<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-17999
ImmunoGen, Inc.
(Exact name of registrant as specified in its charter)
Massachusetts 04-2726691
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
333 Providence Highway
Norwood, MA 02062
(Address of principal executive offices, including zip code)
(781) 769-4242
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [x] No [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
At May 12, 1998 there were 25,359,750 shares of common stock, par value
$.01 per share, of the registrant outstanding.
Exhibit Index at Page: 24
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IMMUNOGEN, INC.
TABLE OF CONTENTS
Page
PART I - FINANCIAL INFORMATION
Item 1 Financial Statements
Consolidated Balance Sheets as of
June 30, 1997 and March 31, 1998....................... 3
Consolidated Statements of Operations
for the three months and nine months ended
March 31, 1997 and 1998................................ 4
Consolidated Statements of Stockholders'
Equity for the year ended June 30, 1997 and
the nine months ended March 31, 1998................... 5
Consolidated Statements of Cash Flows
for the nine months ended March 31,
1997 and 1998.......................................... 6
Notes to Consolidated Financial Statements............. 7
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations.......... 12
PART II - OTHER INFORMATION
Item 2 Changes in Securities.................................. 20
Item 6 Exhibits and Reports on Form 8-K....................... 21
Signatures............................................................... 23
2
<PAGE> 3
IMMUNOGEN, INC.
CONSOLIDATED BALANCE SHEETS
As of June 30, 1997 and March 31, 1998
<TABLE>
<CAPTION>
June 30, March 31,
------------- --------------
1997 1998
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 1,669,050 $ 2,270,966
Due from related party -- 843,000
Prepaids and other current assets 578,497 654,405
------------- -------------
Total current assets 2,247,547 3,768,371
------------- -------------
Property and equipment, net of accumulated
depreciation 2,929,733 2,044,780
Note receivable 1,128,910 596,474
Other assets 43,700 43,700
------------- -------------
Total assets $ 6,349,890 $ 6,453,325
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable 612,559 560,520
Accrued compensation 248,472 145,502
Other current accrued liabilities 841,238 537,909
Current portion of capital lease obligations 37,068 --
Current portion of deferred lease 89,160 52,756
------------- -------------
Total current liabilities 1,828,497 1,296,687
------------- -------------
Deferred lease 59,436 48,364
Minority interest in consolidated subsidiary -- 26,080
Commitments
Stockholders' equity:
Preferred stock; $.01 par value; authorized 5,000,000
shares as of June 30, 1997 and March 31, 1998
Convertible preferred stock, Series A, $.01 par value; issued
and outstanding 1,100 as of June 30, 1997 11 --
(liquidation preference - stated value plus accrued but unpaid
dividends per share)
Convertible preferred stock, Series C, $.01 par value; issued
and outstanding 700 shares as of June 30, 1997 7 --
(liquidation preference - stated value plus accrued but unpaid dividends per share)
Convertible preferred stock, Series D, $.01 par value; issued
and outstanding 1,000 shares as of June 30, 1997 10 --
(liquidation preference - stated value plus accrued but unpaid dividends per share)
Convertible preferred stock, Series E, $.01 par value; issued and outstanding 1,200
shares as of March 31, 1998 -- 12
Common stock; $.01 par value; authorized
30,000,000 shares and 50,000,000 shares as of June 30, 1997 and March 31, 1998,
respectively; issued and outstanding 21,779,767 shares and 25,359,750 shares
as of June 30, 1997 and March 31, 1998, respectively 217,797 253,597
Additional paid-in capital 144,753,538 151,924,297
------------- -------------
144,971,363 152,177,906
Accumulated deficit (140,509,406) (147,095,712)
------------- -------------
Total stockholders' equity 4,461,957 5,082,194
------------- -------------
Total liabilities and stockholders' equity $ 6,349,890 $ 6,453,325
============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 4
IMMUNOGEN, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months and nine months ended March 31, 1997 and 1998
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
1997 1998 1997 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Development fees $ 64,487 $ 110,000 $ 217,719 $ 227,000
Interest 60,999 76,570 156,302 177,033
Licensing 4,573 502 11,145 2,041
Other -- 8,059 -- 10,959
------------ ------------ ------------ ------------
Total revenues 130,059 195,131 385,166 417,033
------------ ------------ ------------ ------------
Expenses:
Research and development 1,842,053 1,395,879 5,819,874 4,298,952
General and administrative 625,997 367,632 1,611,841 1,326,356
Purchase of incomplete research and
development technology -- 871,930 -- 871,930
Interest 3,513 666 76,237 3,635
------------ ------------ ------------ ------------
Total expenses 2,471,563 2,636,107 7,507,952 6,500,873
------------ ------------ ------------ ------------
Loss before income taxes and minority interest (2,341,504) (2,440,976) (7,122,786) (6,083,840)
Income tax expense 200 1,011 888 2,337
------------ ------------ ------------ ------------
Net loss before minority interest (2,341,704) (2,441,987) (7,123,674) (6,086,177)
------------ ------------ ------------ ------------
Minority interest in net loss of consolidated subsidiary -- 40,463 -- 105,350
------------ ------------ ------------ ------------
Net loss (2,341,704) (2,401,524) (7,123,674) (5,980,827)
------------ ------------ ------------ ------------
Dividends on convertible preferred stock 1,829,226 193,599 3,000,985 605,479
------------ ------------ ------------ ------------
Net loss to common shareholders $ (4,170,930) $ (2,595,123) $(10,124,659) $ (6,586,306)
============ ============ ============ ============
Basic and diluted loss per common share $ (0.23) $ (0.10) $ (0.58) (0.28)
============ ============ ============ ============
Shares used in computing basic and diluted loss
per share amounts 18,068,402 24,938,749 17,309,973 23,826,759
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 5
IMMUNOGEN, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the year ended June 30,1997 and the nine months ended March 31, 1998
<TABLE>
<CAPTION>
Common Stock
-----------------------------------
Additional
Paid-in
Shares Amount Capital
---------- -------- -------------
<S> <C> <C> <C>
Balance at June 30, 1996 16,599,855 $165,999 $ 128,525,884
========== ======== =============
Stock options exercised 54,644 545 87,310
Issuance of Common Stock 41,481 415 69,585
Conversion of Convertible Debentures
into Common Stock 351,662 3,517 1,315,217
Exchange of Convertible Debentures for
Series A Convertible Preferred stock -- -- --
Issuance of Series B Convertible Preferred Stock
Issuance of Series C Convertible Preferred Stock -- -- --
Issuance of Series D Convertible Preferred Stock -- -- --
Conversion of Series A Convertible Preferred Stock into Common Stock 1,328,744 13,287 2,766,405
Conversion of Series B Convertible Preferred Stock into Common Stock 1,384,823 13,848 3,539,221
Conversion of Series C Convertible Preferred Stock into Common Stock 2,018,558 20,186 2,956,928
Compensation for put right -- -- --
Non-cash dividends on Convertible Preferred Stock -- -- --
Net loss for the year ended June 30, 1997 -- -- --
---------- -------- -------------
Balance at June 30, 1997 21,779,767 $217,797 $ 139,260,550
========== ======== =============
Stock options exercised 54,500 545 48,505
Issuance of Common Stock in exchange for shares of subsidiary 475,425 4,754 867,176
Conversion of Series A Convertible Preferred Stock into Common Stock 1,347,491 13,475 2,209,764
Conversion of Series C Convertible Preferred Stock into Common Stock 701,180 7,012 1,126,815
Conversion of Series D Convertible Preferred Stock into Common Stock 1,001,387 10,014 1,303,287
Issuance of Series E Convertible Preferred Stock, net of financing costs -- -- --
Value of Common Stock purchase warrants issued -- -- 580,056
Value ascribed to ImmunoGen Warrants issued to BioChem, net of financing costs -- -- 4,065,023
Non-cash dividends on Convertible Preferred Stock -- -- --
Net loss for the nine months ended March 31, 1998 -- -- --
---------- -------- -------------
Balance at March 31, 1998 25,359,750 $253,597 $ 149,461,176
========== ======== =============
</TABLE>
<TABLE>
<CAPTION>
Preferred Stock
---------------------------------------
Additional
Paid-in
Shares Amount Capital
------ -------- -----------
<S> <C> <C> <C>
Balance at June 30, 1996 -- $-- $ --
------ ---- -----------
Stock options exercised -- -- --
Issuance of Common Stock -- -- --
Conversion of Convertible Debentures
into Common Stock -- -- --
Exchange of Convertible Debentures for
Series A Convertible Preferred stock 2,500 25 4,749,586
Issuance of Series B Convertible Preferred Stock 3,000 30 3,486,342
Issuance of Series C Convertible Preferred Stock 3,000 30 4,720,003
Issuance of Series D Convertible Preferred Stock 1,000 10 1,287,092
Conversion of Series A Convertible Preferred Stock into Common Stock (1,400) (14) (2,659,763)
Conversion of Series B Convertible Preferred Stock into Common Stock (3,000) (30) (3,486,342)
Conversion of Series C Convertible Preferred Stock into Common Stock (2,300) (23) (2,910,669)
Compensation for put right -- -- 306,739
Non-cash dividends on Convertible Preferred Stock -- -- --
Net loss for the year ended June 30, 1997 -- -- --
------ ---- -----------
Balance at June 30, 1997 2,800 $ 28 $ 5,492,988
====== ==== ===========
Stock options exercised -- -- --
Issuance of Common Stock in exchange for shares of subsidiary -- -- --
Conversion of Series A Convertible Preferred Stock into Common Stock (1,100) (11) (2,089,817)
Conversion of Series C Convertible Preferred Stock into Common Stock (700) (7) (1,101,334)
Conversion of Series D Convertible Preferred Stock into Common Stock (1,000) (10) (1,287,092)
Issuance of Series E Convertible Preferred Stock, net of financing costs 1,200 12 1,448,376
Value of Common Stock purchase warrants issued -- -- --
Value ascribed to ImmunoGen Warrants issued to BioChem, net of financing costs -- -- --
Non-cash dividends on Convertible Preferred Stock -- -- --
Net loss for the nine months ended March 31, 1998 -- -- --
------ ---- -----------
Balance at March 31, 1998 1,200 $ 12 $ 2,463,121
====== ==== ===========
</TABLE>
<TABLE>
<CAPTION>
Total
Accumulated Stockholders'
Deficit Equity
------------- -----------
<S> <C> <C>
Balance at June 30, 1996 $(127,914,500) $ 777,383
------------- -----------
Stock options exercised -- 87,855
Issuance of Common Stock -- 70,000
Conversion of Convertible Debentures
into Common Stock -- 1,318,734
Exchange of Convertible Debentures for
Series A Convertible Preferred stock -- 4,749,611
Issuance of Series B Convertible Preferred Stock -- 3,486,372
Issuance of Series C Convertible Preferred Stock -- 4,720,033
Issuance of Series D Convertible Preferred Stock -- 1,287,102
Conversion of Series A Convertible Preferred Stock into Common Stock -- 119,915
Conversion of Series B Convertible Preferred Stock into Common Stock -- 66,697
Conversion of Series C Convertible Preferred Stock into Common Stock -- 66,422
Compensation for put right -- 306,739
Non-cash 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 $(140,509,406) $ 4,461,957
============= ===========
Stock options exercised -- 49,050
Issuance of Common Stock in exchange for shares of subsidiary -- 871,930
Conversion of Series A Convertible Preferred Stock into Common Stock -- 133,411
Conversion of Series C Convertible Preferred Stock into Common Stock -- 32,486
Conversion of Series D Convertible Preferred Stock into Common Stock -- 26,199
Issuance of Series E Convertible Preferred Stock, net of financing costs -- 1,448,388
Value of Common Stock purchase warrants issued -- 580,056
Value ascribed to ImmunoGen Warrants issued to BioChem, net of financing costs -- 4,065,023
Non-cash dividends on Convertible Preferred Stock (605,479) (605,479)
Net loss for the nine months ended March 31, 1998 (5,980,827) (5,980,827)
------------- -----------
Balance at March 31, 1998 $(147,095,712) $ 5,082,194
============= ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 6
IMMUNOGEN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS For the nine months ended March 31, 1997
and 1998
<TABLE>
<CAPTION>
March 31,
-------------------------------
1997 1998
------------ ----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(10,124,659) $(6,586,306)
Adjustments to reconcile net loss to net
cash used for operating activities:
Depreciation and amortization 1,149,737 873,712
Purchase of incomplete research and
development technology -- 871,930
Gain on sale of property and equipment -- (10,959)
Loss on sale of property and equipment 2,934 --
Other 5,790 --
Accretion of interest on note receivable (89,014) (77,564)
Non-cash dividend on convertible preferred stock 3,000,985 605,479
Minority interest in net loss of consolidated subsidiary -- (105,350)
Amortization of deferred lease (44,579) (47,476)
Changes in operating assets and liabilities:
Other current assets 1,740 204,092
Accounts payable (25,361) (52,039)
Accrued compensation (56,855) (102,970)
Other accrued liabilities (95,019) (136,656)
------------ ----------
Net cash used for operating activities (6,274,301) (4,564,107)
------------ ----------
Cash flows from investing activities:
Proceeds from sale of property and equipment 17,183 22,200
Payment received on note receivable -- 330,000
Purchase of property and equipment (4,458) --
------------ ----------
Net cash provided by
investing activities 12,725 352,200
------------ ----------
Cash flows from financing activities:
Proceeds from issuance of ATI convertible preferred stock -- 3,538,000
Proceeds from convertible preferred stock 5,990,000 1,500,000
Stock issuances, net 87,855 49,050
Principal payments on capital lease obligations (105,152) (37,068)
Financing costs (38,488) (236,159)
------------ ----------
Net cash provided by
financing activities 5,934,215 4,813,823
------------ ----------
Net change in cash and cash equivalents (327,361) 601,916
------------ ----------
Cash and cash equivalents, beginning balance 2,796,636 1,669,050
------------ ----------
Cash and cash equivalents, ending balance $ 2,469,275 $2,270,966
============ ==========
Supplemental disclosure of cash flow information:
Cash paid for interest $ 8,582 $ 3,635
============ ==========
Cash paid for income taxes $ 1,197 $ 2,279
============ ==========
Supplemental disclosure of non-cash financing activities:
Conversion of convertible debentures including accrued interest $ 1,318,734 $ --
------------ ----------
Conversion of convertible debentures to preferred stock $ 2,500,000 $ --
------------ ----------
Deferred lease of leasehold improvements $ 215,465 $ --
------------ ----------
Conversion of Series A Preferred Stock to Common Stock $ -- $2,089,828
------------ ----------
Conversion of Series C Preferred Stock to Common Stock $ -- $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
------------ ----------
Minority interest $ -- $ 131,430
------------ ----------
Issuance of Common Stock in exchange for shares of subsidiary $ -- $ 871,930
------------ ----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE> 7
IMMUNOGEN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. In the opinion of management, the accompanying financial statements include
all adjustments, consisting of only normal recurring accruals, necessary to
present fairly the consolidated financial position, results of operations and
cash flows of ImmunoGen, Inc. (the "Company"), which include those of its
wholly-owned subsidiary, ImmunoGen Securities Corp., and its 96.5%-owned
subsidiary, Apoptosis Technology, Inc. ("ATI"). The financial disclosures herein
should be read in conjunction with the Company's Annual Report on Form 10-K for
the year ended June 30, 1997.
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. From June 30, 1997 to March 31, 1998,
the Company raised capital from the following sources: $4.381 million received
or receivable by ATI from its collaborator, BioChem Pharma Inc., a Canadian
biopharmaceutical company ("BioChem") (see footnote D); $375,000 received in
October 1997 under a $750,000 grant from the Small Business Innovation Research
Program of the National Cancer Institute to advance development over a two-year
period of the Company's lead product candidate, huC242-DM1; and $1.5 million
received from the sale of the Company's Series E Convertible Preferred Stock to
an institutional investor in a $3.0 million transaction expected to be completed
in one additional installment of $1.5 million on or before July 31, 1998 (see
footnote E). The Company's cash resources remaining at March 31, 1998 were
approximately $2.3 million, and an additional $843,000 was received in April
1998 by ATI from Biochem. The Company anticipates that these existing capital
resources, coupled with the sale of the remaining Series E Stock, will enable
the Company to maintain its current and planned operations through at least
October 1998. The Company also continues its stringent cost control efforts.
The Company continues actively to seek additional capital by pursuing one or
more financing transactions and/or strategic partnering arrangements. While the
Company expects to consummate a financing transaction in the near term, no
assurance can be given that such financing will be available to the Company on
acceptable terms, if at all. If the Company is unable to obtain financing on
acceptable terms in order to maintain operations, it could be forced to further
curtail or discontinue its operations.
7
<PAGE> 8
B. In October 1996, the Company's $2.5 million debenture issued in June 1996 was
converted into 2,500 shares of the Company's 9% Series A Convertible Preferred
Stock, with a stated value of $1,000 per share (the "Series A Stock"). Holders
of the Series A Stock were entitled to receive, when and as declared by the
Board of Directors, cumulative dividends at a rate per share equal to 9% per
annum in cash or, at the Company's option, in shares of the Company's Common
Stock, $.01 par value per share ("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 the $1,000 stated value per share by the lesser of (i) 85% of the
average of the closing bid prices for the Common Stock for the five consecutive
trading days prior to the conversion date, and (ii) $2.50 (subject to certain
adjustments). In addition, holders of the 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 Series A Stock and accumulated dividends thereon had
been converted into 2,676,235 shares of Common Stock. In connection with those
conversions, warrants to purchase 1,338,117 shares of Common Stock were issued.
These warrants have an exercise price of $4 per share and expire at various
dates during 2002 and 2003.
C. 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 up to $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 9% Series B Convertible Preferred Stock, with a stated value of $1,000 per
share ("Series B Stock"). As of February 4, 1997, all 3,000 shares of Series B
Stock plus accumulated 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. These
warrants have a value of $618,900, which was accounted for as non-cash dividends
to holders of Common Stock at the time of issuance of the Series B Stock. Of
these 500,000 warrants, 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 3,000 shares of its 9% Series C Convertible
Preferred Stock, with a stated value of $1,000 per share ("Series C Stock"), in
connection with the October 1996 Private Placement. The 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 Common
Stock at the time of conversion. As of September 30, 1997, all 3,000 shares of
Series C Stock plus accumulated dividends thereon had been converted into
2,719,738 shares of Common Stock. In connection with the issuance of the Series
C Stock, warrants to purchase 1,147,754 shares of Common Stock were also 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 holders of Common Stock at the time of issuance of the
Series C Stock.
8
<PAGE> 9
Also pursuant to the October 1996 Private Placement, the Company, in June 1997,
sold 1,000 shares of its 9% Series D Convertible Preferred Stock, with a stated
value of $1,000 per share ("Series D Stock"), 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 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, because
conversion of the Series D Stock did not occur until after the eightieth day
following its issue date, the investor received warrants to purchase 454,545
shares of Common Stock in connection with the Series D Stock. These warrants
have an exercise price of $1.94 per share and expire in 2002. The $278,000 value
of these warrants was determined at the time of issuance of the Series D Stock
and was accounted for as non-cash dividends to holders of Common Stock at that
time. No additional warrants are issuable in connection with the Series D Stock.
Under the October 1996 Private Placement, the Company had the right to require
the investor to purchase up to $12.0 million of convertible preferred stock from
the Company in a series of private placements, subject to certain conditions.
However, because minimum stock price and minimum market capitalization
requirements have not been maintained, the investor is no longer obligated to
fund the remaining $5.0 million which had been available to the Company under
this agreement.
D. In July 1997, ATI entered into a collaboration 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 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. In August 1997, BioChem
paid ATI an initial payment of $1.852 million, and in each of October 1997,
January 1998 and April 1998, quarterly payments of $843,000 were made. The
balance of $6.744 million 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 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 of March 31, 1998, 4,381 shares of ATI preferred stock were
issued or issuable, representing a 5.9% minority interest (on a converted and
fully-diluted
9
<PAGE> 10
basis) in the net loss of ATI. This minority interest portion of ATI's loss for
the quarter reduced ImmunoGen's net loss by $40,463. In addition, because the
investment is comprised of securities potentially issuable by both the Company
and ATI, only a portion of which is allocable to the ATI securities, the Company
is required to reflect the value of the investment allocable to the ATI
securities as a minority interest on its balance sheet. Based on an appraisal by
an independent valuation consultant completed in November 1997, approximately 3%
of the $4.381 million investment to date, or approximately $131,400, has been
allocated to the minority interest in ATI, with the remainder, or approximately
$4.25 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 of up to
$15.0 million for each product over the course of its development. In addition,
ATI will receive royalties on any future worldwide sales of products resulting
from the collaboration. BioChem's obligation to provide additional financing to
ATI each quarter is subject to satisfaction of specified conditions, including a
condition with respect to the level of ATI's cash and other resources in
addition to the financing.
As part of the collaboration with ATI, BioChem also receives warrants to
purchase shares of 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 Common Stock determined by dividing the amount of BioChem's investment
in ATI by the market price of the Common Stock on the exercise date, subject to
certain limitations. The exercise price 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.
E. 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
Convertible Preferred Stock ("Series E Stock") to an institutional investor. The
investment will be completed in several installments. As of March 31, 1998, $1.5
million had been received; the remainder is expected to be received on or before
July 31, 1998, subject to the terms of 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. Under the terms of the agreement, the investor is entitled to receive
warrants equal to 100% of the number of shares of Common Stock issuable on
conversion. As of March 31, 1998, warrants to purchase 1,411,764 shares of
Common Stock had been issued. These warrants have an exercise price of $2.125
per share and expire in 2004. The value of these warrants, approximately
$580,500, was determined at the time of their issuance and accounted for as
non-cash dividends on convertible preferred stock.
10
<PAGE> 11
F. Effective December 31, 1997, the Company adopted Statement of Financial
Accounting Standards No. 128 ("SFAS 128"), "Earnings Per Share." SFAS 128
requires the calculation and disclosure of basic loss per common share and
diluted loss per common share for all periods presented. The adoption of SFAS
128 had no impact on the amounts presented in the Consolidated Statements of
Operations because the effect of including the options and warrants outstanding
during the periods presented would be antidilutive.
G. ATI was established in January 1993 as a joint venture between the Company
and Dana-Farber Cancer Institute ("Dana-Farber") to develop therapeutics based
on apoptosis technology developed at Dana-Farber. Under the terms of a stock
purchase agreement entered into between the Company, ATI, Dana-Farber and an
individual stockholder, 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 $.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 the 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 96.5%. 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.
11
<PAGE> 12
Item 2. 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
96.5%-owned subsidiary, Apoptosis Technology, Inc. ("ATI"), focuses its efforts
on the discovery and development of anti-cancer therapeutics based on the
regulation of apoptosis. The major sources of the Company's working capital have
been the proceeds of equity and convertible debt and equity financings, license
fees, government-sponsored research grants and income earned on investment of
its available funds. In addition, in July 1997 ATI entered into a research and
collaboration agreement with a large biopharmaceutical company which has
provided and will continue to provide significant funding for ATI's operations
as well as milestone and royalty payments (see LIQUIDITY AND CAPITAL RESOURCES
below). Such funding for ATI's operations will initially be for a three-year
period. The Company does not expect revenues to be derived from product sales
for 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. From June 30, 1997 to March 31, 1998,
the Company has raised capital from the following sources: $4.381 million
received or receivable by ATI from its collaborator, BioChem Pharma Inc., a
Canadian biopharmaceutical company ("BioChem"); $375,000 received in October
1997 under a $750,000 grant from the Small Business Innovation Research Program
of the National Cancer Institute to advance development over a two-year period
of the Company's Series E Convertible Preferred Stock to an institutional
investor in a $3.0 million transaction expected to be completed in one
additional installment of $1.5 million on or before July 31, 1998. The Company's
cash resources remaining at March 31, 1998 were approximately $2.3 million, and
an $843,000 was received in April 1998 by ATI from BioChem. The Company
anticipates that these existing capital resources, coupled with the sale of the
remaining Series E Stock, will enable the Company to maintain its current and
planned operations through at least October 1998. The Company also continues its
stringent cost control efforts begun in December 1994 when it implemented a
significant restructuring program.
Under a financing agreement the Company entered into in October 1996 (the
"October 1996 Private Placement"), the Company was granted the right to require
the investor to purchase up to $12.0 million of convertible preferred stock from
the Company in a series of private placements, of which an aggregate of $7.0
million had been received through June 30, 1997. However, because minimum stock
price and minimum market capitalization requirements have not been maintained,
the investor is no longer obligated to fund the remaining $5.0 million which had
been available to the Company under this agreement.
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<PAGE> 13
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 operations. The Company continues actively to
seek additional capital by pursuing one or more financing transactions and/or
strategic partnering arrangements. While the Company expects to consummate a
transaction in the near term, no assurance can be given that such financing will
be available to the Company on acceptable terms, if at all. If the Company is
unable to obtain financing on acceptable terms in order to maintain operations,
it could be forced to further curtail or discontinue its operations.
RESULTS OF OPERATIONS
Three Months Ended March 31, 1997 and 1998
The Company's revenues increased approximately 50% from approximately $130,000
for the three months ended March 31, 1997 to approximately $195,000 for the
three months ended March 31, 1998. In both periods, revenues were derived in
large part (50% and 56% for the three months ended March 31, 1997 and 1998,
respectively) from amounts received under the SBIR program as development
revenues, with additional amounts received in the form of interest income (47%
and 39% for the three months ended March 31, 1997 and 1998, respectively), as
well as licensing fees pursuant to two licensing agreements. Interest income in
both periods included interest earned on cash balances available for investment,
as well as accretion of interest on a note receivable related to the assignment
of the Company's leases on its Canton, Massachusetts facility and equipment.
The Company's total expenses increased approximately 7% from approximately
$2.5 million for the three months ended March 31, 1997 to approximately $2.6
million for the three months ended March 31, 1998. Research and development
costs constituted the primary component of the Company's total expenses (75% and
53% for the three months ended March 31, 1997 and 1998, respectively),
decreasing approximately 24% from approximately $1.8 million for the three
months ended March 31, 1997 to approximately $1.4 million for the three months
ended March 31, 1998. This decrease is attributable to staffing reductions
prompted by the Company's decision in early calendar 1997 to discontinue
development of its product candidate, Oncolysin B, as well as the Company's
continuing cost reduction efforts begun in December 1994.
General and administrative expenses decreased approximately 41%, from
approximately $626,000 for the three months ended March 31, 1997 to
approximately $368,000 for the three months ended March 31, 1998. This decrease
is attributable to costs incurred in connection with the Company's financing
efforts in the three-month period ended March 31, 1997. No comparable costs are
reflected in the three-month period ended March 31, 1998.
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. The value
of the Common Stock issued was pre-determined by 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 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.
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<PAGE> 14
Financing activities in both periods included issuances of convertible equity
and related common stock purchase warrants. For the three months ended March 31,
1997, dividends totalled approximately $1.8 million, of which approximately 65%
represents the value of warrants issued in connection with the January 1997 sale
of the Company's Series C Convertible Preferred Stock ("Series C Stock"), and
28% of which represents the value of the assured incremental yield embedded in
the conversion terms of the Series C Stock. Dividends for the three months ended
March 31, 1998 represent almost entirely the value of warrants issued in
connection with the March 1998 sale of the Company's Series E Convertible
Preferred Stock ("Series E Stock") in that quarter. All warrants were accounted
for as non-cash dividends to holders of the Company's preferred stock.
In connection with the collaboration entered into in July 1997 between ATI and
BioChem, BioChem will invest a total of $11.125 million in non-voting
convertible preferred stock of ATI in a series of private placements over a
three-year period. 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 no less then
15% of the then outstanding ATI common stock. As of March 31, 1998, 4,381 shares
of ATI preferred stock were issued or issuable, representing a 5.9% 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 quarter reduced the Company's
net loss for the quarter by $40,463. In addition, because the investment is
comprised of securities potentially issuable by both the Company and ATI, only a
portion of which is allocable to the ATI securities, the Company is required to
reflect the value of the investment allocable to the ATI securities as a
minority interest on its balance sheet. Based on an appraisal by an independent
valuation consultant completed in November 1997, approximately 3% of the $4.381
million investment to date, or approximately $131,400, has been allocated to the
minority interest in ATI, with the remainder, or approximately $4.25 million,
allocated to ImmunoGen equity.
Nine Months Ended March 31, 1997 and 1998
The Company's revenues increased approximately 8% from approximately $385,000
for the nine months ended March 31, 1997 to approximately $417,000 for the nine
months ended March 31, 1998. In both periods, revenues were derived in large
part from amounts received under the SBIR Program as development revenues (57%
and 54% for the nine months ended March 31, 1997 and 1998, respectively), and
from amounts received in the form of interest income (41% and 42% for the nine
months ended March 31, 1997 and 1998, respectively). Interest income in both
periods included interest earned on cash balances available for investment, as
well as accretion of interest on a note receivable related to the assignment of
the Company's leases on its Canton, Massachusetts facility and equipment.
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<PAGE> 15
The Company's total expenses decreased approximately 13% from approximately $7.5
million for the nine months ended March 31, 1997 to approximately $6.5 million
for the nine months ended March 31, 1998. Research and development costs
constituted the primary component of the Company's total expenses (78% and 66%
for the nine months ended March 31, 1997 and 1998, respectively), decreasing
approximately 26% from approximately $5.8 million in fiscal 1997 to
approximately $4.3 million in fiscal 1998). This decrease is attributable to
staffing reductions prompted by the Company's decision in early calendar 1997 to
discontinue development efforts on its product candidate, Oncolysin B, as well
as the Company's continuing cost reduction efforts begun in December 1994.
General and administrative expenses decreased approximately 18% from
approximately $1.6 million for the nine months ended March 31, 1997 to
approximately $1.3 million for the nine months ended March 31, 1998. This
decrease represents costs incurred in connection with the Company's financing
efforts in the first quarter of calendar year 1997 for which there are no
comparable costs in calendar year 1998.
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. The value
of the Common Stock issued was pre-determined by 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 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 ($0.04) per common share,
was charged to operations.
Interest expense decreased approximately 95% from approximately $76,200 for the
nine months ended March 31, 1997 to approximately $3,600 for the nine months
ended March 31, 1998. Both periods include interest costs on the remaining
principal balances of the Company's capital lease agreements. The larger costs
in fiscal 1997 represent the costs incurred in connection with the issuances of
convertible debentures. In fiscal 1998, the Company's financing activities
included issuances of convertible equity and related common stock purchase
warrants, giving rise to dividends rather than interest costs, as well dividends
associated with the October 1996 conversion of a $2.5 million convertible
debenture to convertible preferred stock. The dividends accumulated for the nine
months ended March 31, 1997, totalling approximately $3.0 million, represent
(approximately 60%) the value of warrants issued in connection with the sale of
the Company's 9% Series B Convertible Preferred Stock (the "Series B Stock") and
9% Series C Convertible Preferred Stock (the "Series C Stock") in December 1997
and January 1998, respectively, as well as amounts (approximately 32%) which
represent the value of the assured incremental yield embedded in the conversion
terms of the Series B Stock and Series C Stock issued.
In connection with the collaboration between ATI and Biochem, for the nine
months ended March 31, 1998, 4,381 shares of ATI preferred stock were issued or
issuable, resulting in a weighted average 4.95% minority interest (on a
converted, fully-diluted basis) in the net loss of ATI. This minority interest
portion of ATI's loss for such nine-month period reduced ImmunoGen's net loss by
approximately $105,400.
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<PAGE> 16
LIQUIDITY AND CAPITAL RESOURCES
Since July 1, 1996, the Company has financed its operating deficit of
approximately $19.2 million from various sources, including issuances of
convertible debt and equity securities, amounts received pursuant to its fiscal
1996 assignment of leases, funds received under research grants and funds
received from the exercise of stock options.
In March 1996, the Company issued $5.0 million principal amount convertible
debentures in a private placement. As part of the private placement, the Company
issued a $2.5 million principal amount debenture on March 25, 1996. In June
1996, the debenture, together with accrued interest thereon, was converted into
shares of Common Stock, and warrants to purchase 509,000 shares of Common Stock
at an exercise price of $4.00 per share were issued to the holder of the
debenture. These warrants expire in March 2001. In June 1996, a second $2.5
million convertible debenture was issued and then converted into Series A
Convertible Preferred Stock ("Series A Stock") in October 1996. Each share of
Series A Stock was convertible at any time into a number of shares of Common
Stock determined by dividing $1,000 by the lower of (i) $2.50 and (ii) 85% of
the average of the closing bid price of the Common Stock for each the five days
prior to conversion (the "Market Price"). As of January 5, 1998, all 2,500
shares of Series A Stock plus accumulated dividends thereon had been converted
into 2,676,235 shares of Common Stock. In connection with those conversions,
warrants to purchase 1,338,117 shares of Common Stock were issued. These
warrants have an exercise price of $4 per share and expire at various dates
during calendar years 2002 and 2003. In June 1996, the Company issued additional
warrants to purchase 500,000 shares of Common Stock in connection with the
conversion of the debenture into Common Stock. These 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 payment of finder's
fees in connection with the issuance of the debentures. These warrants have an
exercise price of $3.105 per share and expire in 2003.
In October 1996, the Company sold $3.0 million of 9% Series B Convertible
Preferred Stock ("Series B Stock") in connection with the October 1996 Private
Placement. 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. As of February 4, 1997, all 3,000
shares of Series B Stock plus accumulated 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 500,000 warrants, 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.
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<PAGE> 17
In January 1997, the Company sold $3.0 million of 9% 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 Common Stock. As of August 1, 1997, all 3,000 shares
of Series C Stock plus accumulated dividends thereon had been converted into
2,719,738 shares of 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.
In June 1997, the Company sold $1.0 million of 9% Series D Convertible Preferred
Stock ("Series D Stock") in connection with the October 1996 Private Placement.
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 Common Stock at the time of conversion. As of October 21,
1997, all 1,000 shares of Series D Stock plus accumulated dividends thereon had
been converted in 1,001,387 shares of Common Stock. In addition, the investor
received warrants to purchase 454,545 shares of Common Stock. These warrants
have an exercise price of $1.94 per share and expire in 2002.
Also in June 1997, the Company and ATI satisfied an obligation of ATI to one of
its scientific advisors, totaling $120,000, by a combination of cash and 41,481
shares of Common Stock.
The Company had 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 31, 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 of ATI from
72% to 95%. In addition, under the terms of a stock purchase agreement entered
into between the Company, ATI, Dana-Farber Cancer Institute ("Dana-Farber") and
an individual ATI stockholder, 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 ImmunoGen could require such stockholders to sell (the "call
option"), their shares in ATI at a predetermined price. At the Company's
discretion, the shares of common stock of ATI can be paid for 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
$.00002 per share, for an aggregate of $871,930. 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. 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 the 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.
17
<PAGE> 18
In July 1997, ATI entered into a collaboration 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 convertible preferred stock of ATI in a series of private placements
over a three-year period to fund research conducted by the collaboration during
a three-year research term. In August 1997, BioChem paid ATI an initial payment
of $1.852 million, and in each of October 1997, January 1998 and April 1998,
quarterly payments of $843,000 were made. The balance of $6.744 million 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 such stock, at a conversion price equal to the then current market
price of the ATI common stock, but in any event a price that will result in
BioChem acquiring at least 15% of the then outstanding ATI common stock. The
research agreement may be extended beyond the initial three years, on terms
substantially similar to the original, three-year term. BioChem will also make
milestone payments of up to $15.0 million for each product over the course of
its development. In addition, ATI will receive royalties on the future worldwide
sales of products, if any, resulting from the collaboration. BioChem's
obligation to provide additional financing to ATI each quarter is subject to
satisfaction of specified conditions, including a condition with respect to the
level of ATI's cash and other resources in addition to the financing.
As part of the collaboration with ATI, BioChem also receives warrants to
purchase shares of 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's Common Stock determined by dividing the amount of
BioChem's investment in ATI by the market price of the Common Stock on the
exercise date, subject to certain limitations. The exercise price 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.
In December 1997, the Company entered into an agreement, which was amended in
March 1998, to sell $3.0 million of its Series E Convertible Preferred Stock
("Series E Stock") to an institutional investor. As of March 31, 1998, $1.5
million had been received; the remainder is expected to be received on or before
July 31, 1998, subject to the terms of 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. Under the terms of the agreement, the investor is entitled to receive
warrants equal to 100% of the number of shares of Common Stock issuable on
conversion of the preferred stock. As of March 31, 1998, warrants to purchase
1,411,764 shares of Common Stock had been issued. These warrants have an
exercise price of $2.125 per share and expire in 2004.
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<PAGE> 19
In the period since July 1, 1996, less than $5,000 was expended on property and
equipment. No significant amounts are expected to be expended on property and
equipment in fiscal 1998.
The Company expects that any costs incurred in connection with the year 2000
will be immaterial.
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 outcome of this uncertainty.
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 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 history of operating
losses and accumulated deficit; the Company's limited financial resources and
uncertainty as to the availability of additional capital to fund its development
on acceptable terms, if at all; the Company's lack of commercial manufacturing
experience and commercial sales, distribution and marketing capabilities;
reliance on suppliers of antibodies necessary for production of the products and
technologies; the potential development by competitors of competing products and
technologies; the Company's dependence on potential collaborative partners, and
the lack of assurance that the Company will receive any funding under such
relationships to develop and maintain strategic alliances; the lack of assurance
regarding patent and other protection for the Company's proprietary technology;
governmental regulation of the Company's activities, facilities, products and
personnel; the dependence on key personnel; uncertainties as to the extent of
reimbursement for the costs of the Company's potential products and related
treatment by government and private health insurers and other organizations; the
potential adverse impact of government-directed health care reform; the risk of
product liability claims; and general economic conditions. As a result, the
Company's future development efforts involve a high degree of risk. For further
information, refer to the more specific risks and uncertainties discussed in the
Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1997 as
filed with the Securities and Exchange Commission.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
IMMUNOGEN, INC.
Date: September 25, 1998 By: /s/ Mitchel Sayare
-------------------
Mitchel Sayare
Chief Executive Officer
(principal executive officer)
Date: September 25, 1998 By: /s/ Kathleen A. Carroll
------------------------
Kathleen A. Carroll
Vice President,
Finance and Administration
(principal financial officer)
20
