SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the year ended December 31, 1996 Commission File Number: 0-19131
MEDIMMUNE, INC.
(Exact name of registrant as specified in its charter)
Delaware 52-1555759
State or other (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or organization)
35 West Watkins Mill Road
Gaithersburg, Maryland 20878
(Address of principal executive office)
(Zip Code)
Registrant's telephone number, including area code: (301) 417-0770
Securities Registered pursuant to Section 12(b) of the Act: None
Securities Registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes: X No:
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K [ ].
Aggregate market value of the 20,243,426 shares of voting stock held by
non-affiliates of the registrant based on the closing price on
February 28, 1997 was $293,529,677. Common Stock outstanding as of
February 28, 1997: 21,898,698 shares.
Documents Incorporated by Reference:
Document Part of Form 10-K
Proxy Statement for the Annual Meeting Part III
of Stockholders to be held May 16, 1997
MEDIMMUNE, INC.
FORM 10-K
TABLE OF CONTENTS
PART I PAGE
Item 1. Business 1
Item 2. Properties 30
Item 3. Legal Proceedings 31
Item 4. Submission of Matters to a Vote of Security Holders 31
PART II
Item 5. Market for MedImmune, Inc.'s Common Stock and Related
Shareholder Matters 31
Item 6. Selected Financial Data 32
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 32
Item 8. Financial Statements and Supplementary Data 41
Report of Independent Accountants 67
Report of Management 69
Item 9. Changes in and Disagreements with Accountants on
Accounting Financial Disclosure 70
PART III
Item 10. Directors and Executive Officers of MedImmune, Inc. 70
Item 11. Executive Compensation 71
Item 12. Security Ownership of Certain Beneficial Owners and
Management 71
Item 13. Certain Relationships and Related Transactions 71
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND
REPORTS ON FORM 8-K 72
SIGNATURES 74
Schedule I S-1
Exhibit Index E1-E5
Exhibits (Attached to this Report on Form 10-K)
CytoGam is a registered trademark and RespiGam is a trademark of
the Company.
____________________
THE STATEMENTS IN THIS ANNUAL 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 I
ITEM 1. BUSINESS
MedImmune ("the Company") is a biotechnology company focused on
developing and marketing products for infectious diseases and
transplantation medicine. Since commencing operations in 1988,
the Company has pursued a strategy of establishing an initial
commercial base using proven technologies and targeting
well-understood diseases to support longer-term product
development. This strategy has relied on the advancement of an
internally developed pipeline of product candidates and on
in-licensing products from third parties.
The Company is currently marketing two products, CytoGam
(Cytomegalovirus Immune Globulin Intravenous (Human), CMV-IGIV)
and RespiGam (Respiratory Syncytial Virus Immune Globulin
Intravenous (Human), RSV-IGIV). The Company has established core
competencies in transplantation and infectious diseases and has a
research and development portfolio which includes six products
now
1
undergoing clinical trials, including two in Phase 3 studies and
a number of product candidates in preclinical development.
Products on the Market.
RespiGam
RespiGam is marketed for the prevention of serious respiratory
syncytial virus ("RSV") disease in children under 24 months of
age with a lung condition called bronchopulmonary dysplasia
("BPD") or a history of premature birth (i.e., born at 35 weeks
or less gestation). RespiGam is the only product demonstrated to
be safe and effective in reducing the incidence and duration of
RSV hospitalization and the severity of RSV illness in these high
risk infants.
RespiGam is a specialty immune globulin purified from donor
plasma screened to have high levels of neutralizing antibodies
against RSV. RSV is the leading cause of pneumonia and
bronchiolitis in children and results in an estimated 90,000
hospitalizations and 4,500 deaths annually in the United States.
RSV outbreaks occur worldwide, usually during the late fall,
winter and early spring. Certain populations of infants, children
and adults are at increased risk for developing severe RSV
disease. These include severely premature infants (i.e., less
than or equal to 32 weeks gestation) and infants with BPD. There
are approximately 100,000 children in this high-risk group in the
United States.
The Company directly markets RespiGam in the leading 420 neonatal
and pediatric hospitals in the United States. These hospitals
comprise approximately 70% of the total potential business for
RespiGam. The Company's direct marketing efforts are
supplemented
2
by the Wyeth-Lederle Vaccines and Pediatrics sales force of Wyeth-
Ayerst Laboratories (a division of American Home Products
Corporation ("AHP")), one of the leading pharmaceutical companies
focused on pediatric medicine. AHP has focused on promoting
RespiGam to physicians in smaller hospitals and to office-based
pediatricians. The Company submitted an application to Canadian
regulatory authorities during 1996 to request approval to market
RespiGam. There can be no assurance that such a license will be
granted, or, if granted, that licensure will occur in a timely
manner.
The Company has established a collaboration with Baxter
Healthcare Corporation ("Baxter"), one of the leading producers
and marketers of immune globulins worldwide, to commercialize
RespiGam outside North America. The Company has been advised
that Baxter expects to file regulatory applications in Europe
during 1997 seeking a license to market RespiGam throughout
Europe (see "Collaborative Agreements"). There can be no
assurances that such a license or licenses will be granted, or,
if granted, that licensure will occur in a timely manner.
After receiving approval from the United States Food & Drug
Administration ("FDA") for the marketing of RespiGam in January
1996, the Company launched RespiGam for its first full RSV season
during fourth quarter 1996. Sales of RespiGam in the fourth
quarter were $13.9 million. The Company was supply-constrained
in the fourth quarter and expects to be limited in its supply of
RespiGam in the first quarter 1997. The Company has worked
closely with its contract manufacturers to increase product
supply for the 1997-1998 RSV season. While the Company believes
it will
3
be successful in achieving this goal, there can be no assurances
that demand will not exceed supply during subsequent RSV seasons.
CytoGam
CytoGam is marketed for the attenuation of primary
cytomegalovirus ("CMV") disease associated with kidney
transplantation. Approximately 75% of untreated donor-
positive/recipient-negative kidney transplant recipients are
expected to develop CMV disease. Infection of a transplant
recipient with CMV by a donor organ is associated with increased
mortality and substantial morbidity including pneumonia,
hepatitis, opportunistic infections and possibly graft rejection.
CytoGam is a specialty immune globulin product enriched in
antibodies against CMV. CytoGam has been shown to reduce the
incidence of severe CMV disease and opportunistic infections
associated with kidney transplantation. The Company began
marketing CytoGam through its own hospital-based sales force in
1993. Sales of CytoGam have grown at a compounded annual rate of
approximately 30% since 1993 to $18.4 million in 1996. While
sales growth has been strong, the Company expects to continue to
face increasing pressure from cost containment efforts as well as
competition from other effective anti-viral therapies.
Products in Development
MEDI-493 RSV Monoclonal Antibody
MEDI-493 is a humanized monoclonal antibody being evaluated in
clinical studies for the prevention of RSV disease in high-risk
infants (see "RespiGam" above). MEDI-493 is administered by
intramuscular injection and consequently has the potential to
enhance patient care, reduce costs associated with drug
administration and improve convenience for parents, physicians
and
4
nurses. Taken together, the Company believes these benefits may
provide the potential to reach a broader population of children
with MEDI-493 than with RespiGam.
The Company has tested MEDI-493 in Phase 1 and Phase 2 clinical
trials involving approximately 300 patients for both prevention
and treatment of RSV disease. During the 1996-1997 RSV season,
the Company is evaluating MEDI-493 in a Phase 3 clinical trial,
IMpact-RSV, being conducted at 139 medical centers in 1,502 high-
risk infants and children in the United States, Canada and the
United Kingdom. The Company expects to complete the trial in May
1997 and announce results during the third quarter. While the
Company believes it has established a rapid and comprehensive
development program for MEDI-493, substantial risk remains,
including: 1) no assurances can be given that the clinical trial
will show with statistical significance that MEDI-493 is safe and
effective in preventing RSV-associated hospitalization; 2)no
assurances can be given that an observed effect, if any, will be
great enough to warrant commercialization; 3)no assurances can be
given that the FDA will license the drug for marketing; and 4)no
assurances can be given that if FDA licensure occurs, it would
occur in a timely manner. To date, the Company has retained
exclusive worldwide marketing and manufacturing rights for MEDI-
493.
Human Papillomavirus Vaccine
Human papillomaviruses ("HPVs") are responsible for the
development of genital warts and cervical cancer. There are
currently no vaccines to prevent these common sexually
transmitted diseases that affect 24 to 40 million men and women
5
in the United States. There are over 75 different types of HPV
associated with a variety of clinical disorders ranging from
benign lesions to potentially lethal cancers. Four types of HPV
cause the majority of genital warts and cervical cancer cases:
HPV-6, HPV-11, HPV-16 and HPV-18.
The Company's first HPV vaccine candidate, MEDI-501, is composed
of the HPV-11 L1 capsid protein which self assembles into virus-
like particles (VLPs). The VLPs, which are produced in vitro
using recombinant DNA technology, imitate the structure of
natural papillomavirus, but are not infectious. When presented
to the immune system, VLPs may be able to elicit a similar immune
response to that seen with naturally occurring HPV. Scientists
at the Company, in collaboration with a team at Georgetown
University, have shown the potential effectiveness of a VLP
vaccine candidate using a dog model for papillomavirus infection.
The model involves a virus called canine oral papillomavirus
(COPV) which mimics HPV infection closely because it produces
both warts and tumors at a mucosal site. In December 1995, The
Company and its collaborators published in "The Proceedings of
the National Academy of Sciences" the results of studies which
indicated that a COPV VLP vaccine preparation was able to protect
dogs against COPV warts. That study provided the scientific
rationale for developing an analogous vaccine for humans.
The Company began a Phase 1 clinical trial with MEDI-501 in
February 1997 to evaluate its safety, tolerance, and
immunogenicity. The trial, which is being conducted at the
University of Rochester Medical Center, is expected to conclude
in approximately 12 months. The Company expects to begin testing
6
of vaccine candidates for other types of HPVs in the next 12 to
18 months including HPV-18, HPV-16 and HPV-6. The Company
believes a multi-component vaccine consisting of two or more HPV
types would be necessary to prevent HPV disease of the genital
tract.
Monoclonal Antibodies for Transplantation Medicine
The Company is developing several monoclonal antibodies for use
in transplantation medicine. There are approximately 19,000 solid
organ transplants and 11,000 bone marrow transplantation
procedures annually in the United States. Despite significant
improvements in the transplantation arena, life-threatening
complications such as graft-vs.-host disease ("GvHD") and organ
rejection remain serious medical problems.
BTI-322 is a rat anti-CD2 monoclonal antibody being developed by
the Company in collaboration with BioTransplant, Incorporated for
various applications in transplantation medicine. In studies
conducted to date, involving over 60 patients in the United
States and Europe, BTI-322 has shown initial promise in its
ability to prevent and treat organ graft rejection and to treat
GvHD. BTI-322 is currently being evaluated in a multi-center
Phase 2 clinical trial for the treatment of acute GvHD. Safety,
efficacy and pharmacokinetic parameters are being monitored
during the study which is expected to be completed within one
year.
Laboratory studies have suggested that BTI-322 primarily inhibits
the response of T cells directed at transplant antigens while
subsequently allowing immune cells to respond normally to other
7
antigens. The specificity and long lasting effects of this
inhibition suggest that BTI-322 could have potential utility in
applications other than transplantation, such as in autoimmune
diseases. The Company is currently developing MEDI-507, a
humanized form of the product, which is expected to enter
clinical trials in 1997 for selected applications in
transplantation and autoimmune diseases. Autoimmune diseases are
of major medical importance worldwide and include common
afflictions like rheumatoid arthritis, multiple sclerosis and
Crohn's disease.
In 1994, the Company in-licensed from the University of Kentucky
a murine monoclonal antibody known as T10B9 (now MEDI-500). MEDI-
500 suppresses most T cells by binding to a protein (the alpha-
beta receptor) on the surface of the T cell. MEDI-500 has been
evaluated in several transplantation clinical trials involving
approximately 400 individuals. A Phase 2 clinical trial
comparing MEDI-500 with the only commercially available
monoclonal antibody for treatment of acute rejection suggested
that MEDI-500 may have a similar efficacy profile but with
reduced side effects. A Phase 3 clinical trial, sponsored by the
National Heart, Lung, and Blood Institute ("NHLBI"), is currently
evaluating MEDI-500 for prevention of graft-versus-host disease
(GvHD).
Lyme Disease Vaccine
Lyme disease is the most common arthropod-borne disease in the
United States. Virtually every state within the U.S. has
reported cases of Lyme disease, with an annual nationwide
reported incidence of nearly 14,000 new cases in 1996, a 30-40%
8
increase over 1995. Lyme disease is also reported in Europe,
Japan, China, Russia and Australia. The disease is caused by a
bacterium know as Borrelia burgdorferi ("B. burgdorferi") and is
transmitted through a tick, Ixodes scapularis, which is most
commonly found on the white-footed mouse or deer.
The Company in-licensed a newly characterized B. burgdorferi
protein called decorin binding protein ("Dbp") from Texas A&M
University, which initial animal studies suggest may provide
protection against B. burgdorferi infection. Unlike antibodies
to vaccines in development by other companies, Dbp antibodies can
be given to mice during the early phase of infection and still
clear the bacterium from animals. This may allow a significantly
greater window of opportunity for a protective immune response to
clear infection. The Company believes Dbp is the only protein
identified from B. burgdorferi to date for which this effect has
been demonstrated. In addition, antibodies from animals immunized
with Dbp inhibited growth of many strains of the Lyme disease-
causing bacteria not inhibited by antibodies to another vaccine
candidate in development, including some species of Lyme bacteria
commonly found outside the United States. These results suggest
that Dbp may provide an improved Lyme disease vaccine candidate
or, alternatively, a supplement to the vaccine candidates
currently in development.
Urinary Tract Infection Vaccine
Urinary tract infections ("UTIs") commonly require medical
attention in women and children. Escherichia coli ("E. coli")
strains are the main causative agents of UTIs. While many factors
contribute to the acquisition and progression of UTIs, it is
9
widely accepted that colonization of the urogenital tract by
pathogenic bacteria is a prerequisite for disease. A number of
studies have pointed to a role for pilus proteins, the long
filamentous protein appendages on the surface of E. coli, in
mediating attachment to host cells. Certain proteins located at
the distal tip of the pilus, called "adhesins," have been
implicated in this attachment, providing an important novel
target for vaccine development.
The Company and its collaborators at Washington University in St.
Louis are developing antibacterial candidates based on the tip
adhesins on the E. coli pili. The FimH adhesin which is at the
tip of UTI-associated pili, binds to mannose receptors
distributed throughout the human bladder. In preliminary
experiments at the Company, the FimH adhesin protein elicited a
strong antibody response in mice. These antibodies inhibited
attachment to human bladder cells in vitro in greater than 90% of
different E. coli clinical UTI isolates tested. Furthermore,
anti-FimH antibodies reduced bladder colonization by UTI-
associated E. coli in a mouse model. Taken together these data
suggested that the FimH adhesin could potentially serve as a
target for an anti-bacterial vaccine to combat UTIs.
The Company is currently conducting in vivo animal model studies
and designing large scale production and purification protocols
for its first UTI vaccine candidate. Adhesin-based vaccines may
also be an effective strategy for other diseases caused by
bacteria.
Streptococcus pneumoniae Vaccine
10
Streptococcus pneumoniae is a major cause of pneumonia, middle-
ear infections and meningitis worldwide, especially in the very
young or elderly. Pneumonia causes more than one million deaths
per year and is the most common cause of childhood death in
developing countries. In industrialized countries, pneumococcal
pneumonia is a serious problem among the elderly. Middle-ear
infections affect almost every child at least once during the
first 2 years of life. Vaccination against pneumococcal
infections has become more urgent in recent years due to the
emergence of antibiotic-resistant strains throughout the world.
The Company has recently established a collaboration with The
Rockefeller University ("Rockefeller") in New York to develop
products for the prevention and treatment of Streptococcus
pneumoniae infection. The Company has been granted a worldwide
exclusive license to commercialize product candidates developed
from a novel set of genes discovered by scientists at
Rockefeller. In addition, research efforts are underway by
scientists at the Company and Rockefeller to identify novel
conserved surface proteins for potential vaccine applications.
During 1997, promising candidate proteins are expected to be
evaluated in a number of in vitro and in vivo models to determine
their potential as vaccine candidates.
Other Infectious Disease Products
The Company has several additional efforts in place to develop
vaccines for common viral and bacterial infectious diseases
including B19 parvovirus, Haemophilus influenzae and
Staphylococcus aureus.
11
Discovered in 1975, B19 parvovirus has been linked to a number of
serious conditions including certain types of miscarriages in
pregnant women, life-threatening sudden reduction of red blood
cells in sickle cell anemia patients, chronic anemia in AIDS and
chemotherapy patients, and persistent arthritis in some adults.
MEDI-491 is a vaccine intended to prevent human B19 parvovirus
infection. Like MEDI-501, MEDI-491 utilizes virus-like particle
("VLP") technology. By producing two natural B19 parvovirus
proteins in the correct proportions in an insect cell recombinant
protein production system, the Company and collaborators at the
National Heart, Lung, and Blood Institute ("NHLBI") are able to
generate VLPs which resemble the natural B19 parvovirus
particles, but are not infectious. The Company has completed a
Phase 1 clinical trial to evaluate the safety of MEDI-491. The
Company believes that a successful B19 parvovirus vaccine could
be used to immunize women entering their child-bearing years to
protect them from experiencing risk of B19 parvovirus-induced
miscarriages. Alternately, a successful B19 parvovirus vaccine
could be incorporated into routine childhood immunization
programs to reduce the prevalence of this virus.
Haemophilus influenza ("H. influenzae") causes otitis media or
middle ear infections in young children. There are more than
700,000 cases in the United States each year and many infections
recur. As part of MedImmune's ongoing collaboration with Human
Genome Sciences, Inc. ("HGS"), the genome of H. influenzae has
been sequenced and approximately 90 novel surface proteins have
been identified as potential vaccine candidates. These candidate
proteins are currently being evaluated by MedImmune scientists.
12
Staphylococcus aureus ("S. aureus") is a bacterium which infects
over nine million individuals each year in the United States, and
is the most frequent cause of infections in the hospital. A
significant percentage of all hospital-acquired S. aureus
infections are now resistant to most antibiotics. To date, 99% of
the genome has been sequenced and over 3,000 genes have been
identified as part of MedImmune's ongoing collaboration with HGS.
Novel candidates are being selected for evaluation.
Products and Product Development Programs
The following table summarizes the indications and current status of
the Company's products and product development programs.
Product Indication Status(1)
- --------------------------------------------------------------------------
Infectious Disease Products
RespiGam(2) Prevention of serious RSV disease in Marketed
infants with prematurity or lung
disease
MEDI-493 RSV Prevention of RSV disease in infants Phase 3
Monoclonal Treatment of RSV disease Phase 2
Antibody
MEDI-491 B19 Prevention of B19 parvovirus Phase 1
Parvovirus infection
Vaccine
HPV Vaccine Prevention of genital warts Phase 1
Prevention of cervical cancer Pre-clinical
development
Second Generation Prevention of Lyme disease Pre-clinical
Lyme Disease development
Vaccine
13
E. coli Vaccine Prevention of urinary tract Pre-clinical
infections development
H. influenzae Prevention of otitis media (middle Research
Vaccine ear infections)
S. aureus Prevention of staphylococcus Research
Vaccine/ infections
Immunotherapeutic
S. pneumoniae Prevention and treatment of Research
Vaccine streptococcus pneumoniae infection
RSV Vaccine(3) Prevention of RSV disease Phase 2 (AHP
sponsored)
Transplantation Products
CytoGam Attenuation of primary CMV disease in Marketed
kidney transplant patients
Prevention of CMV disease in all Product license
solid organ transplant patients application
amendment
submitted
MEDI-500 (T10B9) Prevention of GvHD in bone marrow Phase 3 (NHLBI
Monoclonal transplant patients sponsored)
Antibody
Treatment of acute kidney rejection Phase 2
BTI-322 Treatment of GvHD in bone marrow Phase 2
Monoclonal transplant patients
Antibody
Prevention of kidney rejection Phase 1
Treatment of acute kidney rejection Phase 1
MEDI-507 Prevention of kidney rejection Pre-clinical
Monoclonal development
Antibody
Treatment of autoimmune diseases Pre-clinical
development
(1) "Phase 1" and "Phase 2" clinical trials generally involve
administration of a product to a limited number of patients
14
to evaluate safety, dosage and, to some extent, efficacy.
"Phase 3" clinical trials generally examine the efficacy
and safety of a product in an expanded patient population at
multiple clinical sites.
(2) AHP co-promotes RespiGam in the United States. Baxter holds
a license to commercialize RespiGam outside North America,
and the Company would receive a royalty on any sales by
Baxter.
(3) This product is being developed by AHP. The Company is
entitled to a royalty on any sales, if and when licensed for
marketing by the FDA.
Marketing, Research, Development and Collaborative Agreements
The Company's internal research programs are augmented by
collaborative projects with its scientific partners. As part of
its strategy, the Company has established alliances with
pharmaceutical and other biotechnology companies, academic
scientists and government laboratories. Currently, its principal
strategic alliances are the following:
American Home Products Corporation.
In November 1993, the Company entered into a strategic alliance
with American Cyanamid Company ("ACY") to co-develop and
co-promote products for the treatment and prevention of RSV and
to co-promote ZOSYN(1), an anti-infective developed by ACY. In 1994,
American Home Products Corporation ("AHP") acquired ACY and in
October 1995, AHP invested $15 million in the Company through the
(1) ZOSYN is a trademark of American Home Products Corporation.
15
purchase of 967,742 shares of Common Stock. The Company and AHP
collaborated on the development of RespiGam and AHP is
co-promoting the product. In connection with the October 1995
investment, the Company and AHP agreed to amend certain terms of
agreements entered into concurrently with the formation of their
1993 strategic alliance. Pursuant to these amendments, AHP's
funding obligations and co-promotion rights with respect to
MEDI-493 were terminated, and the Company returned its right to
co-promote ZOSYN. In addition, the Company's obligation to
co-fund and co-promote an RSV vaccine being developed by AHP was
converted into the right to receive royalties on any sales of
this vaccine, and AHP was granted the right to receive royalties
on any sales of MEDI-493.
Baxter Healthcare Corporation.
In June 1995, the Company entered into an exclusive,
royalty-bearing license agreement with Baxter Healthcare
Corporation ("Baxter") to commercialize RespiGam outside North
America. Within its territory, Baxter will be responsible for
funding clinical and regulatory activities and for manufacturing
and marketing RespiGam. Upon the achievement of certain sales
milestones, Baxter is obligated to reimburse the Company for
certain previously funded research and development activities.
Concurrent with the execution of the license agreement, Baxter
also purchased 826,536 shares of Common Stock for $9.5 million.
BioTransplant, Incorporated.
In October 1995, the Company and BioTransplant, Incorporated
("BTI") formed a strategic alliance for the development of
16
products to treat and prevent organ transplant rejection. The
alliance is based upon the development of products derived from
BTI's anti-CD2 antibody BTI-322, the Company's anti-T cell
receptor antibody MEDI-500 and future generations of products
derived from these two molecules (such as MEDI-507, or humanized
BTI-322). Pursuant to the alliance, the Company received an
exclusive worldwide license to develop and commercialize BTI-322
and any products based on BTI-322, with the exception of the use
of BTI-322 in kits for xenotransplantation or
allotransplantation. The Company has paid BTI $4 million in
license fees and research support to date. The Company has
assumed responsibility for clinical testing and commercialization
of any resulting products. BTI will receive research support and
milestone payments which could total up to an additional $12
million, as well as royalties on any sales of BTI-322, MEDI-500,
MEDI-507 and future generations of these products, if any.
Human Genome Sciences, Inc.
In July 1995, the Company entered into a collaborative research
and development relationship with Human Genome Sciences, Inc.
("HGS") to create antibacterial vaccines and immunotherapeutic
products based upon the genomic sequences of bacteria. The
Company and HGS initiated collaborative research efforts with
programs to develop vaccines for non-typeable Haemophilus
influenzae and Staphylococcus aureus. Rights to another genomic
sequence for vaccine development, Helicobacter pylori, were out-
licensed to Oravax, Inc. and Pasteur Merieux Connaught in
November 1996 for license payments as well as milestone and
royalty obligations. Additional research projects for the
development of vaccines and antibody-based products will be
determined as additional genomic
17
sequences are completed of other bacteria selected by the Company
and HGS. Pursuant to a collaboration and license agreement
between the Company and HGS, the Company will be solely
responsible for the commercialization of any products developed
through the collaboration, and HGS will be entitled to royalties
based upon the extent to which any products jointly developed are
covered by patents or license rights held by HGS.
Massachusetts Health Research Institute and Massachusetts Public
Health Biologics Laboratories.
In August 1989 and April 1990, the Company entered into a series
of research, supply and license agreements with Massachusetts
Health Research Institute ("MHRI") and Massachusetts Public
Health Biologics Laboratories ("MPHBL") covering products
intended for the prevention or treatment of CMV and RSV infection
and other respiratory virus infections by immune globulins or
monoclonal antibodies. The Company has agreed to pay royalties on
all sales using the licensed technology. Pursuant to the
agreements, the Company paid $11.8 million in 1996, $5.1 million
in 1995 and $4.9 million in 1994, for royalties, process
development and manufacturing.
Other Agreements.
The Company has a number of other collaborative and business
agreements with academic institutions and business corporations,
including agreements with 1) Washington University in St. Louis
covering development of pilus-based anti-bacterial vaccines, 2)
Georgetown University, the German Cancer Research Center and the
University of Rochester covering development of vaccines for
human papillomaviruses and 3) Rockefeller University for the
discovery
18
and commercialization of products to treat and prevent
Streptococcus pneumoniae. In addition, the Company has license
agreements with third parties on CytoGam, RespiGam, MEDI-493 and
substantially all of its other potential products. The Company is
obligated to pay royalties on any sales of these products.
Marketing and Sales
The Company is developing a sales and marketing organization
which it believes is responsive to the increased importance of
managed care, the need to lower costs and the necessity to
provide quality service to its customers.
The Company's first product, CytoGam, was originally marketed by
a third party as the Company's exclusive distributor. In
December 1992, the Company reacquired marketing rights to CytoGam
and in January 1993, the Company commenced marketing of CytoGam
in the United States through its own 14-person sales force
focused on 250 leading transplantation hospitals. Sales outside
the United States are made through regional distributors.
After the expansion of the sales and marketing teams in January
1996, the Company now has approximately 70 people in these
groups. The Company has five regional business directors, each
with 15 or more years of sales, marketing or managed care
experience, to manage the regional business units. Approximately
45 sales and managed care representatives cover approximately 500
hospitals and clinics in the United States which specialize in
transplantation and/or pediatric/neonatal care for the promotion
of CytoGam and RespiGam, respectively. Each sales representative
is responsible for selling both CytoGam and RespiGam.
19
The Company's RespiGam sales effort is supplemented by the
approximately 300-person Wyeth-Lederle Vaccines and Pediatrics
sales force of the Wyeth-Ayerst Laboratories (a division of AHP).
While the Company focuses on the top 420 leading neonatal and
pediatric medical centers in the United States (accounting for
approximately 70% of potential RespiGam sales), AHP focuses on
smaller hospitals and pediatrician offices. AHP is among the
leading pharmaceutical companies focused on pediatric medicine.
The Company has established a collaboration with Baxter, one of
the leading producers and marketers of immune globulins
worldwide, to commercialize RespiGam outside North America, if
and when licensed for marketing by foreign regulatory
authorities. The Company has been advised that Baxter intends to
file European regulatory applications during 1997 to request a
license to market RespiGam in Europe. There can be no assurance
that such a license will be granted, or, if granted, that
licensure will occur in a timely manner.
Manufacturing and Supply
The Company has entered into manufacturing, supply and purchase
agreements in order to provide a supply of human plasma and
production capability for CytoGam and RespiGam. CytoGam and
RespiGam are produced from human plasma collected from donors who
have been screened to have higher concentrations of antibodies
against CMV and RSV, respectively. Human plasma for CytoGam and
RespiGam is converted to an intermediate raw material (Fraction
II+III paste) under a supply agreement with Baxter. The Company
has recently entered into an agreement with V.I. Technologies,
20
Inc. to supply additional Fraction II+III paste.
MPHBL processes the Fraction II+III paste into bulk product. The
Company has an informal arrangement with MPHBL for planned
production of bulk product for CytoGam and RespiGam. MPHBL holds
the sole product and establishment licenses for CytoGam and
RespiGam. The Company also has an agreement with Connaught
Laboratories, Inc. ("Connaught") to fill and package CytoGam and
RespiGam. If MPHBL, the suppliers of the Fraction II+III paste,
or Connaught is unable to satisfy the Company's product
requirements on a timely basis or is prevented for any reason
from manufacturing CytoGam or RespiGam, the Company may be unable
to secure an alternative supplier or manufacturer without undue
and materially adverse operational disruption and increased cost.
Currently, RespiGam finished product inventory is in short
supply, and no assurances can be given that an adequate supply
will be available to meet demand. Recently, the Company has
experienced product shortages which have limited product sales
without reducing sales and marketing costs.
In July 1996, the Company entered into an engineering,
procurement, construction and validation services agreement with
Fluor Daniel, Inc. ("Fluor") to design and construct a
manufacturing facility to be located on a 26 acre site in
Frederick, Maryland. The Company estimates the facility will cost
approximately $50 million to construct. The facility is planned
to be a multi-use biologics facility intended to provide
production capability for the manufacture of immune globulins
(CytoGam and RespiGam) and by-products from human plasma. In
addition, the facility is being designed to contain a cell
culture production
21
area for the manufacture of products, such as MEDI-493, MEDI-500
and BTI-322, if and when they are licensed for marketing by the
FDA. There can be no assurance that the facility will receive
regulatory approval for its intended purposes. Additionally,
construction and validation of manufacturing facilities can take
substantial time to complete. In order to produce RespiGam in the
manufacturing facility, the Company may need to obtain certain
rights from MPHBL. No assurances can be given that such rights
can be obtained. Additionally, no assurances can be given that
if the technology to manufacture CytoGam and/or RespiGam is
transferred to the Company from MPHBL, that the Company will
successfully be able to produce these products in the plant.
The Company produces materials for clinical trials in its pilot
plant facility in Gaithersburg, Maryland. Materials currently
being used in clinical trials for MEDI-490, MEDI-493, MEDI-491
and MEDI-500 have been produced at the Company's pilot plant.
Completion is expected in 1997 of an expansion of the Company's
pilot plant facility to support the production of materials for
Phase 3 clinical trials and market entry production requirements.
The Company estimates the cost of expanding this facility to be
approximately $6 million. There can be no assurance that when the
facility is completed, appropriate regulatory approvals will be
obtained to use the facility for market entry manufacturing.
Patents, Licenses and Proprietary Rights
Products currently being developed or considered for development
by the Company are in the area of biotechnology, an area in which
there are extensive patent filings. The patent position of
biotechnology firms generally is highly uncertain and involves
22>
complex legal and factual questions. To date, no consistent
policy has emerged regarding the breadth of claims allowed in
biotechnology patents. Accordingly, there can be no assurance
that patent applications owned or licensed by the Company will
result in patents being issued or that, if issued, such patents
will afford protection against competitors with similar
technology. In addition, there can be no assurance that products
covered by such patents, or any other products developed by the
Company or subject to licenses acquired by the Company, will not
be covered by third party patents, in which case continued
development and marketing of such products would require a
license under such patents. There can be no assurance that such
required licenses will be available to the Company or its
licensees on acceptable terms.
The Company is aware of several patents and patent applications
which may affect the Company's ability to make, use and sell the
Company's products or product candidates, including the
following: (i) three United States patents, directed to
intravenous immune globulin containing high concentrations of
either CMV or RSV antibodies, which have been issued to a major
pharmaceutical company having substantially greater financial
resources than the Company and (ii) United States patents,
directed to murine monoclonal antibodies against T cells and the
use thereof, which have been issued to another major
pharmaceutical company having substantially greater financial
resources than the Company. Although the Company believes that
neither its CytoGam and RespiGam technologies, which use
intravenous immune globulins containing high concentrations of
CMV or RSV antibodies, respectively, nor its MEDI-500 and BTI-322
technologies, which use monoclonal antibodies against T cells,
infringe any valid claims
23
of such patents, the Company can provide no assurances that if a
legal action based on such patents were brought against the
Company, such an action would be resolved in the Company's favor.
If such a dispute were resolved against the Company, in addition
to potential damages, the manufacturing and sale of such products
could be enjoined unless a license were obtained. There can be no
assurances that, if a license were required, such a license would
be made available on terms acceptable to the Company.
Additionally, the Company is aware of several patents covering
the composition of and process for making murine and humanized
monoclonal antibodies for which the Company may need a license or
licenses. If such a license or licenses were required, there can
be no assurance that companies holding such licenses would make
them available to the Company on terms acceptable to the Company.
While the Company has several licenses to issued patents and owns
or has licenses to pending patent applications with respect to
certain of its products, the Company believes that there are
other patents issued to third parties and/or patent applications
filed by third parties which could have applicability to each of
the Company's products and product candidates and which could
adversely affect the Company's freedom to make, use or sell such
products or use certain processes for their manufacture. The
Company is unable to predict whether it will ultimately be
necessary to seek a license from such third parties or, if such a
license were necessary, whether such a license would be available
on terms acceptable to the Company. The necessity for such a
license could have a material adverse effect on the Company's
business.
24
There has been substantial litigation regarding patent and other
intellectual property rights in the biotechnology industry.
Litigation may be necessary to enforce certain intellectual
property rights of the Company. Any such litigation could result
in substantial cost to and diversion of effort by the Company.
Government Regulation
The production and marketing of the Company's products and
research and development activities are subject to regulation for
safety and efficacy by numerous governmental authorities in the
United States and other countries. In the United States,
vaccines, drugs and certain diagnostic products are subject to
FDA review and licensure. The federal Food, Drug and Cosmetics
Act, the Public Health Service Act and other federal statutes and
regulations govern or influence the testing, manufacture, safety,
labeling, storage, record keeping, licensure, advertising and
promotion of such products. No assurances can be given that any
products under development will be licensed for marketing by the
FDA or once approved, that the product will be successfully
commercialized or maintained in the marketplace. Non-compliance
with applicable requirements can result in fines, recall or
seizure of products, total or partial suspension of production,
refusal of the government to approve product license
applications, restrictions on the Company's ability to enter into
supply contracts and criminal prosecution. The FDA also has the
authority to revoke product licenses and establishment licenses
previously granted.
The FDA may designate a drug as an Orphan Drug for a particular
use, in which event the developer of the drug may be entitled to a
25
seven year marketing exclusivity period. CytoGam and RespiGam
have been designated as Orphan Drugs for certain indications by
the FDA. Accordingly, CytoGam and RespiGam have market
exclusivity for their currently licensed indications through
April 17, 1997 and January 17, 2003, respectively.
The Company is also subject to regulation by the Occupational
Safety and Health Administration ("OSHA") and the Environmental
Protection Agency ("EPA") and to regulation under the Toxic
Substances Control Act, the Resources Conservation and Recovery
Act and other regulatory statutes, and may in the future be
subject to other federal, state or local regulations. OSHA and/or
the EPA may promulgate regulations concerning biotechnology that
may affect the Company's research and development programs. The
Company is unable to predict whether any agency will adopt any
regulation which would have a material adverse effect on the
Company's operations. The Company voluntarily attempts to comply
with guidelines of the National Institutes of Health regarding
research involving recombinant DNA molecules. Such guidelines,
among other things, restrict or prohibit certain recombinant DNA
experiments and establish levels of biological and physical
containment that must be met for various types of research.
Sales of pharmaceutical and biopharmaceutical products outside
the United States are subject to foreign regulatory requirements
that vary widely from country to country. Whether or not FDA
licensure has been obtained, licensure of a product by comparable
regulatory authorities of foreign countries must be obtained
prior to the commencement of marketing the product in those
countries. The time required to obtain such licensure may be
longer or shorter than
26
that required for FDA approval, and no assurances can be given
that such approval will be obtained.
Competition
The biotechnology and pharmaceutical industries are characterized
by rapidly evolving technology and intense competition. The
Company's competitors include pharmaceutical, chemical and
biotechnology companies, many of which have financial, technical
and marketing resources significantly greater than those of the
Company. In addition, many specialized biotechnology companies
have formed collaborations with large, established companies to
support research, development and commercialization of products
that may be competitive with those of the Company. Academic
institutions, governmental agencies and other public and private
research organizations are also conducting research activities
and seeking patent protection and may commercialize products on
their own or through joint ventures.
The Company is aware of certain products manufactured by
competitors that are used for the prevention or treatment of
certain diseases the Company has targeted for product
development, including CMV, RSV, Lyme disease, HPV infections and
organ graft rejection. For example, in the prevention of CMV
disease, the Company's CytoGam competes with several other
products including intravenous ganciclovir, manufactured by
Hoffmann-La Roche Inc. The Company is aware that a number of
physicians have prescribed CytoGam in combination with
ganciclovir for the prevention of CMV disease in certain
patients. Recently, three new drugs have been launched relating
to CMV prophylaxis and treatment: 1) Hoffmann-La Roche Inc.
received an FDA license to market a more convenient
27
oral formulation of ganciclovir for prevention of CMV disease in
solid organ transplant recipients and individuals with advanced
HIV infection at risk for developing CMV disease, 2)Chiron
Corporation received an FDA license to market an implant that
would deliver ganciclovir directly to the eye to treat AIDS
patients with CMV retinitis, and 3)Gilead Sciences, Inc. received
an FDA license to market intravenous cidofovir for the treatment
of CMV retinitis in AIDS patients. The Company believes that for
the prevention of RSV disease, the Company's RespiGam does not
compete directly with any product; however, the Company is aware
of one product in the U. S., ribivirin, which is indicated for
the treatment of RSV disease. The existence of these products, or
other products or treatments of which the Company is not aware,
or products or treatments that may be developed in the future,
may adversely affect the marketability of products developed by
the Company. In addition, the Company is aware of other
companies, such as OraVax, Inc., which are developing products
for the treatment and prevention of RSV. These products may
compete directly with RespiGam and may offer relative benefits,
such as ease of administration.
The Company expects its products to compete primarily on the
basis of product efficacy, safety, patient convenience,
reliability, price and patent position. In addition, the first
product to reach the market in a therapeutic or preventive area
is often at a significant competitive advantage relative to later
entrants to the market. The Company's competitive position will
also depend on its ability to attract and retain qualified
scientific and other personnel, develop effective proprietary
products, implement
28
product and marketing plans, obtain patent protection and secure
adequate capital resources.
EXECUTIVE OFFICERS OF THE COMPANY
Officer
Name Age Position Since
- ---------------------------------------------------------------------
Wayne T. Hockmeyer, Ph.D. 52 Chairman and Chief Executive 1988
Officer
David M. Mott 31 President and Chief Operating 1992
Officer
Franklin H. Top, Jr., 61 Executive Vice President and 1988
M.D. Medical Director
David P. Wright 49 Executive Vice President- 1990
Sales and Marketing
Bogdan Dziurzynski 48 Senior Vice President 1994
Regulatory Affairs and
Quality Assurance
James F. Young, Ph.D. 44 Senior Vice President 1989
Research and Development
Dr. Hockmeyer, prior to founding the Company in 1988, was Vice
President Research and Development at Praxis Biologics, Inc.
Mr. Mott, prior to joining the Company in 1992, was Vice
President in the Health Care Investment Banking Group at Smith
Barney, Harris Upham & Co., Inc.
Dr. Top, prior to joining the Company in 1988, was Senior Vice
President for Clinical and Regulatory Affairs at Praxis
Biologics, Inc.
29
Mr. Wright, prior to joining the Company in 1990, was President
of Pediatric Pharmaceuticals, Inc. (1989-1990) and Vice President
of the Gastrointestinal Business Group at Smith, Kline and French
Laboratories.
Mr. Dziurzynski, prior to joining the Company in 1994, was Vice
President of Regulatory Affairs and Quality Assurance at Immunex
Corporation.
Dr. Young, prior to joining the Company in 1989, was Director,
Department of Molecular Genetics at Smith, Kline and French
Laboratories.
EMPLOYEES
As of February 15, 1997, the Company had 252 full time employees.
These include 66 marketing and sales personnel, 31 clinical and
regulatory affairs personnel, and 98 research and development
personnel. The Company considers relations with its employees
to be good.
ITEM 2. PROPERTIES
The Company occupies, under a lease expiring in 2006, a facility
in Gaithersburg, Maryland, that contains approximately 71,000
square feet of research, development and administrative space.
In 1996, the Company acquired a 26 acre parcel of land in
Frederick, Maryland. The Company is constructing a 68,000 square
foot multi-use biologics facility on this site to provide for the
manufacture of immune globulins and by-products from human
plasma. In addition, the facility is designed to contain a cell
30
culture production area for manufacture of products such as MEDI-
493, if and when it is licensed by the FDA.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any material legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR MEDIMMUNE, INC.'S COMMON STOCK
AND RELATED SHAREHOLDER MATTERS
The Company's common stock trades on The Nasdaq Stock Market
under the symbol "MEDI". At February 28, 1997, the Company had
382 common stockholders of record. This figure does not
represent the actual number of beneficial owners of common stock
because shares are generally held in "street name" by securities
dealers and others for the benefit of individual owners who may
vote the shares. The following table shows the range of high and
low closing prices and year end closing prices for the common
stock for the two most recent fiscal years.
1996 1995
---- ----
High Low High Low
---- ---- ---- ----
First Quarter $ 20 1/8 $ 14 $ 7 3/4 $3 1/2
Second Quarter 20 15 1/2 15 1/4 6 1/4
31
Third Quarter 17 1/2 11 3/8 14 3/4 8
Fourth Quarter 17 3/4 14 21 1/2 9 1/2
Year End Close $ 17 $ 20
ITEM 6. SELECTED FINANCIAL DATA
(in thousands, except per share data)
RESULTS FOR THE YEAR 1996 1995 1994 1993 1992
----- ---- ---- ---- ----
Product sales $35,782 $16,173 $12,054 $8,446 $2,560
Contract revenue 5,317 11,263 6,804 6,633 10,491
------- -------- ------- ------- -------
Total revenues 41,099 27,436 18,858 15,079 13,051
Research and develop-
ment expenses 32,192 26,417 21,939 14,936 11,260
Net loss (29,544) (22,671) (18,828) (13,217) (8,468)
Loss per common share (1.41) (1.41) (1.29) (0.96) (0.63)
YEAR END POSITION
Cash and
marketable
securities $114,765 $38,039 $22,527 $44,424 $46,860
Total assets 163,971 57,332 44,724 61,195 59,966
Long term debt 70,874 1,984 2,090 2,186 2,158
Shareholders' 72,865 43,779 34,194 53,021 46,752
equity
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This review contains management's discussion of the Company's
operational results and financial condition and should be read in
conjunction with the accompanying financial statements.
OVERVIEW
MedImmune commenced operations in April 1988 and, through
1990, revenue was generated solely from research and development
32
agreements and research grants. In 1991, contract revenues rose
substantially and the Company began selling its first product,
CytoGam, to an exclusive distributor. In December 1992, the
Company reacquired the CytoGam marketing rights from its
distributor and launched an expanded marketing program for this
product through its own sales force.
On January 18, 1996, the Company's second product, RespiGam
was licensed for marketing by the U.S. Food and Drug
Administration ("FDA") for the prevention of serious lower
respiratory tract infection caused by RSV in children under 24
months of age with BPD or a history of prematurity. AHP's Wyeth-
Lederle Vaccines and Pediatrics sales force co-promotes RespiGam
in the United States. Because of the seasonal nature of RSV,
limited sales, if any, are expected during the second and third
quarters.
To date, product sales have not produced sufficient revenues
to cover the Company's operating expenses. Consequently, the
Company has experienced substantial operating losses. While
results may vary significantly from quarter to quarter, the
Company does not expect to be profitable for the year at least
through 1998.
RESULTS OF OPERATIONS
1996 Compared to 1995
The increase in product sales for the year ended December
31, 1996 as compared to the year ended December 31, 1995 is due
to the commencement of sales of RespiGam in 1996 and a 14%
increase in CytoGam sales. RespiGam sales were $17.3 million in
1996, of which $13.9 million were generated in the fourth
quarter. CytoGam product sales increased to $18.4 million from
$16.2 million in 1995 due primarily to increased units sold.
CytoGam product sales were reduced by a $0.7 million reserve in
the 1996 third quarter for trade receivables due from a
pharmaceutical wholesaler which filed Chapter 11 bankruptcy in
August 1996. Although the Company markets directly to hospitals
and physicians, the Company sells its products through a limited
33
number of pharmaceutical wholesalers and a similar event with
another wholesaler could adversely affect operating income. The
level of future product sales will be dependent on several
factors, including, but not limited to, the timing and extent of
future regulatory approvals of the Company's products and product
candidates, availability of finished product inventory, approval
and commercialization of competitive products and the degree of
acceptance of the Company's products in the marketplace.
Currently, RespiGam finished product inventory is in short
supply, and no assurances can be given that an adequate supply
will be available to meet demand.
Contract revenue decreased to $5.3 million in 1996 from
$11.3 million in 1995, reflecting the completion of milestone and
research funding payments under the Company's strategic alliance
with 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.
The level of contract revenues in future periods will depend
primarily upon the extent to which the Company enters into other
collaborative contractual arrangements, if any.
Cost of sales increased to $19.7 million in 1996 from $10.7
million in 1995, due to the initiation of sales of RespiGam in
1996. The gross margins for 1996 of 45% improved over 1995's
margins of 34% reflecting the addition of RespiGam as well as a
reduction in the royalty rate due to Connaught for CytoGam,
effective for the fourth quarter of 1995. The Company's products
are manufactured by third parties and future per-unit cost of
sales could increase if the Company is unable to negotiate
favorable pricing. The Company is currently constructing its own
manufacturing facility intended for some portion of the
production of its two approved products as well as other product
candidates. This facility is not expected to be completed until
1998 and then is subject to inspection and approval by the FDA.
Cost of sales could be impacted by the potential production in
this facility.
34
Research, development and clinical spending was $32.2
million in 1996 compared to $26.4 million in 1995, reflecting
increased expenditures of over $10 million for MEDI-493 RSV
Monoclonal Antibody clinical studies, including the start of a
1,502 patient Phase 3 clinical trial in the fourth quarter of
1996. This increase was offset by a decrease in clinical spending
for RespiGam, for which two Phase 3 trials were completed in mid-
1995 and licensing was received from the FDA in January 1996.
The level of the Company's total research and development
expenses in future periods will fluctuate depending on the extent
of clinical trial spending. The Company expects clinical trial
expenses for MEDI-493 to remain high through the first half of
1997.
Selling, administrative and general expenses increased to
$22.2 million in 1996 from $11.7 million in 1995, reflecting
primarily the launch of RespiGam in 1996. Approximately 45
additional sales and marketing personnel have been hired since
September 30, 1995, primarily in 1996, to staff for the launch of
RespiGam, resulting in an increase of over $5 million in
salaries, commissions, recruiting, travel and related costs. An
additional $5.2 million was spent on marketing and selling
programs for the launch of RespiGam in 1996. Sales detailing
costs to the Company's corporate partner for RespiGam, AHP,
approximated $1.8 million in 1996 and none in 1995. Offsetting
the increased costs in 1996 was a $4.3 million reimbursement from
AHP of their share of the product line loss on RespiGam for the
year, calculated under the terms of the strategic alliance. In
1997 and future years, AHP's share of RespiGam's potential
profits will result in an increase to selling expenses. General
and administrative expenses increased by $0.7 million reflecting
increased headcount and legal and other costs associated with the
new manufacturing facility.
In December 1995, the Company and Connaught entered into an
amendment to the agreement signed in 1992 in which the Company
reacquired the rights to market CytoGam. In connection with this
amendment, the Company made a lump sum payment of $2.7 million to
35
Connaught in the first half of 1996 upon completion of certain
modifications to Connaught's filling and packaging facility. The
$2.7 million charge was expensed as other operating expenses in
1995.
Interest income increased to $5.7 million in 1996 compared
to $1.7 million in 1995. The increase reflects the proceeds from
the Company's equity and convertible debt offerings in 1996,
resulting in higher cash balances available for investment,
partially offset by a decrease in interest rates which lowered
the overall portfolio yield.
Interest expense increased to $2.3 million in 1996 from $0.3
million in 1995, reflecting interest on the convertible
subordinated notes issued in July 1996. Interest expense in 1996
is net of $0.3 million of interest capitalized against the new
manufacturing facility and the pilot plant expansion.
The 1996 net loss of $29.5 million, or $1.41 per common
share, compared to a 1995 net loss of $22.7 million, or $1.41 per
common share. Shares used in computing loss per share were 21.0
million and 16.1 million, respectively. The Company does not
believe that inflation had a material effect on its financial
statements.
These results were consistent with the Company's objectives
for the year and with the continued development of its
immunotherapeutic and vaccine products. The factors affecting
1996 results may continue to affect near-term financial results.
1995 COMPARED TO 1994
Revenues in 1995 were $27.4 million compared to $18.9
million in 1994. Sales of CytoGam increased to $16.2 million in
1995 from $12.1 million in 1994, reflecting a 23% increase in
units sold as well as the impact of two price increases since
July 1, 1994. Contract revenues increased to $11.3 million from
$6.8 million in 1994, primarily reflecting funding provided under
the Company's strategic alliance with AHP.
Cost of sales for CytoGam rose to $10.7 million in 1995 from
$7.7 million in 1994, reflecting the increase in unit volume and
36
an increase in product unit costs, which include the addition of
a viral inactivation process, increased unit costs of plasma
paste and increased costs for finished product acquired from a
supplier. Research, development and clinical spending was $26.4
million in 1995 compared to $21.9 million in 1994, reflecting a
research license payment of $2.0 million to BioTransplant,
Incorporated ("BTI") for BTI-322, and increased expenditures for
RespiGam and MEDI-493 RSV Monoclonal Antibody clinical studies.
Selling, administrative and general expenses increased to $11.7
million in 1995 from $9.2 million in 1994, reflecting increased
marketing expenditures for RespiGam, a $0.6 million charge
recorded in the fourth quarter in connection with the settlement
of the securities class action lawsuit that had been filed
against the Company, and a $0.5 million charge recorded in the
fourth quarter relating to certain expenditures associated with
preparations for the construction of a manufacturing facility.
In December 1995, the Company entered into a Stipulation of
Settlement resolving a pending securities class action lawsuit
against the Company. The Company recorded a charge of
approximately $0.6 million in 1995 in connection with the
settlement. The Company's insurers contributed the remaining
$3.6 million in 1996, for a total settlement of $4.25 million.
Other operating expenses include the charge for
restructuring of the Connaught agreement as discussed above.
Interest income of $1.7 million was earned in the year ended
December 31, 1995 compared to $1.4 million in 1994, reflecting an
increase in interest rates which improved overall portfolio
yield. Interest expense of $0.3 million was incurred in both
1995 and 1994.
The 1995 net loss of $22.7 million, or $1.41 per common
share, compared to a 1994 net loss of $18.8 million, or $1.29 per
common share. Shares used in computing loss per share were 16.1
million and 14.6 million, respectively.
LIQUIDITY AND CAPITAL RESOURCES
37
Cash and marketable securities were $114.8 million at 1996
year end compared to $38.0 million at 1995 year end. Working
capital was $113.3 million at 1996 year end versus $38.0 million
at 1995 year end.
Net cash used in 1996 operating activities was $25.5 million
compared to $15.9 million used in 1995 and $20.3 million used in
1994. The cash outflow from operations in 1996 reflected the net
loss adjusted for depreciation and amortization and working
capital changes. Working capital changes include: 1) a $7.1
million increase in trade and contract receivables due to
significant fourth quarter sales of RespiGam; 2) a $5.6 million
increase in accounts payable and accrued expenses, reflecting
accrued costs associated with the MEDI-493 Phase 3 clinical
trial, accrued manufacturing costs for production of the
Company's two products, and accrued marketing and selling costs,
including commissions; and 3) a $2.1 million increase in accrued
interest reflecting interest due on the convertible subordinated
notes, paid January 1997. The cash outflow from operations in
1995 reflected the net loss adjusted for depreciation and
amortization and working capital changes, including a $1.9
million decrease in trade and contract receivables and a $2.2
million increase in accrued expenses primarily related to the
amendment to the Connaught agreement.
Cash flows from financing activities were $125.4 million in
1996 compared to $32.2 million in 1995. In February 1996, the
Company completed a public offering of 3.45 million shares of
common stock resulting in net proceeds of $58 million and in July
1996, the Company completed a private placement of $60 million
aggregate principal amount of 7% convertible subordinated notes
due 2003 for net proceeds of $58 million. Additionally, the
Company received $9 million of proceeds from state government
loans in connection with the financing of its new manufacturing
facility. In 1995, the Company received $7.7 million from a
private placement of the Company's common stock with a group of
foreign institutional investors, $9.5 million from a sale of the
Company's common stock to Baxter in connection with an alliance
38
entered into in June 1995, and $15.0 million through a sale of
the Company's common stock to AHP.
Capital expenditures in 1996 were $22.7 million compared to
$1.1 million in 1995. The 1996 expenditures include $17.5
million for the design and construction of the Company's new
manufacturing facility located in Frederick, Maryland and the
expansion of the pilot plant at the Gaithersburg headquarters.
Additional expenditures were for land, laboratory equipment and
administrative expansion. The 1995 expenditures included
expenditures for additional laboratory and office equipment as
well as initial design work for the new manufacturing facility.
Capital expenditures in 1997 are expected to approximate $34
million, due mostly to the construction of the manufacturing
facility and the expansion of the development pilot plant. These
two projects are anticipated to cost a total of $56 million and
are intended to be financed from the proceeds of the convertible
debt offering and state and local loans totaling $11.8 million.
The Company entered into an engineering, procurement,
construction and validation services agreement with Fluor Daniel
to design and construct the manufacturing facility in Frederick,
Maryland. The agreement provides for an early completion bonus
to Fluor Daniel if the facility is completed ahead of schedule or
liquidated damages paid to the Company for certain delays. The
facility, expected to employ 50 to 100 people, will provide
capacity for the Company's immune globulin products and
monoclonal antibody product candidates. The facility is expected
to be completed and initial production commenced during 1998.
There can be no assurance that when the facility is constructed
appropriate regulatory approvals will be obtained to enable the
use of the facility for production of the Company's products or
product candidates. The Company's pilot plant expansion is
intended to support the further production of materials for Phase
3 clinical trials and market entry requirements, if needed, for
MEDI-493.
In addition, the Company is obligated in 1997 to provide
$14.5 million in funding for various clinical trials, research
39
and development and license agreements with certain institutions.
The Company's existing funds, together with funds contemplated to
be generated from product sales and investment income are
expected to provide sufficient liquidity to meet the anticipated
needs of the business for at least the next 18 months, absent the
occurrence of any unforeseen events.
40
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
BALANCE SHEETS
(in thousands, except share data)
December 31, December 31,
1996 1995
---------- ----------
ASSETS
Cash and cash equivalents $12,629 $14,165
Marketable securities 102,136 23,874
Trade receivables, net 8,123 2,687
Contract receivables, net 2,164 1,210
Inventory, net 6,060 6,027
Other current assets 1,713 1,027
---------- ----------
Total Current Assets 132,825 48,990
Property and equipment, net 29,087 8,255
Other assets 2,059 87
---------- ----------
Total Assets $163,971 $57,332
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable, trade $3,942 $2,318
Accrued expenses 10,509 6,538
Accrued interest 2,057 --
Product royalties payable 2,559 1,776
Other liabilities 469 337
---------- ----------
Total Current Liabilities 19,536 10,969
Long term debt 70,874 1,984
Other liabilities 696 600
---------- ----------
Total Liabilities 91,106 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; 218 177
authorized 60,000,000 shares;
issued and outstanding 21,836,763
and 17,706,137 at December 31,
1996 and 1995, respectively
Paid-in capital 172,024 113,435
Accumulated deficit (99,377) (69,833)
---------- ----------
Total Shareholders' Equity 72,865 43,779
---------- ----------
Total Liabilities and $163,971 $57,332
Shareholders' Equity ========== ==========
The accompanying notes are an integral part of these financial
statements
42
Statements of Operations
(in thousands, except share data)
For the year ended December 31,
---------------------------------
1996 1995 1994
-------- -------- --------
REVENUES
Product sales $35,782 $16,173 $12,054
Contracts 5,317 11,263 6,804
-------- -------- --------
Total Revenues 41,099 27,436 18,858
-------- -------- --------
COSTS AND EXPENSES
Cost of sales 19,678 10,678 7,724
Research and development 32,192 26,417 21,939
Selling, administrative 22,165 11,719 9,161
and general
Other operating expenses -- 2,700 --
-------- -------- --------
Total Expenses 74,035 51,514 38,824
-------- -------- --------
Operating Loss (32,936) (24,078) (19,966)
Interest income 5,655 1,657 1,394
Interest expense (2,263) (250) (256)
-------- -------- --------
Net Loss $(29,544) $(22,671) $(18,828)
======== ======== ========
Loss Per Common Share $(1.41) $(1.41) $(1.29)
======== ======== ========
Shares Used in Computing
Loss Per Common Share 21,019 16,061 14,614
======== ======== ========
The accompanying notes are an integral part of these financial statements
43
Statements of Cash Flows
(in thousands) For the year ended December 31,
--------------------------------
1996 1995 1994
-------- --------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(29,544) $(22,671) $(18,828)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 1,843 1,554 1,487
Amortization of premium (discount) on
marketable securities 447 (418) 127
Bad debt expense 724 5 16
Inventory reserve (409) 417 --
Amortization of debt issue costs 155 -- --
Amortization of deferred rent 96 119 181
Increase(decrease) in cash due to
changes in assets and liabilities:
Trade receivables (6,160) (987) (843)
Contract receivables (954) 2,865 (3,119)
Inventory 376 (945) (2,029)
Other assets (641) 1,111 416
Accounts payable and accrued expenses 5,595 2,154 1,673
Product royalties payable 783 818 523
Accrued interest 2,057 -- --
Other liabilities 119 35 92
-------- -------- ---------
Net cash used in operating (25,513) (15,943) (20,304)
activities
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Investments in securities available (131,908) (38,587) (35,144)
for sale
Maturities of securities available 53,199 31,308 40,642
for sale
Capital expenditures (22,675) (1,116) (1,354)
-------- -------- ---------
Net cash (used in) provided by (101,384) (8,395) 4,144
investing activities
-------- -------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common 58,630 32,256 1
stock
Proceeds from issuance of long 69,000 -- --
term debt
Deferred costs from convertible (2,172) -- --
debt issuance
Decrease in long term debt obligations (97) (103) (113)
-------- -------- ---------
Net cash provided by (used in) 125,361 32,153 (112)
financing activities
-------- -------- ---------
Net (decrease) increase in cash and cash (1,536) 7,815 (16,272)
equivalents
Cash and cash equivalents at beginning 14,165 6,350 22,622
of year
-------- -------- ---------
Cash and cash equivalents at end of
year $12,629 $14,165 $6,350
======== ======== =========
The accompanying notes are an integral part of these financial statements.
45
Statements of Shareholders' Equity
(in thousands, except share data)
Common Stock,$.01 par
--------------- Paid-in Accumulated
Shares Amount Capital Deficit Total
--------- ------- ------- --------- -------
Balance,
December 31, 1993 14,609,622 $146 $81,209 $(28,334) $53,021
Common stock options
exercised 8,420 -- 1 -- 1
Net loss -- -- -- (18,828) (18,828)
-------- ------- ------- -------- --------
Balance,
December 31, 1994 14,618,042 146 81,210 (47,162) 34,194
Common stock options
exercised 43,817 -- 92 -- 92
Private placement of
common stock, May
1995,at $6.85 per
share, net of under-
writing commissions
and expenses of $825 1,250,000 13 7,728 -- 7,741
Private placement of
common stock, June
1995,at $11.49 per
share, net of fees and
expenses of $40 826,536 8 9,452 -- 9,460
Private placement of
common stock, October
1995, at $15.50 per
share, net of fees and
expenses of $37 967,742 10 14,953 -- 14,963
Net loss -- -- -- (22,671) (22,671)
-------- ------- -------- -------- -------
Balance,
December 31, 1995 17,706,137 177 113,435 (69,833) 43,779
Common stock options
exercised 288,484 3 700 -- 703
Sale of common stock,
February 1996 public
offering at $18.00 per
share, net of under-
writing commissions
and expenses of $4,173 3,450,000 34 57,893 -- 57,927
Conversion of Series A
Convertible Preferred
Stock 392,142 4 (4) -- --
Net loss -- -- -- (29,544) (29,544)
-------- ------- -------- -------- --------
Balance,
December 31, 1996 21,836,763 $218 $172,024 $(99,377) $72,865
========== ======= ======== ========= ========
The accompanying notes are an integral part of these financial statements.
NOTES TO FINANCIAL STATEMENTS
(in thousands, except share and per share data)
1. ORGANIZATION
MedImmune, Inc. (the Company), a Delaware corporation, is a
biotechnology company focused on the development and marketing of
products for the prevention and treatment of infectious diseases
and for use in transplantation medicine. The Company was
originally incorporated on June 29, 1987 and commenced operations
on April 22, 1988.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Significant accounting policies applied in the preparation
of these financial statements are as follows:
47
Cash and Cash Equivalents
The Company considers all highly liquid instruments
purchased with an original maturity of three months or less to be
cash equivalents.
Marketable Securities
Marketable securities include investments with original
maturities of greater than three months having a remaining
maturity of less than 24 months. The Company's securities are
held for an unspecified period of time and may be sold to meet
liquidity needs. The securities included as marketable
securities are considered available-for-sale as defined by
Statement of Financial Accounting Standards No. 115, "Accounting
for Certain Investments in Debt and Equity Securities".
Amortized cost of marketable securities approximates market;
therefore, no adjustment has been made to shareholders' equity as
a result of changes in market value to these securities.
Interest income is accrued as earned.
Concentration of Credit Risk
The Company has invested its excess cash generally in
securities of the U.S. Treasury, U.S. government agencies,
corporate debt securities, commercial paper and money market
funds with strong credit ratings and deposits with a major bank.
The Company has not experienced any significant losses on its
investments. The Company sells its products primarily to a
limited number of pharmaceutical wholesalers without requiring
collateral. The Company periodically assesses the financial
strength of these wholesalers and establishes allowances for
anticipated losses when necessary.
Inventory
Inventory is stated at the lower of cost or market. Cost is
48
determined using a weighted-average approach which approximates
the first-in, first-out method. The Company receives revenues
from sales of a by-product that results from production of the
Company's principal products. These sales are accounted for as a
reduction in the cost of the principal products.
Product Sales
Product sales are recognized upon shipment of the product to
wholesalers. Product sales are recorded net of reserves for
estimated chargebacks, returns, discounts, and Medicaid rebates.
The Company maintains reserves at a level which management
believes is sufficient to cover estimated future requirements.
Allowances for discounts, returns, bad debts, chargebacks and
Medicaid rebates, which are netted against accounts receivable,
totaled $2,170 and $330 at December 31, 1996 and 1995,
respectively. Product royalty expense is recognized concurrently
with the recognition of product revenue. Royalty expense,
included in cost of sales, was $4,282, $3,056 and $2,416 for the
years ended December 31, 1996, 1995 and 1994, respectively.
Contract Revenues
Contract revenues are recognized over the fixed term of the
contract or, where appropriate, as the related expenses are
incurred. Non-refundable fees or milestone payments in
connection with research and development or commercialization
agreements are recognized when they are earned in accordance with
the applicable performance requirements and contractual terms.
Payments received that are related to future performance are
deferred and recorded as revenues as they are earned over
specified future performance periods.
49
Property and Equipment
Property and equipment are stated at cost. Depreciation of
laboratory and computer equipment is computed on the straight-
line method based upon estimated useful lives ranging from 3 to 7
years. Amortization of leasehold improvements is computed on the
straight-line method based on the shorter of the estimated useful
life of the improvement or the term of the lease. Upon the
disposition of assets, the costs and related accumulated
depreciation are removed from the accounts and any resulting gain
or loss is included in the statements of operations. Repairs and
maintenance costs are expensed as incurred and were $537, $540
and $350 for the years ended December 31, 1996, 1995 and 1994,
respectively.
Lease Expense
Expense related to the facility lease is recognized on a
straight-line basis over the lease term. The difference between
rent expense incurred and the amount of rent paid is recorded as
deferred rent and is included in other liabilities on the balance
sheet.
Income Taxes
Deferred income taxes are recognized for the tax
consequences in future years of differences between the tax bases
of assets and liabilities and their financial reporting amounts
at each year end based on enacted tax laws and statutory tax
rates applicable to the periods in which the differences are
expected to affect taxable income. Valuation allowances are
established when necessary to reduce deferred tax assets to the
amount expected to be realized. Income tax expense is the tax
payable for the period and the change during the period in
deferred tax assets and liabilities.
50
Earnings (Loss) Per Common Share
Earnings (loss) per common share has been computed by
dividing net earnings (loss) by the weighted average number of
common shares and equivalents outstanding. Common share
equivalents, representing shares issuable upon assumed exercise
of stock options and warrants and conversion of debt, are
included in the computation in periods where there are earnings
and when common share equivalents would have a dilutive effect.
Common share equivalents are not included in the computation in
periods with a loss because they are antidilutive.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported
in the financial statements and accompanying notes. Actual
results could differ from those estimates.
3. INVENTORY
Inventory at December 31, is comprised of the following:
1996 1995
------ -----
Raw materials $2,073 $2,193
Work in process 2,758 2,510
Finished goods 1,229 1,324
------ -----
$6,060 $6,027
====== =======
4. PROPERTY AND EQUIPMENT
51
Property and equipment, stated at cost at December 31, is
comprised of the following:
1996 1995
----- -----
Land $ 1,521 $ --
Leasehold improvements 6,860 6,099
Laboratory equipment 7,427 5,254
Office furniture, computers and equipment 3,235 1,854
Construction in progress 17,376 537
------- -------
36,419 13,744
Less accumulated depreciation and
amortization (7,332) (5,489)
------- -------
$29,087 $8,255
======= =======
Construction in progress at December 31, 1996 includes $300 of
capitalized interest related to the design and construction of
the Company's manufacturing facility in Frederick, Maryland and
for expansion of its pilot plant in Gaithersburg, Maryland.
5. FACILITIES LEASES
The Company entered into a 15-year lease beginning in
November 1991, as amended in 1993 and 1996, for administrative
and laboratory facilities in Gaithersburg, Maryland. Under the
52
lease, the Company is obligated to pay a basic monthly rent which
will increase 3% each lease year and in 1996 totaled $855. The
lease also requires the Company to pay for utilities and its
proportionate share of taxes, assessments, insurance and
maintenance costs. Rent expense for the years ended December 31,
1996, 1995 and 1994 was $1,113, $946 and $882, respectively. The
1995 and 1994 expenses are net of sublease rental receipts of
approximately $140 per year from an affiliated company. The
sublease agreement was terminated in October 1995.
The Company's future minimum lease payments under the
facility operating lease are as follows:
Year ending December 31,
-----------------------
1997 $ 991
1998 1,021
1999 1,052
2000 1,084
2001 1,116
thereafter 6,008
--------
$ 11,272
========
6. LONG TERM DEBT
Long term debt at December 31, is comprised of the
following:
53
1996 1995
----- -----
7% convertible subordinated notes, due
2003 $60,000 $ --
7.53% note due to Maryland Industrial
Development Finance Authority, due 2007 5,000 --
4% note due to Maryland Department of
Business and Economic Development, due
2016 4,000 --
Notes payable to landlord, due through
2006, interest 11.5%-13% 1,992 2,089
------- -------
70,992 2,089
Less current portion (118) (105)
------- -------
$70,874 $1,984
======= =======
The convertible subordinated notes were issued in July 1996
and are convertible at the option of the holder into 3,038,780
shares of the Company's common stock at a conversion price of
$19.68 per share, subject to adjustments in certain events. The
notes are not redeemable by the Company prior to July 7, 1999.
After that date, the notes are redeemable with 30 days notice at
a declining premium until the due date, plus accrued interest.
The notes are subordinated to all senior debts of the Company
including the state loans and the loans from the landlord. The
54
Company may be required to redeem the notes at amounts up to 107%
of the principal amount in the event of a change in control of
the Company.
Principal and interest payments on the state notes begin in
1998. Pursuant to the terms of the agreements, the Company is
required to meet certain financial and non-financial covenants
including maintaining minimum cash balances and net worth ratios.
Cash and cash equivalents at December 31, 1996 include a $400
compensating balance related to the notes. The notes are
collateralized by the land, buildings and building fixtures of
the new manufacturing facility. Additional loans of $2.8 million
are also available and will be drawn down in 1997. The
agreements include a provision for early retirement of the notes
by the Company.
Maturities of long term debt for the next five years are as
follows: 1997, $118; 1998, $508; 1999, $678; 2000, $731 and 2001,
$789. Interest paid was $304, $250 and $256, for the years ended
December 31, 1996, 1995 and 1994, respectively. The fair value
of the Company's long term debt at December 31, 1996, based on
quoted market prices or discounted cash flows based on currently
available borrowing rates, was $74,040 compared to its carrying
value of $70,992.
7. EQUITY TRANSACTIONS
In August 1996, the shareholders of the Company approved an
increase in the authorized number of shares of common stock from
30 million shares to 60 million shares.
The holders of the Series A Convertible Preferred Stock
warrants agreed that if such warrants are exercised, the holders
thereof will simultaneously exercise their right to convert the
55
Series A Convertible Preferred Stock received upon exercise of
the warrants into 2,524,525 shares of common stock. The
warrants, which expire on January 12, 2000, are exercisable at
$1.00 per share. Pursuant to an amendment to the warrant
agreement, the holders may elect a cashless exercise of the
warrants for a reduced number of common shares based on a
calculation of the fair market value of the common stock on the
exercise date. During 1996, 415,873 of the Series A Convertible
Preferred Stock warrants were exercised and converted through a
cashless exercise into 392,142 shares of common stock. As of
December 31, 1996, the Company has reserved 2,108,652 shares of
common stock for issuance upon conversion of the Series A
Convertible Preferred Stock. The holders of common stock issued
upon conversion of the Convertible Preferred Stock have, subject
to certain limitations, piggyback and demand registration rights.
8. Common Stock Options
In April 1991, the Board of Directors adopted the 1991
Plan, amended in March 1992 and March 1995, under which 3,500,000
shares of common stock were reserved for issuance upon exercise
of options granted to employees, consultants and advisors of the
Company. In May 1993, a Non-Employee Directors Stock Option Plan
was approved by the shareholders under which 250,000 shares of
common stock were reserved for issuance upon exercise of options
granted to non-employee directors. The 1991 Plan provides for
the grant of incentive and nonqualified stock options and the Non-
Employee Directors Plan provides for the grant of nonqualified
stock options. Both Plans are administered by the Compensation
and Stock Committee of the Board of Directors. The maximum term
of each option granted is 10 years. The option
56
prices under the 1991 Plan and the Non-Employee Directors Plan
are equal to the closing market price on the day prior to the
date of grant.
Prior to the establishment of these plans, the Board of
Directors granted options and periodically set option prices.
The Board of Directors established option prices, prior to the
Company's initial public offering on May 8, 1991, based upon an
evaluation of the fair market value of the Company's stock.
Options normally vest on the anniversary date of the grant over a
three to five year period. The Company has reserved a total of
4,237,730 shares of common stock for issuance under these plans
as of December 31, 1996. Related stock option activity is as
follows:
Options Granted
Prior to
Establishment of Non-Employee
the 1991 Plan 1991 Plan Directors Plan
------------------ ------------------ -----------------
Wtd. Wtd. Wtd.
Avg. Avg. Avg.
Exercise Exercise Exercise
Price Price Price
Shares Per Per Per
Share Shares Share Shares Share
Balance, 845,985
Dec 31, 1993 1,243,367 10,000
Granted - 1,130,728 30,000
Exercised (8,420) - -
Cancelled (15,400) (920,113) -
-------- --------- -------
Balance,
Dec 31, 1994 822,165 1,453,982 40,000
Granted - $ - 1,175,600 $8.13 30,000 $12.58
Exercised (31,800) 6.90 (11,017) 7.60 - -
Cancelled (200) .80 (325,819) 11.46 - -
-------- --------- -------
Balance,
Dec 31, 1995 790,165 3.10 2,292,746 11.26 70,000 10.75
Granted - - 814,400 17.02 15,000 17.00
Exercised (232,804) .64 (55,680) 9.96 - -
Cancelled (2,000) 51.00 (109,407) 13.07 - -
-------- --------- -------
-
Balance,
Dec 31, 1996 555,361 $3.96 2,942,059 $12.81 85,000 $11.85
======== ========= =======
As of December 31, 1996:
Range of exercise
prices $.01 to 21.00 $3.50 to 43.75 $5.00 to 18.75
Wtd. Avg.
remaining
contractual life
for options
outstanding
(years) 5.4 8.0 8.1
Options
exercisable 555,361 1,056,105 30,000
Wtd. Avg.
exercise price of
options
exercisable $3.96 $13.30 $10.96
In February 1994, the Board of Directors authorized a Stock
Option Exchange Program which offered participants in the 1991
Plan holding stock options with exercise prices of $15.00 or
higher the choice to exchange their existing stock options for a
lesser number of new stock options having an exercise price of
$11.75, the fair market value on the date of grant, and a term of
8 1/2 years. As a result of the exchange program, 813,800
58
options shares were exchanged for 564,478 new option shares which
resulted in the net cancellation of 249,322 option shares.
Total option grants outstanding for all plans as of
December 31, 1996 were 3,582,420. There were 490,310 and 165,000
shares available for future option grants at December 31, 1996
under the 1991 Plan and the Non-Employee Directors Plan,
respectively.
The Company has adopted the disclosure-only provisions of
Statement of Financial Accounting Standards No. 123 (SFAS 123) as
they pertain to financial statement recognition of compensation
expense attributable to option grants. As such, no compensation
cost has been recognized on the Company's option plans. If the
Company had elected to recognize compensation cost for the 1991
Plan and the Non-Employee Directors Plan consistent with SFAS
123, the Company's net loss and loss per share on a pro forma
basis would be:
1996 1995
----- -----
Net loss - as reported $29,544 $22,671
Net loss - pro forma $31,246 $23,850
Loss per share - as reported $1.41 $1.41
Loss per share - pro forma $1.49 $1.48
The pro forma expense related to the stock options is recognized
over the vesting period, generally five years. The fair value of
each option grant was estimated using the Black-Scholes option
pricing model with the following weighted average assumptions for
each year:
59
1996 1995
----- -----
Risk-free interest rate 6.09% 6.76%
Expected life of options - years 7 7
Expected stock price volatility 75% 75%
Expected dividend yield N/A N/A
The weighted average fair value of options granted during 1996
and 1995 was $12.63 and $6.02 respectively.
9. Co-Development and Co-Promotion Agreements
On November 8, 1993, the Company signed definitive
agreements with American Cyanamid Company to form an alliance in
the United States for the development and marketing of three
generations of products to prevent and treat respiratory
syncytial virus (RSV) and for the marketing of a new anti-
infective product, ZOSYN, developed by American Cyanamid. The
parties agreed to co-promote and share profits or losses on the
Company's RSV product, RespiGam, which was licensed for marketing
by the United States Food and Drug Administration on January 18,
1996. In 1994, AHP acquired American Cyanamid and in October
1995, AHP invested $15,000 in the Company through the purchase of
967,742 shares of common stock. In connection with this
investment, the Company and AHP agreed to amend certain terms of
agreements entered into concurrently with the formation of their
1993 alliance. Pursuant to these amendments, AHP's funding
obligations and co-promotion rights with respect to the second
generation RSV product being developed by the Company were
terminated, and the Company returned its right to co-promote
ZOSYN to AHP. In addition, the Company's obligation to co-fund
60
and to co-promote an RSV vaccine being developed by AHP was
converted into the right to receive royalties on any sales of
this vaccine, and AHP was granted the right to receive royalties
on any sales of the Company's second generation RSV product
currently under development. The obligations undertaken by AHP
in 1993 to fund certain costs related to RespiGam, to make
certain milestone payments, including $4.5 million upon licensure
by the FDA, and to co-promote RespiGam are unchanged. The $4.5
million milestone payment was received and recorded as contract
revenue in 1996. Revenue of $4,791, $10,744, and $6,173 earned
in 1996, 1995 and 1994, respectively, associated with these
agreements is included as contract revenue in the accompanying
statements of operations. Additionally, $4,299 of reimbursement
for co-promotion activity has been netted against selling,
general and administrative expense for the year ended
December 31, 1996.
10. Connaught Agreement
In December 1995, the Company and Connaught amended the
agreement originally signed in 1992 under which the Company
reacquired the rights to market CytoGam. The amendment provides
for a reduction in the royalty rate to be paid by the Company on
sales of CytoGam after September 30, 1995, and an agreement
pursuant to which Connaught will fill and package the Company's
immune globulin products through 1998. In connection with this
amendment, the Company made a lump sum payment of $2.7 million in
1996 to Connaught upon completion of certain modifications to
Connaught's filling and packaging facility. The $2.7 million
charge is included as other operating expense in the accompanying
statements of operations for the year ended December 31, 1995.
61
11. INCOME TAXES
The tax effects of the temporary differences giving rise to
the Company's deferred tax assets at December 31, are as follows:
1996 1995
------ -----
Net operating loss carryforwards $ 35,562 $ 24,924
Other 4,377 3,113
------- ------
39,939 28,037
Valuation allowance (39,939) (28,037)
------- ------
Net deferred taxes $ -- $ --
======== ========
Realization of net deferred tax assets at the balance sheet
date is dependent on future earnings which are uncertain.
Accordingly, a full valuation allowance was recorded against the
assets.
As of December 31, 1996, the Company had net operating loss
carryforwards available for federal income tax reporting expiring
in years 2003 through 2011 amounting to $111.7 million. In
addition, the Company has $2 million of general business credit
carryforwards expiring through 2011.
The total regular tax net operating loss available of $111.7
million includes $19.6 million which, when realized, will not
affect financial statement income but will be recorded directly
to shareholders' equity. The realization of net operating losses
may be limited by Internal Revenue Code, Section 382.
62
12. COMMITMENTS AND CONTINGENCIES
Research, Development and License Agreements
Baxter Healthcare Corporation. In June 1995 the Company
entered into an exclusive, royalty-bearing license agreement with
Baxter Healthcare Corporation ("Baxter") to commercialize
RespiGam outside North America. Within its territory, Baxter
will be responsible for funding clinical and regulatory
activities and for manufacturing and marketing RespiGam. Upon
the achievement of certain sales milestones, Baxter is obligated
to reimburse the Company for certain previously funded research
and development activities. Concurrent with the execution of the
license agreement, Baxter also purchased 826,536 shares of common
stock for $9.5 million.
BioTransplant, Incorporated. In October 1995, the Company
and BioTransplant, Incorporated ("BTI") formed a strategic
alliance for the development of products to treat and prevent
organ transplant rejection. The alliance is based upon the
development of products derived from BTI's anti-CD2 antibody BTI-
322, the Company's anti-T cell receptor antibody MEDI-500 and
future generations of products derived from these two molecules,
including, but not limited to, MEDI-507. Pursuant to the
alliance, the Company received an exclusive worldwide license to
develop and commercialize BTI-322 and any products based on BTI-
322, with the exception of the use of BTI-322 in kits for
xenotransplantation or allotransplantation. The Company has paid
BTI $4 million in license fees and research support through
December 31, 1996. The Company has assumed responsibility for
clinical testing and commercialization of any resulting products.
63
BTI will receive additional research support and milestone
payments which could total up to an additional $12 million, as
well as royalties on any sales of BTI-322, MEDI-500, MEDI-507 and
future generations of these products, if any.
Other Agreements. The Company has entered into research,
development and license agreements with various federal and
academic laboratories and other institutions to develop further
its products and technology and to perform clinical trials.
Under these agreements, the Company is obligated to provide
funding of approximately $14,530 and $406 in 1997 and 1998,
respectively. The Company has also agreed to make milestone
payments in the aggregate amount of $3,020 on the occurrence of
certain events such as the granting by the FDA of a license for
product marketing in the United States for some of the product
candidates covered by these agreements. In exchange for the
licensing rights for commercial development of proprietary
technology, the Company has agreed to pay royalties on sales
using such licensed technologies.
Construction Agreements
The Company entered into an engineering, procurement,
construction and validation services agreement with Fluor Daniel,
Inc. ("Fluor") in July 1996 to design and construct the Company's
manufacturing facility to be located on a 26 acre site in
Frederick, Maryland. The $42.5 million contract price is being
paid over an 18 month period based on achievement of certain
milestones. In addition, the contract provides for an early
completion bonus or liquidated damages if Fluor deviates from the
agreed upon schedule. The facility will provide capacity for the
production of the Company's immune globulin products; cell
64
culture for other product candidates, including MEDI-493; filling
and packaging; warehousing; laboratories and administration.
Manufacturing, Supply and Purchase Agreements
The Company has entered into manufacturing, supply and
purchase agreements in order to provide production capability for
CytoGam and RespiGam, and to provide a supply of human plasma for
production of both products. No assurances can be given that an
adequate supply of plasma will be available from the Company's
suppliers. Human plasma for CytoGam and RespiGam is converted to
an intermediate raw material (Fraction II+III paste) under a
supply agreement. This intermediate material is then supplied to
the manufacturer of the bulk product. The Company has an informal
arrangement with the bulk manufacturer for planned production
through June 1997 for $5,141, subject to production level
adjustments. If the bulk manufacturer, which holds the sole
product and establishment licenses from the FDA for the
manufacture of CytoGam and RespiGam, is unable to satisfy the
Company's requirements for both products on a timely basis or is
prevented for any reason from manufacturing CytoGam and RespiGam,
the Company may be unable to secure an alternative manufacturer
without undue and materially adverse operational disruption and
increased cost. The Company also has an agreement with Connaught
to fill and package the Company's immune globulin products
through 1998.
13. PENSION PLAN
The Company has a defined contribution 401(k) pension plan
available to all full time employees. Employee contributions are
voluntary and are determined on an individual basis subject to
65
the maximum allowable under federal tax regulations. Participants
are always fully vested in their contributions. There have been
no employer contributions under the plan.
66
Report of Independent Accountants
To the Board of Directors and Shareholders MedImmune, Inc.
We have audited the accompanying balance sheets of
MedImmune, Inc. (the Company) as of December 31, 1996 and 1995,
and the related statements of operations, shareholders' equity
and cash flows and financial statement schedule for each of the
three years in the period ended December 31, 1996. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements and financial statement schedule based on
our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of the Company as of December 31, 1996 and 1995, and the results
of its operations and its cash flows for each of the three years
in the period ended December 31, 1996 in conformity with
generally accepted accounting principles. In addition, in our
opinion the financial statement schedule referred to above, when
67
considered in relation to the basic financial statements taken as
a whole, presents fairly, in all material respects, the
information required to be included therein.
COOPERS & LYBRAND L.L.P.
Rockville, Maryland
February 6, 1997
68
Report of Management
The management of the Company is responsible for the
preparation of the financial statements and related financial
information included in this annual report. The statements were
prepared in conformity with generally accepted accounting
principles, and accordingly, include amounts that are based on
informed estimates and judgments.
Management maintains a system of internal controls to
provide reasonable assurance that assets are safeguarded and that
transactions are properly authorized and accurately recorded.
The concept of reasonable assurance is based on the recognition
that there are inherent limitations in all systems of internal
accounting control and that the costs of such systems should not
exceed the benefits expected to be derived. The Company
continually reviews and modifies these systems, where
appropriate, to maintain such assurance. The system of internal
controls includes careful selection, training and development of
operating and financial personnel, well defined organizational
responsibilities and communication of Company policies and
procedures throughout the organization.
The selection of the Company's independent accountants,
Coopers & Lybrand L.L.P., has been approved by the Board of
Directors and ratified by the shareholders. The Audit Committee
of the Board of Directors, composed solely of outside directors,
meets periodically with the Company's independent accountants and
management to review the financial statements and related
information and to confirm that they are properly discharging
their responsibilities. In addition, the independent accountants
and the Company's legal counsel meet with the Audit Committee,
without the presence of management, to discuss their findings and
69
their observations on other relevant matters. Recommendations
made by Coopers & Lybrand L.L.P. are considered and appropriate
action is taken to respond to these recommendations.
Wayne T. Hockmeyer, Ph.D. David M. Mott
Chairman and Chief Executive President and Chief Operating
Officer Officer
Lawrence C. Hoff
Chairman of the Audit Committee
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF MEDIMMUNE, INC.
Information with respect to directors is included in the
Company's Proxy Statement to be filed pursuant to Regulation 14A
(the "Proxy Statement") under the caption "Election of
Directors," and such information is incorporated herein by
reference. Set forth in Part I, Item 1, are the names and ages
(as of February 6, 1997), the positions and offices held by, and
a brief account of the business experience during the past five
years of each executive officer.
70
All directors hold office until the next annual meeting of
shareholders and until their successors are elected and
qualified. Officers are elected to serve, subject to the
discretion of the Board of Directors, until their successors are
appointed.
ITEM 11. EXECUTIVE COMPENSATION
The section entitled "Executive Compensation" and the
information set forth under the caption "Election of Directors-
Director Compensation" included in the Proxy Statement are
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The common stock information in the section entitled
"Principal Shareholders" of the Proxy Statement is incorporated
herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The section entitled "Certain Transactions" of the Proxy
Statement is incorporated herein by reference.
71
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON
FORM 8-K
The following documents or the portions thereof indicated
are filed as a part of this report.
a) Documents filed as part of the Report
1. Financial Statements and Supplemental Data
a. Balance Sheets at December 31, 1996 and 1995
b. Statements of Operations for the years ended
December 31, 1996, 1995 and 1994
c. Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994
d. Statements of Shareholders' Equity for the years
ended December 31, 1996, 1995 and 1994
e. Notes to Financial Statement
f. Report of Independent Accountants
g. Report of Management
2. Supplemental Financial Statement Schedule
Schedule I - Valuation and Qualifying Accounts Page S-1
b) Reports on Form 8-K
Date Filed Event Reported
10/4/96 MedImmune Reports 63 Percent Increase in
Product Sales
11/22/96 MedImmune Promotes William I. Braden to Vice
President, Engineering, Facilities and
Validation; MedImmune Commences Phase 3
Trial to Evaluate Respiratory Syncytial
Virus Monoclonal Antibody; MedImmune
appoints former Chiron Executive to Vice
President of Business Development
11/25/96 Complete H. Pylori Genome Sequence Licensed
to Oravax and Pasteur Merieux Connaught in
Exclusive Agreement with MedImmune and Human
Genome Sciences for Development of Novel
Vaccines
12/11/96 MedImmune Files IND to Begin Human Clinical
Trials for First Preventative Human
Papillomavirus Vaccine Candidate
12/17/96 MedImmune Announces Second U. S. Patent
Issued for RespiGam; MedImmune Completes
Patient Enrollment in Phase 3 Trial of
Monoclonal Antibody for Respiratory
Syncytial Virus
12/18//96 MedImmune and Biotransplant Begin Phase 2
Trial Evaluating BTI-322 in Treatment of
Graft-versus-Host Disease
C) ITEM 601 EXHIBITS
Those exhibits required to be filed by Item 601 of Regulation S-K
are listed in the Exhibit Index immediately preceding the
exhibits filed herewith and such listing is incorporated by
reference.
73
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Date: March 27, 1997 By: Wayne T. Hockmeyer
Chairman and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons in the
capacities and on the dates indicated.
Date: March 27, 1997 Wayne T. Hockmeyer
Chairman and
Chief Executive Officer
(Principal executive officer)
Date: March 27, 1997 David M. Mott
President and Chief
Operating Officer (Principal
financial and accounting officer)
Date: March 27, 1997 M. James Barrett, Director
Date: March 27, 1997 James H. Cavanaugh, Director
Date: March 27, 1997 Gordon S. Macklin , Director
Date: March 27, 1997 Franklin H. Top, Jr., Director
Date: March 27, 1997 Barbara Hackman Franklin, Director
74
Schedule I
MedImmune, Inc.
Valuation and Qualifying Accounts
(in thousands)
Balance
at Balance
beginning at end
of of
Description period Additions Deductions period
- -------------------------- --------- ---------- ---------- -------
For the year ended
December 31, 1996
Trade and Contract
Receivables Allowance $309 $2,136 ($1,020) $1,425
Trade Receivables Bad
Debt Reserve 21 724 -- 745
Inventory Reserve 417 249 (658) 8
------ ------ ------ ------
$747 $3,125 ($1,694) $2,178
====== ====== ====== ======
For the year ended
December 31, 1995
Trade and Contract
Receivables Allowance $272 $498 ($461) $309
Trade Receivables Bad
Debt Reserve 16 5 -- 21
Inventory Reserve -- 500 (83) 417
------ ------ ------ ------
$288 $1,003 ($544) $747
====== ====== ====== ======
For the year ended
December 31, 1994
Trade and Contract
Receivables Allowance $344 $330 ($402) $272
Trade Receivables Bad
Debt Reserve -- 16 -- 16
Inventory Reserve -- -- -- --
------ ------ ------ ------
$344 $346 ($402) $288
====== ====== ====== ======
S-1
c) Item 601 Exhibits
3.1(4) Restated Certificate of Incorporation, dated May 14, 1991
3.2(3) By-Laws, as amended
10.1(1)(3) License Agreement dated November 15, 1990 between the
Company and Merck & Co., Inc. ("Merck")
10.2(3) Plasma Supply Agreement dated May 31, 1990 between the
Company and Plasma Alliance, Inc.
10.3(3) Termination Agreement dated June 29, 1990 between the
Company and Pediatric Pharmaceuticals, Inc. ("PPI")
(formerly MedImmune, Inc.)
10.4(3) RSV Research Agreement dated August 1, 1989 between the
Company, PPI and the Massachusetts Health Research
Institute, Inc. ("MHRI")
10.5(3) RSV License Agreement dated August 1, 1989 between the
Company, PPI and MHRI
10.6(3) RSV Supply Agreement dated August 1, 1989 between the
Company, PPI, MHRI and the Massachusetts Public Health
Biologic Laboratory ("MPHBL")
10.7(3) CMV License Agreement dated April 23, 1990 between the
Company and MHRI
10.8(3) First Amendment to CMV License Agreement dated May 3, 1991
between the Company and MHRI
10.9(3) CMV Research Agreement dated April 23, 1990 between the
Company, MHRI and MPHBL
10.10(3) License Agreement dated November 8, 1989 between the
Company, PPI, and the Henry M. Jackson Foundation for the
Advancement of Military Medicine ("HMJ")
10.11(3) Research Agreement dated November 8, 1989 between the
Company, PPI and HMJ
10.12(1)(3) Research and License Agreement dated April 1, 1990 between
the Company and New York University
10.13(1)(3) Research and License Agreement dated January 2, 1991
between the Company and the University of Pittsburgh
10.14(3) Patent License Agreement between the Company and the
National Institutes of Health regarding parvovirus
10.15(3) License Agreement dated September 1, 1988 between the
Company and Albany Medical College of Union College
10.16(3) License Agreement dated July 5, 1989 between the Company,
Albert Einstein College of Medicine of Yeshiva University,
The Whitehead Institute and Stanford University
10.17(3) License Agreement dated July 1, 1989 between the Company
and the National Technical Information Service ("NTIS")
10.18(3) License Agreement dated September 1, 1989 between the
Company and NTIS
E-1
10.19(5) Form of Stock Option Agreement, as amended
10.20(3) Convertible Preferred Stock and Warrant Purchase Agreement
between HCV, Everest Trust and the Company dated January
12, 1990 with form of Warrant
10.21(3) Restated Stockholders' Agreement dated May 15, 1991
10.22(3) Lease Agreement between Clopper Road Associates and the
Company dated February 14, 1991
10.23(7) 1991 Stock Option Plan
10.24(3) Sublease between the Company and Pharmavene, Inc.
10.25(4) Agreement between New England Deaconess Hospital
Corporation and the Company, dated as of August 1, 1991
10.26(1)(4) Research Collaboration Agreement between Merck and the
Company effective as of November 27, 1991
10.27(1)(4) Co-promotion Agreement between Merck and the Company
effective as of November 27, 1991
10.28(1)(4) License Agreement between Merck and the Company effective
as of November 27, 1991
10.29(1)(5) Letter Agreement between Merck and the Company, dated
January 26, 1993
10.30(1)(5) Termination, Purchase and Royalty Agreement between CLI and
the Company, dated December 24, 1992
10.30.1(1)(12)Amendment to Termination, Purchase and Royalty
Agreement between Connaught Technology Corporation and
MedImmune, Inc. dated December 31, 1995
10.31(1)(5) Research and License Agreement between Cell Genesys, Inc.
and the Company, dated April 29, 1992
10.31(a)(5) Unredacted pages 2-5 of Exhibit 10.31
10.32(5) Form of 1993 Non-Employee Director Stock Option Plan
10.33(1)(8) Sponsored Research and License Agreement between Georgetown
University and the Company dated February 25, 1993
10.34(1)(8) License Agreement between Roche Diagnostic Systems, Inc.
and the Company dated March 8, 1993
10.35(1)(8) Pip/Tazo Co-Promotion Agreement between American Cyanamid
Company and the Company dated November 8, 1993
10.35.1(12) Agreement dated October 26, 1995 between American Cyanamid
Company and the Company
10.36(1)(8) RSVIG Co-Development and Co-Promotion Agreement between
American Cyanamid Company and the Company dated November 8,
1993
10.36.1(12) Agreement dated October 26, 1995 between American Cyanamid
Company and the Company
10.37(1)(8) RSV MAB Co-Development and Co-Promotion Agreement between
American Cyanamid Company and the Company dated November 8,
1993
E-2
10.37.1(12) Agreement dated October 26, 1995 between American Cyanamid
Company and the Company
10.38(1)(8) RSV Vaccine Co-Development and Co-Promotion Agreement
between American Cyanamid Company and the Company dated
November 8, 1993
10.38.1(12) Agreement dated October 26, 1995 between American Cyanamid
Company and the Company
10.39(1)(10)Fraction II + III Paste Supply Agreement between Baxter
Healthcare Corporation and the Company dated September 1,
1994
10.40(11) Employment Agreement between David P. Wright and the
Company dated January 2, 1995
10.41(11) Employment Agreement between Bogdan Dziurzynski and the
Company dated February 1, 1995
10.42(11) Employment Agreement between Wayne T. Hockmeyer and the
Company dated February 1, 1995
10.43(11) Employment Agreement between David M. Mott and the Company
dated February 1, 1995
10.44(11) Employment Agreement between Franklin H. Top, Jr. and the
Company dated February 1, 1995
10.45(11) Employment Agreement between James F. Young and the Company
dated February 1, 1995
10.46(1)(11)License Agreement between Symbicom AB and the Company dated
May 20, 1994
10.47(1)(11)License Agreement between the University of Kentucky
Research Foundation and the Company effective June 10,
1994
10.48(1)(11)Research and Development Agreement between the University
of Kentucky Research Foundation and the Company effective
June 10, 1994
10.49(1)(11)Research and License Agreement between Washington
University and the Company effective July 1, 1994
10.50(1)(11)Research and License Agreement between Washington
University and the Company effective March 1, 1995
10.51(1)(9) License Agreement between Baxter Healthcare Corporation and
MedImmune, Inc. effective June 2, 1995
10.52(1)(9) Stock Purchase Agreement between Baxter Healthcare
Corporation and MedImmune, Inc. dated June 22, 1995
10.53(1)(10) Alliance Agreement between BioTransplant, Inc. and
MedImmune, Inc. dated October 2, 1995
10.54(12) Stock Purchase Agreement dated October 25, 1995 between
MedImmune, Inc. And American Home Products
10.55(2)(12)Collaboration and License Agreement dated as of July 27,
1995 between MedImmune, Inc. And Human Genome Sciences,
Inc.
E-3
10.56(12) Stipulation of Settlement in reference to MedImmune, Inc.
Securities Litigation, Civil Action No. PJM93-3980
10.57(2)(13)Plasma Supply Agreement dated effective as of February 8,
1996, by and between DCI Management Group, Inc. and
MedImmune, Inc.
10.58(2)(13)License and Research Support Agreement dated as of April
16, 1996, between The Rockefeller University and MedImmune,
Inc.
10.59 First Amendment of Lease Between Clopper Road Associates
and MedImmune, Inc. dated June 8, 1993.
10.60 Second Amendment of Lease Between Clopper Road Associates
and MedImmune, Inc. dated June 30, 1993.
10.61 Third Amendment of Lease between Clopper Road Associates
and MedImmune, Inc. effective as of January 1, 1995.
10.62 Fourth Amendment of Lease between Clopper Road Associates
and MedImmune, Inc. dated October 3, 1996.
10.63 Fifth Amendment of Lease between Clopper Road Associates
and MedImmune, Inc. dated October 3, 1996.
10.64(2) Engineering, Procurement, Construction and Validation
Services Agreement between MedImmune, Inc. and Fluor
Daniel, Inc. effective as of July 31, 1996.
10.65(2) Research and License Agreement between OraVax Merieux Co.
and MedImmune, Inc. effective as of November 1, 1996.
23.1 Consent of Independent Accountants
______________
(1) Confidential treatment has been granted as to certain
portions by the SEC. The copy filed as an exhibit omits the
information subject to the confidentiality grant.
(2) Confidential treatment has been requested as to certain
portions. The copy filed as an exhibit omits the
information subject to the confidentiality request.
(3) Incorporated by reference to exhibit filed in connection
with the Company's Registration Statement No. 33-39579.
(4) Incorporated by reference to exhibit filed in connection
with the Company's Registration Statement No. 33-43816.
(5) Incorporated by reference to exhibit filed in connection
with the Company's Annual Report on Form 10-K for the year
ended December 31, 1992.
(6) Incorporated by reference to exhibit filed in connection
with the Company's Annual Report on Form 10-K for the year
ended December 31, 1991.
(7) Incorporated by reference to exhibit filed in connection
with the Company's Registration Statement No. 33-46165.
E-4
(8) Incorporated by reference to exhibit filed in connection
with the Company's Annual Report on Form 10-K for the year
ended December 31, 1993.
(9) Incorporated by reference to exhibit filed in connection
with the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1995.
(10) Incorporated by reference to exhibit filed in connection
with the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1995.
(11) Incorporated by reference to exhibit filed with the
Company's Annual Report on Form 10-K for December 31, 1994.
(12) Incorporated by reference to exhibit filed with the
Company's Annual Report on Form 10-K for December 31, 1995.
(13) Incorporated by reference to exhibit filed with the
Company's Quarterly Report on Form 10-Q for the Quarter
ended June 30, 1996.
E-5