As filed with the Securities and Exchange Commission on December 24, 1998
Registration No. 333-
================================================================================ 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION Washington,ON MAY 2, 2000
REGISTRATION NO. 333-
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act ofUNDER
THE SECURITIES ACT OF 1933
--------------------------
AMERICAN BIOGENETIC SCIENCES, INC.
(Exact Name of Registrant as Specified Inin Its Charter)
DelawareDELAWARE 11-2655906
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
1375 Akron Street, Copiague,AKRON STREET, COPIAGUE, NY 11726
(631) 789-2600
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
--------------------------
RICHARD A. RUBIN,DAVID H. MURPHREE, ESQ.
PARKER CHAPIN FLATTAUBROWN, RUDNICK, FREED & KLIMPL, LLP
1211 Avenue of the Americas
New York, New York 10036
(212) 704-6000GESMER
ONE FINANCIAL CENTER
BOSTON, MA 02111
(617) 856-8200
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
--------------------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.registration statement.
If the only securities being registered on this Formform are being offered pursuant
to dividend or interest reinvestment plans, please check the following box.[ ]
If any of the securities being registered on this Formform are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: [X]
If this Formform is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Formform is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
=================================================================================================================================
Proposed
Amount Maximum Proposed Maximum
Maximum Amount of
Title ofOf Each Class Amount to beOf To Be Offering Price Aggregate Offering Registration
ofAmount Of
Securities to beTo Be Registered Registered per Share (1) PricePer Share(1) Price(1) Registration Fee
- ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Class A Common Stock,
$.01 par value $0.001 per share.................... 10,800,000 $0.85937 $9,281,196 $2,580.17
Total Registration Fee...............................................................................$2,580.17share 650,000 shares(2) $1.59375 $1,035,937.50 $273.49
=================================================================================================================================
(1) Represents the shares of Class A Common Stock being registered for
resale by the Selling Stockholders. Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) ofunder the Securities Act of 1933, as amended, based on
the basis of the average of the bid and asked priceprices for the registrant's
Class A common stock on April 27, 2000, as reported on the Nasdaq National Market on December 21, 1998.
The Registrant hereby amends this Registration Statement onOTC Bulletin
Board.
(2) Consists of 650,000 shares issuable upon exercise of outstanding warrants.
Also registered hereunder are such date
or datespresently indeterminable number of
additional shares of Class A common stock as may be necessary to delay its effective date untilissued in the Registrant
shall fileevent of
a further amendment which specifically states that this Registration
Statement shall thereafter become effectivemerger, consolidation, reorganization, recapitalization, stock dividend,
stock split or other similar change in accordance with SectionClass A common stock.
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 ofOF THE
SECURITIES ACT OF 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said SectionOR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
may determine.MAY DETERMINE.
================================================================================
The information in this Prospectus is not complete. We may not sell these
securities until the Registration Statement filed with the Securities and
Exchange Commission is effective. This Prospectus is not an offer to sell nor is
it seeking an offer to buy these securities in any State where the offer or sale
is not permitted.2
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED DECEMBER 24, 1998MAY 2, 2000
PROSPECTUS
- ----------
10,800,000 Shares
American Biogenetic Sciences, Inc.
Class650,000 SHARES
AMERICAN BIOGENETIC SCIENCES, INC.
CLASS A Common StockCOMMON STOCK
-------------------
The stockholdersstockholder of American Biogenetic Sciences, Inc. listed on page 157 of
this Prospectus areprospectus is offering for sale 10,800,000 Shares650,000 shares of our Class A Common
Stock of the Companycommon stock
under this Prospectus. This Prospectus may also be used by
those to whom such Selling Stockholders may pledge, donate or transfer their
Shares and their other successors in interest. We issued all of the Shares to
the Selling Stockholders in a private placement transaction in October 1998.prospectus.
The Selling Stockholdersselling stockholder may offer their Sharesits shares through public or private
transactions, at prevailing market prices or at privately negotiated prices. See "Plan of Distribution" on page 17.
The Selling Stockholders will receive all of the net proceeds from the
sale of the Shares. Accordingly, weWe
will not receive any proceeds from the
resalethese sales. See "Plan of the Shares. We have agreed to bear the expenses incident to the
registration of the Shares, other than selling discounts and commissions.
Our Class A Common Stock is currently quoted on the Nasdaq National
Market under the symbol "MABXA.Distribution."
OTC Bulletin Board Symbol
"MABA"
On December 23, 1998,April 28, 2000, the closing price of a share of our Class A Commoncommon stock
on the OTC Bulletin Board was $1.75.
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY CONSIDER
THE FACTORS DESCRIBED UNDER THE CAPTION "RISK FACTORS" BEGINNING ON PAGE 2 OF
THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is ______, 2000
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TABLE OF CONTENTS
PROSPECTUS SUMMARY.............................................................1
RISK FACTORS...................................................................2
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS...............................6
WHERE YOU CAN FIND MORE INFORMATION ABOUT US...................................6
USE OF PROCEEDS................................................................7
SELLING STOCKHOLDER............................................................7
PLAN OF DISTRIBUTION...........................................................7
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES.................................9
LEGAL MATTERS..................................................................9
EXPERTS........................................................................9
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PROSPECTUS SUMMARY
This summary highlights some information from this prospectus. It may not
contain all of the information important to you. To understand this offering
fully and get a better understanding of our business and operations, you should
read the entire prospectus carefully, including the risk factors and the
documents we have incorporated by reference in the section "Where You Can Find
More Information About Us."
Please note that references in this prospectus to "we", "our" or "us" refer
to American Biogenetic Sciences, Inc. and our subsidiary, Stellar Bio Systems,
Inc., not to the selling stockholder.
GENERAL INFORMATION ABOUT AMERICAN BIOGENETIC SCIENCES, INC.
We are engaged in researching, developing and marketing cardiovascular and
neurobiology products for commercial development. We commenced selling our
products during the last quarter of 1997.
Some of our products are designed to be used for IN VIVO, while others are
designed for IN VITRO, diagnostic procedures. IN VIVO diagnostic procedures are
those in which proteins or compounds are injected directly into the body or
bloodstream to assess abnormal reactions or conditions. During IN VITRO
procedures, blood, urine or other bodily fluid or tissue is extracted from the
body and the diagnostic tests are performed in a test tube or other laboratory
equipment.
Our main products are:
o Thrombus Precursor Protein test, referred to as the TpP(TM) test. This
is an IN VITRO diagnostic test used to assess the risk of blood clots
in the veins or arteries. This test is also used to monitor the
performance of anti-clotting therapy or drugs used in the prevention
of blood clots.
o Functional Intact Fibrinogen test, referred to as the FiF(R) test.
This is an IN VITRO diagnostic test which measures the levels of
fibrinogen in blood. Fibrinogen is a protein used in the
blood-clotting process.
o Therapeutic neurocompounds. These are chemical compounds that have
been identified for the treatment of epilepsy, migraine and mania and
other diseases of the nervous system.
o IN VITRO diagnostic products for infectious and auto-immune diseases.
These products can determine the status of diseases such as human
herpes and lupus.
o Mouse serum. This serum is a blood component that lacks blood cells.
IN VITRO diagnostic product manufacturers use it in diagnostic tests
for various purposes.
The company was incorporated in Delaware in September 1983. Our principal
executive offices are located at 1375 Akron Street, Copiague, New York 11726,
and our telephone number at that address is (631) 789-2600.
As of April 20, 2000, we had 40,507,028 shares of Class A common stock and
3,000,000 shares of Class B common stock outstanding. As of that date, we also
had 7,000 share of Series A preferred stock outstanding, which were immediately
convertible into 7,000,000 shares of our Class A common stock. This prospectus
relates to 650,000 shares of our Class A common stock that may be issued upon
exercise of certain outstanding warrants.
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RISK FACTORS
BEFORE YOU BUY SHARES OF OUR CLASS A COMMON STOCK, YOU SHOULD BE AWARE THAT
THERE ARE VARIOUS RISKS ASSOCIATED WITH THAT PURCHASE, INCLUDING THOSE DESCRIBED
BELOW. YOU SHOULD CONSIDER CAREFULLY THESE RISK FACTORS, TOGETHER WITH ALL OF
THE OTHER INFORMATION IN THIS PROSPECTUS AND THE DOCUMENTS WE HAVE INCORPORATED
BY REFERENCE IN THE SECTION "WHERE YOU CAN FIND MORE INFORMATION ABOUT US"
BEFORE YOU DECIDE TO PURCHASE SHARES OF OUR CLASS A COMMON STOCK.
RISKS ASSOCIATED WITH OUR LACK OF OPERATING HISTORY, HISTORY OF LOSSES AND
FUTURE NEED FOR CAPITAL
OUR LACK OF SIGNIFICANT REVENUES FROM PRODUCT SALES AFFECTS OUR ABILITY TO
GENERATE CASH
We are a development stage company. Although we have products at various
stages of development and have started to generate revenues, we may not generate
significant revenues from product sales to advance beyond the development stage.
Through December 31, 1999, we have received an aggregate of $1,384,000 in
licensing fees, royalties and fees under collaborative agreements. Sales of the
TpP and FiF tests and sales of Stellar's products since its acquisition on April
23, 1998, totaled $2,708,000 through December 31, 1999.
WE HAVE A HISTORY OF LOSSES, AND IF WE DO NOT ACHIEVE PROFITABILITY, WE MAY NOT
BE ABLE TO CONTINUE OUR BUSINESS IN THE FUTURE
Our research, development, and general and administrative expenses have
resulted in significant losses in each year since our inception in 1983 and are
expected to continue to result in significant losses for the foreseeable future.
We have incurred the following losses since 1995:
Fiscal year ended:
o December 31, 1995..................... $5,607,000
o December 31, 1996..................... $7,700,000
o December 31, 1997..................... $7,147,000
o December 31, 1998..................... $7,548,000
o December 31, 1999..................... $5,351,000
THE CYCLE FROM PRODUCT DEVELOPMENT TO COMMERCIALIZATION IS LENGTHY AND MAY
RESULT IN DELAYS IN THE COMMERCIALIZATION OF OUR PRODUCTS
Our existing products and our products under development are subject to the
risks inherent in the development of most biotechnology products. We are unable
to predict with any degree of certainty when, or if, we will complete the
research, development and testing of products currently under development and
future products or, if completed, whether we will obtain required regulatory
approvals. In addition, we may not be able to produce our products in commercial
quantities at reasonable costs, and our products may not be accepted by the
medical community.
WE COULD BE REQUIRED TO CUT BACK OR STOP OPERATIONS IF WE ARE UNABLE TO RAISE OR
OBTAIN NEEDED FINANCING
The research, development, commercialization, manufacturing and marketing
of our products will require financial resources that are significantly in
excess of those presently available to us. We probably will need to seek
additional financing, which may result in (1) borrowings that could affect our
results of operations and create an obligation to repay loans and (2) the
issuance of additional shares of our capital stock and/or rights to acquire
additional shares of our capital stock. Such additional issuances of capital
would result in a reduction of your percentage interest in our company. We may
not be able to arrange financing or other third party arrangements necessary to
fully develop and commercialize any of our products on acceptable terms or at
all.
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RISKS ASSOCIATED WITH THE INDUSTRY IN WHICH WE OPERATE
IF WE DO NOT OBTAIN AND MAINTAIN NECESSARY U.S. OR FOREIGN CLEARANCES OR
MANUFACTURING AND MARKETING APPROVALS FOR OUR PRODUCTS, OUR BUSINESS AND
OPERATIONS COULD BE ADVERSELY AFFECTED
The investigation, manufacture, exportation, marketing and sale of
diagnostic and therapeutic products in or from the United States is subject to
regulation by the Food and Drug Administration, as well as by comparable foreign
and state agencies. Although we have obtained pre-market clearance for some of
our existing products, other products may not be approved by the FDA or other
applicable foreign regulatory agencies. Any FDA, foreign and state regulatory
approvals or clearances, once obtained, can be withdrawn or modified. Our
inability to obtain and maintain any necessary United States or foreign
clearances or manufacturing and marketing approvals for our products could have
a material adverse effect on our business, financial condition and results of
operations. In addition, our failure to comply with applicable government
requirements could result in, among other things, fines, injunctions, civil
penalties, recall or seizure of products, total or partial suspension of
production, failure of the government to grant pre-market clearance or
pre-market approval for those products, withdrawal of marketing or manufacturing
approvals, and criminal prosecutions.
WE MAY HAVE TO LOWER PRICES OR SPEND MORE MONEY TO EFFECTIVELY COMPETE AGAINST
COMPANIES WITH GREATER RESOURCES THAN OURS, WHICH COULD RESULT IN LOWER REVENUES
AND/OR PROFITS
The biotechnology industry is characterized by rapid technological
advances, evolving industry standards and technological obsolescence. While our
TpP is a unique diagnostic test that measures the beginning stages of active
clot formation, a feature which we believe has competitive advantages, this
product faces competition from other diagnostic tests that measure blood clots
during the breakdown stage after the blood clot has formed or that measure other
clotting factors that assess the risk of future clots. Our FiF test faces
competition from several other fibrinogen tests. Most of our competitors have
financial resources and research and development staffs and facilities
substantially greater than ours. We may not be able to compete successfully
given this competitive environment. For example, if our competitors offer lower
prices, we could be forced to lower our prices, which would result in reduced
margins and may affect our revenues if we do not compensate for the reduced
margins by increasing our sales volume. On the other hand, if we do not lower
our prices with our competitors, we could lose sales and market share. In either
case, if we are unable to compete against companies that can afford to cut
prices, we would not be able to generate sufficient revenues to grow the company
or reverse our history of losses.
In addition, our competitors and others may develop products that may
render our products obsolete or that have advantages over our products, such as
greater accuracy and precision or greater acceptance by the medical community.
Competing products may also get through the regulatory approval process sooner
than our products, enabling our competitors to market their products earlier
than we can. Usually, the first person to market a product has a significant
marketplace advantage. In addition, other products now in use, presently
undergoing the regulatory approval process or under development by others may
perform functions similar to those of our existing products or products that we
have under development.
A LACK OF ACCEPTANCE OF OUR PRODUCTS BY THE MEDICAL COMMUNITY COULD RESULT IN
LOWER REVENUES
The commercial success of our products is substantially dependent on
acceptance and use of our products by the medical community. Our products may
not be accepted by the medical community, or it may take a lengthy period of
time to gain the necessary acceptance. Widespread acceptance of our products as
useful additional tools for diagnosis and treatment will require educating the
medical community about the products' benefits, reliability and effectiveness.
In addition, the existence or development of competing products, which may be as
or more effective than our products for a specific use, may adversely affect
acceptance of our products.
WE MAY HAVE INCREASED EXPENSES IF OUR MARKETING EFFORTS ARE NOT SUCCESSFUL
Our strategy is to seek arrangements with large pharmaceutical companies to
market our products. In the event we are unable to enter into those arrangements
in the future, or if our arrangements are not successful, we may seek to market
our products through independent distributors or through sales representatives.
Independent
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distributors may require us to develop a marketing program to support sales. In
that event, we may incur additional expenses for the development of promotional
literature and aides, promotional activities, the hiring of sales
representatives and the conduct of additional studies in order to promote the
interests of distributors in our products. We may not be able to develop those
marketing arrangements on satisfactory terms, and we may not have the working
capital necessary to establish the sales support generally required by
independent distributors.
RISKS ASSOCIATED WITH OUR INTERNAL OPERATIONS AND POLICIES
SINCE WE DO NOT INTEND TO DECLARE DIVIDENDS IN THE FORESEEABLE FUTURE, THE
RETURN ON YOUR INVESTMENT WILL DEPEND UPON APPRECIATION OF THE MARKET PRICE OF
YOUR SHARES
Our board of directors does not intend to declare any dividends in the
foreseeable future, but intends to retain all earnings, if any, for use in our
business operations. As a result, your return on your investment in our company
will depend upon the appreciation, if any, in the market price of our common
stock. The holders of our Series A preferred stock and our Class A and Class B
common stock are entitled to receive dividends when, as and if declared by the
board of directors out of funds legally available for dividend payments. To
date, we have not paid any cash dividends. The payment of dividends, if any, in
the future is within the discretion of our board of directors and will depend
upon our earnings, capital requirements and financial condition, and other
relevant factors.
THE LOSS OF THE SERVICES OF MR. ROACH OR MR. NORTH COULD ADVERSELY AFFECT OUR
BUSINESS AND PROSPECTS AND OUR ABILITY TO RECRUIT OR RETAIN QUALIFIED PERSONNEL
Our success may depend upon the efforts of (1) Alfred J. Roach, the
Chairman of our board of directors and one of our major stockholders, and (2)
Mr. John S. North, our President and Chief Executive Officer. Mr. Roach is not
subject to any employment agreement. Our employment agreement with Mr. North
expires on November 15, 2001. Each of these executives is subject to earlier
termination in certain cases. We do not maintain life insurance on the lives of
Mr. Roach or Mr. North. The loss of the services of Mr. Roach or Mr. North could
adversely affect our business and prospects. In addition, because of the nature
of our business, our success depends upon our ability to attract and retain
technologically qualified personnel, particularly research scientists. There is
substantial competition for qualified personnel, including competition from
companies with substantially greater resources than ours. We may not be
successful in recruiting or retaining personnel of the requisite caliber or in
adequate numbers to enable us to conduct our business and effectively compete in
our industry, and the loss of Mr. Roach or Mr. North could make recruitment and
retention even more difficult.
RISKS WHICH MAY DILUTE THE VALUE OF YOUR SHARES OF OUR COMMON STOCK OR LIMIT THE
EFFECT OF YOUR VOTING POWER
OUR COMMON STOCK IS ONLY TRADED ON THE OVER-THE-COUNTER MARKET, AND NASDAQ MAY
DENY OUR REQUEST FOR REINSTATEMENT ON THE NASDAQ SMALLCAP MARKET, WHICH COULD
NEGATIVELY AFFECT THE PRICE AND LIQUIDITY OF THE COMMON STOCK
On January 6, 2000, the Nasdaq Stock Market, Inc. delisted our Class A
common stock from the Nasdaq SmallCap Market. Our Class A common stock currently
trades on the OTC Bulletin Board. We have requested review of the delisting
decision, and we are seeking reinstatement on the Nasdaq NationalSmallCap Market. If we
fail to obtain reinstatement of our Nasdaq SmallCap Market was $.78125.
Becauselisting, the market
value of our Class A common stock could decline, certain regulatory rules will
apply, and stockholders may find it more difficult to dispose of their shares.
THE PRICE OF OUR COMMON STOCK IS HIGHLY VOLATILE
The price of our Class A common stock is highly volatile. During the period
from January 1, 1999 to April 20, 2000, the closing bid price of our Class A
common stock has ranged from a high of $6.41 in March 2000 to a low of $0.25 in
September 1999. We believe that the volatile fluctuations of the market price
are based on a number of factors, including (1) the number of shares in the
market at the time as well as the number of shares we may be required to issue
in the future, compared to the market demand for our shares; (2) our
performance, including the
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development and commercialization of our products and proposed products; and (3)
general economic and market conditions. Following periods of volatility in the
market price of a company's securities, securities class action lawsuits have
often been instituted against such a company. If similar litigation were
instituted against us, it could result in substantial costs and a diversion of
our management's attention and resources, which could have an adverse effect on
our business.
AMERICAN BIOGENETIC SCIENCES, INC. IS CONTROLLED BY ALFRED J. ROACH, WHO MAY
SUBSTANTIALLY DETERMINE THE OUTCOME OF PROPOSALS SUBMITTED TO THE STOCKHOLDERS
As of April 20, 2000, Alfred J. Roach, the Chairman of our Board of
Directors, owned and had the power to vote all 3,000,000 outstanding shares of
our Class B common stock and 4,472,250 shares of our Class A common stock. Each
share of Class B common stock is entitled to ten votes, while each share of
Class A Common Stock has been below $1.00common stock is entitled to one vote. Accordingly, as of April 20, 2000,
Mr. Roach was entitled to cast approximately 48.9% of all votes at meetings of
stockholders or by consent without a meeting. As a result, Mr. Roach will be
able to exercise significant control over our company through his practical
ability to determine the outcome of votes of stockholders regarding, among other
things, nomination and certain other factors, we cannot assure you thatelection of directors and approval of significant
transactions. Mr. Roach's holdings could increase in the future through
conversion of his 1,000 shares of Series A preferred stock into 1,000,000 shares
of Class A common stock, and through his exercise of options and warrants to
purchase an additional 2,410,000 shares of our Class A Common Stock
will continuecommon stock, which he
may exercise at any time.
WE HAVE A SUBSTANTIAL NUMBER OF SHARES RESERVED FOR FUTURE ISSUANCE WHICH, WHEN
ISSUED, WILL REDUCE YOUR PERCENTAGE OF OWNERSHIP AND VOTING POWER AND MAY AFFECT
THE PRICE OF YOUR SHARES OF OUR COMMON STOCK
The issuance of a significant number of shares of stock would dilute the
percentage ownership of existing stockholders and could have a significant
adverse effect on the market price of our Class A common stock. As of April 20,
2000, we had outstanding 40,507,028 shares of Class A common stock. On that
date, we had an additional 24,768,340 shares of Class A common stock reserved
for possible future issuance upon conversion of our Class B common stock and
Series A preferred stock and upon exercise of outstanding options and warrants,
including the 650,000 shares of Class A common stock covered by this prospectus.
In addition, we may in the future seek additional financing, which may
result in the issuance of additional shares of our capital stock and/or rights
to be quoted on Nasdaq. See "Risk Factors - No Assuranceacquire additional shares of Continued Nasdaq Listing," on page 5.
------------------------
This investment involves a high degreeour capital stock.
A SIGNIFICANT NUMBER OF RESTRICTED SHARES MAY BE RESOLD UNDER THIS PROSPECTUS OR
RULE 144, WHICH MAY AFFECT THE MARKET PRICE OF OUR COMMON STOCK
Future sales of risk. You should carefully considersubstantial amounts of shares in the factors describedpublic market, or the
perception that those sales could occur, could adversely affect the market price
of our Class A common stock. Of the 40,507,028 shares of Class A common stock
outstanding as of April 20, 2000, approximately 36,141,101 shares are presently
freely transferable without restriction under the caption "risk factors" beginning on page 5 of
this Prospectus.
NeitherSecurities Act and 4,365,927
shares are "restricted shares" that may be sold under an exemption from
registration under the Securities Act. In addition, the selling stockholder may
exercise outstanding warrants to purchase 650,000 shares of Class A common stock
and Exchange Commission nor any state securities
commission has approved or disapproved these securities, or determined ifsell those shares under this Prospectus is truthful or complete. Any representationprospectus.
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INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
Some of the information in this prospectus and in the documents we have
incorporated by reference may contain forward-looking statements made pursuant
to the contrary is a
criminal offense.
----------------------safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Those statements can generally be identified by the use of forward-looking
words like "may," "will," "expect," "anticipate," "intend," "estimate,"
"continue," "believe," or other similar words. These statements discuss future
expectations, or state other "forward-looking" information. When considering
those statements, you should keep in mind the risk factors and other cautionary
statements in this prospectus and in the other documents filed with the SEC that
we have referred you to. The date ofrisk factors noted in this Prospectus is ______, 1999
section and other
factors noted in this prospectus could cause our actual results to differ
materially from those contained in any forward-looking statements.
WHERE YOU CAN FIND MORE INFORMATION ABOUT US
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
over the Internet at the SEC's Website at "http://www.sec.gov."
We have filed with the SEC a registration statement on Form S-3 to register
the Sharesshares being offered. This Prospectusprospectus is part of that registration statement
and, as permitted by the SEC's rules, does not contain all the information
included in the registration statement. For further information with respect to
us and our Class A Common Stock,common stock, you should refer to the registration statement
and to the exhibits and schedules filed as part of thatthe registration statement,
as well as the documents discussed below.
The SEC allows us to "incorporate by reference" the information we havefile
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference which are
discussed below. You can reviewis
an important part of this prospectus, and copy the registration statement, its
exhibits and schedules, as well as the documentsinformation that we have incorporated by
reference, at the public reference facilities maintained byfile later with
the SEC as described
above. The registration statement, including its exhibits and schedules, are
also available on the SEC's web site.will automatically update or supersede this information.
This Prospectusprospectus may contain summaries of contracts or other documents.
Because they are summaries, they will not contain all of the information that
may be important to you. If you would like complete information about a contract
or other document, you should read the copy filed as an exhibit to the
registration statement or incorporated in the registration statement by
reference.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this Prospectus, and information that we file later with
the SEC will automatically update or supersede this information. We incorporate by reference the documents listed below and any future
filings we will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 (File No. 0-19041) until all of the Sharesshares
are sold:
o Annual Report on Form 10-K for the year ended December 31, 1997;
o Quarterly Reports on Form 10-Q for the fiscal quarters ended
March 31, 1998 (and amendments thereto), June 30, 1998 and
September 30, 1998;
o Current Reports on Form 8-K dated (date of earliest event
reported) April 27, 1998 (as filed on April 28, 1998) and May
20, 1998 (as filed on June 3, 1998);1999; and
o The description of our Class A Common Stockcommon stock contained in the
Registration Statementregistration statement on Form 8-A filed on February 26, 1991,
including all amendments or reports filed for the purpose of updating
suchthat description.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Attention: Chief Financial Officer.Officer
American Biogenetic Sciences, Inc.
1375 Akron Street
Copiague, New York 11726
(516)(631) 789-2600
- 2 -6
PROSPECTUS SUMMARY
This summary highlights some information from this Prospectus. It may not
contain all of the information important to you. To understand this offering
fully10
You can review and get a better understanding of our business and operations, you should
read the entire Prospectus carefully, including the risk factors, and the
documents we have incorporated by reference in the section "Where You Can Find
More Information About Us."
Please note that references in this Prospectus to "we," "our" or "us" refer
to American Biogenetic Sciences, Inc. and our subsidiary, Stellar Bio Systems,
Inc., not to the Selling Stockholders.
The Company
We are engaged in researching, developing and marketing cardiovascular
and neurobiology products for commercial development. Product sales began during
the last quarter of 1997.
Certain of our products are designed to be used for in vivo, while
others are designed for in vitro, diagnostic procedures. In vivo diagnostic
procedures are those in which certain cells or organisms are injected directly
into the body or bloodstream to assess a particular reaction of the living
cells. During in vitro procedures, blood or tissue is extracted from the body
and the diagnostic tests are performed in a test tube or other laboratory
equipment.
Our products include:
o Thrombus Precursor Protein (TpP(TM)) test. This is an in vitro
diagnostic test used to assess the risk of active thrombosis
(blood clots) in the veins or arteries. This test is also used to
monitor the performance of anticoagulent (anti-clotting) therapy
or drugs used in the prevention of blood clots.
o Functional Intact Fibrinogen (FiF(TM)) test. This is an in vitro
diagnostic test which measures the levels of fibrinogen in blood.
Fibrinogen is a protein used in the blood-clotting process.
These tests assist doctors in diagnosing and treating blood clots
lodged deeply in the legs (known as DVT- deep vein thrombosis) and blood clots
in the lungs (known as PE - pulmonary embolisms). Deep vein thrombosis can move
to the lungs and cause pulmonary embolisms, which can be fatal. Thrombosis is
also associated with many other medical conditions, such as heart attacks,
strokes and complicated pregnancies. The Company is pursuing the application of
its tests in these areas with additional clinical testing.
We have also developed patented monoclonal antibodies called MH1 and
45J which we use in our TpP(TM) test. The 45J monoclonal antibody is also used
in our FIF(TM) test. Antibodies are produced in response to substances which are
recognized as foreign by the host. Our antibodies MH1 and 45J were developed
using our patented antigen-free mouse colony. We are evaluating the use of MH1
as an in vivo imaging agent. In this process, a radioisotope is attached to MH1
which emits a signal enabling instruments to detect where a thrombolytic (blood
clot) event has occurred within the body. We have completed the United States
Food and Drug Administration's Phase I/II studies for the use of the MH1 with a
radioisotope as an imaging agent. We must still complete the FDA's Phase II and
Phase III studies.
Our products require approval from the FDA prior to marketing in the
United States. Some in vitro diagnostic products are eligible for an accelerated
FDA application process in accordance with Section 510(k) of the 1976 Medical
Device Amendments to the Federal Food, Drug and Cosmetic Act as a product
"substantially equivalent" to another product in commercial distribution in the
United States before May 28, 1976. To date, we have received Section 510(k)
Pre-Market Clearance from the FDA for our TpP(TM) and FiF(TM) tests. In November
1997, we commenced marketing efforts for the TpP(TM) and FiF(TM) tests.
On April 23, 1998, we purchased all of the issued and outstanding
shares of common stock of Stellar Bio Systems, Inc., a manufacturer and
distributor of in vitro diagnostic products and research reagents used in
- 3 -
the biotechnology industry. Stellar's in vitro diagnostic products focus on the
infectious disease and auto-immune disease markets. Stellar markets a complete
line of products to determine the immune status of numerous human herpes
viruses. In addition, auto-immune diseases, such as lupus, are detected using
Stellar's products. Stellar is also the largest domestic provider of normal
mouse serum, which is used as a test component by major in vitro diagnostic
product manufacturers for a variety of purposes.
Our company was incorporated in Delaware in September 1983. Our
principal executive offices are located at 1375 Akron Street, Copiague, New York
11726, and our telephone number at that address is (516) 789-2600.
The Offering
Class A Common Stock being offered by
the Selling Stockholders........ 10,800,000 Shares
Class A Common Stock outstanding after
this offering................... 35,559,556 Shares
Nasdaq/NMS Symbol........................ MABXA
Use of Proceeds.......................... The Selling Stockholders will receive
all net proceeds from the sale of the
Shares. Accordingly, we will not
receive any proceeds from the resale
of the Shares.
We received $2,700,000 in proceeds
from our sale of the Shares to the
Selling Stockholders. We used such
funds, together with other funds in
our treasury, to repurchase the
remaining 5% Convertible Debentures
and outstanding Warrants issued in a
private placement in May 1998.
We have agreed to bear customary
expenses incident tocopy the registration of the Shares for the benefit of the
Selling Stockholders, other than
discountsstatement, its exhibits and
commissions.
Risk Factors............................. The securities offered hereby involve
a high degree of risk. You should
carefully consider the factors
described under the caption "risk
factors."
- 4 -
RISK FACTORS
Before you buy shares of our Class A Common Stock, you should be aware
that there are various risks associated with such purchase, including those
described below. You should consider carefully these risk factors, together with
all of the other information in this Prospectus, and the documents we have
incorporated by reference in the section "Where You Can Find More Information
About Us" before you decide to purchase shares of our Class A Common Stock.
Some of the information in this Prospectus and in the documents we have
incorporated by reference, may contain forward-looking statements. Such
statements can be generally identified by the use of forward-looking words such
as "may," "will," "expect," "anticipate," "intend," "estimate," "continue,"
"believe," or other similar words. These statements discuss future expectations,
or state other "forward-looking" information. When considering such statements,
you should keep in mind the risk factors and other cautionary statements in this
Prospectus. The risk factors noted in this section and other factors noted in
this Prospectus could cause our actual results to differ materially from those
contained in any forward-looking statements.
Development Stage Company.
The Company remains in the development stage. We have not generated
significant revenues from product sales from our inception through September 30,
1998 and have incurred losses every year since our formation in 1983. Through
September 30, 1998, we have received an aggregate of $1,302,000 in licensing
fees, royalties and under collaborative agreements. Sales of the TpP(TM) and
FIF(TM) tests, which commenced during the fourth quarter of 1997, and sales of
Stellar's products since its acquisition on April 23, 1998, have totaled
$1,003,000 through September 30, 1998.
While we have products at various stages of development and have
started to generate revenues, we cannot assure you as to if and when we may
begin generating significant revenues from product sales and cease being a
development stage company.
History and Expectation of Future Losses; Accumulated Deficit.
Our research, development, and general and administrative expenses have
resulted in significant losses and are expected to continue to result in
significant losses for the foreseeable future. We have incurred the following
losses since 1994:
Fiscal year ended:
o December 31, 1994..................... $7,431,000
o December 31, 1995..................... $5,607,000
o December 31, 1996..................... $7,700,000
o December 31, 1997..................... $7,147,000
Nine months ended:
o September 30, 1998.................... $4,572,000
At September 30, 1998, we had net worth of $4,949,000, with an
accumulated retained earnings deficit of $53,987,000. We had $5,695,000 in cash
and cash equivalents at September 30, 1998. We expect to continue to have losses
in the near future. Our future profitability is dependent, in part, on our
ability to:
o successfully market our existing products and complete products
under development,
o obtain required regulatory approvals and manufacture and
market successfully such products directly or through partners,
and
o acquire products which can be successfully marketed.
- 5 -
No Assurance of Continued Nasdaq Listing.
Our Class A Common Stock is currently quoted on The Nasdaq National
Market. On February 23, 1998, Nasdaq adopted new requirements which issuers are
required to meet in order to maintain their listings. On September 24, 1998,
Nasdaq issued a letter indicating that our Class A Common would be delisted as
of December 28, 1998 unless we complied with the minimum bid requirement of $1
for a period of ten consecutive trading days. This requirement applies to a
listing on both Nasdaq's National Market and SmallCap Market. We provided data
to Nasdaq which shows that our Class A Common Stock met the $1 minimum bid
requirement on each of the twelve consecutive trading days from November 11,
1998 to November 27, 1998. Nevertheless, the Staff of Nasdaq has advised us that
it still intends to delist our Class A Common Stock. We have appealed the
delisting decision by requesting a hearing before an Appeals Panel. The
delisting has been stayed until after the hearing has been held. To date, no
hearing date has been set.
Our stockholders have authorized our Board of Directors to implement a
reverse split of our Class A and Class B Common Stock within a range of one new
share to be issued for each four to eight presently outstanding shares. We may
be required to implement a reverse split in order to maintain a Nasdaq listing
of our Class A Common Stock.
We are also required to maintain net tangible assets of at least
$4,000,000 for Nasdaq National Market, but may only need $2,000,000 to be traded
on the Nasdaq SmallCap Market. Net tangible assets is total assets (excluding
goodwill) minus total liabilities. At September 30, 1998, our net tangible
assets were approximately $4,463,000.
We cannot assure you that our Class A Common Stock will continue to be
quoted on Nasdaq. If we fail to maintain a Nasdaq listing, our securities will
likely be traded on the OTC Bulletin Board. As a result, the market value of our
Class A Common Stock could decline and stockholders may find it more difficult
to dispose of, or to obtain accurate quotations as to the market value of, our
Class A Common Stock.
Unproven Products.
Although we have had recent sales of our TpP(TM) and FiF(TM) kits and
products acquired as part of the acquisition of Stellar, our existing products
and our products under development are subject to the risks inherent in the
development of biotechnology products. In order to finalize these and other
future products for sale, we must complete further research, development and
testing and obtain regulatory clearance. In addition, we must calculate the
costs of large scale manufacturing before any products can deemed to be
commercially viable. We are unable to predict with any degree of certainty when,
or if, we will complete the research, development and testing of products under
development and other future products, or if completed, whether we will obtain
required regulatory approvals. In addition, we cannot assure you that once our
products are developed, tested and approved, that we will be able to produce our
products in commercial quantities at reasonable costs, that our products will be
acceptable to the medical community, or that our marketing and sales efforts
will be successful.
Risks in Developing Our Proposed Products
Our operations are subject to numerous risks associated with the
development of pharmaceutical products, including the competitive and regulatory
environment in which we operate. In addition, we may encounter unanticipated
problems, including development, manufacturing, distribution and marketing
difficulties, some of which may be beyond our financial and technical abilities
to resolve. Accordingly, we cannot assure you that our products will prove to be
commercially viable, or that we will successfully market any products or achieve
significant revenues or profitable operations.
- 6 -
Need For Additional Financing.
The research, development, commercialization, manufacturing and
marketing of our products will likely require financial resources significantly
in excess of those presently available to us. We intend to seek additional
financing which may result in (1) borrowings that could affect our results of
operations and create an obligation to repay the loans and (2) the issuance of
additional shares of our capital stock and/or rights to acquire additional
shares of our capital stock. Such additional issuances of capital would result
in a reduction of your percentage interest in the Company. Future issuances
could cause dilution of the interests of the then existing stockholders of the
Company.
We also intend to continue to seek collaborative, licensing,
co-marketing or other arrangements with large pharmaceutical companies or other
third parties to:
o provide additional funding and clinical expertise,
o perform clinical trials necessary to obtain regulatory approvals,
o provide manufacturing expertise, and
o market our products.
These arrangements may result in our sharing the benefits (i.e.,
royalty payments) of our products with such third parties,schedules, as well as sharing
with, or relying upon, the management of others fordocuments listed below, at the development, testing
and/or marketing of products.
We cannot assure you that we will be able to arrange financing,
collaborative arrangements or other third party arrangementspublic reference
facilities maintained by the SEC as described above. The registration statement,
including its exhibits and schedules, are also available on acceptable terms
necessary to fully develop and commercialize any of our products.
Possible Effects of Acquisition Strategy
Part of our growth strategy involves the acquisition of companies and
product lines which our management may believe could provide synergisms with our
products and operations or otherwise facilitate our growth. In April 1998, we
acquiredSEC's web site.
USE OF PROCEEDS
The selling stockholder is selling all of the issued and outstanding shares of common stock of Stellar Bio
Systems, Inc., a manufacturer and distributor of diagnostic products and
research reagents. In exchange for the shares of Stellar, we paid $120,000 in
cash and issued 398,406 shares of our Class A Common Stock ($700,000 at then
market value). We also agreed to a contingent future payment of up to $650,000
in shares of our Class A Common Stock. The number of shares we may have to issue
depends on the level of Stellar's future revenues and the market price of our
Class A Common Stock at approximately the date of issuance. To date, the
acquisition of Stellar has been our only acquisition.
Any future acquisition may require us to borrow or result in the sale
or issuance of debt or equity securities to private sources or in public
markets. The issuance of any debt could result in the incurrence of significant
interest expense and an obligation to repay such debt. The issuance of equity
could result in substantial dilution in the equity interest of existing
stockholders. Although we are currently engaged in various stages of discussions
with regard to potential acquisitions, we are not presently a party to any
commitment with respect to any acquisition.
We cannot assure you that (1) we will be successful in identifying or
consummating acquisitions on favorable terms, if at all, or in integrating the
operations of Stellar or future acquisitions, or (2) that any businesses we
acquire will achieve sales and profitability that justify our investment.
- 7 -
Integration of Acquisitions.
The success of any acquisition will depend in large measure on our
ability to effectively integrate the operations, management and information
systems of the businesses we acquire. The process of integrating acquired
businesses often involves unforeseen difficulties and may require us to devote a
significant amount of our financial and other resources to such projects.
Acquisitions may also involve a number of additional risks, such as adverse
short-term effects on earnings, diversion of management's attention,
unanticipated problems or legal liabilities, and amortization expense for the
amount of the purchase price paid for acquired assets in excess of their fair
value. Some or all of such factors could have a material adverse effect on our
business, financial condition and results of operations.
In addition, to the extent that agreements relating to our acquisitions
provide for reimbursement to us with respect to contingent and other liabilities
of the acquired business, the reimbursement obligations may be, and in the case
of the acquisition of Stellar are, only available for a limited period of time
and are subject to negotiated limitations. Our business, financial condition and
results of operations could be materially and adversely effected if any future
claims or liabilities which we may have relating to acquisitions are not subject
to any reimbursement obligations, or if the amount of claims or liabilities
exceeds the limitations or the ability of the sellers of the acquired entities
to satisfy their reimbursement obligations.
Certain Effects of Government Regulation.
The investigation, manufacture, exportation, marketing and sale of
diagnostic and therapeutic products and vaccines in or from the United States is
subject to regulation by the Food and Drug Administration, as well as by
comparable foreign and state agencies. Noncompliance with applicable
requirements can result in, among other things, fines, injunctions, civil
penalties, recall or seizure of products, total or partial suspension of
production, failure of the government to grant pre-market clearance or
pre-market approval for devices, withdrawal of marketing or manufacturing
approvals, and criminal prosecutions.
Some in vitro diagnostic products are eligible for an accelerated
application process in accordance with Section 510(k) of the 1976 Medical Device
Amendments to the Federal Food, Drug and Cosmetic Act as a product
"substantially equivalent" to another product in commercial distribution in the
United States before May 28, 1976. In October 1996, we received a Section 510(k)
Pre-Market Clearance to market our TpP(TM) test as an aid in the risk assessment
of thrombosis and the monitoring of anticoagulant therapy. We plan to submit
additional pre-market notifications to obtain clearance to market the TpP(TM)
test for additional specific uses. In June 1997, we received Section 510(k)
Pre-Market Clearance to market our FiF(TM) diagnostic test for the quantitative
determination of fibrinogen in human blood.
Obtaining FDA approval and complying with FDA regulation with respect
to in vivo products (such as certain proposed uses of our MH1 product) is far
more expensive and time consuming than the costs associated with the review of
products for in vitro use. Therefore, we intend to seek joint ventures or
licensing arrangements with respect to our in vivo products in order to share
the costs associated with the regulatory review and/or approval process. We
cannot provide any assurance that we will be able to enter into any such
arrangements or that the terms of such agreement will be favorable to us.
Although we have obtained Pre-Market Clearance for some of our existing
products, we cannot assure you that any of our future products will be approved
by the FDA or other applicable foreign regulatory agency. Any FDA, foreign or
state regulatory approvals or clearances, once obtained, can be withdrawn or
modified. Our inability to obtain and maintain, any necessary United States or
foreign clearances or manufacturing and marketing approvals for our products
could have a material adverse effect on our business, financial condition and
results of operations.
- 8 -
Dependence on Acceptance by Medical Community.
The commercial success of our products is substantially dependent on
acceptance and use of our products by the medical community. Widespread
acceptance of our products as useful additional tools to diagnosis and treatment
will require educating the medical community about the product's benefits,
reliability and effectiveness. In addition, acceptance of our products may be
adversely affected by competing products which may be as or more effective than
our products for a specific use. Accordingly, we cannot assure you that any of
our products will be accepted by the medical community, or, if accepted, as to
the length of time it would take to gain such acceptance.
Marketing Arrangements or Other Sales Arrangements.
It is our strategy to seek arrangements with large pharmaceutical
companies to market our products. In the event we are unable to enter into such
arrangements in the future or if our arrangements are not successful, we may
seek to market our products through independent distributors. Independent
distributors may require us to develop a marketing program to support sales. In
that event, we may incur additional expenses for the development of promotional
literature and aides, the hiring of sales representatives and the completion of
studies in order to promote the interests of distributors in our products. We
cannot assure you that we will be able to develop such marketing arrangements on
satisfactory terms or that, if necessary, we would have the working capital to
establish the sales support generally required by independent distributors.
Manufacturing Facilities.
Although we are presently producing a limited quantity of monoclonal
antibodies for testing and evaluation of our in vitro products, we cannot
provide any assurance that we will able to either finance or meet FDA
regulations for good manufacturing practices required in order to convert and
operate our current facility for the commercial production of these products.
We do not intend to establish our own manufacturing operations for our
in vivo products unless and until, in the opinion of our management, the size
and scope of our business and our financial resources so warrant. Currently, we
have agreements with manufacturers for the production of each of our antibodies
(MH1 and 45J) and our TpP(TM) and FiF(TM) diagnostic kits.
We intend to seek additional third parties to manufacture our in vivo
monoclonal antibody and other in vivo products, or to enter into a joint venture
or license agreement with a partner who will be responsible for future
manufacturing. Each joint venture partner or contract manufacturer participating
in the manufacturing process of our products must comply with FDA regulations
and file documentation with the FDA to support that part of the manufacturing
process in which it is involved.
We cannot assure you that we will be able to manufacture sufficient
quantities of our in vivo monoclonal antibody necessary to obtain full FDA
clearance or approval, that the FDA will accept our manufacturing arrangements,
or that we will maintain existing commercial manufacturing arrangements or
obtain new agreements on acceptable terms.
Patents and Protection of Proprietary Information.
Our business depends, in part, upon our proprietary technology. We rely
on a combination of trade secret laws, patents, trademarks and confidentiality
and other contractual agreements to establish, maintain and protect our
proprietary rights. However, all afford only limited protection.
We hold fifteen U.S. patents for various products and have additional
patent applications pending with the United States Patent and Trademark Office.
We have also obtained or applied for corresponding patents for certain of the
U.S. patents and patent applications in a limited number of foreign countries.
- 9 -
With respect to certain aspects of our technology, we rely upon trade
secrets, unpatented proprietary know-how and continuing technological innovation
to protect access to our proprietary information. We have confidentiality and
invention assignment agreements with our employees, and generally enter into
non-disclosure agreements with our scientific consultants and collaborators. All
members of our Scientific Advisory Committee are employed by or have consulting
agreements with third parties, whose business may conflict or compete with our
business, and any inventions discovered by such individuals will not become our
property.
We cannot assure you that our pending patent applications will issue as
patents, that any issued patent will provide us with significant competitive
advantages or that challenges will not be instituted against the validity or
enforceability of any of our patents. Because foreign patents may afford less
protection under foreign law than is available under U.S. patent law, we cannot
assure that any such patents issued to us will adequately protect our
proprietary information. In addition, other companies may independently develop
similar or more advanced products, design patentable alternatives to our
products or duplicate our trade secrets, and our employees and collaborators
could breach their confidentiality agreements. Also, we may be required, in some
cases, to obtain licenses from third-parties or to redesign our products or
processes to avoid infringement. Any litigation by us to seek to protect our
intellectual property or against us, would be costly and could divert the
efforts and attention of our management and technical personnel, which could
have a material adverse effect on our business, financial condition and results
of operations.
Many of our therapeutic compounds are the subject of patent
applications which we license from various academic institutions. Such licenses
require us to pay royalties on the sales of products. We cannot assure you that
these licensed products will be commercially viable or that the licenses will
not be terminated.
Competition; Rapid Technological Changes.
The biotechnology industry is characterized by rapid technological
advances, evolving industry standards and technological obsolescence. Several of
our competitors, including large pharmaceutical, chemical, biotechnology and
agricultural concerns, universities and other research institutions, have
financial resources and research and development staffs and facilities
substantially greater than ours. Our competitors may develop products which may
render our products obsolete or which have advantages over our products, such as
greater accuracy and precision or greater acceptance by the medical community.
Competing products may also get through the regulatory approval process sooner
than our products, thereby enabling our competitors to market their products
earlier than we can. Usually, the first person to market a product has a
significant marketplace advantage. In addition, other products now in use,
presently undergoing the regulatory approval process, or under development by
others, may perform similar functions as our existing products or those under
development.
Any technical advisory issued by our competitors or our inability to
meet and surpass our competitors' technological advances, could have a material
adverse effect on our business, financial condition and results of operations.
Retention and Attraction of Key Personnel.
Our success depends to a significant extent upon the efforts of (1)
Alfred J. Roach, the Chairman of our Board of Directors and one of our major
stockholders, (2) Mr. John S. North, our President and Chief Executive Officer,
and (3) Dr. Emer Leahy, our Senior Vice President-Business Development. Mr.
Roach is not subject to any employment agreement. Our employment agreement with
Mr. North expires on November 15, 2001 and our employment agreement with Dr.
Leahy expires on November 30, 2001. We do not maintain life insurance on the
lives of Mr. Roach, Mr. North or Dr. Leahy. The loss of the services of Mr.
Roach, Mr. North or Dr. Leahy, as well as certain other personnel, could
adversely affect our business and prospects. Because of the nature of our
business, our success is dependent upon our ability to attract and retain
technologically qualified personnel, particularly research scientists. There is
substantial competition for qualified personnel, including competition from
companies with substantially greater resources than ours. We cannot assure you
that we will be successful in recruiting or retaining personnel of the requisite
caliber or in adequate numbers to enable us to conduct our business and
effectively compete in our industry.
- 10 -
Scientific Advisors to the Company.
We have a Scientific Advisory Committee which consists of scientific
advisors who serve as consultants with respect to the fields of microbiology,
immunology and molecular biology and in cardiovascular disease, hepatic disease
and drug development. These scientists are employed by or work for others, and
they are expected to devote only a small portion of their time to our projects.
In addition, these individuals have employment, consulting or other advisory
arrangements with other entities. As a result, their obligations to these other
entities may conflict or compete with their obligations to us. Regulations,
corporate policies or agreements to which these individuals are or may become
subject with such other entities may limit the ability of the scientific
advisors to continue their relationship with us.
Product Liability; Requirement for Insurance Coverage.
The testing, marketing and sale of pharmaceutical products carries with
it a risk of product liability claims by consumers and others. Instances of
negative reactions by the human immune system to mouse derived antibodies, such
as those generated from our MH1 antigen-free mouse colony, have been reported.
In addition, product and other liability claims may be asserted by physicians,
laboratories, hospitals or patients relying upon the results of our diagnostic
tests. Claims may also be asserted against us by end users of our products,
including persons who may be treated with any in vivo diagnostic or therapeutic
products.
Certain distributors of pharmaceutical products require minimum product
liability insurance coverage as a condition to their purchase of or acceptance
of products for distribution. Our failure to satisfy these insurance
requirements could diminish our ability to achieve broad distribution of our
products which, in turn, would have a material adverse effect upon our business,
financial condition and results of operations.
We have product liability insurance which covers our TpP(TM) and
FiF(TM) products, but do not maintain product liability insurance coverage for
our other products. Although we plan to obtain product liability insurance prior
to the marketing of any of our proposed products, we cannot assure you that we
will be able to secure such insurance or, that if we can obtain insurance, that
insurance can be acquired at a reasonable cost or that our existing or future
insurance policies will be sufficient to cover all possible liabilities. In the
event of any claim or suit against us, lack or insufficiency of insurance
coverage could have a material adverse effect on our business, financial
condition and results of operations.
No Dividends.
The holders of Class A and Class B Common Stock are entitled to receive
dividends when, as and if declared by the Board of Directors out of funds
legally available for dividend payments. To date, we have not paid any cash
dividends. The payment of dividends, if any, in the future is within the
discretion of our Board of Directors and will depend upon our earnings, capital
requirements and financial condition, and other relevant factors. Our Board of
Directors does not intend to declare any dividends in the foreseeable future,
but intends to retain all earnings, if any, for use in our business operations.
Control By Alfred J. Roach.
As of December 15, 1998, Alfred J. Roach, the Chairman of our Board of
Directors, owned and had the power to vote all 3,000,000 outstanding shares of
our Class B Common Stock and 4,035,250 shares of our Class A Common Stock, of
which 4,000,000 shares are covered by this Prospectus. Each share of Class B
Common Stock is entitled to ten votes, while each share of Class A Common Stock
is entitled to one vote. Accordingly, at such date, Mr. Roach was entitled to
cast approximately 51.9% of all votes at meetings or by consent without a
meeting. As a result, Mr. Roach will be able to exercise significant control
over the Company through his ability to determine the outcome of votes of
stockholders regarding, among other things, nomination and election of directors
and approval of significant transactions. In addition, Mr. Roach holds options
to purchase an additional 1,160,000 shares of our Class A Common Stock which he
may exercise at any time.
- 11 -
Dilution; Potential Issuances of Shares.
As of December 15, 1998, we had issued and outstanding:
o 35,559,556 shares of Class A Common Stock, and
o 3,000,000 shares of Class B Common Stock.
At that date, there were an additional 9,237,445 shares of Class A
Common Stock reserved for possible future issuances as follows:
o 3,000,000 shares for issuance upon conversion of the
outstanding Class B Common Stock;
o 2,790,500 shares for issuance upon the exercise of outstanding
options under our 1986 Stock Option Plan. These options are
exercisable at prices ranging from $1.50 to $10.00 per share;
o 2,000,000 shares for issuance upon the exercise of presently
outstanding options or options which may be granted in the
future under our 1996 Stock Option Plan. Options to purchase
1,487,750 shares were outstanding at December 15, 1998. These
options are exercisable at prices ranging from $0.25 to $5.25
per share;
o 487,500 shares for issuance upon the exercise of presently
outstanding options or options which may be granted in the
future under our 1993 Non-Employee Director Stock Option Plan.
Options to purchase 120,000 shares are were outstanding at
December 15, 1998. These options are exercisable at prices
ranging from $1.00 to $6.75 per share and
o 959,445 shares for issuance upon exercise of other outstanding
warrants and options held by unaffiliated third parties. These
warrants and options are exercisable at prices ranging from
$0.75 to $4.25 per share.
The issuance of reserved shares would dilute the equity interest of
existing stockholders and could have a significant adverse effect on the market
price of our Class A Common Stock. See "--Shares Eligible for Future Sale."
Shares Eligible For Future Sale.
Future sales of substantial amounts of shares in the public market, or
the perception that such sales could occur, could adversely affect the market
price of our Class A Common Stock.
As of December 15, 1998, we had outstanding 38,559,556 shares,
consisting of 35,559,556 shares of Class A Common Stock and 3,000,000 shares of
Class B Common Stock. Shares of Class B Common Stock are convertible into Class
A Common Stock on a share for share basis. Of our outstanding shares,
approximately 20,705,368 shares of Class A Common Stock are presently freely
transferable without restriction under the Securities Act.
Of the remaining 14,854,188 outstanding shares (including the 3,000,000
shares of Class A Common Stock issuable upon conversion of Class B Common
Stock):
o 10,800,000 are "restricted securities" issued in October 1998;
o 600,438 shares are "restricted securities" issued between
February 1997 and December 1998; and
o 3,453,750 shares are held by persons who may be deemed to be our
"affiliates". Of these shares, 1,534,500 are "restricted
securities" issued between November 1997 and October 1998. The
- 12 -
remaining 1,919,250 of such shares are "restricted securities"
that were acquired more than two years ago or are not "restricted
securities" because they were acquired in the market or pursuant
to a registration statement under the Securities Act.
In general, an "affiliate" is a person with the power to manage and
direct our policies. The SEC has stated that, generally, executive officers and
directors of an entity are deemed affiliates of the entity.
"Restricted securities" may be (1) sold pursuant to a Prospectus under
an effective registration statement under the Securities Act, (2) in compliance
with the exemption provisions of Rule 144 or (3) pursuant to another exemption
under the Securities Act. Rule 144 permits sales of "restricted securities" by
any person (whether or not an affiliate) after one year, at which time sales can
be made subject to the Rule's volume and other limitations and after two years
by non-affiliates without adhering to Rule 144's volume or other limitations.
Shares of our Class A Common Stock owned by our "affiliates" which are not
"restricted securities" may be sold at any time by complying with Rule 144's
volume and other limitations.
We have registered the following under the Securities Act for resale at
any time or from time to time:
o The 10,800,000 "restricted" shares of Class A Common Stock that
are covered by this Prospectus;
o 398,406 "restricted" shares of Class A Common Stock issued in
April 1998 in consideration for our acquisition of Stellar Bio
Systems, Inc.;
o 5,000 "restricted" shares of Class A Common Stock issued in June
1996;
o 25,000 shares of Class A Common Stock subject to an option held
by a former consultant; and
o 100,000 shares of Class A Common Stock subject to options held
by another former consultant.
All of these registered shares will also be freely transferable without
restriction under the Securities Act subject to applicable Prospectus delivery
requirements. In addition, all shares issuable upon the exercise of options
under our stock option plans have been registered under the Securities Act for
issuance and, unless held by our "affiliates", will be freely tradable upon
issuance. If acquired by our "affiliates," shares issued upon the exercise of
those options will not be "restricted securities" and, therefore, could be sold
at any time by complying with Rule 144's volume and other limitations. See " - -
Dilution; Potential Issuances of Shares."
Possible Volatility of Our Stock Price
The stock market and the price of our Class A Common Stock may be
subject to volatile fluctuations based on general economic and market
conditions, as well as our meeting expectations of our performance, including
the development and commercialization of our products and proposed products. The
price of our Class A Common Stock can also be affected by the number of shares
in the market at the time, as well as a perception of such number, including the shares covered by this
Prospectus. In addition, stock market volatility has had
a significant effect on the market prices of securities issued by many companiesprospectus for reasons unrelated to the operating performance of these companies. In the
past, following periods of volatility in the market price of a company's
securities, securities class action litigation has often been instituted against
such a company. If similar litigation were instituted against us, it could
result in substantial costs and a diversion of our management's attention and
resources, which could have an adverse effect on our business.
Year 2000 Issues
Historically, certain computerized systems have used two digits rather
than four to define the applicable year. Computer equipment and software and
devices with imbedded technology that are time-sensitive may recognize a date
using "00" as the year 1900 rather than the year 2000, resulting in system
failure or miscalculations. This problem is generally referred to as the "Year
2000 issue."
- 13 -
We are in the process of assessing the impact of the Year 2000 issue on
our information systems. We have identified potential deficiencies and are
addressing them through updates and remediation. In accordance with accounting
rules, costs associated with modifying existing computer software for Year 2000
issues will be expensed as incurred. We are also in the process of assessing the
measures being taken by our customers and suppliers to address the Year 2000
issues. We are not dependent on any one customer or supplier and our management
believes that alternate sources of supply for product components are widely
available. We do not expect the cost of implementing the upgrades and
remediations to be material.
USE OF PROCEEDS
The Selling Stockholders are selling all of the Shares covered by this
Prospectus for theirits own account. Accordingly, we will not receive any proceeds
from the resale of the Shares.shares.
We received $2,700,000 in proceeds fromprepared this prospectus to satisfy our sale of the Sharesobligations to the Selling Stockholders. We used the proceeds, together with $1,152,000 of our
funds,selling
stockholder to repurchase:
o the remaining 5% Convertible Debentures with an outstanding
principal amount of $3,248,000 plus interest and a 16% premium of
the principal amount; and
o outstanding Warrants to purchase 261,228 of our Class A Common
Stock at an exercise price of $1.9141 per share.
We had issued these Debentures and Warrants in a private placement in
May 1998.register its shares. We will bear the expenses relating to this
registration, other than selling discounts and commissions, which will be paid
by the Selling Stockholders.
- 14 -
selling stockholder.
SELLING STOCKHOLDERS
We issued theSTOCKHOLDER
The selling stockholder named below may offer and sell up to 650,000 shares of Class A Common Stock covered by this Prospectus
to the Selling Stockholders on October 27, 1998 in a private placement
transaction. Under the terms of the private placement, we issued 10,800,000
shares of Class A Common Stock to the Selling Stockholders at a price of $0.25
per share. At the time of the issuances, the price per share
of our Class A Common Stock was $0.19.common stock under this prospectus. We will not receive any
proceeds from those sales.
The 650,000 shares of our Class A common stock that we are registering
under this prospectus consist of shares that may be issued to the selling
stockholder upon the exercise of certain warrants. We issued the warrants to the
selling stockholder as compensation for investor relation consulting services
provided by the selling stockholder under various consultant agreements. The
warrants expire on dates ranging from November 14, 2000 to January 19, 2004 and
are exercisable at prices ranging from $1.00 to $3.50 per share. We agreed to
register the Shares issued in the private
placementthese shares under the Securities Act at our expense, other than
selling discounts and commissions.commissions, which will be paid for by the selling
stockholder.
The following table lists certain information regarding the Selling
Stockholders'selling stockholder's
beneficial ownership of Sharesshares of our Class A Common Stockcommon stock as of December 15,
1998,April 20, 2000,
and as adjusted to reflect the sale of the Shares.shares. The 650,000 shares of common
stock beneficially owned and to be sold by the selling stockholder consist of
shares of our Class A common stock issuable upon exercise of stock purchase
warrants.
Information concerning the Selling Stockholdersselling stockholder, its pledgees, donees and
other non-sale transferees who may become selling stockholders may change from
time to time. To the extent the selling stockholder or any of its
representatives advise us of such changes, we will report those changes in a
prospectus supplement to the extent required. See "Plan of Distribution."
Shares of ClassSHARES OF CLASS A Shares of Class A Common Stock
Common Stock Shares to be Beneficially
Beneficially Owned Offered Owned After
Name of Selling Stockholder Prior to Offering Hereunder Offering
--------------------------- ------------------- --------- ---------COMMON STOCK
SHARES OF COMMON BENEFICIALLY
STOCK OWNED SHARES OF OWNED AFTER THE OFFERING
PRIOR TO THE COMMON STOCK TO ------------------------------
NAME OFFERING BE SOLD NUMBER PERCENT
- ---- ---------------- --------------- ------ --------
Alfred J. Roach.................................. 8,195,250 (1) 4,000,000 4,195,250 (1)
Larry Kupferberg................................. 522,200 (2) 400,000 122,200 (2)
Donehew Fund Limited Partnership................. 290,000 240,000 50,000
David Biggs...................................... 40,000 40,000
Redington, Inc. 650,000 650,000 0 Robert Donehew................................... 90,000 80,000 10,000
R. Dave Garwood.................................. 50,000 40,000 10,000
The Rachel Beth Heller 1997 Trust Lawrence
Kupferberg, TTEEU/A dtd 7/9/97................. 400,000 400,000 0
The Evan Todd Heller 1997 Trust Lawrence
Kupferberg, TTEE U/A dtd 6/17/97.............. 400,000 400,000 0
Delaware Charter Guarantee &Trust
Company F/B/O Ronald I. Heller - IRA.......... 642,075 (3) 600,000 42,075 (3)
Delaware Charter Guarantee & Trust
Company F/B/O David S. Nagelberg - IRA........ 1,242,075 (4) 1,200,000 42,075 (4)
Tyler Runnels 292,700 280,000 12,700
Kevin Charos & Anthony Charos JTTEN.............. 200,000 200,000 0
Delaware Charter Guarantee & Trust
Company F/B/O Martin H. Meyerson -
IRA........................................... 100,000 100,000 0*
- 15 -
Shares of Class A
Shares of Class A Common Stock
Common Stock Shares to be Beneficially
Beneficially Owned Offered Owned After
Name of Selling Stockholder Prior to Offering Hereunder Offering
--------------------------- ------------------- --------- ---------
Kenneth Koock.................................... 120,000 120,000 0
Jacqueline Knapp................................. 790,000 790,000 0
Janice Halle-Nesses.............................. 790,000 790,000 0
John Davies...................................... 160,000 160,000 0
Invest, Inc...................................... 160,000 160,000 0
Peter Janssen.................................... 800,000 800,000 0
------- ------- ------
Total 15,284,300 10,800,000 4,484,300
- ------------
(1) Includes 3,000,000 shares of Class A Common Stock issuable upon
conversion of currently outstanding Class B Common Stock and 1,160,000
shares of Class A Common Stock issuable upon exercise of presently
exercisable options.
(2) Does not include 400,000 shares of Class A Common Stock beneficially
owned by the Evan Todd Heller 1997 Trust and 400,000 shares of Class A
Common Stock beneficially owned by the Rachel Beth Heller 1997 Trust,
which are listed separately below. Mr. Kupferberg is the trustee of
those trusts.
(3) Includes 42,075 shares of Class A Common Stock issuable upon exercise
of presently exercisable warrants beneficially owned by Mr. Heller.
Those warrants are exercisable at $.075 per share.
(4) Includes 42,075 shares of Class A Common Stock issuable upon exercise
of presently exercisable warrants beneficially owned by Mr. Nagelberg.
Those warrants are exercisable at $.075 per share.
Each of Messrs. Heller, Nagelberg, Koock and Meyerson are employees of
M.H. Meyerson, a financial advisor of ours since August 1998.
- 16 -
-----------------------
* Less than 1%
PLAN OF DISTRIBUTION
The Selling Stockholdersselling stockholder and theirits pledgees, donees, transferees and other
successors in interest,non-sale transferees may offer their Sharesshares at various times in one or more of
the following transactions:
o in the over-the-counter market; or
o in privately negotiated transactions
7
11
at prevailing market prices at the time of sale, at prices related to suchthose
prevailing market prices, at negotiated prices or at fixed prices.
The Selling Stockholdersselling stockholder may also sell the Sharesshares under Rule 144 instead of
under this Prospectus,prospectus, if Rule 144 is available for suchthose sales.
The transactions in the Sharesshares covered by this prospectus may be effectedcarried
out by one or more of the following methods:
o ordinary brokerage transactions and transactions in which the
broker solicits purchasers;
o purchases by a broker or dealer as principal, and the resale
by suchthat broker or dealer for its account pursuant tounder this
Prospectus,prospectus, including resale to another broker or dealer;
o block trades in which the broker or dealer will attempt to sell the
Sharesshares as agent but may position and resell a portion of the block
as principal in order to facilitate the transaction; or
o negotiated transactions between Selling Stockholdersthe selling stockholder and
purchasers, with or without a broker or dealer.
The Selling Stockholdersselling stockholder and any broker-dealers or other persons acting on
the behalf of parties that participate in the distribution of the Sharesshares may be
deemed to be underwriters. As such, anyAny commissions or profits they receive on the resale
of the Sharesshares may be deemed to be underwriting discounts and commissions under
the Securities Act.
As of the date of this Prospectus,prospectus, we are not aware of any agreement,
arrangement or understanding between any broker or dealer and any of the Selling
Stockholdersselling
stockholder with respect to the offer or sale of the Shares pursuant toshares under this
Prospectus.prospectus.
We have advised the Selling Stockholdersselling stockholder that, during the time eachit is engaged
in distributing Sharesshares covered by this Prospectus, eachprospectus, it must comply with the
requirements of the Securities Act and the Exchange Act, including Rule 10b-5
and Regulation M under the
Exchange Act.M. Under suchthose rules and regulations, they:the selling stockholder:
o may not engage in any stabilization activity in connection with our
securities;
o must furnish each broker whichthat offers Class A Common Stockcommon stock covered
by this Prospectusprospectus with the number of copies of this Prospectus
whichprospectus
that are required by each broker; and
o may not bid for or purchase any of our securities or attempt to
induce any person to purchase any of our securities other than as
permitted under the Exchange Act.
InUnder the Purchase and Investment Agreements we executed in connection
withterms of each of the October 1998 private placementwarrants, we agreed to indemnify and hold
harmless each Selling Stockholderthe selling stockholder against certain liabilities, including liabilities under the Securities Act,
which may be based upon, among other things, any untrue statement or alleged
untrue statement of a material fact or any omission or alleged omission of a
material fact, unless made or omitted in reliance upon written information
provided to us by that Selling Stockholder.the selling stockholder for use in this prospectus. We have
agreed to bear the expenses incident to the registration of the Shares,shares, other
than selling discounts and commissions.
- 17 -8
12
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Section 145 of the Delaware General Corporation Law allows companies to
indemnify their directors and officers against expenses, judgments, fines and
amounts paid in settlement, under the conditions and limitations described in
the law, with respect to various lawsuits and other proceedings to which they
become a party by reason of the fact that they were serving as our officer,
director, employee or agent or of another enterprise at our request. Our
certificate of incorporation authorizes us to indemnify our officers, directors
and other agents to the fullest extent permitted under Delaware law.
Our certificate of incorporation provides that a director is not personally
liable for monetary damages to us or our stockholders for breach of his or her
fiduciary duties as a director. However, a director will be held liable for a
breach of his or her duty of loyalty to us or our stockholders, his or her
intentional misconduct or willful violation of law, actions or inactions not in
good faith, an unlawful stock purchase or payment of a dividend under Delaware
law, or transactions from which the director derives an improper personal
benefit. This limitation of liability does not affect the availability of
equitable remedies against the director, including injunctive relief or
rescission.
We have purchased a directors and officers liability and reimbursement
policy that covers liabilities of our directors and officers arising out of
claims based upon acts or omissions in their capacities as directors and
officers.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to our directors, officers or controlling persons
pursuant to the foregoing provisions, or otherwise, we have been informed that
in the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
LEGAL MATTERS
TheFor the purposes of this offering, Brown, Rudnick, Freed & Gesmer will pass
upon the validity of the shares of Class A Common Stock being offered will
be passed upon for the Company by Parker Chapin Flattau & Klimpl, LLP.common stock covered under this
prospectus.
EXPERTS
The audited consolidated financial statements, including the related notes
thereto,to those statements, incorporated by reference in this Prospectusprospectus and elsewhere
in the Registration Statementregistration statement have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect thereto. Suchto
those statements. Those financial statements and report are incorporated by
reference herein in reliance upon the authority of said firmArthur Andersen LLP as
experts in accounting and auditing in giving said reports.
- 18 -9
======================================== ==================================
We have not authorized any dealer, 10,800,00013
================================================================================
WE HAVE NOT AUTHORIZED
ANY DEALER, SALESPERSON 650,000 Shares
salesperson or any other person to give
any information or to represent anything
not contained in this Prospectus. You
must not rely on any unauthorizedOR ANY OTHER PERSON TO GIVE
ANY INFORMATION OR TO
REPRESENT ANYTHING NOT
CONTAINED IN THIS PROSPECTUS.
YOU MUST NOT RELY ON ANY
UNAUTHORIZED INFORMATION.
THIS PROSPECTUS IS NOT AN OFFER American Biogenetic Sciences, Inc.
information. This Prospectus does not
offer to sell or buy any shares in any
jurisdiction where it is unlawful. The
information in this Prospectus isTO SELL NOR IS IT SOLICITING AN
OFFER TO BUY ANY SHARES IN ANY
JURISDICTION WHERE THE OFFER OR
SALE IS NOT PERMITTED.
THE INFORMATION IN THIS
PROSPECTUS IS CURRENT AS
OF _____________, 2000. Class A Common Stock
current as of _____________, 1999.
--------------------- --------------------
TABLE OF CONTENTS PROSPECTUS
--------------------- -----------------------------------------
Page
----Prospectus Summary 1
Risk Factors 2
Information Regarding
Forward-Looking Statements 6
Where You Can Find More
Information About Us...............2
Prospectus Summary.....................3
Risk Factors...........................5Us 6
Use of Proceeds.......................14Proceeds 7 ________ __, 2000
Selling Stockholders .................15Stockholder 7
Plan of Distribution .................177
Indemnification for Securities
Act Liabilities 9
Legal Matters.........................18Matters 9
Experts ..............................18 ________ __, 1999
======================================== ==================================9
===============================================================================
14
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ItemITEM 14. Other Expenses of Issuance and Distribution
Set forthOTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Listed below is an estimate of the fees and expenses payable in connection
with the proposed offering and sale of the Shares whichshares. We will be paid bybear all of the Company.costs
of issuance and distribution as follows:
SEC Registration Fee..............................Fee $ 2,580.17273.49
Accounting Fees and Expenses......................Expenses $ 3,500.002,000.00
Legal Fees and Expenses...........................Expenses $ 7,500.00
Miscellaneous.....................................Costs of Printing and Engraving $ 1,419.836,000.00
Miscellaneous $ 1,226.51
----------
TOTAL........................................$15,000.00
ItemTOTAL $17,000.00
==========
ITEM 15. Indemnification of Directors and OfficersINDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware (the
"DGCL") provides, in general, that a corporation incorporated under the laws of
the State of Delaware, such as the Registrant,our company, may indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, (otherother than a derivative action by or in
the right of the corporation)corporation, by reason of the fact that suchthe person is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another enterprise, against expenses, (including attorneys' fees),
judgments, fines and amounts paid in
settlement actually and reasonably incurred by suchthat person in connection with
suchthat action, suit or proceeding if suchthat person acted in good faith and in a
manner suchthat the person reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe suchthat the person's conduct was
unlawful. In the case of a derivative action, a Delaware corporation may
indemnify any suchthat person against expenses (including attorneys' fees) actually and reasonably incurred by suchthat
person in connection with the defense or settlement of suchthat action or suit if
suchthat person acted in good faith and in a manner suchthat person reasonably believed
to be in or not opposed to the best interests of the corporation, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which suchthat person shall have been adjudged to be liable to the corporation
unless and only to the extent that the court determines suchthat the person is
fairly and reasonably entitled to indemnity for suchthose expenses.
Article VII of the registrant's By-laws provides for indemnification of our
directors, officers, employees and agents of the Company to the fullest extent permitted under
Delaware law. In addition, Article TENTH of the registrant's Restated
Certificate of Incorporation provides, in general, that no director of the
registrant shall be personally liable to the registrant or any of its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the DGCL (which provides that under certain circumstances,
directors may be jointly and severally liable for willful or negligent
violations of the DGCL provisions regarding the payment of dividends or stock
repurchases or redemptions), as the same exists or hereafter may be amended, or
(iv) for any transaction from which the director derived an improper personal
benefit.
Pursuant to the Purchase and Investment Agreements between the Company
and each Selling Stockholder, the Company has agreed to indemnify and hold
harmless the Selling Stockholder, its officers, directors and partners and each
person controlling such Selling Stockholder (within the meaning of the
Securities Act) and each underwriter, if any, and each person who so controls
any underwriter against all, claims, losses, damages and liabilities (or actions
in respect thereof) arising out of or based upon any untrue
II-1
statement (or alleged untrue statement) of a material fact contained in the
Registration Statement (including any prospectus or other document incident to
any such registration or related qualification or compliance with state
securities laws) or based on any omission (or alleged omission) to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading or any violation by the Company of the
Securities Act or any state securities law, relating to any action or inaction
required by the Company in connection with any such registration, qualification
or compliance, and to reimburse each such indemnified person for any legal and
other expenses reasonably incurred in connection with investigating and
defending any such claim, loss, damages, liabilities or action; provided that
the Company will not be liable in any such case to the extent that any such
claim, loss, damage, liabilities or expense arises out of or is based on any
untrue statement or omission (or alleged untrue statement or omission) made in
reliance upon and in conformity with written information furnished to the
Company by any indemnified person stated to be specifically for use in the
Registration Statement (as to which the Selling Stockholders have agreed to
indemnify the Company, its officers and directors and each person who controls
the Company or such Underwriter).
The CompanyABS has purchased a Directors and Officers Liability and Reimbursement
policy that covers certain liabilities of directors and officers of the CompanyABS arising out of
claims based upon acts or omissions in their capacities as directors and
officers.
Item11
15
ITEM 16. Exhibits
Exhibit
NumberEXHIBITS
EXHIBIT
NUMBER DOCUMENT
- ------- 3.1 Restated Certificate---------
4 Form of IncorporationWarrant issued to Redington, Inc. (one of the Company, as filed
with the Secretary of State of the State of Delaware on July 30,
1996 (filed as Exhibit 4.01 to the Company's Registration
Statement on Form S-8, File No. 333-09473).*
3.2 Amendedthree Warrants
substantially identical except for date and Restated By-Laws of the Company (filed as Exhibit
4.02 to the Company's Registration Statement on Form S-8, File
No. 333-09473)price information).*
5 Opinion of Parker Chapin FlattauBrown, Rudnick, Freed & Klimpl, LLPGesmer as to the legality of
the Class A Common Stock being offered.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Parker Chapin FlattauBrown, Rudnick, Freed & Klimpl, LLP (containedGesmer (included in Exhibit 5).
24 Power of Attorney (contained on Signature Page of thisto the
Registration Statement)
99 Form of Purchase and Investment Agreement executed by the Company
and each of the Selling Stockholders on October 27, 1998.
- -----------------------
* Not filed herewith. In accordance with Rule 411 promulgated pursuant to the
Securities Act of 1933, as amended, reference is made to the documents
previously filed with the Commission, which are incorporated by reference
herein.
II-2
Item.
ITEM 17. UndertakingsUNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forthincluded in the Registration
Statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the Registration Statement or any material change to such
information in this Registration Statement; Provided,provided, however,
that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports
filed by the Registrant pursuant tous under Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by
reference in this Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered
therein, and the offering of such securities at the time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant'sour annual
report pursuant tounder Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934 that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
12
16
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to our directors, officers and controlling
persons of the Registrant pursuant to the Registrant's By-Laws,under our by-laws, or otherwise, the
Registrant haswe have been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the
Registrantus of expenses incurred or paid by a director, officerour
directors, officers or controlling person of the Registrantpersons 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 Registrantwe will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-313
17
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
Statementregistration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Town of Copiague, State of New York, on the 23rd1st day of December, 1998.May,
2000.
AMERICAN BIOGENETIC SCIENCES, INC.
By: /s/ Alfred J. Roach
--------------------------------------------------------
Alfred J. Roach,
Chairman of the Board
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints each of Alfred J. Roach, Josef C. Schoell
and Timothy J. Roach and each of them with power of substitution, as his
attorney-in-fact, in all capacities, to sign any amendments to this registration statement
(including
post-effective amendments) 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 said attorney-in-factsattorneys-in-fact or their
substitutes may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statementregistration statement has been signed below by the following persons in the
capacities and on the dates indicated on the 23rd1st day of December, 1998.
Signature TitleMay, 2000.
SIGNATURE TITLE
--------- -----
/s/ Alfred J. Roach
- -----------------------------------------------------------------------
Alfred J. Roach Chairman of the Board and Director
/s/ John S. North
- -----------------------------------------------------------------------
John S. North President, Chief Executive Officer
John S. Northand Director
/s/ Timothy J. Roach
- ----------------------------------
Timothy J. Roach Secretary, Treasurer and Director
/s/ Josef C. Schoell
- -----------------------------------------------------------------------
Josef C. Schoell Vice President-Finance (Principal
Josef C. Schoell
Financial and Accounting Officer)
/s/ Gustav Victor Rudolph Born
- -----------------------------------------------------------------------
Gustav Victor Rudolph Born Director
/s/ Ellena M. Byrne
- -----------------------------------------------------------------------
Ellena M. Byrne Director
/s/ Joseph C. Hogan
- -----------------------------------------------------------------------
Joseph C. Hogan Director
/s/ Timothy J. RoachGlenna M. Crooks
- -------------------------------------
Timothy J. Roach----------------------------------
Glenna M. Crooks Director
/s/ William G. Sharwell
- -------------------------------------
William G. Sharwell Director
II-414
18
EXHIBIT INDEX
Exhibit
NumberEXHIBIT
NUMBER DOCUMENT
- ------- 3.1 Restated Certificate--------
4 Form of IncorporationWarrant issued to Redington, Inc. (one of the Company, as filed
with the Secretary of State of the State of Delaware on July 30,
1996 (filed as Exhibit 4.01 to the Company's Registration
Statement on Form S-8, File No. 333-09473).*
3.2 Amendedthree Warrants
substantially identical except for date and Restated By-Laws of the Company (filed as Exhibit
4.02 to the Company's Registration Statement on Form S-8, File
No. 333-09473)price information).*
5 Opinion of Parker Chapin FlattauBrown, Rudnick, Freed & Klimpl, LLPGesmer as to the legality
of the Class A Common Stock being offered.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Parker Chapin FlattauBrown, Rudnick, Freed & Klimpl, LLP (containedGesmer (included in Exhibit 5).
24 Power of Attorney (contained on Signature Page of thisto the
Registration Statement)
99 Form of Purchase and Investment Agreement executed by the Company
and each of the Selling Stockholders on October 27, 1998.
- -----------------------
* Not filed herewith. In accordance with Rule 411 promulgated pursuant to the
Securities Act of 1933, as amended, reference is made to the documents
previously filed with the Commission, which are incorporated by reference
herein..
15