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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 
FORM 10-Q
 
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
 
 
For quarter ended June 30, 2002
  
Commission File No. 0-19312
 
 
MEDAREX, INC.
(Exact name of registrant as specified in its charter.)
 
 
New Jersey
  
22-2822175
(State or other jurisdiction of
incorporation or organization)
  
(IRS Employer
Identification No.)
     
707 State Road, Princeton, New Jersey
  
08540
(Address or principal executive offices)
  
(Zip Code)
 
Registrant’s telephone number, including area code: (609) 430-2880
 
 
Indicate by check mark whether 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
 
The number of shares of common stock, $.01 par value, outstanding as of August 9, 2002 was 74,474,753 shares.

Page 1 of 27

 
MEDAREX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
 
    
December 31,
2001
     
June 30,
2002
  
           
(Unaudited)
  
ASSETS
                  
Current assets:
                  
Cash and cash equivalents
   
$
31,269
 
   
$
60,706
 
Marketable securities
   
 
435,683
 
   
 
341,420
 
Prepaid expenses and other current assets
   
 
24,860
 
   
 
15,754
 
    
  
Total current assets
   
 
491,812
 
   
 
417,880
 
Property, buildings and equipment:
                  
Land
   
 
6,788
 
   
 
6,788
 
Buildings and leasehold improvements
   
 
56,080
 
   
 
61,654
 
Machinery and equipment
   
 
16,188
 
   
 
25,262
 
Furniture and fixtures
   
 
2,819
 
   
 
3,158
 
Construction in progress
   
 
7,767
 
   
 
1,505
 
    
  
    
 
89,642
 
   
 
98,367
 
Less accumulated depreciation and amortization
   
 
(9,782
)
   
 
(13,549
)
    
  
    
 
79,860
 
   
 
84,818
 
Investments in Genmab
   
 
65,501
 
   
 
65,716
 
Investments in IDM
   
 
48,199
 
   
 
48,199
 
Investments in, and advances to, other affiliates and partners
   
 
14,384
 
   
 
14,384
 
Segregated cash
   
 
1,300
 
   
 
1,300
 
Other assets
   
 
19,371
 
   
 
23,392
 
    
  
Total assets
   
$
720,427
 
   
$
655,689
 
    
  
LIABILITIES AND SHAREHOLDERS’ EQUITY
                  
Current liabilities:
                  
Trade accounts payable
   
$
3,139
 
   
$
2,942
 
Accrued liabilities
   
 
21,485
 
   
 
9,589
 
Due to Corixa
   
 
—  
 
   
 
14,000
 
Deferred contract revenue—current
   
 
19,862
 
   
 
7,303
 
    
  
Total current liabilities
   
 
44,486
 
   
 
33,834
 
Deferred contract revenue—long-term
   
 
1,597
 
   
 
1,016
 
Deferred income taxes and other long-term obligations
   
 
16,782
 
   
 
14,248
 
Convertible subordinated notes
   
 
175,000
 
   
 
175,000
 
Commitments and contingencies
   
 
—  
 
   
 
—  
 
Shareholders’ equity:
                  
Preferred stock, $1.00 par value, 2,000,000 shares authorized; none issued and outstanding
   
 
—  
 
   
 
—  
 
Common stock, $.01 par value; 200,000,000 shares authorized; 74,005,466 shares issued and 72,876,240 outstanding at December 31, 2001 and 74,881,177 shares issued and 73,934,847 shares outstanding at June 30, 2002
   
 
740
 
   
 
749
 
Capital in excess of par value
   
 
570,655
 
   
 
577,910
 
Treasury stock, at cost 1,129,226 shares in 2001 and 946,330 shares in 2002
   
 
(2,840
)
   
 
(2,380
)
Deferred compensation
   
 
2,188
 
   
 
1,548
 
Accumulated other comprehensive income
   
 
37,881
 
   
 
43,633
 
Accumulated deficit
   
 
(126,062
)
   
 
(189,869
)
    
  
Total shareholders’ equity
   
 
482,562
 
   
 
431,591
 
    
  
Total liabilities and shareholders’ equity
   
$
720,427
 
   
$
655,689
 
    
  
See notes to these unaudited consolidated financial statements.

Page 2 of 27

 
MEDAREX, INC. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
 
    
Six Months Ended
     
Three Months Ended
  
    
June 30,
     
June 30,
     
June 30,
     
June 30,
  
    
2001
     
2002
     
2001
     
2002
  
Sales
   
$
256
 
   
$
176
 
   
$
190
 
   
$
76
 
Contract and license revenues
   
 
15,627
 
   
 
14,380
 
   
 
7,523
 
   
 
6,767
 
Sales, contract and license revenues from Genmab (includes sales of $2,808 and $500 in 2002)
   
 
1,250
 
   
 
4,299
 
   
 
500
 
   
 
1,241
 
    
  
  
  
Total revenues
   
 
17,133
 
   
 
18,855
 
   
 
8,213
 
   
 
8,084
 
                                     
Costs and expenses:
                                    
Cost of sales ($1,755 and $327 from sales to Genmab in 2002)
   
 
134
 
   
 
1,806
 
   
 
106
 
   
 
329
 
Research and development
   
 
12,556
 
   
 
35,615
 
   
 
4,496
 
   
 
18,361
 
General and administrative
   
 
7,111
 
   
 
11,196
 
   
 
3,509
 
   
 
5,778
 
Write-off of facility costs
   
 
—  
 
   
 
11,266
 
   
 
—  
 
   
 
11,266
 
Acquisition of in-process technology
   
 
—  
 
   
 
16,312
 
   
 
—  
 
   
 
16,312
 
    
  
  
  
Total costs and expenses
   
 
19,801
 
   
 
76,195
 
   
 
8,111
 
   
 
52,046
 
    
  
  
  
Operating income (loss)
   
 
(2,668
)
   
 
(57,340
)
   
 
102
 
   
 
(43,962
)
                                     
Equity in net loss of affiliate
   
 
(1,759
)
   
 
(7,265
)
   
 
(1,182
)
   
 
(3,676
)
Interest and investment income
   
 
12,462
 
   
 
9,416
 
   
 
5,691
 
   
 
4,470
 
Impairment loss on investments in corporate partners
   
 
—  
 
   
 
(4,091
)
   
 
—  
 
   
 
(2,491
)
Interest expense
   
 
(127
)
   
 
(4,527
)
   
 
(126
)
   
 
(2,309
)
    
  
  
  
Income (loss) before provision for income taxes
   
 
7,908
 
   
 
(63,807
)
   
 
4,485
 
   
 
(47,968
)
Provision for income taxes
   
 
300
 
   
 
—  
 
   
 
150
 
   
 
—  
 
    
  
  
  
Net income (loss)
   
$
7,608
 
   
$
(63,807
)
   
$
4,335
 
   
$
(47,968
)
    
  
  
  
Basic net income (loss) per share
   
$
0.10
 
   
$
(0.86
)
   
$
0.06
 
   
$
(0.65
)
    
  
  
  
Diluted net income (loss) per share
   
$
0.10
 
   
$
(0.86
)
   
$
0.06
 
   
$
(0.65
)
    
  
  
  
Weighted average number of common shares outstanding
                                    
—  basic
   
 
73,898
 
   
 
74,141
 
   
 
73,938
 
   
 
74,269
 
    
  
  
  
—  diluted
   
 
75,540
 
   
 
74,141
 
   
 
75,568
 
   
 
74,269
 
    
  
  
  
 
See notes to these unaudited consolidated financial statements.

Page 3 of 27

 
MEDAREX, INC. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
 
    
For the Six Months Ended
June 30,
  
    
2001
     
2002
  
Operating activities:
                  
Net income (loss)
   
$
7,608
 
   
$
(63,807
)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
                  
Depreciation
   
 
1,459
 
   
 
3,324
 
Amortization
   
 
534
 
   
 
1,146
 
Stock options and awards to employees
   
 
137
 
   
 
327
 
Stock options and warrants to non-employees
   
 
(41
)
   
 
(8
)
Non cash revenue—IDM
   
 
(10,116
)
   
 
(10,116
)
Non cash revenue—Genmab
   
 
(1,000
)
   
 
—  
 
Write-off of facility costs
   
 
—  
 
   
 
11,266
 
Write-off of in