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Filed Pursuant to Rule 424(b)(2)
Registration No. 333-93219
P R O S P E C T U S
5,904,272 SHARES
ILEX ONCOLOGY, INC.
COMMON STOCK
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This prospectus relates to the public offering, which is not being
underwritten, of up to 5,904,272 shares (the "Shares") of our common stock, par
value $.01 per share ("Common Stock"), which are held by certain of our current
stockholders.
The prices at which such stockholders may sell the Shares will be
determined by the prevailing market price for the Shares or in negotiated
transactions. We will not receive any of the proceeds from the sale of the
Shares.
Our Common Stock is traded on The National Market System of Nasdaq
under the symbol "ILXO." On January 3, 2000, the last reported sale price for
our Common Stock on The Nasdaq National Market was $25.00 per share.
This Prospectus is not an offer to sell these securities and is not
soliciting an offer to buy these securities in any state where the offer or sale
is not permitted.
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INVESTING IN OUR COMMON STOCK INVOLVES RISKS. YOU SHOULD READ THE "RISK
FACTORS" BEGINNING ON PAGE 4.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is January 4, 2000.
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AVAILABLE INFORMATION
We have filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 under the Securities Act of
1933, as amended (the "Securities Act"), related to the Shares. This Prospectus
is part of that Registration Statement and does not contain all of the
information set forth in the Registration Statement and its exhibits. You may
obtain further information with respect to the Company and the Shares by
reviewing the Registration Statement and the attached exhibits, which you may
read and copy at the following locations of the Commission:
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Public Reference Room New York Regional Office Chicago Regional Office
Judiciary Plaza Seven World Trade Center Citicorp Center
450 Fifth Street, N.W., Rm. 1024 13th Floor 500 West Madison Street, Suite 1400
Washington, D.C. 20549 New York, New York 10048 Chicago, Illinois 60661-2511
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We are subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Accordingly, we file
reports, proxy statements and other information with the Commission. Such
reports, proxy statements and other information can be inspected and copied at
the locations described above. Copies of such materials can be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Commission maintains a Web site
that contains the Registration Statement, reports, proxy statements and other
information regarding the Company at http://www.sec.gov.
We furnish our stockholders with annual reports containing audited
financial statements with a report thereon by our independent public
accountants, Arthur Andersen LLP.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Commission allows us to "incorporate by reference" certain
information into this Prospectus. This means that we can disclose important
information to you by referring you to another document we have filed separately
with the Commission. The information incorporated by reference is considered to
be a part of this Prospectus, except for any information that is superseded by
other information that is set forth directly in this document.
The following documents that we have previously filed with the Commission
pursuant to the Exchange Act are hereby incorporated by reference into the
Prospectus:
(a) Annual Report on Form 10-K for the year ended December 31, 1998;
(b) Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999,
June 30, 1999 and September 30, 1999;
(c) Current Report on Form 8-K filed July 30, 1999;
(d) Current Report on Form 8-K/A filed September 21, 1999; and
(e) The description of our Common Stock contained in the Registration
Statement on Form 8-A dated February 14, 1997.
ILEX also incorporates by reference additional documents that may be
filed with the Commission between the date of this Prospectus and the date of
completion of the offering of the Shares by the selling stockholders. These
include periodic reports, such as Annual Reports on Form 10-K, Quarterly Reports
on Form 10-Q and Current Reports on Form 8-K, as well as proxy statements.
Documents incorporated by reference are available from us without charge,
excluding all exhibits; except that if we have specifically incorporated by
reference an exhibit in this Prospectus, the exhibit also will be available
without
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charge. Stockholders may obtain documents incorporated by reference in this
Prospectus by requesting them in writing or by telephone from ILEX at the
following address:
ILEX Oncology, Inc.
11550 I.H. 10 West, Suite 100
San Antonio, Texas 78230
Telephone: (210) 949-8200
Attention: Investor Relations
You should rely only on the information contained or incorporated by reference
in this Prospectus. We have not authorized anyone to provide you with
information that is different from what is contained in this Prospectus. This
Prospectus is dated December 21, 1999. You should not assume that the
information contained in this Prospectus is accurate as of any date other than
that date. In this Prospectus, the "Company," "ILEX," "we" and "our" refer to
ILEX Oncology, Inc.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents we have filed with the Securities and
Exchange Commission which we have referenced under "Incorporation of Certain
Documents by Reference" on page 2 contain forward-looking statements made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements represent our management's
judgment regarding future events. Forward-looking statements typically are
identified by use of terms such as "may," "will," "should," "plan," "expect,"
"anticipate," "estimate" and similar words, although some forward-looking
statements are expressed differently. All forward-looking statements other than
statements of historical fact included in this prospectus regarding our
financial position, business strategy and plans or objectives for future
operations are forward-looking statements. We cannot guarantee the accuracy of
the forward-looking statements, and you should be aware that our actual results
could differ materially from those contained in the forward-looking statements
due to a number of factors, including:
o competitive factors;
o general economic conditions;
o relationships with pharmaceutical and biotechnology companies;
o the ability to develop safe and efficacious drugs;
o variability of royalty, license and other revenue;
o failure to satisfy performance obligations;
o ability to enter into future collaborative agreements;
o failure to achieve positive results in clinical trials;
o failure to complete current or secure new contracts with CRO customers;
o uncertainty regarding our patents and patent rights (including the risk
that we may be forced to engage in costly litigation to protect such
patent rights and the material harm to us if there were an unfavorable
outcome of any such litigation);
o governmental regulation and suspension;
o technological change;
o changes in industry practices; and
o one-time events.
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You should also consider carefully the statements under "Risk Factors"
and other sections of this prospectus and in the other documents filed with the
SEC, which address additional factors that could cause our results to differ
from those set forth in the forward-looking statements. All subsequent written
and oral forward-looking statements attributable to ILEX or persons acting on
our behalf are expressly qualified in their entirety by the applicable
cautionary statements. We have no plans to update these forward-looking
statements.
RISK FACTORS
You should carefully examine this entire Prospectus and should give
particular attention to the risk factors set forth below in conjunction with the
other information contained or incorporated by reference in this Prospectus in
evaluating an investment in the Shares.
WE HAVE ONLY A LIMITED OPERATING HISTORY AND WE EXPECT TO CONTINUE TO GENERATE
LOSSES.
We began operations in October 1994 and have only a limited operating
history upon which you can evaluate our business. We have incurred losses every
year since we began operations. As of September 30, 1999, our accumulated
deficit was approximately $74.6 million, including a net loss of approximately
$21.2 million for the year ended December 31, 1998 and a net loss of
approximately $43.3 million for the nine-month period ended September 30, 1999.
We have not generated any revenue from product sales to date, and it is possible
that significant revenues from product sales will never be achieved. Even if we
do achieve significant revenues from product sales or we increase revenues from
our CRO business, we expect to incur significant operating losses over the next
several years. It is possible that we will never achieve profitable operations.
IF WE ARE NOT ABLE TO DEMONSTRATE THE EFFICACY OF OUR DRUG CANDIDATES IN OUR
CLINICAL TRIALS OR OUR CLINICAL TRIALS ARE DELAYED, WE MAY NOT BE ABLE TO OBTAIN
REGULATORY CLEARANCE TO MARKET OUR DRUGS.
Many of our research and development programs are at an early stage.
Clinical testing is a long, expensive and uncertain process. The FDA has not
approved any of our product candidates and we cannot assure you that our data
collected from our clinical trials will be sufficient to support approval by the
FDA. We cannot assure you that the clinical trials will be completed on schedule
or that the FDA will ultimately approve our product candidates for commercial
sale. Furthermore, even if initially positive preclinical studies or clinical
trial results are achieved, it is possible that we will obtain different results
in the later stages of drug development. Drugs in late stages of clinical
development may fail to show the desired safety and efficacy traits despite
having progressed through initial clinical testing. For example, positive
results in early Phase I or Phase II trials may not be repeated in larger Phase
II or Phase III trials. All of our potential drug candidates are prone to the
risks of failure inherent in drug development, including the possibility that
none of our drug candidates will or can:
o be safe and effective;
o otherwise meet applicable regulatory standards;
o be manufactured or produced economically and on a large scale;
o be sold without third parties challenging us and enforcing their patent or
other rights;
o be successfully marketed, particularly if a third party introduces an
equivalent or superior product; or
o be reimbursed by government or private payors.
The clinical trials of any of our drug candidates could be unsuccessful,
which would prevent us from commercializing the drug. Our failure to develop
safe, commercially viable drugs would substantially impair our ability to
generate revenues to sustain operations and materially harm our business and
financial condition.
IF L&I PARTNERS IS UNABLE TO COMMERCIALIZE OUR LEAD PRODUCT CANDIDATE,
CAMPATH(R), WE MAY NOT HAVE SUFFICIENT REVENUES TO CONTINUE OPERATIONS.
CAMPATH(R) is our lead product candidate. Our success will depend, to a
great degree, on the success oF CAMPATH(R). In particular, L&I Partners must be
able to:
o establish the safety and efficacy of CAMPATH(R) in humans;
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o obtain regulatory approvals for CAMPATH(R); and
o achieve market acceptance of CAMPATH(R).
If L&I Partners fails to successfully obtain regulatory approval for and
commercialize CAMPATH(R), our business and financial condition will be
materially harmed.
OUR DEPENDENCE ON COLLABORATIVE PARTNERS FOR DEVELOPMENT, MANUFACTURING AND
MARKETING MAY DELAY OR IMPAIR OUR ABILITY TO GENERATE SIGNIFICANT REVENUES OR
OTHERWISE ADVERSELY AFFECT OUR PROFITABILITY.
We rely on large pharmaceutical companies for development, manufacturing,
marketing and distribution of our drug products. Our reliance on pharmaceutical
companies and other collaborative partners poses the following risks:
o our contracts with collaborative partners may expire or be terminated and
we may not be able to replace them;
o a partner involved in the development of our products may not commit enough
capital or other resources to successfully develop our products;
o the terms of our contracts with collaborative partners may not be favorable
to us in the future;
o our partners may not pursue further development and commercialization of
compounds resulting from their collaboration with us;
o a partner with marketing and distribution rights to one or more of our
products may not commit enough resources to the marketing and distribution
of our products;
o disputes with our partners may arise, leading to delays in or termination
of the research, development or commercialization of product candidates or
resulting in significant litigation or arbitration;
o contracts with our partners may fail to provide significant protection or
may fail to be enforced if one of these partners fails to perform; and
o our collaborative partners could independently develop, or develop with
third parties, drugs which compete with our products.
There is a great deal of uncertainty regarding the success of our current
and future collaborative efforts. Failure of these efforts would materially harm
our business and financial condition.
THE SUCCESS OF CAMPATH(R) IS HIGHLY DEPENDENT ON COLLABORATIONS WITH LEUKOSITE
AND SCHERING AG.
LeukoSite. As part of our joint venture with LeukoSite for the development
and commercialization of CAMPATH(R), we share 50% of the development costs of
CAMPATH(R) with LeukoSite. If we fail for any reason to make a required capital
contribution to the joint venture, then LeukoSite may gain control of the
management of the joint venture and become entitled to a greater share of any
profits derived from product sales of CAMPATH(R). At the same time, if LeukoSite
fails for any reason to make a required capital contribution to the joint
venture, then we may be required to make additional capital contributions to the
joint venture to maintain the desired level of development activities by the
joint venture. It is possible that we may not have the resources to compensate
for any failure by LeukoSite to make any capital contributions in its stead and
the joint venture may not be able to continue operations with lesser funding. In
addition, the joint venture agreement with LeukoSite does not contain a
provision to resolve a deadlock between us and LeukoSite. As such, in the event
of such a deadlock, either we or LeukoSite could prevent the joint venture from
taking action or proceeding with business. This could result in failure to gain
approval for CAMPATH(R), which would materially harm our business and financial
condition.
Schering. We intend to rely on Schering for the sales, marketing and
distribution of CAMPATH(R). If Schering does not devote adequate resources to
the marketing of CAMPATH(R) or if disputes between L&I Partners and Schering
otherwise arise in connection with the commercialization of CAMPATH(R), our
business and financial condition would be materially harmed.
WE MAY BE UNABLE TO OBTAIN THE ADDITIONAL CAPITAL NEEDED TO OPERATE AND GROW OUR
BUSINESS, THEREBY REQUIRING US TO CURTAIL OR CEASE OPERATIONS.
We will require substantial funds in order to:
o continue our research and development programs;
o continue our clinical trials;
o manufacture and, where applicable, market our products; and
o expand our CRO operations.
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We believe that our existing resources will fund our activities as
currently planned for at least two years. We may use these existing resources
before that time, however, because of changes in our research and development
and commercialization plans or other factors affecting our operating expenses or
capital expenditures, including potential acquisitions of other businesses,
assets or technologies.
We cannot be sure that we will be able to obtain any future funds that we
may require, either in the public or private equity markets or otherwise on
acceptable terms, or at all. In addition, under the terms of our agreement with
IMPATH Inc. we are prohibited from incurring any debt without its consent.
If adequate funds are not available, we may have to delay, scale back or
eliminate one or more of our development programs, or obtain funds by entering
into more arrangements with collaborative partners or others that may require us
to relinquish rights to certain of our products or technologies that we would
not otherwise relinquish. These consequences, in turn, could materially harm our
business.
OUR LACK OF OPERATING EXPERIENCE MAY CAUSE US DIFFICULTY IN MANAGING OUR GROWTH.
We have no experience in selling pharmaceutical products and only limited
experience in negotiating, establishing and maintaining strategic relationships,
in manufacturing or procuring products in commercial quantities and conducting
other later-stage phases of the regulatory approval process. We have less than
three years experience operating our CRO business. Our ability to manage our
growth, if any, will require us to improve and expand our management and our
operational and financial systems and controls (particularly with respect to our
CRO business). If our management is unable to manage growth effectively, our
business and financial condition would be materially harmed. In addition, if
rapid growth occurs, it may strain our operational, managerial and financial
resources.
IF WE FAIL TO COMPLY WITH EXTENSIVE REGULATIONS ENFORCED BY DOMESTIC AND FOREIGN
REGULATORY AUTHORITIES, THE COMMERCIALIZATION OF CAMPATH(R) AND OUR OTHER
PRODUCTS WOULD BE PREVENTED OR DELAYED AND OUR ABILITY TO CONDUCT OUR CRO
BUSINESS COULD BE LIMITED.
Our products, including CAMPATH(R), are subject to extensive government
regulations related to development, clinical trials, manufacturing and
commercialization. The process of obtaining FDA and other regulatory approvals
is costly, time-consuming, uncertain and subject to unanticipated delays.
The FDA may refuse to approve an application if it believes that applicable
regulatory criteria are not satisfied. The FDA may also require additional
testing for safety and efficacy. Foreign regulatory authorities may also refuse
to grant any approval. Even after U.S. regulatory approval is obtained for
CAMPATH(R) or any of our other products, we will be subject to continual review.
Newly discovered or developed safety or efficacy data may result in revocation
of our marketing approval. Moreover, if and when such approval is obtained, the
marketing of CAMPATH(R) and any of our other product candidates will be subject
to extensive regulatory requirements administered by the FDA and other
regulatory bodies. Product manufacturing facilities are also subject to
continual review and periodic inspection and approval of manufacturing
modifications. Domestic manufacturing facilities are subject to biennial
inspections by the FDA and must comply with the FDA's current Good Manufacturing
Practices, or cGMP, and other regulations. In complying with these regulations,
manufacturers must spend funds, time and effort in the areas of production,
record keeping, personnel and quality control to ensure full technical
compliance. The FDA stringently applies regulatory standards for manufacturing.
Failure to comply with any of these post-approval requirements can result in,
among other things, warning letters, product seizures, recalls, fines,
injunctions, suspensions or revocations of marketing licenses, operating
restrictions and criminal prosecutions. Any such enforcement action could
materially harm our business. Unanticipated changes in existing regulatory
requirements or the adoption of new requirements could materially harm our
business and financial condition.
The European Union, Japan and other countries also extensively regulate
pharmaceuticals, including biological drug products. No assurance can be given
that we will be able to obtain or maintain other countries' approvals for
CAMPATH(R) or any of our other products.
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IF ANY OF OUR LICENSE AGREEMENTS FOR INTELLECTUAL PROPERTY UNDERLYING CAMPATH(R)
OR ANY OTHER PRODUCT IS TERMINATED, WE MAY LOSE OUR RIGHTS TO DEVELOP OR MARKET
THAT PRODUCT.
We have licensed intellectual property, including patents, patent
applications and know-how, from pharmaceutical companies, research institutions
and others, including the intellectual property underlying our most advanced
product candidates: CAMPATH(R), eflornithine and oxypurinol. Some of our product
development programs depend on our ability to maintain rights under these
licenses.
Each licensor has the power to terminate its agreement with us if we fail
to meet our obligations under that license. We may not be able to meet our
obligations under these license agreements.
If we default under any of these license agreements, we may lose our right
to market and sell any products based on the licensed technology. Losing our
marketing and sales rights would materially harm our business and financial
condition.
THERE ARE POTENTIAL LIMITATIONS ON THIRD-PARTY REIMBURSEMENT AND OTHER
PRICING-RELATED MATTERS THAT COULD REDUCE POTENTIAL SALES OF OUR PRODUCTS AND
MAY DELAY OR IMPAIR OUR ABILITY TO GENERATE SIGNIFICANT REVENUES.
The business and financial condition of pharmaceutical and biotechnology
companies will continue to be affected by the efforts of government and
third-party payors to reduce the cost of health care through various means. In
the U.S., there have been, and we expect that there will continue to be, a
number of federal and state proposals to implement government control regarding
pricing and profitability of prescription pharmaceuticals. An increasing
emphasis on managed care in the U.S. will also continue to exert downward
pressure on pharmaceutical pricing. In addition, sales of prescription
pharmaceuticals are dependent in part on the availability of reimbursement to
the consumer from third-party payors, such as government and private insurance
plans that often mandate rebates or predetermined discounts from list prices.
In certain foreign markets, pricing or profitability of prescription
pharmaceuticals is subject to government control. In particular, individual
pricing negotiations are often required in many countries of the European Union,
irrespective of separate government approval to market a drug.
If we succeed in bringing one or more products to the market, there can be no
assurance that these products will be considered cost effective or that
reimbursement to the consumer will be available or will be sufficient to allow
us to sell our products economically. The level of reimbursement available for
CAMPATH(R) will greatly impact the profitability of our joint venture with
LeukoSite and, in turn, ILEX. There can be no assurance that chemoprevention
drugs which we develop, if any, would be eligible for reimbursement.
FAILURE TO ATTRACT AND RETAIN KEY PERSONNEL AND CONSULTANTS COULD ADVERSELY
AFFECT OUR ABILITY TO OBTAIN FINANCING, CONDUCT PRECLINICAL STUDIES AND CLINICAL
TRIALS OR DEVELOP CAMPATH(R) AND OUR OTHER PRODUCT CANDIDATES.
Our success depends greatly on our ability to attract and retain qualified
scientific and technical personnel. Due to the technical expertise and knowledge
required in our identification and evaluation of potentially viable oncology
compounds or technology in-licensing or acquisition targets, we rely
particularly heavily upon Daniel Von Hoff, M.D., a founder of ILEX, member of
the Board of Directors and Co-Chairman of our Scientific Advisory Board. The
consulting agreement between us and Dr. Von Hoff does not obligate Dr. Von Hoff
to devote any specified level of time or resources to the development of
potential products for us. Dr. Von Hoff has other substantial professional time
commitments, including serving on the scientific advisory boards of other
companies, and it is possible that he will not provide us with any product
opportunities in the future.
We do not have an employment agreement with Mr. Richard Love, our president
and chief executive officer. Loss of the services of Dr. Von Hoff or Mr. Love
would be detrimental to:
o our product development and manufacturing programs;
o our ability to identify and obtain rights to commercially viable oncology
compounds; and
o our ability to raise additional funds should we need to do so.
We are also highly dependent on the other principal members of our
scientific and management staff, and the loss of the services of such personnel
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could materially harm our business and financial condition.
To expand our research and development programs, pursue our product
development plans and expand our CRO business, we will be required to hire
additional qualified scientific and technical personnel, as well as personnel
with expertise in clinical testing and government regulation. There is intense
competition for qualified staff, and there can be no assurance that we will be
able to attract and retain the necessary qualified staff for the development of
our business. The failure to attract and retain key scientific and technical
personnel would materially harm our business and financial condition.
WE MAY NOT BE ABLE TO OBTAIN EFFECTIVE PATENTS TO PROTECT OUR TECHNOLOGIES FROM
USE BY OTHER COMPANIES WITH COMPETITIVE PRODUCTS, AND PATENTS OF OTHER COMPANIES
COULD PREVENT US FROM DEVELOPING OR MARKETING CAMPATH(R) OR OUR OTHER PRODUCT
CANDIDATES.
Our success will depend to a significant degree on our ability to:
o obtain, maintain and enforce patents;
o license rights to patents from third parties;
o protect trade secrets; and
o operate without infringing on the proprietary rights of others.
To date, we have no patents issued in our name. It is possible that we will
not develop technologies, drugs or processes that result in obtaining a patent.
It is also possible that our patent position will not provide sufficient
protection against competitors or that patents issued to or licensed by us will
be infringed or will be challenged, invalidated or circumvented. Competitors may
have filed patent applications, may have been issued patents or may obtain
additional patents and proprietary rights relating to technologies, drugs and
processes that compete with our technologies, drugs and processes. If we fail to
adequately protect our technologies, drugs and processes covered by issued
patents or to obtain patents, our business and financial condition could be
materially harmed.
We have not conducted in-depth validity and infringement studies on the
patent applications that we have in-licensed. These patents and patent
applications which we have in-licensed are subject to potential challenge and
may not provide protection for our compounds. Oxypurinol and aminopterin do not
have patent protection.
If we infringe on the intellectual property rights of others, there can be
no assurance that we would be able to obtain licenses to use the technology on
commercially reasonable terms, or at all.
A third party biotechnology company has offered to license certain
technology to L&I Partners which the biotechnology company has indicated relates
to CAMPATH(R). L&I Partners is in the process of evaluating the necessity of
this license. We are informed that significant questions have been raised
concerning the validity of the patents relating to the third party's technology.
We have not, however, conducted an independent analysis of this technology.
There is no assurance a license regarding this technology will be available to
L&I Partners in the future on acceptable terms, if at all. In the event L&I
Partners does not license this technology and the third party asserts that
CAMPATH(R) or its method of manufacture is an infringement of the third party's
rights, the ability of L&I Partners to commercialize CAMPATH(R) could be
materially harmed.
We also rely on trade secret protection for our unpatented proprietary
technology. Trade secrets are difficult to protect. Other parties could
independently develop substantially equivalent proprietary information and
techniques or gain access to our trade secrets.
We have attempted to prevent the disclosure and use of our know-how and
trade secrets by entering into confidentiality agreements with our employees,
consultants and third parties. However, there are risks that:
o these parties will not honor our confidentiality agreements;
o others will independently develop equivalent or competing technology;
o disputes will arise concerning the ownership of intellectual property or
the applicability of confidentiality obligations; or
o disclosure of our trade secrets will occur regardless of these contractual
protections.
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We often work with consultants and research collaborators at universities
and other research organizations. If any of these consultants or research
collaborators use intellectual property owned by others as part of their work
with us, disputes may arise between us and these other parties as to which one
of us has the rights to intellectual property related to or resulting from the
work done.
Costly litigation might be necessary to protect our orphan drug
designations or patent position or to determine the scope and validity of
third-party proprietary rights, and it is possible that we will not have the
required resources to pursue such litigation or to protect our patent rights. An
adverse outcome in litigation with respect to the validity of any of our patents
could subject us to significant liabilities to third parties, require disputed
rights to be licensed from third parties or require us to cease using a product
or technology. Any of these results could materially harm our business and
financial condition.
WE FACE INTENSE COMPETITION AND RAPID TECHNOLOGICAL CHANGE WHICH COULD RESULT IN
PRODUCTS SUPERIOR TO THOSE WE ARE DEVELOPING.
The technological areas in which we work evolve at a rapid pace. Our future
success depends upon our ability to compete in the research, development and
commercialization of products and technologies in oncology, our area of focus.
Many of our competitors have substantially greater research and development
capabilities and experience and greater manufacturing, marketing, financial and
managerial resources than do we. These competitors may develop products that are
superior to those we are developing and render our products or technologies
non-competitive or obsolete. In addition, we may not be able to keep pace with
technological change.
Products currently exist in the market that will compete directly with the
products that we are seeking to develop. Any product candidate that we develop
and for which we gain regulatory approval must then compete for market
acceptance and market share. Product competition is particularly intense in
markets that we may target with CAMPATH(R) in the future, including
non-Hodgkin's lymphoma and multiple sclerosis.
Significant competitive factors determining whether we will be able to
compete successfully include:
o capabilities of our collaborators;
o efficacy and safety of our products;
o timing and scope of regulatory approval;
o product availability;
o marketing and sales capabilities;
o reimbursement coverage from insurance companies and others;
o degree of clinical benefits of our product candidates relative to their
costs;
o method of administering a product;
o price; and
o patent protection.
Competitive disadvantages in any of these factors could materially harm our
business and financial condition.
In addition, in our CRO business, we primarily compete against in-house
departments of pharmaceutical companies, other CROs and, to a lesser extent,
universities and teaching hospitals, many of which have substantially greater
capital, technical and other resources. We may not be able to compete
successfully in the CRO business in the future.
WE DEPEND ON A RELATIVELY LIMITED NUMBER OF CLIENTS AND INDUSTRIES FOR OUR CRO
REVENUES.
We have in the past derived, and in the future will derive, a significant
portion of our CRO revenue from a relatively limited number of major projects or
clients. For the year ended December 31, 1998, our top five CRO customers
accounted for 85% of our CRO revenue. Our top three clients represented 28%, 22%
and 20% of our 1998 CRO revenue. The loss of business from a significant client
could materially harm our business and financial condition.
Our revenues are highly dependent on research and development expenditures
by the pharmaceutical and biotechnology industries. Decreases in these
expenditures, including decreases resulting from an economic downturn in these
industries or from mergers or other consolidations, could have a material
adverse effect on us. Additionally, we have benefitted from the trend in these
industries to outsource an increasing percentage of clinical trial projects. A
reversal of this trend could materially harm our business and financial
condition.
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IF WE ARE UNABLE TO MAINTAIN OUR RELATIONSHIPS WITH CTRC, US ONCOLOGY AND THEIR
RELATED ENTITIES, OUR ABILITY TO CONDUCT CLINICAL TRIALS AND OUR CRO BUSINESS
COULD BE MATERIALLY HARMED.
We have working relationships with CTRC and US Oncology, two of the most
active organizations conducting oncology clinical trials, to support our CRO
business. If we are unable to maintain these relationships, including the
elements providing us with access to patients of affiliated doctors,
investigators and to potential CRO clients, our business and financial condition
could be materially harmed.
THERE ARE RISKS ASSOCIATED WITH THE NATURE AND PRICING OF OUR CRO CONTRACTS.
Most of our CRO contracts can be terminated upon 60 to 90 days notice by
our customer. Customers terminate or delay service contracts for a variety of
reasons, including:
o the failure of a compound being tested to satisfy safety requirements;
o unexpected or undesired clinical results of the compound;
o the customer's decision to forgo a particular study;
o insufficient patient enrollment or investigator recruitment; or
o production problems resulting in shortages of the compound.
The loss or delay of a large contract or the loss or delay of multiple
contracts could materially harm our business and financial condition.
All of our CRO contracts for the provision of services are fixed-price or
fee-for-service with a cap. Our CRO revenues are earned under contracts which
generally range in duration from a few months to two years. For the nine-month
period ended September 30, 1999, fixed-price contracts accounted for 67% of our
CRO net revenues and fee-for-service accounted for 33% of our CRO net revenues.
We bear the risks of cost overruns in contracts structured as fixed-price
contracts or fee-for-service with a cap. Underpricing of contracts or
significant cost overruns could materially harm our business and financial
condition.
Competition in the CRO industry has resulted in significant price and other
competition. Further increases in such competition, and the resultant price
pressure, could materially harm our business and financial condition.
MANY CRO CUSTOMERS AND POTENTIAL CUSTOMERS MAY PERCEIVE A CONFLICT OF INTEREST
BETWEEN THEIR BUSINESS AND ILEX PRODUCTS, INC. WHICH MAY DETER THEM FROM
CONTRACTING WITH US FOR CRO SERVICES.
Many potential customers of our CRO business are other drug development
companies which may be, or may perceive themselves to be, competitors of ILEX in
the context of our product development business. These drug development
companies may thus be deterred from contracting with us for CRO services and
thereby limit revenue growth potential for our CRO business.
IF WE BECOME SUBJECT TO PRODUCT LIABILITY CLAIMS IN OUR CRO BUSINESS OR IN
CONNECTION WITH COMMERCIALIZATION OF OUR PRODUCTS, THEY MAY RESULT IN DAMAGES
EXCEEDING OUR INSURANCE LIMITATION OR REDUCE DEMAND FOR THE APPLICABLE PRODUCTS.
Clinical research involves the testing of new drugs on human volunteers,
and such testing involves a risk of liability for personal injury or death to
patients from possible unforeseen adverse side effects or improper
administration of the new drug. Many of these patients are already seriously ill
and at risk of further illness or death. Although we maintain our own product
liability and clinical trial insurance and generally obtain indemnification from
our clients, our business could be materially harmed if we were required to pay
damages or incur defense costs:
o in connection with a claim outside the scope of indemnity or insurance
coverage;
o if the indemnity, although applicable, were not performed in accordance
with the terms of the relevant contract; or
o if our liability exceeded the amount of applicable insurance coverage.
In addition, we cannot be sure such insurance will continue to be available
on terms acceptable to us, if at all, or that the insurance coverage, if
obtained, will be sufficient to cover any potential claims or liabilities.
Similar risks would exist for product liability upon the commercialization or
marketing of any products by us or our partners. In addition, regardless of
merit or eventual outcome, product liability claims may result in decreased
demand for the applicable product or our products in general and in injury to
our general reputation.
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OUR LACK OF EXPERIENCE IN HANDLING HAZARDOUS MATERIALS AND IN OTHER
ENVIRONMENTAL MATTERS MAY CAUSE US TO INCUR SUBSTANTIAL COSTS.
We use hazardous materials, chemicals and various other toxic compounds in
our development and other programs. We are therefore subject to federal, state
and local laws and regulations governing the use, manufacture, storage, handling
and disposal of hazardous materials and certain waste products. We cannot
eliminate the risk of contamination or injury from these materials. In such
event, we could be held liable for any damages that result and any such
liability could exceed our resources. We may also incur substantial costs to
comply with environmental regulations if and when we develop commercial-scale
manufacturing capacity.
OUR ABILITY TO CONDUCT ANIMAL TESTING COULD BE LIMITED IN THE FUTURE.
Certain of our CRO business activities involve animal testing. Such
activities have been the subject of controversy and adverse publicity. Animal
rights groups and various other organizations and individuals have attempted to
stop animal testing activities by pressing for legislation and regulation in
these areas. To the extent the activities of these groups are successful, our
business could be materially harmed.
THERE ARE A SUBSTANTIAL NUMBER OF SHARES OF OUR COMMON STOCK BEING REGISTERED
HEREWITH WHICH, WHEN AVAILABLE FOR SALE OR SOLD, COULD RESULT IN A DECREASE IN
OUR STOCK PRICE AND IMPAIR OUR ABILITY TO RAISE FUNDS IN FUTURE EQUITY
OFFERINGS.
The sale, or availability for sale, of substantial amounts of our common
stock in the public market could materially decrease the market price of our
common stock and could impair our ability to raise additional capital.
At October 21, 1999, approximately 6,134,074 shares of common stock,
representing 35.5% of our common stock outstanding, were unregistered and
eligible for sale subject to compliance with Rule 144 of the Securities Act.
In addition, while the holders of substantially all of the 5,904,272 shares
included in the registration statement of which this prospectus is a part are
subject to lock-up agreements prohibiting disposition of their shares until
after February 20, 2000, sales of a substantial number of shares of common stock
could occur at any time thereafter. This may have an adverse effect on the price
of our common stock and may impair our ability to raise capital in the future.
OUR STOCK PRICE MAY FLUCTUATE SIGNIFICANTLY, WHICH MAY MAKE IT DIFFICULT TO
RESELL YOUR SHARES WHEN YOU WANT TO AT PRICES YOU FIND ATTRACTIVE.
The market price of our common stock has been highly volatile. This
volatility may adversely affect the price of our common stock in the future. You
may not be able to resell your shares of common stock following periods of
volatility because of the market's adverse reaction to this volatility. We
anticipate that this volatility, which frequently affects the stock prices of
biotechnology and pharmaceutical companies, will continue. Factors that could
cause such volatility include:
o our quarterly operating results;
o deviations in our operating results from the estimates of securities
analysts;
o FDA and/or international regulatory actions;
o limited trading volumes;
o general economic conditions or economic conditions specific to the
biotechnology and pharmaceutical industries; and
o other developments affecting our competitors or us.
On occasion the equity markets, and in particular the markets for
biotechnology and pharmaceutical stocks, have experienced significant price and
volume fluctuations. These fluctuations have affected the market price for many
companies' securities even though the fluctuations are often unrelated to the
companies' operating performance.
WE ARE SUBJECT TO INFLUENCE FROM PRINCIPAL STOCKHOLDERS, EXECUTIVE OFFICERS AND
DIRECTORS; AND WE ARE SUBJECT TO VARIOUS PROVISIONS THAT COULD DISCOURAGE OR
PREVENT A CHANGE OF CONTROL OF THE COMPANY.
Our executive officers and directors (and their affiliates), in the
aggregate, beneficially own or control approximately 33.3% of our outstanding
common stock and therefore have the ability to exercise substantial influence
over the outcome of most stockholders' actions, including the election of the
members of the Board of Directors. This concentration of ownership could have an
adverse effect on the price of our
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<PAGE> 12
common stock or have the effect of delaying or preventing a change in control of
the Company. In addition, certain provisions of Delaware law and our Certificate
of Incorporation could make it more difficult for a third party to acquire, or
discourage a third party from attempting to acquire, control of ILEX. These
provisions could limit the price that certain investors might be willing to pay
in the future for shares of our common stock. These provisions of Delaware law
and our Certificate of Incorporation may also discourage or prevent certain
types of transactions involving an actual or threatened change in control of
ILEX (including unsolicited takeover attempts), even though such a transaction
may offer our stockholders the opportunity to sell their stock at a price above
the prevailing market price. Certain of these provisions allow us to issue
preferred stock without any vote or further action by the stockholders. These
provisions may make it more difficult for stockholders to take certain corporate
actions and could have the effect of delaying or preventing a change in control
of ILEX. In addition, certain of our corporate partners have the right to
terminate their respective agreements with us upon certain changes in control of
ILEX, which may discourage acquisitions or other changes in control (including
those in which our stockholders might otherwise receive a premium for their
shares over then-current market prices).
WE FACE RISKS RELATING TO THE YEAR 2000.
We recognize that the arrival of the year 2000 poses a challenge to the
ability of computer systems to recognize the date change from 1999 to the year
2000 and beyond. It is possible that non-compliant third-party computers may not
interface properly with our system. This could result in disruptions of our
business through delays in processing customer invoices and orders and in
compiling administrative and financial reporting information. This could
materially harm our business and financial condition.
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<PAGE> 13
THE COMPANY
OVERVIEW
We develop pharmaceuticals for treating and preventing cancer and provide
contract research services to other companies developing anticancer drugs. We
have a portfolio of seven anticancer products in clinical development and
several preclinical stage products. We built this portfolio by in-licensing and
acquiring product candidates developed by others and do not conduct early-stage
drug discovery research ourselves. We recently completed a pivotal clinical
trial in chronic lymphocytic leukemia, or CLL, for our most advanced product
candidate, CAMPATH(R). We are developing CAMPATH(R) in partnership with
LeukoSite, Inc. The results of this trial should enable the partnership to
complete by the end of 1999 the filing with the U.S. Food and Drug
Administration, or FDA, for marketing approval. The FDA has granted CAMPATH(R)
fast-track status, requiring agency review to be completed within six months
from acceptance of the filing. In August 1999 this partnership licensed
worldwide marketing rights (except for Japan and East Asia) for CAMPATH(R) to
Schering AG.
We operate through two subsidiaries: ILEX Products, Inc., through which we
develop our own portfolio of anticancer compounds, and ILEX Oncology Services,
Inc., or ILEX Services, which is our full service contract research
organization, or CRO. ILEX Services manages the preclinical research and
clinical trials for our own product candidates as well as oncology products
being developed by other companies. In addition to building our expertise in
cancer drug development, our CRO business generates revenue, reduces our cost to
perform our own research and development, and gives us access to product
in-licensing opportunities.
OUR MARKET
Cancer encompasses a large number of discrete diseases that afflict many
different parts of the human body. The diversity of cancer diseases and their
overall prevalence create a large need for new and improved treatments. Cancer
is the second leading cause of death in the U.S. It is estimated that one in
three Americans will be diagnosed with cancer. The worldwide oncology drug
market was estimated at $16 billion in 1998, representing 15% growth from 1997.
This market is not saturated, with novel treatments often enjoying premium
pricing and rapid market acceptance.
Fundamentals of the oncology market that are particularly advantageous for
us include:
o accelerated approval procedures adopted by the FDA to shorten the
development process and review time for cancer drugs;
o in-licensing opportunities created by a trend among large pharmaceutical
companies to concentrate on products with larger market potential than most
anticancer drugs;
o favorable pricing and reimbursement for oncology drugs, with some novel
agents commanding $6,000 to $15,000 per course of therapy; and
o a highly concentrated population of oncologists and hematologists which
allows a small sales force to be effective.
OUR STRATEGY
Our objective is to be a leading oncology drug company. We intend to market
or co-market our own products in the future and become an oncology-focused
specialty pharmaceutical company. Our strategy consists of the following
elements:
o focus on the expanding cancer market;
o use our expertise to identify and in-license product candidates;
o reduce risk by developing a broad portfolio of products;
o form strategic collaborations to support development and commercialization
of our products;
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<PAGE> 14
o offer a full range of oncology CRO services; and
o use our CRO business to create in-licensing opportunities and lower our own
development costs.
ILEX PRODUCTS, INC.
We have seven drugs in clinical development and several product candidates
in late preclinical research. All of our product rights were either acquired or
in-licensed. We follow a disciplined approach to product acquisition and
development:
o we only in-license product candidates that have shown strong preclinical or
human efficacy results;
o we only develop drugs that are patent protected, have patents pending or
can qualify for orphan drug designation from the FDA;
o we do not perform early-stage research;
o we advance compounds into Phase II trials only if promising efficacy
results are seen in Phase I trials; and
o we seek partners when deemed appropriate to share the cost and risk of
developing and commercializing our products.
In addition to traditional chemotherapy drugs that kill cancer cells, we
are developing a number of chemoprevention agents, which are intended to be
well-tolerated oral therapies aimed at preventing the occurrence, progression or
recurrence of cancer. The market potential for chemoprevention agents is
increasing as more genetic and other diagnostic tests become available to
identify people at risk of developing cancer. As long-term therapies,
chemoprevention agents have the potential to address new markets substantially
larger than most acute care cancer products. Although long-term studies are
usually needed to prove that a drug can prevent cancer, our strategy is to seek
approval based upon effectively treating a pre-cancerous condition or preventing
the recurrence of cancer, thereby shortening the approval process.
CAMPATH(R)
Our most advanced product candidate, CAMPATH(R), is a humanized monoclonal
antibody in development for treating CLL in patients resistant to currently
available drug therapies. CLL is the most common form of adult leukemia, with
approximately 120,000 patients in the U.S. and Europe suffering from the
disease. Based on pilot human studies, CAMPATH(R) may also have utility in
treating patients with non-Hodgkin's lymphoma, multiple sclerosis and organ
transplants. We are developing CAMPATH(R) in a 50/50 joint venture with
LeukoSite known as L&I Partners, L.P. The partnership recently granted worldwide
marketing rights (excluding Japan and East Asia) for CAMPATH(R) to Schering AG
under an agreement that provides the partnership with up to $30 million of
up-front and milestone payments and approximately 67% of net profits from sales.
In June 1999 we presented data from the pivotal trial of CAMPATH(R), which
was conducted in 93 patients who had failed treatments with fludarabine and an
alkylating agent, the two standard therapies for treating CLL. Of the 93
patients enrolled, 31 (33%) had a complete or partial response. Based on these
results, the partnership has filed the first two parts of its Biologics License
Application, or BLA, with the FDA and expects to file the final part by the end
of 1999.
Eflornithine
Our second most advanced product candidate is eflornithine, a
chemoprevention agent. In April 1999 we initiated a Phase III trial of
eflornithine for preventing the recurrence of superficial bladder cancer. This
double-blind, placebo-controlled, 400-patient trial is being co-sponsored by
the National Cancer Institute, or NCI. More than 140,000 patients in the U.S.
have recurrent superficial bladder cancer. With the NCI, we are also
investigating eflornithine for use in other pre-malignant conditions. The
compound is in a Phase III trial in non-melanoma skin cancer, a Phase IIb trial
in recurrent colon polyps, and Phase II trials in Barrett's esophagus. These
conditions are precursors to skin, colon and esophageal cancer, respectively.
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Oxypurinol
We are developing oxypurinol for treatment of gout. The only currently
available treatment for the cause of gout is allopurinol. However, 3 to 5% of
patients receiving allopurinol develop an intolerance to it. We are developing
oxypurinol as an alternative to allopurinol for these 50,000 to 90,000 patients.
Based on results from our compassionate use program, we plan to pursue marketing
approval for oxypurinol under the FDA's accelerated approval guidelines by
conducting a pivotal Phase II trial in 2000 and submitting a New Drug
Application, or NDA, shortly thereafter.
Other Clinical Candidates
Our other clinical stage products include:
o ILX-295501 -- in-licensed from Eli Lilly and initiated Phase II trials in
four cancers: ovarian, kidney, non-small cell lung and melanoma. Eli Lilly
has the right to repurchase our rights following Phase II trials, with ILEX
retaining a royalty interest;
o Aminopterin -- in Phase II trials for acute leukemia and refractory
endometrial cancer;
o SR-45023A -- in Phase I trials for solid tumors, being co-developed with
Symphar SA, a Swiss biotechnology company; and
o ILX23-7553 -- a vitamin D(3) analog in Phase I trials for breast and
prostate cancers and other solid tumors.
Preclinical Anti-Angiogenesis Candidates
In July 1999 we acquired Convergence Pharmaceuticals, Inc. and its
portfolio of angiogenesis inhibitor product candidates. Angiogenesis inhibitors
help block the formation of new blood vessels that tumors require to grow larger
or to recover from chemotherapy or radiation. Our angiogenesis inhibitor
pipeline includes five proteins that would be given intravenously and a small
molecule inhibitor that would be taken orally.
We are also in preclinical development with THP-Dox, a peptide-doxorubicin
conjugate that binds to a receptor on tumor blood vessels. Doxorubicin is a
widely-used generic chemotherapy agent. We intend to develop THP-Dox as an
anti-angiogenic treatment for prostate, breast and lung cancers.
We expect to bring two of these product candidates into human trials in
2000.
ILEX ONCOLOGY SERVICES, INC.
We believe ILEX Services is the only full service provider of CRO services
focused predominantly on oncology. We offer a full range of specialized
preclinical research and clinical trial services, including chemistry and
toxicology services, small-scale manufacturing, design of clinical protocols,
organization and monitoring of clinical trials and preparation of regulatory
submissions. Based on our expertise, we aim to reduce the time normally required
to develop oncology products and increase the probability of obtaining
regulatory approval. In addition, ILEX Services provides CRO services on a
contract basis to ILEX Products and has been the source of three of the products
we now have in clinical development.
Our CRO revenues grew from $5.9 million in 1997 to $9.7 million in 1998 and
were $9.5 million in the first nine months of 1999. Our CRO client list includes
more than 40 biotechnology and pharmaceutical companies, currently conducting
approximately 100 preclinical studies and clinical trials with us.
We work closely with prestigious cancer research institutions and groups
that give us access to top oncology clinical expertise. Our Board of Directors
includes Dr. Daniel Von Hoff, president of the American Association for Cancer
Research, and Dr. Joseph Bailes, president of the American Society of Clinical
Oncology. In addition, we have a strong relationship with CTRC Research
Foundation, or CTRC Research, our largest stockholder. CTRC Research has one of
the largest oncology Phase I trial organizations in the U.S. We also have strong
historical ties with US Oncology, Inc.,
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the largest oncology physician practice management organization in the U.S.,
whose physicians see approximately 13% of the new cancer patients in the U.S.
annually. Our strong relationships with these groups give us access to a
significant number of patients for enrollment into clinical trials. We believe
that our oncology focus combined with these relationships make us an attractive
option for companies selecting a CRO to develop a cancer drug.
ILEX is a Delaware corporation. Our principal executive offices are located
at 11550 I.H. 10 West, Suite 100, San Antonio, Texas 78230, and our telephone
number is (210) 949-8200.
USE OF PROCEEDS
The Shares to be sold pursuant to the Prospectus are owned by certain
stockholders of the Company. The Company will not receive any of the proceeds
from the sale of the Shares. See "Selling Stockholders."
SELLING STOCKHOLDERS
The table below presents the following information about the number of
shares of the Common Stock of the Company which is owned by the Selling
Stockholders: (i) the number of shares each Selling Stockholder beneficially
owns as of the date of this prospectus, (ii) the percentage of the Company's
outstanding shares of Common Stock that each Selling Stockholder beneficially
owns prior to the offering, (iii) the number of shares that each Selling
Stockholder is offering under this prospectus, (iv) the number of shares that
each Selling Stockholder will beneficially own after the completion of this
offering and (v) the percentage of the Company's outstanding shares of Common
Stock that each Selling Stockholder will beneficially own after the completion
of the offering.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
BEFORE THE OFFERING AFTER THE OFFERING(1)
-------------------------- --------------------------
NUMBER PERCENTAGE SHARES TO NUMBER PERCENTAGE
NAME OF SHARES OF CLASS(2) BE SOLD OF SHARES OF CLASS
---- --------- ----------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
CTRC Research Foundation 2,382,127 11.1 2,382,127 0 0
Advent Health Care and Life
Sciences II Limited
Partnership(3) 757,974 3.5 757,974 0 0
Alta BioPharma Partners, L.P.(3) 742,547 3.4 742,547 0 0
ILEX Chase Partners (AltaBio),
LLC(3) 424,065 1.9 424,065 0 0
Chase Venture Capital Associates,
L.P.(3) 238,920 1.1 238,920 0 0
Eli Lilly and Company(4) 218,858 1.0 218,858 0 0
Raghuram Kalluri(5)(6) 195,000 * 195,000 0 0
Donald Kufe(5)(6) 195,000 * 195,000 0 0
Ralph Robert Weichselbaum,
M.D.(5)(6) 195,000 * 195,000 0 0
Vikas Sukhatme(5)(6) 195,000 * 195,000 0 0
Glenn C. Rice, Ph.D.(5)(7) 130,000 * 130,000 0 0
Advent Health Care and Life
Sciences II Beteiligung GmbH
& Co. KG(3) 58,894 * 58,894 0 0
Chestnut Partners, Inc. 33,546(8) * 28,546 5,000(8) *
Beth Israel Deaconess(5) 30,000 * 30,000 0 0
Tsuneya Ohno(5) 30,000 * 30,000 0 0
Alta Embarcadero Biopharma
Partners, LLC(3)(9) 27,988 * 27,988 0 0
Arch Development
Corporation(5)(10) 20,000 * 20,000 0 0
Advent Partners HLS II Limited
Partnership(3) 16,844 * 16,844 0 0
J. Stephen Dolezalek(5) 10,000 * 10,000 0 0
Advent Partners Limited
Partnership(3) 2,509 * 2,509 0 0
TOTAL 5,904,272 27.4 5,904,272 5,000 *
</TABLE>
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* represents less than 1%
(1) Assumes all shares of Common Stock offered hereby are sold.
(2) Based on 21,481,144 shares of Common Stock outstanding as of December 20,
1999.
(3) Represents shares of Common Stock issued pursuant to a Stock Purchase
Agreement dated July 16, 1999 among ILEX Oncology, Inc. and Alta Biopharma
Partners, L.P., Alta Embarcadero Biopharma, L.L.C., ILEX Chase Partners
(Alta Bio), L.L.C., Chase Venture Capital Associates, L.P., B. J. McCombs,
Advent Health Care and Life Sciences II Limited Partnership, Advent Health
Care and Life Sciences II Beteiligung GmbH & Co. KG, Advent Partners HLS II
Limited Partnership and Advent Partners Limited Partnership.
(4) Shares were issued pursuant to a Stock Purchase Agreement dated January 22,
1999 between ILEX Oncology, Inc. and Eli Lilly and Company.
(5) Represents shares issued pursuant to Plan of Merger and Acquisition
Agreement dated July 16, 1999 among ILEX Oncology, Inc., ILEX Acquisition,
Inc., Convergence Pharmaceuticals, Inc., Vikas Sukhatme, Raghuram Kalluri,
Ralph Weichselbaum, Donald Kufe, Glenn Rice and Tsuneya Ohno.
(6) Member of the Company's Scientific Advisory Board.
(7) Currently Vice President and a Director of the Company.
(8) Includes 5,000 shares held in an individual retirement account of Albert A.
Holman III, the sole shareholder of Chestnut Partners, Inc.
(9) Subsequent to the date of this Prospectus, the shares of Common Stock held
by Alta Embarcadero Biopharma Partners, L.L.C. may be distributed to
Brobeck Trust F/B/O Craig S. Andrews, B.A. Ventures, Ned Brown, Craig L.
Burr 1986 Children's Trust, Dan Case, Child Family Trust U/O/T Dated
December 31, 1997, Jean Deleage, Michael Dovey, William P. Egan 1985
Children's Trust, GC & H Investments, Garrett Gruener, H & Q Fund, Richard
Haiduck, Kingsley Pension Trust, Le Serre, Eileen McCarthy, Beta Profit
Sharing Trust F/B/O Terrance McGuire, Miller Family Trust 6/6/95,
Nottingham Trust, Edward E. Penhoet, Dennis Purcell, G. Kirk Raab, Sanford
R. Robertson, Mario M. Rosati, William J. Rutter, Chuck Stuckey, Robert
Swanson, WS Investment Company 98A, Daniel Janney, Alix Marduel, Guy Nohra,
Marino Polestra and Deleage Children's Trust U/I dated 3/18/82.
(10) Subsequent to the date of this Prospectus, the shares of Common Stock held
by Arch Development Corporation may be distributed to Dana Farber Cancer
Institute, Inc., Beth Israel Deaconess Medical Center, Inc., Ralph
Weichselbaum, Jose Quintans and Steven Chmura. Arch Development Corporation
shares investment power with respect to these shares with the
aforementioned persons.
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<PAGE> 18
PLAN OF DISTRIBUTION
All 5,904,272 shares of Common Stock being registered hereby are being
registered on behalf of the Selling Stockholders. ILEX will receive no proceeds
from this offering. As used herein, the term "Selling Stockholder" includes
donees, pledgees, transferees or other successors-in-interest selling Shares
received from a Selling Stockholder as a gift, pledge, partnership distribution
or other non-sale related transfer after the date of this Prospectus. In
addition, upon the company being notified by a Selling Stockholder that a donee,
pledgee, transferee or other successor-in-interest intends to sell more than 500
shares, a supplement to this prospectus will be filed.
Each Selling Stockholder will act independently of ILEX in making decisions
with respect to the timing, manner and size of each sale. Each Selling
Stockholder may choose to sell the Shares from time to time at market prices
prevailing at the time of the sale, at prices related to the then prevailing
market prices or in negotiated transactions, including pursuant to an
underwritten offering or pursuant to one or more of the following methods:
o a block trade in which the broker or dealer so engaged will attempt to
sell the Shares as agent but may position and resell a portion of the
block as principal in order to facilitate the transaction,
o purchases by a broker or dealer as principal and resale by such broker
or dealer for its account pursuant to this prospectus, and
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers.
In connection with the sale of the Shares, a Selling Stockholder may engage
broker-dealers who in turn may arrange for other broker-dealers to participate.
Broker-dealers may receive commissions or discounts from a Selling Stockholder
in amounts to be negotiated immediately prior to the sale. In addition,
underwriters or agents may receive compensation from a Selling Stockholder or
from purchasers of the Shares for whom they may act as agents, in the form of
discounts, concessions or commissions. Underwriters may sell shares to or
through dealers, and such dealers may receive compensation in the form of
discounts, concessions or commissions from the underwriters or commissions from
the purchasers for whom they act as agents. A Selling Stockholder, underwriters,
brokers, dealers and agents that participate in the distribution of the Shares
may be deemed to be underwriters, and any discounts or commissions received by
them from a Selling Stockholder and any profit on the resale of the Shares by
them may be deemed to be underwriting discounts and commissions under the
Securities Act.
At the time a particular offer of Shares is made, to the extent required, a
supplement to this Prospectus will be distributed which will identify and set
forth the aggregate amount of Shares being offered and the terms of the
offering. Such supplement will also disclose the following information:
o the name or names of any underwriters, dealers or agents,
o the purchase price paid by any underwriter for Shares purchased from
the Selling Stockholders,
o any discounts, commissions and other items constituting compensation
from the Selling Stockholders and/or Billing, and
o any discounts, commissions or concessions allowed or reallowed or paid
to dealers, including the proposed selling price to the public.
We have agreed to indemnify the Selling Stockholders in certain
circumstances against certain liabilities, including liabilities under the
Securities Act. Each Selling Stockholder has agreed to indemnify ILEX in certain
circumstances against certain liabilities, including liabilities under the
Securities Act.
The Selling Stockholders also may resell all or a portion of the Shares in
open market transactions in reliance upon Rule 144 under the Securities Act,
provided he or it meets the criteria and conforms to the requirements of such
Rule.
The Selling Stockholders and any other persons participating in the sale or
distribution of the Shares being registered hereby will be subject to the
provisions of the Exchange Act and the rules and regulations thereunder,
including Regulation M, to the extent applicable. The foregoing provisions may
limit the timing of purchases and sales
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<PAGE> 19
of any of the Shares by a Selling Stockholder or any other such person. This may
affect the marketability of the Shares. Each Selling Stockholder also will
comply with the applicable prospectus delivery requirements under the Securities
Act in connection with the sale or distribution of the Shares hereunder.
In order to comply with certain states' securities laws, if applicable, the
Shares will be sold in such jurisdictions only through registered or licensed
brokers or dealers. In certain states, the Shares may not be sold unless the
Shares have been registered or qualified for sale in such state, unless an
exemption from registration or qualification is available and is obtained.
ILEX will bear all out-of-pocket expenses incurred in connection with the
registration of the Shares, including, without limitation, all registration and
filing fees imposed by the Commission, The Nasdaq Stock Market, Inc. and blue
sky laws, printing expenses, transfer agents' and registrars' fees, and the fees
and disbursements of ILEX's outside counsel and independent public accountants.
The Selling Stockholders will bear all underwriting discounts and commissions
and transfer or other taxes.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Section 145 of the Delaware General Corporation Law (the "DGCL") provides
that a Delaware corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative (a
"proceeding") (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. A
Delaware corporation may indemnify any person under such Section in connection
with a proceeding by or in the right of the corporation to procure judgment in
its favor, as provided in the preceding sentence, against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action, except that no indemnification shall be
made in respect thereof unless, and then only to the extent that, a court of
competent jurisdiction shall determine upon application that such person is
fairly and reasonably entitled to indemnity for such expenses as the court shall
deem proper. A person is fairly and reasonably entitled to indemnity for such
expenses as the court shall deem proper. A Delaware corporation must indemnify
any person who was successful on the merits or otherwise in defense of any
action, suit or proceeding or in defense of any claim, issue or matter in any
proceeding, by reason of the fact that he is or was a director, officer,
employee or agent of the corporation or is or was serving at the request of the
corporation, against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith. A Delaware corporation may
pay for the expenses (including attorneys' fees) incurred by an officer or
director in defending a proceeding in advance of the final disposition upon
receipt of an undertaking by or on behalf of such officer or director to repay
such amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation.
Section 102(b)(7) of the DGCL permits a corporation to provide in its
certificate of incorporation that a director shall not be personally liable to
the corporation or its stockholders for monetary damages for a breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for any
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) in respect of certain unlawful dividend payments
or stock redemptions or repurchases, or (iv) for any transaction from which the
director derived an improper personal benefit. Article of the Company's
Certificate of Incorporation, as amended, eliminates the liability of directors
to the fullest extent permitted by Section 102(b)(7) of the DGCL. The DGCL
permits the purchase of insurance on behalf of directors and officers against
any liability asserted against directors and officers and incurred by such
persons in such capacity, or arising out of their status as such, whether or not
the corporation would have the power to indemnify directors and officers against
such liability.
19
<PAGE> 20
The Company also has a policy insuring its directors and officers against
certain liabilities, including liabilities under the Securities Act.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors and officers and controlling persons pursuant to
the foregoing provisions, the Company has been advised that, in the opinion of
the Commission, such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon by
Fulbright & Jaworski L.L.P.
EXPERTS
The consolidated financial statements included in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1998 incorporated by
reference in this Prospectus have been audited by Arthur Andersen LLP,
independent public accountants, to the extent and for the periods set forth in
their reports incorporated herein by reference, and are incorporated herein in
reliance on such reports given upon the authority of such firm as experts in
accounting and auditing.
20
<PAGE> 21
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NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
ITS DATE.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Available Information................................................................................. 2
Incorporation of Certain Documents
by Reference........................................................................................ 2
Special Note Regarding Forward-Looking
Statements.......................................................................................... 3
Risk Factors.......................................................................................... 4
The Company........................................................................................... 13
Use of Proceeds....................................................................................... 16
Selling Stockholders.................................................................................. 16
Plan of Distribution.................................................................................. 18
Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities......................................................................................... 19
Legal Matters......................................................................................... 20
Experts............................................................................................... 20
</TABLE>
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5,904,272 SHARES
ILEX ONCOLOGY, INC.
COMMON STOCK
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P R O S P E C T U S
JANUARY 4, 2000
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