1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934*
(Amendment No. 4)
IDEC Pharmaceuticals Corporation
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(Name of Issuer)
Common Stock
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(Title of Class of Securities)
449370 10 5
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(CUSIP Number)
IDEC Pharmaceuticals Corporation
William H. Rastetter, Ph.D.
11011 Torreyana Road, San Diego, California 92121 (619)550-8500
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
January 14, 1998
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with this statement. [ ] (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of less than five percent of such class).
(See Rule 13d-7.)
Note: This document is being electronically filed with the Commission, using the
EDGAR system. Additionally, one paper copy of the filing will subsequently be
sent to the Commission. See Rule 13d-1(a) for other parties to whom copies are
to be sent.
*The remainder of this cover page should be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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CUSIP No. 449370 10 5 Page 2 of 11
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(1) Names of Reporting Persons S.S. or I.R.S. Identification Nos. of
Above Persons
Genentech, Inc.
94-2347624
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(2) Check the Appropriate Box if a Member of a Group
Not Applicable (a) [ ]
(b) [ ]
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(3) SEC Use Only
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(4) Source of Funds
WC
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(5) Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e)
[ ]
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(6) Citizenship or Place of Organization
Delaware
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Number of (7) Sole Voting Power: 227,514 shares of non-voting Series A-1,
Shares A-2, A-3 and A-6 Preferred Stock convertible into 1,490,793
Beneficially shares of Common Stock
Owned by
Each (8) Shared Voting Power:
Reporting 0
Person
(9) Sole Dispositive Power: 227,514 shares of non-voting Series
A-1, A-2, A-3 and A-6 Preferred Stock convertible into
1,490,793 shares of Common Stock
(10) Shared Dispositive Power:
0
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(11) Aggregate Amount Beneficially Owned by Each Reporting Person:
227,514 shares of non-voting Series A-1, A-2, A-3 and A-6 Preferred
Stock convertible into 1,490,793 shares of Common Stock
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(12) Check if the Aggregate Amount in Row (11) Excludes
Certain Shares [ ]
Not Applicable
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(13) Percent of Class Represented by Amount in Row (11)
7.8% of Common Stock
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(14) Type of Reporting Person (See Instructions)
CO
Genentech, Inc. ("Genentech" or "Reporting Person") hereby amends its statement
on Schedule 13D filed with the Securities and Exchange Commission on March 25,
1995 (the "Original Schedule 13D") and previously amended on August 25, 1995,
April 11, 1996 and May 31, 1996 with respect to the Convertible Preferred Stock
(defined below) of IDEC Pharmaceuticals Corporation.
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CUSIP No. 449370 10 5 Page 3 of 11
ITEM 1: SECURITY AND ISSUER
1. Class of Securities: Common Stock issuable upon conversion of Preferred
Stock
2. Issuer: IDEC Pharmaceuticals Corporation ("IDEC")
3. Principal Address: 11011 Torreyana Road, San Diego, CA 92121
ITEM 2: IDENTITY AND BACKGROUND
a. Reporting Person: Genentech, Inc. ("Genentech")
b. Place of Organization: Delaware
c. Principal Business: Pharmaceutical company
d. Principal Business Address: 1 DNA Way, South San Francisco, CA
94080
e. Principal Office: As above
f. Criminal Convictions: None
g. Civil Adjudication of Violation of Securities Laws: None
Attached hereto as Exhibit A is a list of Genentech's executive officers and
directors as required by Instruction C to Schedule 13D.
ITEM 3: SOURCE AND AMOUNT OF FUNDS
Pursuant to the terms of a Preferred Stock Purchase Agreement between Genentech
and IDEC dated March 16, 1995 (the "Purchase Agreement"), a copy of which was
attached as Exhibit B to the Original Schedule 13D. Genentech agreed to purchase
up to six subseries of IDEC's Series A Preferred Stock. The six subseries of
Series A Preferred Stock issuable pursuant to the Purchase Agreement are
hereinafter referred to as the "Convertible Preferred Stock."
Under the terms of the Purchase Agreement, on April 4, 1995, Genentech purchased
100,000 shares of IDEC's Series A-1 Preferred Stock (initially convertible into
1,000,000 shares of IDEC Common Stock) for $50.00 per share of Series A-1
Preferred Stock. The total purchase price of $5,000,000 for the Series A-1
Preferred Stock was paid from Genentech's working capital. Under the terms of
the Purchase Agreement, on August 22, 1995, Genentech purchased 37,521 shares of
IDEC's Series A-2 Preferred Stock (initially convertible into 375,210 shares of
IDEC Common Stock) for $66.63 per share of Series A-2 Preferred Stock. The total
purchase price of $2,500,000 for the Series A-2 Preferred Stock was paid from
Genentech's working capital. Under the terms of the Purchase Agreement, on March
15, 1996, Genentech purchased 22,993 shares of IDEC's Series A-3 Preferred Stock
(initially convertible into 229,930 shares of IDEC Common Stock) for $217.46 per
share of Series A-3 Preferred Stock. The total purchase price of $5,000,000 for
the Series A-3 Preferred Stock was paid from Genentech's working capital.
Under the terms of an Acceleration Agreement between Genentech and IDEC dated
May 9, 1996 (the "Acceleration Agreement"), a copy of which was attached as
Exhibit B to the Amended Schedule 13D filed with the Securities and Exchange
Commission on May 21, 1996, Genentech purchased 100,000 shares of IDEC's Series
A-6 Preferred Stock at $75.00 per share of Series A-6 Preferred Stock. The total
purchase price of $7,500,000 for the Series A-6 Preferred Stock was paid from
Genentech's working capital. Each share of Series A-6 Preferred Stock became
convertible into 2.15653 shares of IDEC Common Stock on December 24, 1997, the
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CUSIP No. 449370 10 5 Page 4 of 11
date that was 20 trading days following the date of marketing approval of IDEC's
C2B8 by the U.S. Food and Drug Administration.
Each share of Convertible Preferred Stock is convertible, at the option of
Genentech, into shares of IDEC's Common Stock at predetermined rates described
in IDEC's Certificate of Determination of Preferences (the "Certificate") and
will not have voting rights until converted into shares of IDEC Common Stock.
Each share of Convertible Preferred Stock also will automatically convert into
shares of IDEC's Common Stock at predetermined rates described in the
Certificate upon transfer of ownership to a third party unaffiliated with
Genentech. Under the 1995 Registration Rights Agreement between IDEC and
Genentech, IDEC, at Genentech's request, will file resale registration
statements covering certain of the shares of Common Stock issuable upon
conversion of the Convertible Preferred Stock.
Genentech and IDEC also entered into a Collaboration Agreement dated as of March
16, 1995, as amended, and an Expression Technology License dated as of March 16,
1995. Under the terms of the Collaboration Agreement, Genentech and IDEC will
collaborate in the development of C2B8 for the treatment of humans of
non-Hodgkins B Cell Lymphoma in the United States and Canada. The two companies
will co-promote C2B8 for the treatment in humans of non-Hodgkins B Cell Lymphoma
in the United States and Canada, and share profits from its commercialization.
IDEC also granted Genentech exclusive marketing rights to all other markets
outside the United States and Canada, and IDEC will receive a royalty on sales
in such markets. Genentech has sublicensed its marketing rights in Japan to an
unrelated third party and has agreed to sublicense its marketing rights other
than in the United States and Japan to a related third party. Under the terms of
the Collaboration Agreement, IDEC has elected a representative of Genentech to
its Board of Directors. IDEC's obligation regarding the board seat shall
continue until certain events occur, including termination of the Collaboration
Agreement or Genentech holding less than the number of shares representing the
Common Stock equivalent of the shares of Series A-1 and Series A-2 Preferred
Stock, i.e., the equivalent of 1,375,210 shares of Common Stock. Under the terms
of the Expression Technology License, IDEC licensed its proprietary vector
technology for high expression of recombinant proteins in mammalian cells in
consideration for an up-front licensing fee and royalties on sales of Genentech
products manufactured using the technology.
ITEM 4: PURPOSE OF TRANSACTION
The purpose of the purchases of the shares of Convertible Preferred Stock on
April 4, 1995, August 22, 1995, March 15, 1996 and May 9, 1996 is investment.
Depending on its evaluation of IDEC's business, prospects, financial condition,
the market for IDEC securities, other opportunities available to Genentech,
general economic conditions, general market conditions, other future
developments and the contractual restrictions described in Items 3 and 6,
Genentech may decide to sell some or all of its investment in the capital stock
of IDEC through public market sales or in negotiated transactions, to or through
one or more broker-dealers, or in underwritten offerings, block trades, agency
placements, brokerage transactions or otherwise. Depending on the same factors,
Genentech may in the future purchase additional capital stock of IDEC or enter
into hedging or similar transactions as described in Item 6.
Except as described in Items 3 and 6 and the foregoing paragraph, Genentech does
not have any plan or proposal relating to, or which would result in, any event
described in (a) - (j) of the instructions to this Item 4.
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CUSIP No. 449370 10 5 Page 5 of 11
ITEM 5: INTEREST IN SECURITIES OF ISSUER
a. Beneficial Ownership by Genentech: 1,490,793(1)
Percentage Ownership by Genentech: 7.8%
To the best of Genentech's knowledge, none of the persons listed on Exhibit A
hereto beneficially owns any Common Stock of IDEC.
b. Sole Voting Power of Genentech: 1,490,793
Shared Voting Power: 0
Sole Dispositive Power of Genentech: 1,490,793
Shared Dispositive Power: 0
To the best of Genentech's knowledge, none of the persons listed on Exhibit A
hereto has any sole or shared power to vote or to direct the vote of any IDEC
Common Stock nor sole or shared power to dispose of or direct the disposition of
any IDEC Common Stock.
c. Recent Transactions: Shares of IDEC Common Stock were sold by
Genentech in the public market through broker transactions during December 1997
and January 1998. The sales transactions are set forth on Exhibit B attached
hereto and are hereby incorporated by reference. Except as set forth on Exhibit
B hereto and as described in Item 6, no transactions in IDEC's Common Stock have
been effected during the past 60 days by Genentech nor, to the best of its
knowledge, by any of the persons listed on Exhibit A hereto.
d. Receipt of dividends, etc.: Not applicable
e. Ownership below 5%: Not applicable
ITEM 6: CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIP WITH RESPECT TO
SECURITIES OF THE ISSUER
To the best knowledge of the undersigned, except as described below and in Item
3, there are no contracts, arrangements, understandings or relationships (legal
or otherwise) among the persons named in Item 2 and between such persons and any
person with respect to any securities of IDEC, including but not limited to
transfer or voting of any of the securities, finder's fees, joint ventures, loan
or option agreements, puts or calls, guarantees or profits, division of profits
or losses, or the giving or withholding of proxies.
Under the Standstill Agreement between the parties dated as of March 16, 1995
(the "Standstill Agreement"), a copy of which was attached to the Original
Schedule 13D as Exhibit D, Genentech and IDEC have agreed as follows:
1. Prior to March 16, 2001, Genentech will not acquire any
IDEC equity securities without the written consent of IDEC, except as described
in Item 3; and
2. Prior to March 16, 2001, Genentech will not, without the
written consent of IDEC, make, directly or indirectly, any solicitation of
proxies from stockholders to vote (i) in any contest regarding the election of
directors of IDEC except to the extent necessary to maintain the election of one
director representing Genentech; or (ii) in any contest or on any proposition
regarding any business combination, restructuring, liquidation, sale of assets,
extraordinary dividend or other extraordinary transaction which (A) was
initiated by Genentech or any affiliate of Genentech, or (B) involves IDEC and
- --------
(1) On a Common Stock equivalent basis.
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CUSIP No. 449370 10 5 Page 6 of 11
any third party or person controlled by, under common control with, controlling,
or otherwise affiliated with Genentech. The foregoing obligations terminate
earlier upon the occurrence of certain events described in the Standstill
Agreement.
Subject to the contractual restrictions described above, Genentech may from time
to time enter into hedging transactions, including short sales and buying puts
and selling calls, for its own account or with broker-dealers and the
broker-dealers may engage in short sales of Common Stock of IDEC in the course
of hedging the positions they assume with Genentech. In connection with such
transactions, Genentech may also loan or pledge shares of Convertible Preferred
Stock to a broker-dealer. Genentech has recently entered into the following
hedging transactions:
On December 11, 1997, in privately negotiated transactions, Genentech sold call
options covering an aggregate of 170,000 shares of IDEC Common Stock. The strike
price of the call option was $41.60 per share. The call options can only be
exercised on, and expire on, June 1, 1999.
Between December 16, 1997 and December 29, 1997, in privately negotiated
transactions, Genentech sold call options covering an aggregate of 190,000
shares of IDEC Common Stock. The strike prices of the call options range from
$42.84 to $43.47 per share. The call options can only be exercised on, and
expire on, September 15, 1999.
Between December 30, 1997 and January 6, 1998, in privately negotiated
transactions, Genentech sold call options covering an aggregate of 220,000
shares of IDEC Common Stock. The strike prices of the call options range from
$44.05 to $44.61 per share. The call options can only be exercised on, and
expire on, December 15, 1999.
The call options, if exercised, will be settled in cash, and Genentech will pay
to the counterparty an amount equal to (a) the number of shares subject to the
call option multiplied by (b) the positive amount, if any, determined by
subtracting the call option strike price from the market price per share of the
Common Stock on the expiration date (the "Market Price"). No payment would be
made under the call options if the Market Price is less than the strike price of
the call options on the expiration date.
On December 11, 1997, in privately negotiated transactions, Genentech purchased
put options covering an aggregate of 170,000 shares of IDEC Common Stock. The
strike price of the put option was $32.42 per share. The put options can only be
exercised on, and expire on, June 1, 1999.
Between December 16, 1997 and December 29, 1997, in privately negotiated
transactions, Genentech purchased put options covering an aggregate of 190,000
shares of IDEC Common Stock. The strike prices of the put options range from
$32.30 to $32.78 per share. The put options can only be exercised on, and expire
on, September 15, 1999.
Between December 30, 1997 and January 6, 1998, in privately negotiated
transactions, Genentech purchased put options covering an aggregate of 220,000
shares of IDEC Common Stock. The strike prices of the put options range from
$32.37 to $32.78 per share. The put options can only be exercised on, and expire
on, December 15, 1999.
The put options, if exercised, will be settled in cash, and the counterparty
will pay to Genentech an amount equal to (a) the number of shares subject to the
put option multiplied by (b) the positive amount, if any, determined by
subtracting the Market Price from the put option strike price. No payment would
be made under the put options if the Market Price is greater than the put option
strike price on the expiration date.
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CUSIP No. 449370 10 5 Page 7 of 11
Genentech entered into the call and put options to reduce the investment risk
associated with its rights to convert its Convertible Preferred Stock into
shares of the Common Stock. Genentech intends to engage in additional hedging
activity, which may include the sale of additional call options and the purchase
of additional put options, in connection with hedging the investment risk
associated with its conversion rights with respect to its Convertible Preferred
Stock.
Exhibit C discloses the identity of the counterparties to, and the terms of, the
put and call options.
ITEM 7: EXHIBITS
Exhibit A: Additional information regarding Item 2 hereof.
Exhibit B: Additional information regarding Item 5.c. hereof.
Exhibit C: Schedule of Call and Put Options (additional information regarding
Item 6 hereof)
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Date: February __, 1998
GENENTECH, INC.
Stephen G. Juelsgaard
Vice President,
General Counsel and Secretary
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CUSIP No. 449370 10 5 Page 8 of 11
EXHIBIT A
ITEM 2 (ADDITIONAL INFORMATION):
LIST OF EXECUTIVE OFFICERS AND DIRECTORS OF GENENTECH, INC.
NAME Present Principal Occupation
- ---- ----------------------------
EXECUTIVE OFFICERS
William R. Arathoon, Ph.D. Vice President, Process Sciences
Gregory P. Baird Vice President, Corporate Communications
Joffre B. Baker, Ph.D. Vice President, Research Discovery
Lars Barfod Vice President, Marketing
David W. Beier Vice President, Government Affairs
John Curd, M.D. Vice President, Clinical Development
Robert L. Garnick, Ph.D. Vice President, Regulatory Affairs
Bradford S. Goodwin Vice President, Finance
Susan D. Desmond-Hellmann, M.D., Senior Vice President, Development
M.P.H. and Chief Medical Officer
Dennis J. Henner, Ph.D. Vice President, Research
Judith A. Heyboer Senior Vice President, Human Resources
Paul F. Hohenschuh Vice President, Operations Planning
Logistics
Paula Jardieu, Ph.D. Vice President, Pharmacological Sciences
Edmon R. Jennings Vice President, Corporate Development
Stephen G. Juelsgaard Vice President, General Counsel
and Secretary
Cynthia J. Ladd Vice President, Corporate Law and
Assistant Secretary
Louis J. Lavigne, Jr. Executive Vice President and
Chief Financial Officer
Arthur D. Levinson, Ph.D. Director and President and
Chief Executive Officer
Ted W. Love, M.D. Vice President
Polly Moore, Ph.D. Vice President, Information Resources
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CUSIP No. 449370 10 5 Page 9 of 11
James P. Panek Vice President, Manufacturing,
Engineering & Facilities
Kim Popovits Vice President, Sales
Nicholas J. Simon, III Vice President, Business and
Corporate Development
David C. Stump, M.D. Vice President, Clinical Research
and Genentech Fellow
John M. Whiting Controller
William D. Young Chief Operating Officer
DIRECTORS
Herbert W. Boyer, Ph.D. Director of Genentech, Inc.
Franz B. Humer, Ph.D. Chief Executive Officer of Roche Holding
Ltd and Head of the Pharmaceuticals
Division of Roche Holding Ltd
Jonathan K. C. Knowles, Ph.D. President of Global Research of F.
Hoffmann-La Roche Holding Ltd
Linda Fayne Levinson President of Fayne Levinson Associates
and Principal of Global Retail
Partners, L.P.
J. Richard Munro Member of the Board of Time Warner Inc.
Donald L. Murfin General Partner of Chemical and
Materials Enterprise Associates, L.P.
John T. Potts, Jr., M.D. Director of Research at Massachusetts
General Hospital and Distinguished
Jackson Professor of Clinical Medicine,
Harvard Medical School
C. Thomas Smith, Jr. President and Chief Executive Officer of
VHA, Inc.
David S. Tappan, Jr. Director of Genentech, Inc.
MAILING ADDRESS FOR ALL
EXECUTIVE OFFICERS AND DIRECTORS: 1 DNA Way
South San Francisco, CA 94080-4990
During the last five years: (i) none of the individuals described above has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors); and (ii) none of the individuals described above has been a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction which as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws. Each of the individuals listed above is
a U.S. citizen, except Dr. Humer who is a citizen of Switzerland and Dr. Knowles
who is a citizen of England.
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CUSIP No. 449370 10 5 Page 10 of 11
EXHIBIT B
ITEM 5.C. (ADDITIONAL INFORMATION):
SALES OF IDEC COMMON STOCK BY GENENTECH
- ----------------------------------------------------------
Date Sold No. of Shares Sale Price
- --------- ------------- ----------
12/04/97 15,000 $36.50
12/05/97 95,000 $35.77
12/08/97 45,000 $36.57
01/13/98 75,000 $37.25
01/14/98 100,000 $37.77
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Total 330,000
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EXHIBIT C
ITEM 6. (ADDITIONAL INFORMATION):
SCHEDULE OF CALL AND PUT OPTIONS
CALL OPTIONS
Trade Date Counterparty Number of Shares Strike Price
- ---------- ------------ ---------------- -------------
12/11/97 Morgan Stanley & Co. International Limited 170,000 $41.60
12/16/97 Morgan Stanley & Co. International Limited 50,000 $43.47
12/24/97 Morgan Stanley & Co. International Limited 95,000 $42.84
12/29/97 Morgan Stanley & Co. International Limited 45,000 $42.92
12/30/97 Morgan Stanley & Co. International Limited 60,000 $44.61
01/02/98 Morgan Stanley & Co. International Limited 60,000 $44.12
01/06/98 Morgan Stanley & Co. International Limited 100,000 $44.05
PUT OPTIONS
Trade Date Counterparty Number of Shares Strike Price
- ---------- ------------ ---------------- -------------
12/11/97 Morgan Stanley & Co. International Limited 170,000 $32.42
12/16/97 Morgan Stanley & Co. International Limited 50,000 $32.78
12/24/97 Morgan Stanley & Co. International Limited 95,000 $32.30
12/29/97 Morgan Stanley & Co. International Limited 45,000 $32.36
12/30/97 Morgan Stanley & Co. International Limited 60,000 $32.78
01/02/98 Morgan Stanley & Co. International Limited 60,000 $32.42
01/06/98 Morgan Stanley & Co. International Limited 100,000 $32.37
