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, 2003 |
| 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 |_|
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes |X| No |_|
Number of shares of the registrant's Common Stock, $0.001 par value, outstanding on November 10, 2003: 301,289,794
MILLENNIUM PHARMACEUTICALS, INC.
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2003
TABLE OF CONTENTS
The following Millennium trademarks are used in this Quarterly Report on Form 10-Q: Millennium®, the Millennium “M” logo and design (registered), Millennium Pharmaceuticals™, VELCADE™ (bortezomib) for Injection, and INTEGRILIN® (eptifibatide) Injection. All are covered by registrations or pending applications for registration in the U.S. Patent and Trademark Office and many other countries. CAMPATH® is a registered trademark of ILEX Pharmaceuticals, L.P., ReoPro® is a trademark of Eli Lilly and Company, Aggrastat® is a trademark of Merck & Co., Inc. and Thalomid® (thalidomide) is a registered trademark of Celgene Corporation. 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, 2003 |
December 31, 2002 |
|||||||
|---|---|---|---|---|---|---|---|---|
| (unaudited) | ||||||||
| (in thousands, except per share amounts) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 75,719 | $ | 1,332,391 | ||||
| Marketable securities | 844,017 | 426,672 | ||||||
| Accounts receivable | 29,170 | — | ||||||
| Due from strategic alliance partners | 104,387 | 44,869 | ||||||
| Inventory | 114,490 | 105,346 | ||||||
| Prepaid expenses and other current assets | 22,763 | 29,463 | ||||||
| Total current assets | 1,190,546 | 1,938,741 | ||||||
| Property and equipment, net | 247,133 | 310,325 | ||||||
| Restricted cash | 21,244 | 31,056 | ||||||
| Other assets | 20,386 | 33,168 | ||||||
| Goodwill | 1,201,246 | 1,200,510 | ||||||
| Developed technology, net | 380,625 | 405,721 | ||||||
| Intangible assets, net | 60,583 | 78,086 | ||||||
| Total assets | $ | 3,121,763 | $ | 3,997,607 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 19,972 | $ | 34,216 | ||||
| Accrued expenses | 150,391 | 181,318 | ||||||
| Current portion of deferred revenue | 90,871 | 118,008 | ||||||
| Current portion of capital lease obligations | 15,319 | 16,045 | ||||||
| Current portion of long term debt | — | 599,960 | ||||||
| Total current liabilities | 276,553 | 949,547 | ||||||
| Deferred revenue, net of current portion | 13,427 | 1,704 | ||||||
| Capital lease obligations, net of current portion | 91,019 | 61,338 | ||||||
| Long term debt, net of current portion | 105,461 | 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: 300,154 shares at September 30, 2003 and 291,094 shares at December 31, 2002 issued and outstanding |
300 | 291 | ||||||
| Additional paid-in capital | 4,494,992 | 4,432,040 | ||||||
| Deferred compensation | (613 | ) | (1,952 | ) | ||||
| Accumulated other comprehensive income | 10,712 | 4,119 | ||||||
| Accumulated deficit | (1,870,088 | ) | (1,532,805 | ) | ||||
| Total stockholders' equity | 2,635,303 | 2,901,693 | ||||||
| Total liabilities and stockholders' equity | $ | 3,121,763 | $ | 3,997,607 | ||||
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, |
|||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2003 |
2002 |
2003 |
2002 |
|||||||||||||
| (in thousands, except per share amounts) | ||||||||||||||||
| Revenues: | ||||||||||||||||
| Net product sales | $ | 23,046 | $ | — | $ | 30,915 | $ | — | ||||||||
| Co-promotion revenue | 47,855 | 45,035 | 151,887 | 112,104 | ||||||||||||
| Revenue under strategic alliances | 73,930 | 50,720 | 165,466 | 144,104 | ||||||||||||
| Total revenues | 144,831 | 95,755 | 348,268 | 256,208 | ||||||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of goods sold | 17,763 | 14,309 | 49,024 | 33,891 | ||||||||||||
| Research and development | 119,741 | 140,522 | 377,126 | 364,264 | ||||||||||||
| Selling, general and administrative | 43,018 | 41,844 | 122,223 | 125,084 | ||||||||||||
| Restructuring charges | 52,736 | — | 146,241 | — | ||||||||||||
| Acquired in-process research and development | — | — | — | 242,000 | ||||||||||||
| Amortization of intangibles | 9,676 | 9,810 | 29,028 | 25,107 | ||||||||||||
| Total costs and expenses | 242,934 | 206,485 | 723,642 | 790,346 | ||||||||||||
| Loss from operations | (98,103 | ) | (110,730 | ) | (375,374 | ) | (534,138 | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Investment income, net | 8,493 | 22,234 | 26,797 | 65,283 | ||||||||||||
| Interest expense | (2,675 | ) | (10,383 | ) | (18,210 | ) | (27,624 | ) | ||||||||
| Gain on sale of equity interest in joint venture | — | — | 40,000 | 40,000 | ||||||||||||
| Debt financing charge | — | — | (10,496 | ) | (54,000 | ) | ||||||||||
| Net loss | $ | (92,285 | ) | $ | (98,879 | ) | $ | (337,283 | ) | $ | (510,479 | ) | ||||
| Amounts per common share: | ||||||||||||||||
| Net loss per share, basic and diluted | $ | (0.31 | ) | $ | (0.35 | ) | $ | (1.14 | ) | $ | (1.86 | ) | ||||
| Weighted average shares, basic and diluted | 299,030 | 285,091 | 296,424 | 274,013 | ||||||||||||
See notes to condensed consolidated financial statements.
4
Millennium Pharmaceuticals, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
| Nine Months Ended September 30, |
||||||||
|---|---|---|---|---|---|---|---|---|
| 2003 |
2002 |
|||||||
| (in thousands) | ||||||||
| Cash Flows from Operating Activities: | ||||||||
| Net loss | $ | (337,283 | ) | $ | (510,479 | ) | ||
| Adjustments to reconcile net loss to cash | ||||||||
| used in operating activities: | ||||||||
| Acquired in-process research and development | — | 242,000 | ||||||
| Depreciation and amortization | 78,809 | 61,408 | ||||||
| Restructuring charges | 79,202 | — | ||||||
| Amortization of deferred financing costs | 12,083 | 2,688 | ||||||
| (Gain) loss on marketable securities, net | (2,983 | ) | 4,549 | |||||
| Stock compensation expense | 7,035 | 6,887 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (29,170 | ) | — | |||||
| Due from strategic alliance partners | (69,518 | ) | (45,493 | ) | ||||
| Prepaid expenses and other current assets | (3,467 | ) | 379 | |||||
| Restricted cash and other assets | 25,339 | (5,957 | ) | |||||
| Accounts payable and accrued expenses | 46,597 | 15,546 | ||||||
| Deferred revenue | (15,414 | ) | (40,648 | ) | ||||
| Net cash used in operating activities | (208,770 | ) | (269,120 | ) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Investments in marketable securities | (977,860 | ) | (845,467 | ) | ||||
| Proceeds from sales and maturities of marketable securities | 565,853 | 850,382 | ||||||
| Other investing activity | (4,111 | ) | (235 | ) | ||||
| Purchase of property and equipment and other long term assets | (45,096 | ) | (101,225 | ) | ||||
| Net cash acquired in COR Therapeutics, Inc. acquisition | — | 308,522 | ||||||
| Net cash (used in) provided by investing activities | (461,214 | ) | 211,977 | |||||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds from sales of common stock | ||||||||