ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA REPORT OF INDEPENDENT
ACCOUNTANTS
To the Board of Directors and Stockholders of ImmuLogic Pharmaceutical
Corporation:
We have audited the accompanying consolidated statements of net assets in
liquidation of ImmuLogic Pharmaceutical Corporation (the "Company") as of
December 31, 2000 and 1999, and the related consolidated statements of changes
in net assets in liquidation for the year ended December 31, 2000 and the six
months ended December 31, 1999. In addition, we have audited the consolidated
statements of operations, cash flows and stockholders' equity for the six months
ended June 30, 1999 and the year ended December 31, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
As discussed in Note A to the consolidated financial statements, the Company's
stockholders have approved a plan of complete liquidation and dissolution of the
Company. As a result, the Company has changed its basis of accounting from the
going concern basis to the liquidation basis effective July 1, 1999, under which
the consolidated financial statements reflect assets at estimated net realizable
amounts and liabilities at estimated settlement amounts.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the net assets in liquidation of ImmuLogic
Pharmaceutical Corporation at December 31, 2000 and 1999, the changes in its net
assets in liquidation for the year ended December 31, 2000 and the six months
ended December 31, 1999 and the results of its operations and its cash flows for
the six months ended June 30, 1999 and the year ended December 31, 1998 in
conformity with accounting principles generally accepted in the United States of
America on the bases described in the preceding paragraph.
/s/ PRICEWATERHOUSECOOPERS LLP
-------------------------------
PRICEWATERHOUSECOOPERS LLP
February 6, 2001
13
IMMULOGIC PHARMACEUTICAL CORPORATION
CONSOLIDATED STATEMENTS OF NET ASSETS IN LIQUIDATION
(IN THOUSANDS)
DECEMBER 31, DECEMBER 31,
2000 1999
------------ ------------
ASSETS
Cash and cash equivalents $ 1,009 $ 2,168
Cantab stock -- 12,000
Milestones and royalties receivable 1,500 3,000
Landlord receivable 856 1,400
Other assets 84 53
------- -------
Total assets $ 3,449 $18,621
------- -------
LIABILITIES
Estimated costs to be incurred during liquidation period 650 1,215
Accounts payable and accrued expenses 107 505
------- -------
Total liabilities 757 1,720
------- -------
NET ASSETS IN LIQUIDATION $ 2,692 $16,901
======= =======
The accompanying notes are an integral part of the consolidated financial
statements.
14
IMMULOGIC PHARMACEUTICAL CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS IN LIQUIDATION
(IN THOUSANDS)
TWELVE MONTHS SIX MONTHS
ENDED ENDED
DECEMBER 31, DECEMBER 31,
2000 1999
------------- ------------
Net assets in liquidation, beginning of period $ 16,901 $ 48,943
Cash distribution to shareholders (11,509) (39,868)
Other net changes in cash and cash equivalents 10,350 115
Cash received from milestones -- (300)
Cash received from landlord (544) (272)
Net cash received from the sale of Cantab stock (10,364) --
Net change in other assets and liabilities (133) --
Payment of estimated costs to be incurred and accrued expenses
759 1,283
CHANGES IN LIQUIDATION BASIS ACCOUNTING
ESTIMATES:
Increase (decrease) in estimated net realizable value of
Cantab stock (1,636) 7,000
Decrease in estimated costs to be incurred during the
liquidation period 204 --
Decrease in milestones and royalty receivable (1,500) --
Increase in investment income receivable 164 --
-------- --------
Net assets in liquidation December 31, 2000 $ 2,692 $ 16,901
======== ========
The accompanying notes are an integral part of the consolidated financial
statements.
15
IMMULOGIC PHARMACEUTICAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (GOING CONCERN BASIS)
(IN THOUSANDS), EXCEPT PER SHARE DATA
YEAR ENDED
SIX MONTHS ENDED DECEMBER 31,
------------------------------------
JUNE 30, 1999 1998
------------------------------------
Revenues:
Sponsored research revenues $ 1,088 $ 1,145
Sale of programs -- 3,000
License revenues -- 200
------------ ------------
Total revenues 1,088 4,345
------------ ------------
Operating expenses:
Proprietary research and development -- 4,053
Sponsored research and development 1,088 1,145
General and administrative 2,179 2,161
Loss on leasehold improvements, net 966 --
------------ ------------
Total operating expenses 4,233 7,359
------------ ------------
Operating loss (3,145) (3,014)
Interest income 1,085 2,704
------------ ------------
Net loss $ (2,060) $ (310)
------------ ------------
Basic and diluted net loss per common share $ (0.10) $ (0.02)
------------ ------------
Weighted average number of common shares outstanding
20,376,323 20,362,157
------------ ------------
Comprehensive loss:
Net loss $ (2,060) $ (310)
Other comprehensive loss:
Unrealized loss on Cantab stock (871) --
------------ ------------
Comprehensive loss $ (2,931) $ (310)
------------ ------------
The accompanying notes are an integral part of the consolidated financial
statements.
16
IMMULOGIC PHARMACEUTICAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (GOING CONCERN BASIS)
(In thousands)
YEAR ENDED
SIX MONTHS ENDED DECEMBER 31,
----------------------------------
JUNE 30, 1999 1998
----------------------------------
Cash flows for operating activities:
Net loss $ (2,060) $ (310)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 72 680
Write-off of leasehold improvements 1,446 201
Shares issued for 401(k) employer match 11 48
Gain on sale of equipment (14) (70)
Changes in assets and liabilities:
Prepaid expenses and other assets 219 (2,790)
Accounts payable and accrued expenses 331 (3,082)
Reduction in deferred rent (616) --
Other current and long-term liabilities (325) (50)
-------- --------
Total adjustments 1,124 (5,064)
-------- --------
Net cash used in operating activities (936) (5,373)
Cash flows from investing activities:
Purchase of Cantab stock (6,000) --
Rent received for leasehold improvements 463 480
Proceeds from sale of equipment 133 1,227
Purchase of short-term investments -- (23,934)
Redemption of short-term investments 8,219 34,783
Purchase of long-term investments -- (2,871)
Redemption of long-term investments 4,142 6,107
-------- --------
Net cash provided by investing activities 6,957 15,792
Cash flows from financing activities:
Proceeds from exercise of stock options 1 --
-------- --------
Net cash provided by financing activities 1 --
-------- --------
Net increase (decrease) in cash and cash equivalents 6,022 10,419
Cash and cash equivalents at beginning of period 18,856 8,437
-------- --------
Cash and cash equivalents at end of period $ 24,878 $ 18,856
-------- --------
The accompanying notes are an integral part of the consolidated financial
statements.
17
IMMULOGIC PHARMACEUTICAL CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (GOING CONCERN BASIS)
No. of Shares of Common Additional Unrealized Accumulated Total Stock-
Common Stock Stock Paid-in Loss on Cantab Deficit holders' Equity
Capital Stock
BALANCE AT DECEMBER 31, 1997 20,340,727 203,407 185,250,346 -- (131,434,613) 54,019,140
401(k) employer match 26,945 270 48,167 48,437
Net loss (309,574) (309,574)
================================================================================================
BALANCE AT DECEMBER 31, 1998 20,367,672 203,677 185,298,513 -- (131,744,187) 53,758,003
Exercise of common stock options 1,750 17 1,383 1,400
401(k) employer match 8,624 86 10,435 10,521
Unrealized loss on Cantab stock (871,658) (871,658)
Net loss (2,059,558) (2,059,558)
------------------------------------------------------------------------------------------------
BALANCE AT JUNE 30, 1999 20,378,046 $ 203,780 $185,310,331 $(871,658) $(133,803,745) $50,838,708
================================================================================================
The accompanying notes are an integral part of the consolidated financial
statements.
18
IMMULOGIC PHARMACEUTICAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. NATURE OF BUSINESS
ImmuLogic Pharmaceutical Corporation ("ImmuLogic" or the "Company") is a
company which was in the biopharmaceutical industry to develop novel
products with a primary emphasis on the diagnosis and treatment of
allergies and on the immunological treatment of addiction. Since inception,
the Company did not derive any revenues from product sales and has incurred
significant operating losses.
On March 23 1999, the Board of Directors of ImmuLogic Pharmaceutical
Corporation (the "Company") approved a plan to liquidate and dissolve the
Company (the "Plan"). The Plan was approved by a majority of the
stockholders of the Company on August 25, 1999. The Plan was the end result
of the restructuring which began in 1997 and included the sale of the
Company's programs to Cantab Pharmaceuticals plc ("Cantab"), the sub-lease
of its Waltham, Massachusetts facility and a reduction in workforce. The
key features of the Plan are (1) the conclusion of all business activities,
other than those in execution of the Plan; (2) the sale or disposition of
all of the Company's assets; (3) the satisfaction of all outstanding
liabilities; (4) the payment of liquidating distributions to stockholders
in complete redemption of the Common Stock; and (5) the authorization of
the filing of Certificate of Dissolution with the State of Delaware.
B. LIQUIDATION BASIS OF ACCOUNTING
The consolidated financial statements for fiscal 1998 and for the six
months ended June 30, 1999 were prepared on the going concern basis of
accounting which contemplates realization of assets and satisfaction of
liabilities in the normal course of business. As a result of the adoption
of the Plan and the imminent nature of the liquidation, the Company adopted
the liquidation basis of accounting effective July 1, 1999. This basis of
accounting is considered appropriate when, among other things, liquidation
of a company appears imminent and the net realizable value of assets are
reasonably determinable. Under this basis of accounting, assets are valued
at their estimated net realizable values and liabilities are valued at
their estimated settlement amounts. The conversion from the going concern
to liquidation basis of accounting has required management to make
significant estimates and judgements. In order to record assets at
estimated net realizable value and liabilities at estimated settlement
amounts under liquidation basis accounting, on July 1, 1999 the Company
recorded the following adjustments: recorded a $3.1 million decrease in the
value of the Cantab stock, recorded a $3.2 million receivable for
milestones and royalties, and recorded an accrual of $1.3 million for costs
to be incurred during the liquidation period. Due to the significant
increase in the trading value of the Cantab stock in the fourth quarter of
1999, the Company recorded an adjustment to increase the net estimated
realizable value of the Cantab stock from $5 million to $12 million. In
2000 the Company sold its entire position in Cantab for approximately
$10,364,000. Additionally in 2000, the Company reduced the estimated
19
receivable for milestones and royalties by $1.5 million and decreased its
estimate for estimated costs to be incurred by $204,000 to $650,000 for the
remainder of the liquidation period through August 26, 2002. The decrease
in estimated costs to be incurred during liquidation of approximately
$200,000 is primarily due to the Company's revised estimates of the various
potential future costs expected to be incurred through the liquidation
period.
The amount and timing of future liquidating distributions will depend upon
a variety of factors including, but not limited to, the actual proceeds
from the sale of any of the Company's net assets, the ultimate settlement
amounts of the Company's liabilities and obligations, actual costs incurred
in connection with carrying out the Plan, including management fees and
administrative costs during the liquidation period, and the timing of the
liquidation and dissolution. A summary of significant estimates and
judgements utilized in preparation of the December 31, 2000 consolidated
financial statements on a liquidation basis follows:
Milestones & Royalties
The Company could receive up to a maximum of $11 million in milestone
payments contingent upon Cantab's successful development to the end of
Phase II clinical trials of the Nicotine and Cocaine Programs sold to
Cantab. These payments may be made in cash or in additional ADSs or a
combination thereof at Cantab's discretion. The Company would receive the
following for successful completion of the Phases as defined in the
agreement as follows:
Cocaine............................Phase II $2 million
Nicotine...........................Phase I $3 million
Nicotine...........................Phase II $6 million
Upon receipt of the Phase II Cocaine or Phase I Nicotine milestones in the
form of Cantab stock or ADSs, the Company may sell up to 25% of such shares
in each of the four quarters following the expiration of an initial
six-month period. There would be no lock-up on shares paid in respect of
any additional milestones.
The Company could potentially also receive a share of net royalties Cantab
may receive from vaccine sales proportionate to the level of worldwide
product sales achieved. While the Company will attempt to monetize these
potential royalty streams, the Company does not anticipate receiving
significant value for them and thus has not recorded any net realizable
value for the royalty stream.
The Company estimates that the range of value to be received from these
milestones and royalties to be $0 to $11 million based on the contract
terms. During 2000 the Company has reduced the net realizable value of
these milestones from the $3 million recorded as of December 31, 1999 to
$1.5 million. This reduction is due to the uncertainty surrounding Cantab's
future resulting from the discontinuance of certain Cantab programs
announced in the fourth quarter of 2000 and the delay by Cantab in the
development of the nicotine and
20
cocaine programs. While based on the aforementioned business issues, the
reduction in the milestone and royalty receivable and the balance at
December 31, 2000 was based on subjective judgements by management of the
Company.
Cash Distribution
On September 1, 1999, the Company returned to its stockholders the sum of
$39.9 million (or $1.94 per share, based on 20,550,773 shares of Common
Stock currently outstanding) to stockholders of record as of August 25,
1999. On September 1, 2000 the Company returned to its stockholders the sum
of $9.7 million (or $.47 per share, based on 20,550,773 shares of Common
Stock currently outstanding) to stockholders of record as of August 25,
2000. On December 2, 2000 the Company returned to its stockholders the sum
of $1.85 million (or $.09 per share, based on 20,550,773 shares of Common
Stock currently outstanding) to stockholders of record as of November 30,
2000. Future distributions to stockholders would be made by the Board of
Directors of the Company as the Company's net assets are converted to cash.
The actual amount and timing of future distributions cannot be predicted at
this time. The Company intends to distribute pro rata to its stockholders,
in cash or in-kind, or sell or otherwise dispose of, all of its property
and net assets. The liquidation should be concluded prior to August 27,
2002 by a final liquidating distribution either directly to the
stockholders or to one or more liquidating trusts. Details regarding the
plan to liquidate and dissolve the Company can be found in the Company's
1999 Proxy Statement filed with the Securities and Exchange Commission and
mailed to stockholders on July 15, 1999.
Landlord Receivable
In February 1998, the Company entered into a phased sublease agreement with
Anadys Pharmaceuticals, Inc. (formerly Scriptgen Pharmaceuticals, Inc.) for
the Company's 85,000 square foot headquarters and research and development
facility located in Waltham, Massachusetts. The entire facility was
subleased to Anadys effective August 1, 1999. Under the terms of the
sublease, Anadys has assumed the Company's obligation under the lease in
addition to reimbursing the Company for a portion of the Company's
leasehold improvements. The Company negotiated with the landlord and Anadys
an arrangement, which eliminated the Company's liability for the lease in
the event that Anadys were to default on its sublease obligations. In
consideration for such arrangement, the Company expects to receive $55,000
per month through August of 2002 or approximately $1.25 million in the
aggregate. If Anadys were to default on its lease agreement or if the
Company sold its interest in the lease, the Company would receive less than
or none of the $1.25 million. As of December 31, 2000, the Company has
recorded $856,000 as the estimated net realizable value for the purpose of
liquidation basis accounting.
Liabilities
At December 31, 2000, the Company estimates that there are $650,000 of
costs remaining to be incurred during the remaining liquidation period
through August 26, 2002.
21
C. ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiary, ImmuLogic Securities
Corporation. All intercompany accounts and transactions have been
eliminated.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles for liquidation requires management to make
certain estimates and assumptions that affect the net realizability of
assets and estimated costs to be incurred during the liquidation period and
disclosure of contingent assets and liabilities at the date of the
financial statements. Actual results could differ from those estimates.
CASH
As of December 31, 2000, the Company had cash and cash equivalents of
$1,009,000 invested primarily in money market funds.
REVENUE RECOGNITION
Payments associated with rights to license or sublicense the Company's
technology were recognized as revenue when payments were received. Payments
in connection with sponsored research and the sale of programs were
recognized as revenue when earned under the terms of the agreements.
RESEARCH AND DEVELOPMENT
All research and development costs were expensed as incurred.
INCOME TAXES
The Company follows the liability method of accounting for income taxes
whereby a deferred tax liability is measured by the enacted tax rates which
will be in effect when any differences between the financial statements and
tax basis of assets reverse. The deferred tax liability can be reduced by
net operating losses being carried forward for tax purposes.
The measurement of deferred tax assets is reduced by a valuation allowance
if, based upon weighted available evidence, it is more likely than not that
some or all of the deferred tax assets will not be realized.
NET LOSS PER COMMON SHARE
As explained in Note B, effective July 1, 1999 the Company adopted the
liquidation basis of accounting. Accordingly, the presentation of per
common share information on a liquidation basis is not considered
meaningful and has been omitted.
22
The basic loss per common share, for periods prior to July 1, 1999 was
computed based upon the weighted average number of common shares
outstanding. The Company had 0, 0, and 1,532,018 options outstanding at
December 31, 2000, 1999 and 1998, respectively. These options were not
included in the calculation of dilutive common equivalent shares however,
since the effect of their inclusion would have been anti-dilutive.
D. PROPERTY AND EQUIPMENT
During 1999, all of the Company's equipment and furniture was sold. In
addition, the Company recorded a loss on leasehold improvements in the
amount of $1,446,000 to record the leaseholds at their net realizable value
for liquidation basis accounting.
Depreciation and amortization expense associated with property and
equipment was approximately $72,000, and $680,000, 1999 and 1998,
respectively.
E. STOCKHOLDERS' EQUITY
COMMON STOCK
At December 31, there were 20,550,773 common shares issued and outstanding
for the years 2000 and 1999, respectively.
PREFERRED STOCK
The Company has authorized a single class of preferred stock, par value
$.01, consisting of 1,000,000 shares. This preferred stock may be issued in
series with such rights, preferences and privileges as the Board of
Directors may determine.
SHAREHOLDER RIGHTS PLAN
On July 11, 1995, the Board of the Company declared a dividend of one
preferred stock purchase right (a Right) for each outstanding share of the
Company's Common Stock to stockholders of record at the close of business
on August 1, 1995. The Company adopted the plan to protect shareholders
against unsolicited attempts to acquire control of the Company that do not
offer what the Company believes to be an adequate price to all
shareholders. Each Right entitles the registered holder to purchase from
the Company a unit consisting of one one-thousandth of a share of Series A
Junior Participating Preferred Stock, $.01 par value (the Preferred Stock),
at a purchase price of $75 in cash per unit subject to adjustment.
Initially, the Rights will be attached to all Common Stock certificates
representing shares then outstanding, and no separate Rights Certificates
will be distributed. The Rights will separate from the Common Stock and a
Distribution Date will occur upon the earlier of (i) 10 days following a
public announcement that a person or group of affiliated or associated
persons (an Acquiring Person) has acquired, or obtained the right to
acquire, beneficial ownership of 20% or more of the outstanding shares of
Common Stock, or (ii) 10 business days following the commencement of a
tender offer or exchange offer that would result in a person or group
beneficially owning 30% or more of such outstanding shares of Common Stock.
23
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on August 1, 2005, unless earlier redeemed or
exchanged by the Company as described below.
In the event that any stockholder becomes an Acquiring Person, except
pursuant to a Permitted Offer, each Right will thereafter entitle the
holder thereof to receive, upon exercise, that number of shares of Common
Stock which equals the exercise price of the Right divided by one-half of
the current market price (as defined in the Rights Agreement) of the Common
Stock at the date of the occurrence of the event.
Preferred Stock purchasable upon exercise of the Rights will not be
redeemable. Each share of Preferred Stock will be entitled to a minimum
preferential quarterly dividend payment of $10 per share and will be
entitled to an aggregate dividend of 1,000 times the dividend declared per
share on Common Stock. In the event of liquidation, the holders of the
Preferred Stock will be entitled to a minimum preferential liquidation
payment of $1,000 per share and will be entitled to an aggregate payment of
1,000 times the payment made per share of Common Stock. Each share of
Preferred Stock will have 1,000 votes, voting together with the Common
Stock. Finally, in the event of any merger, consolidation, or other
transaction in which Common Stock is exchanged, each share of Preferred
Stock will be entitled to receive 1,000 times the amount received per share
of Common Stock. These rights are subject to adjustment for any stock
split, stock dividend, recapitalization, or similar event. At December 31,
2000, 20,550,773 preferred stock purchase rights were outstanding.
STOCK OPTIONS
As of December 31, 2000, there were no stock options outstanding. The
Company's stock option plan activity is summarized as follows:
Number Weighted Average
of Options Exercise Price
----------------------------------------------------------------------------
Outstanding at December 31, 1997 1,993,218 $ 8.25
Granted during 1998 313,000 1.44
Exercised during 1998 -- --
Canceled during 1998 (774,200) 9.17
---------- --------
Outstanding at December 31, 1998 1,532,018 7.98
Granted during 1999 -- --
Exercised during 1999 (174,477) 1.44
Canceled during 1999 (1,357,541) 7.03
---------- --------
Outstanding at December 31, 1999 -- $ --
Granted during 2000 -- --
Exercised during 2000 -- --
Canceled during 2000 -- --
---------- --------
Outstanding at December 31, 2000 -- $ --
========== ========
24
F. EMPLOYEE BENEFITS
The Company had a 401(k) savings plan (the Plan) which was available to all
of its qualified permanent employees. Participants could contribute up to
15 percent of their annual compensation to the Plan, subject to certain
limitations. The employer match to the Plan was in the form of Company
Common Stock and was calculated as the lesser of up to one-half of six
percent of a participant's total compensation or $2,000 annually in value
of Common Stock. The fair market value on the date of issuance of the
Common Stock pursuant to the matching contributions totaled approximately
$11,000 and $25,000 in 1999 and 1998, respectively. Due to the Company's
liquidation, the Plan was terminated during 1999. The Company has
distributed the assets of the Plan.
G. INCOME TAXES
At December 31, 2000 the Company had available for federal income tax
purposes net operating loss carryforwards of approximately $137,000,000
expiring in the years 2002 through 2019, which are available to reduce
future federal taxable income. The Company also has available research and
experimentation tax credits of approximately $3,700,000 at December 31,
2000, expiring in the years 2002 through 2018. The net operating loss
carryforwards are subject to limitation in any given year in the event of
significant changes in ownership. The Company has established a valuation
reserve against the entire deferred tax asset arising from these
carryforwards due to the uncertainty of earning sufficient taxable income
and accordingly, has not given recognition to these tax benefits in the
accompanying financial statements. The Company does not believe these
operating loss carryforwards have material value and any benefit relating
to these operating losses could be lost due to failure to meet the
continuity of business requirements.
Significant components of the Company's deferred tax assets and liabilities
are as follows:
DECEMBER 31,
2000 1999
----------------------------------------------------------------------------------------------
Deferred tax assets and liabilities:
Net operating loss and tax credit carryforwards $ 54,723,900 $ 60,369,608
Accrued expenses 302,800 612,000
Accrued revenue (942,404) (1,760,000)
Other 9,054 12,482
------------ ------------
Total deferred tax assets and liabilities 54,093,350 59,234,090
------------ ------------
Valuation allowance (54,093,350) (59,234,090)
------------ ------------
Net deferred tax assets and liabilities $ -- $ --
============ ============
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
25
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth the names, ages and positions of the
executive officers and directors of the Company as of January 31, 2001.
Name Age Position
---- --- --------
J. Richard Crowley 45 Director, President, Secretary and
Treasurer of the Company
Carl S. Goldfischer, M.D. 42 Director
Daniel J. Korpolinski 58 Director
Mr. J. Richard Crowley, a consultant to the Company, served as the
Company's interim Chief Financial Officer from May 1997 until April 1, 1999,
when he was appointed President, Secretary and Treasurer. Mr. Crowley is
President of Keystone Consulting, a contract financial and operational
management services firm which he founded in 1995. Mr. Crowley's experience from
1983 to 1995 includes senior financial and operational positions with the
LittlePoint Corporation, a children's consumer products company, TransNational
Financial Services, a marketer of financial products to affinity groups, and the
Crosby Vandenburgh Group, a contract publisher. From 1979 to 1983, Mr. Crowley
was with Price Waterhouse, during which time he obtained his C.P.A. Mr. Crowley
holds a B.A. in Economics from Providence College. Mr. Crowley also serves on
the Company's Board of Directors.
Dr. Carl S. Goldfischer became a member of the Company's Board of Directors
in March 1997. Dr. Goldfischer is currently a private investor. From May 1996
until December 2000, Dr. Goldfischer served as Vice President, Finance and
Strategic Planning and Chief Financial Officer of ImClone Systems, Inc., a
publicly held biotechnology company. From June 1994 until May 1996, Dr.
Goldfischer served as a health care analyst with Reliance Insurance, an
insurance company. From June 1991 until June 1994, Dr. Goldfischer was Director
of Research for D. Blech & Co., a securities firm. Dr. Goldfischer received a
doctorate of medicine from Albert Einstein College of Medicine in 1988 and
served as a resident in radiation oncology at Montefiore Hospital of the Albert
Einstein College of Medicine until 1991.
Daniel L. Korpolinski became a member of the Company's Board of Directors
in September 1999. Mr. Korpolinski is currently the President and Chief
Executive Officer of StressGen Biotechnologies. From August 1998 to January 2000
Mr. Korpolinski served as the President and Chief Executive Officer, and a
director, of Copley Pharmaceutical Inc., a publicly held pharmaceutical company.
From June 1996 to August 1998, Mr. Korpolinski served as President and Chief
Executive Officer of Prodromics On Line, a health informatics company with
databases for the diagnosis of mental and physical disease. From October 1991 to
June 1996, Mr. Korpolinski served as President and Chief Executive Officer of
CoCensys, Inc., a biopharmaceutical company.
26
Item 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following sets forth certain information regarding compensation paid
during each of the Company's last three fiscal years to each person who served
as the Company's sole executive officer (the "Named Executive Officer").
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
AWARDS
SHARES SUBJECT
NAME AND PRINCIPAL ANNUAL COMPENSATION TO OPTIONS ALL OTHER
POSITION YEAR SALARY BONUS GRANTED COMPENSATION(1)
------------------ ---- ------------------- ----- -------------- ---------------
J. Richard Crowley 2000 $170,573 $ 25,000 -- --
President, Secretary and 1999 176,386 43,000 -- --
Treasurer(1) 1998 101,386 -- 17,273(2) --
(1) Mr. Crowley joined the Company as interim Chief Financial Officer in 1997.
Mr. Crowley was appointed President, Secretary and Treasurer effective
April 1, 1999. Mr. Crowley also serves on the Company's Board of Directors.
(2) Mr. Crowley agreed to the termination of his options in April 1999.
27
OPTION GRANTS IN LAST FISCAL YEAR
No options were granted to the Named Executive Officer in 2000.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND OPTION VALUES AT FISCAL YEAR-END
The Named Executive Officer held no unexercised options at December 31,
2000.
EMPLOYMENT, TERMINATION AND CHANGE-IN-CONTROL ARRANGEMENTS
The Company entered into an employment agreement with its former CEO, Dr.
Joseph Marr on July 3, 1996, as amended, relating to the obligations of the
Company to Dr. Marr in the event of termination of his employment. The agreement
provided that if the Company terminated Dr. Marr's employment for cause, the
Company would be obligated to pay Dr. Marr his compensation and benefits through
the last day of his actual employment. If Dr. Marr terminated his employment for
"good reason" (as defined in the agreement), or his employment was terminated
(other than for "cause," as defined in the agreement) upon a "change in control"
(as defined in the agreement), Dr. Marr would receive a lump-sum cash payment
equal to 12 months of compensation at the level of compensation immediately
prior to termination (the "Base Compensation"). In addition, Dr. Marr would be
eligible to receive an amount equal to the Base Compensation in accordance with
the Company's normal payroll procedures beginning 12 months after the date of
termination and ending 24 months after the date of termination. Compensation
paid during this 12-month period would be offset by other compensation earned in
an employment or consulting arrangement during such period. Furthermore, the
Company would continue to provide medical and other benefits to Dr. Marr for a
period of up to 24 months. Finally, all unvested stock options held by Dr. Marr
would vest upon termination and would be exercisable for 12-months after the
date of termination. At the request of the Board of Directors and as a result of
the significant diminution of his responsibilities, Dr. Marr resigned from the
Company for "good reason" effective April 1, 1999 and is entitled to receive
amounts payable under this agreement, including acceleration in full of the
vesting of all options held by him, which were subsequently cancelled in
December 1999 by letter agreement between the Company and Dr. Marr.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee of the Board of Directors of the
Company was at any time during 2000, or formerly, an officer or employee of the
Company or any subsidiary of the Company, nor has any member of the Compensation
Committee had any relationship with the Company requiring disclosure under Item
404 of Regulation S-K under the Securities Exchange Act of 1934 (as amended, the
"Exchange Act"). No executive officer of the Company has served as a director or
member of the Compensation Committee (or other Committee serving an equivalent
function) of any other entity, whose executive officers served as a director of
or member of the Compensation Committee of the Company.
28
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act and regulations of the Securities and
Exchange Commission (the "Commission") thereunder require the Company's
executive officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of initial
ownership and changes in ownership with the Commission and the National
Association of Securities Dealers, Inc. Such officers, directors and ten-percent
stockholders are also required by the rules of the Commission to furnish the
Company with copies of all Section 16(a) forms they file. Based solely on its
review of the copies of such forms received by it, or written representations
from certain reporting persons that no other reports were required for such
persons, the Company believes that, during or with respect to the period from
January 1, 2000 to December 31, 2000, all of its executive officers, directors
and ten-percent stockholders complied with their Section 16(a) filing
obligations.
COMPENSATION OF DIRECTORS
The Company maintains a compensation program for each director who is not
an employee of the Company or any subsidiary of the Company and who does not
receive more than $50,000 in any year pursuant to a consulting contract with the
Company. Pursuant to this compensation program, each such director receives cash
compensation of $25,000 per annum for his services as a director.
29
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of January 31, 2001,
(except as otherwise noted), with respect to the beneficial ownership of the
shares of Common Stock by (i) each person known by the Company to own
beneficially more than 5% of the outstanding shares of Common Stock, (ii) each
current director of the Company, (iii) each of the Named Executive Officers of
the Company, and (iv) all directors and executive officers of the Company as a
group.
PERCENTAGE OF
NAME AND ADDRESS OF SHARES OF COMMON STOCK OUTSTANDING
BENEFICIAL OWNER BENEFICIALLY OWNED(1) COMMON STOCK(2)
------------------- ---------------------- ---------------
5% Stockholders
Carl C. Ichan (3)
c/o Ichan Associates Corp. 3,006,000 14.63%
767 Fifth Avenue, 47th Floor
New York, NY 10153
State of Wisconsin Investment Board(4) 2,211,500 10.76%
Lake Terrace
121 East Wilson Street
Madison, WI 53703
Directors and Named Executive Officers
Carl S. Goldfischer, M.D 0 0%
Daniel J. Korpolinski 0 0%
J. Richard Crowley 0 0%
President, Secretary and Treasurer;
Director
All directors and executive officers as a group (3
persons) 0 0%
30
(1) The inclusion herein of any shares of Common Stock deemed beneficially
owned does not constitute an admission of beneficial ownership of those
shares. Unless otherwise indicated, each stockholder referred to above has
sole voting and investment power with respect to the shares listed. The
number of shares of Common Stock beneficially owned by each director and
executive officer is determined under the rules of the Commission and the
information is not necessarily indicative of beneficial ownership for any
other purpose. Under such rules, beneficial ownership includes any shares
as to which each executive officer has sole or shared voting power or
investment power and also any shares of Common Stock into which any options
held by such executive officer are exercisable within 60 days after January
31, 2001.
(2) Based upon 20,550,773 shares of Common Stock outstanding as of January 31,
2001.
(3) Based upon a Schedule 13D filed with the Commission on September 7, 1999 by
High River Limited Partnership ("High River"), Riverdale LLC ("Riverdale")
and Carl C. Ichan ("Ichan"), indicating shared voting and dispositive power
with respect to 3,006,000 shares of Common Stock. According to statements
set forth in this filing, Riverdale, an entity which is wholly-owned by
Ichan, is the general partner of High River, the record holder of such
shares.
(4) The State of Wisconsin Investment Board filed a Schedule 13G/A with the
Commission dated February 9, 2000, indicating sole voting and dispositive
power with respect to 2,211,500 shares of Common Stock.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On July 3, 1996, the Company and Dr. Marr entered into an employment
relating to the obligations of the Company to Dr. Marr in the event of
termination of his employment. See "Employment Termination and Change in Control
Arrangements" under the heading, "Item 11 -- Executive Compensation."
31
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A) Documents filed as part of this report:
1. FINANCIAL STATEMENTS
The following financial statements are included in Part II Item 8
filed as part of this Form 10-K:
Report of Independent Accounts
Consolidated Statement of Net Assets in Liquidation as of December
31, 2000 and 1999
Consolidated Statement of Changes in Net Assets in Liquidation for
the year ended December 31, 2000 and for the six months ended
December 31, 1999
Consolidated Statements of Operations for the six months ended June
30, 1999 and years ended December 31, 1998 and 1997 (Going Concern
Basis)
Consolidated Statements of Cash Flows for the six months ended June
30, 1999 and years ended December 31, 1998 and 1997 (Going Concern
Basis)
Consolidated Statements of Changes in Stockholders' Equity for the
six months ended June 30, 1999 and for the years ended December 31,
1998 and 1997 (Going Concern Basis)
Notes to Consolidated Financial Statements
2. FINANCIAL STATEMENT SCHEDULES
The Financial Statement Schedules have been omitted because they
are either not applicable or the required information is included
in the Consolidated Financial Statements or Notes thereto.
3. EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-K
The Exhibit Index is set forth on page 35 of this Form 10-K
immediately preceding the exhibits filed as part of this annual
report on Form 10-K and is incorporated by reference herein.
(B) Reports filed on Form 8-K for the quarter ended December 31, 2000.
None.
32
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.
IMMULOGIC PHARMACEUTICAL CORPORATION
By: /s/ J. Richard Crowley
-------------------------------------
J. Richard Crowley
President, Secretary and Treasurer
Date: March 20, 2001
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:
SIGNATURE DATE TITLE
March 20, 2001 President, Secretary and Treasurer
------------------------------ (Principal Exec. and Financial Officer)
J. Richard Crowley
March 20, 2001 Director
------------------------------
Carl S. Goldfischer
March 20, 2001 Director
------------------------------
Daniel Korpolinski
33
EXHIBIT INDEX
IMMULOGIC PHARMACEUTICAL CORPORATION
ANNUAL REPORT
FORM 10-K - 2000
EXHIBIT NO. DESCRIPTION
-------------------------------------------------------------------------------------
3.01(3) Restated Certificate of Incorporation of the Registrant, as
amended.
3.02(1) Amended and Restated By-laws of the Registrant.
4.01(1) Specimen certificate for shares of the Registrant's Common Stock.
4.02(1) Description of capital stock (contained in the Restated Certificate of
Incorporation the Registrant, as amended, filed as Exhibit 3.01)
10.16(1) Office Lease, dated November 13, 1991, between the Registrant and
Lincoln Street Trust.
10.27(2) Rights Agreement dated as of August 1, 1995, between the
Registrant and the First National Bank of Boston.
10.34(4) Amendment No. 1 to the Rights Agreement dated as of April 3,
1996.
10.39(5) Consultation Agreement dated May 13, 1997 between the Registrant
and J. Richard Crowley.
10.40(6) Sublease dated January 22, 1998 between the Registrant as
sublandlord and Scriptgen Pharmaceuticals, Inc. as subtenant for
the facility at 610 Lincoln Street, Waltham, Massachusetts.
10.41(7) License Agreement, dated June 16, 1998, by and between the
Registrant and Heska Corporation.
10.42(8) Purchase Agreement, dated December 18, 1998, by and between the
Registrant and Cantab Pharmaceuticals plc.
10.43(9) Amendment to the License Agreement, dated June 16, 1998, by and
between the Registrant and Heska Corporation.
10.44(9) Amendment to the Office Lease, dated November 13, 1991, by and
between the Registrant and Lincoln Street Trust.
34
10.45(9) Letter Agreement dated July 30, 1999 by and between the
Registrant and Lincoln Street Trust.
21.01(1) Subsidiaries of the Registrant.
(1) Incorporated by reference to the Company's Registration Statement on Form
S-1 (File No. 33-39592).
(2) Incorporated by reference to the Company's Form 8-K filed on July 27, 1995,
as amended by Form 8-K/A on August 2, 1995, with respect to the adoption of
the Rights Agreement.
(3) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the period ended June 30, 1996.
(4) Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1996.
(5) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the period ended June 30, 1997.
(6) Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1997.
(7) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1998.
(8) Incorporated by reference to the Company's Current Report on Form 8-K dated
February 2, 1999.
(9) Incorporated by reference to the Company's Annual Report on Form 10-K dated
March 30, 2000.
The Company will furnish copies of any of the above exhibits at reasonable
cost to its shareholders and upon written request to Investor Relations, 12
Alfred Street, Suite 300, Woburn, MA 01801.
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