<PAGE>
This filing is made pursuant to Rule 424(b)(4) under the Securities Act of 1933
in connection with Registration Statement No. 333-73417
PROSPECTUS
925,571 SHARES
[Techniclone
Corporation TECHNICLONE
Logo Here] CORPORATION
COMMON STOCK
This prospectus relates to the resale, from time to time, of up to 925,571
shares of Common Stock of Techniclone Corporation by Dunwoody Brokerage
Services, Inc. All or a portion of the shares offered by this prospectus may be
offered for sale, from time to time, by Dunwoody Brokerage Services, Inc. for
its own benefit. See "Dunwoody Brokerage Services, Inc. - The Selling
Stockholder" and "Plan of Distribution."
Techniclone's Common Stock is registered under Section 12(g) of the
Securities Exchange Act of 1934, and is listed on The Nasdaq SmallCap Market
under the symbol "TCLN". On August 12, 1999, the last reported sale price of the
Common Stock on The Nasdaq SmallCap Market was $1.03 per share.
INVESTING IN THE COMMON STOCK INVOLVES SIGNIFICANT RISKS. SEE "RISK
FACTORS" BEGINNING ON PAGE 4.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
August 13, 1999
<PAGE>
TABLE OF CONTENTS
-----------------
PAGE
----
Techniclone Corporation ................................................. 3
Risk Factors............................................................. 4
Forward-Looking Statements...............................................13
Incorporation of Certain Documents By Reference .........................13
The Equity Line Agreement ...............................................14
Use of Proceeds ........................................................17
Dunwoody Brokerage Services, Inc. - The Selling Stockholder .............17
Plan of Distribution ...................................................19
Description of Securities ...............................................21
Legal Matters ...........................................................22
Experts .................................................................22
Indemnification of Directors and Officers ...............................22
Where to Learn More About Techniclone ...................................23
You should rely only on the information contained in this document or to
which we have referred you. We have not authorized anyone to provide you with
information that is different. This document may only be used where it is legal
to sell these securities. The information in this document may only be accurate
on the date of this document.
2
<PAGE>
TECHNICLONE CORPORATION
Techniclone Corporation was incorporated in the State of Delaware on
September 25, 1996. On March 24, 1997, Techniclone International Corporation, a
California corporation (a predecessor company incorporated in June 1981), was
merged with and into Techniclone. This merger was effected for the purpose of
effecting a change in our state of incorporation from California to Delaware and
making certain changes in our charter documents. Techniclone has one
wholly-owned subsidiary Peregrine Pharmaceuticals, Inc., a Delaware corporation,
which was acquired on April 24, 1997.
Techniclone is a biopharmaceutical company engaged in the research,
development and commercialization of targeted cancer therapeutics. We develop
product candidates based primarily on our proprietary collateral tumor targeting
technologies for the treatment of solid tumors and a direct tumor targeting
agent for the treatment of refractory malignant lymphoma. We have four potential
product candidates. Two product candidates are in clinical trials and our other
two product candidates are in preclinical studies.
Collateral (indirect) tumor targeting is the therapeutic strategy of
targeting peripheral structures and cell types, other than the viable cancer
cells directly, as a means to treat solid tumors. We are currently developing
three collateral (indirect) targeting agents for solid tumors: tumor necrosis
therapy, which is potentially capable of carrying a variety of therapeutic
agents to the interior of solid tumors and irradiating the tumor from the inside
out; vaseopermeation enhancement agents, which increase the permeability of the
tumor site and increase the concentration of killing agents at the core of the
tumor; and vascular targeting agents, which shut down the capillaries and blood
vessels that supply solid tumors with nutrients, thus potentially destroying the
tumor. Clinical trials of our tumor necrosis therapy agent for the treatment of
brain cancer are currently being conducted at two medical centers, with
additional sites underway, and an additional clinical trial for the treatment of
pancreatic, prostrate and liver cancers has been initiated at a clinical site in
Mexico City. Our scientists are doing preliminary studies on vaseopermeation
enhancement agents and on vascular targeting agents.
To date, we have not received any significant revenues. However, on March
8, 1999 we entered into a license agreement with Schering A.G., Germany, a major
international pharmaceutical company, with respect to the development,
manufacture and marketing of our direct tumor targeting agent candidate,
Oncolym(R), and received an initial $3 million payment. Oncolym(R) is currently
being studied by Schering A.G., Germany in clinical trials for the treatment of
intermediate and high-grade relapsed or refractory B-cell non-Hodgkins lymphoma.
The license agreement with Schering A.G., Germany also provides for additional
payments and reimbursements of up to $17 million, subject to the achievement of
certain milestones, and royalties based on sales of Oncolym(R). In connection
with our agreement with Schering A.G., Germany for Oncolym(R), Schering A.G.,
Germany has agreed to discuss with us the development and commercialization of
vascular targeting agents, one of our collateral tumor targeting technologies.
Our principal executive offices are located at 14282 Franklin Avenue,
Tustin, California 92780-7017 and our telephone number is (714) 508-6000.
3
<PAGE>
RISK FACTORS
INVESTMENT IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD
CONSIDER THE FOLLOWING DISCUSSION OF RISKS AS WELL AS OTHER INFORMATION IN THIS
PROSPECTUS BEFORE PURCHASING ANY OF OUR COMMON STOCK, TOGETHER WITH ALL OF THE
OTHER INFORMATION CONTAINED IN THIS PROSPECTUS OR INCORPORATED IN THIS
PROSPECTUS BY REFERENCE.
IF WE CANNOT OBTAIN ADDITIONAL FUNDING, OUR PRODUCT DEVELOPMENT AND
COMMERCIALIZATION EFFORTS MAY BE REDUCED OR DISCONTINUED
At April 30, 1999, we had $2,385,000 in cash and cash equivalents. We have
expended, and will continue to expend, substantial funds on the development of
our product candidates and for clinical trials. As a result, we have had
negative cash flows from operations since inception and expect the negative cash
flows from operations to continue for the foreseeable future. We currently have
commitments to expend additional funds for antibody and radioactive isotope
combination services, clinical trials, product development contracts, license
contracts, severance arrangements, employment agreements, consulting agreements,
and for the repurchase of marketing rights to certain product technology. We
expect operating expenditures related to clinical trials to increase in the
future as clinical trial activity increases and expansion for clinical trial
production continues. We also expect that the monthly negative cash flows will
continue. We will require additional funding to sustain our research and
development efforts, provide for future clinical trials, expand our
manufacturing and product commercialization capabilities, and continue our
operations until we are able to generate sufficient revenue from the sale and/or
licensing of our products. Our ability to access funds under our Regulation D
Common Stock Equity Line Subscription Agreement with two institutional investors
is subject to the satisfaction of certain conditions. The failure to satisfy
these conditions may limit or preclude our ability to access such funds, which
could negatively affect our financial position unless additional financing
sources are available. We cannot be certain whether we can obtain required
additional funding on terms satisfactory to us, if at all. If we do raise
additional funds through the issuance of equity or convertible debt securities,
your stock ownership will be diluted and these new securities may have rights,
preferences or privileges senior to yours. If we are unable to raise additional
funds when necessary, we may have to reduce or discontinue development,
commercialization or clinical testing of some or all of our product candidates
or enter into financing arrangements on terms which we would not otherwise
accept. Our future success is dependent upon raising additional money to provide
for our necessary operations. Without obtaining additional financing or
completing a licensing transaction, we believe that we have sufficient cash on
hand as of July 15, 1999 and available pursuant to the Regulation D Common Stock
Equity Line Subscription Agreement (assuming we make an additional quarterly
draw of $2,250,000) to meet our obligations on a timely basis through September
1999. If we are unable to obtain additional financing, there would be a material
adverse effect on our business, financial condition and results of operations.
WE HAVE HAD SIGNIFICANT LOSSES AND ANTICIPATE FUTURE LOSSES
We have experienced significant losses since inception. As of April 30,
1999, our accumulated deficit was approximately $92,678,000. We expect to incur
significant additional operating losses in the future and expect cumulative
losses to increase substantially due to expanded research and development
efforts, preclinical studies and clinical trials, and expansion of manufacturing
and product commercialization capabilities. We also expect losses to fluctuate
substantially from quarter to quarter. All of our products are currently in
development, preclinical studies or clinical trials, and no revenues have been
generated from commercial product sales. To achieve and sustain profitable
operations, we must successfully develop and obtain regulatory approval for our
products, either alone or with others, and must also manufacture, introduce,
market and sell our products. The time frame necessary to achieve market success
for our products is long and uncertain. We do not expect to generate significant
product revenues for the next year. There can be no guarantee that we will ever
generate product revenues sufficient to become profitable or to sustain
profitability.
4
<PAGE>
PROBLEMS IN PRODUCT DEVELOPMENT MAY CAUSE OUR CASH DEPLETION RATE TO INCREASE
Our ability to obtain financing and to manage expenses and our cash
depletion rate is key to the continued development of product candidates and the
completion of ongoing clinical trials. Our cash depletion rate will vary
substantially from quarter to quarter as we fund non-recurring items associated
with clinical trials, product development, antibody manufacturing and facility
expansion and scale-up, patent legal fees and various consulting fees. We have
limited experience with clinical trials and if we encounter unexpected
difficulties with our operations or clinical trials, we may have to expend
additional funds, which would increase our cash depletion rate.
OUR PRODUCT DEVELOPMENT AND COMMERCIALIZATION EFFORTS MAY NOT BE SUCCESSFUL
Since inception, we have been engaged in the development of drugs and
related therapies for the treatment of people with cancer. Our product
candidates, which have not received regulatory approval, are generally in the
early stages of development. If the initial results from any of the clinical
trials are poor, those results will adversely effect our ability to raise
additional capital, which will affect our ability to continue full-scale
research and development for our antibody technologies. In addition, product
candidates resulting from our research and development efforts, if any, are not
expected to be available commercially for at least the next year. Our products
currently in clinical trials represent a departure from more commonly used
methods for cancer treatment. These products, if approved, may experience
under-utilization by doctors who are unfamiliar with their application in the
treatment of cancer. As with any new drug, doctors may be inclined to continue
to treat patients with conventional therapies, in most cases chemotherapy,
rather than new alternative therapies. We or our marketing partner may be
required to implement an aggressive education and promotion plan with doctors in
order to gain market recognition, understanding and acceptance of our products.
Market acceptance could also be affected by the availability of third-party
reimbursement. Accordingly, we cannot guarantee that our product development
efforts, including clinical trials, or commercialization efforts will be
successful or that any of our products, if approved, can be successfully
marketed.
WE MAY NOT BE ABLE TO EXPAND OUR FACILITIES TO IMPLEMENT COMMERCIAL PRODUCTION
OF OUR PRODUCTS
In order to conduct clinical trials on a timely basis, obtain regulatory
approval and be commercially successful, we must expand our manufacturing and
product commercialization processes so that our product candidates, if approved,
can be manufactured and produced in commercial quantities. To date, we have
expended significant funds for the expansion of our antibody manufacturing
capabilities for clinical trial requirements for two of our product candidates
and for refinement of the production processes. We intend to use existing
antibody manufacturing capacity to meet the clinical trial requirements for
these two product candidates and to support the initial commercialization of
these product candidates, if approved. In order to provide additional capacity,
we must successfully negotiate agreements with contract antibody manufacturers
to have these products produced, the cost of which is estimated to be several
million dollars in start-up costs and additional production costs on a "per run
basis". Such contracts would also require an additional investment estimated at
five to nine million dollars over the next two years for required equipment and
related production area enhancements, and for vendor services associated with
technology transfer assistance, expansion and production start-up and for
regulatory assistance. We have limited manufacturing experience, and cannot make
any guarantee as to our ability to expand our manufacturing operations, the
suitability of our present facility for clinical trial production or commercial
production, our ability to make a successful transition to commercial production
or our ability to reach an acceptable agreement with one or more contract
manufacturers to produce any of our other product candidates, if approved, in
clinical or commercial quantities.
5
<PAGE>
OUR TECHNOLOGY AND PRODUCTS MAY PROVE INEFFECTIVE OR BE TOO EXPENSIVE TO MARKET
SUCCESSFULLY
Our future success is significantly dependent on our ability to develop and
test workable products for which we will seek approval from the United States
Food and Drug Administration to market to certain defined patient groups. There
is a significant risk as to the performance and commercial success of our
technology and products. The products we are currently developing will require
significant additional laboratory and clinical testing and investment over the
foreseeable future. Our proposed products may not prove to be effective in
clinical trials or they may cause harmful side effects during clinical trials.
In addition, our product candidates, if approved, may prove impracticable to
manufacture in commercial quantities at a reasonable cost and/or with acceptable
quality. Any of these factors could negatively affect our financial position and
results of operations.
OUR DEPENDENCY ON A LIMITED NUMBER OF SUPPLIERS MAY NEGATIVELY IMPACT OUR
ABILITY TO COMPLETE CLINICAL TRIALS AND MARKET OUR PRODUCTS
We currently procure, and intend in the future to procure, our antibody and
radioactive isotope combination services under negotiated contracts with two
domestic entities, one Canadian entity and one European entity. We cannot
guarantee that these suppliers will be able to qualify their facilities or label
and supply antibody in a timely manner, if at all. Prior to commercial
distribution of any of our products, if approved, we will be required to
identify and contract with a commercial company for commercial antibody and
radioactive isotope combination services. We are presently in discussions with a
few companies to provide commercial antibody and radioactive isotope combination
services. We also currently rely on, and expect in the future to rely on, our
current suppliers for all or a significant portion of our requirements for our
antibody products. Antibody that has been combined with a radioactive isotope
cannot be stockpiled against future shortages. Accordingly, any change in our
existing or future contractual relationships with, or an interruption in supply
from, any such third-party service provider or antibody supplier could
negatively impact our ability to complete ongoing clinical trials and to market
our products, if approved.
TERMINATION OF OUR RELATIONSHIP WITH SCHERING A.G., GERMANY COULD ADVERSELY
AFFECT OUR BUSINESS
In March 1999, we entered into a worldwide license agreement with Schering
A.G., Germany for the worldwide development, marketing and distribution of our
advanced direct tumor targeting agent product candidate, Oncolym(R). Under the
agreement, Schering A.G., Germany has assumed control of the development of this
product candidate and is responsible for obtaining regulatory approvals in the
United States and all foreign countries and handling sales and marketing of this
product candidate. Schering A.G., Germany may terminate the agreement under a
number of circumstances as defined in the agreement, including thirty days'
written notice given at any time prior to receiving regulatory approval. We are
relying on Schering A.G., Germany to apply its expertise and know-how through
the development, launch and sale of this product candidate. If Schering A.G.,
Germany decides to discontinue the development of this product candidate and
terminates our license agreement, we may have to discontinue development,
commercialization and clinical testing of this product candidate, which could
negatively affect our operations and financial performance. In connection with
our agreement with Schering A.G., Germany for our direct tumor targeting agent
product candidate, Schering A.G., Germany has also agreed to discuss the
development and commercialization of our vascular targeting agent technology. If
we enter into an agreement with Schering A.G., Germany with respect to our
vascular targeting agent technology, we will also rely on Schering A.G., Germany
to apply its expertise and know-how through the development, launch and sale of
our vascular targeting agent product candidates. We cannot guarantee that
Schering A.G., Germany will devote the resources necessary to successfully
develop and/or market any product candidate.
6
<PAGE>
WE DO NOT HAVE A SALES FORCE TO MARKET OUR PRODUCTS
At the present time, we do not have a sales force to market any of our
products, if and when they are approved. We intend to sell our products in the
United States and internationally in collaboration with one or more marketing
partners. If and when we receive approval from the United States Food and Drug
Administration for our initial product candidates, the marketing of these
products will be contingent upon our ability to either license or enter into a
marketing agreement with a large company or our ability to recruit, develop,
train and deploy our own sales force. We do not presently possess the resources
or experience necessary to market any of our product candidates. Other than an
agreement with Schering A.G., Germany with respect to the marketing of our
direct tumor targeting agent product candidate, we presently have no agreements
for the licensing or marketing of our product candidates, and we cannot assure
you that we will be able to enter into any such agreements in a timely manner or
on commercially favorable terms, if at all. Development of an effective sales
force requires significant financial resources, time and expertise. We cannot
assure you that we will be able to obtain the financing necessary 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 our product candidates,
if and when they are approved.
WE MAINTAIN ONLY LIMITED PRODUCT LIABILITY INSURANCE AND MAY BE EXPOSED TO
CLAIMS IF OUR INSURANCE COVERAGE IS INSUFFICIENT
The manufacture and sale of human therapeutic products involves an inherent
risk of product liability claims. We maintain only limited product liability
insurance. We cannot assure you that we will be able to maintain existing
insurance or obtain additional product liability insurance on acceptable terms
or with adequate coverage against potential liabilities. Product liability
insurance is expensive, difficult to obtain and may not be available in the
future on acceptable terms, if at all. Our inability to obtain sufficient
insurance coverage on reasonable terms or to otherwise protect against potential
product liability claims in excess of our insurance coverage, if any, or a
product recall could negatively impact our financial position and results of
operations.
EARTHQUAKES MAY DAMAGE OUR FACILITIES
Our corporate and research facilities, where the majority of our research
and development activities are conducted, are located near major earthquake
faults which have experienced earthquakes in the past. Although we carry limited
earthquake insurance, in the event of a major earthquake or other disaster in or
near the greater Southern California area, our facilities may sustain
significant damage and our operations could be negatively affected.
THE LIQUIDITY OF OUR COMMON STOCK MAY BE ADVERSELY AFFECTED IF OUR COMMON STOCK
IS DELISTED FROM THE NASDAQ SMALLCAP MARKET
The Common Stock is presently traded on The Nasdaq SmallCap Market. To
maintain inclusion on The Nasdaq SmallCap Market, we must continue to have
either net tangible assets of at least $2,000,000, market capitalization of at
least $35,000,000, or net income (in either our latest fiscal year or in two of
our last three fiscal years) of at least $500,000. In addition, we must meet
other requirements, including, but not limited to, having a public float of at
least 500,000 shares and $1,000,000, a minimum closing bid price of $1.00 per
share of Common Stock (without falling below this minimum bid price for a period
of 30 consecutive trading days), at least two market makers and at least 300
stockholders, each holding at least 100 shares of Common Stock. At various
times, we have failed to maintain a $1.00 minimum closing bid price for extended
periods of time. As of April 30, 1999, we had failed to maintain a $1.00 minimum
7
<PAGE>
closing bid price for 19 consecutive trading days. From April 30, 1999 through
July 15, 1999, our minimum closing bid price has fallen periodically below the
minimum $1.00 closing bid price. If we fail to meet the minimum closing bid
price of $1.00 for a period of 30 consecutive trading days, we will be notified
by The Nasdaq Stock Market and will then have a period of 90 calendar days from
such notification to achieve compliance with the applicable standard by meeting
the minimum closing bid price requirement for at least 10 consecutive trading
days during such 90 day period. We cannot guarantee that we will be able to
maintain these requirements in the future. If we fail to meet any of The Nasdaq
SmallCap Market listing requirements, the market value of the Common Stock could
fall and holders of Common Stock would likely find it more difficult to dispose
of the Common Stock. In addition, if the minimum closing bid price of the Common
Stock is not at least $1.00 per share for 10 consecutive trading days before we
make a call for proceeds under our Regulation D Common Stock Equity Line
Subscription Agreement with two institutional investors or if the Common Stock
ceases to be included on The Nasdaq SmallCap Market, we would have limited or no
access to funds under the Regulation D Common Stock Equity Line Subscription
Agreement. Moreover, should the market price of the Common Stock fall
significantly, we would be required to issue to the two institutional investors
a much greater number of shares than we would otherwise if the market price were
stable or rising, which could cause the market price of the Common Stock to fall
further and faster. In addition, we and broker-dealers effecting transactions in
the Common Stock may become subject to additional disclosure and reporting
requirements applicable to low-priced securities, which may reduce the level of
trading activity in the secondary market for the Common Stock and limit or
prevent investors from readily selling their shares of Common Stock.
THE SALE OF SUBSTANTIAL SHARES OF OUR COMMON STOCK MAY DEPRESS OUR STOCK PRICE
As of July 15, 1999, we had approximately 76,370,000 shares of Common Stock
outstanding. We are also obligated to issue up to an additional approximately
191,000 shares of Common Stock upon conversion of 91 outstanding shares of our
5% Adjustable Convertible Class C Preferred Stock and exercise of related
warrants. Under our Regulation D Common Stock Equity Line Subscription Agreement
with two institutional investors, we may issue from time to time, at our sole
option, up to an additional approximately 18,150,000 shares of Common Stock in
exchange for an aggregate purchase price of $12,000,000 (assuming a closing bid
price of our Common Stock of $1.00 per share), which includes warrants equal to
10% of the shares of Common Stock issued under such agreement, which must be
exercised on a cashless basis only. In addition, an additional approximately
15,495,000 shares of Common Stock are issuable upon exercise of other
outstanding options and other warrants at an average exercise price of $1.81 per
share. The conversion rate applicable to our Class C Preferred Stock and the
purchase price for the shares of Common Stock to be issued under the Regulation
D Common Stock Equity Line Subscription Agreement, and the exercise price of
related warrants, are at a significant discount to the market price of the
Common Stock. The sale and issuance of these shares of Common Stock, as well as
subsequent sales of shares of Common Stock in the open market, may cause the
market price of the Common Stock to fall and might impair our ability to raise
additional capital through sales of equity or equity-related securities, whether
under the Regulation D Common Stock Equity Line Subscription Agreement or
otherwise. See "The Equity Line Agreement."
OUR HIGHLY VOLATILE STOCK PRICE AND TRADING VOLUME MAY ADVERSELY AFFECT THE
LIQUIDITY OF THE COMMON STOCK
The market price of the Common Stock, and the market prices of securities
of companies in the biotechnology industry generally, have been highly volatile
and is likely to continue to be highly volatile. Also, the trading volume in the
Common Stock has been highly volatile, ranging from as few as 44,000 shares per
day to as many as 19 million shares per day over the past eighteen months, and
is likely to continue to be highly volatile. The market price of the Common
8
<PAGE>
Stock may be significantly impacted by many factors, including announcements of
technological innovations or new commercial products by us or our competitors,
disputes concerning patent or proprietary rights, publicity regarding actual or
potential medical results relating to products under development by us or our
competitors and regulatory developments and product safety concerns in both the
United States and foreign countries. These and other external factors have
caused and may continue to cause the market price and demand for the Common
Stock to fluctuate substantially, which may limit or prevent investors from
readily selling their shares of Common Stock and may otherwise negatively affect
the liquidity of the Common Stock.
WE MAY NOT BE ABLE TO COMPETE WITH OUR COMPETITORS IN THE BIOTECHNOLOGY INDUSTRY
The biotechnology industry is intensely competitive. It is also subject to
rapid change and sensitive to new product introductions or enhancements. We
expect to continue to experience significant and increasing levels of
competition in the future. Virtually all of our existing competitors have
greater financial resources, larger technical staffs, and larger research
budgets than we have, as ell as greater experience in developing products and
running clinical trials. Two of our competitors, IDEC Pharmaceuticals
Corporation and Coulter Pharmaceuticals, Inc., each has a lymphoma antibody that
may compete with our direct tumor targeting agent product, Oncolym(R). IDEC
Pharmaceuticals Corporation is currently marketing its lymphoma product for low
grade non-Hodgkins lymphoma and we believe that Coulter Pharmaceuticals, Inc.
will be marketing its respective lymphoma product prior to the time our
Oncolym(R) product will be submitted to the United States Food and Drug
Administration for marketing approval. Coulter Pharmaceuticals, Inc. has also
announced that it intends to seek to conduct clinical trials of its antibody
treatment for intermediate and/or high-grade non-Hodgkins lymphomas. In
addition, there may be other companies which are currently developing
competitive technologies and products or which may in the future develop
technologies and products which are comparable or superior to our technologies
and products. Some or all of these companies may also have greater financial and
technical resources than we have. Accordingly, we cannot assure you that we will
be able to compete successfully with our existing and future competitors or that
competition will not negatively affect our financial position or results of
operations in the future.
WE MAY NOT BE SUCCESSFUL IF WE ARE UNABLE TO OBTAIN AND MAINTAIN PATENTS AND
LICENSES TO PATENTS
Our success depends, in large part, on our ability to obtain or maintain a
proprietary position in our products through patents, trade secrets and orphan
drug designations. We have been granted several United States patents and have
submitted several United States patent applications and numerous corresponding
foreign patent applications, and have also obtained licenses to patents or
patent applications owned by other entities. However, we cannot assure you that
any of these patent applications will be granted or that our patent licensors
will not terminate any of our patent licenses. We also cannot guarantee that any
issued patents will provide competitive advantages for our products or that any
issued patents will not be successfully challenged or circumvented by our
competitors. Although we believe that our patents and our licensors' patents do
not infringe on any third party's patents, we cannot be certain that we can
avoid litigation involving such patents or other proprietary rights. Patent and
proprietary rights litigation entails substantial legal and other costs, and we
may not have the necessary financial resources to defend or prosecute our rights
in connection with any litigation. Responding to, defending or bringing claims
related to patents and other intellectual property rights may require our
management to redirect our human and monetary resources to address these claims
and may take years to resolve.
9
<PAGE>
OUR PRODUCT DEVELOPMENT AND COMMERCIALIZATION EFFORTS MAY BE REDUCED OR
DISCONTINUED DUE TO DIFFICULTIES OR DELAYS IN CLINICAL TRIALS
We may encounter unanticipated problems, including development,
manufacturing, distribution, financing and marketing difficulties, during the
product development, approval and commercialization process. Our product
candidates may take longer than anticipated to progress through clinical trials
or patient enrollment in the clinical trials may be delayed or prolonged
significantly, thus delaying the clinical trials. Delays in patient enrollment
will result in increased costs and further delays. If we experience any such
difficulties or delays, we may have to reduce or discontinue development,
commercialization or clinical testing of some or all of our product candidates.
Schering A.G., Germany has recently advised us that it is analyzing the results
of the current Phase II clinical development program for our direct tumor
targeting agent product candidate and has stopped enrolling new patients in
ongoing clinical trials for this product candidate under the current protocol.
Schering A.G., Germany has further informed us that if a revised protocol is
developed, it will be submitted to the United States Food and Drug
Administration for additional clinical trials. If Schering A.G., Germany decides
to discontinue the development of this product candidate and terminates our
license agreement for the worldwide development, distribution and marketing of
this product candidate, we may have to discontinue development,
commercialization and clinical testing of this product candidate.
OUR PRODUCT DEVELOPMENT AND COMMERCIALIZATION EFFORTS MAY BE REDUCED OR
DISCONTINUED DUE TO DELAYS OR FAILURE IN OBTAINING REGULATORY APPROVALS
We will need to do substantial additional development and clinical testing
prior to seeking any regulatory approval for commercialization of our product
candidates. Testing, manufacturing, commercialization, advertising, promotion,
export and marketing, among other things, of our proposed products are subject
to extensive regulation by governmental authorities in the United States and
other countries. The testing and approval process requires substantial time,
effort and financial resources and we cannot guarantee that any approval will be
granted on a timely basis, if at all. Companies in the pharmaceutical and
biotechnology industries have suffered significant setbacks in conducting
advanced human clinical trials, even after obtaining promising results in
earlier trials. Furthermore, the United States Food and Drug Administration may
suspend clinical trials at any time on various grounds, including a finding that
the subjects or patients are being exposed to an unacceptable health risk. Even
if regulatory approval of a product is granted, such approval may entail
limitations on the indicated uses for which it may be marketed. Accordingly, we
may experience difficulties and delays in obtaining necessary governmental
clearances and approvals to market our products, and we may not be able to
obtain all necessary governmental clearances and approvals to market our
products. At least initially, we intend, to the extent possible, to rely on
licensees to obtain regulatory approval for marketing our products. The failure
by us or our licensees to adequately demonstrate the safety and efficacy of any
of our product candidates under development could delay, limit or prevent
regulatory approval of the product, which may require us to reduce or
discontinue development, commercialization or clinical testing of some or all of
our product candidates.
OUR PRODUCTS, IF APPROVED, MAY NOT BE COMMERCIALLY VIABLE DUE TO HEALTH CARE
REFORM AND THIRD-PARTY REIMBURSEMENT LIMITATIONS
Recent initiatives to reduce the federal deficit and to reform health care
delivery are increasing cost-containment efforts. We anticipate 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, price controls on pharmaceuticals and other fundamental changes to the
health care delivery system. Legislative debate is expected to continue in the
future, and market forces are expected to drive reductions of health care costs.
Any such changes could negatively impact the commercial viability of our
products, if approved. Our ability to successfully commercialize our product
10
<PAGE>
candidates, if and when they are approved, will depend in part on the extent to
which appropriate reimbursement codes and authorized cost reimbursement levels
of such products and related treatment are obtained from governmental
authorities, private health insurers and other organizations, such as health
maintenance organizations. In the absence of national Medicare coverage
determination, local contractors that administer the Medicare program, within
certain guidelines, can make their own coverage decisions. Accordingly, there
can be no assurance that any of our product candidates, if approved and when
commercially available, will be included within the then current Medicare
coverage determination or the coverage determination of state Medicaid programs,
private insurance companies and other health care providers. In addition,
third-party payors are increasingly challenging the prices charged for medical
products and services. Also, the trend toward managed health care and the growth
of health maintenance organizations in the United States may all result in lower
prices for our products, if approved and when commercially available, than we
currently expect. The cost containment measures that health care payors and
providers are instituting and the effect of any health care reform could
negatively affect our financial performance, if and when one or more of our
products are approved and available for commercial use.
OUR MANUFACTURING AND USE OF HAZARDOUS AND RADIOACTIVE MATERIALS MAY RESULT IN
OUR LIABILITY FOR DAMAGES, INCREASED COSTS AND INTERRUPTION OF ANTIBODY
SUPPLIES
The manufacturing and use of our products require the handling and disposal
of the radioactive isotope I131. We currently rely on, and intend in the future
to rely on, our current contract manufacturers to combine antibodies with
radioactive I131 isotope in our products and to comply with various local, state
and or national and international regulations regarding the handling and use of
radioactive materials. Violation of these local, state, national or
international regulations by these companies or a clinical trial site could
significantly delay completion of the trials. Violations of safety regulations
could occur with these manufacturers, so there is also a risk of accidental
contamination or injury. Accordingly, we could be held liable for any damages
that result from an accident, contamination or injury caused by 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. In
addition, we may incur substantial costs to comply with environmental
regulations. In the event of any noncompliance or accident, the supply of
antibodies for use in clinical trials or commercial products could also be
interrupted.
OUR OPERATIONS AND FINANCIAL PERFORMANCE COULD BE NEGATIVELY AFFECTED IF WE
CANNOT ATTRACT AND RETAIN KEY PERSONNEL
Our success is dependent, in part, upon a limited number of key executive
officers and technical personnel remaining employed with us, including Larry O.
Bymaster, our President and Chief Executive Officer, Steven C. Burke, our Chief
Financial Officer, and Dr. John N. Bonfiglio, our Vice President of Technology
and Business Development and interim Vice President of Clinical and Regulatory
Affairs. We also believe that our future success will depend largely upon our
ability to attract and retain highly-skilled research and development and
technical personnel. We face intense competition in our recruiting activities,
including larger companies with greater resources. We do not know if we will be
successful in attracting or retaining skilled personnel. The loss of certain key
employees or our inability to attract and retain other qualified employees could
negatively affect our operations and financial performance.
OUR BUSINESS MAY BE ADVERSELY EFFECTED IF OUR COMPUTER SYSTEMS AND THE COMPUTER
SYSTEMS OF OUR SUPPLIERS ARE NOT YEAR 2000 COMPLIANT
We are aware of the issues associated with the programming code in existing
computer systems as the year 2000 approaches. The year 2000 problem is pervasive
and complex. The issue is whether computer systems will properly recognize
date-sensitive information in the year 2000 due to the fact that the programming
in most computer systems use a two digit year value, which value will rollover
to "00" as of January 1, 2000. Systems that do not properly recognize such
11
<PAGE>
information could generate erroneous data or cause a system to fail. We have
identified substantially all of our information technology and non- information
technology systems, including major hardware and software platforms in use and
we have modified and upgraded our hardware, software, and information technology
and non- information technology systems to be year 2000 compliant. We do not
presently believe that the year 2000 problem will pose significant operational
problems for our internal computer systems or have a negative affect on our
operations. However, we cannot assure you that any year 2000 compliance problems
of our suppliers will not negatively affect our operations. Because uncertainty
exists concerning the potential costs and effects associated with any year 2000
compliance, we intend to continue to make efforts to ensure that third parties
with whom we have relationships are year 2000 compliant. We have not incurred
significant costs to date associated with year 2000 compliance and presently
believe estimated future costs will not be material. However, actual results
could differ materially from our expectations due to unanticipated technological
difficulties or project delays. If any third parties upon which we rely are
unable to address the year 2000 issue in a timely manner, although we are
uncertain as to our worst case consequences, it could have an adverse impact on
our operations, including delaying our clinical trial programs. In order to
minimize this risk, we have developed a contingency plan, which should be
completed by November 1999, and we intend to devote all resources required to
attempt to resolve any significant year 2000 problems in a timely manner.
12
<PAGE>
FORWARD-LOOKING STATEMENTS
Except for historical information, the information contained in this
prospectus and in our reports filed with the SEC are "forward looking"
statements about our expected future business and financial performance. These
statements involve known and unknown risks, including, among others, risks
resulting from economic and market conditions, the regulatory environment in
which we operate, pricing pressures, accurately forecasting operating and
capital expenditures and clinical trial costs, competitive activities,
uncertainties of litigation and other business conditions, and are subject to
uncertainties and assumptions contained elsewhere in this prospectus. We base
our forward-looking statements on information currently available to us, and we
assume no obligation to update these statements. Our actual operating results
and financial performance may prove to be very different from what we might have
predicted as of the date of this prospectus due to certain risks and
uncertainties. The risks described above in the section entitled "Risk Factors"
specifically address some of the factors that may affect our future operating
results and financial performance.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" into this prospectus the
documents we file with them, which means that we can disclose important
information to you by referring you to these documents. The information that we
incorporate by reference into this prospectus is considered to be part of this
prospectus, and information that we file later with the SEC automatically
updates and supersedes any information in this prospectus. We incorporate by
reference into this prospectus the documents listed below:
o Annual Report on Form 10-K for the fiscal year ended April 30,
1999, as filed with the SEC on July 28, 1999, under Section
13(a) of the Securities Exchange Act of 1934;
o Definitive Proxy Statement with respect to the Annual Meeting
of Stockholders held on October 13, 1998, as filed with the
SEC on August 27, 1998;
o Current Report on Form 8-K, as filed with the SEC on April 16,
1999;
o Current Report on Form 8-K, as filed with the SEC on March 18,
1999;
o Current Report on Form 8-K, as filed with the SEC on January
7, 1999;
o Current Report on Form 8-K, as filed with the SEC on June 29,
1998;
o Current Report on Form 8-K, as filed with the SEC on March 9,
1998;
o Current Report on Form 8-K, as filed with the SEC on November
24, 1997;
o Current Report on Form 8-K, as filed with the SEC on May 12,
1997, as amended by Form 8-K/A Amendment No. 1 to such Form
8-K as filed with the SEC on October 2, 1997, and as further
amended by Form 8-K/A Amendment No. 2 to such Form 8-K as
filed with the SEC on October 14, 1997;
o Definitive Proxy Statement with respect to a Special Meeting
of Stockholders held on April 23, 1998, as filed with the SEC
on March 17, 1998;
o The description of our Common Stock contained in our
Registration Statement on Form 8-A and Form 8-B (Registration
of Successor Issuers) filed under the Securities Exchange Act
of 1934, including any amendment or report filed for the
purpose of updating such description; and
o All other reports filed by us under Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 since the end of our
fiscal year ended April 30, 1999.
All documents we have filed with the SEC under Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 subsequent to the date of this
prospectus and prior to the filing of a post-effective amendment indicating that
all securities offered have been sold (or which re-registers all securities then
remaining unsold), are deemed to be incorporated in this prospectus by this
reference and to be made a part of this prospectus from the date of filing of
such documents.
13
<PAGE>
We will provide, without charge, upon written or oral request of any person
to whom a copy of this prospectus is delivered, a copy of any or all of the
foregoing documents and information that has been or may be incorporated in this
prospectus by reference, other than exhibits to such documents. Requests for
such documents and information should be directed to Techniclone Corporation,
Attention: Steven C. Burke, Chief Financial Officer, 14282 Franklin Avenue,
Tustin, California 92780-7017, telephone number (714) 508-6000.
THE EQUITY LINE AGREEMENT
On June 16, 1998, Techniclone entered into a Regulation D Common Stock
Equity Line Subscription Agreement with two institutional investors. Under this
agreement, Techniclone may issue and sell, from time to time, shares of its
Common Stock for cash consideration up to an aggregate of $20 million.
Techniclone also entered into a Placement Agent Agreement and engaged the
services of Swartz Investments, LLC, a Georgia limited liability company doing
business as Swartz Institutional Finance, as placement agent in connection with
the placement of securities of Techniclone with the two institutional investors
under the Regulation D Common Stock Equity Line Subscription Agreement. Swartz
Investments, LLC subsequently assigned and conveyed all of its rights under the
Placement Agent Agreement and a related Registration Rights Agreement to
Dunwoody Brokerage Services, Inc. and also transferred to Dunwoody Brokerage
Services, Inc. all of the shares of Common Stock and warrants to purchase shares
of Common Stock previously issued to Swartz Investments, LLC. Dunwoody Brokerage
Services, Inc. is a broker-dealer registered with the SEC and the National
Association of Securities Dealers, Inc. with respect to which Swartz
Investments, LLC is an Office of Supervisory Jurisdiction.
The following table provides certain information as of July 15, 1999, with
respect to securities of Techniclone issued to the two institutional investors
and Dunwoody Brokerage Services, Inc. under the Regulation D Common Stock Equity
Line Subscription Agreement and the Placement Agent Agreement:
<TABLE>
<CAPTION>
Shares of Shares subject Shares of Shares subject
Common Stock to Warrants Common Stock to Warrants
Issued to the Issued to the Issued to Dun- Issued to Dun-
Amount Institutional Institutional woody Brokerage woody Brokerage
Date Funded Investors Investors(1) Services, Inc. Services, Inc.(1)
- ------------- ---------- ------------- -------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
June 16, 1998 $3,500,000 2,545,454(2) 254,545(3) 203,636 20,363(3)
Dec. 24, 1998 96,055(4) 60,515(4) 5,091(3)
Feb. 2, 1999 $2,250,000 2,608,695(5) 260,868(6) 260,869 26,086(6)
April 15, 1999 801,347(7) 80,134(7)
May 10, 1999 $ 337,500 551,020(8) 55,102(9) 55,102 5,510(9)
June 2, 1999 $ 337,500 457,626(10) 45,762(11) 45,762 4,576(11)
June 23, 1999 16,110(12) 1,611(12)
June 24, 1999 $1,575,000 1,272,726(13) 127,272(14) 127,272 12,727(14)
July 15, 1999 163,168(15) 16,317(15)
</TABLE>
- ----------------
(1) Warrants are exercisable, on a cashless basis only, at any time through
December 31, 2004.
(2) Purchase price of $1.375 per share.
(3) Exercise price of $1.375 per share.
(4) Issued under a separate agreement between Techniclone and the two
institutional investors.
(5) Purchase price of $0.8625 per share.
(6) Exercise price of $0.8625 per share.
14
<PAGE>
(7) Issued in connection with an adjustment on April 15, 1999 to the
purchase price for one-half of the initial shares sold to the two
institutional investors in June 1998, under the Regulation D Common
Stock Equity Line Subscription Agreement.
(8) Purchase price of $0.6125 per share.
(9) Exercise price of $0.6125 per share.
(10) Purchase price of $0.7375 per share.
(11) Exercise price of $0.7375 per share.
(12) Exercise price of $1.50 per share. Issued on June 23, 1999 pursuant to
the obligation of Techniclone to issue warrants to the two
institutional investors to acquire a number of shares of common stock
equal to 10% of the quotient of the difference between the minimum
commitment amount for 1999 of $6,666,667 and the amount funded to
Techniclone prior to such date under the Regulation D Common Stock
Equity Line Subscription Agreement divided by the market price of the
Common Stock, as defined in the agreement.
(13) Purchase price of $1.2375 per share.
(14) Exercise price of $1.2375 per share.
(15) Issued in connection with an adjustment on July 15, 1999 to the
purchase price for one-half of the initial shares sold to the two
institutional investors in June 1998, under the Regulation D Common
Stock Equity Line Subscription Agreement.
Under the Regulation D Common Stock Equity Line Subscription Agreement,
until June 16, 2001 Techniclone may from time to time, in its discretion and
subject to certain restrictions and limitations, sell to the two institutional
investors a number of shares of Common Stock equal to up to $2,250,000, less the
aggregate dollar amount of any shares sold to the two institutional investors
during the immediately preceding three month period. The purchase price for the
shares to be sold to the institutional investors is equal to 82.5% of the 10-day
low closing bid price immediately preceding the date of sale. However, if 82.5%
of such 10-day low closing bid price results in a discount of less than twenty
cents per share from such price, the purchase price for the shares will be equal
to such 10-day low closing bid price minus twenty cents. The number of shares
which may be sold to the two institutional investors at any one time is limited
to the same number of shares of restricted securities that the institutional
investors would otherwise be able to sell in compliance with Rule 144(e)
promulgated under the Securities Act of 1933, and is also subject to a maximum
dollar amount of $12,000,000 as of the date of this prospectus. In addition, at
the time of each sale of shares, the two institutional investors will be issued
warrants, expiring on December 31, 2004, to purchase a number of shares of
Common Stock equal to 10% of the number of shares of Common Stock sold in such
sale at an exercise price equal to the price per share at which such shares were
sold to the institutional investors. If Techniclone has not fully utilized the
relevant commitment amount under the Regulation D Common Stock Equity Line
Subscription Agreement, Techniclone may also be obligated to issue to the two
institutional investors on June 23, 2000 and June 23, 2001, warrants to purchase
a number of shares of Common Stock equal to 10% of the quotient of the
difference between the relevant minimum commitment amount ($13,333,333 for 2000
and $20,000,000 for 2001) minus the aggregate amount of Common Stock sold to the
institutional investors during all years preceding such date divided by the
market price of the Common Stock, as defined in the agreement.
Under the Placement Agent Agreement, Dunwoody Brokerage Services, Inc. is
entitled to receive the following compensation as a placement agent fee in
connection with the placement and sale of securities of Techniclone to the two
institutional investors:
o a cash placement fee equal to 7% of the purchase price of any and all
securities placed under the Regulation D Common Stock Equity Line
Subscription Agreement;
15
<PAGE>
o a non-accountable expense allowance equal to 1% of the purchase price
of any and all securities placed up to the aggregate purchase price of
the first $10 million of securities placed under the Regulation D
Common Stock Equity Line Subscription Agreement;
o a one time non-accountable expense allowance equal to one hundred
thousand dollars for any and all securities placed in excess of the
aggregate purchase price of the first $10 million of securities placed
under the Regulation D Common Stock Equity Line Subscription Agreement;
and
o an amount of securities equal to 10% of all Common Stock issued under
the Regulation D Common Stock Equity Line Subscription Agreement and an
amount of securities equal to 10% of all warrants issued under the
Regulation D Common Stock Equity Line Subscription Agreement.
Techniclone's ability to require the two institutional investors to
purchase shares of its Common Stock under the Regulation D Common Stock Equity
Line Subscription Agreement is subject to certain conditions and limitations,
including:
o the representations and warranties of Techniclone in the Regulation D
Common Stock Equity Line Subscription Agreement must be true and
correct in all material respects as of the date of each sale;
o Techniclone shall have performed and complied with all obligations
under the Regulation D Common Stock Equity Line Subscription Agreement,
the Registration Rights Agreement and the warrants issued to the two
institutional investors required to be performed as of the date of each
sale;
o no statute, rule, regulation, executive order, decree, ruling or
injunction shall be in effect which prohibits or directly and adversely
affects any of the transactions contemplated by the Regulation D Common
Stock Equity Line Subscription Agreement;
o at the time of a sale, there shall have been no material adverse change
in Techniclone's business prospects or financial condition, except as
disclosed in Techniclone's most recent periodic reports filed since
June 16, 1998 with the SEC under the Securities Exchange Act of 1934;
o Techniclone's Common Stock shall not have been delisted from The Nasdaq
SmallCap Market nor suspended from trading;
o the closing bid price of the Common Stock on any trading during the ten
days preceding the date of the sale cannot be less than or equal to
$0.50; and
o if the closing bid price of the Common Stock on any trading day during
the ten trading days preceding the date of the sale is less than $1.00
but greater than $0.50, Techniclone may only require the purchase by
the two institutional investors of an amount of shares not greater than
15% of the amount that would otherwise be available to Techniclone
under the Regulation D Common Stock Equity Line Subscription Agreement.
Under the Placement Agent Agreement and a related Registration Rights
Agreement between Techniclone, the two institutional investors and Dunwoody
Brokerage Services, Inc., as successor in interest to Swartz Investments, LLC,
Techniclone has filed a registration statement, of which this prospectus forms a
part, in order to permit Dunwoody Brokerage Services, Inc. to resell to the
public the shares of Common Stock issued to Dunwoody Brokerage Services, Inc.
(including shares issuable to Dunwoody Brokerage Services, Inc. upon exercise of
outstanding warrants ) under the Placement Agent Agreement.
The two institutional investors and Dunwoody Brokerage Services, Inc. have
further agreed that they will not engage in any trading practice or activity for
the purpose of manipulating the price of the Common Stock or otherwise engage in
any trading practice or activity that violates the rules and regulations of the
SEC.
16
<PAGE>
USE OF PROCEEDS
The proceeds from the sale of the shares of Common Stock offered by this
prospectus will be received directly by Dunwoody Brokerage Services, Inc.
Techniclone will not receive any proceeds from the sale of the shares of Common
Stock offered by this prospectus. Techniclone will not receive any proceeds from
the exercise of any warrants by Dunwoody Brokerage Services, Inc., which may
only be exercised by Dunwoody Brokerage Services, Inc. in a cashless
transaction.
DUNWOODY BROKERAGE SERVICES, INC. - THE SELLING STOCKHOLDER
Dunwoody Brokerage Services, Inc. may, from time to time, offer and sell
any or all of the shares of Common Stock offered by this prospectus. All of the
shares of Common Stock offered by this prospectus are offered by Dunwoody
Brokerage Services, Inc. Any sales will be for the account of Dunwoody Brokerage
Services, Inc. and Techniclone will not receive any of the proceeds from the
sale of the Shares by Dunwoody Brokerage Services, Inc. The following table
provides certain information as of July 15, 1999, with respect to Dunwoody
Brokerage Services, Inc.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY MAXIMUM NUMBER SHARES BENEFICIALLY
OWNED PRIOR TO OFFERING(1) OF SHARES TO BE SOLD OWNED AFTER OFFERING(2)
NAME OF -------------------------- -------------------- -----------------------
REGISTERED STOCKHOLDER NUMBER PERCENT NUMBER PERCENT
- ---------------------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
Dunwoody Brokerage
Services, Inc.(3)........ 925,571 1.2 % 925,571 0 0.0%
8309 Dunwoody Place
Atlanta, GA 30350
- --------------
</TABLE>
(1) Excludes shares of Common Stock that may be acquired by Dunwoody
Brokerage Services, Inc. under the Placement Agent Agreement in
connection with the issuance and sale of shares of Common Stock to the
two institutional investors under the Regulation D Common Stock Equity
Line Subscription Agreement (including shares of Common Stock issuable
upon the exercise of warrants that may be issued to Dunwoody Brokerage
Services, Inc.). See "The Equity Line Agreement." Based on an aggregate
of 76,369,778 shares of Common Stock issued and outstanding as of July
15, 1999.
(2) Assumes that all of the Shares are sold.
(3) As of the date of this prospectus, Dunwoody Brokerage Services, Inc.
owns 925,571 shares of Common Stock, including 75,964 shares of Common
Stock issuable upon exercise of outstanding warrants which are
currently exercisable, which represents approximately 1.2% of the
issued and outstanding Common Stock as of July 15, 1999. Excludes
shares of Common Stock that may be acquired by Dunwoody Brokerage
Services, Inc. under the Placement Agent Agreement in connection with
the issuance and sale of shares of Common Stock to the two
institutional investors under the Regulation D Common Stock Equity Line
Subscription Agreement (including shares of Common Stock issuable upon
the exercise of warrants that may be issued to Dunwoody Brokerage
Services, Inc.). See "The Equity Line Agreement."
Dunwoody Brokerage Services, Inc. has not had any material relationship
with Techniclone or any of its affiliates within the past three years, other
than as a result of the ownership of securities of Techniclone, through the
placement by Dunwoody Brokerage Services, Inc. or its affiliates of securities
of Techniclone or as a result of the negotiation and the execution of the
Placement Agent Agreement and the Regulation D Common Stock Equity Line
Subscription Agreement. The natural persons controlling Dunwoody Brokerage
Services, Inc. are Robert L. Hopkins and Dwight B. Bronnum.
17
<PAGE>
The shares of Common Stock offered by this prospectus by Dunwoody Brokerage
Services, Inc. were acquired under the Placement Agent Agreement or will be
acquired upon exercise of warrants issued to Dunwoody Brokerage Services, Inc.
Of the 925,571 shares of Common Stock offered by Dunwoody Brokerage Services,
Inc. by this prospectus:
o 849,607 shares are currently issued and outstanding; and
o up to an aggregate of 75,964 shares may be issued to Dunwoody Brokerage
Services, Inc. upon exercise of outstanding warrants, of which up to
25,454 shares are issuable at an exercise price of $1.375 per share, up
to 26,086 shares are issuable at an exercise price of $0.8625 per
share, up to 5,510 shares are issuable at an exercise price of $0.6125
per share, up to 4,576 shares are issuable at an exercise price of
$0.7375 per share, up to 1,611 shares are issuable at an exercise price
of $1.50 per share and up to 12,727 shares are issuable at an exercise
price of $1.2375 per share, all of which may be exercised on a cashless
basis only. See "The Equity Line Agreement."
Under the Placement Agent Agreement and the related Registration Rights
Agreement, Techniclone agreed to register the shares of Common Stock offered by
this prospectus under the Securities Act of 1933 to permit their resale by
Dunwoody Brokerage Services, Inc. from time to time to the public without
restriction. Techniclone will prepare and file such amendments and supplements
to the registration statement as may be necessary in accordance with the rules
and regulations of the Securities Act of 1933 to keep it effective until the
earlier to occur of (i) the date as of which all of the shares of Common Stock
may be resold in a public transaction without volume limitations or other
material restrictions without registration under the Securities Act of 1933,
including without limitation, in compliance with Rule 144 under the Securities
Act of 1933 or (ii) the date as of which all of the shares of Common Stock
offered by this prospectus have been resold. Techniclone has also agreed to
register at various times upon the request of Dunwoody Brokerage Services, Inc.
any additional shares that may be issued in the future to Dunwoody Brokerage
Services, Inc. under the Placement Agent Agreement (including shares issuable
upon exercise of warrants that may be issued in the future to Dunwoody Brokerage
Services, Inc.).
Techniclone has agreed to pay the expenses (other than broker discounts and
commissions, if any) of the preparation of this prospectus.
18
<PAGE>
PLAN OF DISTRIBUTION
Techniclone has been advised by Dunwoody Brokerage Services, Inc. that all
or a portion of the shares of Common Stock offered by this prospectus may be
offered for sale, from time to time, by Dunwoody Brokerage Services, Inc. in one
or more private or negotiated transactions, in open market transactions on the
Nasdaq SmallCap Market, in settlement of short sale transactions, in settlement
of option transactions, 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. Dunwoody Brokerage Services, Inc. may effect these
transactions by selling the shares of Common Stock offered by this prospectus
directly to one or more purchasers or to or through other broker-dealers or
agents including: (a) in a block trade in which the broker or dealer so engaged
will attempt to sell the shares as agent, but may position and resell a portion
of the block as principal to facilitate the transaction; (b) in purchases by
another broker or dealer and resale by such broker or dealer as a principal for
its account; (c) in ordinary brokerage transactions and (d) in transactions in
which the broker solicits purchasers. The compensation to a particular
underwriter, broker-dealer or agent may be in excess of customary commissions.
To Techniclone's knowledge, Dunwoody Brokerage Services, Inc. has made no
arrangement with any brokerage firm (other than itself) for the sale of the
shares of Common Stock offered by this prospectus. Techniclone has been advised
by Dunwoody Brokerage Services, Inc. that it presently intends to dispose of the
shares of Common Stock offered by this prospectus through itself or through
other broker-dealers in ordinary brokerage transactions at market prices
prevailing at the time of the sale. However, depending on market conditions and
other factors, Dunwoody Brokerage Services, Inc. may also dispose of the shares
through one or more of the other methods described above. Concurrently with
sales under this prospectus, Dunwoody Brokerage Services, Inc. may effect other
sales of the shares of Common Stock offered by this prospectus under Rule 144 or
other exempt resale transactions. There can be no assurance that Dunwoody
Brokerage Services, Inc. will sell any or all of the shares of Common Stock
offered by this prospectus.
Dunwoody Brokerage Services, Inc. is an "underwriter" within the meaning of
the Securities Act of 1933 in connection with the sale of the shares of Common
Stock offered by this prospectus. Any other broker-dealers or agents who act in
connection with the sale of the shares of Common Stock offered by this
prospectus may also be deemed to be underwriters. Profits on any resale by
Dunwoody Brokerage Services, Inc. of the shares of Common Stock offered by this
prospectus and any discounts, commissions or concessions received by any such
broker-dealers or agents may be deemed to be underwriting discounts and
commissions under the Securities Act of 1933.
Any broker-dealer participating in such transactions as agent may receive
commissions from Dunwoody Brokerage Services, Inc. (and, if they act as agent
for the purchaser of such shares, from such purchaser). Broker-dealers may agree
with Dunwoody Brokerage Services, Inc. to sell a specified number of shares of
Common Stock offered by this prospectus at a stipulated price per share and, to
the extent such a broker-dealer is unable to do so acting as agent for Dunwoody
Brokerage Services, Inc., to purchase as principal any unsold shares of Common
Stock at the price required to fulfill the broker-dealer commitment to Dunwoody
Brokerage Services, Inc. Broker-dealers who acquire shares of Common Stock
offered by this prospectus as principal may thereafter resell such shares from
time to time in transactions (which may involve crosses and block transactions
and which may involve sales to and through other broker-dealers, including
transactions of the nature described above) in the over-the-counter market, in
negotiated transactions or otherwise at market prices prevailing at the time of
sale or at negotiated prices, and in connection with such resales may pay to or
receive from the purchasers of such shares commissions computed as described
above. To the extent required under the Securities Act of 1933, a supplemental
prospectus will be filed, disclosing (a) the name of any such broker-dealers;
(b) the number of shares of Common Stock involved; (c) the price at which such
shares are to be sold; (d) the commissions paid or discounts or concessions
allowed to such broker-dealers, where applicable; (e) that such broker-dealers
did not conduct any investigation to verify the information set out or
incorporated by reference in this prospectus, as supplemented; and (f) other
facts material to the transaction.
19
<PAGE>
Under applicable rules and regulations under the Securities Exchange Act of
1934, any person engaged in a distribution of the shares of Common Stock offered
by this prospectus may not simultaneously engage in market making activities
with respect to the shares for a period beginning when such person becomes a
distribution participant and ending upon such person's completion of
participation in the distribution. Such activities include stabilization
activities in the Common Stock to effect covering transactions, imposing penalty
bids or effecting passive marketing making bids. In addition, in connection with
transactions in the shares of Common Stock offered by this prospectus,
Techniclone and Dunwoody Brokerage Services, Inc. may be subject to applicable
provisions of the Securities Exchange Act of 1934, and its rules and
regulations, including, Rule 10b-5 of the Securities Exchange Act of 1934. If
Techniclone and Dunwoody Brokerage Services, Inc. are deemed to be distribution
participants, they may also be subject to Regulation M and Rules 100, 101, 102,
103, 104 and 105 of the Securities Exchange Act of 1934. All of the foregoing
may affect the marketability of the shares of Common Stock offered by this
prospectus.
Dunwoody Brokerage Services, Inc. has agreed that it will not create or
increase a net short position with respect to the Common Stock during the ten
trading days prior to any date on which shares are to be sold to the two
institutional investors under the Regulation D Common Stock Equity Line
Subscription Agreement or during the thirty calendar days prior to July 15,
1999. Dunwoody Brokerage Services, Inc. has further agreed that it will not
engage in any trading practice or activity for the purpose of manipulating the
price of the Common Stock or otherwise engage in any trading practice or
activity that violates the rules and regulations of the SEC.
Dunwoody Brokerage Services, Inc. will pay all commissions, transfer taxes
and other expenses associated with the sales of shares of Common Stock by it.
The shares of Common Stock offered by this prospectus are being registered in
compliance with contractual obligations of Techniclone, and Techniclone has
agreed to pay the expenses of the preparation of this prospectus. Techniclone
has also agreed to indemnify Dunwoody Brokerage Services, Inc. against certain
liabilities, including, without limitation, liabilities arising under the
Securities Act of 1933.
Techniclone will not receive any proceeds from the exercise by Dunwoody
Brokerage Services, Inc. of any warrants which it now holds or may in the future
receive under the Placement Agent Agreement , which may only be exercised by
Dunwoody Brokerage Services, Inc. in a cashless transaction. Techniclone will
not receive any of the proceeds from the sale of the shares of Common Stock
offered by this prospectus.
In order to comply with the securities laws of certain states, if
applicable, the shares of Common Stock offered by this prospectus may be sold in
these jurisdictions only through registered or licensed brokers or dealers. In
addition, in certain states the shares of Common Stock offered by this
prospectus may not be sold unless such shares have been registered or qualified
for sale in these states or an exemption from registration or qualification is
available and complied with.
The Common Stock is currently traded on The Nasdaq SmallCap Market under
the symbol "TCLN".
20
<PAGE>
DESCRIPTION OF SECURITIES
As of the date of this prospectus, the authorized capital stock of
Techniclone consists of 120,000,000 shares of Common Stock, par value $.001 per
share, and 5,000,000 shares of Preferred Stock, par value $.001 per share, of
which 10,000 shares are designated as Series B Convertible Preferred Stock
("Class B Stock") and 17,200 shares are designated as 5% Adjustable Convertible
Class C Preferred Stock ("Class C Stock"). As of July 15, 1999, there were
76,369,778 shares of Common Stock outstanding held by 5,833 stockholders of
record, 91 shares of Class C Stock outstanding held by 3 holders of record and
no shares of Class B Stock outstanding.
Holders of Common Stock are entitled to one vote per share on all matters
to be voted upon by the stockholders. Subject to preferences that may be
applicable to the holders of outstanding shares of Preferred Stock, if any, the
holders of Common Stock are entitled to receive such lawful dividends as may be
declared by the Board of Directors. In the event of liquidation, dissolution or
winding up of Techniclone, and subject to the rights of the holders of
outstanding shares of Preferred Stock, if any, the holders of shares of Common
Stock shall be entitled to receive pro rata all of the remaining assets of
Techniclone available for distribution to its stockholders. There are no
redemption or sinking fund provisions applicable to the Common Stock. All
outstanding shares of Common Stock are fully paid and nonassessable, and shares
of Common Stock to be issued in this offering shall be fully paid and
nonassessable.
Warrants which are currently held by Dunwoody Brokerage Services, Inc. or
which may be issued in the future to Dunwoody Brokerage Services, Inc. under the
Placement Agent Agreement are exercisable at any time beginning on the date of
issuance of such warrants and ending on December 31, 2004. The shares of Common
Stock underlying the warrants, when issued upon exercise in whole or in part,
will be fully paid and nonassessable, and Techniclone will pay any transfer tax
incurred as a result of the issuance of the Common Stock to the holder upon its
exercise.
Each of the warrants contain provisions that protect the holder against
dilution by adjustment of the exercise price. Such adjustments will occur in the
event, among others, of a merger, stock split or reverse stock split, stock
dividend or recapitalization. Techniclone is not required to issue fractional
shares upon the exercise of any of the warrants. The holder of the warrants will
not possess any rights as a stockholder until such holder exercises the
warrants. The warrants may be exercised upon surrender on or before the
expiration date of the relevant warrant at the offices of Techniclone, with an
exercise form completed and executed as indicated, accompanied by payment of the
exercise price for the number of shares with respect to which the warrant is
being exercised. The exercise price is payable only by way of a "cashless
exercise," in which that number of shares of Common Stock underlying the warrant
having a fair market value equal to the aggregate exercise price are canceled as
payment of the exercise price.
For the life of each of the warrants, the holder has the opportunity to
profit from a rise in the market price of the Common Stock without assuming the
risk of ownership of the shares of Common Stock issuable upon the exercise of
the warrant. The holder of the warrant may be expected to exercise the warrant
at a time when Techniclone would, in all likelihood, be able to obtain any
needed capital by an offering of Common Stock on terms more favorable than those
provided for by the warrants. Furthermore, the terms on which Techniclone could
obtain additional capital during the life of the warrants may be adversely
affected.
This prospectus does not cover any shares of Common Stock issued or
issuable to the two institutional investors under the Regulation D Common Stock
Equity Line Subscription Agreement or shares of Common Stock issuable upon
exercise of warrants issued or issuable to the two institutional investors under
the Regulation D Common Stock Equity Line Subscription Agreement, which shares
have been separately registered for resale under the Securities Act of 1933, and
are the subject of a separate prospectus.
21
<PAGE>
LEGAL MATTERS
The validity of the shares of Common Stock offered by this prospectus will
be passed upon for Techniclone by Rutan & Tucker, LLP, Costa Mesa, California.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements (and schedule) included in our Annual Report on Form 10-K
for the year ended April 30, 1999, as set forth in their report (which contains
an explanatory paragraph describing conditions that raise substantial doubt
about Techniclone's ability to continue as a going concern as described in Note
1 to the Consolidated Financial Statements therein), which is incorporated in
this prospectus by reference. Our consolidated financial statements are
incorporated by reference in reliance on their report, given on their authority
as experts in accounting and auditing.
The consolidated financial statements and related consolidated financial
statement schedule for the fiscal year ended April 30, 1998, incorporated in
this prospectus by reference from Techniclone Corporation's Annual Report on
Form 10-K for the year ended April 30, 1999, have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report (which expresses an
unqualified opinion and includes an explanatory paragraph regarding substantial
doubt about Techniclone's ability to continue as a going concern), which is
incorporated in this prospectus 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
Techniclone's Bylaws provide that Techniclone will indemnify its directors
and officers and may indemnify its employees and other agents to the fullest
extent permitted by law. Techniclone believes that indemnification under its
Bylaws covers at least negligence and gross negligence by indemnified parties,
and permits Techniclone 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. Techniclone has liability
insurance for its officers and directors.
In addition, Techniclone's Certificate of Incorporation provides that,
under Delaware law, its directors shall not be liable for monetary damages for
breach of the directors' fiduciary duty as a director to Techniclone 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
Techniclone 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.
Provisions of Techniclone's Bylaws require Techniclone, 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 Techniclone) to advance their expenses incurred
22
<PAGE>
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. To the
extent that indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers or persons controlling Techniclone
as discussed in the foregoing provisions, Techniclone has been informed that in
the opinion of the SEC, such indemnification is against public policy as
expressed in the Securities Act of 1933, and is therefore unenforceable.
Techniclone believes that its Certificate of Incorporation and Bylaw provisions
are necessary to attract and retain qualified persons as directors and officers.
Techniclone 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 Techniclone against losses arising from any wrongful
act (as defined by the policy) in his or her capacity as a director of officer.
The policy reimburses Techniclone for amounts which Techniclone lawfully
indemnifies or is required or permitted by law to indemnify its directors and
officers.
WHERE TO LEARN MORE ABOUT TECHNICLONE
Techniclone has filed with the SEC a registration statement on Form S-3
under the Securities Act of 1933, relating to the shares of Common Stock being
offered by this prospectus. For further information pertaining to the Common
Stock and the shares of Common Stock being offering by this prospectus,
reference is made to such registration statement. This prospectus constitutes
the prospectus of Techniclone filed as a part of the registration statement and
it does not contain all information in the registration statement, certain
portions of which have been omitted in accordance with the rules and regulations
of the SEC. In addition, Techniclone is subject to the informational
requirements of the Securities Exchange Act of 1934, and, in accordance with
such requirements, files reports, proxy statements and other information with
the SEC relating to its business, financial statements and other matters.
Reports and proxy and information statements filed under Section 14(a) and 14(c)
of the Securities Exchange Act of 1934 and other information filed with the SEC
as well as copies of the registration statement can be inspected and copied at
the public reference facilities maintained by the SEC at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the SEC's Midwest
Regional Offices at 500 West Madison Street, Chicago, Illinois 60606 and
Northeast Regional Office at 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 SEC at its principal office at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549. Such material may also be obtained
electronically by visiting the SEC's web site on the Internet at
http://www.sec.gov. The Common Stock of Techniclone is traded on The Nasdaq
SmallCap Market under the symbol "TCLN". Reports, proxy statements and other
information concerning Techniclone may be inspected at the National Association
of Securities Dealers, Inc., at 1735 K Street, N.W., Washington D.C. 20006.
23
<PAGE>
================================================================================
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO WHICH
WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS DOCUMENT MAY ONLY BE USED WHERE IT IS LEGAL
TO SELL THESE SECURITIES. THE INFORMATION IN THIS DOCUMENT MAY ONLY BE ACCURATE
ON THE DATE OF THIS DOCUMENT.
----------------------------------
TABLE OF CONTENTS
PAGE
----
Techniclone Corporation ................................................. 3
Risk Factors............................................................. 4
Forward-Looking Statements...............................................13
Incorporation of Certain Documents By Reference .........................13
The Equity Line Agreement ...............................................14
Use of Proceeds ........................................................17
Dunwoody Brokerage Services, Inc. - The Selling Stockholder .............17
Plan of Distribution ...................................................19
Description of Securities ...............................................21
Legal Matters ...........................................................22
Experts .................................................................22
Indemnification of Directors and Officers ...............................22
Where to Learn More About Techniclone ...................................23
-------------------------------
925,571 Shares
[Techniclone
Corporation TECHNICLONE
Logo Here] CORPORATION
COMMON STOCK
-----------------
PROSPECTUS
-----------------
August 13, 1999
================================================================================
