Exhibit 99.1
RISK FACTORS
RISKS RELATED TO OUR BUSINESS
IF WE INCUR OPERATING LOSSES FOR LONGER THAN WE EXPECT, WE MAY BE UNABLE TO
CONTINUE OUR OPERATIONS.
From our inception through September 30, 2001, we have generated net losses
totaling $144.1 million, including $59.7 million during the first nine months of
this year, and we expect to incur increasing and significant losses over the
next several years as we complete our clinical trials, apply for regulatory
approvals, continue development of our technologies, and expand our operations.
To date, we have generated revenues from only one product, our feline leukemia
vaccine named Quilvax-FELV. Our revenues from Quilvax-FELV were $443,000 for the
year ended December 31, 2000 and $1.1 million for the nine months ended
September 30, 2001. We do not expect to generate significant revenues for
several years. Any regulatory, marketing or other difficulties we experience
with Quilvax-FELV, our feline leukemia vaccine, could jeopardize that revenue
stream. Our ability to become profitable will depend on the market acceptance of
Oncophage, our lead cancer vaccine, and our other drugs that receive FDA or
foreign regulatory marketing approval.
IF WE FAIL TO OBTAIN THE CAPITAL NECESSARY TO FUND OUR OPERATIONS, WE WILL BE
UNABLE TO ADVANCE OUR DEVELOPMENT PROGRAMS AND COMPLETE OUR CLINICAL TRIALS.
On September 30, 2001, we had approximately $71.7 million in cash and cash
equivalents. We expect that we will fund our development programs, clinical
trials, and other operating expenses with our current working capital into 2003.
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 facility secured by some of our manufacturing and
laboratory assets. In order to fund our future needs, we will be required to
raise money in the capital markets, through arrangements with corporate
partners, or from other sources. Additional financing, however, may not be
available on favorable terms or at all. If we are unable to raise additional
funds when we need them, we may be required to delay, reduce or eliminate some
or all of our development programs and some or all of our clinical trials,
including the development programs and clinical trials supporting our lead
cancer vaccine, Oncophage. We also may be forced to license technologies to
others that we would prefer to develop internally.
WE MAY NOT RECEIVE SIGNIFICANT PAYMENTS FROM COLLABORATORS DUE TO UNSUCCESSFUL
RESULTS IN EXISTING COLLABORATIONS OR A FAILURE TO ENTER INTO FUTURE
COLLABORATIONS.
Part of our strategy is to develop and commercialize some of our products
by continuing our existing collaborative arrangements with academic and
corporate collaborators and licensees and by entering into new collaborations.
Our success depends on the success of these parties in performing research,
preclinical and clinical testing. These arrangements may require us to transfer
important rights to these corporate collaborators and licensees. These
collaborators and licensees could choose not to devote resources to these
arrangements or, under certain circumstances, may terminate these arrangements
early. In addition, these collaborators and licensees, outside of their
arrangements with us, may develop technologies or products that are competitive
with those that we are developing. As a result, our strategic collaborations may
not continue, we may not be able to enter into new collaborations or we may not
receive revenues from any of these relationships.
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WE MUST RECEIVE SEPARATE REGULATORY APPROVALS FOR EACH OF OUR DRUGS AND VACCINES
IN EACH TYPE OF DISEASE BEFORE WE CAN SELL THEM COMMERCIALLY IN THE UNITED
STATES OR INTERNATIONALLY.
We cannot sell any of our drugs or vaccines until they receive regulatory
approval. Oncophage and any of our other drug candidates could take a
significantly longer time to gain regulatory approval than we expect or may
never gain approval. The process of obtaining and maintaining regulatory
approvals for new therapeutic products is lengthy, expensive and uncertain. It
also can vary substantially, based on the type, complexity and novelty of the
product involved. Our lead product, Oncophage, is a novel cancer therapeutic
vaccine that is personalized for each patient. To date, the FDA and foreign
regulatory agencies have approved only a limited number of cancer therapeutic
vaccines for commercial sale and have relatively little experience in reviewing
personalized medicine therapies. This lack of experience may lengthen the
regulatory review process for Oncophage, increase our development costs and
delay or prevent commercialization.
To obtain regulatory approvals, we must, among other requirements, complete
carefully controlled and well-designed clinical trials demonstrating that a
particular drug or vaccine is safe and effective for the applicable disease. Any
delays or difficulties that we encounter in these clinical trials may have a
substantial adverse impact on our operations and cause our stock price to
decline significantly. We rely on third party clinical investigators to conduct
our clinical trials and as a result, we may encounter delays outside our
control. Future clinical trials may not show that our drugs and vaccines are
safe and effective. In addition, we or the FDA might delay or halt the clinical
trials, including our Phase III trials of Oncophage, for various reasons,
including:
- Oncophage may not appear to be more effective than current therapies;
- Oncophage may have unforeseen or significant adverse side effects or
other safety issues;
- the time required to determine whether Oncophage is effective may be
longer than expected;
- we may be unable to adequately follow or evaluate patients after
treatment with Oncophage;
- patients may die during a clinical trial because their disease is too
advanced or because they experience medical problems that may not be
related to Oncophage;
- sufficient numbers of patients may not enroll in our clinical trials; or
- we may be unable to produce sufficient quantities of Oncophage to
complete the trials.
THE SUCCESS OF OUR ACQUISITION OF ARONEX PHARMACEUTICALS IS LARGELY DEPENDENT ON
ATRAGEN RECEIVING REGULATORY APPROVAL.
A significant factor in our decision to acquire Aronex Pharmaceuticals was
our optimism regarding our ability to obtain regulatory approval of ATRAGEN for
the treatment of acute promyelocytic leukemia, also referred to as APL. In
January 2001, Aronex Pharmaceuticals received a "not approvable" letter from the
FDA for its new drug application, or NDA, for ATRAGEN in APL. In August 2001, we
met with the FDA to discuss our strategy for amending the NDA for ATRAGEN in
APL. Based on the FDA's comments from that meeting, we determined that the
additional development costs necessary to amend the NDA for ATRAGEN in APL would
outweigh the benefits of an approval of ATRAGEN in that indication. We are
evaluating a development strategy for ATRAGEN in other types of cancer. There is
a chance that ATRAGEN will never receive FDA approval, or such approval will be
significantly delayed.
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IF WE ARE UNABLE TO PURIFY HEAT SHOCK PROTEINS FROM SOME CANCER TYPES, THE SIZE
OF OUR POTENTIAL MARKET WOULD DECREASE.
Heat shock proteins occur naturally in the human body and activate powerful
cellular immune responses. Our ability to successfully commercialize Oncophage
for a particular cancer type depends on our ability to purify heat shock
proteins from that type of cancer. Based on our clinical trials conducted to
date, in renal cell carcinoma, we have been able to manufacture Oncophage from
94% of the tumors delivered to our manufacturing facility; for melanoma, 89%;
for colorectal carcinoma, 98%; for gastric cancer, 81%; and for pancreatic
cancer, 30%. The relatively low rate for pancreatic cancer is due to the
abundance of proteases in pancreatic tissue. Proteases are enzymes that break
down proteins. These proteases may degrade the heat shock proteins during the
purification process. We have recently made process development advances that
have improved the manufacture of Oncophage from pancreatic tissue. In a recently
expanded Phase I pancreatic cancer study, Oncophage was manufactured from 5 of 5
tumor samples (100%), bringing the aggregate success rate for this cancer type
to 50%.
We may encounter this problem or similar problems with other types of
cancers as we expand our research. If we cannot overcome these problems, the
number of cancer types that Oncophage could treat would be limited.
IF WE FAIL TO SUSTAIN AND FURTHER BUILD OUR INTELLECTUAL PROPERTY RIGHTS,
COMPETITORS WILL BE ABLE TO TAKE ADVANTAGE OF OUR RESEARCH AND DEVELOPMENT
EFFORTS TO DEVELOP COMPETING PRODUCTS AND OUR BUSINESS WILL SUFFER.
If we are not able to protect our proprietary technology, trade secrets and
know-how, our competitors may use our inventions to develop competing products.
We currently have exclusive rights to 73 issued United States patents and 66
foreign patents. We also have rights to 81 pending United States patent
applications and 97 pending foreign patent applications. However, our patents
may not protect us against our competitors. The standards which the United
States Patent and Trademark Office uses to grant patents, and the standards
which courts use to interpret patents, are not always applied predictably or
uniformly and can change, particularly as new technologies develop.
Consequently, the level of protection, if any, that will be provided by our
patents if we attempt to enforce them and they are challenged in court, is
uncertain. In addition, the type and extent of patent claims that will be issued
to us in the future is uncertain. Any patents which are issued may not contain
claims which will permit us to stop competitors from using similar technology.
In addition to our patented technology, we also rely on unpatented
technology, trade secrets and confidential information. We may not be able to
effectively protect our rights to this technology or information. Other parties
may independently develop substantially equivalent information and techniques or
otherwise gain access to or disclose our technology. We generally require each
of our employees, consultants, collaborators, and certain contractors to execute
a confidentiality agreement at the commencement of an employment, consulting or
collaborative relationship with us. However, these agreements may not provide
effective protection of our technology or information or, in the event of
unauthorized use or disclosure, they may not provide adequate remedies.
WE MAY INCUR SUBSTANTIAL COSTS AS A RESULT OF LITIGATION OR OTHER PROCEEDINGS
RELATING TO PATENT AND OTHER INTELLECTUAL PROPERTY RIGHTS AND WE MAY BE UNABLE
TO PROTECT OUR RIGHTS TO, OR USE, OUR TECHNOLOGY.
If we choose to go to court to stop someone else from using the inventions
claimed in our patents, that individual or company has the right to ask the
court to rule that our patents are invalid and should not be enforced against
that third party. These lawsuits are expensive and would consume time and other
resources even if we were successful in stopping the infringement of our
patents. In addition, there is a risk that the court will decide that our
patents are not valid and that we do not have the right to stop the other party
from using the inventions. There is also the risk that, even if the validity of
our patents is upheld, the court will refuse to stop the other party on the
ground that such other party's activities are not covered by (that is, do not
infringe) our patents.
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Furthermore, a third party may claim that we are using inventions covered
by such third party's patent(s) and may go to court to stop us from engaging in
our normal operations and activities. These lawsuits are expensive and would
consume time and other resources. There is a risk that a court would decide that
we are infringing the third party's patent(s) and would order us to stop the
activities covered by the patent(s). In addition, there is a risk that a court
will order us to pay the other party damages for having violated the other
party's patent(s). The biotechnology industry has produced a proliferation of
patents, and it is not always clear to industry participants, including us,
which patents cover various types of products. The coverage of patents is
subject to interpretation by the courts, and the interpretation is not always
uniform. We know of patents issued to third parties relating to heat shock
proteins and alleviation of symptoms of cancer, respectively. We have reviewed
these patents, and we believe, as to each claim in the patents, that we either
do not infringe the claim of the patents or that the claim is invalid. Moreover,
patent holders sometimes send communications to a number of companies in related
fields, suggesting possible infringement, and we, like a number of biotech
companies, have received this type of communication, including with respect to
the third party patents mentioned above. If we are sued for patent infringement,
we would need to demonstrate that our products either do not infringe the patent
claims of the relevant patent and/or that the patent claims are invalid, and we
may not be able to do this. Proving invalidity, in particular, is difficult
since it requires a showing of clear and convincing evidence to overcome the
presumption of validity enjoyed by issued patents. Additionally, one of the
patent applications licensed to us contains claims that are substantially the
same as claims in one of the third party patents mentioned above. The United
States Patent and Trademark Office has declared an interference proceeding to
resolve this conflict. In an interference proceeding, the party with the
earliest effective filing date has certain advantages. Although we believe that
our claims have an earlier effective filing date than the conflicting claims of
the other patents, if this third party were to prevail in the interference
proceeding, it could result in abandonment of our patent application and the
potential need to seek a license from this party which may not be available on
reasonable terms.
Some of our competitors may be able to sustain the costs of complex patent
litigation more effectively than we can because they have substantially greater
resources. In addition, any uncertainties resulting from the initiation and
continuation of any litigation could have a material adverse effect on our
ability to continue our operations.
WE FACE LITIGATION THAT COULD RESULT IN SUBSTANTIAL DAMAGES AND MAY DIVERT
MANAGEMENT'S TIME AND ATTENTION FROM OUR BUSINESS.
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 commissions 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. While we
intend to vigorously defend these claims, we could be required to pay
substantial damages if the lawsuit is not resolved in our favor and, regardless
of the outcome, the lawsuit may cause a diversion of our management's time and
attention from our business.
IF WE FAIL TO KEEP KEY MANAGEMENT AND SCIENTIFIC PERSONNEL, WE MAY BE UNABLE TO
SUCCESSFULLY DEVELOP OUR THERAPEUTIC DRUGS OR VACCINES, CONDUCT CLINICAL TRIALS
AND OBTAIN FINANCING.
We are highly dependent on our senior management and scientific personnel,
particularly Garo H. Armen, Ph.D., our chairman and chief executive officer,
Pramod K. Srivastava, Ph.D., our chief scientific officer, a member of our board
of directors and chairman of our scientific advisory board, Russell Herndon, our
chief operating officer, and Elma Hawkins, Ph.D., our vice chairman. Since our
manufacturing process is unique, our manufacturing and quality control personnel
are also very important. The competition for these and other qualified personnel
in the biotechnology field is intense. If we are not able to attract and
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retain qualified scientific, technical and managerial personnel, we may be
unable to achieve our business objectives.
In addition, we have licensed a significant portion of our intellectual
property from institutions at which Dr. Srivastava has worked. We also sponsor
research in Dr. Srivastava's laboratory at the University of Connecticut Health
Center in exchange for the right to license discoveries made in that laboratory
with our funding. Dr. Srivastava is a member of the faculty of the University of
Connecticut School of Medicine. The regulations and policies of the University
of Connecticut Health Center govern the relationship between a faculty member
and a commercial enterprise. These regulations and policies prohibit Dr.
Srivastava from becoming our employee. Furthermore, the University of
Connecticut may modify these regulations and policies in the future to further
limit Dr. Srivastava's relationship with us. Dr. Srivastava has a consulting
agreement with us, which includes financial incentives for him to remain
associated with us, but that may not be enough to compel him to remain
associated with us even during the time covered by the consulting agreement. In
addition, this agreement does not restrict his ability to compete with us after
his association is terminated.
IF WE FAIL TO OBTAIN ADEQUATE LEVELS OF REIMBURSEMENT FOR OUR THERAPEUTIC DRUGS
OR VACCINES FROM THIRD PARTY PAYERS, THE COMMERCIAL POTENTIAL OF OUR THERAPEUTIC
DRUGS OR VACCINES WILL BE SIGNIFICANTLY LIMITED.
Our profitability will depend on the extent to which government
authorities, private health insurance providers and other organizations provide
reimbursement for the cost of our therapeutic drugs or vaccines. Many patients
will not be capable of paying for our therapeutic drugs or vaccines themselves.
A primary trend in the United States health care industry is toward cost
containment. Large private payers, managed care organizations, group purchasing
organizations and similar organizations are exerting increasing influence on
decisions regarding the use of particular treatments. Furthermore, many third
party payers limit reimbursement for newly approved health care products. Cost
containment measures may prevent us from becoming profitable.
PRODUCT LIABILITY AND OTHER CLAIMS AGAINST US MAY REDUCE DEMAND FOR OUR PRODUCTS
OR RESULT IN SUBSTANTIAL DAMAGES.
We face an inherent risk of product liability exposure related to testing
our therapeutic drugs or vaccines in human clinical trials and will face even
greater risks when we sell our drugs or vaccines commercially. An individual may
bring a product liability claim against us if one of our drugs or vaccines
causes, or merely appears to have caused, an injury. Regardless of merit or
eventual outcome, product liability claims may result in:
- decreased demand for our therapeutic drugs or vaccines;
- injury to our reputation;
- withdrawal of clinical trial volunteers;
- costs of related litigation; and
- substantial monetary awards to plaintiffs.
We manufacture Oncophage from a patient's tumor and a medical professional
must inject the Oncophage into that same patient. A patient may sue us if we, a
hospital or a delivery company fails to deliver the removed tumor or that
patient's Oncophage. We anticipate that the logistics of shipping will become
more complex as the number of patients we treat increases, and it is possible
that all shipments will not be made without incident. In addition,
administration of Oncophage at a hospital poses another chance for delivery to
the wrong patient. Currently, we do not have insurance that covers loss of or
damage to Oncophage and do not know whether insurance will be available to us at
a reasonable price or at all.
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We have limited product liability coverage for clinical research use of
product candidates. We also maintain limited product liability insurance for the
commercial sale of Quilvax-FELV. This limited insurance coverage may be
insufficient to fully compensate us for future claims.
WE MAY INCUR SIGNIFICANT COSTS COMPLYING WITH ENVIRONMENTAL LAWS AND
REGULATIONS.
We use hazardous, infectious and radioactive materials that could be
dangerous to human health, safety or the environment. As appropriate, we store
these materials and various wastes resulting from their use at our facility
pending ultimate use and disposal. We are subject to a variety of federal, state
and local laws and regulations governing the use, generation, manufacture,
storage, handling and disposal of these materials and wastes resulting from
their use. We may incur significant costs complying with both existing and
future environmental laws and regulations. In particular, we are subject to
regulation by the Occupational Safety and Health Administration and the
Environmental Protection Agency and to regulation under the Toxic Substances
Control Act and the Resource Conservation and Recovery Act. OSHA or the EPA may
adopt regulations that may affect our research and development programs. We are
unable to predict whether any agency will adopt any regulations which could have
a material adverse effect on our operations.
Although we believe our safety procedures for handling and disposing of
these materials comply with federal, state and local laws and regulations, we
cannot entirely eliminate the risk of accidental injury or contamination from
these materials. In the event of an accident, we could be held liable for any
resulting damages which could be substantial.
OUR COMPETITORS IN THE BIOTECHNOLOGY AND PHARMACEUTICAL INDUSTRIES MAY HAVE
SUPERIOR PRODUCTS, MANUFACTURING CAPABILITY OR MARKETING EXPERTISE.
Our business may fail because we face intense competition from major
pharmaceutical companies and specialized biotechnology companies engaged in the
development of therapeutic drugs or vaccines and other therapeutic products,
including heat shock proteins, directed at cancer, infectious diseases,
autoimmnune disorders, and degenerative disorders. Several of these companies,
such as Dendreon, Stressgen, AVAX, Intracel and Cell Genesys utilize similar
technologies and/or personalized medicine techniques. Additionally, many of our
competitors, including large pharmaceutical companies, have greater financial
and human resources and more experience. Our competitors may:
- commercialize their products sooner than we commercialize ours;
- develop safer or more effective therapeutic drugs or preventive vaccines
and other therapeutic products;
- implement more effective approaches to sales and marketing;
- establish superior proprietary positions; or
- discover technologies that may result in medical insights or
breakthroughs which may render our drugs or vaccines obsolete even before
they generate any revenue.
More specifically, if we receive regulatory approvals, some of our
therapeutic drugs or vaccines will compete with well-established, FDA approved
therapies that have generated substantial sales over a number of years. We
anticipate that we will face increased competition in the future as new
companies enter our markets and scientific developments surrounding
immunotherapy and other cancer therapies continue to accelerate.
WE MAY NOT SUCCESSFULLY INTEGRATE OPERATIONS WITH OUR RECENTLY ACQUIRED
BUSINESSES, AND THE INTEGRATION OF THE BUSINESSES MAY BE COSTLY.
On November 16, 2000, we acquired Aquila Biopharmaceuticals, Inc. and on
July 12, 2001, we acquired Aronex Pharmaceuticals, Inc. We are integrating our
operations with those of Aquila and Aronex Pharmaceuticals. These integrations
require significant efforts from each entity, including coordinating
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research and development efforts. Aquila's and Aronex Pharmaceuticals'
collaborators, customers, distributors or suppliers may terminate their
arrangements or demand new arrangements; and Aquila or Aronex Pharmaceuticals
personnel may leave as a result of the acquisitions. Integrating operations may
distract management's attention from the day-to-day business of the combined
company. If we are unable to successfully integrate the operations of these
companies or if this integration process costs more than expected, our future
results will be negatively impacted.
The integration of these businesses into our operations will involve a
number of risks, including:
- the possible diversion of management's attention from other business
concerns;
- the possible loss of key employees from acquisitions;
- potential difficulties in integrating the operations of those businesses;
- the potential inability to successfully replicate our operating
efficiencies in Aquila's or Aronex Pharmaceuticals' operations; and
- unanticipated problems or legal liabilities.
We acquired these companies in order to, among other things, broaden our
product portfolio and, in Aronex Pharmaceuticals' case, to try to bring to
market certain of Aronex Pharmaceuticals' drugs at a faster pace than our
current products. We may find that these drugs are not viable or may take more
resources to bring to market than originally anticipated.
RISKS RELATED TO OUR STOCK
OUR OFFICERS AND DIRECTORS MAY BE ABLE TO BLOCK PROPOSALS FOR A CHANGE IN
CONTROL.
As of September 30, 2001, Antigenics Holdings L.L.C. controlled
approximately 38.5% of our outstanding common stock. Due to this concentration
of ownership, Antigenics Holdings may be able to prevail on all matters
requiring a stockholder vote, including:
- the election of directors;
- the amendment of our organizational documents; or
- the approval of a merger, sale of assets or other major corporate
transaction.
Our directors and officers, if they elect to act together, can control
Antigenics Holdings. In addition, several of our directors and officers directly
and indirectly own shares of our common stock.
ANTI-TAKEOVER PROVISIONS IN OUR CHARTER DOCUMENTS AND UNDER DELAWARE LAW MAY
MAKE AN ACQUISITION OF US MORE DIFFICULT.
We are incorporated in Delaware. Anti-takeover provisions of Delaware law
and our charter documents may make a change in control more difficult even if
the stockholders desire a change in control. Our anti-takeover provisions
include provisions in our certificate of incorporation providing that
stockholders' meetings may only be called by the president or the majority of
the board of directors and a provision in our by-laws providing that our
stockholders may not take action by written consent. Additionally, our board of
directors has the authority to issue up to one million shares of preferred stock
(including the shares being issued in this offering) and to determine the terms
of those shares of stock without any further action by our stockholders. The
rights of holders of our stock are subject to the rights of the holders of any
preferred stock that may be issued. The issuance of preferred stock could make
it more difficult for a third party to acquire a majority of our outstanding
voting stock. Our charter also provides for the classification of our board of
directors into three classes. This "staggered board" generally may prevent
stockholders from replacing the entire board in a single proxy contest. In
addition, our directors may only be removed from office for cause. Delaware law
also prohibits a corporation from engaging in a business combination with any
holder of 15% or more of its capital stock until the holder has
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held the stock for three years unless, among other possibilities, the board of
directors approves the transaction. The board may use this provision to prevent
changes in our management. Also, under applicable Delaware law, our board of
directors may adopt additional anti-takeover measures in the future.
OUR STOCK HAS LOW TRADING VOLUME AND THEREFORE OUR PUBLIC TRADING PRICE MAY BE
VOLATILE.
Since our initial public offering on February 4, 2000, the per share price
of our common stock has fluctuated between $10.00 and $71.50 with an average
daily trading volume over the three months ended September 30, 2001 of
approximately 103,000. The market has experienced significant price and volume
fluctuations that are often unrelated to the operating performance of individual
companies. In addition to general market volatility, many factors may have a
significant adverse effect on the market price of our stock, including:
- announcements of decisions made by public officials;
- results of our preclinical and clinical trials;
- announcements of technological innovations or new commercial products by
us or our competitors;
- developments concerning proprietary rights, including patent and
litigation matters;
- publicity regarding actual or potential results with respect to products
under development by us or by our competitors;
- regulatory developments; and
- quarterly fluctuations in our revenues and other financial results.
THE SALE OF A SUBSTANTIAL NUMBER OF SHARES COULD CAUSE THE MARKET PRICE OF OUR
STOCK TO DECLINE.
The sale by us or the resale by stockholders of shares of our stock could
cause the market price of our stock to decline. As of November 15, 2001, we had
29,004,277 shares of common stock outstanding. All of these shares are eligible
for sale on the Nasdaq National Market, although certain of the shares are
subject to sale volume and other limitations.
We have filed registration statements to permit the sale of 5,236,831
shares of common stock under our equity incentive plan and certain equity plans
that we assumed in the acquisitions of Aquila Biopharmaceuticals and Aronex
Pharmaceuticals. We have also filed a registration statement to permit the sale
of 300,000 shares of common stock under our employee stock purchase plan. As of
September 30, 2001, options to purchase approximately 3,333,000 shares of our
stock upon exercise of options with a weighted average exercise price per share
of $12.14 were outstanding. Many of these options are subject to vesting that
generally occurs over a period of up to five years following the date of grant.
As of September 30, 2001, warrants to purchase approximately 399,000 shares of
our common stock with a weighted average exercise price per share of $24.21 were
outstanding. In addition, in connection with our acquisition of Aronex
Pharmaceuticals, we issued contingent value rights that may result in the
issuance of 326,000 shares of our stock.
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