<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 0-19267
ALKERMES, INC.
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 23-2472830
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
64 Sidney Street, Cambridge, MA 02139-4136
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (617) 494-0171
Not Applicable
Former name, former address, and former fiscal year, if changed since last
report
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes __X___ No _____
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Class Shares Outstanding as of February 8, 2000
----- ------------------------------------------
<S> <C>
Common Stock, par value $.01 26,286,263
</TABLE>
<PAGE> 2
ALKERMES, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
PART I - FINANCIAL INFORMATION
<S> <C>
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets 3
- December 31, 1999 and March 31, 1999
Consolidated Statements of Operations 4
- Three months ended December 31, 1999 and 1998
- Nine months ended December 31, 1999 and 1998
Consolidated Statement of Shareholders' Equity 5
- Nine months ended December 31, 1999
Consolidated Statements of Cash Flows 6
- Nine months ended December 31, 1999 and 1998
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of 10
Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk 16
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 17
SIGNATURES 20
EXHIBIT INDEX 21
</TABLE>
(2)
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS:
ALKERMES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
December 31, March 31,
1999 1999
---- ----
ASSETS
Current Assets:
<S> <C> <C>
Cash and cash equivalents $ 4,778,933 $ 9,115,432
Short-term investments 147,770,798 154,303,220
Prepaid expenses and other current assets 11,320,398 5,745,047
------------- -------------
Total current assets 163,870,129 169,163,699
------------- -------------
Property, Plant and Equipment:
Land 235,000 235,000
Building 3,488,437 3,483,862
Furniture, fixtures and equipment 35,104,358 31,302,274
Leasehold improvements 13,673,732 12,635,756
------------- -------------
52,501,527 47,656,892
Less accumulated depreciation and amortization (19,260,201) (14,292,146)
------------- -------------
33,241,326 33,364,746
------------- -------------
Investments 14,165,540 8,436,067
------------- -------------
Other Assets 1,767,518 2,487,757
------------- -------------
$ 213,044,513 $ 213,452,269
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 6,348,467 $ 6,642,005
Accrued interest 1,797,100 1,570,201
Deferred revenue 7,715,360 9,587,933
Long-term obligations-current portion 9,575,000 10,700,000
------------- -------------
Total current liabilities 25,435,927 28,500,139
------------- -------------
Long-Term Obligations 24,141,625 28,416,625
------------- -------------
Other Long-Term Liabilities 643,782 329,614
------------- -------------
Shareholders' Equity:
Capital stock, par value $.01 per share:
authorized, 2,696,500 shares; none issued
$3.25 Convertible exchangeable preferred stock, par value $.01 per share:
authorized and issued, 2,300,000 shares at December 31, 1999 and
March 31, 1999 (liquidation preference of $115,000,000) 23,000 23,000
1999 Convertible exchangeable preferred stock, par value $.01 per share:
authorized and issued, 3,500 and zero shares at December 31, 1999
and March 31, 1999 (liquidation preference of $35,000,000) 35 --
Common stock, par value $.01 per share: authorized, 80,000,000 shares;
issued, 25,565,653 and 24,982,459 shares; outstanding, 25,523,852
and 24,982,459 shares at December 31, 1999 and March 31, 1999 255,239 249,825
Additional paid-in capital 397,269,889 346,849,432
Deferred compensation (7,028,561) (9,932,199)
Accumulated other comprehensive income (loss) 7,094 (46,873)
Accumulated deficit (227,703,517) (180,937,294)
------------- -------------
Total shareholders' equity 162,823,179 156,205,891
------------- -------------
$ 213,044,513 $ 213,452,269
============= =============
</TABLE>
See notes to consolidated financial statements.
(3)
<PAGE> 4
ALKERMES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Research and development revenue under
collaborative arrangements $ 7,013,356 $ 11,854,359 $ 17,136,864 $ 29,456,873
Interest income 2,482,351 2,341,616 7,423,836 7,565,141
------------ ------------ ------------ ------------
9,495,707 14,195,975 24,560,700 37,022,014
------------ ------------ ------------ ------------
Expenses:
Research and development 13,483,815 12,923,553 39,322,552 34,804,385
General and administrative 3,464,840 3,593,973 10,247,970 10,044,549
Noncash compensation expense 9,025,371 4,922,936 12,722,945 13,207,893
Interest expense 724,772 658,206 2,187,566 1,547,331
Acquisition of in-process research and development -- -- -- 3,221,253
------------ ------------ ------------ ------------
26,698,798 22,098,668 64,481,033 62,825,411
------------ ------------ ------------ ------------
Net loss (17,203,091) (7,902,693) (39,920,333) (25,803,397)
Preferred stock dividends (2,409,982) (1,868,750) (6,845,890) (5,585,550)
------------ ------------ ------------ ------------
Net loss attributable to common shareholders ($19,613,073) ($ 9,771,443) ($46,766,223) ($31,388,947)
============ ============ ============ ============
Basic and diluted loss per common share ($ 0.77) ($ 0.39) ($ 1.85) ($ 1.28)
============ ============ ============ ============
Beighted average number of common shares
outstanding 25,404,264 24,794,656 25,220,708 24,610,918
============ ============ ============ ============
</TABLE>
See notes to consolidated financial statements.
(4)
<PAGE> 5
ALKERMES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
$3.25 Convertible 1999 Convertible
Exchangeable Exchangeable
Preferred Stock Preferred Stock Common Stock
Shares Amount Shares Amount Shares
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, April 1, 1999 2,300,000 $ 23,000 -- $ -- 24,982,459
Issuance of common stock -- -- -- -- 104,378
Issuance of 1999 convertible
exchangeable preferred stock -- -- 3,500 35 --
Noncash compensation -- -- -- -- --
Amortization of noncash compensation -- -- -- -- --
Unrealized gain on marketable securities -- -- -- -- --
Cumulative foreign currency translation
adjustments -- -- -- -- --
Net loss for period -- -- -- -- --
Preferred stock dividends -- -- -- -- --
---------------------------------------------------------------------------------
Balance, June 30, 1999 2,300,000 23,000 3,500 35 25,086,837
Issuance of common stock, net -- -- -- -- 240,680
Compensation relating to options and
restricted stock awards canceled -- -- -- -- --
Noncash compensation -- -- -- -- --
Amortization of noncash compensation -- -- -- -- --
Unrealized loss on marketable securities -- -- -- -- --
Cumulative foreign currency translation
adjustments -- -- -- -- --
Net loss for period -- -- -- -- --
Preferred stock dividends -- -- -- -- --
---------------------------------------------------------------------------------
Balance, September 30, 1999 2,300,000 23,000 3,500 35 25,327,517
Issuance of common stock, net -- -- -- -- 196,335
Noncash compensation -- -- -- -- --
Amortization of noncash compensation -- -- -- -- --
Unrealized gain on marketable securities -- -- -- -- --
Cumulative foreign currency translation
adjustments -- -- -- -- --
Net loss for period -- -- -- -- --
Preferred stock dividends -- -- -- -- --
---------------------------------------------------------------------------------
Balance, December 31, 1999 2,300,000 $ 23,000 3,500 $ 35 25,523,852
=================================================================================
</TABLE>
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Deferred
Amount Capital Compensation
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, April 1, 1999 $ 249,825 $ 346,849,432 ($ 9,932,199)
Issuance of common stock 1,043 653,660 --
Issuance of 1999 convertible
exchangeable preferred stock -- 34,999,965 --
Noncash compensation -- (2,562,055) 2,562,055
Amortization of noncash compensation -- -- 62,197
Unrealized gain on marketable securities -- -- --
Cumulative foreign currency translation
adjustments -- -- --
Net loss for period -- -- --
Preferred stock dividends -- -- --
--------------------------------------------------------------
Balance, June 30, 1999 250,868 379,941,002 (7,307,947)
Issuance of common stock, net 2,407 3,404,563 --
Compensation relating to options and
restricted stock awards canceled -- (754,849) 754,849
Noncash compensation -- 3,207,021 (3,207,021)
Amortization of noncash compensation -- -- 3,635,377
Unrealized loss on marketable securities -- -- --
Cumulative foreign currency translation
adjustments -- -- --
Net loss for period -- -- --
Preferred stock dividends -- -- --
--------------------------------------------------------------
Balance, September 30, 1999 253,275 385,797,737 (6,124,742)
Issuance of common stock, net 1,964 1,542,962 --
Noncash compensation -- 9,929,190 (9,929,190)
Amortization of noncash compensation -- -- 9,025,371
Unrealized gain on marketable securities -- -- --
Cumulative foreign currency translation
adjustments -- -- --
Net loss for period -- -- --
Preferred stock dividends -- -- --
--------------------------------------------------------------
Balance, December 31, 1999 $ 255,239 $ 397,269,889 ($ 7,028,561)
==============================================================
</TABLE>
<TABLE>
<CAPTION>
Other Comprehensive Income (Loss)
Foreign Unrealized
Currency Gain (Loss)
Translation on Marketable Accumulated
Adjustments Securities Deficit Total
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, April 1, 1999 ($ 46,873) $ -- ($180,937,294) $ 156,205,891
Issuance of common stock -- -- -- 654,703
Issuance of 1999 convertible
exchangeable preferred stock -- -- -- 35,000,000
Noncash compensation -- -- -- --
Amortization of noncash compensation -- -- -- 62,197
Unrealized gain on marketable securities -- 100,500 -- 100,500
Cumulative foreign currency translation
adjustments (15,174) -- -- (15,174)
Net loss for period -- -- (8,288,839) (8,288,839)
Preferred stock dividends -- -- (2,098,714) (2,098,714)
----------------------------------------------------------------------------------
Balance, June 30, 1999 (62,047) 100,500 (191,324,847) 181,620,564
Issuance of common stock, net -- -- -- 3,406,970
Compensation relating to options and
restricted stock awards canceled -- -- -- --
Noncash compensation -- -- -- --
Amortization of noncash compensation -- -- -- 3,635,377
Unrealized loss on marketable securities -- (43,500) -- (43,500)
Cumulative foreign currency translation
adjustments 26,307 -- -- 26,307
Net loss for period -- -- (14,428,403) (14,428,403)
Preferred stock dividends -- -- (2,337,194) (2,337,194)
----------------------------------------------------------------------------------
Balance, September 30, 1999 (35,740) 57,000 (208,090,444) 171,880,121
Issuance of common stock, net -- -- -- 1,544,926
Noncash compensation -- -- -- --
Amortization of noncash compensation -- -- -- 9,025,371
Unrealized gain on marketable securities -- 1,500 -- 1,500
Cumulative foreign currency translation
adjustments (15,666) -- -- (15,666)
Net loss for period -- -- (17,203,091) (17,203,091)
Preferred stock dividends -- -- (2,409,982) (2,409,982)
----------------------------------------------------------------------------------
Balance, December 31, 1999 ($ 51,406) $ 58,500 ($227,703,517) $ 162,823,179
==================================================================================
</TABLE>
See notes to consolidated financial statements.
(5)
<PAGE> 6
ALKERMES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
December 31, December 31,
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss ($39,920,333) ($25,803,397)
Adjustments to reconcile net loss to net cash used by
operating activities:
Depreciation and amortization 5,101,011 3,521,793
Amortization of compensation relating to issuance of common stock
and grant of stock options and awards made 12,722,945 13,207,893
Adjustments to other assets 779,315 --
Adjustments to other investments -- 201,600
Changes in assets and liabilities:
Prepaid expenses and other current assets (5,575,741) 854,109
Accounts payable and accrued expenses and accrued interest (60,353) (1,612,891)
Deferred revenue (1,872,573) 2,454,114
Other long-term liabilities 314,168 461,662
------------ ------------
Net cash used by operating activities (28,511,561) (6,715,117)
------------ ------------
Cash flows from investing activities:
Additions to property, plant and equipment, net (4,847,598) (22,118,725)
Maturities of short-term investments, net 6,532,422 35,681,520
Purchases of long-term investments, net (5,729,473) (5,026,217)
Increase in other assets (131,823) (2,634,825)
------------ ------------
Net cash (used) provided by investing activities (4,176,472) 5,901,753
------------ ------------
Cash flows from financing activities:
Proceeds from issuance of 1999 convertible exchangeable preferred stock 35,000,000 --
Proceeds from issuance of common stock, net 5,606,599 5,890,155
Proceeds from issuance of long-term debt -- 18,026,630
Payment of preferred stock dividends (6,845,890) (5,585,550)
Payment of long-term obligations (5,400,000) (3,129,532)
------------ ------------
Net cash provided by financing activities 28,360,709 15,201,703
------------ ------------
Effect of exchange rate changes on cash (9,175) (11,124)
------------ ------------
Net (decrease) increase in cash and cash equivalents (4,336,499) 14,377,215
Cash and cash equivalents, beginning of period 9,115,432 3,699,950
------------ ------------
Cash and cash equivalents, end of period $ 4,778,933 $ 18,077,165
============ ============
Supplementary information:
Interest paid $ 1,586,774 $ 1,018,955
============ ============
Deferred revenue and accrued interest converted to long-term obligations $ -- $ 5,983,292
============ ============
</TABLE>
See notes to consolidated financial statements.
(6)
<PAGE> 7
ALKERMES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The consolidated financial statements for the three and nine month periods ended
December 31, 1999 and 1998 are unaudited and include all adjustments which, in
the opinion of management, are necessary to present fairly the results of
operations for the periods then ended. All such adjustments are of a normal
recurring nature. These financial statements should be read in conjunction with
the Company's Annual Report on Form 10-K for the year ended March 31, 1999,
which includes consolidated financial statements and notes thereto for the years
ended March 31, 1999, 1998 and 1997. In addition, the financial statements
include the accounts of Alkermes Controlled Therapeutics, Inc., Alkermes
Controlled Therapeutics Inc. II, Advanced Inhalation Research, Inc. ("AIR"),
Alkermes Investments, Inc., Alkermes Europe, Ltd. and Alkermes Development
Corporation II ("ADC II"), wholly owned subsidiaries of the Company.
The consolidated financial statements prior to February 1, 1999 give retroactive
effect to the acquisition of AIR on February 1, 1999 (see Note 3 to the
Consolidated Financial Statements included in the Company's Annual Report on
Form 10-K for the year ended March 31, 1999), which has been accounted for as a
pooling of interests.
The results of the Company's operations for any interim period are not
necessarily indicative of the results of the Company's operations for any other
interim period or for a full fiscal year.
The preparation of the Company's financial statements in conformity with
generally accepted accounting principles necessarily requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the consolidated financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
2. COMPREHENSIVE INCOME (LOSS)
Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income," requires companies to display comprehensive income and
its components as part of the Company's full set of consolidated financial
statements. Comprehensive income is comprised of net income and other
comprehensive income. The measurement and presentation of net loss will not
change. Other comprehensive income includes certain changes in equity of the
Company that are excluded from the net loss. Specifically, SFAS No. 130 requires
unrealized holding gains and losses on the Company's available-for-sale
securities and cumulative foreign currency translation adjustments, which are
currently reported in shareholders' equity, to be included in other
comprehensive income (loss).
(7)
<PAGE> 8
Comprehensive income (loss) for the three and nine months ended December 31,
1999 and 1998 is as follows:
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
December 31, 1999 December 31, 1998
----------------- -----------------
<S> <C> <C>
Net loss ($17,203,091) ($ 7,902,693)
Cumulative foreign currency translation adjustments (15,666) (24,085)
Carrying value adjustments -- 103,050
Unrealized gain on marketable securities 1,500 --
------------ ------------
Comprehensive loss ($17,217,257) ($ 7,823,728)
============ ============
</TABLE>
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
December 31, 1999 December 31, 1998
----------------- -----------------
<S> <C> <C>
Net loss ($39,920,333) ($25,803,397)
Cumulative foreign currency translation adjustments (4,533) (9,265)
Carrying value adjustments -- 103,050
Unrealized gain (loss) on marketable securities 58,500 (65,550)
----------- -----------
Comprehensive loss ($40,066,366) ($25,775,162)
=========== ===========
The accumulated other comprehensive income (loss) is as follows:
Balance March 31, 1999 ($46,873)
Change for the three months ended June 30, 1999 85,326
-----------
Balance June 30, 1999 38,453
Change for the three months ended September 30, 1999 (17,193)
-----------
Balance September 30, 1999 21,260
Change for the three months ended December 31, 1999 (14,166)
-----------
Balance December 31, 1999 $ 7,094
===========
</TABLE>
3. GENENTECH, INC. AGREEMENT, 1999 PREFERRED STOCK
In April 1999, the Company amended its license agreement with Genentech, Inc.
("Genentech") to expand their collaboration for Nutropin Depot(TM), an
injectable sustained release formulation of Genentech's human growth hormone
based on Alkermes' ProLease(R) drug delivery system. Under the agreement, the
companies will conduct expanded development activities, including clinical
trials in an additional indication, process and formulation development and
manufacturing. The agreement includes potential milestone payments to the
Company of approximately $40 million.
The terms of the expanded collaboration included the purchase by Genentech of
$35 million (3,500 shares) of newly issued redeemable convertible exchangeable
preferred stock of the Company (the "1999 Preferred Stock"). The 1999 Preferred
Stock is convertible at Genentech's option into shares of common stock and
non-voting common stock of the Company during any period after September 1, 1999
that the closing price of the Company's common stock is above $45 per share for
at least 10 consecutive trading days. The Company has the option to redeem
(8)
<PAGE> 9
the 1999 Preferred Stock, in whole or in part, at any time at the redemption
price of $10,000 per share plus accrued and unpaid dividends (the "Redemption
Price"). There will be a mandatory redemption of any outstanding shares of the
1999 Preferred Stock on January 1, 2009 at the Redemption Price. The Company has
the option to pay the Redemption Price in cash, common stock or non-voting
common stock. Any non-voting common stock to be issued upon conversion or
redemption of the 1999 Preferred Stock is convertible into common stock under
certain circumstances.
The 1999 Preferred Stock is junior to the Company's outstanding $3.25
convertible exchangeable preferred stock issued in March 1998 for a purchase
price of $115 million. The 1999 Preferred Stock has a liquidation preference of
$10,000 per share, plus accrued and unpaid dividends. Dividends on the 1999
Preferred Stock are payable quarterly at a floating three-month LIBOR rate.
4. SUBSEQUENT EVENT
On February 8, 2000 the Company announced that it intends to offer, subject to
market and other conditions, $150 million of Convertible Subordinated Notes due
2007 ($200 million if an option for an additional $50 million is exercised in
full) through initial purchasers to qualified institutional buyers under Rule
144A under the Securities Act of 1933, as amended (the "Securities Act"). The
notes would be convertible into the Company's common stock at the option of the
holder, at a price to be determined. The offering is expected to close in
February 2000. The net proceeds of the proposed offering would be used to fund
research, development and clinical trial activities and for manufacturing
facilities and equipment, as well as for working capital and general corporate
purposes. In addition, the Company may use a portion of the net proceeds for
potential acquisitions of additional technologies and compounds, none of which
are currently planned.
The notes and the common stock issuable upon conversion of the notes have not
been registered under the Securities Act, or any state securities laws, and are
being offered only to qualified institutional buyers in reliance on Rule 144A
under the Securities Act. Unless so registered, the notes and the common stock
issuable upon conversion of the notes may not be offered or sold in the United
States except pursuant to an exemption from the registration requirements of the
Securities Act and applicable state securities laws.
(9)
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
INTRODUCTION
Alkermes is developing innovative pharmaceutical products based on sophisticated
drug delivery systems. The Company has several areas of focus: (i) controlled,
sustained release of injectable drugs lasting several days to several weeks,
utilizing its ProLease(R) and Medisorb(R) technologies; (ii) the development of
pharmaceutical products based on proprietary pulmonary drug delivery
technologies utilizing its Advanced Inhalation Research, Inc. ("AIR(TM)")
technology; (iii) the delivery of drugs into the brain past the blood-brain
barrier utilizing its Cereport(R) technology; and (iv) oral delivery of drugs
using its RingCap(TM) and dose sipping technologies ("DST"). Since its inception
in 1987, the Company has devoted substantially all of its resources to its
research and development programs. Alkermes has not received any revenue from
the sale of products. The Company has been unprofitable since inception and
expects to incur substantial additional operating losses over the next few
years. At December 31, 1999, the Company had an accumulated deficit of
approximately $227.7 million.
The consolidated financial statements prior to February 1, 1999 give retroactive
effect to the acquisition of AIR on February 1, 1999 (see Note 3 to the
Consolidated Financial Statements included in the Company's Annual Report on
Form 10-K for the year ended March 31, 1999), which has been accounted for as a
pooling of interests.
The Company has funded its operations primarily through public offerings and
private placements of equity securities, bank loans and payments under research
and development agreements with collaborators, including Alkermes Clinical
Partners, L.P. ("Clinical Partners"), a research and development limited
partnership whose operations commenced in April 1992. The Company generally
develops its product candidates in collaboration with others on whom the Company
will rely for funding, development, manufacturing and/or marketing.
FORWARD-LOOKING STATEMENTS
Any statements set forth below or otherwise made in writing or orally by the
Company with regard to its expectations as to financial results and other
aspects of its business may constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
statements relate to our future plans, objectives, expectations and intentions
and may be identified by words like "believes," "expects," "may," "will,"
"should," "seeks," or "anticipates," and similar expressions.
Although the Company believes that its expectations are based on reasonable
assumptions within the bounds of its knowledge of its business and operations,
the Company's business is subject to significant risks and there can be no
assurance that actual results of the Company's development activities and its
results of operations will not differ materially from its expectations. Factors
which could cause actual results to differ from expectations include, among
others: (i) The Company's first product, Nutropin Depot(TM), may not produce
significant revenues and, in commercial use, may have unintended side effects,
adverse reactions or incidents of misuse; (ii) the Company and its collaborators
may not be permitted by regulatory authorities to undertake clinical trials for
RingCap
(10)
<PAGE> 11
or DST or to undertake additional clinical trials for ProLease, Cereport,
Medisorb or AIR product candidates or clinical trials could be delayed; (iii)
its product candidates could be ineffective or unsafe during clinical trials;
(iv) even if clinical trials are completed and the data is submitted to the Food
and Drug Administration ("FDA") as a New Drug Application ("NDA") for marketing
approval and to other health authorities as a marketing authorization
application, the NDA or marketing authorization application could fail to be
accepted, or could fail to receive approval on a timely basis, if at all; (v)
the Company could incur difficulties or set-backs in obtaining the substantial
additional funding required to continue research and development programs and
clinical trials; (vi) disputes with collaborators, termination of collaborations
or failure to negotiate acceptable new collaborative arrangements for ProLease,
Medisorb, AIR, RingCap or DST technologies, or for Cereport, could occur; (vii)
the Company's collaborators could elect to terminate or delay development
programs; (viii) even if its product candidates appear promising at an early
stage of development, product candidates could fail to receive necessary
regulatory approvals, be difficult to manufacture on a large scale, be
uneconomical, fail to achieve market acceptance, be precluded from
commercialization by proprietary rights of third parties or experience
substantial competition in the marketplace; (ix) the Company may be unable to
manufacture Nutropin Depot or future products on a commercial scale; (x)
technological change in the biotechnology or pharmaceutical industries could
render the Company's product candidates obsolete or noncompetitive; (xi)
difficulties or set-backs in obtaining and enforcing the Company's patents and
difficulties with the patent rights of others could occur; and (xii) disputes
with Clinical Partners over rights to Cereport and related technology could
occur.
RESULTS OF OPERATIONS
The Company's research and development revenue under collaborative arrangements
for the three and nine months ended December 31, 1999 was $7,013,356 and
$17,136,864 compared to $11,854,359 and $29,456,873 for the corresponding
periods of the prior year. The decrease in such revenue for the three and nine
months ended December 31, 1999 as compared to the corresponding periods of the
prior year was mainly a result of decreased funding earned under collaborative
agreements related to the Company's ProLease and Medisorb technologies. As
discussed in Note 3 to the consolidated financial statements included in this
report, Genentech, Inc. ("Genentech") purchased 3,500 shares of newly issued
convertible exchangeable preferred stock (the "1999 Preferred Stock") of
Alkermes in April 1999 at a purchase price of $35,000,000. The Company is using
the proceeds from the issuance of the 1999 Preferred Stock to conduct expanded
development activities for Nutropin Depot, an injectable sustained release
formulation of Genentech's human growth hormone based on Alkermes' ProLease drug
delivery system.
Interest income for the three and nine months ended December 31, 1999 was
$2,482,351 and $7,423,836 compared to $2,341,616 and $7,565,141 for the
corresponding periods of the prior year. The increase in such income for the
three months ended December 31, 1999 as compared to the corresponding period of
the prior year was mainly a result of an increase in average cash and investment
balances mainly as a result of the sale of the 1999 Preferred Stock. The
decrease in interest income for the nine months ended December 31, 1999 as
compared to the nine months ended December 31, 1998 was primarily a result of a
decrease in interest rates, partially offset by an increase in average cash and
investment balances.
The Company's total operating expenses were $26,698,798 and $64,481,033 for the
three and nine months ended December 31, 1999 as compared to $22,098,668 and
$59,604,158 for the
(11)
<PAGE> 12
three and nine months ended December 31, 1998. The Company separately recorded a
$3,221,253 nonrecurring charge in the three months ended June 30, 1998 for the
DST and RingCap technologies licensed from ALZA Corporation ("ALZA") which are
not yet commercially viable.
Research and development expenses for the three and nine months ended December
31, 1999 were $13,483,815 and $39,322,552 as compared to $12,923,553 and
$34,804,385 for the corresponding periods of the prior year. The increase in
research and development expenses for the three and nine months ended December
31, 1999 as compared to the three and nine months ended December 31, 1998 was
mainly the result of an increase in salary and related benefits and other costs
associated with an increase in personnel as the Company advances its product
candidates through development and clinical trials and prepares for commercial
scale manufacturing. In addition, the Company had an increase in occupancy costs
and depreciation and amortization expense related to its expanded Medisorb
manufacturing facility in Wilmington, Ohio and its new ProLease manufacturing
facility in Cambridge, Massachusetts. The increase in research and development
expenses was partially offset by a decrease in clinical trial costs as the
Company completed the Phase III clinical trial for Nutropin Depot during fiscal
1999 and discontinued the Phase III clinical trial of Cereport in April 1999.
General and administrative expenses for the three and nine months ended December
31, 1999 were $3,464,840 and $10,247,970 compared to $3,593,973 and $10,044,549
for the corresponding periods of the prior year. The decrease in the three
months ended December 31, 1999 as compared to the three months ended December
31, 1998 was primarily the result of decreased legal costs, partially offset by
increased salary and benefits relating to an increase in personnel. The increase
in the nine months ended December 31, 1999 as compared to the nine months ended
December 31, 1998 was mainly the result of increased salary, benefits and other
costs relating primarily to an increase in personnel, partially offset by a
decrease in legal fees.
Noncash compensation expense for the three and nine months ended December 31,
1999 was $9,025,371 and $12,722,945 as compared to $4,922,936 and $13,207,893
for the corresponding periods of the prior year. Noncash compensation charges
primarily relate to common stock issued and stock options granted to certain
employees, consultants and others associated with the Company's subsidiary, AIR.
Fluctuations in amounts are primarily a result of changes in the market value
of the Company's common stock.
Interest expense for the three and nine months ended December 31, 1999 was
$724,772 and $2,187,566 as compared to $658,206 and $1,547,331 for the
corresponding periods from the prior year. The increase in the three and nine
months ended December 31, 1999 as compared to the three and nine months ended
December 31, 1998 was primarily the result of an increase in interest costs
related to an increase in indebtedness.
The Company does not believe that inflation and changing prices have had a
material impact on its results of operations.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents and short-term investments were approximately $152.5
million at December 31, 1999 as compared to $163.4 million at March 31, 1999.
During the nine months ended December 31, 1999, the decrease in cash and cash
equivalents and short-term investments was primarily the result of cash used to
fund operations of the Company, to pay Preferred stock
(12)
<PAGE> 13
dividends, and to pay interest on the Company's indebtedness, partially offset
by the sale by the Company in April 1999 of 3,500 shares of its 1999 Preferred
Stock to Genentech, Inc. ("Genentech") for a purchase price of $35 million and
the receipt of approximately $5.6 million from the exercise of stock options and
warrants.
In addition, long-term Investments include $12.6 million principal amount of
high-grade corporate notes with maturities ranging from 13 to 17 months. The
Company invests in cash equivalents, U.S. Government obligations, high grade
corporate notes and commercial paper. The Company's investment objectives taken
as a whole are, first, to assure conservation of capital and liquidity, and
second, to obtain investment income.
In April 1999, the Company amended its license agreement with Genentech to
expand their collaboration for Nutropin Depot, an injectable sustained release
formulation of Genentech's human growth hormone based on Alkermes' ProLease drug
delivery system. The expanded agreement includes potential milestone payments to
the Company of approximately $40 million. The terms of the collaboration
included the purchase by Genentech of the 1999 Preferred Stock for a purchase
price of $35 million. The 1999 Preferred Stock is convertible at Genentech's
option into shares of common stock and non-voting common stock during any period
after September 1, 1999 that the closing price of the Company's common stock is
above $45 per share for at least 10 consecutive trading days. The 1999 Preferred
Stock may be redeemed at any time by the Company at a redemption price of
$10,000 per share, plus accrued and unpaid dividends, in cash, common stock or
non-voting common stock, at the Company's option. Dividends on the 1999
Preferred Stock are payable quarterly at a floating three-month LIBOR rate.
In December 1999, Nutropin Depot received approval from the FDA for pediatric
growth hormone deficiency (GHD) after being granted a six-month priority review.
The Company has accelerated its manufacturing efforts, and its partner,
Genentech, expects to improve upon the original mid-year 2000 launch target
date.
In January 2000, the Company entered into an agreement with Ares-Serono
International S.A. ("Ares-Serono") to develop a ProLease sustained release
formulation of one of Ares-Serono's as yet undisclosed therapeutic proteins. In
exchange for exclusive worldwide rights to products resulting from this
collaboration, Ares-Serono will provide the Company with development funding and
milestone payments which could exceed $30 million over the next few years and
will pay the Company a royalty based on sales of ProLease products, if any. The
Company is expected to manufacture the ProLease formulations of products
commercialized under the agreement. Ares-Serono will be responsible for
conducting clinical trials, securing regulatory approvals and marketing products
on a worldwide basis.
In February 2000, Glaxo Wellcome elected to obtain a broad license to the
Company's AIR pulmonary drug delivery technology for use in the development of
multiple product candidates in up to four specified therapeutic categories in
the field of respiratory disease. Glaxo Wellcome's decision followed the
completion of a 12-month feasibility program conducted by the two companies. A
definitive license agreement is being negotiated. In exchange for exclusive
worldwide rights to products resulting from the collaboration, Glaxo Wellcome
would provide the Company with development funding and payments based on the
achievement of certain milestones and pay the Company a royalty based on sales
of such products, if any. The Company and Glaxo Wellcome would each have
manufacturing rights and obligations, and Glaxo Wellcome would have
responsibility for conducting clinical trials, securing regulatory
(13)
<PAGE> 14
approvals and marketing products on a worldwide basis. The total economic value
of the collaboration is dependent upon the number of products successfully
commercialized, if any. There can be no assurance that the Company and Glaxo
Wellcome will be able to negotiate the definitive license agreement.
In February 2000, the Company entered into an agreement with Eli Lilly and
Company Limited ("Eli Lilly") to develop an inhaled formulation of human growth
hormone based on the Company's AIR pulmonary drug delivery system. This
agreement followed the successful completion of a nine-month feasibility program
conducted by the two companies. Under the terms of the agreement, the Company
will receive certain initial fees, funding for research and milestone payments.
The Company will also receive royalty payments based on product sales, if any.
In exchange, Eli Lilly will receive exclusive worldwide rights to products
resulting from the collaboration, if any. The Company will be responsible for
manufacturing products commercialized as a result of the agreement, while Eli
Lilly will be responsible for conducting clinical trials, securing regulatory
approvals and marketing on a worldwide basis. Clinical trials of the first
product candidate are expected to begin in 2000.
On February 8, 2000 the Company announced that it intends to offer, subject to
market and other conditions, $150 million of Convertible Subordinated Notes due
2007 ($200 million if an option for an additional $50 million is exercised in
full) through initial purchasers to qualified institutional buyers under Rule
144A under the Securities Act of 1933, as amended (the "Securities Act"). The
notes would be convertible into the Company's common stock at the option of the
holder, at a price to be determined. The offering is expected to close in
February 2000. The net proceeds of the proposed offering would be used to fund
research, development and clinical trial activities and for manufacturing
facilities and equipment, as well as for working capital and general corporate
purposes. In addition, the Company may use a portion of the net proceeds for
potential acquisitions of additional technologies and compounds, none of which
are currently planned.
The Company's research and development costs to date have been financed
primarily by sales of equity securities and payments under research and
development collaborative arrangements. The Company expects to incur significant
additional research and development and other costs, including costs related to
preclinical studies, clinical trials and facilities expansion. Therefore, the
Company expects that its costs, including research and development costs for all
of its product candidates, will exceed revenues significantly for the next few
years, which will result in continuing losses from operations.
Since the research and development revenue from Clinical Partners ended during
the quarter ended June 30, 1996, Alkermes has been using its own resources to
continue to develop Cereport. The Company is required to fund the development of
Cereport to maintain its option to purchase the limited partnership interests in
Clinical Partners. Effective September 30, 1997, the Company entered into an
agreement with ALZA relating to the development and commercialization of
Cereport. ALZA made a $10.0 million upfront payment to Alkermes to fund clinical
development of Cereport, of which $5.2 million has been recorded as deferred
revenue at December 31, 1999. In return, ALZA will have the option to acquire
exclusive worldwide commercialization rights to Cereport. If ALZA exercises its
option, ALZA will make additional payments to cover costs associated with
advanced clinical development. If Cereport is commercialized successfully by
ALZA, ALZA will pay the Company certain milestone
(14)
<PAGE> 15
payments. Alkermes would be responsible for the manufacturing of Cereport, and
the two companies would share approximately equally in any profits from product
sales.
Capital expenditures were approximately $4.8 million for the nine months ended
December 31, 1999, principally reflecting equipment purchases. The Company's
capital expenditures for equipment, facilities and building improvements have
been financed to date primarily with proceeds from bank loans and the sales of
equity securities. Under the provisions of the existing loans, Fleet National
Bank, the Company's principal lender, has a security interest in the Company's
assets securing the outstanding obligations under the loans.
The Company will continue to pursue opportunities to obtain additional financing
in the future. Such financing may be sought through various sources, including
debt and equity offerings, bank borrowings, lease arrangements relating to fixed
assets or other financing methods. The source, timing and availability of any
financings will depend on market conditions, interest rates and other factors.
The Company's future capital requirements will depend on many factors, including
continued scientific progress in its research and development programs, the
magnitude of these programs, progress with preclinical testing and clinical
trials, the time and costs involved in obtaining regulatory approvals, the costs
involved in filing, prosecuting and enforcing patent claims, competing
technological and market developments, the establishment of additional
collaborative arrangements, the cost of manufacturing facilities and of
commercialization activities and arrangements and the cost of product
in-licensing and any possible acquisitions.
The Company may need to raise substantial additional funds for longer-term
product development, regulatory approvals and manufacturing or marketing
activities that it might undertake in the future. There can be no assurance that
additional funds will be available on favorable terms, if at all. If adequate
funds are not available, the Company may be required to curtail significantly
one or more of its research and development programs and/or obtain funds through
arrangements with collaborative partners or others that may require the Company
to relinquish rights to certain of its technologies, product candidates or
future products.
YEAR 2000 READINESS DISCLOSURE
THIS YEAR 2000 READINESS DISCLOSURE STATEMENT CONTAINS INFORMATION CONCERNING
THIRD PARTIES AND THEIR PRODUCTS AND SERVICES, WHICH HAS NOT BEEN INDEPENDENTLY
VERIFIED BY ALKERMES.
The Year 2000 problem concerns the application of computer systems written using
six (e.g., 12/31/99) versus eight (e.g., 12/31/1999) digits to define the
applicable date. This could result, among other things, in computer systems
recognizing "00" as the year 1900 rather than the year 2000. Computer hardware,
software and embedded chip equipment are potentially affected, and, if such
systems and components were not remediated satisfactorily could lead to
operational interruptions and business misinformation.
The Company believes that the Year 2000 problem has been successfully addressed
through its Year 2000 Compliance Plan. The Company's Year 2000 Compliance Plan
provided for a four-phase process: inventory; assessment; remediation and
testing; and preparation of contingency plans. The Company identified its
mission critical and medium priority internal systems which required remediation
to provide for its continuing business operations after January 1, 2000. The
(15)
<PAGE> 16
remaining systems were considered to be of low priority because they were judged
to have no direct impact on safety or the Company's business.
The inventory phase was completed and the assessment phase was substantially
completed, except for information not received from certain external suppliers,
vendors and manufacturers over which the Company does not have control. The
Company underwent planned remediation of stand-alone computers and minor
upgrades. The Company requested information from each supplier, vendor and
manufacturer of mission critical equipment and performed in-house testing on
mission critical equipment. Finally, contingency plans were formulated for each
of the Company's departments.
The Company did not experience any difficulties related to the Year 2000 problem
on December 31, 1999 and has not experienced any such difficulties that the
Company is aware of since that date. The Company's operations have not, to date,
been adversely affected by any difficulties experienced by any of our suppliers
or customers in connection with the Year 2000 problem. The Company's Year 2000
Compliance Plan also addressed issues related to the date February 29, 2000 and
management will continue to monitor the Company's systems for potential
difficulties through that date and the remainder of calendar year 2000.
The Company's total expenditures to become Year 2000 compliant were less than
$900,000. In addition, the Company dedicated significant internal resources,
including staff and equipment, to Year 2000 projects, but did not track such
costs and therefore cannot provide an estimate of the amount of such internal
costs. The Company funded Year 2000 expenditures from its cash.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's Investments consist of U.S. Treasuries and other government
securities, commercial paper and high-grade corporate notes. Substantially all
Investments mature within one year, are not callable by the issuer and have
fixed interest rates. A 10% decline in the average yield of the Investments
would not have a material effect on the Company's results of operations or cash
flows. The Company's debt instruments approximate fair value and generally have
fixed interest rates. See "Liquidity and Capital Resources."
(16)
<PAGE> 17
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Number Exhibit
3.1(a) Second Amended and Restated Articles of Incorporation
of Alkermes, Inc., effective July 23, 1991.
(Incorporated by reference to Exhibit 4.1(a) to the
Company's Report on Form 10-Q for the quarter ended
June 30, 1991).
3.1(b) Statement of Change of Registered Office of Alkermes,
Inc. effective July 23, 1991. (Incorporated by
reference to Exhibit 4.1(b) to the Company's Report on
Form 10-Q for the quarter ended June 30, 1991).
3.1(c) Amendment to the Second Amended and Restated Articles
of Incorporation, as filed with the Pennsylvania
Secretary of State on November 1, 1991. (Incorporated
by reference to Exhibit 4.1(c) to the Company's Report
on Form 10-Q for the quarter ended September 30,
1991).
3.1(d) Amendment to the Second Amended and Restated Articles
of Incorporation, as amended, as filed with the
Pennsylvania Secretary of State on February 12, 1993.
(Incorporated by reference to Exhibit 4.1(d) to the
Company's Report on Form 10-Q for the quarter ended
December 31, 1992).
3.1(e)(I) Amendment to the Second Amended and Restated Articles
of Incorporation, as filed with the Pennsylvania
Secretary of State on February 26, 1998 (designating
3,000,000 shares of Capital Stock as Preferred Stock).
3.1(e)(II) Amendment to the Second Amended and Restated Articles
of Incorporation, as filed with the Pennsylvania
Secretary of State on February 27, 1998 ($3.25
Convertible Preferred Stock Terms). (Incorporated by
reference to Exhibit 4.6 to the Company's Registration
Statement on Form S-3, as amended (File No.
333-50157)).
3.1(f) Amendment to the Second Amended and Restated Articles
of Incorporation, as filed with the Pennsylvania
Secretary of State on April 12, 1999 (1999 Preferred
Stock Terms). (Incorporated by reference to Exhibit
3.1(f) to the Company's Report on Form 10-K for the
year ended March 31, 1999).
(17)
<PAGE> 18
3.1(g) Amendment to the Second Amended and Restated Articles
of Incorporation, as filed with the Pennsylvania
Secretary of State on April 12, 1999 (Non-Voting
Common Stock Terms). (Incorporated by reference to
Exhibit 3.1(g) to the Company's Report on Form 10-K
for the year ended March 31, 1999).
3.1(h) Amendment to the Second Amended and Restated Articles
of Incorporation, as filed with the Pennsylvania
Secretary of State on September 20, 1999 (increasing
authorized Common Stock to 80,000,000 shares).
(Incorporated by reference to Exhibit 3.1(h) to the
Company's Report on Form 10-Q for the quarter ended
September 30, 1999).
3.2 Amended and Restated By-Laws of Alkermes, Inc.,
effective as of June 2, 1999. (Incorporated by
reference to Exhibit 3.2 to the Company's Report on
Form 10-K for the year ended March 31, 1999).
4.1 Specimen of Common Stock Certificate of Alkermes, Inc.
(Incorporated by reference to Exhibit 4 to the
Company's Registration Statement on Form S-1, as
amended (File No. 33-40250)).
4.2 Specimen of $3.25 Convertible Preferred Stock
Certificate of Alkermes, Inc. (Incorporated by
reference to Exhibit 4.1 to the Company's Registration
Statement on Form S-3, as amended (File No.
333-50157)).
4.3 Specimen of 1999 Preferred Stock Certificate of
Alkermes, Inc. (Incorporated by reference to Exhibit
4.3 to the Company's Report on Form 10-K for the
fiscal year ended March 31, 1999).
4.4 Specimen of Non-Voting Common Stock Certificate of
Alkermes, Inc. (Incorporated by reference to Exhibit
4.4 to the Company's Report on Form 10-K for the
fiscal year ended March 31, 1999).
4.5 Form of 1995 Warrant to purchase 300 shares of the
Company's Common Stock. (Incorporated by reference to
Exhibit 4.3 to the Company's Report on Form 10-K for
the fiscal year ended March 31, 1992).
4.6 Form of Global Warrant Certificate for 1994 Class A
Warrants. (Incorporated by reference to Exhibit 4.6 to
the Company's Report on Form 10-Q for the quarter
ended December 31, 1994).
4.7 Form of Global Warrant Certificate for 1994 Class B
Warrants. (Incorporated by reference to Exhibit 4.7 to
the Company's Report on Form 10-Q for the quarter
ended December 31, 1994).
(18)
<PAGE> 19
4.8 Form of Global Warrant Certificate for 1994 Affiliate
Warrants. (Incorporated by reference to Exhibit 4.8 to
the Company's Report on Form 10-Q for the quarter
ended December 31, 1994).
4.9 Form of Global Warrant Certificate for 1994 Incentive
Warrants. (Incorporated by reference to Exhibit 4.9 to
the Company's Report on Form 10-Q for the quarter
ended December 31, 1994).
4.10 Warrant Agreement, dated as of November 18, 1994, by
and between the Company and The First National Bank of
Boston. (Incorporated by reference to Exhibit 4.10 to
the Company's Report on Form 10-Q for the quarter
ended December 31, 1994).
4.11 Indenture, dated as of March 1, 1998, between
Alkermes, Inc. and State Street Bank and Trust
Company, as Trustee. (Incorporated by reference to
Exhibit 4.7 to the Company's Registration Statement on
Form S-3, as amended (File No. 333-50157)).
27 Financial Data Schedule.
(b) During the quarter ended December 31, 1999, the Registrant filed no
Reports on Form 8-K.
(19)
<PAGE> 20
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.
ALKERMES, INC.
(Registrant)
Date: February 14, 2000 By: /s/ Richard F. Pops
------------------------------------
Richard F. Pops
Chief Executive Officer and
Director
(Principal Executive Officer)
Date: February 14, 2000 By: /s/ James M. Frates
------------------------------------
James M. Frates
Vice President, Chief
Financial Officer and Treasurer
(Principal Financial and
Accounting Officer)
(20)
<PAGE> 21
EXHIBIT INDEX
Exhibit
Number Description
3.1(a) Second Amended and Restated Articles of Incorporation
of Alkermes, Inc., effective July 23, 1991.
(Incorporated by reference to Exhibit 4.1(a) to the
Company's Report on Form 10-Q for the quarter ended
June 30, 1991).
3.1(b) Statement of Change of Registered Office of Alkermes,
Inc. effective July 23, 1991. (Incorporated by
reference to Exhibit 4.1(b) to the Company's Report on
Form 10-Q for the quarter ended June 30, 1991).
3.1(c) Amendment to the Second Amended and Restated Articles
of Incorporation, as filed with the Pennsylvania
Secretary of State on November 1, 1991. (Incorporated
by reference to Exhibit 4.1(c) to the Company's Report
on Form 10-Q for the quarter ended September 30,
1991).
3.1(d) Amendment to the Second Amended and Restated Articles
of Incorporation, as amended, as filed with the
Pennsylvania Secretary of State on February 12, 1993.
(Incorporated by reference to Exhibit 4.1(d) to the
Company's Report on Form 10-Q for the quarter ended
December 31, 1992).
3.1(e)(I) Amendment to the Second Amended and Restated Articles
of Incorporation, as filed with the Pennsylvania
Secretary of State on February 26, 1998 (designating
3,000,000 shares of Capital Stock as Preferred Stock).
3.1(e)(II) Amendment to the Second Amended and Restated Articles
of Incorporation, as filed with the Pennsylvania
Secretary of State on February 27, 1998 ($3.25
Convertible Preferred Stock Terms). (Incorporated by
reference to Exhibit 4.6 to the Company's Registration
Statement on Form S-3, as amended (File No.
333-50157)).
3.1(f) Amendment to the Second Amended and Restated Articles
of Incorporation, as filed with the Pennsylvania
Secretary of State on April 12, 1999 (1999 Preferred
Stock Terms). (Incorporated by reference to Exhibit
3.1(f) to the Company's Report on Form 10-K for the
year ended March 31, 1999).
(21)
<PAGE> 22
3.1(g) Amendment to the Second Amended and Restated Articles
of Incorporation, as filed with the Pennsylvania
Secretary of State on April 12, 1999 (Non-Voting
Common Stock Terms). (Incorporated by reference to
Exhibit 3.1(g) to the Company's Report on Form 10-K
for the year ended March 31, 1999).
3.1(h) Amendment to the Second Amended and Restated Articles
of Incorporation, as filed with the Pennsylvania
Secretary of State on September 20, 1999 (increasing
authorized Common Stock to 80,000,000 shares).
(Incorporated by reference to Exhibit 3.1(h) to the
Company's Report on Form 10-Q for the quarter ended
September 30, 1999).
3.2 Amended and Restated By-Laws of Alkermes, Inc.,
effective as of June 2, 1999. (Incorporated by
reference to Exhibit 3.2 to the Company's Report on
Form 10-K for the year ended March 31, 1999).
4.1 Specimen of Common Stock Certificate of Alkermes, Inc.
(Incorporated by reference to Exhibit 4 to the
Company's Registration Statement on Form S-1, as
amended (File No. 33-40250)).
4.2 Specimen of $3.25 Convertible Preferred Stock
Certificate of Alkermes, Inc. (Incorporated by
reference to Exhibit 4.1 to the Company's Registration
Statement on Form S-3, as amended (File No.
333-50157)).
4.3 Specimen of 1999 Preferred Stock Certificate of
Alkermes, Inc. (Incorporated by reference to Exhibit
4.3 to the Company's Report on Form 10-K for the
fiscal year ended March 31, 1999).
4.4 Specimen of Non-Voting Common Stock Certificate of
Alkermes, Inc. (Incorporated by reference to Exhibit
4.4 to the Company's Report on Form 10-K for the
fiscal year ended March 31, 1999).
4.5 Form of 1995 Warrant to purchase 300 shares of the
Company's Common Stock. (Incorporated by reference to
Exhibit 4.3 to the Company's Report on Form 10-K for
the fiscal year ended March 31, 1992).
4.6 Form of Global Warrant Certificate for 1994 Class A
Warrants. (Incorporated by reference to Exhibit 4.6 to
the Company's Report on Form 10-Q for the quarter
ended December 31, 1994).
4.7 Form of Global Warrant Certificate for 1994 Class B
Warrants. (Incorporated by reference to Exhibit 4.7 to
the Company's Report on Form 10-Q for the quarter
ended December 31, 1994).
(22)
<PAGE> 23
4.8 Form of Global Warrant Certificate for 1994 Affiliate
Warrants. (Incorporated by reference to Exhibit 4.8 to
the Company's Report on Form 10-Q for the quarter
ended December 31, 1994).
4.9 Form of Global Warrant Certificate for 1994 Incentive
Warrants. (Incorporated by reference to Exhibit 4.9 to
the Company's Report on Form 10-Q for the quarter
ended December 31, 1994).
4.10 Warrant Agreement, dated as of November 18, 1994, by
and between the Company and The First National Bank of
Boston. (Incorporated by reference to Exhibit 4.10 to
the Company's Report on Form 10-Q for the quarter
ended December 31, 1994).
4.11 Indenture, dated as of March 1, 1998, between
Alkermes, Inc. and State Street Bank and Trust
Company, as Trustee. (Incorporated by reference to
Exhibit 4.7 to the Company's Registration Statement on
Form S-3, as amended (File No. 333-50157)).
27 Financial Data Schedule.
(23)
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