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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 22, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
TECHNICLONE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C>
DELAWARE 95-3698422
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
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14282 FRANKLIN AVENUE, TUSTIN CALIFORNIA 92780-7017 (714) 838-0500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
LON H. STONE
TECHNICLONE CORPORATION
14282 FRANKLIN AVENUE, TUSTIN CALIFORNIA 92780-7017
(714) 838-0500
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
R.C. SHEPARD, ESQ.
STRADLING, YOCCA, CARLSON & RAUTH, A PROFESSIONAL CORPORATION
660 NEWPORT CENTER DRIVE, SUITE 1600
NEWPORT BEACH, CALIFORNIA 92660
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
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. [ ]
CALCULATION OF REGISTRATION FEE
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<S> <C> <C> <C> <C>
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PROPOSED MAXIMUM
TITLE OF EACH CLASS PROPOSED MAXIMUM AGGREGATE
OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE OFFERING AMOUNT OF
REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) REGISTRATION FEE
- -------------------------------------------------------------------------------------------------
Common Stock ($.001 par
value)................. 9,000,000 shares $3.9375 $35,437,500 $10,738.64
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(1) The number of shares of Common Stock registered hereunder represents the
Company's good faith estimate of the number of shares which may be issued
upon conversion of the Company's 5% Adjustable Convertible Class C Preferred
Stock (the "Preferred Stock") or upon exercise of the Warrants, as the case
may be. Pursuant to Rule 416, this Registration Statement also covers an
indeterminate number of additional shares of Common Stock which may become
issuable upon conversion of the Preferred Stock by reason of reductions of
the conversion price, in accordance with the terms of the Certificate of
Designation of 5% Adjustable Convertible Class C Preferred Stock (the
"Certificate of Designation").
(2) In accordance with Rule 457(c), the aggregate offering price of 9,000,000
shares of Common Stock registered hereby which would be issued upon the
conversion of the shares of the Preferred Stock and exercise of Warrants as
provided in the Certificate of Designation, the aggregate offering price is
estimated solely for purposes of calculating the registration fee, as
determined in accordance with Rule 457(c), using the closing price reported
by the Nasdaq Small Cap Market for the Common Stock on August 20, 1997 which
was $3.9375 per share.
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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PROSPECTUS
TECHNICLONE CORPORATION
This Prospectus relates to the offer and sale of 9,000,000 shares of Common
Stock, par value $.001 per share ("Common Stock"), of Techniclone Corporation
(the "Company" or "Techniclone"), which may be offered hereby from time to time
by the selling stockholders named herein (the "Selling Stockholders") for their
own benefit. The Selling Stockholders hold 12,000 shares of 5% Adjustable
Convertible Class C Preferred Stock ("Preferred Stock") issued on April 25, 1997
by the Company for an aggregate purchase price of $12,000,000. The shares of
Preferred Stock are convertible into shares of the Company's Common Stock. In
connection with the sale of shares of Preferred Stock to the Selling
Stockholders, the placement agent was issued warrants to purchase 1,200 shares
of Preferred Stock for $1,200,000 ("Placement Agent Warrant"). The Certificate
of Designation of the 5% Adjustable Convertible Class C Preferred Stock
("Certificate of Designation") provides that a 5% dividend will be paid on the
original purchase price. The dividend is payable quarterly in shares of the
Preferred Stock or at the option of the Company, in cash. The shares of
Preferred Stock paid as a dividend may be converted into shares of the Company's
Common Stock on the same terms as the other shares of the Preferred Stock. When
the placement agent exercises the warrants to purchase shares of Preferred
Stock, such shares will be convertible into Common Stock and Warrants on the
same terms as all other shares of Preferred Stock. Pursuant to the terms and
subject to the limitations and conditions set forth in the Certificate of
Designation, a share of the Preferred Stock is convertible into shares of the
Company's Common Stock (the "Conversion Shares") and stock warrants ("Conversion
Warrants") to purchase shares of the Company's Common Stock, at 110% of the
Conversion Price (as defined below) of the Conversion Shares, an amount of
Common Stock equal to 25% of the number of Conversion Shares issued (the
"Warrant Shares"). The Warrant Shares and the Conversion Shares are sometimes
referred to herein as "Registrable Shares." From time to time, each Selling
Stockholder may convert all or a portion of such Selling Stockholder's shares of
Preferred Stock into Conversion Warrants and shares of Common Stock of the
Company.
The shares of Preferred Stock will be converted into shares of Common Stock
at a discount from the average of the lowest market trading price for the five
days preceding conversion. The Selling Stockholders may begin converting the
shares of Preferred Stock on September 25, 1997. If any shares of Preferred
Stock are converted on or after September 25, 1997 but prior to November 25,
1997 the discount from Market Price is 0.0%, if any shares of Preferred Stock
are converted on or after November 25, 1997 but prior to January 25, 1997 the
discount from Market Price is 13%, if any shares of Preferred Stock are
converted on or after January 25, 1998 but prior to March 25, 1998 the discount
from Market Price is 20%, if any shares of Preferred Stock are converted on or
after March 25, 1998 but prior to May 25, 1998 the discount from Market Price is
22.5%, if any shares of Preferred Stock are converted on or after May 25, 1998
but prior to July 25, 1998 the discount from Market Price is 25%, if any shares
of Preferred Stock are converted on or after July 25, 1998 the discount from
Market Price is 27%.
At any date prior to March 24, 1998 the Conversion Price for any share of
Preferred Stock shall be the discount from Market Price set forth in the
preceding paragraph. At any date after March 24, 1998, the Conversion Price
shall be the lower of (i) the Conversion Price calculated in accordance with the
paragraph set forth above or (ii) the average of the closing prices of the
Common Stock for the thirty (30) trading days including and immediately
preceding March 24, 1998 (such average being the "Conversion Cap").
All of the Conversion Shares and Warrant Shares issued or which are issuable
by the Company are Registrable Shares.
Information regarding the Selling Stockholders is set forth in "Selling
Stockholders" and "Plan of Distribution".
The distribution of the shares of Common Stock offered hereby may be
effected from time to time in one or more transactions. All or a portion of the
Common Stock offered by this Prospectus may be offered for sale, from time to
time, by the Selling Stockholders, or by permitted transferees or successors of
the Selling Stockholders, in private or negotiated transactions, in open market
transactions on the National Association of Securities Dealers Automated
Quotation Small Cap Market ("NASDAQ"), or on one or more exchanges or otherwise,
or a combination of these methods, at prices and terms then obtainable, at fixed
prices, at prices then prevailing at the time of sale, at prices related to such
prevailing prices, or at negotiated prices, or otherwise. The shares of Common
stock offered hereby may be sold by one or more of the following: (i) through
underwriters; (ii) through dealers or agents (which may include underwriters)
including: (a) a block trade in which the broker or dealer so engaged will
attempt to sell the shares of Common Stock as agent, but may position and resell
a portion of the block as principal to facilitate the transaction; (b) purchases
by a broker or dealer and resale by such broker or dealer as a principal for its
account pursuant to this Prospectus; (c) ordinary brokerage transactions and (d)
transactions in which the broker solicits purchasers; or (iii) directly to one
or more purchasers. Usual and customary or specifically negotiated brokerage
fees or commissions may be paid by the Selling Stockholders. Concurrently with
sales under this Prospectus, the Selling Stockholders may effect other sales of
Common Stock or Shares under Rule 144 or other exempt resale transactions.
Selling Stockholders and any underwriters, dealers, brokers, or agents executing
selling orders on behalf of the Selling Stockholders may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"), in which event commissions received by such persons may be
deemed to be underwriting commission under the Securities Act.
SEE "RISK FACTORS," COMMENCING ON PAGE 4, FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY INVESTORS.
The Company will not receive any part of the proceeds from the sale of
Common Stock. See "Use of Proceeds." The Selling Stockholders and intermediaries
through whom such securities are sold may be deemed "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.
All expenses of the registration of securities covered by this Prospectus
are to be borne by the Company, except that the Selling Stockholders will pay
any applicable underwriters' commissions and expenses, brokerage fees or
transfer taxes.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE 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 Common Stock of the Company is registered pursuant to Section 12(g) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and is
listed on the NASDAQ Small Cap under the symbol "TCLN." On August 20, 1997, the
last reported sale price of the Company's Common Stock on the NASDAQ Small Cap
was $3.9375.
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The date of this Prospectus is August 22, 1997.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act of 1934 and in accordance therewith files reports, proxy statements and
other information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the Commission's regional offices at 500 West Madison Street, Chicago,
Illinois 60606 and 7 World Trade Center, New York, New York 10048. Copies of
such material can also be obtained at prescribed rates from the Public Reference
Section of the Commission at its principal office at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549. Such material may be obtained
electronically by visiting the Commission's web site on the Internet at
http://www.sec.gov. The Common Stock of the Company is traded on the Nasdaq
Small Cap Market. Reports, proxy statements and other information concerning the
Company may be inspected at the National Association of Securities Dealers,
Inc., at 1735 K Street, N.W., Washington D.C. 20006.
This Prospectus does not contain all of the information set forth in the
Registration Statement of which this Prospectus is a part and which the Company
has filed with the Commission. For further information with respect to the
Company and the securities offered hereby, reference is made to the Registration
Statement, including the exhibits filed as a part thereof, copies of which can
be inspected at, or obtained at prescribed rates from the Public Reference
Section of the Commission at the address set forth above. Additional updating
information with respect to the Company may be provided in the future by means
of appendices or supplements to this Prospectus.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The documents listed below have been filed by the Company with the
Commission under the Exchange Act and are incorporated by reference herein:
a. The Company's Annual Report on Form 10-K for the fiscal year ended
April 30, 1997, filed with the Commission on July 29, 1997.
b. A Current Report on Form 8-K filed with the Commission on May 12,
1997.
c. The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A and Form 8-B
Registration of Successor Issuers filed under the Exchange Act,
including any amendment or report filed for the purpose of updating
such description.
d. All other reports filed by the Company pursuant to Section 13(a) or
15(d) of the Exchange Act since the end of the Company's fiscal
year ended April 30, 1997.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 and
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the filing of a post-effective amendment which indicates that all securities
offered have been sold or which reregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference in this Prospectus and
to be 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,
or in any other subsequently filed document that also is or is deemed to be
incorporated by reference herein, modifies or supersedes 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.
The Company will provide, without charge, to each person to whom a copy of
this Prospectus is delivered, upon written or oral request of such person, a
copy of any and all of the information that has been or may be incorporated by
reference herein (other than exhibits to such documents unless such exhibits are
specifically incorporated by reference into such documents). Such requests
should be directed to Techniclone Corporation, Attention: William V. Moding,
Chief Financial Officer and Secretary, 14282 Franklin Avenue, Tustin California
92780-7017, telephone number (714) 838-0500.
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THE COMPANY
Techniclone Corporation was incorporated in the State of Delaware on
September 25, 1996. On March 24, 1997, Techniclone International Corporation, a
California corporation, was merged with and into Techniclone Corporation. The
merger was effected for the purpose of effecting a change in the Company's state
of incorporation from California to Delaware. Unless the context otherwise
requires, references to the "Company" herein includes Techniclone Corporation,
its predecessor Techniclone International Corporation, its former subsidiary
Cancer Biologics, Inc. (which was merged into the company on June 26, 1994) and
its wholly owned subsidiary Peregrine Pharmaceuticals, Inc. The principal
executive offices of the Company are located at 14282 Franklin Avenue, Tustin,
California 92780-7017. The Company's telephone number is (714) 838-0500, and the
Company's address on the World Wide Web is http://www.techniclone.com.
The Company is engaged in the research and development of new technologies
which can be utilized in the production of monoclonal antibodies and the
production of specific monoclonal antibodies with prospective diagnostic and
therapeutic applications. To date, the Company has been primarily engaged in the
research, development and production of mouse and chimeric hybridoma cell lines
and in the manufacture of monoclonal antibodies derived from these cell lines
for in vivo therapeutic purposes. Products that appear to have commercial
viability include (i) anti-lymphoma antibodies, LYM-1 and LYM-2 (collectively
the "LYM Antibodies") and (ii) three advanced monoclonal antibody technologies
for collateral targeting of solid tumors, Tumor Necrosis Therapy (TNT), Vascular
Targeting Agents (VTA), and Vasopermeation Enhancement Agents (VEA).
The Company holds an exclusive world-wide license to manufacture and market
products using the LYM Antibodies. In clinical studies conducted at the
University of California at Davis, over fifty patients with B-cell lymphoma were
treated with LYM-1 linked to Iodine-131 (I(131)). A significant number of these
patients had significant clinical responses including patients showing complete
and durable responses. None of the patients experienced the acute toxicities
that normally accompany treatment with conventional cancer therapeutics
radioisotopes.
The Company has begun Phase II/III testing in multi-center clinical trials
of the LYM-1 Antibody in late stage Non-Hodgkins lymphoma patients. The clinical
trials are being sponsored by the Company's marketing partner, Alpha Therapeutic
Corporation ("Alpha"), a wholly-owned subsidiary of Green Cross Corporation. The
clinical trials are currently being held at participating medical centers
including M.D. Anderson, The Cleveland Clinic, Cornell University (N.Y.C.),
George Washington University and the University of Cincinnati. Following the
completion of the clinical trials, the Company expects Alpha to file an
application with the FDA to market LYM-1 in the United States.
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RISK FACTORS
The following factors should be considered carefully in evaluating the
Company and its business before making an investment in the Common Stock offered
hereby, together with all of the other information set forth or incorporated by
reference in this Prospectus.
Fluctuation of Future Operating Results. Future operating results may be
impacted by a number of factors that could cause actual results to differ
materially from those stated herein. These factors include worldwide economic
and political conditions, industry specific factors, the Company's ability to
maintain access to external financing sources and its financial liquidity, the
Company's ability to timely develop and produce commercially viable products at
competitive prices, the availability and cost of components of those products,
and the Company's ability to manage expense levels.
Early Stage of Development. Since its inception, the Company has been
engaged in the development of drugs and related therapies for the treatment of
people with cancer. The Company's product candidates are generally in early
stages of development, with only one in clinical trials. Revenues from product
sales have been insignificant and there have been no revenues from product
royalties. Additionally, products resulting from the Company's research and
development efforts, if any, are not expected to be available commercially for
at least the next year. No assurance can be given that the Company's product
development efforts, including clinical trials, will be successful, that
required regulatory approvals for the indications being studied can be obtained,
that its products can be manufactured at acceptable cost and with appropriate
quality or that any approved products can be successfully marketed.
Need For Additional Capital. At April 30, 1997, the Company had
approximately $12,229,000 in cash. It has significant commitments for
expenditures for building improvements, equipment, furniture and fixtures and
expects these expenditures to increase in the future. The Company has
experienced negative cash flows from operations since its inception and expects
the negative cash flow from operations to continue for the foreseeable future.
The Company expects that the monthly negative cash flow will increase as a
result of increased activities with the Phase II/III clinical trials for LYM-1
(Oncolym(TM)) and as a result of significantly increased research, development
and clinical trial costs associated with the Company's other products, including
Tumor Necrosis Therapy ("TNT") and Vascular Targeting Agents ("VTA"). As a
result of the increased expenditure of funds, the Company believes that it will
be necessary for the Company to raise additional capital to sustain research and
development and provide for future clinical trials. The Company must raise
additional equity funds in order to continue its operations until it is able to
generate sufficient additional revenue from the sale and/or licensing of its
products. There can be no assurance that the Company will be successful in
raising such funds on terms acceptable to it, or at all, or that sufficient
additional capital will be raised to research and develop the Company's
additional products. The Company is discussing the possibility of raising
additional funds with various investment banking firms and private investors,
but as of August 22, 1997, the Company had not entered into any firm commitments
for additional funds. If the initial results from the Phase II/III clinical
trials of LYM-1 (Oncolym(TM)) are poor, then management believes that such
results will have a material adverse effect upon the Company's ability to raise
additional capital, which will affect the Company's ability to continue a
full-scale research and development effort for its antibody technologies. The
Company's future success is highly dependent upon its continued access to
sources of financing which it believes are necessary for the continued growth of
the Company. In the event the Company is unable to maintain access to its
existing financing sources, or obtain other sources of financing there would be
a material adverse effect on the Company's business, financial position and
results of operations.
Shares Eligible for Future Sale; Dilution. If the Market Price of the
Common Stock remains approximately the same and all outstanding warrants and
options are exercised and all outstanding shares of the Class B Convertible
Preferred Stock are converted into Common Stock after August 1, 1998 but prior
to their expiration, approximately 7,300,000 additional shares of Common Stock
could become freely tradable without restriction under the Securities Act. On
issuance such shares will be freely tradable.
All shares of Common Stock issuable upon conversion of the Class C
Preferred Stock and the exercise of the related warrants, will be freely
tradable under the Registration Statement of which this Prospectus is a part.
Sales of substantial amounts of Common Stock in the public market could
adversely affect the prevailing
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market price of the Common Stock and, dependent upon the then current market
price of the Common Stock, increase the number of shares of Common Stock that
are issuable upon conversion of Preferred Stock.
Intense Competition. The biotechnology industry is intensely competitive
and changing rapidly. Substantially all of the Company's existing competitors
have greater financial resources, larger technical staffs, and larger research
budgets than the Company. There can be no assurance that these competitors will
not be able to expend resources to develop their products prior to the Company's
product being granted approval for marketing by the U.S. Food and Drug
Administration. There can be no assurance that the Company will be able to
compete successfully or that competition will not have a material adverse effect
on the Company's business, financial position and results of operations.
Technological Uncertainty. The Company's future success will depend
significantly upon its ability to develop and test workable products for which
the Company will seek FDA approval to market to certain defined groups. A
significant risk remains as to the technological performance and commercial
success of the Company's technology and products. The products currently under
development by the Company will require significant additional laboratory and
clinical testing and investment over the foreseeable future. The significant
research, development, and testing activities, together with the resulting
increases in associated expenses, are expected to result in operating losses for
the foreseeable future. Although the Company is optimistic that it will be able
to successfully complete development of one or more of its products, there can
be no assurance that (i) the Company's research and development activities will
be successful, or that any proposed products will prove to be effective in
clinical trials; (ii) cause harmful side effect during clinical trials; (iii)
may take longer to progress through clinical trials than had been anticipated;
(iv) prove impracticable to manufacture in commercial quantities at reasonable
cost and with acceptable quality; (v) the Company will be able to obtain all
necessary governmental clearances and approvals to market its products; (vi)
that such proposed products will prove to be commercially viable or successfully
marketed; or (vii) that the Company will ever achieve significant revenues or
profitable operations. In addition, the Company may encounter unanticipated
problems, including development, manufacturing, distribution and marketing
difficulties. The failure to adequately address such difficulties could have a
material adverse effect on the Company's business, financial position and
results of operations.
The results of initial preclinical and clinical testing of the products
under development by the Company are not necessarily indicative of results that
will be obtained from subsequent or more extensive preclinical studies and
clinical testing. The Company's clinical data gathered to date with respect to
its LYM-1 (Oncolym(TM)) antibody are primarily from a Phase II dose escalation
trial which was designed to develop and refine the therapeutic protocol, to
determine the maximum tolerated dose of total body radiation and to assess the
safety and efficacy profile of treatment with a radiolabeled antibody. Further,
the data from this Phase II dose escalation trial were compiled from testing
conducted at a single site and with a relatively small number of patients.
Substantial additional development and clinical testing and investment will be
required prior to seeking any regulatory approval for commercialization of this
potential product. There can be no assurance that clinical trials of the
Oncolym(TM) or other product candidates under development will demonstrate the
safety and efficacy of such products to the extent necessary to obtain
regulatory approvals for the indications being studied, or at all. Companies in
the pharmaceutical and biotechnology industries have suffered significant
setbacks in advanced clinical trials, even after obtaining promising results in
earlier trials. The failure to demonstrate adequately the safety and efficacy of
Oncolym(TM) or any other therapeutic product under development could delay or
prevent regulatory approval of the product and would have a material adverse
effect on the Company's business, financial condition and results of operations.
Limited Control of Clinical Trials. The Phase II/III clinical trial for the
Company's LYM-1 (Onocolym(TM)) antibody is being conducted by Alpha. As a result
of Alpha being in charge of the clinical trial, the Company has limited control
over the LYM-1 (Onocolym(TM)) clinical trial. The ability of the Company to
conduct and complete its ongoing and planned clinical trials in a timely manner
is subject to a number of uncertainties and risks, including the rate at which
patients can be accrued in each clinical trial, the Company's ability to obtain
necessary regulatory approvals in each clinical trial and the occurrence of
unanticipated adverse events. Any suspension or delay of any of the clinical
trials could have a material adverse effect on the Company's business, financial
condition and results of operations.
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Government Regulation. The Company's products are subject to extensive
government regulation in the United States by federal, state and local agencies
including principally the Food and Drug Administration. If drug products are
marketed abroad, they are also subject to extensive regulation by foreign
governments. The process of obtaining and maintaining FDA and other required
regulatory approvals for the Company's products is lengthy, expensive and
uncertain. There can be no assurance that the Company can obtain FDA or other
regulatory approval for the marketing of its products or that changes in
existing regulations or the adoption of new regulations will not occur which
will adversely affect the Company. There can be no assurance that any clearances
or approvals, once obtained, will not be withdrawn or that compliance with other
regulatory requirements can be maintained. Failure to comply with FDA and other
regulatory requirements can result in sanctions being imposed, including without
limitation, warning letters, fines, product recalls, seizures, injunctions and
withdrawals of previously approved applications. There can be no assurance that
the Company will be able to comply with applicable regulations and other FDA
regulatory requirements. Such failure could have a material adverse effect on
the Company's business, financial condition and results of operations.
Manufacturing Regulation. Manufacturers of drugs and biologics also are
required to comply with the applicable FDA current good manufacturing practice
("CGMP") regulations, which include requirements relating to quality control and
quality assurance as well as the corresponding maintenance of records and
documentation. Manufacturing facilities are subject to inspection by the FDA,
including unannounced inspection, and must be licensed before they can be used
in commercial manufacturing of the Company's products. There can be no assurance
that the Company or its suppliers will be able to comply with the applicable
CGMP regulations and other FDA regulatory requirements. Such failure could have
a material adverse effect on the Company's business, financial condition and
results of operations.
Single Source of Radiolabeling Services. The Company procures its
radiolabeling services from Mills Biopharmaceuticals, Inc. The Company is
negotiating with several other companies to provide radiolabeling services for
its antibodies and expects to have additional antibody radiolabeling sources in
late-1997. There can be no assurance that contracts with these additional
suppliers will be entered into in a timely manner, if at all, or that
governmental clearances will be provided in a timely manner, if at all, and that
clinical trials will not be delayed or disrupted as a result. While the Company
plans to develop additional suppliers of these services, it expects to rely on
its current suppliers for all or a significant portion of its requirements for
the LYM-1 (Onocolym(TM)) antibody for the foreseeable future. Radiolabeled
antibody cannot be stockpiled against future shortages due to the eight-day
half-life of the I(131) radioisotope. Accordingly, any change in the Company's
existing or planned contractual relationships with, or interruption in supply
from, its third-party suppliers could adversely affect the Company's ability to
complete its ongoing clinical trials and to market the LYM-1 (Onocolym(TM))
antibody, if approved. Any such change or interruption would have a material
adverse effect on the Company's business, financial condition and results of
operations.
Hazardous and Radioactive Materials. The manufacturing and use of the
Company's LYM-1 (Oncolym(TM)) requires the handling and disposal of I(131). The
Company is relying on a contract manufacturer, Mills Biopharmaceuticals, Inc
("MBI"), to radiolabel its LYM-1 antibody with I(131). MBI must comply with
various state and federal regulations regarding the handling and use of
radioactive materials. Violation of these state and federal regulations by MBI
or a clinical trial site could delay significantly completion of such trials.
Violations of safety regulations could occur with this manufacturer, and,
therefore, there is a risk of accidental contamination or injury. In the event
of any such noncompliance or accident, the supply of LYM-1 (Oncolym(TM)) for use
in clinical trials or commercially could be interrupted, which could have a
material adverse effect on the Company's business, financial condition and
results of operations.
The Company could be held liable for any damages that result from such an
accident, contamination or injury from the handling and disposal of these
materials, as well as for unexpected remedial costs and penalties that may
result from any violation of applicable regulations, which could result in a
material adverse effect on the Company's business, financial condition and
results of operations. In addition, the Company may incur substantial costs to
comply with environmental regulations.
6
<PAGE> 8
Dependence on Third Parties for Commercialization. The Company intends to
sell its products in the United States and internationally in collaboration with
marketing partners. The Company has a development and marketing agreement with
Alpha which currently does not possess a sales force to market LYM-1
(Oncolym(TM)). Additionally, the Company does not possess the resources and
experience necessary to market its other product candidates. The Company has no
arrangements for the distribution of its other product candidates, and there can
be no assurance that the Company will be able to enter into any such
arrangements in a timely manner or on commercially favorable terms, if at all.
If and when the FDA approves one of the Company's product candidates, the
Company's ability to market the product will be contingent upon it recruiting,
developing, training and deploying its own sales force and on Alpha recruiting,
training and deploying a sales force. Development of an effective sales force
will require significant financial resources and time. There can be no assurance
that the Company will be able to establish such a sales force in a timely or
cost effective manner, if at all, or that such a sales force will be capable of
generating demand for the Company's product candidates.
Uncertainty of Market Acceptance. Even if the Company's products are
approved for marketing by the FDA and other regulatory authorities, there can be
no assurance that the Company's products will be commercially successful. If the
Company's most advanced product, LYM-1 (Oncolym(TM)) is approved, it would
represent a significant departure from currently approved methods of treatment
for Non-Hodgkin's lymphoma. Accordingly, LYM-1 (Oncolym(TM)) may experience
under-utilization by oncologists and hematologists who are unfamiliar with the
application of LYM-1 (Oncolym(TM)) in the treatment of Non-Hodgkin's lymphoma.
As with any new drug, doctors may be inclined to continue to treat patients with
conventional therapies, in this case chemotherapy, rather than new alternative
therapies. Market acceptance also could be affected by the availability of third
party reimbursement. Failure of LYM-1 (Oncolym(TM)) to achieve market acceptance
would have a material adverse effect on the Company's business, financial
condition and results of operations.
Anticipated Future Losses. The Company has experienced significant losses
since inception. As of July 31, 1997, the Company's accumulated deficit was
approximately $53,000,000. The Company expects to incur significant additional
operating losses in the future and expects cumulative losses to increase
substantially due to expanded research and development efforts, preclinical
studies and clinical trials and development of manufacturing, marketing and
sales capabilities. The Company expects that losses will fluctuate from quarter
to quarter and that such fluctuations may be substantial. All of the Company's
products are in development in preclinical studies and clinical trials, and
significant revenues have not been generated from product sales. To achieve and
sustain profitable operations, the Company, alone or with others, must
successfully develop, obtain regulatory approval for, manufacture, introduce,
market and sell its products. The time frame necessary to achieve market success
is long and uncertain. The Company does not expect to generate significant
product revenues for at least the next few years. There can be no assurance that
the Company will ever generate significant product revenues which are sufficient
to become profitable or to sustain profitability.
Product Liability. The manufacture and sale of human therapeutic products
involve an inherent risk of product liability claims. The Company has only
limited product liability insurance. There can be no assurance that the Company
will be able to maintain existing insurance or obtain additional product
liability insurance on acceptable terms or with adequate coverage against
potential liabilities. Such insurance is expensive, difficult to obtain and may
not be available in the future on acceptable terms, if at all. An inability to
obtain sufficient insurance coverage on reasonable terms or to otherwise protect
against potential product liability claims brought against the Company in excess
of its insurance coverage, if any, or a product recall could have a material
adverse effect upon the Company's business, financial condition and results of
operations.
Health Care Reform and Third-Party Reimbursement. Political, economic and
regulatory influences are subjecting the health care industry in the United
States to fundamental change. Recent initiatives to reduce the federal deficit
and to reform health care delivery are increasing cost-containment efforts. The
Company anticipates that Congress, state legislatures and the private sector
will continue to review and assess alternative benefits, controls on health care
spending through limitations on the growth of private health insurance premiums
and Medicare and Medicaid spending, the creation of large insurance purchasing
groups, price
7
<PAGE> 9
controls on pharmaceuticals and other fundamental changes to the health care
delivery system. Any such proposed or actual changes could affect the Company's
ultimate profitability. Legislative debate is expected to continue in the
future, and market forces are expected to drive reductions of health care costs.
The Company cannot predict what impact the adoption of any federal or state
health care reform measures or future private sector reforms may have on its
business.
Earthquake Risks. The Company's corporate and research facilities, where
the majority of its research and development activities are conducted, are
located near major earthquake faults which have experienced earthquakes in the
past. The Company does not carry earthquake insurance on its facility due to its
prohibitive cost and limited available coverages. In the event of a major
earthquake or other disaster affecting the Company's facilities, the operations
and operating results of the Company could be adversely affected.
Stock Price Fluctuations and Limited Trading Volume. The Company's
participation in the highly competitive biotechnology industry often results in
significant volatility in the Company's common stock price. Also, at times there
is a limited trading volume in the Company's Common Stock. This volatility in
the stock price and limited trading volume are significant risks investors
should consider.
Forward Looking Statements. Based on current expectations, this prospectus
and the Company's Annual Report on Form 10-K and its quarterly and periodic
reports contain certain forward-looking statements within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act. In light of the
important factors that can materially affect results, including those set forth
above, the inclusion of forward-looking information should not be regarded as a
representation by the Company or any other person that the objectives or plans
of the Company will be achieved. The Company may encounter competitive,
technological, financial and business challenges making it more difficult than
expected to continue to develop, market and manufacture its products;
competitive conditions within the industry may change adversely; upon
development of the Company's products, demand for the Company's products may
weaken; the market may not accept the Company's products; the Company may be
unable to retain existing key management personnel; the Company's forecasts may
not accurately anticipate market demand; and there may be other material adverse
changes in the Company's operations or business. Certain important factors
affecting the forward looking statements made herein include, but are not
limited to (i)'accurately forecasting capital expenditures, and (ii)'obtaining
new sources of external financing prior to the expiration of existing support
arrangements or capital. Assumptions relating to budgeting, marketing, product
development and other management decisions are subjective in many respects and
thus susceptible to interpretations and periodic revisions based on actual
experience and business developments, the impact of which may cause the Company
to alter its capital expenditure or other budgets, which may in turn affect the
Company's business, financial position and results of operations.
USE OF PROCEEDS
The only proceeds the Company will receive will be from the exercise of the
Warrants and the exercises of the Placement Agent Warrant. Any proceeds
received by the Company from the exercise of Warrants will be used for general
working capital purposes. The proceeds from the sale of each Selling
Stockholders' Common Stock will belong to the Selling Stockholders. The
Company will not receive any proceeds from such sales of the Common Stock.
DESCRIPTION OF SECURITIES
This Prospectus relates to the offer and sale of 9,000,000 shares of Common
Stock, par value $.001 per share ("Common Stock"), of Techniclone Corporation
(the "Company" or "Techniclone"), which may be offered hereby from time to time
by the selling stockholders named herein (the "Selling Stockholders") for their
own benefit. The Selling Stockholders hold 12,000 shares of 5% Adjustable
Convertible Class C Preferred Stock ("Preferred Stock") issued by the Company
for an aggregate purchase price of $12,000,000 on April 25, 1997. The shares of
Preferred Stock are convertible into shares of the Company's Common Stock. In
connection with the sale of shares of Preferred Stock to the Selling
Stockholders, the placement agent was issued warrants to purchase 1,200 shares
of Preferred Stock for $1,200,000 ("Placement Agent Warrant").
8
<PAGE> 10
The Certificate of Designation of the 5% Adjustable convertible Class C
Preferred Stock ("Certificate of Designation") provides that a 5% dividend will
be paid on the original purchase price. The dividend is payable quarterly in
shares of the Preferred Stock or at the option of the Company in cash. The
shares of Preferred Stock paid as a dividend may be converted into shares of the
Company's Common Stock on the same terms as the shares of the Preferred Stock.
When the placement agent exercises the warrants to purchase shares of Preferred
Stock, such shares will be convertible into Common Stock and Warrants on the
same terms as all other shares of Preferred Stock.
Pursuant to the terms and subject to the limitations and conditions set
forth in the Certificate of Designation, a share of the Preferred Stock is
convertible into shares of the Company's Common Stock (the "Conversion Shares")
and stock warrants ("Conversion Warrants") to purchase, at 110% of the
Conversion Price (as defined below) of the Conversion Shares, an amount of
Common Stock equal to 25% of the number of Conversion Shares issued (the
"Warrant Shares"). From time to time, each Selling Stockholder may convert all
or a portion of such Selling Stockholder's shares of Preferred Stock into
Conversion Warrants and shares of Common Stock of the Company.
The shares of Preferred Stock will be converted into shares of Common Stock
at a discount from the average of the lowest market trading price for the five
days preceding conversion. The Selling Stockholders may begin converting the
shares of Preferred Stock on September 25, 1997. If any shares of Preferred
Stock are converted on or after September 25, 1997 but prior to November 25,
1997 the discount from Market Price is 0.0%, if any shares of Preferred Stock
are converted on or after November 25, 1997 but prior to January 25, 1998 the
discount from Market Price is 13%, if any shares of Preferred Stock are
converted on or after January'25, 1998 but prior to March 25, 1998 the discount
from Market Price is 20%, if any shares of Preferred Stock are converted on or
after March 25, 1998 but prior to May 25, 1998 the discount from Market Price is
22.5%, if any shares of Preferred Stock are converted on or after May 25, 1998
but prior to July 25, 1998 the discount from Market Price is 25%, if any shares
of Preferred Stock are converted on or after July 25, 1998 the discount from
Market Price is 27%.
At any date prior to March 24, 1998 the Conversion Price for any share of
Preferred Stock shall be the discount from Market Price set forth in the
preceding paragraph. At any date after March 24, 1998, the Conversion Price
shall be the lower of (i) the Conversion Price calculated in accordance with the
paragraph set forth above or (ii) the average of the closing prices of the
Common Stock for the thirty (30) trading days including and immediately
preceding March 24, 1998 (such average being the "Conversion Cap").
All of the Conversion Shares and Warrant Shares issued or which issuable by
the Company are Registrable Shares.
Pursuant to a Registration Rights Agreement among the Selling Stockholders
and the Company, the Company agreed to file a registration statement with the
Commission to register the Conversion Shares and the Warrant Shares for resale
by the Selling Stockholders, and to keep the registration statement effective
until such date as is the earlier of (i) the date on which all of the
Registrable Securities have been sold (and no further Registrable Securities may
be issued in the future) and (ii) the date on which all the Registrable
Securities (including any Registrable Securities issuable in the future) may be
immediately sold to the public without registration pursuant to Rule 144(k)
under the Securities Act. The Registration Statement of which this Prospectus is
a part was filed with the Commission pursuant to the Registration Rights
Agreement.
9
<PAGE> 11
SELLING STOCKHOLDERS
The following table sets forth (i) the name of each person or entity who
holds shares of the Company's Class C Preferred Stock acquired pursuant to the
5% Preferred Stock Investment Agreement and (ii) the number shares of Common
Stock each Holder's Class C Preferred Stock is convertible into and being
registered hereby. Because the Selling Stockholders may offer all, some or none
of the Shares, no definitive estimate as to the number of Shares that will be
held by the Selling Stockholders after the offering can be provided and the
table below has been prepared on the assumption that all of the shares held by
such Selling Stockholders being registered hereby will be sold, that such Class
C Stockholders will acquire no additional shares of Common Stock prior to the
completion of this offering, and therefore upon completion of this offering the
Class C Stockholders will beneficially own no shares of Common Stock of the
Company. None of the Selling Stockholders has any material relationship with the
Company or any of its affiliates within the last three years other than as a
result of such Selling Stockholder's ownership of the Company's securities.
No Selling Stockholder may convert the Class C Preferred Stock to the
extent that, if converted into Common Stock, the Class C holder would
beneficially own in excess of 4.9% of the outstanding shares of the Company's
Common Stock.
<TABLE>
<CAPTION>
OWNED BEFORE
OFFERING SHARES OFFERED OWNED AFTER OFFERING
------------------ PURSUANT TO THIS ---------------------
SELLING STOCKHOLDER SHARES PERCENT PROSPECTUS(1) SHARES(2) PERCENT
- ----------------------------------------- ------ ------- ---------------- --------- -------
<S> <C> <C> <C> <C> <C>
Laredo Capital Partners.................. -(1) -(1) 136,364 0 0
Pelain Partners.......................... -(1) -(1) 68,182 0 0
Capital Ventures International........... -(1) -(1) 1,022,727 0 0
CC Investments, LDC...................... -(1) -(1) 3,409,090 0 0
Arbco Associates, L.P.................... -(1) -(1) 340,909 0 0
Kayne Anderson Non-Traditional
Investments, L.P....................... -(1) -(1) 681,818 0 0
Offense Group, L.P....................... -(1) -(1) 681,818 0 0
Fortune Fund LTD Section III............. -(1) -(1) 1,363,636 0 0
Linda Cappello........................... -(1) -(1) 68,182 0 0
Gerard Cappello.......................... -(1) -(1) 68,182 0 0
Proprietary Convertible Investment Group,
Inc.................................... -(1) -(1) 340,909 0 0
Lawrence K. Fleischman................... -(1) -(1) 204,546 0 0
Linda Cappello........................... -(1) -(1) 368,182 0 0
Gerard Cappello.......................... -(1) -(1) 245,455 0 0
---------
Total.................................... 9,000,000
=========
</TABLE>
- ---------------
(1) Estimated number of shares of Common Stock issued upon the conversion of the
Preferred Stock which would be held by such Selling Stockholder as of July
26, 1998 if all Warrants were exercised. The Preferred Stock is convertible
into Common Stock at conversion prices that will vary. The Warrants issued
on conversion give rise to a right to purchase additional shares of Common
Stock at 110% of the effective conversion price. See "Description of
Securities". As a result, in order to provide for adjustments in the
conversion price the number of shares offered pursuant to the Prospectus in
the table above have been adjusted upward by 50% from the number of shares
that would apply if all of the shares of Preferred Stock were converted into
shares of Common Stock, and the Warrant Shares and the additional purchase
right associated with such conversion fully exercised as of July 26, 1998,
with the price of the stock remaining at $4.00. The amounts listed above
therefore include shares issuable upon (i) conversion of Preferred Stock,
(ii) exercise of the Placement Agent Warrant, and (iii) purchase of the
Warrant Shares. For the purposes of computing the beneficial ownership of,
and number of shares registered for sale by the holders of, the Preferred
Stock, each share of Preferred Stock is assumed to have earned dividends for
five (5) quarters and to be convertible at $2.92 per Share (73% of the
Market
10
<PAGE> 12
Price). Pursuant to the Registration Rights Agreement between the Company
and the Selling Stockholders the Company is required to register and keep
registered at all times 135% of the number of shares of Common Stock into
which the Preferred Stock may be converted. Since the Company could incur
severe penalties for failing to keep 135% of the Conversion Shares, the
Company has elected to register 150% of the number of shares of Common Stock
into which the Class C Preferred Stock would be convertible on July 26, 1998
if the price of the Common Stock remains at $4.00 per share.
(2) Assumes that the Selling Stockholder disposes of all of the Common Stock
covered by this Prospectus and does not acquire any additional Common Stock.
PLAN OF DISTRIBUTION
All or a portion of the Common Stock offered by this Prospectus may be
offered for sale from time to time on the NASDAQ Small Cap Market or on one or
more exchanges, or otherwise at prices and terms then obtainable, or in
negotiated transactions. The distribution of these securities may be effected in
one or more transactions that may take place on the over-the-counter market,
including, among others, ordinary brokerage transactions, privately negotiated
transactions or through sales to one or more dealers for resale of such
securities as principals, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at negotiated prices. Usual
and customary or specifically negotiated brokerage fees or commissions may be
paid by the Selling Stockholders.
The Company will not receive any part of the proceeds from the sale of
Common Stock. The Selling Stockholders and intermediaries through whom such
securities are sold may be deemed "underwriters" within the meaning of the
Securities Act, in which event commissions received by such intermediary may be
deemed to be underwriting commissions under the Securities Act.
All expenses of the registration of securities covered by this Prospectus
are to be borne by the Company. The Selling Stockholders will pay any applicable
underwriters' commissions and expenses, brokerage fees or transfer taxes.
Any securities covered by this Prospectus which qualify for sale pursuant
to Rule 144 under the Securities Act may be sold under Rule 144 rather than
pursuant to this Prospectus.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Stradling, Yocca, Carlson & Rauth, a Professional
Corporation, Newport Beach, California.
EXPERTS
The consolidated financial statements and related consolidated financial
statement schedule, incorporated in this prospectus by reference from
Techniclone Corporation's Annual Report on Form 10-K for the year ended April
30, 1997 have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report, which is incorporated herein by reference, and have been
so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Bylaws provide that the Company will indemnify its directors
and officers and may indemnify its employees and other agents to the fullest
extent permitted by law. The Company believes that indemnification under its
Bylaws covers at least negligence and gross negligence by indemnified parties,
and permits the Company to advance litigation expenses in the case of
stockholder derivative actions or other actions, against an undertaking by the
indemnified party to repay such advances if it is ultimately determined that the
indemnified party is not entitled to indemnification. The Company has liability
insurance for its officers and directors.
11
<PAGE> 13
In addition, the Company's Certificate of Incorporation provides that,
pursuant to Delaware law, its directors shall not be liable for monetary damages
for breach of the directors' fiduciary duty as a director to the Company and its
stockholders. This provision in the Certificate of Incorporation does not
eliminate the directors' fiduciary duty, and in appropriate circumstances
equitable remedies such as injunctive or other forms of non-monetary relief will
remain available under Delaware law. In addition, each director will continue to
be subject to liability for breach of the director's duty of loyalty to the
Company for acts or omissions not in good faith or involving intentional
misconduct, for knowing violations of law, for actions leading to improper
personal benefit to the director, and for payment of dividends or approval of
stock repurchases or redemptions that are unlawful under Delaware law. The
provision also does not affect a director's responsibilities under any other
law, such as the federal securities laws or state or federal environmental laws.
The Company's bylaws agreements require the Company, among other things, to
indemnify them against certain liabilities that may arise by reason of their
status or service as directors or officers (other than liabilities arising from
actions not taken in good faith or in a manner the indemnitee believed to be
opposed to the best interests of the Company) to advance their expenses incurred
as a result of any proceeding against them as to which they could be indemnified
and to obtain directors' insurance if available on reasonable terms. Insofar as
indemnification for liabilities arising under the Securities Act of 1933 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 Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and is therefore unenforceable. The Company
believes that its Certificate of Incorporation and Bylaw provisions are
necessary to attract and retain qualified persons as directors and officers.
The Company has in place a directors' and officers' liability insurance
policy that, subject to the terms and conditions of the policy, insures the
directors and officers of the Company against loses arising from any wrongful
act (as defined by the policy) in his or her capacity as a director of officer.
The policy reimburses the Company for amounts which the Company lawfully
indemnifies or is required or permitted by law to indemnify its directors and
officers.
12
<PAGE> 14
======================================================
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS, IN CONNECTION WITH THE OFFERING DESCRIBED HEREIN, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE SELLING STOCKHOLDERS OR ANY UNDERWRITERS,
BROKERS OR AGENTS. 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. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
The Company........................... 3
Risk Factors.......................... 4
Use of Proceeds....................... 8
Description of Securities............. 8
Selling Stockholders.................. 10
Plan of Distribution.................. 11
Legal Matters......................... 11
Experts............................... 11
Indemnification of Directors and
Officers............................ 11
</TABLE>
======================================================
======================================================
9,000,000 SHARES
TECHNICLONE CORPORATION
COMMON STOCK
------------------------
PROSPECTUS
------------------------
August 22, 1997
======================================================
<PAGE> 15
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
broker-dealer discounts and commissions, payable in connection with the sale and
distribution of the securities being registered. All amounts are estimated
except the Securities and Exchange Commission and the Nasdaq Additional Listing
Fee. All of the expenses below will be paid by the Company.
<TABLE>
<S> <C>
Securities and Exchange Commission fee..................... $10,739
Accounting fees and expenses............................... $ 5,000
Legal fees and expenses.................................... $14,000
Printing and Engraving Expenses............................ $ 4,000
Transfer Agent and Registrar Fees.......................... $ 2,000
Miscellaneous.............................................. $ 5,000
-------
Total............................................ $40,739*
=======
</TABLE>
- ---------------
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
(a) As permitted by the Delaware General Corporation Law, the Certificate
of Incorporation of the Company (Exhibit 3.1 hereto) eliminates the liability of
directors to the Company or its stockholders for monetary damages for breach of
fiduciary duty as a directors, except to the extent otherwise required by the
Delaware General Corporation Law.
(b) The Certificate of Incorporation provides that the Company will
indemnify each person who was or is made a party to any proceeding by reason of
the fact that such person is or was a director or officer of the Company against
all expense, liability and loss reasonably incurred or suffered by such person
in connection therewith to the fullest extent authorized by the Delaware General
Corporation Law. The Company's Bylaws (Exhibit 3.2 hereto) provide for a similar
indemnity to directors and officers of the Company to the fullest extent
authorized by the Delaware General Corporation Law.
(c) The Company's Bylaws also gives the Company the ability to enter into
indemnification agreements with each of its directors and officers.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 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 Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
ITEM 16. EXHIBITS
<TABLE>
<S> <C>
5 Opinion of Stradling, Yocca, Carlson & Rauth, a Professional
Corporation.
23.1 Consent of Stradling, Yocca, Carlson & Rauth, a Professional
Corporation (included in Exhibit 5).
23.2 Consent of Deloitte & Touche LLP.
24 Power of Attorney (included on the signature page to the Registration
Statement).
</TABLE>
II-1
<PAGE> 16
ITEM 17. 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;
(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 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 present no more than a 20 percent 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 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.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934, that is incorporated by reference in the
registration statement 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.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 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 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 Act and will be governed by the final adjudication of
such issue.
(d) The undersigned registrant hereby undertakes to deliver, or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
II-2
<PAGE> 17
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 registration
statement to be signed on its behalf by the undersigned, hereunto duly
authorized, in the Anaheim, State of California, on the 20th day of August,
1997.
TECHNICLONE CORPORATION
By: /s/ LON H. STONE
------------------------------------
Lon H. Stone,
Chairman of the Board,
Chief Executive Officer and
President
POWER OF ATTORNEY
Each of the undersigned directors and officers of Techniclone Corporation
does hereby constitute and appoint Lon H. Stone and William V. Moding, and each
of them separately, the true and lawful attorney-in-fact and agent, each with
full power of substitution and delegation, for and in the undersigned's name,
place and state, in any and all capacities, to do any and all acts and things in
the undersigned's name and behalf in his capacity as a director and/or officer
and to execute any and all instruments for us and in our names in the capacity
indicated below, which said attorney and agent, or either of them, may deem
necessary or advisable to enable said corporation to comply with the Securities
Act of 1933, as amended, and any rules, regulations and requirements of the
Securities and Exchange Commission in connection with the Registration Statement
to which the power of attorney is attached, including specifically, but without
limitation, power and authority to sign for the undersigned and in the capacity
indicated below, any and all amendments (including post-effective amendments)
hereto or any related registration statement that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act of 1933, as amended; and the
undersigned does hereby ratify and confirm all that the said attorney and agent,
or either of them, shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ------------------------------- ---------------
<C> <S> <C>
/s/ LON H. STONE Chairman of the Board, Chief August 20, 1997
- --------------------------------------------- Executive Officer, President
Lon H. Stone and Director (Principal
Executive Officer)
/s/ WILLIAM V. MODING Chief Financial Officer, August 20, 1997
- --------------------------------------------- Secretary and Director
William V. Moding (Principal Financial and
Principal Accounting Officer)
/s/ R.C. SHEPARD Assistant Secretary and August 20, 1997
- --------------------------------------------- Director
R.C. Shepard
/s/ CLIVE R. TAYLOR Director August 20, 1997
- ---------------------------------------------
Clive R. Taylor, M.D. Ph.D.
Director August ,1997
- ---------------------------------------------
Edward Joseph Legere, II
Director August , 1997
- ---------------------------------------------
Carmelo J. Santoro
</TABLE>
II-3
<PAGE> 18
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NUMBER
- ------ ----------------------------------------------------------------------- -----------
<S> <C> <C>
5 Opinion of Stradling, Yocca, Carlson & Rauth, a Professional
Corporation............................................................ 20
23.1 Consent of Stradling, Yocca, Carlson & Rauth, a Professional
Corporation (included in Exhibit 5).................................... --
23.2 Consent of Deloitte & Touche LLP....................................... 22
24 Power of Attorney (included on the signature page to the Registration
Statement -- see pages II-4 and II-5).................................. --
</TABLE>
<PAGE> 1
EXHIBIT 5
[LETTERHEAD OF STRADLING, YOCCA, CARLSON & RAUTH]
August 22, 1997
Techniclone Corporation
14280 Franklin Avenue
Tustin, California 92780-7017
Re: Registration Statement on Form S-3: Techniclone Corporation Common Stock,
par value $.001 per share
Ladies and Gentlemen:
At your request, we have examined the Registration Statement on Form S-3,
Registration (the "Registration Statement") being filed by Techniclone
Corporation, a Delaware corporation (the "Company") with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, to register up
to 9,000,000 shares of the Company's Common Stock, par value of $.001 per share
(the "Common Stock"). The Common Stock, under the Registration Statement is
issuable to the Selling Stockholders upon conversion of the 5% Convertible Class
C Preferred Stock and the exercise of the Warrants issued in connection with the
conversion and would be issued and sold for the account of the Selling
Stockholders. Unless specifically defined herein or the context requires
otherwise, capitalized terms used herein shall have the meanings ascribed to
them in the Registration Statement.
In our capacity as your counsel in connection with this transaction, we
have examined the proceedings taken and are familiar with the proceedings
proposed to be taken by you in connection with the authorization, issuance and
sale of the Common Stock.
In such examination, we have assumed the authenticity of all documents
submitted to us as originals, the conformity with originals of all documents
submitted to us as copies and the genuineness of all signatures. We have also
assumed the legal capacity of all natural persons and that, with respect to all
parties to agreements or instruments relevant hereto other than the Company,
such parties had the requisite power and authority to execute, deliver and
perform such agreements or instruments, that such agreements or instruments have
been duly authorized by all requisite action and have been executed and
delivered by such parties and that such agreements or instruments are the valid,
binding and enforceable obligations of such parties.
Based upon the foregoing and the compliance with applicable state
securities laws and the additional proceedings to be taken by the Company as
referred to above, we are of the opinion that the Common Stock has been duly
authorized, and when issued, the Common Stock will be validly issued, fully paid
and nonassessable.
Our opinions herein are limited to the effect on the subject transaction of
United States Federal law and the General Corporation Law of the State of
Delaware. We assume no responsibility regarding the applicability thereto, or
the effect thereon, of the laws of any other jurisdiction.
We consent to your filing this opinion as an exhibit to the Registration
Statement and to the reference to our firm contained under the caption "Legal
Matters" in the prospectus which is a part of the Registration Statement.
Very truly yours,
/s/ STRADLING, YOCCA, CARLSON &
RAUTH
--------------------------------------
Stradling, Yocca, Carlson & Rauth
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement
of Techniclone Corporation on Form S-3 of our report dated May 23, 1997
appearing in the Annual Report on Form 10-K of Techniclone Corporation for the
year ended April 30, 1997 and to the reference to us under the heading "Experts"
the Prospectus, which is part of this Registration Statement.
/s/ DELOITTE & TOUCHE LLP
Costa Mesa, California
August 20, 1997
