As filed with the Securities and Exchange Commission
on October 30, 1997
Registration No. 333-___
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
IMCLONE SYSTEMS INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 04-2834797
(State or other jurisdiction of (I.R.S. Employee
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
Copy to:
Brian W. Pusch, Esq.
Penthouse Suite
29 West 57th Street
New York, New York 10019
(212) 980-0408
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
<PAGE>
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.[ ]
<TABLE>
<CAPTION>
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Proposed Proposed
Title of Amount Maximum Maximum Amount of
Shares to be Offering Price Aggregate Registration
to be Registered Registered Per Share (1) Offering Price (1) Fee
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<S> <C> <C> <C> <C>
Common Stock, 450,000 (2) $6.82 $3,069,000 $930
$.001 par value
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</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 October 27, 1997 as reported by the Nasdaq
National Market.
(2) To be offered and sold by a Selling Stockholder upon exercise of
outstanding Options (the "Options"). Pursuant to Rule 416 under the
Securities Act, this Registration Statement also relates to an
indeterminate number of additional shares of Common Stock which may be
issuable upon exercise of the Options to prevent dilution resulting from
stock splits, stock dividends and similar transactions.
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.
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<PAGE>
SUBJECT TO COMPLETION - DATED October 30, 1997
Information contained herein is subject to completion or amendment. A
Registration Statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the Registration Statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
PROSPECTUS
450,000 Shares
IMCLONE SYSTEMS INCORPORATED
Common Stock, par value $.001 per share
The Registration Statement, of which this Prospectus forms a part,
registers the offer and sale of up to 450,000 shares (the "Shares") of common
stock, par value $.001 per share (the "Common Stock"), of ImClone Systems
Incorporated (the "Company" or "ImClone") by a certain holder of options (the
"Options") to purchase Common Stock (the "Selling Stockholder"). The Selling
Stockholder acquired the Options directly from the Company in a private
placement transaction. See "Selling Stockholder". The Company will not receive
any of the proceeds from the sale of the Shares by the Selling Stockholder. The
Company anticipates using proceeds from the exercise of the Options to (i)
continue to fund and expand its research and development programs and (ii) for
general corporate purposes.
The Company's Common Stock is included on the Nasdaq National Market under
the ticker symbol "IMCL". On October 28, 1997 the closing sale price for the
Common Stock as reported by the Nasdaq National Market was $6.375.
The Selling Stockholder may sell the Shares from time to time in
transactions in the open market, in negotiated transactions, or by a combination
of these methods, at fixed prices that may be changed, at market prices at the
time of sale, at prices related to market prices or at negotiated prices. The
Selling Stockholder may effect these transactions by selling the Shares to or
through broker-dealers, who may receive compensation in the form of discounts or
commissions from the Selling Stockholder or from the purchasers of the Common
Stock for whom the broker-dealers may act as agent or to whom they may sell as
principal, or both. After the passage of the requisite period of time, the
Selling Stockholder may also sell the Shares pursuant to Rule 144 under the
Securities Act of 1933, as amended (the "1933 Act"). See "Plan of Distribution."
The Company will bear all of the expenses in connection with the
registration of the Common Stock offered hereby, which expenses are estimated to
be $12,000. The Selling Stockholder will pay any brokerage compensation in
connection with its sale of the Common Stock.
<PAGE>
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" COMMENCING ON PAGE 8.
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 October __, 1997
ii
<PAGE>
TABLE OF CONTENTS
Page
----
AVAILABLE INFORMATION.........................................................1
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...............................1
CERTAIN FACTORS AFFECTING FORWARD-LOOKING STATEMENTS..........................2
PROSPECTUS SUMMARY............................................................3
RISK FACTORS..................................................................8
USE OF PROCEEDS...............................................................16
SELLING STOCKHOLDER...........................................................16
PLAN OF DISTRIBUTION..........................................................17
LEGAL MATTERS.................................................................19
EXPERTS.......................................................................19
iii
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the U.S.
Securities and Exchange Commission (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., Room 1024, Washington, D.C. 20549 and at the regional
offices of the Commission at 7 World Trade Center, 13th Floor, New York, New
York, l0048 and Northwestern Atrium Center, 500 West Madison Street, Room 1400,
Chicago, Illinois 60661-2511. 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 Commission maintains a World Wide Web site
that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The address
of the site is http://www.sec.gov.
The Company has filed with the Commission under the 1933 Act, a
Registration Statement on Form S-3 (the "Registration Statement"), of which this
prospectus (the "Prospectus") is a part, 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., Room 1024, 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, 1996; (ii) the Company's Current
Reports on Form 8-K, dated April 14, 1997, June 3, 1997, February 25, 1997,
February 25, 1997 and October 15, 1997 (iii) the Company's Quarterly Reports on
Form 10-Q for the fiscal quarters ended March 31, 1997 and June 30, 1997; 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 filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act subsequent to the date hereof and prior to the
filing of a post-effective
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amendment to the Registration Statement which indicates that all shares of
Common Stock offered hereby have been sold or which deregisters all shares of
Common Stock then remaining unsold, shall be deemed to be incorporated by
reference into this Prospectus and to be part hereof from the date of filing of
such documents.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that such statement is modified or
superseded by a statement contained herein or in a subsequently filed document
which also is or is deemed to be incorporated by reference into this Prospectus
and to be a part hereof from the date filing of such documents.
The Company will provide, without charge, to each person (including any
beneficial owner) to whom this Prospectus is delivered, upon written or oral
request of such person, a copy of any and all of the information that has been
incorporated by reference in this Prospectus (not including exhibits to such
information). Such requests should be directed to Harlan W. Waksal, M.D.,
Executive Vice President and Chief Operating Officer, at the Company's principal
executive offices at 180 Varick Street, 7th Floor, New York, New York 10014,
telephone (212) 645-1405.
CERTAIN FACTORS AFFECTING FORWARD-LOOKING STATEMENTS
This prospectus, including the documents and information incorporated
herein by reference, contain forward-looking statements that involve risk 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 herein 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", in the Company's Quarterly Reports on Form
10-Q and in the Company's other reports filed under the Exchange Act, in each
case incorporated herein by reference.
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<PAGE>
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,
University of Virginia, MD Anderson Cancer Center and the University of Alabama.
The first study, involving a single injection of C225 at escalating doses in 13
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 February
1996. A study of the drug in conjunction with cisplatin in head and neck cancer
patients began in May 1995 and was completed in October 1996 with 22 patients.
No dose limiting toxicities were demonstrated in these studies. Studies with
doxorubicin in advanced prostate cancer patients and with paclitaxel in breast
cancer patients were initiated in January 1996 and March 1996, respectively.
Three studies using C225 alone and in conjunction with chemotherapy and
radiation in head and neck cancer patients began in dose escalation trials in
July 1997, April 1997 and April 1997, respectively. ImClone expects to initiate
Phase II/III studies to evaluate the potential of C225 in various tumor types.
Two of these tumor targets will include renal cell cancer where C225 will be
used alone, and head and neck cancers where C225 will be used in combination
with chemotherapy. The Company produces C225 for its clinical trials at its
manufacturing facility in Somerset, New Jersey.
BEC2 Cancer Vaccine. BEC2 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
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<PAGE>
in Phase I clinical trials at Sloan-Kettering against certain forms of cancer,
including small-cell lung carcinoma and melanoma. BEC2 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 BEC2 worldwide, except in North America, in return for research
support, potential milestone fees and royalties on future sales, if any. As of
June 30, 1997, the Company had earned in fiscal 1997 from its collaboration with
Merck $1,500,000 in milestone payments, and $417,000 of research and support
payments which is the first of eight quarterly payments totaling $4.7 million.
ImClone expects to initiate a Phase III multinational clinical trial for BEC2
for use in treatment in small cell lung carcinoma in the fourth quarter of this
year.
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 and has been shown by others in pre-clinical trials to
be a critical factor in liver cell regeneration. 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 which trial was
discontinued. In addition, IL-6m is being supplied to outside academic
laboratories.
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, KDR 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 and to identify and validate
new targets for anti-angiogenic drug intervention. These inhibitors of the
FLK-1/KDR receptor may represent a future treatment for inhibiting tumor growth
in those cancers that use this molecular pathway to stimulate blood vessel
development.
FLK-2 is 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 obtained an
exclusive license from The National Institutes of Health ("NIH") to the
delta-like ("DLK") protein and gene for use in stem cell and gene therapy. DLK
is a member of a family of proteins which appears to have the ability to
maintain cells in an undifferentiated state. The Company also has entered into a
non-exclusive license and supply agreement with Immunex Corporation ("Immunex")
for use of the FLK-2/FLT-3 ligand for ex
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vivo cell therapies. Immunex has a license from the Company to the FLK-2
receptor, limited to the use by Immunex in the manufacture of the FLK-2/FLT-3
ligand.
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 ("American Home") 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 milestone payments and royalties in connection with future
sales of such diagnostic products. In December 1996, the Company and Abbott
modified this agreement to provide for an exclusive sublicensing agreement with
Chiron Diagnostics ("Chiron") 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 May 1997, a European patent was issued for the Company's
proprietary Repair Chain Reaction ("RCR") DNA probe technology which was
licensed to Abbott under the 1992 strategic alliance. The issuance of the patent
entitled the Company to receive two milestone payments totaling $1,000,000 and
royalty payments on sales in covered European countries for products using the
Company's RCR technology. Abbott will be entitled to deduct from royalties
otherwise due, 25% of such royalties due for a two-year period and 50%
thereafter until a total of $500,000 has been deducted. The $1,000,000 in
milestone payments and $75,000 in royalty payments covering 1995 and 1996 were
received in 1997.
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 Somerset, New Jersey manufacturing facility. Of the Company's 108 full-time
personnel on October 15, 1997, 47 were employed in its product development,
clinical and manufacturing programs, 32 in research and 29 in administration.
The Company's staff includes 15 persons with Ph.D. degrees and two with M.D.
degrees.
In addition to its research programs pursued 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, the University of California,
Princeton University, the University of North Carolina, The Wistar Institute,
The University of Texas Southwestern Medical Center and The Mario Negri
Institute for Pharmacological Research. 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
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include Sloan-Kettering, Yale Cancer Center, the University of Virginia, MD
Anderson Cancer Center and the University of Alabama.
In October 1997, the Company entered into a collaboration with CombiChem,
Inc. ("CombiChem") to discover and develop novel small molecules against
selected targets for the treatment of cancer. In the collaboration, the
companies will utilize CombiChem's Discovery Engine(TM) and Universal Informer
Library(TM) to generate small molecules for screening in ImClone's assays for
identification of lead candidates. The Company also made an equity investment in
CombiChem.
The Company operates a facility in Somerset, New Jersey for the manufacture
of bulk materials of its therapeutic candidates in quality and quantity
sufficient for human clinical trials. At this facility, the Company is producing
C225 bulk drug and supporting clinical development of both the C225 and BEC2
programs.
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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The Offering
Common Stock
being Offered................. The Prospectus relates to an offering by the
Selling Stockholder of up to 450,000 shares
of Common Stock which underly the Options.
Common Stock Outstanding
after the Offering............. As of October 15, 1997 the Company had
24,197,830 shares of Common Stock
outstanding. Assuming that all of the Options
are exercised and no other shares of Common
Stock are issued subsequent to October 15,
1997, the Company would have 24,647,830
shares of Common Stock outstanding.
Use of Proceeds................... The Company will not receive any proceeds
from the sale of the Shares offered by the
Selling Stockholder. If all of the Options
are exercised, the Company will receive
estimated proceeds of $506,250. The Company
anticipates using any proceeds received from
the exercise of the Options (i) to continue
to fund and expand its research and
development programs and (ii) for general
corporate purposes, including working
capital. See "Use of Proceeds."
Nasdaq National
Market Symbol................... IMCL
Risk Factors...................... See "Risk Factors" for a discussion of
certain risk factors that should be
considered by prospective investors in
connection with an investment in the Shares
offered hereby.
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RISK FACTORS
An investment in the Shares 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 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 June 30,
1997, the Company had an accumulated deficit of approximately $109 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 expects to incur substantial funding requirements for the
expansion of operations, including (i) the expansion of the clinical trials of
C225 and the related manufacturing program to support these trials and (ii) in
an effort to develop new product
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candidates the expansion of research and development activities including among
other things, increased staffing, the acquisition of equipment, and the
consummation of new outside research agreements. In addition, the entire
$561,000 of outstanding debt to Pharmacia is payable ratably throughout the
period ending February 1998 and $2,113,000 of the Industrial Development Revenue
Bonds (the "1986 Bonds") issued by the New York Industrial Development Agency
("NYIDA") on behalf of the Company becomes due in December 1997. The Company is
currently negotiating the extension of the due date for the 1986 Bonds.
Additionally, the 1986 Bonds may, and the $2,200,000 of the Industrial
Development Revenue Bonds issued by NYIDA in 1990 scheduled to become due in
2004 shall, become due upon the termination of the lease (the "Lease") for the
Company's New York facility. The Lease is scheduled to expire in March 1999 and
the Company is currently in discussions regarding its extension and considering
other alternatives. Assuming the extension of the due date of the 1986 Bonds and
the extension of the Lease, the Company expects that its capital resources,
including the ongoing research support of its corporate partners, will be
sufficient to fund its operations for approximately the next twenty months. The
receipt of certain of such ongoing research support is subject to attaining
research and development milestones, certain of which have not yet been
achieved. No assurance can be given that there will be no change in projected
research support (including research and development milestones), or in other
expenses that would lead to the Company's capital being consumed at a faster
rate than currently expected, or that the 1986 Bonds or the Lease will be
extended. Upon exhaustion of its capital resources, the Company will require
significant levels of additional capital and intends to raise the necessary
capital through additional arrangements with corporate partners, equity or debt
financings or from other sources. There is no assurance that the Company will be
successful in consummating any such arrangements.
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 technology
access 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.
Dilution. Warrants to purchase 2,414,145 shares of the Company's Common
Stock (which includes 1,431,955 warrants held by directors, officers, employees
and consultants), at an average exercise price of approximately $2.71 per share
(subject to adjustment) and stock options to purchase 2,080,395 shares of the
Company's Common Stock (which includes 1,630,395 options granted to employees
and consultants under the Company's stock option plans and the Options) at an
average exercise price of approximately $6.21 per share (subject to adjustment)
were outstanding as of October 15, 1997. 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
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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
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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 42 issued
patents worldwide, 24 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.
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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
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 are some of the areas which 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 C225, the Company's EGFr antibody product. The Company's licensor
did not seek patent protection outside the United States on this antibody.
Outside the United States, the Company is relying in part, on patent
applications exclusively licensed from a major pharmaceutical company, which
claim the use of an EGFr antibody 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 BEC2 monoclonal antibody and certain uses thereof in the United States
and most of Europe. Merck, the Company's licensee of BEC2 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 BEC2 in its territory. No
assurance can be given that such license would be available to the Company in
other parts of the world on commercially acceptable terms, if at all.
The Company maintains a proprietary position with respect to
anti-angiogenic therapeutics, as well as therapeutic methods of treating
angiogenic disease, through patents and patent applications filed by the
Company. The Company is aware that third parties have filed patent applications
that could affect the ability of the Company to commercialize its
anti-angiogenic therapeutics or therapeutic treatments.
The Company's proprietary position with respect to its IL-6m 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
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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-6m 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- 6m 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 has been exclusively licensed on a worldwide basis to a
pharmaceutical company. The Company has entered into a settlement agreement with
the pharmaceutical company whereby the pharmaceutical company has agreed not to
enforce its patent against the Company based on the Company's use of its IL-6m
patent or patent applications.
The Company is also aware of U.S. patents that cover various aspects of
IL-6. The U.S. patents are licensed to the same pharmaceutical company as the
European patent mentioned above. They may be construed to cover the Company's
IL-6m.
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, 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 biopharmaceutical 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
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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
noncompetitive. 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 are 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
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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
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.
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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, 1996, the
Company had net operating loss carryforwards for federal income tax purposes of
approximately $96 million which expire at various dates from 2000 through 2011.
Pursuant to Section 382 of the Internal Revenue Code of 1986, as amended, the
annual utilization of the Company's net operating loss carryforwards may be
limited if the Company experiences a change in ownership of more than 50% within
a three-year period. The Company believes that one or more of such ownership
changes may have occurred since 1986. Therefore, the Company may be
significantly limited in using its tax net operating loss carryforwards arising
before such ownership change(s) to offset future taxable income.
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
dividends will be declared on its Common Stock in the foreseeable future.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares
offered herein by the Selling Stockholder. If all of the Options are exercised,
the Company will receive estimated proceeds of approximately $506,250. The
Company anticipates utilizing any proceeds received from the exercise of the
Options (i) to continue to fund and expand its research and development programs
and (ii) for general corporate purposes, including working capital. There can be
no assurance that any of the Options will be exercised.
SELLING STOCKHOLDER
Stock Ownership
The table below sets forth the number of shares of Common Stock (i) owned
beneficially by the Selling Stockholder; (ii) being offered by the Selling
Stockholder pursuant to this Prospectus; (iii) to be owned beneficially by the
Selling Stockholder after completion of the offering, assuming that all of the
Options are exercised and all of the Shares are sold and (iv) the percentage to
be owned by the Selling Stockholder after completion of the offering. For the
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purposes of this table the Selling Stockholder is deemed to own beneficially the
shares of Common Stock underlying the Options.
In January 1992, the Company participated in the founding of Cadus
Pharmaceutical Corporation ("Cadus") with scientists from Princeton University.
The Company supported the initial growth and development of Cadus, and as of
December 31, 1993 owned approximately 28% of Cadus' common and preferred stock.
In December 1994, the Company completed the sale of one-half of its Cadus shares
for proceeds equaling $3 million to the Selling Stockholder. In April 1995, the
Company completed the sale of the remaining one-half of its shares of capital
stock of Cadus for $3 million to the Selling Stockholder. The Company had a
right to repurchase all such shares of Cadus anytime up until October 27, 1996
for $5.25 per share which it did not exercise. In exchange for such right, the
Company granted the Selling Stockholder the Options. One Option is to purchase
150,000 shares at a price of $2.00 per share, subject to adjustment under
certain circumstances, and the other Option is to purchase 300,000 shares at a
price of $0.6875 per share, subject to adjustment under certain circumstances.
Both Options became exercisable on April 27, 1995 and will expire on April 27,
2000. Dr. Samuel D. Waksal was the Chairman of the board of directors of Cadus
until July 1996 and continues to serve on the board as a director.
In connection with the registration of the Shares offered hereby, the
Company will supply prospectuses to the Selling Stockholder.
SELLING STOCKHOLDER'S TABLE
Percentage of
Number of Outstanding
Number of Shares to be Shares to be
Shares Owned after Owned after
Selling Beneficially Number of Shares Completion of Completion of
Stockholder Owned Offered Hereby the Offering the Offering
- --------------------------------------------------------------------------------
High River 450,000 450,000(1) 0 0
Limited
Partnership
(1) Consists of the Shares being offered pursuant to this Prospectus, which are
issuable upon the exercise of the Options.
PLAN OF DISTRIBUTION
Shares of Common Stock issuable upon exercise of the Options may be sold
pursuant to this Prospectus by the Selling Stockholder. These sales may occur in
privately negotiated transactions or in the over-the-counter market through
brokers and dealers as agents or to brokers and dealers as principals who may
receive compensation in the form of discounts, concessions or commissions from
the Selling Stockholder or from the purchasers of the Common Stock for
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whom the broker-dealers may act as agent or to whom they may sell as principal,
or both. After the passage of the requisite period of time, the Selling
Stockholder may also sell the Shares pursuant to Rule 144 under the 1933 Act.
The Company has been advised by the Selling Stockholder that it has not made any
arrangements relating to the distribution of the Shares. In effecting sales,
broker-dealers engaged by the Selling Stockholder may arrange for other
broker-dealers to participate. Broker-dealers will receive commissions or
discounts from the Selling Stockholder in amounts to be negotiated immediately
prior to the sale.
Upon being notified by the Selling Stockholder that any material
arrangement (other than a customary brokerage account agreement) has been
entered into with a broker or dealer for the sale of Shares through a block
trade, purchase by a broker or dealer, or similar transaction, the Company will
file a supplemented Prospectus pursuant to Rule 424(c) under the 1933 Act
disclosing (a) the name of each such broker-dealer, (b) the number of shares
involved, (c) the price at which such shares were sold, (d) the commissions paid
or discounts or concessions allowed to such broker-dealer(s), (e) if applicable,
that such broker-dealer(s) did not conduct any investigation to verify the
information set out or incorporated by reference in the Prospectus, as
supplemented, and (f) any other facts material to the transaction.
The Selling Stockholder and any broker-dealers who execute sales for the
Selling Stockholder may be deemed to be "underwriters" within the meaning of the
1933 Act by virtue of the number of shares of Common Stock to be sold or resold
by such persons or entities or the manner of sale thereof, or both. If the
Selling Stockholder or any broker-dealer or other holders were determined to be
underwriters, any discounts, concessions or commissions received by them or by
brokers or dealers acting on their behalf and any profits received by them on
the resale of their shares of Common Stock might be deemed underwriting
discounts and commissions under the 1933 Act.
The Selling Stockholder has represented to the Company that any purchase or
sale of the Common Stock by it will be in compliance with Regulation M
("Regulation M") promulgated under the Exchange Act. In general, Rule 102 under
Regulation M prohibits any person connected with a distribution of the Company's
Common Stock (the "Distribution") from directly or indirectly bidding for, or
purchasing for any account in which he has a beneficial interest, any Common
Stock or any right to purchase Common Stock, for a period of one business day
prior to and subsequent to completion of his participation in the Distribution
(the "Distribution Period").
During the Distribution Period, Rule 104 ("Rule 104") under Regulation M
prohibits the Selling Stockholder and any other person engaged in the
Distribution from engaging in any stabilizing bid or purchasing the Common Stock
except for the purpose of preventing or retarding a decline in the open market
price of the Common Stock. No such person may effect any stabilizing transaction
to facilitate any offering at the market. Inasmuch as the Selling Stockholder
will be reoffering and reselling the Common Stock at the market, Rule 104
prohibits it from effecting any stabilizing transaction in contravention of Rule
104 with respect to the Common Stock.
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LEGAL MATTERS
Certain legal matters in connection with the sale of the Shares have been
passed upon for the Company by the Law Offices of Brian W Pusch, New York, New
York. Brian Pusch owns 100 shares of Common Stock.
EXPERTS
The financial statements of ImClone Systems Incorporated as of December 31,
1996 and 1995, and for each of the years in the three-year period ended December
31, 1996, 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.
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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:
SEC registration fee $ 930
Blue Sky fees and expenses* $ 200
Legal fees and expenses* $ 5,000
Accounting fees and expenses* $ 4,000
Miscellaneous* $ 1,870
-------
Total* $12,000
- -------
*Estimated
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
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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 $5 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 (included in signatures)
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
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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)(l)(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 l5 (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
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 l3(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section l5(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be
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.
(c) 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
II-3
<PAGE>
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.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has reasonable grounds to believe that 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 29th day of October, 1997.
IMCLONE SYSTEMS INCORPORATED
By:/s/ Samuel D. Waksal
-------------------------------------
Samuel D. Waksal
President and Chief Executive Officer
II-5
<PAGE>
POWER OF ATTORNEY
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 amen dment 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.
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.
Signature Title Date
/s/Robert F. Goldhammer Chairman of the Board October 29, 1997
- ----------------------------- and Director
(Robert F. Goldhammer)
/s/ Samuel D. Waksal President, Chief Executive October 29, 1997
- ----------------------------- Officer and Director
(Samuel D. Waksal) (Principal Executive Officer)
/s/ Harlan W. Waksal Executive Vice President, October 29, 1997
- ----------------------------- Chief Operating Officer
(Harlan W. Waksal) and Director
/s/ Carl S. Goldfischer Vice President, Finance and October 29, 1997
- ----------------------------- and Chief Financial Officer
(Carl S. Goldfischer) (Principal Financial Officer)
/s/ Richard Barth Director October 29, 1997
- -----------------------------
(Richard Barth)
/s/ Jean Carvais Director October 29, 1997
- -----------------------------
(Jean Carvais)
/s/ Vincent T. DeVita, Jr. Director October 29, 1997
- -----------------------------
(Vincent T. DeVita, Jr.)
/s/ David M. Kies Director October 29, 1997
- -----------------------------
(David M. Kies)
/s/ Paul B. Kopperl Director October 29, 1997
- -----------------------------
(Paul B. Kopperl)
/s/ William R. Miller Director October 29, 1997
- -----------------------------
(William R. Miller)
II-6
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit
- ----------- -------
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
Exhibit 5
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
October 29, 1997
ImClone Systems Incorporated
180 Varick Street
New York, New York 10014
IMCLONE SYSTEMS INCORPORATED
Registration of 450,000 Shares of
Common Stock, par value $.001 per share,
on Form S-3 Registration Statement
Ladies and Gentlemen:
We are 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 450,000
shares (the "Shares") of the Company's Common Stock, par value $.001 per share,
may be offered and sold from time to time by High River Limited Partnership, a
Delaware limited partnership (the "Selling Stockholder"). The Shares are
issuable upon exercise of options granted by the Company to the Selling
Stockholder prior to the date hereof (the "Options").
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, we have examined and relied on originals
or copies, certified or otherwise identified to our 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 such other persons, have made investigations
of law, and have discussed with officers and other representatives of the
Company
<PAGE>
such questions of fact, as we have deemed proper and necessary as a basis for
the opinions hereinafter expressed. As to certain questions of fact we have
relied, without independent verification, on information provided to us by the
Company. We have assumed the genuineness of all signatures appearing on the
documents furnished to or reviewed by us and we have also assumed that any
person purporting to execute any document in a representative capacity is a duly
authorized representative of the person for whom such person executed such
document.
Based upon and subject to the foregoing, we are of the opinion that the
Shares are duly authorized and (1) when the provisions of the securities and
blue sky laws of certain jurisdictions shall have been complied with, and (2)
when the Shares, certificates for which shall have been duly executed, shall
have been delivered against payment of the consideration therefor in accordance
with the Options and such consideration is not less than the par value of the
Shares, the Shares will be validly issued, fully paid and non-assessable under
the laws of the State of Delaware.
We are admitted to practice in the State of New York and we express no
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.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not thereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Securities Act.
Very truly yours,
/s/ Brian W Pusch
Brian W Pusch
BWP:jsm
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
ImClone System Incorporated
We consent to the use of our reports incorporated herein and to the
reference to our firm under the heading "Experts" in the prospectus.
October 29, 1997 /s/ KPMG Peat Marwick LLP
-------------------------
KPMG PEAT MARWICK LLP
