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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
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, 2000
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)
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<S> <C>
MASSACHUSETTS 04-2726691
(State or other jurisdiction of incorporation (I.R.S. Employer Identification No.)
or organization)
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128 SIDNEY STREET, CAMBRIDGE, MA 02139
(Address of principal executive offices, including zip code)
(617) 995-2500
(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)
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 stock held by non-affiliates
at September 18, 2000: $875,723,223 (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 18, 2000: 34,091,415 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 the 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. [X]
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Definitive Proxy Statement for its 2000 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. Our product candidates are
tumor-activated prodrugs, or "TAPs." They are based on our proprietary
technology platform, which combines monoclonal antibodies that target tumor
cells, and potent drugs. Unlike conventional chemotherapeutic agents, TAPs are
intended to deliver potent chemotherapy specifically to a tumor. Each TAP
comprises a small-molecule drug that we have chemically linked to a monoclonal
antibody. (This kind of combination product is often called an immunoconjugate.)
The small-molecule drugs we use are highly potent cell-killing (cytotoxic)
agents. The monoclonal antibodies identify and bind to tumor cells -- they are
"delivery vehicles" that carry the drugs to the tumor. Once the immunoconjugate
has bound to the tumor cell, it gets ingested by the tumor cell. Inside the
target cell, the drug molecules are released from the monoclonal antibody and
kill the cell. Importantly, TAPs are designed to be inactive and nontoxic until
they bind to the surface of a target cell, after which their full cytotoxicity
is restored.
Together with partners, we are currently developing two TAP product
candidates. We also have initiated a licensing program that allows us to
generate cash flow through granting rights to other companies to use portions of
our TAP technology in their product development programs. We can use this
revenue from technology licenses to support research to identify new targets for
TAPs and fund research and development of internal TAP products, which we may
commercialize on our own or with partners.
We initiated human clinical trials of our first TAP product candidate,
huC242-DM1/SB-408075, in December 1999 at the Institute for Drug Development of
the Cancer Therapy and Research Center in San Antonio, Texas.
HuC242-DM1/SB-408075 combines our small-molecule drug, DM1 -- one of a group of
compounds called maytansinoids, which are potent inhibitors of cell
division--and the humanized monoclonal antibody, huC242, which delivers DM1 to
colorectal, pancreatic, and non-small-cell lung cancers. We are developing this
product in collaboration with SmithKline Beecham plc ("SB") under a license
agreement executed in February 1999. (See "-- Licenses -- SmithKline Beecham
plc.") The SB agreement was our first TAP product development partnership.
We have also been conducting preclinical testing of a second TAP candidate,
huN901-DM1, for the treatment of small-cell lung cancer. In May 2000, we granted
British Biotech plc ("British Biotech") the exclusive right to develop and
commercialize huN901-DM1 in the European Union ("EU") and Japan in exchange for
royalties. (See "-- Licenses -- British Biotech plc.") We retained rights to the
United States ("US") and other territories and the right to manufacture the
product worldwide. Also under the agreement, British Biotech is responsible for
conducting the clinical trials necessary to achieve regulatory approval in the
US, EU, and Japan. We will give British Biotech a one-time milestone payment
upon US regulatory approval.
As part of our technology licensing program, we also entered into two
agreements with Genentech, Inc. ("Genentech") in May 2000. (See
"-- Licenses -- Genentech, Inc.") The first agreement gives Genentech a license
to use ImmunoGen's maytansinoid TAP technology with Herceptin(R), its monoclonal
antibody drug approved for the treatment of certain types of breast cancer. The
second agreement with Genentech gives it access to maytansinoid TAP technology
for other antibody product research efforts, along with an option to obtain
exclusive product licenses for a limited number of tumor-cell targets over the
five-year term of the agreement.
ImmunoGen is pursuing a multi-faceted business strategy that includes:
- Developing our first product, huC242-DM1/SB-408075, with SB;
- Supporting commercialization of our second product, huN901-DM1, with
British Biotech. We have retained commercial rights to huN901-DM1 in the
US, at least until the later stages of clinical development, at which
time we will decide whether to sell it ourselves or seek a US marketing
partner;
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- Out-licensing rights to use TAP technology, as we are doing with
Genentech, to generate cash flow to self-fund the development of TAPs
using monoclonal antibodies we will obtain from third parties or targets
against which we make monoclonal antibodies;
- Utilizing chemotherapeutics in addition to DM1, such as DC1, taxane
derivatives, and DNA intercalating agents such as doxorubicin
derivatives, to complement and broaden existing TAP technology; and
- Using our in-house biology expertise, including the know-how of our
subsidiary, Apoptosis Technology Inc. ("ATI"), to discover and validate
new anti-apoptotic drug targets and targets for the development of TAPs.
TUMOR-ACTIVATED PRODRUGS
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 is largely ineffective once the tumor spreads to other
parts of the body, a condition that is called 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
limitations in dosage due to side effects on healthy tissues.
One way in which we address this therapeutic void is through applications
of our tumor cell-specific TAP technology for the targeted delivery of highly
potent chemotherapeutic drugs to tumor cells. Importantly, because TAPs are
inactive until the drug component is released from the antibody component inside
the target cell, they spare normal cells, even those in close proximity to a
tumor. We believe TAPs also may be used in combination with conventional
chemotherapeutics to provide additional tumor-cell killing.
Each of our TAPs comprises a monoclonal antibody coupled to a
small-molecule agent (an effector molecule) with a high degree of cell-killing
ability, or potency. A monoclonal antibody is a protein that detects and binds
to a specific antigen, or marker. Since cancer cells may have unique antigens on
their surface, an antibody with the appropriate 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 that uses an antibody to target such markers
therefore may be used in the treatment of different types of tumors.
ImmunoGen has identified several monoclonal antibodies that it believes
possess the requisite characteristics for use in TAPs. Two of these, huC242 and
huN901, are used in our TAP product candidates currently in development for the
treatment of colorectal cancer and pancreatic cancers, and small-cell lung
cancer, respectively. Laboratory experiments using the C242 antibody suggest
that it may also be useful to target non-small-cell tumors of the lung.
In addition to testing antibodies from conventional sources, such as
academic labs, we believe genomics research, which is generating and validating
many new drug targets, will spawn a significant number of new antibodies in the
future, many of which will be useful for creating TAPs for cancer therapy.
We believe the following attributes distinguish TAP products from other
anti-cancer agents, including naked antibodies. All suggest that TAPs may have
enormous potential to improve cancer therapy:
- Targeting, which unlike chemotherapy, directs the cell killing potential
of TAPs specifically to the tumor and allows for the use of more potent
cytotoxic agents;
- A stable linkage and release mechanism, allowing the high potency of the
effector molecule to be released after binding to and internalization by
the tumor cell;
- A high degree of cell killing at the tumor site which, unlike therapy
using naked antibodies, does not depend on the immune system to kill the
tumor; and
- A tolerable side-effect profile and, consequently, a minimal disturbance
of patients' quality of life during treatment.
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Small-Drug Effector Molecules: Our laboratory and animal tests of several
classes of small-molecule drugs have led us to believe that some of these
small-molecule drugs offer great promise for use as effector molecules in TAPs.
We have developed derivatives of these drugs that allow them to be attached to
antibodies to target tumor cells and allow for their release in a fully active
form at the target site.
The first compound, DM1, is the small-molecule drug we use in our first two
product candidates -- huC242-DM1/SB-408075 and huN901-DM1. It is a potent
inhibitor of cell division derived from maytansine, a natural product. 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.
Based on our in vitro and animal studies, we believe 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 mice specially bred to tolerate human
tumors, our TAPs have shown therapeutic efficacy and complete cures at doses
with no detectable toxicity.
In addition, we are conducting research into the use in TAPs of other
classes of chemotherapeutics. We began a research collaboration with the State
University of New York ("SUNY") at Stony Brook in February 2000 to develop novel
derivatives of the well-known chemotherapeutic, docetaxel (Taxotere(R)), for use
in TAPs.
TAP Products
HUC242-DM1/SB-408075. We believe the C242 antibody possesses the
specificity needed for use as a targeting agent in a TAP. It binds to all
colorectal cancers, binding 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 all
pancreatic tumors and a majority of non-small-cell lung tumors tested.
According to estimates of the American Cancer Society ("ACS"), there will
be 130,200 new cases of colorectal cancer in the United States in 2000, and
56,300 deaths from the disease. The ACS also estimates that in the US during
2000 there will be 28,300 new cases of pancreatic cancer and 28,200 deaths, as
well as 164,100 new cases and 156,900 deaths from lung cancer.
We have linked huC242 to the small-molecule drug, DM1. Because DM1 is a
small-molecule, nonprotein drug, we do not expect huC242-DM1/SB-408075 to
inspire an immune response against the agent. This lack of immunogenicity should
allow for the administration of repeat courses of therapy. HuC242-DM1/ SB-408075
therefore may be a suitable agent for substantially shrinking or eliminating
large tumor masses, either used alone or in combination with other
chemotherapeutics. In December 1998, we executed an agreement to license use of
huC242 in maytansinoid products for the treatment of cancer from its discoverer,
Pharmacia & Upjohn AB (now part of Pharmacia Corp.). (See "-- Licenses --
Pharmacia Corp.")
We began our first human study of huC242-DM1/SB-408075 -- a single-dose
Phase I trial in colorectal, pancreatic and certain non-small-cell lung cancer
patients--in December 1999. We expect our partner, SB, to initiate a second
study -- a multi-dose Phase I trial -- in the third quarter of 2000. Clinical
development and commercialization of this product is being supported through our
1999 agreement with SB, which may be worth over $40 million, exclusive of
royalties on any product sales. Through June 30, 2000, the Company received
$12.0 million under the SB Agreement -- $9.5 million upon the achievement of
certain collaborative milestones and $2.5 million upon issuance of ImmunoGen
Common Stock to SB. Of the $9.5 million cash received for meeting milestones,
$6.2 million has been recorded as revenue in Fiscal Year 2000 and $3.0 million
in Fiscal Year 1999.
The National Cancer Institute ("NCI") of the National Institutes of Health
also supported preclinical testing of this product candidate. In August 1997, we
announced receipt of a $750,000 Phase II Small Business Innovation Research
grant from NCI to support preclinical research and development of huC242-
DM1/SB-408075, including final product formulation in advance of the start of
human clinical studies. The award was for $375,000 annually for two years
retroactive to April 1, 1997.
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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. We have established cell lines that
express humanized N901 at sufficiently high levels to be suitable for scale-up.
As with huC242-DM1/SB-408075, huN901-DM1 is not expected to be immunogenic,
which should allow for the administration of repeat courses of therapy.
Of the 164,100 new cases of lung cancer estimated by ACS for 2000,
approximately 20 percent are expected to be small-cell lung cancer.
Through our collaboration with British Biotech, we expect to initiate the
regulatory process to begin human clinical studies in the US and the EU before
January 2001. Preclinical studies in animals using huN901-DM1 did not reveal
significant toxicities or pathological abnormalities at doses that had been
shown to be curative in human tumor models in immunodeficient mice.
APOPTOSIS TECHNOLOGY
In 1993, along with Dana-Farber Cancer Institute ("Dana-Farber"), we
established Apoptosis Technology, Inc. to identify targets for drugs based on
the regulation of apoptosis, which is an intrinsic "suicide program" within
cells. Cells that undergo apoptosis do so in order to protect the body against
disease. Based on the belief that regulation of the biochemical pathways leading
to apoptosis offered a promising, novel approach to the treatment of disease, we
established ATI as a majority-owned subsidiary.
In August 1997, ATI and BioChem Pharma Inc. ("BioChem") began a
collaboration focused on the discovery and development of novel anti-cancer
therapeutics based on the use of ATI's proprietary screens for the
identification of compounds that regulate the activity of newly discovered
"anti-death" genes and cellular survival factors. In accordance with the
collaborative research plan, from 1998 to 2000, ATI delivered six
high-throughput screens to BioChem to screen their chemical compound library.
BioChem identified "hits," which it is evaluating to determine their suitability
for compound lead development.
ImmunoGen and BioChem agreed in April 2000 not to extend the agreement
beyond its scheduled conclusion on July 31, 2000. Consequently, under the terms
of the agreement, rights to all the screens and targets delivered to BioChem
reverted to ATI effective August 1, 2000. However, in the event BioChem
identifies leads and develops products based on the work of the collaboration,
ATI will receive milestone payments during development and royalties on any
future product sales.
ATI will continue to work on the targets discovered through the BioChem
collaboration. The results of ATI's research also may help us in target
validation in conjunction with future TAP drug discovery collaborations.
BUSINESS STRATEGY
Our goal is to be a leader in the development of TAPs and other novel
pharmaceuticals for the treatment of cancer and other human diseases. To
accomplish this, we are pursuing a multi-faceted business strategy to fund
development of our products including:
- Collaborating with SB for clinical development of our first product
candidate, for colorectal and pancreatic cancers, huC242-DM1/SB-408075.
Following the completion of Phase I/II clinical trials, SB will take over
management of clinical trials and commercialization. We expect this
collaboration, which has provided $12 million in cash to date, will
continue to be a significant source of funding. ImmunoGen will also
receive milestone payments and royalties on any sales of this product;
- Supporting commercialization of huN901-DM1 for the treatment of
small-cell lung cancer with British Biotech. We have retained commercial
rights to huN901-DM1 in the US, at least until the later stages of
clinical development, at which time we will decide whether to sell it
ourselves or seek a US marketing partner. Because we will have generated
data from studies in humans, we expect to be able to retain a greater
share of the value of the compound in the event we decide to seek a
marketing partner;
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- Extending our product portfolio by developing new TAPs in collaboration
with third parties. For example, out-licensing rights to use TAP
technology to third parties for their product development
programs -- such as our May 2000 agreements with Genentech to create new
TAPs that employ maytansinoid TAP technology in combination with
Genentech's antibodies will generate cash flow for us to self-fund the
development of some TAPs internally. These TAPs will use monoclonal
antibodies we obtain from third parties or, via collaborations with
genomics companies, antibodies we make against new anti-cancer targets.
The disposition of commercial rights with regard to any particular
product which we co-develop will depend on market size and access, as
well as the cost of commercial development;
- Utilizing additional chemotherapeutics, such as taxane derivatives, DNA
intercalating agents such as doxorubicin derivatives, and DC1, to
complement and broaden our existing DM1-based TAP technology; and
- Using our in-house biology expertise, including the anti-apoptotic
screens and know-how of ATI, to discover and validate new drug targets
for the development of TAPs.
LICENSES
As part of our business, we enter into license agreements with third
parties. In some cases, we license certain rights to our products to companies
with product development and commercialization capabilities we wish to access,
in exchange for fees, milestones payments, and royalties on product sales. In
other cases, we license certain rights to our technologies in exchange for fees,
milestone payments and royalties on product sales. Our principal licenses and
collaborative agreements are listed below.
SMITHKLINE BEECHAM PLC. In February 1999, we began a collaboration with SB
to jointly develop and commercialize our first TAP, huC242-DM1/SB-408075. Under
the terms of the agreement, SB received exclusive worldwide rights to
commercialize huC242-DM1/SB-408075, except in certain Far East territories. In
addition to royalties, we could receive milestone payments totaling more than
$40.0 million. As of June 30, 2000, we have recognized four milestones under the
SB agreement. We have received a total of $12.0 million in cash under the
agreement, of which we received $9.0 million in fiscal year 2000, including $2.5
million in return for ImmunoGen Common Stock. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."
BRITISH BIOTECH PLC. In May 2000, we granted to British Biotech the
exclusive right to develop and commercialize our second TAP, huN901-DM1, in the
EU and Japan, while we retained full rights to sell the drug in the US and other
territories outside the EU and Japan. Under the agreement, British Biotech is
responsible for conducting the clinical trials necessary to achieve regulatory
approval in the US, EU, and Japan, and will reimburse us for the cost of
producing material for clinical trials. We retain full manufacturing rights. As
of June 30, 2000, we received one up-front payment of $1.5 million. We will give
British Biotech a one-time milestone payment upon US regulatory approval, and
will receive royalties on its sales in the EU and Japan.
GENENTECH, INC. In May 2000, we entered into two agreements with
Genentech. The first agreement gives Genentech an exclusive license to use
ImmunoGen's maytansinoid TAP technology to develop products with certain
antibodies such as Herceptin(R), its monoclonal antibody drug approved for the
treatment of certain types of breast cancer. Genentech will be responsible for
manufacturing, product development and marketing of products resulting from the
license, and we will be reimbursed for any preclinical and clinical materials we
make for them under the agreement. In connection with this agreement, we
received a $2.0 million up-front payment in May 2000. In addition to royalties,
we could receive as much as $40.0 million in milestone payments.
The second agreement with Genentech provides access to our maytansinoid TAP
technology for its antibody product research efforts, along with an option to
obtain exclusive product licenses for a limited number of tumor-cell targets
over the five-year term of the agreement. Genentech paid an up-front technology
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access fee of $3.0 million and could pay milestone payments of up to $40.0
million per target, as well as royalties on sales of resulting products.
BIOCHEM PHARMA INC. In July 1997, ATI and BioChem entered into a
collaboration agreement under which ATI granted 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 drug development. As of April
2000, BioChem has fulfilled all of its funding obligations under the agreement
by purchasing a total of $11.125 million in non-voting, non-dividend-bearing
convertible stock of ATI accompanied by warrants to purchase shares of ImmunoGen
Common Stock. ImmunoGen expects that BioChem will use its shares of ATI
preferred stock, in lieu of cash, to exercise the warrants.
In April 2000, BioChem and ImmunoGen agreed not to extend the collaboration
agreement beyond its scheduled July 31, 2000 termination date. Under the terms
of the agreement, rights to all screens delivered to BioChem reverted to ATI
effective August 1, 2000. In the event BioChem identifies leads and develops
products based on the work of the collaboration, ATI will receive milestone
payments and royalties on any future product sales.
PHARMACIA CORP. On June 1, 1998, we executed an agreement with Pharmacia &
Upjohn AB (now Pharmacia Corp.) under which we received rights to commercialize
maytansinoid products that incorporate the C242 antibody for the treatment of
cancer in exchange for a royalty on product sales and other payments.
OTHER LICENSES. We also have licenses with third parties, including other
companies and academic institutions, to gain access to techniques and materials
for drug discovery and product development and the rights to use those
techniques and materials to make our products. These include rights to certain
antibodies, software used in antibody development, and apoptosis technology.
Subsequent Event: Abgenix, Inc. On September 5, 2000, the Company entered into a
collaboration agreement with Abgenix, Inc. of Fremont, California. The agreement
provides Abgenix with access to ImmunoGen's maytansonoid Tumor-Activated Prodrug
(TAP) technology for use with Abgenix's fully human antibodies generated with
XenoMouse technology. Immunogen will receive $5.0 million in technology access
fee payments, as well as potential milestone payments, and royalties on net
sales of any resulting products. In addition, on September 7, 2000 Abgenix
purchased $15.0 million of ImmunoGen Common Stock at $19.00 per share.
PATENTS, TRADEMARKS AND TRADE SECRETS
We seek patent protection for our proprietary technologies and products,
including those of our subsidiary, ATI, in the US, Europe, Japan and elsewhere.
Among others, we have received patents in the US and Europe claiming the use of
maytansinoids in conjugated form as an invention, US patents claiming use of DC1
and its analogs in immunoconjugates, and patents claiming apoptosis technology.
We have also submitted additional patent applications in the US, Europe,
Japan, and elsewhere covering proprietary small-drug derivatives, TAPs,
apoptosis technology and use of certain of these products and inventions for
indicated diseases. We expect our work will also lead to other patent
applications. In all such cases, ImmunoGen or ATI will either be the assignee or
owner of such patents or have an exclusive license to the technology covered by
the patents. "We cannot assure, however, that the patent applications will issue
as patents or that any patents, if issued, will provide ImmunoGen or ATI with
adequate protection against competitors with respect to the covered products,
technologies or processes.
In addition, many of the processes and much of the know-how of importance
to us are dependent upon the skills, knowledge and experience of certain of our
key scientific and technical personnel, which skills, knowledge and experience
are not patentable. To protect our rights in these areas, we require that all
employees, consultants, advisors and collaborators enter into confidentiality
agreements with us. We cannot assure, however, that these agreements will
provide meaningful protection for our trade secrets, know-how or other
proprietary information in the event of any unauthorized use or disclosure of
such trade secrets, know-
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how or proprietary information. Further, in the absence of patent protection, we
may be exposed to competitors who independently develop substantially equivalent
technology or otherwise gain access to our trade secrets, know-how or other
proprietary information.
COMPETITION
We focus on highly competitive areas of product development. Our
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 us 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 we do. 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 ours.
In particular, 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.
Our competitive position also depends on our ability to develop effective
proprietary products, implement production and marketing plans, including
collaborations with other companies with greater marketing resources than ours,
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
that may compete with our product candidates. In addition, monoclonal antibodies
developed by certain of these companies have been approved for use as cancer
therapeutics -- although not for the clinical indications we are pursuing. In
the future, however, other monoclonal antibodies may compete with our product
candidates.
Because of the prevalence of combination therapy in cancer and the variety
of genes and targets implicated in cancer progression, we believe that products
resulting from applications of new technologies may be complementary to our own.
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;
- The use of gene therapy to deliver genes to regulate gene function, and
- The use of therapeutic vaccines.
ATI's technology also has competition. 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. We expect to face competition from other
biotechnology approaches as well as more traditional, drug-based approaches to
cancer. 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. We also are aware of numerous development-stage companies that are
exploring new therapies for the same disease targets as ATI.
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REGULATORY
Our products are regulated in the US by the FDA in accordance with the
United States Federal Food, Drug, and Cosmetic Act, as well as the Public Health
Service Act. Therapeutic 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"). We
expect that huC242-DM1/SB-408075, huN901-DM1 and other of our TAPs will be
reviewed by CDER.
The steps required before a new drug may be marketed in the US include:
1) Performance of preclinical laboratory, animal, and formulation studies;
2) The submission to the FDA of an Investigational New Drug Application
("IND"), which must become effective before clinical trials may
commence;
3) The completion of adequate and well-controlled human clinical trials to
establish the safety and efficacy of the drug;
4) The submission of a New Drug Application ("NDA") to the FDA; and
5) FDA approval of the NDA, including approval of all product labeling and
advertising.
Even if we or our partners obtain regulatory approvals for our product
candidates, ImmunoGen, our products, and the facilities in which our products
are manufactured are subject to continual review and periodic inspection. The
FDA will require post-marketing reporting to monitor our products' safety. Each
drug manufacturing establishment in the US must be registered with the FDA.
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, quality control and record keeping to ensure full technical
compliance. The FDA stringently applies regulatory standards for manufacturing.
The regulatory issues that have potential impact on the future marketing of
our products are summarized in the following paragraphs.
Clinical Trials Process: Before a new drug may be sold in the US and other
countries, clinical trials of the product must be conducted and the results
submitted to the appropriate regulatory agencies for approval.
In the US, 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 usually 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.
We intend to conduct clinical trials not only in accordance with FDA
regulations, but also within guidelines established by the International
Committee on Harmonization. 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. We intend to rely on foreign licensees to obtain
regulatory approvals to market our products in foreign countries.
9
<PAGE> 10
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 US at the time of application for Orphan Drug designation.
We may pursue this designation with respect to products intended for
qualifying patient populations. A drug that receives Orphan Drug designation and
is the first product of its kind to receive FDA marketing approval for its
product claim is entitled to a seven-year exclusive marketing period in the US
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 US during
such seven-year exclusive marketing period.
New Drugs for Serious or Life-Threatening Illnesses: The 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. We believe that our
products should be qualified for "Fast Track" status.
"Fast Track" status also incorporates initiatives announced by the
President of the United States 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 is 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, 2000, 1999 and 1998, the
Company spent approximately $8.9 million, $6.1 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, 2000, the Company had 60 full-time employees, of whom 41
were engaged in the Company's research and development activities. 27 employees
hold post-graduate degrees, including 15 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 I. Evan, Ph.D. FMedSci,. Gerson and Barbara Bass Bakar Distinguished
Professor of Cancer Biology, UCSF Comprehensive Cancer Center and Cancer
Research Institute. Dr. Evan is a cancer biologist and 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.
10
<PAGE> 11
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.
As of July 31, 2000, ATI's Scientific Advisory Board was terminated.
SCIENTIFIC ADVISORY BOARD
ImmunoGen, Inc.
As of August 1, 2000, ImmunoGen, Inc. formed a Scientific Advisory Board
consisting of the following individuals:
Gerard I. Evan, Ph.D., FMedSci,. Gerson and Barbara Bass Bakar
Distinguished Professor of Cancer Biology, UCSF Comprehensive Cancer Center and
Cancer Research Institute. Dr. Evan is a cancer biologist and an authority on
the control of cellular proliferation and programmed cell death in mammalian
cells.
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.
ITEM 2. PROPERTIES
ImmunoGen leases approximately 52,700 square feet of laboratory and office
space at two locations in Cambridge, Massachusetts, through the June 30, 2003 as
a result of the Amended Lease. The Company also leased 27,500 square feet of
space in Norwood, Massachusetts, which served as the Company's pilot
manufacturing facility as well as its corporate offices. Effective July 1, 2000,
as a result of the Amended Lease the Company leases only 17,400 square feet of
this space as its pilot manufacturing facility. The Company believes that the
manufacturing portion of the Norwood facility 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.
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 2000
First Quarter............................................ $ 3 1/16 $1 3/4
Second Quarter........................................... 6 2
Third Quarter............................................ 20 1/2 4 1/2
Fourth Quarter........................................... 14 1/4 6 5/8
Fiscal Year 1999
First Quarter............................................ $ 1 27/32 $1
Second Quarter........................................... 3 1/8 1 3/16
Third Quarter............................................ 3 25/32 1 15/16
Fourth Quarter........................................... 2 29/32 2 5/32
</TABLE>
11
<PAGE> 12
As of September 18, 2000, there were approximately 675 holders of record of
the Company's Common Stock and, according to the Company's estimates,
approximately 21,500 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.
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, 2000. 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,
IN THOUSANDS, EXCEPT PER SHARE DATA -------------------------------------------------------------------
AND SHARES OUTSTANDING 1996 1997 1998 1999 2000
----------------------------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Total revenues................... $ 541 $ 630 $ 540 $ 3,652 $ 11,559
Total expenses excluding in-process
research and development
expense........................ 19,492 9,713 7,485 7,884 11,942
In-process research and development
expense........................ -- -- 872 -- --
Non-operating income............. 28 -- 46 55 69
Non-cash dividends and other
expenses....................... -- 3,512 605 918 --
Minority interest................ -- -- 160 101 76
Net loss to common stockholders... (18,923) (12,595) (8,216) (4,993) (238)
Basic and diluted loss per common
share.......................... (1.32) (0.70) (0.34) (0.20) (0.01)
Total assets..................... 8,506 6,350 5,877 7,171 19,344
Long-term debt and capital lease
obligations, less current
portion........................ 5,788 59 35 68 1,508
Stockholders' equity............. 777 4,462 4,311 5,329 15,368
Weighted average common shares
outstanding.................... 14,379,064 17,930,164 24,210,340 25,525,061 29,520,576
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW:
Since inception, ImmunoGen has been principally engaged in the 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.
In February 1999, the Company entered into an exclusive license agreement
with SmithKline Beecham plc, London and SmithKline Beecham, Philadelphia
(collectively, "SB") to develop and commercialize ImmunoGen's lead
tumor-activated prodrug ("TAP"), huC242-DM1/SB-408075, for the treatment of
colorectal, pancreatic and non-small-cell lung cancers (the "SB Agreement"). In
December 1999, the Company began a Phase I, single-dose human clinical study of
huC242-DM1/SB-408075. The start of this clinical study triggered a $2.5 million
milestone payment to ImmunoGen, which represented the fourth milestone to be
achieved in ImmunoGen's collaboration with SB to date. Through June 30, 2000,
the Company received $12.0 million under the SB Agreement -- $9.5 million upon
the achievement of certain collaborative milestones and $2.5 million upon
issuance of 1,023,039 shares of ImmunoGen Common Stock to SB, of the $9.5
million cash received for meeting milestones, $6.2 million has been recorded as
revenue in Fiscal Year 2000 and $3.0 million in Fiscal Year 1999.
12
<PAGE> 13
In May 2000, the Company executed two separate licensing agreements with
Genentech, Inc. ("Genentech") of South San Francisco, California. The first
agreement grants an exclusive license to Genentech for ImmunoGen's maytansinoid
TAP technology for use with antibodies such as Herceptin(R). Under the terms of
this agreement, Genentech will receive exclusive worldwide rights to
commercialize anti-HER2 targeting products using ImmunoGen's maytansinoid TAP
platform. Genentech will be responsible for manufacturing, product development
and marketing of any products resulting from the agreement; ImmunoGen will be
reimbursed for any preclinical and clinical materials that it makes under the
agreement. In May 2000, ImmunoGen received a $2.0 million non-refundable,
payment for execution of the agreement, for which no further performance is
required. In addition to royalties on net sales, the terms of the agreement
include certain other payments based on Genentech's achievement of milestones,
assuming all benchmarks are met, for potentially up to $40.0 million.
The second Genentech collaboration provides Genentech with broad access to
ImmunoGen's maytansinoid TAP technology for use with Genentech's proprietary
antibodies. The multi-year agreement provides Genentech with a license to
utilize ImmunoGen's maytansinoid TAP platform in its antibody product research
efforts and an option to obtain product licenses for a limited number of antigen
targets over the agreement's five-year term. Under this agreement, the Company
received a non-refundable technology access fee of $3.0 million in May 2000.
This agreement also provides for certain other payments based on Genentech's
achievement of milestones, assuming all benchmarks are met for potentially up to
$40.0 million per antigen target, and royalties on net sales of resulting
products. Genentech will be responsible for manufacturing, product development
and marketing of any products developed through this collaboration; ImmunoGen
will be reimbursed for any preclinical materials that it makes under the
agreement. The agreement can be renewed for one subsequent three-year period,
for an additional technology access fee.
Also in May 2000, the Company entered into a development, commercialization
and license agreement with British Biotech Pharmaceuticals Limited ("British
Biotech"), a biotechnology company located in Oxford, England, to develop and
commercialize the Company's huN901-DM1 TAP for the treatment of small-cell lung
cancer. This agreement grants British Biotech exclusive rights to develop and
commercialize huN901-DM1 in the European Union and Japan. The Company retains
the rights to commercialize huN901-DM1 in the United States and the rest of the
world, as well as the right to manufacture the product worldwide. Under the
terms of the agreement, British Biotech will be responsible for conducting the
clinical trials necessary to achieve marketing approval in the United States,
European Union and Japan. ImmunoGen is responsible for the preclinical
development, and will be reimbursed for manufacturing the product for clinical
trials. In May 2000, British Biotech paid a fee of $1.5 million for its
territorial rights to huN901-DM1 which has been deferred, to be recorded as
revenue as the Company completes its preclinical development obligations. Upon
approval of the product for marketing in the United States, the Company will pay
to British Biotech a one-time milestone payment of $3.0 million. ImmunoGen will
receive royalties on sales of huN901-DM1 in the European Union and Japan.
To date, the Company has not generated revenues from product sales and
expects to incur significant operating losses over the foreseeable future. As of
June 30, 2000, the Company had approximately $17.3 million in cash and short
term investments. No revenues have been generated from product sales and the
Company does not anticipate having a commercially approved product within the
foreseeable future. Research and development expenses are expected to increase
significantly in the near term as the Company continues its development efforts.
Moreover, the Company expects to spend approximately $2.5 million to upgrade its
development and pilot manufacturing facility in Norwood, Massachusetts. It is
anticipated that the increase in total cash expenditures will be offset by
collaboration-derived proceeds. Accordingly, period-to-period operational
results may fluctuate dramatically. The Company believes that its established
collaborative agreements, while subject to specified milestone achievements,
will provide funding sufficient to allow it to meet its obligations under all
collaborative agreements while also allowing the aggressive development of
certain of those product candidates and technologies outside current
collaborative agreements. However, no assurances can be given that such
collaborative agreement funding will, in fact, be realized. Should the Company
not meet some or all of the terms and conditions of its various collaboration
agreements, it may be
13
<PAGE> 14
required to pursue additional strategic partners, secure alternative financing
arrangements, and/or defer or limit some or all of its research, development
and/or clinical projects.
RESULTS OF OPERATIONS
Revenues
The Company's total revenues for the year ended June 30, 2000 ("2000") were
$11.6 million, compared with $3.65 million for the year ended June 30, 1999
("1999") and $540,000 for the year ended June 30, 1998 ("1998"). The 218%
increase in revenues from 1999 to 2000 is primarily attributable to multiple
milestone payments and access fees recognized under the SB and Genentech
collaboration agreements. During 2000 the Company recognized collaboration
revenue of $6.2 million from SB and $5.0 million form Genentech. During 1999,
$3.0 million in collaboration revenue was earned under the SB agreement and no
collaboration revenue was earned during 1998. Deferred revenue of $1.8 million
as of June 30, 2000 represents progress payments received from collaborators
pursuant to contract revenues not yet earned.
In all three years ended June 30, revenues ($4,800, $400,000 and $305,000
in 2000, 1999 and 1998, respectively) were also derived from development fees
received under the Small Business Innovation Research ("SBIR") program of the
National Cancer Institute. SBIR revenue is recognized when reimbursable expenses
are incurred. As of July 1999, all available funds under currently authorized
SBIR programs had been received by the Company.
Interest income was $379,000 in 2000 compared to $251,000 in 1999 and
$233,000 in 1998. Interest income in all three years included interest earned on
cash balances available for investment and, to a lesser extent, in 1999 and
1998, interest earned on a note receivable from an assignee of one of the
Company's facilities. The increase in total interest income from 1998 to 1999
and then again from 1999 to 2000 is a result of increases in the average daily
invested cash balances offset by the declining average principal balance of the
outstanding note receivable.
Research and Development Expenses
Research and development expenses, which constituted the principal
component of the Company's total operational expenditures (74%, 77% and 69% in
2000, 1999 and 1998, respectively), were $8.9 million in 2000 as compared to
$6.1 million in 1999 and $5.7 million in 1998. The $2.8 million, or 46%,
increase from 1999 to 2000 was primarily due to increased costs associated with
supporting the Company's currently ongoing huC242-DM1/SB-408075 human clinical
trial, as well as the continued development of huN901-DM1 and other TAP product
candidates in advance of their respective human clinical studies. The $0.4
million, or 6.2%, increase in research and development expenses between 1998 and
1999 was mostly due to costs associated with the development and manufacturing
of huC242-DM1/SB-408075 components in advance of its Phase I/ II clinical study,
as well as the further pre-clinical development of huN901-DM1. Future research
and development expenses are expected to significantly increase in connection
with the Company's ongoing clinical study of huC242-DM1/SB-408075. The Company
also anticipates additional development costs will result from both the
advancement of huN901-DM1 toward clinical trials as well as the further
development of other TAP product candidates.
In-process Research and Development
In connection with the exercise of a put option held by a founding
researcher of ATI, in January of 1998, the Company acquired 500,000 shares of
ATI common stock in exchange for the equivalent of $871,930 in ImmunoGen Common
Stock. The value of the incremental ATI ownership purchased, as determined by
the value of the ImmunoGen Common Stock issued, was ascribed to in-process
research and development technology and was charged to operations. No such
transaction occurred in either 2000 or 1999.
14
<PAGE> 15
General and Administrative Expenses
General and administrative expenses were $3.1 million in 2000 compared to
$1.8 million in 1999 and $1.7 million in 1998. The approximate $1.3 million, or
72%, increase from 1999 to 2000 was primarily due to increased administrative
and business development personnel costs, as well as increased expenditures
associated with investor relations and business development. Future general and
administrative expenses are expected to increase in support of the continued
development of the Company's product candidates and technologies.
Non-operating Income
Net non-operating income was $69,000 in 2000 compared to $55,000 in 1999
and $46,000 in 1998. Non-operating income in 2000, 1999 and 1998 was primarily
comprised of prior-period, retroactive favorable insurance rate adjustments as
well as gains on the sales of idle assets.
Minority Interest
ATI operating losses of $76,000, $101,000 and $160,000 for fiscal 2000,
1999 and 1998, respectively, were allocated to ATI's minority stockholder within
the Company's consolidated financial statements.
Non-cash Dividends
Non-cash dividends were $0 in 2000 compared to approximately $918,000 in
1999 and $605,000 in 1998. Non-cash dividends recorded in both 1999 and 1998
represented the Black-Scholes derived fair value of warrants to purchase shares
of ImmunoGen Common Stock issued in connection with the sale of the Company's
Series E Convertible Preferred Stock ("Series E Stock").
LIQUIDITY AND CAPITAL RESOURCES
<TABLE>
<CAPTION>
JUNE 30,
-------------------------
2000 1999 1998
------- ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash and short term investments............................. $17,329 $4,226 $1,742
Working capital............................................. 15,324 3,770 2,138
Stockholders' equity........................................ 15,368 5,329 4,311
</TABLE>
Since July 1, 1999, the Company has financed its operations from various
sources, including revenues earned under collaboration agreements, issuances of
convertible equity securities, amounts received from the assignment of
facilities and equipment, income earned on invested assets, and proceeds from
exercised stock options. Substantially all cash used in fiscal 2000 was used to
support the Company's various research and development activities.
Cash provided by operations during 2000 was approximately $2.4 million,
compared to the negative $3.5 million in 1999. The significant increase in
operational cash flow in 2000 was primarily due to $13.0 million in
collaboration milestone and up-front access fee payments received in the year
ended June 30, 2000 offset by $11.9 million in operational expenses.
Capital purchases increased in 2000 as compared to 1999 from $120,000 to
$424,000. Current year purchases mainly included acquisitions of additional
scientific equipment needed to further develop the Company's TAP product
candidates.
As a result of the recently signed Genentech and British Biotech
collaborative agreements, the Company expects to expend significant cash
resources to update its existing Norwood, Massachusetts development and pilot
manufacturing facility. The Company anticipates that such capital expenditures
could approximate $2.5 million over the next twelve months. Certain capital
outlays are expected to be reimbursed pursuant to the Company's collaborative
agreements.
15
<PAGE> 16
Net cash used in investing activities was $15.6 million in 2000, and
primarily represents purchases of higher-yielding, investment-grade corporate
and U.S. Government debt securities. Net cash provided by investing activities
in 1999 was $844,000 and primarily resulted from payments received on a note
receivable originally issued in connection with the assignment of the Company's
former Canton, Massachusetts facility.
Net cash provided by financing activities increased from $5.2 million in
1999 to $10.5 million in 2000. The increase from 1999 to 2000 is largely due to
the exercise of 3.54 million warrants and options during 2000 as well as the
September 1999 issuance of 1.02 million shares of Common Stock to SB. Total
proceeds from of all ImmunoGen Common Stock issuances occurring within 2000
totaled $7.1 million. In each of 1999 and 2000, $3.4 million was also received
in connection with ATI's issuance of convertible preferred stock to BioChem. The
BioChem research collaboration expired on July 31, 2000; no additional preferred
stock will be issued to Biochem. In both 1999 and 1998, $1.5 million in Series E
Convertible Preferred Stock were issued in a private placement. In 2000, all
Series E Convertible Preferred Stock were converted into 2.82 million shares of
Common Stock. No such issuance of ImmunoGen convertible preferred stock occurred
during fiscal 2000.
As of June 30, 2000, the Company had approximately $17.3 million in cash
and investments. No revenues have been generated from product sales and the
Company does not anticipate having a commercially approved product within the
foreseeable future. Research and development expenses are expected to increase
significantly in the near term as the Company continues its development efforts.
Moreover, the Company expects to spend approximately $2.5 million to upgrade its
development and pilot manufacturing facility in Norwood, Massachusetts. It is
anticipated that the increase in total cash expenditures will be offset by
collaboration-derived proceeds. Accordingly, period-to-period operational
results may fluctuate dramatically. The Company believes that its established
collaborative agreements, while subject to specified milestone achievements,
will provide funding sufficient to allow it to meet its obligations under all
collaborative agreements while also allowing the aggressive development of
certain of those product candidates and technologies outside current
collaborative agreements. However, no assurances can be given that such
collaborative agreement funding will, in fact, be realized. Should the Company
not meet some or all of the terms and conditions of its various collaboration
agreements, it may be required to pursue additional strategic partners, secure
alternative financing arrangements, and/or defer or limit some or all of its
research, development and/or clinical projects.
SUBSEQUENT EVENT
On September 5, 2000, the Company entered into a collaboration agreement
with Abgenix, Inc. of Fremont, California. The agreement provides Abgenix with
access to ImmunoGen's maytansonoid Tumor-Activated Prodrug (TAP) technology for
use with Abgenix's fully human antibodies generated with XenoMouse technology.
Immunogen will receive $5 million in technology access fee payments, as well as
potential milestone payments, and royalties on net sales of any resulting
products. In addition, on September 7, 2000, Abgenix purchased $15 million of
ImmunoGen Common Stock at $19.00 per share.
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 key materials 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
16
<PAGE> 17
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 treatments 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; potential Year 2000 problems; 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.
Recent Accounting Pronouncements
In June 1998, The Financial Accounting Standards Board issued SFAS 133,
"Accounting for Derivative Instruments and Hedging Activities". The effective
date of this statement was deferred to fiscal years beginning after June 15,
2000. This statement requires the recognition of all derivative instruments as
either assets or liabilities in the statement of financial position and the
measurement of those instruments at fair value. The Company does not expect the
adoption of this statement to have a material impact on its financial
statements.
In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin 101 ("SAB 101"), which addresses accounting policies
to be applied in the recognition, presentation and disclosure of revenues from
contract partnerships, in financial statements filed with the SEC. The net
effect of SAB 101, when applicable could defer revenue recognition for some
milestone payments previously received into future accounting periods. On June
26, 2000, the SEC deferred the implementation of SAB 101 from the second
calendar quarter of 2000 until no later than the fourth calendar quarter of
2000, in order to provide companies with additional time to determine the effect
that a change in accounting policy under SAB 101 will have on their revenue
recognition practices. The implementation of SAB 101 will require companies to
report any changes in accounting principle at the time of implementation in
accordance with Accounting Principles Board Opinion No. 20, "Accounting
Changes". The implementation of SAB 101 could have a material effect on the
reported financial results for the year ended June 30, 2001.
In March 2000, the Financial Accounting Standards Board issued FASB
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation -- an interpretation of APB Opinion No. 25" ("FIN 44"). FIN 44
clarifies the application of APB Opinion No. 25 and among other issues clarifies
the following: the definition of an employee for purposes of applying APB
Opinion No. 25; the criteria for determining whether a plan qualifies as a
noncompensatory plan; the accounting consequence of various modifications to the
terms of previously fixed stock options or awards; and the accounting for an
exchange of stock compensation awards in a business combination. FIN 44 is
effective July 1, 2000, but certain conclusions in FIN 44 cover specific events
that occurred after either December 15, 1998 or January 12, 2000. The Company
does not expect the application of FIN 44 to have a material impact on the
Company's financial position or results of operations.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Not applicable.
17
<PAGE> 18
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE(S)
-------
<S> <C>
Report of Independent Accountants........................... 19
Consolidated Financial Statements:
Consolidated Balance Sheets as of June 30, 2000 and
1999................................................... 20
Consolidated Statements of Operations for the Years Ended
June 30, 2000, 1999 and 1998........................... 21
Consolidated Statements of Stockholders' Equity for the
Years Ended June 30, 1998, 1999 and 2000............... 22-23
Consolidated Statements of Cash Flows for the Years Ended
June 30, 2000, 1999 and 1998........................... 24
Notes to Consolidated Financial Statements................ 26
</TABLE>
18
<PAGE> 19
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, stockholders' equity and cash
flows present fairly, in all material respects, the financial position of
ImmunoGen, Inc. (the "Company") at June 30, 2000 and 1999, and the results of
its operations and its cash flows for each of the three years in the period
ended June 30, 2000, in conformity with accounting principles generally accepted
in the United States of America. 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 auditing standards generally
accepted in the United States of America, 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.
PricewaterhouseCoopers LLP Signature
Boston, Massachusetts
July 28, 2000,
except for Note N as to which the date is September 7, 2000
19
<PAGE> 20
IMMUNOGEN, INC.
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2000 AND JUNE 30, 1999
<TABLE>
<CAPTION>
JUNE 30, JUNE 30,
2000 1999
------------- -------------
<S> <C> <C>
ASSETS
Cash and cash equivalents................................... $ 1,408,908 $ 4,225,580
Marketable securities....................................... 15,920,484 --
Due from related party...................................... 47,352 910,108
Current portion of note receivable.......................... -- 350,000
Prepaid and other current assets............................ 415,441 57,915
------------- -------------
Total current assets................................. 17,792,185 5,543,603
------------- -------------
Property and equipment, net of accumulated depreciation..... 1,508,396 1,583,350
Other assets................................................ 43,700 43,700
------------- -------------
Total assets...................................... $ 19,344,281 $ 7,170,653
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable............................................ $ 891,419 $ 869,996
Accrued compensation........................................ 204,210 282,390
Other current accrued liabilities........................... 987,475 528,969
Current portion of deferred lease and capital lease
obligations............................................... 60,083 91,911
Current portion of deferred revenue......................... 325,000 --
------------- -------------
Total current liabilities............................ 2,468,187 1,773,266
------------- -------------
Capital lease obligations................................... 8,137 68,220
Deferred revenue............................................ 1,500,000 --
------------- -------------
Total liabilities................................. 3,976,324 1,841,486
------------- -------------
Commitments and contingencies (Note L)
Stockholders' equity:
Preferred stock; $.01 par value; authorized 5,000,000 as
of June 30, 2000 and 1999:
Convertible preferred stock, Series E, $.01 par
value; issued and outstanding 0 and 2,400 shares
as of June 30, 2000 and 1999, respectively
(liquidation preference -- stated value).......... -- 24
Common stock, $.01 par value; authorized 50,000,000 shares
as of June 30, 2000 and June 30, 1999, respectively;
issued and outstanding 33,050,659 and 25,668,797 shares
as of June 30, 2000 and June 30, 1999, respectively.... 330,507 256,687
Additional paid-in capital................................ 168,682,991 158,790,821
Accumulated deficit....................................... (153,955,925) (153,718,365)
Accumulated other comprehensive income.................... 310,384 --
------------- -------------
Total stockholders' equity........................... 15,367,957 5,329,167
------------- -------------
Total liabilities and stockholders' equity........ $ 19,344,281 $ 7,170,653
============= =============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
20
<PAGE> 21
IMMUNOGEN, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JUNE 30, 2000, 1999 AND 1998
<TABLE>
<CAPTION>
JUNE 30,
-----------------------------------------
2000 1999 1998
----------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Revenue earned under collaboration agreements..... $11,175,000 $ 3,000,000 --
Development fees.................................. 4,800 400,105 $ 304,723
Interest.......................................... 378,522 250,995 232,937
Licensing......................................... 705 1,158 2,454
----------- ----------- -----------
Total revenues............................ 11,559,027 3,652,258 540,114
----------- ----------- -----------
Expenses:
Research and development.......................... 8,878,105 6,097,869 5,744,572
Purchase of in-process research and development
technology..................................... -- -- 871,930
General and administrative........................ 3,063,403 1,785,751 1,740,347
----------- ----------- -----------
Total expenses............................ 11,941,508 7,883,620 8,356,849
----------- ----------- -----------
Gain on the sale of assets..................... 19,538 4,200 25,629
Other income................................... 49,513 51,042 20,645
----------- ----------- -----------
Net loss before minority interest................... (313,430) (4,176,120) (7,770,461)
----------- ----------- -----------
Minority interest in net loss of consolidated
subsidiary..................................... 75,870 101,160 159,524
----------- ----------- -----------
Net loss............................................ 237,560) (4,074,960) (7,610,937)
----------- ----------- -----------
Non-cash dividends on convertible preferred
stock.......................................... -- (917,583) (605,479)
----------- ----------- -----------
Net loss to common stockholders..................... $ (237,560) $(4,992,543) $(8,216,416)
=========== =========== ===========
Basic and diluted loss per common share............. $ (0.01) $ (0.20) $ (0.34)
=========== =========== ===========
Shares used in computing basic and diluted loss per
share amounts..................................... 29,520,576 25,525,061 24,210,340
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
21
<PAGE> 22
IMMUNOGEN, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (NOTE K)
FOR THE YEARS ENDED JUNE 30, 1998, 1999 AND 2000
<TABLE>
<CAPTION>
ACCUMULATED
COMMON STOCK PREFERRED STOCK ADDITIONAL OTHER
--------------------- ---------------- PAID-IN ACCUMULATED COMPREHENSIVE
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT INCOME
---------- -------- ------- ------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at June 30, 1997......... 21,779,767 $217,797 2,800 $ 28 $144,753,538 $(140,509,406) $ --
Stock options exercised.......... 114,302 1,143 -- -- 101,728 -- --
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 (1,100) (11) 119,947 -- --
Conversion of Series C
Convertible Preferred Stock
into Common Stock.............. 701,180 7,012 (700) (7) 25,481 -- --
Conversion of Series D
Convertible Preferred Stock
into Common Stock.............. 1,001,387 10,014 (1,000) (10) 16,195 -- --
Issuance of Series E Convertible
Preferred Stock, net of
financing costs................ -- -- 1,200 12 1,448,376 -- --
Value of Common Stock purchase
warrants issued................ -- -- -- -- 580,056 -- --
Value ascribed to ImmunoGen
warrants issued to BioChem, net
of financing costs............. -- -- -- -- 4,870,088 -- --
Non-cash dividends on convertible
preferred stock................ -- -- -- -- -- (605,479) --
Net loss for the year ended
June 30, 1998................ -- -- -- -- -- (7,610,937) --
---------- -------- ------- ---- ------------ ------------- --------
Balance at June 30, 1998......... 25,419,552 254,195 1,200 12 152,782,585 (148,725,822) --
Stock options exercised........ 174,245 1,742 -- -- 313,545 -- --
Issuance of Series E
Convertible Preferred Stock,
net of financing costs....... -- -- 1,200 12 1,495,193 -- --
Issuance of Common Stock in
exchange for Series E
Preferred Stock placement
services..................... 75,000 750 -- -- (750) -- --
Value of Common Stock purchase
warrants issued.............. -- -- -- -- 917,583 -- --
Compensation for stock option
vesting acceleration for
retired director............. -- -- -- -- 13,275 -- --
Value ascribed to ImmunoGen
warrants issued to BioChem,
net of financing costs....... -- -- -- -- 3,269,390 -- --
Non-cash dividends on
convertible preferred
stock........................ -- -- -- -- -- (917,583) --
Net loss for the year ended June
30, 1999....................... -- -- -- -- -- (4,074,960) --
---------- -------- ------- ---- ------------ ------------- --------
Balance at June 30, 1999......... 25,668,797 256,687 2,400 24 158,790,821 (153,718,365) --
Unrealized gain on marketable
securities..................... -- -- -- -- -- -- 310,384
Net loss for the year ended June
30, 2000....................... -- -- -- -- -- (237,560) --
Comprehensive Income............. -- -- -- -- -- -- --
<CAPTION>
COMPREHENSIVE TOTAL
INCOME STOCKHOLDERS'
(LOSS) EQUITY
------------- -------------
<S> <C> <C>
Balance at June 30, 1997......... $ -- $ 4,461,957
Stock options exercised.......... -- 102,871
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............. -- 4,870,088
Non-cash dividends on convertible
preferred stock................ -- (605,479)
Net loss for the year ended
June 30, 1998................ (7,610,937) (7,610,937)
----------- -----------
Balance at June 30, 1998......... -- 4,310,970
Stock options exercised........ -- 315,287
Issuance of Series E
Convertible Preferred Stock,
net of financing costs....... -- 1,495,205
Issuance of Common Stock in
exchange for Series E
Preferred Stock placement
services..................... -- --
Value of Common Stock purchase
warrants issued.............. -- 917,583
Compensation for stock option
vesting acceleration for
retired director............. -- 13,275
Value ascribed to ImmunoGen
warrants issued to BioChem,
net of financing costs....... -- 3,269,390
Non-cash dividends on
convertible preferred
stock........................ -- (917,583)
Net loss for the year ended June
30, 1999....................... (4,074,960) (4,074,960)
----------- -----------
Balance at June 30, 1999......... -- 5,329,167
Unrealized gain on marketable
securities..................... 310,384 310,384
Net loss for the year ended June
30, 2000....................... (237,560) (237,560)
-----------
Comprehensive Income............. 72,824 --
===========
22
<PAGE> 23
<CAPTION>
ACCUMULATED
COMMON STOCK PREFERRED STOCK ADDITIONAL OTHER
--------------------- ---------------- PAID-IN ACCUMULATED COMPREHENSIVE
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT INCOME
---------- -------- ------- ------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Stock options exercised.......... 131,567 1,316 -- -- 219,192 -- --
Exercise of put option........... 1,023,039 10,231 -- -- 2,489,769 -- --
Warrants exercised............... 3,403,728 34,037 -- -- 4,408,575 -- --
Conversion of Series E
Convertible Preferred Stock
into Common Stock.............. 2,823,528 28,236 (2,400) (24) (28,212) -- --
Compensation for stock option
vesting acceleration for
terminated officer............. -- -- -- -- 349,716 -- --
Value ascribed to ImmunoGen
warrants issued to Biochem, net
of financing costs............. -- -- -- -- 2,453,130 -- --
---------- -------- ------- ---- ------------ ------------- --------
Balance at June 30, 2000......... 33,050,659 $330,507 -- $ -- $168,682,991 $(153,955,925) $310,384
========== ======== ======= ==== ============ ============= ========
<CAPTION>
COMPREHENSIVE TOTAL
INCOME STOCKHOLDERS'
(LOSS) EQUITY
------------- -------------
<S> <C> <C>
Stock options exercised.......... -- 220,508
Exercise of put option........... -- 2,500,000
Warrants exercised............... -- 4,442,612
Conversion of Series E
Convertible Preferred Stock
into Common Stock.............. -- --
Compensation for stock option
vesting acceleration for
terminated officer............. -- 349,716
Value ascribed to ImmunoGen
warrants issued to Biochem, net
of financing costs............. -- 2,453,130
----------- -----------
Balance at June 30, 2000......... $ -- $15,367,957
=========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
23
<PAGE> 24
IMMUNOGEN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2000, 1999 AND 1998
<TABLE>
<CAPTION>
JUNE 30,
---------------------------------------
2000 1999 1998
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss to common stockholders....................... $ (237,560) $(4,992,543) $(8,216,416)
Adjustments to reconcile net loss to net cash used for
operating activities:
Depreciation and amortization.................... 498,619 555,357 1,053,441
Stock issued for in-process research and
development technology........................ -- -- 871,930
Loss (gain) on sale of property and equipment.... (19,539) (4,200) (25,629)
Interest earned on note receivable............... -- (77,362) (103,722)
Compensation for stock option vesting
acceleration.................................. 349,716 13,275 --
Non-cash dividend on convertible preferred
stock......................................... -- 917,583 605,479
Minority interest in net loss of consolidated
subsidiary.................................... (75,870) (101,160) (159,524)
Amortization of deferred lease................... (35,172) (52,760) (60,664)
Changes in operating assets and liabilities:
Due from related party........................... 19,756 5,365 (72,473)
Prepaid and other current assets................. (357,526) (6,555) 197,131
Accounts payable................................. 21,423 170,578 86,859
Accrued compensation............................. (78,180) 57,264 (23,346)
Other current accrued liabilities................ 458,506 -- --
Deferred revenue................................. 1,825,000 (24,277) (121,319)
----------- ----------- -----------
Net cash (used for) provided by operating
activities.................................. 2,369,173 (3,539,435) (5,968,253)
----------- ----------- -----------
Cash flows from investing activities:
Capital expenditures.................................. (423,921) (120,223) (27,480)
Payments received on note receivable.................. 350,000 960,000 330,000
Purchase of marketable securities..................... (20,521,137) -- --
Proceeds from maturities of marketable securities..... 4,950,347 -- --
Prepaid interest from investments..................... (39,310) -- --
Proceeds from sale of property and equipment.......... 19,795 4,200 37,705
----------- ----------- -----------
Net cash (used for) provided by investing
activities.................................. (15,664,226) 843,977 340,225
----------- ----------- -----------
Cash flows from financing activities:
Proceeds from exercise of put option.................. 2,500,000 -- --
Proceeds from stock warrants exercised................ 4,442,612 -- --
Proceeds from convertible preferred stock, net........ -- 1,495,205 1,429,136
Proceeds from issuance of subsidiary convertible
preferred stock, net............................... 3,372,000 3,370,550 4,205,865
Stock issuances, net.................................. 220,508 315,287 102,870
Principal payments on capital lease obligations....... (56,739) (1,829) (37,068)
----------- ----------- -----------
Net cash provided by financing activities..... 10,478,381 5,179,213 5,700,803
----------- ----------- -----------
Net change in cash and cash equivalents................. (2,816,672) 2,483,755 72,775
----------- ----------- -----------
</TABLE>
24
<PAGE> 25
<TABLE>
<CAPTION>
JUNE 30,
---------------------------------------
2000 1999 1998
----------- ----------- -----------
<S> <C> <C> <C>
Cash and cash equivalents, beginning balance............ 4,225,580 1,741,825 1,669,050
----------- ----------- -----------
Cash and cash equivalents, ending balance............... $ 1,408,908 $ 4,225,580 $ 1,741,825
=========== =========== ===========
Supplemental disclosure of noncash financing activities:
Capital lease obligations assumed on acquired
equipment.......................................... $ -- $ 126,788 $ --
=========== =========== ===========
Due from related party for quarterly investment
payment............................................ $ -- $ 843,000 $ 843,000
=========== =========== ===========
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
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
25
<PAGE> 26
IMMUNOGEN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. NATURE OF BUSINESS AND PLAN OF OPERATION:
The Company anticipates that its existing capital resources will enable it
to maintain its current and planned operations at least through fiscal year
2001. ImmunoGen, Inc. ("ImmunoGen" or the "Company") was incorporated in
Massachusetts in 1981 to develop, produce and market commercial anti-cancer and
other pharmaceuticals based on molecular immunology. The Company continues to
research and develop its various products and technologies, and does not expect
to derive revenue from commercially approved product sales within the
foreseeable future. It is anticipated that the Company's existing capital
resources, enhanced by collaborative agreement funding, will enable current and
planned operations to be maintained through at least the next twelve-month
period. However, if the Company is unable to achieve subsequent milestones under
its collaborative agreements, the Company may be required to pursue additional
strategic partners, secure alternative financing arrangements and/or defer or
limit some or all of its research, development and/or clinical projects.
The Company is subject to risks common to companies in the biotechnology
industry including, but not limited to, the safety, efficacy and successful
development of product candidates, fluctuations in operating results, protection
of proprietary technology, limited sales and marketing experience, limited
manufacturing capacity, risk of product liability, compliance with government
regulations and dependence on key personnel and collaborative partners.
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 Apoptosis Technology, Inc. ("ATI") (established in January
1993). All intercompany transactions and balances have been eliminated.
Revenue Recognition
The Company recognizes revenue on milestone based collaboration agreements
when achievement of the milestone has occurred and collection is probable.
Deferred revenues represent milestone payments received from collaborators where
the performance obligations related to the milestone have not been completed.
Revenues recognized are based on the collaboration agreement milestone value and
the relationship of costs incurred to the Company's estimates of total cost
expected to complete that milestone. The Company's estimates of cost include all
costs expected to be incurred to fulfill performance obligations related to the
milestone.
Development revenues of approximately $4,800, $400,000 and $305,000 in
fiscal years 2000, 1999 and 1998, respectively, represent income earned, on a
cost reimbursement basis, under the Small Business Innovation Research 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.
26
<PAGE> 27
IMMUNOGEN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Research and Development Costs
Research and development costs are expensed as incurred.
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.
Financial Instruments and Concentration of Credit Risk
The Company has no significant off balance sheet concentration of credit
risk such as foreign exchange contracts, option contracts or other foreign
hedging arrangements. The Company maintains the majority of its cash balances
with financial institutions. Financial instruments that potentially subject the
Company to concentrations of credit risk primarily consist of the cash and cash
equivalents and short term marketable securities. The Company places its cash,
cash equivalents and marketable securities with high credit quality financial
institutions.
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, $1,194,000 and $3,910,000 of money market funds and repurchase
agreements at June 30, 2000 and 1999, respectively.
Marketable Securities
In accordance with the Company's investment policy, surplus cash is
invested in investment-grade corporate and U.S. Government debt securities
typically with maturity dates of less than one year. The Company determines the
appropriate classification of marketable securities at the time of purchase and
reevaluates such designation as of each balance sheet date. Marketable
securities which meet the criteria for classification as available-for-sale are
carried at fair value based on quoted market prices. Unrealized gains and losses
are reported net, as comprehensive income, within shareholders' equity. The cost
of debt securities is adjusted for amortization of premiums and accretion of
discounts to maturity with all amortization/accretion included in interest
income.
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.............. 3-5 years
Furniture and fixtures...................... 5 years
Leasehold improvements...................... Shorter of lease term or estimated useful life
</TABLE>
27
<PAGE> 28
IMMUNOGEN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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 non-operating income. Gains recorded under sale/leaseback
arrangements are deferred and amortized to operations over the life of the
lease.
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, 2000, the Company has determined that no impairment of long-lived
assets exists.
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 instruments issued with
provisions 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
instruments, is calculated as of the date of issuance of the convertible
securities as either dividends to preferred shareholders 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 readily
determinable at the date of issuance, 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 quoted market price of the Common
Stock on the date of issuance. Accordingly, upon conversion, actual numbers
and/or prices may differ from original estimates.
Recent Accounting Pronouncements
In June 1998, The Financial Accounting Standards Board issued SFAS 133,
"Accounting for Derivative Instruments and Hedging Activities". The effective
date of this statement was deferred to fiscal years beginning after June 15,
2000. This statement requires the recognition of all derivative instruments as
either assets or liabilities in the statement of financial position and the
measurement of those instruments at fair value. The Company does not expect the
adoption of this statement to have a material impact on its financial
statements.
In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin 101 ("SAB 101"), which addresses accounting policies
to be applied in the recognition, presentation and disclosure of revenues from
contract partnerships, in financial statements filed with the SEC. The net
effect of SAB 101, when applicable could defer revenue recognition for some
milestone payments previously received into future accounting periods. On June
26, 2000, the SEC deferred the implementation of SAB 101 from the second
calendar quarter of 2000 until no later than the fourth calendar quarter of
2000, in order to provide companies with additional time to determine the effect
that a change in accounting policy under SAB 101will have on their revenue
recognition practices. The implementation of SAB 101 will require companies to
report any changes in accounting principle at the time of implementation in
accordance with Accounting Principles Board Opinion No. 20, "Accounting
Changes". The implementation of SAB 101 could have a material effect on the
reported financial results for the year ended June 30, 2001.
28
<PAGE> 29
IMMUNOGEN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In March 2000, the Financial Accounting Standards Board issued FASB
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation -- an interpretation of APB Opinion No. 25" ("FIN 44"). FIN 44
clarifies the application of APB Opinion No. 25 and among other issues clarifies
the following: the definition of an employee for purposes of applying APB
Opinion No. 25; the criteria for determining whether a plan qualifies as a
noncompensatory plan; the accounting consequence of various modifications to the
terms of previously fixed stock options or awards; and the accounting for an
exchange of stock compensation awards in a business combination. FIN 44 is
effective July 1, 2000, but certain conclusions in FIN 44 cover specific events
that occurred after either December 15, 1998 or January 12, 2000. The Company
does not expect the application of FIN 44 to have a material impact on the
Company's financial position or results of operations.
C. AGREEMENTS:
SmithKline Beecham Licensing and Stock Purchase Agreements
In February 1999, the Company entered into an exclusive license agreement
with SB to develop and commercialize ImmunoGen's lead tumor activated prodrug,
("TAP") huC242-DM1/SB-408075. Under the terms of the agreement, the Company
could receive more than $40.0 million, subject to the achievement by the Company
of certain development milestones. The Company is also entitled to receive
royalty payments on future product sales, if and when they commence. Finally, at
ImmunoGen's option, SB will purchase up to $5.0 million of ImmunoGen Common
Stock over the next two years, subject to certain conditions. As of June 30,
2000 SB purchased $2.5 million worth of ImmunoGen Common Stock.
The SB Agreement is expected to provide the Company with sufficient cash
funding to carry out its responsibilities in developing huC242-DM1/SB-408075. To
that end, the Company will be responsible for the product's initial assessment
in humans, which began in December 1999. All costs subsequent to the initial
assessment will be the responsibility of SB.
As of June 30, 1999, the first two milestone payments totaling $3.0 million
had been received and recorded as collaboration revenue. Pursuant to the SB
Agreement, the payments represented non-refundable, unrestricted milestones
where no future obligation to perform exists. As of June 30, 2000, the Company
received an additional two milestone payments totaling $6.5 million which were
recorded as collaboration revenue, with the exception of $325,000 of the second
payment recorded as deferred revenue until such time as the remaining ongoing
financial commitment associated with the milestone is satisfied.
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 licensing 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. No
funding of such projects occurred in fiscal 1998, 1999, or 2000 and none is
anticipated in the foreseeable future. To the extent that any invention develops
at Dana-Farber, which derived its principal support and prior 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 to Dana-Farber, if and when
product sales commence, certain royalties based on a formula stipulated in the
agreement.
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
29
<PAGE> 30
IMMUNOGEN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
liquidation preference over the common stock of ATI. 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 the terms of a stock purchase agreement entered into among the
Company, ATI, Dana-Farber and a founding researcher 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 through January 11, 1999. At the Company's discretion, the
options were exercisable through cash or by the delivery of shares of Common
Stock. In January 1998, the individual stockholder exercised his 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 agreement 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 97%. The transaction was accounted for as a step acquisition of a
minority interest in a subsidiary. The incremental 1.5% ATI ownership interest
received by the Company is based upon in-process ATI research and development
technology and, therefore, is not considered a substantiated intangible asset.
Accordingly, the cost of the acquisition, $871,930, or ($0.03) per common share
was charged to operations in 1998.
Genentech Licensing Agreement
In May 2000, the Company executed two separate licensing agreements with
Genentech, Inc. of South San Francisco, California. The first agreement grants
an exclusive license to Genentech for ImmunoGen's TAP for use with antibodies
such as Herceptin(R). Under the terms of the agreement, Genentech will receive
exclusive worldwide rights to commercialize anti-HER2 targeting products using
ImmunoGen's maytansinoid TAP platform. Genentech will be responsible for
manufacturing, product development and marketing of any products resulting from
the agreement; ImmunoGen will be reimbursed for any preclinical and clinical
materials that it makes under the agreement. ImmunoGen received and recorded as
revenue a $2.0 million non-refundable, payment for execution of the agreement,
for which no further performance is required. In addition to royalties on net
sales, the terms of the agreement include certain other payments based on
Genentech's achievement of milestones, assuming all benchmarks are met, for
potentially up to $40.0 million.
Genentech Heads of Agreement
In addition to the Herceptin(R) agreement described above, the Company
announced in May 2000 that it has entered into an additional agreement with
Genentech. This second collaboration provides Genentech with broad access to
ImmunoGen's maytansinoid TAP technology for use with Genentech's proprietary
antibodies. The multi-year agreement provides Genentech with a license to
utilize ImmunoGen's maytansinoid TAP platform in its antibody product research
efforts and an option to obtain product licenses for a limited number of antigen
targets over the agreement's five-year term. Under this agreement, the Company
received and recorded as revenue a non-refundable up-front technology access fee
of $3.0 million in May 2000. This agreement also provides for certain other
payments based on Genentech's achievement of milestones, assuming all benchmarks
are met for potentially up to $40.0 million per antigen target, and royalties on
net sales of resulting products. Genentech will be responsible for
manufacturing, product development and marketing of any products developed
through this collaboration; ImmunoGen will be reimbursed for any
30
<PAGE> 31
IMMUNOGEN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
preclinical materials that it makes under the agreement. The agreement can be
renewed for one subsequent three-year period, for an additional technology
access fee.
British Biotech Development, Commercialization and License Agreement
Also in May 2000, the Company entered into a development, commercialization
and license agreement with British Biotech Pharmaceuticals Limited ("British
Biotech"), a biotechnology company located in Oxford, England, to develop and
commercialize the Company's huN901-DM1 TAP for the treatment of small-cell lung
cancer. The agreement grants British Biotech exclusive rights to develop and
commercialize huN901-DM1 in the European Union and Japan. The Company retains
the rights to commercialize huN901-DM1 in the United States and the rest of the
world, as well as the right to manufacture the product worldwide. Under the
terms of the agreement, British Biotech will be responsible for conducting the
clinical trials necessary to achieve marketing approval in the United States,
European Union and Japan. ImmunoGen is responsible for the remaining preclinical
development, and will be reimbursed for manufacturing the product for clinical
trials. British Biotech paid a fee of $1.5 million for its territorial rights to
huN901-DM1 which has been deferred, to be recorded as revenue as the Company
completes its preclinical development obligations. Upon approval of the product
for marketing in the United States, the Company will pay to British Biotech a
one-time milestone payment of $3.0 million. ImmunoGen will receive royalties on
sales of huN901-DM1 in the European Union and Japan.
D. COMPUTATION OF LOSS PER COMMON SHARE:
Basic and diluted earnings/(loss) per share is calculated based upon the
weighted average number of common shares outstanding during the period. Diluted
earnings per share incorporates the dilutive effect of stock options, warrants
and other convertible securities. As of June 30, 2000, 1999 and 1998, the total
number of options, warrants and other securities convertible into ImmunoGen
Common Stock equaled 6,964,225, 12,610,917 and 9,779,683 respectively. ImmunoGen
Common Stock equivalents as calculated in accordance with the treasury-stock
accounting method, totaled 4,698,751, 3,666,523 and 1,683,325 as of June 30,
2000, 1999 and 1998 respectively. ImmunoGen Common Stock equivalents have not
been included in the loss per share calculation because their effect is
antidilutive.
E. MARKETABLE SECURITIES:
As of June 30, 1999, $4,225,580 in cash and overnight government repurchase
agreements was classified as cash and cash equivalents. The Company's cash, cash
equivalents and marketable securities as of June 30, 2000 are as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Cash and cash equivalents................ $ 1,408,908 $ -- $ -- $ 1,408,908
Commercial paper......................... 7,345,113 301,837 (30) 7,646,920
Government treasury notes................ 8,264,987 10,045 (1,468) 8,273,564
----------- -------- ------- -----------
Total.......................... 17,019,008 311,882 (1,498) 17,329,392
Less amounts classified as cash and cash
equivalents............................ (1,408,908) -- -- (1,408,908)
----------- -------- ------- -----------
Total marketable securities.... $15,610,100 $311,882 $(1,498) $15,920,484
=========== ======== ======= ===========
</TABLE>
During the twelve-month period ended June 30, 2000, $310,000 of unrealized
gains on available-for-sale securities were recognized as comprehensive income.
31
<PAGE> 32
IMMUNOGEN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
F. 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 assumed all payment obligations under the leases, which
amount to approximately $116,000 per month, and made cash payments to the
Company at various dates through July 1999, which totaled approximately $2.4
million. On July 1, 1999, the final scheduled payment of $350,000 was received
in full, thereby satisfying all obligations under the note.
G. PROPERTY AND EQUIPMENT:
Property and equipment consisted of the following at June 30, 2000 and
1999:
<TABLE>
<CAPTION>
JUNE 30,
-------------------------
2000 1999
----------- -----------
<S> <C> <C>
Machinery and equipment..................................... $ 2,085,037 $ 1,976,411
Computer hardware and software.............................. 761,497 531,998
Assets under construction................................... 104,400 113,321
Furniture and fixtures...................................... 67,229 15,401
Leasehold improvements...................................... 8,378,609 8,346,859
----------- -----------
11,396,772 10,983,990
Less accumulated depreciation and amortization.............. 9,888,376 9,400,640
----------- -----------
$ 1,508,396 $ 1,583,350
=========== ===========
</TABLE>
Depreciation and amortization expense was $499,000, $555,000 and $1,053,000
for the years ended June 30, 2000, 1999 and 1998, respectively.
As of June 30, 2000 and June 30, 1999 capital lease amortization totaled
$59,000 and $2,000, respectively. As of June 30, 2000 and June 30, 1999 the cost
of capitalized equipment equaled $140,000 and $29,000, respectively, of which
all is classified under Computer hardware & software.
H. COMPREHENSIVE INCOME (LOSS):
The Company presents comprehensive income in accordance with Statement of
Financial Accounting Standard No. 130, "Reporting Comprehensive Income." For the
years ended June 30, 2000, 1999 and 1998, total comprehensive income (loss)
equaled $72,824, $(4,074,960) and $(7,610,937), respectively. Other
comprehensive income was comprised entirely of unrealized gains recognized on
available-for-sale debt securities.
I. MINORITY INTEREST:
In July 1997, ATI entered into a collaboration agreement with BioChem
Pharma Inc. ("BioChem"), a large Canadian biopharmaceutical company. This
agreement granted 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. As of April 2000, BioChem
fulfilled all of its funding obligations under the agreement by purchasing a
total of $11.125 million in non-voting, non-dividend-bearing convertible
preferred stock of ATI.
In April 2000, BioChem informed ATI of its decision not to extend the
agreement beyond its scheduled July 31, 2000 termination date. Consequently,
under the terms of the agreement, rights to all screens delivered to BioChem
reverted to ATI effective August 1, 2000. However, certain provisions pertaining
to the license of any products resulting from the collaboration will remain in
force. As of August 1, 2000, no compound leads were identified. Until July 31,
2000, all remaining proceeds of the $11.125 million BioChem investment in
32
<PAGE> 33
IMMUNOGEN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
ATI were restricted to support the research and development activities of the
collaboration. After that date, all residual proceeds represent unrestricted
assets of ATI. Of the Company's $17.3 million in cash, cash equivalents and
marketable securities as of June 30, 2000, $1.4 million represents funds
restricted to support ATI's research and development activities under the
BioChem agreement.
The preferred stock issued to BioChem is convertible into ATI common stock
at any time after three years from the date of first issuance, 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. Through June 2000, 11,125 shares of ATI preferred
stock were issued to BioChem, representing a 15% minority interest (on an
if-converted and fully-diluted basis) in the net equity of ATI. This minority
interest portion of ATI's loss reduced ImmunoGen's net loss in each of
twelve-month periods ended June 30, 2000, 1999 and 1998 by $75,870, $101,160,
and $159,524, respectively. Based upon an independent appraisal, approximately
3% of the $11.125 million invested to date, or approximately $334,000, has been
allocated to the minority interest in ATI, with the remainder, or approximately
$10.791 million allocated to the Company's equity.
In accordance with the agreement, proceeds received by ATI from BioChem are
restricted to support the research and development activities of the
collaboration through July 2000. ATI also incurred certain fees reimbursable by
Biochem. At June 30, 2000 and June 30, 1999, the total outstanding reimbursable
fees equaled $47,352 and $67,108 respectively and were reflected on the
Company's consolidated balance sheet within the asset "due from related
parties". Summarized information for ATI at June 30, 2000, 1999 and 1998 and for
the years then ended follows:
<TABLE>
<CAPTION>
2000 1999 1998
----------- ----------- -----------
<S> <C> <C> <C>
Total assets.................................... $ 1,454,621 $ 2,617,265 $ 2,361,334
Total liabilities............................... 525,847 382,561 250,438
Total revenues.................................. 119,393 123,920 112,423
Total expenses (principally research and
development).................................. (3,960,628) (3,370,661) (3,159,437)
Net loss........................................ (3,841,235) (3,246,741) (3,047,014)
</TABLE>
As part of the BioChem agreement, BioChem also received warrants to
purchase shares of ImmunoGen Common Stock equal to the amount invested in ATI
during the three-year research term. Beginning July 31, 2000, these warrants
will be exercisable for a number of shares of ImmunoGen Common Stock determined
by dividing $11.125 million, the amount of BioChem's investment in ATI, by the
market price of 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 number of shares of ImmunoGen'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 ImmunoGen Common Stock on that date, unless stockholder
approval for such 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. ImmunoGen expects that
BioChem will use its shares of ATI preferred stock, in lieu of cash, to exercise
the warrants.
J. INCOME TAXES:
No income tax provision or benefit has been provided for U.S. federal
income tax purposes as the Company has incurred losses since inception. As of
June 30, 2000, net deferred tax assets totaled approximately $56.4 million,
consisting of federal net operating loss carryforwards of approximately $128.4
million, state net operating loss carryforwards of approximately $21.4 million,
net book to tax timing
33
<PAGE> 34
IMMUNOGEN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
differences of approximately $8.9 million and approximately $7.1 million of
research and experimentation credit carryforwards. These net operating loss and
credit carryforwards will expire at various dates between 2001 and 2015 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 $56.4 million and $48.4 million at June 30, 2000 and
1999, 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.
K. 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. On January 5,
1998, the remaining 1,100 unconverted shares of the Series A Stock plus accrued
dividends thereon were converted into 1,347,491 shares of the Company's Common
Stock. In connection with the Series A Stock 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 on
convertible preferred stock at the time of issuance of the Series A Stock.
Also in October 1996, the Company sold 3,000 shares of its Series B
Convertible Preferred Stock ("Series B Stock"). As of February 4, 1997, all
3,000 shares of 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 were valued at $618,900, and were accounted for as non-cash dividends
on convertible preferred stock 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 (the "October 1996 Private Placement") to an institutional investor.
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. On
August 1, 1997, the remaining 700 unconverted shares of the Series C Stock plus
accrued dividends thereon were converted into 701,180 shares of the Company's
Common Stock. In connection with all 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 on convertible
preferred stock 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 a financing agreement that
was entered into in October 1996. The Series D Stock
34
<PAGE> 35
IMMUNOGEN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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 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 on
convertible preferred stock 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
Convertible Preferred Stock ("Series E Stock") to an institutional investor. The
investment was completed in three installments: $1.0 million in December 1997;
$500,000 in March 1998; and $1.5 million in July 1998. The issued Series E Stock
became convertible into Common Stock at the end of a two-year holding period at
$1.0625 per share. In addition, as of June 30, 2000, warrants to purchase
2,823,528 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 was determined at the time of their
issuance and accounted for as non-cash dividends on convertible preferred stock.
Approximately $580,500 and $918,000 in non-cash dividends were recorded in the
each of fiscal 1998 and 1999, respectively. These warrants have an exercise
price of $2.125 per share, and vest over a period of two years subject to
certain provision. Of the total 2,823,528 warrants issued, 941,176 expire in
2004 and 1,882,352 expire in 2005. Also in relation to this agreement, 75,000
shares of common stock were issued to a third party as a finder's fee. The value
of these issued shares equaled $107,000 based on closing prices on the date of
grant and charged to operations.
In January 2000, holders of the Company's Series E Convertible Preferred
Stock ("Series E Stock") exercised their right to convert all 2,400 shares of
Series E Stock into 2,823,528 shares of the Company's Common Stock. In December
1999, six warrant holders exercised their rights to acquire 2,028,019 of shares
of Common Stock at a range of $0.01 to $2.31 per share. In January 2000, two
holders of warrants exercised their rights to acquire 454,600 of shares of
Common Stock at a range of $1.94 to $2.31 per share. In February 2000, five
holders of warrants exercised their rights to acquire 571,670 shares of Common
Stock at a price range of $1.94 to $5.49 per share. In March 2000, two holders
of warrants exercised their rights to acquire 349,439 shares of Common Stock at
a price range of $2.31 to $2.68 per share. During the twelve-month period ended
June 30, 2000, holders of options issued through the Company's 1986 Incentive
Stock Option Plan, as amended, exercised their rights to acquire an aggregate of
131,567 shares at prices ranging from $0.84 per share to $4.25 per share. The
total proceeds from these option and warrant exercises, $7.1 million will be
used to fund current operations.
In February 1999, as part of the exclusive license agreement with SB, at
ImmunoGen's option, SB agreed to purchase up to $5 million of ImmunoGen Common
Stock over the next two years, subject to certain conditions. As of June 30,
2000, SB exercised a put option for $2.5 million resulting in the issuance of
1,023,039 shares of ImmunoGen Common Stock in September 1999.
In July 1997, the Company's majority-owned subsidiary, ATI, entered into a
collaboration with BioChem. As part of the agreement, BioChem received warrants
to purchase shares of ImmunoGen Common Stock equal to $11.125 million, the
amount invested in ATI by BioChem during the three-year research term. These
warrants are exercisable at any time on or after July 31, 2000, until and
including July 31, 2002, into a number of shares of ImmunoGen Common Stock
determined by dividing $11.125 million by the market price of the ImmunoGen
Common Stock on the exercise date, subject to certain limitations. In April
2000, the last quarterly investment of $843,000 was received and warrants
corresponding to that amount were issued. Until
35
<PAGE> 36
IMMUNOGEN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
July 31, 2000, proceeds from this investment were restricted to fund the ongoing
ATI research collaboration. After that date, all residual proceeds represented
unrestricted assets of ATI.
Warrants
In addition to the warrants discussed in this footnote, subheading Common
and Preferred Stock, 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, in connection with a private placement of the Company's
convertible debentures in March 1996. These warrants expire in 2001. As a
finder's fee, the Company 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.
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 shares of Common Stock of the Company. In July 1999, 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 4.85 million shares of Common Stock. In addition to options granted
under the Plan, the Board previously approved the granting of other,
non-qualified options. Information related to stock option activity under the
Plan and outside of the Plan during fiscal years 1998, 1999 and 2000 is as
follows:
<TABLE>
<CAPTION>
NON-QUALIFIED OPTIONS
OPTIONS ISSUED UNDER ISSUED
THE PLAN OUTSIDE OF THE PLAN
--------------------------- ------------------------
AVERAGE AVERAGE
SHARES PRICE PER SHARE SHARES PRICE PER SHARE
--------- --------------- ------ ---------------
<S> <C> <C> <C> <C>
Outstanding at June 30, 1997........ 1,492,967 $4.40 20,000 $7.69
--------- ----- ------ -----
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 20,000 $7.69
--------- ----- ------ -----
Granted........................ 642,700 2.06 -- --
Exercised...................... 174,245 1.81 -- --
Canceled....................... 151,659 5.58 -- --
--------- ----- ------ -----
Outstanding at June 30, 1999........ 2,809,149 $2.65 20,000 $7.69
--------- ----- ------ -----
Granted........................ 596,200 7.27 -- --
Exercised...................... 131,567 1.67 -- --
Canceled....................... 61,774 4.92 -- --
--------- ----- ------ -----
Outstanding at June 30, 2000........ 3,212,008 $3.50 20,000 $7.69
========= ===== ====== =====
</TABLE>
36
<PAGE> 37
IMMUNOGEN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table summarizes aggregate information about total stock
options under the Plan and outside the Plan, outstanding at June 30, 2000:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------------------- ------------------------------
WEIGHTED-AVERAGE
REMAINING
RANGE OF NUMBER CONTRACTUAL WEIGHTED-AVERAGE NUMBER WEIGHTED-AVERAGE
EXERCISE PRICES OUTSTANDING LIFE (YEARS) EXERCISE PRICE EXERCISABLE EXERCISE PRICE
--------------- ----------- ---------------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
$ 0.84 -- 2.50 2,254,458 7.28 $ 1.57 1,483,037 $ 1.59
2.51 -- 5.00 40,650 6.34 3.83 27,775 3.96
5.01 -- 7.50 670,050 8.19 6.58 151,150 5.92
7.51 -- 10.00 3,500 3.34 8.59 3,500 8.59
10.01 -- 12.50 215,050 3.91 11.44 154,050 11.48
12.51 -- 17.00 49,200 1.85 14.75 44,800 14.75
---------- ---------
3,232,008 1,863,312
========== =========
</TABLE>
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, 2000, 1999
and 1998:
<TABLE>
<CAPTION>
AVERAGE AVERAGE
OUTSTANDING PRICE PER SHARE EXERCISABLE PRICE PER SHARE
----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C>
June 30, 2000.................. 3,232,008 $3.50 1,863,312 $3.12
June 30, 1999.................. 2,829,149 2.65 1,343,651 3.94
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 applies the Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," and related interpretation in
accounting for its Plan. Accordingly, no compensation expense is generally
recognized for its stock-based compensation plans. However, in April of 2000,
52,916 options previously granted to a terminating officer were granted
accelerated vesting and, accordingly, the Company charged $350,000 to
compensation expense representing the difference between the exercise price and
the fair value of the stock at the accelerated date.
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 Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation," the Company's net basic and diluted loss per
common share for the years ended June 30, 2000, 1999 and 1998 would have been
adjusted to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
JUNE 30, 2000 JUNE 30, 1999 JUNE 30, 1998
------------- ------------- -------------
<S> <C> <C> <C>
Net Loss............................. $1,378,740 $5,648,419 $8,681,477
Basic and diluted loss per share..... $ 0.05 $ 0.22 $ 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.
37
<PAGE> 38
IMMUNOGEN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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:
<TABLE>
<CAPTION>
2000 1999 1998
------ ------ ------
<S> <C> <C> <C>
Dividend Yield................................ None None None
Volatility.................................... 107.00% 85.00% 85.00%
Risk-free interest rate....................... 6.72% 4.96% 5.53%
Expected life (years)......................... 5.5 5.5 5.5
</TABLE>
Using the Black-Scholes option-pricing model, the fair value of options
granted during fiscal 2000, 1999 and 1998 was $6.00, $1.47 and $0.72,
respectively.
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.
L. COMMITMENTS:
Operating Leases
At June 30, 2000, 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 was subject to a
sublease agreement, which expired in April 2000. Total net receipts under the
sublease agreement, which were credited to rent expense, were approximately $3.4
million through April 2000, of which approximately $707,000, $796,000 and
$774,000 was received by the Company in fiscal 2000, 1999 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. Facilities rent expense/(income), net of the above mentioned
subleased income, was approximately $318,000, $146,000 and $140,000 during
fiscal years 2000, 1999 and 1998.
38
<PAGE> 39
IMMUNOGEN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The minimum rental commitments, including real estate taxes and other
expenses, for the next four years under the non-cancelable capital and operating
lease agreements are as follows:
<TABLE>
<CAPTION>
OPERATING CAPITAL
PERIOD LEASES LEASES
------ ---------- -------
<S> <C> <C>
2001.................................................... $ 794,604 $65,632
2002.................................................... 716,051 8,683
2003.................................................... 583,871 --
---------- -------
Total minimum lease payment............................. 2,094,526 74,315
Total lease commitments................................. $2,094,526 74,315
---------- -------
Less amount representing interest....................... 6,095
-------
Present value of net minimum capital lease payments..... $68,220
=======
</TABLE>
M. 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 that currently totals 20% of the employee's
contribution, up to a maximum amount equal to 1% of the employee's gross salary.
In fiscal, 2000, 1999 and 1998, the Company's contributions to the 401(k) Plan
amounted to approximately $41,075, $26,000, and $25,000, respectively.
N. SUBSEQUENT EVENT:
On September 5, 2000, the Company entered into a collaboration agreement
with Abgenix, Inc. of Fremont, California. The agreement provides Abgenix with
access to ImmunoGen's maytansonoid Tumor-Activated Prodrug (TAP) technology for
use with Abgenix's fully human antibodies generated with XenoMouse technology.
Immunogen will receive $5 million in technology access fee payments, as well as
potential milestone payments, and royalties on net sales of any resulting
products. In addition, on September 7, 2000 Abgenix purchased $15 million of
ImmunoGen Common Stock at $19.00 per share.
39
<PAGE> 40
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 2000 Annual Meeting of Shareholders, which the Company
intends to file with the Securities and Exchange Commission on or before October
27, 2000, 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........... 52 Chairman of the Board of Directors, Chief Executive
Officer and President, and Interim Chief Financial
and Accounting Officer
Walter A. Blattler, Ph.D....... 51 Executive Vice President, Science and Technology and
Treasurer
John M. Lambert, Ph.D.......... 49 Vice President, Research and Development
Pauline Jen Ryan............... 33 Vice President, Business Development
</TABLE>
The background of each executive officer is as follows:
Mitchel Sayare, Chief Executive Officer since 1986, 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. Dr. Blattler was
named Corporate Treasurer on August 8, 2000. The Company's prior Chief Financial
Officer and Treasurer, Kathleen Carroll, resigned effective August 11, 2000.
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.
Pauline Jen Ryan, Vice President, Business Development, joined the Company
in May of 1999, with more than ten years of experience in the pharmaceutical and
biotechnology industries. Most recently, she was
40
<PAGE> 41
Vice President at Capital Management Consulting, Inc., where she provided
strategic counsel. Before that, she managed business development at
Organogenesis, Inc. Ms. Ryan holds a Masters degree in Management from
Northwestern University's Kellogg Graduate School of Management.
The section entitled "Section 16(a) Beneficial Ownership Reporting
Compliance" in the Company's definitive proxy statement for its 1999 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 2000 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 2000 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 2000 Annual Meeting of Shareholders is hereby
incorporated by reference.
41
<PAGE> 42
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
----------- -----------
<C> <S>
(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)
</TABLE>
42
<PAGE> 43
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
(10.16) Amendment to Lease dated August 31, 1995 between
Massachusetts Institute of Technology, as lessor, and the
Registrant, as lessee(14)
(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)
</TABLE>
43
<PAGE> 44
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
(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)
(10.48) License Agreement dated effective June 1, 1998 by and
between the Registrant and Pharmacia & Upjohn AB*(21)
(10.49) License Agreement dated February 1, 1999 between the
Registrant and SmithKline Beecham Corporation*(20)
(10.50) Stock Purchase Agreement dated February 1, 1999 between the
Registrant and SmithKline Beecham plc*(20)
(10.51) License Agreement dated effective May 2, 2000 by and between
the Registrant and Genentech, Inc.*
(10.52) Heads of Agreement dated effective May 2, 2000 by and
between the Registrant and Genentech, Inc.*
(10.53) Development,Commercialization and License Agreement dated
effective May 4, 2000 by and between the Registrant and
British Biotech Pharmaceuticals Limited*
(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.
44
<PAGE> 45
(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.
(20) 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 31,1998.
(21) 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, 1998.
(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 May 4, 2000 -- Item 5: Other Events.
Form 8-K dated May 5, 2000 -- Item 5: Other Events.
Form 8-K dated May 8, 2000 -- Item 5: Other Events.
Form 8-K dated May 16, 2000 -- Item 5: Other Events.
45
<PAGE> 46
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
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 27, 2000
Pursuant to the requirements of the Securities and 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 27, 2000
--------------------------------------------- Directors, Chief Executive Officer
MITCHEL SAYARE and President (principal executive
and financial officer)
/s/ WALTER A. BLATTLER Executive Vice President, Science September 27, 2000
--------------------------------------------- and Technology, Treasurer and
WALTER A. BLATTLER Director
/s/ DAVID W. CARTER Director September 27, 2000
---------------------------------------------
DAVID W. CARTER
/s/ MICHAEL R. EISENSON Director September 27, 2000
---------------------------------------------
MICHAEL R. EISENSON
/s/ STUART F. FEINER Director September 27, 2000
---------------------------------------------
STUART F. FEINER
/s/ MARK S. SKALETSKY Director September 27, 2000
---------------------------------------------
MARK S. SKALETSKY
</TABLE>
46
