As filed with the Securities and Exchange Commission on November 12,1996
Registration Statement No. 333-_____
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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ALLIANCE PHARMACEUTICAL CORP.
(Exact name of registrant as specified in its charter)
New York 14-1644018
(State or other jurisdiction (I.R.S. Employer of incorporation
or organization) Identification Number)
3040 Science Park Road
San Diego, CA 92121
(619) 558-4300
(Address,including zip code, and telephone number, including
area code of registrant's principal executive offices)
DUANE J. ROTH
President
Alliance Pharmaceutical Corp.
3040 Science Park Road
San Diego, CA 92121
(619) 558-4300
(Name, address, including zip code, and telephone number, of agent
for service of process)
---------------
Copy to:
Melvin Epstein, Esq.
Stroock & Stroock & Lavan
Seven Hanover Square New
York, NY 10004-2594
---------------
Approximate date of commencement of proposed sale to the public: As soon
as practicable after this Registration Statement becomes effective.
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] <TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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<S> <C> <C> <C> <C>
Proposed Proposed
Maximum Maximum
Title of Shares Amount to be Aggregate Price Aggregate Amount of
to be Registered Registered(1) Per Unit (1) Offering Price (1) Registration Fee
- -------------------------------------------------------------------------------------------------------------------------------
Common Stock
$.01 par value............... 3,934,782 shares $11.50 per share $45,250,000 $13,712.12
</TABLE>
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(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(c) on the basis of the average of the high and low
prices of the Common Stock reported on the Nasdaq National Market on November 5,
1996.
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 said Section 8(a),
may determine.
<PAGE>
ALLIANCE
PHARMACEUTICAL CORP.
Common Stock
------------
This Prospectus relates to shares (the "Shares") of Common Stock, $.01
par value (the "Common Stock"), which may be offered by certain shareholders of
the Company (the "Selling Shareholders") from time to time directly or through
one or more broker-dealers, in one or more transactions on the Nasdaq National
Market ("Nasdaq"), otherwise in the over-the-counter market, in negotiated
transactions or otherwise, or through a combination of such methods, at fixed
prices, which may be changed, at market prices prevailing at the time of sale,
at prices related to such prevailing market prices or at negotiated prices.
A portion of the Shares have been or will be issued to the Selling
Shareholders over the next twelve months as the result of the acquisition of MDV
Technologies, Inc. by the Company; some or all of the remaining Shares may be
issued to the Selling Shareholders if certain contingent events occur, which
contingent events are expected to occur, if they occur at all, over the next
five years. See "Selling Shareholders."
None of the proceeds of the sale of the Shares by the Selling
Shareholders will be received by the Company. The Company has agreed to bear all
expenses (other than underwriting discounts and selling commissions, and fees
and expense of advisers to the Selling Shareholders) in connection with the
registration of Shares. The Shares offered pursuant to this Prospectus may be
issued in one or more issuances.
The Company's Common Stock is listed on the Nasdaq under the symbol
ALLP. On November 5, 1996, the closing price of the Common Stock as quoted on
Nasdaq was $10.94 per share.
The Common Stock offered hereby involves a high degree of risk. See
"Risk Factors" on page 5 hereof.
--------------------
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 November __, 1996.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1996, which was filed with the Securities and Exchange Commission (the
"Commission") pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended September 30, 1996, which was filed with the Commission pursuant
to the Exchange Act, and the information under the caption "Description of the
Company's Securities" contained in the Company's Registration Statement on Form
8-A, dated October 25, 1984, with respect to the Company's Common Stock, are
incorporated herein by reference and made a part of this Prospectus as of the
date hereof. All reports subsequently filed pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act prior to the termination of the offering of the
Common Stock offered hereby shall be deemed to be incorporated by reference into
this Prospectus. 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 a statement
contained herein or in any document which is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any 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 any person to whom this
Prospectus is delivered, upon written or oral request of such person, a copy of
any or all of the documents which have been incorporated by reference in this
Prospectus, other than exhibits to such documents, unless such exhibits are
specifically incorporated by reference into the documents so incorporated.
Requests for such copies should be directed to Lloyd Rowland, Alliance
Pharmaceutical Corp., 3040 Science Park Road, San Diego, California 92121,
telephone (619) 558-4300.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Exchange Act and in accordance therewith files reports, proxy statements and
other information with the Commission. Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities of
the Commission, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W, Washington,
D.C. 20549, and at the Commission's New York Regional Office, Seven World Trade
Center, 13th Floor, New York, New York 10048, and at its Chicago Regional
Office, Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661, and copies of such materials can be obtained by mail
from the Public Reference Section of the Commission at 450 Fifth Street, N.W,
Washington, D.C. 20549, at prescribed rates. The Company's Common Stock is
listed on Nasdaq. Reports and other information concerning the Company may be
inspected at the offices of the National Association of Securities Dealers, Inc.
at 1735 K Street, N.W., Washington, D.C. 20006.
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be
read in conjunction with, the more detailed information and consolidated
financial statements in this Prospectus or previously filed with the Commission
and incorporated herein by reference. As used in this Prospectus, the terms
"Company" and "Alliance" refer to Alliance Pharmaceutical Corp., MDV
Technologies, Inc. and the consolidated subsidiaries of Alliance Pharmaceutical
Corp., unless the context indicates otherwise.
The Company
Alliance is a pharmaceutical research and development company that
focuses on developing scientific discoveries into potential drug products and
licensing these products to multinational pharmaceutical companies in exchange
for fixed payments and royalties. To date, the Company has entered into
agreements with researchers for the rights to two innovative products, developed
these products through initial clinical (human) trials, and entered into
collaborative relationships with multinational pharmaceutical companies for the
final stages of development and worldwide marketing. These products are
Oxygent(TM), an intravascular oxygen carrier designed to reduce the need for
donor blood transfusions during surgery, which is currently in Phase IIb
clinical trials and is licensed to affiliates of Johnson & Johnson, and
LiquiVent(R), an intrapulmonary agent for use in treatment of acute respiratory
failure, which is currently in a pivotal Phase II/III clinical trial and is
licensed to Hoechst Marion Roussel, Inc., an affiliate of Hoechst AG. Alliance
intends to enter into a collaborative agreement for Imagent(R) US, an ultrasound
contrast agent for which the Company has begun a Phase II clinical trial.
The Company's strategy is to identify potential new pharmaceutical
products through scientific collaborations with researchers and clinicians in
universities and medical centers where many of the basic causes of disease and
potential targets for new therapies are discovered. Using its experience in
defining pharmaceutical formulations, designing manufacturing processes,
conducting preclinical pharmacology and toxicology studies, and conducting
early-phase human testing, Alliance endeavors to advance such discoveries into
clinical development. The Company seeks collaborative relationships for the
final stages of drug development, including completing late-phase human testing,
obtaining worldwide regulatory approvals, building large-scale manufacturing
capacities, and marketing.
Alliance's products currently in clinical development - Oxygent,
LiquiVent, and Imagent US - are based upon perfluorochemical ("PFC") and
emulsion technologies. PFCs are biochemically inert compounds and may be
employed in a variety of therapeutic and diagnostic applications. The Company's
primary drug substance is perflubron, a brominated PFC that has a high
solubility for respiratory gases and can be used to transport these gases safely
throughout the body.
Oxygent, an emulsion containing perflubron, is an intravascular oxygen
carrier to be used as a temporary "blood substitute" to provide oxygen to
tissues during elective surgeries where substantial blood loss is anticipated.
Oxygent has several potential advantages compared to allogeneic (donor) blood:
there is no risk of infectious disease transmission, it is compatible with all
blood types, it has a shelf-life in excess of one year, and it can be
sterilized. Oxygent can be used with autologous blood collection techniques,
including predonation, hemodilution, and salvage, to enhance safety by reducing
the need for allogeneic blood. Oxygent is currently in Phase IIb clinical trials
with surgical patients at multiple sites in the United States and Europe.
In August 1994, the Company entered into a license agreement (the
"Ortho License Agreement") with Ortho Biotech, Inc. and The R.W. Johnson
Pharmaceutical Research Institute, a division of Ortho Pharmaceutical
Corporation, affiliates of Johnson & Johnson (collectively referred to as
"Ortho"), which provides Ortho with worldwide marketing rights to the Company's
injectable PFC emulsions capable of transporting oxygen for therapeutic use,
including Oxygent. The product is being developed jointly by Alliance and Ortho,
with Ortho responsible for substantially all of the remaining costs of
development and marketing. In conjunction with the Ortho License Agreement,
Johnson & Johnson Development Corp. ("J&JDC") purchased equity securities of the
Company for $15.0 million. In addition, Ortho paid Alliance an initial license
fee and will pay milestone payments and royalties on product sales.
LiquiVent, neat perflubron, is an intrapulmonary agent to treat acute
respiratory failure, a disorder that can result from many causes, including
serious infection, traumatic shock, severe burns, and inhalation of toxic
substances, and is characterized by impairment of normal lung function. The
Company is conducting a multi-center pivotal Phase II/III clinical trial with
LiquiVent in pediatric patients with acute respiratory failure, and separate
multi-center Phase II clinical trials in adults and premature infants are
underway. The U.S. Food and Drug Administration ("FDA") has granted Subpart E
status (expedited review) for the development of LiquiVent.
In February 1996, the Company entered into a license agreement (the
"HMRI License Agreement" and, together with the Ortho License Agreement, the
"License Agreements") with Hoechst Marion Roussel, Inc. ("HMRI"), which provides
HMRI with worldwide marketing rights to the intratracheal administration of
liquids, including LiquiVent, which perform bronchoalveolar lavage or liquid
ventilation. The product will be developed jointly by Alliance and HMRI, with
HMRI responsible for substantially all of the costs of development and
marketing. In conjunction with the HMRI License Agreement, HMRI agreed to
purchase equity securities of the Company for $22.0 million. In addition, HMRI
will pay Alliance license fees, milestone payments, and royalties on product
sales.
Imagent US is a PFC-based intravenous ultrasound contrast agent being
developed to aid in the assessment of cardiac function and myocardial perfusion,
as well as the detection of solid organ lesions and blood flow abnormalities
caused by vascular diseases. In preclinical studies, this agent has been found
to enhance the signal from perfused tissues and blood vessels using traditional
gray-scale and color Doppler technologies, as well as the emerging harmonic
ultrasound imaging technique. The Company began a Phase II clinical trial in the
United States in October 1996.
In November 1996, the Company acquired MDV Technologies, Inc. ("MDV")
through the merger (the "MDV Merger") of MDV and a wholly-owned subsidiary of
the Company. The consideration payable in the MDV Merger consists of $15.5
million ($250,000 of which will be used to pay MDV's portion of the brokerage
fee), payable $3 million on the date the MDV Merger was consummated (the
"Effective Date"), $2.5 million on each date occurring three months, six months
and nine months after the Effective Date, and $5 million on the first
anniversary of the Effective Date. The initial $3 million payment included
approximately $1,950,910.45 in repayment of outstanding MDV debt. Additionally,
Alliance will pay up to $20 million if advanced clinical development or
licensing milestones are achieved. The Company will also make certain royalty
payments on the sales of such products. Alliance may buy out its royalty
obligation for $10 million (increasing over time). All of such payments may be
made in cash or, at Alliance's option, Shares, except for the royalty
obligations which will be payable only in cash. There can be no assurance that
any of the contingent payments will be made, because they are dependent on
future developments which are inherently uncertain. See "Risk Factors."
Alliance is supporting internal research efforts to expand the
applicability of its core technologies. Alliance is investigating the use of
PFC-containing gels, reserve emulsions, microemulsions, foams and other
compositions as drug delivery agents. Alliance is also conducting preclinical
studies of a PFC-based formulation that could be beneficial for warm temperature
preservation of kidneys or other organs which may extend the time the organ is
viable for transplantation. The Company has initiated a pilot clinical study in
Europe to assess an apparatus designed to be a combined cardiovascular and
oxygenation monitor that acquires data by minimally invasive means.
Alliance is also assessing an apoptotic factor for regulation of
cancerous cell death and has ongoing research activities to exploit its
expertise in PFC, emulsion, and surfactant technologies. In addition, the
Company is evaluating its antigenized antibody technology for use in developing
a prototype vaccine for an infectious disease and a prototype tolerogen for an
autoimmune disease.
The Company's headquarters are located at 3040 Science Park Road, San
Diego, California 92029, and its telephone number is (619) 558-4300.
<PAGE>
RISK FACTORS
An investment in the Common Stock offered hereby involves a high
degree of risk. The following factors and cautionary statements should be
carefully considered in evaluating the Company and its business:
Limited Product Revenues; History of Operating Losses. Substantially
all of the Company's revenues to date have consisted of licensing fees,
milestone payments, and payments to fund research and development activities
under joint development and license agreements. The Company has had net
operating losses since its inception and expects such losses to continue unless
and until such time as revenues are sufficient to fund its continuing
operations. As of September 30, 1996, the Company had an accumulated deficit of
$216.6 million. There can be no assurance that the Company will be able to
achieve profitability at all or on a sustained basis.
Reliance on Collaborative Partners; Future Collaborations. The Company
has entered into the License Agreements to support the development and
commercialization of Oxygent and LiquiVent and to raise capital. Pursuant to the
License Agreements, the Company has granted significant licensing rights. The
Company's strategy is to seek additional collaborations. However, there can be
no assurance that the Company will be able to negotiate acceptable collaborative
arrangements in the future, or that any current or future arrangements will
ultimately be successful. Under the License Agreements, the Company will depend
on Ortho and HMRI for development, regulatory approval, and marketing of
products. The termination of either of the License Agreements, which can occur
on at least one month's advance notice, or any other future collaborative
arrangement could adversely affect the Company's research, development or,
ultimately, product distribution plans. The Company's revenues from milestone
payments or sales of any product will depend in large part upon the efforts and
abilities of the collaborative partner to perform clinical testing, to obtain
regulatory approvals, and to manufacture and market the product. The amount and
timing of resources devoted to these activities will not be completely within
the Company's control. The collaborative partner will have certain discretion in
deciding whether to commercialize the product. There can be no assurance that
the corporate interests and motivations of the Company's collaborative partners
will remain consistent with those of the Company.
Government Regulation; Uncertainties Related to Clinical Trial
Results. The production and marketing of the Company's products and its research
and development activities are subject to regulation for safety and efficacy by
numerous government authorities in the United States and other countries.
Clinical trials and the manufacturing and marketing of the Company's products
are subject to the testing and approval process of the FDA and foreign
regulatory authorities. The FDA and other regulatory authorities require that
the safety and efficacy of a drug be supported by results from adequate and
well-controlled clinical trials before approval for commercial sale. If the
results of the clinical trials of the Company's products do not demonstrate the
safety and efficacy of the products, the Company will not be able to submit to
the FDA a New Drug Application ("NDA") (or an application for pre-market
approval in the case of a device, such as MDV's technology). Even if the Company
believes the clinical trials demonstrate the safety and efficacy of a product,
the FDA and other regulatory authorities may not accept the Company's assessment
of the results. In either case, the Company may have to conduct additional
clinical trials in an effort to demonstrate the safety and efficacy of the
product. The process of obtaining regulatory clearances or approvals is costly
and time-consuming. The Company cannot predict how long preclinical and clinical
trials will take or whether they will be successful, nor can the Company predict
how long the necessary regulatory approvals or clearances will take. Therefore,
there can be no assurance that the necessary clearances or approvals will be
obtained, or obtained on a timely basis. Without acceptable results and
regulatory approval, the Company would not be able to commercialize its
products, which would have a material adverse effect on the Company. There can
be no assurance that the results of any of the Company's clinical trials will be
favorable or that the Company's products will obtain regulatory approval for
commercialization. The effect of governmental regulations which might arise from
future legislative or administrative action cannot be predicted.
Uncertainty of Development and Commercialization Efforts. The
Company's products require substantial development efforts. The Company or its
collaborative partners may encounter unforeseen technological or scientific
problems, including side effects, which may force abandonment or substantial
change in the development of a specific product or process, or technological
change or product developments by others, any of which may have a material
adverse effect on the Company. Further, even after successful technical
development and receipt of governmental approval, a product may not achieve
commercial success. To date, the Company has received regulatory approval for
the commercial sale of only one of its drug products, the sales of which were
discontinued due to limited revenue potential.
Future Capital Needs; Uncertainty of Additional Financing. The Company
believes that its existing capital resources, including expected revenues from
the License Agreements and investments will be adequate to satisfy its capital
requirements for at least the next 24 months. The Company will need additional
financing to support its long-term product development programs. The Company's
future capital requirements will depend on many factors, including continued
scientific progress in its research and development programs, progress with
preclinical testing and clinical trials, the time and cost involved in obtaining
regulatory approvals, patent costs, competing technological and market
developments, changes in existing collaborative relationships, the Company's
ability to establish development, sales, and marketing arrangements, and the
cost of manufacturing scale up, if necessary. No assurance can be given that
adequate financing will be available to the Company in the future or on terms
acceptable to the Company.
Unpredictability of Patent Protection; Proprietary Technology. The
Company believes that its success will depend largely on its ability to obtain
and maintain patent protection for its own inventions and licenses for the use
of patents owned by third parties. The Company has obtained patents covering
certain intermediate and high concentration PFC emulsions, as well as patents
related to liquid ventilation. The Company has filed, and when appropriate will
file, other patent applications with respect to its products and processes in
the United States and in foreign countries. There can be no assurance, however,
that the Company will develop any additional products and processes which may be
patentable or that any additional patents will be issued. It is possible that
patents issued to the Company or any patents licensed to the Company may be
challenged successfully, that the Company may infringe patents of third parties
unintentionally, and that the Company may have to alter its products or
manufacturing processes to take into account the patents of third parties,
causing delays in product development. Litigation, which could result in a
substantial cost to the Company, may be necessary to enforce any patents issued
to the Company and/or to determine the scope and validity of others' proprietary
rights. The Company also attempts to protect its proprietary products and
processes by relying on trade secret laws and non-disclosure and confidentiality
agreements with its employees and certain other persons who have access to its
products or processes. No assurance can be given that others will not develop
such products or processes independently or obtain access to such products or
processes. To the extent that others develop or obtain similar products or
processes, the Company's competitive position may be affected adversely.
Limited Manufacturing Capability and Experience. While the Company
believes that it can produce materials for clinical trials and the initial
market launch for its emulsion products at its existing San Diego facility and
for LiquiVent at its Otisville facility, it may need to expand its commercial
manufacturing capabilities for its products in the future. This expansion may
occur in stages, each of which would require regulatory approval, and product
demand could at times exceed supply capacity. The Company has not selected a
site or obtained any regulatory approvals for construction of a commercial
production facility for its products, nor can there be any assurance that it
will be able to do so. The projected location and completion date of any
production facility will depend upon regulatory and development activities and
other factors. The Company cannot predict the amount that it will expend for the
construction of such a production facility, and there can be no assurance as to
when or whether the FDA will determine that such facility complies with Good
Manufacturing Practices. Construction of a facility will depend on regulatory
approvals, product development, and capital resources, among other things. The
Ortho License Agreement provides an option to Ortho to elect to manufacture the
emulsion products referred to therein, or to require the Company to manufacture
such products at a negotiated price. The HMRI License Agreement requires the
Company to manufacture LiquiVent at its Otisville facility for a period of time
after market launch and to sell the product to HMRI at a negotiated price. HMRI
will be responsible for establishing production capacity beyond the maximum
capacity of the Otisville facility.
Uncertainty of Third-Party Reimbursement. The Company's ability to
commercialize its products successfully will depend in part on the extent to
which appropriate reimbursement levels for the cost of the products and related
treatment are obtained from government authorities, private health insurers and
other organizations, such as health maintenance organizations ("HMOs").
Third-party payors are increasingly challenging the prices charged for medical
products and services. Also, the trend toward managed health care in the United
States, the growth of organizations such as HMOs, and legislative proposals to
reform healthcare and government insurance programs could significantly
influence the purchase of healthcare services and products, resulting in lower
prices and reducing demand for the Company's products. The cost containment
measures that healthcare providers are instituting and any healthcare reform
could affect the Company's ability to sell its products and may have a material
adverse effect on the Company. There can be no assurance that reimbursement in
the United States or foreign countries will be available for any of the
Company's products, that any reimbursement granted will be maintained, or that
limits on reimbursement available from third-party payors will not reduce the
demand for, or negatively affect the price of, the Company's products. The
unavailability or inadequacy of third-party reimbursement for the Company's
products would have a material adverse effect on the Company. The Company is
unable to forecast what additional legislation or regulation relating to the
healthcare industry or third-party coverage and reimbursement may be enacted in
the future, or what effect the legislation or regulation would have on the
Company's business.
Dependence Upon Key Personnel. The Company's success in developing
marketable products and achieving a competitive position will depend, in part,
on its ability to attract and retain qualified scientific and management
personnel. Competition for such personnel is intense, and no assurance can be
given that the Company will be able to attract and retain such personnel.
Scientific advisors to the Company are employed by or have consulting
arrangements with third parties which may conflict with their obligations to the
Company. The Company's anticipated growth and expansion will require additional
expertise and are expected to place additional demands on the Company's
management and financial resources.
Competition; Rapid Technological Change. Biotechnology and
pharmaceutical companies are highly competitive. There are many pharmaceutical
companies, biotechnology companies, public and private universities, and
research organizations actively engaged in research and development of products
that may be similar to, or seek to attack the same targets as, Alliance's
products. Many of the Company's existing or potential competitors have
substantially greater financial, technical, and human resources than the Company
and may be better equipped to develop, manufacture, and market products. These
companies may develop and introduce products and processes competitive with or
superior to those of the Company. In addition, other technologies or products
may be developed that have an entirely different approach or means of
accomplishing the intended purposes of the Company's products which might render
the Company's technology and products uncompetitive or obsolete. There can be no
assurance that the Company will be able to compete successfully.
Product Liability Claims and Uninsured Risks. Products or processes
that may be developed, licensed, or sold by the Company may expose the Company
to potential liability from claims by end-users of such products or of products
manufactured by such processes, or by manufacturers or others selling such
products, either directly or as a component of other products. The Company
currently maintains limited product liability insurance coverage. There can be
no assurance that the Company will be able to maintain such coverage or obtain
additional coverage on acceptable terms, or that such insurance will provide
adequate coverage against all potential claims.
Volatility of Stock Price; Liquidation Preference; and Lack of
Dividends. The market prices for securities of biopharmaceutical companies
historically have been highly volatile. Announcements concerning the Company or
its competitors, including the results of testing and clinical trials,
technological innovations, or commercial products, government regulations,
developments concerning proprietary rights, including patents and litigation
matters, a change in status of a collaborative partner, public concern relating
to the commercial value or safety of the Company's products, and stock market
conditions in general may have a significant impact on the price of the Common
Stock.
The Company has 200,000 shares of Series C Preferred Stock outstanding
entitled to a liquidation preference of $.01 per share.
The Company has not paid dividends on its Common Stock since its
inception and does not intend to pay any such dividends in the foreseeable
future. For the years ended June 30, 1992, 1993, 1994, 1995 and 1996, and for
the three months ended September 30, 1995 and 1996, the Company has incurred net
losses of $21,766,000, $26,380,000, $36,946,000, $29,717,000, $23,172,000,
$7,572,000 and $4,413,000, respectively.
Shares Eligible for Future Sale. As of October 25, 1996, 3,468,022
shares of Common Stock (or 10% of the total number of shares outstanding on a
fully diluted basis) were issuable upon the exercise of outstanding options and
warrants. Additional shares may be issued upon the conversion of preferred
stock. Also, the Company may issue an indeterminate number of additional shares
of Common Stock as a result of the MDV Merger over a period estimated by the
Company to be approximately five years. See "Selling Shareholders." The
existence of such warrants, options and convertible securities, and the
Company's obligations as a result of the MDV Merger, as well as certain
registration rights, may adversely affect the terms on which the Company may
obtain additional equity financing. The holders of the outstanding warrants and
options are likely to exercise their securities at a time when the Company would
otherwise be able to obtain capital on terms more favorable than those provided
by the exercise or conversion prices thereof.
The cautionary statements set forth above and elsewhere in this
Prospectus, as well as those set forth in the documents incorporated by
reference herein, should be read as accompanying forward-looking statements
included under "Prospectus Summary - The Company" and "Selling Shareholders,"
and in such incorporated documents. The risks described in such statements could
cause the Company's results to differ materially from those expressed in or
indicated by such forward-looking statements.
PLAN OF DISTRIBUTION
The Shares may be offered by the Selling Shareholders from time to
time directly or through one or more broker-dealers, in one or more transactions
on Nasdaq, otherwise in the over-the-counter market, in negotiated transactions
or otherwise, or through a combination of such methods, at fixed prices, which
may be changed, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. The Selling
Shareholders may sell the Shares to or through broker-dealers or underwriters,
and such broker-dealers or underwriters may receive compensation in the form of
discounts, concessions or commissions from the Selling Shareholders and/or the
purchasers of the Shares for which such broker-dealers may act as agent or to
whom they sell as principal, or both (which compensation as to a particular
broker-dealer may be in excess of customary compensation). None of the proceeds
of the sale of the Shares by the Selling Shareholders will be received by the
Company.
The Selling Shareholders and broker-dealers or underwriters that
participate with the Selling Shareholders in the sale of the Shares may be
deemed to be "underwriters" within the meaning of the Securities Act, in which
event any discounts, concessions or commissions received by such broker-dealers
or underwriters and any profit on the resale of the Shares purchased by them may
be deemed to be underwriting commissions or discounts under the Securities Act
of 1933, as amended (the "Securities Act"). To the extent required, the number
of Shares to be sold, the purchase price, the name of any such broker-dealer or
underwriter and any applicable discounts, concessions or commissions with
respect to a particular offer will be set forth in an accompanying Prospectus
Supplement.
The Company has agreed to indemnify the Selling Shareholders and each
underwriter and broker who participates in the offering of the Shares, against
certain civil liabilities including liabilities under the Securities Act and the
Exchange Act.
<PAGE>
SELLING SHAREHOLDERS
The Shares covered by this Prospectus are those issued and which may be
issued as a result of the MDV Merger. The aggregate amount paid or payable by
the Company in Shares, as described above, consists of $15.25 million in
payments which have been made or as to which the only contingency is the passage
of time, and $30 million of payments which are contingent on the progress of
development of MDV's technology (including $10 million which may be paid to buy
out the Company's royalty obligation, if any). The Company estimates that the
period during which such payments will be made will be approximately five years,
but such period may be materially longer or shorter. Moreover, there can be no
assurance that such progress will occur in whole or in part. Since the Company
has the option to pay all such amounts in cash or a combination of Shares and
cash, and the number of Shares to be issued as payment of any such amount will
be based on an average market price during a period preceding the date such
payment is due, there can be no assurance as to either the number of Shares
which may be issued, or the time of their issuance. Therefore, the following
table is based on the assumptions that all such payments will be made in Shares
valued at $15.022 per share, the average of the last reported sales prices on
the Nasdaq for the twenty trading days ending November 6, 1996. The Selling
Shareholders listed in the table are the securityholders of MDV and the holders
of the MDV debt paid on the Effective Date and the dollar amounts shown opposite
their names are based on their respective percentage interests in MDV securities
and in such debt. The Selling Shareholders also include the assignees, donees,
pledgees and other transferees from time to time of the persons listed in the
table and their transferees (except insofar as the disposition by any such
person is exempt from the registration requirements of the Securities Act.) At
the time a particular offer of Shares is made by any Selling Shareholder not
listed in the table, the Company will prepare and file a prospectus supplement
or a post-effective amendment to the Registration Statement of which this
Prospectus is a part, as appropriate, setting forth the name of such Selling
Shareholder, the number of Shares being offered by such Selling Shareholder and
the terms of the offering if different from that described under "Plan of
Distribution."
<TABLE>
<CAPTION>
Aggregate Number of
Amount Shares Percentage of
Selling Receivable in Receivable in Outstanding
Shareholders MDV Merger MDV Merger (1) Common Stock (2)
<S> <C> <C> <C>
Dr. Dennis V. Adams $ 404,485.23 26,921 0.0814%
Noel B. and W. Victor Benjamin $ 448,220.44 29,832 0.0902%
James A. Carbone $ 16,367.97 1,082 0.0033%
Robert I. Chien and Nancy L. Chien, $ 65,471.87 4,352 0.0132%
JTWROS
Comerica Bank, Trustee of the $ 447,696.66 29,798 0.0901%
Norbert J. Cremers Trust U/A
dated 11/17/52, as amended and
restated
J. Desmond Davies $ 395,712.00 26,334 0.0796%
Cheri Emery $ 39,283.12 2,606 0.0079%
Ronald H. Erlich $ 104,755.00 6,967 0.0211%
Dr. Jay A. Fleischman and Lorraine $ 533,988.59 35,543 0.1075%
Fleischman, JTWROS
Frederick J. Foley $ 4,007,795.20 266,792 0.8066%
Charles F. & Rose F. Gerlach $ 424,257.73 28,238 0.0854%
JTWROS
Dilip Gole $ 72,019.06 4,788 0.0145%
Dr. Raymond L. Henry $ 424,257.73 28,238 0.0854%
John Paul Hessburg and Teri Jean $ 910,844.69 60,627 0.1833%
Hessburg, JTWROS
Philip C. Hessburg, M.D. and $ 1,644,915.32 109,497 0.3310%
Elisabeth E. Hessburg, JTWROS
Paul J. Hittler $ 50,806.17 3,378 0.0102%
Gordon W. Hueschen, Trustee of $ 494,705.47 32,927 0.0995%
the Gordon W. Hueschen Trust,
dated 3/4/66 and amended 1/6/90
Judith & Brian D. Hunter, JTWROS $ 13,094.37 867 0.0026%
Dorothy M. Kaye $ 12,832.49 849 0.0026%
Karl W. Kettinger $ 13,094.37 867 0.0026%
Lee T. Knutson, Trustee and his $ 13,094.37 867 0.0026%
successors in trust under the Lee
T. Knutson Declaration of Trust
dated 4/24/95
Paola M. Luptak $ 494,705.47 32,927 0.0995%
Fred Q. Martin, Trustee of the $ 32,735.94 2,173 0.0066%
Fred Q. Martin Revocable Trust
Robert M. Nalbandian, Trustee $ 533,988.59 35,543 0.1075%
of the Robert M. Nalbandian
1995 Revocable Trust dated
8/25/95
Gary W. Posage $ 157,132.49 10,452 0.0316%
Irving R. Schmolka $ 135,657.72 9,026 0.0273%
Florence Fidelino $ 13,094.37 867 0.0026%
Edmund R. Sutherland $ 569,212.46 37,886 0.1145%
Elizabeth J. Sutherland $ 39,283.12 2,606 0.0079%
Paul H. Sutherland $ 39,283.12 2,606 0.0079%
Douglas R. Sutherland $ 39,283.12 2,606 0.0079%
Janice Lawrence $ 13,094.37 867 0.0026%
Robbie Thornton $ 68,745.47 4,572 0.0138%
Tacey X. Viegas $ 187,642.39 12,487 0.0378%
Paul K. Wilkinson $ 111,302.18 7,403 0.0224%
HCC Investments Inc. $12,140,383.86 808,174(3) 2.4434%
Henry L. Hillman, Elsie H. $ 2,540,263.61 169,098(4) 0.5112%
Hillman and C.G. Grefenstette,
Trustees of the Henry L. Hillman
Trust, dated 11/18/85
C.G. Grefenstette and Thomas G. $ 635,065.90 42,268(5) 0.1278%
Bigley, Trustees U/A/T dated
11/16/64 for Juliet Lea Hillman
C.G. Grefenstette and Thomas G. $ 635,065.90 42,268(5) 0.1278%
Bigley, Trustees U/A/T dated
11/16/64 for Audrey Hillman
C.G. Grefenstette and Thomas G. $ 635,065.90 42,268(5) 0.1278%
Bigley, Trustees U/A/T dated
11/16/64 for Henry Lea Hillman,
Jr.
C.G. Grefenstette and Thomas G. $ 635,065.90 42,268(5) 0.1278%
Bigley, Trustees U/A/T dated
11/16/64 for William Talbott
Hillman
Venhill Limited Partnership $ 2,177,443.63 144,948(6) 0.4382%
Hillman Medical Ventures 1989 L.P. $ 1,309,437.45 87,160(7) 0.2635%
Hillman Medical Ventures 1990 L.P. $ 3,928,312.35 261,500(7) 0.7906%
Hillman Medical Ventures 1991 L.P. $ 2,623,719.82 174,656(7) 0.5280%
Hillman Medical Ventures 1995 L.P. $ 2,696,289.64 179,486(7) 0.5417%
Hillman Medical Ventures 1996 L.P. $ 468,435.25 31,183(7) 0.0943%
Thomas G. Adelman and Catherine $ 261,887.49 17,428 0.0527%
M. Adelman, JTWROS
Balbir K. Dulay and Surinder J. $ 32,474.05 2,155 0.0065%
SinghDulay, JTWROS
Stephen G. Flore $ 234,651.19 15,613 0.0472%
Michael G. Hinsberg and Lisa M. $ 55,520.15 3,692 0.0112%
Hinsberg, JTWROS
Lorraine E. Reeve $ 1,268,059.23 84,406 0.2552%
TOTAL $45,250,000.00 3,011,962 9.1062%
</TABLE>
(1) Based on $15.022 per share, in accordance with the assumption set
forth above.
(2) Based on 30,064,056 shares of Common Stock outstanding at September 30,
1996 and the Shares offered hereby.
(3) HCC Investments Inc. ("HCC") is a corporation wholly-owned by
Wilmington Investments Inc. ("Wilmington Investments") which is a
corporation wholly-owned by The Hillman Company ("THC"). THC is a
corporation controlled by the Henry L. Hillman Trust U/A/T dated
November 18, 1985 (the "Henry Hillman Trust"). Mr. Henry L. Hillman
("Mr. Hillman") is the settlor and the sole beneficiary of the Henry
Hillman Trust, which is a revocable trust. The trustees of the Henry
Hillman Trust are, in addition to Mr. Hillman, Elsie H. Hillman and
C.G. Grefenstette. Accordingly, pursuant to Rule 13d-3 of the SEC
under the Exchange Act, Mr. Hillman is deemed to be the beneficial
owner of these Shares.
(4) Because the power to vote and to dispose of the Shares owned by this,
the Henry Hillman Trust, are shared by the trustees, each of the
trustees is also deemed to be a beneficial owner of such Shares.
(5) The trustees of these trusts are C.G. Grefenstette and Thomas G.
Bigley. Because the power to vote and to dispose of the Shares owned
by these trusts are shared by the trustees, each of the trustees is
also deemed to be a beneficial owner of such Shares.
(6) Pursuant to Rule 13d-3 of the SEC under the Exchange Act, the Shares
owned by this partnership are also beneficially owned by the
general partner, Howard B. Hillman, Mr. Henry L. Hillman's half-
brother.
(7) Pursuant to Rule 13d-3 of the SEC under the Exchange Act, the Shares
owned by each of these partnerships are also beneficially owned by the
general partners thereof, Hillman/Dover Limited Partnership and Cashon
Biomedical Associates L.P. ("Cashon"). The general partner of Hillman
Dover Limited Partnership is Wilmington Securities, Inc., a
wholly-owned subsidiary of Wilmington Investments, which is a
corporation wholly-owned by THC. The general partners of Cashon are
Charles G. Hadley, Hal Broderson and Ronald J. Brenner. Pursuant to
Rule 13d-3 of the SEC under the Exchange Act, each of Messrs. Hillman,
Hadley, Broderson and Brenner may be deemed to beneficially own the
Shares owned by each of these partnerships.
<PAGE>
LEGAL OPINIONS
The legality of the issuance of the shares of Common Stock offered
hereby will be passed upon for the Company by Stroock & Stroock & Lavan.
EXPERTS
The consolidated financial statements of Alliance Pharmaceutical Corp.
and its subsidiaries appearing in the Company's Annual Report (Form 10-K) for
the year ended June 30, 1996, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The estimated expenses in connection with the offering, all of which
will be borne by the Registrant, are as follows:
SEC Registration Fee........................ 13,712.12
Blue Sky Fees and Expenses................. 5,000.00
Legal Fees and Expenses.................... 10,000.00
Accounting Fees and Expenses............... 4,000.00
Miscellaneous.............................. 1,287.88
Total.................................... $34,000.00
Item 15. Indemnification of Directors and Officers.
Reference is made to Article VI of the By-Laws of the Company (filed
as Exhibit 3(b) to the Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1989) and to Sections 721-727 of the New York Business
Corporation Law, which, among other things and subject to certain conditions,
authorize the Company to indemnify each of its officers and directors against
certain liabilities and expenses incurred by such persons in connection with
claims made by reason of their being such officers or directors.
Item 16. Exhibits and Financial Statement Schedules.
(a) List of Exhibits
5. Opinion of Stroock & Stroock & Lavan, counsel for Registrant.*
23.(a) Consent of Stroock & Stroock & Lavan (included in Exhibit 5 hereof).*
(b) Consent of Ernst & Young LLP, Independent Auditors.**
24. Power of Attorney.*
- ---------
* Previously filed
** Filed herewith
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 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.
(b) The undersigned registrant hereby undertakes that:
<PAGE>
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this registration statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act of 1933 shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
(d) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(c)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such information
in the registration statement.
provided, however, that paragraphs (d)(1)(i) and (d)(1)(ii) do not
apply if the registration statement is on Form S-3, Form S-8, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or 15(d) of the Securities and Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that 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 San Diego, State of California, on November 6, 1996.
ALLIANCE PHARMACEUTICAL CORP.
(Registrant)
Date: November 6, 1996 By: /s/ Duane J. Roth
Duane J. Roth
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on November 6, 1996, by the following
persons in the capacities indicated.
/s/ Duane J. Roth Chairman of Board of Directors,
Duane J. Roth Chief Executive Officer
/s/ Theodore D. Roth Executive Vice President
Theodore D. Roth and Chief Financial Officer
(Chief Financial Officer)
/s/ Tim T. Hart Treasurer and Controller
Tim T. Hart (Chief Accounting Officer)
* Director
Dr. Pedro Cuatrecasas
* Director
Carroll O. Johnson
* Director
Stephen M. McGrath
* Director
Donald E. O'Neill
* Director
Dr. Helen M. Ranney
* Director
Dr. Jean G. Riess
* Director
Dr. Thomas F. Zuck
*by: /s/ Theodore D. Roth
Theodore D. Roth
Attorney-in-Fact
<PAGE>
Exhibit 23.(b)
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement (Form S-3) and related Prospectus of Alliance
Pharmaceutical Corp. for the registration of shares of its common stock and to
the incorporation by reference therein of our report dated July 18, 1996, with
respect to the consolidated financial statements of Alliance Pharmaceutical
Corp. included in its Annual Report (Form 10-K) for the year ended June 30,
1996, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
San Diego, California
November 11, 1996
