SECURITIES AND EXCHANGE COMMISSION Total Pages- 31
WASHINGTON, D.C. 20549 Exhibit Index- 14
FORM 10-Q
(Mark one)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 1995
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 0-12042
BIOGEN, INC.
(Exact name of registrant as specified in its charter)
Massachusetts 04-3002117
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
14 Cambridge Center, Cambridge, MA 02142
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 679-2000
Former name, former address and former fiscal year, if changed since
last report: Not Applicable
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
Number of shares outstanding of each of the issuer's classes of common
stock, as of August 4, 1995:
Common Stock, par value $0.01 33,369,243
(Title of each class) (Number of Shares)
<PAGE>
B I O G E N , I N C . Page 2
INDEX
Page No.
PART I - FINANCIAL INFORMATION
Condensed Consolidated Balance Sheets -
June 30, 1995 and December 31, 1994 . . . . . . . . . . . . . . .3
Condensed Consolidated Statements of Income -
Three months and six months ended June 30, 1995 and 1994. . . . .4
Condensed Consolidated Statements of Cash Flows -
Six months ended June 30, 1995 and 1994 . . . . . . . . . . . . .5
Notes to Condensed Consolidated Financial Statements. . . . . . . .6
Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . .7
Report of Independent Accountants . . . . . . . . . . . . . . . . 12
PART II - OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . 13
* * * * * * * * * * * * * * * * * *
Note concerning trademarks: Certain names mentioned in this report are
trademarks owned by Biogen, Inc. or its
affiliates. Hirulog(TM) and AVONEX(TM)are
trademarks of Biogen, Inc.
<PAGE>
BIOGEN, INC. AND SUBSIDIARIES Page 3
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30,1995 Dec. 31,1994
(unaudited)
ASSETS
Current assets
Cash and cash equivalents. . . . . . . . . $ 46,738 $ 54,682
Marketable securities. . . . . . . . . . . 227,903 213,120
Accounts receivable. . . . . . . . . . . . 16,900 18,502
Other. . . . . . . . . . . . . . . . . . . 10,610 8,480
-------- --------
Total current assets . . . . . . . . . . . 302,151 294,784
-------- --------
Property and equipment
Total cost . . . . . . . . . . . . . . . . 127,653 104,651
Less accumulated depreciation. . . . . . . 35,277 31,489
-------- --------
Property and equipment, net. . . . . . . . 92,376 73,162
-------- --------
Other assets
Patents, net . . . . . . . . . . . . . . . 8,024 8,116
Other. . . . . . . . . . . . . . . . . . . 1,834 1,800
-------- --------
Total other assets . . . . . . . . . . . . 9,858 9,916
-------- --------
$404,385 $377,862
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable . . . . . . . . . . . . . $ 8,244 $ 9,991
Current portion long-term debt . . . . . . 1,667 --
Other current liabilities. . . . . . . . . 28,784 37,937
-------- --------
Total current liabilities. . . . . . . . . 38,695 47,928
-------- --------
Long-term debt . . . . . . . . . . . . . . . 23,333 --
-------- --------
Shareholders' equity
Common stock . . . . . . . . . . . . . . . 334 331
Additional paid-in capital . . . . . . . . 371,688 368,784
Deficit. . . . . . . . . . . . . . . . . . (29,811) (33,359)
Unrealized gain (loss) on
marketable securities . . . . . . . . . 87 (5,867)
Accumulated translation adjustment . . . . 59 45
-------- --------
Total shareholders' equity . . . . . . . . 342,357 329,934
-------- --------
$404,385 $377,862
======== ========
See Notes to Condensed Consolidated Financial Statements.
<PAGE>
BIOGEN, INC. AND SUBSIDIARIES Page 4
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(in thousands, except per share amounts)
Three Months Six Months
Ended June 30, Ended June 30,
1995 1994 1995 1994
REVENUES
Royalties and product sales. . . $32,717 $32,793 $64,670 $73,960
Interest . . . . . . . . . . . . 4,179 3,986 8,196 7,599
------- ------- ------- -------
Total revenues . . . . . . . . . 36,896 36,779 72,866 81,559
------- ------- ------- -------
EXPENSES
Cost of sales. . . . . . . . . . 2,648 2,146 5,152 4,617
Research and development . . . . 21,270 26,268 41,705 49,602
General and administrative . . . 10,003 5,607 17,524 11,570
Other. . . . . . . . . . . . . . 2,056 1,947 4,517 2,050
--------- ------- ------- -------
Total expenses . . . . . . . . . 35,977 35,968 68,898 67,839
------- ------- ------- -------
INCOME BEFORE INCOME TAXES. . . . 919 811 3,968 13,720
Income taxes. . . . . . . . . . . 205 200 420 1,880
------- ------- ------- -------
NET INCOME. . . . . . . . . . . . $ 714 $ 611 $ 3,548 $11,840
======= ======= ======= =======
NET INCOME PER SHARE. . . . . . . $ 0.02 $ 0.02 $ 0.10 $ 0.34
======= ======= ======= =======
Average shares outstanding. . . . 35,737 34,427 35,607 35,084
======= ======= ======= =======
See Notes to Condensed Consolidated Financial Statements.
<PAGE>
BIOGEN, INC. AND SUBSIDIARIES Page 5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Six Months Ended
June 30,
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES
Net income . . . . . . . . . . . . . . . . . . $ 3,548 $11,840
Adjustments to reconcile net income to
net cash provided from (used by)
operating activities:
Depreciation and amortization . . . . . . . . 5,001 3,646
Other . . . . . . . . . . . . . . . . . . . . 302 1,345
Changes in:
Accounts receivable . . . . . . . . . . . . 1,602 15,091
Other current assets. . . . . . . . . . . . (2,130) (810)
Other assets. . . . . . . . . . . . . . . . (34) (163)
Accounts payable and
other current liabilities. . . . . . . . . (10,900) 975
-------- -------
Net cash provided from (used by)
operating activities. . . . . . . . . . . . . (2,611) 31,924
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of marketable securities . . . . . . (117,587) (269,518)
Proceeds from sales of marketable securities . 108,599 208,210
Acquisitions of property and equipment . . . . (23,002) (14,844)
Additions to patents . . . . . . . . . . . . . (1,120) (1,204)
-------- -------
Net cash used by investing activities. . . . . (33,110) (77,356)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt . . . 25,000 --
Issuance of common stock . . . . . . . . . . . 2,777 9,939
-------- -------
Net cash provided from financing activities. . 27,777 9,939
-------- -------
NET DECREASE IN CASH AND CASH EQUIVALENTS . . . (7,944) (35,493)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD. . . . . . . . . . . . . . 54,682 74,546
-------- -------
CASH AND CASH EQUIVALENTS,
END OF PERIOD. . . . . . . . . . . . . . . . . $ 46,738 $39,053
======== =======
See Notes to Condensed Consolidated Financial Statements.
<PAGE>
BIOGEN, INC. AND SUBSIDIARIES Page 6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. In the opinion of management, the accompanying unaudited condensed
consolidated financial statements include all adjustments, consisting
of only normal recurring accruals, necessary to present fairly the
financial position, results of operations and cash flows of the
Company. The Company's accounting policies are described in the Notes
to Consolidated Financial Statements in the Company's 1994 Annual
Report. Interim results are not necessarily indicative of the
operating results for the full year.
2. During the third quarter of 1994, the Company incurred a pre-tax
charge to other expenses of $25 million as a result of its decision to
discontinue its major activities associated with Hirulog (TM)
development. The charge consists of cash payments to a third-party
manufacturer for product manufactured for clinical trials and to cover
a portion of other costs incurred by the manufacturer in anticipation
of ongoing Hirulog (TM) related activities, and cash payments for
clinical research organizations, clinical investigators and
institutions involved in clinical trials to cover noncancellable costs
incurred by them in conducting clinical trials and in connection with
wind-down activities. Discontinuance of the Hirulog (TM) program did
not result in any termination of employees or internal restructuring
costs. As of June 30, 1995, $2.4 million remained in reserve and is
expected to be settled by the end of 1995.
3. In March 1995, the Company completed construction of its research
laboratory and office building in Cambridge, Massachusetts and
exercised its option to obtain a 7.5% secured term loan with a bank
for $25 million. The annual principal payable in each of the years
1996 through 1999 is $1.7 million with the balance due May 8, 2005.
4. As of December 31,1994, the Company had a deferred tax asset of $58
million (before valuation allowance) consisting of the future tax
benefits from net operating loss carry forwards and other tax credits.
Under Statement of Financial Accounting Standards No. 109 ("SFAS
109"), the Company would be required to recognize all or a portion of
the $58 million deferred tax asset, with corresponding increases to
net income and paid-in capital, if it believes that it is more likely
than not, given the weight of all available evidence, that all or a
portion of the benefits of the carry forward losses and tax credits
will be realized through future profitable operations. Given the
possibility of fluctuations in the Company's revenue stream,
anticipated increases in the Company's expenses, the uncertainties
involved and number of milestones to be achieved in obtaining
regulatory approval for the Company's AVONEX(TM) interferon beta-1a
product and in successfully commercializing the product and the risks
and uncertainties associated with taking new products through the
development pipeline, the Company has concluded, based on the standard
set forth in SFAS 109, that it is more likely than not that the
Company will not realize any benefits from its deferred tax asset
through future profitable operations, and it has therefore recorded a
100% reserve against the asset. The Company will assess the need for
the valuation allowance at each balance sheet date based on all
available evidence, in particular, the then current status of
regulatory filings and commercialization efforts related to
AVONEX(TM).
<PAGE>
BIOGEN, INC. AND SUBSIDIARIES Page 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Overview
Biogen, Inc. (the "Company") is a biopharmaceutical company principally
engaged in developing and manufacturing drugs for human healthcare through
genetic engineering. The Company's primary source of revenues consists of
royalties received from licensees that sell products based on technology
developed by the Company. These royalties are primarily derived from sales
of alpha interferon and hepatitis B products. The level of royalties that
Biogen receives is based on the level of product sales by its licensees
over which the Company has no control. As a result, the Company's revenues
may be affected by the impact on licensees' product sales of short-term
trends, such as the initiation or expiration of a vaccination program in a
particular country, or long-term trends, such as the institution of pricing
reforms in a particular country. Since the Company is not involved in the
development or sale of products by licensees, it is unable to accurately
predict the timing or potential impact of the events or trends which may
affect licensee sales or when and for how long these events and trends are
likely to affect the Company's royalty income. The Company's revenues may
also reflect one-time events such as payment of initial license fees by new
licensees. As a result, the Company's total revenues and income may
continue to fluctuate and quarter-to-quarter comparisons may not
necessarily be meaningful. Until the Company markets its own products
directly, royalties are expected to be the major source of the Company's
revenues.
In 1994, the Company announced the results of a Phase III clinical trial of
its AVONEX(TM) interferon beta-1a product, for the treatment of multiple
sclerosis. In light of the data from the trial, the Company filed during
1995 for a product license for AVONEX(TM) in the United States and market
approval for AVONEX(TM) in Europe and Canada. If the Company is successful
in its efforts to obtain regulatory approval, the Company will market
AVONEX(TM) directly in major markets in the United States and Europe.
Results of Operations
For the second quarter ended June 30, 1995, the Company reported net income
of $0.7 million or $0.02 per share as compared to net income of $0.6
million or $0.02 per share in the second quarter of 1994. For the six
months ended June 30, 1995, the Company had net income of $3.5 million or
$0.10 per share as compared to net income of $11.8 million or $0.34 per
share for the comparable period of 1994.
Total revenues for the second quarter of 1995 were $36.9 million, as
compared to $36.8 million in the comparable quarter of 1994. For the
current quarter, ongoing royalties received from licensee sales of
hepatitis B vaccines, sold by SmithKline Beecham plc ("SmithKline") and
Merck & Co., Inc. ("Merck"), increased and offset the decrease in royalties
received from Schering-Plough Corporation ("Schering-Plough"), the
Company's licensee for alpha interferon. Sales of hepatitis B vaccines
outside the United States increased 20% from the prior year quarter. The
market for hepatitis B vaccines increased significantly in Europe,
primarily in France, where a vaccination program for infants and
adolescents was instituted during 1994. It appears, however, that
hepatitis B vaccine sales in France are beginning to return to normal
Page 8
levels. Alpha interferon sales by Schering-Plough declined in the current
quarter, due primarily to lower sales in Japan, which were driven by a 17%
government-mandated decrease in the price of alpha interferon, effective on
April 1, 1994, and restrictions on off-label usage.
For the current six-month period, total revenues were $72.9 million as
compared to $81.6 million in 1994. Revenues from royalties and product
sales for the current six-month period were lower than the comparable 1994
period, primarily because of the inclusion in the first quarter of 1994 of
a one-time payment of approximately $10 million from Eli Lilly & Co.
("Lilly") under a licensing agreement covering certain patent rights for
gene expression methods. Under this agreement, Lilly paid the Company in
the first quarter of 1994 approximately $10 million in royalties that
related to sales occurring in the periods before the contract was signed.
Ongoing royalties received from licensee sales of hepatitis B vaccines in
the six-month period of 1995 increased and offset the decrease in royalties
received from licensee sales of alpha interferon. Sales of hepatitis B
vaccines outside the United States increased 48% from the prior year's six-
month period and was primarily attributable to the vaccination program
instituted in France. Alpha interferon sales by Schering-Plough declined
in the current six-month period, due primarily to lower sales in Japan. In
the near term, the Company expects overall sales of licensee products to
continue at or slightly below current levels although royalty income may
fluctuate depending on changes in sales volumes for specific products.
However, there are numerous health care reform initiatives currently
underway in the United States and other major pharmaceutical markets and it
is not yet clear what effect, if any, these initiatives or other
developments may have on product sales by the Company's licensees. In
addition, these sales levels may fluctuate from quarter to quarter due to
the timing and extent of major events such as new indication approvals,
vaccination programs or licensing arrangements.
Interest income for the current quarter and six-month period increased from
the comparable 1994 amounts due primarily to higher returns on invested
funds.
Total expenses for the second quarter of 1995 were $36.0 million,
approximately the same level as the 1994 quarter. Cost of sales increased
$0.5 million and primarily represents royalty obligations to third parties.
Research and development expense decreased $5.0 million, due to the
Company's decision in the third quarter of 1994 to discontinue its major
activities associated with development of Hirulog(TM) thrombin inhibitor.
The current quarter included costs for the production of clinical material
by a contract manufacturer while the 1994 quarter had higher costs,
primarily for Hirulog(TM) clinical development. General and administrative
expenses increased by $4.4 million due mostly to higher costs for market
development efforts related to AVONEX(TM), continued development of the
Company's European headquarters in Paris and personnel-related costs.
Other expenses included the effect of foreign exchange movements associated
with the sale of certain accounts receivable and interest on debt
obligations.
For the six-month period ended June 30, 1995, total expenses were $68.9
million as compared to $67.8 million in 1994. Research and development
expenses decreased $7.9 million, primarily due to higher costs in the 1994
period that were associated with the clinical development of Hirulog(TM).
The 1995 period included costs for the production of clinical material by a
contract manufacturer. The Company expects that in the long-term research
and development expenses will increase as the Company expands its
Page 9
development efforts with respect to new products and begins clinical trials
of these products. General and administrative expenses increased $6.0
million due mostly to higher costs for market development efforts related
to AVONEX(TM), continued development of the Company's European headquarters
and legal and personnel-related costs. On May 4, 1995, the Company
announced that it had filed with the European Medicines Evaluation Agency
for European market approval of AVONEX(TM) for treatment of multiple
sclerosis. On May 22, 1995, the Company announced that it had filed with
the U.S. Food and Drug Administration ("FDA") for U.S. market approval of
AVONEX(TM) for treatment of multiple sclerosis. On July 27, 1995, the
Company also announced that it filed with Canada's Health Protection Branch
for Canadian market approval of AVONEX(TM) for treatment of multiple
sclerosis. The Company expects that general and administrative expenses
will increase in the near and long term as compared to 1994 as the Company
begins to put in place the commercial infrastructure and sales and
marketing organizations necessary to sell AVONEX(TM). The anticipated
level of expense will depend on the status of regulatory approvals and the
resulting levels of commercial ramp-up activities. Other expenses included
the effect of foreign exchange movements associated with the sale of
certain accounts receivable, losses from the sale of certain marketable
securities and interest on debt obligations. In general, as development
efforts expand and as AVONEX(TM) ramp-up activities evolve, the Company
anticipates that expenses may equal or exceed revenues until such time as
the Company has successfully marketed AVONEX(TM).
Income tax expense for the 1995 and 1994 periods were substantially less
than the amount computed at U.S. federal statutory rates because of the
utilization of net operating loss carryforwards. As of December 31, 1994,
the Company had a deferred tax asset of $58 million (before valuation
allowance) consisting of the future tax benefits from net operating loss
carry forwards and other tax credits. If fully realized through sufficient
future profitability, this deferred tax asset will reduce future income tax
expense by $29 million and increase paid-in capital by $29 million. The
Company has recorded a 100% valuation allowance against the net deferred
tax asset. Realization of the deferred tax asset and future reversals of
the valuation allowance depend on the Company's ability to achieve future
profitability through earnings from existing sources and from sales of
AVONEX(TM) or other proprietary products. The timing and amount of future
earnings will depend on the Company's success in obtaining approval for and
marketing and selling AVONEX(TM) and the results of clinical trials and
commercialization and development efforts with respect to other products
under development. The Company will assess the need for the valuation
allowance at each balance sheet date based on all available evidence, in
particular the then current status of regulatory filings and
commercialization efforts related to its AVONEX(TM) product.
Financial Condition
At June 30, 1995, cash, cash equivalents and marketable securities amounted
to $274.6 million, a $6.8 million increase from the $267.8 million on hand
at the end of 1994. Working capital increased $16.6 million to $263.5
million. Net cash used by operating activities for the six months ended
June 30, 1995 was $2.6 million. Other outflows of cash included investments
in property and equipment and patents of $24.1 million. The Company's
common stock option and purchase plans provided $2.8 million and in the
first quarter of 1995, the Company received $25 million under a secured
term loan agreement with a bank.
Page 10
In March 1995, the Company completed construction of its research
laboratory and office building in Cambridge, Massachusetts and exercised
its option to obtain a 7.5% secured loan with a bank for $25 million. The
annual principal payable in each of the years 1996 through 1999 is $1.7
million with the balance due May 8, 2005.
In the second quarter of 1995, the Company began construction of its
biologics manufacturing facility in Research Triangle Park, North Carolina.
The estimated cost of construction, including land, is $57 million. As of
June 30, 1995, the Company had commitments totaling approximately $10
million on this project. Until the facility is licensed by the FDA for the
manufacture of AVONEX(TM), the Company will manufacture AVONEX(TM) in its
Cambridge, Massachusetts facility.
In the first quarter of 1993, SmithKline initiated arbitration in the
United States regarding the rate of royalties payable from sales of
hepatitis B vaccines by SmithKline in the United States. The amount paid
by SmithKline and in dispute as of December 31, 1994, was approximately $18
million. In April 1995, an arbitration panel ruled in Biogen's favor. On
June 30, 1995, SmithKline made a motion to vacate this award in the Federal
District Court for the Southern District of New York. However, the Company
believes that an adverse ruling is not probable and, therefore, no amount
has been accrued.
The Company currently believes that the financial resources available to
it, including its current working capital and its existing and anticipated
contractual relationships, will be sufficient to finance its planned
operations and capital expenditures for the near term. However, the
Company may have additional funding needs, the extent of which will depend
upon the level of royalties and product sales, the outcome of clinical
trial programs, the receipt and timing of required regulatory approvals for
products, the results of research and development efforts and business
expansion opportunities. Accordingly, from time to time, the Company may
obtain funding through various means which could include collaborative
agreements, lease or mortgage financings, sales of equity or debt
securities and other financing arrangements.
Outlook
Having completed both of its ongoing Phase III studies and discontinued
Hirulog(TM) development in 1994, the Company has begun to expand its
development efforts related to other products in its pipeline. The
expansion of the pipeline may include increases in spending on internal
projects, the acquisition of third party technologies or products or other
types of investments. Since the Company does not currently market any
drugs directly, the Company has also begun to create a commercial
infrastructure both in the United States and in Europe to market and sell
AVONEX(TM). The timing, nature and scope of the activities related to the
building of a commercial infrastructure will depend on the status of
regulatory filing and approval activities. As development efforts expand
and as AVONEX(TM) ramp-up activities evolve, the Company anticipates that
expenses may equal or exceed revenues until such time as the Company has
successfully marketed AVONEX(TM). As a result, the Company does not expect
past operating results to be indicative of future operating results.
Page 11
While in the past the Company's ability to achieve profitability has been
dependent mainly on the level of royalty revenues as compared to expenses,
in the future, profitability will be dependent on the outcome of a number
of factors. These include: the level of royalties from existing
licensees' product sales as compared to expenses, the timing and extent of
royalties from additional licensing opportunities, successful completion of
development and regulatory filing activities related to AVONEX(TM), receipt
of timely FDA and European regulatory approval for AVONEX(TM), the level of
revenues and profitability from AVONEX(TM) sales, if the product is
approved, the cost and success of developing and commercializing other
products the Company is developing and the cost and success of other
business opportunities that may arise from time to time. There can be no
assurance that the Company will achieve a positive outcome with respect to
any of these factors, or that the timing and extent of the Company's
success with respect to any combination of these factors will be sufficient
to result in the profitability of the Company.
<PAGE>
Page 12
With respect to the unaudited condensed consolidated financial information
of Biogen, Inc. and its subsidiaries at June 30, 1995 and for the three
month and six month periods ended June 30, 1995 and 1994, Price Waterhouse
LLP reported that they have applied limited procedures in accordance with
professional standards for a review of such information. However, their
separate report dated July 27, 1995 appearing herein, states that they did
not audit and they do not express an opinion on that unaudited condensed
consolidated financial information. Price Waterhouse LLP has not carried
out any significant or additional audit tests beyond those which would have
been necessary if their report had not been included. Accordingly, the
degree of reliance on their report on such information should be restricted
in light of the limited nature of the review procedures applied. Price
Waterhouse LLP is not subject to the liability provisions of Section 11 of
the Securities Act of 1933 for their report on the unaudited condensed
consolidated financial information because that report is not a "report" or
a "part" of the registration statement prepared or certified by Price
Waterhouse LLP within the meaning of sections 7 and 11 of the Act.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Biogen, Inc.
We have reviewed the accompanying condensed consolidated balance sheet of
Biogen, Inc. and its subsidiaries as of June 30, 1995, and the related
condensed consolidated statements of income for the three month and six
month periods ended June 30, 1995 and 1994 and of cash flows for the six
month periods ended June 30, 1995 and 1994. This financial information is
the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical
procedures to financial data and making inquiries of persons responsible
for financial and accounting matters. It is substantially less in scope
than an audit conducted in accordance with generally accepted audit
standards, the objective of which is the expression of an opinion regarding
the financial statements taken as a whole. Accordingly, we do not express
such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying condensed consolidated financial
information for it to be in conformity with generally accepted accounting
principles.
We previously audited in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1994, and the
related consolidated statements of income, of cash flows and of
shareholders' equity for the year then ended (not presented herein), and in
our report dated February 7, 1995 we expressed an unqualified opinion on
those consolidated financial statements. In our opinion, the information
set forth in the accompanying condensed consolidated balance sheet as of
December 31, 1994, is fairly stated in all material respects in relation to
the consolidated balance sheet from which it has been derived.
/s/ Price Waterhouse LLP
- ------------------------
Boston, Massachusetts
July 27, 1995
<PAGE>
PART II - OTHER INFORMATION Page 13
Item 4 - Submission of Matters to a Vote of Security Holders
(a) The information set forth in this Item 4 relates to matters
submitted to a vote at the Annual Meeting of Stockholders of
Biogen, Inc. on June 23, 1995.
(b) Not Applicable
(c) A proposal to elect Alan Belzer, Kenneth Murray and James W.
Stevens to serve for three year terms ending in 1998 and until
their successors are duly elected and qualified was approved with
the following vote:
Nominee For Against
Alan Belzer 27,041,399 390,143
Kenneth Murray 27,046,794 384,748
James W. Stevens 27,043,679 387,863
A proposal to ratify the selection of Price Waterhouse LLP as the
Company's independent accountants for the fiscal year ending
December 31, 1995 was approved with 27,326,966 affirmative votes
and 32,368 negative votes cast along with 72,208 abstentions.
A proposal to increase by 2,000,000 the aggregate number of
shares available for the grant of options under the 1985 Non-
Qualified Stock Option Plan and the 1982 Incentive Stock Option
Plan (the "Plans") and amendments to the Plans to limit to
600,000 the number of shares with respect to which options may be
granted under each Plan to any person in any year was approved,
with 17,394,493 affirmative votes and 6,138,604 negative votes
cast along with 156,627 abstentions and 3,741,818 broker non-
votes.
(d) Not applicable
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
No. 10.1 1985 Non-Qualified Stock Option Plan, as amended
through April 25, 1995.
No. 10.2 1982 Incentive Stock Option Plan, as amended through
April 25, 1995.
No. 11 Computation of Earnings per Share.
No. 15 Letter from Price Waterhouse LLP.
(b) There were no reports on Form 8-K filed for the quarter ended
June 30, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BIOGEN, INC.
Dated: August 11, 1995 /s/Timothy M. Kish
----------------------------------
Timothy M. Kish
Vice President-Finance and
Chief Financial Officer
<PAGE>
EXHIBITS Page 14
Index to Exhibits.
No. 10.1 1985 Non-Qualified Stock Option Plan.
No. 10.2 1982 Incentive Stock Option Plan.
No. 11 Computation of Earnings per Share.
No. 15 Letter from Price Waterhouse.
EXHIBIT 11
BIOGEN, INC. and SUBSIDIARIES
Computation of Earnings Per Share
(unaudited)
(in thousands, except per share amounts)
Three Months Six Months
Ended June 30, Ended June 30,
1995 1994 1995 1994
Primary earnings per share
Weighted average number of
shares outstanding . . . . . . . 33,302 32,556 33,234 32,479
Shares deemed outstanding from
the assumed exercise of stock
options and warrants . . . . . . 2,435 1,871 2,373 2,605
------- ------- ------- -------
Total . . . . . . . . . . . . . . 35,737 34,427 35,607 35,084
======= ======= ======= =======
Net income. . . . . . . . . . . . $ 714 $ 611 $ 3,548 $11,840
======= ======= ======= =======
Primary earnings per
share of common stock. . . . . . $ 0.02 $ 0.02 $ 0.10 $ 0.34
======= ======= ======= =======
Fully diluted earnings per share (a)
Weighted average number of
shares outstanding . . . . . . . 33,302 32,556 33,234 32,479
Shares deemed outstanding from
the assumed exercise of stock
options and warrants . . . . . . 2,827 1,871 2,827 2,605
------- ------- ------- -------
Total . . . . . . . . . . . . . . 36,129 34,427 36,061 35,084
======= ======= ======= =======
Net income . . . . . . . . . . . $ 714 $ 611 $ 3,548 $11,840
======= ======= ======= =======
Fully diluted earnings
per share of common stock. . . . $ 0.02 $ 0.02 $ 0.10 $ 0.34
======= ======= ======= =======
(a) This calculation is submitted in accordance with Regulation S-K item
601 (b) (11) although not required by Footnote 2 to Paragraph 14 of
APB Opinion No. 15 because it results in dilution of less than 3%.
EXHIBIT 15
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sirs:
We are aware that our report dated July 27, 1995 (issued pursuant to the
provisions of Statement on Auditing Standards No. 71) on the unaudited
condensed consolidated balance sheet of Biogen, Inc. and subsidiaries at
June 30, 1995, and the related condensed consolidated statements of income
for the three month and six month periods then ended and of cash flows for
the six month period then ended, is incorporated by reference in the
Prospectuses constituting part of its Registration Statements on Form S-3,
as amended (Nos. 33-14741, 33-14743, 33-20183 and 33-51639) and on Form
S-8, as amended (Nos. 2-87550, 2-96157, 33-9827, 33-14742, 33-37312, 33-
22378, 33-41077 and 33-69174). We are also aware of our responsibilities
under the Securities Act of 1933.
Yours very truly,
/s/ Price Waterhouse LLP
- ------------------------
Boston, Massachusetts
August 11, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 46,738
<SECURITIES> 227,903
<RECEIVABLES> 16,900
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 302,151
<PP&E> 127,653
<DEPRECIATION> 35,277
<TOTAL-ASSETS> 404,385
<CURRENT-LIABILITIES> 38,695
<BONDS> 23,333
<COMMON> 334
0
0
<OTHER-SE> 342,023
<TOTAL-LIABILITY-AND-EQUITY> 404,385
<SALES> 64,670
<TOTAL-REVENUES> 72,866
<CGS> 5,152
<TOTAL-COSTS> 64,381
<OTHER-EXPENSES> 4,517
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,968
<INCOME-TAX> 420
<INCOME-CONTINUING> 3,548
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,548
<EPS-PRIMARY> 0.10
<EPS-DILUTED> 0.10
</TABLE>
EXHIBIT 10.1
BIOGEN, INC.
1985 NON-QUALIFIED STOCK OPTION PLAN
(As Amended Through April 25, 1995 and Restated)
I. PURPOSE OF THE PLAN
The Plan is intended to encourage ownership of shares of Common Stock
of the Company by certain employees and Directors of the Company and its
Affiliates and to provide an additional incentive to those employees and
Directors to promote the success of the Company and its Affiliates.
II. DEFINITIONS
1. "Company" means Biogen, Inc., a Massachusetts corporation.
2. "Affiliate" means a corporation in respect of which the Company
owns directly or indirectly fifty percent (50%) or more of the voting
shares thereof or which is otherwise controlled by the Company.
3. "Committee" means the Stock and Option Plan Administration
Committee of the Board of Directors of the Company.
4. "Option" means a stock option granted under this Plan.
III. SHARES SUBJECT TO THE PLAN
The aggregate number of shares as to which Options may be granted from
time to time shall be 9,227,000 of the shares of Common Stock of the
Company (par value $.01); provided, however that such aggregate number
shall be reduced by the number of shares which has been sold under, or may
be sold pursuant to options granted from time to time under, the Company's
1982 Incentive Stock Option Plan (the "ISO Plan"), to the same extent as if
such sales had been made or options granted pursuant to this Plan.
If any option granted under this Plan or the ISO Plan ceases to be
"outstanding", in whole or in part, other than by reason of the exercise of
such option, the shares which were subject to such option shall be
available for the granting of other Options. Any option shall be treated as
"outstanding" until such option is exercised in full, terminates under the
provisions of this Plan or the ISO Plan, as the case may be, or expires by
reason of lapse of time.
The aggregate number of shares as to which Options may be granted
shall be subject to change only by means of an amendment adopted in
accordance with Article XI below, subject to the provisions of Article
VIII.
IV. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Committee. The membership of the
Committee shall be determined, and shall be subject to change without cause
and without notice from time to time, by the Board of Directors of the
Company.
The Committee is authorized to interpret the provisions of the Plan or
of any Option and to make all rules and determinations necessary or
advisable for the administration of the Plan. Subject to the provisions of
the Plan, Options may be granted upon such terms and conditions as the
Committee may prescribe.
This Plan is intended to comply in all respects with Rule 16b-3 or its
successors promulgated under the Securities Exchange Act of 1934 ("1934
Act") with respect to participants who are subject to Section 16 of the
1934 Act, and any provision in this Plan with respect to such persons
contrary to Rule 16b-3 shall be deemed null and void to the extent
permissible by law and deemed appropriate by the Committee.
V. ELIGIBILITY FOR PARTICIPATION
The Committee shall determine which employees and Directors shall be
eligible to participate in the Plan. Without limiting the generality of the
foregoing, Options may be awarded for reasons of performance, merit,
promotion, bonus or upon new employees joining the Company or any
Affiliate.
The Committee may grant to one or more such employees or Directors one
or more Options, and shall designate the number of shares to be optioned
under each Option so granted; provided, however, that no Options shall be
granted after December 31, 2002. In no event shall any employee be granted
in any calendar year options to purchase or receive more than 600,000
shares of the Company's Common Stock pursuant to this Plan.
VI. TERMS AND CONDITIONS OF OPTIONS
No Option issued pursuant to this Plan shall be an incentive stock
option under Section 422 of the Internal Revenue Code of 1986, as amended.
Each Option shall be set forth in writing in an Option agreement, duly
executed on behalf of the Company and by the person to whom such Option is
granted. No Option shall be deemed to have been granted and no purported
grant of any Option shall be effective until such Option shall have been
approved by the Committee. The Committee may provide that Options be
granted subject to such conditions as the Committee may deem appropriate,
including without limitation, subsequent approval by the shareholders of
the Company of this Plan or any amendments thereto. Each such Option
agreement shall be subject to at least the following terms and conditions:
A. Option Price: Except as otherwise determined by the Committee, the
Option price per share for Options granted under the Plan shall be equal to
the fair market value per share of Common Stock on the date of grant of the
Option; provided, however, that in no event shall the Option price be less
than the par value per share of Common Stock. Fair market value shall be
the average of the "high" and "low" sale prices as reported in the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") for
the date of grant of the Option or, if none, for the most recent trading
date thirty (30) days or less prior to the date of grant of the Option on
which the Common Stock was traded.
B. Term of Option: Each Option shall terminate not more than ten (10)
years from the date of the grant thereof, or at such earlier or later time
as the Committee shall expressly resolve.
C. Date of Exercise: The Committee may prescribe the date or dates on
which the Option becomes exercisable, and may provide that the Option
rights accrue or become exercisable in installments over a period of months
or years, or upon the attainment of stated goals.
D. Cancellation and Repurchase Rights: The Committee may stipulate
that any Option which becomes exercisable shall be subject to cancellation
or that shares purchased upon the exercise of such Option shall be subject
to repurchase rights in favor of the Company. In such event the Committee
shall determine the date or dates, or event or events, upon which such
cancellation or repurchase rights shall become effective or shall lapse, as
the case may be.
E. Medium of Payment: The Option price shall be payable upon the
exercise of the Option. It shall be payable in cash, or, if permitted by
the Committee, in shares or other consideration.
F. Termination of Employment: An Option holder who ceases (for any
reason other than death or total and permanent disability or termination of
employment for cause) to be an employee or Director of the Company or of an
Affiliate may exercise any Option granted to the extent that the right to
purchase shares thereunder has accrued on the date of such termination.
Such Option shall be exercisable only within three (3) months after such
date of termination, or, if earlier, within the originally prescribed term
of the Option, unless the Committee shall authorize a different period.
Employment shall not be deemed terminated by reason of a transfer to
another employer which is the Company or an Affiliate.
An Option holder whose employment with the Company or an Affiliate is
terminated by his/her employer for cause or a Director who is removed from
the Board of Directors for cause shall forthwith upon such termination
cease to have any right to exercise any Option. For purposes of this
paragraph, "cause" shall be deemed to include dishonesty with respect to
the employer, insubordination, substantial malfeasance or non-feasance of
duty, unauthorized disclosure of confidential information, and conduct
substantially prejudicial to the business of the Company or any Affiliate.
The determination of the Committee as to the existence of cause shall be
conclusive.
An Option holder to whom an Option has been granted under the Plan who
is absent from work with the Company or with an Affiliate because of
temporary disability, or who is on a permitted leave of absence for any
purpose, shall not, during the period of any such absence, be deemed by
virtue of such absence alone, to have terminated his employment with the
Company or with an Affiliate except as the Committee may otherwise
expressly provide.
G. Total and Permanent Disability: If an Option holder ceases to be an
employee or Director of the Company or of an Affiliate by reason of total
and permanent disability, as determined by the Committee, any Option held
by him or her on the date of disability shall be exercisable as to all or
any part of the shares subject to the Option, all of which shares shall be
fully vested as of the date of such disability. A disabled Option holder
may exercise such Option only within a period of one (1) year after the
date as of which the Committee determines that he or she became disabled or
within such different period as may be determined by the Committee, or, if
earlier, within the originally prescribed term of the Option.
H. Death: If an Option holder dies while the Option holder is an
employee or Director of the Company or of an Affiliate, any Option held by
him or her at the date of death shall be exercisable as to all or any part
of the shares subject to the Option, all of which shares shall be fully
vested as of the date of the Option holder's death. A deceased Option
holder's legal representatives or one who acquires the Option by will or by
the laws of descent and distribution may exercise such Option only within a
period of one (1) year after the date of death or within such different
period as may be determined by the Committee, or, if earlier, within the
originally prescribed term of the Option.
I. Exercise of Option and Issue of Shares: Options shall be exercised
by giving written notice to the Company, addressed to the Company at the
address specified in the Option agreement, with which the Option holder
shall tender the Option price. Such written notice shall be signed by the
person exercising the Option, shall state the number of shares with respect
to which the Option is being exercised, and shall contain any warranty
required by Article VII of the Plan. The issuance of the Option shares may
be delayed by the Company if any law or regulation requires the Company to
take any action with respect to the Option shares prior to the issuance
thereof. Without limiting the generality of the foregoing, nothing
contained herein shall be deemed to require the Company to issue any Option
shares if prohibited by law or applicable regulation.
The shares shall, upon issuance, be evidenced by an appropriate
certificate or certificates in respect of paid-up, non-assessable shares.
J. Assignability and Transferability of Option: By its terms, an
Option granted to an Option holder shall not be transferable by him/her
otherwise than by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order as interpreted under Rule
16b-3(a)(2), and shall be exercisable, during an Option holder's lifetime,
only by the Option holder. Such Option shall not be assigned, pledged, or
hypothecated in any way (whether by operation of law or otherwise) and
shall not be subject to execution, attachment or similar process. Any
attempted transfer, assignment, pledge, hypothecation, or other disposition
of such Option or of any rights granted thereunder contrary to the
provisions of this Paragraph, or the levy of any attachment or similar
process upon an Option or such rights, shall be null and void.
K. Other Provisions: The Option agreements authorized under the Plan
shall be subject to such other terms and conditions, including, without
limitation, restrictions upon the exercise of the Option, as the Committee
shall deem advisable.
L. Non-Employee, Non-Scientific Board Directors' Options: Each
Director who is not (i) an employee of the Company or any of its
Affiliates, or (ii) a member of the Scientific Board of the Company, or
(iii) elected pursuant to an agreement or arrangement between shareholders
of the Company or between the Company and its shareholders, upon first
being appointed or elected to the Board of Directors, and upon every third
anniversary thereof, shall be granted an Option to purchase 15,000 shares
of Common Stock. Each such Option shall have an exercise price equal to the
fair market value per share of Common Stock on the date of grant, as
determined under Section VI.A. above, and a term of ten (10) years, and
shall be exercisable as to one-third (1/3) of the shares subject thereto
upon completion of one full year of service on the Board of Directors after
the date of grant, and as to an additional one-third (1/3) upon completion
of each full year of service thereafter. For any such Director serving in
office on December 6, 1991, the first such Option shall be granted on the
date on which the most recent Option previously granted to him, the vesting
of which is contingent upon continued service on the Board of Directors,
becomes fully vested, and subsequent Options under this Paragraph shall be
granted on every third anniversary of such date. Notwithstanding the
provision of Section XI concerning amendment of the Plan, the provisions of
this Section VI.L. shall not be amended more than once every six months,
other than to comport with changes in the Internal Revenue Code of 1986, as
amended, the Employee Retirement Income Security Act, or the rules
thereunder. The grants of options under this Paragraph L are intended to be
non-discretionary formula awards within the meaning of Rule
16b-3(c)(2)(ii). Paragraph F of Article VI, which cancels the Options of
any Participant determined by the Committee to have been terminated for
cause, shall not apply to the awards under this Paragraph L.
M. Tax Withholding: In the event that any federal, state, or local
income taxes, employment taxes, Federal Insurance Contributions Act
("F.I.C.A.") withholdings or other amounts are required by applicable law
or governmental regulation to be withheld from the Option holder's salary
in connection with the exercise of an Option, the Option holder shall
advance in cash to the Company, or to any Affiliate of the Company which
employs or employed the Option holder, the amount of such withholdings
unless a different withholding arrangement, including the use of shares of
the Company's Common Stock, is authorized by the Committee (and permitted
by law), provided, however, that with respect to persons subject to Section
16 of the 1934 Act, any such withholding arrangement shall be in compliance
with any applicable provisions of Rule 16b-3 promulgated under Section 16
of the 1934 Act. For purposes hereof, the fair market value of the shares
withheld for purposes of payroll withholding shall be determined in the
manner provided in Section VI.A. above, as of the most recent practicable
date prior to the date of exercise. If the fair market value of the shares
withheld is less than the amount of payroll withholdings required, the
Option holder may be required to advance the difference in cash to the
Company or the Affiliate employer.
N. Reload Options: The Committee may authorize reload options ("Reload
Options") to purchase for cash or shares a number of shares of Common
Stock. The number of Reload Options shall equal (i) the number of shares of
Common Stock used to exercise the underlying Options and (ii) to the extent
authorized by the Committee, the number of shares of Common Stock used to
satisfy any tax withholding requirement incident to the exercise of the
underlying Options. The grant of a Reload Option will become effective upon
the exercise of underlying Options through the use of shares of Common
Stock held by the optionee for at least 6 months. Reload Options must be
evidenced in Option agreements or amendments to those agreements. The
Option price per share of Common Stock deliverable upon the exercise of a
Reload Option shall be the fair market value of a share of Common Stock on
the date the grant of the Reload Option becomes effective. The term of each
Reload Option shall be equal to the remaining option term of the underlying
Option. No additional Reload Options shall be granted to Option holders
when Options and/or Reload Options are exercised pursuant to the terms of
this Plan following termination of the Option holder's employment or on
account of death or total and permanent disability. All other provisions of
this Plan with respect to Options shall apply equally to Reload Options.
O. Rights as a Shareholder: No Option holder shall have rights as a
shareholder with respect to any shares covered by such Option except as to
such shares as have been registered in the Company's share register in the
name of such person upon the due exercise of the Option.
VII. PURCHASE FOR INVESTMENT
If and to the extent that the issuance of shares pursuant to the
exercise of Options is deemed by the Company to be subject to the United
States Securities Act of 1933, as now in force or hereafter amended ("1933
Act"), or to the securities law of any other jurisdiction, the Company
shall be under no obligation to issue shares covered by such exercise
unless the person or persons who exercises or who exercise such Option
shall make such warranty or take such action as may be required by any
applicable securities law of any applicable jurisdiction and shall, in the
case of the applicability of the 1933 Act, in the absence of an effective
registration under such Act with respect to such shares, warrant to the
Company, at the time of such exercise, that such person is or that they are
acquiring the shares to be issued to such person or to them, pursuant to
such exercise of the Option, for investment and not with a view to, or for
sale in connection with, the distribution of any such shares; and in such
events the person or persons acquiring such shares shall be bound by the
provisions of a legend endorsed upon any share certificates expressing the
requirements of any applicable non-United States securities law, or, in
cases deemed governed by the 1933 Act, substantially the following legend,
which shall be endorsed upon the certificate or certificates evidencing the
shares issued by the Company pursuant to such exercise:
"The shares have not been registered under the securities laws of
any country, including the United States Securities Act of 1933, as
amended, and the Company may refuse to permit the sale or transfer of all
or any of the shares until (1) the Company has received an opinion of
Counsel satisfactory to the Company that any such transfer is exempt from
registration under all applicable securities laws or (2) in the case of
sales or transfers to which the United States Securities Act of 1933 is
applicable, unless a registration statement with respect to such shares
shall be effective under such Act, as amended."
Without limiting the generality of the foregoing, the Company may
delay issuance of the shares until completion of any action or obtaining of
any consent which the Company deems necessary under any applicable law
(including without limitation state securities or "blue sky" laws).
VIII. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
In the event that the outstanding Common Stock, $.01 par value, of the
Company is changed into or exchanged for a different number or kind of
shares or other securities of the Company or of another corporation by
reason of any reorganization, merger, consolidation, recapitalization,
reclassification, change in par value, stock split-up, combination of
shares or dividend payable in capital stock, or the like, appropriate
adjustment shall be made in the number and kind of shares for the purchase
of which Options may be granted under the Plan, including Options to be
granted pursuant to Article VI L hereof, and, in addition, appropriate
adjustment shall be made in the number and kind of shares and in the Option
price per share subject to outstanding Options so that each Option holder
shall be in a position equivalent to the position the Option holder would
have been in had the Option holder exercised the Options immediately prior
to the applicable event.
IX. DISSOLUTION OR LIQUIDATION OF THE COMPANY
Upon the dissolution or liquidation of the Company other than in
connection with transactions to which the preceding Article VIII is
applicable, all Options granted hereunder shall terminate and become null
and void; provided, however, that if the rights hereunder of an Option
holder or one who acquired an Option by will or by the laws of descent and
distribution have not otherwise terminated and expired, the Option holder
or such person shall have the right immediately prior to such dissolution
or liquidation to exercise any Option granted hereunder to the extent that
the right to purchase shares thereunder has accrued as of the date of
exercise immediately prior to such dissolution or liquidation.
X. TERMINATION OF THE PLAN
Unless the Committee shall decide to reduce or, subject to shareholder
approval, if required under Article XI, to extend the duration of the Plan,
the Plan shall terminate on December 31, 2002. Termination of the Plan
shall not affect any Options granted or any Option agreements executed
prior to the effective date of termination.
XI. AMENDMENT OF THE PLAN
The Plan may be amended by the Committee or the Board of Directors of
the Company provided, however, that if the scope of any amendment is such
as to require shareholder approval in order to comply with Rule 16b-3 under
the 1934 Act such amendment shall require approval by the shareholders. Any
amendment shall not affect any Options theretofore granted and any Option
agreements theretofore executed by the Company and any Option holder unless
such amendment shall expressly so provide. No amendment shall adversely
affect any Option holder with respect to an outstanding Option without the
written consent of such Option holder. With the consent of the Option
holder affected, the Committee may amend any outstanding Option agreement
in a manner not inconsistent with the Plan, including, without limitation,
to accelerate the date of exercise of any installment of any Option.
XII. EMPLOYMENT RELATIONSHIP
Nothing herein contained shall be deemed to prevent the Company or an
Affiliate from terminating the employment of any employee, nor to prevent
any employee from terminating his/her employment with the Company or an
Affiliate.
XIII. EFFECTIVE DATE
This Plan first became effective on January 2, 1985.
EXHIBIT 10.2
BIOGEN, INC.
1982 INCENTIVE STOCK OPTION PLAN
(As Amended Through April 25, 1995 and Restated)
I. DEFINITIONS AND PURPOSE
A. Definitions: References in this document to the "Company" are to
Biogen, Inc., a Massachusetts corporation; reference to the "Plan" are to
the Biogen, Inc. 1982 Incentive Stock Option Plan; references to the "Code"
are to the United States Internal Revenue Code of 1986, as amended. Unless
otherwise specified or unless the context otherwise requires, the following
terms, as used in the Plan, have the following meanings:
1. "Affiliate" means a corporation which, for purposes of Section 422
of the Code, is a parent or subsidiary of the Company, direct or indirect.
2. "Disability" means permanent and total disability as defined in
Section 105(d)(4) of the Code.
3. "Key Employee" means an employee of the Company or of an Affiliate
(including, without limitation, an employee who is also serving as an
officer of the Company or of an Affiliate), designated by the Committee to
be eligible to be granted one or more Options under the Plan.
4. "Option" means a right or option granted under the Plan.
5. "Participant" means a Key Employee to whom one or more Options are
granted under the Plan. As used herein, "Participant" shall include
"Participant's Survivors" where the context requires.
6. "Participant's Survivors" means a deceased Participant's legal
representatives and/or any person or persons who acquired the Participant's
rights to an Option by will or by the laws of descent and distribution.
7. "Shares" mean those shares of the Common Stock, $.01 par value, of
the Company as to which Options have been or may be granted under the Plan.
B. Purposes Of The Plan: The Plan is intended to encourage ownership
of the Shares of the Company by Key Employees in order to attract such Key
Employees, to induce such Key Employees to remain in the employ of the
Company or of an Affiliate and to provide additional incentive for such Key
Employees to promote the success of the Company or its Affiliates. It is
further intended that Options issued pursuant to the Plan shall be eligible
to constitute "incentive stock options" within the meaning of Section 422
of the Code.
II. SHARES SUBJECT TO THE PLAN
The aggregate number of Shares as to which Options may be granted from
time to time shall be 9,227,000; provided, however that such aggregate
number shall be reduced by the number of shares which have been sold under,
or may be sold pursuant to options granted from time to time under the
Company's 1985 Non-Qualified Stock Option Plan (the "1985 Plan"), to the
same extent as if such sales had been made or options granted pursuant to
this Plan.
If any option granted under this Plan or the 1985 Plan ceases to be
"outstanding", in whole or in part, other than by reason of the exercise of
such option, the shares which were subject to such option shall be
available for the granting of other Options. Any option shall be treated as
"outstanding" until such option is exercised in full, terminates under the
provisions of this Plan or the 1985 Plan, as the case may be, or expires by
reason of lapse of time.
The aggregate number of Shares as to which Options may be granted
shall be subject to change only by means of an amendment of the Plan duly
adopted by the Company and approved by the Shareholders of the Company
within one year before or after the date of the adoption of any such
amendment, subject to the provisions of Article VII.
III. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Stock and Option Plan
Administration Committee of the Company (the "Committee"). The membership
of the Committee shall be determined and shall be subject to change without
cause and without notice from time to time, by the Company.
The Committee is authorized to interpret the provisions of the Plan or
of any Option and to make all rules and determinations necessary or
advisable for the administration of the Plan. It may from time to time
determine which employees of the Company or of any Affiliate shall be
designated as Key Employees and which of the Key Employees shall be granted
Options and, subject to the other provisions of the Plan, the number of
Shares for which an Option or Options shall be granted. Subject to the
provisions of the Plan, Options may be granted upon such terms and
conditions as the Committee may prescribe; provided, however, that such
terms and conditions shall be prescribed in the context of preserving, to
the extent reasonably possible, the United States tax status of the Options
as incentive stock options.
This Plan is intended to comply in all respects with Rule 16b-3 or its
successors promulgated under the Securities Exchange Act of 1934 ("1934
Act") with respect to participants who are subject to Section 16 of the
1934 Act,and any provision in this Plan with respect to such persons
contrary to Rule 16b-3 shall be deemed null and void to the extent
permissible by law and deemed appropriate by the Committee.
IV. ELIGIBILITY FOR PARTICIPATION
Each Participant must be a Key Employee of the Company or of an
Affiliate at the time an Option is granted.
The Committee may grant to one or more Key Employees one or more
Options, and shall designate the number of Shares to be optioned under each
Option so granted; provided, however, that no Options shall be granted
after December 31, 2002, and provided further, that the fair market value
(determined as of the date the Options are granted) of the Shares as to
which incentive stock options granted on or after January 1, 1987 by the
Company or its Affiliates to any individual employee under the Plan and/or
under any other incentive stock option plans are exercisable for the first
time in any one calendar year shall not exceed $100,000.
Notwithstanding any of the foregoing provisions, the Committee may
authorize the grant of an Option to a person not then in the employ of the
Company or of an Affiliate, conditioned upon such person becoming eligible
to be a Participant at or prior to the execution of the Option agreement
evidencing such Option.
In no event shall any employee be granted in any calendar year options
to purchase or receive more than 600,000 shares of the Company's Common
Stock pursuant to this Plan.
V. TERMS AND CONDITIONS
Each Option shall be set forth in writing in an Option agreement, duly
executed on behalf of the Company and by the Participant to whom such
Option is granted. No Option shall be deemed to have been granted and no
purported grant of any Option shall be effective, until such Option shall
have been approved by the Committee. The Committee may provide that Options
be granted subject to such conditions as the Committee may deem
appropriate, including without limitation, subsequent approval by the
shareholders of the Company of this Plan or any amendments thereto. Each
such Option agreement shall be subject to at least the following terms and
conditions:
A. Option Price: If, including for this purpose the Shares which are
the subject of Options previously granted and outstanding or proposed to be
granted hereunder, the optionee owns 10% or less of the total combined
voting power of all classes of share capital of the Company, the Option
price (per share) of the Shares covered by each Option granted hereunder
shall be not less than the fair market value (per share) of the Shares on
the date of the grant of the Option; provided, however, that in no event
shall the Option price be less than the par value per share of Common
Stock. In all other cases, the Option price shall be not less than 110% of
the said fair market value. For purposes hereof, the fair market value
shall be the average between the high and low sale prices, as reported in
the National Association of Securities Dealers Automated Quotation System
("NASDAQ") for the date of the grant of the Option or, if none, for the
most recent trading date thirty (30)days or less prior to the date of the
grant of the Option on which the Common Stock was traded. If the fair
market value cannot be determined under the preceding sentence, it shall be
determined in good faith by the Committee.
B. Number of Shares: Each Option shall state the number of Shares to
which it pertains. C. Term of Option: Each Option shall terminate at
such date as the Committee, at the time it authorizes the grant of the
Option, shall determine, and shall be subject to earlier termination as
herein provided, except that if the option price is required under
Paragraph A of this Article V to be at least 110% fair market value, each
such Option shall terminate not more than five (5) years from the date of
the grant hereof; and provided that in no case may the term of any Option
exceed ten (10) years.
D. Date of Exercise: The Committee may prescribe the date or dates on
which the Option becomes exercisable, and may provide that the Option
rights accrue or become exercisable in installments over a period of months
or years, or upon the attainment of stated goals. The Committee may
stipulate that any Option which becomes exercisable shall be subject to
cancellation or that Shares purchased upon the exercise of such Option
shall be subject to repurchase rights in favor of the Company. In such
event, the Committee shall determine the date or dates, or event or events,
upon which such cancellation or repurchase rights shall become effective or
shall lapse, as the case maybe.
E. Medium of Payment: The option price shall be payable upon the
exercise of the Option. It shall be payable in cash, or, if permitted by
the Committee and by Section 422 of the Code, in shares or other
consideration.
F. Prior Options: By its terms, each Option granted prior to January
1, 1987 under the Plan to a Participant, shall not be exercisable while
there is"outstanding" any other incentive stock option (as defined in the
predecessor to Section 422 of the Code), which was granted before the grant
of such Option, to such Participant to purchase Shares in the Company or in
an Affiliate or in a predecessor of the Company or of an Affiliate.
G. Termination of Employment: A Participant who ceases (for any reason
other than death or disability or termination by the Participant's employer
for cause) to be an employee of the Company or of an Affiliate, may
exercise any Option granted to such Participant, to the extent that the
right to purchase Shares thereunder has accrued on the date of such
termination of employment, but only within three (3) months, or such
shorter period as may be determined by the Committee, after such date, or,
if earlier, within the originally prescribed term of the Option. A
Participant's employment shall not be deemed terminated by reason of a
transfer to another employer which is the Company or an Affiliate.
A Participant whose employment is terminated by the Participant's
employer for cause shall forthwith upon such termination cease to have any
right to exercise any Option. For purposes of this paragraph, "cause" shall
be deemed to include dishonesty with respect to the employer,
insubordination,substantial malfeasance or non-feasance of duty,
unauthorized disclosure of confidential information, and conduct
substantially prejudicial to the business of the Company or any Affiliate.
The determination of the Committee as to the existence of cause shall be
conclusive on the Participant and Company.
A Participant to whom an Option has been granted under the Plan who is
absent from work with the Company or with an Affiliate because of temporary
disability, or who is on leave of absence for any purpose permitted by any
authoritative interpretation of Section 422, shall not, during the period
of any such absence, be deemed, by virtue of such absence alone, to have
terminated his employment with the Company or with an Affiliate, except as
the Committee may otherwise expressly provide.
H. Disability: If a Participant ceases to be an employee of the
Company or of an Affiliate by reason of Disability, any Option held by him
or her on the date of Disability shall be exercisable as to all or any part
of the Shares subject to the Option, all of which shares shall be fully
vested as of the date of such Disability. A Disabled Participant may
exercise such Option only within a period of one (1) year after the date as
of which the Committee determines that he or she became Disabled, or, if
earlier, within the originally prescribed term of the Option.
I. Death: If a Participant dies while the Participant is an employee
of the Company or of an Affiliate, any Option held by him or her at the
date of death shall be exercisable as to all or any part of the Shares
subject to the Option, all of which shares shall be fully vested as of the
date of the Participant's death. A deceased Participant's Survivors may
exercise such Option only within a period of one (1) year after the date of
death, or, if earlier, within the originally prescribed term of the Option.
J. Exercise of Option and Issue of Shares: Options shall be exercised
by giving written notice to the Company, addressed to the Company at the
address specified in the Option agreement, with which the Participant shall
tender the Option price. Such written notice shall be signed by the person
exercising the Option, shall state the number of Shares with respect to
which the Option is being exercised, and shall contain any warranty
required by Article VI. The issuance of the Shares may be delayed by the
Company if any law or regulation requires the Company to take any action
with respect to the shares prior to the issuance thereof. Without limiting
the generality of the foregoing, nothing contained herein shall be deemed
to require the Company to issue any Shares if prohibited by law or
applicable regulation.
The Shares shall, upon delivery, be evidenced by an appropriate
certificate or certificates in respect of paid-up, non-assessable Shares.
K. Rights as a Shareholder: No Participant to whom an Option has been
granted shall have rights as a shareholder with respect to any Shares
covered by such Option except as to such Shares as have been registered in
the Company's share register in the name of such Participant upon the due
exercise of the Option.
L. Assignability and Transferability of Options: By its terms, an
Option granted to a Participant shall not be transferable by the
Participant otherwise than by will or by the laws of descent and
distribution and shall be exercisable, during the Participant's lifetime,
only by such Participant. Such Option shall not be assigned, pledged, or
hypothecated in any way (whether by operation of law or otherwise) and
shall not be subject to execution, attachment, or similar process. Any
attempted transfer, assignment, pledge, hypothecation, or other disposition
of any Option or of any rights granted thereunder contrary to the
provisions of this Paragraph L, or the levy of any attachment or similar
process upon an Option or such rights, shall be null and void.
M. Tax Withholding: In the event that any federal, state, or local
income taxes, employment taxes, Federal Insurance Contributions Act
("F.I.C.A.") withholdings or other amounts are required by applicable law
or governmental regulation to be withheld from the Option holder's salary
in connection with the exercise of an Option, the Option holder shall
advance in cash to the Company, or to any Affiliate of the Company which
employs or employed the Option holder, the amount of such withholdings
unless a different withholding arrangement, including the use of shares of
the Company's Common Stock, is authorized by the Committee (and permitted
by law), provided, however, that with respect to persons subject to Section
16 of the 1934 Act, any such withholding arrangement shall be in compliance
with any applicable provisions of Rule 16b-3 promulgated under Section 16
of the 1934 Act. For purposes hereof, the fair market value of the shares
withheld for purposes of payroll withholding shall be determined in the
manner provided in Section V.A. above, as of the most recent practicable
date prior to the date of exercise. If the fair market value of the shares
withheld is less than the amount of payroll withholdings required, the
Option holder may be required to advance the difference in cash to the
Company or the Affiliate employer.
N. Reload Options: Concurrently with the award of Options under the
Plan, the Committee may authorize reload options ("Reload Options") to
purchase for cash or shares a number of shares of Common Stock. The number
of Reload Options shall equal (i) the number of shares of Common Stock used
to exercise the underlying Options and (ii) to the extent authorized by the
Committee, the number of shares of Common Stock used to satisfy any tax
withholding requirement incident to the exercise of the underlying Options.
The grant of a Reload Option will become effective upon the exercise of
underlying Options or Reload Options through the use of shares of Common
Stock held by the optionee for at least 6 months. Reload Options must be
evidenced in Option agreements.The Option price per share of Common Stock
deliverable upon the exercise of a Reload Option shall be determined in
accordance with Paragraph V.A. hereof on the date the grant of the Reload
Option becomes effective. The term of each Reload Option shall be equal to
the remaining option term of the underlying Option. No additional Reload
Options shall be granted to Option holders when Options and/or Reload
Options are exercised pursuant to the terms of this Plan following
termination of the Option holder's employment or on account of death or
total and permanent disability. All other provisions of this Plan with
respect to Options shall apply equally to Reload Options.
O. Other provisions: The Option agreements
authorized under the Plan shall be subject to such other terms and
conditions, including, without limitation, restrictions upon the exercise
of the Option, as the Committee shall deem advisable. Any such Option
agreement shall contain such limitations and restrictions upon the exercise
of the Option as shall be necessary in order that such Option can be an
"incentive stock option" within the meaning of the Section 442 of the Code.
VI. Purchase for Investment
If, and to the extent that, the issuance of Shares pursuant to the
exercise of Options is deemed by the Company to be subject to the United
States Securities Act of 1933, as now in force or hereafter amended, ("1993
Act"), or to the securities laws of any other jurisdiction, the Company
shall be under no obligation to issue the Shares covered by such exercise
unless the person or persons who exercises or who exercise such Option
shall make such warranty as may be required by any applicable securities
law of any applicable jurisdiction and shall, in the case of the
applicability of the 1933 Act, in the absence of an effective registration
under such Act with respect to such Shares, warrant to the Company, at the
time of such exercise, that such person is or that they are acquiring the
Shares to be issued to such person or to them, pursuant to such exercise of
the Option, for investment and not with a view to, or for sale in
connection with, the distribution of any such Shares; and in such events
the person or persons acquiring such Shares shall be bound by the
provisions of a legend endorsed upon any share certificates expressing the
requirements of any applicable non-United States securities law, or, in
cases deemed governed by the 1933 Act substantially the following legend,
which shall be endorsed upon the certificate or certificates evidencing the
Shares issued by the Company pursuant to such exercise:
"The shares have not been registered under the securities laws of any
country including the United States Securities Act of 1933, as
amended, and the Company may refuse to permit the sale or transfer of
all or any of the shares until (1) the Company has received an opinion
of Counsel satisfactory to the Company that any such transfer is
exempt from registration under all applicable securities laws or (2)
in the case of sales or transfer to which the United States Securities
Act of 1933 is applicable, unless a registration statement with
respect to such shares shall be effective under such Act, as amended."
Without limiting the generality of the foregoing, the Company may
delay issuance of the Shares until completion of any action or obtaining of
any consent which the Company deems necessary under any applicable law
(including, without limitation, state securities or "blue sky" laws).
VII. Adjustments upon Changes in Capitalization
In the event that the outstanding Common Stock, $.01 par value, of the
Company is changed into or exchanged for a different number or kind of
shares or other securities of the Company or of another corporation by
reason of any reorganization, merger, consolidation, recapitalization,
reclassification, change in par value, stock split-up, combination of
shares or dividend payable in capital stock, or the like, appropriate
adjustment shall be made in the number and kind of Shares for the purchase
of which Options may be granted under the Plan, and, in addition,
appropriate adjustment shall be made in the number and kind of Shares and
in the Option price per share subject to outstanding Options so that each
Option holder shall be in a position equivalent to the position the Option
holder would have been in had the Option holder exercised the Options
immediately prior to the applicable event. No such adjustment shall be
made which shall, within the meaning of Section 424 of the Code, constitute
such a modification, extension or renewal of any Option as to cause it to
be considered as the grant of a new Option.
VIII. Dissolution or Liquidation of the Company
Upon the dissolution or liquidation of the company other than in
connection with a transaction to which the preceding Article VII is
applicable, all Options granted hereunder shall terminate and become null
and void; provided, however, that if the rights of a Participant or the
Participant's Survivors hereunder have not otherwise terminated and
expired, the Participant or the Participant's Survivors shall have the
right immediately prior to such dissolution or liquidation to exercise any
Option granted hereunder to the extent that the right to purchase Shares
thereunder has accrued as of the date of exercise immediately prior to such
dissolution or liquidation.
IX. Termination of the Plan
The Plan shall terminate on December 31, 2002. The Plan may be
terminated at an earlier date by vote of the Shareholders; provided,
however, that expiration or any such earlier termination shall not affect
any Option granted or Option agreements executed prior to expiration or the
effective date of such termination.
X. Amendment of the Plan
The Plan may be amended by action of the Committee or the Board of
Directors of the Company; provided, however, that if the scope of any
amendment is such as to require shareholder approval in order to preserve
incentive stock option treatment, then such amendments shall also require
approval, within one (1) year before or after the adoption thereof, by the
shareholders, and provided further that if the scope of any amendment is
such as to require shareholder approval in order to comply with Rule 16b-3
under the 1934 Act, then such amendment shall also require approval by the
shareholders. Any amendment shall not affect any Options theretofore
granted and any Option agreements theretofore executed by the Company and a
Participant, unless such amendment shall expressly so provide. No
amendment shall adversely affect any Participant with respect to an
outstanding Option without the written consent of such Participant. With
the consent of the Option holder affected, the Committee may amend any
outstanding Option agreement in a manner not inconsistent with the plan,
including, without limitation, to accelerate the date of exercise of any
installment of any Option.
XI. Employment Relationship
Nothing herein contained shall be deemed to prevent the Company or an
Affiliate from terminating the employment of a Participant, nor to prevent
a Participant from terminating the Participant's employment with the
Company or an Affiliate.
XII. Effective Date
This Plan first became effective as of January 8, 1982, subject to the
approval, within one (1) year after such adoption, of the shareholders of
the Company.
