SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
(Mark one)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 1995
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 0-12042
BIOGEN, INC.
(Exact name of registrant as specified in its charter)
Massachusetts 04-3002117
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
14 Cambridge Center, Cambridge, MA 02142
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 679-2000
Former name, former address and former fiscal year, if changed since
last report: Not Applicable
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
Number of shares outstanding of each of the issuer's classes of common
stock, as of August 4, 1995:
Common Stock, par value $0.01 33,369,243
(Title of each class) (Number of Shares)
B I O G E N , I N C .
INDEX
Page No.
PART I - FINANCIAL INFORMATION
Condensed Consolidated Balance Sheets -
June 30, 1995 and December 31, 1994 . . . . . . . . . . . . . . .3
Condensed Consolidated Statements of Income -
Three months and six months ended June 30, 1995 and 1994. . . . .4
Condensed Consolidated Statements of Cash Flows -
Six months ended June 30, 1995 and 1994 . . . . . . . . . . . . .5
Notes to Condensed Consolidated Financial Statements. . . . . . . .6
Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . .7
Report of Independent Accountants . . . . . . . . . . . . . . . . 12
PART II - OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . 13
* * * * * * * * * * * * * * * * * *
Note concerning trademarks: Certain names mentioned in this report are
trademarks owned by Biogen, Inc. or its
affiliates. Hirulog(TM) and AVONEX(TM)are
trademarks of Biogen, Inc.
BIOGEN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30,1995 Dec. 31,1994
(unaudited)
ASSETS
Current assets
Cash and cash equivalents. . . . . . . . $ 46,738 $ 54,682
Marketable securities. . . . . . . . . . 227,903 213,120
Accounts receivable. . . . . . . . . . . 16,900 18,502
Other. . . . . . . . . . . . . . . . . . 10,610 8,480
-------- --------
Total current assets . . . . . . . . . . 302,151 294,784
-------- --------
Property and equipment
Total cost . . . . . . . . . . . . . . . 127,653 104,651
Less accumulated depreciation. . . . . . 35,277 31,489
-------- --------
Property and equipment, net. . . . . . . 92,376 73,162
-------- --------
Other assets
Patents, net . . . . . . . . . . . . . . 8,024 8,116
Other. . . . . . . . . . . . . . . . . . 1,834 1,800
-------- --------
Total other assets . . . . . . . . . . . 9,858 9,916
-------- --------
$ 404,385 $ 377,862
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable . . . . . . . . . . . . $ 8,244 $ 9,991
Current portion long-term debt . . . . . 1,667 --
Other current liabilities. . . . . . . . 28,784 37,937
-------- --------
Total current liabilities. . . . . . . . 38,695 47,928
-------- --------
Long-term debt . . . . . . . . . . . . . . 23,333 --
-------- --------
Shareholders' equity
Common stock . . . . . . . . . . . . . . 334 331
Additional paid-in capital . . . . . . . 371,688 368,784
Deficit. . . . . . . . . . . . . . . . . (29,811) (33,359)
Unrealized gain (loss) on
marketable securities. . . . . . . . . 87 (5,867)
Accumulated translation adjustment . . . 59 45
-------- --------
Total shareholders' equity . . . . . . . 342,357 329,934
-------- --------
$ 404,385 $377,862
======== ========
See Notes to Condensed Consolidated Financial Statements.
BIOGEN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(in thousands, except per share amounts)
Three Months Six Months
Ended June 30, Ended June 30,
1995 1994 1995 1994
REVENUES
Royalties and product sales. $32,717 $32,793 $64,670 $73,960
Interest . . . . . . . . . . 4,179 3,986 8,196 7,599
------- ------- ------- -------
Total revenues . . . . . . . 36,896 36,779 72,866 81,559
------- ------- ------- -------
EXPENSES
Cost of sales. . . . . . . . 2,648 2,146 5,152 4,617
Research and development . . 21,270 26,268 41,705 49,602
General and administrative . 10,003 5,607 17,524 11,570
Other. . . . . . . . . . . . 2,056 1,947 4,517 2,050
------ ------- ------- -------
Total expenses. . . . . . . . . 35,977 35,968 68,898 67,839
------- ------- ------- -------
INCOME BEFORE INCOME TAXES . . . 919 811 3,968 13,720
Income taxes . . . . . . . . . . 205 200 420 1,880
------- ------- ------- -------
NET INCOME . . . . . . . . . . . $ 714 $ 611 $ 3,548 $11,840
======= ======= ======= =======
NET INCOME PER SHARE . . . . . . $ 0.02 $ 0.02 $ 0.10 $ 0.34
======= ======= ======= =======
Average shares outstanding . . . 35,737 34,427 35,607 35,084
======= ======= ======= =======
See Notes to Condensed Consolidated Financial Statements.
BIOGEN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Six Months Ended
June 30,
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES
Net income . . . . . . . . . . . . . . . . $ 3,548 $11,840
Adjustments to reconcile net income to
net cash provided from (used by)
operating activities:
Depreciation and amortization. . . . . 5,001 3,646
Other. . . . . . . . . . . . . . . . . 302 1,345
Changes in:
Accounts receivable.. . . . . . . . . 1,602 15,091
Other current assets . . . . . . . . (2,130) (810)
Other assets. . . . . . . . . . . . . (34) (163)
Accounts payable and
other current liabilities . . . . . . (10,900) 975
-------- -------
Net cash provided from (used by)
operating activities . . . . . . . . . . (2,611) 31,924
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of marketable securities . . . . (117,587) (269,518)
Proceeds from sales of marketable securities. 108,599 208,210
Acquisitions of property and equipment . . (23,002) (14,844)
Additions to patents . . . . . . . . . . . (1,120) (1,204)
-------- -------
Net cash used by investing activities. . . (33,110) (77,356)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt . 25,000 --
Issuance of common stock . . . . . . . . . 2,777 9,939
-------- -------
Net cash provided from financing activities. 27,777 9,939
-------- -------
NET DECREASE IN CASH AND CASH EQUIVALENTS. . . (7,944) (35,493)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD. . . . . . . . . . . . 54,682 74,546
-------- -------
CASH AND CASH EQUIVALENTS,
END OF PERIOD. . . . . . . . . . . . . . $ 46,738 $ 39,053
======== =======
See Notes to Condensed Consolidated Financial Statements.
[Note 4 of the Notes to Condensed Consolidated Financial Statements
has been amended. The full text of Note 4, as amended, appears below.]
BIOGEN, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. In the opinion of management, the accompanying unaudited condensed
consolidated financial statements include all adjustments, consisting
of only normal recurring accruals, necessary to present fairly the
financial position, results of operations and cash flows of the
Company. The Company's accounting policies are described in the Notes
to Consolidated Financial Statements in the Company's 1994 Annual
Report. Interim results are not necessarily indicative of the
operating results for the full year.
2. During the third quarter of 1994, the Company incurred a pre-tax
charge to other expenses of $25 million as a result of its decision to
discontinue its major activities associated with Hirulog (TM)
development. The charge consists of cash payments to a third-party
manufacturer for product manufactured for clinical trials and to cover
a portion of other costs incurred by the manufacturer in anticipation
of ongoing Hirulog (TM) related activities, and cash payments for
clinical research organizations, clinical investigators and
institutions involved in clinical trials to cover noncancellable costs
incurred by them in conducting clinical trials and in connection with
wind-down activities. Discontinuance of the Hirulog (TM) program did
not result in any termination of employees or internal restructuring
costs. As of June 30, 1995, $2.4 million remained in reserve and is
expected to be settled by the end of 1995.
3. In March 1995, the Company completed construction of its research
laboratory and office building in Cambridge, Massachusetts and
exercised its option to obtain a 7.5% secured term loan with a bank
for $25 million. The annual principal payable in each of the years
1996 through 1999 is $1.7 million with the balance due May 8, 2005.
4. As of December 31,1994, the Company had a deferred tax asset of $58
million (before valuation allowance) consisting of the future tax
benefits from net operating loss carry forwards and other tax credits.
Under Statement of Financial Accounting Standards No. 109 ("SFAS
109"), the Company would be required to recognize all or a portion of
the $58 million deferred tax asset, with corresponding increases to
net income and paid-in capital, if it believes that it is more likely
than not, given the weight of all available evidence, that all or a
portion of the benefits of the carry forward losses and tax credits
will be realized. Given the possibility of fluctuations in the
Company's revenue stream, anticipated increases in the Company's
expenses, the uncertainties involved and number of milestones to be
achieved in obtaining regulatory approval for the Company's AVONEX(TM)
interferon beta-1a product and in successfully commercializing the
product and the risks and uncertainties associated with taking new
products through the development pipeline, the Company has concluded,
based on the standard set forth in SFAS 109, that it is more likely
than not that the Company will not realize any benefits from its
deferred tax asset, and it has therefore recorded a 100% reserve
against the asset. The Company will assess the need for the valuation
allowance at each balance sheet date based on all available evidence,
in particular, the then current status of regulatory filings and
commercialization efforts related to AVONEX(TM).
[Management's Discussion and Analysis of Financial Condition and Results
of Operation has been amended. The full text, as amended, appears below.]
BIOGEN, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Overview
Biogen, Inc. (the "Company") is a biopharmaceutical company principally
engaged in developing and manufacturing drugs for human healthcare through
genetic engineering. The Company's primary source of revenues consists of
royalties received from licensees that sell products based on technology
developed by the Company. These royalties are primarily derived from sales
of alpha interferon and hepatitis B products. The level of royalties that
Biogen receives is based on the level of product sales by its licensees
over which the Company has no control. As a result, the Company's revenues
may be affected by the impact on licensees' product sales of short-term
trends, such as the initiation or expiration of a vaccination program in a
particular country, or long-term trends, such as the institution of pricing
reforms in a particular country. Since the Company is not involved in the
development or sale of products by licensees, it is unable to accurately
predict the timing or potential impact of the events or trends which may
affect licensee sales or when and for how long these events and trends are
likely to affect the Company's royalty income. The Company's revenues may
also reflect one-time events such as payment of initial license fees by new
licensees. As a result, the Company's total revenues and income may
continue to fluctuate and quarter-to-quarter comparisons may not
necessarily be meaningful. Until the Company markets its own products
directly, royalties are expected to be the major source of the Company's
revenues.
In 1994, the Company announced the results of a Phase III clinical trial of
its AVONEX(TM) interferon beta-1a product, for the treatment of multiple
sclerosis. In light of the data from the trial, the Company filed during
1995 for a product license for AVONEX(TM) in the United States and market
approval for AVONEX(TM) in Europe and Canada. If the Company is successful
in its efforts to obtain regulatory approval, the Company will market
AVONEX(TM) directly in major markets in the United States and Europe.
Results of Operations
For the second quarter ended June 30, 1995, the Company reported net income
of $0.7 million or $0.02 per share as compared to net income of $0.6
million or $0.02 per share in the second quarter of 1994. For the six
months ended June 30, 1995, the Company had net income of $3.5 million or
$0.10 per share as compared to net income of $11.8 million or $0.34 per
share for the comparable period of 1994.
Total revenues for the second quarter of 1995 were $36.9 million, as
compared to $36.8 million in the comparable quarter of 1994. For the
current quarter, ongoing royalties received from licensee sales of
hepatitis B vaccines, sold by SmithKline Beecham plc ("SmithKline") and
Merck & Co., Inc. ("Merck"), increased and offset the decrease in royalties
received from Schering-Plough Corporation ("Schering-Plough"), the
Company's licensee for alpha interferon. Sales of hepatitis B vaccines
outside the United States increased 20% from the prior year quarter. The
market for hepatitis B vaccines increased significantly in Europe,
primarily in France, where a vaccination program for infants and
adolescents was instituted during 1994. It appears, however, that
hepatitis B vaccine sales in France are beginning to return to normal
levels. Alpha interferon sales by Schering-Plough declined in the current
quarter, due primarily to lower sales in Japan, which were driven by a 17%
government-mandated decrease in the price of alpha interferon, effective on
April 1, 1994, and restrictions on off-label usage.
For the current six-month period, total revenues were $72.9 million as
compared to $81.6 million in 1994. Revenues from royalties and product
sales for the current six-month period were lower than the comparable 1994
period, primarily because of the inclusion in the first quarter of 1994 of
a one-time payment of approximately $10 million from Eli Lilly & Co.
("Lilly") under a licensing agreement covering certain patent rights for
gene expression methods. Under this agreement, Lilly paid the Company in
the first quarter of 1994 approximately $10 million in royalties that
related to sales occurring in the periods before the contract was signed.
Ongoing royalties received from licensee sales of hepatitis B vaccines in
the six-month period of 1995 increased and offset the decrease in royalties
received from licensee sales of alpha interferon. Sales of hepatitis B
vaccines outside the United States increased 48% from the prior year's six-
month period and was primarily attributable to the vaccination program
instituted in France. Alpha interferon sales by Schering-Plough declined
in the current six-month period, due primarily to lower sales in Japan. In
the near term, the Company expects overall sales of licensee products to
continue at or slightly below current levels although royalty income may
fluctuate depending on changes in sales volumes for specific products.
However, there are numerous health care reform initiatives currently
underway in the United States and other major pharmaceutical markets and it
is not yet clear what effect, if any, these initiatives or other
developments may have on product sales by the Company's licensees. In
addition, these sales levels may fluctuate from quarter to quarter due to
the timing and extent of major events such as new indication approvals,
vaccination programs or licensing arrangements.
Interest income for the current quarter and six-month period increased from
the comparable 1994 amounts due primarily to higher returns on invested
funds.
Total expenses for the second quarter of 1995 were $36.0 million,
approximately the same level as the 1994 quarter. Cost of sales increased
$0.5 million and primarily represents royalty obligations to third parties.
Research and development expense decreased $5.0 million, due to the
Company's decision in the third quarter of 1994 to discontinue its major
activities associated with development of Hirulog(TM) thrombin inhibitor.
The current quarter included costs for the production of clinical material
by a contract manufacturer while the 1994 quarter had higher costs,
primarily for Hirulog(TM) clinical development. General and administrative
expenses increased by $4.4 million due mostly to higher costs for market
development efforts related to AVONEX(TM), continued development of the
Company's European headquarters in Paris and personnel-related costs.
Other expenses included the effect of foreign exchange movements associated
with the sale of certain accounts receivable and interest on debt
obligations.
For the six-month period ended June 30, 1995, total expenses were $68.9
million as compared to $67.8 million in 1994. Research and development
expenses decreased $7.9 million, primarily due to higher costs in the 1994
period that were associated with the clinical development of Hirulog(TM).
The 1995 period included costs for the production of clinical material by a
contract manufacturer. The Company expects that in the long-term research
and development expenses will increase as the Company expands its
development efforts with respect to new products and begins clinical trials
of these products. General and administrative expenses increased $6.0
million due mostly to higher costs for market development efforts related
to AVONEX(TM), continued development of the Company's European headquarters
and legal and personnel-related costs. On May 4, 1995, the Company
announced that it had filed with the European Medicines Evaluation Agency
for European market approval of AVONEX(TM) for treatment of multiple
sclerosis. On May 22, 1995, the Company announced that it had filed with
the U.S. Food and Drug Administration ("FDA") for U.S. market approval of
AVONEX(TM) for treatment of multiple sclerosis. On July 27, 1995, the
Company also announced that it filed with Canada's Health Protection Branch
for Canadian market approval of AVONEX(TM) for treatment of multiple
sclerosis. The Company expects that general and administrative expenses
will increase in the near and long term as compared to 1994 as the Company
begins to put in place the commercial infrastructure and sales and
marketing organizations necessary to sell AVONEX(TM). The anticipated
level of expense will depend on the status of regulatory approvals and the
resulting levels of commercial ramp-up activities. Other expenses included
the effect of foreign exchange movements associated with the sale of
certain accounts receivable, losses from the sale of certain marketable
securities and interest on debt obligations. In general, as development
efforts expand and as AVONEX(TM) ramp-up activities evolve, the Company
anticipates that expenses may equal or exceed revenues until such time as
the Company has successfully marketed AVONEX(TM).
Income tax expense for the 1995 and 1994 periods were substantially less
than the amount computed at U.S. federal statutory rates because of the
utilization of net operating loss carryforwards. As of December 31, 1994,
the Company had a deferred tax asset of $58 million (before valuation
allowance) consisting of the future tax benefits from net operating loss
carry forwards and other tax credits. If fully realized through sufficient
future profitability, this deferred tax asset will reduce future income tax
expense by $29 million and increase paid-in capital by $29 million. The
Company has recorded a 100% valuation allowance against the net deferred
tax asset. Realization of the deferred tax asset and future reversals of
the valuation allowance depend on the Company's ability to achieve future
profitability through earnings from existing sources and from sales of
AVONEX(TM) or other proprietary products. The timing and amount of future
earnings will depend on the Company's success in obtaining approval for and
marketing and selling AVONEX(TM) and the results of clinical trials and
commercialization and development efforts with respect to other products
under development. The Company will assess the need for the valuation
allowance at each balance sheet date based on all available evidence, in
particular the then current status of regulatory filings and
commercialization efforts related to its AVONEX(TM) product.
Under Statement of Financial Accounting Standards No. 109 (SFAS 109), the
Company would be required to recognize all or a portion of its $58.4
million deferred tax asset, with corresponding increases to net income and
paid-in capital, if it believed that it was more likely than not, given the
weight of all available evidence, that all or a portion of the benefits of
the carry forward losses and tax credits would be realized. Given the
possibility of fluctuations in the Company's revenue stream, anticipated
increases in the Company's expenses, the uncertainties involved and number
of milestones to be achieved in obtaining regulatory approval for AVONEX
and in successfully commercializing the product and the risks and
uncertainties associated with taking new products through the development
pipeline, the Company has concluded, based on the standard set forth in
SFAS 109, that it is more likely than not that the Company will not realize
any benefits from its deferred tax asset, and it has therefore recorded a
100% reserve against the asset. In making its determination under SFAS 109,
the Company considered its positive earnings history in 1992 and 1993,
although the weight given to this past history was partially offset by the
Company's loss in 1994, the increases in expenses since 1992 and the short
term nature of some of the events leading to the revenue growth in 1992 and
1993. As noted above, since the Company is not involved in the development
or sale of products by licensees, the Company is unable to accurately
predict the timing or potential impact of all of the events or trends which
may affect licensee sales or when and for how long these events or trends
are likely to affect the Company's royalty income. The Company also
considered whether to take into account potential profits the Company may
earn on sales of AVONEX , if the product is approved and successfully
marketed. The Company recognized, however, that it has never marketed or
sold its own proprietary drug and faces a number of hurdles if it is to be
successful in commercializing AVONEX , including obtaining regulatory
approval for the product and manufacturing plant, establishing customer
service, marketing and sales organizations and obtaining market acceptance
for the product. The Company viewed its lack of operating history as a
fully integrated biopharmaceutical company, the number of hurdles it faces
to successful commercialize AVONEX and the uncertainties related to the
Company's revenue stream as support for recording a 100% reserve against
its deferred tax asset under SFAS 109. The Company finally considered as
support for the reserve the Company's current expectation that, as a result
of commercialization ramp-up and pipeline expansion activities, expenses
may equal or exceed revenues until such time as the Company has profitably
marketed AVONEX . The Company will assess the need for the valuation
allowance at each balance sheet date based on all available evidence, in
particular, the then current status of regulatory filings and the
commercialization efforts related to AVONEX .
Financial Condition
At June 30, 1995, cash, cash equivalents and marketable securities amounted
to $274.6 million, a $6.8 million increase from the $267.8 million on hand
at the end of 1994. Working capital increased $16.6 million to $263.5
million. Net cash used by operating activities for the six months ended
June 30, 1995 was $2.6 million. Other outflows of cash included investments
in property and equipment and patents of $24.1 million. The Company's
common stock option and purchase plans provided $2.8 million and in the
first quarter of 1995, the Company received $25 million under a secured
term loan agreement with a bank.
In March 1995, the Company completed construction of its research
laboratory and office building in Cambridge, Massachusetts and exercised
its option to obtain a 7.5% secured loan with a bank for $25 million. The
annual principal payable in each of the years 1996 through 1999 is $1.7
million with the balance due May 8, 2005.
In the second quarter of 1995, the Company began construction of its
biologics manufacturing facility in Research Triangle Park, North Carolina.
The estimated cost of construction, including land, is $57 million. As of
June 30, 1995, the Company had commitments totaling approximately $10
million on this project. Until the facility is licensed by the FDA for the
manufacture of AVONEX(TM), the Company will manufacture AVONEX(TM) in its
Cambridge, Massachusetts facility.
In the first quarter of 1993, SmithKline initiated arbitration in the
United States regarding the rate of royalties payable from sales of
hepatitis B vaccines by SmithKline in the United States. The amount paid
by SmithKline and in dispute as of December 31, 1994, was approximately $18
million. In April 1995, an arbitration panel ruled in Biogen's favor. On
June 30, 1995, SmithKline made a motion to vacate this award in the Federal
District Court for the Southern District of New York. However, the Company
believes that an adverse ruling is not probable and, therefore, no amount
has been accrued.
The Company currently believes that the financial resources available to
it, including its current working capital and its existing and anticipated
contractual relationships, will be sufficient to finance its planned
operations and capital expenditures for the near term. However, the
Company may have additional funding needs, the extent of which will depend
upon the level of royalties and product sales, the outcome of clinical
trial programs, the receipt and timing of required regulatory approvals for
products, the results of research and development efforts and business
expansion opportunities. Accordingly, from time to time, the Company may
obtain funding through various means which could include collaborative
agreements, lease or mortgage financings, sales of equity or debt
securities and other financing arrangements.
Outlook
Having completed both of its ongoing Phase III studies and discontinued
Hirulog(TM) development in 1994, the Company has begun to expand its
development efforts related to other products in its pipeline. The
expansion of the pipeline may include increases in spending on internal
projects, the acquisition of third party technologies or products or other
types of investments. Since the Company does not currently market any
drugs directly, the Company has also begun to create a commercial
infrastructure both in the United States and in Europe to market and sell
AVONEX(TM). The timing, nature and scope of the activities related to the
building of a commercial infrastructure will depend on the status of
regulatory filing and approval activities. As development efforts expand
and as AVONEX(TM) ramp-up activities evolve, the Company anticipates that
expenses may equal or exceed revenues until such time as the Company has
successfully marketed AVONEX(TM). As a result, the Company does not expect
past operating results to be indicative of future operating results.
While in the past the Company's ability to achieve profitability has been
dependent mainly on the level of royalty revenues as compared to expenses,
in the future, profitability will be dependent on the outcome of a number
of factors. These include: the level of royalties from existing
licensees' product sales as compared to expenses, the timing and extent of
royalties from additional licensing opportunities, successful completion of
development and regulatory filing activities related to AVONEX(TM), receipt
of timely FDA and European regulatory approval for AVONEX(TM), the level of
revenues and profitability from AVONEX(TM) sales, if the product is
approved, the cost and success of developing and commercializing other
products the Company is developing and the cost and success of other
business opportunities that may arise from time to time. There can be no
assurance that the Company will achieve a positive outcome with respect to
any of these factors, or that the timing and extent of the Company's
success with respect to any combination of these factors will be sufficient
to result in the profitability of the Company.
With respect to the unaudited condensed consolidated financial information
of Biogen, Inc. and its subsidiaries at June 30, 1995 and for the three
month and six month periods ended June 30, 1995 and 1994, Price Waterhouse
LLP reported that they have applied limited procedures in accordance with
professional standards for a review of such information. However, their
separate report dated July 27, 1995 appearing herein, states that they did
not audit and they do not express an opinion on that unaudited condensed
consolidated financial information. Price Waterhouse LLP has not carried
out any significant or additional audit tests beyond those which would have
been necessary if their report had not been included. Accordingly, the
degree of reliance on their report on such information should be restricted
in light of the limited nature of the review procedures applied. Price
Waterhouse LLP is not subject to the liability provisions of Section 11 of
the Securities Act of 1933 for their report on the unaudited condensed
consolidated financial information because that report is not a "report" or
a "part" of the registration statement prepared or certified by Price
Waterhouse LLP within the meaning of sections 7 and 11 of the Act.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Biogen, Inc.
We have reviewed the accompanying condensed consolidated balance sheet of
Biogen, Inc. and its subsidiaries as of June 30, 1995, and the related
condensed consolidated statements of income for the three month and six
month periods ended June 30, 1995 and 1994 and of cash flows for the six
month periods ended June 30, 1995 and 1994. This financial information is
the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical
procedures to financial data and making inquiries of persons responsible
for financial and accounting matters. It is substantially less in scope
than an audit conducted in accordance with generally accepted audit
standards, the objective of which is the expression of an opinion regarding
the financial statements taken as a whole. Accordingly, we do not express
such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying condensed consolidated financial
information for it to be in conformity with generally accepted accounting
principles.
We previously audited in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1994, and the
related consolidated statements of income, of cash flows and of
shareholders' equity for the year then ended (not presented herein), and in
our report dated February 7, 1995 we expressed an unqualified opinion on
those consolidated financial statements. In our opinion, the information
set forth in the accompanying condensed consolidated balance sheet as of
December 31, 1994, is fairly stated in all material respects in relation to
the consolidated balance sheet from which it has been derived.
/s/ Price Waterhouse LLP
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Boston, Massachusetts
July 27, 1995
II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders
(a) The information set forth in this Item 4 relates to matters
submitted to a vote at the Annual Meeting of Stockholders of
Biogen, Inc. on June 23, 1995.
(b) Not Applicable
(c) A proposal to elect Alan Belzer, Kenneth Murray and James W.
Stevens to serve for three year terms ending in 1998 and until
their successors are duly elected and qualified was approved with
the following vote:
Nominee For Against
Alan Belzer 27,041,399 390,143
Kenneth Murray 27,046,794 384,748
James W. Stevens 27,043,679 387,863
A proposal to ratify the selection of Price Waterhouse LLP as the
Company's independent accountants for the fiscal year ending
December 31, 1995 was approved with 27,326,966 affirmative votes
and 32,368 negative votes cast along with 72,208 abstentions.
A proposal to increase by 2,000,000 the aggregate number of
shares available for the grant of options under the 1985 Non-
Qualified Stock Option Plan and the 1982 Incentive Stock Option
Plan (the "Plans") and amendments to the Plans to limit to
600,000 the number of shares with respect to which options may be
granted under each Plan to any person in any year was approved,
with 17,394,493 affirmative votes and 6,138,604 negative votes
cast along with 156,627 abstentions and 3,741,818 broker non-
votes.
(d) Not applicable
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
No. 10.1 1985 Non-Qualified Stock Option Plan, as amended
through April 25, 1995.
No. 10.2 1982 Incentive Stock Option Plan, as amended through
April 25, 1995.
No. 11 Computation of Earnings per Share.
No. 15 Letter from Price Waterhouse LLP.
(b) There were no reports on Form 8-K filed for the quarter ended
June 30, 1995.
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.
BIOGEN, INC.
Dated: September 7, 1995 /s/Timothy M. Kish
----------------------------------
Timothy M. Kish
Vice President-Finance and
Chief Financial Officer
EXHIBITS
Index to Exhibits.
No. 10.1 1985 Non-Qualified Stock Option Plan.*
No. 10.2 1982 Incentive Stock Option Plan.*
No. 11 Computation of Earnings per Share.*
No. 15 Letter from Price Waterhouse.
* Exhibit was not refiled with this Form 10-Q/A
EXHIBIT 15
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sirs:
We are aware that our report dated July 27, 1995 (issued pursuant to the
provisions of Statement on Auditing Standards No. 71) on the unaudited
condensed consolidated balance sheet of Biogen, Inc. and subsidiaries at
June 30, 1995, and the related condensed consolidated statements of income
for the three month and six month periods then ended and of cash flows for
the six month period then ended, is incorporated by reference in the
Prospectuses constituting part of its Registration Statements on Form S-3,
as amended (Nos. 33-14741, 33-14743, 33-20183 and 33-51639) and on Form
S-8, as amended (Nos. 2-87550, 2-96157, 33-9827, 33-14742, 33-37312, 33-
22378, 33-41077 and 33-69174). We are also aware of our responsibilities
under the Securities Act of 1933.
Yours very truly,
/s/ Price Waterhouse LLP
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Boston, Massachusetts
September 7, 1995