 31,
2001 2000
------------ ------------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents ............................... $ 4,708,190 $ 1,696,610
Short-term investments .................................. 7,301,704 6,765,854
Compensating cash balance under bank line of credit ..... -- 5,000,000
Other current assets .................................... 415,686 345,696
------------ ------------
Total current assets ................................. 12,425,580 13,808,160
Equipment, furniture and leasehold improvements, net of
accumulated depreciation of $3,592,376 and $3,474,027 ... 372,819 501,660
------------ ------------
Total assets ............................................... $ 12,798,399 $ 14,309,820
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank line of credit ..................................... $ -- $ 5,000,000
Other current liabilities ............................... 2,247,744 800,343
------------ ------------
Total current liabilities ............................ 2,247,744 5,800,343
Commitments and contingencies
Stockholders' equity:
Preferred stock; $.001 par value;
5,000,000 authorized; no shares issued or outstanding -- --
Common stock; $.001 par value;
30,000,000 shares authorized; 11,379,042 and 9,603,520
shares issued and outstanding at June 30, 2001 and
December 31, 2000, respectively ...................... 42,590,268 38,077,469
Notes receivable ........................................ (350,000) (350,000)
Accumulated deficit ..................................... (31,699,835) (29,219,041)
Accumulated other comprehensive loss .................... 10,222 1,049
------------ ------------
Total stockholders' equity ........................... 10,550,655 8,509,477
------------ ------------
Total liabilities and stockholders' equity ................. $ 12,798,399 $ 14,309,820
============ ============
See accompanying notes.
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SONUS PHARMACEUTICALS, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
----------------------------- -----------------------------
2001 2000 2001 2000
----------- ----------- ----------- -----------
Revenues:
License agreements .......................... $ -- $ -- $ 1,000,000 $ --
Royalties ................................... 91,188 44,969 186,716 44,969
----------- ----------- ----------- -----------
Total revenues ................................. 91,188 44,969 1,186,716 44,969
----------- ----------- ----------- -----------
Operating expenses:
Research and development .................... 1,325,132 1,288,089 2,493,193 2,378,659
General and administrative .................. 615,824 1,136,107 1,312,540 2,521,288
----------- ----------- ----------- -----------
Total operating expenses ....................... 1,940,956 2,424,196 3,805,733 4,899,947
----------- ----------- ----------- -----------
Operating loss ................................. (1,849,768) (2,379,227) (2,619,017) (4,854,978)
Other income (expense):
Interest income ............................. 110,197 196,889 252,081 352,595
Interest expense ............................ (3,650) (12,153) (13,858) (18,750)
Other income ................................ -- 4,250,000 -- 4,250,000
----------- ----------- ----------- -----------
Income (loss) before taxes ..................... (1,743,221) 2,055,509 (2,380,794) (271,133)
Income taxes ................................... -- -- 100,000 (176,939)
----------- ----------- ----------- -----------
Net income (loss) .............................. $(1,743,221) $ 2,055,509 $(2,480,794) $ (94,194)
=========== =========== =========== ===========
Net income (loss) per common share:
Basic ....................................... $ (0.18) $ 0.22 $ (0.27) $ (0.01)
Diluted ..................................... $ (0.18) $ 0.22 $ (0.27) $ (0.01)
Shares used in computation of per share amounts:
Basic ....................................... 9,507,221 9,155,897 9,355,069 9,112,787
Diluted ..................................... 9,507,221 9,184,625 9,355,069 9,112,787
See accompanying notes.
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SONUS PHARMACEUTICALS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED JUNE 30,
-------------------------------
2001 2000
------------ ------------
OPERATING ACTIVITIES:
Net loss ...................................................... $ (2,480,791) $ (94,194)
Adjustments to reconcile net loss to net cash used in
operating activities:
Noncash compensation expense ............................... 50,214 --
Depreciation and amortization .............................. 154,348 216,657
Amortization of premium (discount) on marketable securities 10,111 --
Changes in operating assets and liabilities:
Other current assets .................................... (69,990) 68,430
Other current liabilities ............................... 1,447,401 (229,083)
------------ ------------
Net cash used in operating activities ......................... (888,707) (38,190)
INVESTING ACTIVITIES:
Purchases of equipment, furniture and leasehold improvements .. (24,507) (5,173)
Purchases of marketable securities ............................ (6,973,789) (5,977,254)
Proceeds from sale of marketable securities ................... 1,735,320 499,995
Proceeds from maturities of marketable securities ............. 4,700,681 6,899,268
------------ ------------
Net cash provided by (used in) investing activities ........... (562,295) 1,416,836
FINANCING ACTIVITIES:
Proceeds from bank line of credit ............................. 5,000,000 10,000,000
Repayment of bank line of credit .............................. (10,000,000) (10,000,000)
Proceeds from issuance of common stock ........................ 4,462,582 576,771
------------ ------------
Net cash provided by (used in) investing activities ........... (537,418) 576,771
------------ ------------
Increase (decrease) in cash and cash equivalents for the period (1,988,420) 1,955,417
Cash and cash equivalents at beginning of period .............. 6,696,610 894,194
------------ ------------
Cash and cash equivalents at end of period .................... 4,708,190 2,849,611
Marketable securities at end of period ........................ 7,301,704 9,494,433
------------ ------------
Total cash, cash equivalents and marketable securities ........ $ 12,009,894 $ 12,344,044
============ ============
Supplemental cash flow information:
Interest paid .............................................. $ 18,958 $ 13,542
Income taxes paid .......................................... $ 100,000 $ --
See accompanying notes.
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SONUS PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The unaudited financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q. Accordingly, they do not include all of the
information and footnotes required to be presented for complete financial
statements. The accompanying financial statements reflect all adjustments
(consisting only of normal recurring items) which are, in the opinion of
management, necessary for a fair presentation of the results for the interim
periods presented.
The financial statements and related disclosures have been prepared with
the assumption that users of the interim financial information have read or have
access to the audited financial statements for the preceding fiscal year.
Accordingly, these financial statements should be read in conjunction with the
audited financial statements and the related notes thereto included in the Form
10-K for the year ended December 31, 2000 and filed with the Securities and
Exchange Commission on March 7, 2001.
2. CONTINGENCIES
The Company is party to certain litigation related to its business. See
"Part II, Item 1. Legal Proceedings."
3. PATENT LICENSE AGREEMENT
In January 2001, the Company entered into a patent licensing agreement
with Chugai Pharmaceutical, Co., Ltd. (Chugai) and Molecular Biosystems, Inc.
(MBI) that gave Chugai and MBI non-exclusive rights under certain Sonus
ultrasound contrast patents in Japan, South Korea, and Taiwan. The Company
received an initial non-refundable license fee of $1.0 million in January 2001
and a second $1.0 million payment in June 2001. The second $1.0 million payment
will be non-refundable if any claims of a Sonus Japanese patent application are
allowed within a period of two years from the signing of the agreement. If no
claims are allowed on the Japanese patent application within this two-year
period, the Company will repay to Chugai the second $1.0 million payment.
4. COMPREHENSIVE INCOME (LOSS)
Three months ended June 30, Six months ended June 30,
--------------------------- ---------------------------
2001 2000 2001 2000
---------- ---------- ---------- ----------
Net Income (loss) .......................... (1,743,221) 2,055,509 (2,480,794) (94,194)
Unrealized gains on marketable securities... 1,189 -- 9,173 6,150
---------- ---------- ---------- ----------
Comprehensive income ..................... (1,742,032) 2,055,509 (2,471,621) (88,044)
========== ========== ========== ==========
5. COMMON STOCK
In June 2001, the Company sold 1.7 million shares of common stock in a
private placement transaction for gross proceeds of $4.9 million ($4.5 million
net of transaction costs).
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6. SUBSEQUENT EVENT
In August 2001, the Company entered into an agreement with Nycomed
Amersham (Nycomed) whereby the Company sold substantially all of its ultrasound
contrast intellectual property assets to Nycomed for $6.5 million. In addition,
the Company assigned to Nycomed its interest in the ultrasound contrast patent
license agreement with Chugai and MBI.
Sonus and Nycomed previously entered into an agreement in September 1999
whereby Nycomed received an exclusive license to certain of the Company's
ultrasound contrast patents in the U.S. and Europe. In exchange, Nycomed paid
the Company an initial license fee of $10.0 million, assumed the responsibility
and costs of applicable patent litigation, and paid royalties to the Company on
sales of an approved product covered by the licensed patents. This patent
license agreement terminated concurrent with the execution of the asset purchase
agreement.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, and we intend that such
forward-looking statements be subject to the safe harbors created thereby.
Examples of these forward-looking statements include, but are not limited to:
- Market acceptance of our products and the potential size of these
markets;
- Our anticipated future capital requirements and the terms of any capital
financing;
- The progress and results of clinical trials;
- The timing and amount of future contractual payments, product revenues
and operating expenses; and
- The anticipated outcome or financial impact of legal matters.
While these forward-looking statements made by us are based on our current
beliefs and judgement, they are subject to risks and uncertainties that could
cause actual results to vary from the projections in the forward-looking
statements. You should consider the risks below carefully in addition to other
information contained in this report before purchasing shares of our common
stock. If any of the risks listed below occur, they could seriously harm our
business, financial condition or results of operations. In such case, the
trading price of our common stock could decline, and you may lose all or part of
your investment.
The discussion and analysis set forth in this document contains trend analysis,
discussions of regulatory status and other forward-looking statements. Actual
results could differ materially from those projected in the forward-looking
statement as a result of the following factors, among others:
- Dependence on the development and commercialization of products;
- History of operating losses and uncertainty of future financial results;
- Future capital requirements and uncertainty of additional funding;
- Dependence on third parties for funding, clinical development and
distribution;
- Uncertainty of governmental regulatory requirements and lengthy approval
process;
- Uncertainty of U.S. or international legislative or administrative
actions;
- Competition and risk of technological obsolescence;
- Limited manufacturing experience and dependence on a limited number of
contract manufacturers and suppliers;
- Dependence on patents and proprietary rights;
- Limitations on third-party reimbursement for medical and pharmaceutical
products;
- Continued listing on the Nasdaq National Market; and
- Dependence on key employees.
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MD&A OVERVIEW
In Management's Discussion and Analysis we explain the general financial
condition and the results of operations for our company, including:
- An overview of our business;
- Results of operations and why those results are different from the prior
periods;
- The capital resources we currently have and possible sources of
additional funding for future capital requirements; and
- Certain factors that may affect our business and future results.
BUSINESS OVERVIEW
We are engaged in the research and development of therapeutic drug
delivery and blood substitute products utilizing our core technology in emulsion
formulations and surfactant chemistry. Based on this proprietary core
technology, we have developed the TOCOSOL(TM) drug delivery system to solubilize
drugs that are poorly soluble in water. We are developing a cancer therapy
product, S-8184, and a cardiovascular therapy product, S-2646, using the TOCOSOL
technology. We are also developing a blood substitute product, S-9156, based on
our core emulsion formulation technology that utilizes stabilized fluorocarbon
gas microbubbles to more efficiently transport oxygen to body tissues.
S-8184 - Cancer Therapy
The first application of our TOCOSOL drug delivery technology is an
injectable paclitaxel emulsion formulation, S-8184. Paclitaxel is the active
ingredient in the world's leading cancer drug, which is indicated for the
treatment of breast, ovarian and non-small cell lung cancer. We filed an
Investigational New Drug Application, or IND, with the U.S. Food and Drug
Administration in late 2000 and initiated our Phase 1 human clinical study in
December 2000. To date, we have enrolled patients with breast, ovarian, lung and
colon cancers and are encouraged by indications that our formulation may provide
significant advantages for both patients and physicians including a reduction in
side effects, a reduction or elimination of premedications and a reduction in
the administration time using a single, quick injection in a matter of minutes
compared to the hours of infusion with existing formulations of paclitaxel. We
also believe that there may be other potential advantages of our paclitaxel
formulation including tumor targeting, sustained drug release and a ready-to-use
formulation that may position S-8184 as a potentially more effective and
convenient product. We expect to complete patient enrollment in the S-8184 Phase
1 study in the second half of 2001.
S-2646 - Cardiovascular Treatment
Consistent with our strategy to apply our TOCOSOL drug delivery
technology to intravenous marketed drugs that are generic and/or have patents
expiring, S-2646 is a reformulation of an intravenous cardiac drug, amiodarone,
that is marketed for the treatment of acute ventricular arrhythmias, and
specifically unstable ventricular tachycardia, which is essentially rapid,
uncontrolled and life-threatening heart rhythms. The currently marketed form of
the drug has side effects, namely hypotension (low blood pressure) and venous
irritation, that may limit the drug's effectiveness when administered in
emergency situations outside the hospital. S-2646 is being tested to determine
whether the application of our TOCOSOL drug delivery system will lower the
toxicity of the currently marketed intravenous formulation, which could allow
faster administration of the crucial, initial therapeutic dose of the drug in
emergency medical situations, resulting in faster onset of therapeutic benefits
for the patient and may also allow for repeat
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dosing through the use of a conventional intravenous line in the arm. We expect
to complete preclinical studies with S-2646 and file an IND with the U.S. Food
and Drug Administration by the end of 2001.
S-9156 - Blood Substitute
We are also developing a synthetic blood substitute product, S-9156, for
use in therapeutic applications. This product utilizes stabilized gas
microbubbles, formed from our fluorocarbon emulsion technology, for transporting
oxygen to the body's tissues. In pre-clinical studies, S-9156 was shown to carry
large volumes of oxygen adequate to sustain life at doses that are many times
lower than liquid fluorocarbon products that are currently under development by
others. This may present important clinical advantages because many of the side
effects associated with administration of large volumes of liquid fluorocarbons
could be minimized with S-9156. Potential applications for S-9156 include use in
trauma situations to provide immediate tissue oxygenation when there is no
availability or time for typing and cross-matching blood for transfusion or for
oxygenation of solid tumors to increase the effectiveness of radiotherapy. We
expect to complete preclinical studies with S-9156 and file an IND with the U.S.
Food and Drug Administration in 2002.
RESULTS OF OPERATIONS
Our results of operations have varied and will continue to vary
significantly and depend on, among other factors:
- Timing of payments under contractual and license agreements with
third-parties;
- Entering into additional contractual agreements;
- Timing and costs of product development, clinical trials and patent
prosecution; and
- Timing of regulatory approvals.
Revenues in the second quarter of 2001 was $91,000 compared to $45,000
for the second quarter of 2000. Revenues for each period represent royalty
income under an ultrasound contrast patent license agreement with Nycomed
Amersham plc. For the six months ended June 30, 2001, revenue was $1.2 million
compared to $45,000 for the prior year period. Included in 2001 is the $1.0
million non-refundable license fee payment received under our ultrasound
contrast patent license agreement with Chugai.
Total operating expenses were $1.9 million for the second quarter of
2001 compared with $2.4 million for the prior year. The decrease from the prior
year was primarily due to lower general and administrative expenses ($0.6
million the second quarter of 2001 compared to $1.1 million in the second
quarter of 2000) resulting from the cost-reduction measures implemented in
October 2000. Research and development expenses in the second quarter of 2001
were consistent with the prior year ($1.3 million in each second quarter of 2001
and 2000) reflecting the continued investment in our product research and
clinical trial programs. For the first six months of 2001, total operating
expenses were $3.8 million compared to $4.9 million for the prior year period,
with the decrease primarily due to lower general and administrative expenses
resulting from the cost-reduction measures implemented in October 2000.
We anticipate total operating expenses for the next several quarters
will be consistent with or slightly higher than the second quarter of 2001 as we
continue to invest in current and future product development activities.
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Interest income, net of interest expense of $4,000, was $106,000 for the
second quarter of 2001 compared with $185,000, net of interest expense of
$12,000, for the same period of the prior year and $238,000 and $334,000 for the
six months ended June 30, 2001 and 2000, respectively. The decrease in net
interest income was primarily due to lower levels of invested cash in the
current year.
Net loss for the second quarter of 2001 was $1.7 million compared with
net income of $2.1 million for the same period of the prior year. Net loss for
the six months ended June 30, 2001 and 2000, was $2.5 million and $0.1 million,
respectively. The prior year results include other income of $4.25 million from
payments received under patent litigation and insurance settlements.
LIQUIDITY AND CAPITAL RESOURCES
We have historically financed operations with payments from contractual
agreements with third parties, proceeds from equity financings and a bank line
of credit. In June 2001, we completed a private placement equity financing that
raised approximately $4.5 million in net proceeds through the sale of 1.7
million shares of Sonus common stock.
At June 30, 2001, we had cash, cash equivalents and short-term
investments of $12.0 million compared to $13.5 million at December 31, 2000. The
decrease was primarily due to the pay-off of the bank line of credit and funding
of operations, offset in part by the $4.5 million of net proceeds from the
private placement of common stock.
We have a bank loan agreement which provides for a $5.0 million
revolving line of credit facility and bears interest at the prime rate plus 1.0%
per annum. At June 30, 2001, we had no outstanding borrowings under the line of
credit. The line of credit expires in August 2001 and is secured by tangible
assets. We are required to maintain a minimum of $5.0 million of cash in order
to borrow under the line of credit, and the borrowed funds are required to be
held at the bank. We cannot give assurance that we will be able to maintain the
minimum balances necessary to borrow under the line of credit.
We expect that our cash needs will increase in future periods due to
planned clinical trials and other product development costs associated with our
drug delivery and blood substitute products. Based on our current operating
plan, including planned clinical trials and other product development costs, we
estimate that existing cash and short-term investments will be sufficient to
meet our cash requirements for at least 18 months. However, we intend to seek
additional funding through available means, which may include debt and/or equity
financing or funding under additional third party agreements. Our future capital
requirements depend on many factors including:
- The ability to attract and retain new collaborative agreement partners;
- The ability to obtain funding under contractual and licensing
agreements;
- The progress of our research and development programs and clinical
trials;
- The time and costs required to gain regulatory approvals;
- The costs of filing, prosecuting and enforcing patents, patent
applications, patent claims and trademarks; and
- The cost of defending, and any damages or settlement payments that may
be paid pursuant to existing legal proceedings.
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We cannot give assurance that additional financing will be available on
acceptable terms, if at all. Any equity financing would likely result in
substantial dilution to our existing stockholders and debt financing, if
available, may include restrictive covenants. If we are unable to raise
additional financing, we may be required to curtail or delay the development of
our products and new product research and development, which could seriously
harm our business.
ITEM 3. MARKET RISK
The market risk inherent in our short-term investment portfolio
represents the potential loss that could arise from adverse changes in interest
rates. If market rates hypothetically increase immediately and uniformly by 100
basis points from levels at June 30, 2001, the decline in the fair value of the
investment portfolio would not be material. Because we have the ability to hold
our fixed income investments until maturity, we do not expect our operating
results or cash flows to be affected to any significant degree by a sudden
change in market interest rates.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
a. In July 2000, DuPont Pharmaceuticals Company, DuPont Contrast Imaging,
Inc., E.I. DuPont de Nemours & Co., Inc. and DuPont Pharma, Inc. (collectively
"DuPont") filed a complaint in the United States District Court for the District
of Massachusetts against us and certain Nycomed Amersham-related entities
("Nycomed"). DuPont's complaint seeks a declaratory judgment that certain
ultrasound patents we have transferred to Nycomed are invalid and not infringed
by DuPont. We and Nycomed believe DuPont's complaint is without merit and intend
to vigorously defend against the complaint. At the request of Nycomed and us,
the Massachusetts action was transferred to the United States District Court for
the Western District of Washington.
Under our agreement with Nycomed, Nycomed has the right to enforce the
patents in the field of non-perfluoropentane ultrasound contrast agents on
behalf of Nycomed and us, at Nycomed's expense. Pursuant to this right, in July
2000, Nycomed and we filed an action in the United States District Court for the
Western District of Washington alleging that DuPont's contrast agent "Definity"
infringes patents we have transferred to Nycomed. The patent infringement action
filed in district court in Washington involves the same questions of patent
infringement and validity that were raised in DuPont's Massachusetts action.
Both the Massachusetts action and the Washington action have been assigned to
the same District Judge, who has ordered the cases consolidated and to proceed
as one action. Nycomed has filed a motion for summary judgment of infringement
and for a preliminary injunction enjoining the sale of Definity following final
FDA approval. Pursuant to our agreement with Nycomed, Nycomed will bear all
costs and expenses associated with the litigation against DuPont.
b. In 1998, various class action complaints were filed against us and certain
of our officers and directors, alleging violations of Washington State and U.S.
securities laws. In July 2000, with the consent of our insurance carrier, we
entered into a Memorandum of Understanding with the plaintiffs to settle the
action for $4.0 million, an amount within our insurance policy limits,
conditioned upon approval of the Court. As part of the settlement agreement, our
insurance carrier agreed to pay the settlement directly to plaintiffs through an
escrow account funded by the insurance company in 2000. In February 2001, the
Court approved the settlement and entered an order dismissing with prejudice all
claims against us and certain officers and directors.
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ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(c) The following is a summary of transactions by the Company during the
fiscal quarter ended June 30, 2001, involving sales of the Company's securities
that were not registered under the Securities Act of 1993 (the "Securities
Act"):
On June 15, 2001, the Company sold 1,745,000 shares of its
Common Stock under the terms of a Securities Purchase Agreement
to accredited investors in conformity with Rule 506 under
Regulation D and under Section 4(2) of the Securities Act at a
price of $2.80 per share. The Company and the investors
concurrently entered into a Registration Rights Agreement under
which the company had undertaken to register such 1,745,000
shares under the Securities Act within a time frame specified in
the Registration Rights Agreement. Concurrently, the company
also issued warrants to purchase an aggregate of 174,500 shares
of its Common Stock under the terms of certain Warrant
Certificates at an exercise price of $3.36 per share. Such
warrants are exempt from registration under Rule 506 under
Regulation D and under Section 4(2) of the Securities Act.
Pursuant to the terms of the Warrant Certificates the Company
has undertaken to register such 174,500 shares under the
Securities Act within a time frame specified in the Warrant
Certificates. No underwriting or broker's commissions were paid
in connection with the foregoing transactions.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Information regarding matters submitted to a vote of security holders at
our annual meeting of stockholders held on April 25, 2001, is set forth in our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2001.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
10.47 Change in Control Agreement for Nagesh Palepu
10.48 Change in Control Agreement for Michael A. Martino
(b) REPORTS ON FORM 8-K
The Company filed no reports on Form 8-K during the quarter
ended June 30, 2001.
ITEMS 3 AND 5 ARE NOT APPLICABLE AND HAVE BEEN OMITTED.
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SIGNATURES
In accordance with the requirements of the Securities Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
SONUS PHARMACEUTICALS, INC.
Date: September 28, 2001 By: /s/ Richard J. Klein
-------------------------------------
Richard J. Klein
Chief Financial Officer
(Principal Financial and Accounting
Officer)
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