AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 28, 1995
REGISTRATION NO. 33-_____
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
==========
CYTOGEN CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 22-2322400
(State or other juris- (I.R.S. Employer
diction of incorporation Identification No.)
or organization)
600 COLLEGE ROAD EAST, CN 5308
PRINCETON, NEW JERSEY 08540-5308
(609) 987-8210
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
T. JEROME MADISON
VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND SECRETARY
CYTOGEN CORPORATION
600 COLLEGE ROAD EAST, CN 5308
PRINCETON, NEW JERSEY 08540-5308
(609) 987-8210
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
JAMES J. MARINO, ESQUIRE ROBERT ROSENMAN, ESQUIRE
DECHERT PRICE & RHOADS CRAVATH, SWAINE & MOORE
PRINCETON PIKE CORPORATE CENTER, CN 5218 WORLDWIDE PLAZA
PRINCETON, NEW JERSEY 08543-5218 825 EIGHTH AVENUE
(609) 520-3200 NEW YORK, NEW YORK 10019
(212) 474-1300
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]
CALCULATION OF REGISTRATION FEE
====================================================================================================================================
Title of each class Amount to be Proposed maximum Proposed maximum Amount of
of securities to be registered(1) offering price per aggregate registration
registered share or unit(2) offering price(2) fee
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Common Stock, par value $.01 per
share, and Warrants to Purchase
Common Stock..................... $11,000,000 100% $11,000,000 $3,793.10
====================================================================================================================================
(1) Includes (a) the shares of Common Stock, par value $.01 per share (the
"Common Stock"), to be sold pursuant to the Purchase Agreement, (b) the
Warrants to purchase Common Stock, and (c) the number of shares of Common
Stock issuable under the Warrants.
(2) Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457(o) under the Securities Act.
_________________________________
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, or until this Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
1
EXPLANATORY NOTE
----------------
This Registration Statement includes two basic prospectuses with
corresponding forms of prospectus supplements for the offering of the Common
Stock, and the offering of Warrants and the Common Stock issuable upon exercise
of the Warrants. Following this Explanatory Note in sequential order are the (i)
basic prospectus and form of prospectus supplements for the offering of the
Common Stock, and (ii) basic prospectus and form of prospectus supplement for
the Warrants and the Common Stock issuable upon exercise of the Warrants.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION -- DATED MARCH 28, 1995
PROSPECTUS
CYTOGEN CORPORATION
SHARES OF COMMON STOCK
($.01 PAR VALUE)
----------------
This Prospectus relates to the offer from time to time of
shares of Common Stock, par value $.01 per share (the "Shares" or "Common
Stock"), with a purchase price of up to $11,000,000 by Cytogen Corporation (the
"Company") through Nomura Securities International, Inc. ("Nomura"), as
underwriter (the "Arrangement"). The Shares will be purchased by Nomura from the
Company, subject to the terms and conditions of a Purchase Agreement dated March
28, 1995 (the "Purchase Agreement"), in a series of takedowns ("Takedowns") at
prices per Share equal to 90% of the average of the closing bid prices ("Trading
Price") of the Shares reported on the Nasdaq National Market ("Nasdaq") over a
twenty-one trading day pricing period ("Pricing Period") ending prior to the
Takedown. In connection with each Takedown, Nomura will purchase, at a purchase
price of $.001 per Warrant, Warrants (the "Warrants") to purchase a number of
Shares equal to 10% of the total number of Shares sold in such Takedown by the
Company. The Warrants shall be immediately exercisable at an exercise price
equal to 160% of the Trading Price of the Shares issued in such Takedown and may
be exercised during a period of three years following the Takedown.
At the commencement of each Pricing Period, the Company will
prepare and file with the Securities and Exchange Commission (the "Commission")
a supplement to this Prospectus (the "Prospectus Supplement") which sets forth
the maximum aggregate dollar amount of the Takedown, the date of commencement of
the Pricing Period, the expected maximum net proceeds and the expected closing
date. At the end of each Pricing Period, the Company will promptly prepare and
file with the Commission a Prospectus Supplement which sets forth certain terms
of the offering of the Shares, including the number of Shares being purchased
from the Company by Nomura, the price being paid by Nomura for such Shares, the
net proceeds to the Company, and the prices at which the Common Stock was sold
by Nomura during the Pricing Period. Nomura expects to sell the Shares from time
to time in at the market transactions on Nasdaq. Nomura may also sell the Shares
in negotiated transactions, or by a combination of at the market and negotiated
transactions, at fixed prices that may be changed, at market prices at the time
of sale, at prices related to market prices or at negotiated prices. Nomura
intends to effect short sales of the Common Stock during the Pricing Periods.
There can be no assurance that the short sales effected by Nomura will not have
an adverse impact on the current market price of the Common Stock. Nomura may
effect these transactions by selling the Shares to or through broker-dealers,
who may receive compensation in the form of commissions, mark-ups or other
payments from Nomura or from the purchasers of the Shares for whom the broker-
dealers may act as agent or to whom they may sell as a principal, or both. See
"UNDERWRITING".
- -------------
The Company will bear all expenses in connection with the
registration of the Common Stock, which expenses are estimated to be $410,000.
Nomura will pay any brokerage compensation in connection with its sale of the
Shares and Warrants.
The Company has agreed to indemnify Nomura and each other
underwriter within the meaning of the Securities Act of 1933 (the "Securities
Act") that may purchase from or sell for Nomura any of the Shares and Warrants,
and each person, if any, who controls Nomura or any underwriter within the
meaning of the Securities Act, against certain liabilities, including
liabilities under the Securities Act.
The Common Stock is quoted on Nasdaq under the symbol "CYTO".
On _________, 1995, the reported last sale price of the Common Stock, as
reported on Nasdaq, was $_____ per share. See "UNDERWRITING".
--------------
This Prospectus may not be used to consummate sales of the
Shares unless accompanied by a Prospectus Supplement.
____________
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS".
____________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
____________
THE DATE OF THIS PROSPECTUS IS [________], 1995
TABLE OF CONTENTS
-----------------
Page
----
AVAILABLE INFORMATION........................................................ 3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.............................. 3
THE COMPANY.................................................................. 5
RISK FACTORS................................................................. 5
USE OF PROCEEDS............................................................. 10
UNDERWRITING................................................................ 10
LEGAL MATTERS............................................................... 12
EXPERTS..................................................................... 13
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN
CONNECTION WITH THIS OFFERING. ANY INFORMATION OR REPRESENTATION NOT CONTAINED
OR INCORPORATED BY REFERENCE HEREIN MUST NOT BE RELIED ON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL
OR THE SOLICITATION OF AN OFFER TO BUY THE SECURITIES OFFERED HEREBY IN ANY
STATE TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
EXCEPT WHERE OTHERWISE INDICATED, THIS PROSPECTUS SPEAKS AS OF ITS DATE AND
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
2
AVAILABLE INFORMATION
---------------------
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act"), and in accordance
therewith, files reports, proxy statements and other information with 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 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the following Regional Offices of the Commission: New York Regional
Office, Seven World Trade Center, Suite 1300, New York, New York 10048; and
Chicago Regional Office, Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511. Copies of such material can be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Common Stock is
traded on the Nasdaq National Market and such reports, proxy statements and
other information concerning the Company are available for inspection at the
offices of the National Association of Securities Dealers, Inc. (the "NASD"),
9513 Key West Avenue, Rockville, Maryland 20850.
The Company has filed with the Commission a Registration Statement on
Form S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act, with respect to the shares of Common Stock
offered hereby. This Prospectus does not contain all of the information set
forth in the Registration Statement and the exhibits and schedules thereto,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. Statements contained in this Prospectus or in any document
incorporated by reference as to the contents of any contract or other documents
referred to herein or therein are not necessarily complete and in each instance,
reference is made to the copy of such documents filed as an exhibit to the
Registration Statement or such other documents. Each such statement is qualified
in its entirety by such reference. For further information with respect to the
Company and the shares of Common Stock offered hereby, reference is hereby made
to the Registration Statement, exhibits and schedules.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
-----------------------------------------------
The Company hereby incorporates by reference into this Prospectus (i)
its Annual Report on Form 10-K for the Fiscal Year Ended December 31, 1994,
which contains audited financial statements for the Company's latest fiscal year
for which a Form 10-K was required to have been filed, (ii) all other reports
filed by the Company pursuant to Section 13(a) or 15(d) of the Exchange Act
since December 31, 1994, including but not limited to the Current Reports on
Form 8-K filed by the Company with the Commission on January 6, 1995, February
16, 1995, February 23, 1995 and February 24, 1995, respectively and (iii) the
description of the Common Stock, par value $.01 per share, as contained in its
registration statement on Form 8-A declared effective on March 9, 1992.
All documents and reports filed by the Company with the Commission
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, subsequent
to the date hereof and prior to the filing of a post-effective amendment to the
Registration Statement which indicates that all shares of Common Stock offered
hereby have been sold or which deregisters all shares of Common Stock then
remaining unsold, shall be deemed to be incorporated by reference into this
Prospectus and to be a part hereof from the respective dates of filing of such
documents or reports.
Any statement contained in a document incorporated or deemed 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 a subsequently filed document that also is or is deemed to be incorporated
by reference herein modifies or supersedes such statement. Any such statement so
modified
3
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
THE COMPANY HEREBY UNDERTAKES TO 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 AND ALL OF THE INFORMATION
THAT HAS BEEN INCORPORATED BY REFERENCE IN THIS PROSPECTUS (NOT INCLUDING
EXHIBITS TO SUCH INFORMATION UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED
BY REFERENCE INTO SUCH INFORMATION). SUCH REQUESTS SHOULD BE DIRECTED TO T.
JEROME MADISON, VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND SECRETARY, AT THE
COMPANY'S PRINCIPAL EXECUTIVE OFFICES AT 600 COLLEGE ROAD EAST, CN 5308,
PRINCETON, NEW JERSEY 08540-5308; TELEPHONE: (609) 987-8210.
IN CONNECTION WITH ANY TAKEDOWN, FOLLOWING THE DETERMINATION OF THE
NUMBER OF SHARES AND THE PRICE AT WHICH NOMURA IS COMMITTED TO PURCHASE, CERTAIN
UNDERWRITERS MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON
STOCK OF THE COMPANY ON NASDAQ IN ACCORDANCE WITH RULE 10b-6A UNDER THE EXCHANGE
ACT. SEE "UNDERWRITING".
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4
THE COMPANY
-----------
The Company is a biopharmaceutical company engaged in the discovery,
development, manufacture and marketing of products to better diagnose and treat
disease. The Company's current portfolio of products provides targeted delivery
of diagnostic and therapeutic substances directly to the sites of disease. The
Company is using its patented and proprietary technologies to develop specific
in vivo cancer diagnostic imaging and therapeutic products to build a focused
cancer care franchise. The Company may expand from cancer into other therapeutic
areas employing related technologies.
The Company's current focus is on: (i) Samarium 153 EDTMP ("Samarium
EDTMP"), a cancer therapy agent for the treatment of bone pain associated with
bone metastases, which is in late Phase III clinical development with a New Drug
Application submission to the U.S. Food and Drug Administration ("FDA")
anticipated in the first half of 1995; (ii) ProstaScint(TM), a prostate cancer
diagnostic imaging product, for which a Product License Application ("PLA") was
submitted to and accepted for filing by FDA effective March 13, 1995; and (iii)
OncoScint(R) CR/OV, the Company's monoclonal antibody-based diagnostic imaging
agent for colorectal and ovarian cancer, which has been approved by FDA since
December 1992 and, in its colorectal cancer application, in various European
countries since June 1991.
The Company has licensed to The DuPont Merck Pharmaceutical Company
("DuPont Merck") the manufacturing and co-marketing rights to Samarium EDTMP in
the U.S. The Company has assigned high priority to the product development and
commercialization programs for Samarium EDTMP and ProstaScint. The Company is
continuing to evaluate, invest in and support the sales and marketing activities
with respect to OncoScint CR/OV. While the product has technically performed as
predicted in clinical applications, OncoScint CR/OV has achieved very limited
sales, and negligible sales growth, in both the U.S. and European markets since
its introduction.
The Company's strategic plan also supports continued commitment to its
"linker" technology through ongoing product development efforts for cancer
therapeutic agents. The Company expects to expand its current product portfolio
through in-licensing products and technologies. In addition, the Company has
committed additional resources to its molecular recognition unit program which,
as a result of recent patent filings and development trends, has been renamed
the Totally Synthetic Affinity Reagents\SynGenes ("TSARs\SynGenes") program.
This program involves long peptides that have the ability to recognize and bind
to specific target sites in the human body. The Company believes that the
ability of these compounds to bind to predetermined sites may mediate certain
diagnostic or therapeutic effects more effectively than its current monoclonal
antibody delivery systems and other existing products.
The Company is a Delaware corporation with its principal executive
offices at 600 College Road East--CN 5308, Princeton, N.J. 08540-5308. Its
telephone number is (609) 987-8200.
RISK FACTORS
------------
An investment in the shares of Common Stock offered hereby involves a
high degree of risk. Prospective investors should carefully consider the
following risk factors in addition to the other information set forth and
incorporated by reference in this Prospectus before making any decision to
invest in the Common Stock.
HISTORY OF OPERATING LOSSES; ACCUMULATED DEFICIT. The Company commenced
its research activities in 1981, and has never made a profit nor has it ever had
positive cash flow from operations. At December 31, 1994, the Company had an
accumulated deficit of approximately $155.8 million, and the Company anticipates
it will continue to incur substantial losses in the future. The Company first
5
recognized product related revenues in 1992. Product related revenues were
$400,000, $1.6 million and $1.4 million in fiscal 1992, fiscal 1993 and fiscal
1994, respectively. License and contract revenues were $13 million, $8.8 million
and $1 million in fiscal 1992, fiscal 1993 and fiscal 1994, respectively. The
Company recognized license and contract revenues of $9.1 million and $7.9
million in fiscal 1992 and fiscal 1993, respectively, which represented 68% and
76% of total revenue, from CytoRad Incorporated ("CytoRad"), a biopharmaceutical
company engaged in the research and development of proprietary antibody-based
delivery systems for the diagnosis and treatment of prostate cancers and the
treatment of ovarian cancer, utilizing technology licensed from the Company. No
CytoRad license and contract revenues were recognized in fiscal 1994. In
February 1995, CytoRad merged with and into a subsidiary of the Company. As a
result of the merger, the Company estimates that it will record in the first
quarter of 1995 approximately $20 million for acquired research and development
on its statement of operations, representing the amount by which the purchase
price exceeds CytoRad's net book value. The Company anticipates that even if its
products currently in development receive necessary regulatory approvals, its
revenues over the near term will not be sufficient to cover its operating
expenses. The Company's profitability will be dependent on its success in
developing, obtaining and maintaining regulatory approvals for, and effectively
marketing (either itself or through third parties) its products. There can be no
assurance as to when or whether profitability will be achieved.
FUTURE CAPITAL NEEDS; UNCERTAINTY OF FUNDING. The Company estimates that
its existing funds will enable it to maintain its current and planned operations
through fiscal 1995. In order to develop, manufacture and market all of its
products effectively, the Company will require substantial additional funding.
If such funding is not obtained the Company would be required to significantly
curtail its operations. In order to meet these needs, the Company intends to
seek to raise funds through additional sales of equity securities (including
pursuant to the Arrangement), which could result in substantial dilution of the
percentage ownership of the then Company stockholders, through marketing and
out-licensing arrangements, corporate partnering arrangements or strategic
mergers and acquisitions. No assurance can be given as to the Company's success
in obtaining additional funding or as to the terms of any such funding.
The offering of the Shares described herein will be contingent, in part,
upon prevailing market conditions, including the trading price and trading
volume of the Common Stock. In addition, due to the discretionary nature of the
obligation of Nomura to purchase Shares under the Purchase Agreement, there can
be no assurance that the Company will realize any significant levels of funding
from the sale of Shares pursuant to the Arrangement.
CHANGES IN CONTRACT REVENUES. A significant portion of the Company's
total revenues have historically been generated from licensing and related
contracts with third parties. With the exception of a recently executed contract
with DuPont Merck, all of these contracts have either been terminated, in which
event, the Company has reacquired the technology licensed to such third parties,
or have no continuing commercial value. With the exception of such revenues as
may be derived from its license agreement with DuPont Merck, which relates to
the Company's rights to Samarium EDTMP, the Company does not currently have any
source of contract revenues. Under its strategic plan, the Company has assigned
high priority to the product development and commercialization programs for
Samarium EDTMP and ProstaScint while it continues to evaluate, invest in and
support the sales and marketing activities with respect to OncoScint CR/OV,
which to date, has achieved very limited sales and negligible sales growth in
both the U.S. and European markets. The Company's strategic plan also supports
development of additional products and technologies. No assurances can be given
that this strategy will be successful or that the Company will in the future
achieve significant revenues through product sales, license agreements or
otherwise.
6
LIMITED MANUFACTURING CAPABILITY AND EXPERIENCE. The Company has limited
commercial scale manufacturing capacity, and it has not previously produced
commercial quantities of monoclonal prostate cancer antibodies, which are a
necessary element to the development of its ProstaScint product line. An
Establishment License Application ("ELA") for the facility used by the Company
for the production of its colorectal and ovarian imaging products was approved
by FDA in December 1992. An ELA Supplement prepared in 1994 in conjunction with
the PLA for ProstaScint was submitted to and accepted for filing by FDA on March
13, 1995. The Company believes that this facility will allow it to meet its
projected production requirements for its OncoScint CR/OV and ProstaScint
product lines in both the United States and Europe for the near term, although
no assurances can be given to that effect. If the Company's projected production
requirements are not achieved it would suffer materially adverse effects. The
Company currently has the in-house production capacity necessary to produce
projected commercial quantities of prostate cancer monoclonal antibodies for
manufacture of ProstaScint. However, no assurance can be given that the facility
will receive the necessary approvals to produce commercial quantities of
antibodies for ProstaScint, or that commercial quantities of antibodies will be
otherwise obtained. The Company will be required to obtain and maintain
regulatory approval for each of its commercial manufacturing processes and
facilities. Any failure to receive, or substantial delay in obtaining, or an
inability to maintain, regulatory approval for its manufacturing processes and
facilities will have a material adverse effect on the Company.
SINGLE SUPPLIER OF CERTAIN RAW MATERIALS. The raw materials used in the
manufacture of the Company's products include two antibodies. The Company has
both exclusive and non-exclusive license agreements which permit it to use
monoclonal antibodies in the products it is developing. The Company's one
commercial product, OncoScint CR/OV, uses a monoclonal antibody which is
supplied by a single manufacturer. The Company is aware that prior to 1992 this
supplier experienced certain operational difficulties relating to variations in
product yield, although to the Company's knowledge these difficulties have not
been experienced by the supplier since such time. These difficulties did not
materially adversely affect the Company. Although the Company anticipates that
the supplier will be able to meet the Company's needs for commercial quantities
of monoclonal antibodies for OncoScint CR/OV, no assurances can be given to that
effect. Failure by the supplier to provide these requisite monoclonal antibodies
in quantities sufficient to meet demand could have a material adverse effect on
the Company's business.
MARKETING UNCERTAINTIES. The Company has a limited sales force and has
historically relied in large part on third parties to market its products. In
1994 and the first quarter of 1995, the Company terminated its marketing
relationship with both Oncoscint CR/OV marketing partners. Since May 1994, the
Company's direct sales force has been the sole marketer of its OncoScint CR/OV
product in the United States. The Company intends to secure alternative
marketing and distribution partners for OncoScint CR\OV in Europe and Japan. The
Company is currently evaluating its product marketing options in the United
States and is considering maintaining its direct selling efforts, as well as,
co-promotion arrangements or licensing of all rights to a third party. Depending
on the approach selected, significant resources might be required. The Company
is also exploring advances in teleradiology in order to improve the acquisition
and interpretation of an OncoScint CR/OV scan. There can be no assurance that
the Company's marketing strategy will be successful.
The Company's ability to market its products successfully in the future
will be dependent on a number of factors, many of which are not within its
control. Due to slower than anticipated growth in OncoScint CR/OV product sales,
the Company has a significant investment in inventories. These inventories
include raw materials which the Company currently estimates will not be fully
used in the foreseeable future. During fiscal 1993 and fiscal 1994, the Company
recorded $2.3 million and $1.1 million of inventory writedowns due to shelf life
expiration and other inventory realization issues. In July 1993, the Company
petitioned FDA for an extension of the shelf life of its monoclonal antibody raw
material
7
inventories. As of December 31, 1994, the Company had raw materials of $3.2
million, of which approximately $2.0 million exceeded the currently approved FDA
shelf life. The realization of the Company's investment in inventory is
dependent upon growth in product sales and the outcome and timing of the
response by FDA to the Company's request to extend the deemed product shelf
life. The Company cannot predict with accuracy when FDA will respond to such
request and no assurances can be given that such response will be favorable to
the Company. Given the foregoing uncertainties with respect to raw material
inventory, future inventory writedowns may be required.
DEPENDENCE UPON KEY PERSONNEL. The Company's ability to develop
marketable products and to maintain a competitive position in light of
technological developments will depend, in large part, on its ability to attract
and retain qualified scientific personnel and to develop and maintain
relationships with leading research institutions. Competition for such personnel
and relationships is intense. The Company is highly dependent on the principal
members of its management and scientific staff, the loss of whose services might
impede the achievement of development objectives. The Company does not maintain
any significant amounts of key personnel insurance on the lives of its employees
or directors.
POTENTIAL FOR PRODUCT LIABILITY EXPOSURE. The Company could be subject
to product liability claims in connection with the use of products that the
Company is currently developing, manufacturing and marketing or that the Company
or its licensees may develop, manufacture and market in the future. There can be
no assurance that the Company would have sufficient resources to satisfy any
liability resulting from these claims or would be able to have its customers
indemnify or insure the Company against such claims. Although the Company
believes that its current product liability insurance coverage of $5 million per
claim and $5 million in the aggregate is adequate for its present activities,
there can be no assurance that such coverage will be adequate in terms and scope
to protect it against material adverse effects in the event of a successful
product liability claim.
PATENTS AND PROPRIETARY RIGHTS. The Company has been issued patents in
the United States and other countries and has numerous other patent applications
pending to protect its proprietary technology. There can be no assurance that
any patents that have been issued or may be issued in the future will be of
substantial protection or commercial benefit to the Company, will afford the
Company adequate protection from competing products or will not be challenged or
declared invalid. Furthermore, there can be no assurance that additional U.S. or
foreign patents will be issued to the Company. The extent to which the Company
may be required to license other patents or proprietary rights held by others
and the cost and availability of such licenses are presently unknown. The
Company is not aware that any of its activities are in violation of third-party
patents; however, any such violation could have a material adverse effect on its
business. In addition, the Company relies heavily on its proprietary
technologies for which patent applications have been filed but not yet granted
in certain countries. Insofar as the Company relies on trade secrets, non-
disclosure agreements and unpatented know-how to establish and maintain its
competitive technological position, there can be no assurance that others may
not independently develop the same or similar technologies.
GOVERNMENT REGULATION. The Company is subject to regulation by numerous
governmental authorities in the United States, including FDA and the Nuclear
Regulatory Commission, and in other countries. All of the Company's products,
manufacturing processes and facilities require governmental licensing or
approval prior to commercial use and the maintenance of such approvals
thereafter. The approval process applicable to products of the type being
developed by the Company usually takes several years and typically requires
substantial expenditures. The Company submitted an application to FDA for
marketing approval of ProstaScint in January 1995, which was accepted effective
March 13, 1995, and intends to submit an application to FDA for marketing
approval of Samarium EDTMP during the first half of 1995. No assurances can be
given, however, as to whether or when the Company will receive approval for
these products. The Company has submitted an application to FDA for repeat
administration
8
of OncoScint CR/OV. To date, FDA has not issued an approval or non-approval
letter for this extended indication. The Company cannot be sure about the
outcome and timing of FDA's response. The Company may encounter significant
delays or excessive costs in its efforts to secure necessary approvals or
licenses. Future U.S. or foreign legislative or administrative acts could also
prevent or delay regulatory approval of the Company's products. Failure to
obtain or maintain requisite governmental approvals, or failure to obtain
approvals of the scope requested, could delay or preclude the Company from
marketing its products, or limit the commercial use of the products and thereby
have a material adverse effect on the Company.
VOLATILITY OF STOCK PRICE. Nomura's intention to effect short sales of
the Shares during Pricing Periods and the issuance of Shares pursuant to the
Arrangement may have a significant adverse impact on the current market price of
the Common Stock. See "UNDERWRITING--Plan of Distribution". In addition, the
----------------------------------
market price of the securities of biopharmaceutical companies generally and of
the Common Stock in particular has fluctuated over a wide range in the past and
it is likely that the price of these securities will fluctuate in the future.
Announcements of technical innovations, new commercial products, regulatory
approvals, patent or proprietary rights or other developments by the Company or
its competitors could have a significant impact on the market price of the
Common Stock.
RISK OF TECHNOLOGICAL OBSOLESCENCE; HIGHLY COMPETITIVE INDUSTRY.
Biotechnology has undergone rapid and significant technological change. The
Company expects that this technology will continue to develop rapidly, and the
Company's future success will depend, in large part, on its ability to maintain
a competitive position. Rapid technological development may result in products
or processes becoming obsolete before marketing of these products or before the
Company recovers a significant portion of the research, development and
commercialization expenses incurred with respect to those products.
There is intense competition in the biopharmaceutical industry.
Potential competitors in the United States, Europe and other markets are
numerous and include pharmaceutical, chemical, biotechnology and medical device
companies, many of which have substantially greater capital resources, marketing
experience, research and development staffs and facilities than the Company.
Furthermore, some of the Company's competitors may achieve product
commercialization earlier than the Company. The Company also experiences
competition from universities and other research institutions in the development
of the Company's technologies and processes and, in some instances, competes
with others in acquiring technology from universities. In addition, certain of
the Company's products are subject to competition from products developed using
techniques other than those developed in biotechnology.
The biopharmaceutical industry is under pressure to consolidate, with
companies merging to attain critical mass in the marketplace. This trend towards
consolidation is due to a number of factors, including, the high costs
associated with obtaining FDA approval for products, substantial resources
required to commercialize products and unfavorable conditions in the public
capital markets for biopharmaceutical companies seeking financing. The
healthcare industry in general is undergoing significant changes due to cost
containment pressures, reimbursement requirements and the increasing presence of
managed care organizations. There can be no assurance that the Company will not
be influenced by any or all of these factors, all of which are beyond its
control.
NO DIVIDENDS ANTICIPATED IN THE FUTURE. The Company has not paid any
cash dividends on the Common Stock since its inception and does not anticipate
paying any cash dividends in the future. Declaration of dividends on the Common
Stock will depend upon, among other things, future earnings, the operating and
financial condition of the Company, its capital requirements and general
business conditions.
9
DILUTION; SHARES ELIGIBLE FOR FUTURE SALE. Because the Common Stock is
issuable upon exercise of certain issued and outstanding warrants and options
and pursuant to outstanding contingent value rights ("CVRs"), the interests of
the Company's then stockholders will be diluted and the market price of the
Common Stock could be adversely affected by future exercises of the warrants
and/or options or issuances of the Common Stock pursuant to the CVRs and by the
sale of such shares in the public market. As of March 15, 1995, approximately
4,285,000 shares of Common Stock were reserved for issuance upon exercise of
issued and outstanding warrants, approximately 1,874,234 shares of Common Stock
were reserved for issuance pursuant to the CVRs and approximately 5,973,135
shares of Common Stock were reserved for issuance pursuant to employee
retirement savings, stock option and stock award plans and agreements (including
an option granted to Fletcher Capital Markets, Inc., which option has since been
assigned to Harvard Management Company, Inc.).
USE OF PROCEEDS
---------------
Unless otherwise set forth in the applicable Prospectus Supplement, the
net proceeds from the Arrangement will be used for general corporate purposes,
including product commercialization, late-stage product development activities
and exploratory basic research activities within the Company, and selling,
general and administrative expenses. Under the Company's current fiscal 1995
operating budget, approximately 61% will be used for research and development
and 39% will be used for selling, general and administrative expenses.
Management of the Company believes that its current sources of liquidity will be
sufficient to meet anticipated cash requirements through fiscal 1995. To date,
the Company's major uses of cash have included research and development costs,
general and administrative expenses, expenditures for property, plant and
equipment and expenses related to marketing and selling its products.
The Company anticipates continued spending on research and development,
including the completion of Phase III clinical trials for Samarium EDTMP, the
expansion of its product development efforts for ProstaScint and the
acceleration of exploratory research in the Company's TSARs\SynGenes program.
The timing, amount and nature of these expenditures are dependent upon,
and may vary in accordance with, numerous factors including the progress of the
Company's research and development program, the Company's assessment of the
timing of FDA approval and the market potential of its products and that of
competing or complementary products, and other factors beyond the Company's
control. Pending application of the proceeds to the purposes described above,
the net proceeds from the Arrangement will be invested in high-grade, short-
term, interest-bearing investments.
UNDERWRITING
------------
PURCHASE AGREEMENT
Subject to the terms and conditions of the Purchase Agreement, Nomura,
as underwriter, has agreed to purchase, and the Company has agreed to sell to
Nomura, from time to time over the next 24 months, shares of Common Stock with
an aggregate purchase price of up to $49,000,000. The commencement of any
Takedown requires the mutual agreement of Nomura and the Company as to the
aggregate dollar amount and commencement date of the Takedown. Furthermore,
Nomura is entitled to reduce the aggregate dollar amount of a Takedown,
discontinue a Takedown or terminate the Purchase Agreement under certain
circumstances prior to the purchase of the Shares. Nomura is not obligated under
the Purchase Agreement to agree to any Takedown or to purchase a minimum number
of Shares.
10
Under the Purchase Agreement, a Takedown is initiated by the delivery of
a notice by the Company to Nomura proposing an aggregate dollar amount of at
least $500,000 and the commencement date for a Takedown, which will in no event
be sooner than 10 trading days after the date of the initial delivery of a
proposal for a Takedown. If the parties agree upon such terms, a twenty-one
trading day pricing period for the Shares to be issued in the Takedown will
commence on such agreed upon date. The Trading Price for the Shares over such
Pricing Period is determined based on the average of the closing bid prices for
the Shares as quoted on Nasdaq for each day in the Pricing Period. If, on any
trading day during a Pricing Period, (i) a representation, warranty or other
statement of the Company made in the Purchase Agreement is not true and correct,
(ii) in the judgment of Nomura, the Company shall have failed to perform in any
material respect any of its obligations under the Purchase Agreement, (iii)
certain conditions set forth in the Purchase Agreement are not satisfied, or
(iv) the price or trading volume of the Common Stock drops below certain levels,
at the discretion of Nomura, the aggregate dollar amount of a Takedown is
subject to pro rata reduction and such trading day(s) are excluded in computing
the Trading Price. Nomura also has the option in the case of the foregoing
clauses (i), (ii) or (iii) of terminating the Takedown with respect to any
remaining trading days in the Pricing Period and reducing the aggregate dollar
amount of the Takedown accordingly, on a pro rata basis. At the end of the
Pricing Period, the amount of Shares to be issued and sold by the Company to
Nomura in such Takedown is determined by dividing the aggregate dollar amount of
the Takedown by the Trading Price. The purchase price for each Share to be
purchased by Nomura in a Takedown will equal 90% of the related Trading Price.
The closing date for each Takedown will be for each Pricing Period which ends
prior to June 7, 1995, four trading days after the end of such Pricing Period,
and for each Pricing Period which ends on or after June 7, 1995, two trading
days after the end of such Pricing Period.
In connection with the execution of the Purchase Agreement, the Company
has paid Nomura a $100,000 commitment fee. Under the Purchase Agreement, if
Nomura determines that it will not terminate the Purchase Agreement after an
initial six month period, the Company shall further pay Nomura a $200,000
continuation fee. In the event that the Company terminates the Purchase
Agreement at any time, except under certain limited circumstances, the Company
shall be required to pay Nomura a $250,000 termination fee. If Nomura does not
agree to a certain number of Takedowns proposed by the Company, the Company has
the option to terminate the Purchase Agreement or to terminate Nomura's
exclusive right to purchase Shares pursuant to the Purchase Agreement; in either
case, the Company will not be required to pay Nomura the termination fee
described in the preceding sentence. If (i) the Shares are not quoted on Nasdaq,
or (ii) in the case of a merger or consolidation, (A) the Company is not the
surviving entity, and (B) there is deemed to be a "change in control" of the
Company, the Company shall pay to Nomura an amount equal to 1% of the difference
between $49,000,000 and the aggregate dollar amount of Shares sold by the
Company under the Purchase Agreement. In connection with each Takedown, the
Company will sell to Nomura, at a price of $.001 per Warrant, Warrants to
purchase a number of Shares equal to 10% of the Shares sold in the Takedown. The
Warrants so issued will be exercisable at any time during the three year period
following the date of issuance at an exercise price equal to 160% of the related
Trading Price. The issuance to Nomura of the Warrants and the issuance of the
Shares to be issued upon exercise of the Warrants have been registered under the
Securities Act. The Company has agreed to pay the out-of-pocket expenses of
Nomura over the term of the Purchase Agreement, including the fees and
disbursements of counsel.
The Company and certain officers and directors of the Company have
agreed that they will not offer, sell, pledge, contract to sell or otherwise
dispose of, directly or indirectly, or announce any such offer, sale, pledge,
contract or other disposition, or cause to be filed with the Commission a
registration statement under the Securities Act relating to any securities of
the Company substantially similar to the Shares (including without limitation,
securities convertible or exchangeable for the Shares), subject to certain
exceptions, for a period of two years after the date of this Prospectus without
the prior written consent of Nomura, except as otherwise permitted in the
Purchase Agreement.
11
In connection with a letter agreement between the Company and Quaker
Capital Advisors, Inc. ("Quaker") regarding the retention of Quaker to render
advisory services relating to the Company's efforts to secure equity financing,
the Company agreed to pay Quaker (i) a commitment fee equal to 0.1% of the total
amount of the Arrangement, (ii) 2.5% of the net proceeds from the sale of the
Shares to Nomura, and (iii) reimbursement for certain out-of-pocket expenses
incurred by Quaker. The commitment fee provided for in clause (i) of the
preceding sentence will be credited toward payment of the 2.5% fee described in
clause (ii). The Company further paid Quaker for general corporate finance
advisory services for the period July 1994 to November 1994 at the rate of
$5,000 per month.
The Purchase Agreement provides that the Company will indemnify Nomura
against certain liabilities, including liabilities under the Securities Act, or
contribute to payments that Nomura may be required to make in respect thereof.
The Purchase Agreement is included as an exhibit to the Registration
Statement which contains this Prospectus, and the foregoing summary of its terms
is qualified in its entirety by reference to the text of the Purchase Agreement.
PLAN OF DISTRIBUTION
Nomura expects to sell the Shares from time to time in at the market
transactions on Nasdaq. Nomura may also sell the Shares in negotiated
transactions, or by a combination of at the market and negotiated transactions,
at fixed prices that may be changed, at market prices at the time of sale, at
prices related to market prices or at negotiated prices. Nomura intends to
effect short sales of the Common Stock during the Pricing Periods. There can be
no assurance that the short sales effected by Nomura will not have an adverse
impact on the current market price of the Common Stock. Nomura expects to effect
these transactions by selling the Shares to or through broker-dealers, who may
receive compensation in the form of commissions, mark-ups or other payments from
Nomura or from the purchasers of the Shares for whom the broker-dealers may act
as agent or to whom they may sell as a principal, or both.
Any broker-dealers who act as Nomura's agent in connection with the sale
of the Shares may be deemed "underwriters" as that term is defined in the
Securities Act, and any remuneration received by them in connection therewith
may be deemed to be underwriting compensation under the Securities Act.
Nomura may engage in "passive market making" in the Common Stock on
Nasdaq in accordance with Rule 10b-6A under the Exchange Act. Rule 10b-6A
permits, upon the satisfaction of certain conditions, underwriters and selling
group members participating in a distribution that are also Nasdaq market makers
to engage in limited market making transactions during the period when Rule 10b-
6A under the Exchange Act would otherwise prohibit such activity. Rule 10b-6A
prohibits underwriters and selling group members engaged in passive market
making generally from entering a bid or effecting a purchase at a price that
exceeds the highest bid for those securities displayed on Nasdaq by a market
maker that is not participating in the distribution. Under Rule 10b-6A, each
underwriter or selling group member engaged in passive market making is subject
to a daily net purchase limitation equal to 30% of such entity's average daily
trading volume during the two full consecutive calendar months immediately
preceding the date of the filing of the registration statement under the
Securities Act pertaining to the security to be distributed.
LEGAL MATTERS
-------------
The validity of the shares of Common Stock offered hereby has been
passed on for the Company by Dechert Price & Rhoads, Princeton, New Jersey.
Certain legal matters will be passed on for Nomura by Cravath, Swaine & Moore,
New York, New York.
12
EXPERTS
-------
The audited consolidated financial statements and schedules of the
Company incorporated by reference in this Prospectus and elsewhere in the
Registration Statement, to the extent and for the periods indicated in their
report, have been audited by Arthur Andersen LLP, independent public
accountants, and are incorporated herein in reliance upon the authority of said
firm as experts in giving said reports.
The audited financial statements of CytoRad incorporated by reference in
this Prospectus and elsewhere in the Registration Statement, to the extent and
for the periods indicated in their report, have been audited by Arthur Andersen
LLP, independent public accountants, and are incorporated herein in reliance
upon the authority of said firm as experts in giving said reports.
13
Form of File No. 33-_____
PROSPECTUS SUPPLEMENT Filed pursuant to Rule _______
(TO PROSPECTUS DATED__________)
CYTOGEN CORPORATION
Common Stock
($.01 par value)
___________________
Subject to the terms and conditions of the Purchase Agreement
between Cytogen Corporation (the "Company") and Nomura Securities International,
Inc. ("Nomura"), on [ ], the Company and Nomura agreed upon a
Takedown with the following terms:
Maximum Takedown Amount: $______________
Maximum Expected Net
Proceeds: $______________
Pricing Period
Commencement Date: ______________, 199_
Expected Closing
Date: ______________, 199_
The Common Stock is traded on the Nasdaq National Market
("Nasdaq"). On [ ], the reported last sale price of the
Common Stock, as reported on Nasdaq, was $_____ per share .
All initially capitalized terms used herein shall have the same
meaning as specified in the Prospectus.
Nomura Securities International, Inc.
_________________________
The date of this Supplement is ______________, 19___
_________________________
[S-1]
Form of File No. 33-_____
PROSPECTUS SUPPLEMENT Filed pursuant to Rule _______
(TO PROSPECTUS DATED__________)
[ ] Shares
CYTOGEN CORPORATION
Common Stock
($.01 par value)
_______________
Subject to the terms and conditions of the Purchase Agreement
between Cytogen Corporation (the "Company") and Nomura Securities
International, Inc.("Nomura"), on [ ], the Company sold an aggregate
of [ ] shares of Common Stock at the closing of the Takedown, at a purchase
price of [ ] per share to Nomura.
The Common Stock is traded on the Nasdaq National Market
("Nasdaq"). On [ ], the reported last sale price of the Common Stock, as
reported on Nasdaq, was $_____ per share.
_______________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
_______________
=======================================================================================
Purchase Price (1) Proceeds To Company (2)
------------------ -----------------------
- ---------------------------------------------------------------------------------------
Per share................
- ---------------------------------------------------------------------------------------
Total....................
=======================================================================================
(1) The Company has agreed to indemnify Nomura against certain liabilities,
including liabilities under the Securities Act of 1933.
(2) Before deducting estimated expenses of $ payable by the Company.
Nomura Securities International, Inc.
The date of this Prospectus Supplement is , 199__.
_______________
[S-1]
[RECENT DEVELOPMENTS]
[USE OF PROCEEDS]
DILUTION
The net tangible book value per share of the Common Stock at
__________ ___, 199__ was $__________. Without taking into account any change in
the Company's net tangible book value after __________ ___, 199__, other than
giving effect to the issuance and sale of the Shares at the last reported sale
price as shown on the cover page (after deducting offering expenses and
underwriting discounts and commissions), the pro forma net tangible book value
per share of the Common Stock would have been $__________. This represents an
immediate increase in net tangible pro forma book value per share of $__________
to present stockholders and an immediate dilution of $__________ per share to
investors in this offering. The following table illustrates the per share effect
of this dilution on an investor's purchase of Common Stock:
Public offering price of Common Stock.............................. $______
Net tangible book value before offering........................... $______
Increase attributable to payments by new investors................ $______
Pro forma net tangible book value after offering................... $______
Dilution to new investors.......................................... $======
[UNDERWRITING]
[Sales of Common Stock by Nomura During Pricing Period]
[S-2]
================================================================================
No dealer, salesperson or other person has been authorized to give any
information or to make any representations other than those contained or
incorporated by reference in this Prospectus Supplement or the accompanying
Prospectus, and, if given or made, such information or representations must not
be relied upon as having been authorized. This Prospectus Supplement and the
accompanying Prospectus do not constitute an offer to sell or a solicitation of
an offer to buy any securities to which it relates, or an offer or solicitation
of any person in any jurisdiction in which such offer or solicitation would be
unlawful. Neither the delivery of this Prospectus Supplement and the
accompanying Prospectus nor any sale made thereunder shall, under any
circumstances, create an implication that the information contained herein is
correct as of any time subsequent to its date.
_______________
TABLE OF CONTENTS
Prospectus Supplement
Page
----
Recent Developments ............................................... S-
Use of Proceeds ................................................... S-
Dilution .......................................................... S-
Underwriting ...................................................... S-
Prospectus
Available Information..............................................
Incorporation of Certain Documents by
Reference.........................................................
The Company........................................................
Use of Proceeds....................................................
Underwriting.......................................................
Legal Matters......................................................
Experts............................................................
================================================================================
[ ] Shares
CYTOGEN CORPORATION
Common Stock
___________________
PROSPECTUS SUPPLEMENT
_______________
NOMURA SECURITIES INTERNATIONAL, INC.
[____________, 199__]
================================================================================
[S-3]
SUBJECT TO COMPLETION -- DATED MARCH 28, 1995
PROSPECTUS
CYTOGEN CORPORATION
WARRANTS TO PURCHASE COMMON STOCK
AND
SHARES OF COMMON STOCK
($.01 PAR VALUE)
----------------
This Prospectus relates to (i) the sale from time to time by
Nomura Securities International, Inc. ("Nomura") of the Warrants (the
"Warrants") to purchase Common Stock, $.01 par value (the "Common Stock"), of
Cytogen Corporation (the "Company"), and (ii) the sale by the Company of the
shares of Common Stock to be issued on exercise of the Warrants by the holder of
the Warrants and any sale thereof by anyone who would be deemed an "underwriter"
within the meaning of the Securities Act of 1933 (the "Securities Act"). The
Warrants were purchased by Nomura from the Company pursuant to a Purchase
Agreement dated March 28, 1995 (the "Purchase Agreement") and a Warrant
Agreement dated as of March __, 1995 (the "Warrant Agreement") between the
Company and Mellon Securities Trust Company, as Warrant Agent (the "Warrant
Agent"), at a purchase price of $.001 per Warrant. Each Warrant is immediately
exercisable for one share of Common Stock at an exercise price equal to 160% of
a deemed average trading price of the Common Stock at the time of issuance of
the Warrants (subject to certain anti-dilution provisions contained in the
Warrant Agreement). The Warrants may be exercised during a period of three years
from the date of issue. See "DESCRIPTION OF WARRANTS".
-----------------------
At the time of sale of the Warrants by Nomura hereunder, the
Company will prepare and file with the Securities and Exchange Commission (the
"Commission") a supplement to this Prospectus (the "Prospectus Supplement")
which sets forth the exercise price and expiration date of the Warrants being
offered. Nomura may from time to time sell the Warrants in negotiated
transactions or as may otherwise be provided in the applicable Prospectus
Supplement. The Company will not receive any proceeds from sales of the Warrants
by Nomura. The Company will receive all proceeds from the exercise of the
Warrants. Except as may otherwise be provided in an applicable Prospectus
Supplement, Nomura expects to sell any Common Stock received upon exercise of
the Warrants from time to time in at the market transactions on the Nasdaq
National Market ("Nasdaq"). The Company will not receive any proceeds from sales
of the Common Stock issued upon exercise of the Warrants. See "UNDERWRITING".
------------
The Company will bear all expenses in connection with the
registration of the Warrants and Common Stock, which expenses are estimated to
be $45,000.
The Company has agreed to indemnify Nomura and each other
underwriter within the meaning of the Securities Act that may purchase from or
sell for Nomura any of the Warrants and Common Stock, and each person, if any,
who controls Nomura or any underwriter within the meaning of the Securities Act,
against certain liabilities, including liabilities under the Securities Act.
The Common Stock is quoted on Nasdaq under the symbol "CYTO."
This Prospectus may not be used to consummate sales of the
Warrants unless accompanied by a Prospectus Supplement.
____________________________
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS".
____________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
____________________________
THE DATE OF THIS PROSPECTUS IS [________], 1995
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
TABLE OF CONTENTS
-----------------
Page
----
AVAILABLE INFORMATION....................................................... 3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................. 3
THE COMPANY................................................................. 5
RISK FACTORS................................................................ 5
USE OF PROCEEDS............................................................ 10
DESCRIPTION OF WARRANTS.................................................... 11
UNDERWRITING............................................................... 11
LEGAL MATTERS.............................................................. 12
EXPERTS.................................................................... 12
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN
CONNECTION WITH THIS OFFERING. ANY INFORMATION OR REPRESENTATION NOT CONTAINED
OR INCORPORATED BY REFERENCE HEREIN MUST NOT BE RELIED ON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL
OR THE SOLICITATION OF AN OFFER TO BUY THE SECURITIES OFFERED HEREBY IN ANY
STATE TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
EXCEPT WHERE OTHERWISE INDICATED, THIS PROSPECTUS SPEAKS AS OF ITS DATE AND
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
2
AVAILABLE INFORMATION
---------------------
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act"), and in accordance
therewith, files reports, proxy statements and other information with 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 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the following Regional Offices of the Commission: New York Regional
Office, Seven World Trade Center, Suite 1300, New York, New York 10048; and
Chicago Regional Office, Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511. Copies of such material can be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Common Stock is
traded on the Nasdaq National Market and such reports, proxy statements and
other information concerning the Company are available for inspection at the
offices of the National Association of Securities Dealers, Inc. (the "NASD"),
9513 Key West Avenue, Rockville, Maryland 20850.
The Company has filed with the Commission a Registration Statement on
Form S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act, with respect to the Warrants and shares of
Common Stock offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules thereto, certain parts of which are omitted in accordance with the
rules and regulations of the Commission. Statements contained in this Prospectus
or in any document incorporated by reference as to the contents of any contract
or other documents referred to herein or therein are not necessarily complete
and in each instance, reference is made to the copy of such documents filed as
an exhibit to the Registration Statement or such other documents. Each such
statement is qualified in its entirety by such reference. For further
information with respect to the Company and the Warrants and shares of Common
Stock offered hereby, reference is hereby made to the Registration Statement,
exhibits and schedules.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
-----------------------------------------------
The Company hereby incorporates by reference into this Prospectus (i)
its Annual Report on Form 10-K for the Fiscal Year Ended December 31, 1994,
which contains audited financial statements for the Company's latest fiscal year
for which a Form 10-K was required to have been filed, (ii) all other reports
filed by the Company pursuant to Section 13(a) or 15(d) of the Exchange Act
since December 31, 1994, including but not limited to the Current Reports on
Form 8-K filed by the Company with the Commission on January 6, 1995, February
16, 1995, February 23, 1995 and February 24, 1995, respectively and (iii) the
description of the Common Stock, par value $.01 per share, as contained in its
registration statement on Form 8-A declared effective on March 9, 1992.
All documents and reports filed by the Company with the Commission
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, subsequent
to the date hereof and prior to the filing of a post-effective amendment to the
Registration Statement which indicates that all shares of Common Stock offered
hereby have been sold or which deregisters all shares of Common Stock then
remaining unsold, shall be deemed to be incorporated by reference into this
Prospectus and to be a part hereof from the respective dates of filing of such
documents or reports.
Any statement contained in a document incorporated or deemed 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 a subsequently filed document that also is or is deemed to be incorporated
by reference herein modifies or supersedes such statement. Any such statement so
modified
3
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
THE COMPANY HEREBY UNDERTAKES TO 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 AND ALL OF THE INFORMATION
THAT HAS BEEN INCORPORATED BY REFERENCE IN THIS PROSPECTUS (NOT INCLUDING
EXHIBITS TO SUCH INFORMATION UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED
BY REFERENCE INTO SUCH INFORMATION). SUCH REQUESTS SHOULD BE DIRECTED TO T.
JEROME MADISON, VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND SECRETARY, AT THE
COMPANY'S PRINCIPAL EXECUTIVE OFFICES AT 600 COLLEGE ROAD EAST, CN 5308,
PRINCETON, NEW JERSEY 08540-5308; TELEPHONE: (609) 987-8210.
4
THE COMPANY
-----------
The Company is a biopharmaceutical company engaged in the discovery,
development, manufacture and marketing of products to better diagnose and treat
disease. The Company's current portfolio of products provides targeted delivery
of diagnostic and therapeutic substances directly to the sites of disease. The
Company is using its patented and proprietary technologies to develop specific
in vivo cancer diagnostic imaging and therapeutic products to build a focused
cancer care franchise. The Company may expand from cancer into other therapeutic
areas employing related technologies.
The Company's current focus is on: (i) Samarium 153 EDTMP ("Samarium
EDTMP"), a cancer therapy agent for the treatment of bone pain associated with
bone metastases, which is in late Phase III clinical development with a New Drug
Application submission to the U.S. Food and Drug Administration ("FDA")
anticipated in the first half of 1995; (ii) ProstaScint(TM), a prostate cancer
diagnostic imaging product, for which a Product License Application ("PLA") was
submitted to and accepted for filing by FDA effective March 13, 1995; and (iii)
OncoScint(R) CR/OV, the Company's monoclonal antibody-based diagnostic imaging
agent for colorectal and ovarian cancer, which has been approved by FDA since
December 1992 and, in its colorectal cancer application, in various European
countries since June 1991.
The Company has licensed to The DuPont Merck Pharmaceutical Company
("DuPont Merck") the manufacturing and co-marketing rights to Samarium EDTMP in
the U.S. The Company has assigned high priority to the product development and
commercialization programs for Samarium EDTMP and ProstaScint. The Company is
continuing to evaluate, invest in and support the sales and marketing activities
with respect to OncoScint CR/OV. While the product has technically performed as
predicted in clinical applications, OncoScint CR/OV has achieved very limited
sales, and negligible sales growth, in both the U.S. and European markets since
its introduction.
The Company's strategic plan also supports continued commitment to its
"linker" technology through ongoing product development efforts for cancer
therapeutic agents. The Company expects to expand its current product portfolio
through in-licensing products and technologies. In addition, the Company has
committed additional resources to its molecular recognition unit program which,
as a result of recent patent filings and development trends, has been renamed
the Totally Synthetic Affinity Reagents\SynGenes program. This program involves
long peptides that have the ability to recognize and bind to specific target
sites in the human body. The Company believes that the ability of these
compounds to bind to predetermined sites may mediate certain diagnostic or
therapeutic effects more effectively than its current monoclonal antibody
delivery systems and other existing products.
The Company is a Delaware corporation with its principal executive
offices at 600 College Road East--CN 5308, Princeton, N.J. 08540-5308. Its
telephone number is (609) 987-8200.
RISK FACTORS
------------
An investment in the shares of Common Stock offered hereby involves a
high degree of risk. Prospective investors should carefully consider the
following risk factors in addition to the other information set forth and
incorporated by reference in this Prospectus before making any decision to
invest in the Common Stock.
HISTORY OF OPERATING LOSSES; ACCUMULATED DEFICIT. The Company commenced
its research activities in 1981, and has never made a profit nor has it ever had
positive cash flow from operations. At December 31, 1994, the Company had an
accumulated deficit of approximately $155.8 million, and the Company anticipates
it will continue to incur substantial losses in the future. The Company first
5
recognized product related revenues in 1992. Product related revenues were
$400,000, $1.6 million and $1.4 million in fiscal 1992, fiscal 1993 and fiscal
1994, respectively. License and contract revenues were $13 million, $8.8 million
and $1 million in fiscal 1992, fiscal 1993 and fiscal 1994, respectively. The
Company recognized license and contract revenues of $9.1 million and $7.9
million in fiscal 1992 and fiscal 1993, respectively, which represented 68% and
76% of total revenue, from CytoRad Incorporated ("CytoRad"), a biopharmaceutical
company engaged in the research and development of proprietary antibody-based
delivery systems for the diagnosis and treatment of prostate cancers and the
treatment of ovarian cancer, utilizing technology licensed from the Company. No
CytoRad license and contract revenues were recognized in fiscal 1994. In
February 1995, CytoRad merged with and into a subsidiary of the Company. As a
result of the merger, the Company estimates that it will record in the first
quarter of 1995 approximately $20 million for acquired research and development
on its statement of operations, representing the amount by which the purchase
price exceeds CytoRad's net book value. The Company anticipates that even if its
products currently in development receive necessary regulatory approvals, its
revenues over the near term will not be sufficient to cover its operating
expenses. The Company's profitability will be dependent on its success in
developing, obtaining and maintaining regulatory approvals for, and effectively
marketing (either itself or through third parties) its products. There can be no
assurance as to when or whether profitability will be achieved.
FUTURE CAPITAL NEEDS; UNCERTAINTY OF FUNDING. The Company estimates that
its existing funds will enable it to maintain its current and planned operations
through fiscal 1995. In order to develop, manufacture and market all of its
products effectively, the Company will require substantial additional funding.
If such funding is not obtained the Company would be required to significantly
curtail its operations. In order to meet these needs, the Company intends to
seek to raise funds through additional sales of equity securities (including
pursuant to the Arrangement), which could result in substantial dilution of the
percentage ownership of the then Company stockholders, through marketing and
out-licensing arrangements, corporate partnering arrangements or strategic
mergers and acquisitions. No assurance can be given as to the Company's success
in obtaining additional funding or as to the terms of any such funding.
The offering of the Shares described herein will be contingent, in part,
upon prevailing market conditions, including the trading price and trading
volume of the Common Stock. In addition, due to the discretionary nature of the
obligation of Nomura to purchase Shares under the Purchase Agreement, there can
be no assurance that the Company will realize any significant levels of funding
from the sale of Shares pursuant to the Arrangement.
CHANGES IN CONTRACT REVENUES. A significant portion of the Company's
total revenues have historically been generated from licensing and related
contracts with third parties. With the exception of a recently executed contract
with DuPont Merck, all of these contracts have either been terminated, in which
event, the Company has reacquired the technology licensed to such third parties,
or have no continuing commercial value. With the exception of such revenues as
may be derived from its license agreement with DuPont Merck, which relates to
the Company's rights to Samarium EDTMP, the Company does not currently have any
source of contract revenues. Under its strategic plan, the Company has assigned
high priority to the product development and commercialization programs for
Samarium EDTMP and ProstaScint while it continues to evaluate, invest in and
support the sales and marketing activities with respect to OncoScint CR/OV,
which to date, has achieved very limited sales and negligible sales growth in
both the U.S. and European markets. The Company's strategic plan also supports
development of additional products and technologies. No assurances can be given
that this strategy will be successful or that the Company will in the future
achieve significant revenues through product sales, license agreements or
otherwise.
6
LIMITED MANUFACTURING CAPABILITY AND EXPERIENCE. The Company has limited
commercial scale manufacturing capacity, and it has not previously produced
commercial quantities of monoclonal prostate cancer antibodies, which are a
necessary element to the development of its ProstaScint product line. An
Establishment License Application ("ELA") for the facility used by the Company
for the production of its colorectal and ovarian imaging products was approved
by FDA in December 1992. An ELA Supplement prepared in 1994 in conjunction with
the PLA for ProstaScint was submitted to and accepted for filing by FDA on March
13, 1995. The Company believes that this facility will allow it to meet its
projected production requirements for its OncoScint CR/OV and ProstaScint
product lines in both the United States and Europe for the near term, although
no assurances can be given to that effect. If the Company's projected production
requirements are not achieved it would suffer materially adverse effects. The
Company currently has the in-house production capacity necessary to produce
projected commercial quantities of prostate cancer monoclonal antibodies for
manufacture of ProstaScint. However, no assurance can be given that the facility
will receive the necessary approvals to produce commercial quantities of
antibodies for ProstaScint, or that commercial quantities of antibodies will be
otherwise obtained. The Company will be required to obtain and maintain
regulatory approval for each of its commercial manufacturing processes and
facilities. Any failure to receive, or substantial delay in obtaining, or an
inability to maintain, regulatory approval for its manufacturing processes and
facilities will have a material adverse effect on the Company.
SINGLE SUPPLIER OF CERTAIN RAW MATERIALS. The raw materials used in the
manufacture of the Company's products include two antibodies. The Company has
both exclusive and non-exclusive license agreements which permit it to use
monoclonal antibodies in the products it is developing. The Company's one
commercial product, OncoScint CR/OV, uses a monoclonal antibody which is
supplied by a single manufacturer. The Company is aware that prior to 1992 this
supplier experienced certain operational difficulties relating to variations in
product yield, although to the Company's knowledge these difficulties have not
been experienced by the supplier since such time. These difficulties did not
materially adversely affect the Company. Although the Company anticipates that
the supplier will be able to meet the Company's needs for commercial quantities
of monoclonal antibodies for OncoScint CR/OV, no assurances can be given to that
effect. Failure by the supplier to provide these requisite monoclonal antibodies
in quantities sufficient to meet demand could have a material adverse effect on
the Company's business.
MARKETING UNCERTAINTIES. The Company has a limited sales force and has
historically relied in large part on third parties to market its products. In
1994 and the first quarter of 1995, the Company terminated its marketing
relationship with both Oncoscint CR/OV marketing partners. Since May 1994, the
Company's direct sales force has been the sole marketer of its OncoScint CR/OV
product in the United States. The Company intends to secure alternative
marketing and distribution partners for OncoScint CR\OV in Europe and Japan. The
Company is currently evaluating its product marketing options in the United
States and is considering maintaining its direct selling efforts, as well as,
co-promotion arrangements or licensing of all rights to a third party. Depending
on the approach selected, significant resources might be required. The Company
is also exploring advances in teleradiology in order to improve the acquisition
and interpretation of an OncoScint CR/OV scan. There can be no assurance that
the Company's marketing strategy will be successful.
The Company's ability to market its products successfully in the future
will be dependent on a number of factors, many of which are not within its
control. Due to slower than anticipated growth in OncoScint CR/OV product sales,
the Company has a significant investment in inventories. These inventories
include raw materials which the Company currently estimates will not be fully
used in the foreseeable future. During fiscal 1993 and fiscal 1994, the Company
recorded $2.3 million and $1.1 million of inventory writedowns due to shelf life
expiration and other inventory realization issues. In July 1993, the Company
petitioned FDA for an extension of the shelf life of its monoclonal antibody raw
material
7
inventories. As of December 31, 1994, the Company had raw materials of $3.2
million, of which approximately $2.0 million exceeded the currently approved FDA
shelf life. The realization of the Company's investment in inventory is
dependent upon growth in product sales and the outcome and timing of the
response by FDA to the Company's request to extend the deemed product shelf
life. The Company cannot predict with accuracy when FDA will respond to such
request and no assurances can be given that such response will be favorable to
the Company. Given the foregoing uncertainties with respect to raw material
inventory, future inventory writedowns may be required.
DEPENDENCE UPON KEY PERSONNEL. The Company's ability to develop
marketable products and to maintain a competitive position in light of
technological developments will depend, in large part, on its ability to attract
and retain qualified scientific personnel and to develop and maintain
relationships with leading research institutions. Competition for such personnel
and relationships is intense. The Company is highly dependent on the principal
members of its management and scientific staff, the loss of whose services might
impede the achievement of development objectives. The Company does not maintain
any significant amounts of key personnel insurance on the lives of its employees
or directors.
POTENTIAL FOR PRODUCT LIABILITY EXPOSURE. The Company could be subject
to product liability claims in connection with the use of products that the
Company is currently developing, manufacturing and marketing or that the Company
or its licensees may develop, manufacture and market in the future. There can be
no assurance that the Company would have sufficient resources to satisfy any
liability resulting from these claims or would be able to have its customers
indemnify or insure the Company against such claims. Although the Company
believes that its current product liability insurance coverage of $5 million per
claim and $5 million in the aggregate is adequate for its present activities,
there can be no assurance that such coverage will be adequate in terms and scope
to protect it against material adverse effects in the event of a successful
product liability claim.
PATENTS AND PROPRIETARY RIGHTS. The Company has been issued patents in
the United States and other countries and has numerous other patent applications
pending to protect its proprietary technology. There can be no assurance that
any patents that have been issued or may be issued in the future will be of
substantial protection or commercial benefit to the Company, will afford the
Company adequate protection from competing products or will not be challenged or
declared invalid. Furthermore, there can be no assurance that additional U.S. or
foreign patents will be issued to the Company. The extent to which the Company
may be required to license other patents or proprietary rights held by others
and the cost and availability of such licenses are presently unknown. The
Company is not aware that any of its activities are in violation of third-party
patents; however, any such violation could have a material adverse effect on its
business. In addition, the Company relies heavily on its proprietary
technologies for which patent applications have been filed but not yet granted
in certain countries. Insofar as the Company relies on trade secrets, non-
disclosure agreements and unpatented know-how to establish and maintain its
competitive technological position, there can be no assurance that others may
not independently develop the same or similar technologies.
GOVERNMENT REGULATION. The Company is subject to regulation by numerous
governmental authorities in the United States, including FDA and the Nuclear
Regulatory Commission, and in other countries. All of the Company's products,
manufacturing processes and facilities require governmental licensing or
approval prior to commercial use and the maintenance of such approvals
thereafter. The approval process applicable to products of the type being
developed by the Company usually takes several years and typically requires
substantial expenditures. The Company submitted an application to FDA for
marketing approval of ProstaScint in January 1995, which was accepted effective
March 13, 1995, and intends to submit an application to FDA for marketing
approval of Samarium EDTMP during the first half of 1995. No assurances can be
given, however, as to whether or when the Company will receive approval for
these products. The Company has submitted an application to FDA for repeat
administration
8
of OncoScint CR/OV. To date, FDA has not issued an approval or non-approval
letter for this extended indication. The Company cannot be sure about the
outcome and timing of FDA's response. The Company may encounter significant
delays or excessive costs in its efforts to secure necessary approvals or
licenses. Future U.S. or foreign legislative or administrative acts could also
prevent or delay regulatory approval of the Company's products. Failure to
obtain or maintain requisite governmental approvals, or failure to obtain
approvals of the scope requested, could delay or preclude the Company from
marketing its products, or limit the commercial use of the products and thereby
have a material adverse effect on the Company.
VOLATILITY OF STOCK PRICE. Nomura's intention to effect short sales of
the Shares during Pricing Periods and the issuance of Shares pursuant to the
Arrangement may have a significant adverse impact on the current market price of
the Common Stock. See "UNDERWRITING--Plan of Distribution". In
----------------------------------
addition, the market price of the securities of biopharmaceutical companies
generally and of the Common Stock in particular has fluctuated over a wide range
in the past and it is likely that the price of these securities will fluctuate
in the future. Announcements of technical innovations, new commercial products,
regulatory approvals, patent or proprietary rights or other developments by the
Company or its competitors could have a significant impact on the market price
of the Common Stock.
RISK OF TECHNOLOGICAL OBSOLESCENCE; HIGHLY COMPETITIVE INDUSTRY.
Biotechnology has undergone rapid and significant technological change. The
Company expects that this technology will continue to develop rapidly, and the
Company's future success will depend, in large part, on its ability to maintain
a competitive position. Rapid technological development may result in products
or processes becoming obsolete before marketing of these products or before the
Company recovers a significant portion of the research, development and
commercialization expenses incurred with respect to those products.
There is intense competition in the biopharmaceutical industry.
Potential competitors in the United States, Europe and other markets are
numerous and include pharmaceutical, chemical, biotechnology and medical device
companies, many of which have substantially greater capital resources, marketing
experience, research and development staffs and facilities than the Company.
Furthermore, some of the Company's competitors may achieve product
commercialization earlier than the Company. The Company also experiences
competition from universities and other research institutions in the development
of the Company's technologies and processes and, in some instances, competes
with others in acquiring technology from universities. In addition, certain of
the Company's products are subject to competition from products developed using
techniques other than those developed in biotechnology.
The biopharmaceutical industry is under pressure to consolidate, with
companies merging to attain critical mass in the marketplace. This trend towards
consolidation is due to a number of factors, including, the high costs
associated with obtaining FDA approval for products, substantial resources
required to commercialize products and unfavorable conditions in the public
capital markets for biopharmaceutical companies seeking financing. The
healthcare industry in general is undergoing significant changes due to cost
containment pressures, reimbursement requirements and the increasing presence of
managed care organizations. There can be no assurance that the Company will not
be influenced by any or all of these factors, all of which are beyond its
control.
NO DIVIDENDS ANTICIPATED IN THE FUTURE. The Company has not paid any
cash dividends on the Common Stock since its inception and does not anticipate
paying any cash dividends in the future. Declaration of dividends on the Common
Stock will depend upon, among other things, future earnings, the operating and
financial condition of the Company, its capital requirements and general
business conditions.
9
DILUTION; SHARES ELIGIBLE FOR FUTURE SALE. Because the Common Stock is
issuable upon exercise of certain issued and outstanding warrants and options
and pursuant to outstanding contingent value rights ("CVRs"), the interests of
the Company's then stockholders will be diluted and the market price of the
Common Stock could be adversely affected by future exercises of the warrants
and/or options or issuances of the Common Stock pursuant to the CVRs and by the
sale of such shares in the public market. As of March 15, 1995, approximately
4,285,000 shares of Common Stock were reserved for issuance upon exercise of
issued and outstanding warrants, approximately 1,874,234 shares of Common Stock
were reserved for issuance pursuant to the CVRs and approximately 5,973,135
shares of Common Stock were reserved for issuance pursuant to employee
retirement savings, stock option and stock award plans and agreements (including
an option granted to Fletcher Capital Markets, Inc., which option has since been
assigned to Harvard Management Company, Inc.).
ABSENCE OF PUBLIC MARKET FOR WARRANTS. The Warrants will constitute a
new issue of securities with no prior public market. The Company does not intend
to apply for listing of the Warrants on any national securities exchange or
admission for quotation on Nasdaq and there is not expected to be any
established trading market for the Warrants.
USE OF PROCEEDS
---------------
The Company will not receive any of the proceeds from the sale by Nomura
of Warrants or from the re-sale of Common Stock purchased upon the exercise of
Warrants. Unless otherwise provided in an applicable Prospectus Supplement, any
net proceeds to the Company from the sale of the Common Stock upon exercise of
the Warrants will be used for general corporate purposes, including product
commercialization, late-stage product development activities and exploratory
basic research activities within the Company, and selling, general and
administrative expenses.
10
DESCRIPTION OF WARRANTS
-----------------------
Each Warrant represents the right to purchase one share of Common Stock.
The Warrants are issued pursuant to the Purchase Agreement and a Warrant
Agreement between the Company and Mellon Securities Trust Company, as Warrant
Agent. The Warrants are exercisable at any time on or before three years after
the date of issuance (the "Expiration Date"). Except as described below, the
exercise price (the "Exercise Price") of the Warrants is equal to 160% of a
deemed average trading price of the Common Stock at the time of issuance of the
Warrants, as determined in accordance with the terms of the Purchase Agreement.
The Warrant Agreement provides that the Exercise Price and the number of
shares of Common Stock issuable upon exercise of each Warrant will be adjusted
in the event of stock dividends, stock splits, stock combinations,
reclassifications or reorganizations of the Common Stock, or rights offerings or
the issuance of Common Stock at below current market price per share. Fractional
shares will not be issued upon exercise of the Warrants. In lieu thereof, a cash
adjustment based on the closing price of the Common Stock as reported on Nasdaq
on the date of the exercise will be made.
The Warrant Agreement further provides that in case of any consolidation
or merger of the Company with or into another corporation or any sale, lease or
transfer to another person of all or substantially all of the assets of the
Company, the holder of each outstanding Warrant will have the right to receive,
upon exercise of the Warrant, the kind and amount of securities, cash or other
assets receivable upon the consolidation, merger, sale, lease or transfer by a
holder of the number of shares of Common Stock that would have been received
upon the exercise of the Warrant immediately prior to that event. The Warrants
do not confer upon the holder any voting rights or any other rights as a
stockholder of the Company prior to the time of exercise.
The Warrants may be exercised by the surrender of the related Warrant
Certificates to the Warrant Agent, with the warrant exercise form set forth on
the back of the Warrant Certificate duly executed and accompanied by a certified
or official bank check payable to the order of the Company in the amount of the
Exercise Price multiplied by the number of shares of Common Stock to be acquired
pursuant to the exercise or, in the event of a cashless exercise, by specifying
and receiving a number of shares of Common Stock having an aggregate fair market
value equal to the difference between (x) the fair market value of the number of
shares subject to the Warrant and (y) the Exercise Price for the shares.
The Company does not intend to apply for listing of the Warrants on any
national securities exchange or admission for quotation on Nasdaq and there is
not expected to be any established trading market for the Warrants. As of the
date hereof, a class of warrant securities and a class of contingent value
rights securities of the Company are quoted on Nasdaq.
UNDERWRITING
------------
PURCHASE AGREEMENT
The Warrants offered hereby were purchased by Nomura pursuant to the
terms of the Purchase Agreement under which Nomura agreed to purchase up to
$49,000,000 of shares of Common Stock from the Company.
11
PLAN OF DISTRIBUTION
Nomura may from time to time sell the Warrants in negotiated
transactions or as may otherwise be provided in an applicable Prospectus
Supplement. Except as may otherwise be provided in an applicable Prospectus
Supplement, Nomura expects to sell any Common Stock acquired upon exercise of
the Warrants from time to time in at the market transactions on Nasdaq.
Any broker-dealers who act as Nomura's agent in connection with the sale
of the Warrants or shares of Common Stock may be deemed "underwriters" as that
term is defined in the Securities Act, and any remuneration received by them in
connection therewith may be deemed to be underwriting compensation under the
Securities Act.
LEGAL MATTERS
-------------
The validity of the Warrants and shares of Common Stock offered hereby
have been passed on for the Company by Dechert Price & Rhoads, Princeton, New
Jersey. Certain legal matters will be passed on for Nomura by Cravath, Swaine &
Moore, New York, New York.
EXPERTS
-------
The audited consolidated financial statements and schedules of the
Company incorporated by reference in this Prospectus and elsewhere in the
Registration Statement, to the extent and for the periods indicated in their
report, have been audited by Arthur Andersen LLP, independent public
accountants, and are incorporated herein in reliance upon the authority of said
firm as experts in giving said reports.
The audited financial statements of CytoRad incorporated by reference in
this Prospectus and elsewhere in the Registration Statement, to the extent and
for the periods indicated in their report, have been audited by Arthur Andersen
LLP, independent public accountants, and are incorporated herein in reliance
upon the authority of said firm as experts in giving said reports.
12
Form of File No. 33-_____
PROSPECTUS SUPPLEMENT Filed pursuant to Rule _______
(TO PROSPECTUS DATED__________)
CYTOGEN CORPORATION
Warrants to Purchase Common Stock
________________________
During the period [ ] to [ ],
Nomura Securities International, Inc. sold Warrants to Purchase Common Stock,
$.01 par value (the "Common Stock"), of Cytogen Corporation on the dates set
forth below:
NUMBER OF EXERCISE EXPIRATION
DATE WARRANTS PRICE DATE
- --------- --------- -------- ----------
The Common Stock is traded on the Nasdaq National Market
("Nasdaq"). On [ ], the reported last sale price of the
Common Stock, as reported on Nasdaq was $_____ per share.
All initially capitalized terms used herein shall have the same
meaning as specified in the Prospectus.
NOMURA SECURITIES INTERNATIONAL, INC.
________________________
The date of this Prospectus Supplement is ______________, 199__.
_________________________
[S-1]
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth an itemized estimate of fees and expenses
payable by the Registrant in connection with the offering of the securities
described in this Registration Statement, other than underwriting discounts and
commissions.
SEC registration fee.............................. $ 3,793
NASD filing fee................................... 1,600
Blue Sky fees and expenses........................ 15,000
Transfer Agent Fees............................... 5,000
Legal fees and expenses........................... 340,000
Accounting fees and expenses...................... 50,000
Printing expenses................................. 5,000
Miscellaneous..................................... 34,607
--------
Total.................................. $455,000
Item 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "DGCL")
provides generally and in pertinent part that a Delaware corporation may
indemnify its directors, officers, employees and agents against expenses
(including attorneys' fees), judgments, fines and settlements actually and
reasonably incurred by them in connection with any civil, criminal,
administrative or investigative action, suit or proceeding (except actions by or
in the right of the corporation), if, in connection with the matters in issue,
they acted in good faith and in a manner they reasonably believed to be in, or
not opposed to, the best interests of the corporation, and in connection with
any criminal suit or proceeding, they had no reasonable cause to believe their
conduct was unlawful. Section 145 further provides that, in connection with the
defense or settlement of any action by or in the right of the corporation, a
Delaware corporation may indemnify its directors, officers, employees and agents
against expenses actually and reasonably incurred by them if, in connection with
the matters in issue, they acted in good faith and in a manner they 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 such person shall have been adjudged to be liable to the
corporation, absent a determination by a court that such indemnity is proper.
Section 145 further permits a Delaware corporation to grant its directors,
officers, employees and agents additional rights of indemnification through
bylaw provisions and otherwise.
Section 102(b)(7) of the DGCL provides that a certificate of
incorporation may contain a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director provided that such provision
shall not eliminate or limit the liability of a director (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 (relating to
liability for unauthorized acquisitions or redemptions of, or dividends on,
capital stock) or (iv) for any transaction from which the director derived an
improper personal benefit.
II-1
The Restated Certificate of Incorporation, as amended, of the Registrant
provides for the indemnification of the Registrant's directors, officers,
employees and agents to the fullest extent provided by the DGCL.
Article IX, Sections 1 and 2 of the Registrant's By-laws, as amended,
provide as follows:
"SECTION 1. A director of the Corporation shall not be
personally liable to the Corporation or 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 Delaware General Corporation Law, or (iv)
for any transaction from which the director derived an improper personal
benefit.
SECTION 2. Each person who has or is made a party or is
threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a
person of whom he or she is the legal representative, 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 corporation or of a partnership, joint
venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged
action or inaction in an official capacity as a director, officer,
employee or agent or in any other capacity while serving as a director,
officer, employee or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent permitted by the Delaware General
Corporation Law, as the same exists or may hereafter be amended (but, in
the case of any such amendment, only to the extent that such amendment
permits the Corporation to provide broader indemnification rights than
said law permitted the Corporation to provide prior to such amendment),
against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid or to
be paid in settlement) reasonably incurred or suffered by such person in
connection therewith and such indemnification shall continue as to a
person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of his or her heirs, executors and
administrators; provided, however, that, except as provided in this
Section 2, the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof)
initiated by such person only if such proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation. The right to
indemnification conferred in this Section 2 shall be a contract right
and shall include the right to be paid by the Corporation the expenses
incurred in defending any such proceeding in advance of its final
disposition as authorized by the Board of Directors; provided, however,
that if the Delaware General Corporation Law so requires, the payment of
such expenses incurred by a director, officer, employee or agent of the
Corporation in his or her capacity as such in advance of the final
disposition of a proceeding shall be made only upon delivery to the
Corporation of an undertaking, by or on behalf of such director,
officer, employee or agent of the Corporation, to repay all amounts so
advanced if it shall ultimately be determined that such director,
officer, employee or agent of the Corporation is not entitled to be
indemnified under this Section 2 or otherwise."
The Registrant has entered into identical indemnification agreements
with certain of its directors, officers and consultants which generally put into
effect Sections 1 and 2 of its By-laws. In addition, the Registrant's By-laws
provide that the Registrant has the power to purchase liability insurance
policies covering its directors, officers, employees and agents, whether or not
the Registrant
II-2
would have the power to indemnify such person under the DGCL. The Registrant
currently maintains such insurance.
Pursuant to the Purchase Agreement referred to in Exhibit 1.1 of this
Registration Statement, Nomura agrees to indemnify the Registrant and its
directors, officers and each person, if any, who controls the Registrant against
certain liabilities which might arise under the Securities Act of 1933 from
information furnished to the Registrant by or on behalf of Nomura.
Item 16. EXHIBITS.
NO. DESCRIPTION
- -- -----------
1.1 Purchase Agreement by and between the Registrant and Nomura Securities
International, Inc., dated March 28, 1995
4.1 Restated Certificate of Incorporation, as amended(1)
4.2 By-laws, as amended(1)
4.3 Form of Warrant Agreement by and between the Registrant and Mellon
Securities Trust Company, as Warrant Agent, dated as of March __, 1995,
including form of Warrant Certificate attached thereto as Exhibit A*
5.0 Opinion of Dechert Price & Rhoads regarding validity*
23.1.1 Consent of Dechert Price & Rhoads (contained in opinion filed as
Exhibit 5.0)*
23.2.1 Consent of Arthur Andersen LLP
23.2.2 Consent of Arthur Andersen LLP
24.0 Powers of Attorney for each person executing the Registration Statement
on behalf of the Registrant are contained on the signature pages to the
Registration Statement.
_________________
(1) Previously filed as exhibits to Registrant's Registration Statement on
Form S-4 (File No. 33-88612) and incorporated herein by reference
thereto.
* To be filed by Amendment
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 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;
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(2) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) to remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
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 of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(d) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act of 1933 shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
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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 Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the Town of Princeton, State of New Jersey, on March 23, 1995.
CYTOGEN CORPORATION
By: /s/ Thomas J. McKearn
---------------------------------
Thomas J. McKearn
President and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Thomas J. McKearn and T. Jerome Madison
or either of them, his attorney-in-fact, each with the power of substitution,
for him in any and all capacities, to sign any amendments to this Registration
Statement, and to file the same, with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that either of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ William C. Mills III Chairman of the Board of Directors March 23, 1995
- ------------------------
William C. Mills III
/s/ Thomas J. McKearn President, Chief Executive Officer and March 23, 1995
- ------------------------- Director (Principal Executive Officer)
Thomas J. McKearn
/s/ T. Jerome Madison Vice President, Chief Financial March 23, 1995
- ------------------------- Officer, Secretary and Director
T. Jerome Madison (Principal Financial and Accounting Officer)
/s/ George W. Ebright Director March 23, 1995
- -------------------------
George W. Ebright
/s/ Robert F. Johnston Director March 23, 1995
- -------------------------
Robert F. Johnston
/s/ Charles E. Austin Director March 23, 1995
- -------------------------
Charles E. Austin
/s/ Bruce R. Ross Director March 23, 1995
- -------------------------
Bruce R. Ross
II-5
EXHIBIT INDEX
-------------
Exhibit
Number Description
- ------- -----------
1.1 Purchase Agreement by and between the Registrant and Nomura Securities
International, Inc., dated March 28, 1995
23.2.1 Consent of Arthur Andersen LLP
23.2.2 Consent of Arthur Andersen LLP