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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):
April 25, 2002
HYBRIDON, INC.
(Exact name of Registrant as specified in its certificate of incorporation)
Commission File Number 0-27352
Delaware 04-3072298
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
345 Vassar Street 02139
Cambridge, Massachusetts (Zip Code)
(Address of principal executive offices)
(617) 679-5500
(Registrant's telephone number, including area code)
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Item 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
On April 25, 2002, the Board of Directors of Hybridon, Inc. (the
"Company"), upon the recommendation of the Audit Committee of the Board of
Directors, dismissed its principal independent public accountants, Arthur
Andersen LLP ("Arthur Andersen"), and engaged the services of Ernst & Young LLP
("Ernst & Young") to serve as the Company's new principal independent public
accountants for the fiscal year ending December 31, 2002.
During the Company's two most recently completed fiscal years and the
subsequent interim period preceding the dismissal of Arthur Andersen, there were
no disagreements (as defined under Item 304(a)(1)(iv) of Regulation S-K) between
the Company and Arthur Andersen on any matters of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure which
disagreements, if not resolved to Arthur Andersen's satisfaction, would have
caused it to make reference to the subject matter of the disagreement in
connection with its reports on the Company's financial statements for such
years, except as described below.
During the fiscal year ended December 31, 2001, the Company and Arthur
Andersen had a disagreement with respect to revenue recognition and the
application of Staff Accounting Bulletin 101 (SAB 101) to the revenues that the
Company received under its licensing agreement with Isis Pharmaceuticals, Inc.
("Isis").
SAB 101 provides the SEC staff's views in applying generally accepted
accounting principles to selected revenue recognition issues. The four criteria
to be met before revenue can be recognized include:
- persuasive evidence of an arrangement exists;
- delivery has occurred, services have been rendered and obligations have
been satisfied;
- the fee is fixed or determinable; and
- collectibility is reasonably assured.
Determination of the last three criteria are based on management's
judgments regarding the fixed nature of the fee charged for services rendered or
products delivered and the collectibility of these fees. Should changes in
conditions cause management to determine these criteria are not met for any
future transactions, revenues recognized for any reporting period could be
adversely affected. Arthur Andersen concluded that the Company should recognize
revenue under the Isis agreement ratably over the 10-year term of the agreement.
In Arthur Andersen's opinion, the combination of significant rights retained by
the Company and the Company's ongoing obligation to make two representatives
available to attend semi-annual telephonic meetings of a collaboration committee
warranted deferring recognition of the revenue.
The Company's position was that all the revenue received under the Isis
agreement should be recognized when it is received because the amounts received
are not refundable under any circumstances and because the Company does not
believe that it will be required to expend any significant future resources to
comply with the Isis agreement. The Company does not believe that the ongoing
obligation of the Company to make two representatives available to attend
semi-annual telephonic meetings of a collaboration committee is material.
Both the Audit Committee and the Board of Directors discussed the issue
with Arthur Andersen, and the Company agreed to recognize revenue under the Isis
agreement in accordance with Arthur Andersen's conclusions. The Company has
authorized Arthur Andersen to respond fully to any inquiries of Ernst & Young
concerning the subject matter of the disagreement.
Arthur Andersen's reports on the Company's financial statements for each of
the two fiscal years ended December 31, 2001 and 2000 did not contain an adverse
opinion or a disclaimer of opinion, nor were they qualified or modified as to
uncertainty, audit scope or accounting principles.
There were no reportable events (as defined under Item 304 (a)(1)(v) of
Regulation S-K) during the two most recent fiscal years ended December 31, 2001
and 2000 or during the subsequent interim period preceding the dismissal of
Arthur Andersen.
The Company requested Arthur Andersen to furnish it with a letter
addressed to the Securities and Exchange Commission stating whether or not it
agrees with the above statements. A copy of that letter dated April 30, 2002 is
filed as Exhibit 16.1 to this Form 8-K.
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The Company engaged Ernst & Young as the Company's new principal
independent public accountants as of April 25, 2002. During the Company's two
most recent fiscal years and the subsequent interim period prior to engaging
Ernst & Young, neither the Company nor anyone on its behalf consulted with Ernst
& Young regarding either (i) the application of accounting principles to a
specified transaction, either completed or proposed, or the type of audit
opinion that might be rendered on the Company's financial statements, and
neither a written report nor oral advice was provided to the Company by Ernst &
Young that was an important factor considered by the Company in reaching a
decision as to any accounting, auditing or financial reporting issue; or (ii)
any matter that was either the subject of a disagreement or a reportable event.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL STATEMENTS AND EXHIBITS
Exhibit 16.1 Letter from Arthur Andersen LLP, dated April 30, 2002, regarding
change in certifying accountant.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Hybridon, Inc
Date: May 1, 2002 By: /s/ Robert G. Andersen
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Robert G. Andersen
Chief Financial Officer
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