As filed with the Securities and Exchange Commission
on February 10, 1998
Registration No. 333-39067
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
- - - - - - - - - - - - - - - - - -
AMENDMENT NO. 1 TO 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.
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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.[ ]
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 Securities and Exchange Commission, acting
pursuant to Section 8(a), may determine.
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SUBJECT TO COMPLETION - DATED February 10, 1998
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 February 9, 1998 the closing sale price for the
Common Stock as reported by the Nasdaq National Market was $6.625.
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 $14,000. The Selling Stockholder will pay any brokerage compensation in
connection with its sale of the Common Stock.
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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 February __, 1998
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TABLE OF CONTENTS
Page
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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...............................................................18
SELLING STOCKHOLDER...........................................................18
PLAN OF DISTRIBUTION..........................................................19
LEGAL MATTERS.................................................................20
EXPERTS.......................................................................20
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, 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 February 25, 1997, February 25, 1997, April 14, 1997,
June 3, 1997, October 15, 1997, December 4, 1997 and January 21, 1998 (iii) the
Company's Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31,
1997, June 30, 1997 and September 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 amendment to the Registration Statement which
indicates that all shares of Common Stock
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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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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,
among others. 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 l996. 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. 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. In
December 1997, the Company initiated a Phase II trial in metastatic renal cell
carcinoma. ImClone expects to initiate Phase II/III studies to evaluate the
potential of C225 in various tumor types, such as head and neck and pancreatic
cancers.
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 in Phase I clinical trials at Sloan-Kettering
against certain forms of cancer, including small-cell
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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. In December 1990, the Company entered into a research and
license agreement with Merck KGaA ("Merck"), a German-based pharmaceutical
company to develop therapeutic cancer vaccines, including BEC2, for use in small
cell lung carcinoma and malignant melanoma, and thereafter amended and extended
the agreement, most recently in December 1997 (the "Amended Agreement"). Under
the Amended Agreement, Merck has a royalty bearing license to develop and market
BEC2 worldwide, except that in North America the Company has retained the right
to co-market BEC2. Under the Amended Agreement, Merck is responsible for funding
for a single indication clinical development of BEC2 worldwide; provided that if
such costs exceed 17 million DM, Merck and ImClone share such excess costs on a
60%/40% basis. It is the intent of the parties that ImClone will be the
manufacturer of the product worldwide. The December 1997 amendment further
provides for milestone fees of $15,000,000 beyond those called for by the prior
amendment. In connection with the December 1997 amendment, Merck purchased from
the Company 400,000 shares of the Company's Series A Convertible Preferred Stock
(the "Series A Preferred Shares" or "Series A Preferred Stock") for total
consideration of $40,000,000. See "Risk Factors - Dilution". As of September 30,
1997, the Company had earned in fiscal 1997 from its collaboration with Merck
$1,500,000 in milestone payments, and $1,042,000 of research and support
payments which represents the first two of eight quarterly payments totaling
$4.7 million. ImClone expects that a Phase III multinational clinical trial for
BEC2 for use in treatment in small cell lung carcinoma will be initiated in the
first half of 1998.
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
goal of the FLK-2 monoclonal antibody program is 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 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.
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 certain of 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. In June 1997,
the Company received the $1,000,000 in milestone payments and as of September
30, 1997 had received a total of $117,000 in royalty fees.
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 Somerville, New Jersey manufacturing facility. Of the Company's 106
full-time personnel on January 30, 1998, 47 were employed in its product
development, clinical and manufacturing programs, 31 in research and 28 in
administration. The Company's staff includes 15 persons with Ph.D. degrees and
two with M.D. degrees.
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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 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 Somerville, 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. At this facility, the Company also supports 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 January 30, 1998 the Company had
24,306,810 shares of Common Stock
outstanding. Assuming that all of the Options
are exercised and no other shares of Common
Stock are issued subsequent to January 30,
1998, the Company would have 24,756,810
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 September
30, 1997, the Company had an accumulated deficit of approximately $113 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, $2,200,000 of the
Industrial Development Revenue Bonds issued by the New York Industrial
Development Agency ("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 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
two and one-half years. 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 Lease will be
extended. 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 or financings.
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
is in preliminary discussions with several major pharmaceutical companies with
respect to a strategic alliance 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.
Pursuant to the terms of the Company's Series A Preferred Stock, the
holders of the Series A Preferred Shares are entitled to receive, out of funds
legally available therefor, cumulative dividends at the annual rate of $6.00 per
share, compounded annually. Dividends are payable on the then outstanding Series
A Preferred Shares in cash upon the earlier of (i) annually on December 31st of
each year beginning on December 31, 1999; or (ii) at the time of conversion or
redemption of the Series A Preferred Shares on which the dividend is being paid.
Dividends on the Series A Preferred Shares accumulate and accrue from December
15, 1997 (the date of original issuance) and accrue thereafter, whether or not
earned or declared. As of January 30, 1998, dividends aggregating approximately
$309,000 had accrued on the Series A Preferred Shares.
Dilution. Warrants to purchase 2,313,650 shares of the Company's Common
Stock (which includes 1,331,650 warrants held by directors, officers, employees
and consultants), at an average exercise price of approximately $2.76 per share
(subject to adjustment) and stock options to purchase 2,810,595 shares of the
Company's Common Stock (which includes 2,360,595 options
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granted to employees and consultants under the Company's stock option plans and
the Options) at an average exercise price of approximately $6.17 per share
(subject to adjustment) were outstanding as of January 30, 1998. The shares
underlying such options and warrants (except for the Options which are covered
by the Registration Statement of which this prospectus forms a part) are
covered, or will be covered prior to exercise, by effective registration
statements on file with the Commission. 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.
As of January 30, 1998, 400,000 Series A Preferred Shares were outstanding.
The Series A Preferred Shares have a stated value of $100. Up to 100,000 Series
A Preferred Shares were convertible commencing on December 15, 1997 (the
"Issuance Date"); up to an additional 100,000 Series A Preferred Shares are
convertible on or after January 1, 2000 (the "Second Anniversary Date"); up to
an additional 100,000 Series A Preferred Shares are convertible on or after
January 1, 2001 (the "Third Anniversary Date"); and up to an additional 100,000
Series A Preferred Shares are convertible on or after January 1, 2002 (the
"Fourth Anniversary Date"). Series A Preferred Shares converted on or after the
Issuance Date and before the Second Anniversary are convertible at a per share
conversion price of $12.50; Series A Preferred Shares converted on or after the
Second Anniversary Date and before the Third Anniversary Date are convertible at
a per share conversion price equal to the Average Market Price of the Common
Stock for the five (5) consecutive trading days ending one trading day prior to
the Second Anniversary Date; Series A Preferred Shares converted on or after the
Third Anniversary Date and before the Fourth Anniversary Date are convertible at
a per share conversion price equal to the Average Market Price of the Common
Stock for the five (5) consecutive trading days ending one trading day prior to
the Third Anniversary Date; Series A Preferred Shares converted on or after the
Fourth Anniversary Date and before January 1, 2003 are convertible at a per
share conversion price equal to 88% of the Average Market Price of the Common
Stock for the five (5) consecutive trading days ending one trading day prior to
the Fourth Anniversary Date; and Series A Preferred Shares converted on or after
January 1, 2003 are convertible at a per share conversion price equal to the
Average Market Price of the Common Stock for the five (5) consecutive trading
days ending one trading day prior to the receipt by the Company of a notice of
conversion. For purposes of computing the conversion price, "Average Market
Price" of the Common Stock for any period is the average of the closing prices
for the Common Stock for each trading day in such period as reported by the
Nasdaq National Market or any trading system on which the Common Stock may then
be quoted. The conversion price is subject to adjustment in the case of certain
dilutive events. Further, in the event the Average Market Price of the Common
Stock for the five (5) consecutive trading days ending one trading day prior to
any trading day during which any Series A Preferred Shares are outstanding
exceeds 150% of the conversion price then in effect, the Company has the right
to require the holder of the Series A Preferred Shares to convert all such
shares as may then be convertible. In connection with the
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issuance of the Series A Preferred Shares, Merck was granted certain
registration rights with respect to the underlying shares of Common Stock.
Because, commencing after the Second Anniversary Date, the number of shares of
Common Stock into which the Series A Preferred Shares are convertible is related
to the fair market value of the Common Stock, to the extent the fair market
value of the Common Stock decreases, the number of shares issuable upon
conversion of the Series A Preferred Shares will increase. The conversion of a
significant number of Series A Preferred Shares, particularly in circumstances
where the fair market value of the Common Stock is relatively low, could
adversely affect the market price of the 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,
or in conjunction with, 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. Under the
Company's Amended Agreement with Merck, the Company has the right to co-market
BEC2 in North America in the event BEC2 is approved for sale in North America.
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,
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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 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
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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 uncertain, at present.
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, 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.
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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 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 could 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
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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 such required
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
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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
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
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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.
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 and Restrictions. 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. Except as may be utilized to pay the dividends payable on
the Company's Series A Preferred Stock, any earnings which the Company may
realize will be retained to finance the growth of the Company. In addition, the
terms of the Series A Preferred Stock restrict the payment of dividends on other
classes and series of stock.
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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 as of the date of this Prospectus, 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 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 continued to serve on the board as a director until November
1997.
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SELLING STOCKHOLDER'S TABLE
Percentage of
Number of Outstanding
Number of Number of Shares to be Shares to be
Shares Shares Owned after Owned after
Selling Beneficially Offered Completion of Completion of
Stockholder Owned Hereby Offering the Offering
- ----------- ----- ------ -------- ------------
High River Limited 450,000 450,000(1) 0 0
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 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
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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.
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 700 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* $3,870
--------
Total* $14,000
- -------------------
*Estimated
Item 15. Indemnification of Directors and Officers
The Company's Certificate of Incorporation and Amended and Restated By-laws
set 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 and by-law 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. Authority is given to the Board of Directors 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)
* Previously filed as an exhibit hereto.
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,
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<PAGE>
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)(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
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<PAGE>
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.
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<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 9th day of February, 1998.
IMCLONE SYSTEMS INCORPORATED
By: /s/ Samuel D. Waksal
----------------------------------
Samuel D. Waksal
President and Chief Executive Officer
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<PAGE>
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
*
- -------------------------------- Chairman of the Board February 9, 1998
(Robert F. Goldhammer) and Director
/s/ Samuel D. Waksal President, Chief Executive February 9, 1998
- -------------------------------- Officer and Director
(Samuel D. Waksal) (Principal Executive Officer)
* Executive Vice President, February 9, 1998
- -------------------------------- Chief Operating Officer
(Harlan W. Waksal) and Director
*
- -------------------------------- Vice President, Finance and February 9, 1998
(Carl S. Goldfischer) and Chief Financial Officer
(Principal Financial Officer)
* Director February 9, 1998
- --------------------------------
(Richard Barth)
* Director February 9, 1998
- --------------------------------
(Jean Carvais)
* Director February 9, 1998
- --------------------------------
(Vincent T. DeVita, Jr.)
* Director February 9, 1998
- --------------------------------
(David M. Kies)
* Director February 9, 1998
- --------------------------------
(Paul B. Kopperl)
________________________________ Director February _, 1998
(John Mendelsohn)
* Director February 9, 1998
- --------------------------------
(William R. Miller)
*/s/ John B. Landes
- --------------------------------------
By: John B. Landes as attorney-in-fact
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<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit
- ----------- -------
23.2 Consent of KPMG Peat Marwick LLP
<PAGE>
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.
February 9, 1998 /s/ KPMG Peat Marwick LLP
-------------------------
KPMG PEAT MARWICK LLP
