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PROSPECTUS
ALTEON INC.
3,967,724 SHARES
COMMON STOCK
This Prospectus relates to the proposed sale from time to time by
selling stockholders of shares of common stock of Alteon Inc. The shares covered
by this prospectus include shares issuable upon the exercise of warrants owned
by the selling stockholders.
We will not receive any proceeds from sales of the shares by the
selling stockholders but will receive proceeds from the exercise, if any, of the
warrants.
The selling stockholders will sell the shares from time to time
primarily in transactions on the American Stock Exchange or any other market on
which our common stock is traded at the price then prevailing, although sales
may also be made in negotiated transactions or otherwise.
Our common stock is quoted on the American Stock Exchange under the
symbol "ALT." On November 14, 2000 the last reported sale price of the common
stock was $7.44 share.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
BEGINNING ON PAGE 4.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is November 16, 2000
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TABLE OF CONTENTS
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The Company......................................................... 3
Forward Looking Statements.......................................... 3
Risk Factors........................................................ 4
Use of Proceeds..................................................... 11
Selling Stockholders................................................ 12
Plan of Distribution................................................ 13
Legal Matters....................................................... 13
Experts............................................................. 13
Where You Can Find More Information................................. 13
Incorporation of Certain Documents by Reference..................... 14
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THE COMPANY
We are engaged in the discovery and development of new pharmaceutical
products for the treatment of cardiovascular and renal diseases and other
disorders of diabetes and aging. Our proprietary technology focuses on Advanced
Glycosylation End-products, or A.G.E.s, which are abnormal glucose/protein
complexes that form as a result of circulating blood glucose reacting with
proteins.
Our current research and drug development focused on A.G.E. technology
takes three directions: the breaking of A.G.E. cross-links between proteins in
order to prevent or reverse damage, the prevention or inhibition of A.G.E.
formation, and the reduction of the A.G.E. burden through a novel class of
anti-hyperglycemic agents.
ALT-711 is our lead agent in a class of proprietary compounds known as
A.G.E. Crosslink Breakers. ALT-711 offers the possibility of the first
therapeutic approach to break A.G.E. cross-links and the potential to impact or
even reverse tissue damage caused by diabetes and aging. ALT-711 initially is
being developed for cardiovascular indications, but also has potential in a
number of other medical conditions. We have completed a series of Phase I safety
testing of ALT-711 and are currently conducting Phase II trials. We are also
developing additional A.G.E. Crosslink Breaker compounds for a number of other
indications. We are exploring potential corporate partnerships for this program.
While we have sufficient funds for the currently ongoing Phase II trial,
additional funding will be required for additional trials and development of
ALT-711.
Our lead A.G.E.-Formation Inhibitor, pimagedine, has completed a Phase
II trial in dyslipidemia and a Phase II/III pivotal ACTION (A Clinical Trial in
Overt Nephropathy) trial in Type 1 diabetic patients with overt nephropathy. In
the multi-center ACTION trial, pimagedine therapy did not reach statistical
significance in its primary endpoint, the time to doubling of serum creatinine,
but did result in a statistically significant and clinically meaningful
reduction of urinary protein excretion. Pimagedine also reduced, to a
statistically significant extent, cholesterol and triglycerides as well as the
progression of retinopathy. After discussion with the Food and Drug
Administration (FDA) and with scientific and clinical advisors active in
nephrology research and treatment of renal disease, we are actively exploring
potential corporate partnerships for the continued development of pimagedine,
both in the U.S. and abroad.
We are also utilizing our technical expertise in the field of diabetes
to develop compounds focused on glucose regulation and control. These
anti-hyperglycemic compounds, or glucose lowering agents (GLA), are in
pre-clinical studies.
Our principal offices are located at 170 Williams Drive, Ramsey, New
Jersey 07446. Our telephone number is (201) 934-5000.
FORWARD LOOKING STATEMENTS
This prospectus contains forward-looking statements. In some cases you
can identify these statements by the use of words such as "may," "will,"
"expect," "anticipate," "estimate," "continue" or other similar words. These
statements discuss future expectations and projections of results of operations
or of financial conditions. Actual results may differ materially. When
considering these forward-looking statements, you should keep in mind the risk
factors described below and other cautionary statements made in this prospectus.
These factors may cause actual results to differ from any forward-looking
statements.
We do not promise to update forward-looking information or any other
information to reflect actual results or changes in assumptions or other factors
that could affect those statements.
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RISK FACTORS
Investment in our common stock involves substantial risks, including
those described below. You should purchase our common stock only if you can
afford to lose your entire investment. You should carefully consider all of the
information included in this prospectus to evaluate us and our business. You
should make this evaluation before deciding whether to purchase our common
stock. You should understand that additional risks which we cannot predict at
this time may have negative impact on us in the future. You should also
understand that the risks discussed below might affect us more than or in a
different manner than we now predict.
WE MAY NOT BE ABLE TO OBTAIN SUFFICIENT ADDITIONAL FUNDING TO MEET OUR NEEDS OR
TO ALLOW US TO CONTINUE THE RESEARCH, PRODUCT DEVELOPMENT, PRECLINICAL TESTING
AND CLINICAL TRIALS OF OUR PRODUCT CANDIDATES.
We anticipate that our existing available cash and cash equivalents and
short-term investments will be adequate to satisfy our working capital
requirements for our current and planned operations into 2001. We will require
substantial new funding in order to continue the research, product development,
preclinical testing and clinical trials of our product candidates, including
ALT-711 and pimagedine. We will also require additional funding for operating
expenses, the pursuit of regulatory approvals for our product candidates and the
establishment of marketing and sales capabilities. Our future capital
requirements will depend on many factors, including:
- continued scientific progress in our 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.
We cannot be certain that our cash reserves and other liquid assets
will be adequate to satisfy our capital and operating requirements.
We intend to seek funding through arrangements with corporate
collaborators and through public or private sales of our securities, including
equity securities, when and if conditions permit. In addition, we may pursue
opportunities to obtain debt financing, including capital leases, in the future.
We cannot be certain, however, that additional funding will be available on
reasonable terms, if at all. Any additional equity financing would be dilutive
to our stockholders. If adequate funds are not available, we may be required to
curtail significantly or eliminate one or more of our research and development
programs. If we obtain funds through arrangements with collaborative partners or
others, we may be required to relinquish rights to certain of our technologies
or product candidates.
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WE MAY NOT SUCCESSFULLY DEVELOP ANY PRODUCTS.
All of our product candidates are in the research or development stage.
We cannot be certain that we will succeed in the development and marketing of
any therapeutic or diagnostic product. To achieve profitable operations, we
must, alone or with others, successfully identify, develop, introduce and market
proprietary products. Such products will require significant additional
investment, development and preclinical and clinical testing prior to potential
regulatory approval and commercialization.
We have not yet requested or received regulatory approval for any
product from the FDA or any other regulatory body. Before obtaining regulatory
approvals for the commercial sale of any of our products under development, we
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 we cannot be certain
that any clinical trials we undertake will demonstrate sufficient safety and
efficacy to obtain the requisite regulatory approvals or will result in
marketable products.
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.
We cannot be certain that we will undertake additional clinical trials
or that our 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. We do
not expect any of our products, including ALT-711 and pimagedine, to be
commercially available for a number of years, if at all.
WE MAY NEVER GENERATE PROFITS.
All of our revenues to date have been generated from collaborative
research agreements and financing activities, or interest income earned on these
funds. We have not received any revenues from product sales. We cannot be
certain that we will realize product revenues on a timely basis, if at all.
At December 31, 1999, we had an accumulated deficit of $121,496,049. We
anticipate that we will incur substantial, potentially greater losses in the
future. We cannot be certain that our products under development will be
successfully developed or that our products, if successfully developed, will
generate revenues sufficient to enable us to earn a profit. We expect to incur
substantial additional operating expenses over the next several years as our
research, development and clinical trial activities increase. We do not expect
to generate revenues from the sale of products, if any, for a number of years.
Our ability to achieve profitability depends in part on our ability:
- to enter into agreements for product development;
- obtain regulatory approval for our products; and
- develop the capacity, or enter into agreements, for
the manufacture, marketing and sale of any products.
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We cannot be certain that we will obtain required regulatory approvals,
or successfully develop, manufacture, commercialize and market product
candidates or that we will ever achieve product revenues or profitability.
WE MAY NOT BE ABLE TO FORM AND MAINTAIN THE COLLABORATIVE RELATIONSHIPS THAT OUR
BUSINESS STRATEGY REQUIRES.
Our strategy for developing and deriving revenues from our products
depends, in large part, upon entering into arrangements with research
collaborators, corporate partners and others.
We have established collaborative arrangements with Gamida, Roche and
IDEXX with respect to the development of drug therapies and diagnostics
utilizing our scientific platforms. To succeed, we will have to develop
additional relationships. We are seeking to establish new collaborative
relationships to provide the funding necessary for continuation of our product
development but we cannot be certain that such effort will be successful. If we
are unable to enter into or manage additional collaborators, our programs may
suffer and we may be unable to develop products.
OUR DEPENDENCE ON COLLABORATIVE RELATIONSHIPS MAY LEAD TO DELAYS IN PRODUCT
DEVELOPMENT AND DISPUTES OVER RIGHTS TO TECHNOLOGY.
We will, in some cases, be dependent upon outside partners to conduct
preclinical testing and clinical trials and to provide adequate funding for our
development programs. Our corporate partners may have all or a significant
portion of the development and regulatory approval responsibilities. Failure of
the corporate partners to develop marketable products or to gain the appropriate
regulatory approvals on a timely basis, if at all, would have a material adverse
effect on our business, financial condition and results of operations.
In most cases, we will not be able to control the amount and timing of
resources which our corporate partners devote to our programs or potential
products. If any of our corporate partners breached or terminated their
agreements with us or otherwise failed to conduct their collaborative activities
in a timely manner, the preclinical or clinical development or commercialization
of product candidates or research programs could be delayed, and we would be
required to devote additional resources to product development and
commercialization or terminate certain development programs.
We cannot be certain that disputes will not arise in the future with
respect to the ownership of rights to any technology we develop with
third-parties. These and other possible disagreements between us and
collaborators could lead to delays in the collaborative research, development or
commercialization of 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 our business, financial condition and results of
operations.
Any corporate partners we have may develop, either alone or with
others, products that compete with the development and marketing of our
products. Competing products, either developed by the corporate partners or to
which the corporate partners have rights, may result in their withdrawal of
support with respect to all or a portion of our technology, which would have a
material adverse effect on our business, financial condition and results of
operations.
WE MAY NOT BE ABLE TO PROTECT THE PROPRIETARY RIGHTS THAT ARE CRITICAL TO OUR
SUCCESS.
Our success will depend on our ability to obtain patent protection for
our products, preserve our trade secrets, prevent third parties from infringing
upon our proprietary rights and operate without infringing upon the proprietary
rights of others, both in the United States and abroad.
We cannot be certain that competitors will not develop competitive
products outside the protection that may be afforded by the claims of our
patents. We are 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 impact A.G.E. or A.G.E. cross-link formation.
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The degree of patent protection afforded to pharmaceutical inventions
is uncertain and our 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 indications and the use of specific compounds and classes
of compounds to inhibit A.G.E. formation. Competitors may develop and
commercialize pimagedine or pimagedine-like products for indications outside of
the protection provided by the claims of our use patents. Physicians, pharmacies
and wholesalers could then substitute for our pimagedine products. Substitution
for our pimagedine products would have a material adverse effect on our
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 we have several patent applications pending to
protect proprietary technology and potential products, we cannot be certain that
these patents will be issued, that the claims of any patents which do issue will
provide any significant protection of our technology or products, or that we
will enjoy any patent protection beyond the expiration dates of our currently
issued patents.
We also rely upon unpatented trade secrets and improvements, unpatented
know-how and continuing technological innovation to maintain, develop and expand
our competitive position, which we seek to protect, in part, by confidentiality
agreements with our corporate partners, collaborators, employees and
consultants. We also have invention or patent assignment agreements with our
employees and certain, but not all, corporate partners and consultants. We
cannot be certain that relevant inventions will not be developed by a person not
bound by an invention assignment agreement. We cannot be certain that binding
agreements will not be breached, that we would have adequate remedies for such
breach, or that our trade secrets will not otherwise become known to or be
independently discovered by competitors.
WE CANNOT BE CERTAIN THAT REGULATORY APPROVALS WILL BE OBTAINED FOR OUR
PRODUCTS.
Our research, preclinical testing and clinical trials of our product
candidates are, and the manufacturing and marketing of our products will be,
subject to extensive and rigorous regulation by numerous governmental
authorities in the United States and in other countries where we intend to test
and market our product candidates.
Prior to marketing, any product we develop must undergo an extensive
regulatory approval process. This regulatory process, which includes preclinical
testing and clinical trials, and may include post-marketing surveillance, of
each compound to establish its safety and efficacy, can take many years and can
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, we may encounter
delays or rejections 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). We may encounter similar delays in foreign
countries. We cannot be certain that regulatory approval will be obtained for
any drugs we develop. 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 our 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. None
of our products have been approved for commercialization in the United States or
elsewhere. We cannot be certain that we 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 our licensees or
marketing partners from marketing our products or limit the commercial use of
such products and will have a material adverse effect on our business, financial
condition and results of operations.
WE MAY NOT BE ABLE TO COMPETE SUCCESSFULLY WITH BIOTECHNOLOGY COMPANIES AND
ESTABLISHED PHARMACEUTICAL COMPANIES IN THE DEVELOPMENT AND MARKETING OF CURES
AND THERAPIES FOR DIABETES, CARDIOVASCULAR DISEASES AND THE OTHER CONDITIONS FOR
WHICH WE SEEK TO DEVELOP PRODUCTS.
We are engaged in pharmaceutical fields characterized by extensive
research efforts and rapid technological progress. Many established
pharmaceutical and biotechnology companies with resources greater than ours are
attempting to develop products that would be competitive with our products.
Other companies may
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succeed in developing products that are safer, more efficacious or less costly
than any that we may develop and may also be more successful than us in
production and marketing. Rapid technological development by others may result
in our products becoming obsolete before we recover 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
DCCT, published in 1993, showed that tight glucose control reduced the incidence
of diabetic complications. Several pharmaceutical companies have introduced new
products for glucose control for the management of hyperglycemia in Type II
diabetes. In addition, several large companies have initiated or expanded
research, development and licensing efforts to build a diabetic pharmaceutical
franchise focusing on diabetic nephropathy, neuropathy, retinopathy and related
conditions. An example of this is research seeking anti-angiogenesis drugs for
the potential treatment of diabetic retinopathy. It is possible that one or more
of these initiatives may reduce or eliminate the market for some of our
products.
In addition, a broad range of cardiovascular drugs are under
development by many pharmaceutical and biotechnology companies. It is possible
that one or more of these initiatives may reduce or eliminate the market for
some of our products.
EFFORTS TO REDUCE HEALTHCARE COSTS MAY AFFECT OUR OPERATIONS.
Our 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, we expect that there will continue to be federal and state initiatives
to control and/or reduce pharmaceutical expenditures. 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
we receive for any products we may develop and sell in the future and have a
material adverse effect on our business, financial condition and results of
operations. Further, to the extent that cost control initiatives have a material
adverse effect on our corporate partners, our ability to commercialize our
products may be adversely affected.
Our 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. We cannot be certain that any third-party insurance coverage will
be available to patients for any products we develop. Government and other
third-party payors are increasingly attempting to contain health care costs by
limiting both coverage and the level of reimbursement for new therapeutic
products and by refusing in some cases to provide coverage for uses of approved
products for disease indications for which the FDA has not granted labeling
approval. If adequate coverage and reimbursement levels are not provided by
government and other third-party payors for our products, the market acceptance
of these products would be adversely affected.
WE HAVE NO EXPERIENCE IN MARKETING OR SALES AND MAY HAVE TO RELY ON OTHERS TO
MARKET AND SELL ANY PRODUCTS WE MAY DEVELOP, WHICH MAY IMPAIR OUR ABILITY TO
DELIVER PRODUCTS.
For certain of our products, we have licensed exclusive marketing
rights to our corporate partners or formed collaborative marketing arrangements
within specified territories in return for royalties to be received on sales, a
share of profits or beneficial transfer pricing. These agreements are terminable
at the discretion of our partners upon as little as 90 days' prior written
notice. If the licensee or marketing partner terminates an agreement or fails to
market a product successfully, our business, financial condition and results of
operations may be adversely affected.
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We currently have no experience in marketing or selling pharmaceutical
products. In order to achieve commercial success for any approved product, we
must either develop a marketing and sales force or, where appropriate or
permissible, enter into arrangements with third parties to market and sell our
products. We cannot be certain that we will develop successfully marketing and
sales experience or that we will be able to enter into marketing and sales
agreements with others on acceptable terms, if at all, or that any such
arrangements, if entered into, will not be terminated. If we develop our own
marketing and sales capability, it will compete with other companies that
currently have experienced, well funded and larger marketing and sales
operations. To the extent that we enter into co-promotion or other sales and
marketing arrangements with other companies, revenues will depend on the efforts
of others, and we cannot be certain that their efforts will be successful.
WE HAVE NO EXPERIENCE IN MANUFACTURING PRODUCTS AND MAY HAVE TO RELY ON OTHERS
TO MANUFACTURE ANY PRODUCTS WE MAY DEVELOP, WHICH MAY IMPAIR OUR ABILITY TO
DEVELOP OR DELIVER PRODUCTS.
We have no experience in manufacturing products for commercial purposes
and do not have manufacturing facilities. Consequently, we are dependent on
contract manufacturers for the production of products for development and
commercial purposes. The manufacture of our products for clinical trials and
commercial purposes is subject to cGMP regulations promulgated by the FDA. In
the event that we are unable to obtain or retain third-party manufacturing for
our products, we will not be able to commercialize such products as planned. We
cannot be certain that we will be able to enter into agreements for the
manufacture of future products with manufacturers whose facilities and
procedures comply with cGMP and other regulatory requirements. Our current
dependence upon others for the manufacture of our products may adversely affect
our profit margin, if any, on the sale of future products and our ability to
develop and deliver such products on a timely and competitive basis.
USE OF ANY PRODUCTS WE DEVELOP MAY RESULT IN LIABILITY CLAIMS.
The use of any of our potential products in clinical trials and the
sale of any approved products, including the testing and commercialization of
pimagedine or ALT-711, may expose us to liability claims resulting from the use
of products or product candidates. These claims might be made directly by
consumers, pharmaceutical companies or others. We maintain product liability
insurance coverage for claims arising from the use of our products in clinical
trials. However, coverage is becoming increasingly expensive, and we cannot be
certain that we will be able to maintain insurance or, if maintained, that
insurance can be acquired at a reasonable cost or in sufficient amounts to
protect us against losses due to liability that could have a material adverse
effect on our business, financial conditions and results of operations. We
cannot be certain that we will be able to obtain commercially reasonable product
liability insurance for any product approved for marketing in the future or that
insurance coverage and our resources would be sufficient to satisfy any
liability resulting from product liability claims. A successful product
liability claim or series of claims brought against us could have a material
adverse effect on our business, financial condition and results of operations.
WE MAY BE UNABLE TO ATTRACT AND RETAIN THE KEY PERSONNEL ON WHOM OUR SUCCESS
DEPENDS.
We are highly dependent on the principal members of our management and
scientific staff. The loss of services of any of these personnel could impede
the achievement of our development objectives. Furthermore, recruiting and
retaining qualified scientific personnel to perform research and development
work in the future will also be critical to our success. We cannot be certain
that we 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, we
rely on consultants to assist us in formulating our research and development
strategy. All of our consultants are employed outside Alteon and may have
commitments to or consulting or advisory contracts with other entities that may
limit their availability to us.
OUR OPERATIONS INVOLVE A RISK OF INJURY OR DAMAGE FROM HAZARDOUS MATERIALS.
Our research and development activities involve the controlled use of
hazardous materials, chemicals and various radioactive compounds. Although we
believe that our 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, we could
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be held liable for any damages or fines that result. Such liability could have a
material adverse effect on our business, financial condition and results of
operations.
THE CONVERSION OF OUR SERIES G AND SERIES H PREFERRED STOCK MAY ADVERSELY AFFECT
OUR STOCKHOLDERS.
The exact number of shares of common stock issuable upon conversion of
our Series G and Series H Preferred Stock will vary inversely with the market
price of the common stock. The holders of common stock may be materially diluted
by conversion of the Series G and Series H Preferred Stock depending on the
future market price of the common stock. The conversion price of the Series G
and Series H Preferred Stock depends on the average closing price of the common
stock on the American Stock Exchange for the twenty (20) business days
immediately preceding the conversion. On November 14, 2000, the conversion price
was $6.20. If this price were used to determine the number of shares of common
stock issuable upon conversion of the Series G and Series H Preferred Stock, we
would issue a total of approximately 5,767,741 shares of common stock if all
shares of the Series G and Series H Preferred Stock were converted on such date.
To the extent the average price of the common stock during the 20 business days
immediately preceding any date on which shares of the Series G and Series H
Preferred Stock are converted is higher or lower than $6.20, we would issue more
or fewer shares of common stock than reflected in this estimate, and this
difference could be material.
The number of shares of common stock to be issued upon conversion of
the Series G and Series H Preferred Stock will also depend on the number of
shares of Series G and Series H Preferred Stock issued as dividends on the
Series G Preferred Stock.
FUTURE SALES BY OUR CURRENT STOCKHOLDERS MAY ADVERSELY EFFECT OUR STOCK PRICE.
As of November 10, 2000, 20,899,514 shares of Common Stock, 894 shares
of Series G Preferred Stock and 2,682 shares of Series H Preferred Stock were
issued and outstanding. In addition, options to purchase 5,250,652 shares and
warrants to purchase 626,818 shares were outstanding. The sale of common stock
issued upon the exercise of stock options, the exercise of warrants, and the
conversion of Series G and Series H Preferred Stock, as well as future sales of
common stock by us or by existing stockholders, or the perception that sales
could occur, could adversely affect the market price of the common stock.
THE PRICE OF OUR COMMON STOCK IS VOLATILE.
The market prices for securities of biotechnology and pharmaceutical
companies, including ours, 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 our operating results;
- announcement of technological innovations or new
therapeutic products by us 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
us or others;
- future sales of substantial amounts of common stock
by existing stockholders; and
- general market conditions
can have an adverse effect on the market price of the common stock. The
realization of any of the risks described in
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these "Risk Factors" could have a dramatic and adverse impact on the market
price of the common stock.
ANTI-TAKEOVER PROVISIONS COULD MAKE A THIRD-PARTY ACQUISITION OF US, WHICH MAY
BE BENEFICIAL TO OUR STOCKHOLDERS, MORE DIFFICULT.
Our certificate of incorporation provides for staggered terms for the
members of our board of directors and includes a provision (the "fair price
provision") that requires the approval of the holders of 80% of our voting stock
as a condition to a merger or certain other business transactions with, or
proposed by, a holder of 10% or more of our voting stock, except in cases where
certain directors approve the transaction or certain minimum price criteria and
other procedural requirements are met. We have entered into a stockholders'
rights agreement pursuant to which each holder of a share of common stock is
granted a right to purchase our Series F Preferred Stock under certain
circumstances if a person or group acquires or commences a tender offer for 20%
of our outstanding common stock. We have 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 our
charter and Delaware corporate law may discourage certain types of transactions
involving an actual or potential change in control of Alteon.
USE OF PROCEEDS
We 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. We will use such proceeds, if any, for general corporate purposes.
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<PAGE> 12
SELLING STOCKHOLDERS
The following table sets forth information with respect to the selling
stockholders, including (i) the number of shares of common stock beneficially
owned by each selling stockholder as of the date of this prospectus, (ii) the
maximum number of shares of such common stock to be offered hereby, (iii) the
number of shares to be owned after completion of this offering (assuming all
shares offered hereby are sold), and (iv) the percentage of our common stock to
be owned by the selling stockholders after completion of this offering (assuming
all shares offered hereby are sold). The information in the table is based upon
information provided to us by the selling stockholders.
<TABLE>
<CAPTION>
Percentage of
Outstanding
Number of Common Stock
Number of Shares Maximum Number Shares Beneficially
Beneficially Owned of Shares Being Beneficially Owned
Prior to Offering Offered Owned After After
Name of Selling Stockholder (1) (3) (1) (3) Offering (2) Offering
--------------------------- ------- ------- ------------ --------
<S> <C> <C> <C> <C>
EGM Medical Technology Fund, L.P. (4) 250,544 250,544 0 --
EGM Medical Technology Offshore Fund (5) 153,580 153,580 0 --
Herriot Tabuteau (6) 160,290 127,290 33,000 *
Narragansett I, LP (7) 461,496 461,496 0 --
Narragansett Offshore, Ltd. (8) 664,116 664,116 0 --
S.A.C. Capital Associates, LLC (9) 2,034,584 2,004,584 30,000 *
SDS Merchant Fund, LP (10) 306,114 306,114 0 --
</TABLE>
* Less than one percent
(1) Beneficial ownership is determined in accordance with Rule 13d-3 under
the Exchange Act.
(2) Assumes all shares are sold to parties which are not affiliates of the
selling stockholders.
(3) Includes shares and warrants which the selling stockholders have agreed
to purchase from us after the effective date of the registration
statement of which this prospectus is a part.
(4) Includes 71,584 shares issuable upon the exercise of warrants.
(5) Includes 43,880 shares issuable upon the exercise of warrants.
(6) Includes 36,368 shares issuable upon the exercise of warrants.
(7) Includes 131,856 shares issuable upon the exercise of warrants.
(8) Includes 189,748 shares issuable upon the exercise of warrants.
(9) Includes 572,738 shares issuable upon the exercise of warrants.
(10) Includes 87,462 shares issuable upon the exercise of warrants
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<PAGE> 13
PLAN OF DISTRIBUTION
The selling stockholders or their pledgees, donees, transferees, or
other successors in interest may sell the shares offered hereby from time to
time in one or more transactions (which may include block transactions) on the
American Stock Exchange or such other market on which our common stock may, from
time to time, be traded, in privately negotiated transactions, or otherwise 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. In addition, any shares that qualify for sale pursuant to
Rule 144 under the Securities Act may be sold under Rule 144 rather than
pursuant to this prospectus.
The selling stockholders and any broker-dealers or agents that
participate with the selling stockholders in the distribution of the 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.
We agreed 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. We have 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.
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.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is a part of a registration statement on Form S-3 which
we filed with the Securities and Exchange Commission under the Securities Act.
It omits some of the information set forth in the registration statement. You
can find additional information about Alteon in the registration statement.
Copies of the registration statement are on file at the offices of the SEC. You
may obtain them by paying the prescribed fee or you may examine them without
charge at the SEC's public reference facilities described below.
We are subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and as required by the
Exchange Act, we file reports, proxy statements and other information with the
SEC. You may inspect these reports, proxy statements and other information
without charge and copy them at the public reference facilities maintained by
the SEC at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, 7
World Trade Center, New York, New York 10048 and 500 West Madison Street,
Chicago, Illinois 60661. You may obtain copies of these materials from the SEC's
Public Reference at 450 Fifth Street, N.W., Washington,
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<PAGE> 14
D.C. 20549, at prescribed rates. You may obtain information on the operation of
the Public Reference Room by calling the SEC at 1-800-SEC-0330. Such material is
also available through the SEC's Web Site (http://www.sec.gov) and our Web Site
(http://www.alteonpharma.com).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents which we have filed with the SEC are
incorporated herein by reference:
(a) Our Annual Report on Form 10-K for the fiscal year ended
December 31, 1999.
(b) Our Quarterly Reports on Form 10-Q for the quarters ended
March 31, 2000, June 30, 2000, and September 30, 2000.
(c) Our Current Reports on Form 8-K filed January 7, 2000, March
17, 2000, April 12, 2000, October 5, 2000, October 20, 2000
and November 8, 2000.
(d) Our proxy statement for our Annual Meeting of Stockholders
held on June 12, 2000.
(e) The description of our common stock, $.01 par value, which is
contained in our Registration Statement on Form 8-A filed
November 1, 1991, including any amendments or reports filed
for the purpose of updating such description.
(f) The description of our Rights to Purchase Series F Preferred
Stock which is contained in our 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, which we file under 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 of this prospectus 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. We will 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 of this prospectus, other than exhibits to
the documents unless such exhibits are specifically incorporated by reference in
the 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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