As filed with the Securities and Exchange Commission on June 8, 2000.
Registration No. 333-_______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
-------------------------------------
TANOX, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 76-0196733
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10301 STELLA LINK, SUITE 110
HOUSTON, TEXAS 77025-5497
(Address of principal executive offices, including Zip Code)
-----------------------------------------
1987 STOCK OPTION PLAN
1992 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
1997 STOCK OPTION PLAN
2000 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
ADVISORY AGREEMENTS
(Full title of the Plan)
-----------------------------------------
NANCY T. CHANG, PH.D.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
TANOX, INC.
10301 STELLA LINK, SUITE 110
HOUSTON, TEXAS 77025-5497
(713) 664-2288
(Name, address, including zip code, and telephone number,
including area code, of registrant's agent for service)
------------------------------------------
COPIES TO:
WILBURN O. MCDONALD, JR., ESQ.
CHAMBERLAIN, HRDLICKA, WHITE, WILLIAMS & MARTIN
1200 SMITH STREET, SUITE 1400
HOUSTON, TEXAS 77002-4310
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
TITLE OF EACH CLASS OF PROPOSED MAXIMUM PROPOSED
SECURITIES AMOUNT TO BE OFFERING PRICE MAXIMUM AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED(1) PER UNIT(2) OFFERING PRICE REGISTRATION FEE
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMON STOCK,
PAR VALUE $.01
PER SHARE 145,100 $ .275 $ 39,902.50 $10.53
-----------------------------------------------------------------------------------------------
68,400 .625 42,750.00 11.29
-----------------------------------------------------------------------------------------------
84,000 .8313 69,829.20 18.43
-----------------------------------------------------------------------------------------------
278,200 1.0438 290,385.16 76.66
-----------------------------------------------------------------------------------------------
129,600 1.7688 229,236.48 60.52
-----------------------------------------------------------------------------------------------
38,400 2.0813 79,921.92 21.10
-----------------------------------------------------------------------------------------------
48,000 2.2937 110,097.60 29.07
-----------------------------------------------------------------------------------------------
9,600 2.50 24,000.00 6.34
-----------------------------------------------------------------------------------------------
98,400 3.0188 297,049.92 78.42
-----------------------------------------------------------------------------------------------
200,000 3.75 750,000.00 198.00
-----------------------------------------------------------------------------------------------
8,000 4.0625 32,500.00 8.58
-----------------------------------------------------------------------------------------------
9,600 5.2812 50,699.52 13.38
-----------------------------------------------------------------------------------------------
75,600 5.625 425,250.00 112.27
-----------------------------------------------------------------------------------------------
956,160 7.50 7,171,200.00 1,893.20
-----------------------------------------------------------------------------------------------
248,013 8.125 2,015,105.60 531.99
-----------------------------------------------------------------------------------------------
23,000 11.25 258,750.00 68.31
-----------------------------------------------------------------------------------------------
106,400 12.50 1,330,000.00 351.12
-----------------------------------------------------------------------------------------------
27,500 20.00 550,000.00 145.20
-----------------------------------------------------------------------------------------------
20,000 26.00 520,000.00 137.28
-----------------------------------------------------------------------------------------------
5,000 28.625 143,125.00 37.78
-----------------------------------------------------------------------------------------------
8,174,030 45.3125 370,385,734.00 97,781.83
---------- --------------- -----------
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
TOTAL 10,753,003 $384,815,537.28 $101,591.30
----------------------------------------------------------------------------------------------
</TABLE>
(1) This registration statement covers shares of common stock, par value $.01
per share, of the Company consisting of the aggregate number of shares which may
be sold upon the exercise of options which have been granted and/or may
hereafter be granted under the Company's 1987 Stock Option Plan, 1992
Non-Employee Directors' Stock Option Plan, 1997 Stock Option Plan and 2000
Non-Employee Directors' Stock Option Plan (the "Plans") and written compensatory
plans with certain advisors of the Company (collectively, the "Advisory
Agreements"). The maximum number of shares which may be sold upon the exercise
of options granted under the Plans and the Advisory Agreements are subject to
adjustment in accordance with certain anti-dilution and other provisions of the
Plans and the Advisory Agreements. Accordingly, pursuant to Rule 416 under the
Securities Act of 1933, this registration statement includes, in addition to the
number of shares stated above, an indeterminate number of shares which may be
subject to grant or otherwise issuable after the operation of any such
anti-dilution and other provisions.
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(c) and Rule 457(h) under the Securities Act of 1933 as
follows: (i) in the case of shares of common stock which may be purchased upon
exercise of outstanding options, the fee is calculated on the basis of the
prices at which the options may be exercised; and (ii) in the case of other
shares of common stock registered hereby, including shares for which options
have not yet been granted and the option price of which is therefore unknown,
the fee is calculated on the basis of the average of the high and low sale
prices per share of common stock as quoted on the Nasdaq National Market on June
7, 2000.
<PAGE>
PART I
EXPLANATORY NOTE
Tanox, Inc. (the "Company") has prepared this Registration Statement in
accordance with the requirements of Form S-8 under the Securities Act of 1933,
as amended (the "Securities Act") to register shares of its common stock, $.01
par value per share, that are being issued or sold, or may be issued or sold by
the Company pursuant to its 1987 Stock Option Plan, 1992 Non-Employee Directors'
Stock Option Plan, 1997 Stock Option Plan and 2000 Non-Employee Directors' Stock
Option Plan (the "Plans") and written compensatory plans with certain advisors
of the Company (collectively, the "Advisory Agreements"). The Company will
provide without charge to any person, upon written or oral request of such
person, a copy of each document incorporated by reference in Item 3 of Part II
of this registration statement (which documents are incorporated by reference in
the Section 10(a) prospectus as set forth in Form S-8), the other documents
required to be delivered to eligible employees pursuant to Rule 428(b) under the
Securities Act, and additional information about the Plans and the Advisory
Agreements. Requests should be directed to John Blickenstaff at the Company's
offices located at 10301 Stella Link, Suite 110, Houston, Texas 77025-5497. Our
telephone number is 713-664-2288.
This Registration Statement also registers reoffers and resales of shares of
common stock issuable upon the exercise of options granted under the Plans and
the Advisory Agreements that may constitute "restricted securities" under
General Instruction C to Form S-8. Such restricted securities may be re-offered
and resold on a continuous or delayed basis in the future under Rule 415 under
the Securities Act.
This Registration Statement contains two parts. The first part contains a
"reoffer" prospectus prepared in accordance with Part I of Form S-3 (in
accordance with Instruction C of Form S-8). The second part contains the
information required to be in the Registration Statement pursuant to Part II of
Form S-8. Pursuant to the Note to Part I of Form S-8, the Plan information
called for in Part I of Form S-8 is not required to be filed with the Securities
and Exchange Commission (the "Commission"). The Company will deliver to each
Plan participant documents containing the information specified in Part I of
Form S-8 as required by Rule 428 (b)(1) under the Securities Act.
<PAGE>
REOFFER PROSPECTUS
TANOX, INC.
-----------------
22,000 Shares of Common Stock
-----------------
This reoffer prospectus (the "Prospectus") relates to 22,000 shares of common
stock, par value $.01, of Tanox, Inc. (the "Company"), which may be offered and
sold to the public by certain stockholders of the Company (collectively, the
"Selling Stockholders"), who have acquired the shares of common stock through
the exercise of options granted to them under the Company's 1987 Stock Option
Plan (the "1987 Plan"). Our common stock trades on the Nasdaq National Market
under the symbol "TNOX." The last reported sale price of our common stock on the
Nasdaq National Market on June 7, 2000 was $45.625 per share. The Selling
Stockholders may sell their shares at prevailing market prices on the Nasdaq
National Market on the date of sale. Each Selling Stockholder shall bear the
costs of any brokerage fees or commissions in connection with the sale of his or
her shares hereunder.
We will not receive any portion of the proceeds resulting from the sale of the
shares offered by the Selling Stockholders. We will pay for certain of the
expenses relating to the registration of the shares.
Any sales by the Selling Stockholders will be made subject to certain volume
limitations. During any three month period during which this Prospectus is
effective, each Selling Stockholder may sell a maximum of the greater of one
percent of the outstanding common stock of the Company or the average weekly
trading volume of the common stock during the four calendar weeks preceding the
date of the sale.
The Selling Stockholders and any broker executing selling orders on behalf of
the Selling Stockholders may be deemed to be "underwriters" within the meaning
of the Securities Act, in which event commissions received by such broker may be
deemed to be underwriting commissions under the Securities Act.
-------------------------
INVESTING IN THE COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE 6.
-------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OF 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 June 8, 2000.
<PAGE>
TABLE OF CONTENTS
Page
Where You Can Find More Information...................................... 2
Incorporation of Certain Documents by Reference.......................... 3
The Company.............................................................. 4
Risk Factors............................................................. 6
Forward-Looking Statements............................................... 18
Use of Proceeds.......................................................... 18
Selling Stockholders..................................................... 19
Plan of Distribution..................................................... 20
Legal Matters............................................................ 20
Experts.................................................................. 21
Limitation of Liability and Indemnification Matters...................... 21
----------------------------------
We have not authorized any dealer, salesperson or any other person to give any
information or to represent anything not contained in this Prospectus. You must
not rely on any unauthorized information. This Prospectus does not constitute an
offer to sell or a solicitation of an offer to buy nor shall there be any sale
of these securities by any person in any jurisdiction in which it is unlawful
for such person to make such offer, solicitation or sale. The information in
this Prospectus is correct as of the date hereof and you should not assume that
the information contained herein is accurate as of any date other than the date
on the front of this Prospectus.
WHERE YOU CAN FIND MORE INFORMATION
This Prospectus is part of a registration statement on Form S-8 (the
"Registration Statement") we filed with the Commission under the Securities Act
with respect to the shares of common stock offered hereby. This Prospectus does
not contain all the information included or incorporated by reference in the
Registration Statement and exhibits to the Registration Statement.
We file annual, quarterly and current reports and other information with the
Commission. You may access and read our filings, including the complete
Registration Statement and all of the exhibits to it, through the Commission's
world wide web site at WWW.SEC.GOV. This site contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission. You may also inspect without charge and copy
at rates prescribed by the Commission any document we file at the Commission's
public reference room located at 450 Fifth Street, N.W., Washington, D.C. 20549.
2
<PAGE>
Please call the Commission at 1-800-SEC-0330 for further information on the
public reference room. Our shares are quoted on the Nasdaq National Market under
the symbol "TNOX."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed with the Securities and Exchange
Commission (the "Commission"), are incorporated by reference herein:
(a) The Company's final prospectus filed with the Commission
pursuant to Rule 424(b) of the Securities Act, in connection
with the Registration Statement No. 333-96025 on Form S-1
filed with the Commission on April 10, 2000, together with
any and all amendments thereto;
(b) The Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 2000;
(c) The Company's Current Report on Form 8-K, dated June 5,
2000; and
(d) The description of the Company's common stock contained in
the Company's Registration Statement on Form 8-A, filed with
the Commission on April 6, 2000, together with all
amendments thereto, pursuant to Section 12 of the Exchange
Act of 1934 (the "Exchange Act"), as amended.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Exchange Act, after the date of this Registration Statement and
prior to the filing of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference into this
Registration Statement and to be a part hereof from the date of the filing of
such documents. Any statement in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Registration
Statement to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Registration Statement.
We will provide you at your request, and at no charge to you, any document which
we have incorporated into this Prospectus by reference. You may make a request
to us at our offices located at 10301 Stella Link, Suite 110, Houston, Texas
77025-5497, to the attention to John Blickenstaff, our corporate secretary. Our
telephone number is 713-664-2288.
3
<PAGE>
THE COMPANY
OVERVIEW
Tanox identifies and develops therapeutic monoclonal antibodies to address
significant unmet medical needs in the areas of immunology, infectious diseases
and cancer. Monoclonal antibodies are genetically engineered antibodies that
target a specific foreign substance, or antigen. E25, our most advanced product
in development, is an anti-immunoglobulin E, or anti-IgE, antibody. We are
developing E25 in collaboration with Novartis Pharma AG and Genentech, Inc. E25
has successfully completed Phase III clinical trials in both allergic asthma and
seasonal allergic rhinitis (hay fever). Based on the results of these trials,
our collaboration partners filed for marketing approval in the United States,
the EU, Switzerland, Australia and New Zealand on June 2, 2000. In addition, we
are developing a number of monoclonal antibodies to treat other allergic
diseases or conditions, such as severe allergic reactions to peanuts, autoimmune
diseases and HIV, and to restore the suppressed immune systems of chemotherapy
patients.
MONOCLONAL ANTIBODY THERAPEUTICS
Monoclonal antibodies represent an exciting area of novel therapeutic
development. Because of advances in antibody technologies, scientists are now
able to develop antibody products that can be administered to patients on a
chronic basis with reduced concern for adverse responses by the human immune
system. Companies can also manufacture these antibody products more
cost-effectively. As a result, a large number of monoclonal antibodies are now
in clinical and preclinical development. According to an industry survey, 74 out
of 350, or 21% of all, biotechnology medicines in clinical trials in 1998 were
antibodies. The FDA has approved eight therapeutic antibodies, six of them in
the last three years. In 1999, total sales of these products exceeded $1.3
billion.
OUR PRODUCTS IN DEVELOPMENT
E25. In 1987, we discovered a novel approach for treating allergies and asthma
by using monoclonal antibodies to inhibit IgE. E25, a product based on this
discovery, is a humanized (human-like) anti-IgE monoclonal antibody in
development for allergic asthma and allergic rhinitis. We estimate that, in the
United States, allergic asthma afflicts approximately 11 million people, and
allergic rhinitis afflicts approximately 40 million people, of whom
approximately 32 million are seasonal sufferers. A pivotal Phase III clinical
trial and a pivotal Phase IIb clinical trial have demonstrated E25's ability to
prevent or reduce symptoms of seasonal allergic rhinitis. Two Phase III clinical
trials in allergic asthma have demonstrated E25's ability to reduce symptoms
related to asthma. Clinicians who participated in the studies presented the
results of those trials at the American Academy of Allergy Asthma and Immunology
in March 2000. As mentioned above, Novartis and Genentech filed for marketing
approval for both indications in the United States, the EU, Switzerland,
Australia and New Zealand on June 2, 2000.
OTHER PRODUCT CANDIDATES. Using our comprehensive understanding of the human
immune system, we are building a diverse pipeline of monoclonal antibody product
candidates. In addition to E25, we have two other products in clinical
development and we are evaluating several product candidates in preclinical and
research studies.
o HU-901 is a humanized anti-IgE monoclonal antibody similar to E25 that
is in a Phase I/II trial to test its effectiveness in reducing severe
allergic reactions to peanuts. According to a recently published
survey, peanut or tree nut (e.g., walnut, almond and cashew) allergy
affects about 3 million people in the United States. If our clinical
trial indicates that Hu-901 reduces sensitivity to peanuts, we may
also investigate its benefit to patients with other food allergies.
Novartis and Genentech are currently disputing our right to
independently develop this product.
4
<PAGE>
o 5D12 is an anti-CD40 monoclonal antibody that we are developing to
treat autoimmune diseases. We are currently conducting a Phase I/II
trial in patients with Crohn's disease. We expect the results of this
trial to play an important role in determining clinical indications
that we intend to pursue with this product. We have exclusive rights
to 5D12 in Europe and Japan under a license from Chiron Corporation.
We believe potential autoimmune disease indications, such as Crohn's
disease, rheumatoid arthritis, multiple sclerosis and psoriasis,
represent significant market opportunities in Europe and Japan.
o 5A8 is an anti-CD4 antibody that is in preclinical development for
treating HIV.
o 166-32 is a complement factor D inhibiting antibody in research for
treating acute inflammation.
o 163-93 is an anti-G-CSF receptor activating antibody in research for
treating neutropenia, or suppression of the immune system caused by
depletion of white blood cells during chemotherapy.
OUR STRATEGY
Our objective is to leverage our expertise in monoclonal antibodies and our
understanding of the human immune system to advance our product pipeline and
become a profitable biopharmaceutical company. We intend to accomplish this
through the following strategic initiatives:
o continuing to identify and develop novel monoclonal antibodies using
our demonstrated expertise in immunology and monoclonal antibody
technology;
o maximizing the market opportunity for anti-IgE antibodies by exploring
indications beyond allergic asthma and seasonal allergic rhinitis;
o expanding our product pipeline through attractive acquisition and
in-licensing opportunities;
o forming strategic collaborations to complement our research and
development resources and enhance the value of our product development
programs; and
o capturing additional value from our pipeline by retaining marketing
rights for products that we can effectively sell using a small,
targeted sales force.
OTHER INFORMATION
We were incorporated in Texas in March 1986 and we reincorporated in Delaware in
January 2000. Our corporate headquarters, manufacturing facility and principal
research laboratories are located at 10301 Stella Link, Houston, Texas
77025-5497 and our telephone number is 713-664-2288. Tanox(R) and our logo are
our registered service marks.
5
<PAGE>
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS AND OTHER INFORMATION IN
THIS PROSPECTUS BEFORE DECIDING TO INVEST IN OUR COMMON STOCK.
WE HAVE A HISTORY OF NET LOSSES; WE EXPECT TO CONTINUE TO INCUR NET LOSSES AND
WE MAY NEVER ACHIEVE OR MAINTAIN PROFITABILITY.
We have incurred net losses since our inception. As of December 31, 1999, we had
an accumulated deficit of approximately $30.5 million, including a net loss of
approximately $23.3 million for the year ended December 31, 1999. Our losses
have primarily been the result of costs incurred in our research and development
programs and from our general and administrative costs.
We have not earned any revenues from commercial sales of any of our therapeutic
products, and we do not expect sales to commence until at least 2001, if at all.
We have funded our operations principally from licensing fees and milestone
payments under our current or former collaborations and private placements of
our common stock. We expect to continue to incur substantial operating losses
for the foreseeable future, particularly as we increase our research and
development, manufacturing, clinical trial and administrative activities. We
expect that losses will continue until such time, if ever, that we are able to
generate sufficient revenue from milestone payments and royalties on our lead
product candidate, E25, to cover our expenses.
Our ability to achieve and maintain long term profitability depends to a
significant extent on obtaining regulatory approval for and successfully
commercializing E25, and also on successfully completing preclinical and
clinical trials, obtaining required regulatory approvals and successfully
developing, manufacturing and marketing our other current and future product
candidates. We cannot assure you that we will be able to achieve any of the
foregoing or that we will be profitable even if we successfully commercialize
our products.
IF WE DO NOT RECEIVE REGULATORY APPROVALS FOR E25, WE WOULD BE SIGNIFICANTLY
HARMED AND OUR STOCK PRICE WOULD DROP SHARPLY.
E25 is our lead product candidate. Our success will depend, to a great degree,
on the success of E25. In order to successfully commercialize E25, our
collaborators, Novartis and Genentech, must be able to, among other things,
obtain regulatory approvals for E25.
Neither the U.S. Food and Drug Administration, or FDA, nor any European
regulatory agency, has approved E25. Novartis and Genentech filed a biologics
license application, or BLA, for E25 in the United States, the EU, Switzerland,
Australia and New Zealand on June 2, 2000. We cannot assure you that the FDA or
other regulatory authorities will accept these filings, that E25 will be
approved in a timely manner or that it will be approved at all.
If our collaborators fail to successfully obtain regulatory approvals for E25,
our business, financial condition and results of operations will be materially
harmed. Moreover, since E25 is our most advanced product candidate, a setback of
this nature would cause a sharp drop in our stock price. Failure of our E25
program could also reflect adversely on our Hu-901 program, which is also based
on anti-IgE technology.
FAILURE TO RECEIVE MARKET ACCEPTANCE FOR AND SUCCESSFULLY COMMERCIALIZE E25
WOULD HAVE A SIGNIFICANT ADVERSE EFFECT ON US.
6
<PAGE>
Even if the FDA approves E25, we cannot be certain that physicians, patients,
insurers or other third-party payors will accept E25 as a treatment for its
approved indications in the United States or in any foreign markets. A number of
factors may affect the rate and level of E25's market acceptance including:
o regulatory developments related to manufacturing or using E25;
o E25's price relative to other products or competing treatments;
o the effectiveness of Novartis' and Genentech's sales and marketing
efforts;
o the perception by physicians and other members of the healthcare
community of E25's safety, efficacy and benefits compared to those of
competing products or therapies;
o the willingness of physicians to adopt a new allergy treatment
regimen;
o the availability of third-party reimbursement; and
o unfavorable publicity concerning E25 or comparable products or
therapies.
If E25 is not accepted as a safe and effective drug and we are unable to
successfully commercialize it, our business, financial condition and results of
operations will be materially harmed.
FAILURE BY NOVARTIS OR GENENTECH TO DEVELOP, OBTAIN REGULATORY APPROVAL FOR,
MANUFACTURE, MARKET OR DISTRIBUTE E25 OR OTHER ANTI-IGE PRODUCTS MAY DELAY OR
SIGNIFICANTLY IMPAIR OUR ABILITY TO GENERATE REVENUES.
Under the terms of our collaboration agreements, Novartis and Genentech are
responsible for developing, obtaining regulatory approval for, manufacturing,
marketing and distributing E25 and other anti-IgE products that the
collaboration may select for development. We expect for the extended future that
Novartis and Genentech will manufacture, market and distribute E25 and other
selected anti-IgE products, if the FDA approves any of these products. We also
rely on Novartis and Genentech for significant financial and technical
contributions to develop products covered by our collaboration agreements. Our
ability to profit from these products depends on Novartis' and Genentech's
performance under their agreements with us. We cannot control the amount and
timing of resources Novartis and Genentech will devote to any of our products.
If Novartis or Genentech experiences manufacturing or distribution difficulties,
does not actively market E25 or other selected anti-IgE products or does not
otherwise perform under our collaboration agreements, our potential for revenue
from those products will be dramatically reduced. Novartis and Genentech may
terminate our collaboration agreements on short notice. If Novartis or Genentech
terminates our collaboration, we would experience increased capital requirements
to undertake development and marketing at our expense, and we cannot assure you
that we would be able to develop E25 or our other anti-IgE products on our own.
FAILURE BY OUR FUTURE COLLABORATION PARTNERS TO DEVELOP, MANUFACTURE, MARKET OR
DISTRIBUTE OUR OTHER PRODUCTS MAY DELAY OR SIGNIFICANTLY IMPAIR OUR ABILITY TO
GENERATE REVENUES OR OTHERWISE MATERIALLY HARM OUR PROFITABILITY.
We will rely on other collaboration partners to develop, manufacture,
commercialize, market and distribute our other products. Many of our competitors
are similarly seeking to develop or expand their collaboration and license
arrangements with pharmaceutical companies. The success of these efforts by our
competitors could have an adverse impact on our ability to form future
collaboration arrangements. We cannot assure you that we will be able to
negotiate acceptable collaboration agreements in the future or that efforts
under
7
<PAGE>
any collaboration agreements will succeed. To the extent that we choose not to
or are unable to enter into future collaboration agreements, we would experience
increased capital requirements to undertake research, development and marketing
at our own expense. In addition, we may encounter significant delays in
introducing our product candidates or find that the absence of these
collaboration agreements adversely affects our ability to develop, manufacture
or sell our product candidates.
Our reliance on collaboration partners poses the following additional risks:
o disputes with our partners may arise, delaying or terminating our
product candidates' research, development or commercialization or
resulting in significant litigation or arbitration;
o contracts with our partners may fail to provide significant protection
or may become unenforceable if one of these partners fails to perform;
o our partners may not commit enough capital or other resources to
successfully develop our products;
o our partners may not continue to develop and commercialize products
resulting from our collaborations; and
o our partners with marketing and distribution rights to one or more of
our products may not commit enough resources to marketing and
distributing our products.
If any of these risks occur, our product development and productivity may
suffer, and our business, financial condition and results of operations would be
materially harmed.
WE ARE INVOLVED IN LITIGATION AND ARBITRATION PROCEEDINGS WITH NOVARTIS AND
GENENTECH THAT MAY BE VERY COSTLY TO US AND COULD CAUSE US TO LOSE OUR RIGHTS TO
INDEPENDENTLY DEVELOP PRODUCTS.
We are a party to arbitrations and a related federal district court lawsuit with
our collaboration partners Novartis and Genentech, relating to our rights to
develop Hu-901 and other anti-IgE antibodies independently of our collaboration
with Novartis and Genentech. Novartis and Genentech are disputing our right to
pursue development of Hu-901 independently and are claiming that we are using
their unspecified confidential and proprietary information that we have no right
to use.
If we do not succeed in these proceedings, we could incur substantial damages
that would harm our financial position and we could lose our rights to
independently develop products covered by the collaboration, including Hu-901.
Even if we succeed, we may not be able to secure any recovery or develop
anti-IgE products independently of the collaboration. In either case, we expect
these proceedings to consume substantial amounts of our financial and managerial
resources. Further, because of the substantial amount of discovery required in
connection with this type of litigation, there is a risk that disclosure might
compromise some of our confidential information.
NONE OF OUR PRODUCTS HAVE RECEIVED REGULATORY APPROVAL. IF WE DO NOT RECEIVE AND
MAINTAIN REGULATORY APPROVALS, WE WILL NOT BE ABLE TO MARKET OUR PRODUCTS.
Neither the FDA, nor any regulatory authority, has approved any of our products,
including E25. We must receive FDA approval to manufacture and market our
products in the United States. Other countries have similar requirements.
8
<PAGE>
The process that pharmaceutical products must undergo to receive this approval
is extensive, and includes preclinical testing and clinical trials to
demonstrate safety and efficacy and a review of the manufacturing process to
ensure compliance with good manufacturing practices. This process can last many
years, be very costly and still be unsuccessful. The FDA can delay, limit or not
grant approval for many reasons, including:
o a product candidate may not be safe or effective;
o FDA officials may interpret data from preclinical testing and clinical
trials in different ways than we interpret it;
o the FDA might not approve our manufacturing processes or facilities or
the processes or facilities of our collaboration partners;
o the FDA may change its approval policies or adopt new regulations; and
o the FDA may approve a product candidate for fewer than all the
indications requested.
The process of obtaining approvals in foreign countries is subject to delay and
failure for the same reasons. Any delay in or failure to receive approval for
any of our products could materially harm our business, financial condition and
results of operations.
Our products other than E25 require significant additional laboratory
development and/or clinical trials prior to commercialization. We may not
successfully develop products in research and development and our products may
not meet applicable regulatory standards or obtain required regulatory
approvals.
Approval of a product candidate could also depend on post-marketing studies. In
addition, any marketed product and its manufacturer continue to be subject to
strict regulation after approval. Any unforeseen problems with an approved
product or any violation of regulations could result in restrictions on the
product, including its withdrawal from the market. Delays in receiving or
failing to receive regulatory approvals, or losing previously received
approvals, would delay or prevent product commercialization, which would
adversely affect our business, financial condition and results of operations.
WE ARE INVOLVED IN LEGAL PROCEEDINGS WITH OUR FORMER ATTORNEYS THAT MAY BE VERY
COSTLY TO US.
We have been involved in an arbitration regarding a fee dispute with our former
attorneys who represented us in our 1993 lawsuit against Genentech and F.
Hoffman-La Roche, Ltd. and its affiliates, and a 1994 lawsuit filed against us
by Genentech. The arbitration panel issued an award which entitled those
attorneys to receive approximately $3.5 million, including interest, payments
ranging from 33 1/3% to 40% of any future milestone payments received by us from
Genentech following product approval and 10% of the royalties that we receive on
sales of anti-IgE products. We sought a court order vacating the arbitration
award. However, a judgment was entered confirming the award. We intend to pursue
all available remedies, including appealing the decision.
We may not be successful in this proceeding. If this proceeding continues to
result in decisions unfavorable to us, we could lose substantial value from our
collaboration with Novartis and Genentech which could negatively affect our
stock price and harm our business, financial condition and results of
operations. Whether or not we are successful in this proceeding, we expect it to
consume substantial amounts of our financial and managerial resources.
9
<PAGE>
OUR PRECLINICAL AND CLINICAL TESTING RESULTS ARE UNCERTAIN. IF TRIAL RESULTS ARE
NEGATIVE, WE MAY BE FORCED TO STOP DEVELOPING PRODUCTS IMPORTANT TO OUR FUTURE.
We must demonstrate through preclinical studies and clinical trials that our
products are safe and effective for use in each target indication before we can
obtain regulatory approvals to sell our products commercially. These studies and
trials may be very costly and time consuming. The results of preclinical studies
and initial clinical trials of our products do not necessarily predict the
results from later-stage clinical trials. Drugs in later stages of clinical
trials may fail to show the desired safety and efficacy traits despite having
progressed through initial clinical testing. We cannot assure you that the data
collected from clinical trials of our products will be sufficient to support FDA
or other regulatory approval.
The speed with which we are able to enroll patients in clinical trials is an
important factor in determining how quickly we may complete clinical trials.
Many factors affect patient enrollment, including the size of the patient
population, the proximity of patients to clinical sites and the eligibility
criteria for the study. We may target our clinical trial protocols at
indications that have small patient populations, which may make it difficult for
us to enroll enough patients to complete the trials. Delays in patient
enrollment in the trials may result in increased costs, program delays, or both,
which could slow down our product development and approval process, and could
materially harm our business.
Administering any product we develop to humans may produce undesirable side
effects. These side effects could interrupt or delay clinical trials of products
and could result in the FDA or other regulatory authorities denying approval of
our products for any or all targeted indications. The FDA, other regulatory
authorities or we may suspend or terminate clinical trials at any time. Even if
we receive FDA and other regulatory approvals, our products may later exhibit
adverse effects that limit or prevent their widespread use or that force us to
withdraw those products from the market. We cannot assure you that any of our
products will be safe for human use.
WE HAVE LIMITED EXPERIENCE AND CAPABILITY IN MANUFACTURING AND MAY ENCOUNTER
MANUFACTURING PROBLEMS OR DELAYS THAT COULD RESULT IN LOST REVENUE.
To commercialize our products successfully, we and our collaboration partners
must manufacture our products in commercial quantities in compliance with
regulatory requirements and at an acceptable cost. If the manufacturing
facilities used to produce our products cannot pass a pre-approval or periodic
plant inspection, the FDA may not approve our products or it may delay or bar
their sale. Although we expect Novartis and Genentech to manufacture E25 and
other anti-IgE products that our collaboration develops, if the FDA and other
regulatory authorities approve these products, we have reserved the right to
manufacture up to 50% of the worldwide requirements for these products. We
currently have a process development and manufacturing facility for biological
products located in Houston, Texas. However, we have no experience in
manufacturing commercial quantities of antibodies and currently have limited
manufacturing capacity. In order to obtain regulatory approvals and to create
capacity to produce our products in sufficient quantities for commercial sale at
an acceptable cost, we will have to develop or acquire additional technology for
large scale manufacturing and build or otherwise obtain access to adequate
facilities, which will require substantial additional funds. We will also be
required to demonstrate to the FDA and corresponding foreign authorities our
ability to manufacture our products using controlled, reproducible processes. We
cannot assure you that we can develop the necessary manufacturing technology or
that we will be able to fund or build an adequate commercial manufacturing
facility necessary to obtain regulatory approvals and to produce adequate
commercial supplies of our potential products on a timely basis. We cannot
assure you that we, operating alone or with the assistance of others, will be
able to successfully make the transition to commercial production.
10
<PAGE>
WE LACK SALES AND MARKETING EXPERIENCE, WHICH MAKES US DEPEND ON THIRD PARTIES
FOR THEIR EXPERTISE IN THIS AREA.
If we receive the required regulatory approvals, we expect to market and sell
our products principally through distribution, co-marketing, co-promotion or
licensing arrangements with third parties. Under our current collaboration
agreement, Novartis and Genentech have exclusive marketing rights to E25 and
other selected anti-IgE products. However, commercialization rights may revert
back to us if either we or our collaborators terminate our relationship. We
currently have no sales, marketing or distribution capabilities. Any revenues we
receive from our E25 collaboration will depend primarily on the efforts of our
collaboration partners. We intend to retain marketing rights in the United
States and selected Asian countries for products that we can develop and sell
effectively with a small, targeted sales force. If we elect to market products
directly, we would require significant additional expenditures and management
resources to develop an internal sales force. We cannot assure you that we would
be able to establish a successful sales force should we choose to do so.
WE FACE INTENSE COMPETITION AND RAPID TECHNOLOGICAL CHANGE THAT COULD RESULT IN
PRODUCTS THAT ARE SUPERIOR TO THE PRODUCTS WE ARE DEVELOPING.
The biotechnology and pharmaceutical industries are subject to rapid and
significant technological change. We have numerous competitors in the United
States and abroad, including, among others, major pharmaceutical and chemical
companies, specialized biotechnology firms, universities and other research
institutions. These competitors may develop technologies and products that are
more effective or less costly than any of our current or future products or that
could render our technologies and products obsolete or noncompetitive. Many of
these competitors have substantially more resources and product development,
production and marketing capabilities than we do. In addition, many of our
competitors have significantly greater experience than we do in undertaking
preclinical testing and clinical trials of new or improved pharmaceutical
products and obtaining FDA and other regulatory approvals of products for use in
health care. If we succeed in achieving significant commercial sales of our
products, we also will be competing in manufacturing efficiency and marketing
capability, areas in which we have limited or no experience. Furthermore, our
competitors may obtain FDA approval for products sooner and be more successful
in manufacturing and marketing their products than are we or our collaborators.
Products currently exist in the market that will compete directly with the
products that we seek to develop. Any product candidate that we develop and that
obtains regulatory approval must then compete for market acceptance and market
share. Our product candidates may not gain market acceptance among physicians,
patients, healthcare payors and the medical community. Significant factors in
determining whether we will be able to compete successfully include:
o efficacy and safety of our products;
o timing and scope of regulatory approval;
o product availability;
o potential advantages over alternative treatment methods;
o development, marketing, distribution and manufacturing capabilities
and support of our collaborators;
o reimbursement coverage from insurance companies and others;
11
<PAGE>
o price and cost-effectiveness of our products; and
o patent protection.
If our products are not competitive based on these or other factors, our
business, financial condition and results of operations will be materially
harmed.
WE DEPEND ON OUR PATENTS AND PROPRIETARY RIGHTS. THE VALIDITY, ENFORCEABILITY
AND COMMERCIAL VALUE OF THESE RIGHTS ARE HIGHLY UNCERTAIN.
Our success depends in part on obtaining, maintaining and enforcing patents,
licensing the rights to patents and patent applications owned by others,
maintaining trade secrets and operating without infringing on the proprietary
rights of third parties. While we file and prosecute patent applications to
protect our inventions, our pending patent applications may not result in the
issuance of valid patents and our issued patents may not provide competitive
advantages. Also, our patent protection may not prevent others from developing
competitive products using related technology. We cannot assure you that pending
patent applications licensed to us will result in patents being issued or that,
if issued, the patents will give us an advantage over competitors with similar
technology.
We own and have licenses to certain issued patents. The patents we own that are
most material to our business are five U.S. patents and six foreign patents
relating to anti-IgE antibodies. However, the patent position of biotechnology
and pharmaceutical firms is highly uncertain and involves many complex legal and
technical issues. There is no clear policy involving the breadth of claims
allowed or the degree of protection afforded under such patents. Issued patents
can be challenged in litigation in the courts and in proceedings in the patent
and trademark office in the United States and in courts and patent offices in
foreign countries. Issuance of a patent is not conclusive as to its validity,
enforceability or the scope of its claim. We cannot assure you that our patents
will not be successfully challenged as to enforceability, invalidated or limited
in the scope of their coverage. Moreover, litigation to uphold the validity of
patents and to prevent infringement can be very costly and can result in
diverting technical and management personnel's time and attention, which may
materially harm our business, financial condition and results of operations. If
the outcome of litigation is adverse to us, third parties may be able to use our
patented technology without paying us. Moreover, we cannot assure you that our
patents will not be infringed or successfully avoided through design innovation.
Any of these events may materially and adversely effect our business.
There may be patent rights belonging to others that require us to alter our
products, pay licensing fees or cease certain activities. If our products
conflict with patent rights of others, the owners of those patent rights could
bring legal actions against us claiming damages and seeking to stop us from
manufacturing and marketing the affected products. If these legal actions are
successful, in addition to any potential liability for damages, we could be
required to obtain a license in order to continue to manufacture or market the
affected products. We cannot assure you that we would prevail in any such action
or that any license required under any such patent would be made available on
acceptable terms or at all. Any of these events may materially harm our
business, financial condition and results of operations.
Researching, developing and commercializing a biopharmaceutical product often
involves alternative development and optimization routes that are presented at
various stages in the development process. We cannot predict the preferred
routes at the outset of a research and development program, because they will
depend on subsequent discoveries and test results. There are numerous
third-party patents in our field, and it is possible that, to pursue the
preferred development route of one or more of our products, we will need to
obtain a license to a patent, which would decrease the ultimate profitability of
the applicable product. If
12
<PAGE>
we cannot negotiate a license, we might have to pursue a less desirable
development route or terminate the program altogether.
We are aware that other groups have claimed discoveries similar to those covered
by our patent applications. In addition, other companies, some of which may be
our competitors, have filed applications for or have been issued patents and may
obtain additional patents and proprietary rights relating to products or
processes used in, necessary to, competitive with or otherwise related to our
patents and products. These products and processes include, among other items,
patents covering technology relating to humanized monoclonal antibodies that we
anticipate developing. Protein Design Labs, Inc. owns certain patents and patent
applications relating to such humanized antibodies. We have recently taken a
non-exclusive license to these patents and patent applications for one of our
products. We do not know if we can obtain licenses from Protein Design Labs for
our other antibody products.
We must make substantial cash payments and achieve certain milestones and
satisfy certain conditions, including filing investigational new drug
applications, obtaining product approvals and introducing products, to maintain
our rights under certain of our licenses, including our licenses from Chiron and
Biogen, Inc. We cannot assure you that we will be able to maintain our rights
under these licenses. If any of these licenses terminate, we may be unable to
commercialize any related product.
In addition to the intellectual property rights described above, we also rely on
unpatented technology, trade secrets and confidential information. We cannot
assure you that others will not independently develop substantially equivalent
information and techniques or otherwise gain access to our technology or
disclose such technology, or that we can effectively protect our rights in
unpatented technology, trade secrets and confidential information. We require
each of our employees, consultants and advisors to execute a confidentiality
agreement at the commencement of an employment or consulting relationship with
us. We cannot assure you, however, that these agreements will provide effective
protection if an unauthorized use or disclosure of this confidential information
occurs.
WE MAY EXPERIENCE DIFFICULTIES IN MANAGING GROWTH, WHICH COULD MATERIALLY HARM
OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
If our product development efforts and the product development efforts of our
collaborators succeed, our growth could strain our operations, product
development and other managerial and operating resources. Future growth will
impose significant added responsibilities on members of management, including
the need to identify, recruit, maintain and integrate additional employees,
including management. In the future, our financial performance and our ability
to compete effectively will depend, in part, on our ability to manage any future
growth effectively. To that end, we must be able to:
o manage our research and development efforts effectively;
o expand the capacity, scalability and performance of our product
development infrastructure;
o develop our administrative, accounting and management information
systems and controls;
o improve coordination among our research, accounting, finance,
marketing and operations personnel; and
o hire and train additional qualified personnel.
We cannot assure you that we will be able to accomplish these tasks, and our
failure to accomplish any of these tasks could materially harm our business,
financial condition and results of operations.
13
<PAGE>
FAILURE TO ATTRACT AND RETAIN KEY PERSONNEL AND PRINCIPAL MEMBERS OF OUR
SCIENTIFIC AND MANAGEMENT STAFF COULD MATERIALLY HARM OUR BUSINESS, FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Our success depends greatly on our abilities to attract and retain qualified
scientific and technical personnel, as well as to retain the services of our
existing technical management staff. To expand our research and development
programs and pursue our product development plans, 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 we cannot assure you that we will be able
to attract and retain the necessary qualified staff to develop our business. The
failure to attract and retain key scientific and technical personnel and
management staff or the loss of any of our current management team could
materially harm our business and financial condition. We do not maintain, and do
not currently intend to obtain, key employee global life insurance on any of our
personnel.
WE MAY NEED ADDITIONAL FINANCING, BUT OUR ACCESS TO CAPITAL FUNDING IS
UNCERTAIN.
Our current and anticipated development projects require substantial additional
capital. We expect that the net proceeds from this offering, together with our
existing assets and revenue from operations, will sufficiently fund our
operations for the next three years. However, our future capital needs will
depend on many factors, including successfully commercializing E25, receiving
milestone payments from our collaboration partners, and making progress in our
research and development activities. Our success may also depend on the
magnitude and scope of these activities, the progress and level of unreimbursed
costs associated with preclinical studies and clinical trials, the costs
associated with acquisitions, the costs of preparing, filing, prosecuting,
maintaining and enforcing patent claims and other intellectual property rights,
competing technological and market developments, changes in or terminations of
existing collaboration and licensing arrangements, the establishment of
additional collaboration and licensing arrangements, and the cost of
manufacturing scale-up and development of marketing activities, if undertaken by
us. We do not have committed external sources of funding and we cannot assure
you that we will be able to obtain additional funds on acceptable terms, if at
all. If adequate funds are not available, we may be required to:
o delay, reduce the scope of or eliminate one or more of our development
programs;
o obtain funds through arrangements with collaboration partners or
others that may require us to relinquish rights to technologies,
product candidates or products that we would otherwise seek to develop
or commercialize ourselves; or
o license rights to technologies, product candidates or products on
terms that are less favorable to us than might otherwise be available.
If we raise additional funds by issuing additional stock, further dilution to
our stockholders may result, and new investors could have rights superior to
existing stockholders. If funding is insufficient at any time in the future, we
may be unable to develop or commercialize our products, take advantage of
business opportunities or respond to competitive pressures.
WE ARE SUBJECT TO THE UNCERTAINTY RELATED TO REIMBURSEMENT POLICIES AND
HEALTHCARE REFORM MEASURES.
In recent years, there have been numerous proposals to change the healthcare
system in the United States. Some of these proposals have included measures that
would limit or eliminate payments for medical procedures and treatments or
subject pharmaceutical product pricing to government control. In addition, as
14
<PAGE>
a result of the trend towards managed healthcare in the United States, as well
as legislative proposals to reduce government insurance programs, third-party
payors are increasingly attempting to contain healthcare costs by limiting both
coverage and the level of reimbursement of new drug products. Consequently,
significant uncertainty exists as to the reimbursement status of newly-approved
healthcare products. If we or any of our collaborators succeed in bringing one
or more of our products to market, we cannot assure you that third-party payors
will establish and maintain price levels sufficient for us to realize an
appropriate return on our investment in product development. Significant changes
in the healthcare system in the United States or elsewhere, including changes
resulting from adverse trends in third-party reimbursement programs, could
materially reduce our profitability. Such changes could also significantly harm
our ability to raise the capital we would need to continue our operations.
Furthermore, if these proposals affect our collaborators, the proposals may harm
our ability to commercialize the products we develop jointly with them.
WE ARE EXPOSED TO PRODUCT LIABILITY CLAIMS, AND IT IS UNCERTAIN THAT WE CAN
OBTAIN INSURANCE AGAINST THESE CLAIMS AT A REASONABLE RATE IN THE FUTURE.
Our business exposes us to potential product liability risks, which are inherent
in testing, manufacturing, marketing and selling pharmaceutical products. We may
be held liable if any product we develop, or any product that uses or
incorporates any of our technologies, causes injury or is found otherwise
unsuitable during product testing, manufacturing, marketing or sale. We cannot
assure you that we will be able to avoid product liability exposure. Product
liability insurance for the biopharmaceutical industry is generally expensive,
if available at all. We have obtained product liability insurance coverage in
the amount of $5.0 million per occurrence, subject to a $5.0 million aggregate
limitation. However, we cannot assure you that our present insurance coverage is
now or will continue to be adequate. In addition, some of our license and
collaboration agreements require us to obtain product liability insurance.
Future license and collaboration agreements may also include such a requirement.
We cannot assure you that we can obtain adequate insurance coverage at a
reasonable cost in the future. Our inability to obtain sufficient insurance
coverage at an acceptable cost or otherwise to protect against potential product
liability claims could prevent or inhibit us or our collaborators from
commercializing our products. If we are sued for any injury caused by our
products, our liability could exceed our total assets.
WE DEAL WITH HAZARDOUS MATERIALS AND MUST COMPLY WITH ENVIRONMENTAL LAWS AND
REGULATIONS, WHICH CAN BE EXPENSIVE AND RESTRICT HOW WE DO BUSINESS.
Our research and development work and manufacturing processes involve the
controlled use of hazardous materials, including chemical, radioactive and
biological materials. Our operations also produce hazardous waste products. We
are subject to federal, state and local laws and regulations governing how we
use, manufacture, store, handle and dispose of these materials. Although we
believe that we comply in all material respects with applicable environmental
laws and regulations, we cannot assure you that we will not incur significant
costs to comply with environmental laws and regulations in the future. In
addition, current or future environmental laws and regulations may impair our
research, development or production efforts.
WE COULD BE LIABLE FOR DAMAGES, PENALTIES OR OTHER FORMS OF CENSURE IF WE ARE
INVOLVED IN A HAZARDOUS WASTE SPILL OR OTHER ACCIDENT.
Despite precautionary procedures that we implement for handling and disposing of
hazardous materials, we cannot eliminate the risk of accidental contamination or
discharge or any resultant injury from these materials. If a hazardous waste
spill or other accident occurs, we could be liable for damages, penalties or
other forms of censure. In addition, we may be sued for injury or contamination
that results from our use or the use by third parties of these materials, and
our liability could exceed our total assets.
15
<PAGE>
OUR EXECUTIVE OFFICERS AND DIRECTORS OWN A LARGE PERCENTAGE OF OUR VOTING STOCK
AND WILL CONTINUE TO CONTROL OUR COMPANY AND THE OUTCOME OF MATTERS PUT TO A
VOTE OF STOCKHOLDERS AFTER THIS OFFERING.
Our executive officers and directors and their affiliates will, in the
aggregate, own shares representing approximately 35% of our outstanding common
stock. As a result, these stockholders, acting together, will significantly
influence our general management and affairs, and all matters submitted to our
stockholders for approval, including electing directors and approving changes in
control. Such control could discourage others from initiating potential merger,
takeover or other change of control transactions, and may adversely affect the
market price of our common stock.
OUR AMENDED AND RESTATED CERTIFICATE OF INCORPORATION AND BYLAWS AND DELAWARE
LAW CONTAIN CERTAIN PROVISIONS THAT COULD DELAY OR PREVENT A TAKEOVER AND
SUPPRESS OUR STOCK PRICE.
Provisions of our amended and restated certificate of incorporation, bylaws and
Delaware law could delay, defer or prevent a third party from acquiring us,
despite the possible benefit to our stockholders, or otherwise adversely affect
the price of our common stock.
These provisions include:
o the ability of our board of directors to issue shares of preferred
stock and to determine the price and other terms, including
preferences and voting rights, of those shares without stockholder
approval;
o a staggered board of directors;
o a limitation on who may call special meetings of stockholders; and
o advance notice requirements for nomination for election to the board
of directors or for proposing matters that stockholders may act on at
stockholder meetings.
In addition to these provisions, we are subject to certain Delaware laws,
including one that prohibits us from engaging in a business combination with any
interested stockholder for a period of three years from the date the person
became an interested stockholder unless certain conditions are met. We may also
adopt a shareholder rights plan or "poison pill" after this offering. All of
this may discourage potential takeover attempts, discourage bids for our common
stock at a premium over market price or adversely affect the market price of,
and the voting and other rights of the holders of, our common stock.
MARKET VOLATILITY MAY AFFECT OUR STOCK PRICE AND THE VALUE OF YOUR INVESTMENT
MAY BE SUBJECT TO SUDDEN DECREASES.
The trading price for our common stock is likely to be volatile. Prices for our
common stock will be determined in the marketplace and may be influenced by many
factors, including variations in our financial results, changes in earnings
estimates by industry research analysts, investors' perceptions of us and our
financial prospects, results of the governmental approval process for our
products, results of clinical trials, changes in government regulations,
developments in our relationships with our collaboration partners, developments
in our litigation, announcements of new products, technologies or treatments by
us or our competitors and general economic, industry and market conditions. In
addition, the stock markets from time to time have experienced extreme price and
volume fluctuations. In particular, the market prices of the securities of
biotechnology companies have been especially volatile, and often these
fluctuations do not
16
<PAGE>
relate to operating performance. These broad fluctuations may adversely affect
the trading price of our common stock, regardless of our actual operating
performance.
In the past, following periods of market volatility, security holders have
instituted class action litigation. If the market value of our stock experiences
adverse fluctuations and we become involved in this type of litigation, we could
incur substantial legal costs and management's attention could be diverted,
which could materially harm our business or the market price of our common
stock.
SALES OF COMMON STOCK MAY HAVE AN ADVERSE IMPACT ON THE MARKET PRICE OF OUR
COMMON STOCK.
Sales of significant amounts of our common stock or the perception that such
sales will occur could adversely affect the market price of common stock or our
future ability to raise capital by selling equity securities.
We currently have outstanding 42,568,640 shares of common stock. Of these
shares, the 8,568,000 shares of common stock sold in our initial public offering
are freely tradable without restriction under the Securities Act, unless
purchased by our "affiliates" as defined in Rule 144 under the Securities Act.
In addition, 2,752,887 shares currently outstanding were issued upon exercise of
options under the 1987 Plan, the Company's 1992 Non-Employee Directors' Plan,
1997 Stock Option Plan and 2000 Non-Employee Directors' Plan (the "Stock Option
Plans") and written compensatory agreements that the Company has with
consultants (the "Advisory Agreements"), and 2,578,973 shares are issuable upon
exercise of outstanding options. The Form S-8 Registration Statement of which
this reoffer prospectus is a part covers 22,000 shares of common stock already
issued under the 1987 Plan and shares issuable upon exercise of options granted
under the Stock Option Plans and the Advisory Agreements. As a result, those
shares will be freely tradable under the Securities Act subject to the volume
restrictions of Rule 144(e) under the Securities Act which remain in effect
until the Company satisfies the registrant requirements for Form S-3. The
balance of our outstanding common stock will be "restricted securities" under
the Securities Act, subject to restrictions on the timing, manner and volume of
sales of these shares.
In connection with our initial public offering, our officers, directors,
employees and stockholders who together own 32,379,399 shares of our common
stock and options to purchase an additional 2,354,793 shares of common stock
agreed not to sell or otherwise dispose of any shares of our common stock prior
to October 4, 2000, other than shares acquired in the initial public offering.
The lock-up restrictions may be waived by the underwriters of our initial public
offering at any time without any notice to us, our stockholders or to the public
in general. The underwriters waived the lock-up restrictions for the Selling
Stockholders, as to the 22,000 shares being offered hereby, to facilitate
payment of income taxes incurred in connection with the exercise of stock
options.
Since many of the shares that are not currently freely tradable were purchased
at prices substantially below current market prices, we believe a significant
number of these shares may be sold when eligible for resale.
17
<PAGE>
FORWARD-LOOKING STATEMENTS
Some of the information in this Prospectus contains forward-looking statements.
You can find these statements under "The Company," "Risk Factors," "Use of
Proceeds," and elsewhere in this Prospectus.
We typically identify forward-looking statements by using terms such as "may,"
"will," "should," "could," "expect," "plan," "anticipate," "believe,"
"estimate," "predict," "potential" or "continue," or similar words, although we
express some forward-looking statements differently. You should be aware that
actual events could differ materially from those suggested in the
forward-looking statements due to a number of factors, including:
o the ability to develop safe and efficacious drugs;
o failure to achieve positive results in clinical trails;
o failure to successfully commercialize our products;
o relationships with our collaboration partners;
o variability of royalty, license and other revenues;
o ability to enter into future collaboration agreements;
o competition and technological change; and
o existing and future regulations affecting our business.
You should also consider the statements under "Risk Factors" and other sections
of this Prospectus, which address additional factors that could cause our actual
results to differ from those set forth in the forward-looking statements.
USE OF PROCEEDS
We will bear the expenses incurred in connection with this offering, except for
fees of counsel for the Selling Stockholders (if any) and any discounts or
commissions payable with respect to sales of the common stock. We will not
receive any proceeds from the sale of the common stock by the Selling
Stockholders.
18
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth information regarding beneficial ownership of our
common stock as of June 7, 2000 by each of the Selling Stockholders. Beneficial
ownership is determined according to the rules of the Commission, and generally
means that a person has beneficial ownership of a security if he or she
possesses sole or shared voting or investment power of that security, and
includes options that are currently exercisable or exercisable within 60 days.
Each Selling Stockholder has furnished us information with respect to beneficial
ownership. Except as otherwise indicated, we believe that the beneficial owners
of the common stock listed below, based on the information that each of them has
given to us, have sole investment and voting power with respect to their shares,
except where community property laws may apply.
The shares of common stock that are being offered by this Prospectus have been
acquired by the Selling Stockholders pursuant to the exercise of options granted
by us under the 1987 Plan. Both of the Selling Stockholders have entered into
lock-up agreements with the underwriters under which they agreed not to transfer
or dispose of, directly or indirectly, any shares of common stock prior to
October 4,2000. The underwriters have waived the lock-up restrictions on the
22,000 shares of the common stock being offered by this Prospectus.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
Percentage
Number of Class of
Shares Number of Number of Shares Securities
Name and Owned Prior Shares to be Owned After Owned After
Position to Offering Offered Hereby the Offering the Offering
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Wayne L. Gordon
Employee 37,944 11,000 26,944 *
--------------------------------------------------------------------------------------
Sam McKinney
Employee 57,600 11,000 46,600 *
--------------------------------------------------------------------------------------
</TABLE>
* Less than 1%.
19
<PAGE>
PLAN OF DISTRIBUTION
Pursuant to this Prospectus, the Selling Stockholders may sell shares of common
stock from time to time in transactions on the Nasdaq National Market, in
privately negotiated transactions or by a combination of such methods of sale,
at fixed prices which may be changed, at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at negotiated
prices. The Selling Stockholders may effect such transactions by selling the
shares of common stock to or through broker-dealers, and such broker-dealers may
receive compensation in the form of discounts, concessions or commissions from
the Selling Stockholders or the purchasers of the shares for whom such
broker-dealers may act as agent or to whom they sell as principal, or both
(which compensation to a particular broker-dealer might be in excess of
customary commissions). Other methods by which the shares of common stock may be
sold include, without limitation: (i) transactions which involve cross or block
trades or any other transaction permitted by the Nasdaq National Market or other
trading markets, (ii) "at the market" to or through market makers or into an
existing market for the common stock, (iii) in other ways not involving market
makers or established trading markets, including direct sales to purchasers or
sales effected through agents, (iv) through transactions in options or swaps or
other derivatives (whether exchange-listed or otherwise), (v) through short
sales, or (vi) any combination of any such methods of sale. The Selling
Stockholders may also enter into option or other transactions with
broker-dealers which require the delivery to such broker dealers of the common
stock offered hereby, which such broker-dealers may resell pursuant to this
Prospectus. The Selling Stockholders may also make sales pursuant to Rule 144
under the Securities Act of 1933, as amended, if such exemption from
registration is otherwise available.
The Selling Stockholders and any broker-dealers who act in connection with the
sale of shares of common stock hereunder will be subject to the prospectus
delivery requirements because they may be deemed to be "underwriters" as that
term is defined in the Securities Act, and any commissions received by them and
profit on any resale of the shares as principal might be deemed to be
underwriting discounts and commissions under the Securities Act. We have
informed the Selling Stockholders that the anti-manipulative provisions of
Regulation M promulgated under the Securities Exchange Act of 1934 may apply to
their sales in the market.
In order to comply with certain state securities laws, if applicable, the shares
may 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 or an exemption from
registration or qualification is available and is complied with. Sales of shares
must also be made by the Selling Stockholders in compliance with all other
applicable state securities laws and regulations.
There can be no assurance that any of the Selling Stockholders will sell any or
all of the shares offered hereby.
The Company will pay all expenses of the registration of the shares and will not
receive any proceeds from the sale of any shares by the Selling Stockholders.
The Company has notified the Selling Stockholders of the need to deliver a copy
of this Prospectus in connection with any sale of the shares.
LEGAL MATTERS
Chamberlain, Hrdlicka, White, Williams & Martin, Houston, Texas, will pass upon
certain legal matters with respect to the legality of the issuance of the shares
of common stock offered by this Prospectus. Wilburn O. McDonald, Jr. and 9 other
shareholders and employees of Chamberlain, Hrdlicka, White, Williams & Martin
hold 10,716 shares of our common stock, but none are Selling Stockholders.
20
<PAGE>
EXPERTS
The financial statements incorporated herein by reference in this Prospectus and
elsewhere in the registration statement on Form S-1 (Registration No.
333-96025), as amended, have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report with respect thereto which is
incorporated by reference in reliance upon the authority of said firm as experts
in giving said report.
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
Section 145 of the Delaware General Corporation Law authorizes a corporation's
board of directors to indemnify directors and officers in terms sufficiently
broad to permit indemnification under certain circumstances for liabilities,
including reimbursement for expenses incurred, arising under the Securities Act.
As permitted by Delaware law, our amended and restated certificate of
incorporation includes a provision that eliminates the personal liability of our
directors for monetary damages for breach of fiduciary duty as a director,
except for liability:
o for any breach of the director's duty of loyalty to us or our
stockholders;
o for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;
o under Section 174 of the Delaware General Corporation Law regarding
unlawful dividends and stock purchases; or
o for any transaction from which the director derived an improper
personal benefit.
As permitted by Delaware law, our bylaws provide that:
o we must indemnify our directors and officers to the fullest extent
permitted by Delaware law;
o we must advance expenses, as incurred, to our directors and officers
in connection with a legal proceeding, subject to certain limited
exceptions; and
o the rights conferred in the bylaws are not exclusive.
We have entered into indemnification agreements with each of our officers and
directors to give them additional contractual assurances regarding the scope of
the indemnification provided in our amended and restated certificate of
incorporation and bylaws and to provide additional procedural protections. These
agreements, among other things, require us to indemnify each director and
officer to the fullest extent permitted by Delaware law, including
indemnification for expenses such as attorneys' fees, judgments, fines and
settlement amounts incurred by the director or officer in any action or
proceeding, including any action by or in the right of us, arising out of the
person's services as a director or officer of us, any subsidiary of ours or any
other company or enterprise to which the person provides services at our
request. At present, we are not aware of any pending or threatened litigation or
proceeding involving any of our directors, officers, employees or agents where
indemnification would be required or permitted. We believe
21
<PAGE>
that the provisions of our amended and restated certificate of incorporation,
bylaws and these indemnification agreements are necessary to attract and retain
qualified persons as directors and officers.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed that, in the
opinion of the Commission, such indemnification is against public policy as
expressed in the Securities Act, and is therefore unenforceable.
22
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
Tanox, Inc., (the "Company"), hereby incorporates by reference into this
Registration Statement the following documents previously filed with the
Securities and Exchange Commission (the "Commission").
(a) The Company's final prospectus filed with the Commission pursuant
to Rule 424(b) of the Securities Act, in connection with the
Registration Statement No. 333-96025 on Form S-1 filed with the
Commission on April 10, 2000, together with any and all
amendments thereto;
(b) The Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 2000;
(c) The Company's Current Report on Form 8-K, dated June 5, 2000; and
(d) The description of the Company's common stock contained in the
Company's Registration Statement on Form 8-A, filed with the
Commission on April 6, 2000, together with all amendments
thereto, pursuant to Section 12 of the Exchange Act of 1934 (the
"Exchange Act"), as amended.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Exchange Act, after the date of this Registration Statement and
prior to the filing of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference into this
Registration Statement and to be a part hereof from the date of the filing of
such documents. Any statement in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Registration
Statement to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Chamberlain, Hrdlicka, White, Williams & Martin, Houston, Texas, will pass upon
certain legal matters with respect to the legality of the issuance of the shares
of common stock offered by this Prospectus. Wilburn O. McDonald, Jr. and 9 other
shareholders and employees of Chamberlain, Hrdlicka, White, Williams & Martin
hold 10,716 shares of our common stock, but none are Selling Stockholders.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law authorizes a corporation's
board of directors to indemnify directors and officers in terms sufficiently
broad to permit indemnification under certain circumstances for liabilities,
including reimbursement for expenses incurred, arising under the Securities Act
of 1933 (the "Securities Act").
<PAGE>
As permitted by Delaware law, our amended and restated certificate of
incorporation includes a provision that eliminates the personal liability of our
directors for monetary damages for breach of fiduciary duty as a director,
except for liability:
o for any breach of the director's duty of loyalty to us or our
stockholders;
o for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;
o under Section 174 of the Delaware General Corporation Law regarding
unlawful dividends and stock purchases; or
o for any transaction from which the director derived an improper
personal benefit.
As permitted by Delaware law, our bylaws provide that:
o we must indemnify our directors and officers to the fullest extent
permitted by Delaware law;
o we must advance expenses, as incurred, to our directors and officers
in connection with a legal proceeding, subject to certain limited
exceptions; and
o the rights conferred in the bylaws are not exclusive.
We have entered into indemnification agreements with each of our officers and
directors to give them additional contractual assurances regarding the scope of
the indemnification provided in our amended and restated certificate of
incorporation and bylaws and to provide additional procedural protections. These
agreements, among other things, require us to indemnify each director and
officer to the fullest extent permitted by Delaware law, including
indemnification for expenses such as attorneys' fees, judgments, fines and
settlement amounts incurred by the director or officer in any action or
proceeding, including any action by or in the right of us, arising out of the
person's services as a director or officer of us, any subsidiary of ours or any
other company or enterprise to which the person provides services at our
request. At present, we are not aware of any pending or threatened litigation or
proceeding involving any of our directors, officers, employees or agents where
indemnification would be required or permitted. We believe that the provisions
of our amended and restated certificate of incorporation, bylaws and these
indemnification agreements are necessary to attract and retain qualified persons
as directors and officers.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers or persons controlling the Company pursuant
to the foregoing provisions, the Company has been informed that, in the opinion
of the Commission, such indemnification is against public policy as expressed in
the Securities Act, and is therefore unenforceable.
II-2
<PAGE>
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
The shares to be sold under the reoffer prospectus were initially issued by the
Company and were deemed exempt from registration under the Securities Act in
reliance on either (i) Rule 701 promulgated under the Securities Act as offers
and sales of securities pursuant to certain compensatory benefit plans and
contracts relating to compensation in compliance with Rule 701 or (ii) Section
4(2) of the Securities Act as transactions by an issuer not involving any public
offering.
ITEM 8. EXHIBITS.
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
3.1 Certificate of Incorporation, as amended
(Incorporated by reference from Exhibit 3.1
to Tanox's Registration Statement on Form
S-1 (File No.333-96025)).
3.2 Bylaws, as amended (Incorporated by
reference from Exhibit 3.2 to Tanox's
Registration Statement on Form S-1 (File
No.333-96025)).
4.1 Specimen common stock certificate
(Incorporated by reference from Exhibit 4.1
to Tanox's Registration Statement on Form
S-1 (File No.333-96025)).
4.2 1987 Stock Option Plan (Incorporated by
reference from Exhibit 10.2 to Tanox's
Registration Statement on Form S-1 (File
No.333-96025)).
4.3 1992 Non-Employee Directors' Stock Option
Plan (Incorporated by reference from Exhibit
10.3 to Tanox's Registration Statement on
Form S-1 (File No.333-96025)).
4.4 1997 Stock Option Plan (Incorporated by
reference from Exhibit 10.4 to Tanox's
Registration Statement on Form S-1 (File
No.333-96025)).
4.5 2000 Non-Employee Directors' Stock Option
Plan (Incorporated by reference from Exhibit
10.23 to Tanox's Registration Statement on
Form S-1 (File No.333-96025)).
4.6 Form of Advisory Agreement.
5.1 Opinion of Chamberlain, Hrdlicka, White,
Williams & Martin regarding legality of
securities being registered.
23.1 Consent of Arthur Andersen, LLP as
independent accountants.
II-3
<PAGE>
23.2 Consent of Chamberlain, Hrdlicka, White,
Williams & Martin (contained in Exhibit 5.1
hereto).
24.1 Power of Attorney (included in Part II of
the Registration Statement).
ITEM 9. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration
Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement
(or the most recent post-effective amendment hereof)
which, individually or in the aggregate, represent a
fundamental change in the information set forth in this
Registration Statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would
not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum
offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in this
Registration Statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this
Registration Statement or any material change to such
information in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(4) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the Company pursuant to the
foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
Company of expenses incurred or paid by a director, officer or
controlling person of the Company in the
II-4
<PAGE>
successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the Company
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in
the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas, this 8th day of June, 2000.
TANOX, INC.
/s/ NANCY T. CHANG
Nancy T. Chang, President and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Nancy T. Chang and John Blickenstaff, and each of them,
to act as his or her true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities, to sign any and all amendments to this
Registration Statement, and to file the same with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent, full power and authority to do
and perform each and every act and thing requisite and necessary to be done, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or his or
her substitute or substitutes or all of them may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
Date: June 8, 2000 /s/ NANCY T. CHANG
Nancy T. Chang, Chairman of the Board,
President and Chief Executive Officer
Date: June 8, 2000 /s/ DAVID DUNCAN, JR.
David Duncan, Jr., Vice President of
Finance and Chief Financial Officer
Date: June 8, 2000 /s/ TSE WEN CHANG
Tse Wen Chang, Ph.D., Director
Date: June 8, 2000 /s/ OSAMA MIKHAIL
Osama Mikhail, Ph.D., Director
Date: June 8, 2000 /s/ WILLIAM J. JENKINS
William J. Jenkins, M.D., Director
II-6
<PAGE>
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
3.1 Certificate of Incorporation, as amended
(Incorporated by reference from Exhibit 3.1
to Tanox's Registration Statement on Form
S-1 (File No.333-96025)).
3.2 Bylaws, as amended (Incorporated by
reference from Exhibit 3.2 to Tanox's
Registration Statement on Form S-1 (File
No.333-96025)).
4.1 Specimen common stock certificate
(Incorporated by reference from Exhibit 4.1
to Tanox's Registration Statement on Form
S-1 (File No.333-96025)).
4.2 1987 Stock Option Plan (Incorporated by
reference from Exhibit 10.2 to Tanox's
Registration Statement on Form S-1 (File
No.333-96025)).
4.3 1992 Non-Employee Directors' Stock Option
Plan (Incorporated by reference from Exhibit
10.3 to Tanox's Registration Statement on
Form S-1 (File No.333-96025)).
4.4 1997 Stock Option Plan (Incorporated by
reference from Exhibit 10.4 to Tanox's
Registration Statement on Form S-1 (File
No.333-96025)).
4.5 2000 Non-Employee Directors' Stock Option
Plan (Incorporated by reference from Exhibit
10.23 to Tanox's Registration Statement on
Form S-1 (File No.333-96025)).
4.6 Form of Advisory Agreement.
5.1 Opinion of Chamberlain, Hrdlicka, White,
Williams & Martin regarding legality of
securities being registered.
23.1 Consent of Arthur Andersen, LLP as
independent accountants.
23.2 Consent of Chamberlain, Hrdlicka, White,
Williams & Martin (contained in Exhibit 5.1
hereto).
24.1 Power of Attorney (included in Part II of
the Registration Statement).
II-7
