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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED JUNE 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
ACT OF 1934
COMMISSION FILE NUMBER 0-17999
IMMUNOGEN, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
MASSACHUSETTS 04-2726691
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
333 PROVIDENCE HIGHWAY, NORWOOD, MA 02062
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
(781) 769-4242
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, $.01 PAR VALUE
(TITLE OF CLASS)
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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 [ ]
Aggregate market value, based upon the closing sale price of the shares as
reported by the Nasdaq National Market, of voting and non-voting common equity
held by non-affiliates at September 14, 1998: $40,881,913 (excludes shares held
by Executive Officers, Directors, and beneficial owners of more than 10% of the
Company's Common Stock). Exclusion of shares held by any person should not be
construed to indicate that such person possesses the power, direct or indirect,
to direct or cause the direction of management or policies of the registrant, or
that such person is controlled by or under common control with the registrant.
Common Stock outstanding at September 14, 1998: 25,419,552 shares.
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Definitive Proxy Statement for its 1998 Annual
Meeting of Shareholders are incorporated by reference into Part III of this
Report.
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ITEM 1. BUSINESS
THE COMPANY
ImmunoGen, Inc. ("ImmunoGen" or the "Company") develops pharmaceuticals,
primarily for the treatment of cancer. The Company's product candidates are
called tumor-activated prodrugs ("TAPs") and are based on its proprietary
immunoconjugate technology platform. Unlike conventional chemotherapeutic
agents, TAPs are intended to deliver potent chemotherapy specifically to a
tumor. Each TAP immunoconjugate comprises a small-molecule drug which has been
chemically linked to a monoclonal antibody. The small-molecule drugs are highly
potent cell-killing (cytotoxic) agents, while the monoclonal antibodies identify
and bind to tumor cells. An important characteristic of TAPs is that they remain
inactive and nontoxic until they bind to the surface of a tumor cell, after
which their full cytotoxicity is restored.
Two of the Company's product candidates, huC242-DM1 and huN901-DM1, are in
preclinical testing for the treatment of colorectal cancer and small-cell lung
cancer, respectively.
Through its 97-percent-owned subsidiary, Apoptosis Technology, Inc.
("ATI"), the Company develops additional technologies based on the regulation of
the biochemical signals which instruct cells to undergo programmed cell death,
or apoptosis. ATI directs its research toward identification of lead compounds
for the treatment of cancer and viral infections. Disruption of the apoptosis
pathway is recognized as an essential element in both cancer and viral
infections.
ATI has identified several key proteins which play a role in the regulation
of apoptosis in cancer cells and virus-infected cells. Using this information,
ATI has developed proprietary biological model systems, or screens, with which
to identify leads for drug development. In August 1997, the Company announced a
collaboration between ATI and BioChem Pharma Inc. ("BioChem"), a Canadian
biopharmaceutical company, for the discovery and development of novel
anti-cancer therapeutics using screens developed at ATI. See
"-- Licenses -- Apoptosis Technology, Inc. -- BioChem Pharma Inc."
TAPs and ATI's drug discovery technologies represent two different
approaches to developing new cancer therapeutics. Since combination therapy is
prevalent in cancer, the Company expects that drugs developed using ATI's
approach may be complementary to the Company's TAPs.
The Company has a multi-faceted business strategy which includes:
- Aggressively pursuing a corporate partner to support clinical
development and commercialization of its lead product candidate,
huC242-DM1;
- Developing new TAPs in collaboration with other companies. These
TAPs would employ ImmunoGen's immunoconjugate technology on a
non-exclusive basis with antibodies furnished by other companies;
- Self-funding the development of some TAPs to build value in advance
of licensing product rights; and
- Leveraging ATI's knowledge of apoptosis into other disease areas
beyond cancer.
See "-- Business Strategy."
The Company was organized in 1981 as a Massachusetts corporation.
TUMOR-ACTIVATED PRODRUGS (TAPS)
Despite recent advances in diagnosis and treatment, cures in many forms of
cancer continue to be elusive. Surgery may be used to remove primary masses of
some solid tumors, but it largely is ineffective once the tumor spreads to other
parts of the body (metastatic disease). Treatment with combination chemotherapy
and radiation also may not be capable of eradicating disease because of
inadequate drug potency at the tumor site, the result of drug doses that must be
limited because of side-effects to healthy tissues. These agents attack dividing
cells -- not only rapidly dividing cancer cells, but also other dividing cells
such as bone marrow and certain epithelial cells (e.g., hair follicles and the
gastrointestinal lining). As a further impediment to
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successful therapy, tumor cells may be genetically predisposed to become
resistant to treatment with chemotherapy or radiation, making repeat courses of
therapy ineffective.
Because of toxicities, limited potency and resistance associated with
conventional anti-cancer therapies, a significant need still exists for new
therapeutic products. One way in which the Company seeks to address this
therapeutic void is through applications of its tumor cell-specific TAP
immunoconjugate technology for the targeted delivery of highly potent
chemotherapeutic drugs to tumor cells. Importantly, because TAPs are inactive
until released from the antibody inside the tumor, they are capable of killing
tumor cells while sparing normal cells -- even those in close association with a
tumor.
Each of the Company's TAPs consists of a monoclonal antibody coupled to a
small-molecule agent (an effector molecule) with a high degree of cell-killing
potential. A monoclonal antibody is a protein which detects and binds to a
specific antigen, or marker. Since cancer cells may have unique antigens on
their surface, an antibody with the correct specificity for those cells may be
used as a targeting agent. Importantly, some of these markers are found on
several types of tumors. A TAP which uses an antibody that targets such markers
therefore may be used in the treatment of different types of tumors.
ImmunoGen has identified monoclonal antibodies which it believes possess
the requisite characteristics for use in TAPs: two of these, C242 and N901, are
used in ImmunoGen's TAP product candidates currently in development for the
treatment of colorectal cancer and small-cell lung cancer, respectively. In the
past year, the Company has performed laboratory experiments using the C242
antibody which suggest that it may also be useful to target pancreatic tumors
and non small-cell tumors of the lung.
The Company believes the following attributes distinguish its TAP
immunoconjugates as anti-cancer agents with great potential:
- Targeting, which directs the cell killing potential of TAPs
specifically to the tumor;
- A stable linkage and release mechanism, allowing the high potency of
the effector molecule to be released after binding to the tumor;
- A high degree of cell-killing at the tumor site; and
- A tolerable side-effect profile and, consequently, a minimal
disturbance of patients' quality of life during treatment.
Small-Drug Effector Molecules: The Company has conducted laboratory and
animal tests of two types of small-molecule drugs which it believes offer great
promise for use as effector molecules in TAPs. The Company has developed
derivatives of these drugs which allow them to be attached to antibodies to
target tumor cells and allow for their release in a fully active form only at
the target site.
The first compound, DM1, is a potent inhibitor of cell division. It is
derived from maytansine, a natural product. ImmunoGen has incorporated DM1 into
TAPs for the treatment of colorectal cancer and small-cell lung cancer. The
Company has obtained an exclusive license for use of maytansinoids in conjugated
form and has received two United States patents covering the use in conjugated
form of small-drug immunoconjugates derived from maytansine. See "-- Licenses --
ImmunoGen, Inc. -- Takeda Chemical Industries Ltd" and "-- Patents, Trademarks
and Trade Secrets."
The second small-drug compound, DC1, is one of a class of agents called DNA
groove-binding compounds. After binding to DNA, these agents remain strongly
fixed to it, thereby interfering with cellular function and inducing the death
of cells. In April 1998, the Company received a Notice of Allowance of its third
United States patent covering the use of DC1 in immunoconjugates. See "--
Patents, Trademarks and Trade Secrets."
Because different tumor types possess different biological characteristics,
DM1-based TAPs may be more effective against some tumor types, while DC1-based
TAPs may be more effective against other tumor types. To be able to treat a
broad range of cancers effectively, the Company develops both classes of small
molecules.
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Based on its in vitro and animal studies, the Company believes that TAPs
containing either DM1 or DC1 will be more effective than current anti-cancer
drugs at killing tumor cells. This high degree of killing power is important in
shrinking large tumor masses. In animal studies of immunodeficient mice given
human tumors, the Company's TAPs have shown therapeutic efficacy and complete
cures at doses with no observable toxicity.
Antibody Humanization: Humanized antibodies are essential components of
ImmunoGen's TAPs. These antibodies, originally derived from mice, have been
engineered to appear human to the immune system. In this way, they are not
treated as foreign substances and removed from circulation, which may occur over
time with native antibodies of nonhuman origin. Humanized antibodies therefore
are expected to be nonimmunogenic to patients, an essential characteristic for
long-term administration and repeated dosing.
The Company, in conjunction with researchers at the University of Bath in
the United Kingdom, has developed a proprietary method, called resurfacing,
which it uses to humanize the monoclonal antibodies in its immunoconjugates. The
Company believes it has successfully humanized several monoclonal antibodies
using resurfacing, including C242 and N901.
TAP PRODUCTS
huC242-DM1. ImmunoGen uses an antibody, C242, which the Company believes
possesses the requisite specificity for a targeting agent in a TAP: the antibody
binds to all, and binds strongly to approximately 70%, of colorectal cancers and
has minimal cross-reactivity with normal human tissues. In addition, laboratory
tests indicate that the marker targeted by C242 is found on pancreatic tumors
and non small-cell lung tumors.
According to estimates of the American Cancer Society ("ACS"), there will
be 131,600 new cases of colorectal cancer in the United States in 1998, and
56,500 deaths from the disease. The ACS also estimates that there will be 29,000
new cases of pancreatic cancer and 28,900 deaths, as well as 171,500 new cases
and 160,100 deaths from lung cancer.
The Company has linked the humanized version of C242 ("huC242") to the
small-molecule drug, DM1. Because DM1 is a small-molecule, nonprotein drug,
huC242-DM1 is not expected to be immunogenic, which should allow for the
administration of repeat courses of therapy. HuC242-DM1 therefore may be a
suitable agent for substantially shrinking or eliminating large tumor masses,
either used alone or in combination with other chemotherapeutics. In July 1998,
the Company executed an agreement to license use of C242 in maytansinoid
products for the treatment of cancer from its discoverer, Pharmacia & Upjohn AB.
See "-- Licenses -- ImmunoGen, Inc. -- Pharmacia & Upjohn AB."
In March 1998, the Company presented the results of preclinical studies of
this product at the American Association of Cancer Research annual meeting.
Studies in mice and monkeys demonstrated that the drug is stable and well
tolerated at high concentrations and does not cross-react with normal tissues.
New studies also showed that the drug is effective in treating mice given human
pancreatic tumors. Studies reported in August 1996 had previously shown that the
drug completely eradicated large, established human colon tumors in mice at
doses well below those which produce toxic side effects, curing the animals.
Upon completion of final preclinical toxicology studies, the Company
expects to begin clinical studies of huC242-DM1. Under the Company's current
timelines, the first such human trial, in colorectal cancer, could begin as
early as the second quarter of calendar year 1999. The Company is seeking to
obtain additional funding to complete clinical development of this product. The
Company is currently in discussions with a major pharmaceutical company.
The preclinical testing of this product has been supported in part by the
National Cancer Institute ("NCI") of the National Institutes of Health. In
August 1997, the Company announced receipt of a $750,000 Phase II Small Business
Innovation Research grant from NCI to support preclinical research and
development of huC242-DM1, including final product formulation in advance of the
start of human clinical studies. The award is for $375,000 annually for two
years retroactive to April 1, 1997.
huN901-DM1. This product consists of the humanized version of the
antibody, N901, conjugated to DM1. N901 binds to CD56, an antigen found on the
surface of small-cell lung cancer cells. This antibody also
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has been humanized successfully. The Company has established cell lines that
express humanized N901 at sufficiently high levels to be suitable for scale up.
As with huC242-DM1, huN901-DM1 is not expected to be immunogenic, which should
allow for the administration of repeat courses of therapy.
Of the 171,500 new cases of lung cancer estimated by ACS for 1998,
approximately 25-30 percent are expected to be small-cell lung cancer.
The Company expects to test the ability of huN901-DM1 to substantially
reduce or eliminate small-cell lung tumors. The Company may seek additional
funding to complete preclinical and clinical development of this product.
Alternatively, if the Company is successful in completing a licensing agreement
for huC242-DM1, the Company may choose to self-fund development of huN901-DM1 up
to and including early clinical trials. See "-- Business Strategy."
APOPTOSIS TECHNOLOGY
Recent research has shown that human cells have an intrinsic "suicide
program" called apoptosis, one function of which is to destroy certain cells in
order to protect the body against disease. Defects in this program may allow
cancer cells to survive and proliferate or viruses to reproduce and spread.
Inappropriate regulation of apoptosis also has emerged as a key factor in
immunological, neurodegenerative, cardiovascular and other diseases. Based on
the belief that regulation of the biochemical pathways leading to apoptosis
offers a promising, novel approach to the treatment of disease, the Company
established ATI as a majority-owned subsidiary to pursue development of
therapeutics for the regulation of apoptosis.
ATI's drug discovery approach is "gene-based"; namely, it is predicated on
the identification and understanding of the role specific genes play in the
biochemical pathways regulating apoptosis. A gene-based approach has particular
appeal in cancer and viral infections because inhibition of the apoptotic
program is recognized as an essential element of these diseases. ATI focuses its
research in these two areas. ATI has identified several key proteins which
regulate apoptosis in cancer cells and viruses. Using these proteins, ATI has
developed proprietary screens with which to identify leads for drug development.
In August 1997, the Company announced a collaboration between ATI and
BioChem for the discovery and development of novel anti-cancer therapeutics
based on the use of ATI's proprietary screens for the identification of products
which regulate the activity of "anti-death" genes and cellular survival factors.
In accordance with the collaborative research plan, during 1998, ATI delivered
the first two screens to BioChem.
REGULATION OF APOPTOSIS AND CANCER
In normal, healthy tissue, cell proliferation and cell death are intimately
linked, providing an efficient means for organisms to control unwanted or excess
cellular proliferation. Cancer cells have accumulated mutations, however, that
circumvent the normal regulation of proliferation and cell death through
apoptosis, leading to excess and uncontrolled cell growth. Tumor cells escape
apoptosis through the active suppression, or blockage, of stimuli which
otherwise would directly induce cell death. The restoration of apoptosis in
these cells by interference with such blockage of the cell-death pathway
therefore constitutes a promising, gene-based approach to the eradication of
cancer.
It is now well accepted within the scientific community that there are two
key, distinct mechanisms that block apoptosis in cancer cells: (i) the
activation of "anti-death" genes; and (ii) the regulation of cellular survival
factors. Some types of cancer cells may survive due to the activation of
anti-death genes while others may survive due to the activation of specific
survival signals.
Activation of "anti-death" genes. Bcl-2, the product of one of these
anti-death genes, is a member of a family of proteins that has been shown to
regulate apoptosis. Some of these proteins actively suppress apoptosis while
others trigger it. Interactions between those members of the Bcl-2 family which
promote apoptosis, and those which suppress it, regulate the cell-death program.
The Bcl-2 protein has been shown to block apoptosis in tumors and also to make
tumors resistant to chemotherapy. ATI believes that inhibition of the function
of Bcl-2 and other Bcl-2 family cell-death suppressors may restore the
susceptibility of a tumor cell to apoptosis and provide an innovative approach
to the development of anti-cancer therapeutics.
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ATI has collaborated in this area with researchers at the Medical Center of
St. Louis University ("SLU"). In March 1998, ATI licensed rights to certain SLU
inventions relating to methods and use of Bcl-2 in modulating apoptosis. See
"-- Licenses -- Apoptosis Technology, Inc. -- St. Louis University."
ATI has discovered and characterized several proteins of the Bcl-2 family
that are potent promoters of cell death, but whose function in tumor cells is
disrupted by cell-death suppressors such as Bcl-2. The first of these proteins
is the Bak protein. Laboratory experiments have shown that expression of Bak
induces rapid and extensive apoptosis, raising the possibility that it is
directly involved in triggering the cell-death program. ATI received a United
States patent, No. 5,672,686, in September 1997 claiming antibodies which bind
to the Bak protein; it also has filed an additional United States patent
application claiming methods and use of Bak. See "-- Patents, Trademarks and
Trade Secrets."
ATI and collaborators have discovered two other promoters of cell death,
Bik and Bbk. In April 1998, ATI received a Notice of Allowance of a United
States patent claiming composition of matter of Bbk; it also has filed separate
United States patent applications claiming methods and use of Bbk and Bik.
Importantly, ATI scientists also have identified BH3, a domain present in
all three of these promoters of cell death, as well as in other proteins of the
Bcl-2 family. ATI believes that BH3, also known as the GD domain, is sufficient
for the triggering of cell death. ATI believes that the reason apoptosis is
blocked in tumor cells is due to the binding of Bcl-2-related cell-death
suppressors to BH3. Identification of the BH3 domain therefore gives ATI
molecular information with which it can design screens for drugs which
counteract the influence of Bcl-2 and related suppressors of cell death, thereby
restoring apoptosis in tumor cells. In August 1997, ATI was awarded a United
States patent, No. 5,656,725, claiming composition of matter of the GD (BH3)
domain. In May 1998, ATI received a Notice of Allowance of a second United
States patent claiming composition of matter of the GD (BH3) domain; it also has
filed an additional United States patent application claiming methods and use of
BH3. BH3 is the first molecular target for which ATI has developed a screen. ATI
has delivered the screen to BioChem as part of their collaboration.
Regulation of survival signals. Cells also may suppress the cell-death
program through survival signals provided by growth factors such as insulin-like
growth factor 1 ("IGF-1"). Research by collaborators at the Imperial Cancer
Research Fund ("ICRF"), a leading cancer research foundation in the United
Kingdom, has shown that survival signals provided by IGF-1 help prevent cancer
cells from undergoing apoptosis. ATI has established a research program with
ICRF to elucidate the role of IGF-1 and other survival factors in the death
pathway and to identify drugs that mimic or disrupt the survival signal of IGF-1
in cells. The IGF-1 receptor ("IGF-1R") is overexpressed on cells of many tumor
types, such as breast and small-cell lung carcinoma, and may be a critical
requirement for the survival of tumor cells. ATI therefore believes that the
suppression of survival signals may induce apoptosis in a great number of tumor
types.
ATI also collaborates in this area with researchers at Thomas Jefferson
University ("TJU"), Philadelphia, Pennsylvania, who have shown that IGF-1R is
required for cells to become cancerous and that blocking IGF-1R expression can
trigger apoptosis. Through the collaboration, ATI has identified a domain on
IGF-1R which is essential for the transmission of the survival signal, thereby
providing a molecular target for drug design. In December 1997, ATI licensed
exclusive, worldwide rights from TJU to inventions relating to use of unique
domains on IGF-1R in modulating apoptosis. See " -- Licenses -- Apoptosis
Technology, Inc. -- Thomas Jefferson University." IGF-1R is the second molecular
target for which ATI has developed a screen. ATI has delivered the screen to
BioChem as part of their collaboration.
REGULATION OF APOPTOSIS AND VIRAL DISEASE
Viral disease starts with viral infection, which at the cellular level
involves the binding of virus to host cells, viral entry into those cells and
the ultimate commandeering of the host cells' synthetic machinery, which leads
to the generation of new virus particles. It is now generally recognized within
the scientific community that host cells often use their ability to undergo
apoptosis as an effective means of stopping virus propagation: in many viruses,
genes have evolved whose action is to block apoptosis in the host cell and so
permit virus production. In vitro experiments with several viruses have
demonstrated that suppression of their anti-apoptotic mechanisms may effectively
limit viral infection.
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ATI is focusing on the identification of the anti-apoptotic genes of human
cytomegalovirus ("CMV"), a herpes virus which often infects immunocompromised
individuals, such as those afflicted with AIDS or following organ
transplantation, and which is life threatening. ATI is developing screens based
on anti-apoptotic CMV genes which it believes will permit the identification of
compounds effective against the propagation of CMV. In 1998, ATI filed a United
States patent application covering this technology.
BUSINESS STRATEGY
ImmunoGen's objective is to be a leader in the development of novel
pharmaceuticals for the treatment of cancer and other human diseases. The
Company has developed a multi-faceted business strategy to fund development of
its products:
- ImmunoGen is completing preclinical development of huC242-DM1. The
Company expects to seek permission from the United States Food and
Drug Administration ("FDA") to begin human clinical trials of the
drug as early as the second quarter of calendar year 1999. The
Company is aggressively pursuing a corporate partner to support
clinical development and commercialization of huC242-DM1 and, to
that end, is currently in discussions with a major pharmaceutical
company.
- The Company will seek to broaden the value of its technology by
developing new TAPs in collaboration with other companies. These
TAPs would employ ImmunoGen's immunoconjugate technology on a
non-exclusive basis with antibodies furnished by other companies.
- The Company expects to apply some of the funds received from
commercial collaborations to the development of other TAP product
candidates. If sufficient funds are available, the Company may elect
to self-fund development of TAPs through early human studies to
build value in advance of entering into a licensing agreement for
final clinical development and product commercialization.
- ATI will continue to leverage its existing knowledge in the field of
apoptosis. Having completed a licensing arrangement with BioChem for
use of its screens in cancer, the Company will continue to seek
additional pharmaceutical partners which will use ATI's screens
against their libraries of existing drugs in other disease areas.
LICENSES
The Company and ATI each have entered into license agreements with third
parties in order to acquire rights to materials and techniques which strengthen
their technology base, usually in exchange for a royalty on sales of products
which incorporate such materials and techniques. The principal licenses are
listed below:
LICENSES -- IMMUNOGEN, INC.
PHARMACIA & UPJOHN AB. In July 1998, the Company executed an agreement
with Pharmacia & Upjohn AB under which the Company received rights to
commercialize maytansinoid products which incorporate the C242 antibody for the
treatment of cancer, in exchange for a royalty on product sales and other
payments.
OXFORD MOLECULAR LTD. In March 1995, the Company entered into an agreement
with Oxford Molecular Ltd ("OML") under which the two companies cross-licensed
technology for the design of monoclonal antibodies. Under the agreement, the
Company receives access to OML's molecular modeling software in exchange for
granting OML the right to use the Company's proprietary resurfacing technology
in the humanization of monoclonal antibodies outside of the field of oncology
and case-by-case rights within oncology areas not under development at the
Company. OML also will pay the Company a percentage of the gross revenues it
derives from the use of resurfacing.
TAKEDA CHEMICAL INDUSTRIES, LTD. A licensing agreement with Takeda
Chemical Industries, Ltd. ("Takeda"), executed in April 1994, gives the Company
a worldwide license to make, use and market immunoconjugate products containing
maytansine or its analogs. Under the agreement, Takeda will receive a
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royalty based on ImmunoGen's annual net sales of such products and will have a
right of first refusal to market such products in most Asian and certain Middle
Eastern countries.
In addition, Takeda will furnish to ImmunoGen, free of charge, up to 40
grams of maytansine for research and development during the term of the license
agreement.
DANA-FARBER CANCER INSTITUTE. Under a Research and License Agreement with
the Dana-Farber Cancer Institute ("Dana-Farber"), entered into in May 1981, the
Company has provided funds for research projects conducted by Dana-Farber
involving the development of monoclonal antibodies, toxins and drugs for
conjugation and use as cancer therapeutics. Dana-Farber retains ownership of the
technology developed through such research and has granted the Company a
worldwide exclusive license to use such technology in the Company's products,
including the right to sublicense to others. In return for these rights, the
Company agreed to pay Dana-Farber royalties on product sales by ImmunoGen and
its sublicensees.
The Company has no funding obligations to Dana-Farber except for payment of
royalties on future sales of products which incorporate Dana-Farber technology.
The N901 antibody, used in one of the Company's products currently under
development, in part derives from Dana-Farber technology which has been licensed
to the Company under this agreement.
LICENSES -- APOPTOSIS TECHNOLOGY, INC.
ST. LOUIS UNIVERSITY. In March 1998, ATI licensed rights to inventions
relating to methods and use of Bcl-2 in modulating apoptosis from SLU. ATI
receives exclusive, worldwide rights to SLU's allowed United States patent
claiming an antiproliferation domain of Bcl-2 and certain other Bcl-2-related
inventions claimed in SLU's patent applications, in exchange for license fees
and a royalty on product sales.
THOMAS JEFFERSON UNIVERSITY. In December 1997, ATI licensed rights to
inventions relating to methods and use of IGF-1R in modulating apoptosis from
TJU. ATI receives exclusive, worldwide rights to the inventions claimed in TJU's
patent applications, filed in the United States and elsewhere, in exchange for
license fees and a royalty on product sales.
BIOCHEM PHARMA INC. In July 1997, ATI and BioChem entered into a
three-year research collaboration arrangement and a licensing agreement under
which ATI grants BioChem an exclusive, worldwide license to ATI's proprietary
screens based on the Bcl-2 family of proteins and IGF-1R for use in identifying
leads for drug development. The collaboration also covers the identification of
novel targets and the development of new screens in the two areas.
Under the collaboration, BioChem has committed to invest up to $11.125
million in ATI through a series of private placements over a three-year period
to fund research conducted by ATI with respect to the collaboration during that
period. In consideration for its investment, BioChem receives convertible
preferred stock in ATI and warrants to purchase shares of ImmunoGen's Common
Stock equal to the amount invested in ATI during the three-year research term.
The research agreement also may be extended beyond that time under conditions
substantially similar to the original three-year term. BioChem will also make
milestone payments of up to $15 million for each product resulting from the
research collaboration over the course of its development. In addition, ATI will
receive royalties on the sale of products resulting from the collaboration. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
DANA-FARBER CANCER INSTITUTE. In January 1993, ATI and Dana-Farber entered
into a licensing agreement in the field of apoptosis under which ATI was granted
an exclusive, worldwide license, with full right to enter into sublicense
agreements, for all therapeutic applications and certain diagnostic applications
arising from existing inventions and an option to license future inventions made
in specified laboratories at Dana-Farber. In consideration for this license,
Dana-Farber received a minority equity share in ATI, an initial license fee and
a commitment by ATI to fund the research activities of those laboratories at
Dana-Farber from which ATI is to derive rights under the agreement.
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In June 1996, ATI made its final payment under the license agreement. There
are no further funding obligations to Dana-Farber except for payment of
royalties on future sales of products which incorporate Dana-Farber technology.
PATENTS, TRADEMARKS AND TRADE SECRETS
ImmunoGen and ATI seek patent protection for their proprietary technologies
and products both in the United States and abroad. Among them, the Company has
received:
- Two United States patents and one European patent claiming the use
of maytansinoids in conjugated form as an invention;
- Two United States patents and a Notice of Allowance of a third
United States patent claiming use of DC1 and its analogs in
immunoconjugates; and
- One United States patent claiming methods and use of its resurfacing
technology.
ATI has received:
- A United States patent claiming antibodies which bind to the
apoptosis-related protein, Bcl-Y (also referred to as Bak);
- A United States patent and a Notice of Allowance of a second United
States patent claiming composition of matter of the GD (BH3) domain;
- A Notice of Allowance of a United States patent claiming the
anti-proliferation domain of Bcl-2;
- A Notice of Allowance of a United States patent claiming composition
of matter of the apoptosis-related protein, Bbk; and
- A Notice of Allowance of a United States patent claiming the
apoptosis gene, EI24.
In addition, several patents have been issued to Dana-Farber in the United
States covering immunoconjugate technology and apoptosis-related technology,
exclusively licensed by ImmunoGen and ATI, respectively, from Dana-Farber.
Additional patent applications covering proprietary small-drug derivatives,
immunoconjugates, apoptosis technology and use of certain of these products and
inventions for indicated diseases have been submitted in the United States,
Canada, Europe and Japan and are pending or awaiting examination. Work leading
to other patent applications is being performed by Company employees. In all
such cases, the Company or ATI will either be the assignee or owner of such
patents or have an exclusive license to the technology covered by the patents.
No assurance can be given, however, that the patent applications will issue as
patents or that any patents, if issued, will provide ImmunoGen or ATI, as the
case may be, with adequate protection against competitors with respect to the
covered products, technologies or processes.
Many of the processes and much of the know-how of importance to the
Company's and ATI's technologies are dependent upon the skills, knowledge and
experience of certain of their key scientific and technical personnel, which
skills, knowledge and experience are not patentable. To protect their rights in
these areas, the Company and ATI require all employees and their consultants,
advisors and collaborators to enter into confidentiality agreements with
ImmunoGen or ATI, as the case may be. There can be no assurance, however, that
these agreements will provide meaningful protection for the Company's or ATI's
respective trade secrets, know-how or other proprietary information in the event
of any unauthorized use or disclosure of such trade secrets, know-how or
proprietary information. Further, in the absence of patent protection, the
Company or ATI may be exposed to competitors who independently develop
substantially equivalent technology or otherwise gain access to the Company's or
ATI's respective trade secrets, know-how or other proprietary information.
8
<PAGE> 10
COMPETITION
The areas of product development on which the Company has focused are
highly competitive. ImmunoGen's competitors include:
- Major pharmaceutical and chemical companies;
- Specialized biotechnology firms; and
- Universities and research institutions.
Many of the above companies and institutions also compete with the Company
in recruiting and retaining highly qualified scientific personnel. Many
competitors and potential competitors have substantially greater scientific
research and product development capabilities, as well as greater financial,
marketing and human resources than the Company. In addition, many specialized
biotechnology firms have formed collaborations with large, established companies
to support research, development and commercialization of products that may be
competitive with those of the Company.
Competitive factors within the cancer therapeutic market include:
- The safety and efficacy of products;
- The timing of regulatory approval and commercial introduction;
- Special regulatory designation of products, such as Orphan Drug
status; and
- The effectiveness of marketing and sales efforts.
The Company's competitive position also depends on its ability to develop
effective proprietary products, implement production and marketing plans, obtain
patent protection and secure sufficient capital resources.
Continuing development of conventional and targeted chemotherapeutics by
large pharmaceutical companies may result in the identification of new compounds
which may compete with the Company's product candidates. In addition, two
monoclonal antibodies recently have been approved for use as cancer
therapeutics. Although neither of these antibodies was approved for the same
indications as the Company's current product candidates, other monoclonal
antibodies may compete with the Company's product candidates.
Because of the prevalence of combination therapy in cancer and the variety
of genes and targets implicated in cancer progression, the Company believes that
products resulting from applications of new technologies may be complementary to
the Company's products. Such new technologies include, but are not limited to;
- The use of genomics technology to identify new gene-based targets for
the development of anti-cancer drugs;
- The use of high-throughput screening to identify and optimize lead
compounds; and
- The use of gene therapy to deliver genes to regulate gene function.
The technology of ATI is also technology which has many competitors. Over
the past several years, many companies and research institutions, including
academic laboratories, biotechnology companies and large pharmaceutical firms,
have dedicated resources to apoptosis research and the understanding of the
genetic basis of certain diseases, including cancer. ATI is expected to face
competition from other biotechnological approaches as well as more traditional,
drug-based approaches to cancer and viral diseases. ATI will experience
competition from fully integrated pharmaceutical companies with expertise in
research and development, manufacturing and product commercialization. Such
companies have greater resources in these areas than ATI. The Company also is
aware of numerous development-stage companies that are exploring new therapies
for the same disease targets as ATI.
9
<PAGE> 11
REGULATORY ISSUES
ImmunoGen's products are regulated in the United States by the FDA in
accordance with the United States Federal Food, Drug, and Cosmetic Act, as well
as the Public Health Service Act. Parenteral monoclonal antibody products are
most often considered biologicals and therefore subject to regulation by the
Center for Biologics Evaluation and Research within the FDA, while new chemical
entities are regulated under the FDA Center for Drug Evaluation and Research
("CDER"). The Company expects that its huC242-DM1 product candidate and its
other TAPs will be reviewed by CDER.
The steps required before a pharmaceutical agent may be marketed in the
United States include: (a) preclinical laboratory, in vivo, and formulation
studies; (b) the submission to the FDA of an Investigational New Drug
application ("IND"), which must become effective before human clinical trials
may commence; (c) adequate and well-controlled human clinical trials to
establish the safety and efficacy of the drug; (d) the submission of a New Drug
Application ("NDA") to the FDA; and (e) FDA approval of the NDA, including
approval of all product labeling and advertising.
Even if regulatory approvals for the Company's product candidates are
obtained, the Company, its products, and the facilities manufacturing the
Company's products are subject to continual review and periodic inspection. The
FDA will require post-marketing reporting to monitor the safety of the Company's
products. Each United States drug manufacturing establishment must be registered
with the FDA. Domestic manufacturing establishments are subject to periodic
inspections by the FDA and must comply with the FDA's Good Manufacturing
Practices ("GMP"). In complying with GMP, manufacturers must expend funds, time
and effort in the areas of production and quality control to ensure full
technical compliance. The FDA stringently applies regulatory standards for
manufacturing. Discovery of previously unknown problems with respect to a
product, manufacturer or facility may result in restrictions on such product,
manufacturer or facility, including warning letters, suspensions of regulatory
approvals, operating restrictions, delays in obtaining new product approval,
withdrawal of the product from the market, product recalls, fines, injunctions,
and criminal prosecution.
The regulatory issues that have potential impact on the future marketing of
ImmunoGen products are summarized in the following paragraphs:
Clinical Trials Process: Before a pharmaceutical product may be sold in
the United States and other countries, clinical trials of the product must be
conducted and the results submitted to the appropriate regulatory agencies for
approval.
In the United States, these clinical trial programs generally involve a
three-phase process. Typically, Phase I trials are conducted in healthy
volunteers to determine the early side-effect profile and the pattern of drug
distribution and metabolism. In Phase II, trials are conducted in groups of
patients afflicted with the target disease to determine preliminary efficacy and
optimal dosages and to expand the safety profile. In Phase III, large-scale
comparative trials are conducted in patients with the target disease to provide
sufficient data for the proof of efficacy and safety required by federal
regulatory agencies. In the case of drugs for cancer and other life-threatening
diseases, Phase I human testing often is performed in patients with advanced
disease rather than in healthy volunteers. Because these patients are already
afflicted with the target disease, it is possible for such studies to provide
results traditionally obtained in Phase II trials and they often are referred to
as Phase I/II studies.
The Company intends to conduct clinical trials following regulations not
only of the FDA, but in accordance with guidelines established by the
International Committee on Harmonization ("ICH guidelines"). Whether or not FDA
approval has been obtained, approval of a product by the comparable regulatory
authorities of foreign countries must be obtained prior to the commencement of
marketing of the product in those countries. Regulatory approval in Europe is
obtained through the Medicines Control Agency, but regulations governing
pharmaceutical sales may vary from country to country. The Company intends to
rely on foreign licensees to obtain regulatory approvals to market ImmunoGen
products in foreign countries.
10
<PAGE> 12
Regulatory approval often takes a number of years and involves the
expenditure of substantial resources. Approval times also depend on a number of
factors including, but not limited to, the severity of the disease in question,
the availability of alternative treatments and the risks and benefits
demonstrated in clinical trials.
Orphan Drug Designation: The Orphan Drug Act of 1983 generally provides
incentives to manufacturers to undertake development and marketing of products
to treat relatively rare diseases or diseases affecting fewer than 200,000
persons in the United States at the time of application for Orphan Drug
designation.
ImmunoGen may pursue this designation with respect to its products intended
for qualifying patient populations. A drug that receives Orphan Drug designation
and is the first product to receive FDA marketing approval for its product claim
is entitled to a seven-year exclusive marketing period in the United States for
that product claim. However, a drug that is considered by the FDA to be
different from a particular Orphan Drug is not barred from sale in the United
States during such seven-year exclusive marketing period.
New Drugs for Serious or Life-Threatening Illnesses: The recently enacted
FDA Modernization Act allows the designation of "Fast Track" status to expedite
development of new drugs, including review and approvals, and is intended to
speed the availability of new therapies to desperately ill patients. "Fast
Track" procedures permit early consultation and commitment from the FDA
regarding preclinical and clinical studies necessary to gain marketing approval.
ImmunoGen's products should be qualified for "Fast Track" status.
"Fast Track" status also incorporates initiatives announced by the
President and the FDA Commissioner in March 1996, intended to provide cancer
patients with faster access to new cancer therapies. One of these initiatives
states that the initial basis for approval of anti-cancer agents to treat
refractory, hard-to-treat cancer may be objective evidence of response, rather
than statistically improved disease-free and/or overall survival, as has been
common practice. The sponsor of a product approved under this accelerated
mechanism would be required to follow-up with further studies on clinical safety
and effectiveness in larger groups of patients.
RESEARCH AND DEVELOPMENT SPENDING
During each of the three years ended June 30, 1996, 1997 and 1998, the
Company spent approximately $9.6 million, $7.4 million and $5.7 million,
respectively, on research and development activities. Most of these expenditures
were for Company-sponsored research and development.
EMPLOYEES
As of June 30, 1998, the Company had 55 full-time employees, of whom 14
hold Ph.D. degrees. The Company considers its relations with its employees to be
good. None of the Company's employees is covered by a collective bargaining
agreement. The Company has entered into confidentiality agreements with all of
its employees, members of the Scientific Advisory Board and other consultants.
SCIENTIFIC ADVISORY BOARD
Apoptosis Technology, Inc.
Walter A. Blattler, Ph.D., Vice President, ATI and Chairman of the ATI
Scientific Advisory Board. Dr. Blattler was the founding scientist of ImmunoGen,
Inc. and currently serves as ImmunoGen's Executive Vice President, Science and
Technology.
Gerard Evan, Ph.D., Royal Society Napier Research Professor, Department of
Biochemistry, University College, London, and Principal Scientist and Head of
Biochemistry of the Cell Nucleus Laboratory, Imperial Cancer Research Fund,
London. Dr. Evan is an authority on the control of cellular proliferation and
programmed cell death in mammalian cells.
Elliott D. Kieff, M.D., Ph.D., Professor of Medicine and Professor of
Microbiology and Molecular Genetics, Harvard University Medical School; Director
of Infectious Diseases, Brigham & Women's Hospital; member of the National
Academy of Sciences; Chairman of Virology at Harvard University and an authority
on herpes viruses.
11
<PAGE> 13
Stuart F. Schlossman, M.D., Professor of Medicine, Harvard University
Medical School; member of the National Academy of Sciences; Head of the Division
of Tumor Immunology, Dana-Farber Cancer Institute.
ImmunoGen, Inc. does not currently have a Scientific Advisory Board.
ITEM 2. PROPERTIES
ImmunoGen leases approximately 52,700 square feet of laboratory and office
space at two locations in Cambridge, Massachusetts, of which one facility, or
37,700 square feet, has been subleased by the Company. The Company also leases
27,500 square feet of space in Norwood, Massachusetts, which serves as the
Company's pilot manufacturing facility as well as its corporate offices. The
Company had also leased 47,000 square feet of space in Canton, Massachusetts,
until January 1, 1996, when it assigned the lease on that facility to another
biotechnology company. The Company believes that the manufacturing portion of
the Norwood facility, although not yet inspected by the FDA, complies with all
applicable FDA Good Manufacturing Practice regulations.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any material legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
12
<PAGE> 14
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
ImmunoGen's Common Stock is quoted on the Nasdaq National Market under the
symbol IMGN. The table below sets forth the high and low sale prices for
ImmunoGen Common Stock for each of the quarters indicated during the Company's
last two fiscal years.
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
Fiscal Year 1998
First Quarter............................................. 1 13/16 1 5/32
Second Quarter............................................ 1 1/2 23/32
Third Quarter............................................. 2 5/8 27/32
Fourth Quarter............................................ 2 15/32 1 5/16
Fiscal Year 1997
First Quarter............................................. 5 7/8 2 7/8
Second Quarter............................................ 4 2 3/16
Third Quarter............................................. 3 3/4 1 1/4
Fourth Quarter............................................ 2 1 3/16
</TABLE>
As of August 26, 1998, there were approximately 827 holders of record of
the Company's Common Stock and, according to the Company's estimates,
approximately 15,000 beneficial owners of the Company's Common Stock.
The Company has not paid any cash dividends on its Common Stock since its
inception and does not intend to pay any cash dividends in the foreseeable
future.
On July 13, 1998, the Company sold 1,200 shares of its Series E Convertible
Preferred Stock (the "Series E Stock") for an aggregate $1.5 million. Proceeds
are to be used to fund working capital. The sale represented the final
installment under a December 1997 agreement, as amended in March of 1998, to
sell $3.0 million to an institutional investor in accordance with Regulation D,
as promulgated by the Securities Act of 1933, as amended. Consistent with the
prior issuances under the agreement, the Series E Stock will be convertible into
Common Stock at the end of a two-year holding period at $1.0625 per share. As
part of the agreement, on July 13, 1998, the investor also received warrants to
purchase 1,411,764 shares of Common Stock. These warrants, which become
exercisable at the end of a two-year holding period subject to certain
provisions, have an exercise price of $2.125 per share and expire in 2005. The
value of these warrants, approximately $918,000, was determined at the time of
their issuance and accounted for as non-cash dividends on convertible preferred
stock in the first quarter of fiscal 1999. No underwriter was involved in this
transaction.
13
<PAGE> 15
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth consolidated financial data with respect to
the Company for each of the five years in the period ended June 30, 1998. The
information set forth below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the consolidated financial statements and related notes included elsewhere in
this report on Form 10-K.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------------------------------------------------
1994 1995 1996 1997 1998
----------- ----------- ----------- ----------- -----------
IN THOUSANDS, EXCEPT PER SHARE DATA AND SHARES OUTSTANDING
<S> <C> <C> <C> <C> <C>
Total revenues............ $ 926 $ 512 $ 568 $ 630 $ 586
Total expenses............ 24,606 20,363 19,490 9,711 8,354
Net loss to common
stockholders............ (23,690) (19,857) (18,923) (12,595) (8,216)
Basic and diluted loss per
common share............ (2.09) (1.58) (1.32) (0.70) (0.34)
Total assets.............. 38,384 17,046 8,506 6,350 5,877
Capital lease obligations,
less current portion.... 3,519 2,456 5,788 59 35
Stockholders' equity...... 29,960 10,123 777 4,462 4,311
Weighted average common
shares outstanding...... 11,332,194 12,571,134 14,379,064 17,930,164 24,210,340
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
Since inception, the Company has been primarily engaged in research and
development of immunoconjugate products which the Company believes have
significant commercial potential as human therapeutics. The Company's 97%-owned
subsidiary, Apoptosis Technology, Inc. ("ATI"), focuses its efforts on the
discovery and development of anti-cancer and anti-viral therapeutics based upon
regulation of programmed cell death, or apoptosis. Since July 1, 1997, the major
sources of the Company's working capital have been the proceeds of convertible
equity financing, federally-sponsored development grants, income earned on
invested funds and, to a lesser extent, licensing fees. Moreover, in July 1997,
ATI began a three-year research and development collaboration with BioChem
Pharma Inc. ("BioChem"), a large Canadian biopharmaceutical company. This
collaboration has provided and will continue to provide significant funding for
ATI's operations. Further, the collaboration also provides for significant
milestone and royalty payments for any developed products. (see Liquidity and
Capital Resources below). Such funding for ATI's operations will initially
continue through July 2001.
No revenues are expected to be derived from product sales within the
foreseeable future. The Company has been unprofitable since inception and
expects to incur net losses over the next several years, assuming it is able to
raise sufficient working capital to continue operations. The Company anticipates
that its existing capital resources, which include $1.5 million received in July
1998 in connection with the third and final phase of a $3.0 million sale of
Series E Convertible Preferred Stock ("Series E Stock"), will enable the Company
to maintain its current and planned operations into February 1999.
The Company continues to effectively manage its operational expenditures
while actively pursuing additional funding sources. From July 1, 1997 through
July 1998, the Company successfully secured additional capital from various
sources. These sources included:
- $5.2 million received in connection with the July 1997 ATI/BioChem
collaboration agreement;
- $3.0 million received from the sales of Series E Stock to an
institutional investor as discussed above; and
14
<PAGE> 16
- $450,000 received under the Small Business Innovation Research
Program ("SBIR Program") of the National Cancer Institute as part of
a two-year, $750,000 grant to advance the development of the
Company's lead product, huC242-DM1.
As a result of its continuing losses from operations, the Company will be
required to obtain additional capital in the short term to satisfy its ongoing
capital needs and to continue its planned operations. The Company is actively
engaged in discussions with third parties regarding potential financing and/or
strategic partnering arrangements involving an equity investment or other
funding of the Company by such third parties. However, there can be no assurance
that these discussions will result in a completed transaction. If the Company is
unable to obtain financing on acceptable terms in the future or obtain funds
through arrangements with collaborative partners, it could be forced to further
scale back or discontinue its operations.
RESULTS OF OPERATIONS
The Company's revenues increased 11%, from $568,000 for the year ended June
30, 1996 ("1996") to $630,000 for the year ended June 30, 1997 ("1997"), then
decreased 7% to $586,000 for the year ended June 30, 1998 ("1998"). Revenues for
1996, 1997 and 1998 were primarily derived from development fees received, on a
cost reimbursement basis, from the SBIR Program. Total development fees remained
constant at $398,000 and $394,000 for 1996 and 1997, respectively. Development
fees for 1998 decreased 23% to $305,000, as a result of a decrease in
reimbursable expenditures under the SBIR Program. Interest income increased 69%,
from $124,000 in 1996 to $209,000 in 1997, then further increased approximately
11% to $233,000 in 1998. The increases experienced from 1996 to 1998 were
primarily attributable to increases in the average daily invested cash.
The Company's total expenses decreased 50%, from $19.5 million in 1996 to
$9.7 million in 1997, then further decreased 14% to $8.4 million in 1998.
Exclusive of the 1998 purchase of incomplete research and development technology
(approximately $872,000), the 1996 charge taken in connection with the
assignment of the Company's former manufacturing facility in Canton,
Massachusetts (approximately $2.0 million), and the financing costs associated
with the 1996 issuances of convertible debt securities which was recorded as
interest expense (approximately $6.0 million), 1998 represents the fourth
consecutive year of reduced operational expenditures and reflects management's
continued efforts to streamline core operational functions.
Research and development costs, which constituted the principal component
of the Company's total expenditures (49%, 76% and 70% in 1996, 1997 and 1998,
respectively), decreased 23%, from $9.6 million in 1996 to $7.4 million in 1997,
then decreased another 23%, to $5.7 million in 1998. The continuing decrease
over the three-year period was attributable to staffing reductions prompted by
the Company's 1997 decision to refocus its efforts on the development of its
huC242-DM1 and huN901-DM1 tumor-activated prodrugs, as well as continued cost
reduction efforts begun in December 1994. Research and development costs are
expected to increase in 1999, consistent with the Company's plan to submit an
IND application to the FDA for its lead product candidate, huC242-DM1, as early
as the second quarter of calendar year 1999.
General and administration expenses increased 22%, from $1.8 million in
1996 to $2.2 million in 1997, then decreased 23% to $1.7 million in 1998. The
increase in costs in 1997 resulted mainly from charges associated with the
Company's 1997 financing efforts. The decrease in the general and administration
expenses from 1997 to 1998 reflects the decrease in financing charges in 1998,
and the further effects of cost containment programs. General and administration
expenses necessary to support normal costs of operations and additional needs
are expected to increase in fiscal 1999.
The significant decrease in interest expense from $6.1 million in 1996 to
$80,000 in 1997 was directly attributable to interest charges recorded in 1996
in connection with the issuances of convertible debentures, including a non-cash
charge to interest expense of approximately $2.7 million. Such charge was
related to the warrants issued with the debentures, a non-cash charge of $2.4
million associated with the discount feature embedded in the convertible
debentures, and a related $511,000 cash payment to a third party as a finder's
fee. In 1997 and 1998, financing activities included issuances of only
convertible equity and related Common Stock purchase warrants; the fair value of
the warrants and the inherent value of embedded discounts for such issuances are
accounted for as non-cash dividends rather than interest expense.
15
<PAGE> 17
In January 1998, a minority interest holder of ATI common stock exercised a
put option which required the Company to issue the equivalent of $871,930 in
Common Stock in exchange for the holder's 500,000 shares of ATI common stock
(see footnote F to the financial statements). The value of the Common Stock
issued was determined by the terms of the put option and subject to the closing
price of the Common Stock on the date of exercise of the put option. The value
of the incremental ATI ownership purchased by the Company was ascribed to
incomplete research and development technology and, therefore, the cost of the
acquisition, $871,930, or ($0.03) per common share, was charged to operations.
During 1996, no equity transactions occurred that gave rise to dividend
recognition. From 1997 to 1998, non-cash dividends decreased $2.9 million, from
$3.5 million in 1997 to $605,000 in 1998. In 1997 and 1998, non-cash financing
charges included the value of discounts embedded in the terms of the convertible
preferred stock as well as Common Stock purchase warrants associated with the
issuances of the convertible preferred stock. In 1997, total non-cash dividends
of $3.5 million included approximately $351,000 in charges associated with the
9% dividend rate on the convertible preferred stock issued in that year,
approximately $2.1 million of value ascribed to Common Stock purchase warrants
issued in connection with the convertible preferred stock and approximately $1.1
million associated with the discount feature embedded in the convertible
preferred stock. Total dividends for 1998 were approximately $605,000, almost
all of which represented non-cash charges for the value of the discount embedded
in the conversion terms of the issued Series E Stock and related Common Stock
purchase warrants.
In connection with the collaboration agreement between ATI and BioChem, for
the year ended June 30, 1998, 5,224 shares of ATI preferred shares were issued
or issuable, resulting in a weighted average 5.2% minority interest (on a
converted, fully-diluted basis) in the net loss of ATI. The portion of ATI's net
loss for the year ended June 30, 1998 allocated to the minority interest holder
was approximately $160,000.
LIQUIDITY AND CAPITAL RESOURCES
<TABLE>
<CAPTION>
JUNE 30, JUNE 30,
1997 1998
-------- --------
(IN MILLIONS)
<S> <C> <C>
Cash and cash equivalents................................. $1.669 $1.742
Working capital........................................... 0.419 2.138
Stockholders' equity...................................... 4.462 4.311
</TABLE>
As discussed in footnotes A and L of the Notes to Consolidated Financial
Statements, in July 1998, the Company received a total of $2.4 million, as
follows: $1.5 million from the sale of Series E Stock and $843,000 and
approximately $32,000 received by ATI from BioChem for its quarterly installment
payment and other reimbursable expenses, respectively. If these cash
transactions were included in the June 30, 1998 liquidity and capital resources
balances, cash and cash equivalents would have been $4.1 million and
stockholders' equity would have been $5.8 million.
Since July 1, 1995, the Company has financed its cumulative operating
deficit of $27.3 million, net of non-cash purchase of incomplete research and
development technology, dividends, non-cash interest charges and loss on
disposal of assets, from the following sources:
- issuances in fiscal 1996, 1997 and 1998 of the Company's convertible
debt and/or equity securities;
- issuances in fiscal 1998 of a subsidiary's equity securities;
- funds received under the SBIR program;
- proceeds from the assignment of facilities and equipment;
- proceeds received from interest earned on working capital; and
- proceeds received from exercised stock options.
16
<PAGE> 18
In March 1996, the Company issued $5.0 million principal amount convertible
debentures in a private placement (the "March 1996 Financing"). As part of the
March 1996 Financing, the Company issued a $2.5 million principal amount
debenture (the "First Debenture") on March 25, 1996. In June 1996, the First
Debenture, together with interest thereon, was converted into shares of Common
Stock, and warrants (the "First Warrants") to purchase 509,000 shares of Common
stock at an exercise price of $4.00 per share. The First Warrants expire in
March 2001. In June 1996, a second $2.5 million convertible debenture (the
"Second Debenture") was issued, then subsequently converted into 2,500 shares of
Series A Convertible Preferred Stock ("Series A Stock") in October 1996. As of
January 5, 1998, all 2,500 shares of Series A Stock plus accrued interest
thereon had been converted into 2,676,235 shares of Common Stock. In June 1996,
the Company issued additional warrants to purchase 500,000 shares of Common
Stock (the "Additional Warrants") in connection with the conversion of the First
Debenture into Common Stock. The Additional Warrants have an exercise price
equal to $6.00 per share and expire in March 2001. Additionally, warrants to
purchase 250,000 shares of Common Stock were issued as a finder's fee in
connection with the March 1996 Financing arrangement. Upon conversion of the
Series A Stock, the holder received warrants (the "Second Warrants") to purchase
a number of shares of Common Stock equal to 50% of the number of shares issuable
upon conversion of the Series A Stock. The Second Warrants are exercisable at
$4.00 per share and expire five years after the date of issuance. As of January
5, 1998, warrants to purchase 1,338,117 shares of Common Stock were issued on
conversion of the Series A Stock.
Under a financing agreement the Company entered into in October 1996 (the
"October 1996 Private Placement"), the Company initially sold $3.0 million of
Series B Convertible Preferred Stock ("Series B Stock"). As of February 4, 1997,
all 3,000 shares of the Series B Stock plus accrued dividends thereon had been
converted into 1,384,823 shares of Common Stock. In connection with the issuance
of the Series B Stock, warrants to purchase 500,000 shares of Common Stock were
also issued. Of these, 250,000 warrants are exercisable at $5.49 per share and
expire in October 2001. The remaining 250,000 warrants are exercisable at $3.68
per share and expire in January 2002.
In January 1997, the Company sold $3.0 million of Series C Convertible
Preferred Stock ("Series C Stock") in connection with the October 1996 Private
Placement. As of August 1, 1997, all 3,000 shares of the Series C Stock plus
accrued dividends thereon had been converted into 2,719,738 shares of Common
Stock. In connection with the Series C Stock, 1,147,754 warrants to purchase
Common Stock were issued to the investor. These warrants are exercisable at
$2.31 per share and expire in April, 2002.
In June 1997, the Company sold $1.0 million of Series D Convertible
Preferred Stock ("Series D Stock") in connection with the October 1996 Private
Placement. As of October 21, 1997, all 1,000 shares of the Series D Stock plus
accumulated dividends thereon had been converted into 1,001,387 shares of Common
Stock. In connection with the Series D Stock, 454,545 warrants to purchase
Common Stock were issued to the investor. These warrants are exercisable at
$1.94 per share and expire in September 2002.
Also in June 1997, the Company and ATI satisfied an obligation of ATI to
one of ATI's scientific advisors, totaling $120,000, using a combination of cash
and 41,481 shares of Common Stock.
In July 1997, ATI entered into a collaboration agreement with BioChem. The
agreement grants BioChem an exclusive, worldwide license to ATI's proprietary
screens based on two families of proteins involved in apoptosis, for use in
identifying leads for anti-cancer drug development. The agreement also covers
the development of new screens in two areas. Under the agreement, BioChem will
invest a total of $11.125 million in non-voting, non-dividend-bearing
convertible preferred stock of ATI in a series of private placements over a
three-year period to be used exclusively to fund research conducted under the
collaboration during a three-year research term. As of July 16, 1998, $5.2
million had been paid under the agreement. The balance of $5.9 million will be
paid in equal quarterly installments of $843,000. The preferred stock is
convertible into ATI common stock at any time after three years from the date of
first issuance of such stock, at a conversion price equal to the then current
market price of the ATI common stock, but in any event at a price that will
result in BioChem acquiring at least 15% of the then outstanding ATI common
stock. As part of this agreement, BioChem also receives warrants to purchase
shares of ImmunoGen Common Stock equal to the amount invested in ATI during the
three-year research term. These warrants will be exercisable for a
17
<PAGE> 19
number of shares of ImmunoGen Common Stock determined by dividing the amount of
BioChem's investment in ATI by the market price of the ImmunoGen Common Stock on
the exercise date, subject to certain limitations imposed by the Nasdaq Stock
Market rules which limit the sale or issuance by an issuer of certain securities
at a price less than the greater of book or market value. Consequently,
BioChem's ability to convert all of its ImmunoGen warrants into ImmunoGen Common
Stock is limited to a total of 20% of the total number of shares of ImmunoGen
Common Stock outstanding on the date of the initial transaction to the extent
that the conversion price would be less than the market price of ImmunoGen
Common Stock on that date, unless shareholder approval for such conversion is
obtained, if required, or unless the Company has obtained a waiver of that
requirement. The exercise price in connection with the warrants is payable
either in cash or shares of ATI preferred stock, at BioChem's option. The
warrants are expected to be exercised only in the event that the shares of ATI
common stock do not become publicly traded. In the event that ATI common stock
does not become publicly traded, the Company expects that BioChem will use its
shares of ATI preferred stock, in lieu of cash, to exercise the warrants.
BioChem's obligation to provide additional financing to ATI each quarter is
subject to satisfaction of specified conditions, including a condition that ATI
maintain sufficient cash and other resources to allow it to continue its planned
operations (other than performance of its obligations under a certain Research
Agreement) for a minimum period of time.
In December 1997, the Company entered into an agreement, which was amended
in March 1998, to sell $3.0 million of its Series E Stock to an institutional
investor. Proceeds are to be used to fund working capital. As of July 13, 1998,
all $3.0 million had been received. The Series E stock will be convertible into
Common Stock at the end of a two-year holding period at $1.0625 per share. Under
the terms of the agreement, the investor received warrants equal to 100% of the
number of shares of Common Stock issuable on conversion of the Series E Stock.
As of July 13, 1998, warrants to purchase 2,823,528 shares of Common Stock had
been issued. These warrants have an exercise price of $2.125 per share, of which
941,176 expire in 2004 and 1,882,352 expire in 2005. In connection with this
agreement, 75,000 shares of Common Stock were issued to a third party as a
finder's fee.
The Company had originally agreed to obtain or furnish an additional $3.0
million in equity for ATI on such terms and conditions as were mutually agreed
to by ATI and the providers of such additional equity. As of July 1997, ATI owed
the Company approximately $14.2 million. This amount was converted into
22,207,966 shares of ATI common stock, thereby satisfying the agreement to
provide an additional $3.0 million in equity and increasing the Company's
majority ownership interest of ATI from 72% to 95%. Additionally, under the
terms of a stock purchase agreement entered into between the Company, ATI, Dana-
Farber Cancer Institute ("Dana-Farber") and a founding researcher, if ATI had
not completed a public offering of its common stock for at least $5.0 million
prior to January 11, 1998, Dana-Farber and the founding researcher each could
require the Company to purchase (the "put option"), or ImmunoGen could require
such parties to sell (the "call option"), their shares in ATI at a predetermined
price. In January 1998, the founding researcher exercised his put option for
500,000 shares of ATI common stock, par value $0.00002 per share, for an
aggregate $871,930. The value of the Common stock issued was derived from the
terms of the put option and subject to the closing price of the Common Stock on
the date of the exercise of the put option. The Company elected to issue its
Common Stock in lieu of a cash payment and, in March 1998, issued 475,425 shares
of Common Stock to the founding researcher, thereby increasing its ownership of
ATI from 95% to 97%. The transaction was accounted for as a step acquisition of
a minority interest in a subsidiary. The value of the incremental ATI ownership
purchased by the Company was ascribed to incomplete research and development
technology and, therefore, the cost of the acquisition, $871,930, or ($0.03) per
common share, was charged to operations.
In the three-year period since July 1, 1995, approximately $100,000 was
expended on property and equipment. No significant amounts were expended during
fiscal 1998, nor does the Company anticipate significant expenditures on
property and equipment in fiscal 1999.
Because of continuing losses from operations, the Company will be required
to obtain additional capital in the short term to satisfy its ongoing capital
needs and to continue its operations. Although, as previously noted, management
continues to pursue additional funding arrangements and/or strategic partners,
no assurances can be given that such financing will in fact be available to the
Company. If the Company is unable to obtain financing on acceptable terms, it
could be forced to further curtail or discontinue its operations. The
18
<PAGE> 20
accompanying financial statements do not include any adjustment that may result
from the outcome of this uncertainty.
YEAR 2000 ISSUES
Many computer systems were not designed to handle any dates beyond the year
1999 and, therefore, computer hardware and software will need to be modified
prior to the year 2000 in order to remain functional; this is the so-called
"Year 2000" problem. The Company does not believe that it has material exposure
with respect to Year 2000 issues. However, the failure by the Company to convert
systems on a timely basis, or a conversion by the Company that is incompatible
with other information systems, could have a material effect on its business,
financial condition and results of operations. Further, the Company is unable to
ascertain the extent to which the Year 2000 issues will affect its clinical
suppliers, investment custodians, telecommunications providers, third party
research and testing vendors or other third party hardware and software
products. Though not considered likely, the failure of a major supplier or
vendor with Year 2000 problems to convert its systems on a timely basis, or a
conversion that is incompatible with the Company's information systems, could
also have a material adverse effect on the Company's business, financial
condition and results of operations. To date, the Company has not sent
questionnaires or sought certifications from third parties with respect to their
year 2000 compliance and is considering whether or not this is appropriate,
given the nature of the Company's operations.
The Company, in conjunction with its information systems consultant, has
performed an initial evaluation of the impact of the Year 2000 issues on the
Company's information systems and has determined that it will be required to
modify or replace certain accounting and administrative software applications
such that dates beyond June 30, 1999, the beginning of the Company's fiscal year
2000, will be appropriately recognized. The Company has been assured that
commercially produced compliant software packages are readily available. All
remediations are planned to be completed before the end of fiscal year 1999. The
Company is not currently able to estimate the total expense it may incur in
evaluating and remediating any Year 2000 issues, but does not expect those
expenses to be material. Costs and expenses of evaluating and remediating Year
2000 issues will be expensed as they are incurred.
CERTAIN FACTS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS
This report contains certain forward-looking statements as that term is
defined in the Private Securities Litigation Reform Act of 1995. Such statements
are based on management's current expectations and are subject to a number of
factors and uncertainties which could cause actual results to differ materially
from those described in the forward-looking statements. The Company cautions
investors that there can be no assurance that actual results or business
conditions will not differ materially from those projected or suggested in such
forward-looking statements as a result of various factors, including, but not
limited to, the following: the 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 uncertainties associated with preclinical
studies and clinical trials; the early stage of the Company's initial product
development and lack of product revenues; the Company's lack of commercial
manufacturing experience and commercial sales, distribution and marketing
capabilities; reliance on suppliers of antibodies necessary for production of
the products and technologies; the potential development by competitors of
competing products and technologies; the Company's dependence on existing and
potential collaborative partners, and the lack of assurance that the Company
will receive any funding under such relationships to develop and maintain
strategic alliances; the lack of assurance regarding patent and other protection
for the Company's proprietary technology; governmental regulation of the
Company's activities, facilities, products and personnel; the dependence on key
personnel; uncertainties as to the extent of reimbursement for the costs of the
Company's potential products and related 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 economic conditions, both generally and those specifically related to the
biotechnology industry. As a result, the Company's future development efforts
involve a high degree of risk. For further information, refer to the more
specific risks and uncertainties discussed throughout this Annual Report on Form
10-K.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Not applicable.
19
<PAGE> 21
ITEM 8. FINANCIAL STATEMENTS
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants........................... 21
Consolidated Financial Statements:
Consolidated Balance Sheets as of June 30, 1997 and
1998................................................... 22
Consolidated Statements of Operations for the Years Ended
June 30, 1996, 1997 and 1998........................... 23
Consolidated Statements of Stockholders' Equity for the
Years Ended June 30, 1996, 1997 and 1998............... 24
Consolidated Statements of Cash Flows for the Years Ended
June 30, 1996, 1997 and 1998........................... 25
Notes to Consolidated Financial Statements................ 26
</TABLE>
20
<PAGE> 22
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of ImmunoGen, Inc.:
In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, stockholder's equity and cash
flows present fairly, in all material respects, the financial position of
ImmunoGen, Inc. (the "Company") at June 30, 1997 and 1998, and the results of
its operations and its cash flows for each of the three years in the period
ended June 30, 1998, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note A, the Company
has suffered recurring losses from operations; at June 30, 1998, the Company had
cash resources of $1.7 million which, along with $2.4 million received by the
Company in July 1998 and its other existing capital resources, management
anticipates is sufficient to maintain current and planned operations only into
February 1999. Therefore, the Company requires significant additional financing.
These factors raise substantial doubt about the Company's ability to continue as
a going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts
July 29, 1998
21
<PAGE> 23
IMMUNOGEN, INC.
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 1997 AND JUNE 30, 1998
<TABLE>
<CAPTION>
JUNE 30, JUNE 30,
1997 1998
------------- -------------
<S> <C> <C>
ASSETS
Cash and cash equivalents................................... $ 1,669,050 $ 1,741,825
Due from related party...................................... -- 915,473
Current portion of note receivable.......................... 330,000 960,000
Prepaids and other current assets........................... 248,497 51,360
------------- -------------
Total current assets................................... 2,247,547 3,668,658
------------- -------------
Property and equipment, net of accumulated depreciation..... 2,929,733 1,891,696
Note receivable............................................. 1,128,910 272,638
Other assets................................................ 43,700 43,700
------------- -------------
Total assets...................................... $ 6,349,890 $ 5,876,692
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable............................................ $ 612,559 $ 699,418
Accrued compensation........................................ 248,472 225,126
Other accrued liabilities................................... 841,238 553,246
Current portion of capital lease obligations................ 37,068 --
Current portion of deferred lease........................... 89,160 52,756
------------- -------------
Total current liabilities......................... 1,828,497 1,530,546
------------- -------------
Deferred lease.............................................. 59,436 35,176
Commitments
Stockholders' equity:
Preferred stock; $.01 par value; authorized 5,000,000 as
of June 30, 1997 and 1998:
Convertible preferred stock, Series A, $.01 par value;
issued and outstanding 1,100 shares as of June 30,
1997 (liquidation preference -- stated value plus
accrued but unpaid dividends per share).............. 11 --
Convertible preferred stock, Series C, $.01 par value;
issued and outstanding 700 shares as of June 30, 1997
(liquidation preference -- stated value plus accrued
but unpaid dividends per share)...................... 7 --
Convertible preferred stock, Series D, $.01 par value;
issued and outstanding 1,000 shares as of June 30,
1997 (liquidation preference -- stated value plus
accrued but unpaid dividends per share).............. 10 --
Convertible preferred stock, Series E, $.01 par value;
issued and outstanding 1,200 shares as of June 30,
1998 (liquidation preference -- stated value)........ -- 12
Common stock; $.01 par value; authorized 30,000,000 and
50,000,000 shares as of June 30, 1997 and June 30,
1998, respectively; issued and outstanding 21,779,767
and 25,419,552 shares as of June 30, 1997 and June 30,
1998, respectively..................................... 217,797 254,195
Additional paid-in capital................................ 144,753,538 152,782,585
------------- -------------
144,971,363 153,036,792
Accumulated deficit......................................... (140,509,406) (148,725,822)
------------- -------------
Total stockholders' equity............................. 4,461,957 4,310,970
------------- -------------
Total liabilities and stockholders' equity........ $ 6,349,890 $ 5,876,692
============= =============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
22
<PAGE> 24
IMMUNOGEN, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JUNE 30, 1996, 1997 AND 1998
<TABLE>
<CAPTION>
JUNE 30,
--------------------------------------------
1996 1997 1998
------------ ------------ ------------
<S> <C> <C> <C>
Revenues:
Development fees............................... $ 398,289 $ 393,583 $ 304,723
Interest....................................... 124,208 209,398 232,937
Licensing...................................... 18,070 27,057 2,454
Other.......................................... 27,856 -- 46,274
------------ ------------ ------------
Total revenues......................... 568,423 630,038 586,388
------------ ------------ ------------
Expenses:
Research and development....................... 9,622,132 7,418,315 5,744,572
General and administrative..................... 1,769,414 2,213,205 1,729,040
Interest....................................... 6,096,894 79,150 8,232
Purchase of incomplete research and development
technology.................................. -- -- 871,930
Loss on disposal of assets..................... 2,001,480 -- --
------------ ------------ ------------
Total expenses......................... 19,489,920 9,710,670 8,353,774
------------ ------------ ------------
Loss before income taxes and minority
interest.................................... (18,921,497) (9,080,632) (7,767,386)
Income tax expense............................. 1,640 2,764 3,075
------------ ------------ ------------
Net loss before minority interest.............. (18,923,137) (9,083,396) (7,770,461)
Minority interest in net loss of consolidated
subsidiary.................................. -- -- (159,524)
------------ ------------ ------------
Net loss....................................... (18,923,137) (9,083,396) (7,610,937)
------------ ------------ ------------
Non-cash dividends on convertible preferred
stock....................................... -- 3,511,510 605,479
------------ ------------ ------------
Net loss to common stockholders................ $(18,923,137) $(12,594,906) $ (8,216,416)
============ ============ ============
Basic and diluted loss per common share........ $ (1.32) $ (0.70) $ (0.34)
============ ============ ============
Shares used in computing basic and diluted loss
per share amounts........................... 14,379,064 17,930,164 24,210,340
============ ============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
23
<PAGE> 25
IMMUNOGEN, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (NOTE I)
FOR THE YEARS ENDED JUNE 30, 1997 AND 1998
<TABLE>
<CAPTION>
COMMON STOCK PREFERRED STOCK
------------------------------------ -----------------------------
ADDITIONAL ADDITIONAL TOTAL
PAID-IN PAID-IN ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT CAPITAL SHARES AMOUNT CAPITAL DEFICIT EQUITY
---------- -------- ------------ ------ ------ ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at June 30, 1996... 16,599,855 $165,999 $128,525,884 -- $ -- $ -- $(127,914,500) $ 777,383
========== ======== ============ ====== ===== =========== ============= ===========
Stock options
exercised.............. 54,644 545 87,310 -- -- -- -- 87,855
Issuance of Common
Stock.................. 41,481 415 69,585 -- -- -- -- 70,000
Conversion of convertible
debentures into Common
Stock.................. 351,662 3,517 1,315,217 -- -- -- -- 1,318,734
Exchange of convertible
debentures for Series A
Convertible Preferred
Stock.................. -- -- -- 2,500 25 4,749,586 -- 4,749,611
Issuance of Series B
Convertible Preferred
Stock.................. -- -- -- 3,000 30 3,486,342 -- 3,486,372
Issuance of Series C
Convertible Preferred
Stock.................. -- -- -- 3,000 30 4,720,003 -- 4,720,033
Issuance of Series D
Convertible Preferred
Stock.................. -- -- -- 1,000 10 1,287,092 -- 1,287,102
Conversion of Series A
Convertible Preferred
Stock into Common
Stock.................. 1,328,744 13,287 2,766,405 (1,400) (14) (2,659,763) -- 119,915
Conversion of Series B
Convertible Preferred
Stock into Common
Stock.................. 1,384,823 13,848 3,539,221 (3,000) (30) (3,486,342) -- 66,697
Conversion of Series C
Convertible Preferred
Stock into Common
Stock.................. 2,018,558 20,186 2,956,928 (2,300) (23) (2,910,669) -- 66,422
Compensation for put
right.................. -- -- -- -- -- 306,739 -- 306,739
Dividends on convertible
preferred stock........ -- -- -- -- -- -- (3,511,510) (3,511,510)
Net loss for the year
ended June 30, 1997.... -- -- -- -- -- -- (9,083,396) (9,083,396)
---------- -------- ------------ ------ ----- ----------- ------------- -----------
Balance at June 30, 1997... 21,779,767 $217,797 $139,260,550 2,800 $ 28 $ 5,492,988 $(140,509,406) $ 4,461,957
========== ======== ============ ====== ===== =========== ============= ===========
Stock options
exercised.............. 114,302 1,143 101,728 -- -- -- -- 102,871
Issuance of Common Stock
in exchange for shares
of
subsidiary............. 475,425 4,754 867,176 -- -- -- -- 871,930
Conversion of Series A
Convertible Preferred
Stock into Common
Stock.................. 1,347,491 13,475 2,209,764 (1,100) (11) (2,089,817) -- 133,411
Conversion of Series C
Convertible Preferred
Stock into Common
Stock.................. 701,180 7,012 1,126,815 (700) (7) (1,101,334) -- 32,486
Conversion of Series D
Convertible Preferred
Stock into Common
Stock.................. 1,001,387 10,014 1,303,287 (1,000) (10) (1,287,092) -- 26,199
Issuance of Series E
Convertible Preferred
Stock, net of financing
costs.................. -- -- -- 1,200 12 1,448,376 -- 1,448,388
Value of Common Stock
purchase warrants
issued................. -- -- 580,056 -- -- -- -- 580,056
Value ascribed to
ImmunoGen warrants
issued to BioChem, net
of financing costs..... -- -- 4,870,088 -- -- -- -- 4,870,088
Non-cash dividends on
convertible preferred
stock.................. -- -- -- -- -- -- (605,479) (605,479)
Net loss for the year
ended June 30, 1998.... -- -- -- -- -- -- (7,610,937) (7,610,937)
---------- -------- ------------ ------ ----- ----------- ------------- -----------
Balance at June 30, 1998... 25,419,552 $254,195 $150,319,464 1,200 $ 12 $ 2,463,121 $(148,725,822) $ 4,310,970
========== ======== ============ ====== ===== =========== ============= ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
24
<PAGE> 26
IMMUNOGEN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 1996, 1997 AND 1998
<TABLE>
<CAPTION>
JUNE 30,
------------------------------------------
1996 1997 1998
------------ ------------ -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss.................................................. $(18,923,137) $(12,594,906) $(8,216,416)
Adjustments to reconcile net loss to net cash used for
operating activities:
Depreciation and amortization........................... 2,516,231 1,496,598 1,053,441
Purchase of incomplete research and development
technology............................................ -- -- 871,930
Loss on disposal of facility............................ 2,001,480 -- --
Non-cash charge for issuance of Common Stock warrants
and payment of interest expense on convertible
subordinated debenture................................ 5,398,352 -- --
Amortization of debt issuance costs..................... 511,000 -- --
Other................................................... 25,674 5,791 --
Loss (gain) on sale of property and equipment........... -- (8,665) (25,629)
Accretion of interest on note receivable................ (48,395) (119,981) (103,722)
Non-cash dividend on convertible preferred stock........ -- 3,511,510 605,479
Minority interest in net loss of consolidated
subsidiary............................................ -- -- (159,524)
Amortization of deferred lease.......................... -- (66,870) (60,664)
Changes in operating assets and liabilities:
Due from related party................................ -- -- (72,473)
Prepaids and other current assets..................... 267,168 (85,217) 197,131
Accounts payable...................................... (288,690) (50,881) 86,859
Accrued compensation.................................. (163,638) 14,957 (23,346)
Other non-current liabilities......................... (27,856) -- --
Other accrued liabilities............................. 98,777 (88,970) (121,319)
------------ ------------ -----------
Net cash used for operating activities.............. (8,633,034) (7,986,634) (5,968,253)
------------ ------------ -----------
Cash flows from investing activities:
Capital expenditures...................................... (23,608) (50,386) (27,480)
Payments received on note receivable...................... -- -- 330,000
Proceeds from sale of property and equipment.............. -- 11,600 37,705
------------ ------------ -----------
Net cash (used for) provided by investing
activities........................................ (23,608) (38,786) 340,225
------------ ------------ -----------
Cash flows from financing activities:
Proceeds from convertible debentures, net................. 8,089,000 -- --
Proceeds from convertible preferred stock, net............ -- 6,951,512 1,429,136
Proceeds from issuance of subsidiary convertible preferred
stock, net.............................................. -- -- 4,205,865
Stock issuances, net...................................... 122,585 87,855 102,870
Principal payments on capital lease obligations........... (455,543) (141,533) (37,068)
Proceeds from sale of facility............................ 650,000 -- --
------------ ------------ -----------
Net cash provided by financing activities........... 8,406,042 6,897,834 5,700,803
------------ ------------ -----------
Net change in cash and cash equivalents..................... (250,600) (1,127,586) 72,775
------------ ------------ -----------
Cash and cash equivalents, beginning balance................ 3,047,236 2,796,636 1,669,050
------------ ------------ -----------
Cash and cash equivalents, ending balance................... $ 2,796,636 $ 1,669,050 $ 1,741,825
============ ============ ===========
Supplemental disclosure of cash flow information:
Cash paid for interest.................................... $ 684,325 $ 15,007 $ --
============ ============ ===========
Supplemental disclosure of noncash financing activities:
Conversion of convertible debentures including accrued
interest into Common Stock.............................. $ 6,653,340 $ 1,318,734 $ --
============ ============ ===========
Conversion of accounts payable to 11.5% convertible
debenture............................................... $ 1,312,943 $ -- $ --
============ ============ ===========
Assignment of capital lease obligations................... $ 2,639,285 $ -- $ --
============ ============ ===========
Note receivable issued in connection with assignment of
lease................................................... $ 1,338,929 $ -- $ --
============ ============ ===========
Conversion of convertible debentures to preferred stock... $ -- $ 4,749,611 $ --
============ ============ ===========
Third party financing of leasehold improvements........... $ -- $ 215,465 $ --
============ ============ ===========
Issuance of Common Stock to relieve accounts payable...... $ -- $ 70,000 $ --
============ ============ ===========
Conversion of Series A Preferred Stock to Common Stock.... $ -- $ 2,659,777 $ 2,089,828
============ ============ ===========
Conversion of Series B Preferred Stock to Common Stock.... $ -- $ 3,486,372 $ --
============ ============ ===========
Conversion of Series C Preferred Stock to Common Stock.... $ -- $ 2,910,692 $ 1,101,341
============ ============ ===========
Conversion of Series D Preferred Stock to Common Stock.... $ -- $ -- $ 1,287,102
============ ============ ===========
Due from related party for quarterly investment payment... $ -- $ -- $ 843,000
============ ============ ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
25
<PAGE> 27
IMMUNOGEN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. NATURE OF BUSINESS AND PLAN OF OPERATION:
ImmunoGen, Inc. ("ImmunoGen" or the "Company") was incorporated in
Massachusetts on March 27, 1981. The Company was formed to develop, produce and
market commercial cancer and other pharmaceuticals based on molecular
immunology. The Company continues research and development of its various
products and technologies, and expects no revenues to be derived from product
sales in the foreseeable future.
The Company has been unprofitable since inception and expects to incur net
losses over the next several years. The Company's cash resources at June 30,
1998 were approximately $1.7 million. In July 1998, an additional $2.4 million
was received in connection with previously established funding agreements.
Specifically, $1.5 million was received from the sale of Series E Convertible
Preferred Stock ("Series E Stock") to an institutional investor as the final
phase of a $3.0 million equity transaction (see footnote I and L). In addition,
$843,000 and approximately $32,000 was received by Apoptosis Technology, Inc.
("ATI"), the Company's majority-owned subsidiary, from its collaborator, BioChem
Pharma Inc. ("BioChem"), a Canadian biopharmaceutical company, for its quarterly
installment payment and other reimbursed expenses, respectively. (see footnote
E).
The Company has reduced operational expenditures in each of the last three
years. Moreover, through fiscal 1998, the Company secured capital funding from
the following sources: $4.4 million received by ATI from BioChem in connection
with a collaboration agreement entered into between ATI and BioChem in June of
1997; $450,000 received in connection with ImmunoGen's two-year, $750,000 grant
administered by the Small Business Innovation Research Program of the National
Cancer Institute to advance the development of the Company's lead product,
huC242-DM1; and $1.5 million received from the initial sale of Series E Stock to
an institutional investor as part of a $3.0 million transaction which was
completed, as referred to above and in footnotes I and L, in July 1998.
The Company anticipates that its existing capital resources, which include
$2.4 million received in July 1998 as noted above, will enable it to maintain
its current and planned operations into February 1999. Because of its continuing
losses from operations, the Company will be required to obtain additional
capital in the short term to satisfy its ongoing capital needs and to continue
its operations. Although, as noted above, management continues to pursue
additional funding arrangements and/or strategic partners, no assurance can be
given that such financing will in fact be available to the Company. If the
Company is unable to obtain financing on acceptable terms in order to maintain
operations, it could be forced to further curtail or discontinue its operations.
The financial statements do not include any adjustments that might result from
the discontinuance of operations.
The Company is subject to risks common to companies in the biotechnology
industry including, but not limited to, development by the Company or its
competitors of new technological innovations, dependence on key personnel,
protection of proprietary technology, the need to obtain additional funding, and
compliance with governmental regulations.
B. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiary, ImmunoGen Securities Corp. (established in
December 1989), and ATI (established in January 1993) (see Notes E and F). All
intercompany transactions and balances have been eliminated.
Revenue Recognition
Development revenues of approximately $394,000 and $305,000 in fiscal 1997
and 1998, respectively, represent income earned, on a cost reimbursement basis,
under the Small Business Innovation Research
26
<PAGE> 28
IMMUNOGEN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Program of the National Institute of Health and amounts received pursuant to
licensing agreements of the Company and ATI.
Use of Estimates
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.
Research and Development Costs
Research and development costs are expensed as incurred.
Debt and Equity Instruments Issued With Provisions for Conversion Into Common
Stock at a Discount to the Market Price of Common Stock
The value of discounts inherent in convertible securities issued with
provisions providing for conversion into Common Stock at a discount to the
market price of Common Stock, or the value of any warrants issued in connection
with those securities, is calculated as of the date of issuance of the
convertible securities as either dividends to preferred stockholders or as
interest to debtholders. The calculated value of the discount is amortized over
the period in which the discount is earned. In certain instances, the number
and/or exercise prices of warrants to be issued are tied to the market price of
the Common Stock at a future date (the "future price"). Therefore, the number of
warrants to be issued and/or the exercise price of those warrants is not
determinable as of the date of issuance of the convertible security, when the
value is required to be calculated. In those instances, for warrant valuation
purposes, the Company assumes that the future price is equal to the market price
of the Common Stock on the date of issuance of the convertible security.
Accordingly, upon conversion, the actual number of warrants issued and/or their
exercise prices may differ from original estimates.
Cash and Cash Equivalents
The Company considers all investments purchased with maturity dates of
three months or less from the date of acquisition to be cash equivalents.
Cash and cash equivalents include, at cost plus accrued interest which
approximates market value, $1,669,050 and $1,741,825 of money market funds and
repurchase agreements at June 30, 1997 and 1998, respectively.
Financial Instruments and Concentration of Credit Risk
The Company has a note receivable from a biotechnology company with
payments due at various dates through July 1999. Management believes the
carrying amount of this note receivable (on a discounted basis) is a reasonable
estimate of the fair value based on the current rates offered to the Company for
debt with similar maturities.
The Company minimizes the risk associated with concentration of credit by
assuring that financial instruments purchased by its cash manager include only
high-grade, low-risk investments. At June 30, 1997 and 1998, those investments
included various United States Government overnight repurchase agreements, money
market investments with major financial institutions and cash on deposit with
major banks.
27
<PAGE> 29
IMMUNOGEN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Property and Equipment
Property and equipment are stated at cost. The Company provides for
depreciation based upon expected useful lives using the straight-line method
over the following estimated useful lives:
<TABLE>
<S> <C>
Machinery and equipment.............................. 3-5 years
Computer hardware and software....................... 5 years
Furniture and fixtures............................... 5 years
Leasehold improvements............................... Shorter of lease term or
estimated useful life
</TABLE>
Maintenance and repairs are charged to expense as incurred. Upon retirement
or sale, the cost of disposed assets and the related accumulated depreciation
are removed from the accounts and any resulting gain or loss is credited or
charged to operations. Gains recorded under sale/leaseback arrangements are
deferred and amortized to operations over the life of the lease.
Income Taxes
The Company uses the liability method whereby the deferred tax liabilities
and assets are recognized based on temporary differences between the financial
statement and tax basis of assets and liabilities using current statutory tax
rates. A valuation allowance against net deferred tax assets is recorded if,
based on the available evidence, it is more likely than not that some or all of
the deferred tax assets will not be realized.
Management evaluates on a quarterly basis the recoverability of the
deferred tax assets and the level of the valuation allowance. At such time as it
is more likely than not that deferred tax assets are realizable, the valuation
allowance will be appropriately reduced.
Impairment of Long-Lived Assets
The Company periodically evaluates the potential impairment of its
long-lived assets whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. At the occurrence of a
certain event or change in circumstances, the Company evaluates the potential
impairment of an asset based on estimated future undiscounted cash flows. In the
event impairment exists, the Company will measure the amount of such impairment
based on the present value of estimated future cash flows using a discount rate
commensurate with the risks involved. Based on management's assessment as of
June 30, 1998, the Company has determined that no impairment of long-lived
assets exists.
Recent Accounting Pronouncements
In April 1998, the Accounting Standards Executive Committee issued
Statement of Position No. 98-5, "Reporting on the Costs of Start-up Activities."
This statement provides guidance on the financial reporting of start-up costs
and organization costs. It requires costs of start-up activities and
organization costs to be expensed as incurred. The statement is effective for
fiscal years beginning after December 15, 1998. Adoption of this standard will
not impact the financial results of the Company.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities." This statement establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts (collectively referred to as derivatives), and for
hedging activities. The statement requires companies to recognize all
derivatives as either assets or liabilities, with the instruments measured at
fair value. The accounting for changes in fair value, gains or losses, depends
on the intended use of the derivative and its resulting designation. The
statement is effective for all fiscal quarters of fiscal years beginning after
June 15, 1999. Adoption of this standard will not impact the financial results
of the Company.
28
<PAGE> 30
IMMUNOGEN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
C. LOSS PER COMMON SHARE:
In 1997, the Company adopted the provisions of Statement of Financial
Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128") which requires
the disclosure of basic and diluted earnings per common share for all periods
presented. Basic and diluted earnings per share is calculated based on the
weighted average number of common shares outstanding during the period. Diluted
earnings per share also give effect to the dilutive effect of stock options and
warrants (calculated based on the treasury stock method). The Company does not
present diluted earnings per share as the effect of potentially dilutive shares
from stock options, warrants and preferred stock, totaling 3,977,600, 7,812,112
and 9,779,683 shares at June 30, 1996, 1997 and 1998, respectively, is
antidilutive. As a result, adoption of SFAS 128 has not affected the basic and
diluted losses per common share reported in any period.
D. NOTE RECEIVABLE:
Effective January 1, 1996, the Company assigned its leases on its Canton
facility and equipment to another biotechnology company. Under the terms of the
agreements, the assignee has assumed all payment obligations under the leases,
which amount to approximately $116,000 per month and will make cash payments to
the Company at various dates through July 1999 which will total approximately
$2.4 million. Approximately $1,116,000 of the $2.4 million total had been
received through June 30, 1998. Amounts due the Company from the assignee under
these agreements were discounted to their present value using a risk-adjusted
discount rate of approximately 9%. The Company is accreting interest income over
the life of the note and, accordingly, the note receivable balance in the
Company's consolidated balance sheets as of June 30, 1998 reflects the
discounted present value of $1,129,000 plus accreted interest of approximately
$104,000.
E. MINORITY INTEREST:
In July 1997, ATI entered into a collaboration agreement with BioChem. The
agreement grants BioChem an exclusive, worldwide license to ATI's proprietary
screens based on two families of proteins involved in apoptosis, for use in
identifying leads for anti-cancer drug development. The agreement also covers
the subsequent development of new screens in two defined areas.
Under the agreement, BioChem will invest a total of $11.1 million in
non-voting, non-dividend-bearing convertible preferred stock of ATI in a series
of private placements over a three-year period to be used exclusively to fund
research conducted under the collaboration during the three-year research term.
As of June 30, 1998, $4,381,000 had been received and $843,000 remains
outstanding as due from related party. The $5.9 million balance of the
investment, exclusive of the $843,000 quarterly payment outstanding, will be
paid in equal quarterly payments of $843,000. The preferred stock is convertible
into ATI common stock at any time after three years from the date of first
issuance of the stock, at a conversion price equal to the then current market
price of the ATI common stock, but in any event at a price that will result in
BioChem acquiring at least 15% of the then outstanding ATI common stock for its
$11.1 million investment. As of June 30, 1998, 5,224 shares of ATI preferred
stock were issued or issuable, representing a 7.04% minority interest (on a
converted and fully-diluted basis) in the net loss of ATI. This minority
interest portion of ATI's loss for the year reduced ImmunoGen's net loss by
$159,524. In addition, because the investment is comprised of securities
potentially issuable by both the Company and ATI, only a portion of which has
been deemed allocable to the ATI securities, the Company has reflected the value
of the investment allocable to the ATI securities as a minority interest on its
balance sheet. Based upon an independent appraisal, approximately 3% of the $5.2
million invested to date, or approximately $157,000, has been allocated to
minority interest in ATI, with the remainder, or approximately $5.1 million,
allocated to the Company's equity. The research agreement may be extended beyond
the initial three-year term, on terms substantially similar to those for the
original term. BioChem will also make milestone payments up to $15.0 million for
each product over the course of its development. In addition, if and when
product sales commence, ATI will receive royalties on any future worldwide sales
of products resulting from the collaboration. BioChem's obligation to provide
additional
29
<PAGE> 31
IMMUNOGEN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
financing to ATI each quarter is subject to satisfaction of specified
conditions, including a condition that ATI maintain sufficient cash and other
resources to allow it to continue its planned operations (other than performance
of its obligations under the research agreement) for a minimum period of time.
In accordance with the agreement, proceeds received by ATI from BioChem are
restricted to support the research and development activities of the
collaboration. The agreement also establishes certain restrictions on the
transferability of assets between ATI and the Company. Summarized information
for ATI at June 30, 1996, 1997 and 1998 and for the years then ended follows:
<TABLE>
<CAPTION>
1996 1997 1998
----------- ----------- ----------
<S> <C> <C> <C>
Total assets......................................... $ 61,533 $ 22,215 $2,361,334
Total liabilities.................................... 10,320,989 14,348,345 250,438
Total revenues....................................... 8,070 6,657 112,423
Total expenses (principally research and
development)....................................... (3,980,687) (4,079,124) (3,159,437)
Net loss............................................. (3,972,617) (4,072,467) (3,047,014)
</TABLE>
Of the $2,361,334 in total assets as of June 30, 1998, $1,415,704
represents cash and cash equivalents restricted to fund current ATI research and
administrative expenditures.
Additionally, under the terms of the collaboration agreement, ATI incurs
certain fees reimbursable by BioChem. At June 30, 1998, total outstanding
reimbursable fees equaled $72,473 and was reflected on the Company's
consolidated balance sheet as due from related party.
As part of the collaboration with ATI, BioChem also receives warrants to
purchase shares of ImmunoGen Common Stock equal to the amount invested in ATI
during the three-year research term. These warrants will be exercisable for a
number of shares of ImmunoGen Common Stock determined by dividing the amount of
BioChem's investment in ATI by the market price of the ImmunoGen Common Stock on
the exercise date, subject to certain limitations imposed by the Nasdaq Stock
Market rules which limits the sale or issuance by an issuer of certain
securities at a price less than the greater of book or market value.
Consequently, BioChem's ability to convert all of its ImmunoGen warrants into
ImmunoGen Common Stock is limited to a total of 20% of the total number of
shares of the Company's Common Stock outstanding on the date of the initial
transaction to the extent that the conversion price would be less than the
market price of the Common Stock on that date, unless stockholder approval for
such a conversion is obtained, if required, or unless the Company has obtained a
waiver of that requirement. The exercise price is payable in cash or shares of
ATI's preferred stock, at BioChem's option. The warrants are expected to be
exercised only in the event that the shares of ATI common stock do not become
publicly traded. In such event, the Company expects that BioChem will use its
shares of ATI preferred stock, in lieu of cash, to exercise the warrants.
F. AGREEMENTS:
ImmunoGen/Dana-Farber Cancer Institute
The Company had a long-standing research and license agreement with
Dana-Farber Cancer Institute, Inc. ("Dana-Farber"), a Massachusetts
not-for-profit corporation. As part of the research and license agreement, the
Company agreed to fund certain research and development projects conducted by
Dana-Farber in relation to the development and eventual commercialization of
certain biologicals to be used in the treatment of certain forms of cancer. In
fiscal year 1996, the Company incurred research and development expenses of
approximately $40,000, in connection with that agreement. No funding of research
and
30
<PAGE> 32
IMMUNOGEN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
development at Dana-Farber occurred in fiscal 1997 or 1998 and none is expected
to occur in the foreseeable future. To the extent that any invention develops at
Dana-Farber which derived its principal support and funding from the Company,
the Company has the exclusive right to use such invention. Also as part of the
arrangement, the Company is required to pay Dana-Farber, if and when product
sales commence, certain royalties based on a formula stipulated in the
agreement. The Company owed Dana-Farber approximately $900,000 at June 28, 1996
for work performed under the agreement. Of the balance due under the agreement
at June 28, 1996, the Company had accrued interest of approximately $106,000,
and issued a $1.3 million 11.5% convertible debenture as described in Note I to
these financial statements in payment thereof. On July 12, 1996, this debenture
was converted into 351,662 shares of the Company's Common Stock.
ATI/Dana-Farber Agreements
ATI was established as a joint venture between ImmunoGen and Dana-Farber to
develop therapeutics based on apoptosis technology developed at Dana-Farber. In
January 1993, the Company purchased 7,000 shares of Class A Preferred Stock of
ATI. The Class A Preferred Stock is voting stock and carries a liquidation
preference over the common stock of ATI. At June 30, 1997, the Company's
investment represented 72% of the then currently authorized equity of ATI;
accordingly, ATI is consolidated into the financial results of the Company.
Under the terms of a stock purchase agreement entered into between the Company,
ATI, Dana-Farber and an individual stockholder of ATI, if ATI had not concluded
a public offering of its stock for at least $5.0 million prior to January 11,
1998, Dana-Farber and the individual stockholder each could require the Company
to purchase (the "put option"), or the Company could require such stockholders
to sell (the "call option"), their shares of ATI common stock at a predetermined
price. At the Company's discretion, the shares of common stock of ATI can be
paid for by the Company in cash or by delivery of shares of Common Stock. In
January 1998, the individual stockholder exercised the put option for 500,000
shares of ATI common stock, par value $0.00002 per share, for an aggregate of
$871,930. The value of the Common Stock issued was determined by the terms of
the put option and subject to the closing price of the Common Stock on the date
of exercise of the put option. The Company elected to issue its Common Stock in
lieu of a cash payment and, in March 1998, 475,425 shares of Common Stock were
issued to the individual stockholder, thereby increasing the Company's ownership
of ATI from approximately 95% to approximately 97%. The transaction was
accounted for as a step acquisition of a minority interest in a subsidiary. The
value of the incremental ATI ownership purchased by the Company was ascribed to
incomplete research and development technology and, therefore, the cost of the
acquisition, $871,930, or ($0.03) per common share, was charged to operations.
In addition to previous investments in ATI, ImmunoGen was committed to
obtain or furnish another $3.0 million in equity for ATI on such terms and
conditions as were mutually agreed to by ATI and the providers of such
additional equity. As of June 30, 1997, amounts owed by ATI to ImmunoGen
approximated $14.2 million. In July 1997, this balance due ImmunoGen was
converted into shares of ATI common stock, thereby satisfying the agreement to
provide an additional $3.0 million in equity and increasing ImmunoGen's majority
ownership from approximately 72% to approximately 95%.
Under agreements between ATI and Dana-Farber, ATI was the licensee of
Dana-Farber's apoptosis technology and ImmunoGen possessed the exclusive right
to license products developed by ATI, including those products based on
Dana-Farber's apoptosis technology. These agreements were terminated as of
January 1, 1996. A portion of the Company's research and development expenses
was incurred in connection with an agreement between ATI and Dana-Farber, under
which ATI had agreed to fund certain research projects conducted at Dana-Farber.
In fiscal 1996, these expenses amounted to $327,000. The balance due Dana-Farber
under this agreement of approximately $350,000 was included in the June 28, 1996
debenture issued by the Company to Dana-Farber as described in Note I. Under the
terms of the termination agreement,
31
<PAGE> 33
IMMUNOGEN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
the Company satisfied all past and present obligations under the license
agreement and ATI retains any rights to technology developed prior to January 1,
1996.
G. PROPERTY AND EQUIPMENT:
Property and equipment consisted of the following at June 30, 1997 and
1998:
<TABLE>
<CAPTION>
JUNE 30,
-------------------------
1997 1998
----------- -----------
<S> <C> <C>
Machinery and equipment..................................... $ 5,213,352 $ 5,098,931
Computer hardware and software.............................. 1,057,671 1,055,980
Furniture and fixtures...................................... 120,304 120,304
Leasehold improvements...................................... 8,346,859 8,346,859
----------- -----------
14,738,186 14,622,074
Less accumulated depreciation and amortization.............. 11,808,453 12,730,378
----------- -----------
$ 2,929,733 $ 1,891,696
=========== ===========
</TABLE>
Depreciation and amortization expense was $2,516,231, $1,496,598 and
$1,053,441 for the years ended June 30, 1996, 1997 and 1998, respectively.
In connection with the Company's assignment of its equipment leases at its
Canton facility, as described in Note D, the Company wrote off approximately
$9.3 million of assets in fiscal 1996, with a corresponding reduction in
accumulated depreciation of approximately $2.3 million. This disposition of the
Company's Canton assets included recognition of a net loss on its equipment
lease at the Canton facility of approximately $2.0 million for the year ended
June 30, 1996.
The Company's policy is to depreciate property and equipment over its
remaining useful life, and to evaluate the remaining life and recoverability of
such property and equipment in light of current conditions as discussed in Note
A. Since there is doubt about the Company's ability to continue as a going
concern, it is reasonably possible that the Company's estimate that it will
recover the carrying amount of its property and equipment from future operations
will change in the near term; however, management believes the fair value of its
property and equipment exceeds its net book value at June 30, 1998.
H. INCOME TAXES:
No income tax provision or benefit has been provided for United States
federal income tax purposes as the Company has incurred losses since inception.
As of June 30, 1998, net deferred tax assets totaled approximately $46.4
million, consisting of federal net operating loss carryforwards of approximately
$105.6 million, state net operating loss carryforwards of approximately $46.6
million, net book to tax timing differences of approximately $9.2 million and
approximately $4.4 million of research and experimentation credit carryforwards.
These net operating loss and credit carryforwards will expire at various dates
between 1999 and 2013 and may be subject to limitation when used due to certain
changes in ownership of the Company's capital stock. Due to the uncertainty
surrounding the realization of these favorable tax attributes in future tax
returns, the net deferred tax assets of approximately $43.4 million and $46.4
million at June 30, 1997 and 1998, respectively, have been fully offset by a
valuation allowance. Income tax expense consists primarily of state income taxes
levied on the interest income of the Company's wholly-owned subsidiary,
ImmunoGen Securities Corp., at a rate of 1.32%, and state minimum excise tax
liability.
32
<PAGE> 34
IMMUNOGEN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
I. CAPITAL STOCK:
Common and Preferred Stock
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 ("Series A Stock"), with a stated value of $1,000 per share. Holders of
the Series A Stock were entitled to receive, when and as declared by the Board
of Directors, cumulative dividends in cash, or at the Company's option, shares
of the Company's Common Stock, in arrears on the conversion date. The 2,500
shares of Series A Stock were convertible into the same number of shares of
Common Stock as the $2.5 million debenture. Each share of Series A Stock was
convertible into a number of shares of Common Stock determined by dividing
$1,000 by the lower of (i) $2.50 (subject to certain restrictions) and (ii) 85%
of the average of the closing bid price of the Common Stock for the five days
prior to conversion. In addition, holders of Series A Stock were entitled to
receive, on conversion of the Series A Stock, a number of warrants equal to 50%
of the number of shares of Common Stock issued on conversion. As of January 5,
1998, all 2,500 shares of the Series A Stock plus accrued dividends thereon had
been converted into 2,676,235 shares of the Company's Common Stock. In
connection with these conversions, warrants to purchase 1,338,117 shares of
Common Stock were issued. The warrants have an exercise price of $4 per share
and expire at various dates during 2002 and 2003. The warrants were valued at
$623,000 and were accounted for as non-cash dividends to common stockholders at
the time of issuance of the Series A Stock.
Also in October 1996, the Company entered into a financing agreement ("the
October 1996 Private Placement") with an institutional investor under which the
Company was granted the right to require the investor to purchase $12.0 million
of convertible preferred stock from the Company in a series of private
placements. Pursuant to the October 1996 Private Placement, the Company sold
3,000 shares of its Series B Convertible Preferred Stock ("Series B Stock") with
a stated value of $1,000 per share. Each share of Series B Stock was convertible
into a number of shares of Common Stock determined by dividing $1,000 by the
lower of (i) $3.60 and (ii) 85% of the market price of the Common Stock at the
time of the conversion. As of February 4, 1997, all 3,000 shares of the Series B
Stock plus accrued dividends thereon had been converted into 1,384,823 shares of
the Company's Common Stock. In connection with the issuance of the Series B
Stock, warrants to purchase 500,000 shares of the Company's Common Stock were
also issued. Of these, 250,000 warrants are exercisable at $5.49 per share and
expire in October 2001. The remaining 250,000 warrants are exercisable at $3.68
per share and expire in January 2002. These warrants have a value of $618,900,
which was accounted for as non-cash dividends to common stockholders at the time
of issuance of the Series B Stock.
In January 1997, the Company sold $3.0 million of its Series C Convertible
Preferred Stock ("Series C Stock") in connection with the October 1996 Private
Placement. Each share of Series C Stock was convertible into a number of shares
of Common Stock determined by dividing $1,000 by the lower of (i) $2.61 and (ii)
85% of the market price of the Company's Common Stock at the time of conversion.
As of August 1, 1997, all 3,000 shares of the Series C Stock plus accrued
dividends thereon had been converted into 2,719,738 shares of the Company's
Common Stock. In connection with the Series C Stock, warrants to purchase
1,147,754 shares of Common Stock were issued to the investor. These warrants are
exercisable at $2.31 per share and expire in April 2002. The $1.2 million value
of these warrants was accounted for as non-cash dividends to common stockholders
at the time of issuance of the Series C Stock.
In June 1997, the Company sold $1.0 million of its Series D Convertible
Preferred Stock ("Series D Stock") in connection with the October 1996 Private
Placement, bringing the aggregate amount received under the October 1996 Private
Placement to $7.0 million. The Series D Stock was convertible at any time into a
number of shares of Common Stock determined by dividing $1,000 by the lower of
(i) $1.4375 and (ii) 85% of the market price of the Company's Common Stock at
the time of conversion. As of December 31, 1997, all 1,000 shares of Series D
Stock and accumulated dividends thereon had been converted into 1,001,387 shares
of Common Stock. In addition, the investor received warrants to purchase 454,545
shares of
33
<PAGE> 35
IMMUNOGEN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
the Company's Common Stock. These warrants have an exercise price of $1.94 per
share and expire in 2002. The value of these warrants, $278,000, was determined
at the time of issuance of the convertible securities and was accounted for as
non-cash dividends to common stockholders at that time.
Also in June 1997, the Company and ATI satisfied an obligation of ATI to
one of its scientific advisors, totaling $120,000, by paying the advisor a
combination of cash and 41,481 shares of the Company's Common Stock.
In December 1997, the Company entered into an agreement, which was amended
in March 1998, to sell $3.0 million of its non-dividend-bearing Series E Stock
to an institutional investor. Proceeds are to be used to fund working capital.
The installment investment was completed in July 1998 (See Note L). The Series E
Stock will be convertible into Common Stock at the end of a two-year holding
period at $1.0625 per share. In addition, as of June 30, 1998, warrants to
purchase 1,411,764 shares of Common Stock had been issued. These warrants become
exercisable at the end of a two year holding period subject to certain
provisions. The value of the warrants, approximately $580,500, was determined at
the time of their issuances and accounted for as non-cash dividends on
convertible preferred stock. These warrants have an exercise price of $2.125 per
share, and vest over a period of two years subject to certain provisions. Of the
total 1,411,764 warrants issued, 941,176 expire in 2004 and 470,588 expire in
2005. In connection with this agreement, 75,000 shares of Common Stock were
issued to a third party as a finder's fee.
Warrants
In addition to the warrants discussed in this footnote, subheading Common
and Preferred Stock, warrants to purchase 26,738 shares of Common Stock were
issued in March 1994 in connection with a capital lease financing. These
warrants are exercisable at $7.48 per share and expire in April 1999. The value
of these warrants, approximately $77,000, was recognized as interest expense
over the life of the lease.
In connection with a private placement of the Company's convertible
debentures in March 1996, the Company issued warrants to purchase 509,000 and
500,000 shares of Common Stock at exercise prices of $4.00 and $6.00 per share,
respectively, expiring in 2001. As a finder's fee, the Company also issued
warrants to purchase 250,000 shares of the Company's Common Stock to a third
party. The 250,000 warrants have an exercise price of $3.105 and expire in 2003.
The total value of the 1,259,000 warrants issued in connection with the
debentures was approximately $2.7 million, and was charged to interest expense
at the time of the issuance of the warrants.
Stock Options
Under the Company's Restated Stock Option Plan (the "Plan"), originally
adopted by the Board of Directors on February 13, 1986, and subsequently amended
and restated, employees, consultants and directors may be granted options to
purchase up to 3.525 million shares of Common Stock of the Company. Prior to
July 1997, 2.4 million shares of Common Stock were reserved for the grant of
options under the Plan. In July 1997, the Board of Directors authorized, and the
shareholders subsequently approved, amendments to the Plan to increase the total
number of shares reserved for the grant of options to 3.525 million shares of
Common Stock.
34
<PAGE> 36
IMMUNOGEN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Information related to stock option activity under the Plan during fiscal
years 1996, 1997 and 1998 is as follows:
<TABLE>
<CAPTION>
AVERAGE
SHARES PRICE PER SHARE
------ ---------------
<S> <C> <C>
Outstanding at June 30, 1995................................ 1,283,329 $5.31
--------- -----
Granted................................................... 606,800 2.51
Exercised................................................. 108,500 0.76
Canceled.................................................. 117,767 7.58
--------- -----
Outstanding at June 30, 1996................................ 1,663,862 $4.40
--------- -----
Granted................................................... 46,700 3.51
Exercised................................................. 36,645 2.07
Canceled.................................................. 180,950 4.83
--------- -----
Outstanding at June 30, 1997................................ 1,492,967 $4.40
--------- -----
Granted................................................... 1,306,700 0.99
Exercised................................................. 114,302 0.90
Canceled.................................................. 193,012 4.00
--------- -----
Outstanding at June 30, 1998................................ 2,492,353 $2.92
========= =====
</TABLE>
In addition to options granted under the Plan, the Board previously
approved the granting of other, non-qualified options. In fiscal year 1988, the
Company granted non-qualified options to purchase 18,000 shares of Common Stock
at an exercise price of $0.67 per share. These options were subsequently
exercised in 1997. In fiscal year 1993, the Company granted non-qualified
options to purchase 10,000 shares of Common Stock at an exercise price of $12.00
per share. In fiscal year 1997, the Company granted non-qualified options to
purchase 10,000 shares of Common Stock at an exercise price of $3.375 per share.
As of June 30, 1998, options to purchase 20,000 shares were outstanding, of
which options to purchase 12,500 shares were exercisable.
The following table summarizes certain information about total stock
options under the Plan and outside the Plan, outstanding at June 30, 1998:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
----------------------------------------------- ------------------------------
WEIGHTED-AVERAGE
REMAINING WEIGHTED-
RANGE OF NUMBER CONTRACTUAL AVERAGE NUMBER WEIGHTED-AVERAGE
EXERCISE PRICES OUTSTANDING LIFE (YEARS) EXERCISE PRICE EXERCISABLE EXERCISE PRICE
- --------------- ----------- ---------------- -------------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
$ 0.84 -- 2.50 2,025,833 8.33 $1.46 744,458 $2.27
2.51 -- 5.00 48,375 7.92 4.07 14,525 3.93
5.01 -- 7.50 183,695 5.45 5.93 183,545 5.93
7.51 -- 10.00 6,200 5.35 8.44 6,200 8.44
10.01 -- 12.50 191,850 3.60 11.47 191,850 11.47
12.51 -- 14.75 56,400 3.08 14.75 56,400 14.75
--------- ---------
2,512,353 1,196,978
========= =========
</TABLE>
35
<PAGE> 37
IMMUNOGEN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company has granted options at the fair market value of the Common
Stock on the date of such grant. The following options and their respective
average prices per share were outstanding and exercisable at June 30, 1996, 1997
and 1998:
<TABLE>
<CAPTION>
AVERAGE AVERAGE
OUTSTANDING PRICE PER SHARE EXERCISABLE PRICE PER SHARE
----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C>
June 30, 1996........................ 1,691,862 $4.54 1,095,967 $4.79
June 30, 1997........................ 1,512,967 4.57 1,251,785 4.82
June 30, 1998........................ 2,512,353 2.92 1,196,978 4.95
</TABLE>
Options vest at various rates over periods of up to four years and may be
exercised within ten years from the date of grant.
The Company adopted the disclosure provisions of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation," ("SFAS
123") for the fiscal year ended June 30, 1997, but, as permitted, continues to
apply Accounting Principles Board Opinion 25 and related interpretations in
accounting for its stock option issuances. Accordingly, no compensation cost has
been recognized for its employees and outside directors stock options.
Had compensation costs for the Company's stock-based compensation been
determined based on the fair value at the grant dates as calculated in
accordance with SFAS 123, the Company's net basic and diluted loss per common
share for the years ended June 30, 1996, 1997 and 1998 would have been adjusted
to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
JUNE 30, 1996 JUNE 30, 1997 JUNE 30, 1998
------------- ------------- -------------
<S> <C> <C> <C>
Net loss............................... $19,329,698 $12,852,855 $8,652,547
Basic and diluted loss per share....... $ 1.34 $ 0.72 $ 0.36
</TABLE>
The above amounts only include grants within the last three years and may
not be indicative of future pro forma net loss or earnings amounts because
expense is recognized over the vesting period which is greater than the three
years shown.
The fair value of each stock option is estimated on the date of grant using
the Black-Scholes option pricing model with the following weighted-average
assumptions: an expected life of 5.5 years, no dividends, expected volatility of
75%, 75% and 85% for the years ended June 30, 1996, 1997 and 1998, respectively,
and risk-free interest rates of 6.11%, 6.49% and 5.53% for the years ended June
30, 1996, 1997 and 1998, respectively. Using the Black-Scholes option pricing
model, the fair value of options granted during fiscal 1998 was $0.72.
The Black-Scholes option pricing model was developed for use in estimating
the fair value of traded options that have no vesting restrictions and are fully
transferable. In addition, option pricing models require the use of highly
subjective assumptions, including the expected stock price volatility. Because
the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
assumptions can materially affect the fair value estimates, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock-based compensation.
Common Stock Reserved
Shares of authorized Common Stock have been reserved for the exercise of
all options and warrants outstanding.
36
<PAGE> 38
IMMUNOGEN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
J. COMMITMENTS:
Operating Leases
At June 30, 1998, the Company leased facilities in Norwood and Cambridge,
Massachusetts. In fiscal year 1997, the Company amended its lease on the Norwood
facility, extending the lease term to June 30, 2000, with an option to renew
until June 30, 2003. The Cambridge facilities are rented under two separate
lease arrangements. In fiscal year 1997, the Company entered into a three-year
lease renewal for one of these properties, to September 2000. The lease term for
the second Cambridge facility expires in 2003. This facility is subject to a
sublease agreement, with the current sublease term expiring in February 2000.
Total net receipts under the sublease agreement, which are credited to operating
expenses, are expected to total approximately $3.2 million through February
2000, of which approximately $753,000 and $774,000 was received by the Company
in fiscal 1997 and 1998, respectively. The Company is required to pay all
operating expenses for the leased premises subject to escalation charges for
certain expense increases over a base amount. Rent expense for leased facilities
and equipment was approximately $382,000, ($15,000) (net of sublease income of
$753,000) and $140,000 (net of sublease income of $774,000) during fiscal years
1996, 1997 and 1998.
The minimum rental commitments, including real estate taxes, for the next
five years under the lease agreements are as follows:
<TABLE>
<CAPTION>
FISCAL YEAR COMMITMENTS SUBLEASE INCOME NET
- ----------- ----------- --------------- --------
<S> <C> <C> <C>
1999....... $1,227,035 $1,013,787 $213,248
2000....... 1,229,222 675,858 553,364
2001....... 680,607 -- 680,607
2002....... 587,895 -- 587,895
</TABLE>
K. EMPLOYEE BENEFIT PLANS:
Effective September 1, 1990, the Company implemented a deferred
compensation plan under Section 401(k) of the Internal Revenue Code (the "401(k)
Plan"). Under the 401(k) Plan, eligible employees are permitted to contribute,
subject to certain limitations, up to 15% of their gross salary. The Company
makes a matching contribution which currently totals 20% of the employee's
contribution, up to a maximum amount equal to 1% of the employee's gross salary.
In fiscal 1996, 1997 and 1998, the Company's contributions to the 401(k) Plan
amounted to $31,000, $29,500 and $25,000, respectively.
L. SUBSEQUENT EVENT:
On July 13 1998, the Company sold 1,200 shares of its Series E Stock for an
aggregate of $1.5 million. The sale represented the final installment under the
December 1997 agreement (see Note I), as amended in March of 1998, to sell $3.0
million to an institutional investor. Proceeds are to be used to fund working
capital. Consistent with the prior issuances under the agreement, the Series E
Stock will be convertible into Common Stock at the end of a two year holding
period at $1.0625 per share. As part of the agreement, on July 13, 1998, the
investor also received warrants to purchase 1,411,764 shares of Common Stock.
These warrants, which become exercisable at the end of a two-year holding period
subject to certain provisions, have an exercise price of $2.125 per share and
expire in 2005. The value of these warrants, approximately $918,000, was
determined at the time of their issuance and accounted for as non-cash dividends
on convertible preferred stock in the first quarter of fiscal 1999.
37
<PAGE> 39
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS
The section entitled "Election of Directors" in the Company's definitive
proxy statement for its 1998 Annual Meeting of Shareholders, which the Company
intends to file with the Securities and Exchange Commission on or about October
13, 1998, is hereby incorporated by reference.
EXECUTIVE OFFICERS
The following is a list of the executive officers of the Company and their
positions with the Company. Each individual executive officer serves at the
pleasure of the Board of Directors.
<TABLE>
<CAPTION>
NAME AGE POSITIONS WITH THE COMPANY
---- --- --------------------------
<S> <C> <C>
Mitchel Sayare, Ph.D.......... 50 Chairman of the Board of Directors, Chief
Executive Officer and President
Walter A. Blattler, Ph.D...... 49 Executive Vice President, Science and Technology
John M. Lambert, Ph.D......... 47 Vice President, Research and Development
Kathleen A. Carroll........... 46 Vice President, Finance and Administration,
Treasurer and Assistant Secretary
</TABLE>
The background of each executive officer is as follows:
Mitchel Sayare, Chief Executive Officer, a Director since 1986 and Chairman
of the Board of Directors since 1989, joined the Company in 1986. From 1986 to
July 1992 and currently since 1994, Mr. Sayare has served as President of the
Company. From 1982 to 1985, Mr. Sayare was Vice President for Development at
Xenogen, Inc., a biotechnology company specializing in monoclonal antibody-based
diagnostic systems for cancer. From 1977 to 1982, Mr. Sayare was Assistant
Professor of Biophysics and Biochemistry at the University of Connecticut. He
holds a Ph.D. in Biochemistry from Temple University School of Medicine.
Walter A. Blattler, Ph.D., elected a Director in September 1995, served as
Vice President, Research and Development from 1987 to October 1994 and as Senior
Vice President, Research and Development from October 1994 to October 1996.
Since October 1996 Dr. Blattler has served as Executive Vice President, Science
and Technology. Dr. Blattler joined the Company in October 1987. From 1981 to
1987 Dr. Blattler was chief scientist for the ImmunoGen-supported research
program at Dana-Farber Cancer Institute. Dr. Blattler received his Ph.D. from
the Swiss Federal Institute of Technology in Zurich in 1978.
John M. Lambert, Ph.D., Vice President, Research and Development since
November 1996, joined the Company in 1987. Dr. Lambert served as Senior Director
of Research from November 1992 to October 1994 and served as Vice President of
Research from October 1994 to November 1996. Prior to joining ImmunoGen, Dr.
Lambert was Assistant Professor of Pathology at the Dana-Farber Cancer
Institute, where he worked on the research program supported by ImmunoGen. Dr.
Lambert received his Ph.D. in Biochemistry from Cambridge University in England.
Kathleen A. Carroll, Vice President, Finance and Administration, Treasurer
and Assistant Secretary, joined the Company in 1987. Ms. Carroll served as
Controller from October 1990 to October 1996 and has served as Vice President,
Finance and Administration since November 1996, Assistant Secretary since April
1997 and Treasurer since June 1997. Prior to joining ImmunoGen, Ms. Carroll held
various positions in both private industry and public accounting. Ms. Carroll
received her B.S. in Finance from Boston University and a J.D. from Suffolk
University Law School.
38
<PAGE> 40
The section entitled "Section 16(a) Beneficial Ownership Reporting
Compliance" in the Company's definitive proxy statement for its 1998 Annual
Meeting of Shareholders is hereby incorporated by reference.
ITEM 11. EXECUTIVE COMPENSATION
The sections entitled "Executive Compensation" and "Employment Contracts,
Termination of Employment and Change in Control Agreements" in the Company's
definitive proxy statement for its 1998 Annual Meeting of Shareholders are
hereby incorporated by reference.
ITEM 12. SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The section entitled "Principal Shareholders" in the Company's definitive
proxy statement for its 1998 Annual Meeting of Shareholders is hereby
incorporated by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The section entitled "Certain Transactions" in the Company's definitive
proxy statement for its 1998 Annual Meeting of Shareholders is hereby
incorporated by reference.
39
<PAGE> 41
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Financial Statements
(1) and (2) See "Index to Consolidated Financial Statements and
Supplemental Schedules" at Item 8 of this Annual Report on Form 10-K. Schedules
not included herein are omitted because they are not applicable or the required
information appears in the Consolidated Financial Statements or Notes thereto.
(3) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C>
(3.1) Restated Articles of Organization(1)
(3.2) By-Laws, as amended(2)
(4.1) Article 4 of the Restated Articles of Organization as
amended (See Exhibits 3.1 and 3.2)(1)
(4.2) Designation of Series A Preferred Stock(3)
(4.3) Designation of Series B Preferred Stock(4)
(4.4) Designation of Series C Preferred Stock(4)
(4.5) Designation of Series D Preferred Stock(5)
(4.6) Designation of Series E Preferred Stock(6)
(4.7) Form of Common Stock Certificate(7)
(10.1) Research and License Agreement dated as of May 22, 1981 by
and between the Registrant and Sidney Farber Cancer
Institute, Inc. (now Dana-Farber Cancer Institute, Inc.)
with addenda dated as of August 13, 1987 and August 22,
1989(7)
(10.2) Amended and Restated Registration Rights Agreement dated as
of December 23, 1988 by and among the Registrant and various
beneficial owners of the Registrant's securities(7)
(10.3)x Restated Stock Option Plan(8)
(10.4)x Letter Agreement Regarding Employment dated as of October 1,
1987 between the Registrant and Dr. Walter A. Blattler(7)
(10.5) Lease dated May 15, 1997 by and between Harry F. Stimpson,
III, as trustees, lessor, and the Registrant, lessee(5)
(10.6) Leases dated as of December 1, 1986 and June 21, 1988 by and
between James H. Mitchell, Trustee of New Providence Realty
Trust, lessor, and Charles River Biotechnical Services, Inc.
("Lessee") together with Assignment of Leases dated June 29,
1989 between Lessee and the Registrant(9)
(10.7) First Amendment, dated as of May 9, 1991, to Lease dated as
of June 21, 1988 by and between James A. Mitchell, Trustee
of New Providence Realty Trust, lessor, and the
Registrant(10)
(10.8) Confirmatory Second Amendment to Lease dated June 21, 1988
by and between James A. Mitchell, Trustee of New Providence
Realty Trust, lessor, and the Registrant, Lessee(5)
(10.9)x Letter Agreement Regarding Compensation of Mitchel Sayare,
dated April 29, 1994(11)
(10.10) Lease dated as of December 23, 1992 by and between
Massachusetts Institute of Technology, lessor, and the
Registrant, lessee(8)
(10.11) Option Agreement dated April 5, 1990 by and between the
Registrant and Takeda Chemical Industries, Ltd.(12)
(10.12) Capital Lease Agreement dated March 31, 1994 by and between
the Registrant and Aberlyn Capital Management Limited
Partnership(11)
(10.13) Sublease dated as of August 31, 1995 by and between the
Registrant, as landlord, and Astra Research Center Boston,
Inc., as tenant(13)
(10.14) Equipment Use and Services Agreement dated as of August 31,
1995 by and between the Registrant, as landlord, and Astra
Research Center Boston, Inc., as tenant(13)
(10.15) Consent to Sublease and Agreement dated as of August 31,
1995 by and between Massachusetts Institute of Technology,
as lessor, the Registrant, as sublessor, and Astra Research
Center Boston, Inc., as sublessee(13)
(10.16) Amendment to Lease dated August 31, 1995 between
Massachusetts Institute of Technology, as lessor, and the
Registrant, as lessee(14)
</TABLE>
40
<PAGE> 42
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C>
(10.17) Securities Purchase Agreement, including the Form of
Convertible Debenture and The Form of Stock Purchase
Warrant, dated as of March 15, 1996 by and among the
Registrant and Capital Ventures International(14)
(10.18) Registration Rights Agreement dated as of March 15, 1996 by
and among the Registrant and Capital Ventures
International(14)
(10.19) Letter Agreement dated as of March 21, 1996 by and among the
Registrant and Capital Ventures International regarding the
Securities Purchase Agreement dated as of March 15, 1996(14)
(10.20) Letter Agreement dated as of June 6, 1996 by and among the
Registrant and Capital Ventures International regarding an
amendment to their agreement dated March 15, 1996(15)
(10.21) First Amendment to Sublease dated August 31, 1995 by and
between the Registrant, as landlord, and Astra Research
Center Boston, Inc., as tenant(16)
(10.22) Convertible Preferred Stock Purchase Agreement dated as of
October 16, 1996 between Southbrook International
Investments, Ltd. and the Registrant, as amended by an
agreement dated October 16, 1996 and attached thereto(3)
(10.23) Registration Rights Agreement dated as of October 16, 1996
between Southbrook International Investments, Ltd. and the
Registrant(3)
(10.24) Warrant dated October 16, 1996 issued to Southbrook
International Investments, Ltd.(3)
(10.25) Warrant dated October 16, 1996 issued to Brown Simpson,
LLC(3)
(10.26) Warrant dated January 6, 1997 issued to Southbrook
International Investments, Ltd.(4)
(10.27) Convertible Debenture, dated as of June 28, 1996, by and
among the Registrant and The Dana-Farber Cancer Institute,
Inc.(17)
(10.28) Form of Warrant issued by the Registrant to LBC Capital
Resources, Inc.(17)
(10.29) Research Collaboration Agreement dated July 31, 1997 between
Apoptosis Technology, Inc. and BioChem Therapeutic Inc.*(5)
(10.30) License Agreement dated July 31, 1997 between Apoptosis
Technology, Inc., BioChem Pharma Inc., Tanaud Holdings
(Barbados) Ltd. and Tanaud L.L.C.*(5)
(10.31) Stock Purchase Agreement dated July 31, 1997 by and among
Apoptosis Technology, Inc., BioChem Pharma (International)
Inc., and the Registrant*(5)
(10.32) Registration Agreement dated July 31, 1997 between the
Registrant and BioChem Pharma (International) Inc.(5)
(10.33) Registration Agreement dated July 31, 1997 between Apoptosis
Technology, Inc. and the Registrant(5)
(10.34) Form of Warrant issued by the Registrant to BioChem Pharma
(International) Inc.(5)
(10.35) Warrant Certificate dated September 16, 1997 issued to
Southbrook International Investments, Ltd.(18)
(10.36) Warrant Certificate dated July 31, 1997 issued to Capital
Ventures International(18)
(10.37) Warrant Certificate dated August 1, 1997 issued to Capital
Ventures International(18)
(10.38) Warrant Certificate dated August 21, 1997 issued to Capital
Ventures International(18)
(10.39) Warrant Certificate dated October 6, 1997 issued to BioChem
Pharma (International)(18)
(10.40) Series E Convertible Preferred Stock Purchase Agreement by
and among ImmunoGen, Inc., Biotechnology Venture Partners,
L.P., Biotechnology Value Fund, L.P., Biotechnology Value
Fund, Ltd. and Investment 10, L.L.C. dated December 10,
1997*(6)
(10.41) Registration Agreement among ImmunoGen, Inc., Biotechnology
Venture Partners, L.P., Biotechnology Value Fund, L.P.,
Biotechnology Value Fund, Ltd. and Investment 10, L.L.C.
dated December 10, 1997(6)
(10.42) Form of Warrant Certificate issued by the Registrant to
Biotechnology Venture Partners, L.P., Biotechnology Value
Fund, L.P., Biotechnology Value Fund, Ltd. and Investment
10, L.L.C.(6)
(10.43) Warrant Certificate dated December 1,1997 issued to Capital
Ventures International(6)
(10.44) Warrant Certificate dated December 5,1997 issued to Capital
Ventures International(6)
(10.45) Warrant Certificate dated January 5,1998 issued to Capital
Ventures International(6)
(10.46) Warrant Certificate dated January 5, 1998 issued to BioChem
Pharma Inc.(6)
(10.47) First Amendment to Stock Purchase Agreement dated as of
March 18, 1998 by and among ImmunoGen, Inc., Biotechnology
Venture Partners, L.P., Biotechnology Value Fund, Ltd. and
Investment 10, L.L.C.*(19)
</TABLE>
41
<PAGE> 43
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C>
(10.48) License Agreement dated effective June 1, 1998 by and
between the Registrant and Pharmacia & Upjohn AB*
(21) Subsidiaries of the Registrant
(23) Consent of PricewaterhouseCoopers, LLP
(27) Financial Data Schedule
</TABLE>
- ---------------
(1) Previously filed with the Commission as Exhibits to, and incorporated
herein by reference from, the Registrant's Registration Statement on Form
S-1, File No. 33-38883.
(2) Previously filed with the Commission as Exhibits to, and incorporated
herein by reference from, the Registrant's annual report on Form 10-K for
the fiscal year ended June 30, 1990.
(3) Previously filed with the Commission as an exhibit to, and incorporated
herein by reference from, the Registrant's quarterly report on Form 10-Q,
as amended by Form 10-Q/A, for the quarter ended September 30, 1996.
(4) Previously filed with the Commission as an exhibit to, and incorporated
herein by reference from, the Registrant's quarterly report on Form 10-Q,
as amended by Forms 10-Q/A, for the quarter ended December 31, 1996.
(5) Previously filed with the Commission as an exhibit to, and incorporated
herein by reference from, the Registrant's annual report on Form 10-K for
the year ended June 30, 1997.
(6) Previously filed as an exhibit to, and incorporated herein by reference
from, the Registrant's quarterly report on Form 10-Q for the quarter ended
December 31, 1997.
(7) Previously filed with the Commission as Exhibits to, and incorporated
herein by reference from, the Registrant's Registration Statement on Form
S-1, File No. 33-31219.
(8) Previously filed with the Commission as Exhibits to, and incorporated
herein by reference from, the Registrant's quarterly report on Form 10-Q
for the quarter ended December 31, 1992.
(9) Previously filed with the Commission as Exhibit No. 10.10 to, and
incorporated herein by reference from, the Registrant's Registration
Statement on Form S-1, File No. 33-31219.
(10) Previously filed with the Commission as Exhibit No. 10.10a to, and
incorporated herein by reference from, the Registrant's Registration
Statement on Form S-1, File No. 33-43725, as amended.
(11) Previously filed with the Commission as Exhibits to, and incorporated
herein by reference from the registrant's annual report on Form 10-K in the
fiscal year ended June 30, 1994.
(12) Previously filed with the Commission as Exhibit No. 10.15 to, and
incorporated herein by reference from, the Registrant's Registration
Statement on Form S-1, File No. 33-38883.
(13) Previously filed with the Commission as Exhibits to, and incorporated
herein by reference from, the Registrant's annual report on Form 10-K for
the fiscal year ended June 30, 1995.
(14) Previously filed as exhibits to the Registrant's Current Report on Form 8-K
for the March 25, 1996 event, and incorporated herein by reference.
(15) Previously filed as Exhibit 10.29 to the Registrant's Current Report on
Form 8-K for the June 6, 1996 event, and incorporated herein by reference.
(16) Previously filed as an exhibit to, and incorporated herein by reference
from, the Registrant's annual report on Form 10-K for the fiscal year ended
June 30, 1996.
(17) Previously filed with the Commission as an exhibit to, and incorporated
herein by reference from, the Registrant's Registration Statement on Form
S-3, File No. 333-07661.
(18) Previously filed as an exhibit to, and incorporated herein by reference
from, the Registrant's quarterly report on Form 10-Q, as amended by Form
10-Q/A, for the quarter ended September 30, 1997.
(19) Previously filed as an exhibit to, and incorporated herein by reference
from, the Registrant's quarterly report on Form 10-Q for the quarter ended
March 31,1998.
42
<PAGE> 44
(x) Exhibit is a management contract or compensatory plan, contract or
arrangement required to be filed as an exhibit to Form 10-K.
(*) The Registrant has filed a confidential treatment request with the
Commission with respect to this document.
(b) Form 8-K dated August 1, 1997 - Item 5: Other Events. The Company and
BioChem Pharma Inc. announce collaboration for the discovery and
development of novel anti-cancer therapeutics.
Form 8-K dated December 11, 1997 - Item 5: Other Events. The Company
announced the completion of a $3.0 million private placement.
43
<PAGE> 45
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
IMMUNOGEN, INC.
By: /s/ MITCHEL SAYARE
------------------------------------
Mitchel Sayare
Chairman of the Board and
Chief Executive Officer
Dated: September 25, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ MITCHEL SAYARE Chairman of the Board of September 25, 1998
- --------------------------------------------------- Directors, Chief Executive
Mitchel Sayare Officer and President
(principal executive officer)
/s/ KATHLEEN A. CARROLL Vice President, Finance and September 25, 1998
- --------------------------------------------------- Administration, Treasurer and
Kathleen A. Carroll Assistant Secretary (principal
financial officer and
principal accounting officer)
/s/ WALTER A. BLATTLER Executive Vice President, September 25, 1998
- --------------------------------------------------- Science and Technology, and
Walter A. Blattler Director
/s/ DAVID W. CARTER Director September 25, 1998
- ---------------------------------------------------
David W. Carter
/s/ MICHAEL EISENSON Director September 25, 1998
- ---------------------------------------------------
Michael Eisenson
/s/ STUART F. FEINER Director September 25, 1998
- ---------------------------------------------------
Stuart F. Feiner
</TABLE>
44
<PAGE> 46
INDEX TO EXHIBITS
EXHIBIT
NO. DESCRIPTION
- ------- -----------
10.48 License Agreement dated effective June 1, 1998 by and between the
Registrant and Pharmacia & Upjohn AB
21 Subsidiaries of the Registrant
23 Consent of PricewaterhouseCoopers, LLP
27 Financial Data Schedule
<PAGE> 1
EXHIBIT 10.48
Immunogen, Inc. has omitted from this Exhibit 10.48 portions of the
Agreement for which Immunogen, Inc. has requested confidential treatment from
the Securities and Exchange Commission. The portions of the Agreement for which
confidential treatment has been requested are marked with X's in brackets and
such confidential portions have been filed separately with the Securities and
Exchange Commission.
[Execution Copy]
LICENSE AGREEMENT
This License Agreement ("Agreement") is made effective as of June 1, 1998
("Effective Date") by and between PHARMACIA & UPJOHN AB, a company organized and
existing under the laws of Sweden, having an address of Lindhagensgatan 133,
SE-11287 Stockholm, Sweden ("P&U"), and IMMUNOGEN, INC., a corporation organized
and existing under the laws of the Commonwealth of Massachusetts, having an
address of 333 Providence Highway, Norwood, MA 02062, USA ("IMMUNOGEN").
IMMUNOGEN and P&U are each hereafter referred to individually as a "Party" and
together as the "Parties".
WHEREAS, the Parties have previously entered into two research agreements
dated as of December 8, 1992 and December 10, 1993 and an Ancillary Supply
Agreement dated as of May 24, 1994;
WHEREAS, P&U is the owner of proprietary rights in technical information,
trade secrets and know-how relating to the monoclonal antibody designated as
C242 ("C242"), including U.S. Patent No. 5,552,293 and the other patents and
patent applications listed on SCHEDULE A attached hereto (the "P&U Patents");
WHEREAS, P&U, jointly with Zeneca Limited, is the owner of proprietary
rights in certain patents and patent applications relating to conjugates between
any monoclonal antibody binding to the same epitope as C242 and any toxin, which
patents and patent applications are listed on SCHEDULE B attached hereto (the
"P&U/ZENECA Patents");
WHEREAS, IMMUNOGEN has rights in proprietary technology relating to
products involving maytansinoid drug ("May") linked to monoclonal antibodies,
and technical information, trade secrets and know-how relating to the foregoing;
WHEREAS, IMMUNOGEN wishes to obtain, and P&U wishes to grant, a license to
such proprietary rights and patents or patent applications owned by P&U or owned
jointly by
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P&U and Zeneca Limited as set forth in Schedules A and B hereto in order to
develop and market a conjugate between C242 and May ("C242-May"); and
WHEREAS, the Parties have executed a Letter Agreement dated March 5, 1998
setting forth the terms of such license, which the Parties have incorporated
into the definitive agreement set forth herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the Parties hereby agree as follows:
1. DEFINITIONS
Whenever used in the Agreement with an initial capital letter, the terms
defined in this Section 1 shall have the meanings specified.
1.1 "AFFILIATE" shall mean any corporation, firm, limited liability
company, partnership or other entity which directly or indirectly controls or is
controlled by or is under common control with a Party to this Agreement.
"Control" means ownership, directly or through one or more Affiliates, of fifty
percent (50%) or more of the shares of stock entitled to vote for the election
of directors, in the case of a corporation, or fifty percent (50%) or more of
the equity interests in the case of any other type of legal entity, status as a
general partner in any partnership, or any other arrangement whereby a Party
controls or has the right to control the Board of Directors or equivalent
governing body of a corporation or other entity.
1.2 "FIELD" shall mean the treatment of human disease.
1.3 "LICENSED PATENT RIGHTS" means the rights and interests in and to those
issued patents and pending patent applications listed on SCHEDULES A AND B
hereto, and shall include, without limitation, all continuations,
continuations-in-part (but only to the extent claims are directed to subject
matter specifically described in the patents and patent applications listed on
SCHEDULES A AND B), divisions and renewals thereof, all letters patent granted
thereon, and all
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reissues, reexaminations, foreign counterparts and extensions thereof, whether
owned solely by P&U or jointly by P&U and Zeneca Limited, now or in the future.
1.4 "LICENSED PRODUCT" shall mean C242-May.
1.5 "NET SALES" shall mean the gross invoiced sales price charged by
IMMUNOGEN or its Affiliates for the sale of Licensed Product in arm's length
sales to unrelated third parties, less the following amounts incurred by
IMMUNOGEN or its Affiliates with respect to such sale of Licensed Product:
(a) trade, cash and quantity discounts or rebates actually allowed or
taken;
(b) credits or allowances given or made for rejection of or return of,
and for uncollectible amounts on, previously sold Licensed Products or
for retroactive price reductions;
(c) charges for insurance, freight, and other transportation costs
directly related to the delivery of Licensed Product;
(d) sales, transfer and other excise taxes and customs duties levied
on the sale or delivery of Licensed Product (including any tax such as
a value added or similar tax or government charge), other than
franchise or income tax of any kind whatsoever.
Net Sales of Licensed Products shall not include sales or transfers between
IMMUNOGEN and its Affiliates, unless the Licensed Product is consumed by the
Affiliate.
1.6 "SUBLICENSEE" shall mean any non-Affiliate third party sublicensed by
IMMUNOGEN under the license granted to IMMUNOGEN hereunder, to develop, make,
have made, use, have used, offer to sell, sell, have sold, lease, import or have
imported any Licensed Product.
1.7 "TERM" shall have the meaning set forth in Section 6.1.
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1.8 "TERRITORY" shall mean the world.
2. LICENSE GRANT
2.1. LICENSE GRANT.
(a) P&U hereby grants to IMMUNOGEN (i) an exclusive license in the
Territory, under the Licensed Patent Rights which are P&U Patents, as listed on
SCHEDULE A hereto, and (ii) a non-exclusive license in the Territory under the
Licensed Patent Rights which are P&U/ZENECA Patents, as listed on SCHEDULE B
hereto, in each case to develop, have developed, make, have made, use, have
used, sell, have sold, offer for sale, lease, import and have imported Licensed
Products useful in the Field. The license granted pursuant to Section 2.1(a)(ii)
above, with respect to any rights of Zeneca Limited in the P&U/ZENECA Patents,
shall be subject to the written approval of Zeneca Limited as indicated below,
and if such approval is not obtained, shall apply only to the rights in the
United States of P&U in and to such P&U/ZENECA Patents.
(b) No rights are granted hereunder to develop or commercialize any
products or processes or to utilize any intellectual property rights of P&U or
Zeneca Limited other than as expressly provided above.
2.2 PROGRESS REPORTS. On or before February 15 of each year, IMMUNOGEN
shall provide a written summary to P&U of progress made in the development and
commercialization of Licensed Product in the previous calendar year.
2.3 EXCHANGE OF SAFETY INFORMATION. Each Party shall promptly advise the
other Party if it becomes aware of any concerns regarding the safety of C242
when administered to humans.
2.4 SUBLICENSES. IMMUNOGEN shall have the right to grant sublicenses to all
or any portion of its rights under any license granted herein to any Affiliate
or Sublicensee, subject to the prior written approval of P&U, in the case of a
sublicense under the P&U Patents, and the prior written approval of P&U and
Zeneca Limited, in the case of a sublicense under the P&U/ZENECA Patents, such
approval to not be unreasonably withheld and to be given within
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thirty (30) days of any request therefor; provided, however, that in any event
IMMUNOGEN shall remain obligated to ensure compliance with the terms of this
Agreement and payment of royalty and milestone obligations as set forth in
Article 3. Any such sublicense will impose obligations, responsibilities and
standards upon the Sublicensee not less than those imposed on IMMUNOGEN by this
Agreement. A copy of this Agreement shall be attached to any such sublicense
agreement.
3. CONSIDERATION
3.1 LICENSE FEES.
IMMUNOGEN shall pay to P&U a license fee of [XXXXXX]. Such amount shall be
due within ninety (90) days of the date of execution of this Agreement.
3.2 MILESTONE PAYMENTS. IMMUNOGEN shall make the following milestone
payments to P&U upon the first achievement of each indicated event:
(a) [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX] within ten (10) days
following the date IMMUNOGEN or an Affiliate or Sublicensee [XXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXX] and
(b) [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX] within ten (10) days
following the date IMMUNOGEN or an Affiliate or Sublicensee [XXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX].
3.3 ROYALTIES. IMMUNOGEN shall pay to P&U a royalty of [XXXXXXXXXXXXXXX] of
Net Sales of Licensed Products sold by IMMUNOGEN or its Affiliates.
3.4 SUBLICENSES. In the event that IMMUNOGEN grants a sublicense to a
Sublicensee under Licensed Patent Rights to commercialize any Licensed Product,
IMMUNOGEN shall pay to P&U [XXXXXXXXXXXXXXX] of any earned royalties received by
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IMMUNOGEN or its Affiliates from such Sublicensee with respect to the sale by
such Sublicensee of Licensed Products.
3.5 COMPETING PRODUCTS. Notwithstanding the foregoing Sections 3.3 and 3.4,
in the event that, in any country where IMMUNOGEN has the right hereunder to use
or sell Licensed Product, a third party commences the sale of a conjugate drug
binding to the same epitope with the same CDR as C242 (a "Competitive Conjugate
Drug"), and (i) P&U does not own or control any patent rights which could be
enforced to prevent such sale; or (ii) if P&U does own or control patent rights
which could be enforced to prevent such sale and P&U has been unsuccessful for a
period of twelve months from the date of notice of any such event from IMMUNOGEN
in preventing any such sale or entering into a license agreement with such third
party, IMMUNOGEN shall thereafter not be obligated to pay further royalties
pursuant to Sections 3.3 or 3.4 hereof on sales of Licensed Product in such
country for so long as any such sales of a Competitive Conjugate Drug in such
country continue.
3.6 PAYMENT TERMS.
(a) Royalty payments shall be made to P&U in United States Dollars on a
quarterly basis within sixty (60) days following the end of each calendar
quarter for which royalties are due. Each royalty payment shall be accompanied
by a report summarizing the total Net Sales and receipt of royalties from
Sublicensees during the relevant three-month period and the calculation of
royalties, if any, due thereon pursuant to this Article 3. Such reports shall
include at least the following information:
(i) total billings for Licensed Products sold by IMMUNOGEN and its
Affiliates;
(ii) allowable deductions hereunder;
(iii) royalties due pursuant to Section 3.4; and
(iv) total royalties due.
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(b) All royalties shall be payable in full in United States Dollars by wire
transfer to a bank designated in writing by P&U, regardless of the countries in
which sales are made. For the purpose of computing Net Sales for which a
currency other than United States Dollars is received, such currency shall be
converted into United States dollars at the exchange rate for buying United
States Dollars set forth in THE WALL STREET JOURNAL for the last business day of
the calendar quarter.
3.7 ROYALTY TERM. IMMUNOGEN shall pay royalties with respect to each
Licensed Product on a country-by-country basis until (i) the expiration of the
last to expire or to be revoked of any Licensed Patent Right covering such
Licensed Product in such country, or (ii) eight (8) years from the first
commercial sale of such Licensed Product in such country, whichever is later.
Following such period, IMMUNOGEN shall have a fully paid-up, irrevocable license
in such country to make, have made, use, have used, sell, have sold, offer for
sale, lease, import and have imported such Licensed Product in such country.
3.8 RECORDS RETENTION. AUDITS. IMMUNOGEN and its Affiliates shall keep for
three (3) years from the date of each payment of royalties complete and accurate
records of sales by IMMUNOGEN and its Affiliates of each Licensed Product and
receipts by IMMUNOGEN or its Affiliates of royalties from Sublicensees in
sufficient detail to allow the accruing royalties hereunder to be determined
accurately. P&U shall have the right for a period of three (3) years after
receiving any report or statement with respect to royalties due and payable to
appoint an independent certified public accountant reasonably acceptable to
IMMUNOGEN, at P&U's expense, to inspect the relevant records of IMMUNOGEN and
its Affiliates to verify such report or statement. IMMUNOGEN and its Affiliates
shall each make its records available for inspection by such independent
certified public accountant during regular business hours at such place or
places where such records are customarily kept, upon reasonable notice from P&U,
solely to verify the accuracy of the reports and payments. Such inspection right
shall not be exercised more than once in any calendar year nor more than once
with respect to sales of any Licensed Product in any given payment period. P&U
agrees to hold in strict confidence all information concerning royalty payments
and reports, and all information learned in the course of any audit or
inspection, except to the extent necessary for P&U to reveal such information in
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order to enforce its rights under this Agreement or if disclosure is required by
law, regulation or judicial order. The results of each inspection, if any, shall
be binding on both Parties.
4. CONFIDENTIAL INFORMATION
4.1 CONFIDENTIAL INFORMATION. During the term of this Agreement, each Party
may disclose to the other proprietary technical and business information
(collectively, "Confidential Information"). Confidential Information of a Party
shall be deemed to include information of any third party confidentially
obtained by such Party from such third party and permitted to be disclosed to
the other Party hereunder. For a period of ten (10) years after the receipt of
any such Confidential Information, the receiving Party shall keep confidential
all such Confidential Information of the other Party and will not disclose such
Confidential Information of the other Party to third parties by publication or
otherwise, except that confidential disclosures made in connection with the
exercise of rights granted hereunder shall be permitted. Each Party further
agrees not to use Confidential Information of the other Party for any purpose
other than exercising any rights granted to it or reserved by it hereunder. Each
Party shall limit the access to the Confidential Information to its employees
who have a need to know such Confidential Information. Each Party will ensure
that employees to whom Confidential Information is disclosed have agreed in
writing to protect the confidential nature of such Confidential Information and
that such agreements are strictly observed.
Notwithstanding the foregoing, it is understood and agreed that the
receiving Party's obligations of confidentiality and non-use herein shall not
apply to any information which:
(a) is, at the time of disclosure by the disclosing Party hereunder,
or thereafter becomes, a part of the public domain, or publicly known
or available, through no fault, act, omission, or negligence of the
receiving Party or any of its Affiliates, provided that Confidential
Information shall not be deemed to have entered the public domain by
reason of its having been filed with any regulatory authority;
(b) was otherwise in the receiving Party's lawful possession prior to
its receipt from the disclosing Party;
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(c) is lawfully disclosed to the receiving Party or any of its
Affiliates on a non-confidential basis by a third party who is not in
violation of an obligation of confidentiality to the disclosing Party
relative to such information; or
(d) is required to be disclosed pursuant to law, provided, however,
that the receiving Party shall give reasonable notice to the
disclosing Party of any such requirement.
Information disclosed other than in written or electronic form shall be
subject to the terms of this Section 4.1 only if confirmed in writing to other
Party within thirty (30) days of initial disclosure and specifying with
particularity that Confidential Information disclosed other than in written form
which is subject to the provisions of this Section 4.1.
5. PROVISIONS CONCERNING THE PROSECUTION AND
MAINTENANCE OF PATENT RIGHTS
5.1 PATENT PROSECUTION AND MAINTENANCE.
(a) During the Term of this Agreement, P&U shall prosecute, obtain and
maintain the Licensed Patent Rights listed on SCHEDULE A hereto at its sole
expense. P&U agrees that any such prosecution and maintenance shall be conducted
with reasonable diligence.
(b) In the event that P&U desires to discontinue the prosecution or
maintenance of any Licensed Patent Right(s), P&U shall be permitted to elect to
do so provided that it gives at least sixty (60) days prior notice of any such
intention to IMMUNOGEN. Such notice shall specifically identify the patent
application(s) and/or patent(s) for which P&U wishes to make such election.
Following the receipt of such notice, IMMUNOGEN shall have the right to
prosecute, obtain and maintain the patent application(s) and patent(s)
identified in the notice, at its sole expense and for its sole benefit, and upon
any such assumption of responsibility by IMMUNOGEN, such Licensed Patent
Right(s) shall be removed from operation of this Agreement.
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(c) The Parties shall mutually agree before permitting any patent
application or patent within Licensed Patent Rights licensed hereunder to lapse
as well as before authorizing any amendment to any patent application or patent
within such Licensed Patent Rights that would irrevocably limit the lawful scope
of the Licensed Patent Rights as they pertain to the subject matter of this
Agreement.
5.2 NOTICE OF INFRINGEMENT. If, during the Term of this Agreement, either
Party learns of any infringement or threatened infringement by a third party of
the patents within Licensed Patent Rights in the Field, such Party shall
promptly notify the other Party and shall provide such other Party with
available evidence of such infringement. The Parties shall consult to determine
the course of action, if any, to be taken in such circumstances.
5.3 INFRINGEMENT. P&U shall have the right (but not the obligation), at its
own expense, to bring suit against any actual or suspected infringement of the
Licensed Patent Rights and to retain any recovery therefrom. If P&U declines to
take action against any such actual or suspected infringement, then P&U may
authorize IMMUNOGEN to take such action at its own expense and to keep any
damages which might be awarded, such authorization to not be unreasonably
withheld.
5.4 COOPERATION. Each Party shall execute all papers and perform such other
acts as may be reasonably required to maintain any infringement suit brought in
accordance with Section 5.3 above (including giving legal consent for bringing
such suit, and agreeing to be named as a plaintiff or otherwise joined in such
suit) at the expense of the Party bringing suit, and at its option and expense,
may be represented in such suit by counsel of its choice.
6. TERM AND TERMINATION
6.1. TERMINATION PROVISIONS.
(a) This Agreement and the licenses granted herein may be terminated by P&U
upon any breach by IMMUNOGEN of any material obligation or condition, effective
fifteen (15) days after giving written notice to IMMUNOGEN of such termination
in the case of a payment breach and sixty (60) days after giving written notice
to IMMUNOGEN of such termination in the case
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of any other breach, which notice shall describe such breach in reasonable
detail. The foregoing notwithstanding, if the default or breach is cured or
shown to be non-existent within the aforesaid fifteen (15) or sixty (60) day
period, the notice shall be deemed automatically withdrawn and of no effect.
(b) If either Party files for protection under bankruptcy laws, makes an
assignment for the benefit of creditors, appoints or suffers appointment of a
receiver or trustee over its property, files a petition under any bankruptcy or
insolvency act or has any such petition filed against it which is not discharged
within sixty (60) days of the filing thereof, then the other party may terminate
this Agreement by notice to such Party.
6.2 EFFECT OF TERMINATION.
(a) Upon termination of this Agreement under Section 6.1, IMMUNOGEN shall
cease sales of Licensed Products and all rights included in the relevant
licenses granted by P&U to IMMUNOGEN hereunder shall immediately and
automatically revert to P&U; provided, however, that IMMUNOGEN, with the consent
of P&U, shall be entitled to complete the manufacture of any Licensed Product
then in progress and to sell any such completed Licensed Product, along with any
Licensed Product then in inventory, subject to payment of royalties pursuant to
Article 3. Without limiting the generality of the foregoing, all relevant
licenses and sublicenses granted by P&U to IMMUNOGEN hereunder shall terminate
automatically and IMMUNOGEN shall promptly transfer to P&U all related
documents, materials and records in its possession without retaining any copies
thereof.
(b) IMMUNOGEN shall have no obligation to make any milestone or royalty
payment to P&U that has not accrued prior to the effective date of such
termination, but shall remain liable for all obligations accruing prior to
termination, and all obligations relating to sales of inventory as provided in
Section 6.2(a) above.
6.3 TERMINATION BY IMMUNOGEN. IMMUNOGEN may terminate this Agreement, and
the rights and obligations hereunder in its sole discretion at any time by
giving written notice thereof to P&U. Such termination shall be effective ninety
(90) days following the
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date such notice is received by P&U and shall have all consequences as set forth
in Section 6.2 above as if this Agreement had been terminated pursuant to
Section 6.1(a).
6.4 TERMINATION BY P&U. In the event that any third party entity which is
reasonably and in good faith considered by P&U as a major competitor to P&U in
the oncology field becomes the record and beneficial owner of more than fifty
(50) percent of the voting stock of IMMUNOGEN (a "Change of Control"), P&U may,
by written notice to IMMUNOGEN, terminate any license and rights granted under
this Agreement but only to the extent that such rights and licenses have not
been further sublicensed by IMMUNOGEN to an approved Sublicensee in accordance
with the provisions of Section 2.4. Any such termination shall be effective
thirty (30) days after receipt of any such notice. In the event of any such
Change of Control, each approved Sublicensee shall, as a condition of the
survival of its sublicense rights, be required to enter into a written agreement
with P&U pursuant to which it agrees to perform directly any obligation that
IMMUNOGEN is obligated to perform hereunder with respect to its sublicense,
including without limitation, (i) the making of any milestone payment due under
Section 3.2 as a result of such Sublicensee's activities, (ii) the payment to
P&U of 10% of any earned royalties due to IMMUNOGEN or its affiliate from such
Sublicensee, which sum shall in no event be less than 1% of such Sublicensee's
Net Sales of Licensed Product, and (iii) the indemnification of P&U with respect
to the actions of such Sublicensee in accordance with Section 7.5.
Notwithstanding the foregoing, in no event shall P&U be required to assume any
additional obligations to those set forth herein pursuant to any such written
agreement with a Sublicensee.
6.5 REMEDIES. If either Party shall fail to perform or observe or otherwise
breaches any of its material obligations under this Agreement, in addition to
any right to terminate this Agreement, the non-defaulting Party may elect to
obtain other relief and remedies available under law.
6.6 SURVIVING PROVISIONS. Notwithstanding any provision herein to the
contrary, the rights and obligations set forth in Articles 3 and 4, and Sections
5.4, 6.2, 6.5, 6.6, 7.3, 7.4, 7.5, 7.6 and 7.18 hereof shall survive the
expiration or termination of the Term of this Agreement.
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7. MISCELLANEOUS
7.1 P&U REPRESENTATIONS. P&U represents and warrants that: (a) the
execution and delivery of this Agreement and the performance of the transactions
contemplated hereby have been duly authorized by the appropriate P&U management;
(b) P&U is under no obligation which is inconsistent with this Agreement; and
(c) P&U has the full right and legal capacity to grant the rights to IMMUNOGEN
pursuant to Article 2 above, subject to the consent referenced therein, without
violating the rights of any third party.
7.2 IMMUNOGEN REPRESENTATIONS. IMMUNOGEN represents and warrants that: (a)
the execution and delivery of this Agreement and the performance of the
transactions contemplated hereby have been duly authorized by all appropriate
IMMUNOGEN corporate action; and (b) IMMUNOGEN is under no obligation which is
inconsistent with this Agreement.
7.3 NO WARRANTIES. Nothing in this Agreement is or shall be construed as:
(i) a warranty or representation by P&U as to the validity
or scope of any application or patent within the Licensed Patent
Rights;
(ii) a warranty or representation that anything made, used,
sold or otherwise disposed of under any license granted in this
Agreement is or will be free from infringement of patents,
copyrights, and other rights of third parties.
7.4 LIABILITY. NOTWITHSTANDING ANYTHING ELSE IN THIS AGREEMENT OR
OTHERWISE, NEITHER PARTY WILL BE LIABLE WITH RESPECT TO ANY SUBJECT MATTER OF
THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL
OR EQUITABLE THEORY FOR (I) ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE
DAMAGES OR LOST PROFITS OR (II) COST OF PROCUREMENT OF SUBSTITUTE GOODS,
TECHNOLOGY OR SERVICES.
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7.5 INDEMNIFICATION.
(a) IMMUNOGEN shall indemnify, defend and hold harmless P&U, Zeneca
Limited, their Affiliates and their respective directors, officers, employees,
and agents and their respective successors, heirs and assigns (the "Licensor
Indemnitees"), against any liability, damage, loss or expense (including
reasonable attorneys' fees and expenses of litigation) incurred by or imposed
upon the Licensor Indemnitees, or any of them, in connection with any claims,
suits, actions, demands or judgments of third parties, including without
limitation personal injury and product liability matters (except in cases where
such claims, suits, actions, demands or judgments result from a willful material
breach of this Agreement, gross negligence or willful misconduct on the part of
P&U or Zeneca Limited) arising out of or relating to any actions of IMMUNOGEN or
any Affiliate, sublicensee, distributor or agent of IMMUNOGEN under this
Agreement.
(b) The Licensor Indemnitees shall promptly notify IMMUNOGEN of any action
or claim for which they are to be indemnified hereunder and IMMUNOGEN shall have
the sole right to defend, settle or compromise any such action or claim at
IMMUNOGEN's sole cost and expense.
7.6 NOTICES. Any notices, requests, deliveries, approvals or consents
required or permitted to be given under this Agreement to IMMUNOGEN or P&U shall
be in writing and shall be personally delivered or sent by telecopy (with
written confirmation to follow via first class mail), overnight courier
providing evidence of receipt or certified mail, return receipt requested,
postage prepaid, in each case to the respective address specified below (or to
such address as may be specified in writing to the other Party hereto):
P&U: Pharmacia & Upjohn AB
Lindhagensgatan 133
SE - 11287 Stockholm
SWEDEN
Attn: Head of the Legal Department
Telecopy: _______________
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with a copy to: Pharmacia & Upjohn S.p.A.
Via Robert Koch, 1.2
20152 Milano
ITALY
Attn: Head of the Legal Department
Telecopy: 39-2-4838-2225
IMMUNOGEN: ImmunoGen, Inc.
333 Providence Highway
Norwood, MA 02062
USA
Attn: Chief Executive Officer
Telecopy: (781) 255-9679
with a copy to: Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
One Financial Center
Boston, MA 02111
USA
Attn: Jeffrey M. Wiesen, Esq.
Telecopy: (617) 542-2241
Such notices shall be deemed to have been sufficiently given on: (a) the
date sent if delivered in person or transmitted by telecopy, (b) the next
business day after dispatch in the case of overnight courier or (c) five (5)
business days after deposit in the U.S. mail in the case of certified mail.
7.7 GOVERNING LAW. This Agreement will be construed, interpreted and
applied in accordance with the substantive laws of Sweden.
7.8 LIMITATIONS. Except as set forth elsewhere in this Agreement, neither
Party grants to the other Party any right or license to any of its intellectual
property.
7.9 ENTIRE AGREEMENT. This is the entire Agreement between the Parties with
respect to the subject matter herein. No modification shall be effective unless
in writing and signed by the Parties.
7.10 WAIVER. The terms or conditions of this Agreement may be waived only
by a written instrument executed by the Party waiving compliance. The failure of
either Party at any
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time or times to require performance of any provision hereof shall in no manner
affect its rights at a later time to enforce the same. No waiver by either Party
of any condition or term shall be deemed as a continuing waiver of such
condition or term or of another condition or term.
7.11 HEADINGS. Section and subsection headings are inserted for convenience
of reference only and do not form part of this Agreement.
7.12 ASSIGNMENT. This Agreement may not be assigned by either Party without
the consent of the other, which consent shall not be unreasonably withheld,
except that P&U may, without such consent, assign or transfer this Agreement and
the rights, obligations and interests of P&U hereunder, in whole or in part, to
any successor or affiliated organization or company.
7.13 FURTHER ASSURANCES. Each Party agrees to execute, acknowledge and
deliver such further instructions, and to do all such other acts, as may be
necessary or appropriate in order to carry our the purposes and intent of this
Agreement.
7.14 FORCE MAJEURE. Neither Party shall be liable for failure of or delay
in performing obligations set forth in this Agreement, and neither shall be
deemed in breach of its obligations, if such failure or delay is due to natural
disasters or any causes beyond the reasonable control of such Party. In event of
such force majeure, the Party affected thereby shall use reasonable efforts to
cure or overcome the same and resume performance of its obligations hereunder.
7.15 CONSTRUCTION. The Parties hereto acknowledge and agree that: (i) each
Party and its counsel reviewed and negotiated the terms and provisions of this
Agreement and have contributed to its revision; (ii) the rule of construction to
the effect that any ambiguities are resolved against the drafting Party shall
not be employed in the interpretation of this Agreement; and (iii) the terms and
provisions of this Agreement shall be construed fairly as to all Parties hereto
and not in a favor of or against any Party, regardless of which Party was
generally responsible for the preparation of this Agreement.
7.16 SEVERABILITY. If any provision(s) of this Agreement are or become
invalid, are ruled illegal by any court of competent jurisdiction or are deemed
unenforceable under then current applicable law from time to time in effect
during the Term hereof, it is the intention of
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<PAGE> 17
the Parties that the remainder of this Agreement shall not be affected thereby
provided that a Party's rights under this Agreement are not materially affected.
The Parties hereto covenant and agree to renegotiate any such term, covenant or
application thereof in good faith in order to provide a reasonably acceptable
alternative to the term, covenant or condition of this Agreement or the
application thereof that is invalid, illegal or unenforceable, it being the
intent of the Parties that the basic purposes of this Agreement are to be
effectuated.
7.17 STATUS. Nothing in this Agreement is intended or shall be deemed to
constitute a partner, agency, employer-employee, or joint venture relationship
between the Parties.
7.18 ARBITRATION. In the event of any dispute, difference or question
arising between the parties in connection with this Agreement, the construction
hereof, or the rights, duties or liabilities of either party hereunder, then
such dispute shall be resolved by binding arbitration in accordance with the
Rules of Conciliation and Arbitration of the International Chamber of Commerce.
The arbitration panel shall be composed of three arbitrators, appointed in
accordance with such Rules. The decision of the arbitrators shall be by majority
vote and, at the request of either party, the arbitrators shall issue a written
opinion of findings of fact and conclusions of law. Costs shall be borne as
determined by the arbitrators. Unless the parties to the arbitration shall
otherwise agree to a place of arbitration, the place of arbitration shall be at
Stockholm, Sweden. The arbitration award shall be final and binding upon the
parties to such arbitration and may be entered in any court having jurisdiction.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
by their duly authorized representative in two (2) originals.
IMMUNOGEN, INC. PHARMACIA & UPJOHN AB
By: /s/ Mitchel Sayare By: /s/ Fredrik Berg/H. Sievertsson
------------------------------- ------------------------------------
Title: CEO Title: /s/ VP, Legal Affairs VP, GLOBAL
---------------------------- BUSINESS DEV.
---------------------------------
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<PAGE> 18
JOINDER OF ZENECA LIMITED
Zeneca Limited hereby consents to the grant of the license under the
P&U/ZENECA Patents to IMMUNOGEN as set forth in Section 2.1(a) hereof and joins
in such grant. Except as set forth in the previous sentence and in Sections
2.1(b), 2.4, and 7.5 hereof, Zeneca Limited has no rights or obligations under
this Agreement.
ZENECA LIMITED
By: _________________________________
Title: ______________________________
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<PAGE> 19
SCHEDULE A
LICENSED PATENT RIGHTS
P&U PATENTS
-----------
- --------------------------------------------------------------------------------
COUNTRY APPLICATION NO. APPLICATION PUBLICATION PATENT EXPIRY STATUS
NO. DATE NO. NO. DATE
- --------------------------------------------------------------------------------
AU 19425/92 1992-07-03 658198 2012 A
- --------------------------------------------------------------------------------
BY 964 1992-07-03 I
- --------------------------------------------------------------------------------
CA 2073124-9 1992-07-03 A
- --------------------------------------------------------------------------------
EE P9400328 1994-11-16 03031 2014 A
- --------------------------------------------------------------------------------
EP 92850166.7 1992-07-03 0521842 A
- --------------------------------------------------------------------------------
FI 935970 1993-12-31 A
- --------------------------------------------------------------------------------
HU P9400011 1994-01-03 A
- --------------------------------------------------------------------------------
HU P/P00289 1995-06-20 211512 2012 A
- --------------------------------------------------------------------------------
IE 922188 1992-07-03 A
- --------------------------------------------------------------------------------
IL 102390 1992-07-02 P/102390 2012 A
- --------------------------------------------------------------------------------
JP 175848/92 1992-07-03 276987/1993 A
- --------------------------------------------------------------------------------
KR 93-704117 1992-07-02 A
- --------------------------------------------------------------------------------
KZ 933270.1 1992-07-03 WO93/01303 I
- --------------------------------------------------------------------------------
NO P934777 1993-12-22 A
- --------------------------------------------------------------------------------
NZ 243435 1992-07-03 243435 2012 A
- --------------------------------------------------------------------------------
RU 93058456 1992-07-03 I
- --------------------------------------------------------------------------------
UA 93004422 1992-07-03 I
- --------------------------------------------------------------------------------
US 906350 1992-07-02 I
- --------------------------------------------------------------------------------
US 438123 1995-05-08 5552293 2013 A
- --------------------------------------------------------------------------------
A = active
I = inactive
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<PAGE> 20
SCHEDULE B
LICENSED PATENT RIGHTS
P&U /ZENECA PATENTS
-------------------
- --------------------------------------------------------------------------------
COUNTRY APPLICATION APPLICATION PUBLICATION STATUS
NUMBER DATE NUMBER
- --------------------------------------------------------------------------------
Australia 19430/92 1992-07-03 Active - Granted
- --------------------------------------------------------------------------------
Canada 2073113-3 1992-07-03 Active
- --------------------------------------------------------------------------------
Europe 92306149.3 1992-07-03 0528527 Active
- --------------------------------------------------------------------------------
Finland 923085 1992-07-03 Active
- --------------------------------------------------------------------------------
Ireland 922190 1992-07-03 Active
- --------------------------------------------------------------------------------
Israel 102399 1992-07-03 Active
- --------------------------------------------------------------------------------
Japan 177212/92 1992-07-03 Active
- --------------------------------------------------------------------------------
South Korea 11913/92 1992-07-03 Active
- --------------------------------------------------------------------------------
Mexico 923891 1992-07-03 Active
- --------------------------------------------------------------------------------
Norway 922383 1992-06-17 Active
- --------------------------------------------------------------------------------
New Zealand 243437 1992-07-03 Active - Granted
- --------------------------------------------------------------------------------
Taiwan 81107395 1992-07-02 Active
- --------------------------------------------------------------------------------
U.S.A. 908269 1992-07-02 Active
- --------------------------------------------------------------------------------
U.S.A 406801 1995-03-20 Active
- --------------------------------------------------------------------------------
Hungary P9202219 1992-07-03 Active
- --------------------------------------------------------------------------------
Malaysia P19201220 1992-07-01 Active
- --------------------------------------------------------------------------------
Portugal 100660 1992-07-03 Active
- --------------------------------------------------------------------------------
Zimbabwe 101/92 1992-07-03 Active - Granted
- --------------------------------------------------------------------------------
South Africa 92/4973 1992-07-03 Active - Granted
- --------------------------------------------------------------------------------
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<PAGE> 1
EXHIBIT 21
IMMUNOGEN, INC.
SUBSIDIARIES OF THE REGISTRANT
ImmunoGen Securities Corp
Apoptosis Technology, Inc.
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statements of ImmunoGen, Inc. on Forms S-3 (File Nos. 333-2441, 333-15819,
333-22153, 333-31795, 333-07661 and 333-48385) and on Forms S-8 (File Nos.
33-41534 and 33-73544) of our report, which includes an explanatory paragraph
concerning uncertainties surrounding the Company's ability to continue as a
going concern, dated July 29, 1998, on our audit of the consolidated financial
statements of ImmunoGen, Inc. as of June 30, 1998 and 1997, and for each of the
three years in the period ended June 30, 1998, and to the inclusion of the
report in this Annual Report on Form 10-K.
PricewaterhouseCoopers LLP
Boston, Massachusetts
September 28, 1998
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<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUN-30-1998
<PERIOD-END> JUN-30-1998
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<SECURITIES> 0
<RECEIVABLES> 0
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2,463,133
<COMMON> 150,573,659
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