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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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 18, 1998 (excludes shares held by directors)
$3,132,883,164: 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 18, 1998: 73,822,242 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's definitive Proxy Statement for its 1998
Annual Meeting of Stockholders are incorporated by reference into Part III of
this Report, and portions of the Registrant's 1997 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 health care. The Company currently derives revenues from sales
of AVONEX(R) (Interferon beta-1a) for the treatment of relapsing forms of
multiple sclerosis and from sales by Biogen's licensees of a number of products,
including alpha interferon and hepatitis B vaccines and diagnostic products.
Biogen began marketing AVONEX(R) in the United States in 1996 and in the fifteen
member countries of the European Union in 1997. Biogen's revenues from sales of
AVONEX(R) in 1997 were approximately $240 million. During 1997, Biogen also
received approximately $172 million in royalty revenue and license fees from its
licensees, including a one-time license fee of $15 million from Merck & Co.,
Inc. under a collaborative agreement for the development of VLA-4 inhibitor
compounds.
Biogen continues to devote significant resources to its ongoing research
and development efforts. The Company focuses its efforts on areas where it has
particular scientific strengths: multiple sclerosis, kidney diseases,
inflammatory diseases, respiratory diseases, cardiovascular diseases,
developmental biology and gene therapy. In 1997, Biogen completed early-stage
clinical trials of several of its product candidates, including a Phase 2a
clinical trial of LFA3TIP in patients with moderate to severe psoriasis, two
Phase 2a studies of CVT-124, a diuretic being developed as a potential treatment
for edema associated with congestive heart failure, a Phase 2 study of gelsolin,
a mucolytic agent studied as a potential treatment for cystic fibrosis, and a
Phase 1 safety study of humanized 5c8 anti-CD40 ligand monoclonal antibody in
patients with ideopathic thrombocytopenic purpura. Additional clinical trials of
LFA3TIP, humanized 5c8 and CVT-124 are underway or planned. In addition, Biogen
has early-stage research programs directed toward finding therapies for kidney
diseases, exploring ways to treat central nervous system disorders, developing
products for human gene therapy and investigating new ways to modify immune
responses more specifically in order to treat diseases of the immune system.
Biogen is also exploring the use of functional genomics technology to find novel
therapeutics.
AVONEX(R) INTERFERON BETA-1a
Biogen currently markets and sells AVONEX(R) (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(R) is a recombinant form of a protein
produced by fibroblast cells in response to viral infection. AVONEX(R) has been
shown in a pivotal clinical trial both to slow the accumulation of disability
and to reduce the frequency of exacerbations in patients with relapsing forms of
multiple sclerosis.
Biogen began selling AVONEX(R) in the United States in May 1996. In March
1997, Biogen received regulatory approval to market and sell AVONEX(R) in the 15
member countries of the European
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Union (EU). Shortly after approval in the EU, Biogen began selling AVONEX(R) in
the United Kingdom, Germany, Austria, Sweden, Finland, Denmark and Switzerland.
The Company introduced AVONEX(R) in the other countries of the EU, including
Italy, Spain, the Netherlands, France and Ireland, in the latter half of 1997.
AVONEX(R) is also on the market in Norway, Israel and Cyprus. In addition,
Biogen has received regulatory approval and is awaiting final reimbursement and
pricing clearance to market AVONEX(R) in New Zealand. The Company expects to
receive regulatory approval to market and sell AVONEX(R) in Canada in the first
half of 1998.
In the United States and in most of the major countries of the EU, Biogen
uses its own sales force to market AVONEX(R). In those countries, Biogen
distributes AVONEX(R) principally through wholesale distributors of
pharmaceutical products or mail order or specialty distributors or using
shipping service providers. The Company also expects to market AVONEX(R)
directly in Canada. In other countries, including Spain, Sweden, Finland,
Norway, Denmark, Italy, Greece, Portugal, Israel and New Zealand, Biogen sells
AVONEX(R) to distribution partners who are then responsible for most marketing
and distribution activities. The Company has also entered into distribution
agreements covering Australia, Latin America, the Caribbean, and South Africa,
and anticipates entering into agreements covering Eastern Europe, Turkey and the
Middle East in 1998. Under most of these agreements the distribution partners
are responsible for obtaining regulatory approval for AVONEX(R) as well as
marketing and distribution.
Biogen is currently conducting several additional clinical studies of
AVONEX(R). These include a clinical study of AVONEX(R) in patients who have had
only one confirmed exacerbation and a dose comparison study comparing the
approved dosage of AVONEX(R) with a higher dose, both of which were initiated in
1996, and a four-year open-label follow-up study initiated in 1995 to obtain
long-term safety and antigenicity data. In addition, in 1997, Biogen began
enrollment in a clinical study of AVONEX(R) in patients with secondary
progressive multiple sclerosis, and commenced a Phase 2 clinical study of
AVONEX(R) in the treatment of glioma, a type of brain cancer.
Revenues from sales of AVONEX(R) in 1997 were $240 million or
approximately 55% of total revenues. Revenues from sales of AVONEX(R) in 1996
were $76.5 million or approximately 28% of total revenues. Approximately 92% of
AVONEX(R) sales in 1997 and approximately 99% of AVONEX(R) sales in 1996 were
generated in the United States. Sales to three major wholesale distributors in
the United States accounted for 11.3%, 10.8% and 10.5%, respectively, of total
revenues (excluding interest) in 1997.
MAJOR RESEARCH AND DEVELOPMENT 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.
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LFA3TIP
Inflammation is the result of the body's immune system response to
infection and injury. In many autoimmune diseases, the inflammation process is
directed inappropriately against the body's own tissues, causing temporary or
permanent damage. Biogen has focused the efforts of its inflammation programs on
developing drugs to inhibit specific cellular interactions critical to the
inflammation process. Central to inflammation is the activation of T-cells,
specialized white blood cells which initiate and control the immune response.
One of the cellular pathways which activates T-cells is the LFA-3/CD2 pathway.
LFA3TIP, a recombinant protein, is designed to modulate immune responses by
binding to the CD2 receptor. Biogen is developing LFA3TIP as a treatment for
certain autoimmune diseases. In 1997, the Company completed a Phase 2a clinical
study of the safety profile of LFA3TIP in patients with moderate to severe
psoriasis. A second Phase 2a study was extended to test additional routes of
administration. Psoriasis is a chronic autoimmune disease that is characterized
by inflammation and thickening of the skin. An estimated 500,000 psoriasis
patients in the United States and Europe combined have a severe enough form of
the disease to need systemic therapies. The completed Phase 2a study involved 51
patients in the United States and Europe. A larger Phase 2b study designed to
provide initial evidence of the efficacy of LFA3TIP compared to a placebo is
scheduled to commence in the first half of 1998.
HUMANIZED 5c8
The human immune system generates two types of responses: humoral (also
known as antibody) responses and cell-mediated responses. When CD40 ligand
("CD40L") on the surface of an activated T-cell binds to CD40 on the surface of
a B-cell, an antibody response occurs, and the production of antibodies is
triggered. When CD40L on the surface of an activated T-cell binds to CD40 on the
surface of a variety of other cells, such as macrophages and dendritic cells, a
cell-mediated response occurs, and the cells then become activated, triggering
an inflammatory response. The inhibition of the CD40-CD40L pathway offers a
unique target for modulating both types of immune responses.
Biogen is developing hu5c8, a humanized monoclonal antibody which binds
to CD40L, as a treatment for a variety of autoimmune diseases and as a therapy
for preventing organ and cellular transplant rejection. In 1997, the Company
completed a Phase 1 safety study of hu5c8 in patients with ideopathic
thrombocytopenic purpura ("ITP"). The Company expects to commence Phase 2
studies of hu5c8 in 1998 in ITP, systemic lupus erythematosus, and hemophilia A
patients with inhibitors to Factor VIII.
CVT-124
In March 1997, Biogen entered into a research collaboration and license
agreement with CV Therapeutics, Inc. ("CVT") under which the Company obtained
rights to develop and market CVT-124. CVT-124 is a highly selective antagonist
of the adenosine A1 receptor which is expressed principally in the heart, brain
and kidney, and which in the kidney mediates vasoconstriction and reabsorption
of fluids. Biogen is developing CVT-124 as a treatment for edema associated with
congestive heart failure. Congestive heart failure is a chronic progressive
disease that affects approximately four to five million people in the United
States. Patients with the disease experience both a chronic course as well as
acute episodes that, in many cases, require hospitalization. Edema, or fluid
retention, in lungs and extremities
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is a significant symptom of chronic heart failure, leading to increased
morbidity and need for hospitalization. In 1997, Biogen completed two Phase 2a
clinical studies of CVT-124. The Company expects to commence a Phase 2b study
comparing CVT-124 to a currently available therapy in 1998.
VLA-4 INHIBITORS
VLA-4 (Very Late Antigen-4) is a receptor which appears on the surface of
most white blood cells except neutrophils and binds to VCAM-1, a protein found
on the surface of vascular endothelial cells. The VLA-4/VCAM-1 pathway
facilitates migration of white blood cells into tissue as part of the body's
normal response during inflammation. This inflammatory response can be severely
damaging or even life threatening when it is directed against the body's own
tissue in chronic inflammatory diseases such as asthma. Biogen scientists have
developed VLA-4-specific small molecule inhibitors designed to interrupt the
cell adhesion activity of VLA-4 as a means of blocking the inflammation process
in a highly specific manner.
In December 1997, Biogen entered into a collaborative research,
development and license agreement with Merck & Co., Inc. ("Merck") under which
Biogen and Merck will collaborate on developing oral and aerosolized small
molecule inhibitors of VLA-4. Biogen expects that Merck will commence a Phase 1
clinical trial of an aerosolized VLA-4 inhibitor in 1998. Under the agreement
with Merck, Biogen has rights to develop, market and sell small molecule
inhibitors of VLA-4 for the treatment of multiple sclerosis, kidney diseases and
disorders, inflammatory bowel disease and most diseases with small patient
populations. Merck has rights to develop, market and sell small molecule
inhibitors of VLA-4 in all other indications, including asthma. As part of the
agreement, Merck paid to Biogen an upfront fee of $15 million. The agreement
also provides for payments to be made by each party upon the attainment of
certain development milestones by the other party. In addition, if a product is
successfully developed by a party, the other party will receive royalties on
sales of the product. In connection with Merck's agreement with Biogen, Merck's
Japanese affiliate, Banyu Pharmaceutical Co., Ltd., will manage clinical
development and the regulatory approval process in Japan with respect to one of
Biogen's proprietary compounds to be selected by Biogen. The marketing rights to
the compound worldwide, including Japan, will be retained by Biogen.
GELSOLIN
Biogen has been studying a recombinant form of the actin-severing agent,
gelsolin, as a potential therapy for 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. In 1997, Biogen completed a Phase 2 clinical study of
gelsolin. The results of the trial were inconclusive. The Company does not
intend to pursue further clinical development of gelsolin itself, and instead is
currently looking for opportunities to license its rights to a third party.
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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 is currently studying OP-1 as a treatment for acute and
chronic renal failure.
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 obtained access to
exclusive worldwide rights to develop therapeutics directly based on Ontogeny's
proprietary family of sonic, indian and desert hedgehogs for most disease
indications. The Company's current focus is the study of the hedgehog proteins
for the treatment of central nervous system disorders.
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 received certain rights
related to diseases of the liver and lung.
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. In
addition, through its collaboration with CuraGen Corporation, Biogen is
exploring the use of functional genomics technology to find novel therapeutics.
RESEARCH AND DEVELOPMENT COSTS
During 1997, 1996 and 1995, Biogen's research and development costs were
approximately $145.5 million, $132.4 million and $87.4 million, respectively.
RISKS ASSOCIATED WITH DRUG DEVELOPMENT AND COMMERCIALIZATION
Certain of the statements set forth above regarding the Company's
research and development programs and AVONEX(R) commercialization, such as the
statement regarding the anticipated receipt and timing of regulatory approval
for the marketing of AVONEX(R) in Canada and the anticipated commencement of
clinical trials of drugs in development, are forward-looking, and are based upon
the Company's current belief as to the outcome and timing of such future events.
These events are subject to a number of factors and uncertainties which could
cause actual results to differ materially from those described in the
forward-looking statements. For example, to receive final marketing approval
from
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Canada for AVONEX(R) in the first half of 1998, the Company must await final
action by the Canadian regulatory authorities, the outcome and timing of which
is still within the regulatory authorities' sole control. Many important factors
affect the Company's ability to successfully develop and commercialize drugs,
including the ability to demonstrate the safety and efficacy of drug candidates
at each stage of the clinical trial process, to meet applicable regulatory
standards and to receive required regulatory approvals, to be capable of
producing drug candidates in commercial quantities at reasonable costs, to
obtain and maintain all necessary patents or licenses, to compete successfully
against other products, and to market products successfully. There can be no
assurance that any of the products described in this section or resulting from
Biogen's research and development 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, be successfully marketed or successfully meet challenges from
competitive products.
For a detailed discussion of the outlook of the Company, see the
"Outlook" section of "Management's Discussion and Analysis of Financial
Condition and Results of Operations" incorporated by reference under Item 7.
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 covering the production of
alpha interferons through recombinant DNA techniques. See "Patents and Other
Proprietary Rights." Biogen's worldwide licensee for recombinant alpha
interferon, Schering-Plough 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
worldwide 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. In 1997, Schering-Plough also received marketing
clearance from the FDA for use of Intron(R) A for injection in conjunction with
anthracycline-containing combination chemotherapy for the initial treatment of
patients with clinically aggressive non-Hodgkin's lymphoma, and filed a New Drug
Application for the combination use of Intron(R) A and REBETOL(R) (ribavirin,
USP capsules) for the treatment of chronic hepatitis C. 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 19%, 27% and 40% of Biogen's revenues (excluding interest) in
1997, 1996 and 1995, respectively.
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.
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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 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. Biogen has also
licensed rights under its hepatitis B patents to Merck and The Green Cross
Corporation on a non-exclusive basis in Japan. Royalties from SmithKline and
Merck together accounted for approximately 14%, 23% and 48% of Biogen's revenues
(excluding interest) in 1997, 1996 and 1995, respectively.
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 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. See "Patents and Other Proprietary
Rights".
In 1996, Biogen 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, Biogen receives ongoing royalties on sales of
Pharmacia & Upjohn's recombinant human growth hormone product, Genotropin(R), in
the United States, Canada and Japan.
In March 1997, Biogen granted to The Medicines Company ("TMC") exclusive
worldwide rights to develop and market Hirulog(R) (bivalirudin) direct thrombin
inhibitor. Biogen will receive milestone and royalty payments from TMC if TMC is
successful in its efforts to develop and commercialize the drug.
Financial information about foreign operations and export sales is
included in Note 10 of the Notes to Consolidated Financial Statements
incorporated by reference under Item 8.
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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 been issued on a number of these applications. The
Company has also obtained rights to various patents and patent applications
under licenses with third parties which provide for the payment of royalties by
the Company. Issues remain as to the ultimate degree of protection that will be
afforded to Biogen by its patents. There is no certainty that Biogen's existing
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 pending
patent applications or patent applications licensed from third parties will
ultimately be granted as patents or whether those patents that have been issued
or are issued in the future 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.
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 has granted an exclusive
worldwide license to Schering Plough under Biogen's alpha interferon patents,
and receives royalties from Schering Plough on sales of its Intron(R) A brand of
alpha interferon. See "Principal Products Being Marketed or Developed by
Biogen's Licensees - Intron(R) A Alpha Interferon".
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 United States
Patent and Trademark Office to the applicants of a patent application owned by
Genentech, Inc. ("Genentech") 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 1999. In the meantime, the companies are
discussing possible alternative resolutions of the dispute. The primary 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 of the U.S.
Patent and Trademark Office in the interference has not affected Schering
Plough's ability to market its Intron(R) A brand of alpha interferon.
In the event Biogen does not prevail in its action against Genentech and
Roche or does not resolve the matter in another manner satisfactory to Biogen,
Schering Plough's royalty obligation to Biogen on sales of Intron(R) A in the
United States will terminate upon expiration of Biogen's existing U.S. alpha
interferon patent in 2002. In any event Schering Plough's royalty obligation to
Biogen on sales of Intron(R) A in Europe will terminate upon expiration of
Biogen's European alpha interferon patent in 2001.
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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(R). Yamanouchi Pharmaceutical Co. Ltd., Amgen's
licensee, has filed a declaratory judgment action against Biogen in France,
Italy and Germany seeking a judgment that its consensus interferon product does
not infringe Biogen's alpha interferon patent.
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 has licensed its recombinant
hepatitis B antigen patent rights to manufacturers and marketers of hepatitis B
vaccines and diagnostic test kits, and receives royalties on sales of the
vaccines and test kits by its licensees. See "Principal Products Being Marketed
or Developed by Biogen's Licensees - Hepatitis B Vaccines and Diagnostics." The
obligation of SmithKline and Merck to pay royalties on sales of hepatitis B
vaccines and the obligation of Biogen's other licensees under its hepatitis B
patents to pay royalties on sales of diagnostic products will terminate upon
expiration of Biogen's existing hepatitis B patents. Biogen's existing United
States hepatitis B patents will expire in 2004. Biogen's European hepatitis B
patents will expire at the end of 1999, except in those countries in which
Biogen has or is able to obtain supplemental protection certificates. To date
Biogen has received supplemental protection certificates in France, Italy,
Luxembourg, The Netherlands and Sweden, and has a number of additional
applications pending. The additional coverage afforded by the supplemental
protection certificates ranges from two to six years.
RECOMBINANT BETA INTERFERON
In 1997, the Technical Board of Appeal of the European Patent Office
revoked Biogen's European patent covering the production of recombinant beta
interferon. Although no formal appeal procedure exists, Biogen has asked the
European Patent Office to overturn the revocation. A patent application in the
United States with similar claims is still pending. The Company also has a
patent with similar claims in Israel. In Germany, a patent with similar claims
was the subject of a nullity proceeding instituted by Schering AG in the German
Federal Patent Court. In March 1998, the German Federal Patent Court indicated
that it would uphold the German patent but with substantially narrower claims.
The Company will decide whether to appeal the decision after it receives the
written opinion. In July 1997, Biogen sued InterPharm Laboratories Ltd.
("Interpharm"), an affiliate of Ares Serono, S.A. ("Serono"), and related
defendants, claiming that the manufacture by InterPharm of Serono's Rebif(R)
(Interferon Beta-1a) infringes Biogen's patent in Israel. Other parties have
pending patent applications or issued patents in the United States, Europe and
other countries with claims to key intermediates in the production of beta
interferon (the "Taniguchi patents") and to beta interferon itself (the "Roche
patents"). Biogen has obtained non-exclusive rights in various countries of the
world, including the United States, Japan and most European countries, to
manufacture, use and sell AVONEX(R) under the Taniguchi patents and has obtained
worldwide, non-exclusive rights under the Roche patents.
In 1994, a European patent was issued to Dr. Rentschler Biotechnologie
GmbH ("Rentschler") with claims relating to a specific cell line, production
method and form of recombinant beta interferon. Biogen filed an opposition to
the Rentschler patent in the European Patent Office seeking a revocation of the
entire patent on grounds of lack of inventive step and lack of novelty. In April
1997, the Opposition Division of the European Patent Office revoked the
Rentschler patent. Recently the European Patent
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Office indicated that it will grant a second patent to Rentschler based on
another patent application with claims to a specific structure of beta
interferon. At such time as this patent is granted, Biogen will determine
whether or not to oppose it.
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(R). 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 patent, Biogen filed a suit against
Schering AG, 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(R), 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. 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 AG without prejudice 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 the early part of 1999.
OTHER PATENTS
Biogen has granted 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'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. In March 1997, the Opposition Division
decided to revoke Biogen's patent. Biogen has appealed the decision.
In March 1995, Biogen filed suit in the U.S. District Court for the
District of Massachusetts seeking to enjoin Amgen from manufacturing and selling
its Neupogen(R) human granulocyte colony stimulating factor in the United States
and asking for damages for infringing activities. Biogen believes that to make
Neupogen(R) Amgen uses technology claimed in certain of Biogen's gene expression
patents. Biogen does not expect a trial in the case prior to the early part of
1999.
In July 1997, Biogen filed suit in the U.S. District Court for the
District of Massachusetts to enjoin Amgen from manufacturing and selling its
Infergen(R) consensus interferon in the United States and asking for damages for
infringing activities. Biogen believes that to make Infergen(R) Amgen uses
technology claimed in certain of Biogen's gene expression patents. Biogen's
request to have the case consolidated with the Neupogen(R) suit was denied by
the court. Biogen does not expect a trial in the case prior to the early part of
2000.
THIRD PARTY PATENTS
Biogen is aware that others, including various universities and companies
working in the biotechnology field, have also filed patent applications and have
been granted patents in the United
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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. For example, 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 a leadership position depends largely
upon Biogen's continued ability to attract and retain skilled and experienced
personnel, its ability to identify and exploit commercially the products
resulting from biotechnology research 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
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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. The
European Union and other jurisdictions have or are considering similar laws.
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(R) (INTERFERON BETA - 1a)
As a treatment for multiple sclerosis, AVONEX(R) 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, and is sold
in Europe under the brand name Betaferon(R) by Schering AG. AVONEX(R) also faces
competition from Copaxone(R) glatiramer acetate (also known as copolymer-1). In
the United States, Copaxone(R) is marketed by a partnership between Teva
Pharmaceuticals ("Teva") and Hoechst Marion Roussel, Inc. AVONEX(R) also
competes in Italy and Spain with FRONE(R), an extracted form of beta interferon
sold by Ares Serono S.A. ("Serono") and in Germany with Imurek(R) azathioprine
sold by Glaxo Wellcome GmbH. Serono has 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. Serono is also seeking approval to market
Rebif(R) in the United States, but to be approved as a treatment for relapsing
forms of multiple sclerosis would have to overcome the orphan drug status
afforded to AVONEX(R) and Betaseron(R) for that indication by the FDA. A number
of other companies are working to develop products to treat multiple sclerosis
which may in the future compete with AVONEX(R). 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. On occasion, regulatory
authorities may require larger or additional studies, leading to unanticipated
delay or expense.
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In connection with the commercialization of products resulting from
Biogen's research and development 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 regulatory requirements and
approval processes for new products in the European Union operate under similar
principles as those applied in the United States. The process of seeking and
obtaining approval of the FDA or regulatory authorities in the European Union or
other regulatory authorities worldwide for a new product and licensing of the
facilities in which the product is produced are 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, the countries
of the European Union and other countries around the world 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 worldwide 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
applicable 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. 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, 1997, Biogen employed 797 full-time employees in the
United States. Of the 797 employees, approximately 143 were engaged in, or
directly supported, research and development, approximately 423 were involved
in, or directly supported, manufacturing, quality assurance/quality control,
regulatory, medical operations and preclinical and clinical development and
approximately 107 were involved in sales and marketing. In addition, Biogen
maintains consulting arrangements with a
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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 300,992 square feet of additional office,
manufacturing and research and development space in all or part of four other
buildings in Cambridge, consisting of a 67,362 square foot building housing
manufacturing facilities, laboratories and office space, a building with 65,792
square feet of space containing laboratories, purification and aseptic bottling
facilities and office space, a multi-tenant building where the Company leases
approximately 150,838 square feet of office space, of which the Company
currently occupies 94,702 square feet, and a 17,000 square foot building housing
office space and distribution facilities. The Company also has development
options for additional property in Cambridge. The lease expiration dates for the
leased sites range from 2000 to 2012.
In 1997, the Company completed construction of a 100,000 square foot
biologics manufacturing facility in Research Triangle Park, North Carolina. The
Company recently received approval from the FDA to use the Research Triangle
Park facility as an additional site for the manufacture of AVONEX(R).
Biogen financed construction of the buildings which it owns in Cambridge,
Massachusetts and Research Triangle Park, North Carolina with term loans. The
loans are secured by the buildings. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" incorporated by reference under
Item 7.
The Company's European headquarters consists of 1,400 square meters of
office space in a multi-tenant building in Nanterre, France. The lease for this
space terminates in 2003 with Biogen having the right to terminate the lease
earlier under specified circumstances. The Company also leases small offices in
England, Germany, The Netherlands, Switzerland, Austria and Canada.
The Company believes that its production plants in Cambridge, Massachusetts
and Research Triangle Park, North Carolina and existing outside sources will
allow it to meet, in the near term, its production needs for clinical trials and
its production needs for AVONEX(R). Biogen believes that its existing facilities
are in compliance with applicable 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)
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dismissing most of the claims asserted in the plaintiffs' Second Amended
Complaint, including all claims against the Company's outside directors. The
only claims remaining in the case pertain to a statement 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. On September 4, 1997, the Court
denied the motion but narrowed the plaintiff class. A trial is scheduled for
April 1998.
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(R). 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 patent, 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(R), 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. 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 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 the early part of 1999.
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 million 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. Arbitration proceedings
were held in late 1997 in Zurich under Swiss law. The parties expect a decision
in the first half of 1998.
For a description of legal proceedings relating to certain patent rights,
see Item 1, "Business-Patents and Other Proprietary Rights."
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable
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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 ........ 58 Chairman of the Board of Directors
James R. Tobin .......... 53 President and Chief Executive Officer
Burt A. Adelman ......... 45 Vice President - Development Operations
Michael J. Astrue ....... 41 Vice President - General Counsel, Secretary
and Clerk
Frank A. Burke, Jr. ..... 54 Vice President - Human Resources
Lawrence S. Daniels ..... 55 Vice President - Strategic Planning
Joseph M. Davie ......... 58 Vice President - Research
David C. Dlesk .......... 39 Vice President - Operations
Irving H. Fox ........... 54 Vice President - Medical Affairs
Timothy M. Kish ......... 46 Vice President - Finance and Chief Financial
Officer
Mark W. Leuchtenberger .. 41 Vice President - Sales, Marketing and Business
Development
James C. Mullen ......... 39 Vice President - International
David D. Pendergast ..... 49 Vice President - Product Development and
Quality Assurance
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
also 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. Mr. Vincent is a director of CuraGen Corporation.
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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.
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 fourteen year career at the
University of Michigan, where he held
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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.
Timothy M. Kish was appointed Vice President - Finance 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 - Sales, Marketing
and Business Development in January 1998 after serving as Vice President -
Marketing and Sales since October 1996. Mr. Leuchtenberger served as Director of
Distributor Operations, Europe from September 1996 until October 1996 and
Director of Marketing and Program Executive for AVONEX(R) from 1993 until
September 1996. From 1992 to 1993, Mr. Leuchtenberger served as a Product
Manager of the Company, and 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. 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 - Product
Development and Quality Assurance in January 1998 after serving as Vice
President - Quality Assurance and Quality Control of the Company since 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 1997 Annual
Report to Shareholders is hereby incorporated by reference.
ITEM 6 - SELECTED FINANCIAL DATA
The section entitled "Selected Financial Data" in the Company's 1997
Annual Report to Shareholders is hereby incorporated by reference.
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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 1997 Annual Report to
Shareholders is hereby incorporated by reference.
ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The section entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Outlook" in the Company's 1997 Annual
Report to Shareholders is hereby incorporated by reference.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The sections entitled "Consolidated Statements of Income," "Consolidated
Balance Sheets," "Consolidated Statements of Cash Flows," "Consolidated
Statements of Shareholders' Equity," "Notes to Consolidated Financial
Statements" and "Report of Independent Accountants" in the Company's 1997 Annual
Report to Shareholders are hereby incorporated by reference.
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The sections entitled "Election of Directors" and "Section 16(a)
Beneficial Ownership Reporting Compliance" in the Company's definitive proxy
statement for its 1998 Annual Meeting of Stockholders, which the Company intends
to file with the Commission no later than April 30, 1998, are hereby
incorporated by reference.
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" and "Executive
Compensation", in the Company's definitive proxy statement for its 1998 Annual
Meeting of Stockholders, which the Company intends to file with the Commission
no later than April 30, 1998, 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 1998 Annual Meeting of Stockholders, which the Company intends
to file with the Commission no later than April 30, 1998, is hereby incorporated
by reference.
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ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The section entitled "Executive Compensation-Employment Arrangements with
the Company and Certain Transactions" in the Company's definitive proxy
statement for its 1998 Annual Meeting of Stockholders, which the Company intends
to file with the Commission no later than April 30, 1998, 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:
(1) Financial Statements, as required by Item 8 of this Form,
incorporated by reference herein from the 1997 Annual Report to
Shareholders attached hereto as Exhibit 13:
Item Location
- ---- --------
Consolidated Statements of Income Annual Report under the caption
"Biogen, Inc. and Subsidiaries
Consolidated Statements of Income."
Consolidated Balance Sheets Annual Report under the caption
"Biogen, Inc. and Subsidiaries
Consolidated Balance Sheets."
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 1997 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
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(3) Exhibits
Exhibit No. Description
- ----------- -----------
(3.1) Articles of Organization, as amended (p)
(3.2) By-Laws, as amended (g)
(4.1) Form of Common Stock Share Certificate (i)
(4.2) Certificate of Designation of Series A Junior Participating
Preferred Stock (d)
(4.3) Rights Agreement dated as of May 8, 1989 between Registrant and
The First National Bank of Boston, as Rights Agent (d)
(10.1) Independent Consulting and Project Agreement dated as of June 29,
1979 between Registrant and Kenneth Murray (a)**
(10.2) Letter Agreement dated September 23, 1995 with Kenneth Murray
relating to renewal of Independent Consulting Agreement (o)**
(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 A. Sharp
relating to chairmanship of Scientific Board and renewal of
Independent Consulting Agreement (o)**
(10.6) Project Agreement dated as of December 15 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 (f)**
(10.9) Letter Agreement dated April 14, 1995 with Alexander G. Bearn
relating to renewal of Independent Consulting Agreement (o)**
(10.10) Form of Amendment dated July 1, 1988 to Independent Consulting
Agreement between Registrant and Scientific Board Members (c)**
22
23
(10.11) Letter regarding employment of James L. Vincent dated September
23, 1985 (b)**
(10.12) Letter agreement amending employment arrangement between the
Registrant and James L. Vincent dated as of November 21, 1996
(q)**
(10.13) Form of Stock Option Agreement with James L. Vincent under 1985
Non-Qualified Stock Option Plan (g)**
(10.14) Form of Stock Option Agreement with James L. Vincent under 1985
Non-Qualified Stock Option Plan (1995) (o)**
(10.15) Form of Stock Option Agreement with James L. Vincent under 1985
Non-Qualified Stock Option Plan (1997) (*)**
(10.16) Letter dated December 13, 1989 regarding employment of Dr. Irving
H. Fox (e)**
(10.17) Letter dated April 7, 1993 regarding employment of Dr. Joseph M.
Davie (h)**
(10.18) Letter dated January 12, 1994 regarding employment of James R.
Tobin (j)**
(10.19) Form of Indemnification Agreement between Registrant and each
Director and Executive Officer (c)**
(10.20) 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)
(10.21) First Amendment to Lease dated January 19, 1989 amending Cambridge
Center Lease dated October 4, 1982 (g)
(10.22) Second Amendment to Lease dated March 8, 1990 amending Cambridge
Center Lease dated October 4, 1982 (g)
(10.23) Third Amendment to Lease dated September 25, 1991 amending
Cambridge Center Lease dated October 4, 1982 (g)
(10.24) Fourth Amendment to Lease dated October 6, 1993, amending
Cambridge Center Lease dated October 4, 1982 (*)
(10.25) Fifth Amendment to Lease dated October 9, 1997, amending Cambridge
Center Lease dated October 4, 1982 (*).
(10.26) Lease dated October 6, 1993 between North Parcel Limited
Partnership and Biogen Realty Limited Partnership (j)
(10.27) 1983 Employee Stock Purchase Plan, as amended and restated through
September 12, 1997 (*)**
23
24
(10.28) 1982 Incentive Stock Option Plan, as amended through April 25,
1995 and restated with form of Option Agreement (n)**
(10.29) 1985 Non-Qualified Stock Option Plan, as amended through
December 6, 1996 and restated with form of Option Agreement (r) **
(10.30) 1987 Scientific Board Stock Option Plan, as amended through
September 12, 1997 (*)**
(10.31) Voluntary Executive Supplemental Savings Plan (m)**
(10.32) Amendment No.1 dated April 25, 1997, to Voluntary Executive
Supplemental Savings Plan (*)**
(10.33) Amended and Restated Supplemental Executive Retirement Plan (*)**
(10.34) Voluntary Board of Directors Savings Plan (m)**
(10.35) Amendment No. 1 dated April 25, 1997, to Voluntary Board of
Directors Savings Plan (*)**
(10.36) Exclusive License and Development Agreement dated December 8, 1979
between Registrant and Schering Corporation (a)
(10.37) Amendatory Agreement dated May 14, 1985 to Exclusive License and
Development Agreement dated December 8, 1979 (b)
(10.38) Amendment and Settlement Agreement dated September 29, 1988 to
Exclusive License and Development Agreement dated December 8,
1979 (g)
(10.39) Amendment dated March 20, 1989 to Exclusive License and
Development Agreement dated December 8, 1979 (g)
(10.40) 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.) (g)
(10.41) 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.) (g)
(10.42) 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. (g)
(10.43) Supplemental Amendment and Agreement dated as of March 1, 1994
between the Registrant and Schering Corporation (l)
24
25
(13) Incorporated portions from Biogen, Inc. 1997 Annual Report to
Shareholders *
(21) Subsidiaries of the Registrant *
(24.1) Consent of Price Waterhouse LLP *
(27) Financial Data Schedule
(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, 1988,
File No. 0-12042 and incorporated herein by reference.
(d) 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.
(e) 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.
(f) 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.
(g) 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, 1992, File No. 0-12042, and incorporated herein by
reference.
(h) 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.
(i) Previously filed with the Commission as an exhibit to Registration
Statement on Form S-3, File No. 33-51639 filed December 21, 1993,
and incorporated herein by reference.
(j) Previously filed with the Commission as an exhibit to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1993,
File No. 0-12042, and incorporated herein by reference.
25
26
(k) 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.
(l) 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.
(m) 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.
(n) 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.
(o) 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 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, 1996, File No. 0-12042, and incorporated herein by
reference.
(q) Previously filed with the Commission as an exhibit to an amendment
to the Registrant's Annual Report on Form 10-K/A for the fiscal
year ended December 31, 1996, File No. 0-12042, and incorporated
herein by reference.
(r) Previously filed with the Commission as an exhibit to Registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1997,
File No. 0-12042, and incorporated herein by reference.
* Filed herewith
** Management contract or compensatory plan or arrangement
(b) Reports on Form 8-K
During the fourth quarter of 1997, the Company filed a report on Form 8-K
announcing the authorization by the Company's Board of Directors of a stock
repurchase program covering the repurchase of up to 2,500,000 shares of the
Company's Common Stock during a two-year period.
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 March 6, 1998
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 March 6, 1998
- ------------------------- Office and a Director
James R. Tobin (principal executive officer)
/s/ James L. Vincent Chairman of the Board March 6, 1998
- -------------------------
James L. Vincent
/s/ Timothy M. Kish Vice President - Finance and March 6, 1998
- ------------------------- Chief Financial Officer
Timothy M. Kish (principal financial and
accounting officer)
/s/ Alexander G. Bearn Director March 6, 1998
- -------------------------
Alexander G. Bearn
/s/ Harold W. Buirkle Director March 6, 1998
- -------------------------
Harold W. Buirkle
/s/ Alan Belzer Director March 6, 1998
- -------------------------
Alan Belzer
/s/ Mary L. Good Director March 6, 1998
- -------------------------
Mary L. Good
/s/ Thomas F. Keller Director March 6, 1998
- -------------------------
Thomas F. Keller
/s/ Roger H. Morley Director March 6, 1998
- -------------------------
Roger H. Morley
28
/s/ Kenneth Murray Director March 6, 1998
- -------------------------
Kenneth Murray
/s/ Phillip A. Sharp Director March 6, 1998
- -------------------------
Phillip A. Sharp
/s/ James W. Stevens Director March 6, 1998
- -------------------------
James W. Stevens
29
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
10.15 Form of Stock Option Agreement with James L. Vincent under 1985
Non-Qualified Stock Option Plan (1997)
10.24 Fourth Amendment to Lease dated October 6, 1993, amending
Cambridge Center Lease dated October 4, 1982.
10.25 Fifth Amendment to Lease dated October 9, 1997, amending Cambridge
Center Lease dated October 4, 1982.
10.27 1983 Employee Stock Purchase Plan, as amended and restated through
September 12, 1997.
10.30 1987 Scientific Board Stock Option Plan, as amended through
September 12, 1997
10.32 Amendment No. 1 dated April 25, 1997, to Voluntary Executive
Supplemental Savings Plan
10.33 Amended and Restated Supplemental Executive Retirement Plan
10.35 Amendment No. 1 dated April 25, 1997, to Voluntary Board of
Directors Saving Plan
(13) Incorporated portions from Biogen, Inc. 1997 Annual Report to
Shareholders
(21) Subsidiaries of the Registrant
(24.1) Consent of Price Waterhouse LLP
(27) Financial Data Schedule
29