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 September 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 September 30, 1996, 21,656,918 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 5-8
Part II Other Information 8-10
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)
September 30, December 31,
1996 1995
---------- ----------
ASSETS: (Unaudited)
Cash and cash equivalents $ 3,364 $14,165
Marketable securities 120,648 23,874
Trade and contract receivables, net 7,080 3,919
Inventory, net 7,652 6,027
Other current assets 1,002 1,005
---------- ----------
Total Current Assets 139,746 48,990
Property and equipment, net 18,807 8,255
Other assets 2,138 87
---------- ----------
Total Assets $160,691 $57,332
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Accounts payable $2,614 $2,318
Accrued expenses 8,147 6,538
Product royalties payable 991 1,776
Accrued interest payable 975 --
Other current liabilities 115 111
---------- ----------
Total Current Liabilities 12,842 10,743
Long term debt 63,328 1,984
Other liabilities 978 826
---------- ----------
Total Liabilities 77,148 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; 217 177
authorized 60,000,000 shares;
issued and outstanding 21,656,918
at September 30, 1996 and
17,706,137 at December 31, 1995
Paid-in capital 171,929 113,435
Accumulated deficit (88,603) (69,833)
---------- ----------
Total Shareholders' Equity 83,543 43,779
---------- ----------
Total Liabilities and $160,691 $57,332
Shareholders' Equity ========== ==========
The accompanying notes are an integral part of these financial statements
PAGE (1)
MEDIMMUNE, INC
STATEMENTS OF OPERATIONS
(in thousands except per share data)
For the three months For the nine months
ended ended
September 30, September 30,
1996 1995 1996 1995
-------- -------- -------- --------
REVENUES:
Product Sales $4,632 $3,821 $18,086 $11,121
Contracts 148 2,843 5,055 9,330
-------- -------- -------- --------
Total revenues 4,780 6,664 23,141 20,451
-------- -------- -------- --------
COSTS AND EXPENSES:
Cost of sales 2,924 2,295 11,046 7,763
Research and development 7,817 5,965 20,059 20,524
Selling, administrative 5,043 2,511 13,602 7,169
and general
-------- -------- -------- --------
Total expenses 15,784 10,771 44,707 35,456
-------- -------- -------- --------
Operating Loss (11,004) (4,107) (21,566) (15,005)
Interest income 1,806 423 3,880 1,112
Interest expense (964) (62) (1,084) (188)
-------- -------- -------- --------
Net Loss ($10,162) ($3,746) ($18,770) ($14,081)
======== ======== ======== ========
Loss Per Common Share ($0.47) ($0.22) ($0.90) ($0.90)
======== ======== ======== ========
Shares Used in Computing
Loss Per Share 21,656 16,722 20,782 15,600
======== ======== ======== ========
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 nine months ended
September 30,
1996 1995
-------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($18,770) ($14,081)
Noncash items:
Depreciation and amortization 1,337 1,158
Amortization of discount on (494) (372)
marketable securities
Allowance for bad debt 739 --
Other changes in assets and liabilities (5,332) 1,581
-------- ---------
Net cash used in operating activities (22,520) (11,714)
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in marketable securities (96,280) (3,341)
Capital expenditures (11,889) (775)
-------- ---------
Net cash used in investing activities (108,169) (4,116)
-------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common 58,534 17,214
stock and exercise of stock options
Increase (decrease) in long term debt 61,354 (70)
-------- ---------
Net cash provided by financing 119,888 17,144
activities
-------- --------
Net (decrease) increase in cash and cash (10,801) 1,314
equivalents -------- ---------
Cash and cash equivalents at beginning 14,165 6,350
of period -------- ---------
Cash and cash equivalents at end of period $3,364 $7,644
======== =========
The accompanying notes are an integral part of these financial statements.
Page (3)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
General
The financial information presented as of September 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):
September 30, December 31,
1996 1995
------------ ---------------
Raw Materials $2,048 $2,193
Work in Process 2,417 2,510
Finished Goods 3,187 1,324
------ ------
$7,652 $6,027
====== ======
PROPERTY AND EQUIPMENT
Property and equipment at September 30 includes $0.1 million of
capitalized interest related to the design and construction of
the Company's manufacturing facility and expansion of its pilot
plant.
Page (4)
ITEM 2.
MEDIMMUNE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
Product sales grew to $4.6 million in third quarter 1996 from
$3.8 million in third quarter 1995, an increase of 21%. CytoGam
sales increased 28% to $4.9 million, primarily as a result of a
25% increase in vials sold, as well as a price increase which
took effect in mid-1996. Sales of the Company's second product,
RespiGam, approved for marketing by the U. S. Food and Drug
Administration ("FDA") on January 18, 1996, were $0.5 million for
the three months. Sales of RespiGam are expected principally
during the RSV season which typically occurs from November
through April. In addition, a charge of $0.7 million was recorded
against product sales for trade receivables due from a
pharmaceutical wholesaler, which filed for Chapter 11 bankruptcy
in August 1996. Contract revenue in the 1996 third quarter
decreased to $0.1 million from $2.8 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, reimbursements or payments under
this arrangement are deducted from or added to operating
expenses.
Cost of sales increased to $2.9 million in third quarter 1996
from $2.3 million in third quarter 1995, an increase of 27%.
This increase was primarily attributable to a 25% 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"). Cost
of sales was also reduced by a $0.3 million credit for RespiGam
inventory written off in first quarter 1996 that is now expected
to be available for sale in the fourth quarter. Research and
development spending increased 31% to $7.8 million in this year's
quarter compared to $6.0 million in the 1995 quarter. 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 completing RespiGam Phase 3 clinical trials.
Selling, administrative and general expenses increased to $5.0
million in this year's quarter versus $2.5 million in the 1995
third quarter, an increase of 101%. This increase was primarily
a result of marketing expenses incurred for RespiGam and expenses
Page 5
associated with the expanded sales force, partially offset by
reimbursement from AHP of its share of RespiGam product line loss
for the quarter, as well as a $0.2 million increase in general
and administrative expenses.
Interest income of $1.8 million was earned in the 1996 third
quarter, compared to $0.4 million in the third quarter of 1995,
reflecting higher cash balances available for investment, as a
result of the debt and equity offerings in 1996. This was
partially offset by a decrease in interest rates which lowered
the overall portfolio yield. Interest expense of $1.0 million
was incurred in the 1996 quarter versus $0.1 million in the 1995
quarter reflecting interest due on the convertible subordinated
notes that were issued July 8, 1996.
The net loss incurred in the 1996 third quarter of $10.2 million,
or $.47 per common share, compared to a net loss for the third
quarter of 1995 of $3.7 million, or $.22 per common share.
Shares used in computing loss per share were 21.7 million and
16.7 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 fourth
quarter of 1996, the Company anticipates substantial increases in
research and development expenses, primarily reflecting costs of
the MEDI-493 clinical trial program as well as increased sales
and marketing expenses for RespiGam. Raw material supply as well
as production capacity may impose constraints on finished product
availability of CytoGam and RespiGam.
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
Product sales for the nine months ended September 30, 1996
increased 63% to $18.1 million compared to $11.1 million in the
1995 period. Sales of CytoGam increased 38% to $15.3 million in
this year's period from $11.1 million in the 1995 period,
reflecting a 33% increase in units sold as well two price
increases since mid-1995. RespiGam sales were $3.5 million in
the 1996 period following receipt of marketing approval from the
FDA on January 18, 1996. Product sales were reduced by a $0.7
million charge in the 1996 third quarter for trade receivables
due from a pharmaceutical wholesaler which filed Chapter 11
bankruptcy in August 1996. Contract revenue in the 1996 nine
Page (6)
months decreased to $5.1 million from $9.3 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 period rose to $11.0 million from $7.8
million in the 1995 period, reflecting a 33% 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 per-
unit cost in order to meet product demand due to supply
shortages. Research and development spending was relatively flat
at $20.1 million in this year's nine months versus $20.5 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 $13.6 million in
the 1996 nine months versus $7.2 million in the 1995 period
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 the 1996 period include charges of
$0.8 million associated with the Company's manufacturing
facility.
Interest income of $3.9 million was earned in the 1996 nine
months, compared to $1.1 million in the 1995 period, reflecting
higher cash balances available for investment, partially offset
by a decrease in interest rates which lowered the overall
portfolio yield. Interest expense of $1.1 million was incurred
in the 1996 period versus $0.2 million in the 1995 period. This
increase primarily reflects the first quarter of interest due on
the Company's convertible subordinated notes.
The net loss incurred in the 1996 period of $18.8 million, or
$.90 per common share, compared to a net loss for the 1995 period
of $14.1 million, or $.90 per common share. Shares used in
computing loss per share were 20.8 million and 15.6 million for
the nine months ending 1996 and 1995, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Cash and marketable securities at September 30, 1996 were $124.0
million compared to $38.0 million at 1995 year end. Net cash
used in operating activities in the nine months ended
September 30, 1996 was $22.5 million, reflecting primarily the
net loss for the period, an increase in trade and contract
receivables, and a $2.7 million contractual payment to Connaught,
offset by increased accrued expenses, including primarily
clinical trial costs. Capital expenditures of $11.9 million for
Page (7)
the nine months were primarily for design and construction of a
new manufacturing facility and for lab equipment. 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 million shares of common
stock resulting in net proceeds of $58 million. Additionally, on
July 8, 1996, the Company completed an offering of $60 million
aggregate principal amount of 7% convertible subordinated notes
due 2003 for net proceeds of $58 million. Proceeds of the note
offering will be used for general corporate purposes, including
funding capital expenditures associated with the construction of
the Company's new manufacturing facility and expansion of its
pilot plant.
____________________
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:
On May 14, 1996 the Company held its Annual Meeting of
Stockholders. By vote of the Company's stockholders at such
meeting, all of the director nominees were re-elected to one-year
terms and the appointment of Coopers & Lybrand L.L.P. as the
Company's independent auditors was approved. The results of the
voting was as follows:
Page (8)
Election of Directors
Abstain/
For Against Withheld Non-vote
Wayne T. Hockmeyer 16,131,115 -- * --
David M. Mott 16,131,115 -- * --
Franklin H. Top, Jr. 16,131,115 -- * --
M. James Barrett 16,131,115 -- * --
James H. Cavanaugh 16,131,115 -- * --
Barbara Hackman Franklin 16,131,115 -- * --
Lawrence C. Hoff 16,131,115 -- * --
Gordon S. Macklin 16,131,115 -- * --
* Only a minor number of votes withheld authority to vote for various
individual directors, the highest as to any one director being
57,155.
Appointment of Independent Auditors
Coopers & Lybrand L.L.P. 16,154,765 25,855 -- 7,650
On August 5, 1996, the Company held a special meeting of
Stockholders. By vote of the Company's stockholders at such
meeting, an amendment to the Company's Restated Certificate of
Incorporation increasing the number of shares of Common Stock that
the Company is authorized to issue to 60,000,000 from 30,000,000
was approved. The results of the voting were as follows:
Abstain/
For Against Withheld Non-vote
18,697,130 1,077,001 -- 30,680
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
None
(b) Reports on Form 8-K:
Report Date Event reported
6/26/96 MedImmune In-License Key Human
Papillomavirus Vaccine Intellectual
Property from German Cancer Research
Center
Page (9)
7/2/96 MedImmune Submits Application for
Approval of RespiGam in Canada
MedImmune Places $60 Million in 7%
Convertible Subordinated Notes -
Transaction Expected to Close July 8,
1996
7/25/96 MedImmune Reports Record Product Sales
8/12/96 MedImmune Announces Facility Expansion
in Maryland
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: November 14, 1996 /s/David M. Mott
President and
Chief Operating Officer
(Principal accounting and
financial officer)
Page (10)