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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-17999
ImmunoGen, Inc.
(Exact name of registrant as specified in its charter)
Massachusetts 04-2726691
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
333 Providence Highway
Norwood, MA 02062
(Address of principal executive offices, including zip code)
(781) 769-4242
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if
changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes x No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
At February 10, 2000 there were 32,118,439 shares of common stock, par
value $.01 per share, of the registrant outstanding.
Exhibit Index at Page: 18
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IMMUNOGEN, INC.
TABLE OF CONTENTS
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements:
a. Condensed Consolidated Balance Sheets as of
December 31, 1999 and June 30, 1999......................... 3
b. Condensed Consolidated Statements of Operations
for the three months and six months ended
December 31, 1999 and 1998.................................. 4
c. Condensed Consolidated Statements of Stockholders'
Equity for the year ended June 30, 1999 and the
six months ended December 31, 1999.......................... 5
d. Condensed Consolidated Statements of Cash Flows
for the six months ended December 31, 1999 and 1998......... 6
e. Notes to Condensed Consolidated Financial Statements........ 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 10
Item 3. Quantitative and Qualitative Disclosures about Market Risk.. 14
PART II. OTHER INFORMATION .......................................... 14
SIGNATURES........................................................... 17
2
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IMMUNOGEN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, AND JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1999 1999
------------ -------------
<S> <C> <C>
ASSETS
Cash and cash equivalents................................. $ 4,941,470 $ 4,225,580
Marketable securities..................................... 4,051,875 -
Due from related parties.................................. 3,388,715 910,108
Current portion of note receivable........................ - 350,000
Prepaid and other current assets.......................... 90,078 57,915
------------ ------------
Total current assets............................... 12,472,138 5,543,603
------------ ------------
Property and equipment, net of accumulated depreciation... 1,482,473 1,583,350
Other assets.............................................. 43,700 43,700
------------ ------------
Total assets.................................... $ 13,998,311 $ 7,170,653
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable.......................................... $ 811,822 $ 869,996
Accrued compensation...................................... 145,915 282,390
Other current accrued liabilities......................... 526,099 528,969
Current portion of deferred lease and
capital lease obligations................................ 69,523 91,911
------------ ------------
Total current liabilities.......................... 1,553,359 1,773,266
------------ ------------
Capital lease obligations................................. 36,825 68,220
------------ ------------
Total liabilities............................... 1,590,184 1,841,486
------------ ------------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value; authorized 5,000,000
shares as of December 31, 1999 and June 30, 1999:
Convertible preferred stock, Series E, $.01 par
value; issued and outstanding 2,400 as of
December 31, 1999 and June 30, 1999 (liquidation
preference - stated value)............................ 24 24
Common stock, $.01 par value; authorized 50,000,000
shares as of December 31, 1999 and June 30, 1999;
issued and outstanding 28,724,522 and 25,668,797 as
of December 31, 1999 and June 30 1999, respectively .... 287,245 256,687
Additional paid-in capital................................ 163,954,916 158,790,821
Accumulated deficit....................................... (151,863,018) (153,718,365)
Accumulated other comprehensive income.................... 28,960 -
------------ ------------
Total stockholders' equity......................... 12,408,127 5,329,167
------------ ------------
Total liabilities and stockholders' equity...... $ 13,998,311 $ 7,170,653
============ ============
</TABLE>
The accompanying notes are an integral part of the condensed
consolidated financial statements.
3
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IMMUNOGEN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND SIX MONTHS ENDED DECEMBER 31, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------------------ ------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Revenue earned under collaboration agreement.... $ 2,500,000 $ 6,500,000
Development fees................................ - $ 157,623 4,800 $ 262,295
Interest........................................ 74,793 72,787 134,089 143,913
Licensing....................................... 195 300 485 828
----------- ----------- ----------- -----------
Total revenues............................. 2,574,988 230,710 6,639,374 407,036
----------- ----------- ----------- -----------
Expenses:
Research and development........................ 1,890,695 1,420,868 3,721,716 2,846,082
General and administrative...................... 643,212 472,713 1,146,278 817,130
Interest........................................ 4,862 986 10,131 2,428
----------- ----------- ----------- -----------
Total expenses............................. 2,538,769 1,894,567 4,878,125 3,665,640
----------- ----------- ----------- -----------
Earnings/(loss) from operations................... 36,219 (1,663,857) 1,761,249 (3,258,604)
----------- ----------- ----------- -----------
Gain on the sale of assets...................... 1,645 1,000 1,488 4,200
Other income.................................... 42,030 333 42,030 25,280
----------- ----------- ----------- -----------
Net earnings/(loss) before minority interest...... 79,894 (1,662,524) 1,804,767 (3,229,124)
----------- ----------- ----------- -----------
Minority interest in net loss of consolidated
subsidiary..................................... 25,290 25,290 50,580 50,580
----------- ----------- ----------- -----------
Net earnings/(loss)............................... 105,184 (1,637,234) 1,855,347 (3,178,544)
----------- ----------- ----------- -----------
Non-cash dividends on convertible
preferred stock................................ - - - (917,583)
----------- ----------- ----------- -----------
Net earnings/(loss) to common stockholders........ $ 105,184 $(1,637,234) $ 1,855,347 $(4,096,127)
=========== =========== =========== ===========
Earnings/(loss) per common share
Basic........................................... $ 0.00 $ (0.06) $ 0.07 $ (0.16)
=========== =========== =========== ===========
Diluted......................................... $ 0.00 $ (0.06) $ 0.06 $ (0.16)
=========== =========== =========== ===========
Average common shares outstanding
Basic........................................... 27,143,460 25,494,552 26,528,658 25,488,845
=========== =========== =========== ===========
Diluted......................................... 33,463,758 25,494,552 32,848,956 25,488,845
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the condensed
consolidated financial statements.
4
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IMMUNOGEN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED JUNE 30, 1999 AND THE SIX MONTHS ENDED DECEMBER 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
ACCUMULATED
COMMON STOCK PREFERRED STOCK ADDITIONAL OTHER TOTAL
-------------------- ---------------- PAID-IN ACCUMULATED COMPREHENSIVE STOCKHOLDERS'
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT INCOME EQUITY
---------- -------- ------- ------- ------------ ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at June 30, 1998....... 25,419,552 $254,195 1,200 $ 12 $152,782,585 $(148,725,822) $ - $ 4,310,970
========== ======== ======= ======= ============ ============= ============= ============
Comprehensive loss:
Net loss..................... - - - - - (4,074,960) - (4,074,960)
------------
Comprehensive loss........... - - - - - - - (4,074,960)
Issuances of Common Stock...... 174,245 1,742 - - 313,545 - - 315,287
Issuance of Series E
Convertible Preferred Stock,
net of financing costs........ - - 1,200 12 1,495,193 - - 1,495,205
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 - - 917,583
Compensation for stock
option vesting acceleration
for retired director.......... - - - - 13,275 - - 13,275
Value ascribed to ImmunoGen
warrants issued to BioChem,
net of financing costs........ - - - - 3,269,390 - - 3,269,390
Non-cash dividends on
convertible preferred stock... - - - - - (917,583) - (917,583)
---------- -------- ------- ------- ------------ ------------- ------------- ------------
Balance at June 30, 1999....... 25,668,797 $256,687 2,400 $ 24 $158,790,821 $(153,718,365) $ - $ 5,329,167
========== ======== ======= ======= ============ ============= ============= ============
Comprehensive income:
Net earnings................. - - - - - 1,855,347 - 1,855,347
Unrealized gains on
marketable securities, net.. - - - - - - 28,960 28,960
------------
Comprehensive income........... - - - - - - - 1,884,307
Issuance of Common Stock....... 3,055,725 30,558 - - 3,515,256 - - 3,545,814
Tax benefit from stock options
exercised..................... - - - - 13,419 - - 13,419
Value ascribed to ImmunoGen
warrants issued to BioChem,
net of financing costs........ - - - - 1,635,420 - - 1,635,420
---------- -------- ------- ------- ------------ ------------- ------------- ------------
Balance at December 31, 1999... 28,724,522 $287,245 2,400 $ 24 $163,954,916 $(151,863,018) $ 28,960 $ 12,408,127
========== ======== ======= ======= ============ ============= ============= ============
</TABLE>
The accompanying notes are an integral part of the condensed
consolidated financial statements.
5
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IMMUNOGEN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31,
-------------------------
1999 1998
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings/(loss) to common stockholders.......... $ 1,855,347 $(4,096,127)
Adjustments to reconcile net loss to net cash
used for operating activities:
Depreciation and amortization..................... 244,567 334,657
Gain on sale of property and equipment............ (1,488) (4,200)
Interest earned on note receivable................ - (50,297)
Compensation for stock option vesting
acceleration for retired director................ - 13,275
Tax benefit from stock options exercised.......... 13,419 -
Non-cash dividend on convertible preferred stock.. - 917,583
Minority interest in net loss of consolidated
subsidiary....................................... (50,580) (50,580)
Amortization of deferred lease.................... (26,376) (26,376)
Changes in operating assets and liabilities:
Due from related parties......................... (2,478,607) 41,417
Prepaid and other current assets................. (32,163) 20,262
Accounts payable................................. (58,174) 33,432
Accrued compensation............................. (136,475) (116,577)
Other current accrued liabilities................ (2,870) (153,861)
----------- -----------
Net cash used for operating activities....... (673,400) (3,137,392)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments received on note receivable............... 350,000 260,000
Purchase of marketable securities.................. (4,022,915) -
proceeds from sale of property and equipment....... 1,745 4,200
Capital expenditures............................... (143,947) (8,500)
----------- -----------
Net cash (used for) provided by investing
activities.................................. (3,815,117) 255,700
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Common Stock issuances, net........................ 3,545,814 -
Proceeds from convertible preferred stock, net..... - 1,495,205
Proceeds from issuance of subsidiary
convertible preferred stock, net.................. 1,686,000 1,685,252
Principal payments on capital lease obligations.... (27,407) -
----------- -----------
Net cash provided by financing activities.... 5,204,407 3,180,457
----------- -----------
Net change in cash and cash equivalents.............. 715,890 298,765
----------- -----------
Cash and cash equivalents, beginning balance......... 4,225,580 1,741,825
----------- -----------
Cash and cash equivalents, ending balance............ $ 4,941,470 $ 2,040,590
=========== ===========
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITIES:
Due from related party for quarterly investment
payment........................................... $ 843,000 $ 843,000
=========== ===========
Issuance of Common Stock in exchange for
Series E Preferred Stock placement services....... $ - $ 107,812
=========== ===========
</TABLE>
The accompanying notes are an integral part of the condensed
consolidated financial statements.
6
<PAGE> 7
IMMUNOGEN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
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 pharmaceutical product sales in the foreseeable future.
It is anticipated that the Company's existing capital resources 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 agreement (see Note B), the Company may be
required to pursue additional strategic partners, secure alternative funding
arrangements and/or defer or limit some or all of its research and development
projects.
The Company is subject to risks common to companies in the biotechnology
industry including, but not limited to, the development by the Company or its
competitors of new technological innovations, dependence on key personnel,
protection of proprietary technology, manufacturing and marketing limitations,
collaboration arrangements, third-party reimbursements, the need to obtain
additional funding, and compliance with governmental regulations.
BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements at December
31, 1999 and June 30, 1999 and for the three-month and six-month periods ended
December 31, 1999 and 1998 include the accounts of the Company and its
subsidiaries, ImmunoGen Securities Corp. and Apoptosis Technology, Inc. ("ATI").
Although the condensed consolidated financial statements are unaudited, they
include all of the adjustments, consisting only of normal recurring adjustments,
which management considers necessary for a fair presentation of the Company's
financial position in accordance with generally accepted accounting principles
for interim financial information. Certain information and footnote disclosures
normally included in the Company's annual financial statements have been
condensed or omitted. The preparation of interim financial statements requires
the use of management's estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the interim financial statements and the reported
amounts of revenues and expenditures during the reported period. The Company has
been unprofitable since inception and expects to incur significant research and
development expenses that may result in a net loss for the fiscal year ended
June 30, 2000. The results of the interim periods are not necessarily indicative
of the results for the entire year. Accordingly, the interim financial
statements should be read in conjunction with the audited financial statements
and notes thereto included in the Company's Annual Report on Form 10-K for the
year ended June 30, 1999.
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.
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.
7
<PAGE> 8
As of June 30, 1999, $4,225,580 in cash and overnight government repurchase
agreements were classified as cash and cash equivalents. The Company's cash,
cash equivalents and marketable securities as of December 31, 1999 are as
follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
DECEMBER 31, 1999
Cash and money market funds.... $2,553,656 $ - $ - $2,553,656
Commercial paper............... 2,628,842 56,159 - 2,685,001
Government treasury notes...... 3,806,121 - (51,433) 3,754,688
---------- ---------- ---------- ----------
Total........................ 8,988,619 56,159 (51,433) 8,993,345
Less amounts classified as
cash and cash equivalents..... (4,965,704) (10,526) 34,760 (4,941,470)
---------- ---------- ---------- ----------
Total marketable securities.. $4,022,915 $ 45,633 $ (16,673) $4,051,875
========== ========== ========== ==========
</TABLE>
No realized gains or losses on available-for-sale securities were
recognized during the three-month and six-month periods ended December 31, 1999.
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 December 31, 1999 and 1998, the total
number of stock options, warrants and other securities convertible into
ImmunoGen Common Stock, as calculated in accordance with the treasury-stock
accounting method, equaled 11,737,133 and 14,461,528, respectively. Components
of calculating net earnings/(loss) per share are set forth in the following
table:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31,
--------------------------
1999 1998
----------- -----------
<S> <C> <C>
Net earnings/(loss) to common shareholders..... $ 1,855,347 $(4,096,127)
=========== ===========
Weighted average common shares
outstanding, basic........................... 26,528,658 25,488,845
Net effect of dilutive instruments:
Convertible preferred stock................. 4,692,984 5,978,781
Options..................................... 1,234,384 657,060
Warrants.................................... 392,930 -
----------- -----------
Weighted average common shares
outstanding, diluted......................... 32,848,956 32,124,686 *
=========== ===========
Earnings/(loss) per common share, basic....... $ 0.07 $ (0.16)
=========== ===========
Earnings/(loss) per common share, dilutive *.. $ 0.06 $ (0.16)
=========== ===========
</TABLE>
* The dilutive effects of common stock equivalents were not included in the
December 31, 1998 calculation, as their effect was antidilutive.
COMPREHENSIVE INCOME
The Company presents comprehensive income in accordance with Statement of
Financial Accounting Standard No. 130, "Reporting Comprehensive Income." For
both the three-month and six-month periods ended December 31, 1999 and 1998,
total comprehensive income equaled $28,960 and $0, respectively. Comprehensive
income was comprised entirely of unrealized gains recognized on
available-for-sale debt securities.
8
<PAGE> 9
B. AGREEMENTS
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 (the "SB Agreement"). Under the
terms of the agreement, the Company could receive up to a total of $41.5
million, subject to the achievement by the Company of predetermined,
nonrefundable scientific and/or regulatory milestones. The Company is also
entitled to receive royalty payments on future product sales, if and when they
commence.
Under a separate Stock Purchase Agreement, ImmunoGen was also granted the
right to sell up to $5.0 million of ImmunoGen Common Stock to SB in two separate
transactions, subject to certain conditions (the "put options"). On September 1,
1999, the Company exercised the first of these two put options and issued
1,023,039 shares of Common Stock to SB in exchange for $2.5 million.
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 primarily responsible for all costs associated
with the Phase I clinical study that began in December 1999. All costs
subsequent to this initial assessment will be the responsibility of SB. The SB
Agreement is also expected to provide enough additional funding to support
further development of the Company's other current and planned research and
development efforts. As of December 31, 1999, the Company had recognized four
milestones under the SB Agreement, resulting in $9.5 million in collaboration
revenue. Pursuant to the SB Agreement, these payments represented nonrefundable,
unrestricted cash transfers where no future obligation to perform exists. Of the
$9.5 million collaboration revenue recorded to date, $7.0 million had been
received and $2.5 million remained outstanding and included in the asset titled
"Due from related parties" on the December 31, 1999 condensed consolidated
balance sheet. In January 2000, the outstanding $2.5 million balance was
received in full.
C. MINORITY INTEREST
In July 1997, ATI entered into a collaboration agreement with BioChem
Pharma Inc. ("BioChem"), a large Canadian biopharmaceutical company. The BioChem
agreement grants BioChem an exclusive worldwide license to ATI's proprietary
screens based on two families of proteins involved in apoptosis, for use in
identifying leads for anti-cancer drug development.
Under the BioChem agreement, BioChem will invest a total of $11,125,000 in
non-voting, non-dividend-bearing convertible preferred stock of ATI in a series
of quarterly private placements, through March 2000. Proceeds are to be used
exclusively to support the research and development activities of the
collaboration. The BioChem agreement also establishes certain restrictions on
the transferability of assets between ATI and the Company. As of December 31,
1999, BioChem had invested $10,282,000, of which $9,439,000 had been received
and $843,000 remained outstanding and included within the asset entitled "Due
from related parties" on the December 31, 1999 condensed consolidated balance
sheet. The outstanding $843,000 payment was subsequently received in January
2000. The preferred stock issued to BioChem is convertible into ATI common stock
at any time after three years from the first date of 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 December 31, 1999, 10,282 shares of ATI
preferred stock were issued or issuable to BioChem, representing a 13.9%
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 the six-month periods ended December 31, 1999 and 1998 by
$50,580. Based upon an independent appraisal, approximately 3% of the
$10,282,000 invested to date, or approximately $308,000, has been allocated to
the minority interest in ATI, with the remainder, or approximately $9,974,000,
allocated to the Company's equity. Under the BioChem agreement, the initial
three-year research term will expire in July 2000. However, the agreement may be
extended beyond the initial three-year term, at BioChem's discretion, on terms
substantially similar to those for the original term. BioChem will also make
milestone payments up to $15.0 million for each product over the course of its
development. In addition, if and when product sales commence, ATI will receive
royalties on any future worldwide sales of products resulting from the
collaboration. BioChem's obligation to provide additional financing to ATI each
quarter is subject to the satisfaction of special conditions, including a
condition that ATI maintain sufficient cash and other resources to allow it to
continue its planned operations (other than performance of its obligations under
the research agreement) for a minimum period of time. Of the Company's total
$9.0 million in cash, cash equivalents and marketable securities as of December
31, 1999, $1.5 million represents funds restricted to support ATI's research and
administrative expenditures.
9
<PAGE> 10
As part of the BioChem agreement, BioChem also receives warrants to
purchase shares of ImmunoGen Common Stock equal to the amount invested in ATI
during the three-year research term. These warrants will be exercisable for a
number of shares of ImmunoGen Common Stock determined by dividing 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. The warrants are expected to be exercised only in the event
that the shares of ATI common stock do not become publicly traded. In such
event, ImmunoGen expects that BioChem will use its shares of ATI preferred
stock, in lieu of cash, to exercise the warrants.
D. CAPITAL STOCK
In December 1999, holders of warrants originally issued in connection with
a private placement of the Company's Series C Convertible Preferred Stock
exercised their right to acquire 443,200 shares of Common Stock at $2.31 per
share. In exchange for the issued shares of Common Stock, the Company received
$1,023,792. Proceeds from this warrant exercise are to be used to fund current
operations.
In December 1999, holders of warrants originally issued in connection with
a private placement of the Company's Series E Convertible Preferred Stock
exercised their right to acquire 2,823,528 shares of Common Stock at $2.125 per
share. In lieu of cash, the holders elected to utilize a cashless exercise
provision contained in the warrant agreements, resulting in a net distribution
to such holders of 1,584,819 shares of Common Stock. The total number of shares
required to effect the exercise of the warrants was determined using the
aggregate exercise value divided by the closing price of the Common Stock on the
date of exercise.
In July 1997, the Company's majority-owned subsidiary, ATI, entered into a
collaboration with a biopharmaceutical company. As part of the agreement, the
collaborator receives warrants to purchase shares of ImmunoGen Common Stock
equal to the amount invested in ATI by the collaborator during a three-year
research term. These warrants will be 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 the amount invested in ATI by the
market price of the ImmunoGen Common Stock on the exercise date, subject to
certain limitations. On December 31, 1999, the quarterly investment of $843,000
was made in ATI, and warrants corresponding to that amount were issued on
January 6, 2000 in connection with such investment. Proceeds from this
investment are restricted to fund the ongoing ATI research collaboration.
E. SUBSEQUENT EVENTS
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 January 2000, holders of warrants originally issued in connection with a
private placement of the Company's Series C Convertible Preferred Stock
exercised their right to acquire 128,200 shares of Common Stock at $2.31.
Proceeds from this warrant exercise are to be used to fund current operations.
In January 2000, holders of warrants originally issued in connection with a
private placement of the Company's Series D Convertible Preferred Stock
exercised their right to acquire 427,272 shares of Common Stock at $1.94.
Proceeds from this warrant exercise are to be used to fund current operations.
ITEM 2. 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 human clinical study of
10
<PAGE> 11
huC242-DM1/SB-408075. The start of this Phase I 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 December
31, 1999, the Company received $12.0 million under the SB Agreement - $9.5
million in milestone-based collaborative agreement revenue and $2.5 million upon
issuance of ImmunoGen Common Stock to SB.
The Company continues developing huN901-DM1, a TAP for the treatment of
small-cell lung cancer, as well as pursuing additional antibodies to be used to
develop TAP's effective against other cancers. In July 1997, ATI began a
three-year research and development collaboration with BioChem Pharma Inc.
("BioChem"), a large Canadian biopharmaceutical company. At BioChem's option,
this collaboration may be extended beyond its initial three-year term.
To date, the Company has not generated revenues from product sales and does
not anticipate having a commercially approved product in the foreseeable future.
The Company expects to incur significant future research and development
expenses which may not be offset by collaboration derived revenues. Such
research and development expenses are expected to increase over the foreseeable
future as the Company continues its development efforts. Accordingly, period to
period results may fluctuate dramatically. The Company believes that the SB
Agreement, while subject to the achievement by the Company of certain
milestones, will provide cash-based milestone payments sufficient to allow
current and planned operations to continue beyond the next twelve-month period.
Furthermore, the Company is also actively pursuing additional collaboration
partners in support of its other product candidates and TAP technology. However,
no assurances can be given that such SB Agreement milestones and/or additional
partnerships will, in fact, be realized. If the Company is unable to meet some
or all of the terms and conditions in the SB Agreement, it may be required to
pursue additional strategic partners, secure alternative financing arrangements,
and/or defer or limit some or all of its research and development projects.
RESULTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 1999 AND 1998
Revenues
The Company's total revenues for the three months ended December 31, 1999
("1999") were $2.57 million, compared with $231,000 for the three months ended
December 31, 1998 ("1998"). The significant increase in revenues from 1998 to
1999 is primarily attributable to the $2.5 million milestone payment recognized
in December 1999 as collaboration revenue under the SB Agreement. No such
collaboration revenue was earned during 1998. The $2.5 million milestone payment
was recorded upon initiation of Phase I clinical studies of huC242-DM1/SB408075
for the treatment of colorectal, pancreatic and non-small-cell lung cancers.
Milestones earned under the SB Agreement represent one-time, unrestricted
payments recognized upon predetermined scientific and/or regulatory
achievements. Additional collaboration revenues of up to approximately $32.0
million will be earned if the Company achieves certain predetermined SB
Agreement milestones. Therefore, historically recognized collaboration revenues
should not be used as indicators as to the timing or extent of future milestone
payments.
In the three-month period ended December 31, 1998, revenues of $158,000
were also derived from development fees received under the Small Business
Innovation Research Program ("SBIR") of the National Cancer Institute. As of
July 1999, all funds available under authorized SBIR programs had been received.
Therefore, no material development fees are expected to be earned through the
remainder of fiscal year 2000.
Interest income was $75,000 in 1999 compared to $73,000 in 1998. Interest
earned in the three-month period ended December 31, 1999 primarily resulted from
earnings on invested cash balances. Interest earned during the three-month
period ended December 31, 1998 included earnings on invested cash balances as
well as interest earned on a note receivable from an assignee of one of the
Company's facilities. As the note receivable was paid in full on July 1, 1999,
no related interest has been earned in 1999.
Research and Development Expenses
Research and development expenses, which constituted the principal
component of the Company's total operational expenditures (75% in both quarters
ended December 31, 1999 and 1998), were $1.89 million in 1999 compared to $1.42
million in 1998. The $470,000, or 33%, increase from 1998 to 1999 was primarily
due to increased costs associated with the development and manufacturing of
huC242-DM1/SB-408075 components, as well as the further development of
huN901-DM1. Total 1999 increases were offset by significant reductions in
depreciation and, to a lesser extent, decreased salary and related costs. Future
research and development expenses are expected to significantly increase as the
Company continues to fund the initial Phase 1 clinical study of
huC242-DM1/SB-408075. Similarly, additional preclinical development costs
associated with the Company's huN901-DM1 and other TAP product candidates are
also expected to increase future research and development spending.
11
<PAGE> 12
General and Administrative Expenses
General and administrative expenses were $643,000 in 1999 compared to
$473,000 in 1998. The $170,000, or 36%, increase was primarily due to increased
administrative and business development staffing, as well as increased
expenditures associated with investor relations, business development and the
Company's information system. Future general and administrative expenses are
also expected to increase in support of the continued development of the
Company's product candidates and technologies.
Minority Interest
ATI operating losses of $25,290 in each of the three-month periods ended
December 31, 1999 and 1998 were allocated to ATI's minority stockholder within
the Company's condensed consolidated financial statements.
SIX MONTHS ENDED DECEMBER 31, 1999 AND 1998
Revenues
The Company's total revenues for the six months ended December 31, 1999
("1999") were $6.64 million, compared with $407,000 for the six months ended
December 31, 1998 ("1998"). The significant increase in revenues from 1998 to
1999 is primarily attributable to the $6.5 million in milestone payments
recognized as collaboration revenue under the SB Agreement. The collaboration
revenue was comprised of the following: $4.0 million on acceptance by the United
States Food and Drug Administration of the Company's Investigational New Drug
application for huC242-DM1/SB408075, and $2.5 million on initiation of the Phase
I human clinical study. No such collaboration revenues were earned during 1998.
In 1998, revenues of $262,000 were also derived from development fees
received under the SBIR grant program. As of July 1999, all funds available
under authorized SBIR programs had been received. Accordingly, no material
development fees are expected to be earned through the remainder of fiscal year
2000.
Interest income was $134,000 in 1999 compared to $144,000 in 1998. Interest
earned in 1999 primarily resulted from earnings on invested cash balances.
Interest earned in 1998 included earnings on invested cash balances as well as
interest earned on a note receivable from an assignee of one of the Company's
facilities. As the note receivable was paid in full on July 1, 1999, no related
interest has been earned in 1999.
Research and Development Expenses
Research and development expenses were $3.72 million in 1999 compared to
$2.85 million in 1998. The $870,000, or 31%, increase from 1998 to 1999 is due
to the increased costs associated with the development and manufacturing of
huC242-DM1/SB-408075 components, as well as the further development of
huN901-DM1. Total 1999 increases were offset by significant reductions in
depreciation and, to a lesser extent, decreased salary and related costs.
General and Administrative Expenses
General and administrative expenses were $1.15 million in 1999 compared to
$817,000 in 1998. Similar to the results for the three months ended December 31,
1999 and 1998, the $333,000, or 41%, increase was primarily due to increased
administrative and business development staffing as well as increased
expenditures associated with investor relations, business development and the
Company's information system.
Minority Interest
ATI operating losses of $50,580 in 1999 and 1998 were allocated to ATI's
minority stockholder within the Company's condensed consolidated financial
statements.
12
<PAGE> 13
Non-cash Dividends
Non-cash dividends were approximately $918,000 in 1998. No such non-cash
dividends were recognized in 1999. The $918,000 non-cash dividends represented
the Black-Scholes option pricing model derived fair value of warrants to
purchase 1.4 million shares of ImmunoGen Common Stock issued in connection with
the July 1998 sale of the Company's Series E Convertible Preferred Stock.
LIQUIDITY AND CAPITAL RESOURCES
Since July 1, 1999, the Company has primarily financed the net cash used to
support operating activities from various collaborative and financing sources.
These sources include milestone revenues earned under the SB agreement, issues
of equity securities to SB and BioChem, the exercise of warrants to purchase
Common Stock, amounts received from the assignment of facilities and equipment,
and income earned on invested assets. To a lesser extent, the Company has also
received proceeds from the SBIR grant program as well as cash payments from the
exercise of employee stock options. Cash used in operations in the six months
ended December 31, 1999 primarily supported the Company's various research and
development efforts.
Net cash used in operations in the six months ended December 31, 1999 was
$673,000 compared to $3.14 million used in the six months ended December
31,1998. This significant decrease in operational cash use is primarily due to
the recognition of $6.5 million in collaboration revenue earned under the SB
agreement. Offsetting the $2.46 million period to period total decrease in cash
used in operating activities was a $2.5 million increase in "Due from related
parties," which represents the outstanding huC242-DM1/SB408075 Phase I
initiation milestone earned on December 9, 1999. Additionally, for the six
months ended December 31, 1999, $230,000 in operational cash was used to pay
various current assets and liabilities.
Net cash used in investing activities was $3.8 million for the six months
ended December 31, 1999, and primarily represents purchases of higher-yielding,
investment-grade corporate and U.S. Government debt securities. Future
marketable security purchases are expected to increase, consistent with the
Company's intentions to enhance overall returns via investment of available cash
in higher yielding debt securities.
Capital purchases were $144,000 for the six months ended December 31, 1999,
and consisted primarily of information system upgrades. Although the Company
anticipates further research related equipment acquisitions, cash-based
expenditures for property and equipment through the remainder of fiscal 2000 are
not expected to be significant.
On September 1, 1999, the Company exercised a $2.5 million put option
available to it under the SB Agreement. In exchange for the $2.5 million
received, 1,023,039 shares of the Company's Common Stock were issued to SB.
In December 1999, holders of warrants originally issued in connection with
a private placement of the Company's Series C Convertible Preferred Stock
exercised their right to acquire 443,200 shares of Common Stock at $2.31 per
share. Also in December 1999, holders of warrants originally issued in
connection with a private placement of the Company's Series E Convertible
Preferred Stock exercised their right to acquire 2,823,528 shares of Common
Stock at $2.125 per share. In lieu of cash, the holders elected to utilize a
cashless exercise provision contained in the warrant agreements, resulting in a
net distribution of 1,584,819 shares of Common Stock. The total number of shares
required to effect the exercise of the warrants was determined using the
aggregate exercise value divided by the closing price of the Common Stock on the
date of exercise.
For the six-month period ended December 31, 1999, a total of 4,667 stock
options were exercised, resulting in cash receipts to the Company of
approximately $6,000.
From July 1, 1999 to December 31, 1999, an aggregate of $1.686 million was
received from BioChem with respect to the June 30, 1999 and September 30, 1999
quarterly investments. As previously described, in January 2000, another
$843,000 payment was received as payment of the December 1999 quarterly
investment.
In January 2000, and subsequent to the balance sheet date, holders of
warrants originally issued in connection with a private placement of the
Company's Series C Convertible Preferred Stock exercised their right to acquire
128,200 shares of Common Stock at $2.31. Also in January 2000, holders of
warrants originally issued in connection with a private placement of the
Company's Series D Convertible Preferred Stock exercised their right to acquire
427,272 shares of Common Stock at $1.94.
13
<PAGE> 14
The Company anticipates that its existing capital resources, which include
the $2.5 million Phase I initiation milestone payment, the $843,000 December 31,
1999 BioChem investment, and the proceeds from the above-mentioned warrant
exercises will enable the Company to maintain its current and planned operations
through at least the next twelve-month period. Moreover, the Company believes
that the SB Agreement, while subject to the achievement of future development
milestones, will not only provide sufficient equity and milestone payments to
carry out its responsibilities in developing huC242-DM1/SB-408075, but also
provide enough additional funding to support the Company's other current and
planned research and development expenditures. The Company is also actively
seeking partners to support aggressive clinical development and
commercialization of both huN901-DM1, and the Company's other TAP technologies.
However, no assurances can be given that such third-party relationships will be
consummated or that future milestone payments under the SB agreement will in
fact be realized. If the Company is unable to achieve some or all of the SB
Agreement milestones and/or not consummate additional third-party relationships,
it may be required to seek alternative financing arrangements and/or defer or
limit some or all of its research and development projects.
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 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;
unreported 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 the Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1999 as filed with the Securities and Exchange Commission.
YEAR 2000 ISSUES
Prior to January 1, 2000, the Company had completed all upgrades necessary
to ensure that its information systems, facilities and research and development
equipment containing date-sensitive hardware and software was Year 2000
compliant. Also prior to January 1, 2000, the Company sent questionnaires to its
currently engaged third-party suppliers, vendors, administrators and custodians,
inquiring of their progress in identifying and addressing their Year 2000
issues. The Company received responses from all surveyed vendors and, based upon
the information contained in those responses, the Company believes that Year
2000 issues have been addressed by the Company's critical vendors. To date, the
Company has not encountered any problems as a result of the Year 2000. Expenses
related to Year 2000 have not been material, and the Company does not expect to
incur any significant Year 2000 expenses in the future.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In the normal course of business, the financial position of the Company is
subject to certain risks, including market risk associated with interest rate
movements. The Company regularly assesses these risks and has established
policies and business practices designed to mitigate such exposures. The Company
invests surplus cash in low-risk debt securities, typically maturing in one year
or less, pending use in operations. The Company manages these funds by seeking
principal preservation while concurrently enhancing rates of return. The
Company's interest income is therefore sensitive to changes in the general level
of domestic interest rates. Based on the Company's overall interest rate
exposure at December 31, 1999, a near-term change in interest rates would not
materially affect the fair value of interest rate sensitive instruments.
14
<PAGE> 15
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is not a party to any material legal proceedings.
Item 2. Changes in Securities and Use of Proceeds.
In December 1999, holders of warrants originally issued in connection with
a private placement of the Company's Series C Convertible Preferred Stock
exercised their right to acquire 443,200 shares of Common Stock at $2.31
per share. Proceeds from this warrant exercise are to be used to fund
current operations.
In December 1999, holders of warrants originally issued in connection with
a private placement of the Company's Series E Convertible Preferred Stock
exercised their right to acquire 2,823,528 shares of Common Stock at
$2.125 per share. In lieu of cash, the holders elected to utilize a
cashless exercise provision contained in the warrant agreements, resulting
in a net distribution of 1,584,819 shares of Common Stock. The total
number of shares required to effect the exercise of the warrants was
determined using the aggregate exercise value divided by the closing price
of the Common Stock on the date of exercise.
In July 1997, the Company's majority-owned subsidiary, Apoptosis
Technology, Inc. ("ATI"), entered into a collaboration with a
biopharmaceutical company. As part of the agreement, the collaborator
receives warrants to purchase shares of ImmunoGen Common Stock equal to
the amount invested in ATI by the collaborator during a three-year
research term. These warrants will be 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 the amount invested in
ATI by the market price of the ImmunoGen Common Stock on the exercise
date, subject to certain limitations. On December 31, 1999 the quarterly
investment of $843,000 was made in ATI and warrants corresponding to those
amounts were issued on January 6, 2000 in connection with such
investments. All warrants were issued in accordance with Regulation D of
the Securities Exchange Act of 1933. Proceeds from this investment are
restricted to fund the ongoing ATI research collaboration.
In January 2000, and subsequent to the balance sheet date, holders of the
Company's 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 January 2000, holders of warrants originally issued in connection with
a private placement of the Company's Series C Convertible Preferred Stock
exercised their right to acquire 128,200 shares of Common Stock at $2.31.
Proceeds from this warrant exercise are to be used to fund current
operations.
In January 2000 holders of warrants originally issued in connection with a
private placement of the Company's Series D Convertible Preferred Stock
exercised their right to acquire 427,272 shares of Common Stock at $1.94.
Proceeds from this warrant exercise are to be used to fund current
operations.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
The Company's Annual Meeting of Shareholders was held on November 9, 1999.
At the Meeting, the following matters were voted upon:
1) The proposal to elect five (5) directors was approved by a vote of
22,176,897 shares FOR and 594,562 shares WITHHELD.
15
<PAGE> 16
2) The following persons were elected as Directors of the Company and the
record votes cast is as set forth below:
<TABLE>
<CAPTION>
Name Votes Cast Votes For Votes Withheld
------------------ ---------- ---------- --------------
<S> <C> <C> <C>
Mitchel Sayare 22,771,459 22,166,897 604,562
Walter A. Blattler 22,771,459 22,171,597 599,862
David W. Carter 22,771,459 22,174,797 596,662
Michael R. Eisenson 22,771,459 22,160,696 610,763
Stuart F. Feiner 22,771,459 22,166,496 604,963
</TABLE>
3) The proposal to amend the Company's Restated Stock Option Plan to
increase the number of shares reserved for the grant of options from
3.525 million to 4.850 million was approved by the following vote:
Shares FOR 21,157,802
Shares AGAINST 1,472,059
Shares ABSTAINED 141,598
Item 5. Other Information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
10.1 Form of Warrant Certificate issued by the Registrant to BioChem
Pharma Inc. (previously filed as exhibit 10.5 to, and
incorporated herein by reference from, the Registrant's
Registration Statement on Form 10-Q, as amended by form 10-Q/A,
for the quarter ended December 31, 1997)
27 Financial Data Schedule
(b) Reports on Form 8-K
None.
16
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
IMMUNOGEN, INC.
Date: February 10, 2000 By: /s/ Mitchel Sayare
-------------------------------
Mitchel Sayare
President and Chief Executive
Officer
(principal executive officer)
Date: February 10, 2000 By: /s/ Kathleen A. Carroll
-------------------------------
Kathleen A. Carroll
Vice President,
Finance and Administration
(principal financial officer)
17
<PAGE> 18
INDEX TO EXHIBITS
EXHIBIT
NO. DESCRIPTION
- ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUN-30-1999
<PERIOD-END> DEC-31-1999
<CASH> 4,941,470
<SECURITIES> 4,051,875
<RECEIVABLES> 3,388,715
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 12,472,138
<PP&E> 11,116,799
<DEPRECIATION> (9,634,326)
<TOTAL-ASSETS> 13,998,311
<CURRENT-LIABILITIES> 1,553,359
<BONDS> 0
0
24
<COMMON> 287,245
<OTHER-SE> 163,954,916
<TOTAL-LIABILITY-AND-EQUITY> 13,998,311
<SALES> 0
<TOTAL-REVENUES> 6,639,374
<CGS> 0
<TOTAL-COSTS> 4,867,994
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,131
<INCOME-PRETAX> 1,804,767
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,804,767
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,855,347
<EPS-BASIC> 0.07
<EPS-DILUTED> 0.06
</TABLE>
