-----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, P65yQecukzkG43E4wAdqFeci/Tc4TcHcBpx+25MMz1sAkJ1pgux3ZgC3GAMgUUL2 dxWEwpaAQgofyc8OYg5ykw== 0000892569-03-001876.txt : 20030808 0000892569-03-001876.hdr.sgml : 20030808 20030808103555 ACCESSION NUMBER: 0000892569-03-001876 CONFORMED SUBMISSION TYPE: 425 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20030808 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: AAIPHARMA INC CENTRAL INDEX KEY: 0001013243 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-TESTING LABORATORIES [8734] IRS NUMBER: 042687849 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 425 SEC ACT: 1934 Act SEC FILE NUMBER: 000-21185 FILM NUMBER: 03830392 BUSINESS ADDRESS: STREET 1: 2320 SCIENTIFIC PARK DRIVE CITY: WILMINGTON STATE: NC ZIP: 28405 BUSINESS PHONE: 9102547000 MAIL ADDRESS: STREET 1: 2320 SCIENTIFIC PARK DRIVE CITY: WILMINGTON STATE: NC ZIP: 28405 FORMER COMPANY: FORMER CONFORMED NAME: APPLIED ANALYTICAL INDUSTRIES INC DATE OF NAME CHANGE: 19960430 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: CIMA LABS INC CENTRAL INDEX KEY: 0000833298 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 411569769 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 425 BUSINESS ADDRESS: STREET 1: 10000 VALLEY VIEW ROAD CITY: EDEN PRAIRIE STATE: MN ZIP: 55344-9361 BUSINESS PHONE: 9529478700 MAIL ADDRESS: STREET 1: 10000 VALLEY VIEW ROAD CITY: EDEN PRAIRIE STATE: MN ZIP: 55344-9361 425 1 f92115ce425.txt 425 Filed by CIMA LABS INC. Pursuant to Rule 425 under the Securities Act of 1933 and deemed filed pursuant to Rule 14a-12 under the Securities Exchange Act of 1934 Subject Company: aaiPharma Inc. Commission File No. 0-21185 This filing relates to the merger transaction between CIMA LABS INC., a Delaware corporation ("Cima"), aaiPharma Inc., a Delaware corporation ("aaiPharma"), Scarlet Holding Corporation, a Delaware corporation ("Holding Company"), Scarlet MergerCo, Inc., a Delaware corporation and a direct, wholly owned subsidiary of Holding Company ("S MergerCo"), and Crimson MergerCo, Inc., a Delaware corporation and a direct, wholly owned subsidiary of Holding Company ("C MergerCo"), pursuant to an Agreement and Plan of Merger, dated as of August 5, 2003 (the "Merger Agreement"). The Merger Agreement is on file with the Securities and Exchange Commission as an exhibit to the Current Report on Form 8-K, as amended, filed by Cima on August 6, 2003. ADDITIONAL INFORMATION AND WHERE TO FIND IT In connection with a proposed business combination transaction, Scarlet Holding Corporation, the holding company in the proposed transaction, intends to file with the Securities and Exchange Commission (the "SEC") a registration statement on Form S-4 that will include a joint proxy statement/prospectus and other relevant documents in connection with the proposed transaction. Investors of aaiPharma and Cima are urged to read the joint proxy statement/prospectus and other relevant materials when they become available because they will contain important information about Cima, aaiPharma and the proposed transaction. Investors may obtain a free copy of these materials (when they are available) and other documents filed with the Securities and Exchange Commission at the SEC's website at www.sec.gov. A free copy of the joint proxy statement/prospectus when it becomes available may also be obtained from aaiPharma Inc., 2320 Scientific Park Drive, Wilmington, North Carolina 28405 or CIMA LABS INC., 10000 Valley View Road, Eden Prairie, Minnesota 55344. In addition, investors may access copies of the documents filed with the SEC by aaiPharma on aaiPharma's website at www.aaiPharma.com and may access copies of the documents filed with the SEC by Cima on Cima's website at www.cimalabs.com. aaiPharma, Cima and their respective directors, executive officers and certain other members of management and employees may be soliciting proxies from their respective stockholders in favor of the proposed merger. Information regarding the persons who may, under the rules of the SEC, be considered to be participants in the solicitation of aaiPharma's stockholders in connection with the proposed merger is set forth in aaiPharma's proxy statement for its 2003 annual meeting, dated April 8, 2003 and filed with the SEC on April 11, 2003, and information regarding the persons who may, under the rules of the SEC, be considered to be participants in the solicitation of Cima's stockholders in connection with the proposed transaction is set forth in Cima's proxy statement for its 2003 annual meeting, dated April 14, 2003 and filed with the SEC on April 11, 2003. Additional information regarding these individuals and any interest they have in the proposed transaction will be set forth in the joint proxy statement/prospectus when it is filed with the SEC. FORWARD-LOOKING STATEMENTS The materials attached below may contain forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on the current expectations and beliefs of the management of aaiPharma and Cima and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The forward-looking statements contained in this press release include statements about future financial and operating results and the proposed merger of aaiPharma and Cima. These statements are not guarantees of future performance, involve certain risks, uncertainties and assumptions that are difficult to predict, and are based upon assumptions as to future events that may not prove accurate. Therefore, actual outcomes and results may differ materially from what is expressed herein. Risks and uncertainties pertaining to the following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: the ability of aaiPharma and Cima to obtain the stockholder and regulatory approvals required for the merger; the new company's ability to successfully integrate the businesses of the two companies; unexpected costs involved in the merger or to the new company's ability to achieve cost-cutting synergies; the impact of uncertainty surrounding the merger on the businesses of the two companies; the impact of competition, new data, supply issues or marketplace trends on the market for the companies' products; deterioration in the business of aaiPharma or Cima prior to closing; technical, regulatory or manufacturing issues; new data or intellectual property disputes that may affect the companies' programs; the ability of the new company to develop and market products in a timely manner; and difficulties in gaining approval of new products. Additional economic, business, competitive and/or regulatory factors affecting aaiPharma's and Cima's businesses generally that may cause actual results to differ materially are discussed in their respective filings with the SEC, including their Annual Reports on Form 10-K for the fiscal year ended December 31, 2002, especially in the Management's Discussion and Analysis section, their most recent Quarterly Reports on Form 10-Q and their Current Reports on Form 8-K. aaiPharma and Cima do not undertake any obligation to (and expressly disclaim any such obligation to) update or alter their forward-looking statements, whether as a result of new information, future events or otherwise. Attached below are three presentations for employees posted on a joint Cima/aaiPharma website related to the merger. EMPLOYEE-ONLY WEB SITE PRESENTATION OF AAIPHARMA FACILITIES ----------------------------------------------------------- # # # # # # # # # # # # # # # # # # # Within the SCIENCE lies the MEDICINE that will CHANGE a life.(TM) [Photo of aaiPharma headquarters sign] aaiPharma Headquarters (HQ) Wilmington, North Carolina [Photo of aaiPharma headquarters building exterior] Physical Chemistry at HQ [Photo of aaiPharma scientist] Micro and Analytical Labs Hall Street Facilities -- Wilmington, N.C. [Photo of Hall Street Facilities exterior] Inside Hall Street [Photo of Manufacturing worker] Solid Dosage Manufacturing Facility Wilmington, N.C. [Photo of Solid Dosage Manufacturing Facility exterior] Inside Manufacturing [Photo of Manufacturing worker] Biotech Lab -- Wilmington, N.C. [Photo of Biotech Lab building exterior] Inside the Biotech Lab [Photo of aaiPharma scientists] Stability Chambers/Operations Wilmington, N.C. [Photo of Stability Chambers/Operations Facility exterior] Inside Stability [Photo of Interior of Stability Chambers Facility] aaiPharma's Child Care: The Learning Center -- Wilmington, N.C. [Photo of The Learning Center building exterior] Phase I Clinic and Labs Research Triangle Park, NC [Photo of Phase I Clinic and Labs building exterior] Clinical Trials Headquarters Natick, MA [Photo of Clinical Trials Headquarters building exterior] Sterile Manufacturing Facility Charleston, SC [Photo of Sterile Manufacturing building exterior] Inside Sterile Manufacturing Charleston, SC [Photo of Sterile Manufacturing Facility interior and aaiPharma scientists] N. Brunswick, NJ [Photo of Facility exterior] Inside New Jersey Lab [Photo of Scientists and lab interior] Inside New Jersey Lab [Photo of Scientists and lab interior] Development Labs Kansas City, KS [Photo of Development Labs building exterior] Inside Kansas City [Photo of Laboratory equipment] European Headquarters Neu-Ulm, Germany [Photo of European Headquarters building exterior] Inside the Phase I Clinical Neu-Ulm, Germany [Photo of Laboratory interior] Inside the Lab in Neu-Ulm, Germany [Photo of Laboratory interior] Within the SCIENCE lies the MEDICINE that will CHANGE a life [Photo of aaiPharma Headquarters sign] EMPLOYEE-ONLY WEB SITE PRESENTATION ----------------------------------- OF MERGER OVERVIEW ------------------ # # # # # # # # # # # # # # # # # # # AAIPHARMA AND CIMA ANNOUNCE MERGER TO CREATE A LEADING SCIENCE-BASED, SPECIALTY PHARMACEUTICAL COMPANY - ------------------------------------------------------------------------------- AUGUST 5, 2003 FORWARD LOOKING STATEMENTS [GRAPHIC] This presentation contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on the current expectations and beliefs of the management of aaiPharma and Cima and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The forward-looking statements contained in this presentation include statements about future financial and operating results and the proposed merger of aaiPharma and CIMA. These statements are not guarantees of future performance, involve certain risks, uncertainties and assumptions that are difficult to predict, and are based upon assumptions as to future events that may not prove accurate. Therefore, actual outcomes and results may differ materially from what is expressed herein. In any forward-looking statement in which aaiPharma or CIMA expresses an expectation or belief as to future results, that expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement or expectation or belief will result or be achieved or accomplished. Risks and uncertainties pertaining to the following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: the ability of aaiPharma and CIMA to obtain the stockholder and regulatory approvals required for the merger; the new company's ability to successfully integrate the businesses of the two companies; unexpected costs involved in the merger or to the new company's ability to achieve cost-cutting synergies; the impact of uncertainty surrounding the merger on the businesses of the two companies; the impact of competition, new data, supply issues or marketplace trends on the market for the companies' products; a deterioration in the business of aaiPharma and Cima prior to closing; technical, regulatory or manufacturing issues, new data or intellectual property disputes that may affect the companies' programs; the ability of the new company to develop and market products in a timely manner; and difficulties in gaining approval of new products. Additional economic, business, competitive and/or regulatory factors affecting aaiPharma's and CIMA's businesses generally that may cause actual results to differ materially are discussed in their respective filings with the SEC, including their Annual Reports on Form 10-K for the fiscal year ended December 31, 2002, especially in the Management's Discussion and Analysis section, their most recent Quarterly Reports on Form 10-Q and their Current Reports on Form 8-K. aaiPharma and CIMA do not undertake obligation to (and expressly disclaim any such obligation to) update or alter their forward-looking statements, whether as a result of new information, future events or otherwise. [AAIPHARMA LOGO] 2 [CIMA LOGO] TODAY, WE ANNOUNCED A MERGER THAT ALLOWS STRATEGIC ACCELERATION AND VALUE CREATION - -------------------------------------------------------------------------------- aaiPharma CIMA Creating a dynamic science-based, specialty pharmaceutical company based on: [ ] Established, diversified and growing base of proprietary brands [ ] Substantial R&D platform, sales force and manufacturing capabilities [ ] Market-leading drug delivery technologies that create differentiated products [ ] Strong and flexible financial position 3 (AAIPHARMA LOGO) (CIMA LOGO) COMPLEMENTARY STRENGTHS - -------------------------------------------------------------------------------- aaiPharma CIMA Robust Product Market-Leading Pipeline ODT Technologies Successful Base Established Core of Acquired and of Partnered Improved Brands Products and Technologies Strong R&D Knowledge, Proprietary Product Growing Sales and Pipeline and Marketing Capabilities Manufacturing Capabilities Intelligence on Unlevered Product Acquisition Capital Structure Opportunities 4 (AAIPHARMA LOGO) (CIMA LOGO) DYNAMIC VALUE CREATION [GRAPHIC] MERGER BENEFITS - - Ability to apply CIMA orally disintegrating tablet (ODT) drug delivery technologies to aaiPharma products - - Multiple platforms create broad services offering and formulations powerhouse - - Better exploit enabling technologies and diversify revenues - - Preeminent capability in drug delivery technology - - Expedites commercialization of proprietary products - - Enhanced R&D capabilities - - Expanded manufacturing capacity - - Strong cash flow and balance sheet [AAIPHARMA LOGO] 5 [CIMA LOGO] BUT FIRST, A LITTLE BIT MORE ABOUT CIMA 6 WHO IS CIMA? [GRAPHIC] - - Profitable specialty pharmaceutical company that develops and manufactures branded prescription and OTC products for partners based on proprietary orally disintegrating tablet (ODT) technologies [AAIPHARMA LOGO] 7 [CIMA LOGO] WHY ODT TECHNOLOGIES? [GRAPHIC] - - Benefits for pharmaceutical companies - Life cycle solution for branded Rx products - Product line extension and differentiation - Branded generics for specialty companies - - Benefits for patients - Easier to take medicine - Perceived faster acting - Patient-preferred [AAIPHARMA LOGO] 8 [CIMA LOGO] CIMA'S STRATEGY [GRAPHIC] - - PARTNER-FUNDED COLLABORATIONS - Developing/manufacturing products for pharmaceutical company partners - Collaborations have driven CIMA to current stage of development: 3 branded prescription and 3 OTC brands - 12 signed partner-funded collaborations - - PROPRIETARY PRODUCTS - Initiative aimed at retaining greater economic value of products CIMA develops - Currently developing 5 proprietary products [AAIPHARMA LOGO] 9 [CIMA LOGO] PARTNER PRODUCT COLLABORATIONS [GRAPHIC] - - Astra Zeneca: Zomig-ZMT - - Bristol-Myers Squibb: Tempra FirsTabs - - Novartis: Triaminic Softchews - - Organon: Remeron SolTab - - Schwarz Pharma: NuLev - - Wyeth: Alavert [6 PICTUERS] [AAIPHARMA LOGO] 10 [CIMA LOGO] PROPRIETARY PRODUCTS [GRAPHIC] MUCH LIKE WE FOUND, CIMA HOPES TO ACHIEVE GREATER PROPORTION OF ECONOMIC VALUE OF THE COMPOUND BY: - - SELECTING, FUNDING, DEVELOPING PRODUCTS AND SECURING FDA APPROVALS - - BUILDING CLINICAL AND REGULATORY EXPERTISE - - MAJOR PROJECT IS PAIN PRODUCT, ORAVESCENT FENTANYL [AAIPHARMA LOGO] 11 [CIMA LOGO] ORAVESCENT(R) FENTANYL [GRAPHIC] - - THERAPY FOR BREAKTHROUGH CANCER PAIN - - FASTER AND GREATER ABSORPTION THAN LEADING TRANSMUCOSAL TREATMENT - - PHASE III TRIALS SCHEDULED FOR Q3 2003 - - FDA FILING PLANNED Q4 2004 - - GREAT FIT WITH AAIPHARMA'S FOCUS IN PAIN MANAGEMENT [AAIPHARMA LOGO] 12 [CIMA LOGO] CURRENT GMP MANUFACTURING [GRAPHIC] - - Modern 75,000 square foot facility [PHOTO] [PHOTO] - - In-house production and packaging capabilities - - Two production lines - - Annual manufacturing capacity exceeds 500 million tablets - - Second manufacturing site with bottling capabilities in 2003 [AAIPHARMA LOGO] 13 [CIMA LOGO] CIMA SUMMARY [GRAPHIC] WORLDWIDE LEADER IN SPECIALTY PHARMACEUTICALS - - PROPRIETARY ODT TECHNOLOGIES - - SIX SUCCESSFUL COMMERCIAL ODT PRODUCTS - - PROVEN COMMERCIAL MANUFACTURER - - ROBUST PIPELINE OF PARTNERED AND PROPRIETARY PRODUCTS - - HISTORY OF CONSISTENT REVENUE AND EARNINGS GROWTH - $47 million in 2002 operating revenues - 57% compound annual revenue growth past five years [AAIPHARMA LOGO] 14 [CIMA LOGO] AAIPHARMA AND CIMA ANNOUNCE MERGER TO CREATE A LEADING SCIENCE-BASED, SPECIALTY PHARMACEUTICAL COMPANY - ------------------------------------------------------------------------------- AUGUST 5, 2003 15 STRATEGIC ACCELERATION - --------------------------------------------------------------------------------
Increases Growth Broadens R&D Capacity Enhances Corporate Strategic Drives Near Opportunities & Profile Synergies & Long-Term Manufacturing Operations Financial Returns
16 (AAIPHARMA LOGO) (CIMA LOGO) INCREASES GROWTH OPPORTUNITIES [GRAPHIC] - - Application of CIMA ODT technology to aaiPharma products - - Capture full value of CIMA proprietary product pipeline and accelerate aaiPharma pipeline - - Acceleration of new product development through larger R&D budget - - Enables additional brand acquisitions - - Broader exposure of CIMA technologies through Development Services sales force [AAIPHARMA LOGO] 17 [CIMA LOGO] BROADENS R&D AND MANUFACTURING CAPABILITIES [GRAPHIC] - - Expansion of scientific and technical bases - Advances pipeline of proprietary products - Dedicated science-base of 1000+ scientists and researchers built on strong drug development capabilities - Over 175,000 square feet of R&D facilities - Increases investment in R&D - Positioned to develop additional proprietary products - Expected 2004 R&D budget in excess of $30 million [AAIPHARMA LOGO] 18 [CIMA LOGO] BROADENS R&D AND MANUFACTURING CAPABILITIES [GRAPHIC] - - ODT PRODUCTS ON THE MARKET
TECHNOLOGIES PATENT EXCLUSIVITY PRIMARY FUNCITON PARTNER PRODUCTS - - OraSolv(R) 2010 Taste-masking, broader range [Remeron SolTab (R) Logo] of activities and dosage levels - - DuraSolv(TM) 2018 More compactable formulation, [Alavert (R) Logo] more flexible, less expensive [NuLev (R) Logo] packaging - - PakSolv(TM) 2017 Blister packaging process and [Zomig (R) Logo] materials
[AAIPHARMA LOGO] 19 [CIMA LOGO] BROADENS R&D AND MANUFACTURING CAPABILITIES [GRAPHIC]
TECHNOLOGIES PATENT EXCLUSIVITY PRIMARY FUNCITON - - ProSorb(R) 2019 - Very rapid delivery of drugs orally - e.g., 18 minutes - - ProSlo(TM) 2018 - Delivers single or combination drug predictably over a long period, having an immediate and extended release component - - ProCore(TM) 2007 - Slowly releases drugs over an extended period - e.g., 24 hours - - ProSpher(TM) 2018 - A single injection releases drugs for up to six months - - ProLonic(TM) 2016 - An oral dose that delivers drugs at specific times in the colon - - ProMelt(TM) 2019 - A tablet that dissolves and disintegrates in your mouth in seconds but allows the release to be up to 24 hours - - OraVescent(R) 2019 - Oral transmucosal delivery system
[AAIPHARMA LOGO] 20 [CIMA LOGO] BROADENS R&D AND MANUFACTURING CAPABILITIES [GRAPHIC] - - Technologies for Potentially Creating Branded Proprietary Drugs DARVON(R)/DARVOCET(TM) --> ORASOLV(R) METHADONE --> ORASOLV(R) FENTANYL --> ORAVESCENT(R) OMEPTRAZOLE --> ORASOLV(R)
[AAIPHARMA LOGO] 21 [CIMA LOGO] BROADENS R&D AND MANUFACTURING CAPABILITIES [GRAPHIC] - - Expands manufacturing capabilities and capacity - Oral and injectable dose production facilities - 1 billion blister tablet capacity in 2004 - 950 million bottle tablet capacity by 2004 - 75,000 liters of sterile product annually - - Over 190,000 square feet of sterile and non-sterile production facilities - Eden Prairie, MN - Brooklyn Park, MN - Wilmington, NC - Charleston, SC [AAIPHARMA LOGO] 22 [CIMA LOGO] ENHANCES CORPORATE PROFILE [GRAPHIC] - - Increases market capitalization - - Improves share liquidity - - Expands shareholder base - - Provides financial flexibility - - Diversifies revenue stream - - Leverages experienced management team and highly skilled workforce - Employees (approx.): 1,500 - R&D: 1,000 - Sales & Marketing: 200 (pharmaceutical and development) [AAIPHARMA LOGO] 23 [CIMA LOGO] STRATEGIC SYNERGIES [GRAPHIC] - - Estimated Annual Synergies: - 2004 Between $8 million and $10 million - 2005 Between $18 million to $20 million, increasing thereafter - - Economies of scale in manufacturing from increased capacity utilization - - Greater leverage of both companies' R&D expertise and infrastructure - - Elimination of public company costs and rationalization of general & administrative operations - - Sales of CIMA technologies through aaiPharma's existing sales force - - In-sourcing from CIMA partners using our R&D capabilities [AAIPHARMA LOGO] 24 [CIMA LOGO] DRIVES NEAR & LONG-TERM FINANCIAL RETURNS [GRAPHIC] - - Establishing 2004 Holding Company revenue guidance of $405 to $415 million - 2003-2006 CAGR Revenue Growth of 18% to 20% - - Establishing 2004 Holding Company EPS guidance $1.25 to $1.30 - 2003-2006 CAGR EPS Growth of 25% to 30% [AAIPHARMA LOGO] 25 [CIMA LOGO] MANAGEMENT TEAM WITH EXTENSIVE INDUSTRY EXPERIENCE [GRAPHIC]
OFFICER TITLE BACKGROUND FREDERICK SANCILIO Chairman Founded aaiPharma in 1979. aaiPharma: Chairman and Chief Scientific Officer Prior Experience: Burroughs-Wellcome STEVEN RATOFF Vice Chairman CIMA: Chairman of the Board, Interim Chief Executive Officer. Prior Experience: MacroMed, Brown-Forman, BMS PHILIP TABBINER CEO aaiPharma: President and CEO Prior Experience: Bayer, DuPont Merck WILLIAM GINNA CFO aaiPharma: Chief Financial Officer and Executive Vice President. Prior Experience: London International Group, Athlone Industries VIJAY AGGARWAL President, aaiPharma: President, aaiPharma Development Services Development Services Prior Experience: Quest Diagnostics, SmithKline Beecham JOHN HONTZ President, CIMA: Chief Operating Officer CIMA Prior Experience: Glaxo Wellcome, Burroughs-Wellcome DAVID HURLEY President, Pharmaceuticals aaiPharma: President, Pharmaceuticals Prior Experience: Geneva Pharmaceuticals, Novartis, Baxter GEORGE VAN LEAR President, R&D aaiPharma: President, R&D Prior Experience: Senetek, Glaxo Wellcome
[AAIPHARMA LOGO] 26 [CIMA LOGO] TRANSACTION SUMMARY [GRAPHIC] - - Stock-for-stock exchange, tax-free transaction (subject to IRS notification) - - Holding company transaction structure - At closing, all aaiPharma and CIMA shareholders will receive shares in a newly formed public company - 1.000 Holding Company shares for each aaiPharma share - 1.3657 Holding Company shares for each CIMA share - - Share ownership (fully diluted) - aaiPharma 59.4% - CIMA 40.6% - - Approved and recommended by both aaiPharma and CIMA Boards - - At closing, there will be 8 directors of the Holding Company; 4 current aaiPharma directors and 4 current CIMA directors. Prior to the closing, aaiPharma will designate 3 of its directors who are independent and CIMA will designate 2 of its directors who are independent and these 5 independent directors shall select, after the closing, between one and three additional directors to the board of directors of Holding Company. - - Next steps - Hart-Scott-Rodino filings - Special shareholder meetings for both companies--Q4 2003 - Closing anticipated in Q4 of 2003 [AAIPHARMA LOGO] 27 [CIMA LOGO] COMPELLING MERGER OF COMPLEMENTARY BUSINESSES [GRAPHIC] Strategic and cultural fit Diverse portfolio of brands, technologies and partnered products Substantial R&D and manufacturing expertise Strong and flexible financial position Experienced management team Compelling synergies expected [AAIPHARMA LOGO] 28 [CIMA LOGO] ADDITIONAL INFORMATION AND WHERE TO FIND IT [GRAPHIC] - - Scarlet Holding Corporation, the holding company to be formed in this transaction, intends to file with the Securities and Exchange Commission a registration statement on Form S-4 that will include a joint proxy statement/prospectus and other relevant documents in connection with the proposed transaction. INVESTORS OF AAIPHARMA AND CIMA ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT MATERIALS WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT SCARLET HOLDING CORPORATION, CIMA, AAIPHARMA AND THE PROPOSED TRANSACTION. Investors may obtain a free copy of these materials (when they are available) and other documents filed with the Securities and Exchange Commission at the SEC's website at www.sec.gov. A free copy of the joint proxy statement/prospectus when it becomes available may also be obtained from aaiPharma Inc., 2320 Scientific Park Drive, Wilmington, North Carolina 28405 or CIMA, 10000 Valley View Road, Eden Prairie, Minnesota 55344. Investors may access copies of the documents filed with the SEC by aaiPharma on aaiPharma's website at www.aaiPharma.com and investors and may access copies of the documents filed with the SEC by CIMA on CIMA's website at www.cimalabs.com. In addition, copies may be obtained free of charge at written request to aaiPharma at 2320 Scientific Park Drive, Wilmington, North Carolina, attention: CFO or to CIMA at 10000 Valley View Road, Eden Prairie, Minnesota 55344, attention: CFO. - - aaiPharma, CIMA and their respective directors, executive officers and certain other members of management and employees may be deemed to be participants in soliciting proxies from their respective stockholders in favor of the proposed merger. Information regarding the persons who may, under the rules of the SEC, be considered to be participants in the solicitation of aaiPharma's stockholders in connection with the proposed merger is set forth in aaiPharma's proxy statement for its 2003 annual meeting, dated April 8, 2003 and filed with the SEC on April 11, 2003, and information regarding the persons who may, under the rules of the SEC, be considered to be participants in the solicitation of CIMA's stockholders in connection with the proposed transaction is set forth in CIMA's proxy statement for its 2003 annual meeting, dated April 14, 2003 and filed with the SEC on April 11, 2003. - - Additional information regarding these individuals and any interest they have in the proposed transaction will be set forth in the joint proxy statement/prospectus when it is filed with the SEC. [AAIPHARMA LOGO] 29 [CIMA LOGO] EMPLOYEE-ONLY WEB SITE PRESENTATION ----------------------------------- OF AAIPHARMA OVERVIEW --------------------- # # # # # # # # # # # # # # # # # # # aaiPHARMA(TM) DEVELOPING CHEMISTRY INTO MEDICINE Within the SCIENCE lies the MEDICINE that will CHANGE a life.(TM) 30 [AAIPHARMA LOGO] "WE ARE A SCIENCE-BASED SPECIALTY PHARMACEUTICAL COMPANY." 31 [AAIPHARMA LOGO] THE AAIPHARMA WORLD . . . - Wilmington, NC - 8 Sites in Wilmington, including HQ, Labs and Manufacturing - - RTP, NC - - Charleston, SC - - Natick, MA - - North Brunswick, NJ - - Kansas City, KS [PICTURE] - - Neu Ulm, Germany - - Ontario, Canada - - Bois Colombes, France - - Arnhem, The Netherlands 32 [AAIPHARMA LOGO] AAIPHARMA'S HERITAGE - - aaiPharma was founded in 1979 by Dr. Frederick Sancilio as Applied Analytical Industries Inc. (AAII) - - His vision was, from the very beginning, to create a different kind of pharmaceutical company - - He started with analytical testing services and by the late '90s built a leading provider of drug development services - AAI Development Services - - At the end of 2000, he stated the intent to transform to a specialty pharmaceutical company - - Today, we are a thriving, science-based specialty pharma company - aaiPharma 33 [AAIPHARMA LOGO] STRATEGIC FOCUS DRIVE REVENUE GROWTH THROUGH ACQUISITIONS AND COMMERCIALIZATION OF PIPELINE PRODUCTS 1. THERAPEUTIC FOCUS PAIN MANAGEMENT, CRITICAL CARE, AND GASTROINTESTINAL DISEASES 2. ACQUISITION OF ESTABLISHED BRANDS PROVIDES IMMEDIATE PRESENCE IN FOCUS THERAPEUTIC AREAS 3. BROAD RANGE OF RESEARCH AND DRUG DEVELOPMENT CAPABILITIES DRIVE COMMERCIALIZATION OF PIPELINE 34 [AAIPHARMA LOGO] RECENT ACCOMPLISHMENTS - - ACQUIRED A UNIQUE DARVOCET(TM) LINE EXTENSION FROM ATHLON PHARMACEUTICALS - - LAUNCHED DARVON(R) COMPOUND 32 - - ACQUIRED EXCLUSIVE RIGHTS TO AN INJECTABLE CII PAIN MANAGEMENT METHADONE PRODUCT FROM ROXANE LABS - - ANNOUNCED A CO-PROMOTION ALLIANCE WITH SICOR FOR CALCITRIOL INJECTION VIAL - - COMMERCIALLY LAUNCHED AZASAN(TM) (75 MG/100 MG) AND CALCITRIOL INJECTION VIAL - - SUBMITTED NDA FOR M.V.I. ADULT(TM) TO FDA 35 [AAIPHARMA LOGO] PLANNED MILESTONES 2003-2005 - - FDA APPROVAL OF AND LAUNCH OF UNIQUE DARVOCET(TM) LINE EXTENSION - - 2 DARVON(R)/DARVOCET-N(R) LINE EXTENSIONS IN EACH OF 2004 AND 2005 - - COMMERCIAL LAUNCH OF M.V.I. ADULT(TM) IN 2004 - - SNDA FILING ON A NEW M.V.I.(R) LINE EXTENSION IN 2003 36 [AAIPHARMA LOGO] EXECUTIVE MANAGEMENT TEAM
EXECUTIVE OFFICER POSITION PRIOR HEALTHCARE EXPERIENCE - ----------------- -------- --------------------------- Frederick D. Sancilio, Ph.D. Chairman . Founder of aaiPharma, and positions & CSO with Burroughs-Wellcome, Schering-Plough and Hoffmann-Roche Philip S. Tabbiner, D.B.A. President Executive positions with Bayer Diagnostics, & CEO Bayer Corp., Chiron Diagnostics, Dupont Merck-Pharmaceuticals and Radiopharm William L. Ginna, Jr. EVP & CFO CFO London International Group, Americas David M. Hurley President Executive positions with HealthNexis, Novartis Pharmaceuticals (Geneva Pharmaceuticals and Novartis Nutritional Corp.) George E. Van Lear, Ph.D. President, Senetek PLC, DPT Technologies, Glaxo R&D Vijay Aggarwal, Ph.D. President President Quest Diagnostic Ventures, AAI Int'l SmithKline Beecham, Bio Science Laboratories
37 [AAIPHARMA LOGO] AAIPHARMA INNOVATION AAI Development Services R&D Realization Commercialization Pharma Division 38 [AAIPHARMA LOGO] THERAPEUTIC FOCUS AREAS - - Current Focus: - Pain Management - Critical Care - - Pipeline Opportunities: - Gastrointestinal Diseases 39 [AAIPHARMA LOGO] FOCUS: PAIN MANAGEMENT [PHOTO] - - aaiPharma Portfolio of Brands: - Darvon(R) and Darvocet-N(R) Family of Products - Two line extensions in process for launch in 2003 - ProSorb-D(TM) - Phase III clinical trials - Evaluating Novel CII & CIII Products 40 [AAIPHARMA LOGO] PAIN MANAGEMENT PIPELINE
PRE-CLINICAL PHASE I PHASE II PHASE III PRE-FILING SUBMITTED TO FDA DARVON(R)/DARVOCET-N(R) L.E. #1 - - - - - DARVON(R)/DARVOCET-N(R) L.E. #2 - - - - - PROSORB-D(TM) - - - - DARVON(R)/DARVOCET-N(R) L.E. #3 - - NR NR DARVON(R)/DARVOCET-N(R) L.E. #4 - - NR NR DARVON(R)/DARVOCET-N(R) L.E. #5 - - DARVON(R)/DARVOCET-N(R) L.E. #6 -
41 [AAIPHARMA LOGO] FOCUS: CRITICAL CARE [PHOTO] - aaiPharma Portfolio of Brands: - M.V.I.(R) Family of Products - Aquasol(TM) Family of Products - Brethine(R) - Azasan(TM) - Proprietary brand of azathioprine, most comprehensive line of dosage forms on the market today - 50 mg, unique 75 mg and 100 mg dosages - Calcitriol Injection - Injectable vitamin D product in vial form - Shared market exclusivity 42 Critical Care Pipeline [AAIPHARMA LOGO]
Pre-clinical Phase I Phase II Phase III Pre-filing Submitted to FDA M.V.I. ADULT(TM) --------------------------------------------------------------------------------- M.V.I.(R)L.E. -------------------------------------------------------------- BRETHINE(R)L.E. #1 --------------------------------------------------------------
43 Gastrointestinal (GI) Pipeline [AAIPHARMA LOGO]
Pre-clinical Phase I Phase II Phase III Pre-filing Submitted to FDA ECABET (TAL JV) ---------------------------------- MESALAMINE (PROLONIC(TM)) ------- 6-OMEPRAZOLE (PROMELT(R)) -------
44 Research & Development [AAIPHARMA LOGO] - - Uniquely positioned R&D platform consisting of: - INTELLECTUAL PROPERTY - PROPRIETARY DRUG DELIVERY TECHNOLOGIES - NEAR TERM PIPELINE OF BRANDED LINE EXTENSIONS - LONGER TERM DRUG DEVELOPMENT PROGRAMS - - Drug development joint venutre with Tanabe provides access to drug discovery and novel chemical entities 45 Proprietary Drug Delivery Technologies [AAIPHARMA LOGO] PROSORB(R) Very rapid delivery of drugs orally - e.g., 18 minutes PROSLO(TM) Delivers single or combination drugs predictably over a long time period, having an immediate and extended release component PROCORE(TM) Slowly releases drugs over an extended period - e.g., 24 hours PROSPHER(TM) A single injection releases drugs for up to six months PROLONIC(TM) An oral dose that delivers drugs at specific times in the colon PROMELT(TM) A tablet that disappears in your mouth in seconds but allows the release to be up to 24 hours 46 AAI Development Services [AAIPHARMA LOGO] FORMULATIONS DEVELOPMENT Development of oral solid, liquid and parental dosage forms employing proprietary and non-proprietary techniques CLINICAL MANUFACTURING Manufacturing and distribution of blinded clinical trial supplies. Small to medium sized manufacturing of solid, liquid and parental dosage forms ANALYTICAL SERVICES Method development and validation, drug product and ingredient testing, microbiological support, stability storage & studies, technical support and problem solving BIOPHARMACEUTICAL SERVICES BA/BE clinical services, bioanalytical testing and biotechnology analysis and synthesis STATISTICAL SERVICES Full range of data compilation and data management, including bio-statistical and pharmacokinetic analysis PHASE I - IV CLINICAL SERVICES Full range of Phase I-IV clinical services to customers in the pharmaceutical, biotechnology and medical device industries REGULATORY AND CONSULTING SERVICES Consulting services with respect to regulatory affairs, quality compliance and physical and process validations 47 Proven Track Record [AAIPHARMA LOGO] - - 3500+ compounds - - 400+ bioanalytical assays - - 3000+ clinical studies - - 50 active dosage form development projects - - 55+ regulatory filings 48 Development Services is Aligned with Strategy [AAIPHARMA LOGO] - - Develop and enhance product knowledge - - Apply expertise to internal pipeline - - Foster business to business relationships - - Facilitate product acquisitions 49 Client Service Areas [AAIPHARMA LOGO] - - Process improvement and revalidation - - Rescue programs - Assisting clients with FDA consent decree compliance - - Comprehensive Product Development - Medicis Agreement 50 Select Client List [AAIPHARMA LOGO] [Astra Zeneca Logo] [Bayer Logo] [Aventis Logo] [Merck Logo] [Johnson & Johnson] [Bristol Myers Squibb Company Logo] [Novartis Logo] [Osuka Logo] [Lilly Logo] [Teva Pharmaceuticals Logo] [Novo Nordisk Logo] [Abbott Laboratories Logo] [Schering-Plough Logo] [Sanofi-Synthetelabo Logo] [American Home Products Corporation Logo] [BASF Logo] [Elan Logo] [Glaxo Smith Kline Logo] [Roche Logo] 51 FINANCIAL HIGHLIGHTS [PHOTO] 52 Fiscal Year 2002
2001 2002 % GROWTH TOTAL REVENUE $141.1M $230.5M 63% GROSS PROFIT 70.7 145.2 105% INCOME FROM OPERATIONS 13.2 55.4 320% NET INCOME 5.9 22.7(1) 285% DILUTED EPS $0.32 $1.20(1) 275%
1 Before extraordinary loss 53 [AAIPHARMA LOGO] Total aaiPharma Net Revenues [CHART] 54 aaiPharma(TM) ----------------------------------- DEVELOPING CHEMISTRY INTO MEDICINE Within the SCIENCE Lies the MEDICINE that will CHANGE a life.(TM) 55 -----END PRIVACY-ENHANCED MESSAGE-----