As filed with the Securities and Exchange Commission on February 17, 2000
Registration No. 333-93835
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
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CELL THERAPEUTICS, INC.
(Exact name of Registrant as specified in its charter)
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Washington 2384 91-1533912
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
201 Elliott Avenue West
Seattle, Washington 98119
(206) 282-7100
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
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James A. Bianco
President and Chief Executive Officer
Cell Therapeutics, Inc.
201 Elliott Avenue West
Seattle, Washington 98119
(206) 282-7100
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copy to:
Michael J. Kennedy, Esq.
Michael S. Dorf, Esq.
Torrey J. Miller, Esq.
WILSON SONSINI GOODRICH & ROSATI
650 Page Mill Road
Palo Alto, California 94304
(650) 493-9300
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Approximate date of commencement of proposed sale to the public: From time
to time after this registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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CTI hereby amends this Registration Statement on such date or dates as may
be necessary to delay its effective date until CTI shall file a further
amendment that specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of the Securities
Act of 1933, or until the Registration Statement shall become effective on such
date as the SEC, acting pursuant to said Section 8(a), may determine.
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+ +
+The information contained in this preliminary prospectus is not complete and +
+may be changed. These securities may not be sold until the registration +
+statement filed with the Securities and Exchange Commission is effective. +
+This prospectus is not an offer to sell nor does it seek an offer to buy +
+these securities in any jurisdiction where the offer or sale is not +
+permitted. +
+ +
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SUBJECT TO COMPLETION, DATED FEBRUARY 17, 2000
PRELIMINARY PROSPECTUS
6,148,087 Shares
CELL THERAPEUTICS, INC.
Common Stock
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This prospectus relates to the public offering, which is not being
underwritten, of 6,148,087 shares of the common stock of Cell Therapeutics,
Inc., a Washington corporation, which is held by the shareholders named on page
11.
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An investment in the shares of CTI's common stock offered hereby involves
certain risks. See "Risk Factors" beginning on page 1 of this prospectus.
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Our common stock is quoted on the Nasdaq National Market under the symbol
"CTIC." On February 15, 2000, the closing price for the common stock was
$20.313.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is
a criminal offense.
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The date of this Prospectus is , 2000.
You should rely only on the information incorporated by reference or
provided in this prospectus or the prospectus supplement. We have authorized no
one to provide you with different information. We are not making an offer of
these securities in any state where the offer is not permitted. You should not
assume that the information in this prospectus or any prospectus supplement is
accurate as of any date other than the date on the front of the document.
THE COMPANY
CTI is a pharmaceutical research and development company that focuses on the
discovery, development and commercialization of small molecule drugs relevant
to the treatment of cancer. CTI's initial business strategy is to build a
diversified, vertically integrated portfolio of oncology products targeting
major unmet needs in the treatment of patients with cancer. CTI's principal
executive offices are located at 201 Elliott Avenue West, Seattle, WA 98119.
CTI's telephone number is (206) 282-7100.
RISK FACTORS
The risks and uncertainties described below are the material ones facing us.
Additional risks and uncertainties not presently known to us or that we
currently deem immaterial may also impair our business operations. If any of
the following risks actually occur, our business, financial condition or
results of operations could be materially adversely affected. In such case, the
trading price of our common stock could decline. This Form S-3 also contains
"forward-looking" statements that involve risks and uncertainties. Our actual
results could differ materially from those anticipated in these forward-looking
statements as a result of certain factors, including the risks faced by us
described below and elsewhere in this Form S-3.
We are in the middle stages of development of our drug candidates. If we do not
successfully develop our products, we may be unable to generate revenues to
facilitate further research and development.
Our first and second leading drug candidates, Arsenic Trioxide, or ATO, and
Apra, are currently being tested in humans in clinical trials. We acquired ATO
on January 10, 2000 upon our acquisition of PolaRx, a single product company
that owned the rights to ATO. The human clinical trials of the drug candidates
involve the testing of potential therapeutic agents, or effective treatments,
in humans in three phases (Phases I, II, and III) to determine the safety and
efficacy of the drug candidates. Many drugs in human clinical trials fail to
demonstrate the desired safety and efficacy characteristics. Even if our drugs
progress successfully through initial human testing, they may fail in later
stages of development. A number of companies in the pharmaceutical industry,
including CTI, have suffered significant setbacks in advanced clinical trials,
even after reporting promising results in earlier trials. For example, in our
first Phase III human trial for Lisofylline, or LSF, completed in March 1998,
we failed to meet our two primary endpoints, or goals, even though we met our
endpoints in two earlier Phase II trials for LSF. As a result, we are no longer
developing LSF as a potential product. In addition, data obtained from clinical
trials are susceptible to varying interpretations. Government regulators and
our collaborators may not agree with our interpretation of our future clinical
trial results. The clinical trials of ATO, Apra or any of our future drug
candidates may not be successful.
Aside from Apra, which is in Phase II clinical trials, and polyglutamate
paclitaxel, or PG-TXL, which is in Phase I human trials, and ATO, which
recently completed its pivotal trial, our drug candidates are still in research
and preclinical development, which means that they have not yet been tested on
humans. We will need to commit significant time and resources to develop these
and additional product candidates. We are dependent on the successful
completion of our trial for Apra and PG-TXL and obtaining regulatory approval
in order to generate revenues. The failure to generate such revenues may
preclude us from continuing our research and development of these and other
product candidates.
1
Because our product development programs are in an intermediate stage, we
cannot be sure that our compounds will be successfully commercialized.
Since our inception in 1991, we have dedicated substantially all of our
resources to the research and development of our technologies and related
compounds. All of our compounds currently are in research or development, and
none has been submitted for marketing approval. There can be no assurance that
any of our other compounds will enter human clinical trials on a timely basis,
if at all, or that we will develop any product candidates suitable for
commercialization. Prior to commercialization, each product candidate will
require significant additional research, development and preclinical testing
and extensive clinical investigation before submission of any regulatory
application for marketing approval. Potential products that appear to be
promising at early stages of development may not reach the market for a number
of reasons. Potential products may:
. be found ineffective or cause harmful side effects during clinical
testing or clinical trials,
. fail to receive necessary regulatory approvals,
. be difficult to manufacture on a large scale,
. be uneconomical to produce,
. fail to achieve market acceptance, or
. be precluded from commercialization by proprietary rights of third
parties.
We cannot assure you that our product development efforts or that our
collaborative partners' efforts will be successfully completed, that required
regulatory approvals will be obtained or that any products, if introduced, will
be successfully marketed or achieve customer acceptance.
If our lipid and polymer based technologies are not correct, we may be unable
to successfully develop commercial products from our drug candidates.
We rely predominantly upon our lipid and polymer based technologies for the
discovery, development and commercialization of drugs for the treatment of
cancer. It is possible that our lipid or polymer based technological approaches
may not be correct and our drug candidates may not be proven safe or effective.
If our approaches have been incorrect or our products are not successful, it is
possible that our drug candidates ultimately will fail to develop into
commercial products.
We have a history of losses and an expectation of future losses. If we continue
to incur net losses, we may not achieve or maintain profitability.
CTI was incorporated in 1991 and has incurred a net operating loss every
year. As of September 30, 1999, we had an accumulated deficit of approximately
$150.0 million. Losses have resulted principally from costs incurred in
research activities aimed at discovering and developing our product candidates,
and from general and administrative costs associated with our operations. We
currently have no product revenue, and we cannot assure you that we will ever
be able to earn such revenue or that our operations will become profitable,
even if we are able to commercialize any products. We will be required to
conduct significant research, development, testing and regulatory compliance
activities that, together with projected general and administrative expenses,
are expected to result in substantial increasing operating losses for at least
the next several years. Our future profitability depends, in part, on:
. our obtaining regulatory approval for ATO and Apra, our two lead product
candidates,
. our entering into agreements for the commercialization, manufacture and
marketing of ATO and Apra, and
. our entering into agreements for the development, commercialization,
manufacturing and marketing of additional products derived from our other
drug development and discovery programs.
2
We cannot assure you that we, or any potential collaborative partners, will
obtain required regulatory approvals, or successfully develop, commercialize,
manufacture and market product candidates. We may not achieve product revenue
or profitability. Even if we do achieve profitability, we may not be able to
sustain or increase profitability on a quarterly or annual basis.
If we fail to adequately protect our intellectual property, our competitive
position could be harmed.
Development and protection of our intellectual property are important
aspects of our business. If we do not adequately protect our intellectual
property, competitors may be able to practice our technologies and erode our
competitive advantage. Our success depends in part on our ability to:
. obtain patent protection for our products or processes both in the United
States and other countries,
. protect trade secrets,
. operate without infringing upon the proprietary rights of others, and
. prevent others from infringing on our proprietary rights.
The patent position of biopharmaceutical firms generally is highly uncertain
and involves complex legal and factual questions. The U.S. Patent and Trademark
Office has not established a consistent policy regarding the breadth of claims
that it will allow in patents affecting subject matters of interest to CTI. If
it allows broad claims, the number and cost of patent interference proceedings
in the U.S. and the risk of infringement litigation may increase. If it allows
narrow claims, the risk of infringement may decrease, but the value of our
rights under our patents, licenses and patent applications may also decrease.
We cannot assure you that patent applications in which we have rights will
ever issue as patents or that the claims of any issued patents will afford
meaningful protection for our technologies or products. In addition, it is
possible that patents issued to us or our licensors may be challenged and
subsequently narrowed, invalidated or circumvented. Litigation, interference
proceedings or other governmental proceedings that we may become involved in
with respect to our proprietary technologies or the proprietary technology of
others could result in substantial cost to us. Patent litigation is widespread
in the biotechnology industry, and it is not possible to predict how any patent
litigation will affect us. Although we attempt to monitor the patent filings of
our competitors in an effort to guide the design and development of our
products to avoid infringement, third parties may challenge the patents that
have been issued or licensed to us.
In addition, patents issued to third parties may cover our products and
services as ultimately developed. We may need to acquire licenses to these
patents or challenge the validity of these patents. We may not be able to
license any patent rights on acceptable terms or successfully challenge such
patents. The need to do so will depend on the scope and validity of these
patents and ultimately on the final design or formulation of the products and
services that we develop. We currently have rights to key patents through
exclusive license agreements with Memorial Sloan Kettering Cancer Institute,
Samuel Waxman Cancer Research Foundation and Beijing Medical University.
We also rely upon trade secrets, proprietary know-how and continuing
technological innovation to remain competitive. Third parties may independently
develop such know-how or otherwise obtain access to our technology. While our
employees, consultants and corporate partners with access to proprietary
information are generally required to enter into confidentiality agreements,
these agreements may not be honored.
If we fail to keep pace with rapid technological change in the biotechnology
and pharmaceutical industries, our products could become obsolete.
Biotechnology and related pharmaceutical technology have undergone and are
subject to rapid and significant change. We expect that the technologies
associated with biotechnology research and development will continue to develop
rapidly. Our future will depend in large part on our ability to maintain a
competitive
3
position with respect to these technologies. Any compounds, products or
processes that we develop may become obsolete before we recover any expenses
incurred in connection with developing these products.
We are faced with direct and intense competition from our rivals in the
biotechnology and pharmaceutical industries.
The biotechnology and pharmaceutical industries are intensely competitive.
We have numerous competitors in the United States and elsewhere. Our
competitors include major, multinational pharmaceutical and chemical companies,
specialized biotechnology firms and universities and other research
institutions. Many of these competitors have greater financial and other
resources, larger research and development staffs and more effective marketing
and manufacturing organizations, than we do. In addition, academic and
government institutions have become increasingly aware of the commercial value
of their research findings. These institutions are now more likely to enter
into exclusive licensing agreements with commercial enterprises, including our
competitors, to market commercial products.
We cannot give any assurance that our competitors will not succeed in
developing or licensing technologies and drugs that are more effective or less
costly than any we are developing. Our competitors may succeed in obtaining FDA
or other regulatory approvals for drug candidates before we do. We face direct
competition from many companies focusing on areas such as cell signal
transduction, which is the sequence by which one molecule acting on a cell
initiates a series of events that after the function or activity of the cell
surface receptor technology, which deals with the molecules on the surface of a
cell, that bind to specific molecules to initiate signal transduction,
transcription factors, which are molecules that enable messenger RNA copies to
be made from a specific gene, and gene therapies. Drugs resulting from our
research and development efforts, if approved for sale, may not be able to
compete successfully with our competitors' existing products or products under
development.
If we fail to raise substantial additional capital, we will have to curtail or
cease operations.
We expect that the capital raised through the sale of Series D preferred
stock and our existing capital resources and the interest earned thereon will
enable us to maintain our current and planned operations at least through the
first quarter of 2001. Beyond that time, if our capital resources are
insufficient to meet future capital requirements, we will have to raise
additional funds to continue the development of our technologies and complete
the commercialization of products, if any, resulting from our technologies. We
will require substantial funds to: (1) continue our research and development
programs, (2) in-license or acquire additional technologies, and (3) conduct
preclinical studies and clinical trials. We may be required to raise additional
capital to fund our operations repeatedly. Such capital may be raised through
public or private equity financings, partnerships, debt financings, bank
borrowings, or other sources. Our capital requirements will depend upon
numerous factors, including the following:
. the establishment of additional collaborations,
. the development of competing technologies or products,
. changing market conditions,
. the cost of protecting our intellectual property rights,
. the purchase of capital equipment,
. the progress of our drug discovery and development programs, the progress
of our collaborations and receipt of any option/license, milestone and
royalty payment resulting from those collaborations, and
. in-licensing and acquisition opportunities.
Additional funding may not be available on favorable terms or at all. If
adequate funds are not otherwise available, we may be required to curtail
operations significantly. To obtain additional funding, we may need to
4
enter into arrangements that require us to relinquish rights to certain
technologies, drug candidates, products and/or potential markets. To the extent
that additional capital is raised through the sale of equity, or securities
convertible into equity, you may experience dilution of your proportionate
ownership of CTI.
Our stock price is extremely volatile, which may affect our ability to raise
capital in the future.
The market price for securities of biopharmaceutical and biotechnology
companies, including that of CTI, historically have been highly volatile, and
the market from time to time has experienced significant price and volume
fluctuations that are unrelated to the operating performance of such companies.
Fluctuations in the trading price or liquidity of our common stock may
adversely effect our ability to raise capital through future equity financings.
Factors that may have a significant impact on the market price and
marketability of our common stock include:
. announcements of technological innovations or new commercial therapeutic
products by us, our collaborative partners or our present or potential
competitors,
. announcements by us or others of results of preclinical testing and
clinical trials,
. developments or disputes concerning patent or other proprietary rights,
. developments in our relationships with collaborative partners,
. acquisitions,
. litigation,
. adverse legislation,
. changes in governmental regulation, third-party reimbursement policies,
the status of our regulatory approvals or applications,
. changes in earnings,
. changes in securities analysts' recommendations,
. changes in health care policies and practices,
. economic and other external factors,
. period-to-period fluctuations in our financial result, and
. general market conditions.
In the past, following periods of volatility in the market price of a
company's securities, securities class action litigation has often been
instituted. If a securities class action suit is filed against us, we would
incur substantial legal fees and our management's attention and resources would
be diverted from operating our business in order to respond to the litigation.
We are dependent upon collaborative relationships to fund our research and
enhance our drug development programs. If we are unable to find collaborators
in the future, we may not be able to develop our technologies.
A key element of our strategy is to enhance our drug discovery and
development programs and to fund our capital requirements, in part, by entering
into various collaborative arrangements with corporate partners, academic
collaborators and licensors. In 1996, we entered into a Collaboration Agreement
with subsidiaries of Johnson & Johnson to jointly develop and commercialize
LSF. On November 16, 1998, the Collaboration Agreement was amended. Under the
terms of the amended Collaboration Agreement, we assumed all responsibility for
further development of LSF as of January 1,1999. On October 11, 1999 we
announced the
5
results of our Phase III trial from LSF in treating patients with acute myeloid
leukemia, or AML, which is a severe form of leukemia. We did not achieve our
goals of reducing the incidence of serious infections associated with
neutropemia, which is a temporary compromise of the immune system related to
low white blood cell count. In accordance with the amended Collaboration
Agreement, CTI is preparing the data from these trials for Johnson & Johnson's
review. CTI does not anticipate that Johnson & Johnson will elect to resume
responsibility for development and commercialization of LSF.
In July 1998, we in-licensed exclusive worldwide rights to PG-TXL, a water-
soluble and potentially more effective form of the cancer drug, Taxol. However,
we cannot assure you that we will be able to negotiate acceptable collaborative
arrangements in the future or that these collaborations, if entered into, will
be on terms favorable to us. If we are unable to enter into future
collaborations with capable partners and on commercially reasonable terms, the
development and commercialization of our product candidates would be delayed
and possibly postponed indefinitely.
Our dependence on third-party manufacturers means that we may not have
sufficient control over the manufacture of our products.
We currently do not have internal facilities for the manufacture of any of
our products for clinical or commercial production. We will need to develop
additional manufacturing resources, enter into collaborative arrangements with
other parties which have established manufacturing capabilities or elect to
have other third parties manufacture our products on a contract basis. We are a
party to one such agreement with a third-party vendor to furnish Apra bulk drug
substance for future clinical studies. We are dependent on such collaborators
or third parties to supply us in a timely way with products manufactured in
compliance with standards imposed by the FDA and foreign regulators. We cannot
assure you that the manufacturing facilities of contract manufacturers will
comply with applicable manufacturing regulations of the FDA or meet our
requirements for quality, quantity or timeliness.
We may face difficulties in achieving acceptance of our products in the market
due to our lack of sales and marketing capabilities and other factors.
We have no direct experience in marketing, sales or distribution. The
creation of infrastructure to commercialize pharmaceutical products is an
expensive and time-consuming process. We believe, however, that the United
States oncology market is accessible by a limited marketing staff and field
sales organization. Should we have to market and sell our products directly, we
would need to develop a marketing and sales force with technical expertise and
distribution capability. We may be unable to develop the necessary marketing
and sales capabilities and we may not be successful in gaining market
acceptance for our products.
If we lose our key personnel or are unable to attract and retain additional
personnel, we may be unable to pursue collaborations or develop our own
products.
We are highly dependent on the following principal members of our scientific
and management staff: Dr. James A. Bianco, Chief Executive Officer, and Dr.
Jack Singer, Executive Vice President, Research Program Chairman. The loss of
these principal members of our scientific or management staff, or failure to
attract or retain other key scientific personnel employees, could prevent us
from pursuing collaborations or developing our products and core technologies.
Recruiting and retaining qualified scientific personnel to perform research and
development work are critical to CTI's success. There is intense competition
for qualified scientists and managerial personnel from numerous pharmaceutical
and biotechnology companies, as well as from academic and government
organizations, research institutions and other entities. In addition, we rely
on consultants and advisors, including our scientific and clinical advisors, to
assist us in formulating our research and development strategy. All of our
consultants and advisors are employed by other employers or are self-employed,
and have commitments to or consulting or advisory contracts with other entities
that may limit their availability to us.
6
Our potential products are subject to a lengthy and uncertain regulatory
process. If our potential products are not approved, we will not be able to
commercialize those products.
The pharmaceutical industry is subject to stringent regulation with respect
to product safety and efficacy by various federal, state and local authorities.
Of particular significance are the Food and Drug Administration's requirements
covering research and development, testing, manufacturing, quality control,
labeling and promotion of drugs for human use. A pharmaceutical product cannot
be marketed in the U.S. until it has been approved by the FDA, and then can
only be marketed for the indications and claims approved by the FDA. The effect
of government regulation may be to delay marketing of our products for a
considerable or indefinite time, impose costly procedural requirements and
furnish a competitive advantage to larger companies or companies more
experienced in regulatory affairs. Delays in obtaining governmental regulatory
approval could adversely affect our marketing strategy as well as our ability
to generate revenue from product sales.
The regulatory process is expensive and time consuming. Currently, none of
our products are under review by the FDA nor have any of our drug candidates
been reviewed in the past. We are in the process of preparing a New Drug
Application, or NDA, for ATO for the FDA's review. We also have orphan drug
designation with the FDA for ATO, which means that we may be awarded the status
as the sole marketer of ATO for certain specified indications for use in a
limited patient population for a limited period of time if the NDA is approved.
If our products are marketed abroad, they will also be subject to export
requirements and to regulation by foreign governments. The applicable
regulatory approval process is lengthy and expensive and must be completed
prior to the commercialization of a product. We may not be able to obtain
necessary regulatory approvals on a timely basis, if at all, for any of our
products under development. Delays in receipt or failure to receive such
approvals or failure to comply with existing or future regulatory requirements
could have a material adverse effect on our business, financial condition and
results of operations.
Because there is a risk of product liability associated with our products, we
face potential difficulties in obtaining insurance.
Our business exposes us to potential product liability risks inherent in the
testing, manufacturing and marketing of human pharmaceutical products, and we
may not be able to avoid significant product liability exposure. Except for
insurance covering product use in our clinical trials, we do not currently have
any product liability insurance, and it is possible that we will not be able
obtain or maintain such insurance on acceptable terms or that any insurance
obtained will provide adequate coverage against potential liabilities. Our
inability to obtain sufficient insurance coverage at an acceptable cost or
otherwise to protect against potential product liability claims could prevent
or limit the commercialization of any products we develop. A successful product
liability claim in excess of our insurance coverage could result in a liability
greater than our total assets.
Uncertainty regarding third-party reimbursement and health care cost
containment initiatives may limit our returns.
Our ability to commercialize our products successfully will be affected by
the ongoing efforts of governmental and third-party payors to contain or reduce
the cost of health care. Governmental and other third-party payors increasingly
are attempting to contain health care costs by:
. challenging the prices charged for health care products and services,
. limiting both coverage and the amount of reimbursement for new
therapeutic products,
. denying or limiting coverage for products that are approved by the FDA
but are considered experimental or investigational by third-party payors,
and
. refusing in some cases to provide coverage when an approved product is
used for disease indications in a way that has not received FDA marketing
approval.
In addition, the trend toward managed health care in the United States, the
growth of organizations such as health maintenance organizations, and
legislative proposals to reform healthcare and government insurance
7
programs could significantly influence the purchase of healthcare services and
products, resulting in lower prices and reducing demand for our products.
Even if we succeed in bringing any of our proposed products to the market,
they may not be considered cost-effective and third-party reimbursement might
not be available or sufficient. If adequate third party coverage is not
available, we may not be able to maintain price levels sufficient to realize an
appropriate return on our investment in research and product development. In
addition, legislation and regulations affecting the pricing of pharmaceuticals
may change in ways adverse to us before or after any of our proposed products
are approved for marketing. While we cannot predict whether any such
legislative or regulatory proposals will be adopted, the adoption of such
proposals could make it difficult or impossible to sell our products.
Although we believe that we adequately prepared for Year 2000 issues, it is
possible that Year 2000 problems of other companies could impact our business.
Although CTI has not experienced any Year 2000 problems, the systems of
other companies on which CTI's systems rely may still remain vulnerable to the
Year 2000 issue. Potential impacts could include, but are not limited to,
future revenue delays due to delayed research, development, clinical trials or
agency approvals. We presently believe the Year 2000 issue will not pose
significant operational problems for our computer systems, non-IT systems or
third-party relationships.
We believe that the Year 2000 issues have been effectively avoided, but we
have developed for each critical activity a contingency plan to allow
operations to continue even if significant issues are experienced. CTI has a
team assigned to review all information technology systems, all equipment, and
vendors of equipment and services that may be impacted by Year 2000 issues.
Since we use hazardous materials in our business, we may be subject to claims
relating to improper handling, storage or disposal of these materials.
Our research and development activities involve the controlled use of
hazardous materials, chemicals and various radioactive compounds. We are
subject to federal, state and local laws and regulations governing the use,
manufacture, storage, handling and disposal of such materials and certain waste
products. Although we believe that our safety procedures for handling and
disposing of such materials comply with the standards prescribed by state and
federal regulations, the risk of accidental contamination or injury from these
materials cannot be eliminated completely. In the event of such an accident, we
could be held liable for any damages that result and any such liability not
covered by insurance could exceed our resources. Compliance with environmental
laws and regulations may be expensive, and current or future environmental
regulations may impair our research, development or productions efforts. We
believe that our current operations comply in all material respects with
applicable Environmental Protection Agency regulations.
Since ownership of our stock is concentrated in officers, directors and their
affiliates, a change of control may be delayed or prevented, even if the change
would be in the best interest of our shareholders.
Directors and officers of CTI, and their affiliates, beneficially own in the
aggregate 4,085,347 shares of our common stock (including shares of common
stock subject to options or warrants exercisable or convertible within 60 days
of December 1, 1999), representing approximately 25.04 percent of the voting
power of our outstanding securities. Such concentration of ownership may have
the effect of delaying, deferring or preventing a change in control of CTI and
might affect the market price of our common stock, even when a change may be in
the best interests of all shareholders. In addition, the interests of this
concentration of ownership may not always coincide with our interests or the
interests of other shareholders and accordingly, they could cause us to enter
into transactions or agreements which we would not otherwise consider.
8
Because our charter documents contain certain anti-takeover provisions and we
have a rights plan, it may be difficult to sell CTI to a third party, and the
rights of some shareholders could be adversely affected.
Our Restated Articles of Incorporation and Bylaws contain provisions that
may make it more difficult for a third party to acquire or make a bid for us.
These provisions could limit the price that certain investors might be willing
to pay in the future for shares of our common stock. In addition, shares of our
preferred stock may be issued in the future without further shareholder
approval and upon such terms and conditions and having such rights, privileges
and preferences, as the board of directors may determine. The rights of the
holders of common stock will be subject to, and may be adversely affected by,
the rights of any holders of preferred stock that may be issued in the future.
The issuance of preferred stock, while providing desirable flexibility in
connection with possible acquisitions and other corporate purposes, could have
the effect of making it more difficult for a third party to acquire, or of
discouraging a third party from acquiring, a majority of our outstanding voting
stock. We have no present plans to issue any shares of preferred stock. In
addition, we have adopted a shareholder rights plan that, along with certain
provisions of our Restated Articles of Incorporation, may have the effect of
discouraging certain transactions involving a change of control of CTI.
9
USE OF PROCEEDS
CTI will not receive any of the net proceeds from the sale of the shares of
CTI common stock offered hereby, all of which proceeds will be received by the
selling shareholders.
WHERE YOU CAN FIND MORE INFORMATION
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 Room at 450 Fifth Street, N.W., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information on the operation
of the Public Reference Room. Our SEC filings are also available to the public
from our web site at http://www.ctiseattle.com or at the SEC's web site at
http://www.sec.gov. The SEC allows us to "incorporate by reference" the
information we file with them, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus, and
later information filed with the SEC will update and supersede this
information. We incorporate by reference the documents listed below and any
future filings made with the SEC under Section 13a, 13(c), 14, or 15(d) of the
Securities Exchange Act of 1934 until our offering is completed.
(a) Annual Report on Form 10-K for the fiscal year ended December 31, 1998,
filed March 31, 1999, including certain information in CTI's Definitive Proxy
Statement in connection with CTI's 1999 Annual Meeting of Shareholders and
certain information in CTI's Annual Report to Shareholders for the fiscal year
ended December 31, 1998;
(b) Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999,
June 30, 1999 and September 30, 1999;
(c) Current Report on Form 8-K filed January 25, 2000;
(d) The description of CTI common stock contained in its registration
statement on Form 10 filed June 27, 1996 and June 28, 1996, including any
amendments or reports filed for the purpose of updating such descriptions; and
(e) The description of CTI's Preferred Stock Purchase Rights, contained in
its registration statement on Form 8-A filed on November 15, 1996, including
any amendments or reports filed for the purpose of updating such description.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Louis A. Bianco
Executive Vice President, Finance and Administration
Cell Therapeutics, Inc.
201 Elliott Avenue West
Seattle, WA 98119
(206) 282-7100
10
SELLING SHAREHOLDERS
The following table sets forth the number of shares owned by each of the
selling shareholders. None of the selling shareholders has had a material
relationship with CTI within the past three years other than as a result of the
ownership of the shares or other securities of CTI. No estimate can be given as
to the amount of shares that will be held by the selling shareholders after
completion of this offering because the selling shareholders may offer all or
some of the shares and because there currently are no agreements, arrangements
or understandings with respect to the sale of any of the shares. The shares
offered by this prospectus may be offered from time to time by the selling
shareholders named below.
Shares of Common
Shares of Common Stock Number of Shares Stock Beneficially
Beneficially Owned Offered hereby Owned
Prior to Offering for After the Offering
----------------------- Stockholder's --------------------
Name of Beneficial Owner Number Percentage(1) Account(2)(3) Number Percentage(1)
- ------------------------ --------- ------------- ---------------- ------ -------------
The Aries Master Fund... 1,037,797 6.25 1,037,797 0 *
Aries Domestic Fund,
L.P. .................. 420,529 2.63 420,529 0 *
Aries Domestic Fund II,
L.P. .................. 32,585 * 32,585 0 *
Essex Woodlands Health
Ventures Fund IV,
L.P. .................. 3,688,852 19.16 3,688,852 0 *
Caduceus Capital Trust.. 410,692 2.57 410,692 0 *
Caduceus Capital II,
L.P. .................. 204,116 1.29 204,116 0 *
Wayne Rothbaum.......... 122,962 * 122,962 0 *
Steven Olivera.......... 122,962 * 122,962 0 *
Joseph Edelman.......... 61,481 * 61,481 0 *
Mitchell Silber......... 46,111 * 46,111 0 *
- --------
* Represents beneficial ownership of less than one percent.
(1) Based on the number of shares outstanding on December 1, 1999.
(2) Assumes sale of all shares of common stock offered by the selling
stockholders, based on the fixed conversion ratio price of $2.16250 per
share and exercise of warrants to purchase 1,523,810 shares of common
stock. CTI has registered for resale under this prospectus a maximum of up
to 6,148,087 shares of its common stock. In addition, the actual number of
shares of common stock offered for resale may be higher or lower based on
issuances of additional shares in the event of any future stock dividends,
stock distributions, stock splits or similar capital readjustments.
(3) For each selling stockholder, includes shares of common stock issuable upon
conversion of shares of Series D preferred stock (assuming a conversion
price of $2.16250 per share), and also includes shares of common stock
issuable upon exercise in full of such selling stockholder's pro rata share
of warrants to purchase a total of 1,523,810 shares of common stock.
11
PLAN OF DISTRIBUTION
CTI is registering all 6,148,087 shares (the "Shares") on behalf of certain
selling shareholders. All of the shares either originally were issued by us or
will be issued upon the conversion of Series D preferred stock or upon exercise
of warrants to acquire shares of our common stock. CTI will receive no proceeds
from this offering. The selling shareholders named in the table above or
pledgees, donees, transferees or other successors-in-interest selling shares
received from a named selling shareholder as a gift, partnership distribution
or other non-sale-related transfer after the date of this prospectus
(collectively, the "selling shareholders") may sell the shares from time to
time. The selling shareholders will act independently of CTI in making
decisions with respect to the timing, manner and size of each sale. The sales
may be made on one or more exchanges or in the over-the-counter market or
otherwise, at prices and at terms then prevailing or at prices related to the
then current market price, or in negotiated transactions. The selling
shareholders may effect such transactions by selling the shares to or through
broker-dealers. The shares may be sold by one or more of, or a combination of,
the following:
. a block trade in which the broker-dealer so engaged will attempt to sell
the shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction,
. purchases by a broker-dealer as principal and resale by such broker-
dealer for its account pursuant to this prospectus,
. an exchange distribution in accordance with the rules of such exchange,
. ordinary brokerage transactions and transactions in which the broker
solicits purchasers, and
. in privately negotiated transactions.
To the extent required, this prospectus may be amended or supplemented from
time to time to describe a specific plan of distribution. In effecting sales,
broker-dealers engaged by the selling shareholders may arrange for other
broker-dealers to participate in the resales.
The selling shareholders may enter into hedging transactions with broker-
dealers in connection with distributions of the shares or otherwise. In such
transactions, broker-dealers may engage in short sales of the shares in the
course of hedging the positions they assume with selling shareholders. The
selling shareholders also may sell shares short and redeliver the shares to
close out such short positions. The selling shareholders may enter into option
or other transactions with broker-dealers which require the delivery to the
broker-dealer of the shares. The broker-dealer may then resell or otherwise
transfer such shares pursuant to this prospectus. The selling shareholders also
may loan or pledge the shares to a broker-dealer. The broker-dealer may sell
the shares so loaned, or upon a default the broker-dealer may sell the pledged
shares pursuant to this prospectus.
Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from selling shareholders. Broker-dealers
or agents may also receive compensation from the purchasers of the shares for
whom they act as agents or to whom they sell as principals, or both.
Compensation as to a particular broker-dealer might be in excess of customary
commissions and will be in amounts to be negotiated in connection with the
sale. Broker-dealers or agents and any other participating broker-dealers or
the selling shareholders may be deemed to be "underwriters" within the meaning
of Section 2(11) of the Securities Act in connection with sales of the shares.
Accordingly, any such commission, discount or concession received by them and
any profit on the resale of the shares purchased by them may be deemed to be
underwriting discounts or commissions under the Securities Act. Because selling
shareholders may be deemed to be "underwriters" within the meaning of Section
2(11) of the Securities Act, the selling shareholders will be subject to the
prospectus delivery requirements of the Securities Act. In addition, any
securities covered by this prospectus which qualify for sale pursuant to Rule
144 promulgated under the Securities Act may be sold under Rule 144 rather than
pursuant to this prospectus. The selling shareholders have advised CTI that
they have not entered into any agreements, understandings or arrangements with
any underwriters or broker-dealers regarding the sale of their securities.
There is no underwriter or coordinating broker acting in connection with the
proposed sale of shares by selling shareholders.
12
The shares will be sold only through registered or licensed brokers or
dealers if required under applicable state securities laws. In addition, in
certain states the shares may not be sold unless they have been registered or
qualified for sale in the applicable state or an exemption from the
registration or qualification requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the shares may not simultaneously engage in
market making activities with respect to our common stock for a period of two
business days prior to the commencement of such distribution. In addition, each
selling shareholder will be subject to applicable provisions of the Exchange
Act and the associated rules and regulations under the Exchange Act, including
Regulation M, which provisions may limit the timing of purchases and sales of
shares of our common stock by the selling shareholders. CTI will make copies of
this prospectus available to the selling shareholders and has informed them of
the need for delivery of copies of this prospectus to purchasers at or prior to
the time of any sale of the shares.
CTI will file a supplement to this prospectus, if required, pursuant to Rule
424(b) under the Securities Act upon being notified by a selling shareholder
that any material arrangement has been entered into with a broker-dealer for
the sale of shares through a block trade, special offering, exchange
distribution or secondary distribution or a purchase by a broker or dealer.
Such supplement will disclose:
. the name of each such selling shareholder and of the participating
broker-dealer(s),
. the number of shares involved,
. the price at which such shares were sold,
. the commissions paid or discounts or concessions allowed to such broker-
dealer(s), where applicable,
. that such broker-dealer(s) did not conduct any investigation to verify
the information set out or incorporated by reference in this prospectus,
and
. other facts material to the transaction.
In addition, upon being notified by a selling shareholder that a donee or
pledgee intends to sell more than 500 shares, CTI will file a supplement to
this prospectus.
CTI will bear all costs, expenses and fees in connection with the
registration of the shares. The selling shareholders will bear all commissions
and discounts, if any, attributable to the sales of the shares. The selling
shareholders may agree to indemnify any broker-dealer or agent that
participates in transactions involving sales of the shares against certain
liabilities, including liabilities arising under the Securities Act. The
selling shareholders have agreed to indemnify certain persons, including
broker-dealers and agents, against certain liabilities in connection with the
offering of the shares, including liabilities arising under the Securities Act.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for CTI by
Wilson Sonsini Goodrich & Rosati, San Francisco, California.
EXPERTS
The consolidated financial statements of Cell Therapeutics, Inc., appearing
in CTI's Annual Report (Form 10-K) for the year ended December 31, 1998, have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing.
13
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We have not authorized any person to make a statement that differs from
what is in this prospectus. If any person does make a statement that differs
from what is in this prospectus, you should not rely on it. This prospectus is
not an offer to sell, nor is it seeking an offer to buy, these securities in
any state in which the offer or sale is not permitted. The information in this
prospectus is complete and accurate as of its date, but the information may
change after that date.
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TABLE OF CONTENTS
Page
----
The Company................................................................ 1
Risk Factors............................................................... 1
Use of Proceeds............................................................ 10
Where You Can Find More Information........................................ 10
Selling Shareholders....................................................... 11
Plan of Distribution....................................................... 12
Legal Matters.............................................................. 13
Experts.................................................................... 13
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[Cell Therapeutics, Inc. Logo]
COMMON STOCK
NO PAR VALUE
-----------------
PROSPECTUS
-----------------
, 2000
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by CTI in connection with the
sale of common stock being registered. All amounts are estimates except the SEC
registration fee.
SEC Registration Fee................................................ $ 5,276
Legal Fees and Expenses............................................. 50,000
Accounting Fees and Expenses........................................ 10,000
Printing Fees....................................................... 18,000
Transfer Agent Fees................................................. 2,500
Miscellaneous....................................................... 1,000
-------
Total............................................................. $86,776
=======
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sections 23B.08.500 through 23B.08.600 of the Washington Business
Corporation Act (the "WBCA") authorize a court to award, or a corporation's
board of directors to grant, indemnification to directors and officers on terms
sufficiently broad to permit indemnification under certain circumstances for
liabilities arising under the Securities Act of 1933, as amended (the
"Securities Act"). Article IX of CTI's Restated Bylaws provides for
indemnification of CTI's directors, officers, employees and agents to the
maximum extent permitted by Washington law. The directors and officers of CTI
also may be indemnified against liability they may incur for serving in such
capacity pursuant to a liability insurance policy maintained by CTI for such
purpose.
Section 23B.08.320 of the WBCA authorizes a corporation to limit a
director's liability to the corporation or its shareholders for monetary
damages for acts or omissions as a director, except in certain circumstances
involving intentional misconduct, knowing violations of law or illegal
corporate losses or distributions, or any transaction from which the director
personally receives a benefit in money, property or services to which the
director is not legally entitled. Article VI of the Registrant's Restated
Articles of Incorporation (Exhibit 4.1 hereto) contains provisions
implementing, to the fullest extent permitted by Washington law, such
limitations on a director's liability to the Registrant and its shareholders.
CTI has entered into an indemnification agreement with each of its executive
officers and directors in which CTI agrees to hold harmless and indemnify the
officer or director to the fullest extent permitted by Washington law. CTI
agrees to indemnify the officer or director against any and all losses, claims,
damages, liabilities or expenses incurred in connection with any actual,
pending or threatened action, suit, claim or proceeding, whether civil,
criminal, administrative or investigative and whether formal or informal, in
which the officer or director is, was or becomes involved by reason of the fact
that the officer or director is or was a director, officer, employee, trustee
or agent of the Registrant or any related company, partnership or enterprise,
including service with respect to an employee benefit plan, whether the basis
of such proceeding is alleged action (or inaction) by the officer or director
in an official capacity and any action, suit, claim or proceeding instructed by
or at the direction of the officer or director unless such action, suit, claim
or proceeding is or was authorized by CTI's Board of Directors. No indemnity
pursuant to the indemnification agreements shall be provided by CTI on account
of any suit in which a final, unappealable judgment is rendered against the
officer or director for an accounting of profits made from the purchase or sale
by the officer or director of securities of CTI in violation of the provisions
of Section 16(b) of the Securities Exchange Act of 1934, or for damages that
have been paid directly to the officer or director by an insurance carrier
under a policy of directors' and officers' liability insurance maintained by
CTI.
II-1
CTI has entered into Registration Rights Agreements with the selling
holders. Such agreements provide for indemnification by such selling holders of
the Company and its officers and directors, and by the Company of such selling
holders, for certain liabilities arising under the Securities Act or otherwise.
ITEM 16. EXHIBITS
4.1* Securities Purchase Agreement dated as of November 15, 1999 between Cell
Therapeutics, Inc. and the Purchasers named therein.
4.2* Form of Registration Rights Agreement dated as of November 24, 1999
between Cell Therapeutics, Inc. and the Investors named therein.
4.3* Form of Warrant to purchase shares of Common Stock of Cell Therapeutics,
Inc. (pursuant to the Securities Purchase Agreement filed as Exhibit 4.1
hereto).
5.1* Opinion of Wilson Sonsini Goodrich & Rosati
23.1* Consent of Ernst & Young LLP, Independent Auditor
23.2* Consent of Wilson Sonsini Goodrich & Rosati (included in the Opinion of
Wilson Sonsini Goodrich & Rosati filed as Exhibit 5.1 hereto)
24.1* Power of Attorney (included on page II-4 of this registration statement)
- --------
* Previously filed.
ITEM 17. UNDERTAKINGS
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 forth in the registration
statement; and (iii) to include any material information with respect to
the plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions or otherwise, the registrant
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and therefore is
unenforceable. In the event that a claim for indemnification against such
liabilities, other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act, and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act, 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.
II-2
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this amendment to the
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Seattle, State of Washington, on this 17th day
of February, 2000.
CELL THERAPEUTICS, INC.
/s/ James A. Bianco, M.D.
By __________________________________
James A. Bianco, M.D.
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, as amended, this
amendment to the registration statement has been signed below by the following
persons on behalf of CTI and in the capacities and on the dates indicated:
Signature Title Date
--------- ----- ----
/s/ James A. Bianco, M.D. President, Chief Executive February 17, 2000
____________________________________ Officer and Director
James A. Bianco, M.D. (Principal Executive
Officer)
* Executive Vice President, February 17, 2000
____________________________________ Finance and Administration
Louis A. Bianco (Principal Financial
and Accounting Officer)
* Chairman of the Board and February 17, 2000
____________________________________ Director
Max E. Link, Ph.D.
* Director February 17, 2000
____________________________________
Jack W. Singer, M.D.
* Director February 17, 2000
____________________________________
Jack L. Bowman
* Director February 17, 2000
____________________________________
Jeremy L. Curnock Cook
* Director February 17, 2000
____________________________________
Wilfred E. Jaeger, M.D.
* Director February 17, 2000
____________________________________
Mary O'Neil Mundinger
* Director February 17, 2000
____________________________________
Phillip M. Nudelman, Ph.D.
/s/ James A. Bianco, M.D.
*By: __________________________
James A. Bianco, M.D.
(Attorney-in-Fact)
II-3
INDEX TO EXHIBITS
Exhibit
Number Exhibit Title
------- -------------
4.1* Securities Purchase Agreement dated as of November 15, 1999 between
Cell Therapeutics, Inc. and the Purchasers named therein.
4.2* Form of Registration Rights Agreement dated as of November 24, 1999
between Cell Therapeutics, Inc. and the Investors named therein.
4.3* Form of Warrant to purchase shares of Common Stock of Cell
Therapeutics, Inc. (pursuant to the Securities Purchase Agreement
filed as Exhibit 4.1 hereto).
5.1* Opinion of Wilson Sonsini Goodrich & Rosati
23.1* Consent of Ernst & Young LLP, Independent Auditor
23.2* Consent of Wilson Sonsini Goodrich & Rosati (included in the Opinion
of WSGR filed as Exhibit 5.1)
24.1* Power of Attorney (included on page II-4 of this registration
statement)
- --------
* Previously filed.