<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
Amendment No. 1
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
--------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-17999
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ImmunoGen, Inc.
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(Exact name of registrant as specified in its charter)
Massachusetts 04-2726691
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
333 Providence Highway
Norwood, MA 02062
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(Address of principal executive offices, including zip code)
(617) 769-4242
----------------------------------------------------
(Registrant's telephone number, including area code)
148 Sidney Street, Cambridge, MA 02139
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(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports,) and (2) has been subject to such
filing requirements for the past 90 days.
Yes x No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
At November 5, 1996 there were 16,963,161 shares of common stock, par
value $.01 per share, of the registrant outstanding.
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IMMUNOGEN, INC.
TABLE OF CONTENTS
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Page
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PART I - FINANCIAL INFORMATION
Item 1 Financial Statements
Consolidated Balance Sheets as of
June 30, 1996 and September 30, 1996.......................... 3
Consolidated Statements of Operations
for the three months ended September 30, 1995 and 1996........ 4
Consolidated Statements of Stockholders'
Equity for the year ended June 30, 1996 and for
the three months ended September 30, 1996..................... 5
Consolidated Statements of Cash Flows
for the three months ended September 30,
1995 and 1996................................................. 6
Notes to Consolidated Financial Statements.................... 7
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations................. 9
Signatures................................................................. 14
2
<PAGE> 3
Item 1. FINANCIAL STATEMENTS
IMMUNOGEN, INC.
<TABLE>
CONSOLIDATED BALANCE SHEETS
As of June 30, 1996, September 30, 1996,
and Pro Forma at September 30, 1996 (unaudited)
<CAPTION>
Pro Forma Pro Forma
June 30, September 30, Adjustment(A) September 30,
------------- ------------- ------------- -------------
1996 1996 1996
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 2,796,636 $ 955,597 $ 2,990,000 $ 3,945,597
Prepaids and other current assets 163,280 595,899 -- 595,899
------------- ------------- ----------- -------------
Total current assets 2,959,916 1,551,496 2,990,000 4,541,496
------------- ------------- ----------- -------------
Property and equipment, net of accumulated depreciation 4,163,416 3,698,903 -- 3,698,903
Note receivable 1,338,929 1,037,966 -- 1,037,966
Other assets 43,700 43,700 -- 43,700
------------- ------------- ----------- -------------
Total assets $ 8,505,961 $ 6,332,065 $ 2,990,000 $ 9,322,065
============= ============= =========== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable 733,446 1,054,430 -- 1,054,430
Accrued compensation 233,515 158,358 -- 158,358
Other accrued liabilities 832,573 731,081 -- 731,081
Current portion of capital lease obligations 141,533 144,203 -- 144,203
------------- ------------- ----------- -------------
Total current liabilities 1,941,067 2,088,072 -- 2,088,072
------------- ------------- ----------- -------------
Capital lease obligations 37,068 -- -- --
Convertible debentures 5,750,443 4,437,500 $(4,437,500) --
Other non-current liabilities -- -- --
Commitments
Redeemable convertible preferred stock,
$.01 par value; authorized 277,080 shares;
none issued; all authorized shares cancelled
on September 12, 1996 -- -- -- --
Stockholders' equity :
Preferred stock; $.01 par value; authorized 5,000,000 as of
September 30, 1996:
Convertible preferred stock, Series A, $.01 par value;
issued and outstanding 2,500 shares at October 3,
1996 (liquidation preference - stated value plus
accrued but unpaid dividends per share; excludes interest) -- -- 25 25
Convertible preferred stock, Series B, $.01 par value; issued
and outstanding 3,000 shares at October 16, 1996
(liquidation preference - stated value plus accrued but
unpaid dividends per share; excludes interest) -- -- 30 30
Common stock, $.01 par value; authorized
30,000,000 as of June 30, 1996 and September 30, 1996,
respectively; issued and outstanding 16,599,855 and 16,961,494
as of June 30, 1996 and September 30, 1996, respectively 165,999 169,616 -- 169,616
Additional paid-in capital 128,525,884 129,864,459 7,427,445 137,291,904
------------- ------------- ----------- -------------
128,691,883 130,034,075 7,427,500 137,461,575
Accumulated deficit (127,914,500) (130,227,582) -- 130,227,582
------------- ------------- ----------- -------------
Total stockholders' equity 777,383 (193,507) 7,427,500 7,233,993
------------- ------------- ----------- -------------
Total liabilities and stockholders' equity $ 8,505,961 $ 6,332,065 $ 2,990,000 $ 9,322,065
============= ============= =========== =============
<FN>
(A) To reflect the October 1996 conversion of the $2.5 million debenture issued to Capital Ventures International in June 1996 into
2,500 shares of Series A Convertible Preferred Stock and to reflect the October 1996 sale of $3.0 million of convertible
preferred stock to Southbrook International Investment, Ltd.
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 4
IMMUNOGEN, INC.
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months ended September 30, 1995 and 1996 (unaudited)
<CAPTION>
Three Months Ended September 30,
--------------------------------
1995 1996
- -------------------------------------------------------------------------------
<S> <C> <C>
Revenues:
Development fees $ 136,328 $ 82,156
Interest 34,333 21,380
Licensing -- 5,643
Other 13,928 29,037
----------- -----------
Total revenues 184,589 138,216
----------- -----------
Expenses:
Research and development 2,924,600 1,946,034
General and administrative 453,571 438,120
Interest 364,106 66,862
----------- -----------
Total expenses 3,742,277 2,451,016
----------- -----------
Loss before income taxes (3,557,688) (2,312,800)
Income tax expense 453 282
----------- -----------
Net loss $(3,558,141) $(2,313,082)
=========== ===========
Loss per common share $ (0.28) $ (0.14)
=========== ===========
Shares used in computing loss
per share amounts 12,581,910 16,914,771
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
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IMMUNOGEN, INC.
<TABLE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the year ended June 30, 1996 and for
the three months ended September 30, 1996 (unaudited)
<CAPTION>
Common Stock
--------------------------------------
Additional Total
Paid-in Accumulated Stockholders'
Shares Amount Capital Deficit Equity
---------- -------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
Balance at June 30, 1995 12,578,606 $125,786 $118,988,736 $(108,991,363) $ 10,123,159
---------- -------- ------------ ------------- ------------
Stock options excercised 168,500 1,685 120,900 -- 122,585
Conversion of convertible debentures 3,852,749 38,528 6,722,763 -- 6,761,291
Issuance of common stock warrants -- -- 2,693,485 -- 2,693,485
Net loss -- -- -- (18,923,137) (18,923,137)
---------- -------- ------------ ------------- ------------
Balance at June 30, 1996 16,599,855 165,999 128,525,884 (127,914,500) 777,883
========== ======== ============ ============= ============
Stock options excercised 9,977 100 23,358 -- 23,458
Conversion of convertible debentures 351,662 3,517 1,315,217 -- 1,318,734
Net loss -- -- -- (2,313,082) (2,313,082)
---------- -------- ------------ ------------- ------------
Balance at September 30, 1996 16,961,494 $169,616 $129,864,459 $(130,227,582) $ (193,507)
========== ======== ============ ============= ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
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IMMUNOGEN, INC.
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended September 30, 1995 and 1996 (unaudited)
<CAPTION>
September 30,
---------------------------
1995 1996
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(3,558,141) $(2,313,082)
Adjustments to reconcile net loss to net
cash used for operating activities:
Depreciation and amortization 796,731 446,396
Loss on sale of property and equipment (10,886) 2,934
Accretion of interest on note receivable -- (29,037)
Other
Changes in operating assets and liabilities:
Other current assets (79,604) (102,619)
Accounts payable (471,213) 320,984
Accrued compensation 9,234 (75,157)
Other accrued liabilities (142,339) (95,701)
----------- -----------
Net cash used for operating activities (3,456,218) (1,845,282)
----------- -----------
Cash flows from investing activities:
Proceeds from sale of property and equipment -- 15,183
Purchase of property and equipment (18,251) --
Proceeds from sale/maturity of marketable securities 3,000,000 --
Purchase of marketable securities (2,984,898) --
----------- -----------
Net cash (used for) provided by
investing activities (3,149) 15,183
----------- -----------
Cash flows from financing activities:
Proceeds from convertible debentures 3,600,000 --
Stock issuances, net 5,150 23,458
Principal payments on capital lease obligations (175,739) (34,398)
----------- -----------
Net cash provided by (used for)
financing activities 3,429,411 (10,940)
----------- -----------
Net change in cash and cash equivalents (29,956) (1,841,039)
----------- -----------
Cash and cash equivalents, beginning balance 3,047,236 2,796,636
----------- -----------
Cash and cash equivalents, ending balance $ 3,017,280 $ 955,597
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid for interest $ 103,106 $ 4,569
=========== ===========
Cash paid (refunded) for income taxes $ 5,000 $ 1,197
=========== ===========
Supplemental disclosure of noncash financing activities:
Conversion of convertible debentures including accrued interest $ -- $ 1,318,734
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE> 7
IMMUNOGEN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. In the opinion of management, the accompanying financial statements include
all adjustments, consisting of only normal recurring accruals, necessary to
present fairly the consolidated financial position, results of operations and
cash flows of ImmunoGen, Inc. (the "Company"), which include those of its
wholly-owned subsidiary, ImmunoGen Securities Corp., and its 72%-owned
subsidiary, Apoptosis Technology, Inc. ("ATI"). The financial disclosures herein
should be read in conjunction with the Company's Annual Report on Form 10-K for
the year ended June 30, 1996.
The Company has been unprofitable since inception and expects to incur net
losses over the next several years, if it is able to raise sufficient working
capital to continue operations. The Company's cash resources at September 30,
1996 were $1.0 million, and the Company received an additional $3.0 million in
October 1996 pursuant to a private placement of convertible preferred stock. An
additional $9.0 million is available to the Company under this agreement over a
period ending December 31, 1997, if certain conditions are met. The Company
continues actively to seek additional capital by pursuing one or more financing
transactions and/or strategic partnering arrangements. While the Company remains
hopeful that it will be able to consummate an additional financing transaction
in the near term, no assurance can be given that such financing will be
available to the Company on acceptable terms, if at all. If the Company is
unable to obtain financing on acceptable terms in order to maintain operations,
it could be forced to curtail further or discontinue operations.
B. At September 12, 1996, the Board of Directors authorized and the shareholders
approved the elimination of all previously authorized classes of preferred stock
and the authorization of 5,000,000 shares of a new class of preferred stock.
C. In October 1996, the Company's $2.5 million debenture issued in June 1996 was
converted into 2,500 shares of the Company's Series A Convertible Preferred
Stock, with a stated value of $1,000 per share (the "Series A Stock"). The
effect of this conversion is reflected on a pro forma basis on the Company's
consolidated balance sheets as of September 30, 1996 included in Item 1 of Part
I of this report. Holders of the Series A Stock are entitled to receive, when
and as declared by the Board of Directors, cumulative dividends at a rate per
share equal to 9% per annum in cash or, at the Company's option, in shares of
the Company's Common Stock in arrears on the conversion date. The 2,500 shares
of Series A Stock are convertible into the same number of shares of Common Stock
as the $2.5 million debenture was. Each share of Series A Stock is convertible
into a number of shares of Common Stock determined by dividing the $1,000 stated
value per share by the lesser of (i) 85% of the average of the closing bid
prices for the Common Stock for the five consecutive trading days prior to the
conversion date, and (ii) $2.50 (subject to certain adjustments).
7
<PAGE> 8
D. In October 1996, the Company sold 3,000 shares of its Series B Convertible
Preferred Stock, with a stated value of $1,000 per share (the "Series B Stock")
for $3.0 million to an institutional investor as part of an agreement which
grants the Company the right to require the investor to purchase up to $12.0
million of convertible preferred stock from the Company in a series of private
placements. The Company may require the investor to make additional investments
of up to $3.0 million during each of the quarters commencing on January 1, 1997,
April 1, 1997 and July 1, 1997, respectively. If the aggregate investment as of
September 30, 1997 is less than $12.0 million, the Company may require the
investor to make an additional investment of up to $3.0 million in the quarter
commencing on October 1, 1997 in an amount which would bring the total
investment to $12.0 million. Receipt of these additional investments is subject
to obtaining the approval of the Company's shareholders to issue 12,000 shares
of the Company's Convertible Preferred Stock and related common stock purchase
warrants and to the Company meeting certain other conditions.
Holders of the Series B Stock are entitled to receive, when and as declared by
the Board of Directors, cumulative dividends at a rate per share equal to an
annual rate of 9% of the stated value in cash, or at the Company's option,
shares of Common Stock, in arrears on the conversion date. Each share of Series
B Stock is convertible into a number of shares of the Company's Common Stock
determined by dividing the $1,000 stated value per share by the lesser of (i)
$3.60 (the average closing bid price of the Company's Common Stock on the Nasdaq
National Market for the five consecutive trading days prior to the October 16,
1996 original issuance date of the Preferred Stock), and (ii) the Applicable
Percentage (defined below) of the average closing bid price of the Company's
Common Stock for the five consecutive trading days prior to the conversion date
(subject to certain adjustments). The Applicable Percentage will be (i) 100%, if
the conversion date is after November 25, 1996, (ii) 90%, if the conversion date
is after November 25, 1996 but on or before January 4, 1997, and (iii) 85%, if
the conversion date is after January 4, 1997.
In connection with the right granted to the Company, the Company has issued
warrants to the investor to purchase 187,500 shares of the Company's Common
Stock. Warrants to purchase 62,500 shares of the Company's Common Stock were
also issued to a third party pursuant to an arrangement between the investor and
that party. The warrants have an exercise price of $5.49 and expire in October
2001. Additionally, if conversion of the Series B Stock into shares of the
Company's Common Stock occurs after the eightieth day following issuance of the
Series B Stock, warrants to acquire an additional 250,000 shares of the
Company's Common Stock will be issued to the investor with an exercise price
equal to 150% of the closing sale price of the Common Stock on the date of
issuance of the warrants. Similarly, if conversion of any subsequent investment
occurs after the eightieth day following its respective issue date, warrants to
purchase a number of shares of the Company's Common Stock equal to 50% of the
number of shares issued upon such conversion of the subsequent investment will
also be issued, with an exercise price equal to 150% of the closing sale price
of the Common Stock on the date of issuance of the warrants. The effect of the
issuance of 3,000 shares of Series B Stock is reflected on a pro forma basis on
the Company's consolidated balance sheets as of September 30, 1996 included in
Item 1 of Part I of this report.
E. In March 1997, the Securities and Exchange Commission issued a new
interpretation for the accounting for convertible preferred stock and
convertible debt instruments issued with provisions providing for conversion
into common stock at a discount from the market price of the common stock.
Accordingly, the Company has restated its financial statements for the quarter
ended September 30, 1996.
The new interpretation provides that assured incremental yield embedded in the
conversion terms' discount from fair market value should be accounted for as an
additional interest expense in the case of convertible debt and as a dividend
to preferred shareholders in the case of convertible preferred stock.
At September 30, 1996, compliance with this new ruling did not result in any
change in the Company's net loss or loss per share, but did result in changes
to additional paid-in capital and accumulated deficit carried forward from the
balance sheet for the year ended June 30, 1996.
8
<PAGE> 9
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
Since inception, ImmunoGen has been primarily engaged in research and
development of immunoconjugate products which the Company believes have
significant commercial potential as human therapeutics. The major sources of the
Company's working capital have been the proceeds of equity and convertible debt
financings, license fees and income earned on investment of those funds. The
Company expects no revenues to be derived from product sales for the foreseeable
future.
In the past two fiscal years, the Company has successfully reduced its
operating costs. In December 1994, the Company implemented a restructuring plan,
which included halting operations at two of its facilities, reducing or
eliminating certain areas of research and focusing its clinical efforts on its
lead products. In addition, the Company assigned the facility and equipment
leases related to a production facility in Canton, Massachusetts to another
biotechnology company effective January 1, 1996, and subleased 82% of one of its
Cambridge, Massachusetts facilities effective September 1, 1995, inceasing the
subleased space from 82% to 100% of the facility effective October 1, 1996.
The Company has been unprofitable since inception and expects to incur net
losses over the next several years. The Company's cash resources at September
30, 1996 were approximately $1.0 million, and the Company received an additional
$3.0 million in October 1996 pursuant to a private placement of convertible
preferred stock. An additional $9.0 million is available to the Company under
this agreement over a period ending March 31, 1998, if certain conditions are
met. The Company continues actively to seek additional capital by pursuing one
or more financing transactions and/or strategic partnering arrangements.
RESULTS OF OPERATIONS
Three Months Ended September 30, 1996
The Company's revenues decreased approximately 25% from approximately
$185,000 for the three months ended September 30, 1995 to approximately $138,000
for the three months ended September 30, 1996. Interest income totalled
approximately $34,000, or 18% of revenues, for the three months ended September
30, 1995, decreasing approximately 38% to approximately $21,000, or 15% of
revenues, for the three months ended September 30, 1996, reflecting the decrease
in cash balances available for investment in the 1996 period. Revenues for the
three
9
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months ended September 30, 1995 and 1996 include approximately $136,000 and
$82,000, respectively, of development revenue, which respresents revenue earned
under the Small Business Innovation Research Program of the U.S. National
Science Foundation. Revenues for 1996 also include approximately $6,000 of
licensing revenues received pursuant to two licensing agreements. Other income
for the three months ended September 30, 1995 represents a gain on sale of
assets which resulted from a sale/leaseback agreement for equipment at one of
the Company's facilities executed in fiscal 1994 which had been deferred and
recorded as other income through December 1995. Other income for the three
months ended September 30, 1996 represents accretion of interest on a note
receivable related to the assignment of the Company's leases on its Canton
facility and equipment.
The Company's total expenses decreased approximately 35% from approximately
$3.7 million for the three months ended September 30, 1995 to approximately $2.5
million in the same period in 1996, primarily a result of the Company's cost
reduction efforts as described above (see "Overview").
Research and development costs constituted the primary component of the
Company's total ongoing expenses (78% and 79% for the three months ended
September 30, 1995 and 1996, respectively), decreasing from approximately $2.9
million for the three months ended September 30, 1995 to approximately $1.9
million for the three months ended September 30, 1996. This 33% decrease is
principally the result of the savings associated with the Company's
restructuring and other cost reduction efforts begun in fiscal 1995.
General and administrative expenses decreased approximately 3% from
approximately $454,000 for the three months ended September 30, 1995 to
approximately $438,000 for the three months ended September 30, 1996. This
decrease principally represents savings associated with the restructuring plan
and other cost reduction efforts begun in fiscal 1995.
Interest expense decreased 82% from approximately $364,000 for the three
months ended September 30, 1995 to approximately $67,000 for the three months
ended September 30, 1996, primarily due to the interest, financing costs and
warrant costs charged to interest on two of Company's debenture financings in
the first quarter of fiscal 1996. Both periods include costs associated with the
Company's issuance of convertible debentures in addition to the interest costs
associated with the principal balances of the Company's capital lease
agreements.
LIQUIDITY AND CAPITAL RESOURCES
Since July 1, 1994 the Company has financed its operating deficit of
approximately $38.7 million from various sources, including issuances in fiscal
1996 of convertible debentures, amounts received pursuant to its fiscal 1996
assignment of leases and from the exercise of stock options. Since July 1, 1994
the Company has earned approximately $0.6 million of interest income. At
September 30, 1996 approximately $1.0 million of cash and cash equivalents
remained available, and an additional $3.0 million was received in October 1996.
10
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In October 1996, the Company's $2.5 million debenture issued in June 1996
was converted into 2,500 shares of the Company's Series A Convertible Preferred
Stock, with a stated value of $1,000 per share (the "Series A Stock"). The
effect of this conversion is reflected on a pro forma basis on the Company's
consolidated balance sheets as of September 30, 1996 included in Item 1 of Part
I of this report. Holders of the Series A Stock are entitled to receive, when
and as declared by the Board of Directors, cumulative dividends at a rate per
share equal to 9% per annum in cash or, at the Company's option, in shares of
the Company's Common Stock, in arrears on the conversion date. The 2,500 shares
of Series A Stock are convertible into the same number of shares of Common Stock
as the $2.5 million debenture was. Each share of Series A Stock is convertible
into a number of shares of Common Stock determined by dividing the $1,000 stated
value per share by the lesser of (i) 85% of the average of the closing bid
prices for the Common Stock for the five consecutive trading days prior to the
conversion date, and (ii) $2.50 (subject to certain adjustments).
In October 1996, the Company sold 3,000 shares of its Series B Convertible
Preferred Stock, with a stated value of $1,000 per share (the "Series B Stock")
for $3.0 million to an institutional investor as part of an agreement which
grants the Company the right to require the investor to purchase up to $12.0
million of convertible preferred stock from the Company in a series of private
placements. The Company may require the investor to make additional investments
of up to $3.0 million during each of the quarters commencing on January 1, 1997,
April 1, 1997 and July 1, 1997, respectively. If the aggregate investment as of
September 30, 1996 is less than $12.0 million, the Company may require the
investor to make an additional investment of up to $3.0 million in the quarter
commencing on October 1, 1997 in an amount which would bring the total
investment to $12.0 million. Receipt of these additional investments is subject
to obtaining the approval of the Company's shareholders to issue 12,000 shares
of the Company's Convertible Preferred Stock and related common stock purchase
warrants and to the Company meeting certain other conditions.
Holders of the Series B Stock are entitled to receive, when and as declared
by the Board of Directors, cumulative dividends at a rate per share equal to an
annual rate of 9% of the stated value in cash, or at the Company's option,
shares of Common Stock, in arrears on the conversion date. Each share of the
Series B Stock is convertible into a number of shares of the Company's Common
Stock determined by dividing the $1,000 stated value per share by the lesser of
(i) $3.60 (the average closing bid price of the Company's Common Stock on the
Nasdaq National Market for the five consecutive trading days prior to the
October 16, 1996 original issuance date of the Preferred Stock), and (ii) the
Applicable Percentage (defined below) of the average closing bid price of the
Company's Common Stock for the five consecutive trading days prior to the
conversion date (subject to certain adjustments). The Applicable Percentage will
be (i) 100%, if the conversion date is before November 25, 1996, (ii) 90%, if
the conversion date is after November 25, 1996 but on or before January 4,
1997, and (iii) 85%, if the conversion date is after January 4, 1997.
11
<PAGE> 12
In connection with the right granted to the Company, the Company has issued
warrants to the investor to purchase 187,500 shares of the Company's Common
Stock. Warrants to purchase 62,500 shares of the Company's Common Stock were
also issued to a third party pursuant to an arrangement between the investor and
that party. The warrants have an exercise price of $5.49 and expire in October
2001. Additionally, if conversion of the Series B Stock into shares of the
Company's Common Stock occurs after the eightieth day following issuance of the
Series B Stock, warrants to acquire an additional 250,000 shares of the
Company's Common Stock will be issued to the investor with an exercise price
equal to 150% of the closing sale price of the Common Stock on the date of
issuance of the warrants. Similarly, if conversion of any subsequent investment
occurs after the eightieth day following its respective issue date, warrants to
purchase a number of shares of the Company's Common Stock equal to 50% of the
number of shares issued upon such conversion of the subsequent investment will
also be issued, with an exercise price equal to 150% of the closing sale price
of the Common Stock on the date of issuance of the warrants. The effect of the
issuance of 3,000 shares of Series B Stock is reflected on a pro forma basis on
the Company's consolidated balance sheets as of September 30, 1996 included in
Item 1 of Part I of this report.
In the period since July 1, 1994 approximately $0.5 million was expended on
property and equipment. No significant amounts are expected to be expended on
property and equipment in fiscal 1997.
ImmunoGen was committed under its agreements with ATI to provide ATI with
$3.0 million in research and development services and $2.0 million in cash
equity contributions over a three-year period. At June 30, 1995 these
obligations had been fulfilled by the Company. ImmunoGen has also agreed to
obtain or furnish an additional $3.0 million in equity for ATI on such terms and
conditions as may be mutually agreed to by ATI and the providers of such equity.
As of September 30, 1996 amounts owed by ATI to ImmunoGen approximated $11.0
million. The Company intends to convert a majority of this amount into equity of
ATI, thereby satisfying the agreement to provide an additional $3.0 million in
equity.
The Company anticipates that its capital resources existing at September
30, 1996 plus the additional $3.0 million received from its October 1996 private
placement will enable it to maintain its current and planned operations through
approximately February 1997. Receipt of the remaining $9.0 million available to
the Company under its October 1996 financing agreement would enable the Company
to extend its operations through approximately February 1998. However, because
the Company must satisfy certain conditions, including obtaining shareholder
approval of this transaction and maintaining certain price and volume levels in
trading of its Common Stock, there can be no assurance that the Company will
receive any or all of the remaining $9.0 million available under this financing
arrangement. Because of its continuing losses from operations and working
capital deficit, the Company will be required to obtain
12
<PAGE> 13
additional capital to satisfy its ongoing capital needs and to continue its
operations. Although management continues to pursue additional funding
arrangements, no assurance can be given that such financing will in fact be
available on acceptable terms to the Company, if at all. If the Company is
unable to obtain financing on acceptable terms in order to maintain operations,
it could be forced to curtail further or discontinue its operations.
CERTAIN FACTS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS
This report contains certain forward-looking statements as that term is
defined in the Private Securities Litigation Reform Act of 1995. Such statements
are based on management's current expectations and are subject to a number of
factors and uncertainties which could cause actual results to differ materially
from those projected or suggested in such forward-looking statements as a result
of various factors, including, but not limited to, the following: the
uncertainties associated with clinical trials; the early stage of the Company's
initial product development and lack of product revenues; the Company's history
of operating losses and accumulated deficit; the Company's limited financial
resources and uncertainty as to the availability of additional capital to fund
its development on acceptable terms, if at all; the Company's lack of commercial
manufacturing experience and commercial sales, distribution and marketing
capabilities; reliance on suppliers of ricin and antibodies necessary for
production of the products and technologies; the potential development by
competitors of competing products and technologies; the Company's dependence on
potential collaborative partners, and the lack of assurance that the Company
will receive any funding under such relationships to develop and maintain
strategic alliances; the lack of assurance regarding patent and other protection
for the Company's proprietary technology; governmental regulation of the
Company's activities, facilities, products and personnel; the dependence on key
personnel; uncertainties as to the extent of reimbursement for the costs of the
Company's potential products and related treatment by government and private
health insurers and other organizations; the potential adverse impact of
government-directed health care reform; the risk of product liability claims;
and general economic conditions. As a result, the Company's future development
efforts involve a high degree of risk. For further information, refer to the
more specific risks and uncertainties discussed in the Company's Annual Report
on Form 10-K for the fiscal year ended June 30, 1996 as filed with the
Securities and Exchange Commission.
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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.
IMMUNOGEN, INC.
Date: April 7, 1997 By: /s/ Frank J. Pocher
-----------------------------------
Frank J. Pocher
Executive Vice President-Operations
and Chief Financial Officer
(principal financial officer)
14
