As filed with the Securities and Exchange Commission on December 30, 1998
Registration No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------
IMMUNOMEDICS, INC.
(Exact name of registrant as specified in its charter)
Delaware 61-1009366
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
300 American Road
Morris Plains, New Jersey 07950
(973) 605-8200
(Address, including zip code, and telephone
number, including area code, of
registrant's principal executive offices)
------------
Robert J. DeLuccia
President and Chief Executive Officer
Immunomedics, Inc.
300 American Road
Morris Plains, New Jersey 07950
(973) 605-8200
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------
Copies of all communications,
including all communications
sent to the agent for
service, should be sent to:
Michael D. Schwamm, Esq.
Warshaw Burstein Cohen
Schlesinger & Kuh, LLP
555 Fifth Avenue
New York, New York 10017
(212) 984-7700
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box: [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: [x]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
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<TABLE>
<CAPTION>
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CALCULATION OF REGISTRATION FEE
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<S> <C> <C> <C> <C>
Title of Each Class of Amount of Shares to Proposed Maximum Proposed Maximum Aggregate Amount of
Securities to be Registered be Registered Offering Price Per Share Offering Price Registration Fee
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Common Stock, $.01 par
value per share(1) 10,000,000 Shares $3.09375(2) $30,937,500(2) $8,601
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</TABLE>
(1) Consists of shares of common stock issuable upon conversion of
outstanding shares of the Company's Series F Convertible Preferred
Stock.
(2) Pursuant to Rule 457(c), the proposed maximum offering price per share
and proposed maximum aggregate offering price have been calculated on
the basis of the average of the high and low sale prices of the
Company's common stock as reported on The Nasdaq National Market on
December 24, 1998
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
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The information in this Prospectus is subject to completion and may be changed.
The selling stockholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission (of which this
Prospectus is a part) is effective. This Prospectus is not an offer to sell
these securities, and is not soliciting an offer to buy these securities, in any
state where such offer or sale is not permitted
PROSPECTUS Subject to Completion, dated December 29, 1998
IMMUNOMEDICS, INC.
10,000,000 Shares of Common Stock
THE COMPANY
Immunomedics. Inc.
300 American Road
Morris Plains, New Jersey 07950
(973) 605-8200
THE SELLING STOCKHOLDERS
The selling stockholders are offering to sell shares of common stock that they
may acquire upon conversion of shares of our Series F Convertible Preferred
Stock that we issued to them on December 9, 1998 pursuant to a Securities
Purchase Agreement. Additional information concerning our agreement with the
selling stockholders is set forth under the caption "The Company - Recent
Financing Arrangement."
TRADING SYMBOL
Nasdaq National Market - "IMMU"
THE OFFERING
The selling stockholders may sell shares of our common stock from time to time
on the Nasdaq National Market at the prevailing market price or in private,
negotiated transactions. The shares will be sold at prices determined by the
selling stockholders. We will not receive any part of the proceeds from the
sale. We are paying the expenses in connection with the registration of the
shares with the SEC.
A Purchase of Shares Involves a High Degree of Risk. You Should Purchase Shares
Only If You Can Afford a Complete Loss of Your Investment. See "Risk Factors"
Beginning on Page 9.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
Prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
___________, 1999
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TABLE OF CONTENTS
WHERE YOU CAN FIND MORE INFORMATION............................................3
THE COMPANY....................................................................4
Description of Our Business................................................4
Recent Financing Arrangement...............................................5
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS. ............................7
RISK FACTORS...................................................................8
History of Operating Losses................................................8
Limited Number of Approved Products; Lack of Significant Product Revenues..8
Uncertainty of Product Development.........................................8
Unpredictability of Preclinical and Clinical Trials and Patient
Enrollment ................................................................9
Need for Additional Capital................................................9
Limited Marketing and Sales Experience and Capability......................9
Dependence on Third Parties for Distribution of Products..................10
Limited Manufacturing Capability..........................................10
Dependence on Fluids Produced in Mice ....................................10
Dependence on The Center for Molecular Medicine and Immunology............10
Potential Conflicts of Interest with The Center
for Molecular Medicine and Immunology ....................................11
Extensive Government Regulation...........................................11
Uncertainty of Health Care Reimbursement..................................12
Dependence on Key Personnel...............................................12
Possible Inability to Successfully Compete................................12
Impact of Rapid Technological Change......................................12
Limited Protection of Intellectual Property Rights........................12
Specific Patent Issues Involving CEA-Scan.................................13
Product Liability.........................................................13
Control by Existing Principal Stockholder.................................13
Substantial Dilution; Potential for Issuance of Significant
Number of Shares of Common Stock..........................................14
Potential Adverse Impact on Market Price of Common Stock..................14
Stock Price Volatility....................................................15
Effect of Certain Anti-Takeover Provisions................................15
Year 2000 Compliance......................................................15
No Expectation that We will Pay Dividends.................................16
USE OF PROCEEDS...............................................................17
SELLING STOCKHOLDERS..........................................................18
PLAN OF DISTRIBUTION..........................................................20
Manner of Sales; Broker-Dealer Compensation...............................20
Filing of Supplement to Prospectus In Certain Instances...................20
Certain Persons Deemed to be Underwriters.................................20
Regulation M..............................................................20
LEGAL MATTERS.................................................................21
EXPERTS.......................................................................21
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document which we file
at the SEC's Public Reference Rooms in Washington, D.C., New York City and
Chicago. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. The SEC maintains a internet website at
http://www.sec.gov where certain of our publicly filed information may be found.
This Prospectus is part of a registration statement we filed with the
SEC. The registration statement contains more information than this Prospectus
regarding us and our common stock, including supplemental exhibits and
schedules. You can get a copy of the registration statement from the SEC at the
address listed above or from its internet website.
The SEC allows us to "incorporate by reference" into this Prospectus
the information we file with it. This means that we are deemed to be disclosing
such information to you by referring you to those documents. This information is
important and should be reviewed. The information incorporated by reference is
considered to be part of this Prospectus, and later information that we file
with the SEC will automatically update and supercede the information in this
Prospectus.
We incorporate by reference into this Prospectus the documents listed
below and any future filings we make with the SEC under Sections 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934:
* Annual Report on Form 10-K for the fiscal year ended June 30, 1998
* Quarterly Reports on Form 10-Q for the fiscal quarter ended September 30,
1998;
* Current Report on Form 8-K, filed on December 15, 1998;
* Proxy Statement, dated October 2, 1998, with respect to our 1998 annual
meeting of stockholders; and
* Description of the common stock contained in Item 1 of our Registration
Statement on Form 8-A, dated May 7, 1984.
You may request a copy of these filings (excluding all exhibits unless
we have specifically incorporated an exhibit by reference), at no cost, by
writing or telephoning us at:
Immunomedics, Inc.
300 American Road
Morris Plains, New Jersey 07950
(973) 605-8200
Attention: Investor Relations
You should rely on the information incorporated by reference or
provided in this Prospectus or any supplement. We have not authorized anyone to
provide you with different information. You should not assume that the
information in this Prospectus or any supplement is accurate as of any date
other than the date on the front of such document. We are not making an offer of
our shares in any state where the offer is not permitted.
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THE COMPANY
Description of Our Business
We are a biopharmaceutical company, which develops, manufactures and
markets products for the detection and treatment of cancers and other diseases.
These products, which are based on the Company's monoclonal antibody technology,
are designed to deliver radioisotopes, chemotherapeutic agents, toxins, dyes or
other substances to a specific disease site or organ system.
We have received approval from the respective regulatory agencies in
the United States, the 15 member countries of the European Union, Canada and
certain other countries to market and sell CEA- Scan(R) (arcitumomab), our
imaging product for the detection of recurrent and/or metastatic colorectal
cancer.
We also have received approval to market and sell LeukoScan(R)
(sulesomab), our imaging product for detection and diagnosis of osteomyelitis
(bone infection) in long bones and in diabetic foot ulcer patients, in the 15
member countries of the European Union. We have filed an application with the
FDA in the U.S. and the comparable regulatory agency in Canada for approval to
market LeukoScan for osteomyelitis as well as for the diagnosis of acute,
atypical appendicitis.
Marketing, Sales and Distribution
CEA-Scan is marketed and sold in the U.S. directly by our sales force
of approximately 20 sales representatives and 3 regional managers, who are
deployed in major metropolitan areas. Our skilled nuclear medicine technicians
work with this sales force and provide technical support directly to our
customers. We have entered into a distribution arrangement in the U.S. with
Integrated Commercialization Solutions, a division of Bergen Brunswig
Corporation to provide product support services including customer service,
order management, distribution, invoicing and collection.
Our European operations, headquartered in Hillegom, The Netherlands,
include European management, sales and marketing, medical/regulatory, customer
service and administration (including invoicing and collection). We also have
established sales representation in most major European markets, including
Germany, France, Italy and The United Kingdom. We service other markets through
the appointment of local distributors who provide sales and marketing support as
well as local product distribution. We have an agreement with Eli Lilly
Deutschland GmbH to package and distribute our products throughout the 15 member
countries of the European Union and other countries.
Imaging Products
Our imaging products involve injecting a patient with a radioisotope
attached to an antibody fragment. An antibody is a protein that can find and
attach itself to a specific substance called an antigen. Such antigens are
present on tumor cells, white blood cells that accumulate at the sites of
infections, and other disease entities. A radioisotope attached to a
disease-targeting antibody is delivered to a disease site for imaging. A gamma
camera (standard nuclear medicine equipment used for imaging) is then used to
detect and display radioisotope concentrations, revealing the presence, location
and approximate size of the site of disease.
The antibody fragment in CEA-Scan is directed against carcinoembryonic
antigen ('CEA'), which is abundant at the site of virtually all cancers of the
colon or rectum (both primary tumors and metastases) and also is associated with
many other cancers. We are conducting phase IV clinical trials to evaluate the
product following re-administration. We also are performing clinical trials
using CEA-Scan for imaging lung cancer and breast cancer. We are discussing the
results of these clinical trials with the FDA and comparable European regulatory
authorities to determine whether such data will support the submission of
applications for marketing approval. In addition, we are continuing our efforts
in developing cancer detection applications with CEA-Scan utilizing hand-held
radiation-detecting probes for use in colorectal cancer surgery.
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LeukoScan is a monoclonal antibody fragment, which seeks out, and binds
to granulocytes (white blood cells) associated with a potentially wide range of
infectious and inflammatory diseases.
We are studying the following three other imaging products pursuant to
Investigational New Drug applications that we have filed or plan to file with
the FDA and we have ongoing clinical trials in Europe:
LymphoScan(R), for non-Hodgkin's B-cell lymphomas.
AFP-Scan(R), for liver cancer and germ-cell tumors of the ovaries and
testes.
MyeloScan(TM), for imaging of bone marrow for detection of metastatic
marrow disease.
Therapeutic Products
We are applying our expertise in antibody selection, modification and
chemistry to cancer therapeutics, using monoclonal antibodies labeled with
therapeutic radioisotopes or conjugated with drugs. The Company is engaged in
developing anti-cancer products, principally with a technique called
radioimmunotherapy. This technique may deliver radiolabeled therapeutic agents
to tumor sites more selectively than current radiation therapy technologies,
while minimizing debilitating side effects.
Research Programs
In addition to concentrating on our products in clinical development,
we conduct ongoing research in many related areas. We conduct research in-house
and in collaboration with The Center for Molecular Medicine and Immunology also
known as the Garden State Cancer Center and other academic and research centers.
During 1998, we executed a letter of intent to form a joint venture with Beckman
Coulter to develop the next generation of cancer therapeutics using bi-specific
antibodies. We believe our ongoing research efforts will identify new and
improved products and techniques for diagnosing and treating various cancers and
infectious diseases.
Our research efforts are focused in various areas related to our core
technology, including antibody engineering and the identification of other
antibody-directed approaches to cancer therapy. We have made significant
progress in humanizing certain mouse antibodies and have reengineered the
humanized antibodies with improved characteristics. We are continuing our work
on selective coupling of therapeutic site specific agents onto antibody
fragments which will offer the advantage of loading multiple therapeutic
compounds onto antibodies at a particular disease site. We also continue to
investigate pretargeting whereby an antibody is administered first, followed by
a radionuclide administration.
We also are continuing our research into the use of alternative
radioisotopes, such as Yttrium-90 in place of Iodine-131. Our research indicates
that Yttrium-90 is retained by lymphoma cells for longer periods after antibody
metabolism, and shows greater efficacy against larger tumors. We also have
developed a proprietary technology using a compound called "DOTA" to tightly
bind Yttrium-90 to antibodies.
We are also continuing our efforts to scale-up our proprietary method
for technetium-99m radiolabeling of peptides, using single-vial kits.
Recent Financing Arrangement
On December 9, 1998, we completed a private placement of 1,250 shares
of Series F Convertible Preferred Stock to the selling stockholders and received
gross proceeds of $12,500,000.
Each share of Series F Stock has an initial stated value of $10,000,
which increases at the rate of 4 percent per annum. The Series F Stock is
convertible at the option of the selling stockholders, in whole or in part,
beginning on June 8, 1999, subject to acceleration in certain instances. The
number of shares of common stock issuable upon conversion of each share of
Series F Stock will be determined by dividing the stated value of $10,000 plus
an accretion of 4 percent per annum, by the conversion price then in effect.
5
<PAGE>
The conversion price is equal to:
* the Variable Price, if such Variable Price is less than the Trigger
Price;
* the Trigger Price, if the Variable Price is equal to or greater
than the Trigger Price and
less than 150 percent of the Trigger Price; or
* the Trigger Price plus one-half of the amount, if any, by which the
Variable Price exceeds 150 percent of the Trigger Price, if the
Variable Price is greater that 150 percent of the Trigger Price.
The "Trigger Price" will be equal to 125 percent of the Initial Fixed
Price. The "Initial Fixed Price" will be equal to the average closing bid price
of our common stock during the 20 trading days ending June 6, 1999. The
"Variable Price" will be equal to the average of the 15 lowest closing bid
prices for our common stock during the 45 trading days preceding a conversion
date.
The selling stockholders have agreed to certain restrictions on the
amount of Series F Stock that can be converted during the first several months
after the Series F Stock would otherwise be convertible to the extent that the
Series F Stock would be convertible at a price less than 90 percent of the
Initial Fixed Price.
In addition, at any time during the 90-day period commencing on
December 1, 1999, we may, require the selling stockholders to purchase up to an
additional $7.5 million (750 shares) our of Series F Stock. Our right to require
the selling stockholders to purchase this additional amount is subject to
certain conditions and limitations, including that the Variable Price has been
at least equal to the Initial Fixed Price for a specified period of time. Under
certain circumstances and at certain prices, we may elect to redeem any shares
of Series F Stock and under certain circumstances may require the selling
stockholders to convert their Series F Stock. We have granted the selling
stockholders certain participation rights if we issue any future floating rate
convertible securities.
Upon the occurrence of certain events that are within our control, the
selling stockholders may require us to redeem the Series F Stock at a price per
share equal to the greater of (i) 125 percent of the stated value of $10,000 per
share plus the accretion of 4 percent per annum and (ii) the value of the our
common stock that would be issuable upon conversion of the Series F Stock. Upon
the occurrence of certain events that are not within our control, we have the
option to either redeem the Series F Stock or to readjust the conversion price
and/or to pay certain penalties.
Each Investor has agreed that if it engages in short sales transactions
or other hedging activities during the 45 trading days immediately preceding a
conversion date which involve, among other things, sales of shares of our common
stock, the Investor will place its sale orders for common stock in the course of
such activities so as not to complete or effect any such sale on any trading day
during such period at a price which is lower than the lowest sale effected on
such day by persons other than such Investor and its affiliates. Each Investor
also has agreed not to enter into any short sales or other hedging activities
which involve, among other things, sales of shares of our common stock, during
the 25 trading days ending June 7, 1999.
Under a related registration rights agreement, we have agreed to file
and maintain effectiveness of the registration statement of which this
Prospectus is a part. If we fail to do so, the selling stockholders may require
us to pay certain substantial penalties.
In connection with our agreements with the selling stockholders, we
have agreed to reimburse them for their legal expenses in an amount not to
exceed $50,000.
For more information concerning this transaction and the terms of the
Series F Stock, we direct you to our Current Report on Form 8-K which we filed
with the SEC on December 15, 1998, which provides more details and contains
copies of the documents discussed above.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS.
We have made statements in this Prospectus, and in the documents we
incorporate by reference, that are considered by the SEC to be "forward-looking
statements" within the meaning of the Securities Act of 1933 and the Securities
Exchange Act of 1934. Sometimes these statements contain words such as "may,"
"believe," "expect," "continue," "intend," "anticipate" or other similar words.
These statements are not guarantees of our future performance and are subject to
risks, uncertainties and other factors that could cause our actual performance
or achievements to be materially different from those which we project. We have
no obligation to release publicly the result of any revisions to any of our
"forward-looking statements" to reflect events or circumstances that occur after
the date of this Prospectus or to reflect the occurrence of other unanticipated
events.
The following factors, among others, discussed below under "Risk
Factors" or in the documents which we incorporate by reference, could cause
materially different results from those anticipated or projected:
* inherent uncertainties accompanying the marketing of CEA-Scan and
LeukoScan
* inherent uncertainties involving new product development and
marketing
* inability to obtain capital for continued product development and
commercialization
* actions of regulatory authorities concerning product approval
* actions of government and private organizations concerning
reimbursement of medical expenses
* impact of competitive products and pricing
* results of clinical trials
* loss of key employees
* changes in general economic and business conditions
* changes in industry trends
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RISK FACTORS
Investing in our common stock involves a high degree of risk. As a
result, you should be able to sustain a complete loss of your investment. In
addition to the other information in this Prospectus, you should carefully
consider the following factors before purchasing any of our common stock.
History of Operating Losses
We have had significant operating losses since our formation in 1992
and have not earned a profit since our inception. These operating losses and
failure to be profitable have been due mainly to the significant amount of money
that we have had to spend on research and development. As of September 30, 1998,
we had an accumulated deficit of approximately $91 million. We expect to
continue to experience operating losses until such time, if at all, that it is
able to generate sufficient revenues from sales of CEA-Scan, LeukoScan and our
other proposed products.
Limited Number of Approved Products; Lack of Significant Product Revenues
To date, CEA-Scan(R) and LeukoScan(R) are the only products which we
are licensed to market and sell. To date, we have received only limited revenues
from the sale of these products. We cannot assure you that these products will
achieve market acceptance or generate significant sales. Unless we receive
substantial revenues from these products, future revenues will be dependent in
large part upon us receiving payments from corporate partners under licensing
and research agreements or from government grants. However, we cannot assure you
that we will receive such payments in a timely manner, or at all.
While we expect to receive approval from the FDA to market and sell
LeukoScan in the United States, we cannot assure you that such approval will be
received in a timely manner, if at all. In addition, the FDA could impose
conditions on its approval, which could significantly affect the commercial
viability of the product or could require us to undertake significant additional
studies or otherwise expend additional significant funds. If approval to market
and sell LeukoScan in the United States is not received on a timely basis or if
the FDA imposes significant conditions or restrictions, our business and
operations could be significantly and adversely affected.
Uncertainty of Product Development
We have a number of diagnostic and therapeutic products in various
stages of development as well as new areas fro marketed products. Before any of
our other products can be marketed and sold, we must undertake substantial
research and development. All new products face a high degree of uncertainty,
including the following:
* We may not receive regulatory approval to perform human clinical trials
for the products we currently have planned or we may be unable to
successfully complete our ongoing clinical trials.
* We may be unable to obtain approval from the FDA and comparable foreign
authorities because we are unable to demonstrate that the product is
safe and effective, or obtaining regulatory may take significantly more
time and cost significantly more money than we currently anticipate.
* We may discover that the product has undesirable or unintended side
effects or other characteristics that make it impossible or
impracticable for us to continue development or which may limit the
product's commercial use.
* We do not expect that any new product which is currently in research
and development will be commercially available for at least several
years.
* We may be unable to produce the product in commercial quantities at
reasonable cost.
* We may be unable to successfully market the product or to find an
appropriate corporate partner, if necessary, to assist us in the
marketing of the product.
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* The product may not gain satisfactory market acceptance.
* The product may be superceded by another product commercialized for the
same indication(s).
If we are unable to continue to develop products that we can
successfully market, our business, financial condition and results of operations
will be significantly and adversely affected.
Unpredictability of Preclinical and Clinical Trials and Patient Enrollment
Before obtaining regulatory approvals for the commercial sale of any of
our products under development, we must demonstrate through preclinical studies
and clinical trials that the product is safe and efficacious for use for the
indication for which approval is sought. The results from preclinical studies
and early clinical trials may not necessarily be indicative of results that will
be obtained in later-stage testing and we cannot assure you that our future
clinical trials will demonstrate the safety and efficacy of any of our products
or will result in approval to market products. A number of companies in the
biotechnology industry have suffered significant setbacks in advanced clinical
trials, even after promising results in earlier trials.
Our ability to timely complete our clinical trials is dependent upon
many factors, including our investigators' ability to recruit patients for such
trials. Patient enrollment is a function of many factors,, including the size of
the patient population, the nature of the protocol, the proximity of patients to
clinical sites and the eligibility criteria for the study. Delays in planned
patient enrollment may result in increased costs and delays, which may
significantly and adversely affect us.
Need for Additional Capital
For the foreseeable future, we will require significant financial
resources for us to continue our budgeted levels of expenses and capital
expenditures, including for:
* Ongoing pre-clinical and clinical trials of our existing products.
* Research and development of new products.
* Marketing and sales of CEA-Scan and LeukoScan.
* Marketing and sales for our other products if we receive necessary
regulatory approvals.
* Capital expenditures, including Year 2000 compliance upgrades
While we believe that our projected financial resources will be
sufficient to fund our anticipated operating expenses and capital expenditures
through calendar 1999, unless our existing products generate significant
revenues or we enter into corporate partnering arrangements, thereafter we will
require additional financial resources in order to continue our planned levels
of research and development and clinical trials of our proposed products and
regulatory filings for new indications of existing products. Without a
significant increase in product revenues or other infusion of capital, we will
be required to significantly reduce our operating expenses, including the amount
of resources devoted to marketing and sales, product development and clinical
trials, which could have a significant and adverse effect on us. We cannot
assure you that any additional financing will be available to us at all or on
terms we find acceptable or that the terms of such financing will not cause
substantial dilution to our existing stockholders.
Limited Marketing and Sales Experience and Capability
We have only recently established our own sales and marketing
organization to market CEA-Scan and LeukoScan. We cannot assure you that we can
successfully maintain and continue to build such sales force. If we are unable
to continue to build and maintain our sales force, our financial condition and
operating results may be significantly and adversely affected.
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Our commercial sale of our proposed products may be dependent upon
entering our into arrangements with corporate partners and we cannot assure you
that we will be successful in forming such relationships or that such
relationships, even if formed, will be successful.
Dependence on Third Parties for Distribution of Products
We currently do not have the resources to internally develop and
maintain the operating procedures required by the FDA and comparable foreign
regulatory authorities to oversee distribution of our products. As a result, we
have entered into arrangements with third parties to perform such function for
the foreseeable future. If these agreements are terminated, we will be required
to enter into arrangements with other approved third parties in order to be able
to distribute our products. If we are unable to have a distribution arrangement
in place with a FDA-approved distributor prior to termination of an existing
arrangement, we will be unable to continue to distribute our products until an
acceptable alternative is identified and our business may be significantly and
adversely effected.
Limited Manufacturing Capability
While we have the capacity to manufacture all of our current
requirements for CEA-Scan and LeukoScan, if demand for these product increases
significantly, we cannot assure you that we will continue to have the capacity
to manufacture commercial quantities successfully. In addition, if any of our
other products are approved for marketing and sale, we cannot assure you that we
will continue to have the capacity and expertise to manufacture commercial
quantities of multiple products successfully or with acceptable profit margins.
We rely on a single third party to perform certain end-stage portions
of the manufacturing process for CEA-Scan and LeukoScan. While we have qualified
a second entity in the event a second end-stage manufacturer is required, we
cannot assure that we will be able to negotiate an agreement with such entity on
terms we consider acceptable, if at all.
Dependence on Fluids Produced in Mice
CEA-Scan and certain of our other imaging agents are derived
from ascites fluid produced in mice, which are provided by a third-party
supplier. Regulatory authorities, particularly in Europe, have expressed
concerns about the use of mice fluid for the production of monoclonal
antibodies. While we believe that our current quality control procedures ensure
the purity of the fluid we use, we cannot assure you that regulatory authorities
will agree that these procedures will be adequate for future products. While we
are continuing our development efforts to produce certain of our monoclonal
antibodies using cell culture methods, this process constitutes a substantial
production change, which will require additional manufacturing equipment and new
regulatory approval. We cannot assure you that we will have the resources to
acquire the additional manufacturing equipment and resources or that we will
receive the required regulatory approval on a timely basis, if at all. We have
also contracted with a third party for the development and production of certain
humanized antibodies, however we cannot assure that such efforts will be
successful.
Dependence on The Center for Molecular Medicine and Immunology
Our product development has involved, to varying degrees, The Center
for Molecular Medicine and Immunology, a not-for-profit cancer research center.
CMMI performs pilot and pre-clinical trials in product areas of importance to
us. CMMI also conducts basic research and patient evaluations in a number of
areas of potential interest to us, the results of which are made available to us
pursuant to a collaborative research and license agreement. We cannot assure you
that CMMI will be successful in its research activities or that it will develop
any potential products which can be licensed by us.
In addition, if CMMI were no longer to conduct such research and
patient evaluations, we would have to make arrangements with third parties for
the performance of this aspect of our clinical research, which may prolong and
increase expenses associated with pre-clinical testing and initial clinical
trials.
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Potential Conflicts of Interest with The Center
for Molecular Medicine and Immunology
Dr. David M. Goldenberg, our Chairman of the Board and former Chief
Executive Officer, is the founder, President and a member of the Board of
Trustees of CMMI. Dr. Goldenberg devotes more of his time working for CMMI than
for us. In addition, other key personnel currently have responsibilities both to
CMMI and us. While we have put in place certain procedural safeguards and
mechanisms relating to the allocation of research projects and licensing of
proprietary rights between CMMI and us, due to Dr. Goldenberg's and other of our
key employees relationships with both entities, the potential for conflict of
interest exists.
Extensive Government Regulation
Regulation by governmental authorities in the United States and foreign
countries is a significant factor in the manufacture and marketing of our
presently marketed and proposed products as well as our research and development
activities. All of our proposed products will require regulatory approval by
governmental agencies prior to commercialization and our products must undergo
rigorous preclinical and clinical testing and other premarket approval
procedures by the FDA and similar authorities in foreign countries. In addition,
since certain of our potential products involve the application of new
technologies, regulatory approvals may take longer than for products produced
using more conventional methods. Once we begin clinical trials for a new
diagnostic or therapeutic product, it may take five to ten years (or more) to
receive the required regulatory approval to commercialize that product and begin
to market it to the public. Various federal and, in some cases, state statutes
and regulations also govern or influence the manufacturing, safety, labeling,
storage, record keeping and marketing of such products. The lengthy process of
seeking these approvals, and the subsequent compliance with applicable statutes
and regulations, will require us to expend substantial resources. If we fail to
obtain or are otherwise substantially delayed in obtaining, regulatory
approvals, our business and operations could be significantly and adversely
affected.
In responding to a new drug application, or a biologic license
application, the FDA may grant marketing approvals, request additional
information or further research, or deny the application if it determines that
the application does not satisfy its regulatory approval criteria. Approvals may
not be granted on a timely basis, if at all, or if granted may not cover all the
clinical indications for which we are seeking approval or may contain
significant limitations in the form of warnings, precautions or
contraindications with respect to conditions of use.
In addition to laws and regulations enforced by the FDA, we are also
subject to regulation under the various other federal, state or local laws and
regulations. Our research and development involves the controlled use of
hazardous materials, chemicals, viruses and various radioactive compounds.
Although we believe our safety procedures for handling and disposing of such
materials comply with the standards prescribed by state and federal regulations,
the risk of accidental contamination or injury from these materials cannot be
completely eliminated. If an accident occurs, we could be held liable for any
damages that result and any such liability could exceed our resources.
Our facilities are subject to inspection by the FDA. A separate license
from the FDA is required for commercial manufacture of any product. Failure to
maintain such licenses or to meet the inspection criteria of the FDA would
result in disruption to our manufacturing processes and could have a significant
and adverse affect on our business and operations.
For marketing outside the United States, we are subject to foreign
regulatory requirements governing human clinical trials and marketing approval
for drugs and devices. The requirements governing the conduct of clinical
trials, product licensing, pricing and reimbursement vary greatly from country
to country. Failure to comply with such regulatory requirements or obtain such
approvals could impair our ability to develop these markets and could have a
significant and adverse affect on our business and operations.
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Uncertainty of Health Care Reimbursement
Our ability to successfully commercialize our products will 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 insurers and other organizations. Such third-party
payers are increasingly challenging the price of medical products and services.
Several proposals have been made that may lead to a government-directed national
health care system. Adoption of such a system could further limit reimbursement
for medical products, and we cannot assure you that adequate third-party
coverage will be available to enable us to maintain price levels sufficient to
realize an appropriate return on our investment in product development. In
addition, we also cannot assure you that the U.S. government will not implement
a system of price controls. Any such system might adversely affect our ability
to market our products profitably.
Dependence on Key Personnel
The continued development of our business and operations is highly
dependent upon the talents of Dr. Goldenberg and certain key executive officers
and scientific personnel. If Dr. Goldenberg or any of our other key personnel
leave our employ, our operations could be significantly and adversely affected.
In addition, we have an ongoing need to expand our management personnel and
support staff. Competition for qualified personnel in the biotechnology and
pharmaceutical industries is intense and we cannot assure you that we will be
successful in our recruitment efforts. If we are unable to attract and retain
additional qualified personnel, our operations also could be significantly and
adversely affected.
Possible Inability to Successfully Compete
The biotechnology industry is highly competitive, particularly in the
area of cancer diagnostic and therapeutic products. We are likely to encounter
significant competition with respect to our existing products as well as our
products currently under development. A number of companies, including IDEC
Pharaceuticals, Genenitech, Smithkilne Beecham, Nycomed-Amersham, Coulter
Pharamceuticals, are engaged in the biotechnology field, and in particular the
development of cancer diagnostic and therapeutic products. Many of these
companies have significantly greater financial, technical and marketing
resources significantly than us. In addition, many of these companies may have
more established positions in the pharmaceutical industry and may be better
equipped than us to develop, refine and market their products.
We also expect to face increasing competition from universities and
other non-profit research organizations. These institutions carry out a
significant amount of research and development in the field of antibody-based
technology. These institutions are becoming increasingly more aware of the
commercial value of their findings and more active in seeking patent and other
proprietary rights, as well as licensing revenues.
Impact of Rapid Technological Change
We are pursuing an area of product development in which there is the
potential for extensive technological innovation in relatively short periods of
time. We cannot assure you that our competitors will not succeed in developing
products that are safer or more effective than our products. Rapid technological
change or developments by others may result in our current products as well as
those in development becoming non-competitive or obsolete.
Limited Protection of Intellectual Property Rights
Our commercial success is highly dependent upon patents and other
proprietary rights that we own or license. While we actively seek patent
protection both in the United States and abroad for our proprietary technology,
we cannot assure you that our key patents will not be invalidated or will
provide us protection that has commercial significance. Litigation may be
necessary to protect our patent positions, which could be costly and time
consuming. If any of our key patents that we own or license are invalidated, our
business may be significantly and adversely affected.
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While we believe that the protection of patents is important to our
business, we also rely on trade secrets, unpatented know-how and continuing
technological advancement to establish and maintain our competitive position.
Other companies may independently develop similar trade secrets or know-how or
obtain access to our trade secrets, know-how or proprietary technology, which
could significantly and adversely affect our business. Other companies may have
filed applications for or have been issued patents and obtained other
proprietary rights to technology which may be potentially useful to us. If we
determine that the inventions covered by such patents are necessary or useful
for us, we may attempt to license such rights. We cannot assure you that such
rights will be available at all or even upon terms we consider acceptable. If we
are unable to obtain such rights, our business could be significantly and
adversely affected.
Specific Patent Issues Involving CEA-Scan
We have sued F. Hoffmann-LaRoche and its Roche subsidiary and
affiliates in the Netherlands for what we believe to be infringement of our
European patent covering specific anti-CEA antibodies. They have denied that
they are infringing our patents and counter-sued seeking to nullify our Dutch
and German patents. A trial was held on our infringement claim before the Dutch
Patent Court, resulting in dismissal of the action based in part on the trial
judge's inability to resolve validity issues without a full trial of the nullity
action. While we have appealed the dismissal, we cannot assure you we will be
successful. In addition, while the trial on the Dutch nullity action resulted in
dismissal of that action and maintenance of all our patent claims, Roche has
appealed and we cannot assure you that the appeal court will also rule in our
favor. The trial in the German nullity action has been concluded in our favor
but we do not know if Roche will appeal or, if they do, that the appellate court
also will rule in our favor.
We believe that affirmation of the validity of this patent is important
because its claims also protect the antibody we use in our CEA-Scan cancer
imaging product and our CEA-Cide cancer therapy product, as well as the use of
highly specific anti-CEA antibodies for a number of other uses. While we believe
that our European patents are valid and that Hoffmann-LaRoche has infringed
them, and that an unfavorable outcome in the infringement and nullity actions is
unlikely, if we receive an unfavorable outcome, our business could be
significantly and adversely affected.
Product Liability
The clinical testing, marketing and manufacturing of our products
necessarily involves the risk of product liability. While we currently have
product liability insurance, we cannot assure that we will be able to obtain
such insurance in the future at an acceptable cost, if at all. If we cannot
maintain our existing or comparable liability insurance, our ability to test
clinically and market our products may be significantly impaired. Moreover, the
amount and scope of our insurance coverage or indemnification arrangements with
any distributor or other third party upon which we rely may be inadequate to
protect us in the event of a successful product liability claim.
Control by Existing Principal Stockholder
As of December 29, 1998, Dr. Goldenberg controlled the right to vote
over approximately 35 percent of over common stock (including those shares which
he is entitled to vote by powers of attorney or proxy granted to him by his
children and his former wife). As a result of such holdings, Dr. Goldenberg may
have the ability to determine the election of all of our directors, direct
policies and control the outcome of substantially all matters which may be put
to a vote of our stockholders.
Potential Redemption of Series F Stock or Penalty Payments;
The Series F Stock is subject to redemption at the option of the
holders under certain circumstances, including, if a consolidation, merger or
other business combination is completed or a purchase, tender or exchange offer
is accepted by holders of our common stock that is approved by our Board of
Directors. In addition, if certain other events occur, we may be required to pay
significant penalties (which could be as much as 15 percent per year of the
stated value of the Series F Stock) and/or reduce the conversion price of the
Series F Stock. These events include:
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* If a consolidation, merger or other business combination occurs or a
purchase, tender or exchange offer is accepted by a specified
percentage of the holders of the Common Stock, that was not approved by
our Board of Directors.
* If we do not file the registration statement (of which this Prospectus
is a part) with the SEC by January 23, 1999, if such registration
statement does not become effective by May 8, 1999, or, if, after such
registration statement becomes effective, it ceases to be available to
the selling stockholders for the resale of their shares for more than
10 consecutive days.
* If our common stock is delisted from the Nasdaq National Market.
* If we fail to hold a Special Meeting of Stockholders on or before March
23, 1999, to seek approval of the issuance of any shares in excess of
7,577,617 of common stock issuable upon conversion of the Series F
Stock (as required by the rules of The Nasdaq Stock Market, Inc.) or
the proposal is not approved by stockholders.
If any of the foregoing events occur, and, as a result thereof, the
holders of the Series F Stock exercise their rights of redemption or rights to
receive the penalty payments, we may not have the financial ability to make such
payments. Even we have the financial ability to redeem the Series F Stock or pay
the required penalties, such payment could significantly and adversely affect
our financial condition and deplete our cash resources
Substantial Dilution; Potential for Issuance of
Significant Number of Shares of Common Stock
The Series F Preferred Shares that we issued to the selling
stockholders generally will become fully converted into shares of our common
stock beginning on June 8, 1999. Because the conversion price for the Series F
Preferred Shares is not fixed, we may be required to issue to them a significant
number of shares of our common stock (although we are only registering
10,000,000 shares for resale by them at this time). The conversion price
generally will be determined under a formula based upon the average closing bid
price of our common stock over the lowest 15 days during the 45-day period
immediately prior to a conversion date. Had the Series F Stock been immediately
convertible, as of December 24, 1998, the conversion price would have been $2.84
per share and we would have been required to issue approximately 4,402,000
shares of our common stock had the holders converted all of their Series F Stock
on such date.
Given that the conversion price is based on the average of the lowest
closing price during a specified period, it is likely that the market price for
our common stock will be significantly greater than the conversion price for the
Series F Preferred Shares in effect at the time of conversion. In such a case,
the conversion of a significant number of Series F Preferred Shares into common
stock during that period would dilute our other stockholders.
In addition, the resale by the selling stockholders of the common stock
could depress the market price of our common stock. Moreover, as all the common
stock to be sold to the selling stockholders generally will be available for
immediate resale by them on and after June 8, 1999, the mere prospect of such
sales could further adversely affect the market price for our common stock.
For more information about the Series F Stock, see "The Company -
Recent Financing Arrangement."
Potential Adverse Impact on Market Price of Common Stock
As of December 29, 1998, we had a total of 37,888,090 shares of common
stock issued and outstanding, of which 29,580,102 shares were held by
non-affiliates and are freely tradeable in the public market without restriction
under the Securities Act of 1933. The remaining 8,307,988 shares were held by
our directors and executive officers and are considered "restricted securities"
subject to the resale limitations of Rule 144 under the Securities Act. The
prospect of the ability to publicly resell these restricted shares may adversely
affect prevailing market prices for the common stock.
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Stock Price Volatility
We believe that a variety of factors have caused the market price of
our common stock to fluctuate substantially, and that they will continue to do
so in the future. These factors include:
* actual or anticipated fluctuations in our operating results;
* the status of our products in development;
* new products or technical innovations by us or by our existing or
potential competitors;
* the formation or termination of our corporate alliances and
distribution arrangements;
* prolonged periods of regulatory review of new products or new uses for
existing products
* determinations regarding our patent applications and those of others;
* trading strategies occurring in the market place with respect to our
common stock; and
* general market conditions and other factors unrelated to us or outside
our control.
Effect of Certain Anti-Takeover Provisions
Our Board of Directors has the authority, without any further vote by
our stockholders, to issue up to 10,000,000 shares of preferred stock in one or
more series and to determine the designations, powers, preferences and relative,
participating, optional or other rights thereof, including the dividend rate
(and whether dividends are cumulative), conversion rights, voting rights, rights
and terms of redemption, redemption price and liquidation preference. Issuance
of preferred stock could have the effect of delaying, deterring or preventing a
change in control of our Company, or could impose various procedural and other
requirements that could make it more difficult for holders of our common stock
to effect certain corporate actions, including the ability to replace incumbent
directors and to accomplish transactions opposed by the incumbent Board of
Directors. The rights of the holders of our common stock would be subject to,
and may be adversely affected by, the rights of the holders of any preferred
stock that may be issued in the future.
Further, pursuant to the terms of our stockholder rights plan, we have
distributed as a dividend for each outstanding shares of our common stock, a
preferred stock purchase right. This right will cause substantial dilution to
the ownership of a person or group that attempts to acquire us on terms not
approved in advance by our Board of Directors and may have the effect of
deterring hostile takeover attempts.
Year 2000 Compliance
Computer systems may experience problems handling dates beyond the year
1999 because many computer programs use only two digits to identify a year in a
date field. We are in the process of conducting a review of our business
systems, including our computer systems and manufacturing equipment. We also
have sent written inquiries to our customers, distributors and vendors as to
their progress in identifying and addressing problems that their systems may
face in correctly interpreting and processing date information as the year 2000
approaches and is reached. We expect that our review will be completed by March
1999. Based on this review, we intend to implement a plan to achieve year 2000
compliance. However, we cannot assure that our review will be completed as
schedule or that our compliance program will be implemented on a timely basis.
While we believe that we will achieve year 2000 compliance in a manner which
will be non-disruptive to our operations, unforeseen complications could arise
that could disrupt our operations. In addition, while we have commenced work on
various types of contingency planning to address potential problem areas with
internal systems, suppliers and other third parties, we cannot assure you that
we will be able to implement our contingency plan in a timely manner, if at all.
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While we do not believe that Year 2000 compliance will have a
significant affect on our business or operations, we could encounter problems
with supplier and or revenue sources which could adversely affect us. We cannot
accurately predict the occurrence and or outcome of any such problems, nor can
we currently estimate the dollar amount of such problem , which may or may not
be significant. In addition, we cannot assure you that the failure to ensure
year 2000 compliance by a third party would not have a significant and adverse
affect on our business and operations.
No Expectation that We will Pay Dividends
We have never paid any dividends and, for the foreseeable future, we
expect to retain earnings, if any, to finance the expansion and development of
our business. Any future payment of dividends will be within the discretion of
our Board of Directors and will depend upon a variety of factors, including our
earnings, capital requirements, and operating and financial condition. In
addition, we are required to obtain the approval of the holders of the Series F
Stock prior to the payment of any dividends on our common stock.
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USE OF PROCEEDS
We will not receive any proceeds from the sale of our common stock by
the selling stockholders. However, we did receive net proceeds of approximately
$12,350,000 from the issuance of the Series F Stock to the selling stockholders.
We will use the net proceeds we received from the sales of our
preferred securities for general corporate purposes, including research and
development, clinical trials, regulatory filings, manufacturing, marketing and
sales, general and administrative and other expenses, acquisitions of products
and technologies, license, milestone, royalty and similar payments, and
strategic and other acquisitions.
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SELLING STOCKHOLDERS
The table below presents the following information: (1) the number of
shares of Series F Stock owned by each selling stockholder (2) the number of
shares of common stock beneficially owned by each selling stockholder as of the
date of this Prospectus, (3) the number of shares that such selling stockholder
is offering under this Prospectus, and (4) the number of shares that such
selling stockholder will beneficially own after the completion of this offering.
None of the selling stockholders has had a material relationship with
us within the past three years, other than as a result of their purchase of
shares of our Series F Stock. As of the date hereof, no selling stockholder owns
any shares of our common stock other than the shares they may acquire upon
conversion of the Series F Stock.
<TABLE>
<CAPTION>
Shares of Shares of
Shares of Common Stock Shares of Common Stock
Preferred Beneficially Common Stock Beneficially
Stock Owned Prior to Being Owned After
Selling Stockholder Owned the Offering (1) Offered (2) Offering(3)
- -------------------- ----- ---------------- ----------- -----------
<S> <C> <C> <C> <C>
AG Super Fund International Partners, L.P.(4) 20 70,442 70,442 0
Fisher Capital Ltd.(5) 195 686,813 686,813 0
GAM Arbitrage investments, Inc.(4) 20 70,442 70,442 0
HFTP Investment L.L.C.(6) 650 2,289,378 2,289,378 0
Leonardo, L.P.(4) 200 704,424 704,424 0
Ramius Fund, Ltd.(4) 40 140,885 140,885 0
Raphael, L.P.(4) 20 70,442 70,442 0
Wingate Capital Ltd.(5) 105 369,823 369,823 0
- ----------------
</TABLE>
Based upon 37,888,090 shares of common stock outstanding as of December
29, 1998. Except as otherwise noted herein, the number and percentage
of shares beneficially owned is determined in accordance with Rule
13d-3 of the Exchange Act, and the information is not necessarily
indicative of beneficial ownership for any other purpose. Under such
rule, beneficial ownership includes any shares as to which the
individual has sole or shared voting power or investment power and also
any shares which the individual has the right to acquire within 60 days
of the date of this Prospectus through the exercise of any stock option
or other right. Unless otherwise indicated in the footnotes, each
person has sole voting and investment with respect to the shares shown
as beneficially owned.
The number of shares of our common stock shown as beneficially owned by
the selling stockholders prior to the offering represents shares of our
common stock issuable to them assuming conversion, as of December 24,
1998, of all shares of Series F Stock with respect to the $10,000
stated value of the Series F Stock plus an accretion of 4 percent per
year. The number of shares was calculated using an assumed conversion
price of $2.84, which representing the average of the 15 lowest closing
bid prices for the Common Stock during the 45 consecutive trading days
ending on December 24, 1998. Based upon the conversion price provisions
of the Series F Stock, the conversion price will fluctuate from time to
time based on changes in the market price of our common stock. This
Prospectus also covers the resale of such presently indeterminate
number of additional shares as may be issuable upon conversion of the
Series F Stock based upon fluctuations in the conversion price and
certain antidilution provisions. As described in the section "The
Company - Recent Financing Arrangement" above, the actual number of
shares of our common stock issuable upon conversion of the Series F
Stock is based
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upon the market price of common stock at the time of conversion;
therefore. Therefore, the actual number of shares of common stock may
be less than or greater than the number shown as beneficially owned by
the selling stockholders or pf the number covered by this Prospectus.
(2) The number of shares of Common Stock registered pursuant to the
Registration Statement on behalf of the selling stockholders and the
number of Shares offered hereby by such holders have been determined by
agreement between the selling stockholders and us.. Because the number
of shares that will ultimately be issued upon conversion of the Series
F Stock is dependent, subject to certain limitations, upon the average
of certain closing bid prices of our common stock prior to conversion
as discussed above, such number of shares (and therefore the number of
shares offered hereby) cannot be determined at this time.
Pursuant to the terms of a Registration Rights Agreement dated December
9, 1998, we are required to register for resale at least 200 percent of
the number of shares of common stock that would be issuable if all the
Series F Stock were converted as of the date of this Prospectus.
Pursuant to the terms of the Series F Stock, no holder of Series F
Stock may convert the Series F Stock to the extent that the shares of
our common stock to be received by such holder upon such conversion
would cause such holder to beneficially own more than 4.99 percent of
the outstanding shares of Common Stock. In addition, pursuant to the
regulations of The National Association of Securities Dealers, Inc., in
the absence of stockholder approval, the aggregate number of shares of
our common stock issuable to the holders of the Series F Stock at a
discount from market price upon conversion of the Series F Stock may
not equal or exceed 20 percent of the outstanding shares of Common
Stock on December 9, 1998 (i.e., approximately 7,577,617 shares). If
stockholder approval is not obtained to issue shares of our common
stock to the holders of the Series F Stock in excess of such amount,
none of the holders will be entitled to acquire by conversion more
than its proportionate share of such maximum amount.
(3) Assumes that the selling stockholder has sold all of the sale of all
the shares of our common stock which may be sold pursuant to this
Prospectus.
(4) Angelo, Gordon & Co., L.P. is a general partner of Leonardo, L.P., AG
Super Fund International Partners, L.P. and Raphael, L.P., and is
investment advisor to GAM Arbitrage Investments, Inc. and Ramius Fund,
Ltd. and consequently has voting control and investment discretion over
securities held by such entities. The ownership for each of these
entities does not include the ownership information for the other
entities. Angelo, Gordon & Co., L.P. and each of the referenced
entities disclaims beneficial ownership of any of our securities held
by the other referenced entities. Mr. John M. Angelo, the Chief
Executive Officer of Angelo, Gordon & Co., L.P., and Mr. Michael R.
Gordon, the Chief Operating Officer of Angelo, Gordon & Co., L.P., are
the sole general partners of AG Partners, L.P., which is the sole
general partner of Angelo, Gordon & Co., L.P. As such, Mr. Angelo and
Mr. Gordon may be considered beneficial owners of any of our securities
deemed to be beneficially owned by Angelo, Gordon & Co., L.P.
(5) Citadel Limited Partnership is the trading manager of Wingate Capital
Ltd. and Fisher Capital Ltd. and consequently has voting control and
investment discretion over securities held by such entities. Citadel
Limited Partnership is indirectly controlled by Mr. Kenneth C. Griffin.
The ownership for each entities does not include the ownership
information for the other referenced entities. Citadel Limited
Partnership and each of the referenced entities disclaims beneficial
ownership of any of our securities held by the other entities. Mr.
Griffin disclaims beneficial ownership of any of our securities
beneficially owned by Citadel Limited Partnership or the referenced
entities.
(6) Promethean Investment Group L.L.C. is the investment advisor for HFTP
Investment L.L.C. and consequently has voting control and investment
discretion over securities held by such entity. Promethean Investment
Group L.L.C. is indirectly controlled by Mr. James F. O'Brien, Jr.
Promethean Investment Group L.L.C. disclaims beneficial ownership of
any of our securities held by HFTP Investment L.L.C. Mr. O'Brien
disclaims beneficial ownership of any of our securities beneficially
owned by Promethean Investment Group L.L.C.
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PLAN OF DISTRIBUTION
Manner of Sales; Broker-Dealer Compensation.
The selling stockholders may sell any shares of common stock that they
acquire when they convert shares of Series F Stock. The selling stockholders may
elect to sell any such shares in privately negotiated transactions or in the
over-the-counter market through brokers and dealers. Such brokers and dealers
may act as agent or as principals. They may receive compensation in the form of
discounts, concessions or commissions from the selling stockholders or from the
purchasers of their shares of common stock for whom the broker-dealers may act
as agent or to whom the broker-dealers may sell as principal, or both. The
selling stockholders also may sell the shares in reliance upon Rule 144 under
the Securities Act at such times as they are eligible to do so. We have been
advised by the selling stockholders that they have not made any arrangements for
the distribution of the shares of common stock. Broker-dealers who effect sales
for the selling stockholders may arrange for other broker-dealers to
participate. Broker-dealers engaged by the selling stockholders will receive
commissions or discounts from them in amounts to be negotiated prior to the
sale.
Filing of Supplement to Prospectus In Certain Instances.
If any selling stockholder notifies us that he or she has entered into
a material arrangement (other than a customary brokerage account agreement) with
a broker or dealer for the sale of shares of common stock under this Prospectus
through a block trade, purchase by a broker or dealer or similar transaction, we
will file a supplement to this Prospectus under Rule 424(c) under the Securities
Act. Such a supplement will disclose:
* The name of each such broker-dealer.
* The number of Shares involved.
* The price at which those Shares were sold.
* The commissions paid or discounts or concessions allowed to such broker
-dealer(s).
* If applicable, that such broker-dealer(s) did not conduct any
investigation to verify the information contained or incorporated by
reference in this prospectus, as supplemented.
* Any other facts material to the transaction.
Certain Persons Deemed to be Underwriters
The selling stockholders and any broker-dealers who execute sales for
them may be deemed to be "underwriters" within the meaning of the Securities Act
because of the number of shares of common stock to be sold or resold by such
persons or entities or the manner of sale of such shares, or both. If a selling
stockholder or any broker-dealer or other holders were determined to be
underwriters, any discounts, concessions or commissions received by them or by
brokers or dealers acting on their behalf and any profits received by them on
the resale of their shares of common stock might be deemed to be underwriting
discounts and commissions under the Securities Act.
Regulation M
We have informed the selling stockholders that Regulation M promulgated
under the Securities Exchange Act may be applicable to them with respect to any
purchase or sale of shares of common stock. In general, Rule 102 under
Regulation M prohibits any person connected with a distribution of our common
stock (a "Distribution") from directly or indirectly bidding for, or purchasing
for any account in which it has a beneficial interest, any of our common stock
or any right to purchase our common stock, for a period of one business day
before and after completion of its participation in the distribution (we refer
to that time period as the "Distribution Period").
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During the Distribution Period, Regulation M prohibits the selling
stockholders and any other persons engaged in the Distribution from engaging in
any stabilizing bid or purchasing our common stock except for the purpose of
preventing or retarding a decline in the open market price of our common stock.
No such person may effect any stabilizing transaction to facilitate any offering
at the market. Inasmuch as the selling stockholders will be reoffering and
reselling our common stock at the market, Regulation M prohibits them from
effecting any stabilizing transaction in contravention of Regulation M with
respect to our common stock.
The selling stockholders may be entitled, under agreements entered into
with us, to indemnification against liabilities under the Securities Act of
1933, the Securities Exchange Act of 1934 and otherwise.
LEGAL MATTERS
Warshaw Burstein Cohen Schlesinger & Kuh, LLP will give its opinion on
the validity of the common stock. As of the date of this Prospectus, certain
partners of such firm beneficially own an aggregate of 1,200 shares of common
stock.
EXPERTS
Our consolidated financial statements as of June 30, 1998 and 1997 and
for each of the years in the three-year period ended June 30, 1998 have been
incorporated by reference herein and in the registration statement in reliance
upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
21
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following is an itemized statement of the estimated amounts of all
expenses payable by the Company in connection with the registration of the
Shares:
SEC registration fee............................................. $ 8,601
Nasdaq National Market listing fee............................... 17,500
Legal fees and expenses.......................................... 100,000
Accounting fees and expenses..................................... 20,000
Miscellaneous expenses........................................... 3,899
----------
Total ................................................. $150,000
-------------------
Item 15. Indemnification of Directors and Officers.
The Delaware General Corporation Law provides, in substance,
that Delaware corporations shall have the power, under specified circumstances,
to indemnify their directors, officers, employees and agents in connection with
actions or suits by or in the right of the corporation, by reason of the fact
that they were or are such directors, officers, employees and agents, against
expenses (including attorneys' fees) and, in the case of actions, suits or
proceedings brought by third parties, against judgment, fines and amounts paid
in settlement actually and reasonably incurred in any such action, suit or
proceeding.
The Company's Certificate of Incorporation provides that a
director shall not be personally liable to the Company or its stockholders for
monetary damages for breach of fiduciary duty as a director except for liability
(i) for breach of the director's duty of loyalty to the Company or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the Delaware General Corporation Law, or (iv) for any transaction from which the
director derived an improper personal benefit. The Company's Bylaws also provide
that the Company may indemnify its directors, officers and legal representatives
to the fullest extent permitted by Delaware law against all awards and expenses
(including attorneys' fees).
Item 16. Exhibits.
Exhibit No. Description
4.1 - Securities Purchase Agreement, dated as of December 9 1998,
by and among the Company and the investors named therein
(incorporated by reference to Exhibit 10.1 to the Current
Report on Form 8-K, filed by the Company on December 15,
1998).
4.2 - Registration Rights Agreement, dated as of December 9,1998,
by and among the Company and the investors named therein
(incorporated by reference to Exhibit 10.2 to the Current
Report on Form 8-K, filed by the Company on December 15,
1998).
4.3 - Certificate of Designations, Preferences and Rights of
Series F Convertible Preferred Stock (incorporated by
reference to Exhibit 3.1 to the Current Report on Form 8-K,
filed by the Company on December 15, 1998).
5 - Opinion of Warshaw Burstein Cohen Schlesinger & Kuh, LLP.
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23.1 - Consent of KPMG Peat Marwick LLP.
23.2 - Consent of Warshaw Burstein Cohen Schlesinger & Kuh, LLP
(included in their opinion filed as Exhibit 5).
24 - Power of Attorney (included on page II-4).
Item 17. Undertakings.
The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the Company'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 the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
The Company undertakes that it will:
(1) File, during any period in which it offers or sells
securities, a post-effective amendment to this registration statement
to:
(i) Include any prospectus required by section 10(a)
(3) of the Securities Act;
(ii) Reflect in the prospectus any facts or events
which, individually or together, represent a fundamental
change in the information in the registration statement.
Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement.
(iii) Include any material information with respect
to the plan of distribution not previously disclosed in the
registration statement or any material changes to such
information in the registration statement.
provided, however, that the Company does not need to give the
statements in paragraph (a)(1)(i) and (a)(1)(ii) if the information
required in a post-effective amendment is incorporated by reference
from periodic reports filed by the Company under the Exchange Act.
(2) For determining liability under the Securities Act, treat
each post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time to
be the initial bona fide offering.
(3) File a post-effective amendment to remove from
registration any of the securities that remain unsold at the end of the
offering.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise, the
Company 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.
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In the event that a claim for indemnification against such liabilities
(other than the payment by the Company of expenses incurred or paid by a
director, officer or controlling person of the Company 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
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
II-3
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe it meets all of
the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Morris Plains, State of New Jersey, on December 29,
1998.
IMMUNOMEDICS, INC.
By: /s/ Robert J. DeLuccia
Robert J. DeLuccia
President and Chief Executive Officer
(Principal Executive Officer)
Each person whose signature appears below constitutes and appoints
David M. Goldenberg, Robert J. DeLuccia and Kevin Brophy and each of them, his
or her true and lawful attorney-in-fact, with full power of substitution and
resubstitution, for him or her and in his or her 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 other documents in connection therewith, with the
Securities and Exchange Commission under the Securities Act of 1933, hereby
ratifying and confirming all that said attorneys-in-fact or substitutes, may
lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Dated:
December 29, 1998 /s/ David M. Goldenberg
-------------------------------------------------------------
David M. Goldenberg, Chairman of the Board
and a Director
December 29, 1998 /s/ Robert J. DeLuccia
-------------------------------------------------------------
Robert J. DeLuccia, President, Chief Executive
Officer and Director (Principal Executive Officer)
December 29, 1998 W. Robert Friedman, Jr.,
-------------------------------------------------------------
W. Robert Friedman, Jr., Director
December 29, 1998 /s/ Marvin E. Jaffe
-------------------------------------------------------------
Marvin E. Jaffe, Director
December 29, 1998 Richard R. Pivirotto
-------------------------------------------------------------
Richard R. Pivirotto, Director
December 29, 1998 /s/ Richard C. Williams
-------------------------------------------------------------
Richard C. Williams, Director
December 29, 1998 /s/ Kevin X.F. Brophy
-------------------------------------------------------------
Kevin X.F. Brophy, Vice President, Finance and
Administration and Chief Financial Officer (Principal
Financial and Accounting Officer)
II-4
<PAGE>
EXHIBIT 5
WARSHAW BURSTEIN COHEN
SCHLESINGER & KUH, LLP
555 Fifth Avenue
New York, New York 10017
Telephone: (212) 984-7700
Facsimile: (212) 972-9150
December 29, 1998
Immunomedics, Inc.
300 American Road
Morris Plains, New Jersey 07950
Gentlemen and Ladies:
You have requested our opinion, as counsel for Immunomedics, Inc., a
Delaware corporation (the "Company"), in connection with the Registration
Statement on Form S-3 (the "Registration Statement") under the Securities Act of
1933 (the "Act"), filed by the Company with the Securities and Exchange
Commission (the "Commission").
The Registration Statement relates to the offering by the Selling
Stockholder of up to 10,000,000 shares of the Company's common stock, $.01 par
value per share (the "Common Stock"), issuable from time to time, upon
conversion of shares of the Company's Series F Convertible Preferred Stock (the
"Series F Stock").
In the preparation of our opinion, we have examined (1) the Restated
Certificate of Incorporation of the Company, as amended to date, (2) the By-Laws
of the Company, in effect on the date hereof, (3) minutes of meetings of the
Company's Board of Directors, as made available to us by executive officers of
the Company, (4) a certificate from an executive officer of the Company, (5) the
Registration Statement, and (6) the Securities Purchase Agreement, dated as of
December 9, 1998 (the Agreement"), including the exhibits incorporated by
reference therein. In our examinations, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
conformity to the originals of all documents submitted to us as certified,
photostatic or conformed copies, and the authenticity of the originals of all
such latter documents.
Based upon such examination, we are of the opinion that the Shares,
when issued and delivered in accordance with the terms of the Agreement, and the
Certificate of Designations, Preferences and Rights of the Series F Stock, will
be validly issued, fully paid and non-assessable.
We hereby consent to the filing of our opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" in the prospectus included in the Registration Statement. In so doing,
we do not admit that we are in the category of persons whose consent is required
under Section 7 of the Act or the rules and regulations of the Commission
promulgated thereunder.
Certain partners of our Firm beneficially own 1,200 shares of Common
Stock.
Sincerely yours,
WARSHAW BURSTEIN COHEN
SCHLESINGER & KUH, LLP
MDS/HMC
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EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
Immunomedics, Inc.
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the Prospectus.
KPMG PEAT MARWICK LLP
Short Hills, New Jersey
December 29, 1998
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