<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 23, 1999
REGISTRATION NO. 333-60425
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-2
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 (IRS Employer
jurisdiction of Identification No.)
incorporation or
organization)
901 MARINERS 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 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, check the following box. [X]
If the registrant elects to deliver its latest annual report to security
holders, or a complete and legal facsimile thereof, pursuant to Item 11(a)(1) of
this Form, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) 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 this Form is a post-effective amendment filed pursuant to Rule 462(b)
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 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. [ ]
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
SUBJECT TO COMPLETION, DATED JUNE 23, 1999
3,000,000 SHARES
SCICLONE PHARMACEUTICALS, INC.
COMMON STOCK
This prospectus relates to the offer and sale of up to 3,000,000 shares
of our common stock by Cheyenne LLC, a New York limited liability company, the
selling shareholder. 2,500,000 of the shares are issuable from time to time,
under certain circumstances, to the selling shareholder pursuant to the terms of
the Structured Equity Line Flexible Financing(SM) Agreement, dated as of June
30, 1998, between SciClone and the selling shareholder. 500,000 of the shares
are issuable upon exercise of certain warrants issued or issuable to the selling
shareholder pursuant to the equity line. Our agreement with the selling
shareholder is described in more detail on page 10.
Our common stock is quoted on The Nasdaq National Market under the
symbol "SCLN." On June 11, 1999, the last sale price of the common stock as
reported on The Nasdaq National Market was $1.438.
Our principal executive offices are located at 901 Mariners 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 INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
WE 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.
The date of this prospectus is ____________, 1999.
1
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
RISK FACTORS...................................................... 3
ABOUT SCICLONE ................................................... 9
USE OF PROCEEDS................................................... 12
SELLING SHAREHOLDER............................................... 12
PLAN OF DISTRIBUTION.............................................. 12
LEGAL MATTERS .................................................... 14
EXPERTS........................................................... 14
WHERE TO FIND MORE INFORMATION.................................... 15
DOCUMENTS INCORPORATED BY REFERENCE............................... 15
</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 FAIL TO OBTAIN ADDITIONAL REGULATORY APPROVALS OR MARKET
ACCEPTANCE FOR ZADAXIN(R) OR OBTAIN REGULATORY APPROVAL FOR CPX, OUR POTENTIAL
FUTURE REVENUE WOULD BE ADVERSELY AFFECTED. Our principal drug development
efforts currently focus on our two lead drugs, thymosin alpha 1, which the
Company sells under the branded trademark ZADAXIN, and CPX. Thymosin alpha 1 is
a drug that boosts the body's immune system. Clinical trials of ZADAXIN are in
progress and we need favorable results from these trials to get regulatory
approval in major pharmaceutical markets. ZADAXIN has been approved for
commercial sale in 14 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. CPX is a drug that
targets the underlying cause of cystic fibrosis, a disease caused by genetic
defects. CPX is currently undergoing clinical testing in the United States.
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.
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 NOT BE ABLE TO SUSTAIN OUR
OPERATIONS. We began to generate revenues from ZADAXIN in 1997. Future ZADAXIN
revenues are uncertain. 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. 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 expand
our operations or become profitable depends in large part on our ability to do
the following:
- obtain additional financing in the near term to support our
operations and long-term product development and
commercialization efforts;
- increase ZADAXIN sales in existing markets;
- launch ZADAXIN in newly-approved markets;
- obtain additional regulatory approvals for ZADAXIN and/or future
products;
- obtain regulatory approvals for CPX;
3
<PAGE> 5
- enter into a corporate partnering arrangement for development in
the U.S. and Europe of a combination therapy for hepatitis C
including ZADAXIN plus interferon; and
- enter into other agreements for product development and
commercialization.
In addition, we have recently undertaken a program to reduce our cash
expenses in an effort to maximize our cash resources and minimize the
anticipated expenditures needed to operate profitably. This program includes a
domestic restructuring program which reduced our domestic staff. We intend to
continue to review and implement our expense reduction efforts, depending on the
timing and amount of any additional financing we receive and changes in our
capital requirements for product development and commercialization.* If we do
not become profitable, we may not be able to sustain our operations and our
stock price may decrease.
WE NEED TO OBTAIN ADDITIONAL FUNDS IN THE NEAR FUTURE IN ORDER TO HAVE
ENOUGH CAPITAL RESOURCES TO SUPPORT OUR PRODUCT DEVELOPMENT AND
COMMERCIALIZATION PROGRAMS. Since inception, we have financed our operations
primarily through sales of stock. However, we will need to obtain additional
financing to support our product development and commercialization programs
beyond August 1999. Without additional financing, management believes we have
enough capital resources to maintain our current and planned operations only
through August 1999. As a result, our independent auditors have 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. If we are unsuccessful in obtaining additional
funds, we would be required to curtail or cease our operations.
We are evaluating financing alternatives, including a private placement
of common stock and common stock warrants, use of our equity line and debt
financing to increase our capital resources. However, our need for capital will
depend on many factors, including:
- the level of ZADAXIN sales;
- preclinical and clinical development expenses and opportunities;
- the timing and cost of regulatory approvals;
- patent costs;
- our ability to use the equity line; and
- our ability to establish development, sales, manufacturing and
marketing arrangements.
Other than the equity line, we have no commitments or arrangements for
additional funding and we may not be able to obtain the financing we need. 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:
- registration of the investor's resale of the shares;
- a minimum trading price per share;
- volume limitations;
- limitations on the number of shares that can be issued without
shareholder approval; and
- limitations on the number of shares of our common stock the
investor may hold at any time.
The unavailability or timing of financing could prevent or delay our product
development and commercialization programs and would require us to curtail or
cease our operations.
4
<PAGE> 6
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:
- a minimum bid price of $1.00 per share;
- $4,000,000 in net tangible assets; and
- $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 June 11, 1999, the closing bid price of our common stock was
$1.438 and on April 30, 1999, the market value of our public float was
approximately $29,250,000. As of March 31, 1999, we had net tangible assets of
$6,688,000.
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.
POSSIBILITY OF DILUTION TO OUR CURRENT SHAREHOLDERS AND DECREASE IN THE
MARKET PRICE OF OUR COMMON STOCK. 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 warrant to
purchase 200,000 shares of our common stock at an exercise price of $5.53 per
share. We will also issue to the purchaser additional warrants to purchase up to
300,000 shares of common stock at an exercise price of 150% of the weighted
average purchase price of the common stock issued under the equity line during
the year for which an additional warrant is issued. If we do not issue any
common stock under the equity line, the exercise price will be 150% of the
closing sale price of the common stock on the day before the end of the two-year
term of the equity line. The purchaser's resale of common stock acquired under
the equity line could depress the market price of the common stock. Moreover,
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 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
5
<PAGE> 7
approval process in these other countries. Any delay or failure to achieve
regulatory approvals may limit our potential future revenue.
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:
- difficulties and delays in obtaining pricing approvals and
reimbursement;
- difficulties and delays in obtaining product health registration
and importation permits;
- unexpected changes in regulatory requirements;
- tariffs and other barriers;
- political instability;
- the difficulties of staffing and managing foreign operations;
- long payment cycles;
- difficulty in accounts receivable collection;
- currency fluctuations; and
- 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 PROTECT OUR PRODUCTS, TECHNOLOGIES AND TRADE SECRETS, OUR
ABILITY TO USE, MANUFACTURE OR MARKET AND SELL OUR PRODUCTS WOULD BE ADVERSELY
AFFECTED. The United States composition of matter patent and most of the
European composition of matter patents for thymosin alpha 1 have expired. Going
forward, we will have only limited composition of matter patents for 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.
6
<PAGE> 8
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.
WE NEED TO OBTAIN REGULATORY APPROVALS FOR ZADAXIN AND CPX IN ORDER TO
DEVELOP, MARKET AND SELL THEM. 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, 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.
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
7
<PAGE> 9
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 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 be 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,
OUR BUSINESS WOULD BE ADVERSELY Affected. 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 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 OUR BUSINESS AND
FINANCIAL CONDITION COULD BE ADVERSELY AFFECTED IF PRODUCT LIABILITY CLAIMS WERE
ASSERTED AGAINST US. 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 COULD ADVERSELY AFFECT HOLDERS OF COMMON STOCK
OR PREVENT TAKEOVER ATTEMPTS. 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.
8
<PAGE> 10
ABOUT SCICLONE
This prospectus is accompanied by a copy of our Annual Report on Form
10-K for the year ended December 31, 1998 and our Quarterly Report on Form 10-Q
for the most recent fiscal quarter after the year ended December 31, 1998.
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. 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 14
countries: Argentina, Cambodia, Italy, Kuwait, Mexico, Malaysia, Myanmar,
Pakistan, the People's Republic of China, Peru, the Philippines, Singapore,
Venezuela and Vietnam. We have filed for approval to market ZADAXIN in 22
additional countries outside the U.S., Europe and Japan. In 1998, ZADAXIN
generated over $3.6 million in sales, 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 a corporate partnering arrangement 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. In the second quarter of 1998, Schering-Plough K.K. began a
300-patient clinical study of ZADAXIN for treatment of hepatitis B. 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
clinical study for treatment of hepatitis C.
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
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 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 breakthrough preclinical data
demonstrating that CPX repairs the two key protein 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 Grant by the FDA for the first clinical study of
CPX as a treatment for cystic fibrosis. We completed the first clinical study of
CPX in cystic fibrosis patients in April 1998. In October 1998, we were awarded
a prestigious $200,000 Orphan
9
<PAGE> 11
Drug Grant by the FDA for the second clinical study of CPX as a treatment for
cystic fibrosis. We began the second clinical study of CPX in cystic fibrosis
patients in the U.S. in September 1998. 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 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.
EQUITY LINE
In June 1998 we entered into a Structured Equity Line Flexible
Financing(SM) Agreement and a Registration Rights Agreement in which we agreed
to file a registration statement covering resales from time to time, by the
selling shareholder of shares of common stock. This prospectus is a part of the
registration statement. Under the equity line, if certain conditions are
satisfied, we can require the selling shareholder to purchase our common stock
over a period of 24 months for an aggregate purchase price of up to $32 million.
We may terminate the equity line at any time without further obligation to the
selling shareholder. The selling shareholder may terminate the equity line
without further obligation to us if and only if any change in law makes it
impracticable or impossible for the selling shareholder to fulfill its
obligations under the equity line.
Under the Equity Line, during each three month investment period we at
our sole option and discretion, if certain conditions are satisfied, can require
the selling shareholder to purchase our common stock for an aggregate price of
up to $4.0 million. Ten days prior to the beginning of each investment period,
we must notify the selling shareholder of the minimum purchase price per share,
which cannot be less than $1.00, to be paid for our common stock to be purchased
by the selling shareholder, if any, during the investment period. However, we
may reset the minimum price to a value within 15% of the minimum price up to
three times during any investment period. The purchase price per share to be
paid by the selling shareholder for the shares acquired under the equity line
will equal 97% of the lowest sales price of our common stock during the four
trading days immediately preceding the notice of purchase by the selling
shareholder.
The selling shareholder's obligation to purchase shares of common stock
under the equity line is subject to various conditions, including:
- effectiveness of the registration statement under the Securities
Act;
- the price of the common stock being equal to at least the price
we set from time to time as the minimum purchase price;
- continued trading of the common stock on the Nasdaq National
Market;
- the percentage of the common stock beneficially owned by the
selling shareholder or any of its affiliates being not more than
4.9% of our then outstanding common stock; and
10
<PAGE> 12
- the percentage of common stock beneficially owned in the
aggregate by the selling shareholder, affiliates of the selling
shareholder and any managed accounts of The Palladin Group, L.P.
being not more than 9.9% of our then outstanding common stock.
In addition, the selling shareholder is not required to purchase, in any
investment period, an amount in excess of 10% of the product of:
- the daily average value of open market trading of the common
stock; and
- the number of trading days in the investment period during either
the current or immediately preceding investment period.
The 10% is reduced by 1% in each investment period following the first
investment period until it reaches 6% at which time it will be fixed at 6%.
Therefore, we may issue significantly lower shares than offered by this
prospectus.
In connection with the equity line, the selling shareholder received a
five-year warrant to purchase 200,000 shares of the common stock at an exercise
price equal to $5.53 per share. In addition, we agreed to issue to the selling
shareholder, at the end of each calendar year, an additional warrant to purchase
5,000 shares of common stock for each $500,000 of common stock purchased by the
selling shareholder during the year. The additional warrants will have an
exercise price equal to 150% of the weighted average purchase price of the
common stock purchased by the selling shareholder during the year. The number of
shares issuable upon exercise of all the additional warrants may not exceed
300,000. The additional warrants, if any, have a term ending on the same date as
the end of the five-year term of the original warrant. We also agreed to issue
to the selling shareholder, at the end of the term of the equity line, a final
warrant to purchase a number of shares of common stock equal to 300,000 minus
the number of shares of common stock subject to additional warrants, if any. The
final warrant, if issued, will have a term ending on the same date as the end of
the five-year term of the original warrant. The final warrant will have an
exercise price per share equal to the lesser of the exercise price per share of
the original warrant or 150% of the closing sale price of the common stock on
the trading day immediately prior to the last day of the term of the equity
line.
We also agreed to reimburse the selling shareholder for:
- its legal fees and expenses incurred in connection with entering
into the equity line up to a maximum of $50,000; and
- for its costs and expenses incurred in connection with
performancing its obligations under the equity line up to a
maximum of $25,000 initially and $5,000 quarterly on an ongoing
basis.
Under the equity line and the related registration rights agreement, we
agreed to file and keep effective, subject to certain penalties for
non-compliance which may be waived by the selling shareholder, a registration
statement under the Securities Act, for the resale from time to time by the
selling shareholder of the shares of the common stock to be issued under the
equity line and upon exercise of the warrants. We may register additional shares
on a separate registration statement in the future if we decide to sell
additional shares under the equity line.
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 and Japan.
11
<PAGE> 13
USE OF PROCEEDS
We will receive proceeds from the original issuance of the shares, if
any, to the selling shareholder under the equity line. However, we will not
receive any of the proceeds from resales by the selling shareholder of the
shares offered by this prospectus. We may also receive proceeds from the
exercise of the warrants. The Company could receive, before expenses, up to $32
million under the equity line and up to $1,106,000 upon exercise of the original
warrant. In addition, the selling shareholder may receive additional warrants
and/or a final warrant to purchase up to an aggregate of 300,000 shares of
common stock. The amount of gross proceeds received will depend on the exercise
price of the additional warrants, which is 150% of the weighted average purchase
price of the common stock purchased during the year with respect to which an
additional warrant is issued. The amount of gross proceeds received will also
depend on the exercise price of the final warrant, if issued, which is equal to
the lesser of the exercise price per share of the original warrant or 150% of
the closing sale price of the common stock on the trading day immediately prior
to the last day of the term of the equity line. The actual amount of proceeds,
if any, from the equity line, the warrant and the additional warrants and/or
final warrant will depend upon:
- the market price of the common stock;
- whether the selling shareholder elects to exercise the warrant
and the additional warrants and/or final warrant; and
- whether we elect to require the selling shareholder to purchase
common stock under the equity line.
However, we may decide to not issue any shares under the equity line or may be
prevented from issuing shares by the terms of the equity line. Therefore, it is
possible that no shares will be issued to or resold by the selling shareholder
under this prospectus.
We expect that any net proceeds from issuances of common stock to the
selling shareholder pursuant to the equity line, or exercise of the warrants
will be used for general corporate purposes, including research and development,
marketing, sales, and clinical and regulatory activities.
SELLING SHAREHOLDER
The selling shareholder, Cheyenne, LLC, has not had a material
relationship with SciClone during the past three years, other than as a result
of entering into the equity line. Richard D. Squires is the sole managing member
of Cheyenne, LLC.
As of the date of this prospectus, the selling shareholder does not own
any shares of our common stock, other than the 200,000 shares which it has the
right to acquire upon exercise of the warrant. The selling shareholder is
offering up to 3,000,000 of the shares of common stock it may acquire under the
equity line and the warrant and the additional warrants and/or final warrant.
PLAN OF DISTRIBUTION
The selling shareholder may, from time to time, sell all or a portion of
the shares:
- on the Nasdaq National Market, or such other exchange on which
the common stock may from time to time be trading;
- in privately negotiated transactions or otherwise;
- at fixed prices that may be changed;
12
<PAGE> 14
- at market prices prevailing at the time of sale; or
- at prices related to such market prices or at negotiated prices.
The shares may be sold by the selling shareholder by one or more of the
following methods, without limitation:
- block trades in which the broker or dealer so engaged will
attempt to sell the shares as agent but may position and resell a
portion of the block as principal to facilitate the transaction;
- purchases by a broker or dealer as principal;
- an exchange distribution in accordance with the rules of such
exchange;
- ordinary brokerage transactions and transactions in which the
broker solicits purchasers;
- privately negotiated transactions;
- short sales; and
- a combination of any of the above methods of sale.
In effecting sales, brokers and dealers engaged by the selling shareholder may
arrange for other brokers or dealers to participate. Brokers or dealers may
receive commissions or discounts from the selling shareholder, or, if any
broker-dealer acts as agent for the purchaser of the shares, from the purchaser,
in amounts to be negotiated which are not expected to exceed those customary in
the types of transactions involved. Broker-dealers may agree with the selling
shareholder to sell a specified number of shares at a stipulated price per
share. To the extent a broker-dealer is unable to sell a specified number of
shares acting as agent for a selling shareholder, it will purchase as principal
any unsold shares at the price required to fulfill the broker-dealer commitment
to the selling shareholder. Broker-dealers who acquire shares as principal may
resell the shares from time to time in transactions which may involve block
transactions of the nature described above, in the over-the-counter market or
otherwise at prices and on terms then prevailing at the time of sale, at prices
related to the then-current market price or in negotiated transactions. In
connection with resales, broker-dealers may pay to or receive from the
purchasers of the shares commissions as described above. The selling shareholder
may also sell the shares in accordance with Rule 144 under the Securities Act,
rather than under to this prospectus.
The selling shareholder is an "underwriter" as defined in the Securities
Act of 1933 in connection with the sale of the shares offered by this
prospectus. Any broker-dealers or agents that participate with the selling
shareholder in sales of the shares may be considered to be "underwriters" within
the meaning of the Securities Act in connection with sales in which they
participate. If any broker-dealers or agents are considered to be
"underwriters," then any commissions they receive and any profit on the resale
of the shares purchased by them may be considered to be underwriting commissions
or discounts under the Securities Act.
From time to time the selling shareholder may engage in short sales,
short sales against the box, puts and calls and other transactions in
securities, and may sell and deliver the shares in connection with these
transactions or to settle securities loans. If the selling shareholder engages
in such transactions, the price of our common stock may be affected. Under the
equity line, the selling shareholder may not make any sales with the intention
of reducing the price of our common stock. From time to time the selling
shareholder may pledge its shares pursuant to the margin provisions of its
agreements with its brokers. Upon a default by the selling shareholder, the
broker may offer and sell the pledged shares from time to time.
The selling shareholder and any other persons participating in the sale
or distribution of the shares will be subject to the Securities Exchange Act of
1934 and the related rules and regulations, including Regulation M, to the
extent it applies. The Exchange Act and related rules may limit the timing of
purchases and sales of any of the shares by the selling shareholder or any other
such person which may affect the marketability of the shares. The
13
<PAGE> 15
selling shareholder also must comply with the applicable prospectus delivery
requirements under the Securities Act in connection with the sale or
distribution of the shares.
We are required to pay certain fees and expenses incident to the
registration of the shares.
We have agreed to indemnify in certain circumstances the selling
shareholder against certain liabilities, including liabilities under the
Securities Act. The selling shareholder has agreed to indemnify us in certain
circumstances against certain liabilities, including liabilities under the
Securities Act.
We have agreed to use our best efforts to keep the registration
statement, of which this prospectus is a part, effective until the shares may be
or have been sold under Rule 144(k) of the Securities Act.
LEGAL MATTERS
Gray Cary Ware & Freidenrich LLP has opined on certain legal matters
with respect to the validity of the common stock offered by this prospectus.
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.
14
<PAGE> 16
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 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:
- Annual Report on Form 10-K for the year ended December 31, 1998,
filed on March 31, 1999 (File No. 0-19825);
- Current Report on Form 8-K, filed on April 26, 1999 (File No.
0-19825);
- Quarterly Report on Form 10-Q for the quarter ended March 31,
1999, filed on May 14, 1998 (File No. 0-19825);
- 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 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 Mariners Island Boulevard, Suite 205, San Mateo,
California 94404. Our telephone number is (650) 358-3456.
15
<PAGE> 17
================================================================================
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.
3,000,000 SHARES
SCICLONE PHARMACEUTICALS, INC.
COMMON STOCK
----------
PROSPECTUS
----------
__________________, 1999
<PAGE> 18
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 $2,544
Nasdaq filing fee $17,500
Accounting fees and expenses $7,000
Legal fees and expenses $15,000
Miscellaneous expenses $2,956
-------
Total............................................... $45,000
=======
</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> 19
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.
10.1* Structured Equity Line Flexible Financing(SM) Agreement by
and between the Company and Cheyenne LLC dated as of June
30, 1998.
10.2 Amendment No. 1 to Structured Equity Line Flexible
Financing(SM) Agreement by and between the Company and
Cheyenne LLC dated as of June 16, 1999.
10.3* Warrant to purchase up to 200,000 shares of Common Stock of
the Company issued to Cheyenne LLC dated as of June 30,
1998.
10.4* Registration Rights Agreement by and between the Company and
Cheyenne LLC dated as of June 30, 1998.
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>
- ----------
* Incorporated by reference from the Company's Report on Form 8-K filed with the
Commission on July 23, 1998.
** Previously filed.
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;
II-2
<PAGE> 20
(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. 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.
C. 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.
II-3
<PAGE> 21
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-2 and has duly caused this
Post-Effective Amendment No. 1 to registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of San Mateo,
State of California on June 23, 1999.
SCICLONE PHARMACEUTICALS, INC.
By: /s/ Donald R. Sellers
----------------------------------------
Donald R. Sellers
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 1 to 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 June 23, 1999
- --------------------------------- and Director (Principal Executive
Donald R. Sellers Officer)
/s/ Jere E. Goyan* Chairman of the Board and Director June 23, 1999
- --------------------------------
Jere E. Goyan, Ph.D.
/s/ Diane Lee* Director, Corporate Finance and June 23, 1999
- -------------------------------- Administration (Principal Financial
Diane Lee and Accounting Officer)
/s/ John D. Baxter* Director June 23, 1999
- --------------------------------
John D. Baxter, M.D.
/s/ Edwin C. Cadman* Director June 23, 1999
- --------------------------------
Edwin C. Cadman, M.D.
/s/ Rolf H. Henel* Director June 23, 1999
- --------------------------------
Rolf H. Henel
*By: /s/ Donald R. Sellers
---------------------------
Donald R. Sellers,
Attorney-in-fact
</TABLE>
II-4
<PAGE> 22
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
5.1** Opinion of Gray Cary Ware & Freidenrich LLP.
10.1* Structured Equity Line Flexible Financing(SM) Agreement by
and between the Company and Cheyenne LLC dated as of June
30, 1998.
10.2 Amendment No. 1 to Structured Equity Line Flexible
Financing(SM) Agreement by and between the Company and
Cheyenne LLC dated as of June 16, 1999.
10.3* Warrant to purchase up to 200,000 shares of Common Stock of
the Company issued to Cheyenne LLC dated as of June 30,
1998.
10.4* Registration Rights Agreement by and between the Company and
Cheyenne LLC dated as of June 30, 1998.
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>
- ----------
* Incorporated by reference from the Company's Report on Form 8-K filed with the
Commission on July 23, 1998.
** Previously filed.
<PAGE> 1
EXHIBIT 10.2
AMENDMENT NO. 1
TO
STRUCTURED EQUITY LINE FLEXIBLE FINANCING(SM) AGREEMENT
THIS AMENDMENT NO. 1 to STRUCTURED EQUITY LINE FLEXIBLE FINANCING(SM)
AGREEMENT ("Amendment") is dated as of June 16, 1999 between Select Investments,
LLC (the "Investor"), and SciClone Pharmaceuticals, Inc., a corporation
organized and existing under the laws of the State of California (the
"Company"). Capitalized terms not defined herein shall have the meanings
assigned to them in that certain Structured Equity Line Flexible Financing(SM)
Agreement dated as of June 30, 1998 (the "Agreement"), between the Company and
Cheyenne LLC, the predecessor-in-interest to the Investor.
W I T N E S S E T H :
WHEREAS, the Company and the Investor are parties to the Agreement,
pursuant to which the Company may elect to issue to the Investor, and, at the
Company's option, the Investor shall purchase from the Company, from time to
time as provided therein, shares of the Company's Common Stock, no par value
(the "Common Stock"), up to a maximum aggregate Purchase Price of $32,000,000
(the "Maximum Offering Amount"); and
WHEREAS, the Company and the Investor desire to amend the Agreement
to revise the "Floor Price," as defined therein;
NOW, THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
AGREEMENT
Section 1.1 The definition of the term "Floor Price" contained in
Section 1.1 of the Agreement is hereby amended and restated in its entirety as
follows:
""Floor Price" shall be the dollar amount designated by the Company in a
Floor Price Notice, provided that the Company shall not designate the
Floor Price at a dollar amount less than $1.00. In the event a Floor
Price Notice is not received with respect to a certain Investment
Period, the Floor Price set for the preceding Investment Period will
continue to be the Floor Price."
Section 1.2 Section 2.4(b) of the Agreement is hereby amended and
restated in its entirety as follows:
1
<PAGE> 2
"(b) Purchase Price Per Share. The purchase price per share of the
Company's Common Stock (the "Purchase Price") shall be 97% of the low Stock
Price during the four (4) Trading Days prior to but excluding a Mandatory
Purchase Date or an Additional Purchase Date, as the case may be; provided,
however, that upon Investor's prior notice to the Company, which notice may be
provided orally, any trading price below the Floor Price may be considered to be
equal to the Floor Price for purposes of determining the Purchase Price.
Investor agrees not to actively participate in the market with the intention of
reducing the Stock Price."
Section 1.3 Section 2.2(d) of the Agreement is hereby amended and
restated in its entirety as follows:
"(d) 4.9% Limit. Notwithstanding anything herein to the contrary, the
Investor shall not be required or entitled to purchase shares of Common Stock
pursuant to this Agreement on any Closing Date to the extent such purchase, when
aggregated with all other shares of Common Stock then owned by the Investor, and
with the shares of Common Stock beneficially or deemed beneficially owned by the
Investor pursuant hereto, and the Warrant Shares (if then issued and
outstanding) theretofore issued to the Investor pursuant to Section 2.6 and
still owned by the Investor, would result in (i) the Investor or any Affiliate
of the Investor beneficially owning more than 4.9% of all the issued and
outstanding Common Stock on such Closing Date (the "4.9% Limit") or (ii) the
Investor, any Affiliate of the Investor and any other managed account of The
Palladin Group, L.P., in the aggregate beneficially owning more than 9.9% of all
the issued and outstanding Common Stock on such Closing Date. The limits set
forth above shall be determined in accordance herewith and Section 13(d) of the
Exchange Act. The Investor represents that Halifax Fund, L.P., Themis Partners
L.P. and Heracles Fund are not Affiliates of the Investor for purposes of this
provision."
Section 1.4 Except as amended hereby, the Agreement shall remain
unchanged and in full force and effect.
ARTICLE II
MISCELLANEOUS
Section 2.1 No Third Party Beneficiaries. This Amendment is intended for
the benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
Section 2.2 Governing Law. This Amendment shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York without regard to such state's principles of conflict of laws.
Section 2.3 Execution. This Amendment may be executed in two or more
counterparts, all of which shall be considered one and the same agreement, it
being understood that all parties need not sign the same counterpart.
2
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No.
1 to Structured Equity Line Flexible Financing(SM) Agreement to be duly executed
by their respective authorized officers as of the date hereof.
CHEYENNE LLC SCICLONE PHARMACEUTICALS, INC.
By: /s/ Robert L. Chender By: /s/ Shawn K. Singh
----------------------------- -------------------------------------
Name: Robert L. Chender Name: Shawn K. Singh
Title: Managing Director Title: Senior Vice President
3
<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
Post-Effective Amendment No. 1 to the Registration Statement on Form S-2 and the
related Prospectus of SciClone Pharmaceuticals, Inc. for registration of
3,000,000 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
June 17, 1999
