8-K 1 d8k.htm FORM 8-K Form 8-K

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): February 13, 2003

 

Scios Inc.

(Exact Name of Registrant as Specified in Charter)

 

Delaware

  

0-11749

  

95-3701481

(State or Other Jurisdiction of

Incorporation)

  

(Commission

File Number)

  

(I.R.S. Employer

Identification No.)

 

820 W. Maude Avenue

Sunnyvale, CA 94085

(Address of Principal Executive Offices)

 

 

(408) 616-8200

(Registrant’s telephone number, including area code)

 

 

 

Item 5.    Other Events

 

On February 13, 2003 Scios Inc. announced financial results for the fourth quarter and full-year ended December 31, 2002.

 

Scios Inc. reported total revenues of $44.6 million in the fourth quarter of 2002 compared to $10.5 million in the fourth quarter of 2001. Total revenues for the year ended December 31, 2002 were $111.2 million compared to $47.3 million in 2001. Most of the revenues came from sales of the company’s flagship product, Natrecor® (nesiritide), which were $43.3 million in the fourth quarter of 2002, a 66 percent increase over the prior quarter. This increase was largely driven by demand in the hospital setting. For the full-year 2002, Natrecor net sales were $107.3 million versus $14.1 million in 2001.

 

Product and Pipeline Highlights

 

Natrecor

 

  •   Approximately 88 percent of the targeted hospitals have now stocked Natrecor. Of those that stocked the drug in the third quarter of 2002, 87 percent reordered it in the fourth quarter.

 

  •   The FUSION (Follow Up Serial Infusions of Nesiritide) pilot study, which is evaluating the safety and feasibility of follow-up serial infusions of Natrecor, is nearing completion.

 

  •   The ADHERE (Acute Decompensated Heart Failure National Registry) Registry has enrolled over 35,000 patients to date. Over 350 clinicians and staff attended the second annual 2003 ADHERE National Meeting in Palm Springs earlier this year.

 

  •   Enrollment continued in the longitudinal study module of the ADHERE Registry that will follow patients with advanced heart failure for up to two years to assess change in quality of life as a function of medical management and disease progression.

 

  •   Data will be presented from six abstracts related to Natrecor and acute congestive heart failure at the American College of Cardiology Annual Meeting in Chicago (March 30—April 2).

 

SCIO-469 and p38 MAP Kinase Inhibitor Programs

 

  •   SCIO-469, the company’s first-generation oral p38 MAP kinase inhibitor, continues to be evaluated in the fifth dose group of a total six doses in a Phase II clinical trial in patients with rheumatoid arthritis already receiving methotrexate.

 

  •   SCIO-323, a second-generation p38 MAP kinase inhibitor, continues to progress in a Phase I clinical trial, which began in December 2002.

 

Fourth Quarter and Year-End Financial Results

 

Total costs and expenses for the fourth quarter of 2002 were $57.4 million compared to $40.7 million for the fourth quarter of 2001. Total costs and expenses for the year ended December 31, 2002 were $187.5 million compared to $112.5 million for the year ended December 31, 2001.

 

Research and development (R&D) expenses for the fourth quarter of 2002 were $15.8 million, a decrease of approximately 18 percent versus the third quarter of 2002, primarily due to the reduction in expenses relating to preclinical, R&D programs and the redeployment of quality control personnel to the manufacturing area. For the full year of 2002, R&D expenses were $66.8 million, an increase of approximately 39 percent versus the prior year, primarily due to increased spending on the Natrecor and p38 MAP kinase development programs.

 

Selling, general and administrative (SG&A) expenses were $38.9 million in the fourth quarter of 2002, an increase of 59 percent over the prior quarter due to higher sales and marketing expenses, commissions and promotions. For the full year of 2002, SG&A expenses were $114.2 million, an increase of 83 percent over the prior year, reflecting costs associated with the Natrecor launch and associated sales and marketing programs. Toward the end of the fourth quarter of 2002, the Company ended the sales support portion of its agreement with Innovex/Quintiles, resulting in an additional expense of $2.4 million in the fourth quarter of 2002. This termination is ahead of the previously agreed termination date of May 2003.

 

Net loss for the fourth quarter of 2002 was $18.5 million, or $0.40 per share, compared to a net loss of $28.8 million, or $0.63 per share, for the fourth quarter of 2001. Net loss for the year ended December 31, 2002 was $88.1 million, or $1.90 per share, compared to a net loss of $62.5 million, or $1.47 per share, for the comparable period in 2001.

 

Cash, cash equivalents and marketable securities (both current and non-current) at December 31, 2002 were $172.0 million, excluding $24.2 million of restricted marketable securities.

 

Forward-Looking Safe Harbor Statement

 

        This Current Report on Form 8-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which may include statements concerning the proposed merger with Johnson & Johnson and strategic plans, expectations, and objectives for future operations. We generally identify such forward-looking statements using words like “estimate,” “believe,” “intend,” “expect,” “may,” “should,” “plan,” “project,” “contemplate,” “anticipate” or similar statements. Statements that are not historical facts are forward-looking statements based on current assumptions that involve risks and uncertainties. These risks and uncertainties may include the sales penetration and success of Natrecor, the success of clinical trials of Natrecor and our pipeline products, the failure to complete the proposed merger in a timely manner, the inability to obtain Scios shareholder or regulatory approvals or to satisfy other conditions to the merger, actions of governmental entities, and costs related to the merger, as well as other risks detailed from time to time in the reports filed by Scios with the SEC, including the Company’s quarterly reports and annual report on Form 10-K. Actual results, performance or achievements of Scios may differ significantly from those described in these forward-looking statements. Scios disclaims any intention or obligation to update or revise any financial projections or forward-looking statements, whether as a result of new information, future events or otherwise.

 

2

 

SCIOS INC.

Consolidated Balance Sheets

(in thousands, except share date)

 

    

December 31,

2002

     

December 31,

2001

  
    

(Unaudited)

         

Assets

                  

Current assets:

                  

Cash and cash equivalents

   

$

32,174

 

   

$

58,296

 

Marketable securities

   

 

18,504

 

   

 

7,351

 

Restricted marketable securities

   

 

8,435

 

   

 

—  

 

Accounts receivable, net

   

 

16,395

 

   

 

6,943

 

Inventory

   

 

8,179

 

   

 

1,158

 

Prepaid expenses and other assets

   

 

6,569

 

   

 

4,214

 

    
  

Total current assets

   

 

90,256

 

   

 

77,962

 

Marketable securities, non-current

   

 

121,340

 

   

 

63,669

 

Restricted marketable securities, non-current

   

 

15,791

 

   

 

—  

 

Property and equipment, net

   

 

10,089

 

   

 

10,424

 

Other assets

   

 

7,843

 

   

 

4,123

 

    
  

Total assets

   

$

245,319

 

   

$

156,178

 

    
  

Liabilities and stockholders’ equity

                  

Current liabilities:

                  

Accounts payable

   

$

11,150

 

   

$

9,625

 

Accrued employee compensation

   

 

20,731

 

   

 

9,685

 

Other accrued liabilities

   

 

11,807

 

   

 

7,206

 

Deferred contract revenue

   

 

1,166

 

   

 

—  

 

Accrued interest payable

   

 

3,323

 

   

 

3,035

 

Current portion of long-term debt

   

 

25,561

 

   

 

30,000

 

    
  

Total current liabilities

   

 

73,738

 

   

 

59,551

 

Deferred contract revenue

   

 

3,116

 

   

 

—  

 

Long-term debt

   

 

159,624

 

   

 

15,479

 

Other long-term liabilities

   

 

2,245

 

   

 

—  

 

    
  

Total liabilities

   

 

238,723

 

   

 

75,030

 

    
  

Stockholders’ equity:

                  

Preferred stock; $.001 par value; 20,000,000 shares authorized; 4,991 issued and outstanding

   

 

—  

 

   

 

—  

 

Common stock; $.001 par value, 150,000,000 shares authorized; 47,200,660 and 46,015,167 shares issued, respectively; 46,938,860 and 45,985,167 shares outstanding, respectively

   

 

47

 

   

 

46

 

Additional paid-in capital

   

 

575,935

 

   

 

561,352

 

Treasury stock; 261,800 and 30,000 shares, respectively

   

 

(6,014

)

   

 

(445

)

Deferred warrant costs

   

 

(2,194

)

   

 

(6,794

)

Deferred compensation

   

 

—  

 

   

 

(106

)

Accumulated other comprehensive income

   

 

832

 

   

 

999

 

Accumulated deficit

   

 

(562,010

)

   

 

(473,904

)

    
  

Total stockholders’ equity

   

 

6,596

 

   

 

81,148

 

    
  

Total liabilities and stockholders’ equity

   

$

245,319

 

   

 

156,178

 

    
  

 

3

 

SCIOS INC.

Consolidated Statements of Operations

(in thousands, except share and per share data)

 

    

Three months ended

December 31,

     

Twelve months ended

December 31,

  
    

2002

     

2001

     

2002

     

2001

  
    

(Unaudited)

     

(Unaudited)

         

Revenues:

                                    

Product sales

   

$

43,270

 

   

$

9,624

 

   

$

107,293

 

   

$

30,052

 

Research and development contracts and royalties

   

 

1,344

 

   

 

923

 

   

 

3,949

 

   

 

4,788

 

Psychiatric product sales and co-promotion commissions, net of expenses

   

 

—  

 

   

 

—  

 

   

 

—  

 

   

 

3,142

 

Gain on sale of marketing rights

   

 

—  

 

   

 

—  

 

   

 

—  

 

   

 

9,363

 

    
  
  
  
    

 

44,614

 

   

 

10,547

 

   

 

111,242

 

   

 

47,345

 

    
  
  
  

Costs and expenses:

                                    

Costs of product sales

   

 

2,644

 

   

 

(119

)

   

 

6,446

 

   

 

1,916

 

Research and development

   

 

15,841

 

   

 

13,465

 

   

 

66,796

 

   

 

48,130

 

Selling, general and administration

   

 

38,935

 

   

 

27,370

 

   

 

114,235

 

   

 

62,475

 

    
  
  
  
    

 

57,420

 

   

 

40,716

 

   

 

187,477

 

   

 

112,521

 

    
  
  
  

Loss from operations

   

 

(12,806

)

   

 

(30,169

)

   

 

(76,235

)

   

 

(65,176

)

    
  
  
  

Other income (expense):

                                    

Interest income

   

 

1,216

 

   

 

1,386

 

   

 

4,040

 

   

 

4,869

 

Interest expense

   

 

(7,011

)

   

 

(562

)

   

 

(16,365

)

   

 

(2,818

)

Realized gains on securities, net

   

 

195

 

   

 

255

 

   

 

657

 

   

 

849

 

Other income (expense), net

   

 

(141

)

   

 

256

 

   

 

(203

)

   

 

(221

)

    
  
  
  
    

 

(5,741

)

   

 

1,335

 

   

 

(11,871

)

   

 

2,679

 

    
  
  
  

Net loss

   

$

(18,547

)

   

$

(28,834

)

   

$

(88,106

)

   

$

(62,497

)

    
  
  
  

Net loss per common share:

                                    

Basic and diluted

   

$

(0.40

)

   

$

(0.63

)

   

$

(1.90

)

   

$

(1.47

)

Weighted average number of common shares outstanding used in calculation of:

                                    

Basic and diluted

   

 

46,712,776

 

   

 

45,730,836

 

   

 

46,442,681

 

   

 

42,623,093

 

 

4

 

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.

 

Date: February 13, 2003

SCIOS INC.

(registrant)

By:

  

/S/    DAVID W. GRYSKA        

Name: David W. Gryska

Its: Chief Financial Officer

 

 

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