-----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, FHqRuI+bbSd+ZIEOEm+5YdSSlZn5qzqwlcBM9Oimu1PLdhE3UtHvbifkFzEzfBk9 knh8s5V0Vup9XEU4kU4L+g== 0000950149-98-001153.txt : 19980609 0000950149-98-001153.hdr.sgml : 19980609 ACCESSION NUMBER: 0000950149-98-001153 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980608 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SCICLONE PHARMACEUTICALS INC CENTRAL INDEX KEY: 0000880771 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 943116852 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 000-19825 FILM NUMBER: 98643589 BUSINESS ADDRESS: STREET 1: 901 MARINERS ISLAND BLVD STREET 2: SUITE 315 CITY: SAN MATEO STATE: CA ZIP: 94404 BUSINESS PHONE: 6503583456 10-K/A 1 FORM 10-K/A FOR FISCAL YEAR ENDED 12/31/97 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------------------ FORM 10-K/A [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997, OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO __________ COMMISSION FILE NUMBER 0-19825 SCICLONE PHARMACEUTICALS, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) CALIFORNIA 94-3116852 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 901 MARINERS ISLAND BOULEVARD, SAN MATEO, CALIFORNIA 94404 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(650) 358-3456 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: COMMON STOCK, NO PAR VALUE (TITLE OF CLASS) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of the voting stock held by non-affiliates of the Registrant was approximately $72,992,432 as of March 27, 1998, based upon the closing sale price of the Registrant's Common Stock on The Nasdaq National Market on such date. Shares of Common Stock held by each executive officer and director have been excluded from the calculation because such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes. As of March 27, 1998, there were 17,348,108 shares of the Registrant's Common Stock outstanding. ================================================================================ 2 The undersigned registrant hereby amends the following portions of its Annual Report on Form 10-K for the year ended December 31, 1997, as set forth on the pages attached hereto. PART II ITEM 6. SELECTED FINANCIAL DATA The following selected financial data of the Company is qualified by reference to and should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K.
1997 1996 1995 1994 1993 ------------ ------------ ------------ ------------ ------------ STATEMENTS OF OPERATIONS DATA: Product sales................... $ 2,223,052 $ 703,082 $ 273,353 $ -- $ -- Cost of product sales........... 989,792 740,494 737,460 -- -- ------------ ------------ ------------ ------------ ------------ Gross margin.................... 1,233,260 (37,412) (464,107) -- -- Operating expenses: Research and development...... 8,642,137 9,903,536 10,386,312 9,282,051 8,122,716 Special research and development charges......... -- -- -- 3,470,000 -- Marketing..................... 4,144,499 4,240,208 4,323,327 4,375,447 1,771,985 General and administrative.... 3,662,441 3,182,972 2,903,991 3,810,696 2,895,513 ------------ ------------ ------------ ------------ ------------ Total operating expenses........ 16,449,077 17,326,716 17,613,630 20,938,194 12,790,214 ------------ ------------ ------------ ------------ ------------ Loss from operations............ (15,215,817) (17,364,128) (18,077,737) (20,938,194) (12,790,214) Interest and investment income, net........................... 1,218,812 2,618,381 3,302,307 3,056,869 1,111,183 ------------ ------------ ------------ ------------ ------------ Net loss........................ $(13,997,005) $(14,745,747) $(14,775,430) $(17,881,325) $(11,679,131) ============ ============ ============ ============ ============ Basic net loss per share........ $ (0.85) $ (0.85) $ (0.88) $ (1.02) $ (0.89) ============ ============ ============ ============ ============ Weighted average shares used in computing basic net loss per share amounts................. 16,472,765 17,421,312 16,881,652 17,507,564 13,098,462 BALANCE SHEET DATA: Cash, cash equivalents and investments................... $ 12,900,465 $ 35,105,708 $ 47,389,827 $ 63,670,287 $ 45,284,254 Working capital................. 7,416,472 9,223,793 19,283,278 44,796,629 44,995,598 Total assets.................... 19,195,505 42,727,687 54,150,795 67,012,993 48,095,931 Total shareholders' equity...... 15,723,657 37,465,628 49,555,262 62,754,031 45,520,246
17 3 SCICLONE PHARMACEUTICALS, INC. NOTES TO CONSOLIDATED FINANCIALS (CONTINUED) NOTE 8 -- SHAREHOLDERS' EQUITY Common Stock and Warrants In January 1994, the Company sold 2,000,000 shares of common stock in an underwritten public offering at $23.25 per share. The Company received approximately $43,600,000 in net proceeds from the offering. In conjunction with its initial public offering ("IPO"), the Company granted its IPO investment banker warrants to purchase 300,000 shares of common stock and 300,000 non-redeemable warrants. The warrants were exerciseable during the four-year period ending March 16, 1997. The exercise price of the 300,000 shares of common stock was $6.00 per share and the non-redeemable warrants was at $0.33 per warrant. The non-redeemable warrants were further exerciseable into one common share at $15.55 per share. In March 1997, 164,995 warrants exerciseable at $6.00 per share remained outstanding and were exercised by the Company's IPO investment banker resulting in proceeds of approximately $990,000. In exchange for exercising the outstanding warrants at $6.00 per share, the Company lowered the exercise price of the non-redeemable warrants from $15.55 per share to $4.00 per share. In October 1997, 300,000 warrants were exercised at $4.00 per share by the Company's IPO investment banker resulting in proceeds of approximately $1,200,000. In July 1997, the Company loaned to one of its former board members and former executive officers $5.944 million secured by approximately 1.9 million shares of the Company's common stock owned by this individual. The loan carries interest at 7%. During the period this loan is outstanding and immediately prior to the closing of any offering of the Company's common stock, the Company may convert the loan in a non-cash exchange into this individual's SciClone common stock by retiring his SciClone common stock at a fixed discount rate from the offering price. To date, the Company has not retired any of this individual's SciClone common stock. On December 31, 1997, the balance of the loan was $5.944 million and was classified as an offset to shareholders' equity. Repurchase of Common Stock In 1995 and 1994, the Company's Board of Directors authorized the repurchase of up to 1.0 million and 1.5 million shares of the Company's common stock, respectively. In the year ended December 31, 1997, 1996, and 1995, the Company repurchased 684,500, 78,000, and 346,000 shares of its common stock for an aggregate cost of $4,267,000, $659,000, and $1,925,000, respectively. Stock Award Plans In August 1991, the Board of Directors and shareholders of the Company approved the 1991 Stock Plan (the "1991 Plan") and reserved 1,300,000 shares for issuance thereunder. In May 1993, the Board of Directors and shareholders of the Company approved a 2,150,000 share increase in the shares reserved under the 1991 Plan. The 1991 Plan permits the award of incentive or nonqualified stock options and shares of common stock under restricted stock purchase agreements. In January 1992, the Board of Directors and 37 4 SCICLONE PHARMACEUTICALS, INC. NOTES TO CONSOLIDATED FINANCIALS (CONTINUED) shareholders of the Company approved the 1992 Stock Plan (the "1992 Plan") and reserved 240,000 shares for issuance thereunder. The 1992 Plan permits the award of incentive or nonqualified stock options which must be exercised in cash. In June 1995, the Board of Directors and the shareholders of the Company approved the 1995 Equity Incentive Plan (the "1995 Plan") and reserved 1,250,000 shares for issuance thereunder. In May 1997, the Board of Directors and shareholders of the Company approved an amendment to the 1995 Plan which increased by 750,000 the shares reserved for issuance thereunder. The 1995 Plan permits the award of incentive or nonqualified stock options and shares of common stock under restricted stock awards. Under the 1991, 1992 and 1995 Plans, options are exercisable upon conditions determined by the Board of Directors and expire ten years from the date of grant. Options are generally granted at fair market value on the date of grant and vest over time, generally four years. In June 1995, the Board of Directors and the shareholders of the Company approved the Nonemployee Director Stock Option Plan (the "Nonemployee Director Plan") and reserved 250,000 shares for issuance thereunder. The Nonemployee Director Plan automatically grants nonqualified stock options to nonemployee directors upon their appointment or first election to the Company's Board of Directors ("Initial Grant") and annually upon their reelection to the Board of Directors at the Company's Annual Meeting of Shareholders ("Annual Grant"). The options are granted at fair market value on the date of grant. Initial Grants vest annually over a period of three years. Annual Grants vest monthly over a period of one year. In July 1996, the Board of Directors and shareholders of the Company approved the 1996 Employee Stock Purchase Plan (the "ESPP") and reserved 500,000 shares for issuance thereunder. All full-time employees are eligible to participate in the ESPP. Under the terms of the ESPP, employees can choose to have up to 15% of their salary withheld to purchase the Company's common stock. The purchase price of the stock is the lower of 85% of the fair market value as of the first trading day of each quarterly participation period, or as of the last trading day of each quarterly participation period. Under the ESPP, the Company sold 20,432 and 5,675 shares to employees in 1997 and 1996, respectively. The following table summarizes the stock option activity under the 1991, 1992 and 1995 plans and the Nonemployee Director Plan:
WEIGHTED AVERAGE SHARES AVAILABLE SHARES UNDER EXERCISE PRICE OF FOR GRANT OPTION SHARES UNDER PLAN ---------------- ------------ ----------------- BALANCE AT DECEMBER 31, 1994.................. 801,212 2,225,337 $5.81 1995 Plan shares reserved................... 1,250,000 -- -- Nonemployee Director Plan shares reserved... 250,000 -- -- Options canceled............................ 63,963 (63,963) 5.93 Options granted............................. (436,500) 436,500 5.68 Options exercised........................... (66,477) 2.88 --------- --------- BALANCE AT DECEMBER 31, 1995.................. 1,928,675 2,531,397 5.86 Options canceled............................ 107,357 (107,357) 7.97 Options granted............................. (901,850) 901,850 5.73 Options exercised........................... (799,625) 4.66 --------- --------- BALANCE AT DECEMBER 31, 1996.................. 1,134,182 2,526,265 6.11 Additional 1995 Plan shares reserved........ 750,000 -- -- Options canceled............................ 232,595 (232,595) 7.03 Options granted............................. (775,300) 775,300 5.12 Options exercised........................... -- (10,236) 3.14 --------- --------- BALANCE AT DECEMBER 31, 1997.................. 1,341,477 3,058,734 $5.80 ========= =========
38 5 SCICLONE PHARMACEUTICALS, INC. NOTES TO CONSOLIDATED FINANCIALS (CONTINUED) NOTE 10 -- SUBSEQUENT EVENTS -- UNAUDITED In March 1998, the Company received $754,000 from one of its executive officers as a partial payment of a $1,000,000 loan. This payment reduced the loan to $236,500 including accrued interest. (See "Note 1 -- Notes Receivable from Officers.") In April 1998, the Company sold 661,157 shares of Series C convertible preferred stock at $6.05 per share and received approximately $4,000,000 from the offering (before deducting expenses). The preferred stock is convertible into common stock on a scheduled basis over the next five years at prices based on the market price of the common stock during a pricing period preceding conversion. In conjunction with the offering, the Company granted to the investor warrants to purchase 100,000 shares of common stock. These warrants are exercisable during the five year period ending March 2003 at an exercise price of $5.67 per share. (See "Business -- Recent Developments.") 40 6 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. SCICLONE PHARMACEUTICALS, INC. /s/ DONALD R. SELLERS By: -------------------------------------- Donald R. Sellers, Date: June 8, 1998 Chief Executive Officer POWER OF ATTORNEY Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ DONALD R. SELLERS Chief Executive Officer, Director June 8, 1998 - --------------------------------------------- (Principal Executive Officer) Donald R. Sellers /s/ DIANE LEE* Director, Corporate Finance and June 8, 1998 - --------------------------------------------- Administration Diane Lee (Principal Financial and Accounting Officer) /s/ JOHN D. BAXTER, M.D.* Director June 8, 1998 - --------------------------------------------- (John D. Baxter, M.D.) /s/ EDWIN C. CADMAN, M.D.* Director June 8, 1998 - --------------------------------------------- (Edwin C. Cadman, M.D.) /s/ JERE E. GOYAN, PH.D.* Director June 8, 1998 - --------------------------------------------- (Jere E. Goyan, Ph.D.) *By /s/ Donald R. Sellers - --------------------------------------------- Donald R. Sellers, Attorney-in-Fact
49 7 SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS SCICLONE PHARMACEUTICALS INC.
ADDITIONS ----------------------------- BALANCE AT CHARGED TO CHARGED TO BEGINNING OF COSTS AND OTHER BALANCE AT DESCRIPTION PERIOD EXPENSES ACCOUNTS DEDUCTIONS END OF PERIOD ----------- ------------ ---------- ---------------- ---------- ------------- YEAR ENDED DECEMBER 31, 1997 Reserves and allowances deducted from asset accounts: Allowance for uncollectable accounts............................ $ 7,000 $43,000 $200,000(1) -- $250,000 Inventory Reserve..................... 174,888 -- 225,000(1) 74,888(2) 325,000 YEAR ENDED DECEMBER 31, 1996 Reserves and allowances deducted from asset accounts: Allowance for uncollectable accounts............................ -- 7,000 -- -- 7,000 Inventory Reserve..................... 114,753 60,135 -- -- 174,888 YEAR ENDED DECEMBER 31, 1995 Reserves and allowances deducted from asset accounts: Allowance for uncollectable accounts............................ -- -- -- -- -- Inventory Reserve..................... -- 14,753 100,000 -- 114,753
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