FILE NO. 333-58269
FILED PURSUANT TO RULE 424(b)
PROSPECTUS
ENZON, INC.
3,983,000 Shares
Common Stock
($.01 par value)
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This prospectus (the "Prospectus") relates to the offer and sale of up to
3,983,000 shares (the "Shares") of common stock, $.01 par value (the "Common
Stock"), of Enzon, Inc. (the "Company" or "Enzon") by certain selling
stockholders of the Company (each a "Selling Stockholders"). See "Selling
Stockholders." The Company will not receive any of the proceeds from the sale of
the Shares.
The Selling Stockholders may sell the Shares from time to time in one or
more transactions (which may involve block transactions) in the open market, in
negotiated transactions, through the writing of options on the Shares (whether
such options are listed on an options exchange or otherwise) or by a combination
of these methods, at fixed prices that may be changed, at market prices at the
time of sale, at prices related to market prices or at negotiated prices. The
Selling Stockholders may effect these transactions by selling the Shares to or
through broker-dealers, who may receive compensation in the form of discounts or
commissions from the Selling Stockholders or from the purchasers of the Shares
for whom the broker-dealers may act as agent or to whom they may sell as
principal, or both in amounts to be negotiated immediately prior to the sale.
The Selling Stockholders may also pledge the Shares as collateral for margin
accounts or loans and the Shares could be resold pursuant to the terms of such
accounts or loans. The Selling Stockholders, such brokers or dealers and any
other participating brokers or dealers may be deemed to be "underwriters" within
the meaning of the Securities Act of 1933, as amended (the "Securities Act") in
connection with such sales. See "Plan of Distribution."
In addition, any securities covered by this Prospectus which qualify for
sale pursuant to Rule 144 under the Securities Act ("Rule 144") may be sold
under Rule 144 rather than pursuant to this Prospectus. To the extent required,
the specific shares of Common Stock to be sold, the name of any successor
Selling Stockholders, the public offering price, the names of any such agent,
dealer or underwriter, and any applicable commission or discount with respect to
any particular offer will be set forth in an accompanying Prospectus Supplement.
See "Selling Stockholders" and "Plan of Distribution."
Neither the Company nor the Selling Stockholders can presently estimate the
amount of commissions or discounts, if any, that will be paid by the Selling
Stockholders on account of their sale of the Shares from time to time. The
Company will bear all expenses in connection with the registration of the Shares
herein, which expenses are estimated to be approximately $184,000. The Selling
Stockholders will pay any brokerage compensation in connection with their sale
of the Shares. See "Use of Proceeds."
The Company's Common Stock is traded in the over-the-counter market and is
quoted on The Nasdaq National Market, under the symbol "ENZN." On July 8, 1998
the last reported sale price of the Common Stock, as reported on The Nasdaq
National Market was $6.375 per share.
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AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH
DEGREE OF RISK. SEE "RISK FACTORS" COMMENCING ON PAGE 7.
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 July 10, 1998
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TABLE OF CONTENTS
Page
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Available Information ................................................... 2
Incorporation of Certain Documents by Reference ......................... 2
Prospectus Summary ...................................................... 4
Risk Factors ............................................................ 7
Use of Proceeds ......................................................... 12
Selling Stockholders .................................................... 12
Plan of Distribution .................................................... 15
Legal Matters ........................................................... 16
Experts ................................................................. 16
No dealer, salesperson or other person has been authorized to give any
information or to make any representation not contained or incorporated by
reference in this Prospectus in connection with this offering. Any information
or representation not contained or incorporated by reference herein must not be
relied on as having been authorized by the Company, the Selling Stockholders or
their respective agents. This Prospectus does not constitute an offer to sell or
the solicitation of an offer to buy the securities offered hereby in any state
to any person to whom it is unlawful to make such offer or solicitation. Except
where otherwise indicated, this Prospectus speaks as of its date and neither the
delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create an implication that there has been no change in the
affairs of the Company since the date hereof or that the information contained
herein is correct as of any time subsequent to its date.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company can be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, and at the following Regional
Offices of the Commission: New York Regional Office, Seven World Trade Center,
Suite 1300, New York, New York 10048; and Chicago Regional Office, Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. 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 at
prescribed rates. The Commission also maintains a Web site that contains
reports, proxy and information regarding the Company at (http://www.sec.gov).
The Company's Common Stock is listed on the Nasdaq National Market and
reports, proxy and information statements and other information concerning the
Company can be inspected at the National Association of Securities Dealers, 1735
K Street, N.W., 4th Floor, Washington, D.C. 20006-1506.
The Company has filed with the Commission a Registration Statement on Form
S-3 (referred to herein together with all amendments and exhibits thereto as the
"Registration Statement") under the Securities Act, with respect to the shares
of Common Stock offered hereby. This Prospectus which forms a part of the
Registration Statement, does not contain all of the information set forth or
incorporated by reference in the Registration Statement and the exhibits and
schedules thereto, 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 shares of Common Stock offered hereby, reference is hereby
made to the Registration Statement, including the exhibits thereto. Copies of
the Registration Statement, including the exhibits, may be obtained from the
Public Reference Section of the Commission at the aforementioned address upon
payment of the fee prescribed by the Commission. Copies of each document may
also be obtained through the Commission's internet address at
http://www.sec.gov. The summaries contained in this Prospectus of additional
information included in the Registration Statement or any exhibit thereto are
qualified in their entirety by reference to such information or exhibit.
The following trademarks and service marks appear in or are incorporated by
reference into, this Prospectus: ADAGEN(R) and ONCASPAR(R) are registered
trademarks of the Company; PEGNOLOGY(R) is a registered service mark of the
Company; SCA(R) is a registered trademark of Enzon Labs Inc., a wholly-owned
subsidiary of the Company; Intron A(R) is a registered trademark of Schering
Corporation.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference into this Prospectus (i) its
Annual Report on Form 10-K for the Fiscal Year Ended June 30, 1997, which
contains audited financial statements for the Company's latest fiscal year for
which a Form 10-K was required to have been filed and incorporates by reference
certain portions of the Company's definitive Proxy Statement for the Annual
Meeting of Stockholders held December 2, 1997, (ii) all other reports filed by
the Company pursuant to Section 13(a) or 15(d) of the Exchange Act since June
30, 1997, including but not limited to, the Quarterly Reports on Form 10-Q for
the Quarters Ended September 30, 1997, December 31, 1997 and March 31, 1998 and
the Current Report on Form 8-K filed on June 30, 1998 and (iii) the description
of the Company's Common Stock, $.01 par value, as contained in its registration
statement on Form 8-A, filed with the Commission on October 29, 1984, as amended
by a Form 8 filed with the Commission on October 15, 1990.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act, subsequent to the date hereof and prior to the
filing of a post-effective amendment to the Registration Statement which
indicates that all shares of Common Stock offered hereby have been sold or which
deregisters all shares of Common Stock then remaining unsold, shall be deemed to
be incorporated by reference into this Prospectus and to be a part hereof from
the date of filing of such documents.
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Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that such statement is modified or
superseded by a statement contained herein or in a subsequently filed document
which also is or is deemed to be incorporated by reference herein. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide, without charge, to each person (including any
beneficial owner) to whom this Prospectus is delivered, upon written or oral
request of such person, a copy of any and all of the information that has been
incorporated by reference in this Prospectus (not including exhibits to such
information unless such exhibits are specifically incorporated by reference into
such information). Such requests should be directed to John Caruso, Vice
President, Administration, General Counsel and Secretary, at the Company's
principal executive offices at 20 Kingsbridge Road, Piscataway, New Jersey
08854, telephone (732) 980-4500.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and the Consolidated Financial Statements and the Notes thereto
appearing elsewhere herein or incorporated by reference in this Prospectus. This
Prospectus and such documents contain various "forward looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), which represent the Company's intentions, expectations or
beliefs concerning future events, including, but not limited to, statements
regarding management's expectations or beliefs concerning future events. These
forward-looking statements are qualified by important factors that could cause
actual results to differ materially from those in the forward-looking
statements, including, without limitation, those discussed in "Risk Factors."
See "Risk Factors."
The Company
Overview
Enzon is a biopharmaceutical company that develops, manufactures and
markets enhanced therapeutics for life-threatening diseases through the
application of its two proprietary technologies: (i) polyethylene glycol ("PEG")
modification and (ii) single-chain antigen-binding ("SCA") proteins. Enzon is
focusing its research activities primarily in the area of oncology and is
applying its proprietary technologies to compounds of known therapeutic efficacy
in order to enhance the performance of these compounds. The Company is
commercializing its proprietary technologies by developing products internally
and in cooperation with strategic partners. To date, the Company and its
partners have successfully commercialized two products, ONCASPAR and ADAGEN
(described below). The Company currently has two products under development
internally and has established more than 15 strategic alliances and license
relationships for the development of products using the Company's proprietary
technologies. The Company believes that its partners are dedicating substantial
resources to the development of products which incorporate Enzon's proprietary
technologies. These efforts include the development of PEG-Intron A, a PEG
modified version of Schering-Plough Corporation's ("Schering-Plough") product,
INTRON A (interferon alfa 2b), a genetically-engineered anticancer-antiviral
drug, for which Schering-Plough is currently conducting Phase III clinical
trials.
PEG Technology
The PEG process involves chemically attaching PEG, a relatively
non-reactive and non-toxic polymer, to proteins, chemicals and certain other
pharmaceuticals for the purpose of enhancing their therapeutic value (the "PEG
Process"). The attachment of PEG helps to disguise the compound and reduce the
recognition of the compound by the immune system, generally lowering potential
immunogenicity and extending the life of such compounds in the circulatory
system. The PEG Process also increases the solubility of the modified compound
which enhances the delivery of the native compound. To date, Enzon's
commercialized products are PEG modified proteins. Through enhancements, Enzon
is seeking to apply its PEG technology to more traditional organic compounds.
The Company has made significant improvements to the original PEG Process,
collectively referred to as Second Generation PEG Technology, and has applied
for and received certain patents covering some improvements. One of the
components of the Second Generation PEG Technology is new linker chemistries;
the chemical binding of PEG to unmodified proteins. These new linkers provide an
enhanced binding of the PEG to the protein resulting in a more stable compound
with increased circulation life and may result in more activity of the modified
protein.
The Company also has developed a Third Generation PEG Technology that is
designed to enable the technology to be expanded to certain organic compounds
and would give such PEG-modified compounds "Pro
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Drug" attributes. This is accomplished by attaching PEG to a compound by means
of a covalent bond that is designed to break down over time, thereby releasing
the active ingredient in the proximity of various tissues.
The Company believes that the "Pro Drug/Transport Technology" has much broader
usefulness in that it can be applied to a wide range of small molecules, such as
cancer chemotherapy agents, antibiotics, anti-fungals and immunosuppressants, as
well as to proteins and peptides, including enzymes and growth factors, although
there can be no assurance that such application will result in safe, effective,
or commercially viable pharmaceutical products.
Marketed PEG Products
The Company has received marketing approval from the United States Food and
Drug Administration ("FDA") for two first generation PEG technology products:
(i) ONCASPAR, the PEG formulation of asparaginase, for the indication of acute
lymphoblastic leukemia ("ALL") in patients who are hypersensitive to native
forms of L-asparaginase and (ii) ADAGEN, the PEG formulation of adenosine
deaminase, the first successful application of enzyme replacement therapy for an
inherited disease to treat a rare form of Severe Combined Immunodeficiency
Disease ("SCID"), commonly known as the "Bubble Boy Disease."
ADAGEN is marketed by Enzon on a worldwide basis. ONCASPAR is marketed in
the U.S. and Canada by Rhone-Poulenc Rorer Pharmaceuticals, Inc. and certain of
its affiliated entities ("RPR") and in Europe by Medac GmbH ("Medac"). The
Company has also granted exclusive licenses to RPR to sell ONCASPAR in the
Pacific Rim and Mexico. The Company is entitled to royalties on the sales of
ONCASPAR in North America by RPR, as well as manufacturing revenue from the
production of ONCASPAR. The Company's agreements with RPR for the Pacific Rim
and with Medac require the partners to purchase ONCASPAR from the Company at a
set price which increases over the term of the agreements. In addition, the
agreements provide for minimum purchase quantities. The Company manufactures
both ADAGEN and ONCASPAR in its South Plainfield, New Jersey facility.
PEG Products under Development
The Company currently has three products created using its Second and Third
Generation PEG Technology in clinical and preclinical trials. The first is
PEG-Intron A, a PEG modified version of Schering-Plough's product, INTRON A
(interferon alfa 2b), a genetically-engineered anticancer-antiviral drug, for
which Schering-Plough is currently conducting Phase III clinical trials for use
in the treatment of hepatitis C. The second product under development is
PEG-hemoglobin, a proprietary bovine hemoglobin-based oxygen-carrier being
developed for the radiosensitization of solid hypoxic tumors, for which the
Company is currently conducting a Phase Ib clinical trial. The third product
under development is PROTHECAN, a PEG-modified version of camptothecin, a potent
topoisomerase-1 inhibitor, for use in certain cancers, which is currently in
preclinical studies.
PEG-Intron A. PEG-Intron A was developed by the Company in conjunction with
Schering-Plough to have longer lasting activity and an enhanced safety profile
compared to the currently marketed form of INTRON A. PEG-Intron A is currently
in a large scale Phase III clinical trial in hepatitis C patients in the United
States and Europe. Other indications being pursued include chronic myelogenous
leukemia and solid tumors. It is expected that PEG-Intron A will be administered
once a week, compared to the current regimen for unmodified INTRON A of three
times a week. Moreover, it is anticipated that PEG-Intron A will provide a more
convenient dosing schedule with an improved side effect profile and an improved
therapeutic index for hepatitis C patients. Currently, some patients on INTRON A
experience debilitating flu-like symptoms.
Pursuant to an agreement with Schering-Plough, the Company will receive
royalties on worldwide sales of PEG-Intron A, receive milestone payments, and
has the option to be the exclusive manufacturer of PEG-Intron A for the U.S.
market. Schering-Plough's sales of INTRON A were approximately $598 million in
1997
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for all approved indications. The worldwide market for alpha interferon products
is estimated to be in excess of $1 billion for all approved indications. The
patents covering Schering-Plough's INTRON A will begin to expire in 2001. The
Company's Second Generation PEG Technology patents that cover the modified
product should afford Schering-Plough extended patent life for PEG Intron-A.
SCA Technology
The Company also has an extensive licensing program for its second
proprietary technology, SCA protein technology. SCA proteins are genetically
engineered proteins designed to overcome the problems hampering the diagnostic
and therapeutic use of conventional monoclonal antibodies. Preclinical studies
have shown that certain SCA proteins target and penetrate tumors more readily
than conventional monoclonal antibodies. In addition to these advantages,
because SCA proteins are developed at the gene level, they are better suited for
targeted delivery of gene therapy vectors and fully-human SCA proteins can be
isolated directly, with no need for costly "humanization" procedures. Also, many
gene therapy methods require that proteins be produced in an active form inside
cells. SCA proteins can be produced through intracellular expression (inside
cells) more readily than monoclonal antibodies.
Currently, there are nine SCA proteins in Phase I or II clinical trials by
various corporations and institutions. Two of these corporations and
institutions have existing licenses with the Company with respect to SCA
proteins and others are expected to require similar licenses. Some of the areas
being explored are cancer therapy, cardiovascular indications and AIDS. The
Company has granted non-exclusive SCA licenses to more than a dozen companies,
including Bristol-Myers Squibb Company, Baxter Healthcare Corporation, Eli Lilly
& Co., Alexion Pharmaceuticals Inc., and the Gencell division of RPR. These
licenses generally provide for upfront payments, milestone payments and
royalties on sales of FDA approved products.
The Company's principal executive office and mailing address is 20
Kingsbridge Road, Piscataway, New Jersey 08054, and its telephone number is
(732) 980-4500.
The Offering
Securities Offered............ This Prospectus relates to an offering by the
Selling Stockholders of up to 3,983,000
shares of Common Stock of the Company.
Securities Outstanding(1) As of May 29, 1998 the Company had 31,331,081
shares of Common Stock outstanding. After
giving effect to the completion of the
private offering described in "Selling
Stockholders," the Company would have
35,314,081 shares of Common Stock
outstanding.
Use of Proceeds .............. The Company will not receive any proceeds
from the sale of the Shares offered herein by
the Selling Stockholders. See "Use of
Proceeds."
Risk Factors ................. See "Risk Factors" for a discussion of
certain risk factors that should be
considered by prospective investors in
connection with an investment in the shares
of Common Stock offered hereby.
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(1) Excludes 5,417,422 shares reserved for issuance upon exercise of options and
warrants outstanding at May 29, 1998, at weighted average exercise prices of
$4.03 and $4.17, respectively.
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RISK FACTORS
Information contained and incorporated by reference in this Prospectus
contains "forward-looking statements" which can be identified by the use of
forward-looking terminology such as "believes," "expects," "may," "will,"
"should," or "anticipates" or the negative thereof or other variations thereon
or comparable terminology, or by discussions of strategy. No assurance can be
given that the future results covered by the forward-looking statements will be
achieved. The risk factors set forth below constitute cautionary statements
identifying important factors with respect to such forward-looking statements,
including certain risks and uncertainties, that could cause actual results to
vary materially from the future results indicated in such forward-looking
statements. Other factors could also cause actual results to vary materially
from the future results indicated in such forward-looking statements.
An investment in the Shares offered hereby involves a high degree of risk.
Prospective investors should carefully consider the following risk factors in
addition to the other information set forth and incorporated by reference in
this Prospectus before making any decision to invest in the Shares.
Accumulated Deficit and Uncertainty of Future Profitability. The Company was
originally incorporated in 1981. To date, the Company's sources of cash have
been the proceeds from the sale of its stock through public offerings and
private placements, sales of its FDA approved products, ADAGEN(R) and
ONCASPAR(R); sales of its products for research purposes; contract research and
development fees; technology transfer and license fees; and royalty advances. At
March 31, 1998, the Company had an accumulated deficit of approximately $114.5
million. The Company expects to incur operating losses for the foreseeable
future. To date, ADAGEN and ONCASPAR are the only products of the Company which
have been approved for marketing in the United States by the FDA, having been
approved in March 1990 and February 1994, respectively. In addition, ONCASPAR
has been approved for marketing in Canada, Germany and Russia. In order to
achieve profitable operations on a continuing basis, the Company, either alone
or through its partners, must successfully manufacture, market and sell its
ADAGEN and ONCASPAR products and develop, manufacture and market the Company's
products which are under development. These products are in various stages of
development, and the period necessary to achieve regulatory approval and market
acceptance of any individual product is uncertain and typically lengthy, if
achievable at all. Potential investors should be aware of the difficulties a
biopharmaceutical enterprise such as the Company encounters, especially in view
of the intense competition in the pharmaceutical industry in which the Company
competes. There can be no assurance that the Company's plans will either
materialize or prove successful, that its products under development will be
successfully developed or that its products will generate revenues sufficient to
enable the Company to achieve profitability.
Raw Materials and Dependence Upon Suppliers. Except for PEG-hemoglobin, the
Company purchases the unmodified compounds utilized in its approved products and
products under development from outside suppliers. There can be no assurance
that the purified bovine hemoglobin used in the manufacture of PEG-hemoglobin
can be produced by the Company in the amounts necessary to expand the current
clinical trials. The Company may be required to enter into supply contracts with
outside suppliers for certain unmodified compounds. The Company does not produce
the unmodified adenosine deaminase used in the manufacture of ADAGEN, the
unmodified forms of L-asparaginase used in the manufacture of ONCASPAR and the
unmodified camptothecin used in the Company's PROTHECAN product which is under
development and has a supply contract with an outside supplier for the supply of
each of these unmodified compounds. Delays in obtaining or an inability to
obtain any unmodified compound, including unmodified adenosine deaminase,
unmodified L-asparaginase, unmodified bovine blood, or unmodified camptothecin
on reasonable terms, or at all, could have a material adverse effect on the
Company's business, financial condition and results of operations. In the event
the Company is required to obtain an alternate source for an unmodified compound
utilized in a product which is being sold commercially or which is in clinical
development, the FDA and relevant foreign regulatory agencies
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will likely require the Company to perform additional testing, which would cause
delays and additional expenses, to demonstrate that the alternate material is
biologically and chemically equivalent to the unmodified compound previously
used. Such evaluations could include chemical, pre-clinical and clinical studies
and could delay development of a product which is in clinical trials, limit
commercial sales of an approved product and cause the Company to incur
significant additional expenses. If such alternate material is not demonstrated
to be chemically and biologically equivalent to the previously used unmodified
compound, the Company will likely be required to repeat some or all of the
pre-clinical and clinical trials conducted for such compound. The marketing of
an FDA approved drug could be disrupted while such tests are conducted. Even if
the alternate material is shown to be chemically and biologically equivalent to
the previously used compound, the FDA or relevant foreign regulatory agency may
require the Company to conduct additional clinical trials with such alternate
material.
Patents and Proprietary Technology. The Company has licensed, and been issued, a
number of patents in the United States and other countries and has other patent
applications pending to protect its proprietary technology. Although the Company
believes that its patents provide certain protection from competition, there can
be no assurance that such patents will be of substantial protection or
commercial benefit to the Company, will afford the Company adequate protection
from competing products, will not be challenged or declared invalid, or that
additional United States patents or foreign patent equivalents will be issued to
the Company. The scope of patent claims for biotechnological inventions is
uncertain and the Company's patents and patent applications are subject to this
uncertainty. The Company is aware of certain issued patents and patent
applications belonging to third parties, and there may be other patents and
patent applications, containing subject matter which the Company or its
licensees or collaborators may require in order to research, develop or
commercialize at least some of the Company's products. There can be no assurance
that licenses under such patents and patent applications will be available on
acceptable terms or at all. If the Company does not obtain such licenses, it or
its partners could encounter delays in product market introductions while it
attempts to design around such patents or could find that the development,
manufacture or sale of products requiring such licenses could be foreclosed. If
the Company does obtain such licenses it will in all likelihood be required to
make royalty and other payments to the licensors, thus reducing the profits
realized by the Company from the products covered by such licenses. The Company
is aware that certain organizations are engaging in activities that infringe
certain of the Company's PEG technology and SCA patents. There can be no
assurance that the Company will be able to enforce its patent and other rights
against such organizations. The Company expects that there may be significant
litigation in the industry regarding patents and other proprietary rights and,
if Enzon were to become involved in such litigation, it could consume a
substantial amount of the Company's resources. In addition, the Company relies
heavily on its proprietary technologies for which pending patent applications
have been filed and on unpatented know-how developed by the Company. Insofar as
the Company relies on trade secrets and unpatented know-how to maintain its
competitive technological position, there can be no assurance that others may
not independently develop the same or similar technologies. Although the Company
has taken steps to protect its trade secrets and unpatented know-how,
third-parties nonetheless may gain access to such information. The Company has
two research and license agreements with The Green Cross Corporation ("Green
Cross") regarding rHSA. The Company and Yoshitomi Pharmaceutical Industries,
Ltd. ("Yoshitomi"), the successor to Green Cross' business, are currently in
arbitration to resolve the amount of royalties that will be due the Company, if
any. In April 1998, Yoshitomi filed documents in such arbitration seeking a
declaratory judgment that under its agreement with the Company no royalties are
payable. Any adverse decision from such an arbitration proceeding could result
in a material adverse effect to the Company's future business, financial
condition and results of operations. Research Corporation Technologies, Inc.
("Research Corporation") held the original patent upon which the PEG Process is
based and had granted the Company a license under such patent. Research
Corporation's patent for the PEG Process in the United States and its
corresponding foreign patents have expired. Although the Company has obtained
several improvement patents in connection with the PEG Process, there can be no
assurance that any of these patents will enable the Company to prevent
infringement or that competitors will not develop competitive products outside
the protection that may be afforded by these patents. The Company is aware
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that others have also filed patent applications and have been granted patents in
the United States and other countries with respect to the application of PEG to
proteins and other compounds. Based upon the expiration of the Research
Corporation patent, other parties will be permitted to make, use, or sell
products covered by the claims of the Research Corporation patent, subject to
other patents, including those held by the Company. There can be no assurance
that the expiration of the Research Corporation patent will not have a material
adverse effect on the business, financial condition and results of operations of
the Company.
Limited Sales and Marketing Experience; Dependence on Marketing Partners. Other
than ADAGEN, which the Company markets on a worldwide basis to a small patient
population, the Company does not engage in the direct commercial marketing of
any of its products and therefore does not have significant sales and marketing
experience. For certain of its products, the Company has provided exclusive
marketing rights to its corporate partners in return for royalties to be
received on sales. With respect to ONCASPAR, the Company has granted exclusive
marketing rights in North America and the Pacific Rim to RPR. The Company has
also granted exclusive marketing rights in Europe and Russia to Medac Gmbh and
in Israel to Tzamal Pharma Ltd.. The Company expects to retain marketing
partners to market ONCASPAR in other foreign markets, principally South America,
and is currently pursuing arrangements in this regard. There can be no assurance
that such efforts will result in the Company concluding such arrangements.
Regarding the marketing of certain of the Company's other future products, the
Company expects to evaluate whether to create a sales force to market certain
products in the United States or to continue to enter into license and marketing
agreements with others for United States and foreign markets. These agreements
generally provide that all or a significant portion of the marketing of these
products will be conducted by the Company's licensees or marketing partners. In
addition, under certain of these agreements, the Company's licensees or
marketing partners may have all or a significant portion of the development and
regulatory approval responsibilities. There can be no assurance that the Company
will be able to control the amount and timing of resources that any licensee or
marketing partner may devote to the Company's products or prevent any licensee
or marketing partner from pursuing alternative technologies or products that
could result in the development of products that compete with the Company's
products and the withdrawal of support for the Company's products. Should the
licensee or marketing partner fail to develop a marketable product (to the
extent it is responsible for product development) or fail to market a product
successfully, if it is developed, the Company's business, financial condition
and results of operations may be adversely affected. There can be no assurance
that the Company's marketing strategy will be successful. Under the Company's
marketing and license agreements, the Company's marketing partners and licensees
may have the right to terminate the agreements and abandon the applicable
products at any time for any reason without significant payments. The Company is
aware that certain of its marketing partners are pursuing parallel development
of products on their own and with other collaborative partners which may compete
with the licensed products and there can be no assurance that the Company's
other current or future marketing partners will not also pursue such parallel
courses.
Reimbursement from Third-Party Payors. Sales of the Company's products will be
dependent in part on the availability of reimbursement from third-party payors,
such as governmental health administration authorities, private health insurers
and other organizations. Government and other third-party payors are
increasingly sensitive to the containment of health care costs and are limiting
both coverage and levels of reimbursement for new therapeutic products approved
for marketing, and are refusing, in some cases, to provide any coverage for
indications for which the FDA and other national health regulatory authorities
have not granted marketing approval. There can be no assurance that such
third-party payor reimbursement will be available or will permit the Company to
sell its products at price levels sufficient for it to realize an appropriate
return on its investment in product development. Since patients who receive
ADAGEN will be required to do so for their entire lives (unless a cure or
another treatment is developed), lifetime limits on benefits which are included
in most private health insurance policies could permit insurers to cease
reimbursement for ADAGEN. Lack of or inadequate reimbursement by government and
other third party payors for the Company's products would have a material
adverse effect on the Company's business, financial condition and results of
operations.
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<PAGE>
Government Regulation. The manufacturing and marketing of pharmaceutical
products in the United States and abroad is subject to stringent governmental
regulation and the sale of any of the Company's products for use in humans in
the United States will require the prior approval of the FDA. Similar approvals
by comparable agencies are required in most foreign countries. The FDA has
established mandatory procedures and safety standards which apply to the
clinical testing, manufacture and marketing of pharmaceutical products.
Pharmaceutical manufacturing facilities are also regulated by state, local and
other authorities. Obtaining FDA approval for a new therapeutic may take several
years and involve substantial expenditures. ADAGEN was approved by the FDA in
March 1990. ONCASPAR was approved by the FDA in February 1994, in Germany in
November 1994 and in Canada in 1997 in each case for patients with acute
lymphoblastic leukemia who are hypersensitive to native forms of L-asparaginase.
ONCASPAR was approved in Russia for therapeutic use in a broad range of cancers.
Except for these approvals, none of the Company's other products have been
approved for sale and use in humans in the United States or elsewhere. There can
be no assurance that the Company will be able to obtain FDA approval for any of
its other products. In addition, any approved products are subject to continuing
regulation, and noncompliance by the Company with applicable requirements can
result in criminal penalties, civil penalties, fines, recall or seizure,
injunctions requiring suspension of production, orders requiring ongoing
supervision by the FDA or refusal by the government to approve marketing or
export applications or to allow the Company to enter into supply contracts.
Failure to obtain or maintain requisite governmental approvals or failure to
obtain or maintain approvals of the scope requested, will delay or preclude the
Company or its licensees or marketing partners from marketing their products, or
limit the commercial use of the products, and thereby may have a material
adverse affect on the Company's business, financial condition and results of
operations.
Intense Competition and Risk of Technological Obsolescence. Many established
biotechnology and pharmaceutical companies with resources greater than those of
the Company are engaged in activities that are competitive with the Company's
and may develop products or technologies which compete with those of the
Company. The Company is aware that other companies are engaged in utilizing PEG
technology in developing drug products. There can be no assurance that the
Company's competitors will not successfully develop, manufacture and market
competing products utilizing PEG technology or otherwise. Other drugs or
treatment modalities which are currently available or that may be developed in
the future, and which treat the same diseases as those which the Company's
products are designed to treat, may be competitive with the Company's products.
There can be no assurance that the Company will be able to compete successfully
against current or future competitors or that such competition will not have a
material adverse effect on the Company's business, financial condition and
results of operations. Rapid technological development by others may result in
the Company's products becoming obsolete before the Company recovers a
significant portion of the research, development and commercialization expenses
incurred with respect to those products. The Company's success, in large part,
depends upon developing and maintaining a competitive position in the
development of products and technologies in its area of focus. There can be no
assurance that the Company's competitors will not succeed in developing
technologies or products that are more effective than any which are being sold
or developed by the Company or which would render the Company's technologies or
products obsolete or noncompetitive. The Company's failure to develop and
maintain a competitive position with respect to its products and/or technologies
would have a material adverse effect on its business, financial condition and
results of operations.
Uncertainty of Market Acceptance. The Company's products, ONCASPAR and ADAGEN,
have been approved by the FDA to treat patients with acute lymphoblastic
leukemia and a rare form of severe combined immunodeficiency disease,
respectively. Neither product has become widely used due to the small patient
population and limited indications approved by the FDA. The Company's current
research and development efforts are directed towards developing new
technologies to aid in drug delivery. Assuming that the Company is able to
develop such technologies and secure the requisite FDA approvals, the market
acceptance of any such products will depend upon the acceptance by the medical
community of the use of such technologies. There can be no assurance that any
additional products will be approved by the FDA or that, if approved, the
medical
10
<PAGE>
community will use them. In addition, the use of any such new products will
depend upon the extent of third party medical reimbursement, increased awareness
of the effectiveness of such technologies and sales efforts by the Company or
any marketing partner. The Company's proprietary PEG technology has received
only limited market acceptance to date. Failure of the Company to develop new
FDA approved products and to achieve market acceptance for such products would
have a material adverse effect on the Company's business, financial condition
and results of operation.
Potential Product Liability. The use of the Company's products during testing or
after regulatory approval entails an inherent risk of adverse effects which
could expose the Company to product liability claims. The Company maintains
product liability insurance coverage in the total amount of $10 million for
claims arising from the use of its products in clinical trials prior to FDA
approval and for claims arising from the use of its products after FDA approval.
There can be no assurance that the Company will be able to maintain its existing
insurance coverage or obtain coverage for the use of its other products in the
future. There can be no assurance that such insurance coverage and the resources
of the Company would be sufficient to satisfy any liability resulting from
product liability claims or that a product liability claim would not have a
material adverse effect on the Company's business, financial condition or
results of operations.
Future Capital Needs; Uncertainty of Additional Financing. The Company's current
sources of liquidity are its cash reserves, and interest earned on such cash
reserves, sales of ADAGEN and ONCASPAR, sales of its products for research
purposes, and license fees. There can be no assurance as to the level of sales
of the Company's FDA approved products, ADAGEN and ONCASPAR, or the amount of
royalties realized from the commercial sale of ONCASPAR pursuant to the
Company's licensing agreements. Total cash reserves, including short term
investments, as of March 31, 1998, were approximately $6.6 million, and after
giving effect to the approximately $17,600,000 of net proceeds received by the
Company from the private placement of the Shares offered herein, will be
approximately 24,228,000. Based upon its currently planned research and
development activities and related costs and its current sources of liquidity,
the Company anticipates its current cash reserves will be sufficient to meet its
capital and operational requirements for the foreseeable future. The Company's
future needs and the adequacy of available funds will depend on numerous
factors, including without limitation, the successful commercialization of its
products, progress in its product development efforts, the magnitude and scope
of such efforts, progress with preclinical studies and clinical trials, progress
with regulatory affairs activities, the cost of filing, prosecuting, defending
and enforcing patent claims and other intellectual property rights, competing
technological and market developments, and the development of strategic
alliances for the marketing of its products. There can be no assurance that the
Company will not require additional financing for its currently planned capital
and operational requirements. In addition, the Company may seek to acquire
additional technology, enter into strategic alliances and engage in additional
research and development programs, which may require additional financing. The
Company does not have any committed sources of additional financing, and there
can be no assurance that additional funding, if necessary, will be available on
acceptable terms, if at all. To the extent the Company is unable to obtain
financing, it may be required to curtail its activities or sell additional
securities. There can be no assurance that any of the foregoing fund raising
activities will successfully meet the Company's anticipated cash needs. If
adequate funds are not available, the Company's business, financial condition
and results of operations will be materially and adversely affected.
Dividend Policy and Restrictions. The Company has paid no dividends on its
Common Stock, since its inception and does not plan to pay dividends on its
Common Stock in the foreseeable future. Except as may be utilized to pay the
dividends payable on the Company's Series A Cumulative Convertible Preferred
Stock (the "Series A Preferred Stock"), any earnings which the Company may
realize will be retained to finance the growth of the Company. In addition, the
terms of the Series A Preferred Stock restrict the payment of dividends on other
classes and series of stock.
11
<PAGE>
Possible Volatility of Stock Price. Historically, the market price of the
Company's Common Stock has fluctuated over a wide range and it is likely that
the price of the Common Stock will fluctuate in the future. Announcements
regarding technical innovations, the development of new products, the status of
corporate collaborations and supply arrangements, regulatory approvals, patent
or proprietary rights or other developments by the Company or its competitors
could have a significant impact on the market price of the Common Stock. In
addition, due to one or more of the foregoing factors, in one or more future
quarters, the Company's results of operations may fall below the expectations of
securities analysts and investors. In that event, the market price of the
Company's Common Stock could be materially and adversely affected.
Shares Eligible for Future Sale. As of May 29, 1998, the Company had
approximately 31,331,000 shares of Common Stock outstanding and after giving
effect to the consummation of the private offering of 3,983,000 shares of Common
Stock described in "Selling Stockholders" which are offered hereby, but assuming
no additional shares are issued pursuant to outstanding options, warrants or
convertible securities, would have had approximately 35,314,081 shares of Common
Stock outstanding. The 3,983,000 shares of Common Stock offered hereby are
"restricted securities," as that term is defined in Rule 144 under the
Securities Act, which when sold pursuant to the Registration Statement will be
freely transferrable without restrictions under the Securities Act, assuming
such Shares are held by non-affiliates of the Company. Of the other shares of
Common Stock outstanding, approximately 31,274,000 shares will be immediately
available for sale without restriction in the public market and approximately
26,000 shares will be eligible for sale under Rule 144 of the Securities Act. In
addition, the approximately 245,000 shares of Common Stock issuable upon
conversion of the Series A Preferred Stock will be immediately available for
sale without restriction in the public market when issued. Certain holders of
the Company's securities are entitled to registration rights with respect to an
aggregate of approximately 1,886,000 shares of Common Stock, including
approximately 1,039,000 shares underlying outstanding warrants. Of such shares,
approximately 989,000 shares are registered currently on Form S-3 registration
statements. The approximately 4,378,000 shares of Common Stock underlying
outstanding options which are held by employees, directors and consultants are
registered on Form S-8 registration statements. Sales of substantial amounts of
such shares in the public market or the prospect of such sales could adversely
affect the market price of the Common Stock.
Anti-takeover Considerations. The Company has the authority to issue up to
3,000,000 shares of Preferred Stock of the Company in one or more series and to
fix the powers, designations, preferences and relative rights thereof without
any further vote of shareholders. The issuance of such Preferred Stock could
dilute the voting powers of holders of Common Stock and could have the effect of
delaying, deferring or preventing a change in control of the Company. Certain
provisions of the Company's Articles of Incorporation and By-laws, including
those providing for a staggered Board of Directors, as well as Delaware law, may
operate in a manner that could discourage or render more difficult a takeover of
the Company or the removal of management or may limit the price certain
investors may be willing to pay for shares of Common Stock.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares
offered herein by the Selling Stockholders. Expenses expected to be incurred by
the Company in connection with this offering are estimated to be $184,000.
SELLING STOCKHOLDERS
The Shares covered by this Prospectus were acquired from the Company in a
private offering pursuant to Common Stock Purchase Agreements (the "Purchase
Agreements") for an aggregate purchase price of $18,919,250 ($4.75 per share).
The offer and sale by the Company of the Common Stock to the Selling
Stockholders pursuant to the Purchase Agreements was made pursuant to an
exemption from the registration
12
<PAGE>
requirements of the Securities Act provided by Section 4(2) thereof. The
Purchase Agreements contain representations and warranties as to each Selling
Stockholder's status as an "accredited investor" as such term is defined in Rule
501 promulgated under the Securities Act. Warburg Dillon Read LLC (formerly
known as SBC Warburg Dillon Read Inc.) ("Dillon Read"), the placement agent, was
paid a fee of $900,000 or approximately 4.75% of the aggregate purchase price in
connection with the sale of the Shares by the Company to the Selling
Stockholders pursuant to the Purchase Agreements. In addition, the Company
agreed to reimburse Dillon Read for its travel, legal and other out-of-pocket
expenses incurred in connection with the sale of the Shares by the Company to
the Selling Stockholders pursuant to the Purchase Agreements up to a maximum of
$50,000. The Company paid Evolution Capital, a broker/dealer, a fee of $235,155
or approximately 1.25% of the aggregate purchase price in connection with the
sale of the Shares by the Company to the Selling Stockholders pursuant to the
Purchase Agreements.
Pursuant to the Purchase Agreements, each Selling Stockholder has
represented that he, she or it acquired the Shares for its own account as
principal, for investment purposes only, and not with a present view to, or for,
the resale distribution thereof, in whole or in part, within the meaning of the
Securities Act or any state securities law. The Company agreed, in such Purchase
Agreements, to use its best efforts to prepare and file a registration statement
for the resale of the Shares no later than 10 days after the effective date of
the Purchase Agreements and to bear all expenses in connection with the
offering, other than selling commissions, underwriting fees and stock transfer
taxes applicable to the Shares and all fees and disbursements of counsel for any
Selling Stockholder. Accordingly, in order to permit the Selling Stockholders to
sell the Shares when each deems appropriate, the Company has filed with the
Commission a Registration Statement on Form S-3, of which this Prospectus forms
a part, with respect to the resale of the Shares from time to time as described
herein and has agreed to prepare and file such amendments and supplements to the
Registration Statement as may be necessary to keep the Registration Statement
effective until all Shares offered hereby have been sold pursuant thereto or
until such shares are no longer, by reason of Rule 144 or any other rule of
similar effect, required to be registered for the sale thereof by the Selling
Stockholders.
Except as otherwise described in "Stock Ownership," prior to their
acquisition of the Shares, none of the Selling Stockholders had a material
relationship with the Company.
In connection with the registration of the shares of Common Stock offered
hereby, the Company will supply prospectuses to the Selling Stockholders.
Stock Ownership
The table below sets forth (i) the number of shares of Common Stock owned
beneficially by the Selling Stockholders as of July 1, 1998; (ii) the number of
shares of Common Stock being offered by the Selling Stockholders pursuant to
this Prospectus; (iii) the number of shares of Common Stock to be owned
beneficially by the Selling Stockholders after completion of the offering,
assuming that all of the Shares offered hereby are sold; and (iv) the percentage
of the outstanding shares of Common Stock to be owned beneficially by the
Selling Stockholders after completion of the offering, assuming that all of the
Shares offered hereby are sold.
13
<PAGE>
<TABLE>
<CAPTION>
Number of Percentage of
Shares to be Outstanding Shares
Number of Owned of Common Stock
Shares Beneficially to be Owned
Beneficially Number of After Beneficially After
Owned as of Shares Completion Completion
Selling Stockholders July 1, 1998 Offered of Offering(1) of Offering(1)
- -------------------- ------------ -------- -------------- ------------------
<S> <C> <C> <C> <C>
DCF Life Sciences Fund Ltd. 200,000 200,000 0 0
DCF Partners, L.P. 853,000 853,000 0 0
Oracle Partners, L.P. 589,589 315,789 273,800 *
Oracle Institutional Partners,
L.P. 135,996 78,496 57,500 *
GSAM Oracle Fund, Inc. 306,721 168,721 138,000 *
Haussmann Holdings, N.V. 88,226 50,526 37,700 *
Oracle Offshore Ltd. 36,046 18,046 18,000 *
Warburg Dillon Read, LLC(2) 517,900 500,000 17,900 *
Caduceus Capital, L.P. 105,000 105,000 0 0
Caduceus Capital Ltd. 220,000 220,000 0 0
Merlin BioMed L.P. 21,053 21,053 0 0
Deutsche Vermogensbildungsgesell
Schaft mbH 294,737 294,737 0 0
The Aries Trust 1,340,868 747,368 593,500 1.9
Aries Domestic Fund, L.P. 547,964 305,264 242,700 *
Wayne P. Rothbaum(3) 58,000 30,000 28,000 *
Mitchell D. Silber(3) 35,000 15,000 20,000 *
New Technologies Fund 90,000 60,000 30,000 *
</TABLE>
* Less than 1%.
(Notes continued on following page)
14
<PAGE>
(1) Based upon 31,332,831 shares of Common Stock outstanding as of July 1,
1998. Assumes all Shares registered hereby are sold and that no other
shares of Common Stock owned by the Selling Stockholders as of July 1, 1998
are sold. Since the Selling Stockholders may sell all, some or none of
their Shares, no actual determination can be made of the aggregate number
of shares that each Selling Stockholder will own upon completion of the
offering to which this Prospectus relates.
(2) Warburg Dillon Read LLC (formerly known as SBC Warburg Dillon Read Inc.)
acted as the placement agent in the private offering of the Shares to the
Selling Stockholders and received a fee of $900,000 or approximately 4.75%
of the aggregate purchase price and is entitled to reimbursement by the
Company of travel, legal and other out-of-pocket expenses up to a maximum
of $50,000.
(3) Messrs. Rothbaum and Silber are principals with Evolution Capital, a
registered broker-dealer which received a fee of $235,155 or approximately
1.25% of the aggregate purchase price in connection with the sale of the
Shares to the Selling Stockholders. In February 1998, Evolution Capital was
granted options to purchase 50,000 shares of the Company's Common Stock at
an exercise price of $5.9375 per share pursuant to a one year advisory and
consulting agreement which requires Evolution Capital to provide
institutional targeting, dossier reports, institutional surveillance and
overall capital markets intelligence to the Company. In June 1996, The
Carson Group Inc., an affiliate of Mr. Rothbaum, Mr. Silber and Evolution
Capital, received $325,000 in cash and 50,000 five-year warrants to
purchase Common Stock at an exercise price of $4.11 per share as a finder's
fee in connection with the Company's private placement of Common Stock,
preferred stock and warrants in January and March 1996. In addition, The
Carson Group Inc. has received approximately $175,000 in consulting fees
during the past two years for providing institutional targeting, dossier
reports, institutional surveillance and overall capital markets
intelligence to the Company.
The Company has agreed to bear the expenses (other than broker discounts
and commissions, if any, and expenses of counsel and other advisors to certain
of the Selling Stockholders) incurred in connection with the registration of the
Shares.
PLAN OF DISTRIBUTION
The Shares may be sold pursuant to this Prospectus by the Selling
Stockholders. These sales may occur from time to time in one or more
transactions (which may involve block transactions) in the open markets, in
negotiated transactions, through the writing of options on the Shares (whether
such options are listed on an options exchange or otherwise) or by a combination
of such methods of sale, at fixed prices which may be changed, at market prices
prevailing at the time of sale, at prices related to prevailing market prices or
at negotiated prices. The Selling Stockholders may effect these transactions by
selling the Shares to or through broker-dealers, who may receive compensation in
the form of discounts or commissions from the Selling Stockholders or from the
purchasers of the Shares for whom the broker-dealers may act as agent or to whom
they may sell as principal, or both in amounts to be negotiated immediately
prior to the sale. The Selling Stockholders may also pledge the Shares as
collateral for margin accounts or loans and the Shares could be resold pursuant
to the terms of such accounts or loans. There are currently no agreements,
arrangements or understandings with respect to the sale of any of the Shares by
the Selling Stockholders. The Shares are being registered to permit public
secondary trading of the Shares, and the Selling Stockholders may offer the
Shares for resale from time to time. In effecting sales, broker-dealers engaged
by the Selling Stockholders may arrange for other broker-dealers to participate.
Broker-dealers will receive commissions or discounts from the Selling
Stockholders in amounts to be negotiated immediately prior to the sale. Neither
the Company nor the Selling Stockholders can presently estimate the amount of
commissions or discounts, if any, that will be paid by the Selling Stockholders
on account of their sale of the Shares from time to time. In order to comply
with the securities laws of certain states, if applicable, the Shares will be
sold in such jurisdictions only through registered or licensed brokers or
dealers. In addition, in certain states the Shares may not be sold unless they
have been registered or qualified for sale in the applicable state or an
exemption from the registration or qualification requirement is available and is
complied with by the Company and the Selling Stockholders.
15
<PAGE>
The Selling Stockholders and any broker-dealers who execute sales for the
Selling Stockholders may be deemed to be "underwriters" within the meaning of
the Securities Act by virtue of the number of shares of Common Stock to be sold
or resold by such persons or entities or the manner of sale thereof, or both. If
the Selling Stockholders, broker-dealers or other holders were determined to be
underwriters, any discounts 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 underwriting compensation under the
Securities Act.
The Selling Stockholders have represented to the Company that any purchase
or sale of the Common Stock by them will be in compliance with applicable rules
and regulations of the Commission.
In addition, any securities covered by this Prospectus which qualify for
sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144
rather than pursuant to this Prospectus. To the extent required, the specific
shares of Common Stock to be sold, the name of any successor Selling
Stockholders, the public offering price, the names of any such agent, dealer or
underwriter, and any applicable commission or discount with respect to any
particular offer will be set forth in an accompanying Prospectus Supplement. See
"Selling Stockholders."
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the Shares may not simultaneously engage in
market making activities with respect to the Common Stock of the Company for a
restricted period prior to the commencement of such distribution. In addition
and without limiting the foregoing, the Selling Stockholders and any other
person participating in a distribution will be subject to applicable provisions
of the Exchange Act and the rules and regulations thereunder, including, without
limitation, Regulation M, which provisions may limit the timing of purchases and
sales of shares of the Company's Common Stock by the Selling Stockholders.
The Company has agreed to indemnify the Selling Stockholders against
certain liabilities, including liabilities under the Securities Act. The Selling
Stockholders have agreed to indemnify the Company against certain liabilities,
including liabilities under the Securities Act.
There can be no assurance that the Selling Stockholders will sell all or
any of the Shares offered hereby.
LEGAL MATTERS
The legality of the shares of Common Stock offered hereby has been passed
on for the Company by Dorsey & Whitney LLP, New York, New York.
EXPERTS
The consolidated financial statements of Enzon, Inc. and subsidiaries as of
June 30, 1997 and 1996 and for each of the years in the three-year period ended
June 30, 1997, 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.
16
