<Page>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
Quarterly report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended September 30, 2001 Commission File No. 000-29089
Antigenics Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware 06-1562417
(State of Incorporation) (I.R.S. Employer Identification Number)
630 Fifth Avenue, Suite 2100, New York, New York, 10111
(Address of Principal Executive Offices)
(212) 332-4774
(Registrant's Telephone Number, including Area Code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
---------------- ----------------
Number of shares outstanding of the registrant's Common Stock as of November 7,
2001: 29,004,277 shares
<Page>
Antigenics Inc.
Quarter Ended September 30, 2001
Table of Contents
PART I - FINANCIAL INFORMATION Page
----
Item 1 - Unaudited Consolidated Financial Statements:
Consolidated Balance Sheets (unaudited)
December 31, 2000 and September 30, 2001......................................1
Consolidated Statements of Operations (unaudited)
For the Three and Nine Months ended September 30, 2000
and 2001......................................................................2
Consolidated Statements of Cash Flows (unaudited)
For the Nine Months ended September 30, 2000 and 2001.........................3
Notes To Unaudited Consolidated Financial Statements............................................4
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations...........9
Item 3 - Quantitative and Qualitative Disclosures About Market Risk.....................................13
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings..............................................................................14
Item 2 - Changes in Securities and Use of Proceeds from Registered Securities...........................14
Item 6(a) - Exhibits....................................................................................14
Item 6(b) - Current Reports on Form 8-K.................................................................15
Signatures..............................................................................................16
<Page>
PART I - FINANCIAL INFORMATION
Item 1 - Unaudited Consolidated Financial Statements
ANTIGENICS INC. AND SUBSIDIARIES
Consolidated Balance Sheets
DECEMBER 31, 2000 SEPTEMBER 30, 2001
(Unuadited)
--------------------- ----------------------
Assets
Cash and cash equivalents $ 96,142,726 71,748,101
Marketable securities 2,996,750 --
Accounts receivable 532,896 692,981
Inventories 669,618 1,394,135
Prepaid expenses 619,324 1,267,374
Other assets 631,095 402,199
Due from related party 376 --
--------------------- ----------------------
Total current assets 101,592,785 75,504,790
Plant and equipment, net of accumulated amortization and
depreciation of $2,942,744 and $4,966,510 at December 31, 2000
and September 30, 2001, respectively 14,640,281 14,292,693
Goodwill, net of accumulated amortization of $24,895 and
$232,802 at December 31, 2000 and September 30, 2001,
respectively 2,962,475 2,829,669
Intangible assets, net of accumulated amortization of $131,668
and $844,030 at December 31, 2000 and September 30, 2001,
respectively 6,644,163 10,515,006
Other assets 2,125,996 2,469,924
--------------------- ----------------------
Total assets $127,965,700 105,612,082
===================== ======================
Liabilities and Stockholders' Equity
Accounts payable $ 2,273,631 3,377,215
Accrued liabilities 4,002,983 6,392,437
Current portion, long-term debt 2,334,646 5,748,353
--------------------- ----------------------
Total current liabilities 8,611,260 15,518,005
Long-term liabilities 2,650,959 873,101
Commitments and contingencies
Stockholders' Equity:
Preferred stock, par value $0.01 per share; 1,000,000 -- --
shares authorized; no shares issued and outstanding
Common stock, par value $0.01 per share; 100,000,000
shares authorized; 27,316,295 and 28,996,936 shares
issued and outstanding at December 31, 2000 and
September 30, 2001, respectively 273,162 289,968
Additional paid-in capital 202,253,314 234,215,882
Accumulated other comprehensive loss (199,711) (237,977)
Deferred compensation (1,277,357) (965,450)
Accumulated deficit (84,345,927) (144,081,447)
--------------------- ----------------------
Total stockholders' equity 116,703,481 89,220,976
--------------------- ----------------------
Total liabilities and stockholders' equity $127,965,700 105,612,082
===================== ======================
See accompanying notes to unaudited consolidated financial statements.
1
<Page>
ANTIGENICS INC. AND SUBSIDIARIES
Consolidated Statements of Operations
For the three and nine months ended September 30, 2000 and 2001
(unaudited)
Three months ended September 30, Nine months ended September 30,
---------------------------------- -------------------------------
2000 2001 2000 2001
---------------- ---------------- ---------------- --------------
Revenue:
Product sales $ -- 160,287 -- 1,149,271
Research and development -- 634,192 -- 1,807,162
---------------- ---------------- ---------------- --------------
Total Revenue -- 794,479 -- 2,956,433
Expenses:
Cost of sales -- (107,089) -- (687,687)
Research and development (4,356,197) (8,979,141) (11,736,477) (21,604,905)
General and administrative (2,008,106) (3,682,055) (6,447,681) (10,337,655)
Acquired in-process research and development -- (32,436,347) -- (32,436,347)
---------------- ---------------- ---------------- --------------
Operating loss (6,364,303) (44,410,153) (18,184,158) (62,110,161)
Other income/(expense):
Other -- (41,106) -- (41,106)
Interest expense (91,608) (237,083) (296,345) (542,344)
Interest income 1,705,046 684,803 4,520,532 2,958,091
---------------- ---------------- ---------------- --------------
Net loss $(4,750,865) (44,003,539) (13,959,971) (59,735,520)
================ ================ ================ ==============
Net loss per share,
basic and diluted $ (0.19) (1.53) (0.58) (2.14)
================ ================ ================ ==============
Weighted average number of shares outstanding,
basic and diluted 24,804,804 28,785,265 24,193,251 27,852,363
================ ================ ================ ==============
See accompanying notes to unaudited consolidated financial statements.
2
<Page>
ANTIGENICS INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the nine months ended September 30, 2000 and 2001
(unaudited)
September 30,
----------------------------------------
2000 2001
------------------ ------------------
Cash flows from operating activities:
Net loss $(13,959,971) (59,735,520)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 1,141,570 2,944,035
Stock options 2,235,333 971,790
Acquired in-process research and
development -- 32,436,347
Changes in operating assets and liabilities:
Other assets 444,871 63,612
Prepaid expenses (384,368) (522,541)
Inventories -- (724,517)
Accounts receivable -- (160,085)
Accounts payable 1,285,238 (598,897)
Accrued liabilities 404,916 (1,694,698)
Due to/from related party, net 240 376
------------------ ------------------
Net cash used in operating activities (8,832,171) (27,020,098)
------------------ ------------------
Cash flows from investing activities:
Purchases of plant and equipment (1,730,653) (1,249,485)
Investments (300,000) (225,000)
Deferred Aquila Biopharmaceuticals merger
costs (689,939) --
Proceeds from sale of marketable securities -- 2,996,750
Net cash acquired in Aronex Pharmaceuticals
merger -- 2,184,165
------------------ ------------------
Net cash (used in) provided by investing
activities (2,720,592) 3,706,430
------------------ ------------------
Cash flows from financing activities:
Net proceeds from sale of equity 66,788,578 115,696
Exercises of stock options and warrants 497,958 606,266
Payments of long-term debt (598,628) (1,802,919)
------------------ ------------------
Net cash provided by (used in) financing
activities 66,687,908 (1,080,957)
------------------ ------------------
Net increase (decrease) in cash and cash 55,135,145 (24,394,625)
equivalents
Cash and cash equivalents at beginning of period 46,417,942 96,142,726
------------------ ------------------
Cash and cash equivalents at end of period $101,553,087 71,748,101
================== ==================
Supplemental cash flow information:
Cash paid for interest $ 296,345 615,365
Non-cash investing activity
Issuance of equity for Aronex Pharmaceuticals,
Inc. $ -- 30,597,529
See accompanying notes to unaudited consolidated financial statements.
3
<Page>
ANTIGENICS INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2001
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Antigenics Inc.
and subsidiaries have been prepared in accordance with accounting principles
generally accepted in the United States for interim financial information and
with the instructions to Article 10 of Regulation S-X and include the accounts
of Antigenics Inc. and our wholly-owned subsidiaries. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete annual consolidated financial statements. In
the opinion of management, all adjustments considered necessary for a fair
presentation have been included. All significant intercompany balances have been
eliminated. Operating results for the three and nine-month periods ended
September 30, 2001 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2001. For further information, refer
to the consolidated financial statements and footnotes thereto for the year
ended December 31, 2000 included in our annual report on Form 10-K filed with
the Securities and Exchange Commission on March 28, 2001.
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
No. 133, Accounting for Derivative Instruments and Hedging Activities. This
statement, as amended, establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities. Statement No. 133, as amended, is
effective for our fiscal year beginning January 1, 2001. The adoption of
Statement No. 133 did not have an effect on our financial position or results of
operations as we have no derivative or hedging transactions.
In June 2001, the FASB issued Statement No. 141, Business Combinations, and
Statement No. 142, Goodwill and Other Intangible Assets. Statement 141 requires
that the purchase method of accounting be used for all business combinations
initiated after June 30, 2001 as well as all purchase method business
combinations completed after June 30, 2001. Statement 141 also specifies the
criteria intangible assets acquired in a purchase method business combination
must meet to be recognized and reported apart from goodwill, noting that any
purchase price allocable to an assembled workforce may not be accounted for
separately. Statement 142 requires that goodwill and intangible assets with
indefinite useful lives no longer be amortized, but instead that they be tested
for impairment at least annually in accordance with the provisions of Statement
142. Statement 142 also requires that intangible assets with finite useful lives
be amortized over their respective estimated useful lives to their estimated
residual values, and reviewed for impairment in accordance with Statement No.
121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of (as superceded by Statement No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets).
We are required to adopt the provisions of Statement 141 immediately and
Statement 142 effective January 1, 2002. Goodwill and intangible assets acquired
in business combinations completed before July 1, 2001 will continue to be
amortized prior to the adoption of Statement 142.
Statement 141 will require, upon adoption of Statement 142, that we evaluate our
existing intangible assets and goodwill that were acquired in our merger with
Aquila Biopharmaceuticals, Inc. and to make any necessary reclassifications in
order to conform with the new criteria in Statement 141 for recognition apart
from goodwill. Upon adoption of Statement 142, we will be required to reassess
the useful lives and residual values of all intangible assets acquired in
purchase business combinations, and make any necessary amortization period
adjustments by the end of the first interim period after adoption. In addition,
to the extent an intangible asset is identified as having an indefinite useful
life, we will be required to test the intangible asset for impairment in
accordance with the provisions of Statement 142 within the first interim period.
Any impairment loss will be measured as of the date of adoption and recognized
as the cumulative effect of a change in accounting principle in the first
interim period.
In connection with the transitional goodwill impairment evaluation, Statement
142 will require us to perform an assessment of whether there is an indication
that goodwill is impaired as of the date of adoption. Any transitional
impairment loss will be recognized as the cumulative effect of a change in
accounting principle in our consolidated statement of operations.
4
<Page>
As of the date of adoption, we expect to have unamortized goodwill in the amount
of $2,752,000 and unamortized other intangible assets in the amount of
$10,203,000, all of which will be subject to the transition provisions of
Statement 142. Amortization expense related to goodwill and other intangible
assets was $91,000 and $920,000 for the year ended December 31, 2000 and the
nine months ended September 30, 2001, respectively. Because of the effort needed
to comply with adopting Statement 142, it is not practicable to reasonably
estimate the impact of adoption on our consolidated financial statements at the
date of this report, including whether any transitional impairment losses will
be required to be recognized as the cumulative effect of a change in accounting
principle.
NOTE B - MERGER AGREEMENTS
On July 12, 2001, we completed our acquisition of Aronex Pharmaceuticals, Inc.,
a biopharmaceutical company engaged in the identification and development of
proprietary innovative medicines to treat infectious diseases and cancers. We
acquired Aronex Pharmaceuticals to broaden our technological capabilities in
cancer research in general and to try to obtain regulatory approval of certain
of their products. The acquisition was structured as a merger of a wholly-
owned subsidiary of Antigenics with and into Aronex Pharmaceuticals pursuant
to an Agreement and Plan of Merger among Antigenics, Nasa Merger Corp. and
Aronex Pharmaceuticals dated as of April 23, 2001. The merger was a tax-free
reorganization and is being accounted for as a purchase in accordance with
FASB Statement 141, Business Combinations (see Note A).
As consideration for the merger, in exchange for each of their shares of Aronex
Pharmaceuticals common stock, the stockholders of Aronex Pharmaceuticals
received (i) 0.0594 shares of Antigenics common stock and (ii) a contingent
value right to receive additional shares of Antigenics common stock in the event
that a certain milestone is achieved on or before July 6, 2002. Cash was payable
in lieu of any fractional shares of Antigenics' common stock otherwise issuable
in the merger for a price equal to the fraction times $17.41, the closing price
of Antigenics' common stock on July 12, 2001. All outstanding options and
warrants to purchase shares of Aronex Pharmaceuticals common stock were
automatically converted into warrants and options to purchase Antigenics common
stock at the exchange ratio described above. Additionally, an outstanding $2.5
million note previously convertible into shares of Aronex Pharmaceuticals common
stock is now convertible into shares of Antigenics common stock at a rate
adjusted in accordance with the exchange ratio described above. The convertible
note, due May 2002, bears interest at 10% and is convertible into approximately
34,000 shares of our common stock.
The estimated purchase price of $31,161,000 is the sum of (i) $28,632,000
representing the issuance of approximately 1,547,000 shares of Antigenics common
stock valued at $18.505 per share, which represents the average closing price
per share of Antigenics' common stock for the ten trading days ending the second
trading day before July 12, 2001, which have been issued in accordance with the
exchange ratio of 0.0594 shares of Antigenics' common stock for each of the
approximate 26,048,000 outstanding shares of Aronex Pharmaceuticals common stock
as of July 11, 2001, (ii) $1,966,000 representing the fair value of Aronex
Pharmaceuticals options and warrants to acquire Aronex Pharmaceuticals common
stock which became vested upon the consummation of the merger and exchanged for
options and warrants to purchase 283,000 shares of Antigenics common stock and
(iii) an estimated $563,000 for fractional shares and Antigenics' costs of the
merger. The fair value of the Aronex Pharmaceuticals options and warrants has
been calculated using an option pricing model with the following weighted
average assumptions: life of the option or warrant -- employees and directors
options -- 4 years and non-employee options and warrants - remaining
contractual life of 6 years; dividend yield -- nil; risk-free interest rate --
.50%; price volatility -- 74.0%. The final purchase price will be dependent
upon the final costs of the transaction. If additional shares are issued
pursuant to the contingent value rights, the value of such shares will result
in additional goodwill.
The merger is being accounted for under the purchase method of accounting in
accordance with FASB Statement No. 141, which means the purchase price is
allocated to the assets and liabilities of Aronex Pharmaceuticals, including its
intangible assets, based upon their fair values. Valuations of specifically
identifiable intangible assets and acquired in-process research and
development have been completed. The valuation of acquired in-process research
and development ($32,400,000) represents the estimated fair value of products
under development at Aronex Pharmaceuticals calculated using an income approach.
This approach involves estimating the fair value of the acquired in-process
research and development using the present value of the estimated after-tax
cash flows expected to be generated by the purchased in-process research and
development projects. The risk adjusted discount rates range from 45% to 55%,
depending on the risks associated with each specific project. Cash inflows
from projects begin primarily in 2005 and 2006, the expected dates of product
approvals. Gross margins on products are estimated at levels consistent with
industry expectations. The preliminary fair values of the acquired intangible
non-current assets ($4.6 million) and acquired in-process research and
development
5
<Page>
have been proportionately reduced by the amount that the estimated fair value of
the net assets acquired exceeds the estimated purchase price (negative
goodwill). The results of operations and cash flows of Aronex Pharmaceuticals
have been included in our consolidated financial statements prospectively as of
the closing of the merger. In addition, we have recognized a non-recurring
charge to operations of $32,400,000 on July 12, 2001 for the immediate write-off
of the acquired in-process research and development which had not yet reached
technological feasibility or commercialization and which has no alternative
future uses.
On November 16, 2000, we acquired all of the outstanding common stock, options
and warrants of Aquila Biopharmaceuticals Inc., a biotechnology company engaged
in the discovery, product development and commercialization of products to
prevent, treat, or control infectious diseases, autoimmune disorders and
cancers. The acquisition was accounted for using the purchase method of
accounting in accordance with Accounting Principles Board Opinion No. 16,
Business Combinations, and, accordingly, the results of operations of Aquila
Biopharmaceuticals have been included in our consolidated financial statements
from the date of the acquisition. A portion of the purchase price of $44,819,000
was allocated to the identifiable Aquila Biopharmaceuticals net assets acquired
based on their estimated fair values, including $25,800,000 to acquired
in-process research and development, which was immediately written off, and
$3,087,000 to goodwill.
The following table reflects unaudited pro forma combined results of operations
of Antigenics, Aronex Pharmaceuticals and Aquila Biopharmaceuticals as if both
mergers had occurred as of January 1, 2000:
- -----------------------------------------------------------------------------------------------------------------------------
Three months ended Nine months Ended
- -----------------------------------------------------------------------------------------------------------------------------
September 30, 2000 September 30, 2001 September 30, 2000 September 30, 2001
- -----------------------------------------------------------------------------------------------------------------------------
Revenues $ 847,000 $ 794,000 $ 3,849,000 $ 2,956,000
- -----------------------------------------------------------------------------------------------------------------------------
Net loss, before non-recurring charge for
write-off of acquired in-process research
and development $ (10,703,000) $(15,578,000) $ (30,568,000) $ (36,363,000)
- -----------------------------------------------------------------------------------------------------------------------------
Net loss, before non-recurring charge for
write-off of acquired in-process research
and development, per common share, basic
and diluted $ (0.37) $ (0.54) $ (1.08) $ (1.26)
- -----------------------------------------------------------------------------------------------------------------------------
These unaudited pro forma combined results have been prepared for comparative
purposes only and include certain adjustments, such as additional amortization
expense as a result of the new basis in fixed and intangible assets. These
unaudited pro forma combined results exclude the related acquired in-process
research and development charges of $25.8 million and $32.4 million. These
results do not purport to be indicative of the results of operations which
actually would have occurred had the mergers been consummated at the beginning
of 2000, or of future results of operations of the consolidated company.
NOTE C - INITIAL PUBLIC OFFERING
On February 9, 2000, we completed an initial public offering of 4,025,000 shares
of common stock at $18 per share. We received $72,450,000 before deduction of
offering expenses of approximately $6,221,000. Concurrently with the completion
of our initial public offering, we were converted from a limited liability
company to a corporation. All members of the limited liability company exchanged
their respective member interests for shares of common stock in the corporation.
The consolidated financial statements have been retroactively adjusted to
reflect the conversion from a limited liability company to a corporation and the
exchange of each unit of members' equity into 172.0336 shares of common stock.
6
<Page>
NOTE D - INCOME TAXES
Prior to converting to a corporation in February 2000, we were a limited
liability company, and, as such, no federal, state or local income taxes were
levied on the company. Each member of the limited liability company was
individually responsible for reporting their share of the company's net income
or loss on their personal tax returns. As a result, we will not be able to
offset future taxable income, if any, against losses incurred prior to the
conversion to a corporation.
Income taxes are accounted for under the asset and liability method. Beginning
February 9, 2000, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax basis. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be reversed or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date. Deferred tax assets are
recorded when they more likely than not are able to be realized.
Given our history of incurring operating losses, management believes that it is
more likely than not that any deferred tax assets, net of deferred tax
liabilities, will not be realized. Therefore, there is no income tax benefit in
the accompanying financial statements because of a loss before income taxes and
the need to recognize a valuation allowance on net deferred tax assets.
NOTE E - EARNINGS PER SHARE
Basic earnings per share is calculated by dividing net loss by the weighted
average number of common shares outstanding. Diluted earnings per share is
calculated by dividing net loss by the weighted average common shares
outstanding plus the dilutive effect of outstanding stock options, stock
warrants and convertible debt. Because we report a net loss, diluted earnings
per share is the same as basic earnings per share because the effect of
outstanding stock options, stock warrants and convertible debt being added to
weighted average shares outstanding would reduce the net loss per share.
Therefore, outstanding stock options, stock warrants and convertible debt are
not included in the calculation.
NOTE F - STOCK-BASED COMPENSATION PLANS
During the nine months ended September 30, 2001, we granted approximately
369,000 non-qualified stock options and approximately 298,000 incentive stock
options to employees and directors with exercise prices at the fair value of the
underlying shares at the date of grant, all of which vest over periods of three
to five years. These options were granted at a weighted average exercise price
of $13.98 per share. In addition, we granted 24,300 non-qualified stock options
to outside advisors of which 16,000 options vested immediately and the remainder
vest over five years. These options were granted at a weighted average exercise
price of $14.27 per share. Approximately 118,000 options were exercised and
approximately 64,000 options were cancelled during the nine months ended
September 30, 2001.
We recorded a charge to operations related to the grants of options to employees
and directors for the three months ended September 30, 2000 and 2001 of
approximately $134,000 and $122,000, respectively, and for the nine months ended
September 30, 2000 and 2001 of $391,000 and $312,000, respectively. For the
three months ended September 30, 2000, the charge to operations related to
options granted and earned by outside advisors totaled approximately $416,000.
For the three months ended September 30, 2001, we reduced our previously
recorded charge to operations by $40,000. For the nine months ended September
30, 2000 and 2001, the charge to operations related to options granted and
earned by outside advisors totaled approximately $1,844,000 and $606,000,
respectively.
7
<Page>
NOTE G - INVENTORY
Inventories consist of the following at: December 31, 2000 September 30, 2001
----------------- -------------------
Finished Goods $425,000 $1,020,000
Work-in-process 176,000 313,000
Raw materials & supplies 69,000 61,000
---------- ----------
$670,000 $1,394,000
========== ==========
NOTE H - COMMITMENTS AND CONTINGENCIES
On May 18, 2000, we committed $3,000,000 to become a limited partner in a
limited partnership which will invest principally in companies that apply
genomic technologies and information in their offerings of products and services
or that are engaged in research and development and efforts involving genomic
technologies with a view to developing such products and services. Contributions
to the limited partnership are made as authorized by the general partner. As of
September 30, 2001, we have invested $525,000, $225,000 of which was invested
during the nine months ended September 30, 2001, and have included this amount
in non-current other assets. We account for this investment under the cost
method. The general partner of the limited partnership is AGTC Partners, L.P.
NewcoGen Group Inc. is the general partner of AGTC Partners, L.P. Noubar Afeyan,
Ph.D., who is one of our directors, is the president of NewcoGen Group Inc. and
is also a principal of the limited partnership. In addition, Garo H. Armen,
Ph.D., our chief executive officer and one of our directors, is a director of
NewcoGen Group Inc. On October 25, 2001 we were notified of a third capital call
of $300,000 due November 16, 2001.
We have received a Notice of Arbitration filed in the International Chamber of
Commerce Arbitration by DeLaval AB. Antigenics and DeLaval are parties to a
License Agreement concerning technology for the development of a vaccine against
bovine mastitis. We are obligated to make certain payments to DeLaval upon
issuance of certain patents and other related milestones. DeLaval claims in its
arbitration notice that we owe it $1.2 million for milestone payments in
connection with the issuance of certain patents. It is our position that we have
rightfully withheld this payment as an offset against prior payments exceeding
$1.1 million made to DeLaval for issuance of three prior patents, which DeLaval
has wrongfully retained. Subsequent to receiving such payments, DeLaval informed
us that a number of errors had been made in the application for these patents,
several of which are potentially material to the License Agreement and the
underlying technology. Moreover, DeLaval failed to make one or more corrective
filings within the allowable time. DeLaval has failed and refused to return or
credit us for these payments. Accordingly, we have responded to DeLaval's
request for arbitration and intend to defend vigorously against these claims.
The arbitration is in its initial stages, and thus the outcome is uncertain.
Antigenics, our Chairman and Chief Executive Officer Garo Armen, and two
brokerage firms that served as underwriters in our initial public offering have
been named as defendants in a civil class action lawsuit filed on November 5,
2001 in the Federal District Court in the Southern District of New York. The
suit alleges that these underwriters charged secret excessive commission to
certain of their customers in return for allocations of our stock in the
offering. The suit also alleges that shares of our stock were allocated to
certain of the underwriters' customers based upon an agreement by such customers
to purchase subsequent shares of our stock in the secondary market. We intend to
vigorously defend against these claims.
NOTE I - IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In June 2001, the FASB issued Statement No. 143, Accounting For Asset Retirement
Obligations. Statement 143 applies to legal obligations associated with the
retirement of tangible long-lived assets that result from the
8
<Page>
acquisition, construction, or development and/or the normal operation of a
long-lived asset for certain obligations of lessees. This Statement requires
entities to record the fair value of a liability for an asset retirement
obligation in the period incurred. The fair value of the liability is added to
the carrying amount of the associated asset and this additional carrying amount
is depreciated over the life of the asset. The liability is accreted at the end
of each period through charges to operating expense. If the obligation is
settled for other than the carrying amount of the liability, the company will
recognize a gain or loss on settlement. We are required to adopt the provisions
of Statement No. 143 beginning January 1, 2003. We have not determined the
impact, if any, the adoption of this statement will have on our financial
position or results of operations.
In August 2001, the FASB issued Statement No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets. This statement addresses financial accounting
and reporting for the impairment or disposal of long-lived assets. This
statement supersedes Statement No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. This Statement
establishes an accounting model for impairment or disposal of long-lived assets
by sale. Statement 144 is required to be adopted beginning January 1, 2002. We
have not determined the impact, if any, the adoption of Statement No. 144 will
have on our financial position or results of operation.
NOTE J - SUBSEQUENT EVENT
On October 15, 2001, we entered into an amendment to our existing operating
lease with our current landlord to expand our Woburn facility from approximately
30,000 to 59,000 square feet. The future minimum rental payments under the
amended lease, which expires in 2003, are as follows:
Year ending December 31,
2001 $ 278,000
2002 1,113,000
2003 835,000
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
OVERVIEW
We develop treatments for cancers, serious infectious diseases, autoimmune
disorders and degenerative disorders using our proprietary technologies to
program the immune system and improve quality of life. Since our inception in
March 1994, our activities have primarily been associated with the development
of our heat shock protein technology and our lead therapeutic vaccine,
Oncophage. Our business activities have included, product research and
development, intellectual property prosecution, establishing manufacturing
capabilities, manufacturing therapeutic vaccines for clinical trials, and
regulatory and clinical affairs.
We have incurred significant losses since our inception and have first generated
revenues during the year ended December 31, 2000. As of September 30, 2001, we
had an accumulated deficit of approximately $144,081,000. We expect to continue
to incur net losses over the next several years as we complete our clinical
trials, apply for regulatory approvals, continue development of our technology
and expand our operations, including increased expenses associated with the
development of the technologies and product pipeline that were acquired as a
result of the acquisitions of Aquila Biopharmaceuticals and Aronex
Pharmaceuticals. We have been dependent principally on equity and debt
financings to fund our business activities. Our financial results may vary
depending on many factors, including:
9
<Page>
- the progress of our drugs or vaccines in the regulatory process;
- the acceleration of other product candidates into preclinical and
clinical trials;
- our investment in manufacturing process development and in
manufacturing capacity for Oncophage and other product candidates;
- development of a sales and marketing staff and sales activities if
Oncophage or other product candidates are approved for
commercialization; and
- the progress of our other research and development efforts.
During the third quarter ended September 30, 2001, we completed our merger with
Aronex Pharmaceuticals, Inc. The stock acquisition, accounted for using the
purchase method of accounting, resulted in the issuance of approximately 1.5
million shares of our common stock based on an exchange ratio of 0.0594 per
share of our common stock for each outstanding share of Aronex Pharmaceuticals
common stock.
HISTORICAL RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 2000
Revenue: As a result of the acquisition of Aquila Biopharmaceuticals, Inc. in
November 2000, we generated $160,000 of product revenue and $634,000 of research
and development revenue during the three months ended September 30, 2001. We had
no revenues during the three months ended September 30, 2000. Product revenues
consist of sales of the feline leukemia vaccine to our marketing partner Virbac,
S.A., a French company which has exclusive worldwide rights to market the
product. Revenues from research and development activities consist of shipments
of our adjuvant QS-21 to be used in clinical trials by our partners and grant
payments received.
Cost of Sales: Cost of sales, which is related entirely to product revenue, was
$107,000 for the three months ended September 30, 2001. We had no cost of sales
for the three months ended September 30, 2000. For the three months ended
September 30, 2001, cost of sales was 67% of product sales.
Research and Development: Research and development expense increased 106% to
$8,979,000 for the three months ended September 30, 2001 from $4,356,000 for the
three months ended September 30, 2000. The Aquila Biopharmaceuticals and Aronex
Pharmaceuticals acquisitions increased research costs by $2,711,000 for the
three months ended September 30, 2001. The increase was also due to the costs
associated with our Oncophage clinical trials which increased $1,154,000 over
the three months ended September 30, 2000 primarily due to the initiation of
our Phase III clinical trial. Increases in our staff to support our expanded
research and development activities resulted in increasing costs by $438,000.
Other ongoing development activities were $583,000 higher than in 2000. These
increases were partially offset by the decrease in the non-cash charge for
options granted and earned by outside advisors, directors and employees from
$306,000 for the three months ended September 30, 2000 to $43,000 for the three
months ended September 30, 2001. Research and development expenses consist
primarily of compensation for employees and outside advisors conducting research
and development work, funding paid to institutions, including the University of
Connecticut where we sponsor research, costs associated with the operation of
our manufacturing and laboratory facilities and funding paid to support our
clinical trials.
Acquired In-Process Research and Development: Acquired in-process research and
development of $32,436,000 was a non-recurring, non-cash charge related to our
merger with Aronex Pharmaceuticals. A component of the total purchase price of
the merger was allocated to incomplete technology due to the early stage of the
acquired technologies under development but not yet technologically feasible or
commercialized and which have no alternative future uses, and expensed at
acquisition date. The acquired in-process research and development and related
accounting is further described in Note B to our consolidated financial
statements included in this report.
10
<Page>
General and Administrative: General and administrative expenses increased 83% to
$3,682,000 for the three months ended September 30, 2001 from $2,008,000 for the
three months ended September 30, 2000. The Aquila Biopharmaceuticals and Aronex
Pharmaceutical acquisitions increased general and administrative costs by
$842,000 for the three months ended September 30, 2001. The increase was also
due to the growth in the number of employees to support our expanded business
operations which increased costs by $942,000, and other increases in our general
and administrative expenses which were $95,000 higher for the three months ended
September 30, 2001 than for the same period in 2000. These increases were
partially offset by the decrease in the non-cash charge for options granted and
earned by outside advisors, directors and employees to $39,000 for the three
months ended September 30, 2001 from $244,000 for the three months ended
September 30, 2000. General and administrative expenses consist primarily of
personnel compensation, office expenses and professional fees.
Interest expense: Interest expense increased 158% to $237,000 for the three
months ended September 30, 2001 from $92,000 for the three months ended
September 30, 2000 due to the additional borrowings we assumed in the Aquila
Biopharmaceuticals and Aronex Pharmaceuticals acquisitions.
Interest Income: Interest income decreased 60% to $685,000 for the three months
ended September 30, 2001 from $1,705,000 for the three months ended September
30, 2000. This decrease is attributable to a decreasing average cash and cash
equivalents balance during the three months ended September 30, 2001 as compared
to the three months ended September 30, 2000 as well as declining interest rates
during 2001.
NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER
30, 2000
Revenue: We generated $1,149,000 in product revenue and $1,807,000 of research
and development revenue during the nine months ended September 30, 2001. We had
no revenue during the nine months ended September 30, 2000.
Cost of Sales: Cost of sales related entirely to product revenue was $688,000
for the nine months ended September 30, 2001. We had no cost of sales for the
nine months ended September 30, 2000. For the nine months ended September 30,
2001, cost of sales was 60% of product sales.
Research and Development: Research and development expense increased 84% to
$21,605,000 for the nine months ended September 30, 2001 from $11,736,000 for
the nine months ended September 30, 2000. The Aquila Biopharmaceuticals and
Aronex Pharmaceuticals acquisitions increased research costs by $4,797,000 for
the nine months ended September 30, 2001. The increase was also due to the
increase in our costs associated with our Oncophage clinical trials which
increased $2,413,000 over the nine months ended September 30, 2000 primarily due
to the initiation of our Phase III clinical trial. We increased our staff to
support our expanded research and development activities, which increased costs
by $2,020,000. Ongoing pre-clinical research and development activities
increased costs by $520,000 during the third quarter of 2001 as compared to the
same period in 2000. Other costs increased research and development costs by
$633,000. These increases are partially offset by a decrease in the non-cash
charge for options granted and earned by outside advisors, directors and
employees to $635,000 for the nine months ended September 30, 2001 from
$1,149,000 for the nine months ended September 30, 2000. Research and
development expenses consist primarily of compensation for employees and outside
advisors conducting research and development work, funding paid to institutions,
including the University of Connecticut where we sponsor research, costs
associated with the operation of our manufacturing and laboratory facilities and
funding paid to support our clinical trials.
Acquired In-Process Research and Development: Acquired in-process research and
development of $32,436,000 was a non-recurring, non-cash charge related to our
merger with Aronex Pharmaceuticals. A component of the total purchase price of
the merger was allocated to incomplete technology due to the early stage of the
acquired technologies under development but not yet technologically feasible or
commercialized and which have no alternative future uses, and expensed at
acquisition date. The acquired in-
11
<Page>
process research and development and related accounting is further described in
Note B to our consolidated financial statements included in this report.
General and Administrative: General and administrative expenses increased 60% to
$10,338,000 for the nine months ended September 30, 2001 from $6,448,000 for the
nine months ended September 30, 2000. The Aquila Biopharmaceuticals and Aronex
Pharmaceuticals acquisitions increased general and administrative costs by
$2,089,000 for the nine months ended September 30, 2001. The increase was also
due to the growth in the number of our employees to support our expanded
business operations that increased costs by $1,286,000. General corporate
expenses were $752,000 higher for the nine months ended September 30, 2001 as
compared to the same period in 2000 due to an increased public and investor
relation effort, increased legal expenses related to general corporate and
patent activities and increased state corporation and franchise taxes. Other
general and administrative expenses were $512,000 higher for the nine months
ended September 30, 2001 than for the same period in 2000. These increases are
partially offset by the decrease in the non-cash charge for options granted and
earned by outside advisors, directors and employees from $1,086,000 for the nine
months ended September 30, 2000 to $337,000 for the nine months ended September
30, 2001. General and administrative expenses consisted primarily of personnel
compensation, office expenses and professional fees.
Interest expense: Interest expense increased 83% to $542,000 for the nine months
ended September 30, 2001 from $296,000 for the nine months ended September 30,
2000 due to the additional borrowings we assumed in the Aquila
Biopharmaceuticals and Aronex Pharmaceuticals acquisitions.
Interest Income: Interest income decreased 53% to $2,958,000 for the nine months
ended September 30, 2001 from $4,521,000 for the nine months ended September 30,
2000. This decrease is attributable to a lower average cash and cash equivalents
balance during the nine months ended September 30, 2001 as compared to the nine
months ended September 30, 2000 as well as declining interest rates during 2001.
LIQUIDITY AND CAPITAL RESOURCES
We have incurred annual operating losses since inception, and, as of September
30, 2001, we have incurred an accumulated deficit of $144,081,000 inclusive of
non-cash charges of $58,236,000 of acquired in-process research and development
and $13,489,000 related to grants of stock options, warrants and common stock.
Since our inception, we have financed our operations primarily through the sale
of equity, interest income earned on cash and cash equivalent balances and debt
provided through a credit line secured by some of our manufacturing and
laboratory assets. From our inception through September 30, 2001, we raised
aggregate net proceeds of $146,797,000 through the sale of equity and the
exercise of stock options and warrants, and borrowed $3,481,000 under our
$5,000,000 credit facility. We also assumed term loan agreements and a
convertible note payable with a combined outstanding balance of $6,159,000 in
connection with the acquisitions of Aquila Biopharmaceuticals and Aronex
Pharmaceuticals. We expect that we will fund our capital expenditures and
growing operations with our current working capital into 2003. In order to fund
our needs subsequently, we will be required to raise money in the capital
markets, through arrangements with corporate partners, or from other sources.
There is no assurance that any arrangements will succeed and if funds are not
available we may be required to revise our planned capital requirements. Our
future capital requirements include, but are not limited to, supporting our
clinical trial efforts and continuing our other research and development
programs, including increased expenses associated with the development of the
technologies and product pipeline acquired as a result of the Aquila
Biopharmaceuticals and Aronex Pharmaceuticals transactions. Satisfying our
long-term liquidity needs will require the successful commercialization of
Oncophage or other products and may require additional capital.
Our cash and cash equivalents at September 30, 2001 were $71,748,000, a decrease
of $24,395,000 from December 31, 2000. During the nine months ended September
30, 2001, we used cash primarily to finance operations, including our Oncophage
clinical trials. Net cash used in operating activities for the nine months ended
September 30, 2000 and 2001 was $8,832,000 and $27,020,000, respectively. The
increase resulted from the increase in the activity of our Oncophage clinical
trials, on-going development activity, development of acquired technologies and
the general expansion of our research operations.
12
<Page>
Net cash used in investing activities for the nine months ended September 30,
2000 was $2,721,000 as compared to net cash provided by investing activities of
$3,706,000 for the nine months ended September 30, 2001. For the nine months
ended September 30, 2001, we invested $1,249,000 for the purchase of equipment,
furniture and fixtures and an additional $225,000 was contributed to a limited
partnership, of which we became a member during the second quarter of 2000. Our
remaining commitment to this limited partnership on September 30, 2000 was
$2,475,000 with contributions to be made as authorized by the general partner.
On October 25, 2001 we were notified of a third capital call of $300,000 due
November 16, 2001. These expenditures were offset by proceeds from the sale of
marketable securities of $2,997,000 and the net cash acquired in the Aronex
Pharmaceuticals merger of $2,184,000.
Net cash provided by financing activities was $66,689,000 for the nine months
ended September 30, 2000 as compared to net cash used in financing activities of
$1,081,000 for the nine months ended September 30, 2001. Since inception, our
primary source of financing has been from equity investments. During the nine
months ended September 30, 2000 and 2001, sales of equity and exercises of stock
options and warrants totaled approximately $67,286,000 and $722,000,
respectively. At September 30, 2001, we had outstanding $4,113,000 under our
credit facilities, which were used to finance the construction of our
manufacturing and laboratory facilities and to purchase related equipment. Loans
that were drawn down on the credit facilities are secured by specific assets,
including leasehold improvements, which they finance. At September 30, 2001, we
had $2,500,000 outstanding under a convertible note payable that matures in May
2002. This note can be converted into our common stock at $73.23 per share at
the option of the note holder.
OTHER
The Management's Discussion and Analysis of Financial Condition and Results of
Operations contains forward-looking statements reflecting management's current
expectations regarding our future performance and working capital needs. These
expectations are based on certain assumptions regarding the timing of our
clinical trials, the efficacy of products, the availability of capital and other
factors relating to our growth. These expectations may not materialize if
product development efforts are delayed or suspended or if other assumptions
prove incorrect. These factors are more fully discussed in our annual report on
Form 10-K filed with the Securities and Exchange Commission on March 28, 2001.
Item 3 - Quantitative and Qualitative Disclosures About Market Risk
In the normal course of business, we are exposed to fluctuations in interest
rates as we seek debt financing to make capital expenditures. We do not employ
specific strategies, such as the use of derivative instruments or hedging, to
manage our interest rate exposures. During the nine months ended September 30,
2001, we assumed the outstanding debt of Aronex Pharmaceuticals that includes
two term loans with a combined outstanding balance of $947,000 and interest
rates fixed at 10.38% and 11.63%. In addition we assumed a convertible note
payable in the amount of $2,500,000 with interest fixed at 10% per year. Since
the fiscal year ended December 31, 2000, other than the assumption of the
aforementioned debt, there has been no change with respect to our interest rate
exposures or our approach toward those exposures. Further, we do not expect our
market risk exposures to change in the near term.
13
<Page>
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
We have received a Notice of Arbitration filed in the International Chamber
of Commerce Arbitration by DeLaval AB. Antigenics and DeLaval are parties to a
License Agreement concerning technology for the development of a vaccine against
bovine mastitis. We are obligated to make certain payments to DeLaval upon
issuance of certain patents and other related milestones. DeLaval claims in its
arbitration notice that we owe it $1.2 million for milestone payments in
connection with the issuance of certain patents. It is our position that we have
rightfully withheld this payment as an offset against prior payments exceeding
$1.1 million made to DeLaval for issuance of three prior patents, which DeLaval
has wrongfully retained. Subsequent to receiving such payments, DeLaval informed
us that a number of errors had been made in the application for these patents,
several of which are potentially material to the License Agreement and the
underlying technology. Moreover, DeLaval failed to make one or more corrective
filings within the allowable time. DeLaval has failed and refused to return or
credit us for these payments. Accordingly, we have responded to DeLaval's
request for arbitration and intend to defend vigorously against these claims.
The arbitration is in its initial stages, and thus the outcome is uncertain.
Antigenics, our Chairman and Chief Executive Officer Garo Armen, and two
brokerage firms that served as underwriters in our initial public offering have
been named as defendants in a civil class action lawsuit filed on November 5,
2001 in the Federal District Court in the Southern District of New York. The
suit alleges that these underwriters charged secret excessive commission to
certain of their customers in return for allocations of our stock in the
offering. The suit also alleges that shares of our stock were allocated to
certain of the underwriters' customers based upon an agreement by such customers
to purchase subsequent shares of our stock in the secondary market. We intend to
vigorously defend against these claims.
Item 2 - Changes in Securities and Use of Proceeds
On February 9, 2000, we sold 4,025,000 shares of our common stock
(including the underwriters' over allotment option) at $18 per share
to the underwriters. We received net proceeds in the initial public
offering of approximately $66,229,000 reflecting gross proceeds of
$72,450,000, net of underwriter commissions of approximately
$5,071,500 and other offering costs of approximately $1,149,500.
We have used the following net offering proceeds as of September 30,
2001: approximately $3,650,000 for fixed asset additions, $525,000
for investments, $2,552,000 for debt obligations, $1,773,000 for
acquisition costs and $40,204,000 for operations.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
2.1 Agreement and Plan of Merger, dated as of April 23, 2001, among Antigenics
Inc., Nasa Merger Corp. and Aronex Pharmaceuticals, Inc. Filed as Exhibit
2.1 to our Report on Form 8-K (File No. 0-29089) dated April 23, 2001 and
incorporated herein by reference.
4.1 Form of Common Stock Purchase Warrant. Filed as Exhibit 4.2 to the Report
on Form 8-K (File No. 0-20111) of Aronex Pharmaceuticals, Inc. dated April
17, 2000 and incorporated herein by reference.
4.2 Form of Common Stock Purchase Warrant. Filed as Exhibit 4.3 to the Report
on Form 8-K (File No. 0-20111) of Aronex Pharmaceuticals, Inc. dated April
17, 2000 and incorporated herein by reference.
14
<Page>
4.3 Registration Rights Agreement dated August 2, 1989 by and among Aronex
Pharmaceuticals, Inc. and certain of its stockholders. Filed as Exhibit
10.2 to the Registration Statement on Form S-1 (File No. 333-47418) of
Aronex Pharmaceuticals, Inc. and incorporated herein by reference.
4.4 First Amendment to Registration Rights Agreement dated April 18, 1990, by
and among Aronex Pharmaceuticals, Inc. and certain of its stockholders.
Filed as Exhibit 10.3 to the Registration Statement on Form S-1 (File No.
333-47418) of Aronex Pharmaceuticals, Inc. and incorporated herein by
reference.
4.5 Second Amendment to Registration Rights Agreement dated October 31, 1991,
by and among Aronex Pharmaceuticals, Inc. and certain of its stockholders.
Filed as Exhibit 10.4 to the Registration Statement on Form S-1 (File No.
333-47418) of Aronex Pharmaceuticals, Inc. and incorporated herein by
reference.
4.6 Third Amendment to Registration Rights Agreement, dated September 10,
1993, among Aronex Pharmaceuticals, Inc. and certain of its stockholders.
Filed as Exhibit 10.24 to the Registration Statement on Form S-1 (File No.
333-71166) of Aronex Pharmaceuticals, Inc. and incorporated herein by
reference.
4.7 Fourth Amendment to Registration Rights Agreement dated January 20, 1994,
among Aronex Pharmaceuticals and certain of its stockholders. Filed as
Exhibit 10.5 to the Annual Report on Form 10-K/A for the year ended
December 31, 1999 (File No. 0-20111) of Aronex Pharmaceuticals, Inc. and
incorporated herein by reference.
4.8 Form of Warrant to Purchase of Common Stock issued to Paramount Capital
Inc.. Filed as Exhibit 1.2 to the Registration Statement on Form S-1 (File
No. 333-67599) of Aronex Pharmaceuticals, Inc. and incorporated herein by
reference.
4.9 10% Convertible Note, dated May 21, 1999, by Aronex Pharmaceuticals made
payable to Genzyme Corporation. Filed as Exhibit 10.2 to Report on Form
8-K (File No. 0-20111) of Aronex Pharmaceuticals, Inc. dated June 4, 1999
and incorporated herein by reference.
4.10 Common Stock Purchase Warrant issued to Genzyme Corporation. Filed as
Exhibit 10.3 to Report on Form 8-K (File No. 0-20111) of Aronex
Pharmaceuticals, Inc. dated June 4, 1999 and incorporated herein by
reference.
10.1* Exclusive License Agreement, dated October 15, 1986, between Aronex
Pharmaceuticals, Inc., The University of Texas System Board of Regents and
The University of Texas M.D. Anderson Cancer Center. Filed as Exhibit 10.8
to the Registration Statement on Form S-1 (File No. 333-47418) of Aronex
Pharmaceuticals, Inc. and incorporated herein by reference.
10.2* Exclusive License Agreement, dated July 1, 1988, between Aronex
Pharmaceuticals, The University of Texas System Board of Regents and The
University of Texas M.D. Anderson Cancer Center, together with amendments
and extensions thereto. Filed as Exhibit 10.10 to the Registration
Statement on Form S-1 (File No. 333-47418) of Aronex Pharmaceuticals, Inc.
and incorporated herein by reference.
10.3* Amendment No. 2 to Exclusive License Agreement, dated July 9, 1993, among
Aronex Pharmaceuticals, The University of Texas System Board of Regents
and The University of Texas M.D. Anderson Cancer Center. Filed as
Exhibit 10.20 to the Registration Statement on Form S-1 (File No.
333-71166) of Aronex Pharmaceuticals, Inc. and incorporated herein
by reference.
10.4* License Agreement, dated December 12, 2000 between Aronex Pharmaceuticals
and Sumitomo Pharmaceuticals Co., Ltd. Filed as Exhibit 10.1 to Report on
Form 8-K (File No. 0-20111) of Aronex Pharmaceuticals, Inc. dated December
12, 2000 and incorporated herein by reference.
* This mark indicates that certain confidential material contained in the marked
document has been omitted and filed separately with the Securities and Exchange
Commission.
(b) Current Reports on Form 8-K
On July 19, 2001 we filed our Current Report on Form 8-K
disclosing the proposed offering of $50 million of convertible
preferred stock announced on July 13, 2001.
On July 26, 2001 we filed our Current Report on Form 8-K
disclosing the termination of our convertible offering.
15
<Page>
On July 27, 2001 we filed our Current Report on Form 8-K
disclosing the completion of our acquisition of Aronex
Pharmaceuticals, Inc. on July 12, 2001, including the financial
statements of Aronex Pharmaceuticals and the unaudited pro forma
condensed consolidated financial statements of Antigenics.
On September 21, 2001 we filed a Current Report on Form 8-K dated
September 21, 2001 to disclose the results of our meetings with
the U.S. Food and Drug Administration.
Antigenics Inc.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
ANTIGENICS INC.
Date: November 13, 2001 /s/ Garo H. Armen
------------------------------------
Garo H. Armen
President and Chief Executive Officer
(Principal Accounting Officer)
16
<Page>
EXHIBIT INDEX
2.1 Agreement and Plan of Merger, dated as of April 23, 2001, among Antigenics
Inc., Nasa Merger Corp. and Aronex Pharmaceuticals, Inc. Filed as Exhibit
2.1 to our Report on Form 8-K (File No. 0-29089) dated April 23, 2001 and
incorporated herein by reference.
4.1 Form of Common Stock Purchase Warrant. Filed as Exhibit 4.2 to the Report
on Form 8-K (File No. 0-20111) of Aronex Pharmaceuticals, Inc. dated April
17, 2000 and incorporated herein by reference.
4.2 Form of Common Stock Purchase Warrant. Filed as Exhibit 4.3 to the Report
on Form 8-K (File No. 0-20111) of Aronex Pharmaceuticals, Inc. dated April
17, 2000 and incorporated herein by reference.
4.3 Registration Rights Agreement dated August 2, 1989 by and among Aronex
Pharmaceuticals, Inc. and certain of its stockholders. Filed as Exhibit
10.2 to the Registration Statement on Form S-1 (File No. 333-47418) of
Aronex Pharmaceuticals, Inc. and incorporated herein by reference.
4.4 First Amendment to Registration Rights Agreement dated April 18, 1990, by
and among Aronex Pharmaceuticals, Inc. and certain of its stockholders.
Filed as Exhibit 10.3 to the Registration Statement on Form S-1 (File No.
333-47418) of Aronex Pharmaceuticals, Inc. and incorporated herein by
reference.
4.5 Second Amendment to Registration Rights Agreement dated October 31, 1991,
by and among Aronex Pharmaceuticals, Inc. and certain of its stockholders.
Filed as Exhibit 10.4 to the Registration Statement on Form S-1 (File No.
333-47418) of Aronex Pharmaceuticals, Inc. and incorporated herein by
reference.
4.6 Third Amendment to Registration Rights Agreement, dated September 10,
1993, among Aronex Pharmaceuticals, Inc. and certain of its stockholders.
Filed as Exhibit 10.24 to the Registration Statement on Form S-1 (File No.
333-71166) of Aronex Pharmaceuticals, Inc. and incorporated herein by
reference.
4.7 Fourth Amendment to Registration Rights Agreement dated January 20, 1994,
among Aronex Pharmaceuticals and certain of its stockholders. Filed as
Exhibit 10.5 to the Annual Report on Form 10-K/A for the year ended
December 31, 1999 (File No. 0-20111) of Aronex Pharmaceuticals, Inc. and
incorporated herein by reference.
4.8 Form of Warrant to Purchase of Common Stock issued to Paramount Capital
Inc.. Filed as Exhibit 1.2 to the Registration Statement on Form S-1 (File
No. 333-67599) of Aronex Pharmaceuticals, Inc. and incorporated herein by
reference.
4.9 10% Convertible Note, dated May 21, 1999, by Aronex Pharmaceuticals made
payable to Genzyme Corporation. Filed as Exhibit 10.2 to Report on Form
8-K (File No. 0-20111) of Aronex Pharmaceuticals, Inc. dated June 4, 1999
and incorporated herein by reference.
4.10 Common Stock Purchase Warrant issued to Genzyme Corporation. Filed as
Exhibit 10.3 to Report on Form 8-K (File No. 0-20111) of Aronex
Pharmaceuticals, Inc. dated June 4, 1999 and incorporated herein by
reference.
10.1* Exclusive License Agreement, dated October 15, 1986, between Aronex
Pharmaceuticals, Inc., The University of Texas System Board of Regents and
The University of Texas M.D. Anderson Cancer Center. Filed as Exhibit 10.8
to the Registration Statement on Form S-1 (File No. 333-47418) of Aronex
Pharmaceuticals, Inc. and incorporated herein by reference.
10.2* Exclusive License Agreement, dated July 1, 1988, between Aronex
Pharmaceuticals, The University of Texas System Board of Regents and The
University of Texas M.D. Anderson Cancer Center, together with amendments
and extensions thereto. Filed as Exhibit 10.10 to the Registration
Statement on Form S-1 (File No. 333-47418) of Aronex Pharmaceuticals, Inc.
and incorporated herein by reference.
10.3* Amendment No. 2 to Exclusive License Agreement, dated July 9, 1993, among
Aronex Pharmaceuticals, The University of Texas System Board of Regents
and The University of Texas M.D. Anderson Cancer Center. Filed as
Exhibit 10.20 to the Registration Statement on Form S-1 (File No.
333-71166) of Aronex Pharmaceuticals, Inc. and incorporated herein
by reference.
10.4* License Agreement, dated December 12, 2000 between Aronex Pharmaceuticals
and Sumitomo Pharmaceuticals Co., Ltd. Filed as Exhibit 10.1 to Report on
Form 8-K (File No. 0-20111) of Aronex Pharmaceuticals, Inc. dated December
12, 2000 and incorporated herein by reference.
* This mark indicates that certain confidential material contained in the marked
document has been omitted and filed separately with the Securities and Exchange
Commission.