UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K/A
Amendment No. 1 to Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000
Commission File No. 0-20139
Diacrin, Inc.
(Exact name of registrant as specified in its charter)
Delaware 22-3016912
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Building 96 13th Street, Charlestown Navy Yard, Charlestown, MA 02129
(Address of principal executive offices, including zip code)
(617) 242-9100
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12 (b) of the Act:
Title of each class Name of each exchange on which registered
None None
Securities registered pursuant to Section 12 (g) of the Act:
Title of each class
Common Stock, $.01 par value
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO .
---- -----
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. []
The approximate aggregate market value of the voting stock held by
non-affiliates of the registrant (based on the closing price of the Common Stock
on February 28, 2001) was $48,008,297.
As of February 28, 2001, 17,914,704 shares of the registrant's Common
Stock were outstanding.
This Amendment No. 1 on Form 10-K/A to the Registrant's Annual Report on Form
10-K for the year ended December 31, 2000 (the "Report") is being filed to add
the information required to be set forth in Part III of the Report.
PART III
Item 10. Directors and Executive Officers of the Registrant
Information regarding executive officers and directors of the company
is furnished in Part I of this Annual Report on Form 10-K under the heading
"Executive Officers of the Registrant."
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Diacrin, Inc.'s (the "Company's") directors,
executive officers and persons who own more than ten percent of a registered
class of the Company's equity securities to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Officers,
directors and greater than ten percent beneficial owners are required to furnish
the Company with copies of all Section 16(a) forms that they file.
Based solely on its review of the copies of such reports received or
written representations that no other reports were required, the Company
believes that, during the fiscal year ended December 31, 2000, its officers,
directors and ten-percent stockholders complied with all Section 16(a) filing
requirements applicable to such individuals.
Item 11. Executive Compensation
Summary Compensation Table. The following table sets forth certain
information with respect to the annual and long-term compensation for each of
the last three fiscal years of the Company's Chief Executive Officer and Chief
Operating Officer (the "Named Officers"):
Annual Compensation Long-Term Compensation
Awards
Name and Securities Underlying
Principal Position Year Salary($)(1) Bonus($)(2) Options(#)
Thomas H. Fraser 2000 $270,000 $25,000 25,000
President and Chief 1999 260,000 40,000 25,000
Executive Officer 1998 250,000 35,000 25,000
E. Michael Egan 2000 $200,000 $20,000 20,000
Chief Operating Officer 1999 190,000 30,000 20,000
1998 180,000 25,000 20,000
------------------------------
(1) Amounts shown include cash compensation earned and received by the Named
Officers as well as amounts earned but deferred at the election of these
officers to the Company's 401(k) Plan.
(2) Amounts in this column represent bonuses paid or accrued under the annual
management bonus plan.
Option Grants Table. The following table sets forth certain information
regarding options granted during the fiscal year ended December 31, 2000 to the
Named Officers:
Individual Grants
-----------------------------------------------------------
Percent of Potential Realizable Value
Number of Total at Assumed Annual Rates
Securities Options of Stock Price Appreciation
Underlying Granted to Exercise or for Option Term (2)
Options Employees in Base Price Expiration ----------------------------
Name Granted (#) (1) Fiscal Year ($/Sh) Date 5% ($) 10% ($)
---- --------------- ----------- ----------- --------- ------------ --------------
Thomas H. Fraser 25,000 16% $4.69 12/27/10 $73,705 $186,785
E. Michael Egan 20,000 13% $4.69 12/27/10 $58,964 $149,428
---------------
(1) Options granted in 2000 become exercisable in four equal annual
installments, commencing 12 months after the date of grant.
(2) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on assumed rates of stock price appreciation of 5% and 10%
compounded annually from the date the respective options were granted to
their expiration date. Actual gains, if any, on stock option exercises will
depend on the future performance of the Common Stock and the date on which
the options are exercised.
Aggregated Option Exercises and Year-End Option Table. The following
table sets forth certain information regarding aggregate option exercises during
the fiscal year ended December 31, 2000 and the number and value of unexercised
stock options held as of December 31, 2000 by the Named Officers:
Number of
Securities Underlying Value of Unexercised In-
Unexercised Options at the-Money Options at
Fiscal Year-End (#) Fiscal Year-End ($)(2)
Shares Acquired Value Realized Exercisable/ Exercisable/
Name on Exercise (#) ($)(1) Unexercisable Unexercisable
------ ---------------- -------------- ----------------- -----------------
Thomas H. Fraser - - 158,750 / 63,750 $299,375 / $7,799
E. Michael Egan - - 162,495 / 50,000 $395,482 / $6,240
--------------------
(1) Represents the difference between the exercise price and the value of the
Company's Common Stock on the date of exercise.
(2) Based on the value of the Company's Common Stock on December 29, 2000
($5.00 per share), the last trading day of 2000, less the applicable option
exercise price.
Director Compensation
Dr. Horovitz receives $2,000 plus expenses per board meeting attended
plus an additional $4,000 annually for consulting work performed on behalf of
the Company. No other directors receive any cash compensation for services on
the Board of Directors.
On June 19, 2000, all non-employee directors were granted an option to
purchase 6,000 shares of Common Stock under the Company's 1997 Stock Option Plan
at an exercise price of $7.88 per share. The options may be exercised on a
cumulative basis as to 25% of the shares on the first anniversary of the date of
grant and an additional 25% at the end of each one-year period thereafter.
Employment Agreements
The Company has entered into a letter agreement with Dr. Fraser dated
February 6, 1990, providing for an annual salary plus bonus as determined by the
Board of Directors. The Company has agreed with Dr. Fraser to continue to pay
his then current salary for a period of six months if it terminates his
employment without cause. Dr. Fraser has also agreed not to compete with the
Company for one year following termination of his employment. At the Company's
election, this non-competition provision can be extended for an additional
two-year period upon the payment of additional consideration.
Compensation Committee Interlocks and Insider Participation
Mr. Termeer serves on the Company's Compensation Committee. In
September 1996, the Company formed a joint venture with Genzyme Corporation to
develop and commercialize the Company's NeuroCell(TM)-PD and NeuroCell(TM)-HD
products for transplantation into patients with advanced Parkinson's disease and
Huntington's disease, respectively. Under the terms of the joint venture
agreement which was effective October 1, 1996, Genzyme agreed to provide 100% of
the first $10 million in funding and 75% of the following $40 million in funding
for the development and commercialization of the two products. All costs
incurred in excess of $50 million are to be shared equally between the Company
and Genzyme in accordance with the terms of the agreement. Any profits of the
joint venture will be shared equally by the two parties. Mr. Termeer, a member
of the Company's Board of Directors, is President, Chief Executive Officer and
Chairman of the Board of Genzyme. The Company has recorded approximately $14.5
million in revenue from the joint venture since it commenced, $2,081,795 of
which the Company recognized during 2000. Revenues recognized from the joint
venture and funded by Genzyme in accordance with the terms of the joint venture
agreement are currently expected to represent a substantial majority of the
Company's revenues in 2001.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth the beneficial ownership of the
Company's Common Stock as of March 31, 2001 by:
- each person who is known to beneficially own more than 5% of the
Company's Common Stock;
- each director or nominee for director of the Company;
- each executive officer of the Company named in the Summary Compensation
Table under the heading "Executive Compensation"; and
- all executive officers and directors of the Company as a group.
Unless otherwise noted, each person or group has sole voting and
investment power of the shares listed. The inclusion of any shares listed below
as beneficially owned does not constitute an admission of beneficial ownership
of those shares.
The "Options" column reflects shares of the Company's Common Stock
subject to options which are exercisable within 60 days after March 31, 2001.
The shares of the Company's Common Stock which are subject to options are deemed
to be outstanding for the purpose of computing the percentage of ownership of
the person holding such options, but are not deemed to be outstanding for
computing the percentage of ownership of any other person. As of March 31, 2001,
there were 17,914,704 shares of Common Stock outstanding.
Number of Shares
Beneficially Owned Percentage of
----------------------- Common Stock
Name and Address Shares Options Outstanding
HealthCare Ventures II, L.P. (1)........... 3,196,385 -- 17.8%
HealthCare Ventures III, L.P. (1).......... 994,078 -- 5.5
HealthCare Ventures IV, L.P. (1)........... 291,922 -- 1.6
Rho Management Trust II (2)................ 1,592,887 -- 8.9
Hudson Trust (3)........................... 1,342,680 -- 7.5
State of Wisconsin Investment Board (4).... 2,658,200 -- 14.8
Thomas H. Fraser, Ph.D..................... 483,488 158,750 3.6
Zola P. Horovitz, Ph.D. ................... 4,000 19,500 *
John W. Littlechild (1).................... 4,482,385 11,500 25.1
Stelios Papadopoulos, Ph.D................. 200,000 11,500 1.2
Joshua Ruch (5)............................ 1,759,587 11,500 9.9
Henri A. Termeer........................... 7,750 44,500 *
E. Michael Egan............................ 4,169 162,495 1.0
All directors and executive officers as a
group (8 persons).......................... 6,941,379 429,245 40.2
-------------------------------------
* Less than 1.0%
(1) John W. Littlechild is a general partner of HealthCare Partners II, L.P.
("HCPII"), HealthCare Partners III, L.P. ("HCPIII") and HealthCare Partners
IV, L.P. ("HCPIV"), the general partner of HealthCare Ventures II, L.P.
("HCVII"), HealthCare Ventures III, L.P. ("HCVIII") and HealthCare Ventures
IV, L.P. ("HCVIV"), respectively. Mr. Littlechild, together with James H.
Cavanaugh, Harold R. Werner and William Crouse, the other general partners
of HCPII, HCPIII and HCPIV, share voting and investment control with
respect to shares owned by HCVII, HCVIII, and HCVIV, respectively. Mr.
Littlechild does not own any shares of the Company's capital stock in his
individual capacity. The address of HealthCare Ventures II, III and IV,
L.P. is 44 Nassau Street, Princeton, New Jersey 08542.
(2) Rho Management Partners, L.P. may be deemed the beneficial owner of these
shares pursuant to an investment advisory agreement that confers sole
voting and investment control over such shares to Rho Management Partners,
L.P. The address of Rho Management Trust II is c/o Rho Management Company,
Inc., 152 West 57th Street, New York, New York 10019.
(3) The address of Hudson Trust is c/o Summit Asset Management Co., Inc., 47
Hulfish Street, Suite 420, Princeton, New Jersey 08542.
(4) The address of the State of Wisconsin Investment Board is P.O. Box 7842,
Madison, Wisconsin 53707.
(5) Mr. Ruch is a controlling person of Rho Management Partners, L.P. and may
be deemed the beneficial owner of the shares held by Rho Management Trust
II. In addition, Mr. Ruch exercises investment and voting authority over
166,700 shares directly for his own account, for the account of family
members or for the account of other clients of Rho Management Partners,
L.P.
Item 13. Certain Relationships and Related Transactions
HCVII, HCVIII and HCVIV owned 17.8%, 5.5% and 1.6% or our outstanding
capital stock as of March 31, 2001, respectively. HCVII, HCVIII and HCVIV are
limited partnerships which were formed to provide capital to companies in the
health care fields. HCPII, HCPIII and HCPIV are limited partnerships which serve
as general partner of HCVII, HCVIII and HCVIV, respectively. John Littlechild, a
member of our board of directors, is a general partner of HCPII, HCPIII and
HCPIV and Vice Chairman of Healthcare Vetnures LLC, the management company for
HCVII, HCVIII and HCVIV. Mr. Littlechild is an officer of HealthCare Ventures
LLC. See "Security Ownership of Certain Beneficial Owners and Management."
Rho Management Trust II, which owned 8.9% of our outstanding capital
stock as of March 31, 2001, also holds approximately 18.9% and 54.3% of the
outstanding limited partnerships interests in HCVII and HCVIV, respectively. An
affiliate of Rho is also a limited partner of HCPII, HCPIII and HCPIV. Joshua
Ruch, a member of the board of directors, is a controlling person of Rho. See
"Security Ownership of Certain Beneficial Owners and Management."
Hudson, which owned 7.5% of our outstanding capital stock as of March
31, 2001, also holds approximately 6.0% and 11.9% of the outstanding limited
partnership interests of HCVII and HCVIV, respectively. Hudson is also a limited
partner of HCPII. See "Security Ownership of Certain Beneficial Owners and
Management."
See "Executive Compensation - Compensation Committee Interlocks and Insider
Participation."
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this Amendment No. 1 on Form 10-K/A to be
signed on its behalf by the undersigned, thereunto duly authorized.
DIACRIN, INC.
By: /s/ Thomas H. Fraser
------------------------------------
Thomas H. Fraser
President and Chief Executive Officer
Date: April 18, 2001