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Filed pursuant to Rule 424(b)(1)
Registration No. 333-08607
PROSPECTUS
5,000,000 SHARES
T CELL SCIENCES, INC.
COMMON STOCK
$.001 par value
This Prospectus relates to up to 5,000,000 shares of common stock (the
"Common Stock"), $.001 par value per share, of T Cell Sciences, Inc. ("T Cell
Sciences" or the "Company") offered by the Company. The shares of Common Stock
offered hereby are being offered at a single, negotiated price. The shares of
Common Stock offered hereby may be offered and sold to different purchasers at
different times. The Company may sell shares of Common Stock offered hereby
through an exclusive selling agent (the "Selling Agent"), and may also sell
shares of Common Stock directly to purchasers. See "Plan of Distribution."
The Common Stock of the Company is traded under the symbol "TCEL" on the
Nasdaq National Market. On August 26, 1996 the reported closing price for the
Common Stock on the Nasdaq National Market was $2.4375 per share.
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THE SHARES OF COMMON STOCK OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 7.
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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.
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PRICE TO SELLING AGENT PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
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Per Share.... $ 2.1875 $ .13125 $ 2.05625
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Total........ $10,937,500 $656,250 $10,281,250
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(1) The Company has agreed to indemnify the Selling Agent against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Plan of Distribution."
(2) Before deducting estimated expenses of approximately $159,000 payable by
the Company. See "Plan of Distribution."
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GENESIS MERCHANT GROUP
SECURITIES
THE DATE OF THIS PROSPECTUS IS AUGUST 26, 1996.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files proxy statements, reports and other information with the
Securities and Exchange Commission (the "Commission"). Such proxy statements,
reports and other information filed by the Company may be inspected and copied
at the public reference facilities maintained by the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 or at the
Regional Offices of the Commission at Room 3190, John C. Kluczynski Building,
230 South Dearborn Street, Chicago, Illinois 60604, and Room 1400, 75 Park
Place, New York, New York 10007. Copies of such material can be obtained at
prescribed rates from the Public Reference Section of the Commission at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. The
Common Stock of the Company is traded on the Nasdaq National Market System.
Reports and other information concerning the Company may be inspected at the
National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement on Form
S-3 under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the securities offered hereby. This Prospectus does not contain all
the information set forth in the Registration Statement, certain parts of which
are omitted in accordance with the rules and regulations of the Commission. For
further information with respect to the Company and the securities covered
hereby, reference is made to the Registration Statement and to the exhibits
thereto filed as a part thereof.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated in, and made a part of, this Prospectus by reference as of their
respective dates: (1) the Company's Annual Report to Stockholders on Form 10-K
for the fiscal year ended December 31, 1995; (2) the Company's Quarterly Report
on Form 10-Q for the fiscal quarter ended March 31, 1996; (3) the Company's
Current Reports on Form 8-K, filed on March 5, 1996 and May 29, 1996; (4) the
definitive Proxy Statement of the Company for the Annual Meeting of Stockholders
held May 21, 1996; and (5) the description of the Common Stock of the Company
contained in the Company's Registration Statement on Form 8-A, filed September
22, 1986, including all amendments and reports updating such description.
Each document filed subsequent to the date of this Prospectus pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination
of this offering shall be deemed to be incorporated by reference in this
Prospectus and shall be a part hereof from the date of filing of such document.
The Company will furnish without charge to each person, including any beneficial
owner, to whom this Prospectus is delivered, upon request, a copy of any or all
of the documents that have been incorporated by reference to the Registration
Statement of which this Prospectus is a part, other than exhibits to such
documents. Requests should be addressed to: T Cell Sciences, Inc., 119 Fourth
Avenue, Needham, Massachusetts 02194, Attention: Investor Relations (telephone
number (617) 433-0771).
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements and the notes thereto appearing elsewhere
in this Prospectus and incorporated herein by reference. Investors should
carefully consider the information set forth under the heading "Risk Factors"
beginning on page 7 of this Prospectus. This Prospectus contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The
Company's actual results may differ significantly from the results discussed in
the forward-looking statements. Factors that might cause such a difference are
discussed under the heading "Risk Factors" beginning on page 7 of this
Prospectus.
THE COMPANY
T Cell Sciences, Inc. ("T Cell Sciences" or the "Company") is a
biopharmaceutical company engaged in the discovery and development of innovative
drugs targeting the immune and inflammatory systems. The Company's lead
therapeutic program is focused on developing compounds that inhibit the
inappropriate activity of the complement cascade, which is a vital part of the
body's immune defense system. The Company is currently conducting two Phase II
clinical trials for its lead product candidate, TP10, in patients at risk for
the adult respiratory distress syndrome ("ARDS") and reperfusion injury
following lung transplantation. In addition to its complement program, the
Company is engaged in the discovery and development of T cell activation
inhibitors for the prevention of immune rejection of transplanted organs and the
development of a therapeutic vaccine for the treatment of atherosclerosis.
The Company has realigned certain of its operations. In the first quarter
of 1996, the Company sold and licensed the majority of its diagnostic business.
During the second quarter of 1996, the Company suspended internal funding of the
research and development of its T cell antigen receptor program pending
completion of negotiations with Astra AB ("Astra") regarding the transfer of
certain of its rights to such technology. See "The Company--T Cell Regulation"
below. In connection with the realignment of its operations, in June 1996 the
Company appointed Una S. Ryan, Ph.D., the Chief Scientific Officer of the
Company, to the additional positions of President and Chief Operating Officer.
See "Recent Developments."
Complement Inhibition. The complement cascade consists of a series of
proteins that can be activated by antibodies or microorganisms to undergo a
cascade of reactions whose end result is the activation of the immune and
inflammatory systems, as well as the assembly of membrane attack complexes that
destroy cells. Complement is a principal component of the body's defense system
but when activated at the wrong time or as a result of the wrong stimuli may
result in injury or death. Many independent published studies have reported that
the Company's lead compound TP10, a soluble form of naturally occurring
Complement Receptor 1 ("sCR1"), effectively inhibits the activation of the
complement cascade in animal models. The Company believes that regulation of
complement could have therapeutic and prophylactic applications in several acute
and chronic conditions, including ARDS, reperfusion injury, multiple sclerosis,
Alzheimer's disease, rheumatoid arthritis and lupus. In the United States,
several million people are afflicted with these complement-mediated conditions.
In 1995, the Company completed two clinical trials of TP10 in patients with
ARDS and reperfusion injury. These trials were the first clinical trials of a
complement-inhibiting therapeutic. In both trials, TP10 exhibited excellent
safety and pharmacokinetic profiles and a dose-dependent ability to inhibit
complement activity for more than one day with a single injection. Based on
these favorable results, the Company in January 1996 initiated a Phase IIa
clinical trial to evaluate the use of TP10 in patients with ARDS. This trial is
an open label, single dose trial to determine preliminary efficacy of TP10 in
reducing neutrophil accumulation in the lung and improved clinical outcome of
patients with ARDS. In July 1996, the Company initiated a placebo controlled and
blinded Phase I/II clinical trial to prevent reperfusion injury in patients
receiving lung transplants. The Company anticipates completing both of these
trials in the second half of 1997. T Cell Sciences has retained all development,
marketing and manufacturing rights to compounds in its complement inhibition
program worldwide, excluding Japan and Taiwan.
The Company has developed a second generation of complement inhibiting
compounds, the lead candidate of which is a form of sCR1 modified to include the
sLex carbohydrate, a sugar structure that binds to adhesion receptors known as
selectins which are expressed on endothelial cells, platelets, and neutrophils
during inflammation. The Company believes that this second generation of
compounds has the added advantages of localization of drug to the site of
inflammation and additional functionality that inhibits the cell adhesion
process.
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T Cell Regulation. The Company is also developing small molecule compounds
for the inhibition of T cell activation. T cell activation plays an important
role in solid organ transplant rejection, as well as in certain autoimmune
diseases. The Company is seeking to develop an alternative treatment to existing
immunosuppressants such as cyclosporine which, due to toxicity, have limited
application in chronic conditions. Despite this limitation, worldwide sales of
cyclosporine in 1995 exceeded $1 billion. A critical component of the Company's
T cell activation program is its internally developed, proprietary, whole
cell-based, smart screening system that is used to identify potentially relevant
compounds. In order to accelerate its research, T Cell Sciences in March 1996
entered into agreements with ArQule, Inc. and MYCOsearch, Inc. to provide T Cell
Sciences with synthetic and natural product libraries for drug screening. The
Company to date has identified several lead molecules which the Company believes
may be effective in inhibiting T cell activation without apparent signs of
cellular toxicity. The Company has conducted animal studies with two of these
molecules which indicate the potential effectiveness of these molecules in
inhibiting T cell activity.
T Cell Sciences, in conjunction with Astra, has also identified, developed
and tested in animal models, a humanized monoclonal antibody and a peptide that
inhibit a specific subset of T cells related to the autoimmune disease multiple
sclerosis. The Company has suspended internal funding of the research and
development of its T cell antigen receptor program pending the conclusion of
negotiations which the Company believes will result in the transfer of certain
of its rights to this technology to Astra.
CETP Vaccine. The Company is also developing a therapeutic vaccine against
cholesteryl ester transfer protein ("CETP") which may be useful in reducing
risk factors for atherosclerosis. CETP is a key intermediary in the balance of
"good" cholesterol ("HDL") and "bad" cholesterol ("LDL"). T Cell Sciences is
developing a vaccine to stimulate an immune response against CETP, which it
believes may improve the ratio of HDL to LDL and reduce the potential of
heart disease. The Company has conducted studies of rabbits fed a
high-cholesterol, high-fat diet which had been administered T Cell Sciences'
CETP vaccine. In these studies, treated rabbits exhibited an increase in the
level of HDL over 70-day and 108-day periods and exhibited relatively
lesion-free blood vessels, while untreated rabbits showed no increase in HDL
levels and developed significant blood vessel lesions. In 1995, the market for
cholesterol-lowering drugs exceeded $4 billion worldwide.
TRAx Diagnostics. Although it has sold a significant portion of its
diagnostics division, the Company retained its rights to the TRAx diagnostics
technology, including the TRAx CD4 and TRAx CD8 diagnostic kits for cell
enumeration, the most prevalent use of which is in monitoring HIV-infected
individuals. The Company has entered into agreements with third parties for the
manufacture, sale and distribution of TRAx kits to clinical and diagnostic
laboratories in exchange for certain royalty payments.
Patents and Proprietary Rights. The Company has an extensive portfolio of
patents and pending applications supporting its therapeutic efforts and TRAx
technology. Patent rights in the area of complement molecules include an issued
U.S. patent which claims the nucleic acid sequences of recombinant TP10 and its
fragments. The Company also owns rights to a number of other patent applications
relating to TP10, sCR1sLex and other complement inhibitor molecules.
The Company was incorporated in Delaware in 1983 and its principal
executive offices are located at 119 Fourth Avenue, Needham, Massachusetts,
02194, telephone number (617) 433-0771.
RECENT DEVELOPMENTS
In the first half of 1996, the Company reorganized senior management and
refocused its business operations to emphasize its therapeutic drug development
program. In March 1996, the Company sold the operations and research product
line of its wholly owned subsidiary, T Cell Diagnostics, Inc. ("TCD"), excluding
the TRAx diagnostic product franchise, to Endogen, Inc. ("Endogen") for $2.9
million. In 1995, TCD received clearance from the U.S. Food and Drug
Administration (the "FDA") to market TRAx CD4 for CD4 cell enumeration, which is
primarily used in the monitoring of HIV infected patients. In December 1995, TCD
signed an exclusive sales and distribution agreement for TRAx CD4 and CD8 with
Diamedix Corporation in the United States.
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In addition, the Company has suspended internal funding of the research and
development of its T Cell antigen receptor program pending the conclusion of
negotiations for the transfer of certain of its commercialization rights to this
technology to Astra. In connection with the suspension of the internal
development of this program, the Company incurred a $1.8 million write-off of
related patents in the second quarter of 1996.
In June 1996, the Company appointed Una S. Ryan, Ph.D., the Company's Chief
Scientific Officer, to the additional positions of President and Chief Operating
Officer, and named James D. Grant, who serves as a director of the Company, as
Chief Executive Officer. In May 1996, the Company also added Norman W. Gorin, a
former Senior Vice President of US Trust of Boston, as Chief Financial Officer.
In connection with the departure of Alan Tuck, former President and Chief
Executive Officer, the Company and Mr. Tuck executed an agreement containing
certain severance benefits. In connection with the agreement, the Company
incurred a charge of approximately $425,000 in the second quarter of 1996. The
agreement accelerated the exercisability of Mr. Tuck's stock options and
extended the period during which they may be exercised to one year.
<TABLE>
THE OFFERING
<CAPTION>
<S> <C>
Common Stock being offered......................... 5,000,000 shares
Common stock outstanding after the offering ....... 24,946,601 shares(1)
Use of proceeds.................................... The Company anticipates using the net proceeds from this
offering (i) to fund ongoing clinical trials for TP10 and the
manufacture of clinical supplies of TP10, (ii) to fund the
Company's research and development programs for its other
product candidates, and (iii) for general corporate purposes,
including working capital. See "Use of Proceeds."
Nasdaq National Market symbol...................... TCEL
<FN>
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(1) Based on the number of shares outstanding at August 12, 1996. This number
does not include 2,382,476 shares of Common Stock issuable upon the
exercise of options outstanding at such date with a weighted average
exercise price of $5.95 per share. See "Risk Factors -- Dilution."
</TABLE>
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<TABLE>
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data)
<CAPTION>
Year Ended Six Months Ended
December 31, June 30,
-------------------------------- --------------------
1993 1994 1995 1995 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
OPERATING REVENUE:
Product development and
distribution agreements .... $ 5,624 $ 3,737 $ 1,609 $ 1,137 $ 271
Product sales ................. 3,394 3,231 2,354 1,207 506
------- -------- -------- ------- -------
Total operating
revenue .............. 9,018 6,968 3,963 2,344 777
OPERATING EXPENSE:
Cost of product sales ......... 2,317 2,008 1,879 942 352
Research and development ...... 9,438 8,697 8,005 3,994 2,928
General and administrative .... 4,515 4,346 4,217 2,047 3,936
Sales and marketing ........... 2,009 1,412 1,598 737 283
Facility relocation ........... -- 1,599 127 -- --
------- -------- -------- ------- -------
Total operating
expense .............. 18,279 18,062 15,826 7,720 7,499
------- -------- -------- ------- -------
Operating loss .................... (9,261) (11,094) (11,863) (5,376) (6,722)
Non-operating income (expense),
net ............................. 1,193 (490) 3,605 381 562
------- -------- -------- ------- -------
Net loss before minority
interest ........................ (8,068) (11,584) (8,258) (4,995) (6,160)
Minority interest share of loss ... 310 -- -- -- --
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Net loss .......................... $(7,758) $(11,584) $ (8,258) $(4,995) $(6,160)
======= ======== ======== ======= =======
Net loss per common share ......... $ (0.56) $ (0.68) $ (0.47) $ (0.29) $ (0.31)
======= ======== ======== ======= =======
Weighted average common shares
outstanding ...................... 13,931 17,053 17,482 17,055 19,924
======= ======== ======== ======= =======
<CAPTION>
CONSOLIDATED BALANCE SHEET DATA
December 31, 1995 June 30, 1996
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Actual As Adjusted(1)
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<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and securities(2) ... $ 12,275 $ 6,727 $ 16,849
Working capital .......... 11,208 6,038 16,160
Total assets ............. 18,532 11,745 21,867
Accumulated deficit ...... (46,339) (52,498) (52,498)
Total stockholders' equity 16,000 10,181 20,303
<FN>
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(1) Adjusted to give effect as of June 30, 1996 for the sale of 5,000,000
shares of Common Stock offered hereby at a public offering price of $2.1875
per share, net of offering expenses. See "Use of Proceeds."
(2) Excludes $850,000 at December 31, 1995 and June 30, 1996, which was
restricted as collateral pledged in accordance with the Company's operating
lease agreement.
</TABLE>
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RISK FACTORS
In addition to the other information contained or incorporated by reference
in this Prospectus, the following factors should be considered carefully in
evaluating an investment in the shares of Common Stock offered by this
Prospectus.
EARLY STAGE OF PRODUCT DEVELOPMENT; UNCERTAINTIES RELATING TO CLINICAL
TRIALS AND PRODUCT DEVELOPMENT. All of the Company's therapeutic product
candidates are in various stages of research and development and no revenues
have been generated from the commercialization of those products. There can be
no assurance that any of the Company's therapeutic product candidates which are
under development will prove to be safe or effective in clinical trials, will be
approved by regulatory authorities, can be manufactured at acceptable cost with
appropriate quality, or can be successfully marketed. The Company's therapeutic
product candidates will require substantial additional development, including in
the areas of preclinical and clinical testing, regulatory approvals and
manufacturing processes prior to their commercialization. The Company has
performed only limited preclinical and clinical testing of certain of its
product candidates and technologies under development. Preclinical studies of
product candidates may not predict and do not ensure safety or efficacy in
humans and are not necessarily indicative of the results that may be achieved in
clinical trials with humans. There can be no assurance that unacceptable side
effects will not be discovered during preclinical and clinical testing of the
Company's potential products. Even after being cleared by the FDA or the
regulatory authorities of other countries, a product may later be shown to be
unsafe or to not have its purported effect, thereby preventing its widespread
use or requiring its withdrawal from the market. The rate of completion of the
Company's clinical trials depends on, among other factors, the rate of patient
enrollment. Patient enrollment is a function of many factors, including the size
of the patient population, the nature of the clinical protocol, the proximity of
patients to clinical sites and the eligibility criteria for the trial. Delays in
planned patient enrollment may result in increased costs, delays or termination
of clinical trials, which could have a material adverse effect on the Company's
business, financial condition and results of operations. In addition, the
Company may rely on third parties to assist it in overseeing and monitoring
clinical trials, which may result in delays in completing, or failure to
complete, clinical trials if such third parties fail to perform under their
agreements with the Company or fail to meet regulatory standards in the
performance of their obligations under such agreements.
HISTORY OF LOSSES; UNCERTAINTY OF FUTURE PROFITABILITY. The Company has
incurred operating losses since its inception and had accumulated net losses of
approximately $52.5 million as of June 30, 1996. The continued development of
the Company's products will require the commitment of substantial resources to
conduct research and preclinical and clinical programs, to establish
manufacturing capabilities and sales and marketing capabilities, and to
establish additional quality control, regulatory and administrative
capabilities. The Company may incur substantial and increasing operating losses
over the next several years as its product development programs and clinical
testing expand. The amount of net losses and the time required by the Company to
reach sustained profitability are highly uncertain and to achieve profitability
the Company must, among other things, successfully complete development of its
products, obtain regulatory approvals and establish manufacturing and marketing
capabilities. There can be no assurance that the Company will be able to achieve
profitability at all or on a sustained basis.
NEED FOR ADDITIONAL FUNDS. The Company has funded its operations and
capital expenditures to date primarily through equity financing, strategic
alliances with commercial partners, and sales of reagent and diagnostic
products. With the sale of the Company's diagnostic business to Endogen, the
Company will no longer receive revenues from sales of diagnostic products other
than the TRAx business. Since inception, the Company has raised net proceeds of
approximately $63.1 million through equity financings. The Company currently
anticipates that its existing capital resources, including the net proceeds of
this offering, if all of the shares of Common Stock offered hereby are sold at
the offering price of $2.1875 per share, will be adequate to satisfy its capital
requirements through the end of 1997. The Company anticipates that it will need
to raise substantial additional funds, through additional equity or debt
financings, research and development financings, collaborative relationships or
otherwise, prior to the commercialization of its products. There can be no
assurance that any such additional funding will be available to the Company or,
if available, that it will be on
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reasonable terms. Any such additional funding may result in significant dilution
to existing stockholders. If adequate funds are not available, the Company may
be required to significantly curtail its research and development programs or
obtain funds through arrangements with collaborative partners that may require
the Company to relinquish certain material rights to its products.
DEPENDENCE ON THIRD PARTIES FOR CLINICAL SUPPLIES. The Company is dependent
on sourcing from a third party manufacturer for suitable quantities of sCR1
necessary for clinical trials in addition to those currently being conducted by
the Company. The Company is also dependent upon Endogen for supplies of TRAx
products for sale in the United States. The inability to have suitable quality
and quantities of material produced in a timely manner would result in
significant delays in the clinical development and sale of products, which could
adversely affect the Company's business, financial condition and results of
operations.
NO ASSURANCE OF FDA APPROVAL; COMPREHENSIVE GOVERNMENT REGULATION. The
Company's research, development and clinical programs are subject to extensive
regulation by numerous governmental authorities in the United States and other
countries. Most of the Company's products will require governmental approvals
for commercialization which have not yet been obtained and are not expected to
be obtained for several years. Preclinical and clinical trials and manufacturing
and marketing of many of the Company's products will be subject to the rigorous
testing and approval processes of the FDA and corresponding foreign regulatory
authorities. The regulatory process, which includes preclinical, clinical and
post-clinical testing of many of the Company's products to establish their
safety and efficacy, can take many years and requires the expenditure of
substantial resources. Data obtained from preclinical and clinical activities
are susceptible to varying interpretations which could delay, limit or prevent
regulatory approval. In addition, delays or rejection may be encountered based
upon changes in, or additions to, regulatory policies for drug approval during
the period of product development and regulatory review, which may result in
limitations or restrictions on the Company's ability to utilize its technology
or develop its products. Delays in obtaining such approvals could adversely
affect the marketing of products developed by the Company and the Company's
ability to generate commercial product revenues. There can be no assurance that
requisite regulatory approvals will be obtained within a reasonable period of
time, if at all, or that the Company will not encounter problems in clinical
trials that will cause the Company or governmental authorities to delay or
suspend such trials. Moreover, if regulatory approval of a product is granted,
such approval may impose limitations on the indicated uses for which such
product may be marketed which may restrict the patient population for which any
product may be prescribed. Further, even if such regulatory approval is
obtained, a marketed product, its manufacturer and its manufacturing facilities
are subject to continual review and periodic inspections, and later discovery of
previously unknown problems with a product, manufacturer or facility may result
in restrictions on such product or manufacturer, including withdrawal of the
product from the market. Failure to comply with the applicable regulatory
requirements can, among other things, result in fines, suspensions of regulatory
approvals, product recalls, operating restrictions and criminal prosecution.
To commercialize any product and prior to submitting the application for
marketing approval in the United States, the Company must sponsor and file an
Investigational New Drug application ("IND") for each proposed product and must
be responsible for initiating and overseeing the clinical studies to demonstrate
the safety and efficacy that are necessary to obtain FDA approval of such
product. There can be no assurance that the Company will be able to obtain the
necessary clearances for clinical trials or approvals for manufacturing or
marketing any of its product candidates. After completion of clinical trials of
a new product, FDA marketing approval must be obtained. At that time, the
Company must submit relevant data, including the results of product development
activities, preclinical studies and clinical trials, in addition to detailed
manufacturing information. Notwithstanding the submission of relevant data, the
FDA may withhold marketing approval and may require additional clinical trials.
DEPENDENCE ON MANUFACTURING, SALES, DISTRIBUTION AND MARKETING PARTNERS. To
be successful, the Company's therapeutic and diagnostic products must be
manufactured in commercial quantities, within regulatory requirements and at
competitive costs. There can be no assurance that the Company will be able to
obtain access to suitable therapeutic and diagnostic product manufacturing
facilities. Except for research reagents and certain diagnostic products, the
Company has limited experience in sales, marketing and distribution of
commercial products. To market any of its products directly, the Company must
develop a
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substantial marketing and sales force with technical expertise and a
supporting distribution capability. There can be no assurance that the Company
will be able to establish sales and distribution capabilities without undue
delays or expenditures or that it will be successful in gaining market
acceptance for its products. The Company may enter into strategic partnerships
for the manufacturing, sales, distribution and marketing of its products. There
can be no assurance the Company will be able to enter into successful strategic
partnership agreements on terms acceptable to T Cell Sciences, if at all.
COMPETITION AND RISK OF TECHNOLOGICAL OBSOLESCENCE. Biotechnology,
pharmaceuticals and medical diagnostics are rapidly evolving fields in which
developments are expected to continue at a rapid pace. Competitors of the
Company in the United States and abroad are numerous and include, among others,
pharmaceuticals, medical diagnostics and biotechnology companies as well as
universities and other research institutions. The Company's success depends upon
developing and maintaining a competitive position in the development of products
and technologies in its area of focus. Competition from other biotechnology,
pharmaceuticals and medical diagnostics companies is intense and expected to
increase as new products enter the market and new technologies become available.
The Company's competitors may also succeed in developing technologies and
products that are more effective than any which have been or are being developed
by the Company or that render the Company's technologies or products obsolete or
noncompetitive. The Company's competitors may also succeed in obtaining patent
protection or other intellectual property rights that would block the Company's
ability to develop its potential products, or in obtaining regulatory approval
for the commercialization of their products more rapidly or effectively than the
Company. Finally, many of these competitors have substantially greater research
and development capabilities, clinical, manufacturing, regulatory and marketing
experience and financial and managerial resources than the Company.
DEPENDENCE ON PATENTS AND PROPRIETARY TECHNOLOGY. The Company's success
will depend in part on the ability of the Company and its licensors to obtain
and maintain patent protection for the Company's technology and to preserve its
trade secrets and operate without infringing on the proprietary rights of
others, both in the United States and in other countries. The failure of the
Company or its licensors to obtain and maintain patent protection for the
Company's technology could have a material adverse effect on the Company's
business, financial condition and results of operations. Patent positions in the
biotechnology field are highly uncertain and involve complex legal, scientific
and factual questions. To date, there has emerged no consistent policy regarding
the breadth of claims allowed in biotechnology patents, particularly in regard
to human therapeutic uses. There can be no assurance that patent applications
relating to the technology used by the Company will result in patents being
issued or that, if issued, the patent will not be subjected to further
proceedings limiting the scope of the rights under the patent or that such
patent will provide a competitive advantage or will afford protection against
competitors with similar technology, or will not be challenged successfully,
invalidated or circumvented by competitors. Moreover, because patent
applications in the United States are maintained in secrecy until patents issue
and patent applications in certain other countries generally are not published
until more than 18 months after they are filed, and since publication of
discoveries in scientific or patent literature often lags behind actual
discoveries, the Company cannot be certain that it or any licensor was the first
creator of inventions covered by pending patent applications or that it or such
licensor was the first to file patent applications for such inventions. In
addition, the Company could incur substantial costs in defending itself in suits
brought against it or in suits in which the Company may assert its patents
against others. If the outcome of any such litigation is adverse to the Company,
the Company's business, financial condition and results of operations could be
adversely affected. In addition to any potential liability for significant
damages, the Company may be required to obtain licenses to patents or other
proprietary rights of third parties. Costs associated with any licensing
arrangement may be substantial and could include ongoing royalties. No assurance
can be given that any licenses required under any such patents or proprietary
rights would be made available on terms acceptable to the Company, if at all. If
the Company does not obtain such licenses, it could encounter delays in product
market introductions while it attempts to design around such patents or other
rights, or be prevented from manufacturing and marketing such products. In
either case, the failure to obtain such licenses on acceptable terms, if at all,
could have a material adverse effect on the Company's business, financial
condition and results of operations.
The Company also seeks to protect its proprietary technology, including
technology which may not be patented or patentable, in part by confidentiality
agreements and, if applicable, inventors' rights agreements
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<PAGE> 10
with its collaborators, advisors, employees and consultants. There can be no
assurance that these agreements will not be breached, that the Company will have
adequate remedies for any breach, or that the Company's trade secrets will not
otherwise be disclosed to, or discovered by, competitors. Moreover, the Company
conducts a significant amount of research through academic advisors and
collaborators who are prohibited from entering into confidentiality or
inventors' rights agreements by their academic institutions.
DEPENDENCE ON REIMBURSEMENT. In both the United States and elsewhere, sales
of most of the Company's products, if any, will be dependent in part on the
availability of reimbursement from third party payors, such as government and
private insurance plans. Third party payors are increasingly challenging the
prices charged for medical products and services. Moreover, the federal
government of the United States has made the containment of health care costs a
top priority. If the Company succeeds in bringing one or more products to
market, there can be no assurance that these products will be considered
cost-effective, that reimbursement will be available or, if available, that the
level of reimbursement will be sufficient to allow the Company to sell its
products on a profitable basis.
EXPOSURE TO PRODUCT LIABILITY CLAIMS. The Company's business exposes it to
inherent risks of product liability claims, product recalls and associated
adverse publicity which are inherent in the testing, manufacturing, marketing
and sale of human therapeutic products. The Company currently has liability
insurance of limited coverage. There can be no assurance that it will be able to
maintain such insurance or obtain general product liability insurance on
acceptable terms or at reasonable costs or that such insurance will be in
sufficient amounts to provide the Company with adequate coverage against
potential liabilities. A product liability claim or product recall could inhibit
or prevent commercialization of products being developed by the Company. Any
product liability claim or product recall could have a material adverse effect
on the Company's business, financial condition and results of operations.
HEALTH CARE REFORM. The health care industry in the United States and in
Europe is undergoing fundamental changes as the result of political, economic
and regulatory influences. Reforms proposed from time to time include mandated
basic health care benefits, controls on health care spending through limitations
on the growth of private health insurance premiums and Medicare and Medicaid
spending, the creation of large insurance purchasing groups and fundamental
changes to the health care delivery system. The Company anticipates that
alternative health care delivery systems and methods of payment will continue to
be reviewed and assessed, and public debate of these issues will likely
continue. The Company cannot predict whether any reform initiatives will result
or, if adopted, what impact they might have on the Company, and there can be no
assurance that the adoption of reform proposals will not have a material adverse
effect on the Company's business, financial condition and results of operations.
Announcements of reform proposals and the investment community's reaction to
such proposals, announcements by competitors and third-party payors of their
strategy in responding to reform initiatives, and general industry conditions
could produce volatility in the trading and market price of the Common Stock.
HAZARDOUS MATERIALS; ENVIRONMENTAL MATTERS. The Company's research and
development activities involve the controlled use of hazardous materials,
chemicals, biological materials and radioactive compounds. The Company is
subject to federal, state and local laws and regulations governing the use,
manufacture, storage, handling and disposal of such materials and certain waste
products. Although the Company believes that its safety procedures for handling
and disposing of such materials comply with the standards prescribed by such
laws and regulations, the risk of accidental contamination or injury from these
materials cannot be completely eliminated. In the event of such an accident, the
Company could be held liable for any resulting damages, and any such liability
could exceed the Company's resources. The Company may be required to incur
significant costs to comply with environmental laws and regulations in the
future. Current or future environmental laws or regulation may have a material
adverse effect on the Company's business, financial condition and results of
operations.
DEPENDENCE UPON KEY PERSONNEL. The Company is dependent on the members of
its management and scientific staff, the loss of one or more of whom could have
a material adverse effect on the Company. The Company also depends on its
scientific collaborators and advisors, all of whom have commitments that may
limit their availability to the Company. In addition, the Company believes that
its future success will depend
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<PAGE> 11
in large part upon its ability to attract and retain highly skilled scientific,
managerial and marketing personnel, particularly as the Company expands its
activities in clinical trials, the regulatory approval process and sales and
manufacturing. The Company faces significant competition for such personnel and
from other companies, research and academic institutions, government entities
and other organizations. There can be no assurance that the Company will be
successful in hiring or retaining the personnel it requires for continued
growth. The failure to hire and retain such personnel could materially and
adversely affect the Company's prospects.
SHARES ELIGIBLE FOR FUTURE SALE. Future sales of Common Stock in the public
market by existing stockholders could have an adverse effect on the price of the
Common Stock. In addition, the Company has registered the shares of Common Stock
to be issued under its 1985 Incentive Stock Option Plan and its Amended and
Restated 1991 Stock Compensation Plan on a Registration Statement on Form S-8
and approximately 2.4 million shares of Common Stock are presently eligible for
sale upon exercise of currently outstanding options. The Company, its officers
and directors and certain other stockholders, including the former President and
Chief Executive Officer of the Company who in the aggregate, hold approximately
3.2% of the Common Stock to be outstanding after this offering assuming the sale
of all shares of Common Stock offered hereby, have agreed not to offer, sell or
otherwise dispose of their shares of Common Stock, with certain limited
exceptions, for a period of 90 days after the date of this Prospectus without
the prior written consent of Genesis Merchant Group Securities.
VOLATILITY OF STOCK PRICE. The market price of the shares of the Common
Stock, like that of the common stock of many other early-stage biotechnology
companies, may be highly volatile. Factors such as announcements of
technological innovations or new commercial products by the Company or its
competitors, disclosure of results of clinical testing or regulatory
proceedings, governmental regulation and approvals, developments in patent or
other proprietary rights, public concern as to the safety of products developed
by the Company and general market conditions may have a significant effect on
the market price of the Common Stock. In addition, the stock market has
experienced and continues to experience extreme price and volume fluctuations
which have effected the market price of many biotechnology companies and which
have often been unrelated to the operating performance of these companies. These
broad market fluctuations, as well as general economic and political conditions,
may adversely effect the market price of the Common Stock.
IMMEDIATE AND SUBSTANTIAL DILUTION. Purchasers of the shares of Common
Stock will incur an immediate and substantial dilution in the net tangible book
value of the Common Stock of $1.4178 per share, at the public offering price of
$2.1875 per share. See "Dilution."
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<PAGE> 12
USE OF PROCEEDS
Because there is no minimum for the number of shares of Common Stock
offered hereby, the Company cannot determine the net proceeds from the sale of
the shares of Common Stock offered hereby. However, the net proceeds from the
sale of all of the 5,000,000 shares of Stock offered hereby would be
approximately $10.1 million (at the public offering price of $2.1875 per share),
after deducting estimated commissions and underwriting discounts and expenses
payable by the Company. The Company anticipates using the net proceeds from this
offering (i) to fund ongoing clinical trials for TP10 and the manufacture of
clinical supplies of TP10, (ii) to fund the Company's research and development
programs for its other product candidates, and (iii) for general corporate
purposes, including working capital. Pending such uses, the Company plans to
invest such funds in short-term interest-bearing obligations of investment
grade.
The amounts and timing of actual expenditures for each of these purposes
could vary significantly depending upon the progress of the Company's research
and development programs, the results of pre-clinical and clinical studies, the
timing of any regulatory approvals, the performance by the Company's corporate
partners of their obligations, technological advances, the status of competitive
products and the Company's determinations as to the commercial potential of its
products. In addition, the Company's research and development expenditures will
vary as programs are added, expanded or abandoned and as a result of variations
in funding from existing or future corporate partners. If the net proceeds of
the sale of the shares of Common Stock are approximately $10.1 million (assuming
all of the 5,000,000 shares of Common Stock offered hereby are sold at the
public offering price of $2.1875 per share, after deducting estimated
commissions and underwriting discounts and expenses payable by the Company), the
Company believes that its existing capital resources, including the ongoing
research support activities of its corporate partners and such assumed amount of
net proceeds of the sale of shares of Common Stock offered hereby, would be
sufficient to satisfy its capital needs through the end of 1997. In order to
fund its capital needs after that time, the Company will require significant
levels of additional capital and intends to raise the necessary capital through
additional equity or debt financings, arrangements with corporate partners or
from other sources. No assurance can be given that the necessary funds will be
available for the Company to finance its development on acceptable terms, if at
all. If adequate funds are not available from operations or additional sources
of financing, the Company's business will be materially and adversely affected.
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<PAGE> 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
In an effort to focus its business operations on its therapeutic drug
programs, the Company recently realigned certain of its operations. On March 5,
1996, the Company sold the operations and research product line of its wholly
owned subsidiary TCD, excluding the TRAx product franchise and related assets,
to Endogen for a purchase price of approximately $2,900,000. While the Company
will continue the development of its TRAx product franchise, its present plan is
to defer filing a 510(k) application with the FDA for clearance to market TRAx
CD8 in the United States while it focuses on establishing a partnership for
international distribution of its TRAx technology. Furthering its focus toward
the development of proprietary therapeutic products, the Company reorganized its
senior management in June 1996, with the appointment of Una S. Ryan Ph.D., its
Chief Scientific Officer, to the position of President and Chief Operating
Officer, and its Chairman, James D. Grant, as Chief Executive Officer. The
Company also appointed Norman W. Gorin as Chief Financial Officer.
The Company has in the past developed and produced both therapeutic and
diagnostic products, including the development of T cell receptor therapeutics
in collaboration with Astra. The Company has recently suspended internal funding
of the research and development of its T cell receptor therapeutic programs
pending the conclusion of negotiations with Astra to transfer certain of its
rights to the technology. In conjunction with these developments, the Company
has written off certain capitalized patent costs related to the T cell receptor
technology, incurring a $1,752,000 charge to earnings.
The Company is now focusing its resources on the discovery and development
of innovative drugs targeting the immune and inflammatory systems. The Company's
lead therapeutic program is focused on developing compounds that inhibit
complement activation which is part of the body's immune defense system. In
January 1996, the Company initiated a Phase IIa clinical trial for the
evaluation of the Company's lead therapeutic compound, TP10, in patients with
ARDS. In July 1996, the Company initiated a Phase I/II clinical trial to prevent
reperfusion injury in patients receiving lung transplants.
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO SIX MONTHS ENDED JUNE 30, 1995.
For the six months ended June 30, 1996, the Company reported a consolidated net
loss of $6,160,000 or $.31 per share, compared with a net loss of $4,995,000 or
$.29 per share for the six months ended June 30, 1995. The increased loss for
the six months ended June 30, 1996 compared to the same period last year was
primarily due to the $1,752,000 write-off of certain capitalized patent costs, a
$425,000 charge resulting from a severance agreement with the Company's former
President and Chief Executive Officer, lower product development revenue from
Astra and lower product sales resulting from the sale of the research products
and operations of the Company's diagnostic division in March 1996.
Product development revenue decreased 76.2% or $866,000 for the six months
ended June 30, 1996 compared to the same period last year. The decrease
reflected the anticipated lower revenue from Astra. In accordance with its
agreement with Astra, the Company will not receive additional research and
development revenue funding. For the six months ended June 30, 1996, product
development revenue included a $100,000 non-refundable execution fee associated
with an agreement granting CytoTherapeutics, Inc. a worldwide, nonexclusive
license to the Company's technology and patent rights relating to Compliment
Receptor 1 for a series of milestone payments and royalties.
Product sales revenue for the six months ended June 30, 1996 decreased
58.1% to $506,000 compared to $1,207,000 for the comparable period last year.
The decrease in product sales for the six months ended June 30, 1996 is
attributable to the sale of the research products and operations of TCD to
Endogen, partially offset by an increase in TRAx product sales. As a result of
the sale of the research products and operations
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<PAGE> 14
of TCD to Endogen, the Company's product sales revenue for the period included
research product sales for the first two months of the year only, compared with
six months last year. The Company does not anticipate having additional research
product sales in the foreseeable future.
For the six months ended June 30, 1996, research and development expenses
were $2,928,000 compared to $3,994,000 for the same period last year. The
decrease is primarily attributable to the restructuring program implemented in
the second half of 1995 which further focused the Company on priority projects
combined with the sale of the research products and operations of TCD on March
5, 1996. In January 1996, the Company announced the start of a Phase IIa
clinical trial evaluating the use of TP10 in patients with ARDS.
General and administrative expenses increased to $3,936,000 for the six
months ended June 30, 1996 from $2,047,000 for the comparable period last year.
Excluding the $425,000 charge resulting from the severance agreement with the
Company's former President and Chief Executive Officer in June 1996 and the
$1,752,000 write-off of capitalized patent costs, general and administrative
costs decreased 14.1% or $288,000 for the six months compared to last year. The
decrease is mainly attributable to staff reductions combined with the
implementation of discretionary spending controls across all functional areas.
Non-operating income of $562,000 for the six months ended June 30, 1996
includes a gain of $310,000 recognized from the sale of the research products
and operations to Endogen. Interest income decreased 33.9% to $252,000 for the
six months ended June 30, 1996 compared with $381,000 for the six months ended
June 30, 1995. The decrease in interest income is primarily the result of lower
cash balances during the six months ended June 30, 1996 compared to the same
period last year.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents at June 30, 1996 decreased
$5,548,000 to $6,727,000 from $12,275,000 at December 31, 1995. The decrease is
primarily due to the net operating loss of $6,160,000 for the six months ended
June 30, 1996 adjusted for the non-cash write-off of capitalized patent costs of
$1,752,000. Cash used in operations was $5,325,000 for the six months ended June
30, 1996 compared to $5,484,000 for the six months ended June 30, 1995. The
$159,000 decrease in cash used is primarily due to a $832,000 decrease in net
operating loss, adjusted for the write-off of capitalized patent costs and a
charge resulting from a severance agreement with the Company's former President
and Chief Executive Officer.
The Company received a convertible subordinated note receivable in the
principal amount of $1,900,000 in connection with the sale of the research
products and operations of TCD to Endogen. Payments are due in ten semi-annual
installments commencing September 1, 1996 with interest receivable thereon at
the rate of 7% per annum. The outstanding principal amount of the note is
convertible at any time at the option of the Company into shares of common stock
of Endogen.
The Company has no long-term debt. During 1994, the Company entered into an
operating lease agreement with a five year term to lease up to $2 million of
equipment. The lease arrangement requires that the Company maintain certain
restrictive financial covenants, determined at the end of each fiscal quarter.
At September 30, 1995, the Company's cash, cash equivalents and short-term
investment balances were below the minimum covenant requirement. In November
1995, in accordance with the lease agreement, the Company pledged as collateral
cash equal to the amount outstanding on the lease. At June 30, 1996, the Company
had approximately $850,000 outstanding on the lease.
The Company believes its current cash and cash equivalents combined with
anticipated net cash provided by operations will be adequate to meet the
Company's cash requirements for operations through 1996; if all 5,000,000 shares
of Common Stock offered hereby are sold at the public offering price of $2.1875
per share, the Company anticipates that it will have sufficient cash to fund its
operations through the end of 1997. The Company is considering alternative
sources of funding and capital such as through partnering and financing
opportunities.
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<PAGE> 15
Certain of the statements set forth above and elsewhere in this Prospectus,
including statements regarding anticipated revenue, expenses and cash
projections, are forward-looking and are based upon the Company's current belief
about future activities and events. Actual results may differ materially from
anticipated results.
<TABLE>
DILUTION
As of June 30, 1996, the Company had a net tangible book value of
$9,079,000, or $.4552 per share. Net tangible book value per share is determined
by dividing the net tangible book value (tangible assets less liabilities) of
the Company by the number of shares of Common Stock of the Company outstanding
at that date. Adjusting such net tangible book value to give effect to the sale
of all of the shares of Common Stock offered hereby at the public offering price
of $2.1875 per share, and the receipt and application of the net proceeds
therefrom, but without taking into account any other changes in net tangible
book value after June 30, 1996, the pro forma net tangible book value of the
Company as of June 30, 1996 would have been $.7697 per share. This represents an
immediate increase in the net tangible book value of $.3145 per share to
existing stockholders and an immediate dilution of $1.4178 per share to new
investors. The following table illustrates this per share dilution.
<CAPTION>
<S> <C> <C>
Public offering price per share..................................... $2.1875
Net tangible book value per share as of
June 30, 1996 ............................................. .4552
Increase in net tangible book value per share
attributable to the offering(1)............................ .3145
Pro forma net tangible book value per share
after the offering......................................... .7697
-------
Dilution per share to new investors................................. $1.4178
=======
<FN>
- ---------------------
(1) Assuming the sale of all of the 5,000,000 shares of Common Stock offered
hereby at the public offering price of $2.1875 per share and after
deducting estimated commissions or discounts payable to agents,
underwriters or dealers, and expenses payable by the Company in connection
with sale of the shares of Common Stock offered hereby and after giving
effect to the application of the net proceeds of such sale.
</TABLE>
PLAN OF DISTRIBUTION
The Company is selling the shares of Common Stock offered hereby through
Genesis Merchant Group Securities (the "Selling Agent"), in its capacity as
exclusive selling agent. The Selling Agent will be acting on a best efforts
basis pursuant to the terms of a selling agency agreement, dated the date of
this Prospectus (the "Selling Agency Agreement"), between the Company and the
Selling Agent.
The Selling Agency Agreement provides that the obligations of the Selling
Agent are subject to approval of certain legal matters by counsel and various
other conditions, including the absence of any material adverse change, or
development involving a prospective change, in the condition (financial or
other), business, properties, net worth or results of operations of the Company
subsequent to the effective date of the Selling Agency Agreement. The nature of
the Selling Agent's obligations is limited to a best efforts undertaking to
place the Common Stock as agent for the Company. Pursuant to the Selling Agency
Agreement, the Selling Agent may terminate its obligations thereunder at any
time and without further liability by giving notice to the Company.
Pursuant to the Selling Agency Agreement, the Company has agreed to
reimburse the Selling Agent for all costs and actual accountable out-of-pocket
expenses incurred by or on behalf of the Selling Agent in
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<PAGE> 16
connection with the performance of its obligations under the Selling Agency
Agreement for up to $37,500 of such costs and expenses. The Company has also
agreed to indemnify the Selling Agent against certain liabilities, including
liabilities under the Securities Act, or to contribute to payments the Selling
Agent may be required to make in respect thereof.
The Selling Agent has in the past provided, and may in the future provide,
investment banking, financial advisory and other services to the Company.
Subject to certain conditions, the Company has agreed to use reasonable efforts
to cause the Selling Agent to be included as placement agent or co-manager, as
the case may be, in connection with subsequent securities offerings by the
Company prior to January 12, 1998 in which the Company uses the services of a
financial advisor or intermediary.
The directors, executive officers of the Company and certain stockholders
who, in the aggregate, hold 5,786,496 shares of Common Stock, or approximately
23.2% of the Common Stock to be outstanding after this offering assuming the
sale of all shares of Common Stock offered hereby, have agreed not to offer,
sell or otherwise dispose of their shares, with certain limited exceptions, for
a period of 90 days after the date of this Prospectus without the prior written
consent of Genesis Merchant Group Securities. Except for the shares of Common
Stock to be sold in this offering, the Company has agreed not to offer, sell,
contract to sell or otherwise issue any Common Stock or other capital stock,
with limited exceptions, prior to the expiration of 90 days from the date of
this Prospectus without the prior written consent of Genesis Merchant Group
Securities.
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock offered hereby
will be passed upon for the Company by its counsel, Goodwin, Procter & Hoar LLP,
Exchange Place, 24th Floor, Boston, Massachusetts 02109. Certain legal issues
related to the shares of Common Stock will be passed upon for the Selling Agent
by its counsel, McCutchen, Doyle, Brown & Enersen LLP, One Embarcadero Place,
2100 Geng Road, Suite 200, Palo Alto, California 94303-0913.
EXPERTS
The consolidated financial statements and schedules of T Cell Sciences,
Inc. and subsidiary included in the Company's Annual Report to Stockholders on
Form 10-K for the year ended December 31, 1993 have been incorporated by
reference herein and in the registration statement in reliance upon the report
of KMPG Peat Marwick, LLP, independent certified public accountants, and upon
the authority of said firm as experts in accounting and auditing.
The consolidated financial statements as of December 31, 1994 and 1995 and
for each of the two years in the period ended December 31, 1995 incorporated by
reference in this Prospectus have been so included in reliance on the report of
Price Waterhouse LLP, independent public accountants, given on the authority of
said firm as experts in auditing and accounting.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), Washington, D.C. 20549, a Registration Statement (which term
shall include all amendments, exhibits and schedules thereto) on Form S-3 under
the Act with respect to the shares of Common Stock offered hereby. This
Prospectus, which constitutes a part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission, to which Registration Statement reference is hereby made. Statements
made in this Prospectus as to the contents of any contract, agreement or other
document referred to are not necessarily complete. With respect to each such
contract, agreement or other document filed as an exhibit to the Registration
Statement, reference is made to the exhibit for a more complete description of
the matter involved, and each such statement shall be deemed qualified in its
entirety
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<PAGE> 17
by such reference. The Registration Statement and the exhibits thereto may be
inspected and copied at prescribed rates at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549 and at the regional offices of the Commission
located at Seven World Trade Center, 13th Floor, New York, New York 10048 and
500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
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<PAGE> 18
======================================== ==================================
NO DEALER, SALESPERSON OR ANY OTHER
PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS IN 5,000,000 SHARES
CONNECTION WITH THE OFFER MADE BY THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE SELLING AGENT.
NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY T CELL SCIENCES, INC.
IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATES AS OF WHICH INFORMATION
IS GIVEN IN THIS PROSPECTUS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION BY ANYONE IN COMMON STOCK
ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN
WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO
OR TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH SOLICITATION.
--------------------------- ------------------
PROSPECTUS
TABLE OF CONTENTS ------------------
PAGE GENESIS MERCHANT GROUP
---- SECURITIES
Available Information ............ 2
Incorporation of Certain
Documents by Reference ......... 2
Prospectus Summary ............... 3
Risk Factors ..................... 7
Use of Proceeds .................. 12
Management's Discussion and August 26, 1996
Analysis of Financial Condition
and Results of Operations ....... 13
Dilution ......................... 15
Plan of Distribution ............. 15
Legal Matters .................... 16
Experts .......................... 16
Additional Information ........... 16
======================================== ==================================
