SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
{X} QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
Commission File No. 0-19131
MEDIMMUNE, INC.
(Exact name of registrant as specified in its charter)
Delaware 52-1555759
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
35 West Watkins Mill Road, Gaithersburg, MD 20878
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (301) 417-0770
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
As of March 31, 1997, 21,901,918 shares of Common Stock, par
value $0.01 per share, were outstanding.
MEDIMMUNE, INC.
Index to Form 10-Q
Part I Financial Page
Item 1. Financial Statements
Balance Sheets 1
Statements of Operations 2
Condensed Statements of Cash Flows 3
Notes to Financial Statements 4-5
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 6-7
Part II Other Information 8-9
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security
Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
CytoGam and RespiGam are registered trademarks of the
Company.
ITEM 1. FINANCIAL STATEMENTS
MEDIMMUNE, INC.
BALANCE SHEETS
(in thousands, except share data)
March 31 December 31,
1997 1996
---------- ----------
ASSETS: (Unaudited)
Cash and cash equivalents $5,989 $12,629
Marketable securities 86,979 102,136
Trade receivables, net 6,036 8,123
Contract receivables, net 1,802 2,164
Inventory, net 8,998 6,060
Other current assets 1,854 1,713
---------- ----------
Total Current Assets 111,658 132,825
Property and equipment, net 41,536 29,087
Other assets 2,379 2,059
---------- ----------
Total Assets $155,573 $163,971
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Accounts payable $3,175 $3,942
Accrued expenses 16,277 10,509
Product royalties payable 1,431 2,559
Accrued interest 1,232 2,057
Other current liabilities 514 469
---------- ----------
Total Current Liabilities 22,629 19,536
Long term debt 73,245 70,874
Other liabilities 714 696
---------- ----------
Total Liabilities 96,588 91,106
---------- ----------
Commitments and Contingencies
SHAREHOLDERS' EQUITY:
Preferred stock, $.01 par value; authorized
5,524,525 shares; none issued or outstanding -- --
Common stock, $.01 par value; authorized
60,000,000 shares; issued and outstanding
21,901,918 at March 31, 1997 and
21,836,763 at December 31, 1996 219 218
Paid-in capital 172,465 172,024
Accumulated deficit (113,699) (99,377)
---------- ----------
Total Shareholders' Equity 58,985 72,865
---------- ----------
Total Liabilities and Shareholder's Equity $155,573 $163,971
========== ==========
The accompanying notes are an integral part of these financial
statements.
(1)
MEDIMMUNE, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands except per share data)
For the
three months ended
March 31,
1997 1996
-------- --------
REVENUES:
Product sales $10,131 $6,624
Contracts 7 4,810
-------- --------
Total revenues 10,138 11,434
-------- --------
COSTS AND EXPENSES:
Cost of sales 5,215 4,059
Research and development 13,368 5,393
Selling, administrative and general 6,436 4,357
-------- --------
Total expenses 25,019 13,809
-------- --------
Operating Loss (14,881) (2,375)
Interest income 1,538 868
Interest expense (979) (61)
-------- --------
Net Loss ($14,322) ($1,568)
======== ========
Loss Per Common Share ($0.65) ($0.08)
======== ========
Shares Used in Computing
Loss Per Share 21,874 19,294
======== ========
The accompanying notes are an integral part of these financial
statements.
(2)
MEDIMMUNE, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
For the
three months ended
March 31,
1997 1996
-------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($14,322) ($1,568)
Noncash items:
Depreciation and amortization 493 425
Amortization of premium (discount) on
marketable securities 274 (164)
Other 99 21
Other changes in assets and liabilities 2,058 (1,418)
-------- ---------
Net cash used in operating activities (11,398) (2,704)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease (increase) in marketable securities 14,883 (35,962)
Capital expenditures (12,942) (1,514)
-------- ---------
Net cash provided by (used in) 1,941 (37,476)
investing activities -------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common
stock and exercise of stock options 442 58,380
Increase (decrease) in long term debt 2,375 (25)
-------- ---------
Net cash provided by financing
activities 2,817 58,355
-------- --------
Net (decrease) increase in cash and cash
equivalents (6,640) 18,175
Cash and cash equivalents at beginning
of period 12,629 14,165
-------- ---------
Cash and cash equivalents at end of period $5,989 $32,340
======== =========
The accompanying notes are an integral part of these financial
statements.
(3)
MEDIMMUNE, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
General
The financial information presented as of March 31, 1997, and for
the periods ended March 31, 1997 and 1996, is unaudited. In the
opinion of the Company's management, the financial information
contains all adjustments (which consist only of normal recurring
adjustments) necessary for a fair presentation of such financial
information.
Inventory
Inventory is comprised of the following (in thousands):
March 31, 1997 December 31, 1996
-------------- -----------------
Raw Materials $4,393 $2,073
Work in Process 3,614 2,758
Finished Goods 991 1,229
------ ------
$8,998 $6,060
====== ======
Property and Equipment
Property and equipment, stated at cost, is comprised of the
following (in thousands):
March 31, December 31,
1997 1996
---------- -----------
Land $1,521 $1,521
Leasehold improvements 7,313 6,860
Laboratory equipment 7,610 7,427
Office furniture, computers,
and equipment 3,414 3,235
Construction in progress 29,503 17,376
-------- --------
49,361 36,419
Less accumulated depreciation and
amortization (7,825) (7,332)
-------- --------
$41,536 $29,087
======== ========
(4)
Property and equipment at March 31, 1997 includes $0.6 million of
capitalized interest related to the design and construction of
the Company's manufacturing facility in Frederick, Maryland and
its pilot plant facility in Gaithersburg, Maryland.
Long Term Debt
The Company drew down $2.4 million of a total of $2.8 million of
4% State notes that were available in first quarter 1997. The
remaining $0.4 million will be drawn down in the second quarter.
Principal and interest payments on the notes begin in 1998.
Earnings per Share
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, Earnings Per
Share, effective for financial statements for both interim and
annual periods ending after December 15, 1997. This Statement
replaces the existing presentation of primary and fully diluted
earnings per share with basic and diluted earnings per share.
The changes in calculation and presentation are not expected to
have a material effect on the Company's disclosure of earnings
per share.
(5)
ITEM 2.
MEDIMMUNE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
Product sales grew to $10.1 million in first quarter 1997 from
$6.6 million in first quarter 1996, an increase of 53%. CytoGam
sales increased 20% to $5.0 million from $4.2 million in first
quarter 1996. Sales of RespiGam increased 109% to $5.2 million
in first quarter 1997 from $2.5 million in first quarter 1996.
Supply constraints limited first quarter 1997 sales of RespiGam.
Contract revenue in the 1996 first quarter of $4.5 million
includes final milestone and research funding payments under the
Company's strategic alliance with American Home Products ("AHP"),
formerly American Cyanamid Company. Under the terms of the
alliance, the Company and AHP share in the profits or losses of
RespiGam; reimbursements or payments under this arrangement are
deducted from or added to operating expenses.
Cost of sales increased to $5.2 million in first quarter 1997
from $4.1 million in first quarter 1996, an increase of 28%.
This increase was primarily attributable to a 48% increase in
unit volume for CytoGam and RespiGam, offset by a reduction in
the per unit costs of both CytoGam and RespiGam due to lower
production costs. Per unit costs in 1996 were also impacted by
finished product inventory purchased from a third party at a
higher cost, as well as a one-time write-off of $0.3 million for
inventory produced while conducting RespiGam clinical trials.
Research, development and clinical spending increased 148% to
$13.4 million in this year's quarter from $5.4 million in last
year's quarter, reflecting the costs of conducting the Company's
1,502 patient Phase 3 MEDI-493 (RSV monoclonal antibody) clinical
trial. Selling, administrative and general expenses increased to
$6.4 million in this year's quarter versus $4.4 million in the
1996 quarter, an increase of 48%. This increase was primarily a
result of marketing expenses incurred for RespiGam and the full
quarter effect of expenses associated with the expansion of the
sales force for RespiGam, partially offset by reimbursement from
AHP for their share of RespiGam product line loss for the
quarter. An additional $0.2 million increase in general and
administrative expenses was incurred primarily due to non-
capitalizable labor costs incurred in connection with
construction of the Company's Frederick manufacturing facility.
(6)
Interest income of $1.5 million was earned in the 1997 first
quarter, compared to $0.9 million in the first quarter of 1996
reflecting higher cash balances available for investment and an
increase in interest rates which improved the overall portfolio
yield. Interest expense of $1.0 million, reflecting interest due
on the convertible debt issued in July 1996, was incurred in the
1997 quarter versus $0.1 million in the 1996 quarter.
The net loss incurred in the 1997 first quarter was $14.3
million, or $0.65 per common share, compared to a net loss for
the first quarter of 1996 of $1.6 million, or $0.08 per common
share. Shares used in computing loss per share were 21.9 million
and 19.3 million for the 1997 and 1996 quarters, respectively.
These results were consistent with the Company's objectives for
the quarter and with the continued development of its products.
Quarterly financial results may vary significantly due to
seasonality of RespiGam product sales, fluctuation in sales of
CytoGam, research funding and expenditures for research,
development and marketing programs. RespiGam sales are expected
to occur primarily during, and in proximity to, the RSV season,
which typically occurs between November and April in the United
States. No assurances can be given that adequate product supply
will be available to meet demand. In the second quarter of 1997,
the Company anticipates substantial research and development
expenses, primarily reflecting costs to complete the Phase 3 MEDI-
493 clinical trial. These costs are expected to decrease
significantly in the third and fourth quarters once the trial
concludes.
LIQUIDITY AND CAPITAL RESOURCES
Cash and marketable securities at March 31, 1997 were $93.0
million compared to $114.8 million at 1996 year end. Net cash
used in operating activities in the three months ended March 31,
1997 was $11.4 million, reflecting primarily the net loss for the
period and an increase in plasma inventory, offset by increased
accruals for clinical trial expenses and a decrease in accounts
receivable. Capital expenditures of $12.9 million for the three
months were primarily for construction of the manufacturing
facility, expansion of the pilot plant, and lab equipment. The
total cost for the construction of the manufacturing facility and
the expansion of the pilot plant is expected to be approximately
$56 million, of which $33.1 million had been spent as of
March 31, 1997. The Company's existing funds at March 31, 1997,
together with funds expected 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 12 months, absent the occurrence of any unforeseen
events.
(7)
____________________
THE STATEMENTS IN THIS QUARTERLY REPORT THAT ARE NOT DESCRIPTIONS
OF HISTORICAL FACTS MAY BE FORWARD-LOOKING STATEMENTS. SUCH
STATEMENTS REFLECT MANAGEMENT'S CURRENT VIEWS, ARE BASED ON
CERTAIN ASSUMPTIONS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES,
INCLUDING BUT NOT LIMITED TO, FACTORS SUCH AS PRODUCT DEMAND AND
MARKET ACCEPTANCE RISKS, THE EARLY STAGE OF PRODUCT DEVELOPMENT,
COMMERCIALIZATION AND TECHNOLOGICAL DIFFICULTIES, CAPACITY AND
SUPPLY CONSTRAINTS AND OTHER RISKS DETAILED IN THE COMPANY'S
FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. ACTUAL
RESULTS COULD DIFFER MATERIALLY FROM THOSE CURRENTLY ANTICIPATED
AS A RESULT OF THE FOREGOING OR OTHER FACTORS.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Defaults upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders -
[Change in number of authorized shares]
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
10.66 Employment Agreement, dated as of April 1,
1997 by and between Wayne T. Hockmeyer and
MedImmune, Inc.
10.67 Employment Agreement, dated as of April 1,
1997 by and between David M. Mott amd
MedImmune, Inc.
10.68 Employment Agreement, dated as of April 1,
1997 by and between Franklin H. Top, Jr. and
MedImmune, Inc.
10.69 Employment Agreement, dated as of April 1,
1997 by and between David P. Wright and
MedImmune, Inc.
10.70 Employment Agreement, dated as of April 1,
1997 by and between James F. Young and
MedImmune, Inc.
10.71 Employment Agreement, dated as of April 1,
1997 by and between Bogdan Dziurzynski and
MedImmune, Inc.
(8)
(b) Reports on Form 8-K:
Report Date Event reported
1/8/97 MedImmune Reports the Publication of
RespiGam "PREVENT" Study Results in
this Month's Issue of Pediatrics
2/3/97 MedImmune Begins Clinical Trial with
the First Preventative Human
Papillomavirus Vaccine Candidate
2/6/97 MedImmune Reports Product Sales
Increase 250 Percent for Q4 1996 -
Successful launch of new product to
prevent serious RSV in infants
3/10/97 MedImmune Reports First MEDI-493
Clinical Trial Results
3/20/97 MedImmune Reports Results from Double-
Blind, Placebo-Controlled, Phase 1/2
Clinical Trial of MEDI-493
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
MEDIMMUNE, INC.
(Registrant)
Date: May 15, 1997 David M. Mott
President and
Chief Operating Officer
(Principal accounting and
financial officer)
(9)