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1,778,000 SHARES
ABGENIX, INC.
COMMON STOCK
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The selling stockholders are offering 1,778,000 shares of Abgenix,
Inc.'s common stock. Abgenix's stock is traded on the Nasdaq National Market
under the symbol "ABGX." The last reported sale price for the common stock on
the Nasdaq National Market on December 3, 1999 was $78.50 per share. We
advise you to obtain a current market quotation for our common stock. We will
not receive any of the proceeds from the sale of shares by the selling
stockholders and we are not offering any shares for sale under this
prospectus. See "Plan of Distribution" for a description of sales of the
shares by the selling stockholders. In this prospectus, references to
"Abgenix," "we," "us," and "our" refer to Abgenix, Inc., and its subsidiaries.
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INVESTING IN THE COMMON STOCK INVOLVES RISKS.
SEE "RISK FACTORS" BEGINNING ON PAGE 5.
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THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS
HAVE NOT APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS DECEMBER 6, 1999
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TABLE OF CONTENTS
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Where You Can Find Additional Information........................................ 2
Information Incorporated by Reference............................................ 2
Forward Looking Information...................................................... 3
Our Company...................................................................... 4
Risk Factors..................................................................... 5
Use of Proceeds................................................................. 20
Selling Stockholders............................................................ 20
Plan of Distribution............................................................ 20
Legal Matters................................................................... 21
Experts......................................................................... 21
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WHERE YOU CAN FIND ADDITIONAL INFORMATION
We file annual, quarterly and special reports and other information
with the Securities and Exchange Commission. You may read and copy any document
that we file at the Securities and Exchange Commission's public reference rooms
in Washington, D.C., New York, New York and Chicago, Illinois. Please call the
Securities and Exchange Commission at 1-800-SEC-0330 for further information on
the public reference rooms. The Securities and Exchange Commission filings are
also available to the public on the Securities and Exchange Commission's
Internet web site at http://www.sec.gov.
We have filed with the Securities and Exchange Commission a
registration statement on Form S-3 under the Securities Act with respect to the
common stock offered hereby. This prospectus, which is part of the registration
statement, does not contain all of the information set forth in the registration
statement. Certain parts of the registration statement are omitted from the
prospectus in accordance with the rules and regulations of the Securities and
Exchange Commission. You should review the registration statement and its
exhibits and schedules for further information regarding Abgenix and the common
stock offered hereby. This prospectus contains descriptions of some of our
contracts and other documents. These descriptions are not complete. We encourage
you to review the complete copies of these contracts and other documents that
have been filed as exhibits to our reports and other information filed with the
Securities and Exchange Commission pursuant to the Exchange Act or registration
statements filed with the Securities and Exchange Commission pursuant to the
Securities Act.
INFORMATION INCORPORATED BY REFERENCE
The Securities and Exchange Commission allows us to "incorporate by
reference" the information we file with it, which means that we can disclose
important information to you by referring you to those documents. The
information incorporated by reference is considered to be part of this
prospectus, and information that we file with the Securities and Exchange
Commission later will automatically update and supersede this information. We
incorporate by reference our documents listed below and any future filings made
by us with the Securities and Exchange Commission under Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act until the offering of securities under this
prospectus is terminated.
- The description of our common stock contained in our Registration
Statement on Form 8-A filed with the Securities and Exchange
Commission on May 5, 1998;
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- Annual Report on Form 10-K for the year ended December 31, 1998;
- Current Report on Form 8-K dated March 30, 1999;
- Quarterly Report on Form 10-Q for the quarter ended March 31, 1999;
- The description of our preferred share purchase rights contained in
our Registration Statement on Form 8-A filed with the Securities and
Exchange Commission on June 15, 1999;
- Quarterly Report on Form 10-Q for the quarter ended June 30, 1999;
- Quarterly Report on Form 10-Q for the quarter ended September 30,
1999; and
- Current Report on Form 8-K dated November 23, 1999.
You may request a copy of these filings, at no cost, by writing or
telephoning us at: Abgenix, Inc., 7601 Dumbarton Circle, Fremont, California
94555, (510) 608-6500.
You should rely only on the information incorporated by reference or
provided in this prospectus. We have not authorized anyone else to provide you
with different or additional information. You should not assume that the
information in this prospectus is accurate as of any date other than the date on
the front of those documents.
FORWARD LOOKING INFORMATION
Some of the matters discussed under the caption "Risk Factors" and
elsewhere in this prospectus or in the information incorporated by reference
herein may constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such information may involve
known and unknown risks, uncertainties and other factors that may cause our
actual results, performance or achievements to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements.
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OUR COMPANY
Abgenix is a biopharmaceutical company that develops and intends to
commercialize antibody therapeutic products for the treatment of a variety of
disease conditions, including transplant-related diseases, inflammatory and
autoimmune disorders, cardiovascular disease and cancer. We have developed
XenoMouse technology, a proprietary technology, which we believe offers many
advantages including rapid generation of highly specific, fully human antibody
product candidates to essentially any disease target appropriate for antibody
therapy. In addition, we believe our technology offers advantages in product
development and flexibility in manufacturing. We have collaborative arrangements
with multiple pharmaceutical and biotechnology companies involving our XenoMouse
technology. In addition, we have four proprietary antibody product candidates
that are under development internally, three of which are in human clinical
trials.
Our principal executive offices are located at 7601 Dumbarton Circle,
Fremont, California 94555, and our telephone number is (510) 608-6500.
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RISK FACTORS
OUR XENOMOUSE TECHNOLOGY MAY NOT PRODUCE SAFE, EFFICACIOUS OR COMMERCIALLY
VIABLE PRODUCTS.
Our XenoMouse technology is a new approach to the generation of antibody
therapeutic products. We have not commercialized any antibody products based on
XenoMouse technology. We are not aware of any commercialized, fully human
antibody therapeutic products that have been generated from any technologies
similar to ours. Our antibody product candidates are still at a very early stage
of development. We have begun clinical trials with respect to only two fully
human antibody product candidates, ABX-IL8 and ABX-EGF. We cannot be certain
that XenoMouse technology will generate antibodies against all the antigens to
which it is exposed in an efficient and timely manner, if at all. Furthermore,
XenoMouse technology may not result in any meaningful benefits to our current or
potential collaborative partners or be safe and efficacious for patients. If
XenoMouse technology fails to generate antibody product candidates that lead to
the successful development and commercialization of products, our business,
financial condition and results of operations will be materially and adversely
affected.
CLINICAL TRIALS FOR OUR PRODUCT CANDIDATES WILL BE EXPENSIVE AND THEIR OUTCOME
IS UNCERTAIN.
Conducting clinical trials is a lengthy, time-consuming and expensive
process. Before obtaining regulatory approvals for the commercial sale of any
products, we must demonstrate through preclinical testing and clinical trials
that our product candidates are safe and effective for use in humans. We will
incur substantial expense for, and devote a significant amount of time to,
preclinical testing and clinical trials.
Historically, the results from preclinical testing and early clinical trials
have often not been predictive of results obtained in later clinical trials. A
number of new drugs and biologics have shown promising results in clinical
trials, but subsequently failed to establish sufficient safety and efficacy data
to obtain necessary regulatory approvals. Data obtained from preclinical and
clinical activities are susceptible to varying interpretations, which may delay,
limit or prevent regulatory approval. In addition, regulatory delays or
rejections may be encountered as a result of many factors, including changes in
regulatory policy during the period of product development.
As of October 31, 1999, three of our product candidates, ABX-CBL, ABX-IL8
and ABX-EGF, were in clinical trials. Patient follow-up for these clinical
trials has been limited. To date, data obtained from these clinical trials has
been insufficient to demonstrate safety and efficacy under applicable FDA
guidelines. As a result, this data will not support an application for
regulatory approval without further clinical trials. Clinical trials conducted
by us or by third parties on our behalf may not demonstrate sufficient safety
and efficacy to obtain the requisite regulatory approvals for ABX-CBL, ABX-IL8,
ABX-EGF and or any other potential product candidates. Regulatory authorities
may not permit us to undertake any additional clinical trials for our product
candidates.
In addition, our other product candidate is in preclinical development, and
we have not submitted investigational new drug applications nor begun clinical
trials for this product candidate. Our preclinical or clinical development
efforts may not be successfully completed. We may not file further
investigational new drug applications. Our clinical trials may not commence as
planned.
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Completion of clinical trials may take several years or more. The length of
time generally varies substantially according to the type, complexity, novelty
and intended use of the product candidate. Our commencement and rate of
completion of clinical trials may be delayed by many factors, including:
- inability to manufacture sufficient quantities of materials for use in
clinical trials;
- slower than expected rate of patient recruitment;
- inability to adequately follow patients after treatment;
- unforeseen safety issues;
- lack of efficacy during the clinical trials; or
- government or regulatory delays.
We have limited experience in conducting and managing clinical trials. We
rely on third parties, including our collaborative partners, to assist us in
managing and monitoring clinical trials. Our reliance on these third parties may
result in delays in completing, or failing to complete, these trials if they
fail to perform under our agreements with them.
Our product candidates may fail to demonstrate safety and efficacy in
clinical trials. This failure may delay development of other product candidates,
and hinder our ability to conduct related preclinical testing and clinical
trials. As a result of these failures, we may also be unable to obtain
additional financing. Any delays in, or termination of, our clinical trials will
materially and adversely affect our business, financial condition and results of
operations.
THE CLINICAL SUCCESS OF ABX-CBL IS UNCERTAIN.
We recently completed a multi-center confirmatory Phase II trial in graft
versus host disease, or GVHD, with our mouse antibody, ABX-CBL.
As of October 31, 1999, ABX-CBL had been administered to a total of only 162
patients for GVHD and organ transplant rejection indications. ABX-CBL was
administered to a total of 85 of these 162 patients by third parties prior to
Abgenix obtaining an exclusive license to ABX-CBL. We cannot rely on data
obtained from patients studied prior to our obtaining an exclusive license to
ABX-CBL to support the efficacy of ABX-CBL in an application for regulatory
approval.
In our clinical trials, data from 27 patients was used for our preliminary
Phase II report submitted to the FDA. As an extension to the original Phase II
trial protocol, we filed for and received permission from the FDA to enroll
additional patients. Our application to the FDA for approval to advance to a
registration clinical trial contained the original Phase II data plus all
additional data then available from the extension protocol. The results of the
extension protocol may not be favorable or may not extend the findings of the
original Phase II study. In addition, the FDA may view our application as
insufficient and require additional clinical trials before allowing us to
commence a registration clinical trial. Even if we conduct a randomized,
controlled registration study, there are several issues that could adversely
affect the results, including the lack of a standard therapy for GVHD patients
in the control group, unforeseen side effects, variability in the number and
types of patients in the study, and response rates required to achieve
statistical significance in the study. In addition, our clinical trials are
being conducted with patients who have failed conventional treatments and who
are in the most advanced stages of GVHD. During the course of treatment, these
patients can die or suffer adverse medical effects for reasons that may not be
related to ABX-CBL. These adverse effects may affect the interpretation of
clinical trial results. Additional clinical trials will be extensive, expensive
and time-consuming. If ABX-CBL fails to receive regulatory approval, our
business, financial condition and results of operations may be materially and
adversely affected.
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SUCCESSFUL DEVELOPMENT OF OUR PRODUCTS IS UNCERTAIN.
Our development of current and future product candidates is subject to the
risks of failure inherent in the development of new pharmaceutical products and
products based on new technologies. These risks include:
- delays in product development, clinical testing or manufacturing;
- unplanned expenditures in product development, clinical testing or
manufacturing;
- failure in clinical trials or failure to receive regulatory approvals;
- emergence of superior or equivalent products;
- inability to manufacture product candidates on a commercial scale;
- inability to market products due to third-party proprietary rights;
- election by our collaborative partners not to pursue product development;
- failure by our collaborative partners to successfully develop products;
and
- failure to achieve market acceptance.
Because of these risks, our research and development efforts or those of our
collaborative partners may not result in any commercially viable products. To
date, only one of our collaborative partners has exercised its right to obtain a
product license. If a significant portion of these development efforts is not
successfully completed, required regulatory approvals are not obtained, or any
approved products are not commercially successful, our business, financial
condition and results of operations will be materially and adversely affected.
WE ARE AN EARLY STAGE COMPANY.
You must evaluate us in light of the uncertainties and complexities present
in an early stage biopharmaceutical company. Our product candidates are in early
stages of development. We will require significant additional investment in
research and development, preclinical testing and clinical trials, regulatory
and sales and marketing activities to commercialize current and future product
candidates. Our product candidates, if successfully developed, may not generate
sufficient or sustainable revenues to enable us to be profitable.
WE HAVE A HISTORY OF LOSSES.
We have incurred net losses in each of the last four years of operation,
including net losses of approximately $8.3 million in 1995, $7.1 million in
1996, $35.9 million in 1997, and $16.8 million in 1998. We have also incurred
net losses of approximately $10.2 million in the nine months ended
September 30, 1999. As of September 30, 1999, our accumulated deficit was
approximately $79.5 million. Our losses have resulted principally from:
- research and development costs relating to the development of our
XenoMouse technology and antibody product candidates;
- cross-license and settlement costs relating to our patent portfolio; and
- general and administrative costs relating to our operations.
We expect to incur additional losses for the foreseeable future as a result
of increases in our research and development costs, including costs associated
with conducting preclinical testing and clinical trials, and charges related to
purchases of technology or other assets. We intend to invest significantly in
our products prior to entering into collaborative arrangements. This will
increase our
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need for capital and result in substantial losses for several years. We expect
that the amount of operating losses will fluctuate significantly from quarter to
quarter as a result of increases or decreases in our research and development
efforts, the execution or termination of collaborative arrangements, or the
initiation, success or failure of clinical trials.
OUR FUTURE PROFITABILITY IS UNCERTAIN.
Prior to June 1996 our business was owned by Cell Genesys and operated as a
business unit. Since that time, we have funded our research and development
activities primarily from:
- contributions from Cell Genesys;
- private placements of our capital stock;
- the initial public offering of our common stock;
- the follow-on public offering of our common stock;
- revenues generated from our collaborative arrangements;
- equipment leaseline financings; and
- loan facilities.
We expect that substantially all of our revenues for the foreseeable future
will result from payments under collaborative arrangements. To date, these
payments have been in the form of upfront payments, reimbursement for research
and development expenses, license fees and milestone payments. Payments under
our existing and any future collaborative arrangements will be subject to
significant fluctuation in both timing and amount. Our revenues may not be
indicative of our future performance or of our ability to continue to achieve
such milestones. Our revenues and results of operations for any period may also
not be comparable to the revenues or results of operations for any other period.
We may not be able to:
- enter into further collaborative arrangements;
- successfully complete preclinical or clinical trials;
- obtain required regulatory approvals;
- successfully develop, manufacture and market product candidates; or
- generate additional revenues or profitability.
If we fail to achieve any of the above goals, our business, financial
condition and results of operations will be materially and adversely affected.
WE WILL NEED TO FIND COLLABORATIVE PARTNERS TO DEVELOP MANY OF OUR PRODUCT
CANDIDATES.
Our strategy for the development and commercialization of antibody
therapeutic products depends, in large part, upon the formation of collaborative
arrangements with collaborative partners. Potential collaborative partners
include pharmaceutical and biotechnology companies, academic institutions and
other entities. We must enter into these collaborations to successfully develop
and commercialize product candidates. These collaborations are necessary in
order for us to:
- access proprietary antigens for which we can generate fully human antibody
products;
- fund our research and development activities;
- fund preclinical testing, clinical trials and manufacturing;
- seek and obtain regulatory approvals; and
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- successfully commercialize existing and future product candidates.
Only a limited number of fully human antibody product candidates have been
generated pursuant to our collaborations. None of these collaborative product
candidates has entered clinical testing and may not result in commercially
successful products. Current or future collaborative arrangements may not be
successful. If we fail to maintain our existing collaborative arrangements or to
enter into additional collaborative arrangements, our business, financial
condition and results of operations will be materially and adversely affected.
Our dependence on collaborative arrangements with third parties subjects us
to a number of risks. These collaborative arrangements may not be on terms
favorable to us. Agreements with collaborative partners typically allow partners
significant discretion in electing whether to pursue any of the planned
activities. We cannot control the amount and timing of resources our
collaborative partners may devote to the product candidates. Our partners may
not perform their obligations as expected. Business combinations or significant
changes in a collaborative partner's business strategy may adversely affect a
partner's willingness or ability to complete its obligations under the
arrangement. Even if we fulfill our obligations under a collaborative agreement,
our partner can terminate the agreement at any time following proper written
notice. If any collaborative partner were to terminate or breach our agreement
with it, or otherwise fail to complete its obligations in a timely manner, our
business, financial condition and results of operations may be materially and
adversely affected. If we are not able to establish further collaborative
arrangements or any or all of our existing collaborative arrangements are
terminated, we may be required to seek new collaborative arrangements or to
undertake product development and commercialization at our own expense. Such an
undertaking may:
- limit the number of product candidates that we will be able to develop and
commercialize;
- reduce the likelihood of successful product introduction;
- significantly increase our capital requirements; and
- place additional strain on management's time.
Existing or future collaborative partners may pursue alternative
technologies, including those of our competitors. Disputes may arise with
respect to the ownership of rights to any technology or products developed with
any current or future collaborative partner. Lengthy negotiations with potential
new collaborative partners or disagreements between us and our collaborative
partners may lead to delays or termination in the research, development or
commercialization of product candidates or result in time consuming and
expensive litigation or arbitration. If our collaborative partners pursue
alternative technologies or fail to develop or commercialize successfully any
product candidate to which they have obtained rights from us, our business,
financial condition and results of operations may be materially and adversely
affected.
OUR JOINT VENTURE WITH JT AMERICA INC. MAY LIMIT OUR ABILITY TO DEVELOP PRODUCT
CANDIDATES.
In 1991, Cell Genesys and JT America Inc. formed Xenotech, LP, an
equally-owned joint venture, to develop genetically modified strains of mice
which can produce fully human monoclonal antibodies, called XenoMouse
technology, and to commercialize products generated from XenoMouse technology.
Upon our organization, Cell Genesys assigned its rights in Xenotech to us.
We must obtain licenses from Xenotech to commercialize antibody products
generated by XenoMouse technology. We have the right to license the use of
XenoMouse technology from Xenotech to develop a certain number of antigen
targets each year in exchange for royalty payments. If we have used our yearly
allotment of licenses to develop antigen targets and desire to acquire a license
to develop additional antigen targets, we may have to negotiate with JT
America Inc. or others to acquire such rights. Disputes with JT America Inc., or
its parent company Japan Tobacco, Inc., may result in
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the loss of the right to commercialize a product candidate by either party.
Limits on our ability to acquire additional licenses to develop antigen targets,
or disputes with JT America Inc. or Japan Tobacco, will limit our ability to
establish collaborations and fully realize the commercial potential of XenoMouse
technology.
WE FACE INTENSE COMPETITION AND RAPID TECHNOLOGICAL CHANGE.
The biotechnology and pharmaceutical industries are highly competitive and
subject to significant and rapid technological change. We are aware of several
pharmaceutical and biotechnology companies that are actively engaged in research
and development in areas related to antibody therapy. These companies have
commenced clinical trials of antibody products or have successfully
commercialized antibody products. Many of these companies are addressing the
same diseases and disease indications as Abgenix or our collaborative partners.
Also, we compete with companies that offer antibody generation services to
companies that have antigens. These competitors have specific expertise or
technology related to antibody development. These companies include GenPharm
International, Inc., a wholly-owned subsidiary of Medarex, Inc., Cambridge
Antibody Technology Group plc, Protein Design Labs, Inc. and MorphoSys AG.
Some of our competitors have received regulatory approval or are developing
or testing product candidates that may compete directly with our product
candidates. For example, SangStat Medical Corp. markets an organ transplant
rejection product that may compete with ABX-CBL, which is in clinical trials. In
addition, MedImmune, Inc. has a potential antibody product candidate in clinical
trials for graft versus host disease that may compete with ABX-CBL. We are also
aware that several companies, including Genentech, Inc., have potential product
candidates that may compete with ABX-IL8, which is in clinical trials.
Furthermore, we are aware that ImClone Systems, Inc., Medarex and OSI
Pharmaceuticals, Inc. have potential antibody and small molecule product
candidates in clinical development that may compete with ABX-EGF, which is also
in clinical trials. We may also compete with Japan Tobacco in supplying
XenoMouse technology or antibody product candidates to potential collaborative
partners.
Many of these companies and institutions, either alone or together with
their collaborative partners, have substantially greater financial resources and
larger research and development staffs than we do. In addition, many of these
competitors, either alone or together with their collaborative partners, have
significantly greater experience than we do in:
- developing products;
- undertaking preclinical testing and human clinical trials;
- obtaining FDA and other regulatory approvals of products; and
- manufacturing and marketing products.
Accordingly, our competitors may succeed in obtaining patent protection,
receiving FDA approval or commercializing products before us. If we commence
commercial product sales, we will be competing against companies with greater
marketing and manufacturing capabilities, areas in which we have limited or no
experience.
We also face, and will continue to face, competition from academic
institutions, government agencies and research institutions. There are numerous
competitors working on products to treat each of the diseases for which we are
seeking to develop therapeutic products. In addition, any product candidate that
we successfully develop may compete with existing therapies that have long
histories of safe and effective use. Competition may also arise from:
- other drug development technologies and methods of preventing or reducing
the incidence of disease;
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- new small molecules; or
- other classes of therapeutic agents.
Developments by competitors may render our product candidates or
technologies obsolete or noncompetitive. We face and will continue to face
intense competition from other companies for collaborative arrangements with
pharmaceutical and biotechnology companies for establishing relationships with
academic and research institutions, and for licenses to proprietary technology.
These competitors, either alone or with their collaborative partners, may
succeed in developing technologies or products that are more effective than
ours.
MARKET ACCEPTANCE OF OUR PRODUCTS IS UNCERTAIN.
Our product candidates may not gain market acceptance among physicians,
patients, healthcare payors and the medical community. We may not achieve market
acceptance even if clinical trials demonstrate safety and efficacy, and the
necessary regulatory and reimbursement approvals are obtained. The degree of
market acceptance of any product candidates that we develop will depend on a
number of factors, including:
- establishment and demonstration of clinical efficacy and safety;
- cost-effectiveness of our product candidates;
- their potential advantage over alternative treatment methods;
- reimbursement policies of government and third-party payors; and
- marketing and distribution support for our product candidates.
Physicians will not recommend therapies using our products until such time
as clinical data or other factors demonstrate the safety and efficacy of such
procedures as compared to conventional drug and other treatments. Even if the
clinical safety and efficacy of therapies using our antibody products is
established, physicians may elect not to recommend the therapies for any number
of other reasons, including whether the mode of administration of our antibody
products is effective for certain indications. For example, antibody products
are typically administered by infusion or injection, which requires substantial
cost and inconvenience to patients. Our product candidates, if successfully
developed, will compete with a number of drugs and therapies manufactured and
marketed by major pharmaceutical and other biotechnology companies. Our products
may also compete with new products currently under development by others.
Physicians, patients, third-party payors and the medical community may not
accept and utilize any product candidates that we or our collaborative partners
develop. If our products do not achieve significant market acceptance, our
business, financial condition and results of operations will be materially and
adversely affected.
OUR PATENT POSITION IS UNCERTAIN AND OUR SUCCESS DEPENDS ON OUR PROPRIETARY
RIGHTS.
Our success depends in part on our ability to:
- obtain patents;
- protect trade secrets;
- operate without infringing upon the proprietary rights of others; and
- prevent others from infringing on our proprietary rights.
We will be able to protect our proprietary rights from unauthorized use by
third parties only to the extent that our proprietary rights are covered by
valid and enforceable patents or are effectively maintained as trade secrets. We
have one issued patent in the United States, one issued patent in Europe
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and several pending patent applications in the United States relating to
XenoMouse technology. We try to protect our proprietary position by filing
United States and foreign patent applications related to our proprietary
technology, inventions and improvements that are important to the development of
our business. The patent position of biopharmaceutical companies involves
complex legal and factual questions and, therefore, enforceability cannot be
predicted with certainty. Patents, if issued, may be challenged, invalidated or
circumvented. Thus, any patents that we own or license from third parties may
not provide any protection against competitors. Our pending patent applications,
those we may file in the future, or those we may license from third parties, may
not result in patents being issued. Also, patent rights may not provide us with
proprietary protection or competitive advantages against competitors with
similar technology. Furthermore, others may independently develop similar
technologies or duplicate any technology that we have developed. The laws of
certain foreign countries do not protect our intellectual property rights to the
same extent as do the laws of the United States.
In addition to patents, we rely on trade secrets and proprietary know-how.
We seek protection, in part, through confidentiality and proprietary information
agreements. These agreements may not provide meaningful protection or adequate
remedies for our technology in the event of unauthorized use or disclosure of
confidential and proprietary information. The parties may breach such
agreements. Furthermore, our trade secrets may otherwise become known to, or be
independently developed by, our competitors.
WE MAY FACE CHALLENGES FROM THIRD PARTIES REGARDING THE VALIDITY OF OUR PATENTS
AND PROPRIETARY RIGHTS.
Research has been conducted for many years in the antibody field. This has
resulted in a substantial number of issued patents and an even larger number of
patent applications. Patent applications in the United States are, in most
cases, maintained in secrecy until patents issue. The publication of discoveries
in the scientific or patent literature frequently occurs substantially later
than the date on which the underlying discoveries were made. Our commercial
success depends significantly on our ability to operate without infringing the
patents and other proprietary rights of third parties. Our technologies may
infringe the patents or violate other proprietary rights of third parties. In
the event of infringement or violation, we and our collaborative partners may be
prevented from pursuing product development or commercialization. Such a result
will materially and adversely affect our business, financial condition and
results of operations.
In March 1997, we entered into a cross-license and settlement agreement with
GenPharm to avoid protracted litigation. Under the cross-license, we licensed on
a non-exclusive basis certain patents, patent applications, third-party
licenses, and inventions pertaining to the development and use of certain
transgenic rodents, including mice, that produce fully human antibodies that are
integral to our products and business. Our business, financial condition and
results of operations will be materially and adversely affected if any of the
parties breaches the cross-license agreement. We have one issued European patent
relating to XenoMouse technology that is currently undergoing opposition
proceedings within the European Patent Office and the outcome of this opposition
is uncertain.
We are aware of at least two companies that each have a patent claiming the
use of antibodies to the EGF receptor in combination with chemotherapy. We
believe that our antibody product candidate targeting the EGF receptor, ABX-EGF,
may be effective without use in combination with chemotherapy and is not covered
by such claims. If clinical trials demonstrate that combination therapy is
preferable or necessary in the treatment of patients, we may desire to or be
required to obtain a license under these claims from a third party in order to
commercialize ABX-EGF. The license may not be available on commercially
reasonable terms, if at all.
The biotechnology and pharmaceutical industries have been characterized by
extensive litigation regarding patents and other intellectual property rights.
The defense and prosecution of intellectual property suits, United States Patent
and Trademark Office interference proceedings and related legal
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and administrative proceedings in the United States and internationally involve
complex legal and factual questions. As a result, such proceedings are costly
and time-consuming to pursue and their outcome is uncertain. Litigation may be
necessary to:
- enforce our issued and licensed patents;
- protect trade secrets or know-how that we own or license; or
- determine the enforceability, scope and validity of the proprietary rights
of others.
If we become involved in any litigation, interference or other
administrative proceedings, we will incur substantial expense and the efforts of
our technical and management personnel will be significantly diverted. An
adverse determination may subject us to significant liabilities or require us to
seek licenses that may not be available from third parties. We may be restricted
or prevented from manufacturing and selling our products, if any, in the event
of an adverse determination in a judicial or administrative proceeding or if we
fail to obtain necessary licenses. Costs associated with these arrangements may
be substantial and may include ongoing royalties. Furthermore, we may not be
able to obtain the necessary licenses on satisfactory terms, if at all. These
outcomes will materially and adversely affect our business, financial condition
and results of operations.
WE ARE SUBJECT TO EXTENSIVE GOVERNMENT REGULATIONS AND WE MAY NOT BE ABLE TO
OBTAIN REGULATORY APPROVALS.
Our product candidates under development are subject to extensive and
rigorous domestic government regulation. The FDA regulates, among other things,
the development, testing, manufacture, safety, efficacy, record-keeping,
labeling, storage, approval, advertising, promotion, sale and distribution of
biopharmaceutical products. If our products are marketed abroad, they also are
subject to extensive regulation by foreign governments. None of our product
candidates has been approved for sale in the United States or any foreign
market. The regulatory review and approval process, which includes preclinical
studies and clinical trials of each product candidate, is lengthy, expensive and
uncertain. Securing FDA approval requires the submission of extensive
preclinical and clinical data and supporting information to the FDA for each
indication to establish the product candidates' safety and efficacy. For
example, we have not received FDA approval to commence registration clinical
trials for ABX-CBL. The approval process takes many years, requires the
expenditure of substantial resources, involves post-marketing surveillance, and
may involve ongoing requirements for post-marketing studies. Delays in obtaining
regulatory approvals may:
- adversely affect the successful commercialization of any drugs that we or
our collaborative partners develop;
- impose costly procedures on us or our collaborative partners;
- diminish any competitive advantages that we or our collaborative partners
may attain; and
- adversely affect our receipt of revenues or royalties.
Certain material changes to an approved product such as manufacturing
changes or additional labeling claims are subject to further FDA review and
approval. Any required approvals, once obtained, may be withdrawn. Compliance
with other regulatory requirements may not be maintained. Further, if we fail to
comply with applicable FDA and other regulatory requirements at any stage during
the regulatory process, we or our contract manufacturers may be subject to
sanctions, including:
- delays;
- warning letters;
- fines;
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- product recalls or seizures;
- injunctions;
- refusal of the FDA to review pending market approval applications or
supplements to approval applications;
- total or partial suspension of production;
- civil penalties;
- withdrawals of previously approved marketing applications; and
- criminal prosecutions.
We expect to rely on our collaborative partners to file investigational new
drug applications and generally direct the regulatory approval process for many
of our products. Our collaborative partners may not be able to conduct clinical
testing or obtain necessary approvals from the FDA or other regulatory
authorities for any product candidates. If we fail to obtain required
governmental approvals, our collaborative partners will experience delays in or
be precluded from marketing products developed through our research. In
addition, the commercial use of our products will be limited. Delays and
limitations may materially and adversely affect our business, financial
condition and results of operations.
We and our contract manufacturers also are required to comply with the
applicable FDA current good manufacturing practice regulations. Good
manufacturing practice regulations include requirements relating to quality
control and quality assurance as well as the corresponding maintenance of
records and documentation. Manufacturing facilities are subject to inspection by
the FDA. These facilities must be approved before we can use them in commercial
manufacturing of our products. We or our contract manufacturers may not be able
to comply with the applicable good manufacturing practice requirements and other
FDA regulatory requirements. If we or our contract manufacturers fails to
comply, our business, financial condition and results of operations will be
materially and adversely affected.
WE RELY ON A SOLE SOURCE THIRD-PARTY MANUFACTURER AND DO NOT HAVE COMMERCIAL
SCALE MANUFACTURING EXPERIENCE.
We lack the resources and capability to manufacture our products on a
commercial scale. We currently manufacture limited quantities of antibody
products for preclinical testing. While we maintain a limited inventory of
antibody products, we depend on a sole source contract manufacturer to produce
ABX-CBL, ABX-IL8 and ABX-EGF under good manufacturing practice regulations for
use in our clinical trials. Our contract manufacturer has a limited number of
facilities in which our product candidates can be produced. Our contract
manufacturer has limited experience in manufacturing ABX-CBL, ABX-IL8 and
ABX-EGF in quantities sufficient for conducting clinical trials or for
commercialization.
There are, on a worldwide basis, a limited number of contract facilities in
which our product candidates can be produced under good manufacturing practice
regulations for use in pharmaceutical drugs. It can also take a substantial
period of time for a contract facility to begin producing antibodies under good
manufacturing practice regulations. Accordingly, we depend on our contract
manufacturer to produce our product candidates under good manufacturing practice
regulations, which meet acceptable standards for our clinical trials.
Contract manufacturers often encounter difficulties in scaling up
production, including problems involving production yields, quality control and
quality assurance and shortage of qualified personnel. Our contract manufacturer
may not perform as agreed or may not remain in the contract manufacturing
business for the time required by us to successfully produce and market our
product candidates. If our contract manufacturer fails to deliver the required
quantities of our product candidates for clinical
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use on a timely basis and at commercially reasonable prices, and we fail to find
a replacement manufacturer or develop our own manufacturing capabilities, our
business, financial condition and results of operations will be materially and
adversely affected. We may decide to manufacture our product candidates in
quantities sufficient for conducting clinical trials or for commercialization.
If we make this decision, we will face the same risks and encounter the same
difficulties as contract manufacturers.
In addition, Abgenix and our third-party manufacturer are required to
register manufacturing facilities with the FDA and foreign regulatory
authorities. The facilities will then be subject to inspections confirming
compliance with good manufacturing practice requirements established by the FDA
or corresponding foreign regulations. If Abgenix or our third-party manufacturer
fails to maintain compliance with the good manufacturing practice requirements,
our business, financial condition and results of operations will be materially
and adversely affected.
WE DO NOT HAVE MARKETING AND SALES EXPERIENCE.
We do not have a marketing, sales or distribution capability. For certain
products, we may establish an internal marketing and sales force. We intend to
enter into arrangements with third parties to market and sell most of our
products. We may not be able to enter into marketing and sales arrangements with
others on acceptable terms, if at all. To the extent that we enter into
marketing and sales arrangements with other companies, our revenues, if any,
will depend on the efforts of others. These efforts may not be successful. If we
are unable to enter into third-party arrangements, then we must develop a
marketing and sales force, which may need to be substantial in size, in order to
achieve commercial success for any product candidate approved by the FDA. We may
not successfully develop marketing and sales experience or have sufficient
resources to do so. If we do develop such capabilities, we will compete with
other companies that have experienced and well-funded marketing and sales
operations. If we fail to establish successful marketing and sales capabilities
or fail to enter into successful marketing arrangements with third parties, our
business, financial condition and results of operations will be materially and
adversely affected.
WE DEPEND ON KEY PERSONNEL AND MUST CONTINUE TO ATTRACT AND RETAIN KEY EMPLOYEES
AND CONSULTANTS.
We are highly dependent on the principal members of our scientific and
management staff. If we lose any of these persons, our business, financial
condition and results of operations may be materially and adversely affected.
For us to pursue product development, marketing and commercialization plans, we
will need to hire additional qualified scientific personnel to perform research
and development. We will also need to hire personnel with expertise in clinical
testing, government regulation, manufacturing, marketing and finance. Attracting
and retaining qualified personnel will be critical to our success. We may not be
able to attract and retain personnel on acceptable terms given the competition
for such personnel among biotechnology, pharmaceutical and healthcare companies,
universities and non-profit research institutions.
In addition, we rely on members of our Scientific Advisory Board and other
consultants to assist us in formulating our research and development strategy.
All of our consultants and the members of our Scientific Advisory Board are
employed by other entities. They may have commitments to, or advisory or
consulting agreements with, other entities that may limit their availability to
us. If we lose the services of these personnel, the achievement of our
development objectives may be impeded. Such impediments may materially and
adversely affect our business, financial condition and results of operations.
DIRECTORS, EXECUTIVE OFFICERS, PRINCIPAL STOCKHOLDERS AND AFFILIATED ENTITIES
OWN A SIGNIFICANT PERCENTAGE OF OUR CAPITAL STOCK.
As of September 30, 1999, our directors, executive officers, principal
stockholders and affiliated entities beneficially own, in the aggregate,
approximately 28.9% of our outstanding common stock.
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These stockholders, if acting together, will be able to significantly influence
all matters requiring approval by our stockholders. These matters include the
election of directors and the approval of mergers or other business combination
transactions. We may be adversely impacted by the control that such stockholders
will have with respect to matters affecting us.
WE MAY REQUIRE ADDITIONAL FINANCING.
We will continue to expend substantial resources for the expansion of
research and development, including costs associated with conducting preclinical
testing and clinical trials. We will be required to expend substantial funds in
the course of completing required additional development, preclinical testing
and clinical trials of and regulatory approval for product candidates. Our
future liquidity and capital requirements will depend on many factors,
including:
- the scope and results of preclinical testing and clinical trials;
- the retention of existing and establishment of further collaborative
arrangements, if any;
- continued scientific progress in our research and development programs;
- the size and complexity of these programs;
- the time and expense involved in obtaining regulatory approvals, if any;
- competing technological and market developments;
- the time and expense of filing and prosecuting patent applications and
enforcing patent claims;
- the cost of establishing manufacturing capabilities, conducting
commercialization activities and arrangements;
- investment in, or acquisition of, other companies;
- product in-licensing; and
- other factors not within our control.
We believe that our cash balances, cash equivalents, short-term
investments and cash generated from our collaborative arrangements will be
sufficient to meet our operating and capital requirements for at least the
next two years. However, we may need additional financing within this
timeframe. We may need to raise additional funds through public or private
financing, collaborative arrangements or other arrangements. Additional
funding may not be available to us on favorable terms, if at all.
Furthermore, any additional equity financing may be dilutive to stockholders,
and debt financing, if available, may involve restrictive covenants.
Collaborative arrangements may require us to relinquish our rights to certain
of our technologies, product candidates or marketing territories. If we fail
to raise additional funds when needed, our business, financial condition and
results of operations will be materially and adversely affected.
CELL GENESYS EXERCISES SIGNIFICANT INFLUENCE OVER US.
As of September 30, 1999, Cell Genesys beneficially owned approximately
22.5% of our outstanding common stock. As a result, Cell Genesys will have
significant influence over all matters requiring the approval of our
stockholders. These matters include the election of our board of directors and
changes in control of Abgenix. We have entered into a governance agreement with
Cell Genesys which provides that so long as Cell Genesys or a group to which it
belongs owns a specific percentage of our outstanding voting stock, Cell Genesys
or the group shall have the right to nominate a fixed number of directors to
serve on our board. So long as Cell Genesys or the group owns less than 25% but
greater than 15% of our common stock, Cell Genesys has the right to nominate one
out of seven directors to serve on our board. On October 18, 1999, Genzyme
General announced that it had entered into a definitive agreement with Cell
Genesys under which Genzyme will acquire Cell Genesys. Following the
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<PAGE>
completion of that acquisition, Genzyme will acquire Cell Genesys rights,
including the rights under the governance agreement, the right to direct us to
make antibodies to two antigens per year and other rights under our current gene
therapy rights agreement with Cell Genesys.
The governance agreement also provides that Cell Genesys and each of our
officers and directors who owns voting stock shall agree to vote for the persons
nominated as set forth above. We may be adversely impacted by the significant
influence that Cell Genesys will have with respect to matters affecting us.
WE FACE UNCERTAINTY OVER REIMBURSEMENT AND HEALTHCARE REFORM.
In both domestic and foreign markets, sales of our product candidates will
depend in part upon the availability of reimbursement from third-party payors.
Such third-party payors include government health administration authorities,
managed care providers, private health insurers and other organizations. These
third-party payors are increasingly challenging the price and examining the cost
effectiveness of medical products and services. In addition, significant
uncertainty exists as to the reimbursement status of newly approved healthcare
products. We may need to conduct post-marketing studies in order to demonstrate
the cost-effectiveness of our products. Such studies may require us to provide a
significant amount of resources. Our product candidates may not be considered
cost-effective. Adequate third-party reimbursement may not be available to
enable us to maintain price levels sufficient to realize an appropriate return
on our investment in product development. Domestic and foreign governments
continue to propose and pass legislation designed to reduce the cost of
healthcare. Accordingly, legislation and regulations affecting the pricing of
pharmaceuticals may change before our proposed products are approved for
marketing. Adoption of such legislation could further limit reimbursement for
pharmaceuticals. If the government and third-party payors fail to provide
adequate coverage and reimbursement rates for our product candidates, the market
acceptance of our products may be adversely affected. If our products do not
receive market acceptance, our business, financial condition and results of
operations will be materially and adversely affected.
WE FACE PRODUCT LIABILITY RISKS AND MAY NOT BE ABLE TO OBTAIN ADEQUATE
INSURANCE.
The use of any of our product candidates in clinical trials, and the sale of
any approved products, may expose us to liability claims resulting from such use
or sale of our products. These claims might be made directly by consumers,
healthcare providers or by pharmaceutical companies or others selling such
products. We may experience financial losses in the future due to product
liability claims. We have obtained limited product liability insurance coverage
for our clinical trials. Our insurance coverage limits are $5.0 million per
occurrence and $5.0 million in the aggregate. We intend to expand our insurance
coverage to include the sale of commercial products if marketing approval is
obtained for product candidates in development. We may not be able to maintain
insurance coverage at a reasonable cost or in sufficient amounts to protect us
against losses. If a successful product liability claim or series of claims is
brought against us for uninsured liabilities or in excess of insured
liabilities, our business, financial condition and results of operations may be
materially and adversely affected.
OUR OPERATIONS INVOLVE HAZARDOUS MATERIALS.
Our research and manufacturing activities involve the controlled use of
hazardous materials. We cannot eliminate the risk of accidental contamination or
injury from these materials. In the event of an accident or environmental
discharge, we may be held liable for any resulting damages, which may exceed our
financial resources and may materially and adversely affect our business,
financial condition and results of operations.
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OUR STOCK PRICE IS HIGHLY VOLATILE.
The market price of our common stock has been highly volatile and is likely
to continue to be volatile. This may impact your decision to buy, sell or
convert your preferred stock or debentures issued upon exchange of preferred
stock to common stock. The market price and trading volume of shares of our
common stock are volatile, and we expect them to continue to be volatile for the
foreseeable future. For example, during the previous 52 weeks ending
December 3, 1999, our common stock traded at a high of $78.50 per share and a
low of $11.56 per share. Factors affecting our stock price include:
- fluctuations in our operating results;
- announcements of technological innovations or new commercial therapeutic
products by us or our competitors;
- published reports by securities analysts;
- progress with clinical trials;
- government regulation;
- changes in reimbursement policies;
- developments in patent or other proprietary rights;
- developments in our relationship with collaborative partners;
- public concern as to the safety and efficacy of our products;
- sales of a significant number of shares by our partners; and
- general market conditions.
WE HAVE IMPLEMENTED A STOCKHOLDER RIGHTS PLAN AND WE ARE SUBJECT TO
ANTI-TAKEOVER PROVISIONS.
In June 1999, our board of directors adopted a stockholder rights plan. The
stockholder rights plan provides for a dividend distribution of one preferred
shares purchase right on each outstanding share of our common stock. Each right
entitles stockholders to buy 1/1000th of a share of our Series A participating
preferred stock at an exercise price of $120.00. Each right will become
exercisable following the tenth day after a person or group (other than Cell
Genesys or its affiliates, successors or assigns) announces acquisition of 15%
or more of our common stock, or announces commencement of a tender offer, the
consummation of which would result in ownership by the person or group of 15% or
more of our common stock. In the case of Cell Genesys, or its affiliates,
successors or assigns, which beneficially owned approximately 22.5% of our
outstanding common stock as of September 30, 1999, each right will become
exercisable following the tenth day after it announces the acquisition of 25% or
more of our common stock, or announces commencement of a tender offer, the
consummation of which would result in ownership by Cell Genesys, or its
affiliates, successors or assigns, of 25% or more of our common stock. We will
be entitled to redeem the rights at $0.01 per right at any time on or before the
tenth day following acquisition by a person or group of 15% or more (or in the
case of Cell Genesys, or its affiliates, successors or assigns, 25% or more) of
our common stock.
The stockholder rights plan and certain provisions of our amended and
restated certificate of incorporation and amended and restated bylaws may have
the effect of making it more difficult for a third party to acquire, or of
discouraging a third party from attempting to acquire control of Abgenix. This
could limit the price that certain investors might be willing to pay in the
future for our shares of common stock. Certain provisions of our amended and
restated certificate of incorporation and amended and restated bylaws allow us
to:
- issue preferred stock without any vote or further action by the
stockholders;
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- eliminate the right of stockholders to act by written consent without a
meeting;
- specify procedures for director nominations by stockholders and submission
of other proposals for consideration at stockholder meetings; and
- eliminate cumulative voting in the election of directors.
We are subject to certain provisions of Delaware law which could also delay
or make more difficult a merger, tender offer or proxy contest involving
Abgenix. In particular, Section 203 of the Delaware General Corporation Law
prohibits a Delaware corporation from engaging in any business combination with
any interested stockholder for a period of three years unless certain conditions
are met. The stockholder rights plan, the possible issuance of preferred stock,
the procedures required for director nominations and stockholder proposals and
Delaware law could have the effect of delaying, deferring or preventing a change
in control of Abgenix, including without limitation, discouraging a proxy
contest or making more difficult the acquisition of a substantial block of our
common stock. The provisions could also limit the price that investors might be
willing to pay in the future for shares of our common stock.
WE DO NOT INTEND TO PAY CASH DIVIDENDS ON OUR COMMON STOCK.
We intend to retain any future earnings to finance the growth and
development of our business and we do not plan to pay cash dividends on our
common stock in the foreseeable future.
WE FACE UNCERTAINTY WITH YEAR 2000 COMPLIANCE.
The Year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any of our computer
programs or hardware that have date-sensitive software or embedded chips may
recognize a date using "00" as the year 1900 rather than the year 2000. This may
result in a system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to receive supplies from
our vendors, or operate our accounting and other internal systems. If our
software vendors are unable to address the Year 2000 compliance of their
products, or should our suppliers' operations be disrupted by the Year 2000
issue, then our ability to serve collaborative partners and develop products may
be materially and adversely affected.
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<PAGE>
USE OF PROCEEDS
We will not receive any proceeds from the sales of common stock by the
selling stockholders pursuant to this prospectus.
SELLING STOCKHOLDERS
The following table sets forth, to our knowledge, certain
information about the selling stockholders. The table lists applicable
percentage ownership of the selling stockholders based on 16,890,484 shares
of common stock outstanding as of November 24, 1999, which includes the
1,778,000 shares of common stock sold to the selling stockholders on
November 19, 1999.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
---------------------------------------------------------------------
NUMBER BEFORE PERCENT BEFORE NUMBER AFTER PERCENT AFTER
BENEFICIAL OWNER OFFERING OFFERING OFFERING OFFERING
- ---------------- ------------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Allfonds BKG................................ 63,000 * 0 0%
Crosslink Crossover Fund III, L.P. (1)...... 547,698 3.2% 497,698 2.9%
DVG Deutsche
Vermogensbildungsgesellschaft mbH............ 405,000 2.4% 0 0%
DWS Investment GmbH......................... 797,500 4.7% 237,500 1.4%
Franklin California Growth Fund............. 120,000 * 0 0%
Franklin Small Cap Growth Fund.............. 200,000 * 0 0%
Franklin Biotechnology Discovery Fund....... 91,000 1.5% 61,000 *
Franklin Global Health Care Fund............ 25,000 * 0 0%
Franklin Aggressive Growth Fund............. 20,000 * 0 0%
Mara Gotthelf............................... 85,000 * 0 0%
Rolf Hanggi................................. 70,000 * 0 0%
B Metzler Seel Sohn & Co.................... 150,000 * 0 0%
</TABLE>
* Less than 1% of the outstanding shares of common stock.
(1) Includes 121,018 shares held by Crossover Fund II, L.P., 20,000 shares held
by Delta Growth Fund, 167,039 shares held by Omega Ventures II, L.P.,
43,532 shares held by Omega Ventures II Cayman, L.P., and 3,000 shares held
by Crosslink Partners, all of which are affiliates of Crosslink Crossover
Fund III, L.P.
PLAN OF DISTRIBUTION
In November 1999, we entered into a common stock purchase agreement
with the selling stockholders pursuant to which we sold 1,778,000 shares of our
common stock at a purchase price of $42.00 per share. Pursuant to that sale, we
agreed to register the shares under the Securities Act for resale to the public.
Under a registration rights agreement between Abgenix and the selling
stockholders, we must use reasonable efforts to cause this registration
statement to be declared effective by the Securities and Exchange Commission as
soon as practicable and to keep this registration statement, or a replacement,
continuously effective under the Securities Act until the earlier of (1)
November 19, 2001, subject to extension in some circumstances, or (2) such time
as the selling stockholders have sold all shares offered by this prospectus or
a replacement prospectus.
The sale of all or a portion of the shares of common stock offered
hereby by the selling stockholders may be effected from time to time at
prevailing market prices at the time of such sales, at prices related to such
prevailing prices, at fixed prices that may be changed or at negotiated prices.
The selling stockholders may effect such transactions by selling directly to
purchasers in negotiated transactions, to dealers acting as principals or
through one or more brokers, or any combination of these methods of sale. In
addition, shares may be transferred in connection with the settlement of call
options, short sales or similar transactions that may be effected by the selling
stockholders. Dealers or brokers may receive compensation in the form of
discounts, concessions or commissions from the selling stockholders. The selling
stockholders and any brokers or dealers that participate in the distribution may
under certain circumstances be deemed to be "underwriters" within the meaning of
the Securities Act, and any commissions received by such brokers or dealers and
any profits realized on the resale of shares by them may be deemed to be
underwriting discounts and commissions under the Securities Act. Abgenix and the
selling stockholders may agree to indemnify such brokers or dealers against
certain liabilities, including liabilities under the Securities Act.
To the extent required under the Securities Act or the rules of the
Securities and Exchange Commission, a supplemental prospectus will be filed,
disclosing (1) the name of any such brokers or dealers, (2) the number of shares
involved, (3) the price at which such shares are to be sold, (4) the commissions
paid or discounts or concessions allowed to such brokers or dealers, where
applicable, (5) that such brokers or dealers did not conduct any investigation
to verify the information set out in this prospectus, as supplemented, and (6)
other facts material to the transaction.
There is no assurance that the selling stockholders will sell any or
all of the shares of common stock offered hereby.
We have agreed to pay the expenses incurred in connection with the
registration of the shares of common stock offered hereby. The selling
stockholders will be responsible for all selling commissions, transfer taxes and
related charges in connection with the offer and sale of such shares.
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LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for
Abgenix by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo
Alto, California.
EXPERTS
The financial statements of Abgenix, Inc. appearing in Abgenix, Inc.'s
Annual Report (Form 10-K) for the year ended December 31, 1998, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon included therein and incorporated herein by reference. Such financial
statements are incorporated herein by reference in reliance upon such report
given on the authority of such firm as experts in accounting and auditing.
The financial statements of Xenotech, L.P. appearing in Abgenix, Inc.'s
Annual Report (Form 10-K) for the year ended December 31, 1998, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon included therein and incorporated herein by reference in reliance upon
such report given on the authority of such firm as experts in accounting and
auditing.
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