Nuvelo, Inc., Form 8-K, 10/28/03

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

On October 28, 2003, Nuvelo, Inc. (Nuvelo), its landlord, 205 Broadway Realty Trust (Landlord), and Idenix Pharmaceuticals, Inc. (Idenix) entered into an assignment and assumption of lease agreement for the building located at 60 Hampshire Street in Cambridge, Massachusetts. This building was previously occupied by Variagenics, Inc., which merged, with Hyseq Pharmaceuticals, Inc. on January 31, 2003 forming Nuvelo. This assignment and assumption of lease agreement releases Nuvelo from any future obligations for this facility effective immediately, resulting in a net cash savings of approximately $4.4 million over the original term of the lease that was due to terminate on May 31, 2008.

This agreement provides that (1) Nuvelo will pay a $1.5 million allowance for tenant improvements to Idenix by assigning its existing $1.5 million stand by letter of credit, classified as restricted cash, to an escrow agent (2) requires that Nuvelo decommission the building and (3) provide a bill of sale to Idenix for certain furniture, fixtures and equipment that will remain in the building.

On October 30, 2003, we issued a press release, which sets forth our results of operations for the quarter ended September 30, 2003. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

The information in this Current Report on Form 8-K, including Exhibit 99.1, is furnished pursuant to Item 12 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, and is not incorporated by reference into any filing of the company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

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.

Contacts:
Pete Garcia
Sr. VP and Chief Financial Officer
408-215-4574
pgarcia@nuvelo.com

Nicole Estrin
Manager of Corporate Communications & IR
408-215-4572
nestrin@nuvelo.com

SUNNYVALE, Calif., October 30, 2003 /PRNewswire/ — Nuvelo, Inc. (Nasdaq: NUVO) today announced results for the third quarter ended September 30, 2003.

For the three months ended September 30, 2003, Nuvelo reported a net loss of $10.9 million or $0.17 per share compared to a net loss of $1.4 million or $0.06 per share for the same period in 2002. The net loss increase of $9.5 million was primarily attributed to reduced revenue related to the completion of the company’s agricultural gene discovery collaboration with BASF Plant Science LLC in January 2003. Revenues for the third quarter of 2003 were approximately $0.3 million, compared to revenues of $11.0 million for the same period in 2002. Total operating expenses were reduced to $10.9 million for the three months ended September 30, 2003 compared to $12.1 million for the same period in 2002. Nuvelo experienced significant reductions in expenses related to completion of the BASF agreement, eliminating non-core programs and its continued focus on developing biotherapeutics. These expense reductions were partially offset by additional clinical trial and alfimeprase manufacturing costs as Nuvelo continues to move toward completion of its Phase 2 trials.

For the nine months ended September 30, 2003, Nuvelo reported a net loss of $40.8 million or $0.69 per share, compared to a net loss of $28.5 million or $1.34 per share for the same period in 2002. Revenues for the nine month period ended September 30, 2003 were $1.9 million compared to revenues of $22.9 million for the same period in 2002. The loss per share for the three and nine months ended September 30, 2003 was impacted and reduced from the same period in 2002 as a result of additional shares issued through the acquisition of VARIAGENICS, Inc., which was completed on January 31, 2003.

675 Almanor Avenue, Sunnyvale, CA 94085 tel: 408/215-4000 fax: 408/524-4001 www. nuvelo.com

As of September 30, 2003, Nuvelo had approximately $20.4 million in cash, cash equivalents, short-term investments and restricted cash compared to approximately $3.3 million at December 31, 2002. In addition, Nuvelo closed a financing on October 7, 2003, which resulted in proceeds of approximately $26.2 million, after deduction of fees and other expenses related to the transaction.

“In the third quarter, we have continued to make substantial progress in executing our strategy to monetize our non-core assets, advance our gene portfolio into potential product candidates and move forward with our Phase 2 alfimeprase trials,” said Ted W. Love, MD, president and chief executive officer of Nuvelo. “We are focused on further advancement in all of these areas. We are in several discussions surrounding our non-core assets, in the first quarter of next year we expect to complete analysis of the 50 secreted protein genes currently partnered with Kirin and we are beginning preparations for our Phase 3 trials with alfimeprase, expected to begin in the first half of 2004.”

— Appointed Mark Perry, executive vice president of operations for Gilead Sciences, Inc., to our board of directors, replacing Jean-Francois Formela, MD

—Reported successful completion of an interim analysis of our Phase 2 clinical trial with alfimeprase for the potential treatment of patients with peripheral arterial occlusion

—Signed an agreement with SEQUENOM assigning them the entire chemical cleavage patent estate acquired through our merger with VARIAGENICS, as well as an exclusive worldwide license to nine additional restriction enzyme patents

—Oral presentation of our Phase 1 alfimeprase data by Jacob Cynamon, MD of the Montefiore Medical Center at the AIM Symposium, November 18, 2003 in New York, titled “Alfimeprase: A Novel New Thrombolytic Agent That May Reduce Complications And Improve Efficacy”

—Full publication of results from our Phase 1 alfimeprase trial in a medical journal

—Completion of analysis on the 50 secreted protein genes we have in collaboration with the pharmaceutical division of Kirin Brewery Co., Ltd.

— Identification of additional clinical candidates from Nuvelo’s research programs

675 Almanor Avenue, Sunnyvale, CA 94085 tel: 408/215-4000 fax: 408/524-4001 www. nuvelo.com

Nuvelo, Inc., formed by the merger of Hyseq Pharmaceuticals, Inc. and VARIAGENICS, Inc., is engaged in the discovery, development and commercialization of life improving therapeutics for the treatment of human disease. Nuvelo’s lead product candidate, alfimeprase, is partnered with Amgen and is currently in two Phase 2 trials in two indications, peripheral arterial occlusion and catheter occlusion. Additional programs include drug discovery focused on antibody targets and secreted proteins.

Information about Nuvelo is available at our new Web site at www.nuvelo.com or by phoning 408-215-4000.

Statements contained in this press release which are not historical in nature, are intended to be, and are hereby identified as “forward-looking statements” for purposes of the safe harbor provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words such as “believe,” “expect,” “anticipate,” “should,” “may,” “estimate,” “goals,” and “potential,” among others. Such statements are based on our management’s current expectations and involve risks and uncertainties. Actual results and performance could differ materially from those projected in the forward-looking statements as a result of many factors, including, without limitation, the risk that we may not successfully integrate the VARIAGENICS business following our recent merger, uncertainties relating to drug discovery, clinical development processes and the development and commercialization of our molecular diagnostics technology; changes in relationships with strategic partners and dependence upon strategic partners for the performance of critical activities under collaborative agreements; the impact of competitive products and technological changes; uncertainties relating to patent protection and regulatory approval; and uncertainties relating to our ability to obtain substantial additional funds required for progress in drug discovery and development. These and other factors are identified and described in more detail in Nuvelo, Hyseq and VARIAGENICS filings with the SEC, including without limitation Nuvelo’s annual report on Form 10-K and the related Form 10-K/A for the year ended December 31, 2002 and Nuvelo’s quarterly report on Form 10-Q for the quarter ended June 30, 2003. We disclaim any intent or obligation to update these forward-looking statements.

675 Almanor Avenue, Sunnyvale, CA 94085 tel: 408/215-4000 fax: 408/524-4001 www. nuvelo.com

NUVELO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)


		Three months ended						Nine months ended

		September 30, 2003			September 30, 2002			September 30, 2003			September 30, 2002

Contract Revenue:			262			11,022			1,940			22,915
Operating expense:
	Research and development		8,348			9,131			26,421			40,885
	General and administrative		2,861			2,879			14,384			9,102
	Restructuring		—			—			—			610
	(Gain) Loss on sale of assets		(350	)		47			1,212			34

Total operating expenses			10,859			12,057			42,017			50,631

Loss from operations			(10,597	)		(1,035	)		(40,077	)		(27,716	)

Realized gain on investment			—			—			40			—
Interest expense, net			(310	)		(409	)		(760	)		(864	)

Loss before minority interest			(10,907	)		(1,444	)		(40,797	)		(28,580	)

Loss attributable to minority interest			—			—			—			112

Net loss			(10,907	)		(1,444	)		(40,797	)		(28,468	)

Basic and diluted net loss per share			(0.17	)		(0.06	)		(0.69	)		(1.34	)

Weighted average shares used in computing basic and diluted net loss per share			63,961			22,767			58,968			21,197


	September 30,			December 31,
	2003			2002*

	(unaudited)
Cash, cash equivalents and short term investments	$	18,368		$	2,225
Restricted cash		2,010			1,106
Total assets		43,828			27,072
Deferred revenue		—			525
Noncurrent portion of capital leases		1,504			1,026
Notes payable — long term		6,600			4,000
Accumulated deficit		(194,169	)		(153,372	)
Total stockholders’ equity (deficit)	$	4,885		$	(4,564	)

* The condensed consolidated balance sheet data at December 31, 2002 has been derived from the audited financial statements as of that date.

675 Almanor Avenue, Sunnyvale, CA 94085 tel: 408/215-4000 fax: 408/524-4001 www. nuvelo.com

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Nevada	000-22873	36-3855489

(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)


	ITEM 5. Other Events.
	ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits.
	ITEM 12. Results of Operations and Financial Condition.
SIGNATURES
Exhibit Index
EXHIBIT 99.1


	Nuvelo, Inc. (Registrant)

	By:	/s/ Peter S. Garcia

		Peter S. Garcia
		Senior Vice President and Chief Financial Officer
Dated: October 30, 2003


Exhibit
Number		Description

99.1		Press Release dated September 30, 2003.

Table of Contents

Table of Contents

Table of Contents

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		PRESS RELEASE