UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
| |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE |
| SECURITIES EXCHANGE ACT OF 1934 |
| For the quarterly period ended September 30, 2002 |
| OR |
| |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE |
| SECURITIES EXCHANGE ACT OF 1934 |
| For the transition period from
to
. |
| Commission file number 0-28494 |
| MILLENNIUM PHARMACEUTICALS, INC. |
| (Exact name of registrant as specified in its charter) |
| Delaware | 04-3177038 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
75 Sidney Street, Cambridge, Massachusetts 02139
(Address of principal executive offices) (zip code)
(617) 679-7000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No |_|
The total number of shares of the registrant's Common Stock, $0.001 par value, outstanding on November 11, 2002, was 287,785,551.
MILLENNIUM PHARMACEUTICALS, INC.
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2002
TABLE OF CONTENTS
The following Millennium trademarks are used in this Quarterly Report on Form 10-Q: Diagnomics™, Melastatin®, Millennium®, Millennium Pharmaceuticals™, VELCADE™ (bortezomib) for Injection and INTEGRILIN® (eptifibatide) Injection. CAMPATH® is a registered trademark of ILEX Pharmaceuticals, L.P., TNKase™ and Activase® are trademarks of Genentech, Inc., ReoPro® is a trademark of Eli Lilly and Company and Aggrastat® is a trademark of Merck & Co., Inc. Other trademarks used in this Quarterly Report on Form 10-Q are the property of their respective owners.
2
Item 1. Condensed Consolidated Financial Statements
Millennium Pharmaceuticals, Inc.
Condensed Consolidated Balance Sheets
| September 30, 2002 |
December 31, 2001 |
|||||||
|---|---|---|---|---|---|---|---|---|
| (unaudited) | ||||||||
| (in thousands, except per share amounts) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 62,815 | $ | 35,993 | ||||
| Marketable securities | 1,758,685 | 1,438,875 | ||||||
| Due from strategic alliance partners | 36,892 | 18,360 | ||||||
| Inventory | 105,095 | — | ||||||
| Prepaid expenses and other current assets | 67,495 | 21,389 | ||||||
| Total current assets | 2,030,982 | 1,514,617 | ||||||
| Property and equipment, net | 277,437 | 168,600 | ||||||
| Restricted cash | 38,942 | 47,308 | ||||||
| Other assets | 30,453 | 13,362 | ||||||
| Goodwill, net | 1,201,491 | 138,519 | ||||||
| Intangible assets, net | 493,616 | 25,328 | ||||||
| Total assets | $ | 4,072,921 | $ | 1,907,734 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 25,697 | $ | 25,237 | ||||
| Accrued expenses | 164,944 | 89,372 | ||||||
| Current portion of deferred revenue | 136,935 | 71,018 | ||||||
| Current portion of capital lease obligations | 16,942 | 17,536 | ||||||
| Current portion of long term debt | 599,960 | — | ||||||
| Total current liabilities | 944,478 | 203,163 | ||||||
| Deferred revenue, net of current portion | 5,767 | 17,902 | ||||||
| Capital lease obligations, net of current portion | 61,718 | 35,107 | ||||||
| Long term debt, net of current portion | 83,325 | 83,325 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders' equity: | ||||||||
| Preferred Stock, $0.001 par value; 5,000 shares authorized, none issued |
— | — | ||||||
| Common Stock, $0.001 par value; 500,000 shares
authorized: 286,990 shares at September 30, 2002 and 224,290 shares at December 31, 2001 issued and outstanding |
287 | 224 | ||||||
| Additional paid-in capital | 4,398,353 | 2,477,334 | ||||||
| Deferred compensation | (2,512 | ) | (765 | ) | ||||
| Notes receivable from officers | (24 | ) | (315 | ) | ||||
| Accumulated other comprehensive income | 34,620 | 34,371 | ||||||
| Accumulated deficit | (1,453,091 | ) | (942,612 | ) | ||||
| Total stockholders' equity | 2,977,633 | 1,568,237 | ||||||
| Total liabilities and stockholders' equity | $ | 4,072,921 | $ | 1,907,734 | ||||
See notes to condensed consolidated financial statements.
3
Millennium Pharmaceuticals, Inc.
Condensed Consolidated Statements of Operations
(unaudited)
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2002 |
2001 |
2002 |
2001 |
|||||||||||||
| (in thousands, except per share amounts) | ||||||||||||||||
| Revenues: | ||||||||||||||||
| Revenue under strategic alliances | $ | 50,720 | $ | 82,175 | $ | 144,104 | $ | 191,605 | ||||||||
| Copromotion revenue | 45,035 | — | 112,104 | — | ||||||||||||
| Total revenues | 95,755 | 82,175 | 256,208 | 191,605 | ||||||||||||
| Costs and expenses: | ||||||||||||||||
| Research and development | 140,522 | 98,840 | 364,264 | 285,945 | ||||||||||||
| Selling, general and administrative | 37,391 | 18,315 | 114,691 | 53,948 | ||||||||||||
| Cost of copromotion revenue | 18,762 | — | 44,284 | — | ||||||||||||
| Acquired in-process research and development | — | — | 242,000 | — | ||||||||||||
| Amortization of intangibles | 9,810 | 15,714 | 25,107 | 48,010 | ||||||||||||
| Total costs and expenses | 206,485 | 132,869 | 790,346 | 387,903 | ||||||||||||
| Loss from operations | (110,730 | ) | (50,694 | ) | (534,138 | ) | (196,298 | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Investment income | 21,722 | 24,007 | 69,832 | 73,392 | ||||||||||||
| Realized gain on marketable securities | 3,818 | 1,363 | 15,819 | 6,519 | ||||||||||||
| Realized loss on marketable securities | (3,306 | ) | (169 | ) | (20,368 | ) | (760 | ) | ||||||||
| Interest expense | (10,383 | ) | (2,366 | ) | (27,624 | ) | (7,020 | ) | ||||||||
| Gain on sale of equity interest in joint venture | — | — | 40,000 | — | ||||||||||||
| Equity in operations of joint venture | — | 2,625 | — | 1,700 | ||||||||||||
| Debt financing charge | — | — | (54,000 | ) | — | |||||||||||
| Debt conversion expenses | — | — | — | (2,567 | ) | |||||||||||
| Net loss | $ | (98,879 | ) | $ | (25,234 | ) | $ | (510,479 | ) | $ | (125,034 | ) | ||||
| Amounts per common share: | ||||||||||||||||
| Net loss per share, basic and diluted | $ | (0.35 | ) | $ | (0.11 | ) | $ | (1.86 | ) | $ | (0.57 | ) | ||||
| Weighted average shares, basic and diluted | 285,091 | 220,069 | 274,013 | 217,766 | ||||||||||||
See notes to condensed consolidated financial statements.
4
Millennium Pharmaceuticals, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
| Nine Months Ended September 30, |
||||||||
|---|---|---|---|---|---|---|---|---|
| 2002 |
2001 |
|||||||
| (in thousands) | ||||||||
| Cash Flows from Operating activities: | ||||||||
| Net loss | $ | (510,479 | ) | $ | (125,034 | ) | ||
| Adjustments to reconcile net loss to cash used in operating activities: | ||||||||
| Acquired in-process research and development | 242,000 | — | ||||||
| Depreciation and amortization | 61,408 | 72,938 | ||||||
| (Gain) on marketable securities | (15,819 | ) | (6,519 | ) | ||||
| Loss on marketable securities | 20,368 | 760 | ||||||
| Stock compensation expense | 6,887 | 3,214 | ||||||
| Equity in operations of joint venture | — | (1,700 | ) | |||||
| Changes in operating assets and liabilities: | ||||||||
| Due from strategic alliance partners | (5,493 | ) | (7,948 | ) | ||||
| Prepaid expenses and other current assets | (39,621 | ) | (1,194 | ) | ||||
| Restricted cash and other assets | (3,269 | ) | 251 | |||||
| Accounts payable and accrued expenses | (20,652 | ) | 9,848 | |||||
| Deferred revenue | (40,648 | ) | (54,065 | ) | ||||
| Net cash used in operating activities | (305,318 | ) | (109,449 | ) | ||||
| Cash Flows from Investing activities: | ||||||||
| Investments in marketable securities | (845,467 | ) | (616,545 | ) | ||||
| Proceeds from sales and maturities of marketable securities | 850,382 | 474,992 | ||||||
| Investment in joint venture | (235 | ) | (656 | ) | ||||
| Purchase of property and equipment and other long term assets | (65,027 | ) | (36,158 | ) | ||||
| Net cash used in Cambridge Discovery Chemistry Ltd. acquisition | — | (1,614 | ) | |||||
| Proceeds from the sale of Cambridge Discovery Chemistry, Inc. | — | 946 | ||||||
| Net cash acquired in COR Therapeutics, Inc. acquisition | 308,522 | — | ||||||