-----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, Tdxe39Y6McqcFwuv4QbN8uZ4IdHicXPHLsViY5akuA5O7nYYpv/R0uYDfgpDhyS/ 608mR9ayZPOiJuIlFjrndQ== /in/edgar/work/0001005477-00-008099/0001005477-00-008099.txt : 20001121 0001005477-00-008099.hdr.sgml : 20001121 ACCESSION NUMBER: 0001005477-00-008099 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000918 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20001120 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALEXION PHARMACEUTICALS INC CENTRAL INDEX KEY: 0000899866 STANDARD INDUSTRIAL CLASSIFICATION: [2834 ] IRS NUMBER: 133648318 STATE OF INCORPORATION: DE FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-27756 FILM NUMBER: 773868 BUSINESS ADDRESS: STREET 1: 25 SCIENCE PARK STREET 2: STE 360 CITY: NEW HAVEN STATE: CT ZIP: 06511 BUSINESS PHONE: 2037761790 MAIL ADDRESS: STREET 1: 25 SCIENCE PARK STREET 2: STE 360 CITY: NEW HAVEN STATE: CT ZIP: 06511 8-K/A 1 0001.txt AMENDMENT NO. 1 TO FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------------------- FORM 8-K/A ---------- AMENDMENT NO. 1 CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) September 18, 2000 ALEXION PHARMACEUTICALS, INC. (Exact name of registrant as specified in its charter) DELAWARE 0-27756 13-3648318 (State of Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) 352 KNOTTER DRIVE, CHESHIRE, CT 06410 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (203) 776-1790 NOT APPLICABLE (Former name or former address, if changed since last report) ITEM 2. ACQUISTION OR DISPOSITION OF ASSETS. This Amendment No. 1 to the Current Report of Alexion Pharmaceuticals, Inc. (the "Registrant") on Form 8-K dated September 18, 1998 (the "Report") relates to the Registrant's completion of the acquisition of Prolifaron, Inc., a California corporation ("Prolifaron"). The purpose of this Amendment is to amend Item 7 (a) to provide the financial statements of Prolifaron, Item 7 (b) to provide the required pro forma financial information relating to the business combination between the Registrant and Prolifaron, which were impracticable to provide at the time of the initial filing of the Current Report on Form 8-K and to amend Item 7(c) to include the consent of Arthur Andersen LLP. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) Financial Information of Prolifaron, Inc. - (b) Pro forma Financial Information. (c) Exhibits. 1. Consent of Arthur Andersen LLP PROLIFARON, INC. Financial Statements As of December 31, 1999 and June 30, 2000 Together With Report of Independent Public Accountants Report of Independent Public Accountants To the Stockholders and Board of Directors of Prolifaron, Inc.: We have audited the accompanying balance sheet of Prolifaron, Inc. (a California corporation) as of December 31, 1999 and the related statements of operations, stockholders' equity and cash flows for the year ended December 31, 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Prolifaron, Inc. as of December 31, 1999 and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States. /s/ Arthur Andersen LLP San Diego, California June 30, 2000 PROLIFARON, INC. Balance Sheets - December 31, 1999 and June 30, 2000 (unaudited)
1999 2000 ----------- ----------- (unaudited) Assets CURRENT ASSETS: Cash and cash equivalents $ 852,039 $ 788,426 Accounts receivable 375,000 37,500 Prepaid expenses 95,839 33,478 Deferred tax asset 540,797 570,120 ----------- ----------- Total current assets 1,863,675 1,429,524 ----------- ----------- PROPERTY, PLANT AND EQUIPMENT, net 501,274 571,676 ----------- ----------- INTANGIBLES, net 116,000 110,000 DEPOSITS 6,600 6,600 ----------- ----------- 122,600 116,600 ----------- ----------- $ 2,487,549 $ 2,117,800 =========== =========== Liabilities and Stockholders' Equity CURRENT LIABILITIES: Accounts payable $ 25,713 $ 66,201 Accrued liabilities 34,290 37,919 Income tax payable 579,977 179,908 Deferred research revenue -- 937,107 ----------- ----------- Total current liabilities 639,980 1,221,135 ----------- ----------- DEFERRED RESEARCH REVENUE 1,333,333 -- ----------- ----------- STOCKHOLDERS' EQUITY: Common stock, $0.01 par value, 17,000,000 shares authorized, 6,854,721 shares issued and outstanding 68,547 68,547 Additional paid-in capital 1,532,253 2,010,454 Subscription receivable (450,000) (120,000) Retained deficit (636,564) (1,062,336) ----------- ----------- Total stockholders' equity 514,236 896,665 ----------- ----------- $ 2,487,549 $ 2,117,800 =========== ===========
The accompanying notes are an integral part of these balance sheets. - -1- PROLIFARON, INC. Statements of Operations For the Year Ended December 31, 1999 and the Six Months Ended June 30, 2000 and 1999 (unaudited)
Six Months Ended -------------------------- December 31, June 30, June 30, 1999 2000 1999 ----------- ----------- ---------- (unaudited) (unaudited) RESEARCH REVENUES $ 2,438,597 $ 1,221,555 $1,083,333 ----------- ----------- ---------- OPERATING EXPENSES: Research and development 1,542,018 1,735,635 518,207 General and administrative 245,802 197,173 133,407 ----------- ----------- ---------- Total operating expenses 1,787,820 1,932,808 651,614 ----------- ----------- ---------- Income (loss) from operations 650,777 (711,253) 431,719 INTEREST INCOME 78,826 26,226 44,300 OTHER INCOME (LOSS) (815) -- -- ----------- ----------- ---------- Income (loss) before provision for income taxes 728,788 (685,027) 476,019 PROVISION (BENEFIT) FOR INCOME TAXES 521,145 (259,255) 427,097 ----------- ----------- ---------- Net income (loss) $ 207,643 $ (425,772) $ 48,922 =========== =========== ==========
The accompanying notes are an integral part of these financial statements. - -2- PROLIFARON, INC. Statements of Stockholders' Equity For the Year Ended December 31, 1999 and the Six Months Ended June 30, 2000 (unaudited)
Additional Common Stock Paid-In Subscription Retained Shares Amount Capital Receivable Deficit Total Balance, January 1, 1999 6,804,721 $68,047 $1,432,753 $(450,000) $ (844,207) $ 206,593 Issuance of stock for licensed technology 50,000 500 99,500 -- -- 100,000 Net income -- -- -- -- 207,643 207,643 --------- ------- ---------- --------- ----------- --------- Balance, December 31, 1999 6,854,721 68,547 1,532,253 (450,000) (636,564) 514,236 The following information is unaudited: Receipt of stock subscription -- -- -- 330,000 -- 330,000 Compensation expense related to stock options -- -- 478,201 -- -- 478,201 Net loss -- -- -- -- (425,772) (425,772) --------- ------- ---------- --------- ----------- --------- Balance, June 30, 2000 6,854,721 $68,547 $2,010,454 $(120,000) $(1,062,336) $ 896,665 ========= ======= ========== ========= =========== =========
The accompanying notes are an integral part of these financial statements. - -3- PROLIFARON, INC. STATEMENTS OF CASH FLOWS For the Year Ended December 31, 1999 and the Six Months Ended June 30, 2000 and 1999 (unaudited)
Six Months Ended December 31, June 30, June 30, 1999 2000 1999 ------------ --------- ----------- (unaudited) (unaudited) Cash flows from operating activities: Net income (loss) $ 207,643 $(425,772) $ 48,922 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 91,478 76,904 40,141 Loss on sale of fixed assets 815 -- -- Deferred tax asset (540,797) (29,323) (540,797) Deferred compensation -- 478,201 -- Changes in assets and liabilities: Accounts receivable (375,000) 337,500 -- Prepaid expenses (53,114) 62,361 36,125 Income tax receivable -- -- -- Deposits (6,600) -- -- Accounts payable 1,074 40,488 (6,777) Accrued liabilities 21,655 3,629 10,019 Income tax payable 579,977 (400,069) 666,928 Deferred research revenue 833,333 (396,226) 1,166,667 --------- --------- ----------- Net cash provided by (used in) operating activities 760,464 (252,307) 1,421,228 --------- --------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sales of property, plant and equipment 350 -- -- Purchases of property, plant and equipment (278,241) (141,306) (90,184) --------- --------- ----------- Net cash used in investing activities (277,891) (141,306) (90,184) --------- --------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from stock subscriptions -- 330,000 -- --------- --------- ----------- Net cash provided by financing activities -- 330,000 -- --------- --------- ----------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 482,573 (63,613) 1,331,044 CASH AND CASH EQUIVALENTS, beginning of year 369,466 852,039 369,466 --------- --------- ----------- CASH AND CASH EQUIVALENTS, end of year $ 852,039 $ 788,426 $ 1,700,510 ========= ========= =========== SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES: Acquisition of licensed technology $ 100,000 $ -- $ -- ========= ========= =========== SUPPLEMENTAL DISCLOSURE OF CASH PAID FOR: Income taxes $ 482,100 $ 45,137 $ 302,600 ========= ========= ===========
The accompanying notes are an integral part of these financial statements. - -4- PROLIFARON, INC. Notes to Financial Statements December 31, 1999 and June 30, 2000 (unaudited) 1. Business and Organization Prolifaron, Inc. (the "Company"), a California corporation, is a research based company specializing in the discovery and early stage development of novel antibody drug therapies. The Company began operations as a limited liability corporation in 1997 and was re-incorporated as a C corporation on March 26, 1999. The Company is subject to a number of risks and uncertainties associated with companies at a similar stage of maturity, including reliance on key personnel, reliance on a small number of customers, limited operating history and the unproven nature of the Company's technology, revenue and income potential. During September 2000, the Company entered into an agreement with Alexion Pharmaceuticals, Inc. ("Alexion"), whereby Alexion common stock and options, with an aggregate value of approximately $44 million, was exchanged for all of the Company's outstanding shares and options. On the effective date of the agreement, the Company was merged with a wholly-owned subsidiary of Alexion and renamed Alexion Antibody Technologies, Inc. These financial statements have not been adjusted to reflect the merger noted above. 2. Summary of Significant Accounting Policies Use of Estimates The preparation of financial statements and related information and the notes thereto in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues, expenses and disclosures of contingent assets and liabilities. Actual results could differ from these estimates. Interim Financial Statements The accompanying financial statements for the interim period included herein are unaudited. Certain information and note disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States have been omitted, although the Company believes that the disclosures made are adequate to make the information presented not misleading. These unaudited financial statements reflect, in the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to fairly present the results of operations, changes in cash flows and financial position as of and for the periods presented. The results for the interim period presented are not necessarily indicative of results to be expected for a full year. Cash and Cash Equivalents Cash and cash equivalents includes cash in readily available checking and money market accounts with a maturity of three months or less. Property, Plant and Equipment Property, plant and equipment are stated at cost and are depreciated using the straight-line method over the estimated useful lives of the related assets, ranging from 3 to 5 years. - -5- Property, plant and equipment consists of the following:
December 31, June 30, 1999 2000 ------------ -------- (unaudited) Furniture and fixtures $ 20,481 $ 21,266 Lab equipment 402,938 525,660 Leasehold improvements 157,919 158,944 Computers 51,428 68,202 --------- --------- 632,766 774,072 Less - accumulated depreciation and amortization (131,492) (202,396) --------- --------- $ 501,274 $ 571,676 ========= =========
Depreciation expense for the year ended December 31, 1999 and the six months ended June 30, 2000 and 1999 was $89,478, $70,904 and $39,142, respectively. Long-Lived Assets The Company periodically re-evaluates the original assumptions and rationale utilized in the establishment of the carrying value and estimated lives of all of its long-lived assets including property, equipment and intangibles. The determinants for this evaluation include management's estimate of the asset's ability to generate positive income from operations and positive cash flow in future periods as well as the strategic significance of the asset to the Company's business objective. Intangibles Intangibles consists of license agreements for patents which are stated at cost and are amortized using the straight-line method over their estimated useful lives of 10 years. Intangibles consists of the following: December 31, June 30, 1999 2000 ------------ -------- (unaudited) Licensed technology $ 120,000 $ 120,000 Less - accumulated amortization (4,000) (10,000) --------- --------- $ 116,000 $ 110,000 ========= ========= Amortization expense for the year ended December 31, 1999 and the six months ended June 30, 2000 and 1999 was $2,000, $6,000 and $1,000, respectively. Research and Development Costs All research and development costs are charged to expense as incurred. Revenue Recognition The Company receives revenue under collaborative agreements and research grants. - -6- Collaborative agreements can include advance payments, milestone payments and royalties on end user sales. Advance payments received in excess of amounts earned are classified as deferred research revenue and the resulting revenues are recognized based on the work performed. Milestone payments earned in connection with research activities performed under the terms of collaborative agreements are recognized on the achievement of certain milestones. As of December 31, 1999 and June 30, 2000, the Company had not received any royalty revenue under collaborative agreements (see Note 8). Research grant revenue is recorded as earned as defined within the specific agreements. Concentration of Risk During the year ended December 31, 1999 and the six months ended June 30, 2000, 89% and 95%, respectively, of the Company's research revenues were derived from a collaborative agreement with Centocor, Inc. ("Centocor"). At December 31, 1999, Centocor represented 100% of the Company's outstanding accounts receivable (see Note 8). At June 30, 2000, SmithKline-Beecham represented 100% of the Company's outstanding accounts receivable. Income Taxes Deferred tax assets and liabilities reflect the future tax consequences of the difference between the financial reporting and tax basis of assets and liabilities using current enacted tax rates. Valuation allowances are recorded when the realizability of such deferred tax assets is questionable. 3. Related Party During the year ended December 31, 1999 and the six months ended June 30, 2000 and 1999, the firm of Hinshaw & Culbertson, of which a partner was the Chief Financial Officer of the Company, billed and collected $25,131, $9,165 and $19,015, respectively from the Company for legal services. 4. Income Taxes Components of the Company's deferred tax asset as of December 31, 1999 results from the following temporary differences: Depreciation and amortization $ 7,464 Deferred research revenue 533,333 -------- Total deferred tax asset $540,797 ======== The provision for income taxes for the year ended December 31, 1999 consists of Current: Federal $ 900,677 State 161,265 ----------- 1,061,942 ----------- Deferred: Federal (459,677) State (81,120) ----------- (540,797) ----------- Total provision for income taxes $ 521,145 =========== Realization of deferred income taxes is dependent on generating sufficient taxable income during the periods in which temporary differences will reverse. Although realization is not assured, management believes it is - -7- more likely than not that the deferred income taxes will be realized. The amount of deferred income taxes considered realizable, however, could be adjusted in the near term if estimates of future taxable income during the reversal periods are revised. 5. Stockholders' Equity The Company's Articles of Incorporation authorized the Company's Board of Directors to issue an aggregate of 17,000,000 voting common shares having a $0.01 par value and 3,000,000 shares of preferred stock with no par value. The Board of Directors has the right to establish any rights and preferences of any series of preferred stock it so authorizes. In conjunction with a prior year common stock issuance, the Company received notes from several accredited investors. The notes were non-interest bearing and provided for scheduled payments. As of December 31, 1999 and June 30, 2000, the outstanding balances due from the notes were $450,000 and $120,000, respectively. 6. Stock Options The Company has granted stock options to its employees and consultants pursuant to either individual non-qualified stock option grants or its 1999 stock option and long-term incentive plan. The following summarizes stock option activity:
Number of Weighted Options Average Outstanding Exercise Price ----------- -------------- Outstanding, December 31, 1998 -- $-- Granted 395,000 2.05 Exercised -- -- Surrendered, forfeited or expired -- -- ------- Outstanding, December 31, 1999 395,000 2.05 Granted 150,000 2.50 Exercised -- -- Surrendered, forfeited or expired 15,000 2.00 ------- Outstanding, June 30, 2000 530,000 2.18 ======= Exercisable, end of period 269,667 ======= Weighted average fair value of options granted 1.61
The outstanding options expire at various dates from April 21, 2009 to July 1, 2010. On various dates between April 21, 1999 and February 1, 2000, the Company issued an aggregate total of 225,000 options to employees and non-employees at exercise prices of either $2.00 or $2.50, based on the terms of the respective agreements. The deemed fair values at the respective grant dates ranged from $1.38 to $1.90. These grants will be expensed over the vesting periods of the options, which range from immediate vesting to five-year terms. At June 30, 2000, $478,201 of such expense was recognized. - -8- Stock-based compensation has been included in the accompanying statement of operations for the six months ended June 30, 2000 as follows: Operating expenses: Research and development $429,569 General and administrative 48,632 -------- Total stock-based compensation $478,201 ======== As required by SFAS No. 123, the Company has determined, for the year ended December 31, 1999 and the six months ended June 30, 2000, the pro forma information for its incentive stock options under SFAS No. 123. The fair values of the incentive stock option grants were estimated on the date of grant using the Black-Scholes option pricing model using the following weighted average assumptions: risk-free interest rate ranging between 5.28% and 6.72%; dividend yield of 0%; expected market price volatility factor of 85%; and expected lives of the options of seven years. Had compensation cost for incentive stock options granted during the year ended December 31, 1999 been determined consistent with SFAS No. 123, the Company's net income would not have been materially different from its reported net income. Had compensation cost for incentive stock options granted during the six months ended June 30, 2000 been determined consistent with SFAS No. 123, the Company's net loss on a pro forma basis would be $503,303. 7. Commitments and Contingencies Legal Matters The Company may periodically be a defendant in cases incidental to its business activities. While any litigation or investigation has an element of uncertainty, the Company believes that the outcome of any of these matters will not have a materially adverse effect on its financial condition or operations. Operating Leases The Company occupies its office and warehouse space under operating leases which benefit certain stockholders and are subject to an annual adjustment based on the Consumer Price Index. Total rent expense for the year ended December 31, 1999 and the six months ended June 30, 2000 and 1999 was $92,933, $66,589 and $31,890, respectively. On September 29, 2000, the Company amended its lease on its office and warehouse space. The amendment grants the Company use of an additional suite for a period of one year and seven months. The additional rent is included in the operating lease commitment schedule. Minimum future commitments under these operating leases are as follows: Year Ending December 31, - ------------------------ 2000 $ 133,846 2001 171,412 2002 121,484 2003 2,136 2004 2,136 Thereafter 712 --------- $ 431,726 ========= - -9- License Agreements The Company and Dyax Corp. ("Dyax") entered into an agreement dated August 31, 1999, under which Dyax granted the Company use of certain patented technologies. Under the terms of this agreement, the Company may be required to make payments totaling $168,000, depending on the achievement of certain milestones. In addition, an annual maintenance fee of $50,000 must be paid by the Company for the life of the contract, which may extend fifteen years. The Company has the option to terminate the agreement at its sole discretion. 8. Collaboration with Centocor, Inc. In an agreement dated January 1, 1999, the Company and Centocor entered into an agreement under which the Company agreed to grant to Centocor, certain exclusive, royalty-bearing licenses to certain technology and know-how, patents, patent applications, and research results associated with the Company's targeted research program. Under the terms of the agreement, the Company may receive up to $6.5 million including a $2.0 million license payment and payments to support research and development of $4.5 million. In addition, the Company will receive 6% of the net sales on each licensed product using the targeted antibodies, if any such products are successfully developed and receive the necessary regulatory approvals. On June 22, 2000 and effective September 20, 2000, within its rights under the agreement, Centocor cancelled its agreement with the Company. As of December 31, 1999 and June 30, 2000, the Company had received a total of $3.5 million and $4.6 million, respectively, from Centocor, under this agreement. Amounts received in 1999 were comprised of the initial $2.0 million license fee and four quarterly payments of $375,000 each. Amounts received during the six months ended June 30, 2000 were comprised of three quarterly payments of $375,000 each. - -10- Index Page INTRODUCTION 1 FINANCIAL STATEMENTS Unaudited Pro Forma Consolidated Balance Sheet as of July 31, 2000 2 Unaudited Pro Forma Consolidated Statement of Operations for the Year Ended July 31, 2000 3 NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS 4 ARTICLE 1 Introduction The following unaudited pro forma consolidated balance sheet as of July 31, 2000 and the unaudited pro forma consolidated statement of operations for the year ended July 31, 2000 give effect to the merger as of July 31, 2000 for the pro forma consolidated balance sheet and as of August 1, 1999 for the pro forma statement of operations. The unaudited pro forma consolidated financial statements are based on historical financial statements of Alexion Pharmaceuticals, Inc. (Alexion) and Prolifaron, Inc. (Prolifaron), giving effect to the merger applying the purchase method of accounting and the assumptions and adjustments as discussed in the accompanying notes to the unaudited pro forma consolidated financial statements. These unaudited pro forma consolidated financial statements have been prepared by the management of Alexion based upon the consolidated financial statements of Alexion and Prolifaron as of July 31, 2000 and June 30, 2000, respectively and for the years then ended. The unaudited pro forma consolidated financial statements should be read in conjunction with the historical financial statements and notes thereto. The unaudited pro forma consolidated financial statements are not necessarily indicative of what actual results of operations would have been for the period presented had the transaction occurred on the dates indicated and do not purport to indicate the results of the future operations. 1 ALEXION PHARMACEUTICALS, INC./PROLIFARON, INC. Unaudited Pro Forma Consolidated Balance Sheet As of July 31, 2000 (amounts in thousands)
Merger Merger Alexion Prolifaron Pro Forma Pro Forma July 31, 2000 June 30, 2000 Adjustments As Adjusted (Note B) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 91,858 $ 788 $ (500) $ 92,146 Marketable securities 82,671 -- -- 82,671 Reimbursable contract costs 5,095 38 -- 5,133 Other current assets 456 604 -- 1,060 --------- --------- --------- --------- Total current assets 180,080 1,430 (500) 181,010 PROPERTY AND EQUIPMENT, net 8,213 572 -- 8,785 PURCHASED INTANGIBLE ASSETS -- -- 22,538 22,538 DEFERRED FINANCING COSTS, net 3,752 -- -- 3,752 OTHER ASSETS 657 116 (110) 663 --------- --------- --------- --------- Total assets $ 192,702 $ 2,118 $ 21,928 $ 216,748 ========= ========= ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY: CURRENT LIABILITIES: Current portion of notes payable $ 369 $ -- $ -- $ 369 Accounts payable 2,100 66 -- 2,166 Accrued expenses 1,229 218 -- 1,447 Accrued interest 2,730 -- -- 2,730 Deferred revenue 750 937 -- 1,687 --------- --------- --------- --------- Total current liabilities 7,178 1,221 -- 8,399 --------- --------- --------- --------- NOTES PAYABLE, less current portion included above 3,920 -- -- 3,920 --------- --------- --------- --------- CONVERTIBLE SUBORDINATED DEBT 120,000 -- -- 120,000 --------- --------- --------- --------- STOCKHOLDERS' EQUITY: Common stock, $.0001 par value 2 -- -- 2 Common stock, $.01 par value -- 69 (69) -- Paid-in capital 128,836 2,010 41,935 172,781 Subscription receivable -- (120) -- (120) Accumulated deficit (67,214) (1,062) (19,938) (88,214) Other comprehensive loss (20) -- -- (20) Treasury stock, at cost -- -- -- -- --------- --------- --------- --------- Total stockholders' equity 61,604 897 21,928 84,429 --------- --------- --------- --------- Total liabilities and stockholders' equity $ 192,702 $ 2,118 $ 21,928 $ 216,748 ========= ========= ========= =========
The accompanying notes are an integral part of these financial statements. 2 ALEXION PHARMACEUTICALS, INC./PROLIFARON, INC. Unaudited Pro Forma Consolidated Statement of Operations For the Year Ended July 31, 2000 (amounts in thousands, except per share amounts)
Alexion Prolifaron Merger Merger Year Ended Year Ended Pro Forma Pro Forma July 31, 2000 June 30, 2000 Adjustments As Adjusted (Note C) CONTRACT RESEARCH REVENUES $ 21,441 $ 2,578 $ -- $ 24,019 -------- -------- -------- -------- OPERATING EXPENSES: Research and development 40,187 2,760 -- 42,947 General and administrative 4,175 310 -- 4,485 Amortization of purchased intangible assets -- -- 3,296 3,296 -------- -------- -------- -------- Total operating expenses 44,362 3,070 3,296 50,728 -------- -------- -------- -------- Loss from operations (22,921) (492) (3,296) (26,709) OTHER INCOME AND (EXPENSE): Interest income 5,833 60 -- 5,893 Interest expense (3,139) -- -- (3,139) -------- -------- -------- -------- Loss before benefit for income taxes (20,227) (432) (3,296) (23,955) BENEFIT FOR INCOME TAXES -- (165) 165 -- -------- -------- -------- -------- Net loss $(20,227) $ (267) $ (3,461) $(23,955) ======== ======== ======== ======== BASIC AND DILUTED NET LOSS PER COMMON SHARE $ (1.45) $ (1.68) ======== ======== SHARES USED IN COMPUTING BASIC AND DILUTED NET LOSS PER COMMON SHARE 13,914 14,270 ======== ========
The accompanying notes are an integral part of these financial statements. 3 ALEXION PHARMACEUTICALS, INC./PROLIFARON, INC. Notes to Unaudited Pro Forma Consolidated Financial Statements NOTE A In September 2000, Prolifaron was merged with a wholly-owned subsidiary of Alexion and renamed Alexion Antibody Technologies, Inc. As consideration for Alexion's merger with Prolifaron, Alexion has paid to holders of Prolifaron common stock and stock options pursuant to the terms of the merger agreement, 355,594 shares of Alexion common stock, par value $.0001 per share and fully vested options to purchase 44,364 shares of Alexion common stock at a weighted average exercise price of $44.35 per share in exchange for fully vested options of Prolifaron granted under its stock option plan. NOTE B The pro forma consolidated balance sheet includes the estimated adjustments necessary to give full effect to the merger as if it had occurred on July 31, 2000 and reflects the allocation of the cost of the merger to the estimated fair value of assets acquired and liabilities assumed including the issuance of approximately 355,594 shares of Alexion common stock valued at approximately $39.4 million in the aggregate; issuance of options to purchase 44,364 shares of Alexion common stock with an estimated fair value of approximately $4.5 million, in aggregate; payment of $0.5 million in merger transaction costs; and elimination of Prolifaron's equity accounts. The pro forma adjustments are summarized as follows (amounts in thousands): o Use of cash for merger and related transaction costs; $(500) o Issuance of Alexion common stock and stock options; $43,945 o Elimination of Prolifaron common stock, paid-in capital and accumulated deficit accounts; $(69), $(2,010), and $1,062, respectively o In process research and development; $(21,000) o Purchased intangible assets resulting from transaction; $22,538 o Adjustment to carrying value of an asset; $(110) In connection with the merger with Prolifaron, Alexion allocated $21.0 million of the purchase price to in-process research and development projects. This allocation represented the estimated fair value based on risk-adjusted cash flows related to the incomplete research and development projects. At the date of the merger, the development of these projects had not yet reached technological feasibility and the research and development in progress had no alternative future uses. Accordingly, these costs were expensed as of the merger date. At the merger date, Prolifaron was conducting pre-clinical development and testing activities with a goal to develop technologies for antibody discovery and engineering and identify new fully human therapeutic antibodies addressing multiple disease areas. The drug candidates under development represent innovative technologies addressing autoimmune and inflammatory disorders, and cancer. As of the merger date, Prolifaron had incurred approximately $5.7 million of expenses on development projects since its inception in 1998, and expected to spend approximately $8.5 million over the next seven years to complete animal testing of the developmental drug candidates. Management anticipates the in-process projects will enter human clinical trials in 3 to 6 years, and if successful, would be marketed in the U.S. in five to nine years. 4 In making its purchase price allocation, management considered present value calculations of income, an analysis of project accomplishments and remaining outstanding items, an assessment of overall contributions, as well as technological and regulatory risks. The value assigned to purchased in-process technology was determined by estimating the costs to develop the acquired technology into commercially viable products, estimating the resulting net cash flows from the projects, and discounting the net cash flows to their present value. The revenue projection used to value the in-process research and development was based on estimates of relevant market sizes and growth factors, expected trends in technology, and the nature and expected timing of new product introductions by Prolifaron and its competitors. The rates utilized to discount the net cash flows to their present value were based on estimated cost of capital calculations. Due to the risks associated with the projected cash flow forecast, a discount rate of 40 percent was considered appropriate for the in-process R&D. The selected rate reflects the inherent uncertainties surrounding the successful development of the purchased in-process technology, the useful life of such technology, and the uncertainty of technological advances that are unknown at this time. If these projects are not successfully developed, the sales and profitability of the combined companies may by adversely affected in future periods. Additionally, the value of other acquired intangible assets may become impaired. NOTE C The pro forma consolidated statement of operations includes adjustments necessary to reflect the merger as if it had occurred on August 1, 1999. For purposes of the pro forma consolidated statements of operations, acquired in-process research and development ($21.0 million) was assumed to have been written off prior to August 1, 1999. Accordingly, the pro forma consolidated statement of operations does not included such charge. The pro forma adjustments are summarized as follows (amounts in thousands): o Amortization of goodwill resulting from the merger based upon an estimated life of 7 years; $3,163 o Amortization of intangible workforce benefit resulting from the merger based upon an estimated life of 3 years; $133 o Elimination of the income tax benefit of Proliferon as the pro forma consolidated net loss before benefit for income taxes would not have resulted in a tax benefit; $165 The pro forma net loss per share and the pro forma shares used in computing the pro forma net loss per share for the year ended July 31, 2000 are based upon Alexion's historical weighted average common shares outstanding for the period adjusted to reflect the issuance of 355,594 shares of Alexion common stock as described in Note A. There is no difference in pro forma basic and diluted net loss per common share as the effect of stock options issued in connection with the merger is anti-dilutive. 5 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. ALEXION PHARMACEUTICALS, INC. Dated: November 20, 2000 By: /s/ Leonard Bell ------------------------------------- Name: Leonard Bell, M.D. Title: President, Chief Executive Officer, Secretary and Treasurer EXHIBIT INDEX Exhibit No. - ----------- 23.1 Consent of Arthur Andersen LLP EX-23.1 2 0002.txt CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report included in this Form 8-K, into Alexion Pharmaceuticals, Inc.'s previously filed Registration Statements File Nos. 333-19905, 333-24863, 333-29617, 333-41397, 333-47645, 333-71879, 333-71985, 333-36738, and 333-47594. /s/ Arthur Andersen LLP San Diego, California November 14, 2000 -----END PRIVACY-ENHANCED MESSAGE-----