FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission file number: 0-12042
BIOGEN, INC.
(Exact name of Registrant as specified in its charter)
Massachusetts 04-3002117
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
14 Cambridge Center, Cambridge, Massachusetts 02142
(Address of principal executive offices)(zip code)
Registrant's telephone number, including area code: (617) 679-2000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
(Title of class)
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of Registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Aggregate market value of Common Stock held by nonaffiliates
of the Registrant at January 18, 1996: $2,204,009,310 (excludes
shares held by directors). Exclusion of shares held by any person
should not be construed to indicate that such person possesses the
power, direct or indirect, to direct or cause the direction of
management or policies of the Registrant, or that such person is
controlled by or under common control with the Registrant. Common
Stock outstanding at January 18, 1996: 35,513,951 shares.
Documents Incorporated by Reference
Portions of the Registrant's definitive Proxy Statement for
its 1996 Annual Meeting of Stockholders are incorporated by
reference into Part III of this Report, and portions of the
Registrant's 1995 Annual Report to Shareholders are incorporated by
reference into Parts II and IV of this Report.<PAGE>
PART I
Item 1 - Business
Overview
Biogen, Inc. ("Biogen" or the "Company") is a biopharmaceutical
company principally engaged in the business of developing and
manufacturing drugs for human healthcare through genetic engineering.
Biogen currently derives revenues from a number of products sold by
its licensees around the world. During 1995, Biogen's licensees
generated total sales of approximately $1.8 billion from these
products. In the future, Biogen expects to derive additional revenues
from sales of proprietary products which Biogen will market. Biogen
intends to market as its first product its recombinant beta
interferon, AVONEX TM interferon beta 1a, as a therapy for relapsing
forms of multiple sclerosis. In December 1995, an Advisory Committee
of the United States Food and Drug Administration ("FDA") recommended
that the FDA approve AVONEX TM as a treatment for relapsing forms of
multiple sclerosis. Biogen anticipates that it will receive FDA
approval to market and sell AVONEX TM in the United States in the
first half of 1996 after conclusion of labeling discussions with the
FDA and completion of the FDA's inspection of the manufacturing
facilities used to produce AVONEX TM. In 1995, Biogen also applied
for marketing approval for AVONEX TM in several other jurisdictions,
including Canada and the European Union. The Company is in the
process of building the commercial infrastructure necessary to support
marketing and sales of AVONEX TM.
Biogen continues to devote significant resources to its ongoing
research and development efforts. Biogen focuses its research and
development efforts on areas where it has particular scientific and
competitive strengths: inflammatory diseases, respiratory diseases and
certain cancers and viruses. In 1995, Biogen began Phase I clinical
trials of LFA3TIP, one of the product candidates from its T-cell
activation, T-cell/B-cell interaction and cell adhesion programs.
Biogen is conducting preclinical tests on two other anti-inflammatory
product candidates from these programs. Biogen's anti-inflammatory
product candidates are being tested for therapeutic uses in a broad
range of acute and chronic inflammatory and autoimmune diseases.
Biogen is also conducting preclinical tests on an antimucolytic agent
for treatment in cystic fibrosis and several other pulmonary diseases.
In addition, Biogen has earlier-stage research programs directed
toward finding therapies for renal failure and restenosis and, through
a collaboration with Genovo, Inc., toward developing products for
human gene therapy.
AVONEX TM Interferon Beta 1a
Natural beta interferon is a protein produced by fibroblast cells
in response to viral infection. Biogen has developed a recombinant
form of beta interferon for use as a therapy in multiple sclerosis.
Multiple sclerosis is a progressive neurological disease in which the
body loses the ability to transmit messages among nerve cells, leading
to a loss of muscle control, paralysis and, in some cases, death.
Patients with active relapsing multiple sclerosis experience an uneven
pattern of disease progression characterized by periods of stability
interrupted by flareups of the disease after which the patient returns
to a new baseline of functioning. In December 1995, the Central
Nervous System Advisory Committee of the FDA recommended that the FDA
approve Biogen's AVONEX TM interferon beta 1a for treatment of
relapsing forms of multiple sclerosis. The Advisory Committee's
recommendation was based on data from a Phase III clinical trial in
which approximately 37% fewer patients receiving AVONEX TM progressed
one or more units on the Expanded Disability Status Scale (EDSS) than
patients receiving placebo. The EDSS is the standard measure of
disease progression in multiple sclerosis. Patients receiving AVONEX
TM in the trial also experienced approximately 32% fewer exacerbations
of the disease than patients receiving placebo. Additional studies
of AVONEX TM are underway or planned, including an open-label study
to gather additional safety data which began in late 1995, a
monosymptomatic study of AVONEX TM in patients who have had only one
confirmed exacerbation which is scheduled to begin in 1996 and a dose
comparison study which is also scheduled to begin in 1996.
Biogen anticipates that it will receive FDA approval of AVONEX
for the treatment of relapsing forms of multiple sclerosis in the
first half of 1996 after conclusion of labeling discussions with the
FDA and completion of the FDA's inspection of the Company's
manufacturing facility in Cambridge, Massachusetts and the facilities
used by the Company's contract manufacturers in finishing, filling and
packaging the final product. See "Item 2- Properties." Biogen is in
the process of building the commercial infrastructure necessary to
support the marketing and sale of AVONEX TM. The Company plans to
begin marketing AVONEX TM in the United States shortly after receipt
of FDA approval. The Company has also applied for marketing approval
for AVONEX TM in several other jurisdictions, including Canada and the
European Union. See "Patents and Other Proprietary Rights."
Major Research Programs
Biogen's research is focused on biological systems and processes
where its scientific expertise in molecular biology, cell biology,
immunology and protein chemistry can lead to a greater understanding
of disease processes and, as a result, to the creation of new
pharmaceuticals. Biogen selects product candidates from its research
programs to test in clinical trials, focusing its efforts on those
agents which it believes have the greatest potential competitive
advantages and large commercial markets. Described below are Biogen's
major research programs:
Inflammation Program
Biogen scientists have been working to understand the activities
of white blood cells involved in the inflammation process. Biogen has
focused on two events central to inflammation: (1) the activation of
T-cells, specialized white blood cells which initiate and control the
immune response; and (2) the adhesion of white blood cells to the
endothelium (blood vessel walls) and their migration through the
endothelium into surrounding tissues where they cause inflammation.
Activation and adhesion of white blood cells depend upon the binding
of pairs of receptor molecules which appear on the surface of white
blood cells and endothelial cells. When these pairs of receptors bind
together, their interactions create cellular "pathways" for activation
and adhesion events. Biogen has investigated several of these
cellular pathways and identified new receptors in certain of these
pathways.
Based on its research, Biogen has selected three cellular
pathways as the promising points of therapeutic intervention to
prevent inflammation: (1) the LFA-3/CD2 pathway, which activates
T-cells, (2) the VCAM-1/VLA-4 pathway, which is necessary for the
adhesion of several types of white blood cells to endothelial cells,
and (3) the CD40L/CD40 pathway, which activates B-cells which produce
antibodies. Biogen believes that products which interrupt these
pathways will block the inflammation process at an early stage, thus
preventing tissue damage more effectively than currently available
therapies. Moreover, such products should result in selective
inhibition of the immune system, rather than the broad suppression
associated with many therapies currently available or under
development. In in vitro and in vivo experiments the product
candidates from the inflammation program have shown promising
inhibitory effects. In 1995, the Company began a Phase I clinical
trial of one of the product candidates, LFA3TIP, in healthy human
volunteers. LFA3TIP is a recombinant protein that has been designed
to modulate immune responses through interaction with the CD2
receptor. Biogen plans to investigate the use of LFA3TIP initially
as a treatment for severe psoriasis. Biogen is conducting preclinical
tests on two other anti-inflammatory product candidates.
Gelsolin
Thick viscid secretions in the airways of cystic fibrosis ("CF")
patients and patients with other respiratory diseases are believed to
cause progressive pulmonary destruction. A major contributor to the
viscosity of mucus secretions is the release of a large amount of
filamentous actin by degenerating inflammatory cells which migrate in
large numbers to the airways of patients with these diseases. Biogen
and its collaborators believe that severing actin filaments
contaminating the airway mucus may lead to clinical improvement.
Biogen is developing a recombinant form of the actin severing agent,
gelsolin, for reducing airway mucous viscosity in patients with CF,
chronic bronchitis and several other pulmonary diseases. The Company
is presently conducting preclinical studies of gelsolin product
candidates.
Gene Therapy
In 1995, the Company entered into a collaborative research
agreement with Genovo, Inc. ("Genovo") for the development of certain
human gene therapy treatments. Under the agreement, Biogen will pay
more than $35 million to Genovo over a five-year period to fund
research at Genovo and at the Institute for Human Gene Therapy at the
University of Pennsylvania. Under its agreement with Genovo, Biogen
has received a minority equity interest in Genovo and certain
licensing rights related to diseases of the liver and lung with the
first disease targets to be in the areas of cystic fibrosis and
familial hypercholesterolemia.
Other Research Programs
As part of its further research efforts, Biogen is investigating
methods of preventing restenosis and exploring the use of growth
factors to prevent or treat the degeneration of the kidney which
results from renal failure. The Company is also investigating new ways
to modify immune responses more specifically in order to treat
diseases of the immune system.
Research and Development Costs
During 1995, 1994 and 1993, Biogen's research and development
costs were approximately $87.4 million, $91.2 million and $79.3
million, respectively.
Risks Associated with Drug Development
Certain of the statements set forth above regarding the Company's
drug development programs, such as the statement regarding the
anticipated receipt and timing of regulatory approval by the FDA for
the marketing of AVONEX TM, are forward-looking and based upon the
Company's current belief as to the outcome and timing of such future
events. Many important factors affect the Company's ability to
achieve the stated outcomes and to successfully develop and
commercialize drugs, including the ability to obtain and maintain all
necessary patents or licenses, to demonstrate the safety and efficacy
of drug candidates at each stage of the clinical trial process, to
meet applicable regulatory standards and receive required regulatory
approvals, to be capable of producing drug candidates in commercial
quantities at reasonable costs, to compete successfully against other
products, and to market products successfully. For example, to
receive final marketing approval from the FDA for AVONEX TM in the
first half of 1996, the Company must successfully complete the FDA's
inspection of the facilities used to produce AVONEX TM and conclude
labelling discussions with the FDA. There can be no assurance that
any of the products described above or resulting from Biogen's
research programs will be successfully developed, prove to be safe and
efficacious at each stage of clinical trials, meet applicable
regulatory standards, be capable of being produced in commercial
quantities at reasonable costs or be successfully marketed.
Principal Products Being Marketed or Developed by Biogen's Licensees
Intron (R) A Alpha Interferon
Alpha interferon is a naturally occurring protein produced by
normal white blood cells. Biogen has been granted patents in the
United States and in Europe covering the production of alpha
interferons through recombinant DNA techniques and has applications
pending in numerous other countries. See "Patents and Other
Proprietary Rights." Biogen's worldwide licensee for recombinant
alpha interferon, Schering-Plough Corporation ("Schering-Plough"),
first began commercial sales of its Intron (R) A brand of alpha
interferon in the United States in 1986 for hairy-cell leukemia.
Schering-Plough now sells Intron (R) A in 72 countries for as many as
16 indications, including hepatitis B, hepatitis C, genital warts and
Kaposi's sarcoma.
Royalties from Schering-Plough on sales of Intron (R) A accounted
for approximately 40% of Biogen's revenues (excluding interest) in
1995. The majority of sales of Intron (R) A were generated outside the
United States. Currently the largest market for Intron (R) A is in Japan
for the treatment of hepatitis C. The FDA has approved Intron R A for
the treatment of chronic hepatitis B and hepatitis C, hairy cell
leukemia, AIDS-related Kaposi's sarcoma and condylomata acuminata.
In December 1995, the FDA approved the use of Intron (R) A for injection
as an adjuvant treatment to surgery in patients at high risk for
systemic recurrence of malignant melanoma. Schering-Plough has
undertaken studies using Intron (R) A for a number of additional
indications.
Hepatitis B Vaccines and Diagnostics
Hepatitis B is a blood-borne disease which causes a serious
infection of the liver and substantially increases the risk of liver
cancer. More than 250 million people worldwide have chronic hepatitis
B virus infections. Biogen holds several important patents related
to hepatitis B antigens produced by genetic engineering techniques.
See "Patents and Other Proprietary Rights." These antigens are used
in recombinant hepatitis B vaccines and in diagnostic test kits used
to detect hepatitis B infection. In total, sales of hepatitis B
vaccines and diagnostic products by Biogen licensees exceeded $1.1
billion in 1995.
Hepatitis B Vaccines
At least 20 countries around the world, including the United
States, recommend vaccination against hepatitis B for all infants.
The United States Centers for Disease Control and the American Academy
of Pediatrics have also recommended universal immunization of ten-
year-old children and at-risk adolescents. The United States
Occupational Safety and Health Administration has recommended that all
persons with an occupational exposure to blood and other infectious
material receive the hepatitis B vaccine.
SmithKline Beecham Biologicals s.a. ("SmithKline") and Merck &
Co., Inc. ("Merck") are the two major worldwide marketers of hepatitis
B vaccines. Biogen has licensed to SmithKline exclusive rights under
Biogen's hepatitis B patents to market hepatitis B vaccines in the
major countries of the world, excluding Japan. SmithKline's vaccine
is approved in the United States and in over 60 other countries. In
1990, SmithKline and Biogen entered into a sublicense arrangement with
Merck under which Biogen currently receives royalties. Royalties from
SmithKline and Merck together accounted for approximately 48% of
Biogen's revenues (excluding interest) in 1995. Biogen has also
licensed rights under its hepatitis B patents to Merck and The Green
Cross Corporation on a non-exclusive basis in Japan.
In 1993, SmithKline initiated arbitration in the United States
regarding the rate of royalties payable on sales of hepatitis B
vaccines by SmithKline in the United States. In April 1995, an
arbitration panel ruled in Biogen's favor in the arbitration. In June
1995, SmithKline made a motion in the Federal District Court for the
Southern District of New York to vacate the arbitration panel award.
The Company believes that the Federal District Court will uphold the
arbitration decision in favor of Biogen.
Hepatitis B Diagnostics
Biogen has licensed its proprietary hepatitis B rights, on an
antigen-by-antigen and nonexclusive basis, to diagnostic kit
manufacturers. Biogen currently has hepatitis B license or license
and supply agreements for diagnostic use with more than a dozen
companies, including Abbott Laboratories, the major worldwide marketer
of hepatitis B diagnostic kits, Ortho Diagnostic Systems, Inc., Roche
Diagnostic Systems, Inc. and Organon Teknika B.V.
Other Products
Under a license agreement with Eli Lilly and Company ("Lilly"),
Biogen has granted Lilly rights under certain of Biogen's patents
related to gene expression. Lilly uses the patented vectors and
methods in several products that are on the market or in development.
Under the license agreement Biogen receives royalties on sales of
these products.
Hirulog (R) Thrombin Inhibitor
In October 1994, Biogen decided to discontinue its major
activities associated with development of its Hirulog(R) thrombin
inhibitor, based on the results of a Phase III trial of Hirulog(R) in
angioplasty. In the overall patient population, the trial results did
not demonstrate a significant positive effect, compared to the heparin
control, on the primary efficacy end-point. In a prospectively-
defined subset of high risk patients, Hirulog(R) was more effective than
heparin. An important safety advantage was also observed in patients
treated with Hirulog(R) who as a group had a more than 50% lower
incidence of major bleeding complications than the control group. In
December 1995, Biogen completed enrollment of patients in a blinded
Phase II/III trial of Hirulog(R) as an adjunctive to streptokinase in
myocardial infarction which had begun prior to Biogen's decision to
terminate Hirulog development. Analysis of data from the trial is
ongoing. Biogen continues to seek a marketing partner for Hirulog(R) .
Patents and Other Proprietary Rights
Biogen has filed numerous patent applications in the United
States and various other countries seeking protection of a number of
its processes and products, and patents have issued on a number of
these applications. Issues remain as to the ultimate degree of
protection that will be afforded to Biogen by such patents. There is
no certainty that these patents or others, if obtained, will be of
substantial protection or commercial benefit to Biogen. Furthermore,
it is not known to what extent Biogen's other pending patent
applications will ultimately be granted as patents or whether those
patents that have been issued will prevail if they are challenged in
litigation.
Trade secrets and confidential know-how are important to Biogen's
scientific and commercial success. Although Biogen seeks to protect
its proprietary information, there can be no assurance that others
will not either develop independently the same or similar information
or obtain access to Biogen's proprietary information.
Recombinant Alpha Interferon
Biogen has more than 50 patents in countries around the world,
including the United States and countries of the European Patent
Office, covering the production of recombinant alpha interferons.
Biogen continues to seek related patents in the United States and
other countries.
Four infringement suits have been filed in Biogen's name to
enforce its non-US alpha interferon patents. The first suit was filed
in Vienna, Austria against Boehringer Ingelheim Zentrale GmbH ("BI")
and two of its subsidiaries. The Austrian Court has stayed Biogen's
infringement case pending a decision by the Austrian Patent Office on
BI's petition to revoke Biogen's European (Austrian) patent on grounds
peculiar to Austrian law. In April 1995, Biogen received a favorable
decision from the Austrian Patent Office from which BI appealed. A
hearing on the appeal is expected in mid-1996. The second suit was
filed in Dusseldorf, Germany against Dr. Karl Thomae GmbH and two
other BI companies. The German trial and appeal courts ruled in favor
of Biogen and have enjoined Thomae from the further manufacture, use
or sale of recombinant alpha-2(c) interferon. The third suit was filed
in Warsaw, Poland against Boehringer Ingelheim Pharma GmbH ("BI
Pharma"). The trial is scheduled for January 1996 in Poland. The
fourth suit was filed in June 1994 in Tokyo, Japan against Amgen
Limited. The suit seeks to enjoin Amgen from its clinical testing and
planned commercialization of consensus interferon. Biogen does not
expect a decision in this case before 1997. In the United States, a
Biogen patent application claiming recombinant mature human alpha
interferon was involved in an interference to determine who was the
first to invent that specific form of alpha interferon. In December
1995, priority of invention was awarded to the applicants of a patent
application owned by Genentech Inc. and Hoffman La Roche Inc.
("Roche"). Appeal or other review of the decision may be sought. The
U.S. patent under which Biogen has licensed Schering Plough for alpha
interferon was not involved in the interference. Since Roche has
granted certain non-exclusive rights under its patent application to
Schering Plough, the decision will not affect Schering Plough's
ability to market Intron(R) A alpha interferon. See "Principal Products
Being Marketed or Developed by Biogen's Licensees".
Recombinant Hepatitis B Antigens
Biogen has more than 75 patents in countries around the world,
including three in the United States and two in countries of the
European Patent Office, and several patent applications, covering the
recombinant production of hepatitis B surface, core and "e" antigens.
Biogen continues to seek related patents in the United States and
other countries.
Biogen's first European hepatitis B patent was opposed by five
companies. The Opposition Division of the European Patent Office
maintained the patent over those oppositions. Two of the opponents
appealed the Opposition Division's decision to the Technical Board of
Appeal, which is the final arbiter of European oppositions. In June
1994, the Technical Board maintained Biogen's patent in amended form.
Biogen's second European hepatitis B patent was opposed by four
companies. In 1992, the Opposition Division held that Biogen's second
European hepatitis B patent lacked inventive step. Biogen appealed
this decision to the Technical Board of Appeal. In July 1994, the
Technical Board reversed the Opposition Division and maintained the
Biogen patent.
Biogen has filed three infringement suits to enforce its
hepatitis B patents, in England against Medeva plc ("Medeva"), in
Israel against Bio-Technology General (Israel) Ltd. ("BTG"), and in
Singapore against Scitech Medical Products Pte Ltd. and Scitech
Genetics Pte Ltd. The action against Medeva seeks to enjoin Medeva's
planned production and distribution of a hepatitis B vaccine. In
November 1993, the United Kingdom High Court of Justice ruled in favor
of Biogen and enjoined Medeva from infringement of one of Biogen's
European (UK) patents. The Court then stayed the injunction pending
Medeva's appeal. In October 1994, the United Kingdom Court of Appeal
reversed the High Court and held the Biogen patent to be invalid. In
1995, Biogen received leave from the United Kingdom House of Lords to
appeal this decision and filed its petition in June 1995. A hearing
in the House of Lords is scheduled for April 1996. If the House of
Lords does not reverse the decision of the Court of Appeal and hold
the Biogen patent valid and infringed, the Biogen hepatitis B patent
will no longer be enforceable in the United Kingdom or in any of the
various United Kingdom patent registration countries. In 1992, BTG
brought an action against Biogen seeking a compulsory license under
Biogen's Israeli hepatitis B patent and Biogen filed an infringement
suit against BTG, seeking to enjoin BTG's planned production, sale and
distribution of hepatitis B vaccine. In September 1995, the Israeli
Registrar of Patents, Designs and Trademarks decided that it was
lawful and just to grant to BTG a compulsory license. The proceeding
for setting compulsory license terms by the Registrar is scheduled for
the first half of 1996. Biogen may appeal a final decision by the
Registrar to the Israeli District Court. The infringement suit
continues. In 1993, Biogen sued Scitech Products and Scitech Genetics
in Singapore. Since Singapore is a United Kingdom patent registration
country, Biogen's continued prosecution of this case depends on a
favorable outcome in the United Kingdom House of Lords on Biogen's
appeal of the decision holding Biogen's European (UK) patent invalid.
In September 16, 1994, Biogen filed suit against SmithKline
before the President of the Commercial Court of Nivelles, Belgium
alleging unfair trade practices by SmithKline in refusing to provide
to Biogen copies of SmithKline's marketing authorizations for
hepatitis B vaccines in various European countries to enable Biogen
to obtain supplementary protection certificates for its hepatitis B
patents in those countries. In a June 2, 1995 preliminary judgment,
the President of the Commercial Court referred questions on the
subject to the European Court of Justice where the matter is pending.
Recombinant Beta Interferon
The European Patent Office and certain countries have granted
patents to Biogen covering the recombinant production of beta
interferon. In other countries, including the United States, Biogen
has filed patent applications and continues to seek patents covering
the recombinant production of beta interferon and related technology.
Biogen's European patent was opposed by one company. In December
1993, the European Patent Office's Opposition Division dismissed the
opposition and maintained Biogen's patent. The opponent appealed this
decision to the Technical Board of Appeal. Biogen expects a decision
on the appeal in mid 1996. In the United States, Biogen's claims to
key intermediates in the recombinant production of beta interferon
were involved in an interference to determine who was the first to
invent those intermediates in the United States. Priority of
invention was awarded to another party in the interference. Biogen's
pending United States claims to the production of recombinant beta
interferon were not part of that interference. Prosecution of these
claims continues.
Other parties have also filed patent applications in various
countries covering the recombinant production of beta interferon, and,
in particular, key intermediates in that production, as well as beta
interferon itself. One such party has been granted several patents
in the European Patent Office and in certain countries on these key
intermediates. The same party was awarded priority to those
intermediates in the United States interference. Biogen has obtained
non-exclusive rights to manufacture, use and sell recombinant beta
interferon under these patents in various countries of the world,
including the United States, Japan and most European countries.
Another party has been granted various patents in the United States
and in other countries on beta interferon itself. Biogen has obtained
worldwide, non-exclusive rights under these patents to make, use and
sell recombinant beta interferon. Two other patents issued in 1994
to competitors of Biogen with claims related to beta interferon; one
in the United States and one in the European Patent Office. With
respect to the United States patent, Biogen believes there are
substantial issues of validity, enforceability and scope of claims.
With respect to the European patent, Biogen has been aware of it for
many years and believes that it has no applicability to Biogen's
recombinant beta interferon product. Biogen has filed an opposition
to the European patent in the European Patent Office seeking a
revocation of the entire patent on grounds of lack of inventive step
and lack of novelty. Biogen does not believe that either patent will
prevent Biogen's commercialization of AVONEX TM interferon beta 1a for
the treatment of multiple sclerosis.
Other Patents
In January 1994, Biogen filed suit in Osaka, Japan, against
Sumitomo Pharmaceutical Co., Ltd. ("Sumitomo"). The suit seeks to
enjoin Sumitomo from importing and selling its recombinant human
growth hormone products in Japan. Biogen believes that these products
are made by a process that infringes certain of its licensed patents
relating to the secretion of proteins. Biogen does not expect a
decision in the case until 1997.
Biogen has granted Eli Lilly and Company ("Lilly") a non-
exclusive license under certain of Biogen's patents for gene
expression. Lilly uses the patented vectors and methods in several
products that are on the market or in development.
In March 1995, Biogen filed suit in the U.S. District Court for
the District of Massachusetts against Amgen Inc. ("Amgen"). The suit
seeks to enjoin Amgen from manufacturing and selling its Neupogen R
human granulocyte colony stimulating factor in the United States and
asks for damages for infringing activities. Biogen believes that to
make Neupogen R, Amgen uses technology claimed in certain of Biogen's
licensed patents for gene expression. Biogen does not expect a trial
in the case prior to 1997.
In September 1995, Biogen filed suit in the U.S. District Court
for the District of Massachusetts against Pharmacia Inc.
("Pharmacia"). The suit seeks to enjoin Pharmacia from importing and
selling its Genotropin R recombinant human growth hormone in the
United States. Biogen believes that Genotropin R is made by a process
that infringes certain of Biogen's licensed patents relating to the
secretion of proteins. Biogen does not expect a trial in the case
prior to 1997.
Biogen's European patent relating to gene expression was opposed
by Biotechnology General Corp. in December 1993. In August 1995, the
Opposition Division of the European Patent Office sent an interim
communication with a preliminary and non-binding opinion that, at the
present stage of the proceedings, the patent would be maintained. A
hearing is scheduled for March 1996.
Third Party Patents
Biogen is aware that others, including various universities and
companies working in biotechnology, have also filed patent
applications and have been granted patents in the United States and
in other countries claiming subject matter potentially useful or
necessary to Biogen's business. Some of those patents and
applications claim only specific products or methods of making such
products, while others claim more general processes or techniques
useful or now used in the biotechnology industry. Genentech has been
granted patents and is prosecuting other patent applications in the
United States and certain other countries which it may allege are
currently used by Biogen and the rest of the biotechnology industry
to produce recombinant proteins in microbial hosts. Genentech has
offered to Biogen and others in the industry non-exclusive licenses
under those patents and patent applications for various proteins and
in various fields of use, but not for others. Schering-Plough,
Biogen's exclusive licensee for recombinant alpha interferon, is
licensed under certain of these patents for the manufacture, use and
sale of recombinant alpha interferon. The ultimate scope and validity
of Genentech's patents, of other existing patents, or of patents which
may be granted to third parties in the future, the extent to which
Biogen may wish or be required to acquire rights under such patents,
and the availability and cost of acquiring such rights currently
cannot be determined by Biogen.
There has been, and Biogen expects that there may continue to be,
significant litigation in the industry regarding patents and other
intellectual property rights. Such litigation could create
uncertainty and consume substantial resources.
Competition and Marketing
In General
Competition in the biotechnology and pharmaceutical industries
is intense and comes from many and varied sources. Biogen does not
believe that it or any of the other industry leaders can be considered
dominant in view of the rapid technological change in the industry.
Biogen experiences significant competition from specialized
biotechnology firms in the United States, Europe and elsewhere and
from many large pharmaceutical, chemical and other companies. Certain
of these companies have substantially greater financial, marketing and
human resources than Biogen. The pharmaceutical companies have
considerable experience in undertaking clinical trials and in
obtaining regulatory approval to market pharmaceutical products. In
addition, certain of Biogen's products may be subject to competition
from products developed using alternatives to biotechnology
techniques.
Much competition is directed towards establishing proprietary
positions through research and development. A key aspect of such
competition is recruiting and retaining qualified scientists and
technicians. Biogen believes that it has been successful in
attracting skilled and experienced scientific personnel. Biogen
believes that leadership in the industry will be based on managerial
and technological superiority and may be influenced significantly by
patents and other forms of protection of proprietary information. See
"Patents and Other Proprietary Rights". The achievement of such a
position depends upon Biogen's ability to attract and retain skilled
and experienced personnel, its ability to identify and exploit
commercially the products resulting from biotechnology and the
availability of adequate financial resources to fund facilities,
equipment, personnel, clinical testing, manufacturing and marketing.
Many of Biogen's competitors are working to develop products
similar to those under development by Biogen. The timing of the entry
of a new pharmaceutical product into the market can be an important
factor in determining the product's eventual success and
profitability. Early entry may have important advantages in gaining
product acceptance and market share. Moreover, for certain diseases
with limited patient populations, the FDA is prevented under the
Orphan Drug Act, for a period of seven years, from approving more than
one application for the "same" product for a single orphan drug
designation, unless a later product is considered clinically superior.
Accordingly, the relative speed with which Biogen can develop
products, complete the testing and approval process and supply
commercial quantities of the product to the market is expected to have
an important impact on Biogen's competitive position. In addition,
competition among products approved for sale may be based, among other
things, on patent position, product efficacy, safety, reliability,
availability and price.
AVONEX TM
As a treatment for multiple sclerosis, AVONEX TM will compete
with interferon beta 1b which is sold in the United States under the
brandname Betaseron(R) by Berlex Laboratories, Inc., a United States
affiliate of Schering AG, Germany ("Schering AG"), and sold in Europe
under the brandname Betaferon TM by Schering AG. In Italy and Spain,
AVONEX TM will also compete with an extracted form of beta interferon
sold by Ares Serono S.A. Biogen may also face competition from Teva
Pharmaceuticals which has filed a New Drug Application with the FDA
and applications for marketing approvals in other countries for
Copolymer 1 as a treatment for multiple sclerosis. In addition, a
number of other companies are working to develop products to treat
multiple sclerosis which may in the future compete with AVONEX TM.
Biogen believes that competition among treatments for multiple
sclerosis will be based on product performance, service and price.
Regulation
Biogen's current and contemplated activities and the products and
processes that will result from such activities are and will be
subject to substantial government regulation.
Before new pharmaceutical products may be sold in the United
States and other countries, clinical trials of the products must be
conducted and the results submitted to appropriate regulatory agencies
for approval. These clinical trial programs generally involve a
three-phase process. Typically, in Phase I, trials are conducted in
volunteers or patients to determine the early side effect profile and,
perhaps, the pattern of drug distribution and metabolism. In Phase
II, trials are conducted in groups of patients with a specific disease
in order to determine appropriate dosages, expand evidence of the
safety profile and, perhaps, determine preliminary efficacy. In Phase
III, large scale, comparative trials are conducted on patients with
a target disease in order to generate enough data to provide the
statistical proof of efficacy and safety required by national
regulatory agencies. The receipt of regulatory approvals often takes
a number of years, involving the expenditure of substantial resources
and depends on a number of factors, including the severity of the
disease in question, the availability of alternative treatments and
the risks and benefits demonstrated in clinical trials. On occasion,
regulatory authorities may require larger or additional studies,
leading to unanticipated delay or expense.
In connection with the commercialization of products resulting
from Biogen's projects, it is necessary, in a number of countries, to
comply with certain regulations relating to the manufacturing and
marketing of such products and to the products themselves. For
example, the commercial manufacturing, marketing and exporting of
pharmaceutical products require the approval of the FDA in the United
States and of comparable agencies in other countries. The FDA has
established mandatory procedures and safety standards which apply to
the manufacture, clinical testing and marketing of pharmaceutical
products in the United States. The process of seeking and obtaining
FDA approval for a new product and the facilities in which it can be
produced is likely to take a number of years and involve the
expenditure of substantial resources. In addition, the regulatory
approval processes for products in the United States, Canada and
Europe are undergoing or may undergo changes. Biogen cannot determine
what effect any changes in regulatory approval processes may have on
its business.
In the United States, the federal government regularly considers
reforming health care coverage and costs. Resulting legislation or
regulatory actions may have a significant effect on the Company's
business. Biogen's ability to commercialize successfully human
pharmaceutical products also may depend in part on the extent to which
reimbursement for the costs of such products and related treatments
will be available from government health administration authorities,
private health insurers and other organizations. Currently,
substantial uncertainty exists as to the reimbursement status of newly
approved health care products by third-party payors.
Biogen's policy is to conduct relevant research in compliance
with the current United States National Institutes of Health
Guidelines for Research Involving Recombinant DNA Molecules (the "NIH
Guidelines") and all other federal and state regulations. By local
ordinance, Biogen is required, among other things, to comply with the
NIH Guidelines in relation to its facilities in Cambridge,
Massachusetts, and is required to operate pursuant to certain permits.
Various laws, regulations and recommendations relating to safe working
conditions, laboratory practices, the experimental use of animals and
the purchase, storage, movement, import and export and use and
disposal of hazardous or potentially hazardous substances, including
radioactive compounds and infectious disease agents, used in
connection with Biogen's research work are or may be applicable to its
activities. These include, among others, the United States Atomic
Energy Act, the Clean Air Act, the Clean Water Act, the Occupational
Safety and Health Act, the National Environmental Policy Act, the
Toxic Substances Control Act and the Resource Conservation and
Recovery Act, national restrictions on technology transfer and import,
export and customs regulations. The extent of government regulation
which might result from future legislation or administrative action
cannot accurately be predicted. Certain agreements entered into by
Biogen involving exclusive license rights may be subject to national
or supranational antitrust regulatory control, the effect of which
also cannot be predicted.
Employees
At December 31, 1995, Biogen employed 503 full-time employees, of whom
88 held Ph.D. and/or M.D. degrees. Of the 503 employees,
approximately 186 were engaged in, or directly supported, research and
development and approximately 137 were involved in, or directly
supported, manufacturing, quality assurance/quality control,
regulatory, medical operations and preclinical and clinical
development. Biogen maintains consulting arrangements with a number
of scientists at various universities and other research institutions
in Europe and the United States, including the eight outside members
of its Scientific Board.
Item 2 - Properties
Substantially all of Biogen's facilities are located in Cambridge
Massachusetts. In 1995, the Company completed construction of a
150,000 square foot building in Cambridge which houses laboratories
and office space. The Company also leases a total of approximately
269,000 square feet of additional office and research and development
space in all or part of five other buildings in Cambridge, consisting
of a 67,000 square foot building housing manufacturing facilities,
plant, laboratories and office space, a building with 64,000 square
feet of space containing laboratories, purification and aseptic
bottling facilities and office space, a multitenant building where the
Company occupies approximately 95,000 square feet of office space, a
17,000 square foot building housing office space and a 26,000 square
foot building designed for specialized research laboratories. The
leases for the leased sites terminate in 2003, 2004, 2000, 2004 and
1996, respectively, each with the right to renew.
The Company's European headquarters consists of 1,450 square
meters of office space in a multitenant building in Nanterre, France.
The lease for this space terminates in 2003. The Company also has
small offices in England and Germany.
In the second quarter of 1995, the Company began construction of
a biologics manufacturing facility in Research Triangle Park, North
Carolina. The estimated cost of construction, including land, is $57
million. The Company anticipates construction to be completed in
1997. The Company believes that its production plant in Cambridge,
Massachusetts and existing outside sources will allow it to meet its
production needs for clinical trials and its initial production needs
for AVONEX TM until completion and FDA licensing of the North Carolina
facility. Biogen believes that its existing facilities are in
compliance with appropriate regulatory standards. The Company expects
that additional facilities and outside sources will be required to
meet the Company's future research and production needs.
Item 3 - Legal Proceedings
During the fourth quarter of 1994, a total of six class action
lawsuits were initiated against the Company and several of its
directors and officers. On March 3, 1995, these cases were
consolidated into a single proceeding in the United States District
Court for the District of Massachusetts. The lawsuits generally
allege that the Company and the named directors and officers violated
federal securities laws in connection with the Company's public
disclosures, including disclosures relating to its Hirulog R thrombin
inhibitor and other disclosures made in connection with patent matters
related to AVONEX TM. The plaintiffs seek damages in unspecified
amounts. On January 23, 1996, in response to motions to dismiss the
entire case filed by Biogen and the named officer and director
defendants, the District Court issued a Memorandum and Order (dated
January 22, 1996) dismissing most of the claims asserted in the
plaintiffs' Second Amended Complaint, including all claims against the
Company's outside directors and all claims based upon statements
concerning patent matters related to AVONEX TM. The Court also
dismissed most of the claims brought by the plaintiffs relating to
statements concerning the Company's Hirulog(R) thrombin inhibitor,
including all claims relating to the Hirulog(R) Phase II clinical
trials. The only two claims remaining in the case pertain to
statements concerning the results of the Hirulog(R) TIMI-7 clinical
trials on unstable angina. The Court did not reach a decision on the
merits of these claims. The Company will continue to defend
vigorously the claims that remain in the case.
For a description of legal proceedings relating to patent rights,
see Item 1, "Business-Patents and Other Proprietary Rights."
Item 4 - Submission of Matters to a Vote of Security Holders
None
Executive Officers
The following is a list of the executive officers of the Company
and their principal positions with the Company. Each individual
officer serves at the pleasure of the Board of Directors.
Name Age Positions
James L. Vincent . . . 56 Chairman of the Board of Directors,
Chief Executive Officer
James R. Tobin . . . . . 51 President and Chief Operating Officer
Michael J. Astrue . . . 39 Vice President - General Counsel,
Secretary and Clerk
Kenneth M. Bate. . . . 45 Vice President - Marketing and Sales
Frank A. Burke, Jr.. . 52 Vice President - Human Resources
Lawrence S. Daniels. . 53 Vice President - Strategic Planning
Joseph M. Davie. . . . 56 Vice President - Research
Irving H. Fox. . . . . 52 Vice President - Medical Affairs
Timothy M. Kish . . . 44 Vice President - Finance, Chief
Financial Officer and Treasurer
James C. Mullen. . . . 37 Vice President - Operations
Irvin D. Smith . . . . . 63 Vice President - Development
Operations
The background of these officers is as follows:
James L. Vincent joined the Company as its Chief Executive Officer in
October 1985. He also served as Chief Operating Officer and President
from April 1988 until February 1994. He is also Chairman of the Board
of Directors of the Company. Before joining Biogen, Mr. Vincent
served as Group Vice President, Allied Corporation and as President,
Allied Health & Scientific Products Company, a subsidiary of Allied
Corporation. Before joining Allied Corporation, Mr. Vincent was with
Abbott Laboratories, Inc. where he served in various capacities,
including Executive Vice President, Chief Operating Officer and
Director of the parent corporation.
James R. Tobin joined the Company as its President and Chief
Operating Officer in February 1994. Prior to joining the Company,
Mr. Tobin served in various capacities at Baxter International,
including Executive Vice President from 1988 until 1992 and President
and Chief Operating Officer from 1992 until 1993. Mr. Tobin is a
director of Creative BioMolecules, Inc., Medisense Inc. and Genovo,
Inc.
Michael J. Astrue was appointed Vice President - General Counsel,
Secretary and Clerk of the Company in June 1993. Prior to joining the
Company, Mr. Astrue was a partner in the Boston law firm of Mintz,
Levin, Cohn, Ferris, Glovsky and Popeo, P.C. and a managing director
of its wholly-owned consulting firm, ML Strategies, from November 1992
to June 1993. From June 1989 through November 1992, Mr. Astrue served
as General Counsel of the United States Department of Health and Human
Services. From April 1988 through June 1989, Mr. Astrue served as
Associate Counsel to the President of the United States.
Kenneth M. Bate was appointed Vice President - Marketing and Sales in
August 1993 after serving as Vice President - Finance and Chief
Financial Officer since August 1990 and as Treasurer of the Company
since December 1991. From 1978 until 1990, Mr. Bate was employed by
Peter Kiewit & Sons, Inc. and its subsidiaries in various financial
capacities, most recently as Vice President - Treasurer.
Frank A. Burke, Jr., was appointed Vice
President - Human Resources in May 1986 after serving for 12 years in
various human resource management positions at Allied-Signal, Inc.,
most recently as Director of Compensation and Employee Benefits of the
Engineered Materials Sector.
Lawrence S. Daniels was appointed Vice
President - Strategic Planning of the Company in August 1993 after
serving as Vice President - Marketing and Business Development since
November 1991. Prior to joining the Company, Mr. Daniels served for
nine years in planning and administrative functions for Allied-Signal,
Inc., most recently as Vice President, Corporate Strategy Development.
Joseph M. Davie, M.D., Ph.D. was appointed Vice President -
Research of the Company in April 1993. Prior to joining the Company,
Dr. Davie was employed by Searle Corporation where he served as Senior
Vice President - Science and Technology from January 1993 to April
1993, President - Research and Development from July 1987 to January
1993 and Senior Vice President - Discovery Research from January 1987
to July 1987. Dr. Davie is a director of Genovo, Inc.
Irving H. Fox, M.D. was appointed Vice
President - Medical Affairs in February 1990. Dr. Fox joined Biogen
following a 14-year career at the University of Michigan, where he
held professorships in internal medicine and biological chemistry, and
from 1978 to 1990, was program director of the Clinical Research
Center at the University of Michigan Hospital.
Timothy M. Kish was appointed Vice President - Finance, Treasurer
and Chief Financial Officer of the Company in August 1993 after
serving as Corporate Controller of the Company since 1986. Prior to
joining Biogen, Mr. Kish was Director of Finance for Allied Health &
Scientific Products Company, a subsidiary of Allied Corporation.
Before joining Allied, Mr. Kish served in various capacities at Bendix
Corp., most recently as Executive Assistant to the President.
James C. Mullen became Biogen's Vice President
- - Operations in December 1991 after serving as Senior Director -
Operations since February 1991. Mr. Mullen joined the Company in 1989
as Director - Facilities and Engineering and then served as Acting
Director - Manufacturing and Engineering. Before coming to Biogen,
Mr. Mullen held various positions of responsibility from 1984 through
1988 at SmithKline-Beckman Corporation, most recently as Director,
Engineering - SmithKline and French Laboratories, Worldwide.
Irvin D. Smith, Ph.D. was appointed Vice President - Quality
Assurance/Quality Control and Drug Development in August 1993 after
serving as General Manager of Bioferon, Biogen's former joint venture
in Germany, since July 1991. The name of his position was changed to
Vice President-Development Operations in 1994. Dr. Smith was a
private consultant from March 1990 to July 1991 and President and
Chief Executive Officer of Applied BioSystems from October 1987 to
March 1990.
PART II
Item 5 - Market for Registrant's Common Equity and Related Stockholder
Matters
The section entitled "Market for Securities" in the Company's 1995
Annual Report to Shareholders is hereby incorporated by reference.
Item 6 - Selected Financial Data
The section entitled "Selected Financial Data"
in the Company's 1995 Annual Report to Shareholders is hereby
incorporated by reference.
Item 7 - Management's Discussion and Analysis of Financial Condition
and Results of Operations
The section entitled "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in the Company's 1995
Annual Report to Shareholders is hereby incorporated by reference.
Item 8 - Financial Statements and Supplementary Data
The sections entitled "Consolidated Balance Sheets," "Consolidated
Statements of Income," "Consolidated Statements of Cash Flows,"
"Consolidated Statements of Shareholders' Equity," "Notes to
Consolidated Financial Statements" and "Report of Independent
Accountants" in the Company's 1995 Annual Report to Shareholders are
hereby incorporated by reference.
Item 9 - Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
Not Applicable
PART III
Item 10 - Directors and Executive Officers of the Registrant
Directors
The sections entitled "Election of Directors" and "Trading Reports"
in the Company's definitive proxy statement for its 1996 Annual
Meeting of Stockholders, which the Company intends to file with the
Commission no later than April 30, 1996, are hereby incorporated by
reference.
Executive Officers
Information concerning the Company's Executive Officers is set
forth in Part I of this Annual Report on Form 10-K.
Item 11 - Executive Compensation
The sections entitled "Election of Directors", "Executive
Compensation", "Joint Report on Compensation Philosophy" and
"Performance Graph" in the Company's definitive proxy statement for
its 1996 Annual Meeting of Stockholders, which the Company intends to
file with the Commission no later than April 30, 1996, are hereby
incorporated by reference.
Item 12 - Security Ownership of Certain Beneficial Owners and
Management
The section entitled "Share Ownership" in the Company's definitive
proxy statement for its 1996 Annual Meeting of Stockholders, which the
Company intends to file with the Commission no later than April 30,
1996, is hereby incorporated by reference.
Item 13 - Certain Relationships and Related Transactions
The section entitled "Employment Arrangements with the Company and
Certain Transactions" in the Company's definitive proxy statement for
its 1996 Annual Meeting of Stockholders, which the Company intends to
file with the Commission no later than April 30, 1996, is hereby
incorporated by reference.
PART IV
Item 14 - Exhibits, Financial Statement Schedules and Reports on Form
8-K.
(a) Financial Statements and Financial Statement Schedules.
The following documents are filed as a part of this report:
1. Financial Statements, as required by Item 8 of this Form,
incorporated by reference herein from the 1995 Annual Report to
Shareholders attached hereto as Exhibit 13:
Item Location
Consolidated Balance Sheets Annual Report under the caption
"Biogen, Inc. and Subsidiaries
Consolidated Balance Sheets."
Consolidated Statements
of Income Annual Report under the caption
"Biogen, Inc. and Subsidiaries
Consolidated Statements of Income."
Consolidated Statements
of Cash Flows Annual Report under the caption
"Biogen, Inc. and Subsidiaries
Consolidated Statements of Cash
Flows."
Consolidated Statements
of Shareholders' Equity Annual Report under the caption
"Biogen, Inc. and Subsidiaries
Consolidated Statements of
Shareholders' Equity."
Notes to Consolidated
Financial Statements Annual Report under the caption
"Biogen, Inc. and Subsidiaries Notes
to Consolidated Financial
Statements."
Reports of
Independent Accountants Annual Report under the caption
"Report of Independent
Accountants."
With the exception of the portions of the 1995 Annual Report to
Shareholders specifically incorporated herein by reference, such
report shall not be deemed filed as part of this Annual Report on Form
10-K.
(2) Financial Statement Schedules: None
(3) Exhibits
Exhibit No. Description
(3.1) Articles of Organization, as amended (g)
(3.2) By-Laws, as amended (k)
(4.1) Form of Common Stock Share Certificate (m)
(4.2) Certificate of Designation of Series A Junior
Participating Preferred Stock (f)
(4.3) Rights Agreement dated as of May 8, 1989 between
Registrant and The First National Bank of Boston,
as Rights Agent (f)
(10.1) Independent Consulting and Project Agreement dated
as of June 29, 1979 between Registrant and Kenneth
Murray (a)**
(10.2) Letter Agreement dated September 23, 1995 with Sir
Kenneth Murray relating to renewal of Independent
Consulting Agreement *,**
(10.3) Minute of Agreement dated February 5, 1981 among
Registrant, The University Court of the University
of Edinburgh and Kenneth Murray (a)**
(10.4) Independent Consulting Agreement dated as of June
29, 1979 between Registrant and Phillip A. Sharp
(a)**
(10.5) Letter Agreement dated December 15, 1995 with
Phillip Sharp relating to chairmanship of
Scientific Board and renewal of Independent
Consulting Agreement *,**
(10.6) Project Agreement dated as of December 14, 1979
between Registrant and Phillip A. Sharp (a)**
(10.7) Share Restriction and Repurchase Agreement dated as
of December 15, 1979 between Registrant and
Phillip A. Sharp (a)**
(10.8) Consulting Agreement dated as of April 1, 1991, as
amended, between Registrant and Alexander G. Bearn
(i)**
(10.9) Letter Agreement dated April 14, 1995 with Dr.
Alexander Bearn relating to renewal of Independent
Consulting Agreement *,**
(10.10) Form of Amendment dated July 1, 1988 to Independent
Consulting Agreement between Registrant and
Scientific Board Members (e)**
(10.11) Form of Share Purchase Agreement between Registrant
and Scientific Board Members (a)**
(10.12) Form of Stock Option Agreement between Registrant
and each of Alan Belzer, Harold W. Buirkle, James
W. Stevens and Roger H. Morley (c)**
(10.13) Letter regarding employment of James L. Vincent
dated September 23, 1985 (b)**
(10.14) Form of Stock Option Agreement with James L.
Vincent under 1985 Non-Qualified Stock Option Plan
(k)**
(10.15) Form of Stock Option Agreement with James L.
Vincent under 1985 Non-Qualified Stock Option Plan
(1995) *,**
(10.16) Letter dated December 13, 1989 regarding employment
of Dr. Irving H. Fox (h)**
(10.17) Letter dated August 13, 1990 regarding employment
of Mr. Kenneth M. Bate (i)**
(10.18) Letter dated April 7, 1993 regarding employment of
Dr. Joseph M. Davie (l)**
(10.19) Letter dated January 12, 1994 regarding employment
of James R. Tobin (n)**
(10.20) Letter dated August 30, 1993 regarding employment
of Irvin D. Smith, Ph.D. (n)**
(10.21) Form of Indemnification Agreement between
Registrant and each Director and Executive Officer
(e)**
(10.22) Second Amended and Restated Agreement and
Certificate of Limited Partnership dated as of May
15, 1984 among Biogen Medical Products, Inc. as
General Partner and certain limited partners (g)
(10.23) First Amendment dated December 22, 1986 to
Agreement and Certificate of Limited Partnership
(c)
(10.24) Technology License Agreement dated May 15, 1984
between Biogen B.V. and Biogen Medical Products
Limited Partnership (g)
(10.25) Development Contract dated May 15, 1984 between
Biogen B.V. and Biogen Medical Products Limited
Partnership (g)
(10.26) Amendment dated December 22, 1986 to Development
Contract (c)
(10.27) Amendment dated January 1, 1987 to Development
Contract (d)
(10.28) Extension Agreement dated October 10, 1989 relating
to Development Contract (g)
(10.29) Extension Agreement dated December 31, 1993
relating to Development Contract (n)
(10.30) Extension Agreement dated December 31, 1995
relating to Development Contract *
(10.31) Joint Venture Option Agreement dated May 15, 1984
between Biogen, Inc. and Biogen Medical Products
Limited Partnership (g)
(10.32) Purchase Option Agreement dated May 15, 1984
between Biogen B.V. and the limited partners of
Biogen Medical Products Limited Partnership (g)
(10.33) Guaranty dated May 15, 1984 to Biogen Medical
Products Limited Partnership by Registrant
guaranteeing certain obligations of Biogen Medical
Products, Inc., Biogen B.V. and Biogen, Inc. to the
Partnership (g)
(10.34) Demand Loan Agreement dated October 1, 1989 between
Biogen Medical Products Limited Partnership and
Biogen Medical Products, Inc. (g)
(10.35) Standard Form Commercial Lease dated January 29,
1981 between Ira C. Foss and Ira C. Foss, Jr., as
Trustees of Eastern Realty Trust, and B. Leasing,
Inc. (g)
(10.36) Letter of May 24, 1989 exercising option under
Standard Form Commercial Lease dated January 29,
1981 (g)
(10.37) Lease Extension Agreement dated February 20, 1990
between Eastern Realty Trust and Registrant (g)
(10.38) Standard Form Commercial Lease dated June 1, 1989
between Eastern Realty Trust and Registrant (g)
(10.39) Cambridge Center Lease dated October 4, 1982
between Mortimer Zuckerman, Edward H. Linde and
David Barrett, as Trustees of Fourteen Cambridge
Center Trust, and B. Leasing, Inc. (a)
(10.40) First Amendment to Lease dated January 19, 1989
amending Cambridge Center Lease dated October 4,
1982 (k)
(10.41) Second Amendment to Lease dated March 8, 1990
amending Cambridge Center Lease dated October 4,
1982 (k)
(10.42) Third Amendment to Lease dated September 25, 1991
amending Cambridge Center Lease dated October 4,
1982 (k)
(10.43) Lease dated October 6, 1993 between North Parcel
Limited Partnership and Biogen Realty Limited
Partnership (n)
(10.44) 1983 Employee Stock Purchase Plan, as amended and
restated through September 22, 1995 (*,**)
(10.45) 1982 Incentive Stock Option Plan as amended through
April 25, 1995 and restated with form of Option
Agreement (q)**
(10.46) 1985 Non-Qualified Stock Option Plan as amended
through April 25, 1995 and restated with form of
Option Agreement (q) **
(10.47) 1987 Scientific Board Stock Option Plan as amended
through April 3, 1992 and restated with form of
Option Agreement (j)**
(10.48) Voluntary Executive Supplemental Savings Plan (p)**
(10.49) Supplemental Executive Retirement Plan (p)**
(10.50) Voluntary Board of Directors Savings Plan (p)**
(10.51) Exclusive License and Development Agreement dated
December 8, 1979 between Registrant and Schering
Corporation (a)
(10.52) Amendatory Agreement dated May 14, 1985 to
Exclusive License and Development Agreement dated
December 8, 1979 (b)
(10.53) Amendment and Settlement Agreement dated September
29, 1988 to Exclusive License and Development
Agreement dated December 8, 1979 (k)
(10.54) Amendment dated March 20, 1989 to Exclusive License
and Development Agreement dated December 8, 1979
(k)
(10.55) License Agreement (United States) dated March 28,
1988 between Registrant and SmithKline Beecham
Biologicals, s.a. (as successor to Smith Kline-
R.I.T, s.a.) (k)
(10.56) License Agreement (International) dated March 28,
1988 between Registrant and SmithKline Beecham
Biologicals, s.a. (as successor to Smith Kline-
R.I.T., s.a.) (k)
(10.57) Sublicense Agreement dated as of February 15, 1990
among Registrant, SmithKline Beecham Biologicals,
s.a (as successor to SmithKline Biologicals, s.a.)
and Merck and Co., Inc. (k)
(10.58) Supplemental Amendment and Agreement dated as of
March 1, 1994 between the Registrant and Schering
Corporation (o)
(11) Computation of Earnings per Share *
(12) None
(13) Incorporated portions from Biogen, Inc. 1995 Annual
Report to Shareholders *
(22) Subsidiaries of the Registrant *
(24.1) Consent of Price Waterhouse LLP (Included in Part
IV hereof)
(29) None
(a) Previously filed with the Commission as an exhibit
to Registration Statement on Form S-1, File No.
2-81689 and incorporated herein by reference.
(b) Previously filed with the Commission as an exhibit
to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1985, as amended, File No.
0-12042 and incorporated herein by reference.
(c) Previously filed with the Commission as an exhibit
to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1986, as amended, File No.
0-12042 and incorporated herein by reference.
(d) Previously filed with the Commission as an exhibit
to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1987, File No. 0-12042 and
incorporated herein by reference.
(e) Previously filed with the Commission as an exhibit
to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1988, File No. 0-12042 and
incorporated herein by reference.
(f) Previously filed with the Commission as an exhibit
to Registration Statement on Form 8-A, File No.
0-12042, filed May 26, 1989 and incorporated herein
by reference.
(g) Previously filed with the Commission as an exhibit
to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1989, File No. 0-12042, and
incorporated herein by reference.
(h) Previously filed with the Commission as an exhibit
to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1990, File No. 0-12042, and
incorporated herein by reference.
(i) Previously filed with the Commission as an exhibit
to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1991, File No. 0-12042, and
incorporated herein by reference.
(j) Previously filed with the Commission as an exhibit
to Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1992, File No. 0-12042,
and incorporated herein by reference.
(k) Previously filed with the Commission as an exhibit
to the Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1993, File No.
0-12042, and incorporated herein by reference.
(l) Previously filed with the Commission as an exhibit
to the Registrant's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1993, File No. 0-
12042, and incorporated herein by reference.
(m) Previously filed with the Commission as an exhibit
to Registration Statement on Form S-3, File No. 33-
51639, and incorporated herein by reference.
(n) Previously filed with the Commission as an exhibit
to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1994, File No. 0-12042, and
incorporated herein by reference.
(o) Previously filed with the Commission as an exhibit
to the Registrant's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1994, File No. 0-
12042, and incorporated herein by reference.
(p) Previously filed with the Commission as an exhibit
to the Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1994, File No.
0-12042, and incorporated herein by reference.
(q) Previously filed with the Commission as an exhibit
to the Registrant's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1995, File No. 0-
12042, and incorporated herein by reference.
* Filed herewith
** Management contract or compensatory plan or
arrangement
(b) Reports on Form 8-K
None.
<PAGE>
Signatures
Pursuant to the requirements of Section 13 or 15(d) 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.
By:/s/ James L. Vincent
James L. Vincent, Chairman of the Board
and Chief Executive Officer
Dated January 26, 1996
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on the
dates indicated.
Signatures Title Date
/s/ James L. Vincent Chairman of the Board January 26, 1996
James L. Vincent and Chief Executive Officer
(principal executive officer)
/s/ Timothy M. Kish Vice President - Finance,January 26, 1996
Timothy M. Kish Chief Financial Officer
and Treasurer (Principal
financial and accounting officer)
/s/ Alexander Bearn Director January 26, 1996
Alexander Bearn
/s/ Harold W. Buirkle Director January 26, 1996
Harold W. Buirkle
/s/ Alan Belzer Director January 26, 1996
Alan Belzer
/s/ Roger H. Morley Director January 26, 1996
Roger H. Morley
/s/ Kenneth Murray Director January 26, 1996
Kenneth Murray
/s/ Phillip A. Sharp Director January 26, 1996
Phillip A. Sharp
/s/ James W. Stevens Director January 26, 1996
James W. Stevens
/s/ James R. Tobin Director January 26, 1996
James R. Tobin
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
(10.2) Letter Agreement dated September 23, 1995 with Sir
Kenneth Murray relating to renewal of Independent
Consulting Agreement
(10.5) Letter Agreement dated December 15, 1995 with
Phillip Sharp relating to chairmanship of
Scientific Board and renewal of Independent
Consulting Agreement
(10.9) Letter Agreement dated April 14, 1995 with Dr.
Alexander Bearn relating to renewal of Independent
Consulting Agreement
(10.15) Form of Stock Option Agreement with James L.
Vincent under 1985 Non-Qualified Stock Option Plan
(1995)
(10.30) Extension Agreement dated December 31, 1995
relating to Development Contract.
(10.44) 1983 Employee Stock Purchase Plan, as amended and
restated through September 22, 1995
(11) Computation of Earnings per Share
(13) Incorporated portions from Biogen, Inc. 1995 Annual
Report to Shareholders
(22) Subsidiaries of the Registrant
(24.1) Consent of Price Waterhouse LLP
September 23, 1995
Sir Kenneth Murray
4 Mortonhall Road
Edinburgh EH9 2HW
Scotland, United Kingdom
Re: Renewal of Independent Consulting and Project Agreement
Dear Ken:
Your Independent Consulting and Project Agreement with Biogen,
Inc., dated June 29, 1979, as previously amended (the "Agreement"),
under which you serve as a member of the Scientific Board of the
Company expires on September 30, 1995. Biogen greatly values your
input on the Scientific Board, and would like to renew the Agreement
for an additional three-year period commencing as of September 30,
1995 and ending on September 30, 1998, on the same terms and
conditions. In connection with renewal of the Agreement, the Company
will grant you a stock option for the purchase of 15,000 shares of the
Company's Common Stock under the 1987 Scientific Board Stock Option
Plan.
If you agree to renewal of the Agreement on these terms, please
sign both copies of this renewal letter and return one copy to the
attention of Anne Marie Cook at Biogen.
I look forward to your continued participation on the Scientific
Board.
Very truly yours,
/s/ Phillip A. Sharp, Ph.D.
Chairman of Scientific Board
AGREED TO AND ACCEPTED:
/s/ Sir Kenneth Murray, Ph.D.
cook\consultn\murray.ren
December 15, 1995
Phillip A. Sharp, Ph.D.
Salvador E. Luria Professor
Department of Biology
Center for Cancer Research
Room E17-529B
Massachusetts Institute of Technology
40 Ames Street
Cambridge, MA 02139-4307
Re: Renewal of Independent Consulting Agreement
Dear Phil:
Your Independent Consulting Agreement with Biogen, Inc., dated
June 29, 1979, as previously amended (the "Agreement"), under which
you serve as a member of the Scientific Board of the Company and your
service as Chairman of the Scientific Board expire on December 31,
1995. Biogen greatly values your input on the Scientific Board, and
would like to renew the Agreement and your service as Chairman of the
Scientific Board for an additional three-year period, commencing as
of December 31, 1995 and ending on December 31, 1998 (the "Renewal
Term"), on the following terms and conditions:
1. Your annual fee as Chairman of the Scientific Board will be
$75,000 per year, payable quarterly in advance. The fee is to cover
your service as Chairman and is in lieu of the standard fee for
Scientific Board members of $15,000 per year and the per diem fees for
Scientific Board attendance, laboratory visits and consulting
services.
2. Biogen will pay your secretary $500 per calendar quarter in
advance for office expenses incurred in connection with your
responsibilities as Chairman.
<PAGE>
3. As you know, you have been granted an option to purchase
30,000 shares of Common Stock of the Company at an exercise price of
$ 53.938 per share. The option will vest as to one-third of the
shares upon completion of each of the first, second and third year of
consulting services during the Renewal Term.
If you agree to renewal of the Agreement and your service as
Chairman of the Scientific Board on these terms, please sign both
copies of this renewal letter and return one copy to the attention of
Anne Marie Cook at Biogen.
I look forward to your continued participation on the Scientific
Board.
Very truly yours,
/s/ James L. Vincent
Chairman and Chief Executive Officer
AGREED TO AND ACCEPTED:
/s/ Phillip A. Sharp, Ph.D.
cook\consultn\Sharp.ren
April 14, 1995
Dr. Alexander Bearn
Professor Emeritus of Medicine
Cornell Medical College
The Rockefeller University
1230 York Avenue
New York, NY 10021-6399
Re: Renewal of Consultancy Agreement
Dear Dr. Bearn:
Your Consultancy Agreement with Biogen, Inc. dated April 1, 1991
(the "Agreement"), under which you serve as a member of the Scientific
Board of Biogen, expired on April 1, 1995. Biogen would like to renew
the Agreement on the following terms and conditions:
1. The renewal term shall be the three-year period commencing as of
April 1, 1995 and ending on April 1, 1998 (the "Renewal Term").
2. Schedule A of the Agreement shall be replaced in its entirety
with Schedule A attached to this letter.
3. All other terms and conditions of the Agreement shall apply with
full force and effect to your services as a member of the
Scientific Board of Biogen during the Renewal Term, and are
specifically incorporated by reference herein.
<PAGE>
If you agree to renewal of the Agreement on the above terms,
please sign both copies of this letter and return one copy to the
attention of Anne Marie Cook, Assistant General Counsel, Biogen, Inc.,
14 Cambridge Center, Cambridge, MA 02142.
BIOGEN, INC.
By: /s/ James L. Vincent
Chairman of the Board and Chief
Executive Officer
AGREED TO AND ACCEPTED:
/s/ Alexander G. Bearn, M.D.
cook.consultn.bearn2.ren
<PAGE>
Schedule A
Time Commitment
Consultant will devote a minimum of four hours per month to his
services under this Agreement and agrees to prepare for and
attend up to five meetings per year of the Scientific Board.
Payment
1. Fees
For services rendered under this Agreement, Consultant shall be
paid a $15,000 per year retainer, payable in equal quarterly
installments during the term of this Agreement, (ii) $1,500 per
day for attendance at Scientific Board meetings and (iii) $500
per day for time spent in the Company's laboratories.
2. Options
Subject to approval by the Stock and Option Plan Administration
Committee (the "Committee"), Consultant will, at the next
Committee meeting, be granted an option to purchase 15,000
shares of the Company's Common Stock. The option will vest over
three years (5,000 shares per year) and will be subject to the
terms of a stock option agreement to be executed by the Company
and Consultant. The option will be exercisable at a price equal
to the fair market value of the Company's Common Stock on the
date of grant.
STOCK OPTION AGREEMENT
This Agreement is dated as of this 22nd day of September,
1995 between Biogen, Inc., a Massachusetts corporation (the
"Company"), having its principal office in Cambridge,
Massachusetts, and James L. Vincent, an employee and member of the
Board of Directors of Biogen, Inc. (the "Employee"). Any
capitalized term not defined in this Agreement shall have the
meaning set forth in the Company's 1985 Non-Qualified Stock Option
Plan, as amended (the "Plan").
WHEREAS, the Company desires to grant to Employee an option
(the "Option") to purchase ______________ shares of the Company's
Common Stock, par value U.S. $0.01 per share, under the Plan;
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter set forth and for other good and valuable
consideration, the parties hereto agree as follows:
1. GRANT OF OPTION
The Company hereby grants to Employee the right and
Option to purchase all or any part of an aggregate of
shares of its Common Stock, U.S. $0.01 par value (the
"Shares"), on the terms and conditions and subject to all of the
limitations set forth herein and in the Plan. The Option granted
hereby shall not be treated as an incentive stock option under
Section 422 of the Internal Revenue Code of 1986, as amended.
2. EXERCISE PRICE
The exercise price shall be $ per share.
3. EXERCISE OF OPTION
3.1. The Option granted hereby shall be immediately
exercisable for all or any part of the Shares.
3.2A. Notwithstanding the provisions of paragraph 3.1,
if (a) the Company terminates Employee's employment for cause (as
defined in paragraph 8 (e) of the Employment Agreement dated
September 23, 1985 between Employee and the Company (the
"Employment Agreement"), or (b) Employee resigns as an employee
under circumstances which do not constitute (i) permanent or total
disability as defined in Section 4 hereof, or (ii) Constructive
Termination (as defined in paragraph 8 (f) of the Employment
Agreement, and the Employee also no longer serves on the Board of
Directors), then if either (a) or (b) above occurs before September
22, 1996, and Employee has theretofore exercised the Option for any
Shares, the Company may purchase those Shares from Employee at the
price paid by Employee upon exercise; if either (a) or (b) above
occurs on or after September 22, 1996 and before September 22, 1997
and Employee has theretofore exercised the Option for more than 40%
of the Shares originally issuable hereunder, the Company may
purchase the number of Shares for which the Option has been
exercised in excess of 40% of the Shares originally issuable
hereunder at the price paid by Employee upon exercise; if either
(a) or (b) above occurs on or after September 22, 1997 and before
September 22, 1998, and Employee has theretofore exercised the
Option for more than 70% of the Shares originally issuable
hereunder, such purchase right will apply as to the number of
Shares for which the Option has been exercised in excess of 70% of
the Shares originally issuable hereunder at the price paid by
Employee upon exercise.
3.2B. If (a) the Company terminates Employee's
employment other than for cause and the Employee also no longer
serves on the Board of Directors or (b) if Employee resigns under
circumstances which constitute a Constructive Termination within
the provisions of subparagraphs (i) and (ii) of paragraph 8 (f) of
the Employment Agreement and the Employee also no longer serves on
the Board of Directors, then if either (a) or (b) above occurs
before September 22, 1996 and Employee has theretofore exercised
the Option for more than 40% of the Shares originally issuable
hereunder, the Company may purchase the number of Shares for which
the Option has been exercised in excess of 40% of the Shares
originally issuable hereunder at the price paid by Employee upon
exercise; if either (a) or (b) above occurs on or after September
22, 1996 and before September 22, 1997 and Employee has theretofore
exercised the Option for more than 70% of the Shares originally
issuable hereunder, the Company may purchase the number of Shares
for which the Option has been exercised in excess of 70% of the
Shares originally issuable hereunder at the price paid by Employee
upon exercise.
3.2C. Under paragraphs 3.2A and 3.2B, the Option
shall cease to be exercisable as to any Shares which, together with
Shares previously purchased by the Employee upon exercise of the
Option, will exceed the percentages set forth above for the
relevant time period and event. The right of the Company to
purchase Shares pursuant to this Section 3.2 is hereinafter
referred to as the "Purchase Option". Notwithstanding anything to
the contrary contained herein, a resignation or termination of
employment by reason of total and permanent disability, as
determined by the Stock and Option Plan Administration Committee of
the Board of Directors (the "Committee"), in its discretion, shall
not be deemed a resignation or termination for purposes of the
Purchase Option.
4. TERM OF OPTION
The Option shall terminate on September 22, 2005, but
shall be subject to earlier termination as provided herein.
If, for any reason other than termination of employment
by the Company for cause, the Employee no longer serves as an
employee of the Company or an Affiliate and also no longer serves
as a member of the Board of Directors, this Option may be
exercised, if it has not previously expired, within eighteen (18)
months after the later of the date Employee ceases to be an
employee or the date the Employee ceases to be a director.
If the Employee's employment is terminated due to the
total and permanent disability of Employee (as determined by the
Committee, and as to the fact and date of which Employee is
notified by the Committee in writing), and if the Employee also no
longer serves as director, the Option, to the extent not previously
exercised, shall be exercisable by Employee or his legal
representative within eighteen (18) months after the date of the
Committee's determination of total or permanent disability, or, if
earlier, within the time originally described in the first
paragraph of this Section 4. In the event of the death of
Employee, the Option, to the extent not exercised as of the date of
death, may be exercised by the executors, administrators or other
legal representatives of the estate of Employee or by any person or
persons who acquired Employee's rights to the Option by will or the
laws of descent and distribution as provided in the Plan within
eighteen (18) months after the date of Employee's death or, if
earlier, within the time originally prescribed in the first
paragraph of this Section 4.
In the event Employee's employment with the Company or
any of its Affiliates is terminated for cause (as defined in
paragraph 8(e) of the Employment Agreement), upon such termination,
Employee's right to exercise any unexercised portion of this Option
shall immediately cease, and this Option shall immediately
terminate.
5. EXERCISE OF OPTION AND ISSUE OF STOCK
The Option may be exercised in whole or in part (to the
extent that it is exercisable in accordance with its terms) by
giving written notice to the Company, at the address set forth in
Section 8 below, and accompanied by the Option exercise 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 otherwise comply with the
terms and conditions of this Agreement. Payment of the Option
price shall be made to the Company as follows:
(a) In cash; or
(b) By transfer to the Company of shares of Common Stock
which have been held by Employee for at least six (6) months prior
to being used for payment of the Option price, the transfer value
of such shares being their fair market value on the day preceding
the date of notice of exercise (determined in accordance with
paragraph 8 of the Employment Agreement); or
(c) A combination of (a) and (b) above.
The Company shall pay all original issue taxes with
respect to the issue of Shares pursuant hereto and all other fees
and expenses necessarily incurred by the Company in connection
therewith. The payment of any withholding or other similar taxes
shall be made in compliance with Section VI (M) of the Plan. The
holder of this Option shall have the rights of a shareholder only
with respect to those shares covered by the Option which have been
registered in the holder's name in the share register of the
Company upon due exercise of the Option.
6. RESTRICTIONS ON TRANSFER OF SHARES; DETAILS OF THE
PURCHASE OPTION
6.1 Any Shares which are subject to the Option shall not
be transferred by Employee except as permitted herein. Until the
termination of this Agreement, the Shares which are subject to the
Purchase Option may not be transferred by Employee unless and until
the transferee agrees, in a form satisfactory to the Company, to be
bound by this Agreement and to sell any transferred Shares to the
Company should the Company choose to exercise the Purchase Option.
6.2 In the event the Company shall be entitled to and
shall elect to exercise the Purchase Option, it shall give to
Employee a written notice specifying the number of Shares which it
elects to purchase (the "Purchase Stock") and specifying a date for
closing hereunder (the "Closing") which date shall not be more than
thirty (30) calendar days after the giving of such notice. The
Closing shall take place at the Company's principal office in
Massachusetts or such other location as the entity giving the
notice may reasonably designate in such notice.
6.3 At the Closing, Employee shall deliver the Purchase
Stock being purchased by the Company against the simultaneous
delivery to Employee of the purchase price (by certified or bank
cashier's check), for the number of shares of Purchase Stock then
being purchased. In the event that Employee fails to deliver the
number of shares of the Purchase Stock to be purchased, the Company
may elect (a) to establish a segregated account in the amount of
the purchase price, such account to be turned over to Employee upon
delivery of such shares of Purchase Stock, and (b) immediately to
take such action as is appropriate to transfer record title in such
Purchase Stock from Employee to the Company and to treat Employee
and such shares of Purchase Stock in all respects as if delivery of
such shares of Purchase Stock had been made as required by this
Agreement. Employee hereby irrevocably grants the Company a power
of attorney for the purposes of effectuating the preceding
sentence.
6.4 If the Company shall pay a stock dividend or declare
a stock split on or with respect to any of the Company's Common
Stock, or otherwise distribute securities of the Company to the
holders of its Common Stock, whether before or after the exercise
of the Option, the number of Shares of stock or other securities of
the Company issued with respect to the Purchase Stock then subject
to the Purchase Option shall be added to the Purchase Stock then
subject to the Purchase Option without any change in the aggregate
purchase price. If the Company shall distribute to its
stockholders shares of stock of another corporation, the shares of
stock of such other corporation distributed with respect to the
Purchase Stock then subject to the Purchase Option shall be added
to the Purchase Stock covered by the Purchase Option without any
change in the aggregate purchase price. Without limiting the
generality of the foregoing, Employee shall be entitled to retain
any and all cash dividends paid by the Company on the Shares.
6.5 If the outstanding shares of Common Stock of the
Company shall be subdivided into a greater number of shares or
combined into a smaller number of shares, or in the event of a
reclassification of the outstanding shares of Common Stock of the
Company, or if the Company shall be a party to any capital
reorganization, whether before or after the exercise of the Option,
there shall be substituted for the Purchase Stock then covered by
the Purchase Option such amount and kind of securities as are
issued in such subdivision, combination, reclassification, or
capital reorganization in respect of the Purchase Stock subject to
the Purchase Option immediately prior thereto, without any change
in the aggregate purchase price, although the purchase price will
be based on the adjusted exercise price of the Option, if any.
6.6 If the Company shall be completely liquidated, then
the Purchase Option shall cease and terminate as of the date of
such liquidation and Employee shall hold the Shares free of the
Purchase Option.
6.7 The Company shall not be required to transfer any
Shares on its books which shall have been sold, assigned or
otherwise transferred in violation of this Agreement, or to treat
as owner of such Shares, or to accord the right to vote as such
owner or to pay dividends to, any person or organization to which
any such Shares shall have been sold, assigned or otherwise
transferred, from and after any sale, assignment or transfer of any
Shares made in violation of this Agreement.
6.8 All certificates representing any Shares to be
issued to Employee pursuant to the exercise of the Option which are
subject to the Purchase Option shall have endorsed thereon a legend
substantially as follows: "The shares represented by this
certificate are subject to a Stock Option Agreement dated September
22, 1995 between Biogen, Inc. and James L. Vincent, a copy of which
Agreement is available for inspection at the principal offices of
the Company or will be made available upon request."
6.9 This Agreement shall not restrict the transfer by
Employee of shares, if any, which are not acquired pursuant to the
exercise of the Option or which are not, or cease to be, subject to
the Purchase Option in accordance with the terms hereof.
7. NON-ASSIGNMENT
This Option shall not be transferable by Employee other
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) of the Securities Exchange Act of 1934, and shall be
exercisable during Employee's lifetime only by Employee.
8. NOTICES
Any notice required or permitted by the terms of this
Agreement shall be given by registered or certified mail, return
receipt requested, addressed as follows:
To the Company: Biogen, Inc.
14 Cambridge Center
Cambridge, MA 02142
Attn: Vice President - General Counsel
To Employee: James L. Vincent
Biogen, Inc.
14 Cambridge Center
Cambridge, MA 02142
or to such other address or addresses of which notice in the same
manner has previously been given. Any such notice shall be deemed
to have been given when mailed in accordance with the foregoing
provisions.
9. GOVERNING LAW
This Agreement shall be construed and enforced in
accordance with the laws of the Commonwealth of Massachusetts.
10. BENEFIT OF AGREEMENT
This Agreement shall be for the benefit of and shall be
binding upon heirs, executors, administrators and successors of the
parties hereto.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed on its behalf by its duly authorized representative and
Employee has hereunto set his hand as of the day and year first
above written.
BIOGEN, INC. EMPLOYEE:
By: _____________________ _____________________
Michael J. Astrue James L. Vincent
Vice President and
General Counsel
cook.stock.stock.jlv
EXTENSION AGREEMENT
This Extension Agreement dated as of December 31, 1995, is
between Biogen, Inc., a Massachusetts corporation ("Biogen"), and
Biogen Medical Products Limited Partnership, a Massachusetts
limited partnership (the "Partnership").
WHEREAS, Biogen and the Partnership entered into a Development
Contract dated May 15, 1984, as amended October 10, 1989 and
extended December 2, 1992, relating to gamma interferon and
interleukin-2 (the "Development Contract"); and
WHEREAS, the Development Contract will expire on December 31,
1995, and the parties wish to extend such date to December 31,
1996.
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. Section 12(e) is hereby amended by deleting the date
"December 31, 1995" and substituting therefor "December
31, 1996."
2. In all other respects the Development Contract is hereby
ratified and confirmed.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first set forth above.
BIOGEN MEDICAL PRODUCTS LIMITED
PARTNERSHIP
By its General Partner
BIOGEN, INC.
By: /s/ James L. Vincent
BIOGEN, INC.
By: /s/ Michael J. Astrue
BIOGEN, INC.
1983 EMPLOYEE STOCK PURCHASE PLAN
(as amended through September 22, 1995 and restated)
I. Purpose and Definitions
A. Purpose of the Plan: The Plan is intended to encourage
ownership of Shares by all employees of the Company and its
Affiliates, as hereinafter defined.
B. Definitions: Unless otherwise specified or unless the
context otherwise requires, the following terms, as used in this
Employee Stock Purchase Plan, have the following meanings:
1. "Affiliate" means a corporation which is a direct or
indirect fifty percent (50%) or more owned parent or
subsidiary of the Company.
2. "Board" means the Board of Directors of the Company.
3. "Code" means the United States Internal Revenue Code of
1986, as amended.
4. "Committee" means the Company's Stock and Option Plan
Administration Committee to which the Board of Directors has
delegated power to act under and pursuant to the provisions of
this Plan.
5. "Company" means Biogen, Inc., a Massachusetts Corporation.
6. "Compensation" means salary and wages, including overtime
pay, received by an employee before any salary reduction by
the employee under Code Sections 401(k) or 125, but excluding
bonus, incentive and similar payments and all other forms of
non-cash remuneration.
7. "Employee" means any individual who performs services for
the Company or its Affiliates pursuant to an employment
relationship other than those persons whose customary
employment is 20 hours or less per week, excluding employees
of non-U.S. Affiliates of the Company, except as is otherwise
determined by the Committee.
8. "Enrollment Dates" are the earliest date participation is
permitted hereunder by the Committee when the Plan is first
made operative and each successive January 1 and July 1
thereafter.
9. "Fair Market Value"
(i) If Shares are purchased by the Plan on a U.S.
securities exchange, the actual purchase price of such
Shares shall be such Shares' Fair Market Value.
(ii) In all other circumstances including if Shares are
purchased by the Plan from the Company, in determining
such Shares' Fair Market Value, if such Shares are then
listed on any U.S. securities exchange, or the National
Association of Securities Dealers Automated Quotation
System ("NASDAQ") National Market System, the Fair Market
Value shall be the average between the high and low sale
prices, if any, on the largest such exchange or on the
NASDAQ National Market System, as the case may be, on the
applicable date, or, if none, on the most recent trade
date thirty (30) days or less prior to such date. If the
Shares are not then listed on any such exchange or on the
NASDAQ National Market System, the Fair Market Value of
such Shares shall be the average of the closing "Bid" and
the closing "Ask" prices, if any, as reported in NASDAQ
for such date, or if none, on the most recent trade date
thirty (30) days or less prior to such date for which
such quotations are reported. If the Fair Market Value
cannot be determined under the preceding two sentences,
it shall be determined in good faith by the Committee.
10. "Option" means a right or option granted under the Plan.
11. "Participant" means an Employee who is enrolled in the
Plan, provided however that no Employee may be granted an
Option under this Plan if, immediately after the Option is
granted, such Employee owns stock possessing five percent (5%)
or more of the total combined voting power, (or in the case of
non-voting stock, value) of all classes of issued and
outstanding stock of the Company or Affiliate(s) (other than
wholly owned subsidiaries of the Company.) For purposes of
determining stock ownership the applicable rules of the Code
(including attribution) shall control.
12. "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 including where
appropriate his/her estate.
13. "Plan" means this Employee Stock Purchase Plan.
14. "Shares" means the Common Stock, $.01 par value, of the
Company as to which Options have been or may be granted under
the Plan or any shares of capital stock into which the Shares
are changed or for which they are exchanged within the
provisions of Article VI of the Plan.
II. Shares Subject to the Plan
A. Subject to the terms of Article VI the maximum aggregate
number of Shares which may be optioned and purchased from time to
time shall be Two Hundred Fifty Thousand (250,000) Shares.
If an Option ceases to be "outstanding", in whole or in part,
the Shares which were subject to such Option but not purchased
shall be available for the granting of the other Options. An
Option shall be treated as "outstanding" until such Option is
exercised in full, or terminates or expires under the provisions of
the Plan.
B. No options shall be granted after December 31, 1997.
III. Administration of the Plan
The Plan shall be administered by the Committee. Subject to
the provisions of the Plan, the Committee is authorized to
interpret the provisions of the Plan and each Option, and to make
any rules and determinations which it deems necessary or advisable
for the administration of the Plan provided, however, that all such
interpretations, rules, determinations, terms and conditions shall
be made and prescribed in the context of preserving the tax status
of the Options under the Plan granted to Employees subject to
United States Federal Income Taxation, and the Plan itself within
the Meaning of Section 423 of the Code. In addition, the Plan is
intended to comply in all respects with Rule 16b-3 or its
successors promulgated under the Securities Exchange Act of 1934,
as amended ("1934 Act"), with respect to participants who are
subject to Section 16 of the 1934 Act. The Plan will be
interpreted in a manner which comports with this intention.
IV. Eligibility for Participation
A. Subject to the limits in Article II, on the January 1
Enrollment Date of each year in the case of an Employee who is a
Participant on such January 1 Enrollment Date and on the July 1
Enrollment Date of each year in the case of an Employee who is a
Participant on such July 1 Enrollment Date, the Company will be
deemed to have granted to each such Participant an Option to
purchase, during a six-month period commencing on the Enrollment
Date on which such Option is granted and in the manner provided
hereunder, such number of Shares as have an aggregate Employee
Share Price (as determined under Article V(A)) equal to $2,500.
If, on any Enrollment Date, an insufficient number of Shares
remains available under the Plan to grant to each Participant an
Option to purchase such number of Shares, then the number of Shares
subject to each Option to be granted on such Enrollment Date shall
be reduced equally so that the aggregate number of Share subject to
all Options granted on such Enrollment Date shall not exceed the
number of Shares then available under the Plan.
B. Employee Contributions: Each eligible Employee may, on an
Enrollment Application and Payroll Withholding Form filed with
his/her employer's payroll department no later than thirty (30)
days prior to a January or July Enrollment Date (and with respect
to the Plan's first enrollment date specified at Article 1(B)(8),
no later than five days prior to such first Enrollment Date), elect
to participate and make contributions by payroll deduction of any
whole percentage form 1% to 10% of such Employee's Compensation
payable on each payroll period.
In the event that the amount contributed by a Participant
during an Option exercise period (i.e., the six-month periods
commencing on an Enrollment Date) is in excess of the maximum
amount which may be applied to purchase shares for such
Participant, such excess shall be reimbursed to the Participant.
No interest shall accrue or be payable to any Participant in the
Plan with respect to any amount contributed by the Participant,
whether such sums are applied to purchase Shares or are returned to
the Participant.
Payroll deductions may only be increased by a Participant
effective as of an Enrollment Date, but may be decreased effective
with respect to any payroll period, provided written election on a
Change Authorization and Payroll Withholding Form is received by
the Participant's employer's payroll department no later than
thirty (30) days prior thereto.
C. Application of Payroll Contributions:
1. The employer will remit to a bank, stock brokerage
firm or other custodian (the "Custodian") selected by the
Company, the accumulated withheld funds of all electing
Participants together with employer contributions pursuant to
Article IV(G), if any, as soon as reasonably possible
following the end of the month in which the deductions were
made. Prior to such remittance, Participant contributions may
be commingled with other Company funds. Not less frequently
than monthly, the Custodian shall buy from the Company or, if
the Committee prior thereto approves, give an order to the
stock broker selected by the Company to purchase (or if the
Custodian shall be such stock broker, shall itself purchase)
in the open market, the total number of Shares purchasable
with the monies available from such remittance. The date on
which Shares are so acquired shall be referred to as the
"Monthly Share Purchase Date." The Committee shall instruct
the Custodian whether to purchase Shares from the Company or
on the open market, after giving due consideration to any
applicable securities laws and the advice of the chief
financial officer of the Company. A Participant shall be
deemed to have exercised his/her Options on the Monthly Share
Purchase Date to the extent of such purchase unless prior
thereto the Participant shall have effectively withdrawn
pursuant to the terms hereof.
The Company may, in its sole and absolute discretion,
refuse to sell Shares to the Custodian under the Plan if to do
so would be violative of any commitment or restriction
(whether legally binding or otherwise) not to issue or sell
its own shares, as from time to time exists, and whether such
commitment or restriction existed prior to or subsequent to
the adoption of the Plan or for any other reason the Company
deems appropriate. The refusal of the Company to sell Shares
to the Custodian under the Plan shall not adversely affect the
Plan's right and power to acquire such Shares from any other
source the Committee deems appropriate.
2. The certificates representing the Shares so
purchased shall be issued in the name of and delivered to the
Custodian and the account of electing Participant shall be
credited with the number of Shares to which he/she shall be
entitled on the basis of his/her proportion of the aggregate
remittance.
3. Any cash dividends paid on Shares shall automatically
be used to purchase additional shares of the Common Stock of
the Company, unless a Participant in writing instructs the
Custodian to the contrary. The purchases described in the
preceding sentence, whether purchased by the Custodian from
the Company or in the open market, shall be in addition to the
number of Shares purchasable pursuant to Article II(A) and
Article IV(A) and shall not be of Shares optioned under the
Plan. Article IV(G) with respect to employer's contribution
shall be inapplicable with respect to shares of the Common
Stock of the Company acquired under this Article IV(C) (3).
4. By enrolling in the Plan, each Participant is deemed
to have authorized the establishment of a brokerage account in
his/her name at a securities brokerage firm selected by or
approved of by the Committee.
D. Transfer of Certificates to Electing Participants:
1. Upon request by a Participant and receipt by the
Custodian of written notice to such effect from the Company,
all or any portion of the Shares in the Participant's account
shall be transferred by the Custodian out of its name into the
name of the Participant and a certificate evidencing them
shall be issued in the name of and delivered to such
Participant.
2. In order to preserve the intended purposes of the
Plan as set forth in Article 1(A) Employees who become
Participants in the Plan agree not to transfer or otherwise
dispose of Shares acquired on their behalf under the Plan
(other than in the case of an Employee's death or total and
permanent disability as determined by the Committee) prior to
one year from the date of acquisition of such Shares on their
behalf.
E. Shares Retained by the Custodian: Accumulation of Shares
not transferred to Participants under Article IV(D) shall be held
by the Custodian for the account of the Participant entitled
thereto but all rights accruing to an owner of record on such
Shares shall belong to and be vested in the Participant for whose
account it is being held, including the right to receive any and
all dividend payable in respect of such Shares whether in cash,
shares of the Company's Common Stock or otherwise, and the right to
receive all notices of shareholders' meetings (which shall be
forwarded to the Participant by the Custodian without delay) and
direct the Custodian how to vote thereat to the same extent as if
such Shares were held in street name by a brokerage firm or
otherwise.
F. Withdrawal:
1. An electing Participant may discontinue his/her
election and withdraw from the Plan as of the payroll period
next following 30 days from the date written notice on a
Change Authorization and Payroll Withholding Form is received
by his/her employer's payroll department; provided, however,
that an electing Participant who shall have discontinued
his/her election and withdrawn from the Plan may not
resubscribe to the Plan prior to the Enrollment Date
coincident with or next following twelve (12) months from the
effective date of such discontinuance.
2. A Participant shall be deemed to have discontinued
his/her election and withdrawn from the Plan immediately upon
the occurrence of any of the following:
a. The termination for any reason of the Participant by
the Company or an Affiliate. 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 who has elected participation under the Plan
who is absent from work with the Company or with an
Affiliate because of temporary disability (any disability
other than a permanent or total disability) or who is on
leave of absence for any purpose authorized by his/her
employer and permitted by an authoritative interpretation
(e.g., regulation, ruling, case law, etc.) of Section 423
of the Code, shall not, during the period of any such
absence, be deemed, by virtue of such absence alone, to
have terminated such Participant's employment with the
Company or with an Affiliate, except as the Committee may
otherwise expressly provide or determine.
b. Death of the Participant;
c. The filing with or levying upon the Company or the
Custodian of any judgment, attachment, garnishment, or
other court order affecting either the Participant's
earnings or his/her account under the Plan;
d. Termination of the Plan prior to its expiration;
e. Expiration of the Plan.
3. Upon the discontinuance of an election and withdrawal
from the Plan by a Participant, all Shares in the account of
the Participant shall be transferred out of the Custodian's
name and into the name of the Participant and a certificate
evidencing such Shares shall be issued in the name of and
delivered to the Participant; and all dividends and remaining
cash if any credited to his/her account shall be paid to the
Participant.
G. Employer Contribution: Each Participant's employer will,
as frequently as is necessary contribute an amount equal to the
difference between the Employee's Share Price as determined at
Article V(A) and the cost per share to the Custodian if the Shares
are not acquired from the Company. If the Shares are acquired from
the Company, the Company shall sell such Shares to the Custodian at
a price equal to the Employee's Share Price determined pursuant to
Article V(A).
V. Terms and Conditions of Options and Issuance of Shares
No Option shall be granted to a Participant, and no purported
grant of any Option shall be effective, until an Enrollment
Application and Payroll Withholding Form shall have been duly
executed on behalf of the Company and by the Participant. Such
Enrollment Application and Payroll Withholding Form and the
agreement constituted thereby shall be subject to at least the
following terms and conditions:
A. Employee's Share Price: The "Employee's Share Price" as
of a Monthly Share Purchase Date as determined at Article IV (C)(1)
shall be eighty-five percent (85%) of the lower of the:
1. Fair Market Value of the Shares at the date of grant
of the Option (i.e., the applicable January 1 or July 1
Enrollment Date); or
2. Fair Market Value of the Shares at the Monthly Share
Purchase Date.
B. Effect of Death and Participant's Survivors: In the event
that a Participant to whom an Option has been granted ceases to be
an employee of the Company or of an Affiliate by reason of such
Participant's death, such Option to the extent exercisable but not
exercised on the date of death shall be deemed exercised by the
Participant's Survivors to the extent of any monies contributed by
the Participant and his/her employer prior to the Participant's
death.
A Participant may determine that a designated person shall
become the Participant's Survivor either by selecting a joint
account (with a right of survivorship running to such designated
joint owner), or by so designating in his/her will or otherwise as
controlled under the applicable law with respect to testamentary
dispositions. In the absence of a valid disposition the applicable
laws of descent and distribution shall control. The Custodian may
require such proof and indemnification (documentary or otherwise)
as it deems necessary and appropriate before releasing any Shares
and/or funds in a Participant's account to a person other than the
Participant.
C. 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 or pursuant to a qualified domestic relations
order as interpreted under Rule 16b-3 promulgated under the 1934
Act, 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). Any attempted transfer, assignment, pledge,
hypothecation or other disposition of any Option or of any rights
granted hereunder contrary to the provisions of this Article V(C)
shall be null and void.
D. All Participants to Have Equal Rights and Privileges: All
Participants shall have equal rights and privileges under the Plan.
The fact that the maximum number of Shares which may be acquired by
Participants bears a uniform relationship to compensation or is
limited by a maximum purchase restriction shall not be deemed to be
violative of the foregoing sentence.
VI. Adjustments upon Changes in Capitalization
In the event that the outstanding shares of the Company's
Common Stock are 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 to
prevent dilution or enlargement of the rights granted to or
available for Participants, 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 the applicable provisions of the Code,
constitute such a modification, extension or renewal of an Option
as to cause it to be considered as the grant of a new Option.
VII. Effect of 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 VI
is applicable, all Options granted hereunder shall terminate and
become null and void; provided, however, that if the rights of a
Participant or a Participant's Survivors hereunder have not
otherwise terminated and expired, the Participant or the
Participant's Survivors shall be deemed to have exercised such
Options to the extent of any monies contributed by the Participant
or his/her employer as of the date immediately prior to such
dissolution or liquidation.
VIII. Termination of the Plan
No Options shall be granted after December 31, 1997. The Plan
may be terminated at an earlier date by vote of either the
stockholders or the Board. The termination of the Plan shall not
affect any Options granted or Shares acquired prior to the
effective date of such termination.
IX. Amendment of the Plan
Except as provided in the following sentence, the Plan may be
amended by the stockholders, by the Board, or by the Committee,
including amendment of the Plan from time to time to designate
corporations whose employees may be offered Options under the Plan
from among a group consisting of the Company and any corporation
which is or becomes its parent or subsidiary. Amendments
effecting: (i) any increase in the aggregate number of Shares
which may be issued under the Plan (other than an increase merely
reflecting a change in capitalization such as stock dividend or
stock split) or (ii) changing the designation of corporations whose
employees may be offered options under the Plan, except
designations described in the preceding sentence, must be approved
by the stockholders within twelve (12) months after such amendment
is adopted by the Board or by the Committee or such amendment is
void ab initio. In addition, if the scope of any amendment is such
as to require stockholder approval in order to comply with Rule
16b-3 under the 1934 Act, such amendment shall also require
approval by the stockholders. No amendment shall affect any
Options theretofore granted or any Shares theretofore acquired by a
Participant, unless such amendment shall expressly so provide and
unless any Participant to whom an Option has been granted who would
be adversely affected by such amendment consents in writing
thereto.
X. 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 his/her
employment with the Company or an Affiliate.
XI. Optionees Not Stockholders
Neither the granting of an Option nor the deduction from
payroll shall constitute an Employee the owner of Shares covered by
an Option until such Shares have been purchased on his/her behalf
pursuant to Article IV.
XII. Withholding Taxes
Any taxes subject to withholding payable with respect to the
amounts to be paid to the Custodian pursuant to the provisions
hereof will be deducted by a Participant's employer from the
balance of the Participant's salary, and not reduce the amounts so
to be paid to the Custodian.
XIII. Use of Funds by the Company
The proceeds received by the Company from the sale of Shares
pursuant to Options granted under the Plan will be used for general
corporate purposes.
XIV. Statement of Account
Following each purchase of Shares on behalf of a Participant,
such Participant will receive from the Custodian a statement of
his/her account showing (i) the respective total amounts of
payments (by the Participant and if applicable the employer) made
to the Custodian on behalf of such Participant under Article IV
(C)(1) hereof, (ii) the Participant's share of any cash dividends
and other cash distributions and of the amount and proceeds of
sale of any other distributions or rights received by the
Custodian, (iii) the total cost of all Shares purchased by the
Custodian for the account of such Participant, (iv) such
Participant's share of any stock dividends on the Shares, and (v)
the number of shares delivered, or to be delivered, to such
Participant with respect to the period since the last statement.
XI. Brokerage Commissions and Other Costs
Brokerage commissions, if any, payable in connection with the
purchase of Shares hereunder (and shares acquired through dividend
reinvestment, if any) and transfer taxes payable in connection with
the delivery to Participants of Shares acquired hereunder (and
shares acquired through dividend reinvestment, if any) together
with the other costs and expenses incurred in administering the
Plan, including the fees and expenses of the Custodian, will be
borne by the Company and its affiliates.
XIV. Effective Date
This plan became effective on October 1, 1983.
EXHIBIT 11
BIOGEN, INC. and SUBSIDIARIES
Computation of Earnings Per Share
(in thousands, except per share amounts)
1995 1994 1993
Primary earnings (loss) per share
Weighted average number of
shares outstanding.................. 33,975 32,774 31,972
Shares deemed outstanding from
the assumed exercise of stock
options and warrants................ 2,470 -- 2,748
-------- -------- --------
Total................................ 36,445 32,774 34,720
======== ======== ========
Net income (loss).................... $ 5,660 $ (4,897) $ 32,417
======== ======== ========
Primary earnings (loss) per
Share of common stock............... $ 0.16 $ (0.15) $ 0.93
======== ======== ========
Fully diluted earnings (loss) per share (a)
Weighted average number of
shares.............................. 33,975 32,774 31,972
Shares deemed outstanding from
the assumed exercise of stock
options and warrants................ 2,544 -- 3,152
-------- -------- --------
Total................................ 36,519 32,774 35,124
======== ======== ========
Net income (loss).................... $ 5,660 $ (4,897) $ 32,417
======== ======== ========
Fully diluted earnings (loss)
per share of common stock........... $ 0.16 $ (0.15) $ 0.92
======== ======== ========
(a) This calculation is submitted in accordance with Regulation S-K
item 601 (b) (ll) although not required by Footnote 2 to Paragraph
14 of APB Opinion No. 15 because it results in dilution of less
than 3%.
SELECTED FINANCIAL DATA
(in thousands, except per share amounts)
Years Ended December 31, 1991 1992 1993 1994 1995
Total revenues.............$ 69,577 $ 135,114 $ 149,287 $ 156,344 $ 151,691
Royalties revenue.......... 56,477 121,714 136,418 140,433 134,653
Total expenses and taxes... 62,391 96,803 116,870 161,241 146,031
Net income(loss) (a)....... 7,186 38,311 32,417 (4,897) 5,660
Earnings(loss) per common
share.................... 0.15 1.12 0.93 (0.15) 0.16
Cash and marketable
securities............... 185,990 227,888 270,351 267,802 307,948
Total assets............... 253,067 311,192 356,950 377,862 469,201
Long-term debt, less
current portion.......... -- -- -- -- 32,826
Shareholders' equity....... 238,989 284,953 325,174 329,934 382,980
Average shares outstanding. 29,964 34,198 34,720 32,774 36,445
(a) Net loss for the year ended December 31, 1994 includes a pre-tax charge
of $25 million as a result of the Company's decision to discontinue its major
activities associated with the development of its HIRULOG(R) thrombin
inhibitor product.
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 currently
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 received 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 recombinant beta interferon, AVONEX(TM) interferon beta-1a, as a treatment
for relapsing forms of multiple sclerosis. In 1995, based on the data from
the trial, the Company filed for a product license for AVONEX(TM) in the
United States and market approval for AVONEX(TM) in the European Union and
Canada. An independent advisory committee to the U.S. Food and Drug
Administration (the "FDA") recommended, at a meeting on December 4, 1995, that
the FDA approve the Company's product license application for AVONEX(TM) as a
treatment for relapsing forms of multiple sclerosis. The Company has also
filed an application with the FDA for an establishment license for its
Cambridge, Massachusetts facility to manufacture AVONEX(TM). In anticipation
of regulatory approval, the Company is making a significant investment in its
commercial infrastructure to manufacture, market and sell AVONEX(TM). If the
Company is successful in its efforts to obtain regulatory approval for
AVONEX(TM) and for its Cambridge, Massachusetts manufacturing facility, the
Company will market AVONEX(TM) in the United States, Canada and major markets
of Europe.
RESULTS OF OPERATIONS
1995 AS COMPARED TO 1994
Total revenues in 1995 were $151.7 million, as compared to $156.3 million in
1994, a decrease of 3%. Revenues from royalties for 1995 decreased
approximately $5.8 million or 4% as compared to 1994, primarily due to the
inclusion in the first quarter of 1994 of a one-time payment of approximately
$10 million in royalties from Eli Lilly & Co. ("Lilly") under a licensing
agreement covering certain patent rights for gene expression methods. This
one-time payment related to sales that occurred after issuance of the patent
but before the licensing agreement was signed. Licensee sales of products
from which Biogen derives royalties increased from approximately $1.7 billion
in 1994 to approximately $1.8 billion in 1995. Royalty revenue from these
licensee sales increased approximately $5 million primarily as a result of an
increase in sales of hepatitis B vaccines sold by SmithKline Beecham plc
("SmithKline") and Merck & Co., Inc. ("Merck"). This increase was primarily
attributable to a vaccination program in France for infants and adolescents
which began in late 1994. Worldwide hepatitis B vaccine sales in 1995 reached
the billion dollar level with sales outside the United States increasing
approximately 25% in 1995 as compared to 1994. The increase in royalty
revenue from hepatitis B vaccines was partially offset by a slight decline in
royalty revenue from sales of alpha interferon by Schering Plough Corporation
("Schering Plough") in 1995 as compared to 1994.
In the near term, the Company expects overall sales of licensee products to
continue at or near current levels although royalty income may fluctuate
depending on changes in sales volumes for specific products, patent
expirations or other developments. Moreover, 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 legal and regulatory 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 1995 increased by $1.1 million from 1994 due primarily to
higher returns on invested funds.
Expenses
Total expenses for 1995 were $144.2 million as compared to $158.3 million in
1994. Cost of sales increased $0.6 million, or 6% in 1995 as compared to
1994, primarily due to increased royalty obligations to third parties.
Research and development expenses for 1995 were $87.4 million, a decrease of
$3.8 million, or 4% in 1995 as compared to 1994. The decrease was primarily
due to higher costs in 1994 associated with the clinical development of
HIRULOG(R) thrombin inhibitor, partially offset by costs incurred in 1995 for
the production of clinical material by a contract manufacturer and an increase
in personnel costs. The Company expects that, in the long-term, research and
development expenses will increase as the Company expands its development
efforts with respect to new products and begins clinical trials of these
products.
General and administrative expenses increased by $15.6 million, or 63% in 1995
as compared to 1994, due primarily to higher costs for market development
efforts related to AVONEX(TM), including costs related to the Company's
European headquarters in Paris, and legal and personnel-related costs. The
Company expects that general and administrative expenses will increase in the
near and long-term as compared to 1995 as the Company continues 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. In December 1995, an independent advisory committee to
the FDA recommended that the FDA approve the Company's product license
applications for AVONEX(TM) as a treatment for relapsing forms of multiple
sclerosis. The Company has also filed an application with the FDA for an
establishment license for its Cambridge, Massachusetts facility and
application for marketing approval for AVONEX(TM) in several other
jurisdictions, including Canada and the European Union.
Other expenses decreased by $26.4 million in 1995 as compared to 1994,
primarily due to a $25 million pre-tax charge in 1994 as a result of the
Company's decision to discontinue its major activities associated with the
development of its HIRULOG(R) thrombin inhibitor product.
Income tax expense for 1995 and 1994 varied from the amount computed at U.S.
federal statutory rates, primarily as a result of the impact of net operating
loss carryforwards. As of December 31, 1995, the Company had a net deferred
tax asset of $57.1 million (before valuation allowance) consisting primarily
of the future tax benefits from net operating loss carryforwards and other tax
credits. At December 31, 1995, the Company has a 100% valuation allowance
against the net deferred tax asset. If this net deferred tax asset is fully
realized through sufficient future profitability, future reversals of the
valuation allowance will, on a cumulative basis, reduce future income tax
expense by approximately $21.3 million and increase paid-in capital by
approximately $35.8 million. Realization of the net 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 in marketing and selling AVONEX(TM), as well as the results of
development, clinical trials and commercialization of other products under
development. The Company will assess the need for the valuation allowance at
each balance sheet date based on all available evidence.
Under Statement of Financial Accounting Standards (SFAS) No. 109 "Accounting
for Income Taxes", the Company would be required to recognize all or a portion
of its $57.1 million net deferred tax asset, with corresponding increases to
net income and paid-in capital, if it believed that it was more likely than
not, given the weight of all available evidence, that all or a portion of the
benefits of the carryforward losses and tax credits would be realized. 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 AVONEX(TM) 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
net deferred tax asset, and it has therefore recorded a 100% reserve against
the asset. In making its determination under SFAS 109, the Company considered
its positive earnings history in 1992, 1993, and 1995, although the weight
given to this past history was partially offset by the Company's loss in 1994,
the increases in expenses since 1992 and the short-term nature of some of the
events leading to the revenue growth in 1992 and 1993. As noted above, since
the Company is not involved in the development or sale of products by
licensees, the Company is unable to accurately predict the timing or potential
impact of all of the events or trends which may affect licensee sales or when
and for how long these events or trends are likely to affect the Company's
royalty income. The Company also considered whether to take into account
potential profits that the Company may earn on sales of AVONEX(TM), if the
product is approved and successfully marketed. The Company recognized,
however, that it has never marketed or sold its own proprietary drug and faces
a number of hurdles if it is to be successful in commercializing AVONEX(TM),
including obtaining regulatory approval for the product and manufacturing
plant, establishing customer service, marketing and sales organizations and
obtaining market acceptance for the product. The Company viewed its lack of
operating history as a fully integrated biopharmaceutical company, the number
of hurdles it faces to successfully commercialize AVONEX(TM) and the
uncertainties related to the Company's revenue stream as support for recording
a 100% reserve against its net deferred tax asset under SFAS 109. The Company
finally considered as support for the reserve the Company's current
expectation that, as a result of commercialization ramp-up and pipeline
expansion activities, expenses will likely exceed revenues until such time as
the Company has profitably marketed AVONEX(TM). The Company will assess the
need for the valuation allowance at each balance sheet date based on all
available evidence.
During 1995, the Financial Accounting Standards Board issued SFAS 123,
"Accounting for Stock-Based Compensation". Biogen intends to adopt SFAS 123
through disclosure only in 1996.
1994 AS COMPARED TO 1993
Revenues
Total revenues in 1994 were $156.3 million as compared to $149.3 million in
1993, an increase of 5%. This increase was attributed to higher levels of
royalties and interest income.
Revenues from royalties and product sales grew to $140.4 million in 1994 as
compared to $136.4 million in 1993. This increase was due primarily to an
increase in ongoing royalties received from licensee sales of hepatitis B
vaccines, sold by SmithKline and Merck, and a license agreement the Company
signed in the first quarter of 1994 with Lilly. These amounts more than
offset the decrease in royalties received from Schering-Plough, the Company's
licensee for alpha interferon. Sales of hepatitis B vaccines outside the
United States increased 60% in 1994. 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. Sales of
hepatitis B vaccines in the United States decreased 16% from 1993 levels.
During the first quarter of 1994, the Company signed a licensing agreement
with Lilly covering certain patent rights for gene expression methods. Under
this agreement, Lilly paid the Company approximately $10 million in royalties
that related to sales occurring before 1994. Sales of alpha interferon, sold
by Schering-Plough, were $426 million in 1994 as compared to $572 million in
1993. The decrease in alpha interferon sales was primarily attributable to
lower sales in Japan, which was driven by a 17% government-mandated decrease
in the price of alpha interferon, effective on April 1, 1994, and restrictions
on off-label usage.
Interest income for 1994 increased from 1993 due primarily to higher interest
rates and levels of invested funds.
Expenses
Total expenses were $158.3 million in 1994 as compared to $114.7 million in
1993. Cost of sales decreased to $9.9 million and primarily represents
royalty obligations to third parties. Research and development costs were
$91.2 million in 1994 compared to $79.3 million in 1993, an increase of 15%.
The increase in research and development costs was due primarily to increased
regulatory work, development costs and clinical expenses relating to
HIRULOG(R) and recombinant beta interferon. On October 31, 1994, the Company
announced the completion of preliminary analysis of the results of its Phase
III trial for HIRULOG(R) in angioplasty and that the drug did not achieve its
primary efficacy endpoint. As a result, the Company decided to discontinue
its major activities associated with HIRULOG(R) development.
General and administrative expenses increased $7.5 million in 1994 as compared
to 1993. This was primarily due to higher costs related to market development
efforts, establishment of a European headquarters in Paris and legal and
personnel related costs.
Other expenses increased by $26.4 million and includes a third quarter pre-tax
charge of $25 million as a result of the Company's decision to discontinue its
major activities associated with HIRULOG(R) development. The charge relates
entirely to third-party expenses associated with the manufacturing of drug
supplies and wind-down of clinical trial activities. The 1994 amount also
includes losses from the sale of certain marketable securities and impacts of
foreign exchange associated with the sale of certain accounts receivable. The
1993 amount includes a charge of $4.3 million related to the Genentech,
Inc/Schering-Plough patent settlement with respect to the production of
recombinant alpha interferon by Schering-Plough and a charge of $1.8 million
for the wind-down of the Company's fifty percent owned European joint venture.
FINANCIAL CONDITION
At December 31, 1995, cash, cash equivalents and marketable securities were
$307.9 million compared with $267.8 million at December 31, 1994, an increase
of $40.1 million. Working capital increased $40.1 million to $286.9 million.
Net cash provided by operating activities for the year ended December 31, 1995
was $9.4 million. Cash outflows included investments in property and
equipment and patents of $50.3 million and net purchases of marketable
securities of $42 million. Cash inflows included $35.3 million from loan
agreements with banks, $8.9 million from common stock option and purchase
plans activity and $30.6 million from the exercise of 1.8 million common stock
warrants issued in 1989 as part of a research agreement with an insurance
company. All of the warrants issued under this agreement have been exercised.
In March 1995, the Company completed construction of its research laboratory
and office building in Cambridge, Massachusetts and entered into a $25 million
loan with a bank, secured by the building. In the second quarter of 1995, the
Company began construction of its biologics manufacturing facility in Research
Triangle Park, North Carolina. The Company plans to manufacture AVONEX(TM) at
the facility upon licensing by the FDA for the manufacture of AVONEX(TM).
Until the facility is licensed, the Company will manufacture AVONEX(TM) in its
Cambridge, Massachusetts facility which is the subject of an application filed
with the FDA for an establishment license for the manufacture of AVONEX(TM).
The estimated cost of construction, including land, of the Research Triangle
Park facility is $57 million. As of December 31, 1995, the Company had paid
or been invoiced approximately $17 million and had commitments totaling
approximately $36 million on this project. In August 1995, the Company
entered into a loan agreement with a bank for financing of this project.
Under the terms of the agreement, the Company may advance funds during the
construction period up to $50 million. The Company limits its exposure to
fluctuations in interest rates with interest rate swap agreements which fixes
its interest rates on the loans outstanding between 6.39% - 7.75%.
Under the terms of a contract manufacturing agreement signed in the third
quarter of 1994, the Company is committed to purchasing manufacturing capacity
for the production of clinical material through 1997 at a cost of
approximately $4 million each year. Under this same agreement, the Company is
also required to construct for the manufacturer additional manufacturing
capacity, the cost of which is not expected to exceed $5.5 million. A portion
of this amount is reimbursable by the manufacturer upon completion of the
agreement.
In August 1995, the Company signed a collaborative research agreement for the
development of human gene therapy treatments with Genovo, Inc. ("Genovo"), a
gene therapy research company. The Company acquired a significant minority
equity interest in Genovo as well as certain licensing rights. The Company
has agreed to fund research and development costs to Genovo up to
approximately $37 million over the next five years, depending on achievement
of scientific milestones.
In 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, 1995, was approximately $23 million. In April 1995, an
arbitration panel ruled in Biogen's favor in the arbitration. On June 30,
1995, SmithKline made a motion to vacate this decision in the Federal District
Court for the Southern District of New York. The Company believes that an
adverse ruling from the Federal District Court is not probable and therefore,
no amount has been accrued.
During the fourth quarter of 1994, a total of six class action lawsuits were
initiated against the Company and several of its directors and officers.
These cases have been consolidated into a single proceeding in the United
States District Court for the District of Massachusetts. The lawsuits
generally allege that the Company and the named directors and officers
violated federal securities laws in connection with the Company's public
disclosures, including disclosures relating to HIRULOG(R) and other
disclosures made in connection with patent matters related to AVONEX(TM). The
plaintiffs seek damages in unspecified amounts. On January 23, 1996, the
Federal District Court dismissed all claims against the Company's outside
directors, all claims related to AVONEX(TM) and most of the claims relating to
statements concerning the Company's HIRULOG(R) thrombin inhibitor. The only
two claims remaining in the case pertain to statements concerning the results
of the HIRULOG(R) TIMI-7 clinical trial. The Court did not reach a decision
on the merits of these claims. Proceedings with respect to the remaining
claims are in the preliminary stages and accordingly, no estimate can be made
as to the amount or range of any potential loss which could result from the
final outcome of this matter. The Company believes that an adverse ruling
is not probable, and 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, competitive and technological
developments, 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 the majority of the development effort for AVONEX(TM), 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 is in the process of building a
commercial infrastructure both in North America 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 continue to depend on the
status of the Company's regulatory filings and approval activities. As
development efforts expand and as AVONEX(TM) ramp-up activities evolve, the
Company anticipates that expenses will likely 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.
Certain of the statements set forth above and elsewhere in the financial
statements, including statements regarding the anticipated rate of the
Company's royalties in the future, the Company's future expenses, and
predictions as to the anticipated outcome of pending litigation, are forward-
looking and are based upon the Company's current belief of the outcome and
timing of such future events. Important factors which could negatively impact
the Company's results of operations going forward are set forth under Results
of Operations, "1995 As Compared to 1994" and below.
While the Company's ability to achieve profitability in prior years has been
dependent mainly on the level of royalty revenues as compared to expenses, the
Company's future profitability will be dependent on the outcome of a number of
factors. These include: the level of royalties from existing licensee
product sales; the timing and extent of royalties from additional licensing
opportunities; successful completion of development 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,
provided that 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.
BIOGEN, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
As of December 31, 1995 1994
ASSETS
CURRENT ASSETS
Cash and cash equivalents....................... $ 45,770 $ 54,682
Marketable securities........................... 262,178 213,120
Accounts receivable............................. 19,612 18,502
Other........................................... 12,749 8,480
-------- --------
Total current assets.......................... 340,309 294,784
-------- --------
PROPERTY AND EQUIPMENT, NET....................... 115,048 73,162
-------- --------
OTHER ASSETS
Patents, net.................................... 7,988 8,116
Other........................................... 5,856 1,800
-------- --------
Total other assets............................ 13,844 9,916
-------- --------
$ 469,201 $ 377,862
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable................................ $ 12,512 $ 9,991
Current portion of long-term debt............... 1,667 --
Accrued expenses and other...................... 39,216 37,937
-------- --------
Total current liabilities..................... 53,395 47,928
-------- --------
LONG-TERM DEBT, LESS CURRENT PORTION.............. 32,826 --
-------- --------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock, par value $0.01 per share
(55,000,000 shares authorized; issued:
1995 - 35,505,501; 1994 - 33,128,771).......... 355 331
Additional paid-in capital...................... 409,148 368,784
Accumulated deficit............................. (27,699) (33,359)
Unrealized gains(losses) on
marketable securities.......................... 1,245 (5,867)
Cumulative translation adjustments.............. (69) 45
-------- --------
Total shareholders' equity.................... 382,980 329,934
-------- --------
$ 469,201 $ 377,862
======== ========
See accompanying notes to consolidated financial statements.
BIOGEN, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
Years Ended December 31, 1995 1994 1993
REVENUES:
Royalties.......................... $ 134,653 $ 140,433 $ 136,418
Interest........................... 17,038 15,911 12,869
-------- -------- --------
Total revenues................... 151,691 156,344 149,287
-------- -------- --------
EXPENSES:
Cost of sales...................... 10,504 9,948 12,139
Research and development........... 87,448 91,213 79,315
General and administrative......... 40,293 24,686 17,236
Other.............................. 6,001 32,404 5,980
-------- -------- --------
Total expenses................... 144,246 158,251 114,670
-------- -------- --------
Income(loss) before income
taxes......................... 7,445 (1,907) 34,617
INCOME TAXES......................... 1,785 2,990 2,200
-------- -------- --------
Net income(loss)............... $ 5,660 $ (4,897) $ 32,417
======== ======== ========
EARNINGS (LOSS) PER SHARE OF
COMMON STOCK......................... $ 0.16 $ (0.15) $ 0.93
======== ======== ========
Average number of shares outstanding. 36,445 32,774 34,720
======== ======== ========
See accompanying notes to consolidated financial statements.
BIOGEN, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended December 31, 1995 1994 1993
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss).................. $ 5,660 $ (4,897) $ 32,417
Adjustments to reconcile net income
(loss) to net cash provided from
operating activities:
Depreciation and amortization.... 10,916 8,056 6,657
Other............................ (3,177) 3,484 1,473
Changes in:
Accounts receivable............. (1,110) 13,193 1,720
Other current assets............ (4,269) (1,102) (234)
Accounts payable, accrued
expenses and other liabilities.. 1,429 16,152 5,537
-------- -------- --------
Net cash provided from operating
activities........................ 9,449 34,886 47,570
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of marketable
securities........................ (349,025) (312,057) (515,934)
Proceeds from sales of marketable
securities........................ 307,021 285,432 462,706
Acquisitions of property
and equipment..................... (47,998) (40,540) (10,770)
Additions to patents............... (2,311) (3,130) (2,697)
-------- -------- --------
Net cash used by investing
activities........................ (92,313) (70,295) (66,695)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of
long-term debt.................... 35,326 -- --
Repayments on long-term debt....... (833) -- --
Issuance of common stock and warrant
and option exercises.............. 39,459 15,545 7,808
-------- -------- --------
Net cash provided from financing
activities........................ 73,952 15,545 7,808
-------- -------- --------
NET DECREASE IN CASH AND
CASH EQUIVALENTS................... (8,912) (19,864) (11,317)
-------- -------- --------
CASH AND CASH EQUIVALENTS, BEGINNING
OF YEAR............................ 54,682 74,546 85,863
-------- -------- --------
CASH AND CASH EQUIVALENTS,
END OF YEAR........................ $ 45,770 $ 54,682 $ 74,546
======== ======== ========
See accompanying notes to consolidated financial statements.
<TABLE>
BIOGEN, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(in thousands)
Years Ended December 31, 1995, 1994 and 1993
<CAPTION> Unrealized
Gains
Additional (Losses) on Cumulative
Common Paid-in Marketable Translation Shareholders'
Stock Capital Deficit Securities Adjustment Equity
<S> ----------- ----------- ----------- ----------- ----------- ------------
Balance, <C> <C> <C> <C> <C> <C>
December 31, 1992........ $ 317 $ 345,445 $ (60,879) $ -- $ 70 $ 284,953
Issuance of common stock. 475 475
Exercise of options...... 6 7,327 7,333
Net income............... 32,417 32,417
Translation adjustment... (4) (4)
Balance, -------- -------- -------- -------- -------- --------
December 31, 1993........ 323 353,247 (28,462) -- 66 325,174
Conversion of warrants... 5 10,889 10,894
Issuance of common stock. 457 457
Exercise of options...... 3 4,191 4,194
Unrealized losses on
marketable securities... (5,867) (5,867)
Net loss................. (4,897) (4,897)
Translation adjustment... (21) (21)
Balance -------- -------- -------- -------- -------- --------
December 31, 1994........ $ 331 $ 368,784 $ (33,359) $ (5,867) $ 45 $ 329,934
Conversion of warrants... 18 30,582 30,600
Issuance of common stock. 470 470
Exercise of options,
including tax benefits. 6 9,312 9,318
Unrealized gain on
marketable securities... 7,112 7,112
Net income............... 5,660 5,660
Translation adjustment... (114) (114)
Balance -------- -------- -------- -------- -------- --------
December 31, 1995........ $ 355 $ 409,148 $ (27,699) $ 1,245 $ (69) $ 382,980
======== ======== ======== ======== ======== ========
See accompanying notes to consolidated financial statements.<FN></TABLE>
BIOGEN, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
Biogen, Inc. (the "Company") is a biopharmaceutical company principally
engaged in developing and manufacturing drugs for human healthcare through
genetic engineering. The Company is focused primarily on developing and
testing products for the treatment of multiple sclerosis, inflammatory and
respiratory diseases and certain viruses and cancer. 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 Company is in the process of building the commercial infrastructure
necessary to support marketing and sales of its recombinant beta interferon,
AVONEX(TM) interferon beta 1a, as the therapy for relapsing forms of multiple
sclerosis. If the Company is successful in its efforts to obtain regulatory
approval for AVONEX(TM), the Company will market the product in the United
States, Canada and major markets of Europe.
Consolidation Principles
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries. During 1995, the Company formed two wholly-
owned subsidiaries in Europe. All material intercompany balances and
transactions have been eliminated. Certain items in prior years' financial
statements have been reclassified to conform with the current year's
presentation.
Translation of Foreign Currencies
Adjustments resulting from the translation of the financial statements of the
Company's foreign operations into U.S. dollars are excluded from the
determination of net income and are accumulated in a separate component of
shareholders' equity. Foreign exchange translation gains and losses are
included in the results of operations. Such amounts for the years presented
were insignificant.
Cash, Cash Equivalents and Marketable Securities
The Company considers only those investments which are highly liquid, readily
convertible to cash and which mature within three months from date of purchase
to be cash equivalents. The Company invests its excess cash balances in
marketable debt securities, primarily U.S. government securities and corporate
bonds and notes, with strong credit ratings. The Company limits the amount of
investment exposure as to institution, maturity and investment type.
Accounts Receivable
During the first quarter of 1994, the Company entered into an agreement with a
bank to sell certain foreign based accounts receivable, with recourse. At
December 31, 1995, the Company had approximately $9.7 million of foreign based
accounts receivable outstanding under the agreement. The exposure to credit
risk under the recourse provision is minimal since the debtors are highly
rated companies. The selling price is partially determined by foreign
exchange rates at the end of each quarter. Resulting gains and losses are
recorded in other expenses when the receivables are sold.
Property and Equipment
Property and equipment is carried at cost and depreciation is calculated on
the straight-line basis over the estimated useful lives of the assets.
Leasehold improvements are amortized over the lesser of the useful life or the
term of the respective lease. Buildings and equipment are depreciated over
estimated useful lives ranging from 30 to 40 and 5 to 10 years, respectively.
Patents
The costs of patents and patent applications are capitalized and amortized on
the straight-line basis over estimated useful lives up to 15 years.
Accumulated amortization of patent costs was $9.3 million and $7.9 million as
of December 31, 1995 and 1994, respectively.
Revenues
The Company receives revenues under license agreements with a number of third
parties that sell products based on technology developed by the Company. All
of the license agreements provide for the payment of royalties to the Company
based on sales of the licensed product. The Company records these revenues
based on estimates of the sales that occurred during the relevant period.
Many of the license agreements also provide for the payment of one-time, non-
refundable fees when the agreement is signed or when commercial goals are
achieved. These fees are recorded as revenue in accordance with the terms of
the particular agreement.
Research and Development Expenses
Research and development costs are expensed as incurred.
Per Share Data
Earnings (loss) per share is based upon the weighted average number of common
shares and, if dilutive, common stock equivalents outstanding, which include
options and warrants.
2. FINANCIAL INSTRUMENTS
As of January 1, 1994, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" which had no effect on net income. In accordance with SFAS
115, the Company classified its marketable securities as "available for sale"
with the securities recorded at fair market value and unrealized gains and
losses included in shareholders' equity, net of related tax effects.
The following is a summary of marketable securities as of December 31, 1995:
Fair Unrealized Amortized
(in thousands) Value Gains Losses Cost
December 31, 1995:
U.S. Government securities $ 136,218 $ 1,021 $ 535 $ 135,732
Corporate debt securities 125,960 758 -- 125,202
December 31, 1994:
U.S. Government securities $ 151,197 $ 16 $ 4,160 $ 155,341
Corporate debt securities 61,923 -- 1,723 63,646
The average maturity of the Company's marketable securities as of December 31,
1995 was 18 months. Proceeds from maturities and other sales of marketable
securities, which were primarily reinvested, for the year ended December 31,
1995, were $307 million. Realized gains or losses on these sales for the
years ended December 31, 1995, 1994 and 1993 were a $58,000 loss, a $3.4
million loss and a $553,000 gain, respectively.
3. LONG-TERM DEBT
In March 1995, the Company completed construction of its research and office
building in Cambridge, Massachusetts and entered into a $25 million floating
rate (LIBOR plus 1%) loan with a bank. The loan agreement provides for annual
principal payments of $1.7 million in each of the years 1996 through 1999 with
the balance due May 8, 2005. The Company has fixed its interest rate on the
loan at 7.5% under the terms of a swap agreement under which the Company
agrees to exchange with the bank semi-annually the difference between 7.5% and
a floating rate computed on a notional amount beginning at $25 million and
amortizing according to the same terms of the loan agreement.
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. In August
1995, the Company entered into a loan agreement with a bank for financing of
this project. Borrowings under the loan agreement bear interest at LIBOR plus
.0625%. Under the terms of the agreement, the Company may be advanced funds
during the construction period up to $50 million. Beginning upon the earlier
of 90 days after completion of the project or August 1997, the outstanding
principal balance will be payable in 39 consecutive quarterly installments of
$0.8 million, assuming the full $50 million is advanced, with the balance due
in 2007. As of December 31, 1995, funds advanced were $10.3 million. The
Company also entered into two interest rate swap agreements fixing its
interest rate at 6.39% during the construction period and 7.75% during the
remaining term of the loan, payable quarterly.
The Company uses the swap agreements to manage interest costs and risk
associated with the floating rate debt and, accordingly, accounts for the swap
agreements under the accrual basis, recording the differential to be paid or
received as interest expense. The fair value of the swap agreements at
December 31, 1995, representing the cash requirements of the Company to settle
the agreements, approximated $3.2 million. Terms of the loan agreements
include various covenants, including financial covenants which require the
Company to maintain minimum net worth, cash flow and various financial ratios.
The loans are secured by certain assets of the Company. Total interest paid
for the years ended December 31, 1995, 1994 and 1993 amounted to approximately
$2.0 million, $400,000 and $0, respectively.
4. CONSOLIDATED BALANCE SHEET DETAILS
(in thousands) 1995 1994
Property and equipment:
Land............................................ $ 3,301 $ 2,691
Buildings....................................... 23,960 --
Construction in progress........................ 20,184 29,117
Leasehold improvements.......................... 45,663 38,761
Equipment....................................... 61,906 34,082
-------- --------
Total cost...................................... 155,014 104,651
-------- --------
Less accumulated depreciation................... 39,966 31,489
-------- --------
$ 115,048 $ 73,162
======== ========
Accrued expenses and other:
Royalties and licensing fees.................... $ 9,431 $ 8,379
Clinical trial costs............................ 2,105 5,097
Discontinuance of HIRULOG(R) program........... 947 7,813
Income taxes.................................... 5,654 5,312
Other........................................... 21,079 11,336
-------- --------
$ 39,216 $ 37,937
======== ========
5. PENSIONS
The Company has a defined benefit pension plan which provides benefits to
substantially all of its employees. The Company also has a supplemental
retirement benefit plan which covers certain employees. The pension plans are
noncontributory with benefit formulas based on employee earnings and credited
years of service. The Company's funding policy for its pension plans is to
contribute amounts deductible for federal income tax purposes. Funds
contributed to the plans are invested primarily in fixed income and equity
securities. Pension cost for each of the three years ended December 31, 1995
are summarized below:
(in thousands) 1995 1994 1993
Service cost........................ $ 847 $ 791 $ 477
Interest cost....................... 371 313 236
Actual return on plan assets........ (622) 9 (113)
Net amortization and deferral....... 420 (149) (33)
------- ------- -------
Net pension cost.................... $ 1,016 $ 964 $ 567
======= ======= =======
The funded status of the defined benefit plans at December 31, is as follows:
(in thousands) 1995 1994
Actuarial present value of:
Vested benefits obligation..................... $ 4,513 $ 2,720
Non-vested benefits............................ 501 300
-------- --------
Accumulated benefit obligation................. 5,014 3,020
======== ========
Projected benefit obligation..................... 7,267 4,419
Plan assets at fair value........................ 3,385 2,289
-------- --------
Projected benefit obligation in excess
of plan assets................................. 3,882 2,130
Unrecognized net asset........................... 63 83
Unrecognized net loss............................ (1,407) (137)
Unrecognized prior service cost.................. (165) (183)
-------- --------
Accrued pension cost............................. $ 2,373 $ 1,893
======== ========
The projected benefit obligation was determined using an assumed discount rate
of 7.25% for 1995 and 8.5% for 1994. The assumed long-term compensation
increase rate was 5% and the assumed long-term rate of return on plan assets
was 8% for both 1995 and 1994.
6. INCOME TAXES
The components of income (loss) before income taxes and of income tax expense
for each of the three years ended December 31, is as follows:
(in thousands) 1995 1994 1993
Income (loss) before income taxes:
Domestic.......................... $ 28,845 $ (1,533) $ 37,218
Foreign........................... (21,400) (374) (2,601)
-------- -------- --------
$ 7,445 (1,907) $ 34,617
======== ======== ========
Income tax expense:
Federal........................... $ 1,264 $ 2,540 $ 1,700
State............................. 211 415 476
Foreign........................... 310 35 24
-------- -------- --------
$ 1,785 $ 2,990 $ 2,200
======== ======== ========
The Company's foreign subsidiaries generated operating losses in 1995
reflecting the costs of building a commercial infrastructure in Europe and the
foreign subsidiaries investment in the Company's consolidated research and
development efforts.
Deferred tax assets (liabilities) are comprised of the following at December
31:
(in thousands) 1995 1994
Tax credits...................................... $ 20,648 $ 18,287
Loss carryforwards............................... 30,625 29,017
Discontinuance of HIRULOG(R) program............ 5,984 7,548
Other............................................ 4,579 7,702
Deferred tax assets valuation allowance.......... (57,091) (58,437)
-------- --------
Deferred tax assets, net........................ 4,745 4,117
-------- --------
Depreciation and amortization.................... (4,745) (4,117)
-------- --------
Deferred tax liabilities........................ (4,745) (4,117)
-------- --------
$ -- $ --
======== ========
At December 31, 1995, the Company has a 100% valuation allowance against the
net deferred tax asset as the Company has concluded, based on the standard set
forth in Statement of Financial Accounting Standards (SFAS) No. 109,
"Accounting for Income Taxes," that it is more likely than not that the
Company will not realize any benefits from its net deferred tax asset.
Realization of the net 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 in
marketing and selling AVONEX(TM), as well as the results of development,
clinical trials and commercialization of other products under development.
The Company will assess the need for the valuation allowance at each balance
sheet date based on all available evidence.
The net change in the valuation allowance was a decrease of $1.3 million in
1995 and an increase of $10.8 million in 1994. Of the $57.1 million valuation
allowance at December 31, 1995, $35.8 million relating to deductions for non-
qualified stock options will be credited to paid-in capital, if realized.
A reconciliation between the amounts of reported income tax expense and the
amounts computed using the U.S. federal statutory rate of 35% are as follows:
(in thousands) 1995 1994 1993
Income tax expense (benefit) at
statutory rates........................ $ 2,606 $ (667) $ 12,116
State taxes, net of federal income
tax benefit............................ 138 270 309
Foreign losses without tax benefit
and foreign rate differential.......... 7,812 391 934
Effects of losses not currently
utilizable............................. -- 2,962 --
Utilization of net operating loss
carryforwards and deferred tax assets.. (9,485) -- (11,159)
Other, net............................... 714 34 --
-------- -------- --------
Reported income tax expense.............. $ 1,785 $ 2,990 $ 2,200
======== ======== ========
At December 31, 1995, the Company had net operating loss carryforwards
available in the United States for federal income tax return purposes of $84
million and tax credits of $15 million, most of which expire at various dates
through 2010. The Company also has approximately $1.0 million of foreign loss
carryforwards at December 31, 1995 which do not expire. Total income tax
payments for the years ended December 31, 1995, 1994 and 1993 amounted to
$591,000, $170,000 and $983,000, respectively.
7. COMMITMENTS AND CONTINGENCIES
The Company rents laboratory and office space and certain equipment under
noncancellable operating leases. The rental expense under these leases, which
terminate at various dates through 2004, amounted to $5.1 million in 1995,
$4.7 million in 1994 and $3.6 million in 1993. The lease agreements contain
various clauses for renewal at the option of the Company and, in certain
cases, escalation clauses linked generally to rates of inflation. At December
31,1995, minimum annual rental commitments under noncancellable leases were as
follows:
(in thousands)
Year
1996.................................................. $ 6,229
1997.................................................. 5,741
1998.................................................. 4,177
1999.................................................. 3,805
2000.................................................. 3,211
Thereafter............................................ 3,014
--------
Total minimum lease payments.......................... $ 26,177
========
Under the terms of a contract manufacturing agreement signed in 1994, the
Company is committed to purchasing manufacturing capacity for the production
of clinical material through 1997 at a cost of approximately $4 million each
year. Under this same agreement, the Company is also required to construct
for the manufacturer additional manufacturing capacity, the cost of which is
not expected to exceed $5.5 million. A portion of this amount is reimbursable
by the manufacturer upon completion of the agreement.
In August 1995, the Company signed a collaborative research agreement for the
development of human gene therapy treatments with Genovo, Inc. ("Genovo"), a
gene therapy research company. The Company acquired a significant minority
equity interest in Genovo as well as certain licensing rights. The Company
accounts for the investment in Genovo on the equity method of accounting. The
Company has agreed to fund research and development costs to Genovo up to
approximately $37 million over the next five years, depending on achievement
of scientific milestones, which will be recorded as research and development
expense as incurred.
In 1994, the Company made a payment of $2.6 million to SmithKline Beecham plc
("SmithKline"), which amount had been previously reserved, in settlement of a
dispute between the Company and SmithKline regarding the rate of royalties
payable on non-U.S. sales of hepatitis B vaccines by SmithKline. In 1993,
SmithKline initiated arbitration in the United States regarding similar
royalty provisions in a separate agreement governing sales of hepatitis B
vaccines by SmithKline in the United States. The amount paid by SmithKline
and in dispute as of December 31, 1995 was approximately $23 million. In
April 1995, an arbitration panel ruled in Biogen's favor in the arbitration.
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 from the Federal District Court is not
probable and therefore, no amount has been accrued.
During the fourth quarter of 1994, a total of six class action lawsuits were
initiated against the Company and several of its directors and officers.
These cases have been consolidated into a single proceeding in the United
States District Court for the District of Massachusetts. The lawsuits
generally allege that the Company and the named directors and officers
violated federal securities laws in connection with the Company's public
disclosures, including disclosures relating to its HIRULOG(R) thrombin
inhibitor and other disclosures made in connection with patent matters related
to AVONEX(TM). The plaintiffs seek damages in unspecified amounts. On
January 23, 1996, the Federal District Court dismissed all claims against the
Company's outside directors, all claims related to AVONEX(TM) and most of the
claims relating to statements concerning the Company's HIRULOG(R) thrombin
inhibitor. The only two claims remaining in the case pertain to statements
concerning the results of the HIRULOG(R) TIMI-7 clinical trial. The Court
did notreach a decision on the merits of these claims. Proceedings with
respect to the remaining claims are in the preliminary stages and accordingly,
no estimate can be made as to the amount or range of any potential loss which
could result from the final outcome of this matter. The Company believes that
an adverse ruling is not probable, and no amount has been accrued.
8. SHAREHOLDERS' EQUITY
Convertible Exchangeable Preferred Stock
The Company has authority to issue 20,000,000 shares of $.01 par value
preferred stock.
Shareholder Rights Plan
In 1989, the Company's Board of Directors declared a dividend of one preferred
share purchase right (a "right") for each share of common stock outstanding.
Each right entitles the holder to purchase from the Company one one-hundredth
of a share of $0.01 par value Series A junior participating preferred stock at
a price of $68.00 per one-hundredth of a share, subject to certain
adjustments. The rights are exercisable only if a person or group acquires
20% or more of the outstanding common stock of the Company or commences a
tender offer which would result in the ownership of 20% or more of the
outstanding common stock of the Company; or if 10% of the Company's common
stock is acquired and the acquirer is determined by the Board of Directors to
be an adverse person (as defined in the rights plan). Once a right becomes
exercisable, the plan allows the Company's shareholders to purchase common
stock at a substantial discount. Unless earlier redeemed, the rights expire
on May 8, 1999. The Company is entitled to redeem the rights at $.01 per
right, subject to adjustment for any stock split, stock dividend or similar
transaction.
As of December 31, 1995, the Company has authorized the issuance of 400,000
shares of Series A junior participating preferred stock for use in connection
with the shareholder rights plan.
Share Option and Purchase Plans
The Company has several plans and arrangements under which it may grant
options to employees, Directors, Scientific Board members and consultants to
purchase common stock. Options are granted for periods of up to 10 years and
become exercisable in installments over periods of up to 7 years or upon the
achievement of scientific or other goals. Activity under these plans and
arrangement follows:
1995 1994 1993
Outstanding, January 1.. 5,382,068 4,755,330 4,785,293
Granted................ 1,232,600 1,211,697 917,327
Exercised.............. (558,662) (268,539) (564,021)
Cancelled.............. (170,189) (316,420) (383,269)
--------- --------- ---------
Outstanding, December 31 5,885,817 5,382,068 4,755,330
========= ========= =========
Options were exercised during the three years ended December 31, 1995 at
prices ranging from $4.25 to $54.88 per share. The exercise price of options
outstanding at December 31, 1995, 1994 and 1993 ranged from $4.25 to $63.75
per share. At December 31, 1995, 2,962,273 options were exercisable and
1,882,226 shares were reserved for issuance of additional options which may be
granted under the plans.
The Company also has two employee stock purchase plans covering substantially
all of its employees. The plans allow employees to purchase common stock at
85% of the lower of the fair market value at either the date of the beginning
of the plan period or the purchase date. Purchases under the plans are
subject to certain limitations and may not exceed an aggregate of 280,000
shares during the term of the plans; no shares may be issued after December
31, 2004. Through December 31, 1995, 113,492 shares have been issued under
the plans.
During 1995, the Financial Accounting Standards Board issued SFAS 123,
"Accounting for Stock-Based Compensation" (SFAS 123). Biogen intends to adopt
SFAS 123 through disclosure only in 1996.
Common Stock Warrants
During 1995, the Company received $30.6 million from the exercise of 1.8
million common stock warrants issued in 1989 in connection with a research
agreement with an insurance company. During 1994, the Company received $10.9
million from the exercise of 544,600 common stock warrants issued in
connection with the original sale of limited partnership interests in Biogen
Medical Products Limited Partnership. As of December 31, 1995, no common
stock warrants were outstanding.
9. GEOGRAPHIC DATA
Revenues, excluding interest, were derived in the following geographic areas
for the years ended December 31:
(in thousands) 1995 1994 1993
United States........................ $ 44,764 $ 44,083 $ 45,846
Japan................................ 16,082 27,216 43,959
Europe............................... 60,523 56,881 32,273
Other................................ 13,284 12,253 14,340
-------- -------- --------
$ 134,653 $ 140,433 $ 136,418
======== ======== ========
The Company received revenues from two unrelated parties in 1995 accounting
for 40% and 39% of total royalty revenues; respectively; three unrelated
parties in 1994 accounting for 40%, 34% and 11% of total royalty revenues,
respectively; and two unrelated parties in 1993 accounting for 57% and 25% of
total royalty revenues, respectively.
10. OTHER EXPENSES
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(R) development. The charge related
entirely to third-party expenses associated with the manufacture of drug
supplies and wind-down of clinical trial activities.
11. QUARTERLY FINANCIAL DATA (UNAUDITED)
(in thousands, except per share amounts)
First Second Third Fourth Total
Quarter Quarter Quarter Quarter Year
1995
Total revenues............ $ 35,970 $ 36,896 $ 38,177 $ 40,648 $ 151,691
Royalties revenue......... 31,953 32,717 33,884 36,099 134,653
Total expenses and
taxes.................... 33,136 36,182 37,049 39,664 146,031
Net income................ 2,834 714 1,128 984 5,660
Earnings per share of
common stock............. 0.08 0.02 0.03 0.03 0.16
___________________________________________________________________________
1994
Total revenues............ $ 44,780 $ 36,779 $ 31,812 $ 42,973 $ 156,344
Royalties revenue......... 41,167 32,793 27,733 38,740 140,433
Total expenses and
taxes (a)................ 33,551 36,168 58,233 33,289 161,241
Net income (loss) (a)..... 11,229 611 (26,421) 9,684 (4,897)
Earnings (loss) per share
of common stock.......... 0.31 0.02 (0.80) 0.27 (0.15)
_____________________________________________________________________________
(a) Total expenses for the third quarter of 1994 includes a pre-tax
charge of $25 million as a result of the Company's decision to
discontinue its major activities associated with the development of
its HIRULOG(R) thrombin inhibitor product.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Shareholders of Biogen, Inc.
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, of cash flows and of shareholders' equity
present fairly, in all material respects, the financial position of Biogen,
Inc. and its subsidiaries at December 31, 1995 and 1994, and the results of
their operations and their cash flows for each of the three years in the
period ended December 31, 1995, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of
the Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Boston, Massachusetts
January 23, 1996
<PAGE>
MARKET FOR SECURITIES:
Biogen's securities are quoted on
the NASDAQ National Market System.
Common Stock symbol: BGEN
As of January 26, 1996, there were
approximately 2,817 holders of record
of the Company's Common Stock. The
Company has not paid any dividends on
its Common Stock since its inception,
and does not intend to pay any
dividends in the foreseeable future.
The quarterly high and low closing
sales price of the Common Stock on the
NASDAQ National Market System for 1995
and 1994 are as follows:
High Low
FISCAL 1995
First Quarter.... 42 3/832 1/4
Second Quarter... 46 3/437 3/8
Third Quarter.... 61 41 1/5
Fourth Quarter... 64 1/450
FISCAL 1994
First Quarter.... 52 3/432 7/8
Second Quarter... 38 3/427 1/4
Third Quarter.... 55 3/427 3/4
Fourth Quarter... 55 32 3/4
SUBSIDIARIES OF BIOGEN, INC.
State or Other
Jurisdiction of
Name of Incorporation
Biogen Securities Corp. Massachusetts
Biogen Realty Corp. Massachusetts
Biogen GmbH Germany
Biogen Limited U.K.
Biogen France, S.A. France
Biogen International Ltd. Jersey, Channel Islands
Biogen Netherlands B.V. Netherlands
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the
Prospectus constituting part of the Registration Statements on
Form S-3, as amended (Nos. 33-14741, 33-14743, 33-20183 and 33-
51639) and in the Registration Statements on Form S-8, as amended
(Nos. 2-87550, 2-96157, 33-9827, 33-14742, 33-37312, 33-22378,
33-41077, 33-69174, 33-63013 and 33-63015) of Biogen, Inc. and
its subsidiaries of our report dated January 23, 1996 appearing
in the 1995 Annual Report to Shareholders which is incorporated
in this Annual Report on Form 10-K.
Price Waterhouse LLP
Boston, Massachusetts
February 1, 1996
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