<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 30, 1999
Registration No.: 333-37049
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Cytoclonal Pharmaceutics Inc.
--------------------------------
(Exact name of Registrant as specified in its charter)
Delaware
------------
(State or other jurisdiction of incorporation or organization)
75-2402409
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(I.R.S. Employer Identification No.)
9000 Harry Hines Boulevard, Dallas, Texas 75235
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(Address of Principal Executive Offices) (Zip Code)
Cytoclonal Pharmaceutics Inc. 1992 Stock Option Plan
----------------------------------------------------
(Full Title of the Plan)
Arthur P. Bollon, Ph.D.
Cytoclonal Pharmaceutics Inc.
9000 Harry Hines Boulevard
Suite 621
Dallas, Texas 75235
-------------------
(Name and Address of Agent For Service)
(214) 353-2922
--------------
(Telephone Number, Including Area Code, of Agent For Service)
Copies to:
Robert H. Cohen, Esq.
Philip Magri, Esq.
Morrison Cohen Singer & Weinstein, LLP
750 Lexington Avenue
New York, New York 10022
(212) 735-8600
===============================================================================
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED PER SHARE OFFERING PRICE REGISTRATION FEE
------------------- ------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C>
common stock, par 440,000 (1)(2) -- -- (3)
value $.01 per share
total registration fee.................................................................... $ (3)
----------
</TABLE>
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(1) Shares of common stock issuable upon the exercise of options granted
under the Cytoclonal Pharmaceutics Inc. 1992 Stock Option Plan
registered with the SEC on October 2, 1997 on registration statement on
Form S-8 (File No.: 333-37049).
(2) In addition, pursuant to Rule 416(c) under the Securities Act of 1933,
this registration statement also covers an indeterminate amount of
interests to be offered or sold pursuant to the employee benefit plan
described herein.
(3) Fee previously paid. No registration fee required pursuant to General
Instruction E to Form S-8.
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<PAGE> 3
EXPLANATORY NOTE
On October 2, 1997, we filed a registration statement on Form S-8 (File
No.: 333-37049) with the Securities and Exchange Commission, to register options
to purchase 440,000 shares of common stock under our 1992 Stock Option Plan.
We are filing this registration statement on Form S-8 to file a reoffer
prospectus to permit certain "affiliates," as that term is defined in the
Securities Act of 1933, listed in the Selling Stockholder table included in the
prospectus to resell their shares of common stock issuable upon the exercise of
options granted to them pursuant to the 1992 Stock Option Plan.
We incorporate by reference the registration statement on Form S-8
(File No.: 333-37049) we filed with the SEC on October 2, 1997.
iii
<PAGE> 4
PROSPECTUS
CYTOCLONAL PHARMACEUTICS INC.
440,000 SHARES OF COMMON STOCK
This reoffer prospectus is to be used for the resale of up to 440,000
shares of our common stock, 259,000 of which is beneficially owned by affiliates
listed in the "Selling Stockholder" table included in this prospectus, issuable
upon the exercise of options granted under our 1992 Stock Option Plan.
Selling stockholders may sell their shares of common stock through
public or private transactions at current market prices, or at previously
negotiated prices. Although we will not receive any proceeds when the selling
stockholders' sell their common stock to others, we may, however, receive
proceeds when the selling stockholders exercise their options to acquire such
common stock.
Our common stock is listed on the Nasdaq SmallCap Market under the
symbol "CYPH." Our class C warrants are listed on the Nasdaq SmallCap Market
System under the symbol, "CYPHW." Our class D warrants are listed on the Nasdaq
SmallCap Market System under the symbol, "CYPHZ." Our securities are a
speculative investment and involve a high degree of risk.
SEE "RISK FACTORS" BEGINNING ON PAGE 6 OF THIS PROSPECTUS AND
"DILUTION."
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is August 30, 1999.
<PAGE> 5
TABLE OF CONTENTS
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<TABLE>
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Page
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Where You Can Find More Information................................................................3
Prospectus Summary.................................................................................4
Risk Factors.......................................................................................6
Use of Proceeds...................................................................................14
Determination of Offering Price...................................................................14
Plan of Distribution..............................................................................17
Legal Matters.....................................................................................17
Experts...........................................................................................18
</TABLE>
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<PAGE> 6
WHERE YOU CAN FIND MORE INFORMATION
We are a public company. We file annual, quarterly and special reports,
proxy statements and other information with the SEC. You may read and copy any
document we file with the SEC at the SEC's public reference rooms in Washington,
D.C., New York, New York and Chicago, Illinois. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. Our SEC
filings are also available to the public at the SEC's web site at
http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information that we file
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings made
with the SEC under Section 13(a), 13(c), 14, or 15(d) of the Securities Exchange
Act of 1934 until the Selling Stockholders sell all of their shares of common
stock. This prospectus is part of a registration statement we filed with the
SEC.
1. Annual Report on Form 10-K for the fiscal year ended
December 31, 1998;
2. Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 1999;
3. Quarterly Report on Form 10-Q for the fiscal quarter ended
June 30, 1999;
4. Current Report on Form 8-K, dated June 12, 1998, filed with
the SEC on September 9, 1998;
5. Definitive proxy statement filed with the SEC on July 15, 1999
pursuant to Regulation 14A under the Securities Exchange
Act of 1934;
6. The description of our common stock set forth in our
Registration Statement filed under Section 12 of the
Securities Exchange Act of 1934 on Form 8-A on
October 2, 1995, and any amendment or report filed for the
purpose of updating any such description; and
7. Form S-8 (File No.: 333-37049) filed with the SEC on
October 2, 1997.
You may request a copy of these filings, at no cost, by oral
request or by writing to us at the following address:
Cytoclonal Pharmaceutics Inc.
9000 Harry Hines Boulevard
Suite 621
Dallas, Texas 75235
Attention: Daniel Shusterman, Esq.
Telephone: (214) 353-2922
You should rely only on the information incorporated by reference
or provided in this prospectus or any supplement. We have not authorized anyone
else to provide you with different information. The Selling Stockholders will
not make an offer of these shares of common stock in any State where the offer
is not permitted. You should not assume that the information in this prospectus
or any supplement is accurate as of any date other than the date on the front of
those documents.
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<PAGE> 7
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus. This
summary is not complete and may not contain all of the information that you
should consider before investing in the securities. You should read the entire
prospectus carefully. Unless we otherwise say so, when we discuss our
outstanding securities, we exclude all of our shares of common stock issuable
upon the exercise of currently outstanding warrants and options and the
conversion of our convertible securities.
We are a biopharmaceutical company located in Dallas, Texas. Our goal
is to develop products to identify, treat and prevent cancer and other diseases.
To date, our strategy has been to license technologies in their early
development stages from research and educational institutions and further
develop such technologies to the point where we can then sublicense them to
commercial entities. Through our research and development efforts and agreements
with other research institutions and biotechnology companies, we have acquired
and developed rights to certain proprietary technology.
At the present time, we are focusing our attention and resources on a
collaboration agreement we have with Bristol- Myers Squibb Company, Inc. for the
production of Paclitaxel. Paclitaxel is a drug which has proven to be effective
in treating refractory ovarian, breast and non-small cell lung cancer and
Kaposi's Sarcoma. In addition, Paclitaxel has shown potential in treating other
cancer indications in preliminary clinical trials. Presently, however,
Paclitaxel is made from the inner bark and needles of the slow-growing Pacific
yew tree. Our scientists are working in cooperation with Bristol-Myers Squibb to
develop a system for manufacturing Paclitaxel in commercial quantities and at
lower costs. Other areas of focus include the development of the Paclitaxel
treatment of polycystic kidney disease, a drug design program using Quantum Core
Technology(TM), a peptide to suppress breast cancer, and our Human Gene
Discovery Program. Other programs, which involve potential anti-leukemia drugs
and drugs called "anti-sense therapeutics," are being pursued at modest levels.
"Anti-sense therapeutics" are drugs designed to essentially "turn off" genes
involved in different diseases and to prevent such genes from growing or
duplicating. Such therapeutics may help us develop future products or
alternatives to our main programs if unforeseen problems develop.
ORGANIZATIONAL HISTORY
We were originally incorporated in the state of Texas in September 1991
under the name of Bio Pharmaceutics, Inc. In November 1991, we changed our name
to Cytoclonal Pharmaceutics Inc. We were then reincorporated in the state of
Delaware by merger into a wholly-owned Delaware subsidiary in January 1992. Our
executive offices are located at 9000 Harry Hines Boulevard, Suite 621, Dallas,
Texas 75235 and our telephone number is (214) 353-2922.
4
<PAGE> 8
<TABLE>
THE OFFERING
<S> <C>
Securities Offered........................................ 440,000 shares of common stock acquired or to be
acquired by the Selling Stockholders upon the exercise
of options granted to them under our 1992 Stock Option
Plan. See "Selling Stockholders" and "Plan of
Distribution."
Common Stock outstanding as of August 17, 1999,
excluding 10,884,742 shares of common stock which
are issuable upon the exercise of outstanding warrants
and options............................................... 10,395,210
Risk Factors.............................................. The securities offered hereby involve a high degree of
risk. Only investors who can bear the loss of their entire
investment should invest. See "Risk Factors."
Dividend Policy........................................... We will not receive any of the proceeds when the Selling
Stockholders sell their shares of common stock. We may,
however, receive proceeds when such Selling
Stockholders exercise their options to purchase our
common stock. We intend to utilize the net proceeds
from the exercise of options to fund our research and
development activities, including paying royalties and
licensing fees, and for general working capital purposes
and operating expenses. See "Use of Proceeds."
Dividend Policy........................................... We currently intend to retain all future earnings to fund
the development and growth of our business. We do not
anticipate paying cash dividends.
Nasdaq Small Cap Market Symbols........................... Common stock - "CYPH"
Class C warrants - "CYPHW"
Class D warrants - "CYPHZ"
</TABLE>
5
<PAGE> 9
RISK FACTORS
You should carefully consider the following factors and other
information in this prospectus before deciding to invest in the securities we
are offering in this prospectus.
INVESTORS WILL EXPERIENCE A LOSS IN THE BOOK VALUE OF THEIR COMMON STOCK DUE TO
OUR ACCUMULATED DEFICIT.
We had an accumulated deficit of $19,744,000 as of June 30, 1999
(unaudited) and $17,832,000 as of the fiscal year ended December 31, 1998. Our
statement of operations for the fiscal year ended December 31, 1997 shows net
losses of $3,252,000, which means a loss of $.42 per share of common stock. Our
statement of operations for the fiscal year ended December 31, 1998 shows net
losses of $2,728,000, which means a loss of $.30 per share of common stock.
Investors purchasing shares of our common stock will experience a loss in the
book value of their shares due to our net losses.
BECAUSE WE CONTINUE TO EXPERIENCE LOSSES DUE TO OUR RESEARCH AND DEVELOPMENT
ACTIVITIES, WE MAY HAVE DIFFICULTY IN RAISING CAPITAL AND OUR STOCKHOLDERS COULD
EXPERIENCE A DECREASE IN THE VALUE OF THEIR INVESTMENT.
From our formation in 1991 to the date of this prospectus, we have been
experiencing substantial operating losses due to our increasing research and
development activities and general and administrative expenditures. We expect to
have additional losses in the future. Although we had revenue in 1998 from our
license agreement with Bristol-Myers Squibb, it was and remains our sole source
of revenue. We cannot say with any certainty that we will have any future
revenue or, if we do have revenue, that it will be profitable. Our failure to
become profitable may make it more difficult for us to raise additional capital
on favorable terms, if at all. Such failure could have a material adverse effect
on our business.
WE WILL NEED SUBSTANTIAL FUNDS IN THE FUTURE, AND WE MAY HAVE TO ISSUE
ADDITIONAL SECURITIES TO DO SO, WHICH WILL RESULT IN DILUTION TO THE VALUE OF
OUR SECURITYHOLDERS' INVESTMENT.
Since our formation in 1991, we have relied on loans, private
financings, and our November 1995 initial public offering to allow us to
continue our operations. Our cash requirements in the future may be
significantly different from our current estimates because of changes in our
research and development programs, increased competition, advances in technology
and other factors. We cannot say with any certainty that required financing will
be available to us on favorable terms, if at all. If we decide to raise
additional money by issuing more of our securities, securityholders will
experience a dilution to the value of their securities at the time of issuance.
WE DO NOT HAVE ANY PRODUCTS TO DATE AND RELY HEAVILY ON OUR LICENSE
AGREEMENTS-THE LOSS OF ANY OF WHICH WOULD HAVE A MATERIAL ADVERSE EFFECT ON OUR
BUSINESS AND CAUSE A DECREASE IN THE VALUE OF OUR SECURITYHOLDERS' INVESTMENT.
We have key license and collaborative agreements with several
pharmaceutical companies and research institutions, including, but not limited
to, Bristol-Myers Squibb, Enzon, the Research & Development Institute at Montana
State University, the Washington State University Research Foundation, the
University of California at Los Angeles, and the University of Texas at Dallas.
We have also entered into a joint venture agreement with Pestka Biomedical
Laboratories, Inc. In general, we have annual milestone and royalty fee
obligations under these agreements. Although we are currently compliant under
these agreements and do not foresee any future noncompliance, our industry is
extremely competitive and volatile. Generally, if we fail to satisfy such
obligations or cure any other default listed in such agreements, the other
parties may terminate them. Also, we cannot give any assurance that the other
parties to our agreements will honor their obligations, or that we will be able
to extend any of the agreements if they expire. We also cannot give any
assurance that we will be able to enter into new collaborative agreements with
existing or new partners. If we are unable to make the other parties to our
agreements honor their contractual obligations or to extend our current
agreements or if we fail to enter into any additional arrangements, we may
require additional money to
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continue our current activities. The termination or breach of our agreements or
licenses, or our failure to enter into additional agreements and licenses may
have a material adverse effect on our business.
ALTHOUGH WE DO NOT HAVE ANY PRODUCTS TO DATE, EVEN IF WE DO HAVE THEM IN THE
FUTURE, THEY MIGHT NOT WORK OR THEY MIGHT BE TOXIC, DIFFICULT TO PRODUCE ON A
COMMERCIAL SCALE OR DISLIKED BY OUR CUSTOMERS. THIS COULD MATERIALLY ADVERSELY
AFFECT OUR BUSINESS AND CAUSE OUR SECURITYHOLDERS TO LOSE THEIR INVESTMENT.
Research and development of anti-cancer drugs is a lengthy and costly
process. We cannot say with any certainty that we will be able to develop or
produce any products or, if we do, that they will work as intended, be
non-toxic, that customers will like them or that they will be capable of being
manufactured on a large scale. Furthermore, our products will be in the
biotechnology field which has historically had a large number of unsuccessfully
developed products, or if developed, such products have been commercially,
scientifically or medically unacceptable. Any of these impediments could have a
material adverse effect on our business and cause a decrease in the value of our
securityholders' investment.
WE MIGHT NOT HAVE ENOUGH RESOURCES TO COMPETE WITH THE BIOTECHNOLOGY LEADERS,
AND INVESTORS COULD LOSE THEIR MONEY.
We have less than 20 employees in the heavily regulated, competitive
and quickly changing biotechnology industry. Most of our competitors have more
personnel, research and development experience, experience in getting
governmental approval and money than us. Our business may be materially
adversely affected if our competitors develop products before us or produce
superior products to ours.
IF COMPETITORS ARE SUCCESSFUL IN THEIR CHALLENGE OF BRISTOL-MYERS SQUIBB'S
PATENT, WE COULD BE INDIRECTLY HURT UNDER OUR LICENSE AGREEMENT WITH
BRISTOL-MYERS SQUIBB, AND OUR SECURITYHOLDERS COULD EXPERIENCE A DECREASE IN THE
VALUE OF THEIR INVESTMENT.
In June 1998, we entered into license agreement with Bristol-Myers
Squibb, an industry leader, for the development of Paclitaxel production system.
To date, this license agreement has been our sole source of revenue. In June
1991, the National Cancer Institute entered into a collaborative research and
development agreement with Bristol-Myers Squibb to develop Paclitaxel, and it
granted Bristol-Myers Squibb the exclusive use of the Institute's clinical data
in Bristol-Myers' search for FDA approval until December 1997. This
significantly shortened the approval process and prevented any other party from
obtaining the Food & Drug Administration's approval using the Institute's data.
Although Bristol-Myers Squibb has since lost its right of exclusivity under the
agreement, it has patented its method of delivering Paclitaxel intravenously to
a patient. Such patent has in fact kept the Institute's data exclusive and has
put other companies at a competitive disadvantage by effectively preventing them
from using the data. Other companies are currently contesting the exclusivity of
this data in the courts. If such competitors are successful in their challenge,
Bristol-Myers Squibb could suffer which in turn would decrease the value of our
license agreement with them and our securityholders could experience a decrease
in the value of their investment.
WE RELY ON BROAD PATENT PROTECTION FOR OUR TECHNOLOGY BUT WE MAY NOT HAVE ENOUGH
RESOURCES TO CONDUCT OR DEFEND OURSELVES FROM LONG AND EXPENSIVE LITIGATION
CLAIMS REGARDING THE BREADTH OF PATENTS, AND OUR SECURITYHOLDERS COULD
EXPERIENCE A DECREASE IN THE VALUE OF THEIR INVESTMENT.
Our success will depend on our ability to get patent protection for our
products and processes in the United States and elsewhere. We have filed and
intend to continue to file patent applications as we need them. We cannot say
with any certainty, however, that any additional patents will issue from any of
these applications or, if patents do issue, that the claims allowed will be
sufficiently broad to protect our technology. Also, we cannot say with any
certainty that any patents issued to us or licensed by us can withstand
challenges made by others or that we will able to protect our rights. Our
business may be materially adversely affected if we are unable to obtain or
enforce patent protection.
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To date, we have not been sued or threatened by parties claiming that
we have infringed their patents. Further, we do not believe that any of our
patents have been infringed by other parties, and, accordingly, we have not
taken any action to date. However, we are aware of patent applications and
issued patents belonging to our competitors, and we are uncertain whether any of
these, or of any patent applications which we do not know about, will require us
to alter or cease our potential products or processes. We cannot say with any
certainty that we will be able to obtain any licenses to technology that we will
require or, if obtainable, that the cost of them will be reasonable. Our failure
to obtain any necessary licenses to any technology could substantially hurt our
business. Expensive and drawn-out litigation may also be necessary for us to
assert any of our rights or to determine the scope and validity of rights
claimed by other parties. Litigation could be too expensive for us to pursue
without great cost and uncertainty as to the outcome. Our failure to pursue
litigation could result in the loss of our rights which could substantially hurt
our business.
WE ARE IN DIRECT COMPETITION WITH OTHER BIOPHARMACEUTICAL COMPANIES TO DEVELOP
AND PRODUCE ANTI-CANCER PRODUCTS. OUR BUSINESS WOULD BE MATERIALLY ADVERSELY
AFFECTED IF OUR TRADE SECRETS AND CONFIDENTIAL INFORMATION WERE DISCLOSED TO OUR
COMPETITORS, AND INVESTORS COULD EXPERIENCE A DECREASE IN THE VALUE OF THEIR
INVESTMENTS.
We also rely on trade secrets and confidential information which we try
to protect by entering into confidentiality agreements with other parties. We
cannot say with any certainty that any of the confidentiality agreements will be
honored or, if breached, we would have enough remedies to protect the
confidential information, or that our competitors will not independently learn
our trade secrets. The loss of our trade secrets would substantially hurt our
business.
WE ARE A SMALL COMPANY WITH LITTLE REVENUE, AND WE MAY NOT HAVE THE HUMAN AND
FINANCIAL RESOURCES TO WITHSTAND THE REQUIRED LENGTHY FDA TESTING AND APPROVAL
PROCESSES.
The Food & Drug Administration and other similar agencies in foreign
countries have lengthy and detailed laboratory testing and approval requirements
for therapeutic and diagnostic pharmaceutical and biological products. It often
takes companies several years and large sums of money to satisfy these
requirements, depending on the complexity and novelty of the products. Since we
are a small company within limited personnel and financial resources, we might
not be able to withstand the rigorous and time consuming FDA approval process as
compared to our larger competitors. Furthermore, since we are in the highly
competitive biopharmaceutical industry, any failure or delay in obtaining any
FDA approvals could substantially hurt our company, and investors could lose
their money. We cannot say with any certainty that the FDA or other regulatory
agencies will grant us approval for any of our products on a timely basis, if at
all.
WE HAVE LITTLE REVENUE AND MAY NOT HAVE THE FINANCIAL RESOURCES TO COMPLY WITH
OSHA, EPA AND OTHER AGENCIES' REQUIREMENTS.
We have to comply with the Occupational Safety and Health
Administration, Environmental Protection Agency, Toxic Substances Control Act,
Resource Conservation and Recovery Act and other regulatory laws. In the future,
we could also be subject to other federal, state or local regulations. OSHA or
the EPA may establish regulations which could affect our research and
development programs. We are unable to predict whether any agency will adopt any
rule which could substantially hurt our business.
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OUR PRODUCTS, IF ANY, WILL BE INNOVATIVE AND MAY NOT BE COVERED BY INSURANCE
COMPANIES OR OTHER THIRD-PARTY PAYERS WHICH MAY MAKE OUR PRODUCTS LESS
MARKETABLE TO OUR CUSTOMERS AND CAUSE A DECREASE IN THE VALUE OF OUR
SECURITYHOLDERS' INVESTMENT.
Our success in developing our products may depend, in part, on whether
we will be reimbursed by government health administration authorities, private
health insurers and other organizations. There is significant uncertainty if
costs associated with newly-approved health care products will be reimbursed. If
adequate coverage and reimbursement levels are not provided by government and
third-party payers for uses of our products, it will make it very difficult for
us to market our products to doctors and hospitals because their patients might
not be able to pay for the products without any insurance coverage or
reimbursement. We cannot say with any certainty whether sufficient insurance
coverage will be available for us to establish and maintain price levels
sufficient to realize an appropriate return on developing new products.
Government and other third-party payers are attempting to contain health care
costs more every day by limiting both coverage and the level of reimbursement of
new therapeutic and diagnostic products approved for marketing by FDA and by
refusing, in some cases, to provide any coverage of uses of approved products
for disease indications for which FDA has not granted marketing approval. Such
refusal by insurance companies and third-party payers to reimburse the costs of,
expenses associated with, our products might have a material adverse effect on
our business.
OUR LICENSE AGREEMENT WITH BRISTOL-MYERS SQUIBB, AN INDUSTRY LEADER, HAS, TO
DATE, BEEN OUR SOLE SOURCE OF REVENUE. OUR SECURITYHOLDERS COULD EXPERIENCE A
DECREASE IN THE VALUE OF THEIR INVESTMENTS IF SUCH AGREEMENT IS TERMINATED OR
CEASES TO GENERATE REVENUE.
In June 1998, we entered into a license agreement and a research and
development agreement with Bristol-Myers Squibb. Through June 30, 1999, we have
earned $1,666,000 in revenue from the license agreement. Such agreement has
been our sole source of revenues to date. Under the license agreement, we
granted to Bristol-Myers Squibb exclusive sublicenses under our agreements with
the Research & Development Institute at Montana State University and the
Washington State University Research Foundation relating to technologies for the
production of Paclitaxel. Our license agreement with Bristol-Myers Squibb
requires them to pay us royalty and milestone payments. The term of our license
agreement with Bristol-Myers Squibb ends on the later ten (10) years from the
first commercial sale of the licensed products or such time as neither the
making, use nor sale at the time by Bristol-Myers Squibb, its affiliates or
sublicensees does not infringe any U.S. or foreign patents or patent
applications, copyrights or trademarks owned and licensed by the Research &
Development Institute and the Washington State University Research Foundation.
Bristol-Myers Squibb may terminate the license agreement upon 90 days notice. We
cannot say with any certainty that Bristol-Myers Squibb will successfully
manufacture or market the licensed property, if at all, or that we will be able
to maintain our agreements with the Research & Development Institute or the
Washington State University Research Foundation. Although we do not have any
reason to believe Bristol-Myers Squibb is unwilling to work with us under our
license agreement with them, it is a possibility that Bristol-Myers Squibb
might, in the future, decide not to utilize our technology, use other technology
they find superior or enter into a license agreement or agreements with another
party or parties, thereby decreasing their need to utilize our technology under
our license agreement with them or even cause them to terminate the license
agreement. Our loss of the license agreement with Bristol-Myers Squibb could
have a material adverse effect on our business and stockholders could experience
a decrease in the value of their investments.
WE LACK MANUFACTURING EXPERIENCE AND FACILITIES, AND IF WE HAVE TO EXPEND
RESOURCES TO BUILD FACILITIES OR IF WE FAIL TO HIRE COMPETENT OUTSIDE
MANUFACTURERS, OUR SECURITYHOLDERS COULD EXPERIENCE A DECREASE IN THE VALUE OF
THEIR INVESTMENT.
We currently do not have facilities or personnel capable of
manufacturing any products in commercial quantities. In the future, we may
establish our own manufacturing facilities to manufacture products if it becomes
economically attractive to do so. Building and operating production facilities
would require substantial additional funds and other resources and well as
interrupt our daily operations. We cannot be sure, however, whether sufficient
funds
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to build satisfactory manufacturing facilities would be available on favorable
terms to us, if at all. If we cannot obtain sufficient financing, we will most
likely have to retain outside manufacturers. We cannot be sure, however, whether
we will be able to retain competent manufacturers at affordable rates, or that
the manufacturers will be able to produce and deliver our products pursuant to
our instructions concerning quality, quantity and time as well as other factors.
If we are unable to manufacture our products, if any, or have them manufactured
by others our business would be materially adversely affected and our
securityholders would experience a decrease in the value of their investment.
WE LACK MARKETING EXPERIENCE. IF WE FAIL TO RETAIN COMPETENT MARKETING PERSONNEL
OR OUTSIDE MARKETERS, OR IF WE HAVE INSUFFICIENT RESOURCES TO MARKET OUR
PRODUCTS, OUR SECURITYHOLDERS COULD EXPERIENCE A DECREASE IN THE VALUE OF THEIR
INVESTMENTS.
As of August 17, 1999, we had 19 employees, none of whom have any
experience in marketing pharmaceutical products. We would have to spend
significant funds and dedicate a significant amount of management resources to
develop our own sales force. We cannot say with any certainty that any funds or
resources for such purposes will be available on favorable terms, if at all.
Further, we cannot say with any certainty that, with a sales force, we would
successfully penetrate the markets for any of our products. For certain products
under development, we may seek to enter into marketing agreements with other
entities which would grant them exclusive marketing rights in return for
royalties based on sales, if any. Under some of these agreements, the other
entity may have the responsibility for all or a significant part of the
development and obtaining regulatory approval. In the event that the marketing
and development partner fails to develop a marketable product or fails to
successfully market a product, our business could be substantially hurt. The
sale of certain products outside the United States will also be dependent upon
the successful completion of arrangements with future partners, licensees or
distributors in each territory. We cannot give any assurance, however, that we
will successfully establish any additional collaborative arrangements or that,
if established, such future partners will successfully commercialize any
products, if at all.
WE ARE A SMALL COMPANY AND HEAVILY DEPEND UPON OUR OFFICERS, DIRECTORS AND
SCIENTISTS WHO ARE HIGHLY SKILLED IN BIOPHARMACOLOGY, ESPECIALLY OUR CHIEF
EXECUTIVE OFFICER AND PRESIDENT, ARTHUR P. BOLLON, PH.D. OUR BUSINESS WOULD BE
MATERIALLY ADVERSELY AFFECTED BY THE LOSS OF ANY SUCH PERSONS, AND
SECURITYHOLDERS COULD EXPERIENCE A DECREASE IN THE VALUE OF THEIR INVESTMENT.
Much of our success depends upon the continued contributions of our
executive officers, scientific and technical personnel and consultants. We are
particularly dependent upon Arthur P. Bollon, Ph.D., the Chairman of our Board
of Directors, Chief Executive Officer and President, and Daniel Shusterman, the
Vice President of Operations, Treasurer and Chief Financial Officer, Dorit Arad,
Ph.D., our Vice President of Drug Design, as well as our senior scientists,
Susan L. Berent, Ph.D., Hakim Labidi, Ph.D., Rajinder S. Sidhu, Ph.D. and
Richard M. Torczynski, Ph.D. As of August 17, 1999, we had 19 full-time
employees, 15 of whom are engaged directly in research and development
activities, including 6 Ph.D.s, and 4 of whom are in executive and
administrative positions. Our employees are not governed by any collective
bargaining agreement, and we believe that our relationship with our employees is
good. We currently have an employment agreement with Dr. Bollon which expires on
November 6, 2003. Although we maintain "key person" life insurance which
provides that upon the death or incapacity of Dr. Bollon, we will receive $2
million, Dr. Bollon's death or incapacity could substantially hurt our business.
The competition for qualified personnel is intense, and the loss of services of
certain key personnel could substantially hurt our business.
OUR SCIENTISTS WORK FOR OTHER COMPANIES AND INSTITUTIONS, AND WE MAY NOT HAVE
THE RIGHT TO THEIR INVENTIONS AND DISCOVERIES, WHICH MIGHT HAVE A MATERIAL
ADVERSE EFFECT ON OUR BUSINESS.
Our scientific collaborators and advisors are employed by companies and
institutions other than us, and some of them have consulting or other advisory
arrangements with other entities and institutions which could conflict or
compete with their obligations to us. Inventions or processes discovered by such
persons will not necessarily become our property but may remain the property of
such persons or of such persons' full-time employers. Our failure to
10
<PAGE> 14
successfully assert our rights to any inventions or processes discovered by our
scientists might have a material adverse effect on our business.
IF WE CANNOT OBTAIN SATISFACTORY PRODUCT LIABILITY INSURANCE FOR OUR FUTURE
PRODUCTS, IF ANY, WE MAY NOT BE ABLE TO ENTER INTO MATERIAL AGREEMENTS WHICH
REQUIRE US TO HAVE SUCH INSURANCE, AND INVESTORS COULD, THEREFORE, EXPERIENCE A
DECREASE IN THE VALUE OF THEIR INVESTMENT.
To date, we have not had any product liability claims filed or
threatened against us. In the future, however, when and if we develop products,
our products could expose us to product liability claims. Although we intend to
obtain product liability insurance for our ongoing clinical trials, we cannot
say with any certainty that we will be able to obtain, maintain or increase our
insurance coverage in the future on terms favorable to us, if at all, or that
any claims against us will not be greater than the amount of such coverage.
Distributors of pharmaceutical and biological products often require minimum
product liability insurance coverage as a condition before they start purchasing
or accepting products for distribution. Our failure to satisfy such insurance
requirements could decrease our ability to achieve broad distribution of our
proposed products and have a material adverse effect on our business and
investors could experience a decrease in the value of their investment.
THE VALUE OF OUR SECURITYHOLDERS' INVESTMENT MAY BE SUPPRESSED BECAUSE OUR
COMPANY MAY BE A LESS ATTRACTIVE TAKEOVER CANDIDATE DUE TO THE FACT THAT A
MAJORITY OF OUR STOCK IS OWNED BY AFFILIATES.
Our current officers, directors and stockholders who own more than 5%
of our securities beneficially own or control approximately 57.0% of our
outstanding shares of common stock, which represents approximately 54.0% of our
total outstanding voting securities. Such officers, directors and principal
stockholders may, therefore, be able to elect all of our directors, to determine
the outcome of most corporate actions requiring stockholder approval, and
otherwise to control the direction of our business which may cause the price of
our common stock to be suppressed.
ALTHOUGH WE DO NOT PAY DIVIDENDS ON OUR COMMON STOCK, WE PAY ANNUAL DIVIDENDS ON
OUR SERIES A PREFERRED STOCK BY GIVING THE HOLDERS THEREOF MORE SERIES A
PREFERRED STOCK. OUR SERIES A PREFERRED STOCK IS CONVERTIBLE INTO COMMON STOCK,
AND SUCH CONVERSION WILL DILUTE THE BOOK VALUE OF THE COMMON STOCK PURCHASED IN
THIS OFFERING.
Since 1991, we have not paid any dividends on our common stock. We
intend to retain future earnings, if any, to provide funds for the operation of
our business and, accordingly, do not anticipate paying any cash dividends on
our common stock in the future. Furthermore, the terms of our outstanding series
A preferred stock do not allow for the payment of cash dividends on the common
stock unless and until all accrued and unpaid dividends on the series A
preferred stock shall have been paid or set apart for payment. Historically
speaking, we have paid dividends on our series A preferred stock with
payment-in-kind. Our series A preferred stock is convertible into an equal
number of shares of common stock. As more holders of the series A preferred
stock convert their preferred stock into common stock, investors in this
offering will experience a decline in the book value of their common stock.
WE ARE OBLIGATED TO INDEMNIFY OUR OFFICERS AND DIRECTORS, ABSENT CERTAIN
CIRCUMSTANCES, WHICH MAY REQUIRE US TO SPEND TIME AND MONEY OTHERWISE ALLOCATED,
AND CAUSE A DECREASE IN THE VALUE OF OUR SECURITYHOLDERS' INVESTMENT.
We are incorporated under the laws of the state of Delaware. Our
certificate of incorporation includes certain provisions permitted under the
Delaware General Corporation Law, whereby our officers and directors are
indemnified by us against certain liabilities. Our certificate of incorporation
also limits, to the fullest extent permitted by Delaware General Corporate Law,
a director's liability for monetary damages for breach of fiduciary duty,
including gross negligence, except liability for breach of loyalty, acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of the law, the unlawful payment of a dividend or unlawful stock
purchase or redemption and any transaction from which the director derives an
improper personal benefit. An insurance policy, which provides for coverage for
certain liabilities of its officers and directors has been issued to us.
However, although we do not currently know of any conduct of any officer or
director which may have a material effect on our business,
11
<PAGE> 15
if such insurance proves to be inadequate, we will have to use funds otherwise
allocated to indemnify any director. The use of funds and resources, including
management's time and energy, to properly indemnify or otherwise prepare for the
defense of any director might have a material adverse effect on our business.
WE ARE RELIANT UPON THE MARKET-MAKING ACTIVITIES OF JANSSEN-MEYERS ASSOCIATES,
L.P., WHICH IS ALSO AN AFFILIATE. WITHOUT JANSSEN-MEYERS' MARKET-MAKING
ACTIVITIES, INVESTORS MAY HAVE DIFFICULTY RESELLING THEIR SECURITIES.
Messrs. Meyers and Janssen are the principals of the corporate general
partner of one of our market-makers who was also the underwriter of our initial
public offering, Janssen-Meyers Associates, L.P. If Janssen-Meyers or its
affiliates are deemed to have control of our business, regulatory requirements
of the SEC, Nasdaq and the New York Stock Exchange, Inc. could prevent them from
engaging in market-making activities relating to our securities. If
Janssen-Meyers is unable to make a market in our securities because it is deemed
to have effective voting control or if, for any other reason, it chooses not to
or is unable to make a market in our securities, there can be no assurance that
any other broker-dealers would make a market in our securities. Without
market-makers, it would be very difficult for holders of our securities to sell
their securities in the secondary market, and the market prices for such
securities would be substantially harmed. Also, we cannot give any assurances
that an active trading market for our securities be maintained whether or not
Janssen-Meyers makes a market in our securities. In the absence of such a
market, investors may be unable to liquidate their investment.
IF WE FAIL TO MEET NASDAQ'S MAINTENANCE REQUIREMENTS AND ARE DELISTED FROM
NASDAQ, INVESTORS MAY HAVE DIFFICULTY SELLING THEIR SECURITIES, WHICH WOULD
CAUSE A DECREASE IN THE VALUE OF THEIR INVESTMENT.
Our common stock, class C warrants and class D warrants are currently
quoted on the Nasdaq SmallCap Market System. Our common stock is quoted under
the symbol, "CYPH." Our class C warrants are quoted under the symbol, "CYPHW."
Our class D warrants are quoted under the symbol, "CYPHZ." Nasdaq has certain
requirements that every company must meet in order to have their securities
quoted on the Nasdaq SmallCap System. Although we currently meet Nasdaq's
criteria for continued listing, we cannot say with any certainty that we will
continue to meet such criteria.
For continued inclusion on the Nasdaq SmallCap Market System, a company
has to maintain the following:
o either:
o net tangible assets of $2 million,
o market capitalization of $35 million or
o net income of $500,000 in the most recently
completed fiscal year or in two of the last
three most recently completed fiscal years;
o a minimum bid price of $1.00 per share;
o in the case of a convertible debt security, a principal
amount outstanding of at least $5 million;
o in the case of common stock, at least 300 round lot holders; and
o 500,000 publicly held shares having a market value of at least
$1 million.
If we are unable to meet the continued listing criteria of the Nasdaq
SmallCap Market System any time in the future due to our continued operating
losses or otherwise, and our securities are delisted, trading of our securities,
if any, would be conducted in the over-the-counter market in the so-called "pink
sheets" or, if available, the NASD's "Electronic Bulletin Board." As a result,
investors could find it more difficult to dispose of, or to obtain accurate
quotations as to the value of, our securities.
12
<PAGE> 16
IF WE ARE DELISTED FROM NASDAQ, BROKER-DEALERS MAY BE UNWILLING TO SELL
INVESTORS' STOCK, AND INVESTORS WOULD EXPERIENCE A DECREASE IN THE VALUE OF
THEIR INVESTMENT.
If our securities are delisted from the Nasdaq SmallCap Market System,
they may become subject to Rule 15g-9 under the Exchange Act of 1934, which
imposes additional sales practice requirements on broker-dealers that sell such
securities. There are exceptions to Rule 15g-9 and they include transactions
meeting the safe-harbor requirements of Rules 505 or 506 under Regulation D of
the Securities Act, and transactions in which the purchaser is an institutional
accredited investor, as defined in the Securities Act, or an established
customer, as defined in the Securities Act, of the broker-dealer. For
transactions which have to comply with the requirements of Rule 15g-9 under the
Exchange Act of 1934, a broker-dealer must determine whether or not the
purchaser meets a special suitability standard, and the broker-dealer must
receive the purchaser's written consent to the transaction before the sale.
These requirements could make broker-dealers unwilling or even unable to sell
our securities which could make it more difficult for our investors to resell
their securities to other parties.
IF OUR STOCK IS DELISTED BY NASDAQ AND BECOMES A "PENNY STOCK," INVESTORS MIGHT
EXPERIENCE A DECREASE IN THE VALUE OF THEIR INVESTMENTS DUE TO THE RESTRICTIONS
ON BROKER-DEALERS IN SELLING "PENNY STOCK."
The SEC defines a "penny stock" to be any equity security that has a
market price under $5.00 per share or has an exercise price under $5.00 per
share, subject to certain exceptions. Unless exempt, the rules require the
delivery, prior to any transaction in a penny stock, of SEC material telling the
purchaser certain information about the penny stock. Purchasers must also be
told about the commissions that the broker-dealers and the registered
representatives will get and they must be told about the securities current
prices. Finally, purchasers must also be given statements every month which have
to tell the purchaser about his or her securities' recent prices and about the
limitations of the penny stock market. These penny stock restrictions will not
apply to our securities if they stay quoted on the Nasdaq SmallCap Market
System, and if they have certain price and volume information provided on a
current and continuing basis or if they meet certain minimum net tangible assets
or average revenue criteria. We cannot say with any certainty, however, that our
securities will continue to meet the Nasdaq SmallCap Market requirements in the
future and if we do not, the prices of our securities could decrease and
investors could find it difficult to sell their securities. If we were to remain
exempt from the penny-stock restrictions, we still have to comply with Section
15(b)(6) under the Exchange Act of 1934, which gives the SEC the authority to
stop any person who breaks the law when selling penny stock from selling any
more penny stock or from working with any broker-dealer.
WE HAVE GRANTED REGISTRATION RIGHTS TO SEVERAL PARTIES HOLDING OUR COMMON STOCK
OR WHO HAVE THE RIGHT TO PURCHASE OUR COMMON STOCK. THE REGISTRATION OF SUCH
SECURITIES WILL INCREASE THE NUMBER OF FREELY TRADEABLE SHARES OF OUR COMMON
STOCK AND MAY DECREASE THE BOOK VALUE OF OUR SECURITYHOLDERS' SHARES OF OUR
COMMON STOCK.
There will be 10,835,210 registered shares of our common stock
outstanding upon the completion of this offering. All of these shares will be
freely transferrable without restriction if we continue to comply with the SEC
and certain states' registration requirements. Certain of our other outstanding
securities are not registered with the SEC, and are considered to be "restricted
securities" as that term is defined in Rule 144 under the Securities Act and may
only be sold in certain circumstances.
We have also granted certain investors demand and "piggy-back"
registration rights to have their common stock registered with the SEC. We will
have to pay for the expense of registration if one or more of these groups
exercise their demand registration rights or "piggy-back" registration rights.
The expense could be high. Also, because there would be a high number of shares
outstanding, we could find it more difficult to obtain future financing.
The sale, or availability for sale, of substantial amounts of common
stock in the public market pursuant to Rule 144 or registration could cause the
market price of the common stock and our other securities to decrease which
could hurt our ability to raise additional money through the sale of our
securities or through debt financing. Also, to the extent that outstanding
options and warrants are exercised, securityholders' ownership interest will
drop. Also, if and to the
13
<PAGE> 17
extent that we reduce the exercise price of outstanding warrants or options, our
stockholders could experience additional dilution.
THE VALUE OF THE SECURITYHOLDERS' INVESTMENT MAY BE SUPPRESSED BECAUSE OUR
COMPANY MAY BE A LESS ATTRACTIVE TAKEOVER CANDIDATE DUE TO THE FACT THAT OUR
BOARD OF DIRECTORS HAS THE DISCRETION TO ISSUE 10,000,000 SHARES OF PREFERRED
STOCK SUPERIOR TO OUR COMMON STOCK WITHOUT STOCKHOLDER APPROVAL.
Our certificate of incorporation authorizes our board of directors to
issue a maximum of 10,000,000 shares of preferred stock on terms which may be
determined by them without getting stockholder approval. Of these 10,000,000
shares, 4,000,000 shares have already been designated as series A preferred
stock of which 705,343 remain outstanding as of August 17, 1999. The series A
preferred stock may be converted by the holder into an equal number of shares of
common stock. Also, the terms of the series A preferred stock include dividend
and liquidation preferences which could also hurt the rights of holders of the
common stock being offered hereby. Each share of series A preferred stock is
entitled to one vote on all matters on which the common stock has the right to
vote. Holders of series A preferred stock are entitled to vote as a separate
class on any proposed adverse change in their rights, preferences or privileges
and any increase in the number of authorized shares of series A preferred stock.
Further, the terms of any additional series of preferred stock, which may also
include priority claims to assets and dividends, as well as special voting
rights, could hurt the rights of the holders of the common stock being offered
hereby. Other than the series A preferred stock, we have not issued any other
preferred stock, and we do not plan to issue any additional preferred stock
other than payment-in-kind dividends. Investors should also know that if too
much preferred stock is outstanding, it could make it more difficult for a third
party to take control of our business or to remove our board of directors and
executive officers. Hostile bids for control of a company usually result in the
market prices for a company's securities to increase. It would also dilute or
subordinate the rights of holders of common stock and cause the market price of
the common stock to drop.
USE OF PROCEEDS
We will not receive any proceeds when the Selling Stockholders' sell
their common stock to others. However, we may receive proceeds when the Selling
Stockholders exercise their options to acquire such common stock. We intend to
use any such proceeds for research and development and other general corporate
purposes.
DETERMINATION OF OFFERING PRICE
The Selling Stockholders may sell their shares of common stock through
public or private transactions at current market prices, or at previously
negotiated prices.
SELLING STOCKHOLDERS
The shares of common stock to which this prospectus relates are being
registered for reoffers and resales by the Selling Stockholders who have
acquired or may acquire such common stock pursuant to the exercise of options
granted under our 1992 Stock Option Plan. The Selling Stockholders named below
may resell all, a portion or none of their shares of common stock, from time to
time.
Participants under our 1992 Stock Option Plan who are deemed to be
"affiliates" of Cytoclonal Pharmaceutics Inc. and who may acquire common stock
under our 1992 Stock Option Plan may be added to the Selling Stockholders listed
below from time to time by use of a prospectus supplement filed pursuant to Rule
424(b) under the Securities Act. An "affiliate" is defined in Rule 405 under the
Securities Act as a "person that directly, or indirectly, through one or more
intermediaries, controls or is controlled by, or is under common control with"
Cytoclonal Pharmaceutics Inc.
The table below sets forth with respect to each Selling Stockholder who
is an affiliate of Cytoclonal Pharmaceutics Inc., the number of shares of common
stock beneficially owned before and after the sale of the common
14
<PAGE> 18
stock offered hereby, the number of shares of common stock to be sold, and the
percent of the outstanding shares of common stock owned before and after the
sale of the common stock offered hereby.
<TABLE>
<CAPTION>
COMMON
COMMON COMMON STOCK STOCK
STOCK WHICH MAY BE BENEFICIALLY PERCENTAGE (%)
BENEFICIALLY SOLD PURSUANT OWNED OF COMMON STOCK
OWNED BEFORE TO THIS AFTER OWNED
SELLING STOCKHOLDER REOFFER(1) PROSPECTUS(2) REOFFER(2) AFTER REOFFER (3)
------------------- ------------ ------------- ------------ -------------------
<S> <C> <C> <C> <C>
Arthur P. Bollon, Ph.D.
- -President, Chairman
and Chief Executive
Officer 633,400(4) 200,000 433,400 3.9%
Daniel M. Shusterman
- -Vice President
Operations, Treasurer
and Chief Financial
Officer 68,000(5) 10,000 58,000 *
Ira Gelb, M.D.
- -Director 112,000(6) 19,000 93,000 *
Irwin Gerson
- -Director 108,000(7) 15,000 93,000 *
Walter Lovenberg, Ph.D.
- -Director 113,500(8) 15,000 98,500 *
</TABLE>
- ----------------------------
*Represents less than 1%.
(1) Unless indicated, the we assume that all persons named in the table
have sole voting and investment power with respect to all shares of our
common stock beneficially owned by them. For purposes of this table,
any security which such person has the right to acquire within 60 days
after such date is deemed to be outstanding for the purpose of
computing the percentage ownership for such person, but is not deemed
to be outstanding for the purpose of computing the percentage of any
other person.
(2) Does not include shares of common stock that may be acquired by the
Selling Stockholders upon exercise of options which have not vested
within 60 days of this prospectus which shares, if any, will be added
to the number of shares listed by one or more supplements to this
prospectus. Furthermore, the inclusion in this prospectus of the stated
number of shares does not constitute a commitment to sell any or all of
such shares. The number of shares of common stock offered shall be
determined from time to time by each Selling Stockholder at his or her
sole discretion.
(3) Based on an aggregate of 10,835,210 shares of common stock that will be
issued and outstanding upon the completion of this offering, consisting
of 10,395,210 shares of common stock issued and outstanding as of
August 17, 1999 and the 440,000 to which this prospectus relates.
(4) Includes 167,400 shares of common stock and options to purchase 466,000
shares of common stock. Does not include options to purchase 79,000
shares of common stock not exercisable within 60 days hereof.
15
<PAGE> 19
(5) Includes 5,000 shares of common stock and options to purchase 63,000
shares of common stock. Does not include options to purchase 17,000
shares of common stock not exercisable within 60 days hereof.
(6) Includes options to purchase 112,000 shares of common stock. Does
not include options to purchase 17,000 shares of common stock not
exercisable within 60 days hereof.
(7) Includes options to purchase 108,000 shares of common stock. Does
not include options to purchase 17,000 shares of common stock not
exercisable within 60 days hereof.
(8) Includes 2,500 shares of common stock, options to purchase 108,000
shares of common stock and warrants to purchase 3,000 shares of common
stock. Does not include options to purchase 17,000 shares of common
stock not exercisable within 60 days hereof.
16
<PAGE> 20
PLAN OF DISTRIBUTION
The shares of common stock to which this prospectus pertains may be
sold or transferred for value by the Selling Stockholders, or by pledgees,
donees, transferees or other successors in interest to the Selling Stockholders,
in one or more transactions on the Nasdaq SmallCap Market, in negotiated
transactions or in a combination of such methods of sale, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at prices otherwise negotiates. The Selling Stockholders may effect
such transactions by selling their shares of common stock to or through
broker-dealers, and such broker-dealers may receive compensation in the form of
underwriting discounts, concessions or commissions from the Selling Stockholders
and/or the purchasers of the shares of common stock for whom such broker-dealers
may act as agent (which compensation may be less than or in excess of customary
commissions). The Selling Stockholders and any broker-dealers that participate
in the distribution of the shares of common stock may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act, and
any commissions received by them and any profit on the resale of the shares of
common stock sold by them may deemed to be underwriting discounts and
commissions under the Securities Act. The sale of the shares of common stock by
the Selling Stockholders is subject to the prospectus delivery requirements of
the Securities Act.
Upon us being notified by a Selling Stockholder that any material
arrangement has been entered into with a broker or dealer for the sale of shares
of common stock through a secondary distribution, or a purchase by a
supplemented prospectus will be filed, if required, pursuant to Rule 424(b)
under the Securities Act, disclosing (i) the name of each such Selling
Stockholder and the participating broker-dealers, (ii) the number of shares of
Common Stock involved, (iii) the price at which such shares are being sold, (iv)
the commissions paid or the discounts or concessions allowed to such
broker-dealers, (v) where applicable, that such broker-dealers did not conduct
any investigation to verify the information set out or incorporated by reference
in the Prospectus, as supplemented, and (vi) other facts material to the
transactions.
In addition to any such number of shares of common stock sold
hereunder, a Selling Stockholder may, at the same time, sell any shares of
common stock, including the shares of common stock to which this prospectus
pertains, owned by him or her in compliance with all of the requirements of Rule
144 promulgated under the Securities Act, regardless of whether such shares are
covered by this prospectus.
There is no assurance that any of the Selling Stockholders will sell
any or all of the shares of common stock offered hereby.
We will pay all expenses in connection with this offering other than
commissions and discounts of underwriters, dealers or agents. All selling and
other expenses incurred by individual Selling Stockholders will be borne by such
Selling Stockholders.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for
us by Morrison Cohen Singer & Weinstein, LLP, New York, New York, a partner of
which holds options to acquire shares of common stock being registered in this
Registration Statement.
17
<PAGE> 21
EXPERTS
The balance sheets as of December 31, 1998 and 1997 and the related
statements of operations, changes in stockholders' equity and cash flows for
each of the years in the three-year period ended December 31, 1998 included in
the Annual Report on Form 10-K for the fiscal year ended December 31, 1998 which
is incorporated by reference in this prospectus have been audited by, and are
incorporated by reference herein in reliance upon the report of Richard A.
Eisner & Company, LLP, independent auditors, given on the authority of that firm
as experts in accounting and auditing.
18
<PAGE> 22
- -------------------------------------------------------------------------------
No dealer, salesperson or any other individual has been authorized to give any
information or to make any representations not contained in this prospectus and,
if given or made, such information or representations must not be relied upon as
having been authorized by us or the Selling Stockholders. This prospectus does
not constitute an offer to sell, or a solicitation to buy, any security by any
person in any jurisdiction which such offer or solicitation is unlawful. Neither
the delivery of this prospectus nor any sale made hereunder shall, under any
circumstances imply that the information in this prospectus is correct as of any
time subsequent to the date of this prospectus.
- --------------------------------------------------------------------------------
440,000 SHARES
CYTOCLONAL PHARMACEUTICS INC.
COMMON STOCK
-----------
PROSPECTUS
-----------
AUGUST 30, 1999
- --------------------------------------------------------------------------------
<PAGE> 23
PART II
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
Cytoclonal Pharmaceutics Inc. incorporates by reference the documents
listed below into this Post-Effective Amendment No. 1 to Registration Statement
on Form S-8. All documents subsequently filed by Cytoclonal Pharmaceutics Inc.
pursuant to Section 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of
1934, prior to the filing of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference in this
Registration Statement and to be part thereof from the date of filing of such
documents:
1. Annual Report on Form 10-K for the fiscal year ended
December 31, 1998;
2. Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 1999;
3. Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1999;
4. Current Report on Form 8-K, dated June 12, 1998,
filed with the SEC on September 9, 1998;
5. Definitive proxy statement filed with the SEC on July
15, 1999 pursuant to Regulation 14A under the
Securities Exchange Act of 1934;
6. The description of our common stock set forth in our
Registration Statement filed under Section 12 of the
Securities Exchange Act of 1934 on Form 8-A on
October 2, 1995, and any amendment or report filed
for the purpose of updating any such description;
7. Form S-8 (File No.: 333-37049) filed with the SEC on
October 2, 1997.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
A partner of Morrison Cohen Singer & Weinstein, LLP, counsel to
Cytoclonal Pharmaceutics Inc. in connection with this offering holds options to
acquire shares of common stock being registered in this Registration Statement.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Certificate of Incorporation and By-Laws of the Registrant provides
that Cytoclonal Pharmaceutics Inc. 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.
Insofar as indemnification for liabilities under the Securities Act may
be permitted to Directors, officers or controlling persons of Cytoclonal
Pharmaceutics Inc. pursuant to Cytoclonal Pharmaceutics Inc.'s By-Laws and the
Delaware General Corporation Law, Cytoclonal Pharmaceutics Inc. has been
informed 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.
Cytoclonal Pharmaceutics Inc.'s Certificate of Incorporation includes
certain provisions permitted pursuant to Delaware law whereby officers and
Directors of Cytoclonal Pharmaceutics Inc. are to be indemnified against certain
liabilities. Cytoclonal Pharmaceutics Inc.'s Restated Certificate of
Incorporation also limits, to the fullest extent permitted by Delaware law, a
director's liability for monetary damages for breach of fiduciary duty,
including
II-1
<PAGE> 24
gross negligence, except liability for (i) breach of the director's duty of
loyalty, (ii) acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of the law, (iii) the unlawful payment of a
dividend or unlawful stock purchase or redemption and (iv) any transaction from
which the director derives an improper personal benefit. Delaware law does not
eliminate a director's duty of care and this provision has no effect on the
availability of equitable remedies such as injunction or rescission based upon a
director's breach of the duty of care. In addition, Cytoclonal Pharmaceutics
Inc. has obtained an insurance policy providing coverage for certain liabilities
of its officers and Directors.
In accordance with Section 102(a)(7) of the GCL, the Certificate of
Incorporation of the Registrant eliminates the personal liability of directors
to Cytoclonal Pharmaceutics Inc. or its stockholders for monetary damages for
breach.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS
<TABLE>
<CAPTION>
No. Description
---- -----------
<S> <C>
4.1 Cytoclonal Pharmaceutics Inc. 1992 Stock Option Plan*
5.1 Opinion of Morrison Cohen Singer & Weinstein, LLP
23.1 Consent of Morrison Cohen Singer & Weinstein, LLP (included in
Exhibit 5.1 hereto)
23.2 Consent of Richard A. Eisner & Company, LLP
24.1 Powers of Attorney**
</TABLE>
- -----------------------------------
* Filed previously as an exhibit to Registration Statement on Form S-8
(File No.: 333-37049) and is incorporated by reference herein.
** Included on the signature page of Registration Statement on Form S-8
(File No.: 333-37049).
II-2
<PAGE> 25
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-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Dallas, State of Texas, on this 30th day of
August 1999.
CYTOCLONAL PHARMACEUTICS INC.
By: /s/ ARTHUR P. BOLLON
----------------------------------------
Name: Arthur P. Bollon, Ph.D.
Title: Chairman, President and
Chief Executive Officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, as
amended, this registration statement has been signed below by the following
persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ ARTHUR P. BOLLON Chairman, President, Chief August 30, 1999
- ------------------------------ Executive Officer and Director
Arthur P. Bollon, Ph.D. (principal executive officer)
/s/ DANIEL SHUSTERMAN Vice President Operations,
- ------------------------------ Treasurer and Chief Financial
Daniel Shusterman, J.D. Officer (principal financial
and accounting officer)
* Director
- ------------------------------
Ira Gelb, M.D.
* Director
- ------------------------------
Irwin C. Gerson
* Director
- ------------------------------
Walter M. Lovenberg, Ph.D.
Director
- ------------------------------
Gary E. Frashier
*By: Arthur P. Bollon
------------------------- August 30, 1999
Arthur P. Bollon, Attorney-in-Fact
</TABLE>
II-3
<PAGE> 26
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description
--- -----------
<S> <C>
5.1 Opinion of Morrison Cohen Singer & Weinstein, LLP
23.1 Consent of Morrison Cohen Singer & Weinstein, LLP (included in Exhibit 5.1 hereto)
23.2 Consent of Richard A. Eisner & Company, LLP
</TABLE>
<PAGE> 1
EXHIBIT 5.1
MORRISON COHEN SINGER & WEINSTEIN, LLP
750 LEXINGTON AVENUE
NEW YORK, NEW YORK 10022
TELEPHONE: (212) 735-8600
FACSIMILE: (212) 735-8708
August 30, 1999
Cytoclonal Pharmaceutics Inc.
9000 Harry Hines Boulevard
Suite 621
Dallas, Texas 75235
re: Post-Effective Amendment No. 1 to
Form S-8 (Registration Statement No.: 333-37049)
Dear Sirs:
We have served as your counsel in connection with the preparation of
the above-captioned registration statement (the "Registration Statement") to be
filed with the Securities and Exchange Commission pursuant to the Securities Act
of 1933, as amended (the "Securities Act"), representing the offering and
issuance to certain persons, including "affiliates," as defined in the
Securities Act, of options to purchase 440,000 shares of common stock, par value
$.01 per share (the "Common Stock") under the Cytoclonal Pharmaceutics Inc. 1992
Stock Option Plan (the "Plan").
We have examined such corporate records, documents and matters of law
as we have considered appropriate for the purposes of this opinion.
Based upon such examination and our participation in the preparation of
the Registration Statement, it is our opinion that the Common Stock, when issued
in the manner described in the Plan, will be validly issued, fully paid and
non-assessable.
We consent to the reference made to our firm in the Registration
Statement and to the filing of this opinion as an Exhibit 5.1 to the
Registration Statement.
Very truly yours,
/s/ Morrison Cohen Singer & Weinstein, LLP
------------------------------------------
Morrison Cohen Singer & Weinstein, LLP
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Post-Effective
Amendment No. 1 to Registration Statement on Form S-8 of Cytoclonal
Pharmaceutics Inc. (the "Company") of our report dated February 6, 1999 on our
audits of the financial statements of the Company as of December 31, 1998 and
1997, and for each of the years in the three-year period ended December 31,
1998, included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1998. We also consent to the reference to our firm under the
caption "Experts" in the Prospectus.
/s/ Richard A. Eisner & Company, LLP
- ------------------------------------
Richard A. Eisner & Company, LLP
New York, New York
August 26, 1999
