As filed with the Securities and Exchange Commission on June 11, 1996
Registration No. 333-_____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
Form S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
__________________________
NeoRx Corporation
(Exact name of registrant as specified in its charter)
Washington 91-1261311
(State of Incorporation) (I.R.S. Employer Identification Number)
410 West Harrison Street
Seattle, Washington 98119
(206) 281-7001
(Address and telephone number of registrant's principal executive offices)
Jeffrey J. Miller, Ph.D., J.D.
Senior Vice President
Business Development and Legal Affairs, and Secretary
410 West Harrison Street
Seattle, Washington 98119
(206) 281-7001
(Name, address and telephone number of agent for service)
_________________________
Copies to:
Stephen A. McKeon
David K. Yao
Perkins Coie
1201 Third Avenue, 40th Floor
Seattle, Washington 98101-3099
(206) 583-8888
_________________________
Approximate date of commencement of proposed sale to the public:
From time to time after this Registration Statement becomes effective.
_________________________
If the only Securities being registered on this form are being offered pur-
suant to dividend or interest reinvestment plans, please check the following
box. __________
If any of the Securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than Securities offered only in connection with dividend or interest
reinvestment plans, check the following
box. X
If this Form is filed to register additional Securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. __________
<PAGE>
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. __________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. __________
_________________________
CALCULATION OF REGISTRATION FEE:
Title of Securities to Be Registered: Common Stock, $.02 par value per share
Amount to Be Registered: 346,763 (2)
Proposed Maximum Offering Price Per Unit (1): $7.00
Proposed Maximum Aggregate Offering Price (1): $2,427,341
Amount of Registration Fee: $837.00
_______________
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c).
(2) In accordance with Rule 429, the Warrant Prospectus contained herein is
a combined prospectus which also relates to the Company's Registration
Statement on Form S-3 (No.33-60029), which registered for resale
1,654,338 shares of Common Stock and 1,323,471 warrants.
This 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 State-
ment shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Registration Statement shall become effec-
tive on such date as the Commission, acting pursuant to said Section 8(a), may
determine.
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<PAGE>
EXPLANATORY NOTE
This Registration Statement contains two forms of Prospectus: one relating
to 268,904 shares of Common Stock held by The DuPont Merck Pharmaceutical Com-
pany (the "DuPont Merck Prospectus") and the other relating to 77,859 shares
issuable upon exercise of outstanding warrants held by Den Norske
Krigsforsikring for Skib (the "Warrant Prospectus").
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these Securities has been filed with the
Securities and Exchange Commission. These Securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these
Securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.
<PAGE>
Subject to Completion, dated June 11, 1996
PROSPECTUS
268,904 Shares of Common Stock
NeoRx Corporation
This Prospectus relates to 268,904 shares (the "Shares") of common
stock, $.02 par value per share (the "Common Stock"), of NeoRx
Corporation (the "Company" or "NeoRx"). The Shares may be offered by
a certain shareholder of the Company (the "Selling Shareholder") from
time to time in transactions in the over-the-counter market through
Nasdaq, in privately negotiated transactions, through the writing of
options on the Shares, or through a combination of such methods of
sale, at fixed prices that may be changed, at market prices prevailing
at the time of sale, at prices relating to such prevailing market
prices or at negotiated prices. The Selling Shareholder may effect
such transactions by selling the Shares to or through broker-dealers,
and such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Shareholder
and/or the purchasers of the Shares for whom such broker-dealers may
act as agents or to whom they may sell as principals, or both (which
compensation as to a particular broker-dealer may be in excess of
customary commissions). See "Selling Shareholder" and "Plan of
Distribution."
None of the proceeds from the sale of the Shares by the Selling
Shareholder will be received by the Company. The Company has agreed
to bear all expenses (other than selling commissions and fees and
expenses of counsel and other advisors to the Selling Shareholder) in
connection with the registration and sale of the Shares being offered
by the Selling Shareholder. The Company has agreed to indemnify the
Selling Shareholder against certain liabilities, including liabilities
under the Securities Act of 1933, as amended (the "Securities Act").
All the Shares were "restricted securities" under the Securities
Act prior to their registration hereunder. The Company sold the
Shares to the Selling Shareholder in a private transaction in October
1994. This Prospectus has been prepared so that future sales of the
Shares will not be restricted under the Securities Act. In connection
with any sales, the Selling Shareholder and any brokers participating
in such sales may be deemed to be "underwriters" within the meaning of
the Securities Act. See "Selling Shareholder."
The Common Stock is quoted on The Nasdaq Stock Market under the
symbol "NERX." On June 4, 1996, the closing sales price for the
shares of Common Stock as reported on Nasdaq was $7.00 per share.
__________________________
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE
"RISK FACTORS" BEGINNING ON PAGE 3.
__________________________
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 ___________, 1996.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files reports, proxy statements
and other information with the Securities and Exchange Commission
(the "Commission"). Such reports, proxy statements and other
information filed by the Company may be inspected and copies
obtained (at prescribed rates) at the public reference facilities
maintained by the Commission in Washington, D.C. (450 Fifth Street,
N.W., Judiciary Plaza, Washington, D.C. 20549) and at the
Commission's Regional Offices in New York (7 World Trade Center,
13th Floor, New York, New York 10048) and Chicago (Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661).
Such reports, proxy statements and other information may also be
inspected at the offices of the National Association of Securities
Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
This Prospectus is part of a Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") filed with the Commission under the Securities Act with
respect to the Common Stock offered hereby. This Prospectus does not
contain all the information set forth in the Registration Statement,
certain portions of which have been omitted in accordance with the
Commission's rules and regulations. For further information with
respect to the Company and the Common Stock offered hereby, reference
is made to the Registration Statement and the exhibits thereto. The
statements in this Prospectus are qualified in their entirety by
reference to the contents of any agreement or other document incorporated
herein by reference, a copy of which is filed as an exhibit to either the
Registration Statement or other filings by the Company with the
Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company will provide without charge to each person to whom a
copy of this Prospectus is delivered, upon such person's written or
oral request, a copy of any or all of the documents incorporated
by reference herein (other than exhibits to such documents, unless
such exhibits are specifically incorporated by reference into the
information that this Prospectus incorporates). Requests should be
directed to NeoRx Corporation, 410 West Harrison Street, Seattle,
Washington 98119, Attention: Investor Relations.
The following documents filed with the Commission pursuant to
the Exchange Act are incorporated herein by reference:
1. The Company's Annual Report 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 Report on Form 8-K filed by the
Company on April 16, 1996.
All documents filed with the Commission by the Company pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent
to the date of this Prospectus and prior to the termination of the
offering of the Common Stock offered hereby shall be deemed incorporated
by reference into this Prospectus and to be a part hereof from the
respective dates of filing such documents. Any statement contained
in a document incorporated or deemed to be incorporated by reference
herein shall be deemed modified, superseded or replaced for purposes
of this Prospectus to the extent that a statement contained herein or
in any subsequently filed document that also is or is deemed to be
incorporated by reference herein modifies, supersedes or replaces
such statement. Any statement so modified, superseded or replaced
shall not be deemed, except as so modified, superseded or replaced,
to constitute a part of this Prospectus.
__________________________
The Company's principal offices are located at 410 West Harrison
Street, Seattle, Washington 98119, and its telephone number is
(206) 281-7001.
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<PAGE>
RISK FACTORS
Prospective purchasers should carefully consider the risk factors
set forth below as well as the other information set forth in this
Prospectus before purchasing the Common Stock offered hereby.
Early Stage of Product Development; Technological Uncertainty
To date, substantially all of the Company's revenues have consisted
of payments received under agreements with corporate partners and from
government research contracts, none of which provide for material
future funding. The Company has received no revenues to date from
product sales, does not expect regulatory approval for commercial
sales of its lung cancer imaging product earlier than the third
quarter of 1996 and does not expect to seek U.S. regulatory approval
for sales of its cancer and anti-restenosis treatment products before
1999. The Company's current research and development activities are
focused primarily on its proposed therapeutic products, which are in
an early stage of development. In preclinical studies the Company's
pretargeting technology has shown promise for the treatment of cancer
tumors in animals. Results obtained in preclinical studies are not
necessarily indicative of results that will be obtained in human
clinical trials. The Company initiated a Phase I dose escalation
study in humans in mid-1994 and does not expect to complete such study
before the second half of 1996. The Company's proposed therapeutic
products for the prevention of restenosis are also in an early stage
of development.
The Company will require collaborative partners to assist in
developing its potential products, and there can be no assurance that
the Company will be able to negotiate acceptable collaborative
arrangements in the future. In addition, the Company's potential
products will require significant additional research and development
and extensive clinical testing prior to commercial use. There can be
no assurance that these potential products will be successfully
developed into drugs that can be administered to humans or that any
such drugs or related therapies will prove to be safe and effective in
clinical trials or cost-effective to manufacture. Further, these
potential products may prove to have undesirable and unintended side
effects that may prevent or limit their commercial use.
History of Losses; Need for Additional Funds
The Company has been unprofitable since inception and expects to
incur additional operating losses over the next several years. These
operating losses may fluctuate from period to period. For the period
from February 13, 1984 (the Company's inception) to March 31, 1996,
the Company incurred net losses aggregating $109.4 million. The
Company's existing capital resources and interest income thereon are
currently expected to be sufficient to fund the Company's operations
through late 1997. The Company's actual expenditures will depend on
numerous factors, including results of research and development
activities, clinical trials, the levels of resources that the Company
devotes to establishing and expanding marketing and manufacturing
capabilities, competitive and technological developments and the
timing and cost of relationships with parties to collaborative
agreements. The Company will require substantial additional funds to
complete the development of its therapeutic products. Adequate funds
for these purposes, whether through additional financings,
collaborative arrangements with corporate sponsors or other sources,
may not be available when needed or on terms favorable to the Company.
Dependence on Suppliers
The Company depends on the timely delivery from suppliers of certain
materials and services. In connection with its research, preclinical
studies and clinical trials, the Company has periodically experienced
interruption in the supply of monoclonal antibodies, including the
-3-
<PAGE>
1990 loss of its former sole supplier of the antibody used in its
cancer imaging products. Interruptions in these and other supplies
could occur in the future. The Company will need to develop sources
for commercial quantities of yttrium-90, the radionuclide used in its
proposed cancer therapeutic products, and for the antibody, streptavidin
and clearing agent used in Avicidin. The catheter used to deliver the
Company's proposed anti-restenosis products has not yet been approved
for sale by the FDA; commercial use of such catheter depends on receiving
such approval. In addition, the Company depends on a supply of the
catheter from its manufacturer, and there can be no assurance that the
manufacturer will provide a timely and adequate supply of catheters to
the Company. Any failure by the manufacturer to timely and adequately
supply catheters would have a material adverse effect on the Company's
ability to commercialize these products.
Dependence on Others for Commercial Manufacturing and Marketing
The Company has no manufacturing facilities for commercial
production of its products under development. The Company also has
no experience in sales, marketing or distribution. The Company's
strategy for commercialization of its products requires entering
into various arrangements with corporate collaborators, licensors,
licensees and others to manufacture, distribute and market its
products. The Company will depend on the success of these outside
parties in performing their responsibilities. Although the Company
believes that parties to its existing and any future arrangements will
have an economic motivation to successfully perform their contractual
responsibilities, the amount and timing of resources to be devoted to
these activities are not within the Company's control. There can be
no assurance that such parties will perform their obligations as
expected, that the Company will derive any revenues from such
arrangements or that the Company's reliance on others for
manufacturing products will not result in unforeseen problems with
product supply. The Company entered into agreements with Boehringer
Ingelheim and DuPont Merck under which Boehringer Ingelheim has
worldwide manufacturing rights and non-North American marketing rights
and DuPont Merck has exclusive North American marketing rights to the
Company's Verluma lung cancer imaging product. The Company intends to
seek collaborative partners to assist in developing, manufacturing and
marketing its therapeutic products under development. There can be no
assurance that the Company will be able to negotiate acceptable
collaborative arrangements in the future or that its current or future
collaborative arrangements will be successful.
Competition
Cancer imaging and therapy and anti-restenosis product development
is highly competitive. There are numerous competitors developing
products to detect, stage or treat each of the diseases for which the
Company is seeking to develop products. Some competitors have adopted
product development strategies similar to the Company's approach of
targeting cancer cells by linking radionuclides to monoclonal
antibodies. Many emerging companies have corporate partnership
arrangements with large, established companies to support research,
development and commercialization efforts of products that may be
competitive with those being developed by the Company. In addition, a
number of established pharmaceutical and chemical companies are
developing proprietary technologies or have enhanced their
capabilities by entering into arrangements with, or acquiring,
companies with proprietary monoclonal antibody-based technology or
other technologies applicable to the imaging or treatment of cancer
and restenosis. Many of the Company's existing or potential
competitors have or have access to substantially greater financial,
research and development, marketing and production resources than
those of the Company and may be better equipped than NeoRx to develop,
manufacture and market competing products. The Company's competitors
may develop and introduce products that are more effective than those
of the Company or that would render the Company's technology and
products under development less competitive, uneconomical or obsolete.
-4-
<PAGE>
Technological Uncertainties Regarding Human Immune Response to
Foreign Proteins
The Company's Avicidin cancer therapy product, which is in Phase
I/II clinical testing, currently uses a monoclonal antibody of murine
(mouse) origin coupled to streptavidin, a protein of bacterial origin.
These molecules appear as foreign proteins to the human immune system,
which develops its own antibody in response. The HAMA response, or
"human anti-streptavidin antibody" response, or "HASA," may limit the
number of doses that may be safely or effectively administered to a
patient, thereby limiting a product's efficacy. The Company believes
that humanized antibodies may reduce HAMA and that chemical modification
of streptavidin may reduce HASA. Gene cloning technology permits splicing
of human and murine antibody portions together, thereby yielding humanized
molecules. Although the Company has produced a humanized version of the
murine antibody used in Avicidin and has initiated a Phase I human safety
study of the humanized antibody, there can be no assurance that such
humanized antibody would reduce the extent to which HAMA or HASA may
limit the effectiveness of the Company's cancer therapy products or that
the Company will successfully commercialize products incorporating the
humanized antibody.
Uncertainty Regarding Patents and Proprietary Rights
The patent position of biotechnology firms generally is highly
uncertain and involves complex legal and factual questions, and
currently no consistent policy has emerged regarding the breadth of
claims allowed in biotechnology patents. Products and processes
important to NeoRx are subject to this uncertainty. Accordingly,
there can be no assurance that the Company's patent applications will
result in additional patents being issued or that, if issued, patents
will afford protection against competitors with similar technology,
nor can there be any assurance that any patents issued to the Company
will not be infringed by or designed around by others or that others
will not obtain patents that the Company would need to license or
design around. Moreover, the technology applicable to the Company's
products is developing rapidly. Research institutes, universities and
biotechnology companies, including the Company's competitors, have
filed applications for, or have been issued, numerous patents and may
obtain additional patents and proprietary rights relating to products
or processes competitive with or relating to those of the Company.
The scope and validity of such patents, the extent to which the
Company may be required to obtain licenses thereunder or under other
proprietary rights and the cost and availability of licenses are
unknown. To the extent licenses are required, there can be no
assurance that they will be available on commercially reasonable
terms, if at all. The Company also relies on unpatented proprietary
technology. There can be no assurance that others will not
independently develop substantially equivalent proprietary information
and techniques, that others will not otherwise gain access to the
Company's proprietary technology, or disclose such technology, or that
the Company can meaningfully protect its rights in such unpatented
proprietary technology.
Delays and Costs Resulting From Government Regulation
The manufacture and marketing of the Company's proposed products and
its research and development activities are subject to regulation for
safety, efficacy and quality by numerous government authorities in the
United States and other countries. Clinical trials, manufacturing and
marketing of products are subject to the rigorous testing and approval
processes of the FDA and equivalent foreign regulatory authorities.
Clinical trials and regulatory approval can take a number of years to
accomplish and require the expenditure of substantial resources.
There can be no assurance that clinical trials will be started or
completed successfully within any specified time period. Delays in
approval can occur for a number of reasons, including the Company's
failure to obtain necessary supplies of monoclonal antibodies or other
materials or to obtain a sufficient number of available patients to
support the claims necessary for regulatory approval. There can be no
assurance that requisite FDA approvals will be obtained on a timely
basis, if at all, or that any approvals granted will cover all the
clinical indications for which the Company may seek approval.
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<PAGE>
Boehringer Ingelheim filed a PLA and an ELA with the FDA for approval
to manufacture and market Verluma in March 1994. In December 1995,
ODAC recommended that the FDA approve Verluma. On March 22, 1996,
Boehringer Ingelheim advised the Company that it had decided to
discontinue the use of a contract manufacturer of a non-biologic
component of the Verluma product and assume responsibility for its
manufacture. Because Boehringer Ingelheim must validate its
manufacturing processes and procedures for this component, the Company
does not expect FDA approval before the third quarter 1996. The
Company's business would be adversely affected by significant delays
in FDA approval of the manufacture and marketing of this product by
Boehringer Ingelheim or by failure of the FDA to grant such approval.
Delays or failure to obtain regulatory approval would adversely affect
or prevent the marketing of other products developed by the Company
and its ability to receive royalty or other product revenues. The
manufacture and marketing of drugs are subject to continuing FDA
review and later discovery of previously unknown problems with a
product, manufacturer or facility may result in restrictions,
including withdrawal of the product from the market. Marketing the
Company's products abroad will require similar regulatory approvals
and is subject to similar risks. In addition, the Company is unable
to predict the extent of adverse governmental regulation that might
arise from future U.S. or foreign government action.
Risk of Product Liability
The testing, manufacturing, marketing and sale of human healthcare
products under development by the Company entail an inherent risk that
product liability claims will be asserted against the Company.
Although the Company is insured against such risks up to a $10 million
annual aggregate limit in connection with human clinical trials and
commercial sales of its products under development, there can be no
assurance that the Company's present product liability insurance is
adequate. A product liability claim in excess of the Company's
insurance coverage could have a material adverse effect on the Company
and may prevent the Company from obtaining adequate product liability
insurance in the future on affordable terms. In addition, there can
be no assurance that product liability coverage will continue to be
available in sufficient amounts or at an acceptable cost.
Uncertainty of Pharmaceutical Pricing, Healthcare Reform and Reimbursement
The levels of revenues and profitability of pharmaceutical companies
may be affected by the continuing efforts of government and third-party
payors to contain or reduce the costs of healthcare through various means.
For example, in certain foreign markets pricing or profitability of
prescription pharmaceuticals is subject to governmental control.
In the United States, there have been, and the Company expects that
there will continue to be, a number of federal and state proposals to
implement similar governmental control. It is uncertain what legislative
proposals will be adopted or what actions federal, state or private payors
for healthcare goods and services may take in response to any healthcare
reform proposals or legislation. Even in the absence of statutory change,
market forces are changing the healthcare sector. The Company cannot
predict the effect healthcare reforms may have on its business, and
there can be no assurance that any such reforms will not have a material
adverse effect on the Company. Further, to the extent that such proposals
or reforms have a material adverse effect on the business, financial
condition and profitability of other pharmaceutical companies that are
prospective collaborators for certain of the Company's potential
products, the Company's ability to commercialize its products under
development may be adversely affected. In addition, both in the
United States and elsewhere, sales of prescription pharmaceuticals
depend in part on the availability of reimbursement to the consumer
from third-party payors, such as governmental and private insurance
plans. Third-party payors are increasingly challenging the prices
charged for medical products and services. 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 and that
reimbursement to the consumer will be available or will be sufficient
to allow the Company to sell its products on a competitive basis.
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<PAGE>
Reliance on Key Personnel
The Company's success will depend in part on the efforts of certain
key scientists and management personnel. Because of the specialized
nature of the Company's business, the Company's ability to maintain
its competitive position will depend in part on its ability to attract
and retain qualified personnel. Competition for such personnel is
intense. There can be no assurance that the Company will be able to
hire sufficient qualified personnel on a timely basis or retain such
personnel. The loss of key management or scientific personnel could
have an adverse effect on the Company's business. The Company does
not maintain key man insurance on any of its scientists or management
personnel.
Compliance With Environmental Regulations; Hazardous Materials
The Company is subject to federal, state and local laws, rules,
regulations and policies governing the use, generation, manufacture,
storage, air emission, effluent discharge, handling and disposal of
certain materials and wastes in connection with its research and
development activities and its manufacturing of clinical trial
materials. Although the Company believes that it has complied with
these laws and regulations in all material respects, there can be no
assurance that it will not be required to incur significant costs to
comply with environmental and health and safety regulations in the
future. The Company's research and development and clinical
manufacturing processes involve the controlled use of small amounts of
hazardous and radioactive materials. 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.
Possible Volatility of the Price of the Common Stock
The market price of the Common Stock may be highly volatile.
Factors such as announcements of technological innovations or new
commercial products by the Company or its competitors, governmental
regulation, results and timing of clinical trials, sales by existing
shareholders, regulatory approvals or developments relating to
corporate alliances or patent or proprietary rights may have a
significant impact on the market price of the Common Stock. In
addition, general market price declines, volatility or share
illiquidity in the future could adversely affect the market price of
the Common Stock.
DIVIDENDS
The Company has never paid dividends on the Common Stock and does
not anticipate paying any cash dividends on the Common Stock in the
foreseeable future. In addition, under the terms of its $2.4375
Convertible Exchangeable Preferred Stock, Series 1, cash dividends on
the Common Stock may not be paid unless full cumulative dividends on
such preferred stock have been paid.
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<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company
at March 31, 1996.
<TABLE>
<CAPTION>
March 31, 1996
--------------
(in thousands)
<S> <C>
Noncurrent liabilities:
9 3/4% Convertible Subordinated Debentures........................ $ 1,195
Other noncurrent liabilities...................................... 77
--------
Total noncurrent liabilities.................................. 1,272
--------
Shareholders' equity:
Series Preferred Stock, $.02 par value per share; 3,000,000 shares
authorized:
Convertible Exchangeable Preferred Stock, Series 1;
208,240 shares outstanding.................................... 4
Convertible Preferred Stock, Series 2;
46,667 shares outstanding..................................... 1
Common Stock, $.02 par value per share, 60,000,000 shares
authorized, 15,349,577 shares outstanding (1)..................... 307
Additional paid-in capital........................................ 139,058
Accumulated deficit since inception............................... (117,050)
--------
Total shareholders' equity.................................... 22,320
--------
Total capitalization................................ $ 23,592
========
</TABLE>
_______________
(1) Does not include (i) 1,033,727 shares of Common Stock reserved
for issuance upon exercise of outstanding warrants; (ii) 2,811,853
shares of Common Stock reserved for issuance upon exercise of
outstanding stock options; (iii) 46,318 shares of Common Stock
reserved for issuance upon the conversion of the 9 3/4% Convertible
Subordinated Debentures; (iv) 236,636 shares of Common Stock reserved
for issuance upon conversion of the Convertible Exchangeable Preferred
Stock, Series 1; and (v) 1,239,860 shares of Common Stock reserved
for issuance upon conversion of the Convertible Preferred Stock,
Series 2.
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<PAGE>
SELLING SHAREHOLDER
The Company sold 268,904 shares to The DuPont Merck Pharmaceutical
Company ("DuPont Merck"), the Selling Shareholder, in a private transaction
in October 1994 at a purchase price of $3.7188 per share in connection
with a license agreement. The Shares have been registered pursuant to
the Company's agreement with the Selling Shareholder to remove their
restricted status under the Securities Act. After completion of this
offering, assuming all the Shares being offered are sold, the Selling
Shareholder will not own any shares of Common Stock.
No affiliate of the Selling Shareholder has held any position,
office or other material relationship with the Company or any of its
affiliates within the past three years.
PLAN OF DISTRIBUTION
The resale of the Shares by the Selling Shareholder may be
effected from time to time in transactions in the over-the-counter
market through Nasdaq, in privately negotiated transactions, through
the writing of options on the Shares, or through a combination of such
methods of sale, at fixed prices that may be changed, at market prices
prevailing at the time of sale, at prices relating to such prevailing
market prices or at negotiated prices. The Selling Shareholder may
effect such transactions by selling the Shares to or through broker-
dealers, and such broker-dealers may receive compensation in the form
of discounts, concessions or commissions from the Selling Shareholder
and/or the purchasers of the Shares for whom such broker-dealers may
act as agents or to whom they may sell as principals, or both (which
compensation as to a particular broker-dealer may be in excess of
customary commissions). Any broker-dealer may act as a broker-dealer
on behalf of the Selling Shareholder in connection with the offering
of certain of the Shares by the Selling Shareholder. None of the
proceeds from the sale of the Shares by the Selling Shareholder will
be received by the Company. In addition, any of the Shares that
qualify for sale pursuant to Rule 144 promulgated under the Securities
Act may be sold in transactions complying with such Rule, rather than
pursuant to this Prospectus.
The Selling Shareholder and any broker-dealers who act in
connection with the sale of the Shares hereunder may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities
Act, and any commissions received by them and profit on any resale of
the Shares as principal might be deemed to be underwriting discounts
and commissions under the Securities Act. The Company has agreed to
bear all expenses (other than selling commission and fees and expenses
of counsel and other advisors to the Selling Shareholder) in
connection with the registration and sale of the Shares being offered
by the Selling Shareholder. The Company has agreed to indemnify the
Selling Shareholder against certain liabilities, including liabilities
under the Securities Act.
There can be no assurance that the Selling Shareholder will sell
any or all of the Shares offered by it hereunder.
-9-
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The Company is authorized to issue 60,000,000 shares of Common
Stock, $.02 par value per share, and 3,000,000 shares of Series
Preferred Stock, $.02 par value per share.
Common Stock
The holders of Common Stock are entitled to one vote per share
for each share held of record on all matters submitted to a vote of
shareholders, except that in elections of directors, shareholders are
entitled to cumulate votes by multiplying the number of votes they are
entitled to cast by the number of directors for whom they are entitled
to vote and cast the product for a single candidate or distribute the
product among two or more candidates. The holders of Common Stock are
entitled to receive ratably such dividends as are declared by the
Company's Board of Directors out of funds legally available therefor.
In the event of a liquidation, dissolution or winding up of the
Company, holders of Common Stock have the right to a ratable portion
of assets remaining after payment of liabilities and the liquidation
preferences of any outstanding shares of Series Preferred Stock. The
holders of Common Stock have no preemptive rights or rights to convert
their Common Stock into any other securities of the Company and are
not subject to future calls or assessments by the Company. All
outstanding shares of Common Stock are, and the shares of Common Stock
issuable upon conversion of the Series Preferred Stock, upon
conversion of debentures upon issuance and exchange, and upon exercise
of warrants, will be, fully paid and nonassessable. At March 31,
1996, there were approximately 15.3 million shares of Common Stock
outstanding held of record by approximately 1,100 shareholders.
Series Preferred Stock
The Company is authorized to issue 3,000,000 shares of Series
Preferred Stock, par value $.02 per share, of which 208,240 shares of
its $2.4375 Convertible Exchangeable Preferred Stock, Series 1 (the
"Series 1 Preferred Stock"), and 46,667 shares of its Series 2
Convertible Preferred Stock were outstanding at March 31, 1996.
If declared by the Company's Board of Directors, holders of
Series 1 Preferred Stock are entitled to receive a cash dividend of
$2.4375 per share, payable in semi-annual installments on June 1 and
December 1. Dividends are cumulative. Each share of Series 1
Preferred Stock is convertible into approximately 1.14 shares of
Common Stock, subject to adjustment in certain events. The Series 1
Preferred Stock is redeemable at the Company's option at certain
redemption prices, $25.98 per share at the date of this Prospectus,
reducing to $25.00 per share by 1999. The holders of Series 1
Preferred Stock have no voting rights, except in limited
circumstances.
The holders of Series 2 Convertible Preferred Stock are entitled
to receive a dividend of 8% per year of the "Stated Value" ($100 per
share) on a cumulative basis, with quarterly compounding. Dividends
shall be paid in cash or Common Stock, at the Company's option, at the
time that such Series 2 Convertible Preferred Stock is converted or
redeemed. Each share of Series 2 Convertible Preferred Stock is
convertible into Common Stock at a conversion price equal to 83% of
the average market price of the Common Stock for the five consecutive
trading days ending one day prior to the date of conversion, subject
to certain restrictions on conversion and adjustment in certain
circumstances; provided, however, that such conversion price shall not
be less than $4.41 (except in certain circumstances) nor more than
$8.36 per share of Common Stock. The Series 2 Convertible Preferred
Stock is redeemable by the Company at a price of $120.50 per share,
plus accrued and unpaid dividends. The holders of Series 2
Convertible Preferred Stock have no voting rights, except in limited
circumstances.
The Company's Board of Directors may, without further action by
the Company's shareholders, issue additional Series Preferred Stock in
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<PAGE>
one or more series and fix all the rights and preferences thereof,
including dividend rights, dividend rates, conversion rights, voting
rights, terms of redemption, redemption price or prices, liquidation
preferences and the number of shares constituting any series or the
designations of such series.
Warrants
At March 31, 1996, the Company had 1,634,907 Common Stock
purchase warrants outstanding. Every four such warrants entitle the
holder thereof to purchase one share of Common Stock at an exercise
price of $5.3125. Such warrants are exercisable until April 25, 1998.
Additionally, in conjunction with an agreement, the Company issued
Boehringer Ingelheim warrants to purchase shares of the Company's
Common Stock. At March 31, 1996, warrants to purchase 625,000 shares
were outstanding, which warrants are exercisable through September 11,
1997. Such warrants entitle the holder thereof to purchase 375,000
shares of Common Stock at an exercise price of $21.12 per share and
250,000 shares of Common Stock at an exercise price of $15.84 per
share.
The exercise price and, in some cases, the number of shares of
Common Stock issuable upon exercise of the warrants will be appropriately
adjusted in the event of stock splits, stock combinations, rights
offerings or stock or other dividends involving the Common Stock.
Fractional shares will not be issued upon exercise of the warrants
and, in lieu thereof, a cash adjustment based on the fair market value
of the Common Stock as reported on the Nasdaq National Market (or as
reported on a national securities exchange, if applicable) on the date
of exercise will be made. In case of any reclassification or capital
reorganization, or in case of any consolidation or merger of NeoRx with
or into another corporation or any sale, lease or transfer to another
corporation of all or substantially all the assets of NeoRx, the holder
of each outstanding warrant will have the right, upon subsequent exercise
of a warrant, to purchase the kind and amount of shares of stock or other
securities and property receivable upon such reclassification, capital
reorganization, consolidation, merger, sale, lease or transfer by a
holder of the number of shares of Common Stock that might have been
received upon the exercise of such warrant immediately prior thereto,
and the exercise price will be appropriately adjusted. The warrants
do not confer on the holder any voting or preemptive rights, or any
other rights as a shareholder of NeoRx.
Antitakeover Provisions
Certain provisions of the Company's Restated Articles of
Incorporation and Bylaws, as well as the Washington Business
Corporation Act, could discourage a third party from attempting to
acquire, or make it more difficult for a third party to acquire,
control of the Company without approval of the Company's Board of
Directors. Such provisions could also limit the price that certain
investors might be willing to pay in the future for shares of Common
Stock. Certain of such provisions allow the Board of Directors to
authorize the issuance of Series Preferred Stock with rights superior
to those of the Common Stock. The rights of the holders of Common
Stock will be subject to, and may be adversely affected by, the rights
of holders of any Series Preferred Stock issued in the future. The
issuance of additional Series Preferred Stock, while providing
desirable flexibility in connection with possible acquisitions and
other corporate purposes, could make it more difficult for a party to
acquire, or discourage a party from acquiring, a majority of the
Company's outstanding voting shares. The Company is also subject to
the provisions of Chapter 23B.19 of the Washington Business
Corporation Act, which generally prohibits any "significant business
transactions" within five years of the date a person acquires 10% or
more of the outstanding voting shares of a Washington corporation
unless the transaction or the acquisition is approved prior to the
acquisition date by a majority of a corporation's then board of
directors. In addition, the Company is subject to the "fair price"
provisions of Chapter 23B.17 of the Washington Business Corporation
Act, which generally prohibits "interested shareholder transactions"
(such as a merger, sale of assets or liquidation) with a person who
beneficially owns 20% or more of a corporation's outstanding voting
Shares, unless approved by a majority vote of disinterested directors
or a two-thirds vote of disinterested shareholders.
-11-
<PAGE>
The Company is party to a Rights Agreement designed to maximize
the long-term value of the Company for its shareholders by deterring
takeover abuses and providing adequate time for the Company's Board of
Directors and shareholders to evaluate acquisition proposals. In
accordance with the Rights Agreement, one preferred stock purchase
right is attached to each share of outstanding Common Stock. The
rights are not exercisable until ten days after a person or group
acquires 20% or more of the Company's Common Stock or ten business
days (or such later date as may be determined by the Board of
Directors) after a person or group announces an offer to purchase 20%
or more of the Company's Common Stock. If the rights become
exercisable, the holders may exercise them to purchase Series A Junior
Participating Preferred Stock or may exercise them to purchase shares
of Common Stock with a market value of two times the $40 exercise
price of the rights. If a person or group has acquired 20% or more of
the Company's Common Stock and thereafter acquires the Company by
merger or transfer of 50% or more of the Company's assets or earning
power, the rights become rights to purchase common stock of the
acquiring company having the market value of two times the exercise
price of the rights. If the Company's Board of Directors determines
an acquisition of the Company to be in the best interests of the
Company and its shareholders, it will redeem the rights or amend the
Rights Agreement so the rights will not become exercisable as a result
of the approved acquisition.
Transfer Agent
The Company's transfer agent and registrar is First Interstate
Bank of Washington, N.A.
LEGAL OPINIONS
The validity of the Common Stock offered hereby has been passed
upon for the Company by Perkins Coie, Seattle, Washington.
EXPERTS
The audited financial statements of the Company incorporated by
reference in this Prospectus and in the Registration Statement have
been audited by Arthur Andersen LLP, independent public accountants,
as indicated in their report with respect thereto, and are
incorporated herein in reliance upon the authority of said firm as
experts in accounting and auditing in giving said report.
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<PAGE>
No dealer, salesperson or other person has been authorized to give
any information or to make any representations other than those contained
in this Prospectus in connection with the offering herein contained
and, if given or made, such information or representations must not be
relied upon as having been authorized by the Company. This Prospectus
does not constitute an offer to sell, or a solicitation of an offer to
buy, the Shares offered hereby in any jurisdiction to any person to
whom it is unlawful to make an offer or solicitation. Neither the
delivery of this Prospectus nor any sale made hereunder shall, under
any circumstances, create an implication that there has been no change
in the affairs of the Company since the date hereof.
____________________
<TABLE>
<CAPTION>
Page
<S> <C>
Available Information .......................................... 2
Incorporation of Certain Documents by Reference ................ 2
Risk Factors ................................................... 3
Dividends ...................................................... 7
Capitalization ................................................. 8
Selling Shareholder ............................................ 9
Plan of Distribution ........................................... 9
Description of Capital Stock ................................... 10
Legal Opinions ................................................. 12
Experts ........................................................ 12
</TABLE>
NEORX CORPORATION
268,904 Shares of
Common Stock
P R O S P E C T U S
__________, 1996
<PAGE>
Information contained herein is subject to completion or amendment.
A registration statement relating to these Securities has been filed
with the Securities and Exchange Commission. These Securities may not
be sold nor may offers to buy be accepted prior to the time the
registration statement becomes effective. This prospectus shall not
constitute an offer to sell or the solicitation of an offer to buy nor
shall there be any sale of these Securities in any State in which such
offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such State.
<PAGE>
Subject to Completion, dated June 11, 1996
PROSPECTUS
1,654,338 Shares of Common Stock
1,323,471 Warrants to Purchase Common Stock
77,859 Warrant Shares
NeoRx Corporation
This Prospectus relates to (i) 1,654,338 shares (the "Shares")
of common stock, $.02 par value per share (the "Common Stock"),
(ii) 1,323,471 warrants (the "Warrants") to purchase Common Stock of
NeoRx Corporation (the "Company" or "NeoRx") and (iii) 77,859 shares
of Common Stock of NeoRx issuable upon exercise of 311,436 Warrants
held by a shareholder (the "Warrant Shares"). Every four Warrants
entitle the registered holder thereof to purchase one share of
Common Stock at a price of $5.3125. The Shares, the Warrants and
the Warrant Shares collectively are referred to herein as the
"Securities." The Securities may be offered by certain shareholders
of the Company (the "Selling Security Holders") from time to time in
transactions in the over-the-counter market through Nasdaq, in
privately negotiated transactions, through the writing of options on
the Securities, or through a combination of such methods of sale, at
fixed prices that may be changed, at market prices prevailing at the
time of sale, at prices relating to such prevailing market prices or
at negotiated prices. The Selling Security Holders may effect such
transactions by selling the Securities to or through broker-dealers,
and such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Security
Holders and/or the purchasers of the Securities for whom such
broker-dealers may act as agents or to whom they may sell as
principals, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions). See
"Selling Security Holders" and "Plan of Distribution."
None of the proceeds from the sale of the Securities by the
Selling Security Holders will be received by the Company. The
Company has agreed to bear all expenses (other than selling
commissions and fees and expenses of counsel and other advisers to
the Selling Security Holders) in connection with the registration
and sale of the Securities being offered by the Selling Security
Holders. The Company has agreed to indemnify the Selling Security
Holders against certain liabilities, including liabilities under the
Securities Act of 1933, as amended (the "Securities Act").
All the Securities were "restricted securities" under the
Securities Act prior to their registration hereunder. The Company
sold 1,323,471 units (the "Units"), each Unit consisting of one
share of Common Stock and one Warrant to purchase one-quarter of one
share of Common Stock, to the Selling Security Holders in private
transactions in April 1995. The Shares, including the 330,867
shares of Common Stock underlying the Warrants, and the Warrants are
registered hereunder. This Prospectus covers not only the resale of
shares to be issued upon exercise of the Warrants by the Selling
Security Holders, but also the issuance of shares upon exercise of
the Warrants by subsequent purchasers of the Warrants. The Company
sold an additional 77,859 units in September 1995 pursuant to
Regulation S to one of the Selling Security Holders, each such unit
consisting of three shares of Common Stock and four warrants to
purchase one-quarter of one share of Common Stock. The 77,859
shares of Common Stock underlying the warrants sold in September
1995 are also registered hereunder. This Prospectus has been
prepared so that future sales of the Securities will not be
restricted under the Securities Act. In connection with any sales,
the Selling Security Holders and any brokers participating in such
sales may be deemed to be "underwriters" within the meaning of the
Securities Act. See "Selling Security Holders."
The Common Stock is quoted on the Nasdaq National Market under
the symbol "NERX." On June 4, 1996, the closing sales price for the
shares of Common Stock as reported on the Nasdaq National Market was
$7.00 per share. Prior to this offering, there has been no public
market for the Warrants, and there can be no assurance that any such
market will develop. The Warrants have been approved for quotation
on the Nasdaq National Market under the symbol "NERXW."
__________________________
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS
BEGINNING ON PAGE 4."
__________________________
<PAGE>
THE 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 REPRESEN-
TATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
__________________________
The date of this Prospectus is __________, 1996.
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<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
in accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements and other information
filed by the Company may be inspected and copies obtained (at
prescribed rates) at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Judiciary Plaza, Washington,
D.C. 20549 and at the Commission's Regional Offices in New York (7
World Trade Center, 13th Floor, New York, New York 10048) and Chicago
(Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661). Such reports, proxy statements and other information
may also be inspected at the offices of the National Association of
Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
This Prospectus is part of a Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") filed with the Commission under the Securities Act with
respect to the Securities. This Prospectus does not contain all the
information set forth in the Registration Statement, certain portions
of which have been omitted in accordance with the Commission's rules
and regulations. For further information with respect to the Company
and the Securities offered hereby, reference is made to the
Registration Statement and the exhibits thereto. The statements in
this Prospectus as to the contents of any agreement or other document
of which a copy is filed as an exhibit to either the Registration
Statement or other filings by the Company with the Commission
incorporated herein by reference are qualified in their entirety by
reference thereto.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company will provide without charge to each person to whom a
copy of this Prospectus is delivered, upon such person's written or
oral request, a copy of any or all of the documents incorporated by
reference herein (other than exhibits to such documents, unless such
exhibits are specifically incorporated by reference into the
information that this Prospectus incorporates). Requests should be
directed to: NeoRx Corporation, 410 West Harrison Street, Seattle,
Washington 98119, Attention: Investor Relations.
The following documents filed with the Commission by the Company
are incorporated by reference into this Prospectus:
(1) The Company's Annual Report 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 Report on Form 8-K filed by the Company
on April 16, 1996.
All documents filed with the Commission by the Company pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to
the date of this Prospectus and prior to the termination of the
offering of the Securities offered hereby shall be deemed incorporated
by reference into this Prospectus and to be a part hereof from the
respective dates of filing such documents. Any statement contained in
a document incorporated or deemed to be incorporated by reference
herein shall be deemed modified, superseded or replaced for purposes
of this Prospectus to the extent that a statement contained herein or
in any subsequently filed document that also is or is deemed to be
incorporated by reference herein modifies, supersedes or replaces such
statement. Any statement so modified, superseded or replaced shall
not be deemed, except as so modified, superseded or replaced, to
constitute a part of this Prospectus.
__________________________
The Company's principal offices are located at 410 West Harrison
Street, Seattle, Washington 98119, and its telephone number is (206)
281-7001.
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<PAGE>
RISK FACTORS
Prospective purchasers should carefully consider the risk factors
set forth below as well as the other information set forth in this
Prospectus before purchasing the Securities offered hereby.
Early Stage of Product Development; Technological Uncertainty
To date, substantially all of the Company's revenues have consisted
of payments received under agreements with corporate partners and from
government research contracts, none of which provide for material
future funding. The Company has received no revenues to date from
product sales, does not expect regulatory approval for commercial
sales of its lung cancer imaging product earlier than the third
quarter of 1996 and does not expect to seek U.S. regulatory approval
for sales of its cancer and anti-restenosis treatment products before
1999. The Company's current research and development activities are
focused primarily on its proposed therapeutic products, which are in
an early stage of development. In preclinical studies the Company's
pretargeting technology has shown promise for the treatment of cancer
tumors in animals. Results obtained in preclinical studies are not
necessarily indicative of results that will be obtained in human
clinical trials. The Company initiated a Phase I dose escalation
study in humans in mid-1994 and does not expect to complete such study
before the second half of 1996. The Company's proposed therapeutic
products for the prevention of restenosis are also in an early stage
of development.
The Company will require collaborative partners to assist in
developing its potential products, and there can be no assurance that
the Company will be able to negotiate acceptable collaborative
arrangements in the future. In addition, the Company's potential
products will require significant additional research and development
and extensive clinical testing prior to commercial use. There can be
no assurance that these potential products will be successfully
developed into drugs that can be administered to humans or that any
such drugs or related therapies will prove to be safe and effective in
clinical trials or cost-effective to manufacture. Further, these
potential products may prove to have undesirable and unintended side
effects that may prevent or limit their commercial use.
History of Losses; Need for Additional Funds
The Company has been unprofitable since inception and expects to
incur additional operating losses over the next several years. These
operating losses may fluctuate from period to period. For the period
from February 13, 1984 (the Company's inception) to March 31, 1996,
the Company incurred net losses aggregating $109.4 million. The
Company's existing capital resources and interest income thereon are
currently expected to be sufficient to fund the Company's operations
through late 1997. The Company's actual expenditures will depend on
numerous factors, including results of research and development
activities, clinical trials, the levels of resources that the Company
devotes to establishing and expanding marketing and manufacturing
capabilities, competitive and technological developments and the
timing and cost of relationships with parties to collaborative
agreements. The Company will require substantial additional funds to
complete the development of its therapeutic products. Adequate funds
for these purposes, whether through additional financings,
collaborative arrangements with corporate sponsors or other sources,
may not be available when needed or on terms favorable to the Company.
Dependence on Suppliers
The Company depends on the timely delivery from suppliers of certain
materials and services. In connection with its research, preclinical
studies and clinical trials, the Company has periodically experienced
interruption in the supply of monoclonal antibodies, including the
-4-
<PAGE>
1990 loss of its former sole supplier of the antibody used in its
cancer imaging products. Interruptions in these and other supplies
could occur in the future. The Company will need to develop sources
for commercial quantities of yttrium-90, the radionuclide used in its
proposed cancer therapeutic products, and for the antibody,
streptavidin and clearing agent used in Avicidin. The catheter used
to deliver the Company's proposed anti-restenosis products has not yet
been approved for sale by the FDA; commercial use of such catheter
depends on receiving such approval. In addition, the Company depends
on a supply of the catheter from its manufacturer, and there can be no
assurance that the manufacturer will provide a timely and adequate
supply of catheters to the Company. Any failure by the manufacturer
to timely and adequately supply catheters would have a material
adverse effect on the Company's ability to commercialize these
products.
Dependence on Others for Commercial Manufacturing and Marketing
The Company has no manufacturing facilities for commercial
production of its products under development. The Company also has no
experience in sales, marketing or distribution. The Company's
strategy for commercialization of its products requires entering into
various arrangements with corporate collaborators, licensors,
licensees and others to manufacture, distribute and market its
products. The Company will depend on the success of these outside
parties in performing their responsibilities. Although the Company
believes that parties to its existing and any future arrangements will
have an economic motivation to successfully perform their contractual
responsibilities, the amount and timing of resources to be devoted to
these activities are not within the Company's control. There can be
no assurance that such parties will perform their obligations as
expected, that the Company will derive any revenues from such
arrangements or that the Company's reliance on others for
manufacturing products will not result in unforeseen problems with
product supply. The Company entered into agreements with Boehringer
Ingelheim and DuPont Merck under which Boehringer Ingelheim has
worldwide manufacturing rights and non-North American marketing rights
and DuPont Merck has exclusive North American marketing rights to the
Company's Verluma lung cancer imaging product. The Company intends to
seek collaborative partners to assist in developing, manufacturing and
marketing its therapeutic products under development. There can be no
assurance that the Company will be able to negotiate acceptable
collaborative arrangements in the future or that its current or future
collaborative arrangements will be successful.
Competition
Cancer imaging and therapy and anti-restenosis product development
is highly competitive. There are numerous competitors developing
products to detect, stage or treat each of the diseases for which the
Company is seeking to develop products. Some competitors have adopted
product development strategies similar to the Company's approach of
targeting cancer cells by linking radionuclides to monoclonal
antibodies. Many emerging companies have corporate partnership
arrangements with large, established companies to support research,
development and commercialization efforts of products that may be
competitive with those being developed by the Company. In addition, a
number of established pharmaceutical and chemical companies are
developing proprietary technologies or have enhanced their
capabilities by entering into arrangements with, or acquiring,
companies with proprietary monoclonal antibody-based technology or
other technologies applicable to the imaging or treatment of cancer
and restenosis. Many of the Company's existing or potential
competitors have or have access to substantially greater financial,
research and development, marketing and production resources than
those of the Company and may be better equipped than NeoRx to develop,
manufacture and market competing products. The Company's competitors
may develop and introduce products that are more effective than those
of the Company or that would render the Company's technology and
products under development less competitive, uneconomical or obsolete.
-5-
<PAGE>
Technological Uncertainties Regarding Human Immune Response to
Foreign Proteins
The Company's Avicidin cancer therapy product, which is in Phase
I/II clinical testing, currently uses a monoclonal antibody of murine
(mouse) origin coupled to streptavidin, a protein of bacterial origin.
These molecules appear as foreign proteins to the human immune system,
which develops its own antibody in response. The HAMA response, or
"human anti-streptavidin antibody" response, or "HASA," may limit the
number of doses that may be safely or effectively administered to a
patient, thereby limiting a product's efficacy. The Company believes
that humanized antibodies may reduce HAMA and that chemical
modification of streptavidin may reduce HASA. Gene cloning technology
permits splicing of human and murine antibody portions together,
thereby yielding humanized molecules. Although the Company has
produced a humanized version of the murine antibody used in Avicidin
and has initiated a Phase I human safety study of the humanized
antibody, there can be no assurance that such humanized antibody would
reduce the extent to which HAMA or HASA may limit the effectiveness of
the Company's cancer therapy products or that the Company will
successfully commercialize products incorporating the humanized
antibody.
Uncertainty Regarding Patents and Proprietary Rights
The patent position of biotechnology firms generally is highly
uncertain and involves complex legal and factual questions, and
currently no consistent policy has emerged regarding the breadth of
claims allowed in biotechnology patents. Products and processes
important to NeoRx are subject to this uncertainty. Accordingly,
there can be no assurance that the Company's patent applications will
result in additional patents being issued or that, if issued, patents
will afford protection against competitors with similar technology,
nor can there be any assurance that any patents issued to the Company
will not be infringed by or designed around by others or that others
will not obtain patents that the Company would need to license or
design around. Moreover, the technology applicable to the Company's
products is developing rapidly. Research institutes, universities and
biotechnology companies, including the Company's competitors, have
filed applications for, or have been issued, numerous patents and may
obtain additional patents and proprietary rights relating to products
or processes competitive with or relating to those of the Company.
The scope and validity of such patents, the extent to which the
Company may be required to obtain licenses thereunder or under other
proprietary rights and the cost and availability of licenses are
unknown. To the extent licenses are required, there can be no
assurance that they will be available on commercially reasonable
terms, if at all. The Company also relies on unpatented proprietary
technology. There can be no assurance that others will not
independently develop substantially equivalent proprietary information
and techniques, that others will not otherwise gain access to the
Company's proprietary technology, or disclose such technology, or that
the Company can meaningfully protect its rights in such unpatented
proprietary technology.
Delays and Costs Resulting From Government Regulation
The manufacture and marketing of the Company's proposed products and
its research and development activities are subject to regulation for
safety, efficacy and quality by numerous government authorities in the
United States and other countries. Clinical trials, manufacturing and
marketing of products are subject to the rigorous testing and approval
processes of the FDA and equivalent foreign regulatory authorities.
Clinical trials and regulatory approval can take a number of years to
accomplish and require the expenditure of substantial resources.
There can be no assurance that clinical trials will be started or
completed successfully within any specified time period. Delays in
approval can occur for a number of reasons, including the Company's
failure to obtain necessary supplies of monoclonal antibodies or other
materials or to obtain a sufficient number of available patients to
support the claims necessary for regulatory approval. There can be no
assurance that requisite FDA approvals will be obtained on a timely
basis, if at all, or that any approvals granted will cover all the
clinical indications for which the Company may seek approval.
-6-
<PAGE>
Boehringer Ingelheim filed a PLA and an ELA with the FDA for approval
to manufacture and market Verluma in March 1994. In December 1995,
ODAC recommended that the FDA approve Verluma. On March 22, 1996,
Boehringer Ingelheim advised the Company that it had decided to
discontinue the use of a contract manufacturer of a non-biologic
component of the Verluma product and assume responsibility for its
manufacture. Because Boehringer Ingelheim must validate its
manufacturing processes and procedures for this component, the Company
does not expect FDA approval before the third quarter 1996. The
Company's business would be adversely affected by significant delays
in FDA approval of the manufacture and marketing of this product by
Boehringer Ingelheim or by failure of the FDA to grant such approval.
Delays or failure to obtain regulatory approval would adversely affect
or prevent the marketing of other products developed by the Company
and its ability to receive royalty or other product revenues. The
manufacture and marketing of drugs are subject to continuing FDA
review and later discovery of previously unknown problems with a
product, manufacturer or facility may result in restrictions,
including withdrawal of the product from the market. Marketing the
Company's products abroad will require similar regulatory approvals
and is subject to similar risks. In addition, the Company is unable
to predict the extent of adverse governmental regulation that might
arise from future U.S. or foreign government action.
Risk of Product Liability
The testing, manufacturing, marketing and sale of human healthcare
products under development by the Company entail an inherent risk that
product liability claims will be asserted against the Company.
Although the Company is insured against such risks up to a $10 million
annual aggregate limit in connection with human clinical trials and
commercial sales of its products under development, there can be no
assurance that the Company's present product liability insurance is
adequate. A product liability claim in excess of the Company's
insurance coverage could have a material adverse effect on the Company
and may prevent the Company from obtaining adequate product liability
insurance in the future on affordable terms. In addition, there can
be no assurance that product liability coverage will continue to be
available in sufficient amounts or at an acceptable cost.
Uncertainty of Pharmaceutical Pricing, Healthcare Reform and Reimbursement
The levels of revenues and profitability of pharmaceutical companies
may be affected by the continuing efforts of government and third-party
payors to contain or reduce the costs of healthcare through various means.
For example, in certain foreign markets pricing or profitability of
prescription pharmaceuticals is subject to governmental control. In the
United States, there have been, and the Company expects that there will
continue to be, a number of federal and state proposals to implement
similar governmental control. It is uncertain what legislative proposals
will be adopted or what actions federal, state or private payors for
healthcare goods and services may take in response to any healthcare
reform proposals or legislation. Even in the absence of statutory change,
market forces are changing the healthcare sector. The Company cannot
predict the effect healthcare reforms may have on its business, and
there can be no assurance that any such reforms will not have a material
adverse effect on the Company. Further, to the extent that such proposals
or reforms have a material adverse effect on the business, financial
condition and profitability of other pharmaceutical companies that are
prospective collaborators for certain of the Company's potential
products, the Company's ability to commercialize its products under
development may be adversely affected. In addition, both in the
United States and elsewhere, sales of prescription pharmaceuticals
depend in part on the availability of reimbursement to the consumer
from third-party payors, such as governmental and private insurance
plans. Third-party payors are increasingly challenging the prices
charged for medical products and services. 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 and that
reimbursement to the consumer will be available or will be sufficient
to allow the Company to sell its products on a competitive basis.
-7-
<PAGE>
Reliance on Key Personnel
The Company's success will depend in part on the efforts of certain
key scientists and management personnel. Because of the specialized
nature of the Company's business, the Company's ability to maintain
its competitive position will depend in part on its ability to attract
and retain qualified personnel. Competition for such personnel is
intense. There can be no assurance that the Company will be able to
hire sufficient qualified personnel on a timely basis or retain such
personnel. The loss of key management or scientific personnel could
have an adverse effect on the Company's business. The Company does
not maintain key man insurance on any of its scientists or management
personnel.
Compliance With Environmental Regulations; Hazardous Materials
The Company is subject to federal, state and local laws, rules,
regulations and policies governing the use, generation, manufacture,
storage, air emission, effluent discharge, handling and disposal of
certain materials and wastes in connection with its research and
development activities and its manufacturing of clinical trial
materials. Although the Company believes that it has complied with
these laws and regulations in all material respects, there can be no
assurance that it will not be required to incur significant costs to
comply with environmental and health and safety regulations in the
future. The Company's research and development and clinical
manufacturing processes involve the controlled use of small amounts of
hazardous and radioactive materials. 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.
Possible Volatility of the Price of the Securities
The market price of the Securities following this offering may be
highly volatile. Factors such as announcements of technological
innovations or new commercial products by the Company or its
competitors, governmental regulation, results and timing of clinical
trials, regulatory approvals or developments relating to corporate
alliances or patent or proprietary rights may have a significant
impact on the market price of the Securities. In addition, general
market price declines, volatility or share illiquidity in the future
could adversely affect the market price of the Securities.
No Assurance of Public Market for Warrants
Prior to this offering, there has been no public trading market
for the Warrants. There can be no assurance that a regular trading
market will develop after this offering or that, if developed, it will
be sustained. The Company has the right to suspend use of this
Prospectus for a discrete period of time upon the occurrence of
certain events.
DIVIDENDS
The Company has never paid dividends on the Common Stock and does
not anticipate paying any cash dividends on the Common Stock in the
foreseeable future. In addition, under the terms of its $2.4375
Convertible Exchangeable Preferred Stock, Series 1, cash dividends on
the Common Stock may not be paid unless full cumulative dividends on
such preferred stock have been paid.
-8-
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company
at March 31, 1996.
<TABLE>
<CAPTION>
March 31, 1996
--------------
(in thousands)
<S> <C>
Noncurrent liabilities:
9 3/4/% Convertible Subordinated Debentures....................... $ 1,195
Other noncurrent liabilities...................................... 77
--------
Total noncurrent liabilities................................... 1,272
--------
Shareholders' equity:
Series Preferred Stock, $.02 par value per share; 3,000,000 shares
authorized:
Convertible Exchangeable Preferred Stock, Series 1;
208,240 shares outstanding..................................... 4
Convertible Preferred Stock, Series 2;
46,667 shares outstanding ..................................... 1
Common Stock, $.02 par value per share, 60,000,000 shares
authorized, 15,349,577 shares outstanding (1)..................... 307
Additional paid-in capital........................................ 139,058
Accumulated deficit since inception............................... (117,050)
--------
Total shareholders' equity..................................... 22,320
--------
Total capitalization................................ 23,592
=========
</TABLE>
_______________
(1) Does not include (i) 1,033,727 shares of Common Stock reserved for
issuance upon exercise of outstanding warrants; (ii) 2,811,853 shares
of Common Stock reserved for issuance upon exercise of outstanding
stock options; (iii) 46,318 shares of Common Stock reserved for
issuance upon the conversion of the 9 3/4% Convertible Subordinated
Debentures; (iv) 236,636 shares of Common Stock reserved for issuance
upon conversion of the Convertible Exchangeable Preferred Stock,
Series 1; and (v) 1,239,860 shares of Common Stock reserved for
issuance upon conversion of the Convertible Preferred Stock, Series 2.
-9-
<PAGE>
SELLING SECURITY HOLDERS
The following table provides the names of the Selling Security
Holders and the number of Securities being offered by each of them.
<TABLE>
<CAPTION>
Securities Offered
--------------------
Selling Security Holders Shares(1) Warrants
- -------------------------------------------- --------- --------
<S> <C> <C>
Ardsley Advisory Partners (2) 781,250 625,000
Sam Oracle Fund, Inc. 76,838 61,471
Quasar International Partners C.V. 93,750 75,000
Oracle Partners, L.P. 282,500 226,000
Oracle Institutional Partners, L.P. 17,500 14,000
State of Oregon Stock Growth Fund 187,500 150,000
Viking Medical Ventures Limited 62,500 50,000
Ivy Management Inc. for Ivy Emerging
Growth Fund 28,750 23,000
Ivy Management Inc. for Universal
U.S. Emerging Growth Fund 96,250 77,000
Framlington Unit Management Limited
A/C Health Fund 20,000 16,000
Selina W. Hewlett 7,500 6,000
Den Norske Krigsforsikring for Skib (3) 77,859 0
</TABLE>
_______________
(1) Includes Shares issuable upon exercise of the Warrants.
(2) Assuming the sale of all the Shares offered by Ardsley Advisory
Partners ("Ardsley"), Ardsley will hold approximately 9.5% of the
Company's outstanding stock.
(3) Consists of Shares issuable upon the exercise of certain warrants
held by Den Norske Krigsforsikring for Skib ("Den Norske").
Assuming the sale of all the Shares offered by Den Norske, Den
Norske will hold 233,577 shares of Common Stock (approximately
1.5% of the Company's outstanding Common Stock).
After completion of this offering, assuming all the Shares being
offered are sold, none of the Selling Security Holders, other than
Ardsley and Den Norske, will own any shares of Common Stock.
No Selling Security Holder has held any position, office or other
material relationship with the Company or any of its affiliates within
the past three years.
-10-
<PAGE>
The Company sold 1,323,471 Units, each Unit consisting of one
share of Common Stock and one Warrant to purchase one-quarter of one
share of Common Stock, to the Selling Security Holders in private
transactions in April 1995. The Company anticipates that the net
proceeds from the sale of the Units will be used to fund research and
development efforts, losses, working capital requirements relating to
the development and commercialization of the Company's products and
programs, and for other general corporate purposes. The Shares,
including the 330,867 shares of Common Stock underlying the Warrants,
and the Warrants are registered hereunder. The Company sold an
additional 77,859 units in September 1995 pursuant to Regulation S to
one of the Selling Security Holders, each such unit consisting of
three shares of Common Stock and four warrants to purchase one-quarter
of one share of Common Stock. The 77,859 shares of Common Stock
underlying the warrants sold in September 1995 are also registered
hereunder. This Prospectus covers not only the resale of shares to be
issued upon exercise of the Warrants by the Selling Security Holders,
but also the issuance of shares upon exercise of the Warrants by
subsequent purchasers of the Warrants. All the Securities being
offered by the Selling Security Holders, except for the Shares to be
sold by Den Norske, were acquired by them from NeoRx in private
transactions pursuant to individual purchase agreements dated as of
April 18, 1995 at a gross purchase price per Unit of $5.3125. UBS
Securities Inc. and Vector Securities International, Inc. acted as
co-placement agents on behalf of NeoRx in connection with the sale of
the Units by NeoRx to the Selling Security Holders. In consideration of
the services provided by the co-placement agents, NeoRx paid them an
aggregate fee of 7% of the gross purchase price. The Shares being
registered for sale by Den Norske represent shares of Common Stock
issuable upon the exercise of certain warrants purchased by Den Norske
as part of the sale of units of Common Stock and warrants by the
Company pursuant to Regulation S in September 1995.
Each Selling Security Holder has represented to the Company that
it purchased the Securities for investment, with no present intention
of distribution. However, in recognition of the fact that investors,
even though purchasing the Securities for investment, may wish to be
legally permitted to sell their securities when they deem appropriate,
the Company has filed with the Commission under the Securities Act the
Registration Statement with respect to the resale of the Securities
from time to time in transactions in the over-the-counter market
through Nasdaq, in privately negotiated transactions, through the
writing of options on the Securities, or through a combination of such
methods of sale and has agreed to prepare and file such amendments and
supplements to the Registration Statement as may be necessary to keep
the Registration Statement effective for three years from its
effective date.
PLAN OF DISTRIBUTION
The resale of the Securities by the Selling Security Holders may
be effected from time to time in transactions in the over-the-counter
market through Nasdaq, in privately negotiated transactions, through
the writing of options on the Securities, or through a combination of
such methods of sale, at fixed prices that may be changed, at market
prices prevailing at the time of sale, at prices relating to such
prevailing market prices or at negotiated prices. The Selling
Security Holders may effect such transactions by selling the
Securities to or through broker-dealers, and such broker-dealers may
receive compensation in the form of discounts, concessions or
commissions from the Selling Security Holders and/or the purchasers of
the Securities for whom such broker-dealers may act as agents or to
whom they may sell as principals, or both (which compensation as to a
particular broker-dealer may be in excess of customary commissions).
Any broker-dealer may act as a broker-dealer on behalf of one or more
of the Selling Security Holders in connection with the offering of
certain of the Securities by the Selling Security Holders. None of
the proceeds from the sale of the Securities by the Selling Security
Holders will be received by the Company. In addition, any of the
Securities that qualify for sale pursuant to Rule 144 promulgated
under the Securities Act may be sold in transactions complying with
such Rule, rather than pursuant to this prospectus.
-11-
<PAGE>
The Company has the right to suspend use of this Prospectus for a
discrete period of time upon the occurrence of certain events,
including pending corporate developments.
The Selling Security Holders and any broker-dealers who act in
connection with the sale of the Securities hereunder may be deemed to
be "underwriters" within the meaning of Section 2(11) of the
Securities Act, and any commissions received by them and profit on any
resale of the Securities as principal might be deemed to be
underwriting discounts and commissions under the Securities Act. The
Company has agreed to bear all expenses (other than selling
commissions and fees and expenses of counsel and other advisers to the
Selling Security Holders) in connection with the registration and sale
of the Securities being offered by the Selling Security Holders. The
Company has agreed to indemnify the Selling Security Holders against
certain liabilities, including liabilities under the Securities Act.
There can be no assurance that the Selling Security Holders will
sell any or all of the Securities offered by them hereunder.
DESCRIPTION OF THE WARRANTS
The Company sold 1,323,471 Units, each Unit consisting of one
share of Common Stock and one Warrant to purchase one-quarter of one
share of Common Stock, to the Selling Security Holders (except for Den
Norske) in private transactions in April 1995. As part of an
additional unit offering in September 1995, the Company sold 311,436
Warrants to purchase one-quarter of one share of Common Stock to Den
Norske in a private transaction. Every four Warrants entitle the
registered holder thereof to purchase one share of Common Stock at a
price of $5.3125 (the "Stock Purchase Price"). The Warrants are
exercisable from October 25, 1995 through April 25, 1998.
The Stock Purchase Price and, in some cases, the number of shares
of Common Stock issuable upon exercise of the Warrants will be
appropriately adjusted in the event of stock splits, stock
combinations, rights offerings or stock or other dividends involving
the Common Stock. Fractional shares will not be issued upon exercise
of the Warrants and, in lieu thereof, a cash adjustment based on the
fair market value of the Common Stock as reported on the Nasdaq
National Market (or as reported on a national securities exchange, if
applicable) on the date of exercise will be made.
In case of any reclassification or capital reorganization, or in
case of any consolidation or merger of NeoRx with or into another
corporation or any sale, lease or transfer to another corporation of
all or substantially all the assets of NeoRx, the holder of each of
the outstanding Warrants will have the right, upon subsequent exercise
of a Warrant, to purchase the kind and amount of shares of stock or
other securities and property receivable upon such reclassification,
capital reorganization, consolidation, merger, sale, lease or transfer
by a holder of the number of shares of Common Stock that might have
been received upon the exercise of such Warrant immediately prior
thereto, and the Stock Purchase Price will be appropriately adjusted.
The Warrants do not confer on the holder any voting or preemptive
rights, or any other rights as a stockholder of NeoRx.
The Warrants may be exercised in whole or in part by the
surrender of the Warrants to the Company at the principal office of
First Interstate Bank of Washington, N.A. in Seattle, Washington or at
the principal office of the Company in Seattle, Washington, with the
form of election to exercise set forth on the back of the Warrant
certificate duly completed and signed, and accompanied by cash or a
cashier's check (or by bank wire transfer of immediately available
funds) in the amount of the Stock Purchase Price multiplied by the
number of shares of Common Stock to be acquired pursuant to such
exercise.
-12-
<PAGE>
The provisions of the Warrants pursuant to which the shares
registered on behalf of Den Norske will be issued are substantially
identical to the provisions of the Warrants described above.
DESCRIPTION OF CAPITAL STOCK
The Company is authorized to issue 60,000,000 shares of Common
Stock, $.02 par value per share, and 3,000,000 shares of Series
Preferred Stock, $.02 par value per share.
Common Stock
The holders of Common Stock are entitled to one vote per share
for each share held of record on all matters submitted to a vote of
shareholders, except that in elections of directors, shareholders are
entitled to cumulate votes by multiplying the number of votes they are
entitled to cast by the number of directors for whom they are entitled
to vote and cast the product for a single candidate or distribute the
product among two or more candidates. The holders of Common Stock are
entitled to receive ratably such dividends as are declared by the
Company's Board of Directors out of funds legally available therefor.
In the event of a liquidation, dissolution or winding up of the
Company, holders of Common Stock have the right to a ratable portion
of assets remaining after payment of liabilities and the liquidation
preferences of any outstanding shares of Series Preferred Stock. The
holders of Common Stock have no preemptive rights or rights to convert
their Common Stock into any other securities of the Company and are
not subject to future calls or assessments by the Company. All
outstanding shares of Common Stock are, and the shares of Common Stock
issuable upon conversion of the Series Preferred Stock, upon
conversion of debentures upon issuance and exchange, and upon exercise
of warrants, will be, fully paid and nonassessable. At March 31,
1996, there were approximately 15.3 million shares of Common Stock
outstanding held of record by approximately 1,100 shareholders.
Series Preferred Stock
The Company is authorized to issue 3,000,000 shares of Series
Preferred Stock, par value $.02 per share, of which 208,240 shares of
its $2.4375 Convertible Exchangeable Preferred Stock, Series 1 (the
"Series 1 Preferred Stock"), and 46,667 shares of its Series 2
Convertible Preferred Stock were outstanding at March 31, 1996.
If declared by the Company's Board of Directors, holders of
Series 1 Preferred Stock are entitled to receive a cash dividend of
$2.4375 per share, payable in semi-annual installments on June 1 and
December 1. Dividends are cumulative. Each share of Series 1
Preferred Stock is convertible into approximately 1.14 shares of
Common Stock, subject to adjustment in certain events. The Series 1
Preferred Stock is redeemable at the Company's option at certain
redemption prices, $25.98 per share at the date of this Prospectus,
reducing to $25.00 per share by 1999. The holders of Series 1
Preferred Stock have no voting rights, except in limited
circumstances.
The holders of Series 2 Convertible Preferred Stock are entitled
to receive a dividend of 8% per year of the "Stated Value" ($100 per
share) on a cumulative basis, with quarterly compounding. Dividends
shall be paid in cash or Common Stock, at the Company's option, at the
time that such Series 2 Convertible Preferred Stock is converted or
redeemed. Each share of Series 2 Convertible Preferred Stock is
convertible into Common Stock at a conversion price equal to 83% of
the average market price of the Common Stock for the five consecutive
trading days ending one day prior to the date of conversion, subject
to certain restrictions on conversion and adjustment in certain
circumstances; provided, however, that such conversion price shall not
be less than $4.41 (except in certain circumstances) nor more than
$8.36 per share of Common Stock. The Series 2 Convertible Preferred
Stock is redeemable by the Company at a price of $120.50 per share,
plus accrued and unpaid dividends. The holders of Series 2
Convertible Preferred Stock have no voting rights, except in limited
circumstances.
-13-
<PAGE>
The Company's Board of Directors may, without further action by
the Company's shareholders, issue additional Series Preferred Stock in
one or more series and fix all the rights and preferences thereof,
including dividend rights, dividend rates, conversion rights, voting
rights, terms of redemption, redemption price or prices, liquidation
preferences and the number of shares constituting any series or the
designations of such series.
Warrants
At March 31, 1996, the Company had 1,634,907 Common Stock
purchase warrants outstanding. Every four such warrants entitle the
holder thereof to purchase one share of Common Stock at an exercise
price of $5.3125. Such warrants are exercisable until April 25, 1998.
Additionally, in conjunction with an agreement, the Company issued
Boehringer Ingelheim warrants to purchase shares of the Company's
Common Stock. At March 31, 1996, warrants to purchase 625,000 shares
were outstanding, which warrants are exercisable through September 11,
1997. Such warrants entitle the holder thereof to purchase 375,000
shares of Common Stock at an exercise price of $21.12 per share and
250,000 shares of Common Stock at an exercise price of $15.84 per
share.
The exercise price and, in some cases, the number of shares of
Common Stock issuable upon exercise of the warrants will be
appropriately adjusted in the event of stock splits, stock
combinations, rights offerings or stock or other dividends involving
the Common Stock. Fractional shares will not be issued upon exercise
of the warrants and, in lieu thereof, a cash adjustment based on the
fair market value of the Common Stock as reported on the Nasdaq
National Market (or as reported on a national securities exchange, if
applicable) on the date of exercise will be made. In case of any
reclassification or capital reorganization, or in case of any
consolidation or merger of NeoRx with or into another corporation or
any sale, lease or transfer to another corporation of all or
substantially all the assets of NeoRx, the holder of each outstanding
warrant will have the right, upon subsequent exercise of a warrant, to
purchase the kind and amount of shares of stock or other securities
and property receivable upon such reclassification, capital
reorganization, consolidation, merger, sale, lease or transfer by a
holder of the number of shares of Common Stock that might have been
received upon the exercise of such warrant immediately prior thereto,
and the exercise price will be appropriately adjusted. The warrants
do not confer on the holder any voting or preemptive rights, or any
other rights as a shareholder of NeoRx.
Antitakeover Provisions
Certain provisions of the Company's Restated Articles of
Incorporation and Bylaws, as well as the Washington Business
Corporation Act, could discourage a third party from attempting to
acquire, or make it more difficult for a third party to acquire,
control of the Company without approval of the Company's Board of
Directors. Such provisions could also limit the price that certain
investors might be willing to pay in the future for shares of Common
Stock. Certain of such provisions allow the Board of Directors to
authorize the issuance of Series Preferred Stock with rights superior
to those of the Common Stock. The rights of the holders of Common
Stock will be subject to, and may be adversely affected by, the rights
of holders of any Series Preferred Stock issued in the future. The
issuance of additional Series Preferred Stock, while providing
desirable flexibility in connection with possible acquisitions and
other corporate purposes, could make it more difficult for a party to
acquire, or discourage a party from acquiring, a majority of the
Company's outstanding voting shares. The Company is also subject to
the provisions of Chapter 23B.19 of the Washington Business
Corporation Act, which generally prohibits any "significant business
transactions" within five years of the date a person acquires 10% or
more of the outstanding voting shares of a Washington corporation
unless the transaction or the acquisition is approved prior to the
acquisition date by a majority of a corporation's then board of
directors. In addition, the Company is subject to the "fair price"
provisions of Chapter 23B.17 of the Washington Business Corporation
Act, which generally prohibits "interested shareholder transactions"
(such as a merger, sale of assets or liquidation) with a person who
beneficially owns 20% or more of a corporation's outstanding voting
Shares, unless approved by a majority vote of disinterested directors
or a two-thirds vote of disinterested shareholders.
-14-
<PAGE>
The Company is party to a Rights Agreement designed to maximize
the long-term value of the Company for its shareholders by deterring
takeover abuses and providing adequate time for the Company's Board of
Directors and shareholders to evaluate acquisition proposals. In
accordance with the Rights Agreement, one preferred stock purchase
right is attached to each share of outstanding Common Stock. The
rights are not exercisable until ten days after a person or group
acquires 20% or more of the Company's Common Stock or ten business
days (or such later date as may be determined by the Board of
Directors) after a person or group announces an offer to purchase 20%
or more of the Company's Common Stock. If the rights become
exercisable, the holders may exercise them to purchase Series A Junior
Participating Preferred Stock or may exercise them to purchase shares
of Common Stock with a market value of two times the $40 exercise
price of the rights. If a person or group has acquired 20% or more of
the Company's Common Stock and thereafter acquires the Company by
merger or transfer of 50% or more of the Company's assets or earning
power, the rights become rights to purchase common stock of the
acquiring company having the market value of two times the exercise
price of the rights. If the Company's Board of Directors determines
an acquisition of the Company to be in the best interests of the
Company and its shareholders, it will redeem the rights or amend the
Rights Agreement so the rights will not become exercisable as a result
of the approved acquisition.
LEGAL MATTERS
The validity of the Securities being offered hereby has been
passed upon for the Company by Perkins Coie, 1201 Third Avenue, 40th
Floor, Seattle, Washington.
EXPERTS
The audited financial statements incorporated by reference in
this Prospectus and elsewhere in the Registration Statement have been
audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are incorporated
by reference herein in reliance upon the authority of said firm as
experts in giving said reports.
-15-
<PAGE>
No dealer, salesperson or other person has been authorized to give any
information or to make any representations other than those contained in
this Prospectus in connection with the offering herein contained and, if
given or made, such information or representations must not be relied upon
as having been authorized by the Company or the Selling Security Holders.
This Prospectus does not constitute an offer to sell, or a solicitation of
an offer to buy, the securities offered hereby in any jurisdiction to any
person to whom it is unlawful to make an offer or solicitation. Neither
the delivery of this Prospectus nor any sale made hereunder shall, under
any circumstances, create an implication that there has been no change in
the affairs of the Company since the date hereof.
____________________
<TABLE>
<CAPTION>
Page
<S> <C>
Available Information ...................................... 3
Incorporation of Certain Documents by Reference ............ 3
Risk Factors ............................................... 4
Dividends .................................................. 8
Capitalization ............................................. 9
Selling Security Holders ................................... 10
Plan of Distribution ....................................... 11
Description of the Warrants ................................ 12
Description of Capital Stock ............................... 13
Legal Matters .............................................. 15
Experts .................................................... 15
NEORX CORPORATION
1,654,338 Shares of
Common Stock
1,323,471 Warrants to
Purchase Common Stock
77,859 Warrant Shares
P R O S P E C T U S
_________, 1996
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the estimated expenses of the
registrant in connection with the issuance and distribution of the
securities being registered, other than the underwriting discount and
commissions (all amounts are estimated except Securities and Exchange
Commission registration fee).
Securities and Exchange Commission
registration fee ............................. $ 837
Blue sky filing fees and expenses.............. 5,000
Legal fees and expenses........................ 10,000
Accountants' fees and expenses................. 1,000
Misellaneous expenses.......................... 1,163
------
Total $ 18,000
======
Item 15. Indemnification of Directors and Officers
The Washington Business Corporation Act, Sections 23B.08.510
through 23B.08.570, gives the registrant the power to indemnify
directors, officers, employees and agents of the registrant and those
serving at the registrant's request in similar positions in any other
corporation, partnership, joint venture, trust or other enterprise in
terms sufficiently broad to permit such indemnification under certain
circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933, as amended (the
"Securities Act"). The registrant's Restated Articles of
Incorporation and Bylaws provide for indemnification of the
registrant's directors, officers, employees and other agents to the
maximum extent permitted by the Washington Business Corporation Act.
In addition, the registrant has obtained directors' and officers'
liability insurance.
Item 16. Exhibits
Number Description
- ------ -----------
4.1 Form of Indenture, dated as of June 1, 1989,
between NeoRx Corporation and First Interstate
Bank of Washington, N.A., as trustee*
4.2 Specimen Warrant Certificate**
4.3 Rights Agreement, dated as of April 10, 1996, between
NeoRx Corporation and First Interstate Bank of
Washington, N.A., as Rights Agent***
4.4 Form of Purchase Agreement***
5.1 Opinion of Perkins Coie as to the legality of the
securities being registered
23.1 Consent of Arthur Andersen LLP (included on page
II-4)
23.2 Consent of Perkins Coie (included in the opinion
filed as Exhibit 5.1)
24.1 Power of Attorney (see signature page)
II-1
<PAGE>
_______________
* Filed as an exhibit to the registrant's Registration Statement on
Form S-1 (Registration No. 33-28545) effective May 31, 1989 and
incorporated herein by reference.
** Filed as an exhibit to the registrant's Form 8-A dated April 15,
1996 and incorporated herein by reference.
*** Filed as an exhibit to the registrant's Registration Statement on
Form S-3 (Registration No. 33-60029) effective August 8, 1995 and
incorporated herein by reference.
Item 17. Undertakings
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(a)(3)
of the Securities Act;
(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.
(2) That, for the purpose of determining any liability under
the Securities Act, 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 that remain unsold at
the termination of the offering.
That, for purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act), 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 in the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act 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 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 of whether such indemnification
by it is against public policy as expressed in the Securities Act and
will be governed by the final adjudication of such issue.
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<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 Seattle, State
of Washington, on May 31, 1996.
NEORX CORPORATION
By /s/ Paul G. Abrams
--------------------
Paul G. Abrams
President, Chief Executive Officer and Director
POWER OF ATTORNEY
Each person whose signature appears below constitutes and
appoints Robert M. Littauer and Jeffrey J. Miller, or either of them,
his attorneys-in-fact, with the power of substitution, for him in any
and all capacities, to sign any amendments to this registration
statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that said attorneys
- -in-fact, or their substitute or substitutes, may do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on the
31th day of May, 1996 in the capacities indicated.
Signature Title
- --------- -----
Paul G. Abrams President, Chief Executive Officer
and Director
Robert M. Littauer Senior Vice President, Chief
Financial Officer and Treasurer
Fred B. Craves Chairman of the Board
James G. Andress Director
Jack L. Bowman Director
Lawrence H.N. Kinet Director
Carl-Heinz Pommer Director
II-3
<PAGE>
Exhibit 11.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our report dated February 16,
1996 included in the NeoRx Corporation Form 10-K for the year ended
December 31, 1995 and to all references to our Firm included in this
registration statement.
Arthur Andersen LLP
Seattle, Washington
June 5, 1996
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<PAGE>
EXHIBIT 5.1
<PAGE>
June 7, 1996
Board of Directors
NeoRx Corporation
410 West Harrison Street
Seattle, WA 98119-4007
Re: Registration of 346,763 Shares of Common Stock
Dear Ladies and Gentlemen:
We have acted as counsel to NeoRx Corporation (the "Company") in
connection with the proceedings to register for resale under the
Securities Act of 1933, as amended, (i) 268,904 previously issued and
outstanding shares of the Company's Common Stock (the "Shares") and
(ii) 77,859 shares (the "Warrant Shares") of the Company's Common
Stock issuable upon the exercise of certain warrants (the "Warrants").
We have also reviewed the corporate proceedings related to the
issuance of the Shares and the Warrants.
Based on the foregoing, it is our opinion that (i) the Shares are
validly issued, fully paid and non-assessable and (ii) the Warrant
Shares, upon payment of the related exercise price and the issuance
and delivery of the Warrant Shares in accordance with the terms of the
Warrants, will be validly issued, fully paid and nonassessable.
We consent to the filing of this opinion as an exhibit to the
Company's registration statement on Form S-3 with respect to the
Shares and the Warrant Shares and to the reference to our firm in the
registration statement under the captions "Legal Opinions."
Sincerely,
PERKINS COIE
