<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 29, 1998
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
--------------------------
AMERICAN BIOGENETIC SCIENCES, INC.
(Exact Name of Registrant as Specified In Its Charter)
DELAWARE 11-2655906
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
1375 AKRON STREET, COPIAGUE, NY 11726
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
--------------------------
STEVEN R. LONDON, ESQUIRE
BROWN, RUDNICK, FREED & GESMER
ONE FINANCIAL CENTER, BOSTON, MASSACHUSETTS 02111
(617) 856-8200
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, please 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, please 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
===============================================================================================================================
Proposed Proposed
Amount Maximum Maximum Amount of
Title of Each Class of to Be Offering Price Aggregate Registration
Securities to Be Registered Registered Per Share(1) Offering Price(1) Fee
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Common Stock, $ .001 par value 398,406 Shares $1.0315 $410,956 $121.23
===============================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933. Based upon the average
of the high and low price of the Common Stock as reported on the Nasdaq National
Market, on July 24, 1998.
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> 2
PROSPECTUS
398,406 SHARES
AMERICAN BIOGENETIC SCIENCES, INC.
CLASS A COMMON STOCK
--------------------
This Prospectus relates to an aggregate of 398,406 shares (the
"Shares") of Class A Common Stock, par value $.001 per share (the "Common
Stock"), of American Biogenetic Sciences, Inc. (the "Company) which may be
offered and sold, from time to time, by stockholders of the Company (the
"Selling Stockholders"). See "Selling Stockholders."
The Common Stock of the Company is traded on the Nasdaq National Market
("Nasdaq/NMS") under the symbol "MABXA." On July 24, 1998, the closing price on
the Nasdaq/NMS for the Common Stock was $1.00 per share.
The Selling Stockholders have advised the Company that they may sell,
from time to time, all or part of the shares of Common Stock covered by this
Prospectus through any of several methods, including ordinary brokerage
transactions or block transactions on the Nasdaq/NMS at market prices, or in
privately negotiated transactions at prices agreed upon by the parties. See
"Plan of Distribution."
The Company will not receive any proceeds from the sale of the Shares
covered by this Prospectus. The Company shall pay all expenses incurred in
effecting the registration of such Shares, including all registration and filing
fees, and legal and accounting fees for counsel to the Company. The Selling
Stockholders will bear all brokerage or underwriting discounts, commissions or
expenses, if any, and the fees and expenses, if any, of its counsel, which are
applicable to the Shares offered hereby.
-------------
AN INVESTMENT IN THE SHARES INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 3.
-------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is ____________, 1998.
<PAGE> 3
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company can be inspected and
copied at the public reference facilities maintained by the Commission at
Judiciary Plaza, 450 Fifth Street, NW, Room 1024, Washington, D.C. 20549, and at
the Commission's Regional Offices at Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300, New
York, New York 10048, at prescribed rates. The Commission maintains a website
(http://www.sec.gov) that contains reports, proxy and information statements and
other information electronically filed through the Commission's Electronic Data
Gathering, Analysis and Retrieval system ("EDGAR"). The Company's Common Stock
is quoted on the Nasdaq/NMS, and reports, proxy statements and certain other
information concerning the Company can also be inspected at the offices of
Nasdaq Operations, 1735 K Street NW, Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement on
Form S-3 (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the Shares. This Prospectus,
which constitutes a part of the Registration Statement, does not contain all of
the information set forth in the Registration Statement and the exhibits and
schedules thereto, to which reference is hereby made. Statements contained in
this Prospectus, and in any document incorporated herein by reference, as to the
contents of any contract or any other document referred to are not necessary
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 such
document, each such statement being qualified in all respects by such reference.
The Registration Statement has been filed through EDGAR and is publicly
available through the Commission's website (http://www.sec.gov). The
Registration Statement, together with its exhibits and schedules, may be
inspected without charge at the Public Reference Section of the Commission in
Washington, D.C. at the address noted above, and copies of all or any part
thereof may be obtained from the Commission upon payment of the prescribed fees.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the Commission
pursuant to the Exchange Act (File No. 0-19041) are incorporated herein by
reference:
(1) the Company's Annual Report on Form 10-K for the year ended
December 31, 1997;
(2) the Company's Unaudited Quarterly Report on Form 10-Q and the
amendment thereto for the fiscal quarter ended March 31, 1998;
(3) the Company's Current Reports on Form 8-K dated (date of earliest
event reported) April 27, 1998 (as filed on April 28, 1998) and May 20, 1998 (as
filed on June 3, 1998); and
(4) the description of the Company's Class A Common Stock contained in
the Registration Statement on Form 8-A filed by the Company on February 26,
1991, including all amendments or reports filed for the purpose of updating such
description.
All reports and other documents subsequently filed by the Company pursuant
to Sections 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 shall be deemed to be
incorporated by reference in this Prospectus and shall be part hereof from the
date of the filing of such document. Any statement contained in this Prospectus
or in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein, or in any other subsequently filed
document that also is (or is deemed to be) incorporated by reference herein,
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of the Registration Statement or 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 of the documents incorporated by
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<PAGE> 4
reference in this Prospectus (other than exhibits) unless such exhibits are
expressly incorporated by reference in such documents. Requests for such
documents should be submitted in writing to: American Biogenetic Sciences, Inc.,
1375 Akron Street, Copiague, New York 11726, or by telephone at (516) 789-2600,
Attn: Chief Financial Officer.
--------------
THE COMPANY
American Biogenetic Sciences, Inc. (the "Company" or the "Registrant")
is engaged in the research, development and production of cardiovascular and
neurobiology products for commercial development. The Company's enabling
technology is a patented antigen-free mouse colony which allows the generation
of highly specific monoclonal antibodies that are difficult to obtain from
conventional systems. The Company has utilized this technology to supply
antibodies for its innovative in vitro and in vivo diagnostic products.
Over the last few years, the Company has directed its efforts primarily
toward the development of cardiovascular and neurobiology products. These
efforts have led to the development of the Company's Thrombus Precursor Protein
(T(p)P(TM)) test, an assay for the risk assessment of active thrombosis (blood
clots) and the monitoring of anticoagulant therapy, and Functional Intac
Fibrinogen (FiF (TM)) test, an assay to measure levels of fibrinogen in blood,
as well as to the Company's patented specific monoclonal antibody MH1, with
radioisotope, for use as an in vivo imaging agent. In October 1996, the Company
received a Section 510(k) Pre-Market Clearance from the United States Food and
Drug Administration ("FDA") for its T(p)P(TM) test. In June 1997, the Company
received a Section 510(k) Pre-Market Clearance from the FDA to market its FiF
(TM) test. In November 1997, the Company initiated its marketing efforts for the
T(p)P(TM) and FiF (TM) through exhibitions and presentations at the MEDICA '97
trade show held in Dusseldorf, Germany. These efforts led to the initial sales
of T(p)P(TM) kits to European and Japanese distributors. On April 23, 1998, the
Company purchased all of the issued and outstanding shares of common stock of
Stellar Bio Systems, Inc. ("Stellar"), a manufacturer and distributor of
research reagents and diagnostic products.
The Company was incorporated in Delaware in September 1983. The
Company's principal executive offices are located at 1375 Akron Street,
Copiague, New York 11726, and its telephone number at that address is (516)
789-2600.
RISK FACTORS
An investment in the securities offered hereby is speculative in
nature, involves a high degree of risk and should not be made by any investor
who cannot afford the loss of his entire investment. In evaluating an investment
in the Company, prospective investors should carefully consider the following
risk factors in addition to the other information included herein and in the
information incorporated herein by reference. Certain statements included in
this Prospectus (and the information incorporated herein by reference)
concerning the Company's future results, future performance, intentions,
objectives, plans and expectations contain forward-looking statements. Those
statements are subject to a number of known and unknown risks and uncertainties
that, in addition to general economic and business conditions, could cause
actual results, performance and achievement to differ materially from those
described or implied in the forward-looking statements. Factors that could cause
or contribute to such differences include, but are not limited to, those
discussed below.
DEVELOPMENT STAGE COMPANY; HISTORY OF LOSSES; ACCUMULATED DEFICIT.
The Company remains in the development stage as it has not yet
generated significant revenues from product sales. The Company has, however,
received an aggregate of $1,302,000 in licensing fees, royalties and under
collaborative agreements from its inception through March 31, 1998.
Additionally, during the fourth quarter of fiscal 1997, the Company made its
initial sales of TpP(TM). Through March 31, 1998, sales of the Company's
products aggregated $264,000. Further, in April 1998, the Company acquired all
of the issued and outstanding shares of common stock of Stellar. For the year
ended December 31, 1997, Stellar was profitable and had revenues of $1,400,000.
While the Company has products at various stages of development and has started
to generate revenues, there can be no assurance as to when the Company may begin
generating significant revenues from product sales and cease being a development
stage company. The development of the Company's products has required, and is
expected to continue to require, significant research and development,
preclinical testing and clinical trials, as well as regulatory approvals.
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<PAGE> 5
The Company's activities, together with the Company's research,
development, and general and administrative expenses, have resulted in
significant losses and are expected to continue to result in significant losses
for the foreseeable future. At March 31, 1998, the Company had net worth of
$5,658,000, with an accumulated retained earnings deficit of $50,832,000. The
Company's ability to achieve profitability is dependent, in part, on its ability
to successfully complete its existing products and products under development,
obtain required regulatory approvals and manufacture and market successfully
such products directly or through partners, and its ability to acquire products
which can be successfully marketed.
The Company's operations are subject to numerous risks associated with
the development of pharmaceutical products, including the competitive and
regulatory environment in which the Company operates. In addition, the Company
may encounter unanticipated problems, including development, manufacturing,
distribution and marketing difficulties, some of which may be beyond the
Company's financial and technical abilities to resolve. Accordingly, there can
be no assurance that the Company's existing, under development or proposed
products will prove to be commercially viable, or that the Company will
successfully market any products or achieve significant revenues or profitable
operations.
NEED FOR ADDITIONAL FINANCING.
At March 31, 1998, the Company had working capital of $5,249,000. On
May 20, 1998, the Company sold $4,000,000 in principal amount of 5% Convertible
Debentures due May 20, 2001 (the "Debentures") and warrants to purchase up to
261,228 shares of Common Stock (the "Warrants") in a private placement,
generating net proceeds of approximately $3,744,000. However, the research,
development, commercialization, manufacturing and marketing of the Company's
existing, under development and proposed products is likely to require financial
resources significantly in excess of those presently available to the Company.
Accordingly, the Company intends to seek additional financing which may result
in borrowings that could affect its results of operations or the issuance of
additional shares of the Company's capital stock and/or rights to acquire
additional shares of capital stock that could cause dilution of the interests of
the then existing stockholders in the Company. The Company also intends to
continue to seek collaborative, licensing, co-marketing or other arrangements
with large pharmaceutical companies or other third parties to provide additional
funding and clinical expertise to perform tests necessary to obtain regulatory
approvals, provide manufacturing expertise and to market the Company's products,
which may result in the Company sharing the benefits (i.e., royalty payments) of
its products with such third parties, as well as sharing with, or relying upon,
the management of others for the development, testing and/or marketing of
products. There can be no assurance that the Company will be able to arrange
financing, collaborative arrangements or other third party arrangements on
acceptable terms necessary to fully develop and commercialize any of its
products. If the Company is unable to enter into such arrangements or obtain the
substantial additional financing necessary on acceptable terms, it would be
unable to successfully complete development of or commercialize its products.
ACQUISITION STRATEGY AND INTEGRATION OF ACQUISITIONS.
Part of the Company's growth strategy involves the acquisition of
companies and product lines which the Company believes could provide it with
access to technologies, products, management and technical expertise,
manufacturing capabilities or manufacturing sources, and/or distribution or
market means that could provide synergisms with the Company's operations or
otherwise facilitate its growth.
The Company's only acquisition to date was the acquisition of all of
the common stock of Stellar, a manufacturer and distributor of research reagents
and diagnostic products, in April 1998 for $120,000, 398,406 shares of the
Company's Class A Common Stock ($700,000 at the then market value as defined in
the Stellar Agreement) and contingent future payments of up to $650,000 in
shares of the Company's Class A Common Stock based on the level of Stellar's
future revenues and the market price of the Company's Common Stock at
approximately the date of issuance. Any future acquisition may result in the use
of the Company's cash, necessitate borrowings or result in the sale or issuance
of debt or equity securities to private sources or in public markets. The
issuance of any debt could result in the incurrence of significant interest
expense and an obligation to repay such debt in priority to payments to the
Company's stockholders. The issuance of equity could result in substantial
dilution in the equity interest of existing stockholders. Although the Company
is considering acquisitions and is currently engaged in various stages of
discussions with regard to potential acquisitions, the Company is not presently
a party to any commitment with respect to any acquisition.
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<PAGE> 6
The success of any acquisition, including the acquisition of Stellar,
will depend in large measure on the Company's ability to effectively integrate
the operations, management and information systems of the acquired businesses.
The process of integrating acquired businesses often involves unforeseen
difficulties and may require the Company to devote a significant amount of its
financial and other resources thereto. Acquisitions may involve a number of
additional risks, such as adverse short-ter effects on the Company's reported
operating results, diversion of management's attention, the ability of the
Company to retain key personnel, unanticipated problems or legal liabilities,
and amortization expense for the amount of the purchase price paid for acquired
assets in excess of their fair value, some or all of such factors could have a
material adverse effect on the Company's business, financial condition and
results of operations. Further, to the extent that the agreements relating to
acquisitions by the Company provide for indemnification of the Company with
respect to contingent and other liabilities of the acquired entity, such
indemnification obligations may be, and are in the case of the acquisition of
Stellar, for a limited duration and subject to negotiated limitations. If any
claims or liabilities of the Company relating to acquisitions are not subject to
any indemnification obligations, or if the amount of such claims or liabilities
exceed such limitations or the ability of the sellers of the acquired entities
to satisfy their indemnification obligations, the Company's business, financial
condition and results of operations could be materially and adversely effected.
There can be no assurance that the Company will be successful in
identifying or consummating acquisitions on favorable terms, if at all, or in
integrating the operations of Stellar or future acquisitions, or that any
acquired businesses will achieve sales and profitability that justify the
Company's investment therein.
UNPROVEN PRODUCTS.
Although the Company has had recent sales of its TpP(TM) and FiF(TM)
kits and products acquired as part of the acquisition of Stellar, the Company's
existing products, products under development and proposed products are subject
to the risks inherent in the development of biotechnology products. These
products require further research, development, testing and regulatory
clearance. Such products require demonstration of commercial scale manufacturing
before any products can be proven to be commercially viable. The Company is
unable to predict with any degree of certainty when, or if, the research,
development, testing and regulatory approval process for any of its products
will be completed. There can be no assurance that the Company's technology will
result in the development of any product that meets applicable regulatory
standards or continues to meet applicable regulatory standards, is capable of
being produced in commercial quantities at reasonable costs, is acceptable to
the medical community, or will be successfully marketed. Accordingly, the
Company is unable to predict whether its technology will result in any
commercially viable products.
CERTAIN EFFECTS OF GOVERNMENT REGULATION.
The investigation, manufacture, exportation and sale of diagnostic and
therapeutic products and vaccines in or from the United States is subject to
regulation by the FDA, including review and/or approval before marketing, as
well as by comparable foreign and state agencies. Noncompliance with applicable
requirements can result in, among other things, fines, injunctions, civil
penalties, recall or seizure of products, total or partial suspension of
production, failure of the government to grant pre-market clearance or
pre-market approval for devices, withdrawal of marketing or manufacturing
approvals and criminal prosecutions.
Some in vitro diagnostic products are eligible for an accelerated
application process in accordance with Section 510(k) of the 1976 Medical Device
Amendments to the Federal Food, Drug and Cosmetic Act as a product
"substantially equivalent" to another product in commercial distribution in the
United States before May 28, 1976. In October 1996, the Company received a
Section 510(k) Pre-Market Clearance to market the TpP(TM) test as an aid in the
risk assessment of thrombosis and the monitoring of anticoagulant therapy and
plans to submit additional pre-market notifications to obtain clearance to
market the test for additional specific indications. In June 1997, the Company
received Section 510(k) Pre-Market Clearance to market its FiF(TM) diagnostic
test for the quantitative determination of fibrinogen in human plasma.
Obtaining FDA approval and complying with FDA regulation with respect
to in vivo products (such as is required for the Company's patented specific
monoclonal antibody MH1 obtained from the Company's antigen free mouse colony)
is far more expensive and time consuming than the costs associated with the
review of products for in vitro use. Therefore, the Company intends to seek
joint ventures or licensing arrangements with respect to its existing MH1
imaging product and other proposed in vivo products, including therapeutic
products, so that the costs
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associated with the regulatory review and/or approval process will be borne by,
or shared with, the joint venturer or licensee. There can be no assurance that
the Company will be able to enter into any such arrangements or, if it is able
to, that the terms of such arrangements will be favorable to the Company.
Further, until the Company's under development and proposed therapeutic products
have been clinically tested, there can be no assurance that such products will
be found safe and efficacious or superior to products previously approved by the
FDA.
Any FDA, foreign or state regulatory approvals or clearances, once
obtained, can be withdrawn or modified. Delay by the Company in obtaining, or
inability of the Company to obtain and maintain, any necessary United States or
foreign clearances or manufacturing and marketing approvals for new or existing
products or product enhancements, or unanticipated cost resulting from these
regulatory requirements, would have a material adverse effect on the Company's
business, financial condition and results of operations.
DEPENDENCE ON ACCEPTANCE BY MEDICAL COMMUNITY.
Sales on a commercial basis of the Company's products for use as
diagnostics or therapeutics will be substantially dependent on acceptance by the
medical community. Widespread acceptance of the Company's in vitro diagnostic
tests as a useful adjunct to diagnosis and treatment will require educating the
medical community as to the benefits and reliability of such products.
Similarly, the use of any products for in vivo diagnosis (including those
utilizing mouse antibodies) and therapy will require educating the medical
community as to their benefits, reliability, safety and effectiveness.
Additionally, any of the Company's products may face competition from other
products which may be as or more effective than the Company's products for a
given indication. Accordingly, there can be no assurance that any of the
Company's products will be accepted in the medical community, or, if accepted,
as to the length of time it would take to gain such acceptance.
MARKETING ARRANGEMENTS OR OTHER SALES ARRANGEMENTS.
It has been the Company's policy to seek arrangements with large
pharmaceutical companies to market its existing and under development products.
In the event the Company is unable to enter into sufficient arrangements or if
the arrangements which it has entered into or may enter into in the future are
not successful, the Company would likely seek to market such products through
independent distributors which may require the Company to develop a marketing
program to support sales. In such event, the Company may be required, among
other things, to pay the expenses of developing promotional literature and
aides, hiring sales representatives and completing studies to interest
distributors in selling the Company's products. Any independent distributors
that the Company may engage may also market competitive products. There can be
no assurance that the Company will be able to enter into arrangements for the
distribution of any products on satisfactory terms.
MANUFACTURING FACILITIES.
While the Company is presently producing a limited quantity of
monoclonal antibodies for testing and evaluation of its in vitro products, there
can be no assurances that the Company will be able to either finance or meet FDA
regulations for good manufacturing practices required in order to convert and
operate such facility for commercial production of such products. The Company
does not intend to establish its own manufacturing operations for its in vivo
products unless and until, in the opinion of management of the Company, the size
and scope of its business and its financial resources so warrant. It is the
Company's intention to seek additional third parties to manufacture its in vivo
monoclonal antibody and other in vivo products, or enter into a joint venture or
license agreement with a partner who will be responsible for future
manufacturing. Each joint venture partner or contract manufacturer participating
in the manufacturing process of the Company's products must comply with FDA
regulations and file documentation with the FDA to support that part of the
manufacturing process in which it is involved. The Company is currently
contracting with four good manufacturing practices manufacturers for the
production of antibodies and the TpP(TM) and FiF(TM) kits. There is no assurance
that third parties will be able to manufacture sufficient quantities of the
Company's in vivo monoclonal antibody necessary to obtain full FDA clearance or
approval, that the FDA will accept the Company's manufacturing arrangements, or
that these commercial manufacturing arrangements can be obtained on acceptable
terms.
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<PAGE> 8
PATENTS AND PROTECTION OF PROPRIETARY INFORMATION.
The Company's business depends in part upon its proprietary technology.
The Company relies on a combination of trade secret laws, patents, trademarks
and confidentiality agreements and other contractual provisions to establish,
maintain and protect its proprietary rights, all of which afford only limited
protection. There can be no assurance that others will not independently develop
substantially equivalent proprietary information and techniques or otherwise
gain access to the Company's trade secrets or disclose such technology or that
the Company can meaningfully protect its trade secrets.
The Company has been issued or licensed to use twelve patents and has
additional patent applications pending in the United States. The Company has
obtained or applied for corresponding patents for certain of these patents and
patent applications in a limited number of foreign countries. These patents
relate to certain products of the Company under development including the use of
monoclonal antibodies specific for fibrinogen and monoclonal antibodies specific
for fibrin, the use of the Company's antigen free mouse colony to generate
monoclonal antibodies, a method of obtaining primed lymphocytes collected from
immunized antigen-free mice, an immunoassay for soluble fibrin using the
Company's proprietary fibrin-specific monoclonal antibody as a method of
detecting a thrombotic event, the use of the Company's proprietary
fibrin-specific monoclonal antibody as an antithrombotic agent, and the use of
the Company's proprietary fibrin-specific monoclonal antibody in conjunction
with a thrombolytic reagent for the treatment of thrombosis. There can be,
however, no assurance that the Company's pending patent applications or any
future applications will be approved, that any patents will provide the Company
with competitive advantages or will not be challenged by third parties, or that
the patents of others will not render the Company's patents obsolete or
otherwise have an adverse effect on the Company's ability to conduct business.
Because foreign patents may afford less protection under foreign law than is
available under United States patent law, there can be no assurance that any
such patents issued to the Company will adequately protect the Company's
proprietary information. Others may have filed and may file patent applications
in the future that are similar to or identical to those of the Company. To
determine the priority of inventions, the Company may have to participate in
interference proceedings declared by the United States Patent and Trademark
Office or opposition proceedings before a foreign patent office that could
result in substantial cost to the Company. No assurance can be given that any
such interfering patent or patent application will not have priority over patent
applications filed on behalf of the Company or that the Company will prevail in
any opposition proceeding. In addition, there can be no assurance that the
Company's products and technologies do not infringe or violate any patents or
proprietary rights of third parties. Any intellectual property litigation would
be costly and could divert the efforts and attention of the Company's management
and technical personnel, which could have a material adverse effect on the
Company's business, financial condition and results of operations.
Many of the Company's therapeutic compounds are the subject of patent
applications licensed by the Company from various academic institutions. Such
licenses require the Company to pay royalties on the sales of products. There
can be no assurance that these licensed products will be commercially viable or
that the licenses will not be terminated.
With respect to certain aspects of its technology, the Company
currently relies upon, and intends to continue to rely upon, trade secrets,
unpatented proprietary know-how and continuing technological innovation to
protect access to the Company's proprietary information. Relationships between
the Company and its scientific consultants and collaborators may provide such
persons access to the Company's know-how, although, in general, the Company
enters into confidentiality agreements with the parties involved. Similarly, the
Company's employees and consultants have entered into agreements with the
Company which require that such persons forebear from disclosing confidential
information of the Company and to assign to the Company all rights in any
inventions made while in the Company's engagement relating to Company
activities. All members of the Company's Scientific Advisory Committee are
employed by or have consulting agreements with third parties, the business of
which may conflict or compete with the Company, and any inventions discovered by
such individuals will not become the property of the Company. See "--Scientific
Advisors to the Company", below. There can be no assurance that trade secrets
will be developed, or that secrecy obligations will be honored, or that others
will not independently develop similar or superior technology. To the extent
that consultants, employees, collaborators or other third parties apply
technological information independently developed by them or by others to
Company projects, disputes may arise as to the ownership of such information
which may not be resolved in favor of the Company. Any unauthorized disclosure
of the Company's trade secrets or proprietary know-how would have a material
adverse effect on the Company's business, financial condition and results of
operations.
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<PAGE> 9
COMPETITION; RAPID TECHNOLOGICAL CHANGES.
Many companies, including large pharmaceutical, chemical, biotechnology
and agricultural concerns, universities and other research institutions, with
financial resources and research and development staffs and facilities
substantially greater than those of the Company, as well as a number of small
companies, are engaged in the research and development of products which are or
may be similar to, or competitive with, the Company's existing, under
development and proposed products.
Other products now in use, presently undergoing the regulatory approval
process, or under development by others may perform similar functions as the
Company's existing, under development and proposed products. The biotechnology
industry is characterized by rapid technological advances, and competitors may
develop products which may render the Company's existing, under development and
proposed products obsolete or which have advantages over the Company's products,
such as greater accuracy and precision or greater acceptance by the medical
community. Any such development by competitors, or the failure by the Company to
meet and surpass its competitors' technological advances, could have a material
adverse effect on the Company's business, financial condition and results of
operations. In addition, competitors may be able to complete the regulatory
approval process sooner and, therefore, market their products earlier than the
Company.
RETENTION AND ATTRACTION OF KEY PERSONNEL.
The success of the Company may be dependent on the efforts of Alfred J.
Roach, Chairman of the Board of Directors, Chief Executive Officer and a major
stockholder of the Company, Dr. Stephen H. Ip, President, Chief Operating
Officer and a Director of the Company, and Dr. Emer Leahy, Senior Vice
President-Business Development of the Company. Dr. Ip and Dr. Leahy are each
parties to employment agreements with the Company, which expire December 31,
1999 and November 30, 2001, respectively. Mr. Roach is not subject to any
employment agreement. The Company does not maintain life insurance on the lives
of Mr. Roach, Dr. Ip or Dr. Leahy. The loss of the services of Mr. Roach, Dr. Ip
or Dr. Leahy, as well as certain other personnel, could adversely affect the
Company's business and prospects. Because of the nature of its business, the
Company's success is dependent upon its ability to attract and retain
technologically qualified personnel, particularly research scientists. There is
substantial competition for qualified personnel, including competition from
companies with substantially greater resources than the Company. There is no
assurance that the Company will be successful in recruiting or retaining
personnel of the requisite caliber or in adequate numbers to enable it to
conduct its business, and it may be time consuming and costly to recruit
qualified personnel.
SCIENTIFIC ADVISORS TO THE COMPANY.
The Company has a Scientific Advisory Committee which is comprised of
scientific advisors who serve as consultants to the Company with respect to the
fields of microbiology, immunology and molecular biology and in cardiovascular
disease, hepatic disease and drug development. These scientists are employed by
or work for others, and they are expected to devote only a small portion of
their time to the Company. In addition, these individuals have employment,
consulting or other advisory arrangements with other entities and, as a result,
their obligations to these other entities may conflict or compete with their
obligations to the Company. There can be no assurance that regulations or
policies now in effect or adopted in the future to which these individuals are
or may be subject with such other entities might not limit the ability of the
scientific advisors to continue their relationship with the Company.
PRODUCT LIABILITY; REQUIREMENT FOR INSURANCE COVERAGE.
The testing, marketing and sale of pharmaceutical products entails a
risk of product liability claims by consumers and others. Additionally, the
Company's monoclonal antibodies are generated from an antigen free mouse colony
and instances of negative reactions by the human immune system to mouse derived
antibodies have been reported. Product and other liability claims may be
asserted by physicians, laboratories, hospitals or patients relying upon the
results of the Company's diagnostic tests. Claims may also be asserted against
the Company by end users of the Company's products, including persons who may be
treated with any in vivo diagnostic or therapeutic products.
8
<PAGE> 10
Certain distributors of pharmaceutical products require minimum product
liability insurance coverage as a condition precedent to the purchase of or
acceptance of products for distribution. Failure to satisfy such insurance
requirements could impede the ability of the Company to achieve broad
distribution of products, which would have a material adverse effect upon the
Company's business, financial condition and results of operations.
The Company has obtained product liability insurance covering its
TpP(TM) and FiF(TM) products, but does not maintain product liability insurance
coverage for its other products. Although the Company will attempt to obtain
product liability insurance prior to the marketing of any of its proposed
products, there can be no assurance that the Company will be able to secure such
insurance or, if available, that such insurance can be acquired at a reasonable
cost or will be sufficient to cover all possible liabilities. In the event of
any claim or suit against the Company, lack or insufficiency of insurance
coverage could have a material adverse effect on the business, financial
condition and results of operations of the Company.
CONTROL BY ALFRED J. ROACH.
As of June 30, 1998, Alfred J. Roach, Chairman of the Board of
Directors of the Company, owned and had the power to vote all 1,775,500
outstanding shares of the Company's Class B Common Stock and 885,250 shares of
the Company's Class A Common Stock (and held options to purchase an additional
1,160,000 shares of the Company's Class A Common Stock, all of which were
exercisable on June 30, 1998). Each share of Class B Common Stock is entitled to
ten votes, while each share of Class A Common Stock is entitled to one vote.
Accordingly, at such date, Mr. Roach was entitled to cast approximately 48.5% of
all votes entitled to be cast by stockholders at meetings or by consent without
a meeting. As a result, Mr. Roach controls the Company.
POTENTIAL ISSUANCES OF SHARES.
In addition to the 20,649,945 shares of Class A Common Stock
outstanding on June 30, 1998, the Company had 12,407,362 shares of Class A
Common Stock reserved for future issuance as follows: (i) 1,775,500 shares were
reserved for issuance upon conversion of Class B Common Stock, (ii) 2,791,750
shares were reserved for issuance upon the exercise of outstanding options under
the Company's 1986 Stock Option Plan (which plan has expired as to the future
grant of options) at prices ranging from $1.50 to $10.00 per share, (iii)
2,000,000 were reserved for issuance upon the exercise of options granted or
which may be granted in the future under the Company's 1996 Stock Option Plan,
under which options to purchase 854,250 shares, at exercise prices ranging from
$1.52 to $5.25 per share, were outstanding, (iv) 487,500 shares were reserved
for issuance upon the exercise of options granted or which may be granted in the
future under the Company's 1993 Non-Employee Director Stock Option Plan, under
which options to purchase 120,000 shares, at exercise prices ranging from $1.00
to $6.75 per share, were outstanding, (v) 601,864 shares were reserved for
issuance upon conversion of the $500,000 in principal amount of the Company's 8%
Convertible Debentures due October 13, 1998, which are convertible (with
interest from the respective dates of issuance) at a price equal to the lesser
of $3.375 or 85% of the average closing bid price of the Company's Class A
Common Stock for the five trading days prior to the conversion date, (vi)
4,000,000 shares were reserved for issuance upon conversion of the Debentures
and 261,228 shares were reserved for issuance upon exercise of the Warrants in
connection with the Company's private placement in May 1998, (vii) 489,520
shares were reserved for issuance upon exercise of other warrants and options
issued to unaffiliated third parties (at exercise prices ranging from $2.25 to
$5.76 per share). In addition to the foregoing, in connection with the Stellar
transaction, the Company may be obligated to issue up to $650,000 in shares of
the Company's Class A Stock as contingent future payments upon Stellar's
attainment of future revenue milestones. The issuance of reserved shares would
dilute the equity interest of existing stockholders and could have a significant
adverse effect on the market price of the Company's Class A Common Stock. See
also "--Shares Eligible for Future Sale", below.
NO DIVIDENDS.
The holders of Class A and Class B Common Stock are entitled to receive
dividends when, as and if declared by the Board of Directors out of funds
legally available therefor. To date, the Company has not paid any cash
dividends. The payment of dividends, if any, in the future is within the
discretion of the Board of Directors and will depend upon the Company's
earnings, its capital requirements and financial condition, and other relevant
factors. The Board of Directors does not intend to declare any dividends in the
foreseeable future, but intends to
9
<PAGE> 11
retain all earnings, if any, for use in Company's business operations. The
Company has agreed not to establish a record date for the payment of dividends
at any time that at least $400,000 principal amount of Debentures are
outstanding. Furthermore, as the Company will be required to obtain additional
financing, it is likely that there will be additional restrictions on the
Company's ability to declare any dividends.
SHARES ELIGIBLE FOR FUTURE SALE.
At June 30, 1998, the Company had outstanding 22,425,445 shares,
consisting of 20,649,945 shares of Class A Common Stock and 1,775,500 shares of
Class B Common Stock (which are convertible into Class A Common Stock on a share
for share basis). Upon completion of this Offering, approximately 19,554,774
shares of Class A Common Stock are presently freely transferable without
restriction under the Securities Act.
Of the remaining 2,870,671 outstanding shares (including the 1,775,500
shares of Class A Common Stock issuable upon conversion of Class B Common
Stock), (i) 92,421 shares are "restricted securities" that were acquired by the
holders thereof between February 1997 and May 1998 and (ii) 2,778,250 shares are
held by persons who may be deemed to be "affiliates" of the Company, 310,000 of
which are "restricted securities" acquired by the holder thereof between
November 1997 and June 1998 and the balance of which were acquired more than two
years ago or were acquired pursuant to a registration statement under Securities
Act. Rule 144 promulgated by the Commission under the Securities Act ("Rule
144"), provides, in general, that all persons (including affiliates) who have
satisfied a one year holding period with respect to "restricted securities", as
well as affiliates with respect to all other securities held by them, may,
subject to fulfillment of certain requirements, sell within any three month
period a number of shares of Class A Common Stock which does not exceed the
greater of 1% of the then outstanding shares of Class A Common Stock or the
average weekly trading volume in Class A Common Stock during the four calendar
weeks prior to such sale. Rule 144 also permits, under certain circumstances,
the sale of "restricted securities" without any quantity or other limitation by
a person who is not an affiliate of the Company (and has not been an affiliate
for at least three months preceding the sale) and who has satisfied a two year
holding period. The latter provision is applicable as to all 601,864 shares that
may be issued upon conversion of the Company's 8% Convertible Debentures issued
in October 1995. "Affiliates" are persons who control, are controlled by or are
under common control with the Company.
All shares issuable upon the exercise of options under the Company's
stock option plans have been registered under the Securities Act for issuance
and, unless held by "affiliates" of the Company (who will be able to sell such
shares by complying with Rule 144, discussed above, but without any additional
holding period), will be freely tradable upon issuance. The Company has also
registered under the Securities Act for resale (i) 5,000 shares of Class A
Common Stock issued in June 1996 and 25,000 shares of Class A Common Stock
subject to an option held by a former consultant, (ii) 100,000 shares of Class A
Common Stock subject to options held by another former consultant, and (iii)
4,261,228 shares registered in connection with the sale of the Debentures and
Warrants sold in the Company's private placement in May 1998. See "--Potential
Issuances of Shares", above. Any sale of a substantial number of the foregoing
shares could have a significant adverse effect on the market price of the
Company's Class A Common Stock.
NO ASSURANCE OF CONTINUED NASDAQ/NMS LISTING.
The Company is required to comply with numerous rules promulgated by
Nasdaq/NMS in order for its Class A Common Stock to continue to be quoted
thereon. Among other things, as such requirements pertain to the Company, the
Company is required to maintain an adjusted tangible net worth of at least
$4,000,000 and its Class A Common Stock must have an aggregate market value of
shares held by persons other than officers and directors ("public float") of at
least $5,000,000, a minimum bid price of at least $1.00 per share and at least
400 persons who own at least 100 shares. These requirements are similar to those
that are required for the Class A Common Stock to be eligible for inclusion on
Nasdaq's Small Cap Market. There can be no assurance that the Company will
continue to be eligible for trading on Nasdaq/NMS or, if not, meet the
requirements for listing or maintenance on the Nasdaq Small Cap Market.
10
<PAGE> 12
USE OF PROCEEDS
The proceeds from the sale of the Shares offered hereby will be the
property of the Selling Stockholders and will be used by them in their
discretion. No part of the proceeds will be received by the Company.
SELLING STOCKHOLDERS
The Company issued the Shares being offered hereby to the Selling
Stockholders as partial consideration for the acquisition by the Company of the
stock of Stellar Bio Systems, Inc. The Company is obligated, under that certain
Stock Purchase Agreement dated April 23, 1998, pursuant to which the Company
acquired all of the outstanding shares of stock of Stellar Bio Systems, Inc., to
register the Shares offered hereby under the Securities Act for resale by John
Brewer, William Barton and Sean O'Neill (collectively referred to as the
"Selling Stockholders"). The following table sets forth (i) the number of shares
of Common Stock beneficially owned by each Selling Stockholder prior to the
offering of any shares hereunder, (ii) the number of shares of Common Stock that
may be offered by each Selling Stockholder under this Prospectus, and (iii) the
number of shares of the Company's Class A Common Stock to be beneficially owned
by each Selling Stockholder after the Offering, assuming the sale of all of the
Shares offered hereby. This information is based upon information received from
or on behalf of each Selling Stockholder.
<TABLE>
<CAPTION>
Number of Shares
Beneficially Owned Prior Number of Shares Which Number of Shares Owned After
Name of Beneficial Owner to Offering May Be Offered Offering (1)
- ------------------------ ----------- -------------- ------------
<S> <C> <C> <C>
John Brewer 184,223 184,223 0
William Barton 174,342 174,342 0
Sean O'Neill 39,841 39,841 0
</TABLE>
- --------------------------
(1) Assumes the sale of all the shares of Common Stock offered hereby. See "Plan
of Distribution."
PLAN OF DISTRIBUTION
The price and manner of sale of the Shares offered hereunder are in the
sole discretion of the Selling Stockholders. The Shares offered hereby may be
offered through any of several methods, such as ordinary brokerage transactions
or block transactions on the Nasdaq/NMS at market prices, or in privately
negotiated transactions at prices agreed upon by the parties. Neither the
Company nor, to the knowledge of the Company, the Selling Stockholders, have any
agreement, arrangement or understanding with any broker or dealer entered into
prior to the effective date of the Registration Statement of which this
Prospectus is a part with respect to the sale of the Common Stock offered
hereby.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby has been
passed upon for the Company by Messrs. Brown, Rudnick, Freed & Gesmer, One
Financial Center, Boston, MA 02111.
EXPERTS
The audited consolidated financial statements, including the related
notes thereto, incorporated by reference in this Prospectus and elsewhere in the
Registration Statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in accounting and auditing in giving said reports.
11
<PAGE> 13
No dealer, salesman or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus or a supplement to the Prospectus in connection with the offering
described herein, and, if given or made, such information or representations
must not be relied upon as having been authorized by the Company or the Selling
Stockholders. Neither this Prospectus nor any supplement to this Prospectus
constitutes an offer to sell or a solicitation of an offer to buy any securities
other than those specifically offered hereby or of any securities offered hereby
in any jurisdiction where, or to any person to whom, it is unlawful to make an
offer or solicitation. Neither the delivery of this Prospectus nor any
supplement to this Prospectus nor any sale made hereunder shall, under any
circumstances create an implication that the information herein or therein is
correct as of any time subsequent to its date.
---------------------
TABLE OF CONTENTS
---------------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information............................ 2
Incorporation of Certain Documents by Reference . 2
The Company...................................... 3
Risk Factors..................................... 3
Use of Proceeds.................................. 11
Selling Stockholders............................. 11
Plan of Distribution............................. 11
Legal Matters.................................... 11
Experts.......................................... 11
</TABLE>
398,406 Shares
AMERICAN BIOGENETIC SCIENCES, INC.
CLASS A COMMON STOCK
--------------------
PROSPECTUS
---------------------
____________, 1998
12
<PAGE> 14
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION Set forth below is an
estimate of the fees and expenses payable in connection with the proposed
offering of the shares which will be paid by the Company.
<TABLE>
<S> <C>
SEC Registration Fee................................ $ 121.23
Accounting Fees and Expenses........................ 3,500.00*
Legal Fees and Expenses............................ 7,500.00*
Miscellaneous....................................... 3,878.77
-------------
TOTAL........................................... $ 15,000.00
</TABLE>
- --------------------
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware (the
"DGCL") provides, in general, that a corporation incorporated under the laws of
the State of Delaware, such as the Registrant, may indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding (other than a derivative action by or in
the right of the corporation) by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another enterprise, against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding if such person acted
in good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe such person's
conduct was unlawful. In the case of a derivative action, a Delaware corporation
may indemnify any such person against expenses (including attorneys' fees)
actually and reasonably incurred by such person in connection with the defense
or settlement of such action or suit if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
court determines such person is fairly and reasonably entitled to indemnity for
such expenses.
Article VII of the registrant's By-laws provides for indemnification of
directors, officers, employees and agents of the Company to the fullest extent
permitted under Delaware law. In addition, Article TENTH of the registrant's
Restated Certificate of Incorporation provides, in general, that no director of
the registrant shall be personally liable to the registrant or any of 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
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the DGCL (which provides that under certain circumstances,
directors may be jointly and severally liable for willful or negligent
violations of the DGCL provisions regarding the payment of dividends or stock
repurchases or redemptions), as the same exists or hereafter may be amended, or
(iv) for any transaction from which the director derived an improper personal
benefit.
Pursuant to Section 10.8(b) of the Stock Purchase Agreement between the
Company and Stellar Bio Systems dated April 23, 1998 (the "Stock Purchase
Agreement"), to the extent permitted by law, each Selling Stockholder has agreed
to indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed this registration statement, each person, if any, who
controls Company within the meaning of the Securities Act, any underwriter (as
defined in the Securities Act) and each other Selling Stockholder against any
losses, claims, damages or liabilities to which the Company or any such
director, officer, controlling person, underwriter or Selling Stockholder may
become subject, under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereto) arise out of or
are based upon any untrue or alleged untrue statement of any material fact
contained or expressly incorporated by reference in this registration statement,
including any preliminary prospectus or final prospectus contained herein or any
amendment or supplement hereto, or arise out of or based upon the omission or
alleged omission to state herein a material fact required to be stated therein
or necessary to make the statements herein not misleading, in each case to the
extent, but only to the extent, that such
<PAGE> 15
untrue statement or alleged untrue statement or omission or alleged omission was
made in the registration statement, preliminary prospectus, final prospectus, or
amendments or supplements hereto, in reliance upon and in conformity with
written information furnished by such Selling Stockholder expressly for use in
connection with such registration; and such Selling Stockholder will reimburse
any legal or other expenses reasonably incurred by Company or any such director,
officer, controlling person, underwriter or Selling Stockholder in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided that that the indemnity agreement contained in Section 10.8(b)
of the Stock Purchase Agreement shall not apply to amounts paid in settlement of
any such loss, claim, damage, liability or action if such settlement is effected
without the consent of the indemnifying Selling Stockholder (which consent shall
not be unreasonably withheld).
The Company has purchased a Directors and Officers Liability and
Reimbursement Policy that covers certain liabilities of directors and officers
of the Company arising out of claims based upon acts or omissions in their
capacities as directors or officers.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- ------
<S> <C>
3.1 Restated Certificate of Incorporation of the Company (filed as Exhibit
4.01 to the Company's Registration Statement on Form S-8, File No.
333-09473).*
3.2 Amended and Restated By-Laws of the Company (filed as Exhibit 4.02 to
the Company's Registration Statement on Form S-8, File No. 333-09473).*
4.1 Specimen Certificate for shares of Class A Common Stock (filed as
Exhibit 4.3 to the Company's Registration Statement on Form S-1, File
No. 33-31616).*
4.2 Form of the Company's 5% Convertible Debentures (filed as Exhibit 4.1
to the Company's Current Report on Form 8-K dated May 20, 1998 filed
with the Commission on June 3, 1998, File No. 0-19041).*
5 Opinion of Brown, Rudnick, Freed & Gesmer as to the legality of the
Class A Common Stock being offered.**
23.1 Consent of Arthur Andersen LLP.**
23.2 Consent of Brown, Rudnick, Freed & Gesmer, P.C. (contained in Exhibit
5).**
24 Power of Attorney (contained on Signature Page of this Registration
Statement).**
</TABLE>
---------------------
* Not filed herewith. In accordance with Rule 411 promulgated pursuant to
the Securities Act of 1933, as amended, reference is made to the
documents previously filed with the Commission, which are incorporated
by reference herein.
** Filed herewith.
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;
(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 this 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 by the
Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in this Registration Statement.
II-2
<PAGE> 16
(2) That, for the purpose of determining any liability under the
Securities Act, each 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 the 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 Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the Registrant's Restated Certificate of Incorporation,
Amended and Restated By-Laws, or otherwise, the Registrant has been advised that
in the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the 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.
II-3
<PAGE> 17
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 Town of Copiague, State of New York, on the 29th day of July
1998.
AMERICAN BIOGENETIC SCIENCES, INC.
By: /s/ Alfred J. Roach
----------------------
Alfred J. Roach, Chairman of the
Board of Directors and Chief Executive
Officer and Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Alfred J. Roach, Josef C. Schoell and Timothy J.
Roach and each of them, with the power to act without the other, his true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution for him or in his name, place and stead, in any and all
capacities to sign any and all amendments or post-effective amendments to this
Registration Statement, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
or his substitutes, may lawfully 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 below by the following persons in the
capacities indicated on the 29th day of July, 1998. and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Alfred J. Roach Chairman of the Board (Chief July 29, 1998
Alfred J. Roach Executive Officer)
/s/ Josef C. Schoell Vice President, Finance (Principal July 29, 1998
Josef C. Schoell Financial and Accounting Officer)
/s/ Gustav Victor Rudolph Born Director July 29, 1998
Gustav Victor Rudolph Born
/s/ Ellena M. Byrne Director July 29, 1998
Ellena M. Byrne
/s/ Joseph C. Hogan Director July 29, 1998
Joseph C. Hogan
/s/ Stephen H. Ip Director July 29, 1998
Stephen H. Ip
/s/ Timothy J. Roach Director July 29, 1998
Timothy J. Roach
/s/ William G. Sharwell Director July 29, 1998
William G. Sharwell
</TABLE>
<PAGE> 18
EXHIBIT INDEX
Exhibit
Number
3.1 Restated Certificate of Incorporation of the Company (filed as Exhibit
4.01 to the Company's Registration Statement on Form S-8, File No.
333-09473).*
3.2 Amended and Restated By-Laws of the Company (filed as Exhibit 4.02 to
the Company's Registration Statement on Form S-8, File No. 333-09473).*
4.1 Specimen Certificate for shares of Class A Common Stock (filed as
Exhibit 4.3 to the Company's Registration Statement on Form S-1, File
No. 33-31616).*
4.2 Form of the Company's 5% Convertible Debentures (filed as Exhibit 4.1
to the Company's Current Report on Form 8-K dated May 20, 1998 filed
with the Commission on June 3, 1998, File No. 0-19041).*
5 Opinion of Brown, Rudnick, Freed & Gesmer as to the legality of the
Class A Common Stock being offered.**
23.1 Consent of Arthur Andersen LLP.**
23.2 Consent of Brown, Rudnick, Freed & Gesmer, P.C. (contained in Exhibit
5).**
24 Power of Attorney (contained on Signature Page of this Registration
Statement).*
- --------------------
* Not filed herewith. In accordance with Rule 411 promulgated pursuant to
the Securities Act of 1933, as amended, reference is made to the
documents previously filed with the Commission, which are incorporated
by reference herein.
** Filed herewith.
<PAGE> 1
EXHIBIT 5
July 29, 1998
American Biogenetic Sciences, Inc.
1375 Akron Street
Copiague, New York 11726
Attn: Alfred J. Roach, Chief Executive Officer
RE: Registration Statement on Form S-3 filed on July 29, 1998
Ladies and Gentlemen:
We have acted as counsel to American Biogenetic Sciences, Inc., a
Delaware corporation (the "Company"), in connection with the preparation and
filing with the Securities and Exchange Commission of a Registration Statement
on Form S-3 (the "Registration Statement") pursuant to which the Company is
registering under the Securities Act of 1933, as amended (the "Act"), a total of
398,406 shares of common stock, $.001 par value (the "Shares"). This opinion is
being rendered in connection with the filing of the Registration Statement.
In connection with this opinion, we have examined the following
documents (collectively, the "Documents"):
(i) the Restated Certificate of Incorporation of the Company,
dated April 17, 1998, as certified by the Secretary of State
of the State of Delaware, and a certificate of the Secretary
of the Company dated July 29, 1998 that there have been no
amendments thereto;
(ii) the Amended and Restated By-laws of the Company, certified by
the Secretary of the Company as presently being in effect;
(iii) a Certificate of the Secretary of the Company dated July 29,
1998 which certifies the adoption of resolutions by the Board
of Directors of the Company which authorize, among other
things, the Company to enter into a Stock Purchase Agreement
(the "Stock Purchase Agreement") dated April 23, 1998, by and
among the Company, Stellar Bio Systems, Inc. ("Stellar") and
all of the stockholders of Stellar (the "Selling
Stockholders");
(iv) the Stock Purchase Agreement; and
(v) oral confirmation on July 29, 1998 from Continental Stock
Transfer & Trust Company, the Company's transfer agent, as to
the number of issued and outstanding shares of the Company.
We have, without independent investigation, relied upon the
representations and warranties of the various parties as to matters of objective
fact contained in the Documents.
We have not made any independent review or investigation of orders,
judgments, rules or other regulations or decrees by which the Company or any of
its property may be bound, nor have we made any independent investigation as to
the existence of actions, suits, investigations or proceedings, if any, pending
or threatened against the Company.
<PAGE> 2
With your concurrence, the opinions hereafter expressed, whether or not
qualified by language such as "to our knowledge," are based solely upon (1) our
review of the Documents and (2) such review of published sources of law as we
have deemed necessary.
This firm, in rendering legal opinions, customarily makes certain
assumptions which are described in Schedule A hereto. In the course of our
representation of the Company in connection with preparation of the Registration
Statement, nothing has come to our attention which causes us to believe reliance
upon any of those assumptions is inappropriate, and, with your concurrence, the
opinions hereafter expressed are based upon those assumptions.
We express no legal opinion upon any matter other than that explicitly
addressed in numbered paragraph 1 below, and our express opinion therein
contained shall not be interpreted to be an implied opinion upon any other
matter.
Our opinion contained herein is limited to the Delaware General
Corporation Law and the Federal law of the United States of America.
1. Based upon and subject to the foregoing, we are of the opinion that
the Shares have been duly authorized and validly issued, and are fully paid and
non-assessable.
We understand that this opinion is to be used in connection with the
Registration Statement. We consent to the filing of this opinion as an Exhibit
to said Registration Statement and to the reference to our firm wherever it
appears in the Registration Statement, including the prospectus constituting a
part thereof and any amendments thereto. This opinion may be used in connection
with the offering of the Shares only while the Registration Statement, as it may
be amended from time to time, remains effective under the Act.
Very truly yours,
BROWN, RUDNICK, FREED & GESMER
By: BROWN, RUDNICK, FREED & GESMER,
P.C., a Partner
By: /s/ Steven R. London
--------------------------------
Steven R. London, A Member
Duly Authorized
<PAGE> 3
SCHEDULE A
BROWN, RUDNICK, FREED & GESMER
STANDARD ASSUMPTIONS
In rendering legal opinions in third party transactions, Brown,
Rudnick, Freed & Gesmer makes certain customary assumptions described below:
1. Each natural person executing any of the Documents has
sufficient legal capacity to enter into such Documents and
perform the transactions contemplated thereby.
2. The Company holds requisite title and rights to any property
involved in the transactions described in the Documents and
purported to be owned by it.
3. Each person other than the Company has all requisite power and
authority and has taken all necessary corporate or other
action to enter into those Documents to which it is a party or
by which it is bound, to the extent necessary to make the
Documents enforceable against it.
4. Each person other than the Company has complied with all legal
requirements pertaining to its status as such status relates
to its rights to enforce the Documents against the Company.
5. Each Document is accurate, complete and authentic, each
original is authentic, each copy conforms to an authentic
original and all signatures are genuine.
6. All official public records are accurate, complete and
properly indexed and filed.
7. There has not been any mutual mistake of fact or
misunderstanding, fraud, duress, or undue influence by or
among any of the parties to the Documents.
8. The conduct of the parties to the transactions described in
the Documents has complied in the past and will comply in the
future with any requirement of good faith, fair dealing and
conscionability.
9. Each person other than the Company has acted in good faith and
without notice of any defense against the enforcement of any
rights created by, or adverse claim to any property or
security interest transferred or created as part of, the
transactions described in the Documents.
10. There are no agreements or understandings among the parties to
or bound by the Documents, and there is no usage of trade or
course of prior dealing among such parties, that would define,
modify, waive, or qualify the terms of any of the Documents.
11. The Company will not in the future take any discretionary
action (including a decision not to act) permitted under any
Document that would result in a violation of law or constitute
a breach or default under that or any other Document or court
or administrative orders, writs, judgments and decrees that
name the Company and are specifically directed to it or its
property.
12. The Company will obtain all permits and governmental approvals
not required at the time of the closing of the transaction
contemplated by the Documents but which are subsequently
required, and will take all actions similarly required,
relevant to subsequent consummation of the transaction
contemplated by the Document or performance of the Documents.
13. All parties to or bound by the Documents will act in
accordance with, and will refrain from taking any action that
is forbidden by, the terms and conditions of the Documents.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of our report dated February 18, 1998,
included in American Biogenetic Sciences, Inc.'s Form 10-K for the year ended
December 31, 1997, and to all references to our firm included in this
Registration Statement.
/s/ ARTHUR ANDERSEN LLP
Melville, New York
July 29, 1998
