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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 10, 1997
REGISTRATION NO. 333-19451
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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INTERFERON SCIENCES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 22-2313648
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
783 JERSEY AVENUE
NEW BRUNSWICK, NEW JERSEY 08901
(908) 249-3250
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
LAWRENCE M. GORDON, ESQ.
CHIEF EXECUTIVE OFFICER
INTERFERON SCIENCES, INC.
9 WEST 57TH STREET
NEW YORK, NEW YORK 10019
(212) 230-9513
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
ROBERT J. HASDAY, ESQ.
DUANE, MORRIS & HECKSCHER
SUITE 3300
122 EAST 42ND STREET
NEW YORK, NEW YORK 10168
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box, and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SHARE OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
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Common Stock, par value $.01 per share................ 6,513,400 shares(1) $1.67(2) $10,877,378(2) $3,296.18(3)
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Common Stock, par value $0.1 per share................ 2,645,300 shares(4) $2.55(5) $ 6,745,515(5) $2,044.10
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</TABLE>
(1) Includes 449,200 shares of Common Stock issuable upon the exercise of
options. There is also registered hereunder such indeterminate additional
number of shares of Common Stock as may become issuable pursuant to the
anti-dilution provisions of such options.
(2) Estimated solely for the purpose of calculating the registration fee based
on the average of the high and low prices of the Common Stock on January 2,
1997 as reported by NASDAQ, pursuant to Rule 457(c)
(3) Previously paid.
(4) Includes 2,606,238 shares of Common Stock issuable upon exercise of options
and warrants. There are also registered hereunder such indeterminate
additional number of shares of Common Stock as may become issuable pursuant
to the anti-dilution provisions of such options and warrants.
(5) Estimated solely for the purpose of calculating the registration fee based
on the average of the high and low prices of the Common Stock on February 5,
1997 as reported by NASDAQ, pursuant to Rule 457(c).
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED FEBRUARY 10, 1997
PROSPECTUS
INTERFERON SCIENCES, INC.
9,158,700 SHARES OF COMMON STOCK
The shares of Common Stock, par value $.01 per share (the "Common Stock"),
of Interferon Sciences, Inc., a Delaware corporation (the "Company"), being
offered hereby are being sold by certain stockholders of the Company (the
"Selling Stockholders"). The Company will not receive any proceeds from the sale
of shares by the Selling Stockholders. See "Selling Stockholders."
The Common Stock is quoted on the NASDAQ SmallCap Market under the symbol
"IFSC." On February 7, 1997, the last reported sale price of the Common Stock on
the NASDAQ SmallCap Market was $2 7/16 per share.
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INVESTMENT IN THE SHARES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" ON PAGES 3-10 OF THIS PROSPECTUS.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS FEBRUARY , 1997
<PAGE> 3
AVAILABLE INFORMATION
The Prospectus omits certain of the information contained in the
Registration Statement relating to the securities offered hereby which is on
file with the Securities and Exchange Commission (the "Commission"). The Company
is subject to the informational requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and in accordance therewith files
periodic reports, proxy statements, and other information with the Commission.
Such Registration Statement, reports, proxy statements, and other information
can be inspected, without charge, and copied at the public reference facilities
maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549, and at its regional offices located at 7 World
Trade Center, 13th Floor, New York, New York 10048 and Northwestern Atrium
Center, 500 West Madison Street, Chicago, Illinois 60061. Copies of such
material can be obtained at prescribed rates from the Public Reference Section
of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated in this Prospectus by reference:
(a) the Company's Annual Report on Form 10-K for the year ended
December 31, 1995;
(b) the Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1996, June 30, 1996, and September 30, 1996;
(c) the Company's Current Report on Form 8-K filed on January 14,
1997; and
(d) the description of the Common Stock contained in the Company's
Prospectus included in the Company's Registration Statement on Form S-2,
File No. 33-59479, as filed pursuant to Rule 424(b) under the Securities
Act of 1933, as amended (the "Securities Act").
All documents filed by the Company pursuant to Section 13(a), 13(c), 14, or
15(d) of the Exchange Act on or after the date of this Prospectus and prior to
the termination of the offering hereby of the Common Stock shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
modifies, supersedes, or replaces such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus. Any person receiving a copy of this
Prospectus may obtain without charge, upon written or oral request, a copy of
any of the documents incorporated by reference herein, except for exhibits to
such documents (unless such exhibits are specifically incorporated by reference
into the documents which this Prospectus incorporates). Requests should be
directed to: Corporate Secretary, Interferon Sciences, Inc., 783 Jersey Avenue,
New Brunswick, New Jersey 08901, telephone number (908) 249-3250.
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ALFERON(R) and ALFERON LDO(R) are registered trademarks of the Company.
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THE COMPANY
Interferon Sciences, Inc. (the "Company") is a biopharmaceutical company
currently engaged in the manufacture and sale of ALFERON N Injection, the only
product approved by the United States Food and Drug Administration ("FDA") that
is based upon a natural source, multi-species alpha interferon ("Natural Alpha
Interferon"). ALFERON N Injection is approved for the treatment by injection of
certain types of genital warts and is being developed by the Company for the
potential treatment of hepatitis C, hepatitis B, HIV, multiple sclerosis,
cancers, and other indications. The Company also is developing ALFERON N Gel and
ALFERON LDO, the Company's topical and oral formulations of Natural Alpha
Interferon. In February 1997, the Company's Board of Directors approved, subject
to stockholders' approval, a proposal to amend the Company's Restated
Certificate of Incorporation to effect a reverse stock split in which each four
shares of issued Common Stock will be reclassified and changed into one share of
new Common Stock of the Company. All numbers of shares of Common Stock and per
share data set forth in this Prospectus will be proportionately adjusted if the
reverse stock split is implemented. The Company's principal offices and research
and production facilities are located at 783 Jersey Avenue, New Brunswick, New
Jersey 08901 and its telephone number is (908) 249-3250.
RISK FACTORS
Prospective investors should consider carefully the following factors,
together with the other information contained or incorporated by reference in
this Prospectus, in evaluating an investment in the Common Stock offered hereby.
This Prospectus contains or incorporates by reference certain forward-looking
statements reflecting management's current views with respect to future events
and financial performance. These forward-looking statements are subject to
certain risks and uncertainties, all of which are difficult to predict and many
of which are beyond the control of the Company, that could cause actual results
to differ materially from those in the forward-looking statements, including,
but not limited to, the following factors.
CONTINUING AND INCREASING OPERATING LOSSES; ACCUMULATED DEFICIT. The
Company has experienced significant operating losses since its inception in
1980. As of September 30, 1996, the Company had an accumulated deficit of
approximately $79.6 million. For the nine months ended September 30, 1996 and
the years ended December 31, 1995, 1994, and 1993, the Company had losses from
operations of approximately $9.8 million, $7.4 million, $11.8 million, and $8.3
million, respectively.
Although the Company received approval to market ALFERON N Injection for
the treatment of genital warts from the FDA in October 1989 and from the
comparable Mexican regulatory authority in December 1994 and recently entered
into an agreement for Cell Pharm GmbH ("Cell Pharm") to distribute ALFERON N
Injection in Germany, it has had only limited revenues from the sale of ALFERON
N Injection to date. In order for the Company to operate profitably, the Company
must sell significantly more ALFERON N Injection. Increased sales in the United
States will depend primarily upon the attainment of FDA approval to market
ALFERON N Injection for additional indications, of which there can be no
assurance. See "Products Under Development" and "Regulatory Approvals" below in
this section. Moreover, the Company cannot market ALFERON N Injection in other
markets unless appropriate regulatory approvals are obtained. See "Foreign
Regulatory Approvals" below in this section. There can be no assurance that
sufficient quantities of ALFERON N Injection will be sold to allow the Company
to operate profitably.
FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING. The Company will
require substantial funds to conduct research and development and preclinical
and clinical testing and to manufacture and market its products. The Company
anticipates that its future capital requirements will increase as a result of
its reacquisition in May 1996 of United States and Canadian marketing rights for
ALFERON N Injection from Purdue Pharma L.P. and its affiliates (collectively,
"Purdue"). For the nine months ended September 30, 1996 and the years ended
December 31, 1995, 1994, and 1993, the cash utilized by the Company's operations
was approximately $11.2 million, $7.1 million, $7.8 million, and $7.8 million,
respectively. The Company's future capital requirements will depend on many
factors, including: continued scientific progress in its drug development
programs; the magnitude of these programs; progress with preclinical testing and
clinical trials; the time and costs involved in obtaining regulatory approvals;
the costs involved in filing, prosecuting, and
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enforcing patent claims; competing technological and market developments;
changes in its existing research relationships; the ability of the Company to
establish collaborative arrangements; and effective commercialization activities
and arrangements.
On December 24, 1996, the Company sold in a private placement (the "Private
Placement") 5,615,000 shares (the "Private Placement Shares") of Common Stock at
a price of $1.625 per share. The $9,124,375 of proceeds from such sale (less
estimated expenses of $50,000) will be used (i) to increase the Company's
inventory of ALFERON N Injection in response to increased market demand, (ii) to
expand the Company's manufacturing facility, which will provide significantly
increased production capacity in the event the Company's Phase 3 clinical trials
currently in progress for HIV and hepatitis C are successfully concluded and
ALFERON N Injection is approved for the treatment of these new indications by
the FDA (of which there can be no assurance), (iii) to increase the Company's
marketing and sales capabilities, and (iv) to fund the Company's clinical
programs. Sunrise Securities Corp. ("Sunrise"), the underwriter for the best
efforts offerings by the Company in 1995 and 1996, acted as placement agent in
the Private Placement and in connection therewith received a commission (which
it assigned to its designees) of 488,262 shares of Common Stock (the "Private
Placement Commission Shares") and options (the "Private Placement Commission
Options") to purchase 488,261 shares of Common Stock at a purchase price of
$1.95 per share. The Private Placement Options are exercisable for a period of
four years, commencing on January 2, 1998, and cannot be sold, transferred,
assigned, or hypothecated until such date, except that they may be assigned, in
whole or in part, to any successor, officer, or partner of Sunrise. The Private
Placement Shares, the Private Placement Commission Shares, and the shares
underlying the Private Placement Commission Options are registered hereunder.
See "Selling Stockholders."
Management believes that the cash available as of January 1, 1997 will be
sufficient to enable the Company to continue operations until at least July 1,
1998, although no assurance can be given in this regard. To fund the Company's
operations beyond such date, the Company will require additional funding,
whether from financial markets or collaborative or other arrangements with
corporate partners or from other sources, which may not be available when needed
or on terms acceptable to the Company. Insufficient funds will require the
Company to delay, scale back, or eliminate certain or all of its research and
development programs or to license third parties to commercialize products or
technologies that the Company would otherwise seek to develop itself or to shut
down or curtail its manufacturing facility.
NO GUARANTEED SOURCE OF REQUIRED MATERIALS. The Company uses a number of
essential materials in the production of Natural Alpha Interferon, including
human white blood cells, and has limited sources from which to procure such
materials. The Company does not have long-term agreements for the supply of most
of such materials. There can be no assurance that long-term supply agreements
covering essential materials can be entered into on commercially reasonable
terms, if at all. Although the Company currently obtains human white blood cells
from several sources, the loss of any one source of supply could have a material
adverse effect on the Company. In such event, the Company may be required to
scale back its operations or stop manufacturing such product. The costs and
availability of products and materials required by the Company for the
commercial production of ALFERON N Injection and other products which the
Company may commercially produce are subject to fluctuation depending on a
variety of factors beyond the Company's control, including competitive factors,
changes in technology, and FDA and other governmental regulation and there can
be no assurance that the Company will be able to obtain such products and
materials on terms acceptable to the Company or at all.
DEPENDENCE ON CERTAIN DISTRIBUTORS; LIMITED MARKETING PROGRAM. The Company
currently has marketing arrangements for the distribution of ALFERON N Injection
in Mexico, Germany, and Japan. In addition, in connection with the Company's
reacquisition in May 1996 of United States and Canadian marketing rights for
ALFERON N Injection, Purdue agreed to provide during the first year after the
reacquisition certain distribution services to the Company with respect to
24,000 vials of ALFERON N Injection and to provide during the second year after
the reacquisition, if requested by the Company, certain distribution services to
the Company with respect to up to 30,000 vials of ALFERON N Injection. Unless
the Company enters into additional marketing arrangements with other companies
or develops its own sales force, the Company will be dependent on the ability of
its current distributors to sell sufficient quantities of
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ALFERON N Injection to allow the Company to operate profitably. Since the
reacquisition of marketing rights, the Company has focused its marketing efforts
in the United States on making additional sales to existing customers. In
September 1996, the Company hired an executive vice president for sales and
marketing, who is evaluating the Company's marketing strategy based on sales
experience to date and is considering a number of options, including forming a
small sales force and entering into additional agreements with marketing
partners. However, there can be no assurance that the Company will be able to
enter into additional marketing agreements on acceptable terms, if at all, or
that the Company will be able to successfully market and sell ALFERON N
Injection or any other product.
PRODUCTS UNDER DEVELOPMENT. The Company's products under development
include (i) ALFERON N Injection for the potential treatment of HIV, hepatitis C,
hepatitis B, multiple sclerosis, cancers, and other indications, (ii) ALFERON N
Gel for the potential treatment of cervical dysplasia, recurrent genital herpes,
other viral diseases, and cancers, and (iii) ALFERON LDO for the potential
treatment of certain symptoms of patients infected with the HIV virus and the
treatment of other viral diseases. However, there can be no assurance that these
products will be cost-effective, safe, and effective treatments for these
diseases, and there is no assurance of receiving regulatory approvals to market
these products. The Company cannot market such products until such approvals are
obtained. Even if such approvals are obtained, there can be no assurance that
any of these products will be successful or will produce significant revenues or
profits for the Company. The ability of the Company to become profitable depends
on the successful commercial development of these products.
POTENTIAL SIDE EFFECTS. The Company is engaged in the manufacture and sale
of a single FDA approved product, ALFERON N Injection for the treatment of
refractory or recurring external genital warts in adults. In clinical trials
conducted for the treatment of genital warts with ALFERON N Injection, patients
have not experienced serious side effects; however, there can be no assurance
that unexpected or unacceptable side effects will not be found in the future for
this use or other potential uses of this product or for any other product the
Company might develop which could threaten or limit such product's usefulness.
See "Risk of Product Liability" below in this section.
SUBSTANTIAL COMPETITION. In the United States and Mexico, the Company
currently competes with Schering-Plough Corp.'s ("Schering") injectable
recombinant interferon product and other therapies in the treatment of genital
warts. If and when the Company obtains additional approvals of uses of its
products (such as the approval obtained by Cell Pharm in Germany), it expects to
compete primarily on the basis of product performance with Schering and a number
of additional pharmaceutical companies, both in the United States and abroad,
including Hoffmann-La Roche, Inc. ("Hoffmann"), F. Hoffmann-LaRoche Ltd.
("Roche"), Amgen Inc., and Glaxo Wellcome Inc. The Company's potential
competitors have developed or may develop products (containing either alpha
interferon or other therapeutic compounds) or other treatment modalities for
those uses. Many of the Company's potential competitors are among the largest
pharmaceutical companies in the world, are well known to the public and the
medical community, and have substantially greater financial resources, product
development, and manufacturing and marketing capabilities than the Company or
its marketing partners. Schering's recombinant interferon product has achieved
market dominance for the treatment of hepatitis C and hepatitis B in the United
States and other markets, and there can be no assurance that, if the Company is
able to obtain regulatory approval of ALFERON N Injection for the treatment of
those diseases, it will be able to achieve any significant penetration into
those markets. In addition, because certain of the competitive products are not
dependent on a source of human blood cells, such products may be able to be
produced in greater volume and at a lower cost than ALFERON N Injection and the
Company's other Natural Alpha Interferon formulations. Currently, the Company's
wholesale price on a per unit basis of ALFERON N Injection is substantially
higher than that of the competitive recombinant alpha interferon products. Other
companies may succeed in developing products earlier than the Company, obtaining
approvals for such products from the FDA more rapidly than the Company, or
developing products that are more effective than those proposed to be developed
by the Company. While the Company will seek to expand its technological
capabilities in order to remain competitive, there can be no assurance that
research and development by others or other medical advances will not render the
Company's technology or products obsolete or non-competitive or result in
treatments or cures superior to any therapy developed by the
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Company, or that any therapy developed by the Company will be preferred to any
existing or newly developed technologies.
POTENTIAL PATENT INFRINGEMENT CLAIMS. On March 5, 1985, the United States
Patent and Trademark Office issued a patent to Hoffmann claiming purified human
alpha (leukocyte) interferon (regardless of how it is produced). Roche, the
parent of Hoffmann, also has been issued patents covering human alpha interferon
in many countries throughout the world. As of March 31, 1995, the Company
obtained a non-exclusive perpetual license from Hoffmann and Roche which grants
the Company the worldwide rights to make, use, and sell, without a potential
patent infringement claim from Hoffmann or Roche, any formulation of Natural
Alpha Interferon. The license permits the Company to grant marketing rights with
respect to Natural Alpha Interferon products to third parties, except that the
Company cannot grant marketing rights with respect to injectable products in any
country in which Hoffmann or Roche has patent rights covered by the license to
any third party not listed on a schedule of approximately 50 potential marketing
partners without the consent of Hoffmann and Roche, which consent cannot be
unreasonably withheld. There can be no assurance that the Company will not want
to grant such marketing rights to a third party not listed on such schedule, or
that Hoffmann and Roche will not withhold the required consent. In addition, if
such license were terminated, the Company may be subject to a patent
infringement lawsuit by Hoffmann and Roche if it continued to market Natural
Alpha Interferon products. If such a suit were brought, the Company would have
to either counterclaim to attempt to invalidate the Hoffmann and Roche patents
or prove that it did not infringe such patents.
In addition, there may have been other patent applications filed in the
United States and in foreign countries, some of which may have been filed by
potential competitors of the Company, with respect to the technologies and/or
products which may be required by the Company to produce its current and
proposed products. If any of such patents issue in the United States or in
foreign countries in a form which covers the Company's products or processes,
the Company would be required to obtain licenses under such patents in
connection with the domestic and international commercialization of such
products. There can be no assurance that the Company could obtain licenses under
any of such patents if so issued, particularly if they were issued to companies
directly in competition with the Company, or that, even if the Company could
obtain licenses, it could do so on commercially reasonable terms.
If the sale or use of any of the Company's products were to become the
basis of a patent infringement lawsuit, assuming the Company could not obtain a
license on satisfactory terms, the Company may be required to incur substantial
litigation expenses, and such litigation could also consume substantial
management time, which could have a material adverse effect upon the financial
condition of the Company even if it were to be successful in the litigation. If
the Company proved unsuccessful in such litigation, it may be required to pay a
royalty for the use of the claimed patents or cease producing the products and
redevelop the products in such a way as to avoid infringing any claimed patent
rights. There can be no assurance in such case that the Company could obtain a
license under such patents on commercially reasonable terms or at all, or that
it could successfully redevelop the products to fall outside the scope of the
claim.
It is the Company's policy to seek licenses if it believes that the terms
of such licenses, when weighed against the expense and uncertainties of
potential litigation, are cost effective.
POSSIBLE INABILITY TO PROTECT TECHNOLOGY. To a significant extent, the
ability of the Company to protect its rights in any products or technology it
may develop depends upon its ability to obtain suitable patent or similar
protection. The ability of the Company to obtain patents, and the nature,
extent, and enforceability of the intellectual property rights that are obtained
as a result of the Company's research, involve complex legal and factual issues.
New technology and products developed by the Company may not qualify for patent
protection or, if they do qualify, may be subject to challenge or to protracted
judicial proceedings. In addition, the Company may determine not to seek
additional patent or other protection for its technology or products. It is not
certain that other patents will be issued or, if issued, that they will afford
the Company protection from competitive products. Although the Company's
practice is to require its technical and scientific employees and consultants to
execute confidentiality agreements covering proprietary information, there can
be no assurance that others will not independently make similar discoveries or
otherwise obtain access to proprietary
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information of the Company. In addition, the Company has a non-exclusive license
agreement with Hoffmann and Roche which enables the Company to sell its
products. There can be no assurance that Hoffmann or Roche has not granted or
will not grant a similar license to another company with considerably greater
financial, technical, and marketing resources than the Company or that Hoffmann
or Roche will not enter the market itself with a competitive product.
While the Company has recently been issued a United States patent for
Natural Alpha Interferon produced from human peripheral blood leukocytes and its
production process and has several patent applications pending, it is possible
that others have or may develop equivalent or superior products or technologies
which would not fall within the scope of the Company's patent claims or which
might involve inventions similar in scope to those of the Company for which
patent or similar rights are obtained by others prior to the time that the
Company is able to do so.
REGULATORY APPROVALS. The production and marketing of the Company's
products in the United States, as well as its ongoing research and development
activities, are subject to regulation by governmental agencies, most
significantly the FDA. Such regulation includes requirements for obtaining FDA
approval prior to marketing each of its products in the United States. In order
to obtain such FDA approval, the Company must demonstrate, among other things,
the safety and efficacy of each product through pre-clinical and clinical
testing. Obtaining such approvals is a time-consuming process and requires the
expenditure of substantial resources. Each facility in which the products are
produced and packaged, whether operated by the Company or a third party, must
meet the FDA's standards for current good manufacturing practices and must also
be approved prior to marketing any product produced or packaged in such
facility. Any significant change in the production process which may be
commercially required, including changes in sources of certain raw materials, or
any change in the location of the production facilities will also require FDA
approval. To the extent a portion of the manufacturing process for a product is
handled by an entity other than the Company, the Company must similarly receive
FDA approval for the participation by such third party in the manufacturing
process. For example, the Company has entered into an agreement with
Sanofi-Winthrop, Inc. ("Sanofi") pursuant to which Sanofi formulates and
packages ALFERON N Injection. The Company presently has a biologic establishment
license for the facilities in which it produces ALFERON N Injection, which
includes the facilities in which Sanofi formulates and packages ALFERON N
Injection. If the Company's or Sanofi's present manufacturing facilities were
damaged or destroyed or the Company's arrangements with Sanofi were terminated,
there can be no assurance that FDA approval could be obtained for another
facility or that another facility could be built and approved on a timely basis
or on commercially reasonable terms. Delays in obtaining, or the failure to
obtain, any necessary regulatory approvals could have a material adverse effect
on the Company's ability to develop, produce, and sell its products. In
addition, failure of the Company to comply in any respect with FDA requirements
with respect to the production and marketing of biological drug products can
subject the Company to potential civil and criminal penalties and its products
to seizure and other civil enforcement action. Because of the uncertain nature
of many of these requirements, there can be no assurance that regulatory
problems of this type will not occur.
FOREIGN REGULATORY APPROVALS. To market its products outside of the United
States, the Company is subject to numerous and varying foreign regulatory
requirements, implemented by foreign health authorities, governing the design
and conduct of human clinical trials and marketing approval. The approval
procedure varies among countries and can involve additional testing, and the
time required to obtain approval may differ from that required to obtain FDA
approval. At present, foreign marketing authorizations are applied for at a
national level, although certain registration procedures are available within
the European Union (the "EU") to companies wishing to market a product in more
than one EU member country. If a regulatory authority is satisfied that adequate
evidence of safety, quality, and efficacy has been presented, marketing
authorization is usually granted. The foreign regulatory approval process
includes all of the risks associated with obtaining FDA approval set forth
above. Approval by the FDA does not ensure approval by other countries. There
can be no assurance that the Company's products will receive such approvals. In
addition, under certain circumstances, the Company may be required to obtain FDA
authorization to export products for sale in foreign countries. For instance, in
most cases, the Company may not export products that have not been approved by
the FDA unless it first obtains an export permit from the FDA. However, these
FDA export
7
<PAGE> 9
restrictions generally do not apply if the Company's products are exported in
conformance with their United States approvals or are manufactured outside the
United States. At the present time, the Company does not have any foreign
manufacturing facilities.
In May 1990, the Company's licensee applied for a product license in the
United Kingdom for the use of ALFERON N Injection for the intralesional
treatment of refractory or recurring external genital warts in patients 18 years
of age or older. In October 1991, the Committee on Safety of Medicines informed
the Company's licensee that it might be unable to advise the Licensing Authority
to grant a product license. Subsequent oral and written representations made by
the Company to the Committee resolved certain of the issues raised by the
Committee, but the Committee believed that additional information and possibly
clinical work would be necessary to resolve certain other quality and safety
issues and determined to advise the Licensing Authority not to grant a product
license at that time. The Company's licensee was entitled to appeal this
recommendation and has done so. The Company can appear before or make written
representations to the Committee about such advice, but has not done so. The
Company is considering whether to continue to pursue this appeal or to have the
Company's licensee withdraw the product license application. The Company could
submit a new application for the same use or for another use if and when
sufficient clinical data is available. There can be no assurance, however, that
approval of the use of ALFERON N Injection for the treatment of genital warts or
any other indication will be obtained even if it is pursued.
UNCERTAINTY OF PHARMACEUTICAL PRICING AND RELATED MATTERS; NEED FOR
REIMBURSEMENT. The future revenues and profitability of, and availability of
capital for, biotechnology companies may be affected by the continuing efforts
of governmental and third-party payors to contain or reduce the costs of health
care through various means. For example, in certain foreign markets, the pricing
and profitability of prescription pharmaceuticals is subject to government
control. In Japan, which is currently the world's largest market for interferon
products, the government imposed price cuts ranging from 13.5% to 22.7% in 1994
on certain interferon products then being marketed in Japan. The Company cannot
predict whether similar price cuts will be imposed on any of the Company's
products in Japan or in any other country at such time as such products are
being marketed in such country or the size or duration of any cuts that may be
imposed. However, there can be no assurance that any such cuts will not have a
material adverse effect on the Company's future results of operations. There
have been, and the Company expects there to continue to be, a number of United
States federal and state proposals to implement similar government control. It
is uncertain what form any health care reform legislation may take or what
actions the federal, state, and private payors may take in response to the
suggested reforms. The Company cannot predict when any suggested reforms will be
implemented, if ever, or the effect of any implemented reform on the Company's
business. There can be no assurance, however, that any implemented reform will
not have a material adverse effect on the Company's future results of
operations. The Company's long-term ability to market its products successfully
may depend in part on the extent to which reimbursement for the cost of such
products and related treatment will be available from public and private health
insurers and other organizations. Third-party payors are increasingly
challenging the prices of medical products and services. The reimbursement
status of newly-approved health care products is highly uncertain, and there can
be no assurance that third-party coverage will be available or that available
third-party coverage will enable the Company to maintain price levels sufficient
to realize an appropriate return on its investment in product development. While
recombinant alpha interferon products can be produced at a lower cost per unit
than the Company's formulations of Natural Alpha Interferon products, until dose
regimens and treatment durations are determined, the Company is unable to
determine whether the cost of treatment with the Company's products will be
greater, equal to, or less than the cost of competing treatments.
ROYALTY OBLIGATIONS. The Company is a party to certain license agreements
pursuant to which it is obligated to pay royalties based upon the commercial
exploitation of its products. Royalty payments under such license agreements
with respect to ALFERON N Injection, ALFERON N Gel, and ALFERON LDO could
aggregate up to 9.5%, 13.5%, and 19.5%, respectively, of the Company's net sales
of such products. Such royalty obligations, together with any additional
royalties which may be payable by the Company, may limit the Company's marketing
strategies and prevent it from obtaining adequate profit margins and could have
a material adverse effect on the commercial exploitation of the Company's
products.
8
<PAGE> 10
In connection with the acquisition of certain intellectual property and
technology rights from National Patent Development Corporation ("NPDC"), the
Company agreed to pay NPDC a royalty of $1 million. Such amount is payable if
and when the Company generates income before income taxes, limited to 25% of
such income before income taxes per year until such amount is paid in full.
LIMITED PRODUCTION EXPERIENCE. Although the Company has produced ALFERON N
Injection in accordance with its commercial requirements, it has never produced
ALFERON N Injection at levels which would allow the Company to operate
profitably. There can be no assurance that, if the Company's commercial
requirements increase to such levels, the Company will be able to produce
ALFERON N Injection at such levels and at a competitive price.
RISK OF PRODUCT LIABILITY. The Company's products have undergone or will
undergo extensive clinical testing prior to the granting of any regulatory
approval for the purpose, among other things, of determining the safety of such
products. The Company may sell products which cause unexpected adverse reactions
or result in an allergic or other reaction or which are alleged to have
unacceptable adverse side effects. Product liability risk is inherent in the
testing, manufacture, marketing, and sale of the Company's products, and there
can be no assurance that the Company will be able to avoid significant product
liability exposure. Such liability might result from claims made directly by
consumers or by pharmaceutical companies or others selling such products. It is
impossible to predict the scope of injury or liability from such unexpected
reactions, or the measure of damages which might be imposed as a result of any
claims or the cost of defending such claims. The Company has a product liability
insurance policy in the amount of $10,000,000. Although the Company believes
this amount is sufficient, there is no assurance that the Company will be able
to maintain such coverage, and even if it does maintain it, in the event that
the Company becomes subject to liability claims in excess of any insurance
coverage it may have in effect, the Company may not have sufficient assets or
liquidity to satisfy such claims which could result in the Company's inability
to continue its operations. Furthermore, any published reports or rumors
suggesting a link between a Company product and injury to a person could be
expected to materially impair the Company's ability to market such product.
RETENTION OF KEY PERSONNEL. Because of the specialized scientific nature
of the Company's business, it is necessary to attract and retain personnel with
a wide variety of scientific capabilities. Competition for such personnel is
intense. There can be no assurance that the Company will continue to attract and
retain personnel of high scientific caliber. None of the Company's key employees
have employment agreements. The Company does not maintain key man life insurance
for any of its key employees and does not intend to obtain such insurance. The
Company's loss of services of certain of its employees or other members of its
staff could have a material adverse effect on the Company's operations.
CONFLICTS OF INTEREST. As of February 10, 1997, NPDC beneficially owned
approximately 15% of the outstanding shares of Common Stock. Certain conflicts
of interest may arise as a result of NPDC's stock ownership in the Company and
certain related transactions between the Company and NPDC. Furthermore, the
chief executive officer of the Company also serves as general counsel of NPDC
and may have conflicts of interest in allocating management time, services, and
functions between the Company and NPDC. In addition, certain directors of NPDC
also serve as directors of the Company.
PREFERRED STOCK. The Company's charter provides for 5,000,000 authorized
but unissued shares of Preferred Stock, the rights, preferences, qualifications,
limitations, and restrictions of which may be fixed by the Board of Directors
without any further vote or action by the stockholders. The ability to issue the
Preferred Stock could have the effect of delaying, deferring, or preventing a
change of control of the Company.
OPTIONS AND WARRANTS. As of February 10, 1997, the Company had outstanding
options to purchase 5,611,844 shares (including options issued to Sunrise or its
designees for 2,411,594 shares) and warrants to purchase 704,844 shares of
Common Stock. For the life of the outstanding options and warrants, the holders
are given, at nominal cost, the opportunity to profit if the price for the
Common Stock in the public market exceeds the exercise price of the options or
warrants, without assuming the risk of ownership, with a resulting dilution in
the interest of other security holders. If the public market price of the Common
Stock does not rise above the exercise price of the options or warrants during
the exercise period, then such securities will expire worthless. As long as the
outstanding options and warrants remain unexercised, the terms under which the
9
<PAGE> 11
Company could obtain additional capital may be adversely affected. Moreover, the
holders of these securities may be expected to exercise them at a time when the
Company would, in all likelihood, be able to obtain any needed capital by a new
offering of its securities on terms more favorable than those provided by these
securities.
VOLATILITY OF SHARE PRICE; LACK OF LIQUIDITY. There has been significant
volatility in the market prices for publicly traded shares of biotechnology
companies, including the Company. There can be no assurance that the price of
the Common Stock will remain at or exceed current levels. Factors, such as
announcements of technological or product developments by the Company or its
competitors, governmental regulation, or patent or proprietary rights
developments, may have a significant impact on the market price of the Common
Stock.
Effective August 3, 1995, the trading market for the Common Stock was
changed from the NASDAQ National Market System to the NASDAQ SmallCap Market
because of the failure of the Company to satisfy the listing requirements for
the NASDAQ National Market System. The liquidity of the Common Stock may be
adversely affected by such change. In addition, while 28 firms made a market in
the Common Stock as of February 10, 1997, all or some of such firms may
discontinue such activities at any time or from time to time, which may
adversely affect the price and liquidity of the Common Stock.
DIVIDENDS ON COMMON STOCK UNLIKELY. The Company does not, in the
foreseeable future, anticipate paying any dividends on the Common Stock.
10
<PAGE> 12
CAPITALIZATION
The following table sets forth the capitalization of the Company (i) as of
September 30, 1996 and (ii) as adjusted to give effect to the Private Placement
(assuming no other changes in capitalization after September 30, 1996).
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
(UNAUDITED)
-----------------------------
ACTUAL AS ADJUSTED
------------ ------------
<S> <C> <C>
Stockholders' equity:
Preferred Stock, par value $.01 per share, 5,000,000 shares
authorized; none issued and outstanding.................... -- --
Common Stock, par value $.01 per share, 55,000,000 shares
authorized; 43,001,517 shares issued and outstanding;
49,104,779 shares issued and outstanding as adjusted(1).... $ 430,015 $ 491,048
Capital in excess of par value.................................. 98,026,314 107,039,656
Accumulated deficit............................................. (79,606,574) (79,606,574)
------------ ------------
Total stockholders' equity............................ $ 18,849,755 $ 27,924,130
------------ ------------
Total capitalization.......................................... $ 18,849,755 $ 27,924,130
=========== ===========
</TABLE>
- ---------------
(1) Does not include (i) 3,200,250 shares of Common Stock reserved for issuance
upon the exercise of options outstanding under the Company's stock option
plan, (ii) 679,530 shares (704,844 shares as adjusted) reserved for issuance
upon the exercise of outstanding warrants, and (iii) 1,923,333 shares
(2,411,594 shares as adjusted) reserved for issuance upon the exercise of
options issued to Sunrise or its designees.
The Company has no short-term or long-term debt or material long-term lease
obligations.
11
<PAGE> 13
SELLING STOCKHOLDERS
The following table sets forth certain information as of the date of this
Prospectus with respect to the Selling Stockholders. The shares to be sold by
the Selling Stockholders represent shares of Common Stock currently owned by the
Selling Stockholders or which may be acquired by them on exercise of options or
warrants. Each of the Selling Stockholders has certain registration rights with
respect to the shares of Common Stock to be sold. The Company will receive the
exercise price on any such exercise but will not receive any of the proceeds
from the sale of such shares. Beneficial ownership after this offering will
depend on the number of shares sold by each Selling Stockholder.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY OWNED PERCENTAGE OF
PRIOR TO THIS CLASS PRIOR TO NUMBER OF
NAME OF SELLING STOCKHOLDERS OFFERING THIS OFFERING SHARES OFFERED
- ----------------------------------------------- ------------------ -------------- --------------
<S> <C> <C> <C>
GT Global Health Care Fund(1).................. 3,592,500 7.3% 3,500,000(2)
GT Global Fund, Inc.
Global Healthcare Class(1)................... 1,050,000 2.1% 1,000,000(2)
GT Global Fund, Inc.
Global Theme Class(1)........................ 500,000 1.0% 500,000(2)
Public Employee Retirement
System of Idaho.............................. 415,000 (3) 415,000(2)
City of Milford Pension &
Retirement Fund.............................. 240,000 (3) 200,000(2)
Sunrise Securities Corp.(4).................... 50,000 (3) 50,000(5)
Nathan Low(6).................................. 2,484,213 4.9% 1,799,213(7)
Preston Tsao(6)................................ 115,805 (3) 115,805(8)
Paul Scharfer(6)............................... 799,601 1.6% 799,601(9)
Lawrence Zaslow(6)............................. 41,063 (3) 41,063(10)
Derek Caldwell(6).............................. 50,000 (3) 50,000(11)
Dwight Miller(6)............................... 15,545 (3) 15,545(12)
Alan Swerdloff(6).............................. 35,629 (3) 23,629(13)
Scott Chinitz(6)............................... 5,000 (3) 5,000
Mark Germain................................... 643,844 1.3% 643,844(14)
</TABLE>
- ---------------
(1) Mutual fund managed by Chancellor LGT Asset Management, Inc. Table does not
include 431,700 shares owned by GT Health Care Fund, which is also managed
by Chancellor LGT Asset Management, Inc.
(2) Shares purchased in the Private Placement.
(3) Less than one percent.
(4) On May 10, 1995, Sunrise was retained by the Company to introduce the
Company to a specified pharmaceutical company. The engagement expired
without any compensation being payable to Sunrise.
Sunrise acted as the underwriter for a best efforts offering by the Company
which was completed in August and September 1995 pursuant to which the
Company sold 12,000,000 shares of Common Stock for an aggregate of
$14,400,000. In connection with such offering, (i) Sunrise received
underwriting discounts of $1,112,100, a non-accountable expense allowance
of $335,900, an accountable expense allowance of $4,800, and options to
purchase 1,123,333 shares of Common Stock at an exercise price of $1.86 per
share and (ii) the Company, the Company's officers and directors, and the
Company's principal stockholders agreed (subject to certain exceptions) not
to sell, directly or indirectly, any of their shares of Common Stock or
other equity securities of the Company for periods ranging from six to 24
months from August 14, 1995, without the consent of the Company and
Sunrise.
Sunrise acted as the underwriter for a best efforts offering by the Company
which was completed in May 1996 pursuant to which the Company sold
8,000,000 shares of Common Stock for an aggregate of
12
<PAGE> 14
$16,000,000. In connection with such offering, Sunrise received
underwriting discounts of $1,120,000, a non-accountable expense allowance
of $240,000, and options to purchase 800,000 shares of Common Stock at an
exercise price of $2.40 per share.
Sunrise acted as placement agent in the Private Placement and in connection
therewith received the Private Placement Commission Shares and the Private
Placement Commission Options.
(5) Includes 50,000 shares of Common Stock issuable upon exercise of options at
an exercise price of $2.40 per share. Does not include 488,262 shares of
Common Stock, and 2,361,594 shares of Common Stock issuable upon exercise
of options, owned by designees of Sunrise.
(6) Designee and officer or employee of Sunrise.
(7) Includes 862,242 shares issuable upon exercise of options with an exercise
price of $1.86 per share, 493,450 shares issuable upon exercise of options
with an exercise price of $2.40 per share, and 190,942 shares issuable upon
exercise of options with an exercise price of $1.95 per share.
(8) Includes 96,275 shares issuable upon exercise of options with an exercise
price of $1.86 per share and 19,530 shares issuable upon exercise of
options with an exercise price of $1.95 per share.
(9) Includes 123,753 shares issuable upon exercise of options with an exercise
price of $1.86 per share, 256,550 shares issuable upon exercise of options
with an exercise price of $2.40 per share, and 212,576 shares issuable upon
exercise of options with an exercise price of $1.95 per share.
(10) Includes 41,063 shares issuable upon exercise of options with an exercise
price of $1.86 per share.
(11) Includes 50,000 shares issuable upon exercise of options with an exercise
price of $1.95 per share.
(12) Includes 8,080 shares issuable upon exercise of options with an exercise
price of $1.95 per share.
(13) Includes 7,133 shares issuable upon exercise of options with an exercise
price of $1.95 per share.
(14) Includes 321,922 shares issuable upon exercise of warrants with an exercise
price of $2.62 per share and 321,922 shares issuable upon exercise of
warrants with an exercise price of $4.03 per share.
The sale of shares of Common Stock by the Selling Stockholders may be
effected from time to time in transactions (which may include block transactions
by or for the account of the Selling Stockholders) in the over-the-counter
market or in negotiated transactions, through the writing of options on such
shares, a combination of such methods of sale, or otherwise. Sales may be made
at fixed prices which may be changed, at market prices prevailing at the time of
sale, or at negotiated prices.
Selling Stockholders may effect such transactions by selling their shares
directly to purchasers, through broker-dealers acting as agents for the Selling
Stockholders, or to broker-dealers who may purchase shares as principals and
thereafter sell the shares from time to time in the over-the-counter market, in
negotiated transactions, or otherwise. Such broker-dealers, if any, may receive
compensation in the form of discounts, concessions, or commissions from the
Selling Stockholders and/or the purchasers for whom such broker-dealers may act
as agents or to whom they may sell as principals or both (which compensation as
to a particular broker-dealer may be in excess of customary commissions).
The Selling Stockholders and broker-dealers, if any, acting in connection
with such sale might be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act and any commission received by them and any
profit on the resale of such shares might be deemed to be underwriting discounts
and commissions under the Securities Act.
LEGAL MATTERS
The legality of the securities offered hereby will be passed on for the
Company by Andrea D. Kantor, Associate General Counsel of the Company. Ms.
Kantor owns 15,526 shares of Common Stock and has options to purchase 36,750
shares of Common Stock, all of which are currently exercisable.
13
<PAGE> 15
EXPERTS
The audited consolidated financial statements of the Company and its
subsidiary at December 31, 1995 and 1994, and for each of the years in the three
year period ended December 31, 1995, incorporated by reference herein have been
incorporated by reference herein in reliance upon the report of KPMG Peat
Marwick LLP, independent certified public accountants, incorporated by reference
herein, and upon the authority of said firm as experts in auditing and
accounting.
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-3 under the Securities Act with respect to the shares of Common Stock being
offered by this Prospectus. This Prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits thereto,
certain portions of which have been omitted as permitted by the rules and
regulations of the Commission. For further information with respect to the
Company and the Offering, reference is made to the Registration Statement,
including the exhibits thereto, which may be inspected without charge at the
Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549.
Copies of the Registration Statement may be obtained from the Commission at its
principal office upon payment of prescribed fees. Statements contained in this
Prospectus as to the contents of any contract or other document are not
necessarily complete, and in each instance where such contract or other document
is an exhibit to the Registration Statement, reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement, each statement being qualified in all respects by such reference.
14
<PAGE> 16
- ------------------------------------------------------
- ------------------------------------------------------
NO DEALER, SALESPERSON, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF ANY OFFER
TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANYONE IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, IMPLY
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATES AS OF WHICH
SUCH INFORMATION IS GIVEN.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
The Company......................... 3
Risk Factors........................ 3
Capitalization...................... 11
Selling Stockholders................ 12
Legal Matters....................... 13
Experts............................. 14
Additional Information.............. 14
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
INTERFERON SCIENCES, INC.
9,158,700 SHARES
OF
COMMON STOCK
------------------
PROSPECTUS
------------------
FEBRUARY , 1997
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 17
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth an itemized statement of all expenses in
connection with the issuance and distribution of the securities being registered
hereby. All are estimated except the SEC fee.
<TABLE>
<S> <C>
SEC registration fee....................................................... $ 5,341
Accounting fees and expenses............................................... 5,000
Legal fees and expenses.................................................... 20,000
Cost of printing........................................................... 15,000
Miscellaneous.............................................................. 4,659
-------
Total............................................................ $50,000
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article 9 of the Company's Restated Certificate of Incorporation provides
that the Company shall, to the full extent then permitted by law, indemnify all
persons whom it may indemnify pursuant thereto. In addition, Article 10 of the
Company's Restated Certificate of Incorporation eliminates personal liability of
its directors to the full extent permitted by Section 102(b)(7) of the General
Corporation Law of the State of Delaware.
Section 145 of the General Corporation Law of the State of Delaware permits
a corporation to indemnify its directors and officers against expenses
(including attorney's fees), judgments, fines and amounts paid in settlements
actually and reasonably incurred by them in connection with any action, suit or
proceeding brought by third parties, if such directors or officers acted in good
faith and in a manner they reasonably believed to be in or not opposed to the
best interests of the corporation and, with respect to any criminal action or
proceeding, had no reason to believe their conduct was unlawful. In a derivative
action, i.e., one by or in the right of the corporation, indemnification may be
made only for expenses actually and reasonably incurred by directors and
officers in connection with the defense or settlement of an action or suit, and
only with respect to a matter as to which they shall have acted in good faith
and in a manner they reasonably believed to be in or not opposed to the best
interest of the corporation, except that no indemnification shall be made if
such person shall have been adjudged liable to the corporation, unless and only
to the extent that the court in which the action or suit was brought shall
determine upon application that the defendant officers or directors are
reasonably entitled to indemnity for such expenses despite such adjudication of
liability.
Section 102(b)(7) of the General Corporation Law of the State of Delaware
provides that a corporation may eliminate or limit the personal liability of a
director to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, provided that such provision shall not
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the General Corporation Law
of the State of Delaware, or (iv) for any transaction from which the director
derived an improper personal benefit. No such provision shall eliminate or limit
the liability of a director for any act or omission occurring prior to the date
when such provision becomes effective.
The Company currently has a $1,000,000 directors' and officers' liability
insurance policy.
II-1
<PAGE> 18
ITEM 16. EXHIBITS.
<TABLE>
<C> <C> <S>
5.1 -- Opinion of Andrea D. Kantor, Esq., Associate General Counsel, Registrant, as to the
legality of the securities being registered*
23.1 -- Consent of Independent Auditors*
23.2 -- Consent of Andrea D. Kantor (included in Exhibit 5.1)*
</TABLE>
- ---------------
* Filed herewith.
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities
Act, as amended (the "Securities Act") may be permitted to directors, officers
and controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant 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 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the 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 Registrant 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 whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
A. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
B. 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;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which individually or in the
aggregate, represent a fundamental change in the information set forth
in the 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% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
II-2
<PAGE> 19
Provided, however, That paragraphs (1)(i) and (1)(ii) do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished
to the Commission by the Registrant pursuant to section 13 or section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by reference
in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, 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 remains unsold at the
termination of the offering.
II-3
<PAGE> 20
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-3 and has duly caused this Amendment No. 1 to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York, and the State of New York, on this
10th day of February, 1997.
INTERFERON SCIENCES, INC.
By: /s/ LAWRENCE M. GORDON
------------------------------------
Lawrence M. Gordon
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed by the following persons in
their capacities on February 10, 1997.
<TABLE>
<C> <S>
/s/ SAMUEL H. RONEL, PH.D. Vice Chairman of the Board
- ---------------------------------------------
Samuel H. Ronel, Ph.D.
/s/ LAWRENCE M. GORDON Chief Executive Officer and Director
- --------------------------------------------- (Principal Executive Officer)
Lawrence M. Gordon
/s/ STANLEY G. SCHUTZBANK, PH.D. President and Director
- ---------------------------------------------
Stanley G. Schutzbank, Ph.D.
Director
- ---------------------------------------------
Leon Botstein, Ph.D.
Director
- ---------------------------------------------
Jerome I. Feldman
Director
- ---------------------------------------------
Sheldon L. Glashow, Ph.D
/s/ SCOTT N. GREENBERG Director
- ---------------------------------------------
Scott N. Greenberg
Director
- ---------------------------------------------
Roald Hoffmann, Ph.D
/s/ MARTIN M. POLLAK Director
- ---------------------------------------------
Martin M. Pollak
/s/ DONALD W. ANDERSON Controller (Principal Accounting and Financial
- --------------------------------------------- Officer)
Donald W. Anderson
</TABLE>
The foregoing constitute a majority of the members of the Board of
Directors.
II-4
<PAGE> 21
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------ ------------------------------------------------------------------------ ------------
<C> <C> <S> <C>
5.1 -- Opinion of Andrea D. Kantor, Esq., Associate General Counsel,
Registrant, as to the legality of the securities being registered*
23.1 -- Consent of Independent Auditors*
23.2 -- Consent of Andrea D. Kantor (included in Exhibit 5.1)*
</TABLE>
- ---------------
* Filed herewith.
<PAGE> 1
EXHIBIT 5.1
INTERFERON SCIENCES, INC. [LOGO] [LETTERHEAD]
February 10, 1997
Interferon Sciences, Inc.
783 Jersey Avenue
New Brunswick, New Jersey 08901
Gentlemen:
Reference is made to the Registration Statement on Form S-3 of Interferon
Sciences, Inc. (the "Company") relating to the registration of shares of the
Company's common stock, par value $.01 per share (the "Common Stock").
I am Associate General Counsel of the Company, and have examined such
corporate records and other documents as I have deemed relevant. Based upon the
above, I am of the opinion that the Common Stock to be sold pursuant to the
Registration Statement is validly authorized and issued, fully paid, and
non-assessable.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and the use of my name in the Prospectus.
Very truly yours,
Andrea D. Kantor
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Interferon Sciences, Inc.
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
KPMG PEAT MARWICK LLP
New York, New York
February 10, 1997
