AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 26, 1997.
FILE NO. 333-36925
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
______________________
APHTON CORPORATION
(Exact name of registrant as specified in its charter)
CALIFORNIA 95-3640931
(State or other (I.R.S.
jurisdiction EMPLOYER
of incorporation IDENTIFICATION
or organization) NUMBER)
P.O. Box 1049
Woodland, California 95776
(530) 666-5226
(Address, including zip code, and
telephone number,
including area code, of registrant's
principal executive offices)
___________________________
PHILIP C. GEVAS
President and Chief Executive Officer
APHTON CORPORATION
P.O. Box 1049
Woodland, California 95776
(530) 666-5226
<PAGE>
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
TIMOTHY B. GOODELL, ESQ.
WHITE & CASE
1155 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
___________________________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please check the
following box. ( )
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. (X)
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. ( )
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. ( )
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. ( )
<TABLE>
CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF SECURITIES AMOUNT TO AGGREGATE PRICE AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED BE REGISTERED PER SHARE<F1> PRICE)<F2> FEE
<S> <C> <C> <C> <C>
Common Stock, no par value 715,000 13.56<F2> $9,697,188 $2,939
Common Stock, no par value, issuable
upon exercise of the Warrant 225,000 $17.50<F3> $3,937,500 $1,193
Total 940,000 $4,132
<FN>
<F1> Estimated solely for the purpose of calculating the Registration Fee in accordance with Rule 457 of the Securities Act of
1933.
<F2> Based on average of the high and low prices of the Common Stock reported on NASDAQ National Market System on September 30,
1997.
<F3> Based on the exercise price of the Warrants pursuant to which such shares may be issued.
</TABLE>
______________________
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.
<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 NOVEMBER 26, 1997
940,000 SHARES OF COMMON STOCK, NO PAR VALUE
APHTON CORPORATION
This Prospectus relates to offers and sales, if any, of up to 715,000
shares (the "Resale Shares") of common stock, no par value (the "Common
Stock"), of Aphton Corporation (the "Company" or "Aphton"), which may be
offered or sold from time to time by the selling stockholder named herein (the
"Selling Stockholder"). This Prospectus also relates to the issuance after
June 16, 1998 of up to 225,000 shares of Common Stock (the "Warrant Shares"
and together with the Resale Shares, the "Shares") upon exercise by the
Selling Stockholder of that certain Warrant, dated June 16, 1997, of the
Company (the "Warrant") issued to the Selling Stockholder. The Company issued
the Resale Shares and the Warrant to the Selling Stockholder through a private
placement of such securities completed on June 16, 1997.
The Company will receive no part of the proceeds of any sales of Resale
Shares by the selling Stockholder, but will receive the exercise price for
each Warrant Share issued pursuant to any exercise of the Warrant. The
exercise price is $17.50 per share, subject to adjustment in accordance with
the terms of the Warrant, and the maximum aggregate exercise price is
$3,937,500 (subject to adjustment). The Company has agreed to pay the costs
and expenses incurred in connection with the registration of the Shares, but
the Selling Stockholder will be responsible for all selling commissions,
transfer taxes and related charges in connection with offers and sales, if
any, by it of Shares. See "Plan of Distribution."
__________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
__________________
SEE "RISK FACTORS" COMMENCING ON PAGE 8 FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT
IN THE COMMON STOCK.
The Selling Stockholder may sell all or a portion of the Shares in
transactions (which may involve one or more block transactions) on the
National Association of Securities Dealers Inc. Automated Quotation System
("NASDAQ") National Market System, in negotiated transactions or in the over-
the-counter market at then-prevailing market prices, at prices related to such
prices or at negotiated prices. The Selling Stockholder may effect some or
all of such transactions by selling to or through one or more broker-dealers,
and such broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the Selling Stockholder. The Selling Stock-
holder and any broker-dealers that participate in the distribution may under
certain circumstances be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"), and any discounts,
concessions or commissions received by such broker-dealers and any profits
realized on the resale of Resale Shares by them may be deemed to be
<PAGE>
underwriting discounts and commissions under the Securities Act. The Company
has agreed to indemnify the Selling Stockholder against certain liabilities,
including, without limitation, certain liabilities under the Securities Act.
To the extent required, the specified Resale Shares to be sold, the public
offering price, the names of any such broker-dealers, and any applicable
commission or discount with respect to any particular offer will be set forth
in a prospectus supplement. See "Plan of Distribution."
The Common Stock of the Company is traded on the NASDAQ National Market
System under the symbol "APHT". On November 23, 1997, the last reported sales
price of the Company's Common Stock on the NASDAQ National Market System was
$11.125 per share.
THE DATE OF THIS PROSPECTUS IS NOVEMBER __, 1997.
<PAGE>
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY APHTON. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF APHTON SINCE
THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH
JURISDICTION.
__________________
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 and information statements and
other information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy and information 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 1204, Washington, D.C. 20549, and at the following Regional Offices of
the Commission: New York Regional Office, 7 World Trade Center, 13th Floor,
New York, New York 10048, and Chicago Regional Office, Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
material may be obtained from the Public Reference Section of the Commission
at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. In addition, the Commission maintains a web site on the
internet at http://www.sec.gov, that contains the Company's reports, proxy
statements and other information. Such material can also be inspected at the
offices of the Nasdaq National Market, 1735 K Street, N.W., Washington, D.C.
20006.
The Company has filed with the Commission a Registration Statement on
Form S-3 (the "Registration Statement"), with respect to the Shares, of which
this Prospectus forms a part. This Prospectus does not contain all the
information set forth in the Registration Statement and the exhibits and
schedules thereto, certain parts of which are omitted in accordance with the
rules and regulations of the Commission. Statements contained in this
Prospectus as to the contents of any contract or other document are not
necessarily complete and 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 is
qualified in its entirety by such reference. For further information regard-
ing the Company and the Shares, reference is made to such Registration
Statement and the exhibits and schedules thereto. The Registration Statement
and the exhibits and schedules thereto may be inspected without charge at the
office of the Commission at 450 Fifth Street, N.W., Room 1204, Washington,
D.C. 20549, and copies may be obtained from the Commission at prescribed
rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference and made a part hereof, except as superseded
or modified herein: the Company's Annual Report on Form 10-K for the year
ended April 30, 1997 and the Company's Form 10-Q dated July 31, 1997.
All documents filed by the Company with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the offering of the Shares covered
by this Prospectus shall be deemed to be incorporated by reference into this
<PAGE>
Prospectus and to be a part hereof from the date of filing of such documents.
Any statement contained in any document incorporated or deemed to be
incorporated by reference in this Prospectus shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement con-
tained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference in this Prospectus modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as modified or superseded, to constitute a part of this
Prospectus.
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 DOCUMENTS THAT HAVE BEEN
OR MAY BE INCORPORATED BY REFERENCE IN THIS PROSPECTUS (OTHER THAN EXHIBITS TO
SUCH DOCUMENTS WHICH ARE NOT SPECIFICALLY INCORPORATED BY REFERENCE INTO SUCH
DOCUMENTS). SUCH REQUESTS SHOULD BE DIRECTED TO THE COMPANY: APHTON
CORPORATION, P.O. BOX 1049, WOODLAND, CA 95776-1049 (TELEPHONE: (530) 666-
5226).
PROJECTIONS AND FORWARD-LOOKING STATEMENTS
Certain statements in this Prospectus constitute "forward-looking
statements" within the meaning of the Securities Act. Such forward-looking
statements are subject to risks and uncertainties that could cause actual
results to differ materially from those stated in the Prospectus. Such risks
and uncertainties include, among others, those described under the heading
"Risk Factors." Forward-looking statements are made based upon management's
expectations, assumptions, judgments and beliefs concerning future
developments and global economic, industry and financial market conditions,
and their potential effect upon the Company.
<PAGE>
THE COMPANY
Aphton Corporation is a biopharmaceutical company developing products
using its innovative vaccine-like technology for neutralizing, or "blocking,"
hormones. The precisely targeted hormones are those that participate in
diseases, both malignant and non-malignant, in (a) the gastrointestinal system
and (b) the reproductive system. These products, called immunogens, treat the
following diseases: (a) Gastroesophageal Reflux Disease (GERD, or severe
heartburn), ulcers and colorectal, stomach, liver and pancreatic cancers; (b)
endometriosis and prostate, breast, endometrial and ovarian cancers.
Aphton's approach to the treatment of major diseases is to employ (anti)
"hormone therapy." Aphton's hormone therapy involves neutralizing, or
blocking, hormones which play a critical role in diseases of the
gastrointestinal and reproduction systems. Aphton has selected the strategy
of hormone therapy because it has proved, over many years, to be efficacious
in the treatment of major diseases, both malignant and non-malignant; in
short, because this risk-averse strategy has been proven to be effective in
humans. Well-documented examples of such efficacy in humans are: blocking
gastrin (Proglumide) and histamine (Zantac, Tagamet), which in turn is
stimulated by gastrin, in order to reduce stomach acid to treat ulcerations of
the esophagus and to heal or prevent peptic ulcers; blocking estrogen
(Tamoxifen) for breast cancer therapy and blocking testosterone for prostate
cancer therapy.
Aphton has completed both safety and dose-ranging Phase I/II clinical
trials with its immunotherapeutic product, Gastrimmune(TM) in terminal cancer
patients. Aphton has demonstrated, during the dose-ranging phase, that
Gastrimmune(TM) induces large antibody responses in terminally ill patients
whose colon cancer has metastasized to the liver. Aphton plans to conduct
clinical trials and apply for approval for all of the above gastrointestinal
system cancers and stomach cancer has been selected as the first indication
for which regulatory approval will be sought. There is no current effective
therapy for stomach cancer.
In February, 1997 Aphton signed a strategic alliance for all human
application for Gastrimmune(TM) with Pasteur Merieux Connaught ("PMC") (Rhone-
Poulenc Group), the world's largest vaccine manufacturer and marketer. Under
the terms of the twenty-year agreement, Aphton will be responsible for product
development, clinical trials and regulatory agency approvals, and PMC will be
responsible for promotion, advertising, marketing, distribution and sales of
Gastrimmune(TM) in the United States, Canada, Europe (including the C.I.S.
countries) and Mexico. In addition, Aphton and PMC will enter into agreements
providing for the supply of Gastrimmune(TM) to PMC and the supply of certain
components of Gastrimmune(TM); and other Aphton products to Aphton. PMC will
fund the costs associated with product introduction, promotion, advertising
and marketing throughout the territory covered by the agreement. Under the
terms of the agreement, in addition to upfront consideration, Aphton will
receive the majority of the profits from sales of Gastrimmune(TM), with the
balance of profits to be retained by PMC. Discussions are continuing between
PMC and Aphton for marketing rights to Gastrimmune(TM) in Japan and other
Asian markets.
Aphton has also entered into a strategic alliance with Schering-Plough
Animal Health for the veterinary applications of Aphton's Gastrimmune(TM).
Equine ulcers will be the first market targeted under this agreement. There
are hundreds of thousands of highly-valued race horses in the U.S. and the
scientific literature indicates that a very high percentage of them suffer
from (stress) ulcers, particularly during training.
Aphton's immunogen, Gonadimmune(TM), for use in breast and prostate
cancer therapy, among other reproductive system diseases, has completed the
toxicology testing (safety) required for human use, having previously
completed extensive and successful preclinical animal testing (safety and
<PAGE>
efficacy). Aphton plans to initiate a Phase I/II clinical trial for both
breast cancer and prostate cancer patients with this product.
Aphton has exclusive manufacturing, distribution and sales rights for an
immunocontraceptive product, also utilizing vaccine-like technology. Aphton
is collaborating with the World Health Organization (WHO) on the clinical
development of the product. This product will be sold, when approved,
worldwide in both the developed and the developing countries and will confer
protective immunity and prevent pregnancy.
Aphton's strengths include its innovative technology and products which
specifically neutralize, or block, hormones in a novel manner, providing
significant benefits and advantages over conventional drugs (blockers), some
of which have severe disadvantages. Aphton's products, of course, must
proceed successfully through the clinical trials and regulatory process in the
same manner as many newly discovered drugs whose mode of action, in contrast,
have not been demonstrated previously to be clinically effective in humans.
However, Aphton believes that employing a strategy of therapeutic approach
that has been proven effective in humans significantly reduces risk and
enhances the likelihood of: clinical trials success; obtaining regulatory
agency approval; achieving commercial success in the market place; and,
benefiting large numbers of patients suffering from these serious diseases.
In view of the foregoing, Aphton believes that its crucial task, in
addition to proper planning and execution during clinical trials, is to
demonstrate in human trials that each product induces the patient's immune
system to neutralize, or block, its targeted hormone. Aphton believes that
therapeutic efficacy should then follow and be demonstrated in the pivotal
Phase III trials, given the history of success and efficacy for hormone
therapy.
RISK FACTORS
In addition to the other information contained in this Prospectus, the
following risk factors should be carefully considered.
EARLY STAGE OF PRODUCT DEVELOPMENT. All of the Company's potential
products are in research and development, and no revenues have been generated
from product sales. The Company's most advanced potential product, an
immunogen for the treatment of colorectal cancer, has completed the dose-
ranging clinical trial phase in the United Kingdom, and results obtained in
preclinical studies are not necessarily indicative of results that will be
obtained in the clinical trial. The Company's other current potential
products, for the treatment of stomach cancer, pancreatic cancer, GERD,
chronic peptic ulcers, breast cancer, endometriosis and prostate cancer are at
the same (stomach and pancreatic cancer) or even earlier phases of
development. All of the Company's potential products will require significant
additional research and development and expensive, extensive, time consuming
clinical testing prior to commercial use. Accordingly, the Company does not
expect to derive revenues from these products for a number of years, if at
all. There can be no assurance that these potential products will be
successfully developed into immunogens that can be administered to humans or
that any such immunogen will prove safe and effective in clinical trials or
cost-effective to manufacture and administer. In addition, there can be no
assurance that the Company will not encounter problems in clinical trials that
will cause the Company to delay or suspend a clinical trial, that such of the
Company's products as are currently under development will be completed
successfully within any specified time period, if at all, that such testing
will show such products to be safe or effective or that any of the Company's
products will receive required regulatory approval. Further, if any of the
Company's products do receive regulatory approval, there can be no assurance
that the Company will be capable of producing such products in commercial
quantities at reasonable costs or that such products will be accepted by the
marketplace.
<PAGE>
ABSENCE OF PROFITABLE OPERATIONS; NO DIVIDENDS. The Company has
experienced significant operating losses since its inception in 1981 and
expects to continue to incur substantial operating losses for at least the
next several years. Losses are expected to increase as a result of the
expenses associated with clinical testing and research and development. As of
April 30, 1997, the Company had an accumulated deficit of approximately $25
million. The Company's ability to achieve profitability depends upon its
ability, alone or through relationships with third parties, to successfully
develop its technology and products, to obtain required regulatory approvals
and to manufacture, market and sell such products. There can be no assurance
that the Company will ever have profitable operations or that profitability,
if achieved, can be sustained on an ongoing basis.
The Company has never paid any dividends and does not expect to pay cash
dividends in the foreseeable future.
CAPITAL REQUIREMENTS; UNCERTAINTY OF ADDITIONAL FINANCING. The
development of the Company's technology and products will require a commitment
of substantial funds to conduct the costly and time-consuming research and
clinical trials necessary for such development. The Company's future capital
requirements will depend on many other factors including continued scientific
progress in the research and development (clinical trials) of the Company's
products, the ability of the Company to collaborate with others for the manu-
facture, marketing and sale of its products, the cost of regulatory approvals,
the cost of establishing, maintaining and enforcing intellectual property
rights, competing technological and market developments and changes in
Aphton's existing research relationships. The Company's net rate of
expenditure during the two year period ended April 30, 1997 averaged approxi-
mately $431,000 per month. The rate of expenditure, however, is anticipated
to increase substantially as the Company proceeds through, its Phase III
clinical trials for its Gastrimmune(TM) products. Such rate of expenditure
may increase further if the Company pursues preclinical studies or clinical
trials for its other products at a faster rate than currently anticipated.
The Company believes that its current capital resources, which are composed
primarily of cash and cash equivalents, should be sufficient, barring
unforeseen circumstances, to fund its operating expenses and capital
requirements as currently planned into the year 2000.
The Company may seek additional financing through collaborative
arrangements or through public or private equity or debt financings. There
can be no assurance that additional financing will be available on acceptable
terms or at all. If additional funds are raised by issuing equity securities,
dilution to the interests of shareholders may result. If adequate funds are
not available, the Company may be required to delay, reduce the scope of or
eliminate one or more of its research or development programs or to obtain
funds through arrangements with collaborative partners or others that may
require the Company to relinquish rights to certain of its technologies,
potential products or products that the Company would otherwise seek to
develop or commercialize itself.
DIFFERENT APPROACH TO DISEASE TREATMENT; NO PROOF OF EFFICACY OR MARKET
ACCEPTANCE. The Company believes that its products under development are
based on an approach to disease therapy and prevention which previously has
not been utilized successfully by any pharmaceutical or biotechnology company.
There can be no assurance that the Company's product development efforts will
be successfully completed, that the Company's products will be proven to be
safe and effective, that approval by the U.S. Food and Drug Administration
("FDA") or any other applicable regulatory agency will be obtained or that
medical centers, hospitals, physicians or patients will accept the Company's
products as readily as current drug therapies or other forms of treatment.
Undesirable and unintended side effects or unfavorable publicity concerning
any of the Company's products or other products incorporating a similar
approach could limit or curtail commercial use of the Company's products and
could have an adverse effect on the Company's ability to obtain regulatory
approvals and to achieve physician and patient acceptance.
<PAGE>
GOVERNMENT REGULATION AND PRODUCT APPROVALS. The research, preclinical
development, clinical trials, manufacturing and marketing of Aphton's products
are subject to extensive regulation by numerous governmental authorities in
the United States and other countries. Clinical trials and manufacturing and
marketing of products will be subject to rigorous testing and approval
processes by the FDA and equivalent foreign regulatory authorities, including
the Medicines Control Agency ("MCA") in the United Kingdom. The process of
obtaining FDA and other required regulatory approvals is lengthy and
expensive. The time required for FDA approval is uncertain, and typically
takes a number of years, depending on the type, complexity and novelty of the
product. Since certain of the Company's planned products involve the
application of new technologies and are based on a new therapeutic approach,
regulatory approvals may be obtained more slowly than for products produced
using more conventional technologies. Additionally, delays or disapprovals
may be encountered based upon additional government regulation resulting from
future legislation or administrative action or changes in FDA or equivalent
foreign regulatory policy made during the period of product development and
regulatory review.
The Company plans to apply for MCA approval to commercialize its poten-
tial immunogen for the treatment of one or more of the gastrointestinal system
cancers and ulcerations previously described prior to applying for similar FDA
approval. Even if the Company obtains MCA approval, FDA approval would still
be required prior to marketing such a product in the United States. To date,
the Company has not filed any application with the FDA for any of its planned
products. There is no assurance as to if or when the Company will be able to
file an Investigational New Drug application ("IND") (a type of submission
used to ultimately obtain FDA approval to market a new drug) with the FDA or
as to if or when after such filing the FDA would permit the Company to proceed
with clinical trials in the United States. Clinical trials will seek safety
data as well as efficacy data and will require substantial time and signifi-
cant funding. There is no assurance that clinical trials in the United
Kingdom will be fully completed and no assurance that clinical trials will be
started or completed successfully in the United States or any other country
within any specified time period, if at all, with respect to any of the Com-
pany's products. Furthermore, the Company, the MCA or the FDA may suspend
clinical trials at any time if it is determined that the participants in such
trials are being exposed to unacceptable health risks. Aphton cannot assure
that approval for any products developed by the Company will be granted by
applicable regulatory agencies on a timely basis, if at all, or, if granted,
that such approval will cover all the clinical indications for which the
Company is seeking approval or will not contain significant limitations in the
form of warnings, precautions or contraindications with respect to conditions
of use. Any delay in obtaining, or failure to obtain, such approvals would
adversely affect the Company's ability to generate product revenue. Failure
to comply with the applicable regulatory requirements can, among other things,
result in fines, suspensions of regulatory approvals, product recalls,
operating restrictions and criminal prosecution. In addition, the marketing
and manufacturing of drugs and biological products are subject to continuing
FDA review, and later discovery of previously unknown problems with a product,
its manufacture or its marketing may result in the FDA requiring further
clinical research or restrictions on the product or the manufacturer,
including withdrawal of the product from the market.
TECHNOLOGICAL CHANGE; COMPETITION. The treatment of diseases such as
those to which the Company's products are directed is subject to rapid,
unpredictable and significant change. The Company's products under
development seek to address certain cancers and diseases currently addressed,
to some extent, by existing or evolving products and technologies of other
biotechnology and pharmaceutical companies. Competition from other
biotechnology companies, large pharmaceutical companies and universities and
other research institutions is intense and is expected to increase. Many of
these companies and institutions have substantially greater resources,
research and development staffs and facilities than the Company and have
substantially greater experience in obtaining regulatory approval, and in
manufacturing and marketing pharmaceutical products. In addition, other
<PAGE>
technologies may in the future be the basis of competitive products. There
can be no assurance that the Company's competitors will not succeed in
developing technologies and products that are more effective than those being
developed by the Company or that would render the Company's technology and
products obsolete or noncompetitive.
UNCERTAINTY OF PROTECTION OF PATENTS AND PROPRIETARY RIGHTS. The
Company's success will depend in large part on its ability to obtain patents,
both in the United States and in other countries, maintain its unpatented
trade secrets and operate without infringing on the proprietary rights of
others. The patent positions of biotechnology and pharmaceutical companies
can be highly uncertain and involve complex legal and factual questions, and
therefore the breadth and enforceability of claims allowed in patents obtained
by the Company cannot be predicted.
The Company holds issued patents and has pending patent applications and
patent applications in preparation. Aphton intends to file additional patent
applications, when appropriate, relating to its technologies, improvements to
its technologies and specific products it may develop. There can be no
assurance, however, that its pending applications or patent applications in
preparation or to be prepared will be issued as patents. Additionally, there
can be no assurance that any issued, pending or future patents, will not be
challenged, invalidated or circumvented, or that the rights granted will
provide proprietary protection or competitive advantages to the Company. If
any of the Company's patents are invalidated or held to be unenforceable, the
Company could lose the protection of rights believed by it to be valuable, and
its business could be materially and adversely affected. Additionally, the
existing patents, patents pending and patents that may subsequently be
obtained by the Company will not necessarily preclude competitors from
developing products that can be marketed in competition with products
developed by the Company and thus would substantially lessen the value of the
Company's proprietary rights.
The commercial success of the Company also will depend, in part, on
Aphton not infringing patents issued to others. There is no assurance that
the Company's products will not infringe on the patents or proprietary rights
of others. The Company may be required to obtain licenses to patents, patent
applications or other proprietary rights of others. The Company cannot assure
that any such licenses would be made available on terms acceptable to the
Company, if at all. If the Company does not obtain such licenses, it could
encounter delays in product introductions while it attempts to design around
such patents, or the development, manufacture or sale of products requiring
such licenses could be precluded. The Company could incur substantial costs,
including diversion of management time, in defending itself in litigation
brought against it on such patents or in litigation in which the Company
asserts its patents against another party, or in litigation brought by another
party asserting its patents against the Company. If competitors of the
Company prepare and file patent applications in the United States that claim
technology also claimed by the Company, the Company may have to participate in
interference proceedings declared by the U.S. Patent and Trademark Office to
determine priority of invention, which could result in substantial financial
costs to the Company and diversion of management attention, even if the
eventual outcome is favorable to the Company. The Company believes there will
continue to be significant litigation in the industry regarding patent and
other intellectual property rights.
The Company also relies on trade secrets to protect its technology,
especially where patent protection is not believed to be appropriate or
obtainable. Thus, Aphton protects its proprietary, technology and processes,
in part, by confidentiality agreements with its employees, consultants and
certain contractors. There can be no assurance that these agreements will not
be breached, that the Company would have adequate remedies for any breach, or
that the Company's trade secrets will not otherwise become known or be
independently discovered by competitors.
<PAGE>
DEPENDENCE ON OTHERS FOR MANUFACTURING AND MARKETING. The Company has no
manufacturing facilities for commercial production of its products under
development and has no experience in marketing, sales or distribution. The
Company intends to continue establishing arrangements with and rely on third
parties, including large pharmaceutical companies, to manufacture, market,
sell and distribute any product it develops. Although the Company believes
that parties to any future arrangements will have an economic incentive to
successfully perform their contractual responsibilities, the amount and timing
of resources to be dedicated to these activities will not be within the
Company's control. There can be no assurance that such parties will perform
their obligations as expected, that the Company will derive any revenues from
such arrangements or that the Company's reliance on others for manufacturing
products will not result in unforeseen problems with product supply. If the
Company should encounter delays or difficulties in its current relationships
or in seeking to establish relationships with third parties to produce,
package and distribute any product it develops, market introduction and
subsequent sales of such products would be adversely affected. Moreover,
contract manufacturers that the Company may use must adhere to current good
manufacturing practice ("GMP") regulations enforced by the FDA through its
facilities inspection program. If these facilities cannot pass a pre-approval
plant inspection, any FDA pre-market approval of the Company's potential
products would be adversely affected. Additionally, such manufacturers are
subject to continual review and periodic inspections by the FDA and discovery
of previously unknown problems with a manufacturer or facility may result in
FDA restrictions which could adversely affect the manufacture and marketing of
the Company's products.
DEPENDENCE ON AND NEED FOR KEY PERSONNEL. The Company is dependent upon
the services of its senior management, none of whom are subject to an
employment agreement with the Company. The Company has not insured itself
against the loss, due to death or disability, of any key personnel. The
Company believes, however, that the loss of the services of any key personnel
would not have a material adverse effect on the Company. Because of the
specialized nature of its business, the Company's success also depends upon
its ability to attract and retain highly qualified scientists and other
technical personnel. The Company faces intense competition for such persons
and there can be no assurance that the Company will be able to attract or
retain such individuals.
UNCERTAIN EFFECT OF HEALTH CARE REFORMS. The levels of revenues and
profitability of biotechnology and pharmaceutical companies, including the
Company, may be affected by the continuing efforts of governmental and third-
party payors to contain or reduce the costs of health care through various
means. For example, in certain foreign markets, pricing or profitability of
prescription pharmaceuticals is subject to government control. In the United
States, there have been, and the Company expects that there will continue to
be, a number of federal and state proposals to control health care costs. It
is uncertain what legislative proposals, if any, will be adopted or what
actions federal, state or third-party payors may take in response to any
health care reform proposals or legislation. The Company cannot predict the
effect health care reforms may have on its business, and no assurance can be
given that any such reforms will not have a material adverse effect on the
Company. Further, to the extent that such proposals or reforms have an
adverse effect on the business, financial condition and profitability of other
biotechnology or pharmaceutical companies that are prospective corporate
partners for certain of the Company's products, the Company's ability to
commercialize its products may be adversely affected.
THIRD PARTY REIMBURSEMENT. Successful commercialization of the Company's
products will depend in part on the availability of adequate reimbursement
from third-party health care payors, such as government and private health
insurers and other organizations for its products intended for human use.
Third-party payors are increasingly challenging the pricing of medical
products and services. Significant uncertainty exists as to the reimbursement
status of newly approved health care products. There can be no assurance that
any product that the Company succeeds in bringing to market will be eligible
<PAGE>
for reimbursement at a level which is sufficient to enable the Company to
achieve market acceptance of its products or to maintain appropriate pricing.
Without such reimbursement, the market for the Company's products may be
limited. Significant reductions in insurance coverage also may have an
adverse affect on the Company's future operations.
PRODUCT LIABILITY CLAIMS AND UNINSURED RISK. The use of any of the Com-
pany's products, whether for commercial applications or during pre-clinical or
clinical trials, exposes the Company to an inherent risk of product liability
claims in the event such products cause injury or result in adverse effects.
Such liability might result from claims made directly by health care
institutions, contract laboratories or others selling or using such products.
The Company currently maintains product liability coverage against risks
associated with testing its products in clinical trials. Insurance coverage
for product liabilities, however, is becoming increasingly expensive and dif-
ficult to obtain. There can be no assurance that insurance coverage will be
available in the future at an acceptable cost, if at all, or in sufficient
amounts to protect the Company against such liability. The obligation to pay
any product liability claim in excess of whatever insurance the Company is
able to acquire could have a material adverse effect on the business,
financial condition and future prospects of the Company.
HAZARDOUS MATERIALS; ENVIRONMENTAL MATTERS. The Company's research and
development activities involve the controlled use of hazardous materials,
chemicals, cultures and various radioactive compounds. The Company is subject
to federal, state and local laws and regulations governing the use,
generation, manufacture, storage, air emission, effluent discharge, 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. Current or future environmental laws or regulations could materially
adversely affect the Company's business, financial condition and results of
operations.
CONCENTRATION OF OWNERSHIP. At September 30, 1997, the Company's
officers and directors, together with the principal co-founders of the Company
who are members of its Scientific Advisory Board, beneficially own
approximately 47% (45% on a fully-diluted basis) of the Company's outstanding
Common Stock. Such a high level of ownership by such persons may have a
significant effect in delaying, deferring or preventing any potential change
in control of the Company.
POSSIBLE VOLATILITY OF STOCK PRICE. The market price of the Company's
Common Stock, like that of securities of other biotechnology companies, has
fluctuated significantly in recent years and is likely to fluctuate in the
future. Announcements by the Company or others regarding scientific
discoveries, technological innovations, litigation, commercial products,
patents or proprietary rights, the progress of clinical trials, government
regulation, public concern as to the safety of drugs and reliability of the
Company's testing processes, and general market conditions may have a signifi-
cant effect on the market price of the Common Stock. Fluctuations in
financial performance from period to period also may have a significant impact
on the market price of the Common Stock.
OUTSTANDING WARRANTS; SHARES AVAILABLE FOR FUTURE ISSUANCE AND SALE. As
of September 30, 1997, the Company had outstanding warrants to purchase
2,009,300 shares of Common Stock expiring at various dates through December
31, 2015, with exercise prices ranging from $0.25 to $24.00 per share, all of
which contain anti-dilution provisions. The exercise of these warrants could
result in dilution of the value of the Shares and the voting power represented
thereby. The Company may issue additional capital stock, warrants and/or
<PAGE>
options to raise capital in the future which could result in additional
dilution. See, "Risk Factors -- Capital Requirements; Uncertainty of
Additional Financing." Additionally, to attract and retain key personnel, the
Company may issue additional securities, including stock options.
No prediction can be made as to the effect, if any, that future sales of
shares of Common Stock, or the availability of shares for future sale, will
have on the market price of the Common Stock prevailing from time to time.
Sales of substantial amounts of the Common Stock in the public market, or the
perception that such sales could occur, could adversely affect the market
price of the Common Stock and may make it more difficult for the Company to
sell its equity securities in the future at a time and price which it deems
appropriate. Public or private sales of substantial amounts of the Common
Stock by persons or entities that have exercised options and/or warrants could
adversely affect the prevailing market price of the Common Stock.
DILUTION
Net tangible book value per share is determined by dividing the
difference between the total amount of tangible assets and the total amount of
liabilities by the number of shares of Common Stock outstanding. As of July
31, 1997, the net tangible book value of the Company was approximately
$10,329,000 or $.76 per share.
If the Warrant is exercised in full, as of July 31, 1997 there would be
13,848,404 shares of Common Stock outstanding with a net tangible book value
of $1.03 per share (assuming no change to the shares outstanding or net
tangible book value as of July 31, 1997 other than pursuant to such
conversion). Based on the foregoing assumption, the purchase of the Warrant
Shares through the exercise of the Warrant at an exercise price of $17.50 per
share would result in the Debenture holder suffering immediate dilution of
$16.47 per share.
The sale of any Resale Shares by the Selling Stockholder, however, will
transfer ownership of such Shares to purchasers participating in such
offerings so that their sale will not have an effect on the Company's
capitalization, balance sheet or net tangible book value per share.
SELLING STOCKHOLDER
The following table sets forth certain information with respect to the
Selling Stockholder. The Selling Stockholder named below may sell the Resale
Shares offered hereby from time to time and may choose to sell less than all
or none of such shares. The Selling Stockholder has not had any material
relationship with the Company within the past three years.
The number of shares to be owned by the Selling Stockholder following the
offering of the Resale Shares assuming all Resale Shares are sold will be 5.16
percent of Aphton's outstanding Common Stock.
<PAGE>
<TABLE>
BENEFICIAL MAXIMUM BENEFICIAL
OWNERSHIP NUMBER OF OWNERSHIP
PRIOR TO SHARES AFTER OFFERING
NAME OFFERING<F1> OFFERED NUMBER OF SHARES<F2>
<S> <C> <C> <C>
Smith Barney 1,425,000 715,000 710,000
Fundamental Value Fund
<F1> Assumes the Selling Stockholder has fully exercised the Warrant.
<F2> Assumes all Resale Shares are sold by the Selling Stockholder.
</TABLE>
USE OF PROCEEDS
The Company will receive no proceeds from the sale of any Resale Shares
by the Selling Stockholder.
Assuming the Warrant is fully exercised at the exercise price of $17.50
per share, the proceeds received by the Company from such exercise will total
$3,937,500. These proceeds will be added to working capital and used to fund
operations (including clinical trials for Aphton's immunogens for colorectal,
pancreatic and stomach cancers, GERD, chronic peptic ulcers, breast and
prostate cancers and endometriosis) for product development and other general
purposes.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 20,000,000 shares
of Common Stock, no par value.
COMMON STOCK
The holders of Common Stock are entitled to one vote for each share held
of record on all matters submitted to a vote of the shareholders. At any
election of directors, no shareholder shall be entitled to cumulative votes
(i.e., cast for any one or more candidates a number of votes greater than the
number of the shareholder's shares) unless such candidate or candidates' names
have been placed in nomination prior to the voting and the shareholder has
given notice at the meeting prior to the voting of the shareholder's intention
to cumulate the shareholder's votes. If any one shareholder has given such
notice, all shareholders may cumulate their votes for candidates in nomina-
tion, and give one candidate a number of votes equal to the number of
directors to be elected multiplied by the number of votes to which the
shareholder's shares are entitled, or distribute the shareholder's votes on
the same principle among as many candidates as the shareholder thinks fit. In
any election of directors, the candidates receiving the highest number of
votes up to the number of directors to be elected are elected.
Holders of Common Stock are entitled to receive ratably such dividends as
may be declared by the Board of Directors out of funds legally available
therefor. In the event of a liquidation, dissolution or winding up of the
Company, holders of Common Stock are entitled to share ratably in all assets
remaining after payment of liabilities. Holders of Common Stock have no
preemptive rights and no right to convert their Common Stock into any other
securities. There are no restrictions on alienation of the Common Stock, and
no redemption or sinking fund provisions applicable to the Common Stock. All
outstanding shares of Common Stock are, and, upon payment of the conversion
price for and issuance of the Resale Shares pursuant to the Debenture, all
shares outstanding will be, fully paid and nonassessable.
WARRANTS
<PAGE>
As of September 30, 1997, there were warrants outstanding to purchase
2,009,300 shares expiring at various dates through December 31, 2015, with
exercise prices ranging from $0.25 to $24.00. All of the warrants outstanding
contain anti-dilution provisions. Except for institutional holders, which
comprise less than 20% of the total, all of the warrants and the underlying
common stock, if and when issued, have restrictive conditions and holding
periods.
TRANSFER AGENTS AND REGISTRAR
The transfer agent and registrar for the Company's Common Stock is U.S.
Stock Transfer Corporation, Glendale, California 91204.
PLAN OF DISTRIBUTION
The Warrant entitles the Selling Stockholder, at any time after June 16,
1998 and not later than June 18, 2004, to exercise the Warrant in whole at any
time, or in part (but not for less than 100 shares at any time) from time to
time, for the purchase of up to an aggregate of 225,000 shares of Common Stock
at an exercise price of $17.50 per share. The exercise price is subject to
certain anti-dilution adjustments in accordance with the terms of the Warrant.
The sale of all or a portion of the Resale Shares offered hereby by the
Selling Stockholder may be effected in transactions (which may involve one or
more block transactions) on the NASDAQ National Market System,in negotiated
transactions or in the over-the-counter market at then-prevailing market
prices, at prices related to such prices or at negotiated prices. The Selling
Stockholder may effect such transactions by selling to or through one or more
broker-dealers, and such broker-dealers may receive compensation in the form
of discounts, concessions or commissions from the Selling Stockholder. The
Selling Stockholder and any broker-dealers that participate in the
distribution may under certain circumstances be deemed to be "underwriters"
within the meaning of the Securities Act, and any discounts, concessions or
commissions received by such broker-dealers and any profits realized on the
resale of Resale Shares by them may be deemed to be underwriting discounts and
commissions under the Securities Act. The Company and the Selling Stockholder
may agree to indemnify such broker-dealers against certain liabilities,
including, without limitation, certain liabilities under the Securities Act,
or, if such indemnity is unavailable, to contribute toward amounts required to
be paid in respect of such liabilities.
The Selling Stockholder, to the knowledge of the Company, has not entered
into any selling agreement underwriting agreement or other arrangement with
any underwriting firm or broker-dealer for the offer or sale of the Resale
Shares.
To the extent required under the Securities Act, a supplemental
prospectus will be filed, disclosing (a) the name of any such broker-dealers,
(b) the number of shares involved, (c) the price at which such shares are to
be sold, (d) the commissions paid or discounts or concessions allowed to such
broker-dealers, where applicable, (e) that such broker-dealers did not conduct
any investigation to verify the information set out or incorporated by
reference in this prospectus, as supplemented, and (f) other facts material to
the transaction.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of the Resale Shares may not simultaneously engage
in market-making activities with respect to such shares for a period of one or
five business days prior to the commencement of such distribution. In
addition to, and without limiting, the foregoing, each of the Selling
Stockholder and any other person participating in a distribution will be
subject to the applicable provisions of the Exchange Act and the rules and
regulations thereunder, including, without limitation, Regulation M, which
provisions may limit the timing of purchases and sales of any of the Resale
<PAGE>
Shares by the Selling Stockholder or any such other person. All of the
foregoing may affect the marketability of the Resale Shares.
The Selling Stockholder, to the knowledge of the Company, has not entered
into any selling agreement, underwriting agreement or other arrangement with
any underwriting firm or broker-dealer for the offer or sale of the Resale
Shares.
There is no assurance that the Selling Stockholder will sell any or all
of the Resale Shares offered hereby.
The Company has agreed to pay certain costs and expenses incurred in
connection with the registration of the Shares, except that the Selling
Stockholder will be responsible for all selling commissions, transfer taxes
and related charges in connection with the offer and sale of Resale Shares.
In order to comply with the Securities laws of certain states, if
applicable, the Resale Shares will be sold in such jurisdictions, if required,
only through registered or licensed broker dealers.
The Company has agreed to indemnify the Selling Stockholder against
certain liabilities, including, without limitation, certain liabilities under
the Securities Act.
The Company has agreed to keep the registration statement relating to the
offering and sale by the Selling Stockholder of the Resale Shares continuously
effective (a) in case of the Resale Shares until the earlier to occur of (i)
June 16, 1999 and (ii) such earlier date as such Resale Shares shall have been
sold by the Selling Stockholder and (b) in case of the Warrant Shares (i) June
16, 2004 and (ii) such earlier date as all the Warrant Shares shall have been
issued by the Company.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for the
Company by the law firm of White & Case, New York, New York.
EXPERTS
The Company's balance sheets as of April 30, 1997 and 1996 and statements
of operations, stockholders' equity, and cash flows for each of the three
years in the period ended April 30, 1997 incorporated by reference in this
prospectus have been incorporated herein in reliance on the report of Coopers
& Lybrand L.L.P., independent accountants, given on the authority of said firm
as experts in accounting and auditing.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
SEC Registration fee . . . . . . . . . . . . . $ 4,132
Legal fees and expenses . . . . . . . . . . . . . 15,000
Accounting fees and expenses . . . . . . . . . 2,400
NASDAQ Listing Fee . . . . . . . . . . . . . . 17,500
Miscellaneous . . . . . . . . . . . . . . . . . . 0
Total . . . . . . . . . . . . . . . . . . . $39,032
* All amounts are estimated except for the SEC Registration Fee.
Item 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The indemnification which may be provided by the Company, a California
corporation, to its officers and directors ("Insiders") is governed by the
provisions of Section 317 of the California Corporations Code (the "Code").
Under Section 317 the Company may indemnify an officer or director from and
against expense, judgments, fines, settlements and other amounts actually and
reasonably incurred in connection with threatened, pending or completed legal
proceedings including, in certain circumstances, proceedings by or in the
right of the Company, in which such Insider is involved by reason of such
Insider's relationship with the Company, provided that a determination has
been made (by the directors, independent legal counsel in a written opinion,
the shareholders or the court) that such Insider acted in good faith and in a
manner that such Insider reasonably believed to be in the best interests of
the Company and, in a criminal proceeding, if the Insider had no reasonable
cause to believe that such person's conduct was unlawful. To the extent that
an Insider is successful on the merits in any such proceeding, the Code
provides that such director or officer shall be indemnified.
Article 5 of the Company's Amended Articles of Incorporation ("Articles
of Incorporation") limits the liability of directors to the fullest extent
permissible under California law. In addition, Article 6 of the Articles of
Incorporation provides for indemnification of Insiders to the fullest extent
permissible under California law. Currently under the Code, this shields
Insiders from all liability, including for breach of fiduciary duty as a
director, except (i) for acts or omissions that involve intentional misconduct
or a knowing and culpable violation of law, (ii) for acts or omissions that
the Insider believes to be contrary to the best interests of the Company or
its shareholders or that involve the absence of good faith, (iii) for any
transaction in which the Insider derived an improper personal benefit, (iv)
for acts or omissions that show a reckless disregard for the Insider's duty to
the Company or its shareholders in circumstances in which the Insider was
aware, or should have been aware, in the ordinary course of performing the
Insider's duties, of a risk of serious injury to the Company or its
shareholders, (v) for acts or omissions that constitute an unexcused pattern
of inattention that amounts to an abdication of the Insider's duty to the
Company or its shareholders, (vi) under Section 310 of the Code involving
contracts or transactions in which a director has a material financial
interest or (vii) under Section 316 of the Code involving unlawful
distributions to shareholders and unlawful loans or guarantees.
Section 5.06 of the Company's Bylaws authorizes the Company to indemnify
its directors and officers, as well as to enter into indemnity agreements with
its officers and directors, in a manner that is not materially different from
that provided by Section 317 of the Code.
<PAGE>
Item 16. EXHIBITS.
<TABLE>
EXHIBIT INDEX
Sequentially
Exhibit No. Description Numbered Page
<S> <C> <C>
4.1 Specimen of Common Stock Certificate
(Incorporated by reference to Exhibit 4.1
to the Company's Registration Statement on
Form S-1 (Reg. No. 33-38255)
5.1 Opinion and consent of White & Case
23.1 Written consent of Coopers & Lybrand L.L.P.
23.2 Written consent of White & Case (included
in their opinion filed as Exhibit 5.1 hereto)
24.1 Power of Attorney appointing Philip C. Gevas
and Frederick W. Jacobs to sign and file
amendments hereto (see "Power of Attorney"
in the Registration Statement).
</TABLE>
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 (the "Securities Act");
(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;
(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 information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports
filed with or furnished to the Commission by the Registrant
pursuant to Section 13 or 15(d) of the Exchange Act that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, 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.
<PAGE>
(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, each
filing of the Registrant's annual report pursuant to Section
13(a) or 15(d) of the Exchange Act (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered
therein, 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 may be permitted to directors, officers and
controlling persons of the Registrant, the Registrant has been
advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the
Securities 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 indem-
nification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of
such issue.
<PAGE>
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
Amendment No. 1 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Miami, Florida, on the 25th day of November, 1997.
Aphton Corporation
By:/s/Philip C. Gevas
------------------
Philip C. Gevas
Chairman, President, CEO and CFO
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 has been signed by the following persons in the capacities and
on the dates indicated.
<PAGE>
<TABLE>
Signature Title Date
<S> <C> <C>
/s/Philip C. Gevas Chairman of the Board, November 25, 1997
__________________ Chief Executive Officer,
Philip C. Gevas President and Chief
Financial Officer
*
- ----------------------- Chief Accounting Officer November 25, 1997
Frederick W. Jacobs
*
- ----------------------- Director November 25, 1997
Robert S. Basso
*
- ----------------------- Director November 25, 1997
William A. Hasler
*
- ----------------------- Director November 25, 1997
Nicholas John Stathis
By/s/Philip C. Gevas
------------------
Philip C. Gevas
Attorney-in-fact
</TABLE>
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statement of Aphton Corporation on Form S-3 (File No. 333-36925) of our report
dated July 18, 1997, on our audits of the financial statements of Aphton
Corporation as of April 30, 1997 and 1996 and for the years ended April 30,
1997, 1996, and 1995, which report is included in 1997 Annual Report on Form
10-K incorporated by reference in this registration statement. We also
consent to the reference to our firm under the caption "Experts".
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Honolulu, Hawaii
November 19, 1997
