<PAGE>
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 June 30, 1997
Commission File No. 0-19131
MEDIMMUNE, INC.
(Exact name of registrant as specified in its charter)
Delaware 52-1555759
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
35 West Watkins Mill Road, Gaithersburg, MD 20878
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (301)417-0770
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 [ ]
As of June 30, 1997, 23,766,937 shares of Common Stock, par value $0.01 per
share, were outstanding.
<PAGE>
MEDIMMUNE, INC.
Index to Form 10-Q
Part I Financial Page
Item 1. Financial Statements
Balance Sheets 1
Statements of Operations 2
Condensed Statements of Cash Flows 3
Notes to Financial Statements 4-6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 7-9
Part II Other Information 10-12
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
CytoGam and RespiGam are registered trademarks of the Company.
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<TABLE>
<CAPTION>
ITEM 1. FINANCIAL STATEMENTS
MEDIMMUNE, INC.
BALANCE SHEETS
(in thousands, except share data)
June 30, December 31,
1997 1996
---------- ----------
<S> <C> <C>
ASSETS: (Unaudited)
Cash and cash equivalents $2,001 $12,629
Marketable securities 61,892 102,136
Trade receivables, net 3,166 8,123
Contract receivables, net 4,157 2,164
Inventory, net 15,959 6,060
Other current assets 2,424 1,713
---------- ----------
Total Current Assets 89,599 132,825
Property and equipment, net 51,634 29,087
Other assets 2,608 2,059
---------- ----------
Total Assets $143,841 $163,971
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Accounts payable $1,141 $3,942
Accrued expenses 12,939 10,509
Product royalties payable 1,886 2,559
Accrued interest 2,339 2,057
Other current liabilities 968 469
---------- ----------
Total Current Liabilities 19,273 19,536
Long term debt 76,759 70,874
Other liabilities 734 696
---------- ----------
Total Liabilities 96,766 91,106
---------- ----------
Commitments and Contingencies
SHAREHOLDERS' EQUITY:
Preferred stock, $.01 par value; authorized
5,524,525 shares; none issued or outstanding -- --
Common stock, $.01 par value; authorized
60,000,000 shares; issued and outstanding
23,766,937 at June 30, 1997 and
21,836,763 at December 31, 1996 238 218
Paid-in capital 172,745 172,024
Accumulated deficit (125,908) (99,377)
---------- ----------
Total Shareholders' Equity 47,075 72,865
---------- ----------
Total Liabilities and Shareholders' Equity $143,841 $163,971
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
(1)
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<TABLE>
<CAPTION>
MEDIMMUNE, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands except per share data)
For the For the
three months ended six months ended
June 30, June 30,
----------------- -----------------
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues:
Product sales $ 6,225 $ 6,830 $ 16,356 $ 13,454
Contracts 186 97 193 4,907
-------- -------- -------- --------
Total revenue 6,411 6,927 16,549 18,361
-------- -------- -------- --------
Costs and Expenses:
Cost of sales 3,430 4,063 8,645 8,122
Research and development 10,573 6,849 23,941 12,242
Selling, administrative
and general 4,956 4,202 11,392 8,559
-------- -------- -------- --------
Total expenses 18,959 15,114 43,978 28,923
-------- -------- -------- --------
Operating Loss (12,548) (8,187) (27,429) (10,562)
Interest income 1,181 1,206 2,719 2,074
Interest expense (842) (59) (1,821) (120)
--------- --------- --------- ---------
Net Loss ($12,209) ($7,040) ($26,531) ($8,608)
======== ======== ========= =========
Loss Per Common Share ($0.55) ($0.33) ($1.20) ($0.42)
======== ======== ======== ========
Shares Used in Computing
Loss Per Share 22,319 21,386 22,097 20,340
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
(2)
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<TABLE>
<CAPTION>
MEDIMMUNE, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
For the
six months ended
June 30,
1997 1996
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($26,531) ($8,608)
Noncash items:
Depreciation and amortization 1,124 881
Amortization of premium (discount) on
marketable securities 520 (302)
Other 197 41
Other changes in assets and liabilities (9,052) (4,687)
-------- --------
Net cash used in operating activities (33,742) (12,675)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease (increase) in marketable securities 39,724 (47,148)
Capital expenditures (23,671) (3,071)
-------- --------
Net cash provided by (used in)
investing activities 16,053 (50,219)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common
stock and exercise of stock options 741 58,523
Increase (decrease) in long term debt 6,320 (51)
-------- --------
Net cash provided by financing
activities 7,061 58,472
-------- --------
Net decrease in cash and cash
equivalents (10,628) (4,422)
Cash and cash equivalents at beginning
of period 12,629 14,165
-------- --------
Cash and cash equivalents at end of period $2,001 $9,743
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
(3)
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MEDIMMUNE, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
General
The financial information presented as of June 30, 1997, and for the
periods ended June 30, 1997 and 1996, is unaudited. In the opinion of the
Company's management, the financial information contains all adjustments
(which consist only of normal recurring adjustments) necessary for a fair
presentation of such financial information.
Inventory
Inventory is comprised of the following (in thousands):
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
-------------- -----------------
<S> <C> <C>
Raw Materials $5,470 $2,073
Work in Process 7,691 2,758
Finished Goods 2,798 1,229
------ ------
$15,959 $6,060
====== ======
</TABLE>
Property and Equipment
Property and equipment, stated at cost, is comprised of the following (in
thousands):
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
---------- -----------
<S> <C> <C>
Land $1,521 $1,521
Leasehold improvements 10,316 6,860
Laboratory equipment 8,338 7,427
Office furniture, computers,
and equipment 3,614 3,235
Construction in progress 36,301 17,376
-------- --------
60,090 36,419
Less accumulated depreciation and (8,456) (7,332)
amortization
-------- --------
$51,634 $29,087
======== ========
</TABLE>
(4)
<PAGE>
Property and equipment at June 30, 1997 includes $1.1 million of
capitalized interest related to the design and construction of the
Company's manufacturing facility in Frederick, Maryland and its pilot plant
facility in Gaithersburg, Maryland.
Long Term Debt
The Company drew down the remaining $0.4 million balance of a total of
$2.8 million of 4% State notes that were available in second quarter 1997.
Principal and interest payments on the notes begin in 1998.
In June 1997, the company signed an agreement with Transamerica Business
Credit Corporation (Transamerica) to provide $15 million of loans to the
Company collateralized by certain of the Company's equipment. In June
1997, the Company received $3.6 million of proceeds under this agreement at
an interest rate of 10.6%. The loans have six year terms at rates tied to
six year U.S. Treasury notes at the time of the draw.
Equity Transactions
In June 1997, a total of 1,937,840 of the remaining 2,108,652 Series A
Convertible Preferred Stock Warrants were exercised and converted through a
cashless exercise into 1,827,185 shares of common stock.
Earnings per Share
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, Earnings Per Share, effective
for financial statements for both interim and annual periods ending after
December 15, 1997. This Statement replaces the existing presentation of
primary and fully diluted earnings per share with basic and diluted
earnings per share. The changes in calculation and presentation are not
expected to have a material effect on the Company's disclosure of earnings
per share.
Subsequent Events
On July 16, 1997, the Company announced positive results on its IMpact-RSV
(MedI-493, RSV monoclonal antibody) clinical trial. Initial analysis of
the results suggested a 55% decrease in RSV related hospitalizations. The
Company hopes to file a Biologic License Application with the United States
Food and Drug Administration ("FDA") before the end of 1997.
Also in July, the Company announced the adoption of a Stockholder Rights
Plan designed to prevent an acquiror from gaining control of the Company
(5)
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without offering a fair price to all of the Company's stockholders. The
Plan calls for the distribution of common stock purchase Rights as a
dividend to stockholders of record as of the close of business on July 21,
1997 at the rate of one Right for each share of common stock. The Rights
will be exercisable only if a twenty percent or more stake in the Company
is acquired without approval of a majority of the Continuing Directors, as
defined in the Rights Plan.
(6)
<PAGE>
ITEM 2.
MEDIMMUNE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1997 AND 1996
Product sales were $6.2 million in second quarter 1997 versus $6.8 million
in second quarter 1996, a decrease of 9%. CytoGam sales in the 1997 quarter
were $5.3 million compared to $6.3 million in the 1996 quarter, a decrease
of 17%. The 17% decrease is attributable to wholesaler stocking that
occurred in second quarter 1996 in advance of a price increase that took
effect in July 1996 as well as increased competition in the United States
from antiviral products, particularly oral ganciclovir, licensed by the FDA
to Hoffman La Roche Inc. in December 1996 for prevention of cytomegalovirus
in solid organ transplant recipients. Sales of RespiGam increased 84% to
$1.0 million in second quarter 1997 from $0.5 million in second quarter
1996.
Cost of sales decreased to $3.4 million in the 1997 period from $4.1
million in the 1996 period, a decrease of 16%. This decrease was primarily
attributable to an 11% decrease in unit volume for CytoGam and RespiGam,
and a reduction in the per unit costs of both CytoGam and RespiGam due to
lower production costs. Research, development and clinical spending
increased 54% to $10.6 million in this year's quarter from $6.8 million in
last year's quarter, primarily reflecting the costs of conducting the
Company's 1,502 patient Phase 3 IMpact-RSV (MEDI-493 RSV monoclonal
antibody) clinical trial. Selling, administrative and general expenses
increased to $5.0 million in this year's quarter versus $4.2 million in the
1996 quarter, an increase of 18%. This increase was primarily a result of
increased wage and related expenses for the sales force. In addition,
reduced RespiGam product line loss for the quarter due to lower
expenditures on RespiGam marketing programs and increased RespiGam sales
resulted in less reimbursement from American Home Products ("AHP"),
formerly American Cyanamid Company, for their share of product line loss.
Interest income of $1.2 million was earned in both the 1997 and 1996
quarters. Interest expense of $0.8 million, reflecting interest due on the
convertible debt issued in July 1996, was incurred in the 1997 quarter
versus $0.1 million in the 1996 quarter.
The net loss for the 1997 second quarter was $12.2 million, or $0.55 per
common share, compared to a net loss for the second quarter of 1996 of $7.0
million, or $0.33 per common share. Shares used in computing loss per
share were 22.3 million and 21.4 million for the 1997 and 1996 quarters,
respectively.
(7)
<PAGE>
These results were consistent with the Company's objectives for the quarter
and with the continued development of its products. Quarterly financial
results may vary significantly due to seasonality of RespiGam product
sales, fluctuation in sales of CytoGam, research funding, and expenditures
for research, development and marketing programs. RespiGam sales are
expected to occur primarily during, and in proximity to, the RSV season,
which typically occurs between November and April in the United States.
The Company has experienced product supply constraints in the past and no
assurances can be given that adequate product supply will be available to
meet future demand. In the third quarter of 1997, the Company anticipates
lower research and development expenses, as Phase 3 MEDI-493 clinical trial
activities are concluded.
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
Product sales for the six months ended June 30, 1997 increased 22% to $16.4
million from $13.5 million in the 1996 six months. RespiGam sales
increased 104% to $6.1 million in first half 1997 from $3.0 million in
first half 1996. Supply constraints limited first quarter 1997 sales of
RespiGam. Sales of CytoGam totaled $10.2 million in first half 1997
compared to $10.5 million in first half 1996, reflecting a 3% decrease in
units sold, offset by a price increase that took effect in mid-1996.
Contract revenue in the 1996 first half of $4.9 million included final
milestone and research funding payments under the Company's strategic
alliance with AHP. Under the terms of the alliance, the Company and AHP
share in the profits or losses of RespiGam; reimbursements or payments
under this arrangement are deducted from or added to operating expenses.
Cost of sales for first half 1997 increased 6% to $8.6 million from $8.1
million in first half 1996, reflecting a 17% increase in units sold, offset
by a reduction in the per unit costs of both CytoGam and RespiGam due to
lower production costs. Research, development and clinical spending grew
to $23.9 million, an increase of 96% over first half 1996. The increase
was mostly attributable to the costs of conducting the Company's 1,502
patient Phase 3 IMpact-RSV (MedI-493 RSV monoclonal antibody) clinical
trial. Selling, administrative and general expenses increased 33% to $11.4
million in the 1997 six months from $8.6 million in the 1996 period.
Selling expenses increased $1.3 million over the 1996 half reflecting the
full effect of the increased sales force for RespiGam and increased wage
and commission costs. Administrative expenses increased $0.8 million
primarily as a result of higher salary and related expenses, and increased
legal costs.
(8)
<PAGE>
Interest income of $2.7 million was recorded for the 1997 six months versus
$2.1 million in the 1996 period, reflecting higher cash balances available
for investment. Interest expense of $1.8 million was recognized in the
1997 first half primarily as a result of the interest due on the
convertible debt issued in July 1996.
The net loss for the 1997 six months of $26.5 million, or $1.20 per common
share, compared to a net loss of $8.6 million, or $0.42 per common share
for the 1996 six months. Shares used in computing loss per share were 22.1
million and 20.3 million for the 1997 and 1996 periods, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Cash and marketable securities at June 30, 1997 were $63.9 million compared
to $114.8 million at 1996 year end. Net cash used in operating activities
in the six months ended June 30, 1997 was $33.7 million, reflecting
primarily the net loss for the period and an increase in inventory.
Capital expenditures of $23.7 million for the six months were primarily for
construction of the manufacturing facility in Frederick, Maryland,
expansion of the pilot plant located at the Company's Gaithersburg,
Maryland headquarters, and lab equipment. The total cost for the
construction of the manufacturing facility and the expansion of the pilot
plant is expected to be approximately $56 million, of which $41.5 million
had been spent as of June 30, 1997. The Company's existing funds at June
30, 1997, together with funds expected to be generated from product sales
and investment income are expected to provide sufficient liquidity to meet
the anticipated needs of the business for at least the next 12 months,
absent the occurrence of any unforeseen events.
____________________
THE STATEMENTS IN THIS QUARTERLY REPORT THAT ARE NOT DESCRIPTIONS OF
HISTORICAL FACTS MAY BE FORWARD-LOOKING STATEMENTS. SUCH STATEMENTS
REFLECT MANAGEMENT'S CURRENT VIEWS, ARE BASED ON CERTAIN ASSUMPTIONS AND
ARE SUBJECT TO RISKS AND UNCERTAINTIES, INCLUDING BUT NOT LIMITED TO,
FACTORS SUCH AS PRODUCT DEMAND AND MARKET ACCEPTANCE RISKS, THE EARLY STAGE
OF PRODUCT DEVELOPMENT, COMMERCIALIZATION AND TECHNOLOGICAL DIFFICULTIES,
CAPACITY AND SUPPLY CONSTRAINTS AND OTHER RISKS DETAILED IN THE COMPANY'S
FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. ACTUAL RESULTS COULD
DIFFER MATERIALLY FROM THOSE CURRENTLY ANTICIPATED AS A RESULT OF THE
FOREGOING OR OTHER FACTORS.
(9)
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Defaults upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders -
On May 16, 1997 the Company held its Annual Meeting of Stockholders. By
vote of the Company's stockholders at such meeting, all of the director
nominees were re-elected to one year terms. An amendment to the MedImmune,
Inc. 1991 Stock Option Plan increasing the maximum number of shares
reserved for issuance thereunder from 3,500,000 to 5,500,000 and the
appointment of Coopers & Lybrand L.L.P. as the Company's independent
auditors were also approved. The results of the voting were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Election of Directors
Abstain/
For Against Withheld Non-vote
Wayne T. Hockmeyer 21,132,128 -- 222,210 --
David M. Mott 21,132,730 -- 221,608 --
Franklin H. Top, Jr. 21,132,730 -- 221,608 --
M. James Barrett 21,132,730 -- 221,608 --
James H. Cavanaugh 21,132,730 -- 221,608 --
Barbara Hackman Franklin 21,129,730 -- 224,608 --
Lawrence C. Hoff 21,132,730 -- 221,608 --
Gordon S. Macklin 21,132,730 -- 221,608 --
Amendment to 1991 Stock
Option Plan 10,295,644 7,847,650 105,510
Appointment of Independent Auditors
Coopers & Lybrand L.L.P. 21,250,335 91,598 -- 12,405
</TABLE>
Item 5. Other Information - None
(10)
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: None
(b) Reports on Form 8-K:
<TABLE>
<CAPTION>
<C> <S>
Report Date Event reported
4/8/97 MedImmune Reports Third Set of
Clinical results Evaluating MEDI-493
4/14/97 Annual Letter to Shareholders (as
printed in 1996 Annual Report)
4/15/97 MedImmune and BioTransplant Submit IND
to Begin First Human Clinical Trail
with MEDI-507
4/28/97 MedImmune Reports Product Sales
Increase 53 Percent During First
Quarter 1997
4/28/97 MedImmune Announces Candidate Vaccine
Prevents Urinary Tract Infections
5/06/97 MedImmune Reports Fourth Set of
Clinical Results Evaluating MEDI-493
Presentations at The Society for
Pediatric Research Annual Meeting
5/13/97 BioTransplant and MedImmune Report
Phase 1/2 Results of BTI 322 Induction
Therapy Trial - FDA Gives Clearance to
Commence Clinical Trails with
Humanized Version
6/18/97 MedImmune Presents at Capital Region
Technology Investor Conference
Marketed Products, an Extensive
Pipline and Near-term Opportunities
</TABLE>
(11)
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
<TABLE>
<S> <C>
(REGISTRANT) MEDIMMUNE, INC.
BY (SIGNATURE) /s/ David M. Mott
(NAME AND TITLE) David M. Mott, President and Chief Operating Officer
(Principal accounting and financial officer)
(DATE) August 14, 1997
</TABLE>
(12)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MEDIMMUNE,
INC.'S QUARTERLY REPORT ON FORM 10-Q FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FILING.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 2,001
<SECURITIES> 61,892
<RECEIVABLES> 7,323
<ALLOWANCES> 0
<INVENTORY> 15,959
<CURRENT-ASSETS> 89,599
<PP&E> 51,634
<DEPRECIATION> 0
<TOTAL-ASSETS> 143,841
<CURRENT-LIABILITIES> 19,273
<BONDS> 76,759
0
0
<COMMON> 238
<OTHER-SE> 172,745
<TOTAL-LIABILITY-AND-EQUITY> 143,841
<SALES> 16,356
<TOTAL-REVENUES> 16,549
<CGS> 8,645
<TOTAL-COSTS> 43,978
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,821
<INCOME-PRETAX> (26,531)
<INCOME-TAX> 0
<INCOME-CONTINUING> (26,531)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (26,531)
<EPS-PRIMARY> (1.20)
<EPS-DILUTED> (1.20)
</TABLE>
