1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
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 0-17999
ImmunoGen, Inc.
(Exact name of registrant as specified in its charter)
Massachusetts 04-2726691
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
333 Providence Highway
Norwood, MA 02062
(Address of principal executive offices, including zip code)
(781) 769-4242
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed
since last report.)
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 the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
At May 12, 1998 there were 25,359,750 shares of common stock, par value
$.01 per share, of the registrant outstanding.
Exhibit Index at Page: 24
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IMMUNOGEN, INC.
TABLE OF CONTENTS
Page
PART I - FINANCIAL INFORMATION
Item 1 Financial Statements
Consolidated Balance Sheets as of
June 30, 1997 and March 31, 1998....................... 3
Consolidated Statements of Operations
for the three months and nine months ended
March 31, 1997 and 1998................................ 4
4
Consolidated Statements of Stockholders'
Equity for the year ended June 30, 1997 and
the nine months ended March 31, 1998................... 5
Consolidated Statements of Cash Flows
for the nine months ended March 31,
1997 and 1998.......................................... 6
Notes to Consolidated Financial Statements............. 7
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations.......... 12
PART II - OTHER INFORMATION
Item 2 Changes in Securities.................................. 20
Item 6 Exhibits and Reports on Form 8-K....................... 21
Signatures............................................................... 23
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IMMUNOGEN, INC.
CONSOLIDATED BALANCE SHEETS
As of June 30, 1997 and March 31, 1998
June 30, March 31,
------------- --------------
1997 1998
- -------------------------------------------------------------------------------------------------------------------------------
ASSETS
Cash and cash equivalents $ 1,669,050 $ 2,270,966
Due from minority interest holder -- 843,000
Prepaids and other current assets 578,497 654,405
------------- -------------
Total current assets 2,247,547 3,768,371
------------- -------------
Property and equipment, net of accumulated
depreciation 2,929,733 2,044,780
Note receivable 1,128,910 596,474
Other assets 43,700 43,700
------------- -------------
Total assets $ 6,349,890 $ 6,453,325
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable 612,559 560,520
Accrued compensation 248,472 145,502
Other current accrued liabilities 841,238 537,909
Current portion of capital lease obligations 37,068 --
Current portion of deferred lease 89,160 52,756
------------- -------------
Total current liabilities 1,828,497 1,296,687
------------- -------------
Deferred lease 59,436 48,364
Minority interest in consolidated subsidiary -- 26,080
Commitments
Stockholders' equity:
Preferred stock; $.01 par value; authorized 5,000,000
shares as of June 30, 1997 and March 31, 1998
Convertible preferred stock, Series A, $.01 par value; issued
and outstanding 1,100 as of June 30, 1997 11 --
(liquidation preference - stated value plus accrued but unpaid
dividends per share)
Convertible preferred stock, Series C, $.01 par value; issued
and outstanding 700 shares as of June 30, 1997 7 --
(liquidation preference - stated value plus accrued but unpaid dividends per share)
Convertible preferred stock, Series D, $.01 par value; issued
and outstanding 1,000 shares as of June 30, 1997 10 --
(liquidation preference - stated value plus accrued but unpaid dividends per share)
Convertible preferred stock, Series E, $.01 par value; issued and outstanding 1,200
shares as of March 31, 1998 -- 12
Common stock, $.01 par value; authorized
30,000,000 shares and 50,000,000 shares as of June 30, 1997 and March 31, 1998,
respectively; issued and outstanding 21,779,767 shares and 25,359,750 shares
as of June 30, 1997 and March 31, 1998, respectively 217,797 253,597
Additional paid-in capital 144,753,538 151,052,367
------------- -------------
144,971,363 151,305,976
Accumulated deficit (140,509,406) (146,223,782)
------------- -------------
Total stockholders' equity 4,461,957 5,082,194
------------- -------------
Total liabilities and stockholders' equity $ 6,349,890 $ 6,453,325
============= =============
The accompanying notes are an integral part of the financial statements.
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IMMUNOGEN, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months and nine months ended March 31, 1997 and 1998
Three Months Ended Nine Months Ended
March 31, March 31,
1997 1998 1997 1998
------------ ------------ ------------ ------------
Revenues:
Development fees $ 64,487 $ 110,000 $ 217,719 $ 227,000
Interest 60,999 76,570 156,302 177,033
Licensing 4,573 502 11,145 2,041
Other -- 8,059 -- 10,959
------------ ------------ ------------ ------------
Total revenues 130,059 195,131 385,166 417,033
------------ ------------ ------------ ------------
Expenses:
Research and development 1,842,053 1,395,879 5,819,874 4,298,952
General and administrative 625,997 367,632 1,611,841 1,326,356
Interest 3,513 666 76,237 3,635
------------ ------------ ------------ ------------
Total expenses 2,471,563 1,764,177 7,507,952 5,628,943
------------ ------------ ------------ ------------
Loss before income taxes and minority interest (2,341,504) (1,569,046) (7,122,786) (5,211,910)
Income tax expense 200 1,011 888 2,337
------------ ------------ ------------ ------------
Net loss before minority interest (2,341,704) (1,570,057) (7,123,674) (5,214,247)
------------ ------------ ------------ ------------
Minority interest in net loss of consolidated subsidiary -- 40,463 -- 105,350
------------ ------------ ------------ ------------
Net loss (2,341,704) (1,529,594) (7,123,674) (5,108,897)
------------ ------------ ------------ ------------
Dividends on convertible preferred stock 1,829,226 193,599 3,000,985 605,479
------------ ------------ ------------ ------------
Net loss to common shareholders $ (4,170,930) $ (1,723,193) $(10,124,659) $ (5,714,376)
============ ============ ============ ============
Basic and diluted loss per common share $ (0.23) $ (0.07) $ (0.58) (0.24)
============ ============ ============ ============
Shares used in computing basic and diluted loss
per share amounts 18,068,402 24,938,749 17,309,973 23,826,759
============ ============ ============ ============
The accompanying notes are an integral part of the financial statements.
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IMMUNOGEN, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the year ended June 30,1997 and the nine months ended March 31, 1998
Common Stock
-----------------------------------
Additional
Paid-in
Shares Amount Capital
---------- -------- -------------
Balance at June 30, 1996 16,599,855 $165,999 $ 128,525,884
========== ======== =============
Stock options exercised 54,644 545 87,310
Issuance of Common Stock 41,481 415 69,585
Conversion of Convertible Debentures
into Common Stock 351,662 3,517 1,315,217
Exchange of Convertible Debentures for
Series A Convertible Preferred stock -- -- --
Issuance of Series B Convertible Preferred Stock
Issuance of Series C Convertible Preferred Stock -- -- --
Issuance of Series D Convertible Preferred Stock -- -- --
Conversion of Series A Convertible Preferred Stock into Common Stock 1,328,744 13,287 2,766,405
Conversion of Series B Convertible Preferred Stock into Common Stock 1,384,823 13,848 3,539,221
Conversion of Series C Convertible Preferred Stock into Common Stock 2,018,558 20,186 2,956,928
Compensation for put right -- -- --
Non-cash dividends on Convertible Preferred Stock -- -- --
Net loss for the year ended June 30, 1997 -- -- --
---------- -------- -------------
Balance at June 30, 1997 21,779,767 $217,797 $ 139,260,550
========== ======== =============
Stock options exercised 54,500 545 48,505
Issuance of Common Stock in exchange for shares of subsidiary 475,425 4,754 (4,754)
Conversion of Series A Convertible Preferred Stock into Common Stock 1,347,491 13,475 2,209,764
Conversion of Series C Convertible Preferred Stock into Common Stock 701,180 7,012 1,126,815
Conversion of Series D Convertible Preferred Stock into Common Stock 1,001,387 10,014 1,303,287
Issuance of Series E Convertible Preferred Stock, net of financing costs -- -- --
Issuance of Warrants to purchase Common Stock -- -- 580,056
Value ascribed to ImmunoGen Warrants issued to BioChem, net of financing costs -- -- 4,065,023
Non-cash dividends on Convertible Preferred Stock -- -- --
Net loss for the nine months ended March 31, 1998 -- -- --
---------- -------- -------------
Balance at March 31, 1998 25,359,750 $253,597 $ 148,589,246
========== ======== =============
Preferred Stock
---------------------------------------
Additional
Paid-in
Shares Amount Capital
------ -------- -----------
Balance at June 30, 1996 -- $-- $ --
------ ---- -----------
Stock options exercised -- -- --
Issuance of Common Stock -- -- --
Conversion of Convertible Debentures
into Common Stock -- -- --
Exchange of Convertible Debentures for
Series A Convertible Preferred stock 2,500 25 4,749,586
Issuance of Series B Convertible Preferred Stock 3,000 30 3,486,342
Issuance of Series C Convertible Preferred Stock 3,000 30 4,720,003
Issuance of Series D Convertible Preferred Stock 1,000 10 1,287,092
Conversion of Series A Convertible Preferred Stock into Common Stock (1,400) (14) (2,659,763)
Conversion of Series B Convertible Preferred Stock into Common Stock (3,000) (30) (3,486,342)
Conversion of Series C Convertible Preferred Stock into Common Stock (2,300) (23) (2,910,669)
Compensation for put right -- -- 306,739
Non-cash dividends on Convertible Preferred Stock -- -- --
Net loss for the year ended June 30, 1997 -- -- --
------ ---- -----------
Balance at June 30, 1997 2,800 $ 28 $ 5,492,988
====== ==== ===========
Stock options exercised -- -- --
Issuance of Common Stock in exchange for shares of subsidiary -- -- --
Conversion of Series A Convertible Preferred Stock into Common Stock (1,100) (11) (2,089,817)
Conversion of Series C Convertible Preferred Stock into Common Stock (700) (7) (1,101,334)
Conversion of Series D Convertible Preferred Stock into Common Stock (1,000) (10) (1,287,092)
Issuance of Series E Convertible Preferred Stock, net of financing costs 1,200 12 1,448,376
Issuance of Warrants to purchase Common Stock -- -- --
Value ascribed to ImmunoGen Warrants issued to BioChem, net of financing costs -- -- --
Non-cash dividends on Convertible Preferred Stock -- -- --
Net loss for the nine months ended March 31, 1998 -- -- --
------ ---- -----------
Balance at March 31, 1998 1,200 $ 12 $ 2,463,121
====== ==== ===========
Total
Accumulated Stockholders'
Deficit Equity
------------- -----------
Balance at June 30, 1996 $(127,914,500) $ 777,383
------------- -----------
Stock options exercised -- 87,855
Issuance of Common Stock -- 70,000
Conversion of Convertible Debentures
into Common Stock -- 1,318,734
Exchange of Convertible Debentures for
Series A Convertible Preferred stock -- 4,749,611
Issuance of Series B Convertible Preferred Stock -- 3,486,372
Issuance of Series C Convertible Preferred Stock -- 4,720,033
Issuance of Series D Convertible Preferred Stock -- 1,287,102
Conversion of Series A Convertible Preferred Stock into Common Stock -- 119,915
Conversion of Series B Convertible Preferred Stock into Common Stock -- 66,697
Conversion of Series C Convertible Preferred Stock into Common Stock -- 66,422
Compensation for put right -- 306,739
Non-cash dividends on Convertible Preferred Stock (3,511,510) (3,511,510)
Net loss for the year ended June 30, 1997 (9,083,396) (9,083,396)
------------- -----------
Balance at June 30, 1997 $(140,509,406) $ 4,461,957
============= ===========
Stock options exercised -- 49,050
Issuance of Common Stock in exchange for shares of subsidiary -- --
Conversion of Series A Convertible Preferred Stock into Common Stock -- 133,411
Conversion of Series C Convertible Preferred Stock into Common Stock -- 32,486
Conversion of Series D Convertible Preferred Stock into Common Stock -- 26,199
Issuance of Series E Convertible Preferred Stock, net of financing costs -- 1,448,388
Issuance of Warrants to purchase Common Stock -- 580,056
Value ascribed to ImmunoGen Warrants issued to BioChem, net of financing costs -- 4,065,023
Non-cash dividends on Convertible Preferred Stock (605,479) (605,479)
Net loss for the nine months ended March 31, 1998 (5,108,897) (5,108,897)
------------- -----------
Balance at March 31, 1998 $(146,223,782) $ 5,082,194
============= ===========
The accompanying notes are an integral part of the financial statements.
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IMMUNOGEN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS For the nine months ended March 31, 1997
and 1998
March 31,
-------------------------------
1997 1998
------------ ----------
Cash flows from operating activities:
Net loss $(10,124,659) $(5,714,376)
Adjustments to reconcile net loss to net
cash used for operating activities:
Depreciation and amortization 1,149,737 873,712
Gain on sale of property and equipment -- (10,959)
Loss on sale of property and equipment 2,934 --
Other 5,790 --
Accretion of interest on note receivable (89,014) (77,564)
Non-cash dividend on convertible preferred stock 3,000,985 605,479
Minority interest in net loss of consolidated subsidiary -- (105,350)
Amortization of deferred lease (44,579) (47,476)
Changes in operating assets and liabilities:
Other current assets 1,740 204,092
Accounts payable (25,361) (52,039)
Accrued compensation (56,855) (102,970)
Other accrued liabilities (95,019) (136,656)
------------ ----------
Net cash used for operating activities (6,274,301) (4,564,107)
------------ ----------
Cash flows from investing activities:
Proceeds from sale of property and equipment 17,183 22,200
Payment received on note receivable -- 330,000
Purchase of property and equipment (4,458) --
------------ ----------
Net cash provided by
investing activities 12,725 352,200
------------ ----------
Cash flows from financing activities:
Proceeds from issuance of ATI convertible preferred stock -- 3,538,000
Proceeds from convertible preferred stock 5,990,000 1,500,000
Stock issuances, net 87,855 49,050
Principal payments on capital lease obligations (105,152) (37,068)
Financing costs (38,488) (236,159)
------------ ----------
Net cash provided by
financing activities 5,934,215 4,813,823
------------ ----------
Net change in cash and cash equivalents (327,361) 601,916
------------ ----------
Cash and cash equivalents, beginning balance 2,796,636 1,669,050
------------ ----------
Cash and cash equivalents, ending balance $ 2,469,275 $2,270,966
============ ==========
Supplemental disclosure of cash flow information:
Cash paid for interest $ 8,582 $ 3,635
============ ==========
Cash paid for income taxes $ 1,197 $ 2,279
============ ==========
Supplemental disclosure of non-cash financing activities:
Conversion of convertible debentures including accrued interest $ 1,318,734 $ --
------------ ----------
Conversion of convertible debentures to preferred stock $ 2,500,000 $ --
------------ ----------
Deferred lease of leasehold improvements $ 215,465 $ --
------------ ----------
Conversion of Series A Preferred Stock to Common Stock $ -- $2,089,828
------------ ----------
Conversion of Series C Preferred Stock to Common Stock $ -- $1,101,341
------------ ----------
Conversion of Series D Preferred Stock to Common Stock $ -- $1,287,102
------------ ----------
Due from minority interest holder $ -- $ 843,000
------------ ----------
Minority interest $ -- $ 131,430
------------ ----------
Issuance of Common Stock in exchange for shares of subsidiary $ -- $ 871,930
------------ ----------
The accompanying notes are an integral part of the financial statements.
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IMMUNOGEN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. In the opinion of management, the accompanying financial statements include
all adjustments, consisting of only normal recurring accruals, necessary to
present fairly the consolidated financial position, results of operations and
cash flows of ImmunoGen, Inc. (the "Company"), which include those of its
wholly-owned subsidiary, ImmunoGen Securities Corp., and its 96.5%-owned
subsidiary, Apoptosis Technology, Inc. ("ATI"). The financial disclosures herein
should be read in conjunction with the Company's Annual Report on Form 10-K for
the year ended June 30, 1997.
The Company has been unprofitable since inception and expects to incur net
losses over the next several years, assuming it is able to raise sufficient
working capital to continue operations. From June 30, 1997 to March 31, 1998,
the Company raised capital from the following sources: $4.381 million received
or receivable by ATI from its collaborator, BioChem Pharma Inc., a Canadian
biopharmaceutical company ("BioChem") (see footnote D); $375,000 received in
October 1997 under a $750,000 grant from the Small Business Innovation Research
Program of the National Cancer Institute to advance development over a two-year
period of the Company's lead product candidate, huC252-DM1; and $1.5 million
received from the sale of the Company's Series E Convertible Preferred Stock to
an institutional investor in a $3.0 million transaction expected to be completed
in one additional installment of $1.5 million on or before July 31, 1998 (see
footnote E). The Company's cash resources remaining at March 31, 1998 were
approximately $2.3 million, and an additional $843,000 was received in April
1998 by ATI from Biochem. The Company anticipates that these existing capital
resources, coupled with the sale of the remaining Series E Stock, will enable
the Company to maintain its current and planned operations through at least
October 1998. The Company also continues its stringent cost control efforts.
The Company continues actively to seek additional capital by pursuing one or
more financing transactions and/or strategic partnering arrangements. While the
Company expects to consummate a financing transaction in the near term, no
assurance can be given that such financing will be available to the Company on
acceptable terms, if at all. If the Company is unable to obtain financing on
acceptable terms in order to maintain operations, it could be forced to further
curtail or discontinue its operations.
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B. In October 1996, the Company's $2.5 million debenture issued in June 1996 was
converted into 2,500 shares of the Company's 9% Series A Convertible Preferred
Stock, with a stated value of $1,000 per share (the "Series A Stock"). Holders
of the Series A Stock were entitled to receive, when and as declared by the
Board of Directors, cumulative dividends at a rate per share equal to 9% per
annum in cash or, at the Company's option, in shares of the Company's Common
Stock, $.01 par value per share ("Common Stock"), in arrears on the conversion
date. The 2,500 shares of Series A Stock were convertible into the same number
of shares of Common Stock as the $2.5 million debenture. Each share of Series A
Stock was convertible into a number of shares of Common Stock determined by
dividing the $1,000 stated value per share by the lesser of (i) 85% of the
average of the closing bid prices for the Common Stock for the five consecutive
trading days prior to the conversion date, and (ii) $2.50 (subject to certain
adjustments). In addition, holders of the Series A Stock were entitled to
receive, on conversion of the Series A Stock, a number of warrants equal to 50%
of the number of shares of Common Stock issued on conversion. As of January 5,
1998, all 2,500 shares of Series A Stock and accumulated dividends thereon had
been converted into 2,676,235 shares of Common Stock. In connection with those
conversions, warrants to purchase 1,338,117 shares of Common Stock were issued.
These warrants have an exercise price of $4 per share and expire at various
dates during 2002 and 2003.
C. In October 1996, the Company entered into a financing agreement (the "October
1996 Private Placement") with an institutional investor under which the Company
was granted the right to require the investor to purchase up to $12.0 million of
convertible preferred stock from the Company in a series of private placements.
Pursuant to the October 1996 Private Placement, the Company sold 3,000 shares of
its 9% Series B Convertible Preferred Stock, with a stated value of $1,000 per
share ("Series B Stock"). As of February 4, 1997, all 3,000 shares of Series B
Stock plus accumulated dividends thereon had been converted into 1,384,823
shares of Common Stock. In connection with the issuance of the Series B Stock,
warrants to purchase 500,000 shares of Common Stock were also issued. These
warrants have a value of $618,900, which was accounted for as non-cash dividends
to holders of Common Stock at the time of issuance of the Series B Stock. Of
these 500,000 warrants, 250,000 warrants are exercisable at $5.49 per share and
expire in October 2001. The remaining 250,000 warrants are exercisable at $3.68
per share and expire in January 2002.
In January 1997, the Company sold 3,000 shares of its 9% Series C Convertible
Preferred Stock, with a stated value of $1,000 per share ("Series C Stock"), in
connection with the October 1996 Private Placement. The Series C Stock was
convertible into a number of shares of Common Stock determined by dividing
$1,000 by the lower of (i) $2.61 and (ii) 85% of the market price of the Common
Stock at the time of conversion. As of September 30, 1997, all 3,000 shares of
Series C Stock plus accumulated dividends thereon had been converted into
2,719,738 shares of Common Stock. In connection with the issuance of the Series
C Stock, warrants to purchase 1,147,754 shares of Common Stock were also issued
to the investor. These warrants are exercisable at $2.31 per share and expire in
April 2002. The $1.2 million value of these warrants was accounted for as
non-cash dividends to holders of Common Stock at the time of issuance of the
Series C Stock.
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Also pursuant to the October 1996 Private Placement, the Company, in June 1997,
sold 1,000 shares of its 9% Series D Convertible Preferred Stock, with a stated
value of $1,000 per share ("Series D Stock"), bringing the aggregate amount
received under the October 1996 Private Placement to $7.0 million. The Series D
Stock was convertible at any time into a number of shares of Common Stock
determined by dividing $1,000 by the lower of (i) $1.4375 and (ii) 85% of the
market price of the Common Stock at the time of conversion. As of December 31,
1997, all 1,000 shares of Series D Stock and accumulated dividends thereon had
been converted into 1,001,387 shares of Common Stock. In addition, because
conversion of the Series D Stock did not occur until after the eightieth day
following its issue date, the investor received warrants to purchase 454,545
shares of Common Stock in connection with the Series D Stock. These warrants
have an exercise price of $1.94 per share and expire in 2002. The $278,000 value
of these warrants was determined at the time of issuance of the Series D Stock
and was accounted for as non-cash dividends to holders of Common Stock at that
time. No additional warrants are issuable in connection with the Series D Stock.
Under the October 1996 Private Placement, the Company had the right to require
the investor to purchase up to $12.0 million of convertible preferred stock from
the Company in a series of private placements, subject to certain conditions.
However, because minimum stock price and minimum market capitalization
requirements have not been maintained, the investor is no longer obligated to
fund the remaining $5.0 million which had been available to the Company under
this agreement.
D. In July 1997, ATI entered into a collaboration with BioChem. The agreement
grants BioChem an exclusive, worldwide license to ATI's proprietary screens
based on two families of proteins involved in apoptosis, for use in identifying
leads for anti-cancer drug development. The agreement also covers the
development of new screens in two areas.
Under the agreement, BioChem will invest a total of $11.125 million in
non-voting convertible preferred stock of ATI in a series of private placements
over a three-year period to be used exclusively to fund research conducted under
the collaboration during a three-year research term. In August 1997, BioChem
paid ATI an initial payment of $1.852 million, and in each of October 1997,
January 1998 and April 1998, quarterly payments of $843,000 were made. The
balance of $6.744 million will be paid in equal quarterly payments of $843,000.
The preferred stock is convertible into ATI common stock at any time after three
years from the date of first issuance of such stock, at a conversion price equal
to the then current market price of the ATI common stock, but in any event at a
price that will result in BioChem acquiring at least 15% of the then outstanding
ATI common stock. As of March 31, 1998, 4,381 shares of ATI preferred stock were
issued or issuable, representing a 5.9% minority interest (on a converted and
fully-diluted
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10
basis) in the net loss of ATI. This minority interest portion of ATI's loss for
the quarter reduced ImmunoGen's net loss by $40,463. In addition, because the
investment is comprised of securities potentially issuable by both the Company
and ATI, only a portion of which is allocable to the ATI securities, the Company
is required to reflect the value of the investment allocable to the ATI
securities as a minority interest on its balance sheet. Based on an appraisal by
an independent valuation consultant completed in November 1997, approximately 3%
of the $4.381 million investment to date, or approximately $131,400, has been
allocated to the minority interest in ATI, with the remainder, or approximately
$4.25 million, allocated to the Company's equity. The research agreement may be
extended beyond the initial three-year term, on terms substantially similar to
those for the original term. BioChem will also make milestone payments of up to
$15.0 million for each product over the course of its development. In addition,
ATI will receive royalties on any future worldwide sales of products resulting
from the collaboration. BioChem's obligation to provide additional financing to
ATI each quarter is subject to satisfaction of specified conditions, including a
condition with respect to the level of ATI's cash and other resources in
addition to the financing.
As part of the collaboration with ATI, BioChem also receives warrants to
purchase shares of Common Stock equal to the amount invested in ATI during the
three-year research term. These warrants will be exercisable for a number of
shares of Common Stock determined by dividing the amount of BioChem's investment
in ATI by the market price of the Common Stock on the exercise date, subject to
certain limitations. The exercise price is payable either in cash or shares of
ATI preferred stock, at BioChem's option. The warrants are expected to be
exercised only in the event that the shares of ATI common stock do not become
publicly traded. In the event that ATI common stock does not become publicly
traded, the Company expects that BioChem will use its shares of ATI preferred
stock, in lieu of cash, to exercise the warrants.
E. In December 1997, the Company entered into an agreement, which was amended in
March 1998, to sell $3.0 million of its non dividend-bearing Series E
Convertible Preferred Stock ("Series E Stock") to an institutional investor. The
investment will be completed in several installments. As of March 31, 1998, $1.5
million had been received; the remainder is expected to be received on or before
July 31, 1998, subject to the terms of the agreement. The Series E Stock will be
convertible into Common Stock at the end of a two-year holding period at $1.0625
per share. Under the terms of the agreement, the investor is entitled to receive
warrants equal to 100% of the number of shares of Common Stock issuable on
conversion. As of March 31, 1998, warrants to purchase 1,411,764 shares of
Common Stock had been issued. These warrants have an exercise price of $2.125
per share and expire in 2004. The value of these warrants, approximately
$580,500, was determined at the time of their issuance and accounted for as
non-cash dividends on convertible preferred stock.
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F. Effective December 31, 1997, the Company adopted Statement of Financial
Accounting Standards No. 128 ("SFAS 128"), "Earnings Per Share." SFAS 128
requires the calculation and disclosure of basic loss per common share and
diluted loss per common share for all periods presented. The adoption of SFAS
128 had no impact on the amounts presented in the Consolidated Statements of
Operations because the effect of including the options and warrants outstanding
during the periods presented would be antidilutive.
G. ATI was established in January 1993 as a joint venture between the Company
and Dana-Farber Cancer Institute ("Dana-Farber") to develop therapeutics based
on apoptosis technology developed at Dana-Farber. Under the terms of a stock
purchase agreement entered into between the Company, ATI, Dana-Farber and an
individual stockholder, if ATI had not concluded a public offering of its stock
for at least $5.0 million prior to January 11, 1998, Dana-Farber and the
individual stockholder each could require the Company to purchase (the "put
option"), or the Company could require such stockholders to sell (the "call
option"), their shares of ATI common stock at a predetermined price. At the
Company's discretion, the shares of common stock of ATI can be paid for by the
Company in cash or by delivery of shares of Common Stock. In January 1998, the
individual stockholder exercised the put option for 500,000 shares of ATI common
stock, par value $.00002 per share, for an aggregate of $871,930. The Company
elected to issue its Common Stock in lieu of a cash payment and, in March 1998,
475,425 shares of Common Stock were issued to the individual stockholder,
thereby increasing the Company's ownership of ATI from approximately 95% to
approximately 96.5%.
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12
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
Since inception, the Company has been primarily engaged in research and
development of immunoconjugate products which the Company believes have
significant commercial potential as human therapeutics. The Company's
96.5%-owned subsidiary, Apoptosis Technology, Inc. ("ATI"), focuses its efforts
on the discovery and development of anti-cancer therapeutics based on the
regulation of apoptosis. The major sources of the Company's working capital have
been the proceeds of equity and convertible debt and equity financings, license
fees, government-sponsored research grants and income earned on investment of
its available funds. In addition, in July 1997 ATI entered into a research and
collaboration agreement with a large biopharmaceutical company which has
provided and will continue to provide significant funding for ATI's operations
as well as milestone and royalty payments (see LIQUIDITY AND CAPITAL RESOURCES
below). Such funding for ATI's operations will initially be for a three-year
period. The Company does not expect revenues to be derived from product sales
for the foreseeable future.
The Company has been unprofitable since inception and expects to incur net
losses over the next several years, assuming it is able to raise sufficient
working capital to continue operations. From June 30, 1997 to March 31, 1998,
the Company has raised capital from the following sources: $4.381 million
received or receivable by ATI from its collaborator, BioChem Pharma Inc., a
Canadian biopharmaceutical company ("BioChem"); $375,000 received in October
1997 under a $750,000 grant from the Small Business Innovation Research Program
of the National Cancer Institute to advance development over a two-year period
of the Company's Series E Convertible Preferred Stock to an institutional
investor in a $3.0 million transaction expected to be completed in one
additional installment of $1.5 million on or before July 31, 1998. The Company's
cash resources remaining at March 31, 1998 were approximately $2.3 million, and
an $843,000 was received in April 1998 by ATI from BioChem. The Company
anticipates that these existing capital resources, coupled with the sale of the
remaining Series E Stock, will enable the Company to maintain its current and
planned operations through at least October 1998. The Company also continues its
stringent cost control efforts begun in December 1994 when it implemented a
significant restructuring program.
Under a financing agreement the Company entered into in October 1996 (the
"October 1996 Private Placement"), the Company was granted the right to require
the investor to purchase up to $12.0 million of convertible preferred stock from
the Company in a series of private placements, of which an aggregate of $7.0
million had been received through June 30, 1997. However, because minimum stock
price and minimum market capitalization requirements have not been maintained,
the investor is no longer obligated to fund the remaining $5.0 million which had
been available to the Company under this agreement.
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As a result of its continuing losses from operations, the Company will be
required to obtain additional capital in the short term to satisfy its ongoing
capital needs and to continue its operations. The Company continues actively to
seek additional capital by pursuing one or more financing transactions and/or
strategic partnering arrangements. While the Company expects to consummate a
transaction in the near term, no assurance can be given that such financing will
be available to the Company on acceptable terms, if at all. If the Company is
unable to obtain financing on acceptable terms in order to maintain operations,
it could be forced to further curtail or discontinue its operations.
RESULTS OF OPERATIONS
Three Months Ended March 31, 1997 and 1998
The Company's revenues increased approximately 50% from approximately $130,000
for the three months ended March 31, 1997 to approximately $195,000 for the
three months ended March 31, 1998. In both periods, revenues were derived in
large part (50% and 56% for the three months ended March 31, 1997 and 1998,
respectively) from amounts received under the SBIR program as development
revenues, with additional amounts received in the form of interest income (47%
and 39% for the three months ended March 31, 1997 and 1998, respectively), as
well as licensing fees pursuant to two licensing agreements. Interest income in
both periods included interest earned on cash balances available for investment,
as well as accretion of interest on a note receivable related to the assignment
of the Company's leases on its Canton, Massachusetts facility and equipment.
The Company's total expenses decreased approximately 29% from approximately $2.5
million for the three months ended March 31, 1997 to approximately $1.8 million
for the three months ended March 31, 1998. Research and development costs
constituted the primary component of the Company's total expenses (75% and 79%
for the three months ended March 31, 1997 and 1998, respectively), decreasing
approximately 24% from approximately $1.8 million for the three months ended
March 31, 1997 to approximately $1.4 million for the three months ended March
31, 1998. This decrease is attributable to staffing reductions prompted by the
Company's decision in early calendar 1997 to discontinue development of its
product candidate, Oncolysin B, as well as the Company's continuing cost
reduction efforts begun in December 1994.
General and administrative expenses decreased approximately 41%, from
approximately $626,000 for the three months ended March 31, 1997 to
approximately $368,000 for the three months ended March 31, 1998. This decrease
is attributable to costs incurred in connection with the Company's financing
efforts in the three-month period ended March 31, 1997. No comparable costs are
reflected in the three-month period ended March 31, 1998.
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14
Financing activities in both periods included issuances of convertible equity
and related common stock purchase warrants. For the three months ended March 31,
1997, dividends totalled approximately $1.8 million, of which approximately 65%
represents the value of warrants issued in connection with the January 1997 sale
of the Company's Series C Convertible Preferred Stock ("Series C Stock"), and
28% of which represents the value of the assured incremental yield embedded in
the conversion terms of the Series C Stock. Dividends for the three months ended
March 31, 1998 represent almost entirely the value of warrants issued in
connection with the March 1998 sale of the Company's Series E Convertible
Preferred Stock ("Series E Stock") in that quarter. All warrants were accounted
for as non-cash dividends to holders of the Company's preferred stock.
In connection with the collaboration entered into in July 1997 between ATI and
BioChem, BioChem will invest a total of $11.125 million in non-voting
convertible preferred stock of ATI in a series of private placements over a
three-year period. The preferred stock is convertible into ATI common stock at
any time after three years from the date of first issuance of such stock, at a
conversion price equal to the then current market price of the ATI common stock,
but in any event at a price that will result in BioChem acquiring no less then
15% of the then outstanding ATI common stock. As of March 31, 1998, 4,381 shares
of ATI preferred stock were issued or issuable, representing a 5.9% minority
interest (on a converted and fully-diluted basis) in the net loss of ATI. This
minority interest portion of ATI's loss for the quarter reduced the Company's
net loss for the quarter by $40,463. In addition, because the investment is
comprised of securities potentially issuable by both the Company and ATI, only a
portion of which is allocable to the ATI securities, the Company is required to
reflect the value of the investment allocable to the ATI securities as a
minority interest on its balance sheet. Based on an appraisal by an independent
valuation consultant completed in November 1997, approximately 3% of the $4.381
million investment to date, or approximately $131,400, has been allocated to the
minority interest in ATI, with the remainder, or approximately $4.25 million,
allocated to ImmunoGen equity.
Nine Months Ended March 31, 1997 and 1998
The Company's revenues increased approximately 8% from approximately $385,000
for the nine months ended March 31, 1997 to approximately $417,000 for the nine
months ended March 31, 1998. In both periods, revenues were derived in large
part from amounts received under the SBIR Program as development revenues (57%
and 54% for the nine months ended March 31, 1997 and 1998, respectively), and
from amounts received in the form of interest income (41% and 42% for the nine
months ended March 31, 1997 and 1998, respectively). Interest income in both
periods included interest earned on cash balances available for investment, as
well as accretion of interest on a note receivable related to the assignment of
the Company's leases on its Canton, Massachusetts facility and equipment.
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15
The Company's total expenses decreased approximately 25% from approximately $7.5
million for the nine months ended March 31, 1997 to approximately $5.6 million
for the nine months ended March 31, 1998. Research and development costs
constituted the primary component of the Company's total expenses (78% and 76%
for the nine months ended March 31, 1997 and 1998, respectively), decreasing
approximately 26% from approximately $5.8 million in fiscal 1997 to
approximately $4.3 million in fiscal 1998). This decrease is attributable to
staffing reductions prompted by the Company's decision in early calendar 1997 to
discontinue development efforts on its product candidate, Oncolysin B, as well
as the Company's continuing cost reduction efforts begun in December 1994.
General and administrative expenses decreased approximately 18% from
approximately $1.6 million for the nine months ended March 31, 1997 to
approximately $1.3 million for the nine months ended March 31, 1998. This
decrease represents costs incurred in connection with the Company's financing
efforts in the first quarter of calendar year 1997 for which there are no
comparable costs in calendar year 1998.
Interest expense decreased approximately 95% from approximately $76,200 for the
nine months ended March 31, 1997 to approximately $3,600 for the nine months
ended March 31, 1998. Both periods include interest costs on the remaining
principal balances of the Company's capital lease agreements. The larger costs
in fiscal 1997 represent the costs incurred in connection with the issuances of
convertible debentures. In fiscal 1998, the Company's financing activities
included issuances of convertible equity and related common stock purchase
warrants, giving rise to dividends rather than interest costs, as well dividends
associated with the October 1996 conversion of a $2.5 million convertible
debenture to convertible preferred stock. The dividends accumulated for the nine
months ended March 31, 1997, totalling approximately $3.0 million, represent
(approximately 60%) the value of warrants issued in connection with the sale of
the Company's 9% Series B Convertible Preferred Stock (the "Series B Stock") and
9% Series C Convertible Preferred Stock (the "Series C Stock") in December 1997
and January 1998, respectively, as well as amounts (approximately 32%) which
represent the value of the assured incremental yield embedded in the conversion
terms of the Series B Stock and Series C Stock issued.
In connection with the collaboration between ATI and Biochem, for the nine
months ended March 31, 1998, 4,381 shares of ATI preferred stock were issued or
issuable, resulting in a weighted average 4.95% minority interest (on a
converted, fully-diluted basis) in the net loss of ATI. This minority interest
portion of ATI's loss for such nine-month period reduced ImmunoGen's net loss by
approximately $105,400.
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LIQUIDITY AND CAPITAL RESOURCES
Since July 1, 1996, the Company has financed its operating deficit of
approximately $18.3 million from various sources, including issuances of
convertible debt and equity securities, amounts received pursuant to its fiscal
1996 assignment of leases, funds received under research grants and funds
received from the exercise of stock options.
In March 1996, the Company issued $5.0 million principal amount convertible
debentures in a private placement. As part of the private placement, the Company
issued a $2.5 million principal amount debenture on March 25, 1996. In June
1996, the debenture, together with accrued interest thereon, was converted into
shares of Common Stock, and warrants to purchase 509,000 shares of Common Stock
at an exercise price of $4.00 per share were issued to the holder of the
debenture. These warrants expire in March 2001. In June 1996, a second $2.5
million convertible debenture was issued and then converted into Series A
Convertible Preferred Stock ("Series A Stock") in October 1996. Each share of
Series A Stock was convertible at any time into a number of shares of Common
Stock determined by dividing $1,000 by the lower of (i) $2.50 and (ii) 85% of
the average of the closing bid price of the Common Stock for each the five days
prior to conversion (the "Market Price"). As of January 5, 1998, all 2,500
shares of Series A Stock plus accumulated dividends thereon had been converted
into 2,676,235 shares of Common Stock. In connection with those conversions,
warrants to purchase 1,338,117 shares of Common Stock were issued. These
warrants have an exercise price of $4 per share and expire at various dates
during calendar years 2002 and 2003. In June 1996, the Company issued additional
warrants to purchase 500,000 shares of Common Stock in connection with the
conversion of the debenture into Common Stock. These warrants have an exercise
price equal to $6.00 per share and expire in March 2001. Additionally, warrants
to purchase 250,000 shares of Common Stock were issued as payment of finder's
fees in connection with the issuance of the debentures. These warrants have an
exercise price of $3.105 per share and expire in 2003.
In October 1996, the Company sold $3.0 million of 9% Series B Convertible
Preferred Stock ("Series B Stock") in connection with the October 1996 Private
Placement. Each share of Series B Stock was convertible into a number of shares
of Common Stock determined by dividing $1,000 by the lower of (i) $3.60 and (ii)
85% of the market price of the Common Stock. As of February 4, 1997, all 3,000
shares of Series B Stock plus accumulated dividends thereon had been converted
into 1,384,823 shares of Common Stock. In connection with the issuance of the
Series B Stock, warrants to purchase 500,000 shares of Common Stock were also
issued. Of these 500,000 warrants, 250,000 warrants are exercisable at $5.49 per
share and expire in October 2001. The remaining 250,000 warrants are exercisable
at $3.68 per share and expire in January 2002.
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17
In January 1997, the Company sold $3.0 million of 9% Series C Convertible
Preferred Stock ("Series C Stock") in connection with the October 1996 Private
Placement. Each share of Series C Stock was convertible into a number of shares
of Common Stock determined by dividing $1,000 by the lower of (i) $2.61 and (ii)
85% of the market price of Common Stock. As of August 1, 1997, all 3,000 shares
of Series C Stock plus accumulated dividends thereon had been converted into
2,719,738 shares of Common Stock. In connection with the Series C Stock,
warrants to purchase 1,147,754 shares of Common Stock were issued to the
investor. These warrants are exercisable at $2.31 per share and expire in April
2002.
In June 1997, the Company sold $1.0 million of 9% Series D Convertible Preferred
Stock ("Series D Stock") in connection with the October 1996 Private Placement.
The Series D Stock was convertible at any time into a number of shares of Common
Stock determined by dividing $1,000 by the lower of (i) $1.4375 and (ii) 85% of
the market price of Common Stock at the time of conversion. As of October 21,
1997, all 1,000 shares of Series D Stock plus accumulated dividends thereon had
been converted in 1,001,387 shares of Common Stock. In addition, the investor
received warrants to purchase 454,545 shares of Common Stock. These warrants
have an exercise price of $1.94 per share and expire in 2002.
Also in June 1997, the Company and ATI satisfied an obligation of ATI to one of
its scientific advisors, totaling $120,000, by a combination of cash and 41,481
shares of Common Stock.
The Company had agreed to obtain or furnish an additional $3.0 million in equity
for ATI on such terms and conditions as were mutually agreed to by ATI and the
providers of such additional equity. As of July 31, 1997, ATI owed the Company
approximately $14.2 million. This amount was converted into 22,207,966 shares of
ATI common stock, thereby satisfying the agreement to provide an additional $3.0
million in equity and increasing the Company's majority ownership of ATI from
72% to 95%. In addition, under the terms of a stock purchase agreement entered
into between the Company, ATI, Dana-Farber Cancer Institute ("Dana-Farber") and
an individual ATI stockholder, if ATI had not concluded a public offering of its
stock for at least $5.0 million prior to January 11, 1998, Dana-Farber and the
individual stockholder each could require the Company to purchase (the "put
option"), or ImmunoGen could require such stockholders to sell (the "call
option"), their shares in ATI at a predetermined price. At the Company's
discretion, the shares of common stock of ATI can be paid for in cash or by
delivery of shares of Common Stock. In January 1998, the individual stockholder
exercised the put option for 500,000 shares of ATI common stock, par value
$.00002 per share, for an aggregate of $871,930. The Company elected to issue
its Common Stock in lieu of a cash payment and, in March 1998, issued 475,425
shares of the Common Stock to the individual investor, thereby increasing its
ownership of ATI from 95% to approximately 96.5%.
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18
In July 1997, ATI entered into a collaboration with BioChem. The agreement
grants BioChem an exclusive, worldwide license to ATI's proprietary screens
based on two families of proteins involved in apoptosis, for use in identifying
leads for anti-cancer drug development. The agreement also covers the
development of new screens in two areas.
Under the agreement, BioChem will invest a total of $11.125 million in
non-voting convertible preferred stock of ATI in a series of private placements
over a three-year period to fund research conducted by the collaboration during
a three-year research term. In August 1997, BioChem paid ATI an initial payment
of $1.852 million, and in each of October 1997, January 1998 and April 1998,
quarterly payments of $843,000 were made. The balance of $6.744 million will be
paid in equal quarterly payments of $843,000. The preferred stock is convertible
into ATI common stock at any time after three years from the date of first
issuance of such stock, at a conversion price equal to the then current market
price of the ATI common stock, but in any event a price that will result in
BioChem acquiring at least 15% of the then outstanding ATI common stock. The
research agreement may be extended beyond the initial three years, on terms
substantially similar to the original, three-year term. BioChem will also make
milestone payments of up to $15.0 million for each product over the course of
its development. In addition, ATI will receive royalties on the future worldwide
sales of products, if any, resulting from the collaboration. BioChem's
obligation to provide additional financing to ATI each quarter is subject to
satisfaction of specified conditions, including a condition with respect to the
level of ATI's cash and other resources in addition to the financing.
As part of the collaboration with ATI, BioChem also receives warrants to
purchase shares of Common Stock equal to the amount invested in ATI during the
three-year research term. These warrants will be exercisable for a number of
shares of ImmunoGen's Common Stock determined by dividing the amount of
BioChem's investment in ATI by the market price of the Common Stock on the
exercise date, subject to certain limitations. The exercise price is payable
either in cash or shares of ATI preferred stock, at Biochem's option. The
warrants are expected to be exercised only in the event that the shares of ATI
common stock do not become publicly traded. In the event that ATI common stock
does not become publicly traded, the Company expects that BioChem will use its
shares of ATI preferred stock, in lieu of cash, to exercise the warrants.
In December 1997, the Company entered into an agreement, which was amended in
March 1998, to sell $3.0 million of its Series E Convertible Preferred Stock
("Series E Stock") to an institutional investor. As of March 31, 1998, $1.5
million had been received; the remainder is expected to be received on or before
July 31, 1998, subject to the terms of the agreement. The Series E Stock will be
convertible into Common Stock at the end of a two-year holding period at $1.0625
per share. Under the terms of the agreement, the investor is entitled to receive
warrants equal to 100% of the number of shares of Common Stock issuable on
conversion of the preferred stock. As of March 31, 1998, warrants to purchase
1,411,764 shares of Common Stock had been issued. These warrants have an
exercise price of $2.125 per share and expire in 2004.
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In the period since July 1, 1996, less than $5,000 was expended on property and
equipment. No significant amounts are expected to be expended on property and
equipment in fiscal 1998.
The Company expects that any costs incurred in connection with the year 2000
will be immaterial.
Because of its continuing losses from operations, the Company will be required
to obtain additional capital in the short term to satisfy its ongoing capital
needs and to continue its operations. Although, as noted above, management
continues to pursue additional funding arrangements and/or strategic partners,
no assurance can be given that such financing will in fact be available to the
Company. If the Company is unable to obtain financing on acceptable terms in
order to maintain operations, it could be forced to further curtail or
discontinue its operations. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
CERTAIN FACTS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS
This report contains certain forward-looking statements as that term is defined
in the Private Securities Litigation Reform Act of 1995. Such statements are
based on management's current expectations and are subject to a number of
factors and uncertainties which could cause actual results to differ materially
from those described in the forward-looking statements. The Company cautions
investors that there can be no assurance that actual results or business
conditions will not differ materially from those projected or suggested in such
forward-looking statements as a result of various factors, including, but not
limited to, the following: the uncertainties associated with preclinical studies
and clinical trials; the early stage of the Company's initial product
development and lack of product revenues; the Company's history of operating
losses and accumulated deficit; the Company's limited financial resources and
uncertainty as to the availability of additional capital to fund its development
on acceptable terms, if at all; the Company's lack of commercial manufacturing
experience and commercial sales, distribution and marketing capabilities;
reliance on suppliers of antibodies necessary for production of the products and
technologies; the potential development by competitors of competing products and
technologies; the Company's dependence on potential collaborative partners, and
the lack of assurance that the Company will receive any funding under such
relationships to develop and maintain strategic alliances; the lack of assurance
regarding patent and other protection for the Company's proprietary technology;
governmental regulation of the Company's activities, facilities, products and
personnel; the dependence on key personnel; uncertainties as to the extent of
reimbursement for the costs of the Company's potential products and related
treatment by government and private health insurers and other organizations; the
potential adverse impact of government-directed health care reform; the risk of
product liability claims; and general economic conditions. As a result, the
Company's future development efforts involve a high degree of risk. For further
information, refer to the more specific risks and uncertainties discussed in the
Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1997 as
filed with the Securities and Exchange Commission.
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IMMUNOGEN, INC.
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
Not applicable.
Item 2. CHANGES IN SECURITIES
On January 5, 1998, the Company issued warrants to purchase 161,457
shares of its Common Stock to the holder of its Series A Convertible Preferred
Stock (the "Series A Stock") in connection with the conversion of an aggregate
of 200 shares of Series A Stock. The Series A Stock provided that if conversion
did not occur on or before the eightieth day after its issuance, the investor
would receive warrants to purchase shares of Common Stock equal to 50% of the
number of shares issued on each conversion of the Series A Stock. These warrants
have an exercise price of $4 per share and are exercisable for five years from
the date of issuance.
All of the warrants issued pursuant to the terms of the Series A Stock
were issued in a private placement pursuant to Section 4(2) of the Securities
Act of 1933, as amended, and Regulation D promulgated thereunder.
In July 1997, the Company's 96.5%-owned subsidiary, Apoptosis
Technology, Inc. ("ATI"), entered into a collaboration with a biopharmaceutical
company. As part of the agreement, the collaborator receives warrants to
purchase shares of Common Stock equal to the amount invested in ATI by the
collaborator during a three-year research term. These warrants will be
exercisable at any time on or after July 31, 2000 until and including July 31,
2002 into a number of shares of Common Stock determined by dividing the amount
invested in ATI by the market price of the Common Stock on the exercise date,
subject to certain limitations. On each of January 5 and April 2, 1998,
investments of $843,000 were made in ATI and warrants corresponding to those
amounts were issued in connection with such investments.
On December 9, 1997, the Company filed a Certificate of Vote of
Directors Establishing a Series of a Class of Stock designating 2,400 shares of
Series E Preferred Stock ("Series E Stock"). On March 19, 1998, 400 shares of
Series E Stock were sold to an institutional investor for cash consideration of
$0.5 million in a private placement under Regulation D of the Securities Act of
1933, as amended. This sale of Series E Stock was part of an aggregate $3.0
million investment in the Company by the institutional investor. Each share of
Series E Stock is
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convertible at the end of a two-year holding period into a number of shares of
Common Stock determined by dividing the stated value of the Series E Stock of
$1,250 per share by $1.0625. Under the terms of the agreement, the investor is
entitled to receive a number of warrants to purchase Common Stock equal to 100%
of the number of shares of Common Stock into which the Series E Stock can be
converted. Consequently, on March 19, 1998, the Company issued warrants to
purchase 470,588 shares of Common Stock. These warrants are exercisable at any
time only on or after March 19, 2000 (except for a "cashless exercise," which
may be exercised on or after March 19, 1998) until and including March 18 2005,
at an exercise price of $2.125 per share.
On March 19, 1998, the Company issued 475,425 shares of Common Stock to
an investor in ATI. These shares were issued pursuant to a shareholders'
agreement dated January 11, 1998 between certain ATI shareholders, ATI and the
Company. Under the terms of the agreement, the investors were granted a put
option which allows them to sell their shares of ATI common stock to the
Company, at predetermined rates, if ATI had not become public by January 11,
1998. In January 1998, an investor exercised his put option for 500,000 shares
of ATI common stock. At the Company's option, shares of Common Stock were issued
in lieu of cash in exchange for such shares of ATI common stock.
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
Item 5. OTHER INFORMATION
Not applicable.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit
10.1 First Amendment to Stock Purchase Agreement by and among
ImmunoGen, Inc., Biotechnology Venture Partners, L.P.,
Biotechnology Value Fund, L.P., Biotechnology Value Fund,
Ltd. and Investment 10, L.L.C. dated March 18, 1998
(a confidential treatment request has been filed with
the Commission with respect to this document)
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22
10.2 Form of Warrant Certificate issued by the Registrant to
Biotechnology Venture Partners, L.P., Biotechnology
Value Fund, L.P., Biotechnology Value Fund, Ltd. and
Investment 10, L.L.C. (previously filed as Exhibit 10.2 to
the Company's Quarterly Report on Form 10-Q for the quarter
ended December 31, 1997)
10.3 Warrant Certificate Dated January 5, 1998 issued to
Capital Ventures International (previously filed as Exhibit 10.6
to the Company's Quarterly Report on Form 10-Q for the
quarter ended December 31, 1997)
10.4 Form of Warrant Certificate issued to BioChem Pharma Inc.
27 Financial Data Schedule
(b) Reports on Form 8-K
None
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
IMMUNOGEN, INC.
Date: May 13, 1998 By: /s/ Mitchel Sayare
-------------------
Mitchel Sayare
Chief Executive Officer
(principal executive officer)
Date: May 13, 1998 By: /s/ Kathleen A. Carroll
------------------------
Kathleen A. Carroll
Vice President,
Finance and Administration
(principal financial officer)
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IMMUNOGEN, INC.
EXHIBIT INDEX
Exhibit
10.1 First Amendment to Stock Purchase Agreement by and among ImmunoGen,
Inc., Biotechnology Venture Partners, L.P., Biotechnology Value
Fund, L.P., Biotechnology Value Fund, Ltd. and Investment 10,
L.L.C. dated March 18, 1998 (a confidential treatment
request has been filed with the Commission with
respect to this document)
10.2 Form of Warrant Certificate issued by the Registrant to Biotechnology
Venture Partners, L.P., Biotechnology Value Fund, L.P., Biotechnology
Value Fund, Ltd. and Investment 10, L.L.C. (previously filed as
Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the
quarter ended December 31, 1997)
10.3 Warrant Certificate Dated January 5, 1998 issued to Capital Ventures
International (previously filed as Exhibit 10.6 to the Company's Quarterly
Report on Form 10-Q for the quarter ended December 31, 1997)
10.4 Form of Warrant Certificate issued to BioChem Pharma Inc.
27 Financial Data Schedule
24
1
EXHIBIT 10.1
FIRST AMENDMENT TO
STOCK PURCHASE AGREEMENT
BY AND AMONG
IMMUNOGEN, INC.,
BIOTECHNOLOGY VENTURE PARTNERS, L.P.,
BIOTECHNOLOGY VALUE FUND, L.P.,
BIOTECHNOLOGY VALUE FUND, LTD.
AND
INVESTMENT 10, L.L.C.
This FIRST AMENDMENT TO THE STOCK PURCHASE AGREEMENT (the "Agreement") made
on the 10th day of December, 1997 by and among ImmunoGen, Inc., a Massachusetts
corporation (the "Company"), Biotechnology Venture Partners, L.P. ("BVP"), a
Delaware limited partnership, Biotechnology Value Fund, L.P. ("BVF 1"), a
Delaware limited partnership, Biotechnology Value Fund, Ltd. ("BVF 2"), a Cayman
Island corporation and Investment 10, L.L.C. ("I10"), an Illinois limited
liability company (collectively BVP, BVF 1, BVF 2 and I10 are referred to as the
"Investor") is made as of the 18th day of March, 1998 (this "Amendment").
WHEREAS, the Company desires to issue and sell to Investor and Investor
desires to acquire shares (the "Preferred Shares") of the Company's Series E
convertible preferred stock, par value $.01 per share, convertible into shares
of the Company's Common Stock, par value $.01 per share ("Common Stock"), and
having the designations, powers, preferences, and other terms set forth on
EXHIBIT A to the Agreement;
WHEREAS, the Company desires to issue and sell to Investor and Investor
desires to acquire common stock purchase warrants substantially in the form of
EXHIBIT B to the Agreement (each, a "Warrant" and collectively, the "Warrants")
to purchase shares of the Company's common stock, par value $.01 per share (the
"Warrant Shares"); and
WHEREAS, the Company and the Investor desire to amend the terms concerning
the closings for the above-referenced transactions.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. SECTION 1.4. Section 1.4 of the Agreement is hereby deleted in its
entirety and shall be amended to read as follows:
PAYMENT. The Investor agrees to make payment of $1,000,000, $500,000 and
$1,500,000 for the 800, 400 and 1,200 Preferred Shares being delivered at the
Initial Closing,
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Second Closing and Final Closing (each as hereinafter defined), respectively, by
certified check or wire transfer on the applicable Closing Date to an account
specified by the Company.
2. SECTION 2.1. Section 2.1 of the Agreement is hereby deleted in its
entirety and shall be amended to read as follows:
CLOSING. Subject to the satisfaction of the conditions set forth in
Articles VI and VII hereof, (i) the initial closing for $1,000,000 (the "Initial
Closing") shall take place at a place and time (the "Initial Closing Date")
mutually agreed by the Company and the Investor, but in any event no later than
December 10, 1997; (ii) the second closing for $500,000 (the "Second Closing")
shall take place (the "Second Closing Date") within three (3) business days
after the Company delivers to BVF, Inc. (the "BVF Representative") * and (iii)
the final closing (the "Final Closing") for $1,500,000 shall take place (the
"Final Closing Date") within three (3) business days after * . Unless stated
otherwise, as hereinafter used the terms Initial Closing, Second Closing and
Final Closing shall be referred to as the "Closing" and the Initial Closing
Date, Second closing Date and Final Closing Date shall be referred to as the
"Closing Date." At each Closing, (a) the Company shall deliver to the Investor
one or more stock certificates registered in their names for an aggregate of
800, 400 and 1,200 Preferred Shares, respectively, against payment to the
Company of the purchase price therefor pursuant to Section 1.4, and (b) the
Company shall deliver to the Investor the applicable portion of the Warrant
registered in their name to purchase the number of shares indicated therein.
3. SECTION 8.2 Section 8.2(b) of the Agreement is hereby deleted in its
entirety and shall be amended to read as follows:
The Investor, jointly and severally, agrees to indemnify the Company and
its shareholders, officers, directors, employees, agents and representatives
against any damages, claims, losses, liabilities and expenses (including
reasonable counsel fees and other expenses) which may be suffered or incurred by
it as a result of any breach of any representation, warranty, or covenant made
by the Investor in this Agreement; provided, however, that in no event shall the
Investor's liability under this Section 8.2(b) for failure to make the payments
required by Section 1.4 exceed the difference between (i) $3 million and (ii)
the aggregate amount of payments made by the Investor pursuant to Section 1.4;
and
4. SECTION 9.2 Section 9.2 of the Agreement is hereby deleted in its
entirety and shall be amended to read as follows:
- --------------------------
*Confidential treatment requested as to certain portions, which portions are
omitted and filed separately with the Commission.
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ENTIRE AGREEMENT. This Agreement, including amendments hereto, exhibits,
or other documents referred to herein, embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior oral or written agreements and understandings
relating to the subject matter hereof. No statement, representation, warranty,
covenant or agreement of any kind not expressly set forth in this Agreement
shall affect, or be used to interpret, change or restrict, the express terms and
provisions of this Agreement.
5. SECTION 9.14. Section 9.14 of the Agreement is hereby deleted in its
entirety and shall be amended to read as follows:
FURTHER ASSURANCES. In case at any time after any Closing any further
action is necessary or desirable to carry out the purposes of this Agreement,
the Company and the Investor will take such further action as the other party
may reasonably request, all at the sole cost and expense of the requesting party
(unless the requesting party is entitled to indemnification therefor under
Article VIII).
6. SCHEDULE 3.4. Schedule 3.4 of the Agreement is hereby deleted in its
entirety and shall be amended to read as follows:
GOVERNMENTAL CONSENTS, ETC. ImmunoGen will file a Form D with the
Securities and Exchange Commission pursuant to the Securities Act of 1933, as
amended, following the Initial Closing.
7. EFFECT OF AMENDMENT. The Agreement, as amended hereby, is ratified and
confirmed, and the undersigned agree and acknowledge that the Agreement as so
amended remains in full force and effect.
8. GOVERNING LAW. This Amendment and the rights and obligations of the
parties hereunder shall be governed by and construed in accordance with the laws
of the Commonwealth of Massachusetts, without giving effect to the conflict of
law principles thereof.
9. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, and by different parties hereto on separate counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the undersigned hereto have executed this Amendment
as of the date first above written.
IMMUNOGEN, INC.
By: /s/ Mitchel Sayare
-------------------
Name: Mitchel Sayare
Title: Chief Executive Officer
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BIOTECHNOLOGY VENTURE
PARTNERS, L.P.
By: BVF Partners L.P., its general partner
By: BVF, Inc. its general partner
By: /s/ Mark N. Lampert
---------------------------------
Mark N. Lampert, President
BIOTECHNOLOGY VALUE FUND, L.P.
By: BVF Partners L.P., its general partner
By: BVF, Inc. its general partner
By: /s/ Mark N. Lampert
---------------------------------
Mark N. Lampert, President
BIOTECHNOLOGY VALUE FUND,
LTD.
By: /s/ Mark N. Lampert
---------------------------------
Mark N. Lampert, Director
INVESTMENT 10 L.L.C.
By: Grosvenor Multi-Strategy Fund, L.P.,
its Member
By: Grosvenor Capital Management, L.P.,
its general partner
By: Grosvenor Capital Management, Inc.,
its general partner
/s/ Paul Meister
------------------------------------
Paul Meister, Vice President
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EXHIBIT 10.4
FORM OF WARRANT CERTIFICATE
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933. THESE SECURITIES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED BY ANY
PERSON UNLESS (1) EITHER (A) A REGISTRATION STATEMENT WITH RESPECT TO SUCH
SECURITIES SHALL BE EFFECTIVE UNDER THE SECURITIES ACT OF 1933, OR (B) THE
COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO IT THAT AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS THEN AVAILABLE, AND (2) THERE
SHALL HAVE BEEN COMPLIANCE WITH ALL APPLICABLE STATE SECURITIES LAWS.
WARRANT CERTIFICATE
DATED [______]
WARRANT TO PURCHASE SHARES OF COMMON STOCK
OF IMMUNOGEN, INC.
No. W[___] For the Purchase of
Shares of Common Stock
IMMUNOGEN, INC., a Massachusetts corporation (the "Company"), hereby
certifies that, for value received, BioChem Pharma Inc., or its registered
assigns (the "Holder"), is the registered owner of a warrant (this "Warrant") to
purchase from the Company a number of shares of the Common Stock, $.01 par value
per share, of the Company (the "Common Stock," each such share being a "Warrant
Share" and all such shares being the "Warrant Shares") determined by dividing
$843,000 by the average of the Per Share Market Value (as defined in Section 10)
for the five (5) consecutive trading days preceding the Exercise Date (the
"Exercise Price"), as adjusted from time to time as provided in Section 7 and
except as provided in Section 3(f). This Warrant may be exercised at any time or
from time to time on or after July 31, 2000 (the "Initial Exercise Date") until
and including July 31, 2002 (the "Expiration Date"), all subject to the
following terms and conditions:
1. REGISTRATION OF WARRANT. The Company shall register this Warrant, upon
records to be maintained by the Company for that purpose, in the name of the
record Holder of this Warrant from time to time. The Company may deem and treat
the registered Holder of this Warrant as the absolute owner thereof for the
purpose of any exercise thereof or any distribution to the Holder thereof, and
for all other purposes, and the Company shall not be affected by the notice to
the contrary.
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2. REGISTRATION OF TRANSFERS AND EXCHANGES.
a. Subject to Section 2(c) below, the Company shall register the transfer
of this Warrant upon records to be maintained by the Company for that purpose,
upon surrender of this Warrant Certificate, with the Form of Assignment attached
hereto duly completed and signed, to the Company at the office specified in or
pursuant to Section 3(c). Upon any such registration of transfer, a new Warrant
Certificate, in substantially the form of this Warrant Certificate, evidencing
the portion of this Warrant so transferred, shall be issued to the transferee
and a new Warrant Certificate, in similar form, evidencing the remaining portion
of this Warrant not so transferred, if any, shall be issued to the then
registered Holder hereof.
b. This Warrant Certificate is exchangeable, upon the surrender hereof by
the Holder hereof at the office of the Company specified in or pursuant to
Section 3(c), for new Warrant Certificates, in substantially the form of this
Warrant Certificate, evidencing in the aggregate the right to purchase the
number of Warrant Shares which may then be purchased hereunder, each of such new
Warrant Certificates to be dated the date of such exchange and to represent the
right to purchase such number of Warrant Shares as shall be designated by said
Holder hereof at the time of such surrender.
c. Each Holder of this Warrant acknowledges that this Warrant is subject
to restrictions on transfer set forth in a Stock Purchase Agreement (the "Stock
Purchase Agreement"), dated as of July 31, 1997 among BioChem Pharma
(International) Inc., the Company and Apoptosis Technology, Inc. ("ATI"), and
agrees to be bound by the restrictions on the sale, pledge, assignment and
transfer of the warrants discussed therein. Each Holder of this Warrant
acknowledges that this Warrant and the Warrant Shares have not been registered
under the Securities Act of 1933, as now in force or hereafter amended, or any
successor legislation (the "Act"), and agrees not to sell, pledge, distribute,
offer for sale, transfer or otherwise dispose of this Warrant or any Warrant
Shares issued upon the exercise of this Warrant in the absence of (a) an
effective registration statement under the Act as to this Warrant or the Warrant
Shares and registration or qualification of this Warrant or the Warrant Shares
under any applicable Blue Sky or state securities law then in effect, or (b) an
opinion of counsel, satisfactory to the Company, that such registration and
qualification are not required under the Act.
Without limiting the generality of the foregoing, the Company shall be
under no obligation to issue the Warrant Shares covered by such exercise unless
and until the Holder shall have executed an investment letter in form and
substance satisfactory to the Company, including a warranty at the time of such
exercise, that the Holder is acquiring the Warrant Shares for its own account,
for investment and not with a view to, or for sale in connection with, the
distribution of any such Warrant Shares, in which event the Holder shall be
bound by the provisions of the following legend or a legend in substantially
similar form which shall be endorsed upon the certificate(s) evidencing the
Warrant Shares issued pursuant to such exercise:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THESE SECURITIES MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED BY ANY PERSON UNLESS (1) EITHER
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(A) A REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES SHALL BE
EFFECTIVE UNDER THE SECURITIES ACT OF 1933, OR (B) THE COMPANY SHALL HAVE
RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO IT THAT AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT IS THEN AVAILABLE, AND (2) THERE SHALL HAVE
BEEN COMPLIANCE WITH ALL APPLICABLE STATE SECURITIES LAWS."
In addition, without limiting the generality of the foregoing, the Company
may delay issuance of the Warrant Shares until the completion of any action or
the receipt of any consent, which the Company deems necessary under any
applicable law (including, without limitation, state securities or "blue sky"
laws).
3. DURATION AND EXERCISE OF WARRANT.
a. This Warrant shall be exercisable by the Holder on any business day
before 5:00 P.M., New York time, at any time and from time to time on or after
the Initial Exercise Date to and including the Expiration Date. At 5:00 P.M.,
New York time, on the Expiration Date, this Warrant shall become void and of no
value.
b. Subject to the limitations set forth in Sections 3(c) and 3(f) and to
the other provisions of this Warrant Certificate, including adjustments to (i)
the number of Warrant Shares issuable on the exercise of this Warrant and (ii)
the Exercise Price pursuant to Section 7, the Holder shall have the right to
purchase from the Company (and the Company shall be obligated to issue and sell
to the Holder) at the Exercise Price, fully paid, non-assessable Warrant Shares.
c. Subject to Sections 2(b), 2(c), 4 and 8, upon surrender of this
Warrant Certificate, with the Form of Election to Purchase attached hereto duly
completed and signed, to the Company at its office at 333 Providence Highway,
Norwood, Massachusetts, 02062 Attention: Treasurer, or at such other address as
the Company may specify in writing to the then registered Holder of this
Warrant, and upon payment of the Exercise Price multiplied by the number of
Warrant Shares then issuable upon exercise of this Warrant (i) in lawful money
of the United States of America or (ii) as provided in Section 3(e) below, all
as specified by the Holder of this Warrant Certificate in the Form of Election
to Purchase, the Company shall promptly issue and cause to be delivered to or
upon the written order of the registered Holder of this Warrant, and in such
name or names as such registered Holder may designate, a certificate for the
Warrant Shares issued upon such exercise of this Warrant. Any person so
designated to be named therein shall be deemed to have become Holder of record
of such Warrant Shares as of the Date of Exercise of this Warrant.
The "Date of Exercise" of this Warrant means the date on which the Company
shall have received (i) this Warrant Certificate, with the Form of Election to
Purchase attached hereto appropriately completed and duly signed, and (ii)
payment of the Exercise Price for this Warrant.
d. The Warrant evidenced by this Warrant Certificate shall be
exercisable, either in its entirety or, from time to time, for part of the
number of Warrant Shares evidenced by this
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Warrant Certificate. If less than all of the Warrant Shares evidenced by this
Warrant Certificate are exercised at any time, the Company shall issue, at its
expense, a new Warrant Certificate, in substantially the form of this Warrant
Certificate, for the remaining number of Warrant Shares evidenced by this
Warrant Certificate.
e. In lieu of the delivery of the full Exercise Price in lawful money of
the United States of America as described in subsection 3(c) above, all or part
of the payment due upon exercise of this Warrant may be made, at the option of
the Holder, by surrendering to the Company shares of Series B Convertible
Preferred Stock of ATI ("ATI Preferred Stock"), such that for each $1,000
otherwise payable in cash, the Holder shall surrender to the Company one share
ATI Preferred Stock.
f. If on the Exercise Date applicable to any exercise of this Warrant,
(i) the Common Stock is then listed for trading on the Nasdaq National Market,
(ii) the Exercise Price then in effect is less than $1.237, (iii) the Company
has not previously obtained Stockholder Approval (as defined below), (iv) the
Company has not obtained a waiver of the Stockholder Approval requirement of
Rule 4460(i) of the Nasdaq Stock Market (or any successor or replacement
provision thereof) ("Rule 4460(i)"), and (v) the Company is required to obtain
Stockholder Approval under Rule 4460(i) as a condition to continued listing on
the Nasdaq Stock Market, then the Company shall issue to the Holder a number of
Common Shares which, together with all Common Shares previously issued upon
exercise of this Warrant or the other warrants issued to the Holder pursuant to
the Stock Purchase Agreement (the "Related Warrants"), will not exceed 4,355,950
(the "Issuable Maximum"). If the Holder is not able to exercise this Warrant in
full because the number of shares otherwise issuable upon exercise of this
Warrant exceeds the Issuable Maximum, the Holder shall be entitled to exercise
this Warrant for shares of the Company's preferred stock ("Preferred Stock")
having the powers, preferences and other terms described in SCHEDULE 1 hereto in
lieu of Warrant Shares, such that for each $1,000 in value that the Holder is
not able to convert into Common Shares, the Holder shall be entitled to exercise
this Warrant to purchase one share of Preferred Stock. "Stockholder Approval"
means the approval by the majority of the total votes cast on the proposal, in
person or by proxy, at a meeting of the stockholders of the Company held in
accordance with the Company's Restated Articles of Organization and By-laws as
then in effect, of the issuance by the Company of shares of Common Stock
exceeding the Issuable Maximum as a consequence of the exercise of this Warrant
and the Related Warrants, as and to the extent required pursuant to
Rule 4460(i).
4. PAYMENT OF TAXES. The Company will pay all documentary stamp taxes
attributable to the issuance of Warrant Shares upon the exercise of this
Warrant; provided, however, that the Company shall not be required to pay any
tax or taxes which may be payable in respect of any transfer involved in the
registration of any stock certificates for Warrant Shares in a name other than
that of the Holder, and the Company shall not be required to issue or deliver
the stock certificates for Warrant Shares unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such
tax has been paid. The Holder shall be responsible for all other tax liability
that may arise as a result of holding or transferring this Warrant or receiving
the Warrant Shares under this Warrant Certificate.
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5. REPLACEMENT OF WARRANT CERTIFICATE. If this Warrant Certificate is
mutilated, lost, stolen or destroyed, the Company may in its discretion issue in
exchange and substitution for and upon cancellation hereof, or in lieu of and
substitution for this Warrant Certificate, a new Warrant Certificate of like
tenor, but only upon receipt of evidence reasonably satisfactory to the Company
of such loss, theft or destruction and indemnity, if requested, satisfactory to
it. Applicants for a substitute Warrant Certificate shall also comply with such
other reasonable regulations and pay such other reasonable charges as the
Company may prescribe.
6. RESERVATION OF WARRANT SHARES. From and after the date that the
stockholders of the Company approve an amendment to the Company's Restated
Articles of Organization, as amended, to increase the Company's authorized
Common Stock to 50,000,000 shares, the Company will at all times reserve and
keep available, free from preemptive rights, out of the aggregate of its
authorized but unissued Common Stock or its authorized and issued Common Stock
held in its treasury, for the purpose of enabling it to satisfy any obligation
to issue Warrant Shares upon exercise of this Warrant, the maximum number of
Warrant Shares (as adjusted from time to time pursuant to Section 7 hereof)
which may then be deliverable upon the exercise of this Warrant.
7. ADJUSTMENT TO THE NUMBER OF WARRANT SHARES ISSUABLE. The number of Warrant
Shares issuable upon the exercise of this Warrant is subject to adjustment from
time to time as set forth in this Section 7. Upon each such adjustment of the
Exercise Price pursuant to this Section 7, the Holder shall thereafter, prior to
the Expiration Date, be entitled to purchase, at the Exercise Price resulting
from such adjustment, the number of Warrant Shares obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by the number of
Warrant Shares issuable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment. In the event the Company and the Holder disagree as to any
adjustment to the Exercise Price hereunder, an Appraiser, selected by the
Holders of a majority in interest of this Warrant and the Related Warrants,
shall give its opinion as to the adjustment, if any (not inconsistent with the
standards established in this Section 7), of the Exercise Price; provided,
however, that the Company, after receipt of the determination by such Appraiser,
shall have the right to promptly select an additional Appraiser, in which case
the adjustment shall be equal to the average of the adjustments recommended by
each such Appraiser. The Board of Directors of the Company (the "Board"), shall
make the adjustment recommended forthwith upon the receipt of such opinion or
opinions; provided further, however, that no such adjustment of the Exercise
Price shall be made which, in the opinion of the Appraiser(s) giving the
aforesaid opinion or opinions, would result in an increase of the Exercise Price
to more than the Exercise Price then in effect.
a. If the Company, at any time while this Warrant is outstanding, (i)
shall pay a stock dividend or otherwise make a distribution or distributions on
shares of Common Stock payable in shares of Common Stock, (ii) subdivide
outstanding shares of Common Stock into a larger number of shares, (iii) combine
outstanding shares of Common Stock into a smaller
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number of shares, or (iv) issue by reclassification of shares of Common Stock
any shares of capital stock of the Company, the Exercise Price shall be
multiplied by a fraction of which the numerator shall be the number of shares of
Common Stock outstanding before such event and of which the denominator shall be
the number of shares of Common Stock outstanding after such event. Any
adjustment made pursuant to this Section 7(a) shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or reclassification.
b. If the Company, at any time while this Warrant is outstanding, shall
distribute to all holders of Common Stock (and not to the Holder) evidences of
its indebtedness or assets or rights or warrants to subscribe for or purchase
any security (excluding those referred to in Section 7(d) hereof), then in each
such case the Exercise Price for which the Warrant Shares shall be purchased
shall be determined by multiplying the Exercise Price in effect immediately
prior to the record date fixed for determination of stockholders entitled to
receive such distribution by a fraction of which the denominator shall be the
Exercise Price determined as of the record date mentioned above, and of which
the numerator shall be the Exercise Price on such record date less the then fair
market value at such record date of the portion of such assets or evidence of
indebtedness so distributed applicable to one outstanding share of Common Stock
as determined by the Board in good faith; provided, however, that in the event
of a distribution exceeding 10% of the net assets of the Company, such fair
market value shall be determined by a nationally recognized or major regional
investment banking firm or firm of independent certified public accountants of
recognized standing (which may be the firm that regularly examines the financial
statements of the Company) (an "Appraiser"), selected in good faith by the
Holders of a majority of the Warrants that are then outstanding; and provided
further, however, that the Company, after receipt of the determination by such
Appraiser shall have the right to select an additional Appraiser, in which case
the fair market value shall be equal to the average of the determinations by
each such Appraiser. In either case, the adjustments shall be described in a
statement provided to the Holder and all other Holders of Related Warrants of
the portion of assets or evidences of indebtedness so distributed or such
subscription rights applicable to one share of Common Stock. Such adjustment
shall be made whenever any such distribution is made and shall become effective
immediately after the record date mentioned above.
c. In case of any reclassification of the Common Stock, any consolidation
or merger of the Company with or into another person, the sale or transfer of
all or substantially all of the assets of the Company or any compulsory share
exchange pursuant to which the Common Stock is converted into other securities,
cash or property, then the Holder shall have the right thereafter to exercise
this Warrant only into the shares of stock and other securities and property
receivable upon or deemed to be held by holders of Common Stock following such
reclassification, consolidation, merger, sale, transfer or share exchange, and
the Holder shall be entitled upon such event to receive such amount of
securities or property as the shares of the Common Stock into which this Warrant
could have been converted immediately prior to such reclassification,
consolidation, merger, sale, transfer or share exchange would have been
entitled. The terms of any such consolidation, merger, sale, transfer or share
exchange shall include such terms so as to continue to give to the Holder the
right to receive the securities or property set forth in this
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Section 7(c) upon any exercise following such consolidation, merger, sale,
transfer or share exchange. This provision shall similarly apply to successive
reclassifications, consolidations, mergers, sales, transfers or share exchanges.
d. If:
i. the Company shall declare a dividend (or any other
distribution) on its Common Stock; or
ii. the Company shall declare a special nonrecurring cash dividend
on or a redemption of its Common Stock; or
iii. the Company shall authorize the granting to all of the holders
of Common Stock, rights or warrants to subscribe for or purchase any
shares of capital stock of any class or of any rights; or
iv. the approval of any stockholders of the Company shall be
required in connection with any reclassification of Common Stock
(other than a subdivision or combination of the outstanding shares of
Common Stock), any consolidation or merger to which the Company is a
party, any sale or transfer of all or substantially all of the assets
of the Company, or any compulsory share exchange whereby Common Stock
is converted into other securities, cash or property; or
v. the Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding-up of the affairs of the Company;
then the Company shall cause to be filed at each office or agency maintained for
the purpose of exercising this Warrant, and shall cause to be mailed to the
Holder, in accordance with Section 10 hereof, at least thirty (30) days prior to
the applicable record or effective date hereinafter specified, a notice stating
(x) the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken,
the date as of which the holders of Common Stock of record to be entitled to
such dividend, distributions, redemption, rights or warrants are to be
determined, or (y) the date on which such reclassification, consolidation,
merger, sale, transfer, share exchange, dissolution, liquidation or winding-up
is expected to become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding-up; provided, however, that the failure to
mail such notice or any defect therein or in the mailing thereof shall not
affect the validity of the corporate action required to be specified in such
notice.
e. In any case in which this Section 7 shall require that an adjustment
be made effective as of the record date for a specified event, the Company may
elect to defer until occurrence of such event (i) issuing to the Holder, if this
Warrant is exercised after such record date, the Warrant Shares and other
capital stock of the Company, if any, issuable upon such exercise over and above
the Warrant Shares and other capital stock of the Company, if any, issuable upon
such
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exercise on the basis of the Exercise Price prior to adjustment and (ii) paying
to the Holder any amount in cash in lieu of a fractional share pursuant to
Section 8 hereof; provided, however, that the Company shall deliver to the
Holder a due bill or other appropriate instrument evidencing the Holder's right
to receive such additional Warrant Shares, other capital stock and/or cash upon
the occurrence of the event requiring such adjustment.
f. Any determination that the Company or the Board must make pursuant to
this Section 7 shall be conclusive if made in good faith.
8. FRACTIONAL SHARES. The Company shall not be required to issue fractional
Warrant Shares on the exercise of this Warrant. The number of full Warrant
Shares which shall be issuable upon the exercise of this Warrant shall be
computed on the basis of the aggregate number of Warrant Shares purchasable on
exercise of this Warrant so presented. If any fraction of a Warrant Share would,
except for the provisions of this Section 8, be issuable on the exercise of this
Warrant, the Company shall pay an amount in cash equal to the Exercise Price
multiplied by such fraction.
9. WARRANT AGENT.
a. The Company shall serve as warrant agent under this Warrant. Upon
thirty (30) days' notice to the Holder, the Company and the Holder may appoint a
new warrant agent. After acceptance in writing of such appointment by the new
warrant agent, the new warrant agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named herein as
the warrant agent, without any further assurance, conveyance, act or deed, but
if for any reason it shall be necessary or expedient to execute and deliver any
further assurance, conveyance, act or deed, the same shall be done at the
expense of the Company and shall be legally and validly executed and delivered
by the Company.
b. Any corporation into which the Company or any new warrant agent may be
merged or any corporation resulting from any consolidation to which the Company
or any new warrant agent shall be a party or any corporation to which the
Company or any new warrant agent transfers substantially all of its corporate
trust or shareholders services business shall be a successor warrant agent under
this Warrant without any further act. Any such successor warrant agent shall
promptly cause notice of its succession as warrant agent to be mailed (by first
class mail, postage prepaid) to the Holder at the Holder's last address as shown
on the register maintained the warrant agent pursuant to this Warrant.
10. NOTICES. All notices or other communications hereunder shall be given, and
shall be deemed duly given and received if given, by facsimile and by mail,
postage prepaid: (1) if to the Company, addressed as follows: IMMUNOGEN, INC.,
333 Providence Highway, Norwood, Massachusetts 02062, Attention: Treasurer, or
to facsimile number: (617) 769-4242; or (ii) if to the Holder, addressed to the
Holder at the facsimile number and address of the Holder appearing on the
warrant register or such other address or facsimile number as the Holder may
provide to the Company in accordance with this Section 10. Any such notice shall
be deemed given and
8
9
effective upon the earliest to occur of (i) receipt of such facsimile at the
facsimile number specified in this Section 10, (ii) five (5) business days after
deposit in the United States mails or (iii) upon actual receipt by the party to
whom such notice is required to be given.
11. PER SHARE MARKET VALUE.
As used in this Warrant, "Per Share Market Value" means on any particular
date (a) the closing sale price per share of the Common Stock on such date on
The Nasdaq National Market or Nasdaq SmallCap Market or other stock exchange on
which the Common Stock has been listed or if there is no such price on such
date, then the closing sale price on such exchange on the date nearest preceding
such date, or (b) if the Common Stock is not listed on The Nasdaq National
Market or Nasdaq SmallCap Market or any stock exchange, the closing sale price
for a share of Common Stock in the over-the-counter market, as reported by the
Nasdaq Stock Market at the close of business on such date, or (c) if the Common
Stock is not quoted on the Nasdaq Stock Market, the closing sale price for a
share of Common Stock in the over-the-counter market as reported by the National
Quotation Bureau Incorporated (or similar organization or agency succeeding to
its functions of reporting prices), or (d) if the Common Stock is not reported
by the National Quotation Bureau Incorporated (or similar organization or agency
succeeding to its functions of reporting prices), then the average of the "Pink
Sheet" quotes for the relevant conversion period, or (e) if the Common Stock is
not publicly traded, the fair market value of a share of Common Stock as
determined by an Appraiser (which shall conduct a good faith appraisal) selected
in good faith by the holders of a majority in interest of the shares of the
Company's Series B Preferred Stock; provided, however, that the Company, after
receipt of the determination by such Appraiser, shall have the right to select
an additional Appraiser (which shall conduct a good faith appraisal), in which
case, the fair market value shall be equal to the average of the determinations
by each such Appraiser.
12. MISCELLANEOUS.
a. This Warrant shall be binding on and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
b. Nothing in this Warrant shall be construed to give to any person or
corporation other than the Company, the Holder and any registered Holder of
Warrant Shares any legal or equitable right, remedy or cause under this Warrant;
this Warrant shall be for the sole and exclusive benefit of the Company, the
Holder and any other registered Holder of Warrant Shares.
c. This Warrant shall be governed by and construed and enforced in
accordance with the internal laws of the Commonwealth of Massachusetts without
regard to the conflict of law principles thereof.
d. The headings herein are for convenience only, do not constitute a part
of this Warrant and shall not be deemed to limit or affect any of the provisions
hereof.
9
10
e. In case any one or more of the provisions of this Warrant shall be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Warrant shall not in any way be affected
or impaired thereby and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
by its authorized officer as of the date first indicated above.
IMMUNOGEN, INC.,
in its corporate capacity and in its
capacity as the warrant agent hereunder
By: _____________________________________
Mitchel Sayare
President and Chief Executive Officer
10
11
FORM OF ELECTION TO PURCHASE
(To Be Executed by the Holder if the Holder Desires to Exercise the Warrant
Evidenced by the Foregoing Warrant Certificate)
To ImmunoGen, Inc.:
The undersigned hereby irrevocably elects to exercise the Warrant evidenced by
the foregoing Warrant Certificate No. W-[___], and to purchase thereunder,
__________ full shares of Common Stock issuable upon exercise of said Warrant
and: __(i) makes payment of $ _______, representing the full purchase price for
such shares at the Exercise Price per share provided for in the Warrant, OR (ii)
elects to purchase the Warrant Shares by means of a "cashless exercise" as
described in Section 3(e) of the Warrant Certificate by surrendering _______
shares of ATI Preferred Stock, OR (iii) makes payment of $_______ in cash and
elects to pay the balance of the Exercise Price for the Warrant Shares by means
of a "cashless exercise" as described in Section 3(e) of the Warrant Certificate
by surrendering _______ shares of ATI Preferred Stock, and makes payment in cash
of any applicable taxes payable by the undersigned pursuant to such Warrant
Certificate.
The undersigned requests that certificates for the Warrant Shares be issued
in the name of __________________________________________
PLEASE INSERT SOCIAL SECURITY
OR TAX IDENTIFICATION NUMBER: __________________________
(PLEASE PRINT NAME AND ADDRESS)
_________________________________________________________
_________________________________________________________
_________________________________________________________
If said number of Warrant Shares shall not be all the Warrant Shares evidenced
by the foregoing Warrant Certificate, the undersigned requests that a new
Warrant Certificate evidencing the Warrant Shares not so exercise be issued in
the name of and delivered to:
(PLEASE PRINT NAME AND ADDRESS)
_________________________________________________________
_________________________________________________________
_________________________________________________________
Name of Holder:
Dated: ______________________
(Print) ___________________________________
By: _______________________________________
Title: ____________________________________
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FORM OF ASSIGNMENT
FOR VALUE RECEIVED, ____________________________ hereby sells, assigns, and
transfers to each assignee set forth below all of the rights of the undersigned
in and to the portion of the Warrant (as defined in and evidenced by the
foregoing Warrant Certificate) set opposite the name of such assignee below and
in and to the foregoing Warrant Certificate with respect to said portion of the
Warrant:
Name Of Assignee Address Number Of Warrant Shares
- ---------------- ------- ------------------------
If the total of said Warrant Shares shall not be all the Warrant Shares
evidenced by the foregoing Warrant Certificate, the undersigned requests that a
new Warrant Certificate evidencing the Warrant Shares not so assigned be issued
in the name of and delivered to the undersigned.
(Please print name and address):
Name of Holder:
Dated: ______________________
(Print) ___________________________________
By: _______________________________________
Title: ____________________________________
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SCHEDULE 1
PREFERRED STOCK TERMS
SECTION 1. DESIGNATION, AMOUNT AND PAR VALUE. The series of ImmunoGen,
Inc. (the "Company") Preferred Stock shall be designated as the [Designation]
Preferred Stock (the "Preferred Stock"), and the number of shares so designated
shall be _____. The par value of each share of Preferred Stock shall be $.01.
Each share of Preferred Stock shall have a stated value of $1,000 per share (the
"Stated Value").
SECTION 2. DIVIDENDS. At all times prior to July 31, 2002, in the event
the Board of Directors of the Company (the "Board"), shall declare a dividend
payable upon the then outstanding shares of common stock, $.01 par value, of the
Company (or stock of any other class into which such shares may hereafter have
been reclassified or changed) ("Common Stock"), the Board shall declare at the
same time a dividend upon the then outstanding shares of the Preferred Stock,
payable at the same time as the dividend paid on the Common Stock, in an amount
equal to the amount of dividends per share of Preferred Stock, as would have
been payable on [the Warrant Shares in lieu of which the shares of Preferred
Stock were issued]. From and after July 31, 2002, the holders of Preferred Stock
shall be entitled to receive a cumulative dividend payable in arrears in cash
quarterly on the last day of each January, April, July and October, commencing
on October 31, 2002 (each, a "Dividend Payment Date"), at a rate per annum
multiplied by the Stated Value equal to the prime rate as announced by the Wall
Street Journal from time to time, such rate to be adjusted automatically on the
effective date of any change in such rate, plus 1%, in preference to dividends
on any Common Stock or any class ranking, as to dividend rights, junior to the
Preferred Stock, and such dividends shall accrue (whether or not declared and
whether or not there shall be funds legally available for the payment of
dividends) without interest, and shall be payable on the Dividend Payment Date.
SECTION 3. VOTING RIGHTS. Except as otherwise provided herein and as
otherwise provided by law, the Preferred Stock shall have no voting rights.
However, so long as any shares of Preferred Stock are outstanding, the Company
shall not, without the affirmative vote of the holders of a majority of the
shares of the Preferred Stock then outstanding, alter or change adversely the
powers, preferences or rights given to the Preferred Stock.
SECTION 4. LIQUIDATION. Upon any liquidation, dissolution or winding-up
of the Company, whether voluntary or involuntary (a "Liquidation"), the holders
of shares of Preferred Stock shall be entitled to receive out of the assets of
the Company available for distribution to holders of the Company's capital
stock, before payment or distribution of any of such assets to the holders of
Common Stock, for each share of Preferred Stock an amount equal to the Stated
Value, plus an amount equal to all declared but unpaid dividends per share,
without interest, and if the assets of the Company shall be insufficient to pay
in full such amounts, then the entire assets to be distributed shall be
distributed among the holders of Preferred Stock ratably in accordance with the
respective amounts that would be payable on such shares if all amounts payable
thereon were paid in full. A sale, conveyance or disposition of all or
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14
substantially all of the assets of the Company or the effectuation by the
Company of a transaction or series of related transactions in which more than
50% of the voting power of the Company is disposed of shall be deemed a
Liquidation. The Company shall mail written notice of any such Liquidation, not
less than 30 days prior to the payment date stated therein, to each record
holder of Preferred Stock.
SECTION 5. CONVERSION. Each share of Preferred Stock shall be convertible
into the number of Warrant Shares in lieu of which the shares of Preferred Stock
were originally issued at any time on or after July 31, 2000 and before July 31,
2007; PROVIDED THAT, on the conversion date, either (A) the Common Stock is not
then listed for trading on the Nasdaq National Market, (B) the Exercise Price
(as defined in the Warrant Certificate) then in effect is greater than $1.237,
(C) the Company has previously obtained Stockholder Approval (as defined in the
Warrant Certificate), (D) the Company has obtained a waiver of the Stockholder
Approval requirement of Rule 4460(i) of the Nasdaq Stock Market (or any
successor or replacement provision thereof) ("Rule 4460(i)"), or (E) the Company
is no longer required to obtain Stockholder Approval under Rule 4460(i) as a
condition to continued listing on the Nasdaq Stock Market.
5
12-MOS
JUN-30-1998
MAR-31-1998
2,270,966
0
0
0
0
3,768,371
14,645,750
12,600,970
6,453,325
1,296,687
0
0
12
253,597
151,052,367
6,453,325
0
417,033
0
0
5,625,308
0
3,635
(5,106,560)
2,337
0
0
0
0
(5,714,376)
(0.24)
(0.24)
