<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For quarter ended June 30, 2000 Commission File No. 0-19312
------------- -------
MEDAREX, INC.
-------------
(Exact name of registrant as specified in its charter.)
New Jersey 22-2822175
---------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
707 State Road #206, Princeton, New Jersey 08540
------------------------------------------ -----
(Address or principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 430-2880
--------------
Indicate by check mark whether registrant (1) has filed all reports required to
be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
-
The number of shares of common stock, $.01 par value, outstanding as of August
1, 2000 was 36,020,286 shares.
Page 1 of 15
<PAGE>
MEDAREX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
December 31, June 30,
----------------- ------------------
1999 2000
(Unaudited)
<S> <C> <C>
ASSETS
------
Current assets:
Cash and cash equivalents $ 14,366 $ 149,226
Marketable securities 15,781 222,822
Prepaid expenses and
other current assets 4,395 10,976
----------------- ------------------
Total current assets 34,542 383,024
Property and equipment:
Machinery and equipment 5,061 5,538
Furniture and fixtures 336 386
Leasehold improvements 2,310 2,336
Construction in progress - 400
----------------- ------------------
7,707 8,660
Less accumulated depreciation and amortization (4,633) (5,192)
----------------- ------------------
3,074 3,468
Investments in, and advances to affiliates 499 18,340
Segregated cash 1,300 21,443
Patent rights and other assets 1,067 746
----------------- ------------------
Total assets $ 40,482 $ 427,021
================= ==================
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
Trade accounts payable $ 620 $ 304
Accrued liabilities 5,133 3,575
Deferred contract revenue - current 6,407 7,163
----------------- ------------------
Total current liabilities 12,160 11,042
Deferred contract revenue - long-term 6,000 3,500
Long-term obligations 23 11
Commitments - -
Shareholders' equity:
Preferred stock, $1.00 par value, 2,000,000 shares authorized;
none issued and outstanding - -
Common stock, $.01 par value; 100,000,000 shares authorized;
32,714,942 shares issued and 32,112,442 outstanding
at December 31,1999 and 35,797,347 shares issued and 35,194,847
shares outstanding at June 30, 2000 327 358
Capital in excess of par value 149,032 547,372
Treasury stock, at cost 602,500 shares (3,031) (3,031)
Deferred compensation 2,970 2,970
Accumulated other comprehensive income (loss) (563) 1,114
Accumulated deficit (126,436) (136,315)
----------------- ------------------
Total shareholders' equity 22,299 412,468
----------------- ------------------
Total liabilities and shareholders' equity $ 40,482 $ 427,021
================= ==================
</TABLE>
See notes to these unaudited consolidated financial statements.
Page 2 of 15
<PAGE>
MEDAREX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share data)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30, June 30, June 30,
1999 2000 1999 2000
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Sales $ 487 $ 113 $ 443 $ 58
Grants, contract and license revenues 6,540 5,129 990 3,051
----------- ---------- ---------- -----------
Total revenues 7,027 5,242 1,433 3,109
Costs and expenses:
Cost of sales 156 54 128 27
Research and development 10,168 17,260 4,690 11,901
General and administrative 2,616 5,905 1,334 3,018
----------- ---------- ---------- -----------
Operating loss (5,913) (17,977) (4,719) (11,837)
Equity in net loss of affiliate - (158) - (158)
Interest and dividend income 558 8,558 291 6,592
Interest expense (4) (2) (2) (1)
----------- ---------- ---------- -----------
Loss before provision for income taxes (5,359) (9,579) (4,430) (5,404)
Provision for income taxes - 300 - 150
----------- ---------- ---------- -----------
Net loss $ (5,359) $ (9,879) $ (4,430) $ (5,554)
=========== ========== ========== ===========
Basic and diluted net loss per share $ (0.17) $ (0.28) $ (0.14) $ (0.16)
=========== ========== ========== ===========
Weighted-average number of common
shares outstanding during the period
- basic and diluted 31,585,959 34,829,279 31,663,866 35,763,557
</TABLE>
See notes to these unaudited consolidated financial statements.
Page 3 of 15
<PAGE>
MEDAREX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
For the Six Months Ended
June 30,
1999 2000
------------ -----------
<S> <C> <C>
Operating activities:
Net loss $(5,359) $ (9,879)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 385 390
Amortization 203 189
Value of stock options to employees - 1,402
Value of stock options and warrants to non-employees - 1,351
Equity in net loss of affiliate - 158
Changes in operating assets and liabilities, net of acquisition:
Prepaid expenses and other current assets 190 (2,369)
Trade accounts payable 25 (316)
Accrued liabilities (2,378) (1,554)
Deferred contract revenue (850) (1,744)
------------ -----------
Net cash used in operating activities (7,784) (12,372)
Investing activities:
Purchase of property and equipment (333) (953)
Decrease in other assets - 300
Increase in advances to affiliate - (17,999)
Increase in segregated cash - (20,143)
Purchase of marketable securities (4,000) (212,437)
Sale of marketable securities 11,239 7,073
------------ -----------
Net cash provided by (used in) investing activities 6,906 (244,159)
Financing activities:
Cash received from sales of securities, net 34 391,407
Principal payments under debt obligations (36) (16)
------------ -----------
Net cash provided by financing activities (2) 391,391
------------ -----------
Net increase (decrease) in cash and cash equivalents (880) 134,860
Cash and cash equivalents at beginning of period 4,411 14,366
------------ -----------
Cash and cash equivalents at end of period $3,531 $ 149,226
============ ===========
Supplemental disclosures of cash flow information
Cash paid during period for:
Income taxes $ - $ -
============ ===========
Interest $ 4 $ 2
============ ===========
</TABLE>
See notes to these unaudited consolidated financial statements.
Page 4 of 15
<PAGE>
MEDAREX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands)
1. Organization and Basis of Presentation
The unaudited consolidated financial statements have been prepared from the
books and records of Medarex, Inc. and Subsidiaries (the "Company") in
accordance with the instruction to Form 10-Q and, accordingly, do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Interim results are not necessarily
indicative of the results that may be expected for the year. For further
information, refer to the financial statements and footnotes thereto included in
the Company's annual report on Form 10-K for the year ended December 31, 1999.
2. Net Loss per Share
Basic and diluted loss per share is calculated in accordance with the
Financial Accounting Standards Board ("FASB") SFAS No. 128, Earnings per Share.
Potentially dilutive securities have been excluded from the computation, as
their effect is antidilutive.
3. Marketable Securities
Marketable securities consist of fixed income investments with a maturity
of greater than three months and other highly liquid investments that can be
readily purchased or sold using established markets. Such securities, which are
classified as available-for-sale, are carried at market with unrealized gains
and losses reported as a separate component of shareholders' equity.
4. Contingencies
The Company has a contingent commitment to pay $1,000 to Essex Chemical
Corporation ("Essex") without interest in installments equal to 20% of net after
tax earnings of the Company in future years. The Company's contingent
commitment, as amended, to pay up to $1,000 out of future earnings may be
satisfied, at the Company's option, through the payment of cash or shares of the
Company's Common Stock having a fair market value equal to the amount owed,
provided that such shares are registered with the Securities and Exchange
Commission.
In the ordinary course of our business, the Company is at times subject to
various legal proceedings. The Company does not believe that any of our current
legal proceedings, individually or in the aggregate, will have a material
adverse effect on its operations or financial condition.
Page 5 of 15
<PAGE>
MEDAREX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands)
5. Contract and License Agreements
In April 2000, the Company entered into collaboration with Coulter
Pharmaceutical through which Coulter will obtain access to Medarex's HuMAb-Mouse
technology to generate fully human monoclonal antibodies against a number of
specific target antigens.
Under the terms of the agreement, Coulter will have the option to obtain
exclusive commercial rights to these antibodies. In return, Medarex could
receive research and development payments, license fees and milestone payments,
as well as royalties on commercial sales of the fully human antibodies developed
by Coulter.
In May 2000, the Company announced a broad antibody development agreement
with Centocor, Inc., a wholly owned subsidiary of Johnson & Johnson. This
agreement allows Centocor and other affiliates of Johnson & Johnson to access
the HuMAb-Mouse technology for an unlimited number of targets. Under the terms
of the agreement, Medarex will receive technology access fees, and could also
receive license fees, milestone fees and royalties on product sales.
In February of 2000 the Company entered into a binding letter of intent
with Eos Biotechnology, Inc. to develop and commercialize genomics-derived
antibody-based therapeutic products. Pursuant to the letter of intent, on May
15, 2000 the Company paid $5,000 to Eos Biotechnology and deposited an
additional $20,000 in a third party escrow account, to be released over time to
Eos Biotechnology upon the achievement of certain milestones. This escrow
deposit is included on our June 30, 2000 balance sheet as segregated cash.
Dr. Frederick B. Craves, a member of our board of directors, is also a member
of the board of directors of Eos Biotechnology. Dr. Craves did not vote on any
board action regarding the Eos Biotechnology transaction. BCC Acquisition I LLC
("BCC Acquisition"), which beneficially owns approximately 9% of our common
stock, is an affiliate of The Bay City Capital Fund I, L.P. ("BCC Fund"), which
owns approximately 15% of the shares of Eos Biotechnology's capital stock. Dr.
Craves is a principal of Bay City Capital LLC, an affiliate of BCC Fund, which
is one of the members of BCC Acquisition.
In June 2000, the Company announced the launch of an alliance with Biosite
Diagnostics, Inc. aimed at accelerating drug research via Trans-Phage
Technology. This high throughput method to create fully human antibodies
combines the immunological power of Medarex's HuMAb-Mouse with the speed of
Biosite's Omniclonal phage display technology. Through this alliance Biosite
and Medarex will offer pharmaceutical and biotechnology companies access to
large volumes of high-affinity, fully human antibodies to validate genomic
targets and to identify promising drug candidates. Under the terms of the
agreement, Biosite will receive research funding of $3 million per year over
eight years from Medarex, along with research fees and, if any products are
generated through the collaboration, milestone payments and royalties. Biosite
may also receive diagnostic rights to targets identified through the
collaboration. Medarex anticipates, as a result of this alliance, receiving
payments from third-party collaborators, including milestone payments, royalties
and reimbursement payments, that may offset the research funding being paid to
Biosite.
Also in June 2000, the Company and Corixa Corporation, a research and
development-based biotechnology company, announced a collaboration to discover
and develop fully human monoclonal antibodies against selected targets from
Corixa's library of proprietary autoimmune disease, cancer and infectious
disease antigens.
Page 6 of 15
<PAGE>
MEDAREX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands)
5. Contract and License Agreements (con't)
Corixa intends to contribute three targets initially and up to six or
more targets a year during the term of the agreement. Medarex will contribute
its HuMAb-Mouse technology to the multi-year collaboration, targeted to
generate, screen and characterize fully human monoclonal antibodies directed
against Corixa's antigens. Corixa, and in some cases Medarex, will then be
responsible for determining whether the characterized antibodies have an
immunotherapeutic effect in tissue culture experiments and in animal models of
human disease.
When antibodies are jointly determined to be worthy of clinical
investigation, Corixa and Medarex will hold a closed auction between the two
parties for the rights to develop the specific antibody-based product(s). The
company with the winning bid will pay the bid amount in cash to the other
company and will be responsible at that point in time for all product
development and commercialization expenses and decisions. The other company
will receive future product development milestone payments and royalties on
future product sales.
On June 13 2000, the Company announced that it signed an agreement with
MedImmune, Inc. to develop fully human antibodies to multiple antigens using
Medarex's HuMAb-Mouse technology. Under the terms of the agreement, MedImmune
receives an exclusive, worldwide license for the use of Medarex's HuMAb-Mouse
technology for the development of antibodies against respiratory syncytial virus
(RSV) and an option to further license the use of this technology for additional
antigens. Medarex receives technology access fees and could also receive
license and milestone payments, as well as royalties on product sales.
6. Equity Investment
The Company has a 45% investment in Genmab A/S a Danish biotechnology
company. In June 2000, the Company invested $18,000 in Genmab to maintain the
Company's 45% ownership. As a result of this transaction, the Company is
accounting for Genmab using the equity method.
7. Comprehensive Income (Loss)
On January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" (SFAS 130). SFAS 130
establishes new rules for the reporting and display of comprehensive income and
its components. The adoption of SFAS 130 had no impact on the Company's results
of operations or shareholders' equity. SFAS 130 requires unrealized gains or
losses on the Company's available-for-sale securities, which prior to adoption
were reported separately in shareholders' equity to be included in other
comprehensive income.
Page 7 of 15
<PAGE>
MEDAREX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands)
7. Comprehensive Income (Loss) (con't)
The components of comprehensive loss for the three and six-month periods
ended June 30, are as follows:
<TABLE>
<CAPTION>
Six months ended June 30, Three months ended June 30,
1999 2000 1999 2000
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net loss $(5,359) $(9,879) $(4,430) $(5,554)
Unrealized gain (loss) on (402) 1,677 (460) 2,179
securities
------------------------------ ----------------------------
Total comprehensive loss $(5,761) $(8,202) $(4,890) $(3,375)
</TABLE>
8. Segment Information
The Company is an integrated monoclonal antibody-based company with
antibody discovery, development and manufacturing capabilities. The operations
of the Company and its wholly-owned subsidiaries constitute one business
segment.
Revenue from customers representing 10% or more of total revenues for the
three and six months ended June 30, 1999 and 2000 is as follows:
<TABLE>
<CAPTION>
Six months ended June 30, Three months ended June 30,
Customer 1999 2000 1999 2000
-------------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Kirin Brewery Co., Ltd. 0% 57% 0% 48%
Centocor, Inc. 57% 1% 0% 1%
Merck KGaA 22% 0% 34% 0%
Genmab A/S 5% 7% 26% 10%
Aventis Behring L.L.C. 5% 1% 10% 0%
Novartis Pharma AG 3% 7% 11% 6%
</TABLE>
No other single customer accounted for more than 10% of the Company's total
revenues for the three and six months ended June 30, 1999 and 2000,
respectively.
Page 8 of 15
<PAGE>
MEDAREX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands)
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
This Quarterly Report on Form 10-Q contains "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, which represent
our projections, estimates, expectations or beliefs concerning among other
things, financial items that relate to management's future plans or objectives
or to our future economic and financial performance. Forward-looking statements
involve known and unknown risks and uncertainties and are indicated by words
such as "anticipates", "expects", "believes", "plans", "could" and similar words
and phrases. These risks and uncertainties include, but are not limited to, our
early stage of product development, history of operating losses and accumulated
deficit, additional financing requirements and access to capital funding,
dependence on strategic alliances, government regulation of the
biopharmaceutical industry and other risks that may be detailed from time to
time in our periodic reports and registration statements filed with the
Securities and Exchange Commission.
Liquidity and Capital Resources
-------------------------------
We have approximately $372,000 in cash, cash equivalents and marketable
securities and approximately $21,400 in a segregated cash account as of June 30,
2000. Operating activities consumed $12,372 of cash for the six-month period
ended June 30, 2000.
We recently entered into a binding letter of intent with Eos Biotechnology,
Inc. to develop and commercialize genomics-derived antibody-based therapeutic
products. Pursuant to the letter of intent, on May 15, 2000 we paid $5,000 to
Eos Biotechnology and deposited an additional $20,000 in a third party escrow
account to be released over time to Eos Biotechnology upon the achievement of
certain milestones. This escrow deposit is included on our balance sheet as
segregated cash. We have also entered into a non-binding letter of intent with
IDM relating to the development of certain of our non-HuMAb-Mouse antibody-based
products. Under the terms of the letter of intent, we are required to pay IDM
$2,000 upon the execution of a definitive agreement which we anticipate will
occur during the third quarter of 2000. In addition, we are required to purchase
additional equity in IDM, or a comparable interest in a new jointly owned entity
to fund up to an additional $5,000 in the event IDM does not complete a public
or private financing of at least $7,000 on or before December 31, 2000. Such an
event could cause us to incur losses to the extent of our investment in IDM.
On June 7, 2000 we invested $18,000 in Genmab A/S to maintain our 45%
ownership of this Danish biotechnology company that is developing fully human
antibody products to treat life threatening and debilitating diseases, including
cancer and chronic, inflammatory conditions, such as rheumatoid arthritis and
psoriasis.
We have financed our operations since inception through the sale of our
securities in public and private placements, sales of our products for research
purposes and technology transfer and license fees.
Page 9 of 15
<PAGE>
MEDAREX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands)
Liquidity and Capital Resources (con't)
---------------------------------------
Our current sources of liquidity are our cash, cash equivalents and
marketable securities, interest and dividends earned on such cash, cash
equivalents and marketable securities, sales of our products for research and
contract and licensing revenues. We believe that under existing operating plans
our current sources of liquidity will be sufficient to meet anticipated cash
requirements for the foreseeable future.
We lease approximately 43,000 square feet of laboratory, clinical trial
production and office space in a modern facility on a research campus in
Annandale, New Jersey, that was developed by Exxon Research and Engineering
Company as its corporate research headquarters. The term of the lease expires on
September 30, 2003, subject to renewal for an additional five years. We believe
that this facility is well suited for clinical-grade production of monoclonal
antibodies, since we have in place most utilities required for clinical-grade
production of such antibodies, including a production unit designed to meet cGMP
standards. This facility has a capacity of 10 kilograms of monoclonal antibody
production per year. We believe that our existing facilities are adequate for
the production of materials for clinical trials of our products and for
providing the services we offer to our corporate partners in connection with our
human antibody technology. However, we do not currently have the capability to
manufacture our products under development in large commercial quantities and
have no experience in commercial-scale manufacturing.
In April 2000, we signed a new lease for approximately 57,000 square feet
of laboratory and office space in San Jose, California. This property, leased
for approximately 10 years, will be used by our expanding GenPharm subsidiary.
At June 30, 2000 the aggregate future minimum lease commitments over the
remainder of the lease terms are approximately $20,125. As of June 30, 2000, we
have commitments for approximately $12,621 of capital expenditures.
Upon exhaustion of our current cash reserves, our continued operations will
depend on our ability to raise additional funds through equity or debt financing
and/or enter into licensing or joint development agreements, including
collaborative research and development arrangements with large pharmaceutical
companies pursuant to which certain costs associated with the regulatory
approval process for certain of our products would be borne by the licensees or
joint developers. We may not be able to successfully complete such sales or
financing activities.
Page 10 of 15
<PAGE>
MEDAREX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands)
Results of Operations
---------------------
Six months ended June 30, 1999 and 2000
---------------------------------------
Revenue for the six-month period ended June 30, 2000 decreased by $1,785, a
25% decrease from the six-month period ended June 30, 1999. The decrease
relates principally to a $4,000 milestone payment from Centocor, Inc. received
in January 1999, partially offset by $3,000 of contract and license revenues
from Kirin Brewery Co., Ltd. in the first half of 2000.
Cost of sales decreased by $102 during the first six months of 2000, a 65%
decrease as compared to the first six months of 1999. Production of MDX CD4 for
Genmab A/S, which was produced in 1999, ceased in 2000 resulting in this
decrease.
Research and development expenses increased $7,092 during the first six
months of 2000, a 70% increase from the first six months of 1999. The increase
is principally due to a $5,000 payment to Eos Biotechnology, as part of a
binding letter of intent for upfront fees to develop and commercialize genomics-
derived antibody-based therapeutic products, and higher personnel costs.
General and administrative expenses increased by $3,289 for the first six
months of 2000, a 126% increase from the first six months of 1999. The increase
is primarily attributable to heightened personnel costs incurred in connection
with the expansion of our business activities and shareholder relation expenses.
Included in these expenses are non-cash charges for options issued to employees
and warrants issued to a consulting firm of $918 and $1,074, respectively.
Equity in net loss of affiliate of $158 reflects our share of Genmab's loss
subsequent to our June 2000 investment of $18,000 in this joint venture
biotechnology company. Genmab is an affiliated company (45 percent owned) and
is accounted for using the equity method.
Interest and dividend income increased by $8,000 for the six-months ending
June 30, 2000, a 1434% increase as compared to the quarter ended June 30, 1999.
The increase reflects interest earned on the proceeds received from the March 3,
2000 follow-on public offering of our common stock. We sold 2,399,204 shares
and received net proceeds of approximately $388,000.
Three months ended June 30, 1999 and 2000
-----------------------------------------
Revenue for the three-month period ended June 30, 2000 increased by
$1,676, a 117% increase from the three-month period ended June 30, 1999. The
increase relates principally to $1,500 of contract and license revenues from
Kirin Brewery Co., Ltd. recognized in the second quarter of 2000.
Cost of sales decreased by $101 during the second quarter of 2000, a 79%
decrease as compared to the quarter ended June 30, 1999. Production of MDX CD4
for Genmab A/S, which was produced in 1999, ceased in 2000 resulting in this
decrease.
Page 11 of 15
<PAGE>
MEDAREX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands)
Three months ended June 30, 1999 and 2000 (con't)
-------------------------------------------------
Research and development expenses increased $7,211 during the quarter
ended June 30, 2000, a 154% increase as compared to the same period in 1999.
The increase is principally due to the $5,000 payment to Eos Biotechnology and
higher personnel costs.
General and administrative expenses increased by $1,684 for the three-month
period ending June 30, 2000, a 126% increase from the same period in 1999. The
increase is primarily attributable to heightened personnel costs and shareholder
relation expenses. Included in these expenses are non-cash charges for options
issued to employees and warrants issued to a consulting firm of $918 and $383,
respectively.
Equity in net loss of affiliate of $158 reflects our share of Genmab's loss
subsequent to our June 2000 investment of $18,000 in this joint venture
biotechnology company. Genmab is an affiliated company (45 percent owned) and
is accounted for using the equity method.
Interest and dividend income increased by $6,301 for the three-months
ending June30, 2000, a 2165% increase as compared to the quarter ended June 30,
1999. The increase reflects interest earned on the proceeds received from the
first quarter 2000 follow-on public offering of our Common Stock. We sold
2,399,204 shares and received net proceeds of approximately $388,000.
We have incurred and will continue to incur significant costs in the area
of research and development, including pre-clinical and clinical trials as our
products develop. Administrative costs are also expected to increase with the
increase of administrative activities and the creation of a marketing
organization.
Page 12 of 15
<PAGE>
Part II - Other Information
Item 4. Submission of Matters to a Vote of Security Holders
At the Annual Meeting of Shareholders held on May 18, 2000, the Company
elected two Class I Directors each to serve for a term to expire in 2003,
amended the Company's Restated Certificate of Incorporation to increase the
number of authorized shares of our Common Stock from 40,000,000 to
100,000,000 and voted to approve the Company's 2000 Stock Option Plan. In
addition, the Company voted to confirm the appointment of Ernst & Young LLP
as independent auditors for the 2000 fiscal year. Out of the 35,151,835
eligible votes, 25,664,384 were cast at the meeting either by proxies
solicited in accordance with Schedule 14A or by securities holders voting
in person. There were 9,487,451 broker non-votes which are not included in
the following table as they were not treated as being present at the
meeting. In the case of directors, abstentions are treated as votes
withheld and are included in the table. The tabulation of votes for each
nominee is set forth under Item No. 1 below, the adoption of the Company's
2000 Stock Option Plan is set forth under Item No. 2 below, the amendment
to the Company's Restated Certificate of Incorporation is set forth under
Item No. 3 below and the appointment of Ernst & Young LLP as independent
auditors for the 2000 fiscal year is set forth in Item No. 4 below:
Item No. 1
----------
Nominees for Directors
----------------------
Directors Votes For Votes Withheld
--------- ---------- --------------
Charles R. Schaller 23,822,975 1,841,409
Donald L.Drakeman 24,855,431 808,953
The following persons are incumbent directors whose terms of office continue
after the Annual Meeting:
Class III Terms Expiring in 2001 Class II Terms Expiring in 2002
-------------------------------- -------------------------------
Irwin Lerner Michael A. Appelbaum
Dr. Julius Vida Michael W. Fanger
Dr. W. Leigh Thompson, Jr. Fred Craves
Item No. 2
----------
Approval of the 2000 Stock Option Plan:
FOR AGAINST ABSTAIN
--- ------- -------
20,517,885 5,125,714 21,585
Page 13 of 15
<PAGE>
Item No. 3
----------
Amendment to the Company's Restated Certificate of Incorporation:
FOR AGAINST ABSTAIN
--- ------- -------
22,874,061 2,772,254 18,069
Item No. 4
----------
Appointment of Ernst & Young LLP as Independent Auditors for the 2000
fiscal year:
FOR AGAINST ABSTAIN
--- ------- -------
25,604,666 48,709 11,009
Item 6. Exhibits and reports on Form 8-K
(a) Reports on Form 8-K:
None
(b) Exhibits
27.1 Financial Data Schedule
Page 14 of 15
<PAGE>
Signatures
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MEDAREX, INC.
-------------
(Registrant)
Date: August 10, 2000 By /s/ Michael A. Appelbaum
---------------------------
Michael A. Appelbaum
Executive Vice President
Finance and Administration
(Principal Financial and
Accounting Officer)
Page 15 of 15
