<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 22, 1998
REGISTRATION NO. 333-61477
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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VION PHARMACEUTICALS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<TABLE>
<S> <C>
DELAWARE 13-3671221
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
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4 SCIENCE PARK
NEW HAVEN, CONNECTICUT 06511
(203) 498-4210
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
------------------------
JOHN A. SPEARS
PRESIDENT AND CHIEF EXECUTIVE OFFICER
VION PHARMACEUTICALS, INC.
4 SCIENCE PARK
NEW HAVEN, CONNECTICUT 06511
(203) 498-4210
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
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COPIES OF ALL COMMUNICATIONS, INCLUDING ALL COMMUNICATIONS SENT TO THE AGENT FOR
SERVICE, SHOULD BE SENT TO:
D. TERENCE JONES, ESQ.
WIGGIN & DANA
ONE CENTURY TOWER
NEW HAVEN, CONNECTICUT 06508
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable 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]
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. [ ]
------------------------
PURSUANT TO RULE 416 UNDER THE SECURITIES ACT OF 1933, AS AMENDED, THERE ARE
ALSO BEING REGISTERED SUCH ADDITIONAL SECURITIES AS MAY BE ISSUABLE TO THE
SELLING SECURITYHOLDERS PURSUANT TO APPLICABLE ANTI-DILUTION PROVISIONS.
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 SECTION 8(a), MAY
DETERMINE.
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<PAGE> 2
PROSPECTUS
VION PHARMACEUTICALS, INC.
2,950,152 SHARES OF COMMON STOCK
280,501 REDEEMABLE CLASS A WARRANTS
561,602 REDEEMABLE CLASS B WARRANTS
This Prospectus relates to 2,950,152 shares of Common Stock, $.01 par value
("Common Stock") of Vion Pharmaceuticals, Inc., a Delaware corporation (the
"Company") and 280,501 Redeemable Class A Warrants (the "Class A Warrants") and
561,602 Redeemable Class B Warrants ("Class B Warrants") of the Company. The
Common Stock, the Class A Warrants, the Class B Warrants and the underlying
securities are being offered by the Selling Securityholders set forth herein.
See "Selling Securityholders." The Company is also registering the exercise of
the Class A Warrants and the Class B Warrants by persons other than the Selling
Securityholders. The Class A Warrants and the Class B Warrants are referred to
herein collectively as the "Warrants" and the Common Stock, the securities
issuable upon exercise of Warrants, together with the Warrants, are sometimes
collectively referred to herein as the "Securities." Each Class A Warrant
entitles the holder to purchase, at an exercise price of $4.63, subject to
adjustment, one share of Common Stock and one Class B Warrant, and each Class B
Warrant entitles the holder to purchase, at an exercise price of $6.23, subject
to adjustment, one share of Common Stock. The Warrants are exercisable at any
time after issuance through August 13, 2000. The Warrants are subject to
redemption by the Company for $.05 per Warrant, upon 30 days' written notice, if
the average closing bid price of the Common Stock exceeds $7.30 per share with
respect to the Class A Warrants and $9.80 per share with respect to the Class B
Warrants for 30 consecutive business days ending within 15 days of the date of
the notice of redemption.
The securities offered by the Selling Securityholders pursuant to this
Prospectus may be sold from time to time by the Selling Securityholders. The
distribution of the Common Stock, Class A Warrants, and the Class B Warrants
offered hereby by the Selling Securityholders may be effected in one or more
transactions that may take place on the Nasdaq SmallCap Market, including
ordinary brokers' transactions, privately negotiated transactions or through
sales to one or more dealers for resale of such securities as principals, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. Usual and customary or
specifically negotiated brokerage fees or commissions may be paid by the Selling
Securityholders. The Selling Securityholders, and intermediaries through whom
such securities are sold, may be deemed underwriters within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
securities offered, and any profits realized or commissions received may be
deemed underwriting compensation. The Company has agreed to indemnify the
Selling Securityholders against certain liabilities, including liabilities under
the Securities Act. The Company will not receive any of the proceeds from the
sale of securities by the Selling Securityholders. See "Selling Securityholders"
and "Plan of Distribution."
------------------------
FOR INFORMATION CONCERNING CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY
PROSPECTIVE INVESTORS, SEE "RISK FACTORS" BEGINNING ON PAGE 3 OF THIS
PROSPECTUS.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this Prospectus is October 22, 1998
<PAGE> 3
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files periodic reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed with the Commission may be inspected and
copied at the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549 and at the regional offices of the Commission
located at 500 West Madison Street, Chicago, Illinois 60661, and Seven World
Trade Center, New York, New York 10048. Copies of such material can be obtained
from the Public Reference Section of the Commission at prescribed rates by
writing to the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. The
Commission maintains a Web site at http://www.sec.gov that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission, including the Company. In
addition, reports, proxy materials and other information concerning the Company
may be inspected at the offices of The Nasdaq Stock Market, 1735 K Street N.W.,
Washington, D.C. 20006.
This Prospectus constitutes a part of a Registration Statement on Form S-3
(herein, together with all amendments and exhibits, referred to as the
"Registration Statement") filed by the Company with the Commission under the
Securities Act. This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information with respect to the Company and the Common Stock, Class A Warrants
and Class B Warrants, reference is hereby made to the Registration Statement.
Statements contained herein concerning the provisions of any document are not
necessarily complete, and in each instance reference is made to the copy of such
document filed as an exhibit to the Registration Statement or otherwise filed
with the Commission. Each such statement is qualified in its entirety by such
reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which are on file with the Commission (File No.
0-26534), are incorporated in this Prospectus by reference and made a part
hereof:
(a) The Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1997.
(b) The Company's Quarterly Report on Form 10-QSB for the fiscal
quarter ended March 31, 1998.
(c) The Company's Quarterly Report on Form 10-QSB for the fiscal
quarter ended June 30, 1998.
(d) The description of the Company's Common Stock, Class A Warrants
and Class B Warrants contained in Item 1 of the Company's Registration
Statement on Form 8-A dated July 31, 1995.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of this offering shall be deemed to be incorporated by reference
into this Prospectus and to be a part hereof from the respective dates of filing
of such documents. Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for all purposes to the extent that a statement contained in this
Prospectus or any other subsequently filed document that is also incorporated by
reference herein modifies or supersedes such statement. Any such statements so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request of such person, a copy of
any or all of the foregoing documents incorporated herein by reference (other
than exhibits to such documents, unless such exhibits are specifically
incorporated by reference into such documents). Written or telephone requests
should be directed to Vion Pharmaceuticals, Inc., 4 Science Park, New Haven,
Connecticut 06511, Attention: Thomas E. Klein, Vice President -- Finance, (203)
498-4210.
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<PAGE> 4
RISK FACTORS
An investment in the Securities offered by this Prospectus involves a high
degree of risk. Prospective investors should carefully consider the following
risk factors, in addition to the information set forth in this Prospectus, in
connection with an investment in the Securities offered hereby. This Prospectus,
including the information incorporated by reference herein, includes "forward
looking statements" within the meaning of Section 27A of the Securities Act and
Section 21E of the Exchange Act. All of the statements contained in this
Prospectus, other than statements of historical fact, should be considered
forward looking statements. Certain important factors that could cause actual
results to differ materially from the Company's expectations (the "Cautionary
Statements") are disclosed in this Prospectus, including, without limitation, in
this "Risk Factors" section. All subsequent written and oral forward looking
statements by or attributable to the Company or persons acting on its behalf are
expressly qualified in their entirety by such Cautionary Statements. Prospective
investors are cautioned not to place undue reliance on these forward looking
statements, which speak only as of the date hereof and are not intended to give
any assurance as to future results. The Company undertakes no obligation to
publicly release any revisions to these forward looking statements to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
Limited Operating History; Accumulated Deficit and Anticipated Future
Losses. The Company is in the development-stage and to date has not generated
any ongoing material revenues. At June 30, 1998, the Company had an accumulated
deficit of $27,895,970 and since then significant losses and decreases in
working capital have occurred and are expected to continue for the foreseeable
future. A substantial portion of the Company's losses have been incurred in
connection with research sponsored by it pursuant to an agreement with Yale
University (the "Yale/MelaRx Agreement") on several product candidates, most of
which are not currently being pursued. The Company continues to have substantial
financial commitments to Yale pursuant to such agreement. The Company will be
required to conduct significant research, development, testing and regulatory
compliance activities which, together with projected general and administrative
expenses, are expected to result in operating losses for at least the next
several years, particularly due to the extended time period before the Company
expects to commercialize its principal products, if ever. There can be no
assurance that the Company's research and development activities will result in
any commercially viable products or that the Company will ever realize revenues
from the sale of any of its products.
Early Stage of Product Development. The Company is engaged in research and
development on a variety of technologies, pharmaceutical compounds and other
chemical or biological compositions or processes for therapeutic uses, primarily
in connection with the treatment of cancer. There has been only limited research
on many of the Company's technologies and results obtained in research and
testing conducted to date are not conclusive as to whether compounds being
investigated by the Company will be safe and effective for their proposed use.
Most of the Company's proposed products are in the early developmental stage,
require significant further research and development and in many cases lead
compounds have not yet been selected. Most of these proposed products were
licensed pursuant to an agreement with Yale University (the "Yale/ OncoRx
Agreement"), which agreement did not provide for ongoing sponsored research. The
Company will need to develop further its own internal research and development
capability to conduct additional research and development activities with
respect to these product candidates. All of the Company's product candidates
require testing and regulatory clearances or approvals, including but not
limited to the Food and Drug Administration (the "FDA"), prior to their
commercial distribution. Accordingly, the Company expects that most of its
products will not be commercially available for a number of years, if ever. The
successful development of any product is subject to the risks of failure
inherent in the development of products or therapeutic procedures based on
innovative technologies. These risks include the possibilities that any or all
of these proposed products or procedures are found to be ineffective or unsafe,
or otherwise fail to receive necessary regulatory clearances or approvals; that
the proposed products or procedures are uneconomical to market or do not achieve
broad market acceptance; that third parties hold proprietary rights that
preclude the Company from marketing them; or that third parties market a
superior or equivalent product. The Company is unable to predict whether its
research and development activities will result in any commercially viable
products or procedures. Further, due to the extended testing and regulatory
review process required before
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marketing clearance can be obtained, the time frames for commercialization of
any products or procedures are long and uncertain.
Uncertainty and Risks of TAPET(TM) Technology. The use of bacteria in
general, and salmonella in particular, to deliver genes or gene products is a
new technology, and existing preclinical and clinical data on the safety and
efficacy of this technology are very limited. No products utilizing the TAPET
technology are in human clinical trials, and the results of preclinical studies
do not predict safety or efficacy in humans. TAPET uses salmonella bacteria for
delivery of genes or enzymes to tumors. Possible serious side effects of the
Company's TAPET program include bacterial infections, particularly the risk of
sepsis, a serious and often fatal bacterial infection of the blood. The Company
is bioengineering the bacterial vectors used in TAPET in an effort to eliminate
virulence factors and to minimize the risk of such side effects. However, there
can be no assurance that unacceptable side effects will not be discovered during
preclinical and clinical testing of the Company's potential products.
Need for Significant Additional Funds and Collaborative Arrangements;
Potential Default Under License Agreements. The Company believes that its
current cash plus the interest income thereon should be sufficient to enable the
Company to continue funding its operations at currently budgeted spending levels
through April 1999. However, the Company's cash requirements may vary materially
from those now planned because of results of research and development, results
of product testing, relationships with strategic partners, changes in the focus
and direction of the Company's research and development programs, competitive
and technological advances, the regulatory process in the United States and
abroad and other factors. The Company received an opinion from its auditors,
filed as part of its Annual Report for the fiscal year ended December 31, 1997,
expressing substantial doubt as to its ability to continue as a going concern.
The Company addressed the immediate need for additional capital by raising funds
through a private placement of its securities, although the Company expects to
require additional financing to fund its longer-term activities and may require
additional capital for acquisitions and new development projects.
The Company's working capital is not sufficient to fund the Company's
operations through the commercialization of the first therapeutic products
resulting from its research and development projects. The Company will require
substantial additional funds for its research and product development programs,
for operating expenses and to pursue regulatory clearances. The Company has also
incurred significant financial commitments to academic collaborators in
connection with license and sponsored research agreements and will incur
significant additional financial obligations. Adequate funds for these purposes,
whether through financial markets or collaborative or other arrangements with
corporate partners or from other sources, may not be available when needed.
Other than with respect to its collaboration with Boehringer Ingelheim
International GmbH ("BI") with regard to Promycin and its license agreements
with SanMar Laboratories with regard to Melasyn(R), the Company has no
commitments to obtain any additional funds and there can be no assurance that
additional funds can be obtained on terms acceptable to the Company, if at all.
Insufficient funds may require the Company to delay, scale back or eliminate
certain of its research and product development programs or license third
parties to commercialize products or technologies that the Company would
otherwise seek to develop itself. Additionally, if funds are insufficient, the
Company may be unable to meet its obligations under its license agreements,
research agreements or other collaborative agreements, make research payments or
commercialize the technologies licensed under such agreements.
In the event that any payments required to be made to academic
collaborators or licensors are not made in a timely fashion, or if the Company
is otherwise in default under agreements with such parties, such parties will
have the right to terminate their research and license arrangements with the
Company. Termination of any such arrangements would have a material adverse
effect on the Company by rendering it unable to continue development of or to
commercialize all or a portion of its product candidates licensed under that
agreement. See "-- Risks Relating to Sponsored Research and License Agreements."
Dependence on Patents and Trade Secrets; Uncertainty of Patent Position and
Trade Secrets. The Company's success will depend to a significant extent on its
ability, or the ability of its licensors, to obtain and maintain patent
protection on technologies and products and preserve trade secrets and to
operate without infringing the proprietary rights of others. The patent
situation in the field of biopharmaceutical products
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generally is highly uncertain and involves complex legal, scientific and factual
questions. To date there has emerged no consistent policy regarding the breadth
of claims allowed in biopharmaceutical patents. Accordingly, there can be no
assurance that patent applications filed by or on behalf of the Company will
result in patents being issued or that, if issued, the patents will afford
protection against competitors with similar technology. Furthermore, there can
be no assurance that others will not independently develop similar technologies
or duplicate any technology developed by the Company. Because of the extensive
time required for development, testing and regulatory review of a potential
product, it is possible that before any of the Company's potential products can
be commercialized, any related patent may expire, or remain in existence for
only a short period following commercialization, thus reducing any advantage of
the patent. Moreover, composition of matter patent protection may not be
available for certain of the Company's product candidates. Specifically,
composition of matter patent protection is not likely to be available for 3TC, a
novel nucleoside analog licensed pursuant to the Yale/OncoRx Agreement, and is
not available for Promycin (porfiromycin). While the Company may seek
alternative protection, there can be no assurance that the Company will be able
to secure meaningful proprietary protection for any of its proposed products.
The Company's processes and potential products may conflict with patents
which have been or may be granted to competitors, universities or others. As the
biopharmaceutical industry expands and more patents are issued, the risk
increases that the Company's processes and potential products may give rise to
claims that they infringe the patents of others. Such other persons could bring
legal actions against the Company claiming damages and seeking to enjoin
clinical testing, manufacturing and marketing of the affected product or
process. If any such actions are successful, in addition to any potential
liability for damages, the Company could be required to obtain a license in
order to continue to conduct clinical tests, manufacture or market the affected
product or use the affected process. There can be no assurance that the Company
would prevail in any such action or that any license required under any such
patent would be made available on acceptable terms, if at all. If the Company
becomes involved in litigation, litigation could consume a substantial portion
of the Company's resources.
The Company is aware that patent applications have been filed by and/or
United States patents have been issued to, IAF BioChem International, Inc.,
Emory University, Glaxo Group Limited, University of Georgia Research
Foundation, Inc., and The Wellcome Foundation Limited of Unicorn House that
relate to the subject matter of patent applications licensed to the Company,
namely, 3TC and/or its use as an anti-hepatitis B virus ("HBV") agent. The
Company is also aware that patent applications have been filed by Biochem Pharma
that relate to subject matter licensed to the Company, namely b-L-FddC and its
use as an anti-HBV agent.
The Company cannot predict whether its or its competitors' patent
applications will result in valid patents being issued. Litigation, which could
result in substantial cost to the Company, may also be necessary to enforce the
Company's patent and proprietary rights and/or to determine the scope and
validity of the patents or proprietary rights of others. The Company may
participate in interference proceedings which may in the future be declared by
the United States Patent and Trademark Office to determine priority of
invention, which could result in substantial cost to the Company.
To the extent that consultants, key employees or other third parties apply
technological information independently developed by them or by others to the
Company's proposed projects, third parties may own all or part of the
proprietary rights to such information, and disputes may arise as to the
ownership of the proprietary rights to such information which may not be
resolved in favor of the Company. To the extent that the Company requires rights
to any resulting technologies, it may be necessary to negotiate additional
license agreements or the Company may be unable to utilize such technologies.
See "-- Risks Relating to Sponsored Research and License Agreements."
The Company may also rely on trade secrets that it may seek to protect, in
part, through confidentiality agreements with employees and other parties. There
can be no assurance that these agreements will not be breached, that the Company
will have adequate remedies for any breach or that the Company's trade secrets
will not otherwise become known to or independently developed by competitors.
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Risks Relating to Sponsored Research and License Agreements. The Company
has incurred significant financial commitments to academic collaborators in
connection with licenses and sponsored research agreements. In particular,
through December 31, 1997, the Company has paid to Yale approximately $4,800,000
pursuant to the Yale/MelaRx Agreement. The Company continues to have substantial
funding commitments under the Yale/MelaRx Agreement and other sponsored research
agreements, whether or not such research results in suitable product candidates.
Moreover, the Company generally does not have the right to control the research
being conducted pursuant to sponsored research agreements and there can be no
assurance that such research will result in products which the Company will
pursue. In particular, the Company is currently making unrestricted grants to
Yale to support certain research, including research in Dr. Yung-Chi Cheng's
laboratory. There can be no assurance that these funds will be used to conduct
research relating to products which the Company desires to pursue. Additionally,
to the extent that such research results in technologies not licensed to the
Company pursuant to the Yale/OncoRx Agreement, it may be necessary to negotiate
additional license agreements or the Company may be unable to utilize such
technologies.
Certain rights of the Company arise under the Yale/OncoRx Agreement
pursuant to which the Company obtained a license for certain technology
developed in the laboratories of Dr. Alan C. Sartorelli, the Chairman of the
Company's Scientific Advisory Board, and Dr. Yung-Chi Cheng and Dr. James J.
Fischer, members of the Scientific Advisory Board. The Company does not have the
rights to the results of current or future research being performed by Dr.
Sartorelli, Dr. Cheng or Dr. Fischer. There can be no assurance that the Company
will be successful in obtaining the rights to future research performed by Dr.
Sartorelli, Dr. Cheng or Dr. Fischer.
Dependence on Key Personnel. Because of the specialized scientific nature
of the Company's business, it is dependent upon its ability to attract and
retain qualified management, scientific and technical personnel. The Company is
also dependent upon other key employees, collaborators at other research
institutions and the Company's scientific advisors. John Spears, the Company's
President and Chief Executive Officer, may be considered a key employee. The
loss of any individuals upon which the Company is dependent could have a
material adverse effect on the Company. Competition among biopharmaceutical and
biotechnology companies for qualified employees is intense. The loss of
qualified employees, or an inability to attract, retain and motivate any
additional highly skilled employees required for the expansion of the Company's
activities, could adversely affect its business and prospects. There can be no
assurance that the Company will be able to retain and continue to attract
qualified employees.
Dependence on Others; No Manufacturing and Marketing Capability. The
Company's strategy for the research, development and commercialization of
certain of its products entails entering into various arrangements with
corporate partners, licensors, licensees and others, and is dependent upon the
subsequent success of these outside parties in performing their
responsibilities. The Company may also rely on its collaborative partners to
conduct research efforts and clinical trials, to obtain regulatory approvals and
to manufacture and to market certain of the Company's products. In particular,
the Company has engaged a contract research organization to conduct the Phase
III clinical studies of porfiromycin. Although the Company believes that parties
to any such arrangements would have an economic motivation to succeed in
performing their contractual responsibilities, the amount and timing of
resources to be devoted to these activities may not be within the control of the
Company. There can be no assurance that such parties will perform their
obligations as expected or that any revenue will be derived from such
arrangements. There can also be no assurance that the Company will be successful
in establishing any additional collaborative arrangements or that, if
established, the parties to such arrangements will be successful in
commercializing products.
The Company has no experience in manufacturing or marketing any therapeutic
products. The Company currently does not have the resources to manufacture or
market by itself on a commercial scale any products that it may develop. The
Company currently intends to outsource some or all manufacturing requirements it
may have. While the Company believes that it will be able to enter into contract
manufacturing arrangements, there can be no assurance that it will be able to
enter into suitable arrangements. In the event that the Company decides to
establish a manufacturing facility, the Company will require substantial
additional funds
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and will be required to hire and retain significant additional personnel and
comply with the extensive FDA-mandated good manufacturing practices ("GMP")
applicable to such a facility.
Uncertainty of Government Regulatory Requirements; Lengthy Approval
Process. The FDA and comparable agencies in foreign countries impose
substantial requirements upon the development, manufacturing and marketing of
drugs, biologics and medical devices through the regulation of laboratory and
clinical testing procedures, manufacturing, labeling, registration,
notification, clearance or approval, marketing, distribution, recordkeeping,
reporting and promotion, and other costly and time-consuming procedures.
Satisfaction of clearance or approval requirements typically takes several years
or more and varies substantially based upon the type, complexity and novelty of
the product. The Company has obtained Orphan Drug status for porfiromycin and
intends to seek Orphan Drug designation for products where appropriate, where no
patent protection is feasible. There can be no assurance that Orphan Drug status
will be obtained for any of the Company's other proposed products.
The effect of government regulation may be to delay marketing of new
products for a considerable or indefinite period of time, to impose costly
procedures upon the Company's activities and to furnish a competitive advantage
to larger companies that compete with the Company. There can be no assurance
that FDA or other regulatory clearance or approval for any products developed by
the Company will be granted on a timely basis, if at all, or, once granted, that
clearances or approvals will not be withdrawn or other regulatory action taken
which might limit the Company's ability to market its proposed products. Any
such delay in obtaining or failure to obtain or maintain such clearances or
approvals would adversely affect the manufacturing and marketing of the
Company's products and the ability to generate product revenue.
Uncertainty Related to Health Care Reimbursement and Reform Measures. The
Company's success in generating revenue from sales of therapeutic products and
medical devices may depend, in part, on the extent to which reimbursement for
the costs of such products and medical devices and related treatments will be
available from government health administration authorities, private health
insurers and other organizations. Significant uncertainty exists as to the
reimbursement status of newly-approved health care products. There can be no
assurance that adequate third-party insurance coverage will be available for the
Company to establish and maintain price levels sufficient for realization of an
appropriate return on its investment in developing new therapies or products.
Government and other third-party payors are increasingly attempting to contain
health care costs by limiting both coverage and the level of reimbursement of
new therapeutic products and medical devices approved for marketing by the FDA
and by refusing, in some cases, to provide any coverage of uses of approved
products for disease indications other than those for which the FDA has granted
marketing approval. If adequate coverage and reimbursement levels are not
provided by government and third-party payors for uses of the Company's
therapeutic products and medical devices, the market acceptance of these
products could be adversely affected.
In addition, Congress regularly considers numerous proposals relating to
healthcare reform which, if adopted, could affect the amount paid for
pharmaceutical products and medical procedures. The Company is unable to predict
which proposals, if any, will be adopted, or the effect such proposals may have
on the Company's operations. Future changes in federal, state or local
regulation (or in the interpretation of current regulations) could have a
material adverse effect on the Company.
Competition. The Company is engaged in a rapidly evolving field.
Competition from other pharmaceutical companies, biotechnology companies and
research and academic institutions is intense and expected to increase. The
market for cancer products is large and growing rapidly, and will attract new
entrants. Many companies engaged in the biotechnology and biopharmaceutical
sectors have focused on cancer and most of these companies have substantially
greater financial and other resources and development capabilities than the
Company and have substantially greater experience in undertaking pre-clinical
and clinical testing of products, obtaining regulatory approvals and
manufacturing and marketing pharmaceutical products. Accordingly, certain of the
Company's competitors may succeed in obtaining approval for products more
rapidly than the Company. Other companies may succeed in developing and
commercializing products earlier than the Company that are safer and more
effective than those proposed to be developed by the Company. In addition to
competing with universities and other research institutions in the development
of products, technologies and
7
<PAGE> 9
processes, the Company may compete with other companies in acquiring rights to
products or technologies from universities. There can be no assurance that the
Company will develop products that are more effective or achieve greater market
acceptance than competitive products, or that the Company's competitors will not
succeed in developing products and technologies that are more effective than
those being developed by the Company or that would render the Company's products
and technologies less competitive or obsolete.
Risks of Technological Obsolescence. The areas in which the Company is
developing, distributing, and/or licensing products involve rapidly developing
technology. Others may develop products which may render products being
developed, distributed or licensed by the Company obsolete or uneconomical or
result in products superior to the Company's products.
No Product Liability Insurance. The use or misuse of Company products in
clinical trials and the marketing of any pharmaceutical products it may develop
may expose the Company to product liability claims. The Company does not
currently have any product liability insurance. Although in the future the
Company may seek to obtain product liability insurance, there can be no
assurance that it will be able to obtain or maintain such insurance on
acceptable terms, that such insurance will provide adequate coverage against
potential liabilities or that a product liability claim will not have a material
adverse effect on the Company.
Significant Influence of Insiders; Potential Anti-Takeover Provisions. As
of October 15, 1998, the Company's directors and executive officers beneficially
owned approximately 15% of the outstanding Common Stock of the Company. As a
result, such directors and officers will be able to significantly influence the
election of all of the Company's directors and otherwise influence control of
the Company's operations. The Company's Board of Directors is also authorized to
issue from time to time, without stockholder authorization, shares of preferred
stock, in one or more designated series or classes. The Company is also subject
to a Delaware statute regulating business combinations. Any of these provisions
could discourage, hinder or preclude an unsolicited acquisition of the Company
and could make it less likely that stockholders receive a premium for their
shares as a result of any such attempt.
Outstanding Warrants, Options and Convertible Preferred Stock. The Company
has outstanding (i) 1,071,333 Class A Warrants to purchase an aggregate of
1,071,333 shares of Common Stock and 1,071,333 Class B Warrants; (ii) 1,308,632
Class B Warrants to purchase 1,308,632 shares of Common Stock; (iii) Purchase
Options granted to assignees of the underwriter of the Company's initial public
offering (the "Underwriter") to purchase an aggregate of 1,091,503 shares of
Common Stock, assuming exercise of the underlying warrants (the "Underwriter
Purchase Option"); (iv) warrants to purchase 545,727 shares of Common Stock held
by employees of Paramount Capital, Inc. which were granted to Paramount Capital,
Inc. in connection with a private financing; and (v) options to purchase
1,644,737 shares of Common Stock, including 1,297,175 shares granted under its
Amended and Restated 1993 Stock Option Plan (the "Plan"). In addition, the
Company has 202,825 shares of Common Stock reserved for issuance upon exercise
of options which are available to be granted under the Plan. Holders of such
warrants and options are likely to exercise them when, in all likelihood, the
Company could obtain additional capital on terms more favorable than those
provided by warrants and options. Further, while these warrants and options are
outstanding, the Company's ability to obtain additional financing on favorable
terms may be adversely affected. In addition, the Company has outstanding
616,656 shares of Class A Convertible Preferred Stock which is convertible into
1,712,933 shares of Common Stock and 5,000 shares of 5% Convertible Preferred
Stock Series 1998 which is convertible into 1,406,250 shares of Common Stock.
The holders of the Underwriter Purchase Option are Selling Securityholders
hereunder. See "Selling Securityholders."
Possible Delisting of Securities From The Nasdaq Stock Market. While the
Company's Common Stock meets the current Nasdaq listing requirements, there can
be no assurance that the Company will meet the criteria for continued listing.
Continued inclusion on Nasdaq generally requires that (i) the Company maintain
at least $2,000,000 in net tangible assets, a $35,000,000 market capitalization
or net income of at least $500,000 in two of the three prior years, (ii) at
least 500,000 shares in the public float valued at $1,000,000 or more, (iii) a
minimum Common Stock bid price of $1.00, (iv) at least two active market makers,
and (v) at least 300 shareholders of Common Stock. If the Company is unable to
satisfy Nasdaq's
8
<PAGE> 10
maintenance requirements, its securities may be delisted from Nasdaq. In such
event, trading, if any, in the Common Stock would thereafter be conducted in the
over-the-counter market in the so-called "pink sheets" or the NASD's "Electronic
Bulletin Board." Consequently, the liquidity of the Company's securities could
be impaired, not only in the number of securities which could be bought and
sold, but also through delays in the timing of transactions, reduction in
security analysts' and the news media's coverage of the Company and lower prices
for the Company's securities than might otherwise be attained.
Potential Adverse Effect of Redemption of Warrants. The Warrants may be
redeemed by the Company at a redemption price of $.05 per Warrant upon not less
than 30 days' prior written notice if the closing bid price of the Common Stock
shall have averaged in excess of $7.30 per share for the Class A Warrants and
$9.80 per share with respect to the Class B Warrants, for 30 consecutive
business days ending within 15 days of the notice. Redemption of the Warrants
could force the holders to exercise the Warrants and pay the exercise price
therefor at a time when it may be disadvantageous for the holders to do so, to
sell the Warrants at the then current market price when they might otherwise
wish to hold the Warrants, or to accept the redemption price which, at the time
the Warrants are called for redemption, is likely to be substantially less than
the market value of the Warrants.
Current Prospectus and State Registration to Exercise Warrants. Holders of
Warrants will only be able to exercise the Warrants if (i) a current prospectus
under the Securities Act relating to the securities underlying the Warrants is
then in effect and (ii) such securities are qualified for sale or exempt from
qualification under the applicable securities laws of the states in which the
various holders of Warrants reside. Although the Company has undertaken and
intends to use its best efforts to maintain a current prospectus covering the
securities underlying the Warrants, there can be no assurance that the Company
will be able to do so. The value of the Warrants may be greatly reduced if a
prospectus covering the securities issuable upon the exercise of the Warrants is
not kept current or if the securities are not qualified, or exempt from
qualification, in the states in which the holders of Warrants reside. If and
when the Warrants become redeemable by the terms thereof, the Company may
exercise its redemption right even if it is unable to qualify the underlying
securities for sale under all applicable state securities laws. Holders of
Warrants called for redemption residing in states where the underlying
securities have not been qualified for sale would generally still be able to
sell their Warrants at the then market price thereof.
Risks of Low-Priced Stock. If the Company's securities were delisted from
Nasdaq (See "-- Possible Delisting of Securities From The Nasdaq Stock Market"),
they could become subject to Rule 15g-9 under the Exchange Act, which imposes
additional sales practice requirements on broker-dealers that sell such
securities except in transactions exempted by such Rule, including transactions
meeting the requirements of Rule 505 or 506 of Regulation D under the Securities
Act and transactions in which the purchaser is an institutional accredited
investor (as defined) or an established customer (as defined) of the broker or
dealer. For transactions covered by this rule, a broker-dealer must make a
special suitability determination for the purchaser and have received the
purchaser's written consent to the transaction prior to sale. Consequently, such
rule may adversely affect the ability of broker-dealers to sell the Company's
securities and may adversely affect the ability of purchasers in this offering
to sell any of the securities acquired hereby in the secondary market.
Commission regulations define a "penny stock" to be any non-Nasdaq equity
security that has a market price (as therein defined) of less than $5.00 per
share or with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction by a broker-dealer involving a penny stock,
unless exempt, the rules require delivery, prior to any transaction in a penny
stock, of a disclosure schedule prepared by the Commission relating to the penny
stock market. Disclosure is also required to be made about commissions payable
to both the broker-dealer and the registered representative and current
quotations for the securities. Finally, monthly statements are required to be
sent disclosing recent price information for the penny stock held in the account
and information on the limited market in penny stocks.
The foregoing required penny stock restrictions will not apply to the
Company's securities if such securities continue to be listed on Nasdaq and have
certain price and volume information provided on a current and continuing basis
or meet certain minimum net tangible assets or average revenue criteria. There
9
<PAGE> 11
can be no assurance that the Company's securities will continue to qualify for
exemption from these restrictions. In any event, even if the Company's
securities were exempt from such restrictions, it would remain subject to
Section 15(b)(6) of the Exchange Act, which gives the Commission the authority
to prohibit any person that is engaged in unlawful conduct while participating
in a distribution of a penny stock from associating with a broker-dealer or
participating in a distribution of a penny stock, if the Commission finds that
such a restriction would be in the public interest. If the Company's securities
were subject to the rules on penny stocks, the market liquidity for the
Company's securities could be severely adversely affected.
Effects of Current Offering on Market Price. Future sales of Common Stock,
Class A Warrants and Class B Warrants in the public market by existing
stockholders pursuant to this shelf registration statement or otherwise, could
have an adverse effect on the price of the Company's securities. 2,950,152
shares of Common Stock, 280,501 Class A Warrants and 561,602 Class B Warrants
will have been registered hereby under the Securities Act of 1933, as amended,
for resale to the public, which, on October 15, 1998, beneficially constituted
approximately 18%, 20% and 30% of the Company's Common Stock, Class A Warrants
and Class B Warrants, respectively. As of October 19, 1998, 1,009,327 shares of
Common Stock underlying vested options are eligible for resale and an additional
635,410 shares may be sold from time to time as additional outstanding options
vest. Sales of Common Stock or other securities, or the possibility of such
sales, in the public market may adversely affect the market price of the Common
Stock or the other securities offered hereby. Historically, the Company's
securities have been thinly traded. This low trading volume may have had a
significant effect on the market price of the Company's securities, which may
not be indicative of the market price in a more liquid market.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sales of
Securities by the Selling Securityholders. See "Selling Securityholders" for a
list of those persons and entities receiving the proceeds from the sales of the
Securities offered hereby.
BACKGROUND OF THE COMPANY
OncoRx Inc. ("Old OncoRx") was founded in May 1993 to engage in the
discovery, development and marketing of products for the treatment of cancer and
cancer-related disorders. Prior to the Merger described below, Old OncoRx's
business consisted principally of entering into a license agreement with Yale
University (the "Yale/OncoRx Agreement") in August 1994. MelaRx Pharmaceuticals,
Inc. ("MelaRx") was formed in March 1992 to engage in the research and
development, pursuant to an agreement with Yale University (the "Yale/MelaRx
Agreement") of therapeutic, cosmetic and other products which are derived from
technology relating to melanin and the control of the effect of ultraviolet
radiation upon the skin and related systems. In April 1995, Old OncoRx was
merged (the "Merger") into OncoRx Research Corp., a wholly-owned subsidiary of
MelaRx, and stockholders of Old OncoRx were issued 2,654,038 shares of Common
Stock and 23,859 shares of Preferred Stock of the Company, and an option to
acquire 750,000 shares of the Common Stock of Old OncoRx was converted into an
option to acquire 286,312 shares of Common Stock. Pursuant to the Merger, the
name of MelaRx was changed to OncoRx, Inc. Simultaneously therewith, each share
of Common Stock of MelaRx was converted into approximately 0.16 shares of Series
A Common Stock (resulting in 2,000,000 shares of outstanding Series A Common
Stock) and each option and warrant to acquire Common Stock was converted into
the right to receive approximately 0.16 shares of Series A Common Stock (the
"Recapitalization").
Additionally, prior to the Merger, certain founders of MelaRx deposited
710,994 of their shares of Series A Common Stock of the Company (after giving
effect to the Recapitalization) in escrow. The shares deposited in escrow were
canceled upon the closing of the Company's initial public offering in August
1995. Upon such cancellation, each of the remaining 1,289,006 shares of the
Series A Common Stock of the Company previously held by MelaRx stockholders were
adjusted to equal approximately 1.55 shares of Common Stock of the Company (a
total of 2,000,000 shares) and, as a result, the number of shares of outstanding
Common Stock remained unchanged after such cancellation. The number of shares
subject to
10
<PAGE> 12
options and warrants granted by MelaRx prior to the Merger were also adjusted
into the right to acquire approximately 1.55 shares of Common Stock for each
share of Series A Common Stock subject to such options or warrants.
In April 1996 the name of the Company was changed from OncoRx, Inc. to Vion
Pharmaceuticals, Inc.
The Company's executive offices are located at 4 Science Park, New Haven,
CT 06511 and its telephone number is (203) 498-4210.
11
<PAGE> 13
RECENT DEVELOPMENTS
Warrant Exchange Offer. On May 19, 1998, the Company commenced an exchange
offer whereby it offered to exchange for each outstanding Class A Warrant, at
the holder's option, either (i) 0.438 shares of the Company's Common Stock (the
"Class A All Share Option"), or (ii) (A) 0.254 shares of Common Stock and (B)
$0.66 in cash (the "Class A Cash plus Share Option") (together, the "Class A
Exchange Offer"). The Company simultaneously commenced an exchange offer whereby
it offered to exchange for each outstanding Class B Warrant, at the holder's
option, either (i) 0.212 shares of Common Stock (the "Class B All Share Option")
or (ii) (A) 0.123 shares of Common Stock and (B) $0.32 in cash (the "Class B
Cash plus Share Option") (together the "Class B Exchange Offer", and together
with the Class A Exchange Offer, the "Exchange Offer"). The Exchange Offer
terminated on June 29, 1998. An aggregate of 3,209,806 Class A Warrants
(representing approximately 75.3% of the Class A Warrants outstanding) and
1,881,835 Class B Warrants (representing approximately 59.5% of the Class B
Warrants outstanding) were validly tendered for exchange pursuant to the
Exchange Offer. The Company accepted for exchange all validly tendered Class A
Warrants and Class B Warrants. Of the 3,209,806 Class A Warrants tendered for
exchange, holders of 3,150,704 Class A Warrants elected the Class A All Share
Option (resulting in the issuance of 1,380,014 shares of Common Stock) and
holders of 59,102 Class A Warrants elected the Class A Cash plus Share Option
(resulting in the issuance of 15,013 shares of Common Stock and $39,007.32 in
cash). Of the 1,881,835 Class B Warrants tendered for exchange, holders of
1,870,315 Class B Warrants elected the Class B All Share Option (resulting in
the issuance of 396,508 shares of Common Stock) and holders of 11,520 Class B
Warrants elected the Class B Cash plus Share Option (resulting in the issuance
of 1,417 shares of Common Stock and $3,686.40 in cash).
Private Placement of Series 1998 Preferred Stock. On June 30, 1998, the
Company completed a private placement of 5,000 shares of 5% Convertible
Preferred Stock Series 1998 ("Series 1998 Preferred Stock"), at $1,000 per
share, resulting in net proceeds to the Company of $4,738,796. Each share of
Series 1998 Preferred Stock is initially convertible into approximately 277.778
shares of the Company's common stock. The shares of Series 1998 Preferred Stock
are non-voting (except as required by applicable law) and pay quarterly in-kind
dividends of 5% per annum. The issuance of the Series 1998 Preferred Stock
triggered certain anti-dilution adjustment provisions in the Company's warrants,
resulting in the issuance of additional warrants and a reduction in the exercise
price thereof. See "Warrant Anti-Dilution Adjustment."
Warrant Anti-Dilution Adjustment. Pursuant the Warrant Agreement governing
the rights of the Class A Warrants and the Class B Warrants, the issuance of the
Series 1998 Preferred Stock has resulted in an adjustment to the exercise price
of the Class A Warrants and the Class B Warrants and a corresponding
distribution of additional Class A Warrants and Class B Warrants.
Specifically, on September 8, 1998 (the "Payment Date") each holder of a
Class A Warrant at the close of business on August 26, 1998 (the "Record Date")
received an additional 0.02 Class A Warrants (2 per 100 outstanding) and the
exercise price of the Class A Warrants was reduced from $4.73 to $4.63. In
addition, on the Payment Date each holder of a Class B Warrant at the close of
business on the Record Date received an additional 0.02 Class B Warrants (2 per
100 outstanding) and the exercise price of the Class B Warrants was reduced from
$6.37 to $6.23.
Class B Preferred Stock Conversion Agreement. On August 11, 1998, the
Company reached an agreement with each of the holders of its Class B Convertible
Preferred Stock (the "Class B Preferred Stock"), which provided that the holders
of the Class B Preferred Stock would immediately convert an aggregate of 2,892
shares of Class B Preferred Stock, constituting all of the outstanding Class B
Preferred Stock, into an aggregate of 1,171,994 shares of Common Stock. The
number of shares of Common Stock issued represented a ten percent premium over
the number of shares otherwise issuable upon conversion of the Class B Preferred
Stock. In addition, holders of the Class B Preferred Stock waived their
"anti-dilution" rights arising from the issuance of the Series 1998 Preferred
Stock. See "-- Private Placement of Series 1998 Preferred Stock."
12
<PAGE> 14
SELLING SECURITYHOLDERS
The following table sets forth certain information as of October 15, 1998
(except as otherwise indicated), as to the security ownership of the Selling
Securityholders. Except as set forth below, none of the Selling Securityholders
has had a material relationship with the Company or any of its predecessors or
affiliates within the past three years. Unless otherwise indicated, each Selling
Stockholder will hold less than one percent of the applicable class of
securities being sold after the offering and is selling all of its securities of
the Company pursuant to this offering.
<TABLE>
<CAPTION>
CLASS A CLASS B
WARRANTS WARRANTS COMMON STOCK
NAME BEING SOLD BEING SOLD BEING SOLD
- ---- ---------- ---------- ------------
<S> <C> <C> <C>
Elliott Associates, L.P.(1)..................... 0 0 890,304
Westgate International, L.P.(2)................. 0 0 890,304
Martin Bell(3).................................. 28,050 56,100 109,150
Alison Brown.................................... 337 674 1,311
J. Morton Davis................................. 19,074 38,148 74,222
Steve Monte..................................... 225 450 875
David Nachamie.................................. 561 1,122 2,183
Kalman Renov(4)................................. 104,346 208,692 406,038
Michael Siciliano............................... 561 1,122 2,183
Esther Stahler.................................. 72,296 152,592 296,888
Brian Wasserman................................. 1,122 2,244 4,366
Kenton Wood(5).................................. 2,244 4,488 8,732
D.H. Blair & Co., Inc.(6)....................... 28,050 56,100 109,150
D.H. Blair Investment Banking Corp.(7).......... 19,074 38,148 74,222
Steven A. Sherman(8)............................ 561 1,122 2,183
Colin Winthrop & Co., Inc....................... 0 0 16,514
Delaware Charter Guarantee Ttee FBO
Anthony G. Balestrieri Managed Account........ 0 0 5,695
Delaware Charter Guarantee Ttee FBO
Esther M. Balestrieri IRA..................... 0 0 5,695
Delaware Charter Guarantee Ttee FBO
Anthony P. Balestrieri Roth IRA............... 0 0 50,137
</TABLE>
- ---------------
(1) Elliott Associates, L.P. ("Elliott") is the beneficial owner of 1,253,914
shares of Common Stock which represents 8.63% of the Company's outstanding
Common Stock prior to the offering and will represent approximately 3.5% of
the Company's outstanding Common Stock if all the Common Stock being
registered in this offering is sold. The address of Elliott Associates, L.P.
is 712 Fifth Avenue, New York, NY 10019. Information set forth herein is
compiled from a Schedule 13D and Schedule 13D Amendment No. 1 filed with the
Commission on August 14, 1998 and September 3, 1998, respectively, and is as
of September 3, 1998.
(2) Westgate International, L.P. ("Westgate") is the beneficial owner of
1,256,356 shares of Common Stock which represents 8.65% of the Company's
outstanding Common Stock prior to the offering and will represent
approximately 3.5% of the Company's outstanding Common Stock if all the
Common Stock being registered in this offering is sold. The address of
Westgate is c/o Midland Bank Trust Corporation (Cayman) Limited, Mary
Street, Grand Cayman, Cayman Islands. One of Elliott's general partners also
controls Westgate's investment manager. Information set forth herein is
compiled from a Schedule 13D and Schedule 13D Amendment No. 1 filed with the
Commission on August 14, 1998 and September 3, 1998, respectively, and is as
of September 3, 1998.
(3) Mr. Bell is also the holder of an additional 1,242 shares of Common Stock.
(4) Kalman Renov is the beneficial owner, in addition to the securities being
offered hereby, of (i) 22,528 shares of Common Stock owned by his wife Ruki
Renov, (ii) 102,257 shares of Common Stock, (iii) an
13
<PAGE> 15
aggregate of 31,539 shares of Common Stock owned by his children, (iv) 2,244
shares issuable upon exercise of 1,122 Class A Warrants owned by a family
partnership of which Mr. Renov is president, and (v) the securities being
sold hereunder by D.H. Blair & Co., Inc. (see note 6, below). Mr. Renov and
his wife are shareholders of D.H. Blair & Co., Inc. Common Stock
beneficially owned by Mr. Renov represents 4.7% of the Company's outstanding
Common Stock prior to the offering and will represent 1.1% of the Company's
outstanding Common Stock after the offering. Although Mr. Renov is including
securities owned by his wife in his aggregate beneficial ownership, he
expressly disclaims beneficial ownership of all securities held by Ms.
Renov. Mr. Renov's address is c/o Laidlaw & Co., 100 Park Avenue, 25th
Floor, New York, NY 10017.
(5) Mr. Wood is also the holder of an additional 10,000 shares of Common Stock.
(6) Kalman Renov is a stockholder of D.H. Blair & Co., Inc. See note 4.
(7) D.H. Blair Investment Banking Corp. acted as underwriter of the Company's
initial public offering in August 1995.
(8) Mr. Sherman is also the holder of an additional 500 shares of Common Stock.
14
<PAGE> 16
PLAN OF DISTRIBUTION
The Company is registering the Securities on behalf of the Selling
Securityholders. All costs, expenses and fees in connection with the
registration of the Securities offered hereby will be borne by the Company.
Brokerage commissions, if any, attributable to the sale of the Securities will
be borne by the Selling Securityholders. The Company will deliver a Prospectus
to investors who may elect to exercise the Warrants acquired in this offering.
Sales of Securities may be effected from time to time in transactions
(which may include block transactions) on The Nasdaq SmallCap Market, in
negotiated transactions, or a combination of such methods of sale, at fixed
prices, at market prices prevailing at the time of sale, or at negotiated
prices. The Selling Securityholders may effect such transactions by selling
Securities directly to purchasers or to or through broker-dealers which may act
as agents or principals. Such broker-dealers may receive compensation in the
form of discounts, concessions, or commissions from the Selling Securityholders
and/or the purchasers of Securities for whom such broker-dealers may act as
agents or to whom they sell as principal, or both (which compensation as to a
particular broker-dealer might be in excess of customary commissions). The
Selling Securityholders and any broker-dealers that act in connection with the
sale of the Securities might be deemed to be "underwriters" within the meaning
of Section 2(11) of the Securities Act and any commission received by them and
any profit on the resale of the Securities as principal might be deemed to be
underwriting discounts and commissions under the Securities Act. The Selling
Securityholders may agree to indemnify any agent, dealer or broker-dealer that
participates in transactions involving sales of the Securities against certain
liabilities, including liabilities arising under the Securities Act. Liabilities
under the federal securities laws cannot be waived.
Because the Selling Securityholders may be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act, the Selling
Securityholders will be subject to prospectus delivery requirements under the
Securities Act. Furthermore, in the event of a "distribution" of the shares,
such Selling Securityholder, any selling broker or dealer and any "affiliated
purchasers" may be subject to Regulation M under the Exchange Act, which
Regulation would prohibit, with certain exceptions, any such person from bidding
for or purchasing any security which is the subject of such distribution until
his participation in that distribution is completed. In addition, Regulation M
also prohibits any bid or purchase for the purpose of pegging, fixing or
stabilizing the price of Common Stock in connection with this offering.
LEGAL MATTERS
Certain legal matters with respect to the validity of the Securities
offered hereby have been passed upon for the Company by Wiggin & Dana, New
Haven, Connecticut.
EXPERTS
The consolidated financial statements of Vion Pharmaceuticals, Inc.
appearing in Vion Pharmaceuticals, Inc.'s Annual Report (Form 10-KSB) for the
year ended December 31, 1997, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon (which contains an
explanatory paragraph describing conditions that raise substantial doubt about
the Company's ability to continue as a going concern) included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
15
<PAGE> 17
===============================================================================
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE SELLING STOCKHOLDERS. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL OR THE SOLICITATION OF ANY OFFER TO BUY THE COMMON STOCK TO ANY
PERSON IN ANY JURISDICTION WHERE, OR IN ANY CIRCUMSTANCE IN WHICH, SUCH OFFER OR
SOLICITATION MAY NOT LEGALLY BE MADE. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE AFFAIRS OF THE COMPANY OR
THE INFORMATION SET FORTH IN THE PROSPECTUS IS CORRECT AS OF ANY TIMES
SUBSEQUENT TO THE DATE OF THIS PROSPECTUS.
------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
Available Information................... 2
Incorporation of Certain Documents by
Reference............................. 2
Risk Factors............................ 3
Use of Proceeds......................... 10
Background of the Company............... 10
Recent Developments..................... 12
Selling Securityholders................. 13
Plan of Distribution.................... 15
Legal Matters........................... 15
Experts................................. 15
</TABLE>
2,950,152 SHARES OF COMMON STOCK
280,501 REDEEMABLE CLASS A WARRANTS
561,602 REDEEMABLE CLASS B WARRANTS
VION PHARMACEUTICALS, INC.
------------------------
PROSPECTUS
------------------------
October 22, 1998
===============================================================================
<PAGE> 18
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses payable by the Company in connection with the distribution of
the securities being registered hereby are as follows (asterisks indicate an
estimate):
<TABLE>
<CAPTION>
AMOUNT
----------
<S> <C>
SEC Registration Fee........................................ $ 2,407.85
Printing and Engraving Expenses............................. $10,000.00*
Accounting Fees and Expenses................................ 5,000.00*
Legal Fees and Expenses..................................... 15,000.00*
Blue Sky Fees and Expenses.................................. 2,000.00*
Miscellaneous Expenses...................................... 92.15*
----------
Total............................................. $34,500.00*
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Certificate of Incorporation and Bylaws of the Registrant provide that
the Registrant shall indemnify any person to the full extent permitted by the
Delaware General Corporation Law (the "GCL"). Section 145 of the GCL, relating
to indemnification, is hereby incorporated herein by reference.
In accordance with Section 102(a)(7) of the GCL, the Certificate of
Incorporation of the Registrant eliminates the personal liability of directors
to the Registrant or its stockholders for monetary damages for breach of
fiduciary duty as a director with certain limited exceptions set forth in
Section 102(a)(7).
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
2.1 -- Agreement and Plan of Merger among MelaRx Pharmaceuticals,
Inc., OncoRx Research Corp. and OncoRx, Inc. dated as of
April 19, 1995(1)
2.2 -- Certificate of Merger, dated April 20, 1995(1)
4.1 -- Form of Bridge Note(1)
4.2 -- Form of Warrant Agreement for Warrants issued in connection
with the bridge financing(1)
4.3 -- Form of Underwriter's Unit Purchase Option(1)
4.4 -- Form of Placement Agent's Warrant(1)
4.5 -- Form of Warrant Agreement for Class A and Class B
Warrants(1)
5.1 -- Opinion of Wiggin & Dana
23.1 -- Consent of Ernst & Young L.L.P.
23.2 -- Consent of Wiggin & Dana (included in Exhibit 5.1)
24.1 -- Power of Attorney (included on signature page)*
</TABLE>
- ---------------
* Previously filed.
(1) Incorporated by reference to the Company's Registration Statement on Form
SB-2 (File No. 33-93468), effective August 14, 1995.
II-1
<PAGE> 19
ITEM 17. UNDERTAKINGS
(1) The undersigned Registrant hereby undertakes that it will:
(a) File, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act,
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the registration statement, and
(iii) Include any additional or changed material information on the
plan of distribution.
(b) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial
bona fide offering.
(c) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of this offering.
(2) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(3) The undersigned registrant hereby undertakes that it will:
(a) For determining any liability under the Securities Act, treat 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 as part of this registration statement as
of the time it was declared effective.
(b) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration
statement, and the offering of such securities at that time as the initial
bona fide offering of those securities.
II-2
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, 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 New Haven, State of Connecticut on October 21, 1998.
VION PHARMACEUTICALS, INC.
(Registrant)
By: /s/ JOHN A. SPEARS
------------------------------------
Name: John A. Spears
Title: President and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ WILLIAM R. MILLER* Chairman of the Board October 21, 1998
- ---------------------------------------------------
William R. Miller
/s/ JOHN A. SPEARS Director, President and Chief October 21, 1998
- --------------------------------------------------- Executive Officer (Principal
John A. Spears and Executive Officer)
/s/ THOMAS E. KLEIN Vice President -- Finance and October 21, 1998
- --------------------------------------------------- Chief Financial Officer
Thomas E. Klein (Principal Accounting
Officer)
Director
- ---------------------------------------------------
Michel C. Bergerac
/s/ FRANK T. CARY* Director October 21, 1998
- ---------------------------------------------------
Frank T. Cary
Director
- ---------------------------------------------------
James L. Ferguson
/s/ MICHAEL C. KENT* Director October 21, 1998
- ---------------------------------------------------
Michael C. Kent
/s/ ALAN C. SARTORELLI* Director October 21, 1998
- ---------------------------------------------------
Alan C. Sartorelli
/s/ E. DONALD SHAPIRO* Director October 21, 1998
- ---------------------------------------------------
E. Donald Shapiro
Director
- ---------------------------------------------------
Walter Wriston
*By: /s/ THOMAS E. KLEIN
-----------------------------------------------
Thomas E. Klein
Attorney-in-fact
</TABLE>
II-3
<PAGE> 1
Exhibit 5.1
WIGGIN & DANA
ONE CENTURY TOWER
NEW HAVEN, CT 06508
October 21, 1998
Vion Pharmaceuticals, Inc.
4 Science Park
New Haven, CT 06511
Ladies and Gentlemen:
We refer to Amendment No. 1 to the Registration Statement on
Form S-3 (No. 333-61477) (the "Registration Statement") to be filed by Vion
Pharmaceuticals, Inc. (the "Company") with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, relating to 2,950,152
shares of Common Stock, $.01 par value per share, of the Company (the "Common
Stock"), 280,501 Redeemable Class A Warrants (the "Class A Warrants") and
561,602 Redeemable Class B Warrants (the "Class B Warrants") (the Class A
Warrants and Class B Warrants, collectively, the "Warrants", and the Common
Stock and the Warrants, collectively, the "Securities").
As counsel for the Company, we have examined such corporate
records, other documents and such questions of law as we have considered
necessary or appropriate for the purposes of this opinion and, upon the basis of
such examination, advise you that, in our opinion the Securities are legally
issued, fully paid and non-assessable, or when issued upon exercise of Warrants
or other convertible securities in accordance with the terms thereof, will be
legally issued, fully paid and non-assessable.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and the reference to this firm under the caption "Legal
Matters" in the Prospectus contained therein. This consent is not to be
construed as an admission that we are a person whose consent is required to be
filed with the Registration Statement under the provisions of the Securities Act
of 1933.
Very truly yours,
/S/ WIGGIN & DANA
<PAGE> 1
EXHIBIT 23.1
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in Amendment
No. 1 to the Registration Statement (Form S-3 No. 333-61477) and related
Prospectus of Vion Pharmaceuticals, Inc. for the registration of 2,950,152
shares of its common stock, 280,501 Redeemable Class A Warrants, and 561,602
Redeemable Class B Warrants and to the incorporation by reference therein of our
report dated February 6, 1998 with respect to the consolidated financial
statements of Vion Pharmaceuticals, Inc. included in its Annual Report (Form
10-KSB) for the year ended December 31, 1997, filed with the Securities and
Exchange Commission.
/s/ ERNST & YOUNG LLP
Hartford, Connecticut
October 20, 1998
