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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, 2000
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, 2000 there were 33,037,659 shares of common stock, par value
$.01 per share, of the registrant outstanding.
Exhibit Index at Page: 22
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IMMUNOGEN, INC.
TABLE OF CONTENTS
Page
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PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements:
a. Condensed Consolidated Balance Sheets as of
March 31, 2000 and June 30, 1999............................ 3
b. Condensed Consolidated Statements of Operations
for the three months and nine months ended
March 31, 2000 and 1999..................................... 4
c. Condensed Consolidated Statements of Stockholders'
Equity for the year ended June 30, 1999 and the
nine months ended March 31, 2000............................ 5
d. Condensed Consolidated Statements of Cash Flows
for the nine months ended March 31, 2000 and 1999........... 6
e. Notes to Condensed Consolidated Financial Statements........ 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 12
Item 3. Quantitative and Qualitative Disclosures about Market Risk.. 17
PART II. OTHER INFORMATION .......................................... 18
SIGNATURES........................................................... 21
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IMMUNOGEN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2000 AND JUNE 30, 1999
(UNAUDITED)
MARCH 31, JUNE 30,
2000 1999
------------ -------------
ASSETS
Cash and cash equivalents................................. $ 2,127,386 $ 4,225,580
Marketable securities..................................... 11,193,647 -
Due from related parties.................................. 857,956 910,108
Current portion of note receivable........................ - 350,000
Prepaid and other current assets.......................... 106,756 57,915
------------ ------------
Total current assets............................... 14,285,745 5,543,603
------------ ------------
Property and equipment, net of accumulated depreciation... 1,458,563 1,583,350
Other assets.............................................. 43,700 43,700
------------ ------------
Total assets.................................... $ 15,788,008 $ 7,170,653
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable.......................................... $ 839,239 $ 869,996
Accrued compensation...................................... 258,940 282,390
Other current accrued liabilities......................... 398,442 528,969
Current portion of deferred lease and
capital lease obligations................................ 62,826 91,911
------------ ------------
Total current liabilities.......................... 1,559,447 1,773,266
------------ ------------
Capital lease obligations................................. 20,309 68,220
------------ ------------
Total liabilities............................... 1,579,756 1,841,486
------------ ------------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value; authorized 5,000,000
shares as of March 31, 2000 and June 30, 1999:
Convertible preferred stock, Series E, $.01 par
value; issued and outstanding 0 and 2,400 shares
as of March 31, 2000 and June 30, 1999,respectively
(liquidation preference - stated value).............. - 24
Common stock, $.01 par value; authorized 50,000,000
shares as of March 31, 2000 and June 30, 1999;
issued and outstanding 33,035,509 and 25,668,797
shares as of March 31, 2000 and June 30 1999,
respectively ........................................... 330,355 256,687
Additional paid-in capital................................ 168,330,397 158,790,821
Accumulated deficit....................................... (154,667,397) (153,718,365)
Accumulated other comprehensive income.................... 214,897 -
------------ ------------
Total stockholders' equity......................... 14,208,252 5,329,167
------------ ------------
Total liabilities and stockholders' equity...... $ 15,788,008 $ 7,170,653
============ ============
The accompanying notes are an integral part of the condensed
consolidated financial statements.
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IMMUNOGEN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND NINE MONTHS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
------------------------ ------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
Revenues:
Revenue earned under collaboration agreement.... - $ 1,000,000 $ 6,500,000 $ 1,000,000
Development fees................................ - 115,310 4,800 377,605
Interest........................................ $ 120,095 45,494 254,184 189,407
Licensing....................................... - 329 485 1,157
----------- ----------- ----------- -----------
Total revenues............................. 120,095 1,161,133 6,759,469 1,568,169
----------- ----------- ----------- -----------
Expenses:
Research and development........................ 2,262,513 1,417,456 5,984,229 4,263,538
General and administrative...................... 689,167 432,287 1,835,445 1 249,417
Interest........................................ 4,134 754 14,265 3,182
----------- ----------- ----------- -----------
Total expenses............................. 2,955,814 1,850,497 7,833,939 5,516,137
----------- ----------- ----------- -----------
Earnings/(loss) from operations................... (2,835,719) (689,364) (1,074,470) (3,947,968)
----------- ----------- ----------- -----------
Gain on the sale of assets...................... 50 - 1,538 4,200
Other income/(expense).......................... 6,000 (800) 48,030 24,480
----------- ----------- ----------- -----------
Net earnings/(loss) before minority interest...... (2,829,669) (690,164) (1,024,902) (3,919,288)
----------- ----------- ----------- -----------
Minority interest in net loss of consolidated
subsidiary..................................... 25,290 25,290 75,870 75,870
----------- ----------- ----------- -----------
Net earnings/(loss)............................... (2,804,379) (664,874) (949,032) (3,843,418)
----------- ----------- ----------- -----------
Non-cash dividends on convertible
preferred stock................................ - - - (917,583)
----------- ----------- ----------- -----------
Net earnings/(loss) to common stockholders........ $(2,804,379) $ (664,874) $ (949,032) $(4,761,001)
=========== =========== =========== ===========
Earnings/(loss) per common share
Basic and Diluted............................... $ (0.09) $ (0.03) $ (0.03) $ (0.19)
=========== =========== =========== ===========
Average common shares outstanding
Basic and Diluted............................... 32,051,859 25,514,229 28,356,336 25,497,183
=========== =========== =========== ===========
The accompanying notes are an integral part of the condensed
consolidated financial statements.
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IMMUNOGEN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED JUNE 30, 1999 AND THE NINE MONTHS ENDED MARCH 31, 2000
(UNAUDITED)
ACCUMULATED
COMMON STOCK PREFERRED STOCK ADDITIONAL OTHER TOTAL
-------------------- ---------------- PAID-IN ACCUMULATED COMPREHENSIVE STOCKHOLDERS'
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT INCOME EQUITY
---------- -------- ------- ------- ------------ ------------- ------------- ------------
Balance at June 30, 1998....... 25,419,552 $254,195 1,200 $ 12 $152,782,585 $(148,725,822) $ - $ 4,310,970
========== ======== ======= ======= ============ ============= ============= ============
Comprehensive loss:
Net loss..................... - - - - - (4,074,960) - (4,074,960)
------------
Comprehensive loss........... - - - - - - - (4,074,960)
Issuances of Common Stock...... 174,245 1,742 - - 313,545 - - 315,287
Issuance of Series E
Convertible Preferred Stock,
net of financing costs........ - - 1,200 12 1,495,193 - - 1,495,205
Issuance of Common Stock in
exchange for Series E
Preferred Stock placement
services...................... 75,000 750 - - (750) - - -
Value of Common Stock
purchase warrants issued...... - - - - 917,583 - - 917,583
Compensation for stock
option vesting acceleration
for retired director.......... - - - - 13,275 - - 13,275
Value ascribed to ImmunoGen
warrants issued to BioChem,
net of financing costs........ - - - - 3,269,390 - - 3,269,390
Non-cash dividends on
convertible preferred stock... - - - - - (917,583) - (917,583)
---------- -------- ------- ------- ------------ ------------- ------------- ------------
Balance at June 30, 1999....... 25,668,797 $256,687 2,400 $ 24 $158,790,821 $(153,718,365) $ - $ 5,329,167
========== ======== ======= ======= ============ ============= ============= ============
Comprehensive loss:
Net loss..................... - - - - - (949,032) - (949,032)
Unrealized gains on
marketable securities, net.. - - - - - - 214,897 214,897
------------
Comprehensive loss............. - - - - - - - (734,135)
Issuance of Common Stock....... 4,543,184 45,432 - - 7,101,239 - - 7,146,671
Conversion of Series E
Convertible Preferred Stock
into Common Stock............ 2,823,528 28,236 (2,400) (24) (28,212) - - -
Tax benefit from stock options
exercised..................... - - - - 13,419 - - 13,419
Value ascribed to ImmunoGen
warrants issued to BioChem,
net of financing costs........ - - - - 2,453,130 - - 2,453,130
---------- -------- ------- ------- ------------ ------------- ------------- ------------
Balance at March 31, 2000...... 33,035,509 $330,355 - $ - $168,330,397 $(154,667,397) $ 214,897 $ 14,208,252
========== ======== ======= ======= ============ ============= ============= ============
The accompanying notes are an integral part of the condensed
consolidated financial statements.
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IMMUNOGEN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED)
NINE MONTHS ENDED
MARCH 31,
-------------------------
2000 1999
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings/(loss) to common stockholders.......... $ (949,032) $(4,761,001)
Adjustments to reconcile net loss to net cash
used for operating activities:
Depreciation and amortization..................... 367,574 444,803
Gain on sale of property and equipment............ (1,538) (4,200)
Interest earned on note receivable................ - (67,439)
Compensation for stock option vesting
acceleration for retired director................ - 13,275
Tax benefit from stock options exercised.......... 13,419 -
Non-cash dividend on convertible preferred stock.. - 917,583
Minority interest in net loss of consolidated
subsidiary....................................... (75,870) (75,870)
Amortization of deferred lease.................... (35,172) (39,572)
Changes in operating assets and liabilities:
Due from related parties......................... 52,152 53,047
Prepaid and other current assets................. (48,841) (5,359)
Accounts payable................................. (30,757) 14,310
Accrued compensation............................. (23,450) (54,065)
Other current accrued liabilities................ (130,527) (53,476)
----------- -----------
Net cash used for operating activities....... (862,042) (3,617,964)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments received on note receivable............... 350,000 610,000
Purchase of marketable securities.................. (12,172,990) -
Proceeds from maturities of marketable securities.. 1,194,240 -
proceeds from sale of property and equipment....... 1,795 4,200
Capital expenditures............................... (243,044) (18,570)
----------- -----------
Net cash (used for) provided by investing
activities.................................. (10,869,999) 595,630
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Common Stock issuances............................. 7,146,671 99,199
Proceeds from convertible preferred stock, net..... - 1,495,205
Proceeds from issuance of subsidiary
convertible preferred stock, net.................. 2,529,000 2,527,550
Principal payments on capital lease obligations.... (41,824) -
----------- -----------
Net cash provided by financing activities.... 9,633,847 4,121,954
----------- -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS.............. (2,098,194) 1,099,620
----------- -----------
CASH AND CASH EQUIVALENTS, BEGINNING BALANCE......... 4,225,580 1,741,825
----------- -----------
CASH AND CASH EQUIVALENTS, ENDING BALANCE............ $ 2,127,386 $ 2,841,445
=========== ===========
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITIES:
Due from related party for quarterly investment
payment........................................... $ 843,000 $ 843,000
=========== ===========
Issuance of Common Stock in exchange for
Series E Preferred Stock placement services....... $ - $ 107,812
=========== ===========
The accompanying notes are an integral part of the condensed
consolidated financial statements.
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IMMUNOGEN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
ImmunoGen, Inc. ("ImmunoGen" or the "Company") was incorporated in
Massachusetts in 1981 to develop, produce and market commercial anti-cancer and
other pharmaceuticals based on molecular immunology. The Company continues to
research and develop its various products and technologies, and does not expect
to derive revenue from commercially approved product sales within the
foreseeable future. It is anticipated that the Company's existing capital
resources, enhanced by collaborative agreement funding, will enable current and
planned operations to be maintained through at least the next twelve-month
period. However, if the Company is unable to achieve subsequent milestones under
its collaborative agreements (see Notes B and E), the Company may be required to
pursue additional strategic partners, secure alternative financing arrangements
and/or defer or limit some or all of its research, development and/or clinical
projects.
The Company is subject to risks common to companies in the biotechnology
industry including, but not limited to, the development by the Company or its
competitors of new technological innovations, dependence on key personnel,
protection of proprietary technology, manufacturing and marketing limitations,
collaboration arrangements, third-party reimbursements, the need to obtain
additional funding, and compliance with governmental regulations.
BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements at March 31,
2000 and June 30, 1999 and for the three-month and nine-month periods ended
March 31, 2000 and 1999 include the accounts of the Company and its
subsidiaries, ImmunoGen Securities Corp. and Apoptosis Technology, Inc. ("ATI").
Although the condensed consolidated financial statements are unaudited, they
include all of the adjustments, consisting only of normal recurring adjustments,
which management considers necessary for a fair presentation of the Company's
financial position in accordance with generally accepted accounting principles
for interim financial information. Certain information and footnote disclosures
normally included in the Company's annual financial statements have been
condensed or omitted. The preparation of interim financial statements requires
the use of management's estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the interim financial statements and the reported
amounts of revenues and expenditures during the reported period. The Company has
been unprofitable since inception and expects to incur significant research and
development expenses that may result in a net loss for the fiscal year ended
June 30, 2000. The results of the interim periods are not necessarily indicative
of the results for the entire year. Accordingly, the interim financial
statements should be read in conjunction with the audited financial statements
and notes thereto included in the Company's Annual Report on Form 10-K for the
year ended June 30, 1999.
ACCOUNTING PROUNCEMENTS
In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin 101 ("SAB 101"), "Revenue Recognition in Financial
Statements," which provides guidance related to revenue recognition based on
interpretations and practices followed by the SEC. The effective date of this
bulletin was deferred to no later than the second fiscal quarter beginning after
December 31, 1999. SAB 101 requires companies to report any changes in revenue
recognition as a cumulative change in accounting principle at the time of
implementation in accordance with Accounting Principles Board Opinion No. 20,
"Accounting Changes." The Company is currently in the process of evaluating the
impact, if any, that SAB 101 will have on its financial position or results of
operations.
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In March 2000, the Financial Accounting Standards Board issued FASB
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation - an interpretation of APB Opinion No. 25" ("FIN 44"). FIN 44
clarifies the application of APB Opinion No. 25 and among other issues clarifies
the following: the definition of an employee for purposes of applying APB
Opinion No. 25; the criteria for determining whether a plan qualifies as a
noncompensatory plan; the accounting consequence of various modifications to the
terms of previously fixed stock options or awards; and the accounting for an
exchange of stock compensation awards in a business combination. FIN 44 is
effective July 1, 2000, but certain conclusions in FIN 44 cover specific events
that occurred after either December 15, 1998 or January 12, 2000. The Company
does not expect the application of FIN 44 to have a material impact on the
Company's financial position or results of operations.
CASH AND CASH EQUIVALENTS
The Company considers all investments purchased with maturity dates of
three months or less from the date of acquisition to be cash equivalents.
MARKETABLE SECURITIES
In accordance with the Company's investment policy, surplus cash is
invested in investment-grade corporate and U.S. Government debt securities
typically with maturity dates of less than one year. The Company determines the
appropriate classification of marketable securities at the time of purchase and
reevaluates such designation as of each balance sheet date. Marketable
securities which meet the criteria for classification as available-for-sale are
carried at fair value based on quoted market prices. Net unrealized gains and
losses are reported as comprehensive income within shareholders' equity. The
cost of debt securities is adjusted for amortization of premiums and accretion
of discounts to maturity with all amortization/accretion included in interest
income.
As of June 30, 1999, $4,225,580 in cash and overnight government repurchase
agreements were classified as cash and cash equivalents. The Company's cash,
cash equivalents and marketable securities as of March 31, 2000 are as follows:
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
----------- ---------- ---------- ----------
Cash and money market funds.... $ 2,127,386 $ - $ - $ 2,127,386
Commercial paper............... 6,330,150 216,800 (30) 6,546,920
Government treasury notes...... 4,648,600 270 (2,143) 4,646,727
----------- ---------- ---------- -----------
Total........................ 13,106,136 217,070 (2,173) 13,321,033
Less amounts classified as
cash and cash equivalents..... (2,127,386) - - (2,127,386)
----------- ---------- ---------- -----------
Total marketable securities.. $10,978,750 $ 217,070 $ (2,173) $11,193,647
=========== ========== ========== ===========
No realized gains or losses on available-for-sale securities were
recognized during the three-month and nine-month periods ended March 31, 2000.
COMPUTATION OF LOSS PER COMMON SHARE
Basic and diluted earnings/(loss) per share is calculated based upon the
weighted average number of common shares outstanding during the period. Diluted
earnings per share incorporates the dilutive effect of stock options, warrants
and other convertible securities. As of March 31, 2000 and 1999, the total
number of stock options, warrants and other securities convertible into
ImmunoGen Common Stock, as calculated in accordance with the treasury-stock
accounting method, equaled 5,009,091 and 7,198,981, respectively. Components of
calculating net earnings/(loss) per share are set forth in the following table:
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NINE MONTHS ENDED
MARCH 31,
--------------------------
2000 1999
----------- -----------
Net earnings/(loss) to common shareholders..... $ (949,032) $(4,761,001)
=========== ===========
Weighted average common shares
outstanding, basic........................... 28,356,336 25,497,183
Net effect of dilutive instruments:
Convertible preferred stock................. 927,083 6,269,307
Options..................................... 2,289,142 783,381
Warrants.................................... 1,792,866 146,293
----------- -----------
Weighted average common shares
outstanding, diluted......................... 33,365,427 32,696,164
=========== ===========
Earnings/(loss) per common share, basic....... $ (0.03) $ (0.19)
=========== ===========
Earnings/(loss) per common share, dilutive *.. $ (0.03) $ (0.19)
=========== ===========
* The dilutive effects of common stock equivalents were not included in
either March 31, 2000 or 1999 calculation, as their effect was antidilutive.
COMPREHENSIVE INCOME
The Company presents comprehensive income in accordance with Statement of
Financial Accounting Standard No. 130, "Reporting Comprehensive Income." For the
nine-month period ended March 31, 2000, comprehensive income totaled $214,897.
No comprehensive income was recorded in the nine-month period ended March 31,
1999. Accumulated other comprehensive income is comprised entirely of unrealized
gains recognized on available-for-sale debt securities.
B. AGREEMENTS
In February 1999, the Company entered into an exclusive license agreement
with SmithKline Beecham plc, London and SmithKline Beecham, Philadelphia
(collectively, "SB") to develop and commercialize ImmunoGen's lead tumor
activated prodrug ("TAP"), huC242-DM1/SB-408075 (the "SB Agreement"). Under the
terms of the agreement, the Company could receive up to a total of $41.5
million, subject to the achievement by the Company of predetermined,
nonrefundable scientific and/or regulatory milestones. The Company is also
entitled to receive royalty payments on future product sales, if and when they
commence.
Under a separate Stock Purchase Agreement, ImmunoGen was also granted the
right to sell up to $5.0 million of ImmunoGen Common Stock to SB in two separate
transactions, subject to certain conditions (the "put options"). On September 1,
1999, the Company exercised the first of these two put options and issued
1,023,039 shares of Common Stock to SB in exchange for $2.5 million.
The SB Agreement is expected to provide the Company with sufficient cash
funding to carry out its responsibilities in developing huC242-DM1/SB-408075. To
that end, the Company is responsible for costs associated with the currently
ongoing huC242-DM1/SB-408075 clinical study, which was initiated in December
1999. All costs subsequent to this clinical study will be the responsibility of
SB. The SB Agreement, assuming milestones continue to be achieved under the
Agreement, is also expected to provide enough additional funding to help
subsidize further development of the Company's other current and planned
research and development efforts. As of March 31, 2000, the Company had
recognized four milestones under the SB Agreement, resulting in $9.5 million in
collaboration revenue. Pursuant to the SB Agreement, these payments represented
nonrefundable, unrestricted cash transfers where no future obligation to perform
exists.
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C. MINORITY INTEREST
In July 1997, ATI entered into a collaboration agreement with BioChem
Pharma Inc. ("BioChem"), a large Canadian biopharmaceutical company. This
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. As of April 2000, BioChem
has fulfilled all of its funding obligations under the agreement by purchasing a
total of $11.125 million in non-voting, non-dividend-bearing convertible
preferred stock of ATI.
In April 2000, BioChem informed ATI of its decision not to extend the
agreement beyond its scheduled July 31, 2000 termination date. Consequently,
under the terms of the agreement, rights to all screens delivered to BioChem
will revert to ATI effective August 1, 2000. However, certain provisions
pertaining to the license of any products resulting from the collaboration will
remain in force. Although no compound leads have yet been identified, should a
product candidate result, BioChem remains obligated to make milestone payments
up to $15.0 million for each product over the course of its development. In
addition, if and when product sales commence, ATI will receive royalties on any
future worldwide sales of products resulting from the collaboration. Until July
31, 2000, all remaining proceeds of the $11.125 million BioChem investment in
ATI are restricted to support the research and development activities of the
collaboration. After that date, all residual proceeds will represent
unrestricted assets of ATI. Of the Company's $13.3 million in cash, cash
equivalents and marketable securities as of March 31, 2000, $1.5 million
represents funds restricted to support ATI's research and development activities
under the BioChem agreement.
The preferred stock issued to BioChem is convertible into ATI common stock
at any time after three years from the date of first issuance, 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. Through March 31, 2000, 11,125 shares of ATI
preferred stock were issued or issuable to BioChem, representing a 15% minority
interest (on an if-converted and fully-diluted basis) in the net equity of ATI.
This minority interest portion of ATI's loss reduced ImmunoGen's net loss in
each of the nine-month periods ended March 31, 2000 and 1999 by $75,870. Based
upon an independent appraisal, approximately 3% of the $11.125 million invested
to date, or approximately $334,000, has been allocated to the minority interest
in ATI, with the remainder, or approximately $10.791 million allocated to the
Company's equity.
As part of the BioChem agreement, BioChem also received warrants to
purchase shares of ImmunoGen Common Stock equal to the amount invested in ATI
during the three-year research term. Beginning July 31, 2000, these warrants
will be exercisable for a number of shares of ImmunoGen Common Stock determined
by dividing $11.125 million, the amount of BioChem's investment in ATI, by the
market price of ImmunoGen Common Stock on the exercise date, subject to certain
limitations imposed by the Nasdaq Stock Market rules, which limit the sale or
issuance by an issuer of certain securities at a price less than the greater of
book or market value. Consequently, BioChem's ability to convert all of its
ImmunoGen warrants into ImmunoGen Common Stock is limited to a total of 20% of
the number of shares of ImmunoGen's Common Stock outstanding on the date of the
initial transaction to the extent that the conversion price would be less than
the market price of ImmunoGen Common Stock on that date, unless stockholder
approval for such conversion is obtained, if required, or unless the Company has
obtained a waiver of that requirement. The exercise price is payable in cash or
shares of ATI's 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 such event, ImmunoGen expects that BioChem will use
its shares of ATI preferred stock, in lieu of cash, to exercise the warrants.
D. CAPITAL STOCK
In January 2000, holders of the Company's Series E Convertible Preferred
Stock ("Series E Stock") exercised their right to convert all 2,400 shares of
Series E Stock into 2,823,528 shares of the Company's Common Stock.
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In February 2000, a holder of warrants originally issued in connection with
a private placement of the Company's Series A Convertible Preferred Stock
exercised his right to acquire 50,000 shares of Common Stock at $3.11 per share.
Proceeds from this warrant exercise will be used to fund current operations.
In February and March 2000, holders of warrants originally issued in
connection with a private placement of the Company's Series B Convertible
Preferred Stock exercised their rights to acquire 239,069 and 5,000 shares of
Common Stock at $3.68 per share and $5.49 per share, respectively. Proceeds from
these warrant exercises will be used to fund current operations.
Between January and March 2000, holders of warrants originally issued in
connection with a private placement of the Company's Series C Convertible
Preferred Stock exercised their rights to acquire 654,368 shares of Common Stock
at $2.31 per share. Proceeds from these warrant exercises will be used to fund
current operations.
In January 2000, holders of warrants originally issued in connection with a
private placement of the Company's Series D Convertible Preferred Stock
exercised their rights to acquire 427,272 shares of Common Stock at $1.94 per
share. Proceeds from these warrant exercises will be used to fund current
operations.
During the three-month period ended March 31, 2000, holders of options
issued through the Company's 1986 Incentive Stock Option Plan, as amended,
exercised their rights to acquire an aggregate of 111,750 shares at prices
ranging from $0.84 per share to $11.25 per share. The total proceeds from these
option exercises, $204,058, will be used to fund current operations.
In July 1997, the Company's majority-owned subsidiary, ATI, entered into a
collaboration with BioChem. As part of the agreement, BioChem received warrants
to purchase shares of ImmunoGen Common Stock equal to $11.125 million, the
amount invested in ATI by BioChem during the 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 ImmunoGen Common Stock
determined by dividing $11.125 million by the market price of the ImmunoGen
Common Stock on the exercise date, subject to certain limitations. As of March
31, 2000, the last quarterly investment of $843,000 was due to ATI. In April
2000, this amount due was received and warrants corresponding to that amount
were issued. Until July 31, 2000, proceeds from this investment are restricted
to fund the ongoing ATI research collaboration.
E. SUBSEQUENT EVENTS
In May 2000, the Company executed two separate licensing agreements with
Genentech, Inc. of South San Francisco, California. The first agreement grants
an exclusive license to Genentech for ImmunoGen's maytansinoid tumor-activated
prodrug (TAP) for use with antibodies such as Herceptin(R). Under the terms of
the agreement, Genentech will receive exclusive worldwide rights to
commercialize anti-HER2 targeting products using ImmunoGen's maytansinoid TAP
platform. Genentech will be responsible for manufacturing, product development
and marketing of any products resulting from the agreement; ImmunoGen will be
reimbursed for any preclinical and clinical materials that it makes under the
agreement. ImmunoGen is due a $2.0 million non-refundable, up-front payment for
execution of the agreement, for which no further performance is required. In
addition to royalties on net sales, the terms of the agreement include
achievement-based milestone payments, assuming all benchmarks are met, for
potentially up to $40.0 million.
In addition to the Herceptin(R) agreement described above, the Company
announced in May 2000 that it has entered into an additional agreement with
Genentech. This second collaboration provides Genentech with broad access to
ImmunoGen's maytansinoid TAP technology for use with Genentech's proprietary
antibodies. The multi-year agreement provides Genentech with a license to
utilize ImmunoGen's maytansinoid TAP platform in its antibody product research
efforts and an option to obtain product licenses for a limited number of antigen
targets over the agreement's five-year term. This agreement provides for an
up-front technology access fee of $3.0 million, potential milestone payments
- --assuming benchmarks are met--of up to nearly $40.0 million per antigen target,
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and royalties on net sales of resulting products. Genentech will be responsible
for manufacturing, product development and marketing of any products developed
through this collaboration; ImmunoGen will be reimbursed for any preclinical
materials that it makes under the agreement. The agreement can be renewed for
one subsequent three-year period, for an additional technology access fee.
Also in May 2000, the Company entered into a development, commercialization
and license agreement with British Biotech Pharmaceuticals Limited ("British
Biotech"), a biotechnology company located in Oxford, England, to develop and
commercialize the Company's huN901-DM1 TAP for the treatment of small-cell lung
cancer. The agreement grants British Biotech exclusive rights to develop and
commercialize huN901-DM1 in the European Union and Japan. The Company retains
the rights to commercialize huN901-DM1 in the United States and the rest of the
world, as well as the right to manufacture the product worldwide. Under the
terms of the agreement, British Biotech will be responsible for conducting the
clinical trials necessary to achieve marketing approval in the United States,
European Union and Japan. ImmunoGen is responsible for the remaining preclinical
development, and will be reimbursed for manufacturing the product for clinical
trials. British Biotech paid an up-front fee of $1.5 million for its territorial
rights. Upon approval of the product for marketing in the United States, the
Company will pay to British Biotech a one-time milestone payment. ImmunoGen will
receive royalties on sales of huN901-DM1 in the European Union and Japan.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
Since inception, ImmunoGen has been principally engaged in the research and
development of immunoconjugate products which the Company believes have
significant commercial potential as human therapeutics. The Company's 97%-owned
subsidiary, Apoptosis Technology, Inc. ("ATI"), focuses its efforts on the
discovery and development of anti-cancer and anti-viral therapeutics based upon
regulation of programmed cell death, or apoptosis.
In February 1999, the Company entered into an exclusive license agreement
with SmithKline Beecham plc, London and SmithKline Beecham, Philadelphia
(collectively, "SB") to develop and commercialize ImmunoGen's lead tumor
activated prodrug ("TAP"), huC242-DM1/SB-408075, for the treatment of
colorectal, pancreatic and non-small-cell lung cancers (the "SB Agreement"). In
December 1999, the Company began a single-dose human clinical study of
huC242-DM1/SB-408075. The start of this clinical study triggered a $2.5 million
milestone payment to ImmunoGen, which represented the fourth milestone to be
achieved in ImmunoGen's collaboration with SB to date. Through March 31, 2000,
the Company received $12.0 million under the SB Agreement - $9.5 million in
milestone-based collaborative agreement revenue and $2.5 million upon issuance
of ImmunoGen Common Stock to SB.
In May 2000, the Company executed two separate licensing agreements with
Genentech, Inc. of South San Francisco, California. The first agreement grants
an exclusive license to Genentech for ImmunoGen's maytansinoid tumor-activated
prodrug (TAP) for use with antibodies such as Herceptin(R). Under the terms of
the agreement, Genentech will receive exclusive worldwide rights to
commercialize anti-HER2 targeting products using ImmunoGen's maytansinoid TAP
platform. Genentech will be responsible for manufacturing, product development
and marketing of any products resulting from the agreement; ImmunoGen will be
reimbursed for any preclinical and clinical materials that it makes under the
agreement. ImmunoGen is due a $2.0 million non-refundable, up-front payment for
execution of the agreement, for which no further performance is required. In
addition to royalties on net sales, the terms of the agreement include
achievement-based milestone payments, assuming all benchmarks are met, for
potentially up to $40.0 million.
In addition to the Herceptin(R) agreement described above, the Company
announced in May 2000 that it has entered into an additional agreement with
Genentech. This second collaboration provides Genentech with broad access to
ImmunoGen's maytansinoid TAP technology for use with Genentech's proprietary
antibodies. The multi-year agreement provides Genentech with a license to
utilize ImmunoGen's maytansinoid TAP platform in its antibody product research
efforts and an option to obtain product licenses for a limited number of antigen
targets over the agreement's five-year term. This agreement provides for an
up-front technology access fee of $3.0 million, potential milestone payments
- --assuming benchmarks are met--of up to nearly $40.0 million per antigen target,
and royalties on net sales of resulting products. Genentech will be responsible
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for manufacturing, product development and marketing of any products developed
through this collaboration; ImmunoGen will be reimbursed for any preclinical
materials that it makes under the agreement. The agreement can be renewed for
one subsequent three-year period, for an additional technology access fee.
Also in May 2000, the Company entered into a development, commercialization
and license agreement with British Biotech Pharmaceuticals Limited ("British
Biotech"), a biotechnology company located in Oxford, England, to develop and
commercialize the Company's huN901-DM1 TAP for the treatment of small-cell lung
cancer. The agreement grants British Biotech exclusive rights to develop and
commercialize huN901-DM1 in the European Union and Japan. The Company retains
the rights to commercialize huN901-DM1 in the United States and the rest of the
world, as well as the right to manufacture the product worldwide. Under the
terms of the agreement, British Biotech will be responsible for conducting the
clinical trials necessary to achieve marketing approval in the United States,
European Union and Japan. ImmunoGen is responsible for the remaining preclinical
development, and will be reimbursed for manufacturing the product for clinical
trials. British Biotech paid an up-front fee of $1.5 million for its territorial
rights. Upon approval of the product for marketing in the United States, the
Company will pay to British Biotech a one-time milestone payment. ImmunoGen will
receive royalties on sales of huN901-DM1 in the European Union and Japan.
As of March 31, 2000, the Company had approximately $13.3 million in cash
and cash equivalents. In addition, in May 2000, an additional $7.35 million was
received from the following sources: $5.0 million from Genentech, $1.5 million
from British Biotech, and $843,000 from BioChem. No revenues have been generated
from product sales and the Company does not anticipate having a commercially
approved product within the foreseeable future. Research and development
expenses are expected to increase significantly in the near term as the Company
continues its development efforts. Moreover, the Company expects to spend
approximately $2.0 million to upgrade its development and pilot manufacturing
facility in Norwood, Massachusetts. It is anticipated that the increase in total
cash expenditures will be offset by collaboration-derived proceeds. Accordingly,
period-to-period operational results may fluctuate dramatically. The Company
believes that its established collaborative agreements, while subject to
specified milestone achievements, will provide funding sufficient to allow it to
meet its obligations under all collaborative agreements while also allowing the
aggressive development of those product candidates and technologies outside
current collaborative agreements. However, no assurances can be given that such
collaborative agreement funding will, in fact, be realized. Should the Company
not meet some or all of the terms and conditions of its various collaboration
agreements, it may be required to pursue additional strategic partners, secure
alternative financing arrangements, and/or defer or limit some or all of its
research, development and/or clinical projects.
ACCOUNTING PROUNCEMENTS
In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin 101 ("SAB 101"), "Revenue Recognition in Financial
Statements," which provides guidance related to revenue recognition based on
interpretations and practices followed by the SEC. The effective date of this
bulletin was deferred to no later than the second fiscal quarter beginning after
December 31, 1999. SAB 101 requires companies to report any changes in revenue
recognition as a cumulative change in accounting principle at the time of
implementation in accordance with Accounting Principles Board Opinion No. 20,
"Accounting Changes." The Company is currently in the process of evaluating the
impact, if any, that SAB 101 will have on its financial position or results of
operations.
In March 2000, the Financial Accounting Standards Board issued FASB
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation - an interpretation of APB Opinion No. 25" ("FIN 44"). FIN 44
clarifies the application of APB Opinion No. 25 and among other issues clarifies
the following: the definition of an employee for purposes of applying APB
Opinion No. 25; the criteria for determining whether a plan qualifies as a
noncompensatory plan; the accounting consequence of various modifications to the
terms of previously fixed stock options or awards; and the accounting for an
exchange of stock compensation awards in a business combination. FIN 44 is
effective July 1, 2000, but certain conclusions in FIN 44 cover specific events
that occurred after either December 15, 1998 or January 12, 2000. The Company
does not expect the application of FIN 44 to have a material impact on the
Company's financial position or results of operations.
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RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
Revenues
Revenues for the three-month period ended March 31, 2000 ("2000") were
$120,000 compared with $1.16 million for the three-month period ended March 31,
1999 ("1999"). The significant decrease in revenues from 1999 to 2000 is
primarily attributable to the timing of milestone payments received in
connection with the Company's collaboration with SB. During the third quarter of
1999, the Company recorded a $1.0 million SB agreement-signing milestone; no
collaboration-related revenue was recognized during the three months ended March
31, 2000. Additional substantial collaboration revenues will be earned if the
Company achieves the predetermined milestones set forth in the respective SB,
Genentech and British Biotech agreements. Accordingly, historically recognized
collaboration revenues should not be used as indicators of the timing or extent
of future milestone payments, and the recognition of such milestones will cause
period-to-period results to fluctuate dramatically.
In the three-month period ended March 31, 1999, revenues of $115,000 were
also derived from development fees received under the Small Business Innovation
Research Program ("SBIR") of the National Cancer Institute. As of July 1999, all
funds available under authorized SBIR programs had been recognized and received.
Accordingly, no material development fees are expected to be earned through the
remainder of fiscal year 2000.
Interest income was $120,000 in 2000 compared to $45,000 in 1999. The
increase in interest income from 1999 to 2000 primarily resulted from the
increase in funds available for investment.
Research and Development Expenses
Research and development expenses, which constituted the principal
component of the Company's total operational expenditures (77% in both quarters
ended March 31, 2000 and 1999), were $2.26 million in 2000 compared to $1.42
million in 1999. The $840,000, or 59%, increase from 1999 to 2000 was primarily
due to increased costs associated with the development and manufacturing of
huC242-DM1/SB-408075 clinical components, as well as the further preclinical
development of huN901-DM1. Future research and development expenses are expected
to significantly increase in connection with the Company's ongoing initial
clinical study of huC242-DM1/SB-408075. The Company also anticipates additional
development costs will result from both the advancement of huN901-DM1 toward
human clinical trials as well as the development of other TAP product
candidates.
General and Administrative Expenses
General and administrative expenses were $689,000 in 2000 compared to
$432,000 in 1999. The $257,000, or 59%, increase was primarily due to increased
administrative and business development staffing, as well as increased
expenditures associated with investor relations, business development and the
Company's information system. Future general and administrative expenses are
also expected to increase congruently with the continued development of the
Company's product candidates and technologies.
Minority Interest
ATI operating losses of $25,290 in each of the three-month periods ended
March 31, 2000 and 1999 were allocated to ATI's minority stockholder within the
Company's condensed consolidated financial statements.
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NINE MONTHS ENDED MARCH 31, 2000 AND 1999
Revenues
Revenues for the nine months ended March 31, 2000 ("2000") were $6.76
million, compared with $1.57 million for the nine months ended March 31, 1999
("1999"). The significant increase in revenues from 1999 to 2000 is primarily
attributable to the $6.5 million in milestone payments recognized as
collaboration revenue under the SB Agreement in 2000 compared with $1.0 million
recognized in 1999. The collaboration revenues recognized in 2000 were comprised
of the following: $4.0 million on acceptance by the United States Food and Drug
Administration of the Company's Investigational New Drug application for
huC242-DM1/SB408075, and $2.5 million on initiation of the currently ongoing
clinical study. The 1999 collaboration revenue represented a $1.0 million
agreement-signing milestone.
In 1999, revenues of $378,000 were also derived from development fees
received under the SBIR grant program. As of July 1999, all funds available
under authorized SBIR programs had been received. Accordingly, no material
development fees are expected to be earned through the remainder of fiscal year
2000.
Interest income was $254,000 in 2000 compared to $189,000 in 1999. The
increase in interest income from 1999 to 2000 primarily resulted from the
increase in funds available for investment.
Research and Development Expenses
Research and development expenses were $5.98 million in 2000 compared to
$4.26 million in 1999. The $1.72 million, or 40%, increase from 1999 to 2000 is
due to the increased costs associated with supporting the Company's currently
ongoing huC242-DM1/SB-408075 human clinical trial, as well as the continued
development of huN901-DM1 in advance of human clinical studies.
General and Administrative Expenses
General and administrative expenses were $1.84 million in 2000 compared to
$1.25 million in 1999. Similar to the results for the three months ended March
31, 2000 and 1999, the $590,000, or 47%, increase was primarily due to increased
administrative and business development staffing as well as increased
expenditures associated with investor relations, business development and the
Company's information system.
Minority Interest
ATI operating losses of $75,870 in 2000 and 1999 were allocated to ATI's
minority stockholder within the Company's condensed consolidated financial
statements.
Non-cash Dividends
Non-cash dividends were approximately $918,000 in the nine months ended
March 31, 1999. No such non-cash dividends were recognized in nine months ended
March 31, 2000. The $918,000 non-cash dividends represented the Black-Scholes
option pricing model derived fair value of warrants to purchase 1.4 million
shares of ImmunoGen Common Stock issued in connection with the July 1998 sale of
the Company's Series E Convertible Preferred Stock.
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LIQUIDITY AND CAPITAL RESOURCES
Since July 1, 1999, the Company has financed the net cash used to support
operating activities primarily from various collaborative and financing sources.
These sources include:
- $6.5 million from milestone revenues earned under the Company's SB agreement;
- $5.0 million from equity issuances to SB and BioChem and;
- $4.6 million from the exercise of warrants and options to purchase Common
Stock.
To a lesser extent, the Company also received proceeds from the SBIR grant
program as well as the final principal payment on a note receivable from the
prior assignment of facilities and equipment. Cash used in operations in the
nine months ended March 31, 2000 primarily supported the Company's various
research and development efforts.
Net cash used in operations during the nine months ended March 31, 2000 was
$862,000 compared to $3.62 million used in the nine months ended March 31,1999.
This 76% decrease in operational cash use is largely due to the recognition and
receipt of $5.5 million more collaboration revenue in 2000 as compared to 1999.
Offsetting the increase in collaboration revenue was a $2.3 million increase in
total operational expenses.
Net cash used in investing activities was $10.87 million for the nine
months ended March 31, 2000, and primarily represents purchases of
higher-yielding, investment-grade corporate and U.S. Government debt securities.
Net cash used in investing activities during the nine-month period ended March
31, 1999 was $595,000 and primarily resulted from payments received on a note
receivable originally issued in connection with the assignment of the Company's
former Canton, Massachusetts facility.
Capital purchases were $243,000 for the nine months ended March 31, 2000,
and consisted primarily of information system upgrades along with scientific
equipment purchases associated with the Company's clinical manufacturing and
development functions. As a result of the recently signed Genentech and British
Biotech collaborative agreements, the Company expects to expend significant cash
resources to update its existing Norwood, Massachusetts development and pilot
manufacturing facility. The Company anticipates that such capital expenditures
could approximate $2.0 million over the next twelve months. Certain capital
outlays are expected to be reimbursed pursuant to the Company's collaborative
agreements.
Net cash provided by financing activities increased from $4.12 million in
the nine months ended March 31, 1999 to $9.63 million in same nine-month period
ended March 31, 2000. The increase is largely due to the exercise of 1.49
million warrants and options during the nine-month period ended March 31, 2000
and to the September 1999 issuance of 1.02 million shares of Common Stock to SB.
Total proceeds from of all ImmuniGen Common Stock issuances occurring within the
nine-month period totaled $7.15 million. In fiscal 1999, $1.5 million in Series
E Convertible Preferred Stock was issued in a private placement. No such
issuance of ImmunoGen convertible preferred occurred during fiscal 2000. In each
of the nine-month periods ended March 31, 1999 and 2000, $2.5 million was also
received in connection with ATI's issuance of convertible preferred stock to
BioChem. The BioChem research collaboration expires on July 31, 2000; no
additional preferred stock will be issued.
As of March 31, 2000, the Company had approximately $13.3 million in cash
and cash equivalents. In addition, in April and May 2000, an additional $7.35
million was received from the following sources: $5.0 million from Genentech,
$1.5 million from British Biotech, and $843,000 from BioChem. The Company
anticipates that these capital resources will enable the Company to meet its
operational expenses and capital expenditures at least through the next
twelve-month period. The Company believes that its established collaborative
agreements, while subject to specified milestone achievements, will provide
funding sufficient to allow the Company to meet its obligations under all
collaborative agreements while also allowing the Company to aggressively develop
product candidates and technologies not covered by collaborative agreements.
However, no assurances can be given that such collaborative agreement funding
will, in fact, be realized. Should the Company not meet some or all of the terms
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and conditions of its various collaboration agreements, it may be required to
pursue additional strategic partners, secure alternative financing arrangements,
and/or defer or limit some or all of its research, development and/or clinical
projects.
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 key materials necessary for production of the products
and technologies; the potential development by competitors of competing products
and technologies; the Company's dependence on existing and 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 treatments 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;
unreported Year 2000 problems; and economic conditions, both generally and those
specifically related to the biotechnology industry. 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
throughout the Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1999 as filed with the Securities and Exchange Commission.
YEAR 2000 ISSUES
Prior to January 1, 2000, the Company had completed all upgrades necessary
to ensure that its information systems, facilities and research and development
equipment containing date-sensitive hardware and software was Year 2000
compliant. Also prior to January 1, 2000, the Company sent questionnaires to its
then engaged third-party suppliers, vendors, administrators and custodians,
inquiring of their progress in identifying and addressing their Year 2000
issues. The Company received responses from all surveyed vendors and, based upon
the information contained in those responses, the Company believes that Year
2000 issues have been addressed by the Company's critical vendors. To date, the
Company has not encountered any problems as a result of Year 2000 issues.
Expenses related to Year 2000 issues have not been material, and the Company
does not expect to incur any significant Year 2000 expenses in the future.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In the normal course of business, the financial position of the Company is
subject to certain risks, including market risk associated with interest rate
movements. The Company regularly assesses these risks and has established
policies and business practices designed to mitigate such exposures. The Company
invests surplus cash in low-risk debt securities, typically maturing in one year
or less, pending use in operations. The Company manages these funds by seeking
principal preservation while concurrently enhancing rates of return. The
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Company's interest income is therefore sensitive to changes in the general level
of domestic interest rates. Based on the Company's overall interest rate
exposure at March 31, 1999, a near-term change in interest rates would not
materially affect the fair value of interest rate sensitive instruments.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is not a party to any material legal proceedings.
Item 2. Changes in Securities and Use of Proceeds.
In January 2000, holders of the Company's Series E Convertible
Preferred Stock ("Series E Stock") exercised their right to convert
all 2,400 shares of Series E Stock into 2,823,528 shares of the
Company's Common Stock.
In February 2000, a holder of warrants originally issued in
connection with a private placement of the Company's Series A
Convertible Preferred Stock exercised his right to acquire 50,000
shares of Common Stock at $3.11 per share. Proceeds from this warrant
exercise will be used to fund current operations.
In February and March 2000, holders of warrants originally issued in
connection with a private placement of the Company's Series B
Convertible Preferred Stock exercised their rights to acquire 239,069
and 5,000 shares of Common Stock at $3.68 per share and $5.49 per
share, respectively. Proceeds from these warrant exercises will be
used to fund current operations.
Between January and March 2000, holders of warrants originally issued
in connection with a private placement of the Company's Series C
Convertible Preferred Stock exercised their rights to acquire 654,368
shares of Common Stock at $2.31 per share. Proceeds from these
warrant exercises will be used to fund current operations.
In January 2000, holders of warrants originally issued in connection
with a private placement of the Company's Series D Convertible
Preferred Stock exercised their rights to acquire 427,272 shares of
Common Stock at $1.94 per share. Proceeds from these warrant
exercises will be used to fund current operations
During the three-month period ended March 31, 2000, holders of
options issued through the Company's 1986 Incentive Stock Option
Plan, Option Plan, as amended, exercised their rights to acquire an
aggregate of 111,750 shares at prices ranging from $0.84 per share to
$11.25 per share. The total proceeds from these option exercises,
$204,058, will be used to fund current operations.
In July 1997, the Company's majority-owned subsidiary, ATI, entered
into a collaboration with BioChem. As part of the agreement, BioChem
received warrants to purchase shares of ImmunoGen Common Stock equal
to $11.125 million, the amount invested in ATI by BioChem during the
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 ImmunoGen Common Stock determined by
dividing $11.125 million by the market price of the ImmunoGen Common
Stock on the exercise date, subject to certain limitations. As of
March 31, 2000, the last quarterly investment of $843,000 was due to
ATI. In April 2000, this amount due was received and warrants
corresponding to that amount were issued. Until July 31, 2000,
proceeds from this investment are restricted to fund the ongoing ATI
research collaboration.
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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
10.1 Form of Warrant Certificate issued by the Registrant
to BioChem Pharma Inc. (previously filed as exhibit
10.5 to, and incorporated herein by reference from,
the Registrant's Registration Statement on Form 10-Q,
as amended by form 10-Q/A, for the quarter ended
March 31, 1997)
27 Financial Data Schedule
(b) Reports on Form 8-K
Form 8-K dated May 4, 2000 - Item 5: Other Events.
ImmunoGen, Inc. and Genentech, Inc. announced that
Genentech has exclusively licensed ImmunoGen's
maytansinoid Tumor-Activated Prodrug (TAP) technology
for use with anti-HER2 antibodies such as
Herceptin(R). Under the terms of the agreement,
Genentech will receive exclusive worldwide rights to
commercialize anti-HER2 targeting products using
ImmunoGen's maytansinoid TAP platform. Genentech will
be responsible for manufacturing, product development
and marketing of products resulting from the license;
ImmunoGen will be reimbursed for any preclinical and
clinical materials that it makes under the agreement.
ImmunoGen will receive an up-front payment of $2
million. In addition to royalties on net sales, the
terms of the agreement include milestone payments,
assuming all benchmarks are met, for potentially up
to $40 million..
Form 8-K dated May 5, 2000 - Item 5: Other Events.
ImmunoGen, Inc. and British Biotech plc announced a
license agreement to develop and commercialize
ImmunoGen's huN901-DM1 tumor- activated prodrug (TAP)
for treatment of small-cell lung cancer. British
Biotech has been granted the exclusive right to
develop and commercialize huN901-DM1 in the European
Union ("EU") and Japan. ImmunoGen retains the rights
to commercialize huN901-DM1 in the United States and
the rest of the world, as well as the right to
manufacture the product worldwide. British Biotech
paid an up-front fee of $1.5 million for its
territorial rights. Under the agreement, British
Biotech is responsible for conducting the clinical
trials necessary to achieve regulatory approval in
the US, EU and Japan. ImmunoGen is responsible for
the remaining preclinical development, and will be
reimbursed for manufacturing the product for clinical
trials. It is anticipated that a Phase I clinical
trial will start in the fourth quarter of this year.
Upon regulatory approval of the product for marketing
in the US, ImmunoGen will pay British Biotech a
one-time milestone payment. ImmunoGen will receive
royalties on sales of huN901-DM1 in the EU and Japan.
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Form 8-K dated May 8, 2000 - Item 5: Other Events.
ImmunoGen, Inc. and Genentech, Inc. announced a
second collaboration between the two companies. This
second collaboration provides Genentech with broad
access to ImmunoGen's maytansinoid Tumor-Activated
Prodrug (TAP) technology for use with proprietary
antibodies. The multi-year agreement provides
Genentech with a license to utilize ImmunoGen's
maytansinoid TAP platform in its antibody product
research efforts and an option to obtain exclusive
product licenses for a limited number of antigen
targets over the agreement's five-year term.
The agreement provides for an up-front technology
access fee of $3 million and potential milestone
payments--assuming benchmarks are met-of up to nearly
$40 million per antigen target, and royalties on net
sales of resulting products. Genentech will be
responsible for manufacturing, product development
and marketing of any products developed through the
collaboration; ImmunoGen will be reimbursed for any
preclinical materials that it makes under the
agreement. The agreement can be renewed for one
subsequent three-year period, for an additional
technology access fee. Genentech is developing a
Herceptin(R) TAP conjugate under a separate,
previously announced, agreement with ImmunoGen.
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21
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 12, 2000 By: /s/ Mitchel Sayare
-----------------------
Mitchel Sayare
President and Chief Executive
Officer
(principal executive officer)
Date: May 12, 2000 By: /s/ Kathleen A. Carroll
-----------------------
Kathleen A. Carroll
Vice President,
Finance and Administration
(principal financial officer)
21
22
INDEX TO EXHIBITS
EXHIBIT
NO. DESCRIPTION
- ------- -----------
27 Financial Data Schedule
5
9-MOS
JUN-30-2000
JUN-30-1999
MAR-31-2000
2,127,386
11,193,647
857,956
0
0
14,285,745
11,215,897
(9,757,334)
15,788,008
1,559,447
0
0
0
330,355
168,330,397
15,788,008
0
6,759,469
0
7,819,674
(49,568)
0
14,265
(1,024,902)
0
(1,024,902)
0
0
0
(949,032)
(0.03)
(0.03)
