As filed with the Securities and Exchange Commission on September 29, 1998
REGISTRATION NO. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------------
BIO-TECHNOLOGY GENERAL CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 13-3033811
------------------------------- ----------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
70 WOOD AVENUE SOUTH, ISELIN, NEW JERSEY 08830
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES (ZIP CODE))
------------------------------------
BIO-TECHNOLOGY GENERAL CORP.
1998 EMPLOYEE STOCK PURCHASE PLAN
(FULL TITLE OF THE PLAN)
SIM FASS
CHAIRMAN OF THE BOARD, CHIEF EXECUTIVE OFFICER AND PRESIDENT
BIO-TECHNOLOGY GENERAL CORP.
70 WOOD AVENUE SOUTH, ISELIN, NEW JERSEY 08830
(NAME AND ADDRESS OF AGENT FOR SERVICE)
TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE: (732) 632-8800
------------------------------------
Copies of all communications, including all communications sent to the agent for
service, should be sent to:
ROBERT SHAW, ESQ. ROY GOLDMAN, ESQ.
BIO-TECHNOLOGY GENERAL CORP. FULBRIGHT & JAWORSKI L.L.P.
70 WOOD AVENUE SOUTH 666 FIFTH AVENUE
ISELIN, NEW JERSEY 08830 NEW YORK, NEW YORK 10103
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
MAXIMUM AGGREGATE AMOUNT OF
TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE FEE
---------------- ------------- ------------ ----- ---
<S> <C> <C> <C> <C>
Common Stock, par value of
$.01 per share............. 3,000,000 share $6.8125 $20,437,500 $6,029.07
</TABLE>
(1) This registration statement shall also cover any additional indeterminable
number of shares as may be required pursuant to the Bio-Technology General
Corp. 1998 Employee Stock Purchase Plan in the event of a stock dividend,
stock split, recapitalization or other similar change in the Common Stock.
(2) Estimated pursuant to Rule 457(h) of the Securities Act of 1933, as
amended (the "Act"), solely for the purpose of calculating the
registration fee.
In addition, pursuant to Rule 416(c) under the Act, this registration
statement also covers an indeterminate amount of interests to be offered or sold
pursuant to the employee benefit plan described herein.
<PAGE>
PROSPECTUS
3,000,000 SHARES
BIO-TECHNOLOGY GENERAL CORP.
COMMON STOCK
UNDER THE BIO-TECHNOLOGY GENERAL CORP.
1998 EMPLOYEE STOCK PURCHASE PLAN
This Prospectus relates to the offer and sale of up to 3,000,000 shares
(the "Shares") of Common Stock, par value $0.01 per share (the "Common Stock"),
of Bio-Technology General Corp. ("BTG" or the "Company"). The Shares are being
offered for sale by certain stockholders of the Company (the "Selling
Stockholders") who acquire such Shares pursuant to the Company's 1998 Employee
Stock Purchase Plan (the "Plan"). See "Selling Stockholders." The Company's
Common Stock is traded on the Nasdaq Stock Market's National Market (the "Nasdaq
National Market") under the symbol "BTGC." On September 28, 1998, the closing
price of the Common Stock, as reported in the consolidated reporting system, was
$6.7813 per share.
The Company will not receive any of the proceeds from sales of the Shares
by the Selling Stockholders. The Shares may be offered from time to time by the
Selling Stockholders (and their donees and pledgees) through ordinary brokerage
transactions, in negotiated transactions or otherwise, at market prices
prevailing at the time of sale or at negotiated prices. See "Plan of
Distribution."
The Selling Stockholders may be deemed to be "Underwriters" as defined in
the Securities Act of 1933, as amended (the "Securities Act"). If any
broker-dealers are used to effect sales, any commissions paid to broker-dealers
and, if broker-dealers purchase any of the Shares as principals, any profits
received by such broker-dealers on the resale of the Shares, may be deemed to be
underwriting discounts or commissions under the Securities Act. In addition, any
profits realized by the Selling Stockholders may be deemed to be underwriting
commissions. All costs, expenses and fees in connection with the registration of
the Shares will be borne by the Company. Brokerage commissions, if any,
attributable to the sale of the Shares will be borne by the Selling Stockholders
(or their donees and pledgees).
------------
SEE "RISK FACTORS", WHICH BEGINS ON PAGE 6 OF THIS PROSPECTUS, FOR
CERTAIN INFORMATION THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus is September 29, 1998
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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"). Proxy statements, reports
and other information concerning the Company can be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and the regional offices
of the Commission located at Seven World Trade Center, 13th Floor, New York, New
York 10048, and 500 West Madison Street, Chicago, Illinois 60661, and copies of
such material can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and its public
reference facilities in New York, New York and Chicago, Illinois, at prescribed
rates. Copies of such information may also be inspected at the reading room of
the library of the National Association of Securities Dealers, Inc., 1735 K
Street, N.W., Washington, D.C. 20006. The Commission maintains a World Wide Web
site on the Internet at http://www.sec.gov that contains reports, proxy and
information statements and other information regarding the Company and other
registrants that file electronically with the Commission.
This Prospectus constitutes a part of a Registration Statement on Form S-8
(herein, together with all amendments and exhibits, referred to as the
"Registration Statement") filed by the Company with the Commission under the
Securities Act. This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information with respect to the Company and the Common Stock, reference is
hereby made to the Registration Statement. Statements contained herein
concerning the provisions of any contract, agreement or other document are not
necessarily complete, and in each instance reference is made to the copy of such
contract, agreement or other document filed as an exhibit to the Registration
Statement or otherwise filed with the Commission. Each such statement is
qualified in its entirety by such reference. Copies of the Registration
Statement together with exhibits may be inspected at the offices of the
Commission as indicated above without charge and copies thereof may be obtained
therefrom upon payment of a prescribed fee.
Private Securities Litigation Reform Act Safe Harbor Statement. This
Prospectus (including the documents incorporated by reference herein) contains
certain forward-looking statements (as such term is defined in the Private
Securities Litigation Reform Act of 1995) and information relating to BTG that
are based on the beliefs of the management of BTG, as well as assumptions made
by and information currently available to the management of BTG. When used in
this Prospectus, the words "estimate," "project," "believe," "anticipate,"
"intend," "expect" and similar expressions are intended to identify
forward-looking statements. Such statements reflect the current views of BTG
with respect to future events and are subject to risks and uncertainties that
could cause actual results to differ materially from those contemplated in such
forward-looking statements, including those discussed under "Risk Factors."
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. BTG does not undertake any
obligation to publicly release any revisions to these forward looking statements
to reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
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<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The information in the following documents filed by BTG with the
Commission (File No. 0-15313) pursuant to the Exchange Act is incorporated by
reference in this Prospectus:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997.
(b) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998.
(c) The Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1998.
(d) The Company's Form 8-A dated July 25, 1983, as amended by Amendment
No. 1 to Form 8-A dated September 29, 1983 and Amendment No. 2 to
Form 8-A dated October 1, 1986.
All documents and reports subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the offering of the securities
offered hereby shall be deemed incorporated by reference into this Prospectus
and to be a part hereof from the date of the filing of such documents or
reports. The information relating to the Company in this Prospectus should be
read together with the information in the documents incorporated by reference.
Any statement contained in a document incorporated by reference herein,
unless otherwise indicated therein, speaks as of the date of the document. Any
statement contained in a document incorporated by reference herein shall be
deemed to be modified or superseded for all purposes to the extent that a
statement contained in this Prospectus modifies or replaces such statement.
The Company will furnish without charge to each person to whom this
Prospectus is delivered, upon request, a copy of any or all of the documents
described above, other than exhibits to such documents, unless such exhibits are
specifically incorporated by reference into such documents. Requests should be
addressed to: Bio-Technology General Corp., 70 Wood Avenue South, Iselin, New
Jersey 08830, Attention: President (Tel. No. (732) 632-8800). The Company
furnishes its stockholders with an annual report containing audited financial
statements. In addition, the Company may furnish such other reports as may be
authorized, from time to time, by the Board of Directors.
THE COMPANY HAS RECEIVED FROM THE SECURITIES AUTHORITY OF THE STATE OF
ISRAEL AN EXEMPTION FROM THE OBLIGATION TO PUBLISH THIS FORM S-8 IN THE MANNER
REQUIRED FOR THE PUBLICATION OF A PROSPECTUS PURSUANT TO THE PREVAILING LAWS OF
THE STATE OF ISRAEL. NOTHING IN SUCH EXEMPTION SHALL BE CONSTRUED AS
AUTHENTICATION OR APPROVAL OF THE RELIABILITY OR ACCURACY OF THE MATTERS
CONTAINED IN THIS FORM S-8 OR AS AN EXPRESSION OF OPINION AS TO THE QUALITY OF
THE SECURITIES WHICH ARE THE SUBJECT OF THIS FORM S-8.
3
<PAGE>
THE COMPANY
Bio-Technology General Corp. ("BTG" or the "Company") is engaged in the
research, development, manufacture and marketing of biopharmaceutical products.
Through a combination of internal research and development, acquisitions,
collaborative relationships and licensing arrangements, BTG has developed a
portfolio of therapeutic products, including five products that have received
regulatory approval for sale, of which four are currently being marketed, four
products that are in clinical trials and three products that are in pre-clinical
development. The Company distributes its products on a worldwide basis through a
direct sales force in the United States and primarily through third-party
license and distribution relationships elsewhere. The Company seeks both broad
markets for its products as well as specialized markets where it can seek Orphan
Drug status and potential marketing exclusivity.
The Company's approved products include Oxandrin(R) (oxandrolone) for the
treatment of weight loss due to severe trauma, chronic infection, extensive
surgery or unknown pathophysiology, which is primarily marketed in the United
States and which to date has been primarily used to treat weight loss in AIDS
patients; Bio-Tropin(TM) (human growth hormone), which is currently being
marketed in Japan and in several countries in Europe, Latin America and the Far
East for the treatment of growth hormone deficiency in children; BioLon(TM)
(sodium hyaluronate), which is currently marketed in several countries in North
and Latin America, Europe, Asia, Africa and the Far East for the protection of
the corneal endothelium during ophthalmic implant surgery; Delatestryl(R)
(injectable testosterone), which is currently marketed in the United States for
hypogonadism and delayed puberty; and Silkis(R), a vitamin D derivative, which
is currently approved in two European countries for the topical treatment of
recalcitrant psoriasis.
The Company's principal products in registration, advanced stages of
development and clinical testing include a higher dosage formulation of Oxandrin
for the treatment of AIDS cachexia; Oxandrin for the treatment of malnutrition
in persons suffering from alcoholic hepatitis; Androtab-SL(R) (sublingual
testosterone) for the treatment of hypogonadism; Bio-Hep-B(TM), a third
generation vaccine against hepatitis-B virus; OxSODrol(TM) (human superoxide
dismutase) for the treatment of bronchopulmonary dysplasia in premature infants;
and Fibrimage(TM), a clot-imaging agent. BTG's current pre-clinical research
focus is on cardiovascular drugs, principally Factorex(TM), an anti-coagulant,
as well as recombinant insulin.
The Company's primary objective is to become a leading biopharmaceutical
company focused on developing and commercializing a broad spectrum of
therapeutic products on a worldwide basis. To achieve this objective, the
Company is: (i) expanding acceptance of approved products by seeking broader
application within their current regulatory approvals; (ii) developing new
formulations for approved products by pursuing new dosages, formulations, and
delivery systems which will be easier to use and may provide additional
proprietary protection; (iii) continuing to develop novel and innovative
products through internal research and development; (iv) expanding sales and
marketing capabilities, both in the United States, where the Company utilizes a
direct sales force, and outside the United States, where the Company will
continue to establish relationships with marketing partners worldwide; and (v)
acquiring complementary technologies and products that enable the Company to
broaden its product line and leverage its distribution network.
The Company was founded in 1980 to develop, manufacture and market novel
therapeutic products. The Company's overall administration, licensing, human
clinical studies, marketing activities, quality assurance and regulatory affairs
are primarily coordinated at the Company's headquarters in Iselin, New Jersey.
Pre-clinical studies, research and development activities and manufacturing of
the Company's biotechnology derived products are primarily
4
<PAGE>
carried out through Bio-Technology General (Israel) Ltd. ("BTG-Israel"), the
Company's wholly-owned subsidiary in Rehovot, Israel. The Company's telephone
number is (732) 632-8800.
5
<PAGE>
RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the shares
of Common Stock offered by this Prospectus. This Prospectus contains, in
addition to historical information, forward-looking statements that involve
risks and uncertainties. The Company's actual results could differ materially.
Factors that could cause or contribute to such differences include, but are not
limited to, those discussed below, as well as those discussed elsewhere in this
Prospectus.
Dependence on Oxandrin. A substantial portion of the increase in the
Company's revenues in 1997 and the first half of 1998 resulted from increasing
sales of Oxandrin, which the Company relaunched in the United States in December
1995. There can be no assurance that such sales increases will continue. Sales
of Oxandrin in 1995, 1996, 1997 and the first half of 1998 amounted to
approximately $3.0 million, $15.1 million, $27.9 million and $19.8 million,
respectively, representing 14%, 37%, 52% and 61%, respectively, of the Company's
total product sales in those periods. A substantial number of users of Oxandrin
are patients with AIDS and as more successful treatments for this disease, such
as protease inhibitors, are developed, the need to use Oxandrin by these
patients may be reduced. Although the Company is working to expand the use of
Oxandrin to treat other conditions covered by the product's current United
States Food and Drug Administration ("FDA") approval, such as the treatment of
weight loss suffered by burn victims and persons suffering from chronic
obstructive pulmonary disease and cancer, there can be no assurance that the
Company will be successful in its efforts. Additionally, there are no patents
covering Oxandrin, and there can be no assurance that others will not introduce
an oxandrolone product.
Dependence on Third-Party Suppliers. The Company is dependent on third
parties for the manufacture of Oxandrin and Delatestryl and the filling and
vialing of its Bio-Tropin product. Although the Company is a party to an
exclusive supply arrangement with G.D. Searle & Company Limited ("Searle"), and
an alternative exclusive supply agreement with Societa Prodotti Antibiotici
S.p.A. ("SPA"), covering the supply of Oxandrin to BTG through at least the year
2003, there can be no assurance that Searle will continue, or that SPA will be
able, to provide the Company with sufficient supplies of Oxandrin to satisfy its
future needs. Bristol-Myers Squibb Company ("Bristol") has manufactured
Delatestryl for the Company pursuant to an agreement which expired in December
1997. There can be no assurance that Bristol will continue to honor the
Company's purchase orders or that the Company's supply requirements will be
satisfied. In addition, the Company is dependent on Dr. Madaus GmbH ("Dr.
Madaus") to fill and vial the Company's Bio-Tropin product. Any failure of
Searle and SPA, Bristol or Dr. Madaus to fulfill its obligations to the Company
could have a material adverse effect on the business, results of operations and
financial condition of the Company. There can be no assurance that the Company
would be able to find an alternative supplier for any of Searle and SPA, Bristol
or Dr. Madaus if they were unable or unwilling to fulfill their obligations to
the Company.
Dependence on Third Party Licensees. The Company has derived, and expects
to continue to derive over the next several years, revenues from existing and
new licensing, research and development and marketing agreements. These
agreements typically provide the Company's licensees with certain rights,
subject to an obligation to pay royalties to the Company based on any future
product sales or to purchase product from the Company, to manufacture and market
specified products developed using the Company's proprietary technology. Certain
of these agreements provide for funding by licensees of research activities
performed on their behalf by the Company. Continued funding and participation by
these licensees will depend not only on the timely achievement of milestones,
which cannot be assured, but also on each licensee's own financial, competitive,
marketing and strategic considerations. Such considerations include the relative
advantages, including patent and proprietary positions, of alternate products
being marketed or developed by others.
6
<PAGE>
Furthermore, the amounts of any payments to be received by the Company under its
license agreements from sales of product by licensees will be dependent on the
extent to which its licensees devote resources to the development and
commercialization of the products. Although the Company believes its licensees
have an economic motivation to commercialize their products, the Company will
have no effective control over the licensees' commercialization efforts.
Risk of Pending Patent Litigation. To date, the Company has been, or
currently is, party to several administrative and legal proceedings relating to
its technologies, products and patents and the patents of others. On March 16,
1993, Genentech, Inc. ("Genentech") filed a complaint with the United States
International Trade Commission (the "ITC") alleging, among other things, that
BTG's importation of its human growth hormone ("hGH") into the United States
violates Section 337 of the Tariff Act of 1930 because of the existence of
certain claims in U.S. patents of Genentech. Genentech sought an immediate
investigation and an order that BTG cease and desist from importing hGH into the
United States. The trial on the Genentech complaint was held in April 1994. In
January 1995, the ITC issued a final decision dismissing the complaint with
prejudice as a sanction for Genentech's conduct which resulted in an incomplete
record and violated the due process rights of BTG and Novo-Nordisk A/S, another
respondent in the proceeding. The ITC also found no violation by BTG of Section
337 of the Tariff Act of 1930. Genentech appealed the ITC decision to the United
States Court of Appeals for the Federal Circuit (the "CAFC"). The appeal was
heard in 1995, and in August 1997 the CAFC reversed the ITC decision and
remanded the investigation to the ITC. However, Genentech then withdrew its
complaint, the result of which is that Genentech is barred from asserting the
patents at issue, regarding hGH, against BTG in the ITC. During 1993 and 1994,
BTG incurred total legal fees of approximately $4.2 million relating to the ITC
proceeding.
On December 1, 1994, Genentech filed a lawsuit against BTG in the United
States District Court for the District of Delaware alleging that BTG's
importation of hGH infringed two Genentech process patents. In January 1995, BTG
commenced an action against Genentech in the United States District Court for
the Southern District of New York (the "U.S. District Court") seeking, among
other things, declaratory judgments as to the non-infringement, invalidity and
unenforceability of such Genentech patents as well as damages resulting from
Genentech's actions in the ITC proceedings. The Delaware action was consolidated
with the New York action, and in August 1995 the U.S. District Court granted a
preliminary injunction prohibiting the commercial introduction in the United
States of BTG's hGH. In April 1996, the CAFC rejected BTG's appeal of the grant
of the preliminary injunction. In May 1996, the CAFC rejected BTG's request for
a rehearing and a rehearing en banc. BTG filed a petition for a writ of
certiorari with the United States Supreme Court, which was denied in October
1996. BTG is now precluded from marketing and distributing its human growth
hormone in the United States pending the outcome of the patent infringement
action. Although BTG believes that it does not infringe any valid Genentech
patent, there can be no assurance that BTG will not be found to be infringing
Genentech's patents. If BTG is ultimately found by the U.S. District Court to
infringe one or more claims in Genentech's U.S. patents, it likely will be
precluded from selling its hGH in the United States during the life of these
Genentech patents. The Company is currently evaluating its options in light of
the U.S. District Court and CAFC decisions. During 1995, the Company incurred
total legal fees relating to this litigation of approximately $824,000, which
amount was initially capitalized but subsequently written off in the first
quarter of 1996 following the CAFC decision.
In September 1993, JCR Pharmaceuticals Co., Ltd. ("JCR"), the Company's
exclusive distributor of hGH in Japan, received a letter from attorneys
representing Genentech and its licensee, Kabi Pharmacia AV, claiming that JCR's
sale of the Company's hGH infringed certain Genentech patents and patent
applications and demanding that JCR cease the sale of the Company's hGH in
Japan. During 1994, JCR and BTG filed oppositions to two Genentech
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<PAGE>
patent applications in Japan that were first published for opposition in the
first half of 1994. BTG was informed in April 1997 that its and JCR's
oppositions were denied. During 1997 BTG and JCR filed oppositions to a third
related Genentech patent in Japan and also to a later filed fourth patent. An
additional early Genentech patent was published for opposition during 1997, and
BTG filed an opposition in June 1998. There can be no assurance that these
oppositions will be successful. Although the Company does not believe that it is
infringing or has ever infringed any valid Genentech patent or patent
application, there can be no assurance that BTG's hGH will not be found to
infringe certain Genentech patents in Japan. If the Company's hGH is found to
infringe certain Genentech patents in Japan, JCR and/or the Company may be
obligated to pay damages, and would need to obtain a license from Genentech in
order to continue sales of hGH in Japan. There can be no assurance that such a
license will be granted by Genentech, or that JCR will not be required to stop
selling the Company's hGH in Japan. Sales of hGH to JCR in 1996, 1997 and the
first half of 1998 were approximately $12.9 million, $10.1 million and $3.0
million, respectively, representing 32%, 19% and 9%, respectively, of the
Company's total product sales in those periods and 71%, 60% and 34%,
respectively, of the Company's total hGH product sales in those periods.
During 1991, BTG received notification from the United States Patent
Office Board of Patent Appeals and Interferences (the "Patent Office") of the
declaration of an interference between an issued patent assigned to BTG covering
a method for producing enzymatically active human copper/zinc superoxide
dismutase ("SOD") in bacteria and a pending application of Chiron Corp.
("Chiron") which claims an earlier filing date. While BTG is vigorously
defending its patent, it cannot predict the outcome of such interference.
However, should BTG's patent be disallowed and a corresponding patent be issued
to Chiron, BTG's present method of producing enzymatically active human
copper/zinc SOD in bacteria may need to be altered, which may or may not be
possible; alternatively, BTG could seek a license to market under Chiron's
patent, which may or may not be available. Subsequent to the interference being
declared, Chiron was issued a U.S. patent for the bacterially produced form of
recombinant human copper/zinc SOD. BTG sought to have the Patent Office either
expand the scope of the existing interference action or declare a separate
interference to determine that BTG rather than Chiron should hold the patent for
the bacterially produced form of recombinant human copper/zinc SOD on the basis
that BTG scientists, not Chiron scientists, invented the method for producing
recombinant human copper/zinc SOD in bacteria. A second interference was
declared by the Patent Office in May 1998 and this interference is currently
proceeding. Unless BTG is able to prevail in these efforts or to obtain a
license from Chiron, BTG may be unable to commercialize its OxSODrol product in
the United States. In addition, the Israeli Patent Office has accepted a Chiron
patent application covering a DNA construct having certain specified functions
for expression of active copper/zinc SOD and a method for production of active
copper/zinc SOD in a microorganism harboring this construct. BTG is opposing the
grant of this patent; however, there can be no assurance that this opposition
will be successful. If the opposition is unsuccessful, BTG may be precluded from
manufacturing OxSODrol in Israel. In March 1993, the United States Patent Office
issued a patent exclusively licensed to BTG containing broad claims for the gene
encoding human copper/zinc SOD, related recombinant expression vectors and
genetically engineered cells containing the gene. BTG believes that Chiron could
not commercialize its yeast-produced SOD product in the United States without
infringing this patent. However, the issuance of this patent does not assure
BTG's ability to commercialize its OxSODrol product.
In September 1991, the Company received a letter from Biogen, Inc.
("Biogen") stating that it believed that the Company's recombinant surface
antigen of the hepatitis-B virus, which is an active ingredient of the Company's
Bio-Hep-B vaccine, or the Company's intermediates for the process of making such
antigen, falls within the claims of one or more of Biogen's patents and/or
patent applications. The Company has also made inquiries of Biogen and
SmithKline Beecham (the exclusive licensee of all of Biogen's hepatitis-B
patents except those
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in Japan) requesting that the Company be granted a license to the Biogen
patents; however, such efforts were not successful.
In January 1992, BTG-Israel filed an application in the Israeli Patent
Office for a compulsory license to manufacture BTG's Bio-Hep-B vaccine under
Biogen's Israeli patent. In September 1995, the Israeli Registrar of Patents
(the "Registrar") ruled in an interlocutory decision that BTG-Israel is entitled
to a compulsory license to the Biogen patent. Biogen's appeal of the
interlocutory decision was rejected. In November 1996, the Registrar set the
terms of the license, including royalties to be paid by BTG to Biogen. Biogen
appealed the Registrar's decision to the District Court of Tel Aviv, Israel, and
moved for a stay of the license, which was granted ex parte pending hearings
with both parties. Following hearings which took place in December 1996, the
motion was denied in January 1997; however, the ex parte stay was left in force
pending Biogen's appeal to the Supreme Court and maintained by the Supreme Court
pending the decision by the District Court on the merits of Biogen's appeal. The
District Court heard the appeal in early March 1997, and in June 1997 the
District Court denied Biogen's appeal and subsequent motion for a stay pending
Biogen's appeal of the District Court decision to the Supreme Court on the
merits. In March 1998, the Supreme Court held a hearing on Biogen's application
for leave to appeal the District Court decision denying Biogen's appeal and
granted Biogen leave to appeal. This proceeding is now underway. No decision is
likely before early 1999, and the patent will expire in Israel in December 1999.
In the absence of any decision by the Supreme Court, the compulsory license is
effective and allows BTG-Israel to produce the vaccine in Israel upon receipt of
regulatory approval and to export the vaccine to countries in which neither
Biogen nor others have been granted a blocking patent. There can be no assurance
that the compulsory license will not be subsequently revoked by the Israeli
Patent Office or by a court. If the compulsory license is revoked, BTG may not
be able to manufacture or sell its Bio-Hep-B vaccine in Israel or to export such
product from Israel unless the Biogen patent expires or is revoked.
In August 1992, Biogen sued BTG-Israel for allegedly infringing its
Israeli patent (which is the subject of the compulsory license) by virtue of its
preparation of BTG's Bio-Hep-B vaccine for use in clinical trials, and applied
for an interlocutory injunction restraining BTG-Israel from continuing research
and development activities and clinical trials. In June 1993, the District Court
of Tel Aviv, Israel denied Biogen's application for an interlocutory injunction
in connection with research and development and clinical trials, but enjoined
BTG-Israel from commercial marketing of its Bio-Hep-B vaccine unless permitted
by Biogen or its exclusive licensee, until a license is obtained, or until the
patent expires or is revoked. With the grant of the compulsory license, Biogen
and BTG agreed to suspend the infringement suit until a decision is rendered on
Biogen's appeal of the grant of the compulsory license to the Supreme Court.
Biogen has notified the District Court that if the compulsory license is upheld
by the Supreme Court, it will withdraw the infringement suit. If the
infringement proceedings continue, there can be no assurance that the outcome of
these proceedings will be favorable to BTG. An outcome unfavorable to BTG may
adversely affect the ability of BTG to commercialize and market the Bio-Hep-B
vaccine prior to expiration of the Biogen patent in Israel in December 1999.
The Company has been advised by Scitech Medical Products, Pte., Ltd.
("Scitech"), its Bio-Hep-B licensee in certain countries in the Far East, that
in April 1993 Biogen initiated suit against Scitech in Singapore asserting that
Scitech's conduct of clinical trials in Singapore with respect to the Company's
hepatitis-B vaccine constitutes infringement of Biogen's patent rights in
Singapore and claiming rights in the data obtained by Scitech through its
clinical trials in Singapore and that an interlocutory hearing was held in
September 1993. Scitech notified the Company that the application for the
injunction was dismissed by the High Court in September 1994, but Biogen has not
withdrawn its case against Scitech in Singapore. Biogen's Singapore patent
rights are based on the registration of its corresponding U.K. patents, and the
validity of patents in Singapore depends on the validity of the corresponding
U.K. patents.
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Biogen's broad U.K. patent (on which Singapore registration is based) was
invalidated by the U.K. Court of Appeals in October 1994, which decision was
upheld by the House of Lords in October 1996. Biogen is currently attempting to
have amended claims allowed. Additionally, three claims of a narrower U.K.
patent were upheld. The Company believes that none of these claims will affect
commercialization of the Company's vaccine, although there can be no assurance
of this. The Company is aware that certain other patents have been granted or
are pending that may prevent the Company from selling its vaccine in the United
States, Europe and certain other countries. The Company's failure to obtain any
needed license, or a determination that its vaccine infringes the patent rights
of Biogen or others, would substantially limit, if not prohibit, the
commercialization of the Bio-Hep-B vaccine in those countries in which Biogen or
others have a patent until such patent is revoked or expires. The ability of the
Company to secure any necessary licenses or sublicenses to these patents or
applications cannot be predicted.
Three patent applications of Genentech in Israel which cover general
methods relating to genetically engineered products and to human growth hormone
were accepted in 1983 (two) and 1985 (one). BTG is opposing the grant of these
patents. One of these three Israeli applications corresponds to the two U.S.
patents which are the subject of the complaint asserted by Genentech against BTG
in the United States District Court in Delaware (subsequently consolidated with
related proceedings in New York). Additionally, in 1984 an Israeli patent
application of Biogen which relates to expression vectors was accepted; BTG is
opposing the grant of this patent. There can be no assurance that BTG will be
successful in its opposition to the grant of these patents. If BTG is
unsuccessful in its opposition in Israel, then BTG may be unable to manufacture
its products in Israel.
The Company has also initiated proceedings in Israel and Europe to oppose
the grant to several of its competitors of patents relating to vector systems,
and may oppose corresponding patents in other jurisdictions. Although the
outcome of these proceedings cannot be predicted with certainty and will likely
not be determined for several years, the Company believes that the outcome will
be favorable, although there can be no assurance of this. The Company is aware
of patent applications filed by, or patents issued to, other entities with
respect to technology potentially useful to the Company and, in some cases,
related to products and processes being developed by the Company. The Company
cannot presently assess the effect, if any, that these patents may have on its
operations. The extent to which efforts by other researchers have or will result
in patents and the extent to which the issuance of patents to others would have
a materially adverse effect on the Company or would force the Company to obtain
licenses from others are currently unknown.
Uncertainty of Protection of Patents and Proprietary Technology. The
Company has developed patentable technology and proprietary know-how and has
acquired from various universities and institutions certain basic technologies,
as to which either patents have been issued or patent applications are pending.
There can be no assurance that patent applications will result in issued
patents, that the claims allowed in such issued patents will be sufficiently
broad to protect the Company's proprietary rights or that patents will not be
challenged, circumvented or invalidated or that rights granted pursuant to such
patents will provide competitive advantages to the Company. The Company's
success depends in part on its ability to continue to obtain patent protection
in the United States and other countries for its technologies and the products,
if any, resulting from such technologies. Patent applications in the United
States are maintained in secrecy until a patent issues, and the Company cannot
be certain that others have not filed patent applications for technology covered
by the Company's pending applications or that the Company was the first to file
patent applications for such technology. The Company also relies on trade
secrets, proprietary know-how and technological innovation which it seeks to
protect with confidentiality agreements with its employees, consultants and
licensees. There can be no assurance that these agreements will not be breached,
that the Company will have adequate remedies for any breach or that BTG's
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trade secrets and proprietary know-how will not otherwise become known or be
independently discovered by competitors.
BTG's commercial success will also depend in part on the Company not
infringing patents or proprietary rights of third parties. A number of companies
and research and academic institutions have developed technologies, filed patent
applications or received patents on various technologies that relate to the
Company's business, and such entities may file applications for or be issued
patents in the future with respect to technology potentially necessary or useful
to BTG. Some of these technologies, applications or patents may conflict with
the Company's technologies and existing or future patents, if any, or patent
applications. Such conflict could limit the scope of patents that BTG has
obtained or may obtain in the future or result in patent applications failing to
issue as patents. In addition, if third parties obtain patents which cover the
Company's activities, there can be no assurance that BTG would be able to
license such patents on reasonable terms, or at all, or be able to license or
develop alternative technology. As more patents are issued to third parties, the
risk that the Company's products and activities may give rise to claims that
they infringe the patents of others increases.
The Company expects that administrative hearings, litigation or both will
be necessary to determine the validity and scope of its and others' proprietary
or biotechnology patents. Such administrative proceedings or litigation have to
date required, and may in the future require, a significant commitment of the
Company's resources. Any such commitment may divert resources from other areas
of the Company.
Limited Manufacturing Capacity and Experience. The Company has limited
commercial scale manufacturing capacity and experience. While it is expected
that the Company's manufacturing facilities will allow the Company to satisfy
its current and anticipated near-term requirements, the Company will need a
larger facility to meet anticipated increases in demand for its products. The
Company is required to obtain regulatory approval for all of its commercial
manufacturing processes and facilities, and to date the Company has been able to
obtain such approvals. Any failure to receive, or substantial delay in
obtaining, regulatory approval for its manufacturing processes and facilities
could have a material adverse effect on the Company.
The manufacture of the Company's products involves a number of technical
steps and requires meeting stringent quality control specifications imposed by
governmental regulatory bodies and by the Company itself. Further, such products
can only be manufactured in facilities approved by the applicable regulatory
authorities. As a result, the Company may not be able to quickly and efficiently
replace its manufacturing capacity in the event that it is unable to manufacture
its products at its facilities. In the event of a natural disaster, equipment
failure, strike, war or other difficulty, BTG may be unable to manufacture its
products in a manner necessary to fulfill demand. BTG's inability to fulfill
demand may permit its licensees and distributors to terminate their agreements,
seek alternate suppliers or manufacture the products themselves. Additionally,
if the Company does not receive regulatory approval for any new facility, it
would likely be unable to meet the anticipated increased demand for its
products, which would have a material adverse effect on BTG's business, results
of operations and financial condition.
The Company is dependent on third parties to manufacture all or a portion
of certain of its products. See "-- Dependence on Third-Party Suppliers."
Limited Marketing Capability and Experience. The Company established a
sales and marketing force in the United States during the second half of 1995 to
promote distribution of Oxandrin and other BTG products in the United States.
With respect to territories outside the United States, the Company does not yet
have an established sales force and relies on third
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parties to market its products. There can be no assurance that the Company's
marketing strategy will be successful. The Company's ability to market its
products successfully in the future will be dependent on a number of factors,
many of which are not within its control.
Limited Commercial Products. The Company's principal activities since its
formation in 1980 have been the research and development of products with
commercial potential. Commercialization of the Company's products is subject to
successful clinical testing and governmental approvals, the timing of which is
not within the control of the Company and has taken and may continue to take
longer than anticipated. Acceptance by the medical community of the Company's
products is also necessary for their successful commercialization.
Historical Operating Losses. Prior to 1995, the Company's revenues were
not sufficient to offset the expenses incurred in its research, development and
production activities. At June 30, 1998, the Company had an accumulated deficit
of approximately $46.2 million. Revenue has in the past and may in the immediate
future continue to display significant variations due to the level of sales of
existing products, the introduction of new products and new research and
development contracts and licensing arrangements, the completion or termination
of those contracts and arrangements, the timing and amounts of milestone
payments and the timing of regulatory approvals of products. The Company's
continued profitability will be dependent on its success in developing,
obtaining regulatory approvals for and effectively marketing its products. The
annual cash flows of the Company have fluctuated significantly due to the impact
of net income and losses, capital spending, working capital requirements and
issuances of Common Stock and other financings. The Company expects that cash
flow in the near future will be primarily determined by the levels of net income
and financings, if any, undertaken by the Company.
Capital Needs. The development and commercialization of products requires
a substantial amount of funds. The Company's cash requirements are currently
satisfied primarily through product sales. Historically, cash requirements were
satisfied primarily through (i) product sales, (ii) funding of projects through
collaborative research and development arrangements, (iii) contract fees, (iv)
government of Israel funding of a portion of certain research and development
projects and (v) equity and debt financings. There can be no assurance that
these financing alternatives will be available in the future to satisfy the
Company's cash requirements. The Company believes that its remaining cash
resources, together with anticipated product sales, scheduled payments to be
made to BTG under its current agreements with pharmaceutical partners and third
parties and continued funding from the Chief Scientist of the State of Israel
(the "Chief Scientist") at current levels, will be sufficient to fund the
Company's ongoing operations for the foreseeable future. There can, however, be
no assurance that product sales will occur as anticipated, that scheduled
payments will be made by third parties, that current agreements will not be
canceled, that the Chief Scientist will continue to provide funding at current
levels, or that unanticipated events requiring the expenditure of funds will not
occur.
The satisfaction of the Company's future cash requirements will depend in
large part on the status of commercialization of the Company's products, the
Company's ability to enter into additional research and development and
licensing arrangements, and the Company's ability to obtain additional equity
investments, if necessary. There can be no assurance that the Company will be
able to obtain additional funds or, if such funds are available, that such
funding will be on favorable terms. If additional funds are raised by issuing
equity securities of the Company, dilution to existing stockholders may result.
If adequate funds are not available, BTG may be required to significantly
curtail one or more of its commercialization efforts or research and development
programs or obtain funds through arrangements with collaborative partners or
others on less favorable terms than might otherwise be available.
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Effect of Governmental Regulation. The Company is subject to regulation by
numerous governmental authorities in the United States and other countries. All
of the Company's products, manufacturing processes and facilities require
governmental licensing or approval prior to commercial use. The approval process
applicable to products of the type being developed by the Company usually takes
five to seven years from the commencement of human clinical trials and typically
requires substantial expenditures. The Company and its licensees may encounter
significant delays or excessive costs in their respective efforts to secure
necessary approvals or licenses. Before obtaining regulatory approval for the
commercial sale of its products, the Company is required to conduct preclinical
and clinical trials to demonstrate that the product is safe and efficacious for
the treatment of the target disease. The results from preclinical animal studies
and early clinical trials may not be predictive of results that will be obtained
in large scale testing. A number of biotechnology companies have recently
suffered significant setbacks in advanced clinical trials, even after
experiencing promising results in preclinical and early human testing.
Additionally, the timing of completion of clinical trials is dependent upon a
number of factors, many of which are outside the Company's control, including
the rate of patient enrollment. Patient enrollment is a function of several
factors, including the size of the patient population and the proximity of
patients to clinical sites. Delays in patient enrollment could result in
increased costs and delays in completion of the clinical trials. In addition,
preclinical and clinical trials must meet regulatory and institutional
requirements. Data obtained from preclinical and clinical activities are
susceptible to varying interpretations which could delay, limit or prevent
regulatory approval. In addition, the Company and its partners may encounter
delays or rejections based upon changes in the policies of regulatory
authorities.
Future United States or foreign legislative or administrative acts could
also prevent or delay regulatory approval of the Company's or its licensees'
products. Failure to obtain requisite governmental approvals, or failure to
obtain approvals of the scope requested, could delay or preclude the Company or
its licensees from marketing their products, could limit the commercial use of
the products and could also allow competitors time to introduce competing
products ahead of product introduction by the Company and thereby have a
material adverse effect on the Company's results of operations, liquidity and
financial condition. Even after regulatory approval is obtained, use of the
products could reveal side effects that, if serious, could result in suspension
of existing approvals and delays in obtaining approvals in other jurisdictions.
Regulation by governmental authorities in the United States and other
countries is a significant factor affecting the timing of the commercialization
of the Company's products and its ongoing research and development activities.
The timing of regulatory approvals is not within the Company's control. To date,
the length of time required to obtain regulatory approval of
genetically-engineered products has been significantly longer than expected,
both for the Company and the biotechnology industry in general. These delays
have had, and if they continue could have, a material adverse effect on the
results of operations and financial condition of the Company. The Company
believes that these delays have in the past negatively impacted its ability to
attract funding and that, as a result, the terms of such financings have been
less favorable to the Company than they might otherwise have been had the
Company's product revenues provided sufficient funds to finance the large costs
of taking a product from discovery through commercialization. As a result, the
Company has had to license the commercialization of many of its products to
third parties in exchange for research funding and royalties on product sales;
this will result in lower revenues than if BTG had commercialized the products
on its own.
Failure to comply with applicable regulatory requirements can, among other
things, result in fines, suspension of regulatory approvals, product recalls,
seizure of products, imposition of operating restrictions and criminal
prosecutions. Further, FDA policy or similar policies of regulatory agencies in
other countries may change and additional governmental
13
<PAGE>
requirements may be established that could prevent or delay regulatory approval
of the Company's products.
Uncertainty of Healthcare Reimbursement. The Company's ability to
successfully commercialize human therapeutic products may depend in part on the
extent to which reimbursement for the cost of such products and related
treatment will be available from government health administration authorities,
private health coverage insurers and other organizations. Significant
uncertainty exists as to the reimbursement status of newly approved healthcare
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 product development. Government
and other third party payors are increasingly attempting to contain healthcare
costs by limiting both coverage and the level of reimbursement for new
therapeutic products approved for marketing by the FDA and by refusing, in some
cases, to provide any coverage for use of approved products for disease
indications for which the FDA has not granted marketing approval. If adequate
coverage and reimbursement levels are not provided by government and third-party
payors for use of the Company's healthcare products, the market acceptance of
these products would be adversely affected. In addition, in recent years a
number of federal and state healthcare reform proposals have been introduced to
contain healthcare costs. There can be no assurance as to the ultimate content,
timing or effect of any healthcare reform legislation, nor is it possible at
this time to estimate the impact of potential legislation on the Company.
Regulatory approval of prices is also required in most countries outside the
United States. In particular, certain European countries will condition their
approval of a product on the agreement of the seller not to sell the product for
more than a certain price in that country. There can be no assurance that the
establishment of a price in one European country will not have the practical
effect of requiring the Company's marketing partners to sell the product in
other European countries at no higher than such price. Because BTG generally
supplies product to its marketing partners for a specified percentage of net
sales, there can be no assurance that the resulting prices would be sufficient
to generate an acceptable return on the Company's investment in its products or
even cover the Company's manufacturing costs for such product.
Risk of Technical Obsolescence; Highly Competitive Industry. Biotechnology
has undergone rapid and significant technological change. The Company expects
that this technology will continue to develop rapidly, and the Company's future
success will depend, in large part, on its ability to maintain a competitive
position. Rapid technological development may result in products or processes
becoming obsolete before marketing of these products or before the Company
recovers a significant portion of the research, development and
commercialization expenses incurred with respect to those products. Numerous
companies, including well-known pharmaceutical and biotechnology companies, are
engaged in the business of researching and developing products similar to those
of the Company. Many of these companies have substantially greater capital
resources and larger research and development staffs and facilities than the
Company. Such companies may succeed in their research, developing on a more
timely basis products that may be more effective than any which may be developed
by the Company. These companies may also be more successful than the Company in
the production and marketing of such products.
Retention of Key Personnel. The Company is dependent upon the efforts of
its officers and scientists and other employees. The loss of certain of these
key employees could materially and adversely affect the Company's business.
There is a great deal of competition for the limited number of scientists with
expertise in the area of the Company's operations. The business of the Company
is dependent upon its ability to attract and retain qualified research and
managerial personnel. The Company does not maintain, and has no current
intention of obtaining, "key man" life insurance on any of its employees.
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Risk of Operations in Israel. The Company's primary research, development
and production operations are at this time conducted in Israel by its
wholly-owned subsidiary BTG-Israel and can be affected by economic, military and
political conditions in that country and in the Middle East in general. The
Company manages its Israeli operations with the object of protecting against any
material net financial loss in U.S. dollars from the impact of Israeli inflation
and currency devaluations on its non-U.S. dollar assets and liabilities. The
Bank of Israel's monetary policy has been to manage the exchange rate while
allowing the Consumer Price Index to rise by approximately 11% in 1996, 7% in
1997 and 2% in the six month period ended June 30, 1998. For those expenses
linked to the Israeli Shekel, such as salaries and rent, this resulted in
corresponding increases in these costs in U.S. dollars. In 1996, 1997 and the
six months ended June 30, 1998, the Shekel was devalued by approximately 4%, 7%
and 4%, respectively, against the U.S. dollar. As a result, for those expenses
linked to the Israeli Shekel, such as salaries and rent, this resulted in
corresponding increases in these costs in U.S. dollars in 1996 and 1997, but a
decease in these costs in U.S. dollars in the six months ended June 30, 1998. To
the extent that expenses in Shekels exceed BTG's revenues in Shekels (which to
date have consisted primarily of research funding from the Chief Scientist and
product sales in Israel), the devaluations of Israeli currency have been and
will continue to be a benefit to BTG's financial condition. However, should
BTG's revenues in Shekels exceed its expenses in Shekels in any material
respect, the devaluation of the Shekel will adversely affect BTG's financial
condition. Further, to the extent the devaluation of the Shekel with respect to
the U.S. dollar does not substantially offset the increase in the costs of local
goods and services in Israel, BTG's financial results will be adversely affected
as local expenses measured in U.S. dollars will increase. There can be no
assurance that the government of Israel will continue to devalue the Shekel from
time to time to offset the effects of inflation in Israel.
Risk of Product Liability. The testing and marketing of the Company's
products entail risk of product liability. Although the Company has so far been
able to obtain indemnification from pharmaceutical companies commercializing its
products, there can be no assurance that other such companies will agree in the
future to indemnify the Company for other of the Company's products or that such
companies will, if obligated to do so, have adequate resources to fulfill their
indemnity agreements. Further, to the extent the Company elects to test or
market products independently, it will bear the risk of product liability
directly. The Company presently has $10,000,000 of product liability insurance
coverage in place. Any successful product liability claim made against the
Company could substantially reduce or eliminate any stockholders' equity the
Company may have and could have a significant adverse impact on the future of
the Company.
Volatility of Share Price. The market prices for securities of
biotechnology companies, including the Company, have been volatile, and it is
likely that the price of the Common Stock will fluctuate in the future. Factors
such as announcements of technological innovations or new commercial products by
the Company or its competitors, announcements by the Company or its competitors
of results in preclinical testing and clinical trials, governmental regulation,
patent or proprietary rights developments, public concern as to the safety or
other implications of biotechnology products, changes in earnings estimates and
recommendations by securities analysts, and market conditions in general may
have a significant impact on the market price of the Common Stock. In addition,
the market price of the Common Stock could be adversely affected by future
exercises of outstanding warrants and options. At August 31, 1998, options and
warrants to purchase an aggregate of approximately 6.3 million shares and 3.9
million shares, respectively, of Common Stock were outstanding. A substantial
portion of these options and warrants have exercise prices below the current
market price of the Common Stock. Additionally, all of the shares of Common
Stock issuable upon exercise of these outstanding options and warrants have been
registered for resale under the Securities Act of 1933, as amended, and,
accordingly, when issued will be freely tradable without restriction. In
addition, the Company may issue additional stock, warrants and/or options to
raise capital in the future. The Company may also issue additional securities in
connection with its employee benefit plans. During the terms of such options and
warrants, the holders thereof
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are given the opportunity to profit from a rise in the market price of the
Common Stock. The exercise of such options and warrants may have an adverse
effect on the market value of the Common Stock. The existence of such options
and warrants may adversely affect the terms on which the Company can obtain
additional equity financing. To the extent the exercise prices of such options
and warrants are less than the net tangible book value of the Common Stock at
the time such options and warrants are exercised, the Company's stockholders
will experience an immediate dilution in the net tangible book value of their
investment. Further, the future sale of a substantial number of shares of Common
Stock by existing stockholders and option and warrant holders may have an
adverse impact on the market price of the Common Stock.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of Common Stock by
the Selling Stockholders.
SELLING STOCKHOLDERS
The Company will supplement this Prospectus from time to time to include
certain information concerning the security ownership of the Selling
Stockholders and the position, office or other material relationship which a
Selling Stockholder has had within the past three years with the Company or any
of its predecessors or affiliates.
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PLAN OF DISTRIBUTION
The Company is registering the Shares on behalf of the Selling
Stockholders. All costs, expenses and fees in connection with the registration
of the Shares offered hereby will be borne by the Company. Brokerage
commissions, if any, attributable to the sale of Shares will be borne by the
Selling Stockholders (or their donees or pledgees).
Sales of Shares may be effected from time to time in transactions (which
may include block transactions) on the Nasdaq National Market, in negotiated
transactions, or a combination of such methods of sale, at fixed prices which
may be changed, at market prices prevailing at the time of sale, or at
negotiated prices. The Selling Stockholders have advised the Company that they
have not entered into any agreements, understandings or arrangements with any
underwriters or broker-dealers regarding the sale of their securities. The
Selling Stockholders may effect such transactions by selling Common Stock
directly to purchasers or to or through broker-dealers which may act as agents
or principals. Such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Stockholder and/or the
purchasers of Common Stock for whom such broker-dealers may act as agents or to
whom they sell as principal, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions). The Selling
Stockholders and any broker-dealers that act in connection with the sale of the
Common Stock might be deemed to be "underwriters" within the meaning of Section
2(11) of the Securities Act and any commission received by them and any profit
on the resale of the shares of Common Stock as principal might be deemed to be
underwriting discounts and commissions under the Securities Act. The Selling
Stockholders may agree to indemnify any agent, dealer or broker-dealer that
participates in transactions involving sales of the shares against certain
liabilities, including liabilities arising under the Securities Act. Liabilities
under the federal securities laws cannot be waived.
Because the Selling Stockholders may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Securities Act, the Selling Stockholders
will be subject to prospectus delivery requirements under the Securities Act.
Furthermore, in the event of a "distribution" of the Shares, such Selling
Stockholder, any selling broker or dealer and any "affiliated purchasers" may be
subject to Rule 10b-6 under the Exchange Act, which Rule would prohibit, with
certain exceptions, any such person from bidding for or purchasing any security
which is the subject of such distribution until his participation in that
distribution is completed. In addition, Rule 10b-7 under the Exchange Act
prohibits any "stabilizing bid" or "stabilizing purchase" for the purpose of
pegging, fixing or stabilizing the price of Common Stock in connection with this
offering.
The Selling Stockholders may be entitled under agreements entered into
with the Company to indemnification against liabilities under the Securities
Act.
LEGAL MATTERS
Legal matters relating to the Common Stock have been passed upon for the
Company by Fulbright & Jaworski L.L.P., 666 Fifth Avenue, New York, New York
10103. Partners and Of Counsel of Fulbright & Jaworski L.L.P., as of June 30,
1998, beneficially owned an aggregate of 24,300 shares of the Company's Common
Stock.
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EXPERTS
The audited financial statements incorporated by reference in this
Prospectus and elsewhere in the Registration Statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
report.
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========================================
NO PERSON IS AUTHORIZED IN
CONNECTION WITH ANY OFFERING MADE HEREBY
TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY
SECURITY OTHER THAN THE COMMON STOCK
OFFERED HEREBY, NOR DOES IT CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY TO ANY PERSON IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO
MAKE SUCH AN OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPEC-
TUS NOR ANY SALE MADE HEREUNDER SHALL
UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY
DATE SUBSEQUENT TO THE DATE HEREOF.
-----------------
TABLE OF CONTENTS
PAGE
Available Information ................2
Incorporation of Certain
Documents by Reference ............ 3
The Company ......................... 4
Risk Factors......................... 6
Use of Proceeds..................... 16
Selling Stockholders.................16
Plan of Distribution.................17
Legal Matters .......................17
Experts..............................18
========================================
========================================
3,000,000
Shares
BIO-TECHNOLOGY
GENERAL CORP.
Common Stock
---------------------
PROSPECTUS
---------------------
September 29, 1998
========================================
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents heretofore filed by Bio-Technology General
Corp. ("Registrant") (File No. 0-15313) with the Securities and Exchange
Commission (the "Commission") are incorporated herein by reference:
(i) The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997.
(ii) The Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1998.
(iii) The Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1998.
(iv) The Company's Form 8-A dated July 25, 1983, as amended by
Amendment No. 1 to Form 8-A dated September 29, 1983 and
Amendment No. 2 to Form 8-A dated October 1, 1986.
In addition, all documents filed by Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934 subsequent to
the date of this filing and prior to the filing of a post-effective amendment
which indicates that all securities offered have been sold or which deregisters
all securities then remaining unsold, shall be deemed to be incorporated herein
by reference and to be a part thereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purposes
hereof to the extent that a statement contained 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 part of this registration statement.
THE COMPANY HAS RECEIVED FROM THE SECURITIES AUTHORITY OF THE STATE
OF ISRAEL AN EXEMPTION FROM THE OBLIGATION TO PUBLISH THIS FORM S-8 IN THE
MANNER REQUIRED FOR THE PUBLICATION OF A PROSPECTUS PURSUANT TO THE PREVAILING
LAWS OF THE STATE OF ISRAEL. NOTHING IN SUCH EXEMPTION SHALL BE CONSTRUED AS
AUTHENTICATION OR APPROVAL OF THE RELIABILITY OR ACCURACY OF THE MATTERS
CONTAINED IN THIS FORM S-8 OR AS AN EXPRESSION OF OPINION AS TO THE QUALITY OF
THE SECURITIES WHICH ARE THE SUBJECT OF THIS FORM S-8.
II-1
<PAGE>
ITEM 4. DESCRIPTION OF SECURITIES
Not Applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not Applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145(a) of the General Corporation Law of Delaware provides
that a Delaware corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation), by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses, judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
Section 145(b) provides that a Delaware corporation may indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses actually
and reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted under similar standards, except that no
indemnification may be made in respect of any claim, issue or matter as to which
such person shall have been adjudged to be liable to the corporation unless and
only to the extent that the court in which such action or suit was brought shall
determine that despite the adjudication of liability, such person is fairly and
reasonably entitled to be indemnified for such expenses which the court shall
deem proper.
Section 145 further provides that to the extent a director, officer,
employee or agent of a corporation has been successful in the defense of any
action, suit or proceeding referred to in subsections (a) and (b) or in the
defense of any claim, issue or matter therein, he shall be indemnified against
expenses actually and reasonably incurred by him in connection therewith; that
indemnification provided for by Section 145 shall not be deemed exclusive of any
other rights to which the indemnified party may be entitled; and that the
corporation may purchase and maintain insurance on behalf of any person who is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him or incurred by him in any
such
II-2
<PAGE>
capacity or arising out of his status as such, whether or not the corporation
would have the power to indemnify him against such liabilities under such
Section 145.
The Registrant's By-laws provide that the Registrant shall indemnify
certain persons, including officers, directors, employees and agents, within the
limitations permitted by Section 145 of the General Corporation Law of the State
of Delaware. The Registrant has also entered into indemnification agreements
with its current directors and executive officers. Reference is made to the
By-laws and Form of Indemnity Agreement filed as exhibits 3(b) and 10(h),
respectively, to the Registrant's Annual Report on Form 10-K.
The Registrant maintains a policy of insurance under which the
directors and officers of the Registrant are insured, subject to the limits of
the policy, against certain losses arising from claims made against such
directors and officers by reason of any acts or omissions covered under such
policy in their respective capacities as directors and officers.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
ITEM 8. EXHIBITS
(a) See Index to Exhibits.
ITEM 9. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth herein;
(iii) To include any material information with respect
to the plan of distribution not previously disclosed herein or
any material change to such information in this registration
statement;
Provided, however, That paragraphs (a)(1)(i) and (a)(1)(ii) of this
section do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Commission by the Registrant
pursuant to Section 13 or Section
II-3
<PAGE>
15(d) of the Securities Exchange Act of 1934 that are incorporated herein
by reference;
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof; and
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Iselin, State of New Jersey, on September 28,
1998.
Bio-Technology General Corp.
By: /s/SIM FASS
--------------------------------------
(Sim Fass, Chairman of the Board,
Chief Executive Officer and President)
----------------
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints SIM FASS and YEHUDA STERNLICHT, or either
of them, his true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement and to file the same with all
exhibits thereto and all documents in connection therewith, with the Securities
and Exchange Commission, granting said attorney-in-fact and agent and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorney-in-fact and agent or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
II-5
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/SIM FASS Chairman of the Board, September 28, 1998
- ---------------------- President, CEO and
(Sim Fass) Director (Principal
Executive Officer)
/s/HERBERT CONRAD Director September 28, 1998
- ----------------------
(Herbert Conrad)
/s/CARL KAPLAN Director September 28, 1998
- ----------------------
(Carl Kaplan)
/s/ALLAN ROSENFIELD Director September 28, 1998
- ----------------------
(Allan Rosenfield)
/s/DAVID TENDLER Director September 28, 1998
- ----------------------
(David Tendler)
/s/VIRGIL THOMPSON Director September 28, 1998
- ----------------------
(Virgil Thompson)
Director
- ----------------------
(Dan Tolkowsky)
/s/FAYE WATTLETON Director September 28, 1998
- ----------------------
(Faye Wattleton)
/s/HERBERT WEISSBACH Director September 28, 1998
- ----------------------
(Herbert Weissbach)
II-6
<PAGE>
Signature Title Date
- --------- ----- ----
/s/YEHUDA STERNLICHT Vice President-Finance September 28, 1998
- ---------------------- and Chief Financial
(Yehuda Sternlicht) Officer (Principal
Financial and
Accounting Officer)
II-7
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NO.
4(a) The Bio-Technology General Corp. 1998 Employee Stock Purchase Plan.
5 Opinion of Fulbright & Jaworski L.L.P.
23 Consent of Arthur Andersen L.L.P.
24 Power of attorney authorizing representatives to sign this
Registration Statement and any and all amendments (including
post-effective amendments) to this Registration Statement on behalf of
Bio-Technology General Corp. and certain directors and officers
thereof (included on signature page).
II-8
Exhibit 4(a)
BIO-TECHNOLOGY GENERAL CORP.
1998 EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE
The purpose of this 1998 Employee Stock Purchase Plan (the "Plan") is to
provide employees of Bio-Technology General Corp. (the "Company") and its
subsidiaries who wish to become stockholders of the Company an opportunity to
purchase shares of Common Stock of the Company (the "Shares"). The Plan is
intended to qualify as an "employee stock purchase plan" within the meaning of
Section 423 of the Internal Revenue Code of 1986, as amended (the "Code").
2. ELIGIBLE EMPLOYEES
Subject to the provisions of Sections 7, 8 and 9 below, any individual who
is in the full-time employment of the Company or any subsidiary (as defined in
Section 424(f) of the Code) of the Company on the day on which a Grant Date (as
defined in Section 3 below) occurs is eligible to participate in an offering of
Shares made by the Company hereunder. Full-time employment shall mean customary
employment by the Company or any subsidiary for:
(a) 20 hours or more per week; and
(b) more than five months in the calendar year.
3. GRANT DATES
From time to time, the Board of Directors may fix a date (a "Grant Date")
or a series of dates (each of which is a "Grant Date") on which the Company will
grant rights to purchase Shares ("Rights") to employees eligible to participate.
4. PRICES
The purchase price per Share for Shares covered by a grant of Rights
hereunder shall be determined by the Board of Directors on or prior to the Grant
Date, but in no event shall be less than the lesser of:
(a) eighty-five percent (85%) of the fair market value of a Share on
the Grant Date; or
(b) eighty-five percent (85%) of the fair market value of a Share on
the date such Right is exercised as to that Share.
For purposes of the Plan, the term "fair market value" on any date means:
<PAGE>
(a) the closing price (on that date) of the Common Stock on the
principal national securities exchange on which the Common Stock is
traded, if the Common Stock is then traded on a national securities
exchange;
(b) the last reported sale price (on that date) of the Common Stock
on the Nasdaq National Market or SmallCap Market, if the Common Stock is
then traded on one of such markets; or
(c) the average of the closing bid and asked prices last quoted (on
that date) by an established quotation service for over-the-counter
securities, if the Common Stock is not reported on a national securities
exchange, the Nasdaq National Market or the Nasdaq SmallCap market.
5. EXERCISE OF RIGHTS AND METHOD OF PAYMENT
(a) Rights granted under the Plan will be exercisable on specific dates as
determined by the Board of Directors.
(b) The method of payment for Shares purchased upon exercise of Rights
granted hereunder shall be through regular payroll deductions or by lump sum
cash payment, or both, as determined by the Board of Directors. No interest
shall be paid upon payroll deductions or other payments in exercise of Rights
unless specifically provided for by the Board of Directors.
6. TERMS OF RIGHTS
Rights granted hereunder shall be exercisable during a twenty-seven (27)
month period beginning on the Grant Date or such shorter period as determined by
the Board of Directors. All Rights granted to an employee shall terminate upon
termination of employment of the employee. Any amounts received or withheld by
the Company from or on behalf of a participating employee with respect to a
Right granted hereunder and not utilized for the purchase of Shares upon
exercise of such Right shall be promptly returned to such employee by the
Company after termination of such Right, except that amounts that were not so
utilized because such amounts were insufficient to purchase a whole Share may be
applied toward the purchase of Shares pursuant to a Right subsequently granted
hereunder, if any.
7. SHARES SUBJECT TO THE PLAN
No more than three million (3,000,000) Shares may be sold pursuant to
Rights granted under the Plan. Appropriate adjustments in the above figure, in
the number of Shares covered by outstanding Rights granted hereunder, in the
exercise price of the Rights and in the maximum number of Shares which an
employee may purchase (pursuant to Section 9 below) shall be made to give effect
to any mergers, consolidations, reorganizations, recapitalizations, stock
splits, stock dividends or other relevant changes in the capitalization of the
Company occurring after the effective date of the Plan, provided that no
fractional Shares shall be subject to a Right and each Right shall be adjusted
downward to the nearest full Share. Any agreement of merger or consolidation
will include provisions for protection of the then existing Rights of
2
<PAGE>
participating employees under the Plan. Either authorized and unissued Shares or
issued Shares heretofore or hereafter reacquired by the Company may be made
subject to Rights under the Plan. If for any reason any Right under the Plan
terminates in whole or in part, Shares subject to such terminated Right may
again be subject to a Right under the Plan.
8. LIMITATIONS ON GRANTS
Anything to the contrary notwithstanding, pursuant to Section 423 of the
Code:
(a) No employee shall be granted a Right hereunder if such employee,
immediately after the Right is granted, owns stock possessing five percent
(5%) or more of the total combined voting power or value of all classes of
stock of the Company or any subsidiary, in each case computed in
accordance with Section 423(b)(3) and 424(d) of the Code.
(b) No employee shall be granted a Right which permits his Rights to
purchase Shares under all employee stock purchase plans of the Company and
its subsidiaries to accrue at a rate which exceeds twenty-five thousand
dollars ($25,000) (or such other maximum as may be prescribed from time to
time by the Code) of fair market value of such Shares (determined at the
time such Right is granted) for each calendar year in which such Right is
outstanding at any time, all in accordance with the provisions of Section
423(b)(8) of the Code.
9. LIMITS ON PARTICIPATION
(a) Participation shall be limited to eligible employees who enroll under
the Plan. All participating employees will have the same rights and privileges
under the Plan to the extent required by Section 423(b)(5) of the Code.
(b) No Right granted to any participating employee shall cover more than
twelve thousand (12,000) Shares.
10. CANCELLATION OF ELECTION TO PARTICIPATE
An employee who has elected to participate in the Plan may, unless the
employee has waived this cancellation right at the time of such election in a
manner established by the Administrator (as defined in Section 18), cancel such
election as to all (but not less than all) of the Rights granted by giving
written notice of such cancellation to the Company before the next exercise date
specified by the Board of Directors. Any amounts paid by the employee or
withheld for the purchase of Shares from the employee's compensation through
payroll deductions shall be paid to the employee or to the employee's estate,
without interest.
11. TERMINATION OF EMPLOYMENT
Upon termination of employment for any reason, including the death of the
employee, before the date on which an outstanding Right granted under the Plan
is exercisable, such Right shall immediately terminate and amounts paid by the
employee
3
<PAGE>
or withheld for the purchase of Shares from the employee's compensation through
payroll deductions shall be paid to the employee or to the employee's estate,
without interest.
12. LIMITS ON SALE OF STOCK PURCHASED UNDER THE PLAN
The Plan is intended to provide Shares for investment and not for resale.
The Company does not, however, intend to restrict or influence any employee in
the conduct of his or her own affairs. An employee may, therefore, sell Shares
purchased under the Plan at any time the employee chooses, subject to compliance
with any applicable federal or state securities laws; provided, however, that
because of certain federal tax requirements, each employee agrees, by entering
the Plan, promptly to give the Company notice of any such Shares disposed of
within two years after the date of grant of the applicable Right, showing the
number of such Shares disposed of.
13. EMPLOYEE'S RIGHTS AS STOCKHOLDER
No participating employee shall have any rights as a stockholder in the
Shares covered by a Right granted hereunder until such Right has been exercised,
full payment has been made for the corresponding Shares and the purchase has
been entered in the records of the Transfer Agent for the Shares.
14. RIGHTS NOT TRANSFERABLE
Rights under the Plan are not assignable or transferable by a
participating employee.
15. AMENDMENTS OR DISCONTINUANCE OF THE PLAN
The Board of Directors of the Company shall have the right to amend,
modify or terminate the Plan at any time without notice; provided, however, that
the then existing Rights of all participating employees shall not be adversely
affected thereby, except that in the case of a participating employee of a
foreign subsidiary of the Company the Plan may be varied to conform with local
laws, and provided further that, subject to the provisions of Section 7 above,
no such amendment to the Plan shall, without the approval of the stockholders of
the Company:
(a) Increase the total number of Shares which may be offered under
the Plan; or
(b) Amend the Plan in any manner which would render Rights granted
hereunder unqualified for special tax treatment under Section 421 of the
Code.
16. EFFECTIVE DATE AND APPROVALS
The Plan shall become effective as of August 1, 1998. The Company's
obligation to offer, sell or deliver its Shares under the Plan is subject to the
approval of the Company's stockholders and any governmental approval required in
connection with the authorized issuance or sale of such Shares and is further
subject to the
4
<PAGE>
determination by the Company that all applicable securities laws have been
complied with.
17. TERM OF THE PLAN
No Rights may be granted under the Plan after December 31, 2006.
18. ADMINISTRATION OF THE PLAN
The Board of Directors or any committee or person(s) to whom it delegates
its authority (the "Administrator") shall administer, interpret and apply all
provisions of the Plan. The Administrator may waive such provisions of the Plan
as it deems necessary to meet special circumstances not anticipated or covered
expressly by the Plan. Nothing contained in this Section shall be deemed to
authorize the Administrator to alter or administer the provisions of the Plan in
a manner inconsistent with the provisions of Section 423 of the Code.
5
Exhibit 5
[Letterhead of Fulbright & Jaworski L.L.P.]
September 28, 1998
Bio-Technology General Corp.
70 Wood Avenue South
Iselin, New Jersey 08830
Dear Sirs:
We refer to the Registration Statement on Form S-8 (the
"Registration Statement") to be filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Act"), on behalf
of Bio-Technology General Corp., a Delaware corporation (the "Company"),
relating to 3,000,000 shares of the Company's Common Stock, $.01 par value (the
"Common Stock"), to be issued pursuant to the Bio-Technology General Corp. 1998
Employee Stock Purchase Plan (the "Plan").
As counsel to the Company, we have examined such corporate records,
other documents and such questions of law as we have deemed necessary or
appropriate for the purposes of this opinion and, upon the basis of such
examinations, advise you that in our opinion all necessary corporate proceedings
by the Company have been duly taken to authorize the issuance of the Common
Stock pursuant to the Plan and the shares of Common Stock being registered
pursuant to the Registration Statement, when issued and paid for in accordance
with the terms of the Plan, will be duly authorized, validly issued, fully paid
and non-assessable.
We consent to the filing of this opinion as Exhibit 5 to the
Registration Statement. This consent is not to be construed as an admission that
we are a person whose consent is required to be filed with the Registration
Statement under the provisions of the Act.
Very truly yours,
/s/ Fulbright & Jaworski L.L.P.
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated February 26, 1998
included in Bio-Technology General Corp.'s Form 10-K for the year ended December
31, 1997 and to all references to our Firm included in this registration
statement on Form S-8 registering 3,000,000 shares of Common Stock.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
New York, New York
September 24, 1998
