-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EvAwFgdZ52EOQI9cJ1BbmDIGqdjZYY/5KHABPNGMN/66HS2qaC9IBn4DAWO+JnfI 0ygIHrwBRi5pda/Lvl9XaA== 0000950123-04-010913.txt : 20040913 0000950123-04-010913.hdr.sgml : 20040913 20040913130600 ACCESSION NUMBER: 0000950123-04-010913 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20040913 ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20040913 DATE AS OF CHANGE: 20040913 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SCHERING PLOUGH CORP CENTRAL INDEX KEY: 0000310158 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 221918501 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-06571 FILM NUMBER: 041027075 BUSINESS ADDRESS: STREET 1: ONE GIRALDA FARMS CITY: MADISON STATE: NJ ZIP: 07940-1000 BUSINESS PHONE: 9738227000 8-K 1 y02005e8vk.txt SCHERING-PLOUGH CORPORATION 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 September 13, 2004 Date of Report (Date of Earliest Event Reported) Schering-Plough Corporation (Exact name of registrant as specified in its charter) New Jersey (State or other jurisdiction of incorporation) 1-6571 (Commission File Number) 22-1918501 (IRS Employer Identification Number) 2000 Galloping Hill Road Kenilworth, NJ 07033 (Address of principal executive offices, including Zip Code) (908) 298-4000 (Registrant's telephone number, including area code) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation 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 7.01 Regulation FD Disclosure. Schering-Plough Corporation today announced a strategic alliance with Bayer, expected to be effective October 1, 2004. The press release regarding the alliance is furnished with this 8-K as Exhibit 99.1 and Investor Frequently Asked Questions and Answers (FAQs) are furnished with this 8-K as Exhibit 99.2. Item 9.01 Financial Statements and Exhibits. The following exhibits are furnished with this 8-K: 99.1 Press release titled "Schering-Plough Enters Into Strategic Alliance with Bayer" dated September 13, 2004 99.2 September 13, 2004 Investor Frequently Asked Questions and Answers (FAQs) 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. Schering-Plough Corporation By: /s/ Douglas J. Gingerella ------------------------- Douglas J. Gingerella Vice President and Controller Date: September 13, 2004 2 Exhibit Index The following exhibits are furnished with this 8-K: 99.1 Press release titled "Schering-Plough Enters Into Strategic Alliance with Bayer" dated September 13, 2004 99.2 September 13, 2004 Investor Frequently Asked Questions and Answers (FAQs) 3 EX-99.1 2 y02005exv99w1.txt PRESS RELEASE Exhibit 99.1 SCHERING-PLOUGH ENTERS INTO STRATEGIC ALLIANCE WITH BAYER KENILWORTH, N.J., Sept. 13, 2004 -- Schering-Plough Corporation (NYSE: SGP) today announced that it has entered into a strategic agreement with Bayer designed to maximize the companies' pharmaceutical resources while maintaining each company's own strategic interests. The agreement is expected to be effective Oct. 1, 2004. In the United States and Puerto Rico, Schering-Plough has acquired exclusive rights to market, sell and distribute Bayer's primary care products AVELOX (moxifloxacin HCl) and CIPRO (ciprofloxacin HCl) in the antibiotics category and will undertake on behalf of Bayer the U.S. commercialization activities for the erectile dysfunction medicine LEVITRA (vardenafil HCl) under Bayer's co-promotion agreement with GlaxoSmithKline PLC. The addition of these products is expected to strengthen Schering-Plough's primary care presence in the United States, with the goal of more effectively realizing the potential of the Schering-Plough and Bayer primary care product portfolios. In the Japanese market, Bayer will co-market Schering-Plough's novel cholesterol absorption inhibitor ZETIA(R) (ezetimibe), currently under regulatory review in Japan, leveraging Bayer's established expertise and relationships with cardiovascular specialists to enhance the local launch of the product. Additionally, under the terms of the agreement, Bayer will support the promotion of certain Schering-Plough oncology products in the United States and key European markets for a defined period of time. "This strategic agreement represents a further step in our Action Agenda to build the New Schering-Plough," said Fred Hassan, Schering-Plough chairman and chief executive officer. "The collaboration will enhance our primary care product line and complement our respiratory franchise. We anticipate that it will also strengthen our presence in Japan through the co-marketing of ZETIA with Bayer in this key cardiovascular market, pending approval by Japanese authorities." Under the agreement, there will be a business integration and transition period during the remainder of 2004. For Schering-Plough, the transaction is expected to be mildly dilutive in 2004 in terms of its impact on earnings per share. Thereafter, the transaction is expected to be mildly accretive. Products in development at both companies are not covered under the agreement. Bayer's drug products will remain the property and legal responsibility of Bayer and continue to be sold under the Bayer brand names. UNITED STATES AND PUERTO RICO Schering-Plough will undertake Bayer's marketing and sales activities in the United States and Puerto Rico for all of its primary care products, including AVELOX and CIPRO in the antibiotics category, the cardiovascular product ADALAT (nifedipine) and some other smaller, established primary care Bayer products. Schering-Plough will pay Bayer a substantial royalty based on net sales of these products. Schering-Plough will also undertake Bayer's U.S. commercialization activities for the erectile dysfunction medicine LEVITRA under Bayer's existing global co-promotion agreement and will jointly manage the business in the United States with GlaxoSmithKline PLC. Schering-Plough and Bayer will share Bayer's portion of the profits on the U.S. sales of LEVITRA. A substantial number of high-performing Bayer sales representatives and marketing personnel are expected to be integrated into Schering-Plough's pharmaceutical organization in the United States and Puerto Rico. AVELOX (oral and IV formulations) is a broad-spectrum, fast-acting fluoroquinolone antibiotic for certain respiratory and skin infections. CIPRO (BID, XR and IV formulations) is a broad-spectrum, fluoroquinolone antibiotic approved for certain respiratory, skin, urinary tract and other infections. In the United States, Schering-Plough will market these products alongside its own products, including NASONEX(R) (mometasone furoate monohydrate), CLARINEX(R) (desloratadine) and FORADIL(R) AEROLIZER(R) (formoterol fumarate inhalation powder) in the allergy/respiratory category and VYTORIN(R) (ezetimibe/simvastatin) and ZETIA in the cardiovascular category. In terms of effective use of field force resources, the respiratory and anti-infective product lines are seasonal and thus highly complementary to one another. The agreement with Bayer potentially restricts Schering-Plough from marketing products in the United States that would compete with Bayer's quinolone antibiotic AVELOX. As previously announced on June 22, 2004, Schering-Plough and Toyama Chemical Co. Ltd. entered into a definitive licensing agreement for garenoxacin, Toyama's proprietary quinolone antibacterial agent. As a result of the agreement with Bayer, Schering-Plough expects it may need to sublicense rights to the Toyama product in the United States. The company is exploring its options with regard to garenoxacin and will continue to fulfill its commitments to Toyama under its arrangement, including taking the product through regulatory approval. JAPAN In Japan, the Schering-Plough and Bayer local organizations will co-market Schering-Plough's novel cholesterol absorption inhibitor ZETIA, once approved for distribution, while remaining functionally independent. ZETIA is currently under regulatory review in Japan. The agreement does not include rights to any future ZETIA combination products in Japan. ONCOLOGY Concurrent with today's announcement, Bayer said it plans to build a global oncology business. The agreement with Bayer provides for Bayer to promote certain Schering-Plough cancer products in the United States and key European markets for a defined period of time, supplementing efforts by Schering-Plough's oncology sales force. Schering-Plough is a global science-based health care company with leading prescription, consumer and animal health products. Through internal research and collaborations with partners, Schering-Plough discovers, develops, manufactures and markets advanced drug therapies to meet important medical needs. Schering-Plough's vision is to earn the trust of the physicians, patients and customers served by its more than 30,000 people around the world. The company is based in Kenilworth, N.J., and its Web site is www.schering-plough.com. DISCLOSURE NOTICE: This press release contains "forward-looking statements" within the meaning of the Securities Litigation Reform Act of 1995, including the potential strategic benefits and potential financial impact of the strategic agreement with Bayer. Forward-looking statements relate to expectations or forecasts of future events and not to historical information. Schering-Plough does not assume the obligation to update any forward-looking statement. There are no guarantees about the timing of implementation of the strategic agreement, the results of the strategic agreement, the performance of Schering-Plough stock or the performance of Schering-Plough's business. Actual results may vary materially from forward-looking statements made here or in other Schering-Plough written or spoken communications due to many factors and uncertainties, which include the market acceptance of ZETIA in Japan, trade buying patterns for all products covered by the strategic agreement ("covered products"), the introduction and performance of products competitive to the covered products, legislation that may impact the pricing/availability of the covered products and other items impacting Schering-Plough, the pharmaceutical industry, and business generally, all as discussed in Schering-Plough's Securities and Exchange Commission filings, including the 2004 second quarter 10-Q and future SEC filings. # # # EX-99.2 3 y02005exv99w2.txt FREQUENTLY ASKED QUESTIONS Exhibit 99.2 September 13, 2004, Investor Frequently Asked Questions and Answers From time to time, Investor Relations will provide FAQs on various topics of interest to investors. The following is a compilation of frequently asked questions and answers related to the alliance with Bayer. Q On September 13, Schering-Plough announced it entered into a strategic alliance with Bayer. Is this a merger between Schering-Plough and Bayer? A No. Schering-Plough and Bayer will remain independent companies. This alliance signifies a creative, new approach to industry collaborations and is designed to maximize the companies' pharmaceutical resources and build value while maintaining each company's own strategic interests. Q Why did Schering-Plough enter into a strategic alliance with Bayer? What are the general terms of the deal? A On Sept. 13, Schering-Plough announced that it has entered into a strategic alliance with Bayer involving Bayer's U.S. pharmaceutical business and a Zetia collaboration in Japan. This alliance with Bayer accomplishes three things for Schering-Plough: 1) The alliance allows Schering-Plough to leverage and enhance its primary care infrastructure in the U.S. and Puerto Rico by increasing the number of product offerings to physicians and patients, including AVELOX, CIPRO and LEVITRA. In addition, a substantial number of high-performing Bayer sales representatives and marketing personnel are expected to be integrated into Schering-Plough. 2) In Japan, the alliance with Bayer gives Schering-Plough a strong partner with deep expertise in cardiovascular disease to co-market ZETIA, Schering-Plough's novel cholesterol absorption inhibitor, upon local approval. 3) Through the alliance, Schering-Plough will gain additional support for promotion of certain oncology products in the U.S. and key European markets. Q What are the financial terms of the agreement? A Under the terms of the strategic alliance, Schering-Plough will record U.S. sales of Bayer's primary care products, excluding LEVITRA. Schering-Plough will pay a substantial royalty to Bayer based on U.S. net sales of these products. Schering-Plough will co-promote LEVITRA with GlaxoSmithKline PLC in the U.S. Schering-Plough and Bayer will share Bayer's portion of the profits on the U.S. sales of LEVITRA. In Japan, Zetia profits will be shared by the two companies. Q Are there any one-time costs to Schering-Plough? A Under the agreement, there will be a business integration and transition period during the remainder of 2004. As a result, there may be some integration and transition costs, primarily in 2004. For Schering-Plough, the transaction is expected to be mildly dilutive in 2004, in terms of its impact on earnings per share (EPS). While the agreement is principally strategically driven, as such the transaction is expected to be mildly accretive after 2004. Q What is the likely impact of this strategic alliance on your income statement? A The terms of the alliance are expected to be effective on October 1, 2004. Once effective, Schering-Plough will record its share of LEVITRA profits as alliance revenue. Schering-Plough will record U.S. net sales of Bayer's primary care products, excluding LEVITRA. Bayer will continue to manufacture these products and Schering-Plough will pay a substantial royalty to Bayer (expensed in the "Cost of Goods" line) based on U.S. net sales of these primary care products. The royalty rate paid to Bayer will decrease as sales exceed predetermined levels. As a result of the planned integration of a substantial number of Bayer's high-performing sales representatives and marketing personnel into Schering-Plough, Schering-Plough's "Selling, General & Administrative" expense line will reflect the increase in size of its primary care sales force. For Schering-Plough, the transaction is expected to be mildly dilutive in 2004, in terms of its impact on earnings per share (EPS). While the agreement is principally strategically driven, as such the transaction is expected to be mildly accretive after 2004. Q How will Schering-Plough's recent in-licensing of garenoxacin from Toyama be affected by this collaboration? A The agreement with Bayer potentially restricts Schering-Plough from marketing products in the United States that would compete with Bayer's quinolone antibiotic AVELOX. As previously announced on June 22, 2004, Schering-Plough and Toyama Chemical Co. Ltd. entered into a definitive licensing agreement for garenoxacin, Toyama's proprietary quinolone antibacterial agent. As a result of the agreement with Bayer, Schering-Plough expects it may need to sublicense rights to the Toyama product in the United States. The company is exploring its options with regard to garenoxacin and will continue to fulfill its commitments to Toyama under its arrangement, including taking the product through regulatory approval. Q How does this collaboration affect Schering-Plough's PDE-5 inhibitor in early phase development for the treatment for erectile dysfunction? A The agreement with Bayer potentially restricts Schering-Plough from marketing products in the United States that would compete with the erectile dysfunction product LEVITRA. If approved, Schering-Plough's PDE-5 inhibitor would be a direct competitor to LEVITRA. As a result of the agreement with Bayer, Schering-Plough expects it may need to out license U.S. rights to its PDE-5 inhibitor for the treatment of erectile dysfunction. Q Why did you choose Bayer as a partner for Zetia in Japan? Does the agreement include the development of a combination cholesterol product in Japan? A In Japan, Bayer is a leading international pharmaceutical company, with a well-recognized expertise in cardiovascular therapy. Bayer has demonstrated skill and competence in the hyperlipidemia therapeutic area and Schering-Plough believes that Bayer will be able to help make Zetia a successful first-line monotherapy as well as add-on therapy for the treatment of high cholesterol in Japan. This alliance does not cover the commercialization of a combination product in Japan. Schering-Plough retains those rights exclusively. Q What is the status of ZETIA in Japan? A Following a filing in the fourth quarter of 2003, Zetia is under regulatory review in Japan. Q Will Bayer share in the profits/revenues of the Schering-Plough oncology products that they will promote in the U.S. and key European markets? A No. Schering-Plough will continue to book all sales and profits from its oncology products. DISCLOSURE NOTICE: This Investor FAQ contains "forward-looking statements" within the meaning of the Securities Litigation Reform Act of 1995, including the potential strategic benefits and potential financial impact of the strategic agreement with Bayer. Forward-looking statements relate to expectations or forecasts of future events and not to historical information. Schering-Plough does not assume the obligation to update any forward-looking statement. There are no guarantees about the timing of implementation of the strategic agreement, the results of the strategic agreement, the performance of Schering-Plough stock or the performance of Schering-Plough's business. Actual results may vary materially from forward- looking statements made here or in other Schering-Plough written or spoken communications due to many factors and uncertainties, which include the market acceptance of ZETIA in Japan, trade buying patterns for all products covered by the strategic agreement ("covered products"), the introduction and performance of products competitive to the covered products, legislation that may impact the pricing/availability of the covered products and other items impacting Schering-Plough, the pharmaceutical industry, and business generally, all as discussed in Schering-Plough's Securities and Exchange Commission filings, including the 2004 second quarter 10-Q and future SEC filings. -----END PRIVACY-ENHANCED MESSAGE-----