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As filed with the Securities and Exchange Commission on September 30, 2003.

Registration No. 333-107098



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549


AMENDMENT NO. 2
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933


IDEC PHARMACEUTICALS CORPORATION
(Exact Name of Registrant as Specified in Its Charter)

Delaware   2836   33-0112644
(State or Other Jurisdiction of
Incorporation or Organization)
  (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification Number)

3030 Callan Road
San Diego, California 92121
(858) 431-8500
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)

John M. Dunn, Esq.
Senior Vice President and General Counsel
IDEC Pharmaceuticals Corporation
3030 Callan Road
San Diego, California 92121
(858) 431-8500
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)


Copies to:

David R. Snyder, Esq.
Pillsbury Winthrop LLP
101 West Broadway, Suite 1800
San Diego, California 92101-4700
Phone: (619) 234-5000
Fax: (619) 236-1995
  Louis A. Goodman, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
One Beacon Street
Boston, Massachusetts 02108
Phone: (617) 573-4800
Fax: (617) 573-4822

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effectiveness of this Registration Statement and the effective time of the merger of Bridges Merger Corporation, a wholly owned subsidiary of the Registrant, with and into Biogen, Inc. as described in the Agreement and Plan of Merger, dated as of June 20, 2003, included as Annex A to the joint proxy statement/prospectus forming a part of this Registration Statement.


        If the securities being registered on this form are being offered in connection with the formation of a holding company and are in compliance with General Instruction G, check the following box. o

        If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o             

        If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration for the same offering. o             


        THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY DETERMINE.




THE INFORMATION IN THIS JOINT PROXY STATEMENT/PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION OF WHICH THIS JOINT PROXY STATEMENT/PROSPECTUS IS A PART IS EFFECTIVE. THIS JOINT PROXY STATEMENT/PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED. THIS JOINT PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE A SOLICITATION OF A PROXY IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH PROXY SOLICITION.

IDEC PHARMACEUTICALS LOGO   BIOGEN INC. LOGO


MERGER PROPOSAL—YOUR VOTE IS IMPORTANT

        The boards of directors of IDEC Pharmaceuticals Corporation and Biogen, Inc. unanimously have approved a merger of equals designed to create one of the world's largest biotechnology companies. We believe the combined company will be able to create more stockholder value than could be achieved by either company individually. We ask for your support in voting in favor of the proposals to be presented at our special meetings.

        If the merger is completed, Biogen stockholders will receive 1.15 shares of IDEC common stock for each share of Biogen common stock they hold, plus cash in lieu of fractional shares. IDEC stockholders will continue to own their existing IDEC shares. Upon completion of the merger, Biogen will be a wholly owned subsidiary of IDEC, IDEC's name will be changed to BIOGEN IDEC INC. and the shares of the combined company will be traded on the Nasdaq National Market under the symbol "BIIB."

        We are asking IDEC stockholders to approve the issuance of the shares of IDEC common stock in connection with the merger and an amendment to IDEC's certificate of incorporation to increase the authorized shares of IDEC common stock and to change the name of the corporation to BIOGEN IDEC INC. We are also asking IDEC stockholders to approve a new equity incentive plan, entitled the 2003 Omnibus Equity Plan, and a new Performance Based Management Incentive Plan, both of which will become effective upon completion of the merger. IDEC's special meeting will be held on:

[                        ], [                        ], 2003

10:00 a.m.

at the following location:

10950 North Torrey Pines Road

San Diego, California 92037

        IDEC's board of directors unanimously recommends that IDEC stockholders vote FOR the issuance of shares of IDEC common stock in connection with the merger, the amendment to IDEC's certificate of incorporation described above and the approval of the 2003 Omnibus Equity Plan and the Performance Based Management Incentive Plan.


        We are asking Biogen stockholders to approve the merger agreement. Biogen's special meeting will be held on:

[                        ], [                        ], 2003

[          ] a.m.

at the following location:

15 Cambridge Center
Cambridge, Massachusetts 02142

        Biogen's board of directors unanimously recommends that Biogen stockholders vote FOR the approval of the merger agreement.

        We cannot complete the merger unless Biogen stockholders approve the merger agreement and IDEC stockholders approve the issuance of shares of IDEC common stock in the merger. In addition, approval by IDEC's stockholders of the amendment of IDEC's certificate of incorporation is a condition to closing under the merger agreement. Your vote is very important. Whether or not you plan to attend your company's special meeting, please take the time to vote by completing and mailing the enclosed proxy card to us.

        We encourage you to read carefully this joint proxy statement/prospectus, including the section entitled "Risks Relating to the Merger" beginning on page 18, before voting your shares.

SIGNATURE   SIGNATURE

William H. Rastetter, Ph.D.
Chairman and Chief Executive Officer
IDEC Pharmaceuticals Corporation

 

James C. Mullen
Chairman and Chief Executive Officer
Biogen, Inc.

        Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the merger or the securities to be issued in the merger or determined if this joint proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

        This joint proxy statement/prospectus is dated                        , 2003 and is first being mailed to the stockholders of IDEC and Biogen on or about                        , 2003.



REFERENCES TO ADDITIONAL INFORMATION

        This joint proxy statement/prospectus incorporates important business and financial information about IDEC and Biogen from other documents that are not included in or delivered with this joint proxy statement/prospectus. This information is available to you without charge upon your request. You can obtain the documents incorporated by reference in this joint proxy statement/prospectus by requesting them in writing or by telephone from the appropriate company at the following addresses and telephone numbers:

IDEC Pharmaceuticals Corporation
3030 Callan Road
San Diego, California 92121
(858) 431-8656
Attn: Investor Relations
  Biogen, Inc.
14 Cambridge Center
Cambridge, Massachusetts 02142
(617) 679-2812
Attn: Investor Relations

        If you would like to request documents, the applicable company must receive your request by                        , 2003 (which is at least five business days before the date of the special meetings), in order for you to receive them before your special meeting.

        See "Where You Can Find More Information" beginning on page 118.


IDEC PHARMACEUTICALS LOGO


NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

To All Stockholders of IDEC Pharmaceuticals Corporation:

        NOTICE IS HEREBY GIVEN that IDEC will hold a special meeting of its stockholders on                        ,                , 2003, 10:00 a.m., local time, at the Hilton La Jolla at Torrey Pines located at 10950 North Torrey Pines Road, San Diego, California 92037 for the following purposes:

        Holders of record of IDEC common stock at the close of business on September 25, 2003, the record date, are entitled to receive this notice and to vote their shares at the special meeting or any adjournment or postponement of that meeting. As of the record date, there were 155,605,231 shares of IDEC common stock outstanding. Each share of IDEC common stock is entitled to one vote on each matter properly brought before the special meeting.

        A list of the stockholders entitled to vote at IDEC's special meeting will be available at the special meeting and for ten days prior to the meeting, between the hours of 8:45 a.m. and 4:30 p.m., at IDEC's corporate offices located at 3030 Callan Road, San Diego, California 92121. You should contact the Secretary of IDEC if you wish to review this list of stockholders.

        After careful consideration, IDEC's board of directors unanimously has determined that the merger is advisable, fair to and in the best interests of IDEC and its stockholders and unanimously has approved each of the following:


        IDEC's board of directors unanimously recommends that you vote to approve each of IDEC's proposals listed above, all of which are described in detail in the accompanying joint proxy statement/prospectus.

    By Order of the Board of Directors,

 

 

 

 

 

SIGNATURE


John M. Dunn
Secretary

[                        ], 2003
San Diego, California

 

 

IMPORTANT

        Your vote is important. Even if you plan to attend the special meeting, please vote using one of the following options:

        If your shares are held in the name of a bank, broker or other fiduciary, please follow the instructions on the voting instruction card furnished by the record holder. REMEMBER, YOUR VOTE IS IMPORTANT, SO PLEASE ACT TODAY.


BIOGEN INC. LOGO

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

To All Stockholders of Biogen, Inc.:

        NOTICE IS HEREBY GIVEN that Biogen will hold a special meeting of its stockholders on                        ,                         2003,             a.m., local time, at its offices located at 15 Cambridge Center, Cambridge, Massachusetts 02142 for the following purposes:

        Holders of record of Biogen common stock at the close of business on September 25, 2003, the record date, are entitled to receive this notice and to vote their shares at the special meeting or any adjournment or postponement of that meeting. As of the record date, there were 149,497,141 shares of Biogen common stock outstanding. Each share of Biogen common stock is entitled to one vote on each matter properly brought before the special meeting. If the merger is approved, each share of Biogen common stock will be converted into the right to receive 1.15 shares of IDEC common stock.

        After careful consideration, Biogen's board of directors unanimously has determined that the merger is advisable, fair to and in the best interests of Biogen and its stockholders and unanimously has adopted and approved the merger agreement and the proposed merger. Biogen's board of directors unanimously recommends that you vote to approve the merger agreement and the proposal relating to adjournment.

    By Order of the Board of Directors,

 

 

 
    SIGNATURE

Thomas J. Bucknum
Secretary
[                        ], 2003
Cambridge, Massachusetts
   

IMPORTANT

        Your vote is important. Even if you plan to attend the special meeting, please complete and mail the enclosed proxy card. If your shares are held in the name of a bank, broker or other fiduciary, please follow the instructions on the voting instruction card furnished by the record holder. REMEMBER, YOUR VOTE IS IMPORTANT, SO PLEASE ACT TODAY.




TABLE OF CONTENTS

 
  Page
QUESTIONS AND ANSWERS ABOUT THE MERGER   1

SUMMARY

 

4
  The Companies   4
  The Proposed Merger   5
  What Biogen Stockholders Will Receive in the Merger   5
  Recommendations to Stockholders   5
  Reasons for the Merger   6
  Opinion of IDEC's Financial Advisor   7
  Opinion of Biogen's Financial Advisor   7
  Board of Directors and Management Following the Merger   7
  Stockholder Votes Required   7
  Treatment of Biogen Stock Options   8
  Ownership of Common Stock of the Combined Company After the Merger   8
  Conditions to Completion of the Merger   9
  Regulatory Matters Relating to the Merger   9
  Material U.S. Federal Income Tax Consequences of the Merger   10
  Listing of Common Stock of the Combined Company   10
  Dissenters' Rights of Appraisal   10
  Interests of Certain Persons in the Merger   11
  Restrictions on Alternative Transactions   11
  Accounting Treatment of the Merger   11
  Amendment to IDEC's Certificate of Incorporation   12
  Summary Selected Historical Financial Information   12
  Summary Selected Unaudited Pro Forma Combined Financial Information   14
  Comparative Per Share Information   16
  Comparative Per Share Market Price and Dividend Information   17
  Recent Closing Prices   17

RISKS RELATING TO THE MERGER

 

18

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

 

21

THE PROPOSED MERGER

 

23
  General   23
  IDEC's Proposals   23
  Biogen's Proposals   23
  Background of the Merger   24
  Reasons of IDEC's Board of Directors for the Merger   29
  Reasons of Biogen's Board of Directors for the Merger   32
  Accounting Treatment of the Merger   34
  Material U.S. Federal Income Tax Consequences of the Merger   34
  Regulatory Matters Relating to the Merger   36
  Dissenters' Rights of Appraisal   36
  Federal Securities Laws Consequences; Stock Transfer Restriction Agreements   38
  Stock Exchange Listing; Delisting and Deregistration of Biogen Common Stock   38
  Certain Litigation   38
     

i



THE COMPANIES

 

39
  IDEC   39
  Biogen   40

OPINIONS OF FINANCIAL ADVISORS

 

41
  Opinion of IDEC's Financial Advisor—Merrill Lynch   41
  Opinion of Biogen's Financial Advisor—Goldman Sachs   46

INTERESTS OF CERTAIN PERSONS IN THE MERGER

 

55
  Interests of Executive Officers and Directors of IDEC in the Merger   55
  Employment Agreement with William H. Rastetter, Ph.D.   55
  IDEC Severance Plans and Agreements   55
  Interests of Executive Officers and Directors of Biogen in the Merger   56
  New Employment Agreement with James C. Mullen   56
  Biogen Severance Plans and Agreements   57
  Treatment of Biogen Stock Options   58
  Indemnification; Directors' and Officers' Insurance   58

THE MERGER AGREEMENT

 

59
  General   59
  Closing Matters   59
  Consideration to Be Received in the Merger; Treatment of Stock Options   59
  Exchange of Certificates in the Merger   60
  Fractional Shares   60
  Listing of Common Stock of the Combined Company   60
  Covenants   60
  Other Covenants and Agreements   65
  Representations and Warranties   66
  Conditions to Completion of the Merger   67
  Termination of Merger Agreement   67
  Termination Fee   69
  Amendments, Extensions and Waivers   72

PRO FORMA FINANCIAL DATA

 

73
  IDEC and Biogen Unaudited Pro Forma Condensed Combined Financial Statements   73
  Unaudited Pro Forma Condensed Combined Statement of Income for the Six Months Ended June 30, 2003   74
  Unaudited Pro Forma Condensed Combined Statement of Income for the Year Ended December 31, 2002   75
  Unaudited Pro Forma Condensed Combined Balance Sheet as of June 30, 2003   76
  Notes to Unaudited Pro Forma Condensed Combined Financial Statements   77

INFORMATION ABOUT THE MEETINGS AND VOTING

 

81
  The IDEC Special Meeting   81
  The Biogen Special Meeting   90

COMPARISON OF STOCKHOLDER RIGHTS
AND CORPORATE GOVERNANCE MATTERS

 

93
     

ii



DESCRIPTION OF IDEC CAPITAL STOCK

 

111
  Authorized Capital Stock   111
  IDEC Common Stock   111
  IDEC Preferred Stock   111
  IDEC's Amended and Restated Rights Agreement   112
  Transfer Agent and Registrar   115

LEGAL MATTERS

 

115

EXPERTS

 

115

ADDITIONAL INFORMATION FOR STOCKHOLDERS

 

116
  Future Stockholder Proposals   116

WHERE YOU CAN FIND MORE INFORMATION

 

118
ANNEXES    
  Annex A   Agreement and Plan of Merger
  Annex B   2003 Omnibus Equity Plan
  Annex C   Performance Based Management Incentive Plan
  Annex D   Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated
  Annex E   Opinion of Goldman, Sachs & Co.
  Annex F   Massachusetts Appraisal Rights Statute

iii



QUESTIONS AND ANSWERS ABOUT THE MERGER

Q:
Why are the companies proposing the merger?

A:
We believe that a combination of IDEC and Biogen will create a leading global biotechnology company that will capitalize on the complementary strengths of each company and produce greater stockholder value than would be expected absent the proposed merger.

Q:
What will a stockholder receive when the merger occurs?

A:
IDEC Stockholders:
Q:
What do I need to do now?

A:
After you carefully read this document, including the annexes, please vote your shares as soon as possible so that your shares will be represented at your company's special meeting. Please follow the instructions set forth on the proxy card or on the instruction card provided by the record holder if your shares are held in the name of your broker, a bank or other nominee.

Q:
Why is my vote important?

A:
If you are an IDEC stockholder and you do not submit a proxy or vote in person at your special meeting, it will have the same effect as a vote against the proposal to amend IDEC's certificate of incorporation but it will not have any effect on the other proposals to be presented at the special meeting. If you submit a proxy and affirmatively elect to abstain from voting, your proxy will be counted as present for purposes of determining the presence of a quorum and will have the same effect as a vote against each of the proposals to be voted on at the special meeting. IDEC stockholder approval of the issuance of shares in the merger and the amendment to the certificate of incorporation is a condition to closing under the merger agreement. See "Information About the Meetings and Voting—The IDEC Special Meeting" on page 81.
Q:
If my shares are held in "street name" by my broker, will my broker vote my shares for me?

A:
Yes, but only if you instruct your broker as to how you want your shares voted. If you do not provide your broker with instructions on how to vote your "street name" shares, your broker cannot vote on any of the proposals.

1


Q:
What if I fail to instruct my broker?

A:
If you fail to instruct your broker to vote your shares and the broker submits an unvoted proxy, the resulting broker "non-vote" will be counted toward the quorum at the respective special meeting, and, with the exception of the vote by IDEC stockholders to amend IDEC's certificate of incorporation and the vote by Biogen stockholders to approve the merger agreement, it will otherwise have no effect on the proposals to be voted on at the special meetings.

Q:
If my shares are held in Biogen's 401(k) plan, will the trustee vote my shares for me?

A:
Yes, but only if you instruct the trustee as to how you want your shares voted. You may give voting instructions for the number of shares of Biogen common stock equal to the interest in Biogen common stock credited to your Biogen 401(k) account as of the record date. To vote these shares, complete and return the voting instruction form sent to you with this joint proxy statement/prospectus by Fidelity Management Trust Company. The trustee will vote your shares in accordance with your instructions. If you do not send instructions, the trustee will not vote the shares credited to your account on any of the proposals.
Q:
Can I change my vote after I have mailed my proxy card?

A:
Yes. Stockholders who hold shares in their own name can change their vote at any time before their proxy is voted at their company's special meeting.

        IDEC Stockholders:

        Biogen Stockholders:

Q:
When and where are the special meetings?

A:
IDEC's special meeting will take place on    , 2003, at the Hilton La Jolla at Torrey Pines located at 10950 North Torrey Pines Road, San Diego, California 92037, at 10:00 a.m., local time.

2


Q:
Should I send in my stock certificates now?

A:
No. After the merger is completed, the combined company will send Biogen stockholders written instructions for exchanging their stock certificates. IDEC stockholders may keep their existing stock certificates.

Q:
When do you expect the merger to be completed?

A:
We hope to complete the merger as soon as possible after the special meetings occur and all closing conditions under the merger agreement are satisfied.

Q:
Who do I call if I have questions about the special meetings or the merger?

A:
If you have any questions about the merger, or if you need additional copies of this joint proxy statement/prospectus or the enclosed proxy, you should contact:

IDEC STOCKHOLDERS:   BIOGEN STOCKHOLDERS:

IDEC Pharmaceuticals Corporation
3030 Callan Road
San Diego, California 92121
(858) 431-8656
Attention: Investor Relations

 

Biogen, Inc.
14 Cambridge Center
Cambridge, Massachusetts 02142
(617) 679-2812
Attention: Investor Relations

        YOU MAY ALSO OBTAIN ADDITIONAL INFORMATION ABOUT IDEC AND BIOGEN FROM DOCUMENTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION BY FOLLOWING THE INSTRUCTIONS IN THE SECTION ENTITLED "WHERE YOU CAN FIND MORE INFORMATION" ON PAGE 118.

3



SUMMARY

        This summary highlights information from this joint proxy statement/prospectus that we believe is the most important information to be considered by stockholders in determining how to vote on the proposals described in this joint proxy statement/prospectus. This summary may not contain all of the information that is important to you, and we encourage you to read this joint proxy statement/prospectus in its entirety. The information contained in this summary is qualified in its entirety by, and should be read in conjunction with, the detailed information and financial statements, including the notes thereto, appearing elsewhere in this joint proxy statement/prospectus and the documents incorporated into this joint proxy statement/prospectus by reference. See "Where You Can Find More Information" on page 118. We have included references to other portions of this joint proxy statement/prospectus to direct you to a more complete description of the topics presented in this summary.

The Companies (see page 39)

IDEC Pharmaceuticals Corporation
Bridges Merger Corporation
3030 Callan Road
San Diego, California 92121
(858) 431-8500
Internet Address: www.idecpharm.com (Information set forth in IDEC's website is not incorporated herein by reference.)

        IDEC is a biotechnology company engaged primarily in the research, development, manufacture and commercialization of targeted therapies for the treatment of cancers and autoimmune and inflammatory diseases. IDEC's two commercial products, Rituxan® (rituximab) and Zevalin® (ibritumomab tiuxetan), are for use in the treatment of certain B-cell non-Hodgkin's lymphomas, or B-cell NHLs. Rituxan is copromoted with Genentech, Inc., or Genentech, in the United States. Outside of the United States, rituximab, marketed as MabThera, is sold by F. Hoffman-La Roche, or Roche, except in Japan where Roche copromotes Rituxan in collaboration with Zenyaku Kogyo Co., Ltd., or Zenyaku. IDEC receives royalties on sales of Rituxan outside the United States. Rituxan achieved net sales of $638 million in the United States for the first half of 2003 (of which IDEC recorded $192 million as its share of copromotion profits) and $1.08 billion in the United States for the year ended December 31, 2002 (of which IDEC recorded $324 million as its share of copromotion profits). In February 2002, Zevalin became the first radioimmunotherapy approved by the U.S. Food and Drug Administration, or the FDA, for the treatment of certain B-cell NHLs. IDEC commenced sales of Zevalin in the United States in April 2002. IDEC has granted marketing and distribution rights for Zevalin outside the United States to Schering Aktiengesellschaft, or Schering AG. Marketing approval for Zevalin in Europe is pending. Zevalin achieved net sales of $10.6 million in the United States for the first half of 2003 and $13.7 million in the United States for the year ended December 31, 2002. IDEC reported revenues of $240.8 million for the first half of 2003, $404.2 million in the year 2002 and $272.7 million in the year 2001. IDEC employs 1,000 people. IDEC spent $93.6 million on research and development in 2002.

        Bridges Merger Corporation is a Massachusetts corporation and a wholly owned subsidiary of IDEC. Bridges Merger Corporation was organized solely for the purpose of entering into the merger agreement with Biogen and completing the merger. It has not conducted any business operations. If the merger is completed, Bridges Merger Corporation will cease to exist following the merger of it with and into Biogen.

4


Biogen, Inc.
14 Cambridge Center
Cambridge, Massachusetts 02142
(617) 679-2000
Internet Address: www.biogen.com (Information set forth in Biogen's website is not incorporated herein by reference.)

        Biogen is a global biotechnology company that develops, manufactures and markets novel human therapeutic products. Its primary focus is on developing pharmaceutical products that address unmet medical needs, particularly in its core therapeutic areas of neurology, dermatology and rheumatology. Biogen currently sells AVONEX® (Interferon beta-1a) for the treatment of relapsing multiple sclerosis and AMEVIVE® (alefacept) for the treatment of adult patients with moderate-to-severe chronic plaque psoriasis who are candidates for systemic therapy or phototherapy. Biogen also receives revenues from royalties on sales by its licensees of a number of products covered under patents that it controls and from contract revenues related to a collaborative agreement with IDEC. Biogen's revenues for 2002 were $1.148 billion, approximately 90% of which were from sales of AVONEX. Biogen employs 2,700 people worldwide. Biogen spent $368 million on research and development in 2002.

The Proposed Merger (see page 23)

        Under the terms of the proposed merger, Bridges Merger Corporation, a wholly owned subsidiary of IDEC formed for the purpose of the merger, will merge with and into Biogen. As a result, Biogen will survive the merger and will become a wholly owned subsidiary of IDEC upon completion of the merger. IDEC will change its name to BIOGEN IDEC INC. upon completion of the merger.

        The merger agreement is included as Annex A to this joint proxy statement/prospectus. We encourage you to read carefully the merger agreement in its entirety, as it is the legal document that governs the merger.

What Biogen Stockholders Will Receive in the Merger (see "The Merger Agreement—Consideration to be Received in the Merger; Treatment of Stock Options" on page 59)

        Biogen stockholders will receive 1.15 shares of IDEC common stock for each share of Biogen common stock they hold. The exchange ratio is fixed and will not be adjusted for changes in the market value of the common stock of Biogen or IDEC. IDEC will not issue fractional shares in the merger. Therefore, the total number of shares of IDEC common stock that each Biogen stockholder will receive in the merger will be rounded down to the nearest whole number, and each Biogen stockholder will receive a cash payment for the remaining fraction of a share of IDEC common stock that he or she would otherwise receive, if any, based on the average closing price of IDEC common stock for the ten trading days preceding the date of the merger.

Recommendations to Stockholders

To IDEC Stockholders (see "The Proposed Merger—Reasons of IDEC's Board of Directors for the Merger" on page 29):

        IDEC's board of directors believes that the merger is advisable, fair to and in the best interests of IDEC stockholders and unanimously recommends that IDEC stockholders vote FOR the proposal to issue shares of IDEC common stock in the merger.

5



        IDEC's board of directors also unanimously recommends that IDEC stockholders vote FOR the proposals to:

To Biogen Stockholders (see "The Proposed Merger—Reasons of Biogen's Board of Directors for the Merger" on page 32):

        Biogen's board of directors believes that the merger is advisable, fair to and in the best interests of Biogen stockholders and recommends that Biogen stockholders vote FOR the proposals to:


Reasons for the Merger (see pages 29 and 32)

        The boards of directors of IDEC and Biogen believe that this merger will accelerate both companies' strategic plans and create one of the world's largest biotechnology companies, with the scientific depth, global marketing strength and financial resources to take greater advantage of new opportunities and to bring innovative new products to market more quickly.

        The boards of both companies believe that the combined company will benefit from:

        The boards of directors of both companies also recognize that there are risks associated with the merger including:

6


Opinion of IDEC's Financial Advisor (see page 41)

        On June 20, 2003, Merrill Lynch, Pierce, Fenner & Smith Incorporated, or Merrill Lynch, financial advisor to IDEC, rendered to IDEC's board of directors its oral opinion, subsequently confirmed by delivery of a written opinion dated June 20, 2003, that, as of that date, and based upon and subject to the factors and assumptions set forth in the opinion and based upon such other matters as Merrill Lynch considered relevant, the exchange ratio in the merger was fair from a financial point of view to the holders of IDEC common stock. The full text of Merrill Lynch's written opinion is included as Annex D to this joint proxy statement/prospectus. We encourage you to read carefully this opinion in its entirety for a description of the procedures followed, assumptions made, matters considered and limitations on the review undertaken. Merrill Lynch provided its opinion for the use and benefit of IDEC's board of directors and Merrill Lynch's opinion does not constitute a recommendation as to how any stockholder should vote on the merger or any matter related thereto.

Opinion of Biogen's Financial Advisor (see page 46)

        On June 20, 2003, Goldman, Sachs & Co., or Goldman Sachs, financial advisor to Biogen, delivered to Biogen's board of directors its oral opinion, subsequently confirmed by delivery of a written opinion dated June 20, 2003, that, as of that date, and based upon and subject to the considerations described in its opinion and based upon such other matters as Goldman Sachs considered relevant, the exchange ratio of 1.15 shares of IDEC common stock to be received for each share of Biogen common stock was fair to holders of Biogen common stock, from a financial point of view. The full text of Goldman Sachs' written opinion, which sets forth the assumptions made, procedures followed, matters considered, and limitations on the review undertaken in connection with the opinion is included as Annex E to this joint proxy statement/prospectus. Goldman Sachs provided its opinion for the information and assistance of Biogen's board of directors in connection with its consideration of the transaction contemplated by the merger agreement. Goldman Sachs' opinion is not a recommendation as to how any Biogen stockholder should vote with respect to the merger. We encourage you to read carefully this opinion in its entirety.

Board of Directors and Management Following the Merger (see "Interests of Certain Persons in the Merger" on page 55 and "The Merger Agreement—Other Covenants and Agreements" on page 65)

        Upon completion of the merger, William H. Rastetter, Ph.D., Chairman and Chief Executive Officer of IDEC, will serve as Executive Chairman and Chairman of the Board of Directors of the combined company and James C. Mullen, Chairman and Chief Executive Officer of Biogen, will serve as Chief Executive Officer and President of the combined company.

        IDEC and Biogen have agreed that the board of directors of the combined company will consist of 12 directors, with six directors being designated by IDEC (one of whom will be Dr. Rastetter) and six directors being designated by Biogen (one of whom will be Mr. Mullen).

Stockholder Votes Required

For IDEC Stockholders (see page 81):

        Approval of the proposals to issue shares of IDEC common stock in the merger, to approve the Stock Plan, to approve the Incentive Plan and to adjourn the special meeting, if necessary, to solicit

7



additional votes in favor of the foregoing proposals, each requires the affirmative vote of at least a majority of the voting power present at the special meeting, as long as a quorum, which is a majority of the shares entitled to vote, is present in person or by proxy at the special meeting. Approval of the proposal to amend IDEC's certificate of incorporation requires the affirmative vote of at least a majority of the outstanding shares of IDEC common stock. Approval of the proposal to issue shares of IDEC common stock in the merger is a condition to completion of the merger. Stockholder approval of the proposal to amend IDEC's certificate of incorporation is a condition to closing under the merger agreement, but may be waived by IDEC and Biogen if the proposal is not approved by IDEC stockholders and IDEC's and Biogen's boards of directors determine that the companies nonetheless should complete the merger. IDEC has sufficient shares of common stock authorized and unissued under its existing certificate of incorporation to complete the merger if stockholder approval of the amendment to the certificate of incorporation is not received; however, IDEC will be unable to change the name of the combined company to BIOGEN IDEC INC. without such amendment to the certificate of incorporation. IDEC has no immediate plans, arrangements or understandings for the issuance of shares that would be authorized by the amendment to the certificate of incorporation.

        On the record date, directors and executive officers of IDEC and their affiliates beneficially owned or had the right to vote 17,364,463 shares of IDEC common stock, representing approximately 10.5% of the shares of IDEC common stock outstanding on the record date. To IDEC's knowledge, directors and executive officers of IDEC and their affiliates intend to vote their common stock in favor of the proposals described in the preceding paragraph.

For Biogen Stockholders (see page 90):

        Approval of the merger agreement requires the affirmative vote of at least a majority of the outstanding shares of Biogen common stock. Approval of the merger agreement is a condition to the completion of the merger. Approval of any proposal to adjourn the special meeting, if necessary, to solicit additional votes in favor of the merger requires the affirmative vote of at least a majority of the votes cast by holders of Biogen common stock present at the special meeting.

        On the record date, directors and executive officers of Biogen and their affiliates beneficially owned or had the right to vote 1,606,652 shares of Biogen common stock, representing approximately 1.07% of the shares of Biogen common stock outstanding on the record date. To Biogen's knowledge, directors and executive officers of Biogen and their affiliates intend to vote their common stock in favor of the merger agreement and the proposal to adjourn the special meeting, if necessary, to solicit additional votes.

Treatment of Biogen Stock Options (see "The Merger Agreement—Consideration to be Received in the Merger; Treatment of Stock Options" on page 59)

        Each outstanding Biogen stock option will be assumed by IDEC as of the completion of the merger and, after such date, will be exercisable for shares of common stock of the combined company under the same terms and conditions of the same documents as currently govern such options. The number of shares of common stock of the combined company underlying the new option will equal the number of shares of Biogen common stock for which the corresponding Biogen option was exercisable, multiplied by 1.15 and rounded down to the nearest whole share. The per share exercise price of each new option will equal the exercise price of the corresponding Biogen option, divided by 1.15 and rounded up to the nearest one cent.

Ownership of Common Stock of the Combined Company After the Merger

        IDEC stockholders will own approximately 50.5% of the combined company and Biogen stockholders will own approximately 49.5% of the combined company, measured on a fully diluted

8



basis. As used in the calculation of IDEC stockholder and Biogen stockholder ownership, fully diluted means that the number of shares of common stock issuable upon conversion or exercise, as applicable, of outstanding convertible securities and stock options with conversion prices or exercise prices, as applicable, that are less than the market price of the applicable company's common stock minus the number of shares of stock that could be purchased with the proceeds that would be received by the companies from the exercise of such options (assuming such options actually were exercised), are deemed to be outstanding. The ownership percentages are based on the number of shares of IDEC and Biogen common stock, convertible preferred stock, convertible debt securities and stock options outstanding on May 31, 2003 and the market prices of IDEC and Biogen common stock shortly prior to the signing of the merger agreement.

Conditions to Completion of the Merger (see page 67)

        Completion of the merger depends upon the satisfaction of a number of conditions, including the following:

        Completion of the merger also depends upon the satisfaction, or waiver, of the following conditions:

Regulatory Matters Relating to the Merger (see page 36)

        Under the HSR Act, the merger cannot be completed until (i) IDEC and Biogen have made required notifications and submitted required information and materials to the U.S. Federal Trade Commission, or the FTC, and the Antitrust Division of the U.S. Department of Justice and (ii) specified waiting period requirements have expired or been terminated. IDEC and Biogen filed the required notification and report forms with these entities on July 9, 2003. On August 6, 2003, IDEC and Biogen received notice that the FTC had granted an early termination of the waiting period under the HSR Act.

9


        IDEC and Biogen each conduct business in various foreign countries, some of which require filings with regulatory authorities in connection with the proposed merger.

        IDEC and Biogen are not permitted to complete the merger unless the regulatory conditions described above are satisfied.

Material U.S. Federal Income Tax Consequences of the Merger (see page 34)

        Assuming the merger qualifies as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, or the Code, for U.S. federal income tax purposes, which IDEC and Biogen anticipate, holders of Biogen common stock whose shares of Biogen common stock are exchanged in the merger for shares of common stock of the combined company will not recognize gain or loss, except to the extent of cash, if any, received in lieu of a fractional share of common stock of the combined company.

        The discussion of material U.S. federal income tax consequences of the merger contained in this joint proxy statement/prospectus is intended to provide only a general summary and is not a complete analysis or description of all potential U.S. federal income tax consequences of the merger. The discussion does not address tax consequences that may vary with, or are contingent on, individual circumstances. In addition, it does not address any foreign, state or local taxes. IDEC and Biogen strongly urge each holder of Biogen common stock to consult his or her tax advisor to determine the particular U.S. federal, state, or local or foreign income or other tax consequences to that stockholder of the merger.

        It is a condition to the completion of the merger that IDEC receive a written opinion from Pillsbury Winthrop LLP and Biogen receive a written opinion from Skadden, Arps, Slate, Meagher and Flom LLP, in each case dated as of the effective date of the merger, both to the effect that the merger will qualify as a reorganization within the meaning of Section 368(a) of the Code. Neither IDEC nor Biogen intends to waive this closing condition; however, in the event that either IDEC or Biogen waives receipt of such written opinion from its counsel, IDEC and Biogen will file a new joint proxy statement/prospectus which includes disclosure that does not characterize the merger as a reorganization within the meaning of Section 368(a) of the Code.

Listing of Common Stock of the Combined Company (see page 60)

        The shares of common stock of the combined company to be issued in the merger will be listed on the Nasdaq National Market under the ticker symbol "BIIB."

Dissenters' Rights of Appraisal (see page 36)

        IDEC is incorporated under the laws of the State of Delaware. Under Delaware law, IDEC stockholders will not have dissenters' rights of appraisal in connection with the issuance of shares of common stock of the combined company in the merger.

        Biogen is incorporated under the laws of Massachusetts. Under Massachusetts law, Biogen stockholders have the right to dissent from the merger and to receive payment in cash for the appraised value of their shares of Biogen common stock in lieu of receiving shares of common stock of the combined company. The appraised value of their shares of Biogen common stock may be more than, less than or equal to the value of the merger consideration. Any Biogen stockholder who wishes to exercise his or her right to dissent must take the following actions:

10



        Merely voting against the merger agreement will not preserve the dissenter's rights of a Biogen stockholder. Sections 85 through 98 of the Massachusetts Business Corporation Law, or MBCL, are reprinted in their entirety and included as Annex F to this joint proxy statement/prospectus. Failure by a Biogen stockholder to precisely comply with all procedures required by the MBCL may result in the loss of dissenters' rights for that stockholder.

Interests of Certain Persons in the Merger (see page 55)

        When IDEC and Biogen stockholders consider their respective board of directors' recommendations that they vote in favor of the proposals relating to the merger, they should be aware that certain executive officers of IDEC and Biogen and the members of IDEC's and Biogen's boards of directors have interests in the merger that may be different from, or in addition to, the interests of stockholders generally. In particular, all executive officers have interests in the combined company as employees in terms of job responsibilities, working environment and compensation which are in addition to and different from their interests as stockholders. All continuing directors will have the responsibility for being directors of a new and larger company after the merger. The chief executive officers of IDEC and Biogen have new employment agreements and certain other executive officers are covered by severance agreements. IDEC's and Biogen's boards of directors were aware of and considered these potentially conflicting interests when they approved the proposals relating to the merger.

Restrictions on Alternative Transactions (see "The Merger Agreement—Covenants—No Solicitation" on page 62)

        The merger agreement contains restrictions on the ability of each of IDEC and Biogen to solicit or engage in discussions or negotiations with a third party with respect to a proposal to acquire a significant interest in the applicable company. Notwithstanding these restrictions, the merger agreement provides that under specified circumstances, if either party receives an acquisition proposal from a third party that is a superior proposal, as defined in the merger agreement, it may furnish nonpublic information to that third party and engage in negotiations regarding the superior proposal with that third party. Prior to withdrawing its recommendation in favor of the merger in light of a superior proposal, IDEC or Biogen, as applicable, must, if requested by the other party, negotiate with the other party to amend the merger agreement so that the third party proposal is no longer a superior proposal. Even if IDEC or Biogen receives a proposal from a third party that is a superior proposal, it is obligated to hold a stockholders meeting relating to the merger proposals which are the subject of this joint proxy statement/prospectus.

        Under certain circumstances, if the merger agreement is terminated by a party in connection with the existence of a superior proposal, a termination fee of up to $230 million may be payable by the party that received the superior proposal. See "The Merger Agreement—Termination Fee" on page 69.

Accounting Treatment of the Merger (see page 34)

        IDEC will account for the merger under the purchase method of accounting for business combinations under accounting principles generally accepted in the United States, which means that the assets and liabilities of Biogen will be recorded, as of the completion of the merger, at their fair values and added to those of IDEC.

11



Amendment to IDEC's Certificate of Incorporation

        At IDEC's special meeting, holders of IDEC common stock will be asked to approve an amendment to IDEC's certificate of incorporation increasing the authorized number of shares of common stock from 500,000,000 to 1,000,000,000 and changing the name of the company to BIOGEN IDEC INC., effective upon the completion of the merger. Stockholder approval of the amendment to IDEC's certificate of incorporation is a condition to closing under the merger agreement, but may be waived by IDEC and Biogen if the proposal is not approved by IDEC stockholders and IDEC's and Biogen's boards of directors determine that the companies nonetheless should complete the merger. IDEC has sufficient shares of common stock authorized and unissued under its existing certificate of incorporation to complete the merger if stockholder approval of the amendment to the certificate of incorporation is not received; however, IDEC will be unable to change the name of the combined company to BIOGEN IDEC INC. without such amendment to the certificate of incorporation. IDEC has no immediate plans, arrangements or understandings for the issuance of shares that would be authorized by the amendment to the certificate of incorporation.

Summary Selected Historical Financial Information

        IDEC and Biogen are providing the following financial information to aid you in your analysis of the financial aspects of the merger. IDEC and Biogen derived the summary selected historical consolidated balance sheets data and consolidated statements of income data as of and for the years ended December 31, 1998 through December 31, 2002 from the audited consolidated financial statements of IDEC and Biogen for those periods. IDEC and Biogen derived the statements of income data for the six months ended June 30, 2002 and 2003 and the balance sheet data as of June 30, 2003 from the unaudited consolidated financial statements of IDEC and Biogen for those periods.

        In the opinion of IDEC's management, the unaudited consolidated financial statements of IDEC have been prepared on a basis consistent with its audited consolidated financial statements and include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the financial position and results of operations for these periods. In the opinion of Biogen's management, the unaudited consolidated financial statements for Biogen have been prepared on a basis consistent with its audited consolidated financial statements and include all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the financial position and results of operations for these periods. The operating results for the six months ended June 30, 2003 are not necessarily indicative of the results that may be expected for the entire fiscal year of IDEC, Biogen or the combined company.

        The table below represents summary selected historical consolidated statements of income and consolidated balance sheets data of IDEC and Biogen, and you should read it together with the historical financial statements and related notes contained in the annual reports and other information that each company has filed with the Securities and Exchange Commission and incorporated by reference into this joint proxy statement/prospectus. See "Where You Can Find More Information" on page 118 for more information.

12



IDEC Summary Selected Historical Financial Information

IDEC Pharmaceuticals Corporation and Subsidiaries
(in thousands, except per share amounts)

Consolidated Statement of Income Data:

 
  Years Ended December 31,
  Six Months
Ended June 30,

 
  1998
  1999
  2000
  2001
  2002
  2002
  2003
Product sales   $   $   $   $   $ 13,711   $ 3,300   $ 10,642

Revenues from unconsolidated joint business arrangement

 

 

53,813

 

 

93,197

 

 

132,782

 

 

251,428

 

 

385,809

 

 

170,637

 

 

229,276
Corporate partner revenues     33,146     24,806     21,900     21,249     4,702     2,935     890
Total revenues     86,959     118,003     154,682     272,677     404,222     176,872     240,808
Total operating costs and expenses     68,055     76,586     98,823     141,540     190,346     85,185     134,522
Income before income tax provision and cumulative effect of accounting change     21,900     45,606     69,347     161,604     231,522     100,086     112,849
Income before cumulative effect of accounting change     21,478     43,157     57,408     101,659     148,090     65,056     69,966
Cumulative effect of accounting change             (9,263 )              
Net income   $ 21,478   $ 43,157   $ 48,145   $ 101,659   $ 148,090   $ 65,056   $ 69,966
   
 
 
 
 
 
 
Diluted earnings per share:                                          
  Before cumulative effect of accounting change   $ 0.15   $ 0.29   $ 0.36   $ 0.59   $ 0.85   $ 0.37   $ 0.41
  Cumulative effect of accounting change             (0.06 )              
   
 
 
 
 
 
 
  Diluted earnings per share   $ 0.15   $ 0.29   $ 0.30   $ 0.59   $ 0.85   $ 0.37   $ 0.41
   
 
 
 
 
 
 
Shares used in calculation of diluted earnings per share     140,262     151,287     159,310     181,481     179,634     180,965     178,066

Consolidated Balance Sheet Data:

 
  December 31,
   
 
  June 30,
2003

 
  1998
  1999
  2000
  2001
  2002
Cash, cash equivalents and securities available-for sale   $ 73,502   $ 246,826   $ 750,526   $ 866,607   $ 1,447,865   $ 1,450,693
Due from related parties     17,473     23,654     41,753     67,651     100,288     103,729
Total assets     125,273     307,074     856,406     1,141,216     2,059,689     2,158,577
Notes payable, less current portion     2,095     122,910     128,888     135,977     866,205     876,641
Total stockholders' equity     106,428     159,978     694,619     956,479     1,109,690     1,200,131

13


Biogen Summary Selected Historical Financial Information

Biogen, Inc. and Subsidiaries
(in thousands, except per share amounts)

Consolidated Statement of Income Data:

 
  Years Ended December 31,
  Six Months
Ended June 30,

 
  1998
  1999
  2000
  2001
  2002
  2002
  2003
Product revenues   $ 394,863   $ 620,636   $ 760,292   $ 970,546   $ 1,034,357   $ 516,527   $ 571,326
Royalty revenues     162,724     173,799     165,373     71,766     114,007     41,079     71,883
Contract revenues                             3,136
  Total revenues     557,587     794,435     925,665     1,042,312     1,148,364     557,606     646,345
Total costs and expenses     366,948     478,184     597,309     682,114     851,727     412,299     484,475
Income before income taxes     210,193     329,016     487,105     389,497     276,595     160,439     168,617
Net income     138,697     220,450     333,577     272,683     199,148     115,516     121,404
Diluted earnings per share   $ 0.90   $ 1.40   $ 2.16   $ 1.78   $ 1.31   $ 0.76   $ 0.80
Shares used in calculating diluted earnings per share     154,270     157,788     154,602     152,916     151,930     152,118     151,467

Consolidated Balance Sheet Data:

 
  December 31,
   
 
  June 30,
2003

 
  1998
  1999
  2000
  2001
  2002
Cash, cash equivalents and short-term marketable securities   $ 516,914   $ 654,539   $ 682,412   $ 798,107   $ 867,109   $ 857,895
Total assets     924,715     1,277,973     1,431,856     1,721,046     2,006,988     2,038,348
Long-term debt, less current portion     56,960     52,073     47,185     42,297     37,410     34,966
Total stockholders' equity     718,613     979,530     1,106,402     1,348,832     1,595,421     1,710,142
Dividends—none                                    

Summary Selected Unaudited Pro Forma Combined Financial Information

        The merger will be accounted for under the purchase method of accounting, which means that the assets and liabilities of Biogen will be recorded, as of completion of the merger, at their fair values and added to those of IDEC. For a more detailed description of purchase accounting, see "The Proposed Merger—Accounting Treatment of the Merger" on page 34.

        We have presented below selected unaudited pro forma combined financial information that is intended to provide you with a better picture of what the businesses might have looked like had IDEC and Biogen actually been combined. The unaudited pro forma combined balance sheet combines the historical consolidated balance sheets of IDEC and Biogen as of June 30, 2003, giving effect to the merger as if it occurred on June 30, 2003. The unaudited pro forma combined statements of income combine the historical consolidated statements of income of IDEC and Biogen for the year ended December 31, 2002 and the six months ended June 30, 2003, giving effect to the merger as if it occurred on January 1, 2002. The combined financial information would have been different, perhaps materially, had the companies actually been combined as of that date. The selected unaudited pro forma combined financial information does not reflect the effect of asset dispositions, if any, or cost savings that may result from the merger or any non-recurring charges directly attributable to the merger, such as in-process research and development and amortization of the inventory step-up. You

14



should not rely on the selected unaudited pro forma combined financial information as being indicative of the historical results that would have occurred had the companies been combined or the future results that may be achieved after the merger. The following selected unaudited pro forma combined financial information has been derived from, and should be read in conjunction with, the Unaudited Pro Forma Condensed Combined Financial Statements and related notes included in this joint proxy statement/prospectus.

BIOGEN IDEC INC. and Subsidiaries
(in thousands, except per share amounts)

Pro Forma Combined Statement of Income Data:

 
  Year Ended
December 31, 2002

  Six Months Ended
June 30, 2003

Product sales   $ 1,048,068   $ 581,968
Royalties     114,007     71,883
Revenues from unconsolidated joint business     385,809     229,276
Corporate partner revenues     4,702     890
Total revenues     1,552,586     884,017
Income before income taxes     265,342     159,026
Net income (1)     174,549     103,974
Diluted earnings per share   $ 0.51   $ 0.30
Shares used in calculation of diluted earnings per share     354,354     352,253

Pro Forma Combined Balance Sheet Data:

 
  June 30, 2003
Cash, cash equivalents and marketable securities   $2,308,588
Due from related parties   103,729
Total assets   9,648,493
Notes payable, less current portion   911,607
Total stockholders' equity   7,112,599
Dividends  

(1)
Included in net income are several merger-related charges, such as amortization of intangible assets and deferred compensation.

15


Comparative Per Share Information

        The following table sets forth selected historical share, net income per share and book value per share information of IDEC and Biogen and unaudited pro forma combined share, net income per share and book value per share information after giving effect to the merger between IDEC and Biogen, assuming that 1.15 shares of IDEC common stock had been issued in exchange for each outstanding share of Biogen common stock. The pro forma equivalent information of Biogen was derived using the historical share, net income per share and book value per share information assuming that 1.15 shares of IDEC common stock had been issued in exchange for each outstanding share of Biogen common stock. You should read this information in conjunction with the selected historical financial information included elsewhere in this document and the historical financial statements of IDEC and Biogen and related notes that are incorporated in this document by reference. The unaudited pro forma combined share, net income per share and book value per share information is derived from, and should be read in conjunction with, the Unaudited Pro Forma Condensed Combined Financial Statements and related notes included in this joint proxy statement/prospectus. The historical share, net income per share and book value per share information is derived from unaudited consolidated financial statements of IDEC and Biogen as of and for the six months ended June 30, 2003. The historical share and net income per share information is derived from audited consolidated financial statements of IDEC and Biogen as of and for the year ended December 31, 2002. The amounts set forth below are in thousands, except per share amounts.

 
  IDEC
  Biogen
 
  Historical
  Pro Forma
Combined

  Historical
  Pro Forma
Equivalent

 
  Year Ended December 31, 2002

Basic earnings per share   $ 0.97   $ 0.54   $ 1.33   $ 1.16
Diluted earnings per share   $ 0.85   $ 0.51   $ 1.31   $ 1.14
Shares used in calculating earnings per share:                        
  Basic     153,086     324,824     149,337     171,738
  Diluted     179,634     354,354     151,930     174,720
 
  IDEC
  Biogen
 
  Historical
  Pro Forma
Combined

  Historical
  Pro Forma
Equivalent

 
  Six Months Ended June 30, 2003

Basic earnings per share   $ 0.45   $ 0.32   $ 0.81   $ 0.71
Diluted earnings per share   $ 0.41   $ 0.30   $ 0.80   $ 0.70
Book value per share   $ 7.72   $ 21.73   $ 11.44   $ 9.95
Dividends                
Shares used in calculating per share information:                        
  Basic     154,924     326,874     149,552     171,985
  Diluted     178,066     352,253     151,467     174,187
  Book value     155,419     327,307     149,468     171,888

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Comparative Per Share Market Price and Dividend Information

        IDEC common stock and Biogen common stock are each listed on the Nasdaq National Market. IDEC's ticker symbol is "IDPH" and Biogen's ticker symbol is "BGEN." The following table sets forth, for the calendar quarters indicated, based on published financial sources, the high and low bid prices per share of IDEC common stock and Biogen common stock as reported on the Nasdaq National Market. Neither IDEC nor Biogen has paid any cash dividends on its common stock to date.

 
  IDEC Common Stock*
  Biogen Common Stock
 
  High
  Low
  High
  Low
2000                        
  First Quarter   $ 57.67   $ 25.00   $ 129.00   $ 67.88
  Second Quarter     42.88     18.54     74.88     48.50
  Third Quarter     60.04     36.75     75.62     52.62
  Fourth Quarter     77.65     50.38     64.62     47.12

2001

 

 

 

 

 

 

 

 

 

 

 

 
  First Quarter   $ 67.56   $ 32.63   $ 75.00   $ 50.25
  Second Quarter     75.00     33.50     67.50     51.75
  Third Quarter     69.60     44.78     62.80     48.29
  Fourth Quarter     73.32     47.07     61.15     52.10

2002

 

 

 

 

 

 

 

 

 

 

 

 
  First Quarter   $ 71.40   $ 50.09   $ 58.30   $ 48.02
  Second Quarter     66.84     30.75     51.31     38.36
  Third Quarter     47.67     20.76     41.43     28.43
  Fourth Quarter     47.41     31.17     46.81     28.50

2003

 

 

 

 

 

 

 

 

 

 

 

 
  First Quarter   $ 37.14   $ 27.80   $ 43.44   $ 29.31
  Second Quarter     42.05     30.01     50.52     29.95
  Third Quarter (through September 26, 2003)     38.94     31.85     43.87     36.12

*
Adjusted for a 3-for-1 stock split by way of a stock dividend in January 2001.

Recent Closing Prices

        The following table sets forth the high and low bid prices per share of IDEC common stock and Biogen common stock as reported on the Nasdaq National Market on June 20, 2003, the last full trading day prior to the announcement of the signing of the merger agreement, and                        , 2003, the most recent practicable date prior to the mailing of this joint proxy statement/prospectus to IDEC and Biogen stockholders. The equivalent price per share is equal to the high and low bid prices of a share of IDEC common stock on that date multiplied by 1.15, the exchange ratio in the merger.

 
   
   
  Biogen Common Stock
  Equivalent Price Per Share
 
 
  IDEC Common Stock
 
Date

 
  High
  Low
  High
  Low
  High
  Low
 
June 20, 2003   $ 39.88   $ 38.08   $ 44.88   $ 43.20   $ 45.86   $ 43.79  
            , 2003   [          ] [          ] [          ] [          ] [          ] [          ]

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RISKS RELATING TO THE MERGER

        In addition to the other information included in this joint proxy statement/prospectus, including the matters addressed in "Cautionary Statement Concerning Forward-Looking Statements," you should consider carefully the following risks before voting at your special meeting. Further, you should read and consider the risks and uncertainties associated with each of the businesses of IDEC and Biogen because these risks also will affect the combined company. These risks and uncertainties can be found in the sections entitled "Item 1—Business" and "Item 7A—Quantitative and Qualitative Disclosures About Market Risk" of IDEC's annual report on Form 10-K for the year ended December 31, 2002 and the portion of Management's Discussion and Analysis of Financial Condition and Results of Operations entitled "Forward-Looking Information and Risk Factors That May Affect Future Results" of IDEC's Quarterly Report on Form 10-Q for the three and six months ended June 30, 2003, and "Item 1—Business" and the portion of the Management's Discussion and Analysis of Financial Condition and Results of Operations entitled "Outlook" contained in Exhibit 13 to Biogen's annual report on Form 10-K for the year ended December 31, 2002 and the portion of the Management's Discussion and Analysis of Financial Condition and Results of Operations entitled "Outlook" contained in Biogen's Quarterly Report on Form 10-Q for the three and six months ended June 30, 2003, which are filed with the Securities and Exchange Commission and incorporated by reference in this joint proxy statement/prospectus. Although we believe that the risks described below and in each company's Form 10-K and Form 10-Qs represent all material risks currently applicable to the companies, additional risks and uncertainties not presently known to IDEC and Biogen or that currently are not believed to be important to IDEC and Biogen also may affect adversely the merger and the combined company following the merger.

The value of common stock of the combined company to be received by Biogen stockholders in the merger will fluctuate

        The number of shares of common stock of the combined company issued in the merger for each share of Biogen common stock is fixed. The market price of IDEC common stock and Biogen common stock when the merger is completed may vary from their market prices at the date of this joint proxy statement/prospectus and at the date of the special meetings of IDEC and Biogen. For example, during the 12-month period ended on                        , 2003, the most recent practical date prior to the mailing of this joint proxy statement/prospectus, the low and high bid prices for IDEC common stock ranged from $    to $    , and the low and high bid prices for Biogen common stock ranged from $    to $    . See "Comparative Per Share Market Price and Dividend Information" on page 17 for more detailed share price information.

        Future variations may be the result of various factors including:

        The merger consideration will not be adjusted for any increase or decrease in the market price of IDEC common stock or Biogen common stock. If the market value of IDEC common stock declines prior to the time the merger is completed, the value of the merger consideration to be received by Biogen stockholders will decline. In addition, the merger may not be completed until a significant period of time has passed after IDEC's and Biogen's special meetings. At the time of their special

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meetings, IDEC and Biogen stockholders will not know the exact value of the shares of common stock of the combined company that will be issued in connection with the merger.

        Stockholders of IDEC and Biogen are urged to obtain current market quotations for IDEC common stock and Biogen common stock before voting their shares at the special meetings.

We may be unable to integrate our operations successfully and realize all of the anticipated benefits of the merger

        The merger involves the integration of two companies that previously have operated independently, which is a complex, costly and time-consuming process. The difficulties of combining the companies' operations include, among other things:

        The process of integrating operations could cause an interruption of, or loss of momentum in, the activities of the combined company's business and the loss of key personnel. The diversion of management's attention and any delays or difficulties encountered in connection with the merger and the integration of the two companies' operations could harm the business, results of operations, financial condition or prospects of the combined company after the merger.

        Among the factors considered by IDEC's and Biogen's boards of directors in connection with their approvals of the merger agreement were the opportunities for cost savings from operating efficiencies that could result from the merger. There can be no assurance that these savings will be realized within the time periods contemplated or that they will be realized at all. There also can be no assurance that the integration of IDEC and Biogen will result in the realization of the full benefits anticipated by the companies to result from the merger.

Obtaining required approvals and satisfying closing conditions may delay or prevent completion of the merger

        The merger is subject to review by, and IDEC and Biogen are required to make pre-merger notification filings with, the Antitrust Division of the U.S. Department of Justice and the FTC under the HSR Act. IDEC and Biogen have been notified that the FTC granted early termination of the waiting period under the HSR Act. In addition, other filings with, notifications to and authorizations and approvals of, governmental agencies in foreign countries with respect to the transactions contemplated by the merger agreement, relating primarily to antitrust issues, must be made and received prior to the completion of the merger. Completion of the merger is conditioned upon the receipt of all material governmental authorizations, consents, orders and approvals. IDEC and Biogen are seeking to obtain all required regulatory approvals prior to the special meetings; however, no assurances can be given that all required regulatory approvals will be obtained or that restrictions on the combined company will not be sought by governmental agencies as a condition to obtaining those approvals. There can be no assurance that any operating restrictions imposed would not affect adversely the value of the combined company.

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The merger agreement requires payment of a termination fee of up to $230 million in certain instances, which could deter a third party from proposing an alternative transaction to the merger

        Under the terms of the merger agreement, IDEC, Biogen or both may be required to pay to the other a termination fee of up to $230 million if the merger agreement is terminated under certain circumstances. With some exceptions, these circumstances include, among others, (i) situations in which one party has terminated the merger agreement as a result of the withdrawal, modification or change in the recommendation of the other party's board of directors with respect to the merger and (ii) certain other terminations if, prior to the termination, a third party announced an offer or indicated an interest in a transaction involving a party and/or, within 12 months of such termination, that party enters into a transaction involving the sale of that party, or the merger of that party, with another company. The effect of this termination fee may discourage competing bidders from presenting proposals to acquire or merge with IDEC or Biogen that, from a financial perspective, might be superior to the terms of the merger. For a more complete description of the termination rights of each party and the termination fees payable under the merger agreement, see "The Merger Agreement—Termination of Merger Agreement" and "—Termination Fee" on pages 67 and 69.

IDEC is a party to litigation concerning certain of its intellectual property

        On September 10, 2001, IDEC filed a lawsuit in the federal district court in the Southern District of California against Corixa Corporation, formerly Coulter Pharmaceuticals, Inc., or Corixa, and the University of Michigan seeking declaratory judgment that Zevalin and its use in the treatment of various B-cell non-Hodgkin's lymphomas, or NHLs, does not infringe certain issued U.S. patents of Corixa regarding products and processes relating to radioimmunotherapy, and a further declaration that Corixa's patents are invalid. On September 12, 2001, Corixa, GlaxoSmithKline, plc (Corixa's marketing partner), or Glaxo, and the University of Michigan filed a lawsuit in the federal district court in the District of Delaware against IDEC for patent infringement. The lawsuit claims that IDEC infringes the patents that are the subject of IDEC's declaratory judgment action against Corixa. The lawsuit seeks damages and to permanently enjoin IDEC from commercializing Zevalin. This action has been transferred to the federal district court for the Southern District of California and has been consolidated with IDEC's lawsuit. IDEC cannot predict or determine the outcome of this litigation. An unfavorable outcome in this matter could limit IDEC's ability to sell Zevalin, could require IDEC to pay damages for past sales of Zevalin and could require that IDEC obtain a license from third parties to sell Zevalin. Any such unfavorable outcome could harm IDEC's business and IDEC's results of operations.

        On September 10, 2001, IDEC filed a second lawsuit in the federal district court in the Southern District of California against Glaxo seeking declaratory judgment that IDEC's manufacture of Zevalin does not infringe certain issued U.S. patents of Glaxo relating to cell culture media, and a further declaration that Glaxo's patents are invalid. In November 2002, IDEC settled the lawsuit and received a non-exclusive license under the Glaxo patents in exchange for payment of a lump-sum license fee.

        On February 25, 2003, IDEC filed an additional complaint against Corixa and Glaxo in the federal district court in the Southern District of California. The complaint alleges that Corixa's and Glaxo's conduct since the recommendation for approval of Bexxar® (tositumomab, iodine I-131 tositumomab) by the FDA's Oncologic Drugs Advisory Committee constitutes, or will constitute, infringement of a patent recently issued to IDEC. The complaint seeks available remedies under patent laws, including monetary damages and permanent injunctive relief.

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CAUTIONARY STATEMENT CONCERNING

FORWARD-LOOKING STATEMENTS

        This joint proxy statement/prospectus and the other documents incorporated by reference into this joint proxy statement/prospectus contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements in this joint proxy statement/prospectus and the other documents incorporated into this joint proxy statement/prospectus by reference that are not historical facts are identified as "forward-looking statements" for the purpose of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, or the Exchange Act, and Section 27A of the Securities Act of 1933, or the Securities Act. Forward-looking statements include projections, assumptions or information concerning possible or assumed future actions, events or results of operations of IDEC, Biogen or the combined company. These statements involve estimates and assumptions based on the judgment of each company's management. A number of risks and uncertainties may cause actual results to differ materially from those suggested by the forward-looking statements. Forward-looking statements include the information in this joint proxy statement/prospectus and the other documents incorporated by reference into this joint proxy statement/prospectus regarding:

        These statements may be preceded by, followed by or include the words "believes," "expects," "anticipates," "intends," "plans," "estimates" or similar expressions. We claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 for all forward-looking statements. We do not undertake any obligation to publicly update any forward-looking statements to reflect subsequent events or circumstances.

        Forward-looking statements are not guarantees of performance. You should understand that the following important factors, in addition to those discussed in "Risks Relating to the Merger" above and elsewhere in this document, and in the documents which are incorporated into this joint proxy statement/prospectus by reference, could affect the future results of IDEC, Biogen and the combined

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company after the completion of the merger and could cause those results or other outcomes to differ materially from those expressed or implied in our forward-looking statements:

Competitive Factors

Operating Factors

Economic and Industry Conditions

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THE PROPOSED MERGER

        The following is a description of the material aspects of the proposed merger. The following discussion is a summary only and may not contain all of the information that is important to you. We encourage you to read carefully this entire joint proxy statement/prospectus, including the merger agreement included as Annex A to this joint proxy statement/prospectus, for a more complete understanding of the merger.

General

        Each of IDEC's and Biogen's board of directors unanimously has approved the merger agreement. At the effective time of the merger, Bridges Merger Corporation will be merged with and into Biogen, and Biogen will become a wholly owned subsidiary of IDEC. Biogen stockholders will receive 1.15 shares of IDEC common stock for each share of Biogen common stock they own.

        IDEC's board of directors is using this joint proxy statement/prospectus to solicit proxies from the holders of IDEC common stock for use at IDEC's special meeting to be held to approve the issuance of IDEC common stock in the merger and related transactions and as a prospectus relating to the issuance of IDEC common stock to Biogen stockholders in connection with the merger. Biogen's board of directors is using this document to solicit proxies from the holders of Biogen common stock for use at Biogen's special meeting to be held to approve the merger agreement and related transactions.

IDEC's Proposals

        At IDEC's special meeting, holders of IDEC common stock are being asked to vote on:

        THE MERGER WILL NOT BE COMPLETED UNLESS IDEC STOCKHOLDERS APPROVE THE ISSUANCE OF THE SHARES OF IDEC COMMON STOCK IN THE MERGER.

Biogen's Proposals

        At Biogen's special meeting, holders of Biogen common stock will be asked to vote on:

        THE MERGER WILL NOT BE COMPLETED UNLESS BIOGEN STOCKHOLDERS APPROVE THE MERGER AGREEMENT.

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Background of the Merger

        The managements of IDEC and Biogen continually review their options for achieving long-term strategic goals and enhancing stockholder value.

        In the fall of 2002, William H. Rastetter, Ph.D., Chairman and Chief Executive Officer of IDEC, and James C. Mullen, Chairman and Chief Executive Officer of Biogen, discussed the possibility of exploring a potential strategic collaboration involving Biogen and IDEC. In particular, Mr. Mullen raised the possibility of a collaboration around several of Biogen's oncology product candidates. The discussions were followed by substantive negotiations regarding such a strategic collaboration that resulted in the signing of a collaboration agreement on January 30, 2003.

        During the course of the collaboration negotiations, Dr. Rastetter asked IDEC's financial advisor, Merrill Lynch, to assist IDEC in evaluating whether a possible business combination with Biogen or one or more other entities would enhance stockholder value. This analysis did not lead to discussions regarding a potential business combination with any party other than Biogen.

        During the month of December 2002, Dr. Rastetter and Mr. Mullen met to discuss the progress of the collaboration negotiations. During this meeting, they also discussed the complementary nature of their companies' products and research and development efforts and had a very preliminary discussion regarding the possibility of a business combination between IDEC and Biogen. Exploratory discussions continued in the context of discussions on the strategic oncology collaboration during several telephone conversations between Dr. Rastetter and Mr. Mullen during the month of December 2002.

        At its regularly scheduled meeting on December 18, 2002, IDEC's board of directors was presented a preliminary analysis of a business combination with Biogen prepared by Merrill Lynch. The presentation included background information about Biogen and strategic rationale for a combination with Biogen. IDEC's board of directors agreed that members of IDEC's executive management should expand discussions with Biogen. IDEC also began consulting with its legal and financial advisors about a possible business combination with Biogen. Consultations by IDEC with these advisors continued throughout the remaining business combination discussions.

        On January 8 and January 9, 2003, Dr. Rastetter and Mr. Mullen, together with Connie Matsui, Senior Vice President, Planning and Resource Development of IDEC, and Craig E. Schneier, Ph.D., Executive Vice President of Human Resources of Biogen, met to exchange information relating to organizational structure. Following these meetings, Ms. Matsui and Dr. Schneier had several telephone conversations to exchange preliminary ideas about the possible organizational structure of a combined company. On January 16, 2003, Dr. Rastetter, Mr. Mullen and Peter Kellogg, Executive Vice President, Finance and Chief Financial Officer of Biogen, had a telephone conversation during which they continued exploratory discussions concerning a potential business combination.

        On January 22, 2003, Dr. Rastetter and Mr. Mullen had an extended telephone conversation during which they continued exploratory discussions concerning the strategic rationale for a potential business combination of IDEC and Biogen. They agreed to establish teams of senior managers, financial advisors and outside legal advisors to determine if the two companies' business strategies could be appropriately aligned, whether a business combination would be in the best interests of the companies' respective stockholders and whether a preliminary agreement could be reached on basic issues relating to the legal and managerial structure of a business combination.

        On January 24, 2003, IDEC's board of directors held a special meeting at which it considered and approved the product collaboration with Biogen. At that meeting, Dr. Rastetter updated the board of directors on various considerations in connection with a possible business combination with Biogen.

        During a special telephonic meeting of Biogen's board of directors on January 27, 2003, Mr. Mullen advised the board of his initial exploratory discussions with Dr. Rastetter.

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        On January 30, 2003, IDEC and Biogen announced that an agreement had been reached relating to the oncology product collaboration.

        On January 31, 2003, Biogen retained Goldman Sachs as financial advisor in connection with a possible strategic transaction between Biogen and IDEC. At a regularly scheduled meeting of Biogen's board of directors on February 7, 2003, there was a general discussion of the strategic rationale for a possible business combination between IDEC and Biogen.

        A non-disclosure agreement was signed by the parties on February 11, 2003. Following execution of the non-disclosure agreement, representatives of IDEC, Biogen and outside legal, accounting and financial advisors met on February 11 and February 12, 2003. At these meetings, both companies presented information relating to their products, manufacturing operations and finances. There were also discussions concerning alternative merger structures, including merging a subsidiary of Biogen into IDEC, merging Biogen into a subsidiary of IDEC and merging a subsidiary of IDEC into Biogen. Although no final decision was reached, the participants generally agreed that a merger of a new subsidiary of IDEC into Biogen would best preserve the important contractual agreements of the parties.

        On February 19, 2003, at its regularly scheduled meeting, IDEC's board of directors met with representatives of Pillsbury Winthrop LLP, special counsel to IDEC, and Merrill Lynch to discuss a potential business combination with Biogen. At the meeting, representatives of Merrill Lynch gave a presentation to IDEC's board of directors discussing possible financial and market implications of a transaction. In addition, representatives of Pillsbury Winthrop and John M. Dunn, Senior Vice President and General Counsel of IDEC, discussed legal and practical considerations of a business combination with Biogen. At the conclusion of the February 19, 2003 meeting, IDEC's board of directors authorized IDEC's management to continue discussions with Biogen regarding a possible transaction.

        During the last two weeks of February 2003, Dr. Rastetter and Mr. Mullen had several phone conversations to discuss a potential business combination, including discussions regarding management organization and structure. Based on numerous factors, including the parties' market capitalization, present and future revenue and profit streams, existing and pipeline products and a desire for equal treatment of both parties in terms of board and management structure, it was agreed in principle that, if there were a business combination, it should be structured as a merger of equals. The main implications of structuring the transaction as a merger of equals that were discussed were that there would be no significant premium paid by either company for the stock of the other, that the board of directors of the merged company initially would be composed of an equal number of IDEC and Biogen directors and that the senior management team of the merged company would contain executives from each company.

        At a special meeting of Biogen's board of directors on February 26, 2003, which was attended by representatives of Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to Biogen, and representatives of Goldman Sachs, there was a lengthy discussion regarding a possible business combination with IDEC. Representatives of Goldman Sachs reviewed the businesses of IDEC and Biogen and certain potential strategic and financial benefits of a combination. The board discussed the opportunity to create increased stockholder value through a combination with IDEC. Possible terms of a potential transaction also were discussed, including (i) structuring the transaction as a merger of equals, (ii) merging Biogen into a subsidiary of IDEC with Biogen stockholders receiving IDEC common stock, (iii) the board of directors of the combined company would initially be composed of an equal number of IDEC and Biogen directors, (iv) appointing Dr. Rastetter as the Executive Chairman and Mr. Mullen as the Chief Executive Officer of the combined company and (v) locating the headquarters of the combined company at Biogen's current facility in Cambridge, Massachusetts. After full discussion, the board did not raise any objections to these terms. The board also discussed the risks

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relating to the difficulty of integrating the two companies. At the conclusion of the meeting, the board agreed that the strategic rationale for the transaction was sound and authorized Mr. Mullen to move forward in discussions and negotiations.

        IDEC's management and its financial and legal advisors met on March 5, 2003 to discuss due diligence topics and process, financial terms and possible structures of the potential business combination. Between March 17 and March 20, 2003, members of IDEC's and Biogen's executive managements met with certain members of the other company's board of directors. The meetings focused on the strategic rationale for a potential business combination and the ramifications of structuring the transaction as a merger of equals. At the same time, members of IDEC's executive management toured Biogen's manufacturing facilities and discussed manufacturing, financial and other integration issues with members of Biogen's executive management.

        During a special telephonic meeting of Biogen's board of directors on March 26, 2003, Mr. Mullen updated the directors on discussions with representatives of IDEC. There was discussion regarding leadership and management issues, the due diligence that needed to be completed and the many issues that needed to be successfully resolved before management could make any recommendation to the board.

        Each company made available to the other party data rooms containing legal and business due diligence materials beginning on April 2, 2003. From that time on, members of IDEC's and Biogen's senior managements and their internal and external legal, accounting and financial advisors conducted due diligence reviews from an operational, financial, accounting, tax and legal perspective, including participating in discussions with members of the other party's management. From April 2 through April 9, 2003, representatives of the principal business units of the two companies met as part of the companies' ongoing due diligence efforts.

        On April 10, 2003, Dr. Rastetter and Mr. Mullen met with Biogen's board of directors to discuss the potential business combination and the vision for a combined company. In a conference call with IDEC's board of directors on April 11, 2003, IDEC's management reviewed the status and results of IDEC's due diligence of Biogen to date and the results of the April 10, 2003 meeting. The April 11, 2003 conference call was followed by another call with IDEC's board of directors on May 9, 2003 to update it further on the status of due diligence and negotiations of the proposed business combination.

        At a regularly scheduled meeting of Biogen's board of directors on April 11, 2003, attended by representatives of Skadden Arps and Goldman Sachs, there were extensive discussions regarding a possible business combination and its potential benefits. The discussions included a review of the previously discussed strategic rationale for the transaction, a presentation relating to IDEC's key products and manufacturing capabilities and a review of financial information relating to IDEC and Biogen. There was also a continued discussion of the risks relating to integrating the operations of the two companies. A summary of due diligence activities and results also was presented. Representatives of Skadden Arps discussed the fiduciary duties of the board of directors in the context of a proposed business combination with IDEC. The board directed management to continue due diligence activities and negotiations with IDEC senior management.

        During the remainder of April and continuing through May, the parties and their legal and financial advisors continued their due diligence and engaged in negotiations with respect to a merger agreement. Dr. Rastetter and Mr. Mullen had numerous phone conversations relating to various aspects of the potential business combination. There was also a meeting in San Diego on May 8, 2003, among Dr. Rastetter, Mr. Mullen, William R. Rohn, President and Chief Operating Officer of IDEC, and Edward M. Rodriguez, Vice President, Finance and Controller of IDEC, during which discussions focused on organizational matters and possible synergies that could result from a business combination.

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        At its regularly scheduled meeting on May 19, 2003, IDEC's board of directors reviewed the terms of the proposed business combination with representatives of Pillsbury Winthrop, including, among other things, the following terms of a draft of the merger agreement: the representations and warranties, covenants, post-closing board composition, provisions with respect to alternative transactions, termination provisions and termination fee provisions. Representatives of Pillsbury Winthrop and Mr. Dunn also discussed the board's fiduciary duties under the circumstances. In addition, members of IDEC's executive management and representatives of Merrill Lynch reviewed with the board the financial aspects of, and strategic rationale for, the proposed business combination.

        From May 28 through May 30, 2003, representatives from each company met to discuss financial and functional synergies between the two companies and matters relating to integration of the two companies if a business combination occurred.

        Biogen's board of directors held a regularly scheduled meeting on June 5, 2003, which was attended by representatives of Skadden Arps and Goldman Sachs. The board was updated on the status of due diligence and of the merger agreement negotiations, and representatives of Goldman Sachs reviewed with the board the financial aspects of, and strategic rationale for, the proposed business combination. Mr. Kellogg gave a financial overview of the proposed business combination, including a discussion of potential synergies. Thomas J. Bucknum, Executive Vice President and General Counsel of Biogen, gave an overview of the then current draft of the merger agreement. In addition, Mr. Mullen reviewed management's ongoing discussions with Elan Pharma International Limited, or Elan, Biogen's collaboration partner in the development of ANTEGREN® (natalizumab), regarding obtaining a waiver from Elan with respect to the change of control and related buy-sell provisions contained in Biogen's agreement with Elan. At this meeting, management was directed to continue discussions and negotiations with IDEC, with a view to finalizing the merger agreement, and with Elan, with a view to obtaining the waiver.

        During the next two weeks, the parties negotiated final terms of a merger agreement. Although the parties had previously agreed in principle that any transaction would be effected as a merger of equals, implying an exchange ratio which should result in an approximately equal division of the equity of the combined company between the stockholders of the two companies, the final share exchange ratio had not been agreed to by the parties. During the week of June 16, 2003, discussions continued between Dr. Rastetter and Mr. Mullen and the two companies' respective financial advisors relating to the exchange ratio. A principal implication of the parties' decision to structure the transaction as a merger-of-equals was that the exchange ratio would be established at a level such that each share of Biogen stock would be exchanged for a fixed number of shares of IDEC's stock whose aggregate price approximated the price of a share of Biogen stock. Based on an examination of recent stock prices, the parties, on June 19, 2003, reached a preliminary understanding that an exchange ratio of 1.15 would best implement the transaction as a merger of equals. The application of the 1.15 exchange ratio resulted in an ownership structure for the combined company in which IDEC stockholders would own 50.5% of the common stock of the combined company and Biogen stockholders would own 49.5% of the common stock of the combined company, measured on a fully diluted basis.

        On June 19, 2003, the compensation committee of IDEC's board of directors met and considered and adopted the severance arrangements that IDEC's management recommended be approved in connection with the proposed transaction, as well as the proposed employment arrangements between Dr. Rastetter and IDEC and Mr. Mullen and IDEC, in each case, to become effective upon completion of the merger. The severance arrangements were adopted to provide severance protection for all IDEC executives at and above the level of vice president upon a termination of their employment by IDEC without cause. In general, the severance arrangements provide that these individuals will be entitled to severance upon a termination of their employment without cause following a change of control of the company, as defined in the plan. The employment agreements with Dr. Rastetter and Mr. Mullen were adopted as a means of retaining the services of, and structuring the positions and duties of, each of

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Dr. Rastetter and Mr. Mullen. The proposed employment agreements are based upon Mr. Mullen's existing employment agreement with Biogen, as Dr. Rastetter was not a party to an employment agreement with IDEC prior to the signing of the merger agreement. The substantive terms of Mr. Mullen's proposed agreement are identical to those of his existing employment agreement with Biogen, except for the following provisions: (i) his position is changed from President, Chief Executive Officer and Chairman of the Board of Biogen to Chief Executive Officer and member of the IDEC board of directors; (ii) in the new agreement, Mr. Mullen reports to the combined company's Chairman of the Board of Directors rather than to the board of directors as a whole; (iii) payments due from the company upon Mr. Mullen's termination of employment by the company without cause or by Mr. Mullen for good reason increase from two times annual base salary and target bonus to three times such amounts and his employee benefits continuation increased from 24 months to 36 months following such a termination; and (iv) upon such a termination, the new agreement vests all outstanding stock options held by Mr. Mullen.

        On June 20, 2003, IDEC's board of directors held a special meeting to consider adoption of the merger agreement and approval of the transactions contemplated by the merger agreement. Prior to the meeting, IDEC's board of directors was provided with materials, including substantially final drafts of the merger agreement and related documents. At this meeting:

Following detailed discussion, IDEC's board of directors unanimously adopted the merger agreement and unanimously approved the transactions contemplated thereby, including the merger, the issuance of shares to Biogen stockholders and the amendment to IDEC's certificate of incorporation. IDEC's board of directors also unanimously approved the severance and retention arrangements and the employment agreements with Dr. Rastetter and Mr. Mullen that had been approved by the compensation committee of IDEC's board of directors on June 19, 2003. The board also unanimously determined to recommend that IDEC stockholders vote in favor of the issuance of shares in connection with the merger, the amendment of the certificate of incorporation and the other proposals relating to the merger. By action by unanimous written consent on July 10, 2003, IDEC's board of directors subsequently approved the Stock Plan and the Incentive Plan and resolved to recommend that IDEC stockholders vote in favor of the approval of the plans at the special meeting.

        On June 20, 2003, Biogen's board of directors held a special meeting to consider approval of the merger agreement. Prior to the meeting, Biogen's board of directors was provided with a copy of the merger agreement, in substantially final form, and a summary of the transaction.

        At the June 20th Biogen board meeting:

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Following a discussion of the proposed transaction, Biogen's board of directors unanimously determined that the merger and terms of the merger agreement were advisable, fair to and in the best interests of Biogen and its stockholders, unanimously approved the merger agreement and determined to recommend to Biogen stockholders that they approve the merger agreement.

        Following the approvals of the merger and related transactions by their respective boards of directors, IDEC and Biogen executed the merger agreement on June 20, 2003. Prior to the opening of trading on the Nasdaq National Market on June 23, 2003, IDEC and Biogen issued a joint press release announcing the execution of the merger agreement.

        IDEC did not engage in any discussions with any other candidates regarding a potential business combination prior to entering into the merger agreement with Biogen. During the period in which there were discussions with IDEC concerning a potential business combination, Biogen did not engage in discussions with any other party concerning a possible business combination.

Reasons of IDEC's Board of Directors for the Merger

        In reaching its decision to approve the merger agreement and proceed with the business combination with Biogen, IDEC's board of directors consulted with IDEC's management, legal advisors, accounting advisors and financial advisors regarding the strategic, operational and financial aspects of the merger. In the course of reaching its decision to approve the merger agreement, the board considered a variety of factors, including the following material factors:

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30


        In particular, all executive officers have interests in the combined company as employees in terms of job responsibilities, working environment and compensation which are in addition to and different from their interests as stockholders. All continuing directors will have the responsibility for being directors of a new and larger company after the merger. The chief executive officers of IDEC and Biogen have new employment agreements and certain other executive officers are covered by severance agreements.

        In its review of the proposed merger, IDEC's board of directors considered the potential adverse impact of other factors, including:

        IDEC's board of directors did not find it constructive to and did not quantify, rank or otherwise assign relative weights to the factors considered in reaching its decision. IDEC's board of directors considered all of the factors outlined above, both positive and negative, in reaching its decision; however, individual members of IDEC's board of directors may have placed different weight on different factors.

        This summary of the reasoning of IDEC's board of directors, as well as certain information presented in this section, is forward-looking in nature. This information should be read in light of the factors discussed under the section entitled "Cautionary Statement Concerning Forward-Looking Statements" on page 21.

        IDEC's board of directors unanimously approved the merger agreement, the merger and the other transactions contemplated thereby and believes that the terms of the merger are advisable, fair to and in the best interests of IDEC and its stockholders. IDEC's board of directors unanimously recommends that IDEC stockholders vote FOR the proposals relating to approval of the issuance of shares of IDEC common stock in the merger, approval of the amendment of IDEC's certificate of incorporation, approval of the Stock Plan, approval of the Incentive Plan and approval of the adjournment of the special meeting to a later date, if necessary, to solicit additional proxies if there are not sufficient votes at the special meeting to approve the merger-related proposals.

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Reasons of Biogen's Board of Directors for the Merger

        In making its decision as to the advisability of approving the merger agreement and proceeding with the business combination with IDEC, Biogen's board of directors consulted with Biogen's management and its financial and legal advisors. In the course of reaching its decision, the board considered a variety of factors, including the following:

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        In its review of the proposed merger, Biogen's board of directors also reviewed and considered the interests that certain officers and directors of Biogen may have with respect to the merger in addition to their interests as stockholders of Biogen generally. In particular, all executive officers have interests in the combined company as employees in terms of job responsibilities, working environment and compensation which are in addition to and different from their interests as stockholders. All continuing directors will have the responsibility for being directors of a new and larger company after the merger. Specific agreements with certain executive officers are described beginning at page 56.

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        In its review of the proposed merger, Biogen's board of directors considered the potential adverse impact of other factors on the proposed transaction including:

        In view of the wide variety of factors considered in connection with its evaluation of the merger and the complexity of these matters, Biogen's board of directors did not find it useful to and did not attempt to quantify, rank or otherwise assign relative weights to these factors. Biogen's board of directors conducted an overall analysis of the factors described above, and overall considered the factors favorable to and to support its determination. In considering the factors described above, individual members of Biogen's board of directors may have given different weight to different factors.

        Biogen's board of directors unanimously recommends that Biogen stockholders vote FOR approval of the merger agreement and the proposal relating to the adjournment of the special meeting to a later date, if necessary, to solicit additional proxies if there are not sufficient votes at the special meeting to approve the merger agreement.

Accounting Treatment of the Merger

        The merger will be accounted for as a purchase by IDEC under accounting principles generally accepted in the United States. Under the purchase method of accounting, the assets and liabilities of Biogen will be recorded, as of completion of the merger, at their respective fair values and added to those of IDEC. Reported financial condition and results of operations of IDEC issued after completion of the merger will reflect Biogen's balances and results after completion of the merger, but will not be restated retroactively to reflect the historical financial position or results of operations of Biogen. Following the completion of the merger, the earnings of the combined company will reflect purchase accounting adjustments, including in-process research and development charges and increased cost of sales, amortization and depreciation expense for acquired assets and related tax benefits.

Material U.S. Federal Income Tax Consequences of the Merger

        The following is a discussion of the material U.S. federal income tax consequences of the merger to Biogen stockholders who exchange their shares of Biogen common stock for shares of common stock of the combined company in the merger. This discussion addresses only a Biogen stockholder who is a U.S. citizen or resident and holds Biogen common stock as a capital asset. It does not address all of the U.S. federal income tax consequences that may be relevant to a particular Biogen stockholder in light of that stockholder's individual circumstances or to a Biogen stockholder who is subject to special rules, including, without limitation:

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        The following discussion is based on the Code, applicable Treasury regulations, administrative interpretations and court decisions, each as in effect as of the date of this joint proxy statement/prospectus and all of which are subject to change, possibly with retroactive effect. It is not binding on the Internal Revenue Service, or the IRS. In addition, the discussion does not address any state, local or foreign tax consequences of the merger.

        Biogen stockholders strongly are urged to consult their tax advisors as to the specific tax consequences to them of the merger in light of their particular circumstances including the applicability and effect of U.S. federal, state, local, foreign and other tax laws.

        IDEC and Biogen have structured the merger so that it is anticipated that the merger will qualify as a reorganization within the meaning of Section 368(a) of the Code. It is a condition to the completion of the merger that IDEC receive a written opinion from Pillsbury Winthrop LLP and Biogen receive a written opinion from Skadden, Arps, Slate, Meagher & Flom LLP, in each case dated as of the effective date of the merger, both to the effect that the merger will qualify as such a reorganization. IDEC's and Biogen's conditions relating to these tax opinions are not waivable after receipt of Biogen stockholder approval without reapproval by Biogen stockholders (with appropriate disclosure), and neither IDEC nor Biogen intends to waive this condition. The opinions will rely on assumptions, including assumptions regarding the absence of changes in existing facts and law and the completion of the merger in the manner contemplated by the merger agreement, and representations and covenants made by IDEC, Bridges Merger Corporation and Biogen, including those contained in representation letters of officers of IDEC, Bridges Merger Corporation and Biogen. If any of those representations, covenants or assumptions is inaccurate, counsel may not be able to render the required opinions and the tax consequences of the merger could differ from those discussed here. An opinion of counsel represents counsel's best legal judgment and is not binding on the IRS or any court, nor does it preclude the IRS from adopting a contrary position. No ruling has been or will be sought from the IRS on the U.S. federal income tax consequences of the merger.

        Assuming that the merger qualifies as a reorganization within the meaning of Section 368(a) of the Code for U.S. federal income tax purposes:

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Regulatory Matters Relating to the Merger

        U.S. Antitrust Laws.    Under the HSR Act and its associated rules, the merger may not be completed until notifications have been given and certain information and materials have been furnished to and reviewed by the Antitrust Division of the U.S. Department of Justice and the FTC and the required waiting period has expired or been terminated. IDEC and Biogen filed the required notification and report forms under the HSR Act with the FTC and the Department of Justice on July 9, 2003. On August 6, 2003, IDEC and Biogen received notice that the FTC had granted an early termination of the waiting period under the HSR Act. It remains possible that state antitrust authorities and private parties in certain circumstances might bring legal action under the antitrust laws seeking to enjoin the merger or seeking conditions to the completion of the merger.

        Other Jurisdictions.    In addition to filings under the HSR Act, other regulatory approvals or filings are required or advisable in connection with the completion of the merger. Required filings include filings with applicable authorities in Germany, Finland, Spain and Turkey.

Dissenters' Rights of Appraisal

        Under the Massachusetts Business Corporation Law, or MBCL, Biogen stockholders who object to the merger are entitled to appraisal rights in connection with the merger. If the merger is completed, a Biogen stockholder who has followed the procedures under Sections 85 through 98 of the MBCL may, instead of receiving the merger consideration, require the combined company to pay the "fair value" (determined as provided under the MBCL) for the shares of Biogen common stock held by such stockholder, in cash. The following is a brief summary of certain features of Sections 85 through 98 of the MBCL, the full text of which is included in this joint proxy statement/prospectus as Annex F. This summary is not exhaustive and is subject to, and qualified in its entirety by reference to, the full text of such provisions.

        If you are contemplating the exercise of your dissenters' rights of appraisal in connection with the merger, you should carefully review the text of Sections 85 through 98 of the MBCL, particularly the procedural steps required to perfect dissenters' rights. We also encourage you to consult your legal counsel before attempting to exercise your dissenters' rights. If you do not fully and precisely satisfy the procedural requirements of the MBCL, you may lose your dissenters' rights.

        Requirements for Exercising Rights.    To preserve your right if you wish to exercise your statutory dissenters' rights, you must:

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        If you do not satisfy each of the requirements, you cannot exercise dissenters' rights and, if the merger agreement is approved by Biogen stockholders and the merger becomes effective, your shares of Biogen common stock will be converted into the right to receive shares of IDEC common stock pursuant to the terms of the merger agreement.

        Notice.    Your written notice of your intent to exercise dissenters' rights must be filed with Biogen at: Biogen, Inc., 14 Cambridge Center, Cambridge, Massachusetts 02142, Attn: Corporate Secretary.

        It is important that Biogen receive all written notices before the special meeting. Your written notice to demand payment should specify (i) your name and mailing address, (ii) the number of shares of Biogen common stock you own and (iii) your intention to demand cash payment for your shares of Biogen common stock if the merger agreement is approved. A vote against the merger agreement does not alone constitute a written objection.

        Vote.    Your shares must either not be voted at Biogen's special meeting or must be voted against the approval of the merger agreement. Submitting a properly signed proxy card that is received prior to the vote at the special meeting that does not direct how the shares of Biogen common stock represented by that proxy are to be voted will constitute a vote in favor of the merger and a waiver of your statutory appraisal rights. Provided you follow the proper procedures, failure to vote against a matter will not constitute a waiver of your appraisal rights.

        Appraisal Procedures.    If the merger agreement is approved by Biogen stockholders and the merger is completed, within ten days after the merger becomes effective, Biogen will send written notice to each stockholder who timely filed a written objection and whose shares were not voted in favor of the approval of the merger agreement advising him or her that the merger has been completed.

        Within 20 days after the mailing of the notice by Biogen, the dissenting stockholder must demand in writing payment for his or her shares of Biogen common stock. If Biogen and the stockholder fail to agree on the value of Biogen stock within 30 days after the expiration of the 20-day demand period, either Biogen or the stockholder may file a bill in equity in the Superior Court Department of Middlesex County, Massachusetts, asking that such court determine the fair value of Biogen common stock. The bill in equity must be filed within four months after the expiration of the 30-day period.

        If the bill in equity is timely filed, the court or an appointed special master will hold a hearing. After a hearing, the court will determine the fair value of the Biogen stock and order payment of such value, together with interest, if any, to the stockholders entitled thereto upon the transfer by them to Biogen of the certificates representing such stock if certificated or, if uncertificated, upon receipt of instruction transferring such stock to Biogen. The fair value of the shares is determined as of the day preceding the date of the vote approving the merger agreement excluding any element of value arising from the expectation or completion of the merger.

        The enforcement by a stockholder of his or her request to receive payment for shares of Biogen stock, as provided under the applicable statutory provisions, is the stockholder's exclusive remedy, except that the stockholder retains his or her right to bring or maintain an appropriate proceeding to obtain relief on the ground that the corporate action will be or is illegal or fraudulent as to the stockholder. In addition, dissenting stockholders are not limited to the statutory remedy of judicial appraisal where violations of fiduciary duty exist.

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Federal Securities Laws Consequences; Stock Transfer Restriction Agreements

        The registration statement of which this joint proxy statement/prospectus is a part does not cover any resales of the IDEC common stock to be received by Biogen stockholders upon completion of the merger, and no person is authorized to make any use of this joint proxy statement/prospectus in connection with any such resale.

        All shares of IDEC common stock received by Biogen stockholders in the merger will be freely transferable, except that shares of IDEC common stock received by persons who are deemed to be "affiliates" of Biogen under the Securities Act at the time of Biogen's special meeting may be resold by them only in transactions permitted by Rule 145 under the Securities Act or as otherwise permitted under the Securities Act. Persons who may be deemed to be affiliates of Biogen for these purposes generally include individuals or entities that control, are controlled by or are under common control with Biogen, and may include directors and executive officers of Biogen. The merger agreement permits IDEC to place appropriate legends on stock certificates of persons deemed affiliates and to issue stop transfer instructions to IDEC's stock transfer agent.

Stock Exchange Listing; Delisting and Deregistration of Biogen Common Stock

        It is a condition to the merger that the shares of IDEC common stock issuable in the merger be approved for listing on the Nasdaq National Market, subject to official notice of issuance. If the merger is completed, Biogen common stock will cease to be listed on the Nasdaq National Market and Biogen's shares will be deregistered under the Exchange Act.

Certain Litigation

        On June 25, 2003, a suit was filed in the Superior Court of California, County of San Diego, on behalf of a purported class of Biogen stockholders against Biogen, IDEC and certain members of Biogen's board of directors alleging, among other things, that each of Biogen, IDEC and the members of Biogen's board of directors breached and/or aided in the breach of the other defendants' breaches of their fiduciary duties of candor, loyalty, due care, independence, good faith and fair dealing by tailoring the structural terms of the merger to meet the specific needs of IDEC rather than attempting to obtain the highest price reasonably available for Biogen. An agreement in principal to resolve the suit has been reached based upon the disclosure of certain additional information in this joint proxy statement/prospectus and the payment of attorneys' fees in an amount to be determined by the court.

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THE COMPANIES

IDEC

        IDEC is a biotechnology company engaged primarily in the research, development, manufacture and commercialization of targeted therapies for the treatment of cancer and autoimmune and inflammatory diseases. IDEC's two commercial products, Rituxan (rituximab) and Zevalin (ibritumomab tiuxetan), are for use in the treatment of B-cell NHLs. B-cell NHLs currently afflict approximately 300,000 patients in the United States, as reported by the National Cancer Institute, an independent third party research organization. IDEC is also developing products for the treatment of cancers and various autoimmune and inflammatory diseases, such as rheumatoid arthritis, allergic asthma and allergic rhinitis.

        In November 1997, Rituxan became the first monoclonal antibody approved by the FDA for a cancer therapy indication. Rituxan, marketed in the United States under a copromotion arrangement between IDEC and Genentech, achieved net sales of $779 million in the United States in 2001 (of which IDEC recorded $229 million as its share of copromotion profits), compared to $1.08 billion in the United States in 2002 (of which IDEC recorded $324 million as its share of copromotion profits), an increase of 39%. In the first half of 2003, Rituxan achieved net sales of $638 million in the United States. Revenues from IDEC's Rituxan copromotion arrangement with Genentech as a percent of IDEC's total revenues were 92% in 2001, 95% in 2002 and 95% in the first half of 2003. Roche sells rituximab, marketed as MabThera, outside the United States, except in Japan where it copromotes Rituxan in collaboration with Zenyaku.

        Under IDEC's copromotion arrangement with Genentech, IDEC shares responsibility with Genentech for selling and continued development of Rituxan in the United States. Continued development of Rituxan includes conducting supportive research and post-approval clinical studies on Rituxan and seeking to obtain approval of Rituxan for additional indications. Genentech provides support functions for the commercialization of Rituxan, including marketing, customer service, order entry, distribution, shipping and billing. Since September 1999, Genentech has been responsible for all worldwide manufacturing of Rituxan.

        All U.S. sales of Rituxan and associated costs and expenses are recognized by Genentech and IDEC records its share of the pretax copromotion profits on a quarterly basis. IDEC's profit-sharing formula with Genentech with respect to Rituxan has two tiers; IDEC earns a higher percentage of the pretax copromotion profits at the upper tier once a fixed pretax copromotion profit level is met. The profit-sharing formula resets annually at the beginning of each year to the lower tier. IDEC began recording its profit share at the higher percentage during the first quarter of both 2001 and 2002. IDEC receives royalties on sales of Rituxan outside the United States by Roche and Zenyaku.

        Initial results of a Roche sponsored Phase II blinded, randomized, controlled study of Rituxan plus steroids alone or in combination with methotrexate or cyclophosphamide in rheumatoid arthritis were presented at the American College of Rheumatology Meeting in 2002. These results suggest that Rituxan had significant activity in rheumatoid arthritis. IDEC, in conjunction with Genentech and Roche, is now pursuing Phase III trials and additional Phase II trials in this indication.

        In February 2002, Zevalin became the first radioimmunotherapy approved by the FDA for the treatment of certain B-cell NHLs. Zevalin, which is delivered intravenously, is approved as a treatment for relapsed or refractory low-grade, follicular, or transformed B-cell NHL, including patients with Rituxan refractory follicular NHL. IDEC commenced selling Zevalin in April 2002 and achieved net sales of $13.7 million in the United States in 2002 and $10.6 million in the United States in the first half of 2003. Revenues from the sale of Zevalin as a percent of IDEC's total revenues were 3% in 2002 and 4% in the first half of 2003. IDEC has retained all U.S. marketing and distribution rights to Zevalin and has granted marketing and distribution rights outside the United States to Schering AG. The European Agency for the Evaluation of Medicinal Products has accepted for filing the Zevalin Marketing Authorization Application, submitted by Schering AG in the European Union. In September

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2003, Zevalin was recommended for approval by the European Committee for Proprietary Medicinal Products, or CPMP, for the treatment of adult patients with rituximab relapsed or refractory CD20+ follicular B-cell NHL. Final approval is pending.

        In January 2003, IDEC signed a collaboration agreement with Biogen under which IDEC and Biogen will collaborate on the development of three oncology therapeutics from Biogen's pipeline of early-stage product candidates.

        In June 2003, IDEC and Genentech entered into an amended and restated collaboration agreement for the development of one or more new humanized anti-CD20 antibodies targeting B-cell disorders for a broad range of indications. Genentech and IDEC plan to file an investigational new drug application on the first such humanized anti-CD20 antibody by the end of 2003.

Biogen

        Biogen is a global biotechnology company that develops, manufactures and markets novel human therapeutic products. Biogen's primary focus is developing pharmaceutical products that address unmet medical needs, particularly in its core therapeutic areas of neurology, dermatology and rheumatology. Biogen currently sells AVONEX for the treatment of relapsing multiple sclerosis and AMEVIVE for the treatment of adult patients with moderate-to-severe chronic plaque psoriasis who are candidates for systemic therapy or phototherapy. Biogen also receives revenues from royalties on sales by its licensees of a number of products covered under patents that it controls and from contract revenues related to a collaborative agreement with IDEC. In addition, Biogen has a pipeline of development stage products and a number of research programs in its core therapeutic areas and in other areas of interest.

        Based on data from an independent third party research organization, Biogen's distributors and internal Biogen analysis, Biogen believes that AVONEX is the most prescribed therapeutic product for the treatment of multiple sclerosis worldwide. Globally, over 122,000 patients have selected AVONEX as their treatment of choice. In 2002, Biogen focused its sales and marketing efforts on continuing to drive AVONEX growth in the United States and the European Union in the face of increasing competition. As a result of these efforts, Biogen achieved revenues from sales of AVONEX of $1.03 billion in 2002, compared to $970.5 million in 2001. In the first half of 2003, revenues from sales of AVONEX were $560.6 million. Revenues from the sale of AVONEX as a percent of Biogen's total revenues were 93% in 2001, 90% in 2002 and 87% in the first half of 2003.

        Biogen launched its second product, AMEVIVE, in February 2003 in the United States. AMEVIVE is approved in the United States for the treatment of adult patients with moderate-to-severe chronic plaque psoriasis who are candidates for systemic therapy or phototherapy. Sales of AMEVIVE represented 2% of Biogen's total revenues in the first half of 2003. In February 2003, Biogen withdrew its application for approval to market AMEVIVE in the European Union. This decision was based on a determination by the CPMP that more clinical information is needed to approve AMEVIVE. Biogen plans to develop the additional information necessary to obtain approval of AMEVIVE for psoriasis patients in the European Union. Developing the data and re-filing the application may take several years.

        In addition to ongoing development work with its marketed products, Biogen continues to devote significant resources to other ongoing development efforts, including its collaboration with Elan Corporation plc, or Elan, on ANTEGREN and with IDEC on oncology product candidates.

        With Elan, Biogen is developing ANTEGREN for use in the treatment of multiple sclerosis and Crohn's disease. In January 2003, the results of the Phase II clinical studies of ANTEGREN in multiple sclerosis and Crohn's disease were published in the New England Journal of Medicine. Based on the Phase II results, together with Elan, Biogen currently is conducting three Phase III clinical studies of ANTEGREN, two in multiple sclerosis and one in Crohn's disease. These three studies became fully enrolled during 2002.

        In January 2003, Biogen signed a collaboration agreement with IDEC under which Biogen and IDEC will collaborate on the development of three oncology therapeutics from Biogen's pipeline of early-stage product candidates.

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OPINIONS OF FINANCIAL ADVISORS

Opinion of IDEC's Financial Advisor—Merrill Lynch

        IDEC retained Merrill Lynch to act as its financial advisor in connection with a possible business combination with Biogen. On June 20, 2003, Merrill Lynch rendered to IDEC's board of directors its oral opinion, subsequently confirmed by delivery of a written opinion dated June 20, 2003, that, as of such date and based upon and subject to the factors and assumptions set forth in the opinion, the exchange ratio in the proposed merger of 1.15 shares of IDEC common stock for each share of Biogen common stock was fair from a financial point of view to the holders of IDEC common stock.

        The full text of Merrill Lynch's opinion, which sets forth the assumptions made, matters considered, and qualifications and limitations on the review undertaken by Merrill Lynch, is included as Annex D to this joint proxy statement/prospectus and is incorporated herein by reference. The summary of Merrill Lynch's opinion set forth in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of such opinion. The holders of IDEC common stock are urged to read the opinion in its entirety. Merrill Lynch's opinion was provided for the use and benefit of IDEC's board of directors and was directed only to the fairness from a financial point of view of the exchange ratio to the holders of IDEC common stock. Merrill Lynch's opinion did not address the merits of the underlying decision by IDEC to engage in the merger and does not constitute a recommendation to any holder of IDEC common stock as to how such holder should vote on the proposed merger or any matter related thereto.

        The exchange ratio was determined through negotiations between IDEC and Biogen and was approved by IDEC's board of directors. Merrill Lynch provided advice to IDEC during the course of those negotiations.

        The summary set forth below does not purport to be a complete description of the analyses underlying the Merrill Lynch opinion or the presentations made by Merrill Lynch to IDEC's board of directors. The preparation of a fairness opinion is a complex analytic process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. In arriving at its opinion, Merrill Lynch considered the results of all analyses and did not attribute any particular weight to any analysis or factor considered by it; Merrill Lynch made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all such analyses. While each factor set forth below is separate, Merrill Lynch believes that its analyses must be considered as a whole and that selecting portions of its analyses or of the summary set forth below, without considering all analyses, would create an incomplete view of the process underlying its opinion.

        Any estimates contained in the analyses performed by Merrill Lynch are not necessarily indicative of actual values or future results, which may be significantly more or less favorable than suggested by such analyses. Additionally, estimates of the value of businesses or securities do not purport to be appraisals or to reflect the prices at which such businesses or securities might actually be sold. Accordingly, such analyses and estimates are inherently subject to substantial uncertainty. In addition, as described above, Merrill Lynch's opinion was among several factors taken into consideration by IDEC's board of directors in making its determination to approve the merger agreement and the merger. Consequently, the analyses performed by Merrill Lynch described below should not be viewed as determinative of the decision of IDEC's board of directors or IDEC's management with respect to the fairness of the exchange ratio.

        In arriving at its opinion, Merrill Lynch, among other things:

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        In preparing its opinion, Merrill Lynch assumed and relied on the accuracy and completeness of all information supplied or otherwise made available to Merrill Lynch, discussed with or reviewed by or for Merrill Lynch, or publicly available, and Merrill Lynch did not assume any responsibility for independently verifying such information or undertake an independent evaluation or appraisal of any of the assets or liabilities of IDEC or Biogen or been furnished with any such evaluation or appraisal, nor has Merrill Lynch evaluated the solvency or fair value of IDEC or Biogen under any state or federal laws relating to bankruptcy, insolvency or similar matters. In addition, Merrill Lynch did not assume any obligation to conduct any physical inspection of the properties or facilities of IDEC or Biogen. With respect to the financial forecast information and the cost savings and related expenses and synergies expected to result from the merger furnished to or discussed with Merrill Lynch by IDEC or Biogen, Merrill Lynch assumed that they have been reasonably prepared and reflect the best currently available estimates and judgment of IDEC's or Biogen's management as to the expected future financial performance of IDEC or Biogen, as the case may be, and the cost savings and related expenses and synergies expected to result from the merger. Merrill Lynch also assumed that the merger will qualify as a tax-free reorganization for U.S. federal income tax purposes.

        The Merrill Lynch opinion was necessarily based upon market, economic and other conditions as they existed and could be evaluated on, and on the information made available to Merrill Lynch as of, the date of the Merrill Lynch opinion. Merrill Lynch assumed, in all respects material to its analysis, that all governmental, regulatory or other consents or approvals (contractual or otherwise) necessary for or in connection with the merger will be obtained without any adverse effect on IDEC or Biogen or on the contemplated benefits of the merger. Merrill Lynch also assumed, in all respects material to its analysis, that the merger will be consummated as described in the merger agreement, that all representations and warranties of each party contained in the merger agreement are true and correct, that each party to the merger agreement will perform all of the covenants and agreements required to be performed by it thereunder without any consents or waivers of the other parties thereto and that all

42


conditions to the completion of the merger will be satisfied without waiver thereof. Merrill Lynch noted that they are not legal, tax or regulatory experts and have relied upon, without assuming any responsibility for independent verification or liability therefor, the assessment of IDEC's legal, tax and regulatory advisors with respect to the legal, tax and regulatory matters related to the merger.

        In connection with the preparation of its opinion, Merrill Lynch was not authorized by IDEC or IDEC's board of directors to solicit, nor did Merrill Lynch solicit, third-party indications of interest for the acquisition of all or any part of IDEC.

        The following is a summary of the material valuation, financial and comparative analyses presented by Merrill Lynch to the board of directors of IDEC in connection with the rendering of its opinion.

        For purposes of the summary below, the references to "implied equity ownership of IDEC" refer to the percentage ownership interest that holders of IDEC common stock would have in the combined company derived using the different methods of analysis described below. In calculating the implied equity ownership of IDEC, Merrill Lynch utilized the Treasury Stock Method and assumed all the in-the-money options issued by IDEC and Biogen were exercised for cash. Because IDEC also has convertible securities outstanding, Merrill Lynch assumed the issuance of approximately 14,000,000 shares of IDEC common stock upon conversion of IDEC's in-the-money 1999 Liquid Yield Option Notes®, or LYONs, and the issuance of approximately 2,000,000 shares of IDEC common stock upon conversion of IDEC's in-the-money convertible preferred securities. Based on the exchange ratio of 1.15 shares of IDEC common stock for each share of Biogen common stock and these assumptions, Merrill Lynch calculated the implied equity ownership of IDEC to be 50.5%.

        Historical Exchange Ratio Analysis.    Merrill Lynch calculated the implied equity ownership of IDEC based on the relative daily closing stock prices of IDEC and Biogen from January 1, 2003 to June 19, 2003. This analysis showed that the implied equity ownership of IDEC ranged from a low of 47.0% to a high of 58.5% during this period.

        In addition, Merrill Lynch calculated the average historical implied equity ownership of IDEC over various periods of time prior to June 19, 2003. The following table presents the average historical implied equity ownership of IDEC resulting from this analysis:

 
  Average Implied Equity
Ownership of IDEC

June 19, 2003   51.5%
One Week prior   50.8%
Two Weeks prior   50.8%
Four Weeks prior   51.0%
Six Weeks prior   50.8%
Two Months prior   50.7%
Six Months prior   50.8%

        Relative Earnings Contribution Analysis.    Merrill Lynch performed an analysis of the pro forma relative contributions by each of IDEC and Biogen to, among other things, earnings before interest and taxes, or EBIT, and net income of the combined company, in each case before taking into account net synergies expected to result from the merger projected by IDEC's management. The following table presents the estimated implied equity ownership of IDEC for 2003, 2004, 2005 and 2006 based upon the percentage contributions of IDEC and Biogen to the combined company's pro forma EBIT and net income. The EBIT calculations were based upon the operating projections of IDEC's management and publicly available research analyst estimates for Biogen and were adjusted for the respective capital structures of IDEC and Biogen. The net income calculations were based upon the operating projections of IDEC's management and First Call consensus estimates for each of IDEC and Biogen. First Call

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consensus estimates are publicly available compilations of updated broker dealer research provided by First Call Corporation, a Thompson Financial company.

 
  2003
  2004
  2005
  2006
EBIT   45.0%   49.8%   52.5 % 54.2%
Net Income   39.2% - 41.2%   44.0% - 44.8%   48.0 % 50.6% - 51.0%

        Comparable Publicly Traded Company Analysis.    Merrill Lynch reviewed publicly available information as of June 19, 2003, including First Call consensus estimates, to calculate specified financial and operating information, market values and trading multiples (as described below) and then compared such financial and operating information, market values and trading multiples of IDEC and Biogen as of June 19, 2003, with the corresponding financial and operating information, market values and multiples of Amgen, Inc., Genentech, Inc., Gilead Sciences Inc., Genzyme Corporation (pro forma for the exchange of certain of its tracking stocks into common stock of Genzyme Corporation), Serono S.A., MedImmune, Inc. and Chiron Corporation. Merrill Lynch selected such companies for comparison with IDEC and Biogen because they are the publicly-traded companies most comparable to IDEC and Biogen in the biotechnology industry with operations that for the purposes of this analysis may be considered similar to certain operations of IDEC and Biogen. The selected companies were considered comparable to IDEC and Biogen by Merrill Lynch because each had currently marketable products, operating scale and capabilities similar to IDEC and Biogen, and had growth characteristics and operating metrics similar to IDEC and Biogen.

        Merrill Lynch derived an estimated valuation range for IDEC by comparing:

        Based in part on the above analysis, Merrill Lynch selected assumed multiples for earnings per share (from 33.0x to 39.0x for IDEC in 2003, from 27.0x to 31.0x for IDEC in 2004, from 26.0x to 31.0x for Biogen in 2003 and from 22.0x to 25.0x for Biogen in 2004) and for earnings per share as a multiple of estimated 5-year compound annual growth rates (from 1.50x to 1.70x for each of IDEC and

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Biogen in 2003). Using low and high assumed multiples for each criterion, Merrill Lynch calculated the following ranges of implied equity ownership of IDEC:

 
  Implied Equity Ownership of IDEC
 
Measure

 
  Low
  High
 
P/E Multiple 2003   45.6 % 45.4 %
2004   49.0 % 49.2 %

P/E/Growth

 

 

 

 

 
2003   55.1 % 55.1 %

        None of the selected comparable companies listed above and used in the above analysis is identical to IDEC and Biogen. Accordingly, an analysis of the results of the foregoing analysis is not purely mathematical. Rather, it involves complex considerations and judgments concerning differences in financial and operating characteristics of the comparable companies and other factors that could affect the public trading value of the comparable companies or company to which they are being compared.

        Pro Forma Merger Analysis.    Merrill Lynch performed an analysis of the potential pro forma financial impacts of the merger on the cash earnings per share (calculated without deducting from earnings estimated amortization of intangibles and incremental expenses resulting from the merger) of IDEC common stock for 2003, 2004 and 2005 based upon the operating projections of IDEC's management and First Call consensus estimates and other publicly available research analyst estimates for Biogen. In performing this analysis, Merrill Lynch assumed, among other things:

        The results of this analysis indicated that, both in scenarios including and excluding the net synergies expected to result from the merger, the merger would be accretive to the projected cash earnings per share of IDEC common stock in 2003, 2004 and 2005.

        Merrill Lynch performed the same pro forma analysis using First Call consensus estimates for IDEC rather than operating projections of IDEC's management. The results of this analysis indicated that, both in scenarios including and excluding the net synergies expected to result from the merger, the merger would be accretive to the projected cash earnings per share of IDEC common stock in 2003, 2004 and 2005.

        Pursuant to a letter agreement between IDEC and Merrill Lynch, dated as of May 14, 2003, IDEC agreed to pay Merrill Lynch (i) a fee of two million dollars upon the execution of the merger agreement, (ii) a fee of $15 million upon the closing of the merger involving IDEC and Biogen and (iii) the lesser of $15 million or 6% of any fee, payment, judgment, amount or profit payable to IDEC following or in connection with the termination, abandonment or failure to occur of the merger or other transactions involving IDEC and Biogen. Any fee paid pursuant to clause (i), however, will be deducted from any fee to which Merrill Lynch is entitled to receive pursuant to clauses (ii) or (iii). IDEC has also agreed to indemnify Merrill Lynch and certain related persons for various liabilities, including liabilities under the federal securities laws, related to or arising out of the performance by Merrill Lynch of services under its engagement. In addition to acting as financial advisor to IDEC in connection with the merger, Merrill Lynch has, during the past two years, advised IDEC in connection with various capital markets activities. In connection with the provision of these services, Merrill Lynch received customary fees from IDEC.

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        IDEC retained Merrill Lynch to act as its financial advisor in connection with the merger based upon Merrill Lynch's qualifications, experience, reputation and expertise. Merrill Lynch is an internationally recognized investment banking and advisory firm. IDEC did not place any limitations on Merrill Lynch concerning its engagement as financial advisor to IDEC's board of directors in connection with the merger. Merrill Lynch, as part of its investment banking business, is continuously engaged in the valuation of businesses and securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements and valuations for corporate and other purposes.

        Merrill Lynch has, in the past, provided financial advisory and financing services to IDEC and may continue to do so and has received, and may receive, fees for the rendering of such services. In addition, in the ordinary course of its business, Merrill Lynch and its affiliates may actively trade shares of IDEC common stock and other securities of IDEC, as well as shares of Biogen common stock and other securities of Biogen, for their own account and for the accounts of customers and, accordingly, may at any time hold a long or short position in such securities.

Opinion of Biogen's Financial Advisor—Goldman Sachs

        On June 20, 2003, Goldman Sachs, financial advisor to Biogen, delivered to Biogen's board of directors its oral opinion, subsequently confirmed by delivery of a written opinion dated June 20, 2003, that, as of that date, and based upon and subject to the considerations described in its opinion and based upon such other matters as Goldman Sachs considered relevant, the exchange ratio of 1.15 shares of IDEC common stock to be received for each share of Biogen common stock was fair to holders of Biogen common stock from a financial point of view.

        The full text of the written opinion of Goldman Sachs, which sets forth the assumptions made, procedures followed, matters considered, and limitations on the review undertaken in connection with the opinion, is included as Annex E to this joint proxy statement/prospectus. Goldman Sachs provided its opinion for the information and assistance of Biogen's board of directors in connection with its consideration of the transaction contemplated by the merger agreement. Goldman Sachs' opinion is not a recommendation as to how any holder of Biogen common stock should vote with respect to the merger. We encourage you to read the opinion in its entirety.

        In connection with its opinion, Goldman Sachs reviewed, among other things:


        Goldman Sachs also held discussions with members of the senior managements of Biogen and IDEC regarding their assessment of the strategic rationale for, and the potential benefits of, the transaction contemplated by the merger agreement and the past and current business operations, financial condition and future prospects of Biogen and IDEC.

46


        In addition, Goldman Sachs:

        Goldman Sachs relied upon the accuracy and completeness of all of the financial, accounting, legal and other information discussed with or reviewed by it and assumed the accuracy and completeness of this information for purposes of rendering its opinion. In that regard, Goldman Sachs assumed, with the consent of Biogen's board of directors, that the financial forecasts prepared by the management of Biogen and IDEC, including the forecasts relating to the cost savings and operating synergies referred to above, were reasonably prepared on a basis reflecting the best currently available estimates and judgments of Biogen and IDEC, and that the forecasts, cost savings and operating synergies would be realized in the amounts and time periods contemplated thereby. In addition, Goldman Sachs did not make an independent evaluation or appraisal of the assets and liabilities of Biogen or IDEC or any of their respective subsidiaries, and Goldman Sachs was not furnished with any such evaluations or appraisals. Goldman Sachs also assumed that all material governmental, regulatory or other consents and approvals necessary for the completion of the transaction contemplated by the merger agreement would be obtained without any adverse effect on Biogen or IDEC or on the contemplated benefits of the transaction contemplated by the merger agreement. Goldman Sachs was not requested to solicit, and did not solicit, interest from other parties with respect to an acquisition of, or other business combination with, Biogen. Goldman Sachs' opinion does not address the relative merits of the transaction as compared to any alternative business transaction that might be available to Biogen, nor does it address the underlying business decision of Biogen to engage in the contemplated transaction. In addition, Goldman Sachs is not expressing any opinion as to the prices at which the Biogen common stock or the IDEC common stock will trade at any time.

        The following is a summary of the material financial analyses presented by Goldman Sachs to Biogen's board of directors in connection with providing its opinion to Biogen's board. The following summary, however, does not purport to be a complete description of the financial analyses performed by Goldman Sachs. The order of analyses described does not represent relative importance or weight given to those analyses by Goldman Sachs. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and are alone not a complete description of Goldman Sachs' financial analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before June 19, 2003, and is not necessarily indicative of current market conditions.

Historical Stock Trading Analysis

        Goldman Sachs reviewed and compared the historical daily trading prices of IDEC common stock during the period from June 19, 2002 to June 19, 2003 with a Profitable Biotech Index, comprised of the common stock of Amgen Inc., Biogen Inc., Cephalon, Inc., Chiron Corporation, Genentech Inc., Genzyme Corporation, Gilead Sciences, Inc., MedImmune, Inc., SangStat Medical Corporation and QLT, Inc. These companies were selected by Goldman Sachs because they are the primary profitable public biotech companies that develop and market human therapeutic products.

47



        The analysis indicated that for the period from June 19, 2002 to June 19, 2003, the IDEC common stock initially outperformed or performed comparably to the above index; but, since November 2002, IDEC common stock has been underperforming the Profitable Biotech Index.

        Goldman Sachs also reviewed and compared the historical daily trading prices of Biogen common stock during the period from June 19, 2002 to June 19, 2003 with a Profitable Biotech Index, comprised of the common stock of Amgen Inc., Cephalon, Inc., Chiron Corporation, Genentech Inc., Genzyme Corporation, Gilead Sciences, Inc., IDEC, MedImmune, Inc., SangStat Medical Corporation and QLT, Inc. The analysis indicated that, for the period from June 19, 2002 to June 19, 2003, Biogen common stock generally underperformed the Profitable Biotech Index.

Discounted Cash Flow Analysis—IDEC

        Goldman Sachs performed an analysis to derive indicative present values per share of IDEC common stock, based on discounted cash flow methodologies. Using IDEC's management's projections for IDEC, as adjusted by Biogen's management, Goldman Sachs performed this analysis on a stand-alone basis. Goldman Sachs analyzed the business of IDEC based on the IDEC base case scenario, which involved IDEC's management's projections, as adjusted by Biogen's management, of future revenue growth and earnings for the fiscal years 2003 through 2007, without any cost savings, operating synergies or one-time charges.

        In its analysis of the IDEC base case scenario, Goldman Sachs applied discount rates ranging from 10.0% to 14.0% and terminal value multiples of estimated 2008 price to earnings ranging from 15.0x to 25.0x. The ranges for discount rates and terminal value multiples were chosen by Goldman Sachs based upon its prior experience in analyzing cost of capital ranges that could be applicable. The determination of applicable cost of capital ranges took into account overall market conditions, as well as industry conditions and factors such as the specific products offered by various companies and their market performance. Based on these discount rates and terminal value multiples, Goldman Sachs derived an illustrative equity reference range per share of IDEC common stock of $30.05 to $56.37.

        Based upon the illustrative range of equity values described above, Goldman Sachs derived ranges of implied perpetuity growth rates for the IDEC common stock and of implied premiums or discounts to the closing price per share of IDEC common stock on June 19, 2003 as set forth below.

Illustrative Equity Value
Per Share of
IDEC Common Stock

  Implied Perpetuity
Growth Rate

  Premium (Discount)
to Closing Price
on June 19, 2003

$30.05   8.1%   (22.9)%
$56.37   6.5%   44.5%

        Goldman Sachs also performed a sensitivity analysis to derive a range of implied aggregate equity values for IDEC by adjusting the incremental revenue growth rate and incremental operating margin assumed in IDEC's management's projections for IDEC, as adjusted by Biogen's management. Based upon ranges of both incremental growth rates and incremental operating margins from (10.0)% to 10.0%, Goldman Sachs calculated a range of illustrative present values of IDEC aggregate equity of approximately $3.9 billion to approximately $11.6 billion.

        Goldman Sachs performed an analysis, using discounted cash flow methodologies, to derive illustrative present values of IDEC's cash flows from Rituxan and Zevalin. Using IDEC's management's projections for Rituxan and Zevalin, as adjusted by Biogen's management, Goldman Sachs performed this analysis on a stand-alone basis, which involved projections of future sales of Rituxan and Zevalin for the fiscal years 2003 through 2007, without any cost savings or operating synergies. For purposes of this analysis, Goldman Sachs assumed that IDEC has a 38% share of operating profits from U.S.-based sales of Rituxan under its collaboration agreement with Genentech.

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        In its analysis of Rituxan and Zevalin values, Goldman Sachs applied discount rates ranging from 10.0% to 14.0% and terminal value multiples of estimated 2007 sales ranging from 5.0x to 7.0x and 4.0x to 6.0x, respectively. The ranges for discount rates and terminal value multiples were chosen by Goldman Sachs based upon its prior experience in analyzing cost of capital ranges that could be applicable. The determination of applicable cost of capital ranges took into account overall market conditions, as well as industry conditions and factors such as the specific products offered by various companies and their market performance. Based on these discount rates and terminal value multiples, Goldman Sachs calculated implied values of Rituxan and Zevalin per IDEC share, implied perpetuity growth rates for Rituxan and Zevalin sales and the implied percentage of IDEC's fully diluted market capitalization (approximately $6.9 billion based upon the $39.00 closing price per share of IDEC common stock on June 19, 2003) represented by illustrative values of Rituxan and Zevalin sales as set forth below.

 
  Illustrative Value
Per Share of IDEC Common Stock

  Implied Perpetuity Growth Rate
  Implied Percentage of IDEC Market Capitalization
Rituxan   $24.37 - $36.19   0.2% - 6.6%   62.5% - 92.8%
Zevalin   $1.72 - $3.03   3.5% - 9.4%   4.3% - 7.5%

Discounted Cash Flow Analysis—Biogen

        Goldman Sachs also performed an analysis to calculate illustrative present values per share of Biogen common stock using discounted cash flow methodologies. Using Biogen's management's projections, Goldman Sachs performed this analysis on a stand-alone basis. Goldman Sachs analyzed the business of Biogen based on the Biogen base case scenario, which involved Biogen's management's projections of future revenue growth and earnings for the fiscal years 2003 through 2007, without any cost savings, operating synergies or one-time charges.

        This analysis of the Biogen base case scenario is based on discount rates ranging from 10.0% to 14.0% and terminal value multiples of estimated 2008 price to earnings ranging from 15.0x to 25.0x. The discount rates and terminal value multiples were chosen by Goldman Sachs based upon its prior experience in analyzing cost of capital ranges that could be applicable. The determination of applicable cost of capital ranges took into account overall market conditions, as well as industry conditions and factors such as the specific products offered by various companies and their market performance. Based on these discount rates and terminal value multiples, Goldman Sachs derived an illustrative equity reference range per share of Biogen common stock of $40.35 to $74.19.

        Based upon the range of implied equity values described above, Goldman Sachs calculated ranges of implied perpetuity growth rates for the Biogen common stock and of implied premiums or discounts to the closing price per share of Biogen common stock on June 19, 2003 as set forth below.

Illustrative Equity Value Per Share of Biogen Common Stock
  Implied Perpetuity
Growth Rate

  Premium (Discount)
to Closing Price
on June 19, 2003

$40.35   9.4%   (6.7)%
$74.19   7.3%   71.5%

        Goldman Sachs also performed a sensitivity analysis to derive a range of implied aggregate equity values for Biogen by adjusting the incremental revenue growth rate and incremental operating margin assumed in Biogen's management's projections. Based upon ranges of both incremental growth rates and incremental operating margins from (10.0)% to 10.0%, Goldman Sachs calculated a range of illustrative present values of Biogen aggregate equity of approximately $6.8 billion to approximately $10.4 billion.

        In addition, Goldman Sachs performed an analysis, using discounted cash flow methodologies, based on Biogen's cash flows from AVONEX, AMEVIVE and ANTEGREN. Using Biogen's

49



management's projections for AVONEX, AMEVIVE and ANTEGREN, Goldman Sachs performed this analysis on a stand-alone basis, which involved Biogen's management's projections of sales of AVONEX, AMEVIVE and ANTEGREN for the fiscal years 2003 through 2007, without any cost savings or operating synergies.

        In its analysis of AVONEX, AMEVIVE and ANTEGREN values, Goldman Sachs applied discount rates ranging from 10.0% to 14.0% for AVONEX, 11.0% to 15.0% for AMEVIVE and 13.0% to 17.0% for ANTEGREN, and terminal value multiples of estimated 2007 sales ranging from 3.0x to 5.0x for AVONEX, 5.0x to 7.0x for AMEVIVE and 5.0x to 7.0x for ANTEGREN, respectively. The ranges for discount rates and terminal value multiples were chosen by Goldman Sachs based upon its prior experience in analyzing cost of capital ranges that could be applicable. The determination of applicable cost of capital ranges took into account overall market conditions, as well as industry conditions and factors such as the specific products offered by various companies and their market performance. Based on these discount rates and terminal value multiples, Goldman Sachs calculated implied values of AVONEX, AMEVIVE and ANTEGREN per Biogen share, implied perpetuity growth rates for of AVONEX, AMEVIVE and ANTEGREN and the implied percentage of Biogen's fully diluted market capitalization (approximately $6.6 billion based upon the $43.25 closing price per share of Biogen common stock on June 19, 2003) as set forth below:

 
  Illustrative Values
Per Share of Biogen
Common Stock

  Implied Perpetuity
Growth Rate

  Implied Percentage
of Biogen Market Capitalization

AVONEX   $25.12 - $38.16   (6.5)% - 3.1%   58.1% - 88.2%
AMEVIVE   $8.98 - $14.48   4.4% - 10.0%   20.8% - 33.5%
ANTEGREN   $3.79 - $7.62   11.4% - 15.8%   8.7% - 17.6%

Pro Forma Growth Analysis

        Using Biogen's management's projections for Biogen and IDEC's management's projections for IDEC, as adjusted by Biogen's management, for the five years ended December 31, 2007, Goldman Sachs compared the implied compound annual growth rate, or CAGR, for the combined company with that for each of Biogen and IDEC on a stand-alone basis over the same five-year period for revenue, earnings before interest and tax, or EBIT, net income and cash earnings per share. For purposes of this analysis, EBIT for the combined company was derived by taking into account Biogen's and IDEC's managements' projected operating synergies; net income for the combined company was derived by taking into account Biogen's management's projected operating and tax synergies; and cash earnings per share was calculated by adjusting GAAP earnings per share for amortization expense, non-cash and other merger-related charges and based upon the pro forma share count assuming an exchange ratio of 1.15 shares of IDEC common stock per share of Biogen common stock. Goldman Sachs' analysis indicated that the proposed merger, when taking into account projected operating synergies, would enhance Biogen's standalone CAGR for all financial items listed above for the five years ended December 31, 2007.

Historical Exchange Ratio and Ownership Analysis

        Goldman Sachs reviewed the implied historical exchange ratios determined by dividing the closing price per share of Biogen Common Stock by the closing price per share of IDEC common stock over the period June 19, 2002 through June 19, 2003 and compared the implied fully diluted ownership of holders of Biogen common stock in the combined company with the 49.5% fully diluted ownership those holders will have based upon the exchange ratio of 1.15 shares of IDEC common stock for each share of Biogen common stock. Goldman Sachs also reviewed the number of trading days since January 1, 2003 that Biogen's fully diluted ownership was below 49.5%. This analysis indicated that

50



Biogen's fully diluted ownership was below 49.5% for 61 of the 117 trading days year to date, and 47 of the 64 trading days over the three month period ended June 19, 2003.

Exchange Ratio and Implied Premium Analysis

        Goldman Sachs reviewed the historical trading prices of IDEC common stock and Biogen common stock in order to derive implied prices per share of Biogen common stock using the 1.15 exchange ratio and the implied premium to the $43.25 closing price per share of Biogen common stock on June 19, 2003 as set forth in the following table:

Trading Period

  Biogen Price
  IDEC Price
  Implied Biogen
Price Based on
1.15x
Exchange Ratio

  Implied Exchange Ratio Premium
 
June 19, 2003   43.25   39.00   44.85   3.7 %
One Week Average (a)   46.04   40.50   46.58   1.2 %
Two Weeks Average (b)   45.60   40.10   46.12   1.1 %
One Month Average (c)   43.85   38.67   44.47   1.4 %
Two Months Average (d)   40.20   35.17   40.44   0.6 %
Three Months Average (e)   38.59   35.31   40.61   5.2 %
Six Months Average (f)   38.20   33.62   38.66   1.2 %
One Year Average (g)   37.28   36.74   42.25   13.3 %
52 Week High (Nov. 27, 2002)   44.90   33.14   38.11   (15.1 )%
52 Week Low (Sept. 27, 2002)   29.39   42.22   48.55   65.2 %

(a)
One week represents trading days from 6/13/2003 through 6/19/2003.

(b)
Two weeks represents trading days from 6/6/2003 through 6/19/2003.

(c)
One month represents trading days from 5/20/2003 through 6/19/2003.

(d)
Two months represents trading days from 4/20/2003 through 6/19/2003.

(e)
Three months represents trading days from 3/20/2003 through 6/19/2003.

(f)
Six months represents trading days from 12/20/2002 through 6/19/2003.

(g)
One year represents trading days from 6/20/2002 through 6/19/2003.

        Goldman Sachs also compared the historical trading price of Biogen common stock for the corresponding periods with the implied price per share of Biogen common stock derived by using IDEC's closing price of $39.00 on June 19, 2003 and multiplying this by the 1.15 exchange ratio in order to calculate the implied premium (discount) per share of Biogen common stock over the periods set forth in the following table:

Trading Period

  Biogen Price
  Absolute Price Implied
Premium

 
June 19, 2003   43.25   3.7 %
One Week Average   46.04   (2.6 )%
Two Weeks Average   45.60   (1.6 )%
One Month Average   43.85   2.3 %
Two Months Average   40.20   11.6 %
Three Months Average   38.59   16.2 %
Six Months Average   38.20   17.4 %
One Year Average   37.28   20.3 %
52 Week High (Nov. 27, 2002)   44.90   (0.1 )%
52 Week Low (Sept. 27, 2002)   29.39   52.6 %

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Contribution Analysis

        Goldman Sachs conducted a contribution analysis of Biogen relative to the pro forma combined entity resulting from the merger using discounted cash flow methodologies. Using projections provided by management of Biogen and IDEC without taking into account any cost savings or operating synergies, Goldman Sachs derived theoretical equity contribution percentages for Biogen assuming a discount rate of 12.0% and terminal value multiples of price to earnings for Biogen and IDEC ranging from 15.0x to 25.0x. The discount rate and range of terminal value multiples were chosen by Goldman Sachs based upon its prior experience in analyzing cost of capital ranges that could be applicable. The determination of applicable cost of capital ranges took into account overall market conditions, as well as industry conditions and factors such as the specific products offered by various companies and their market performance. Based on this discount rate and these terminal value multiples, Goldman Sachs derived theoretical equity reference range contribution percentages ranging from 41.6% to 64.2%.

        Goldman Sachs also reviewed historical and estimated future operating and financial information, including, among other things, sales, EBIT, and net income, for IDEC, Biogen and the pro forma combined entity resulting from the merger based on Biogen's management's projections for Biogen and IDEC's management's projections for IDEC, as adjusted by Biogen's management, without taking into account any cost savings or operating synergies. Goldman Sachs analyzed the relative income statement contribution of IDEC and Biogen to the combined company on a pro forma basis based on financial data for 2002 and on the assumptions provided to Goldman Sachs by Biogen's management for estimated years 2003 through 2007. Goldman Sachs calculated the relative contributions of IDEC and Biogen to the combined company in terms of (1) sales, (2) EBIT, (3) net income, (4) fully diluted equity market capitalization, based on the closing price of IDEC common stock of $39.00 and the closing price of Biogen common stock of $43.25 on June 19, 2003 and (5) enterprise value, based on the closing price of IDEC common stock of $39.00 and the closing price of Biogen common stock of $43.25 on June 19, 2003, IDEC net cash of approximately $756.0 million as of March 31, 2002 and Biogen net cash of approximately $770.8 million as of March 31, 2003. The implied percentage of the combined company derived from Biogen's and IDEC's contribution to sales and EBIT, reflected adjustments for the net cash positions of each company as of March 31, 2003. The results of these analyses for 2003 and 2007 are as follows:

 
   
   
  Implied % of Combined Equity
   
 
  % Contribution
   
 
  Implied Exchange Ratio
 
  IDEC
  Biogen
  IDEC
  Biogen
Sales                    
FY 2003E   28.4 % 71.6 % 30.8 % 69.2 % 2.378x
FY 2007E   38.7 % 61.3 % 39.9 % 60.1 % 1.609x

EBIT

 

 

 

 

 

 

 

 

 

 
FY 2003E   40.5 % 59.5 % 41.5 % 58.5 % 1.504x
FY 2007E   53.4 % 46.6 % 53.0 % 47.0 % 0.956x

Net Income

 

 

 

 

 

 

 

 

 

 
FY 2003E   35.9 % 64.1 % 35.9 % 64.1 % 1.903x
FY 2007E   47.9 % 52.1 % 47.9 % 52.1 % 1.164x

Equity Market Capitalization

 

51.5

%

48.5

%

51.5

%

48.5

%

 

Enterprise Value

 

51.7

%

48.3

%

 

 

 

 

 

Pro Forma Merger Analysis

        Based upon Biogen's management's estimates and projections for Biogen and IDEC's management's estimates and projections for IDEC, as adjusted by Biogen's management, Goldman Sachs prepared a sensitivity analysis for both IDEC and Biogen as to the effect of the merger on their respective cash and GAAP earnings per share, or EPS, assuming realization of various percentage

52



levels of cost synergies projected by Biogen management as a result of the combination of IDEC and Biogen over the period of 2003 to 2007.

        Goldman Sachs' analysis indicated that for Biogen the proposed merger would be dilutive to GAAP EPS in 2003 and in 2007. Assuming realization of operating synergies projected by Biogen's and IDEC's managements and excluding identifiable intangible asset amortization and other merger related expenses, this analysis indicated that the merger would be dilutive to cash EPS in 2003 and accretive to cash EPS in 2007.

        For IDEC, assuming realization of operating synergies projected by Biogen's and IDEC's managements, this analysis indicated that the merger would be dilutive to GAAP EPS in 2003 and accretive to GAAP EPS in 2007 and it would be accretive to cash EPS beginning in 2003.

Stock Price Analysis

        Based upon Biogen's and IDEC's managements' estimates for 2004 cash earnings per share for the pro forma combined entity resulting from the merger, Goldman Sachs derived a range of implied values per share of Biogen common stock assuming a 1.15 exchange ratio, price to earnings multiples for the stock of the combined entity ranging from 22.0x to 30.0x and realization of projected cost synergies from 0% to 100%. The low and high ends of the range of price to earnings multiples were derived by dividing the prices of Biogen and IDEC common stock by the Wall Street consensus estimates of the 2004 earnings per share for Biogen and IDEC, respectively. Based upon this analysis, Goldman Sachs derived an implied range of values per share of Biogen common stock of $41.45 to $57.92.

        Based upon Biogen's management's estimates for 2004 cash earnings per share for the pro forma combined entity resulting from the merger, Goldman Sachs derived a range of implied values per share of Biogen common stock assuming a 1.15 exchange ratio, PEG ratios (price to earnings ratio divided by growth rate in earnings per share) for the stock of the combined entity ranging from 1.30x to 1.80x and realization of projected cost synergies from 0% to 100%. The range of PEG ratios was derived by dividing the range of price to earnings multiples described above by Wall Street consensus estimates of long-term growth for Biogen and IDEC, respectively. Based upon this analysis, Goldman Sachs derived a range of indicative values per share of Biogen common stock of $48.99 to $69.51.

        The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary described above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Goldman Sachs' opinion. In arriving at its fairness determination, Goldman Sachs considered the results of all the analyses and did not attribute any particular weight to any factor or analysis considered by it; rather, Goldman Sachs made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all the analyses. No company used in the above analyses as a comparison is directly comparable to Biogen or IDEC.

        Goldman Sachs prepared these analyses solely for purposes of providing an opinion to the Biogen board of directors as to the fairness from a financial point of view to holders of Biogen common stock of the exchange ratio of 1.15 shares of IDEC common stock to be received for each share of Biogen common stock. These analyses do not purport to be appraisals or to necessarily reflect the prices at which the business or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty and are based upon numerous factors or events beyond the control of the parties or their respective advisors, none of Biogen, IDEC or Goldman Sachs assumes responsibility if future results are materially different from those forecast.

        As described above, the opinion of Goldman Sachs to Biogen's board of directors was one of many factors taken into consideration by Biogen's board in making its determination to approve the merger

53



agreement. The foregoing summary does not purport to be a complete description of the analyses performed by Goldman Sachs.

        Goldman Sachs, as part of its investment banking business, is continually engaged in performing financial analyses with respect to businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities as private placements as well as for estate, corporate and other purposes. Goldman Sachs has acted as financial advisor to Biogen in connection with, and has participated in certain of the negotiations leading to, the transaction. In addition, Goldman Sachs has provided certain investment banking services to Biogen in the past, and may provide investment banking services to Biogen, IDEC and the combined company in the future, for which services Goldman Sachs has received, or may receive compensation.

        Biogen selected Goldman Sachs as its financial advisor because Goldman Sachs is an internationally recognized investment banking firm that has substantial experience in transactions similar to the transaction contemplated by the merger agreement. In addition, Goldman Sachs provides a full range of financial advisory and securities services and, in the course of its normal trading activities, may from time to time effect transactions and hold long and short positions in securities, including derivative securities, of Biogen and IDEC for its own account and for the accounts of customers.

        Pursuant to a letter agreement, dated January 31, 2003, Biogen engaged Goldman Sachs to act as its financial advisor in connection with a potential transaction involving IDEC. Pursuant to this letter agreement, Biogen agreed to pay Goldman Sachs a transaction fee of $14 million. Of this amount, a fee of one million dollars was paid upon the execution of the merger agreement and a fee of $13 million is payable upon completion of the merger. Biogen has also agreed to pay Goldman Sachs an additional two million dollars, payable upon completion of the merger, in connection with Biogen's review of alternatives relating to collaboration arrangements in connection with a potential transaction involving IDEC. Biogen has also agreed to reimburse Goldman Sachs for its reasonable out-of-pocket expenses, including attorneys' fees and disbursements, and to indemnify Goldman Sachs against certain liabilities, including certain liabilities under the federal securities laws.

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INTERESTS OF CERTAIN PERSONS IN THE MERGER

Interests of Executive Officers and Directors of IDEC in the Merger

        IDEC's directors and executive officers have interests in the merger as individuals in addition to, and that may be different from, their interests as stockholders. In particular, all executive officers have interests in the combined company as employees in terms of job responsibilities, working environment and compensation which are in addition to and different from their interests as stockholders. All continuing directors will have the responsibility for being directors of a new and larger company after the merger. Specific agreements with certain executive officers are described below. IDEC's board of directors was aware of these interests and considered them in its decision to approve the merger agreement.

Employment Agreement with William H. Rastetter, Ph.D.

        IDEC currently does not have in effect an employment agreement with William H. Rastetter, Ph.D. In connection with the signing of the merger agreement, IDEC has entered into an employment agreement with Dr. Rastetter, which will become effective upon completion of the merger. The agreement has a three-year initial term and contains a provision that automatically extends the term by one day on a daily basis beginning one year after the merger, unless written notice not to renew the agreement is given. The agreement provides that Dr. Rastetter will serve as the Executive Chairman of the combined company and Chairman of the Board of Directors of the combined company. Pursuant to the agreement, Dr. Rastetter also will be responsible for discovery research, venture strategy and investment, public policy and public relations, corporate strategy, portfolio management and strategic initiatives functions of the company.

        The agreement provides that Dr. Rastetter will receive a minimum annual base salary of $900,000 during the term and provides for an annual target bonus opportunity equal to his annual base salary. The agreement provides that Dr. Rastetter will receive severance payments in the event of a termination of his employment by the company (other than a termination for "cause" or due to his disability (in each case as defined in the agreement)) or by Dr. Rastetter for "good reason" (as defined in the agreement), including a lump-sum payment in an amount equal to three times the sum of (x) his annual base salary and (y) his annual target bonuses. In addition, Dr. Rastetter would receive a pro-rata bonus for the year in which such termination occurred and all of Dr. Rastetter's then outstanding unvested options immediately would vest and become exercisable upon such termination of employment. If payments in an amount greater than $100,000 made to Dr. Rastetter under the agreement (or any other plan or agreement) are subject to excise tax under the provisions of Section 4999 of the Code, the agreement provides that the company will pay him an additional amount such that the amount retained by him would equal the net amount of payments which would have been received by him absent application of the excise tax. Also, in the event of a legal proceeding related to the agreement which occurs on or following a change in control of the company, the company will pay Dr. Rastetter's reasonable legal fees and expenses related to such proceeding. Dr. Rastetter has agreed, pursuant to the agreement, not to compete with the company during his employment and for a period of one year following termination of his employment (such period being reduced to six months for termination on or following the occurrence of a change in control).

IDEC Severance Plans and Agreements

        IDEC has entered into change of control letter agreements, dated as of the later of April 8, 1992 or their date of employment, with the following officers: William H. Rastetter, Ph.D., William R. Rohn, Nabil Hanna, Ph.D., Paul C. Grint, M.D., John M. Dunn, Connie L. Matsui, Michael E. Wiebe, Ph.D., Wolfgang Berthold, Ph.D. and Mark C. Wiggins. Pursuant to these agreements, in the event that the officer is terminated "involuntarily" (as defined in the agreement) within 18 months following a

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"change of control" (as defined in the agreement) of IDEC, unvested options held by the officer that were acquired on or after the date of the officer's letter agreement will accelerate and become fully vested.

        In connection with signing the merger agreement, IDEC adopted the IDEC Executive Severance Plan. Under the plan, all IDEC executives at and above the level of vice president are entitled to severance upon a termination of their employment by IDEC without "cause" (as defined in the plan). This severance protection is not triggered upon the occurrence of the merger, but would be applicable to a qualifying termination prior to or following the merger. The principal severance benefits under this plan consist of (i) a lump sum severance payment ranging from a minimum of six months of annual base salary or target bonus (for executives at the level of vice president) or nine months (for executives at the level of senior or executive vice president) up to a maximum of 12 to 18 months of such payments and (ii) continuation of medical and dental insurance benefits for a corresponding period. A total of 16 executives are participants in the plan.

        IDEC's bylaws will be amended upon completion of the merger to provide that, until the third anniversary of the completion of the merger, the affirmative vote of at least 80% of IDEC's entire board of directors (excluding directors who are then serving as an officer or employee of IDEC) will be required to (i) remove William H. Rastetter, Ph.D., from his position as the Executive Chairman of the combined company and Chairman of the Board of Directors of the combined company or significantly diminish his position, authority, duties or responsibilities or (ii) remove James C. Mullen from his position as Chief Executive Officer of the combined company or significantly diminish his position, authority, duties or responsibilities.

Interests of Executive Officers and Directors of Biogen in the Merger

        Biogen's directors and executive officers have interests in the merger as individuals in addition to, and that may be different from, their interests as stockholders. In particular, all executive officers have interests in the combined company as employees in terms of job responsibilities, working environment and compensation which are in addition to and different from their interests as stockholders. All continuing directors will have the responsibility for being directors of a new and larger company after the merger. Specific agreements with certain executive officers are described below. Biogen's board of directors was aware of these interests and considered them in its decision to approve the merger agreement.

New Employment Agreement with James C. Mullen

        Biogen currently has an employment agreement with James C. Mullen. In connection with the signing of the merger agreement, IDEC has entered into an employment agreement with Mr. Mullen which will become effective upon completion of the merger and will supercede and replace the existing employment agreement between Mr. Mullen and Biogen. The agreement has a three-year initial term and contains a provision that automatically extends the term by one day on a daily basis beginning one year after the merger, unless written notice not to renew the agreement is given. The agreement provides that Mr. Mullen will serve as the Chief Executive Officer of the combined company and a member of its board of directors. Pursuant to the agreement, Mr. Mullen will report to the Executive Chairman of the combined company, and all functions of the combined company (other than discovery research, venture strategy and investment, public policy and public relations, corporate strategy, portfolio management and strategic initiatives functions of the company), including commercial operations and technical operations, product development and clinical research, program management, regulatory affairs, business development, information technology, investor relations, finance, human resources, legal and governmental affairs, will report to Mr. Mullen.

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        The agreement provides that Mr. Mullen receive a minimum annual base salary of $900,000 during the term and provides for an annual target bonus opportunity equal to his annual base salary. The agreement provides that Mr. Mullen will receive severance payments in the event of termination of his employment by the company (other than a termination for "cause" or due to his disability (in each case as defined in the agreement)) or by Mr. Mullen for good reason (as defined in the agreement), including a lump sum payment in an amount equal to three times the sum of (x) his annual base salary and (y) his annual target bonuses. In addition, Mr. Mullen would receive a pro-rata bonus for the year in which such termination occurred and all of Mr. Mullen's then outstanding options which were not yet vested and exercisable would become immediately vested and exercisable upon such termination of employment. If payments in an amount greater than $100,000 made to Mr. Mullen under the agreement (or any other plan or agreement) are subject to excise tax under the provisions of Section 4999 of the Code, the agreement provides that the company will pay him an additional amount such that the amount retained by him would equal the net amount of payments which would have been received by him absent application of the excise tax. Also, in the event of a legal proceeding related to the agreement which occurs on or following a change in control of the company, the company will pay Mr. Mullen's reasonable legal fees and expenses related to such proceeding. Mr. Mullen has agreed, pursuant to the agreement, not to compete with the company during his employment and for a period of one year following termination of his employment (such period being reduced to six months for termination on or following the occurrence of a change in control).

        The principal changes to Mr. Mullen's new employment agreement from his prior employment agreement are the following: (i) his position is changed from President, Chief Executive Officer and Chairman of the Board of Directors of Biogen to Chief Executive Officer and member of the IDEC board of directors; (ii) Mr. Mullen reports to the combined company's Chairman of the Board of Directors rather than to the board of directors as a whole; (iii) payments due from the company upon Mr. Mullen's termination of employment by the company without cause or by Mr. Mullen for good reason increase from two times annual base salary and target bonus to three times such amounts and his employee benefits continuation increased from 24 months to 36 months following such a termination; and (iv) upon such a termination, the new agreement vests all outstanding stock options held by Mr. Mullen.

Biogen Severance Plans and Agreements

        Pursuant to the Biogen Executive Severance Plan, all Biogen executives at and above the level of vice president are entitled to severance upon a termination of their employment by Biogen without "cause" (as defined in the plan). This severance protection is not triggered upon the occurrence of the merger, but would be applicable to a qualifying termination prior to or following the merger. The principal severance benefits under this plan consist of (i) a lump sum severance payment ranging from a minimum of six months of annual base salary or target bonus (for executives at the level of vice president) or nine months (for executives at the level of senior or executive vice president) up to a maximum of 12 to 18 months of such payments and (ii) continuation of medical and dental insurance benefits for a corresponding period. A total of 52 executives are participants in the plan.

        Pursuant to the original terms of letter agreements between Biogen and each of Peter Kellogg and Hans-Peter Hasler, dated June 21, 2000 and October 8, 2001, respectively, if such executive's employment its terminated as a result of a change of control of Biogen, the remaining principal and interest on the mortgage loan from Biogen to the terminated executive would be forgiven. The merger does not constitute a change of control under these agreements. The amount of remaining principal outstanding with respect to these interest-free mortgage loans is $1,000,000 with respect to Mr. Kellogg's loan and $250,000 with respect to Mr. Hasler's loan. Each of these letter agreements, and a letter agreement between Biogen and Craig E. Schneier, Ph.D., dated June 22, 2001, also provide for a signing bonus, structured in the form of a loan from Biogen, which is being forgiven over a 36-month

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period from the making of the loan and which will be forgiven in full if the executive is terminated without cause. The amount of these signing bonuses was $200,000 with respect to Mr. Kellogg and $250,000 with respect to each of Messrs. Hasler and Schneier. In addition, Mr. Schneier will be paid his severance benefits (which are as described above) in the event his employment terminates at a time when Mr. Mullen is no longer President and Chief Executive Officer of Biogen.

Treatment of Biogen Stock Options

        In the merger, each outstanding stock option for Biogen common stock will be converted into an option to purchase common stock of the combined company as of the date of the completion of the merger. The number of shares of common stock underlying the new option will equal the number of shares of Biogen common stock to which the corresponding Biogen option was subject, multiplied by 1.15. The per share exercise price of each new IDEC option will be equal to the exercise price of the corresponding Biogen option divided by 1.15. All other terms of the Biogen stock option will remain unchanged after the conversion.

Indemnification; Directors' and Officers' Insurance

        The merger agreement generally provides that following completion of the merger, the combined company will fulfill the obligations of Biogen pursuant to any indemnification agreements between Biogen and its directors or officers. Following the merger, the certificate of incorporation and bylaws of the combined company will contain provisions with respect to indemnification that are at least as favorable to Biogen directors and officers as those contained in the Biogen articles of organization and bylaws in effect on the date the merger agreement was executed. These provisions will not be adversely amended or repealed for a period of six years following completion of the merger, unless such modification is required by law. For a period of six years after the completion of the merger, the combined company will continue in effect the current policies of directors' and officers' and fiduciary liability insurance maintained by Biogen (or no less favorable substitute policies), but only with respect to claims arising from facts or events which occurred at or before the completion of the merger.

        Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the registrant pursuant to the foregoing provisions, IDEC has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

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THE MERGER AGREEMENT

        The following is a summary of the material terms of the merger agreement. This summary does not purport to describe all of the terms of the merger agreement and is qualified by reference to the complete merger agreement which is included as Annex A to this joint proxy statement/prospectus and incorporated by reference herein. All stockholders of IDEC and Biogen are urged to read the entire merger agreement carefully.

General

        Under the merger agreement, Bridges Merger Corporation, a wholly owned subsidiary of IDEC, will merge with and into Biogen, with Biogen continuing as the surviving corporation. As a result of the merger, Biogen will become a wholly owned subsidiary of IDEC.

Closing Matters

        Closing.    Unless the parties agree otherwise, the closing of the merger will take place on a date specified by the parties but no later than the second business day after all closing conditions have been satisfied or waived at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, One Beacon Street, Boston, Massachusetts 02108. See "Conditions to Completion of the Merger" below for a more complete description of the conditions that must be satisfied or waived prior to closing.

        Completion of the Merger.    As soon as practicable after the satisfaction or waiver of the conditions to the merger, IDEC and Biogen will file articles of merger with the Secretary of the Commonwealth of Massachusetts in accordance with the relevant provisions of the Massachusetts Business Corporation Law. The merger will become effective when the articles of merger are filed or at such later time as IDEC and Biogen agree and specify in the articles of merger.

Consideration to be Received in the Merger; Treatment of Stock Options

        The merger agreement provides that, at the completion of the merger:

        As soon as practicable after the completion of the merger, the combined company will deliver notices to the holders of Biogen stock options. These notices will set forth each holder's rights under the Biogen stock plans as assumed by the combined company, including that, in connection with the merger and pursuant to the terms of the Biogen stock plans, the agreements evidencing the grants of the Biogen stock options will continue in effect on the same terms and conditions, taking into account provisions providing for full vesting of those options and the adjustments to the number of shares underlying, and the exercise price of, the options. To the extent permitted by law, IDEC will comply with the terms of the Biogen stock plans and will use its commercially reasonable efforts to ensure that

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the stock options which qualified as incentive stock options prior to the completion of the merger continue to qualify as incentive stock options of the combined company after the merger.

Exchange of Certificates in the Merger

        Before the closing of the merger, an exchange agent will be appointed to handle the exchange of Biogen stock certificates for certificates representing shares of IDEC common stock and the payment of cash for fractional shares. Promptly after the closing of the merger, the exchange agent will send a letter of transmittal to each former Biogen stockholder explaining the procedure for surrendering Biogen stock certificates in exchange for certificates representing the number of shares of IDEC common stock into which the shares of Biogen common stock were converted in the merger. A former Biogen stockholder should, if required, complete the substitute IRS Form W-9 included with the letter of transmittal to avoid possible backup withholding tax on cash in lieu of fractional shares of common stock of the combined company of $20 or more.

        After the completion of the merger, each certificate that previously represented shares of Biogen common stock will only represent the right to receive the shares of IDEC common stock into which those shares of Biogen common stock have been converted. In addition, after the completion of the merger, Biogen will not register any transfers of the shares of Biogen common stock. IDEC stockholders need not exchange their stock certificates.

Fractional Shares

        No fractional shares of IDEC common stock will be issued in the merger. Instead, the exchange agent will pay each of those stockholders who would have otherwise been entitled to a fractional share of IDEC common stock an amount in cash determined by multiplying the fractional share interest by the average closing price, as reported on the Nasdaq National Market, of one share of IDEC common stock for the ten most recent trading days preceding the date of the merger.

Listing of Common Stock of the Combined Company

        IDEC has agreed to use all commercially reasonable efforts to cause the shares of IDEC common stock to be issued in the merger and the shares of IDEC common stock to be reserved for issuance upon exercise of the Biogen stock options to be approved for listing on the Nasdaq National Market, subject to official notice of issuance, in connection with the completion of the merger. IDEC's symbol "IDPH" will be changed to "BIIB" effective upon the first trading day following the merger, assuming the listing application is approved. Approval for listing on the Nasdaq National Market of the shares of IDEC common stock issuable to Biogen stockholders in the merger, subject only to official notice of issuance, is a condition to the obligations of IDEC and Biogen to complete the merger.

Covenants

        Each of IDEC and Biogen have undertaken certain covenants in the merger agreement restricting the conduct of our respective businesses between the date the merger agreement was signed and the completion of the merger. Some of these covenants are complicated and not easily summarized. You are urged to read carefully the section of the merger agreement entitled "Conduct of Business." The following summarizes the more significant of these covenants:

        Conduct of Business.    Except as expressly required by, or provided for, in the merger agreement, or agreed to by the other party in writing, each of Biogen and IDEC is required to carry on its business in the ordinary course, consistent with past practice and use all commercially reasonable efforts to (i) preserve its current business organization, (ii) maintain the services of its current officers and key employees and (iii) preserve its relationships with its customers, suppliers and other persons with which it has significant business relations.

        Required Consent.    Without the prior written consent of the other party, and with certain exceptions described in the merger agreement (which exceptions apply to certain but not all of the following items), none of Biogen, IDEC or any of their respective subsidiaries may take any of the following actions or authorize, commit or agree to take any of the following actions:

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        Consultation.    Subject to certain exceptions and to the extent permitted by applicable law, each of IDEC and Biogen must use commercially reasonable efforts to consult with the other party (and to consider in good faith the advice of such party) prior to taking any of the following actions (or authorizing, committing or agreeing to take any of the following actions):

        Biogen has also agreed to use its commercially reasonable efforts to consult with IDEC with respect to obtaining any consent or waiver regarding the merger under the collaboration agreement between Biogen and Elan and with respect to any acquisition or disposition of any asset, right or license which is the subject of that collaboration agreement. Provided Biogen has materially complied with this consultation requirement, any amendment, termination or waiver of the collaboration agreement between Biogen and Elan or any other agreement or transaction involving Biogen in connection with obtaining such consent or waiver or such an acquisition or dispostion, and any act, effect or occurrence or state of facts arising therefrom, shall not constitute a breach by Biogen of the merger agreement or a failure by Biogen to satisfy any closing condition in the merger agreement. By waiver dated June 20, 2003, Elan waived, in respect of the merger, certain change of control and related buy-sell provisions in the collaboration agreement between Biogen and Elan.

        No Solicitation.    Each of IDEC and Biogen has agreed that, except in certain circumstances, IDEC and Biogen and their respective subsidiaries will not, nor will either company authorize or

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permit any of its officers, directors, employees, financial advisors, attorneys, accountants or other representatives to, take any of the following actions:

        The merger agreement also provides that each party will promptly advise the other of the status and terms of any alternative transaction proposal or any inquiry or request for information relating to any alternative transaction proposal and the status and terms of any such discussions or negotiations. Each of IDEC and Biogen shall also notify the other of any meeting of the board of directors of such party at which any alternative transaction proposal is reasonably likely to be considered.

        An "alternative transaction" includes, with respect to any party, with certain exceptions, any liquidation or dissolution of such party, or any transaction or series of related transactions with one or more third parties involving any one or more of the following:

        Each of IDEC and Biogen, in response to an unsolicited, bona fide, written proposal for an alternative transaction that is determined in accordance with the merger agreement by such party's board of directors to constitute a "superior proposal" (as defined on page 64 of this joint proxy statement/prospectus), may (i) furnish its nonpublic information to a person proposing such superior proposal and (ii) participate in discussions or negotiations with such person regarding such superior proposal if all of the following conditions are met:

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        In response to the receipt of an unsolicited proposed alternative transaction that is determined to be a superior proposal, the board of directors of the party receiving such proposal may withhold, withdraw, amend or modify its recommendation in favor of the merger and, in the case of a tender or exchange offer made directly to stockholders, may recommend that the stockholders accept the tender or exchange offer if all of the following conditions are met:

        A "superior proposal," with respect to a party, means any unsolicited, bona fide written proposal made by a third party to acquire, directly or indirectly, pursuant to a tender offer, exchange offer, merger, consolidation or other business combination:

        No proposed alternative acquisition will be deemed to be a superior proposal if such proposal is subject to a financing condition or any financing required to consummate such acquisition proposal is not committed.

        In addition, in no event may either party submit any alternative transaction or superior proposal to its stockholders for approval during the term of the merger agreement. No alternative transaction or change of recommendation will limit or otherwise affect the obligation of Biogen or IDEC to convene

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their respective special meeting in connection with the merger that is the subject of this joint proxy statement/prospectus. However, neither IDEC nor Biogen is prohibited from disclosing to its stockholders a position relating to a tender offer or exchange offer which constitutes a superior proposal.

Other Covenants and Agreements

        Expenses.    Each company has agreed to pay its own costs and expenses incurred in connection with the merger and the merger agreement. Each company has agreed to pay 50% of any expenses incurred in connection with the filing with the Securities and Exchange Commission of the registration statement of which this joint proxy statement/prospectus forms a part, the HSR Act filing fees and the costs associated with the printing and mailing of this joint proxy statement/prospectus.

        Election to IDEC's Board of Directors.    In connection with the completion of the merger, IDEC will expand its board of directors to 12 members and will cause the election of six members to be designated by Biogen. Six members of IDEC's board prior to the merger will continue to serve as directors following the merger. These board members will include James C. Mullen, Biogen's existing Chairman and Chief Executive Officer, and William H. Rastetter, Ph.D., IDEC's existing Chairman and Chief Executive Officer. Dr. Rastetter will serve as Executive Chairman of the combined company and Chairman of the Board of Directors of the combined company, and Mr. Mullen will serve as President and Chief Executive Officer of the combined company following the merger. In addition, (i) the committees of the board of directors following the merger will comprise an equal number of Biogen-designated directors and IDEC-designated directors, (ii) each of the three classes of directors following the merger will include two Biogen-designated directors and two IDEC-designated directors, (iii) Dr. Rastetter and Mr. Mullen will be elected to the class of directors with the longest remaining term, (iv) the Chairman of the compensation committee of the combined company will be an IDEC-designated director and (v) the Chairman of the corporate governance and nominating committee and the finance and audit committee of the combined company will be Biogen-designated directors.

        Other Covenants and Agreements.    The merger agreement contains certain other covenants and agreements, including covenants relating to:

        IDEC's bylaws will also be amended upon completion of the merger to provide that, until the third anniversary of the completion of the merger, the affirmative vote of at least 80% of IDEC's entire

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board of directors (excluding directors who are then serving as an officer or employee of IDEC) will be required to (i) remove William H. Rastetter, Ph.D., from his position as the Executive Chairman of the combined company and Chairman of the Board of Directors of the combined company or significantly diminish his position, authority, duties or responsibilities or (ii) remove James C. Mullen from his position as Chief Executive Officer of the combined company or significantly diminish his position, authority, duties or responsibilities.

Representations and Warranties

        The merger agreement contains substantially reciprocal representations and warranties, many of which are qualified by materiality, made by each of us to the other. The representations and warranties relate to, among other topics, the following:

        The merger agreement also contains certain representations and warranties of IDEC with respect to its wholly owned subsidiary, Bridges Merger Corporation, including corporate organization and authorization, absence of a breach of the certificate of incorporation and the bylaws, no prior business activities and capitalization of the merger subsidiary.

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Conditions to Completion of the Merger

        The obligations of Biogen and IDEC to complete the merger are subject to the satisfaction of the following conditions:

        In addition, each of Biogen's and IDEC's obligation to effect the merger are subject to the satisfaction or waiver of the following additional conditions:

Termination of Merger Agreement

        Right to Terminate.    The merger agreement may be terminated at any time prior to the completion of the merger, whether before or after the stockholder approvals have been obtained by either IDEC or Biogen, or both, under the following circumstances:

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Termination Fee

        If terminated, the merger agreement will become void and, except in circumstances where a termination fee is payable or in instances of a willful breach of any representation or warranty in the merger agreement or a breach of any covenant or agreement contained in the merger agreement, neither party will have any liability to the other party under the merger agreement. Upon a termination, a party may become obligated to pay to the other party a termination fee, as described below:

        Biogen will be obligated to pay a termination fee to IDEC equal to up to $230 million as follows:

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        No termination fee will be payable by Biogen if (i) the merger agreement is terminated by IDEC solely as a result of Biogen's board of directors changing its recommendation with respect to the merger in accordance with the terms of the merger agreement as a result of a material adverse change of IDEC and (ii) prior to such termination, no third party has announced an offer or indication of interest with respect to an alternative transaction involving Biogen.

        IDEC will be obligated to pay a termination fee to Biogen equal to up to $230 million as follows:

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        No termination fee will be payable by IDEC if (i) the merger agreement is terminated by Biogen solely as a result of the board of directors of IDEC changing its recommendation with respect to the merger in accordance with the terms of the merger agreement as a result of a material adverse change of Biogen and (ii) prior to such termination, no third party has announced an offer or indication of interest with respect to an alternative transaction involving IDEC.

        An "acquisition" involving IDEC or Biogen means, with certain exceptions, any of the following:

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Amendments, Extensions and Waivers

        Amendment.    The merger agreement may be amended by the parties at any time before or after the stockholder meetings to approve the merger. However, following the stockholder meetings, an amendment that changes the amount or form of consideration to be delivered to Biogen stockholders can only be effected with approval of the Biogen and IDEC stockholders.

        Extension; Waiver.    At any time prior to the completion of the merger, any party may (i) extend the time for performance of any obligations or other acts of the other party, (ii) waive any inaccuracies in the representations and warranties of the other party contained in the merger agreement or in any document delivered pursuant to the merger agreement or (iii) with certain exceptions, waive compliance by another party with any of the agreements or conditions contained in the merger agreement.

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PRO FORMA FINANCIAL DATA

IDEC and Biogen Unaudited Pro Forma Condensed Combined Financial Statements

        The following unaudited pro forma condensed combined financial statements give effect to the merger of IDEC and Biogen in a transaction to be accounted for as a purchase with IDEC treated as the acquiror. The unaudited pro forma condensed combined balance sheet combines the historical consolidated balance sheets of IDEC and Biogen as of June 30, 2003, giving effect to the merger as if it occurred on June 30, 2003. The unaudited pro forma condensed combined statements of income combine the historical consolidated statements of income of IDEC and Biogen for the year ended December 31, 2002 and the six months ended June 30, 2003, giving effect to the merger as if it occurred on January 1, 2002, reflecting only pro forma adjustments expected to have a continuing impact on the combined results.

        These unaudited pro forma condensed combined financial statements are for informational purposes only. They do not purport to indicate the results that would have actually been obtained had the merger been completed on the assumed date or for the periods presented, or which may be realized in the future. To produce the pro forma financial information, IDEC allocated the purchase price using its best estimates of fair value. These estimates are based on the most recently available information. To the extent there are significant changes to Biogen's business, including results from ongoing clinical trials, the assumptions and estimates herein could change significantly. Furthermore, the parties expect to have reorganization and restructuring expenses as well as potential operating efficiencies as a result of combining the companies. The pro forma financial information does not reflect these potential expenses and efficiencies. The unaudited pro forma condensed combined financial statements should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the historical consolidated financial statements, including the related notes, of IDEC and Biogen covering these periods, incorporated by reference into this joint proxy statement/prospectus. See "Where You Can Find More Information" on page 118 for more information.

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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
Six Months Ended June 30, 2003
(Amounts in thousands, except per share amounts)

 
  IDEC
  Biogen
  Pro Forma
Adjustments

  Note 3
Reference

  Pro Forma
Combined

Revenues:                            
  Product sales   $ 10,642   $ 571,326           $ 581,968
  Royalties         71,883             71,883
  Revenues from unconsolidated joint business     229,276                 229,276
  Corporate partner revenues     890     3,136     (3,136 ) J     890
   
 
 
     
    Total revenues     240,808     646,345     (3,136 )       884,017
   
 
 
     
Operating costs and expenses:                            
  Cost of sales     4,643     91,912     240   N      
                  34   M     96,829
  Research and development     76,827     201,189     (3,136 ) J      
                  119,127   L      
                  501   N      
                  768   I      
                  692   M     395,968
  Selling, general and administrative     53,052     191,374     859   N      
                  99   M      
                  120   Q     245,504
   
 
 
     
    Total operating costs and expenses     134,522     484,475     119,304         738,301
   
 
 
     
Income from operations     106,286     161,870     (122,440 )       145,716
   
 
 
     
Other income (expenses), net     6,563     6,747             13,310
   
 
 
     
Income before income taxes     112,849     168,617     (122,440 )       159,026
Income taxes     42,883     47,213     (35,044 ) O     55,052
   
 
 
     
Net income   $ 69,966   $ 121,404   $ (87,396 )     $ 103,974
   
 
 
     

Basic earnings per share

 

$

0.45

 

 

 

 

 

 

 

 

 

$

0.32
   
                 
Diluted earnings per share   $ 0.41                   $ 0.30
   
                 

Shares used in calculating earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Basic     154,924     149,552     (149,552 ) P      
   
 
               
                  171,950   P     326,874
  Diluted     178,066     151,467     (151,467 ) P      
   
 
               
                  174,187   P     352,253

See the accompanying Notes to Unaudited Pro Forma Condensed Combined Financial Statements, which are an integral part of these statements.

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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
Year Ended December 31, 2002
(Amounts in thousands, except per share amounts)

 
  IDEC
  Biogen
  Pro Forma
Adjustments

  Note 3
Reference

  Pro Forma
Combined

 
Revenues:                              
  Product sales   $ 13,711   $ 1,034,357   $       $ 1,048,068  
  Royalties         114,007             114,007  
  Revenues from unconsolidated joint business     385,809                 385,809  
  Corporate partner revenues     4,702                 4,702  
   
 
 
     
 
    Total revenues     404,222     1,148,364             1,552,586  
   
 
 
     
 
Operating costs and expenses:                              
  Cost of sales     1,457     160,159     480   N        
                  250   M     162,346  
  Research and development     93,648     367,567     238,254   L        
                  1,001   N        
                  (568 ) I        
                  1,190   M     701,092  
  Selling, general and administrative     95,241     324,001     1,718   N        
                  210   M        
                  240   Q     421,410  
   
 
 
     
 
    Total operating costs and expenses     190,346     851,727     242,775         1,284,848  
   
 
 
     
 
Income from operations     213,876     296,637     (242,775 )       267,738  
   
 
 
     
 
Other income (expenses), net     17,646     (20,042 )           (2,396 )
   
 
 
     
 
Income before income taxes     231,522     276,595     (242,775 )       265,342  
Income taxes     83,432     77,447     (70,086 ) O     90,793  
   
 
 
     
 
Net income   $ 148,090   $ 199,148   $ (172,689 )     $ 174,549  
   
 
 
     
 
Basic earnings per share   $ 0.97                   $ 0.54  
   
                 
 
Diluted earnings per share   $ 0.85                   $ 0.51  
   
                 
 

Shares used in calculating earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Basic     153,086     149,337     (149,337 ) P     324,824  
   
 
           
 
                  171,738   P        
  Diluted     179,634     151,930     (151,930 ) P     354,354  
   
 
           
 
                  174,720   P        

See the accompanying Notes to Unaudited Pro Forma Condensed Combined Financial Statements, which are an integral part of these statements.

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UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
As of June 30, 2003
(Amounts in thousands)

 
  IDEC
  Biogen
  Pro Forma
Adjustments

  Note 3
Reference

  Pro Forma
Combined

 
ASSETS                              
Current assets:                              
  Cash and cash equivalents   $ 292,538   $ 62,151   $       $ 354,689  
  Marketable securities     445,096     795,744             1,240,840  
  Accounts receivable, net     1,991     197,154     (1,987 ) J     197,158  
  Inventories     38,419     83,505     443,000   H     564,924  
  Other current assets     149,997     77,824             227,821  
   
 
 
     
 
    Total current assets     928,041     1,216,378     441,013         2,585,432  
   
 
 
     
 
Marketable securities     713,059                   713,059  
Property, plant & equipment     368,503     764,598     29,443   H     1,162,544  
Other assets     148,974     40,610             189,584  
Intangibles, net         16,762     (16,762 ) I        
                  3,760,000   B     3,760,000  
Goodwill             1,237,874   B     1,237,874  
   
 
 
     
 
    Total assets   $ 2,158,577   $ 2,038,348   $ 5,451,568       $ 9,648,493  
   
 
 
     
 
LIABILITIES AND STOCKHOLDERS' EQUITY                              
Current liabilities:                              
  Accounts payable and accrued expenses   $ 51,440   $ 164,681   $ (1,987 ) J   $  
                  20,250   D     234,384  
  Other current liabilities     806     75,804     114,760   E     191,370  
   
 
 
     
 
    Total current liabilities     52,246     240,485     133,023         425,754  
   
 
 
     
 
Notes payable     876,641     34,966             911,607  
Deferred tax liabilities         33,702     1,099,219   E     1,132,921  
Other liabilities     29,559     19,053     17,000   F     65,612  
   
 
 
     
 
    Total liabilities     958,446     328,206     1,249,242         2,535,894  
   
 
 
     
 
Stockholders' equity:                              
  Convertible preferred stock                        
  Common stock     79     1,517     (1,517 ) G        
                  86   A     165  
  Additional paid-in-capital     998,886     840,237     (840,237 ) G        
                  6,456,579   A        
                  309,761   A     7,765,226  
  Accumulated other comprehensive income     3,024     28,483     (28,483 ) G     3,024  
  Retained earnings (deficit)     333,142     913,296     (913,296 ) G        
                  (845,000 ) C     (511,858 )
  Deferred compensation                 (8,958 ) K     (8,958 )
  Less treasury stock, at cost     135,000     73,391     (73,391 ) G     135,000  
   
 
 
     
 
    Total stockholders' equity     1,200,131     1,710,142     4,202,326         7,112,599  
   
 
 
     
 
    Total liabilities and stockholders' equity   $ 2,158,577   $ 2,038,348   $ 5,451,568       $ 9,648,493  
   
 
 
     
 

See accompanying Notes to Unaudited Pro Forma Condensed Combined Financial Statements, which are an integral part of these statements.

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NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS

1.
DESCRIPTION OF TRANSACTION AND BASIS OF PRESENTATION

        On June 20, 2003, IDEC and Biogen signed an Agreement and Plan of Merger under which a wholly owned subsidiary of IDEC will merge with and into Biogen in a transaction to be accounted for as a purchase under accounting principles generally accepted in the United States of America. Under the purchase method of accounting, the assets and liabilities of Biogen will be recorded as of the acquisition date, at their fair values and added to those of IDEC. The reported financial condition and results of operations of IDEC after completion of the merger will reflect these values, but will not be restated retroactively to reflect historical financial position or results of operations at Biogen. The transaction is expected to qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code. Under the terms of the merger agreement, each share of Biogen common stock outstanding at the closing of the merger will be exchanged for 1.15 shares of IDEC common stock, plus cash in lieu of fractional shares. In addition, each option to purchase Biogen common stock that is outstanding on the closing date will be assumed by IDEC and will thereafter constitute an option to acquire the number of shares of IDEC common stock determined by multiplying the number of shares of Biogen common stock subject to the option immediately prior to the merger by 1.15, rounded down to the nearest whole share, with an exercise price equal to the exercise price of the assumed Biogen option divided by 1.15, rounded up to the nearest whole cent. Each of these options will be subject to the same terms and conditions that were in effect for the related Biogen options. The merger is subject to customary closing conditions, including regulatory approvals, as well as approval by IDEC and Biogen stockholders.

2.
PURCHASE PRICE

        A preliminary estimate of the purchase price is as follows (table in thousands):

Fair value of IDEC shares issued   $ 6,456,665
Estimated fair value of IDEC stock options exchanged for Biogen stock options     309,761
Estimated transaction costs incurred by IDEC     20,250
   
Estimated purchase price   $ 6,786,676
   

        The fair value of the IDEC shares used in determining the purchase price was $37.69 per share based on the average of the closing price of IDEC common stock for the period two days before through two days after the June 23, 2003 merger agreement announcement date. The fair value of the IDEC stock options issued was determined using the Black-Scholes option pricing model with the following assumptions: stock price of $37.69, which is the value ascribed to the IDEC shares in determining the purchase price; volatility of 40%; risk-free interest rate of 1.8%; and an expected life of 4.0 years.

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        The estimated purchase price has been allocated to the acquired tangible and intangible assets and liabilities based on their estimated fair values as of June 30, 2003 (table in thousands):

Inventories   $ 526,505  
Accounts receivable     197,154  
Property and equipment     794,041  
Acquired identifiable intangible assets     3,760,000  
In-process research and development     845,000  
Goodwill     1,237,874  
Deferred stock-based compensation     8,958  
Other current and long-term assets     976,329  
Assumed liabilities     (328,206 )
Increase benefit plan liability to fair value     (17,000 )
Deferred tax liabilities arising from fair value adjustments     (1,213,979 )
   
 
Total   $ 6,786,676  
   
 

        The allocation of the purchase price is preliminary. The final determination of the purchase price allocation will be based on the fair values of assets acquired, including the fair values of in-process research and development, other identifiable intangibles and deferred stock-based compensation and the fair values of liabilities assumed as of the date that the merger is consummated. The excess of the purchase price over the fair value of assets and liabilities acquired is allocated to goodwill. The purchase price allocation will remain preliminary until IDEC completes a third-party valuation of significant identifiable intangible assets acquired (including in-process research and development) and determines the fair values of other assets and liabilities acquired. The final determination of the purchase price allocation is expected to be completed as soon as practicable after consummation of the merger. The final amounts allocated to assets and liabilities acquired could differ significantly from the amounts presented in the unaudited pro forma condensed combined financial statements.

        The amount allocated to acquired identifiable intangible assets has been attributed to the following categories (table in thousands):

Patents   $ 670,000
Core technology     3,090,000
   
Total   $ 3,760,000
   

        The estimated fair value attributed to core technology, which relates to Biogen's existing FDA-approved products, was determined based on a discounted forecast of the estimated net future cash flows to be generated from the technology. The estimated fair value attributed to core technology will be amortized over 15 to 19 years which is the estimated period over which cash flows will be generated from the technology.

        The estimated fair value attributed to patents represents only those patents from which Biogen derives cash flows through contractual third-party out-licensing activity and not patents related to Biogen's current product portfolio or in-process research projects. The estimated fair value was determined based on a discounted forecast of the estimated net future cash flows to be generated from the patents. The estimated fair value attributed to patents will be amortized over 17 years which is the estimated period over which cash flows will be generated from the patents.

        The amount allocated to in-process research and development represents an estimate of the fair value of purchased in-process technology for research projects that, as of the expected closing date of the merger, will not have reached technological feasibility and have no alternative future use. Only those research projects that had advanced to a stage of development where management believed reasonable net future cash flow forecasts could be prepared and a reasonable likelihood of technical

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success existed were included in the estimated fair value. Accordingly, the in-process research and development primarily represents the estimated fair value of ANTEGREN, Biogen's drug currently in Phase III development for Crohn's disease and multiple sclerosis. The estimated fair value of the in-process research and development was determined based on a discounted forecast of the estimated net future cash flows for each project, adjusted for the estimated probability of technical success and FDA approval for each research project. In-process research and development will be expensed immediately following consummation of the merger.

3.
PRO FORMA ADJUSTMENTS

(A)
To record the value of the IDEC common stock and stock options issued in the merger. Cash paid in lieu of fractional shares will be from existing cash balances which has not been reflected.

(B)
To record the estimated fair values of acquired identifiable intangible assets and goodwill arising from the merger.

(C)
To record the estimated fair value of in-process research and development acquired in the merger. Because this expense is directly attributable to the acquisition and will not have a continuing impact, it is not reflected in the pro forma condensed combined statements of income. However, this item will be recorded as an expense immediately following consummation of the merger.

(D)
To record the estimated IDEC transaction costs of $20.25 million; transaction costs incurred by Biogen will be expensed as incurred.

(E)
To record the deferred tax liabilities resulting from book-tax basis differences attributable to the fair value adjustments.

(F)
To record the projected benefit obligation associated with Biogen's defined benefit plan at its estimated fair value.

(G)
To eliminate Biogen's historical stockholders' equity accounts.

(H)
To record the estimated step-up of Biogen's inventory and property and equipment from book value to fair value. The step-up in the fair value of Biogen's inventory equals the difference between the carrying value of the inventory and the market value of the inventory determined using the net realizable value method. In accordance with SFAS 141, paragraph 37(c), Biogen's inventory was valued as follows:

Raw materials inventory was valued at estimated current replacement cost, which is equal to the carrying value.

Work in process inventory was valued at the estimated selling price of finished goods less the sum of costs to complete, costs of disposal, and a reasonable profit allowance on the selling efforts and manufacturing/completion efforts.

Finished goods inventory was valued at the estimated selling price less the sum of costs of disposal and a reasonable profit allowance on the selling effort.
Raw materials   $
Work in process     345,000
Finished goods     98,000
   
Total   $ 443,000
   

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4.
FORWARD-LOOKING STATEMENTS

        The statements contained in this section may be deemed to be forward-looking statements within the meaning of Section 21E of the Exchange Act and Section 27A of the Securities Act. Forward-looking statements are typically identified by the words "believe," "expect," "anticipate," "intend," "estimate" and similar expressions. These forward-looking statements are based largely on management's expectations and are subject to a number of uncertainties. Actual results could differ materially from these forward-looking statements. Neither IDEC nor Biogen undertake any obligation to update publicly or revise any forward-looking statements. For a more complete discussion of the risks and uncertainties which may affect such forward-looking statements, please refer to the section entitled "Cautionary Statement Concerning Forward-Looking Statements" on page 21.

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INFORMATION ABOUT THE MEETINGS AND VOTING

The IDEC Special Meeting

        IDEC's board of directors is using this joint proxy statement/prospectus to solicit proxies from the holders of IDEC common stock for use at the special meeting of IDEC stockholders. IDEC is first mailing this joint proxy statement/prospectus and accompanying form of proxy to IDEC stockholders on or about            , 2003.

When and Where the IDEC Special Meeting Will Be Held

        IDEC's special meeting will be held at the Hilton La Jolla at Torrey Pines located at 10950 North Torrey Pines Road in San Diego, California 92037 on               starting at 10:00 a.m., local time.

What Will Be Voted Upon

        At the IDEC special meeting, IDEC stockholders will be asked to consider and vote on the following items:

        IDEC's board of directors unanimously recommends that IDEC stockholders vote FOR each of these proposals. Detailed descriptions of each of these proposals is set forth below:

Proposal to Issue Shares of IDEC Common Stock in the Merger

        At the special meeting, IDEC stockholders will be asked to approve the issuance of up to 192,759,213 shares of IDEC common stock to holders of Biogen common stock in exchange for such holders' shares of Biogen common stock. Stockholder approval of the issuance of these shares of IDEC common stock is a condition to closing the merger, which cannot be waived by the parties. Approval of the proposal to issue shares of IDEC common stock in the merger requires the affirmative vote of at least a majority of the stock having voting power present, in person or by proxy, at the special meeting so long as a quorum is present in person or by proxy at the special meeting.

Proposal to Amend IDEC's Certificate of Incorporation

        At the special meeting, IDEC stockholders will be asked to approve an amendment to IDEC's certificate of incorporation to increase the authorized number of shares of common stock from 500,000,000 to 1,000,000,000 and to change the name of the company to BIOGEN IDEC INC. These changes would become effective only upon the closing of the merger. Approval of the amendment to IDEC's certificate of incorporation is a condition to closing the merger, but may be waived by the parties. IDEC currently has sufficient authorized but unissued shares of common stock under its

81



certificate of incorporation to enable IDEC to complete the merger even if IDEC stockholders do not approve the amendment to the certificate of incorporation; however, IDEC will be unable to change its name to BIOGEN IDEC INC. if the amendment to the certificate of incorporation is not approved.

        IDEC desires to amend its certificate of incorporation in order to expand the number of authorized shares it will have available following the completion of the merger. IDEC has no immediate plans, commitments, arrangements or understandings to issue any of the shares of common stock to be authorized by the amendment to any third party. Approval of the proposal to amend IDEC's certificate of incorporation requires the affirmative vote of at least a majority of the outstanding shares of IDEC common stock entitled to vote.

Proposal to Approve the 2003 Omnibus Equity Plan

        The merger agreement requires IDEC's board of directors to adopt, subject to stockholder approval, the Stock Plan. The Stock Plan will become effective, if approved by the stockholders, upon the completion of the merger. In connection with the approval of the Stock Plan and the completion of the merger, IDEC's and Biogen's existing stock option plans (other than IDEC's 1993 Non-Employee Directors Stock Option Plan) will be amended so that no new grants may be made under those plans.

        A copy of the Stock Plan is included as Annex B to this joint proxy statement/prospectus. The Stock Plan is intended to encourage ownership of shares of the combined company's common stock by employees of the company and its subsidiaries and affiliates and to provide an additional incentive to such employees and directors to promote the company's success. Approximately 3,800 persons will be eligible to participate in the Stock Plan. The Stock Plan will be administered by the combined company's compensation committee.

        This proposal is being submitted to stockholders for approval to ensure qualification of the Stock Plan under Nasdaq rules and to allow the combined company to grant incentive stock options under the plan. In addition, if the Stock Plan is approved by the IDEC stockholders and the other conditions of Internal Revenue Code Section 162(m) relating to performance-based compensation are satisfied, compensation paid to covered officers pursuant to the Stock Plan will be deductible under Section 162(m).

        Approval of the proposal to adopt the Stock Plan requires the affirmative vote of at least a majority of the stock having voting power present, in person or by proxy, at the special meeting so long as a quorum is present in person or by proxy at the special meeting. Approval of the Stock Plan is not a condition to closing of the merger.

        The compensation committee can grant five types of awards under the Stock Plan: restricted stock, stock options (including both incentive stock options within the meaning of Section 422 of the Internal Revenue Code and nonqualified options, which are options that do not qualify as incentive stock options), phantom stock, stock bonus awards and other awards (including stock appreciation rights). In addition, the compensation committee may, in its discretion, make other awards valued in whole or in part by reference to, or otherwise based on, our common stock.

        A total of 17,400,000 shares of common stock have been reserved for issuance under the Stock Plan, subject to equitable adjustment upon the occurrence of any stock dividend or other distribution, recapitalization, reclassification, stock split, subdivision, reorganization, merger, consolidation, combination, repurchase, share exchange or other similar corporate transaction or event (under the original terms of the merger agreement, the parties agreed that 22,500,000 shares would be reserved for issuance under the Stock Plan; subsequent to the signing of the merger agreement, the parties agreed to reduce the number of shares subject to the Stock Plan to 17,400,000). The maximum number of

82



shares of common stock that may be the subject of awards to a participant in any year is 1,500,000. The maximum number of shares subject to awards other than options is 3,100,000.

        Officers, including named executive officers, directors and employees are eligible to receive awards under the Stock Plan, at the discretion of the compensation committee. To date, no awards have been granted under the Stock Plan.

        Awards will become exercisable or otherwise vest at the times and upon the conditions that the compensation committee may determine, as reflected in the applicable award agreement; however, awards of restricted stock, phantom stock, stock bonuses and Other Awards (as defined below) other than stock appreciation rights granted in connection with stock options must vest over the minimum periods, if any, required by the Stock Plan, as described below. The compensation committee has the authority to accelerate the vesting and/or exercisability of any outstanding award, provided that the compensation committee determines that such acceleration is necessary or desirable in light of extraordinary circumstances. Further, the compensation committee may provide in any award agreement that the vesting of the associated award will automatically accelerate upon the occurrence of a "Change in Control" (as defined in the Stock Plan). Because awards under the Stock Plan are discretionary, it is not possible to determine the size of future awards.

        Restricted Stock.    The compensation committee may grant restricted shares of common stock to such persons, in such amounts, at such price, if any, and subject to such terms and conditions as the compensation committee may determine in its discretion, except that grants of restricted stock must vest over a period of not less than three years. Except for restrictions on transfer and such other restrictions as the compensation committee may impose, participants will have all the rights of a stockholder with respect to the restricted stock. Unless the compensation committee determines otherwise, termination of employment during the restricted period will result in the forfeiture by the participant of all shares still subject to restrictions. If a participant's employment is terminated "For Cause," as defined in the Stock Plan, then the participant will immediately forfeit all shares.

        Stock Options.    Options entitle the holder to purchase shares of common stock during a specified period at a purchase price specified by the compensation committee (but at a price not less than 100% of the fair market value of the common stock on the date the option is granted). Each option granted under the Stock Plan will be exercisable for a period of ten years from the date of grant, or such lesser period as the compensation committee shall determine. Options may be exercised in whole or in part by: the payment of cash of the full option price of the shares purchased; if permitted by the compensation committee, by tendering shares of common stock held by the person for at least six months with a fair market value equal to the option price of the shares purchased; or, if permitted by the compensation committee, through a cashless exercise program established with a securities brokerage firm. Upon the exercise of an option, restricted shares of common stock may be issued under the Stock Plan which are subject to repurchase by the company in accordance with certain provisions outlined in the Stock Plan. If a participant's employment is terminated "For Cause," then the participant will immediately lose the right to exercise any unexercised options.

        Phantom Stock.    A phantom stock award is an award of the right to receive upon the vesting date an amount of cash, common stock or other property based upon an increase in the value of the common stock during the term of the award. Phantom stock awards will be granted only in lieu of salary or cash bonus otherwise payable to a participant and will be subject to a minimum one year vesting period. If a participant's employment is terminated "For Cause," then the participant will forfeit all unvested phantom stock.

        Stock Bonus Awards.    A stock bonus award is an award of common stock made at the discretion of the compensation committee. Stock bonus awards will only be granted in lieu of salary or cash bonus otherwise payable to a participant and will be subject to a minimum one year vesting period.

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Otherwise, stock bonus awards will be made upon such terms and conditions (if any) as the compensation committee may determine. If a participant's employment is terminated "For Cause," then the participant will forfeit all unvested stock.

        Other Awards (including Stock Appreciation Rights).    Other forms of awards (including any stock appreciation rights) valued in whole or in part by reference to, or otherwise based on, common stock may be granted either alone or in addition to other awards under the Stock Plan. "Other Awards," as defined in the Stock Plan, will only be granted in lieu of salary or cash bonus otherwise payable to a participant. Subject to the provisions of the Stock Plan, the compensation committee shall have sole and complete authority to determine the persons to whom and the time or times at which such Other Awards shall be granted, the number of shares of common stock to be granted pursuant to such Other Awards and all other conditions of such Other Awards, except that Other Awards (other than stock appreciation rights granted in connection with stock options) will be subject to a minimum one year vesting period. A stock appreciation right may be granted in connection with an option, either at the time of grant or at any time thereafter during the term of the option, or may be granted unrelated to an option. If a participant's employment is terminated "For Cause," then the participant will immediately lose the right to exercise any unexercised stock appreciation rights or Other Awards.

        Each member of the compensation committee is now and is expected to be a "non-employee director" (within the meaning of Rule 16b-3 promulgated under Section 16 of the Exchange Act) and an "outside director" (within the meaning of Section 162(m) of the Internal Revenue Code).

        The Stock Plan may be amended by the company's board of directors, subject to stockholder approval where necessary to satisfy applicable laws or regulatory requirements and for amendments which increase the number of shares available under the plan, materially change the class of persons eligible under the plan, would have the effect of materially increasing the benefits accruing to participants under the plan or materially alter the vesting provisions for awards of restricted stock. No award outstanding under the Stock Plan may be repriced, regranted through cancellation or otherwise amended to reduce the exercise price without the approval of our stockholders. The Stock Plan will terminate on the date that is ten years following the date of its adoption, unless such term is extended with the consent of the company's stockholders. However, awards granted before the termination of the Stock Plan may extend beyond that date in accordance with their terms.

        The Stock Plan provides that a participant who terminates employment other than for cause, death, disability or retirement shall generally have three months to exercise the vested portion of his or her award. If a participant dies or his or her employment ceases due to total and permanent disability (as determined by the compensation committee), the award shall become fully exercisable and the participant may generally exercise the award within one year of the participant's death or cessation of employment.

        The Stock Plan provides that upon a participant's retirement (as defined in the Stock Plan) awards granted to such participant under the Stock Plan accelerate and become fully vested for 50% of the number of shares of common stock covered by the unvested awards and for an additional 10% for every year of employment beyond ten years. Upon retirement, awards may generally be exercised within three years of retirement to the extent vested upon retirement.

        Awards granted under the Stock Plan are non-transferable, other than by will, by the laws of descent and distribution, pursuant to a qualified domestic relations order or as otherwise permitted by the compensation committee.

        Awards granted under the Stock Plan terminate upon the dissolution or liquidation of the company (other than in connection with a "Change in Control"). The participant may exercise,

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immediately prior to the dissolution or liquidation, the award to the extent then exercisable on the date immediately prior to such dissolution or liquidation.

        The Stock Plan provides that if awards are assumed or replaced in a corporate transaction (as defined by the Stock Plan) and a designated employee (all of the combined company's senior management are expected to be designated employees) is either terminated other than "For Cause" or leaves for good reason at any time within two years following a corporate transaction, his or her awards, as assumed or replaced, will accelerate and become fully vested or exercisable, as the case may be. Options and stock appreciation rights held by the designated employee are then exercisable until the earlier of one year following the designated employee's termination date and the expiration date of the option or stock appreciation right, as the case may be. The Stock Plan also provides that if the combined company elects to terminate the plan or cash out stock options or stock appreciation rights prior to a corporate transaction, then each affected award of executive officers as well as other employees will accelerate and become fully exercisable immediately prior to the corporate transaction. In the event of a corporate change of control (as defined by the Stock Plan), the Stock Plan provides that the awards of executive officers as well as all other employees will accelerate and become fully exercisable immediately prior to the corporate change of control.

        New Plan Benefits.    There have been no awards granted under the Stock Plan to date. Additionally, inasmuch as awards under the Stock Plan will be granted at the sole discretion of the compensation committee, no determination can be made at this time as to the persons who will receive awards under the Stock Plan or the amount of any such awards.

        Certain Federal Income Tax Consequences.    Set forth below is a discussion of certain U.S. federal income tax consequences with respect to awards that may be granted pursuant to the Stock Plan. The following discussion is a brief summary only, and reference is made to the Internal Revenue Code and the regulations and interpretations issued thereunder for a complete statement of all relevant federal tax consequences. This summary is not intended to be exhaustive and does not describe state, local or foreign tax consequences of participation in the Stock Plan.

        Incentive Stock Options.    In general, no taxable income is realized by a participant upon the grant of an incentive stock option. If shares of common stock are issued to a participant pursuant to the exercise of an incentive stock option and the participant does not dispose of the shares within the two-year period after the date of grant or within one year after the receipt of such shares by the participant, then, generally (i) the participant will not realize ordinary income with respect to the option and (ii) upon sale of such shares, any amount realized in excess of the exercise price paid for the shares will be taxed to such participant as capital gain. The amount by which the fair market value of the common stock on the exercise date of an incentive stock option exceeds the purchase price generally will, however, constitute an item which increases the participant's "alternative minimum taxable income."

        If shares acquired upon the exercise of an incentive stock option are disposed of in a disqualifying disposition, the participant generally would include in ordinary income in the year of disposition an amount equal to the excess of the fair market value of the shares at the time of exercise (or, if less, the amount realized on the disposition of the shares) over the exercise price paid for the shares.

        Subject to certain exceptions, an incentive stock option generally will not be treated as an incentive stock option if it is exercised more than three months following termination of employment. If an incentive stock option is exercised at a time when it no longer qualifies as an incentive stock option, such option will be treated as an nonqualified stock options as discussed below.

        Nonqualified Stock Options.    In general, no taxable income is realized by a participant upon the grant of an nonqualified stock option. Upon exercise of an nonqualified stock option, the participant generally would include in ordinary income at the time of exercise an amount equal to the excess, if

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any, of the fair market value of the shares at the time of exercise over the exercise price paid for the shares.

        In the event of a subsequent sale of shares received upon the exercise of an nonqualified stock option, any appreciation after the date on which taxable income is realized by the participant with respect to the option exercise should be taxed as capital gain in an amount equal to the excess of the sales proceeds for the shares over the participant's basis in such shares. The participant's basis in the shares will generally equal the amount paid for the shares plus the amount included in ordinary income by the participant upon exercise of the nonqualified stock option.

        Restricted Stock.    A participant will not recognize any income upon the receipt of restricted stock unless the holder elects under Section 83(b) of the Internal Revenue Code, within 30 days of such receipt, to recognize ordinary income in an amount equal to the fair market value of the restricted stock at the time of receipt, less any amount paid for the shares. If the election is made, the holder will not be allowed a deduction for amounts subsequently required to be returned to the company. If the election is not made, the holder will generally recognize ordinary income, on the date that the restrictions to which the restricted stock are subject are removed, in an amount equal to the fair market value of such shares on such date, less any amount paid for the shares. At the time the holder recognizes ordinary income, the company generally will be entitled to a deduction in the same amount.

        Generally, upon a sale or other disposition of restricted stock with respect to which the holder has recognized ordinary income (i.e., a Section 83(b) election was previously made or the restrictions were previously removed), the holder will recognize capital gain or loss in an amount equal to the difference between the amount realized on such sale or other disposition and the holder's basis in such shares.

        Other Types of Awards.    The grant of a stock appreciation right will not result in income for the grantee or in a tax deduction for the company. Upon the settlement of such a right or the payment of a stock bonus award, the participant will recognize ordinary income equal to the aggregate value of the payment received, and the company generally will be entitled to a tax deduction in the same amount.

Proposal to Approve the Performance Based Management Incentive Plan

        The merger agreement requires IDEC's board of directors to adopt, subject to stockholder approval, the Incentive Plan. The Incentive Plan, will become effective, if approved by the stockholders, upon the completion of the merger. The Incentive Plan will replace the existing management incentive plans of IDEC. A copy of the plan is included as Annex C to this joint proxy statement/prospectus. Internal Revenue Code Section 162(m) precludes the company from taking a deduction for compensation for Federal income tax purposes in excess of one million dollars paid to any named executive officer. Certain qualified performance-based compensation is excluded from this limitation. Compensation to be paid under the plan will be excluded from the Section 162(m) limitation if the plan is approved by our stockholders. The purpose of the plan is to attract and retain skilled employees and to motivate and reward employees for exceptional performance, while maintaining the deductibility for U.S. federal income tax purposes of compensation paid under the plan to the maximum extent possible.

        Approval of the proposal to adopt the Incentive Plan requires the affirmative vote of at least a majority of the stock having voting power present, in person or by proxy, at the special meeting so long as a quorum is present in person or by proxy at the special meeting. Approval of the Incentive Plan is not a condition to the closing of the merger.

        Material Terms of the Performance Based Management Incentive Plan.    The Incentive Plan participants may include executive officers and certain other key employees of the combined company and its subsidiaries and affiliates who are nominated by the Chief Executive Officer and approved by the compensation committee, or selected by the compensation committee. Unless otherwise permitted

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by the compensation committee, executive officers and key employees approved for participation in the plan shall be excluded from participation in any of our other cash bonus or incentive programs.

        The Incentive Plan is intended to supplement a person's salary and result in total cash compensation for above average performance that will exceed the average compensation level of comparable companies.

        Participants may receive incentive awards under the Incentive Plan on the basis of percentages established in advance as recommended by the Chief Executive Officer and approved by the compensation committee, or established by the compensation committee, as part of the company's annual compensation plan. In connection with the planning of their performance goals for the plan year, the Chief Executive Officer recommends for approval by the compensation committee, or the compensation committee establishes, the target incentive award for each participant (expressed as a percentage of the annual base pay of the participant). The target incentive award for each participant will be established in accordance with guidelines established by the compensation committee. Because of the many variables in establishing base salary structures, the plan does not contemplate achieving any degree of uniformity in the relationship of incentive awards to annual base pay. Therefore, the range of target incentive awards will be broad. The guidelines will generally be as follows: relative significance of the individual's function in directly influencing the company's performance; the target incentive awards for individuals in similar roles at competing companies; and the relative competitive total compensation for the respective positions.

        The compensation committee will determine and approve the terms and performance goals of the Incentive Plan at the beginning of each fiscal year. Each year, the compensation committee will establish a formula for determining the amount of incentive award a participant may actually receive and such formula will specify the participants or class of participants to which such formula applies. Generally, a formula established by the compensation committee will reflect both (i) company-wide goals which generally should be based on key elements of the company's annual operating plan and (ii) specific goals relating to the performance of the respective participant. Corporate goals and individual goals will be objective and the formula shall be objective and state the method for computing the amount that may be paid to a participant if the performance goal or goals are attained. A formula established by the compensation committee may provide that if certain specified goals are not met, no incentive awards will be awarded under the plan for the year to which such formula applies. The compensation committee may award a participant an incentive award that is less than, equal to or greater than his or her target incentive award, provided that the calculation is not discretionary, but rather is pursuant to an objective formula for computing the amount of compensation payable to the participant.

        Performance goals under the Incentive Plan will be based on one or more of the following business criteria: revenue growth; earnings per share; return on capital employed; profits after taxes; total return to stockholders and earnings (before any one or more of the following items: interest, taxes, depreciation or amortization); operating income; cash flow; return on equity; return on invested capital; return on assets; cost reductions or savings; funds from operations; appreciation in the market value of the company's common stock; progress on the company's product pipeline; research productivity; movement of programs from research to development; product development; product market share; in-licensing and/or out-licensing; mergers and/or acquisitions; sales of assets and/or subsidiaries; litigation; information services related projects; employee turnover and/or other human resources activities; manufacturing quality; production measures; inventory levels; supply chain management; support services; site, plant, building and/or facility development; government relations; management and director composition; leadership development; and/or talent management. Performance goals will relate to significant and measurable areas that require special attention during the plan year. The purpose is to add special emphasis to those particular activities and reward for their accomplishments.

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From year-to-year, it is expected that the emphasis will change both in relation to the selected individual goals as well as to the importance of such goals in determining the actual incentive award.

        Promptly following the close of a year, the respective managers will evaluate the performance of the participants, determine the extent to which individual goals were achieved (in terms of percentage achievement, subject to a maximum percentage established annually by the compensation committee, which in no event shall be more than 225%) and, with assistance from the chief human resources officer, forward a report on such evaluations and determinations to the compensation committee for review and approval. In all cases, the extent to which individual goals were achieved shall be determined only after a self-assessment has been completed. The final determination of the extent to which corporate goals were achieved (in terms of percentage achievement, subject to a maximum percentage established annually by the compensation committee, which in no event shall be more than 225%) will be made and certified in writing by the compensation committee, promptly following the availability of year-end financial and operational results. The maximum amount payable to any participant may not exceed three million five hundred thousand dollars.

        Stockholder approval of the Incentive Plan is required for the company to be able to exclude compensation paid under the plan to any named executive officer from the one million dollar limitation of Section 162(m). If the plan and the maximum annual award payable to any of the named executive officers pursuant to the plan are approved by the stockholders at the meeting, such approval shall be effective until the earlier of (i) the 2008 annual meeting of stockholders; (ii) modification of the persons eligible to receive awards under the plan; (iii) modification of the business criteria which performance goals shall be based upon; or (iv) modification of the maximum annual award payable to any participant pursuant to the plan.

        New Plan Benefits.    There have been no payments made under the Incentive Plan to date. Additionally, inasmuch as payments under the Incentive Plan will be made to participants who are selected in the sole discretion of the compensation committee, acting upon nominations of the Chief Executive Officer, and inasmuch as payments will be made upon the achievement of performance goals established by the compensation committee for each participant, no determination can be made at this time as to the persons who will receive payments under the Incentive Plan or the amount of any such payments.

Proposal to Adjourn the Special Meeting

        At the special meeting, IDEC stockholders will be asked to approve a proposal to adjourn the special meeting to a later date, if necessary, to solicit additional proxies if there are not sufficient votes in favor of the proposals to be voted on at the special meeting. Stockholder approval of the proposal to adjourn the special meeting requires the affirmative vote of at least a majority of the stock having voting power present, in person or by proxy, at the special meeting so long as a quorum is present in person or by proxy at the special meeting.

Record Date and Stockholders Entitled To Vote

        IDEC stockholders who hold their shares of record as of the close of business on September 25, 2003 are entitled to notice of and to vote at IDEC's special meeting. On the record date, there were 155,605,231 shares of IDEC common stock outstanding and entitled to vote at the special meeting, held by 387 holders of record.

        Each share of IDEC common stock is entitled to one vote. Shares held by IDEC in its treasury are not voted. As of the IDEC record date, IDEC's directors and executive officers beneficially owned and were entitled to vote 17,364,463 shares of IDEC common stock, which represents 10.5% of IDEC's outstanding common stock.

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Quorum Requirement

        A quorum of IDEC stockholders is necessary to hold a valid meeting. The presence in person or by proxy at the meeting of holders of a majority of the outstanding shares of IDEC common stock entitled to vote at the meeting is a quorum. Abstentions and broker non-votes count as present for establishing a quorum. A broker non-vote occurs on an item when a broker is not permitted to vote on that item without instruction from the beneficial owner of the shares and no instruction is given.

Voting Your Shares and Changing Your Vote

        Voting Your Shares.    You may vote in person at the special meeting by ballot or by submitting a proxy. You may also vote by mail, telephone or the Internet if you do not attend the special meeting. If you do not vote, it will have the same effect as voting against the amendment to the certificate of incorporation and will have no effect on the outcome of the other proposals presented at the IDEC special meeting.

        If you plan to attend the special meeting and wish to vote in person, you will be given a ballot at the meeting. Please note, however, that if you are not the record holder of your shares and you wish to vote in person at the special meeting, you must bring to the meeting a proxy from the record holder of the shares authorizing you to vote at the meeting.

        If your shares are registered in your name, you are encouraged to vote by proxy even if you plan to attend the special meeting in person. Voting instructions are included on your proxy card. If you properly complete the proxy card, sign, date and return it in the enclosed envelope or submit a proxy by telephone or the Internet in time to vote, one of the individuals named as your proxy will vote your shares as you have directed.

        If your shares are held in the name of a bank, broker or other fiduciary, you must provide the record holder with instructions on how to vote your shares. Please follow the instructions on the voting instruction card furnished by the record holder, which may include options to submit your vote by mail, telephone or the Internet.

        Changing Your Vote.    If your shares are registered in your name, you may revoke your proxy at any time before the meeting. You may revoke your proxy by (i) timely delivering by mail, telephone or the Internet a valid, subsequently-dated proxy, (ii) delivering notice in writing to the Secretary of IDEC or (iii) submitting a vote by ballot at the special meeting. Attending the special meeting in person will not revoke a previously submitted proxy unless you request that such action be taken.

        If your shares are not registered in your name, you may change your vote by timely submitting a new voting instruction card.

How Proxies Are Counted

        If you return a signed and dated proxy card but fail to indicate how the shares are to be voted, those shares represented by your proxy card will be voted for approval of all of the proposals identified on the proxy card. A valid proxy also gives the individuals named as proxies authority to vote in their discretion when voting the shares on any other matters that are properly presented for action at the IDEC special meeting. A properly executed proxy marked "ABSTAIN" will not be voted; however, it will be counted to determine whether there is a quorum present at the special meeting and it will count as voting power present at the meeting. The proposal to amend IDEC's certificate of incorporation requires the affirmative vote of a majority of the outstanding shares of IDEC common stock; therefore, a proxy marked "ABSTAIN" will have the same effect as a vote against such proposal. A proxy marked "ABSTAIN" will have the same effect as a vote against the other proposals to be voted upon at the IDEC special meeting. Brokers cannot vote the shares that they hold beneficially either for or against any of the proposals without specific instructions from the person who beneficially owns those shares.

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Broker non-votes (i.e., shares held by brokers which are represented at a meeting but with respect to which the broker is not empowered to vote on a particular proposal) will be counted for purposes of determining whether there is a quorum at the IDEC special meeting. Broker non-votes will have the effect of voting against the proposal to amend IDEC's certificate of incorporation, but broker non-votes will have no effect on the outcome of the other proposals.

Other Business; Adjournments

        We are not currently aware of any other business to be acted upon at the special meeting. If, however, other matters are properly brought before the special meeting, or any adjournment thereof, your proxies include discretionary authority on the part of the individuals appointed to vote your shares or act on those matters according to their best judgment.

        Adjournments may be made for the purpose of, among other things, soliciting additional proxies. Any adjournment may be made from time to time by approval of the holders of shares representing a majority of the votes present in person or by proxy at the meeting, as long as a quorum is present in person or by proxy at the special meeting, without further notice other than by an announcement made at the meeting. If a quorum is not present or represented by proxy at the special meeting, the stockholders entitled to vote have the power to adjourn the meeting.

IDEC Stockholder Account Maintenance

        IDEC's transfer agent is Mellon Investor Services LLC. All communications concerning accounts of IDEC stockholders of record, including address changes, name changes, inquiries as to requirements to transfer shares of common stock and similar issues can be handled by calling the Mellon Investor Services toll-free number, 1-888-522-6645 (United States) or 1-201-329-8660 (International), or by contacting Mellon's web site at www.melloninvestor.com and then click on Investor Service Direct®.

        In addition, IDEC stockholders can access their account through Mellon's Internet website. IDEC stockholders can view their current balance, access their account history, sell or request a certificate for shares held in the Mellon Investor Services Program and obtain current and historical stock prices. To access your account on the Internet, visit www.melloninvestor.com and then click on Investor Service Direct®. For other information about IDEC, stockholders can visit IDEC's website at www.idecpharm.com. Information on Mellon's or IDEC's website is not incorporated by reference herein.

Cost of Solicitation

        IDEC and Biogen will share equally the cost of filing, printing and mailing this joint proxy statement/prospectus. In addition to this mailing, proxies may be solicited by directors, officers or employees of IDEC in person or by telephone or electronic transmission. None of the directors, officers or employees will be directly compensated for such services. IDEC has retained InvestorCom, Inc. to assist in the distribution and solicitation of proxies. IDEC will pay InvestorCom a fee of $75,000 for these services.

        The extent to which these proxy soliciting efforts will be necessary depends entirely upon how promptly proxies are submitted. You should submit your proxy without delay. We also reimburse brokers and other nominees for their expenses in sending these materials to you and getting your voting instructions.

The Biogen Special Meeting

        This joint proxy statement/prospectus is being furnished in connection with the solicitation of proxies from the holders of Biogen common stock by Biogen's board of directors relating to the merger

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proposal and any other matters to be voted upon at the Biogen special meeting and at any adjournment or postponement of the meeting. Biogen mailed this joint proxy statement/prospectus to its stockholders beginning                        , 2003.

When and Where the Biogen Special Meeting Will Be Held

        Biogen's special meeting will be held at its offices located at 15 Cambridge Center, Cambridge, Massachusetts 02142 on                        starting at              a.m. local time.

What Will Be Voted Upon

        At Biogen's special meeting, Biogen stockholders will be asked to consider and vote on the following items:


Record Date and Stockholders Entitled to Vote

        Biogen stockholders who hold their shares of record as of the close of business on September 25, 2003, are entitled to notice of and to vote at Biogen's special meeting. On the record date, there were 149,497,141 shares of Biogen common stock outstanding and entitled to vote at the special meeting, held by 2,264 holders of record.

Quorum Requirement

        In order to have a quorum, a majority of the shares of Biogen common stock that are outstanding and entitled to vote at the special meeting must be represented in person or by proxy. If a quorum is not present, a majority of the shares that are represented may adjourn or postpone the special meeting.

Vote Required for Approval

        The merger proposal must be approved by the affirmative vote of at least a majority of the shares of Biogen common stock that are outstanding and entitled to vote at the special meeting. Any proposal to adjourn the meeting to solicit additional votes in favor of the merger agreement must be approved by at least a majority of the votes cast in person or by proxy at the special meeting. Each share of Biogen stock is entitled to cast one vote. As of the Biogen record date, Biogen directors and executive officers beneficially owned and were entitled to vote 1,606,652 outstanding shares of Biogen common stock representing 1.07% of Biogen outstanding common stock.

Voting Your Shares and Changing Your Vote

        Voting Your Shares.    You may vote by proxy or in person at the special meeting. If you do not vote, it will have the same effect as voting against the merger agreement, but will have no effect on the proposal to adjourn the special meeting, if necessary.

        If you plan to attend the special meeting and wish to vote in person, you will be given a ballot at the meeting. Please note, however, that if you are not the record holder of your shares and you wish to vote in person at the special meeting, you must bring to the meeting a proxy from the record holder of the shares authorizing you to vote at the meeting.

        If your shares are registered in your name, you are encouraged to vote by proxy even if you plan to attend the special meeting in person. To grant your proxy, complete the proxy card, sign, date and return it in the enclosed envelope. To be valid, a returned proxy card must be signed and dated.

        If your shares are held in the name of a bank, broker, or other fiduciary, you must provide the record holder with instructions on how to vote your shares. Please follow the instructions on the voting instruction card furnished by the record holder which may include options to vote by telephone or the Internet as well as by mail.

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        If you are a participant in the Biogen Savings Plan, you can vote the shares credited to your account by completing and returning the voting instruction form sent to you with this proxy statement/prospectus by Fidelity Management Trust Company. The trustee will vote your shares in accordance with your instructions. If you do not send instructions, the trustee will not vote the shares credited to your account.

        Changing Your Vote.    If your shares are registered in your name, you may revoke your proxy at any time before the meeting. You may revoke your proxy by delivering notice in writing to the Secretary of Biogen or by mailing, or delivering at the meeting, a subsequently dated proxy or delivering a ballot in person at the meeting. Attending the meeting in person will not itself revoke a previously submitted proxy unless you request it.

        If your shares are not registered in your name, you may change your vote by a timely submission of a new voting instruction card.

        If you have shares in the Biogen Savings Plan, you may revoke a previously given voting instruction by timely filing with the trustee either a written revocation or a properly completed and signed voting instruction form bearing a later date.

How Proxies Are Counted

        If you return a signed and dated proxy card but do not indicate how the shares are to be voted, those shares represented by your proxy card will be voted for approval of the merger proposal and any proposal to adjourn the special meeting to solicit additional votes relating to the merger. A valid proxy also gives the individuals named as proxies authority to vote in their discretion when voting the shares on any other matters that are properly presented for action at the Biogen special meeting. A properly executed proxy marked "ABSTAIN" will not be voted. However, it will be counted to determine whether there is a quorum present at the special meeting. Accordingly, since the affirmative vote of at least a majority of the shares outstanding and entitled to vote at the Biogen special meeting is required to approve the merger agreement, a proxy marked "ABSTAIN" will have the effect of a vote against this proposal. A proxy marked "ABSTAIN" will have no effect on the proposal to adjourn the meeting to solicit additional proxies in favor of the merger agreement. Broker non-votes (i.e., shares held by brokers which are represented at a meeting but with respect to which the broker is not empowered to vote on a particular proposal) will be counted for purposes of determining whether there is a quorum at the Biogen special meeting. However, brokers cannot vote the shares that they hold beneficially either for or against the merger agreement without specific instructions from the person who beneficially owns those shares. Therefore, if your shares are held by a broker and you do not give your broker instructions on how to vote your shares, this will have the same effect as voting against the merger agreement. Brokers also may not vote on any proposal to adjourn the meeting to solicit additional proxies in favor of the merger agreement, and broker non-votes will have no effect on any such adjournment proposal.

Cost of Solicitation

        Biogen and IDEC will share equally the cost of filing, printing and mailing this joint proxy statement and prospectus. In addition to solicitation by mail, telephone or other means, Biogen will make arrangements with brokerage houses and other custodians, nominees and fiduciaries to send proxy material to beneficial owners. Biogen will, upon request, reimburse these institutions for their reasonable expenses. Biogen has retained D.F. KING & Co., Inc., for an anticipated fee of approximately $25,000, plus costs and expenses, to aid in the solicitation of proxies and to verify certain records related to the solicitation. In addition, proxies may be solicited by certain officers, directors and employees of Biogen and IDEC. These individuals will not receive any consideration in connection with these services.

        BIOGEN STOCKHOLDERS SHOULD NOT SEND IN THEIR STOCK CERTIFICATES WITH THE PROXY CARDS. SOON AFTER THE MERGER IS COMPLETED, YOU WILL RECEIVE WRITTEN INSTRUCTIONS ON HOW TO EXCHANGE YOUR BIOGEN STOCK CERTIFICATES FOR SHARES OF IDEC COMMON STOCK.

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COMPARISON OF STOCKHOLDER RIGHTS AND CORPORATE GOVERNANCE MATTERS

        IDEC is a Delaware corporation subject to the provisions of the Delaware General Corporation Law, or DGCL. Biogen is a Massachusetts corporation subject to the provisions of the Massachusetts Business Corporation Law, or MBCL. Upon completion of the merger, Biogen stockholders, whose rights are currently governed by Biogen's articles of organization and bylaws and the MBCL, will become stockholders of IDEC and their rights will be governed by IDEC's certificate of incorporation and bylaws and the DGCL.

        The following description summarizes material differences which may affect the rights of holders of IDEC common stock and Biogen common stock. This summary is not intended to be a complete discussion of all those differences or a complete description of the specific provisions referred to in this summary, and is qualified in its entirety by reference to the DGCL, the MBCL and the various documents of IDEC and Biogen that we refer to in this summary. The identification of specific differences is not intended to indicate that other equally or more significant differences do not exist. For additional information regarding the specific rights of holders of IDEC capital stock, you should read the section of this proxy statement/prospectus entitled "Description of IDEC Capital Stock" beginning on page 111. You should read carefully the relevant provisions of the MBCL and the DGCL, the certificate of incorporation and bylaws of IDEC and the articles of organization and bylaws of Biogen, which are incorporated by reference into this joint proxy statement/prospectus.

 
  Rights of IDEC stockholders
  Rights of Biogen stockholders
Class of Common Stock   IDEC has only one class of common stock outstanding. Holders of IDEC common stock are entitled to all of the rights and obligations provided to common stockholders under its certificate of incorporation and bylaws and under Delaware law.   Biogen has only one class of common stock outstanding. Holders of Biogen common stock are entitled to all of the rights and obligations provided to common stockholders under its articles of organization and bylaws and under Massachusetts law.

Corporate Governance

 

The rights of IDEC stockholders are governed by Delaware law and under IDEC's certificate of incorporation and bylaws. Upon completion of the merger, the rights of IDEC stockholders will continue to be governed by Delaware law and IDEC's certificate of incorporation and bylaws.

 

The rights of Biogen stockholders are currently governed by Massachusetts law and Biogen's articles of organization and bylaws. Upon completion of the merger, the rights of Biogen stockholders will be governed by Delaware law and IDEC's certificate of incorporation and bylaws.

Authorized Capital Stock

 

The authorized capital stock of IDEC consists of 500,000,000 shares of common stock, $0.0005 par value per share, and 8,000,000 shares of preferred stock, $0.001 par value per share. Upon completion of the merger (and assuming stockholder approval of the amendment to the certificate of incorporation), the authorized number of shares of common stock will be increased from 500,000,000 to 1,000,000,000.

 

The authorized capital stock of Biogen consists of 375,000,000 shares of common stock, $0.01 par value per share and 20,000,000 shares of preferred stock, par value $.01 per share (of which 250,000 shares are designated as Series A-1 Junior Participating Preferred Stock and 2,760,000 shares are designated as $2.125 Convertible Exchangeable Preferred Stock).

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  Rights of IDEC stockholders
  Rights of Biogen stockholders
Board Authority to Issue Capital Stock   IDEC's board of directors is authorized to issue, without stockholder approval, undesignated shares of common stock or preferred stock in one or more series, and to determine the rights, preferences, privileges and restrictions of any such series, including dividend rights, conversion rights, voting rights, rights and terms of redemption, redemption price or liquidation preferences and the number of shares constituting any such class or series and the designation of such class or series. For a description of the terms of IDEC's existing outstanding preferred stock, see "Description of IDEC Capital Stock—IDEC Preferred Stock" on page 111.   Biogen's board of directors, subject to limitations prescribed by law and the provisions of its articles of organization, is authorized to provide for the issuance of undesignated shares of preferred stock, without stockholder approval, and to fix the number of shares to be included in each such designation, preferences, voting powers, qualification and special or relative rights or privileges of each such series.

Dividends and Stock Repurchases

 

Under the DGCL, a corporation may pay dividends out of surplus, or, if there is no surplus, out of net profits for the current or preceding fiscal year in which the dividend is declared, provided that the amount of capital of the corporation following the declaration and payment of the dividend is not less than the aggregate amount of the capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets.
In addition, Delaware law generally provides that a corporation may redeem or repurchase its shares only if the redemption or repurchase would not impair the capital of the corporation. A Delaware corporation may redeem or repurchase shares having a preference, or if no shares entitled to such a preference are outstanding, any of its shares, upon the distribution of any of its assets if such shares will be retired upon acquisition, and provided that, after the reduction in capital made in connection with such retirement of shares, the corporation's remaining assets are sufficient to pay any debts not otherwise provided for.

 

Under the MBCL, a corporation may make a distribution by paying a dividend or redeeming or repurchasing its own stock so long as such distribution: (i) is not made when the corporation is insolvent, (ii) does not render the corporation insolvent and (iii) does not violate the corporation's articles of organization. Stockholders to whom a corporation makes a distribution when the corporation is, or is thereby rendered, insolvent are liable to the corporation up to the amount of the distribution made to such stockholder which could have been made without rendering the corporation insolvent.
The directors of a Massachusetts corporation who vote to authorize a dividend, redemption or repurchase of stock are jointly and severally liable to the corporation if such distribution (i) is made when the corporation is insolvent, (ii) renders the corporation insolvent or (iii) violates the corporation's articles of organization, to the extent such distribution is not repaid to the corporation by the stockholders.

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  Rights of IDEC stockholders
  Rights of Biogen stockholders

 

 

IDEC's certificate of incorporation provides that the board of directors may determine and fix the rate at which dividends on the shares of IDEC common stock shall be declared and paid or set aside for payment.
IDEC has never paid cash dividends on its common stock.

 

Biogen's articles of organization provide that the board of directors may declare and pay dividends out of any funds legally available for the declaration of dividends, subject to any provision of Biogen's articles of organization and subject to the relative rights and preferences of any shares of preferred stock authorized and issued.
Biogen has never paid cash dividends on its common stock.

Voting Rights

 

The outstanding voting securities of IDEC consist of the shares of IDEC common stock. Each holder of IDEC common stock is entitled to one vote per share.

 

The outstanding voting securities of Biogen consist of the shares of Biogen common stock. Each holder of Biogen common stock is entitled to one vote per share.

Redemption and Exchange Features

 

IDEC common stock is not redeemable.

 

Biogen common stock is not redeemable.

Meetings of Stockholders; Notice

 

A special meeting of stockholders may be called by the president, the chairman of the board or a majority of the board of directors.
Under its bylaws, IDEC must give each stockholder of record a written notice stating the location, date, time and purpose of the meeting. Notice must be given in writing not fewer than ten nor more than 60 days before the date of the meeting.

 

A special meeting of stockholders may be called by the board of directors, the chairman of the board of directors or by the clerk upon the written application of one or more stockholders who hold at least 40% in interest of the capital stock entitled to vote at the meeting.
Under its bylaws, Biogen must give each stockholder of record written notice stating the location, date, time and purposes for which the meeting is called. Notice must be given in writing at least seven days before the meeting.

Record Date for Determining Stockholders Entitled to Vote

 

IDEC's bylaws provide that for purposes of determining the stockholders entitled to notice of a meeting or to vote thereat, or to express consent to a corporate action in writing without a meeting, the board of directors of IDEC may fix, in advance, a record date which shall not precede the date upon which the resolution fixing the record date is adopted by the board of directors and which shall not be fewer than ten days nor more than 60 days before the date of such meeting, nor more than 60 days prior to any other action. Only

 

Biogen's bylaws provide that for purposes of determining the stockholders entitled to notice of a meeting or to vote thereat, the board of directors may fix, in advance, a record date which shall not be more than 60 days nor less than seven days before the date of such meeting. Only stockholders of record on the date fixed by the board of directors are entitled to notice and to vote at the meeting. If no record date is fixed, the record date is the day immediately preceding the date notice of the meeting is given.

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    stockholders of record on the date fixed by the board of directors are entitled to notice and to vote at the meeting.    

Stockholder Action by Written Consent

 

Under the DGCL, unless the bylaws state otherwise, stockholders may take any action without a meeting. IDEC's bylaws provide that any action to be taken at any annual or special meeting of stockholders may be taken without a meeting, without prior notice and without a vote if a written consent, setting forth the action so taken, is signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting.

 

Under the MBCL, stockholders may take any action required or permitted to be taken at a meeting without a meeting so long as they act by unanimous written consent. Such consents are treated for all purposes as a vote at a meeting.
Biogen's bylaws require that certain bylaws may only be amended, adopted or repealed at a stockholder meeting. See "Amendments to Bylaws" below.


Stockholder Proposals


 


Any stockholder of record who has continuously owned not less than the lesser of $2,000 in market value or one percent of IDEC's outstanding voting stock for at least one year may submit a stockholder proposal. The stockholder must continue to own those shares through the date upon which the stockholders' meeting is held. The stockholder must also represent that he or she, or a representative, will attend the meeting to present the proposal.
For a regularly scheduled annual meeting, the stockholder must submit the proposal, supporting statement and requested information to IDEC not less than 120 days before the date of IDEC's proxy statement for the previous year's annual meeting. If IDEC did not hold an annual meeting the previous year, or if the date of the current year's annual meeting has been changed by more than 30 days from the date of the previous year's meeting, then the deadline is a reasonable time before IDEC begins to print and mail its proxy materials. If the proposal is for a meeting of stockholders other than a regularly


 


Biogen's bylaws provide that a stockholder must give timely notice to the clerk of the company in order to properly bring a proposal before an annual meeting or special meeting. To be timely, the stockholder must deliver notice to Biogen not less than 60 days, but not more than 90 days, prior to the meeting. However, if less than 70 days' notice or prior public disclosure of the date of the meeting is made to stockholders, notice by the stockholder must be received no later than the 10th day following the day on which such notice or public disclosure of the date of the meeting is made.
A stockholder's notice to the clerk relating to the proposal must include all of the following information:
• A brief description of the proposal and the reasons for conducting such business at the meeting
• The name and address, as they appear on the corporation's books, of the stockholder and any other stockholders known by such stockholder to support such proposal
• The class and number of shares of Biogen's capital stock beneficially

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scheduled annual meeting, the deadline is a reasonable time before IDEC begins to print and mail its proxy materials.
A stockholder may submit a single proposal in the form of a resolution and supporting statement (not to exceed 500 words) to be included in IDEC's proxy solicitation. The stockholder's proposal must include all of the following information:
• The name and address of the stockholder
• The number of shares of IDEC's capital stock owned by the stockholder
• The date upon which such shares were acquired
• An indication whether the shares are held in "street" or nominee name
• Documentation to support a claim for beneficial ownership
IDEC may exclude the proposal if the stockholder fails to follow one of the eligibility or procedural requirements identified above, but only after IDEC has notified the stockholder of the problem and the stockholder fails to correct it. IDEC may also exclude the proposal for any of the reasons set forth in Securities and Exchange Commission Rule 14a-8 and related rules. If IDEC intends to exclude a proposal from its proxy materials, IDEC must file its reasons with the Securities and Exchange Commission. The Securities and Exchange Commission will issue a no-action letter stating whether the proposal should be excluded.




 




    owned by the stockholder and any other stockholders known by such stockholder to support such proposal as of the date of such stockholder notice
• Any financial interest of the stockholder in such proposal
If a stockholder's notice relates to a nominee for election as a director, the notice must set forth all of the following:
• The name, age, business experience and home and business address of each person to be nominated
• The name and address, as they appear on the corporation's books, of the stockholder who intends to make such nomination and any other stockholders known by such stockholder to support the nomination
• The class and number of shares of Biogen's capital stock beneficially owned by such stockholder and any other stockholders known by such stockholder to support such proposal as of the date of such stockholder notice

Quorum for Meetings of Stockholders

 

The holders of a majority in interest of all outstanding stock entitled to vote at an IDEC stockholder meeting, present in person or represented by proxy, constitutes a quorum for transacting business at a meeting.

 

The holders of a majority in interest of all outstanding stock entitled to vote at a Biogen stockholder meeting, present in person or represented by proxy, constitutes a quorum for transacting business at a meeting.

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Stockholder Inspection   The DGCL provides any stockholder with the right to inspect the company's stock ledger, stockholder lists and other books and records for a purpose reasonably related to the person's interest as a stockholder.   The MBCL and Biogen's bylaws provide that stockholders have the right for a proper purpose to inspect the corporation's articles of organization, bylaws, records of all meetings of incorporators and stockholders and stock and transfer records, including the stockholder list. Any officer or agent of the corporation who refuses such an inspection will be liable to any stockholder for actual damages caused by such refusal. In addition, stockholders have a common law right to petition the court for an order to inspect other books and records of the corporation.

Number of Directors

 

IDEC currently has nine directors. IDEC's bylaws provide that the number of directors which shall constitute the whole board shall be determined by resolution of the board of directors or by the stockholders at the annual meeting of the stockholders.
Pursuant to the merger agreement, IDEC will expand its board of directors to 12 persons upon completion of the merger.

 

Biogen currently has 11 directors. Biogen's bylaws provide that the board of directors shall consist of not less than three and not more than 15 directors, which number, subject to the rights of the holders of any preferred stock, shall be determined by the board of directors, except that, in the absence of any such determination, such number shall be nine. Such number may be enlarged or reduced by a vote of a majority of directors then in office.

Classification of Board of Directors

 

IDEC's bylaws provide that the board of directors will consist of three classes. At each annual meeting of stockholders, directors elected to succeed those directors whose terms expire shall be elected for a three-year term.

 

Biogen's bylaws provide that the board of directors will consist of three classes. At each annual meeting of stockholders or special meeting in lieu thereof following the initial classification of the board of directors, directors elected to succeed those directors whose terms then expire are elected for a term of office to expire at the third succeeding annual meeting of the stockholders or special meeting in lieu thereof after their election and until their successors are duly elected and qualified.

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  Rights of Biogen stockholders

 

 

 

 

 

Removal of Directors

 

Under the DGCL, directors may be removed with or without cause by a majority vote of stockholders entitled to vote at the election of directors; however, if the board of directors of the company is classified into several classes of directors (as is the case with IDEC), directors may be removed only for cause.
Under IDEC's bylaws, any director, or the entire board of directors, may be removed, with cause, by the holders of a majority of shares entitled to vote at an election of directors.

 

Under the MBCL, except as otherwise provided in the articles of organization or bylaws, directors may be removed with or without cause by a majority vote of stockholders entitled to vote on the election of directors or by a majority vote of the directors then in office.
Under Biogen's articles of organization and bylaws, however, directors may be removed from office at any time (i) only for cause (and only after reasonable notice and an opportunity to be heard) and (ii) only by the affirmative vote of the holders of at least 80% of the voting power of all shares of Biogen's capital stock entitled to vote generally in the election of directors, voting together as a single class, or by the affirmative vote of three-fourths of the directors then serving.

Limitation on Personal Liability of Directors and Officers

 

IDEC's certificate of incorporation provides that directors shall not be personally liable to IDEC or its stockholders for monetary damages for breaching their fiduciary duties, except for liability (i) for any breach of the director's duty of loyalty to IDEC or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL or (iv) for any transaction from which the director derived an improper personal benefit.

 

Biogen's articles of organization provide that directors shall not be personally liable to Biogen or its stockholders for monetary damages for breaching their fiduciary duties; provided, however, that this provision does not limit the liability of a director (i) for any breach of the director's duty of loyalty to Biogen or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Sections 61 or 62 of the MBCL (relating to distributions and loans) or (iv) with respect to any transaction from which the director derived an improper personal benefit.

Indemnification of Directors and Officers

 

IDEC's certificate of incorporation and bylaws provide that IDEC shall, to the fullest extent permitted by the DGCL, as amended from time to time, indemnify directors for all expenses and liabilities imposed upon them due to any proceeding in which they may become involved by serving or having

 

Biogen's articles of organization provide for the indemnification of directors and officers of the corporation for all expenses and liabilities imposed upon them due to any proceeding in which they may become involved by serving or having served as directors or officers of the

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served as a director of IDEC, or at IDEC's request, as a director or officer of another corporation. The board of directors, in its discretion, has the power on behalf of IDEC to indemnify any current or former officer or employee made a party to any action.
The DGCL and IDEC's bylaws permit IDEC to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent, or is or was serving at the request of IDEC as a director, officer, employee or agent of another organization against any liability incurred by that person or arising out of that person's status as such.
IDEC enters into agreements with its officers and directors which affirm IDEC's obligation to indemnify them to the fullest extent permitted by law.
The DGCL permits a corporation to indemnify persons against judgments in actions brought by or in the right of the corporation.


 


corporation or at the request of Biogen as directors or officers of another corporation, including any corporation or other entity of which a majority of any class of equity security is owned by Biogen or an affiliate of Biogen, or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan to the fullest extent authorized by the MBCL, as amended from time to time.
The MBCL and Biogen's articles of organization and bylaws permit Biogen to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of Biogen as a director, officer, employee or agent of another organization against any liability incurred by that person or arising out of that person's status as such, whether or not Biogen would have the power to indemnify that person against such liability.
Biogen has entered into agreements with certain of its officers and directors which affirm Biogen's obligation to indemnify them to the fullest extent permitted by law and contain various procedural and other provisions which expand the protection afforded by Biogen's articles of organization.
The MBCL does not explicitly address indemnifying persons against judgments in actions brought by or in the right of the corporation. The general standard applies to these cases.

Amendments to Certificate of incorporation

 

Under the DGCL, a majority vote of the outstanding shares of common stock is required to amend a company's certificate of incorporation. Under IDEC's certificate of incorporation, IDEC reserves the right to amend or repeal any provision contained in its certificate of

 

Under the MBCL, amendments to the provisions of the articles of organization of a corporation concerning increases or reduction of the corporation's capital stock, changes in par value, changes in the number of authorized shares and changes in the corporate name require a vote of a

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incorporation in any manner prescribed by the DGCL, and all rights conferred to stockholders are granted subject to this reservation.

 

majority of each class of stock outstanding and entitled to vote thereon. All other amendments to the articles of organization require the vote of two-thirds of each class of stock outstanding and entitled to vote thereon. However, the articles of organization may provide that the articles of organization may be amended by a vote of less than two-thirds, but not less than a majority. If an amendment would adversely effect the rights of any class of stock, the amendment must be authorized by the proportion of that class of stock required by the MBCL or the articles of organization to approve such an amendment, voting separately.
Under Biogen's articles of organization, a vote of 80% or more of the voting power of the outstanding capital stock entitled to vote generally in the election of directors, voting together as a single class, is required to alter, amend or repeal Article 6A entitled "Certain Business Combinations," Article 6C entitled "Board of Directors" and Article 6G entitled "Making, Amending and Repealing Bylaws," of the articles of organization; all other amendments are governed by the MBCL.

Amendments to Bylaws

 

IDEC's bylaws may be amended, altered or repealed, or new bylaws may be adopted, by a majority vote of the board of directors; provided, however, that the stockholders may change or repeal any bylaw adopted by the board of directors by a majority vote. No amendment or supplement to the bylaws adopted by the board of directors may vary or conflict with any amendment or supplement adopted by the stockholders.

 

Biogen's bylaws may be amended, altered or repealed, and new bylaws may be adopted, by a majority of the board of directors, except with respect to any provision thereof which by law, the articles of organization or the bylaws requires action by the stockholders (who also have the power to amend, adopt or repeal the bylaws), in which case the bylaws may be amended by the stockholders at any stockholders meeting by vote of the holders of a majority in interest of all stock issued and outstanding and entitled to vote, except as otherwise provided in Biogen's articles of organization.

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        Article 6G of Biogen's articles of organization provides that Articles II and III and Sections 2 and 3 of Article I of Biogen's bylaws (relating to the board of directors, officers and annual and special meetings) may not be altered, amended or repealed, and no provision inconsistent therewith may be adopted, without the vote of the holders of at least 80% of the voting power of all shares of the corporation entitled to vote generally in the election of directors, voting together as a single class.


Anti-Takeover Provisions


 


Section 203 of the DGCL prohibits a Delaware corporation from engaging in a "business combination" with a person owning 15% or more of the corporation's voting stock, referred to as an "interested stockholder," for three years following the time that person became an interested stockholder, unless any one of the following occurs:
• The board of directors approves the stock acquisition or the business combination before the person becomes an interested stockholder
• The person became an interested stockholder in a transaction in which it acquired at least 85% of the voting stock in the transaction, excluding shares owned by directors and officers and shares owned by some employee stock plans
• A combination transaction is approved by the board of directors and by at least two-thirds of the outstanding voting stock not owned by the interested stockholder
A Delaware corporation may elect in its certificate of incorporation or bylaws not to be governed by Section 203. IDEC has not made that election.


 


The Massachusetts "Business Combination" statute prohibits a Massachusetts corporation from engaging in a "business combination" with a stockholder owning five percent or more of the corporation's voting stock referred to as an "interested stockholder," for three years from the date that stockholder became an interested stockholder, unless one of the following occurs:
• The board of directors had approved either the business combination or the stock acquisition or other transaction which resulted in the stockholder becoming an interested stockholder before the stockholder became an interested stockholder
• Upon consummation of the transaction in which the stockholder becomes an interested stockholder, such stockholder owned at least 90% of the outstanding voting securities of the corporation (excluding shares owned by directors and officers and certain employee stock plans)
• The business combination transaction is approved by both the board of directors and at an annual or special meeting of stockholders by two-thirds of the outstanding voting stock not owned by the interested stockholder

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  Rights of Biogen stockholders

 

 

 

 

 
        Biogen may elect, with stockholder approval, not to be governed by the Massachusetts Business Combination statute. Biogen has not made that election.

Control Share Acquisition Statute

 

Delaware does not have a Control Share Acquisition statute.

 

Under the Massachusetts Control Share Acquisition Statute for Massachusetts corporations, a person who acquires beneficial ownership of shares of stock of a corporation in a threshold amount equal to or greater than one-fifth, one-third, or a majority of the voting stock of the corporation, referred to as a "control share acquisition," must obtain the approval of a majority of shares entitled to vote generally in the election of directors (excluding (i) any shares owned by such person acquiring or proposing to acquire beneficial ownership of shares in a control share acquisition, (ii) any shares owned by any officer of the corporation and (iii) any shares owned by any employee of the corporation who is also a director of the corporation) in order to vote the shares that such person acquires in crossing the foregoing thresholds. The statute does not require that such person consummate the purchase before the stockholder vote is taken.
Biogen may elect not to be governed by the Control Share Acquisition Statute by including a provision in the corporation's articles of organization or bylaws pursuant to which the corporation opts out of the statute.
Under its bylaws, Biogen has elected not to be governed by this statute.

Stockholder Rights Plan

 

As described in the Amended and Restated Rights Agreement dated as of July 26, 2001, as amended, between IDEC and Mellon Investor Services LLC (f/k/a ChaseMellon Shareholder Services LLC), as rights agent, each outstanding share of IDEC common

 

Biogen has adopted a stockholder rights plan pursuant to that certain Rights Agreement, dated May 8, 1999, between Biogen, Inc. and Equiserve Trust Company, N.A. (as successor to State Street Bank and Trust Company), as amended. The following is a

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stock represents a right that, when exercisable, will entitle the holder to purchase 1/1000th of a share of preferred stock, designated as Series X Junior Participating Preferred Stock, at a price of $500 per 1/1000th of a share.
The rights are not currently exercisable but will become exercisable upon the earlier of:
• A public announcement that a person, entity or group has acquired, or obtained the right to acquire, 15% or more of the outstanding shares of common stock (other than as a result of repurchases of stock by IDEC, any IDEC employee benefit plan or certain other instances set forth in the rights agreement)
• Ten business days following the commencement of a tender offer or exchange offer which would result in any person, entity or group becoming an Acquiring Person (as defined in the rights agreement)
In the event that, after the first date of public announcement that an Acquiring Person has become such, IDEC is involved in a merger or other business combination transaction (whether or not IDEC is the surviving corporation) or 50% or more of IDEC's assets or earning power are sold, each holder of a right (other than the Acquiring Person) has the right, upon exercise, to buy that number of shares of common stock equal to the market value of two times the purchase price.
The rights expire on the earliest of:
• July 26, 2011
• Upon completion of a merger with a person, entity or group who (i) acquired common stock pursuant to a Permitted Offer (as defined in the rights agreement) and (ii) is offering in the merger the same




 




summary of the rights agreement and is subject to and qualified in its entirety by the terms and conditions of the rights agreement. See "Where You Can Find More Information" on page 118.
Each outstanding share of Biogen common stock represents a right that, when exercisable in accordance with the rights agreement, will entitle the holder to purchase 1/1000th of a share of Series A-1 Junior Participating Preferred Stock at a price of $850 per 1/1000th of a preferred share, subject to adjustment.
The rights are not currently exercisable, but will become exercisable upon the earlier of:
• The close of business on the tenth day the following the day on which the Biogen or an acquiring person publicly announces or publicly discloses facts indicating that a person, entity or group of affiliated or associated persons, an "acquiring person" (other than certain excluded persons) have acquired, beneficial ownership of ten percent or more of the outstanding shares of Biogen common stock
• The tenth business day (or such later date as may be determined by action of the board of directors prior to such time as any person or entity becomes an acquiring person) following the commencement of, or announcement of an intention to make, a tender offer or exchange offer the consummation of which would result in the beneficial ownership by a person or group of ten percent or more of the outstanding shares of Biogen common stock
In the event that any person becomes an acquiring person, each holder of right, other than rights beneficially owned by the acquiring person or an

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    price per share and form of consideration paid in the Permitted Offer
• Redemption or exchange of the rights by IDEC
For a more comprehensive description of IDEC's Amended and Restated Rights Agreement, see "Description of IDEC Capital Stock—IDEC's Amended and Restated Rights Agreement" on page 112.



 



associate or affiliate of such acquiring person or certain of their transferees (which rights will thereafter be void), will have the right to receive, upon exercise, that number of common shares having a market value of two times the purchase price of the rights.
In the event that, following the date a person becomes an acquiring person, referred to as the "shares acquisition date," the company is acquired in a merger or other business combination transaction or 50% or more of its consolidated assets or earning power are sold each holder of a right will thereafter have the right to receive, upon the exercise of the right at the then current exercise price of the right, that number of shares of common stock of the acquiring company which at the time of such transaction will have a market value of two times the exercise price of the right.
At any time prior to the earlier of (i) the close of business on the tenth business day following the shares acquisition date or (ii) May 8, 2009, the board of directors may redeem the rights in whole, but not in part, at a price of $.001 per right, subject to adjustment. Following the expiration of the above periods, the rights become nonredeemable.
The rights expire on the earliest of:
• May 8, 2009
• Redemption or exchange of the rights by Biogen
The execution and delivery of the merger agreement did not, and the completion of the merger or the transactions contemplated by the merger agreement will not, result in the rights becoming exercisable or in IDEC or its existing and future affiliates and associates being deemed an "acquiring person" under the rights agreement.

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Provisions Relating to Some Business Combinations


 


The DGCL generally requires that a merger or consolidation or sale, lease or exchange of all or substantially all of a corporation's property and assets be approved by the directors and by a majority of the outstanding stock.
Under the DGCL, a surviving corporation need not obtain stockholder approval for a merger if:
• Each share of the surviving corporation's stock outstanding prior to the merger remains outstanding in identical form after the merger
• The merger agreement does not amend the certificate of incorporation of the surviving corporation
• Either no shares of common stock of the surviving corporation are to be issued or delivered in the merger, or, if common stock will be issued or delivered, it will not increase the number of shares of common stock outstanding prior to the merger by more than 20%


 


Under the MBCL, the affirmative vote of two-thirds of the outstanding shares of each class of stock entitled to vote on the matter is required to authorize the sale, lease or exchange of all or substantially all of Biogen's property and assets or a merger or consolidation of Biogen into any other corporation, unless the articles of organization provide for authorization by a lesser proportion, but not less than a majority. Biogen's articles of organization provide that the vote of a majority of the outstanding shares of capital stock entitled to vote is required to approve the sale, lease or exchange of all or substantially all of Biogen's assets or the merger or consolidation of Biogen into any other corporation (other than transactions with "interested stockholders"), provided such sale, lease, exchange, merger or consolidation has been approved by a majority of Biogen's board of directors.
Under the MBCL, unless the corporation's articles of organization otherwise provides for a stockholder vote, a surviving corporation need not obtain stockholder approval for a merger if:
• The merger agreement does not change the name, the amount of shares authorized of any class of stock or other provisions of the articles of organization of the surviving corporation
• The shares of the surviving corporation to be issued or delivered in the merger do not exceed 15% of the shares of stock of that class outstanding immediately prior to the merger
Under Biogen's articles of organization, the following transactions with any "interested stockholder," defined as the beneficial owner of more than 15% of the voting power of

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the then outstanding "voting stock" require the affirmative vote of the holders of at least 80% of the voting power of the then outstanding shares of voting stock:
• Any merger or consolidation of Biogen with any interested stockholder
• Any sale, lease, license, exchange, mortgage, pledge, transfer or other disposition to or with any interested stockholder
• The issuance or transfer by Biogen or any of its subsidiaries of any securities of Biogen or any of its subsidiaries to any interested stockholder in exchange for payment having an aggregate fair market value equal to or greater than 10% of the combined assets of Biogen and its subsidiaries
• Any reclassification of securities of Biogen or other transaction which has the effect of increasing the proportionate share of securities owned by any interested stockholder; or the adoption of any plan or proposal for the liquidation or dissolution of Biogen proposed by or on behalf of any interested stockholder
The affirmative vote of 80% of the voting power of the then outstanding shares of voting stock is not required for a "business combination" not involving any cash or other consideration being received by the stockholders if such business combination has been approved by a majority of the board of directors of Biogen who are disinterested directors, or for any other business combination that has either been approved by a majority of the board of directors of Biogen who are disinterested directors or meets the following criteria:
• The aggregate amount of cash and

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    the fair market value of any other consideration to be received per share by holders of common stock of Biogen shall be at least equal to the higher of the following:
    • The highest per share price paid by the interested stockholder for any shares of common stock (i) within the two-year period immediately prior or (ii) in the transaction in which it became an interested stockholder, or
    • The fair market value per share of common stock of Biogen
• The aggregate amount of cash and the fair market value of any other consideration to be received per share by holders of voting stock other than common stock of Biogen shall be at least equal to the highest of the following:
    • The highest per share price paid by the interested stockholder for any shares of common stock (i) within the two-year period immediately prior or (ii) in the transaction in which it became an interested stockholder
    • The highest preferential amount per share to which the holders of voting stock are entitled in the event of any voluntary liquidation, dissolution or winding up of Biogen
    • The fair market value per share of such class of voting stock of Biogen
• The consideration to be received by holders of any particular class of outstanding voting stock (including common stock) shall be in cash or in the same form as the interested stockholder has previously paid for such voting stock
• Prior to the business combination (i) except as approved by a majority

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    of the disinterested directors, there shall have been no failure to declare and pay any full quarterly dividends on any preferred stock of Biogen, (ii) there shall have been (1) no reduction in the annual rate of dividends on common stock, except as approved by a majority of disinterested directors, (2) an increase in such annual rate of dividends as necessary to reflect any transaction which has the effect of reducing the number of outstanding shares of common stock, unless such failure is approved by a majority of the disinterested directors, and (iii) the interested stockholder shall not have become the beneficial owner of any additional shares of voting stock
• After such interested stockholder has become an interested stockholder, such interested stockholder shall not have received the benefit of any loans, guarantees, pledges or the financial assistance or any tax advantages provided by Biogen and
• A proxy or information statement describing the proposed business combination shall be mailed to Biogen stockholders at least 30 days prior to the consummation of the business combination
A majority of the board of directors of Biogen shall have the duty to determine whether a person is an interested stockholder. Once the board has made a determination, that a person is an interested stockholder, then a majority of the disinterested directors shall have the power and duty to determine (i) the number of shares of voting stock beneficially owned by any person, (ii) whether a person is an affiliate or associate of another, (iii) whether the assets or consideration received for the issuance or transfer of securities by Biogen or

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  Rights of IDEC stockholders
  Rights of Biogen stockholders

 

 

 

 

 

 

 

 

 

any of its subsidiaries in any business combination has an aggregate fair market value equal to or greater than 10% of the combined assets of Biogen and its subsidiaries and (iv) whether an affirmative vote of 80% of the voting power of the then outstanding shares of voting stock is required.





Appraisal or Dissenters' Rights





 





Under the DGCL, the right of dissenting stockholders to obtain the fair value for their shares is available in connection with some mergers and consolidations. Unless otherwise provided in the corporate certificate of incorporation, appraisal rights are not available to stockholders when the corporation will be the surviving corporation in a merger and no vote of its stockholders is required to approve the merger. In addition, no appraisal rights are available to holders of shares of any class of stock which is either:
• Listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the NASD
• Held of record by more than 2,000 stockholders





 





Under the MBCL, a properly dissenting stockholder is entitled to receive the appraised value of his shares when the corporation votes to do any one of the following:
• Sell, lease or exchange all of substantially all of its property and assets
• Adopt an amendment to its articles of organization that adversely affects the rights of the stockholder
• Merge or consolidate with another corporation
No appraisal rights are available, however, to stockholders of a corporation surviving the merger if the merger does not require the approval of these stockholders.
In order to exercise their appraisal rights, stockholders must do all of the following:
• Deliver to the corporation a written objection to the corporate action stating their intention to demand payment for their shares
• Not vote in favor of the corporate action triggering the appraisal right
• Follow the appraisal procedures set out under the MBCL
See "The Proposed Merger—Dissenters' Rights of Appraisal" on page 36.

110



DESCRIPTION OF IDEC CAPITAL STOCK

        The following is a summary of the material terms of IDEC's capital stock before and after the completion of the merger. It is only a summary; therefore, it is not meant to be complete and does not contain all of the information that may be important to you. Accordingly, you should read carefully the more detailed provisions of IDEC's certificate of incorporation, IDEC's bylaws and IDEC's Amended and Restated Rights Agreement, all of which are incorporated by reference and will be sent to stockholders of IDEC and Biogen upon request. See "Where You Can Find More Information," on page 118.

Authorized Capital Stock

        Prior to Completion of the Merger.    Under IDEC's certificate of incorporation, IDEC's authorized capital stock consists of 500,000,000 shares of common stock, $0.0005 par value per share, and 8,000,000 shares of preferred stock, $0.001 par value per share. As of July 31, 2003, there were issued and outstanding 155,449,170 shares of common stock and 36,214 shares of preferred stock.

        After Completion of the Merger.    At IDEC's special meeting, holders of IDEC common stock will be asked to approve an amendment to IDEC's certificate of incorporation increasing the authorized number of shares of common stock to 1,000,000,000. There will be no increase in the authorized number of shares of preferred stock. IDEC has sufficient shares of common stock authorized and unissued under its existing certificate of incorporation to complete the merger if stockholder approval of the amendment to the certificate of incorporation is not received; however, IDEC will be unable to change the name of the combined company to BIOGEN IDEC INC. without such amendment to the certificate of incorporation. IDEC has no immediate plans, arrangements or understandings for the issuance of shares that would be authorized by the amendment to the certificate of incorporation.

IDEC Common Stock

        IDEC Common Stock Outstanding.    The outstanding shares of IDEC common stock are, and the shares of IDEC common stock issued under the merger will be, duly authorized, validly issued, fully paid and non-assessable.

        Voting Rights.    Each holder of IDEC common stock is entitled to one vote for each share of IDEC common stock held of record on the applicable record date on all matters submitted to a vote of stockholders.

        Dividend Rights; Rights Upon Liquidation.    The holders of IDEC common stock are entitled to receive, from funds legally available for the payment thereof, dividends when and as declared by resolution of IDEC's board of directors, subject to any preferential dividend rights granted to the holders of any outstanding IDEC preferred stock. In the event of a liquidation, dissolution or winding up of IDEC, each share of IDEC common stock is entitled to share pro rata in any distribution of IDEC's assets after payment or providing for the payment of liabilities and the liquidation preference of any outstanding IDEC preferred stock.

        Preemptive Rights.    Holders of IDEC common stock have no preemptive rights to purchase, subscribe for or otherwise acquire any unissued or treasury shares or other securities.

IDEC Preferred Stock

        IDEC Preferred Stock.    Pursuant to IDEC's certificate of incorporation, IDEC's board of directors is authorized to issue up to an aggregate of 8,000,000 shares of preferred stock in one or more series and to fix the rights, preferences, privileges and restrictions, including the dividend rights, conversion rights, voting rights, rights and terms of redemption, redemption price or prices, liquidation preferences

111


and the number of shares constituting any series or the designations of such series, without any further vote or action by the stockholders. The issuance of preferred stock in certain circumstances may have the effect of delaying, deferring or preventing a change of control in IDEC without further actions of the stockholders. The issuance of preferred stock with voting and conversion rights may adversely affect the voting power of the holders of common stock, including the loss of voting control to others.

        IDEC Preferred Stock Outstanding.    The outstanding shares of IDEC preferred stock are duly authorized, validly issued, fully paid and non-assessable. As of July 31, 2003, there were 13,221 shares of Series A-2 Preferred Stock outstanding, 22,993 shares of Series A-3 Preferred Stock outstanding and no other shares of preferred stock outstanding. Each share of Series A-2 and A-3 Preferred Stock is convertible at any time into 60 shares of IDEC common stock. None of the IDEC preferred stock outstanding has voting rights, except as may be required by the DGCL.

        In the event of a liquidation, dissolution or winding up of IDEC, holders of the outstanding Series A-2 and Series A-3 Preferred Stock will have a right to receive a return of their original purchase price for their shares of preferred stock, prior to and in preference of any distribution of assets of IDEC to any holder of IDEC common stock. Under the terms of IDEC's outstanding Series A-2 and Series A-3 Preferred Stock as set forth in IDEC's certificate of incorporation, a liquidation is deemed to include any situation in which (i) a single stockholder or group of affiliated stockholders, other than Genentech or its controlled affiliate, who would be required to file a Schedule 13D under the Exchange Act, acquires or obtains the right to acquire IDEC voting stock so that its total holdings of such stock equal or exceed 50% of the then outstanding IDEC voting stock or (ii) any third party, other than Genentech or its controlled affiliate, acquires or obtains the right to acquire all or substantially all of IDEC's assets. The outstanding shares of Series A-2 and A-3 Preferred Stock automatically convert into common stock in the event that a person or entity other than Genentech or its affiliate acquires such shares.

IDEC's Amended and Restated Rights Agreement

        The following is a summary description of the rights issued under IDEC's Amended and Restated Rights Agreement. This description is subject to, and is qualified in its entirety by reference to, the text of the Amended and Restated Rights Agreement, which is incorporated by reference into this document. See "Where You Can Find More Information" on page 118.

        On July 22, 1997, IDEC's board of directors declared a dividend distribution of one "right" for each outstanding share of IDEC common stock to stockholders of record at the close of business on August 11, 1997, or the record date. Since the record date, IDEC has issued one right with each newly issued share of common stock. On July 26, 2001, the board of directors amended the terms of the rights. The description and terms of the rights are set forth in that certain rights agreement between the Company and Mellon Investor Services LLC (f/k/a ChaseMellon Shareholder Services LLC), as the rights agent, originally dated as of July 22, 1997, but amended and restated as of July 26, 2001, and as amended as of June 20, 2003. The following is a summary of the rights as amended to date:

112


113


114


Transfer Agent and Registrar

        Mellon Investor Services LLC is the transfer agent and registrar for IDEC common stock. Following completion of the merger, IDEC intends to have EquiServe to serve as transfer agent and registrar for BIOGEN IDEC INC.


LEGAL MATTERS

        Pillsbury Winthrop LLP, San Diego, California, will render an opinion on the legality of the IDEC common stock to be issued to Biogen stockholders in the merger. It is a condition to the completion of the merger that each of IDEC and Biogen receive an opinion from Pillsbury Winthrop LLP and Skadden, Arps, Slate, Meagher & Flom LLP, respectively, concerning the tax treatment of the merger.


EXPERTS

        The consolidated financial statements of IDEC Pharmaceuticals Corporation as of December 31, 2002 and 2001, and for each of the years in the three-year period ended December 31, 2002, have been incorporated by reference herein and in the registration statement in reliance upon the report of KPMG LLP, independent accountants, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing.

        The financial statements of Biogen, Inc. incorporated in this joint proxy statement/prospectus by reference to the Annual Report on Form 10-K for the year ended December 31, 2002 have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting.

115



ADDITIONAL INFORMATION FOR STOCKHOLDERS

Future Stockholder Proposals

IDEC

        Under the present rules of the Securities and Exchange Commission, if a stockholder wants IDEC to include a proposal in its proxy statement and form of proxy for presentation at IDEC's 2004 annual meeting of the stockholders, the proposal must be received by IDEC by December 12, 2003, attention: Secretary, at 3030 Callan Road, San Diego, California, 92121; provided, however, that if the date of the 2004 annual meeting of stockholders is changed by more than 30 days from the date of the previous year's meeting held on May 19, 2003, then the deadline is a reasonable time before IDEC begins to print and mail its proxy materials. Any nominations for directors and/or an item of business to be introduced at an annual meeting of stockholders must be submitted in writing to the Secretary of IDEC at the address noted above.

        IDEC's annual meeting of stockholders is generally held in the middle of May. Assuming that IDEC's 2004 annual meeting is held on schedule, IDEC must receive notice of your intention to introduce a nomination or other item of business at that meeting by March 20, 2004. If IDEC does not receive notice by that date, or if we meet other requirements of the Securities and Exchange Commission rules, the persons named as proxies in the proxy materials relating to that meeting will use their discretion in voting the proxies when these matters are raised at the meeting.

        Any nomination must contain the all of the following information about the nominee:

        Any notice of a proposed item of business must include all of the following information:

        IDEC's board of directors is not aware of any matters that are expected to come before the special meeting other than those referred to in this joint proxy statement/prospectus. If any other matter should come before the special meeting, the persons named in the accompanying proxy intend to vote the proxies in accordance with their best judgment.

116



        The chairman of the meeting may refuse to allow the transaction of any business not presented beforehand, or to acknowledge the nomination of any person not made in compliance with the foregoing procedures.

Biogen

        Biogen does not currently expect to hold a 2004 annual meeting of stockholders because Biogen does not expect to be a separate public company if the merger has been completed at that time. If the merger has not been completed and such a meeting is held, stockholder proposals will be eligible for consideration for inclusion in the proxy statement for the 2004 annual meeting in accordance with Rule 14a-8 under the Exchange Act.

        To be eligible for inclusion in the proxy materials for a 2004 annual meeting, if one is held, stockholder proposals must be received by Biogen, attention: Executive Vice President—General Counsel, at 14 Cambridge Center, Cambridge, Massachusetts, 02142, before the close of business on December 20, 2003; provided, however, that if the date of the 2004 annual meeting is changed by more than 30 days from the date of the previous year's annual meeting, held on June 6, 2003, then the deadline is a reasonable time before Biogen begins to print and mail its proxy materials.

        Stockholder proposals that are intended to be presented at Biogen's 2004 annual meeting, if one is held, but not included in the proxy materials must be received by Biogen, attention: Clerk, at 14 Cambridge Center, Cambridge, Massachusetts, 02142, not less than 60, but not more than 90, days prior to the date of the 2004 annual meeting. However, if less than 70 days' notice or prior public disclosure of the date of the meeting is made to stockholders, the notice of the stockholder's proposal must be received by Biogen not later than the 10th day following the day on which such notice or public disclosure of the date of the meeting is made.

        Upon timely receipt of any stockholder proposal, Biogen will determine whether to present such proposal at the 2004 annual meeting or include it in the proxy materials in accordance with applicable Securities and Exchange Commission regulations.

        The stockholder's notice relating to the proposal must include all of the following information:

        If a stockholder's notice relates to a nominee for election as a director, the notice must set forth all of the following:

117



WHERE YOU CAN FIND MORE INFORMATION

        IDEC and Biogen file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission. You may read and copy any of these reports, statements or other information at the Securities and Exchange Commission's public reference room located at 450 Fifth Street, N.W., Washington D.C. 20549. Please call the Securities and Exchange Commission at l-800-SEC-0330 for further information on the public reference room. IDEC's and Biogen's Securities and Exchange Commission filings are also available to the public from commercial document retrieval services and at the web site maintained by the Securities and Exchange Commission at www.sec.gov.

        IDEC has filed a registration statement on Form S-4 to register with the Securities and Exchange Commission the IDEC common stock to be issued to Biogen stockholders upon completion of the merger. This joint proxy statement/prospectus is a part of that registration statement and constitutes a prospectus of IDEC in addition to being a proxy statement of IDEC and Biogen for their respective meetings. As allowed by Securities and Exchange Commission rules, this joint proxy statement/prospectus does not contain all the information you can find in the registration statement or the exhibits to the registration statement.

        The Securities and Exchange Commission allows us to "incorporate by reference" information into this joint proxy statement/prospectus, meaning that we can disclose important information by referring to another document filed separately with the Securities and Exchange Commission. The information incorporated by reference is deemed to be part of this joint proxy statement/prospectus, except for any information superseded by information in, or incorporated by reference in, this joint proxy statement/prospectus. This joint proxy statement/prospectus incorporates by reference the documents set forth below that we have previously filed with the Securities and Exchange Commission. These documents contain important information about our companies and their finances.

IDEC SECURITIES AND EXCHANGE COMMISSION FILINGS (FILE NO. 019311)

  PERIOD
Annual Report on Form 10-K   Fiscal Year ended December 31, 2002
Quarterly Report on Form 10-Q   Quarter ended March 31, 2003
Quarterly Report on Form 10-Q   Quarter ended June 30, 2003
Current Reports on Form 8-K   Filed on April 15, 2003, June 23, 2003 and July 17, 2003
Proxy Statement on Schedule 14A   Filed on April 11, 2003
The description of the rights agreement, contained in the Registration Statement on Form 8-A/A filed pursuant to Section 12 of the Exchange Act on July 27, 2001 and the Form 8-A/A filed on June 25, 2003, including any amendment or report filed with the Securities and Exchange Commission for the purpose of updating this description   Filed on July 27, 2001 and June 25, 2003

118


BIOGEN SECURITIES AND EXCHANGE COMMISSION FILINGS (FILE NO. 12042)

  PERIOD
Annual Report on Form 10-K and Form 10-K/A   Fiscal Year ended December 31, 2002
Quarterly Report on Form 10-Q   Quarter ended March 31, 2003
Quarterly Report on Form 10-Q   Quarter ended June 30, 2003
Current Reports on Form 8-K   Filed on April 4, 2003, April 17, 2003,
June 23, 2003 and July 24, 2003
Proxy Statement on Schedule 14A   Filed on April 17, 2003
The description of the rights agreement, contained in the Registration Statement on Form 8-A/A filed pursuant to Section 12 of the Exchange Act, including any amendment or report filed with the Securities and Exchange Commission for the purpose of updating this description   Filed on June 23, 2003

        IDEC and Biogen are also incorporating by reference additional documents that each company has filed with the Securities and Exchange Commission under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act between the date of the initial filing of the registration statement of which this joint proxy statement/prospectus is a part and the effectiveness of the registration statement, as well as between the date of this joint proxy statement/prospectus and the termination of the offering contemplated by this joint proxy statement/prospectus.

        All information contained or incorporated by reference in this joint proxy statement/prospectus relating to IDEC has been supplied by IDEC, and all information relating to Biogen has been supplied by Biogen.

        If you are a stockholder, you may have already received some of the documents incorporated by reference. Alternatively, you can obtain any of these documents through us or the Securities and Exchange Commission. Documents incorporated by reference are available from IDEC and Biogen without charge, excluding all exhibits unless IDEC or Biogen has specifically incorporated by reference an exhibit in this joint proxy statement/prospectus. Stockholders may obtain documents incorporated by reference in this joint proxy statement/ prospectus by requesting them in writing or by telephone from the appropriate party at the following address:

        If you are an IDEC stockholder and would like to request documents from IDEC, please do so by                        , 2003 to receive them before IDEC's special meeting. If you are a Biogen stockholder and would like to request documents from Biogen, please do so by                        , 2003 to receive them before Biogen's special meeting.

119


        You can also get more information by visiting IDEC's website at www.idecpharm.com. Except to the limited extent expressly provided in this joint proxy statement/prospectus, information contained in our website is not incorporated by reference into this joint proxy statement/prospectus.

        YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS JOINT PROXY STATEMENT/PROSPECTUS TO VOTE ON THE PROPOSALS TO IDEC AND BIOGEN STOCKHOLDERS IN CONNECTION WITH THE MERGER, AS THE CASE MAY BE. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM WHAT IS CONTAINED IN THIS JOINT PROXY STATEMENT/PROSPECTUS. THIS JOINT PROXY STATEMENT/PROSPECTUS IS DATED            , 2003. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS JOINT PROXY STATEMENT/PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN SUCH DATE, AND NEITHER THE MAILING OF THIS JOINT PROXY STATEMENT/PROSPECTUS TO STOCKHOLDERS NOR THE ISSUANCE OF SHARES OF IDEC COMMON STOCK IN THE MERGER SHALL CREATE ANY IMPLICATION TO THE CONTRARY.

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ANNEX A




AGREEMENT AND PLAN OF MERGER

BY AND AMONG

IDEC PHARMACEUTICALS CORPORATION,

BRIDGES MERGER CORPORATION

AND

BIOGEN, INC.

DATED AS OF JUNE 20, 2003






AGREEMENT AND PLAN OF MERGER

TABLE OF CONTENTS

ARTICLE I THE MERGER   A-1
 
SECTION 1.1

 

The Merger

 

A-1
  SECTION 1.2   Closing   A-1
  SECTION 1.3   Effective Time   A-2
  SECTION 1.4   Effects of The Merger   A-2
  SECTION 1.5   Purposes of the Surviving Corporation   A-2
  SECTION 1.6   Organizational Documents of the Surviving Corporation   A-2
  SECTION 1.7   Directors and Officers of the Surviving Corporation   A-2
  SECTION 1.8   IDEC Charter Amendment   A-2
  SECTION 1.9   Alternative Structure   A-2

ARTICLE II EFFECTS OF THE MERGER; EXCHANGE OF CERTIFICATES

 

A-3
 
SECTION 2.1

 

Effect on Capital Stock

 

A-3
  SECTION 2.2   Exchange of Shares and Certificates   A-4

ARTICLE III REPRESENTATIONS AND WARRANTIES

 

A-6
 
SECTION 3.1

 

Representations and Warranties of Biogen

 

A-6
  SECTION 3.2   Representations and Warranties of IDEC and Merger Sub   A-20

ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS

 

A-34
 
SECTION 4.1

 

Conduct of Business

 

A-34
  SECTION 4.2   No Solicitation   A-39

ARTICLE V ADDITIONAL AGREEMENTS

 

A-41
 
SECTION 5.1

 

Preparation of SEC Documents; Stockholders' Meetings

 

A-41
  SECTION 5.2   Accountant's Letters   A-43
  SECTION 5.3   Access to Information; Confidentiality   A-43
  SECTION 5.4   Reasonable Efforts   A-44
  SECTION 5.5   Indemnification and Insurance   A-45
  SECTION 5.6   Fees and Expenses   A-45
  SECTION 5.7   Public Announcements   A-45
  SECTION 5.8   Listing   A-46
  SECTION 5.9   Tax-Free Reorganization Treatment   A-46
  SECTION 5.10   Post-Agreement Operations   A-46
  SECTION 5.11   Conveyance Taxes   A-46
  SECTION 5.12   Equity Awards and Employee Benefits   A-46
  SECTION 5.13   Consents of Accountants   A-48
  SECTION 5.14   IDEC Board   A-48
  SECTION 5.15   Affiliate Legends   A-49
  SECTION 5.16   Notification of Certain Matters   A-49
  SECTION 5.17   Section 16 Matters   A-49
  SECTION 5.18   Rights Plans; State Takeover Laws   A-49
  SECTION 5.19   Reservation of IDEC Common Stock   A-50
         

A-i


  SECTION 5.20   Actions with Respect to the New IDEC Stock Plan and the New IDEC Annual Bonus Plan   A-50

ARTICLE VI CONDITIONS PRECEDENT

 

A-50
 
SECTION 6.1

 

Conditions to Each Party's Obligation to Effect The Merger

 

A-50
  SECTION 6.2   Conditions to Obligations of Biogen   A-51
  SECTION 6.3   Conditions to Obligations of IDEC and Merger Sub   A-52

ARTICLE VII TERMINATION, AMENDMENT AND WAIVER

 

A-52
 
SECTION 7.1

 

Termination

 

A-52
  SECTION 7.2   Effect of Termination   A-54
  SECTION 7.3   Payments   A-54
  SECTION 7.4   Amendment   A-56
  SECTION 7.5   Extension; Waiver   A-56

ARTICLE VIII GENERAL PROVISIONS

 

A-57
 
SECTION 8.1

 

Nonsurvival of Representations and Warranties

 

A-57
  SECTION 8.2   Notices   A-57
  SECTION 8.3   Definitions   A-58
  SECTION 8.4   Terms Defined Elsewhere   A-61
  SECTION 8.5   Interpretation   A-63
  SECTION 8.6   Counterparts   A-64
  SECTION 8.7   Entire Agreement; No Third-Party Beneficiaries   A-64
  SECTION 8.8   Governing Law   A-64
  SECTION 8.9   Assignment   A-64
  SECTION 8.10   Consent to Jurisdiction   A-64
  SECTION 8.11   Headings, etc.   A-64
  SECTION 8.12   Severability   A-64
  SECTION 8.13   Failure or Indulgence Not Waiver; Remedies Cumulative   A-65
  SECTION 8.14   Waiver of Jury Trial   A-65
  SECTION 8.15   Specific Performance   A-65
 
EXHIBIT A

 

FORM OF IDEC CERTIFICATE OF AMENDMENT

 

AA-1

A-ii



AGREEMENT AND PLAN OF MERGER

        THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered into as of June 20, 2003, by and among IDEC PHARMACEUTICALS CORPORATION, a Delaware corporation ("IDEC"), BRIDGES MERGER CORPORATION, a Massachusetts corporation and a direct wholly owned subsidiary of IDEC ("Merger Sub"), and BIOGEN, INC., a Massachusetts corporation ("Biogen").

W I T N E S S E T H:

        WHEREAS, the respective Boards of Directors of IDEC, Merger Sub and Biogen have deemed it advisable and in the best interests of their respective corporations and stockholders that IDEC and Biogen engage in a business combination in a merger of equals in order to advance their respective long-term strategic business interests; and

        WHEREAS, in furtherance thereof, the Boards of Directors of each of IDEC, Merger Sub and Biogen have approved this Agreement and the merger of Merger Sub with and into Biogen with Biogen continuing as the surviving corporation (the "Merger"), upon the terms and subject to the conditions set forth in this Agreement and in accordance with the provisions of the Massachusetts Business Corporation Law (the "MBCL"); and

        WHEREAS, the Board of Directors of Biogen has determined to recommend to its stockholders the approval and adoption of this Agreement and the Merger; and

        WHEREAS, the Board of Directors of IDEC has determined to recommend to its stockholders approval of the IDEC Charter Amendment (as defined in Section 1.8) and the issuance of shares of IDEC Common Stock (as defined in Section 2.1(a)) in connection with the Merger (the "Share Issuance"); and

        WHEREAS, IDEC, as the sole stockholder of Merger Sub, has approved this Agreement and the Merger; and

        WHEREAS, for United States federal income tax purposes, it is intended that the Merger shall qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and this Agreement is intended to be, and is hereby, adopted as a plan of reorganization within the meaning of Section 368 of the Code.

        NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:


ARTICLE I

THE MERGER

        SECTION 1.1    The Merger.    Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the MBCL, at the Effective Time (as defined in Section 1.3), Merger Sub shall be merged with and into Biogen, the separate corporate existence of Merger Sub shall cease and Biogen shall continue as the surviving corporation in the Merger (the "Surviving Corporation") and shall succeed to and assume all the property, rights, privileges, powers and franchises of Merger Sub in accordance with the MBCL.

        SECTION 1.2    Closing.    The closing of the Merger (the "Closing") shall take place at 10:00 a.m., Boston time, on a date to be specified by the parties, which shall be no later than the second business day after satisfaction or waiver of all of the conditions set forth in Article VI (other than delivery of items to be delivered at the Closing and other than those conditions that by their nature are to be satisfied at the Closing, it being understood that the occurrence of the Closing shall remain subject to

A-1



the delivery of such items and the satisfaction or waiver of such conditions at the Closing) at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, One Beacon Street, Boston, Massachusetts, unless another time, date or place is agreed to in writing by the parties hereto. The date on which the Closing occurs is referred to herein as the "Closing Date."

        SECTION 1.3    Effective Time.    Subject to the terms and conditions of this Agreement, as soon as practicable on the Closing Date, the parties shall cause the Merger to be consummated by filing articles of merger executed in accordance with the relevant provisions of the MBCL (the "Articles of Merger") with the Secretary of State of the Commonwealth of Massachusetts (the "Secretary of State") and shall make all other filings or recordings required under the MBCL. The Merger shall become effective at such time as the Articles of Merger are duly filed with the Secretary of State, or at such subsequent date or time as IDEC and Biogen shall agree and specify in the Articles of Merger. The time at which the Merger becomes effective is referred to herein as the "Effective Time."

        SECTION 1.4    Effects of The Merger.    At the Effective Time, the Merger shall have the effects set forth in this Agreement and in the applicable provisions of the MBCL.

        SECTION 1.5    Purposes of the Surviving Corporation.    The purposes of the Surviving Corporation shall be as set forth in Article 2 of the articles of organization of the Surviving Corporation.

        SECTION 1.6    Organizational Documents of the Surviving Corporation.    At the Effective Time, the Biogen Charter (as defined in Section 3.1(a)(ii)) shall be amended and restated in its entirety to be identical to the articles of organization of Merger Sub, as in effect immediately prior to the Effective Time, until thereafter amended in accordance with the MBCL and as provided in such articles of organization; provided, however, that at the Effective Time, Article I of the articles of organization of the Surviving Corporation shall be amended and restated in its entirety to read as follows: "The name of the corporation is Biogen, Inc." After the Effective Time, the authorized capital stock of the Surviving Corporation shall consist of 1,000 shares of common stock, par value $.01 per share. At the Effective Time, the Biogen By-Laws (as defined in Section 3.1(a)(ii)) shall be amended and restated in their entirety to be identical to the by-laws of Merger Sub, as in effect immediately prior to the Effective Time, until thereafter amended in accordance with the MBCL and as provided in such by-laws.

        SECTION 1.7    Directors and Officers of the Surviving Corporation.    The initial directors of the Surviving Corporation shall be the IDEC Designated Directors (as defined in Section 5.14) and the Biogen Designated Directors (as defined in Section 5.14), until their respective successors are duly elected or appointed and qualified. The initial officers of the Surviving Corporation shall be the officers of Biogen immediately prior to the Effective Time, until their respective successors are duly appointed.

        SECTION 1.8    IDEC Charter Amendment.    Immediately prior to the Effective Time, and subject to the terms and conditions of this Agreement and receipt of IDEC Stockholder Approval (as defined in Section 3.2(c)(iii)), pursuant to the applicable provisions of Delaware General Corporation Law, IDEC shall cause the IDEC Charter (as defined in Section 3.2(a)(ii)) to be amended (the "IDEC Charter Amendment") to (i) change the name of IDEC to "BIOGEN IDEC INC." and (ii) increase the number of authorized shares of IDEC Common Stock to one billion (1,000,000,000) shares, by filing a Certificate of Amendment substantially in the form of Exhibit A hereto (the "IDEC Certificate of Amendment") with the Secretary of State of the State of Delaware in accordance with applicable provisions of the Delaware General Corporation Law.

        SECTION 1.9    Alternative Structure.    Biogen and IDEC may mutually agree to revise the structure of the Merger provided for herein at any time prior to receipt of either Biogen Stockholder Approval (as defined in Section 3.1(c)(iii)) or IDEC Stockholder Approval, or at any time thereafter if, with appropriate disclosure, any required further approval of the revised structure is obtained from the stockholders of Biogen and IDEC, as applicable; provided, however, that under any such revised

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structure the Merger would qualify as a reorganization within the meaning of Section 368(a) of the Code. Biogen and IDEC agree to consider in good faith the request of the other party to revise the structure of the Merger from that set forth herein.


ARTICLE II

EFFECTS OF THE MERGER; EXCHANGE OF CERTIFICATES

        SECTION 2.1    Effect on Capital Stock.    Subject to the terms and conditions of this Agreement, at the Effective Time, by virtue of the Merger and without any action on the part of IDEC, Merger Sub, Biogen or the holders of any shares of common stock, par value $0.01 per share, of Biogen (together with any associated Biogen Rights (as defined in Section 3.1(b)(i)), "Biogen Common Stock"):

        (a)    Conversion of Biogen Common Stock.    Each share of Biogen Common Stock issued and outstanding immediately prior to the Effective Time, other than any shares of Biogen Common Stock to be canceled pursuant to Section 2.1(c) or, subject to Section 2.1(g), held by a Dissenting Holder (as defined in Section 2.1(g)(i)), shall be automatically converted into the right to receive 1.150 (the "Exchange Ratio") fully paid and nonassessable shares of common stock, par value $0.0005 per share ("IDEC Common Stock"), of IDEC (together with any associated IDEC Rights (as defined in Section 3.2(b)(i)), the "Merger Consideration")) upon surrender of the Certificate (as defined in Section 2.2(b)) which immediately prior to the Effective Time represented such share of Biogen Common Stock in the manner provided in Section 2.2(b) (or, in the case of a lost, stolen or destroyed certificate, Section 2.2(i)). As a result of the Merger, at the Effective Time, each holder of a Certificate shall cease to have any rights with respect thereto, except (i) the right to receive the Merger Consideration payable in respect of the shares of Biogen Common Stock represented by such Certificate immediately prior to the Effective Time, any cash in lieu of fractional shares payable pursuant to Section 2.1(e) and any dividends or other distributions payable pursuant to Section 2.2(c) , all to be issued or paid, without interest, in consideration therefor upon the surrender of such Certificate in accordance with Section 2.2(b) or (ii) in the case of a Dissenting Holder, the rights set forth in Section 2.1(g).

        (b)    Capital Stock of Merger Sub.    Each issued and outstanding share of common stock, par value $0.01 per share, of Merger Sub shall be converted into one fully paid and nonassessable share of common stock, par value $0.01 per share, of the Surviving Corporation.

        (c)    Cancellation of Treasury Shares.    Each share of Biogen Common Stock held in the treasury of Biogen, if any, shall automatically be extinguished without any conversion, and no consideration shall be delivered in respect thereof.

        (d)    Biogen Options and Employee Stock Purchase Plans.    At the Effective Time, (i) all options to purchase Biogen Common Stock (each, a "Biogen Option") issued and outstanding under each Biogen Stock Plan (as defined in Section 3.1(b)(i)) shall be assumed by IDEC in accordance with Section 5.12(a) and (ii) all rights outstanding under Biogen's 1983 Employee Stock Purchase Plan, as amended and restated, and the 1994 International Employee Stock Purchase Plan, as amended and restated (collectively, the "Biogen Purchase Plans"), shall be treated as set forth in Section 5.12(b).

        (e)    Fractional Shares.    No fraction of a share of IDEC Common Stock will be issued by virtue of the Merger, but in lieu thereof each holder of shares of Biogen Common Stock who would otherwise be entitled to a fraction of a share of IDEC Common Stock (after aggregating all fractional shares of IDEC Common Stock that otherwise would be received by such holder) shall, upon surrender of such holder's Certificate(s), receive from IDEC an amount of cash (rounded to the nearest whole cent), without interest, equal to the product of: (i) such fraction, multiplied by (ii) the average closing price of one share of IDEC Common Stock for the ten (10) most recent trading days that IDEC Common

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Stock has traded ending on the trading day one day prior to the Effective Time, as reported on the Nasdaq National Market.

        (f)    Adjustments to Exchange Ratio.    The Exchange Ratio shall be adjusted to reflect fully the appropriate effect of any stock split, reverse stock split, stock dividend (including any dividend or distribution of securities convertible into IDEC Common Stock or Biogen Common Stock), reorganization, recapitalization, reclassification or other like change with respect to IDEC Common Stock or Biogen Common Stock having a record date on or after the date hereof and prior to the Effective Time.

        (g)    Dissenter's Rights.    

        SECTION 2.2    Exchange of Shares and Certificates.    

        (a)    Exchange Agent.    At or prior to the Effective Time, IDEC shall engage an institution reasonably satisfactory to Biogen to act as exchange agent in connection with the Merger (the "Exchange Agent"), pursuant to an agreement reasonably satisfactory to Biogen. At the Effective Time, IDEC shall deposit with the Exchange Agent, in trust for the benefit of the holders of shares of Biogen Common Stock immediately prior to the Effective Time, certificates representing the shares of IDEC Common Stock issuable pursuant to Section 2.1(a). In addition, IDEC shall make available by depositing with the Exchange Agent, as necessary from time to time after the Effective Time as needed, cash in an amount sufficient to make the payments in lieu of fractional shares pursuant to Section 2.1(e) and any dividends or distributions to which holders of shares of Biogen Common Stock may be entitled pursuant to Section 2.2(c). All cash and IDEC Common Stock deposited with the Exchange Agent shall hereinafter be referred to as the "Exchange Fund."

        (b)    Exchange Procedures.    Promptly after the Effective Time, IDEC shall cause the Exchange Agent to mail to each holder of record of a certificate or certificates which immediately prior to the Effective Time represented outstanding shares of Biogen Common Stock (the "Certificates"), which at the Effective Time were converted into the right to receive the Merger Consideration pursuant to Section 2.1 hereof, (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass only upon delivery of the Certificates to the Exchange Agent and shall be in such form and have such other provisions as IDEC may reasonably specify) and (ii) instructions for use in effecting the surrender of the Certificates in exchange for certificates representing whole shares of IDEC Common Stock, cash in lieu of any fractional shares pursuant to Section 2.1(e) and any dividends or other distributions payable pursuant to Section 2.2(c). Upon

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surrender of Certificates for cancellation to the Exchange Agent or to such other agent or agents as may be appointed by IDEC, together with such letter of transmittal, duly completed and validly executed in accordance with the instructions thereto, and such other documents as may reasonably be required by the Exchange Agent, the holder of such Certificates shall be entitled to receive in exchange therefor a certificate representing that number of whole shares of IDEC Common Stock (after taking into account all Certificates surrendered by such holder) to which such holder is entitled pursuant to Section 2.1 (which shall be uncertificated book entry form unless a physical certificate is requested), payment in lieu of fractional shares which such holder is entitled to receive pursuant to Section 2.1(e) and any dividends or distributions payable pursuant to Section 2.2(c), and the Certificates so surrendered shall forthwith be canceled. In the event of a transfer of ownership of Biogen Common Stock which is not registered in the transfer records of Biogen, a certificate representing the proper number of shares of IDEC Common Stock may be issued to a Person (as defined in Section 8.3(o)) other than the Person in whose name the Certificate so surrendered is registered, if such Certificate shall be properly endorsed or otherwise be in proper form for transfer and the Person requesting such issuance shall pay any transfer or other taxes required by reason of the issuance of shares of IDEC Common Stock to a Person other than the registered holder of such Certificate or establish to the satisfaction of IDEC that such tax has been paid or is not applicable. Until surrendered as contemplated by this Section 2.2(b), each Certificate shall be deemed at any time after the Effective Time to represent only the right to receive the Merger Consideration (and any amounts to be paid pursuant to Section 2.1(e) or Section 2.2(c)) upon such surrender. No interest shall be paid or shall accrue on any amount payable pursuant to Section 2.1(e) or Section 2.2(c).

        (c)    Distributions with Respect to Unexchanged Shares.    No dividends or other distributions with respect to IDEC Common Stock with a record date after the Effective Time shall be paid to the holder of any unsurrendered Certificate with respect to the shares of IDEC Common Stock represented thereby, and no cash payment in lieu of fractional shares shall be paid to any such holder pursuant to Section 2.1(e) hereof, until such Certificate has been surrendered in accordance with this Article II. Subject to Applicable Law (as defined in Section 3.1(g)(i)), following surrender of any such Certificate, there shall be paid to the recordholder thereof, without interest, (i) promptly after such surrender, the number of whole shares of IDEC Common Stock issuable in exchange therefor pursuant to this Article II, together with any cash payable in lieu of a fractional share of IDEC Common Stock to which such holder is entitled pursuant to Section 2.1(e) and the amount of dividends or other distributions with a record date after the Effective Time theretofore paid with respect to such whole shares of IDEC Common Stock, and (ii) at the appropriate payment date, the amount of dividends or other distributions with a record date after the Effective Time and a payment date subsequent to such surrender payable with respect to such whole shares of IDEC Common Stock.

        (d)    No Further Ownership Rights in Biogen Common Stock.    All shares of IDEC Common Stock issued upon the surrender for exchange of Certificates in accordance with the terms of this Article II and any cash paid pursuant to Section 2.1(e) or Section 2.2(c) shall be deemed to have been issued (and paid) in full satisfaction of all rights pertaining to the shares of Biogen Common Stock previously represented by such Certificates. At the Effective Time, the stock transfer books of Biogen shall be closed and there shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of the shares of Biogen Common Stock which were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates are presented to the Surviving Corporation or the Exchange Agent for any reason, they shall be canceled and exchanged as provided in this Article II.

        (e)    Termination of Exchange Fund.    Any portion of the Exchange Fund which remains undistributed to the holders of Certificates one year after the Effective Time shall be delivered to IDEC, upon demand, and any holders of Certificates who have not theretofore complied with this Article II shall thereafter look only to IDEC for payment of their claim for the Merger Consideration,

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any cash in lieu of fractional shares of IDEC Common Stock pursuant to Section 2.1(e) and any dividends or distributions pursuant to Section 2.2(c).

        (f)    No Liability.    None of IDEC, Merger Sub, Biogen or the Exchange Agent shall be liable to any Person in respect of any shares of IDEC Common Stock (or dividends or distributions with respect thereto) or cash from the Exchange Fund delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. If any Certificate shall not have been surrendered prior to seven years after the Effective Time, or immediately prior to such earlier date on which any shares of IDEC Common Stock, any cash in lieu of fractional shares of IDEC Common Stock or any dividends or distributions with respect to IDEC Common Stock issuable in respect of such Certificate would otherwise escheat to or become the property of any Governmental Entity (as defined in Section 3.1(c)(v)), any such shares, cash, dividends or distributions in respect of such Certificate shall, to the extent permitted by Applicable Law, become the property of the Surviving Corporation, free and clear of all claims or interest of any Person previously entitled thereto.

        (g)    Investment of Exchange Fund.    The Exchange Agent shall invest any cash included in the Exchange Fund as directed by IDEC on a daily basis provided that no such investment or loss thereon shall affect the amounts payable to former stockholders of Biogen after the Effective Time pursuant to this Article II. Any interest and other income resulting from such investment shall become a part of the Exchange Fund, and any amounts in excess of the amounts payable pursuant to this Article II shall promptly be paid to IDEC.

        (h)    Withholding Rights.    IDEC or the Exchange Agent shall be entitled to deduct and withhold from any consideration payable pursuant to this Agreement to any Person who was a holder of Biogen Common Stock immediately prior to the Effective Time such amounts as IDEC or the Exchange Agent may be required to deduct and withhold with respect to the making of such payment under the Code, or any provision of federal, state, local or foreign tax law. To the extent that amounts are so withheld by IDEC or the Exchange Agent, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Person to whom such consideration would otherwise have been paid.

        (i)    Lost, Stolen or Destroyed Certificates.    In the event any Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall issue in exchange for such lost, stolen or destroyed Certificates, upon the making of an affidavit of that fact by the holder thereof, such shares of IDEC Common Stock as may be required pursuant to Section 2.1(a), cash for fractional shares pursuant to Section 2.1(e) and any dividends or distributions payable pursuant to Section 2.2(c); provided, however, that IDEC may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed Certificates to deliver an agreement of indemnification in form reasonably satisfactory to IDEC, or a bond in such sum as IDEC may reasonably direct as indemnity, against any claim that may be made against IDEC or the Exchange Agent in respect of the Certificates alleged to have been lost, stolen or destroyed.


ARTICLE III

REPRESENTATIONS AND WARRANTIES

        SECTION 3.1    Representations and Warranties of Biogen.    Except as set forth in the disclosure schedule dated as of the date of this Agreement and executed and delivered by Biogen to IDEC concurrently with or prior to the execution and delivery by Biogen of this Agreement (the "Biogen Disclosure Schedule"), Biogen represents and warrants to IDEC and Merger Sub as set forth below. Each exception set forth in the Biogen Disclosure Schedule, and any other information included in the Biogen Disclosure Schedule, is identified by reference to, or has been grouped under a heading referring to, a specific individual subsection of this Agreement and shall be deemed to be disclosed solely for purposes of such subsection, except to the extent that disclosure in one subsection of the

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Biogen Disclosure Schedule is specifically referred to in another subsection of the Biogen Disclosure Schedule by appropriate cross-reference.

        (a)    Organization, Standing and Corporate Power; Charter Documents; Subsidiaries.    

        (b)    Capital Structure.    

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        (c)    Authority; Board Approval; Voting Requirements; No Conflict; Required Filings and Consents.    

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        (d)    SEC Documents; Financial Statements.    

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        (e)    Information Supplied.    None of the information supplied or to be supplied by or on behalf of Biogen for inclusion or incorporation by reference in (i) the registration statement on Form S-4 to be filed with the SEC by IDEC in connection with the issuance of IDEC Common Stock in the Merger (including any amendments or supplements, the "Form S-4") will, at the time the Form S-4 becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading or (ii) the Joint Proxy Statement will, at the date it is first mailed to Biogen's stockholders or at the time of the Biogen Stockholders' Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. The Joint Proxy Statement and the Form S-4 will comply as to form in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations thereunder, except that no representation or warranty is made by Biogen with respect to information or statements with respect to IDEC or its Subsidiaries made or incorporated by reference therein supplied by or on behalf of IDEC for inclusion or incorporation by reference in the Joint Proxy Statement or the Form S-4.

        (f)    Absence of Certain Changes or Events.    

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        (g)    Compliance with Applicable Laws; Permits; Litigation.    

        (h)    Labor and Other Employment Matters.    

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        (i)    Benefit Plans.    

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        (j)    Taxes.    

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        (k)    Regulatory Compliance; Supply.    

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        (l)    Environmental Matters.    As of the date hereof, except as would not, individually or in the aggregate, reasonably be likely to have a Material Adverse Effect on Biogen, (i) the operations of Biogen and its Subsidiaries are in compliance with all applicable Environmental Laws (as defined in Section 8.3(e) ), including possession and compliance with the terms of all licenses required by Environmental Laws, (ii) there are no pending, or to the Knowledge of Biogen, threatened suits, actions, investigations or proceedings under or pursuant to Environmental Laws against Biogen or its Subsidiaries or involving any real property currently or, to the Knowledge of Biogen, formerly owned, operated or leased by Biogen or its Subsidiaries, (iii) Biogen and its Subsidiaries are not subject to and have received no written allegations of any Environmental Liabilities (as defined in Section 8.3(f)) and, to the Knowledge of Biogen, no facts, circumstances or conditions relating to, arising from, associated with or attributable to any real property currently or, to the Knowledge of Biogen, formerly owned, operated or leased by Biogen or its Subsidiaries or operations thereon has resulted in or would reasonably be likely to result in Environmental Liabilities, and (iv) all real property owned or operated by Biogen or its Subsidiaries is free of contamination from Hazardous Materials (as defined in Section 8.3(i)) that would have an adverse effect on human health or the environment.

        (m)    Intellectual Property.    Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Biogen, (i) Biogen and each of its Subsidiaries owns or has a legally enforceable right to use (in each case, free and clear of any Liens) all Intellectual Property used in or necessary for the conduct of its business as currently conducted, including without limitation all patents and patent applications and all trademark registrations and trademark applications; (ii) to the Knowledge of Biogen, the conduct of the business of Biogen and its Subsidiaries as currently conducted does not infringe on or misappropriate, either directly or indirectly, the Intellectual Property rights of any Person and the use by Biogen or its Subsidiaries of any Intellectual Property is, to the Knowledge of Biogen, in accordance with any applicable grant, license, agreement, instrument or other arrangement pursuant to which Biogen or any Affiliate acquired the right to use such Intellectual Property; (iii) to the Knowledge of Biogen, no Person has advised Biogen or any of its Subsidiaries in writing that it is challenging or threatening to challenge the ownership, use, validity or enforceability of any Intellectual Property owned or used by Biogen or its Subsidiaries; (iv) to the Knowledge of Biogen, no Person is misappropriating, infringing, diluting or otherwise violating any right of Biogen or any of its Subsidiaries with respect to any Intellectual Property owned or used by Biogen or its Subsidiaries; (v) to the Knowledge of Biogen, neither Biogen nor any of its Subsidiaries has received written notice of any pending or threatened claim, order or proceeding with respect to the validity, enforcement or maintenance of any Intellectual Property owned or used by Biogen or its Subsidiaries and, to the Knowledge of Biogen, no Intellectual Property owned or used by Biogen or its Subsidiaries is being used or enforced in a manner that would reasonably be expected to result in the abandonment, cancellation or unenforceability of such Intellectual Property; (vi) to the Knowledge of Biogen, the Intellectual Property owned or used by Biogen or its Subsidiaries has not expired, been cancelled or abandoned and all maintenance and renewal fees necessary to preserve the rights of Biogen in connection with such Intellectual Property have been paid in a timely manner; (vii) neither Biogen nor

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any of its Subsidiaries has entered into any consent, indemnification, forbearance to sue, settlement agreement, license or other arrangement which reasonably could be expected to provide a third party a defense to patent infringement in connection with any Intellectual Property owned or used by Biogen; (viii) to the Knowledge of Biogen, Biogen and each of its Subsidiaries has implemented commercially reasonable measures to maintain the confidentiality of the Intellectual Property and all other property used in the business of Biogen or its Subsidiaries as presently conducted; (ix) each current and former employee of Biogen or its Subsidiaries who has contributed to or participated in research and development activities has entered into an agreement with Biogen or a Biogen Subsidiary that has accorded Biogen or the Subsidiary full, effective and exclusive ownership rights in and to all tangible or intangible property created thereby; and (x) each employee, officer and director of Biogen or its Subsidiaries has entered into an agreement to maintain the confidential information of Biogen and its Subsidiaries and, to the Knowledge of Biogen, all consultants of Biogen or its Subsidiaries who have been in a position to receive any confidential information of Biogen or its Subsidiaries have entered into written agreements with Biogen or its Subsidiaries to maintain the confidentiality of all such information.

        (n)    State Takeover Statutes.    The Board of Directors of Biogen has adopted a resolution or resolutions approving this Agreement, the Merger and the other transactions contemplated hereby, and, assuming the accuracy of IDEC's representation and warranty contained in Section 3.2(q) (without giving effect to the Knowledge qualification contained therein), such approval constitutes approval of the Merger and the other transactions contemplated hereby by the Board of Directors of Biogen under the provisions of Chapter 110F of the Massachusetts General Laws ("Chapter 110F") such that Chapter 110F does not apply to this Agreement, the Merger or the other transactions contemplated hereby. To the Knowledge of Biogen, no state takeover statute other than Chapter 110F (which has been rendered inapplicable) is applicable to the Merger or the other transactions contemplated hereby.

        (o)    Brokers.    Except for fees payable to Goldman, Sachs & Co., no broker, investment banker, financial advisor or other Person, is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Biogen.

        (p)    Opinion of Financial Advisor.    Biogen has received the opinion of its financial advisor, Goldman, Sachs & Co., dated the date of this Agreement, to the effect that, as of such date, the Exchange Ratio is fair, from a financial point of view, to the holders of Biogen Common Stock.

        (q)    Ownership of IDEC Common Stock.    None of Biogen, its Subsidiaries or, to the Knowledge of Biogen without independent investigation, any of their respective Affiliates, (i) beneficially owns (as defined in Rule 13d-3 under the Exchange Act) directly or indirectly, or is party to any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of, shares of capital stock of IDEC, or (ii) within the preceding thirty-six (36) months, beneficially owned directly or indirectly, or was party to any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of, shares of capital stock of IDEC.

        (r)    Material Contracts.    

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        (s)    Interested Party Transactions.    Since the date of the Biogen Balance Sheet, no event has occurred that would be required to be reported as a Certain Relationship or Related Transaction pursuant to Statement of Financial Accounting Standards No. 57 or Item 404 of Regulation S-K of the SEC.

        (t)    Biogen Rights Agreement.    Biogen has taken all action so that the execution of this Agreement, the consummation of the Merger and the other transactions contemplated hereby do not and will not result in the grant of any rights to any Person under the Biogen Rights Agreement or enable, require or cause the Biogen Rights to be exercised, distributed or triggered.

        SECTION 3.2    Representations and Warranties of IDEC and Merger Sub.    Except as set forth in the disclosure schedule dated as of the date of this Agreement and executed and delivered by IDEC and Merger Sub to Biogen concurrently with or prior to the execution and delivery by IDEC and Merger Sub of this Agreement (the "IDEC Disclosure Schedule"), IDEC and Merger Sub represent and warrant to Biogen as set forth below. Each exception set forth in the IDEC Disclosure Schedule, and any other information included in the IDEC Disclosure Schedule, is identified by reference to, or has been grouped under a heading referring to, a specific individual subsection of this Agreement and shall be deemed to be disclosed solely for purposes of such subsection, except to the extent that disclosure in one subsection of the IDEC Disclosure Schedule is specifically referred to in another subsection of the IDEC Disclosure Schedule by appropriate cross-reference.

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        (a)    Organization, Standing and Corporate Power; Charter Documents; Subsidiaries.    

        (b)    Capital Structure.    

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        (c)    Authority; Board Approval; Voting Requirements; No Conflict; Required Filings and Consents.    

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        (d)    SEC Documents; Financial Statements.    

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        (e)    Information Supplied.    None of the information supplied or to be supplied by or on behalf of IDEC or Merger Sub for inclusion or incorporation by reference in (i) the Form S-4 will, at the time the Form S-4 becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading or (ii) the Joint Proxy Statement will, at the date it is first mailed to IDEC's stockholders or at the time of the IDEC Stockholders' Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. The Joint Proxy Statement and the Form S-4 will comply as to form in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations thereunder, except that no representation or warranty is made by IDEC with respect to information or statements with respect to Biogen or its Subsidiaries made or incorporated by reference therein supplied by or on behalf of Biogen for inclusion or incorporation by reference in the Joint Proxy Statement or the Form S-4.

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        (f)    Absence of Certain Changes or Events.    

        (g)    Compliance with Applicable Laws; Permits; Litigation.    

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        (h)    Labor and Other Employment Matters.    

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        (i)    Benefit Plans.    

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        (j)    Taxes.    

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        (k)    Regulatory Compliance; Supply.    

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        (l)    Environmental Matters.    As of the date hereof, except as would not, individually or in the aggregate, reasonably be likely to have a Material Adverse Effect on IDEC, (i) the operations of IDEC and its Subsidiaries are in compliance with all applicable Environmental Laws, including possession and compliance with the terms of all licenses required by Environmental Laws, (ii) there are no pending, or to the Knowledge of IDEC, threatened suits, actions, investigations or proceedings under or pursuant to Environmental Laws against IDEC or its Subsidiaries or involving any real property currently or, to the Knowledge of IDEC, formerly owned, operated or leased by IDEC or its Subsidiaries, (iii) IDEC and its Subsidiaries are not subject to and have received no written allegations of any Environmental Liabilities and, to the Knowledge of IDEC, no facts, circumstances or conditions relating to, arising from, associated with or attributable to any real property currently or, to the Knowledge of IDEC, formerly owned, operated or leased by IDEC or its Subsidiaries or operations thereon has resulted in or would reasonably be likely to result in Environmental Liabilities, and (iv) all real property owned or

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operated by IDEC or its Subsidiaries is free of contamination from Hazardous Materials that would have an adverse effect on human health or the environment.

        (m)    Intellectual Property.    Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on IDEC, (i) IDEC and each of its Subsidiaries owns or has a legally enforceable right to use (in each case, free and clear of any Liens) all Intellectual Property used in or necessary for the conduct of its business as currently conducted, including without limitation all patents and patent applications and all trademark registrations and trademark applications; (ii) to the Knowledge of IDEC, the conduct of the business of IDEC and its Subsidiaries as currently conducted does not infringe on or misappropriate, either directly or indirectly, the Intellectual Property rights of any Person and the use by IDEC or its Subsidiaries of any Intellectual Property is, to the Knowledge of IDEC, in accordance with any applicable grant, license, agreement, instrument or other arrangement pursuant to which IDEC or any Affiliate acquired the right to use such Intellectual Property; (iii) to the Knowledge of IDEC, no Person has advised IDEC or any of its Subsidiaries in writing that it is challenging or threatening to challenge the ownership, use, validity or enforceability of any Intellectual Property owned or used by IDEC or its Subsidiaries; (iv) to the Knowledge of IDEC, no Person is misappropriating, infringing, diluting or otherwise violating any right of IDEC or any of its Subsidiaries with respect to any Intellectual Property owned or used by IDEC or its Subsidiaries; (v) to the Knowledge of IDEC, neither IDEC nor any of its Subsidiaries has received written notice of any pending or threatened claim, order or proceeding with respect to the validity, enforcement or maintenance of any Intellectual Property owned or used by IDEC or its Subsidiaries and, to the Knowledge of IDEC, no Intellectual Property owned or used by IDEC or its Subsidiaries is being used or enforced in a manner that would reasonably be expected to result in the abandonment, cancellation or unenforceability of such Intellectual Property; (vi) to the Knowledge of IDEC, the Intellectual Property owned or used by IDEC or its Subsidiaries has not expired, been cancelled or abandoned and all maintenance and renewal fees necessary to preserve the rights of IDEC in connection with such Intellectual Property have been paid in a timely manner; (vii) neither IDEC nor any of its Subsidiaries has entered into any consent, indemnification, forbearance to sue, settlement agreement, license or other arrangement which reasonably could be expected to provide a third party a defense to patent infringement in connection with any Intellectual Property owned or used by IDEC; (viii) to the Knowledge of IDEC, IDEC and each of its Subsidiaries has implemented commercially reasonable measures to maintain the confidentiality of the Intellectual Property and all other property used in the business of IDEC or its Subsidiaries as presently conducted; (ix) each current and former employee of IDEC or its Subsidiaries who has contributed to or participated in research and development activities has entered into an agreement with IDEC or a IDEC Subsidiary that has accorded IDEC or the Subsidiary full, effective and exclusive ownership rights in and to all tangible or intangible property created thereby; and (x) each employee, officer and director of IDEC or its Subsidiaries has entered into an agreement to maintain the confidential information of IDEC and its Subsidiaries and, to the Knowledge of IDEC, all consultants of IDEC or its Subsidiaries who have been in a position to receive any confidential information of IDEC or its Subsidiaries have entered into written agreements with IDEC or its Subsidiaries to maintain the confidentiality of all such information.

        (n)    State Takeover Statutes.    The Board of Directors of IDEC has adopted a resolution or resolutions approving this Agreement, the Merger, the Share Issuance, and the other transactions contemplated hereby, and, assuming the accuracy of Biogen's representation and warranty contained in Section 3.1(q) (without giving effect to the Knowledge qualification contained therein), such approval constitutes approval of the Merger, the Share Issuance and the other transactions contemplated hereby by the Board of Directors of IDEC under the provisions of Section 203 of the Delaware General Corporation Law ("Section 203") such that Section 203 does not apply to this Agreement, the Share Issuance and the other transactions contemplated hereby. To the Knowledge of IDEC, no state takeover statute other than Section 203 (which has been rendered inapplicable) is applicable to the Merger, the Share Issuance or the other transactions contemplated hereby.

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        (o)    Brokers.    Except for fees payable to Merrill Lynch & Co., no broker, investment banker, financial advisor or other Person is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of IDEC or Merger Sub.

        (p)    Opinion of Financial Advisor.    IDEC has received the opinion of its financial advisor, Merrill Lynch & Co., dated the date of this Agreement, to the effect that, as of such date, the Exchange Ratio is fair, from a financial point of view, to holders of IDEC Common Stock.

        (q)    Ownership of Biogen Common Stock.    None of IDEC, Merger Sub, their respective Subsidiaries or, to the Knowledge of IDEC without independent investigation, any of their respective Affiliates, (i) beneficially owns (as defined in Rule 13d-3 under the Exchange Act) directly or indirectly, or is party to any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of, shares of capital stock of Biogen, or (ii) within the preceding thirty-six (36) months, beneficially owned directly or indirectly, or was party to any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of, shares of capital stock of Biogen.

        (r)    Material Contracts.    

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        (s)    Interested Party Transactions.    Since the date of the IDEC Balance Sheet, no event has occurred that would be required to be reported as a Certain Relationship or Related Transaction pursuant to Statement of Financial Accounting Standards No. 57 or Item 404 of Regulation S-K of the SEC.

        (t)    IDEC Rights Agreement.    IDEC has taken all action (including without limitation amending the IDEC Rights Agreement to clarify and confirm that, prior to the Effective Time, a Person shall not be deemed the "Beneficial Owner" or to have "Beneficial Ownership" of, or to "Beneficially Own" (as such terms are defined in the IDEC Rights Agreement), any share