As Filed with the Securities and Exchange Commission on July 17, 1997
Registration No. 333-28309
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________
AMENDMENT NO. 2
TO
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
________________________
The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
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PROSPECTUS
SUBJECT TO COMPLETION, DATED JULY 17, 1997
Alteon Inc.
3,191,965 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 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 July 16, 1997, the last
reported sale price of the Common Stock was $3.5625 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 number of shares which the agreements pursuant to
which the Warrants and Preferred Stock were issued require the
Registrant to reserve for issuance upon exercise of the Warrants
and conversion of the Preferred Stock, 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. Pursuant to Rule 416 under the Securities Act
of 1933, this Prospectus also covers such additional shares of
the Company's Common Stock as may be issued upon conversion of
the Preferred Stock and as a result of stock splits, stock
dividends and anti-dilution adjustments with respect to the
shares registered hereby and the Warrants and Preferred 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 July , 1997
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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, May 9, 1997 and June 24, 1997.
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(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.
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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. Alteon has also entered into a
licensing arrangement with IDEXX Laboratories, Inc. ("IDEXX")
pursuant to which IDEXX received a license to develop and market
Alteon's lead compound, pimagedine, as a potential therapeutic in
companion animals and Alteon's A.G.E. diagnostics technology for
companion animal use. 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.
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.
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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.
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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. The
Preferred Stock Investment Agreement pursuant to which the
Preferred Stock was sold to the Selling Stockholders prohibits
the Company from incurring debt other than trade payables and a
working capital facility not to exceed $3,000,000 for a period of
up to 12 months from the effective date of the Registration
Statement of which this Prospectus is a part and so will limit
any possible debt financing. 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.
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.
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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 he 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 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.
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.
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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.
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Dependence on Collaborative Relationships
The Company has established collaborative arrangements with
Yamanouchi, Gamida, Boehringer Mannheim and IDEXX 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.
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.
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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.
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 o protection afforded
by patents for licensed technologies or for future discoveries
will be adequate to protect the Company's proprietary technology.
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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 ca 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
ears 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,
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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 or treatment of stroke has
been submitted, the Company has not submitted any other IND
application for any product candidate and one 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.
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
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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.
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
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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 0 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
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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.
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
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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.
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 July 16, 1997 the low trading
price of the Common Stock on the Nasdaq National Market was
$3.53125 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 7.5% applicable on
the date hereof and 14.5% applicable on and after October 21,
1997 were applied, the Company would issue a total of
approximately 1,552,016 and 1,679,081 shares of Common Stock,
respectively, if all shares of the Preferred Stock were converted
on such date together with all dividends accrued thereon. 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 $3.53125, 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."
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Effect of Rights and Preferences of Preferred Stock on Holders of
Common Stock
For so long as the Preferred Stock is outstanding, the
Company may not pay any dividends on the Common Stock without the
consent of a majority in interest of the holders of the Preferred
Stock. In the event of the liquidation or dissolution of the
Company, the holders of the Preferred Stock will be entitled to
receive, prior to any distribution of assets of the Company to
holders of the Common Stock, $1,000 per share plus (i) dividends
added to the Liquidation Preference (as hereinafter defined),
(ii) default payments owed under the Registration Rights
Agreement (as hereinafter defined) and (iii) accrued but unpaid
dividends. See "Description of Preferred Stock and Warrants."
Although the Company has never paid a dividend to the holders of
its Common Stock and does not expect to do so in the foreseeable
future, if ever, the terms of the Preferred Stock may prevent
payment of a dividend on the Common Stock even if the Company
determined that such a dividend were appropriate. In addition,
the terms of the Preferred Stock will limit the amounts that may
be available for distribution to holders of Common Stock in the
event of the liquidation or dissolution of the Company.
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
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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.
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 the sale of
the Preferred Stock to the Selling Stockholders and proceeds from
the exercise of the Warrants, if any, will be used for general
corporate purposes.
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<PAGE>
<PAGE>
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, (iii) the maximum number of shares of
such Common Stock to be offered hereby, (iv) the number of shares
to be owned after completion of the Offering (assuming all shares
offered hereby are sold), and (v) the percentage of the Company's
Common Stock to be owned by the Selling Stockholders after
completion of the Offering (assuming all shares offered hereby
are sold). 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>
Percentage
Number of Shares of Outstanding
Beneficially Owned Maximum Number of Number of Shares Common Stock
Name of Selling Prior to Offering Shares Being Beneficially Owned Beneficially Owned
Stockholder (1)(2)(3) Offered (1)(2) After Offering (3)(4) After Offering
<S> <C> <C> <C> <C>
Halifax Fund, L.P. 843,291(5) 843,291(5) 0 0
Galileo Capital, 84,329(6) 84,329(6) 0 0
L.L.C.
RGC International 196,768(7) 196,768(7) 0 0
Investors, LDC
Heracles Fund 84,329(8) 84,329(8) 0 0
Lewis Fraser 70,274(9) 70,274(9) 0 0
Themis Partners, 126,494(10) 126,494(10) 0 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) the number of shares of
Common Stock issuable if all shares of Preferred Stock, together
with dividends accrued thereon, beneficially owned by such person
were converted on into Common Stock at a conversion price of
$3.74, such price being 96.5% of the average daily low trading
prices of the Common Stock during the 10 trading days immediately
preceding July 17, 1997. The Preferred Stock is convertible into
Common Stock at a conversion price of 96.5% (or 92.5% and 85.5%
if the conversion occurs on or after July 22, 1997 and October
21, 1997, respectively) of the average of the daily low trading
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prices of the Common Stock during the 10 trading days immediately
preceding the date of conversion. See "Description of Preferred
Stock and Warrants." The actual number of shares of Common Stock
issuable upon conversion of the Preferred Stock 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."
(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.
(5) Represents shares issuable to Halifax Fund, L.P., a Cayman
Islands limited partnership, upon exercise of Warrants to
purchase 30,000 shares of Common Stock and conversion of 3,000
shares of Preferred Stock.
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<PAGE>
(6) Represents shares issuable to Galileo Capital, L.L.C., a
Delaware limited liability company, upon exercise of Warrants to
purchase 3,000 shares of Common Stock and conversion of 300
shares of Preferred Stock.
(7) Represents shares issuable to RGC International Investors,
LDC, a Cayman Islands limited duration company, upon exercise of
Warrants to purchase 7,000 shares of Common Stock and conversion
of 700 shares of Preferred Stock.
(8) Represents shares issuable to the Heracles Fund, a Cayman
Islands corporation, upon exercise of Warrants to purchase 3,000
shares of Common Stock and conversion of 300 shares of Preferred
Stock.
(9) Represents shares issuable to Lewis Fraser upon exercise of
Warrants to purchase 2,500 shares of Common Stock and conversion
of 250 shares of Preferred Stock.
(10) Represents shares issuable to Themis Partners, L.P., a
Delaware limited partnership, upon exercise of Warrants to
purchase 4,500 shares of common stock and conversion of 450
shares of Preferred Stock.
DESCRIPTION OF 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 in the amount of 3% of the
Liquidation Preference (as defined below) for each 30 day period
during which the Company is in default of its obligations (i) to
cause the Common Stock issued on conversion of the Preferred
Stock and exercise of the Warrants to be listed on the Nasdaq
National Market, (ii) to maintain a registration statement
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covering such shares in effect, and (iii) to have sufficient
authorized shares of Common Stock available for issuance upon
such conversion of the Preferred Stock. The Registration Rights
Agreement also provides that if the Company fails to cure a
default of its obligation to maintain an effective registration
statement, the holders of the Preferred Stock may require 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 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 the default payments (as
described below) 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 d viding the
Liquidation Preference by the conversion price, which is equal to
the percentage set forth below of the average of the daily low
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trading prices of the Common Stock during the 10 trading days
immediately preceding the date of conversion. The applicable
percentages are as follows:
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 its obligations under the
Registration Rights Agreement to cause a registration statement
to become effective in a timely manner. 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 the Company is not in default of its obligations under
the Registration Rights Agreement (as described above) and if the
Company's assets exceed its liabilities and it is not subject to
liquidation or dissolution, the Company may require any Preferred
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<PAGE>
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.
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. At the Company's Annual Meeting of
Stockholders held on June 10, 1997, the stockholders approved the
removal of this limitation. Accordingly, there is no limit on
the number of shares of Common Stock into which the Preferred
Stock may be converted.
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.
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<PAGE>
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 pledgees, donees or other 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 addition,
any shares that qualify for sale pursuant to Rule 144 under the
Securities Act of 1933 may be sold under Rule 144 rather than
pursuant to this Prospectus.
-25-
<PAGE>
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.
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.
-26-
PAGE
<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 3,191,965 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 JULY __, 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................... 4
Forward Looking Statements.... 5
Risk Factors.................. 5
Use of Proceeds...............18
Selling Stockholders..........19
Description of
Stock and Warrants...........21
Plan of Distribution..........25
Legal Matters.................26
Experts.......................26
-27-
<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 ........................ $3,792.43
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 ....................................... $17,292.43
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.
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 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
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.
3.2* - Consent of Smith, Stratton, Wise, Heher & Brennan.
(contained in Exhibit 5).
* Previously filed.
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.
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>
<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
Amendment No. 2 to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City
of Ramsey, State of New Jersey, on July 17, 1997.
ALTEON INC.
By: /s/ James J. Mauzey
--------------------------
James J. Mauzey
Chairman of the Board and
Chief Executive Officer
PAGE
<PAGE>
Pursuant to the requirements of the Securities Act of 1933,
this Amendment No. 2 to the 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 July 17, 1997
- --------------------- Chief Executive Officer
James J. Mauzey and Director (principal
executive officer)
/s/ Jere E. Goyan President, Chief Operating July 17, 1997
- --------------------- Officer and Director
Jere E. Goyan
/s/ Kenneth I. Moch Senior Vice President July 17, 1997
- --------------------- Finance and Business
Kenneth I. Moch Development, Chief
Financial Officer
(principal financial
officer)
/s/ Elizabeth O'Dell Vice President, Finance July 17, 1997
- --------------------- and Administration,
Elizabeth A. O'Dell Treasurer, Secretary
(principal accounting
officer)
* Director July 17, 1997
- ---------------------
Anthony Cerami
* Director July 17, 1997
- ---------------------
Marilyn G. Breslow
* Director July 17, 1997
- ---------------------
Mark Novitch
/s/ David K. McCurdy Director July 17, 1997
- ---------------------
David K. McCurdy
* Director July 17, 1997
- ---------------------
Alan J. Dalby
* Director July 17, 1997
- ---------------------
Robert N. Butler
* By his signature set forth below, the undersigned, pursuant to
duly authorized powers of attorney filed with the Securities and
Exchange Commission, has signed this Amendment No. 2 to the
Registration Statement on behalf of the persons indicated.
By: /s/ Kenneth I. Moch
-------------------
Kenneth I. Moch
(attorney-in-fact)
<PAGE>
<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).
* Previously filed.
<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
July 17, 1997
