SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark one)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended JUNE 30, 1997
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission File Number 0-12042
BIOGEN, INC.
(Exact name of registrant as specified in its charter)
Massachusetts 04-3002117
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
14 Cambridge Center, Cambridge, MA 02142
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 679-2000
Former name, former address and former fiscal year, if changed since
last report: Not Applicable
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
Number of shares outstanding of each of the issuer's classes of common
stock, as of July 14, 1997:
Common Stock, par value $0.01 73,935,753
(Title of each class) (Number of Shares)
<PAGE>
B I O G E N , I N C .
INDEX
Page No.
PART I - FINANCIAL INFORMATION
Condensed Consolidated Statements of Income -
Three months and six months ended June 30, 1997 and 1996 . . . . . 3
Condensed Consolidated Balance Sheets -
June 30, 1997 and December 31, 1996. . . . . . . . . . . . . . . . 4
Condensed Consolidated Statements of Cash Flows -
Six months ended June 30, 1997 and 1996. . . . . . . . . . . . . . 5
Notes to Condensed Consolidated Financial Statements . . . . . . . . 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . . . . . 9
PART II - OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . .15
* * * * * * * * * * * * * * * * * *
Note concerning trademarks: HIRULOG(R) and AVONEX(R) are
registered trademarks of Biogen, Inc.
<PAGE>
BIOGEN, INC. AND SUBSIDIARIES Page 3
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(in thousands, except per share amounts)
Three Months Six Months
Ended June 30, Ended June 30,
1997 1996 1997 1996
REVENUES
Product sales. . . . . . . . . . . $56,440 $ 6,125 $109,056 $ 6,125
Royalties. . . . . . . . . . . . . 36,007 35,032 78,222 69,410
Interest . . . . . . . . . . . . . 5,206 4,244 10,113 8,709
------- ------ ------- ------
Total revenues. . . . . . . . . . 97,653 45,401 197,391 84,244
------- ------ ------- ------
EXPENSES
Cost of sales. . . . . . . . . . . 11,444 3,836 23,188 7,989
Research and development . . . . . 32,014 29,302 69,922 53,713
Selling, general and
administrative. . . . . . . . . . 20,960 19,747 42,124 32,993
Other. . . . . . . . . . . . . . . (190) 809 144 1,318
------ ------ ------ ------
Total expenses. . . . . . . . . . 64,228 53,694 135,378 96,013
------ ------ ------- ------
INCOME BEFORE INCOME
TAXES . . . . . . . . . . . . . 33,425 (8,293) 62,013 (11,769)
Income taxes . . . . . . . . . . . 13,477 800 25,055 982
------ ------- ------- -------
NET INCOME . . . . . . . . . . . . $19,948 $(9,093) $36,958 $(12,751)
======= ======== ======= =========
NET INCOME PER SHARE . . . . . . . $ 0.26 $ (0.13) $ 0.48 $ (0.18)
======= ======== ======= =========
Average shares outstanding . . . . 76,248 71,416 76,546 71,308
====== ====== ====== ======
See Notes to Condensed Consolidated Financial Statements.
BIOGEN, INC. AND SUBSIDIARIES Page 4
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30,1997 Dec.31,1996
(unaudited)
ASSETS
Current assets
Cash and cash equivalents . . . . . . . . $ 73,250 $ 62,032
Marketable securities . . . . . . . . . . 282,611 259,349
Accounts receivable, less allowances of
$1,312 in 1997 and $1,480 in 1996. . . . 59,807 42,952
Deferred tax asset, net . . . . . . . . . 49,976 47,888
Other . . . . . . . . . . . . . . . . . . 32,778 23,533
-------- -------
Total current assets. . . . . . . . . . . 498,422 435,754
-------- --------
Property, plant and equipment
Total cost. . . . . . . . . . . . . . . . 224,970 217,926
Less accumulated depreciation . . . . . . 57,681 52,603
-------- --------
Property, plant and equipment, net. . . . 167,289 165,323
-------- --------
Other assets
Patents, net. . .. . . . . . . . . . . . . 12,586 10,458
Marketable securities . . . . . . . . . . 18,936 16,003
Other. . . . . . . . . . . . . . . . . . . 7,679 7,034
-------- --------
$704,912 $634,572
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable. . . . . . . . . . . . . $ 11,460 $ 15,722
Current portion long-term debt. . . . . . 4,888 4,017
Other current liabilities . . . . . . . . 65,342 68,209
-------- --------
Total current liabilities . . . . . . . . 81,690 87,948
-------- --------
Long-term debt . . . . . . . . . . . . . . 64,289 62,254
-------- --------
Shareholders' equity
Common stock. . . . . . . . . . . . . . . 739 725
Additional paid-in capital. . . . . . . . 512,916 471,623
Retained earnings . . . . . . . . . . . . 49,789 12,831
Unrealized loss on
marketable securities, net of tax . . . (4,579) (743)
Cumulative translation adjustment . . . . 68 (66)
-------- -------
Total shareholders' equity. . . . . . . . 558,933 484,370
-------- -------
$704,912 $634,572
======== ========
See Notes to Condensed Consolidated Financial Statements.
BIOGEN, INC. AND SUBSIDIARIES Page 5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Six Months Ended
June 30,
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES
Net income(loss). . . . . . . . . . . . . . . . . . $ 36,958 $(12,751)
Adjustments to reconcile net income (loss)
to net cash provided from (used by)
operating activities:
Depreciation and amortization. . . . . . . . . . . 9,071 7,334
Deferred income taxes. . . . . . . . . . . . . . . 20,683 (217)
Other. . . . . . . . . . . . . . . . . . . . . . . 2,550 --
Changes in:
Accounts receivable . . . . . . . . . . . . . . . (16,855) (7,925)
Other current assets. . . . . . . . . . . . . . . (9,245) (10,603)
Other assets. . . . . . . . . . . . . . . . . . . (345) 87
Accounts payable and
other current liabilities. . . . . . . . . . . . (3,571) 8,064
-------- -------
Net cash provided from (used by) operating
activities. . . . . . . . . . . . . . . . . . . . . 39,246 (16,011)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of marketable securities. . . . . . . . . (217,012) (179,859)
Proceeds from sales of marketable securities. . . . 192,804 212,662
Investments in research collaborations . . . . . . . (11,000) --
Acquisitions of property and equipment. . . . . . . (13,461) (35,565)
Additions to patents. . . . . . . . . . . . . . . . (3,562) (1,589)
------- -------
Net cash used by investing activities . . . . . . . (52,231) (4,351)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt. . . . . . 4,545 19,042
Payments of long-term debt. . . . . . . . . . . . . (1,639) (833)
Issuance of common stock . . . . . . . . . . . . . . 21,297 6,441
------- -------
Net cash provided from financing activities . . . . 24,203 24,650
------- -------
NET INCREASE IN CASH AND
CASH EQUIVALENTS. . . . . . . . . . . . . . . . . . 11,218 4,288
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD . . . . . . . . . . . . . . . . 62,032 45,770
------- -------
CASH AND CASH EQUIVALENTS,
END OF PERIOD . . . . . . . . . . . . . . . . . . . $ 73,250 $ 50,058
======== ========
See Notes to Condensed Consolidated Financial Statements.
BIOGEN, INC. AND SUBSIDIARIES Page 6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. In the opinion of management, the accompanying unaudited condensed
consolidated financial statements include all adjustments, consisting
of only normal recurring accruals, necessary to present fairly the
financial position, results of operations and cash flows of the
Company. The Company's accounting policies are described in the Notes
to Consolidated Financial Statements in the Company's 1996 Annual
Report. Interim results are not necessarily indicative of the
operating results for the full year.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards Number 128 "Earnings per
Share" ("SFAS 128") which changes the method of calculating earnings
per share. SFAS 128 requires the presentation of "basic" earnings per
share and "diluted" earnings per share on the face of the income
statement. Basic earnings per share is computed by dividing the net
income available to common shareholders by the weighted average shares
of outstanding common stock. The calculation of diluted earnings per
share is similar to basic earnings per share except that the denominator
includes dilutive common stock equivalents such as stock
options and warrants. The Company will adopt SFAS 128 in the fourth
quarter of 1997, as early adoption is not permitted. The Company does
not expect the adoption of SFAS 128 to have a material impact on its
earnings per share calculation.
2. As of June 30, 1997, the Company had $21.7 million outstanding under a
term loan secured by a laboratory and office building in Cambridge,
Massachusetts. Principal payments of $.8 million are due semi-
annually through 2004 with the balance due May 8, 2005.
As of June 30, 1997 the Company had $47.5 million outstanding under the
a loan agreement with a bank for financing the construction of its
biological manufacturing facility in North Carolina (the "Construction
Loan"). The Construction Loan is secured by the facility. Payments of
$.8 million are due quarterly through 2006 with the balance due on
March 31, 2007.
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 the underlying buildings.
<PAGE>
3. Inventories are stated at the lower of cost or market with cost
determined under the first-in/first-out ("FIFO") method. Raw
materials include inventory used in the production of pre-clinical
and clinical products and are expensed as research and development
costs when consumed. Inventories, net of applicable reserves and
allowances, at June 30, 1997 and December 31, 1996 are as follows:
(In Thousands)
June 30, 1997 Dec. 31, 1996
Raw materials $ 4,236 $ 3,262
Work in process 9,738 7,801
Finished goods 9,957 5,495
---------- ----------
$ 23,931 $ 16,558
========== ==========
4. On July 3, 1996, Berlex Laboratories, Inc. ("Berlex") filed suit
against Biogen in the United States District Court for the District of
New Jersey alleging infringement by Biogen of Berlex's "McCormick"
patent in the United States in the production of Biogen's
AVONEX(R)(Interferon beta-1a). Berlex seeks a judgment granting it
unspecified damages, a trebling of any damages awarded and a permanent
injunction restraining Biogen from alleged infringement. An
unfavorable ruling in the Berlex suit could have a material adverse
effect on the Company's results of operations and financial position.
The Company believes that it has meritorious defenses to the Berlex
claim; however, the ultimate outcome is not determinable at this time.
Prior to the date of the suit filed by Berlex, Biogen had filed a suit
against Schering AG ("Schering"), Berlex and the Board of Trustees of
the Leland Stanford Jr. University ("Stanford") in the United States
District Court for the District of Massachusetts for a declaratory
judgment of non-infringement and invalidity of the McCormick patent
contending that AVONEX(R), its manufacturing process and intermediates
used in that process do not infringe the McCormick patent and that such
patent is not valid. In November 1996, the U.S. District Court in
Massachusetts ruled that it had jurisdiction and Berlex's New Jersey
action was transferred to Massachusetts. Biogen and Stanford
subsequently entered into an agreement voluntarily dismissing Stanford
from the suit. A trial is not expected before the latter part of 1998.
In June 1996, ASTA Medica Aktiengesselschaft ("ASTA") filed for
arbitration against Biogen with the International Chamber of Commerce
(ICC) in Paris, France. In its complaint, ASTA alleges that Biogen's
1993 termination of a 1989 agreement licensing ASTA to market
recombinant interferon beta in certain European territories was
ineffective. The agreement at issue also included as a party Bioferon,
a Biogen joint venture that declared bankruptcy in 1993. The ASTA
complaint asks that an ICC panel declare that the 1989 license is still
in force, and, in the alternative, seeks approximately $5 million in
damages. The territories in the 1989 license included most of Western
Europe except Germany. The arbitration will take place in Zurich under
Swiss law. The Company's management believes that it has meritorious
defenses to this claim and given the defenses, believes the ultimate
outcome of this legal proceeding will not have a material adverse
effect on the results of operations or financial position of the
Company.
<PAGE>
Page 8
The Company is also a party to a class action lawsuit in connection
with disclosures related to Biogen's Hirulog(R) product. The Company's
management believes that it has meritorious defenses to the claims in
this lawsuit and given the defenses, believes the ultimate outcome of
this legal proceeding will not have a material adverse effect on the
results of operations or financial position of the Company.
5. In March 1997, the Company and its wholly-owned subsidiary, Biotech
Manufacturing Limited, signed a research collaboration and license
agreement (the "Agreement") with CV Therapeutics, Inc. ("CVT") under
which Biogen obtained rights to develop and market CVT's therapeutic
CVT-124 for the treatment of edema associated with congestive heart
failure. Under the terms of the Agreement, the Company purchased
approximately 670,000 shares of CVT common stock for $7 million and
paid a one-time license fee of $5 million. In addition, pursuant to the
terms of the Agreement, the Company established a $12 million line of
credit that CVT may use for operating purposes. At June 30, 1997, the
Company had advanced $3 million under the line of credit to CVT.
6. Income tax expense for June 30, 1997 varied from the amount computed at
U.S. statutory rates primarily due to the benefit of research and
development and investment tax credits partially offset by foreign
losses for which the Company will receive no current tax benefit. The
exercise of nonqualified stock options results in a reduction of
taxable income of the Company equal to the difference between the
option price and the fair market value on the date of the exercise.
During the three and six months ended June 30, 1997, $883,000 and $21
million, respectively, was credited to additional paid-in capital
relating to this tax benefit from stock option exercises.
<PAGE>
BIOGEN, INC. AND SUBSIDIARIES Page 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Overview
Biogen, Inc. (the "Company" or "Biogen") is a biopharmaceutical company
principally engaged in the business of developing, manufacturing and
marketing drugs for human health care. The Company currently derives
revenues from sales of AVONEX(R) which is sold under the Biogen name and
from royalties on worldwide sales by the Company's licensees of a number
of products covered under patents controlled by the Company, including
alpha interferon and hepatitis B products. In May 1996, the Company
received a license from the United States Food and Drug Administration
("FDA") to market Biogen's new product AVONEX(R) as a treatment for
relapsing forms of multiple sclerosis ("MS"). MS is a chronic
inflammatory disease of the central nervous system that affects over one
million people worldwide. In March 1997, the Company received regulatory
approval to market AVONEX(R) for the treatment of relapsing MS in the 15
member countries of the European Union. During the first quarter of 1997,
the Company began marketing AVONEX(R) in the United Kingdom, Germany,
Sweden, Finland and Switzerland. Final pricing and reimbursement
approvals are anticipated in certain other countries of the European Union
during 1998. AVONEX(R) is also on the market in Israel and Cyprus. The
Company is also seeking approval for AVONEX(R) in Canada and several other
countries.
Results of Operations
For the quarter ended June 30, 1997, the Company reported net income of
$19.9 million or $0.26 per share as compared to a net loss of $9.1 million
or $(0.13) per share for the comparable period of 1996. For the six
months ended June 30, 1997, the Company recorded net income of $37 million
or $0.48 per share as compared to a net loss of $12.8 million or $0.18 per
share for the comparable period of 1996.
Total revenues for the current quarter were $97.7 million, as compared to
$45.4 million in the quarter ended June 30, 1996, an increase of $52.3
million or 115%. The increase in total revenues was primarily due to sales
of the Company's product AVONEX(R) which was introduced in May 1996.
Sales of AVONEX(R) accounted for $56.4 million of total revenues in the
second quarter of 1997 compared to $6.1 million for the comparable period
in 1996. Revenues from royalties for the current quarter were $36 million,
an increase of $1 million or 2.9% as compared to the quarter ended June
30, 1996. The Company expects product sales as a percentage of total
revenue to increase over the course of the fiscal year as the Company
continues its introduction of AVONEX(R) in new markets. The Company,
however, expects to face increasing competition in the MS marketplace from
other treatments for MS.
Total revenues for the six months ended June 30, 1997 were $197.4 million,
including $109.1 million from sales of AVONEX(R), as compared to $84.2
million in the comparable period of 1996. Royalties during the six months
ended June 30, 1997 increased $8.8 million, or 12.7% from the comparable
period in 1996, primarily as a result of an increase in alpha interferon
sales by Schering-Plough, which were partially offset by a decrease in
royalties on sales of Hepatitis B vaccines sold by SmithKline and Merck.
Page 10
In the near term, the Company expects overall sales of licensee products
and royalty revenues to fluctuate depending on changes in sales volumes
for specific products, patent expirations, new licensing arrangements or
other developments. Licensee sales levels may also fluctuate from quarter
to quarter due to the timing and extent of major events such as new
indication approvals or vaccination programs.
Interest income for the current quarter was $5.2 million, an increase of
$1 million or 23.8% as compared to $4.2 million in the comparable period
in 1996. For the six months ended June 30, 1997, interest income was
$10.1 million compared to $8.7 million in the six months ended June 30,
1996, an increase of $1.4 million or 16.1%. The increase in interest
income is primarily a result of increased funds invested.
Total expenses for the current quarter were $64.2 million as compared to
$53.7 million in the quarter ended June 30, 1996, an increase of $10.5
million or 19.6%. Cost of sales in the current quarter totaled $11.4
million an increase of $7.6 million from the quarter ended June 30, 1996.
Cost of sales in the current quarter includes product costs of $8.8
million compared to $1 million in the quarter ended June 30, 1996,
relating to sales of AVONEX(R). Research and development expenses for the
current quarter were $32 million, an increase of $2.7 million or 9.3% as
compared to the quarter ended June 30, 1996. This increase was primarily
due to research funding under existing collaboration agreements, an
increase in clinical trial costs and an increase in the Company's
development efforts related to other research and development programs in
its pipeline. The Company expects that, in the long-term, research and
development expenses will increase as the Company continues to expand its
development efforts with respect to new products and begins clinical
trials of these products. Selling, general and administrative expenses
for the current quarter were $21 million, an increase of $1.3 million or
6.6% as compared to the quarter ended June 30, 1996. This increase was
primarily due to the selling and marketing expenses related to sales of
AVONEX(R). The Company expects that selling, general and administrative
expenses will increase in the near and long-term as the Company continues
to put in place the commercial infrastructure and sales and marketing
organizations necessary to sell AVONEX(R) worldwide. The anticipated
level of expense will depend on the overall sales levels achieved by
AVONEX(R).
Total expenses for the six-month period ended June 30, 1997 were $135.4
million as compared to $96 million in the comparable period in 1996, an
increase of $39.4 million or 41%. Cost of sales for the six months ended
June 30, 1997 were $23.2 million as compared to $8 million in the
comparable period of 1996, an increase of $15.2 million or 190%. Cost of
sales for the six months ended June 30, 1997 and 1996 included $16.6
million and $1 million of product costs, respectively, related to the
sales of AVONEX(R). Cost of sales relating to royalty revenue decreased
$.5 million from $7.1 million to $6.6 million. Research and development
expenses for the current six-month period were $69.9 million as compared
to $53.7 million in the comparable 1996 period, an increase of $16.2
million or 30.2%. This increase was primarily due to the research
collaboration with CV Therapeutics, Inc. ("CVT"), an increase in clinical
trial costs and an increase in the Company's development efforts related
to other research and development programs in its pipeline. In March
1997, the Company entered into a research collaboration and license
agreement with CVT under which Biogen obtained rights to develop and
Page 11
market CVT's therapeutic CVT-124 for treatment of edema associated with
congestive heart failure. In addition to CVT, Biogen currently has three
early stage compounds in clinical trials. They are LFA3TIP, a T-cell
inhibiting protein being tested as a potential treatment for severe
psoriasis, Gelsolin, a mucolytic agent, that is being studied for
treatment of cystic fibrosis, chronic bronchitis and several other
pulmonary diseases, and CD40 ligand antibody, which is being studied as a
potential treatment for certain autoimmune diseases. The Company continues
to add additional internal resources in the area of research and
development. Selling, general and administrative expenses for the six-month
period ended June 30, 1997 were $42.1 million as compared to $33
million in the comparable period in 1996, an increase of $9.1 million or
27.6%. This increase was primarily due to the selling and marketing
expenses related to sales of AVONEX(R).
Income tax expense for June 30, 1997 varied from the amount computed at
U.S. statutory rates primarily due to the benefit of research and
development and investment tax credits offset by foreign losses for which
the Company will receive no current tax benefit. The Company's effective
tax rate in 1997 is 40.5% and it is expected to continue at or near this
level for the remainder of 1997.
In February 1997, the Financial Accounting Standards Board issued SFAS
128, "Earnings per Share" ("SFAS 128") which changes the method of
calculating earnings per share. SFAS 128 requires the presentation of
basic earnings per share and diluted earnings per share on the face of the
income statement. Basic earnings per share is computed by dividing the net
income available to common shareholders by the weighted average shares of
outstanding common stock. The calculation of diluted earnings per share
is similar to basic earnings per share except that the denominator
includes dilutive common stock equivalents such as stock options and
warrants. See Note 1 to the Condensed Consolidated Financial Statements.
<PAGE>
Page 12
Financial Condition
At June 30, 1997, cash, cash equivalents and short term marketable
securities were $355.9 million compared with $321.4 million at December
31, 1996, an increase of $34.5 million. Working capital increased $68.9
million to $416.7 million between December 31, 1996 and June 30, 1997. Net
cash provided from operating activities for the current quarter was $39.2
million, compared with $16.0 million used by operating activities in 1996.
Cash outflows for the six months ended June 30, 1997, included investments
in property and equipment and patents of $17.0 million and $11 million
related to research collaboration agreements. Cash inflows included $4.5
million from loan agreements with banks and $21.3 million from common
stock option exercises and stock purchase plan activity.
The Company has several research programs and collaborations underway. In
March 1997, the Company and its wholly-owned subsidiary, Biotech
Manufacturing Limited, signed a research collaboration and license
agreement (the "Agreement") with CVT under which Biogen obtained rights to
develop and market CVT's therapeutic CVT-124 for the treatment of edema
associated with congestive heart failure. Under the terms of the
Agreement, the Company purchased approximately 670,000 shares of CVT
common stock for $7 million and paid a one-time license fee of $5 million.
In addition, pursuant to the terms of the Agreement, the Company
established a $12 million line of credit that CVT may use for operating
purposes. At June 30, 1997, the Company had advanced $3 million under the
line of credit to CVT.
Several legal proceedings were pending during the current quarter which
involve the Company. See Note 4 to the Condensed Consolidated Financial
Statement and Item 1 - Business, "Patents and Other Proprietary Rights" of
the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 for discussions of these legal proceedings.
The Company currently believes that the financial resources available to
it, including its current working capital, revenues from product sales and
its existing and anticipated contractual relationships, will be sufficient
to finance its planned operations and capital expenditures for the near
term. However, the Company may have additional funding needs, the extent
of which will depend upon the level of royalties and product sales, the
outcome of clinical trial programs, the receipt and timing of required
regulatory approvals for products, the results of research and development
efforts and business expansion opportunities. Accordingly, from time to
time, the Company may obtain funding through various means which could
include collaborative agreements, lease or mortgage financing, sales of
equity or debt securities and other financing arrangements.
<PAGE>
Page 13
Outlook
Safe Harbor Statement under Private Securities Litigation Reform Act of
1995
In addition to historical information, this quarterly report on Form 10-Q
contains forward-looking statements that involve risks and uncertainties
that could cause actual results to differ materially from those reflected
in such forward-looking statements. Reference is made in particular to
forward-looking statements regarding the anticipated level of future
royalty revenues, product sales, expenses and profits and predictions as
to the anticipated outcome of pending litigation. These and all other
forward-looking statements are made based on the Company's current belief
as to the outcome and timing of such future events. Factors which could
cause actual results to differ from the Company's expectations and which
could negatively impact the Company's results of operations are discussed
below and elsewhere in this Management's Discussion and Analysis of
Financial Condition and Results of Operation.
Dependence on AVONEX(TM) Sales and Royalty Revenue
While in the past the Company's ability to achieve profitability has been
dependent mainly on the level of royalty revenues as compared to expenses,
in the future, continued profitability will also be highly dependent on
the level of revenues and profitability from AVONEX(R) sales. The
Company's ability to sustain profitability from sales of AVONEX(R) will
depend on a number of factors, including: continued market acceptance of
AVONEX(R) in the United States; the Company's ability to maintain a high
level of patient satisfaction with AVONEX(R) in treating the relapsing
form of multiple sclerosis, a disease which is characterized by an uneven
pattern of disease progression; the nature of regulatory and pricing
decisions related to AVONEX(R) worldwide and the extent to which AVONEX(R)
receives reimbursement coverage; market acceptance of AVONEX(R) outside
the United States; successful resolution of the lawsuit with Berlex
related to the "McCormick" patent, which if decided in Berlex's favor
could have a material adverse effect on the Company's operations; the
Company's ability to sustain market share of AVONEX(R) in light of the
introduction of competitive products for the treatment of multiple
sclerosis, such as Teva Pharmaceuticals' Copaxone(R) glatiramer acetate,
which was recently launched in the United States, and Ares-Serono's
Rebif(R), an interferon beta-1a product, which is the subject of a pending
application in the European Union, and also in light of the recent
decision of the European Patent Office to revoke the Company's European
patent covering the expression of recombinant beta interferon; the success
of ongoing development work related to AVONEX(R) in expanded multiple
sclerosis indications and the continued accessibility of third parties to
vial, label, and distribute AVONEX(R) on acceptable terms. The Company's
ability to maintain the level of its royalty revenues will depend on:
sustaining the scope and validity of existing patents; the efforts of
licensees in the clinical testing and marketing of products from which the
Company derives revenue; and the timing and extent of royalties from
additional licensing opportunities. There can be no assurance that the
Company will achieve a positive outcome with respect to any of the factors
discussed in this Section 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 sustained profitability of the Company. For a
further discussion of risks regarding drug development, patent matters,
including the Berlex lawsuit on the "McCormick" patent, competition in the
Page 14
multiple sclerosis market and regulatory matters, see the Company's Annual
Report on Form 10-K for the period ended December 31, 1996 under the
headings "Business - Risks Associated with Drug Development", "Business -
Patents and Other Proprietary Rights", "Business - Competition and
Marketing -AVONEX(TM)(interferon beta 1a)", "Business - Regulation" and
"Legal Proceedings."
New Products
AVONEX(R) is currently the only product sold by the Company. The
Company's long-term viability and growth will depend on the successful
development and commercialization of other products from its research
activities and collaborations. The Company has begun to expand its
development efforts related to other potential 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. Product development involves a high degree
of risk. Many important factors affect the Company's ability to
successfully develop and commercialize drugs, including the ability to
obtain and maintain necessary patents and licenses, to demonstrate 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. There can be no
assurance that the Company will be successful in its efforts to develop
and commercialize new products.
<PAGE>
Page 15
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders
(a) The information set forth in this Item 4 relates to matters
submitted to a vote at the Annual Meeting of Stockholders of Biogen,
Inc. on June 6, 1997.
(b) Not applicable.
(c) A proposal to elect Harold W. Buirkle, Dr. Alexander G. Bearn and
James L. Vincent to serve for three year terms ending in 2000 and
until their successors are duly elected and qualified was approved
with the following vote:
Nominee For Authority Withheld
Harold W. Buirkle 58,446,168 324,067
Alexander G. Bearn 58,457,629 312,606
James L. Vincent 58,472,579 297,656
A proposal to ratify the selection of Price Waterhouse LLP as the
Company's independent accountants for the fiscal year ending December
31, 1997 was approved with 55,588,299 affirmative votes, 44,860
negative votes, 137,067 abstentions and 0 broker non-votes.
(d) Not applicable.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
No. 11 Computation of Earnings per Share.
(b) There were no reports on Form 8-K filed for the
quarter ended June 30, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BIOGEN, INC.
Dated: July 24, 1997 /s/Timothy M. Kish
----------------------------------
Timothy M. Kish
Vice President-Finance and
Chief Financial Officer<PAGE>
Page 16
PART II - OTHER INFORMATION
EXHIBITS
Index to Exhibits.
No. 10.1 1985 Non-qualified Stock Option Plan (as amended
through December 6, 1996).
No. 10.2 1987 Scientific Board Stock Option Plan (as amended
through December 6, 1996)
No. 11 Computation of Earnings per Share.<PAGE>
Page 17
EXHIBIT 11
BIOGEN, INC. and SUBSIDIARIES
Computation of Earnings Per Share
(unaudited)
(in thousands, except per share amounts)
Three Months Six Months
Ended June 30, Ended June 30,
1997 1996 1997 1996
Primary earnings per share
Weighted average number of
shares outstanding. . . . . . . . . 73,887 71,416 73,578 71,308
Shares deemed outstanding from
the assumed exercise of stock
options and warrants. . . . . . . . 2,361 -- 2,968 --
------- ------- ------ ------
Total . . . . . . . . . . . . . . . 76,248 71,416 76,546 71,308
====== ======= ====== ======
Net income. . . . . . . . . . . . . . $19,948 $(9,093) $36,958 $(12,751)
======= ======== ======= =========
Primary earnings per
share of common stock . . . . . . . $ 0.26 $ (0.13) $ 0.48 $(0.18)
======= ======== ======= =======
Fully diluted earnings per share (a)
Weighted average number of
shares outstanding. . . . . . . . . 73,887 71,416 73,578 71,308
Shares deemed outstanding from
the assumed exercise of stock
options and warrants. . . . . . . . 2,416 -- 2,996 --
------ ------ ------ ------
Total . . . . . . . . . . . . . . . . 76,303 71,416 76,574 71,308
====== ====== ====== ======
Net income . . . . . . . . . . . . . $19,948 $ (9,093) $36,958 $(12,751)
======= ======= ======= ========
Fully diluted earnings
per share of common stock . . . . . $ 0.26 $ (0.13) $ 0.48 $(0.18)
======= ======== ======= =======
(a) This calculation is submitted in accordance with Regulation S-K item
601 (b) (11) although not required by Footnote 2 to Paragraph 14 of APB
Opinion No. 15 because it results in dilution of less than 3%.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 73,250
<SECURITIES> 282,611
<RECEIVABLES> 58,495
<ALLOWANCES> 1,312
<INVENTORY> 23,931
<CURRENT-ASSETS> 498,222
<PP&E> 224,970
<DEPRECIATION> 57,681
<TOTAL-ASSETS> 704,912
<CURRENT-LIABILITIES> 81,690
<BONDS> 64,289
0
0
<COMMON> 739
<OTHER-SE> 558,194
<TOTAL-LIABILITY-AND-EQUITY> 704,912
<SALES> 109,056
<TOTAL-REVENUES> 197,391
<CGS> 23,188
<TOTAL-COSTS> 135,378
<OTHER-EXPENSES> 144
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,179
<INCOME-PRETAX> 62,013
<INCOME-TAX> 25,055
<INCOME-CONTINUING> 36,958
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 36,958
<EPS-PRIMARY> 0.48
<EPS-DILUTED> 0.48
</TABLE>
BIOGEN, INC.
1985 NON-QUALIFIED STOCK OPTION PLAN
(AS AMENDED THROUGH DECEMBER 6, 1996 AND REVISED TO REFLECT TWO-FOR-ONE STOCK
SPLIT EFFECTED IN NOVEMBER 1996)
I. PURPOSE OF THE PLAN
The Plan is intended to encourage ownership of shares of Common Stock of the
Company by certain employees and Directors of the Company and its Affiliates
and to provide an additional incentive to those employees and Directors to
promote the success of the Company and its Affiliates.
II. DEFINITIONS
1. "Company" means Biogen, Inc., a Massachusetts corporation.
2. "Affiliate" means a corporation in respect of which the Company
owns directly or indirectly fifty percent (50%) or more of the voting shares
thereof or which is otherwise controlled by the Company.
3. "Committee" means the Stock and Option Plan Administration Committee
of the Board of Directors of the Company.
4. "Option" means a stock option granted under this Plan.
III. SHARES SUBJECT TO THE PLAN
The aggregate number of shares as to which Options may be granted
from time to time shall be 18,454,000 of the shares of Common Stock of the
Company (par value $.01); provided, however that such aggregate number shall
be reduced by the number of shares which has been sold under, or may be sold
pursuant to options granted from time to time under, the Company's 1982
Incentive Stock Option Plan (the "ISO Plan"), to the same extent as if such
sales had been made or options granted pursuant to this Plan.
If any option granted under this Plan or the ISO Plan ceases to be
"outstanding", in whole or in part, other than by reason of the exercise of
such option, the shares which were subject to such option shall be available
for the granting of other Options. Any option shall be treated as
"outstanding" until such option is exercised in full, terminates under the
provisions of this Plan or the ISO Plan, as the case may be, or expires by
reason of lapse of time.
The aggregate number of shares as to which Options may be granted shall be
subject to change only by means of an amendment adopted in accordance with
Article XI below, subject to the provisions of Article VIII.
IV. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Committee. The membership of
the Committee shall be determined, and shall be subject to change without
cause and without notice from time to time, by the Board of Directors of the
Company.
The Committee is authorized to interpret the provisions of the Plan
or of any Option and to make all rules and determinations necessary or
advisable for the administration of the Plan. Subject to the provisions of the
Plan, Options may be granted upon such terms and conditions as the Committee
may prescribe.
This Plan is intended to comply in all respects with Rule 16b-3 or
its successors promulgated under the Securities Exchange Act of 1934 ("1934
Act") with respect to participants who are subject to Section 16 of the 1934
Act, and any provision in this Plan with respect to such persons contrary to
Rule 16b-3 shall be deemed null and void to the extent permissible by law and
deemed appropriate by the Committee.
V. ELIGIBILITY FOR PARTICIPATION
The Committee shall determine which employees and Directors shall be
eligible to participate in the Plan. Without limiting the generality of the
foregoing, Options may be awarded for reasons of performance, merit,
promotion, bonus or upon new employees joining the Company or any Affiliate.
The Committee may grant to one or more such employees or Directors
one or more Options, and shall designate the number of shares to be optioned
under each Option so granted; provided, however, that no Options shall be
granted after December 31, 2002. In no event shall any employee be granted
in any calendar year options to purchase or receive more than 1,200,000 shares
of the Company's Common Stock pursuant to this Plan.
VI. TERMS AND CONDITIONS OF OPTIONS
No Option issued pursuant to this Plan shall be an incentive stock
option under Section 422 of the Internal Revenue Code of 1986, as amended.
Each Option shall be set forth in writing in an Option agreement, duly
executed on behalf of the Company and by the person to whom such Option
is granted. No Option shall be deemed to have been granted and no purported
grant of any Option shall be effective until such Option shall have been
approved by the Committee. The Committee may provide that Options be granted
subject to such conditions as the Committee may deem appropriate, including
without limitation, subsequent approval by the shareholders of the Company
of this Plan or any amendments thereto. Each such Option agreement shall be
subject to at least the following terms and conditions:
A. Option Price: Except as otherwise determined by the Committee,
the Option price per share for Options granted under the Plan shall be equal
to the fair market value per share of Common Stock on the date of grant of
the Option; provided, however, that in no event shall the Option price be
less than the par value per share of Common Stock. Fair market value shall be
the average of the "high" and "low" sale prices as reported in the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") for
the date of grant of the Option or, if none, for the most recent trading date
thirty (30) days or less prior to the date of grant of the Option on which the
Common Stock was traded.
B. Term of Option: Each Option shall terminate not more than ten
(10) years from the date of the grant thereof, or at such earlier or later
time as the Committee shall expressly resolve.
C. Date of Exercise: The Committee may prescribe the date or dates
on which the Option becomes exercisable, and may provide that the Option rights
accrue or become exercisable in installments over a period of months or years,
or upon the attainment of stated goals.
D. Cancellation and Repurchase Rights: The Committee may stipulate
that any Option which becomes exercisable shall be subject to cancellation or
that shares purchased upon the exercise of such Option shall be subject to
repurchase rights in favor of the Company. In such event the Committee shall
determine the date or dates, or event or events, upon which such cancellation
or repurchase rights shall become effective or shall lapse, as the case may be.
E. Medium of Payment: The Option price shall be payable upon the exercise
of the Option. It shall be payable in cash, or, if permitted by the Committee,
in shares or other consideration.
F. Termination of Employment: An Option holder who ceases (for any reason
other than death or total and permanent disability or termination of employment
for cause) to be an employee or Director of the Company or of an Affiliate may
exercise any Option granted to the extent that the right to purchase shares
thereunder has accrued on the date of such termination. Such Option shall
be exercisable only within three (3) months after such date of termination,
or, if earlier, within the originally prescribed term of the Option, unless
the Committee shall authorize a different period. Employment shall not be
deemed terminated by reason of a transfer to another employer which is
the Company or an Affiliate.
An Option holder whose employment with the Company or an Affiliate is
terminated by his/her employer for cause or a Director who is removed from the
Board of Directors for cause shall forthwith upon such termination cease to have
any right to exercise any Option. For purposes of this paragraph, "cause" shall
be deemed to include dishonesty with respect to the employer, insubordination,
substantial malfeasance or non-feasance of duty, unauthorized disclosure of
confidential information, and conduct substantially prejudicial to the business
of the Company or any Affiliate. The determination of the Committee as to the
existence of cause shall be conclusive.
An Option holder to whom an Option has been granted under the Plan who is
absent from work with the Company or with an Affiliate because of temporary
disability, or who is on a permitted leave of absence for any purpose, shall
not, during the period of any such absence, be deemed by virtue of such
absence alone, to have terminated his employment with the Company or with an
Affiliate except as the Committee may otherwise expressly provide.
G. Total and Permanent Disability: If an Option holder ceases to be
an employee or Director of the Company or of an Affiliate by reason of total
and permanent disability, as determined by the Committee, any Option held by
him or her on the date of disability shall be exercisable as to all or any
part of the shares subject to the Option, all of which shares shall be fully
vested as of the date of such disability. A disabled Option holder may
exercise such Option only within a period of one (1) year after the date as of
which the Committee determines that he or she became disabled or within such
different period as may be determined by the Committee, or, if earlier, within
the originally prescribed term of the Option.
H. Death: If an Option holder dies while the Option holder is an
employee or Director of the Company or of an Affiliate, any Option held by
him or her at the date of death shall be exercisable as to all or any part of
the shares subject to the Option, all of which shares shall be fully vested as
of the date of the Option holder's death. A deceased Option holder's legal
representatives or one who acquires the Option by will or by the laws of
descent and distribution may exercise such Option only within a period of one
(1) year after the date of death or within such different period as may be
determined by the Committee, or, if earlier, within the originally prescribed
term of the Option.
I. Exercise of Option and Issue of Shares: Options shall be exercised by
giving written notice to the Company, addressed to the Company at the address
specified in the Option agreement, with which the Option holder shall tender
the Option price. Such written notice shall be signed by the person exercising
the Option, shall state the number of shares with respect to which the Option
is being exercised, and shall contain any warranty required by Article VII of
the Plan. The issuance of the Option shares may be delayed by the Company if
any law or regulation requires the Company to take any action with respect to
the Option shares prior to the issuance thereof. Without limiting the
generality of the foregoing, nothing contained herein shall be deemed to require
the Company to issue any Option shares if prohibited by law or applicable
regulation.
The shares shall, upon issuance, be evidenced by an appropriate
certificate or certificates in respect of paid-up, non-assessable shares.
J. Assignability and Transferability of Option: By its terms, an
Option granted to an Option holder shall not be transferable by such Option
holder other than (i) by will or by the laws of descent and distribution or
(ii) pursuant to a qualified domestic relations order, as defined by the Code
or Title 1 of the Employee Retirement Income Security Act or the rules
thereunder, or (iii) as otherwise determined by the Committee and set forth
in the applicable Option agreement. The designation of a beneficiary of an
Option by an Option holder shall not be deemed a transfer prohibited by this
paragraph. Except as provided in the preceding sentence, an Option shall be
exercisable, during an Option holder's lifetime, only by the Option holder
(or by his or her legal representative) and shall not be assigned, pledged,
or hypothecated in any way (whether by operation of law or otherwise) and
shall not be subject to execution, attachment or similar process. Any
attempted transfer, assignment, pledge, hypothecation, or other disposition of
any Option or of any rights granted thereunder contrary to the provisions of
this Paragraph, or the levy of any attachment or similar process upon an
Option or other such rights, shall be null and void.
K. Other Provisions: The Option agreements authorized under the Plan
shall be subject to such other terms and conditions, including, without
limitation, restrictions upon the exercise of the Option, as the Committee
shall deem advisable.
L. Non-Employee, Non-Scientific Board Directors' Options: Each
Director who is not (i) an employee of the Company or any of its Affiliates,
or (ii) a member of the Scientific Board of the Company, or (iii) elected
pursuant to an agreement or arrangement between shareholders of the Company
or between the Company and its shareholders, upon first being appointed or
elected to the Board of Directors, and upon every third anniversary thereof,
shall be granted an Option to purchase 30,000 shares of Common Stock. Each
such Option shall have an exercise price equal to the fair market value per
share of Common Stock on the date of grant, as determined under Section VI.A.
above, and a term of ten (10) years, and shall be exercisable as to one-third
(1/3) of the shares subject thereto upon completion of one full year of
service on the Board of Directors after the date of grant, and as to an
additional one-third (1/3) upon completion of each full year of service
thereafter. For any such Director serving in office on December 6, 1991, the
first such Option shall be granted on the date on which the most recent Option
previously granted to him, the vesting of which is contingent upon continued
service on the Board of Directors, becomes fully vested, and subsequent
Options under this Paragraph shall be granted on every third anniversary of such
date. Notwithstanding the provision of Section XI concerning amendment of the
Plan, the provisions of this Section VI.L. shall not be amended more than once
every six months, other than to comport with changes in the Internal Revenue
Code of 1986, as amended, the Employee Retirement Income Security Act, or the
rules thereunder. The grants of options under this Paragraph L are intended to
be non-discretionary formula awards within the meaning of Rule 16b-3(c)(2)(ii).
Paragraph F of Article VI, which cancels the Options of any Participant
determined by the Committee to have been terminated for cause, shall not
apply to the awards under this Paragraph L.
M. Tax Withholding: In the event that any federal, state, or local
income taxes, employment taxes, Federal Insurance Contributions Act ("F.I.C.A.")
withholdings or other amounts are required by applicable law or governmental
regulation to be withheld from the Option holder's salary in connection with
the exercise of an Option, the Option holder shall advance in cash to the
Company, or to any Affiliate of the Company which employs or employed the Option
holder, the amount of such withholdings unless a different withholding
arrangement, including the use of shares of the Company's Common Stock, is
authorized by the Committee (and permitted by law), provided, however, that
with respect to persons subject to Section 16 of the 1934 Act, any such
withholding arrangement shall be in compliance with any applicable provisions
of Rule 16b-3 promulgated under Section 16 of the 1934 Act. For purposes
hereof, the fair market value of the shares withheld for purposes of payroll
withholding shall be determined in the manner provided in Section VI.A. above,
as of the most recent practicable date prior to the date of exercise. If the
fair market value of the shares withheld is less than the amount of payroll
withholdings required, the Option holder may be required to advance the
difference in cash to the Company or the Affiliate employer.
N. Reload Options: The Committee may authorize reload options ("Reload
Options") to purchase for cash or shares a number of shares of Common Stock.
The number of Reload Options shall equal (i) the number of shares of Common
Stock used to exercise the underlying Options and (ii) to the extent authorized
by the Committee, the number of shares of Common Stock used to satisfy any tax
withholding requirement incident to the exercise of the underlying Options. The
grant of a Reload Option will become effective upon the exercise of underlying
Options through the use of shares of Common Stock held by the optionee for at
least 6 months. Reload Options must be evidenced in Option agreements or
amendments to those agreements. The Option price per share of Common Stock
deliverable upon the exercise of a Reload Option shall be the fair market value
of a share of Common Stock on the date the grant of the Reload Option becomes
effective. The term of each Reload Option shall be equal to the remaining
option term of the underlying Option. No additional Reload Options shall be
granted to Option holders when Options and/or Reload Options
are exercised pursuant to the terms of this Plan following termination of the
Option holder's employment or on account of death or total and permanent
disability. All other provisions of this Plan with respect to Options shall
apply equally to Reload Options.
O. Rights as a Shareholder: No Option holder shall have rights as a
shareholder with respect to any shares covered by such Option except as to such
shares as have been registered in the Company's share register in the name of
such person upon the due exercise of the Option.
VII. PURCHASE FOR INVESTMENT
If and to the extent that the issuance of shares pursuant to the
exercise of Options is deemed by the Company to be subject to the United
States Securities Act of 1933, as now in force or hereafter amended
("1933 Act"), or to the securities law of any other jurisdiction, the Company
shall be under no obligation to issue shares covered by such exercise unless
the person or persons who exercises or who exercise such Option shall make
such warranty or take such action as may be required by any applicable
securities law of any applicable jurisdiction and shall, in the case of the
applicability of the 1933 Act, in the absence of an effective registration
under such Act with respect to such shares, warrant to the Company, at the
time of such exercise, that such person is or that they are acquiring the
shares to be issued to such person or to them, pursuant to such exercise of the
Option, for investment and not with a view to, or for sale in connection with,
the distribution of any such shares; and in such events the person or persons
acquiring such shares shall be bound by the provisions of a legend endorsed
upon any share certificates expressing the requirements of any applicable
non-United States securities law, or, in cases deemed governed by the 1933 Act,
substantially the following legend, which shall be endorsed upon the certificate
or certificates evidencing the shares issued by the Company pursuant to such
exercise:
"The shares have not been registered under the securities laws of any
country, including the United States Securities Act of 1933, as amended, and the
Company may refuse to permit the sale or transfer of all or any of the shares
until (1) the Company has received an opinion of Counsel satisfactory to the
Company that any such transfer is exempt from registration under all applicable
securities laws or (2) in the case of sales or transfers to which the United
States Securities Act of 1933 is applicable, unless a registration statement
with respect to such shares shall be effective under such Act, as amended."
Without limiting the generality of the foregoing, the Company may
delay issuance of the shares until completion of any action or obtaining of
any consent which the Company deems necessary under any applicable law
(including without limitation state securities or "blue sky" laws).
VIII. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
In the event that the outstanding Common Stock, $.01 par value, of the
Company is changed into or exchanged for a different number or kind of shares or
other securities of the Company or of another corporation by reason of any
reorganization, merger, consolidation, recapitalization, reclassification,
change in par value, stock split-up, combination of shares or dividend payable
in capital stock, or the like, appropriate adjustment shall be made in the
number and kind of shares for the purchase of which Options may be granted
under the Plan, including Options to be granted pursuant to Article VI L
hereof, and, in addition, appropriate adjustment shall be made in the
number and kind of shares and in the Option price per share subject to
outstanding Options so that each Option holder shall be in a position
equivalent to the position the Option holder would have been in had the
Option holder exercised the Options immediately prior to the applicable event.
IX. DISSOLUTION OR LIQUIDATION OF THE COMPANY
Upon the dissolution or liquidation of the Company other than in
connection with transactions to which the preceding Article VIII is applicable,
all Options granted hereunder shall terminate and become null and void;
provided, however, that if the rights hereunder of an Option holder or one who
acquired an Option by will or by the laws of descent and distribution have not
otherwise terminated and expired, the Option holder or such person shall have
the right immediately prior to such dissolution or liquidation to exercise
any Option granted hereunder to the extent that the right to purchase shares
thereunder has accrued as of the date of exercise immediately prior to such
dissolution or liquidation.
X. TERMINATION OF THE PLAN
Unless the Committee shall decide to reduce or, subject to shareholder
approval, if required under Article XI, to extend the duration of the Plan, the
Plan shall terminate on December 31, 2002. Termination of the Plan shall not
affect any Options granted or any Option agreements executed prior to the
effective date of termination.
XI. AMENDMENT OF THE PLAN
The Plan may be amended by the Committee or the Board of Directors of
the Company provided, however, that if the scope of any amendment is such as to
require shareholder approval in order to comply with Rule 16b-3 under the 1934
Act such amendment shall require approval by the shareholders. Any amendment
shall not affect any Options theretofore granted and any Option agreements
theretofore executed by the Company and any Option holder unless such amendment
shall expressly so provide. No amendment shall adversely affect any Option
holder with respect to an outstanding Option without the written consent of
such Option holder. With the consent of the Option holder affected, the
Committee may amend any outstanding Option agreement in a manner not
inconsistent with the Plan, including, without limitation, to accelerate the
date of exercise of any installment of any Option.
XII. EMPLOYMENT RELATIONSHIP
Nothing herein contained shall be deemed to prevent the Company or an
Affiliate from terminating the employment of any employee, nor to prevent any
employee from terminating his/her employment with the Company or an Affiliate.
XIII. EFFECTIVE DATE
This Plan first became effective on January 2, 1985.
cooka.stock.1985nq.pln
BIOGEN, INC.
1987 SCIENTIFIC BOARD STOCK OPTION PLAN
(AS AMENDED THROUGH DECEMBER 6, 1996 AND REVISED TO REFLECT TWO-FOR-ONE STOCK
SPLIT EFFECTED IN NOVEMEBR 1996)
1. PURPOSE OF THE PLAN
The Biogen, Inc. 1987 Scientific Board Stock Option Plan (the "Plan") is
intended to encourage ownership of shares of the common stock, $.01 par value
(the "Common Stock"), of the Company by members of the Scientific Board of the
Company and to provide an additional incentive to those scientific Board members
to promote the success of the Company and its Affiliates.
2. DEFINITIONS
2.1 "Company" means Biogen, Inc. and any successor to its business.
2.2 "Affiliate" means a corporation in respect of which the Company owns
directly or indirectly fifty percent (50%) or more of the voting shares thereof
or which is otherwise controlled by the Company.
2.3 "Committee" means the Stock and Option Plan Administration Committee of the
Board of Directors of the Company.
2.4 "Option" means a stock option granted under this Plan.
3. SHARES SUBJECT TO THE PLAN
The aggregate number of shares as to which Options may be granted from time to
time under this Plan shall be 3,000,000 of the shares of Common Stock.
If an Option ceases to be "outstanding", in whole or in part, other than by
reason of the exercise of such Option, the shares which were subject to such
Option shall be available for the granting of other Options. Any Option shall
be treated as "outstanding" until such Option is exercised in full, terminates
under the provisions of the Plan or expires by reason of lapse of time.
The aggregate number of shares as to which Options may be granted shall be
subject to change only by means of an amendment of the Plan in accordance with
Article 11 below or pursuant to the provisions of Article 8 below.
4. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Committee. The membership of the Committee
shall bedetermined, and shall be subject to change without cause and without
notice from time to time, by the Board of Directors of the Company.
The Committee is authorized to interpret the provisions of the Plan or of any
Option and to make all rules and determinations necessary or advisable for the
administration of the Plan. Subject to the provisions of the Plan, Options may
be granted upon such terms and conditions as the Committee may prescribe.
This Plan is intended to comply in all respects with Rule 16b-3 or its
successors promulgated under the Securities Exchange Act of 1934 ("1934 Act")
with respect to participants who are subject to Section 16 of the 1934 Act,
and any provision in this Plan with respect to such persons contrary to Rule
16b-3 shall be deemed null and void to the extent permissible by law and deemed
appropriate by the Committee.
5. ELIGIBILITY FOR PARTICIPATION
The Committee shall determine which Scientific Board members shall be eligible
to participate in the Plan, may grant to one or more such Scientific Board
members one or more Options, and shall designate the number of shares to be
optioned under each Option so granted; provided, however, that no Options shall
be granted after December 31, 1997.
6. TERMS AND CONDITIONS OF OPTIONS
No Option issued pursuant to this Plan shall be an incentive stock option
under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
Each Option shall be set forth in an Option agreement, duly executed on behalf
of the Company and by the person to whom such Option is granted. No Option shall
be deemed to have been granted and no purported grant of any Option shall be
effective until such Option shall have been approved by the Committee. The
Committee shall determine the terms and conditions of Options granted,
including provisions relating to termination of the Option holder's
consultancy, death and disability; provided, however, that each such Option
agreement shall be subject to at least the following terms and conditions:
6.1 Option Price: Except as otherwise determined by the Committee, the Option
price per share for Options granted under the Plan shall be equal to the fair
market value per share of Common Stock on the date of grant of the Option;
provided, however, that in no event shall the Option price be less than the
par value per share of the Common Stock. Fair market value shall be the average
of the "high" and "low" sale prices as reported in the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") for the date of grant
of the Option or, if none, for the most recent trading date thirty (30) days or
less prior to the date of grant of the Option on which the Common Stock was
traded.
6.2 Term of Option: Each Option shall terminate upon a date determined at the
time of grant by the Committee, but not later than ten (10) years from the date
of the grant thereof.
6.3 Date of Exercise: The Committee may prescribe the date or dates on which
the Option becomes exercisable, and may provide that the Option rights accrue or
become exercisable in installments over a period of months or years, or upon the
attainment of stated goals. The Committee may stipulate that any Option which
becomes exercisable shall be subject to cancellation or that shares purchased
upon the exercise of such Option shall be subject to repurchase rights in favor
of the Company. In such event the Committee shall determine the date or dates,
or event or events, upon which such cancellation or repurchase rights shall
become effective or shall lapse, as the case may be.
6.4 Medium of Payment: The option price shall be payable upon the exercise of
the Option. It shall be payable in cash or, if permitted by the Committee and
permitted by law, in shares or other consideration.
6.5 Exercise of Option and Issue of Shares: Options shall be exercised by
giving written notice to the Company, addressed to the Company at the address
specified in the Option agreement, with which the Option holder shall tender
the Option price. Such written notice shall be signed by the person exercising
the Option, shall state the number of shares with respect to which the Option is
being exercised, and shall contain any warranty required by Article 7 of the
Plan. The issuance of the Option shares may be delayed by the Company if any
law or regulation requires the Company to take any action with respect to the
Option shares prior to the issuance thereof. Without limiting the generality
of the foregoing, nothing contained herein shall be deemed to require the
Company to issue any Option shares if prohibited by law or applicable
regulation.
The shares shall, upon issuance, be evidenced by an appropriate certificate or
certificates in respect of paid-up, non-assessable shares.
6.6 Assignability and Transferability of Option: By its terms, an Option
granted to an Option holder shall not be transferable by such Option holder
other than (i) by will or by the laws of descent and distribution or (ii)
pursuant to a qualified domestic relations order, as defined by the Code or
Title 1 of the Employee Retirement Income Security Act or the rules thereunder,
or (iii) as otherwise determined by the Committee and set forth in the
applicable Option agreement. The designation of a beneficiary of an Option by
an Option holder shall not be deemed a transfer prohibited by this paragraph.
Except as provided in the preceding sentence, an Option shall be exercisable,
during an Option holder's lifetime, only by the Option holder (or by his or her
legal representative) and shall not be assigned, pledged or hypothecated in any
way (whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar process. Any attempted transfer, assignment,
pledge, hypothecation, or other disposition of any Option or of any rights
granted thereunder contrary to the provisions of this Plan, or the levy of any
attachment or similar process upon an Option or other such rights shall be null
and void.
6.7 Other Provisions: The Option agreements authorized under the Plan shall
be subject to such additional terms and conditions, including, without
limitation, restrictions upon the exercise of the Option, as the Committee
shall deem advisable.
6.8 Tax Withholding: In the event that any federal, state, or local income
taxes, employment taxes, Federal Insurance Contributions Act ("F.I.C.A.")
withholdings or other amounts are required by applicable law or governmental
regulation to be withheld from the Option holder's salary in connection with
the exercise of an Option, the Option holder shall advance in cash to the
Company, or to any Affiliate of the Company which employs or employed the
Option holder, the amount of such withholdings unless a different withholding
arrangement, including the use of shares of the Company's Common Stock, is
authorized by the Committee (and permitted by law), provided, however, that
with respect to persons subject to Section 16 of the 1934 Act, any such
withholding arrangement shall be in compliance with any applicable provisions
of Rule 16b-3 promulgated under Section 16 of the 1934 Act. For purposes
hereof, the fair market value of the shares withheld for purposes of payroll
withholding shall be determined in the manner provided in Article 6.1. above, as
of the most recent practicable date prior to the date of exercise. If the fair
market value of the shares withheld is less than the amount of payroll
withholdings required, the Option holder may be required to advance the
difference in cash to the Company or the Affiliate employer.
6.9 Reload Options: The Committee may authorize reload options ("Reload
Options") to purchase for cash or shares a number of shares of Common Stock.
The number of Reload Options shall equal (i) the number of shares of Common
Stock used to exercise the underlying Options and (ii) to the extent authorized
by the Committee, the number of shares of Common Stock used to satisfy any tax
withholding requirement incident to the exercise of the underlying Options. The
grant of a Reload Option will become effective upon the exercise of underlying
Options through the use of shares of Common Stock held by the optionee for at
least 6 months. Reload Options must be evidenced in Option agreements or
amendments to those agreements. The Option price per share of Common Stock
deliverable upon the exercise of a Reload Option shall be the fair market value
of a share of Common Stock on the date the grant of the Reload Option becomes
effective. The term of each Reload Option shall be equal to the remaining
option term of the underlying Option. No additional Reload Options shall be
granted to Option holders when Options and/or Reload Options are exercised
pursuant to the terms of this Plan following termination of the Option holder's
employment or on account of death or total and permanent disability. All other
provisions of this Plan with respect to Options shall apply equally to Reload
Options.
6.10 Rights as a Shareholder: No Option holder shall have rights as a
shareholder with respect to any shares covered by such Option except as to
such shares as have been registered in the Company's share register in the
name of such person upon the due exercise of the Option.
7. PURCHASE FOR INVESTMENT
If and to the extent that the issuance of shares pursuant to the exercise
of Options is deemed by the Company to be subject to the United States
Securities Act of 1933, as now in force or hereafter amended (the "Act"), or
to the securities law of any other jurisdiction, the Company shall be under
no obligation to issue shares covered by such exercise unless the person or
persons who exercises or who exercise such Option shall make such warranty or
take such action as may be required by any applicable securities law or shall,
in the case of the applicability of the Act, in the absence of an effective
registration under the Act with respect to such shares, warrant to the Company,
at the time of such exercise, that such person is or that they are acquiring the
shares to be issued to such person or to them, pursuant to such exercise of the
Option, for investment and not with a view to, or for sale in connection with,
the distribution of any such shares; and in such events the person or persons
acquiring such shares shall be bound by the provisions of a legend endorsed upon
any share certificates expressing the requirements of any applicable non-United
States securities law, or, in cases deemed governed by the Act, substantially
the following legend, or such other legend as counsel for the Company shall
deem appropriate, which shall be endorsed upon the certificate or certificates
evidencing the shares issued by the Company pursuant to such exercise:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933 and may not be sold, assigned or
transferred in the absence of an effective registration statement under
said Act or an opinion of counsel satisfactory to the Company that such
registration is not, in the circumstances, required."
Without limiting the generality of the foregoing, the Company may delay
issuance of the shares until completion of any action or obtaining of any
consent which the Company deems necessary under any applicable law (including
without limitation state securities or "blue sky" laws
and federal or state payroll tax withholding laws).
8. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
In the event that the outstanding Common Stock, $.01 par value, of the Company
is changed into or exchanged for a different number or kind of shares or other
securities of the Company or of another corporation by reason of any
reorganization, merger, consolidation, recapitalization, reclassification,
change in par value, stock split-up, combination of shares or dividend payable
in capital stock, or the like, appropriate adjustment shall be made in the
number and kind of shares for the purchase of which Options may be granted
under the Plan, and, in addition, appropriate adjustment shall be made in the
number and kind of shares and in the option price per share subject to
outstanding Options so that each Option holder shall be in a position
equivalent to the position the Option holder would have been in had the Option
holder exercised the Options immediately prior to the applicable event.
9. 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 8 is applicable, all Options
granted hereunder shall terminate and become null and void; provided, however,
that if the rights hereunder of an Option holder or one who acquired an Option
by will or by the laws of descent and distribution have not otherwise terminated
and expired, the Option holder or such person shall have the right immediately
prior to such dissolution or liquidation to exercise any Option granted
hereunder to the extent that the right to purchase shares thereunder has
accrued as of the date of exercise immediately prior to such dissolution or
liquidation.
10. TERMINATION OF THE PLAN
Unless the Committee shall decide to reduce or, subject to shareholder approval,
extend the duration of the Plan, the Plan shall terminate on December 31, 1997.
Termination of the Plan shall not affect any Options granted or any Option
agreements executed prior to the effective date of termination.
11. AMENDMENT OF THE PLAN
The Plan may be amended by the Committee or the Board of Directors of the
Company, provided, however, that if the scope of any amendment is such as to
require shareholder approval in order to comply with Rule 16b-3 under the 1934
Act, then such amendment shall require approval by the shareholders. Any
amendment shall not affect any Options theretofore granted and any Option
agreements theretofore executed by the Company and any Option holder unless
such amendment shall expressly so provide. No amendment shall adversely
affect any Option holder with respect to an outstanding Option without the
written consent of such Option holder. With the consent of the Option holder
affected, the Committee may amend any outstanding Option agreement in a manner
not inconsistent with the Plan, including, without limitation, to accelerate
the date of exercise of any installment of any Option.
12. EMPLOYMENT RELATIONSHIP
Nothing herein contained shall be deemed to prevent the Company or an
Affiliate from terminating the employment or consultancy of any Option holder,
nor to present any Option holder from terminating his/her employment or
consultancy with the Company or an Affiliate.
13. EFFECTIVE DATE
This Plan became effective as of March 6, 1987.
cooka.stock.1987sci.pln
