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PROSPECTUS
920,716 Shares
CENTOCOR, INC.
COMMON STOCK
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This Prospectus relates to 920,716 shares of Common Stock, $.01 par value
per share, of Centocor, Inc. ("Centocor" or the "Company") that were acquired by
Eli Lilly and Company ("Lilly" or the "Selling Shareholder") in a private
transaction. See "Selling Shareholder." Some or all of the shares of Common
Stock to which this Prospectus relates may be sold from time to time by the
Selling Shareholder, or by pledgees, donees, transferees or other successors in
interest to the Selling Shareholder, at public or private sale at prevailing
market prices, prices related to prevailing market prices, negotiated prices or
fixed prices (and, in the case of sales through brokers, upon payment of normal
brokerage commissions). The Company will not receive any of the proceeds from
the sale of the shares of Common Stock offered hereunder by the Selling
Shareholder.
The Common Stock of the Company is quoted on the Nasdaq National Market
under the symbol "CNTO." The last reported sale price of the Common Stock on the
Nasdaq National Market on July 10, 1996 was $27.00 per share.
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SEE "RISK FACTORS" COMMENCING ON PAGE 4 HEREOF FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-----------------------------
This Prospectus does not constitute an offer to sell securities in any
jurisdiction to any person to whom it is unlawful to make such offer in such
jurisdiction.
No person has been authorized by the Company to give any information or to
make any representations, other than as contained in this Prospectus, and, if
given or made, such information or representations must not be relied upon.
Neither delivery of this Prospectus nor any sale made hereunder shall,
under any circumstances, create any implication that there has been no change in
the affairs of the Company since the date hereof.
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The date of this Prospectus is July 11, 1996
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company may be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549-1004, and
at the Commission's following Regional Offices: New York Regional Office, 7
World Trade Center, Suite 1300, New York, New York 10048; and Chicago Regional
Office, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511.
Copies of such material may also be obtained at prescribed rates from the Public
Reference Branch of the Commission at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549-1004. Quotations relating to the Company's Common Stock
appear on the Nasdaq National Market and such reports and other information
concerning the Company can also be inspected at the offices of the Nasdaq Stock
Market, 1735 K Street, N.W., Washington, D.C. 20006-1506.
The Company has filed with the Commission a Registration Statement on Form
S-3 under the Securities Act of 1933 (the "Securities Act") with respect to the
Common Stock offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules thereto, certain portions of which have been omitted as permitted by
the rules and regulations of the Commission. Statements contained in this
Prospectus as to the contents of any contract or other document referred to are
not necessarily complete; and with respect to each such contract or document
filed as an exhibit to the Registration Statement, reference is made to such
exhibit for a more complete description of the matters involved, each such
statement being qualified in all respects by such reference. For further
information with respect to the Company and the Common Stock, reference is made
to the Registration Statement and exhibits thereto. The information so omitted,
including exhibits, may be obtained from the Commission at its principal office
in Washington, D.C. upon payment of the prescribed fees, or may be inspected
without charge at the public reference facilities of the Commission at 450 Fifth
Street, N.W., Judiciary Plaza, Room 1024, Washington, D.C. 20549-1004.
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THE COMPANY
Centocor is a biotechnology company that develops therapeutic and
diagnostic human health care products for cardiovascular, autoimmune and
infectious diseases and cancer. The Company's primary technological focus is on
monoclonal antibodies, with additional programs in genetic vaccines and
peptides. The Company's strategy is to identify proprietary high value-added
product opportunities, and to commercialize those opportunities by focusing on
clinical development, regulatory process, manufacturing and market development.
The Company seeks to license technology and product candidates from research
institutions and other biotechnology companies, in addition to conducting
selected basic research.
The Company has two therapeutic products approved for sale and several
product candidates in various stages of development. ReoPro is marketed and
sold in the United States and Europe for the reduction of acute ischemic cardiac
complications in patients undergoing angioplasty procedures who are at high risk
for abrupt artery closure. Panorex is marketed and sold in Germany as an
adjuvant therapy in the treatment of post-operative colorectal cancer. Panorex
is a trademark of Centocor. ReoPro is a trademark of Lilly. The Company also
markets several diagnostic products for cancer and infectious disease in the
United States, Europe and Japan.
Consistent with its strategy, the Company maintains and seeks
strategic alliances with major pharmaceutical companies for the
commercialization and marketing of each of its therapeutic products, pursuant to
which the Company and its respective partner jointly focus on the continued
clinical and market development for the product, while the Company's partner
primarily conducts the marketing, promotion and distribution of such product.
The Company maintains and seeks distribution agreements for its diagnostic
products with companies having established positions and distribution networks
in applicable market segments.
The Company was incorporated in Pennsylvania in 1979. The Company's
corporate headquarters are located at 200 Great Valley Parkway, Malvern,
Pennsylvania 19355, and its telephone number is (610) 651-6000.
In this Prospectus, the terms "Centocor" and the "Company" include
Centocor, Inc. and its subsidiaries, and the term "Common Stock" refers to the
common stock, $.01 par value per share, of the Company, including the common
stock purchase rights attached thereto.
The 920,716 shares of the Company's Common Stock covered by this
Prospectus (the "Shares") are, or may be, offered by the Selling Shareholder.
The Selling Shareholder is Lilly. See "Selling Shareholder."
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RISK FACTORS
Before purchasing the shares of Common Stock offered hereby, prospective
investors should consider carefully the risk factors set forth below as well as
the other information set forth elsewhere in this Prospectus or incorporated
herein by reference in evaluating the Company and its business.
Liquidity and Capital Resources; Need for and Uncertainty of Additional Capital
The Company has incurred significant operating expenses attempting to
develop therapeutic and diagnostic products. The Company's product sales have
not produced sufficient revenues to cover the Company's operating costs.
Consequently, the Company has experienced substantial net cash outflows, which
have been only partially offset by significant contract revenues received
through collaborative alliances with pharmaceutical companies and the Company's
financing activities.
The Company's future financial condition is highly dependent upon the
reduction of the Company's rate of net cash outflows and, ultimately, upon the
achievement of significant and sustained levels of therapeutic product sales.
For the year ended December 31, 1995, sales of the Company's products, including
ReoPro and Panorex, did not generate sufficient revenue to result in positive
cash flow for the year. Under the Company's strategy of entering into
collaborative alliances with established pharmaceutical companies, the Company
generally shares sales revenues from products covered by such arrangements with
its partners. There can be no assurance that those products, in conjunction with
the Company's therapeutic product candidates under development and diagnostic
products, will achieve a level of sales sufficient to generate positive cash
flow from operations for the Company, given the current and currently
anticipated future scope of the Company's operations. The level of future sales
of both diagnostic and therapeutic products will be dependent upon several
factors, including, but not limited to, the timing and extent of future
regulatory approvals of the Company's products, approval and commercialization
of competitive products and the degree of acceptance of the Company's products
in the marketplace. There can be no assurance that Food and Drug Administration
(the "FDA") or other regulatory approvals expanding the authorized use of ReoPro
and Panorex or permitting the commercial sale of any of the Company's product
candidates under development will be obtained. Failure to obtain additional
timely FDA or other regulatory approvals for the use of ReoPro and Panorex or
other product candidates will have a material adverse effect on the Company.
Until significant and sustained levels of therapeutic product sales are
achieved, the Company expects that it will need to secure significant additional
funding in the future from collaborative arrangements with pharmaceutical
companies or from the capital markets. There can be no assurance that sufficient
additional funding will be available to the Company or that the Company can
obtain additional collaborations with established pharmaceutical companies and
receive payments for product rights and/or the achievement of milestones under
such collaborative agreements. Even if the Company obtains such funding, there
can be no assurance that such
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funding will be sufficient to sustain the Company's operations until it
generates positive cash flows from operations.
As of March 31, 1996, agreements covering $17,396,000 of Centocor's
outstanding debt balances contain certain financial and non-financial covenants,
including the maintenance of minimum equity and cash balances and compliance
with certain financial ratios. Centocor is currently not in compliance with
certain of these covenants; however, Centocor has obtained waivers of such
covenants on the condition that it maintains certain investments at the lending
bank, which at March 31, 1996 totalled $20,000,000. There can be no assurance
that Centocor will be able to continue to collateralize such loans and,
accordingly, Centocor has classified this $17,396,000 of debt as short-term.
Additionally, $7,229,000 of Centocor's short-term debt is secured by investments
maintained at the lending bank of $7,260,000. If cash flows continue to be
negative, Centocor's ability to service its debt may be impaired.
History of Operating Losses; Risks Associated with Products Under Development
Centocor has recorded significant losses from operations. Many of
Centocor's product candidates are in various stages of research, development or
clinical testing, and cannot be sold commercially without first obtaining a
license for marketing from the FDA and, outside the United States, other
regulatory authorities. The process of obtaining such licenses usually takes a
number of years to complete and requires significant expenditures to conduct
clinical trials of the safety and efficacy of a potential product. There can be
no assurance that any of the Company's products currently under development will
obtain the required approvals or, if approved, will obtain sufficient market
acceptance to become commercially successful. Even if one or more of its
products under development is licensed for marketing by the FDA and achieves
substantial market acceptance, there can be no assurance that the Company will
achieve profitability. Additionally, the Company has in the past recorded
substantial special charges for acquired research and development, inventory
reserves for one of the Company's products that was withdrawn from the market,
restructurings, a royalty buyout, and a writedown of certain facilities and
equipment. There can be no assurance that Centocor will not record additional
special charges in the future or that product sales will be sufficient to cover
its future operating expenses.
Litigation
The Company is subject to litigation. Litigation to which the Company is
currently or has been subjected relates to, among other things, the Company's
patent and intellectual property rights, licensing arrangements with other
persons and financing activities. The Company cannot predict with certainty the
eventual outcome of pending litigation, and could be required to incur
substantial expense in defending these lawsuits. The Company has in the past
taken substantial special charges relating to certain litigation, and there can
be no assurance that pending, or future, legal proceedings will not result in
additional special charges or have a material adverse effect on the Company's
financial condition and results of operations.
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Dependence on Collaborative Partners; Customer Concentration
Centocor's strategy for research, development and commercialization of
certain of its products entails entering into various arrangements with
corporate partners and others, including those discussed below. The success of
these products is dependent, in part, upon the subsequent success of these
outside parties in performing their responsibilities. The Company's
collaborators may also compete with the Company. Although Centocor believes its
collaborators have an economic incentive to succeed in performing their
contractual responsibilities, the amount and timing of resources that they
devote to these activities is not within the control of Centocor. There can be
no assurance that such parties will perform their obligations as expected or
that any revenue will be derived from such arrangements. If any of Centocor's
collaborators breaches or terminates its agreement with the Company or otherwise
fails to conduct its collaborative activities in a timely manner, the
development or commercialization of the product candidate or research program
under such collaborative arrangement may be delayed, the Company may be required
to undertake unforeseen additional responsibilities or to devote unforeseen
additional funds or other resources to such development or commercialization, or
such development or commercialization could be terminated. The termination or
cancellation of collaborative arrangements could also adversely affect the
Company's financial condition, intellectual property position and operations. In
addition, disagreements between collaborators and the Company could lead to
delays in the collaborative research, development or commercialization of
certain products or could require or result in formal legal process or
arbitration for resolution. These consequences could be time-consuming and
expensive and could have material adverse effects on the Company.
In July 1992, Centocor and Lilly entered into a Sales and Distribution
Agreement (the "Sales and Distribution Agreement"). Under that agreement,
Centocor is principally responsible for developing and manufacturing ReoPro, and
Lilly will assist Centocor in the regulatory filings and continued development
of ReoPro for various clinical indications. Also, in the event Centocor cannot
manufacture ReoPro or under certain other circumstances, such as material breach
of the agreement by or the bankruptcy of Centocor, Lilly has the option to
assume the manufacture of ReoPro and assure the continued supply of the product,
even to the extent of acquiring Centocor's related manufacturing assets at their
independently appraised values.
Centocor may be required to make a payment to Lilly of $40 million through
December 31, 1996, or decreasing amounts through December 31, 1999, in the event
of any change in control of Centocor or in the event of any governmental action
or determination that results in the Sales and Distribution Agreement not being
in full force and effect in all material respects in major jurisdictions,
excluding the United States, and the subsequent termination of the Sales and
Distribution Agreement by Lilly based solely on such events.
In November 1993, Centocor and Glaxo Wellcome plc ("Glaxo Wellcome")
entered into an alliance agreement for the development and marketing of certain
of Centocor's monoclonal antibody-based cancer therapeutic products, including
Panorex. In November 1994, Centocor and Glaxo Wellcome amended their alliance
agreement and Glaxo Wellcome became the exclusive worldwide distributor for
Panorex. Under the agreement, Glaxo Wellcome is responsible principal-
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ly for the continuing clinical development of Panorex, and Centocor is
responsible principally for manufacturing Panorex and securing regulatory
approvals.
The Company may seek additional collaborative arrangements to develop and
commercialize its products in the future. There can be no assurance that the
Company will be able to negotiate acceptable collaborative arrangements in the
future or that any such collaborative arrangements will be successful. In
addition, there can be no assurance that the Company's collaborative partners
will not pursue alternative technologies or develop alternative compounds
independently or in collaboration with others as a means of developing
treatments for the diseases targeted by their collaborative programs with
Centocor.
During 1995, approximately 50% of the Company's total product sales were to
three customers, as follows: 24% to Lilly, 11% to Glaxo Wellcome and 15% to
Toray-Fuji Bionics, Inc. During 1994, approximately 60% of the Company's total
product sales were to four customers, as follows: 10% to Abbott Laboratories,
12% to Boehringer Mannheim GmbH, 13% to CIS bio International and 25% to Toray-
Fuji Bionics, Inc.
Patents and Licensing Arrangements; CPIII Purchase Option
Products currently being marketed, developed or considered for development
by the Company are in the area of biotechnology, an area in which there are
extensive patent filings. The patent position of biotechnology firms generally
is highly uncertain and involves complex legal and factual questions. To date,
no consistent policy has emerged regarding the breadth of claims allowed in
biotechnology patents. Accordingly, there can be no assurance that patent
applications owned or licensed by the Company will result in patents being
issued or that, if issued, such patents will afford protection against
competitors with similar technology. In addition, there can be no assurance that
products covered by such patents, or any other products developed by the Company
or subject to licenses acquired by the Company, will not be covered by third
party patents, in which case continued development and marketing of such
products would require a license under such patents. There can be no assurance
that such required licenses will be available to the Company or its licensees on
acceptable terms.
Other entities have filed applications for or have been issued patents and
are expected to obtain additional patents to which Centocor may need to acquire
rights. The extent to which Centocor may need to obtain rights to any such
patents or to contest their scope or validity will depend on final product
formulation and other factors. The ability to license any such patents and the
likelihood of successfully contesting the scope or validity of such patents are
uncertain and the costs associated therewith may be significant. If Centocor is
required to acquire rights to valid and enforceable patents but cannot do so at
a reasonable cost, Centocor's ability to manufacture or market its products in
the country of issuance of any such patent may be materially adversely affected.
There has been substantial litigation regarding patent and other
intellectual property rights in the biotechnology industry. Litigation may be
necessary to enforce certain intellectual property
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rights of the Company. Any such litigation could result in substantial cost to
and diversion of effort by the Company.
ReoPro is being developed by Centocor for Centocor Partners III, L.P.
("CPIII"). Centocor has an exclusive option to purchase the limited partnership
interests in CPIII. There can be no assurance that Centocor will exercise its
option to purchase the limited partnership interests in CPIII. If Centocor does
not or is unable to exercise such option, it will have no rights to the
technology or products developed on behalf of CPIII, including ReoPro.
Governmental Regulation
Substantially all of the Company's products require regulatory approval by
governmental agencies. In particular, human therapeutic products are subject to
rigorous preclinical and clinical testing for safety and efficacy and approval
processes by the FDA, as well as regulatory authorities in foreign countries.
The process of obtaining such approvals is costly and time-consuming. There can
be no assurance that required approvals will be obtained. Any failure to obtain,
or delay in obtaining, such approvals could adversely affect the ability of the
Company or its collaborators to market products successfully and to generate
revenues from sales.
Any approved products are subject to continuing regulation, and non-
compliance with applicable requirements can result in fines, recall or seizure
of products, total or partial suspension of production, refusal of the
government to approve product license applications, restrictions on the
Company's ability to enter into supply contracts and criminal prosecution. The
FDA also has the authority to revoke product licenses and establishment licenses
previously granted. Further, the regulation of recombinant DNA technologies and
the regulation of manufacturing facilities by state, local and other authorities
is subject to change.
Uncertainties Regarding Health Care Reimbursement and Reform
The Company's ability to commercialize products successfully may depend in
part on the extent to which reimbursement for the costs of such products and
related treatments will be available from governmental health administration
authorities, private health insurers and other organizations. Significant
uncertainty exists as to the reimbursement status of newly approved health care
products, and there can be no assurance that adequate third party coverage will
be available for the Company to maintain price levels sufficient for realization
of an appropriate return on its investment in developing new products.
Government and other third party payors are increasingly attempting to contain
health care costs by limiting both coverage and the level of reimbursement for
new products approved for marketing by the FDA, and by refusing, in some cases,
to provide any coverage for uses of approved products for indications for which
the FDA has not granted marketing approval. Currently Medicare reimburses for
angioplasty procedures on a per procedure basis regardless of whether additional
drugs, such as ReoPro, are used in conjunction with the therapy. Although the
Company is seeking to have angioplasty with ReoPro reimbursed at a higher rate
than angioplasty without ReoPro, the Company believes the benefits of using
ReoPro will outweigh its cost and accordingly believes that Medicare's current
non-reimbursement policy will not adversely affect sales of ReoPro. Recent
initiatives to reduce
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governmental deficits in the United States and elsewhere and to reform health
care delivery are increasing these cost containment efforts. As managed care
organizations continue to expand as a means of containing health care costs, the
Company believes there may be attempts by such organizations to restrict use or
delay authorization to use new products, such as those being developed by the
Company, pending completion of cost/benefit analyses of such products by those
managed care organizations. If adequate coverage and reimbursement levels are
not provided by government and other third party payors for uses of the
Company's products, the market acceptance of these products would be adversely
affected.
Significant Competition and Technological Change
Monoclonal antibody, genetic vaccine and peptide technology and other
innovations in biotechnology are being examined, evaluated and practiced in
biology research laboratories throughout the United States and in many other
countries, including laboratories of other biotechnology companies and major
pharmaceutical firms, many of which have greater resources than Centocor.
Several established pharmaceutical companies have internal research and
development groups, and alliances with other biotechnology companies, and are
seeking to develop monoclonal antibody-based, genetic vaccine-based, peptide-
based and other biological products. In addition, a number of companies have
recently entered the biological products field, some through acquisition or
merger, and more may be expected to do so in the future. As a result, Centocor
anticipates that new biological products will be developed by others.
Centocor's management believes that its ability to compete in its targeted
markets will depend upon, among other things, its ability to develop, produce
and market innovative products. Centocor's management also believes that
significant competition will come from established pharmaceutical companies that
have greater capital resources, manufacturing and marketing experience, research
and development staffs, sales forces and production facilities than Centocor.
Such competition is expected to be in the form of a variety of therapeutic
products, which may include monoclonal antibody-based, genetic vaccine-based and
peptide-based products. There can be no assurance that the activities of others
will not render Centocor's products or technologies obsolete or uncompetitive.
Exposure to Currency Fluctuations
Centocor maintains a pharmaceutical manufacturing facility in Leiden, The
Netherlands and an in-vitro diagnostic products manufacturing facility in
Guildford, England. In addition, product sales include sales in foreign
currencies. As a result, Centocor's operating results are subject to currency
fluctuations. Currency fluctuations may result in variations in the costs of
products produced which may affect the Company's gross margin from sales.
Furthermore, currency fluctuations may cause reported sales to fluctuate from
period to period regardless of the fluctuation in the volume of such sales in
foreign currencies.
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Change in Control
Certain provisions of Centocor's charter documents (including cumulative
voting provisions for electing directors and provisions permitting Centocor to
issue preferred stock in the future), the terms of Centocor's shareholders
rights plan, pursuant to which the holders of the Common Stock have certain
rights to purchase shares of the Company's preferred stock, the terms relating
to the acceleration of the exercisability of certain options and the vesting of
certain restricted stock awards and the terms of certain convertible securities
relating to the purchase of such securities by Centocor, may have the effect of
delaying, deferring or preventing a change in control of Centocor, thereby
possibly having the effect of depriving shareholders of receiving a premium for
their shares of Common Stock. Certain provisions of Pennsylvania law relating to
the acquisition of shares representing voting control over 20% or more of
Centocor's stock may have a similar effect.
Additionally, in the event of a change in control of Centocor, Centocor may
be required to make a payment to Lilly of $40 million through December 31, 1996
or decreasing amounts through December 31, 1999. See "-Dependence on
Collaborative Partners; Customer Concentration."
Skilled Personnel and Key Relationships
The success of Centocor will depend, in large part, on Centocor's continued
ability to attract and retain highly qualified management, scientific,
manufacturing and sales and marketing personnel, and on its ability to develop
and maintain important relationships with leading research institutions and key
distributors. Competition for such personnel and relationships is intense. There
can be no assurance that Centocor will be able to attract or retain such
personnel or maintain such relationships.
Product Liability
The testing and marketing of medical products entail an inherent risk of
product liability. Centocor maintains limited product liability insurance
coverage. Centocor's business may be materially adversely affected by a
successful product liability claim in excess of any insurance coverage. There
can be no assurance that product liability insurance coverage will continue to
be available to Centocor in the future on reasonable terms or at all.
Variation in Quarterly Operating Results
The Company's results of operations can be expected to be subject to
quarterly fluctuations. Quarterly results can fluctuate as a result of a number
of factors, including timing of research and development expenses, the level of
product sales, the completion or commencement of significant contracts and
foreign exchange fluctuations. The Company believes that quarterly comparisons
of its financial results should not be relied upon as an indication of future
performance.
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Volatility of Centocor Common Stock Price; Absence of Dividends
The market prices for securities of biotechnology companies in general, and
Centocor in particular, have been highly volatile and may continue to be highly
volatile in the future. Announcements of technological innovations or new
commercial products by Centocor or its competitors, developments concerning
proprietary rights, including patents, publicity regarding actual or potential
medical results relating to products under development by Centocor, regulatory
developments in both the United States and foreign countries, public concern as
to the safety of biotechnology products and economic and other external factors
or other calamity or crisis, as well as period-to-period fluctuations in
financial results, may have a significant impact on the market price of the
Common Stock. Centocor has not paid any dividends and does not expect to pay
any dividends in the foreseeable future.
Dilution
As of April 30, 1996, approximately 4,551,000 shares of Common Stock were
issuable upon exercise of outstanding options and warrants and upon vesting of
restricted stock awards. Additionally, approximately 2,049,000 shares of Common
Stock were issuable upon conversion of Centocor's 6/3/4% Convertible Debentures
due 2001. Centocor also holds an exclusive option under an arrangement with
CPIII under which Centocor may issue additional shares of Common Stock to effect
the purchase of the limited partnership interests in CPIII. To the extent such
options and warrants are exercised and such securities are converted, the
interests of holders of Common Stock will be diluted. As of April 30, 1996,
there were approximately 67,548,000 shares of Common Stock issued and
outstanding. As of April 30, 1996, Centocor had a net tangible book value per
share of Common Stock of $2.77.
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SELLING SHAREHOLDER
The Shares are, or may be, offered by the Selling Shareholder. The Selling
Shareholder is Lilly.
On July 15, 1992, the Company and Lilly entered into the Sales and
Distribution Agreement, pursuant to which Lilly became the exclusive worldwide
distributor of ReoPro. Under the terms of its Sales and Distribution Agreement
with Lilly, the Company sells ReoPro to Lilly for Lilly's further sale to the
end market. The Company is principally responsible for developing and
manufacturing ReoPro and for securing regulatory approvals. Lilly is
principally responsible for the marketing, selling and distribution of ReoPro.
The Company has entered into an Amendment to Sales and Distribution
Agreement (the "Amendment") dated as of June 26, 1996 with Lilly, pursuant to
which, among other things, (i) Lilly agreed to terminate its rights to market,
sell and distribute ReoPro in Japan and (ii) Lilly agreed to use its best
efforts to assign to Centocor any rights that it may have in its trademark
application for "ReoPro" in Japan. Centocor issued the Shares to Lilly in
consideration for Lilly's performance under the Amendment. Pursuant to the
Amendment, the Company has agreed to register the Shares on a Form S-3
registration statement in a manner that will constitute a "shelf" registration
for purposes of Rule 415 under the Securities Act. This Prospectus is part of a
Registration Statement filed by the Company with the Commission in order to
register the Shares and fulfill the foregoing obligation of the Company.
Additional information as to the Selling Shareholder and its beneficial
ownership of the Company's Common Stock is set forth below.
<TABLE>
Common Stock To
Be Beneficially
Common Stock Owned If All Shares
Beneficially Owned Shares That That May Be Offered
On July 9, 1996 May Be Offered Hereunder Are Sold
--------------------- --------------------
Name Shares Percent Hereunder Shares Percent
---- ------ ------- -------------- ------ -------
<S> <C> <C> <C>
Eli Lilly and Company 1,585,716 2.3% 920,716 665,000 1.0%
------------------ ---------- ------- ------
</TABLE>
Pledgees, donees or transferees of or other successors in interest to
the Selling Shareholder will be identified in a supplement to this Prospectus.
If the number of shares of Common Stock transferred is material, the new holders
of the shares transferred will also be identified in a post-effective amendment
to the Registration Statement.
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PLAN OF DISTRIBUTION
The Company has been advised that the distribution of the Shares by
Lilly, or by pledgees, donees or transferees of or other successors in interest
to Lilly, may be effected from time to time in one or more transactions (which
may involve block transactions) on The Nasdaq National Market or such other
exchange or market in which the Company's Common Stock may from time to time be
trading, in negotiated transactions or in a combination of any such
transactions. Such transactions may be effected by Lilly at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, at negotiated prices or at fixed prices. Lilly may effect such
transactions by selling Shares to or through broker-dealers, including purchases
by a broker-dealer as principal and resale by such broker-dealer for its account
pursuant to this Prospectus. Such broker-dealers will receive compensation in
the form of discounts or commissions from Lilly and may receive commissions from
the purchasers of Shares for whom such broker-dealers may act as agents (which
discounts or commissions from Lilly or such purchasers, if in excess of those
customary for the types of transactions involved, will be disclosed in a
supplemental prospectus).
Any broker-dealer that participates with the Selling Shareholder in
the distribution of Common Stock may be deemed to be an "underwriter" within the
meaning of the Securities Act, and any commissions or discounts received by such
broker-dealer and any profit on the resale of Shares by such broker-dealer may
be deemed to be underwriting discounts and commissions under the Securities Act.
Under the terms of the Amendment, the costs and expenses of the
registration of the Shares, except for underwriting or selling discounts or
commissions, will be paid by the Company. These costs and expenses borne by the
Company will include, without limitation, all registration and filing fees,
printing expenses and costs of special audits incident to or required by the
registration of the Shares.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Shares offered hereunder by the Selling Shareholder.
LEGAL MATTERS
The validity of the issuance of the Shares offered hereby has been
passed upon for the Company by Duane, Morris & Heckscher, Philadelphia,
Pennsylvania.
EXPERTS
The consolidated financial statements and schedule of the Company as of
December 31, 1995 and 1994, and for each of the years in the three-year period
ended December 31, 1995 and the financial statements of CPIII as of December 31,
1995 and 1994, and for each of the years in the three-year period ended December
31, 1995, have been incorporated by reference herein and in the registration
statement in reliance upon the report of KPMG Peat Marwick LLP,
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<PAGE>
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended December 31,
1995, the Company's Quarterly Reports on Form 10-Q for the quarter ended March
31, 1996 and the Company's Current Reports on Form 8-K dated January 26, 1996
and February 15, 1996 filed with the Securities and Exchange Commission and the
description of the Company's Common Stock contained in its Registration
Statements on Form 8-A as filed with the Commission on April 28, 1983, as
amended, and October 11, 1988 are hereby incorporated by reference in this
Prospectus except as superseded or modified herein. All documents filed with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, as amended after the date of this Prospectus and prior to
the termination of the offering shall be deemed to be incorporated by reference
into this Prospectus and to be a part hereof from the date of filing of such
documents. Any statement contained in any 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 which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus. The Company will provide
without charge to each person, including any beneficial owner, to whom this
Prospectus is delivered, upon written or oral request of such person, a copy of
any and all of the documents that have been or may be incorporated by reference
herein (other than exhibits to such documents which are not specifically
incorporated by reference into such documents). Such requests should be directed
to the Company's Corporate Secretary at its principal executive offices at 200
Great Valley Parkway, Malvern, Pennsylvania 19355, or by telephone at
(610) 651-6000.
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