-----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, SfJ08Ufg7xaPQ7cu3/QK7CfJmxhAmMRH6/zCCao9VZg98nlcBhxxrkSjiIK7rX1Z wZqFqhVM7oT1C5fOc8Kr/Q== 0001021408-02-005206.txt : 20020416 0001021408-02-005206.hdr.sgml : 20020416 ACCESSION NUMBER: 0001021408-02-005206 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20011231 FILED AS OF DATE: 20020412 FILER: COMPANY DATA: COMPANY CONFORMED NAME: 3 DIMENSIONAL PHARMACEUTICALS INC CENTRAL INDEX KEY: 0000914201 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 232716487 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-16019 FILM NUMBER: 02609765 BUSINESS ADDRESS: STREET 1: 665 STOCKTON DRIVE STREET 2: SUITE 104 CITY: EXTON STATE: PA ZIP: 19341 BUSINESS PHONE: 6104588959 MAIL ADDRESS: STREET 1: 665 STOCKTON DRIVE STREET 2: SUITE 104 CITY: EXTON STATE: PA ZIP: 19341 10-K/A 1 d10ka.txt FORM 10-K AMENDMENT NO. 2 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Amendment No. 2 to FORM 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2001 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 000-30992 3-DIMENSIONAL PHARMACEUTICALS, INC. (Exact name of registrant as specified in its charter) Delaware 23-2716487 (State of incorporation) (I.R.S. Employer Identification No.) Three Lower Makefield Corporate Center, Suite 300, 1020 Stony Hill Road, Yardley, PA 19067 (Address of principal offices including zip code) (267) 757-7200 (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: None 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 the definitive proxy statement incorporated by reference in Part III of this annual report on Form 10-K or any amendment to this annual report on Form 10-K. [X] As of February 11, 2002, the aggregate market value of the Common Stock held by non-affiliates of the registrant was $111,835,628. Such aggregate market value was computed by reference to the closing sale price of the Common Stock as reported on the Nasdaq National Market on such date. As of February 11, 2002, there were 22,494,902 shares of the registrant's Common Stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the definitive Proxy Statement for the Registrant's 2002 Annual Meeting of Stockholders to be held on May 17, 2002, to be filed within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K, are incorporated by reference into Part III of this Report and certain exhibits are incorporated by reference into Part IV of this Report. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Item 8. Financial Statements and Supplementary Data INDEX TO CONSOLIDATED FINANCIAL STATEMENTS 3-DIMENSIONAL PHARMACEUTICALS, INC. CONTENTS
Page ---- Consolidated Financial Statements Report of independent public accountants As of and for the year ended December 31, 2001......................... F-2 As of December 31, 2000 and for the years ended December 31, 2000 and 1999.................................................................. F-3 Consolidated balance sheets as of December 31, 2001 and 2000............. F-4 Consolidated statements of operations for the years ended December 31, 2001, 2000 and 1999..................................................... F-5 Consolidated statements of stockholders' equity (deficit) for the years ended December 31, 2001, 2000 and 1999.................................. F-6 Consolidated statements of cash flows for the years ended December 31, 2001, 2000 and 1999..................................................... F-7 Notes to consolidated financial statements............................... F-8
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To 3-Dimensional Pharmaceuticals, Inc.: We have audited the accompanying consolidated balance sheet of 3- Dimensional Pharmaceuticals, Inc. (a Delaware corporation) and subsidiaries as of December 31, 2001, and the related consolidated statements of operations, stockholders' equity (deficit) and cash flows for the year then ended. 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 3-Dimensional Pharmaceuticals, Inc. and subsidiaries as of December 31, 2001, and the results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States. Arthur Andersen LLP Philadelphia, Pennsylvania February 19, 2002 F-2 INDEPENDENT AUDITORS' REPORT Board of Directors and Stockholders 3-Dimensional Pharmaceuticals, Inc. Yardley, Pennsylvania We have audited the accompanying consolidated balance sheet of 3- Dimensional Pharmaceuticals, Inc. and subsidiary as of December 31, 2000 and the related consolidated statements of operations, changes in stockholders' equity (deficit) and cash flows for the years ended December 31, 2000 and 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 audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of 3-Dimensional Pharmaceuticals, Inc. and subsidiary as of December 31, 2000, and the consolidated results of their operations and their cash flows for the years ended December 31, 2000 and 1999 in conformity with accounting principles generally accepted in the United States of America. Richard A. Eisner & Company, LLP New York, New York February 7, 2001 F-3 3-DIMENSIONAL PHARMACEUTICALS, INC. CONSOLIDATED BALANCE SHEETS
December 31, December 31, ------------ ------------ 2001 2000 ------------ ------------ ASSETS Current assets: Cash and cash equivalents......................... $ 19,519,000 $114,557,000 Marketable securities............................. 80,870,000 -- Prepaid expenses and other current assets......... 3,087,000 977,000 ------------ ------------ Total current assets............................ 103,476,000 115,534,000 Property and equipment, net........................ 11,735,000 5,508,000 Restricted cash.................................... 835,000 -- Other assets....................................... 1,073,000 2,202,000 ------------ ------------ $117,119,000 $123,244,000 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses............. $ 5,759,000 $ 3,193,000 Current portion of deferred revenue............... 9,601,000 7,385,000 Note payable...................................... 5,000,000 -- Current portion of long-term debt................. 1,066,000 1,209,000 Current portion of settlement accrual............. -- 500,000 ------------ ------------ Total current liabilities....................... 21,426,000 12,287,000 Deferred revenue, less current portion............. 3,286,000 9,619,000 Long-term debt, less current portion............... 161,000 1,315,000 ------------ ------------ 24,873,000 23,221,000 ------------ ------------ COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Preferred Stock--$.001 par value: 5,000,000 shares authorized, none issued and outstanding at December 31, 2001 and 2000....................... -- -- Common stock--$.001 par value; 45,000,000 shares authorized, 21,988,238 and 21,385,798 shares issued and outstanding at December 31, 2001 and December 31, 2000, respectively.............. 22,000 21,000 Additional paid-in capital........................ 158,450,000 157,223,000 Note receivable from officer...................... (260,000) (390,000) Deferred compensation............................. (2,386,000) (3,570,000) Accumulated deficit............................... (64,703,000) (53,261,000) Accumulated other comprehensive income............ 1,123,000 -- ------------ ------------ Total stockholders' equity......................... 92,246,000 100,023,000 ------------ ------------ $117,119,000 $123,244,000 ============ ============
The accompanying notes are an integral part of these consolidated financial statements. F-4 3-DIMENSIONAL PHARMACEUTICALS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31, --------------------------------------- 2001 2000 1999 ------------ ----------- ------------ Research and grant revenue........... $ 28,399,000 $12,409,000 $ 4,489,000 Costs and expenses: Research and development............ 29,614,000 14,562,000 12,136,000 General and administrative.......... 15,334,000 8,652,000 6,525,000 Litigation settlement............... -- -- 1,500,000 ------------ ----------- ------------ 44,948,000 23,214,000 20,161,000 ------------ ----------- ------------ Loss from operations................. (16,549,000) (10,805,000) (15,672,000) Interest income...................... 5,344,000 3,458,000 328,000 Interest expense..................... (237,000) (646,000) (625,000) ------------ ----------- ------------ Loss before income taxes............. (11,442,000) (7,993,000) (15,969,000) Provision for income taxes........... -- 159,000 -- ------------ ----------- ------------ Net loss............................. (11,442,000) (8,152,000) (15,969,000) Declared and accrued cumulative dividends on preferred stock........ -- (396,000) (669,000) ------------ ----------- ------------ Net loss applicable to common stock.. $(11,442,000) $(8,548,000) $(16,638,000) ============ =========== ============ Basic and diluted net loss per common share--historical................... $ (0.53) $ (0.97) $ (27.37) ============ =========== ============ Weighted average common shares outstanding--historical............. 21,626,000 8,778,000 608,000 ============ =========== ============ Basic and diluted net loss per common share--pro forma.................... $ (0.52) $ (1.57) =========== ============ Weighted average common shares outstanding--pro forma.............. 15,663,000 10,198,000 =========== ============
The accompanying notes are an integral part of these consolidated financial statements. F-5 3-DIMENSIONAL PHARMACEUTICALS, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
Preferred Stock Common Stock ------------------ ------------------- Notes Accumulated Additional Receivable Other Par Par Paid-in From Deferred Comprehensive Accumulated Shares Value Shares Value Capital Officers Compensation Income (Loss) Deficit ---------- ------ ---------- ------- ------------ ---------- ------------ ------------- ------------ Balance--December 31, 1998........ 1,400,000 $1,000 733,979 $ 1,000 $ 3,875,000 $(121,000) $ -- $ -- $(29,140,000) Common stock issued pursuant to exercise of stock options... -- -- 11,439 -- 11,000 -- -- -- -- Value of options issued to consultants..... -- -- -- -- 18,000 -- -- -- -- Value of warrants issued in connection with bridge loan..... -- -- -- -- 26,000 -- -- -- -- Dividend declared on Series A-1 preferred....... -- -- -- -- (501,000) -- -- -- -- Forgiveness of loans made to officers........ -- -- -- -- -- 51,000 -- -- -- Net loss......... -- -- -- -- -- -- -- -- (15,969,000) ---------- ------ ---------- ------- ------------ --------- ----------- ---------- ------------ Balance--December 31, 1999........ 1,400,000 1,000 745,418 1,000 3,429,000 (70,000) -- -- (45,109,000) Common stock issued pursuant to exercise of stock options, warrants and stock grants.... -- -- 622,010 -- 1,605,000 (521,000) -- -- -- Common stock issued pursuant to cashless exercise of warrants........ -- -- 1,017,230 1,000 (1,000) -- -- -- -- Issuance of Series D preferred stock, net of offering costs of $24,000......... 625,000 1,000 -- -- 4,976,000 -- -- -- -- Common stock issued pursuant to initial public offering, net of offering costs of $7,362,500...... -- -- 5,750,000 6,000 78,882,000 -- -- -- -- Conversion of convertible preferred stock........... (2,025,000) (2,000) 723,214 1,000 1,000 -- -- -- -- Conversion of redeemable preferred stock........... -- -- 12,463,389 12,000 63,523,000 -- -- -- -- Conversion of notes payable-- dividends and accrued interest........ -- -- 71,234 -- 1,068,000 -- -- -- -- Dividends declared on Series A-1 preferred....... -- -- -- -- (563,000) -- -- -- -- Value of options issued to consultants..... -- -- -- -- 392,000 -- -- -- -- Deferred compensation charge in connection with option grants... -- -- -- -- 3,983,000 -- (3,983,000) -- -- Forfeiture of options subject to deferred compensation.... -- -- -- -- (53,000) -- 53,000 -- -- Deferred compensation expense......... -- -- -- -- -- -- 360,000 -- -- Common stock reacquired...... -- -- (6,697) -- (19,000) 19,000 -- -- -- Forgiveness of loans made to officers........ -- -- -- -- -- 182,000 -- -- -- Net loss......... -- -- -- -- -- -- -- -- (8,152,000) ---------- ------ ---------- ------- ------------ --------- ----------- ---------- ------------ Balance--December 31, 2000........ -- -- 21,385,798 21,000 157,223,000 (390,000) (3,570,000) -- (53,261,000) Common stock issued pursuant to exercise of stock options... -- -- 246,134 -- 603,000 -- -- -- -- Common stock issued pursuant to exercise of warrants........ -- -- 356,306 1,000 10,000 -- -- -- -- Value of options issued to consultants..... -- -- -- -- 433,000 -- -- -- -- Compensation charge in connection with acceleration of vesting terms on options......... -- -- -- -- 365,000 -- -- -- -- Forfeiture of options subject to deferred compensation.... -- -- -- -- (184,000) -- 184,000 -- -- Deferred compensation expense......... -- -- -- -- -- -- 1,000,000 -- -- Forgiveness of loans made to officer......... -- -- -- -- -- 130,000 -- -- -- Comprehensive loss: -- Net loss........ -- -- -- -- -- -- -- (11,442,000) Unrealized gain on investments.... -- -- -- -- -- -- -- 1,123,000 -- Comprehensive loss............ ---------- ------ ---------- ------- ------------ --------- ----------- ---------- ------------ Balance--December 31, 2001........ -- $ -- 21,988,238 $22,000 $158,450,000 $(260,000) $(2,386,000) $1,123,000 $(64,703,000) ========== ====== ========== ======= ============ ========= =========== ========== ============ Total Stockholders' Equity (Deficit) -------------- Balance--December 31, 1998........ $(25,384,000) Common stock issued pursuant to exercise of stock options... 11,000 Value of options issued to consultants..... 18,000 Value of warrants issued in connection with bridge loan..... 26,000 Dividend declared on Series A-1 preferred....... (501,000) Forgiveness of loans made to officers........ 51,000 Net loss......... (15,969,000) -------------- Balance--December 31, 1999........ (41,748,000) Common stock issued pursuant to exercise of stock options, warrants and stock grants.... 1,084,000 Common stock issued pursuant to cashless exercise of warrants........ -- Issuance of Series D preferred stock, net of offering costs of $24,000......... 4,977,000 Common stock issued pursuant to initial public offering, net of offering costs of $7,362,500...... 78,888,000 Conversion of convertible preferred stock........... -- Conversion of redeemable preferred stock........... 63,535,000 Conversion of notes payable-- dividends and accrued interest........ 1,068,000 Dividends declared on Series A-1 preferred....... (563,000) Value of options issued to consultants..... 392,000 Deferred compensation charge in connection with option grants... -- Forfeiture of options subject to deferred compensation.... -- Deferred compensation expense......... 360,000 Common stock reacquired...... -- Forgiveness of loans made to officers........ 182,000 Net loss......... (8,152,000) -------------- Balance--December 31, 2000........ 100,023,000 Common stock issued pursuant to exercise of stock options... 603,000 Common stock issued pursuant to exercise of warrants........ 11,000 Value of options issued to consultants..... 433,000 Compensation charge in connection with acceleration of vesting terms on options......... 365,000 Forfeiture of options subject to deferred compensation.... -- Deferred compensation expense......... 1,000,000 Forgiveness of loans made to officer......... 130,000 Comprehensive loss: Net loss........ (11,442,000) Unrealized gain on investments.... 1,123,000 -------------- Comprehensive loss............ (10,319,000) -------------- Balance--December 31, 2001........ $ 92,246,000 ==============
The accompanying notes are an integral part of these consolidated financial statements. F-6 3-DIMENSIONAL PHARMACEUTICALS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31, ---------------------------------------- 2001 2000 1999 ------------ ------------ ------------ Cash flows from operating activities: Net loss............................. $(11,442,000) $ (8,152,000) $(15,969,000) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization....... 2,863,000 1,922,000 1,565,000 Amortization of premium on marketable securities.............. 851,000 -- 19,000 Amortization of discount on marketable securities.............. (691,000) -- -- Accretion of interest on discounted note payable....................... 34,000 26,000 -- Non-cash compensation expense....... 1,495,000 201,000 51,000 Valuation of options and warrants... 433,000 752,000 44,000 Interest paid with common stock..... -- 49,000 -- Interest paid with preferred stock.. -- 239,000 -- Changes in: Other assets...................... (981,000) (1,899,000) 260,000 Accounts payable and accrued expenses ........................ 2,566,000 454,000 1,620,000 Settlement accrual................ (500,000) (1,000,000) 1,500,000 Deferred revenue.................. (4,117,000) 16,116,000 345,000 ------------ ------------ ------------ Net cash provided by (used in) operating activities............ (9,489,000) 8,708,000 (10,565,000) ------------ ------------ ------------ Cash flows from investing activities: Purchases of marketable securities.. (137,978,000) -- -- Maturities of marketable securities......................... 58,071,000 -- 7,267,000 Cash restricted for collateral...... 835,000 -- -- Acquisition of subsidiary, net of $25,000 cash acquired.............. -- -- (5,000) Capital expenditures................ (9,090,000) (3,469,000) (278,000) ------------ ------------ ------------ Net cash provided by (used in) investing activities............ (89,832,000) (3,469,000) 6,984,000 ------------ ------------ ------------ Cash flows from financing activities: Proceeds from sale of stock......... -- 102,212,000 -- Proceeds from exercise of options and warrants ...................... 614,000 1,068,000 11,000 Dividends paid on Series A-1 Preferred Stock.................... -- (229,000) -- Proceeds from issuance of short-term debt............................... 5,000,000 -- 10,000,000 Repayment of long-term debt and notes payable...................... (1,331,000) (1,378,000) (1,224,000) ------------ ------------ ------------ Net cash provided by financing activities...................... 4,283,000 101,673,000 8,787,000 ------------ ------------ ------------ Net increase (decrease) in cash and cash equivalents.................... (95,038,000) 106,912,000 5,206,000 Cash and cash equivalents--beginning of year............................. 114,557,000 7,645,000 2,439,000 ------------ ------------ ------------ Cash and cash equivalents--end of year................................ $ 19,519,000 $114,557,000 $ 7,645,000 ============ ============ ============ Supplemental disclosures of cash flow information: Cash paid for interest.............. $ 204,000 $ 331,000 $ 446,000 Noncash investing and financing activities: Equipment purchased under capital leases............................ -- -- $ 390,000 Dividends declared but not paid.... -- $ 501,000 Note receivable exchanged for common stock...................... -- $ 521,000 -- Notes payable (including interest due of $89,000) exchanged for common stock...................... -- $ 1,068,000 -- Notes payable (including interest due of $353,000) exchanged for redeemable preferred stock........ -- $ 10,353,000 -- Conversion of redeemable and convertible preferred stock to common stock...................... -- $ 71,751,000 --
The accompanying notes are an integral part of these consolidated financial statements. F-7 3-DIMENSIONAL PHARMACEUTICALS, INC. NOTES TO FINANCIAL STATEMENTS December 31, 2001 and 2000 NOTE A--DESCRIPTION OF BUSINESS 3-Dimensional Pharmaceuticals, Inc. (the Company) is a drug discovery and development company that has a pipeline of drug candidates in the areas of cancer and inflammation, and metabolic and cardiovascular diseases. The Company has developed an integrated set of proprietary technologies called DiscoverWorks(R) to accelerate and improve the drug discovery process. DiscoverWorks enables scientists to design characteristics into drug candidates that the Company believes increases the probability of development success. The Company uses DiscoverWorks to discover and develop drugs for its own pipeline and in collaboration with pharmaceutical and biotechnology companies. The Company has incurred net losses since inception in 1993 and may incur additional losses for at least the next several years. Through December 31, 2001, substantially all of the Company's revenue has been derived from corporate collaborations, license agreements and government grants. The Company expects that substantially all of its funds for the next several years will result from payments from these sources, from outlicensing of technologies and internally developed drug candidates, and from interest income. The Company expects to spend significant resources to enhance its drug discovery technologies and to fund research and development of its pipeline of drug candidates. Through December 31, 2001, the Company's technologies have not been used in the development of any compound that has reached the point of commercialization. In order to achieve profitability, the Company must continue to develop products and technologies that can be commercialized by the Company or through existing and future collaborations. NOTE B--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [1] Principles of consolidation: The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All inter-company balances have been eliminated in consolidation. [2] Cash, cash equivalents and marketable securities: The Company considers all highly liquid investment instruments purchased with an original maturity of three months or less to be cash equivalents. Marketable securities include investments in commerical paper, notes and bonds with original maturities of greater than three months having a remaining maturity of less than 24 months. These marketable securities are treated for accounting purposes as available-for-sale and as such are reported at their fair market values. At December 31, 2001, the Company had $1,123,000 of unrealized gains on these marketable securities. All realized gains and losses are recorded in the results of operations. Unrealized gains and losses have been recorded as a separate component of stockholders' equity. [3] Restricted Cash: Restricted cash of $0.8 million at December 31, 2001 collateralizes a $0.8 million outstanding letter of credit associated with the lease of the Company's Cranbury research facility. The funds are invested in a money market fund. (Note K) [4] Property and equipment: Property and equipment are recorded at cost and depreciated using the straight-line method over estimated useful lives of two to five years. Leasehold improvements and equipment acquired under capital leases are amortized over the lesser of the economic useful life of the improvement or asset or the term of the lease. Expenditures for repairs and maintenance are charged to expense as incurred, while major renewals and improvements are capitalized. F-8 3-DIMENSIONAL PHARMACEUTICALS, INC. NOTES TO FINANCIAL STATEMENTS [5] Revenue recognition: Revenue from corporate collaborations and licensing agreements consists of up-front fees, research and development funding and milestone payments. Non- refundable up-front fees are deferred and amortized to revenue over the related performance period. Periodic payments for research and development activities and government grants are recognized over the period that the Company performs the related activities under the terms of the agreements. Revenue resulting from the achievement of milestone events stipulated in the agreements is recognized when the milestone is achieved. In the year ended December 31, 1999, the Company changed its method of recognizing revenue with respect to nonrefundable up-front fees received under corporate collaboration research agreements to the method described above to conform with the requirements of an accounting bulletin on revenue recognition issued by the staff of the Securities and Exchange Commission in December 1999 and retroactively restated its prior years' financial statements to reflect the application of the new method. Prior to the change, the Company recognized revenue from such fees upon the execution of the agreement. [6] Research and development: Research and development costs are expensed as incurred. [7] Accounting for stock-based compensation: The Company accounts for its stock-based compensation plans under Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25). In October 1995, the Financial Accounting Standards Board issued Statement No. 123, "Accounting for Stock-Based Compensation" (SFAS No. 123), which establishes a fair value-based method of accounting for stock- based compensation plans. The Company has adopted the disclosure-only alternative under SFAS No. 123, which requires disclosure of the pro forma effects on net loss and net loss per share as if stock-based employee compensation was measured under SFAS No. 123, as well as certain other information. The Company accounts for stock-based compensation to non- employees using the fair value method in accordance with SFAS No. 123. The Company has recognized deferred stock compensation related to certain stock option grants (see Note I). [8] Use of estimates: The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. [9] Per share data: Historical basic and diluted net loss per common share is computed by dividing the net loss increased by declared and accrued cumulative dividends on the Series A-1 preferred stock for the year by the weighted average number of common shares exclusive of outstanding shares of common stock which are subject to repurchase and are nonvested. As their effects would be anti- dilutive, shares of common stock issuable upon conversion of preferred stock (for the periods prior to conversion) and exercise of outstanding options and warrants as well as outstanding common shares which are nonvested during the periods were not included in computing diluted net loss per common share. F-9 3-DIMENSIONAL PHARMACEUTICALS, INC. NOTES TO FINANCIAL STATEMENTS Securities and the related number of common shares not included in the diluted computation for the years ended December 31, 2001, 2000 and 1999 that could potentially dilute basic earnings per share, if any, in the future are as follows: Dilutive Potential Common Shares*
2001 2000 1999 --------- ---------- ---------- Preferred Stock (see below).................. -- 6,858,000 9,545,000 Options...................................... 2,991,000 2,115,000 2,023,000 Warrants..................................... 279,000 1,531,000 1,843,000 Common stock--subject to repurchase.......... 111,000 179,000 115,000 --------- ---------- ---------- 3,381,000 10,683,000 13,526,000 ========= ========== ==========
-------- * Includes weighted average shares for period prior to conversion and exercise. The preferred stock automatically converted into common stock on a 1 for .36 basis and certain nonvested common stock automatically became vested upon completion of the initial public offering of the Company's common stock in August 2000. Accordingly, pro forma basic and diluted net loss per common share on the accompanying consolidated statements of operations for the years ended December 31, 2000 and 1999 has been calculated by dividing net loss by the weighted average outstanding common shares as if the preferred stock were converted into common stock, and certain nonvested common stock was vested, as of the original date of issuance. [10] Comprehensive loss: Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income," requires the reporting of all changes in equity of an enterprise that result from recognized transactions and other economic events of the period other than transactions with owners in their capacity as owners. The Company's other comprehensive loss includes unrealized gains on available for sale securities. [11] Impairment of long-lived assets: As required by Statement of Financial Accounting Standards No. 121,"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of," the Company assesses the recoverability of any long-lived assets for which an indicator of impairment exists. Specifically, the Company calculates, and recognizes, any impairment losses by comparing the carrying value of these assets to its estimate of the undiscounted future operating cash flows. Although its current and historical operating cash flows are indicators of impairment, the Company believes that the future cash flows to be received from its long-lived assets will exceed the assets' carrying value. Accordingly, the Company has not recognized any impairment losses through December 31, 2001. [12] Income taxes: The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." The objective of this pronouncement is to recognize and measure, in accordance with enacted tax laws, the amount of current and deferred income taxes payable or refundable at the date of the financial statements as a result of all events that have been recognized in the financial statements. F-10 3-DIMENSIONAL PHARMACEUTICALS, INC. NOTES TO FINANCIAL STATEMENTS NOTE C--CERTAIN RESEARCH AND COLLABORATION AGREEMENTS In December 1997, the Company entered into a research collaboration with Heska Corporation to assist in the discovery and development of new veterinary therapeutic agents. The agreement originally had a two-year research term, which was revived and extended until May 31, 2002. As of December 31, 2001, the Company received up-front cash payments and research funding aggregating approximately $2.7 million. In October 1999, the Company entered into a research collaboration and license agreement with Hoechst Schering, AgrEvo GmbH, now part of Aventis CropScience GmbH, under which the Company utilized its DirectedDiversity(R) technology in the discovery of compounds applicable to plant and pest management. The initial term of the agreement was for two years and was extended until it expired in January 2002. As of December 31, 2001, the Company has received up-front payments, payment for delivery of compounds and research funding of approximately $3.4 million. In December 1999, the Company entered into a collaboration with Boehringer Ingelheim Pharmaceuticals, Inc., or BIPI, to use its DirectedDiversity technology to assist BIPI in the discovery of new drugs for specific biological targets in humans. The initial term of the collaboration was for two years and, in April 2001, the collaboration was expanded to cover additional targets and the research term was extended until March 2003. As of December 31, 2001, the Company has received up-front payments and research funding aggregating approximately $4.1 million, and will receive additional committed research funding of approximately $3.1 million over the remaining term of the collaboration. The Company could also receive milestone payments of up to $2.4 million for the first product developed depending on whether stipulated milestones are met, and is eligible to receive additional milestone payments if subsequent products are developed. The Company is also entitled to receive royalties on the sales of resulting products. In February 2000, the Company entered into a collaboration with DuPont Pharmaceuticals Company (acquired by Bristol-Myers Squibb Company in October 2001) under which the Company would utilize its DirectedDiversity technology to develop new drugs for specific biological targets. As of December 31, 2001, the Company has received up-front payments and research funding aggregating approximately $2.6 million. The agreement expired on December 31, 2001, the end of the initial research term of the collaboration. In March 2000, the Company was awarded and commenced a research project in which it was the recipient of a two-year Small Business Innovative Research (SBIR) award totaling up to $1 million. In addition, in June 2001, the Company was awarded and commenced an additional research project under a two-year SBIR Award totaling up to $1 million. The SBIRs are sponsored by the National Institutes of Health. In May 2000, the Company entered into a license and research agreement with Schering AG, Germany, in which Schering AG obtained, for human therapeutic uses, exclusive worldwide rights to the Company's urokinase inhibitor compounds. During the initial two-year research and development term, the Company is to receive payments for research funding totaling $5 million, of which $4.1 million was received by December 31, 2001. In addition, the Company is eligible to receive milestone payments of up to approximately $23 million for the first product developed in a therapeutic area depending on whether stipulated milestones are met, and future milestone payments for additional therapeutic areas and royalties on the sales of any resulting products. In connection with the agreement, an affiliate of Schering AG made a $5 million equity investment in the Company consisting of shares of preferred stock that converted into 223,214 shares of common stock. In July 2000, the Company entered into a collaboration with Bristol-Myers Squibb Company, or BMS, under which the Company will use its DiscoverWorks technologies to assist BMS in the discovery and development of new human drugs for specific biological targets. In the initial three-year term of the research F-11 3-DIMENSIONAL PHARMACEUTICALS, INC. NOTES TO FINANCIAL STATEMENTS collaboration, BMS will supply biological targets and the Company will create chemical libraries and screen such libraries against these targets. BMS may terminate research activities with 90 days notice, without cause, but must pay any remaining research funding during the initial research term or one-half of the remaining research funding during any extended term. Following the end of the initial research or any extended research term, either party may terminate the agreement on 30 days notice if no compound is being optimized or developed under the collaborative agreement. The Company received up-front cash licensing and technology access fees amounting to $19 million, net of a $4.5 million refund resulting from a modification of the agreement, and research funding of $14.4 million has been committed over the first three years of the collaboration of which $7.5 million was received by December 31, 2001. In addition, the Company could receive milestone payments through the clinical development stages, and royalty payments on the sales of any resulting products, with the amount at each level determined based on the Company's involvement in the related optimization and development activities. For each compound, depending on whether all pre-clinical and clinical milestones are met and depending on the Company's contribution to the development of the compound, the Company could receive milestone payments aggregating up to between $4.5 million and $15 million. In December 2000, the Company entered into an agreement with Centocor, Inc., a subsidiary of Johnson & Johnson, under which Centocor acquired worldwide rights to the Company's direct thrombin inhibitor program. Centocor is responsible for development and worldwide commercialization of all compounds under the agreement. For the deep vein thrombosis indication, the Company has an option to co-develop and co-promote with Centocor in the United States. Under the agreement, the Company received an up-front cash payment of $6 million from Centocor, research funding of $0.8 million during the year ended December 31, 2001 and a milestone payment of $4 million in October 2001 and is eligible to receive additional committed research funding of $0.8 million over the remaining term of the contract. The Company could also receive milestone payments of up to $38 million based on the achievement of certain milestones for the first compound developed and approved under the agreement. In addition, the Company is entitled to receive royalties on the sales of any products marketed under the agreement. In December 2001, the Company entered into a collaboration with Johnson & Johnson Pharmaceutical Research & Development, L.L.C., or J&J PRD, to utilize the Company's DiscoverWorks technology to discover and optimize small molecule drug leads directed towards genomics targets identified by J&J PRD. The initial research term is for approximately one year, subject to renewal by mutual agreement. Under the terms of this agreement, the Company received an up-front technology access fee and committed research funding aggregating $3.6 million. The contract provides that the Company could also receive milestone payments of up to $4.2 million for the first product developed depending on whether stipulated milestones are met and could receive additional milestones if subsequent products are developed. The contract also provides that the Company is entitled to receive royalties on the sales of any resulting products. All revenue from research and collaboration agreements is earned from activities performed in the United States. Revenue from foreign corporate collaborators (based on the location of the collaborator) comprised 13%, 30% and 23% of total collaboration revenues for the years ended December 31, 2001, 2000 and 1999, respectively. F-12 3-DIMENSIONAL PHARMACEUTICALS, INC. NOTES TO FINANCIAL STATEMENTS Revenue from the Company's major customers as a percentage of total revenue, for the years ended December 31, 2001, 2000 and 1999 was comprised of the following:
Customer 2001 2000 1999 -------- ---- ---- ---- A........................... 43% 35% -- B........................... 30% -- -- C........................... 4% 16% 3% D........................... 9% 13% -- E........................... 8% 14% -- F........................... -- -- 37% G........................... -- 3% 27% H........................... -- -- 20% --- --- --- 94% 81% 87% === === ===
Deferred revenue at December 31, 2001, which consists of unamortized up- front fees, is expected to be recognized as revenue in 2002 and 2003 in the amounts of $9,601,000 and $3,286,000, respectively. NOTE D--PROPERTY AND EQUIPMENT Property and equipment, all of which are located in the United States, is summarized as follows:
As of December 31, ------------------------ 2001 2000 ----------- ----------- Laboratory equipment, computer software and office equipment............................ $12,330,000 $ 6,720,000 Leasehold improvements....................... 4,570,000 2,655,000 ----------- ----------- 16,900,000 9,375,000 Less accumulated depreciation and amortization................................ (5,165,000) (3,867,000) ----------- ----------- $11,735,000 $ 5,508,000 =========== ===========
NOTE E--ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses consist of the following:
As of December 31, --------------------- 2001 2000 ---------- ---------- Professional fees.................................. $ 950,000 $ 289,000 Equipment.......................................... 1,473,000 685,000 Payroll and related expenses....................... 1,615,000 1,280,000 Trade payables..................................... 1,721,000 939,000 ---------- ---------- $5,759,000 $3,193,000 ========== ==========
NOTE F--DEBT [1] Short-term note payable: On December 31, 2001, the Company completed a short-term note financing for $5 million. The note bears interest at the prime rate of 4.75%. Principal and interest is due by February 28, 2002. The Company intends to repay the principal and interest and to arrange to refinance the amount borrowed as a long-term note. F-13 3-DIMENSIONAL PHARMACEUTICALS, INC. NOTES TO FINANCIAL STATEMENTS [2] Convertible notes payable: On November 18, 1999, the Company completed a convertible note financing for $10 million. The notes bore interest at the rate of prime + 1% per annum (9.5% through December 31, 1999). Principal and interest was due on the first anniversary of the closing date (the Maturity Date). The notes provided that, if prior to the Maturity Date the Company raised an additional $10 million through the sale of redeemable preferred stock, the notes and any unpaid accrued interest would convert into the redeemable stock on the same terms and conditions as given to the new investors. On March 31, 2000, the Company raised $18.4 million through the sale of redeemable preferred stock, which upon completion of the IPO converted into 2,186,101 shares of common stock. In connection therewith, the $10 million of convertible notes and $353,000 of accrued interest were converted into shares of redeemable preferred stock, which upon completion of the IPO converted into 1,232,559 shares of common stock. In connection with the sale of the notes, the Company issued warrants to purchase 1,250,000 shares of common stock exercisable at $3.50 per share for a period of one year. The Company recorded a noncash interest charge in connection with these warrants of $26,000 for the year ended December 31, 1999. All of the warrants were exercised prior to expiration, certain of which on a net issuance basis, resulting in the issuance of 1,119,285 shares of common stock. [3] Long-term debt: Long-term debt, including capital lease obligations, was as follows:
As of December 31, --------------------- 2001 2000 ---------- ---------- Loans payable(a)................................... $1,010,000 $2,002,000 Note payable(b).................................... 217,000 308,000 Capital lease obligations.......................... -- 214,000 ---------- ---------- 1,227,000 2,524,000 Current portion of long-term debt.................. 1,066,000 1,209,000 ---------- ---------- Long-term debt..................................... $ 161,000 $1,315,000 ========== ==========
- -------- (a) During 1998 and 1999, the Company entered into a series of 48-month loans to finance the purchase of laboratory equipment and office equipment and certain tenant improvements at interest rates varying between 10.68% and 11.65%. The loans are payable in monthly installments of principal and interest aggregating $98,000 with final payments in 2002 and 2003 aggregating $362,000 and $39,000, respectively. Borrowings related to the purchase of laboratory equipment and office equipment are collateralized by the equipment. (b) The note is payable in annual installments of $125,000 through December 2003. Interest on the note payable has been imputed at 10.0% per annum. As of December 31, 2001, the discounted amount of the note is $217,000 (face value $250,000). Minimum principal repayments of long-term debt as of December 31, 2001 were as follows: 2002........................................................... $1,066,000 2003........................................................... 161,000 ---------- Total...................................................... $1,227,000 ==========
F-14 3-DIMENSIONAL PHARMACEUTICALS, INC. NOTES TO FINANCIAL STATEMENTS NOTE G--FAIR VALUE OF FINANCIAL INSTRUMENTS Statement of Financial Accounting Standards No. 107, "Disclosures About Fair Value of Financial Instruments," requires the Company to disclose the estimated fair value of its financial instruments. The carrying amounts reported in the balance sheets for cash and cash equivalents, accounts payable and accrued expenses approximate fair value because of the short-term duration of those items. The carrying amounts of debt and notes payable approximate fair value because the interest rates on such debt approximate the market rate. NOTE H--REDEEMABLE PREFERRED STOCK AND EQUITY SECURITIES [1] Preferred stock: In August 2000, all outstanding Series A, B, C and D preferred shares and the notes payable were automatically converted into common shares of the Company on a 1 to .36 basis upon completion of the initial public offering of the Company's common stock. [2] Common Stock: In August 2000, the Company completed an initial public offering of its common stock. The offering consisted of 5,000,000 shares, which were priced at $15 per share. The Company also granted its underwriters an option to purchase 750,000 shares to cover over allotments, which was exercised concurrently with the IPO. Net proceeds to the Company after subtracting underwriting discounts and expenses was $78,888,000. [3] Warrants: As of December 31, 2001, the Company has outstanding warrants to purchase common shares, all of which are exercisable, as follows:
Expiration Number of Common Exercise Price Date Shares Reserved -------------- ---------- ---------------- $0.03 2005 5,894 $0.03 2006 90,599 $0.03 2007 5,336 $7.00 2004 4,500 -------- *106,329 ========
- -------- * Weighted average exercise price was $.32 and weighted average remaining contractual life was 4.44 years. [4] Common stock subject to repurchase: As of December 31, 2001 and 2000, 93,792 and 139,796 shares of common stock, respectively, are subject to repurchase by the Company. The shares are subject to repurchase at the Company's option at the original purchase prices, ranging from $2.94 to $6.30, in the event that the purchaser's relationship with the Company is terminated. The number of shares subject to repurchase by the Company decreases by 25% on the one-year anniversary of the sale, and further reduces upon later anniversary dates. [5] Note receivable from officer: At December 31, 2001, the Company has a note receivable from an officer with an unpaid balance of $260,000 in connection with a loan made in March 2000 to purchase 176,871 restricted shares of the Company's common stock. The loan is collateralized by the officer's beneficial interest in the stock. Under the terms of the F-15 3-DIMENSIONAL PHARMACEUTICALS, INC. NOTES TO FINANCIAL STATEMENTS note, interest accrues on the unpaid principal at approximately 7% per annum. Principal and accrued interest is to be paid in four equal installments with the first payment due six months from the loan date and the remaining payments due annually thereafter. The Company has forgiven installments of principal and interest due on loans to this officer and to other officers as part of the overall executive compensation program. These amounts have been recorded as compensation expense totaling $156,000, $182,000 and $58,000 for the years ended December 31, 2001, 2000 and 1999, respectively. NOTE I--EQUITY COMPENSATION PLANS The Company has maintained two equity compensation plans (together the Plans) for the issuance of stock options and other stock grants to its employees, non-employee directors, advisors and consultants. The Company's Equity Compensation Plan adopted in 1993, as amended, provides for the issuance of restricted stock and the granting of both incentive stock options and nonqualified stock options to purchase a total of 3,022,095 shares of common stock. The options vest over various periods, not exceeding five years, and expire no later than ten years from date of grant. Upon the close of the Company's IPO in August 2000, the Company stopped making grants under the 1993 Plan. During 2000, the board of directors and stockholders approved the 2000 Equity Compensation Plan, which became effective upon the close of the IPO in August 2000 and provided for the granting of up to 2,200,000 shares of common stock. On May 14, 2001, the board of directors and stockholders increased the number of shares under the plan to 4,200,000 shares of common stock. The 2000 Plan provides for grants of incentive stock options, nonqualified stock options, stock awards and performance units. The Plans are administered by a committee of the board of directors. The committee has the authority to determine the term during which an option may be exercised (provided that no option may have a term of more than ten years), the exercise price of an option and the rate at which options may be exercised. Incentive stock options may be granted only to employees of the Company. Nonqualified stock options may be granted to employees, directors or consultants of the Company. For incentive stock options, the exercise price may not be less than the fair value of the stock on the date of grant. The Company applies APB 25 in accounting for its employee stock option awards, which requires the recognition of compensation expense for the difference between the market value of the underlying common stock and the exercise price of the option at the grant date. Pro forma information regarding net loss and loss per share is required by SFAS No. 123, and has been determined as if the Company had accounted for its employee stock options under the fair value method of that statement. The weighted average fair value of options granted during the years ended December 31, 2001, 2000 and 1999 is estimated to be $6.80, $13.83 and $.35, respectively. The fair value of these options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:
Year Ended December 31, ------------------------- 2001 2000 1999 ------- ------- ------- Risk-free interest rate........................ 5.7% 5.9% 6.6% Expected life.................................. 6 Years 6 Years 6 Years Expected volatility............................ 102% 120% 10% Divided yield.................................. 0% 0% 0%
F-16 3-DIMENSIONAL PHARMACEUTICALS, INC. NOTES TO FINANCIAL STATEMENTS Had compensation cost for the Company's stock options been determined based upon the fair value at the grant date for awards under the Plans consistent with the methodology prescribed under SFAS No. 123, the Company's pro forma net loss and pro forma net loss per share would be as follows:
Year Ended December 31, ------------------------------------- 2001 2000 1999 ----------- ----------- ----------- Net loss: Historical......................... $11,442,000 $ 8,152,000 $15,969,000 Pro forma.......................... 15,652,000 10,388,000 16,398,000 Basic and diluted net loss per share: Historical......................... $ (0.53) $ (0.97) $ (27.37) Pro forma.......................... $ (0.72) $ (1.23) $ (28.07)
The following table summarizes information about stock option activity under the Plans during the periods indicated:
Incentive Options Nonqualified Options -------------------- ------------------------ Weighted Weighted Average Average Exercise Excercise Shares Price Shares Price ---------- -------- ----------- ----------- Balance--December 31, 1998.... 1,020,149 $ 2.08 160,487 $ 1.92 Granted....................... 157,585 2.94 727,619 3.67 Exercised..................... (11,439) 0.97 -- -- Forfeited..................... (31,541) 2.65 -- -- ---------- ----------- Balance--December 31, 1999.... 1,134,754 2.20 888,106 3.35 Granted....................... 455,170 11.07 431,090 15.17 Exercised..................... (200,569) 1.80 (191,433) 2.59 Forfeited..................... (133,832) 3.44 -- -- ---------- ----------- Balance--December 31, 2000.... 1,255,523 5.34 1,127,763 8.00 Granted....................... 1,096,421 10.16 230,142 12.66 Exercised..................... (1,096,974) 2.45 (49,214) 2.44 Forfeited..................... (134,998) 10.46 (86,891) 15.17 ---------- ----------- Balance--December 31, 2001.... 2,019,972 $ 7.90 1,221,800 $ 8.59 ---------- ------ ----------- --------
The following table presents information relating to stock options outstanding and exercisable at December 31, 2001:
Options Outstanding Options Exercisable ------------------------------ -------------------- Weighted Average Weighted Weighted Remaining Average Average Number Life Exercise Number Exercise Range of Exercise Price Outstanding in Years Price Exercisable Price - ----------------------- ----------- --------- -------- ----------- -------- Incentive Stock Options $0.03 to $7.28........... 904,494 6.77 $ 3.52 559,235 $ 2.45 $7.29 to $30.00.......... 1,115,478 9.20 11.44 48,690 16.02 --------- ------- 2,019,972 8.11 $ 7.90 607,925 $ 3.54 ========= ====== ======= ====== Nonqualified Stock Options $0.03 to $7.28........... 710,853 7.40 $ 3.89 382,965 $ 3.66 $7.29 to $30.00.......... 510,947 8.98 15.14 109,503 17.54 --------- ------- 1,221,800 8.06 $ 8.59 492,468 $ 6.75 ========= ====== ======= ======
F-17 3-DIMENSIONAL PHARMACEUTICALS, INC. NOTES TO FINANCIAL STATEMENTS In addition to the stock option activity, the Company issued 7,143 shares of restricted stock at a weighted average purchase price per share of $6.30 under the Plans during the year ended December 31, 2000. The Company reacquired 6,697 unvested, restricted shares at a purchase price of $19,000 during 2000. As of December 31, 2001, 2,689,242 common shares were available for future grants under the 2000 Plan. The Company records expense for option grants to non-employees in the amount of the fair value per share, as computed using the Black-Scholes option-pricing model and variable plan accounting over the vesting period. The Company recognized non-cash expense of $433,000, $392,000 and $18,000 for the years ended December 31, 2001, 2000 and 1999, respectively in conjunction with such non-employee option grants. During the year ended December 31, 2001, the Company recorded charges totaling $365,000 resulting from changes in terms of certain stock options to former employees, directors and consultants. During the year ended December 31, 2000, in connection with the grant of options to employees and directors and the change in status of an option holder from a consultant to an employee, the Company recorded deferred stock compensation of $3,983,000, representing the difference between the exercise price and the market value of the Company's common stock on the dates such stock options were granted or status was changed. Deferred compensation is included as a component of stockholders' equity (deficit) and is being amortized to expense over the vesting period of the stock options. For the years ended December 31, 2001 and 2000, the Company incurred deferred stock compensation expense of $1,000,000 and $360,000, respectively. NOTE J--401(K) PLAN The Company maintains a defined contribution 401(k) plan available to eligible employees. Employee contributions are voluntary and are determined on an individual basis, limited to the maximum amount allowable under federal tax regulations. During the year ended December 31, 2001, the Company began making matching contributions in the amount of 50% of employee contributions up to 6%. The Company, at its discretion, may also make certain contributions to the plan. For the years ended December 31, 2001 and 2000, the Company contributed $266,000 as matching contributions and $226,000 as a discretionary contribution to the plan, respectively. The Company made no contributions during 1999. NOTE K--COMMITMENTS AND CONTINGENCIES [1] Leases: The Company currently occupies approximately 104,500 square feet of space, including its corporate headquarters and clinical development offices in Yardley, Pennsylvania and two research facilities located in Exton, Pennsylvania and Cranbury, New Jersey. The Yardley facility includes 20,500 square feet of office space, which the Company occupied in October 2001 and which is leased through March 2006. The Company leases approximately 41,000 square feet of space in Exton, Pennsylvania which houses one of the Company's research and development facilities, including approximately 10,000 square feet, adjacent to its initial space, which the Company occupied in December 2000. The initial 31,000 square feet of the Exton facility is leased through June 2008 and the additional 10,000 square feet is subject to options allowing the Company to extend that portion of the lease term through June 2008. The Company's other research and development facility includes approximately 43,000 square feet of space in Cranbury, New Jersey. The Cranbury facility is leased through May 2007. At December 31, 2001 minimum annual rentals under the leases are as follows: F-18 3-DIMENSIONAL PHARMACEUTICALS, INC. NOTES TO FINANCIAL STATEMENTS
Year Ending December 31, Amount ------------------------ ----------- 2002................................... $ 2,418,000 2003................................... 2,460,000 2004................................... 2,503,000 2005................................... 2,469,000 2006................................... 2,412,000 Thereafter............................... 1,207,000 ----------- $13,469,000 ===========
The leases provide for scheduled rental increases and escalations for increases in real estate taxes and certain operating expenses. At December 31, 2001, the Company has recorded a deferred rent liability in the amount of $84,000. Rent expense was $2,224,000, $547,000 and $516,000 for the years ended December 31, 2001,2000 and 1999, respectively. [2] Letter of Credit: The Company had an outstanding letter of credit at December 31, 2001, totaling $0.8 million pursuant to the lease for the Cranbury research facility. (Note B[3]) [3] Contingencies: The Company may be, from time to time, a party to various legal proceedings arising from normal business activities. Although the amount of any liability that could arise with respect to currently pending actions cannot be accurately predicted, management believes that the ultimate resolution of these matters will not have a material adverse effect on the Company's financial condition or result of operations. NOTE L--INCOME TAXES As of December 31, 2001, the Company has a net operating loss carryforward and a research and development credit carryforward for federal income tax purposes of approximately $49,680,000 and $2,909,000 respectively, which begin to expire in 2016. In addition, the Company has an alternative minimum tax credit carryforward of $120,000 as of December 31, 2001. Deferred tax assets, which represent the tax effects of loss and credit carryforwards and temporary differences between the financial statement amounts and the tax basis of assets and liabilities consist of:
As of December 31, ------------------------ 2001 2000 ----------- ----------- Net operating loss carryforwards................. $18,210,000 $14,760,000 Research and development credit carryforwards.... 2,909,000 1,321,000 Alternative minimum tax credit carryforward...... 120,000 117,000 Income deferred for financial statement purposes, taxable when received for tax purposes.......... 4,930,000 6,652,000 Operating expenses, capitalized and amortized as start up costs for tax purposes................. -- 247,000 Other--depreciation and expenses not currently deductible...................................... 806,000 376,000 ----------- ----------- Total deferred tax asset......................... 26,975,000 23,473,000 Valuation allowance.............................. (26,975,000) (23,473,000) ----------- ----------- Net deferred tax asset....................... $ -- $ -- =========== ===========
F-19 3-DIMENSIONAL PHARMACEUTICALS, INC. NOTES TO FINANCIAL STATEMENTS The Company has not recorded a benefit from its carryforwards or deductible temporary differences because realization of the benefit is uncertain and, therefore, a valuation allowance has been provided for the deferred tax asset at December 31, 2001 and 2000, respectively. The provision for income taxes for the year ended December 31, 2000 represents a provision for the federal alternative minimum tax and state income tax. The difference between the tax benefit computed at the statutory tax rate of 34% and the Company's effective tax rate is due to the increase in the valuation allowance of $3,502,000, $4,305,000 and $6,805,000 for the years ended December 31, 2001, 2000 and 1999, respectively, and the provision for the federal alternative minimum tax and state income tax of $159,000 for the year ended December 31, 2000. In subsequent years, the Company may be subject to an annual limitation on the utilization of its net operating loss and research and development tax credit carryforwards under Section 382 of the Internal Revenue Code. NOTE M--SETTLEMENT OF LITIGATION In October 1998, a complaint was filed in the United States District Court for the District of Delaware by Anadys Pharmaceuticals, Inc. alleging that the Company infringed two Anadys U.S. Patents. On March 7, 2000, the Company and Anadys entered into a Settlement Agreement for a total of $1.5 million which was paid by the Company for settlement of the litigation. NOTE N--QUARTERLY RESULTS (unaudited):
Quarter ended -------------------------------------------------- September March 31 June 30 30 December 31 Total Year ----------- ----------- ----------- ----------- ------------ 2001 Revenues................ $ 5,796,000 $ 6,643,000 $ 5,788,000 $10,172,000 $ 28,399,000 Net loss................ (1,641,000) (3,094,000) (4,965,000) (1,742,000) (11,442,000) Basic net loss per common share-- historical*............ $ (0.08) $ (0.14) $ (0.23) $ (0.08) $ (0.53) Diluted net loss per common share-- historical*............ $ (0.08) $ (0.14) $ (0.23) $ (0.08) $ (0.53) =========== =========== =========== =========== ============ 2000 Revenues................ $ 1,484,000 $ 2,131,000 $ 4,994,000 $ 3,800,000 $ 12,409,000 Net income (loss)....... (3,742,000) (2,477,000) 409,000 (2,342,000) (8,152,000) Basic net income (loss) per common share-- historical*............ $ (5.92) $ (3.76) $ 0.03 $ (0.11) $ (0.97) Diluted net income (loss) per common share--historical*..... $ (5.92) $ (3.76) $ 0.02 $ (0.11) $ (0.97) Basic net income (loss) per common share--pro forma.................. $ (0.36) $ (0.18) $ 0.02 $ (0.11) $ (0.52) Diluted net income (loss) per common share--pro forma....... $ (0.36) $ (0.18) $ 0.02 $ (0.11) $ (0.52) =========== =========== =========== =========== ============
- -------- * Per common share amounts for the quarters and full years have been calculated separately. Accordingly, quarterly amounts do not add to the annual amounts because of differences in the weighted average common shares outstanding during each period principally due to the effect of the Company's issuing shares of its common stock during the year. (1) During the quarter ended December 31, 2000, revenues included a $0.4 million adjustment resulting from a modification of the agreement with BMS. F-20 NOTE O--TPO MIMETIC PROGRAM: In January 2002, the Company acquired worldwide rights to a pre-clinical compound, 3DP-3534, from GlaxoSmithKline Plc, or GSK, for the prevention and treatment of thrombocytopenia, or low blood platelet count. All payments for the compound will be made to GSK in shares of the Company's stock. The Company made an initial payment of 0.5 million shares and is obligated to issue up to 1.9 million additional shares should the compound achieve certain key development and regulatory milestone events. With respect to the initial 0.5 million shares issued, the Company will recognize a non-cash in-process research and development charge in the first quarter of 2002 of $4.1 million. F-21 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure On September 24, 2001, upon the recommendation of the Audit Committee and the Board of Directors, the Company dismissed Richard A. Eisner & Company, LLP (Eisner) as the Company's independent accountants. Eisner's reports on the financial statements of the Company for each of the fiscal years ended December 31, 2000 and 1999 did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope, or accounting principles. During the Company's 2000 and 1999 fiscal years and the interim period ended September 24, 2001, the Company did not have any disagreements with Eisner on any matter relating to accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Eisner, would have caused Eisner to make reference to the subject matter of the disagreement in connection with its report. On September 24, 2001, the Board of Directors approved the Company's retention of Arthur Andersen LLP to act as the Company's independent accountants. During the Company's 2000 and 1999 fiscal years and the interim period ended September 24, 2001, the Company did not consult Arthur Andersen LLP regarding either the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the financial statements of the Company. Additionally, the Company did not consult Arthur Andersen LLP during the Company's 2000 and 1999 fiscal years or the interim period ended September 24, 2001, regarding any matter that was the subject of a disagreement or a reportable event. PART III Item 10. Directors and Executive Officers of the Registrant The response to this item is contained in part under the caption "Executive Officers of the Registrant" in Part I of this Annual Report on Form 10-K and the remainder is incorporated by reference from the discussion under the caption "Nomination and Election of Directors" from our Proxy Statement relating to our Annual Meeting of Stockholders scheduled for May 17, 2002, which will be filed within 120 days after the close of the Company's fiscal year covered by this Report. Item 11. Executive Compensation This information will be included in our Proxy Statement relating to our Annual Meeting of Stockholders scheduled for May 17, 2002, which will be filed within 120 days after the close of our fiscal year covered by this Report, and is incorporated herein by reference to such Proxy Statement. Item 12. Security Ownership of Certain Beneficial Owners and Management This information will be included in our Proxy Statement relating to our Annual Meeting of Stockholders scheduled for May 17, 2002, which will be filed within 120 days after the close of our fiscal year covered by this Report, and is incorporated herein by reference to such Proxy Statement. Item 13. Certain Relationships and Related Transactions This information will be included in our Proxy Statement relating to our Annual Meeting of Stockholders scheduled for May 17, 2002, which will be filed within 120 days after the close of our fiscal year covered by this Report, and is incorporated herein by reference to such Proxy Statement. F-22 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K (a) Documents filed as part of this report: (1) Financial Statements The financial statements are included under Item 8 of this Report. (2) Financial Statement Schedules The financial statement schedules listed under Item 8 of this Report are omitted because they are not applicable or required information, and are shown in the financial statements or the notes thereto. (3) List of Exhibits. The following is a list of exhibits filed as part of this annual report on Form 10-K. Where so indicated in parentheses, exhibits which were previously filed are incorporated herein by reference.
Exhibit Number Description ------- ----------- 3 (i) Ninth Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.4 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 3 (ii) Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.5 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 4.1 Form of Common Stock Certificate of Company (incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 10.1 3-Dimensional Pharmaceuticals, Inc. Equity Compensation Plan, as amended (incorporated by reference to Exhibit 10.1 to the Company's Registration Statement on Form S-1 (File No. 333-37606))./1/ 10.2 Third Amended and Restated Stockholders' Agreement by and among the Company and the Stockholders identified therein, dated March 31, 2000 (incorporated by reference to Exhibit 10.2 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 10.3 Series B Preferred Stock Purchase Agreement between the Company and Merck KGaA, dated October 11, 1996 (incorporated by reference to Exhibit 10.3 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 10.4 Series C Preferred Stock Purchase Agreement between the Company and American Home Products Corporation, dated June 13, 1997 (incorporated by reference to Exhibit 10.4 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 10.5 Series D Preferred Stock Purchase Agreement between the Company and Schering Berlin Venture Corporation, dated May 17, 2000 (incorporated by reference to Exhibit 10.5 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 10.6 Warrant to Purchase Common Stock of the Company issued to HealthCare Ventures III, L.P., dated November 18, 1999 (incorporated by reference to Exhibit 10.6 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 10.7 Warrant to Purchase Common Stock of the Company issued to HealthCare Ventures IV, L.P., dated November 18, 1999 (incorporated by reference to Exhibit 10.7 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 10.8 Warrant to Purchase Common Stock of the Company issued to Rho Management Trust II, dated November 18, 1999 (incorporated by reference to Exhibit 10.8 to the Company's Registration Statement on Form S-1 (File No. 333-37606)).
F-23
Exhibit Number Description ------- ----------- 10.9 Warrant to Purchase Common Stock of the Company issued to Aetna Life Insurance Company, dated November 18, 1999 (incorporated by reference to Exhibit 10.9 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 10.10 Warrant to Purchase Common Stock of the Company issued to Henry Rothman, dated November 18, 1999 (incorporated by reference to Exhibit 10.10 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 10.11 Warrant to Purchase Common Stock of the Company issued to Abingworth Bioventures SICAV, dated November 18, 1999 (incorporated by reference to Exhibit 10.11 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 10.12 Warrant to Purchase Common Stock of the Company issued to Sentron Medical, Inc., dated November 18, 1999 (incorporated by reference to Exhibit 10.12 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 10.13 Warrant to Purchase Common Stock of the Company issued to Biotech Growth S.A., dated November 18, 1999 (incorporated by reference to Exhibit 10.13 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 10.14 Employment Offer Letter to David C. U'Prichard, dated September 1, 1999 (incorporated by reference to Exhibit 10.14 to the Company's Registration Statement on Form S-1 (File No. 333-37606))./1/ 10.15 Settlement Agreement between the Company and Anadys Pharmaceuticals, Inc. (Formerly Scriptgen Pharmaceuticals, Inc.), dated March 7, 2000 (incorporated by reference to Exhibit 10.15 to the Company's Registration Statement on Form S-1 (File No. 333-37606))./2/ 10.16 Research Collaboration Agreement between the Company and BioCryst Pharmaceuticals, Inc., dated October 18, 1996, and Amendment No.1 thereto, dated October 18, 1996 (incorporated by reference to Exhibit 10.16 to the Company's Registration Statement on Form S-1 (File No. 333-37606))./2/ 10.17 Collaborative Discovery and Lead Optimization Agreement between the Company and Boehringer Ingelheim Pharmaceuticals, Inc., dated December 17, 1999 (incorporated by reference to Exhibit 10.17 to the Company's Registration Statement on Form S-1 (File No. 333-37606))./2/ 10.18 Collaborative Research and License Agreement between the Company and Hoechst Schering AgrEvo GmbH, now Aventis CropScience GmbH, dated October 18, 1999 (incorporated by reference to Exhibit 10.18 to the Company's Registration Statement on Form S-1 (File No. 333-37606))./2/ 10.19 Collaborative Research and License Agreement between the Company and E.I. DuPont de Nemours & Co., dated October 12, 1998 (incorporated by reference to Exhibit 10.19 to the Company's Registration Statement on Form S-1 (File No. 333-37606))./2/ 10.20 Collaborative Discovery and Lead Optimization Agreement between the Company and DuPont Pharmaceuticals Company, dated February 11, 2000 (incorporated by reference to Exhibit 10.20 to the Company's Registration Statement on Form S-1 (File No. 333-37606))./2/ 10.21 Nonexclusive Patent License Agreement between the Company and DuPont Pharmaceuticals Company, dated February 11, 2000 (incorporated by reference to Exhibit 10.21 to the Company's Registration Statement on Form S-1 (File No. 333-37606))./2/ 10.22 Research and License Agreement between the Company and the Heska Corporation, dated December 18, 1997, and Amendment No.1 thereto, dated December 18, 1997 (incorporated by reference to Exhibit 10.22 to the Company's Registration Statement on Form S-1 (File No. 333-37606))./2/ 10.23 License and Research Agreement between the Company and Schering AG, Germany, dated May 17, 2000 (incorporated by reference to Exhibit 10.23 to the Company's Registration Statement on Form S-1 (File No. 333-37606))./2/
F-24
Exhibit Number Description ------- ----------- 10.24 Master Loan and Security Agreement between the Company and Phoenixcor, Inc., dated June 18, 1998 (incorporated by reference to Exhibit 10.24 to the Company's Registration Statement on Form S-1 (File No. 333- 37606)). 10.25 Amended and Restated Lease for Combination Office/Laboratory/Light Manufacturing Space at Eagleview Corporate Center Lot 28 between the Company and Eagleview Technology Partners, dated December 12, 1997 (incorporated by reference to Exhibit 10.25 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 10.26 Master Lease Agreement between the Company and Transamerica Business Credit Corporation, dated June 12, 1997 (incorporated by reference to Exhibit 10.26 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 10.27 Warrant to Purchase Common Stock of the Company issued to Transamerica Business Credit Corporation, dated June 12, 1997 (incorporated by reference to Exhibit 10.27 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 10.28 Master Lease Agreement, Loan Agreement and Subordination Agreement between the Company and Comdisco, Inc., dated March 7, 1994 (incorporated by reference to Exhibit 10.28 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 10.29 Warrant to Purchase Series A Preferred Stock, originally dated March 7, 1994 and reissued to CDC Realty, Inc., dated July 21, 1998 (incorporated by reference to Exhibit 10.29 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 10.30 Warrant to Purchase Series A Preferred Stock, originally dated March 7, 1994 and reissued to Gregory Stento, dated July 21, 1998 (incorporated by reference to Exhibit 10.30 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 10.31 Warrant to Purchase Series A Preferred Stock, originally dated April 25, 1995 and reissued to Comdisco, Inc., dated July 21, 1998 (incorporated by reference to Exhibit 10.31 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 10.32 Warrant to Purchase Series A Preferred Stock, originally dated April 25, 1995 and reissued to Gregory Stento, dated July 21, 1998 (incorporated by reference to Exhibit 10.32 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 10.33 Form of Warrant to Purchase Common Stock (along with Schedule of Holders of Certain Warrants to Purchase Common Stock) (incorporated by reference to Exhibit 10.33 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 10.34 3-Dimensional Pharmaceuticals, Inc. 2000 Equity Compensation Plan (incorporated by reference to Exhibit 10.34 to the Company's Registration Statement on Form S-1 (File No. 333-37606))./1/ 10.35 DiscoverWorks(TM) Drug Discovery Collaboration Agreement between the Company and Bristol-Myers Squibb Company, dated July 7, 2000 (incorporated by reference to Exhibit 10.35 to the Company's Registration Statement on Form S-1 (File No. 333-37606))./2/ 10.36 DiscoverWorks(TM) Nonexclusive License and Purchase Agreement between the Company and Bristol-Myers Squibb Company, dated July 7, 2000 (incorporated by reference to Exhibit 10.36 to the Company's Registration Statement on Form S-1 (File No. 333-37606))./2/ 10.37 Letter agreement between the Company and Bristol-Myers Squibb Company, dated December 18, 2000 (incorporated by reference to Exhibit 10.37 to the Company's Annual Report on Form 10-K (File No. 000-309992)). 10.38 Research, Development and Commercialization Agreement between the Company and Centocor, Inc., dated as of December 29, 2000 (incorporated by reference to Exhibit 10.38 to the Company's Annual Report on Form 10-K (File No. 000-30992))./2/
F-25
Exhibit Number Description ------- ----------- 10.39 First Amendment to Lease between the Company and Eagleview Technology Partners dated October 24, 2000 (incorporated by reference to Exhibit 10.39 to the Company's Annual Report on Form 10-K (File No. 000- 30992))./2/ 10.40 Agreement of Sublease between the Company and Advanced Medicine, Inc., dated December 13, 2000 (incorporated by reference to Exhibit 10.40 to the Company's Annual Report on Form 10-K (File No. 000-30992))./2/ 10.41 Additional and Alternative Target Agreement between the Company and Boehringer Ingelheim Pharmaceuticals, Inc. dated April 20, 2001 (incorporated by reference to Exhibit 10.41 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter period ended June 30, 2001 (File No. 000-30992))./2/ 10.42 Amendment No. 1 dated May 16, 2001, to Discoverworks Drug Discovery Collaboration Agreement between the Company and Bristol-Myers Squibb Company, dated July 7, 2000 (incorporated by reference to Exhibit 10.42 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter period ended June 30, 2001 (File No. 000-30992))./2/ 10.43 Agreement of Lease dated June 14, 2001, between the Company and Cedar Brook Corporate Center, L.P. (incorporated by reference to Exhibit 10.43 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter period ended June 30, 2001 (File No. 000-30992)). 10.44 Amendment No. 2 dated October 4, 2001, to Research, Development and Commercialization Agreement between the Company and Centocor, Inc., dated December 29, 2000 (incorporated by reference to Exhibit 10.44 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter period ended September 30, 2001 (File No. 000-30992))./2/ 10.45 Agreement of Lease dated August 8, 2002, between the Company and Newtown Office Development III, L.P. (incorporated by reference to Exhibit 10.45 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter period ended September 30, 2001 (File No. 000-30992)). 10.46 Collaboration Research and Development Agreement dated October 25, 2001 between the Company and Athersys, Inc./4/,/5/. 10.47 Discoverworks Drug Discovery Collaboration Agreement dated December 28, 2001 between the Company and Janssen Pharmaceuticals and the R.W. Johnson Pharmaceutical Research Institute/4/,/5/. 10.48 License Agreement dated January 7, 2002 between the Company and GlaxoSmithKline plc, including Exhibit D consisting of a Stock Purchase Agreement and a Registration Rights Agreement between the Company and GlaxoSmithKline plc./4/,/5/. 11.1 Statements or computation of per share income (loss)./5/ 21.1 Subsidiaries of the Registrant (incorporated by reference to the Company's Annual Report on Form 10-K (File No. 000-30992)). 23.1 Consent of Arthur Andersen LLP./3/ 23.2 Consent of Richard A. Eisner & Company, LLP./3/ 99.1 Letter relating to Arthur Andersen LLP./5/
- -------- /1/Compensation plans or arrangements in which directors and executive officers are eligible to participate. /2/Confidential treatment granted with respect to portions of this exhibit. Omitted portions were filed separately with the Securities and Exchange Commission. /3/Filed herewith. /4/Confidential treatment has been requested with respect to portions of this exhibit. Omitted portions have been filed separately with the Securities and Exchange Commission. /5/Previously filed. (b) Reports on Form 8-K: None F-26 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. Date: April 9, 2002 3-Dimensional Pharmaceuticals, Inc. /s/ Scott M. Horvitz By: _________________________________ Scott M. Horvitz, Vice President Finance and Administration (Principal Accounting Officer)
Name Title Date ---- ----- ---- /s/ Scott M. Horvitz Vice President, April 9, 2002 - ------------------------------------- Finance and Scott M. Horvitz Administration (Principal Accounting Officer)
INDEX TO EXHIBITS
Exhibit Number Description ------- ----------- 3 (i) Ninth Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.4 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 3 (ii) Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.5 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 4.1 Form of Common Stock Certificate of Company (incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 10.1 3-Dimensional Pharmaceuticals, Inc. Equity Compensation Plan, as amended (incorporated by reference to Exhibit 10.1 to the Company's Registration Statement on Form S-1 (File No. 333-37606))./1/ 10.2 Third Amended and Restated Stockholders' Agreement by and among the Company and the Stockholders identified therein, dated March 31, 2000 (incorporated by reference to Exhibit 10.2 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 10.3 Series B Preferred Stock Purchase Agreement between the Company and Merck KGaA, dated October 11, 1996 (incorporated by reference to Exhibit 10.3 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 10.4 Series C Preferred Stock Purchase Agreement between the Company and American Home Products Corporation, dated June 13, 1997 (incorporated by reference to Exhibit 10.4 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 10.5 Series D Preferred Stock Purchase Agreement between the Company and Schering Berlin Venture Corporation, dated May 17, 2000 (incorporated by reference to Exhibit 10.5 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 10.6 Warrant to Purchase Common Stock of the Company issued to HealthCare Ventures III, L.P., dated November 18, 1999 (incorporated by reference to Exhibit 10.6 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 10.7 Warrant to Purchase Common Stock of the Company issued to HealthCare Ventures IV, L.P., dated November 18, 1999 (incorporated by reference to Exhibit 10.7 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 10.8 Warrant to Purchase Common Stock of the Company issued to Rho Management Trust II, dated November 18, 1999 (incorporated by reference to Exhibit 10.8 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 10.9 Warrant to Purchase Common Stock of the Company issued to Aetna Life Insurance Company, dated November 18, 1999 (incorporated by reference to Exhibit 10.9 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 10.10 Warrant to Purchase Common Stock of the Company issued to Henry Rothman, dated November 18, 1999 (incorporated by reference to Exhibit 10.10 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 10.11 Warrant to Purchase Common Stock of the Company issued to Abingworth Bioventures SICAV, dated November 18, 1999 (incorporated by reference to Exhibit 10.11 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 10.12 Warrant to Purchase Common Stock of the Company issued to Sentron Medical, Inc., dated November 18, 1999 (incorporated by reference to Exhibit 10.12 to the Company's Registration Statement on Form S-1 (File No. 333-37606)).
Exhibit Number Description ------- ----------- 10.13 Warrant to Purchase Common Stock of the Company issued to Biotech Growth S.A., dated November 18, 1999 (incorporated by reference to Exhibit 10.13 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 10.14 Employment Offer Letter to David C. U'Prichard, dated September 1, 1999 (incorporated by reference to Exhibit 10.14 to the Company's Registration Statement on Form S-1 (File No. 333-37606))./1/ 10.15 Settlement Agreement between the Company and Anadys Pharmaceuticals, Inc. (Formerly Scriptgen Pharmaceuticals, Inc.), dated March 7, 2000 (incorporated by reference to Exhibit 10.15 to the Company's Registration Statement on Form S-1 (File No. 333-37606))./2/ 10.16 Research Collaboration Agreement between the Company and BioCryst Pharmaceuticals, Inc., dated October 18, 1996, and Amendment No.1 thereto, dated October 18, 1996 (incorporated by reference to Exhibit 10.16 to the Company's Registration Statement on Form S-1 (File No. 333-37606))./2/ 10.17 Collaborative Discovery and Lead Optimization Agreement between the Company and Boehringer Ingelheim Pharmaceuticals, Inc., dated December 17, 1999 (incorporated by reference to Exhibit 10.17 to the Company's Registration Statement on Form S-1 (File No. 333-37606))./2/ 10.18 Collaborative Research and License Agreement between the Company and Hoechst Schering AgrEvo GmbH, now Aventis CropScience GmbH, dated October 18, 1999 (incorporated by reference to Exhibit 10.18 to the Company's Registration Statement on Form S-1 (File No. 333-37606))./2/ 10.19 Collaborative Research and License Agreement between the Company and E.I. DuPont de Nemours & Co., dated October 12, 1998 (incorporated by reference to Exhibit 10.19 to the Company's Registration Statement on Form S-1 (File No. 333-37606))./2/ 10.20 Collaborative Discovery and Lead Optimization Agreement between the Company and DuPont Pharmaceuticals Company, dated February 11, 2000 (incorporated by reference to Exhibit 10.20 to the Company's Registration Statement on Form S-1 (File No. 333-37606))./2/ 10.21 Nonexclusive Patent License Agreement between the Company and DuPont Pharmaceuticals Company, dated February 11, 2000 (incorporated by reference to Exhibit 10.21 to the Company's Registration Statement on Form S-1 (File No. 333-37606))./2/ 10.22 Research and License Agreement between the Company and the Heska Corporation, dated December 18, 1997, and Amendment No.1 thereto, dated December 18, 1997 (incorporated by reference to Exhibit 10.22 to the Company's Registration Statement on Form S-1 (File No. 333-37606))./2/ 10.23 License and Research Agreement between the Company and Schering AG, Germany, dated May 17, 2000 (incorporated by reference to Exhibit 10.23 to the Company's Registration Statement on Form S-1 (File No. 333-37606))./2/ 10.24 Master Loan and Security Agreement between the Company and Phoenixcor, Inc., dated June 18, 1998 (incorporated by reference to Exhibit 10.24 to the Company's Registration Statement on Form S-1 (File No. 333- 37606)). 10.25 Amended and Restated Lease for Combination Office/Laboratory/Light Manufacturing Space at Eagleview Corporate Center Lot 28 between the Company and Eagleview Technology Partners, dated December 12, 1997 (incorporated by reference to Exhibit 10.25 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 10.26 Master Lease Agreement between the Company and Transamerica Business Credit Corporation, dated June 12, 1997 (incorporated by reference to Exhibit 10.26 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 10.27 Warrant to Purchase Common Stock of the Company issued to Transamerica Business Credit Corporation, dated June 12, 1997 (incorporated by reference to Exhibit 10.27 to the Company's Registration Statement on Form S-1 (File No. 333-37606)).
Exhibit Number Description ------- ----------- 10.28 Master Lease Agreement, Loan Agreement and Subordination Agreement between the Company and Comdisco, Inc., dated March 7, 1994 (incorporated by reference to Exhibit 10.28 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 10.29 Warrant to Purchase Series A Preferred Stock, originally dated March 7, 1994 and reissued to CDC Realty, Inc., dated July 21, 1998 (incorporated by reference to Exhibit 10.29 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 10.30 Warrant to Purchase Series A Preferred Stock, originally dated March 7, 1994 and reissued to Gregory Stento, dated July 21, 1998 (incorporated by reference to Exhibit 10.30 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 10.31 Warrant to Purchase Series A Preferred Stock, originally dated April 25, 1995 and reissued to Comdisco, Inc., dated July 21, 1998 (incorporated by reference to Exhibit 10.31 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 10.32 Warrant to Purchase Series A Preferred Stock, originally dated April 25, 1995 and reissued to Gregory Stento, dated July 21, 1998 (incorporated by reference to Exhibit 10.32 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 10.33 Form of Warrant to Purchase Common Stock (along with Schedule of Holders of Certain Warrants to Purchase Common Stock) (incorporated by reference to Exhibit 10.33 to the Company's Registration Statement on Form S-1 (File No. 333-37606)). 10.34 3-Dimensional Pharmaceuticals, Inc. 2000 Equity Compensation Plan (incorporated by reference to Exhibit 10.34 to the Company's Registration Statement on Form S-1 (File No. 333-37606))./1/ 10.35 DiscoverWorks(TM) Drug Discovery Collaboration Agreement between the Company and Bristol-Myers Squibb Company, dated July 7, 2000 (incorporated by reference to Exhibit 10.35 to the Company's Registration Statement on Form S-1 (File No. 333-37606))./2/ 10.36 DiscoverWorks(TM) Nonexclusive License and Purchase Agreement between the Company and Bristol-Myers Squibb Company, dated July 7, 2000 (incorporated by reference to Exhibit 10.36 to the Company's Registration Statement on Form S-1 (File No. 333-37606))./2/ 10.37 Letter agreement between the Company and Bristol-Myers Squibb Company, dated December 18, 2000 (incorporated by reference to Exhibit 10.37 to the Company's Annual Report on Form 10-K (File No. 000-309992)). 10.38 Research, Development and Commercialization Agreement between the Company and Centocor, Inc., dated as of December 29, 2000 (incorporated by reference to Exhibit 10.38 to the Company's Annual Report on Form 10-K (File No. 000-30992))./2/ 10.39 First Amendment to Lease between the Company and Eagleview Technology Partners dated October 24, 2000 (incorporated by reference to Exhibit 10.39 to the Company's Annual Report on Form 10-K (File No. 000- 30992))./2/ 10.40 Agreement of Sublease between the Company and Advanced Medicine, Inc., dated December 13, 2000 (incorporated by reference to Exhibit 10.40 to the Company's Annual Report on Form 10-K (File No. 000-30992))./2/ 10.41 Additional and Alternative Target Agreement between the Company and Boehringer Ingelheim Pharmaceuticals, Inc. dated April 20, 2001 (incorporated by reference to Exhibit 10.41 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter period ended June 30, 2001 (File No. 000-30992))./2/ 10.42 Amendment No. 1 dated May 16, 2001, to Discoverworks Drug Discovery Collaboration Agreement between the Company and Bristol-Myers Squibb Company, dated July 7, 2000 (incorporated by reference to Exhibit 10.42 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter period ended June 30, 2001 (File No. 000-30992))./2/
Exhibit Number Description ------- ----------- 10.43 Agreement of Lease dated June 14, 2001, between the Company and Cedar Brook Corporate Center, L.P. (incorporated by reference to Exhibit 10.43 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter period ended June 30, 2001 (File No. 000-30992)). 10.44 Amendment No. 2 dated October 4, 2001, to Research, Development and Commercialization Agreement between the Company and Centocor, Inc., dated December 29, 2000 (incorporated by reference to Exhibit 10.44 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter period ended September 30, 2001 (File No. 000-30992))./2/ 10.45 Agreement of Lease dated August 8, 2002, between the Company and Newtown Office Development III, L.P. (incorporated by reference to Exhibit 10.45 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter period ended September 30, 2001 (File No. 000-30992)). 10.46 Collaboration Research and Development Agreement dated October 25, 2001 between the Company and Athersys, Inc./4/,/5/. 10.47 Discoverworks Drug Discovery Collaboration Agreement dated December 28, 2001 between the Company and Janssen Pharmaceuticals and the R.W. Johnson Pharmaceutical Research Institute/4/,/5/. 10.48 License Agreement dated January 7, 2002 between the Company and GlaxoSmithKline plc, including Exhibit D consisting of a Stock Purchase Agreement and a Registration Rights Agreement between the Company and GlaxoSmithKline plc./4/,/5/. 11.1 Statements or computation of per share income (loss)./5/ 21.1 Subsidiaries of the Registrant (incorporated by reference to the Company's Annual Report on Form 10-K (File No. 000-30992)). 23.1 Consent of Arthur Andersen LLP./3/ 23.2 Consent of Richard A. Eisner & Company, LLP./3/ 99.1 Letter relating to Arthur Andersen LLP./5/
- -------- /1/Compensation plans or arrangements in which directors and executive officers are eligible to participate. /2/Confidential treatment granted with respect to portions of this exhibit. Omitted portions were filed separately with the Securities and Exchange Commission. /3/Filed herewith. /4/Confidential treatment has been requested with respect to portions of this exhibit. Omitted portions have been filed separately with the Securities and Exchange Commission. /5/ Previously filed. EX-23.1 3 dex231.txt CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS Exhibit 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report dated February 19, 2002 included in this Form 10-K into the Company's previously filed Registration Statements on Form S-8, File Nos. 333-54890 and 333-61978. /s/ Arthur Andersen LLP Philadelphia, Pa. April 9, 2002 EX-23.2 4 dex232.txt INDEPENDENT AUDITOR'S CONSENT EXHIBIT 23.2 INDEPENDENT AUDITORS' CONSENT We hereby consent to the incorporation by reference into the Company's Registration Statements on Form S-8, File Nos. 333-54890 and 333-61978 of our report dated February 7, 2001, of our audit of the financial statements of 3- Dimensional Pharmaceuticals, Inc. as of December 31, 2000 and for each of the years in the two-year period then ended in this Form 10-K. /s/ Richard A. Eisner & Company, LLP New York, New York April 9, 2002 -----END PRIVACY-ENHANCED MESSAGE-----