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As filed with the Securities and Exchange Commission on September 30, 1997
Registration No. ___________
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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THE LIPOSOME COMPANY, INC.
(Exact name of registrant as specified in its charter)
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Delaware 22-2370691
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
<TABLE>
<S> <C>
One Research Way Charles A. Baker
Princeton Forrestal Center Chairman and Chief Executive Officer
Princeton, New Jersey 08540 The Liposome Company, Inc.
(609) 452-7060 One Research Way
(Address, including zip code, and Princeton Forrestal Center
telephone number, including area code, Princeton, New Jersey 08540
of registrant's principal executive offices) 609-452-7060
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
</TABLE>
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Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement.
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|
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Title of Each Class of Proposed Maximum Amount of
Securities to Be Registered Aggregate Registration Fee
Offering Price(1)
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<S> <C> <C>
Common Stock, par value $0.01 per share............................... $255,000 $77.27
===========================================================================================================================
</TABLE>
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(1) The actual number of shares to be registered will be that number that
has an aggregate price of $255,000.00 based on the closing price of the
Common Stock on the Nasdaq National Market on the effective date of
this registration statement.
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 said Section 8(a),
may determine.
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<PAGE>
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.
Subject to Completion Dated September __, 1997
Prospectus ________ Shares
[Shares Having $255,000 Aggregate Offering Price at Time of
Effectiveness of Registration Statement]*
The Liposome Company, Inc.
Common Stock
($.01 par value)
--------------------
This Prospectus covers the offering for resale of _____ shares
(the "Shares") of common stock, par value $.01 per share (the "Common Stock"),
of The Liposome Company, Inc., a Delaware corporation (the "Company"), which may
be offered from time to time by the Selling Stockholder named herein under
"Selling Stockholder." [Based on the closing price of the Common Stock on
September 17, 1997, which was $7.375, the number of shares that would have to be
sold to obtain this aggregate price would be 34,577.]* The Company will receive
no part of the proceeds of sales made hereunder. All expenses of registration
incurred in connection with an offering of the Shares are being borne by the
Company, except for the fees, expenses and disbursements of the Selling
Stockholder's counsel.
The Common Stock is quoted on the Nasdaq National Market under
the symbol "LIPO." On September 17, the last reported sale price of the Common
Stock was $7.375 per share.
The Shares may be offered by the Selling Stockholder for sale
through underwriters or dealers or from time to time on the Nasdaq National
Market, or otherwise, at prices then obtainable. The Company has agreed to
indemnify the Selling Stockholder against certain liabilities, including
liabilities under the Securities Act of 1933, as amended (the "Securities Act").
The Selling Stockholder and any broker executing selling orders on behalf of the
Selling Stockholder may be deemed to be underwriters within the meaning of the
Securities Act. Commissions received by underwriters or by any such broker may
be deemed to be underwriting commissions under the Securities Act. See "PLAN OF
DISTRIBUTION."
Prospective investors should consider carefully the matters
discussed under "RISK FACTORS" beginning on page 4.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE 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 _______, 1997.
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* Will be eliminated in final prospectus
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AVAILABLE INFORMATION
The Company is subject to the information reporting
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files periodic reports, proxy statements and
other information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the regional offices of the Commission located at Seven World
Trade Center, 13th Floor, New York, New York 10048 and Northwestern Atrium
Center, 500 West Madison Street (Suite 1400), Chicago, Illinois 60661. Copies of
all or part of such materials may also be obtained at prescribed rates from the
public reference facilities maintained by the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. In addition, the
Commission maintains a Web site at http://www.sec.gov that contains reports,
proxy statements and other information. Such material also can be inspected at
the offices of the National Association of Securities Dealers, Inc., 1735 K
Street, N.W., Washington, D.C. 20006.
The Company has filed with the Commission a registration
statement (which term shall encompass any amendments thereto) on Form S-3 under
the Securities Act of 1933, as amended (the "Securities Act") with respect to
the securities offered hereby (the "Registration Statement"). This Prospectus,
which constitutes part of the Registration Statement, does not contain all of
the information set forth in the Registration Statement, certain items of which
are contained in exhibits to the Registration Statement as permitted by the
rules and regulations of the Commission. For further information with respect to
the Company and the securities offered by this Prospectus, reference is made to
the Registration Statement, including the exhibits thereto, and the financial
statements and notes thereto filed or incorporated by reference as a part
thereof, which are on file at the offices of the Commission and may be obtained
upon payment of the fee prescribed by the Commission, or may be examined without
charge at the offices of the Commission. Statements made in this Prospectus
concerning the contents of any document referred to herein are not necessarily
complete, and, in each such instance, are qualified in all respects by reference
to the applicable documents filed with the Commission. The Registration
Statement and the exhibits thereto filed by the Company with the Commission may
be inspected and copied at the locations described above.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the
Commission pursuant to the Exchange Act (Commission File No. 0-14887) are
incorporated herein by reference:
(a) the Company's annual report on Form 10-K for the fiscal
year ended December 29, 1996;
(b) the Company's amended annual report on Form 10-K for the
fiscal year ended December 29, 1996, filed on May 6, 1997;
(c) the Company's quarterly report on Form 10-Q for the
quarter ended March 30, 1997;
(d) the Company's report on Form 8-K dated June 25, 1997 and
filed on June 27, 1997: and
(e) the Company's quarterly report on Form 10-Q for the
quarter ended June 29, 1997.
All documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus
and prior to the filing of a post-effective amendment that indicates the
termination of this offering shall be deemed to be incorporated in this
Prospectus by reference and to be a part hereof from the date of filing of such
documents.
Any statements 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 a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide, without charge to each person to
whom this Prospectus has been delivered, a copy of any or all of the documents
referred to above that have been or may be incorporated by reference herein
other than exhibits to such documents (unless such exhibits are specifically
incorporated by reference therein). Requests for such copies should be directed
to The Liposome Company, Inc., One Research Way, Princeton Forrestal Center,
Princeton, New Jersey 08540 Attention: Carol J. Gillespie, Vice President,
General Counsel and Secretary. Telephone requests may be directed to (609)
452-7060.
FORWARD LOOKING STATEMENTS
THIS PROSPECTUS CONTAINS AND INCORPORATES BY REFERENCE CERTAIN
FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995 WITH RESPECT TO THE FINANCIAL CONDITION, RESULTS
OF OPERATIONS AND BUSINESS OF THE COMPANY, INCLUDING, WITHOUT LIMITATION,
STATEMENTS UNDER THE CAPTION "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS" IN THE COMPANY'S ANNUAL AND QUARTERLY
REPORTS. THESE FORWARD LOOKING STATEMENTS INVOLVE CERTAIN RISKS AND
UNCERTAINTIES. NO ASSURANCE CAN BE GIVEN THAT ANY OF SUCH MATTERS WILL BE
REALIZED. FACTORS THAT MAY CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE
CONTEMPLATED BY SUCH FORWARD LOOKING STATEMENTS INCLUDE, AMONG OTHERS, THE
FACTORS DISCUSSED IN THE SECTION HEREIN ENTITLED "RISK FACTORS."
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<PAGE>
RISK FACTORS
The following risk factors should be considered carefully in
addition to the other information contained in this Prospectus in evaluating an
investment in the shares of Common Stock registered hereby:
Management of Growth. The Company is currently experiencing a
period of rapid growth which has placed and could continue to place a strain on
the Company's financial, management and other resources. The Company's ability
to manage its staff and facilities growth effectively will require it to
continue to improve its operational, financial and other internal systems and to
train, motivate and manage its employees. If the Company's management is unable
to manage growth effectively and new employees are unable to achieve anticipated
performance levels, the Company's business and results of operations could be
adversely affected.
Early Stage of Commercialization. The Company's first
commercial sales of ABELCET(R) commenced in the United Kingdom in the second
quarter of 1995 and in the United States toward the end of the fourth quarter of
1995. In other countries where marketing approvals have been received, the
Company will determine on an individual country basis whether the product should
be marketed by marketing partners or distributors or by the Company. In various
additional foreign countries the Company has filed marketing applications with
respect to ABELCET(R). There can be no assurance that such applications will be
accepted or, if approved, that there will not be restrictions which might lead
the Company to refrain from marketing and selling in some or all of these
markets. The Company's long-term viability and growth will depend on successful
commercialization of products resulting from its research activities. No
assurance can be given that TLC D-99 or other products currently under
development will be successfully commercialized or that the required regulatory
approvals will be obtained.
History of Operating Losses and Accumulated Deficit. The
Company has incurred losses in each year since its inception and anticipates
that operating losses will continue for at least one year. The Company's
accumulated deficit at June 29, 1997 was approximately $175,417,000. The Company
will need to commit significant financial and other resources to the commercial
manufacturing, marketing and working capital requirements of its products in the
United States and other countries where product approvals have been obtained.
Limited Manufacturing Capabilities. In order to be successful,
the Company's current and future products, if any, must be manufactured in
commercial quantities, in compliance with regulatory requirements, at an
acceptable cost and with sufficient stability. There can be no assurance that
facilities and staff will be adequate to produce quantities of such products
sufficient to satisfy demand. The Company owns a manufacturing facility in
Indianapolis, Indiana for the manufacture of its commercial products on a scale
the Company believes to be sufficient to meet worldwide demand. During 1996, the
Company refitted this facility to manufacture ABELCET(R). However, the facility
has not yet been approved by European authorities, and there can be no assurance
that such approval will be forthcoming. In addition, should fire or other
natural disaster strike the Indianapolis manufacturing facility, the Company has
no alternative source for the manufacture of ABELCET(R) unless it reactivates
its manufacturing facility in Princeton, New Jersey. TLC D-99, to which the
Company reacquired marketing rights from Pfizer, Inc. ("Pfizer") in July 1997,
will be manufactured by the Company, and there can be no assurance that the the
Company's manufacturing facility for TLC D-99 would be approved to manufacture
commercial supplies of the product, that its capacity would be adequate to
supply commercial demand, or that the Company could contract with a third party
to manufacture the product on acceptable terms. A substantial capital investment
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<PAGE>
would be required in order to manufacture TLC D-99 at the Company's Indianapolis
facility, and there can be no assurance that the necessary funds would be
available or that the facility would be approved by the relevant regulatory
authorities.
Limited Marketing and Sales Experience. In the United States,
the Company has assembled an experienced hospital sales force, which was
increased from 20 representatives to 40 representatives at the end of the 1996
fiscal year. However, the experience of the marketing staff and the sales force
in marketing ABELCET(R) is limited, and there can be no assurance that revenues
from sales of this product will increase in proportion to increasing
expenditures on marketing personnel and programs. If TLC D-99 or other products
to be marketed by the Company are approved, it may be necessary to hire
additional marketing and sales staff, and there can be no assurance that
personnel with the proper qualifications can be found or that they will be
successful in gaining market acceptance for the Company's products. In addition,
significant additional expenditures, management resources and time would be
required in connection with any further sales force expansion. To the extent
that the Company determines not to, or is unable to, expand its sales force, it
will be dependent on third parties for the marketing and distribution of its
products, and there can be no assurance that the Company will be able to
contract with third party marketing partners or distributors on acceptable
terms. See also the section on "Risks Associated with International Sales."
Competition. 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. Some of the Company's 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
preclinical testing and human clinical trials of new or improved pharmaceutical
products and in obtaining approval from the U.S. Food and Drug Administration
("FDA") and other regulatory approvals on products for use in health care. In
particular, the Company is aware that other companies are developing lipid-based
or liposomal amphotericin B products and have obtained regulatory approvals for
such products in certain markets. Two competitors received approvals for
lipid-based amphotericin B products in certain markets before ABELCET(R) was
approved, which may confer a competitive advantage for their products. In the
United States, although ABELCET(R) was the first lipid-based amphotericin B
product to be approved for marketing, one competitor's product was approved in
the fourth quarter of 1996, and another competitor's product was approved in
August 1997. Although it cannot be predicted how the existence of competing
lipid-based products may affect the U.S. antifungal market, it is possible that
the Company's share of this market will decline and that price competition will
reduce the overall size of the market. In addition, other companies are also
developing liposomal anthracycline products similar to TLC D-99, two of which
have been cleared by the FDA for treatment of Kaposi's Sarcoma. The Company is
also competing with respect to manufacturing efficiency and marketing
capabilities, areas in which the Company has limited experience.
Risk of Technological Change. The biopharmaceutical industry
is characterized by extensive research and development efforts, and is subject
to rapid and significant technological change. The Company has numerous
competitors, including major pharmaceutical and chemical companies, specialized
biotechnology firms, other companies developing liposomes or other lipid-based
products, universities and other research institutions. New developments in
lipid and liposome research as well as new pharmaceutical products and
drug-delivery systems are expected to continue at a rapid pace. Competitors may
succeed in developing technologies and products that are more effective than any
that are being developed by the Company or that would render the Company's
technology and products non-competitive.
5
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Uncertainties Related to Clinical Trials. Before obtaining
regulatory approvals for the commercial sale of any of its products under
development, the Company must demonstrate through preclinical studies and
clinical trials that the product is safe and effective for use in each target
indication. The results from preclinical studies and early clinical trials may
not be predictive of results that will be obtained in large-scale testing, and
there can be no assurance that the Company's clinical trials will demonstrate
the safety and efficacy of any products or will result in marketable products.
Many pharmaceutical and drug delivery companies have suffered significant
setbacks in advanced clinical trials, even after obtaining promising results in
earlier trials. In some cases, products have failed to show superiority over
placebo because the results with placebo were better than could be anticipated
from past experience in the indication under study.
Uncertainty of Government Regulatory Requirements; Lengthy
Approval Process. Human therapeutic products, vaccines and in vivo diagnostic
products are subject to rigorous preclinical and clinical testing and approval
by the FDA and comparable agencies in other countries and, to a lesser extent,
by state regulatory authorities prior to marketing. The process of obtaining
such approvals, especially for human therapeutic products, is likely to take a
number of years and will involve the expenditure of substantial resources. If
the FDA requests additional data, these time periods can be materially
increased. Even after such additional data is submitted, there can be no
assurance of obtaining FDA approval. In addition, product approvals may be
withdrawn or limited for noncompliance with regulatory standards or the
occurrence of unforeseen problems following initial marketing. The Company 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. Failure
to obtain or maintain requisite governmental approvals, or failure to obtain
approvals of the intended clinical uses requested, could delay or preclude the
Company or its licensees from further developing particular products or from
marketing their products, or limit the commercial use of the products and
thereby have a material adverse effect on the Company's liquidity and financial
condition. No assurance can be given with respect to any future new drug
application ("NDA") submitted to the FDA by the Company that such NDA will be
accepted for consideration, that it will be promptly reviewed, that the FDA will
find the data submitted adequate or that such NDA will ultimately be approved.
The Company's Dependence on and the Uncertainty of Protection
of Patents and Proprietary Rights. The protection provided to the Company by its
patents and proprietary rights is key. The Company has a number of United States
and foreign patents and patent applications relating to various aspects of lipid
and liposome technologies. The patent position of biopharmaceutical companies
generally is highly uncertain and involves complex legal and factual questions.
There can be no assurance that any patents will afford the Company commercially
significant protection for its proprietary technology or have commercial
application, and litigation may be necessary to determine the validity and scope
of the Company's proprietary rights. Moreover, the patent laws of foreign
countries and the enforcement of such laws may afford less protection than
comparable U.S. laws. The Company may not have adequate funds to defend or
prosecute the patents in question. In Europe, several of the Company's granted
patents are being opposed by other companies. Loss of some of these oppositions
may result in decreased patent protection for the Company's products.
Other public and private concerns, including universities, may
have filed applications for, or have been issued, patents with respect to
technology potentially useful or necessary to the Company. If any of the
Company's proprietary technology in these areas were to conflict with the rights
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of others, the Company's ability to commercialize products using such
technologies could be materially adversely affected. The scope and validity of
such patents, the extent to which the Company may wish or need to acquire
licenses under such patents, and the cost or availability of such licenses, are
currently unknown.
In addition, the Company relies on unpatented proprietary
know-how, and there can be no assurance that others will not obtain access to or
independently develop such know-how. Although employees, corporate sponsors,
research partners and consultants are not given access to proprietary know-how
of the Company until they have executed confidentiality agreements, these
agreements may not provide meaningful protection for the Company's proprietary
know-how in the event of any unauthorized use or disclosure of such know-how.
Uncertainty of Future Financial Results; Fluctuations in
Operating Results. The Company's quarterly operating results depend upon a
variety of factors, including the price, volume and timing of sales of the
Company's approved products; variations in payments under collaborative
agreements, including royalties, fees and other contract revenues; the
availability of third-party reimbursement; and the regulatory approvals of new
products, or expanded labeling of existing products. The Company's quarterly
operating results may also fluctuate significantly depending on other factors,
including the timing of approvals and the success of product launches in
international markets, the expansion of clinical trials for ABELCET(R) and TLC
D-99, changes in the level of development activity for ELL-12 and other
products, changes in the Company's level of research expenditures, and
variations in gross margins of the Company's products that may be caused by
increased costs of raw materials, competitive pricing pressures, or the mix
between product sales in the United States and sales to the Company's
international marketing partners and distributors. The Company expects
quarter-to-quarter fluctuations to continue in the future, and there can be no
assurance that the Company's revenues will not decline or that the Company will
ever achieve profitability.
Need for Additional Financing and Uncertain Access to Capital
Funding. The Company's capital requirements depend upon many factors, including
the progress of the Company's product development programs; the time required to
obtain regulatory approvals; the resources that the Company devotes to the
development, manufacturing and marketing of products; and the demand for its
products if and when approved. It is possible that the Company may require
additional financing to complete the clinical testing and to manufacture and to
market its products. There can be no assurance that such financing will be
available or will be available on acceptable terms.
Product Liability. The testing, manufacturing and marketing of
the Company's products entail an inherent risk of adverse events that could
expose the Company to product liability claims. The Company has obtained
insurance against the risk of product liability claims. However, there is no
guarantee that this insurance will be adequate, that the amount of this
insurance can be increased, or that the policies can be renewed. Moreover, the
amount and scope of any coverage obtained may be inadequate to protect the
Company in the event of a successful product liability claim.
Dependence on Key Personnel. The Company's ability to
successfully develop, manufacture and market 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.
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.
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Uncertainty of Pharmaceutical Pricing and Reimbursement. The
Company's business may be materially adversely affected by the continuing
efforts of worldwide governmental and third-party payors to contain or reduce
the costs of pharmaceutical products. An increasing emphasis on managed care and
consolidation of hospital purchasing in the United States has and will continue
to put pressure on pharmaceutical pricing, which could reduce the price that the
Company is able to charge for any current or future products. In addition, price
competition may result from competing product sales, attempts to gain market
share or introductory pricing programs, all of which could have a material
adverse effect on the Company's results of operations and financial condition.
The Company's ability to generate significant revenues from its products may
also 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 payors.
If purchasers or users of the Company's products are not entitled to adequate
reimbursement for the cost of 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.
Dependence Upon Suppliers. The Company currently relies on a
limited number of suppliers to provide the materials used to manufacture its
products, certain of which materials are purchased only from one supplier. In
the event the Company could not obtain adequate quantities of necessary
materials from its existing suppliers, there can be no assurance that the
Company would be able to access alternative sources of supply within a
reasonable period of time or at commercially reasonable rates. In particular,
the Company presently acquires amphotericin B, a principal ingredient in
ABELCET(R), from one supplier on what the Company believes are favorable terms.
Although the Company has qualified an alternative supplier for amphotericin B,
the loss of the Company's current supplier could have a material adverse effect
on the Company. Similarly, the Company has only one supplier for the doxorubicin
used in TLC D-99, which is a proprietary form of the compound and is not
available from other sources. Regulatory requirements applicable to
pharmaceutical products tend to make the substitution of suppliers more costly
and, unless a substitute supplier is previously qualified as is the Company's
alternate amphotericin B supplier, more time-consuming. The unavailability of
adequate commercial quantities, the inability to develop alternative sources, a
reduction or interruption in supply or a significant increase in the price of
materials could have a material adverse effect on the Company's ability to
manufacture and market its products.
Risks Associated with International Sales. There are
significant challenges and risks to the Company associated with conducting
business in some foreign countries, including, but not limited to, disparate
governmental regulation of pharmaceutical products, uncertain intellectual
property protection, delays in establishing international distribution channels
and difficulties in collecting international accounts receivable. The Company
does not have extensive experience in international sales. In the United
Kingdom, where the Company's subsidiary markets ABELCET(R) directly, the success
of marketing and sales efforts depends on attracting qualified personnel and
managers familiar with local marketing conditions. In other countries, the sales
of ABELCET(R) depend on the efforts of local marketing partners and
distributors. If either the Company's subsidiaries or its local marketing
partners or distributors are unable to gain product acceptance in the local
medical community, if they fail to comply with local regulations, or if they do
not commit adequate resources to promotional activities, sales could be
adversely affected. In some countries, pricing is controlled by government
authorities and may be subject to reductions that reduce the profitability of
sales or make it uneconomic to market the Company's products in certain markets.
The regulations of some health authorities require that the marketing
registration for the Company's products be issued in the name of a local
distributor, and obtaining the return or transfer of the registration in the
event of termination of the distributor could be difficult. Collection of
accounts may be less certain in some jurisdictions, and payment periods may be
longer than is usual in the United States. The Company's international business
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and financial performance could also be adversely affected by such matters as
fluctuations in currency exchange rates, currency controls, tariff regulations,
foreign duties and taxes, pricing controls and regulations and difficulties in
obtaining export licenses.
Volatility of Stock Price. There has been a history of
significant volatility in the market prices for shares of companies in a similar
stage of development to that of the Company, and the market price of the shares
of the Company's Common Stock has been volatile. Factors such as announcements
of technological innovations or new commercial products by the Company or its
competitors, developments relating to regulatory approvals, governmental
regulation, decisions made by corporate sponsors under collaborative research
and development agreements regarding product development activities,
developments or disputes relating to patent or proprietary rights, as well as
period-to-period fluctuations in revenues and financial results, may have a
significant impact on the market price of the Company's Common Stock.
Possible Adverse Effect on Market Price Due to Shares Eligible
for Future Sale. Sales of substantial amounts of Common Stock in the public
market after this offering could adversely affect the market price of the Common
Stock and the ability of the Company to raise capital through an offering of
equity securities. There are options outstanding to purchase approximately
4,227,000 shares of Common Stock, and additional shares of Common Stock may also
become available for sale in the public market from time to time in the future.
Exercise of such options and issuance of such additional shares would dilute the
percentage ownership interest of existing holders of Common Stock. Under a
Registration Statement that became effective September 22, 1997, the Company
registered on behalf of another shareholder 7,514,346 shares of Common Stock,
representing approximately 20% of the shares outstanding as of the date of this
prospectus. The sale of all or a significant number of those shares at once or
over a short period of time could also have an adverse effect on the market
price of the Common Stock.
Prospective investors should carefully read the Company's
discussion of risk factors in reports the Company files pursuant to the Exchange
Act, particularly under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
THE COMPANY
The Company is engaged in the discovery, development,
manufacturing and marketing of proprietary lipid- and liposome-based and other
pharmaceuticals for the treatment of life-threatening illnesses. ABELCET(R)
(Amphotericin B Lipid Complex Injection), the Company's first commercialized
product, has been approved in the United States and a number of other countries
for the treatment of various severe systemic fungal infections and is the
subject of marketing application filings in other countries.
TLC D-99, a liposomal form of the chemotherapeutic agent
doxorubicin, is in Phase III clinical studies for metastatic breast cancer.
Furthermore, the Company recently initiated the preclinical development of TLC
ELL-12 (liposomal ether lipid), a new cancer therapeutic that may have
applications for the treatment of many different cancers including prostrate
cancer and non small-cell lung carcinoma. The Company also has a continuing
discovery research program concentrating primarily on the treatment of cancer
and inflammatory conditions.
The Company's marketed product and products in development are
based on its knowledge and understanding of lipids, the substances that comprise
the membrane of all living cells. The products developed by the Company with
9
<PAGE>
this technology include drug delivery vehicles and novel pharmaceuticals
utilizing modulated cell signaling and bio-active lipids.
The Company's mission is to discover, develop, manufacture and
market pharmaceutical products emanating from its technical core that have
application as treatments for life-threatening conditions such as cancer and
infectious disease. To supplement and expand its internal discovery
capabilities, the Company may in-license pharmaceutical compounds for further
development, manufacturing and marketing.
For further information about the business and operations of
the Company, reference is made to the Company's reports incorporated herein by
reference. See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
The principal executive offices of the Company are located at
One Research Way, Princeton Forrestal Center, Princeton, New Jersey 08540 and
its telephone number is (609) 452-7060.
DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital stock consists of 60,000,000
shares of Common Stock, $.01 par value per share, and 2,400,000 shares of
Preferred Stock, $.01 par value per share. As of September 23, 1997, 37,493,065
shares of Common Stock were issued and outstanding. There were no shares of
Preferred Stock issued. For further information about the Company's authorized
capital stock, reference is made to the Company's reports incorporated herein by
reference. See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale
of the Shares by the Selling Stockholder.
SELLING STOCKHOLDER
The Board of Regents of the University of Texas System (the
"Selling Stockholder") is an agency of the State of Texas. As an assignee of
certain patent rights, the Selling Stockholder brought claims against the
Company in 1996 for patent infringement, which claims were settled by an
agreement that became effective on July 1, 1997. As part of that settlement, the
Company agreed to issue to the Selling Stockholder shares of Common Stock having
a guaranteed market value of $255,000 as of the date on which they become
marketable (the "Shares"). The Company also agreed to register the Shares for
sale by the Selling Stockholder, in a manner that would enable the Selling
Stockholder, if it chose, to realize the sum of $255,000 from the sale of the
Shares, and to pay interest on that amount from July 31, 1997 until the Shares
become marketable. The settlement agreement also required the Company to make a
cash payment and to pay future royalties on its sales of the drug ABELCET(R)
(amphotericin B lipid complex injection).
10
<PAGE>
PLAN OF DISTRIBUTION
The Selling Stockholder has advised the Company that,
depending on market conditions and other factors, it may sell the Shares of
Common Stock offered hereby from time to time, in one or more transactions,
which may involve block transactions, on the Nasdaq National Market, or
otherwise, at market prices prevailing at the time of sale, at negotiated
prices, or at fixed prices, which may be changed. Such sales may be effected by
the Selling Stockholder, its pledgees, donees, or other successors in interest,
directly or through agents, underwriters or dealers.
To the extent required pursuant to Rule 424 under the
Securities Act, a Prospectus Supplement will be filed with the Securities and
Exchange Commission with respect to a particular offering of all or any portion
of the Shares (the "Offered Securities") setting forth the terms of any
offering, including the name or names of any underwriters or agents, if any, any
underwriting discounts and other items constituting underwriters' compensation,
the offering price and any discounts or concessions allowed or reallowed or paid
to dealers. Any offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
If underwriters are used in a sale, the Offered Securities
will be acquired by the underwriters for their own account and may be resold
from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. The Offered Securities may be offered to the public either
through underwriting syndicates represented by one or more managing underwriters
or directly by one or more firms acting as underwriters. The underwriter or
underwriters with respect to a particular underwritten offering to be named in
the Prospectus Supplement relating to such offering and, if an underwriting
syndicate is used, the managing underwriter or underwriters, will be set forth
on the cover of such Prospectus Supplement. Unless otherwise set forth in the
Prospectus Supplement relating thereto, the obligations of the underwriters to
purchase the Offered Securities will be subject to conditions precedent and the
underwriters will be obligated to purchase all of the Offered Securities if any
are purchased.
If dealers are utilized in the sale of Shares in respect of
which this Prospectus is delivered, the Selling Stockholder will sell such
Shares to the dealers as principals. The dealers may then resell such Shares to
the public at varying prices to be determined by such dealers at the time of
resale. The names of the dealers and the terms of the transaction will be set
forth in a Prospectus Supplement relating thereto. The Selling Stockholder may
also loan or pledge the Shares to a broker-dealer and the broker-dealer may sell
the Shares so loaned or upon a default the broker-dealer may effect sales of the
pledged Shares pursuant to this Prospectus.
If an agent is used, the agent will be named, and the terms of
the agency and any commissions will be set forth in a Prospectus Supplement
relating thereto. Unless otherwise indicated in the Prospectus Supplement, any
such agent will be acting on a best efforts basis for the period of its
appointment.
The Shares may be sold directly by the Selling Stockholder to
institutional investors or others, who may be deemed to be underwriters within
the meaning of the Securities Act with respect to any resale thereof. The terms
of any such sales, including the terms of any bidding or auction process, will
be described in the Prospectus Supplement relating thereto.
Agents, dealers and underwriters may be entitled under
agreements entered into with the Selling Stockholder to indemnification against
certain civil liabilities, including liabilities under the Securities Act, or to
contribution with respect to payments which such agents, dealers or underwriters
may be required to make in respect thereof. Agents, dealers and underwriters may
be customers of, engage in transactions with, or perform services for the
Company or the Selling Stockholder in the ordinary course of business.
11
<PAGE>
The Company will bear all costs and expenses of the
registration of the Shares under the Securities Act and certain state securities
laws, other than fees of counsel for the Selling Stockholder and any discounts
or commissions payable with respect to sales of the Shares. The Selling
Stockholder will pay any transaction costs associated with effecting any sales
that occur.
The Selling Stockholder is not restricted as to the number of
Shares that may be sold at any one time, and it is possible that a significant
number of Shares could be sold at the same time, which may have an adverse
effect on the market price of the Common Stock.
The Company has agreed to indemnify the Selling Stockholder
against certain civil liabilities, including liabilities under the Securities
Act.
LEGAL MATTERS
The validity of the Shares offered hereby will be passed upon
for the Company by Dewey Ballantine, 1301 Ave. of the Americas, New York, N.Y.
10019.
EXPERTS
The consolidated balance sheets as of December 29, 1996 and
December 31, 1995 and the consolidated statements of operations, stockholders'
equity, and cash flows for each of the three years in the period ended December
29, 1996, incorporated by reference in this Prospectus, have been incorporated
herein in reliance on the report of Coopers & Lybrand L.L.P., independent
accountants, given upon the authority of said firm as experts in accounting and
auditing.
12
<PAGE>
==============================================================================
No dealer, salesperson or other person has been authorized to
give any information or to make any representations other than
those contained in or incorporated by reference in this
Prospectus in connection with the offer made by this
Prospectus and, if given or made, such information or
representations must not be relied upon as having been
authorized by the Company, the Selling Stockholder, or any
underwriter. Neither the delivery of this Prospectus nor any
sale made hereunder shall, under any circumstances, create an
implication that there has been no change in the affairs of
the Company since the date as of which information is given in
this Prospectus. This Prospectus does not constitute an offer
or solicitation by anyone in any jurisdiction in which such
offer or solicitation is not authorized or in which the person
making such offer or solicitation is not qualified to do so or
to any person to whom it is unlawful to make such offer or
solicitation.
--------------------
Table of Contents
Page
Prospectus
Available Information......................................2
Incorporation of Certain Documents
by Reference.............................................3
Forward Looking Statements.................................3
Risk Factors...............................................4
The Company................................................9
Description of Capital Stock..............................10
Use of Proceeds...........................................10
Selling Stockholder.......................................10
Plan of Distribution......................................11
Legal Matters.............................................12
Experts...................................................12
===============================================================================
<PAGE>
===============================================================================
________ Shares
The Liposome Company, Inc.
Common Stock
($.01 par value)
----------
Prospectus
----------
September , 1997
===============================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Securities and Exchange Commission registration fee............ $ 77
Printing expenses..............................................
Accounting fees and expenses................................... $ 1,000
Legal fees and expenses........................................ $ 1,000
Nasdaq National Market Listing Fee.............................
Miscellaneous..................................................
Total ................................................ $ 2,077
Item 15. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law (the "DGCL")
provides for the indemnification of officers and directors under certain
circumstances against expenses (including attorneys' fees, judgments, fines
and amounts paid in settlement) actually and reasonably incurred in connection
with the defense or settlement of any threatened, pending or completed legal
proceedings in which they are involved by reason of the fact that they are or
were officers or directors of the Company if they acted in good faith and in a
manner that they reasonably believed to be in or not opposed to the best
interests of the Company, and, in respect to the criminal actions or
proceedings, if they had no reasonable cause to believe that their conduct was
unlawful. The Certificate of the Company provides for indemnification of its
officers and directors to the full extent authorized by law.
Pursuant to Section 102(b)(7) of the DGCL, the Company's Certificate
of Incorporation (the "Certificate") provides that the directors of the
Company, individually or collectively, shall not be held personally liable to
the Company or its stockholders for monetary damages for breaches of fiduciary
duty as directors, except that any director shall remain liable (i) for any
breach of the director's fiduciary duty of loyalty to the Company or its
stockholders, (ii) for acts or omissions not in good faith or involving
intentional misconduct or a knowing violation of law, (iii) for liability
under Section 174 of the DGCL or (iv) for any transaction from which the
director derived an improper personal benefit.
The Company maintains officers' and directors' liability insurance
which insures against liabilities that the officers and directors of the
Company may incur in such capacities.
Furthermore, the Company, as well as its directors and officers, may
be entitled to indemnification by any underwriters named in the Prospectus
Supplement against certain civil liabilities under the Securities Act under
agreements entered into between the Company and such underwriters.
II-1
<PAGE>
Item 16. List of Exhibits.
4.1 - Settlement Agreement between the Board of Regents of the University of
Texas System, the University of Texas M.D. Anderson Cancer Center, and
The Liposome Company, Inc. dated July 1, 1997, including Patent License
Agreement as Exhibit B (confidential treatment requested).
5.1 - Opinion of Dewey Ballantine as to legality of the securities being
registered.
23.1 - Consent of Coopers & Lybrand L.L.P.
23.2 - Consent of Dewey Ballantine (contained in Exhibit 5.1).
24.1 - Power of Attorney (included on signature page).
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. 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 end 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 a 20% 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 the registration
statement or any material change to such information in the
registration statement.
Provided, however, that paragraphs (1)(i) and (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 section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
II-2
<PAGE>
(4) 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 section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
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 provisions described in Item 15 above, 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
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question 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.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Township of Plainsboro, State of New Jersey, on September 26,
1997.
THE LIPOSOME COMPANY, INC.
By /s/ Charles A. Baker
------------------------------------
Charles A. Baker
Chairman of the Board of Directors,
President, Chief Executive Officer
and Director
II-3
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Charles A. Baker and Carol J. Gillespie, and each
or either of them, as his true and lawful attorneys-in-fact and agents, each
acting alone, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign any or all
amendments to this Registration Statement, including post-effective amendments,
and to file the same, with all exhibits thereto, and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, and hereby ratifies and confirms all that said
attorney-in-fact and agents, each acting alone, or their substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Charles A. Baker Chairman of the Board, September 26, 1997
- ----------------------------------------------------- President, Chief Executive
Charles A. Baker Officer and Director
/s/ James G. Andress
- ----------------------------------------------------- Director September 26, 1997
James G. Andress
/s/ Morton Collins, Ph.D. Director September 26, 1997
- -----------------------------------------------------
Morton Collins, Ph.D.
/s/ Stuart F. Feiner Director September 26, 1997
- -----------------------------------------------------
Stuart F. Feiner
/s/ Robert F. Hendrickson Director September 26, 1997
- -----------------------------------------------------
Robert F. Hendrickson
/s/ Bengt Samuelsson Director September 26, 1997
- -----------------------------------------------------
Professor Bengt Samuelsson, M.D.
/s/ Joseph T. Stewart, Jr. Director September 26, 1997
- -----------------------------------------------------
Joseph T. Stewart, Jr.
/s/ Gerald Weissman Director September 26, 1997
- -----------------------------------------------------
Gerald Weissman, M.D.
/s/ Horst Witzel Director September 26, 1997
- -----------------------------------------------------
Horst Witzel, Dr. - Ing.
</TABLE>
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Exhibit Page
--------- ------- ------------
<S> <C>
4.1 - Settlement Agreement between the Board of Regents of the University of II-7
Texas System, the University of Texas M.D. Anderson Cancer Center, and The
Liposome Company, Inc. dated July 1, 1997, including Patent License
Agreement as Exhibit B (confidential treatment requested).
5.1 - Opinion of Dewey Ballantine as to legality of the securities being II-25
registered.
23.1 - Consent of Coopers & Lybrand L.L.P. II-26
23.2 - Consent of Dewey Ballantine (contained in Exhibit 5.1). *
24.1 - Power of Attorney (included on signature page).
</TABLE>
<PAGE>
Exhibit 4.1
SETTLEMENT AGREEMENT
This Agreement is between BOARD OF REGENTS OF THE UNIVERSITY OF TEXAS
SYSTEM and THE UNIVERSITY OF TEXAS M.D. ANDERSON CANCER CENTER, Plaintiffs
(collectively referred to herein as "Board of Regents"), and THE LIPOSOME
COMPANY, INC., Defendant (referred to herein as "TLC").
WHEREAS, Board of Regents and TLC are desirous of settling the various
claims embodied in the litigation presently pending as Civil Action No.
H-96-1040 in the United States District Court for the Southern District of
Texas, Houston Division;
NOW, THEREFORE, it is hereby agreed as follows:
1. Dismissal of Action
On or before August 31, 1997, Board of Regents and TLC shall
file a Stipulation of Dismissal in the above-entitled action in which each party
dismisses all of its claims in the action with prejudice and agrees to bear its
own costs and attorney fees, as set forth in Exhibit A attached hereto and made
a part hereof for all purposes.
2. License to TLC
Board of Regents hereby agrees to grant, and TLC agrees to
accept, a license under U.S. Patent No. 4,663,167 ("the `167 patent"), under the
terms and conditions set forth in Exhibit B.
3. Release
3.1 Board of Regents hereby releases TLC, TLC's Affiliates and
customers of TLC and TLC's Affiliates from any and all past claims for damages,
injunction, attorney fees, and any other liability arising out of the
<PAGE>
manufacture, use, offer to sell or sale of the ABELCET(R) product or any method
or product infringing the `167 patent. For purposes of this Agreement, "TLC
Affiliates" shall mean business entities (a) more than fifty percent (50%) owned
by TLC, (b) that own more than fifty percent (50%) of TLC, or (c) that are more
than fifty percent (50%) owned by a business entity that owns more than fifty
percent (50%) of TLC.
3.2 TLC hereby releases Board of Regents, its agents and
attorneys, from any and all claims for damages, attorney fees, and any other
liability arising out of this litigation.
4. Confidentiality
4.1 Except for a press release to be mutually agreed upon by
the parties, TLC and Board of Regents shall keep the terms and conditions of
this Agreement in strict confidence and shall not, without first securing the
written consent of the other party, disclose the terms or conditions of the
Agreement to any other person or entity except (a) the Board of Regents may
fully disclose the terms and conditions of this Agreement to the named inventors
of the '167 Patent provided that, prior to such disclosure the inventors agree
to keep such information in strict confidence and not disclose such terms or
conditions to any other person or entity; (b) as may be required by law,
government regulations, the rules of the Nasdaq National Market requirements and
Generally Accepted Accounting Principles; (c) any of the parties may disclose
this Agreement to a court for the purpose of securing compliance therewith; or
(d) these restrictions shall not apply to any information which was publicly
available as of August 1, 1997.
<PAGE>
5. Miscellaneous
5.l This Agreement embodies the total understanding of the
parties, and no provision hereof may be modified unless such modification is in
writing and signed by the parties to this Agreement.
5.2 This Agreement has been executed in multiple counterparts,
each of which shall be deemed an original. 5.3 This Agreement shall be governed
by the laws of the State of Texas. 5.4 This Agreement shall have an effective
date of July 1. 1997.
THE UNIVERSITY OF TEXAS BOARD OF REGENTS OF THE
M.D. ANDERSON CANCER CENTER UNIVERSITY OF TEXAS SYSTEM
By:____________________________ By:_______________________________
Michael J. Best Ray Farabee
Chief Financial Officer Vice Chancellor and
General Counsel
APPROVED AS TO CONTENT: APPROVED AS TO FORM:
By:______________________________________ By:_______________________________
William J. Doty Georgia Harper, Esq.
Director, Technology Department Office of General Counsel
THE LIPOSOME COMPANY, INC.
By:____________________________________
Charles A. Baker
Chairman of the Board and
Chief Executive Officer
<PAGE>
IN THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
BOARD OF REGENTS OF THE ss.
UNIVERSITY OF TEXAS SYSTEM, ss.
and THE UNIVERSITY OF TEXAS ss.
M.D. ANDERSON CANCER CENTER, ss.
ss.
Plaintiffs, ss. Civil Action No. H-96-1040
ss.
v. ss.
ss.
THE LIPOSOME COMPANY, INC. ss.
ss.
Defendant. ss.
STIPULATION OF DISMISSAL
It is hereby stipulated and agreed that the above-entitled action
shall be and hereby is dismissed and, further, it is specifically stipulated and
agreed that:
(1) the claims of Plaintiffs, Board of Regents of The University of
Texas System and The University of Texas M.D. Anderson Cancer Center, set forth
in Plaintiffs' Original Complaint and Plaintiffs' Reply to Amended Answer and
Counterclaim of The Liposome Company, Inc., are dismissed with prejudice; and
(2) the claims of Defendant, The Liposome Company, Inc., set forth in
the Amended Answer and Counterclaim of The Liposome Company, Inc., are dismissed
with prejudice.
Each of the parties is to bear its own costs and attorney fees.
EXHIBIT A
<PAGE>
All relief otherwise requested by each of the parties against the other
is denied.
Dated:______________________ ____________________________________
Floyd R. Nation - SB 14819500
Attorney-in-Charge
David L. Parker - SB 15475320
ARNOLD, WHITE & DURKEE
1900 One American Center
600 Congress Avenue
Austin, Texas 78701
Telephone: (512)418-3000
Facsimile: (512)474-7577
ATTORNEYS FOR PLAINTIFFS
Dated:______________________ ______________________________________
Robin C. Gibbs - SB 07853000
Attorney-in-Charge
J. Christopher Reynolds - SB 16801900
GIBBS & BRUNS, LLP
1100 Louisiana, Suite 5300
Houston, Texas 77002
Telephone: (713)650-8805
Facsimile: (713)750-0903
ATTORNEYS FOR DEFENDANT
APPROVED:
_____________________________
Hon. Nancy F. Atlas
U.S. District Judge
<PAGE>
PATENT LICENSE AGREEMENT
THIS twelve (12) page AGREEMENT ("AGREEMENT") is made on this first (1st) day of
July, 1997, by and between the BOARD OF REGENTS ("BOARD") of THE UNIVERSITY OF
TEXAS SYSTEM ("SYSTEM"), an agency of the State of Texas, whose address is 201
West 7th Street, Austin, Texas 78701, THE UNIVERSITY OF TEXAS M. D. ANDERSON
CANCER CENTER ("MDA"), a component Institution of the SYSTEM and THE LIPOSOME
COMPANY, a Delaware corporation having a principal place of business located at
1 Research Way, Princeton, New Jersey 08540 ("LICENSEE").
TABLE OF CONTENTS
RECITALS Page 2
I. EFFECTIVE DATE Page 2
II. DEFINITIONS Page 2
III. LICENSE Page 3
IV. CONSIDERATION, PAYMENTS AND REPORTS Page 4
V. INFRINGEMENT BY THIRD PARTIES Page 6
VI. INFRINGEMENT NOTICE Page 6
VII. INDEMNIFICATION Page 6
VIII. USE OF BOARD AND COMPONENT'S NAME Page 7
IX. CONFIDENTIAL INFORMATION Page 7
X. ASSIGNMENT Page 8
XI. TERMS AND TERMINATION Page 8
XII. WARRANTY: SUPERIOR-RIGHTS Page 9
XIII. GENERAL Page 9
SIGNATURES Page 11
<PAGE>
EXHIBIT B
RECITALS
A. BOARD owns certain PATENT RIGHTS related to LICENSED SUBJECT MATTER, which
were developed at MDA, a component institution of SYSTEM.
B. BOARD desires to have the LICENSED SUBJECT MATTER used for the benefit of
LICENSEE, BOARD, SYSTEM, MDA, the inventor, and the public as outlined in
the Intellectual Property Policy promulgated by the BOARD.
C. LICENSEE wishes to obtain a license from BOARD to practice LICENSED
SUBJECT MATTER.
NOW, THEREFORE, in consideration of the mutual covenants and premises herein
contained, the parties hereto agree as follows:
I. EFFECTIVE DATE
1.1 Subject to approval by BOARD, this AGREEMENT shall be effective as of the
date written herein above ("EFFECTIVE DATE").
II. DEFINITIONS
As used in this AGREEMENT, the following terms shall have the meanings
indicated:
2.1 ABELCET(R)product shall mean the TLC product as approved and marketed in
the United States under NDA 50-724 or in any other territory under a
regulatory filing based on the product information in NDA 50-724.
2.2 AFFILIATE shall mean any business entity more than fifty percent (50%)
owned by LICENSEE, any business entity which owns more than fifty percent
(50%) of LICENSEE, or any business entity that is more than fifty percent
(50%) owned by a business entity that owns more than fifty percent (50%)
of LICENSEE.
2.3 LICENSED PRODUCTS shall mean ABELCET(R) or any product or service
comprising LICENSED SUBJECT MATTER SOLD by LICENSEE that is made, used, or
sold in the LICENSED TERRITORY pursuant to this AGREEMENT.
2.4 LICENSED SUBJECT MATTER shall mean inventions and discoveries defined
herein as PATENT RIGHTS.
2.5 LICENSED TERRITORY shall mean the United States of America.
2.6 NET SALES shall mean
<PAGE>
2.6 PATENT RIGHTS shall only mean any and all of BOARD'S rights in the
inventions claimed in the '167 patent, and all divisionals, continuations,
continuations-in-part, reissues, reexaminations or extensions thereof or
of the patent application(s) from which the '167 patent issued or an
application which claims priority from any patent application(s)which gave
rise to the '167 patent.
2.7 SALE or SOLD shall mean the transfer or disposition of a LICENSED PRODUCT
for value to a party other than LICENSEE, LICENSEE'S AFFILIATE or
sublicensee.
2.8 '167 patent shall mean U. S. Pat. No. 4,663,167 issued May 5, 1987.
III. LICENSE
3.1 BOARD, through MDA, hereby grants to LICENSEE a royalty-bearing, exclusive
license under LICENSED SUBJECT MATTER to manufacture, have manufactured,
use, offer for sale, and/or sell LICENSED PRODUCTS within LICENSED
TERRITORY. This grant shall be subject to Paragraph 12.2 and 12.3
hereinbelow, the payment by LICENSEE to BOARD of all consideration as
provided in Paragraph 4.1 of this AGREEMENT, and shall be further subject
to rights retained by BOARD and MDA to:
(a) Publish the general scientific findings from MDA's research
related to LICENSED SUBJECT MATTER; and
(b) Subject to the provisions of ARTICLE IX herein below, use any
information contained in LICENSED SUBJECT MATTER for
educationally-related research, teaching, patient care, and
other purposes.
3.2 LICENSEE shall have the right to extend the license granted herein
to any AFFILIATE provided that such AFFILIATE consents to be bound
by all of the terms and conditions of this AGREEMENT.
3.3 Subject to the Paragraph 3.4 herein below, LICENSEE shall have the
right to grant sublicenses under LICENSED SUBJECT MATTER consistent
with the terms of this AGREEMENT provided that LICENSEE shall be
responsible for its sublicensees relative to this AGREEMENT, and for
diligently collecting all amounts due LICENSEE from sublicensees. In
the event a sublicensee pursuant hereto becomes bankrupt, insolvent or
is placed in the hands of a receiver or trustee, LICENSEE, to the
extent allowed under applicable law and in a timely manner, agrees to
use its best reasonable efforts to collect any and all consideration
owed to LICENSEE and to have the sublicense agreement confirmed or
rejected by a court of proper jurisdiction.
<PAGE>
3.4 LICENSEE agrees to deliver to MDA a true and correct copy of each
sublicense granted by LICENSEE, and any modification or termination
thereof, within thirty (30) days after execution, modification, or
termination.
3.5 Upon termination of this AGREEMENT, BOARD and MDA agree to accept as
successors to LICENSEE, existing sublicensees in good standing at the
date of termination provided that such sublicensees consent in writing
to be bound by all of the terms and conditions of this AGREEMENT.
3.6 BOARD, through MDA, hereby grants TLC and TLC's AFFILIATES a covenant
not to sue for patent infringement based upon any currently issued
patent, pending application or a patent issued on an application
claiming priority from an application pending on July 1, 1997, owned by
BOARD as a result of their manufacture, use, offer to sell, or sale of
TLC's ABELCET(R) product. Unless by mutual written agreement between
BOARD, MDA and LICENSEE, this covenant not to sue shall automatically
terminate if this Agreement is terminated prior to expiration of the
full term of this Agreement as set forth in Article 11.1 hereinbelow.
IV. CONSIDERATION, PAYMENTS AND REPORTS
4.1 In consideration of rights granted by BOARD to LICENSEE under this
AGREEMENT, and as full and complete satisfaction of any claims the
BOARD or MDA brought or could have brought for sales of ABELCET(R),
LICENSEE agrees to pay MDA the following:
(a) Non-refundable initial royalty composed of the following:
(1) A payment of
, which shall not reduce the amount of any other
payment provided for in this ARTICLE IV, and which
shall be due and payable within thirty (30) days
after approval of this AGREEMENT by BOARD as invoiced
by MDA;
(2) Issuance of common stock of The Liposome Company to
BOARD or its designee(s) with a value guaranteed by
LICENSEE equal to Two Hundred Fifty-Five Thousand &
00/100 Dollars ($255,000) (LICENSEE will pay interest
of eight percent (8%) per annum after July 31, 1997
until the stock becomes marketable.)
(3)
(4) Issuance to the BOARD or its designee(s) of warrants
to purchase one million (1,000,000) shares of common
stock of The Liposome Company at Fifteen & 00/100
Dollars ($15) per share exercisable from July 1, 1998
<PAGE>
through July 1, 2008, provided however, all such
warrants shall become callable by The Liposome
Company when the price of a common share of stock of
The Liposome Company reaches Twenty-Five & 00/100
Dollars ($25) per share and such share price remains
at or above Twenty-Five & 00/100 Dollars ($25) per
share for two (2) continuous weeks (such share price
being its closing price on the NASDAQ).
(b) A running royalty as set forth in Exhibit 1 hereto as a
percent of NET SALES of LICENSED PRODUCTS manufactured, used,
or sold in the LICENSED TERRITORY. Within forty-five (45) days
after March 31, June 30, September 30, and December 31 of each
year during the term of this AGREEMENT, LICENSEE shall deliver
to BOARD and MDA a true and accurate report, giving such
particulars of the business conducted by LICENSEE, LICENSEE'S
AFFILIATES and its sublicensees, if any exist, during the
preceding three (3) calendar months under this AGREEMENT as
necessary for BOARD to account for LICENSEE'S payments
hereunder. Such report shall include all pertinent data,
including, but not limited to: (a) the total quantities of
LICENSED PRODUCTS produced; (b) the total gross sales and
revenues from LICENSEE PRODUCTS, (c) the calculation of NET
SALES and royalties thereon; (d) the total royalties so
computed and due MDA; and (e) all other amounts due MDA
herein. Simultaneously with the delivery of each such report,
LICENSEE shall pay to MDA the amount, if any, due for the
period of such report. If no payments are due, it shall be so
reported.
4.2
4.3 During the Term of this AGREEMENT and for one (1) year thereafter,
LICENSEE shall keep complete and accurate records of its and its
sublicensees' gross sales and NET SALES of LICENSED PRODUCTS to enable
the royalties payable hereunder to be determined. LICENSEE shall permit
MDA or its representatives, at MDA's expense, to periodically examine
its books, ledgers, and records during regular business hours for the
purpose of and to the extent necessary to verify any report required
under this AGREEMENT. In the event that the amounts due to MDA are
determined to have been underpaid in an amount equal to or greater than
five percent (5%) of the total amount due during the period of time so
examined, LICENSEE shall pay the cost of such examination, and accrued
interest at the highest allowable rate.
4.4 All amounts payable hereunder by LICENSEE shall be payable in United
States funds without deductions for taxes, assessments, fees, or
charges of any kind. Checks shall be made payable to The University of
Texas M. D. Anderson Cancer Center and mailed by U.S. Mail to Box
297402, Houston, Texas 77297 Attention: Manager, Sponsored Programs.
<PAGE>
V. INFRINGEMENT BY THIRD PARTIES
5.1 LICENSEE shall have the right to enforce at its expense any patent
exclusively licensed hereunder against infringement by third parties
and shall be entitled to retain recovery from such enforcement.
LICENSEE shall pay MDA a royalty on any monetary recovery to the extent
that such monetary recovery by LICENSEE is held to be damages or a
reasonable royalty in lieu thereof. In the event that LICENSEE does not
file suit against a substantial infringer of such patents within six
(6) months of knowledge thereof, then BOARD and MDA shall have the
right at their sole discretion to enforce any patent licensed hereunder
on behalf of itself and LICENSEE, with MDA retaining all recoveries
from such enforcement.
VI. INFRINGEMENT NOTICE
6.1 LICENSEE or LICENSEE'S AFFILIATES shall inform BOARD and MDA, in
writing within thirty (30) days, of becoming aware of any suspected
infringement (actual or threatened) in the LICENSED TERRITORY of any
claim in the PATENT RIGHTS by a third party, and, with respect to such
activities as are suspected, LICENSEE or LICENSEE'S AFFILIATES shall
set forth the facts and details of such suspected infringement in
reasonable detail.
VII. INDEMNIFICATION
7.1 LICENSEE shall hold harmless and indemnify BOARD, SYSTEM, MDA, its
Regents, officers, employees, students, and agents from and against any
claims, demand, or causes of action whatsoever, costs of suit and
reasonable attorney's fees including without limitation those costs
arising on account of any injury or death of persons or damage to
property caused by, or arising out of, or resulting from, the exercise
or practice of the license granted hereunder by LICENSEE or its
officers, employees, agents or representatives.
VIII. USE OF BOARD AND COMPONENT'S NAME
8.1 LICENSEE shall not use the name of (or the name of any employee of)
MDA, SYSTEM or BOARD without the advance, express written consent of
BOARD secured through:
The University of Texas
M. D. Anderson Cancer Center
Office of Public Affairs
1515 Holcombe Boulevard
Box 229
Houston, Texas 77030
ATTENTION: Stephen C. Stuyck
<PAGE>
IX. CONFIDENTIAL INFORMATION
9.1 Except for a press release to be mutually agreed upon by the parties,
LICENSEE, BOARD AND MDA shall keep the terms and conditions of this
Agreement in strict confidence and shall not, without first securing
the written consent of the other party, disclose the terms or
conditions of the Agreement to any other person or entity except (a)
MDA may fully disclose the terms and conditions of this Agreement to
the named inventors of the '167 Patent provided that, prior to such
disclosure the inventors agree to keep such information in strict
confidence and not disclose such terms or conditions to any other
person or entity; (b) as may be required by law, government
regulations, the rules of the Nasdaq National Market requirements and
Generally Accepted Accounting Principles; (c) any of the parties may
disclose this Agreement to a court for the purpose of securing
compliance therewith; or (d) these restrictions shall not apply to any
information which was publicly available as of August 1, 1997.
9.2 BOARD, MDA and LICENSEE each agree that all information contained in
documents marked "confidential" which are forwarded to one by the other
shall be received in strict confidence, used only for the purposes of
this AGREEMENT, and not disclosed by the recipient party (except to the
named inventors of the '167 patent under conditions of confidentiality,
or as required by law or court order), its agents or employees without
the prior written consent of the other party, unless such information
(a) was in the public domain at the time of disclosure, (b) later
became part of the public domain through no act or omission of the
recipient party, its employees, agents, successors or assigns, (c) was
lawfully disclosed to the recipient party by a third party having the
right to disclose it, (d) was already known by the recipient party at
the time of disclosure, (e) was independently developed or (f) is
required to be submitted to a government agency pursuant to any
preexisting obligation.
9.3 BOARD'S, MDA'S and LICENSEE'S obligation of confidence hereunder shall
be fulfilled by using the same degree of care with the other party's
confidential information as it uses to protect its own confidential
information. This obligation shall exist while this AGREEMENT is in
force and for a period of three (3) years thereafter.
<PAGE>
X. ASSIGNMENT
10.1 Except in connection with the sale of substantially all of
LICENSEE's assets to a third party this AGREEMENT may not be
assigned by LICENSEE without the prior written consent of MDA.
XI. TERMS AND TERMINATION
11.1 Subject to Articles 11.2, and 11.3 hereinbelow, the term of this
AGREEMENT shall extend from the Effective Date set forth hereinabove as
long as PATENT RIGHTS have not expired, been extinguished by failure to
pay fees or by final adjudication of invalidity.
11.2 Subject to any rights herein which survive termination, this AGREEMENT
will earlier terminate in its entirety:
(a) automatically if LICENSEE shall become bankrupt or insolvent
and/or if the business of LICENSEE shall be placed in the
hands of a receiver or trustee, whether by voluntary act of
LICENSEE or otherwise; or
(b) (i) upon thirty (30) days written notice by MDA if LICENSEE
shall breach or default on the payment obligations of ARTICLE
IV, or use of name obligations of ARTICLE VIII; or (ii) upon
ninety (90) days written notice by MDA if LICENSEE shall
breach or default on any other obligation under this
AGREEMENT; provided, however, LICENSEE may avoid such
termination if before the end of such thirty (30) day period
if LICENSEE provides notice and accurate, written evidence
satisfactory to MDA that such breach has been cured and the
manner of such cure; or
(c) at any time by mutual written agreement between LICENSEE, MDA
and BOARD.
11.3 Upon termination of this AGREEMENT for any cause:
(a) nothing herein shall be construed to release either party of
any obligation matured prior to the effective date of such
termination.
(b) LICENSEE covenants and agrees to be bound by the provisions of
ARTICLES VII, VIII and IX of this AGREEMENT.
(c) LICENSEE may, after the effective date of such termination, or
upon expiration of PATENT RIGHTS, sell all LICENSED PRODUCTS
therefore that LICENSEE, LICENSEE'S AFFILIATES or sublicensees
may have on hand at the date of expiration or termination,
provided that LICENSEE pays the appropriate royalty thereon
and any other amounts due pursuant to ARTICLE IV of this
AGREEMENT.
<PAGE>
XII. WARRANTY: SUPERIOR-RIGHTS
12.1 Except for the rights, if any, of the Government of the United States
as set forth hereinbelow, BOARD represents and warrants its belief that
it is the owner of the entire right, title, and interest in and to
LICENSED SUBJECT MATTER, and that it has the sole right to grant
licenses thereunder, and that it has not knowingly granted licenses
thereunder to any other entity that would restrict rights granted
hereunder except as stated herein.
12.2 LICENSEE understands that the LICENSED SUBJECT MATTER may have been
developed under a funding agreement with the Government of the United
States of America and, if so, that the Government may have certain
rights relative thereto. This AGREEMENT is explicitly made subject to
the Government's rights under any such agreement and any applicable law
or regulation, including P.L. 96-517 as amended by P.L. 98-620. To the
extent that there is a conflict between any such agreement, applicable
law or regulation and this AGREEMENT, the terms of such Government
agreement, applicable law or regulation shall prevail.
12.3 LICENSEE understands and agrees that BOARD, by this AGREEMENT, makes no
representation as to the operability or fitness for any use, safety,
efficacy, approvablity by regulatory authorities, time and cost of
development, patentability, and/or breadth of the LICENSED SUBJECT
MATTER. Also LICENSEE understands and agrees that BOARD, by this
AGREEMENT, makes no representation as to whether there are any patents
now held, or which will be held, by others or by BOARD on the LICENSED
PRODUCTS, nor does BOARD make any representation that the inventions
contained in PATENT RIGHTS do not infringe any other patents now held
or that will be held by others or by BOARD.
XIII. GENERAL
13.1 This AGREEMENT constitutes the entire and only AGREEMENT between the
parties for LICENSED SUBJECT MATTER and all other prior negotiations,
representations, agreements and understandings are superseded hereby.
No agreements altering or supplementing the terms hereof may be made
except by means of a written document signed by the duly authorized
representatives of the parties.
<PAGE>
13.2 Any notice required by this AGREEMENT shall be given by prepaid,
first class, certified mail, return receipt requested, and addressed
in the case of BOARD to:
BOARD OF REGENTS
The University of Texas System
201 West Seventh Street
Austin, Texas 78701
ATTENTION: System Intellectual
Property Office
with copy to: The University of Texas
M.D. Anderson Cancer Center
Office of Technology Development
1020 Holcombe Boulevard, Suite 1405
Houston, Texas 77030
ATTENTION: William J. Doty
or in the case of LICENSEE to: The Liposome Company
One Research Way
Princeton Forrestal Center
Princeton, NJ 08540
ATTENTION: Office of General Counsel
or such other address as may be given from time to time under the terms
of this notice provision.
13.3 LICENSEE covenants and agrees to comply with all applicable federal,
state and local laws and regulations in connection with its activities
pursuant to this AGREEMENT.
13.4 This AGREEMENT shall be construed and enforced in accordance with the
laws of the United States of America and of the State of Texas.
13.5 Failure of BOARD to enforce a right under this AGREEMENT shall not act
as a waiver of that right or the ability to later assert that right
relative to the particular situation involved.
13.6 Headings included herein are for convenience only and shall not be used
to construe this AGREEMENT.
13.7 If any provision of this AGREEMENT shall be found by a court to be
void, invalid or unenforceable, the same shall be reformed to comply
with applicable law or stricken if not so conformable, so as not to
affect the validity or enforceability of this AGREEMENT.
<PAGE>
IN WITNESS WHEREOF, parties hereto have caused their duly authorized
representatives to execute this AGREEMENT.
THE UNIVERSITY OF TEXAS BOARD OF REGENTS OF THE
M.D. ANDERSON CANCER CENTER UNIVERSITY OF TEXAS SYSTEM
By ______________________________ By_________________________________
Michael J. Best Ray Farabee
Chief Financial Officer Vice Chancellor and
General Counsel
APPROVED AS TO CONTENT: APPROVED AS TO FORM:
By_______________________________ By_________________________________
William J. Doty Georgia Harper, Esq.
Director, Technology Development Office of General Counsel
THE LIPOSOME COMPANY, INC.
By________________________________
Name______________________________
Title_____________________________
<PAGE>
EXHIBIT 1
ROYALTY SCHEDULE
<PAGE>
Exhibit 5.1
September 26, 1997
The Liposome Company, Inc.
One Research Way
Princeton Forrestal Center
Princeton, New Jersey 08540
Re: The Liposome Company, Inc.--Registration Statement
on Form S-3 (the "Registration Statement")
Dear Ladies and Gentlemen:
We have acted as counsel to The Liposome Company, Inc. a
Delaware corporation (the "Company"), in connection with proposed issue and sale
pursuant to the Registration Statement of shares of common stock, par value $.01
per share, of the Company having an aggregate market value on the date of
effectiveness of the Registration Statement of $255,000 (the "Shares").
We have examined such corporate records, certificates and
other documents as we have considered necessary for the purposes hereof. In such
examination, we have assumed the genuineness of all signatures, the authenticity
of all documents submitted to us as originals, the conformity to the original
documents of all documents submitted to us as copies and the authenticity of the
originals of such latter documents. As to any facts material to our opinion, we
have, when relevant facts were not independently established, relied upon the
aforesaid records, certificates and documents.
Based on the foregoing, we are of the opinion that, upon
issuance and delivery in accordance with the Settlement Agreement and Patent
License Agreement filed as Exhibit 4.1 to the Registration Statement, the Shares
will be duly authorized, validly issued, fully paid and nonassessable.
Our opinion set forth herein is limited in all cases to
matters arising under the General Corporation Law of the State of Delaware. We
consent to the use of this opinion as an Exhibit to the Registration Statement
and to the references to our firm under the heading "Legal Matters" in the
prospectus that is a part of the Registration Statement. In giving such consent,
we do not thereby concede that we are within the category of persons whose
consent is required under Section 7 of the Securities Act of 1933, as amended,
or the rules and regulations of the Commission thereunder.
Very truly yours,
/s/ DEWEY BALLANTINE
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
the Liposome Company, Inc. on Form S-3 of our report dated February 3, 1997, on
our audit of the consolidated financial statements and financial statement
schedules of The Liposome Company, as of December 29, 1996 and December 31,
1995, and for the years ended December 29, 1996 and December 31, 1995 and 1994,
which report is included in the company's annual report on Form 10-K for the
year ended December 29, 1996. We also consent to the references to our firm
under the caption "Experts".
Coopers & Lybrand L.L.P.
Princeton, New Jersey
September 26, 1997
