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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
JULY 18, 2001
Date of Report (date of earliest event reported)
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VERTEX PHARMACEUTICALS INCORPORATED
(Exact name of Registrant as specified in its charter)
MASSACHUSETTS 000-19319 04-3039129
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of Identification No.)
incorporation)
130 WAVERLY STREET, CAMBRIDGE, MASSACHUSETTS, 02139-4242
(Address of principal executive offices)
(617) 444-6100
(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
This Form 8-K/A amends the Current Report on Form 8-K filed on August 1,
2001 to incorporate Item 7(b) Pro Forma Financial Information.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(b) Pro Forma Financial Information.
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
On July 18, 2001, Vertex Pharmaceuticals Incorporated (Vertex) completed a
merger with Aurora Biosciences Corporation (Aurora). Vertex acquired all of
Aurora's outstanding common stock in a tax-free, stock for stock transaction,
for approximately 14.1 million shares of Vertex common stock. Each share of
Aurora common stock issued and outstanding prior to the merger was exchanged for
.62 share of Vertex common stock.
The following unaudited pro forma combined financial information gives
effect to the merger using the pooling of interests method of accounting, after
giving effect to the pro forma adjustments described below and in the
accompanying notes. The unaudited pro forma combined financial information
should be read in conjunction with the audited historical consolidated financial
statements and related notes of Vertex and Aurora.
The unaudited pro forma combined statements of operations give effect to the
merger as if it had occurred at the beginning of the periods presented. The
unaudited pro forma combined statements of operations for each year in the
three-year period ended December 31, 2000 combine the audited historical
consolidated statements of operations of Vertex for each year in the three-year
period ended December 31, 2000 included in its annual report on Form 10-K and
the audited historical consolidated statements of operations of Aurora for each
year in the three-year period ended December 31, 2000 included in its current
report on Form 8-K dated May 18, 2001. The unaudited pro forma combined
statements of operations for the three months ended March 31, 2001 combine the
unaudited historical consolidated statements of operations of Vertex for the
three months ended March 31, 2001 and the unaudited historical consolidated
statements of operations of Aurora for the three months ended March 31, 2001 as
found in their respective filings on Form 10-Q.
The unaudited pro forma combined condensed balance sheet gives effect to the
merger as if it had occurred on March 31, 2001. The unaudited pro forma combined
condensed balance sheet combines the unaudited condensed historical consolidated
balance sheets of Vertex and Aurora as of March 31, 2001. The pro forma balance
sheet as of March 31, 2001 reflects $21.6 million in accounts payable and
accrued expenses and in stockholders' equity representing estimated expenses to
be incurred in connection with the merger--primarily advisor, legal and
accounting fees and expenses. These costs have not been reflected in the pro
forma statements of operations for any period; they will be reflected in the
statement of operations during the accounting period in which the merger was
consummated.
In the third quarter of 2001, in connection with the conforming of
accounting policies between the Company and Aurora, the Company elected to
change its accounting principle related to the recognition of collaborative
research and development revenues in accordance with the Securities and Exchange
Commission's Staff Accounting Bulletin No. 101, REVENUE RECOGNITION IN FINANCIAL
STATEMENTS, from the method prescribed in Emerging Issues Task Force Issue
No. 91-6 to the substantive milestone method. The Company will record the
cumulative effect of this change in accounting principle in its Form 10-Q for
the fiscal quarter ended September 30, 2001, retroactive to January 1, 2001. The
pro forma balance sheet as of March 31, 2001 reflects an increase in deferred
revenue and a corresponding decrease in stockholders' equity amounting to
$27,528,000 pursuant to this change in accounting principle. In addition, the
pro forma combined statement of operations for the three months ended
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March 31, 2001 reflects a decrease in revenue and a corresponding increase in
net loss of $1,627,000 representing the impact on the first quarter of the
accounting change; the cumulative effect of the accounting change has not been
reflected in the pro forma statement of operations for the three months ended
March 31, 2001.
The unaudited pro forma combined financial information is presented for
illustrative purposes only and does not purport to be indicative of the
operating results or financial position that would have actually occurred if the
merger had been in effect on the dates indicated, nor is it necessarily
indicative of future operating results or financial position of the merged
companies. The pro forma adjustments are based on the information and
assumptions available at the time of the filing of this 8K/A.
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VERTEX PHARMACEUTICALS INCORPORATED
PRO FORMA COMBINED BALANCE SHEET
MARCH 31, 2001
(UNAUDITED)
PRO FORMA PRO FORMA
VERTEX AURORA ADJUSTMENTS COMBINED
-------- -------- ----------- ---------
(IN THOUSANDS)
ASSETS
Current assets:
Cash and cash equivalents........................ $222,662 $ 10,367 $ -- $233,029
Short-term investments, available for sale....... 100,674 61,752 -- 162,426
Accounts receivable.............................. 7,615 20,681 -- 28,296
Prepaid expenses and other current assets........ 2,327 8,070 -- 10,397
-------- -------- --------- --------
Total current assets........................... 333,278 100,870 -- 434,148
Property and equipment, net........................ 36,063 20,913 -- 56,976
Long-term investments, available for sale.......... 361,535 30,194 -- 391,729
Other assets....................................... 38,668 13,944 -- 52,612
-------- -------- --------- --------
Total assets................................... $769,544 $165,921 $ -- $935,465
======== ======== ========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses............ $ 18,512 $ 12,396 $ 21,600(1) $ 52,508
Deferred revenue................................. 11,174 12,209 27,528(2) 50,911
Other current liabilities........................ 2,186 5,305 -- 7,491
-------- -------- --------- --------
Total current liabilities...................... 31,872 29,910 49,128 110,910
Other noncurrent liabilities....................... 1,966 9,293 -- 11,259
Convertible subordinated notes..................... 345,000 -- -- 345,000
-------- -------- --------- --------
Total liabilities.............................. 378,838 39,203 49,128 467,169
-------- -------- --------- --------
Stockholders' equity............................... 390,706 126,718 (49,128) 468,296(3)
-------- -------- --------- --------
Total liabilities and stockholders' equity..... $769,544 $165,921 $ -- $935,465
======== ======== ========= ========
------------------------
(1) Reflects estimated expenses of $21.6 million in connection with the
merger--primarily advisor, legal and accounting fees and expenses.
(2) Reflects the impact of the change in accounting principle, including the
$25,901,000 cumulative effect as of January 1, 2001 and the additional
deferred revenue of $1,627,000 for the three months ended March 31, 2001.
(3) Reflects the conversion of 22.5 million shares of Aurora common stock to
14.0 million shares of Vertex common stock based on the exchange ratio in
the merger agreement.
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VERTEX PHARMACEUTICALS INCORPORATED
PRO FORMA COMBINED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2001
(UNAUDITED)
PRO FORMA PRO FORMA
VERTEX AURORA ADJUSTMENTS COMBINED
-------- -------- ----------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Revenues:
Royalties and product sales....................... $ 2,513 $ -- $ -- $ 2,513
Discovery service and technology revenues......... -- 17,521 -- 17,521
Collaborative and other research and development
revenues........................................ 16,544 -- (1,627)(1) 14,917
-------- ------- ------- --------
Total revenues.................................. 19,057 17,521 (1,627) 34,951
Operating expenses:
Royalties and product costs....................... 837 -- -- 837
Cost of discovery service and technology
revenues........................................ -- 9,004 -- 9,004
Research and development.......................... 26,119 5,844 -- 31,963
Sales, general and administrative................. 7,496 5,739 -- 13,235
-------- ------- ------- --------
Total operating expenses........................ 34,452 20,587 -- 55,039
-------- ------- ------- --------
Net loss from operations............................ (15,395) (3,066) (1,627) (20,088)
-------- ------- ------- --------
Interest income and other, net...................... 11,299 1,771 -- 13,070
Interest expense.................................... (4,774) (229) -- (5,003)
-------- ------- --------
Loss before taxes................................... (8,870) (1,524) (1,627) (12,021)
-------- ------- ------- --------
Provision for income taxes.......................... -- (198) -- (198)
Net loss before cumulative effect of change in
accounting principle.............................. $ (8,870) $(1,722) $(1,627) $(12,219)
======== ======= ======= ========
Basic and diluted net loss per common share before
cumulative effect of change in accounting
principle......................................... $ (0.15) $ (0.08) $ (0.17)
======== ======= ========
Basic and diluted weighted average number of common
shares outstanding................................ 60,011 22,437 73,922
------------------------
(1) Reflects the impact of the change in accounting principle related to revenue
recognition for the three months ended March 31, 2001.
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VERTEX PHARMACEUTICALS INCORPORATED
PRO FORMA COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2000
(UNAUDITED)
PRO FORMA PRO FORMA
VERTEX AURORA ADJUSTMENTS COMBINED
-------- -------- ----------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Revenues:
Royalties and product sales....................... $ 12,036 $ -- $ -- $ 12,036
Discovery service and technology revenues......... -- 75,155 -- 75,155
Collaborative and other research and development
revenues........................................ 66,091 -- -- 66,091
-------- ------- ------- --------
Total revenues.................................. 78,127 75,155 -- 153,282
Operating expenses:
Royalties and product costs....................... 4,082 -- -- 4,082
Cost of discovery service and technology
revenues........................................ -- 39,563 -- 39,563
Research and development.......................... 84,921 16,172 -- 101,093
Sales, general and administrative................. 27,806 18,181 -- 45,987
-------- ------- ------- --------
Total operating expenses........................ 116,809 73,916 -- 190,725
-------- ------- ------- --------
Net income (loss) from operations................... (38,682) 1,239 -- (37,443)
-------- ------- ------- --------
Interest income and other, net...................... 27,679 5,633 -- 33,312
Interest expense.................................... (24,944) (1,084) -- (26,028)
Equity in losses of unconsolidated subsidiary....... (550) -- -- (550)
-------- ------- ------- --------
Income (loss) before taxes.......................... (36,497) 5,788 -- (30,709)
-------- ------- ------- --------
Provision for income taxes.......................... -- (870) -- (870)
-------- ------- ------- --------
Net income (loss) before cumulative effect of change
in accounting principle........................... (36,497) 4,918 -- (31,579)
-------- ------- ------- --------
Cumulative effect of change in accounting
principle......................................... (3,161) -- -- (3,161)
Net income (loss)................................... $(39,658) $ 4,918 $ -- $(34,740)
======== ======= ======= ========
Basic net income (loss) per common share before
cumulative effect of change in accounting
principle......................................... $ (0.67) $ 0.23 $ (0.47)
Diluted net income (loss) per common share before
cumulative effect of change in accounting
principle......................................... $ (0.67) $ 0.20 $ (0.47)
Cumulative effect of change in accounting
principle--basic.................................. $ (0.06) -- $ (0.04)
Cumulative effect of change in accounting
principle--diluted................................ $ (0.06) -- $ (0.04)
-------- ------- --------
Basic net income (loss) per common share............ $ (0.73) $ 0.23 $ (0.51)
======== ======= ========
Diluted net income (loss) per common share.......... $ (0.73) $ 0.20 $ (0.51)
======== ======= ========
Basic weighted average number of common shares
outstanding....................................... 54,322 21,548 67,682
Diluted weighted average number of common shares
outstanding....................................... 54,322 24,094 67,682
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VERTEX PHARMACEUTICALS INCORPORATED
PRO FORMA COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
(UNAUDITED)
PRO FORMA PRO FORMA
VERTEX AURORA ADJUSTMENTS COMBINED
-------- -------- ----------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Revenues:
Royalties and product sales....................... $ 8,053 $ -- $ -- $ 8,053
Discovery service and technology revenues......... -- 58,327 -- 58,327
Collaborative and other research and development
revenues........................................ 42,507 -- -- 42,507
-------- ------- ----------- --------
Total revenues.................................. 50,560 58,327 -- 108,887
Operating expenses:
Royalties and product costs....................... 2,925 -- -- 2,925
Cost of discovery service and technology
revenues........................................ -- 31,656 -- 31,656
Research and development.......................... 72,180 12,849 -- 85,029
Sales, general and administrative................. 26,131 14,787 -- 40,918
-------- ------- ----------- --------
Total operating expenses........................ 101,236 59,292 -- 160,528
-------- ------- ----------- --------
Net loss from operations............................ (50,676) (965) -- (51,641)
-------- ------- ----------- --------
Interest income and other, net...................... 11,088 1,866 -- 12,954
Interest expense.................................... (654) (1,050) -- (1,704)
Equity in losses of unconsolidated subsidiary....... (724) -- -- (724)
-------- ------- ----------- --------
Loss before taxes................................... (40,966) (149) -- (41,115)
-------- ------- ----------- --------
Provision for income taxes.......................... -- (39) -- (39)
-------- ------- ----------- --------
Net loss............................................ $(40,966) $ (188) $ -- $(41,154)
======== ======= =========== ========
Basic and diluted net loss per common share......... $ (0.80) $ (0.01) $ (0.66)
======== ======= ========
Basic and diluted weighted average number of common
shares outstanding................................ 51,036 18,655 62,602
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VERTEX PHARMACEUTICALS INCORPORATED
PRO FORMA COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
(UNAUDITED)
PRO FORMA PRO FORMA
VERTEX AURORA ADJUSTMENTS COMBINED
-------- -------- ----------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Revenues:
Discovery service and technology revenues........ $ -- $ 33,511 $ -- $ 33,511
Collaborative and other research and development
revenues....................................... 29,055 -- -- 29,055
-------- -------- ----------- --------
Total revenues................................. 29,055 33,511 -- 62,566
Operating expenses:
Cost of discovery service and technology
revenues....................................... -- 27,110 -- 27,110
Research and development......................... 58,668 18,204 -- 76,872
Sales, general and administrative................ 18,135 8,100 -- 26,235
-------- -------- ----------- --------
Total operating expenses....................... 76,803 53,414 -- 130,217
-------- -------- ----------- --------
Net loss from operations........................... (47,748) (19,903) -- (67,651)
-------- -------- ----------- --------
Interest income and other, net..................... 15,343 2,510 -- 17,853
Interest expense................................... (681) (740) -- (1,421)
-------- -------- ----------- --------
Loss before taxes.................................. (33,086) (18,133) -- (51,219)
-------- -------- ----------- --------
Benefit for income taxes........................... -- 212 -- 212
-------- -------- ----------- --------
Net loss........................................... $(33,086) $(17,921) $ -- $(51,007)
======== ======== =========== ========
Basic and diluted net loss per common share........ $ (0.65) $ (1.00) $ (0.83)
======== ======== ========
Basic and diluted weighted average number of common
shares outstanding............................... 50,598 17,972 61,741
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
VERTEX PHARMACEUTICALS INCORPORATED
(Registrant)
Date: September 28, 2001 By: /s/ JOSHUA S. BOGER
-----------------------------------------
Joshua S. Boger
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
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