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AS FILED WITH THE SECURITIES AD EXCHANGE COMMISSION ON AUGUST 27, 1999
REGISTRATION NO. 333-
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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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AVI BIOPHARMA, INC.
(Exact name of registrant as specified in its charter)
OREGON 93-0797222
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
ONE S.W. COLUMBIA, SUITE 1105, PORTLAND, OR 97258
(503) 227-0554
(Address, including zip code, and telephone number,
including area code of registrant's principal executive offices)
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DENIS R. BURGER, PH.D.
PRESIDENT & CHIEF EXECUTIVE OFFICER
AVI BIOPHARMA, INC.
ONE S.W. COLUMBIA, SUITE 1105, PORTLAND, OR 97258
(503) 227-0554
(Name, address, including zip code, and telephone number,
including area code of agent for service)
COPY TO:
BYRON W. MILSTEAD, ESQ.
ATER WYNNE LLP
222 S.W. COLUMBIA, SUITE 1800, PORTLAND, OR 97201-6618
Approximate date of commencement of proposed sale to 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, 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. / /
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CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
To Be To Be Price Per Offering Registration
Registered Registered Share (1) Price (1) Fee
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<S> <C> <C> <C> <C>
Common Stock, 975,000 $3.4375 $3,351,563 $932
$.0001 par value shares
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(1) The offering price is estimated solely for the purpose
of calculating the registration fee in accordance with
Rule 457(c) using the average of the high and low price
reported by the Nasdaq National Market for the Common Stock
on August 26, 1999, which was approximately $3.4375 per
share.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
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SELLING SHAREHOLDERS'
PROSPECTUS
AVI BIOPHARMA, INC.
975,000 Common Shares
Nasdaq National Market
AVII
This Investment involves a High Degree of Risk. You Should Purchase Shares
Only If You Can Afford a Complete Loss of Your Investment. See Risk Factors
beginning on page 9.
----------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved the Common Shares, or determined if this
Prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
- This is an offering of Common Shares by existing
shareholders of AVI BioPharma, Inc.
- The selling shareholders will receive all of the proceeds
from the sale of the Common Shares, less any commissions or
discounts paid to brokers or other agents. We will not
receive any of the proceeds from the sale of the Common
Shares.
- The selling shareholders may offer and sell the Common
Shares on the Nasdaq National Market at prevailing market
prices, or in privately negotiated transactions at prices
other than the market price. On August 26, 1999, the
closing sale price for our Common Shares on the Nasdaq
National Market was $3.375.
- The Common Shares were obtained by the selling shareholders
in transactions that were exempt from the registration
requirements of the Securities Act of 1933, as amended, and
represent approximately 7% of the Company's outstanding
Common Stock.
The information in this Prospectus is not complete and may be changed. The
selling shareholders may not sell their Common Shares until the registration
statement filed with the Securities and Exchange Commission is effective. This
Prospectus is not an offer to sell Common Shares and it is not soliciting an
offer to buy Common Shares in any state where the offer or sale is not
permitted.
August 26, 1999
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TABLE OF CONTENTS
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PAGE
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 5
SUMMARY 6
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS 8
RISK FACTORS 9
INFORMATION ABOUT THE COMPANY 13
OUR SELLING SHAREHOLDERS 17
PLAN OF DISTRIBUTION 18
DESCRIPTION OF CAPITAL SHARES 19
LEGAL MATTERS 21
EXPERTS 21
ADDITIONAL INFORMATION
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents which we filed with the Securities and Exchange
Commission are incorporated by reference in this Prospectus:
(1) our Annual Report on Form 10-KSB for the year ended
December 31, 1998, which we refer to in the rest of
this document as our Annual Report; and
(2) our Report on Form 10-QSB dated August 12, 1999, for
the quarter ended June 30, 1999.
In addition, all documents which we file with the Securities and
Exchange Commission ("Commission") pursuant to Section 13, 14 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), after the
date of the Registration Statement and before termination of the offering of
Common Shares, including all annual reports on Form 10-KSB, and all filings
on Forms 10-QSB and 8-K, will be deemed to be incorporated by reference in
this Prospectus and to be a part of this Prospectus from the date those
documents are filed. Any statement contained in a document which is
incorporated, or deemed to be incorporated, by reference into this
Prospectus, shall be considered modified or superseded for purposes of this
Prospectus to the extent that a statement contained in this Prospectus or in
any other subsequently filed document which also is, or is deemed to be,
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
You may request a copy of any document incorporated by reference in this
Prospectus at no cost. To receive a copy, write or call us at AVI BioPharma,
Inc., One S.W. Columbia, Suite 1105, Portland, Oregon 97258, Attention: Mr.
Alan P. Timmins, (503) 227-0554.
We are subject to the informational requirements of the Exchange Act and
file reports and other information with the Commission. Reports and other
information which we file with the Commission, including the Registration
Statement on Form S-3 of which this Prospectus is a part, may be inspected
and copied at the public reference facilities of the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, at
prescribed rates. The Commission's telephone number is 1-800-SEC-0330. These
materials may be obtained electronically by visiting the Commission's web
site on the Internet at http://www.sec.gw. Our Common Stock is listed on the
Nasdaq National Market. Reports, proxy statements and other Company materials
also can be inspected at 1735 K Street, N.W., Washington, D.C. 20006-1506.
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SUMMARY
MANY OF THE MATTERS SET FORTH IN THIS MEMORANDUM CONTAIN FORWARD-LOOKING
STATEMENTS THAT ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE SET FORTH HEREIN. WE REFER YOU TO
CAUTIONARY INFORMATION CONTAINED ELSEWHERE HEREIN AND IN OTHER DOCUMENTS WE FILE
WITH THE SECURITIES AND EXCHANGE COMMISSION FROM TIME TO TIME.
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BUSINESS AVI BioPharma, Inc. (AVI) is an emerging biopharmaceutical
company developing therapeutic products using three distinct
platform technologies:
Therapeutic cancer vaccines Avicine-TM- clinical stage
Gene-targeted drugs Neu-Genes-Registered Trademark- clinical stage
Drug delivery technologies CytoPorter-TM- pre-clinical stage
Our principal focus is the treatment of life-threatening
diseases, most notably cancer and heart disease. Currently
approved drugs or other therapies often prove to be
ineffective in treating advanced stages of these diseases or
produce numerous unwanted side-effects. Our two leading
platforms, Avicine and Neu-Genes, are specifically aimed at
solving the challenges faced by today's pharmaceutical
products. Each of these products represent large market
opportunities. It is estimated that the world-wide market
for therapeutic cancer vaccines exceeds $2 billion.
CANCER VACCINES Avicine, a therapeutic vaccine, represents our most advanced
product opportunity, having recently completed a Phase II
human clinical trial for colorectal cancer. Therapeutic
cancer vaccines operate under the rationale that active
immunization can stimulate an immune response against a
pre-existing cancer. The therapeutic benefit of the vaccine
hinges on the existence of specific target sites, called
tumor antigens, on the tumor cells.
The target for Avicine is human chorionic gonadotropin
(hCG). Not only is hCG responsible for stimulating fetal
development during pregnancy, but it is also a tumor marker
found on cancer cells of all major types including cancer of
the colon, pancreas, prostate, lung and breast. It is
believed that the role of hCG in pregnancy and cancer is
similar. In both cases, it (i) serves as a growth factor
encouraging rapid cell division, (ii) fosters the
formulation of blood vessels, (iii) stimulates invasion of
other tissues and (iv) dampens the immune system to allow
the fetus, or the tumor, to avoid rejection. Avicine uses
an anti-hCG approach to treating cancer.
Avicine has completed five clinical studies in cancer,
including Phase II trials in colorectal, in which a total of
172 patients received treatment. From these studies, we
believe that the vaccine is a safe and essentially non-toxic
therapy and capable of producing a specific immune response
in most of the patients. Further, the patients who mounted
an immune response to hCG lived longer than patients treated
with other conventional therapies. We intend to investigate
further the use of Avicine alone or in conjunction with
other approved therapies.
GENE-TARGETED
DRUGS Most conventional drugs seek to modify the function of
target molecules with as few side effects as possible. Many
drugs fail due to (i) their low level of selectivity for a
specific disease target or (ii) because of difficulties in
their delivery. These two issues also contribute to
unwanted side effects. Safe and effective therapeutics for
cancer, heart disease, and inflammatory diseases have been
particularly difficult to develop because these diseases
have few targets for therapeutic intervention that would not
prove toxic to the patient.
Our gene-targeted drug platform, Neu-Genes, uses synthetic
polymers to block the function of certain genetic sequences
involved in the disease process. Targeting specific genetic
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sequences provides for greater selectivity than available
through conventional drugs. Neu-Genes have the potential to
provide safe and effective treatment for a wide range of
human diseases.
We have completed pre-clinical studies and expect to begin
Phase I/II clinical trials with Neu-Gene compounds in the
later half of 1999 for bone cancer and restenosis, the
blockage of arteries following a balloon angioplasty
treatment.
INTRACELLULAR DRUG
DELIVERY For drugs to reach a target within a cell, they must cross
both tissue and cellular barriers. This requires the drugs
to achieve solubility in both the blood stream and cell
membranes. CytoPorter-TM-, our intracellular drug delivery
platform, is being developed specifically to address this
drug delivery challenge. CytoPorter is in pre-clinical
development.
STRATEGY We have the experience and resources to initiate the drug
discovery and development, move drug candidates through
pre-clinical development and into early stage clinical
trials (Phase I and Phase II). Our strategy for the near
term (2-5 years) is to license the marketing and sales
rights for our product candidates to pharmaceutical partners
after Phase II clinical trials. In this manner, expensive,
late-stage clinical development, marketing and sales will be
the responsibility of the licensee. With adequate resources
we may consider taking greater responsibility for the
late-stage clinical development and marketing opportunities.
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CLINICAL DEVELOPMENT PROGRAM
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Product Candidate Pre-clinical Phase I Phase II Phase III
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Avicine Completed Completed Completed 1999
(Colorectal Cancer Vaccine)
Avicine Completed Completed 1999
(Pancreatic Cancer Vaccine)
Avicine Completed Completed 1999
(Prostate Cancer Vaccine)
Resten-NG Completed 1999 1999
(Gene-Targeted Drug for Restenosis)
Resten-NG Completed 1999
(Gene-Targeted Drug for Cancer)
CytoPorter-TM- 1999
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus includes forward-looking statements, regarding, among other
items:
- our intention to introduce new products
- FDA approval for our products
- our expectations about the markets for our products
- acceptance of our products in the marketplace
- our future capital needs
- success of our patent applications
- the status of Year 2000 compliance efforts
We have based these forward-looking statements largely on our expectations.
Forward-looking statements are subject to risks and uncertainties, certain
of which are beyond our control. Actual results could differ materially from
those anticipated as a result of the factors described in the "Risk Factors"
section beginning on page 9, including among others:
- delays in developing, or the failure to develop,
products
- delays in obtaining, or our inability to obtain,
approval by the FDA and other regulatory authorities
for our products
- the development of competing or more effective products
by other parties
- uncertainty of market acceptance of our products
- problems that we may face in manufacturing, marketing,
and distributing our products
- the timing of our future capital needs
- our inability to raise additional capital when needed
- delays in the issuance of, or the failure to obtain,
patents for certain of our products and technologies
- problems with important suppliers and business partners
We do not undertake any obligation to publicly update or revise any
forward-looking statements contained in this Prospectus or incorporated by
reference, whether as a result of new information, future events or otherwise.
Because of these risks and uncertainties, the forward-looking events and
circumstances discussed in this Prospectus might not transpire.
NOTES TO READERS OF THIS PROSPECTUS
We were incorporated in Oregon in 1980. When we refer to "us," "we,"
"our," "the Company" and "AVI" in this prospectus, we mean AVI BioPharma, Inc.,
and its consolidated subsidiaries. Our executive offices are located at
One S.W. Columbia, Suite 1105, Portland, Oregon 97258. Our telephone number at
that location is (503) 227-0554. Information contained on our websites does not
constitute part of this prospectus.
This prospectus includes our trademarks and registered trademarks,
including Avicine, Neu-Gene and CytoPorter. Each other trademark, trade name or
service mark appearing in this prospectus belongs to its holder.
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RISK FACTORS
The Shares offered by this Prospectus are speculative and involve a high
degree of risk. Before making an investment, you should carefully read this
entire Prospectus and consider the following risk factors.
HISTORY OF OPERATING LOSSES AND ANTICIPATED FUTURE LOSSES
We incurred a net operating loss of $26.7 million in 1998, and $3.7
million for the first six months of 1999. "Net operating loss" represents
the amount by which our expenses (other than interest expense) exceed
revenues. As of June 30, 1999, our accumulated deficit was $46.5 million.
Our losses have resulted principally from expenses incurred in research and
development of our technology and products and from selling, general and
administrative expenses that we have incurred while building our business
infrastructure. We expect to continue to incur significant operating losses
in the future as we continue our research and development efforts and seek to
obtain regulatory approval of our products. Our ability to achieve
profitability depends on our ability to complete development of our products,
obtain regulatory approvals and market our products. It is uncertain when,
if ever, we will become profitable.
EARLY STAGE OF PRODUCT DEVELOPMENT
Although we began operations in 1980, we are only in the early stages of
the development of our pharmaceutical products. We have devoted almost all
of our time to research and development of our technology and products,
protecting our proprietary rights and establishing strategic alliances. Our
proposed products are in the pre-clinical or clinical stages of development
and will require significant further research, development, clinical testing
and regulatory clearances. We have no products available for sale, except
for research reagents, and we do not expect to have any products available
for sale for several years. We have not received any significant revenues
from the sale of products and we cannot assure investors that we will
successfully develop marketable products, that our sales will increase or
that we will become profitable. Third parties may develop superior or
equivalent but less expensive, products.
LACK OF ASSURANCE OF REGULATORY APPROVALS
Except for Avicine, none of our products has been tested in humans, and,
except for Avicine, we have not filed an Investigational New Drug Application
with the United States Food and Drug Administration on any of our products
currently under development. Our proposed products are subject to
development risks. These risks include the possibilities that any of the
products could be found to be ineffective or toxic, or could fail to receive
necessary regulatory clearances. We cannot assure you that any of our
products will receive marketing approval from the FDA.
LACK OF OPERATING EXPERIENCE
We have engaged solely in the development of pharmaceutical technology.
Although some of our management have experience in biotechnology company
operations, we have limited experience in manufacturing or selling
pharmaceutical products. We also have only limited experience in negotiating
and maintaining strategic relationships, and in conducting clinical trials
and other later-stage phases of the regulatory approval process. We cannot
assure investors that we will successfully engage in any of these activities.
NEED FOR FUTURE CAPITAL AND UNCERTAINTY OF ADDITIONAL FUNDING
Since we began operations, we have obtained operating funds primarily by
selling shares of our company.
Based on our current plans, we believe that current cash balances will
be sufficient to meet our operating needs for approximately the next six
months. Furthermore, the actual amount of funds that we will need will be
determined by many factors, some of which are beyond our control. These
factors include the success of our research and development efforts, the
status of our pre-clinical and clinical testing, costs relating to securing
regulatory approvals and the costs and timing of obtaining new patent rights,
regulatory changes, competition and technological developments in the market.
We may need funds sooner than currently anticipated.
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We anticipate that we will need to obtain additional funds during or at
the end of this eighteen-month period. If necessary, potential sources of
additional funding include strategic relationships, public or private sales
of our shares or debt or other arrangements. We do not have any committed
sources of additional financing at this time, and it is uncertain whether we
can obtain additional funding when we need it on terms that will be
acceptable to us or at all. If we raise funds by selling additional shares,
the ownership interest of our existing shares will be diluted. If we are
unable to obtain financing when needed, our business and future prospects
would be materially adversely affected.
DEPENDENCE ON OTHERS FOR CLINICAL TESTING, MANUFACTURING AND MARKETING
We do not intend to conduct human clinical trials ourselves. We also do
not intend to commercially manufacture our products to conduct our clinical
trials. We anticipate entering into relationships with larger pharmaceutical
companies to conduct later pharmaceutical trials and to manufacture and
market our products. We may be unable to enter into corporate partnerships
which could impede our ability to bring our products to market. We cannot
assure investors that any corporate partnerships, if entered, will be on
favorable terms or will result in the successful development or marketing of
our products. If we are unsuccessful in establishing advantageous clinical
testing, manufacturing and marketing relationships, we are not likely to
generate significant revenues and become profitable.
GOVERNMENTAL REGULATION
All of our products are subject to extensive regulation by the United
States Food and Drug Administration and by comparable agencies in other
countries. The FDA and comparable agencies require new pharmaceutical
products to undergo lengthy and detailed clinical testing procedures and
other costly and time-consuming compliance procedures. We cannot predict
when we will complete our clinical trials or when we will be able to submit
our products for regulatory review. Even if we submit a new drug
application, there may be delays in obtaining regulatory approvals, if we
obtain them at all. Sales of our products outside the United States will
also be subject to regulatory requirements governing clinical trials and
product approval. These requirements vary from country to country and could
delay introduction of our products in those countries.
DEPENDENCE ON KEY PERSONNEL
Our success will depend to a large extent on the abilities and continued
service of several key employees, including Drs. Denis Burger, Patrick
Iversen, Dwight Weller and Mr. Jeffrey L. Lillard. The loss of any of these
key employees could significantly delay the achievement of our goals.
Competition for qualified personnel in our industry is intense, and our
success will be dependent on our ability to attract and retain highly skilled
personnel.
COMPETITION
The biotechnology industry is highly competitive. We compete with
companies in the United States and abroad that are engaged in the development of
pharmaceutical technologies and products. They include:
- biotechnology, pharmaceutical, chemical and other
companies;
- academic and scientific institutions;
- governmental agencies; and
- public and private research organizations.
Many of these companies and many of our other competitors have much
greater financial and technical resources and production and marketing
capabilities than we do. Our industry is characterized by extensive research
and development and rapid technological progress. Competitors may
successfully develop and market superior or less expensive products which
render our products less valuable or unmarketable.
PATENTS AND PROPRIETARY RIGHTS
Our success will depend on our existing patents and licenses, and our
ability to obtain additional patents in the future. We have filed 45 patent
applications in the United States, Canada, Europe, Australia and Japan and 35
patents
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have been issued. We license the composition, manufacturing and use of
Avicine in all fields except fertility regulation from Dr. Vernon Stevens and
The Ohio State University.
We cannot assure investors that our 10 pending patent applications will
result in patents being issued in the United States or foreign countries. In
addition, we cannot guarantee that patents which have been or will be issued
will afford meaningful protection for our technology and products.
Competitors may develop products similar to ours which do not conflict with
our patents. Others may challenge our patents and, as a result, our patents
could be narrowed or invalidated. The patent position of biotechnology firms
generally is highly uncertain, involves complex legal and factual questions,
and has recently been the subject of much litigation. No consistent policy
has emerged from the United States Patent and Trademark Office or the courts
regarding the breadth of claims allowed or the degree of protection afforded
under biotechnology patents. In addition, there is a substantial backlog of
biotechnology patent applications at the USPTOs and the approval or rejection
of patents may take several years.
Our success will also depend partly on our ability to operate without
infringing upon the proprietary rights of others, as well as our ability to
prevent others from infringing on our proprietary rights. We may be required
at times to take legal action in order to protect our proprietary rights and,
despite our best efforts, we may be sued for infringing on the patent rights
of others. Patent litigation is costly and, even if we prevail, the cost of
such litigation could adversely affect our financial condition. If we do not
prevail, in addition to any damages we might have to pay, we could be
required to stop the infringing activity or obtain a license. We cannot be
certain that any required license would be available to us on acceptable
terms, or at all. If we fail to obtain a license, our business might be
materially adversely affected.
To help protect our proprietary rights in unpatented trade secrets, we
require our employees, consultants and advisors to execute confidentiality
agreements. However, we cannot guarantee that these agreements will provide
us with adequate protection if confidential information is used or disclosed
improperly. In addition, in some situations, these agreements may conflict
with, or be subject to, the rights of third parties with whom our employees,
consultants or advisors have prior employment or consulting relationships.
Further, others may independently develop substantially equivalent
proprietary information and techniques, or otherwise gain access to our trade
secrets.
POTENTIAL PRODUCT LIABILITY
The use of our products will expose us to the risk of product liability
claims. Although we intend to obtain product liability insurance coverage,
we cannot guaranty that product liability insurance will continue to be
available to us on acceptable terms or that our coverage will be sufficient
to cover all claims against us. A product liability claim, even one without
merit or for which we have substantial coverage, could result in significant
legal defense costs, thereby increasing our expenses, lowering our earnings
and, depending on revenues, potentially result in additional losses.
OUR PREFERRED SHARES, CLASSIFIED BOARD OF DIRECTORS AND OREGON LAWS COULD
PROHIBIT TAKEOVERS
Our authorized capital consists of 50,000,000 Common Shares and
2,000,000 preferred shares. The Board of Directors, without any further vote
by the shareholders, has the authority to issue preferred shares and to
determine the price, preferences, rights and restrictions, including voting
and dividend rights, of these shares. The rights of the holders of Common
Shares may be affected by the rights of holders of any preferred shares that
the Board of Directors may issue in the future. For example, the Board of
Directors may allow the issuance of preferred shares with more voting rights,
higher dividend payments or more favorable rights upon dissolution, than the
Common Shares. If preferred shares are issued in the future, it may also be
more difficult for others to acquire a majority of our outstanding voting
shares. See "Description of Capital Shares" at page 20.
In addition, we have a "classified" Board of Directors, which means that
only one-half of our directors are eligible for election each year.
Therefore, if shareholders wish to change the composition of the Board of
Directors, it would take at least two years to remove a majority of the
existing directors or to change all directors. Having a classified Board of
Directors may, in some circumstances, deter or delay mergers, tender offers
or other possible transactions which may be favored by some or a majority of
our shareholders.
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The Oregon Control Share Act and Business Combination Act limit parties
who acquire a significant amount of voting shares from exercising control
over us. The Act may lengthen the period for a proxy contest or for a person
to vote their shares to elect the majority of our Board.
VOLATILITY OF STOCK MARKET COULD DRIVE DOWN PRICE OF COMMON SHARES
The market prices for securities of biotechnology companies,
particularly those that are not profitable, have been highly volatile.
Publicized events and announcements may have a significant impact on the
market price of our Common Shares. For example, announcements publicizing
poor quarterly financial results, biological or medical discoveries by
competitors, failed technological innovations, unfavorable developments
concerning patents or other proprietary rights or unfavorable domestic or
foreign regulatory developments, may have the effect of temporarily or
permanently driving down the price of a company's stock. In addition, the
stock market from time to time experiences extreme price and volume
fluctuations which particularly affect the market prices for emerging and
life sciences companies, such as ours, and which are often unrelated to the
operating performance of the affected companies. These broad market
fluctuations may adversely affect the ability of a shareholder to dispose of
his shares at a price equal to or above the price at which the Shares were
purchased.
FUTURE SALE OF ELIGIBLE SHARES MAY LOWER PRICE OF COMMON SHARES
We have outstanding 13,351,206 Common Shares. Of these shares,
13,351,206 are eligible for sale under Rule 144 or are otherwise freely
tradeable. The 975,000 shares covered by this Prospectus will be freely
tradeable so long as we keep the Registration Statement (of which this
Prospectus is a part) effective. In addition:
- Our employees and others hold options to buy a total of
2,161,734 Common Shares. The Common Shares to be issued
upon exercise of these options, have been registered, and
therefore may be freely sold when issued;
- There are outstanding warrants to buy 4,915,348 Common
Shares. The Shares issuable upon exercise of 4,416,814
warrants are registered. These Shares may be freely sold
when issued. The holders of warrants covering 400,000
shares have incidental registration rights to have the
shares issuable upon the exercise of their warrants
registered. Once registered, those shares may be freely
sold when issued, for so long as the registration statement
is effective and current; and
- We may issue options to purchase up to an additional 162,848
Common Shares under our stock option plans, which also will
be fully saleable when issued.
Sales of substantial amounts of Common Shares into the public market could
lower the market price of our Common Shares.
ABSENCE OF DIVIDENDS
We have never paid dividends on our Common Shares and do not intend to pay
dividends in the foreseeable future.
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INFORMATION ABOUT THE COMPANY
For a detailed description of our business and information about our
management, see our Annual Report which is incorporated into this prospectus by
reference. The following information supplements or supersedes, as may be
appropriate, the information contained in our Annual Report:
PRODUCT DEVELOPMENT OVERVIEW
VACCINES - AVICINE THERAPEUTIC CANCER VACCINE
RATIONALE: Prominent among the newer strategies to treat cancer is the
therapeutic cancer vaccine approach. The rationale employed with this approach
is that active immunization against the tumor can stimulate an immune response
that can be effective in fighting an existing cancer.
Target sites on tumor cells, called tumor-associated antigens, represent
the key components in a cancer vaccine, and the therapeutic benefit of the
vaccine hinges on the selection of these target sites. AVI BioPharma's
therapeutic cancer vaccine, Avicine, was designed to elicit an immune response
directed against a well-characterized target, human chorionic gonadotropin
(hCG).
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AVICINE VACCINE TARGET
- Human Chorionic Gonadotropin (hCG),
"The Pregnancy Hormone"
- A widely expressed tumor target
------------------------------------------------------
Normally, hCG is secreted during pregnancy by fetal cells and the
placenta. Cancer is the only significant exception to the normal hCG
secretion process. Given this selectivity, hCG is an ideal potential target
for a therapeutic cancer vaccine approach. Many different human cancers
produce hCG and it is considered a marker of malignancy. Since hCG is a
natural human protein, patients do not mount an immune response to hCG unless
they are actively immunized.
The advantages of hCG as a cancer vaccine target compared to other
potential targets are significant. This cancer marker is not usually found on
normal cells with the exception of those present during a pregnancy. The
hormone is widely expressed on all of the major types of cancer, and expression
correlates with tumor aggressiveness. Antibodies to hCG are believed to block
the hormonal functions that hCG plays in both pregnancy and cancer, including
growth promotion, invasion, angiogenesis, and immunosuppression. Therefore, an
immune response directed against hCG can be viewed as a two-pronged attack,
directing an immune attack against the tumor and neutralizing the hormonal
benefits provided by hCG.
The hCG component in Avicine is a small peptide from this hormone. The
peptide is conjugated to a carrier, diphtheria toxoid, to enhance the immune
response. Diphtheria toxoid was selected due to wide experience with it as a
vaccine component in man, and since most of the population worldwide is
vaccinated against it. This provides for an existing immune response to this
carrier in patients, which is believed to be important in stimulating an immune
response to the hCG peptide.
-13-
<PAGE>
-----------------------------------------------------------
AVICINE DISTINGUISHING CHARACTERISTICS
- Fully characterized synthetic vaccine
- Produced inexpensively in large quantities
- Targets a widely expressed tumor antigen
(hCG)
- Ready for advanced clinical testing
(Phase III)
- Applicable to most cancer types in
multiple clinical settings
- Twenty years of research and development
-----------------------------------------------------------
CLINICAL TRIALS OF AVICINE IN CANCER: Three Phase I studies of Avicine in
87 patients with cancer have been completed. Overall, these studies showed
Avicine to be safe and essentially non-toxic. The vaccine was effective in
stimulating an immune response to hCG in that most patients. Moreover, apparent
survival benefits and some tumor regressions were noted.
AVI has conducted two Phase II studies with Avicine, a pilot Phase II study
in 10 patients with advanced pancreatic cancer, and a multicenter Phase II study
in 77 patients with colorectal cancer. Patients with advanced pancreatic cancer
are currently treated with chemotherapy, and have a median survival of
approximately 18 to 25 weeks. In the 10 advanced pancreatic patients treated
with Avicine, the median survival was approximately 33 weeks. Although we
believes these results to be encouraging, the Company hesitates to draw
conclusions from such a small study other than to use these results to design
additional trials.
Two additional clinical trials have been designed and are scheduled to be
initiated in 1999. A Phase II study in patients with advanced pancreatic
cancer in which 52 patients will be randomized to two treatment arms, and a
second Phase II clinical trial in patients with prostate cancer.
--------------------------------------------------------------------------
AVICINE CLINICAL TRIALS
<TABLE>
<CAPTION>
TRIAL DESCRIPTION & TYPE PATIENTS STATUS
<S> <C> <C> <C>
1 Phase I safety study 43 treated Completed
2 Phase I metastatic cancer 21 treated Completed
3 Phase Ib metastatic cancer 23 treated Completed
4 Phase II pancreatic and extension 8 treated Completed
5 Phase II colorectal 77 treated Completed
6 Phase II pancreatic 52 1999
7 Phase II prostate 16 1999
8 Phase III colorectal licensing trial 300 1999
</TABLE>
--------------------------------------------------------------------------
MULTICENTER PHASE II STUDY IN PATIENTS WITH COLORECTAL CANCER: A Phase II
study of Avicine in 77 patients with advanced colorectal cancer has been
completed. The objectives of this trial were to determine whether
administration of the vaccine would induce immune responses in patients with
metastatic colorectal cancer and to measure safety and efficacy in these
patients.
Overall, 51 of the 77 patients responded to the vaccine by producing
antibodies to hCG. The patients that were antibody responders had a median
survival of 42 weeks. Patients that did not respond immunologically had a
median survival of just 17 weeks. Further analysis of the data showed that
patients that produced antibodies to both targets on the hCG peptide had a
median survival of 66 weeks. This is significantly improved survival (66 versus
37 weeks) compared to treatment with the Pharmacia-Upjohn drug,
Camptosar-Registered Trademark-, the current standard of care for advanced
colorectal cancer. We have also learned how to stimulate production of
antibodies to both targets in most patients.
-14-
<PAGE>
Overall these clinical data suggest that the patients that received Avicine
and responded by making hCG antibodies had improved median survival compared to
patients treated with chemotherapeutic drugs. Avicine was found to be safe and
did not exhibit the toxicity associated with cytotoxic drug treatment. Based on
these data, AVI BioPharma plans to initiate a Phase III licensing trial in
300 patients with advanced colorectal cancer in 1999.
ANTISENSE - NEU-GENE TECHNOLOGY
TECHNICAL OVERVIEW
GENE-TARGETED THERAPEUTICS. Most human diseases arise from the function or
dysfunction of genes within the body, either those of pathogens, such as
viruses, or of one's own genes. New techniques in molecular biology have led to
the identification of the genes associated with most of the major human diseases
and to the determination of the sequence of their genetic code. Using modern
methods of chemical synthesis, compounds can be prepared that recognize target
gene sequences in a pathogen or pathogenic process. When these compounds bind
tightly to the disease-causing sequence, the genetic process is inhibited, and
thus the pathogen or pathogenic process is disabled. This is called "antisense"
technology since the "sense" of the genetic code is blocked.
Limitations of antisense technology in the late 1980s led the Company to
pursue the development of NEU-GENE antisense technology with improved
pharmaceutical advantages. This effort culminated in the Company's
development of a new class gene-targeted drugs. These patented
third-generation agents, known as NEU-GENE compounds, display advantageous
pharmaceutical properties (stability, specificity, potency and cost
effectiveness) over earlier second-generation compounds now in clinical
trials by others.
NEAR-TERM ANTISENSE PRODUCT DEVELOPMENT B CANCER AND RESTENOSIS
The first application of the Company's antisense technology is designed to
treat proliferation disorders including cancer and restenosis, a cardiovascular
disease. The Company's NEU-GENE target for proliferative is the gene component
named c-myc. The Company believes that this target is applicable to a range of
proliferative diseases including many types of cancer, certain cardiovascular
and inflammatory diseases, and some non-malignant proliferative disorders such
as psoriasis, polycystic kidney disease, and chronic graft rejection. The
Company has finished pre-clinical development of its first NEU-GENE compound,
Resten-NG, and expects to file an IND and initiate two Phase I/II clinical
trials in 1999 for restenosis and cancer.
The following table summarizes the Company's broader NEU-GENE Antisense
Development Program:
- --------------------------------------------------------------------------------
ANTISENSE DEVELOPMENT PROGRAM
<TABLE>
<CAPTION>
Antisense Target Clinical Indication
---------------- -------------------
<S> <C>
C-myc cancer, restenosis, psoriasis, chronic graft rejection
Telomerase cancer
BCL2 cancer
TNF alpha arthritis, septic shock, asthma
NF kappa B Crohn's Disease, chronic inflammation
ICAM-1 arthritis, chronic graft rejection
Hepatitis C virus hepatitis
</TABLE>
- --------------------------------------------------------------------------------
-15-
<PAGE>
DRUG DELIVERY - CYTOPORTER
The body has protective barriers that shield it from penetration by
foreign agents. Two of these barriers, cell membranes and the outermost
layer of the skin, are composed of lipid layers (fat-like substances). The
lipid composition of these barriers prevents water-soluble agents from the
environment or in the blood from penetrating into the interior of cells and
interfering with critical cellular functions. These lipid layers are the
principal barriers to effective drug delivery for many drugs that have an
intracellular site of action.
AVI has developed an effective drug delivery technology, called
CYTOPORTER, to facilitate the transport of drugs across the lipid barriers of
the skin and cell membranes into the interior of cells. This takes place at
a rate that is practical to achieve pharmaceutical results. Furthermore, we
believe that CYTOPORTER can be chemically adjusted to accommodate a range of
drug delivery challenges. The CYTOPORTER drug delivery technology is
patented and is currently at the research and development stage. It has
applications to FDA approved drugs with delivery problems and drugs in
development by pharmaceutical and Biotech companies. We designed this
technology to assist in the delivery of our antisense compounds to their
genetic targets.
-16-
<PAGE>
OUR SELLING SHAREHOLDERS
The following table provides certain information with respect to the
Shares held by each Selling Shareholder as of August 9, 1999. Except as
otherwise noted in the footnotes following the table, none of the Selling
Shareholders with our Company or our subsidiaries or other affiliates within
the past three years, other than owning Common Shares. Except as otherwise
noted, all of the Common Shares owned by each Selling Shareholder are
registered for sale pursuant to this Prospectus. The Selling Shareholders,
however, are not under any obligation to sell all of any portion of their
Shares, nor are the Selling Shareholders obligated to sell any of their
Shares immediately under this Prospectus. We will not receive any proceeds
from any sales of Shares by the Selling Shareholders.
<TABLE>
<CAPTION>
Number of Shares Owned
Common Shares After Offering(1)
Beneficially
Selling Shareholder Owned Before Offering(1) Shares Offered Number(2) Percent
- ------------------------ ------------------------ -------------- --------- -------
<S> <C> <C> <C> <C>
Paulson Investment Company(2) 879,309 559,540 319,769 2.4
Chet and Jackie Paulson(3) 132,020 81,820 50,200 *
Erick Paulson 13,640 13,640 0 *
Wayne Hamersly 86,000 85,000 1,000 *
Scott and Luba Weber 10,000 10,000 0 *
Farrel Johnson 110,100 50,000 60,100 *
Douglas Little(4) 53,424 25,000 28,424 *
Abdul Halat 305,500 150,000 155,500 1.2
1,309,440 975,000 28,940
</TABLE>
- ------------------------
Less than 1%.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of Common Stock
subject to options and warrants currently exercisable or convertible, or
exercisable or convertible within 60 days of August 19, 1999, are deemed
beneficially owned and outstanding for computing the percentage of the
person holding such securities, but are no considered outstanding for
computing the percentage of any other person.
(2) Includes 228,353 shares subject to warrants exercisable within 60 days of
August 19, 1999.
(3) Includes 25,200 shares subject to warrants exercisable within 60 days of
August 19, 1999.
(4) Includes 500 shares subject to warrants exercisable within 60 days of
August 19, 1999.
-17-
<PAGE>
PLAN OF DISTRIBUTION
The Common Shares may be sold from time to time by the selling shareholders
in one or more transactions at fixed prices, at market prices at the time of
sale, at varying prices determined at the time of sale or at negotiated prices.
The Selling Shareholders may offer their Common Shares in one or more of the
following transactions:
- on any national securities exchange or quotation
service on which the Common Shares may be listed or
quoted at the time of sale, including the Nasdaq
National Market;
- in the over-the-counter market;
- in private transactions;
- through options;
- by pledge to secure debts and other obligations;
- or a combination of any of the above transactions.
If required, we will distribute a supplement to this Prospectus to describe
material changes in the terms of the offering by the Selling Shareholders.
The Common Shares described in this Prospectus may be sold from time to
time directly by the selling shareholders. Alternatively, the selling
shareholders may from time to time offer Common Shares to or through
underwriters, broker/dealers or agents. The selling shareholders and any
underwriters, broker/dealers or agents that participate in the distribution
of the Common Shares may be deemed to be "underwriters" within the meaning of
the Securities Act of 1933. Any profits on the resale of Common Shares and
any compensation received by any underwriter, broker/dealer or agent may be
deemed to be underwriting discounts and commissions under the Securities Act
of 1933.
Any shares covered by this Prospectus which qualify for sale pursuant to
Rule 144 under the Securities Act of 1933 may be sold under Rule 144 rather
than pursuant to this Prospectus. The selling shareholders may not be able
to sell all of their shares under Rule 144. The selling shareholders may
transfer, devise or gift such shares by other means not described in this
Prospectus.
To comply with the securities laws of certain jurisdictions, the Common
Shares must be offered or sold only through registered or licensed brokers or
dealers. In addition, in certain jurisdictions, the Common Shares may not be
offered or sold unless they have been registered or qualified for sale or an
exemption is available and complied with.
The anti-manipulation provisions of Rules 101 through 104 under
Regulation M of the Exchange Act may apply to purchases and sales of Common
Shares by the Selling Shareholders. In addition, there are restrictions on
market-making activities by persons engaged in the distribution of the Common
Shares.
We have agreed to pay all of the expenses relating to the registration,
offering and sale of the Shares by the Selling Shareholder to the public,
other than commissions or discounts of underwriters, broker/dealers or
agents. We estimate that our expenses in connection with the Offering will
be approximately $10,932.
-18-
<PAGE>
DESCRIPTION OF CAPITAL SHARES
Our authorized capital consists of 50,000,000 shares of Common Stock,
par value $0.0001 per share, and 2,000,000 shares of Preferred Stock, par
value $0.0001 per share.
TRANSFER AGENT
Our transfer agent and registrar is ChaseMellon Shareholder Services, LLC.
COMMON STOCK
We are authorized to issue 50,000,000 shares of Common Stock. As of
June 30, 1999, 13,351,206 shares of Common Stock were outstanding and were
held of record by approximately 950 shareholders. Holders of Common Stock
are entitled to one vote for each share at all meetings of our shareholders.
Subject to preferences of Preferred Stockholders, Common Stockholders are
entitled to receive ratably dividends declared by our Board. Common
Stockholders have no preemptive, subscription, redemption or conversion
rights. If we are liquidated or dissolved, Common Stockholders would share
equally in our assets remaining after the payment of all our liabilities and
the liquidation preference of any Preferred Stockholders.
PREFERRED STOCK
Our Board of Directors is authorized to issue up to 2,000,000 shares of
undesignated Preferred Stock. No shares of Preferred Stock have been issued.
Our Board has the authority to issue Preferred Stock in one or more series
and to fix the rights, preferences, privileges and restrictions of the
Preferred Stock, as well as fix the number of shares, without any further
vote or action by the shareholders. Our Board, without shareholder approval,
may issue Preferred Stock with voting and conversion rights superior to the
voting rights of the Common Shares. The Preferred Stock may also decrease
the amount of earnings and assets distributed to Common Stockholders.
Issuance of Preferred Stock may delay or prevent a change in control.
WARRANTS
REPRESENTATIVES' WARRANTS. We issued Representatives' Warrants to the
underwriters of our initial public offering to purchase 400,000 shares of our
common stock. The Representatives' Warrants entitle the holder to acquire up
to 200,000 units, each unit consisting of a share of common stock and a
warrant to purchase a share of common stock for $10.80 per unit and are
exercisable until June 3, 2002. The warrant initially entitles the holder to
purchase one share of common stock at a price of $13.50.
NASDAQ WARRANTS. We have outstanding warrants to purchase 2,300,000
shares of common stock that were issued in our initial public offering and
are traded on the Nasdaq National Market under the symbol AVIIW. These
warrants are exercisable until June 3, 2002. We may redeem them at a price
of $0.25 per warrant if the closing bid price of our Common Stock has been at
least 200% of the warrant exercise price for twenty (20) consecutive trading
days. The initial exercise price of these warrants is $13.50.
ITC MERGER WARRANTS. We have outstanding warrants to purchase
2,116,814 shares of the common stock that were issued in connection with our
acquisition of ImmunoTherapy Corporation. These warrants are exercisable
after September 15, 2000 and until May 15, 2003. We may redeem them at a
price of $0.25 per warrant if the closing bid price of our common stock has
been at least 200% of the exercise price for twenty (20) consecutive trading
days and the warrants have been exercisable. These warrants will be traded
under the symbol AVIIX.
-19-
<PAGE>
OTHER WARRANTS. We have also issued warrants to purchase 98,543 shares
of common stock. These warrants are currently exercisable. We have issued
an additional 100,000 warrants which are exercisable at $3.60 per share and
have a term of five years.
STOCK OPTIONS
A total of 2,200,000 shares of our common stock are reserved for
issuance under our 1992 Stock Incentive Plan. As of June 30, 1999, we had
outstanding 1,940,240 options to purchase shares under the 1992 Stock
Incentive Plan.
In 1998, we assumed the obligations under the 1997 Stock Option Plan of
ImmunoTherapy Corporation. After the acquisition of ImmunoTherapy
Corporation and as of June 30, 1999, 221,494 options to purchase shares of
our common stock were outstanding under the 1997 plan.
OREGON CONTROL SHARES AND BUSINESS COMBINATION STATUTES
We are subject to the Oregon Control Share Act (the "Control Share
Act"). The Control Share Act generally provides that a person (the "Acquiring
Person") who acquires voting stock of an Oregon corporation in a transaction
that results in the Acquiring Person holding more than 20.0%, 33.3% or 50.0%
of the total voting power of the corporation (a "Control Share Acquisition")
cannot vote the shares it acquires in the Control Share Acquisition ("control
shares") unless voting rights are accorded to the control shares by (i) a
majority of each voting group entitled to vote and (ii) the holders of a
majority of the outstanding voting shares, excluding the control shares held
by the Acquiring Person and shares held by our officers and inside directors.
The term "Acquiring Person" is broadly defined to include persons acting as
a group.
The Acquiring Person may, but is not required to, submit to us a
statement setting forth certain information about the Acquiring Person and
its plans with respect to us. The statement may also request that we call a
special meeting of shareholders to determine whether voting rights will be
accorded to the control shares. If the Acquiring Person does not request a
special meeting of shareholders, the issue of voting rights of control shares
will be considered at the next annual meeting or special meeting of
shareholders. If the Acquiring Person's control shares are accorded voting
rights and represent a majority or more of all voting power, shareholders who
do not vote in favor of voting rights for the control shares will have the
right to receive the appraised "fair value" of their shares which may not be
less than the highest price per share by the Acquiring Person for the control
shares.
We are subject to certain provisions of the Oregon Business Corporation
Act that govern business combinations between corporations and interested
shareholders (the "Business Combination Act"). The Business Combination Act
generally provides that if a person or entity acquires 15% or more of the
voting stock of an Oregon corporation (an "Interested Shareholder"), the
corporation and the Interest Shareholder, or any affiliated entity of the
Interested Shareholder, may not engage in certain business combination
transactions for three years following the date the person became an
Interested Shareholder. Business combination transactions for this purpose
include (a) a merger or plan of share exchange, (b) any sale, lease, mortgage
or other disposition of 10% or more of the assets of the corporation, and (c)
certain transactions that result in the issuance of capital stock of the
corporation to the Interested Shareholder. These restrictions do not apply
if (i) the Interested Shareholder, as a result of the transaction in which
such person became an Interested Shareholder, owns at least 85% of the
outstanding voting stock of the corporation (disregarding shares owned by
directors who are officers and certain employee benefit plans), (ii) the
Board of Directors approves the share acquisition or business combination
before the Interested Shareholder acquires 15% or more of the corporation's
outstanding voting stock or (iii) the Board of Directors and the holders of
at least two-thirds of the outstanding voting stock of the corporation
(disregarding shares owned by the Interested Shareholder) approve the
transaction after the Interested Shareholder acquires 15% or more of the
corporation's voting stock. See "RISK FACTORS -- Anti-Takeover Effects of
Certain Charter Provisions and Oregon Law."
-20-
<PAGE>
LEGAL MATTERS
Ater Wynne LLP, 222 S.W. Columbia, Suite 1800, Portland, Oregon 97201,
our attorneys, have opined that the Common Shares are duly and validly
issued, fully paid and nonassessable.
EXPERTS
The audited financial statements 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 included herein in reliance upon the authority of said firm as experts in
accounting and auditing in giving said report.
-21-
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
<TABLE>
<S> <C>
SEC Registration Fee $ 932
Nasdaq Listing Fee --
Accountant's Fees and Expenses 5,000
Legal Fees and Expense 5,000
Blue Sky Fee and Expenses --
Miscellaneous --
Total 10,932
</TABLE>
* Represents expenses related to the distribution by
the Selling Shareholder pursuant to the Prospectus
prepared in accordance with the requirements of
Form S-3. These expenses will be borne by the
Company on behalf of the Selling Shareholder. All
amounts are estimates except for the SEC
Registration Fee and the Nasdaq and Boston Stock
Exchange listing fees.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Articles of Incorporation provide for indemnification of
the officers and directors of the Company to the fullest extent permitted by
law. The Oregon Business Corporation Act, permits a corporation to limit,
under certain circumstances, a director's liability for monetary damages in
actions brought by the corporation or its stockholders. As an Oregon
corporation, the Company is subject to the OBCA and the exculpation from
liability and indemnification provision contained therein. Pursuant to
Section 60.047(2)(d) of the OBCA, Article II of the Company's Fifth Restated
Articles of Incorporation (the "Articles") eliminates the liability of the
Company's directors to the Company or its stockholders for monetary damages,
except for any liability related to breach of the duty of loyalty, actions
not in good faith and certain other liabilities.
Section 60.387, ET SEQ., of the OBCA allows corporations to indemnify
their directors and officers against liability where the director or officer
has acted in good faith and with a reasonable belief that actions taken were
in the best interests of the corporation or at least not adverse to the
corporation's best interests and, if in a criminal proceeding, the individual
had not reasonable cause to believe the conduct in question was unlawful.
Under the OBCA, corporations may not indemnify against liability in
connection with a claim by or in the right of the corporation but may
indemnity against the reasonable expenses associated with such claims.
Corporations may not indemnify against breached of the duty of loyalty. The
OBCA mandates indemnification against all reasonable expenses incurred in the
successful defense of any claim made or threatened whether or not such claims
was by or in the right of the corporation. Finally, a court may order
indemnification if it determines that the director or officer is fairly and
reasonably entitled to indemnification in view of all the relevant
circumstances whether or not the director or officer met the good faith and
reasonable belief standards or conduct set out in the statute.
The OBCA also provides that the statutory indemnification provisions are
not deemed exclusive of any other rights to which directors or officers may
be entitled under a corporation's articles of incorporation or bylaws, any
agreement, general or specific action of the board of directors, voce of
stockholders or otherwise.
The Company's Articles also provide for the elimination of liability of
directors for monetary damages to the full extent permitted by the Oregon
Business Corporations Act.
The Company has entered into indemnification agreements with its
directors and certain of its officers.
-22-
<PAGE>
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
Exhibits
Number --------
------
<S> <C>
5.1 Opinion of Ater Wynne LLP
23.1 Consent of Arthur Andersen LLP, independent public
accountants
23.2 Consent of Ater Wynne LLP (included in Exhibit 5.1)
24.1 Power of Attorney (included on page II-3)
</TABLE>
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement
to include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material changes to such information in this
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 remains
unsold at the termination of the offering.
(4) 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 Exchange Act
that is incorporated by reference in this registration statement
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities shall be deemed to be in the initial bona fide
offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification is 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 of
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.
-23-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement on Form S-3 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Beaverton,
State of Oregon, on August 26, 1999.
AVI BIOPHARMA, INC.
By: /s/ Denis R. Burger
-----------------------------------------
Denis R. Burger, Ph.D.
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Denis R. Burger and Alan P. Timmins,
jointly and severally, his attorneys-in-fact, each with the power of
substitution, for him in any and all capacities, to sign any amendment to
this Registration Statement on Form S-3 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 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 on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Denis R. Burger, Ph.D. President, Chief Executive August 26, 1999
- --------------------------------- Officer and Chairman of the -------------------
Denis R. Burger, Ph.D. Board (Principal Executive Officer)
/s/ Alan P. Timmins Chief Operating Officer, Chief August 26, 1999
- --------------------------------- Financial Officer and Director -------------------
Alan P. Timmins (Principal Financial and
Accounting Officer)
/s/ Dwight D. Weller, Ph.D. Senior Vice President of August 26, 1999
- --------------------------------- Chemistry and Manufacturing -------------------
Dwight D. Weller, Ph.D. And Development and Director
/s/ Patrick L. Iverson, Ph.D. Senior Vice President of August 26, 1999
- --------------------------------- Research and Development -------------------
Patrick L. Iverson, Ph.D. and Director
-24-
<PAGE>
/s/ Jeffrey L. Lillard Vice President and Director August 26, 1999
- --------------------------------- -------------------
Jeffrey L. Lillard
/s/ Bruce L. A. Carter, Ph.D. Director August 26, 1999
- --------------------------------- -------------------
Bruce L. A. Carter, Ph.D.
/s/ Nick Bunick Director August 26, 1999
- --------------------------------- -------------------
Nick Bunick
/s/ Joseph Rubinfeld Director August 26, 1999
- --------------------------------- -------------------
Joseph Rubinfeld
</TABLE>
-25-
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Number
------
<S> <C>
5.1 Opinion of Ater Wynne LLP
23.1 Consent of Arthur Andersen LLP, independent public
accountants
23.2 Consent of Ater Wynne LLP (included in Exhibit 5.1)
24.1 Power of Attorney (included on page II-3)
</TABLE>
-26-
<PAGE>
EXHIBIT 5.1
ATER WYNNE LLP
222 SW Columbia, Suite 1800
Portland, Oregon 97201
Telephone: 503 / 226-1191
Fax: 503 / 226-0079
August 26, 1999
Board of Directors
AVI BioPharma Inc.
One SW Columbia, Suite 1105
Portland, OR 97258
Gentlemen:
In connection with the registration of 975,000 shares (the "Shares") of
common stock, $.0001 par value (the "Common Stock"), of AVI BioPharma Inc., an
Oregon corporation (the "Company"), under the Registration Statement on Form S-3
to be filed with the Securities and Exchange Commission on August 27, 1999 (the
"Registration Statement"), and the proposed offer and sale of the Common Stock
pursuant to the Registration Statement, we have examined such corporate records,
certificates of public officials and officers of the Company and other documents
as we have considered necessary or proper for the purpose of this opinion. The
Shares were issued by the Company to a shareholder in a private placement and
subsequently were sold to the Selling Shareholders.
Based on the foregoing and having regard to legal issues which we deem
relevant, it is our opinion that the Shares are validly issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
above-mentioned Registration Statement and to the reference to this firm
under the caption "Legal Matters" in the Prospectus constituting a part of
the Registration Statement. This consent shall not be construed to cause
this firm to be in the category of persons whose consent is required to be
filed pursuant to Section 7 of the Securities Act of 1933, as amended, or the
rules thereunder.
Very truly yours,
/s/ Ater Wynne LLP
ATER WYNNE LLP
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors
AVI BioPharma, Inc.
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated January 27, 1999
included in the Company's Form 10-KSB for the year ended December, 31 1998 and
to all references to our Firm included in this registration statement.
Portland, Oregon
August 24, 1999
