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 June 30, 1996
Commission File No. 0-19131
MEDIMMUNE, INC.
(Exact name of registrant as specified in its charter)
Delaware 52-1555759
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
35 West Watkins Mill Road, Gaithersburg, MD 20878
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (301) 417-0770
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 [ ]
As of June 30, 1996, 21,655,284 shares of Common Stock, par value
$0.01 per share, were outstanding.
MEDIMMUNE, INC.
Index to Form 10-Q
Part I Financial Page
Item 1. Financial Statements
Balance Sheets 1
Statements of Operations 2
Condensed Statements of Cash Flows 3
Notes to Financial Statements 4
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 5-7
Part II Other Information 8-9
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security
Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
CytoGam is a registered trademark and
RespiGam is a trademark of the Company.
ITEM 1. FINANCIAL STATEMENTS
MEDIMMUNE, INC. BALANCE SHEETS
(in thousands, except share data)
June 30, December 31,
1996 1995
---------- ----------
ASSETS: (Unaudited)
Cash and cash equivalents $9,743 $14,165
Marketable securities 71,324 23,874
Trade and contract receivables, net 7,573 3,919
Inventory, net 6,173 6,027
Other current assets 885 1,005
---------- ----------
Total Current Assets 95,698 48,990
Property and equipment, net 10,445 8,255
Other assets 152 87
---------- ----------
Total Assets $106,295 $57,332
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Accounts payable $1,367 $2,318
Accrued expenses 6,526 6,538
Product royalties payable 1,743 1,776
Other current liabilities 114 111
---------- ----------
Total Current Liabilities 9,750 10,743
Long term debt 1,926 1,984
Other liabilities 925 826
---------- ----------
Total Liabilities 12,601 13,553
---------- ----------
Commitments and Contingencies
SHAREHOLDERS' EQUITY:
Preferred stock, $.01 par value; authorized -- --
5,524,525 shares; none issued or outstanding
Common stock, $.01 par value; authorized 216 177
30,000,000 shares; issued and outstanding
21,655,284 at June 30, 1996 and
17,706,137 at December 31, 1995
Paid-in capital 171,919 113,435
Accumulated deficit (78,441) (69,833)
---------- ----------
Total Shareholders' Equity 93,694 43,779
---------- ----------
Total Liabilities and Shareholder's Equity $106,295 $57,332
========== ==========
The accompanying notes are an integral part of these financial
statements.
Page 1
MEDIMMUNE, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands except per share data)
For the three For the six
months ended months ended
June 30 June 30,
1996 1995 1996 1995
-------- -------- -------- --------
REVENUES:
Product Sales $6,830 $4,236 $13,454 $7,300
Contracts 97 3,624 4,907 6,487
-------- -------- -------- --------
Total revenues 6,927 7,860 18,361 13,787
-------- -------- -------- --------
COSTS AND EXPENSES:
Cost of sales 4,063 2,911 8,122 5,468
Research and development 6,849 7,991 12,242 14,559
Selling, administrative and 4,202 2,138 8,559 4,658
general
-------- -------- -------- --------
Total expenses 15,114 13,040 28,923 24,685
-------- -------- -------- --------
Operating Loss (8,187) (5,180) (10,562) (10,898)
Interest income 1,206 374 2,074 690
Interest expense (59) (63) (120) (127)
-------- -------- -------- --------
Net Loss ($7,040) ($4,869) ($8,608) ($10,335)
======== ======== ======== ========
Loss Per Common Share ($0.33) ($0.32) ($0.42) ($0.69)
======== ======== ======== ========
Shares Used in Computing
Loss Per Share 21,386 15,436 20,340 15,029
======== ======== ======== ========
The accompanying notes are an integral part of these financial
statements.
PAGE 2
MEDIMMUNE, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
For the
six months ended
June 30,
1996 1995
-------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES: ($8,608) ($10,335)
Net loss
Noncash items:
Depreciation and amortization 881 767
Amortization of discount on marketable (302) (167)
securities
Other changes in assets and liabilities (4,646) 1,838
-------- ---------
Net cash used in operating activities (12,675) (7,897)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
(Increase)decrease in marketable securities (47,148) 2,143
Capital expenditures (3,071) (412)
-------- ---------
Net cash (used in)/provided by (50,219) 1,731
investing activities -------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common 58,523 17,233
stock and exercise of stock options
Decrease in long term debt (51) (46)
-------- ---------
Net cash provided by financing 58,472 17,187
activities
-------- --------
Net (decrease) increase in cash and cash (4,422) 11,021
equivalents
Cash and cash equivalents at beginning 14,165 6,350
of period -------- ---------
Cash and cash equivalents at end of period $9,743 $17,371
======== =========
The accompanying notes are an integral part of these financial
statements.
PAGE 3
MEDIMMUNE, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
General
The financial information presented as of June 30, 1996 and 1995,
and for the periods then ended is unaudited, but in the opinion
of the Company's management contains all adjustments (which
consist only of normal recurring adjustments) necessary for a
fair presentation of such financial information.
Inventory
Inventory is comprised of the following (in thousands):
June 30, 1996 December 31, 1995
------------ ---------------
Raw Materials 1,433 $2,193
Work in Process 3,653 2,510
Finished Goods 1,087 1,324
------ ------
6,173 $6,027
====== ======
SUBSEQUENT EVENTS
The Company broke ground on August 12, 1996 on its approximately
$50 million manufacturing facility. On July 31, 1996, the Company
purchased two adjacent parcels of land in Frederick, Maryland,
totaling 26 acres, for $1.5 million. Additionally, on August 9,
1996, the Company signed an Engineering, Procurement, Construc-
tion and Validation Agreement with Fluor Daniel to design, build,
equip and validate the facility. The financing for the new
facility is expected to be provided by a combination of $13
million of State, Frederick County and Frederick City loans and
the proceeds from the recently completed convertible debt
offering.
The Company also has begun work on a $6 million expansion of its
Gaithersburg, Maryland pilot plant facility for production of
products undergoing human clinical evaluation. Construction of
the pilot plant is expected to be completed in 1997.
PAGE 4
ITEM 2.
MEDIMMUNE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1996 AND 1995
Product sales grew to $6.8 million in second quarter 1996 from
$4.2 million in second quarter 1995, an increase of 61%. CytoGam
sales increased to $6.3 million, or 49%, primarily as a result of
a 44% increase in vials sold, as well as a price increase which
took effect in mid-1995. Sales of the Company's second product,
RespiGam, amounting to $0.5 million, are expected principally
during the RSV season which typically occurs from November
through April. Contract revenue in the 1996 second quarter
decreased to $0.1 million from $3.6 million in the 1995 quarter,
reflecting the completion of milestone and research funding
payments under the Company's strategic alliance with American
Home Products ("AHP"), formerly American Cyanamid Company. Under
the terms of the alliance, the Company and AHP will share in the
profits or losses of RespiGam, sales for which commenced January,
1996; reimbursements or payments under this arrangement are
deducted from or added to operating expenses.
Cost of sales increased to $4.1 million in second quarter 1996
from $2.9 million in second quarter 1995 an increase of 40%.
This increase was primarily attributable to a 44% increase in
unit volume for CytoGam and the addition of cost of sales for
RespiGam, offset by a reduction in the royalty paid on CytoGam
sales in the 1996 period as a result of an amendment to the
agreement with Connaught Laboratories, Inc. ("Connaught")
Research, development and clinical spending was $6.8 million in
this year's quarter compared to $8.0 million in the 1995 quarter,
a decrease of 14%. Research and development expenses incurred in
1996 include costs of conducting the Company's MEDI-493 (RSV
monoclonal antibody) and MEDI-500 (T10B9) clinical trials, while
1995 expenses included the costs of conducting RespiGam Phase 3
clinical trials. The 1996 quarter also includes a $0.5 million
payment to Rockefeller University for a worldwide exclusive
license to commercialize Rockefeller's Streptococcus pneumoniae
technology. Selling, administrative and general expenses
increased to $4.2 million in this year's quarter versus $2.1
million in the 1995 quarter, an increase of 97%. This increase
was primarily a result of marketing expenses incurred for
RespiGam and the first full quarter of expenses associated with
the expanded sales force, partially offset by reimbursement from
AHP of their share of RespiGam product line loss for the quarter,
as well as a $0.6 million increase in general and administrative
expenses primarily due to charges of $0.4 million for costs
PAGE 5
incurred in connection with the Company's proposed manufacturing
facility.
Interest income of $1.2 million was earned in the 1996 second
quarter, compared to $0.4 million in the second quarter of 1995
reflecting higher cash balances available for investment,
partially offset by a decrease in interest rates which lowered
the overall portfolio yield. Interest expense of $0.1 million
was incurred in both the 1996 and 1995 quarters.
The net loss incurred in the 1996 second quarter of $7.0 million,
or $.33 per common share, compared to a net loss for the second
quarter of 1995 of $4.9 million, or $.32 per common share.
Shares used in computing loss per share were 21.4 million and
15.4 million for the 1996 and 1995 quarters, respectively.
These results were consistent with the Company's objectives for
the quarter and with the continued development of its
immunotherapeutic and vaccine products. Quarterly financial
results may vary significantly due to seasonality of RespiGam
product sales, fluctuation in sales of CytoGam, research funding
and expenditures for research, development and marketing
programs. RespiGam sales are expected to occur primarily during,
and in proximity to, the RSV season, which typically occurs
between November and April in the United States. In the third
and fourth quarters of 1996, the Company anticipates substantial
increases in research and development expenses, primarily
reflecting costs of MEDI-493 and MEDI-500 clinical trial
programs. Production capacity may impose constraints on finished
product availability of CytoGam and RespiGam.
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
Total revenue for the six months ended June 30, 1996 was $18.4
million compared to $13.8 million in the 1995 first half. Sales
of CytoGam increased to $10.5 million in this year's first half
from $7.3 million in the 1995 period, reflecting a 37% increase
in units sold as well a price increase in mid-1995. RespiGam
sales were $3.0 million in the first half of 1996 following
receipt of marketing approval from the U. S. Food and Drug
Administration ("FDA") on January 18, 1996. Contract revenue in
the 1996 first half decreased to $4.9 million from $6.5 million
in the 1995 period, primarily reflecting funding provided under
the Company's strategic alliance with American Home Products.
Cost of sales in the 1996 first half rose to $8.1 million from
$5.5 million in the 1995 period, reflecting a 37% increase in
unit volume of CytoGam and the addition of cost of sales for
RespiGam. Cost of sales for both periods include the purchase of
certain finished product inventory from a third party at a higher
PAGE 6
per-unit cost in order to meet product demand due to supply
shortages. Research, development and clinical spending decreased
16% to $12.2 million in this year's first half versus $14.6
million in the 1995 period. Expenses in the 1996 period include
the costs of conducting MEDI-493 (RSV monoclonal antibody) and
MEDI-500 (T10B9) clinical trials. Expenses in the 1995 period
included the costs of Phase 3 RespiGam clinical trials. Selling,
administrative and general expenses increased to $8.6 million in
first half 1996 versus $4.7 million in first half 1995 primarily
reflecting costs of marketing RespiGam and the expansion of the
sales force, partially offset by AHP reimbursement of their share
of RespiGam product line loss. Administrative expenses for first
half 1996 included a charge of $0.4 million associated with the
Company's proposed manufacturing facility.
Interest income of $2.1 million was earned in the 1996 first
half, compared to $0.7 million in the first half of 1995,
reflecting higher cash balances available for investment,
partially offset by a decrease in interest rates which lowered
the overall portfolio yield. Interest expense of $0.1 million
was incurred in both the 1996 and 1995 periods.
The net loss incurred in the 1996 first half of $8.6 million, or
$0.42 per common share, compared to a net loss for the first half
of 1995 of $10.3 million, or $0.69 per common share. Shares used
in computing loss per share were 20.3 and 15.0 million for 1996
and 1995, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Cash and marketable securities at June 30, 1996 were $81.1
million compared to $38.0 million at 1995 year end. Net cash
used in operating activities in the six months ended June 30,
1996 was $12.7 million, reflecting primarily the net loss for the
period, an increase in accounts receivable, and a $2.7 million
contractual payment to Connaught, offset by increased accruals
for clinical trial expenses. Capital expenditures of $3.1
million for the six months were primarily for lab equipment and
initial design of a new manufacturing facility. The Company
expects to invest approximately $56 million in expansion of its
pilot plant facility and on construction of a manufacturing
facility during 1996 and 1997. In February 1996, the Company
completed a public offering of 3.45 milion shares of common stock
resulting in net proceeds of $58 million. Additionally, on
July 8, 1996, the Company completed a convertible subordinated
note offering for net proceeds of $58.0 million. The 7% notes,
due 2003, will be used for the construction of the manufacturing
facility, the development pilot plant and general corporate
purposes.
PAGE 7
____________________
THE STATEMENTS IN THIS QUARTERLY REPORT THAT ARE NOT DESCRIPTIONS
OF HISTORICAL FACTS MAY BE FORWARD-LOOKING STATEMENTS. SUCH
STATEMENTS REFLECT MANAGEMENT'S CURRENT VIEWS, ARE BASED ON
CERTAIN ASSUMPTIONS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES,
INCLUDING BUT NOT LIMITED TO, FACTORS SUCH AS PRODUCT DEMAND AND
MARKET ACCEPTANCE RISKS, THE EARLY STAGE OF PRODUCT DEVELOPMENT,
COMMERCIALIZATION AND TECHNOLOGICAL DIFFICULTIES, CAPACITY AND
SUPPLY CONSTRAINTS AND OTHER RISKS DETAILED IN THE COMPANY'S
FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. ACTUAL
RESULTS COULD DIFFER MATERIALLY FROM THOSE CURRENTLY ANTICIPATED
AS A RESULT OF THE FOREGOING OR OTHER FACTORS.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Defaults upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders -
[Change in number of authorized shares]
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
10.57 Plasma Supply Agreement dated effective as
of February 8, 1996, by and between DCI Management
Group, Inc. and MedImmune, Inc.
10.58 License and Research Suport Agreement dated
as of April 16, 1996, between The Rockefeller
University and MedImmune, Inc.
(b) Reports on Form 8-K:
Report Date Event reported
4/18/96 MedImmune and Rockefeller University
Establish Collaboration to Discover
and Commercialize Products for
Prevention and Treatment of
PAGE 8
Streptococcus Pneumoniae
4/25/96 MedImmune Reports Product Sales
Increase 116% for Q1 1996
6/6/96 MedImmune Secured Broad Patent
Coverage for Human B19 Parvovirus
Vaccine
6/20/96 MedImmune Announces Proposed Private
Offering of Convertible Debt
MedImmune Reports Data on New Lyme
Disease Vaccine Candidate at
International Lyme Meeting -
Antibodies to Newly Discovered Decorin
Binding Protein Prevent Infection in
Animals
6/20/96 MedImmune In-Licenses Key Human
Papillomavirus Vaccine Intellectual
Property from German Cancer Research
Center
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.
MEDIMMUNE, INC.
(Registrant)
Date: August 14, 1996 /s/David M. Mott
President and
Chief Operating Officer
(Principal accounting and
financial officer)
PAGE 9