UNITED STATES
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 Date of report (Date of earliest event
reported): June 2, 2006
Genelabs Technologies, Inc.
(Exact Name of Registrant as Specified in its Charter)
California 0-19222 94-3010150
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
505 Penobscot Drive, Redwood City, California 94063
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (650) 369-9500
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligations of the registrant under any of the
following provisions:
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01. Entry into a Material Definitive Agreement
On June 2, 2006, Genelabs Technologies, Inc. entered into a License and
Research Collaboration Agreement with Novartis Institutes for BioMedical
Research, Inc., for the research, development and commercialization of
non-nucleoside compounds targeting the hepatitis C virus (HCV) NS5b polymerase.
Under the agreement, the parties will collaborate to develop one or more
compounds for the treatment of HCV. Novartis will have exclusive worldwide
rights to develop and commercialize such compounds for HCV infection and other
potential disease indications, as well as other compounds developed by Genelabs
in the research program.
Under the collaboration, Genelabs will receive upfront payments of
$12.5 million and research funding of approximately $3 million to $4 million per
year over a planned two-year research program. The amount of the research
funding depends on the number of Genelabs' scientists working on the program.
Novartis has the right to extend the research program and funding for an
additional year. Genelabs could also receive over $175 million for achievement
of specified development, regulatory and sales milestones if multiple compounds
are commercialized and all potential clinical, regulatory and sales milestones
are met. Research under the collaboration will be overseen by a committee with
equal representation by the parties, with Novartis having the final decision
right. If a product is approved for sale, Genelabs is also eligible to receive
royalties on net sales of that product.
In addition, Genelabs has granted Novartis an exclusive option to
negotiate, for a limited period of time, for exclusive license rights to
Genelabs' HCV NS5a program, in which compounds are currently in the lead
optimization phase. Subject to the parties' mutual obligation to negotiate in
good faith, Genelabs is not obligated to enter into a license with Novartis for
its NS5a program.
Under the License and Research Collaboration Agreement, each party may
terminate the agreement if the other party commits an uncured material breach of
its obligations. Novartis may also terminate the agreement without cause after
the termination of the research program. In the event of a change of control of
Genelabs involving a potential competitor, Novartis has the option to either
terminate the Agreement or terminate only the research program, in which event
the other provisions of the agreement will remain in effect, including Novartis'
licenses and its obligations to make royalty and milestone payments. Novartis
may also terminate the research program if Genelabs is unable to perform its
research obligations due to lack of specified personnel or facilities.
Lazard acted as financial advisor to Genelabs.
Forward-Looking Statements
This report on Form 8-K contains forward-looking statements regarding
the future collaboration with Novartis and payments that may be received under
the collaboration with Novartis. These forward-looking statements are based on
Genelabs' current expectations and are subject to uncertainties and risks that
could cause actual results to differ materially from the statements made.
Uncertainties and risks include, without limitation, the failure to
commercialize multiple compounds or any compounds, that all or some of the
potential clinical, regulatory and sales milestones are not met, failures or
setbacks in Genelabs' HCV research and development programs; problems in the
collaboration with Novartis; progress and announcements by competitors regarding
their HCV programs; the potential delisting of Genelabs common stock from the
Nasdaq Capital Market, failure by Genelabs to raise additional funds, or lease
termination. Please see the information appearing in Genelabs' filings with the
Securities and Exchange Commission, including our most recent Quarterly Report
on Form 10-Q, under the captions "Item 1A - Risk Factors" and "Forward-Looking
Statements," for more discussion regarding uncertainties and risks associated
with the company's research programs, early stage of development and other risks
which may affect the company or cause actual results to differ from those
included in the forward-looking statements. Genelabs does not undertake any
obligation to update these forward-looking statements or risks to reflect events
or circumstances after the date of this report on Form 8-K.
Item 3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule
or Standard; Transfer of Listing
On June 5, 2006, Genelabs received a staff determination letter from
The Nasdaq Stock Market, Inc. ("Nasdaq") stating that the minimum bid price of
Genelabs' common stock does not meet the requirements of Nasdaq Marketplace Rule
4310(c)(4). That rule, in conjunction with Rule 4310(c)(8)(D), requires that the
minimum bid price for Genelabs' common stock not remain below $1.00 per share
for a period of 30 consecutive business days. The 30 consecutive business day
period with respect to Genelabs' common stock ended on June 2, 2006, the last
trading day before Genelabs announced the HCV collaboration with Novartis
described under Item 1.01 above.
Genelabs will regain compliance with Rule 4310(c)(4) if the bid price
of Genelabs' common stock closes at $1.00 per share or more for a minimum of 10
consecutive business days. Genelabs has until December 4, 2006 to regain
compliance or its common stock may be delisted. On each of the three business
days since Genelabs received the letter from Nasdaq, shares of Genelabs' common
stock closed with a bid price greater than or equal to $1.83 per share.
Item 7.01. Regulation FD Disclosure
A copy of the Company's press release announcing its License and
Research Collaboration Agreement with Novartis Institutes for BioMedical
Research, Inc. is filed herewith and attached as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits
(c) Exhibits
Exhibit Number Description
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99.1 Press Release of Registrant, dated June 5, 2006, entitled
"Genelabs Announces Collaboration for Development and
Commercialization of HCV Non-Nucleoside Drug Candidates"
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 hereunto duly authorized.
Genelabs Technologies, Inc.
Date: June 8, 2006 By: /s/ Matthew M. Loar
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Name: Matthew M. Loar
Title: Chief Financial Officer
EXHIBIT INDEX
Exhibit Number Description
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99.1 Press Release of Registrant, dated June 5, 2006, entitled
"Genelabs Announces Collaboration for Development and
Commercialization of HCV Non-Nucleoside Drug Candidates"