SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933
IMCLONE SYSTEMS INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 04-
2834797
(State or other jurisdiction of (I.R.S.
Employer Incorporation or organization)
Identification No.)
180 Varick Street
New York, New York 10014
(212) 645-1405
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Harlan W. Waksal, M.D.
Executive Vice President and Chief Operating Officer
ImClone Systems Incorporated
180 Varick Street
New York, New York 10014
(212) 645-1405
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
Brian W. Pusch, Esq.
Penthouse Suite
29 West 57th Street
New York, New York 10019
(212) 980-0408
Approximate date of commencement of proposed sale to
the public: As soon as practicable after this Registration
Statement becomes effective.
If the only securities being registered on this Form
are being offered pursuant to dividend or interest
reinvestment plans, please check the following box: [ ]
If any of the securities being registered on this Form
are to be offered on a delayed or continuous basis pursuant
to Rule 415 under the Securities Act of 1933, other than
securities offered only in connection with dividend or
interest reinvestment plans, check the following box: [x]
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: [ ]
If this Form is a post-effective amendment filed
pursuant to Rule 462(c) under the Securities Act, check the
following box and list the Securities Act registration
statement number of the earlier effective registration
statement for the same offering: [ ]
If delivery of the prospectus is expected to be made
pursuant to Rule 434, please check the following box: [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Amount of
Title of Amount Maximum Maximum
Registration
Shares to be Offering Price Aggregate
Fee
to be Registered Registered Per Share(1) Offering Price(1)
- ---------------- ---------- ------------ ---------------
- ---------
<S> <C> <C> <C>
<C>
Common Stock, 264,940 $ 9.125 $ 2,417,577.50
$732.60
$.001 par value
</TABLE>
(1) Estimated solely for the purpose of calculating the
registration fee pursuant to Rule 457(c), based upon the
average of the high and low sale prices for the Common
Stock on the Nasdaq National Market on February 4, 1997, as
reported by The Wall Street Journal.
The Registrant hereby amends this Registration
Statement on such date or dates as may be necessary to delay
its effective date until the Registrant shall file a further
amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until the
Registration Statement shall become effective on such date as
the Commission, acting pursuant to Section 8(a), may
determine.
IMCLONE SYSTEMS INCORPORATED
Common Stock, $.001 Par Value
This Prospectus relates to 264,940 shares of Common
Stock, $.001 par value (the "Common Stock"), of ImClone
Systems Incorporated, a Delaware corporation (the "Company"),
offered 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 of Common Stock offered by this Prospectus 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 offered hereby 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 purchase certain of the shares
offered hereby upon exercise of such warrants. 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
offered hereby which are 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 February 5, 1997, the closing sale
price of the Common Stock was $8.50 on the Nasdaq National
Market, as reported by The Wall Street Journal.
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 February ___, 1997
TABLE OF CONTENTS
AVAILABLE INFORMATION 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 2
CERTAIN FACTORS AFFECTING FORWARD-LOOKING STATEMENTS 3
PROSPECTUS SUMMARY 3
RISK FACTORS 5
RECENT DEVELOPMENTS 11
USE OF PROCEEDS 13
SELLING STOCKHOLDERS 13
PLAN OF DISTRIBUTION 14
LEGAL MATTERS 15
EXPERTS 15
.c.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.
.c.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 Reports on Form 10-Q for
the fiscal quarters ended March 31, 1996, June 30, 1996 and
September 30, 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.
.c.CERTAIN FACTORS AFFECTING FORWARD-LOOKING
STATEMENTS
This Prospectus, including the documents and information
incorporated herein by reference, contains forward-looking
statements that involve risks and uncertainties. The
Company's actual operations, performance and results could
differ materially from those reflected in, or anticipated by,
these forward-looking statements. In evaluating the Company
and its operations, performance and results, investors should
consider, among other things, the factors discussed under
"Risk Factors" and the risks and uncertainties discussed in
the Company's most recent Annual Report on Form 10-K under
the captions "Business" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations"
and in the Company's Quarterly Reports on Form 10-Q, in each
case incorporated herein by reference.
.c.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 human 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 multi-injection study of C225 alone in 17
patients was completed in November 1995. A study of the drug
in conjunction with cisplatin in head and neck cancer
patients began in May 1995 and was completed in November 1996
with 22 patients. 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 have been enrolled in the
United Kingdom in a 164-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.
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. Interleukin-6 Mutein has been shown by others in
pre-clinical trials to be a critical factor in liver cell
regeneration.
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 and
its human form, 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 a 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 Wyeth/Lederle
division of American Home Products Corporation 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, molecular and
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 90 full-time personnel on
December 31, 1996, 36 were employed in its product
development, clinical and manufacturing programs, 29 in
research and 25 in administration. The Company's staff
includes 15 persons with Ph.D's and 2 with M.D.'s.
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 the National
Cancer Institute, 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.
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.
Common Stock being offered
by Selling Stockholders 264,940 shares
Common Stock outstanding 20,339,449 shares (1)
__________
(1) Based on the number of shares outstanding at
January 31, 1997. This number does not include 5,350,126
shares of Common Stock issuable upon exercise of options
and warrants outstanding at December 31, 1996. See "Risk
Factors _ Dilution."
.c.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, 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 September 30,
1996, the Company had an accumulated deficit of approximately
$97.2 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,
1997 total approximately $20.5 million, which includes $1.7
million of a remaining $1.9 million obligation to Pharmacia
and Upjohn, Inc. ("Pharmacia"). See "Recent Developments."
At September 30, 1996, the Company had a cash and cash
equivalents and securities available for sale balance of
approximately $15.3 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 Pharmaceutical
Corporation ("Cadus") for $3.0 million to High River Limited
Partnership ("High River"). See "Recent Developments."
The Company expects that its capital resources,
including the ongoing research support of its corporate
partners, will be sufficient to fund its operations through
1997. 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 $1.4
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 $2.7 million 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 $2.4
million 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 3,252,425 shares of the
Company's Common Stock (which includes 2,205,625 warrants
issued pursuant to compensatory plans for directors,
officers, employees and consultants) at an average exercise
price of approximately $2.36 per share (subject to
adjustment) and stock options to purchase 2,097,701 shares of
the Company's Common Stock (which includes 1,647,701 options
granted to employees and consultants under the Company's
stock option plans) at an average exercise price of
approximately $6.06 per share (subject to adjustment) were
outstanding as of December 31, 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-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 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 40 issued patents worldwide, 22 of which are
issued United States patents. The Company is the assignee or
exclusive licensee of approximately 35 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 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 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 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 for 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
which is now on appeal. If this patent survives the
opposition with the scope granted after the opposition
period, 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
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 December 31, 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 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.
.c.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. In exchange for receiving a
now-expired right to repurchase all the outstanding shares of
capital stock of Cadus, 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 $1,228,000 on the
extinguishment of the debt. The Company has registered such
shares of Common Stock with the Commission under a
registration statement in accordance with the provisions of
the 1933 Act.
In July 1995, a director loaned the Company $180,000 in
exchange for a long-term note due two years from issuance at
an 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
$10,000 in cash. The Company recorded an extraordinary loss
of $39,000 on the extinguishment of the debt. The Company
has registered such shares of Common Stock with the
Commission under a registration statement in accordance with
the provisions of the 1933 Act.
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.
In October 1996, the Company obtained an exclusive,
worldwide patent license from the National Institutes of
Health for the delta-like (DLK) protein and gene. The
agreement provides the Company with an exclusive license to
stem cell and gene therapy applications of the DLK protein
and gene, as well as related diagnostic uses.
In December 1996, the Company entered into a technology
cross-licensing agreement with Immunex Corporation
("Immunex") relating to FLT3/FLK-2 ligand and its receptor.
FLT3 ligand is a hematopoietic growth factor. Under the
terms of the agreement, the Company has exclusively licensed
the receptor to Immunex for use in the manufacture of the
ligand. In return, the Company will receive an initial
payment and a royalty based on the sales of the ligand by
Immunex and its sub-licensees. In addition, Immunex has
granted the Company a non-exclusive license in the United
States and Canada to use its patented FLT3/FLK-2 ligand,
manufactured by Immunex, for ex-vivo stem cell expansion
together with an exclusive license to distribute the ligand
with its own proprietary products for ex-vivo expansion.
Immunex has agreed to seek to obtain the consent of its
parent company, American Home Products Corporation, to expand
the territory of this license to include the world outside
North America.
In December 1996, the Company and Abbott modified their
1992 diagnostic strategic alliance to provide for an
exclusive sublicensing agreement with Chiron Diagnostics for
the Company's patented DNA signal amplification technology,
Ampliprobe. Under the terms of the agreement, all sales of
Chiron branched DNA diagnostic probe technology in countries
covered by Company patents will be subject to a royalty to
Abbott to be passed through to the Company.
In December 1996, the Company signed an agreement with
Finova Technology Finance, Inc. ("Finova") to finance the
lease of laboratory and computer-related equipment and make
certain building and leasehold improvements to existing
facilities involving payments aggregating approximately
$2,500,000. The first of multiple intended leases has been
signed at a cost of $421,000. Each lease has a fair market
value purchase option at the expiration of a 42-month term.
Pursuant to the agreement, the Company issued to Finova a
warrant expiring December 31, 1999 to purchase 23,220 shares
of Common Stock at an initial exercise price of $9.69 per
share. The shares issuable upon exercise of this warrant are
included in the shares being offered by this Prospectus.
.c.USE OF PROCEEDS
Although the Company will not receive any proceeds
directly from the sale by any Selling Stockholder of the
shares of Common Stock offered by this Prospectus, certain of
the Selling Stockholders must exercise warrants to acquire
their shares in order to sell such shares. The net proceeds
received by the Company upon exercise of such warrants,
estimated to be approximately $399,740 if all such warrants
are exercised for cash, will be used for working capital and
other corporate purposes.
..c.SELLING STOCKHOLDERS
The following table sets forth certain information with
respect to the shares of Common Stock offered by this
Prospectus, as of January 28, 1997. 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. 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 the shares
of Common Stock to be offered by such Selling Stockholder.
See "Plan of Distribution."
<TABLE>
<CAPTION>
Name
Number of Shares
of Number of Shares Number of Shares of
Common Stock
Selling Common Stok Owned of Common
Owned after
Stockholder Prior to the Offering Stock to be Offered the
Offering(1)
- ----------- --------------------- ------------------- ----
- ----------
<S> <C> <C> <C>
Altschul
Investment
Group, L.P. 37,000 27,000
10,000
Arthur G.
Altschul, Jr. 99,600 9,000
90,600
Atticus
Partners L.P. 40,500 34,000
6,500
BFH II, LLC 25,000 25,000
0
Julie Diaz 5,000 5,000
0
Finova
Technology
Finance, Inc. 23,220(2) 23,220
0
Peter J.
Gutschow 10,000(3) 1,000
9,000
Deborah Hughes 3,000(2) 3,000
0
Douglas E.
Rogers 1,000(2) 1,000
0
Thomas A.
Rosse 144,025(4) 6,000
138,025
SBSF
Biotechnology
Fund, L.P. 45,000 45,000
0
Tarragona
Fund, Inc. 46,000 30,000
16,000
Aliza Waksal 48,500(5) 20,000
28,500
Elana Waksal 20,876(5) 10,000
10,876
Harlan W.
Waksal(6) 895,780(7) 720
895,060(8)
Jack and
Sabina Waksal 239,051(9) 25,000
214,051(10)
------------ -------- ----
- -------
TOTAL: 1,683,552 264,940
1,418,612
</TABLE>
(1) Assuming the sale of all shares offered hereby.
(2) Issuable upon exercise of warrants.
(3) Includes 9,000 shares issuable upon exercise of options
and 1,000 shares issuable upon exercise of warrants.
(4) Includes 37,500 shares issuable upon exercise of options
and 6,000 shares issuable upon exercise of warrants.
(5) Includes 20,000 shares issuable upon exercise of
warrants.
(6) Executive Vice President and Chief Operating Officer of
the Company since 1987 and a director of the Company
since 1984.
(7) Includes 40,000 shares issuable upon exercise of
options,
737,680 shares issuable upon exercise of warrants and
2,600 shares owned by family members of Dr. Waksal, as to
which he disclaims beneficial ownership.
(8) Represents beneficial ownership of approximately 4.2% of
the outstanding Common Stock.
(9) Includes 215,000 shares issuable upon exercise of
warrants.
(10) Represents beneficial ownership of approximately 1.0% of
the outstanding Common Stock.
.c.PLAN OF DISTRIBUTION
. The distribution of the shares of Common Stock 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 such shares as principals, in
privately negotiated transactions, through the writing of
options on such 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 offered hereby.
The Company has agreed with certain of the Selling
Stockholders to file the Registration Statement of which this
Prospectus is a part with the Commission, and has agreed with
certain of the Selling Stockholders to keep the Registration
Statement 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.
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.
.c.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.
.c.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
Statement in reliance upon the report of KPMG Peat Marwick
LLP, independent certified public accountants, incorporated
by reference herein, and upon the authority of said firm as
experts in accounting and auditing.
PART II
Information Not Required in Prospectus
Item 14. Other Expenses of Issuance and
Distribution
The following table sets forth all expenses payable by
the Company in connection with the sale of the Shares. (All
amounts shown are estimates except the registration fee with
the SEC):
<TABLE>
<S> <C>
SEC Registration fee..............$732.60
Blue Sky fees and expenses.........100.00
Legal fees and expenses.........18,000.00
Accounting fees and expenses.....2,500.00
Miscellaneous....................3,767.40
Total.....................$25,000.00
</TABLE>
Item 15. Indemnification of Directors and Officers
The Company's Certificate of Incorporation sets forth
the extent to which officers or directors of the Company may
be indemnified against any liabilities which they may incur.
The general effect of such charter provision is that any
person made a party to an action, suit or proceeding by
reason of the fact that he is or was a director or officer of
the Company, or of another corporation or other enterprise
which he served as such at the request of the Company, shall
be indemnified by the Company against expenses (including
attorneys' fees, judgments, fines and amounts paid in
settlement) reasonably incurred by him in connection with
such action, suit or proceeding, to the full extent permitted
under the laws of the State of Delaware. The Company's
Certificate of Incorporation gives the Board of Directors the
authority to extend such indemnification to employees and
other agents of the Company as well.
The general effect of the indemnification provisions
contained in Section 145 of the Delaware General Corporation
Law is as follows: A director or officer who, by reason of
such directorship or officership, is involved in any action,
suit or proceeding (other than an action by or in the right
of the corporation) may be indemnified by the corporation
against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to
believe that his conduct was unlawful. A director or officer
who, by reason of such directorship or officership, is
involved in any action or suit by or in the right of the
corporation may be indemnified by the corporation against
expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement
of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the
best interests of the corporation, except that no
indemnification may be made in respect of any claim, issue or
matter as to which he shall have been adjudged to be liable
to the corporation unless and only to the extent that a court
of appropriate jurisdiction shall approve such
indemnification.
The Company's Certificate of Incorporation provides
that, to the maximum extent permitted under the Delaware
General Corporation Law, a director of the Company shall not
be personally liable to the Company or to any of its
stockholders for monetary damages for breach of fiduciary
duty as a director of the Company. Section 102(b)(7) of the
Delaware General Corporation Law permits a corporation to
include in its certificate of incorporation a provision that
eliminates or limits the personal liability of a director to
the corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, provided that such
provision shall not eliminate or limit the liability of a
director (i) for any breach of the director's duty of loyalty
to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section
174 of the Delaware General Corporation Law or (iv) for any
transaction from which the director derived an improper
personal benefit.
The Company maintains $1 million in insurance for its
officers and directors in connection with claims against them
in their capacity as officers or directors.
Item 16. Exhibits
5 - Opinion of Law Offices of Brian W Pusch
23.1 - Consent of Law Offices of Brian W Pusch
(included in Exhibit 5)
23.2 - Consent of KPMG Peat Marwick LLP
24 - Power of Attorney (see page II-4)
Item 17. Undertakings
(a) 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 of 1933;
(ii) To reflect in the prospectus
any facts or events arising after the
effective date of this 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 this Registration
Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities
offered (if the total dollar value of
securities offered would not exceed that which
was registered) and any deviation from the low
or high and of the estimated maximum offering
range may be reflected in the form of
prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more
than 20 percent change in the maximum
aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective registration statement;
(iii) To include any material information with
respect to the plan of distribution not
previously disclosed in this Registration
Statement or any material change to such
information in this Registration Statement;
provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii)
do not apply if the registration statement is on Form S-3,
Form S-8, or Form F-3, and the information required to be
included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 that are incorporated
by reference in this Registration Statement.
(2) That, for the purpose of determining any
liability under the Securities Act of 1933, each such post-
effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of the
offering.
(b) The undersigned Registrant hereby undertakes that,
for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's
annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant
to Section 15(d) of the 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 herein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering
thereof.
(h) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by the issuer of expenses incurred or paid by a
director, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed
in the Act and will be governed by the final adjudication of
such issue.
(i) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability
under the Securities Act of 1933, the information omitted
from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and
contained in a form of Prospectus filed by the Registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared
effective.
(2) For the purpose of determining any liability
under the Securities Act of 1933, each post-effective
amendment that contains a form of prospectus shall be deemed
to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering
thereof.
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 New York, State of New York, on
the 7th day of February, 1997.
IMCLONE SYSTEMS INCORPORATED
By /s/ SAMUEL D. WAKSAL
Samuel D. Waksal
President and Chief
Executive
Officer
Pursuant to the requirements of the Securities Act of
1933, this Registration Statement has been signed below by
the following persons in the capacities and on the dates
indicated. Each person whose individual signature appears
below hereby authorizes Samuel D. Waksal, Harlan W. Waksal
and John B. Landes, or any one of them, to execute in the
name of each such person and to file any amendment to this
Registration Statement and appoints Samuel D. Waksal, Harlan
W. Waksal and John B. Landes, or any one of them, as
attorney-in-fact to sign on his behalf individually and in
each capacity stated below and to file any amendments to this
Registration Statement, including any and all post-effective
amendments.
Signature Title Date
/s/ ROBERT F.GOLDHAMMER Chairman of February 7,1997
(Robert F. Goldhammer) the Board and
Director
/s/ SAMUEL D. WAKSAL President, February 7, 1997
(Samuel D. Waksal) Chief Executive
Officer and
Director
(Principal
Executive
Officer)
/s/ HARLAN W. WAKSAL Executive February 7, 1997
(Harlan W. Waksal) Vice President,
Chief
Operating
Officer
and Director
/s/ CARL GOLDFISCHER Vice February 7, 1997
(Carl Goldfischer) President of
Financial and
Strategic
Planning and
Chief
Financial
Officer
(Principal
Financial
Officer)
/s/ RICHARD BARTH Director February 7, 1997
(Richard Barth)
/s/ JEAN CARVAIS Director February 7, 1997
(Jean Carvais)
/s/ VINCENT T. Director February 7, 1997
DEVITA,JR.
(Vincent T. DeVita, Jr.)
/s/ DAVID M. KIES Director February 7, 1997
(David M. Kies)
/s/ PAUL B. KOPPERL Director February 7, 1997
(Paul B. Kopperl)
/s/ WILLIAM R. MILLER Director February 7, 1997
(William R. Miller)
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Exhibit Page No.
<S> <C>
5 Opinion of Law Offices of Brian W Pusch
23.1 Consent of Law Offices of Brian W Pusch
(included in Exhibit 5)
23.2 Consent of KPMG Peat Marwick LLP
24 Power of Attorney (see page II-4)
</TABLE>
law offices of
Brian W Pusch
attorneys at law
Penthouse Suite
29 west 57th street
new york, ny 10019
telephone (212) 980-0408
facsimile (212) 980-7055
February 7, 1997
ImClone Systems Incorporated
180 Varick Street
New York, New York 10014
IMCLONE SYSTEMS INCORPORATED
Registration of 264,940 Shares of
Common Stock, par value $.001 per share,
on Form S-3 Registration Statement
- ----------------------------------------
Ladies and Gentlemen:
I am acting as special counsel to ImClone Systems
Incorporated, a Delaware corporation (the "Company"), in
connection with the filing by the Company with the U.S.
Securities and Exchange Commission pursuant to the Securities
Act of 1933, as amended (the "Securities Act"), of a
Registration Statement on Form S-3 (the "Registration
Statement") pursuant to which 264,940 shares (the "Shares")
of the Company's Common Stock, par value $.001 per share, may
be offered and sold from time to time by the Selling
Stockholders (as defined in the Registration Statement). As
described in the Prospectus forming a part of the
Registration Statement under "Selling Stockholders," certain
of the Shares are outstanding on the date hereof (the
"Outstanding Shares") and the remainder of the Shares (the
"Warrant Shares") are to be issued upon exercise of warrants
issued or granted by the Company prior to the date hereof
(collectively, the "Warrants").
This opinion is being furnished pursuant to the
requirements applicable to Item 16 of Part II of the
Registration Statement.
In connection with this opinion, I have examined and
relied on originals or copies, certified or otherwise
identified to my satisfaction, of such corporate records,
documents, agreements or other instruments of the Company,
orders, rulings and certificates of public officials,
officers and representatives of the Company and its
subsidiaries and such other persons, have made investigations
of law, and have discussed with officers and other
representatives of the Company such questions of fact, as I
have deemed proper and necessary as a basis for the opinions
hereinafter expressed.
In my examination, I have assumed the genuineness of all
signatures, the legal capacity of all natural persons, the
authenticity of all documents submitted to me as originals,
the conformity to original documents of all documents
submitted to me as certified or photostatic copies and the
authenticity of the originals of such latter documents. As
to certain factual matters, I have relied upon statements and
representations of officers and other representatives of the
Company and others.
Based upon and subject to the foregoing, I am of the
opinion that:
1. the Outstanding Shares are duly authorized,
validly issued, fully paid and non-assessable under the
laws of the State of Delaware; and
2. the Warrant Shares are duly authorized and
(a) when the provisions of the securities and blue sky
laws of certain jurisdictions shall have been complied
with, and (b) when the Warrant Shares, certificates for
which shall have been duly executed, shall have been
delivered against payment of the consideration therefor
in accordance with the respective Warrants, the Warrant
Shares will be validly issued, fully paid and non-
assessable under the laws of the State of Delaware.
I am admitted to practice in the State of New York and I
do not purport to express an opinion herein concerning any
laws other than the laws of the State of New York and the
General Corporation Law of the State of Delaware.
I hereby consent to the filing of this opinion as an
exhibit to the Registration Statement. In giving such
consent, I do not thereby admit that I am in the category of
persons whose consent is required under Section 7 of the
Securities Act.
Very truly yours,
Brian W. Pusch
BWP:dc
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
ImClone Systems Incorporated:
We consent to the use of our report incorporated herein
by reference and to the reference to our firm under the
heading "Experts" in the prospectus.
KPMG PEAT MARWICK LLP
New York, New York
February 7, 1997
