<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 14, 1997
REGISTRATION NO. 333-
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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)
RICHARD L. ANDERSON
SENIOR VICE PRESIDENT
CHIEF FINANCIAL OFFICER, SECRETARY AND TREASURER
410 WEST HARRISON STREET
SEATTLE, WASHINGTON 98119
(206) 281-7001
(Name, address and telephone number of agent for service)
-------------------------
Copies to:
Stephen A. McKeon
Patrick J. Devine
Perkins Coie
1201 Third Avenue, 40th Floor
Seattle, Washington 98101-3099
(206) 583-8888
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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
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the Securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, as amended, 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> 2
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. [ ]
-------------------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES TO AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
BE REGISTERED REGISTERED PER UNIT (1) PRICE (1) REGISTRATION FEE
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.02 par
value per share............ 3,303,027(2) $4.25 $14,037,865 $4,254
=================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c).
(2) Pursuant to Rule 416 under the Securities Act of 1933, there are also
being registered such indeterminate number of additional shares of
Common Stock as may be issuable upon conversion of the Convertible
Preferred Stock described herein and payment of dividends thereon
pursuant to the provisions thereof regarding determination of the
applicable conversion price and dividend rate.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 3
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> 4
Subject to Completion, dated April 14, 1997
PROSPECTUS
3,303,027 SHARES OF COMMON STOCK
OF
NEORX CORPORATION
This Prospectus relates to up to 3,303,027 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 certain
shareholders of the Company (the "Selling Shareholders") from time to time in
transactions in the over-the-counter market through the Nasdaq National Market
("Nasdaq"), in privately negotiated transactions, through the writing of options
on the Shares, or otherwise, 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 Shareholders 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 Shareholders 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 Shareholders" and "Plan of Distribution."
None of the proceeds from the sale of the Shares by the Selling
Shareholders will be received by the Company. The Company has agreed to bear all
expenses (other than selling commissions and fees and certain expenses of
counsel and other advisors to the Selling Shareholders) in connection with the
registration and sale of the Shares being offered by the Selling Shareholders.
The Company has agreed to indemnify the Selling Shareholders 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 120,000 shares of Series
3 Convertible Preferred Stock, $.02 par value per share (the "Series 3 Preferred
Stock"), to the Selling Shareholders in private transactions on March 31 and
April 1, 1997. The shares of Common Stock issuable upon conversion of the Series
3 Preferred Stock, as well as shares of Common Stock payable as dividends upon
the Series 3 Preferred Stock, constitute the Shares being registered hereunder.
The shares of Common Stock offered by the Selling Shareholders hereby include
such presently indeterminate number of shares as may be issued on conversion of
or in payment of dividends on the Series 3 Preferred Stock pursuant to the
provisions thereof regarding determination of the applicable conversion price
and dividend rate. The actual number of shares of Common Stock issued or
issuable upon the conversion of the Series 3 Preferred Stock and the payment of
dividends thereon is subject to adjustment depending on factors which cannot be
predicted by the Company at this time, including among others, the future
market price of the Common Stock. 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 Shareholders and any brokers
participating in such sales may be deemed to be "underwriters" within the
meaning of the Securities Act. See "Selling Shareholders."
The Common Stock is quoted on Nasdaq under the symbol "NERX." On April
10, 1997, the closing sales price for the Common Stock as reported on Nasdaq was
$4.38 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 April 14, 1997.
<PAGE> 5
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
copied (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). The
Company is an electronic filer and the Commission maintains a web site that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The address
of the web site is "http://www.sec.gov". The Company's 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 Shares 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 Shares 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 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, 1996;
(2) Current report on Form 8-K filed with the Commission on
April 11, 1997; and
(3) The description of the capital stock contained in the
Company's Registration Statement on Form 8-A filed with the
Commission on March 21, 1988.
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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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 Shares offered hereby. These risk factors could cause the
Company's actual results to differ materially from those expressed in the
Company's forward-looking statements in this report and presented elsewhere by
the Company's management from time to time.
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 and does not expect
to seek United States regulatory approval for sales of its cancer and
anti-restenosis treatment products before the year 2000. Royalties from sales by
the DuPont Merck Pharmaceutical Company ("DuPont Merck") of the VERLUMA(TM)
small cell lung cancer imaging kit began in 1997. 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 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. The Company's existing capital resources
and interest income thereon are currently expected to be sufficient to fund the
Company's operations until early 1999. 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. If funds are raised
by issuing equity securities, purchasers of the Shares issued hereunder may
suffer immediate and substantial dilution.
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 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 the AVICIDIN(R) cancer therapy agent. The catheter
used to deliver the Company's proposed anti-restenosis products has not yet been
approved for sale by the Food and Drug Administration (the "FDA"); commercial
use of the catheter depends on receiving such
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approval. In addition, the Company depends on the 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. Also,
the drug used in the atherosclerosis clinical trial to raise activated TGF(beta)
levels is dependent on a third party both for supply and for agreement to
continue testing and commercialization after Phase I.
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 International GmbH
("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 small cell lung cancer imaging product. The Company has entered into an
agreement granting Schwarz Pharma AG marketing rights in North America and
Europe to NeoRx's proposed BIOSTENT(TM) product for treatment of restenosis. The
Company intends to seek collaborative partners to assist in developing,
manufacturing and marketing its other 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 cardiovascular disease 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 major pharmaceutical companies, either alone or
through collaboration with smaller companies, have active programs in
anti-restenosis therapy. Moreover, metal stents are now being used after
angioplasty to hold open the arteries by mechanical means. Several major
pharmaceutical companies market a drug from the class of HMG CoA-reductase
inhibitors that have been shown to reduce risk of heart attack. 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 the Company to
develop, manufacture and market competing products. The Company's competitors
already have, or 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.
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
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<PAGE> 8
appear as foreign proteins to the human immune system, which develops its own
antibody in response. This "human anti-mouse antibody" ("HAMA") response, or the
"human anti-streptavidin antibody" ("HASA") response, 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 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 the AVICIDIN agent
and has initiated a collaboration to modify streptavidin, there can be no
assurance that either 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 the Company 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 GOVERNMENTAL 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.
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.
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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.
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 currently does not
maintain key person 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
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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 (the "Series 1 Preferred Stock")", its Series 2
Convertible Preferred Stock (the "Series 2 Preferred Stock")" and its Series 3
Preferred Stock, cash dividends on the Common Stock may not be paid unless full
cumulative dividends on such preferred stock have been paid.
If declared by the Company's Board of Directors, holders of Series 1
Preferred Stock are entitled to receive an annual cash dividend of $2.4375 per
share, payable in semi-annual installments on June 1 and December 1. Dividends
are cumulative. Holders of Series 2 Preferred Stock are entitled to receive a
dividend of 8% per year of the "Stated Value" ($100 per share) on a cumulative
basis. Dividends shall be paid in cash or Common Stock, at the Company's option.
Holders of Series 3 Preferred Stock are entitled to receive a dividend of 7% per
year of the "Stated Value" ($100 per share) on a cumulative basis. Dividends
shall be paid in cash or Common Stock, at the Company's option.
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CAPITALIZATION
The following table sets forth the capitalization of the Company at
December 31, 1996, and as adjusted to give effect to the private sale of the
Convertible Preferred Stock.
<TABLE>
<CAPTION>
DECEMBER 31, 1996
---------------------------
ACTUAL AS ADJUSTED
------------ -------------
(in thousands)
<S> <C> <C>
Noncurrent liabilities:
9 3/4% Convertible Subordinated Debentures ............................. $ 1,195 $ 1,195
Capital leases, less current portion ................................... 47 47
--------- ---------
Total noncurrent liabilities ....................................... 1,242 1,242
--------- ---------
Shareholders' equity:
Series Preferred Stock, $.02 par value per share, 3,000,000 shares
authorized:
Convertible Exchangeable Preferred Stock, Series 1, 208,240 shares
issued and outstanding,
Convertible Preferred Stock, Series 2, 5,167 shares issued and
outstanding, and
Convertible Preferred Stock, Series 3, -0- and 120,000 shares issued
and outstanding, respectively, as adjusted ............................. 4 6
Common Stock, $.02 par value per share, 60,000,000 shares authorized,
16,450,565 shares issued and outstanding(1) ............................ 329 329
Additional paid-in capital ............................................. 140,789 152,256
Accumulated deficit .................................................... (124,043) (124,043)
--------- ---------
Total shareholders' equity ......................................... 17,079 28,548
--------- ---------
Total capitalization ....................................... $ 18,321 $ 29,790
--------- ---------
</TABLE>
- ----------
(1) Does not include shares of Common Stock reserved as of March 31, 1997
as follows: (i) 1,033,727 shares reserved for issuance upon exercise of
outstanding warrants; (ii) 3,093,458 shares reserved for issuance upon
exercise of outstanding stock options; (iii) 46,318 shares reserved for
issuance upon the conversion of the 9 3/4% Convertible Subordinated
Debentures; (iv) 236,636 shares reserved for issuance upon conversion
of the $2.4375 Convertible Exchangeable Preferred Stock, Series 1; (v)
up to 128,543 shares reserved for issuance upon conversion of the
Series 2 Convertible Preferred Stock; and (vi) up to 3,303,027 shares
reserved for issuance upon conversion of and payment of dividends upon
the Series 3 Convertible Preferred Stock.
-8-
<PAGE> 12
SELLING SHAREHOLDERS
The following table provides the names of the Selling Shareholders and
the number of Shares being offered by each of them.
<TABLE>
<CAPTION>
SELLING SHAREHOLDERS SHARES OFFERED(1)
-------------------- -----------------
<S> <C>
GFL Advantage Fund Limited............................... Up to 2,752,522 shares
Grace Funding Partners, L.P.............................. Up to 550,505 shares
</TABLE>
(1) The number of shares of Common Stock shown as offered by each Selling
Shareholder represents the number of shares which the Company has
initially agreed to register. The number of shares of Common Stock
offered by the Selling Shareholders hereby include such presently
indeterminate number of shares as may be issued on conversion of the
Series 3 Preferred Stock and in payment of dividends thereon pursuant to
the provisions thereof regarding determination of the applicable
conversion price and the dividend calculation rate. The actual number of
shares of Common Stock issued or issuable upon the conversion of the
Series 3 Preferred Stock and the payment of dividends thereon is subject
to adjustment depending upon factors which cannot be predicted by the
Company at this time, including, among others, the future market price
of the Common Stock, the payment of dividends on the Series 3 Preferred
Stock in cash and anti-dilution adjustments. Pursuant to the terms of
the Series 3 Preferred Stock, the Series 3 Preferred Stock is
convertible by each holder thereof and dividends are payable in Common
Stock only to the extent that the number of shares of Common Stock then
beneficially owned by such holder and its related persons (not including
shares underlying unconverted shares of Series 3 Preferred Stock) would
not exceed 4.9% of the then outstanding shares of Common Stock as
determined in accordance with Sections 13(d) and 16 of the Securities
Exchange Act of 1934, as amended. Accordingly, the number of shares of
Common Stock set forth for such Selling Shareholder may exceed the
actual number of shares of Common Stock that such Selling Shareholder
could own beneficially at any given time through its ownership of the
Series 3 Preferred Stock. See "Description of Capital Stock -- Series
Preferred Stock." The number of shares noted as being offered by the
Selling Shareholders is also subject to increase in the event of a stock
split, stock dividend or similar transaction involving the Common Stock
pursuant to Rule 416 under the Securities Act.
After completion of this offering, none of the Selling Shareholders
will own any shares of Common Stock, assuming all the Shares being offered are
sold.
No Selling Shareholder has held any position or office or has had any
other material relationship with the Company or any of its affiliates within the
past three years.
The Company sold 120,000 shares of Series 3 Preferred Stock for $12
million to the Selling Shareholders in private transactions on March 31 and
April 1, 1997. The Company anticipates that the net proceeds from the sale of
such shares of Series 3 Preferred Stock will be used to fund research and
development efforts, losses and working capital requirements relating to the
development and commercialization of the Company's products and programs and for
other general corporate purposes. The shares of Common Stock issuable upon
conversion of the Convertible Preferred Stock and shares of Common Stock payable
as dividends upon the Convertible Preferred Stock constitute the Shares being
registered hereunder.
Each Selling Shareholder has represented to the Company that it
purchased the Shares for its own account for investment only and not with a view
towards the public sale or distribution thereof except pursuant to sales
registered under the Securities Act. In recognition of the fact that such
investors, even though purchasing the Shares for investment, may wish to be
legally permitted to sell their Shares when they deem appropriate, the Company
agreed with the Selling Shareholders to file with the Commission under the
Securities Act the Registration Statement with respect to the resale of the
Shares 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 and has agreed to
prepare and file such amendments and supplements to the Registration Statement
as may be necessary to keep the Registration Statement effective until the date
on which the Selling Shareholders have sold all the Shares.
PLAN OF DISTRIBUTION
All of the Shares offered hereby may be sold from time to time by the
Selling Shareholders, or by pledges, donees, transferees or other successors in
interest. The sale of the Shares by the Selling Shareholders may be effected
from time to time in transactions in the over-the-counter market through Nasdaq,
or on one or more other securities markets and exchanges, in privately
negotiated transactions, through the writing of options on the Shares, or
otherwise, 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. In addition,
a Selling Shareholder may, subject to certain limitations agreed with the
Company, sell short the Common Stock of the Company, and in such instances, this
Prospectus may be delivered in connection with such short sale and the Shares
offered hereby may be used to cover such short sale. The Selling Shareholders
may effect the above-mentioned 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 Shareholders 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 Shareholders in connection with
the offering of certain of the Shares by the Selling Shareholders. None of the
proceeds from the sale
-9-
<PAGE> 13
of the Shares by the Selling Shareholders 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 Company has the right to suspend use of this Prospectus for a
discrete period of time under certain circumstances.
Including and without limiting the foregoing, in connection with
distributions of the Common Stock, a Selling Shareholder may enter into hedging
transactions with broker-dealers and the broker-dealers may engage in short
sales of the Common Stock in the course of hedging the positions they assume
with such Selling Shareholder. A Selling Shareholder may also enter into option
or other transactions with broker-dealers that involve the delivery of the
Common Stock to the broker-dealers, who may then resell or otherwise transfer
such Common Stock. A Selling Shareholder may also loan or pledge the Common
Stock to a broker-dealer and the broker-dealer may sell the Common Stock so
loaned or upon a default may sell or otherwise transfer the pledged Common
Stock.
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 may 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 certain expenses of counsel
and other advisors to the Selling Shareholders) in connection with the
registration and sale of the Shares being offered by the Selling Shareholders.
The Company has agreed to indemnify the Selling Shareholders against certain
liabilities, including liabilities under the Securities Act.
There can be no assurance that the Selling Shareholders will sell any
or all of the Shares offered by them hereunder.
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. As of March 31, 1997, there were approximately 16.5 million
shares of Common Stock outstanding held of record by approximately 1005
shareholders.
SERIES PREFERRED STOCK
The Company is authorized to issue 3,000,000 shares of Series Preferred
Stock, par value $.02 per share. At April 1, 1997, 208,240 shares of Series 1
Preferred Stock, 5,167 shares of Series 2 Preferred Stock and 120,000 shares of
Series 3 Preferred Stock were outstanding.
-10-
<PAGE> 14
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, initially $27.44 per share, 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 Preferred Stock are entitled to receive a
dividend of 8% per year of the "Stated Value" ($100 per share) on a cumulative
basis. Dividends shall be paid in cash or Common Stock, at the Company's option.
Each share of Series 2 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 and subject to certain minimum and maximum conversion
prices per share of Common Stock. The Series 2 Preferred Stock is redeemable by
the Company at a price of $120.50 per share of Series 2 Preferred Stock, plus
accrued and unpaid dividends. The holders of Series 2 Preferred Stock have no
voting rights, except in limited circumstances.
The holders of Series 3 Preferred Stock are entitled to receive a
dividend of 7% per year of the "Stated Value" ($100 per share) on a cumulative
basis. Dividends shall be paid in cash or Common Stock, at the Company's option.
Each share of Series 3 Preferred Stock is convertible into Common Stock at a
conversion price equal to 85% 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 and subject to certain minimum and maximum conversion
prices per share of Common Stock. The Series 3 Preferred Stock is redeemable by
the Company at formula prices. The holders of Series 3 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 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
As of March 31, 1997, the Company had 1,634,907 Common Stock purchase
warrants outstanding that have been registered for resale with the Commission.
Every four such warrants entitle the registered 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 to Boehringer Ingelheim 625,000 warrants to
purchase shares of the Company's Common Stock through September 11, 1997, of
which 375,000 warrants have an exercise price of $21.12 per share and 250,000
warrants have 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 Nasdaq (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 the Company with or into another corporation
or any sale, lease or transfer to another corporation of all or substantially
all the assets of the Company, 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 the Company.
-11-
<PAGE> 15
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 adopted a Shareholders' Rights Plan intended to protect the
rights of shareholders by deterring coercive or unfair takeover tactics. The
Board of Directors declared a dividend to holders of the Company's Common Stock
of one preferred share purchase right (the "Right") for each outstanding share
of the Common Stock. The Right is exercisable 10 days following the offer to
purchase or acquisition of beneficial ownership of 20% of the outstanding Common
Stock by a person or group of affiliated persons. Each Right entitles the
registered holder, other than the acquiring person or group, to purchase from
the Company one-hundredth of one share of Series A Junior Participating
Preferred Stock ("Series A Preferred Stock") at a price of $40, subject to
adjustment. The Rights expire April 10, 2006. In lieu of exercising the Right by
purchasing one one-hundredth of one share of Series A Preferred Stock, the
holder of the Right, other than the acquiring person or group, may purchase for
$40 that number of the Company's Common Stock having a market value of twice
that price.
The Company is also subject to the provisions of Chapter 23B.19 of the
Washington Business Corporation Act, which, among other things, 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.
TRANSFER AGENT
The transfer agent and registrar for the Common Stock, the Series
Preferred Stock and the Warrants is ChaseMellon Shareholder Services, LLC.
LEGAL MATTERS
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.
-12-
<PAGE> 16
================================================================================
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.
--------------------
PAGE
Available Information....................... 2
Incorporation of Certain Documents
by Reference............................. 2
Risk Factors................................ 3
Dividends................................... 7
Capitalization.............................. 8
Selling Shareholders........................ 9
Plan of Distribution........................ 10
Description of Capital Stock................ 10
Legal Matters............................... 13
Experts..................................... 13
================================================================================
NEORX CORPORATION
3,303,027 SHARES OF
COMMON STOCK
P R O S P E C T U S
__________, 1997
================================================================================
<PAGE> 17
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 (all amounts are estimated except the Securities and Exchange
Commission registration fee).
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee........... $ 4,254
Blue sky filing fees and expenses............................. 5,000
Legal fees and expenses....................................... 10,000
Accountants' fees and expenses................................ 1,000
Miscellaneous expenses........................................ 746
----------
Total................................................ $ 21,000
==========
</TABLE>
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
------ -----------
3.1(a) Restated Articles of Incorporation of the registrant, dated
April 29, 1996*
3.1(b) Articles of Amendment dated March 31, 1997 to Restated
Articles of Incorporation**
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 Statement of Rights and Preferences relating to Convertible
Exchangeable Preferred Stock, Series 1, par value $.02 per
share****
4.3 Specimen Warrant Certificate+
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-5)
23.2 Consent of Perkins Coie (included in the opinion filed as
Exhibit 5.1)
II-1
<PAGE> 18
24.1 Power of Attorney (see signature page)
- ----------
* Filed as an exhibit to the registrant's Annual Report on Form 10-K for
the year ended December 31, 1996 and incorporated herein by reference.
** Filed herewith.
*** 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 Registration Statement on Form
S-4 (Registration No. 33-33153) effective March 27, 1990 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, 1994 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
II-2
<PAGE> 19
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.
II-3
<PAGE> 20
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 April 14, 1997.
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
Richard L. Anderson as his attorney-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 attorney-in-fact, or his substitute, 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 14th day
of April, 1997 in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Paul G. Abrams President, Chief Executive Officer and Director
------------------------------- (Principal Executive Officer)
Paul G. Abrams
/s/ Richard L. Anderson Senior Vice President, Chief Financial Officer,
------------------------------- Secretary and Treasurer (Principal Financial and
Richard L. Anderson Accounting Officer
/s/ Fred B. Craves Chairman of the Board of Directors
-------------------------------
Fred B. Craves
/s/ James G. Andress Director
-------------------------------
James G. Andress
/s/ Jack L. Bowman Director
-------------------------------
Jack L. Bowman
/s/ Lawrence H.N. Kinet Director
-------------------------------
Lawrence H.N. Kinet
/s/ Carl-Heinz Pommer Director
-------------------------------
Carl-Heinz Pommer
</TABLE>
II-4
<PAGE> 21
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 25, 1997 incorporated by reference in NeoRx Corporation's Form 10-K for
the year ended December 31, 1996 and to all references to our firm included in
this registration statement.
Arthur Andersen LLP
Seattle, Washington
April 14, 1997
II-5
<PAGE> 1
EXHIBIT 3.1(b)
ARTICLES OF AMENDMENT
OF
NEORX CORPORATION
Pursuant to RCW 23B.06.020, NeoRx Corporation, a Washington
corporation, hereby states that the Designation of Rights and Preferences of
Series 3 Convertible Preferred Stock attached hereto as Exhibit A duly adopted
by the Board of Directors of the corporation on March 28, 1997.
These Articles of Amendment are executed by said corporation by its
duly authorized officer.
DATED: March 31, 1997
NEORX CORPORATION
By /s/ Richard L. Anderson
------------------------------
Richard L. Anderson
Senior Vice President
<PAGE> 2
EXHIBIT A
DESIGNATION OF RIGHTS AND PREFERENCES OF
SERIES 3 CONVERTIBLE PREFERRED STOCK
A series of Preferred Stock is hereby designated as Series 3
Convertible Preferred Stock which series shall consist of 120,000 shares, par
value $.02 per share (the "Series 3 Shares"), and which shall have the rights,
preferences, privileges and limitations as set forth below:
(1) Dividends. The holders of the Series 3 Shares
shall be entitled to a dividend of seven percent (7%) per
annum of the Stated Value (as defined below), on a cumulative
basis. Dividends on the Series 3 Shares shall be fully
cumulative, shall accrue without interest (except as otherwise
provided herein as to dividends in arrears) from the date of
original issuance and shall be payable quarterly on January 1,
April 1, July 1, and October 1 of each year commencing July 1,
1997 (except that if any such date is a Saturday, Sunday, or
legal holiday, then such dividend shall be payable on the next
succeeding day that is not a Saturday, Sunday or legal
holiday) to holders of record as they appear on the stock
books of the Company on such dividend payment dates. Dividends
on the Series 3 Shares shall be paid in cash or subject to the
limitations in this Section 1, shares of Common Stock of the
Company or any combination of cash and shares of Common Stock,
at the option of the Company as hereinafter provided. The
amount of the dividends payable per share of Series 3 Shares
for each quarterly dividend period shall be computed by
dividing the annual dividend amount by four. The amount of
dividends payable for the initial dividend period and any
period shorter than a full quarterly dividend period shall be
computed on the basis of a 360-day year of twelve 30-day
months. Dividends not paid on a payment date, whether or not
such dividends have been declared, will bear interest at the
rate of 12% per annum until paid. No dividends or other
distributions, other than dividends payable solely in shares
of Common Stock or other capital stock of the Company ranking
junior as to dividends to the Series 3 Shares (collectively,
the "Junior Dividend Stock"), shall be paid or set apart for
payment on any shares of Junior Dividend Stock, and no
purchase, redemption, or other acquisition shall be made by
the Company of any shares of Junior Dividend Stock unless and
until all accrued and unpaid dividends on the Series 3 Shares
and interest on dividends in arrears at the rate specified
herein shall have been paid or declared and set apart for
payment.
<PAGE> 3
If the Company elects in the exercise of its sole
discretion to issue shares of Common Stock in payment of
dividends on the Series 3 Shares, the Company shall issue and
dispatch, or cause to be issued and dispatched, by the third
trading day after such dividend payment date to each holder of
such shares a certificate representing the number of whole
shares of Common Stock arrived at by dividing the Average
Market Price of one share of Common Stock for the five
consecutive trading days ending one trading day prior to such
dividend payment date into the total amount of cash dividends
such holder would be entitled to receive if the aggregate
dividends on the Series 3 Shares held by such holder which are
being paid in shares of Common Stock were being paid in cash;
provided, however, that if certificates representing shares of
Common Stock are issued and dispatched to holders of Series 3
Shares subsequent to the fifth trading day after a dividend
payment date, such Average Market Price for such five trading
day period shall be reduced by one percent for each trading
day after the third trading day following such dividend
payment date to the date of dispatch of shares of Common
Stock. No fractional shares of Common Stock shall be issued in
payment of dividends. In lieu thereof, the Company shall pay
cash in an amount equal to the product of (x) the Average
Market Price of one share of Common Stock for the five
consecutive trading days ending one trading day prior to such
dividend payment date times (y) the fraction of a share of
Common Stock which would otherwise be issuable by the Company.
The Company shall not exercise its right to issue shares of
Common Stock in payment of dividends on Series 3 Shares if:
(i) the number of shares of Common Stock
at the time authorized, unissued and unreserved for all
purposes, or held in the Company's treasury, is insufficient
to pay the portion of such dividends to be paid in shares of
Common Stock;
(ii) the issuance or delivery of shares of
Common Stock as a dividend payment would require registration
with or approval of any governmental authority under any law
or regulation, and such registration or approval has not been
effected or obtained;
(iii) the shares of Common Stock to be
issued as a dividend payment have not been authorized for
listing, upon official notice of issuance, on any securities
exchange or market on which the Common Stock is then listed;
or have not been approved for quotation if the Common Stock is
traded in the over-the-counter market;
-2-
<PAGE> 4
(iv) the Average Market Price of one share
of Common Stock for the five consecutive trading days ending
one trading day prior to the applicable dividend payment date
is less than the par value of one share of Common Stock;
(v) the shares of Common Stock (A) cannot
be sold or transferred without restriction by unaffiliated
holders who receive such shares of Common Stock as a dividend
payment or (B) are no longer listed on a national securities
exchange, on the Nasdaq National Market or the Nasdaq SmallCap
Market;
(vi) after giving effect to such
distribution, the number of shares of Common Stock
beneficially owned by such holder and all other holders whose
holdings would be aggregated with such holder for purposes of
calculating beneficial ownership in accordance with Sections
13(d) and 16 of the Securities Exchange Act of 1934, as
amended, and the regulations thereunder ("Sections 13(d) and
16"), including, without limitation, any person serving as an
adviser to any holder (collectively, the "Related Persons"),
would exceed four and nine-tenths percent (4.9%) of the
outstanding shares of Common Stock (calculated in accordance
with Sections 13(d) and 16). The Company shall not issue any
fraction of a share of Common Stock in payment of a dividend,
but shall pay cash therefor. The Company shall, so long as any
of the Series 3 Shares are outstanding, reserve and keep
available out of its authorized and unissued Common Stock,
such number of shares of Common Stock as shall from time to
time be sufficient to pay dividends hereunder. Every reference
herein to the Common Stock of the Company (unless a different
intention is expressed) shall be to the shares of the Common
Stock of the Company, $.02 par value, as such stock exists
immediately after the issuance of the Series 3 Shares provided
for hereunder, or to stock into which such Common Stock may be
changed from time to time thereafter.
"Average Market Price" of any security for any period
shall be computed as the arithmetic average of the closing bid
prices for such security for each trading day in such period
on the National Association of Securities Dealers Automated
Quotation National Market System (the "Nasdaq-NMS"), or, if
the Nasdaq-NMS is not the principal trading market for such
security, on the principal trading market for such security
(all as appropriately adjusted for any stock dividend, stock
split or other similar
-3-
<PAGE> 5
transaction during such period or between the end of such
period and the date of conversion or dividend payment, as
applicable); provided, however, that if on any date there
shall be no reported closing bid price of such security, the
closing bid price of such security on such date shall be
deemed to be the closing bid of such security on the date next
preceding such date on which a closing bid price for such
security has been so reported; provided further, however, that
if on any date there shall be no reported closing bid price of
such security and at the time the closing bid price for such
date is being determined that shall be known a closing bid
price so reported for the date next subsequent to such date on
which a closing bid price shall have been so reported, then
the closing bid price of such security on such date for which
there shall have been no reported closing bid price shall be
the lower of (x) the closing bid price of such security as
determined pursuant to the second proviso to this definition
and (y) the closing bid price as so reported for such
succeeding day for which a closing bid price as so reported is
known.
(2) Conversion of Series 3 Shares. The holders of the
Series 3 Shares shall have the right, at their option, except
with respect to mandatory conversions pursuant to Section 2(j)
below, to convert the Series 3 Shares into shares of Common
Stock on the following terms and conditions:
(a)(i) Each Series 3 Share shall be
convertible, at any time after the earlier of (A) 60 days
after the date of issuance or (B) the effective date of the
Registration Statement (the "Registration Statement") filed by
the Company pursuant to the Registration Rights Agreements
between the Company and the original purchasers of the Series
3 Shares (the "Registration Rights Agreements"), into the
number of fully paid and nonassessable shares (calculated to
the nearest whole share) of Common Stock determined by
dividing the Stated Value by the conversion price (the
"Conversion Price") in effect at the time of conversion
determined as hereinafter provided; provided, however, that in
no event shall any holder be entitled to convert in excess of
that number of Series 3 Shares which, after giving effect to
such conversion, would result in the number of shares of
Common Stock beneficially owned by such holder and all Related
Persons exceeding four and nine-tenths percent (4.9%) of the
outstanding shares of Common Stock (calculated in accordance
with Sections 13(d) and 16). Each Series 3 Share shall have a
value of One Hundred Dollars ($100) (the "Stated Value") for
the purpose of such conversion. If Series 3 Shares are called
for redemption as provided in Section (4), such shares shall
be
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<PAGE> 6
convertible at the option of the holder at any time after the
date specified above and prior to the close of business on the
fifth full business day prior to the date set for such
redemption, unless default shall be made by the Company in
providing the funds for the payment of the redemption price in
which case such Series 3 Shares shall be so convertible once
again after such default.
(ii) So long as the Company shall be in
compliance in all material respects with its obligations to
the holders of the Series 3 Shares (including its obligations
under the Registration Rights Agreements and the provisions of
this Designation of Rights and Preferences) and so long as the
Registration Statement filed by the Company pursuant to the
Registration Rights Agreements shall be effective, commencing
on the date which is 91 days (subject to extension as provided
herein) after the effective date of the Registration Statement
filed by the Company pursuant to the Registration Rights
Agreements, the Company shall have the right to cause the
conversion of a portion of the Series 3 Shares into Common
Stock by written notice to the holders of the Series 3 Shares
given not less than 20 days and not more than 60 days prior to
the conversion date fixed in the notice.
The amount of Series 3 Shares which the
Company shall have the right to cause to be converted during
each of the following periods shall be the number of shares
determined based on the following percentages (which shall be
cumulative) of the number of Series 3 Shares originally issued
by the Company:
<TABLE>
<CAPTION>
Period Subsequent to
Effective Date of Registration Cumulative Percentage
Statement
<S> <C>
91 days to 180 days 25%
181 days to 270 days 50%
271 days to 360 days 75%
361 days and thereafter 100%
</TABLE>
The number of Series 3 Shares held by each
holder of Series 3 Shares which the Company may cause to be
converted in
-5-
<PAGE> 7
accordance with this Section 2(a)(ii) shall be determined pro
rata based on the number of Series 3 Shares originally
purchased by each holder of Series 3 Shares. The number of
Series 3 Shares of each holder which the Company may cause to
be converted in each instance shall be reduced by the number
of Series 3 Shares converted by such holder (or such holder's
direct or indirect transferor) prior to the conversion date
fixed by the Company in its notice given hereunder. The number
of shares of Common Stock issued upon conversion of each
Series 3 Share pursuant to this Section (2)(a)(ii) shall be
the same number of shares of Common Stock as would be issued
upon conversion of such Series 3 Share by the holder on the
conversion date under this Section 2(a)(ii) if the holder had
converted such Series 3 Share pursuant to Section (2)(a)(i) on
such date. If a Negotiation Notice or a Filing Notice (each as
defined in the Registration Rights Agreements) shall have been
given by the Company, then the number of days during which the
holders are unable to use the Registration Statement filed by
the Company pursuant to the Registration Rights Agreements or
to sell securities of the Company, as the case may be, by
reason of such Negotiation Notice or Filing Notice shall be
added to the numbers of days for the periods shown in the
table set forth above. Notwithstanding any other provision, in
no event may the Company cause the conversion of Series 3
Shares if the Conversion Price would be the Conversion Price
Floor. (b) The Conversion Price shall be eighty-five percent
(85%) of the Average Market Price for the Common Stock for the
five (5) consecutive trading days ending one trading day prior
to the date the Conversion Notice (as defined below) is
received by the Transfer Agent (as defined below), subject to
adjustment as provided herein; provided, however, in no event
shall the Conversion Price be an amount less than $3.93 per
share (such price to be subject to equitable adjustment from
time to time for stock splits, stock dividends, combinations,
capital reorganizations and similar events relating to the
Common Stock occurring after the date of filing Articles of
Amendment with the Secretary of State of the State of
Washington) of Common Stock or, if at any time after the
Registration Statement is first declared effective by the SEC
the closing final price per share of Common Stock is at least
$6.25 per share (such price to be subject to equitable
adjustment from time to time for stock splits, stock
dividends, combinations, capital reorganizations and similar
events relating to the Common Stock occurring after the date
of filing Articles of Amendment with the Secretary of State of
the State of Washington) for ten consecutive
-6-
<PAGE> 8
trading days, then thereafter in no event shall the Conversion
Price be an amount less than $4.41 per share (such price to be
subject to equitable adjustment from time to time for stock
splits, stock dividends, combinations, capital reorganizations
and similar events relating to the Common Stock occurring
after the date of filing Articles of Amendment with the
Secretary of State of the State of Washington) of Common Stock
(the applicable price being the "Conversion Price Floor") or
more than one hundred twenty-five percent (125%) of the
Average Market Price for the Common Stock for the five (5)
consecutive trading days ending one trading day prior to the
original issuance of the Series 3 Shares (the "Conversion
Price Ceiling").
(c) The Conversion Price shall be reduced
by three percent (3%) (e.g., from 85% to 82% in the case of
the first such adjustment for a full 30 days) for each 30 days
or portion thereof while the following obligations of the
Company remain unsatisfied:
(i) The Company has not filed the
Registration Statement with the Securities and Exchange
Commission within fifteen (15) days after the date of original
issuance of the Series 3 Shares, or the Registration Statement
has not been declared effective within sixty (60) days after
such date; or
(ii) The Corporation shall have failed to
request acceleration of the Registration Statement as and when
required by Section 3(a) of the Registration Rights
Agreements; or
(iii) The Registration Statement ceases to
remain effective during the time period for which the
Registration Rights Agreements obligate the Company to keep it
effective; or
(iv) During the time period for which the
Registration Rights Agreements obligate the Company to keep
the Registration Statement effective, the right of the holders
of Series 3 Shares to sell Common Stock pursuant to the
Registration Statement is suspended for any reason other than
a Negotiation Event or a Filing Notice (each as defined in the
Registration Rights Agreements).
(d) If the Company shall consolidate with
or merge into any corporation or reclassify its outstanding
shares of Common Stock (other than by way of subdivision or
reduction of such shares) (each a "Major Transaction"), then
each Series 3 Share shall
-7-
<PAGE> 9
thereafter be convertible into the number of shares of stock
or securities (the "Resulting Securities") or property of the
Company, or of the entity resulting from such consolidation or
merger, to which a holder of the number of shares of Common
Stock delivered upon conversion of such Series 3 Share would
have been entitled upon such Major Transaction, had the holder
of such Series 3 Share exercised its right of conversion and
had such Common Stock been issued and outstanding and had such
holder been the holder of record of such Common Stock at the
time of such Major Transaction, and the Company shall make
lawful provision therefor as a part of such consolidation,
merger or reclassification.
(e) The Company shall not issue any fraction
of a share of Common Stock upon any conversion, but shall pay
cash therefor at the Conversion Price then in effect
multiplied by such fraction.
(f) The right of the holders of Series 3
Shares to convert their shares shall be exercised by
delivering (which may be done by telephone line facsimile
transmission) to the conversion agent (the "Conversion Agent")
appointed by the Company pursuant to the Securities Purchase
Agreements entered into with the original purchasers of the
Series 3 Shares (the "Purchase Agreements") a written notice,
duly signed by or on behalf of the holder, stating the number
of Series 3 Shares to be converted in the form specific in the
Purchase Agreements (the "Conversion Notice"). If a holder of
Series 3 Shares elects to convert any Series 3 Shares in
accordance with Section (2)(a)(i) or the Company elects to
cause any Series 3 Shares to be converted in accordance with
Section 2(a)(ii), such holder shall not be required to
physically surrender the certificate(s) representing such
shares of Series 3 Shares to the Company unless all of the
Series 3 Shares represented thereby are so converted. Each
holder of Series 3 Shares and the Company shall maintain
records showing the number of shares so converted and the
dates of such conversions or shall use such other method,
satisfactory to such holder and the Company, so as to not
require physical surrender of such certificates upon each such
conversion. In the event of any dispute or discrepancy, such
records of the Company shall be controlling and determinative
in the absence of manifest error. Notwithstanding the
foregoing, if any Series 3 Shares evidenced by a particular
certificate therefor are converted as aforesaid, the holder of
Series 3 Shares may not transfer the certificate(s)
representing such Series 3 Shares unless such holder first
physically surrenders
-8-
<PAGE> 10
such certificate(s) to the Company, whereupon the Company will
forthwith issue and deliver upon the order of such holder of
Series 3 Shares new certificate(s) of like tenor, registered
as such holder of Series 3 Shares (upon payment by such holder
of Series 3 Shares of any applicable transfer taxes) may
request, representing in the aggregate the remaining number of
Series 3 Shares represented by such certificate(s). Each
holder of Series 3 Shares, by acceptance of a certificate for
such shares, acknowledges and agrees that (1) by reason of the
provisions of this paragraph following conversion of any
Series 3 Shares represented by such certificate, the number of
Series 3 Shares represented by such certificate may be less
than the number of shares stated on such certificate and, by
reason of Section (4)(b), the number of shares of Common Stock
from the Maximum Share Amount allocated to the Series 3 Shares
represented by such certificate for purposes of conversion of
such shares may be less than the number thereof on such
certificate and (2) the Company may place a legend on the
certificates for Series 3 Shares which refers to or describes
the provisions of this paragraph. The Company shall pay any
tax arising in connection with any conversion of Series 3
Shares except that the Company shall not, however, be required
to pay any tax which may be payable in respect of any transfer
involved in the issue and delivery upon conversion of shares
of Common Stock or other securities or property in a name
other than that of the holder of Series 3 Shares being
converted, and the Company shall not be required to issue or
deliver any such shares or other securities or property unless
and until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of any such
tax or shall have established to the satisfaction of the
Company that such tax has been paid. The number of shares of
Common Stock to be issued upon each conversion of Series 3
Shares shall be the number set forth in the applicable
Conversion Notice which number shall be conclusive absent
manifest error. The Company shall notify a holder who has
given a Conversion Notice of any claim of manifest error
within one business day after such holder gives such
Conversion Notice and no such claim of error shall limit or
delay performance of the Company's obligation to issue upon
such conversion the number of shares of Common Stock which are
not in dispute. A Conversion Notice shall be deemed for all
purposes to be in proper form unless the Company notifies a
holder of Series 3 Shares being converted within one business
day after a Conversion Notice has been given (which notice
shall specify all defects in the Conversion Notice) and any
Conversion Notice containing any such
-9-
<PAGE> 11
defect shall nonetheless be effective on the date given if the
converting holder promptly undertakes in writing to correct
all such defects.
(g) If a holder shall have given a
Conversion Notice for Series 3 Shares or if the Company shall
have caused the conversion of Series 3 Shares pursuant to
Section 2(a)(ii), the Company shall issue and deliver to such
person certificates for the Common Stock issuable upon such
conversion within three business days after such Conversion
Notice is given and the person converting shall be deemed to
be the holder of record of the Common Stock issuable upon such
conversion, and all rights with respect to the shares
surrendered shall forthwith terminate except the right to
receive the Common Stock or other securities, cash, or other
assets as herein provided. If a holder shall have given a
Conversion Notice as provided herein, the Company's obligation
to issue and deliver the certificates for Common Stock shall
be absolute and unconditional, irrespective of any action or
inaction by the converting holder to enforce the same, any
waiver or consent with respect to any provision thereof, the
recovery of any judgment against any person or any action to
enforce the same, any failure or delay in the enforcement of
any other obligation of the Company to the holder of record,
or any setoff, counterclaim, recoupment, limitation or
termination, or any breach or alleged breach by the holder of
any obligation to the Company, and irrespective of any other
circumstance which might otherwise limit such obligation of
the Company to the holder in connection with such conversion.
If the Company fails to issue and deliver the certificates for
the Common Stock to the holder converting Series 3 Shares
pursuant to the first sentence of this paragraph as and when
required to do so, in addition to any other liabilities the
Company may have hereunder and under applicable law (1) the
Company shall pay or reimburse such holder on demand for all
out-of-pocket expenses including, without limitation, fees and
expenses of legal counsel incurred by such holder as a result
of such failure, (2) the percentage used for determining the
Conversion Price applicable to such conversion shall be
reduced by two-and-one-half percentage points from the
percentage otherwise so used for such conversion and (3) such
holder may by written notice (which may be given by mail,
courier, personal service or telephone line facsimile
transmission) or oral notice (promptly confirmed in writing)
given at any time prior to delivery to such holder of the
certificates for the shares of Common Stock issuable upon such
conversion of Series 3 Shares, rescind such
-10-
<PAGE> 12
conversion, whereupon such holder shall have the right to
convert such Series 3 Shares thereafter in accordance
herewith.
Series 3 Shares are outstanding, reserve and
keep available out of its authorized and unissued Common
Stock, solely for the purpose of effecting the conversion of
the Series 3 Shares, such number of shares of Common Stock as
shall from time to time be sufficient to effect the conversion
of all of the Series 3 Shares then outstanding.
(i) The Company shall pay any and all taxes
which may be imposed upon it with respect to the issuance and
delivery of Common Stock upon the conversion of the Series 3
Shares as herein provided. The Company shall not be required
in any event to pay any transfer or other taxes by reason of
the issuance of such Common Stock in names other than those in
which the Series 3 Shares surrendered for conversion are
registered on the Company's records, and no such conversion or
issuance of Common Stock shall be made unless and until the
person requesting such issuance has paid to the Company the
amount of any such tax, or has established to the satisfaction
of the Company and its transfer agent, if any, that such tax
has been paid.
(j) So long as the Company shall be in
compliance in all material respects with its obligations to
the holders of the Series 3 Shares (including its obligations
under the Registration Rights Agreements and the provisions of
this Designation of Rights and Preferences) and so long as the
Registration Statement shall be effective, on the date (the
"Mandatory Conversion Date") which is two years after the date
of issuance of the Series 3 Shares, all of the outstanding
Series 3 Shares shall be converted, in accordance with the
provisions, and subject to the limitations, of this Section
(2), into shares of Common Stock to the extent the same are at
such time convertible into shares of Common Stock. On the
Mandatory Conversion Date all outstanding Series 3 Shares (or
such lesser number of Series 3 Shares as are convertible into
Common Stock on the Mandatory Conversion Date) shall be
converted into such number of shares of Common Stock as shall
be determined pursuant to this Section (2) as if the
conversion of such number of Series 3 Shares were made by the
holders thereof in accordance herewith without any further
action on the part of the holders of such Series 3 Shares.
Upon receipt by the Company of certificates for Series 3
Shares converted into shares of Common Stock in accordance
with
-11-
<PAGE> 13
this Section (2)(j), the Company shall issue and, within three
trading days after such surrender, deliver to or upon the
order of such holder (i) that number of shares of Common Stock
as shall be issuable in respect of the conversion of the
number of Series 3 Shares converted, together with accrued and
unpaid dividends thereon to the date of conversion and accrued
and unpaid interest on dividends on such shares which are in
arrears, into Common Stock as shall be determined in
accordance herewith and (ii) a new certificate for the balance
of Series 3 Shares, if any.
(3) Voting Rights. Holders of Series 3 Shares shall
have no voting rights, except as required by law.
(4) Redemption. (a) The Company may, at any time
subsequent to ninety (90) days after the issuance of the
Series 3 Shares, redeem the whole or any part of the Series 3
Shares then outstanding at a redemption price per Series 3
Share equal to the greater of (i) the sum of (a) the sum of
(1) $100, (2) an amount equal to the accrued but unpaid
dividends on such Series 3 Share, and (3) an amount equal to
the accrued and unpaid interest on dividends in arrears
(determined as provided in Section (1) through the redemption
date specified in the applicable notice of redemption plus (b)
an amount equal to the product obtained by multiplying (x) the
sum stated in the immediately preceding clause (a) times (y)
the quotient (expressed as a percentage) obtained by dividing
(A) the amount determined by subtracting from 100 percent the
percentage in effect on the redemption date specified in the
applicable notice of redemption for purposes of computing the
Conversion Price applicable to a conversion of Series 3 Shares
on such date by (B) the percentage in effect on the redemption
date specified in the applicable notice of redemption for
purposes of computing the Conversion Price applicable to a
conversion of Series 3 Shares on such date and (ii) an amount
equal to the product obtained by multiplying (x) the number of
shares of Common Stock which would, but for the redemption
pursuant to this Section (4)(a), be issuable on conversion in
accordance with Section (2)(a) of one Series 3 Share and any
accrued and unpaid dividends thereon and any accrued and
unpaid interest on dividends thereon in arrears if a
Conversion Notice were given by the holder of such Series 3
Share on such redemption date (determined without regard to
any limitation on conversion contained in Section (2)(a))
times (y) the Average Market Price of the Common Stock for the
five consecutive trading days ending one trading day prior to
such redemption date.
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<PAGE> 14
(1) In case of redemption of only part of
the Series 3 Shares at any time outstanding, the Company shall
designate the amount of Series 3 Shares so to be redeemed and
shall redeem such Series 3 Shares on a pro rata basis. Subject
to the limitations and provisions herein contained, the Board
of Directors shall have the power and authority to prescribe
the terms and conditions upon which the Series 3 Shares shall
be redeemed from time to time.
(2) Notice of every redemption shall be
given by mail to every holder of record of any Series 3 Shares
then to be redeemed, at least thirty (30), but no more than
forty-five (45), days prior to the date fixed as the date for
the redemption thereof, at the respective addresses of such
holders as the same shall appear on the stock transfer books
of the Company. The notice shall state that the Series 3
Shares shall be redeemed by the Company at the redemption
price specified above, upon the surrender for cancellation, at
the time and place designated in such notice, of the
certificates representing the Series 3 Shares to be redeemed,
properly endorsed in blank for transfer, or accompanied by
proper instruments of assignment and transfer in blank, with
signatures guaranteed, and bearing all necessary transfer tax
stamps thereto affixed and cancelled. On and after the date
specified in the notice described above, each holder of Series
3 Shares called for redemption shall be entitled to receive
therefor the specified redemption price upon presentation and
surrender at the place designated in such notice of the
certificates for Series 3 Shares called for redemption,
properly endorsed in blank for transfer or accompanied by
proper instruments of assignment or transfer in blank, and
bearing all necessary transfer tax stamps thereto affixed and
cancelled.
(3) If the Company shall give notice of
redemption as aforesaid (and unless the Company shall fail to
pay the redemption price of the Series 3 Shares presented for
redemption in accordance with such notice), all Series 3
Shares called for redemption shall be deemed to have been
redeemed on the date specified in such notice, whether or not
the certificates for such Series 3 Shares shall be surrendered
for redemption, and such Series 3 Shares so called for
redemption shall from and after such date cease to represent
any interest whatsoever in the Company or its property, and
the holders thereof shall have no rights other than the right
to receive such redemption price without any interest thereon
from and after such date.
-13-
<PAGE> 15
(b) Mandatory Redemption Based on Maximum Share
Amount.
(1) Notwithstanding any other provision
herein, unless the Stockholder Approval shall have been
obtained from the stockholders of the Company or waived by the
Nasdaq National Market (the "Nasdaq"), the Company shall not
be required to issue upon conversion of Series 3 Shares more
than 3,303,027 shares (such amount to be subject to equitable
adjustment from time to time for stock splits, stock
dividends, combinations, capital reorganizations and similar
events relating to the Common Stock occurring after the date
of filing these Articles of Amendment with the Secretary of
State of the State of Washington) of Common Stock (the
"Maximum Share Amount"), less the aggregate number of shares
of Common Stock issued by the Company pursuant to Section (1)
as dividends on the Series 3 Shares, upon conversion of Series
3 Shares pursuant to Section (2). The Maximum Share Amount
shall be allocated among the Series 3 Shares at the time of
initial issuance thereof pro rata based on the total number of
authorized Series 3 Shares provided in these Articles of
Amendment. Each certificate for Series 3 Shares initially
issued shall bear a notation as to the number of shares
constituting the portion of the Maximum Share Amount allocated
to the Series 3 Shares represented by such certificate for
purposes of conversion thereof. The Company shall maintain
records which show the number of shares of Common Stock issued
by the Company pursuant to Section (1) as dividends on the
Series 3 Shares represented by each certificate, which records
shall be controlling in the absence of manifest error. Upon
surrender of any certificate for Series 3 Shares for transfer
or reregistration thereof (or, at the option of the holder,
for conversion pursuant to Section (2)(a) of less than all of
the Series 3 Shares represented thereby), the Company shall
make a notation on the new certificate issued upon such
transfer or reregistration or evidencing such unconverted
shares, as the case may be, as to the remaining number of
shares of Common Stock from the Maximum Share Amount remaining
available for conversion of the Series 3 Shares evidenced by
such new certificate (including, without limitation, by taking
into account the number of shares of Common Stock issued by
the Company pursuant to Section (1) as a dividend on the
Series 3 Shares represented by the certificate so surrendered
and not previously reflected on the certificate so
surrendered, as shown on the records maintained by the
Company). If any certificate for Series 3 Shares is
surrendered for split-up into two or more
-14-
<PAGE> 16
certificates representing an aggregate number of Series 3
Shares equal to the number of Series 3 Shares represented by
the certificate so surrendered (as reduced by any
contemporaneous conversion of Series 3 Shares represented by
the certificate so surrendered), each certificate issued on
such split-up shall bear a notation of the portion of the
Maximum Share Amount allocated thereto determined by pro rata
allocation from among the remaining portion of the Maximum
Share Amount allocated to the certificate so surrendered. If
any Series 3 Shares represented by a single certificate are
converted in full pursuant to Section (2)(a), all of the
portion of the Maximum Share Amount allocated to such Series 3
Shares which remains unissued after such conversion shall be
reallocated pro rata to the outstanding Series 3 Shares held
of record by the holder of record at the close of business on
the date of such conversion of the Series 3 Shares so
converted, and if there shall be no other Series 3 Shares held
of record by such holder at the close of business on such
date, then such portion of the Maximum Share Amount shall be
allocated pro rata among the Series 3 Shares outstanding on
such date.
(2) The Company shall promptly, but in no
event later than five business days after the occurrence, give
notice to each holder (by telephone line facsimile
transmission at such number as such holder has specified in
writing to the Company for such purposes or, if such holder
shall not have specified any such number, by overnight courier
or first-class mail, postage prepaid, at such holder's address
as the same appears on the stock books of the Company) and any
holder may at any time after the occurrence give notice to the
Company, in either case, if on any ten trading days within any
period of 20 consecutive trading days the Company would not
have been required to convert Series 3 Shares of such holder
in accordance with Section (2)(a) as a consequence of the
limitations set forth in Section(4)(b)(1) had all outstanding
Series 3 Shares held by such holder been converted into Common
Stock on each such day, determined without regard to the
limitation, if any, on such holder relating to beneficial
ownership under Sections 13(d) and 16 which is contained in
Section (2)(a) (any such notice, whether given by the Company
or a holder, an "Inconvertibility Notice"). If the Company
shall have given or been required to give any Inconvertibility
Notice, or if a holder shall have given any Inconvertibility
Notice, then within ten business days after such
Inconvertibility Notice is given or was required to be given,
the holder receiving or giving, as the case may be, the
Inconvertibility Notice shall have the right by written notice
to the Company (which
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<PAGE> 17
written notice may be contained in the Inconvertibility Notice
given by the holder) to direct the Company to redeem the
portion of such holder's outstanding shares of Series A
Convertible Preferred Stock (which, if applicable, shall be
all of such holder's outstanding Series 3 Shares if all of
such holder's Series 3 Shares are inconvertible as specified
herein) as shall not, on the business day prior to the date of
such redemption, be convertible into shares of Common Stock by
reason of the limitations set forth in Section (4)(b)(1)
(determined without regard to the limitation, if any, on such
holder relating to beneficial ownership under Sections 13(d)
and 16 which is contained in Section (2)(a)), within ten
business days after such holder so directs the Company, at a
price per share equal to the Share Limitation Redemption Price
(as defined below) unless prior to the date the Corporation is
required to redeem such Series 3 Shares the Company delivers a
written notice to the holder otherwise so entitled to
redemption of such Series 3 Shares stating that the Company
has elected to seek the Stockholder Approval (a "Stockholder
Approval Notice"). If a holder directs the Company to redeem
outstanding Series 3 Shares and, prior to the date the Company
is required to redeem such Series 3 Shares, the Company would
have bee able, within the limitations set forth in Section
(4)(b)(1), to convert all of such holder's outstanding Series
3 Shares (determined without regard to the limitation, if any,
on such holder relating to beneficial ownership under Sections
13(d) and 16 which is contained in Section(2)(a)) on any ten
trading days within any period of 20 consecutive trading days
commencing after the period of 20 consecutive trading days
which gave rise to the applicable Inconvertibility Notice from
the Company or such holder of Series 3 Shares, as the case may
be, had all of such holder's outstanding Series 3 Shares been
surrendered for conversion into Common Stock on each of such
ten trading days within such 20 trading day period, then the
Company shall not be required to redeem any Series 3 Shares by
reason of such Inconvertibility Notice.
(3) If the Company shall have given a
Stockholder Approval Notice, then the Company thereafter shall
use its best efforts to convene a meeting of the stockholders
of the Company or to seek written consents in lieu thereof to
obtain the Stockholder Approval. If (x) the Stockholder
Approval is sought but is not obtained at such meeting or any
adjournment thereof (or through solicitation of written
consents), (y) the Company abandons its efforts to obtain the
Stockholder Approval or (z) the Stockholder
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<PAGE> 18
Approval is not obtained within 60 days after the earliest
Inconvertibility Notice in respect of which Series 3 Shares
have not been redeemed by reason of the Company's decision to
seek the Stockholder Approval, then in each such case the
Company shall thereafter promptly (but in no event more than
ten days thereafter) redeem such portion (which shall be all,
if all Series 3 Shares are not convertible by reason of the
limitations in Section (4)(b)(1)) of the outstanding Series 3
Shares as shall not, on the business day prior to the date of
such redemption, be convertible into shares of Common Stock by
reason of the limitations set forth in Section (4)(b)(1), on
and subject to the terms and conditions of this Section
(4)(b).
(4) Notwithstanding the giving of any notice
by the Company to the holders of Series 3 Shares pursuant to
Section (4)(a)(1) or the giving or the absence of any notice
by holders of Series 3 Shares in response thereto or any
redemption of Series 3 Shares pursuant to Section (4)(b)(2),
thereafter the provisions of Section (4)(b)(2) shall continue
to be applicable on any occasion unless the Stockholder
Approval shall have been obtained from the stockholders of the
Company or waived by the Nasdaq.
(5) As used herein, the term "Share
Limitation Redemption Date" means each date on which the
Company is required to redeem Series 3 Shares as provided in
this Section(4)(b). On each Share Limitation Redemption Date,
the Company shall make payment in immediately available funds
of the applicable Share Limitation Redemption Price to such
holder of Series 3 Shares to be redeemed to or upon the order
of such holder as specified by such holder in writing to the
Company at least one business day prior to such Share
Limitation Redemption Date. If the Company is required to
redeem all or any portion of a holder's outstanding Series 3
Shares pursuant to this Section (4)(b), the Company shall make
payment to such holder of the shares of Series A Convertible
Preferred Stock to be redeemed in respect of each share of
Series A Convertible Preferred Stock to be redeemed of an
amount equal to the greater of (i) the sum of (1) $100, (2) an
amount equal to the accrued but unpaid dividends on such
Series 3 Share, and (3) an amount equal to the accrued and
unpaid interest on dividends in arrears (determined as
provided in Section (1) through the applicable Share
Limitation Redemption Date plus (b) an amount equal to the
product obtained by multiplying (x) the sum stated in the
immediately preceding clause (a) times (y) the quotient
(expressed as a percentage) obtained by dividing (A) the
amount determined by
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<PAGE> 19
subtracting from 100 percent the percentage in effect on the
applicable Share Limitation Redemption Date for purposes of
computing the Conversion Price applicable to a conversion of
Series 3 Shares on such applicable Share Limitation Redemption
Date by (B) the percentage in effect on the applicable Share
Limitation Redemption Date specified in the applicable notice
of redemption for purposes of computing the Conversion Price
applicable to a conversion of Series 3 Shares on such
applicable Share Limitation Redemption Date and (ii) the
product obtained by multiplying (x) the number of shares of
Common Stock which would be issuable upon conversion in
accordance with Section (2)(a) of one Series 3 Share and any
accrued and unpaid dividends thereon and any accrued and
unpaid interest on dividends thereon in arrears if a
Conversion Notice were given by the holder of such Series 3
Shares on the applicable Share Limitation Redemption Date
(determined without regard to any limitation on conversion
relating to beneficial ownership under Sections 13(d) and 16
which is contained in Section (2)(a)) times (y) the average
Market Price of the Common Stock for the five consecutive
trading days ending one trading day prior to the applicable
Share Limitation Redemption Date (the "Share Limitation
Redemption Price"). Upon redemption of less than all of the
Series 3 Shares evidenced by a particular certificate,
promptly, but in no event later than three business days after
surrender of such certificate to the Company, the Company
shall issue a replacement certificate for the shares of Series
A Convertible Preferred Stock evidenced by such certificate
which have not been redeemed. Only whole shares of Series A
Convertible Preferred Stock may be redeemed.
(6) As used in this Section (4)(b),
"Stockholder Approval" means the approval by a majority of the
votes cast by the holders of shares of Common Stock (in person
or by proxy) at a meeting of the stockholders of the Company
(duly convened at which a quorum was present), or a written
consent of holders of shares of Common Stock entitled to such
number of votes given without a meeting, of the issuance by
the Company of 20% or more of the outstanding Common Stock of
the Company for less than the greater of the book or market
value of such Common Stock on conversion of the Series A
Convertible Preferred Stock, as and to the extent required
under Rule 4460(i) of the Nasdaq (or any successor or
replacement provision thereof).
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<PAGE> 20
(5) Liquidation, Dissolution, Winding Up. In the
event of any voluntary or involuntary liquidation, dissolution
or winding up of the Company, the holders of the Series 3
Shares shall be entitled to receive in cash out of the assets
of the Company, whether from capital or from earnings,
available for distribution to its stockholders (the "Series 3
Funds"), before any amount shall be paid to the holders of the
Common Stock or any other class or series of stock which ranks
junior to the Series 3 Shares as to distribution of assets
upon liquidation, dissolution or winding up of the Company, an
amount equal to the Stated Value per Series 3 Share plus any
accrued and unpaid dividends plus interest on dividends in
arrears at the rate provided herein, provided that, if the
Series 3 Funds are insufficient to pay the full amount due to
the holders of Series 3 Shares and holders of shares of other
classes or series of preferred stock of the Company that are
of equal rank with the Series 3 Shares as to payments of
Series 3 Funds (the "Pari Passu Shares"), then each holder of
Series 3 Shares and Pari Passu Shares shall receive a
percentage of the Series 3 Funds equal to the full amount of
Series 3 Funds payable to such holder as a percentage of the
full amount of Series 3 Funds payable to all holders of Series
3 Shares and Pari Passu Shares. The purchase or redemption by
the Company of stock of any class, in any manner permitted by
law, shall not, for the purposes hereof, be regarded as a
liquidation, dissolution or winding up of the Company. Neither
the consolidation nor merger of the Company with or into any
other corporation or corporations, nor the sale or transfer by
the Company of less than substantially all of its assets,
shall, for the purposes hereof, be deemed to be a liquidation,
dissolution or winding up of the Company. No holder of Series
3 Shares shall be entitled to receive any amounts with respect
thereto upon any liquidation, dissolution or winding up of the
Company other than the amounts provided for herein.
(6) Series 3 Rank. All shares of Common Stock shall
be of junior rank to all Series 3 Shares in respect to the
preferences as to dividends, distributions and payments upon
the liquidation, dissolution or winding up of the Company. The
rights of the shares of Common Stock shall be subject to the
preferences and relative rights of the Series 3 Shares. The
Series 3 Shares shall rank junior to the Company's Convertible
Exchangeable Preferred Stock, Series 1, and on a parity with
the Company's Series 2 Convertible Preferred Stock, in respect
of dividends and distributions and payments upon the
liquidation, dissolution or winding up of the Company. The
Company may authorize and issue additional or other preferred
stock
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<PAGE> 21
which is of equal rank with the Series 3 Shares in respect of
the preferences as to dividends and distributions and payments
upon the liquidation, dissolution or winding up of the
Company. In the event of the merger or consolidation of the
Company with or into another corporation, the Series 3 Shares
shall maintain their relative powers, designations and
preferences provided for herein.
(7) Vote to Change the Terms of Series 3 Shares. The
affirmative vote at a meeting duly called for such purpose on
the written consent without a meeting of the holders of the
not less than two-thirds (2/3) of the then outstanding Series
3 Shares shall be required to amend, alter, change or repeal
any of the powers, designations, preferences and rights of the
Series 3 Shares.
(8) Amendments Upon Conversion or Redemption of
Outstanding Series 3 Shares. When, as a result of the
conversion or redemption of the Series 3 Shares, no Series 3
Shares remain outstanding, the Board of Directors may, at its
discretion and without a vote of the shareholders of the
Company, withdraw this Designation in its entirety by
providing for the filing of the applicable amendment or
restatement of the Company's Restated Articles of
Incorporation, and the Series 3 Shares designated hereby shall
thereby return to the status of authorized but unissued and
undesignated shares of Preferred Stock of the Company.
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<PAGE> 1
EXHIBIT 5.1
PERKINS COIE
A LAW PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
1201 THIRD AVENUE, 40TH FLOOR - SEATTLE, WASHINGTON 98101-3099
TELEPHONE: (206) 583-8888 - FACSIMILE: (206) 583-8500
April 14, 1997
Board of Directors
NeoRx Corporation
410 West Harrison Street
Seattle, WA 98119-4007
RE: REGISTRATION OF 3,303,027 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, 3,303,027 shares of the Company's Common Stock (the
"Conversion Shares") issuable upon conversion of the Company's Series 3
Convertible Preferred Stock.
Based on the foregoing, it is our opinion that the Conversion Shares,
upon their issuance and delivery in accordance with the terms of the Company's
Series 3 Convertible Preferred Stock, 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 for Form S-3 with respect to the Conversion Shares and to
the reference to our firm in the registration statement under the caption "Legal
Matters."
Sincerely,
PERKINS COIE
