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): August 21, 2003

GENVEC, INC.
(Exact name of issuer as specified in charter)
Delaware	0-24469	23-2705690
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)
65 West Watkins Mill Road Gaithersburg, MD
(Address of principal executive offices)
20878
(Zip code)
(240) 632-0740
(Registrant’s telephone number, including area code)

Item 2.            Acquisition or Disposition of Assets.

On August 21, 2003, Diacrin, Inc. (“Diacrin”) was merged (“Merger”) with and into GenVec, Inc. (“GenVec”), pursuant to an Agreement and Plan of Reorganization, as amended, dated as of April 14, 2003 and a related Agreement and Plan of Merger, dated as of April 14, 2003 (collectively, the “Merger Agreement”).  The Merger was approved by the stockholders of Diacrin and GenVec at a special meeting and an annual meeting, respectively, held on August 21, 2003.

Upon consummation of the Merger, Thomas H. Fraser, Ph.D., Zola P. Horovitz, Ph.D., Stelios Papadopoulos, Ph.D. and Joshua Ruch, directors of Diacrin, became directors of GenVec.

At the effective time of the Merger, each outstanding share of the common stock, par value $.01 per share, of Diacrin was converted into 1.5292 shares of the common stock, par value $.001 per share, of GenVec (“GenVec Common Stock”) and cash in lieu of fractional shares.  The shares of GenVec Common Stock issued in the Merger were registered pursuant to a Registration Statement on Form S-4 (No. 333-105320) (“Registration Statement”) filed with the Securities and Exchange Commission (“Commission”) under the Securities Act of 1933, as amended.  The Registration Statement was filed on May 16, 2003 and declared effective on July 21, 2003.  In addition, the Company assumed all options outstanding under the Diacrin stock option plans.  In connection with the Merger, the Company will issue, or reserve for issuance upon exercise of options, a total of approximately 30 million shares of Company common stock.

As a result of the Merger, GenVec acquired Diacrin’s leased premises located in Charlestown, Massachusetts, at which Diacrin’s corporate offices, laboratories and manufacturing facilities were located.  GenVec also acquired laboratory equipment and supplies used in the research, development and production of biopharmaceutical products.  It is anticipated that the operations of GenVec will require the continued use of the leased premises, equipment and supplies acquired from Diacrin as a result of the Merger.

The foregoing description of the Merger is qualified in its entirety by reference to the Merger Agreement included as Appendix A to the joint proxy statement/prospectus included in the Registration Statement.  Additional information relating to Diacrin is contained in periodic reports filed by Diacrin with the Commission pursuant to the Securities Exchange Act of 1934, as amended (File No. 000-20139).

Item 5.            Other Events.

In addition to approving the Merger, the Company’s stockholders approved an amendment to the Company’s amended and restated certificate of incorporation to increase the number of authorized shares of Company common stock from 60,000,000 to 100,000,000.  In connection with this amendment, the Company also amended its certificate of designation to increase the number of authorized shares of Series A Preferred Stock of the Company, par value $.001 per share, from 600,000 to 1,000,000.  The Company's stockholders also approved an amendment of the Company's 2002 Stock Incentive Plan, increasing by 1,000,000 (from 5,082,112 to 6,082,112) the number of shares authorized for issuance thereunder.

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Also in connection with the Merger, the Company and American Stock Transfer & Trust Company amended the Rights Agreement, dated as of September 7, 2001 between the Company and American Stock Transfer & Trust Company (the “Rights Agreement”) to provide that HealthCare Ventures LLC, HealthCare Ventures II, L.P., HealthCare Ventures III, L.P., HealthCare Ventures IV, L.P., HealthCare Ventures V, L.P. and HealthCare Ventures, VI, L.P. (collectively, “HealthCare Ventures”), will not be deemed an “Acquiring Person” under the Rights Agreement as a result of the Merger even though following the Merger HealthCare Ventures will own in excess of 20% of the Company’s outstanding common stock.  However, if following the Merger, HealthCare Ventures were to acquire additional Company common stock (other than pursuant to pre-existing contractual pre-emptive rights), HealthCare Ventures would become an “Acquiring Person” under the Rights Agreement, as amended.

A copy of the amendment to the Rights Agreement is set forth as Exhibit 4.1 hereto, and incorporated herein by reference.

Item 7.            Financial Statements, Pro Forma Financial Information and Exhibits.

(a)  Financial Statements of Business Acquired.  The financial statements required to be filed pursuant to Item 7(a)(1) are not included with this report.  In accordance with Item 7(a)(4) of Form 8-K, the Company will file such statements by amendment to this Form 8-K no later than October 20, 2003.

(b)  Pro Forma Financial Information.  The pro forma financial information required to be filed pursuant to Item 7(b) is not included with this report.  In accordance with Item 7(b)(2) of Form 8-K, the Company will file such financial information by amendment to this Form 8-K no later than October 20, 2003.

(c)  Exhibits.  The following exhibits are filed with this Current Report on Form 8-K:

Exhibit Number Referred to in Item 601 of Regulation S-K	Description
2.1	Agreement and Plan of Reorganization, as amended, between GenVec, Inc. and Diacrin, Inc. dated April 14, 2003 and related Agreement and Plan of Merger between GenVec, Inc. and Diacrin, Inc., dated April 14, 2003.  Incorporated by reference to Appendix A to the joint proxy statement/prospectus included in our Registration Statement on Form S-4 (File No. 333-105320), dated May 16, 2003 and declared effective on July 21, 2003.
4.1	Amendment No. 1 to Rights Agreement, dated August 21, 2003, between GenVec, Inc. and American Stock Transfer & Trust Company, filed herewith.
99.1	Press Release, dated August 21, 2003, filed herewith.

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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.

		GENVEC, INC.
		(Registrant)
	By:	/s/ Jeffrey W. Church
		Jeffrey W. Church
		Chief Financial Officer, Treasurer and
		Corporate Secretary
Date:  August 22, 2003

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EXHIBIT INDEX

Exhibit No.	Description
2.1	Agreement and Plan of Reorganization, as amended, between GenVec, Inc. and Diacrin, Inc. dated April 14, 2003 and related Agreement and Plan of Merger between GenVec, Inc. and Diacrin, Inc., dated April 14, 2003.  Incorporated by reference to Appendix A to the joint proxy statement/prospectus included in our Registration Statement on Form S-4 (File No. 333-105320), dated May 16, 2003 and declared effective on July 21, 2003.
4.1	Amendment No. 1 to Rights Agreement, dated August 21, 2003, between GenVec, Inc. and American Stock Transfer & Trust Company, filed herewith.
99.1	Press Release, dated August 21, 2003, filed herewith.

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EX-4.1

Exhibit 4.1

AMENDMENT NO. 1 TO RIGHTS AGREEMENT

AMENDMENT NO. 1, dated as of August 21, 2003 (this “Amendment”), to the Rights Agreement, dated as of September 7, 2001, (the “Rights Agreement”), between GenVec, Inc., a Delaware corporation (the “Company”), and American Stock Transfer & Trust Company, as rights agent (the “Rights Agent”).

WITNESSETH

WHEREAS, the Company and the Rights Agent have previously entered into the Rights Agreement; and

WHEREAS, no Distribution Date (as defined in Section 3(a) of the Rights Agreement) has occurred as of the date of this Amendment; and

WHEREAS, Section 27 of the Rights Agreement provides that (i)  prior to the Distribution Date (as such term is defined in the Rights Agreement), the Company may and the Rights Agent shall, if the Company so directs, supplement or amend any provision of the Rights Agreement without approval of any holder of the Rights; and (ii) any supplement or amendment duly approved by the Company shall be executed by the Rights Agent upon delivery to the Rights Agent of such proposed supplement or amendment by the Company; and

WHEREAS, the Company and Diacrin, Inc. (“Diacrin”) have entered into an Agreement and Plan of Merger, dated as of April 14, 2003 (the “Merger Agreement”) and an Agreement and Plan of Reorganization of even date therewith (the “Reorganization Agreement”) pursuant to which Diacrin will be merged (the “Merger”) with and into the Company and each share of common stock of Diacrin outstanding will be converted into the right to receive the consideration set forth therein; and

WHEREAS, as of the date hereof, “Affiliates” (as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended) of HealthCare Ventures LLC (“HealthCare Ventures”) beneficially owned approximately 15.7% of the outstanding shares of Company common stock and approximately 24.8% of the outstanding shares of Diacrin common stock; and

WHEREAS, upon completion of the Merger, Affiliates of HealthCare Ventures are expected to beneficially own in excess of 20% of the outstanding shares of the Company’s common stock; and

WHEREAS, at a meeting on April 14, 2003, the Board of Directors of the Company determined that it is in the best interest of the Company and its stockholders to amend the Rights Agreement so that a Distribution Date would not occur as a result of the Merger because Affiliates of HealthCare Ventures beneficially owning in excess of 20% of the Company’s common stock solely as a result of the Merger; and

WHEREAS, the Board of Directors of the Company has approved and adopted this Amendment and directed that the proper officers take all appropriate steps to execute and put into effect this Amendment.

NOW, THEREFORE, the Company hereby amends the Rights Agreement as follows:

Section 1(a) of the Rights Agreement is hereby amended by inserting the following text after the last sentence thereof:

“In addition, HealthCare Ventures, LLC, HealthCare Ventures II, L.P., HealthCare Ventures III, L.P., HealthCare Ventures IV, L.P., HealthCare Ventures V, L.P. and HealthCare Ventures VI, L.P. and their Affiliates and Associates (collectively, the “HealthCare Ventures Group”) shall not be an Acquiring Person to the extent that the Beneficial Ownership of the HealthCare Ventures Group equals or exceeds 20% as a result of the acquisition of Common Stock by HealthCare Ventures II, L.P., HealthCare Ventures III, L.P. and HealthCare Ventures IV, L.P. pursuant to an Agreement and Plan of Merger, dated as of April 14, 2003 between the Company and Diacrin, Inc., a Delaware Corporation (“Diacrin”) and the related Agreement and Plan of Reorganization, as amended of even date therewith pursuant to which Diacrin will be merged with and into the Company and each share of common stock of Diacrin outstanding will be converted into the right to receive the consideration set forth therein (the “Merger”), so long as Beneficial Ownership of the HealthCare Ventures Group immediately prior to the Merger is less than 20%; provided, however, if at any time after the Merger, (x) the Beneficial Ownership of the HealthCare Ventures Group equals or exceeds 20%, and (y) the HealthCare Ventures Group becomes the Beneficial Owner of any additional Common Stock (other than in connection with the exercise of preemptive rights by HealthCare Ventures V, L.P. or HealthCare Ventures, VI, L.P., pursuant to Section 4 of that certain the Investor Rights Agreement, dated as of December 21, 2001), then the HealthCare Ventures Group shall be deemed an Acquiring Person.”

Except as amended hereby, the Rights Agreement shall remain in full force and effect and shall be otherwise unaffected hereby.

Capitalized terms used in this Amendment and not defined herein shall have the meanings assigned thereto in the Rights Agreement.

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This Amendment may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

In all respects not inconsistent with the terms and provisions of this Amendment, the Rights Agreement is hereby ratified, adopted, approved and confirmed.  In executing and delivering this Amendment, the Rights Agent shall be entitled to all the privileges and immunities afforded to the Rights Agent under the terms and conditions of the Rights Agreement.

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to be duly executed and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written.

ATTEST:		GENVEC, INC.
By	/s/ Jeffrey W. Church	By	/s/ Paul H. Fischer
	Name:  Jeffrey W. Church		Name:  Paul H. Fischer, Ph.D.
	Title:  Chief Financial Officer,		Title:  President and Chief
	Treasurer and Corporate Secretary		Executive Officer
ATTEST:		AMERICAN STOCK TRANSFER & TRUST COMPANY
By	/s/ Susan Silber	By	/s/ Herbert J. Lemmer
	Name:  Susan Silber		Name:  Herbert J. Lemmer
	Title:  Assistant Secretary		Title:  Vice President

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EX-99.1

Exhibit 99.1

I.              II.            65 West Watkins Mill Road
Gaithersburg, MD 20878
tel:  240-632-0740
www.genvec.com

GenVec Investor Contact

Paul H. Fischer, PhD

President and Chief Executive Officer

240-632-0740

GenVec Media Contact

Virginia M. Dunn

Corporate Communications

301-944-1172

GENVEC COMPLETES MERGER WITH DIACRIN, INC.

GAITHERSBURG, MD (August 21, 2003) - GenVec, Inc. (Nasdaq:GNVC) today announced that it has completed the merger of Diacrin, Inc. of Charlestown, MA with and into GenVec.  The transaction closed today following approval of the merger by shareholders of both parties.  Approximately 98 percent of the votes cast at the shareholder meetings of GenVec and Diacrin were in favor of the merger.

Under the terms of the transaction, announced April 15, 2003, each share of Diacrin common stock will be exchanged for 1.5292 shares of GenVec common stock, with cash being paid in lieu of fractional shares.

GenVec’s cash upon closing of the transaction is estimated at over $45 million. The combined company incorporates key strengths of both entities and will conduct

business as GenVec, Inc.  Attributes of the combined company include a strong product pipeline, process development and manufacturing expertise and facilities, and significant financial resources.

“GenVec will focus on the commercialization of its lead oncology product candidate, TNFerade™,” said Paul H. Fischer, Ph.D., President and Chief Executive Officer of GenVec.  Dr. Fischer continued, “Partnerships will be sought to support the development of the company’s cardiology program, comprised of BIOBYPASS^® and cell therapy, and for PEDF, a product candidate to prevent vision loss from macular degeneration. The company will seek to expand its revenue-generating vaccine collaborations, which currently include development programs for vaccines against HIV, SARS, malaria and dengue virus.”

Thomas H. Fraser, Ph.D., former President and Chief Executive Officer of Diacrin, will serve as Chairman of the Board of the combined company. Dr. Fischer will remain as President and Chief Executive Officer of GenVec and the new nine-member Board of Directors is comprised of five representatives from GenVec and four representatives from Diacrin.

Needham & Company, Inc. advised GenVec and SG Cowen Securities Corporation advised Diacrin on this transaction.  Effective at the close of market today, Diacrin shares ceased trading on the NASDAQ National Market.

In addition to approving the Diacrin merger, other actions taken at GenVec’s meeting included the election of Directors, approval of an increase in authorized common stock, approval of a stock option plan amendment, and ratification of the selection of KPMG, LLP as GenVec’s independent auditors for 2003.

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GenVec is a publicly held biotechnology company focused on the development and commercialization of novel therapies that improve patient care.  Additional information on GenVec is available at its web site located at www.genvec.com and in the company’s various filings with the Securities and Exchange Commission.

Statements herein relating to future financial or business performance, conditions or strategies and other financial and business matters, including expectations regarding future revenues and operating expenses, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act.  GenVec cautions that these forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time.  Factors that may cause actual results to differ materially from the results discussed in the forward-looking statements or historical experience include risks and uncertainties inherent in a merger transaction, including those relating to the inability to achieve planned synergies or execute integration plans and establish management and organizational structure.  Other risk factors include the failure by GenVec to secure and maintain relationships with collaborators; risks relating to the early stage of GenVec’s product candidates under development; uncertainties relating to clinical trials; risks relating to the commercialization, if any, of GenVec’s proposed product candidates (such as marketing, regulatory, patent, product liability, supply, competition and other risks); dependence on the efforts of third parties; dependence on intellectual property; and risks that we may lack the financial resources and access to capital to fund our operations.  Further information on the factors and risks that could affect GenVec’s business, financial conditions and results of operations, are contained in GenVec’s filings with the U.S. Securities and Exchange Commission (SEC), which are available at www.sec.gov.  These forward-looking statements speak only as of the date of this press release, and GenVec assumes no duty to update forward-looking statements.

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