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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission file number: 0-12042
BIOGEN, INC.
(Exact name of Registrant as specified in its charter)
Massachusetts 04-3002117
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
14 Cambridge Center, Cambridge, Massachusetts 02142
(Address of principal executive offices)(zip code)
Registrant's telephone number, including area code: (617) 679-2000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.01
par value
(Title of class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10- K or any amendment to
this Form 10-K. [ ]
Aggregate market value of Common Stock held by nonaffiliates of the
Registrant at February 13, 1997: $3,526,097,099 (excludes shares held by
directors). Exclusion of shares held by any person should not be construed to
indicate that such person possesses the power, direct or indirect, to direct or
cause the direction of management or policies of the Registrant, or that such
person is controlled by or under common control with the Registrant. Common
Stock outstanding at February 13, 1997: 73,060,328 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's definitive Proxy Statement for its 1997 Annual
Meeting of Stockholders are incorporated by reference into Part III of this
Report, and portions of the Registrant's 1996 Annual Report to Shareholders are
incorporated by reference into Parts II and IV of this Report.
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PART I
ITEM 1 - BUSINESS
OVERVIEW
Biogen, Inc. ("Biogen" or the "Company") is a biopharmaceutical company
principally engaged in the business of developing, manufacturing and marketing
drugs for human healthcare. Biogen currently derives revenues from United States
sales of AVONEX(TM) (Interferon beta-1a) for the treatment of relapsing forms of
multiple sclerosis and from worldwide sales by Biogen's licensees of a number of
products, including alpha interferon and hepatitis B vaccines and diagnostic
products. Biogen began selling AVONEX(TM) in the United States in May 1996, upon
receipt of a product license from the United States Food and Drug Administration
("FDA"). During 1996, Biogen's revenues from sales of AVONEX(TM) were
approximately $76.5 million. The Company expects to receive regulatory approval
to market and sell AVONEX(TM) in the European Union in the first half of 1997.
During 1996, Biogen also received approximately $181.5 million in royalty
revenue from its licensees on sales of their products, including a one-time
royalty payment of $30.0 million from Pharmacia & Upjohn AB. Biogen's licensees
generated total sales of greater than $2.0 billion in 1996 from products covered
under licenses with Biogen.
Biogen continues to devote significant resources to its ongoing research
and development efforts. Biogen focuses its research and development efforts on
areas where it has particular scientific strengths: inflammatory diseases,
respiratory diseases, kidney diseases and certain cancers and viruses. In 1996,
Biogen completed two Phase 1 clinical trials of LFA3TIP, one of the product
candidates from Biogen's inflammation program. The trials were designed to study
LFA3TIP's safety profile in healthy human volunteers. A Phase 2-A clinical trial
of LFA3TIP to study the safety profile of LFA3TIP in psoriasis patients is
currently underway. Biogen also expects that clinical testing of at least one
other product candidate from its inflammation program will begin in 1997.
Biogen's anti-inflammatory product candidates are being tested for therapeutic
uses in a broad range of acute and chronic inflammatory and autoimmune diseases.
In 1996, Biogen also commenced a Phase 1 clinical trial to study the safety
profile of gelsolin, a mucolytic agent which is a potential treatment for cystic
fibrosis and several other pulmonary diseases. In addition, Biogen has
earlier-stage research programs directed toward finding therapies for kidney
diseases, through a collaboration with Creative BioMolecules, central nervous
system disorders, through a collaboration with Ontogeny, Inc., and toward
developing products for human gene therapy through a collaboration with Genovo,
Inc. Biogen is also exploring the use of growth factors to prevent or treat the
degeneration of the kidney which results from renal failure, and is
investigating new ways to modify immune responses more specifically in order to
treat diseases of the immune system.
AVONEX(TM) INTERFERON BETA-1A
In May 1996, upon receipt of a license from the FDA, Biogen commenced
marketing and sales in the United States of AVONEX(TM) (Interferon beta-1a) for
the treatment of relapsing forms of multiple sclerosis. Multiple sclerosis is a
progressive neurological disease in which the body loses the ability to transmit
messages among nerve cells, leading to a loss of muscle control, paralysis and,
in some cases, death. Patients with active relapsing multiple sclerosis
experience an uneven pattern of disease progression characterized by periods of
stability interrupted by flareups of the disease after which the patient returns
to a new baseline of functioning. AVONEX(TM) is a recombinant form of a protein
produced by fibroblast cells in response to viral infection. AVONEX(TM) has been
shown in a pivotal clinical trial to both slow the accumulation of disability
and to
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reduce the frequency of exacerbations in patients with relapsing forms of
multiple sclerosis. A clinical study of AVONEX(TM) in patients who have had only
one confirmed exacerbation and a dose comparison study comparing the approved
dosage of AVONEX(TM) with a higher dose are currently underway. Revenues from
sales of AVONEX(TM) in 1996 were approximately $76.5 million.
In the last quarter of 1996, Biogen received regulatory approval of its
application to market and sell AVONEX(TM) in Israel for the treatment of
relapsing forms of multiple sclerosis. The Company expects to receive a license
from regulatory authorities in Israel in the first half of 1997. Biogen also
received, in late 1996, a positive opinion from the Committee for Proprietary
Medicinal Products ("CPMP") of the European Medicines Evaluation Agency ("EMEA")
in connection with Biogen's application for marketing approval in the European
Union and a positive opinion in connection with Biogen's application for
marketing approval in Switzerland. The CPMP's opinion represents the EMEA's
scientific evaluation of AVONEX(TM) as a treatment for relapsing forms of
multiple sclerosis. Biogen expects to receive final EMEA approval in the first
half of 1997. The Company plans to begin marketing AVONEX(TM) in the United
Kingdom and Germany shortly after receipt of EMEA approval, and in France after
approval and completion of pricing discussions with French regulatory
authorities. Biogen intends to market and sell AVONEX(TM) through distribution
partners in Spain, Scandinavia, Italy and Greece. The Company has also applied
for approval to market and sell AVONEX(TM) in Canada, New Zealand, and Norway.
The Company does not expect to receive regulatory approval in Australia in the
foreseeable future.
MAJOR RESEARCH PROGRAMS
Biogen's research is focused on biological systems and processes where its
scientific expertise in molecular biology, cell biology, immunology and protein
chemistry can lead to a greater understanding of disease processes and, as a
result, to the creation of new pharmaceuticals. Biogen selects product
candidates from its research programs to test in clinical trials, focusing its
efforts on those agents which it believes have the greatest potential
competitive advantages and large commercial markets. Described below are
Biogen's major research programs.
INFLAMMATION PROGRAM
Biogen scientists have been working to understand the activities of white
blood cells involved in the inflammation process. Biogen has focused on two
events central to inflammation: (1) the activation of T-cells, specialized white
blood cells which initiate and control the immune response; and (2) the adhesion
of white blood cells to the endothelium (blood vessel walls) and their migration
through the endothelium into surrounding tissues where they cause inflammation.
Activation and adhesion of white blood cells depend upon the binding of pairs of
receptor molecules which appear on the surface of white blood cells and
endothelial cells. When these pairs of receptors bind together, their
interactions create cellular "pathways" for activation and adhesion events.
Biogen has investigated several of these cellular pathways and identified new
receptors in certain of these pathways.
Based on its research, Biogen has selected three cellular pathways as the
promising points of therapeutic intervention to prevent inflammation: (1) the
LFA-3/CD2 pathway, which activates T-cells, (2) the VCAM-1/VLA-4 pathway, which
is necessary for the adhesion of several types of white blood cells to
endothelial cells, and (3) the CD40L/CD40 pathway, which activates B-cells which
produce antibodies. Biogen believes that products which interrupt these pathways
will block the inflammation process at an early stage, thus preventing tissue
damage more effectively than currently available therapies. Moreover, such
products should result in selective inhibition of the immune system, rather than
the broad suppression
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associated with many therapies currently available or under development. In in
vitro and in vivo experiments the product candidates from the inflammation
program have shown promising inhibitory effects. In 1996, the Company completed
two Phase 1 clinical trials of LFA3TIP, one of the product candidates from
Biogen's inflammation program. LFA3TIP is a recombinant protein that has been
designed to modulate immune responses through interaction with the CD2 receptor.
The trials were designed to study the drug's safety profile in healthy human
volunteers. A Phase 2-A clinical trial to study the safety profile of LFA3TIP in
patients with severe psoriasis is currently underway. Biogen is conducting
preclinical tests on two other anti-inflammatory product candidates, VLA4, a
small molecule antagonist, and CD40 Ligand, a monoclonal antibody. Biogen
expects to begin clinical trials of CD40 Ligand in 1997.
GELSOLIN
In 1996, Biogen commenced a Phase 1 clinical trial of a recombinant form of
the actin-severing agent, gelsolin. Biogen is developing gelsolin as a therapy
for reducing airway mucous viscosity in patients with cystic fibrosis ("CF"),
chronic bronchitis and several other pulmonary diseases. Thick viscid secretions
in the airways of CF patients and patients with other respiratory diseases are
believed to cause progressive pulmonary destruction. A major contributor to the
viscosity of mucus secretions is the release of a large amount of filamentous
actin by degenerating inflammatory cells which migrate in large numbers to the
airways of patients with these diseases. Biogen and its collaborators believe
that severing actin filaments contaminating the airway mucus may lead to
clinical improvement.
OP-1
In 1996, Biogen entered into a collaborative research and license agreement
with Creative BioMolecules, Inc. ("CBM") for the development of CBM's
morphogenic protein, OP-1, for the treatment of kidney diseases and disorders.
OP-1 is a circulating human protein agonist expressed during development and
regeneration of the kidney, spinal cord and bone. Under its agreement with CBM,
Biogen obtained exclusive worldwide rights to develop, market and sell OP-1 in
the renal field. Biogen will initially focus on the development of OP-1 as a
treatment for acute and chronic renal failure. As part of the collaboration with
CBM, Biogen purchased approximately 1.5 million shares of CBM's Common Stock.
HEDGEHOG PROTEINS
In 1996, the Company entered into a research collaboration and license
agreement with Ontogeny, Inc. ("Ontogeny") for the development of three specific
"Hedgehog" cell differentiation proteins. Hedgehog proteins are a class of novel
human proteins that are responsible for inducing the formation or regeneration
of tissue. Under its agreement with Ontogeny, Biogen receives exclusive
worldwide rights to therapeutics directly based on Ontogeny's proprietary family
of Hedgehog proteins, sonic, indian and desert Hedgehogs, for most disease
indications. The Company's initial focus will be development of the Hedgehog
proteins for the treatment of central nervous system disorders. As part of the
collaboration with Ontogeny, Biogen purchased a minority equity interest in
Ontogeny.
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GENE THERAPY
In 1995, the Company entered into a collaborative research agreement with
Genovo, Inc. ("Genovo") for the development of certain human gene therapy
treatments. Under its agreement with Genovo, Biogen has agreed to pay more than
$35 million to Genovo over a five-year period to fund research at Genovo and at
the Institute for Human Gene Therapy at the University of Pennsylvania. Under
its agreement with Genovo, Biogen has received a substantial minority equity
interest in Genovo and certain licensing rights related to diseases of the liver
and lung with the first disease targets to be in the areas of cystic fibrosis
and familial hypercholesterolemia.
OTHER RESEARCH PROGRAMS
As part of its further research efforts, Biogen is exploring the use of
growth factors to prevent or treat the degeneration of the kidney which results
from renal failure. The Company is also investigating new ways to modify immune
responses more specifically in order to treat diseases of the immune system.
RESEARCH AND DEVELOPMENT COSTS
During 1996, 1995 and 1994, Biogen's research and development costs were
approximately $132.4 million, $87.4 million and $91.2 million, respectively.
RISKS ASSOCIATED WITH DRUG DEVELOPMENT
Certain of the statements set forth above regarding the Company's drug
development programs, such as the statement regarding the anticipated receipt
and timing of regulatory approval by the EMEA for the marketing of AVONEX(TM) in
the European Union, are forward-looking and are based upon the Company's current
belief as to the outcome and timing of such future events. Many important
factors affect the Company's ability to successfully develop and commercialize
drugs, including the ability to obtain and maintain all necessary patents or
licenses, to demonstrate the safety and efficacy of drug candidates at each
stage of the clinical trial process, to meet applicable regulatory standards and
receive required regulatory approvals, to be capable of producing drug
candidates in commercial quantities at reasonable costs, to compete successfully
against other products, and to market products successfully. For example, to
receive final marketing approval from the EMEA for AVONEX(TM) in the first half
of 1997, the Company must await final action by the EMEA, the outcome and timing
of which is still within the EMEA's sole control. There can be no assurance that
any of the products described in this section or resulting from Biogen's
research programs will be successfully developed, prove to be safe and
efficacious at each stage of clinical trials, meet applicable regulatory
standards, be capable of being produced in commercial quantities at reasonable
costs or be successfully marketed.
PRINCIPAL PRODUCTS BEING MARKETED OR DEVELOPED BY BIOGEN'S LICENSEES
INTRON(R) A ALPHA INTERFERON
Alpha interferon is a naturally occurring protein produced by normal white
blood cells. Biogen has been granted patents in the United States and in Europe
covering the production of alpha interferons through recombinant DNA techniques
and has applications pending in numerous other countries. See "Patents and Other
Proprietary Rights." Biogen's worldwide licensee for recombinant alpha
interferon, Schering-Plough
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Corporation ("Schering-Plough"), first began commercial sales of its Intron(R) A
brand of alpha interferon in the United States in 1986 for hairy-cell leukemia.
Schering-Plough now sells Intron(R) A in 72 countries for as many as 16
indications. The FDA has approved Intron(R) A for the treatment of chronic
hepatitis B and hepatitis C, hairy cell leukemia, AIDS-related Kaposi's sarcoma,
condylomata acuminata, and for injection as an adjuvant treatment to surgery in
patients at high risk for systemic recurrence of malignant melanoma.
Schering-Plough has undertaken studies using Intron(R) A for a number of
additional indications. Royalties from Schering-Plough on sales of Intron(R) A
accounted for approximately 27% of Biogen's revenues (excluding interest) in
1996. The majority of sales of Intron(R) A were generated outside the United
States.
HEPATITIS B VACCINES AND DIAGNOSTICS
Hepatitis B is a blood-borne disease which causes a serious infection of
the liver and substantially increases the risk of liver cancer. More than 250
million people worldwide have chronic hepatitis B virus infections. Biogen holds
several important patents related to hepatitis B antigens produced by genetic
engineering techniques. See "Patents and Other Proprietary Rights." These
antigens are used in recombinant hepatitis B vaccines and in diagnostic test
kits used to detect hepatitis B infection. In total, sales of hepatitis B
vaccines and diagnostic products by Biogen licensees exceeded $1.1 billion in
1996.
HEPATITIS B VACCINES
At least 20 countries around the world, including the United States,
recommend vaccination against hepatitis B for all infants. The United States
Centers for Disease Control and the American Academy of Pediatrics have also
recommended universal immunization of ten-year-old children and at-risk
adolescents. The United States Occupational Safety and Health Administration has
recommended that all persons with an occupational exposure to blood and other
infectious material receive the hepatitis B vaccine.
SmithKline Beecham Biologicals s.a. ("SmithKline") and Merck & Co., Inc.
("Merck") are the two major worldwide marketers of hepatitis B vaccines. Biogen
has licensed to SmithKline exclusive rights under Biogen's hepatitis B patents
to market hepatitis B vaccines in the major countries of the world, excluding
Japan. SmithKline's vaccine is approved in the United States and in over 60
other countries. In 1990, SmithKline and Biogen entered into a sublicense
arrangement with Merck under which Biogen currently receives royalties.
Royalties from SmithKline and Merck together accounted for approximately 23% of
Biogen's revenues (excluding interest) in 1996. Biogen has also licensed rights
under its hepatitis B patents to Merck and The Green Cross Corporation on a
non-exclusive basis in Japan.
In April 1995, an arbitration panel ruled in Biogen's favor in an
arbitration initiated by SmithKline regarding the rate of royalties payable on
sales of hepatitis B vaccines by SmithKline in the United States. In June 1995,
SmithKline made a motion in the Federal District Court for the Southern District
of New York to vacate the arbitration panel award. In 1996, the court upheld the
arbitration panel's decision in Biogen's favor. SmithKline did not appeal the
court's decision.
HEPATITIS B DIAGNOSTICS
Biogen has licensed its proprietary hepatitis B rights, on an
antigen-by-antigen and nonexclusive basis, to diagnostic kit manufacturers.
Biogen currently has hepatitis B license or license and supply agreements for
diagnostic use with more than a dozen companies, including Abbott Laboratories,
the major
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worldwide marketer of hepatitis B diagnostic kits, Ortho Diagnostic Systems,
Inc., Roche Diagnostic Systems, Inc. and Organon Teknika B.V.
OTHER PRODUCTS
Under a license agreement with Eli Lilly and Company ("Lilly"), Biogen has
granted Lilly rights under certain of Biogen's patents related to gene
expression. Lilly uses the patented vectors and methods in several products that
are on the market or in development. Under the license agreement Biogen receives
royalties on sales of these products.
In 1996, Biogen Technologies, Inc., a wholly-owned subsidiary of Biogen,
Inc., granted a sublicense to Pharmacia & Upjohn AB ("Pharmacia & Upjohn") under
certain patent rights to proprietary protein secretion technology exclusively
licensed to Biogen by Harvard University. Under the terms of the license
agreement, Pharmacia & Upjohn agreed to make a one-time royalty payment to
Biogen Technologies, Inc. of $30 million, and to pay ongoing royalties on sales
of Pharmacia & Upjohn's recombinant human growth hormone product, Genotropin(R),
in the United States, Canada and Japan. As part of the agreement, Biogen and
Pharmacia & Upjohn settled their litigation related to the secretion technology
in Japan, the United States and Sweden.
HIRULOG(R) THROMBIN INHIBITOR
In March 1996, Biogen announced the results of a double-blinded,
multi-center, randomized Phase 2/3 trial of its HIRULOG(R) direct thrombin
inhibitor versus heparin for the treatment of acute myocardial infarctions
("MI") in patients also treated with streptokinase. The study, which began prior
to Biogen's 1994 decision to terminate HIRULOG(R) development, compared the
effect of high and low doses of HIRULOG(R) with heparin in reaching early
TIMI-Grade III flow patency, indicating normal flow of blood through vessels.
This endpoint in the treatment of acute MI has been directly correlated with
improvements in survival and cardiac function. All patients in the study were
treated with aspirin as well as streptokinase. In the trial, half the patients
receiving the high dose of HIRULOG(R) showed fully open vessels within 90 to 120
minutes, compared to a third of heparin-treated patients. There was no increase
in bleeding risk associated with HIRULOG(R) administration. Biogen continues to
seek to license HIRULOG(R) to a third party for further development and
marketing.
PATENTS AND OTHER PROPRIETARY RIGHTS
Biogen has filed numerous patent applications in the United States and
various other countries seeking protection of a number of its processes and
products, and patents have issued on a number of these applications. Issues
remain as to the ultimate degree of protection that will be afforded to Biogen
by such patents. There is no certainty that these patents or others, if
obtained, will be of substantial protection or commercial benefit to Biogen.
Furthermore, it is not known to what extent Biogen's other pending patent
applications will ultimately be granted as patents or whether those patents that
have been issued will prevail if they are challenged in litigation.
Trade secrets and confidential know-how are important to Biogen's
scientific and commercial success. Although Biogen seeks to protect its
proprietary information, there can be no assurance that others will not either
develop independently the same or similar information or obtain access to
Biogen's proprietary information.
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RECOMBINANT ALPHA INTERFERON
Biogen has more than 50 patents in countries around the world, including
the United States and countries of the European Patent Office, covering the
production of recombinant alpha interferons. Biogen continues to seek related
patents in the United States and other countries.
Four infringement suits have been filed in Biogen's name to enforce its
non-US alpha interferon patents. The first suit was filed in Vienna, Austria
against Boehringer Ingelheim Zentrale GmbH ("BI") and two of its subsidiaries.
The Austrian Court has stayed Biogen's infringement case pending a decision by
the Austrian Patent Office on BI's petition to revoke Biogen's European
(Austrian) patent on grounds peculiar to Austrian law. In April 1995, Biogen
received a favorable decision from the Austrian Patent Office from which BI
appealed. In June 1996, BI's appeal was rejected. A hearing before the Austrian
Court is scheduled for March 1997 to set the schedule for the infringement case.
The second suit was filed in Dusseldorf, Germany against Dr. Karl Thomae GmbH
and two other BI companies. The German trial and appeal courts ruled in favor of
Biogen and have enjoined Thomae from the further manufacture, use or sale of
recombinant alpha- 2(c) interferon. The third suit was filed in Warsaw, Poland
against Boehringer Ingelheim Pharma GmbH ("BI Pharma"). In October 1996, the
parties mutually agreed to withdraw from the infringement suit and nullity
action without decision. The fourth suit was filed in June 1994 in Tokyo, Japan
against Amgen Limited. The suit seeks to enjoin Amgen from its clinical testing
and planned commercialization of consensus interferon. Biogen does not expect a
decision in this case before 1998. In the United States, a Biogen patent
application claiming recombinant mature human alpha interferon was involved in
an interference to determine who was the first to invent that specific form of
alpha interferon. In December 1995, priority of invention was awarded by a
decision of the U.S. Patent and Trademark Office to the applicants of a patent
application owned by Genentech Inc. and Hoffman La Roche Inc. ("Roche"). In
April 1996, Biogen appealed the decision by way of a civil action against
Genentech and Roche in the U.S. District Court for the District of
Massachusetts. A decision is not expected before 1998. The U.S. patent under
which Biogen has licensed Schering Plough for alpha interferon was not involved
in the interference. Since Roche has granted certain non-exclusive rights under
its patent application to Schering Plough, the decision will not affect Schering
Plough's ability to market Intron(R) A alpha interferon. See "Principal Products
Being Marketed or Developed by Biogen's Licensees". In December 1996, Schering
Plough filed suit in its own name, as exclusive licensee, against Amgen, Inc.
("Amgen") to enforce Biogen's U.S. alpha interferon patent claiming it to be
infringed by Amgen's consensus interferon product known as "Infergen". Biogen
subsequently joined the suit as a co-plaintiff. Biogen is also a defendant in a
related declaratory judgement action filed by Amgen.
RECOMBINANT HEPATITIS B ANTIGENS
Biogen has more than 75 patents in countries around the world, including
three in the United States and two in countries of the European Patent Office,
and several patent applications, covering the recombinant production of
hepatitis B surface, core and "e" antigens. Biogen continues to seek related
patents in the United States and other countries.
Biogen's first European hepatitis B patent was opposed by five companies.
The Opposition Division of the European Patent Office maintained the patent over
those oppositions. Two of the opponents appealed the Opposition Division's
decision to the Technical Board of Appeal, which is the final arbiter of
European oppositions. In June 1994, the Technical Board maintained Biogen's
patent in amended form.
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Biogen's second European hepatitis B patent was opposed by four companies.
In 1992, the Opposition Division held that Biogen's second European hepatitis B
patent lacked inventive step. Biogen appealed this decision to the Technical
Board of Appeal. In July 1994, the Technical Board reversed the Opposition
Division and maintained the Biogen patent.
Biogen has filed three infringement suits to enforce its hepatitis B
patents, in England against Medeva plc ("Medeva"), in Israel against
Bio-Technology General (Israel) Ltd. ("BTG"), and in Singapore against Scitech
Medical Products Pte Ltd. and Scitech Genetics Pte Ltd. The action against
Medeva sought to enjoin Medeva's planned production and distribution of a
hepatitis B vaccine. In November 1993, the United Kingdom High Court of Justice
ruled in favor of Biogen and enjoined Medeva from infringement of one of
Biogen's European (UK) patents. The Court then stayed the injunction pending
Medeva's appeal. In October 1994, the United Kingdom Court of Appeal reversed
the High Court and held the Biogen patent to be invalid. In 1995, Biogen
received leave from the United Kingdom House of Lords to appeal this decision
and filed its petition in June 1995. In October 1996, the House of Lords
dismissed Biogen's appeal. The Biogen hepatitis B patent involved will no longer
be enforceable with its current claims in the United Kingdom or in any of the
various United Kingdom patent registration countries. Biogen will seek to amend
the claims. In 1992, BTG brought an action against Biogen seeking a compulsory
license under Biogen's Israeli hepatitis B patent and Biogen filed an
infringement suit against BTG, seeking to enjoin BTG's planned production, sale
and distribution of hepatitis B vaccine. In September 1995, the Israeli
Registrar of Patents, Designs and Trademarks decided that it was lawful and just
to grant to BTG a compulsory license. In November 1996, the Registrar set the
royalty terms of the compulsory license. Biogen will appeal the decision by the
Registrar to the Israeli District Court. The infringement suit continues. In
1993, Biogen sued Scitech Products and Scitech Genetics in Singapore. Since
Singapore is a United Kingdom patent registration country, Biogen's continued
prosecution of this case depends on a favorable outcome in its attempt to amend
the claims of the European (UK) patent.
In September 16, 1994, Biogen filed suit against SmithKline before the
President of the Commercial Court of Nivelles, Belgium alleging unfair trade
practices by SmithKline in refusing to provide to Biogen copies of SmithKline's
marketing authorizations for hepatitis B vaccines in various European countries
to enable Biogen to obtain supplementary protection certificates for its
hepatitis B patents in those countries. In a June 2, 1995 preliminary judgment,
the President of the Commercial Court referred questions on the subject to the
European Court of Justice. In January 1997, the European Court of Justice ruled
that the requirement for providing a marketing authorization as part of a filing
for a supplemental protection certificate is a formality designed to demonstrate
that the relevant product is on the market. The Court said that the applicable
regulatory agencies should provide appropriate documentation to national patent
offices in connection with filings for supplemental protection certificates. The
effect of this decision should be to allow Biogen to extend its hepatitis B
patents for an average of about sixteen months in those countries of the
European Union in which Biogen has not already obtained patent extension.
RECOMBINANT BETA INTERFERON
The European Patent Office and certain countries have granted patents to
Biogen covering the recombinant production of beta interferon. In other
countries, including the United States, Biogen has filed patent applications and
continues to seek patents covering the recombinant production of beta interferon
and related technology.
Biogen's European patent was opposed by one company. In December 1993, the
European Patent Office's Opposition Division dismissed the opposition and
maintained Biogen's patent. The opponent appealed this decision to the Technical
Board of Appeal. Biogen expects a decision on the appeal in the second quarter
of 1997. In the United States, Biogen's claims to key intermediates in the
recombinant
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production of beta interferon were involved in an interference to determine who
was the first to invent those intermediates in the United States. Priority of
invention was awarded to another party in the interference. Biogen's pending
United States claims to the production of recombinant beta interferon were not
part of that interference. Prosecution of these claims continues.
Other parties have also filed patent applications in various countries
covering the recombinant production of beta interferon, and, in particular, key
intermediates in that production, as well as beta interferon itself. One such
party has been granted several patents in the European Patent Office and in
certain countries on these key intermediates. The same party was awarded
priority to those intermediates in the United States interference. Biogen has
obtained non-exclusive rights to manufacture, use and sell recombinant beta
interferon under these patents in various countries of the world, including the
United States, Japan and most European countries. Another party has been
granted various patents in the United States and in other countries on beta
interferon itself. Biogen has obtained worldwide, non-exclusive rights under
these patents to make, use and sell recombinant beta interferon. In 1994 a
European patent issued to a competitor of Biogen with claims related to beta
interferon. Biogen has filed an opposition to the European patent in the
European Patent Office seeking a revocation of the entire patent on grounds of
lack of inventive step and lack of novelty. A hearing before the Opposition
Division of the European Patent Office is scheduled to begin in the second
quarter of 1997. Biogen does not believe that the European patent will prevent
Biogen's commercialization of AVONEX(TM) interferon beta 1a in Europe for the
treatment of multiple sclerosis. On July 3, 1996, Berlex Laboratories, Inc.
("Berlex") filed suit against Biogen in the United States District Court for
the District of New Jersey alleging infringement by Biogen of Berlex's "
McCormick" patent in the United States in the production of AVONEX(TM). Berlex
seeks a judgment granting it unspecified damages, a trebling of any damages
awarded and a permanent injunction restraining Biogen from alleged
infringement. Prior to the date of the suit filed by Berlex on the McCormick
patents, Biogen filed a suit against Schering AG ("Schering"), Berlex and the
Board of Trustees of the Leland Stanford Jr. University ("Stanford") in the
United States District Court for the District of Massachusetts for a
declaratory judgment of non-infringement and invalidity of the McCormick patent
contending that AVONEX(TM), its manufacturing process and intermediates used in
that process do not infringe the McCormick patent and that such patent is not
valid. In November 1996, the U.S. District Court for the District of
Massachusetts ruled that it had jurisdiction and Berlex's New Jersey action was
transferred to Massachusetts and consolidated for pre-trial purposes with the
Massachusetts case. Biogen and Stanford subsequently entered into an agreement
voluntarily dismissing Stanford from the suit. In February 1997, the U.S.
District Court in Massachusetts dismissed Biogen's declaratory judgment action
as to Schering without prejudice to reconsideration if such dismissal is later
shown to result in an injustice to Biogen. The suit involving Berlex is still
pending. A trial is not expected before 1998.
OTHER PATENTS
Biogen has granted Eli Lilly and Company ("Lilly") a non-exclusive license
under certain of Biogen's patents for gene expression. Lilly uses the patented
vectors and methods in several products that are on the market or in
development.
Biogen has granted Pharmacia & Upjohn AB ("Pharmacia & Upjohn") a
sublicense under certain of patents related to the secretion of proteins
licensed exclusively to Biogen by Harvard University. Pharmacia & Upjohn uses
the patented subject matter in connection with its Genotropin(R) recombinant
human growth hormone.
In March 1995, Biogen filed suit in the U.S. District Court for the
District of Massachusetts against Amgen Inc. ("Amgen"). The suit seeks to enjoin
Amgen from manufacturing and selling its Neupogen(R) human granulocyte colony
stimulating factor in the United States and asks for damages for infringing
activities. Biogen believes that to make Neupogen(R) Amgen uses technology
claimed in certain of Biogen's licensed patents for gene expression. Biogen does
not expect a trial in the case prior to 1998.
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Biogen's European patent relating to gene expression was opposed by
Biotechnology General Corp. in December 1993. A hearing was held by the
Opposition Division of the European Patent Office in March 1996. No decision has
been rendered.
THIRD PARTY PATENTS
Biogen is aware that others, including various universities and companies
working in biotechnology, have also filed patent applications and have been
granted patents in the United States and in other countries claiming subject
matter potentially useful or necessary to Biogen's business. Some of those
patents and applications claim only specific products or methods of making such
products, while others claim more general processes or techniques useful or now
used in the biotechnology industry. Genentech has been granted patents and is
prosecuting other patent applications in the United States and certain other
countries which it may allege are currently used by Biogen and the rest of the
biotechnology industry to produce recombinant proteins in microbial hosts.
Genentech has offered to Biogen and others in the industry non-exclusive
licenses under those patents and patent applications for various proteins and in
various fields of use, but not for others. Schering-Plough, Biogen's exclusive
licensee for recombinant alpha interferon, is licensed under certain of these
patents for the manufacture, use and sale of recombinant alpha interferon. The
ultimate scope and validity of Genentech's patents, of other existing patents,
or of patents which may be granted to third parties in the future, the extent to
which Biogen may wish or be required to acquire rights under such patents, and
the availability and cost of acquiring such rights currently cannot be
determined by Biogen.
There has been, and Biogen expects that there may continue to be,
significant litigation in the industry regarding patents and other intellectual
property rights. Such litigation could create uncertainty and consume
substantial resources.
COMPETITION AND MARKETING
IN GENERAL
Competition in the biotechnology and pharmaceutical industries is intense
and comes from many and varied sources. Biogen does not believe that it or any
of the other industry leaders can be considered dominant in view of the rapid
technological change in the industry. Biogen experiences significant competition
from specialized biotechnology firms in the United States, Europe and elsewhere
and from many large pharmaceutical, chemical and other companies. Certain of
these companies have substantially greater financial, marketing, research and
development and human resources than Biogen. The pharmaceutical companies have
considerable experience in undertaking clinical trials and in obtaining
regulatory approval to market pharmaceutical products. In addition, certain of
Biogen's products may be subject to competition from products developed using
alternatives to biotechnology techniques.
Much competition is directed towards establishing proprietary positions
through research and development. A key aspect of such competition is recruiting
and retaining qualified scientists and technicians. Biogen believes that it has
been successful in attracting skilled and experienced scientific personnel.
Biogen believes that leadership in the industry will be based on managerial and
technological superiority and may be influenced significantly by patents and
other forms of protection of proprietary information. See "Patents and Other
Proprietary Rights". The achievement of such a position depends upon Biogen's
ability to attract and retain skilled and experienced personnel, its ability to
identify and exploit commercially the products resulting
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from biotechnology and the availability of adequate financial resources to fund
facilities, equipment, personnel, clinical testing, manufacturing and marketing.
Many of Biogen's competitors are working to develop products similar to
those under development by Biogen. The timing of the entry of a new
pharmaceutical product into the market can be an important factor in determining
the product's eventual success and profitability. Early entry may have important
advantages in gaining product acceptance and market share. Moreover, for certain
diseases with limited patient populations, the FDA is prevented under the Orphan
Drug Act, for a period of seven years, from approving more than one application
for the "same" product for a single orphan drug designation, unless a later
product is considered clinically superior. Accordingly, the relative speed with
which Biogen can develop products, complete the testing and approval process and
supply commercial quantities of the product to the market is expected to have an
important impact on Biogen's competitive position. In addition, competition
among products approved for sale may be based, among other things, on patent
position, product efficacy, safety, reliability, availability and price.
AVONEX(TM) (INTERFERON BETA - 1A)
As a treatment for multiple sclerosis, AVONEX(TM) competes with interferon
beta-1b which is sold in the United States under the brand name Betaseron(R) by
Berlex Laboratories, Inc., a United States affiliate of Schering AG, Germany
("Schering AG"), and sold in Europe under the brandname Betaferon(TM) by
Schering AG. In Italy and Spain, AVONEX(TM) will also compete with an extracted
form of beta interferon sold by Ares Serono S.A. ("Serono"). In late 1996,
Serono also filed for approval in the European Union to market and sell
Rebif(R), its recombinant interferon beta-1a product, as a treatment for
multiple sclerosis. Biogen will also face competition from Teva Pharmaceuticals
("Teva") which recently received a license from the FDA to market its glatiramer
acetate (also known as copolymer-1) in the United States as a treatment for
multiple sclerosis. Teva's product will be marketed in the United States under
the brandname Copaxone(TM) through a partnership between Teva and Hoechst Marion
Roussel. Teva has also filed for marketing approvals in other countries. In
addition, a number of other companies are working to develop products to treat
multiple sclerosis which may in the future compete with AVONEX(TM). Biogen
believes that competition among treatments for multiple sclerosis will be based
on product performance, service and price.
REGULATION
Biogen's current and contemplated activities and the products and processes
that will result from such activities are and will be subject to substantial
government regulation.
Before new pharmaceutical products may be sold in the United States and
other countries, clinical trials of the products must be conducted and the
results submitted to appropriate regulatory agencies for approval. These
clinical trial programs generally involve a three-phase process. Typically, in
Phase 1, trials are conducted in volunteers or patients to determine the early
side effect profile and, perhaps, the pattern of drug distribution and
metabolism. In Phase 2, trials are conducted in groups of patients with a
specific disease in order to determine appropriate dosages, expand evidence of
the safety profile and, perhaps, determine preliminary efficacy. In Phase 3,
large scale, comparative trials are conducted on patients with a target disease
in order to generate enough data to provide the statistical proof of efficacy
and safety required by national regulatory agencies. The receipt of regulatory
approvals often takes a number of years, involving the expenditure of
substantial resources and depends on a number of factors, including the severity
of the disease in question, the availability of alternative treatments and the
risks and benefits demonstrated in clinical trials.
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On occasion, regulatory authorities may require larger or additional studies,
leading to unanticipated delay or expense.
In connection with the commercialization of products resulting from
Biogen's projects, it is necessary, in a number of countries, to comply with
certain regulations relating to the manufacturing and marketing of such products
and to the products themselves. For example, the commercial manufacturing,
marketing and exporting of pharmaceutical products require the approval of the
FDA in the United States and of comparable agencies in other countries. The FDA
has established mandatory procedures and safety standards which apply to the
manufacture, clinical testing and marketing of pharmaceutical products in the
United States. The process of seeking and obtaining FDA approval for a new
product and licensing of the facilities in which the product is produced is
likely to take a number of years and involve the expenditure of substantial
resources. In addition, the regulatory approval processes for products in the
United States, Canada and Europe are undergoing or may undergo changes. Biogen
cannot determine what effect any changes in regulatory approval processes may
have on its business.
In the United States, the federal government regularly considers reforming
health care coverage and costs. Resulting legislation or regulatory actions may
have a significant effect on the Company's business. Biogen's ability to
commercialize successfully human pharmaceutical products also may depend in part
on the extent to which reimbursement for the costs of such products and related
treatments will be available from government health administration authorities,
private health insurers and other organizations. Currently, substantial
uncertainty exists as to the reimbursement status of newly approved health care
products by third-party payors.
Biogen's policy is to conduct relevant research in compliance with the
current United States National Institutes of Health Guidelines for Research
Involving Recombinant DNA Molecules (the "NIH Guidelines") and all other federal
and state regulations. By local ordinance, Biogen is required, among other
things, to comply with the NIH Guidelines in relation to its facilities in
Cambridge, Massachusetts, and is required to operate pursuant to certain
permits.
Various laws, regulations and recommendations relating to safe working
conditions, laboratory practices, the experimental use of animals and the
purchase, storage, movement, import and export and use and disposal of hazardous
or potentially hazardous substances, including radioactive compounds and
infectious disease agents, used in connection with Biogen's research work are or
may be applicable to its activities. These include, among others, the United
States Atomic Energy Act, the Clean Air Act, the Clean Water Act, the
Occupational Safety and Health Act, the National Environmental Policy Act, the
Toxic Substances Control Act and the Resource Conservation and Recovery Act,
national restrictions on technology transfer and import, export and customs
regulations. The extent of government regulation which might result from future
legislation or administrative action cannot accurately be predicted. Certain
agreements entered into by Biogen involving exclusive license rights may be
subject to national or supranational antitrust regulatory control, the effect of
which also cannot be predicted.
EMPLOYEES
At December 31, 1996, Biogen employed 675 full-time employees in the United
States, of whom 108 held Ph.D. and/or M.D. degrees. Of the 675 employees,
approximately 209 were engaged in, or directly supported, research and
development, approximately 183 were involved in, or directly supported,
manufacturing, quality assurance/quality control, regulatory, medical operations
and preclinical and clinical
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development and approximately 91 were involved in sales and marketing. Biogen
maintains consulting arrangements with a number of scientists at various
universities and other research institutions in Europe and the United States,
including the nine outside members of its Scientific Board.
ITEM 2 - PROPERTIES
Biogen's principal executive offices and a majority of its administrative,
manufacturing and research and development facilities are located in Cambridge
Massachusetts. The Company owns a 150,000 square foot building in Cambridge
which houses laboratories and office space. The Company also leases a total of
approximately 271,000 square feet of additional office and research and
development space in all or part of five other buildings in Cambridge,
consisting of a 67,000 square foot building housing manufacturing facilities,
plant, laboratories and office space, a building with 66,000 square feet of
space containing laboratories, purification and aseptic bottling facilities and
office space, a multi tenant building where the Company occupies approximately
95,000 square feet of office space, a 17,000 square foot building housing office
space and distribution facilities and a 26,000 square foot building designed for
specialized research laboratories. The leases for the leased sites terminate in
2003, 2004, 2000, 2004 and 1999, respectively, each with the right to renew.
The Company's European headquarters consists of 1,400 square meters of
office space in a multitenant building in Nanterre, France. The lease for this
space terminates in 2003. The Company also has small offices in England, Germany
and The Netherlands.
In the second quarter of 1995, the Company began construction of a
biologics manufacturing facility in Research Triangle Park, North Carolina. The
estimated cost of construction, including land, is $59 million. The Company has
substantially completed construction of the facility.
The Company believes that its production plant in Cambridge, Massachusetts
and existing outside sources will allow it to meet its production needs for
clinical trials and its production needs for AVONEX(TM) until FDA licensing of
the North Carolina facility. Biogen believes that its existing facilities are in
compliance with appropriate regulatory standards. The Company expects that
additional facilities and outside sources will be required to meet the Company's
future research and production needs.
ITEM 3 - LEGAL PROCEEDINGS
During the fourth quarter of 1994, a total of six class action lawsuits
were initiated against the Company and several of its directors and officers. On
March 3, 1995, these cases were consolidated into a single proceeding in the
United States District Court for the District of Massachusetts. On January 23,
1996, in response to motions to dismiss the entire case filed by Biogen and the
named officer and director defendants, the District Court issued a Memorandum
and Order (dated January 22, 1996) dismissing most of the claims asserted in the
plaintiffs' Second Amended Complaint, including all claims against the Company's
outside directors. The only two claims remaining in the case pertain to
statements concerning the results of the HIRULOG(R) TIMI-7 clinical trial in
unstable angina. The Court did not reach a decision on the merits of these
claims. On October 11, 1996, the Company filed a motion for summary judgment in
the case. The plaintiffs have opposed the motion. The Company will continue to
defend vigorously the claims that remain in the case.
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On October 7, 1996, a judge dismissed the lawsuit filed by Berlex
Laboratories, Inc. against the FDA in the U.S. District Court for the District
of Columbia in which Berlex claimed that the FDA's approval of Biogen's
AVONEX(TM) (Interferon beta-1a) was improper. Biogen was an intervenor-defendant
in the litigation. In dismissing the suit, the judge held that the FDA acted
lawfully when it determined that AVONEX(TM) was clinically superior to Berlex's
Betaseron(R) interferon beta-1b under the Orphan Drug law and that the FDA's
determination that AVONEX(TM) was safe, pure and potent was amply supported by
the record. Berlex chose not to appeal this decision.
On July 3, 1996, Berlex filed suit against Biogen in the United States
District Court for the District of New Jersey alleging infringement by Biogen
of Berlex's "McCormick" patent in the United States in the production of
AVONEX(TM). Berlex seeks a judgment granting it unspecified damages, a trebling
of any damages awarded and a permanent injunction restraining Biogen from
alleged infringement. Prior to the date of the suit filed by Berlex on the
McCormick patents, Biogen had filed a suit against Schering AG ("Schering"),
Berlex and the Board of Trustees of the Leland Stanford Jr. University
("Stanford") in the United States District Court for the District of
Massachusetts for a declaratory judgment of non-infringement and invalidity of
the McCormick patent contending that AVONEX(TM), its manufacturing process and
intermediates used in that process do not infringe the McCormick patent and
that such patent is not valid. In November 1996, the U.S. District Court in
Massachusetts ruled that it had jurisdiction and Berlex's New Jersey action was
transferred to Massachusetts and consolidated for pre-trial purposes with the
Massachusetts case. Biogen and Stanford subsequently entered into an agreement
voluntarily dismissing Stanford from the suit. In February 1997, the U.S.
District Court in Massachusetts dismissed Biogen's declaratory judgment action
as to Schering without prejudice to reconsideration if such dismissal is later
shown to result in an injustice to Biogen. The suit involving Berlex is still
pending. A trial is not expected before 1998.
In June 1996, ASTA Medica Aktiengesselschaft filed for arbitration against
Biogen with the International Chamber of Commerce (ICC) in Paris, France. In its
complaint, ASTA alleges that Biogen's 1993 termination of a 1989 agreement
licensing ASTA to market recombinant interferon beta in certain European
territories was ineffective. The agreement at issue also included as a party
Bioferon, a Biogen joint venture that declared bankruptcy in 1993. The ASTA
complaint asks that an ICC panel declare that the 1989 license is still in
force, and, in the alternative, seeks approximately $5,000,000 in damages. The
territories included in the 1989 license were Austria, Belgium, Denmark,
Finland, France, Greece, Iceland, Ireland, Luxembourg, The Netherlands, Norway,
Portugal, Sweden, Switzerland and the United Kingdom. The arbitration will take
place in Zurich under Swiss law. Biogen expects that the arbitration proceeding
will be held in late 1997. Biogen considers the ASTA claims to be without merit.
For a description of legal proceedings relating to patent rights, see Item
1, "Business-Patents and Other Proprietary Rights."
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
EXECUTIVE OFFICERS
The following is a list of the executive officers of the Company and their
principal positions with the Company. Each individual officer serves at the
pleasure of the Board of Directors.
Name Age Positions
- ---- --- ---------
James L. Vincent........... 57 Chairman of the Board of Directors
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James R. Tobin . . . . 52 President and Chief Executive Officer
Burt A. Adelman . . . 44 Vice President - Development Operations
Michael J. Astrue . . 40 Vice President - General Counsel, Secretary
and Clerk
Frank A. Burke, Jr.... 53 Vice President - Human Resources
Lawrence S. Daniels... 54 Vice President - Strategic Planning
Joseph M. Davie....... 57 Vice President - Research
David C. Dlesk . . . .. 38 Vice President - Operations
Irving H. Fox......... 53 Vice President - Medical Affairs
Timothy M. Kish ...... 45 Vice President - Finance, Chief Financial
Officer and Treasurer
Mark W. Leuchtenberger 40 Vice President - Marketing and Sales
James C. Mullen....... 38 Vice President - International
David D. Pendergast. . 48 Vice President - QA\QC
The background of these officers is as follows:
James L. Vincent has been Chairman of the Board of Directors of the Company
since October 1985. From October 1985 until February 1997, Mr. Vincent served as
Chief Executive Officer of the Company. He also served as Chief Operating
Officer and President from April 1988 until February 1994. Before joining
Biogen, Mr. Vincent served as Group Vice President, Allied Corporation and as
President, Allied Health & Scientific Products Company, a subsidiary of Allied
Corporation. Before joining Allied Corporation, Mr. Vincent was with Abbott
Laboratories, Inc. where he served in various capacities, including Executive
Vice President, Chief Operating Officer and Director of the parent corporation.
James R. Tobin was appointed Chief Executive Officer of the Company in
February 1997. He has served as President of the Company since February 1994.
From February 1994 until February 1997, Mr. Tobin also served as Chief Operating
Officer of the Company. Prior to joining the Company, Mr. Tobin served in
various capacities at Baxter International, including Executive Vice President
from 1988 until 1992 and President and Chief Operating Officer from 1992 until
1994. Mr. Tobin is a director of Creative BioMolecules, Inc. and Genovo, Inc.
Burt A. Adelman, M.D. was appointed Vice President - Development Operations
of the Company in August 1996 after serving as Vice President - Regulatory
Affairs since May 1995. From 1991 until May 1995, Dr. Adelman was Director of
Medical Research at Biogen. Dr. Adelman has served as Lecturer of Medicine at
Harvard Medical School and Brigham and Women's Hospital since 1992.
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Michael J. Astrue was appointed Vice President - General Counsel, Secretary
and Clerk of the Company in June 1993. Prior to joining the Company, Mr. Astrue
was a partner in the Boston law firm of Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo, P.C. and a managing director of its wholly-owned consulting firm, ML
Strategies, from November 1992 to June 1993. From June 1989 through November
1992, Mr. Astrue served as General Counsel of the United States Department of
Health and Human Services. From April 1988 through June 1989, Mr. Astrue served
as Associate Counsel to the President of the United States.
Frank A. Burke, Jr., was appointed Vice President - Human Resources in May
1986 after serving for 12 years in various human resource management positions
at Allied-Signal, Inc., most recently as Director of Compensation and Employee
Benefits of the Engineered Materials Sector.
Lawrence S. Daniels was appointed Vice President - Strategic Planning of
the Company in August 1993 after serving as Vice President - Marketing and
Business Development since November 1991. Prior to joining the Company, Mr.
Daniels served for nine years in planning and administrative functions for
Allied- Signal, Inc., most recently as Vice President, Corporate Strategy
Development.
Joseph M. Davie, M.D., Ph.D. was appointed Vice President - Research of the
Company in April 1993. Prior to joining the Company, Dr. Davie was employed by
Searle Corporation where he served as Senior Vice President - Science and
Technology from January 1993 to April 1993, President - Research and Development
from July 1987 to January 1993 and Senior Vice President - Discovery Research
from January 1987 to July 1987. Dr. Davie is a director of Genovo, Inc.
David C. Dlesk was appointed Vice President - Operations of the Company in
August, 1996 after serving as Senior Director of Manufacturing and Engineering
since May 1996. Prior to joining Biogen, Mr. Dlesk was Chief Executive Officer
of Medical Media Systems, a developer of software for computer-aided surgery.
From 1981 to 1993, Mr. Dlesk held a number of positions with Baxter Healthcare
Corporation, including Director of Business Development, Venture Technology,
General Manager Bentley Laboratories B.V. and Manager of Drug Delivery
Technology Group for the I.V. Systems Division.
Irving H. Fox, M.D. was appointed Vice President - Medical Affairs in
February 1990. Dr. Fox joined Biogen following a 14-year career at the
University of Michigan, where he held professorships in internal medicine and
biological chemistry, and from 1978 to 1990, was program director of the
Clinical Research Center at the University of Michigan Hospital.
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Timothy M. Kish was appointed Vice President - Finance, Treasurer and Chief
Financial Officer of the Company in August 1993 after serving as Corporate
Controller of the Company since 1986. Prior to joining Biogen, Mr. Kish was
Director of Finance for Allied Health & Scientific Products Company, a
subsidiary of Allied Corporation. Before joining Allied, Mr. Kish served in
various capacities at Bendix Corp., most recently as Executive Assistant to the
President.
Mark W. Leuchtenberger was appointed Vice President - Marketing and Sales
in October 1996 after serving as Director of Distributor Operations, Europe
from September 1996 until October 1996 and Director of Marketing and Program
Executive for AVONEX(TM) from 1993 until September 1996. From 1992 to 1993, Mr.
Leuchtenberger served as a Product Manager of the Company. From 1990 to 1992,
he served as Market Development Manager. Prior to joining Biogen, Mr.
Leuchtenberger worked for the consulting firm of Bain & Company from 1987 to
1990.
James C. Mullen became Biogen's Vice President - International in August,
1996 after serving as Vice President - Operations since December 1991 and as
Senior Director - Operations from February 1991 to December 1991. Mr. Mullen
joined the Company in 1989 as Director - Facilities and Engineering and then
served as Acting Director - Manufacturing and Engineering. Before coming to
Biogen, Mr. Mullen held various positions of responsibility from 1984 through
1988 at SmithKline-Beckman Corporation, most recently as Director, Engineering -
SmithKline and French Laboratories, Worldwide.
David D. Pendergast, Ph.D. was appointed Vice President - Quality Assurance
and Quality Control of the Company in April 1996. Dr. Pendergast joined Biogen
from Fisons Pharmaceuticals, Manchester U.K. where he served as Director,
Quality Assurance/Quality Control of Fisons PLC from 1992 to 1996. Prior to
joining Fisons, Dr. Pendergast served, over a twenty year period, in various
capacities at The Upjohn Company, including Vice President - Quality Assurance
from 1989 to 1992.
PART II
ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The section entitled "Market for Securities" in the Company's 1996 Annual
Report to Shareholders is hereby incorporated by reference.
ITEM 6 - SELECTED FINANCIAL DATA
The section entitled "Selected Financial Data" in the Company's 1996 Annual
Report to Shareholders is hereby incorporated by reference.
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The section entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in the Company's 1996 Annual Report to
Shareholders is hereby incorporated by reference.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The sections entitled "Consolidated Balance Sheets," "Consolidated
Statements of Income," "Consolidated Statements of Cash Flows," "Consolidated
Statements of Shareholders' Equity," "Notes to Consolidated Financial
Statements" and "Report of Independent Accountants" in the Company's 1996 Annual
Report to Shareholders are hereby incorporated by reference.
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable
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PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS
The sections entitled "Election of Directors" and "Section 16(a) Beneficial
Ownership Reporting Compliance" in the Company's definitive proxy statement for
its 1997 Annual Meeting of Stockholders, which the Company intends to file with
the Commission no later than April 30, 1997, are hereby incorporated by
reference.
EXECUTIVE OFFICERS
Information concerning the Company's Executive Officers is set forth in
Part I of this Annual Report on Form 10-K.
ITEM 11 - EXECUTIVE COMPENSATION
The sections entitled "Election of Directors", "Executive Compensation",
"Joint Report on Compensation Philosophy" and "Performance Graph" in the
Company's definitive proxy statement for its 1997 Annual Meeting of
Stockholders, which the Company intends to file with the Commission no later
than April 30, 1997, are hereby incorporated by reference.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The section entitled "Share Ownership" in the Company's definitive proxy
statement for its 1997 Annual Meeting of Stockholders, which the Company intends
to file with the Commission no later than April 30, 1997, is hereby incorporated
by reference.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The section entitled "Employment Arrangements with the Company and Certain
Transactions" in the Company's definitive proxy statement for its 1997 Annual
Meeting of Stockholders, which the Company intends to file with the Commission
no later than April 30, 1997, is hereby incorporated by reference.
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) Financial Statements and Financial Statement Schedules.
The following documents are filed as a part of this report:
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1. Financial Statements, as required by Item 8 of this Form, incorporated
by reference herein from the 1996 Annual Report to Shareholders attached hereto
as Exhibit 13:
Item Location
- ---- --------
Consolidated Balance Sheets Annual Report under the caption "Biogen, Inc. and
Subsidiaries Consolidated Balance Sheets."
Consolidated Statements of Income Annual Report under the caption "Biogen, Inc. and
Subsidiaries Consolidated Statements of Income."
Consolidated Statements of Cash Flows Annual Report under the caption "Biogen, Inc. and
Subsidiaries Consolidated Statements of Cash
Flows."
Consolidated Statements of Shareholders' Equity Annual Report under the caption "Biogen, Inc. and
Subsidiaries Consolidated Statements of
Shareholders' Equity."
Notes to Consolidated Financial Statements Annual Report under the caption "Biogen, Inc. and
Subsidiaries Notes to Consolidated Financial
Statements."
Reports of Independent Accountants Annual Report under the caption "Report of
Independent Accountants."
With the exception of the portions of the 1996 Annual Report to
Shareholders specifically incorporated herein by reference, such report shall
not be deemed filed as part of this Annual Report on Form 10-K.
(2) Financial Statement Schedules: None
(3) Exhibits
Exhibit No. Description
- ----------- -----------
(3.1) Articles of Organization, as amended (*)
(3.2) By-Laws, as amended (k)
(4.1) Form of Common Stock Share Certificate (m)
(4.2) Certificate of Designation of Series A Junior Participating
Preferred Stock (f)
(4.3) Rights Agreement dated as of May 8, 1989 between Registrant
and The First National Bank of Boston, as Rights Agent (f)
(10.1) Independent Consulting and Project Agreement dated as of
June 29, 1979 between Registrant and Kenneth Murray (a)**
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21
(10.2) Letter Agreement dated September 23, 1995 with Sir Kenneth
Murray relating to renewal of Independent Consulting Agreement
(r)**
(10.3) Minute of Agreement dated February 5, 1981 among Registrant,
The University Court of the University of Edinburgh and
Kenneth Murray (a)**
(10.4) Independent Consulting Agreement dated as of June 29, 1979
between Registrant and Phillip A. Sharp (a)**
(10.5) Letter Agreement dated December 15, 1995 with Phillip Sharp
relating to chairmanship of Scientific Board and renewal of
Independent Consulting Agreement (r)**
(10.6) Project Agreement dated as of December 14, 1979 between
Registrant and Phillip A. Sharp (a)**
(10.7) Share Restriction and Repurchase Agreement dated as of
December 15, 1979 between Registrant and Phillip A. Sharp
(a)**
(10.8) Consulting Agreement dated as of April 1, 1991, as amended,
between Registrant and Alexander G. Bearn (i)**
(10.9) Letter Agreement dated April 14, 1995 with Dr. Alexander
Bearn relating to renewal of Independent Consulting Agreement
(r)**
(10.10) Form of Amendment dated July 1, 1988 to Independent Consulting
Agreement between Registrant and Scientific Board Members
(e)**
(10.11) Form of Share Purchase Agreement between Registrant and
Scientific Board Members (a)**
(10.12) Form of Stock Option Agreement between Registrant and certain
outside directors (c)**
(10.13) Letter regarding employment of James L. Vincent dated
September 23, 1985 (b)**
(10.14) Form of Stock Option Agreement with James L. Vincent under
1985 Non-Qualified Stock Option Plan (k)**
(10.15) Form of Stock Option Agreement with James L. Vincent under
1985 Non-Qualified Stock Option Plan (1995) (r)**
(10.16) Letter dated December 13, 1989 regarding employment of
Dr. Irving H. Fox (h)**
(10.17) Letter dated April 7, 1993 regarding employment of
Dr. Joseph M. Davie (l)**
(10.18) Letter dated January 12, 1994 regarding employment of James R.
Tobin (n)**
21
22
(10.19) Form of Indemnification Agreement between Registrant and each
Director and Executive Officer (e)**
(10.20) Second Amended and Restated Agreement and Certificate of
Limited Partnership dated as of May 15, 1984 among Biogen
Medical Products, Inc. as General Partner and certain limited
partners (g)
(10.21) First Amendment dated December 22, 1986 to Agreement and
Certificate of Limited Partnership (c)
(10.22) Technology License Agreement dated May 15, 1984 between Biogen
B.V. and Biogen Medical Products Limited Partnership (g)
(10.23) Development Contract dated May 15, 1984 between Biogen B.V.
and Biogen Medical Products Limited Partnership (g)
(10.24) Amendment dated December 22, 1986 to Development Contract (c)
(10.25) Amendment dated January 1, 1987 to Development Contract (d)
(10.26) Joint Venture Option Agreement dated May 15, 1984 between
Biogen, Inc. and Biogen Medical Products Limited Partnership
(g)
(10.27) Purchase Option Agreement dated May 15, 1984 between Biogen
B.V. and the limited partners of Biogen Medical Products
Limited Partnership (g)
(10.28) Guaranty dated May 15, 1984 to Biogen Medical Products Limited
Partnership by Registrant guaranteeing certain obligations of
Biogen Medical Products, Inc., Biogen B.V. and Biogen, Inc. to
the Partnership (g)
(10.29) Demand Loan Agreement dated October 1, 1989 between Biogen
Medical Products Limited Partnership and Biogen Medical
Products, Inc. (g)
(10.30) Certificate of Cancellation of Certificate of Limited
Partnership of Biogen Medical Products Limited Partnership
dated December 24, 1996 *
(10.31) Standard Form Commercial Lease dated January 29, 1981 between
Ira C. Foss and Ira C. Foss, Jr., as Trustees of Eastern
Realty Trust, and B. Leasing, Inc. (g)
(10.32) Letter of May 24, 1989 exercising option under Standard Form
Commercial Lease dated January 29, 1981 (g)
(10.33) Lease Extension Agreement dated February 20, 1990 between
Eastern Realty Trust and Registrant (g)
(10.34) Standard Form Commercial Lease dated June 1, 1989 between
Eastern Realty Trust and Registrant (g)
22
23
(10.35) Cambridge Center Lease dated October 4, 1982 between Mortimer
Zuckerman, Edward H. Linde and David Barrett, as Trustees of
Fourteen Cambridge Center Trust, and B. Leasing, Inc. (a)
(10.36) First Amendment to Lease dated January 19, 1989 amending
Cambridge Center Lease dated October 4, 1982 (k)
(10.37) Second Amendment to Lease dated March 8, 1990 amending
Cambridge Center Lease dated October 4, 1982 (k)
(10.38) Third Amendment to Lease dated September 25, 1991 amending
Cambridge Center Lease dated October 4, 1982 (k)
(10.39) Lease dated October 6, 1993 between North Parcel Limited
Partnership and Biogen Realty Limited Partnership (n)
(10.40) 1983 Employee Stock Purchase Plan, as amended and restated
through September 22, 1995 (r)**
(10.41) 1982 Incentive Stock Option Plan as amended through
April 25, 1995 and restated with form of Option Agreement
(q)**
(10.42) 1985 Non-Qualified Stock Option Plan as amended through
April 25, 1995 and restated with form of Option Agreement
(q)**
(10.43) 1987 Scientific Board Stock Option Plan as amended through
April 3, 1992 and restated with form of Option Agreement (j)**
(10.44) Voluntary Executive Supplemental Savings Plan (p)**
(10.45) Supplemental Executive Retirement Plan (p)**
(10.46) Voluntary Board of Directors Savings Plan (p)**
(10.47) Exclusive License and Development Agreement dated
December 8, 1979 between Registrant and Schering Corporation
(a)
(10.48) Amendatory Agreement dated May 14, 1985 to Exclusive License
and Development Agreement dated December 8, 1979 (b)
(10.49) Amendment and Settlement Agreement dated September 29, 1988 to
Exclusive License and Development Agreement dated
December 8, 1979 (k)
(10.50) Amendment dated March 20, 1989 to Exclusive License and
Development Agreement dated December 8, 1979 (k)
(10.51) License Agreement (United States) dated March 28, 1988 between
Registrant and SmithKline Beecham Biologicals, s.a.
(as successor to Smith Kline-R.I.T, s.a.) (k)
(10.52) License Agreement (International) dated March 28, 1988 between
Registrant and SmithKline Beecham Biologicals, s.a.
(as successor to Smith Kline-R.I.T., s.a.) (k)
23
24
(10.53) Sublicense Agreement dated as of February 15, 1990 among
Registrant, SmithKline Beecham Biologicals, s.a (as successor
to SmithKline Biologicals, s.a.) and Merck and Co., Inc. (k)
(10.54) Supplemental Amendment and Agreement dated as of March 1, 1994
between the Registrant and Schering Corporation (o)
(11) Computation of Earnings per Share *
(12) None
(13) Incorporated portions from Biogen, Inc. 1996 Annual Report to
Shareholders *
(21) Subsidiaries of the Registrant *
(24.1) Consent of Price Waterhouse LLP (Included in Part IV hereof)
(29) None
(a) Previously filed with the Commission as an exhibit to
Registration Statement on Form S-1, File No. 2-81689 and
incorporated herein by reference.
(b) Previously filed with the Commission as an exhibit to
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1985, as amended, File No. 0-12042 and
incorporated herein by reference.
(c) Previously filed with the Commission as an exhibit to
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1986, as amended, File No. 0-12042 and
incorporated herein by reference.
(d) Previously filed with the Commission as an exhibit to
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1987, File No. 0-12042 and incorporated herein by
reference.
(e) Previously filed with the Commission as an exhibit to
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1988, File No. 0-12042 and incorporated herein by
reference.
(f) Previously filed with the Commission as an exhibit to
Registration Statement on Form 8-A, File No. 0-12042, filed
May 26, 1989 and incorporated herein by reference.
(g) Previously filed with the Commission as an exhibit to
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1989, File No. 0-12042, and incorporated herein
by reference.
(h) Previously filed with the Commission as an exhibit to
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1990, File No. 0-12042, and incorporated herein
by reference.
24
25
(i) Previously filed with the Commission as an exhibit to
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1991, File No. 0-12042, and incorporated herein
by reference.
(j) Previously filed with the Commission as an exhibit to
Registrant's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1992, File No. 0-12042, and incorporated herein
by reference.
(k) Previously filed with the Commission as an exhibit to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1993, File No. 0-12042, and incorporated
herein by reference.
(l) Previously filed with the Commission as an exhibit to the
Registrant's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1993, File No. 0-12042, and incorporated herein
by reference.
(m) Previously filed with the Commission as an exhibit to
Registration Statement on Form S-3, File No. 33-51639, and
incorporated herein by reference.
(n) Previously filed with the Commission as an exhibit to
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994, File No. 0-12042, and incorporated herein
by reference.
(o) Previously filed with the Commission as an exhibit to the
Registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1994, File No. 0-12042, and incorporated
herein by reference.
(p) Previously filed with the Commission as an exhibit to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1994, File No. 0-12042, and incorporated
herein by reference.
(q) Previously filed with the Commission as an exhibit to the
Registrant's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1995, File No. 0-12042, and incorporated herein
by reference.
(r) Previously filed with the Commission as an exhibit to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995, File No. 0-12042, and in incorporated
herein by reference.
* Filed herewith
** Management contract or compensatory plan or arrangement
(b) Reports on Form 8-K
During the fourth quarter of 1996, the Company filed the following report
on Form 8-K: On November 26, 1996, the Company filed a report on Form 8-K to
disclose receipt of a positive opinion from
25
26
the Committee for Proprietary Medicinal Products of the European Medicines
Evaluation Agency in connection with Biogen's application for marketing approval
of its AVONEX(TM) (interferon beta-1a) in the European Union.
26
27
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
BIOGEN, INC.
By: /s/ James L. Vincent
---------------------------------------
James L. Vincent, Chairman of the Board
Dated February 21, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
SIGNATURES TITLE DATE
- ---------- ----- ----
/s/ James R. Tobin President, Chief Executive February 21, 1997
- ---------------------- Officer and a Director
James R. Tobin (principal executive officer)
/s/ James L. Vincent Chairman of the Board February 21, 1997
- ----------------------
James L. Vincent
/s/ Timothy M. Kish Vice President - Finance, February 21, 1997
- ---------------------- Chief Financial Officer and
Timothy M. Kish Treasurer (Principal financial
and accounting officer)
/s/ Alexander Bearn Director February 21, 1997
- ----------------------
Alexander Bearn
/s/ Harold W. Buirkle Director February 21, 1997
- ----------------------
Harold W. Buirkle
/s/ Alan Belzer Director February 21, 1997
- ----------------------
Alan Belzer
/s/ Thomas F. Keller Director February 21, 1997
- ----------------------
Thomas F. Keller
/s/ Roger H. Morley Director February 21, 1997
- ----------------------
Roger H. Morley
/s/ Kenneth Murray Director February 21, 1997
- ----------------------
Kenneth Murray
/s/ Phillip A. Sharp Director February 21, 1997
- ----------------------
Phillip A. Sharp
/s/ James W. Stevens Director February 21, 1997
- ----------------------
James W. Stevens
28
EXHIBIT INDEX
-------------
Exhibit No. Description
- ----------- -----------
(3.1) Articles of Organization, as amended.
(10.30) Certificate of Cancellation of Certificate of Limited
Partnership of Biogen Medical Products Limited Partnership
dated December 24, 1996
(11) Computation of Earnings per Share
(13) Incorporated portions from Biogen, Inc. 1996 Annual Report to
Shareholders
(21) Subsidiaries of the Registrant
(24.1) Consent of Price Waterhouse LLP
28