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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 29, 1998JUNE 22, 1999
Registration No. 333-333-69735
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
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AMERICAN BIOGENETIC SCIENCES, INC.
(Exact Name of Registrant as Specified In Its Charter)
DELAWARE 11-2655906
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
1375 AKRON STREET, COPIAGUE, NY 11726
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
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STEVEN R. LONDON, ESQUIRE
BROWN, RUDNICK, FREEDRICHARD A. RUBIN, ESQ.
PARKER CHAPIN FLATTAU & GESMER
ONE FINANCIAL CENTER, BOSTON, MASSACHUSETTS 02111
(617) 856-8200KLIMPL, LLP
1211 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
(212) 704-6000
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
--------------------------
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, please check the following box. /X/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, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / /[ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
CALCULATION OF REGISTRATION FEE
===============================================================================================================================
Proposed Proposed
Amount Maximum Maximum Amount of
Title of Each Class of to Be Offering Price Aggregate Registration
Securities to Be Registered Registered Per Share(1) Offering Price(1) Fee
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Class A Common Stock, $ .001 par value 398,406 Shares $1.0315 $410,956 $121.23
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(1) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933. Based upon the average
of the high and low price of the Common Stock as reported on the Nasdaq National
Market, on July 24, 1998.[ ]
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)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 SAID SECTION 8(a)8(A),
MAY DETERMINE.
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2The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell nor is it seeking an offer to buy these securities in any state where
the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED JUNE 22, 1999
PROSPECTUS
398,40610,800,000 SHARES
AMERICAN BIOGENETIC SCIENCES, INC.American Biogenetic Sciences, Inc.
CLASS A COMMON STOCK
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This Prospectus relates to an aggregate of 398,406 shares (the
"Shares") of Class A Common Stock, par value $.001 per share (the "Common
Stock"),-------------------
The stockholders of American Biogenetic Sciences, Inc. (the "Company) whichlisted on page
11 of this prospectus are offering for sale 10,800,000 shares of class A common
stock of ABS under this prospectus.
The selling stockholders may be
offered and sold, from time to time, by stockholdersoffer their shares through public or
private transactions, at prevailing market prices, or at privately negotiated
prices. See "Plan of Distribution."
Nasdaq National Market Symbol:
"MABXA"
On June 18, 1999, the Company (the
"Selling Stockholders"). See "Selling Stockholders."
The Common Stockclosing price of the Company is tradeda share of our class A common
stock on the Nasdaq National Market ("Nasdaq/NMS") under the symbol "MABXA." On July 24, 1998, the closing price on
the Nasdaq/NMS for the Common Stock was $1.00 per share.
The Selling Stockholders have advised the Company that they may sell,
from time to time, all or part of the shares of Common Stock covered by this
Prospectus through any of several methods, including ordinary brokerage
transactions or block transactions on the Nasdaq/NMS at market prices, or in
privately negotiated transactions at prices agreed upon by the parties. See
"Plan of Distribution."
The Company will not receive any proceeds from the sale of the Shares
covered by this Prospectus. The Company shall pay all expenses incurred in
effecting the registration of such Shares, including all registration and filing
fees, and legal and accounting fees for counsel to the Company. The Selling
Stockholders will bear all brokerage or underwriting discounts, commissions or
expenses, if any, and the fees and expenses, if any, of its counsel, which are
applicable to the Shares offered hereby.
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AN$1.0625.
THIS INVESTMENT IN THE SHARES INVOLVES A HIGH DEGREE OF RISK. SEEYOU SHOULD CAREFULLY
CONSIDER THE FACTORS DESCRIBED UNDER THE CAPTION "RISK FACTORS"
BEGINNING ON PAGE 3.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY3 OF THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION ORNOR ANY STATE SECURITIES
COMMISSION NOR
HAS THEAPPROVED OR DISAPPROVED THESE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACYDETERMINED
IF THIS PROSPECTUS IS TRUTHFUL OR ADEQUACY OF THIS PROSPECTUS.COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectusprospectus is ____________, 1998.______, 1999
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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 reports, proxy statements and otherPROSPECTUS SUMMARY
This summary highlights some information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company can be inspected and
copied at the public reference facilities maintained by the Commission at
Judiciary Plaza, 450 Fifth Street, NW, Room 1024, Washington, D.C. 20549, and at
the Commission's Regional Offices at Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300, New
York, New York 10048, at prescribed rates. The Commission maintains a website
(http://www.sec.gov) that contains reports, proxy and information statements and
other information electronically filed through the Commission's Electronic Data
Gathering, Analysis and Retrieval system ("EDGAR"). The Company's Common Stock
is quoted on the Nasdaq/NMS, and reports, proxy statements and certain other
information concerning the Company can also be inspected at the offices of
Nasdaq Operations, 1735 K Street NW, Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement on
Form S-3 (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the Shares. This Prospectus,
which constitutes a part of the Registration Statement, doesfrom this prospectus. It may
not contain all of the information set forth inimportant to you. To understand this offering
fully and get a better understanding of our business and operations, you should
read the Registration Statemententire prospectus carefully, including the risk factors and the
exhibits and
schedules thereto, to which reference is hereby made. Statements contained in
this Prospectus, and in any document incorporated herein by reference, as to the
contents of any contract or any other document referred to are not necessary
complete and, in each instance, reference is made to the copy of such contract
or other document filed as an exhibit to the Registration Statement or such
document, each such statement being qualified in all respects by such reference.
The Registration Statement has been filed through EDGAR and is publicly
available through the Commission's website (http://www.sec.gov). The
Registration Statement, together with its exhibits and schedules, may be
inspected without charge at the Public Reference Section of the Commission in
Washington, D.C. at the address noted above, and copies of all or any part
thereof may be obtained from the Commission upon payment of the prescribed fees.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the Commission
pursuant to the Exchange Act (File No. 0-19041) are incorporated herein by
reference:
(1) the Company's Annual Report on Form 10-K for the year ended
December 31, 1997;
(2) the Company's Unaudited Quarterly Report on Form 10-Q and the
amendment thereto for the fiscal quarter ended March 31, 1998;
(3) the Company's Current Reports on Form 8-K dated (date of earliest
event reported) April 27, 1998 (as filed on April 28, 1998) and May 20, 1998 (as
filed on June 3, 1998); and
(4) the description of the Company's Class A Common Stock contained in
the Registration Statement on Form 8-A filed by the Company on February 26,
1991, including all amendments or reports filed for the purpose of updating such
description.
All reports and other documents subsequently filed by the Company pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the offering shall be deemed to bewe have incorporated by reference in this Prospectus and shall be part hereof from the date of the filing of such document. Any statement containedsection "Where You Can Find
More Information About Us."
Please note that references in this Prospectusprospectus to "we", "our" or in a document incorporated or deemed"us"
refer to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein, or in any other subsequently filed
document that also is (or is deemed to be) incorporated by reference herein,
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of the Registration Statement or this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon written or oral
request of such person, a copy of any of the documents incorporated by
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reference in this Prospectus (other than exhibits) unless such exhibits are
expressly incorporated by reference in such documents. Requests for such
documents should be submitted in writing to: American Biogenetic Sciences, Inc. and our subsidiary, Stellar Bio
Systems, Inc., 1375 Akron Street, Copiague, New York 11726, or by telephone at (516) 789-2600,
Attn: Chief Financial Officer.
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THE COMPANY
American Biogenetic Sciences, Inc. (the "Company" ornot to the "Registrant")
isselling stockholders.
GENERAL INFORMATION ABOUT ABS
We are engaged in the research, developmentresearching, developing and production ofmarketing cardiovascular
and neurobiology products for commercial development. The Company's enabling
technology is a patented antigen-free mouse colony which allows the generation
of highly specific monoclonal antibodies that are difficult to obtain from
conventional systems. The Company has utilized this technology to supply
antibodies for its innovative in vitro and in vivo diagnostic products.
OverWe commenced selling our
products during the last few years,quarter of 1997.
Some of our products are designed to be used for IN VIVO, while others
are designed for IN VITRO, diagnostic procedures. IN VIVO diagnostic procedures
are those in which proteins or compounds are injected directly into the Company has directed its efforts primarily
towardbody or
bloodstream to assess abnormal reactions or conditions. During IN VITRO
procedures, blood, urine or other bodily fluid or tissue is extracted from the
development of cardiovascularbody and neurobiology products. These
efforts have led to the development of the Company'sdiagnostic tests are performed in a test tube or other laboratory
equipment.
Our main products are:
o Thrombus Precursor Protein (T(p)P(TM)) test, an assay forreferred to as the TpP(TM) test.
This is AN IN Vitro diagnostic test used to assess the risk assessment of
active thrombosis (blood
clots) andblood clots in the monitoringveins or arteries. This test is also used to
monitor the performance of anticoagulantanti-clotting therapy andor drugs used in
the prevention of blood clots.
o Functional IntacIntact Fibrinogen (FiF (TM)) test, an assayreferred to measureas the FiF(TM)
test. This is AN IN Vitro diagnostic test which measures the
levels of fibrinogen in blood. Fibrinogen is a protein used in the
blood-clotting process.
These tests assist doctors in diagnosing and treating blood clots
lodged in the legs and the lungs, known as well as tothrombosis, a condition which can be
fatal. Thrombosis is also associated with many other medical conditions, like
heart attacks, strokes and complications during pregnancies. We are pursuing the
Company'sapplication of our tests in these areas with additional clinical testing. We
have also developed patented specific monoclonal antibody MH1, with
radioisotope,antibodies for use as an in vivo imaging agent. In October 1996, the Company
received a Section 510(k) Pre-Market Clearance from the United States Foodour TpP(TM) and Drug Administration ("FDA") for its T(p)P(TM) test. In June 1997, the Company
received a Section 510(k) Pre-Market Clearance from the FDA to market its FiF
(TM) test. In November 1997, the Company initiated its marketing efforts for the
T(p)P(TM) and FiF (TM) through exhibitions and presentations at the MEDICA '97
trade show held in Dusseldorf, Germany. These efforts led to the initial sales
of T(p)P(TM) kits to European and Japanese distributors.FIF(TM)
tests.
On April 23, 1998, the
Companywe purchased all of the issued and outstanding
shares of common stock of Stellar Bio Systems, Inc. ("Stellar"), a manufacturer and
distributor of IN VITRO diagnostic products and research reagents used in the
biotechnology industry. A reagent is a chemical substance used to detect another
substance in a chemical reaction. Stellar's IN VITRO diagnostic products focus
on the infectious disease and auto-immune disease markets. Stellar markets a
complete line of products to determine the immune status of numerous human
herpes viruses. In addition, auto-immune diseases, like lupus, are detected
using Stellar's products. Stellar is also the largest domestic provider of
normal mouse serum, which is used as a test component by major IN VITRO
diagnostic products.
The Companyproduct manufacturers for a variety of purposes.
Our company was incorporated in Delaware in September 1983. The
Company'sOur
principal executive offices are located at 1375 Akron Street, Copiague, New York
11726, and itsour telephone number at that address is (516) 789-2600.
As of June 15, 1999, we had 36,295,130 shares class A common stock and
3,000,000 shares of class B common stock outstanding. This offering will not
result in the issuance of additional shares.
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RISK FACTORS
An investment in the securities offered hereby is speculative in
nature, involves a high degree of risk and should not be made by any investor
who cannot afford the loss of his entire investment. In evaluating an investment
in the Company, prospective investors should carefully consider the following
risk factors in addition to the other information included herein and in the
information incorporated herein by reference. Certain statements included in
this Prospectus (and the information incorporated herein by reference)
concerning the Company's future results, future performance, intentions,
objectives, plans and expectations contain forward-looking statements. Those
statements are subject to a number of known and unknown risks and uncertainties
that, in addition to general economic and business conditions, could cause
actual results, performance and achievement to differ materially from those
described or implied in the forward-looking statements. Factors that could cause
or contribute to such differences include, but are not limited to, those
discussed below.
DEVELOPMENT STAGE COMPANY;BEFORE YOU BUY SHARES OF OUR CLASS A COMMON STOCK, YOU SHOULD BE AWARE
THAT THERE ARE VARIOUS RISKS ASSOCIATED WITH THAT PURCHASE, INCLUDING THOSE
DESCRIBED BELOW. YOU SHOULD CONSIDER CAREFULLY THESE RISK FACTORS, TOGETHER WITH
ALL OF THE OTHER INFORMATION IN THIS PROSPECTUS AND THE DOCUMENTS WE HAVE
INCORPORATED BY REFERENCE IN THE SECTION "WHERE YOU CAN FIND MORE INFORMATION
ABOUT US" BEFORE YOU DECIDE TO PURCHASE SHARES OF OUR CLASS A COMMON STOCK.
RISKS ASSOCIATED WITH OUR LACK OF OPERATING HISTORY,
HISTORY OF LOSSES; ACCUMULATED DEFICIT.
The CompanyLOSSES AND FUTURE NEED FOR CAPITAL
OUR LACK OF SIGNIFICANT REVENUES FROM PRODUCT SALES AFFECTS OUR ABILITY TO
GENERATE CASH
ABS remains in the development stage as it has not yet
generated significant revenues from product sales. The Company has, however,
received an aggregate of $1,302,000 in licensing fees, royalties and under
collaborative agreements from its inception through March 31, 1998.
Additionally, during the fourth quarter of fiscal 1997, the Company made its
initial sales of TpP(TM). Through March 31, 1998, sales of the Company's
products aggregated $264,000. Further, in April 1998, the Company acquired all
of the issued and outstanding shares of common stock of Stellar. For the year
ended December 31, 1997, Stellar was profitable and had revenues of $1,400,000.
While the Company hasstage. Although we have products at
various stages of development and hashave started to generate revenues, there can be no assurance as to when the Companywe may begin
generatingnot
generate significant revenues from product sales and cease being a development
stage company. The developmentThrough March 31, 1999, we have received an aggregate of
$1,342,000 in licensing fees, royalties and under collaborative agreements.
Sales of the Company'sTpP(TM) and FIF(TM) tests, which commenced during the fourth
quarter of 1997, and sales of Stellar's products has required, and is
expected to continue to require, significant research and development,
preclinical testing and clinical trials, as well as regulatory approvals.
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The Company's activities, together with the Company'ssince its acquisition on April
23, 1998, totaled $1,639,000 through March 31, 1999.
WE HAVE A HISTORY OF LOSSES AND, IF WE DO NOT ACHIEVE PROFITABILITY,
WE MAY NOT BE ABLE TO CONTINUE OUR BUSINESS IN THE FUTURE
Our research, development, and general and administrative expenses have
resulted in significant losses in each year since our inception in 1983, and are
expected to continue to result in significant losses for the foreseeable future.
AtWe have incurred the following losses since 1994:
Fiscal year ended:
o December 31, 1994..................... $7,431,000
o December 31, 1995..................... $5,607,000
o December 31, 1996..................... $7,700,000
o December 31, 1997..................... $7,147,000
o December 31, 1998..................... $7,548,000
Three Months Ended:
o March 31, 1998, the Company had net worth of
$5,658,000, with an accumulated retained earnings deficit of $50,832,000. The
Company's ability to achieve profitability is dependent, in part, on its ability
to successfully complete its1999........................ $1,471,000
THE CYCLE FROM PRODUCT DEVELOPMENT TO COMMERCIALIZATION IS LENGTHY
AND MAY RESULT IN DELAYS IN THE COMMERCIALIZATION OF OUR PRODUCTS
Our existing products and our products under development are subject to
the risks inherent in the development of biotechnology products. We are unable
to predict with any degree of certainty when, or if, we will complete the
research, development and testing of products under development and other future
products, or if completed, whether we will obtain required regulatory approvals and manufacture and market successfully
such products directly or through partners, and its ability to acquire products
which can be successfully marketed.
The Company's operations are subject to numerous risks associated with
the development of pharmaceutical products, including the competitive and
regulatory environment in which the Company operates.approvals.
In addition, we may not be able to produce our products in commercial quantities
at reasonable costs, and our products may not be accepted by the Company
may encounter unanticipated problems, including development, manufacturing,
distribution and marketing difficulties, some of which may be beyond the
Company's financial and technical abilities to resolve. Accordingly, there can
be no assurance that the Company's existing, under development or proposed
products will prove to be commercially viable, or that the Company will
successfully market any products or achieve significant revenues or profitable
operations.
NEED FOR ADDITIONAL FINANCING.
At March 31, 1998, the Company had working capital of $5,249,000. On
May 20, 1998, the Company sold $4,000,000 in principal amount of 5% Convertible
Debentures due May 20, 2001 (the "Debentures") and warrants to purchase up to
261,228 shares of Common Stock (the "Warrants") in a private placement,
generating net proceeds of approximately $3,744,000. However, themedical
community.
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WE COULD BE REQUIRED TO CUT BACK OR STOP OPERATIONS IF WE ARE
UNABLE TO RAISE OR OBTAIN NEEDED FINANCING
The research, development, commercialization, manufacturing and
marketing of the Company's
existing, under development and proposedour products is likely towill require financial resources which are
significantly in excess of those presently available to the Company.
Accordingly, the Company intendsus. We continue to seek
additional financing which may result in (1) borrowings that could affect itsour
results of operations orand create an obligation to repay the loans and (2) the
issuance of additional shares of the Company'sour capital stock and/or rights to acquire
additional shares of our capital stock that could cause dilutionstock. Such additional issuances of the interests of
the then existing stockholders in the Company. The Company also intends to
continue to seek collaborative, licensing, co-marketing or other arrangements
with large pharmaceutical companies or other third parties to provide additional
funding and clinical expertise to perform tests necessary to obtain regulatory
approvals, provide manufacturing expertise and to market the Company's products,
which maycapital
would result in the Company sharing the benefits (i.e., royalty payments)a reduction of its products with such third parties, as well as sharing with, or relying upon,
the management of others for the development, testing and/or marketing of
products. There can be no assurance that the Company willyour percentage interest in ABS. We may not be
able to arrange financing collaborative arrangements or other third party arrangements on acceptable terms
necessary to fully develop and commercialize any of itsour products.
If the Company is unable to enter into such arrangements or obtain the
substantial additional financing necessary on acceptable terms, it would be
unable to successfully complete development of or commercialize its products.
ACQUISITION STRATEGYRISKS ASSOCIATED WITH THE INDUSTRY IN WHICH WE OPERATE
IF WE DO NOT OBTAIN AND INTEGRATION OF ACQUISITIONS.
Part of the Company's growth strategy involves the acquisition of
companies and product lines which the Company believes could provide it with
access to technologies, products, management and technical expertise,
manufacturing capabilities or manufacturing sources, and/or distribution or
market means that could provide synergisms with the Company's operations or
otherwise facilitate its growth.
The Company's only acquisition to date was the acquisition of all of
the common stock of Stellar, a manufacturer and distributor of research reagents
and diagnostic products, in April 1998 for $120,000, 398,406 shares of the
Company's Class A Common Stock ($700,000 at the then market value as defined in
the Stellar Agreement) and contingent future payments of up to $650,000 in
shares of the Company's Class A Common Stock based on the level of Stellar's
future revenues and the market price of the Company's Common Stock at
approximately the date of issuance. Any future acquisition may result in the use
of the Company's cash, necessitate borrowings or result in the sale or issuance
of debt or equity securities to private sources or in public markets. The
issuance of any debt could result in the incurrence of significant interest
expense and an obligation to repay such debt in priority to payments to the
Company's stockholders. The issuance of equity could result in substantial
dilution in the equity interest of existing stockholders. Although the Company
is considering acquisitions and is currently engaged in various stages of
discussions with regard to potential acquisitions, the Company is not presently
a party to any commitment with respect to any acquisition.
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The success of any acquisition, including the acquisition of Stellar,
will depend in large measure on the Company's ability to effectively integrate
the operations, management and information systems of the acquired businesses.
The process of integrating acquired businesses often involves unforeseen
difficulties and may require the Company to devote a significant amount of its
financial and other resources thereto. Acquisitions may involve a number of
additional risks, such as adverse short-ter effects on the Company's reported
operating results, diversion of management's attention, the ability of the
Company to retain key personnel, unanticipated problems or legal liabilities,
and amortization expense for the amount of the purchase price paid for acquired
assets in excess of their fair value, some or all of such factors could have a
material adverse effect on the Company's business, financial condition and
results of operations. Further, to the extent that the agreements relating to
acquisitions by the Company provide for indemnification of the Company with
respect to contingent and other liabilities of the acquired entity, such
indemnification obligations may be, and are in the case of the acquisition of
Stellar, for a limited duration and subject to negotiated limitations. If any
claims or liabilities of the Company relating to acquisitions are not subject to
any indemnification obligations, or if the amount of such claims or liabilities
exceed such limitations or the ability of the sellers of the acquired entities
to satisfy their indemnification obligations, the Company's business, financial
condition and results of operations could be materially and adversely effected.
There can be no assurance that the Company will be successful in
identifying or consummating acquisitions on favorable terms, if at all, or in
integrating the operations of Stellar or future acquisitions, or that any
acquired businesses will achieve sales and profitability that justify the
Company's investment therein.
UNPROVEN PRODUCTS.
Although the Company has had recent sales of its TpP(TM) and FiF(TM)
kits and products acquired as part of the acquisition of Stellar, the Company's
existing products, products under development and proposed products are subject
to the risks inherent in the development of biotechnology products. These
products require further research, development, testing and regulatory
clearance. Such products require demonstration of commercial scale manufacturing
before any products can be proven to be commercially viable. The Company is
unable to predict with any degree of certainty when, or if, the research,
development, testing and regulatory approval process for any of its products
will be completed. There can be no assurance that the Company's technology will
result in the development of any product that meets applicable regulatory
standards or continues to meet applicable regulatory standards, is capable of
being produced in commercial quantities at reasonable costs, is acceptable to
the medical community, or will be successfully marketed. Accordingly, the
Company is unable to predict whether its technology will result in any
commercially viable products.
CERTAIN EFFECTS OF GOVERNMENT REGULATION.MAINTAIN NECESSARY U.S. OR FOREIGN CLEARANCES OR
MANUFACTURING AND MARKETING APPROVALS FOR OUR PRODUCTS, OUR BUSINESS AND
OPERATIONS COULD BE ADVERSELY AFFECTED
The investigation, manufacture, exportation, marketing and sale of
diagnostic and therapeutic products and vaccines in or from the United States is subject to
regulation by the FDA, including review and/or approval before marketing,Food and Drug Administration, as well as by comparable foreign
and state agencies. NoncomplianceAlthough we have obtained pre-market clearance for some of
our existing products, other products may not be approved by the FDA or other
applicable foreign regulatory agencies. Any FDA, foreign and state regulatory
approvals or clearances, once obtained, can be withdrawn or modified. Our
inability to obtain and maintain any necessary United States or foreign
clearances or manufacturing and marketing approvals for our products could have
a material adverse effect on our business, financial condition and results of
operations. In addition, noncompliance with applicable government requirements
can result in, among other things, fines, injunctions, civil penalties, recall
or seizure of products, total or partial suspension of production, failure of
the government to grant pre-market clearance or pre-market approval for devices,those
products, withdrawal of marketing or manufacturing approvals, and criminal
prosecutions.
Some in vitro diagnostic products are eligible for an accelerated
application process in accordance with Section 510(k) of the 1976 Medical Device
Amendments to the Federal Food, DrugWE MAY HAVE TO LOWER PRICES OR SPEND MORE MONEY TO EFFECTIVELY COMPETE AGAINST
COMPANIES WITH GREATER RESOURCES THAN US WHICH COULD RESULT IN LOWER REVENUES
AND/OR PROFITS
The biotechnology industry is characterized by rapid technological
advances, evolving industry standards and Cosmetic Act astechnological obsolescence. While our
TpP(TM) is a product
"substantially equivalent" to another product in commercial distribution in the
United States before May 28, 1976. In October 1996, the Company received a
Section 510(k) Pre-Market Clearance to market the TpP(TM) test as an aid in the
risk assessment of thrombosis and the monitoring of anticoagulant therapy and
plans to submit additional pre-market notifications to obtain clearance to
market the test for additional specific indications. In June 1997, the Company
received Section 510(k) Pre-Market Clearance to market its FiF(TM)unique diagnostic test forwhich measures the quantitative determinationbeginning stages of
fibrinogen in human plasma.
Obtaining FDA approval and complying with FDA regulation with respect
to in vivo products (such as is required for the Company's patented specific
monoclonal antibody MH1 obtained from the Company's antigen free mouse colony)
is far more expensive and time consuming than the costs associated with the
review of products for in vitro use. Therefore, the Company intends to seek
joint ventures or licensing arrangements with respect to its existing MH1
imagingactive clot formation, a feature which we believe has competitive advantages,
this product and other proposed in vivo products, including therapeutic
products, so that the costs
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associated with the regulatory review and/or approval process will be borne by,
or shared with, the joint venturer or licensee. There can be no assurance that
the Company will be able to enter into any such arrangements or, if it is able
to, that the terms of such arrangements will be favorable to the Company.
Further, until the Company's under development and proposed therapeutic products
have been clinically tested, there can be no assurance that such products will
be found safe and efficacious or superior to products previously approved by the
FDA.
Any FDA, foreign or state regulatory approvals or clearances, once
obtained, can be withdrawn or modified. Delay by the Company in obtaining, or
inability of the Company to obtain and maintain, any necessary United States or
foreign clearances or manufacturing and marketing approvals for new or existing
products or product enhancements, or unanticipated cost resulting from these
regulatory requirements, would have a material adverse effect on the Company's
business, financial condition and results of operations.
DEPENDENCE ON ACCEPTANCE BY MEDICAL COMMUNITY.
Sales on a commercial basis of the Company's products for use as
diagnostics or therapeutics will be substantially dependent on acceptance by the
medical community. Widespread acceptance of the Company's in vitro diagnostic
tests as a useful adjunct to diagnosis and treatment will require educating the
medical community as to the benefits and reliability of such products.
Similarly, the use of any products for in vivo diagnosis (including those
utilizing mouse antibodies) and therapy will require educating the medical
community as to their benefits, reliability, safety and effectiveness.
Additionally, any of the Company's products may facefaces competition from other products which may be asdiagnostic tests that measure blood
clots during the breakdown stage after the blood clot has formed or more effective than the Company's products for a
given indication. Accordingly, there can be no assuranceclotting
factors that anyassess the risk of the
Company's products will be accepted in the medical community, or, if accepted,
as to the lengthfuture clots. Our FiF(TM) test faces competition
from several other fibrinogen tests. Most of time it would take to gain such acceptance.
MARKETING ARRANGEMENTS OR OTHER SALES ARRANGEMENTS.
It has been the Company's policy to seek arrangements with large
pharmaceutical companies to market its existing and under development products.
In the event the Company is unable to enter into sufficient arrangements or if
the arrangements which it has entered into or may enter into in the future are
not successful, the Company would likely seek to market such products through
independent distributors which may require the Company to develop a marketing
program to support sales. In such event, the Company may be required, among
other things, to pay the expenses of developing promotional literature and
aides, hiring sales representatives and completing studies to interest
distributors in selling the Company's products. Any independent distributors
that the Company may engage may also market competitive products. There can be
no assurance that the Company will be able to enter into arrangements for the
distribution of any products on satisfactory terms.
MANUFACTURING FACILITIES.
While the Company is presently producing a limited quantity of
monoclonal antibodies for testing and evaluation of its in vitro products, there
can be no assurances that the Company will be able to either finance or meet FDA
regulations for good manufacturing practices required in order to convert and
operate such facility for commercial production of such products. The Company
does not intend to establish its own manufacturing operations for its in vivo
products unless and until, in the opinion of management of the Company, the size
and scope of its business and its financial resources so warrant. It is the
Company's intention to seek additional third parties to manufacture its in vivo
monoclonal antibody and other in vivo products, or enter into a joint venture or
license agreement with a partner who will be responsible for future
manufacturing. Each joint venture partner or contract manufacturer participating
in the manufacturing process of the Company's products must comply with FDA
regulations and file documentation with the FDA to support that part of the
manufacturing process in which it is involved. The Company is currently
contracting with four good manufacturing practices manufacturers for the
production of antibodies and the TpP(TM) and FiF(TM) kits. There is no assurance
that third parties will be able to manufacture sufficient quantities of the
Company's in vivo monoclonal antibody necessary to obtain full FDA clearance or
approval, that the FDA will accept the Company's manufacturing arrangements, or
that these commercial manufacturing arrangements can be obtained on acceptable
terms.
6
8
PATENTS AND PROTECTION OF PROPRIETARY INFORMATION.
The Company's business depends in part upon its proprietary technology.
The Company relies on a combination of trade secret laws, patents, trademarks
and confidentiality agreements and other contractual provisions to establish,
maintain and protect its proprietary rights, all of which afford only limited
protection. There can be no assurance that others will not independently develop
substantially equivalent proprietary information and techniques or otherwise
gain access to the Company's trade secrets or disclose such technology or that
the Company can meaningfully protect its trade secrets.
The Company has been issued or licensed to use twelve patents and has
additional patent applications pending in the United States. The Company has
obtained or applied for corresponding patents for certain of these patents and
patent applications in a limited number of foreign countries. These patents
relate to certain products of the Company under development including the use of
monoclonal antibodies specific for fibrinogen and monoclonal antibodies specific
for fibrin, the use of the Company's antigen free mouse colony to generate
monoclonal antibodies, a method of obtaining primed lymphocytes collected from
immunized antigen-free mice, an immunoassay for soluble fibrin using the
Company's proprietary fibrin-specific monoclonal antibody as a method of
detecting a thrombotic event, the use of the Company's proprietary
fibrin-specific monoclonal antibody as an antithrombotic agent, and the use of
the Company's proprietary fibrin-specific monoclonal antibody in conjunction
with a thrombolytic reagent for the treatment of thrombosis. There can be,
however, no assurance that the Company's pending patent applications or any
future applications will be approved, that any patents will provide the Company
with competitive advantages or will not be challenged by third parties, or that
the patents of others will not render the Company's patents obsolete or
otherwiseour competitors have an adverse effect on the Company's ability to conduct business.
Because foreign patents may afford less protection under foreign law than is
available under United States patent law, there can be no assurance that any
such patents issued to the Company will adequately protect the Company's
proprietary information. Others may have filed and may file patent applications
in the future that are similar to or identical to those of the Company. To
determine the priority of inventions, the Company may have to participate in
interference proceedings declared by the United States Patent and Trademark
Office or opposition proceedings before a foreign patent office that could
result in substantial cost to the Company. No assurance can be given that any
such interfering patent or patent application will not have priority over patent
applications filed on behalf of the Company or that the Company will prevail in
any opposition proceeding. In addition, there can be no assurance that the
Company's products and technologies do not infringe or violate any patents or
proprietary rights of third parties. Any intellectual property litigation would
be costly and could divert the efforts and attention of the Company's management
and technical personnel, which could have a material adverse effect on the
Company's business, financial condition and results of operations.
Many of the Company's therapeutic compounds are the subject of patent
applications licensed by the Company from various academic institutions. Such
licenses require the Company to pay royalties on the sales of products. There
can be no assurance that these licensed products will be commercially viable or
that the licenses will not be terminated.
With respect to certain aspects of its technology, the Company
currently relies upon, and intends to continue to rely upon, trade secrets,
unpatented proprietary know-how and continuing technological innovation to
protect access to the Company's proprietary information. Relationships between
the Company and its scientific consultants and collaborators may provide such
persons access to the Company's know-how, although, in general, the Company
enters into confidentiality agreements with the parties involved. Similarly, the
Company's employees and consultants have entered into agreements with the
Company which require that such persons forebear from disclosing confidential
information of the Company and to assign to the Company all rights in any
inventions made while in the Company's engagement relating to Company
activities. All members of the Company's Scientific Advisory Committee are
employed by or have consulting agreements with third parties, the business of
which may conflict or compete with the Company, and any inventions discovered by
such individuals will not become the property of the Company. See "--Scientific
Advisors to the Company", below. There can be no assurance that trade secrets
will be developed, or that secrecy obligations will be honored, or that others
will not independently develop similar or superior technology. To the extent
that consultants, employees, collaborators or other third parties apply
technological information independently developed by them or by others to
Company projects, disputes may arise as to the ownership of such information
which may not be resolved in favor of the Company. Any unauthorized disclosure
of the Company's trade secrets or proprietary know-how would have a material
adverse effect on the Company's business, financial condition and results of
operations.
7
9
COMPETITION; RAPID TECHNOLOGICAL CHANGES.
Many companies, including large pharmaceutical, chemical, biotechnology
and agricultural concerns, universities and other research institutions, with financial
resources and research and development staffs and facilities substantially
greater than thoseours. We may not be able to compete successfully given these
factors. For example, if our competitors offer lower prices, we could be forced
to lower prices which would result in reduced margins and would only reduce
prices to get more volume, so that may affect revenues if we do not make up
volume. If we do not lower prices we could lose sales and market share. In
either case, if we are unable to compete against companies who can afford to cut
prices, we would not be able to generate sufficient revenues to grow the company
or reverse our history of the Company, as well as a number of small
companies, are engaged in the researchlosses.
In addition, our competitors and development of products which are or
may be similar to, or competitive with, the Company's existing, under
development and proposed products.
Other products now in use, presently undergoing the regulatory approval
process, or under development by others may perform similar functions as the
Company's existing, under development and proposed products. The biotechnology
industry is characterized by rapid technological advances, and competitors may develop products which may
render the Company's existing, under development and
proposedour products obsolete or which have advantages over the Company'sour products, such as
greater accuracy and precision or greater acceptance by the medical community.
Any such development by competitors, or the failure by the Company to
meet and surpass its competitors' technological advances, could have a material
adverse effect on the Company's business, financial condition and results of
operations. In addition, competitorsCompeting products may be able to completealso get through the regulatory approval process sooner
and, therefore,than our products, enabling our competitors to market their products earlier
than we can. Usually, the Company.
RETENTION AND ATTRACTIONfirst person to market a product has a significant
marketplace advantage. In addition, other products now in use, presently
undergoing the regulatory approval process or under
- 4 -
development by others may perform similar functions as our existing products or
those under development.
A LACK OF KEY PERSONNEL.ACCEPTANCE OF OUR PRODUCTS BY THE MEDICAL COMMUNITY
COULD RESULT IN LOWER REVENUES
The commercial success of our products is substantially dependent on
acceptance and use of our products by the Companymedical community. Our products may
not be accepted by the medical community or it may take a lengthy period of time
to gain the necessary acceptance. Widespread acceptance of our products as
useful additional tools for diagnosis and treatment will require educating the
medical community about the products' benefits, reliability and effectiveness.
In addition, acceptance of our products may be dependentadversely affected by competing
products which may be as or more effective than our products for a specific use.
WE MAY HAVE INCREASED EXPENSES IF OUR MARKETING EFFORTS ARE NOT SUCCESSFUL.
It is our strategy to seek arrangements with large pharmaceutical
companies to market our products. In the event we are unable to enter into those
arrangements in the future or if our arrangements are not successful, we may
seek to market our products through independent distributors or through sales
representatives. Independent distributors may require us to develop a marketing
program to support sales. In that event, we may incur additional expenses for
the development of promotional literature and aides, promotional activities, the
hiring of sales representatives and the conduct of additional studies in order
to promote the interests of distributors in our products. We may not be able to
develop those marketing arrangements on satisfactory terms and we may not have
the working capital necessary to establish the sales support generally required
by independent distributors.
RISKS ASSOCIATED WITH OUR INTERNAL OPERATIONS AND POLICIES
SINCE WE DO NOT INTEND TO DECLARE DIVIDENDS IN THE FORESEEABLE FUTURE, THE
RETURN ON YOUR INVESTMENT WILL DEPEND UPON APPRECIATION OF THE MARKET PRICE OF
YOUR SHARES
Our board of directors does not intend to declare any dividends in the
foreseeable future, but intends to retain all earnings, if any, for use in our
business operations. As a result, the return on your investment in ABS will
depend upon any appreciation in the market price of the common stock. The
holders of class A and class B common stock are entitled to receive dividends
when, as and if declared by the board of directors out of funds legally
available for dividend payments. To date, we have not paid any cash dividends.
The payment of dividends, if any, in the future is within the discretion of our
board of directors and will depend upon our earnings, capital requirements and
financial condition, and other relevant factors.
THE LOSS OF THE SERVICES OF MR. ROACH OR MR. NORTH COULD ADVERSELY
AFFECT OUR BUSINESS AND PROSPECTS
Our success may depend upon the efforts of (1) Alfred J. Roach, the
Chairman of the Boardour board of Directors,directors and one of our major stockholders, and (2)
Mr. John S. North, our President and Chief Executive Officer and a major
stockholder of the Company, Dr. Stephen H. Ip, President, Chief Operating
Officer and a Director of the Company, and Dr. Emer Leahy, Senior Vice
President-Business Development of the Company. Dr. Ip and Dr. Leahy are each
parties to employment agreements with the Company, which expire December 31,
1999 and November 30, 2001, respectively.Officer. Mr. Roach is not
subject to any employment agreement. The Company doesOur employment agreement with Mr. North
expires on November 15, 2001. Each are subject to earlier termination in certain
cases. We do not maintain life insurance on the lives of Mr. Roach Dr. Ip or Dr. Leahy.Mr. North.
The loss of the services of Mr. Roach Dr. Ip
or Dr. Leahy, as well as certain other personnel,Mr. North could adversely affect the
Company'sour
business and prospects. Because of the nature of itsour business, the
Company'sour success is
dependent upon itsour ability to attract and retain technologically qualified
personnel, particularly research scientists. There is substantial competition
for qualified personnel, including competition from companies with substantially
greater resources than
the Company. There is no
assurance that the Company will- 5 -
ours. We may not be successful in recruiting or retaining personnel of the
requisite caliber or in adequate numbers to enable itus to conduct itsour business
and effectively compete in our industry.
OUR COMPUTER SYSTEMS MAY NOT RECOGNIZE THE YEAR 2000 WHICH MAY AFFECT OUR
COMPUTER SYSTEMS AND DISRUPT OUR BUSINESS
The concerns about the upcoming year 2000 have arisen because older
computer programs that used two digits rather than four to define the applicable
year could malfunction. As a result, any computer programs that have
date-sensitive software may recognize a date using 00 as the calendar year 1900
rather than the year 2000. This could result in a computer system failure or in
miscalculations causing disruptions of operations, including a temporary
inability to process transactions, send invoices, or engage in similar normal
business activities.
We are in the process of assessing the impact of the Year 2000 issue on
our information systems. We have identified potential deficiencies and are
addressing them through updates and remediation. In accordance with accounting
rules, costs associated with modifying existing computer software for Year 2000
issues will be expensed as incurred. We are also in the process of assessing the
measures being taken by our customers and suppliers to address the Year 2000
issues and expect to have a contingency plan in place. However, we are not
dependent on any one customer or supplier and our management believes that
alternate sources of supply for product components are widely available.
RISKS WHICH MAY DILUTE THE VALUE OF YOUR ABS SHARES OR LIMIT
THE EFFECT OF THEIR VOTING POWER
IF WE CANNOT MEET THE NASDAQ NATIONAL MARKET SYSTEM MAINTENANCE REQUIREMENTS AND
NASDAQ RULES, NASDAQ MAY DELIST THE COMMON STOCK WHICH COULD NEGATIVELY AFFECT
THE PRICE OF THE COMMON STOCK AND YOUR ABILITY TO SELL THE COMMON STOCK
The closing price of our class A common stock on June 15, 1999 was
$1.00 and our tangible net assets, as defined under Nasdaq rules, were
$4,466,000 as of March 31, 1999. The Nasdaq National Market continuing listing
parameters require that stocks generally have a minimum bid price of $1.00 and
that listed companies have net tangible assets of $4,000,000. We may not be able
to continue to meet these and other Nasdaq requirements. If we fail to maintain
a Nasdaq listing, our securities will likely be traded on the OTC Bulletin
Board. As a result, the market value of our class A common stock could decline
and stockholders may find it more difficult to dispose of, or to obtain accurate
quotations as to the market value of, our class A common stock.
THE PRICE OF OUR COMMON STOCK IS HIGHLY VOLATILE
The price of our class A common stock is highly volatile. During the
period from January 1, 1998 to June 11, 1999 the price of our class A common
stock has ranged from a high of $2.63 in February 1998 to a low of $0.16 in
October 1998. Following periods of volatility in the market price of a company's
securities, securities class action litigation has often been instituted against
such a company. If similar litigation were instituted against us, it could
result in substantial costs and a diversion of our management's attention and
resources, which could have an adverse effect on our business. The volatile
fluctuations of the market price are based on a number of factors, including (1)
the number of shares in the market at the time as well as the number of shares
we may be time consuming and costlyrequired to recruit
qualified personnel.
SCIENTIFIC ADVISORS TO THE COMPANY.
The Company has a Scientific Advisory Committee which is comprised of
scientific advisors who serve as consultants to the Company with respect to the
fields of microbiology, immunology and molecular biology and in cardiovascular
disease, hepatic disease and drug development. These scientists are employed by
or work for others, and they are expected to devote only a small portion of
their time to the Company. In addition, these individuals have employment,
consulting or other advisory arrangements with other entities and, as a result,
their obligations to these other entities may conflict or compete with their
obligations to the Company. There can be no assurance that regulations or
policies now in effect or adoptedissue in the future, to which these individuals are
or may be subject with such other entities might not limit the ability of the
scientific advisors to continue their relationship with the Company.
PRODUCT LIABILITY; REQUIREMENT FOR INSURANCE COVERAGE.
The testing, marketing and sale of pharmaceutical products entails a
risk of product liability claims by consumers and others. Additionally, the
Company's monoclonal antibodies are generated from an antigen free mouse colony
and instances of negative reactions by the human immune system to mouse derived
antibodies have been reported. Product and other liability claims may be
asserted by physicians, laboratories, hospitals or patients relying upon the
results of the Company's diagnostic tests. Claims may also be asserted against
the Company by end users of the Company's products, including persons who may be
treated with any in vivo diagnostic or therapeutic products.
8
10
Certain distributors of pharmaceutical products require minimum product
liability insurance coverage as a condition precedentcompared to the purchasemarket demand for our
shares;(2) our performance and meeting expectations of or
acceptanceour performance,
including the development and commercialization of our products for distribution. Failure to satisfy such insurance
requirements could impede the ability of the Company to achieve broad
distribution of products, which would have a material adverse effect upon the
Company's business, financial condition and results of operations.
The Company has obtained product liability insurance covering its
TpP(TM)proposed
products; and FiF(TM) products, but does not maintain product liability insurance
coverage for its other products. Although the Company will attempt to obtain
product liability insurance prior to the marketing of any of its proposed
products, there can be no assurance that the Company will be able to secure such
insurance or, if available, that such insurance can be acquired at a reasonable
cost or will be sufficient to cover all possible liabilities. In the event of
any claim or suit against the Company, lack or insufficiency of insurance
coverage could have a material adverse effect on the business, financial
condition(3) general economic and results of operations of the Company.
CONTROLmarket conditions.
- 6 -
ABS IS CONTROLLED BY ALFRED J. ROACH.
As of June 30, 1998,15, 1999, Alfred J. Roach, the Chairman of theour Board of
Directors, of the Company, owned and had the power to vote all 1,775,5003,000,000 outstanding shares of
the Company's Classour class B Common Stockcommon stock and 885,2504,575,250 shares of the Company's Classour class A Common Stock (and held options to purchase an additional
1,160,000 shares of the Company's Class A Common Stock, allcommon stock, of
which were
exercisable on June 30, 1998).4,000,000 shares are covered by this prospectus. Each share of Classclass B
Common Stockcommon stock is entitled to ten votes, while each share of Classclass A Common Stockcommon stock
is entitled to one vote. Accordingly, at such date,as of June 15, 1999, Mr. Roach was
entitled to cast approximately 48.5%52.5% of all votes entitled to be cast by stockholders at meetings of stockholders or
by consent without a meeting. As a result, Mr. Roach controlswill be able to exercise
significant control over ABS through his ability to determine the Company.
POTENTIAL ISSUANCES OF SHARES.
In addition to the 20,649,945 sharesoutcome of
Class A Common Stock
outstanding on June 30, 1998, the Company had 12,407,362 sharesvotes of Class A
Common Stock reserved for future issuance as follows: (i) 1,775,500 shares were
reserved for issuance upon conversionstockholders regarding, among other things, nomination and election of
Class B Common Stock, (ii) 2,791,750
shares were reserved for issuance upon the exercisedirectors and approval of outstanding options under
the Company's 1986 Stock Option Plan (which plan has expired as tosignificant transactions. Mr. Roach's holdings of ABS
may increase in the future grant of options) at prices ranging from $1.50 to $10.00 per share, (iii)
2,000,000 were reserved for issuance upon thethrough his exercise of options granted or
which may be granted in the future under the Company's 1996 Stock Option Plan,
under which options to purchase 854,250 shares, at exercise prices ranging from
$1.52 to $5.25 per share, were outstanding, (iv) 487,500 shares were reserved
for issuance upon the exercise of options granted or which may be granted in the
future under the Company's 1993 Non-Employee Director Stock Option Plan, under
which options to purchase 120,000 shares, at exercise prices ranging from $1.00
to $6.75 per share, were outstanding, (v) 601,864 shares were reserved for
issuance upon conversion of the $500,000 in principal amount of the Company's 8%
Convertible Debentures due October 13, 1998, which are convertible (with
interest from the respective dates of issuance) at a price equal to the lesser
of $3.375 or 85% of the average closing bid price of the Company's Class A
Common Stock for the five trading days prior to the conversion date, (vi)
4,000,000 shares were reserved for issuance upon conversion of the Debentures
and 261,228 shares were reserved for issuance upon exercise of the Warrants in
connection with the Company's private placement in May 1998, (vii) 489,520
shares were reserved for issuance upon exercise of other warrants and options
issued to unaffiliated third parties (at exercise prices ranging from $2.25 to
$5.76 per share). In addition to the foregoing, in connection with the Stellar
transaction, the Company may be obligated to issue up to $650,000 inan
additional 1,185,000 shares of the Company's Classour class A Stock as contingent future payments upon Stellar's
attainment of future revenue milestones.common stock which he may exercise at
any time.
WE HAVE A SUBSTANTIAL NUMBER OF SHARES RESERVED FOR FUTURE ISSUANCES WHICH, WHEN
ISSUED, WILL REDUCE YOUR PERCENTAGE OF OWNERSHIP AND VOTING POWER AND MAY AFFECT
THE PRICE OF YOUR ABS COMMON STOCK
The issuance of reserveda significant number of shares would dilute the
equity interestpercentage ownership of existing stockholders and could have a significant
adverse effect on the market price of our class A common stock. As of June 15,
1999, we had 11,285,045 shares of class A common stock reserved for possible
future issuances upon conversion of the Company's Classclass B common stock and exercise of
outstanding options and warrants. See "Dilution."
In addition, we intend to seek additional financing which may result in
the issuance of additional shares of our capital stock and/or rights to acquire
additional shares of our capital stock.
A Common Stock.SIGNIFICANT NUMBER OF RESTRICTED SHARES MAY BE RESOLD UNDER THIS PROSPECTUS OR
RULE 144.
Future sales of substantial amounts of shares in the public market, or
the perception that those sales could occur, could adversely affect the market
price of our class A common stock. As of June 15, 1999, we had outstanding
36,295,130 shares of class A common stock. Of our outstanding shares,
approximately 20,591,868 shares of class A common stock are presently freely
transferable without restriction under the Securities Act, 10,800,000 shares may
be sold pursuant to this Prospectus, and 4,903,262 shares are "restricted
shares" which may be sold under an exemption from registration under the
Securities Act. See also "--Shares"Dilution"; "Shares Eligible for Future Sale", below.
NO DIVIDENDS.
The holdersSale."
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
Some of Class Athe information in this prospectus and Class B Common Stock are entitled to receive
dividends when, as and if declaredin the documents we have
incorporated by reference, may contain forward-looking statements. Those
statements can be generally identified by the Boarduse of Directors outforward-looking words like
"may," "will," "expect," "anticipate," "intend," "estimate," "continue,"
"believe," or other similar words. These statements discuss future expectations,
or state other "forward-looking" information. When considering those statements,
you should keep in mind the risk factors and other cautionary statements in this
prospectus. The risk factors noted in this section and other factors noted in
this prospectus could cause our actual results to differ materially from those
contained in any forward-looking statements.
- 7 -
WHERE YOU CAN FIND MORE INFORMATION ABOUT US
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file 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 over the Internet at the SEC's Website at "http://www.sec.gov."
We have filed with the SEC a registration statement on Form S-3 to
register the shares being offered. This prospectus is part of that registration
statement and, as permitted by the SEC's rules, does not contain all the
information included in the registration statement. For further information with
respect to us and our class A common stock, you should refer to the registration
statement and to the exhibits and schedules filed as part of the registration
statement, as well as the documents discussed below.
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
an important part of this prospectus, and information that we file later with
the SEC will automatically update or supersede this information.
This prospectus may contain summaries of contracts or other documents.
Because they are summaries, they will not contain all of the information that
may be important to you. If you would like complete information about a contract
or other document, you should read the copy filed as an exhibit to the
registration statement or incorporated in the registration statement by
reference.
We incorporate by reference the documents listed below and any future
filings we will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 (File No.
0-19041) until all of the shares are sold:
o Annual Report on Form 10-K for the year ended December 31,
1998 (and the amendment to that Annual Report filed with the
SEC on April 30, 1999;
o Quarterly Report on Form 10-Q for the quarter ended March 31,
1999; and
o The description of our class A common stock contained in the
registration statement on Form 8-A filed on February 26, 1991,
including all amendments or reports filed for the purpose of
updating that description.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Attention: Chief Financial Officer
American Biogenetic Sciences, Inc.
1375 Akron Street
Copiague, New York 11726
(516) 789-2600
You can review and copy the registration statement, its exhibits and
schedules, as well as the documents listed below, at the public reference
facilities maintained by the SEC as described above. The registration statement,
including its exhibits and schedules, are also available on the SEC's web site.
- 8 -
USE OF PROCEEDS
The selling stockholders are selling all of the shares covered by this
prospectus for their own account. Accordingly, we will not receive any proceeds
from the resale of the shares.
We received $2,700,000 in proceeds from our sale of the shares to the
selling stockholders. We used the proceeds, together with $1,152,000 of our
funds, legally available therefor. Toto repurchase:
o all remaining 5% convertible debentures at their principal
amount of $3,248,000 plus interest and a 16% premium of the
principal amount; and
o outstanding warrants to purchase 261,228 of our class A common
stock at an exercise price of $1.9141 per share.
We will bear the expenses relating to this registration, other than
discounts and commissions, which will be paid by the selling stockholders.
DILUTION
As of June 15, 1999, we had issued and outstanding 36,295,130 shares of
class A common stock.
At that date, there were an additional 11,285,045 shares of class A
common stock reserved for possible future issuances as follows:
o 3,000,000 shares for issuance upon conversion of outstanding
class B common stock;
o 2,513,250 shares for issuance upon the Company has not paid any cash
dividends. The paymentexercise of dividends, if any,outstanding
options under our 1986 Stock Option Plan. These options are
exercisable at prices ranging from $1.50 to $10.00 per share;
o 3,995,000 shares for issuance upon the exercise of presently
outstanding options and options which may be granted in the
future is within the
discretion of the Board of Directors and will dependunder our 1996 Stock Option Plan. Options to purchase
2,359,250 shares were outstanding under this plan at June 15,
1999. These options are exercisable at prices ranging from
$0.25 to $5.25 per share;
o 487,500 shares for issuance upon the Company's
earnings, its capital requirementsexercise of presently
outstanding options and financial condition, and other relevant
factors. The Board of Directors does not intend to declare any dividendsoptions which may be granted in the
foreseeable future but intendsunder our 1993 Non-Employee Director Stock Option Plan.
Options to 9
11
retain all earnings, if any,purchase 140,000 shares were outstanding under this
plan at June 15, 1999. These options are exercisable at prices
ranging from $1.00 to $6.75 per share; and
o 1,289,295 shares for use in Company's business operations. The
Company has agreed notissuance upon exercise of other
outstanding warrants and options held by unaffiliated third
parties. These warrants and options are exercisable at prices
ranging from $0.75 to establish a record date for the payment of dividends
at any time that at least $400,000 principal amount of Debentures are
outstanding. Furthermore, as the Company will be required to obtain additional
financing, it is likely that there will be additional restrictions on the
Company's ability to declare any dividends.$4.25 per share.
SHARES ELIGIBLE FOR FUTURE SALE.
At June 30, 1998,SALE
Of the Company had outstanding 22,425,445 shares,
consisting of 20,649,94536,295,130 shares of Classclass A Common Stock and 1,775,500common stock outstanding as of June
15, 1999, approximately 20,591,868 shares of
Class B Common Stock (which are convertible into Class A Common Stock on a share
for share basis). Upon completion of this Offering, approximately 19,554,774
shares of Class A Common Stock are presently freely transferable
without restriction under the Securities Act.
Of the remaining 2,870,67115,703,262 outstanding shares (includingof class A common stock:
o 10,800,000 are "restricted securities", issued in October
1998, which are covered by this prospectus. These shares will
be freely tradeable without restriction (subject to prospectus
delivery requirements) on the 1,775,500
shareseffective date of Class A Common Stock issuable upon conversion of Class B Common
Stock), (i) 92,421the
registration statement;
- 9 -
o 809,012 shares are "restricted securities" that were acquired by the
holders thereofissued between
February 1997 and May 1998June 1999; and
(ii) 2,778,250o 4,094,250 shares are held by persons who may be deemed to be
our "affiliates" of the Company, 310,000 of
which. Of these shares, 2,056,500 are "restricted
securities" acquired by the holder thereofissued between November 1997 and June 1998 and the balance1999. The
remaining 2,037,750 of whichthose shares are "restricted
securities" that were acquired more than two years ago or are
not "restricted securities" because they were acquired pursuant toin the
market or under a registration statement under the Securities
Act.
"Restricted securities", regardless by whom held, and unrestricted
securities held by our affiliates, may be sold:
(1) under a prospectus under an effective registration
statement under the Securities Act,
(2) in compliance with the exemption provisions of Rule 144,
or
(3) under another exemption under the Securities Act.
Rule 144 promulgated by the Commission under the Securities Act ("Rule
144"), provides, in general, that all persons (including affiliates) who have
satisfied a one year holding period with respect to "restricted securities", as
well as affiliates with respect to all other securities held by them, may,
subject to fulfillment of certain requirements, sell within any three month
period a number of shares of Class A Common Stock which does not exceed the
greater of 1% of the then outstanding shares of Class A Common Stock or the
average weekly trading volume in Class A Common Stock during the four calendar
weeks prior to such sale. Rule 144 also permits under certain circumstances,
the salesales of "restricted securities" withoutby any quantityperson,
whether or other limitation by
a person who is not an affiliate, after one year. At that time, sales or "restricted
securities" can be made subject to the Rule's volume and other limitations.
After two years sales of "restricted securities" by non-affiliates can be made
without adhering to Rule 144's volume or other limitations. Shares of our class
A common stock owned by our "affiliates" which are not "restricted securities"
may be sold at any time by complying with Rule 144's volume and other
limitations.
In general, an "affiliate" is a person with the power to manage and
direct our policies. The SEC has stated that, generally, executive officers and
directors of an entity are deemed affiliates of the Company (and has not been an affiliate
for at least three months preceding the sale) and who has satisfied a two year
holding period. The latter provision is applicable as toentity.
In addition, all 601,864 shares that
may be issued upon conversion of the Company's 8% Convertible Debentures issued
in October 1995. "Affiliates" are persons who control, are controlled by or are
under common control with the Company.
All shares issuable upon the exercise of options under the Company'sour
stock option plans have been registered under the Securities Act for issuance
and, unless held by our "affiliates" of the Company (who will be able to sell such
shares by complying with Rule 144, discussed above, but without any additional
holding period), will be freely tradable upon issuance. The Company has also
registeredIf
acquired by our "affiliates," shares issued upon the exercise of those options
could be sold at any time by complying with Rule 144's volume and other
limitations unless covered by a registration statement and prospectus that
permits their sale without those limitations. To date, no registration
statements have been filed with respect to the resale of those shares. See
"Dilution."
SELLING STOCKHOLDERS
We issued the shares of class A common stock covered by this prospectus
to the selling stockholders on October 27, 1998 in a private placement
transaction. Under the terms of the private placement, we issued 10,800,000
shares of class A common stock to the selling stockholders at a price of $0.25
per share. At the time of the issuances, the price per share of our class A
common stock was $0.19. We agreed to register the shares issued in the private
placement under the Securities Act at our expense, other than selling discounts
and commissions which will be paid for resale (i) 5,000by the selling stockholders.
The following table lists information regarding the selling
stockholders' ownership of shares of Classour class A Common Stock issued incommon stock as of June 199615,
1999, and 25,000 shares of Class A Common Stock
subjectas adjusted to an option held by a former consultant, (ii) 100,000 shares of Class A
Common Stock subject to options held by another former consultant, and (iii)
4,261,228 shares registered in connection withreflect the sale of the Debenturesshares.
Information concerning the selling stockholders, their pledgees, donees
and Warrants soldother non-sale transferees who may become selling stockholders, may change
from time to time. To the extent the selling stockholders or any of their
representatives advises us of such changes, we will report those changes in the Company's private placement in May 1998. See "--Potential
Issuances of Shares", above. Any sale of a
substantial number of the foregoing
shares could have a significant adverse effect on the market price of the
Company's Class A Common Stock.
NO ASSURANCE OF CONTINUED NASDAQ/NMS LISTING.
The Company is required to comply with numerous rules promulgated by
Nasdaq/NMS in order for its Class A Common Stock to continue to be quoted
thereon. Among other things, as such requirements pertainprospectus supplement to the Company, the
Company is required to maintain an adjusted tangible net worthextent required. See "Plan of at least
$4,000,000 and its Class A Common Stock must have an aggregate market value of
shares held by persons other than officers and directors ("public float") of at
least $5,000,000, a minimum bid price of at least $1.00 per share and at least
400 persons who own at least 100 shares. These requirements are similar to those
that are required for the Class A Common Stock to be eligible for inclusion on
Nasdaq's Small Cap Market. There can be no assurance that the Company will
continue to be eligible for trading on Nasdaq/NMS or, if not, meet the
requirements for listing or maintenance on the Nasdaq Small Cap Market.Distribution."
- 10 -
12
USE OF PROCEEDS
The proceeds from the sale of the Shares offered hereby will be the
property of the Selling Stockholders and will be used by them in their
discretion. No part of the proceeds will be received by the Company.
SELLING STOCKHOLDERS
The Company issued the Shares being offered hereby to the Selling
Stockholders as partial consideration for the acquisition by the Company of the
stock of Stellar Bio Systems, Inc. The Company is obligated, under that certain
Stock Purchase Agreement dated April 23, 1998, pursuant to which the Company
acquired all of the outstanding shares of stock of Stellar Bio Systems, Inc., to
register the Shares offered hereby under the Securities Act for resale by John
Brewer, William Barton and Sean O'Neill (collectively referred to as the
"Selling Stockholders"). The following table sets forth (i) the number of shares
of Common Stock beneficially owned by each Selling Stockholder prior to the
offering of any shares hereunder, (ii) the number of shares of Common Stock that
may be offered by each Selling Stockholder under this Prospectus, and (iii) the
number of shares of the Company's Class A Common Stock to be beneficially owned
by each Selling Stockholder after the Offering, assuming the sale of all of the
Shares offered hereby. This information is based upon information received from
or on behalf of each Selling Stockholder.
Number of Shares
Beneficially Owned Prior Number of Shares Which Number of Shares Owned After
Name of Beneficial Owner to Offering May Be Offered Offering (1)
-SHARES OF CLASS A
SHARES OF COMMON STOCK
COMMON BENEFICIALLY OWNED AFTER
STOCK SHARES OF THE OFFERING
OWNED PRIOR COMMON ------------------------
----------- -------------- ------------TO THE STOCK TO BE
NAME OFFERING SOLD NUMBER PERCENT
---- -------- ---- ------ -------
Alfred J. Roach.................................... 8,760,250(1) 4,000,000 4,760,250(1) 12%
Larry Kupferberg................................... 400,000(2) 400,000 0(2) *
Donehew Fund Limited Partnership................... 240,000 240,000 0 *
David Biggs........................................ 40,000 40,000 0 *
Robert Donehew..................................... 80,000 80,000 0 *
R. Dave Garwood.................................... 40,000 40,000 0 *
The Rachel Beth Heller 1997 Trust, Lawrence
Kupferberg, TTEEU/A dtd 7/9/97................... 400,000 400,000 0 *
The Evan Todd Heller 1997 Trust, Lawrence
Kupferberg, TTEE U/A dtd 6/17/97................ 400,000 400,000 0 *
Delaware Charter Guarantee &Trust
Company F/B/O Ronald I. Heller - IRA............ 642,075(3) 600,000 42,075(3) *
Delaware Charter Guarantee & Trust
Company F/B/O David S. Nagelberg - IRA.......... 1,242,075(4) 1,200,000 42,075(4) *
Tyler Runnels...................................... 292,700 280,000 12,700 *
Kevin Charos & Anthony Charos JTTEN................ 200,000 200,000 0 *
Delaware Charter Guarantee & Trust
*
Company F/B/O Martin H. Meyerson - IRA.......... 100,000 100,000 0
Kenneth Koock...................................... 120,000 120,000 0 *
Jacqueline Knapp................................... 790,000 790,000 0 *
Janice Halle-Nesses................................ 790,000 790,000 0 *
John Brewer 184,223 184,223Davies........................................ 160,000 160,000 0 William Barton 174,342 174,342*
Invest, Inc........................................ 160,000 160,000 0 Sean O'Neill 39,841 39,841 0*
Peter Janssen...................................... 886,900 800,000 86,900 *
------- ------- -----------
Total 15,719,000 10,800,000 4,919,000
- -------------------------------------------------
* Less than 1%
- 11 -
(1) Assumes the sale of all theIncludes 3,000,000 shares of Common Stock offered hereby. See "Planclass A common stock issuable upon
conversion of Distribution."currently outstanding class B common stock and 1,185,000
shares of class A common stock issuable upon exercise of presently
exercisable options. These options are exercisable at prices ranging
from $0.28 to $5.50 per share. Each share of class B common stock is
entitled to ten votes per share. Percent assumes the conversion of the
class B common stock and the exercise of the options held by Mr. Roach.
(2) Does not include 400,000 shares of class A common stock beneficially
owned by the Evan Todd Heller 1997 Trust and 400,000 shares of class A
common stock beneficially owned by the Rachel Beth Heller 1997 Trust,
which are listed separately below. Mr. Kupferberg is the trustee of
those trusts.
(3) Includes 42,075 shares of class A common stock issuable upon exercise
of presently exercisable warrants beneficially owned by Mr. Heller.
Those warrants are exercisable at $.075 per share.
(4) Includes 42,075 shares of class A common stock issuable upon exercise
of presently exercisable warrants beneficially owned by Mr. Nagelberg.
Those warrants are exercisable at $.075 per share.
Mr. Roach has been Chairman of our Board of Directors since 1983 and
also served as Chief Executive Officer from September 1983 until November 1998.
Each of Messrs. Heller, Nagelberg, Koock and Meyerson are employees of
M.H. Meyerson, one of our financial advisors since August 1998.
PLAN OF DISTRIBUTION
The priceselling stockholders and manner of saletheir pledgees, donees, transferees and
other non-sale transferees, may offer their shares at various times in one or
more of the Shares offered hereunder arefollowing transactions:
o in the sole discretion of the Selling Stockholders. The Shares offered hereby may be
offered through any of several methods, such as ordinary brokerage transactionsover-the-counter market; or
block transactions on the Nasdaq/NMS at market prices, oro in privately negotiated transactions
at prevailing market prices agreed uponat the time of sale, at prices related to those
prevailing market prices, at negotiated prices or at fixed prices.
The selling stockholders may also sell the shares under Rule 144
instead of under this prospectus, if Rule 144 is available for those sales.
The transactions in the shares covered by the parties. Neither the
Company nor, to the knowledgethis prospectus may be
effected by one or more of the Company,following methods:
o ordinary brokerage transactions and transactions in which the
Selling Stockholders, havebroker solicits purchasers;
o purchases by a broker or dealer as principal, and the resale
by that broker or dealer for its account under this
prospectus, including resale to another broker or dealer;
o block trades in which the broker or dealer will attempt to
sell the shares as agent but may position and resell a portion
of the block as principal in order to facilitate the
transaction; or
- 12 -
o negotiated transactions between selling stockholders and
purchasers, with or without a broker or dealer.
The selling stockholders and any broker-dealers or other persons acting
on the behalf of parties that participate in the distribution of the shares may
be deemed to be underwriters. Any commissions or profits they receive on the
resale of the shares may be deemed to be underwriting discounts and commissions
under the Securities Act.
As of the date of this prospectus, we are not aware of any agreement,
arrangement or understanding withbetween any broker or dealer entered into
prior to the effective dateand any of the Registration Statement of which this
Prospectus is a partselling
stockholders with respect to the offer or sale of the Common Stock offered
hereby.shares under this
prospectus.
We have advised the selling stockholders that, during the time each is
engaged in distributing shares covered by this prospectus, each must comply with
the requirements of the Securities Act and the Exchange Act, including Rule
10b-5 and Regulation M. Under those rules and regulations, they:
o may not engage in any stabilization activity in connection
with our securities;
o must furnish each broker which offers class A common stock
covered by this prospectus with the number of copies of this
prospectus which are required by each broker; and
o may not bid for or purchase any of our securities or attempt
to induce any person to purchase any of our securities other
than as permitted under the Exchange Act.
In the Purchase and Investment Agreements we executed in connection
with the October 1998 private placement we agreed to indemnify and hold harmless
each selling stockholder against liabilities under the Securities Act, which may
be based upon, among other things, any untrue statement or alleged untrue
statement of a material fact or any omission or alleged omission of a material
fact, unless made or omitted in reliance upon written information provided to us
by that selling stockholder in this prospectus. We have agreed to bear the
expenses incident to the registration of the shares, other than selling
discounts and commissions.
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Section 145 of the Delaware General Corporation Law allows companies to
indemnify their directors and officers against expenses, judgments, fines and
amounts paid in settlement, under the conditions and limitations described in
the law, with respect to various lawsuits and other proceedings to which they
become a party by reason of the fact that they were serving as our officer,
director, employee or agent or of another enterprise at our request. Our
certificate of incorporation authorizes us to indemnify our officers, directors
and other agent to the fullest extent permitted under Delaware law.
Our certificate of incorporation provides that a director is not
personally liable for monetary damages to us or our stockholders for breach of
his or her fiduciary duties as a director. However, a director will be held
liable for a breach of his or her duty of loyalty to us or our stockholders, his
or her intentional misconduct or willful violation of law, actions or in actions
not in good faith, an unlawful stock purchase or payment of a dividend under
Delaware law, or transactions from which the director derives an improper
personal benefit. This limitation of liability does not affect the availability
of equitable remedies against the director including injunctive relief or
rescission.
We have purchased a directors and officers liability and reimbursement
policy that covers liabilities of our directors and officers arising out of
claims based upon acts or omissions in their capacities as directors and
officers.
- 13 -
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers and controlling persons pursuant
to the foregoing provisions, or otherwise, we have been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
LEGAL MATTERS
The validity of the shares of Common Stockclass A common stock being offered hereby has beenwill be
passed upon for the CompanyABS by Messrs. Brown, Rudnick, FreedParker Chapin Flattau & Gesmer, One
Financial Center, Boston, MA 02111.Klimpl, LLP.
EXPERTS
The audited consolidated financial statements, including the related
notes thereto,to those statements, incorporated by reference in this Prospectusprospectus and
elsewhere in the Registration Statementregistration statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
thereto,to those statements. Those financial statements and report are incorporated by
reference herein in reliance upon the authority of said firm as experts in
accounting and auditing in giving said reports.
11- 14 -
13
No dealer, salesman or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus or a supplement to the Prospectus in connection with the offering
described herein, and, if given or made, such information or representations
must not be relied upon as having been authorized by the Company or the Selling
Stockholders. Neither this Prospectus nor any supplement to this Prospectus
constitutes an offer to sell or a solicitation of an offer to buy any securities
other than those specifically offered hereby or of any securities offered hereby
in any jurisdiction where, or to any person to whom, it is unlawful to make an
offer or solicitation. Neither the delivery of this Prospectus nor any
supplement to this Prospectus nor any sale made hereunder shall, under any
circumstances create an implication that the information herein or therein is
correct as of any time subsequent to its date.================================================================================
WE HAVE NOT AUTHORIZED
ANY DEALER, SALESPERSON 10,800,000 Shares
OR ANY OTHER PERSON TO GIVE
ANY INFORMATION OR TO
REPRESENT ANYTHING NOT
CONTAINED IN THIS PROSPECTUS.
YOU MUST NOT RELY ON ANY
UNAUTHORIZED INFORMATION.
THIS PROSPECTUS DOES NOT OFFER American Biogenetic Sciences, Inc.
TO SELL OR BUY ANY
SHARES IN ANY JURISDICTION
WHERE IT IS UNLAWFUL.
THE INFORMATION IN THIS
PROSPECTUS IS CURRENT AS
OF _____________, 1999. Class A Common Stock
--------------------- --------------------
TABLE OF CONTENTS ---------------------
Page
----
Available Information............................ 2
Incorporation of Certain Documents by Reference . 2
The Company...................................... 3
Risk Factors..................................... 3
Use of Proceeds.................................. 11
Selling Stockholders............................. 11
Plan of Distribution............................. 11
Legal Matters.................................... 11
Experts.......................................... 11
398,406 Shares
AMERICAN BIOGENETIC SCIENCES, INC.
CLASS A COMMON STOCK
--------------------
PROSPECTUS
--------------------- ____________, 1998
12---------------------
Page
----
Prospectus Summary......................2
Risk Factors............................3
Information Regarding
Forward-Looking Statements..........7
Where You Can Find More
Information About Us................8
Use of Proceeds.........................9
Dilution................................9 ________ __, 1999
Shares Eligible for Future Sale.........9
Selling Stockholders ..................10
Plan of Distribution ..................12
Indemnification for Securities
Act Liabilities.....................13
Legal Matters..........................14
Experts ...............................14
======================================= ======================================
14
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Set forthListed below is an estimate of the fees and expenses payable in connection
with the proposed offering of the shares which will be paid by the Company.
SEC Registration Fee................................ $ 121.23
Accounting Fees and Expenses........................ 3,500.00*
Legal Fees and Expenses............................ 7,500.00*
Miscellaneous....................................... 3,878.77
-------------
TOTAL........................................... ABS.
SEC Registration Fee.......................................$ 2,580.17
Accounting Fees and Expenses...............................$ 3,500.00
Legal Fees and Expenses....................................$ 7,500.00
Miscellaneous..............................................$ 1,419.83
----------
TOTAL.................................................$15,000.00
- --------------------
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware
(the "DGCL") provides, in general, that a corporation incorporated under the
laws of the State of Delaware, such as the Registrant,ABS, may indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, (otherother than a derivative action by or in
the right of the corporation)corporation, by reason of the fact that suchthe person is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another enterprise, against expenses, (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by suchthat person in connection with
suchthat action, suit or proceeding if suchthat person acted in good faith and in a
manner suchthat person reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe suchthat person's conduct was
unlawful. In the case of a derivative action, a Delaware corporation may
indemnify any suchthat person against expenses (including attorneys' fees) actually and reasonably incurred by suchthat
person in connection with the defense or settlement of suchthat action or suit if
suchthat person acted in good faith and in a manner suchthat person reasonably believed
to be in or not opposed to the best interests of the corporation, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which suchthat person shall have been adjudged to be liable to the corporation
unless and only to the extent that the court determines suchthat person is fairly
and reasonably entitled to indemnity for suchthose expenses.
Article VII of the registrant's By-laws provides for indemnification of
directors, officers, employees and agents of the CompanyABS to the fullest extent permitted
under Delaware law. In addition, Article TENTH of the registrant's Restated
Certificate of Incorporation provides, in general, that no director of the
registrant shall be personally liable to the registrant or any of its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the DGCL (which provides that under certain circumstances,
directors may be jointly and severally liable for willful or negligent
violations of the DGCL provisions regarding the payment of dividends or stock
repurchases or redemptions), as the same exists or hereafter may be amended, or
(iv) for any transaction from which the director derived an improper personal
benefit.
Pursuant to Section 10.8(b) ofUnder the Stock Purchase Agreementand Investment Agreements between the
CompanyABS and Stellar Bio Systems dated April 23, 1998 (the "Stock Purchase
Agreement"), to the extent permitted by law, each
Selling Stockholderselling stockholder, ABS has agreed to indemnify and hold harmless the Company, each of its directors, each ofselling
stockholder, its officers, who have signed this registration statement,directors and partners and each person if any, who
controls Company withincontrolling
the selling stockholder (within the meaning of the Securities Act, any underwriter (as
defined in the Securities Act) and each
other Selling Stockholderunderwriter, if any, and each person who so controls any underwriter against
anyall, claims, losses, claims, damages or liabilities to which the Company or any such
director, officer, controlling person, underwriter or Selling Stockholder may
become subject, under the Securities Act or otherwise, insofar as such losses,
claims, damages orand liabilities (or actions in respect thereto) arise out of or
are based upon any untrue or alleged untrue statement of any material fact
contained or expressly incorporated by reference in this registration statement,
including any preliminary prospectus or final prospectus contained herein or any
amendment or supplement hereto, or arisethereof)
arising out of or based upon any untrue
II-2
statement (or alleged untrue statement) of a material fact contained in the
registration statement (including any prospectus or other document incident to
that registration or related qualification or compliance with state securities
laws) or based on any omission or(or alleged omissionomission) to state hereintherein a material
fact required to be stated therein or necessary to make the statements hereintherein
not misleading or any violation by ABS of the Securities Act or any state
securities law, relating to any action or inaction required by ABS in connection
with that registration, qualification or compliance, and to reimburse each
indemnified person for any legal and other expenses reasonably incurred in
connection with investigating and defending any claim, loss, damages,
liabilities or action; provided that ABS will not be liable in that case to the
extent but only to the extent, that such
15any claim, loss, damage, liabilities or expense arises out of or is
based on any untrue statement or omission (or alleged untrue statement or
omission or alleged omission wasomission) made in the registration statement, preliminary prospectus, final prospectus, or
amendments or supplements hereto, in reliance upon and in conformity with written information
furnished to ABS by such Selling Stockholder expresslyany indemnified person stated to be specifically for use in
connection with such registration;the registration statement (as to which the selling stockholders have agreed to
indemnify ABS, its officers and such Selling Stockholder will reimburse
any legaldirectors and each person who controls ABS or
other expenses reasonably incurred by Company or any such director,
officer, controlling person, underwriter or Selling Stockholder in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided that that the indemnity agreement contained in Section 10.8(b)
of the Stock Purchase Agreement shall not apply to amounts paid in settlement of
any such loss, claim, damage, liability or action if such settlement is effected
without the consent of the indemnifying Selling Stockholder (which consent shall
not be unreasonably withheld)Underwriter).
The CompanyABS has purchased a Directors and Officers Liability and Reimbursement
Policypolicy that covers certain liabilities of directors and officers of the CompanyABS arising out of
claims based upon acts or omissions in their capacities as directors orand
officers.
II-3
ITEM 16. EXHIBITS
EXHIBIT
NUMBER
- ------
3.1 Restated Certificate of Incorporation of the Company (filed as Exhibit
4.01 to the Company's Registration Statement on Form S-8, File No.
333-09473).*
3.2 Amended and Restated By-Laws of the Company (filed as Exhibit 4.02 to
the Company's Registration Statement on Form S-8, File No. 333-09473).*
4.1 Specimen Certificate for shares of Class A Common Stock (filed as
Exhibit 4.3 to the Company's Registration Statement on Form S-1, File
No. 33-31616).*
4.2 Form of the Company's 5% Convertible Debentures (filed as Exhibit 4.1
to the Company's Current Report on Form 8-K dated May 20, 1998 filed
with the Commission on June 3, 1998, File No. 0-19041).*
5 Opinion of Brown, Rudnick, Freed & Gesmer as to the legality of the
Class A Common Stock being offered.**
23.1 Consent of Arthur Andersen LLP.**
23.2 Consent of Brown, Rudnick, Freed & Gesmer, P.C. (contained in Exhibit
5).**
24 Power of Attorney (contained on Signature Page of this Registration
Statement).**
---------------------Exhibit Number
- --------------
*3.1 Restated Certificate of Incorporation of the Company,
as filed with the Secretary of State of the State of
Delaware on July 30, 1996 (filed as Exhibit 4.01 to
the Company's Registration Statement on Form S-8,
File No. 333-09473).
*3.2 Amended and Restated By-Laws of the Company (filed as
Exhibit 4.02 to the Company's Registration Statement
on Form S-8, File No. 333-09473).
+5 Opinion of Parker Chapin Flattau & Klimpl, LLP to the
legality of the Class A common stock being offered.
Incorporated by reference to Exhibit 5 to the initial
filing of the registration statement, file number
333-69735, filed with the Commission on December 24,
1998.
23.1 Consent of Arthur Andersen LLP.
+23.2 Consent of Parker Chapin Flattau & Klimpl, LLP
(contained in Exhibit 5). Incorporated by reference
to Exhibit 23.2 to the original registration
statement, file number 333-69735, filed with the
Commission on December 24, 1998.
x24 Power of Attorney (contained on Signature Page of
Amendment No. 1 to the Registration Statement).
*99 Form of Purchase and Investment Agreement executed by
the Company and each of the selling stockholders on
October 27, 1998. Incorporated by reference to
Exhibit 99 to the original registration statement,
file number 333-69735, filed with the Commission on
December 24, 1998.
- -----------------------
* Not filed herewith. In accordance with Rule 411 promulgated pursuant tounder the
Securities Act of 1933, as amended, reference is made to the documentsdocument
indicated in parenthesis previously filed with the Commission, which areis
incorporated by reference herein.
**+ Filed herewith.with pre-initial filing of this Registration Statement.
x Filed with Amendment No. 1 to this Registration Statement.
II-4
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forthincluded in the Registration Statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in this Registration Statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the
Registrant pursuant toABS under Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by
reference in this Registration Statement.
II-2
16
(2) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant'sABS' annual
report pursuant tounder Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934 that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) 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 Registrant's Restated Certificate of Incorporation,
Amended and RestatedABS under its By-Laws, or otherwise, the RegistrantABS has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the RegistrantABS of expenses incurred or paid by a director, officer or
controlling person of the RegistrantABS 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 RegistrantABS 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.
II-3II-5
17
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrantregistrant 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 Amendment to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the Town of Copiague, State of New York, on the
29th21st day of July
1998.June, 1999.
AMERICAN BIOGENETIC SCIENCES, INC.
By: /s/ Alfred J. Roach
-----------------------------------------------------
Alfred J. Roach,
Chairman of the Board of Directors and Chief Executive
Officer and Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Alfred J. Roach, Josef C. Schoell and Timothy J.
Roach and each of them, with the power to act without the other, his true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution for him or in his name, place and stead, in any and all
capacities to sign any and all amendments or post-effective amendments to this
Registration Statement, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
or his substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the following
persons in the capacities indicated on the 29th21st day of July, 1998.June, 1999.
Signature Title
--------- -----
/s/ Alfred J. Roach
- -----------------------------
Alfred J. Roach Chairman of the Board, Director
*
- -----------------------------
John S. North President, Chief Executive Officer, Director
+* Vice President-Finance (Principal
- ----------------------------- Financial and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Alfred J. Roach Chairman of the Board (Chief July 29, 1998
Alfred J. Roach Executive Officer)
/s/ Josef C. Schoell Vice President, Finance (Principal July 29, 1998
Josef C. Schoell Financial and Accounting Officer)
/s/ Gustav Victor Rudolph Born Director July 29, 1998
Gustav Victor Rudolph Born
/s/ Ellena M. Byrne Director July 29, 1998
Ellena M. Byrne
/s/ Joseph C. Hogan Director July 29, 1998
Joseph C. Hogan
/s/ Stephen H. Ip Director July 29, 1998
Stephen H. Ip
/s/ Timothy J. Roach Director July 29, 1998
Timothy J. Roach
/s/ William G. Sharwell Director July 29, 1998Accounting
Josef C. Schoell Officer)
*
- -----------------------------
Gustav Victor Rudolph Born Director
*
- -----------------------------
Ellena M. Byrne Director
*
- -----------------------------
Glenna M. Crooks Director
*
- -----------------------------
Joseph C. Hogan Director
*
- -----------------------------
Timothy J. Roach Director
*
- -----------------------------
William G. Sharwell
Director
*By: /s/ Josef C. Schoel
- -----------------------------
Attorney-in-Fact
18
EXHIBIT INDEX
Exhibit
Number
3.1- -------
*3.1 Restated Certificate of Incorporation of the Company,
as filed with the Secretary of State of the State of
Delaware on July 30, 1996 (filed as Exhibit 4.01 to
the Company's Registration Statement on Form S-8,
File No. 333-09473).*
3.2
*3.2 Amended and Restated By-Laws of the Company (filed as
Exhibit 4.02 to the Company's Registration Statement
on Form S-8, File No. 333-09473).*
4.1 Specimen Certificate for shares of Class A Common Stock (filed as
Exhibit 4.3 to the Company's Registration Statement on Form S-1, File
No. 33-31616).*
4.2 Form of the Company's 5% Convertible Debentures (filed as Exhibit 4.1
to the Company's Current Report on Form 8-K dated May 20, 1998 filed
with the Commission on June 3, 1998, File No. 0-19041).*
5
+5 Opinion of Brown, Rudnick, FreedParker Chapin Flattau & Gesmer asKlimpl, LLP to the
legality of the Class A Common Stockcommon stock being offered.**
Incorporated by reference to Exhibit 5 to the initial
filing of the registration statement, file number
333-69735, filed with the Commission on December 24,
1998.
23.1 Consent of Arthur Andersen LLP.**
23.2
+23.2 Consent of Brown, Rudnick, FreedParker Chapin Flattau & Gesmer, P.C.Klimpl, LLP
(contained in Exhibit 5).** Incorporated by reference
to Exhibit 23.2 to the original registration
statement, file number 333-69735, filed with the
Commission on December 24, 1998.
X24 Power of Attorney (contained on Signature Page of
thisAmendment No. 1 to the Registration Statement).*
*99 Form of Purchase and Investment Agreement executed by
the Company and each of the selling stockholders on
October 27, 1998. Incorporated by reference to
Exhibit 99 to the original registration statement,
file number 333-69735, filed with the Commission on
December 24, 1998.
- -------------------------------------------
* Not filed herewith. In accordance with Rule 411 promulgated pursuant to
the Securities Act of 1933, as amended, reference is made to the
documents previously filed with the Commission, which are incorporated
by reference herein.
**+ Filed herewith.with the initial filing of this Registration Statement.
x Filed with Amendment No. 1 to this Registration Statement.