AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 26, 1996
Registration Statement No. 333-15905
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2
to
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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]
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. The maximum number of Shares which may be issued to the Selling
Shareholders will be 3,307,507, based on and subject to the assumptions set
forth under "Selling Shareholders". 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 December 20, 1996, the closing price of the Common Stock as quoted on Nasdaq
was $15 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 December __, 1996.
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. They are also available through the
Commission's World Wide Web site (http://www.sec.gov). 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.
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 exclusive worldwide development and marketing rights to the Company's
injectable PFC emulsions capable of transporting oxygen for therapeutic use,
including Oxygent. The Ortho License Agreement provides for Alliance to assist
in the continued development of the product, 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"), an affiliate of Johnson & Johnson, 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 exclusive worldwide development and marketing rights to the intratracheal
administration of liquids, including LiquiVent, which perform bronchoalveolar
lavage or liquid ventilation. The HMRI License Agreement provides for Alliance
to assist in the continued development of the product, 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.
On November 13, 1996, the Company acquired MDV Technologies, Inc.
("MDV") through the merger (the "MDV Merger") of MDV and a wholly-owned
subsidiary of the Company. MDV is engaged in the development of a
thermo-reversible gel (FloGel trademark) intended for use as an anti-adhesion
treatment for persons undergoing abdominal or pelvic surgeries. FloGel is
applied in a cold, liquid form and becomes a gel at body temperature. MDV has
obtained preliminary human safety data with the product's current formulation,
and has performed preclinical studies on additional formulations.
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 continues to support internal research 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.
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. 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. 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 exclusive, worldwide marketing
rights to Oxygent and Liquivent. 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, or that they will market the Company's products in a way or to the
extent that the Company will consider satisfactory. The exclusivity of the
Company's collaborative arrangements may prevent the Company from replacing one
collaborative partner with another that the Company might deem better suited to
its requirements.
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,
although it believes that it is in compliance in all material respects with all
applicable regulations, 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.
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.
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 $13.681 per share, the average of the last reported sales prices on
the Nasdaq for the twenty trading days ended December 20, 1996. The Selling
Shareholders listed in the table are the former 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 29,565 0.0983%
Noel B. and W. Victor Benjamin $ 448,220.44 32,762 0.1090%
James A. Carbone $ 16,367.97 1,196 0.0040%
Robert I. Chien and Nancy L. Chien, $ 65,471.87 4,786 0.0159%
JTWROS
Comerica Bank, Trustee of the $ 447,696.66 32,724 0.1088%
Norbert J. Cremers Trust U/A
dated 11/17/52, as amended and
restated
J. Desmond Davies $ 395,712.00 28,924 0.0962%
Cheri Emery $ 39,283.12 2,871 0.0096%
Ronald H. Erlich $ 104,755.00 7,657 0.0255%
Dr. Jay A. Fleischman and Lorraine $ 533,988.59 39,031 0.1298%
Fleischman, JTWROS
Frederick J. Foley $ 4,007,795.20 292,946 0.9744%
Charles F. & Rose F. Gerlach $ 424,257.73 31,011 0.1031%
JTWROS
Dilip Gole $ 72,019.06 5,264 0.0175%
Dr. Raymond L. Henry $ 424,257.73 31,011 0.1031%
John Paul Hessburg and Teri Jean $ 910,844.69 66,577 0.2215%
Hessburg, JTWROS
Philip C. Hessburg, M.D. and Elisabeth $ 1,644,915.32 120,234 0.3999%
E. Hessburg, JTWROS
Paul J. Hittler $ 50,806.17 3,714 0.0124%
Gordon W. Hueschen, Trustee of $ 494,705.47 36,160 0.1203%
the Gordon W. Hueschen Trust,
dated 3/4/66 and amended 1/6/90
Judith & Brian D. Hunter, JTWROS $ 13,094.37 957 0.0032%
Dorothy M. Kaye $ 12,832.49 938 0.0031%
Karl W. Kettinger $ 13,094.37 957 0.0032%
Lee T. Knutson, Trustee and his $ 13,094.37 957 0.0032%
successors in trust under the Lee
T. Knutson Declaration of Trust
dated 4/24/95
Paola M. Luptak $ 494,705.47 36,160 0.1203%
Fred Q. Martin, Trustee of the $ 32,735.94 2,393 0.0080%
Fred Q. Martin Revocable Trust
Robert M. Nalbandian, Trustee $ 533,988.59 39,031 0.1298%
of the Robert M. Nalbandian
1995 Revocable Trust dated
8/25/95
Gary W. Posage $ 157,132.49 11,485 0.0382%
Irving R. Schmolka $ 135,657.72 9,916 0.0330%
Florence Fidelino $ 13,094.37 957 0.0032%
Edmund R. Sutherland $ 569,212.46 41,606 0.1384%
Elizabeth J. Sutherland $ 39,283.12 2,871 0.0096%
Paul H. Sutherland $ 39,283.12 2,871 0.0096%
Douglas R. Sutherland $ 39,283.12 2,871 0.0096%
Janice Lawrence $ 13,094.37 957 0.0032%
Robbie Thornton $ 68,745.47 5,025 0.0167%
Tacey X. Viegas $ 187,642.39 13,716 0.0456%
Paul K. Wilkinson $ 111,302.18 8,136 0.0271%
HCC Investments Inc. $12,140,383.86 887,390 2.9517%
Henry L. Hillman, Elsie H. $ 2,540,263.61 185,678 0.6176%
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 46,420 0.1544%
Bigley, Trustees U/A/T dated
11/16/64 for Juliet Lea Hillman
C.G. Grefenstette and Thomas G. $ 635,065.90 46,420 0.1544%
Bigley, Trustees U/A/T dated
11/16/64 for Audrey Hillman
C.G. Grefenstette and Thomas G. $ 635,065.90 46,420 0.1544%
Bigley, Trustees U/A/T dated
11/16/64 for Henry Lea Hillman,
Jr.
C.G. Grefenstette and Thomas G. $ 635,065.90 46,420 0.1544%
Bigley, Trustees U/A/T dated
11/16/64 for William Talbott
Hillman
Venhill Limited Partnership $ 2,177,443.63 159,158 0.5294%
Hillman Medical Ventures 1989 L.P. $ 1,309,437.45 95,712 0.3184%
Hillman Medical Ventures 1990 L.P. $ 3,928,312.35 287,136 0.9551%
Hillman Medical Ventures 1991 L.P. $ 2,623,719.82 191,778 0.6379%
Hillman Medical Ventures 1995 L.P. $ 2,696,289.64 197,083 0.6566%
Hillman Medical Ventures 1996 L.P. $ 468,435.25 34,240 0.1139%
Thomas G. Adelman and Catherine M. $ 261,887.49 19,142 0.0637%
Adelman, JTWROS
Balbir K. Dulay and Surinder J. $ 32,474.05 2,374 0.0079%
SinghDulay, JTWROS
Stephen G. Flore $ 234,651.19 17,152 0.0571%
Michael G. Hinsberg and Lisa M. $ 55,520.15 4,058 0.0135%
Hinsberg, JTWROS
Lorraine E. Reeve $ 1,268,059.23 92,688 0.3083%
TOTAL $45,250,000.00 3,307,507 11.0015%
- -----
</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.
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:
(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 December 26, 1996.
ALLIANCE PHARMACEUTICAL CORP.
(Registrant)
Date: December 26, 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 December __, 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
December 26, 1996
