As filed with the Securities and Exchange Commission on October 26, 2000
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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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APHTON CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 95-3640931
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
444 BRICKELL AVENUE
SUITE 51-507
MIAMI, FLORIDA 33131-2492
(305) 374-7338
(Address, including zip code, and telephone
number, including area code, of registrant's principal
executive offices)
---------------------------
PHILIP C. GEVAS
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
APHTON CORPORATION
444 BRICKELL AVENUE
SUITE 51-507
MIAMI, FLORIDA 33131-2492
(305) 374-7338
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Copies to:
TIMOTHY B. GOODELL, ESQ.
WHITE & CASE LLP
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>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM AGGREGATE PROPOSED MAXIMUM AMOUNT OF
TITLE OF SECURITIES AMOUNT TO PRICE PER SHARE(1)(2) AGGREGATE OFFERING REGISTRATION FEE(2)
TO BE REGISTERED BE REGISTERED PRICE(1)
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<S> <C> <C> <C> <C>
Common Stock, $.001 par value 1,291,509 $26.56 $34,302,479.04 $9,055.85
====================================================================================================================================
(1) Estimated solely for the purpose of calculating the Registration Fee in accordance with Rule 457 of the Securities Act of 1933.
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(2) Based on average of the high and low prices of the Common Stock reported on the Nasdaq National Market System on October 23,
2000. 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.
====================================================================================================================================
</TABLE>
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE
SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED OCTOBER __, 2000
1,291,509 SHARES OF COMMON STOCK, PAR VALUE $.001 PER SHARE
APHTON CORPORATION
This prospectus relates to an offering of up to 1,291,509 shares of common
stock of Aphton Corporation, a Delaware corporation. The shares of common stock
(which we refer to as the Shares) may or may not be offered for sale from time
to time by the selling stockholders. We will not receive any of the proceeds
from the sale of the Shares.
The Shares are listed on the Nasdaq National Market under the symbol
"APHT." On October 23, 2000, the last reported sale price of our common stock
reported on Nasdaq was $27.13.
We have been advised by the selling stockholders that they may or may not
sell all or a portion of the Shares from time to time on Nasdaq. They may also
make private sales of Shares to purchasers directly. Alternatively, they may
from time to time offer the Shares through underwriters, brokers, dealers or
agents, who may receive compensation in the form of underwriting discounts,
commissions or concessions.
INVESTING IN THE SHARES INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE 1 OF THIS PROSPECTUS FOR A DISCUSSION OF CERTAIN FACTORS YOU SHOULD
CONSIDER BEFORE YOU BUY SHARES.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
---------------------
The date of this prospectus is October ___, 2000
<PAGE>
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS..........................................................1
RISK FACTORS...................................................................1
FORWARD-LOOKING STATEMENTS.....................................................7
THE COMPANY....................................................................8
USE OF PROCEEDS................................................................8
THE SELLING STOCKHOLDERS.......................................................9
PLAN OF DISTRIBUTION...........................................................9
LEGAL MATTERS.................................................................12
EXPERTS.......................................................................12
WHERE YOU CAN FIND MORE INFORMATION...........................................12
INCORPORATION OF DOCUMENTS BY REFERENCE.......................................12
<PAGE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement on Form S-3 that we
filed with the Securities and Exchange Commission using a "shelf" registration
process. Under this process, the selling stockholders may, from time to time,
sell up to 1,291,509 Shares in one or more offerings. This prospectus does not
contain all of the information included in the registration statement and the
exhibits thereto. Statements included in this prospectus as to the contents of
any contract or other document that is filed as an exhibit to the registration
statement are not necessarily complete and you should refer to that agreement or
document for a complete description of these matters. You should read both this
prospectus and any prospectus supplement, together with the additional
information described in this prospectus under the heading "Where You Can Find
More Information."
RISK FACTORS
If you purchase our Shares, you will take on a financial risk. In deciding
whether to invest, you should carefully consider the following factors, the
information contained in this prospectus and the other information to which we
have referred you. Additional risks and uncertainties not presently known to us
or that we currently consider not material may also impair our business
operations. If any of the following risks actually occur, our business,
financial condition or results of operations could be materially adversely
affected. In such case, the trading price of our common stock could decline, and
you may lose all or part of your investment.
OUR POTENTIAL PRODUCTS ARE IN THE EARLY STAGES OF PRODUCT DEVELOPMENT. All
of our potential products are in research and development, and we have generated
no revenues from product sales. Our most advanced potential product, an
immunogen for the treatment of pancreatic cancer is in Phase III pivotal trials
in the US and Europe. Our other current potential products, for the treatment of
stomach cancer, colorectal cancer, gastroesophageal reflux disease (or GERD),
chronic peptic ulcers, breast cancer, endometriosis and prostate cancer are at
the same or even earlier phases of development. All of our potential products
will require significant additional research and development and expensive,
extensive, time consuming clinical testing prior to commercial use. Accordingly,
we do not expect to derive revenues from these products for a number of years,
if at all. We can offer 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, we can offer no
assurance that we will not encounter problems in clinical trials that will cause
us to delay or suspend a clinical trial, that such of our 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 our products will receive required regulatory approval.
Further, if any of our products do receive regulatory approval, there can be no
assurance that we will be capable of producing those products in commercial
quantities at reasonable costs or that those products will be accepted by the
marketplace.
WE EXPECT TO CONTINUE TO INCUR OPERATING LOSSES IN THE NEXT SEVERAL YEARS.
We have experienced significant operating losses since our inception in 1981 and
expect to continue to incur substantial operating losses for at least the next
several years. We expect losses to increase as a result of the expenses
associated with clinical testing and research and development. As of January 31,
2000, we had an accumulated deficit of approximately $53 million. Our ability to
achieve profitability depends upon our ability, alone or through relationships
with third parties, to successfully develop our technology and products, to
obtain required regulatory approvals and to manufacture, market and sell such
products. There can be no assurance that we will ever have profitable operations
or that profitability, if achieved, can be sustained on an ongoing basis.
We have never paid any dividends and do not expect to pay cash dividends
before significant product revenues, if any, are realized, if then.
WE HAVE SUBSTANTIAL CAPITAL REQUIREMENTS AND WE MAY NOT BE ABLE TO OBTAIN
ADDITIONAL FINANCING. The development of our 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. Our
future capital requirements will depend on many other factors including
continued scientific progress in the research and development (clinical trials)
of our products, our ability to collaborate with others for the manufacture,
marketing and sale of our products, the cost of regulatory approvals, the cost
of establishing, maintaining and enforcing intellectual property rights,
competing technological and market developments and changes in our existing
research relationships. Our net rate of expenditure during the two year period
ended January 31, 2000 averaged approximately $873,000 per month. We anticipate,
however, that the rate of expenditure will increase substantially as we proceed
through the Phase III clinical trials for our anti-gastrin immunogen products.
This rate of expenditure may increase further if we pursue preclinical studies
or clinical trials for our other products at a faster rate than we currently
anticipate. We believe that our current capital resources, which are composed
primarily of cash and cash equivalents, should be sufficient, barring unforeseen
circumstances, to fund our operating expenses and capital requirements as
currently planned into the year 2002.
We 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 we
raise additional funds by issuing equity securities, dilution to the interests
of stockholders may result. If adequate funds are not available, we may be
required to delay, reduce the scope of or eliminate one or more of our research
or development programs or to obtain funds through arrangements with
collaborative partners or others that may require us to relinquish rights to
certain of our technologies, potential products or products that we would
otherwise seek to develop or commercialize ourselves.
OUR DIFFERENT APPROACH TO DISEASE TREATMENT MAY NOT PROVE SUCCESSFUL. We
believe that our products under development are based on an approach to disease
therapy and prevention which previously has not been used successfully by any
pharmaceutical or biotechnology company. We cannot offer any assurance that we
will successfully complete our product development efforts, that our 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
our products as readily as current drug therapies or other forms of treatment.
Undesirable and unintended side effects or unfavorable publicity concerning any
of our products or other products incorporating a similar approach could limit
or curtail commercial use of our products and could have an adverse effect on
our ability to obtain regulatory approvals and to achieve physician and patient
acceptance.
THE DEVELOPMENT OF OUR PRODUCTS IS SUBJECT TO EXTENSIVE REGULATION. The
research, preclinical development, clinical trials, manufacturing and marketing
of our 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 undergo 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 our 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, we may encounter delays or disapprovals 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.
We may apply for MCA approval to commercialize our potential 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 we obtain MCA approval, FDA approval would still be required prior to
marketing such a product in the United States. Although we have filed an
Investigational New Drug application ("IND") (a type of submission used to
ultimately obtain FDA approval to market a new drug) with the FDA and the FDA
has permitted us to proceed with clinical trials in the United States for
pancreatic cancer and for gastric cancer, the clinical trials will seek safety
data as well as efficacy data and will require substantial time and significant
funding. We cannot offer any assurance that clinical trials in the United
Kingdom or the US or any other country will be fully and successfully completed
within any specified time period, if at all, with respect to any of our
products. Furthermore, we, 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. We cannot offer assurance that approval for any
products we develop will be granted by applicable regulatory agencies on a
timely basis, if at all, or, if granted, that the approval will cover all the
clinical indications for which we are 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 our 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.
THE INDUSTRY IN WHICH WE OPERATE IS CHARACTERIZED BY RAPID TECHNOLOGICAL
CHANGE AND INTENSE competition. The treatment of diseases such as those to which
our products are directed is subject to rapid, unpredictable and significant
change. Our 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 we do and have
substantially greater experience in obtaining regulatory approval, and in
manufacturing and marketing pharmaceutical products. In addition, other
technologies may in the future be the basis of competitive products. There can
be no assurance that our competitors will not succeed in developing technologies
and products that are more effective than those we are developing or that would
render our technology and products obsolete or noncompetitive.
OUR ABILITY TO ENFORCE OUR PATENTS AND PROPRIETARY RIGHTS IS UNCERTAIN. Our
success will depend in large part on our ability to obtain patents, both in the
United States and in other countries, maintain our 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 we have obtained cannot be
predicted.
We hold issued patents and have pending patent applications and patent
applications in preparation. We intend to file additional patent applications,
when appropriate, relating to our technologies, improvements to our technologies
and specific products we may develop. We can offer no assurance, however, that
our pending applications or patent applications in preparation or to be prepared
will be issued as patents. Additionally, we can offer 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 us. If any of our patents are invalidated or held to
be unenforceable, we could lose the protection of rights we believe to be
valuable, and our business could be materially and adversely affected.
Additionally, the existing patents, patents pending and patents that we may
subsequently obtain will not necessarily preclude competitors from developing
products that can be marketed in competition with products we have developed and
thus would substantially lessen the value of our proprietary rights.
Our commercial success also will depend, in part, on our not infringing
patents issued to others. We can offer no assurance that our products will not
infringe on the patents or proprietary rights of others. We may be required to
obtain licenses to patents, patent applications or other proprietary rights of
others. We cannot assure that any such licenses would be made available on terms
acceptable to us, if at all. If we do not obtain such licenses, we could
encounter delays in product introductions while we attempt to design around such
patents, or the development, manufacture or sale of products requiring such
licenses could be precluded. We could incur substantial costs, including
diversion of management time, in defending ourselves in litigation brought
against us on such patents or in litigation in which we assert our patents
against another party, or in litigation brought by another party asserting its
patents against us. If our competitors prepare and file patent applications in
the United States that claim technology also claimed by us, we 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 us and diversion of management attention, even if
the eventual outcome is favorable to us. We believe there will continue to be
significant litigation in the industry regarding patent and other intellectual
property rights.
We also rely on trade secrets to protect our technology, especially where
patent protection is not believed to be appropriate or obtainable. Thus, we
protect our proprietary, technology and processes, in part, by confidentiality
agreements with our employees, consultants and certain contractors. We can offer
no assurance that these agreements will not be breached, that we would have
adequate remedies for any breach, or that our trade secrets will not otherwise
become known or be independently discovered by competitors.
WE DEPEND ON OTHERS FOR MANUFACTURING AND MARKETING. We have no
manufacturing facilities for commercial production of our products under
development and have no experience in marketing, sales or distribution. We
intend to continue establishing arrangements with and rely on third parties,
including large pharmaceutical companies, to manufacture, market, sell and
distribute any product we develop. Although we believe 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 our control. We can offer no
assurance that such parties will perform their obligations as expected, that we
will derive any revenues from such arrangements or that our reliance on others
for manufacturing products will not result in unforeseen problems with product
supply. Should we encounter delays or difficulties in our current relationships
or in seeking to establish relationships with third parties to produce, package
and distribute any product we develop, market introduction and subsequent sales
of such products would be adversely affected. Moreover, contract manufacturers
that we may use must adhere to current good manufacturing practice 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 our potential products would be adversely affected. Additionally,
these 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 our products.
WE DEPEND ON KEY PERSONNEL. We are dependent upon the services of our
senior management, none of whom are subject to an employment agreement with us.
We have not insured against the loss, due to death or disability, of any key
personnel. We believe, however, that the loss of the services of any key
personnel would not have a material adverse effect on us. Because of the
specialized nature of our business, our success also depends upon our ability to
attract and retain highly qualified scientists and other technical personnel. We
face intense competition for such persons and there can be no assurance that we
will be able to attract or retain such individuals.
FUTURE HEALTH CARE REFORMS MAY ADVERSELY AFFECT OUR FINANCIAL RESULTS. The
levels of revenues and profitability of biotechnology and pharmaceutical
companies, including Aphton, 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 we expect 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. We 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 us. 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 our products, our ability
to commercialize our products may be adversely affected.
WE DEPEND ON THIRD PARTY REIMBURSEMENT. Successful commercialization of our
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. We can offer no assurance that any product that
we succeed in bringing to market will be eligible for reimbursement at a level
which is sufficient to enable us to achieve market acceptance of our products or
to maintain appropriate pricing. Without such reimbursement, the market for our
products may be limited. Significant reductions in insurance coverage also may
have an adverse affect on our future operations.
WE MAY BE EXPOSED TO PRODUCT LIABILITY CLAIMS AND UNINSURED RISK. The use
of any of our products, whether for commercial applications or during
pre-clinical or clinical trials, exposes us 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. We
currently maintain product liability coverage against risks associated with
testing our products in clinical trials. Insurance coverage for product
liabilities, however, is becoming increasingly expensive and difficult 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
us against such liability. The obligation to pay any product liability claim in
excess of whatever insurance we are able to acquire could have a material
adverse effect on our business, financial condition and future prospects.
OUR BUSINESS INVOLVES THE USE OF HAZARDOUS MATERIALS THAT COULD EXPOSE US
TO ENVIRONMENTAL LIABILITY. Our research and development activities involve the
controlled use of hazardous materials, chemicals, cultures and various
radioactive compounds. We are 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 we believe that our 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, we
could be held liable for any damages that result and any such liability could
exceed our resources. We 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 our
business, financial condition and results of operations.
OWNERSHIP OF OUR COMMON STOCK IS CONCENTRATED. At May 8, 2000, our officers
and directors, beneficially own approximately 13% (12% on a fully-diluted basis)
of our 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 Aphton.
THE PRICE OF OUR COMMON STOCK MAY BE VOLATILE. The market price of our
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 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 our testing processes, and general market
conditions may have a significant 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.
THE EXERCISE OF OUTSTANDING WARRANTS COULD DILUTE THE VALUE OF THE SHARES.
As of July 31, 2000, we had outstanding warrants to purchase approximately
2,800,000 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. We
may issue additional capital stock, warrants and/or options to raise capital in
the future which could result in additional dilution. Additionally, to attract
and retain key personnel, we 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 us to sell our 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.
FORWARD-LOOKING STATEMENTS
This prospectus, any prospectus supplement and the documents incorporated
by reference in this prospectus may contain forward-looking statements within
the meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act, including statements regarding our expectations, beliefs, intentions or
strategies regarding the future. All forward-looking statements involve inherent
risks and uncertainties. The forward-looking statements included or incorporated
by reference in these documents are based on the beliefs of our management as
well as assumptions made by us and information available to us on the date
hereof. Our actual results could differ materially from those anticipated in
these forward-looking statements. In evaluating our business, you should
consider carefully the factors set forth above under the heading "Risk Factors"
in addition to the other information set forth in this prospectus and
incorporated by reference in this prospectus.
THE COMPANY
Aphton Corporation is a biopharmaceutical company in late-stage, pivotal
Phase III clinical trials. Aphton is developing products using its innovative
vaccine-like technology for neutralizing, and removing from circulation,
hormones that participate in gastrointestinal system and reproductive system
cancer and non-cancer diseases. Aphton is also developing products for
neutralizing hormones to prevent pregnancy. Aphton has strategic alliances with
Aventis Pasteur (NYSE: AVE) SmithKline Beecham PLC (NYSE: SBH), Schering Plough
Animal Health (NYSE: SGP) and the World Health Organization (WHO). Aphton's Web
page, describing the company, its technology, products, strategic alliances and
news releases can be visited at: www.aphton.com. The Web site is not a part of
this prospectus.
We have financed our operations since inception through the sale of our
equity securities and, to a lesser extent, operating revenues from R&D limited
partnerships to conduct research and development. These funds provided us with
the resources to acquire staff, construct our research and development
facilities, acquire capital equipment and to finance technology and product
development, manufacturing and clinical trials.
We anticipate that our existing capital resources, which are composed
primarily of cash and short-term cash investments, including the proceeds of our
private placements and interest thereon, would enable us to maintain our
currently planned operations into the year 2002. Our working capital and capital
requirements will depend on numerous factors, including the following: the
progress of our research and development program, preclinical testing and
clinical trials; the timing and cost of obtaining regulatory approvals; the
levels of resources that we devote to product development, manufacturing and
marketing capabilities; technological advances; competition; and collaborative
arrangements or strategic alliances with other drug companies, including the
further development, manufacturing and marketing of certain of our products and
our ability to obtain funds from such strategic alliances or from other sources.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the Shares by the selling
stockholders.
THE SELLING STOCKHOLDERS
The selling stockholders are named in the table below. Except as described
in this prospectus, the selling stockholders have not had a material
relationship with us or any of our affiliates within the past three years.
The following table sets forth the number of Shares owned by the selling
stockholders as of the date of this prospectus.
<TABLE>
Shares Beneficially Owned Shares Which May Be Shares Beneficially Owned
Name Prior to Offering Offered After Offering(1)
---- ------------------------- ------------------- -------------------------
<S> <C> <C> <C>
DWS Investment GmbH 800,000 800,000 800,000
C.I. Global Biomemonics Sector 190,000 190,000 190,000
Share
C.I. Global Biotechnology 150,000 150,000 150,000
Sector Share
DG Lux Lacuna Apo Biotech 90,909 90,909 90,909
Biocapital Investments, 60,600 60,600 60,600
Limited Partnership
--------------------
(1) Assumes that the selling stockholders do not immediately sell or otherwise dispose of any Shares covered by this prospectus
and that the selling stockholders did not acquire any additional Shares.
</TABLE>
All of the Shares being offered by this prospectus were acquired by the
selling stockholders under Stock Purchase Agreements with Aphton Corporation.
PLAN OF DISTRIBUTION
WHO MAY SELL THE SHARES AND APPLICABLE RESTRICTIONS
We will not receive any of the proceeds from the sale of the Shares. The
selling stockholders may be offering and selling all Shares offered under this
prospectus or the selling stockholders may hold the shares indefinitely.
The selling stockholders may also sell the Shares directly to market makers
acting as principals and/or broker-dealers acting as agents for themselves or
their customers. These broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the selling stockholders and/or the
purchasers of Shares for whom such broker-dealers may act as agents or to whom
they sell as principal, or both. The compensation as to a particular
broker-dealer might be in excess of customary commissions. Market makers and
block purchasers purchasing the Shares will do so for their own account and at
their own risk. The selling stockholders and any broker-dealer or agent that
acts in connection with the sale of the Shares might be deemed to be
"underwriters" as that term is defined under the Securities Act, and any
commissions received by the broker-dealer or agent and any profit on the resale
of the Shares sold by them while acting as principals might be deemed to be
underwriting discounts or commissions under the Securities Act.
The selling stockholders may sell all or any part of the Shares offered by
this prospectus through an underwriter. To our knowledge, none of the selling
stockholders has entered into any agreement with a prospective underwriter. If
any selling stockholder enters into such an agreement, the relevant details will
be set forth in a supplement to this prospectus.
To comply with the securities laws of certain jurisdictions, the Shares
offered by this prospectus may need to be offered or sold in such jurisdictions
only through registered or licensed brokers or dealers.
MANNER OF SALES
The selling stockholders will act independently of us in making decisions
with respect to the manner and size of each sale. The selling stockholders may
sell the Shares from time to time in one or more of the following types of
transactions (which may include block transactions):
o on the Nasdaq National Market;
o in privately negotiated transactions;
o by selling to a broker or dealer as principal and resale by the broker
or dealer for its own account;
o through underwriters or dealers who may receive compensation in the
form of underwriting discounts, concessions or commissions;
o in block transactions to market makers or other purchasers at a price
per share which may be below the then prevailing market price;
o through put or call options transactions relating to the Shares;
o through short sales of the Shares; or
o through a combination of the above methods of sale.
The sale price of the Shares may be the market price of our common stock
prevailing at the time of sale, a price related to the prevailing market price,
a negotiated price or such other price as the selling stockholders determine
from time to time. Each of the selling stockholders has the sole discretion not
to accept any purchase offer or make any sale of Shares if it deems the purchase
price to be unsatisfactory at any particular time.
Under applicable rules and regulations under the Securities Exchange Act of
1934, any person engaged in a distribution of Shares covered by this prospectus
may be limited in its ability to engage in market activities with respect to
such Shares. The selling stockholders, for example, will be subject to
applicable provisions of the Exchange Act and the rules and regulations under
it, including Rule 10b-5 and Regulation M. Regulation M may restrict certain
activities of the selling stockholders and limit the timing of purchases and
sales of any Shares by the selling stockholders. Furthermore, under Regulation
M, persons engaged in a distribution of securities are prohibited from
simultaneously engaging in market making and certain other activities with
respect to such securities for a specified period of time prior to the
commencement of such distributions, subject to specified exceptions or
exemptions.
REGISTRATION RIGHTS OF THE SELLING STOCKHOLDERS
We have agreed to maintain the effectiveness of the registration statement
of which this prospectus forms a part until April 30, 2003.
SUSPENSION OF THIS OFFERING
Under the terms of the Stock Purchase Agreements, we may require the
selling stockholders to suspend the availability of this prospectus and not to
effect any sales of Shares if we notify the selling stockholders of such a
suspension.
PROSPECTUS DELIVERY
Because the selling stockholders may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Securities Act, the selling stockholders
will be subject to the prospectus delivery requirements of the Securities Act.
At any time a particular offer of the Shares is made, a revised prospectus or
prospectus supplement, if required, will be distributed which will set forth:
o the names of the selling stockholders and of any participating
underwriters, broker-dealers or agents;
o the aggregate amount of securities being offered;
o the price at which the Shares were sold and other material terms of
the offering;
o any discounts, commissions, concessions and other items constituting
compensation from the selling stockholders and any discounts,
commissions or concessions allowed or reallowed or paid to dealers;
and
o that the participating broker-dealers did not conduct any
investigation to verify the information in this prospectus or
incorporated in this prospectus by reference.
The prospectus supplement or a post-effective amendment will be filed with the
SEC to reflect the disclosure of additional information with respect to the
distribution of the Shares.
INDEMNIFICATION
We have agreed to indemnify the selling stockholders against certain
liabilities, including liabilities arising under the Securities Act. The selling
stockholders may agree to indemnify any agent, dealer or broker-dealer that
participates in transactions involving sales of the Shares against certain
liabilities, including liabilities arising under the Securities Act.
FEES AND EXPENSES
We have agreed to pay all costs, expenses and fees in connection with the
registration of the Shares. The selling stockholders will pay all underwriting
discounts and commissions and brokerage commissions and fees, if any, payable
with respect to the Shares.
LEGAL MATTERS
The validity of the Shares offered hereby will be passed upon by White
& Case LLP, New York, New York.
EXPERTS
The financial statements incorporated in this prospectus by reference to
the Annual Report on Form 10-K for the year ended January 31, 2000, have been so
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational reporting requirements of the
Securities Exchange Act of 1934, and therefore we file reports, proxy statements
and other information with the SEC. You may read and copy these reports and
other information at the Public Reference Room maintained by the SEC at 450
Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. In
addition, the SEC maintains a home page on the Internet (http://www.sec.gov)
that contains certain reports and other information filed by the Company.
INCORPORATION OF DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" information from other
documents that we file with them, which means that we can disclose important
information by referring to those documents. The information incorporated by
reference is considered to be part of this prospectus, and information that we
file later with the SEC will automatically update and supersede this
information.
This prospectus incorporates by reference the documents listed below.
o Annual Report on Form 10-K for the year ended January 31, 2000;
o Quarterly Report on Forms 10-Q for the quarter and three months ended
April 30, 2000 and for the quarter and six months ended July 31, 2000;
o Current Report on Form 8-K which stated that effective May 19, 2000,
the Board of Directors of Aphton Corporation engaged the accounting
firm of Ernst & Young LLP as independent public accountants for the
registrant for fiscal 2001; and
o The description of our common stock contained in our Registration
Statement on Form 8-A, filed with the SEC on January 30, 1998.
We also incorporate by reference additional documents that we may file with
the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
after the date of this prospectus and prior to the entire time all of the Shares
offered by this prospectus are sold. These include periodic reports, such as
Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports
on Form 8-K, as well as proxy statements.
We undertake to provide without charge to each person, including any
beneficial owner, to whom a prospectus is delivered, a copy of these filings, at
no cost, by writing or telephoning us. Any requests should be directed to:
S-3, 1/00 Documentation Reference
Aphton Corporation
444 Brickell Avenue
Suite 51-507
Miami, Florida 33131-2492
Tel: (305) 374-7338
You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement. We have not authorized anyone
else to provide you with different information. You should not assume that the
information in this prospectus or any supplement is accurate as of any date
other than the date on the front of those documents.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
SEC registration fee...............................$ 9,035
Legal fees and expenses............................ 20,000
Accounting fees and expenses....................... 6,000
Miscellaneous...................................... 5,000
Total.....................................$40,035
* All amounts are estimated except for the SEC Registration Fee.
Item 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "DGCL") permits
the Company to indemnify any person who is or was a director, officer, employee
and agent, or is or was serving at the request of the Company as a director,
officer, employee or agent of another company, partnership, joint venture, trust
or other enterprise (each an "Insider") against liability for each such
Insider's acts taken in his or her capacity as an Insider in a civil action,
suit or proceeding if such actions were taken in good faith and in a manner
which the Insider reasonably believed to be in or not opposed to the best
interests of the Company, and in a criminal action, suit or proceeding, if the
Insider had no reasonable cause to believe his or her conduct was unlawful,
including under certain circumstances, suits by or in the right of the Company
for any expenses, including attorneys' fees, judgments, fines and amounts paid
in settlements and for any liabilities which the Insider may have incurred in
consequence of such action, suit or proceeding under conditions stated in said
Section 145. The Company's Certificate of Incorporation and By-Laws provide that
the Company shall indemnify its directors and officers to the fullest extent
authorized by the DGCL; provided, that the Company will not be required to
indemnify any director or executive officer in connection with a proceeding
initiated by such person, with certain exceptions.
As permitted by Section 102(b)(7) of the DGCL, Article NINTH of the
Company's Certificate of Incorporation provides that a director of the Company
will not be personally liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability (i) for
any breach of the director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL,
as amended, which concerns unlawful payments of dividends, stock purchases or
redemption, or (iv) for any transaction from which the director derived an
improper personal benefit.
The Company's Certificate of Incorporation permits the Company to secure
insurance on behalf of any director, officer, employee or agent of the Company
or another Company, partnership, joint venture, trust or other enterprise for
any liability arising out of his or her actions in such capacity, regardless of
whether the Company would have the power to indemnify such person against such
liability under the DGCL.
Item 16. EXHIBITS.
Exhibit No. Description
4.1 Certificate of Incorporation of Aphton Corporation (Incorporated
by reference to Exhibit 3.1 to the registrant's Current Report on
Form 8-K filed on January 30, 1998).
4.2 Specimen of Common Stock Certificate (Incorporated by reference
to Exhibit 4.1 to the registrant's Registration Statement on Form
8-A filed on January 30, 1998).
5.1 Opinion of White & Case LLP.
23.1 Written consent of PricewaterhouseCoopers LLP.
23.2 Written consent of White & Case LLP (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).
<PAGE>
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.
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
percent change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
registration statement.;
(iii)To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(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.
(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.
(e) The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is
sent or given, the latest annual report to security holders that is
incorporated by reference in the prospectus and furnished pursuant to and
meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities
and Exchange Act of 1934; and, where interim financial information required
to be presented by Article 3 of Regulation S-X are not set forth in the
prospectus, to deliver, or cause to be delivered to each person to whom the
prospectus is sent or given, the latest quarterly report that is
specifically incorporated by reference in the prospectus to provide such
interim financial information.
(h) 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 indemnification 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 registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Miami, Florida, on the 26th day of October, 2000.
APHTON CORPORATION
By: /s/ PHILIP C. GEVAS
-------------------------------------------
Philip C. Gevas
Chairman, President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, each person whose signature appears
below constitutes and appoints Philip C. Gevas and Frederick W. Jacobs, jointly
and severally, as attorneys-in-fact, each with power of substitution, for such
person in any and all capacities, to sign any amendments to this Registration
Statement, and to file the same, with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that each of said attorneys-in-fact, or his or her
substitute or substitutes, may do or cause to be done by virtue hereof.
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 dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ PHILIP C. GEVAS Chairman, President and Chief October 26, 2000
-------------------------------------- Executive Officer
Philip C. Gevas
/s/ ROBERT S. BASSO Director October 26, 2000
--------------------------------------
Robert S. Basso
/s/ WILLIAM A. HASLER Vice Chairman of the Board, Director October 26, 2000
-------------------------------------- and Co-Chief Executive Officer
William A. Hasler
/s/ NICHOLAS JOHN STATHIS Director October 26, 2000
--------------------------------------
Nicholas John Stathis
/s/ GEORGES HIBON Director October 26, 2000
------------------
Georges Hibon
/s/ FREDERICK W. JACOBS Vice President, Treasurer and Chief October 26, 2000
-------------------------------------- Accounting Officer
Frederick W. Jacobs
</TABLE>
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
4.1 Certificate of Incorporation of Aphton Corporation (Incorporated
by reference to Exhibit 3.1 to the registrant's Current Report on
Form 8-K filed on January 30, 1998).
4.2 Specimen of Common Stock Certificate (Incorporated by reference
to Exhibit 4.1 to the Company's Registration Statement on Form
8-A filed on January 30, 1998).
5.1 Opinion of White & Case LLP.
23.1 Written consent of PricewaterhouseCoopers LLP.
23.2 Written consent of White & Case LLP (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).
