<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X Quarterly report pursuant to Section 13 or 15(d) of the Securities ---
Exchange Act of 1934: For the quarterly period ended January 31, 2000
OR
- --- Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934:
For the transition period from to
--------------- ----------------
Commission file number: 0-27756
ALEXION PHARMACEUTICALS, INC.
-----------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 13-3648318
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
25 SCIENCE PARK, SUITE 360, NEW HAVEN, CONNECTICUT 06511
--------------------------------------------------------
(Address of principal executive offices) (Zip Code)
203-776-1790
------------
(Registrant's telephone number, including area code)
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
--- ---
<TABLE>
<CAPTION>
COMMON STOCK, $0.0001 PAR VALUE 15,028,023 SHARES
------------------------------- -----------------------------
<S> <C>
CLASS OUTSTANDING AT MARCH 14, 2000
</TABLE>
<PAGE>
ALEXION PHARMACEUTICALS, INC.
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I. FINANCIAL INFORMATION. 3
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS. 3
Consolidated Balance Sheets as of January 31, 2000 3
and July 31, 1999
Consolidated Statements of Operations for the three months and six months 4
ended January 31, 2000 and 1999
Consolidated Statements of Cash Flows for the six months
ended January 31, 2000 and 1999 5
Notes to Consolidated Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS. 11
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 14
PART II. OTHER INFORMATION.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS. 16
ITEM 5. OTHER INFORMATION. 16
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. 16
SIGNATURES 17
</TABLE>
Page 2 of 17
<PAGE>
ALEXION PHARMACEUTICALS, INC.
Consolidated Balance Sheets
(amounts in thousands)
<TABLE>
<CAPTION>
January 31, 2000 July 31, 1999
---------------- -------------
---------------- -------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 53,311 $ 24,238
Marketable securities 8,950 4,090
Reimbursable contract costs: billed 5,898 4,577
unbilled 1,272 2,285
Prepaid expenses 2,129 472
--------- ---------
Total current assets 71,560 35,662
--------- ---------
Fixed Assets, net of accumulated
depreciation and amortization 7,759 7,413
--------- ---------
Security Deposits and Other Assets 1,011 1,299
--------- ---------
TOTAL ASSETS $ 80,330 $ 44,374
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of notes payable $ 368 $ 368
Accounts payable 2,834 3,544
Accrued expenses 1,047 2,328
Deferred revenue 750 450
--------- ---------
Total current liabilities 4,999 6,690
--------- ---------
Notes Payable, less current portion included above 4,199 4,383
--------- ---------
Stockholders' Equity:
Common stock $.0001 par value; 25,000 shares
authorized; 14,957 and 11,304 shares issued
at January 31, 2000 and July 31, 1999, respectively 2 1
Additional paid-in capital 126,933 80,287
Accumulated deficit (55,803) (46,987)
Treasury stock, at cost; 12 shares -- --
--------- ---------
Total stockholders' equity 71,132 33,301
--------- ---------
TOTAL LIABILITIES AND NET STOCKHOLDERS' EQUITY $ 80,330 $ 44,374
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
Page 3 of 17
<PAGE>
ALEXION PHARMACEUTICALS, INC.
Consolidated Statements of Operations
(UNAUDITED)
(amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three months ended January 31, Six months ended January 31,
------------------------------ ----------------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
CONTRACT RESEARCH REVENUES $ 6,679 $ 170 $ 12,967 $ 425
-------- -------- -------- --------
-------- -------- -------- --------
OPERATING EXPENSES:
Research and Development 9,840 4,681 20,980 8,465
General and Administrative 1,150 790 1,765 1,418
-------- -------- -------- --------
Total Operating Expenses 10,990 5,471 22,745 9,883
-------- -------- -------- --------
OPERATING (LOSS) (4,311) (5,301) (9,778) (9,458)
OTHER INCOME, net 672 421 962 918
-------- -------- -------- --------
NET (LOSS) ($ 3,639) ($ 4,880) (8,816) (8,540)
-------- -------- -------- --------
-------- -------- -------- --------
NET (LOSS) PER COMMON SHARE- BASIC
AND DILUTED (Note 3) ($ 0.26) ($ 0.43) ($ 0.69) ($ 0.76)
-------- -------- -------- --------
-------- -------- -------- --------
SHARES USED IN COMPUTING BASIC AND
DILUTED (LOSS) PER COMMON SHARE 14,239 11,227 12,779 11,246
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
Page 4 of 17
<PAGE>
ALEXION PHARMACEUTICALS, INC.
Consolidated Statements of Cash Flows
(UNAUDITED)
(amounts in thousands)
<TABLE>
<CAPTION>
Six months ended January 31,
----------------------------
2000 1999
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($ 8,816) ($ 8,540)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 720 340
Compensation expense related to grant of stock options 99 33
Change in assets and liabilities:
Reimbursable contract cost (308) 137
Prepaid expenses (1,657) (252)
Accounts payable (710) 260
Accrued expenses (1,281) 24
Deferred revenue 300 (67)
-------- --------
Net cash used in operating activities (11,653) (8,065)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable securities, net (4,860) (1,611)
Purchases of fixed assets (1,066) (333)
Patent application costs -- (4)
-------- --------
Net cash used in investing activities (5,926) (1,948)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock 46,548 364
Repayments of notes payable (184) (185)
Security deposits and other assets 288 0
-------- --------
Net cash provided by financing activities 46,652 179
-------- --------
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 29,073 (9,834)
CASH and CASH EQUIVALENTS, beginning of period 24,238 31,509
-------- --------
CASH AND CASH EQUIVALENTS, end of period $ 53,311 $ 21,675
-------- --------
-------- --------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest expense $ 147 $ 40
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
Page 5 of 17
<PAGE>
ALEXION PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. OPERATIONS AND BASIS OF PRESENTATION -
Alexion Pharmaceuticals, Inc. ("Alexion" or the "Company") was organized in 1992
and is engaged in the development of proprietary products for the treatment of
cardiovascular, autoimmune and neurologic disorders. The Company is currently
conducting Phase II clinical trials for its two lead C5 Inhibitor product
candidates, 5G1.1-SC and 5G1.1. The Company is also developing Apogen
immunotherapeutic products affecting disease-causing T-cells. In addition, the
Company is developing therapies employing the transplantation of cells from
other species into humans known as xenotransplantation.
On March 8, 2000, the Company completed a $120 million placement of 5.75%
Convertible Subordinated Notes due March 15, 2007. The offering was made through
initial purchasers to qualified institutional buyers under Rule 144A of the
Securities Act of 1933. The notes will be convertible into shares of the
Company's common stock at a price equal to $106.425 per share.
In November 1999, the Company sold 3.415 million shares of common stock at a
price of $14.00 per share in a follow-on public offering, resulting in net
proceeds of approximately $44.4 million to the Company.
The Company has incurred consolidated losses since inception and has made no
product sales to date.
The Company may need additional financing to obtain regulatory approvals for its
product candidates, fund operating losses, and, if deemed appropriate, establish
manufacturing, sales, marketing and distribution capabilities.
The Company expects to incur substantial expenditures in the foreseeable future
for the research and development and commercialization of its products. The
Company will seek to raise necessary funds through public or private equity or
debt financings, bank loans, collaborative or other arrangements with corporate
sources, or through other sources of financing.
The accompanying consolidated financial statements include Alexion
Pharmaceuticals, Inc. and its wholly-owned subsidiary Columbus Farming
Corporation ("Columbus"). Columbus was formed on February 9, 1999 to acquire
certain manufacturing assets from United States Surgical Corporation ("US
Surgical") (See Note 5). All significant inter-company balances and transactions
have been eliminated in consolidation.
The consolidated financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission ("SEC") and include, in the opinion of management, all
adjustments, consisting of normal, recurring adjustments, necessary for a fair
presentation of interim period results. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. The results for the interim periods
presented are not necessarily indicative of results to be expected for any
future period. These consolidated
Page 6 of 17
<PAGE>
ALEXION PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
condensed financial statements should be read in conjunction with the audited
financial statements and notes thereto included in the Company's Form 10-K
Annual Report for the fiscal year ended July 31, 1999, as amended.
2. CASH AND CASH EQUIVALENTS AND MARKETABLE SECURITIES -
Cash and cash equivalents are stated at cost, which approximates market, and
include short-term highly liquid investments with original maturities of less
than three months.
The Company invests in marketable securities of highly rated financial
institutions and investment-grade debt instruments and limits the amount of
credit exposure with any one entity. The Company has classified its marketable
securities as "available for sale" and, accordingly, carries such securities at
aggregate fair value. Unrealized gains or losses are included in stockholders'
equity as a component of additional paid-in capital.
3. NET (LOSS) PER SHARE -
The Company computes and presents net loss per common share in accordance with
Statement of Financial Accounting Standard (SFAS) No. 128, "Earnings Per Share".
There is no difference in basic and diluted net loss per common share as the
effect of stock options and equivalents is anti-dilutive for all periods
presented.
4. REVENUES -
Contract research revenues recorded by the Company consist of research and
development support payments, license fees, and milestone payments under
collaboration with third parties and amounts received under various government
grants.
Research and development support revenues are recognized as the related work and
expenses are incurred under the terms of the contracts for development
activities. Revenues derived from the achievement of milestones are recognized
when the milestone is achieved. Non-refundable license fees received in exchange
for specific rights to the Company's technologies, research, potential products
and markets are recognized as revenues as earned in accordance with the terms of
the contracts (See Note 8).
Unbilled reimbursable contract costs as shown on the accompanying consolidated
balance sheets represent reimbursable costs incurred in connection with research
contracts which have not yet been billed. The Company bills these costs and
recognizes the costs and related revenues in accordance with the terms of the
contracts.
Deferred revenue results from cash received in advance of revenue recognition
under research and development contracts.
Page 7 or 17
<PAGE>
ALEXION PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Revenues recorded during the three and six months ended January 31, 2000 and
1999 consist of license fees, research and development support, reimbursement of
costs related to clinical development and manufacturing of clinical supplies
under the collaboration agreement with Procter & Gamble Pharmaceuticals Inc.
("P&G"). Revenues also include funding from the Commerce Department's National
Institute of Standards and Technology ("NIST") through grants from the Advanced
Technology Program ("ATP").
In November 1997, the Company and US Surgical were awarded a three-year, $2
million cooperative agreement from NIST to fund a joint xenotransplantation
project. This agreement was modified into a single entity (Alexion only)
agreement in February 1999. In October 1998, the Company was awarded another
three-year $2 million agreement from NIST to fund a xenotransplantation project.
In November 1999, the Company was awarded a three-year $2 million agreement from
NIST to fund another xenotransplantation project.
In January 1999, the Company entered into an exclusive collaboration with P&G to
develop and commercialize 5G1.1-SC. Under this collaboration, the Company will
initially pursue the development of 5G1.1-SC for the treatment of inflammation
caused by cardiopulmonary bypass surgery, myocardial infarction and angioplasty.
The Company has granted P&G an exclusive license to the Company's intellectual
property related to 5G1.1-SC, with the right to sublicense. P&G has agreed to
fund all clinical development and manufacturing costs relating to 5G1.1-SC for
these indications. In addition, under this agreement, P&G has agreed to pay the
Company up to $95 million in payments, which include a non-refundable upfront
license fee (See Note 8), as well as milestone and research and development
support payments. In addition, the Company will receive royalties on worldwide
sales of 5G1.1-SC for all indications. The Company has a preferred position
relative to third-party manufacturers to manufacture 5G1.1-SC worldwide. The
Company shares co-promotion rights with P&G to sell, market and distribute
5G1.1-SC in the United States, and has granted P&G the exclusive rights to sell,
market and distribute 5G1.1-SC outside of the United States.
A summary of revenues generated from contract research collaboration and grant
awards is as follows for the three and six months ended January 31, (dollars in
thousands):
<TABLE>
<CAPTION>
Three months ended Six months ended
------------------ ----------------
Collaboration/Grant Awards 2000 1999 2000 1999
-------------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
P&G ......................... $ 6,031 -- $12,069 --
NIST and NIH................. 648 $ 103 898 $ 258
Other ....................... -- 67 -- 167
------- ------- ------- -------
$ 6,679 $ 170 $12,967 $ 425
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
5. NOTES PAYABLE -
Page 8 of 17
<PAGE>
ALEXION PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
In November 1998, a term loan was used to finance the purchase of capital
equipment. The term loan requires quarterly principal payments of $92,000
commencing August 3, 1998 and payable through August 2001. The balance on the
note was $647,000 at January 31, 2000. The term loan agreement requires the
Company to maintain a restricted cash balance equal to 115% of the outstanding
loan balance plus accrued interest in an interest bearing account as collateral
for the note.
In February 1999, the Company acquired manufacturing assets for the
xenotransplantation program developed by US Surgical, a subsidiary of Tyco
International Ltd., and financed the purchase with a note payable bearing
interest at 6% per annum, in the amount of approximately $3.9 million due in May
2005. The note is secured by certain manufacturing assets of Columbus. Interest
on the note is payable quarterly.
Page 9 of 17
<PAGE>
ALEXION PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
6. EQUITY
In November 1999, the Company sold 3.415 million shares of common stock at a
price of $14.00 per share in a follow-on public offering resulting in net
proceeds of approximately $44.4 million to the Company.
In connection with the Company's initial public offering in 1996, the Company
sold to its underwriter, for nominal consideration, warrants to purchase 220,000
shares of common stock. These warrants are exercisable at a price of $9.90 per
share for a period of forty-two (42) months commencing on August 27, 1997.
During the quarter ended January 31, 2000, warrants have been exercised for the
purchase of 153,274 shares of Common Stock resulting in aggregate proceeds of
approximately $1.5 million to the Company.
7. COMPREHENSIVE INCOME (LOSS) -
SFAS No. 130 "Reporting Comprehensive Income" establishes standards for
reporting and display of comprehensive income (loss) and its components in a
full set of general purpose financial statements. The objective of SFAS No. 130
is to report a measure of all changes in equity of an enterprise that result
from transactions and other economic events of the period other than
transactions with owners. There was no significant difference in comprehensive
loss and net loss for the three and six month periods ended January 31, 2000 and
1999.
8. RECENTLY ISSUED ACCOUNTING STANDARDS -
Staff Accounting Bulletin No. 101 (SAB 101), Revenue Recognition, was issued in
December 1999. SAB 101 will require companies to recognize certain up-front
non-refundable fees over the life of the related collaboration agreement when
such fees are received in conjunction with collaboration agreements which have
multiple elements. The Company is required to adopt this new accounting
principle through a cummulative charge to retained earnings, in accordance with
the provisions of APB Opinion No. 20, no later than the first quarter of fiscal
2001. The Company believes that the adoption of SAB 101 will have a material
impact on its future operating results as it applies to the $10.0 million
up-front non-refundable payment received by it in connection with its
collaboration with Proctor & Gamble. The Company's historical financial
statements reflect this payment as revenue in the year ended July 31, 1999.
Based on guidance currently available, the Company will be required to record
the $10.0 million fee as revenue over the future life, as defined, of the
collaboration agreement. As of January 31, 2000, the Company had not yet adopted
this new accounting principle.
Page 10 of 17
<PAGE>
ALEXION PHARMACEUTICALS, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS WHICH INVOLVE RISKS AND
UNCERTAINTIES. SUCH STATEMENTS ARE SUBJECT TO CERTAIN FACTORS WHICH MAY CAUSE
OUR PLANS AND RESULTS TO DIFFER SIGNIFICANTLY FROM PLANS AND RESULTS DISCUSSED
IN THE FORWARD-LOOKING STATEMENTS. FACTORS THAT MIGHT CAUSE OR CONTRIBUTE TO
SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO THOSE DISCUSSED IN EXHIBIT 99.1
TO OUR ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED JULY 31, 1999, AS
AMENDED.
OVERVIEW
We are engaged in the development of products for the treatment of
cardiovascular, autoimmune and neurologic diseases caused by undesired effects
of the human immune system. Since our inception in January 1992, we have devoted
substantially all of our resources to drug discovery, research and product
development. In 1998, we began to focus more of our resources in clinical
testing and trials. Our two lead product candidates are currently in seven
clinical development programs. 5G1.1-SC, in collaboration with Procter & Gamble,
is in a Phase IIb cardiopulmonary bypass efficacy trial and in two 1000 patient
Phase II myocardial infarction (heart attack) efficacy trials. 5G1.1 is in a
Phase II efficacy trial for the chronic treatment of rheumatoid arthritis and a
Phase II efficacy trial for the treatment of membranous nephritis. In addition,
we are commencing a Phase Ib pilot study for treatment of psoriasis and a Phase
Ib pilot study for treatment of dermatomyositis both using 5G1.1. To date, we
have not received any revenues from the sale of products. We have incurred
operating losses since we began our operations. As of January 31, 2000, we had
an accumulated deficit of $55.8 million. We expect to incur substantial and
increasing operating losses for the next several years due to expenses
associated with product research and development, pre-clinical studies and
clinical testing, regulatory activities, manufacturing development and scale-up
and developing a sales and marketing force.
We plan to develop and commercialize on our own those product candidates for
which the clinical trials and marketing requirements can be funded by our own
resources. For those products for which greater resources will be required, our
strategy is to form corporate partnerships with major pharmaceutical companies
for product development and commercialization. In January 1999, we entered into
a collaboration agreement with Proctor & Gamble Pharmaceuticals to develop and
commercialize one of our C5 Inhibitor products, 5G1.1-SC, for various acute
cardiovascular indications such as cardiopulmonary bypass, heart attack, and
angioplasty. As of January 2000, we have completed enrollment of over 35% of the
up to 1000 patients in a Phase IIb efficacy trial with 5G1.1-SC in patients
undergoing cardiopulmonary bypass during coronary artery bypass graft surgery
and we have commenced enrolling up to 1000 patients each in two Phase IIb
efficacy studies in myocardial infarction (heart attack) patients receiving
thrombolytic therapy and myocardial infarction (heart attack) patients receiving
angioplasty.
RESULTS OF OPERATIONS
Page 11 of 17
<PAGE>
ALEXION PHARMACEUTICALS, INC.
THREE MONTHS ENDED JANUARY 31, 2000
COMPARED WITH THREE MONTHS ENDED JANUARY 31, 1999
We earned contract research revenues of $6.7 million for the three months ended
January 31, 2000 and $170,000 for the same period ended January 31, 1999. This
increase was due to contract revenues from our collaborative agreement with
Procter & Gamble for research and development support and clinical development
and process manufacturing related expense reimbursements.
We incurred research and development expenses of $9.8 million for the three
months ended January 31, 2000 and $4.7 million for the three months ended
January 31, 1999. The increase resulted principally from costs associated with
our expansion of clinical trials for our lead C5 Inhibitors, 5G1.1-SC and 5G1.1,
and the cost of manufacturing development and manufacturing of our C5
Inhibitors.
Our general and administrative expenses were $1.2 million for the three months
ended January 31, 2000 and $790,000 for the three months ended January 31, 1999.
This increase resulted principally from higher payroll related costs,
depreciation and other professional fees.
Other income, net, was $672,000 for the three months ended January 31, 2000 and
$421,000 for the three months ended January 31, 1999. This increase resulted
principally from greater interest income from higher cash balances available for
investment during the period resulting from our follow-on public offering that
raised $44.4 million in net proceeds.
As a result of the above factors, we incurred a net loss of $3.6 million for the
three months ended January 31, 2000 and a net loss of $4.9 million for the three
months ended January 31, 1999.
SIX MONTHS ENDED JANUARY 31, 2000
COMPARED WITH SIX MONTHS ENDED JANUARY 31, 1999
We earned contract research revenues of $13.0 million for the six months ended
January 31, 2000 and $425,000 for the same period ended January 31, 1999. This
increase was due primarily to contract revenues from our collaborative agreement
with Procter & Gamble for research and development support and clinical
development and process manufacturing related expense reimbursements.
We incurred research and development expenses of $21.0 million for the six
months ended January 31, 2000 and $8.5 million for the six months ended January
31, 1999. The increase resulted principally from costs associated with our
expansion of clinical trials for our lead C5 Inhibitors, 5G1.1-SC and 5G1.1, and
the cost of manufacturing development and manufacturing of our C5 Inhibitors.
Our general and administrative expenses were $1.8 million for the six months
ended January 31, 2000 and $1.4 million for the six months ended January 31,
1999. This increase resulted principally from higher payroll related costs,
depreciation and other professional fees.
Page 12 of 17
<PAGE>
ALEXION PHARMACEUTICALS, INC.
Other income, net, was $962,000 for the six months ended January 31, 2000 and
$918,000 for the six months ended January 31, 1999. This increase resulted
principally from greater interest income from higher cash balances available for
investment during the period.
As a result of the above factors, we incurred net losses of $8.8 million for the
six months ended January 31, 2000 and net losses of $8.5 million for the six
months ended January 31, 1999.
LIQUIDITY AND CAPITAL RESOURCES
As of January 31, 2000, we had working capital of $66.6 million, including $62.3
million of cash, cash equivalents and marketable securities. This compares with
working capital at January 31, 1999 of $27.4 million, including $29.3 million of
cash, cash equivalents and marketable securities. This increase in working
capital was due to the increase in available cash from the follow-on public
offering in November 1999.
In November 1999, we sold 3.415 million shares of common stock at a price of
$14.00 per share in a follow-on public offering, resulting in net proceeds of
approximately $44.4 million to the Company.
On March 8, 2000, we completed a $120 million placement of 5.75% Convertible
Subordinated Notes due March 15, 2007. The offering was made through initial
purchasers to qualified institutional buyers under Rule 144A of the Securities
Act of 1933. The notes will be convertible into shares of our common stock at a
price equal to $106.425 per share.
In connection with our initial public offering in 1996, we sold to the
underwriter, for nominal consideration, warrants to purchase 220,000 shares of
common stock. These warrants are exercisable at a price of $9.90 per share for a
period of forty-two (42) months commencing on August 27, 1997. During the
quarter ended January 31, 2000, warrants have been exercised for the purchase of
153,274 shares of Common Stock resulting in aggregate proceeds of approximately
$1.5 million to the Company.
We anticipate that our existing available capital resources with the proceeds of
our sale of $120 million of Convertible Subordinated Notes, together with the
anticipated funding from the collaboration agreement with Procter and Gamble,
will provide us adequate funding for the clinical testing of our C5 inhibitor
product, 5G1.1-SC in cardiopulmonary bypass and acute coronary syndromes. We
believe that our available capital resources, funding from existing grants and
interest earned on available cash and marketable securities should be sufficient
to fund our operating expenses and capital requirements as currently planned for
at least the next thirty-six months. While we currently have no material
commitments for capital expenditures, our future capital requirements will
depend on many factors, including the progress of our research and development
programs, progress and results of clinical trials, the time and costs involved
in obtaining regulatory approvals, the costs involved in obtaining and enforcing
patents and any necessary licenses, our ability to establish development and
commercialization relationships, and the costs of manufacturing scale-up.
Page 13 of 17
<PAGE>
ALEXION PHARMACEUTICALS, INC.
We expect to incur substantial additional costs, including costs associated with
research, pre-clinical and clinical testing, manufacturing process development,
and additional capital expenditures related to personnel and facilities
expansion and manufacturing requirements in order to commercialize our products
currently under development. In addition to funds we may receive from our
collaboration with Procter & Gamble, we may need to raise or generate
substantial additional funding in order to complete the development and
commercialization of our product candidates. Our additional financing may
include public or private equity offerings, bank loans and/or collaborative
research and development arrangements with corporate partners. There can be no
assurance that funds will be available on terms acceptable to us, if at all, or
that discussions with potential collaborative partners will result in any
agreements on a timely basis, if at all. The unavailability of additional
financing could require us to delay, scale back or eliminate certain research
and product development programs or to license third parties to commercialize
products or technologies that we would otherwise undertake itself, any of which
could have a material adverse effect.
We lease our administrative and research and development facilities under one
operating lease on a month-to-month basis while we are negotiating a longer term
arrangement.
YEAR 2000
While we have not experienced any Year 2000 problems to date, such problems
could arise in the future. In that event, our operations could be affected in
several adverse ways. Failure of a scientific instrument or laboratory facility
or by any of our suppliers could result, among other things, in the loss of
experiments that would take weeks to set up and repeat. Such delays in the
progress of research could have an adverse impact on our stock price and on our
ability to raise capital, and the cost of repeating lost experiments cannot
reasonably be estimated at this time. In addition, research delays could occur
due to the impact of Year 2000 problems at major vendors, government research
funding agencies, or development partners.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS.
Interest income on the Company's marketable securities is carried in "Other
income (expense)". The Company accounts for its marketable securities in
accordance with Statement of Financial Accounting Standards No. 115, "Accounting
for Certain Investments in Debt and Equity Securities" ("SFAS 115"). All of the
cash equivalents and marketable securities are treated as available-for-sale
under SFAS 115.
Investments in fixed rate interest earning instruments carry a degree of
interest rate risk. Fixed rate securities may have their fair market value
adversely impacted due to a rise in interest rates. Due in part to these
factors, the Company's future investment income may fall short of expectations
due to changes in interest rates or the Company may suffer losses in principal
if forced to sell securities which have seen a decline in market value due to
changes in interest rates. The Company's marketable securities are held for
purposes other than trading. The marketable securities as of January 31, 2000,
had maturities of less than twelve months. The
Page 14 of 17
<PAGE>
ALEXION PHARMACEUTICALS, INC.
weighted-average interest rate on marketable securities at January 31, 2000 was
5.9%. The fair value of marketable securities held at January 31, 2000 was $8.9
million.
Page 15 of 17
<PAGE>
ALEXION PHARMACEUTICALS, INC.
PART II. OTHER INFORMATION.
Item 4. Submission of Matters to a Vote of Security Holders.
At the Company's Annual Meeting of Stockholders held on February 17, 2000, the
stockholders voted to elect the following directors by the votes indicated:
<TABLE>
<S> <C>
John H. Fried, Ph.D.: 12,151,084 For, 1,975 Against or Withheld, 0 Abstaining
Leonard Bell, M.D.: 12,151,084 For, 1,975 Against or Withheld, 0 Abstaining
Jerry T. Jackson: 12,151,384 For, 1,675 Against or Withheld, 0 Abstaining
Max Link, Ph.D.: 12,151,584 For, 1,475 Against or Withheld, 0 Abstaining
Joseph A. Madri, Ph.D., M.D.: 12,151,784 For, 1,275 Against or Withheld, 0 Abstaining
Leonard Marks, Jr, Ph.D.: 12,151,384 For, 1,675 Against or Withheld, 0 Abstaining
R. Douglas Norby: 12,151,584 For, 1,475 Against or Withheld, 0 Abstaining
Alvin S. Parven: 12,151,384 For, 1,675 Against or Withheld, 0 Abstaining
</TABLE>
Item 5. Other Information.
The 2000 Annual meeting of stockholders of the Company will
be held on or about December 8, 2000 rather than February
2001. All stockholder proposals which are intended to be
presented at the 2000 annual meeting of stockholders of the
Company must be received by the Company no later than July 7,
2000 for inclusion in the Board of Directors' proxy statement
and form of proxy relating to that meeting.
Item 6. Exhibits and Reports.
(a) Exhibits
Exhibit 27 - Financial Data Schedule
Exhibit 10.30 - Collaboration Agreement dated
December 22, 1999 between the Company and Genzyme Transgenics
Corporation.*
(b) Form 8-K
Current report on Form 8-K dated December 3, 1999, relating
to the Company's November 1999 follow-on public stock offering.
Current Report on Form 8-K dated January 18, 2000, relating to the
Company's agreement with Genzyme Transgenics Corporation.
*The Company has applied for confidential treatment with respect
to specific portions of this agreement.
Page 16 of 17
<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.
ALEXION PHARMACEUTICALS, INC.
Date: March 15, 2000 By: /s/ Leonard Bell, M.D.
---------------------------------------
Leonard Bell, M.D.
President and Chief Executive Officer,
Secretary and Treasurer (principal
executive officer)
Date: March 15, 2000 By: /s/ David W. Keiser
---------------------------------------
David W. Keiser
Executive Vice President and Chief
Operating Officer (principal financial
officer)
Date: March 15, 2000 By: /s/ Barry P. Luke
---------------------------------------
Barry P. Luke
Vice President of Finance and
Administration
(principal accounting officer)
Page 17 of 17
<PAGE>
SECTION A
THIS AGREEMENT (the "Agreement") is made this 22nd day of December 1999 (the
"Effective Date") by and between GENZYME TRANSGENICS CORPORATION ("GTC"), with
offices at 175 Crossing Boulevard, Framingham, Massachusetts 01702-9322 U.S.A.
and Alexion Pharmaceuticals Inc. ("Alexion") located at 25 Science Park, New
Haven, Connecticut 06511.
1. BACKGROUND. Alexion is a biopharmaceutical company actively involved in
the development of [***] (the "Product"). Alexion is interested in GTC
producing Product in the milk of transgenic goats (the "Project"). GTC is
willing to perform the Project, subject to the terms and conditions of this
Agreement, including the Project Work Plan set forth herein.
2. EXPRESSION TECHNOLOGY. "Expression Technology" means GTC's proprietary
technology, which GTC shall use to generate and propagate transgenic animal
founder lines for Product.
3. PERFORMANCE OF THE PROJECT. The Project will be performed by GTC in
accordance with the Project Work Plan, which may be amended from time to time by
written agreement of the parties.
GTC shall conduct the Project in conformance with the Good Laboratory Practice
requirements of the United States Food and Drug Administration ("FDA") and
otherwise in compliance with all laws, ordinances, and governmental rules or
regulations pertaining thereto.
GTC will have met the success criteria of the Project and the Project will be
concluded upon demonstration that founder females produce in the ordinary course
milk containing fully processed, functional Product and delivery of reasonable
quantities of samples to Alexion, provided that GTC uses commercially reasonable
and diligent efforts to achieve such criteria within the timeline as hereinafter
provided. GTC makes no guarantee that such success criteria can be attained.
4. RECORDS.
4.1 GTC will keep accurate records of the status and progress of the
Project. GTC will not destroy such records without giving Alexion
prior written notice and the opportunity to further store such
records.
4.2 Alexion's personnel shall have the right to review such records
at GTC's facilities during regular business hours on 5 days'
written notice.
<PAGE>
5. REPORTS.
5.1 PROJECT UPDATES. GTC will keep Alexion advised of the status of
the Project through regular telephone conversations and meetings.
5.2 FINAL REPORT. GTC will complete a final report of the Project
within sixty (60) days of its completion. If performance of the
Project is suspended or terminated prior to completion, GTC will
promptly provide Alexion with a final report of the results of
the Project through the date of suspension or termination.
Alexion is and shall at all times remain the sole owner of the
reports prepared by GTC.
6. COMPENSATION. Alexion agrees to pay GTC for the Project as
follows:
6.1 Alexion will pay GTC a Start-up fee of [***], payable on
execution of this Agreement by both parties;
6.2 Alexion will pay GTC a fee of [***] upon completion of the
microinjection of a suitable number of goat embryos which would
normally be expected to yield [***], and transfer of such
embryos to recipient females;
6.3 Alexion will pay GTC a fee of [***] upon the birth of the
first F0 goat transgenic for Product;
6.4 Alexion will pay GTC a success fee for expression of Product as
follows:
a. [***]
b. [***]
For avoidance of doubt, Alexion will only pay a maximum amount
equal to [***] for the successful expression of Product.
c. In the event GTC is not successful in obtaining either a
male or female founder animal with induced and/or natural
expression of approximately [***], as per (a)
3
<PAGE>
and (b) above, and the DNA provided by Alexion is
verified correct, GTC will conduct a second round of
microinjections [***].
6.5 Alexion will pay GTC a fee of [***] upon delivery of an amount
of clarified intermediate product which yields at least
[***] of pre-pivotal clinical grade Product, as
produced by a development scale purification process consistent
with industry standards, for comparability testing.
6.6 Should Alexion at its sole discretion elect to enter into a
Clinical Development and/or Commercial Supply Agreement pursuant
to Section 10.4 below, Alexion will pay GTC a commercial fee of
[***].
6.7 Alexion will pay GTC a fee in the amount of [***] in the
event that Alexion decides these activities are required.
6.8 Alexion will reimburse GTC for costs incurred as a result of
GTC's assistance with Alexion's collaboration with a third-party
to develop and scale-up a downstream purification process for
Product, [***].
Fully Burdened Costs means GTC's direct labor and materials
costs, plus allocable indirect overhead expenses and allocable
selling, general and administrative expenses, determined in
accordance with generally accepted accounting principles,
consistently applied.
6.9 Except for under the conditions set forth in Section 6.4(c),
Alexion also agrees to pay for transgenic animal maintenance
costs at [***] GTC's FBC during any period of delay in
the Project where GTC is not funded by Alexion to conduct
activities on the Project, until such time as the Project is
terminated, provided that such delay is not caused by the acts or
omissions of GTC. A minimum of thirty (30) days termination
notice applies to these costs.
7. CONFIDENTIALITY.
7.1 For a period of [***] years from the termination of this
Agreement, any Confidential Information (as defined below)
disclosed by the disclosing party hereunder, directly or
indirectly, to the receiving party hereunder, shall be deemed
confidential, and shall not be disclosed by the receiving party
to third parties, except as set forth below. Access to such
Confidential Information will be limited to employees, agents,
Affiliates (as defined
4
<PAGE>
below), consultants or contractors of the receiving party who
reasonably require such Confidential Information and who are
bound to the receiving party by similar obligations in respect of
confidentiality and use. The receiving party will use such
Confidential Information only to carry out its obligations or to
exercise its rights hereunder and will not use such Confidential
Information for its own benefit or for the benefit of others or
in any way inconsistent with this Agreement.
7.2 Nothing contained herein will in any way restrict or impair each
party's right to use, disclose or otherwise deal with any
Confidential Information which:
i) at the time of disclosure, is in the public knowledge;
ii) after disclosure, becomes part of the public knowledge by
publication or otherwise, except by breach of this Agreement by
the receiving party;
iii) was demonstrably in the receiving party's possession at the
time of such disclosure, and which was not acquired, directly or
indirectly, from the disclosing party;
iv) the receiving party receives from third parties, provided
such Confidential Information was not obtained by such third
parties, directly or indirectly, from the disclosing party on a
confidential basis;
v) results from research and development of the receiving party
demonstrably independent of such disclosure;
vi) is required to be disclosed by legal process; provided,
however, in each case the party so disclosing Confidential
Information timely informs the other party and uses its
reasonable efforts to limit the disclosure and maintain
confidentiality to the extent possible and permits the other
party to attempt by appropriate legal means to limit such
disclosure; and
vii) the disclosing party identifies in writing as being for
public disclosure.
7.3 For purposes of this Agreement, the term "Confidential
Information" shall mean all of the data, information, technology,
samples, DNA, specimens, materials and any other information
affecting the business operations of the disclosing party
received by the receiving party from the disclosing party
hereunder.
7.4 For purposes of this Agreement, the term "Affiliate" shall mean
any corporation which controls, is controlled by or is under
common control with a party hereto. A corporation shall be
regarded as in control of another corporation if it owns or
directly
5
<PAGE>
or indirectly controls at least fifty percent (50%) of the voting
stock of the other corporation, or in the absence of the
ownership of at least fifty percent (50%) of the voting stock, if
it possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the
corporation.
7.5 In addition, neither party shall originate any written publicity,
news release or other public announcement or statement relating
to this Agreement or to the performance hereunder or the
existence of an arrangement between the parties without prior
review and written approval of the other party. Notwithstanding
the foregoing, either party may make a public written disclosure
if required by applicable law provided that prior to making such
written disclosure, the disclosing party shall provide the other
party with a copy of, and reasonable opportunity to review, the
materials to be disclosed. To the extent that the non-disclosing
party requests that any information in the proposed disclosure be
deleted, the disclosing party shall request confidential
treatment of such information pursuant to applicable law, so that
there be omitted from the materials that are publicly filed any
information that the non-disclosing party requests to be deleted.
8. RIGHTS AND DEVELOPMENTS.
8.1 DEFINITION. "Rights and Developments" include, without
limitation, ideas, concepts, discoveries, inventions,
developments, know-how, patent rights, trade secrets, techniques,
methodologies, innovations, improvements, writings,
documentation, data and other rights (whether or not protectable
under state, federal, or foreign patent, trademark, copyright or
similar laws) that are conceived, discovered, invented,
developed, created, made or reduced to practice by GTC, alone or
jointly with others, in performance of the Project.
8.2 OWNERSHIP.
a. All Rights and Developments relating to Alexion's Product
or its use shall be solely owned by Alexion, regardless
of the designation of inventorship between the parties
and their employees.
GTC shall promptly notify Alexion of all such Rights and
Developments and shall transfer and assign to Alexion all
rights, title and interest in the Rights and
Developments, and Alexion, in its sole discretion, may
apply for patents and other intellectual property rights
relating to the Rights and Developments. GTC shall, at
Alexion's request, execute such declarations, assignments
and other documents required by Alexion to effect such
transfer and assignment and any intellectual property
applications.
6
<PAGE>
b. All Rights and Developments relating to the Expression
Technology shall be solely owned by GTC, regardless of
the designation of inventorship between the parties and
their employees.
Alexion shall promptly notify GTC of all such Rights and
Developments and shall transfer and assign to GTC all
rights, title and interest in the Rights and
Developments, and GTC, in its sole discretion, may apply
for patents and other intellectual property rights
relating to the Rights and Developments. Alexion shall,
at GTC's request, execute such declarations, assignments
and other documents required by GTC to effect such
transfer and assignment and any intellectual property
applications.
c. All transgenic animals expressing Alexion's Product which
are generated by GTC as part of the Project performed
under this Agreement shall be solely owned by Alexion,
regardless of the designation of inventorship between the
parties and their employees, [***].
In the case where Alexion uses the animals to make at
least a portion of Alexion's commercial Product and where
GTC does not manufacture all of Alexion's commercial
Product, [***] from the commercial manufacture of
transgenic Product on Alexion's behalf.
d. All other Rights and Developments shall be jointly owned
by the parties, regardless of the designation of
inventorship between the parties and their employees.
8.3 PATENT RIGHTS. Any patent applications covering Rights and
Developments owned by Alexion will be prepared and filed by
Alexion, with expenses paid [***]. Any patent applications
covering Rights and Developments owned by GTC or jointly owned by
the parties will be prepared and filed by GTC, [***].
If either party elects not to file or maintain an application
or patent covering any jointly owned Rights and Developments,
that party shall promptly notify the other party, which shall
7
<PAGE>
have the right to file or maintain such applications or patents,
at its expense. Inventorship will be determined according to U.S.
patent law.
8.4 INFRINGEMENT OF THIRD PARTY PATENTS.
a. GTC warrants that it shall not knowingly infringe any
existing third-party patents or other intellectual
property rights of any third party relating to the
transgenic expression vectors, clarification and other
processes used in connection with the Project.
b. Alexion warrants that it shall not knowingly infringe any
existing thirdparty patents or other intellectual
property rights of any third party relating to the DNA
supplied by Alexion to GTC hereunder and used in
connection with the Project.
9. INDEMNIFICATION. Alexion and GTC shall each defend, indemnify and hold the
other and it's affiliates and the respective directors, officers, employees and
agents and affiliates, harmless from and against any and all losses, damages,
liabilities, claims, demands, judgements, settlements, costs and expenses
(including, without limitation, reasonable attorneys' fees and other costs of
defense) arising out of, relating to or resulting from the breach of any of
their respective representations, warranties and covenants contained within this
Agreement or their respective negligence or willful misconduct.
10. TERM AND TERMINATION.
10.1 TERM. The term of this Agreement shall commence on the Effective
Date. Unless earlier terminated in accordance with the provisions
of this Agreement, the Project shall terminate upon GTC's making
available for delivery to Alexion:
a. the Final Report in a form reasonably satisfactory to
Alexion,
b. any transgenic founder animals generated for Alexion's
Product, and
c. samples of deliverable Product as indicated in the
Project Work Plan.
10.2 TERMINATION BY EITHER PARTY. This Agreement may be terminated by
either party in the event of a material breach by the other party
of the terms hereof; provided, however, the nondefaulting party
shall first give to the defaulting party written notice of the
proposed termination of this Agreement, specifying the grounds
therefore, and the defaulting party shall have thirty (30) days
after such notice is given to cure the breach. If not so cured,
this Agreement shall terminate at the expiration of such thirty
(30) days.
8
<PAGE>
Upon termination, neither party will have any further obligations
under this Agreement, except (a) the liabilities accrued through
the date of termination and (b) the obligations which by their
terms survive termination shall survive. Upon termination, GTC
will return to Alexion or dispose of any of Alexion's Product and
any transgenic animals generated by GTC pursuant to the Project
in accordance with Alexion's instructions.
10.3 CONTINUING OBLIGATION. The termination or expiration of this
Agreement shall not relieve either party of its obligations to
the other party in respect of (a) the confidentiality or use of
Confidential Information and, (b) any publication or presentation
relating to the Project, or (c) indemnification as provided in
Section 9.
10.4 FURTHER CLINICAL DEVELOPMENT AND COMMERCIAL SUPPLY AGREEMENT. In
the event that the parties decide to enter into an agreement for
the supply of Product for clinical and/or commercial use, GTC
agrees to scale up the transgenic production herd, develop and
scale up a primary recovery step (Tangential Flow Filtration,
"TFF"), and assist Alexion [***]. The parties agree to commence
good faith negotiations in an effort to reach agreement on the
terms of such an agreement, such negotiations to ensure an
efficient transition from development to clinical and/or
commercial activities and not to unnecessarily delay the
development of transgenically-produced Product.
In the event of an agreement to produce Product for clinical
studies, GTC will provide the required Product at [***].
In the event of entering into a Development and Commercial
Agreement, the key compensation elements will be as follows:
a. Within a Development and Commercial Agreement constructed
under industry standard terms and conditions, GTC will
provide Product for commercial activities at [***]
at a commercially relevant scale for Alexion.
[***] TFF stage Product. This would result in an
effective transfer price to Alexion of [***] of TFF
stage Product). In the event GTC is able to lower its
costs, GTC and Alexion will share equally in the
benefits;
9
<PAGE>
b. [***] will pay the capital costs associated with herd
scale up and the construction of a dedicated barn, dairy
and primary recovery (TFF) suite as agreed to by the
parties;
c. Alexion will pay GTC a royalty of [***].
11. ASSIGNABILITY. This Agreement, and the rights and obligations hereunder,
may not be assigned or transferred by either party without the prior written
consent of the other party, such consent not to be unreasonably withheld, except
that GTC or Alexion may assign this Agreement to an affiliated company or in
connection with the merger, consolidation or sale of all or substantially all of
it assets.
12. PUBLICATION. Any publication or presentation relating to the Project must
first be approved in writing by both parties, such approval not to be
unreasonably withheld. Each party agrees to submit, for review, any proposed
publication (including any writing to be presented orally) relating to the
Project at least forty-five (45) days prior to submission for publication or
presentation. If either party requests a delay in publication or presentation,
the other party agrees to delay the publication or presentation, for a period of
ninety (90) days from the date of such request. Such period may be extended, if
necessary, for an additional period mutually acceptable to the parties.
Notwithstanding the foregoing, both parties agree that no publication or
presentation shall contain Confidential Information with respect to which it has
confidentiality obligations pursuant to Section 7 hereof.
13. GOVERNING LAW AND ENTIRETY. The validity, interpretation and performance of
this Agreement shall be governed and construed in accordance with the laws of
the State of Massachusetts, U.S.A. This document along with any Confidentiality
Agreement, constitutes the full understanding of the parties with respect to the
subject matter hereof, and a complete and exclusive statement of the terms of
their agreement, and no terms, conditions, understanding or agreement purporting
to modify or vary the terms of this Agreement shall be binding unless made in
writing and signed by the party to be bound.
14. NO WAIVER. No waiver of any term or condition of this Agreement shall be
valid or binding on either party unless agreed in writing by the party to be
charged. The failure of either party to enforce at any time any of the
provisions of this Agreement, or the failure to require at any time performance
by the other party of any of the provisions of this Agreement, shall in no way
be construed to be a present or future waiver of such provisions, nor in any way
affect the validity of either party to enforce each and every such provision
thereafter.
15. COUNTERPARTS. This Agreement may be executed in two counterparts, each of
which shall be deemed an original and both of which together shall constitute
one instrument.
16. INDEPENDENT CONTRACTORS. The relationship of Alexion and GTC established by
this Agreement is that of independent contractors, and nothing contained in this
Agreement shall be
10
<PAGE>
construed to: (a) give either party the power to direct or control the
day-to-day activities of the other, (b) constitute the parties as partners,
joint venturers, co-owners or otherwise as participants in a joint or common
undertaking; or (c) allow a party to create or assume any obligation on behalf
of the other party for any purpose whatsoever. Nothing in this Agreement will
give rise to the creation of any labor relation by and between either party and
any employees of the other party.
11
<PAGE>
IN WITNESS WHEREOF, duly-authorized representatives of the parties have
signed this Agreement as a document under seal of the Effective Date.
ALEXION PHARMACEUTICALS INC. GENZYME TRANSGENICS
CORPORATION
By: /s/ David W. Keiser By: /s/ Michael W. Young
------------------------------- ---------------------------------
Print Name: David W. Keiser Print Name: Michael W. Young
Title: Exec. Vice-President and COO Title: Vice-President, Commercial
Duly Authorized Development Duly Authorized
12
<PAGE>
SECTION B
PROJECT WORK PLAN
WORK PLAN OBJECTIVES:
1. Generate founder goats transgenic for Product
2. Evaluate transgenic technology for the manufacture of Product for
clinical use at a scale of [***].
3. Provide Product samples for in vitro testing
4. Deliver to Alexion an amount of clarified intermediate Product which
yields [***], as produced by a development scale purification process
consistent with industry standards.
WORK PLAN ACTIVITIES:
1. [***]
2. [***]
3. [***]
4. [***]
5. [***]
6. [***]
7. [***]
8. [***]
9. [***]
10. [***]
11. [***]
12. [***]
13
<PAGE>
FROM GTC
GTC agrees to conduct the Project as described below. GTC shall provide
personnel, facilities and resources as required to perform the Project.
[***]
A provisional timeline is set forth below:
TIME ACTIVITY
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
14
<PAGE>
FROM ALEXION
In connection with the Project, Alexion shall supply GTC with the following:
(a) [***];
(b) [***];
(c) [***];
(d) [***].
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET. THE STATEMENT OF OPERATIONS, AND THE STATEMENT OF CASH FLOWS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-2000
<PERIOD-START> AUG-01-1999
<PERIOD-END> JAN-31-2000
<CASH> 53,311
<SECURITIES> 8,950
<RECEIVABLES> 7,170
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 71,560
<PP&E> 11,791
<DEPRECIATION> (4,032)
<TOTAL-ASSETS> 80,330
<CURRENT-LIABILITIES> 4,999
<BONDS> 4,199
0
0
<COMMON> 2
<OTHER-SE> 71,132
<TOTAL-LIABILITY-AND-EQUITY> 80,330
<SALES> 0
<TOTAL-REVENUES> 12,967
<CGS> 0
<TOTAL-COSTS> 22,745
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (962)
<INCOME-PRETAX> (8,816)
<INCOME-TAX> 0
<INCOME-CONTINUING> (8,816)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,816)
<EPS-BASIC> (0.69)
<EPS-DILUTED> (0.69)
</TABLE>
