<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
Commission file number: 0-19117
IMMULOGIC PHARMACEUTICAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 13-3397957
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
610 LINCOLN STREET, WALTHAM, MASSACHUSETTS 02451
(781) 466-6000
(Address, including zip code, and telephone number,
including area code, of registrant's
principal executive offices)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock,
Par Value $.01
Preferred Stock Purchase Rights
Par Value $.01
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 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 by a check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to the
Form 10-K. [ X ]
The aggregate market value of the Common Stock held by non-affiliates of the
registrant, based on the last sale price of the Common Stock reported on the
Nasdaq over-the-counter bulletin board on March 13, 2000 was $14,796,525.
The number of shares of Common Stock outstanding as of March 13, 2000 was
20,550,773.
DOCUMENTS INCORPORATED BY REFERENCE - None
<PAGE> 2
PART I
ITEM 1. BUSINESS
GENERAL
ImmuLogic Pharmaceutical Corporation ("ImmuLogic" or the "Company") is a
biopharmaceutical company, incorporated under the laws of the State of Delaware
on March 26, 1987.
On February 5, 1999, the Company announced that its Board of Directors had
decided to conclude the business activities of the Company as soon as
practicable. On March 23 1999, the Board of Directors approved a plan to
liquidate and dissolve the Company (the "Plan"). The Plan was approved by a
majority of the stockholders of the Company on August 25, 1999. The key features
of the Plan are (1) the conclusion of all business activities, other than those
in execution of the Plan; (2) the sale or disposition of all of the Company's
assets; (3) the satisfaction of all outstanding liabilities; (4) the payment of
liquidating distributions to stockholders in complete redemption of the Common
Stock; and (5) the authorization of the filing of Certificate of Dissolution
with the State of Delaware. As a result of the adoption of the Plan and the
imminent nature of the liquidation, the Company adopted the liquidation basis of
accounting effective July 1, 1999, whereby assets are valued at their estimated
net realizable values and liabilities are valued at their estimated settlement
amounts. The valuation of assets and liabilities requires many estimates and
assumptions by management and there are substantial uncertainties in carrying
out the provisions of the Plan. The amount and timing of future liquidating
distributions will depend upon a variety of factors including, but not limited
to, the actual proceeds from the sale of any of the Company's assets, the
ultimate settlement amounts of the Company's liabilities and obligations, and
actual costs incurred in connection with carrying out the Plan, including
management fees and administrative costs during the liquidation period.
The Company is a Delaware corporation and Delaware law requires that the Company
stay in existence as a non-operating entity for three years from August 27,
1999, the date the Company filed a certificate of dissolution in Delaware.
During the dissolution period, the Company will attempt to convert its remaining
net assets to cash as expeditiously as possible.
On September 1, 1999, the Company returned to its stockholders the sum of $39.9
million (or $1.94 per share, based on 20,550,773 shares of Common Stock
currently outstanding) to stockholders of record as of August 25, 1999. Future
distributions to stockholders would be made by the Board of Directors of the
Company as the Company's net assets are converted to cash. The actual amount and
timing of future distributions cannot be predicted at this time. The Company
intends to distribute pro rata to its stockholders, in cash or in-kind, or sell
or otherwise dispose of, all of its property and net assets. The liquidation
should be concluded prior to August 27, 2002 by a final liquidating distribution
either directly to the stockholders or to one or more liquidating trusts.
Details regarding the plan to liquidate and dissolve the Company can be found in
the Company's 1999 Proxy Statement filed with the Securities and Exchange
Commission and mailed to stockholders on July 15, 1999.
2
<PAGE> 3
PATENTS AND PROPRIETARY RIGHTS
ImmuLogic's material proprietary rights consisted of patents and licenses to
patents in the following areas: general immunotherapy and autoimmune, allergy
and drug abuse therapy.
The Company's rights relating to general immunotherapy were licensed from
Washington University and the Massachusetts Institute of Technology ("MIT"). The
license from Washington University was terminated in January 1999. The Company
terminated the license from MIT effective July 27, 1999.
The Company's patents relating to autoimmune therapy have been discontinued.
The Company's patents relating to allergy therapy were transferred to Heska
Corporation ("Heska") in December 1999. For the transfer of these patents and
the Company's agreement to relinquish certain of its rights to receive license
fees and royalties under the license agreement signed with Heska in 1998, the
Company received the sum of $300,000 in cash.
The Company's patents relating to drug abuse therapy were sold to Cantab
Pharmaceuticals plc ("Cantab") on February 2, 1999. See the description of this
transaction set forth under the heading "Risk Factors" below.
RISK FACTORS
The Company's plan is to conclude the business activities of the Company and
distribute the Company's net assets to its stockholders. The Company and its
future plans are subject to a number of risks and uncertainties, including those
set forth below:
The Company no longer satisfies the requirements for continued listing of its
common stock on the Nasdaq National Market ("NASDAQ"). The Company received a
notice from NASDAQ on October 19, 1999, indicating that the company would be
delisted as of January 22, 2000. The delisting of the Company's common stock in
fact occurred on that date. Because NASDAQ has delisted the Company's common
stock, the ability of stockholders to buy and sell shares may be materially
impaired. The Company's common stock is now traded on the NASDAQ
over-the-counter bulletin board.
Any future payments which the Company may receive under its agreements with
Cantab and Heska, and, therefore, any future value which may be returned to the
Company's stockholders with respect to those agreements, are dependent upon the
successful development and commercialization of the products licensed or sold to
such companies, as the case may be. The respective ability of Cantab and Heska
to develop and commercialize their products is subject to all of the risks and
uncertainties inherent in the biotechnology industry, including those associated
with the early stage of development of such products, government regulation,
competition, patents and proprietary rights, manufacturing and marketing,
additional financing requirements and access to capital, product liability and
third-party reimbursement. There can be no assurance that any of these products
will be
3
<PAGE> 4
successfully developed or commercialized or that the Company will receive any
value with respect to them during the liquidation period.
The Company sold certain assets related to its drugs of addiction vaccine
programs for the treatment of nicotine and cocaine addiction to Cantab. In
exchange for these assets and cash totaling $6,000,000, the Company received
2,566,845 new Cantab Ordinary Shares of 2p each, which are represented by
855,615 American Depository Shares ("ADS's"). In addition, ImmuLogic is entitled
to receive additional payments if Cantab achieves certain milestones in its
cocaine and nicotine clinical development. These payments may, at the option of
Cantab, be paid in ADS's. The ADS's held by the Company are subject to certain
contractual limitations with respect to disposition of the shares. In addition,
the ADS's currently held by the Company, and which may be issued to the Company,
are subject to extreme price and volume fluctuations. Accordingly, the net
realizable value of $12,000,000, which the Company recorded to be received upon
disposition of such shares and to be distributed to the stockholders with
respect thereto, cannot be assured.
The actual timing of future distributions cannot be predicted at this time. The
Company intends to distribute pro rata to its stockholders, in cash or in-kind,
or sell or otherwise dispose of, all of its property and net assets. The
liquidation should be concluded prior to the third anniversary thereof by a
final liquidating distribution either directly to the stockholders or to one or
more liquidating trusts. Details regarding the plan to liquidate and dissolve
the Company can be found in the Company's 1999 Proxy Statement filed with the
Securities and Exchange Commission and mailed to stockholders on July 15, 1999.
EMPLOYEES
As of March 13, 2000, the Company had two part-time consultants and no full-time
employees.
ITEM 2. PROPERTIES
In February, 1998, the Company entered into a phased sublease agreement with
Scriptgen for the Company's 85,000 square foot headquarters and research and
development facility located in Waltham, Massachusetts. The entire facility was
subleased to Scriptgen effective August 1, 1999. Under the terms of the
sublease, Scriptgen has assumed the Company's obligation under the lease in
addition to reimbursing the Company for a portion of the Company's leasehold
improvements. The Company negotiated with the landlord and Scriptgen an
arrangement which eliminated the Company's liability for the lease in the event
that Scriptgen were to default on its sublease obligations. In consideration for
such arrangement, the Company expects to receive $55,000 per month through
August of 2002 or approximately $1.76 million in the aggregate. If Scriptgen
were to default on its lease agreement or if the Company sold its interest in
the lease, the Company would receive less than the $1.76 million. As of December
31, 1999, the Company has recorded $1.4 million as the estimated net realizable
value for the purpose of liquidation basis accounting.
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ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICER OF THE REGISTRANT
The executive officer of the Company and his age and position with the Company
as of March 13, 2000 is as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
---- --- -------------------------
<S> <C> <C>
J. Richard Crowley 44 President, Treasurer and Secretary
</TABLE>
J. RICHARD CROWLEY, a consultant to ImmuLogic, holds the position of President,
Treasurer and Secretary and previously served as ImmuLogic's interim Chief
Financial Officer through April 1999. Mr. Crowley is President of Keystone
Consulting, a contract financial and operational management services firm. Mr.
Crowley's experience from 1983 to 1995 includes senior financial and operational
positions with the LittlePoint Corporation, TransNational Financial Services and
the Crosby Vandenburgh Group. From 1979 to 1983, Mr. Crowley was employed by
Price Waterhouse, during which time he obtained his C.P.A. Mr. Crowley holds a
B.A. in Economics from Providence College. Mr. Crowley is also a member of the
Board of Directors of ImmuLogic.
Executive officers of the Company are elected by the Board of Directors on an
annual basis and serve at the discretion of the Board of Directors. There is no
family relationship among any of the officers or directors.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is currently traded on the Nasdaq over-the-counter
bulletin board under the symbol IMUL. From May 1992 through January 22, 2000,
the Company's Common Stock was traded on the over-the-counter market on the
Nasdaq National Market under the symbol IMUL. Due to the Company's liquidation,
the stock was delisted from the Nasdaq National Market on January 22, 2000. The
following table sets forth for the periods indicated the range of high and low
closing sale prices per share of the Common Stock as reported by the Nasdaq
National Market.
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
1999
First Quarter $ 1 15/16 $ 1 1/4
Second Quarter 1 31/32 1 27/32
Third Quarter 2 3/32 3/16
Fourth Quarter 3/4 5/32
1998
First Quarter $ 2 1/4 $ 1 3/8
Second Quarter 2 7/16 1 5/16
Third Quarter 2 1/16 1 5/16
Fourth Quarter 1 3/4 1 1/8
</TABLE>
On December 31, 1999, there were approximately 347 holders of record of the
Company's Common Stock.
On September 1, 1999, the Company returned to its stockholders the sum of $39.9
million (or $1.94 per share, based on 20,550,773 shares of Common Stock
currently outstanding) to stockholders of record as of August 25, 1999. Future
distributions to stockholders would be made by the Board of Directors of the
Company as the Company's net assets are converted to cash. The actual amount and
timing of future distributions cannot be predicted at this time. The Company
intends to distribute pro rata to its stockholders, in cash or in-kind, or sell
or otherwise dispose of, all of its property and net assets. The liquidation
should be concluded prior to August 27, 2002 by a final liquidating distribution
either directly to the stockholders or to one or more liquidating trusts.
Details regarding the plan to liquidate and dissolve the Company can be found in
the Company's 1999 Proxy Statement filed with the Securities and Exchange
Commission and mailed to stockholders on July 15, 1999. The timing of future
distributions cannot be predicted at this time.
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ITEM 6. SELECTED FINANCIAL DATA
The following selected financial data of the Company as of and for the five
years ended December 31, 1999 are derived from the financial statements of the
Company. The information set forth below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included as Item 7 and the financial statements and related
footnotes included as Item 8 in this Form 10-K. Effective July 1, 1999, the
Company adopted the liquidation basis of accounting and as a result does not
reflect full year operating results for 1999 in the selected financial data
shown below. For the six months ended December 31, 1999, the Company recorded
an increase in net assets of approximately $6 million relating to the adoption
of liquidation basis accounting.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF OPERATIONS DATA: SIX MONTHS
ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
(IN THOUSANDS, EXCEPT PER SHARE DATA) 1999 1998 1997 1996 1995
- ------------------------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Total revenues $ 1,088 $ 4,345 $ 2,049 $ 9,239 $ 7,758
Research and development expenses 1,088 5,197 17,103 25,882 24,709
General and administrative expenses 2,179 2,162 6,390 6,830 6,433
Net loss (2,060) (310) (18,119) (18,870) (19,151)
Basic and diluted net loss per share (0.10) (0.02) (0.89) (0.93) (1.12)
Weighted average number of common
shares outstanding 20,376 20,362 20,273 20,206 17,035
</TABLE>
<TABLE>
<CAPTION>
Consolidated Balance Sheet and Net Assets In
Liquidation Data: DECEMBER 31,
(IN THOUSANDS, EXCEPT DIVIDEND DATA) 1999 1998 1997 1996 1995
- ------------------------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents and
short- and long-term investments $2,168 $ 48,628 $ 52,293 $ 70,047 $ 85,960
Total assets 18,621 56,195 59,588 79,654 97,579
Net assets in liquidation 16,901 - - - -
Long-term obligations - 275 325 375 425
Stockholders' equity 53,758 54,019 71,926 89,535
Dividends ($39,868,500 based on 20,550,773 shares
outstanding on September 1, 1999) $1.94 - - - -
</TABLE>
7
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
Since inception, the Company had focused on the research and clinical
development of products to treat allergies, autoimmune diseases, and vaccines
for the management of drugs of abuse.
On February 5, 1999, the Company announced that its Board of Directors had
decided to conclude the business activities of the Company as soon as
practicable. On March 23 1999, the Board of Directors approved a plan to
liquidate and dissolve the Company (the "Plan"). The Plan was approved by a
majority of the stockholders of the Company on August 25, 1999. The key features
of the Plan are (1) the conclusion of all business activities, other than those
in execution of the Plan; (2) the sale or disposition of all of the Company's
assets; (3) the satisfaction of all outstanding liabilities; (4) the payment of
liquidating distributions to stockholders in complete redemption of the Common
Stock; and (5) the authorization of the filing of Certificate of Dissolution
with the State of Delaware. As a result of the adoption of the Plan and the
imminent nature of the liquidation, the Company adopted the liquidation basis of
accounting effective July 1, 1999, whereby assets are valued at their estimated
net realizable values and liabilities are valued at their estimated settlement
amounts. The valuation of assets and liabilities requires many estimates and
assumptions by management and there are substantial uncertainties in carrying
out the provisions of the Plan. The amount and timing of future liquidating
distributions will depend upon a variety of factors including, but not limited
to, the actual proceeds from the sale of any of the Company's assets, the
ultimate settlement amounts of the Company's liabilities and obligations, and
actual costs incurred in connection with carrying out the Plan, including
management fees and administrative costs during the liquidation period.
The Company is a Delaware corporation and Delaware law requires that the Company
stay in existence as a non-operating entity for three years from August 27,
1999, the date the Company filed a certificate of dissolution in Delaware.
During the dissolution period, the Company will attempt to convert its remaining
net assets to cash as expeditiously as possible.
On September 1, 1999, the Company returned to its stockholders the sum of $39.9
million (or $1.94 per share, based on 20,550,773 shares of Common Stock
currently outstanding) to stockholders of record as of August 25, 1999. Future
distributions to stockholders would be made by the Board of Directors of the
Company as the Company's net assets are converted to cash. The actual amount and
timing of future distributions cannot be predicted at this time. The Company
intends to distribute pro rata to its stockholders, in cash or in-kind, or sell
or otherwise dispose of, all of its property and net assets. The liquidation
should be concluded prior to August 27, 2002 by a final liquidating distribution
either directly to the stockholders or to one or more liquidating trusts.
Details regarding the plan to liquidate and dissolve the Company can be found in
the Company's 1999 Proxy Statement filed with the Securities and Exchange
Commission and mailed to stockholders on July 15, 1999.
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LIQUIDITY AND CAPITAL RESOURCES
The Company's primary objectives are to liquidate its net assets in an efficient
manner that optimizes the values for such assets and to reduce operating costs.
The period of time to liquidate the assets and distribute the proceeds of the
Company's assets is subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond the Company's control.
As of December 31, 1999, the Company had cash and cash equivalents of $2,168,000
invested primarily in high-grade commercial paper and money market funds.
The Company currently owns 2,566,845 Cantab ordinary shares in the form of
855,615 American Depository Shares ("ADSs"). One ADS is equal to approximately
three ordinary shares. Under the terms of the Company's agreement with Cantab,
the Company could not sell any of the ADSs or Cantab ordinary shares represented
by the ADSs prior to August 2, 1999. Thereafter, the Company may immediately
sell up to 25% of the ADSs, and then may sell an additional 25% every 90 days
thereafter. In addition, the Company is obligated to sell such shares through a
broker or brokers designated by Cantab and approved by the Company, and in a
manner to be agreed upon by the Company and Cantab that is mutually advantageous
to the Company and Cantab, considering the desire for the Company to sell and
the desire of Cantab to avoid undue disruption of the market for such
securities. The valuation of this investment is based upon subjective judgements
due to the inherent uncertainty of Cantab's volatile stock price, low trading
volume, the large quantity of shares the Company holds in Cantab, and
restrictions in place under the Company's agreement with Cantab as outlined
above. Accordingly, based upon its 90 day trading history, applying a discount
factor and taking into consideration the contractual restrictions to which it is
subject, the Company has recorded an asset of $12 million, the estimated net
realizable value of the stock for purposes of liquidation basis accounting.
The Company could receive up to a maximum of $11 million in milestone payments
contingent upon Cantab's successful development to the end of Phase II clinical
trials of the Nicotine and Cocaine Programs sold to Cantab. These payments may
be made in cash or in additional ADSs or a combination thereof at Cantab's
discretion. The Company would receive the following for successful completion of
the Phases as defined in the agreement as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Cocaine......................... Phase II $2 million
Nicotine........................ Phase I $3 million
Nicotine........................ Phase II $6 million
</TABLE>
Upon receipt of the Phase II Cocaine or Phase I Nicotine milestones in the form
of Cantab stock or ADSs, the Company may sell up to 25% of such shares in each
of the four quarters following the expiration of an initial six-month period.
There would be no lock-up on shares paid in respect of any additional
milestones.
The Company could potentially also receive a share of net royalties Cantab may
receive from vaccine sales proportionate to the level of worldwide product sales
achieved. While the Company will attempt to monetize these potential royalty
streams, the Company does not anticipate receiving significant value for them
and thus has not recorded any net realizable value for the royalty streams.
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<PAGE> 10
The Company estimates that the range of value to be received from these
milestones and royalties to be $0 to $11 million based on the contract terms.
The Company has recorded $3.0 million as the estimated net realizable value for
the purpose of liquidation basis accounting, which assumes the realization of
one of these milestones.
In February, 1998, the Company entered into a phased sublease agreement with
Scriptgen for the Company's 85,000 square foot headquarters and research and
development facility located in Waltham, Massachusetts. The entire facility was
subleased to Scriptgen effective August 1, 1999. Under the terms of the
sublease, Scriptgen has assumed the Company's obligation under the lease in
addition to reimbursing the Company for a portion of the Company's leasehold
improvements. The Company negotiated with the landlord and Scriptgen an
arrangement which eliminated the Company's liability for the lease in the event
that Scriptgen were to default on its sublease obligations. In consideration for
such arrangement, the Company expects to receive $55,000 per month through
August of 2002 or approximately $1.76 million in the aggregate. If Scriptgen
were to default on its lease agreement or if the Company sold its interest in
the lease, the Company would receive less than the $1.76 million. As of December
31, 1999, the Company has recorded $1.4 million as the estimated net realizable
value for the purpose of liquidation basis accounting.
At December 31, 1999, the Company estimates that there are $1.2 million of costs
remaining including management compensation, professional fees, insurance, and
facility costs to be incurred during the remaining liquidation period through
August 26, 2002. Accrued expenses and other current liabilities consist
primarily of costs incurred through June 30, 1999, including severance costs and
other operating costs incurred prior to the liquidation of the Company.
RESULTS OF OPERATIONS
Six Months Ended June 30, 1999 (the last period in which the Company had
operations)
All significant changes between 1999 and 1998 were due to the accrual of
estimated costs to liquidate the Company as discussed under the heading
"Liquidity and Capital Resources" and other costs incurred in discontinuing the
operations of the Company as discussed below.
Revenues for the six months ending June 30, 1999 were $1,088,000 which were
entirely generated from research and development services performed for Cantab.
These services terminated on June 30, 1999.
Research and development expenses for the six months ended June 30, 1999 were
$1,088,000, relating entirely to research and development services performed for
Cantab. These services terminated on June 30, 1999.
General and administrative expenses for the six months ended June 30, 1999 were
$2,179,000 which included approximately $1,006,000 in severance for 15
employees, including the former President and Chief Executive Officer of the
Company.
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During the first six months of 1999, a net write-off of $966,000 was recorded in
connection with the disposition of the Company's Lease.
For the first six months of 1999, interest income was $1,085,000 resulting from
interest earned on an average cash and investment balance of approximately
$45,458,000.
YEARS ENDED DECEMBER 31, 1998 AND 1997
Total revenues in 1998 were $4,345,000 compared to $2,049,000 in 1997. The
increase in total revenues from 1997 was primarily due to revenues recorded by
the Company totaling $3,000,000 in December 1998 due from Cantab Pharmaceuticals
plc ("Cantab") for the sale of the Company's assets related to its drugs of
addiction vaccine programs for the treatment of nicotine and cocaine addiction.
In addition, the Company received a total of $200,000 in license payments during
1998 from Heska Corporation ("Heska") and Sankyo Co., Ltd. ("Sankyo"). Sponsored
research funding from Schering AG totaled $312,500 in 1998 as compared to
$1,250,000 in 1997 due to the completion of the research funding under the
agreement as of March 31, 1998. Revenue received from the National Institute of
Health ("NIH") under the Company's grants was $832,000 and $615,000 in 1998 and
1997, respectively.
Total operating expenses were $7,359,000 in 1998 compared to $23,492,000 in
1997. Research and development expenses were $5,198,000 in 1998 compared to
$17,103,000 in 1997, a decrease of $11,905,000 or 69.6%. The decrease in
operating and research and development expenses was primarily due to reduced
headcount and related costs due to the discontinuation of all of the Company's
research and development programs with the exception of the Company's drugs of
addiction programs, which were both sold in December 1998. Severance costs
related to the Company's downsizing totaled $150,000 and $1,211,000 in 1998 and
1997 respectively, and non- cash charges of $187,000 and $355,000 were recorded
in 1998 and 1997 respectively for the writedown of the Company's leasehold
improvements to their currently estimated net realizable value.
General and administrative expenses were $2,162,000 in 1998 compared to
$6,390,000 in 1997, a decrease of $4,228,000 or 66.2%. The decrease in general
and administrative costs was due primarily to reduced headcount and related
costs resulting from the Company's downsizing. Severance paid to the former
chairman of the board of the Company during 1997 totaled $1,054,000 and
additional severance costs related to the Company's downsizing totaling $43,000
and $882,000 in 1998 and 1997 respectively.
Net interest income was $2,705,000 in 1998 compared to $3,325,000 in 1997, a
decrease of $620,000 or 18.6%. The decrease resulted primarily from a lower
average investable cash and investment balance resulting from cash used in
operations during 1998.
FUTURE RESULTS
This Annual Report on Form 10-K contains forward-looking statements. For this
purpose, any statements contained herein that are not statements of historical
fact may be deemed to be forward-looking statements. Without limiting the
foregoing, the words "believes," "anticipates," "plans," expects," "intends",
"estimates", and similar expressions are intended to identify forward-looking
11
<PAGE> 12
statements. The Company's plan is to conclude the business activities of the
Company and distribute the Company's net assets to its stockholders. There are a
number of important factors that could affect the future activities of the
Company, including, without limitation, the factors set forth below.
The Company no longer satisfies the requirements for continued listing of its
common stock on the Nasdaq National Market ("NASDAQ"). The Company received a
notice from NASDAQ on October 19, 1999, indicating that the company would be
delisted as of January 22, 2000. The delisting of the company's common stock in
fact occurred on that date. Because NASDAQ has delisted the Company's common
stock, the ability of stockholders to buy and sell shares may be materially
impaired. The Company's common stock is now traded on the NASDAQ
over-the-counter bulletin board.
Any future payments which the Company may receive under its agreements with
Cantab and Heska, and, therefore, any future value which may be returned to the
Company's stockholders with respect to those agreements, are dependent upon the
successful development and commercialization of the products licensed or sold to
such companies, as the case may be. The respective ability of Cantab and Heska
to develop and commercialize their products is subject to all of the risks and
uncertainties inherent in the biotechnology industry, including those associated
with the early stage of development of such products, government regulation,
competition, patents and proprietary rights, manufacturing and marketing,
additional financing requirements and access to capital, product liability and
third-party reimbursement. There can be no assurance that any of these products
will be successfully developed or commercialized or that the Company will
receive any value with respect to them during the liquidation period.
The Company sold certain assets related to its drugs of addiction vaccine
programs for the treatment of nicotine and cocaine addiction to Cantab. In
exchange for these assets and cash totaling $6,000,000, the Company received
2,566,845 new Cantab Ordinary Shares of 2p each, which are represented by
855,615 American Depository Shares ("ADS's"). In addition, ImmuLogic is entitled
to receive additional payments if Cantab achieves certain milestones in its
cocaine and nicotine clinical development. These payments may, at the option of
Cantab, be paid in ADS's. The ADS's held by the Company are subject to certain
contractual limitations with respect to disposition of the shares. In addition,
the ADS's currently held by the Company, and which may be issued to the Company,
are subject to extreme price and volume fluctuations. Accordingly, the net
realizable value of $12,000,000, which the Company recorded to be received upon
disposition of such shares and to be distributed to the stockholders with
respect thereto, cannot be assured.
The actual timing of future distributions cannot be predicted at this time. The
Company intends to distribute pro rata to its stockholders, in cash or in-kind,
or sell or otherwise dispose of, all of its property and net assets. The
liquidation should be concluded prior to the third anniversary thereof by a
final liquidating distribution either directly to the stockholders or to one or
more liquidating trusts. Details regarding the plan to liquidate and dissolve
the Company can be found in the Company's 1999 Proxy Statement filed with the
Securities and Exchange Commission and mailed to stockholders on July 15, 1999.
12
<PAGE> 13
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 133 ("SFAS 133"), "Accounting for
Derivative Instruments and Hedging Activities". This Statement requires
companies to record derivatives on the balance sheet as assets or liabilities,
measured at fair value. Gains or losses resulting from the change in the values
of those derivatives would be accounted for depending on the use of the
derivative and whether it qualifies for hedge accounting. In June 1999, the FASB
issued Statement of financial Accounting Standard No. 137 ("SFAS 137"),
"Accounting for Derivative Instruments and Hedging Activities - Deferral of the
Effective Date of FAS Statement 133", which postponed the adoption of SFAS No.
133. As such the Company is not required to adopt the statement until the year
ending December 31, 2001. We believe the adoption of SFAS No. 133 will not have
any effect on the financial statements.
In December 1999, the Staff of the Securities and Exchange Commission issued
Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements"
("SAB 101"). SAB 101 summarizes certain of the Staff's views in applying
accounting principles generally accepted in the United States to revenue
recognition in financial statements. We believe the provisions of SAB 101 will
not have any effect on the financial statements.
Item 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company's investment policy specifies credit quality standards for the
Company's investments and limits the amount of credit exposure to any single
issue, issuer or type of investment. The Company does not believe that it has
any material exposure to market risk with respect to derivative or other
financial instruments which would require disclosure under this item.
13
<PAGE> 14
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of ImmuLogic Pharmaceutical
Corporation:
We have audited the accompanying consolidated statement of net assets in
liquidation of ImmuLogic Pharmaceutical Corporation (the "Company") as of
December 31, 1999, and the related consolidated statement of changes in net
assets in liquidation for the six months ended December 31, 1999. In addition,
we have audited the accompanying consolidated balance sheet of the Company as of
December 31, 1998, and the related consolidated statements of operations, cash
flows and stockholders' equity for the six months ended June 30, 1999 and the
years ended December 31, 1998 and 1997. 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.
Except as discussed in the following paragraph, we conducted our audits in
accordance with auditing standards generally accepted in the United States.
Those standards 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. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
As discussed in Note B to the consolidated financial statements, the Company has
recorded the estimated net realizable value of the Cantab stock at $12 million
based upon subjective judgements of management. Due to the inherent
uncertainties of the amounts realizable in the future from such sale and the
contractual restrictions with respect to the disposal of this stock at December
31, 1999, management was unable to provide us information with respect to the
timing and nature of the sale of the Cantab Stock. Accordingly, we were unable
to satisfy ourselves as to the estimated net realizable value of the Cantab
Stock at December 31, 1999.
As discussed in Note A to the consolidated financial statements, the Company's
stockholders have approved a plan of complete liquidation and dissolution of the
Company. As a result, the Company has changed its basis of accounting from the
going concern basis to the liquidation basis effective July 1, 1999, under which
the consolidated financial statements reflect assets at estimated net realizable
amounts and liabilities at estimated settlement amounts.
In our opinion, except for the effects of such adjustments, if any, as might
have been determined to be necessary had we been able to satisfy ourselves as to
the net realizable value of the Cantab stock at December 31, 1999, the
consolidated financial statements referred to above present fairly, in all
material respects, the net assets in liquidation of ImmuLogic Pharmaceutical
Corporation at December 31, 1999, the changes in its net assets in liquidation
for the six months ended December 31, 1999, its financial position at December
31, 1998, and the results of its operations and its cash flows for the six
months ended June 30, 1999 and the years ended December 31, 1998 and 1997 in
conformity with accounting principles generally accepted in the United States on
the bases described in the preceding paragraph.
/s/ PRICEWATERHOUSECOOPERS LLP
PRICEWATERHOUSECOOPERS LLP
March 13, 2000
14
<PAGE> 15
IMMULOGIC PHARMACEUTICAL CORPORATION
CONSOLIDATED STATEMENT OF NET ASSETS IN LIQUIDATION
<TABLE>
<CAPTION>
DECEMBER 31,
1999
----
<S> <C>
ASSETS
Cash and cash equivalents $ 2,167,716
Cantab stock 12,000,000
Milestones and royalties 3,000,000
Landlord receivable 1,400,000
Other assets 53,316
-----------
Total assets $18,621,032
-----------
LIABILITIES
Estimated costs to be incurred during liquidation period 1,215,000
Accounts payable and accrued expenses 505,431
-----------
Total liabilities 1,720,431
-----------
NET ASSETS IN LIQUIDATION $16,900,601
===========
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
15
<PAGE> 16
IMMULOGIC PHARMACEUTICAL CORPORATION
CONSOLIDATED BALANCE SHEET (GOING CONCERN BASIS)
<TABLE>
<CAPTION>
December 31, 1998
-----------------
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 18,855,527
Short-term investments 8,218,939
Receivable from sale of programs 3,000,000
Prepaid expenses and other current assets 351,106
-------------
Total current assets 30,425,572
Property and equipment, net of accumulated
depreciation of $6,970,395 4,167,079
Long-term investments 21,553,126
Other assets 48,790
-------------
Total assets $ 56,194,567
-------------
LIABILITIES
Current liabilities:
Accounts payable $ 185,096
Accrued expenses 1,926,468
Other current liabilities 50,000
-------------
Total current liabilities 2,161,564
Long-term liabilities 275,000
-------------
Total liabilities $ 2,436,564
-------------
Commitments
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value; 1,000,000 shares authorized;
no shares issued or outstanding
Common stock, $.01 par value; 40,000,000 shares authorized; --
20,367,672 shares issued and outstanding at December 31, 1998 $ 203,677
Additional paid-in-capital 185,298,513
Accumulated deficit (131,744,187)
-------------
Total stockholders' equity 53,758,003
-------------
Total liabilities and stockholders' equity $ 56,194,567
-------------
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
16
<PAGE> 17
IMMULOGIC PHARMACEUTICAL CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION
<TABLE>
<CAPTION>
SIX MONTHS
ENDED DECEMBER 31,
1999
----
<S> <C>
Stockholders' equity, July 1, 1999 $ 50,838,708
Liquidation basis adjustments:
Adjust assets and liabilities to fair value (595,504)
Accrued estimated costs of liquidation (1,300,000)
------------
Net assets in liquidation July 1, 1999 48,943,204
Dividend paid on September 1, 1999 (39,868,500)
Changes in other assets and liabilities 453,902
Adjust assets and liabilities to fair value 7,371,995
------------
Net assets in liquidation, December 31, 1999 $ 16,900,601
============
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
17
<PAGE> 18
IMMULOGIC PHARMACEUTICAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (GOING CONCERN BASIS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEARS ENDED DECEMBER 31,
JUNE 30, 1999 1998 1997
------------- ---- ----
<S> <C> <C> <C>
Revenues:
Sponsored research revenues $ 1,088,287 $ 1,144,929 $ 2,048,672
Sale of programs -- 3,000,000 --
License revenues -- 200,000 --
------------ ------------ ------------
Total revenues 1,088,287 4,344,929 2,048,672
------------ ------------ ------------
Operating expenses:
Proprietary research and development -- 4,052,646 14,615,582
Sponsored research and development 1,088,287 1,144,929 2,486,984
General and administrative 2,178,561 2,161,594 6,389,593
Loss on leasehold improvements, net 966,000 -- --
------------ ------------ ------------
Total operating expenses 4,232,848 7,359,169 23,492,159
------------ ------------ ------------
Operating loss (3,144,561) (3,014,240) (21,443,487)
Interest income 1,085,003 2,704,666 3,324,924
------------ ------------ ------------
Net loss $ (2,059,558) $ (309,574) $(18,118,563)
============ ============ ============
Basic and diluted net loss per common share $ (0.10) $ (0.02) $ (0.89)
============ ============ ============
Weighted average number of common shares outstanding 20,376,323 20,362,157 20,273,315
============ ============ ============
Comprehensive loss:
Net loss $ (2,059,558) $ (309,574) $(18,118,563)
Other comprehensive loss:
Unrealized loss on Cantab stock (871,658) -- --
------------ ------------ ------------
Comprehensive loss $ (2,931,216) $ (309,574) $(18,118,563)
------------ ------------ ------------
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
18
<PAGE> 19
IMMULOGIC PHARMACEUTICAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (GOING CONCERN BASIS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEARS ENDED DECEMBER 31,
JUNE 30, 1999 1998 1997
------------- ---- ----
<S> <C> <C> <C>
Cash flows for operating activities:
Net loss $ (2,059,558) $ (309,574) $(18,118,563)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 72,433 680,042 2,447,378
Write-off of leasehold improvements 1,446,279 200,544 443,881
Shares issued for 401(k) employer match 10,521 48,437 134,515
Compensation expense -- -- 7,557
Gain on sale of equipment (14,150) (70,396) (13,765)
Changes in assets and liabilities:
Prepaid expenses and other assets 219,212 (2,789,974) 63,996
Accounts payable and accrued expenses 330,850 (3,082,272) (2,108,886)
Reduction in deferred rent (615,932) -- --
Other current and long-term liabilities (325,000) (50,000) (50,000)
------------ ------------ ------------
Total adjustments 1,124,213 (5,063,619) 924,676
------------ ------------ ------------
Net cash used in operating activities (935,345) (5,373,193) (17,193,887)
Cash flows from investing activities:
Purchase of equipment -- -- (629,104)
Purchase of leasehold improvements -- -- (15,661)
Purchase of Cantab stock (6,000,000) -- --
Rent received for leasehold improvements 462,746 480,461 --
Proceeds from sale of equipment 132,609 1,227,071 15,130
Purchase of short-term investments -- (23,933,789) (39,206,494)
Redemption of short-term investments 8,218,939 34,783,092 51,019,076
Purchase of long-term investments -- (2,871,538) (24,294,056)
Redemption of long-term investments 4,142,140 6,106,587 14,929,862
------------ ------------ ------------
Net cash provided by investing activities 6,956,434 15,791,884 1,818,753
Cash flows from financing activities:
Proceeds from exercise of stock options 1,400 -- 69,830
------------ ------------ ------------
Net cash provided by financing activities 1,400 -- 69,830
------------ ------------ ------------
Net increase (decrease) in cash and cash equivalents 6,022,489 10,418,691 (15,305,304)
Cash and cash equivalents at beginning of period 18,855,527 8,436,836 23,742,140
------------ ------------ ------------
Cash and cash equivalents at end of period $ 24,878,016 $ 18,855,527 $ 8,436,836
============ ============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
19
<PAGE> 20
IMMULOGIC PHARMACEUTICAL CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (GOING CONCERN BASIS)
<TABLE>
<CAPTION>
Unrealized Total
No. of Additional Loss Stock-
Shares of Common Paid-in on Cantab Accumulated holders'
Common Stock Stock Capital Stock Deficit Equity
------------ ----- ------- ----- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1996 20,224,516 $ 202,245 $ 185,039,606 $ - $ (113,316,050) $ 71,925,801
Exercise of common stock options 85,947 859 68,971 69,830
401(k) employer match 30,264 303 134,212 134,515
Compensation expense 7,557 7,557
Net loss (18,118,563) (18,118,563)
---------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1997 20,340,727 203,407 185,250,346 - (131,434,613) 54,019,140
---------------------------------------------------------------------------------------------
401(k) employer match 26,945 270 48,167 48,437
Net loss (309,574) (309,574)
---------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1998 20,367,672 203,677 185,298,513 - (131,744,187) 53,758,003
Exercise of common stock options 1,750 17 1,383 1,400
401(k) employer match 8,624 86 10,435 10,521
Unrealized loss on Cantab stock (871,658) (871,658)
Net loss (2,059,558) (2,059,558)
---------------------------------------------------------------------------------------------
BALANCE AT JUNE 30, 1999 20,378,046 $ 203,780 $ 185,310,331 $ (871,658) $ (133,803,745) $ 50,838,708
---------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
20
<PAGE> 21
IMMULOGIC PHARMACEUTICAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. NATURE OF BUSINESS
ImmuLogic Pharmaceutical Corporation ("ImmuLogic" or the "Company") is
a biopharmaceutical company, which was developing novel products with a
primary emphasis on the immunological treatment of addiction and the
diagnosis and treatment of allergies. Since inception, the Company has
not derived any revenues from product sales and has incurred
significant operating losses.
On March 23 1999, the Board of Directors of ImmuLogic Pharmaceutical
Corporation (the "Company") approved a plan to liquidate and dissolve
the Company (the "Plan"). The Plan was approved by a majority of the
stockholders of the Company on August 25, 1999. The Plan was the end
result of the restructuring which began in 1997 and included the sale
of the Company's programs to Cantab Pharmaceuticals plc ("Cantab"), the
sub-lease of its Waltham, Massachusetts facility and a reduction in
workforce. The key features of the Plan are (1) the conclusion of all
business activities, other than those in execution of the Plan; (2) the
sale or disposition of all of the Company's assets; (3) the
satisfaction of all outstanding liabilities; (4) the payment of
liquidating distributions to stockholders in complete redemption of the
Common Stock; and (5) the authorization of the filing of Certificate of
Dissolution with the State of Delaware.
B. LIQUIDATION BASIS OF ACCOUNTING
The consolidated financial statements for fiscal 1998 and 1997 and for
the six months ended June 30, 1999 were prepared on the going concern
basis of accounting which contemplates realization of assets and
satisfaction of liabilities in the normal course of business. As a
result of the adoption of the Plan and the imminent nature of the
liquidation, the Company adopted the liquidation basis of accounting
effective July 1, 1999. This basis of accounting is considered
appropriate when, among other things, liquidation of a company appears
imminent and the net realizable value of assets are reasonably
determinable. Under this basis of accounting, assets are valued at
their estimated net realizable values and liabilities are valued at
their estimated settlement amounts. The conversion from the going
concern to liquidation basis of accounting has required management to
make significant estimates and judgements. In order to record assets
at estimated net realizable value and liabilities at estimated
settlement amounts under liquidation basis accounting on July 1, 1999
the Company recorded the following adjustments: recorded a $3.1
million decrease in the value of the Cantab stock, recorded a $3.2
million receivable for milestones and royalties, and recorded an
accrual of $1.3 million for costs to be incurred during the
liquidation period. Due to the significant increase in the trading
value of the Cantab stock, in the fourth quarter of 1999 the Company
recorded an adjustment to increase the estimated net realizable value
of the Cantab stock by $7 million. Additionally, during the six months
ended December 31, 1999, the Company recorded a $400,000 net decrease
in the receivable from the landlord of the Waltham, Massachusetts
facility.
21
<PAGE> 22
The amount and timing of future liquidating distributions will depend
upon a variety of factors including, but not limited to, the actual
proceeds from the sale of any of the Company's net assets, the ultimate
settlement amounts of the Company's liabilities and obligations, actual
costs incurred in connection with carrying out the Plan, including
management fees and administrative costs during the liquidation period,
and the timing of the liquidation and dissolution. A summary of
significant estimates and judgements utilized in preparation of the
December 31, 1999 consolidated financial statements on a liquidation
basis follows:
Cantab Stock
In December 1998, the Company signed an agreement with Cantab for the
sale of the Company's assets and the transfer of control over the
programs related to its drugs of addiction vaccine programs for the
treatment of nicotine and cocaine addiction. The assets sold consisted
primarily of patents and other intellectual property, as well as
certain equipment and materials used in these programs. In connection
with this sale, the Company remitted $6,000,000 in cash to Cantab in
1999 and received 2,566,845 Cantab ordinary shares in the form of
855,615 American Depository Shares ("ADSs"). One ADS is equal to
approximately three ordinary shares. Under the terms of the Company's
agreement with Cantab, the Company could not sell any of the ADSs or
Cantab ordinary shares represented by the ADSs prior to August 2, 1999.
Thereafter, the Company may immediately sell up to 25% of the ADSs, and
then may sell an additional 25% every 90 days thereafter. In addition,
the Company is obligated to sell such shares through a broker or
brokers designated by Cantab and approved by the Company, and in a
manner to be agreed upon by the Company and Cantab that is mutually
advantageous to the Company and Cantab, considering the desire for the
Company to sell and the desire of Cantab to avoid undue disruption of
the market for such securities.
During the twelve months ended March 13, 2000, the ADSs traded on the
Nasdaq National Market in a range of $6.38 to $33.00 The average daily
volume of the shares during this twelve-month period has been
approximately 4,200 shares. The Board of Directors has not yet
determined when to sell any shares of Cantab stock or the manner of any
such sale. This determination will be based on the judgement of the
Board of Directors as to whether the sale of the Cantab stock at any
particular time will result in realization of the highest possible
value to the Company's stockholders and will be based upon several
factors, including without limitation, (i) the Company's contractual
obligations to Cantab regarding the sale of the ADSs; (ii) the
anticipated effect on the market price of Cantab stock; (iii) whether a
sale of Cantab stock would require registration under the Securities
Act or the Exchange Act; (iv) whether an orderly public market for
Cantab stock exists; and (v) the availability of one or more purchasers
of the stock in a private sale. The valuation of this investment is
based upon subjective judgements due to the inherent uncertainty of
Cantab's volatile stock price, low trading volume, the large quantity
of shares the Company holds in Cantab, and restrictions in place under
the Company's agreement with Cantab as outlined above. Accordingly,
based upon its 90 day trading history, applying a discount factor and
taking into consideration the contractual restrictions to which it is
subject, the Company has recorded an asset of $12 million, the
estimated net realizable value of the stock for purposes of liquidation
basis accounting.
22
<PAGE> 23
Milestones & Royalties
The Company could receive up to a maximum of $11 million in milestone
payments contingent upon Cantab's successful development to the end of
Phase II clinical trials of the Nicotine and Cocaine Programs sold to
Cantab. These payments may be made in cash or in additional ADSs or a
combination thereof at Cantab's discretion. The Company would receive
the following for successful completion of the Phases as defined in the
agreement as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Cocaine..................... Phase II $2 million
Nicotine.................... Phase I $3 million
Nicotine.................... Phase II $6 million
</TABLE>
Upon receipt of the Phase II Cocaine or Phase I Nicotine milestones in
the form of Cantab stock or ADSs, the Company may sell up to 25% of
such shares in each of the four quarters following the expiration of an
initial six-month period. There would be no lock-up on shares paid in
respect of any additional milestones.
The Company could potentially also receive a share of net royalties
Cantab may receive from vaccine sales proportionate to the level of
worldwide product sales achieved. While the Company will attempt to
monetize these potential royalty streams, the Company does not
anticipate receiving significant value for them and thus has not
recorded any net realizable value for the royalty stream.
The Company estimates that the range of value to be received from these
milestones and royalties to be $0 to $11 million based on the contract
terms. The Company has recorded $3.0 million as the estimated net
realizable value for the purpose of liquidation basis accounting, which
assumes the realization of one of these milestones.
Landlord Receivable
In February, 1998, the Company entered into a phased sublease agreement
with Scriptgen for the Company's 85,000 square foot headquarters and
research and development facility located in Waltham, Massachusetts.
The entire facility was subleased to Scriptgen effective August 1,
1999. Under the terms of the sublease, Scriptgen has assumed the
Company's obligation under the lease in addition to reimbursing the
Company for a portion of the Company's leasehold improvements. The
Company negotiated with the landlord and Scriptgen an arrangement which
eliminated the Company's liability for the lease in the event that
Scriptgen were to default on its sublease obligations. In consideration
for such arrangement, the Company expects to receive $55,000 per month
through August of 2002 or approximately $1.76 million in the aggregate.
If Scriptgen were to default on its lease agreement or if the Company
sold its interest in the lease, the Company would receive less than the
$1.76 million. As of December 31, 1999, the Company has recorded $1.4
million as the estimated net realizable value for the purpose of
liquidation basis accounting.
23
<PAGE> 24
Liabilities
At December 31, 1999, the Company estimates that there are $1.2 million
of costs remaining including management compensation ($350,000),
professional fees ($500,000), insurance ($225,000), and
facility/miscellaneous costs ($125,000) to be incurred during the
remaining liquidation period through August 26, 2002.
C. ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements include the accounts
of the Company and its wholly-owned subsidiary, ImmuLogic Securities
Corporation. All intercompany accounts and transactions have been
eliminated.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles for liquidation requires management to
make certain estimates and assumptions that affect the net
realizability of assets and estimated costs to be incurred during the
liquidation period and disclosure of contingent assets and liabilities
at the date of the financial statements. Actual results could differ
from those estimates.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to
concentrations of credit risk consist primarily of receivables from
Cantab and Cantab stock. These assets make up 89% of the Company's
total net assets at December 31, 1999.
Cash
As of December 31, 1999, the Company had cash and cash equivalents of
$2,168,000 invested primarily in high-grade commercial paper and money
market funds.
Revenue Recognition
Payments associated with rights to license or sublicense the Company's
technology were recognized as revenue when payments were received.
Payments in connection with sponsored research and the sale of programs
were recognized as revenue was earned under the terms of the
agreements.
Research and Development
All research and development costs were expensed as incurred.
24
<PAGE> 25
Income Taxes
The Company follows the liability method of accounting for income taxes
whereby a deferred tax liability is measured by the enacted tax rates
which will be in effect when any differences between the financial
statements and tax basis of assets reverse. The deferred tax liability
can be reduced by net operating losses being carried forward for tax
purposes.
The measurement of deferred tax assets is reduced by a valuation
allowance if, based upon weighted available evidence, it is more likely
than not that some or all of the deferred tax assets will not be
realized.
Net Loss Per Common Share
As explained in Note B, effective July 1, 1999 the Company adopted the
liquidation basis of accounting. Accordingly, the presentation of per
common share information on a liquidation basis is not considered
meaningful and has been omitted.
The basic loss per common share, for periods prior to July 1, 1999 was
computed based upon the weighted average number of common shares
outstanding. The Company had 0, 1,532,018, and 1,993,218 options
outstanding at December 31, 1999, 1998 and 1997, respectively. These
options were not included in the calculation of dilutive common
equivalent shares however, since the effect of their inclusion would
have been anti-dilutive.
New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133 ("SFAS 133"),
"Accounting for Derivative Instruments and Hedging Activities". This
Statement requires companies to record derivatives on the balance sheet
as assets or liabilities, measured at fair value. Gains or losses
resulting from the change in the values of those derivatives would be
accounted for depending on the use of the derivative and whether it
qualifies for hedge accounting. In June 1999, the FASB issued Statement
of Financial Accounting Standard No. 137 ("SFAS 137"), "Accounting for
Derivative Instruments and Hedging Activities - Deferral of the
Effective Date of FAS Statement 133", which postponed the adoption of
SFAS No. 133. As such the Company is not required to adopt the
statement until the year ending December 31, 2001. We believe the
adoption of SFAS No. 133 will not have any effect on the financial
statements.
In December 1999, the Staff of the Securities and Exchange Commission
issued Staff Accounting Bulletin No. 101, "Revenue Recognition in
Financial Statements" ("SAB 101"). SAB 101 summarizes certain of the
Staff's views in applying accounting principles generally accepted in
the United States to revenue recognition in financial statements. We
believe the provisions of SAB 101 will not have any effect on the
financial statements.
25
<PAGE> 26
D. PROPERTY AND EQUIPMENT
During 1999, all of the Company's equipment and furniture was sold. In
addition, the Company recorded a loss on leasehold improvements in the
amount of $1,446,000 to record the leaseholds at their net realizable
value for liquidation basis accounting.
Depreciation and amortization expense associated with property and
equipment was approximately $72,000, $680,000, and $2,447,000 in 1999,
1998, and 1997, respectively.
E. STOCKHOLDERS' EQUITY
COMMON STOCK
At December 31, there were 20,550,773 and 20,367,672 common shares
issued and outstanding for the years 1999 and 1998, respectively.
PREFERRED STOCK
The Company has authorized a single class of preferred stock, par value
$.01, consisting of 1,000,000 shares. This preferred stock may be
issued in series with such rights, preferences and privileges as the
Board of Directors may determine.
SHAREHOLDER RIGHTS PLAN
On July 11, 1995, the Board of the Company declared a dividend of one
preferred stock purchase right (a Right) for each outstanding share of
the Company's Common Stock to stockholders of record at the close of
business on August 1, 1995. The Company adopted the plan to protect
shareholders against unsolicited attempts to acquire control of the
Company that do not offer what the Company believes to be an adequate
price to all shareholders. Each Right entitles the registered holder to
purchase from the Company a unit consisting of one one-thousandth of a
share of Series A Junior Participating Preferred Stock, $.01 par value
(the Preferred Stock), at a purchase price of $75 in cash per unit
subject to adjustment.
Initially, the Rights will be attached to all Common Stock certificates
representing shares then outstanding, and no separate Rights
Certificates will be distributed. The Rights will separate from the
Common Stock and a Distribution Date will occur upon the earlier of (i)
10 days following a public announcement that a person or group of
affiliated or associated persons (an Acquiring Person) has acquired, or
obtained the right to acquire, beneficial ownership of 20% or more of
the outstanding shares of Common Stock, or (ii) 10 business days
following the commencement of a tender offer or exchange offer that
would result in a person or group beneficially owning 30% or more of
such outstanding shares of Common Stock.
26
<PAGE> 27
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on August 1, 2005, unless earlier
redeemed or exchanged by the Company as described below.
In the event that any stockholder becomes an Acquiring Person, except
pursuant to a Permitted Offer, each Right will thereafter entitle the
holder thereof to receive, upon exercise, that number of shares of
Common Stock which equals the exercise price of the Right divided by
one-half of the current market price (as defined in the Rights
Agreement) of the Common Stock at the date of the occurrence of the
event.
Preferred Stock purchasable upon exercise of the Rights will not be
redeemable. Each share of Preferred Stock will be entitled to a minimum
preferential quarterly dividend payment of $10 per share and will be
entitled to an aggregate dividend of 1,000 times the dividend declared
per share on Common Stock. In the event of liquidation, the holders of
the Preferred Stock will be entitled to a minimum preferential
liquidation payment of $1,000 per share and will be entitled to an
aggregate payment of 1,000 times the payment made per share of Common
Stock. Each share of Preferred Stock will have 1,000 votes, voting
together with the Common Stock. Finally, in the event of any merger,
consolidation, or other transaction in which Common Stock is exchanged,
each share of Preferred Stock will be entitled to receive 1,000 times
the amount received per share of Common Stock. These rights are subject
to adjustment for any stock split, stock dividend, recapitalization, or
similar event. At December 31, 1999, 20,550,773 preferred stock
purchase rights were outstanding.
STOCK OPTIONS
As of December 31, 1999, there were no stock options outstanding.
The Company's stock option plan activity is summarized as follows:
<TABLE>
<CAPTION>
Number Weighted Average
of Options Exercise Price
---------- --------------
<S> <C> <C>
Outstanding at December 31, 1996 2,750,223 $ 9.12
Granted during 1997 549,650 4.09
Exercised during 1997 (85,947) .81
Canceled during 1997 (1,220,708) 8.87
---------- ----------
Outstanding at December 31, 1997 1,993,218 8.25
Granted during 1998 313,000 1.44
Exercised during 1998 -- --
Canceled during 1998 (774,200) 9.17
---------- ----------
Outstanding at December 31, 1998 1,532,018 7.98
Granted during 1999 -- --
Exercised during 1999 (174,477) 1.43
Canceled during 1999 (1,357,541) 7.03
---------- ----------
Outstanding at December 31, 1999 -- $ --
========== ==========
</TABLE>
27
<PAGE> 28
F. LICENSE AGREEMENT
In May 1987, the Company entered into an agreement with the
Massachusetts Institute of Technology (MIT) under which the Company was
granted a worldwide, exclusive license under certain patent
applications. The Company terminated this license effective on July 27,
1999. As a result of the termination, the total due under the agreement
was reduced to $50,000 which was paid in April 1999. No further amounts
are due under this agreement.
G. LEASE COMMITMENTS
In February, 1998, the Company entered into a phased sublease agreement
with Scriptgen for the Company's 85,000 square foot headquarters and
research and development facility located in Waltham, Massachusetts.
The entire facility was subleased to Scriptgen effective August 1,
1999. Under the terms of the sublease, Scriptgen has assumed the
Company's obligation under the lease in addition to reimbursing the
Company for a portion of the Company's leasehold improvements. The
Company negotiated with the landlord and Scriptgen an arrangement which
eliminated the Company's liability for the lease in the event that
Scriptgen were to default on its sublease obligations. In consideration
for such arrangement, the Company expects to receive $55,000 per month
through August of 2002 or approximately $1.76 million in the aggregate.
If Scriptgen were to default on its lease agreement or if the Company
sold its interest in the lease, the Company would receive less than the
$1.76 million. As of December 31, 1999, the Company has recorded an
estimate of $1.4 million as the estimated net realizable value for the
purpose of liquidation basis accounting.
H. EMPLOYEE BENEFITS
The Company had a 401(k) savings plan (the Plan) which was available to
all of its qualified permanent employees. Participants could contribute
up to 15 percent of their annual compensation to the Plan, subject to
certain limitations. The employer match to the Plan was in the form of
Company Common Stock and was calculated as the lesser of up to one-half
of six percent of a participant's total compensation or $2,000 annually
in value of Common Stock. The fair market value on the date of issuance
of the Common Stock pursuant to the matching contributions totaled
approximately $11,000, $25,000 and $90,000 in 1999, 1998 and 1997,
respectively. Due to the Company's liquidation, the Plan was terminated
during 1999. The Company is in the process of distributing the assets
of the Plan.
I. INCOME TAXES
At December 31, 1999 the Company had available for federal income tax
purposes net operating loss carryforwards of approximately $138,000,000
expiring in the years 2002 through 2019, which are available to reduce
future federal taxable income. The Company also has available research
and experimentation tax credits of approximately $3,700,000 at December
31, 1999, expiring in the years 2002 through 2019. The net operating
loss carryforwards are subject to limitation in any given year in the
event of significant changes in
28
<PAGE> 29
ownership. The Company has established a valuation reserve against the
entire deferred tax asset arising from these carryforwards due to the
uncertainty of earning sufficient taxable income and accordingly, has
not given recognition to these tax benefits in the accompanying
financial statements. The Company does not believe these operating loss
carryforwards have material value and any benefit relating to these
operating losses could be lost due to failure to meet the continuity of
business requirements.
Significant components of the Company's deferred tax assets and
liabilities are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1999 1998
---- ----
<S> <C> <C>
Deferred tax assets and liabilities:
Net operating loss and tax credit carryforwards $ 60,369,608 $ 56,988,972
Depreciation -- 2,630,050
Accrued expenses 612,000 326,764
Accrued revenue (1,760,000) --
MIT license agreement -- 130,000
Other 12,482 31,380
------------ ------------
Total deferred tax assets and liabilities 59,234,090 60,107,166
------------ ------------
Valuation allowance (59,234,090) (60,107,166)
------------ ------------
Net deferred tax assets and liabilities $ -- $ --
============ ============
</TABLE>
29
<PAGE> 30
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
The following table sets forth the names, ages and positions of the
executive officers and directors of the Company as of March 13, 2000.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
J. Richard Crowley 44 Director, President, Secretary and
Treasurer of the Company
Carl S. Goldfischer, M.D. 41 Director
Daniel J. Korpolinski 57 Director
</TABLE>
Mr. J. Richard Crowley, a consultant to the Company, served as the
Company's interim Chief Financial Officer from May 1997 until April 1, 1999,
when he was appointed President, Secretary and Treasurer. Mr. Crowley is
President of Keystone Consulting, a contract financial and operational
management services firm which he founded in 1995. Mr. Crowley's experience from
1983 to 1995 includes senior financial and operational positions with the
LittlePoint Corporation, a children's consumer products company, TransNational
Financial Services, a marketer of financial products to affinity groups, and the
Crosby Vandenburgh Group, a contract publisher. From 1979 to 1983, Mr. Crowley
was with Price Waterhouse, during which time he obtained his C.P.A. Mr. Crowley
holds a B.A. in Economics from Providence College. Mr. Crowley also serves on
the Company's Board of Directors.
Dr. Carl S. Goldfischer became a member of the Company's Board of
Directors in March 1997. Dr. Goldfischer has served as Vice President, Finance
and Strategic Planning and Chief Financial Officer of ImClone Systems, Inc., a
publicly-held biotechnology company, since May 1996. From June 1994 until May
1996, Dr. Goldfischer served as a health care analyst with Reliance Insurance,
an insurance company. From June 1991 until June 1994, Dr. Goldfischer was
Director of Research for D. Blech & Co., a securities firm. Dr. Goldfischer
received a doctorate of medicine from Albert Einstein College of Medicine in
1988 and served as a resident in radiation oncology at Montefiore Hospital of
the Albert Einstein College of Medicine until 1991.
30
<PAGE> 31
Daniel L. Korpolinski became a member of the Company's Board of
Directors in September 1999. Mr. Korpolinski served as the President and Chief
Executive Officer, and a director, of Copley Pharmaceutical Inc., a
publicly-held pharmaceutical company, from August 1998 to January 2000. From
June 1996 to August 1998, Mr. Korpolinski served as President and Chief
Executive Officer of Prodromics On Line, a health informatics company with
databases for the diagnosis of mental and physical disease. From October 1991 to
June 1996, Mr. Korpolinski served as President and Chief Executive Officer of
CoCensys, Inc., a biopharmaceutical company.
31
<PAGE> 32
Item 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following sets forth certain information regarding compensation
paid during each of the Company's last three fiscal years to each person who
served as the Company's Chief Executive Officer and each of the Company's other
most highly compensated officers, based on salary and bonuses earned during 1999
(the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
SHARES SUBJECT
NAME AND PRINCIPAL TO OPTIONS ALL OTHER
POSITION YEAR SALARY BONUS GRANTED COMPENSATION(1)
- -------- ---- ------ ----- ------- ---------------
<S> <C> <C> <C> <C> <C>
J. Joseph Marr, M.D. (2) 1999 $52,500 -- -- $328,154
Former President and Chief 1998 210,000 $100,000 172,727 21,763
Executive Officer 1997 210,000 100,000 200,000 50,797
J. Richard Crowley 1999 $176,586 $43,000 -- --
President, Secretary and 1998 101,386 -- 17,273 --
Treasurer(3) 1997 80,797 -- 30,000 --
</TABLE>
- --------------------
(1) Amounts for Dr. Marr in 1999 include $310,000 in severance pay issued
on April 1, 1999, vacation pay in the amount of $11,469 and $6,685 of
premiums paid on, and the cash surrender value of , insurance policies
maintained by the Company.
(2) Dr. Marr resigned as President and Chief Executive Officer on April 1,
1999.
(3) Mr. Crowley joined the Company as interim Chief Financial Officer in
1997. Mr. Crowley was appointed President, Secretary and Treasurer
effective April 1, 1999. Mr. Crowley also serves on the Company's Board
of Directors.
32
<PAGE> 33
OPTION GRANTS IN LAST FISCAL YEAR
No options were granted to either of the Named Executive Officers in
1999.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND OPTION VALUES AT FISCAL YEAR-END
The following table provides information on the value of unexercised
options held by the Named Executive Officers at December 31, 1999.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED
SHARES ACQUIRED OPTIONS AT YEAR-END(1)
NAME ON EXERCISE VALUE REALIZED EXERCISABLE UNEXERCISABLE
- ---- ----------- -------------- ----------- -------------
<S> <C> <C> <C> <C>
J. Joseph Marr, M.D. 172,727 $79,454 - -
J. Richard Crowley - - - -
</TABLE>
EMPLOYMENT, TERMINATION AND CHANGE-IN-CONTROL ARRANGEMENTS
The Company entered into an employment agreement with Dr. Marr on July
3, 1996, as amended, relating to the obligations of the Company to Dr. Marr in
the event of termination of his employment. The agreement provided that if the
Company terminated Dr. Marr's employment for cause, the Company would be
obligated to pay Dr. Marr his compensation and benefits through the last day of
his actual employment. If Dr. Marr terminated his employment for "good reason"
(as defined in the agreement), or his employment was terminated (other than for
"cause," as defined in the agreement) upon a "change in control" (as defined in
the agreement), Dr. Marr would receive a lump-sum cash payment equal to 12
months of compensation at the level of compensation immediately prior to
termination (the "Base Compensation"). In addition, Dr. Marr would be eligible
to receive an amount equal to the Base Compensation in accordance with the
Company's normal payroll procedures beginning 12 months after the date of
termination and ending 24 months after the date of termination. Compensation
paid during this 12-month period would be offset by other compensation earned in
an employment or consulting arrangement during such period. Furthermore, the
Company would continue to provide medical and other benefits to Dr. Marr for a
period of up to 24 months. Finally, all unvested stock options held by Dr. Marr
would vest upon termination and would be exercisable for 12-months after the
date of termination. At the request of the Board of Directors and as a result of
the significant diminution of his responsibilities, Dr. Marr resigned from the
Company for "good reason" effective April 1, 1999 and is entitled to receive
amounts payable under this agreement, including acceleration in full of the
vesting of all options held by him, which
33
<PAGE> 34
were subsequently cancelled in December 1999 by letter agreement between the
Company and Dr. Marr.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee of the Board of Directors of
the Company was at any time during 1999, or formerly, an officer or employee of
the Company or any subsidiary of the Company, nor has any member of the
Compensation Committee had any relationship with the Company requiring
disclosure under Item 404 of Regulation S-K under the Securities Exchange Act of
1934 (as amended, the "Exchange Act"). No executive officer of the Company has
served as a director or member of the Compensation Committee (or other Committee
serving an equivalent function) of any other entity, whose executive officers
served as a director of or member of the Compensation Committee of the Company.
34
<PAGE> 35
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act and regulations of the Securities and
Exchange Commission (the "Commission") thereunder require the Company's
executive officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of initial
ownership and changes in ownership with the Commission and the National
Association of Securities Dealers, Inc. Such officers, directors and ten-percent
stockholders are also required by the rules of the Commission to furnish the
Company with copies of all Section 16(a) forms they file. Based solely on its
review of the copies of such forms received by it, or written representations
from certain reporting persons that no other reports were required for such
persons, the Company believes that, during or with respect to the period from
January 1, 1999 to December 31, 1999, all of its executive officers, directors
and ten-percent stockholders complied with their Section 16(a) filing
obligations.
COMPENSATION OF DIRECTORS
The Company maintains a compensation program for each director who is
not an employee of the Company or any subsidiary of the Company and who does not
receive more than $50,000 in any year pursuant to a consulting contract with the
Company. Pursuant to this compensation program, each such director receives cash
compensation of $25,000 per annum for his services as a director.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of February 29,
2000 (except as otherwise noted), with respect to the beneficial ownership of
the shares of Common Stock by (i) each person known by the Company to own
beneficially more than 5% of the outstanding shares of Common Stock, (ii) each
current director of the Company, (iii) each of the Named Executive Officers of
the Company, and (iv) all directors and executive officers of the Company as a
group.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF SHARES OF COMMON STOCK PERCENTAGE OF OUTSTANDING
BENEFICIAL OWNER BENEFICIALLY OWNED(1) COMMON STOCK (2)
---------------- --------------------- ----------------
<S> <C> <C>
5% Stockholders
Carl C. Ichan (3)
c/o Ichan Associates Corp. 3,006,000 14.63%
767 Fifth Avenue, 47th Floor
New York, NY 10153
State of Wisconsin Investment Board(4) 2,211,500 10.76%
Lake Terrace
121 East Wilson Street
Madison, WI 53703
</TABLE>
35
<PAGE> 36
<TABLE>
<CAPTION>
NAME AND ADDRESS OF SHARES OF COMMON STOCK PERCENTAGE OF OUTSTANDING
BENEFICIAL OWNER BENEFICIALLY OWNED(1) COMMON STOCK (2)
---------------- --------------------- ----------------
<S> <C> <C>
Directors and Named Executive Officers
Carl S. Goldfischer, M.D. 0 *
Daniel J. Korpolinski 0 *
J. Richard Crowley 0 *
President, Secretary and Treasurer;
Director
J. Joseph Marr, M.D. 0 *
Former President and Chief
Executive Officer
All directors and executive officers as a group (3 0 *
persons)
</TABLE>
- -----------------
* Less than 1% of the total number of outstanding shares of Common Stock.
36
<PAGE> 37
(1) The inclusion herein of any shares of Common Stock deemed beneficially
owned does not constitute an admission of beneficial ownership of those
shares. Unless otherwise indicated, each stockholder referred to above
has sole voting and investment power with respect to the shares listed.
The number of shares of Common Stock beneficially owned by each
director and executive officer is determined under the rules of the
Commission and the information is not necessarily indicative of
beneficial ownership for any other purpose. Under such rules,
beneficial ownership includes any shares as to which each executive
officer has sole or shared voting power or investment power and also
any shares of Common Stock into which any options held by such
executive officer are exercisable within 60 days after February 29,
2000.
(2) Based upon 20,550,773 shares of Common Stock outstanding as of February
29, 2000.
(3) Based upon a Schedule 13D filed with the Commission on September 7,
1999 by High River Limited Partnership ("High River"), Riverdale LLC
("Riverdale") and Carl C. Ichan ("Ichan"), indicating shared voting and
dispositive power with respect to 3,006,000 shares of Common Stock.
According to statements set forth in this filing, Riverdale, an entity
which is wholly-owned by Ichan, is the general partner of High River,
the record holder of such shares.
(4) The State of Wisconsin Investment Board filed a Schedule 13G/A with the
Commission dated February 9, 2000, indicating sole voting and
dispositive power with respect to 2,211,500 shares of Common Stock.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On July 3, 1996, the Company and Dr. Marr entered into an employment
relating to the obligations of the Company to Dr. Marr in the event of
termination of his employment. See "Employment Termination and Change in Control
Arrangements" under the heading, "Item 11 -- Executive Compensation."
37
<PAGE> 38
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A) Documents filed as part of this report:
1. FINANCIAL STATEMENTS
The following financial statements are included in Part II
Item 8 filed as part of this Form 10-K:
Report of Independent Accounts
Consolidated Statement of Net Assets in Liquidation as of
December 31, 1999
Consolidated Balance Sheet as of December 31, 1998 (Going
Concern Basis)
Consolidated Statement of Changes in Net Assets in
Liquidation as of December 31, 1999
Consolidated Statements of Operations for the six months
ended June 30, 1999 and years ended December 31, 1998 and
1997 (Going Concern Basis)
Consolidated Statements of Cash Flows for the six months
ended June 30, 1999 and years ended December 31, 1998 and
1997 (Going Concern Basis)
Consolidated Statements of Changes in Stockholders' Equity
for the six months ended June 30, 1999 and for the years
ended December 31, 1998 and 1997 (Going Concern Basis)
Notes to Consolidated Financial Statements
2. FINANCIAL STATEMENT SCHEDULES
The Financial Statement Schedules have been omitted because
they are either not applicable or the required information is
included in the Consolidated Financial Statements or Notes
thereto.
3. EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-K
The Exhibit Index is set forth on page 40 of this Form 10-K
immediately preceding the exhibits filed as part of this
annual report on Form 10-K and is incorporated by reference
herein.
(B) Reports filed on Form 8-K for the quarter ended December 31, 1999.
None.
38
<PAGE> 39
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
IMMULOGIC PHARMACEUTICAL CORPORATION
By: /s/ J. Richard Crowley
------------------------------------
J. Richard Crowley
President, Secretary and Treasurer
Date: March 28, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE DATE TITLE
--------- ---- -----
<S> <C> <C>
/s/ J. Richard Crowley March 28, 2000 President, Secretary and Treasurer
- ----------------------------- (Principal Exec. and Financial Officer)
J. Richard Crowley
/s/ Carl S. Goldfischer March 28, 2000 Director
- -----------------------------
Carl S. Goldfischer
/s/ Daniel Korpolinski March 28, 2000 Director
- -----------------------------
Daniel Korpolinski
</TABLE>
39
<PAGE> 40
EXHIBIT INDEX
IMMULOGIC PHARMACEUTICAL CORPORATION
ANNUAL REPORT
FORM 10-K - 1999
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
3.01(3) Restated Certificate of Incorporation of the Registrant, as amended.
3.02(1) Amended and Restated By-laws of the Registrant.
4.01(1) Specimen certificate for shares of the Registrant's Common Stock.
4.02(1) Description of capital stock (contained in the Restated Certificate of Incorporation the
Registrant, as amended, filed as Exhibit 3.01)
10.16(1) Office Lease, dated November 13, 1991, between the Registrant and Lincoln Street Trust.
10.27(2) Rights Agreement dated as of August 1, 1995, between the Registrant and the First
National Bank of Boston.
10.34(4) Amendment No. 1 to the Rights Agreement dated as of April 3, 1996.
10.39(5) Consultation Agreement dated May 13, 1997 between the Registrant and J. Richard Crowley.
10.40(6) Sublease dated January 22, 1998 between the Registrant as sublandlord and Scriptgen
Pharmaceuticals, Inc. as subtenant for the facility at 610 Lincoln Street, Waltham,
Massachusetts.
10.41(7) License Agreement, dated June 16, 1998, by and between the Registrant and Heska
Corporation.
10.42(8) Purchase Agreement, dated December 18, 1998, by and between the Registrant and Cantab
Pharmaceuticals plc.
10.43 Amendment to the License Agreement, dated June 16, 1998, by and between the Registrant
and Heska Corporation.
10.44 Amendment to the Office Lease, dated November 13, 1991, by and between the Registrant
and Lincoln Street Trust.
</TABLE>
40
<PAGE> 41
<TABLE>
<CAPTION>
<S> <C>
10.45 Letter Agreement dated July 30, 1999 by and between the Registrant and Lincoln Street
Trust.
21.01(1) Subsidiaries of the Registrant.
27.01 Financial Data Schedule
</TABLE>
(1) Incorporated by reference to the Company's Registration
Statement on Form S-1 (File No. 33-39592).
(2) Incorporated by reference to the Company's Form 8-K filed on
July 27, 1995, as amended by Form 8-K/A on August 2, 1995,
with respect to the adoption of the Rights Agreement.
(3) Incorporated by reference to the Company's Quarterly Report on
Form 10-Q for the period ended June 30, 1996.
(4) Incorporated by reference to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1996.
(5) Incorporated by reference to the Company's Quarterly Report on
Form 10-Q for the period ended June 30, 1997.
(6) Incorporated by reference to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1997.
(7) Incorporated by reference to the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1998.
(8) Incorporated by reference to the Company's Current Report on
Form 8-K dated February 2, 1999.
The Company will furnish copies of any of the above exhibits
at reasonable cost to its shareholders and upon written
request to Investor Relations, 610 Lincoln Street, Waltham, MA
02451.
41
<PAGE> 1
Exhibit 10.43
FIRST AMENDMENT TO LICENSE AGREEMENT
This First Amendment is made and entered into as of the thirteenth day of
December, 1999, by and between HESKA CORPORATION, a Delaware corporation having
its principal place of business at 1613 Prospect Parkway, Fort Collins, Colorado
80525 (Facsimile: 970-484-9505) ("HESKA") and IMMULOGIC PHARMACEUTICAL
CORPORATION, a Delaware corporation having its principal place of business at
610 Lincoln Street, Waltham, Massachusetts 02154 (Facsimile: 781-466-6050)
("IMMULOGIC").
WHEREAS, HESKA and IMMULOGIC are parties to that certain License Agreement
dated as of June 16, 1998 (the "LICENCE AGREEMENT"); and
WHEREAS, the Licensed Technology described in EXHIBIT A attached hereto is
owned by IMMULOGIC (the "OWNED TECHNOLOGY") and consists of (i) the patent and
patent applications assigned solely to IMMULOGIC and listed on Exhibit A-1 and
(ii) IMMULOGIC's ownership rights in the patents and patent applications
assigned to IMMULOGIC and another party and listed on Exhibit A-2; and
WHEREAS, IMMULOGIC owns the ALLERVAX(TM) trademark and all registrations
and goodwill associated therewith (also referred to herein as part of the "Owned
Technology"); and
WHEREAS, IMMULOGIC and Sankyo Co. Ltd. Are parties to that certain Patent
License Agreement dated as of May 22, 1998, a copy of which is attached as
Exhibit E hereto (the "Sankyo License"); and
WHEREAS, the Licensed Technology described in EXHIBIT B attached hereto is
licensed by IMMULOGIC from third parties and sublicensed to HESKA pursuant to
the License Agreement ("SUBLICENSED TECHNOLOGY") and consists of (i)) the patent
and patent applications assigned to another party and licensed exclusively to
IMMULOGIC and listed on Exhibit B-1 and (ii) IMMULOGIC's exclusive license
rights in the patents and patent applications assigned to IMMULOGIC and another
party and listed on Exhibit B-2; and
WHEREAS, HESKA and IMMULOGIC desire to amend the License Agreement as set
forth in this First Amendment;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS. Capitalized terms used in this First Amendment (and the
Recitals above) shall have the meanings ascribed to them in the License
Agreement, unless otherwise expressly defined herein.
2. AMENDMENTS TO LICENSE AGREEMENT. Upon execution and delivery of this
First Amendment, HESKA shall pay to IMMULOGIC Three Hundred Thousand Dollars
($300,000), in immediately available funds (the "BUYOUT PAYMENT"). In
consideration of the Buyout Payment, the License Agreement is hereby amended as
follows:
1
<PAGE> 2
(a) CONVEYANCE OF OWNED TECHN0LOGY TO HESKA.
(i) IMMULOGIC hereby conveys, transfers and sets over to HESKA
all right title and interest in and to the Owned Technology. IMMULOGIC hereby
agrees, at its own expense, to do all such things and take all such actions, and
to make, execute and deliver all such other documents and instruments, including
but not limited to patent assignments, trademark assignments, copyright
assignments, bills of sale, and other conveyance documents, as shall be
reasonably requested by HESKA to implement the foregoing conveyance of the Owned
Technology and otherwise carry out the provisions, intent and purpose of this
First Amendment.
(ii) IMMULOGIC hereby represents and warrants to HESKA that
(A) IMMULOGIC has, and conveys to HESKA hereunder, good and marketable title to
the Owned Technology, free and clear of all liens, encumbrances and restrictions
of any kind whatsoever (other than as expressly set forth in EXHIBIT A) and (B)
the representations and warranties of IMMULOGIC set forth in Sections 7.1(b),
(e), (f) and (g) of the License Agreement are true and correct with respect to
the Owned Technology and this First Amendment as if made on the date of this
First Amendment.
(b) ASSIGNMENT AND ASSUMPTION OF SUBLICENSED TECHNOLOGY.
(i) Promptly after the execution and delivery of this First
Amendment, but in no event after June 30, 2000, IMMULOGIC shall cause each
licensor of the Sublicensed Technology to execute and deliver to HESKA an
Assignment and Assumption Agreement in the form of EXHIBIT C attached hereto,
which shall incorporate the terms and conditions set forth in EXHIBIT D attached
hereto relating to each respective licensor (each, an "Assistant Agreement").
(ii) If IMMULOGIC shall fail to deliver any Assignment Agreement
when due, HESKA may exercise any and all of its rights and remedies for breach
of the License Agreement, and without limiting the generality of the foregoing,
if IMMULOGIC shall fail to deliver all Assignment Agreements on or before the
first date that a milestone payment is otherwise due and payable under Section
3.1(b)(ii) or Section 3.1(b)(iii) of the License Agreement, HESKA may, by
written notice to IMMULOGIC, terminate its obligations under such Sections
3.1(b)(ii) and 3.1(b)(iii).
(iii) If IMMULOGIC in good faith seeks to obtain an Assignment
Agreement from any licensor and such licensor refuses in writing to enter into
such Assignment Agreement due to any provisions of the applicable Exhibit D,
IMMULOGIC shall be released from its obligation to deliver the Assignment
Agreement unless HESKA agrees to waive such provision (but not any other
provision) of Exhibit D to which the licensor will not agree within 10 days of
written notice from IMMULOGIC. In the event IMMULOGIC is released from its
obligation to deliver a particular Assignment Agreement under this subparagraph,
the provisions of section 2(b)(ii) shall not apply with respect to that
Assignment Agreement.
(c) ELIMINATION OF ROYALTIES AND CERTAIN MILESTONE PAYMENTS. The
following sections of the License Agreement are hereby deleted in their entirety
and shall have no further force and effect: Section 3.1(b)(i), Section 3.2(a),
Section 3.2(b), Section 3.2(c), Section 3.3, Section 3.4(a) and Section 3.4(c).
Without limiting the generality of the foregoing, no further
2
<PAGE> 3
consideration shall be payable by HESKA to IMMULOGIC under the License Agreement
except for the amounts payable, if any, pursuant to the terms and conditions of
Section 3.1(b)(ii) and Section 3.1(b)(iii). Article 4 of the License Agreement
shall apply only with respect to payments, if any, due under Section 3.1(b)(ii)
and Section 3.1(b)(iii).
(d) COVENANT NOT TO COMPETE. Article 5 of the License Agreement shall
continue to apply to the Owned Technology and Sublicensed Technology, for a
period of five (5) years after the date of this First Amendment. The last
sentence of Article 5 of the License Agreement is hereby deleted in its
entirety.
(e) PATENT PROSECUTION: INFRINGEMENT ACTIONS. IMMULOGIC's rights and
obligations under Article 6 of the License Agreement with respect to the Owned
Technology shall be of no further force and effect after the date of this First
Amendment.
(f) ASSUMPTION OF SANKYO LICENSE. IMMULOGIC hereby conveys and
assigns to HESKA, as of the date hereof, all of IMMULOGIC's right, title and
interest in and to the Sankyo License, and HESKA hereby assumes the Sankyo
License as licensor thereunder and agree to perform all obligations to be
performed thereunder on and after such date (but not other obligations).
IMMULOGIC represents and warrants that IMMULOGIC has performed all of its
obligations under the Sankyo License through the date hereof.
3. EFFECT OF THIS FIRST AMENDMENT. In the event of any conflict between
the terms and conditions of this First Amendment and the License Agreement, this
First Amendment shall govern and control. Upon execution and delivery of this
First Amendment, the License Agreement shall continue in full force and effect,
as amended by the express terms of this First Amendment.
3
<PAGE> 4
IN WITNESS WHEREOF, the parties have executed this First Amendment by their
duly authorized representatives, effective as of the date on which this First
Amendment has been duly signed by both parties, which date will be inserted at
the top of this Agreement.
IMMULOGIC PHARMACEUTICAL
CORPORATION
By /s/ Richard Crowley
------------------------------
Richard Crowley
President
HESKA CORPORATION
By /s/ Paul Hudnut
------------------------------
Paul Hudnut
Executive Vice President
EXHIBITS:
- --------
A Owned Technology
B Sublicensed Technology
C Form of Assignment and Assumption Agreement
D Individual Terms and Conditions of Each Assignment Agreement
E Sankyo License
4
<PAGE> 5
EXHIBIT A
TO FIRST AMENDMENT TO LICENSE AGREEMENT
Owned Technology
PATENT AND PATENT ASSIGNMENTS
The patents and patent applications listed on Exhibit A-1 and IMMULOGIC's
ownership rights in the patents and patent applications assigned to IMMULOGIC
and another party and listed on Exhibit A-2.
TRADEMARKS
ALLERVAX
LIENS AND ENCUMBRANCES
Patent License Agreement, dated May 22, 1998 between ImmuLogic Pharmaceutical
Corporation and Sankyo Co. Ltd., a correct and complete copy of which is
attached to this First Amendment to License Agreement as Exhibit E.
KNOW-HOW AND BIOLOGICAL MATERIALS
As stated in the License Agreement and its exhibits.
5
<PAGE> 1
Exhibit 10.44
SECOND AMENDMENT TO LEASE
This Second Amendment to Lease ("Amendment") dated as of July 30, 1999 and
effective as of August 1, 1999 and is made by and among Lincoln Street Trust, as
Landlord ("Landlord"), Immulogic Pharmaceutical Corporation ("Immulogic") and
Scriptgen Pharmaceuticals, Inc. ("Scriptgen").
RECITAL
WHEREAS, Immulogic entered into that certain Lease dated November 29, 1991,
and an Amendment thereto dated May 8, 1992 (as amended, the "Lease") for the
entire building located at 610 Lincoln Street, Waltham, Massachusetts (the
"Premises"):
WHEREAS, subsequently Immulogic sublet the Premises pursuant to a Sublease
dated January 22, 1998 by and between Immulogic and Scriptgen whereby Scriptgen
subleased substantially all of the Premises (the "Sublease");
WHEREAS, Immulogic, Scriptgen and Landlord entered into that certain letter
agreement dated February 16, 1998 whereby Scriptgen agreed to certain covenants
in connection with the Sublease (the "Letter Agreement");
WHEREAS, Immulogic desires to be released of its obligations under the
Lease;
WHEREAS, Scriptgen desires to become the Tenant under the Lease; and
WHEREAS, Landlord has agreed to relieve Immulogic of its obligations under
the Lease and recognize Scriptgen as Tenant by amending the Lease and
substituting Scriptgen as the tenant thereunder subject to the following terms
and conditions contained herein.
NOW, THEREFORE FOR GOOD AND VALUABLE CONSIDERATION, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Immulogic's interest in the Lease is hereby assigned to Scriptgen.
Scriptgen hereby assumes all liability and obligations of Immulogic as
Tenant under the Lease on and after the date of this Amendment, and
Immulogic is hereby released from all liability and obligations under
the Lease which shall accrue after the date of this Amendment.
Notwithstanding the foregoing, Scriptgen shall be liable as if
Scriptgen was the original tenant named in the Lease for any and all
claims relating to hazardous substances as defined in Section 5.2 of
the Lease caused by Scriptgen, its agents, employees, invitees,
licensees and contractors and for any acts or omissions of Scriptgen,
its agents, employees, invitees, licensees and contractors during
Scriptgen's occupancy of the Premises under the Sublease. The Sublease
is hereby terminated. However, the covenants set forth in the Letter
1
<PAGE> 2
Agreement shall survive termination of the Sublease and are hereby
incorporated in the Lease and shall be binding on Landlord and
Scriptgen.
2. The following shall be deleted following the term "TENANT" in Section
1.1, "Immulogic Pharmaceutical Corporation" and "SCRIPTGEN
Pharmaceuticals, Inc." shall be substituted in lieu thereof.
3. The following shall be deleted following the term "TENANT'S ORIGINAL
ADDRESS" in Section 1.1 "One Kendall Square, Building 600, Cambridge,
MA 02130" and "610 Lincoln Street, Waltham MA 02254" shall be
substituted in lieu thereof.
4. The following shall be deleted after the term "ANNUAL FIXED RENT" in
Section 1.1:
Lease Years 1 and 2: $1,055,060.50
Lease Year 3: $1,097,777.50
Lease Year 4: $1,183,205.50
Lease Year 5: $1,225,920.50
Lease Year 6 through 8: $1,268,635.50
Lease Years 9 and 10: $1,311,350.60
and "Annual Fixed Rent through August 31, 2002 is $2,392,040.04
annually" shall be inserted in lieu thereof. The Annual Fixed Rent
includes all tenant improvements, fixtures and other property owned by
Landlord (or transferred to Landlord hereunder) currently used by
Scriptgen at the Premises.
5. The following shall be deleted in Section 1.1 of the Lease: "Security
Deposit: $750,000," "Broker: R.M. Bradley & Co., Inc. and Lynch,
Murphy, Walsh and Partners," and "Tenant's Authorized Representative:
Janet C. Bush."
6. The following shall be deleted from Section 1.2 of the Lease: "Exhibit
B. Construction Costs Disbursement Schedule."
7. Article III of the Lease, entitled "Construction of Premises," shall
be deleted in its entirety.
8. The second sentence in Section 5.2 shall be deleted in its entirety
and replaced with the following: "Tenant shall obtain and maintain all
permits necessary for all operations conducted in the Premises, and
shall comply with the terms thereof."
9. Section 8.6 of the Lease shall be deleted in its entirety and the
following shall be substituted in lieu thereof:
"Each party warrants to the other that it has had no dealings with any
broker or agent in connection with this Lease. Each party covenants to
pay, hold harmless
-2-
<PAGE> 3
and indemnify the other from and against any and all cost, expense or
liability for any compensation, commissions and charges claimed by any
broker or agent with respect to this Lease or the negotiation thereof,
or arising from a breach of the foregoing warranty."
10. The following is hereby added as a new section, 8.18:
8.18 CONSTRUCTION OF ADDITION
Landlord shall have the right to construct an addition to the
Premises (the "Addition") and, in connection with the development of
the Addition, Landlord shall have the right to make alterations to the
exterior of the Premises and building systems located therein; to
utilize the Premises for access and egress to and from the Addition or
utilities serving the Addition; to alter or expand the loading
facilities at the Premises and to utilize the loading facilities for
the Addition in common with Premises; to shore up the foundations
and/or walls of the Premises; to erect scaffolding and protective
barricades around, within or adjacent to the Premises; and to do any
other act necessary for the safety of the Premises or the development
of the Addition. Landlord shall not be liable to Tenant for any
compensation or reduction of rent by reason of inconvenience or
annoyance or for loss of business resulting from any act by Landlord
pursuant to this Section 8.18, provided that Landlord shall not
materially interfere with Tenant's use of the Premises and shall use
reasonable efforts to minimize the extent and duration of any
inconvenience, annoyance or loss of business to Tenant resulting from
any work pursuant to this Section in or about the Premises, consistent
with accepted construction practice.
11. The Lease is hereby amended by adding a new Article X thereto, to read
in its entirety as follows, and simultaneously with the execution of
this Amendment Immulogic shall pay over to Landlord the Security
Deposit currently held by Immulogic under the Sublease, which shall
become the Security Deposit under the Lease:
The Security Deposit will be held by Landlord in an interest-bearing
account for and during the Term, which deposit shall be returned to
Tenant within thirty (30) days after the expiration or termination of
the Lease, provided there exists no breach of any undertaking of
Tenant. Provided Tenant is not in default of this Lease, all interest
on the Security Deposit shall be paid to Tenant on an annual basis on
each anniversary of the Commencement Date. If all or any part of the
Security Deposit is applied to an obligation of Tenant hereunder,
Tenant shall immediately, upon request by Landlord, restore the
Security Deposit to its original amount. Tenant shall not have the
right to call upon Landlord to apply all or any part of the Security
Deposit to cure any default or fulfill any obligation of Tenant, by
such use shall solely be in the discretion of the Landlord. Provided
Tenant is
-3-
<PAGE> 4
not in default of any of its obligations hereunder, the Security
Deposit shall be reduced to $250,000.00 and $250,000.00 returned to
the Tenant within ten (10) days after Tenant provides evidence
reasonably satisfactory to Landlord that Tenant has successfully
completed a public offering of Tenant's common stock, which raised not
less than $30,000,000.00.
12. Exhibit B to the Lease shall be deleted in its entirety.
13. Each of Landlord and Immulogic covenants, warrants and represents
that: (i) the copy of the Lease and the Letter Agreement attached
hereto as EXHIBIT A is a true and correct copy of the Lease and the
Letter Agreement and there are no amendments or modifications thereto
except as included in said EXHIBIT A; (ii) the Lease and the Letter
Agreement are a complete statement of the agreement of the parties
thereto with respect to the use and occupancy of the Premises; (iii)
the Lease and the Letter Agreement are in full force and effect; (iv)
it has not given or received any notice of default or notice of
termination of the Lease or the Letter Agreement, and is not in
default of any monetary obligations or, to the best of its knowledge,
in the performance of or compliance with any material provisions of
the Lease and the Letter Agreement, and to the best of its knowledge
no facts or circumstances exist which, with the giving of notice or
the passage of time or both, would constitute such a default
thereunder (Landlord waives its rights in connection with any
nonmonetary defaults under the Lease of which it is not now aware
except for defaults arising from the acts or omissions of Scriptgen,
its agents, employees, invitees, licensees and contractors during
Scriptgen's occupancy of the Premises under the Sublease), and (v) to
the best of its knowledge, each other party to the Lease and the
Letter Agreement is not in default in the performance of or compliance
with any material provisions of the Lease and the Letter Agreement,
and to the best of its knowledge no facts or circumstances exist
which, with the given of notice or the passage of time or would
constitute such a default thereunder.
14. Scriptgen covenants, warrants and represents that (i) it has not given
or received any notice of default or notice of termination of the
Sublease or the Letter Agreement and it is not in material default in
the performance or compliance of any of the material provisions of the
Sublease or the Letter Agreement and no facts or circumstances exist
which would, with the giving of notice or the passage of time or both
would constitute a default thereunder; and (ii) to the best of its
knowledge, Landlord is not in default in the performance of or
compliance with any material provisions of the Lease or the Letter
Agreement, and no facts or circumstances exist which, with the given
of notice or the passage of time or both, would constitute such a
default thereunder. Scriptgen hereby agrees that (i) the copy of the
Lease and the Letter Agreement attached hereto as Exhibit A is a true
and correct copy of the Lease and the Letter Agreement and there are
no amendments or modifications thereto except as included in said
Exhibit A; (ii) the Lease and the Letter Agreement are a complete
statement of the agreement of the
-4-
<PAGE> 5
parties thereto with respect to the use and occupancy of the Premises;
(iii) to the best of Scriptgen's knowledge, the Lease and the Letter
Agreement are in full force and effect.
15. Immulogic hereby transfers, assigns and conveys to Landlord all of its
right, title and interest in all tenant improvements, fixtures or any
other personal property of any kind on, under, over or about the
Premises and hereby warrants and represents that all such property is
owned by Immulogic free and clear of any liens, security interests, or
adverse claims (other than rights of Scriptgen under the Sublease).
16. All other terms and provisions of the Lease are hereby ratified and
confirmed.
17. Notwithstanding anything contained in this Amendment to the contrary,
this Amendment shall not be effective and bind the parties until the
Landlord's lender has consented to this Amendment, it being understood
that the consent of Landlord's lender is a condition to this
Amendment.
18. This Amendment may be signed in counterparts, all of which taken
together shall constitute one agreement, provided that it shall not be
binding upon any party hereto unless and until at least one
counterpart shall have been executed and delivered by each party
hereto.
SIGNATURE PAGE TO FOLLOW
-5-
<PAGE> 6
IN WITNESS WHEREOF, the parties have executed this First Amendment to Lease
as of the date first written above as a sealed instrument.
LINCOLN STREET TRUST SCRIPTGEN PHARMACEUTICALS, INC.
Landlord
By: /s/ Michael D. Bank By: /s/ John Barberich
------------------------ ------------------------
Name: Michael D. Bank Name: John Barberich
Title: Managing Director Title: Vice President & CFO
IMMULOGIC PHARMACEUTICAL
CORPORATION
By: /s/ J. Richard Crowley
------------------------
Name: J. Richard Crowley
Title: President
-6-
<PAGE> 1
Exhibit 10.45
LINCOLN STREET TRUST
POST OFFICE BOX 9198
WALTHAM, MASSACHUSETTS 02254-9198
July 30, 1999
Immulogic Pharmaceutical Corporation
610 Lincoln Street
Waltham, Massachusetts 02451
Re: Letter Agreement regarding Tenant Improvements, Insurance,
and Reimbursement of Landlord's Expenses
-------------------------------------------------------------
Gentlemen:
Reference is hereby made to that certain Lease dated November 29, 1991 and
an amendment thereto dated May 8, 1992 (as amended, the "Lease") between Lincoln
Street Trust as landlord ("Landlord") and Immulogic Pharmaceutical Corporation
as tenant ("Immulogic") whereby Immulogic leased the entire building known and
numbered as 610 Lincoln Street, Waltham, Massachusetts. All terms not defined
herein have the meaning ascribed to them in the Lease.
In connection with the assignment of Immulogic's interest in the Lease to
Scriptgen Pharmaceuticals, Inc. ("Scriptgen") by virtue of the Second Amendment
to Lease, of even date herewith, among Landlord, Immulogic and Scriptgen,
Landlord and Immulogic agree as follows:
1. Commencing August 1, 1999, Landlord shall pay Immulogic a sum equal to
$54,399.00 monthly during the remaining term of the Lease but only if,
as and when Landlord has received from Scriptgen (or any successor
tenant to Scriptgen under the Lease) the monthly installment of Annual
Fixed Rent, together with all other charges and payments then due and
payable under the Lease. Landlord shall pay such sum to Immulogic
within fifteen (15) days of Landlord's receipt thereof.
2. Immulogic shall obtain, at its sole cost and expense, an insurance
policy insuring Landlord, its beneficiary, and their trustees,
employees, agents and
1
<PAGE> 2
Immulogic Pharmaceutical Corporation
July __, 1999
Page 2
contractors against any and all loss, cost, damage, expense, claims,
or liability arising out of any release of hazardous substances as
defined in Section 5.2 of the Lease caused by Immulogic, its agents,
employees, invitees, licensees or contractors. The insurance shall be
for a term of five (5) years in an amount not less than Five Million
Dollars from an insurance company and in form and substance reasonably
satisfactory to Landlord. Until such time as Immulogic has procured
such policy and Landlord has approved same, the sums due and payable
pursuant to paragraph 1 above shall be retained and held in escrow by
the Landlord (the "Retained Funds"). If such insurance policy is not
delivered within ninety (90) days of the date hereof, Immulogic
forfeits all right, title and interest to the Retained Funds and all
other amounts due under paragraph 1 above and Landlord shall terminate
the escrow and shall keep the Retained Funds and all other amounts due
under paragraph 1 above.
3. Immulogic has paid to Landlord as of the date hereof the sum of
$4,000.00 as reimbursement to Landlord for legal expenses and
disbursements incurred by Landlord in connection with this
transaction.
This lease agreement shall be binding upon and for the benefit of the parties'
successors and assigns.
LINCOLN STREET TRUST, Landlord
By: /s/ Michael D. Bank
------------------------------
Name: Michael D. Bank
----------------------
Title: Managing Trustee
---------------------
Agreed and acknowledged:
IMMULOGIC PHARMACEUTICAL
CORPORATION
By: /s/ J. Richard Crowley
------------------------------
Name: J. Richard Crowley
----------------------
Title: President
---------------------
2
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM IMMULOGIC
PHARMACEUTICAL CORPORATION REPORT ON FORM 10K FOR THE YEAR ENDED DECEMBER 31,
1999, CONSOLIDATED STATEMENT OF NET ASSETS IN LIQUIDATION AND CONSOLIDATED
STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH IMMULOGIC PHARMACEUTICAL CORPORATION ON FORM 10K
FOR THE YEAR ENDED DECEMBER 31, 1999
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 2,167
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,167
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 18,621
<CURRENT-LIABILITIES> 1,720
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-BASIC> 0
<EPS-DILUTED> 0<F1>
<FN>
<F1>IMMULOGIC ADOPTED THE LIQUIDATION BASIS OF ACCOUNTING EFFECTIVE JULY 1, 1999
AND THEREFORE ABOVE DATA IS NOT APPLICABLE WITH THE EXCEPTION OF ASSET AND
LIABILITY DATA.
</FN>
</TABLE>
