<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 20, 1999
REGISTRATION NO. 333-____________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
- --------------------------------------------------------------------------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
- ------------------------------------------------------------------------------
SCICLONE PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
- ------------------------------------------------------------------------------
CALIFORNIA 94-3116852
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
901 MARINER'S ISLAND BOULEVARD, SUITE 205
SAN MATEO, CALIFORNIA 94404
(650) 358-3456
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
------------------------------------------------------------------------------
DONALD R. SELLERS
PRESIDENT AND CHIEF EXECUTIVE OFFICER
SCICLONE PHARMACEUTICALS, INC.
901 MARINERS ISLAND BOULEVARD, SUITE 205
SAN MATEO, CALIFORNIA 94404
(650) 358-3456
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
J. HOWARD CLOWES, ESQ.
Gray Cary Ware & Freidenrich LLP
139 Townsend Street, Suite 400
San Francisco, California 94107
(415) 836-2500
- --------------------------------------------------------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time as described in the Prospectus after the effective date of this
Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X] 1
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] _______________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _______________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=========================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
Title of Each Class of AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
Securities to be Registered REGISTERED PER SHARE PRICE REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
common stock (no par value) 2,515,934 shares(1) 1.539(2) $3,872,022 $1,142
common stock (no par value) 2,515,934 shares(3) 1.72 (4) $4,327,406 $1,276
common stock (no par value) 345,933 shares(3) 1.83 (4) $ 633,057 $ 186
total: 5,377,801 shares $8,832,485 $2,604
=========================================================================================================
</TABLE>
(1) Consists of shares of SciClone Pharmaceuticals, Inc. common stock issued
to investors in connection with SciClone's July 21, 1999 financing, as
described in the prospectus.
(2) Estimated solely for the purpose of computing the registration fee pursuant
to Rule 457(c) of the Securities Act of 1933, as amended, and based on the
average of the high and low sales prices of the common stock, as reported
on the Nasdaq National Market on August 17, 1999.
(3) Consists of shares of SciClone Common Stock issuable upon exercise of
warrants issued to investors and placement agents in connection with
SciClone's July 21, 1999 financing, as described in the prospectus.
(4) Represents the exercise price of the warrants pursuant to Rule 457(g) of
the Securities Act.
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 SUCH SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2
THE INFoRMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
THE SELLING SHAREHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SEC IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO
SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED AUGUST 20, 1999
SCICLONE PHARMACEUTICALS, INC.
COMMON STOCK
2,515,934 Shares Issued and Outstanding
and
2,861,867 Shares Subject to Warrants
This prospectus relates to the offer and sale of our common stock by the
selling shareholders, as follows:
o 2,515,934 shares issued to investors in our July 21, 1999 financing;
o up to 2,515,934 shares issuable upon exercise of warrants, with an
exercise price of $1.72 per share, issued to the investors in the
financing; and
o up to 345,933 shares issuable upon exercise of warrants, with an
exercise price of $1.83 per share, issued to the placement agents in
connection with the financing.
Our common stock is quoted on The Nasdaq National Market under the
symbol "SCLN." On August 18, 1999, the last sale price of the common stock as
reported on The Nasdaq National Market was $1.50.
Our principal executive offices are located at 901 Mariner's Island
Boulevard, Suite 205, San Mateo, California 94404, and our telephone number is
(650) 358-3456.
----------------------------------
AN INVESTMENT IN SCICLONE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK.
PLEASE CAREFULLY CONSIDER THE INFORMATION UNDER THE HEADING "RISK FACTORS"
BEGINNING ON PAGE 3.
----------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is ____________, 1999.
1
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
RISK FACTORS.................................................................3
ABOUT SCICLONE..............................................................10
USE OF PROCEEDS.............................................................12
SELLING SHAREHOLDERS........................................................12
PLAN OF DISTRIBUTION........................................................14
LEGAL MATTERS...............................................................16
EXPERTS ....................................................................16
WHERE TO FIND MORE INFORMATION..............................................17
DOCUMENTS INCORPORATED BY REFERENCE.........................................17
</TABLE>
2
<PAGE> 4
RISK FACTORS
You should carefully consider the following risk factors, together with
the other information contained or incorporated by reference in this prospectus,
in evaluating whether to purchase shares of our common stock.
This prospectus contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1934 and Section 21E of the Securities
Exchange Act and we have attempted to identify these statements with an asterisk
("*"). Actual results could differ materially from those projected in these
forward-looking statements due to a variety of factors, including those set
forth below.
IF WE DO NOT CONTINUE TO INCREASE OUR SALES, WE MAY NOT BECOME PROFITABLE WHICH
MAY PREVENT OR DELAY OUR LONG-TERM PRODUCT DEVELOPMENT AND COMMERCIALIZATION
EFFORTS
We began to generate revenues from thymosin alpha 1, which we sell under
the branded trademark ZADAXIN, in 1997. Future ZADAXIN revenues are uncertain.
Our other drug under development, CPX, is a drug that targets the underlying
cause of cystic fibrosis, a disease caused by genetic defects. Marketing
approvals for CPX and additional marketing approvals for ZADAXIN are uncertain.
We have experienced significant operating losses since our inception and have a
substantial accumulated deficit. Furthermore, we expect our operating expenses
to increase over the next several years if we expand our development, clinical
testing and marketing capabilities.* Our ability to become profitable depends in
large part on our ability to do the following:
o increase ZADAXIN sales in existing markets;
o launch ZADAXIN in newly-approved markets;
o obtain additional regulatory approvals for ZADAXIN and/or future
products;
o obtain regulatory approvals for CPX;
o enter into additional corporate partnering arrangements for
development of ZADAXIN in the U.S. and Europe for hepatitis C and
cancer; and
o enter into other agreements for product development and
commercialization.
If we do not become profitable, we may have to delay or curtail our
long-term product development and commercialization efforts.
IF WE EXPERIENCE DIFFICULTIES IN OUR FOREIGN SALES AND OPERATIONS, OUR FINANCIAL
CONDITION WOULD SUFFER
Our financial condition in the near term is highly dependent on ZADAXIN
sales in foreign jurisdictions. The majority of our current ZADAXIN sales are to
customers in the People's Republic of China. However, ZADAXIN sales in the
People's Republic of China may be limited due to its low average income and
poorly developed infrastructure. In addition, our sales and operations in Asia,
Latin America and the Middle East are subject to inherent risks, including:
o difficulties and delays in obtaining pricing approvals and
reimbursement;
o difficulties and delays in obtaining product health registration and
importation permits;
o unexpected changes in regulatory requirements;
o tariffs and other barriers;
3
<PAGE> 5
o political instability;
o the difficulties of staffing and managing foreign operations;
o long payment cycles;
o difficulty in accounts receivable collection;
o currency fluctuations; and
o potential adverse tax consequences.
We currently do not have any sales in the United States with which to offset any
decrease in revenue from ZADAXIN sales in Asia, Latin America and the Middle
East. In addition, certain countries in these territories regulate
pharmaceutical prices. This regulation may reduce prices for ZADAXIN
significantly below those that would prevail in a free market.
IF WE FAIL TO OBTAIN ADDITIONAL REGULATORY APPROVALS OR MARKET ACCEPTANCE FOR
ZADAXIN(R) OR IF WE FAIL TO OBTAIN REGULATORY APPROVAL FOR CPX, OUR POTENTIAL
FUTURE REVENUE WOULD BE LIMITED
Our principal drug development efforts currently focus on our two lead
drugs, ZADAXIN and CPX. We need favorable results from additional clinical
trials of ZADAXIN to get regulatory approval in major pharmaceutical markets.
ZADAXIN has been approved for commercial sale in 16 countries, principally as a
treatment for hepatitis B and hepatitis C, diseases caused by viruses that
affect the liver. However, we may not be able to obtain approvals for ZADAXIN in
other countries or for the treatment of additional medical conditions, such as
cancer.
Our launch of ZADAXIN in the People's Republic of China, the Philippines
and Singapore was our first commercial introduction of ZADAXIN, and may not be
successful. Moreover, our future launches of ZADAXIN in additional countries may
not be successful. Future sales of ZADAXIN will depend on market acceptance and
successful distribution.
In particular, although the People's Republic of China has the highest
prevalence of hepatitis B in the world, its low average income and poorly
developed distribution infrastructure may make it difficult to successfully
commercialize ZADAXIN in the Chinese market. Because we currently rely on
ZADAXIN as our sole source of revenue, our failure to demonstrate its efficacy
in future clinical trials, obtain additional marketing approvals or successfully
commercialize ZADAXIN would adversely affect our revenue and operating results.
CPX is currently undergoing clinical testing in the United States. We
may experience delays and difficulties in clinical trials of CPX. In addition,
clinical trials may not prove that CPX is an effective treatment for cystic
fibrosis. Our failure to demonstrate the safety and efficacy of CPX as a
treatment for cystic fibrosis in a clinical trial, obtain regulatory approval of
CPX as a treatment for cystic fibrosis or successfully commercialize CPX could
adversely affect our potential future revenue and operating results.
IF WE DO NOT BECOME PROFITABLE, WE MAY NEED TO OBTAIN ADDITIONAL FUNDS IN ORDER
TO SUPPORT OUR LONG-TERM PRODUCT DEVELOPMENT AND COMMERCIALIZATION PROGRAMS
Since inception, we have financed our operations primarily through sales
of stock. Due to our continuing operating losses, our independent auditors
issued an opinion on our financial statements for the period ended December 31,
1998 that includes a paragraph emphasizing the uncertainty surrounding our
ability to continue as a going concern. However, in July 1999, we completed two
private placements of common stock and common stock warrants which resulted in
aggregate net proceeds of approximately $5.5 million, excluding the proceeds
which will be received if the warrants are exercised. However, if we do not
continue to increase our ZADAXIN revenue and become profitable, we will need to
obtain additional financing to support our long-term product development and
commercialization programs.
4
<PAGE> 6
Our need for capital will depend on many factors, including:
o the level of ZADAXIN sales;
o the timing and amount of preclinical and clinical development
expenses and opportunities;
o the timing and cost of regulatory approvals;
o patent costs;
o our ability to use our equity line, described below;
o whether any or all of our outstanding common stock warrants are
exercised and the timing and amount of such exercises; and
o our ability to establish corporate partnering arrangements for
development, sales, manufacturing and marketing of our products.
The unavailability or timing of any necessary financing could prevent or delay
our long-term product development and commercialization programs. Other than the
equity line and our outstanding warrants to purchase common stock, we have no
commitments or arrangements for additional funding and we may not be able to
obtain financing if and when needed.
IF WE ISSUE ADDITIONAL COMMON STOCK OR SECURITIES CONVERTIBLE INTO COMMON STOCK,
THE PERCENTAGE OWNERSHIP OF OUR THEN-CURRENT SHAREHOLDERS WOULD BE REDUCED AND
THE MARKET PRICE OF OUR COMMON STOCK MAY DECREASE
In July 1999, we completed two equity financings in which we issued an
aggregate of 3,886,079 shares of common stock and warrants to purchase an
aggregate of 4,415,191 shares of common stock. Any common stock issued upon
exercise of the warrants would reduce the percentage ownership of our
then-current shareholders and decrease any earnings per share. Public resale of
the common stock issued in the private placements and issuable upon exercise of
the warrants and the possibility of such resales may depress the market price of
our common stock.
In addition, we have entered into a Structured Equity Line Flexible
Financing Agreement which allows us, subject to certain limitations, to sell to
the purchaser under the equity line up to $4 million of common stock during each
"investment period" during the two-year term of the equity line. An "investment
period" under the equity line is approximately three months. If we sell stock
under the equity line, the purchaser's price will be 97% of the lowest reported
sale price during the four days immediately prior to each purchase date selected
by the purchaser during the investment period. In order to use the equity line,
our common stock must trade at more than $1.00 per share, unless we reach a
different agreement with the purchaser under the equity line. Draws under the
equity line are subject to certain conditions, including:
o registration of the investor's resale of the shares;
o a minimum trading price per share;
o volume limitations;
o limitations on the number of shares that can be issued without
shareholder approval; and
o limitations on the number of shares of our common stock the investor
may hold at any time.
If we sell common stock under the equity line, the percentage ownership of our
then-current shareholders will be reduced. In connection with the equity line,
we also issued to the purchaser a five-year warrant to purchase 200,000
5
<PAGE> 7
shares of our common stock at $5.67 per share. We will also issue to the
purchaser additional warrants to purchase up to 300,000 shares of common stock.
Because the shares that may be issued under the equity line, along with the
shares issuable upon exercise of the warrant and additional warrants, can be
immediately resold by the purchaser, the possibility of these sales could
adversely affect the market price of the common stock.
Similarly, if we raise additional funds through the issuance of common
stock or securities convertible into or exercisable for common stock, the
percentage ownership of our then-current shareholders will be reduced.
IF WE DO NOT CONTINUE TO COMPLY WITH CERTAIN NASDAQ LISTING REQUIREMENTS, OUR
COMMON STOCK MAY BE DELISTED WHICH WOULD MAKE IT MORE DIFFICULT TO SELL OUR
COMMON STOCK
Our common stock is listed on the Nasdaq National Market. To remain
listed on the Nasdaq, a company must meet certain criteria, including:
o a minimum bid price of $1.00 per share;
o $4,000,000 in net tangible assets; and
o $5,000,000 market value of the public float, excluding shares held
directly or indirectly by any of our officers or directors and by
anyone holding beneficially more than 10% of our outstanding shares.
As of August 18, 1999, the closing bid price of our common stock was
$1.50 and as of August 13, 1999, the market value of our public float was
approximately $35.0 million. As of July 31, 1999, we had net tangible assets of
approximately $7,315,000.
If we fail to meet Nasdaq's listing criteria our common stock may be
delisted. Our common stock would thereafter be traded in the non-Nasdaq,
over-the-counter market. If our common stock were delisted, it may be more
difficult to dispose of, or get an accurate market value of, our common stock.
This could severely limit our common shareholders' ability to sell our common
stock in the secondary market.
IF WE DO NOT OBTAIN ADDITIONAL PRODUCT RIGHTS FROM THIRD PARTIES OR IF OUR
LICENSEES DO NOT PERFORM THEIR OBLIGATIONS, OUR POTENTIAL FUTURE REVENUE WOULD
BE LIMITED
Our strategy includes entering into various corporate partnering
arrangements. To date, we have acquired rights to ZADAXIN, CPX and certain other
drugs but we are only actively pursuing clinical development of ZADAXIN and CPX.
If we do not license or otherwise acquire rights to additional drugs we may have
a shortage of drugs to develop which would limit our potential future revenue.
In addition, we have exclusively sublicensed our rights to develop and
market ZADAXIN in Japan to Schering-Plough K.K. However, Schering-Plough K.K.
already has a substantial commitment to alpha interferon, which is an approved
drug for hepatitis B and hepatitis C in Japan. Our relationship with
Schering-Plough K.K. may not be successful and we may not be able to negotiate
similar additional arrangements in the future. We generally do not have control
over the amount and timing of resources that our collaborators devote to their
activities with us. If these parties do not perform their obligations as we
expect them to, the development and sale of our products could be limited or
delayed.
Our ability to obtain regulatory approval in one country may be delayed
or adversely affected by the timing of regulatory activities and approvals in
other countries, particularly if we do not participate in the regulatory
approval process in these other countries. Any delay or failure to achieve
regulatory approvals may limit our potential future revenue.
6
<PAGE> 8
IF WE FAIL TO PROTECT OUR PRODUCTS, TECHNOLOGIES AND TRADE SECRETS, WE MAY NOT
BE ABLE TO SUCCESSFULLY USE, MANUFACTURE OR MARKET AND SELL OUR PRODUCTS OR WE
MAY FAIL TO ADVANCE OR MAINTAIN OUR COMPETITIVE POSITION
The United States composition of matter patent, which covers the
chemical structure of thymosin alpha 1, and most of the European composition of
matter patents for thymosin alpha 1 have expired. Going forward, we will have
only limited patents covering the chemical structure of thymosin alpha 1 and
this could adversely affect our proprietary rights. Our success depends
significantly on our ability to obtain patent protection for our products and
technologies, to preserve our trade secrets and to avoid infringing on the
proprietary rights of third parties. However, our pending patent applications
may not result in issued patents. Any patents that are issued may not provide a
competitive advantage to us or may be invalidated or circumvented by our
competitors. Others may independently develop similar products or designs around
patents issued or licensed to us. Patents issued to or patent applications filed
by other companies could have an adverse effect on our ability to use,
manufacture or market our products or maintain our competitive position with
respect to our products. Many of our patents and patent applications relating to
thymosin alpha 1 are held under exclusive licenses. If we breach the terms of
any of these licenses we could lose our rights to these patents and patent
applications. Holders of patents licensed to us may not file, prosecute, extend
or maintain their patents in countries where we have rights.
Other companies obtaining patents on products or processes useful to us
may bring infringement actions against us. This type of litigation is typically
costly and time-consuming and could require us to obtain licenses from others,
or prevent us from using, manufacturing or marketing our products. These
licenses may not be available on commercially reasonable terms, if at all.
Pharmaceuticals are not patentable or have only recently become
patentable in certain countries in the territory in which we have exclusive
rights to ZADAXIN. Enforcement of intellectual property rights in many countries
in this territory has been limited or non-existent. Future enforcement of
patents and proprietary rights in many countries in this territory will likely
be problematic or unpredictable. Moreover, the issuance of a patent in one
country does not assure the issuance of a similar patent in another country.
Claim interpretation and infringement laws vary by nation, so the extent of any
patent protection is uncertain and may vary in different jurisdictions.
IF WE FAIL TO OBTAIN REGULATORY APPROVALS FOR OUR PRODUCTS IN COUNTRIES IN WHICH
WE HAVE NOT BEEN APPROVED, WE CANNOT DEVELOP, MARKET AND SELL OUR PRODUCTS IN
THOSE COUNTRIES
The research, preclinical and clinical development, manufacturing,
marketing and sale of ZADAXIN, CPX and our other drug candidates are subject to
extensive regulation by governmental authorities. ZADAXIN, CPX and any other
products must be approved before they can be sold in any jurisdiction. Obtaining
regulatory approval is time-consuming and expensive. In some countries where we
are contemplating marketing and selling ZADAXIN, the regulatory approval process
for drugs that have not been previously approved in countries with established
clinical trial review procedures is uncertain, and this may delay the grant of
regulatory approvals for ZADAXIN.
We are currently sponsoring clinical trials and pursuing regulatory
approvals for ZADAXIN in a number of countries and we are currently sponsoring
clinical trials of CPX in the United States. However, we may not be able to
complete these trials in a timely or cost-effective manner, and even if
completed, these trials may not fulfill the relevant regulatory approval
criteria. We ultimately may not be able to obtain regulatory approvals in these
countries. Adverse results in our development programs also could result in
restrictions on the use of ZADAXIN and, if approved, CPX.
Our failure to comply with applicable United States or foreign
regulatory requirements could, among other things, result in warning letters,
fines, suspensions of regulatory approvals, product recalls or seizures,
operating restrictions, injunctions and criminal prosecutions. In addition,
government regulations may be established or imposed which prevent or delay
regulatory approval of ZADAXIN, CPX or our future products.
7
<PAGE> 9
IF WE ARE NOT ABLE TO ESTABLISH AND MAINTAIN ADEQUATE MANUFACTURING AND SUPPLY
RELATIONSHIPS, THE DEVELOPMENT AND SALE OF OUR PRODUCTS COULD BE IMPAIRED
We have entered into contract manufacturing and supply agreements for
ZADAXIN and CPX. To be successful, our products must be manufactured in
commercial quantities, in compliance with regulatory requirements and at an
acceptable cost. While we believe we have and will be able to establish and
maintain manufacturing relationships with experienced suppliers*, we may not be
able to establish long-term manufacturing relationships with these suppliers. We
currently have vialing and packaging supply agreements in effect and a
sufficient supply of finished ZADAXIN for the near term. We have recently
changed and upgraded our manufacturing source of finished ZADAXIN for our
international markets, excluding Japan. In certain countries, this change may
require additional regulatory approvals. If we do not obtain any required
regulatory approvals of this manufacturing change in a timely fashion, new
ZADAXIN marketing approvals may be delayed or sales may be interrupted until the
manufacturing change is approved.
Production interruptions, if any, could significantly delay clinical
development of potential products and reduce third party or clinical researcher
interest and support of proposed trials. These kinds of interruptions could also
impede commercialization of our products, including sales of ZADAXIN in approved
markets, and impair their competitive position, which would have a material
adverse effect on our business.
WE MAY LOSE MARKET SHARE OR OTHERWISE FAIL TO COMPETE IN THE INTENSELY
COMPETITIVE PHARMACEUTICAL INDUSTRY
Competition in the pharmaceutical industry is intense and we expect that
competition to increase. We believe that the principal competitive factors in
the pharmaceutical industry include the efficacy, safety, price and therapeutic
regimen associated with a given drug. Our competitors include pharmaceutical
companies, biotechnology firms, universities and other research institutions,
both in the United States and abroad, that are actively engaged in research and
development of chronic and life-threatening diseases such as hepatitis B,
hepatitis C, cancer, immune system disorders and cystic fibrosis. Most of our
competitors, particularly large pharmaceutical companies, have substantially
greater financial, technical, regulatory, manufacturing, marketing and human
resource capabilities than we do. Most of them also have extensive experience in
undertaking the clinical testing and obtaining the regulatory approvals
necessary to market drugs. In addition, we currently rely on sales of ZADAXIN as
a treatment for hepatitis B and hepatitis C as our sole source of revenue.
Several large pharmaceutical companies have substantial commitments to alpha
interferon, which is an approved drug for treating hepatitis B and hepatitis C.
IF THIRD PARTY REIMBURSEMENT IS NOT AVAILABLE OR PATIENTS CANNOT OTHERWISE PAY
FOR ZADAXIN, WE MAY NOT BE ABLE TO SUCCESSFULLY MARKET ZADAXIN
Our ability to successfully sell ZADAXIN depends in part on whether
pharmaceutical drug consumers will be reimbursed for the cost of ZADAXIN. This
reimbursement may come from government health administration authorities,
private health insurers and other organizations. Third-party reimbursement for
new therapeutic products is highly uncertain and may not be available for our
future products. In many of the foreign countries in which we currently operate
or intend to operate, reimbursement for ZADAXIN under government or private
health insurance programs is currently not available, particularly in Cambodia,
the People's Republic of China, Mexico, the Philippines, Peru, Myanmar and
Malaysia. In the United States, certain proposed health care reforms could limit
the amount of third-party reimbursement available for our products. In many
countries where we have marketing rights to ZADAXIN, government resources and
per capita income may be so low that our products will be prohibitively
expensive. In these countries, we may not be able to market our products on
economically favorable terms, if at all.
IF WE ARE UNABLE TO ATTRACT AND RETAIN QUALIFIED PERSONNEL OR IF OUR PRESIDENT
AND CHIEF EXECUTIVE OFFICER, CHIEF OPERATING OFFICER, CHIEF ADMINISTRATIVE
OFFICER OR OUR REGIONAL MANAGING DIRECTOR FOR GREATER CHINA LEFT SCICLONE, WE
MAY NOT BE ABLE TO SUCCESSFULLY DEVELOP AND COMMERCIALIZE OUR PRODUCTS
We are highly dependent upon our ability to attract and retain qualified
personnel because of the specialized, scientific and international nature of our
business. There is intense competition for qualified
8
<PAGE> 10
management, scientific and technical personnel in the pharmaceutical industry,
and we may not be able to attract and retain the qualified personnel we need to
grow and develop our business globally. In addition, many key responsibilities
at SciClone are assigned to a relatively small number of individuals, such as
our President and Chief Executive Officer, Chief Operating Officer, Chief
Administrative Officer and our Regional Managing Director for Greater China. If
we are unable to attract and retain qualified personnel as needed or promptly
replace those employees who are critical to our product development and
commercialization, the development and commercialization of our products would
adversely be affected. We do not maintain "key person" life insurance on any of
our key personnel.
WE HAVE LIMITED PRODUCT LIABILITY INSURANCE AND ANY PRODUCT LIABILITY CLAIMS
ASSERTED AGAINST US COULD RESULT IN SIGNIFICANT EXPENSES AND DECREASED DEMAND
FOR OUR PRODUCTS
Companies which test, manufacture, market and sell pharmaceutical
products commonly receive product liability claims. These claims may be asserted
against us. Product liability insurance for the pharmaceutical industry
generally is expensive, if it is available at all. We have product liability
insurance coverage for our clinical trials and commercial sales. However,
product liability claims in excess of our insurance coverage or that resulted in
the payment of large deductibles would adversely affect our financial condition
and demand for our products.
ISSUING PREFERRED STOCK WITH RIGHTS SENIOR TO THOSE OF OUR COMMON STOCK COULD
ADVERSELY AFFECT HOLDERS OF COMMON STOCK OR HINDER TAKEOVER TRANSACTIONS THAT
OFFER COMMON SHAREHOLDERS AN OPTIMAL PRICE FOR THEIR SHARES
Our charter documents give our board of directors the authority to issue
additional series of preferred stock without a vote or action by our
shareholders. The board also has the authority to determine the terms of
preferred stock, including price, preferences and voting rights. The rights of
holders of our common stock may be adversely affected by the rights granted to
holders of preferred stock. For example, a series of preferred stock may be
granted the right to receive a liquidation preference -- a pre-set distribution
in the event SciClone is liquidated -- that would reduce the amount available
for distribution to holders of common stock. In addition, the issuance of
preferred stock could make it more difficult for a third party to acquire a
majority of our outstanding voting stock. As a result, common shareholders could
be prevented from participating in transactions that would offer an optimal
price for their shares.
9
<PAGE> 11
ABOUT SCICLONE
GENERAL
SciClone acquires, develops and commercializes drugs for treating
chronic and life-threatening diseases such as hepatitis B, hepatitis C, cancer,
immune system disorders and cystic fibrosis. We have two drugs in clinical
testing, ZADAXIN and CPX, and we have other potential drugs in preclinical
development.
ZADAXIN. Our lead drug is ZADAXIN, which boosts the immune system. The
immune system plays a key role in the fight against several diseases. We are
pursuing development of ZADAXIN for treatment of hepatitis B, hepatitis C,
cancer and certain immune system disorders, as well as an enhancement to the
effectiveness of viral vaccines. ZADAXIN is approved for marketing in 16
countries: Argentina, Brunei, Cambodia, Italy, Kuwait, Mexico, Malaysia,
Myanmar, Pakistan, the People's Republic of China, Peru, the Philippines,
Singapore, Sri Lanka, Venezuela and Vietnam. We have filed for approval to
market ZADAXIN in 19 additional countries outside the U.S., Europe and Japan. In
the first six months of 1999, ZADAXIN generated approximately $3.6 million in
sales, equivalent to the $3.6 million in annual sales generated by ZADAXIN in
all of 1998, primarily in the People's Republic of China, the Philippines and
Singapore for treatment of hepatitis B. We hold worldwide development,
manufacturing and marketing rights to ZADAXIN. In Japan, we have sublicensed our
rights to Schering-Plough, K.K., the Japanese subsidiary of Schering-Plough
Corporation, the leading marketer of viral hepatitis therapies worldwide.
We are pursuing additional corporate partnering arrangements for
development in the U.S. and Europe of a combination therapy for hepatitis C
including ZADAXIN plus interferon.* Hepatitis C affects over 170 million people
worldwide, including over 10 million people in the United States, Europe and
Japan, which are the world's largest pharmaceutical markets. Our clinical data
show that the combination of ZADAXIN plus interferon could be a significant
therapeutic advance in the fight against the hepatitis C epidemic. Interferon,
the only established therapy for hepatitis C, leads to a response in only 5% to
20% of patients and causes unpleasant side effects. Rebetron(TM), a
combination of two drugs, interferon and ribavirin, was approved for treatment
of hepatitis C in the U.S. and certain other countries in 1998. This combination
benefits certain patients. However, ribavirin has its own potential side
effects, and increases the risk of side effects when combined with interferon.
Importantly, ZADAXIN combined with interferon has shown clinical promise for
treatment of hepatitis C without increasing the risk of additive side effects.
In Japan, the world's largest market for viral hepatitis therapies, we
have exclusively sublicensed our rights to develop and market ZADAXIN to
Schering-Plough K.K. Schering-Plough K.K. is conducting a 300-patient phase 3
study of ZADAXIN for treatment of hepatitis B. In phase 3, large-scale,
multi-center trials are conducted in patients afflicted with the target disease
to provide sufficient data for the statistical proof of efficacy and safety
required by regulatory agencies to apply for marketing approval of a drug. The
drug interferon, including Schering-Plough K.K.'s interferon, is the leading
therapy for hepatitis B in Japan. Schering-Plough K.K. is also developing
ZADAXIN in a phase 2 program for treatment of hepatitis C. Phase 2 trials are
conducted with groups of patients afflicted with the target disease to make a
preliminary determination of efficacy and optimal dosages and to provide
additional evidence of safety.
CPX. Our second drug in clinical testing is CPX. CPX is a protein-repair
therapy initially developed by the United States National Institutes of Health,
commonly known as NIH, as a potential treatment for cystic fibrosis, the most
common fatal genetic disease in the U.S. and Europe.
Cystic fibrosis is caused by mutations in the gene that encodes a
certain protein known as the cystic fibrosis transmembrane conductance
regulator, or CFTR, protein. More than 70% of cystic fibrosis patients have a
certain type of genetic mutation, referred to as the "delta F508" mutation. In
October 1997, Dr. Harvey Pollard of the Uniformed Services University of the
Health Sciences and formerly of the NIH, presented preclinical data
demonstrating that CPX repairs the two key protein-associated defects causing
cystic fibrosis in patients with the delta F508 genetic mutation. CPX is the
only drug in clinical development with the potential to correct the two key
protein-associated defects in most cystic fibrosis patients. In 1997, we were
awarded a $100,000 Orphan Drug
10
<PAGE> 12
Grant by the FDA for phase 1 development of CPX as a treatment for cystic
fibrosis. Typically, phase 1 trials are conducted in a small number of healthy
volunteers, or in rare cases patients, to determine the toxicity,
pharmacological effects, metabolism and dose range requirements for the drug. We
completed our phase 1 clinical study of CPX in cystic fibrosis patients in April
1998. In October 1998, we were awarded a $200,000 Orphan Drug Grant by the FDA
for phase 2 development of CPX as a treatment for cystic fibrosis. We began the
phase 2 clinical study of CPX in cystic fibrosis patients in the U.S. in
September 1998 and in April 1999 Cystic Fibrosis Foundation awarded us a
$517,000 research grant for phase 2 development of CPX. The Cystic Fibrosis
Foundation provided substantial financial support for early research on CPX at
the NIH. The Cystic Fibrosis Foundation also supported us in our application for
an Investigational New Drug exemption to gain approval from the FDA to begin
testing of CPX directly on cystic fibrosis patients rather than the standard
process of testing first in healthy volunteers. The Cystic Fibrosis Foundation
continues to support us with protocol review, patient recruitment and
investigator and study center selection.
We have other drug candidates in early preclinical development. We plan
to continue to evaluate the pharmaceutical potential of our preclinical drug
candidates in 1999.
Internationally, we have 41 ZADAXIN distribution arrangements covering
46 countries outside the U.S., Europe and Japan. We intend to out-license our
products where a collaborative arrangement will materially enhance the prospects
for a drug's commercial success in licensed markets. Our license with
Schering-Plough K.K. for exclusive rights to develop and market ZADAXIN in
Japan, and our arrangements with our ZADAXIN distributors are examples of this
strategy. We are currently pursuing additional corporate partnering arrangements
in the U.S. and Europe for development of ZADAXIN, particularly the combination
of ZADAXIN plus interferon for the treatment of hepatitis C.* We intend to
produce ZADAXIN, CPX and any future products through contract manufacturing and
supply agreements. We have entered into separate supply agreements in the U.S.
and Europe for the supply of bulk and finished product thymosin alpha 1. We
contract with a major U.S. pharmaceutical company for the supply of bulk CPX and
another U.S. pharmaceutical manufacturer for finished product CPX.
FORMATION AND OTHER INFORMATION
SciClone was incorporated in California in 1990. Our international
operating subsidiary, SciClone Pharmaceuticals International Ltd., is
incorporated in the Cayman Islands and headquartered in Hong Kong. We also have
office locations in Singapore, Taiwan, Japan and Italy.
11
<PAGE> 13
USE OF PROCEEDS
If the warrants are exercised by the selling shareholders, we will
receive proceeds in the form of the exercise price. The warrants issued to the
investors for up to 2,515,934 shares have an aggregate exercise price of
$4,327,406, or $1.72 per share. The warrants issued to the placement agents for
up to 345,933 shares have an aggregate exercise price of $633,057, or $1.83 per
share. If we receive any proceeds from the exercise of the warrants, we expect
to use them for working capital. We will not receive any proceeds from the sale
of the shares of common stock by the selling shareholders and all proceeds will
go to the selling shareholders to be used for their own purposes.
SELLING SHAREHOLDERS
The 5,377,801 shares offered by this prospectus consist of shares issued
or issuable to institutional investors and the placement agents in connection
with a privately placed equity financing on July 21, 1999, as follows:
o 2,515,934 shares of common stock issued to the investors;
o up to 2,515,934 shares of commons stock issuable upon exercise of
warrants, with an exercise price of $1.72, issued to the investors;
and
o up to 345,933 shares of common stock issuable upon exercise of
warrants, with an exercise price of $1.83, issued to the placement
agents.
The investor warrants and the placement agent warrants are exercisable until
July 20, 2004. The table below sets forth each selling shareholder, the number
of shares of common stock which it owns or has the right to acquire as of July
21, 1999, the number of shares of common stock subject to sale under this
prospectus and the number of shares of common stock it would own assuming the
sale of all shares of common stock covered by this prospectus. The shares
offered by the investors consist of an equal number of:
o shares issued in the financing and outstanding; and
o shares subject to warrants issued in the financing.
The shares offered by the placement agents consist of shares issuable upon
exercise of warrants issued in connection with our July 21, 1999 financing.
Beneficial ownership is determined in accordance with rules promulgated
by the SEC, and the information is not necessarily indicative of beneficial
ownership for any other purpose. This table is based upon information supplied
to us by the selling shareholders. Except as otherwise indicated, as of July 21,
1999, we believe that each person named in the table has sole voting and
investment power with respect to all of the shares of our common stock listed as
beneficially owned by it.
<TABLE>
<CAPTION>
Shares Beneficially Shares Offered Shares Beneficially
Owned Prior to the by this Owned After
Selling Shareholders Offering Prospectus the Offering
-------------------- ------------------- -------------- -------------------
<S> <C> <C> <C>
Investors:
Biotechnology Development Fund, L.P. 210,062 210,062 --
Biotechnology Development Fund III, L.P. 167,294 167,294 --
</TABLE>
12
<PAGE> 14
<TABLE>
<S> <C> <C> <C>
Brown Simpson Strategic Growth Fund, Ltd. 2,044,024 2,044,024 --
Brown Simpson Strategic Growth Fund, L.P. 1,100,628 1,100,628 --
Clarion Capital Corporation 252,000 252,000 --
New York Life Insurance Company 1,257,860 1,257,860 --
Placement Agents:
Moors & Cabot, Inc. 132,378 94,350 38,028
John Dakin 55,000 40,000 15,000
Samuel Skinner 55,000 40,000 15,000
Jim McCamant 22,378 14,350 8,028
H.C. Wainwright & Co., Inc. 27,334 23,584 3,750
Matthew Balk 102,660 68,160 34,500
Eric Singer 20,047 20,047 --
Scott Weisman 51,691 45,441 6,250
</TABLE>
Moors & Cabot, Inc. is a corporation of which Michael Braun is the
Senior Vice President. Mr. Braun may be deemed to have investment and voting
control over the shares held by Moors & Cabot, Inc.
H.C. Wainwright & Co., Inc. is a corporation of which Steve Barrett is
the Chief Executive Officer. Mr. Barrett may be deemed to have investment and
voting control over the shares held by H.C. Wainwright & Co., Inc.
13
<PAGE> 15
PLAN OF DISTRIBUTION
The selling shareholders may sell their shares of common stock on the
Nasdaq National Market, or other exchange on which the common stock is trading,
in privately negotiated transactions or otherwise. The shares may be sold by the
selling shareholders by one or more of the following methods:
o block trades in which the broker or dealer will attempt to sell the
shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
o purchases by a broker or dealer as principal and resale by such
broker or dealer for its account pursuant to this prospectus;
o an exchange distribution in accordance with the rules of such
exchange;
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
o privately negotiated transactions;
o short sales; or
o a combination of any of the above methods.
Brokers and dealers engaged by the selling shareholders may arrange for
other brokers or dealers to participate. Brokers or dealers may receive
commissions or discounts from the selling shareholders. If any broker-dealer
acts as agent for a purchaser of shares, the broker-dealer may receive
commissions or discounts from the purchaser. Commissions or discounts will be
negotiated at the time of the transaction and are not expected to exceed
customary amounts.
Broker-dealers may agree with the selling shareholders to sell a
specified number of shares at a stipulated price per share. To the extent the
broker-dealer is unable to sell the specified number, it may purchase as
principal any unsold shares at the price required to fulfill the broker-dealer's
commitment to the selling shareholder. Broker-dealers who acquire shares as
principal may then resell such shares from time to time in transactions, which
may involve block transactions as described above, in the over-the-counter
market or otherwise. Resales by broker-dealers may be at prices and on terms
then prevailing at the time of sale, at prices then related to the then-current
market price or in negotiated transactions. In connection with resales,
broker-dealers may pay to or receive from purchasers of the shares commissions
as described above. The selling shareholders may also sell their shares in
accordance with Rule 144 under the Securities Act, rather than pursuant to this
prospectus.
The selling shareholders and any broker-dealers or agents that
participate with the selling shareholders in sales of the shares may be deemed
to be "underwriters" within the meaning of the Securities Act. If so, any
commissions received by such broker-dealers or agents and any profit on the
resale of shares purchased by them may be deemed to be underwriting commissions
or discounts under the Securities Act.
From time to time the selling shareholders may engage in short sales,
short sales against the box, puts and calls and other transactions in our
securities or instruments that derive their value from our securities, and may
sell and deliver the shares covered by this prospectus in connection with the
transactions or to settle securities loans. From time to time the selling
shareholders may pledge their shares pursuant to the margin provisions of its
agreements with its brokers. Upon a default by the selling shareholders, the
broker may offer and sell the pledged shares from time to time.
Under our agreement with the selling shareholders, we agreed to file a
registration statement covering the 2,515,934 shares issued in our July 21, 1999
financing and the 2,861,867 shares issuable upon exercise of warrants issued in
connection with the financing within 30 days following the closing of the
financing and to keep a registration statement covering these shares effective
for up to three years following the closing.
14
<PAGE> 16
We will pay all expenses related to the registration of the shares
covered by this prospectus, including:
o filing, registration and qualification fees;
o printers' fees;
o accounting fees; and
o the fees and disbursements of our outside counsel.
We will not pay underwriters' or brokers' discounts and commissions or
the fees or disbursements of counsel for any selling shareholder.
The selling shareholders are not restricted as to the price or prices at
which they may resell the shares. Any resales may have an adverse effect on the
market price of the common stock. In addition, it is possible that a significant
number of shares could be sold at the same time, which also may have an adverse
effect on the market price of the common stock.
We have agreed to indemnify the selling shareholders against certain
civil liabilities, including liabilities under the Securities Act.
15
<PAGE> 17
LEGAL MATTERS
The legality of the shares offered by this prospectus is being passed
upon by Gray Cary Ware & Freidenrich LLP, Palo Alto, California.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedule included in our Annual Report on Form 10-K for
the year ended December 31, 1998, as set forth in their report, which contains
an explanatory paragraph describing conditions that raise substantial doubt
about our ability to continue as a going concern as described in Note 1 to the
consolidated financial statements, which is incorporated by reference in this
prospectus and elsewhere in the registration statement. Our financial statements
and schedule are incorporated by reference in reliance on Ernst & Young LLP's
report, given on their authority as experts in accounting and auditing.
16
<PAGE> 18
WHERE TO FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. These reports, proxy statements and other
information filed with the SEC may be inspected and copied at the SEC Public
Reference Room, 450 Fifth Street, N.W., Washington, D.C. 20549.
You may obtain information about the operation of the SEC Public
Reference Room by calling 1-800-SEC-0330. You can also inspect this material
free of charge at a Web site maintained by the SEC at http://www.sec.gov.
Finally, you can also inspect reports and other information concerning SciClone
at the offices of the National Association of Securities Dealers, Inc., Market
Listing Section, 1735 K Street, N.W., Washington, D.C. 20006. SciClone common
stock is traded on The Nasdaq National Market under the symbol "SCLN."
SciClone's Internet web site is located at http://www.sciclone.com.
DOCUMENTS INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" information that we file
with them which means that we can disclose important information to you by
referring you to these documents. The information incorporated by reference is
an important part of this prospectus and information we later file with the SEC
will automatically update and supersede this information. The following
documents filed by us with the SEC are incorporated in this prospectus by
reference:
o Annual Report on Form 10-K for the year ended December 31, 1998,
filed on March 31, 1999 (File No. 0-19825);
o Current Report on Form 8-K, filed on April 26, 1999 (File No.
0-19825);
o Quarterly Report on Form 10-Q for the quarter ended March 31, 1999,
filed on May 14, 1998 (File No. 0-19825);
o Current Report on Form 8-K, filed on August 4, 1999 (File No.
0-19825);
o Quarterly Report on Form 10-Q for the quarter ended June 30, 1999,
filed on August 13, 1999 (File No. 0-19825); and
o The description of SciClone's Common Stock contained in SciClone's
Registration Statement on Form 8-A filed under the Securities
Exchange Act, including any amendment or report filed for the purpose
of updating that description (File No. 0-19825).
We also incorporate by reference all documents and reports filed by us
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934 after the date of this prospectus. We will provide free of charge to each
person, including any beneficial owner, to whom this prospectus is delivered,
upon written or oral request, a copy of any or all of the documents incorporated
by reference in this prospectus. Please direct such requests to Investor
Relations, SciClone Pharmaceuticals, Inc., 901 Mariner's Island Boulevard, Suite
205, San Mateo, California 94404. Our telephone number is (650) 358-3456.
17
<PAGE> 19
- --------------------------------------------------------------------------------
WE HAVE NOT AUTHORIZED ANYONE TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS
PROSPECTUS. THE INFORMATION IN THIS PROSPECTUS IS CORRECT AS OF THE DATE OF
THIS PROSPECTUS. DELIVERY OF THIS PROSPECTUS AFTER THE DATE
INDICATED BELOW DOES NOT MEAN THAT THE INFORMATION IS STILL CORRECT.
SCICLONE PHARMACEUTICALS, INC.
COMMON STOCK
2,515, 934 SHARES ISSUED AND OUTSTANDING
AND
2,861,867 SHARES SUBJECT TO WARRANTS
----------------------
PROSPECTUS
----------------------
_______________, 1999
- --------------------------------------------------------------------------------
<PAGE> 20
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses in connection with
the sale and distribution of the securities being registered, other than
underwriting discounts and commissions. All of the amounts shown are estimates
except the Securities and Exchange Commission registration fees and Nasdaq
filing fee.
<TABLE>
<CAPTION>
To be Paid
By The
Registrant
<S> <C>
SEC Registration Fee $ 2,604
Nasdaq filing fee $17,500
Accounting fees and expenses $ 5,000
Legal fees and expenses $25,000
Miscellaneous expenses $ 896
Total...................................................... $51,000
=======
</TABLE>
- ------------------------
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted by Section 204 of the California Corporations Code (the
"CCC"), the Registrant's Articles of Incorporation provide that each person who
is or was or who had agreed to become a director or officer of the Registrant or
who had agreed at the request of the Registrant's Board of Directors or an
officer of the Registrant to serve as an employee or agent of the Registrant or
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall be indemnified by the Registrant
to the full extent permitted by the CCC or any other applicable laws. Such
Articles of Incorporation also provide that no amendment or repeal of such
Articles shall apply to or have any effect on the right to indemnification
permitted or authorized thereunder for or with respect to claims asserted before
or after such amendment or repeal arising from acts or omissions occurring in
whole or in part before the effective date of such amendment or repeal.
The Registrant's Bylaws provide that the Registrant shall indemnify to
the full extent authorized by law any person made or threatened to be made a
party to an action or a proceeding, whether criminal, civil, administrative or
investigative, by reason of the fact that he, his testator or intestate was or
is a director, officer or employee of the Registrant or any predecessor of the
Registrant or serves or served any other enterprise as a director, officer or
employee at the request of the Registrant or an predecessor of the Registrant.
The Registrant's Bylaws also provide that the Registrant may enter into one or
more agreements with any person which provides for indemnification greater or
different than that provided in such Articles of Incorporation.
The Registrant has entered into indemnification agreements with its
directors and certain of its officers.
The Registrant intends to purchase and maintain insurance on behalf of
any person who is a director or officer against any loss arising from any claim
asserted against him and incurred by him in any such capacity, subject to
certain exclusions.
See also the undertakings set out in response to Item 17 herein.
II-1
<PAGE> 21
ITEM 16. EXHIBITS.
The following exhibits are filed with this Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
<S> <C>
5.1 Opinion of Gray Cary Ware & Freidenrich LLP.
23.1 Consent of Ernst & Young LLP, independent auditors.
23.2 Consent of Gray Cary Ware & Freidenrich LLP (included in
Exhibit 5.1).
24.1 Power of Attorney (included in the Signature Page contained
in Part II of the Registration Statement).
</TABLE>
ITEM 17. UNDERTAKINGS.
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933 (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. 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% 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 (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a
post-effective amendment by those paragraphs is contained
in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act
of 1934 that are incorporated by reference in 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.
B. The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act, each filing of
the Registrant's annual report pursuant to section 13(a) or section
15(d) of
II-2
<PAGE> 22
the Securities Exchange Act of 1934 that is incorporated by reference in
the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
C. The undersigned Registrant hereby undertakes to deliver or cause
to be delivered with the prospectus, to each person to whom the
prospectus is sent or given, the latest annual report to security
holders that is incorporated by reference in the prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule
14c-3 under the Securities Exchange Act of 1934; and, where interim
financial information required to be presented by Article 3 of
Regulation S-X are not set forth in the prospectus, to deliver, or cause
to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by
reference in the prospectus to provide such interim financial
information.
D. 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
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer, or controlling person of the
Registrant in the successful defense of any action, suit, or proceeding)
is asserted by such director, officer, or controlling person in
connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.
E. The undersigned Registrant hereby undertakes that:
(1) For the purposes of determining any liability under the
Securities Act, the information omitted from the form of
prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of prospectus
filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of the
registration statement as of the time it was declared effective.
(2) For the purposes of determining any liability under the
Securities Act, each post-effective amendment that contains a
form of prospectus 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.
III-3
<PAGE> 23
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of San Mateo, State of California on August 20, 1999.
SCICLONE PHARMACEUTICALS, INC.
By: /s/ Donald R. Sellers
-------------------------------------
Donald R. Sellers
President, Chief Executive Officer
and Interim Chief Financial Officer
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Donald R. Sellers and Shawn K. Singh, and
each of them, as his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him or her and in his or her
name, place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement on Form
S-3, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in connection therewith, as fully to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that said
attorney-in-facts and agents, or either of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Donald R. Sellers President, Chief Executive Officer, August 20, 1999
- ---------------------------------- Interim Chief Financial Officer and
Donald R. Sellers Director (Principal Executive, Financial
and Accounting Officer)
/s/ Jere E. Goyan Chairman of the Board and Director August 20, 1999
- ----------------------------------
Jere E. Goyan, Ph.D.
/s/ John D. Baxter Director August 20, 1999
- ----------------------------------
John D. Baxter, M.D.
/s/ Edwin C. Cadman Director August 20, 1999
- ----------------------------------
Edwin C. Cadman, M.D.
/s/ Rolf H. Henel Director August 20, 1999
- ----------------------------------
Rolf H. Henel
</TABLE>
II-4
<PAGE> 24
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
<S> <C>
5.1 Opinion of Gray Cary Ware & Freidenrich LLP.
23.1 Consent of Ernst & Young LLP, independent auditors.
23.2 Consent of Gray Cary Ware & Freidenrich LLP (included in
Exhibit 5.1).
24.1 Power of Attorney (included in the Signature Page contained
in Part II of the Registration Statement).
</TABLE>
<PAGE> 1
EXHIBIT 5.1
[GRAY CARY WARE & FREIDENRICH LLP LETTERHEAD]
August 20, 1999
Securities and Exchange Commission
450 Fifth Street, N.W
Washington, D.C. 20549
RE: SCICLONE PHARMACEUTICALS, INC.
REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
As legal counsel for SciClone Pharmaceuticals, Inc., a California corporation
(the "Company"), we are rendering this opinion in connection with the
preparation and filing of a registration statement on Form S-3 (the
"Registration Statement") relating to the registration under the Securities Act
of 1933, as amended, of 5,377,801 shares of Common Stock (the "Shares"), issued
by the Company or issuable upon exercise of warrants issued by the Company in
connection with the Company's July 21, 1999 financing.
We have examined such instruments, documents and records as we deemed relevant
and necessary for the basis of our opinion herein after expressed. In such
examination, we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity to
the originals of all documents submitted to us as copies.
Based on such examination, we are of the opinion that the 2,515,934 Shares
issued by the Company are, and the 2,861,867 Shares issuable upon exercise of
the warrants, when issued in accordance with the terms of the warrants, will be,
duly authorized, validly issued, fully paid, and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement referred to above and the use of our name wherever it
appears in said Registration Statement.
This opinion is to be used only in connection with the issuance of the Shares
while the Registration Statement is in effect.
Respectfully submitted,
/s/ GRAY CARY WARE & FREIDENRICH LLP
- ------------------------------------
GRAY CARY WARE & FREIDENRICH LLP
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement on Form S-3 and the related Prospectus of SciClone
Pharmaceuticals, Inc. for registration of 5,377,801 shares of its Common Stock
and to the incorporation by reference therein of our report dated March 17,
1999, with respect to the consolidated financial statements and schedule of
SciClone Pharmaceuticals, Inc. included in its Annual Report on Form 10-K for
the year ended December 31, 1998 filed with the Securities and Exchange
Commission.
/s/ ERNST & YOUNG LLP
Palo Alto, California
August 18, 1999
