As Filed with the Securities and Exchange Commission on June 2,
1997
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
________________________
Alteon Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware
(State of Incorporation)
13-3304550
(I.R.S. Employer Identification No.)
170 Williams Drive
Ramsey, New Jersey 07446
(201) 934-5000
(Address, including zip code, and telephone number,
including
area code, of Registrant's principal executive offices)
James J. Mauzey
Chief Executive Officer
Alteon Inc.
170 Williams Drive
Ramsey, New Jersey 07647
(201) 934-5000
(Name, address, including zip code, and telephone
number,
including area code, of agent for service)
________________________
Copy to:
Richard J. Pinto, Esq.
Smith, Stratton, Wise, Heher & Brennan
600 College Road East
Princeton, New Jersey 08540
(609) 924-6000
________________________
Approximate date of commencement of proposed sale to the
public: From
time to time after the effective date of this Registration
Statement.
If the only securities being registered on this form are
being offered
pursuant to dividend or interest reinvestment plans, please check
the
following box. / /
If any of the securities being registered on this form are
to be offered
on a delayed or continuous basis pursuant to Rule 415 of 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. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Maximum
Proposed Maximum
Amount of
Title of Shares Amount to be Offering Price
Aggregate
Registration
to be Registered Registered(1) per Share(2)
Offering
Price(2) Fee
<S> <C> <C>
<C>
Common Stock,
$.01 par value....... 1,559,149 $3.96875
$6,187,872.59
$1,875.11
</TABLE>
(1) The shares of Common Stock offered hereby include 50,000
shares issuable
upon the exercise of warrants and such presently
indeterminate number of
shares of Common Stock as shall be issuable upon conversion
of all of the
5,000 shares of the 6% Cumulative Convertible Preferred
Stock of the
Company (the "Preferred Stock") issued in a private
placement in April,
1997. The Preferred Stock is convertible into Common Stock
at a
conversion price which reflects a discount from the market
price of the
Common Stock at the time of conversion. The number of shares
of Common
Stock issuable in connection therewith and offered for
resale hereby is
an estimate based upon the low trading price of $3.875 on
May 29, 1997,
and a discount rate of 14.5% (the rate which will apply on
and after
October 21, 1997), is subject to adjustment and could be
materially less
or more than such estimated amount depending upon factors
which cannot be
predicted by the Registrant at this time, including, among
other factors,
the date on which the Preferred Stock is converted and the
future market
price of the Common Stock. Pursuant to Rule 416 under the
Securities Act
of 1933, this Registration Statement also covers such
additional shares
of the Registrant's Common Stock as may be issued as a
result of stock
splits, stock dividends and anti-dilution adjustments with
respect to the
shares registered hereby.
(2) Estimated solely for the purpose of calculating the
registration fee,
based on the average of the high and low prices for the
Common Stock as
reported on the Nasdaq National Market on May 29, 1997, in
accordance
with Rule 457 under the Securities Act of 1933.
________________________
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
<PAGE>
PROSPECTUS
SUBJECT TO COMPLETION, DATED MAY 30, 1997
Alteon Inc.
1,559,149 Shares*
Common Stock
(par value $.01 per share)
________________________
This Prospectus relates to the proposed sale from time to
time by certain
stockholders (the "Selling Stockholders") of shares (the
"Shares") of common
stock, $.01 par value per share (the "Common Stock") of Alteon
Inc. ("Alteon"
or the "Company") issuable upon conversion of the Company's 6%
Cumulative
Convertible Preferred Stock, $.01 par value per share (the
"Preferred Stock"),
and exercise of warrants issued to the Selling Stockholders in
connection with
their purchase of the Preferred Stock (the "Warrants"). All
expenses of
registration incurred in connection herewith are being borne by
the Company,
but all selling and other expenses incurred by the Selling
Stockholders will
be borne by the Selling Stockholders. The Company has agreed to
indemnify the
Selling Stockholders against certain liabilities under the
Securities Act of
1933 (the "Securities Act"). See "Plan of Distribution."
The Company will not receive any proceeds from sales of the
Shares by the
Selling Stockholders but will receive proceeds from the exercise,
if any, of
the Warrants.
The Selling Stockholders have not advised the Company of any
specific
plans for the distribution of the Shares covered by this
Prospectus, but it is
anticipated that the Shares will be sold from time to time by the
Selling
Stockholders or their successors in interest primarily in
transactions (which
may include block transactions) on the Nasdaq National Market or
such other
market on which the Company's Common Stock may, from time to
time, be traded
at the price then prevailing, although sales may also be made in
negotiated
transactions or otherwise. See "Plan of Distribution."
The Company's Common Stock is quoted on the Nasdaq National
Market under
the symbol ALTN. On May 29, 1997, the last reported sale price
of the Common
Stock was $3.875 per share.
________________________
The Common Stock offered hereby involves a high degree of risk.
See "Risk
Factors."
*The Shares of Common Stock offered hereby include 50,000
shares issuable
upon exercise of the Warrants and such presently indeterminate
number of
shares of Common Stock as shall be issuable upon conversion of
all of the
5,000 shares of the 6% Cumulative Convertible Preferred Stock of
the Company,
$.01 par value per share (the "Preferred Stock"), issued in a
private
placement in April, 1997. The Preferred Stock is convertible
into Common
Stock at a conversion price which reflects a discount from the
market price of
the Common Stock at the time of conversion. The number of shares
of Common
Stock issuable in connection therewith and offered for resale
hereby is an
estimate based upon the low trading price of $3.875 per share of
the Common
Stock on May 29, 1997 and a discount rate of 14.5% (the rate
which will apply
on and after October 21, 1997), is subject to adjustment and
could be
materially less or more than such estimated amount depending upon
factors
which cannot be predicted by the Company at this time, including,
among other
factors, the date on which the Preferred Stock is converted and
the future
market price of the Common Stock. This presentation is not
intended to
constitute a prediction as to the future market price of the
Common Stock or
as to the number of shares of Common Stock that may be issued
upon conversion
of the Preferred Stock. See "Risk Factors-Effect of the
Conversion of the
Preferred Stock" and "Description of Preferred Stock and
Warrants."
________________________
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 , 1997
- 1 -
<PAGE>
ADDITIONAL INFORMATION
This Prospectus, which constitutes a part of a registration
statement on
Form S-3 (the "Registration Statement") filed by the Company with
the
Securities and Exchange Commission (the "Commission") under the
Securities
Act, omits certain of the information set forth in the
Registration Statement.
Reference is hereby made to the Registration Statement and to the
exhibits
thereto for further information with respect to the Company and
the securities
offered hereby. Copies of the Registration Statement and the
exhibits thereto
are on file at the offices of the Commission and may be obtained
upon payment
of the prescribed fee or may be examined without charge at the
public
reference facilities of the Commission described below.
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
Commission. Reports, proxy statements and other information
filed by the
Company can be inspected without charge and copied at the public
reference
facilities maintained by the Commission at Room 1024, Judiciary
Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549 and at the following
regional
offices of the Commission: 7 World Trade Center, New York, New
York 10048 and
500 West Madison Street, 14th Floor, Chicago, Illinois 60661.
Copies of such
materials can be obtained from the Public Reference Section of
the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Such
material is also available through the Commission's Web Site
(http://www.sec.gov). Alteon's Common Stock is listed and traded
on the
Nasdaq National Market. Reports, proxy statements and other
information filed
by the Company may also be inspected at the National Association
of Securities
Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20002
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission are
incorporated herein
by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal
year ended
December 31, 1996 as amended by Form 10-K/A.
(b) The Company's Quarterly Report on Form 10-Q for the
quarter ended
March 31, 1997.
(c) The Company's Current Reports on Form 8-K filed April
25, 1997 and
May 9, 1997.
- 2 -
<PAGE>
(d) The description of the Company's Common Stock, $.01 par
value, which
is contained in the Company's Registration Statement on
Form 8-A
filed November 1, 1991, including any amendments or
reports filed
for the purpose of updating such description.
(e) The description of the Company's Rights to Purchase
Series F
Preferred Stock which is contained in the Company's
Registration
Statement on Form 8-A, filed August 4, 1995, including
any
amendments or reports filed for the purpose of updating
such
description.
All documents 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
termination of the offering shall be deemed to be incorporated by
reference
herein and to be a part hereof from the date of the filing of
such documents.
Any statement contained herein or in a document incorporated by
reference 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
the statement
is modified or superseded by any other subsequently filed
document which is
incorporated or is deemed to be incorporated by reference herein.
Any
statement so modified or superseded shall not be deemed, except
as so modified
or superseded, to constitute a part of this Prospectus.
This Prospectus incorporates documents by reference which are
not
presented herein or delivered herewith. Alteon hereby undertakes
to provide
without charge to each person, including any beneficial owner, to
whom this
Prospectus is delivered, on the written or oral request of such
person, a copy
of any or all of the documents referred to above which have been
or may be
incorporated into this Prospectus and deemed to be a part hereof,
other than
exhibits to such documents unless such exhibits are specifically
incorporated
by reference in such documents. These documents are available
upon request
from Elizabeth A. O'Dell, Vice President, Finance and
Administration, Alteon
Inc., 170 Williams Drive, Ramsey, New Jersey 07446, (201)
934-5000.
THE COMPANY
Alteon is engaged in the discovery and development of
pharmaceutical
products for the treatment of the complications of diabetes and
age-related
diseases. The Company's efforts have focused primarily on
developing its lead
compound, pimagedine, to inhibit or block abnormal
glucose/protein complexes
that lead to diabetic complications such as kidney disease and
dyslipidemia.
The Company has completed one clinical trial and is conducting
three clinical
trials evaluating pimagedine as a treatment for the complications
of diabetes,
including two Phase III clinical trials for diabetic kidney
disease.
Alteon has a strategic alliance with Yamanouchi
Pharmaceutical Co., Ltd.
("Yamanouchi") for the collaborative development and
commercialization of
certain areas of Alteon's leading technology. Under its
agreements with
Alteon, Yamanouchi has made an equity investment in Alteon, has
agreed to
provide substantial funding for Alteon's product development and
has been
granted marketing rights in specified territories. Alteon has
also entered
into a licensing arrangement with Corange International Ltd.,
acting through
Boehringer Mannheim Diagnostics ("Boehringer Mannheim"), for
Alteon's
diagnostic technology. Under the agreement, Boehringer Mannheim
received a
license to develop and market diagnostic products that measure
advanced
glycosylation end-product ("A.G.E.") levels for research and
commercial
purposes. In addition, Alteon has entered into clinical testing
and
distribution agreements with Gamida for Life ("Gamida"), formerly
Eryphile BV.
Under these agreements, Gamida conducted, at its own expense, a
Phase II
clinical trial in Israel to evaluate pimagedine in patients with
diabetes and
elevated serum cholesterol levels, and will have the right to
distribute
pimagedine, if successfully developed and approved for marketing,
in specified
territories. In order to expand its internal research and
development
capacities, Alteon has licensed patent rights from Washington
University to
technology for the development of pimagedine for inflammatory
disorders.
- 3 -
<PAGE>
The Company was incorporated in Delaware in 1986. The
Company's principal
executive offices are located at 170 Williams Drive, Ramsey, New
Jersey 07446
and its telephone number is (201) 934-5000.
FORWARD LOOKING STATEMENTS
This Prospectus includes certain forward-looking statements
made pursuant
to the safe harbor provisions of the Private Securities
Litigation Reform Act
of 1995. The words "believes," "anticipates," "expects" and
similar
expressions are intended to identify such forward-looking
statements. Such
statements are subject to certain risks and uncertainties that
could cause
actual results to differ materially from those anticipated by the
statements
made by the Company. Factors described in this Prospectus,
including without
limitation those identified in "Risk Factors" and in the
documents
incorporated herein by reference, could cause the Company's
actual results to
differ materially from those expressed in any forward-looking
statements made
by the Company.
RISK FACTORS
The following risk factors should be considered
carefully in
evaluating an investment in the Shares offered by this
Prospectus:
Need for Future Funding; Uncertainty of Access to Capital
Alteon will require substantial funding in order to
continue its
research, product development, preclinical testing and clinical
trials of its
product candidates. The Company will also require additional
funding for
operating expenses, the pursuit of regulatory approvals for its
product
candidates and establishing marketing and sales capabilities.
The Company's
future capital requirements will depend on many factors,
including continued
scientific progress in its research and development programs, the
size and
complexity of these programs, progress with preclinical testing
and clinical
trials, the time and costs involved in obtaining regulatory
approvals, the
costs involved in filing, prosecuting and enforcing patent
claims, competing
technological and market developments, the establishment of
additional
collaborative arrangements, the cost of manufacturing
arrangements,
commercialization activities, and the cost of product
in-licensing and
strategic acquisitions, if any. There can be no assurance that
the Company's
cash reserves and other liquid assets, including funding that may
be received
from the Company's commercial partners and interest income earned
thereon,
will be adequate to satisfy its capital and operating
requirements.
Alteon intends to seek funding through arrangements with
corporate
collaborators and through public or private sales of the
Company's securities,
including equity securities. In addition, the Company has
obtained capital
leases and may pursue opportunities to obtain debt financing in
the future.
There can be no assurance, however, that additional funding will
be available
on reasonable terms, if at all. Any additional equity financings
would be
dilutive to the Company's stockholders. If adequate funds are
not available,
Alteon may be required to curtail significantly one or more of
its research
and development programs and/or obtain funds through arrangements
with
collaborative partners or others that may require Alteon to
relinquish rights
to certain of its technologies or product candidates.
- 4 -
<PAGE>
Uncertainties Related to Clinical Trials
Before obtaining regulatory approvals for the commercial
sale of any
of its products under development, the Company must demonstrate
through
preclinical studies and clinical trials that the product is safe
and effective
for use in each target indication. The results from preclinical
studies and
early clinical trials may not be predictive of results that will
be obtained
in large-scale testing, and there can be no assurance that the
Company's
clinical trials will demonstrate sufficient safety and efficacy
to obtain the
requisite regulatory approvals or will result in marketable
products. In
addition, clinical trials are often conducted with patients
having the most
advanced stages of disease. During the course of treatment, these
patients can
die or suffer other adverse medical effects for reasons that may
not be
related to the pharmaceutical agent being tested but which can
nevertheless
affect clinical trial results. A number of companies in the
pharmaceutical
industry have suffered significant setbacks in advanced clinical
trials, even
after promising results in earlier trials. If the Company's lead
compound,
pimagedine, is not shown to be safe and effective in clinical
trials, the
resulting delays in developing other compounds and conducting
related
preclinical testing and clinical trials, as well as the need or
additional
financing, would have a material adverse effect on the Company's
business,
financial condition and results of operations.
The rate of completion of the Company's clinical trials
may be
delayed by many factors. For example, as a result of independent
academic
research which implied that pimagedine had potential tumorigenic
activity, and
the Company's preclinical animal studies which demonstrated
evidence of
gastric and other toxicities, additional studies, data analysis
and
modification of protocols were needed before pivotal human
clinical trials
could begin. This caused a delay in the initiation of Phase
II/III clinical
trials of pimagedine in patients with diabetic nephropathy. In
addition,
delays may occur in enrolling patients as a result of the lack of
availability
of patients who satisfy the protocol for a particular trial,
variations in the
performance of the principal investigators in the trials, the
response of
potential patients to recruitment efforts and the performance of
the Company's
collaborative partners who manage portions of the clinical
trials. Delays in
completion of the trials may also occur as a result of
difficulties in
retaining patients in the trials, preliminary safety data
analysis which
requires changes in the protocols and delays in approval of the
trials by
institutional review boards at the trial sites. Accordingly, no
assurance can
be given that enrollment in any of the Company's clinical trials
can be
achieved on a timely basis, if at all, or that clinical trials
can be
successfully completed within any particular time frame or at
all. Any delays
in, or termination of, the Company's clinical trial efforts would
have a
material adverse effect on the Company's business, financial
condition and
results of operations.
There can be no assurance that Alteon will be permitted
by regulatory
authorities to undertake additional clinical trials for
pimagedine or, if the
trials are conducted, that any of the Company's product
candidates will prove
to be safe and efficacious or will receive regulatory approvals.
Uncertainties Related to the Early Stage of Development;
Technological
Uncertainties
All of the Company's product candidates are in the
research or
development stage, and all revenues to date have been generated
from
collaborative research agreements and financing activities, or
interest income
earned on these funds. No revenues have been generated from
product sales.
There can be no assurance that product revenues can be realized
on a timely
basis, if ever.
- 5 -
<PAGE>
Alteon has not yet requested or received regulatory
approval for any
product from the U.S. Food and Drug Administration ("FDA") or any
other
regulatory body. There can be no assurance that Alteon will
succeed in the
development and marketing of any therapeutic or diagnostic
product. To
achieve profitable operations, the Company must, alone or with
others,
successfully identify, develop, introduce and market proprietary
products. If
potential products are identified, they will require significant
additional
investment, development, preclinical testing and clinical trials
prior to
potential regulatory approval and commercialization.
The development of new pharmaceutical products is highly
uncertain
and subject to a number of significant risks. Potential products
that appear
to be promising at early stages of development may not reach the
market for a
number of reasons. Potential products may be found ineffective
or cause
harmful side effects during preclinical testing or clinical
trials, fail to
receive necessary regulatory approvals, be difficult to
manufacture on a large
scale, be uneconomical, fail to achieve market acceptance or be
precluded from
commercialization by proprietary rights of third-parties. The
Company's lead
compound, pimagedine, has not been proven safe and effective in
humans and
utilizes a mechanism of action as yet unproven in humans. There
can be no
assurance that the Company's product development efforts will be
successfully
completed, that required regulatory approvals can be obtained or
that any
products, if introduced, will be successfully marketed or achieve
customer
acceptance. Commercial availability of any Alteon products,
including
pimagedine, is not expected for a number of years, if at all.
Uncertainty of Future Profitability
At March 31, 1997, the Company had an accumulated
deficit of
$58,577,861. The Company anticipates that it will incur
substantial losses in
the future, potentially greater than losses incurred in prior
years. There
can be no assurance that the Company's products under development
will be
successfully developed or that its products, if successfully
developed, will
generate revenues sufficient to enable the Company to earn a
profit. Alteon
expects to incur substantial additional operating expenses over
the next
several years as its research, development and clinical trial
activities
increase. To the extent that the Company is unable to obtain
third-party
funding for expenses, the Company expects that increased expenses
will result
in increased losses from operations. Alteon does not expect to
generate
revenues from the sale of products, if any, for several years.
The Company's
ability to achieve profitability depends in part on its ability
to enter into
agreements for product development, obtain regulatory approval
for its
products and develop the capacity, or enter into agreements, for
the
manufacture, marketing and sale of any products. There can be no
assurance
that Alteon will obtain required regulatory approvals, or
successfully
develop, manufacture, commercialize and market product candidates
or that the
Company will ever achieve product revenues or profitability.
Dependence on Collaborative Relationships
The Company has established collaborative arrangements
with
Yamanouchi, Gamida and Boehringer Mannheim with respect to the
development of
drug therapies and diagnostics using the Company's A.G.E.
technology. The
Company will, in some cases, be dependent upon these outside
partners to
conduct preclinical testing and clinical trials and to provide
adequate
funding for the Company's development programs. Under certain of
these
arrangements, the Company's commercial partners may have all or a
significant
portion of the development and regulatory approval
responsibilities. Failure
of the commercial partners to develop marketable products or to
gain the
appropriate regulatory approvals would have a material adverse
effect on the
Company's business, financial condition and results of
operations.
- 6 -
<PAGE>
In most cases, the Company cannot control the amount and
timing of
resources which its commercial partners devote to the Company's
programs or
potential products. If any of the Company's commercial partners
breach or
terminate their agreements with the Company or otherwise fail to
conduct their
collaborative activities in a timely manner, the preclinical or
clinical
development or commercialization of product candidates or
research programs
will be delayed, and the Company will be required to devote
additional
resources to product development and commercialization, or
terminate certain
development programs. The termination of collaborative
arrangements would
have a material adverse effect on the Company's business,
financial condition
and results of operations. There can be no assurance that
disputes will not
arise in the future with respect to the ownership of rights to
any technology
developed with third-parties. These and other possible
disagreements between
collaborators and the Company could lead to delays in the
collaborative
research, development or commercialization of certain product
candidates or
could require or result in litigation or arbitration, which would
be
time-consuming and expensive, and would have a material adverse
effect on the
Company's business, financial condition and results of
operations.
Alteon's commercial partners may develop, either alone
or with
others, products that compete with the development and marketing
of the
Company's products. Competing products, either developed by the
commercial
partners or to which the commercial partners have rights, may
result in their
withdrawal of support with respect to all or a portion of the
Company's
technology, which would have a material adverse effect on the
Company's
business, financial condition and results of operations.
Uncertainties Related to Patents and Proprietary Technology
The Company's success will depend on its ability to
obtain patent
protection for its products, preserve its trade secrets, prevent
third-parties
from infringing upon its proprietary rights and operate without
infringing
upon the proprietary rights of others, both in the United States
and abroad.
The degree of patent protection afforded to
pharmaceutical inventions
is uncertain and the Company's potential products are subject to
this
uncertainty. Pimagedine is not a novel compound and is not
covered by a
composition of matter patent. The patents covering pimagedine
are use patents
containing claims covering therapeutic methods and the use of
specific
compounds and classes of compounds to inhibit A.G.E. formation.
Competitors
may be able to commercialize pimagedine products for indications
outside of
the protection provided by the claims of the Company's use
patents.
Physicians, pharmacies and wholesalers could then substitute for
the Company's
pimagedine products. Substitution for the Company's pimagedine
products would
have a material adverse effect on the company's business,
financial condition
and results of operations. Use patents may afford a lesser
degree of
protection in certain foreign countries due to their patent laws.
In
addition, although the Company has several patent applications
pending to
protect its proprietary technology, there can be no assurance
that these
patents will be issued, that the claims of any patents which do
issue will
provide any significant protection of the Company's technology or
that the
Company will enjoy any patent protection beyond the expiration
dates of
its currently issued patents.
There can be no assurance that competitors will not
develop
competitive products outside the protection that may be afforded
by the claims
of the Company's patents. The Company is aware that other
parties have been
issued patents and have filed patent applications in the United
States and
foreign countries with respect to other agents which inhibit
A.G.E. formation.
- 7 -
<PAGE>
Because of the substantial length of time and expense
associated with
bringing new products through development and regulatory approval
to the
marketplace, the pharmaceutical industry places considerable
importance on
obtaining patent and trade secret protection for new
technologies, products
and processes. There can be no assurance as to the success or
timeliness in
obtaining any such patents, that the breadth of the claims
obtained will
provide any significant protection of the Company's technology,
or that the
degree of protection afforded by patents for licensed
technologies or for
future discoveries will be adequate to protect the Company's
proprietary
technology.
The Company also relies upon unpatented trade secrets
and
improvements, unpatented know-how and continuing technological
innovation to
develop and maintain its competitive position, which it seeks to
protect, in
part, by confidentiality agreements with its commercial partners,
collaborators, employees and consultants. The Company also has
invention or
patent assignment agreements with its employees and certain, but
not all,
commercial partners and consultants. There can be no assurance
that relevant
inventions will not be developed by a person not bound by an
invention
assignment agreement. There can be no assurance that binding
agreements will
not be breached, that the Company would have adequate remedies
for any breach,
or that the Company's trade secrets will not otherwise become
known or be
independently discovered by competitors.
Government Regulation; No Assurance of Regulatory Approval
The Company's research, preclinical testing and clinical
trials of
its product candidates are, and the manufacturing and marketing
of its
products will be, subject to extensive and rigorous regulation by
numerous
governmental authorities in the United States and in other
countries where the
Company intends to test and market its product candidates.
Prior to marketing, any product developed by the Company
must undergo
an extensive regulatory approval process. This regulatory
process, which
includes preclinical testing and clinical trials, and may include
post-marketing surveillance, of each compound to establish its
safety and
efficacy, can take many years and require the expenditure of
substantial
resources. Data obtained from preclinical and clinical
activities are
susceptible to varying interpretations which could delay, limit
or prevent
regulatory approval. In addition, delays or rejections may be
encountered
based upon changes in FDA policy for drug approval during the
period of
product development and FDA regulatory review of each submitted
new drug
application ("NDA"). Similar delays may also be encountered in
foreign
countries. There can be no assurance that regulatory approval
will be
obtained for any drugs developed by the Company. Moreover,
regulatory approval
may entail limitations on the indicated uses of the drug.
Further, even if
regulatory approval is obtained, a marketed drug and its
manufacturer are
subject to continuing review and discovery of previously unknown
problems with
a product or manufacturer which may have adverse effects on the
Company's
business, financial condition and results of operations,
including
withdrawal of the product from the market. Violations of
regulatory
requirements at any stage, including preclinical testing and
clinical trials,
the approval process or post-approval, may result in various
adverse
consequences including the FDA's delay in approving or its
refusal to approve
a product, withdrawal of an approved product from the market and
the
imposition of criminal penalties against the manufacturer and NDA
holder.
Except for pimagedine, which was allowed to proceed into human
clinical trials
for diabetic patients with nephropathy, end-stage renal disease
and
dyslipidemia and as to which an IND for treatment of stroke has
been
submitted, the Company has not submitted any other IND
application for any
product candidate and none has been approved for
commercialization in the
United States or elsewhere. No assurance can be given that the
Company will
be able to obtain FDA approval for any products. Failure to
obtain requisite
governmental approvals or failure to obtain approvals of the
scope requested
will delay or preclude the Company or its licensees or marketing
partners from
marketing the Company's products or limit the commercial use of
the products
and will have a material adverse effect on the Company's
business, financial
condition and results of operations.
- 8 -
<PAGE>
Intense Competition and Risk of Technological Obsolescence;
Alternate Cures or
Therapies for Diabetes
The Company is engaged in pharmaceutical fields
characterized by
extensive research efforts and rapid technological progress.
Many established
pharmaceutical and biotechnology companies with resources greater
than those
of the Company are attempting to develop products that would be
competitive
with the Company's products. Other companies may succeed in
developing
products that are safer, more efficacious or less costly than any
that may be
developed by Alteon and may also be more successful than Alteon
in production
and marketing. Rapid technological development by others may
result in the
Company's products becoming obsolete before the Company recovers
a significant
portion of the research, development or commercialization
expenses incurred
with respect to those products.
Certain technologies under development by other
pharmaceutical
companies could result in a cure for diabetes or the reduction of
the
incidence of diabetes and its complications. For example, a
number of
companies are investigating islet cell transplantation as a
possible cure for
Type I diabetes. Results of a study conducted by the National
Institutes of
Health, known as the Diabetes Control and Complications Trial,
published in
1993, showed that tight glucose control reduced the incidence of
diabetic
complications. Numerous companies are pursuing methods to
control glucose
levels. In addition, several large companies are researching
aldose reductase
inhibitors as therapeutics for diabetic neuropathy, retinopathy
and related
conditions. Several companies have initiated research with
anti-angiogenesis
drugs for the potential treatment of diabetic retinopathy.
Furthermore, the
Company is aware of the development by several pharmaceutical
companies of
thiazolidinedione derivatives ("glitazones") for the treatment of
Type II
diabetes. In January 1997 Warner-Lambert Company was given
approval and
clearance by the FDA for the marketing of Resulin(TM)
(troglitazone), an
anti-diabetic drug designed to target insulin resistance in Type
II diabetes.
In the event one or more of these initiatives are successful, the
market for
the Company's products may be reduced or eliminated.
Captopril, a product marketed by Bristol-Myers Squibb
Company, has
been approved for Type I diabetic nephropathy. The patent
covering captopril
expired in February 1996. Other pharmaceutical companies may
choose to market
and sell this drug which will lead to a decrease in its price.
Sales of
captopril may reduce or eliminate the market for any product
developed by the
Company for this indication.
Uncertainties Related to Pharmaceutical Pricing and Reimbursement
The Company's business, financial condition and results
of operations
may be materially adversely affected by the continuing efforts of
government
and third-party payors to contain or reduce the costs of health
care through
various means. For example, in certain foreign markets, pricing
and/or
profitability of prescription pharmaceuticals are subject to
government
control. In the United States, the Company expects that there
will continue
to be a number of federal and state proposals to implement
similar government
control. In addition, increasing emphasis on managed care in the
United
States will continue to put pressure on pharmaceutical pricing.
Cost control
initiatives could decrease the price that the Company receives
for any
products it may develop and sell in the future and have a
material adverse
effect on the Company's business, financial condition and results
of
operations. Further, to the extent that cost control initiatives
have a
material adverse effect on the Company's commercial partners, the
Company's
ability to commercialize its products may be adversely affected.
- 9 -
<PAGE>
The Company's ability to commercialize pharmaceutical
products may
depend in part on the extent to which reimbursement for the
products will be
available from government health administration authorities,
private health
insurers and other third-party payors. Significant uncertainty
exists as to
the reimbursement status of newly approved health care products,
and
third-party payors, including Medicare, are increasingly
challenging the
prices charged for medical products and services. There can be
no assurance
that any third-party insurance coverage will be available to
patients for any
products developed by the Company. Government and other
third-party payors
are increasingly attempting to contain health care costs by
limiting both
coverage and the level of reimbursement for new therapeutic
products and by
refusing in some cases to provide coverage for uses of approved
products for
disease indications for which the FDA has not granted labeling
approval. If
adequate coverage and reimbursement levels are not provided by
government and
other third-party payors for the Company's products, the market
acceptance of
these products would be adversely affected.
Uncertainties Related to Marketing and Sales
For certain of its products, the Company has licensed
exclusive
marketing rights to its commercial partners or formed
collaborative marketing
arrangements within specified territories in return for royalties
to be
received on sales or a share of profits. These agreements are
terminable at
the discretion of the Company's partners upon as little as 90
days prior
written notice. If the licensee or marketing partner terminates
an agreement
or fails to market a product successfully, the Company's
business, financial
condition and results of operations may be adversely affected.
Alteon currently has no experience in marketing or
selling
pharmaceutical products. In order to achieve commercial success
for any
approved product, Alteon must either develop a marketing and
sales force or,
where appropriate or permissible, enter into arrangements with
third-parties
to market and sell its products. There can be no assurance that
Alteon will
successfully develop marketing and sales experience or that it
will be able to
enter into marketing and sales agreements with others on
acceptable terms, if
at all. If the Company develops its own marketing and sales
capability, it
will compete with other companies that currently have experienced
and well
funded marketing and sales operations. To the extent that the
Company enters
into co-promotion or other sales and marketing arrangements with
other
companies, any revenues to be received by Alteon will be
dependent on the
efforts of others and there can be no assurance that their
efforts will be
successful.
No Manufacturing Experience; Reliance on Third-Party
Manufacturing
The Company's strategy for development and
commercialization of
certain of its products is dependent upon entering into various
arrangements
with research collaborators, commercial partners and others and
upon the
subsequent success of these third-parties in performing their
obligations.
The Company has no experience in manufacturing products
for
commercial purposes and does not have manufacturing facilities.
Consequently,
the Company is dependent on contract manufacturers for the
production of
products for development and commercial purposes. The
manufacture of the
Company's products for clinical trials and commercial purposes is
subject to
current Good Manufacturing Practice ("GMP") regulations
promulgated by the
FDA. In the event that the Company is unable to obtain or retain
third-party
manufacturing, it will not be able to commercialize its products
as planned.
There can be no assurance that the Company will be able to enter
into
agreements for the manufacture of future products with
manufacturers whose
facilities and procedures comply with GMP and other regulatory
requirements.
The Company's current dependence upon others for the manufacture
of its
products may adversely affect its profit margin, if any, on the
sale of future
products and the Company's ability to develop and deliver
products on a timely
and competitive basis.
- 10 -
<PAGE>
Potential Product Liability; Uncertainties Related to Insurance
The use of any of the Company's potential products in
clinical trials
and the sale of any approved products, including the testing and
commercialization of pimagedine, may expose the Company to
liability claims
resulting from the use of products or product candidates. These
claims might
be made directly by consumers, pharmaceutical companies or
others. The
Company maintains product liability insurance coverage for claims
arising from
the use of its products in clinical trials in the amount of $20.0
million.
However, coverage is becoming increasingly expensive, and no
assurance can be
given that the Company will be able to maintain insurance or, if
maintained,
that insurance can be acquired at a reasonable cost or in
sufficient amounts
to protect the Company against losses due to liability that could
have a
material adverse effect on the Company's business, financial
conditions and
results of operations. There can be no assurance that the
Company will be
able to obtain commercially reasonable product liability
insurance for
any product approved for marketing in the future or that
insurance coverage
and the resources of the Company would be sufficient to satisfy
any liability
resulting from product liability claims. A successful product
liability claim
or series of claims brought against the Company could have a
material adverse
effect on its business, financial condition and results of
operations.
Attraction and Retention of Key Employees and Consultants
The Company is highly dependent on the principal members
of its
management and scientific staff. The loss of services of any of
these
personnel could impede the achievement of the Company's
development
objectives. Furthermore, recruiting and retaining qualified
scientific
personnel to perform research and development work in the future
will also be
critical to the Company's success. There can be no assurance
that the Company
will be able to attract and retain personnel on acceptable terms
given the
competition between pharmaceutical and health care companies,
universities and
non-profit research institutions for experienced scientists. In
addition, the
Company relies on consultants and members of its Scientific
Advisory Board to
assist the Company in formulating its research and development
strategy. All
of Alteon's consultants and the members of the Scientific
Advisory Board are
employed by employers other than the Company and may have
commitments to or
consulting or advisory contracts with other entities that may
limit their
availability to the Company.
Hazardous Materials
The Company's research and development activities
involve the
controlled use of hazardous materials, chemicals and various
radioactive
compounds. Although the Company believes that its safety
procedures for
handling and disposing of hazardous materials comply with the
standards
prescribed by state and federal regulations, the risk of
accidental
contamination or injury from these materials cannot be completely
eliminated.
In the event of an accident, the Company could be held liable for
any damages
or fines that result; such liability could have a material
adverse effect on
the Company's business, financial condition and results of
operations.
- 11 -
<PAGE>
Effect of the Conversion of the Preferred Stock
The exact number of shares of Common Stock issuable upon
conversion
of all of the Preferred Stock will vary inversely with the market
price of the
Common Stock. The Preferred Stock is convertible into Common
Stock at a
conversion price which reflects a discount from the market price
of the Common
Stock at the time of conversion. The holders of Common Stock may
be
materially diluted by conversion of the Preferred Stock depending
on the
future market price of the Common Stock and the discount rate
applied to
determine the number of shares of Common Stock issuable upon
conversion. On
May 29, 1997 the low trading price of the Common Stock on the
Nasdaq National
Market was $3.875 per share. If such price were used to
determine the number
of shares of Common Stock issuable upon conversion of the
Preferred Stock and
if the discount rate of 3.5% applicable on the date hereof, 7.5%
effective on
and after July 3, 1997 and 14.5% on and after October 21, 1997
were applied,
the Company would issue a total of approximately 1,337,122,
1,394,943, and
1,509,149 shares of Common Stock, respectively, if all shares of
the Preferred
Stock were converted on such date. To the extent the average of
the daily low
trading prices of the Common Stock during the 10 trading days
immediately
preceding any date on which shares of Preferred Stock are
converted is higher
or lower than $3.875, the Company would issue more or fewer
shares of Common
Stock than reflected in such estimate, and such difference could
be material.
In addition, the discount rate that applies in calculating the
number of
shares of Common Stock issuable upon conversion is subject to
further
increases under certain circumstances. Any increases in the
discount rate
will result in more shares of Common Stock being issuable upon
conversion.
See "Description of Preferred Stock and Warrants."
Potential Adverse Effects of Shares Eligible for Future Sale
As of March 31, 1997, 3,412,028 shares of Common Stock
were issuable
upon the exercise of outstanding stock options. The issuance of
Common Stock,
which will be freely tradeable, upon the exercise of stock
options, as well as
future sales of Common Stock or of shares of Common Stock by
existing
stockholders, or the perception that sales could occur, could
adversely affect
the market price of the Common Stock. The Company's commercial
partner,
Yamanouchi, is a significant stockholder. The sale of shares by
Yamanouchi
could be viewed in the marketplace as a lack of confidence in the
Company and
could have a substantial negative impact on the market price of
the Common
Stock.
Volatility of Common Stock Price
The market prices for securities of biotechnology and
pharmaceutical
companies, including Alteon, have historically been highly
volatile, and the
market has from time to time experienced significant price and
volume
fluctuations that are unrelated to the operating performance of
particular
companies. Factors such as fluctuations in the Company's
operating results,
announcement of technological innovations or new therapeutic
products by the
Company or others, clinical trial results, developments
concerning agreements
with collaborators, governmental regulation, developments in
patent or other
proprietary rights, public concern as to the safety of drugs
developed by the
Company or others, future sales of substantial amounts of Common
Stock by
existing stockholders and general market conditions can have an
adverse effect
on the market price of the Common Stock. The realization of any
of the risks
described in these "Risk Factors" could have a dramatic and
adverse impact on
market price.
Potential Adverse Effect of Anti-Takeover Provisions
The Company's Certificate of Incorporation provides for
staggered
terms for the members of the Board of Directors and includes a
provision (the
"Fair Price Provision") that requires the approval of the holders
of 80% of
the Company's voting stock as a condition to a merger or certain
other
business transactions with, or proposed by, a holder of 10% or
more of the
Company's voting stock, except in cases where certain Directors
approve the
transaction or certain minimum price criteria and other
procedural
requirements are met. The Company has entered into a
Stockholders' Rights
Agreement pursuant to which each holder of a share of Common
Stock is granted
a Right to purchase the Company's Series F Preferred Stock under
certain
circumstances if a person or group acquires or commences a tender
offer for
20% of the Company's outstanding Common Stock. The Company has
also adopted a
Change in Control Severance Benefits Plan which provides for
severance
benefits to employees upon certain events of termination of
employment after
or in connection with a change in control as defined in the Plan.
In
addition, the Board of Directors has the authority, without
further action by
the stockholders, to fix the rights and preferences of, and issue
shares of,
Preferred Stock. The staggered board terms, Fair Price
Provision,
Stockholders' Rights Agreement, Change in Control Severance
Benefits Plan,
Preferred Stock provision and other provisions of the Company's
charter and
Delaware corporate law may discourage certain types of
transactions involving
an actual or potential change in control of the Company.
- 12 -
<PAGE>
USE OF PROCEEDS
The Company will receive no proceeds from the sale of
the Shares by
the Selling Stockholders but will receive proceeds from the
exercise, if any,
of the Warrants. Proceeds from exercise of the Warrants, if any,
will be used
for general corporate purposes.
SELLING STOCKHOLDERS
The following table sets forth certain information with
respect to
the Selling Stockholders, including (i) the names of the Selling
Stockholders,
(ii) the number of shares of Common Stock beneficially owned by
the Selling
Stockholders as of the date of this Prospectus, and (iii) the
maximum number
of shares of such Common Stock to be offered hereby. Because the
Selling
Stockholders may offer all, a portion or none of the Common Stock
offered
pursuant to this Prospectus, no estimate can be given as to the
amount of
Common Stock that will be held by the Selling Stockholders upon
termination of
the offering. See "Plan of Distribution." The information in
the table is
based upon information provided to the Company by the Selling
Stockholders,
except for the assumed conversion ratio of shares of Preferred
Stock into
shares of Common Stock, which is based solely on the assumptions
discussed in
the footnotes to the table.
<TABLE>
<CAPTION>
Number of Shares
Beneficially Owned Maximum Number of
Number
of Shares
Name of Selling Prior to Offering Shares Being
Beneficially Owned
Stockholder (1)(2)(3) Offered (1)(2)
After
Offering (3)(4)
<S> <C> <C>
<C>
Halifax Fund, LP 935,490 935,490
0
Galileo Capital, 93,549 93,549
0
LLC
RGC International 218,281 218,281
0
Investors, LDC
Heracles Fund 93,549 93,549
0
Lewis Fraser 77,957 77,957
0
Themis Partners, 140,323 140,323
0
L.P.
</TABLE>
(1) Such beneficial ownership represents the aggregate of
(a) the number
of shares of Common Stock beneficially owned by each such person,
(b) the
number of shares of Common Stock issuable upon exercise of the
Warrants,
and (c) an estimate of the number of shares of Common Stock
issuable upon
the conversion of all shares of Preferred Stock beneficially
owned by such
person, assuming the low trading price of $3.875 per share of the
Common
Stock on May 29, 1997 and a discount rate of 14.5% (the rate
which will
apply on and after October 21, 1997) were used to determine the
number of
shares of Common Stock issuable as of the date hereof. The
actual number
of shares of Common Stock offered hereby is subject to adjustment
and
could be materially less or more than the estimated amount
indicated
depending upon factors which cannot be predicted by the Company
at this
time, including, among other factors, the date on which the
Preferred
Stock is converted and the future market price of the Common
Stock. This
presentation is not intended to constitute a prediction as to the
future
market price of the Common Stock. Pursuant to the terms of the
Warrants and
the Certificate of Designations for the Preferred Stock, a holder
of
Warrants or Preferred Stock may exercise the Warrants or convert
the
Preferred Stock only to the extent that the number of shares of
Common
Stock issuable upon such exercise or conversion, together with
the number
of shares of Common Stock then beneficially owned by such holder
and its
affiliates (other than by virtue of ownership of the Warrants or
Preferred
Stock) does not exceed 4.9% of the total issued and outstanding
shares of
the Company's Common Stock, provided that a holder may waive this
limitation immediately upon a pending change in control
transaction and
otherwise upon 61 days' prior written notice to the Company.
Accordingly,
the number of shares of Common Stock set forth above for each
Selling
Stockholder may exceed the actual number of shares of Common
Stock that
such Selling Stockholder could own beneficially at any given time
through
its ownership of the Warrants and the Preferred Stock. To the
extent that
beneficial ownership set forth in the table does not reflect the
61 days
limitation regarding the exercise of the Warrants and the
conversion of
the Preferred Stock, the information set forth in the table is
not
determined in accordance with Rule 13d-3 under the Exchange Act.
See
"Risk Factors -- Effect of the Conversion of the Preferred Stock"
and
"Description of Preferred Stock and Warrants."
- 13 -
<PAGE>
(2) Except as set forth in footnote (1), beneficial
ownership is
determined in accordance with Rule 13d-3 under the Exchange Act.
(3) Does not include an aggregate of 1,000,000 shares of
Common Stock
issuable upon exercise of the Delisting Warrants (as hereinafter
defined).
See "Description of Preferred Stock and Warrants."
(4) Assumes all shares are sold to parties which are not
affiliates of
the Selling Stockholder.
DESCRIPTION OF PREFERRED STOCK AND WARRANTS
Pursuant to a Preferred Stock Investment Agreement (the
"Agreement")
dated as of April 24, 1997 the Company sold to the initial
Selling
Stockholders (the "Investors") 5,000 shares of the Preferred
Stock and the
Warrants for an aggregate purchase price of $5,000,000. The
Company also
entered into a Registration Rights Agreement with the Investors
(the
"Registration Rights Agreement") pursuant to which the Company
agreed to file
with the Securities and Exchange Commission a registration
statement for the
resale of the Common Stock issuable upon conversion of the
Preferred Stock and
exercise of the Warrants and to keep such registration statement
in effect
until all such Common Stock is sold or eligible for resale
pursuant to Rule
144(k) promulgated under the Securities Act (i.e., a period of
two years for
holders who are not affiliates of the Company). The Registration
Rights
Agreement imposes monetary penalties on the Company for failure
to meet its
obligations and in the event of certain defaults requires the
Company to
redeem the Preferred Stock or the Common Stock issued upon
conversion, as the
case may be, at a price equal to 130% of the Liquidation
Preference (as
defined below) in the case of Preferred Stock and 130% of average
of the daily
low trading prices of the Common Stock during the 10 trading days
immediately
preceding the date of conversion in the case of Common Stock.
Pursuant to the
Agreement and in connection with the Registration Rights
Agreement, the
Company issued to the Investors warrants to purchase 1,000,000
shares of
Common Stock at a price of $.10 per share, which warrants will be
exercisable
only if the Company fails, refuses or is unable to cause the
securities
registrable under the Registration Rights Agreement to be listed
on the Nasdaq
National Market or if the Common Stock is delisted from the
Nasdaq National
Market and the Company does not elect to redeem the then
outstanding Preferred
Stock for the price set forth above (the "Delisting Warrants").
The Preferred Stock has a liquidation value of $1,000
per share plus
accrued dividends and certain default payments owed by the
Company to the
holders of the Preferred Stock pursuant to the Registration
Rights Agreement
(the "Liquidation Preference"). In the event of the liquidation
of the
Company, holders of the Preferred Stock will be entitled to
receive an amount
per share equal to the Liquidation Preference before any
distribution of
assets of the Company to the holders of any class of stock
ranking junior to
the Preferred Stock.
The holders of the Preferred Stock are entitled to
receive cumulative
dividends at the per share rate of 6% of the Liquidation
Preference per year.
At the option of the Company, such dividends may be paid in cash
or by adding
the amount thereof to the Liquidation Preference of the shares of
Preferred
Stock. The Certificate of Designations for the Preferred Stock
contains no
restriction on the repurchase or redemption of shares by the
Company while
there is an arrearage in the payment of dividends.
Each share of Preferred Stock is convertible at any time
prior to the
Forced Conversion Date (as defined below) into a number of shares
of Common
Stock determined by dividing the Liquidation Preference by the
conversion
price, which is equal to the percentage set forth below of the
average of the
daily low trading prices of the Common Stock during the 10
trading days
immediately preceding the date of conversion. The applicable
percentages are
as follows:
- 14 -
<PAGE>
96.5% during calendar days 1 through 89 following
issuance of
the Preferred Stock
92.5% during calendar days 90 through 179 following
issuance of
the Preferred Stock
85.5% thereafter
The applicable percentages are subject to decrease in the event
that the
Company does not comply with certain obligations under the
Registration Rights
Agreement. Issuance of Common Stock upon conversion of the
Preferred Stock
will have a dilutive effect on holders of the Common Stock.
In the event of a Change in Control (as defined below),
for a period
commencing on the announcement of a transaction intended or
likely to result
in a Change in Control and ending 10 trading days after a
subsequent contrary
announcement or the consummation of the Change in Control, the
Preferred Stock
will be convertible into Common Stock at a conversion price which
is 83% of
the lowest of the daily low trading prices of the Common Stock
during the 10
trading days immediately preceding the date of conversion. A
Change in
Control will be deemed to have occurred if at any time (x) there
occurs any
consolidation or merger of the Company with or into any other
corporation or
other entity or person (whether or not the Company is the
surviving
corporation), or any other corporate reorganization or
transaction or series
of related transactions in which in excess of 50% of the
Company's voting
power is transferred through a merger, consolidation, tender
offer or similar
transaction, or there occurs any event which causes the
occurrence of a
Distribution Date (as defined in Section 3(b) of the
Stockholders' Rights
Agreement, dated as of July 27, 1995, between the Company and
Registrar and
Transfer Company, as rights agent, as amended) or a substantially
similar
occurrence under any successor or similar plan, (y) in excess of
50% of the
Company's Board of Directors consists of directors not nominated
by the prior
Board of Directors of the Company, or (z) any person (as defined
in Section
13(d) of the Exchange Act), together with its affiliates and
associates (as
such terms are defined in Rule 405 under the Securities Act),
beneficially
owns or is deemed to beneficially own (as described in Rule 13d-3
under the
Exchange Act without regard to the 60-day exercise period) in
excess of 50% of
the Company's voting power.
If certain conditions are met, the Company may require
any Preferred
Stock held on the date which is (i) the fifth anniversary of the
date of
issuance of the Preferred Stock or (ii) the first date following
the third
anniversary of such date of issuance on which the aggregate
Liquidation
Preference of the outstanding Preferred Stock is less than
$250,000 (the
"Forced Conversion Date") to be converted at the then-applicable
conversion
price.
If certain conditions are met, the Company may redeem
any Preferred
Stock held on the Forced Conversion Date for cash at a price
equal to the
Liquidation Preference for the shares to be redeemed divided by
the applicable
percentage for determining the conversion price. In addition, the
Company may
redeem for cash any Preferred Stock held on a date when the
aggregate
Liquidation Preference of the outstanding Preferred Stock is less
than
$250,000 for a price equal to 130% of the Liquidation Preference
of the
shares.
To the extent required by Rule 4460 of the National
Association of
Securities Dealers, Inc., the outstanding Preferred Stock may not
be converted
into more than 3,141,965 shares of Common Stock.
- 15 -
<PAGE>
Holders of the Preferred Stock generally have no voting
rights.
However, the affirmative vote of the holders of a majority of the
outstanding
Preferred Stock is necessary for (i) any amendment of the
Certificate of
Designations of the Preferred Stock, (ii) any amendment to the
Certificate of
Incorporation or by-laws of the Company that may amend or change
or adversely
affect any of the rights, preferences, or privileges of the
Preferred Stock,
(iii) any waiver of a default in payment of dividends on the
Preferred Stock,
and (iv) any reorganization or reclassification of the capital
stock of the
Company, any consolidation or merger of the Company with or into
any other
corporation or corporations, or any sale of all or substantially
all of the
assets of the Company, that would have an adverse effect on any
of the rights,
preferences, or privileges of the Preferred Stock.
The Certificate of Designations for the Preferred Stock
provides that if,
during the period ending 6 months after the issuance of the
Preferred Stock,
the Company sells or agrees to sell Common Stock or securities
convertible
into Common Stock (other than in a public offering or a private
placement to
an affiliate of The Palladin Group, L.P. or in connection with a
strategic
alliance, sales to underwriters or issuances under stock option
plans) for a
price that is less than the effective conversion price of the
Preferred Stock
at such time, the conversion price shall be adjusted so that it
is no greater
than the price of the newly issued Common Stock.
The Company has agreed that as long as over 20% of the
Preferred Stock is
outstanding, it will not (a) declare or pay any dividends or make
any
distributions to any holders of Common Stock, (b) purchase or
otherwise
acquire for value any Common Stock or other equity securities of
the Company
either junior to or on parity with the Preferred Stock, or (c)
authorize or
issue any equity security senior to the Preferred Stock.
The holders of the Warrants are entitled to purchase, in the
aggregate,
50,000 shares of Common Stock for $4.025 per share. The Warrants
may be
exercised at any time and from time to time, in whole or in part,
prior to
April 24, 2004. The number of shares and kind of securities
issuable on
exercise of the Warrants is subject to adjustment in the event of
certain
subdivisions or combinations of the securities issuable upon
exercise of the
Warrants, declarations of dividends or distributions on the
Common Stock,
mergers or consolidations of the Company and reorganizations or
reclassifications of the securities issuable upon exercise of the
Warrants.
PLAN OF DISTRIBUTION
The Shares offered hereby may be sold by the Selling
Stockholders or
their transferees from time to time in one or more transactions
(which may
include block transactions) in the over-the-counter market, on
the Nasdaq
National Market or such other market on which the Company's
Common Stock may,
from time to time, be traded in privately negotiated
transactions, through the
writing of options on the Shares (whether such options are listed
on an
options exchange or otherwise) or by a combination of such
methods of sale, at
fixed prices which may be changed, at market prices prevailing at
the time of
sale, at prices related to prevailing market prices or at
negotiated prices.
The Selling Stockholders may effect such transactions by selling
the Shares to
or through broker-dealers, and such broker-dealers may receive
compensation in
the form of discounts, concessions or commissions from the
Selling
Stockholders and/or the purchasers of the Shares for whom such
broker-dealers
may act as agents or to whom they sell as principals, or both
(which
compensation as to a particular broker-dealer might be in excess
of customary
commissions). The Selling Stockholders may deliver the Shares to
close out
previously established short positions and may also pledge the
Shares as
collateral for margin accounts, and such Shares could be resold
pursuant to
the terms of such accounts.
In order to comply with the securities laws of certain
states, if
applicable, the Shares will be sold in such jurisdictions only
through
registered or licensed brokers or dealers. In addition, in
certain states the
Shares may not be sold unless they have been registered or
qualified for sale
in the applicable state or an exemption from the registration or
qualification
requirements is available and is complied with.
- 16 -
<PAGE>
The Selling Stockholders and any broker-dealers or
agents that
participate with the Selling Stockholders in the distribution of
Shares may be
deemed to be "underwriters" within the meaning of the Securities
Act, and any
commissions received by them and any profit on the resale of the
Shares
purchased by them may be deemed to be underwriting commissions or
discounts
under the Securities Act.
To the extent required, the type and number of Shares to
be sold, the
purchase price and public offering price, the name or names of
any agent,
dealer or underwriter, and any applicable commissions or
discounts with
respect to a particular offering will be set forth in an
accompanying
Prospectus Supplement to this Prospectus.
Pursuant to the Preferred Stock Investment Agreement and
the
Registration Rights Agreement, the Company agreed to register the
Shares under
the Securities Act and to indemnify and hold the Selling
Stockholders harmless
against certain liabilities, including certain liabilities under
the
Securities Act, that could arise in connection with the sale by
the Selling
Stockholders of the Shares. The Company has agreed to bear
certain expenses
(other than selling commissions) in connection with the
registration and sale
of the Shares being offered by the Selling Stockholders,
estimated to be
$17,875.11.
LEGAL MATTERS
The validity of the issuance of the Common Stock being
offered hereby
has been passed upon by Smith, Stratton, Wise, Heher & Brennan,
Princeton, New
Jersey. A member of Smith, Stratton, Wise, Heher & Brennan holds
an option to
purchase 16,800 shares of Common Stock.
EXPERTS
The financial statements incorporated by reference in
this
Registration Statement have been audited by Arthur Andersen LLP,
independent
public accountants, as indicated in their reports with respect
thereto, and
are included herein in reliance upon the authority of said firm
as experts in
giving said reports.
- 17 -
<PAGE>
No dealer, salesperson or other
individual has been authorized to
give any information or to make any
representations other than those
contained in this Prospectus in
connection with the offer made by
this Prospectus and, if given or
made, such information or
representations must not be relied
upon as having been authorized by the
Company. This Prospectus does not Alteon Inc.
constitute an offer to sell or a 1,559,149
Shares
solicitation of an offer to buy any Common Stock
securities in any jurisdiction in
which such offer or solicitation is
not authorized or in which the person
making such offer or solicitation is
not qualified to do so, or to any
person to whom it is unlawful to make --------
such offer or solicitation. Neither PROSPECTUS
the delivery of this Prospectus nor --------
any sale made hereunder shall, under
any circumstances, create any
implication that there has been no
change in the affairs of the Company ,
1997
or that information contained herein
is correct as of any time subsequent
to the date hereof.
__________________
TABLE OF CONTENTS
Page
Additional Information........ 2
Available Information......... 2
Incorporation of Certain
Documents by Reference...... 2
The Company................... 3
Forward Looking Statements.... 4
Risk Factors.................. 4
Use of Proceeds...............13
Selling Stockholders..........13
Description of Preferred
Stock and Warrants...........14
Plan of Distribution..........16
Legal Matters.................17
Experts.......................17
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth an itemized estimate (other
than the SEC
registration fee which is the actual, not estimated, fee) of fees
and expenses
payable by the registrant in connection with the offering
described in this
registration statement, other than underwriting discounts and
commissions:
SEC registration fee ........................ $1,875.11
Printing, shipping & engraving expenses...... 1,000.00
Legal fees and expenses ..................... 7,500.00
Accounting fees ............................. 3,000.00
Miscellaneous expenses....................... 2,000.00
Total ....................................... $15,375.11
All expenses of registration incurred in connection herewith
are being
borne by the Company, but all selling and other expenses incurred
by the
Selling Stockholders will be borne by the Selling Stockholders.
Item 15. Indemnification of Directors and Officers.
Subsection (a) of Section 145 of the General Corporation Law
of Delaware
empowers a corporation to 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, whether civil, criminal, administrative or
investigative
(other than an action by or in the right of the corporation) by
reason of the
fact that he 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 corporation,
partnership,
joint venture, trust or other enterprise, against expenses
(including
attorneys' fees), judgments, fines and amounts paid in settlement
actually and
reasonably incurred by him in connection with such action, suit
or proceeding
if he acted in good faith and in a manner he 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
his conduct
was unlawful.
Subsection (b) of Section 145 empowers a corporation to
indemnify any
person who was or is a party or is threatened to be made a party
to any
threatened, pending or completed action or suit by or in the
right of the
corporation to procure a judgment in its favor by reason of the
fact that he
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 corporation, partnership, joint venture,
trust or other
enterprise, against expenses (including attorneys' fees) actually
and
reasonably incurred by him in connection with the defense or
settlement of
such action or suit if he acted in good faith and in a manner he
reasonably
believed to be in or not opposed to the best interests of the
corporation and
except that no indemnification shall be made in respect to 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 of
Chancery or the
court in which such action or suit was brought shall determine
upon
application that, despite the adjudication of liability but in
view of all of
the circumstances of the case, such person is fairly and
reasonably entitled
to indemnity for such expenses which the Court of Chancery or
such other court
shall deem proper.
<PAGE>
Section 145 further provides that to the extent a director or
officer of
a corporation has been successful in the defense of any action,
suit or
proceeding referred to in subsections (a) and (b) or in defense
of any claim,
issue or matter therein, he shall be indemnified against expenses
(including
attorneys' fees) actually and reasonably incurred by him in
connection
therewith; that the indemnification provided by Section 145 shall
not be
deemed exclusive of any other rights to which the indemnified
party may be
entitled; and that the scope of indemnification extends to
directors,
officers, employees, or agents of a constituent corporation
absorbed in a
consolidation or merger and persons serving in that capacity at
the request of
the constituent corporation for another. Section 145 also
empowers the
corporation to purchase and maintain insurance on behalf of a
director or
officer of the corporation against any liability asserted against
him or
incurred by him in any such capacity or arising out of his status
as such
whether or not the corporation would have the power to indemnify
him against
such liabilities under Section 145.
Article IX of the registrant's By-laws specifies that the
registrant shall
indemnify its directors and officers to the full extent permitted
by the
General Corporation Law of Delaware. This provision of the
By-laws is deemed
to be a contract between the registrant and each director and
officer who
serves in such capacity at any time while such provision and the
relevant
provisions of the General Corporation Law of Delaware are in
effect, and any
repeal or modification thereof shall not offset any rights or
obligations then
existing with respect to any state of facts then or theretofore
existing or in
any action, suit or proceeding theretofore or thereafter brought
or threatened
in whole or in part upon any such state of facts.
Section 102(b)(7) of the Delaware General Corporation Law
enables a
corporation in its certificate of incorporation to limit the
personal
liability of members of its board of directors for violation of a
director's
fiduciary duty of care. This Section does not, however, limit
the liability
of a director for breaching his duty of loyalty, failing to act
in good faith,
engaging in intentional misconduct or knowingly violating a law,
or from any
transaction in which the director derived an improper personal
benefit. This
Section also will have no effect on claims arising under the
federal
securities laws. The registrant's certificate of incorporation
limits the
liability of its directors as authorized by Section 102(b)(7).
The registrant currently carries liability insurance for the
benefit of
its directors and officers which provides coverage for losses of
directors and
officers for liabilities arising out of claims against such
persons acting as
directors or officers of the registrant (or any subsidiary
thereof) due to any
breach of duty, neglect, error, misstatement, misleading
statement, omission
or act done by such directors and officers, except as prohibited
by law. The
total coverage under the insurance policy is $10,000,000. The
liability
limit, however, shall be reduced by amounts incurred for legal
defense, which
amounts are to be applied against the retention amount. The
insurance policy
also provides for the advancement of reasonable fees, costs and
expenses
including attorneys' fees under certain circumstances, incurred
by directors
and officers in investigating, adjusting, defending and appealing
any claim,
subject to repayment by such director or officer if it is
ultimately
determined that such insureds are not entitled under the terms of
the policy
to payment of such loss.
The insurance policy will not provide coverage to the
directors and
officers to the extent that the Company has indemnified the
directors or
officers. The policy provides for the reimbursement of the
Company to the
extent the Company has indemnified the directors and officers
pursuant to law,
contract or the Certificate of Incorporation or By-laws of the
Company.
Moreover, the registrant would not be required to indemnify a
director or
officer for any claim based upon: (i) the director or officer
gaining, in
fact, a personal profit or advantage to which he or she was not
legally
<PAGE>
entitled, (ii) the director or officer committing, in fact, any
criminal or
deliberately fraudulent act, (iii) the payment to any director or
officer of
any remuneration without the previous approval of the
stockholders of the
Company, which payment without such previous approval shall be
held to have
been illegal, (iv) any claim for accounting of profits made in
connection with
a violation of 16(b) of the Exchange Act or a similar state law,
(v) any
attempt, whether successful or unsuccessful, by any person to
acquire
securities of the Company against the opposition of the Board of
Directors of
the Company, or any action, whether successful or unsuccessful,
by the Company
or the Board of Directors to resist such attempts; provided
however that the
exclusion shall not apply if the Company has obtained a written
opinion from
legal counsel that such resistive action is a lawful exercise of
the Board of
Directors' business judgment and an opinion from an investment
banking firm
that the price of such acquisition of securities is inadequate,
(vi)
environmental claims and violations, (vii) violation of the
Employee
Retirement Income Security Act of 1974, as amended, and (viii)
claims made
against the directors or officers under federal or state law
based upon the
filing of a registration statement with the Securities and
Exchange Commission
or based upon any underwriting agreement for the offer of any
security.
At present, there is no pending litigation or proceeding
involving a
director or officer of the registrant as to which indemnification
is being
sought nor is the registrant aware of any threatened litigation
that may
result in claims for indemnification by any director or officer.
Item 16. Exhibits.
Exhibit
Number Description
4.1 - Restated Certificate of Incorporation. (Incorporated by
Reference
to Exhibit 3.1 to the Company's Registration Statement
on Form S-1
(File Number 33-42574) which became effective on
November 1, 1991).
4.2 - Certificate of the Voting Powers, Designations,
Preference and
Relative Participating, Optional and Other Special
Rights and
Qualifications, Limitations or Restrictions of Series F
Preferred
Stock of the Company. (Incorporated by Reference to
Exhibit 4.2 to
the Company's Current Report on Form 8-K filed on August
4, 1995).
4.3 - By-laws, as amended. (Incorporated by Reference to
Exhibit 99.1 to
the Company's Current Report on Form 8-K filed on
September 8,
1995).
4.4 - Stockholders' Rights Agreement dated as of July 27,
1995, between
Alteon Inc. and Registrar and Transfer Company, as
Rights Agent.
(Incorporated by reference to Exhibit 4.1 to the
Company's Current
Report on Form 8-K filed on August 4, 1995).
4.5 - Certificate of Designations of 6% Cumulative Convertible
Preferred
Stock for Alteon Inc.(Incorporated by reference to
Exhibit 3.1 to
the Company's Current Report on Form 8-K filed on May 9,
1997).
4.6 - Registration Rights Agreement dated as of April 24, 1997
between
Alteon Inc. and the investors named on the signature
page thereof
(Incorporated by reference to Exhibit 4.1 to the
Company's Current
Report on Form 8-K filed on May 9, 1997).
4.7 - Form of Common Stock Purchase Warrant (Incorporated by
reference to
Exhibit 4.2 to the Company's Current Report on Form 8-K
filed on May
9, 1997).
<PAGE>
4.8 - Form of Common Stock Purchase Delisting Warrant
(Incorporated by
reference to Exhibit 4.3 to the Company's Current Report
on Form 8-K
filed on May 9, 1997).
4.9 - Amendment to Stockholders' Rights Agreement between
Alteon Inc. and
Registrar and Transfer Company, as Rights Agent
(Incorporated by
reference to Exhibit 4.4 to the Company's Current Report
on Form 8-K
filed on May 9, 1997).
5 - Opinion of Smith, Stratton, Wise, Heher & Brennan.
23.1 - Consent of Arthur Andersen LLP, independent public
accountants.
23.2 - Consent of Smith, Stratton, Wise, Heher & Brennan.
(contained in Exhibit 5).
24 - Power of Attorney (see "Power of Attorney" below).
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section
10(a)(3)
of the Securities Act of 1933.
(ii) To reflect in the prospectus any facts or
events
arising after the effective date of the registration
statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a
fundamental change in
the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease
in volume of
securities offered (if the total dollar value of
securities offered
would not exceed that which was registered) and any
deviation from
the low or high end of the estimated maximum offering
range may be
reflected in the form of prospectus filed with the
Commission
pursuant to Rule 424(b) if, in the aggregate, the
changes in volume
and price represent no more than a 20 percent change in
the maximum
aggregate offering price set forth in the "Calculation
of
Registration Fee" table in the effective registration
statement.
(iii) To include any material information with
respect to the
plan of distribution not previously disclosed in the
registration
statement or any material change to such information in
the
registration statement;
Provided, however, that paragraphs (1)(i) and
(1)(ii) above do
not apply if the information required to be included in
a
post-effective amendment by those paragraphs is
contained in periodic
reports filed with or furnished to the Commission by the
registrant
pursuant to section 13 or section 15(d) of the Exchange
Act that are incorporated by reference in the
registration statement.
(2) That for the purpose of determining any liability
under the
Securities Act, each such post-effective amendment shall
be
deemed to be a new registration statement relating to
the securities
offered therein, and the offering of such securities at
that time
shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a
post-effective
amendment any of the securities being registered which
remain unsold
at the termination of the offering.
<PAGE>
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
Exchange Act that is incorporated by reference in the
registration statement
shall be deemed to be a new registration statement relating to
the securities
offered therein, and the offering of such securities at that time
shall be
deemed to be the initial bona fide offering thereof.
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 foregoing provisions, or otherwise,
the registrant
has been advised that in the opinion of the Commission such
indemnification is
against public policy as expressed in the Securities Act and is,
therefore,
unenforceable. In the event that a claim for indemnification
against such
liabilities (other than the payment by the registrant of expenses
incurred or
paid by a director, officer or controlling person of the
registrant in the
successful defense of any action, suit or proceeding) is asserted
by such
director, officer or controlling person in connection with the
securities
being registered, the registrant will, unless in the opinion of
its counsel
the matter has been settled by controlling precedent, submit to a
court of
appropriate jurisdiction the question whether such
indemnification by it is
against public policy as expressed in the Securities Act and will
be governed
by the final adjudication of such issue.
<PAGE>
SIGNATURES
The Registrant. Pursuant to the requirements of the
Securities Act of
1933, the Registrant certifies that it has reasonable grounds to
believe that
it meets all of the requirements for filing on Form S-3 and has
duly caused
this Registration Statement to be signed on its behalf by the
undersigned,
thereunto duly authorized, in the City of Ramsey, State of New
Jersey, on May
29, 1997.
ALTEON INC.
By: /s/ James J. Mauzey
--------------------------
James J. Mauzey
Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose
signature
appears below constitutes and appoints James J. Mauzey, Kenneth
I. Moch and
Elizabeth A. O'Dell, and each or any one of them, his true and
lawful
attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any
and all
capacities, to sign any and all amendments (including
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 and necessary to be done in
connection
therewith, as fully to all intents and purposes as he might or
could do in
person, hereby ratifying and conforming all that said
attorneys-in-fact and
agents, or any of them, or their or his substitutes or
substitute, may
lawfully do or cause to be done by virtue hereof.
<PAGE>
Pursuant to the requirements of the Securities Act of 1933,
this
registration statement has been signed below by the following
persons in the
capacities and on the dates indicated.
Signature Title
Date
/s/ James J. Mauzey Chairman of the Board May
29, 1997
- ------------------------ Chief Executive Officer
James J. Mauzey and Director (principal
executive officer)
/s/ Jere E. Goyan President, Chief Operating May
29, 1997
- ------------------------ Officer and Director
Jere E. Goyan
/s/ Kenneth I. Moch Senior Vice President May
29, 1997
- ------------------------ Finance and Business
Kenneth I. Moch Development, Chief
Financial Officer
(principal financial
officer)
/s/ Elizabeth A. O'Dell Vice President, Finance May
29, 1997
- ------------------------ and Administration,
Elizabeth A. O'Dell Treasurer, Secretary
(principal accounting
officer)
/s/ Anthony Cerami Director May
29, 1997
- ------------------------
Anthony Cerami
/s/ Marilyn G. Breslow Director May
29, 1997
- ------------------------
Marilyn G. Breslow
/s/ Mark Novitch Director May
29, 1997
- ------------------------
Mark Novitch
/s/ Louis Fernandez Director May
29, 1997
- ------------------------
Louis Fernandez
/s/ Alan J. Dalby Director May
29, 1997
- ------------------------
Alan J. Dalby
/s/ Robert N. Butler Director May
29, 1997
- ------------------------
Robert N. Butler
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
4.1 - Restated Certificate of Incorporation. (Incorporated by
Reference to Exhibit 3.1 to the Company's Registration
Statement on Form S-1 (File Number 33-42574) which
became
effective on November 1, 1991).
4.2 - Certificate of the Voting Powers, Designations,
Preference
and Relative Participating, Optional and Other Special
Rights and Qualifications, Limitations or Restrictions
of
Series F Preferred Stock of the Company. (Incorporated
by
Reference to Exhibit 4.2 to the Company's Current Report
on
Form 8-K filed on August 4, 1995).
4.3 - By-laws, as amended. (Incorporated by Reference to
Exhibit
99.1 to the Company's Current Report on Form 8-K filed
on
September 8, 1995).
4.4 - Stockholders' Rights Agreement dated as of July 27,
1995,
between Alteon Inc. and Registrar and Transfer Company,
as
Rights Agent. (Incorporated by reference to Exhibit 4.1
to
the Company's Current Report on Form 8-K filed on August
4,
1995).
4.5 - Certificate of Designations of 6% Cumulative Convertible
Preferred
Stock for Alteon Inc.(Incorporated by reference to
Exhibit 3.1 to
the Company's Current Report on Form 8-K filed on May 9,
1997).
4.6 - Registration Rights Agreement dated as of April 24, 1997
between
Alteon Inc. and the investors named on the signature
page thereof
(Incorporated by reference to Exhibit 4.1 to the
Company's Current
Report on Form 8-K filed on May 9, 1997).
4.7 - Form of Common Stock Purchase Warrant (Incorporated by
reference
to Exhibit 4.2 to the Company's Current Report on Form
8-K filed
on May 9, 1997).
4.8 - Form of Common Stock Purchase Delisting Warrant
(Incorporated by
reference to Exhibit 4.3 to the Company's Current Report
on Form
8-K filed on May 9, 1997).
4.9 - Amendment to Stockholders' Rights Agreement between
Alteon Inc.
and Registrar and Transfer Company, as Rights Agent
(Incorporated
by reference to Exhibit 4.4 to the Company's Current
Report on
Form 8-K filed on May 9, 1997).
5 - Opinion of Smith, Stratton, Wise, Heher & Brennan.
23.1 - Consent of Arthur Andersen LLP, independent public
accountants.
23.2 - Consent of Smith, Stratton, Wise, Heher & Brennan
(contained
in Exhibit 5).
24 - Power of Attorney (see "Power of Attorney" above).
<PAGE>
May 30,
1997
Alteon Inc.
170 Williams Drive
Ramsey, New Jersey 07647
Ladies and Gentlemen:
We have acted as counsel to Alteon Inc., a Delaware
corporation (the
"Company"), in connection with the filing by the Company of a
registration
statement on Form S-3 (the "Registration Statement") under the
Securities Act
of 1933, as amended, relating to the registration of shares (the
"Shares") of
the Company's common stock, $.01 par value, issuable upon
conversion of the
Company's 6% Cumulative Convertible Preferred Stock (the
"Preferred Stock")
and Common Stock Purchase Warrants dated as of April 24, 1997
(the
"Warrants"), which are to be offered by the Selling Stockholders
named in the
Registration Statement.
In connection with the Registration Statement, we have
examined such
corporate records and documents, other documents, and such
questions of law as
we have deemed necessary or appropriate for purposes of this
opinion. On the
basis of such examination, it is our opinion that the Shares,
when issued and
delivered upon conversion of the Preferred Stock in accordance
with the terms
of Certificate of Designations therefor and the exercise of the
Warrants in
accordance with the terms thereof will be validly issued, fully
paid and
non-assessable.
We consent to the filing of this opinion as Exhibit 5 to the
Registration Statement and to the reference to this firm under
the heading
"Legal Matters" in the Registration Statement.
Very truly yours,
/s/ Smith, Stratton, Wise,
Heher & Brennan
<PAGE>
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Alteon Inc.
As independent public accountants, we hereby consent to the
incorporation by
reference in this registration statement of our report dated
February 20, 1997
included in Alteon Inc.'s Form 10-K for the year ended December
31, 1996 and
to all references to our firm included in this registration
statement.
/s/ Arthur
Andersen LLP
ARTHUR ANDERSEN
LLP
Roseland, New Jersey
May 28, 1997
