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Rule 424(b)(3)
Registration No. 333-07339
Registration No. 33-95860
PROSPECTUS
IMCLONE SYSTEMS INCORPORATED
COMMON STOCK, $.001 PAR VALUE
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This Prospectus relates to (i) 2,318,900 shares (the
"Previously Registered Shares") of Common Stock, $.001 par value (the
"Common Stock"), of ImClone Systems Incorporated, a Delaware corporation
(the "Company"), previously registered by the Company on a Registration
Statement on Form S-3 No. 33-95860, which Registration Statement was
ordered effective by the Securities and Exchange Commission (the
"Commission") on October 2, 1995 and (ii) 712,500 shares (the "Newly
Registered Shares," and together with the Previously Registered Shares,
the "Shares") of the Company's Common Stock, being offered (the
"Offering") by the selling stockholders listed herein or by pledgees,
donees, transferees or other successors in interest that receive any of
the Shares as a gift, partnership distribution or other non-sale related
transfer (the "Selling Stockholders"). See "Selling Stockholders."
The distribution of the Shares by the Selling Stockholders
may be effected in one or more transactions that may take place in the
over-the-counter market, or such other market on which the Company's
securities may from time to time be trading, including ordinary broker's
transactions or through sales to one or more dealers for resale of the
Shares as principals, in privately negotiated transactions, through the
writing of options on the Shares (whether such options are listed on an
options exchange or otherwise) or by 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 related to such prevailing market prices
or at negotiated prices. Usual and customary or specifically negotiated
brokerage fees or commissions may be paid by the Selling Stockholders in
connection with such sales of the Shares. To the extent required, the
specific Shares to be sold, the names of the Selling Stockholders, the
purchase price, the public offering price, the names of any agent,
dealer or underwriter, any applicable commission or discount with
respect to a particular offering of the securities covered hereby, and
other terms pertaining to any particular plan of distribution thereof
and not set forth herein, will be set forth in an accompanying
Prospectus supplement. Selling Stockholders may also sell the Shares
pursuant to Rule 144 under the Securities Act of 1933, as amended (the
"1933 Act").
The aggregate proceeds to the Selling Stockholders from the
sale of the Shares will be the sale price of the Shares sold less the
aggregate underwriters' commissions and underwriters' discounts, if any,
and the expenses of distribution. The Company will not receive any
proceeds from the sale of shares of Common Stock by the Selling
Stockholders, but the Company will receive cash equal to the exercise
price of warrants to acquire certain Shares to be exercised before such
Shares can be sold hereunder. See "Use of Proceeds." The Company has
agreed to indemnify certain of the Selling Stockholders against certain
liabilities, including certain liabilities under the 1933 Act. See
"Plan of Distribution" for indemnification arrangements.
The Selling Stockholders and any broker-dealer, agent or
underwriter that participates with the Selling Stockholders in the
distribution of Shares may be deemed "underwriters" within the meaning
of the 1933 Act and any commission received by them and any profit on
the resale of the Shares purchased by them may be deemed to be
underwriting commissions or discounts under the 1933 Act.
The Common Stock is listed on the Nasdaq National Market
under the symbol IMCL. On June 28, 1996, the closing sale price of the
Common Stock was $9 1/8 on the Nasdaq National Market, as reported by
The Wall Street Journal.
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THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS."
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 July 3, 1996
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TABLE OF CONTENTS
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AVAILABLE INFORMATION..................................3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........3
PROSPECTUS SUMMARY.....................................4
RISK FACTORS...........................................6
RECENT DEVELOPMENTS....................................12
USE OF PROCEEDS........................................13
SELLING STOCKHOLDERS...................................14
PLAN OF DISTRIBUTION...................................16
LEGAL MATTERS..........................................17
EXPERTS................................................17
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports and other information with the
Commission. Such reports, proxy statements and other information filed
by the Company can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the regional offices of the Commission at
7 World Trade Center, 13th Floor, New York, New York, 10048 and Citicorp
Center, 500 West Madison Street, Room 1400, Chicago, Illinois, 60661.
Copies of such material can be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W. Washington, D.C.
20549, at prescribed rates.
The Company has filed with the Commission a Registration Statement
on Form S-3 (of which this Prospectus is a part) under the 1933 Act,
with respect to the securities offered hereby. As permitted by the
rules and regulations of the Commission, this Prospectus does not
contain all of the information set forth in the Registration Statement
and the exhibits and schedules thereto. For further information with
respect to the Company and the securities offered hereby, reference is
made to the Registration Statement, including the financial statements
and exhibits incorporated therein by reference or filed as a part
thereof, which may be examined without charge, and copies of such
material can be obtained at prescribed rates from the Public Reference
Section maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Statements contained in this Prospectus as to
the contents of any contract or other document referred to are not
necessarily complete. In each instance reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement or otherwise filed with the Commission, each such statement
being qualified in all respects by such reference, and such contract or
other document shall be deemed incorporated by reference into this
Prospectus.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission are hereby
incorporated by reference and made a part hereof: (i) the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1995;
(ii) the Company's Current Reports on Form 8-K, dated February 5, 1996
and February 14, 1996; (iii) the Company's Quarterly Report on Form 10-Q
for the fiscal quarter ended March 31, 1996; and (iv) the description of
the Common Stock contained in the Company's Registration Statement on
Form 8-A dated October 23, 1991.
All documents subsequently filed by the Company with the
Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the
Exchange Act prior to the termination of the offering of the shares of
Common Stock offered hereby shall be deemed to be incorporated herein by
reference and to be a part hereof from the respective dates of filings
of such documents. The Company hereby undertakes to provide without
charge to each person to whom a copy of this Prospectus is delivered,
upon the request of such person, a copy of any or all documents
incorporated herein by reference, other than exhibits to such documents.
Requests for such copies should be addressed to the attention of Harlan
W. Waksal, Executive Vice President and Chief Operating Officer, ImClone
Systems Incorporated, 180 Varick Street, New York, New York, 10014,
telephone number (212) 645-1405.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more
detailed information, "Risk Factors" and financial statements (including
the notes thereto) included or incorporated by reference in this
Prospectus. The securities offered hereby involve a high degree of
risk. See "Risk Factors."
THE COMPANY
ImClone Systems Incorporated is a biopharmaceutical company
engaged primarily in the research and development of therapeutic
products for the treatment of cancer and cancer-related disorders. The
Company's product candidates include interventional therapeutics for
cancer and cancer vaccines.
C225. The Company's lead interventional therapeutic for cancer
is a chimerized (part mouse, part human) antibody that acts to block the
Epidermal Growth Factor receptor ("EGFr"). EGFr is expressed in select
normal human tissues and has been shown to be over-expressed in the
cells of approximately one-third of all cancers. Extensive in vivo
animal studies with human tumors have shown that C225 in combination
with various chemotherapeutic agents (doxorubicin, cisplatin or
paclitaxel) demonstrates a pronounced enhancement of the anti-tumor
effect of the chemotherapeutic agents, resulting in the complete
destruction of human tumors in substantially all the animals in these
studies. These studies have demonstrated long-term tumor-free survival
of animals.
Since December 1994, the Company has initiated several Phase
Ib/IIa clinical trials of C225 at Memorial Hospital (the patient care
arm of Memorial Sloan-Kettering Cancer Center ("Sloan-Kettering")), Yale
Cancer Center and the University of Virginia. The first study,
involving a single injection of C225 at escalating doses in thirteen
patients, was completed in March 1995. Subsequent studies have been
initiated with escalating doses of C225 both with and without
chemotherapy. A study of the drug in conjunction with cisplatin in head
and neck cancer patients began in May 1995. Studies with doxorubicin in
advanced prostate cancer patients and with paclitaxel in breast cancer
patients were initiated in January 1996 and March 1996, respectively.
The Company produces C225 for its clinical trials at its manufacturing
facility in Branchburg, New Jersey.
105AD7 Cancer Vaccine. 105AD7 is a human monoclonal antibody
which mimics an antigen known as gp72 which is common on cancers of the
gastrointestinal tract, including colorectal carcinoma. This human
monoclonal antibody has been shown to stimulate cellular immune anti-
tumor responses in animal models and has recently been tested in a Phase
I human clinical study in the United Kingdom in thirteen patients with
advanced colorectal carcinoma. The results of that study indicate that
in a majority of patients 105AD7 stimulated a cellular immune response
and significantly increased the overall mean survival time in treated
patients compared to patients not immunized, with no discernible
toxicity related to the drug. Based on these results, late stage
colorectal carcinoma patients are currently being enrolled in the United
Kingdom in a 160-patient Phase II clinical trial.
BEC-2 Cancer Vaccine. BEC-2 is a monoclonal anti-idiotypic
antibody which the Company believes may be useful to prevent or delay
the onset of recurrent primary tumors or metastatic disease. The
antibody, which mimics the ganglioside GD3, has been tested since 1991
in Phase I clinical trials at Sloan-Kettering against certain forms of
cancer, including small-cell lung carcinoma and melanoma. BEC-2 has
shown statistically significant prolonged survival of patients with
small-cell lung carcinoma in a pilot study at Sloan-Kettering. The
Company has granted Merck KGaA (formerly E. Merck) ("Merck"), a German-
based pharmaceutical company, rights to manufacture and market BEC-2
worldwide, except in North America, in return for research support,
potential milestone fees and royalties on future sales.
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Interleukin-6 Mutein (IL-6m). The Company has developed a
recombinant molecular variant of Interleukin-6, a naturally occurring
hematopoietic growth factor. IL-6m has been shown in animal tests to
significantly stimulate the production of platelets. A pilot human
clinical trial of IL-6m was initiated at Hadassah Hospital in Jerusalem,
Israel in early 1994 in pre-chemotherapeutic patients with ovarian or
lung cancer. The Company believes that IL-6m may be useful in the
treatment of thrombocytopenia, a potentially life-threatening deficiency
of platelets resulting from chemotherapy, radiation therapy and bone
marrow transplantation.
Other Product Candidates. The Company is seeking to develop
inhibitors of angiogenesis, which is the formulation of new blood
vessels necessary for tissue growth, including tumor growth. The
Company has acquired proprietary rights to the recombinant mouse form of
a key receptor involved in angiogenesis, the FLK-1 receptor. The
Company has developed various antibodies with high affinity for the
receptor, which block the activation of the receptor and thereby inhibit
angiogenesis. The Company has also initiated a program to develop small
molecule inhibitors of angiogenesis.
FLK-2 is also a tyrosine kinase receptor which is expressed on
sub-population of human hematopoietic stem cells, acute myeloblastic
leukemia and acute lymphoblastic leukemia, and possibly human neural and
neural-like tumors. The goals of the FLK-2 monoclonal antibody program
are to develop therapeutic antibodies that can be used to treat FLK-2
expressing tumors.
The Company is also conducting research in hematopoiesis (growth
and development of blood cell elements) aimed at discovering factors to
support hematopoietic stem cells and to control the proliferation,
differentiation and functional deterioration of hematopoietic elements.
The Company has licensed its diagnostic and infectious disease
vaccine product areas, based on its earlier research, to corporate
partners for further development and commercialization. The Company has
granted the Lederle/Praxis Biologics Division of American Cyanamid
Company a worldwide license to manufacture and market its infectious
disease vaccines, which are in development. The Company has also
entered into a strategic alliance with Abbott Laboratories ("Abbott"),
pursuant to which the Company has licensed certain of its diagnostic
products to Abbott on a worldwide basis. In mid-1995, Abbott launched
in Europe its first DNA-based test, using the Company's technology, for
the diagnosis of the sexually transmitted disease chlamydia. The
Company is entitled to receive potential milestone payments and
royalties in connection with future sales of such diagnostic products.
Research and Development. The Company initiated its in-house
research and development efforts in 1986. The Company has assembled a
scientific staff with a variety of complementary skills in a broad base
of advanced research technologies, including oncology, immunology, cell
biology and protein and synthetic chemistry. The Company has also
recruited a staff of technical and professional employees to carry out
manufacturing of clinical trial materials at its Branchburg, New Jersey
manufacturing facility. Of the Company's 81 full-time personnel on June
14, 1996, 27 were employed in its product development, clinical and
manufacturing programs, 30 in research and 24 in administration. The
Company's staff includes 12 persons with Ph.Ds and 2 with an M.D.
In addition to its research programs conducted in-house, the
Company collaborates with certain academic institutions to support
research in areas related to the Company's product development efforts.
These institutions include Sloan-Kettering, University of California,
Princeton University, and Hadassah Medical Organization. Usually,
research supported at outside academic institutions is performed in
conjunction with additional in-house research. The Company also has
collaborations with institutions related to the performance of its
clinical trials. Such institutions include Cancer Research Campaign,
Sloan-Kettering, Yale Cancer Center and the University of Virginia.
The Company operates a clinical-grade facility in Branchburg, New
Jersey to manufacture its therapeutic candidates in quality and
quantities sufficient for clinical trials. At this facility, the
Company is producing C225, the EGFr antibody, to supply its clinical
trials.
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The Company was incorporated in Delaware in 1984 and commenced its
principal research and development operations in March 1986. The
Company's principal executive offices and laboratories are located at
180 Varick Street, New York, New York, 10014, and the telephone number
is (212) 645-1405.
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Common Stock being offered
by Selling Stockholders.................3,031,400 shares (1)
Common Stock outstanding...............19,813,684 shares (2)
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(1) Such amount consists of 2,318,900 Previously Registered
Shares and 712,500 Newly Registered Shares.
(2) Based on the number of shares outstanding at June 14,
1996. This number does not include 5,703,463 shares of Common Stock
issuable upon exercise of options and warrants outstanding at such
date. See "Risk Factors - Dilution."
RISK FACTORS
An investment in the shares of Common Stock being offered by this
Prospectus involves a high degree of risk. In addition to the other
information contained or incorporated by reference in this Prospectus,
the following factors should be considered carefully in evaluating an
investment in the shares of Common Stock offered hereby.
Early Stage of Product Development; Technological Uncertainty.
The Company was founded in 1984 and opened its laboratory in New York in
1986. Substantially all of the Company's products are in research or
the early stages of development or clinical studies. Substantially all
the Company's revenues were generated from license and research
arrangements with corporate sponsors. The Company's revenues under its
research and license agreements with corporate sponsors have fluctuated
and are expected to fluctuate significantly from period to period.
Similarly, the Company's results of operations have fluctuated and are
expected to fluctuate significantly from period to period. These
variations have been, and are expected to be, based primarily on the
timing of entering into supported research and license agreements, the
status of development of the Company's various products, the timing and
level of revenues from sales by its partner in diagnostics, Abbott
Laboratories, of products bearing the Company's technology, the addition
or termination of research programs or funding support, performance by
the Company's corporate collaborators of their funding obligations, the
achievement of specified research or commercialization milestones and
variations in the level of expenditures for the Company's proprietary
products during any given period. The Company's products will require
substantial additional development and clinical testing and investment
prior to commercialization. To achieve profitable operations, the
Company, alone or with others, must successfully develop, introduce and
market its products. No assurance can be given that any of the
Company's product development efforts will be successfully completed,
that required regulatory approvals can be obtained or that any products,
if developed, will be successfully manufactured or marketed or achieve
customer acceptance.
History of Operating Losses and Accumulated Deficit. The Company
has experienced significant operating losses in each year since its
inception due primarily to substantial research and development
expenditures. As of March 31, 1996, the Company had an accumulated
deficit of approximately $89.1 million. The Company expects to incur
significant additional operating losses over each of the next several
years.
Cash Requirements; Need for Additional Funding. The Company has
expended and will continue to expend in the future substantial funds to
continue the research and development of its products, conduct
preclinical and clinical trials, establish clinical-scale and
commercial-scale manufacturing in its own facilities or in the
facilities of others, and market its products. The Company's budgeted
cash expenditures for the twelve month period ending December 31, 1996
total approximately $15.0 million, which includes $676,000 of a $2.4
million obligation to Pharmacia and Upjohn, Inc. ("Pharmacia"). Such
budgeted amount of cash expenditures for 1996 does not include the
repurchase for approximately $5.7 million of 3,238,184 shares of capital
stock of Cadus Pharmaceutical Corporation ("Cadus"). See "Recent
Developments."
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At June 14, 1996, the Company had a cash balance of approximately
$19.7 million, virtually all of which represents the remaining balance
of the proceeds of public offerings of 3,000,000 shares of Common Stock
in November 1995 and 2,200,000 shares of Common Stock in February 1996.
In August 1995, the Company raised $4.0 million from a financing with
the Oracle Group (as defined below). In April 1995, the Company
completed the sale of the remaining one-half of its shares of capital
stock of Cadus for $3.0 million to High River Limited Partnership ("High
River"). See "Recent Developments."
The Company expects that its existing capital resources, including
the ongoing research support of its corporate partners, will be
sufficient to fund its operations through mid-1997 (assuming no exercise
of the Company's option to repurchase the shares of Cadus).
Accordingly, in order to fund its capital needs after that time, the
Company will require significant levels of additional capital and
intends to raise the necessary capital through additional equity or debt
financings, arrangements with corporate partners or from other sources.
The Company has entered into preliminary discussions with several major
pharmaceutical companies concerning the funding of research and
development for certain of its products in research. No assurance can
be given that the Company will be successful in pursuing any such
alternatives. In addition, the Company may seek to enter into a
significant strategic partnership with a pharmaceutical company for the
development of its lead product candidate, C225. Such a strategic
alliance could include an up-front equity investment and license fees
plus milestone fees and revenue sharing. There can be no assurance that
the Company will be successful in achieving such an alliance, nor can
the Company predict the amount of funds which might be available to it
if it entered into such an alliance or the time at which such funds
would be made available.
The Company has granted a security interest in substantially all
facility equipment located in its New York City facility to secure the
obligations of the Company to the New York City Industrial Development
Agency (the "NYIDA") relating to the 1986 Industrial Development Revenue
Bond (the "1986 Industrial Development Bond") and the 1990 Industrial
Development Revenue Bond, which were issued to finance a portion of the
cost of this facility. See "Recent Developments."
Failure to Pay Certain Obligations. In July 1993, the Company
entered into an agreement with Erbamont, Inc., now a subsidiary of
Pharmacia, to acquire the worldwide rights to IL-6m, a blood cell growth
factor, which had been licensed to Pharmacia pursuant to a development
and licensing agreement. In consideration of the return of rights and
the transfer of certain material and information, the Company has paid
$0.9 million and has further obligations to Pharmacia. Such
obligations, including those to pay for IL-6 mutein material
manufactured and supplied by Pharmacia, totaled $2.4 million at March
31, 1996. In addition, the Company is required to pay Pharmacia
$2,700,000 in royalties on eventual sales of IL-6m, if any. In March,
1996, the Company entered into a Repayment Agreement with Pharmacia (the
"Repayment Agreement") pursuant to which it has agreed to pay the
$2,400,000 over 24 months commencing in March 1996, with interest only
payable during the first six months. In connection with the Repayment
Agreement, the Company has signed a Confession of Judgment, which can be
filed by Pharmacia with an appropriate court in the case of default by
the Company. Pursuant to a Security Agreement entered into with
Pharmacia, the Company has pledged its interests in patents related to
IL-6m and to heparanase to secure its obligations under the Repayment
Agreement.
Dilution. Warrants to purchase 3,644,375 shares of the Company's
Common Stock (which includes 2,719,375 warrants issued pursuant to
compensatory plans for directors, officers, employees and consultants)
at an average exercise price of approximately $3.07 per share (subject
to adjustment) and stock options to purchase 2,059,088 shares of the
Company's Common Stock (which includes 1,609,088 options granted to
employees and consultants under the Company's stock option plans) at an
average exercise price of approximately $5.50 per share (subject to
adjustment) were outstanding as of June 14, 1996. For the life of such
options and warrants, the holders thereof are given an opportunity to
benefit from a rise in the market price of the Common Stock with a
resulting dilution of the interest of other stockholders. The exercise
of such options and warrants is likely to be undertaken at a time when
the Company, in all probability, could obtain additional equity capital
from the public on terms more favorable than those provided for pursuant
to the options and warrants. The exercise of a significant number of
options and warrants at any one time or the sale of a substantial number
of shares of Common Stock acquired upon exercise of options or warrants
could adversely affect the market price of the Company's Common Stock
and the Company's ability to raise additional equity capital.
Limited Manufacturing Experience. To be successful, the Company's
products must be manufactured in commercial quantities in compliance
with regulatory requirements and at acceptable costs. Although the
Company has developed products in the laboratory and in some cases has
produced sufficient quantities of materials for pre-
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clinical animal trials and early stage clinical trials, production in
late stage clinical or commercial quantities may create technical
challenges for the Company. The Company owns a facility which is used
as its clinical-scale manufacturing facility. If it commercializes its
products, the Company plans to adapt this facility for use as its
commercial-scale manufacturing facility. However, the Company has
limited experience in clinical-scale manufacturing and no experience in
commercial-scale manufacturing, and no assurance can be given that the
Company will be able to make the transition to late stage clinical or
commercial production. The timing and any additional costs of adapting
the facility for commercial manufacturing will depend on several
factors, including the progress of products through clinical trials, and
are not yet determinable.
Establishing Sales and Marketing Capability. As a research and
development stage company, the Company does not have significant
experience in selling or marketing new products. The Company's current
strategy does not necessarily include marketing products on its own, as
it intends to do so initially through its corporate partners. See "Risk
Factors_Dependence on Certain Contractual Agreements with Corporate
Partners." At such time as the Company seeks to market directly a new
product, the Company will require expertise in sales and marketing.
There can be no assurance that the Company will be able to retain
qualified or experienced sales and marketing personnel or that any
efforts undertaken by such personnel will be successful.
Dependence on Certain Contractual Agreements with Corporate
Partners. To date, the Company has derived substantially all, and the
Company expects to continue to derive over the next several years a
substantial portion, of its revenues related to research and development
funding and license fee revenues from agreements with corporate
partners. These agreements typically provide the corporate partner with
certain rights to manufacture and/or market in certain geographic areas
specified products which are developed using the Company's proprietary
technology, subject to an obligation to pay royalties to the Company
based on future product sales, if any. Certain of these agreements
provide for funding by corporate partners of research activities
performed by the Company, and in some cases for payments to the Company
of license fees either upon entering into such agreements or upon
achievement of specified research, regulatory and commercialization
milestones, or both. The Company's revenues from these agreements are
not received at regular intervals, have fluctuated in the past and are
expected to continue to fluctuate in the future. In general, the
agreements from which the Company derives such revenues are subject to
early termination at the election of the corporate partner. In the
past, some of these arrangements have been terminated. There is no
assurance that revenues from these sources will be maintained, or that
the Company will enter into any additional agreements of a similar
nature.
Under most of these agreements, the corporate partner, at least
for certain territories, controls and is responsible for the design and
conduct of pre-clinical and clinical trials, seeking and obtaining of
regulatory approvals, establishing clinical-and commercial-scale
manufacturing capabilities and manufacturing and marketing of products
in those territories. The amount and timing of funding and the
investment of other resources under such agreements is controlled by
such other parties and also is subject to the risk of financial or other
difficulties that may befall such other parties. In addition, the
corporate partners or their affiliates may be pursuing alternative
products or technologies addressing the same purposes as those which are
the subject of the collaboration with the Company. While the Company
believes its corporate partners have or will have an economic motivation
to succeed in performing their obligations under such agreements, there
can be no assurance that the corporate interests and motivations of
these partners will remain consistent with those of the Company.
Uncertainties as to Patents and Proprietary Technologies. The
patent position of biopharmaceutical companies generally is highly
uncertain and involves complex legal and factual questions. The
Company's success will depend, in part, on its ability to obtain patents
on its own products, obtain licenses to use third parties' technologies,
protect trade secrets, and operate without infringing the proprietary
rights of others. If the Company is unable to obtain patents that
adequately protect its own products, or if any of the Company's
proprietary technologies were to conflict with the rights of others, the
Company's ability to commercialize products using such technologies
could be materially and adversely affected.
The Company currently is the exclusive licensee or assignee of 34
issued patents worldwide, 19 of which are issued United States patents.
The Company is the assignee or exclusive licensee of approximately 34
families of patent applications in the United States and in foreign
countries directed to its proprietary technology. There can be no
assurance that patents will issue as a result of any of such
applications. Nor can there be any assurance that issued patents would
be of substantial protection or commercial benefit to the Company or
would afford the Company adequate protection from competing products.
For example, issued patents may be challenged and declared invalid. In
addition, under many of its license agreements with third parties, the
Company is required to meet
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specified milestone or diligence requirements in order to retain its
license to such third party patents and patent applications. There can
be no assurance that the Company will satisfy any of these requirements.
The Company holds rights under certain third party patents that it
considers necessary for the development of its technology. It is
anticipated that, in order to commercialize certain of the products that
the Company is developing or may develop, the Company may be required to
obtain additional licenses to patents from third parties. However, the
extent to which such licenses may be required, the availability of such
licenses, and the cost of such licenses, if they are available, are
presently uncertain.
The Company is aware that other parties have filed patent
applications in various countries in several areas in which the Company
is developing products. Some of these patent applications have issued
as patents, and some are still pending. There can be no assurance that
the pending patent applications will not issue as patents. Issued
patents are entitled to a rebuttable presumption of validity under the
laws of the United States and certain other countries. These issued
patents may adversely affect, or prevent, the ability of the Company to
develop the commercial products it is attempting to develop. If
licenses to such patents are needed, there can be no assurance that any
such licenses would be obtainable or obtainable on acceptable terms.
The following areas may be adversely affected by the patents and
patent applications of others:
The Company has an exclusive license to an issued U.S. patent for
the murine form of its EGFr antibody product, C225. The Company's
licensor did not seek patent protection outside the United States on
this antibody. Outside the United States, the Company is relying on
patent applications exclusively licensed from a major pharmaceutical
company, which claim the use of EGFr antibody used in conjunction with
chemotherapeutic agents. The Company is currently prosecuting these
applications. There can be no assurance that the Company will be
successful in these efforts.
The EGFr antibodies being developed by the Company are
"chimerized" monoclonal antibodies. Patents have been issued to other
biotechnology companies that cover the chimerization of antibodies, and
the Company may be required to obtain licenses under these patents in
order to commercialize its chimerized monoclonal antibodies. There can
be no assurance that the Company will be able to obtain such licenses in
the territories where it proposes commercialization.
The Company is aware that third-party patents have been issued in
the United States and Europe covering anti-idiotypic antibodies and/or
their use for the treatment of tumors. Such patents, if valid, could be
construed to cover the Company's BEC-2 monoclonal antibody and certain
uses thereof in the United States and most of Europe. Merck, the
Company's licensee of BEC-2 worldwide, except in North America, has
informed the Company that it has obtained a non-exclusive, worldwide
license to such patent in order to market BEC-2, and has offered a
sublicense to the Company under its rights in the United States. No
assurance can be given that such license or sublicense would be
available to the Company in other parts of the world on commercially
acceptable terms, if at all.
The Company's proprietary position with respect to its IL-6 mutein
is based on patents and patent applications filed by the Company. The
Company is aware of patents issued to a third party in the United States
and Europe covering cysteine depleted proteins. Patent applications by
this third party also have been filed in other countries. The issued
U.S. and European patents may be construed to cover use of the Company's
IL-6 mutein in the United States and Europe and, assuming such patents
are valid, enforceable and infringed could require the Company to obtain
a license to the patents in order to commercialize the Company's product
in the U.S. and Europe, including Great Britain, France, Germany, Sweden
and Italy. Similar licenses might have to be obtained in order to
market the product in other countries if similar patents are issued in
those jurisdictions.
The Company is also aware that United States patents have been
issued to third parties relating to a general process for purifying
proteins that the Company may use in producing its IL-6 mutein and to
the use of IL-6 to treat thrombocytopenia. The Company may be required
to or decide to seek a license to some or all of these patents.
In addition, the Company is aware of third-party patents for
native recombinant IL-6 and methods for its production. The Company is
aware of a European patent for the DNA encoding of human recombinant IL-
6 and methods for its production, which the Company believes has been
exclusively licensed on a worldwide basis to a pharmaceutical company.
This patent is subject to an opposition proceeding in Europe. If this
patent survives the
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<PAGE>
opposition with the scope originally granted, it could be construed as
covering the Company's IL-6 mutein, its production or both.
The Company is aware that third parties have filed patent
applications in areas that could affect the ability of the Company or
its licensee for diagnostics, Abbott Laboratories, to commercialize the
Company's diagnostic products. These areas include target amplification
technology and signal amplification technology. Third party patents
have already issued in the field of target amplification such as
polymerase chain reaction technology (also known as PCR).
There has been significant litigation in the industry regarding
patents and other proprietary rights. Such litigation has consumed
substantial resources for the parties involved. If the Company became
involved in similar litigation regarding its intellectual property
rights, the cost of such litigation could be substantial and could have
a material adverse effect on the Company.
Certain proprietary trade secrets and unpatented know-how are
important to the Company in conducting its research and development
activities. There can be no assurance that others may not independently
develop the same or similar technologies. Although the Company has
taken steps, including entering into confidentiality agreements with its
employees and third parties, to protect its trade secrets and unpatented
know-how, third parties nonetheless may gain access to such information.
Reliance on and Attraction and Retention of Key Personnel and
Consultants. The Company's ability to successfully develop marketable
products and to maintain a competitive position will depend in large
part on its ability to attract and retain highly qualified scientific
and management personnel and to develop and maintain relationships with
leading research institutions and consultants. The Company is highly
dependent upon the principal members of its management, scientific staff
and Scientific Advisory Board. Competition for such personnel and
relationships is intense, and there can be no assurance that the Company
will be able to continue to attract and retain such personnel.
Technological Change and Risk of Obsolescence; Competition. The
biopharmaceutical industry is subject to rapid and significant
technological change. The Company has numerous competitors, including
major pharmaceutical and chemical companies, specialized biotechnology
firms, universities and other research institutions. These competitors
may succeed in developing technologies and products that are more
effective than any which are being developed by the Company or which
would render the Company's technology and products obsolete and non-
competitive. Many of these competitors have substantially greater
financial and technical resources and production and marketing
capabilities than the Company. In addition, many of the Company's
competitors have significantly greater experience than the Company in
pre-clinical testing and human clinical trials of new or improved
pharmaceutical products and in obtaining Food and Drug Administration
("FDA") and other regulatory approvals on products for use in health
care. The Company is aware of various products under development or
manufactured by competitors that are used for the prevention, diagnosis
or treatment of certain diseases the Company has targeted for product
development, some of which use therapeutic approaches that compete
directly with certain of the Company's product candidates. The Company
has limited experience in conducting and managing pre-clinical testing
necessary to enter clinical trials required to obtain government
approvals and has limited experience in conducting clinical trials.
Accordingly, the Company's competitors may succeed in obtaining FDA
approval for products more rapidly than the Company, which could
adversely affect the Company's ability to further develop and market its
products. If the Company commences significant commercial sales of its
products, it will also be competing with respect to manufacturing
efficiency and marketing capabilities, areas in which the Company has
limited or no experience.
Extensive Government Regulation. Research, pre-clinical
development, clinical trials and the manufacturing and marketing of
therapeutic and diagnostic products under development by the Company are
subject to extensive and rigorous regulation by governmental authorities
in the United States and other countries. Clinical trials and the
manufacturing and marketing of products will be subject to the testing
and approval processes of the FDA and comparable foreign regulatory
authorities. The process of obtaining required FDA regulatory approvals
for the types of products under development by the Company usually takes
many years and is expensive. Development of a new biologic therapeutic
or vaccine product may take, from initiation of clinical trials until
FDA approval, on average five to ten years or more, while in vitro
diagnostics may take approximately two to six years or more depending on
the requirements of the approval process or clinical data requirements.
If the FDA requests additional data, these time periods can be
substantially increased. Even after such additional data is submitted,
there can be no assurance of obtaining FDA approval. In addition,
product approvals may be withdrawn or limited for
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<PAGE>
noncompliance with
regulatory standards or the occurrence of unforeseen problems following
initial marketing. The Company has not sought or received regulatory
approval for the commercial sale of any of its products or for any
manufacturing processes or facilities. The Company and its licensees
may encounter significant delays or excessive costs in their respective
efforts to secure necessary approvals or licenses. Future federal,
state, local or foreign legislative or administrative acts could also
prevent or delay regulatory approval of the Company's or its licensees'
products. There can be no assurance that the Company or its
collaborative partners will be able to obtain the necessary approvals
for clinical testing, manufacturing or marketing of the Company's
products or that the clinical data they obtain in clinical studies will
be sufficient to establish the safety and effectiveness of the products.
Failure to obtain or maintain requisite governmental approvals or
failure to obtain approvals of the clinical intended uses requested,
could delay or preclude the Company or its licensees from further
developing particular products or from marketing their products or could
limit the commercial use of the products and thereby have a material
adverse effect on the Company's liquidity and financial condition.
Product Liability Exposure. The use of the Company's product
candidates during testing or after approval entails an inherent risk of
adverse effects which could expose the Company to product liability
claims. There can be no assurance that the Company would have
sufficient resources to satisfy any liability resulting from these
claims. The Company endeavors to obtain indemnification by its
corporate partners against certain of such claims. However, there can
be no assurance that such parties will honor, or have the financial
resources to honor, such obligations. The Company currently has limited
product liability insurance for products in pre-clinical and clinical
testing. There can be no assurance that such coverage will be adequate
in scope to protect the Company in the event of a successful product
liability claim.
Hazardous Materials; Environmental Matters. The Company's
research and development activities involve the controlled use of
hazardous materials, chemicals, viruses and various radioactive
compounds. The Company is subject to federal, state and local laws and
regulations governing the use, manufacture, storage, handling and
disposal of such materials and certain waste products. Although the
Company believes that its safety procedures for handling and disposing
of such materials comply with the standards prescribed by such laws and
regulations, the risk of accidental contamination or injury from these
materials cannot be completely eliminated. In the event of such an
accident, the Company could be held liable for any damages that result,
and any such liability could exceed the resources of the Company. The
Company may be required to incur significant costs to comply with
environmental laws and regulations in the future. The Company's
operations, business or assets may be materially or adversely affected
by current or future environmental laws or regulations.
Uncertainty of Health Care Reimbursement and Related Matters. The
Company's ability to earn sufficient returns on its products may depend
in part on the extent to which reimbursement for the costs of such
products and related treatments will be available from government health
administration authorities, private health coverage insurers and other
organizations. If purchasers or users of the Company's products are not
entitled to adequate reimbursement for the cost of using such products,
they may forego or reduce such use. Significant uncertainty exists as
to the reimbursement status of newly approved health care products, and
there can be no assurance that adequate third-party coverage will be
available.
Concentration of Share Ownership and Control by Officers and
Directors. The Company's current officers and directors will
beneficially own approximately 14% of the outstanding shares of Common
Stock after completion of the sale of all of the shares of Common Stock
offered hereby, including shares issuable upon the exercise of
outstanding options and warrants as of June 14, 1996. Accordingly, the
officers and directors are able to influence significantly the election
of all of the directors and most corporate action.
Possible Volatility of Stock Price. The Company believes that
factors such as the status of its products in development, announcements
of new products, formation or termination of corporate alliances, other
developments by the Company, its competitors or the FDA, determinations
in connection with patent applications of the Company or others and
variations in quarterly operating results could cause the market price
for the Common Stock to fluctuate substantially. In addition, the stock
market has experienced extreme price and volume fluctuations that have
particularly affected the market price for many high technology and
healthcare-related companies and that have often been unrelated to the
operating performance of these companies. These broad market
fluctuations may adversely affect the market price of the Common Stock.
Limitations on Net Operating Loss Carryforwards. At December 31,
1995, the Company had net operating loss carryforwards for federal
income tax purposes of approximately $69.9 million which expire at
various dates from
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<PAGE>
2000 through 2010. Pursuant to the Tax Reform Act of
1986, annual utilization of the Company's net operating loss
carryforwards may be limited if a cumulative change in ownership of more
than 50% occurs within a three-year period. Based on preliminary
reviews, the Company believes that a change of ownership occurred in
connection with its initial public offering in November 1991 and again
in the fourth quarter of 1995 as a result of the offering of shares of
Common Stock completed in November 1995. If either event were
ultimately determined to have resulted in a change of ownership, the
Company's utilization of net operating losses relating to the period
prior to such event would be subject to significant annual limitations.
Dividend Policy. The Company has never paid any cash dividends on
its Common Stock. The Board of Directors will determine future dividend
policy based on the Company's results of operations, financial
condition, capital requirements and other circumstances. The Company
does not anticipate that any cash dividends will be declared in the
foreseeable future.
RECENT DEVELOPMENTS
On April 27, 1995, the Company completed the sale of the remaining
one-half of its shares of capital stock of Cadus for $3.0 million to
High River. The Company has a right to repurchase all 3,238,184 shares
of Cadus any time prior to October 27, 1996 for $1.75 per share, subject
to adjustment under certain circumstances. In exchange for such right,
the Company granted to High River two options to purchase shares of
Common Stock. One option is for 150,000 shares at an exercise price per
share equal to $2.00, subject to adjustment under certain circumstances,
and the other option is for 300,000 shares at an exercise price per
share equal to $0.69, subject to adjustment under certain circumstances.
Both options will expire on April 26, 2000.
On August 11, 1995, the Oracle Group purchased 1,000,000 shares of
Common Stock for a purchase price of $1.5 million and made a loan to the
Company in the aggregate amount of $2.5 million with a two-year
maturity, but subject to mandatory prepayment, in whole or in part, upon
the occurrence of certain events, including the raising of certain
additional funds. The Oracle Group includes Oracle Partners, L.P.,
Quasar International Partners C.V., Oracle Institutional Partners L.P.,
Sam Oracle Fund, Inc. and Warren B. Kanders. The Oracle Group also
received warrants exercisable at any time until August 10, 2000
entitling the holders thereof to purchase an aggregate of 500,000 shares
of Common Stock at a price of $1.50 per share and 500,000 shares of
Common Stock at a price of $3.00 per share. As a result of the
Company's offerings of shares of its Common Stock in November 1995 and
February 1996, the Oracle Group was entitled to require the Company to
apply 20 percent of the gross proceeds of the sale of the shares of
Common Stock from the offerings to repay the loan.
In May 1996, the Company and the Oracle Group exchanged the notes
in the aggregate outstanding principal amount of $2.5 million for
333,333 shares of Common Stock and the Company paid the accrued and
unpaid interest through April 15, 1996, the date of the agreement in
principle, on the notes in the amount of $143,000 in cash. The Company
recorded an extraordinary loss of $542,000 on the extinguishment of the
debt. The Company has agreed to register such shares of Common Stock
with the Commission under a registration statement in accordance with
the provisions of the 1933 Act. If such registration statement has not
been declared effective by the Commission on or before September 4,
1996, the Oracle Group has the right, at its option, to receive 33,333
additional shares of Common Stock from the Company or, in lieu thereof,
a cash payment in the full amount of the loan, together with interest
thereon, in which case all 333,333 shares would be surrendered to the
Company.
In July 1995, a director loaned the Company $180,000 in exchange
for a long-term note due two years from issuance at on annual interest
rate of 8%. As part of the transaction, the director was granted 36,000
warrants to purchase Company common stock at $1.50 per share and an
additional 36,000 warrants to purchase Company common stock at $3.00 per
share.
In May 1996, the Company and the director exchanged the note for
24,000 shares of Common Stock and the Company paid the accrued and
unpaid interest through April 15, 1996, the date of the agreement in
principle, on the note in the amount of $2,000 in cash. The Company
recorded an extraordinary loss of $39,000 on the extinguishment of the
debt. The Company has agreed to register such shares of Common Stock
with the Commission under a registration statement in accordance with
the provisions of the 1933 Act. If such registration statement is not
declared effective by the Commission on or about September 4, 1996, the
director has the right, at his option to receive 2,400 additional shares
of Common Stock from the Company, or, in lieu thereof, a cash payment in
the full amount of the loan, together with interest thereon, in which
case all 24,000 shares would be surrendered to the Company.
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<PAGE>
On November 30, 1995, the Company completed a public sale of
3,000,000 shares of Common Stock at a per share price to the public of
$3.75. Net proceeds to the Company from this sale totaled approximately
$10.6 million after deducting expenses payable by the Company in
connection with the offering and the commission paid by the Company.
On February 14, 1996, the Company completed a public sale of
2,200,000 shares of Common Stock at a per share price to the public of
$6.63. Net proceeds to the Company from this sale totaled approximately
$13,600,000 after deducting expenses payable by the Company in
connection with the offering and the commission paid by the Company.
In May 1996, the Company extended its collaboration with Merck for
the development of a therapeutic cancer vaccine, BEC-2, for use in
small-cell lung carcinoma and in malignant melanoma. The collaboration
continues a research and license agreement between the two companies
signed in December of 1990. Under the terms of the modified agreement,
the Company will receive up to $11.7 million in license fees, research
and development support and milestone payments in addition to the monies
previously received in the original agreement. In return, Merck will
receive marketing rights to BEC-2 for all therapeutic indications
outside North America. Formerly the rights of Merck were confined to
Europe, Australia and New Zealand. Merck will also share in the
development costs for the United States and Europe and will pay all
development costs in other territories. The Company will be entitled to
royalties based upon product sales outside of North America.
In May 1996, the Company entered into a two-year renewable employment
agreement with Carl S. Goldfischer, pursuant to which Mr. Goldfischer
will serve as the Company's Vice President for Finance and Strategic
Planning, and Chief Financial Officer. The agreement includes
provisions relating to termination of employment with and without cause,
certain payments to Mr. Goldfischer in case of termination, and
compensation and stock options to be awarded to Mr. Goldfischer during
the term of the agreement.
In June 1996, the Company and the NYIDA extended the maturity of
the Company's $2.1 million repayment obligation to the NYIDA for the
1986 Industrial Revenue Bond, which was due on June 18, 1996, to
December 15, 1997.
USE OF PROCEEDS
Although the Company will not receive any proceeds directly from
the sale of the Shares by any Selling Stockholder, some of the Selling
Stockholders must exercise warrants to acquire certain Shares before
completing the sale of such Shares. The net proceeds received by the
Company upon exercise of such warrants, estimated to be approximately
$3,284,000 if all such warrants are exercised, will be used for working
capital and other corporate purposes.
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<PAGE>
SELLING STOCKHOLDERS
The following table sets forth certain information with respect to
the Shares held by the Selling Stockholders as of July 31, 1995, unless
another date is indicated. Except as indicated below or elsewhere in
this Prospectus, none of the Selling Stockholders listed below has had a
material relationship within the past three years with the Company or
any of its subsidiaries, other than as a result of the ownership of the
Common Stock or options, warrants or other rights to acquire shares of
Common Stock. The following table includes Previously Registered Shares
and Newly Registered Shares, but does not include any shares of Common
Stock previously sold by such Selling Stockholders. Except as otherwise
noted, based on the information shown each Selling Stockholder would
beneficially own less than one percent of the Common Stock after
disposition by such Selling Stockholder of its Shares. See "Plan of
Distribution."
<TABLE>
<CAPTION>
Number of Shares
Name Number of Shares Number of Shares of Common Stock
of Common Stock Owned of Common Owned after
Selling Stockholder Prior to the Offering Stock to be Offered(1) the Offering(2)
- ------------------- --------------------- ---------------------- ---------------
<S> <C> <C> <C>
DFA Group Trust - 255,000 231,000 24,000
Small Company Subtrust
DFA Group Trust - 93,500 91,000 2,500
The 6-10 Subtrust
U.S. 6-10 Small 9,800 7,000 2,800
Company Series
U.S. 9-10 Small 143,000 131,000 12,000
Company Portfolio
Robert F. Goldhammer(8) 743,576(3) 160,574 583,002
Paul B. Kopperl 31,460(4) 10,460 21,000
Peter M. Rogalin 110,100(5) 12,300 97,800
Harlan W. Waksal 999,882(6) 2,460 997,422
Barry N. Wish 145,190(7) 3,690 141,500
Oracle Partners, L.P.(8) 1,128,800(9) 1,145,480 0
Quasar International 263,333(10) 322,466 26,000
Partners C.V.(8)
Oracle Institutional 145,600(11) 66,560 79,040
Partners L.P.(8)
Sam Oracle Fund, Inc.(8) 624,100(12) 568,410 55,690
Warren B. Kanders (8) 12,500 13,750 0
Elizabeth A. Burke (8) 6,000(13) 6,000 0
Jack and Sabina Waksal (8) 190,000(14) 190,000 0
Arthur Altschul (8) 4,200(14) 4,200 0
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Number of Shares
Name Number of Shares Number of Shares of Common Stock
of Common Stock Owned of Common Owned after
Selling Stockholder Prior to the Offering Stock to be Offered(1) the Offering(2)
- ------------------- --------------------- ---------------------- ---------------
<S> <C> <C> <C>
Charles Altschul(8) 1,800(14) 1,800 0
Diana L. Altschul(8) 1,800(14) 1,800 0
Emily Altschul(8) 1,800(14) 1,800 0
Stephen F. Altschul(8) 1,800(14) 1,800 0
Arthur Altschul, Jr.(8) 11,800(15) 1,800 10,000
Overbrook Foundation(8) 15,000(16) 7,500 7,500
Peter Hofbauer(8) 8,000(14) 8,000 0
Donald D. Kennedy(8) 7,500(14) 7,500 0
F. Stanton Moyer(8) 3,750(14) 3,750 0
Peter Phelps(8) 2,000(14) 2,000 0
Siri von Reis(8) 11,800(17) 1,800 10,000
Alexis Stewart(8) 500(14) 500 0
Elana Waksal(8) 11,676(18) 10,000 1,676
Raymond H. Welsh(8) 169,849(19) 15,000 154,849
------------- --------- ---------
TOTAL: 5,155,116 3,031,400 2,226,779
</TABLE>
- --------------
(1) Includes Shares which may be issued by the Company to the Selling
Stockholders if the Registration Statement (of which this
Prospectus is a part) has not been declared effective on or before
September 4, 1996. The maximum number of such Shares which may be
offered hereby by such Selling Stockholders are as follows: Robert
Goldhammer 2,400 Shares; Oracle Partners, L.P. 16,680 Shares;
Quasar International Partners C.V. 5,133 Shares; Oracle
Institutional Partners L.P. 960 Shares; Sam Oracle Fund, Inc. 9,310
Shares and Warren B. Kanders 1,250 Shares.
(2) Assuming the sale of all Shares offered hereby.
(3) Includes 8,542 Shares issuable upon the exercise of options,
499,990 Shares issuable upon the exercise of warrants and 13,314
Shares held in trust for the children of Thomas A. Rosse, as to
which Mr. Goldhammer disclaims beneficial ownership. Information
as of May 24, 1996.
(4) Includes 5,000 Shares issuable upon the exercise of options and
2,460 Shares issuable upon the exercise of warrants.
(5) Includes 25,000 Shares issuable upon the exercise of options,
12,300 Shares issuable upon the exercise of warrants and 22,800
Shares owned by family members of Mr. Rogalin, as to which he
disclaims beneficial ownership.
(6) Includes 19,102 Shares issuable upon the exercise of options,
862,680 Shares issuable upon the exercise of warrants and 2,600
Shares owned by family members of Dr. Waksal, as to which he
disclaims beneficial ownership.
(7) Includes 3,690 Shares issuable upon the exercise of warrants,
26,500 Shares held in trust for the children of Mr. Wish, as to
which he disclaims beneficial ownership, and 115,000 Shares owned
by BNW Partners, wholly-owned by Mr. Wish.
(8) Information as of May 24, 1996.
(9) Includes 481,000 Shares issuable upon the exercise of warrants.
(10) Includes 148,000 Shares issuable upon the exercise of warrants.
(11) Includes 28,000 Shares issuable upon the exercise of warrants.
-15-
<PAGE>
(12) Includes 268,000 Shares issuable upon the exercise of warrants.
(13) Includes 3,000 shares issuable upon exercise of warrants.
(14) Issuable upon exercise of warrants.
(15) Includes 1,800 shares issuable upon exercise of warrants.
(16) Includes 7,500 shares issuable upon exercise of warrants.
(17) Includes 1,800 shares issuable upon exercise of warrants.
(18) Includes 10,000 shares issuable upon exercise of warrants.
</R)
(19) Includes 15,000 shares issuable upon exercise of warrants.
PLAN OF DISTRIBUTION
The distribution of the Shares by the Selling Stockholders may be
effected in one or more transactions that may take place in the over-
the-counter market, or such other market on which the Company's
securities may from time to time be trading, including ordinary broker's
transactions or through sales to one or more dealers for resale of the
Shares as principals, in privately negotiated transactions, through the
writing of options on the Shares (whether such options are listed on an
options exchange or otherwise) or by 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 related to such prevailing market prices
or at negotiated prices. If the Selling Stockholders effect such
transactions by selling Shares through underwriters, dealers or agents,
such underwriters, dealers or agents may receive compensation in the
form of underwriting discounts, concessions or commissions from the
Selling Stockholders and/or the purchasers of the Shares for whom they
may act as agent. The Selling Stockholders and any such underwriters,
dealers or agents that participate in the distribution of the Shares may
be deemed to be underwriters, and any profit on the sale of the Shares
by them and any discounts, commissions or concessions received by them
may be deemed to be underwriting discounts and commissions under the
1933 Act. Selling Stockholders may also sell Shares pursuant to Rule
144 under the 1933 Act. Brokers or dealers acting in connection with
the sale of the Shares may receive fees or commissions in connection
therewith. The Company will not receive any of the proceeds from the
sale by the Selling Stockholders of Shares.
At the time a particular offer of Shares is made pursuant to the
Offering, to the extent required, a supplement to this Prospectus will
be distributed which will identify and set forth the number of Shares
being offered and the terms of the offering, including the name or names
of any underwriters, dealers or agents, any discounts, commissions and
other items constituting compensation from the Selling Stockholders
and/or the Company and any discounts, commissions or concessions allowed
or reallowed or paid to dealers, including the proposed selling price to
the public. Such supplement to this Prospectus and, if necessary, a
post-effective amendment to the Registration Statement of which this
Prospectus is a part, will be filed with the Commission to reflect the
disclosure of additional information with respect to the distribution of
Shares.
Under applicable rules and regulations under the Exchange Act, any
person engaged in a distribution of shares of Common Stock may not
simultaneously engage in market making activities with respect to such
shares of Common Stock for a period of nine business days prior to the
commencement of such distribution, subject to certain exceptions. In
addition and without limiting the foregoing, the Selling Stockholders
and any other person participating in the distribution of Shares will be
subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, including, without limitation, Rules 10b-6 and
10b-7, which provisions may limit the timing of purchases and sales of
any Shares by the Selling Stockholders or any other such person. All of
the foregoing may affect the marketability of the Shares.
The Company has agreed with certain of the Selling Stockholders to
file the Registration Statements of which this Prospectus is a part with
the Commission, and has agreed with certain of the Selling Stockholders
to keep the Registration Statements effective until various dates in the
future or such earlier time as all of the Shares have been sold. The
Company has agreed to indemnify certain of the Selling Stockholders
against certain liabilities they may incur in connection with the sale
of the Shares, including liabilities under the 1933 Act.
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<PAGE>
In order to comply with certain states' securities laws, if
applicable, the Shares may be sold in such jurisdictions only through
registered or licensed brokers or dealers. In certain states, the
Shares may not be sold unless the Shares have been registered or
qualified for sale in such state or an exemption from registration or
qualification is available and is complied with.
LEGAL MATTERS
Certain legal matters in connection with the sale of Shares by the
Selling Stockholders have been passed upon for the Company by the Law
Offices of Brian W Pusch, New York, New York, special counsel for the
Company. Brian W. Pusch owns 100 shares of Common Stock.
EXPERTS
The financial statements of ImClone Systems Incorporated as of
December 31, 1995 and 1994, and for each of the years in the three-year
period ended December 31, 1995, have been incorporated by reference
herein and in the Registration Statements in reliance upon the report of
KPMG Peat Marwick LLP, independent certified public accountants,
incorporated by reference, and upon the authority of said firm as
experts in accounting and auditing.
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