As filed with the Securities and Exchange Commission on November 5, 2004
Registration Statement No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-----------------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CYTOGEN CORPORATION
---------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware 22-2322400
--------------------------------- -----------------------------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
650 College Road East, 3rd Floor
Princeton, New Jersey 08540
(609) 750-8200
-------------------------------------------------------------
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
William J. Thomas, Esq.
Senior Vice President and General Counsel
Cytogen Corporation
650 College Road East, 3rd Floor
Princeton, New Jersey 08540
(609) 750-8223
--------------------------------------------------------
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
-------------------------------------
COPY TO:
Randall B. Sunberg, Esq.
Morgan, Lewis & Bockius LLP
502 Carnegie Center
Princeton, New Jersey 08540
(609) 919-6600
-------------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [x]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] .
-------
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] .
------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
---------------------------
CALCULATION OF REGISTRATION FEE
Proposed Maximum
Title Of Each Class of Securities Amount to be Aggregate Offering Amount Of
To Be Registered Registered Price Registration Fee
-------------------------------------------------------------------------------------------------------------------------
Debt Securities.......................... --- --- ---
Common stock,
$0.01 par value per share(1).......... --- --- ---
Preferred Stock,
$0.01 par value per share............. --- --- ---
Warrants................................. --- --- ---
Units.................................... --- --- ---
Total(4)................................. $70,000,000(2) $70,000,000(2)(3) $8,869
(1) Includes rights to purchase shares of our Series C Junior Participating
Preferred Stock pursuant to the Amended and Restated Rights Agreement dated
October 19, 1998. No separate consideration is paid for these rights and,
as a result, the registration fee for these rights is included in the fee
for the common stock.
(2) The securities registered consist of $70,000,000 of an indeterminate number
or amount of debt securities, common stock, preferred stock, warrants
and/or units, as may be issued from time to time at indeterminate prices.
In no event will the aggregate initial offering price of all securities
issued from time to time pursuant to this registration statement exceed
$70,000,000 or the equivalent thereof in foreign currencies, foreign
currency units or composite currencies. Such amount represents the issue
price rather than the principal amount of any debt securities issued at
original issue discount or liquidation value of any shares of preferred
stock.
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) of the Securities Act of 1933, as amended (the
"Securities Act"). Exclusive of accrued interest, distributions and
dividends, if any. Rule 457(o) permits the registration fee to be
calculated on the basis of the maximum offering price of all of the
securities listed and, therefore, the table does not specify by each class
information as to the amount to be registered or the proposed maximum
offering price per security.
(4) This registration statement also registers such indeterminate amounts of
securities as may be issued from time to time upon conversion, exercise or
settlement of, or in exchange for, the securities registered hereunder and,
pursuant to Rule 416(a) under the Securities Act of 1933, as amended, such
indeterminable number of shares as may be issued from time to time as a
result of anti-dilution provisions thereof or upon conversion or exchange
as a result of stock splits, stock dividends or similar transactions.
------------------------------
THE COMPANY HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS
MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE COMPANY SHALL FILE A
FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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 OFFERS TO BUY THESE SECURITIES
IN ANY STATE OR JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED NOVEMBER 5, 2004
PROSPECTUS
CYTOGEN CORPORATION
$70,000,000
DEBT SECURITIES
COMMON STOCK
PREFERRED STOCK
WARRANTS
UNITS
Cytogen Corporation may offer up to $70,000,000 of debt securities, common
stock, preferred stock, warrants and units, from time to time. This prospectus
describes the general terms of, and the general manner in which we will offer,
these securities. When we offer these securities, we will provide a prospectus
supplement containing the specific terms of that offering. The prospectus
supplement will also describe the specific manner in which we offer these
securities. This prospectus may not be used to consummate sales of these
securities unless accompanied by a prospectus supplement.
Our common stock is traded on the Nasdaq National Market under the symbol
"CYTO." On November 3, 2004, the closing sale price of our common stock on
Nasdaq was $10.26 per share. You are urged to obtain current market quotations
for our common stock.
------------------------------
INVESTING IN OUR SECURITIES INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" COMMENCING ON PAGE 4.
------------------------------
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 November , 2004.
---
TABLE OF CONTENTS
--------------------------------------------------------------------------------
About this Prospectus................................................. 2
Cytogen Corporation................................................... 3
Reverse Stock Split................................................... 3
Risk Factors.......................................................... 4
We have a history of operating losses and an accumulated deficit
and expect to incur losses in the future....................... 4
We depend on sales of ProstaScint and Quadramet for substantially
all of our near-term revenues.................................. 4
We depend on acceptance of our products by the medical community
for the continuation of our revenues........................... 5
We rely heavily on our collaborative partners.................... 5
Our business could be harmed if certain agreements expire or are
terminated..................................................... 6
Our intellectual property is difficult to protect................ 7
There are risks associated with the manufacture and supply of
our products................................................... 9
Our products, generally, are in the early stages of development
and commercialization and we may never achieve the revenue
goals set forth in our business plan........................... 10
All of our potential oncology products will be subject to the
risks of failure inherent in the development of diagnostic
or therapeutic products based on new technologies.............. 11
Competition in our field is intense and likely to increase....... 11
We have limited sales, marketing and distribution capabilities
for our products............................................... 12
Failure of third party payors to provide adequate coverage and
reimbursement for our products could limit market acceptance
and affect pricing of our products and affect our revenues..... 13
If we are unable to comply with applicable governmental regulation
we may not be able to continue our operations.................. 14
We depend on attracting and retaining key personnel.............. 15
Our business exposes us to product liability claims that may
exceed our financial resources, including our insurance
coverage, and may lead to the curtailment or termination of
our operations................................................. 16
Our security measures may not protect our unpatented proprietary
technology..................................................... 16
We may not be able to implement AxCell's business plan........... 16
We may need to raise additional capital, which may not be
available...................................................... 16
Our capital raising efforts may dilute stockholder interests..... 17
We may need to raise funds other than through the issuance of
equity securities.............................................. 17
Our PSMA product development program is novel and, consequently,
inherently risky.............................................. 17
We could be negatively impacted by future interpretation or
implementation of federal and state fraud and abuse laws,
including anti-kickback laws and federal and state false claims
statutes ...................................................... 18
Our business involves environmental risks that may result in
liability...................................................... 20
--------------------------------------------------------------------------------
-i-
--------------------------------------------------------------------------------
We have been subject to patent litigation........................ 21
Our stock price has been and may continue to be volatile, and
your investment in our stock could decline in value or
fluctuate significantly........................................ 21
We have adopted various anti-takeover provisions which may
affect the market price of our common stock and prevent or
frustrate attempts by our stockholders to replace or remove
our management team............................................ 21
The liquidity of our common stock could be adversely affected if
we are delisted from The Nasdaq National Market................ 22
A large number of our shares are eligible for future sale which
may adversely impact the market price of our common stock...... 23
Because we do not intend to pay, and have not paid, any cash
dividends on our shares of common stock, our stockholders will
not be able to receive a return on their shares unless the
value of our shares appreciates and they sell them............. 23
Special Note Regarding Forward-Looking Statements..................... 23
Use of Proceeds....................................................... 24
Ratio of Earnings to Fixed Charges and Preferred Stock Dividends...... 24
Description of Debt Securities........................................ 25
Description of Capital Stock.......................................... 31
Description of Warrants............................................... 34
Description of Units.................................................. 36
Global Securities..................................................... 36
Plan of Distribution.................................................. 38
Legal Matters......................................................... 40
Experts............................................................... 40
Where You Can Find More Information................................... 41
Information Incorporated By Reference................................. 41
--------------------------------------------------------------------------------
-ii-
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission using a "shelf" registration or continuous
offering process. We may from time to time sell debt securities, common stock,
preferred stock, warrants and/or units in one or more offerings up to a total
dollar amount of $70,000,000.
Each time we sell these securities we will provide you with a prospectus
supplement containing specific information about the terms of each such sale.
This prospectus may not be used to sell any of the securities unless accompanied
by a prospectus supplement. The prospectus supplement also may add, update or
change information in this prospectus. If there is any inconsistency between the
information in the prospectus and the prospectus supplement, you should rely on
the information in the prospectus supplement. You should read both this
prospectus and any prospectus supplement together with additional information
described under the heading "Where You Can Find More Information" beginning on
page 41 of this prospectus.
Unless otherwise indicated or unless the context otherwise requires, all
references in this prospectus to "we," "us," or similar references mean Cytogen
Corporation and its subsidiaries.
You should rely only on the information contained in this prospectus or in
a prospectus supplement or amendment. We have not authorized anyone to provide
you with information different from that contained or incorporated by reference
in this prospectus. We may offer to sell, and seek offers to buy these
securities only in jurisdictions where offers and sales are permitted. The
information contained in this prospectus or a prospectus supplement or amendment
or incorporated herein by reference is accurate only as of the date of this
prospectus, regardless of the time of delivery of this prospectus or of any sale
of securities.
-2-
CYTOGEN CORPORATION
Cytogen Corporation is a product-driven biopharmaceutical company that
develops and commercializes innovative molecules that can be used to build
leading franchises across multiple markets. Our marketed products include
QuadrametTM (samarium Sm-153 lexidronam injection), a long-acting, non-opioid
treatment for the relief of pain due to metastatic bone disease arising from
prostate, breast, multiple myeloma and other types of cancer, and ProstaScint(R)
(capromab pendetide) kit for the preparation of Indium In-111 capromab
pendetide, the first and only commercial monoclonal antibody-based molecular
imaging agent targeting prostate-specific membrane antigen, or PSMA, used to
image the extent and spread of prostate cancer, in the United States. We are
also developing therapeutics targeting prostate-specific membrane antigen
(PSMA), a protein highly expressed on the surface of prostate cancer cells and
the neovasculature of solid tumors.
In addition to the products listed above, in August, 2000, we expanded our
product pipeline by entering into marketing, license and supply agreements with
Advanced Magnetics, Inc. for Combidex(R). We have exclusive United States
marketing rights to Combidex for all indications. Combidex (ferumoxtran-10) is
an investigational molecular imaging agent consisting of iron oxide
nanoparticles, which is currently being developed for use in conjunction with
magnetic resonance imaging to aid in the differentiation of cancerous and
non-cancerous lymph nodes, and is currently under review by the U.S. Food and
Drug Administration (FDA). In September 2004, Advanced Magnetics submitted a
complete response to an approvable letter received in June 2000 from the FDA for
Combidex. The complete response was accepted by the FDA and was assigned a user
fee goal date of March 30, 2005.
We have had a history of operating losses since our inception. We had a net
loss of $5.6 million for the three months ended September 30, 2004, a net loss
of $14.3 million for the nine months ended September 30, 2004 and a net loss of
$9.4 million for the year ended December 31, 2003. Although we continually look
to expand our product pipeline, we currently rely on two products, ProstaScint
and Quadramet, for substantially all of our revenues. In addition, we have, from
time to time, ceased sales of certain products, such as brachytherapy products
and OncoScint(R) CR/OV, that we previously believed would generate significant
revenues for our business. Our products are subject to significant regulatory
review by the FDA and other federal and state agencies, which requires
significant time and expenditures in seeking product approvals. In addition, we
rely on collaborative partners to a significant degree to manufacture our
products, to secure raw materials, and to provide licensing rights to their
proprietary products for us to sell and market to others.
We are a Delaware corporation. We were incorporated and began operations in
1980 under the name Hybridex, Inc. and changed our name to Cytogen Corporation
in April 1980. Our executive offices are located at 650 College Road East, Suite
3100, Princeton, New Jersey 08540, our telephone number is (609) 750-8200 and
our Internet address is http://www.cytogen.com The information on our Internet
website is not incorporated by reference in this prospectus. Unless the context
otherwise requires references in this prospectus to "Cytogen," the "Company,"
"we," "us," and "our" refer to Cytogen Corporation and our subsidiaries.
ProstaScint(R) and OncoScint(R) are registered United States trademarks of
Cytogen Corporation. We are the owner of a pending United States trademark
application, Serial No. 78374967, relating to Quadramet. All other trade names,
trademarks or service marks appearing in this Registration Statement on Form S-3
are the property of their respective owners, and not the property of Cytogen
Corporation or any of our subsidiaries.
REVERSE STOCK SPLIT
On October 25, 2002, we received approval from our stockholders at a duly
called and held special meeting of stockholders to effect a reverse split of our
common stock. Our Board of Directors thereafter approved a one-for-ten reverse
split of our outstanding, issued and authorized shares of
-3-
common stock, which became effective on October 25, 2002. All numbers set forth
in this Registration Statement on Form S-3 reflect the effect of such
one-for-ten reverse stock split.
RISK FACTORS
INVESTING IN OUR COMMON STOCK OR OTHER SECURITIES INVOLVES A HIGH DEGREE OF
RISK. YOU SHOULD CAREFULLY CONSIDER THE RISKS AND UNCERTAINTIES DESCRIBED BELOW
BEFORE PURCHASING OUR SECURITIES. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR,
OUR BUSINESS, FINANCIAL CONDITION OR RESULTS OF OPERATIONS WOULD LIKELY SUFFER.
IN THAT CASE, THE TRADING PRICE OF OUR COMMON STOCK OR THE VALUE OF OUR OTHER
SECURITIES COULD FALL, AND YOU MAY LOSE ALL OR PART OF THE MONEY YOU PAID TO BUY
OUR SECURITIES.
WE HAVE A HISTORY OF OPERATING LOSSES AND AN ACCUMULATED DEFICIT AND EXPECT TO
INCUR LOSSES IN THE FUTURE.
Given the high level of expenditures associated with our business and our
inability to generate revenues sufficient to cover such expenditures, we have
had a history of operating losses since our inception. We had a net loss of $5.6
million for the three months ended September 30, 2004, a net loss of $14.3
million for the nine months ended September 30, 2004 and a net loss of $9.4
million for the year ended December 31, 2003. We had net losses of $15.7 million
and $12.1 million for the years ended December 31, 2002 and 2001, respectively.
We had an accumulated deficit of $380 million as of September 30, 2004.
In order to develop and commercialize our technologies, particularly our
prostate-specific membrane antigen technology, and expand our products, we
expect to incur significant increases in our expenses over the next several
years. As a result, we will need to generate significant additional revenue to
become profitable.
To date, we have taken affirmative steps to rationalize our trend of
operating losses. Such steps include, among other things:
o undergoing steps to realign and implement our focus as a product-driven
biopharmaceutical company;
o establishing and maintaining our in-house specialty sales force;
o reacquiring North American and Latin American marketing rights to Quadramet
from Berlex Laboratories in August 2003; and
o enhancing our marketed product portfolio through marketing alliances and
strategic arrangements such as we have done with the Combidex product,
which we intend to market if this product is approved by the FDA.
Although we have taken these affirmative steps, we may never be able to
successfully implement them, and our ability to generate and sustain significant
additional revenues or achieve profitability will depend upon the factors
discussed elsewhere in this section entitled, "Risk Factors." As a result, we
may never be able to generate or sustain significant additional revenue or
achieve profitability.
WE DEPEND ON SALES OF PROSTASCINT AND QUADRAMET FOR SUBSTANTIALLY ALL OF OUR
NEAR-TERM REVENUES.
We expect Quadramet and ProstaScint to account for substantially all of our
product related revenues in the near future. Revenues from ProstaScint and
Quadramet accounted for approximately 40% and 60%, respectively, of our product
related revenues in the three months ended September 30, 2004, and 50% and 50%,
respectively in the nine months ended September 30, 2004. For the year ended
-4-
December 31, 2003, royalty and product revenues from Quadramet and sales
revenues from ProstaScint accounted for approximately 35% and 60%, respectively,
of our product related revenues. For the year ended December 31, 2002, royalties
from Quadramet and product revenues from ProstaScint accounted for approximately
15% and 64%, respectively, of our product related revenues. If ProstaScint or
Quadramet does not achieve broader market acceptance, either because we fail to
effectively market such products or our competitors introduce competing
products, we may not be able to generate sufficient revenue to become
profitable.
WE DEPEND ON ACCEPTANCE OF OUR PRODUCTS BY THE MEDICAL COMMUNITY FOR THE
CONTINUATION OF OUR REVENUES.
Our business, financial condition and results of operations depend on the
acceptance of our marketed products as safe, effective and cost-efficient
alternatives to other available treatment and diagnostic protocols by the
medical community, including:
o health care providers, such as hospitals and physicians; and
o third-party payors, including Medicare, Medicaid, private insurance
carriers and health maintenance organizations.
With respect to ProstaScint, our customers, including technologists and
physicians, must successfully complete our Partners in Excellence Program, a
proprietary training program designed to promote the correct acquisition and
interpretation of ProstaScint images. This product is technique-dependent and
requires a learning commitment by technologists and physicians and their
acceptance of this product as part of their treatment practices. With respect to
Quadramet, we believe that challenges we may encounter in generating market
acceptance for this product include the need to further educate patients and
physicians about Quadramet's properties, approved uses and how Quadramet may be
differentiated from other radiopharmaceuticals and used in combination with
other treatments for the palliation of pain due to metastatic bone disease, such
as analgesics, opioids, bisphosphonates, and chemotherapeutics. If we are unable
to educate our existing and future customers about ProstaScint and Quadramet,
our revenues may decrease. If ProstaScint or Quadramet do not achieve broader
market acceptance, we may not be able to generate sufficient revenue to become
profitable.
Generating market acceptance and sales of our products has proven
difficult, time consuming and uncertain. We launched OncoScint CR/OV in December
1992, ProstaScint in October 1996, Quadramet in March 1997, a brachytherapy
product in February 2001 and NMP22 BladderChek in November 2002. Revenues for
ProstaScint grew from $55,000 in 1996 to $6.5 million in 2003. Royalties from
sales and product revenues for Quadramet grew from $3.3 million in 1997 to $3.9
million in 2003. Royalties from sales of Quadramet in the initial years of sales
were supported by a guaranteed minimum revenue arrangement with the third party
licensor of Quadramet. OncoScint CR/OV selling activity was discontinued in
December 2002 and selling activities for the brachytherapy products were
discontinued in January 2003. We began marketing NMP22 BladderChek in November
2002. Sales of NMP22 BladderChek have been minimal to date and we do not expect
significant revenues from sales of NMP22 BladderChek. Currently, substantially
all of our revenues are derived from sales of ProstaScint and Quadramet.
WE RELY HEAVILY ON OUR COLLABORATIVE PARTNERS.
Our success depends largely upon the success and financial stability of our
collaborative partners. We have entered into the following agreements for the
development, sale, marketing, distribution and manufacture of our products,
product candidates and technologies:
o a license agreement with The Dow Chemical Company relating to the Quadramet
technology;
-5-
o a manufacturing and supply agreement for the manufacture of Quadramet with
Bristol-Myers Squibb Medical Imaging, Inc.;
o a manufacturing agreement for the manufacture of ProstaScint with Laureate
Pharma, L.P.;
o marketing, license and supply agreements with Advanced Magnetics, Inc.
related to Combidex;
o a distribution services agreement with Specialty Pharmaceutical Services
for ProstaScint;
o various agreements which form and control our joint venture with Progenics
Pharmaceuticals, Inc. for the development of PSMA for in vivo immunotherapy
for prostate and other cancers; and
o a license agreement between our joint venture and AlphaVax Human Vaccines,
Inc.
Because our collaborative partners are responsible for certain
manufacturing and distribution activities, among others, these activities are
outside our direct control and we rely on our partners to perform their
obligations. In the event that our collaborative partners are entitled to enter
into third party arrangements that may economically disadvantage us, or do not
perform their obligations as expected under our agreements, our products may not
be commercially successful. As a result, any success may be delayed and new
product development could be inhibited with the result that our business,
financial condition and results of operation could be significantly and
adversely affected.
OUR BUSINESS COULD BE HARMED IF CERTAIN AGREEMENTS EXPIRE OR ARE TERMINATED.
If our collaborative agreements expire or are terminated and we cannot
renew or replace them on commercially reasonable terms, our business and
financial results may suffer. If the licenses and/or agreements described below
expire or are terminated, we may not be able to find suitable alternatives to
them on a timely basis or on reasonable terms, if at all. The loss of the right
to use these technologies that we have licensed or the loss of any services
provided to us under these agreements would significantly and adversely affect
our business, financial condition and results of operations. For example, in
January 2003, we provided Draximage Inc. with notice of our intent to terminate
our product manufacturing and supply agreement and license agreement with
Draximage relating to the brachytherapy products which represented 20% of our
product-related revenues for the year ended December 31, 2002. In April 2003, we
entered into an agreement with Draximage formally terminating each of these
agreements. We no longer market and sell the brachytherapy products.
We currently depend on the following agreements for our present and future
operating results:
DOW CHEMICAL. In May 1993, we obtained an exclusive license from The Dow
Chemical Company to North American rights to use Quadramet as a therapeutic
radiopharmaceutical for metabolic bone disease or tumor regression for cancer
caused by metastatic or primary cancer in bone in humans, and for the treatment
of disease characterized by osteoblastic response in humans. Our license was
expanded to include Latin America in 1995.
Our license agreement with Dow with respect to Quadramet shall remain in
effect, unless earlier terminated pursuant to the terms thereof, for a term of
twenty (20) years from May 30, 1993 or until the last to expire of the related
patents. We anticipate such termination date to be May 30, 2013.
BRISTOL-MYERS SQUIBB MEDICAL IMAGING, INC. Quadramet is manufactured by
BMSMI pursuant to the terms of a manufacturing and supply agreement with us
effective as of January 1, 2004. Under this agreement, BMSMI has agreed to
manufacture, supply and distribute Quadramet for us in exchange for a
-6-
minimum payment of at least $4.2 million annually through 2008. The agreement
shall thereafter renew for five successive one-year periods unless terminated by
either party upon two years notice, or earlier terminated pursuant to the terms
thereof. The agreement is terminable by either party, at any time, upon two
years notice to the other. We also pay BMSMI a variable amount per month for
each order placed to cover the cost of customer service and distribution.
AGREEMENT WITH DR. HOROSZEWICZ REGARDING PROSTASCINT. In 1989, we entered
into an agreement with Dr. Julius S. Horoszewicz pursuant to which we assigned
certain rights to the patent claiming the 7E11-C5 antibody, as well as
additional patents relating to the ProstaScint product and commercialization
rights thereto. Under our agreement, which will remain in effect until the
expiration of the last related patent, we have made, and may continue to make,
certain payments to Dr. Horoszewicz.
LAUREATE PHARMA, L.P. In January 2003, we entered into a contract
manufacturing agreement with Laureate Pharma, L.P., pursuant to which Laureate
was obligated to manufacture ProstaScint for us through December 31, 2003. In
September 2004, we entered into another agreement with Laureate pursuant to
which Laureate is manufacturing additional quantities of ProstaScint for us in
exchange for expected payments of at least an aggregate of $5.1 million through
2006. This agreement was effective immediately upon execution and shall
terminate, unless earlier terminated pursuant to the terms thereof, upon
Laureate's completion of the production campaign and shipment of the resulting
products from Laureate's facility in Princeton, NJ. We believe that this
agreement will provide us with a sufficient supply of ProstaScint to satisfy our
commercial requirements for approximately the next four years based upon current
sales levels. In October 2004, Laureate entered into a definitive agreement with
Safeguard Scientifics, Inc. pursuant to which it is intended that Safeguard will
acquire Laureate's business and assets. Following the transaction, which is
expected to be consummated in the fourth quarter of 2004, Laureate is expected
to continue to operate as a full service contract manufacturing organization. We
do not anticipate that we will experience any disruption in Laureate's
performance of its obligations to produce ProstaScint.
ADVANCED MAGNETICS, INC. In August, 2000, we expanded our product pipeline
by entering into marketing, license and supply agreements with Advanced
Magnetics, Inc. for Combidex. We have exclusive United States marketing rights
to Combidex for all indications. Combidex (ferumoxtran-10) is an investigational
molecular imaging agent consisting of iron oxide nanoparticles, which is
currently being developed for use in conjunction with magnetic resonance imaging
to aid in the differentiation of cancerous and non-cancerous lymph nodes, and is
currently under review by the U.S. Food and Drug Administration. In September
2004, Advanced Magnetics submitted a complete response to an approvable letter
received in June 2000 from the FDA for Combidex. The complete response was
accepted by the FDA and was assigned a user fee goal date of March 30, 2005. Our
license and marketing agreement with Advanced Magnetics will continue until
August 25, 2010, and shall thereafter automatically renew for successive five
year periods, unless notice of non-renewal or termination is given by us or
Advanced Magnetics, 90 days prior to the commencement of any renewal period.
SLOAN KETTERING INSTITUTE FOR CANCER RESEARCH. In 1993, we began a
development program with SKICR involving PSMA and our proprietary monoclonal
antibody. In November 1996, we exercised an option for, and obtained, an
exclusive worldwide license from the SKICR to its PSMA-related technology. The
term of the license shall end on the date of expiration of the last to expire of
the licensed patents unless it earlier terminates by operation of law or by acts
of the parties in accordance with the terms of the agreement.
OUR INTELLECTUAL PROPERTY IS DIFFICULT TO PROTECT.
In addition to our key agreements referenced above, our business and
competitive positions are also dependent upon our ability to protect our
proprietary technology. Because of the substantial length of
-7-
time and expense associated with the development of new products, we, like the
rest of the biopharmaceutical industry, place considerable importance on
obtaining and maintaining patent and trade secret protection for new
technologies, products and processes. We have filed patent applications for
certain aspects of our technology for diagnostic and therapeutic products and/or
the methods for their production and use.
In addition, the protection afforded by a duly issued patent is limited in
duration. With respect to our ProstaScint product, we rely or have relied
primarily on United States patent numbers 5,162,504 (expiring October 28, 2010),
4,741,900 (expired June 9, 2004), 4,671,958 (expired June 9, 2004), and
4,867,973 (expired June 9, 2004). With respect to Quadramet, we rely primarily
on United States patent numbers 4,898,724 (expiring March 28, 2011), 4,937,333
(expiring August 4, 2009), 4,897,254 (expiring January 30, 2007), 5,066,478
(expiring November 19, 2008), and 5,300,279 (expiring November 19, 2008), which
were licensed to us by The Dow Chemical Company. In addition, we rely on United
States patent number 5,495,042 (expiring November 4, 2013), which is assigned to
us, and United States patent numbers 5,714,604 (expiring February 3, 2015) and
5,762,907 (expiring November 21, 2006).
The patent positions of pharmaceutical, biopharmaceutical and biotechnology
companies, including us, are generally uncertain and involve complex legal and
factual questions. Our patents and patent applications may not protect our
technologies and products because, among other things:
o there is no guarantee that any of our pending patent applications will
result in issued patents;
o we may develop additional proprietary technologies that are not patentable;
o there is no guarantee that any patents issued to us, our collaborators or
our licensors will provide a basis for a commercially viable product;
o there is no guarantee that any patents issued to us or our collaborators
will provide us with any competitive advantage;
o there is no guarantee that any patents issued to us or our collaborators
will not be challenged, circumvented or invalidated by third parties; and
o there is no guarantee that any patents previously issued to others or
issued in the future will not have an adverse effect on our ability to do
business.
In addition, patent law in the technology fields in which we operate is
uncertain and still evolving. The degree of protection that may be afforded by
any patents we are issued or license from others may not be sufficient to
protect our commercial interests. Furthermore, others may independently develop
similar or alternative technologies, duplicate our technologies, or, if patents
are issued to us, design around the patented technologies developed by us. We
could incur substantial costs in litigation if we are required to defend
ourselves in patent suits by third parties or if we initiate such suits. In
addition, if challenged by others in litigation, the patents we have been
issued, which we have been assigned or we have licensed from others may be found
invalid. It is also possible that our activities may infringe patents owned by
others. Defense and prosecution of patent matters can be expensive and
time-consuming and, regardless of whether the outcome is favorable to us, can
result in the diversion of substantial financial, managerial and other
resources. An adverse outcome could:
o subject us to significant liability to third parties;
o require us to cease any related research and development activities and
product sales; or
-8-
o require us to obtain licenses from third parties.
Any licenses required under any such third-party patents or proprietary
rights may not be available on commercially reasonable terms, if at all.
Moreover, the laws of certain countries may not protect our proprietary rights
to the same extent as the laws of the United States. We cannot predict whether
our or our competitors' pending patent applications will result in the issuance
of valid patents which may significantly and adversely affect our business,
financial condition and results of operations.
THERE ARE RISKS ASSOCIATED WITH THE MANUFACTURE AND SUPPLY OF OUR PRODUCTS.
If we are to be successful, our products will have to be manufactured by
contract manufacturers in compliance with regulatory requirements and at costs
acceptable to us. If we are unable to successfully arrange for the manufacture
of our products and product candidates, either because potential manufacturers
are not cGMP compliant, are not available or charge excessive amounts, we will
not be able to successfully commercialize our products and our business,
financial condition and results of operations will be significantly and
adversely affected.
ProstaScint is currently manufactured at a current Good Manufacturing
Practices, or cGMP, compliant manufacturing facility operated by Laureate
Pharma, L.P. We entered into a development and manufacturing agreement with DSM
Biologics Company B.V. in July 2000, which we intended would replace an earlier
arrangement we had with Laureate with respect to ProstaScint. Our relationship
with DSM was subsequently terminated. Although we entered into another agreement
with Laureate in September 2004 pursuant to which Laureate is manufacturing
additional quantities of ProstaScint for us, our failure to maintain a long term
supply agreement on commercially reasonable terms will have a material adverse
effect on our business, financial condition and results of operations. In
October 2004, Laureate entered into a definitive agreement with Safeguard
Scientifics, Inc. pursuant to which it is intended that Safeguard will acquire
Laureate's business and assets. Following the transaction, which is expected to
be consummated in the fourth quarter of 2004, Laureate is expected to continue
to operate as a full service contract manufacturing organization. We do not
anticipate that we will experience any disruption in Laureate's performance of
its obligations to produce ProstaScint.
Quadramet is manufactured by BMSMI, pursuant to an agreement with us. Both
primary components of Quadramet, particularly Samarium-153 and EDTMP, are
provided to BMSMI by outside suppliers. Due to radioactive decay, Samarium-153
must be produced on a weekly basis. BMSMI obtains its requirements for
Samarium-153 from a sole supplier and EDTMP from another sole supplier.
Alternative sources for these components may not be readily available, and any
alternative supplier would have to be identified and qualified, subject to all
applicable regulatory guidelines. If BMSMI cannot obtain sufficient quantities
of the components on commercially reasonable terms, or in a timely manner, it
would be unable to manufacture Quadramet on a timely and cost-effective basis,
which would have a material adverse effect on our business, financial condition
and results of operations.
The Company, our contract manufacturers and testing laboratories are
required to adhere to FDA regulations setting forth requirements for cGMP, and
similar regulations in other countries, which include extensive testing, control
and documentation requirements. Ongoing compliance with cGMP, labeling and other
applicable regulatory requirements is monitored through periodic inspections and
market surveillance by state and federal agencies, including the FDA, and by
comparable agencies in other countries. Failure of our contract vendors or us to
comply with applicable regulations could result in sanctions being imposed on
us, including fines, injunctions, civil penalties, failure of the government to
grant pre-market clearance or pre-market approval of drugs, delays, suspension
or withdrawal of approvals, seizures or recalls of products, operating
restrictions and criminal prosecutions any of which could significantly and
adversely affect our business, financial condition and results of operations.
-9-
OUR PRODUCTS, GENERALLY, ARE IN THE EARLY STAGES OF DEVELOPMENT AND
COMMERCIALIZATION AND WE MAY NEVER ACHIEVE THE REVENUE GOALS SET FORTH IN OUR
BUSINESS PLAN.
We began operations in 1980 and have since been engaged primarily in
research directed toward the development, commercialization and marketing of
products to improve the diagnosis and treatment of cancer and other diseases. In
October 1996, we introduced for commercial use our ProstaScint imaging agent. In
March 1997, we introduced for commercial use our Quadramet therapeutic product.
In November 2002, we began promoting NMP22 BladderChek to urologists in the
United States, and now have the right to promote NMP22 BladderChek solely to
oncologists. Sales of NMP22 BladderChek have been minimal to date, and we do not
expect significant revenues from sales of NMP22 BladderChek.
In August 2000, we expanded our product pipeline by entering into
marketing, license and supply agreements with Advanced Magnetics, Inc. for
Combidex. We have exclusive United States marketing rights to Combidex for all
indications. In September 2004, Advanced Magnetics submitted a complete response
to an approvable letter received in June 2000 from the FDA for Combidex. The
complete response was accepted by the FDA and was assigned a user fee goal date
of March 30, 2005.
To date, we have allocated, and expect to continue to allocate, significant
amounts of time and resources in preparation for the commercial launch of
Combidex. We cannot assure you, however, that Advanced Magnetics will obtain
approval from the FDA for Combidex on a timely basis, if at all. If Advanced
Magnetics does not secure regulatory approval for Combidex, we will not be
permitted to sell and market Combidex as we have anticipated and we will not
realize any return on the significant amount of time and resources we have
allocated to Combidex.
Our PSMA technologies are still in the early stages of development. In July
2004, as part of our continuing efforts to reduce non-strategic expenses, we
initiated the closure of facilities at our AxCell BioSciences subsidiary.
Research projects through academic, governmental and corporate collaborators
will continue to be supported and additional applications for the intellectual
property and technology at AxCell are being pursued. We may be unable to further
develop or commercialize any of these products and technologies in the future.
Our business is therefore subject to the risks inherent in an early-stage
biopharmaceutical business enterprise, such as the need:
o to obtain sufficient capital to support the expenses of developing our
technology and commercializing our products;
o to ensure that our products are safe and effective;
o to obtain regulatory approval for the use and sale of our products;
o to manufacture our products in sufficient quantities and at a reasonable
cost;
o to develop a sufficient market for our products; and
o to attract and retain qualified management, sales, technical and scientific
staff.
The problems frequently encountered using new technologies and operating in
a competitive environment also may affect our business, financial condition and
results of operations. If we fail to properly address these risks and attain our
business objectives, our business could be significantly and adversely affected.
-10-
ALL OF OUR POTENTIAL ONCOLOGY PRODUCTS WILL BE SUBJECT TO THE RISKS OF FAILURE
INHERENT IN THE DEVELOPMENT OF DIAGNOSTIC OR THERAPEUTIC PRODUCTS BASED ON NEW
TECHNOLOGIES.
Product development for cancer treatment involves a high degree of risk.
The product candidates we develop, pursue or offer may not prove to be safe and
effective, may not receive the necessary regulatory approvals, may be precluded
by proprietary rights of third parties or may not ultimately achieve market
acceptance. These product candidates will require substantial additional
investment, laboratory development, clinical testing and regulatory approvals
prior to their commercialization. We may experience difficulties, such as the
inability to initiate clinical trials or receive timely regulatory approvals,
that could delay or prevent the successful development, introduction and
marketing of new products.
Before we obtain regulatory approvals for the commercial sale of any of our
products under development, we must demonstrate through preclinical studies and
clinical trials that the product is safe and effective for use in each target
indication. The results from preclinical studies and early-stage clinical trials
may not be predictive of results that will be obtained in large-scale,
later-stage testing. Our clinical trials may not demonstrate safety and efficacy
of a proposed product, and therefore, may not result in marketable products. A
number of companies in our industry have suffered significant setbacks in
advanced clinical trials, even after promising results in earlier trials.
Clinical trials or marketing of any potential diagnostic or therapeutic products
may expose us to liability claims for the use of these diagnostic or therapeutic
products. We may not be able to maintain product liability insurance or
sufficient coverage may not be available at a reasonable cost. In addition,
internal development of diagnostic or therapeutic products will require
significant investments in product development, marketing, sales and regulatory
compliance resources. We will also have to establish or contract for the
manufacture of products, including supplies of drugs used in clinical trials,
under the cGMP of the FDA. We cannot assure you that product issues will not
arise following successful clinical trials and FDA approval.
The rate of completion of clinical trials also depends on the rate of
patient enrollment. Patient enrollment depends on many factors, including the
size of the patient population, the nature of the protocol, the proximity of
patients to clinical sites and the eligibility criteria for the study. Delays in
planned patient enrollment may result in increased costs and delays, which could
have a harmful effect on our ability to develop the products in our pipeline. If
we are unable to develop and commercialize products on a timely basis or at all,
our business, financial condition and results of operations could be
significantly and adversely affected.
COMPETITION IN OUR FIELD IS INTENSE AND LIKELY TO INCREASE.
All of our products and product candidates are subject to significant
competition from organizations that are pursuing technologies and products that
are the same as or similar to our technology and products. Many of the
organizations competing with us have greater capital resources, research and
development staffs and facilities and marketing capabilities.
We face, and will continue to face, intense competition from one or more of
the following entities:
o pharmaceutical companies;
o biotechnology companies;
o diagnostic companies;
o medical device companies;
-11-
o radiopharmaceutical distributors;
o academic and research institutions; and
o government agencies.
The markets in which our products compete are large. Our most significant
competitors include various pharmaceutical and medical device companies,
radiopharmaceutical distributors and biotechnology companies.
Quadramet primarily competes with Strontium-89 chloride in the
radiopharmaceutical pain palliation market. Strontium-89 chloride is
manufactured and marketed either as Metastron, by Amersham Health, or in a
generic form by Bio-Nucleonics Pharma, Inc. Amersham manufactures Metastron and
sells the product through its wholly-owned network of radiopharmacies, direct to
end-users and through other radiopharmacy distributors. The generic version is
distributed directly by the manufacturer or is sold through radiopharmacy
distributors such as Cardinal Health and Custom Care Pharmacy. The first
radiopharmaceutical introduced as a metastatic bone cancer pain palliation
agent, Phosphorus-32 (P-32), is no longer routinely utilized clinically in the
United States.
Competitive imaging modalities to ProstaScint include computed tomography
(CT), magnetic resonance (MR) imaging, and position emission tomography (PET).
Polymedco manufactures BTAStat, a point of care urine-based test approved
for monitoring bladder cancer patients. BTAStat, marketed by Mentor, competes
with NMP22 BladderChek (a product of Matritech for which we are the sole
distributor to oncologists in the United States through December 31, 2004).
NMP22 BladderChek is, however, the only point of care urine-based test approved
for both monitoring and diagnosis of bladder cancer. Matritech has retained
rights to market NMP22 BladderChek directly to physicians other than
oncologists, such as primary care physicians.
Additionally, we face competition in the development of PSMA-related
technology and products primarily from Millennium Pharmaceuticals, Inc. and
Medarex, Inc.
Before we recover development expenses for our products and technologies,
the products or technologies may become obsolete as a result of technological
developments by others or us. Our products could also be made obsolete by new
technologies, which are less expensive or more effective. We may not be able to
make the enhancements to our technology necessary to compete successfully with
newly emerging technologies and failure to do so could significantly and
adversely affect our business, financial condition and results of operations.
WE HAVE LIMITED SALES, MARKETING AND DISTRIBUTION CAPABILITIES FOR OUR PRODUCTS.
We have established an internal sales force that is responsible for
marketing and selling ProstaScint, Quadramet and NMP22 BladderChek. Although we
are expanding our sales force, it still has limited sales, marketing and
distribution capabilities compared to those of many of our competitors.
Effective August 1, 2003, we reacquired marketing rights to Quadramet from
Berlex Laboratories, Inc. in North and Latin America, for an upfront payment of
$8.0 million and the obligation to pay royalties to Berlex on future sales of
Quadramet. If our internal sales force is unable to successfully market
Quadramet and ProstaScint, our business and financial condition would be
adversely affected. If we are unable to establish and maintain significant
sales, marketing and distribution efforts within the United States, either
internally or through arrangements with third parties, our business may be
significantly and adversely affected. In locations outside of the United States,
we have not established a selling presence. To the extent that our sales force,
from time to time, markets and sells additional products, we cannot be certain
that adequate resources or sales capacity will be available to effectively
accomplish these tasks.
-12-
FAILURE OF THIRD PARTY PAYORS TO PROVIDE ADEQUATE COVERAGE AND REIMBURSEMENT FOR
OUR PRODUCTS COULD LIMIT MARKET ACCEPTANCE AND AFFECT PRICING OF OUR PRODUCTS
AND AFFECT OUR REVENUES.
Sales of our products depend in part on the availability of favorable
coverage and reimbursement by governmental healthcare programs such as Medicare
and Medicaid as well as private health insurance plans. Each payor has its own
process and standards for determining whether and, if so, to what extent it will
cover and reimburse a particular product or service. Whether and to what extent
a product may be deemed covered by a particular payor depends upon a number of
factors, including the payor's determination that the product is reasonable and
necessary for the diagnosis or treatment of the illness or injury for which it
is administered according to accepted standards of medical practice, cost
effective, not experimental or investigational, not found by the FDA to be less
than effective, and not otherwise excluded from coverage by law, regulation, or
contract. There may be significant delays in obtaining coverage for
newly-approved products, and coverage may not be available or could be more
limited than the purposes for which the product is approved by the FDA.
Moreover, eligibility for coverage does not imply that any product will be
reimbursed in all cases or at a rate that allows us to make a profit or even
cover our costs, which include, for example, research, development, production,
sales, and distribution costs. Interim payments for new products, if applicable,
also may not be sufficient to cover our costs and may not be made permanent.
Reimbursement rates may vary according to the use of the product and the
clinical setting in which it is used, may be based on payments allowed for
lower-cost products that are already reimbursed, may be incorporated into
existing payments for other products or services, and may reflect budgetary
constraints and/or imperfections in Medicare or Medicaid data. Net prices for
products may be reduced by mandatory discounts or rebates required by government
healthcare programs, or other payors, or by any future relaxation of laws that
restrict imports of certain medical products from countries where they may be
sold at lower prices than in the United States.
Third party payors often follow Medicare coverage policy and payment
limitations in setting their own coverage policies and reimbursement rates, and
may have sufficient market power to demand significant price reductions. Even if
successful, securing coverage at adequate reimbursement rates from government
and third party payors can be a time consuming and costly process that could
require us to provide supporting scientific, clinical and cost-effectiveness
data for the use of our products among other data and materials to each payor.
Our inability to promptly obtain favorable coverage and profitable reimbursement
rates from government-funded and private payors for our products could have a
material adverse effect on our business, financial condition and results of
operations, and our ability to raise capital needed to commercialize products.
Our business, financial condition and results of operations will continue
to be affected by the efforts of governmental and third-party payors to contain
or reduce the costs of healthcare. There have been, and we expect that there
will continue to be, a number of federal and state proposals to regulate
expenditures for medical products and services, which may affect payments for
therapeutic and diagnostic imaging agents such as our products. In addition, an
emphasis on managed care increases possible pressure on the pricing of these
products. While we cannot predict whether these legislative or regulatory
proposals will be adopted, or the effects these proposals or managed care
efforts may have on our business, the announcement of these proposals and the
adoption of these proposals or efforts could affect our stock price or our
business. Further, to the extent these proposals or efforts have an adverse
effect on other companies that are our prospective corporate partners, our
ability to establish necessary strategic alliances may be harmed.
-13-
IF WE ARE UNABLE TO COMPLY WITH APPLICABLE GOVERNMENTAL REGULATION WE MAY NOT BE
ABLE TO CONTINUE OUR OPERATIONS.
Any products tested, manufactured or distributed by us or on our behalf
pursuant to FDA approvals are subject to pervasive and continuing regulation by
numerous regulatory authorities, including primarily the FDA. We may be slow to
adapt, or we may never adapt to changes in existing requirements or adoption of
new requirements or policies. Our failure to comply with regulatory requirements
could subject us to enforcement action, including product seizures, recalls,
withdrawal, suspension, or revocation of approvals, restrictions on or
injunctions against marketing our products based on our technology, and civil
and criminal penalties. We may incur significant costs to comply with laws and
regulations in the future or compliance with laws or regulations may create an
unsustainable burden on our business.
Numerous federal, state and local governmental authorities, principally the
FDA, and similar regulatory agencies in other countries, regulate the
preclinical testing, clinical trials, manufacture and promotion of any compounds
or agents we or our collaborative partners develop, and the manufacturing and
marketing of any resulting drugs. The product development and regulatory
approval process is lengthy, expensive, uncertain and subject to delays.
The regulatory risks we face also include the following:
o any compound or agent, including generics, we or our collaborative partners
develop must receive regulatory agency approval before it may be marketed
as a drug in a particular country;
o the regulatory process, which includes preclinical testing and clinical
trials of each compound or agent in order to establish its safety and
efficacy, varies from country to country, can take many years and requires
the expenditure of substantial resources;
o in all circumstances, approval of the use of previously unapproved
radioisotopes in certain of our products requires approval of the Nuclear
Regulatory Commission and/or equivalent state regulatory agencies, which
may be a lengthy process. A radioisotope is an unstable form of an element
which undergoes radioactive decay, thereby emitting radiation which may be
used, for example, to image or destroy harmful growths or tissue;
o data obtained from preclinical and clinical activities are susceptible to
varying interpretations which could delay, limit or prevent regulatory
agency approval; and
o delays or rejections may be encountered based upon changes in regulatory
agency policy during the period of product development and/or the period of
review of any application for regulatory agency approval. These delays
could adversely affect the marketing of any products we or our
collaborative partners develop, impose costly procedures upon our
activities, diminish any competitive advantages we or our collaborative
partners may attain and adversely affect our ability to receive royalties.
Regulatory agency approval for a product or agent may not be received and
may entail limitations on the indicated uses that could limit the potential
market for any such product. For example, as disclosed in our press releases and
periodic filings, we have exclusive United States marketing rights to Combidex,
an investigational molecular imaging agent consisting of iron oxide
nanoparticles, which is currently being developed for use in conjunction with
magnetic resonance imaging to aid in the differentiation of cancerous and
non-cancerous lymph nodes, and is under review by the FDA. In June 2000,
Advanced Magnetics received an approvable letter from the FDA with respect to
Combidex. An approvable letter is a written communication to an applicant from
the FDA stating that the agency will approve the
-14-
application or abbreviated application if specific and satisfactory additional
information or material is submitted or specific conditions are met. An
approvable letter does not constitute approval of any part of an application or
abbreviated application and does not permit marketing of the drug that is the
subject of the application or abbreviated application. In September 2004, we
announced that Advanced Magnetics submitted a complete response to the
approvable letter for Combidex. The September 30, 2004 submission was accepted
and assigned a user fee goal date of March 30, 2005.
If and when we obtain approval or clearance for our products, the
marketing, manufacture, labeling, packaging, adverse event and other reporting,
storage, advertising and promotion and record keeping related to our products
would remain subject to extensive regulatory requirements. Discovery of
previously unknown problems with a drug, its manufacture or its manufacturer may
result in restrictions on such drug, manufacture or manufacturer, including
withdrawal of the drug from the market.
The Food, Drug and Cosmetics Act and the Public Health Service Act require:
(i) that our products be manufactured in FDA registered facilities subject to
inspection; and (ii) that we comply with cGMP, which imposes certain procedural
and documentation requirements upon us and our manufacturing partners with
respect to manufacturing and quality assurance activities. If we or our contract
partners do not comply with cGMP or we do not comply with any of the FDA's other
postmarket requirements we may be subject to sanctions, including fines,
injunctions, civil penalties, recalls or seizures of products, total or partial
suspension of production, product recalls, failure of the government to grant
clearance or premarket approval for devices or premarket approval for drugs or
biologics, suspension, revocation or withdrawal of marketing approvals and
criminal prosecution.
From time to time, legislation is drafted and introduced in Congress that
could significantly change the statutory provisions governing the approval,
manufacturing and marketing of products regulated by the FDA. In addition, FDA
regulations and guidance are often revised or reinterpreted by the agency in
ways that may significantly affect our business and our products. It is
impossible to predict whether legislative changes will be enacted, or FDA
regulations, guidance or interpretations changed, or what the impact of such
changes, if any, may be.
WE DEPEND ON ATTRACTING AND RETAINING KEY PERSONNEL.
We are highly dependent on the principal members of our management and
scientific staff. The loss of their services might significantly delay or
prevent the achievement of development or strategic objectives. Our success
depends on our ability to retain key employees and to attract additional
qualified employees. Competition for personnel is intense, and therefore we may
not be able to retain existing personnel or attract and retain additional highly
qualified employees in the future.
On December 17, 2002, we entered into a letter agreement with Michael D.
Becker in connection with Mr. Becker's promotion to President and Chief
Executive Officer of the Company. Under the terms of such letter agreement, Mr.
Becker receives an annual base salary of $280,000. Mr. Becker is also eligible
to participate in our Cytogen Corporation Performance Bonus Plan, as and if
approved by our Board of Directors, with a target bonus rate of 35% of base
salary based upon performance objectives. Mr. Becker is also entitled to all
existing Company benefits, at the sole discretion of the Board of Directors. In
addition, Mr. Becker was granted options to purchase 200,000 shares of our
common stock under our 1995 Stock Option Plan. Pursuant to the terms of the
letter agreement, in the event we terminate Mr. Becker's employment for reasons
other than for cause, as defined therein, Mr. Becker shall be entitled to
receive twelve months' base pay and continuation of benefits under COBRA, and a
pro rata portion of any incentive benefits earned through the date of
termination.
We do not carry key person life insurance policies and we do not typically
enter into long-term arrangements with our key personnel. If we are unable to
hire and retain personnel in key positions, our
-15-
business, financial condition and results of operations could be significantly
and adversely affected unless qualified replacements can be found.
OUR BUSINESS EXPOSES US TO PRODUCT LIABILITY CLAIMS THAT MAY EXCEED OUR
FINANCIAL RESOURCES, INCLUDING OUR INSURANCE COVERAGE, AND MAY LEAD TO THE
CURTAILMENT OR TERMINATION OF OUR OPERATIONS.
Our business is subject to product liability risks inherent in the testing,
manufacturing and marketing of our products and product liability claims may be
asserted against us, our collaborators or our licensees. While we currently
maintain product liability insurance in the amount of $10.0 million, such
coverage may not be adequate to protect us against future product liability
claims. In addition, product liability insurance may not be available to us in
the future on commercially reasonable terms, if at all. Although we have not had
a history of claims payments that have exceeded our insurance coverage or
available financial resources, if liability claims against us exceed our
financial resources or coverage amounts, we may have to curtail or terminate our
operations. In addition, while we currently maintain directors and officers
liability insurance in the amount of $25.0 million, such coverage may not be
available on commercially reasonable terms or be adequate to cover any claims
that we may be required to satisfy in the future. Our insurance coverage is
subject to industry standard and certain other limitations.
OUR SECURITY MEASURES MAY NOT PROTECT OUR UNPATENTED PROPRIETARY TECHNOLOGY.
We also rely upon trade secret protection for some of our confidential and
proprietary information that is not subject matter for which patent protection
is available. To help protect our rights, we require all employees, consultants,
advisors and collaborators to enter into confidentiality agreements that require
disclosure, and in most cases, assignment to us, of their ideas, developments,
discoveries and inventions, and that prohibit the disclosure of confidential
information to anyone outside Cytogen or our subsidiaries. Although we are
unaware of any unauthorized use or disclosure of our unpatented proprietary
technology to date, these agreements may not provide adequate protection for our
trade secrets, know-how or other proprietary information or prevent such
unauthorized use or disclosure.
WE MAY NOT BE ABLE TO IMPLEMENT AXCELL'S BUSINESS PLAN.
In September 2002, we began the restructuring of our subsidiary, AxCell
BioSciences Corporation, in an effort to reduce expenses and position Cytogen
for stronger long-term growth in oncology. In July 2004, as part of our
continuing efforts to reduce non-strategic expenses, we initiated the closure of
facilities at our AxCell BioSciences subsidiary. Research projects through
academic, governmental and corporate collaborators will continue to be supported
and additional applications for the intellectual property and technology at
AxCell are being pursued. We may be unable to further develop or commercialize
any of Axcell's technologies in the future.
WE MAY NEED TO RAISE ADDITIONAL CAPITAL, WHICH MAY NOT BE AVAILABLE.
Our cash, cash equivalents and short-term investments were $40.5 million at
September 30, 2004. We expect that our existing capital resources should be
adequate to fund our operations and commitments into 2007.
We have incurred negative cash flows from operations since our inception
and have expended, and expect to continue to expend in the future, substantial
funds based upon the:
o success of our product commercialization efforts;
o success of any future acquisitions of complementary products and
technologies we may make;
-16-
o magnitude, scope and results of our product development and research and
development efforts;
o progress of preclinical studies and clinical trials;
o progress toward regulatory approval for our products;
o costs of filing, prosecuting, defending and enforcing patent claims and
other intellectual property rights;
o competing technological and market developments; and
o expansion of strategic alliances for the sale, marketing and distribution
of our products.
Our business or operations may change in a manner that would consume
available resources more rapidly than anticipated. We expect that we will have
additional requirements for debt or equity capital, irrespective of whether and
when we reach profitability, for further product development costs, product and
technology acquisition costs and working capital. To the extent that our
currently available funds and revenues are insufficient to meet current or
planned operating requirements, we will be required to obtain additional funds
through equity or debt financing, strategic alliances with corporate partners
and others, or through other sources. These financial sources may not be
available when we need them or they may be available, but on terms that are not
commercially acceptable to us. If adequate funds are not available, we may be
required to delay, further scale back or eliminate certain aspects of our
operations or attempt to obtain funds through arrangements with collaborative
partners or others that may require us to relinquish rights to certain of our
technologies, product candidates, products or potential markets. If adequate
funds are not available, our business, financial condition and results of
operations will be materially and adversely affected.
OUR CAPITAL RAISING EFFORTS MAY DILUTE STOCKHOLDER INTERESTS.
If we raise additional capital by issuing equity securities or convertible
debentures, including the securities registered pursuant to this prospectus,
such issuance will result in ownership dilution to our existing stockholders,
and new investors could have rights superior to those of our existing
stockholders. The extent of such dilution will vary based upon the amount of
capital raised.
WE MAY NEED TO RAISE FUNDS OTHER THAN THROUGH THE ISSUANCE OF EQUITY SECURITIES.
If we raise additional funds through collaborations and licensing
arrangements, we may be required to relinquish rights to certain of our
technologies or product candidates or to grant licenses on unfavorable terms. If
we relinquish rights or grant licenses on unfavorable terms, we may not be able
to develop or market products in a manner that is profitable to us.
OUR PSMA PRODUCT DEVELOPMENT PROGRAM IS NOVEL AND, CONSEQUENTLY, INHERENTLY
RISKY.
We are subject to the risks of failure inherent in the development of
product candidates based on new technologies, including our PSMA technology.
These risks include the possibility that:
o the technologies we use will not be effective;
o our product candidates will be unsafe;
o our product candidates will fail to receive the necessary regulatory
approvals;
-17-
o the product candidates will be hard to manufacture on a large scale or will
be uneconomical to market; and
o we will not successfully overcome technological challenges presented by our
potential new products.
Our other research and development programs involve similarly novel
approaches to human therapeutics. Consequently, there is no precedent for the
successful commercialization of therapeutic products based on our PSMA
technologies. If we fail to develop such products, our business financial
condition and results of operations could be significantly and adversely
affected.
WE COULD BE NEGATIVELY IMPACTED BY FUTURE INTERPRETATION OR IMPLEMENTATION OF
FEDERAL AND STATE FRAUD AND ABUSE LAWS, INCLUDING ANTI-KICKBACK LAWS AND FEDERAL
AND STATE FALSE CLAIMS STATUTES.
We are subject to various federal and state laws pertaining to healthcare
fraud and abuse, including anti-kickback laws and false claims laws, among
others. Violations of these laws are punishable by criminal and/or civil
sanctions, including, in some instances, imprisonment and exclusion from
participation in federal and state healthcare programs, including Medicare,
Medicaid, and veterans' health programs, among others.
The federal and state governments have significantly increased the
financial resources allocated to enforcing healthcare fraud and abuse laws.
Private insurers and various state enforcement agencies also have increased
their level of scrutiny of healthcare claims and arrangements in an effort to
identify and prosecute fraudulent and abusive practices in the healthcare
industry.
We have not been challenged by a governmental authority under any of these
laws and believe that our operations are in compliance with such laws. However,
because of the far-reaching nature of these laws, we may be required to alter
one or more of our practices to be in compliance with these laws. Healthcare
fraud and abuse laws and regulations are complex, and even minor, inadvertent
irregularities can potentially give rise to claims that the law has been
violated. Any violations of these laws could result in a material adverse effect
on our business, financial condition and results of operations. If there is a
change in law, regulation or administrative or judicial interpretations, we may
have to change our business practices or our existing business practices could
be challenged as unlawful, which could have a material adverse effect on our
business, financial condition and results of operations.
The healthcare fraud and abuse laws to which we are subject include the
following, among others:
FEDERAL AND STATE ANTI-KICKBACK LAWS AND SAFE HARBOR PROVISIONS. The
federal anti-kickback law makes it a felony to knowingly and willfully offer, or
pay remuneration "to induce" a person to refer an individual or to recommend or
arrange for the purchase, lease or ordering of any item or service for which
payment may be made under the Medicare or state healthcare programs. The
anti-kickback prohibitions apply regardless of whether the remuneration is
provided directly or indirectly, in cash or in kind. Interpretations of the law
have been very broad. Under current law, courts and federal regulatory
authorities have stated that this law is violated if even one purpose, as
opposed to the sole or primary purpose, of the arrangement is to induce
referrals. Violations of the anti-kickback law carry potentially severe
penalties including imprisonment of up to five years, criminal fines, civil
money penalties and exclusion from the Medicare and Medicaid programs.
The U.S. Department of Health and Human Services Office of Inspector
General, or OIG, has published "safe harbors" that exempt some arrangements from
enforcement action under the anti-kickback statute. These statutory and
regulatory safe harbors protect various bona fide employment relationships,
personal service arrangements, certain discount arrangements, among other
things, provided
-18-
that certain conditions set forth in the statute and regulations are satisfied.
The safe harbor regulations, however, do not comprehensively describe all lawful
arrangements, and the failure of an arrangement to satisfy all of the
requirements of a particular safe harbor does not mean that the arrangement is
unlawful. Failure to comply with the safe harbor provisions, however, may mean
that the arrangement will be subject to scrutiny by the OIG.
Many states have adopted similar prohibitions. Some of these state laws
lack specific "safe harbors" that may be available under federal law. Sanctions
under these state anti-kickback laws may include civil money penalties, license
suspension or revocation, exclusion from Medicare or Medicaid, and criminal
fines or imprisonment.
We believe that our contracts and arrangements are not in violation of
applicable anti-kickback or related laws. We cannot assure you, however, that
these laws will ultimately be interpreted in a manner consistent with our
practices.
FALSE CLAIMS ACTS. We are subject to state and federal laws that govern the
submission of claims for reimbursement. The federal Civil False Claims Act
imposes civil liability on individuals or entities that submit, or "cause" to be
submitted, false or fraudulent claims for payment to the government. Violations
of the Civil False Claims Act may result in treble damages, civil monetary
penalties for each false claim submitted and exclusion from the Medicare and
Medicaid programs. In addition, we could be subject to criminal penalties under
a variety of federal statutes to the extent that we knowingly violate legal
requirements under federal health programs or otherwise present or cause the
presentation of false or fraudulent claims or documentation to the government.
In addition, the OIG may impose extensive and costly corporate integrity
requirements upon entities and individuals subject to a false claims judgment or
settlement. These requirements may include the creation of a formal compliance
program, the appointment of an independent review organization, and the
imposition of annual reporting requirements and audits conducted by an
independent review organization to monitor compliance with the terms of the
agreement and relevant laws and regulations.
The Federal Civil False Claims Act also allows a private individual to
bring a "qui tam" suit on behalf of the government for violations of the Civil
False Claims Act, and if successful, the "qui tam" relator shares in the
government's recovery. A qui tam suit may be brought by, with only a few
exceptions, any private citizen who has material information of a false claim
that has not yet been previously disclosed. Recently, the number of qui tam
suits brought in the healthcare industry has increased dramatically. In
addition, several states have enacted laws modeled after the Federal Civil False
Claims Act.
CIVIL MONETARY PENALTIES. The Civil Monetary Penalties Statute states that
civil penalties ranging between $10,000 and $50,000 per claim or act may be
imposed on any person or entity that knowingly submits, or causes the submission
of, improperly filed claims for federal health benefits, or makes payments to
induce a beneficiary or provider to reduce or limit the use of healthcare
services or to use a particular provider or supplier. Civil monetary penalties
may be imposed for violations of the anti-kickback statute and for the failure
to return known overpayments, among other things.
PROHIBITION ON EMPLOYING OR CONTRACTING WITH EXCLUDED PROVIDERS. The Social
Security Act and federal regulations state that individuals or entities that
have been convicted of a criminal offense related to the delivery of an item or
service under the Medicare or Medicaid programs or that have been convicted,
under state or federal law, of a criminal offense relating to neglect or abuse
of residents in connection with the delivery of a healthcare item or service
cannot participate in any federal healthcare programs, including Medicare and
Medicaid.
HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT OF 1996. HIPAA created
new healthcare related crimes, and granted authority to the Secretary of the
Department of Health and Human Services ("HHS") to impose certain civil
penalties. Particularly, the Secretary may now exclude from Medicare
-19-
any individual with a direct or indirect ownership interest in an entity
convicted of healthcare fraud or excluded from the program. Under HIPAA and
other healthcare laws, it is a crime to knowingly and willfully commit a
healthcare fraud, and knowingly and willfully falsify, or conceal material
information or make any materially false or fraudulent statements in connection
with claims and payment for healthcare services by a healthcare benefit plan.
HIPAA also created new programs to control fraud and abuse, and requires new
investigations, audits and inspections.
We believe that operations materially comply with applicable regulatory
requirements. There can be no assurance that the outcome of any inquiry audit or
investigation will be undertaken by HHS, OIG or DOJ. If we are ever found to
have engaged in improper practices, we could be subjected to civil,
administrative or criminal fines, penalties or restitutionary relief, and
suspension or exclusion of the entity or individuals from participation in
federal and state healthcare programs.
PATIENT INFORMATION AND PRIVACY. HIPAA also mandates, among other things,
the establishment of regulatory standards addressing the electronic exchange of
health information, standards for the privacy and security of health information
maintained or exchanged electronically, and standards for assigning unique
health identifiers to healthcare providers. Sanctions for failure to comply with
HIPAA standards include civil and criminal penalties. The Security Standards
require us to implement certain security measures to protect certain
individually identifiable health information, called protected health
information, or PHI, in electronic format. The Standards for Privacy of
Individually Identifiable Information restrict use and disclosure of PHI unless
patient authorization for such disclosures are obtained. These Privacy Standards
not only require our compliance with standards restricting the use and
disclosure of PHI, but also require us to obtain satisfactory assurances that
any business associate of ours who has access to our PHI similarly will
safeguard such PHI.
We have evaluated these rules to determine the effects of the rules on our
business, and we believe that we have taken the appropriate steps to ensure that
we will comply with these standards in all material respects by their respective
compliance deadlines.
OUR BUSINESS INVOLVES ENVIRONMENTAL RISKS THAT MAY RESULT IN LIABILITY.
We are subject to a variety of local, state, federal and foreign government
regulations relating to storage, discharge, handling, emission, generation,
manufacture and disposal of toxic, infectious or other hazardous substances used
to manufacture our products. If we fail to comply with these regulations, we
could be liable for damages, penalties, or other forms of censure and our
business could be significantly and adversely affected. We currently do not
carry insurance for contamination or injury resulting from the use of such
materials.
Two of our marketed products, ProstaScint and Quadramet utilize radioactive
materials. ProstaScint is not manufactured or shipped as a radioactive material
because the radioactive component is not added until the product has arrived at
its final destination (a radiopharmacy). Laureate Pharma, our most recent
contract manufacturer of ProstaScint, holds a radioactive materials license
because such license is required for certain release and stability tests of the
product.
Quadramet however, is manufactured and shipped as radioactive, and
therefore, the manufacturing and distribution of this product must comply with
regulations promulgated by the U.S. Nuclear Regulatory Commission. BMSMI
manufacturers and distributes Quadramet, and is, therefore, subject to these
regulations.
-20-
WE HAVE BEEN SUBJECT TO PATENT LITIGATION.
On March 17, 2000, we were served with a complaint filed against us in the
United States District Court for the District of New Jersey by M. David
Goldenberg and Immunomedics, Inc. (collectively "Plaintiffs"). The litigation
claimed that our ProstaScint product infringes a patent purportedly owned by
Goldenberg and licensed to Immunomedics. We believe that ProstaScint did not
infringe this patent, and that the patent was invalid and unenforceable. In June
2004, the U.S. Court of Appeals for the Federal Circuit affirmed the district
court's grant of summary judgment of no literal infringement. Regarding
infringement under the doctrine of equivalents, however, the U.S. Court of
Appeals for the Federal Circuit disagreed with the district court's conclusion
that there was no issue of material fact and reversed the district court's grant
of summary judgment on this point and remanded for further proceedings on the
issue. In September 2004, we settled the patent infringement suit for an
undisclosed payment, without any admission of fault or liability.
We cannot give any assurance that we will not become subject to additional
patent litigation in the future, which could result in material expenditures to
us.
OUR STOCK PRICE HAS BEEN AND MAY CONTINUE TO BE VOLATILE, AND YOUR INVESTMENT IN
OUR STOCK COULD DECLINE IN VALUE OR FLUCTUATE SIGNIFICANTLY.
The market prices for securities of biotechnology and pharmaceutical
companies have historically been highly volatile, and the market has from time
to time experienced significant price and volume fluctuations that are unrelated
to the operating performance of particular companies. The market price of our
common stock has fluctuated over a wide range and may continue to fluctuate for
various reasons, including, but not limited to, announcements concerning our
competitors or us regarding:
o results of clinical trials;
o technological innovations or new commercial products;
o changes in governmental regulation or the status of our regulatory
approvals or applications;
o changes in earnings;
o changes in health care policies and practices;
o developments or disputes concerning proprietary rights;
o litigation or public concern as to safety of the our potential products;
and
o changes in general market conditions.
These fluctuations may be exaggerated if the trading volume of our common
stock is low. These fluctuations may or may not be based upon any of our
business or operating results. Our common stock may experience similar or even
more dramatic price and volume fluctuations which may continue indefinitely.
WE HAVE ADOPTED VARIOUS ANTI-TAKEOVER PROVISIONS WHICH MAY AFFECT THE MARKET
PRICE OF OUR COMMON STOCK AND PREVENT OR FRUSTRATE ATTEMPTS BY OUR STOCKHOLDERS
TO REPLACE OR REMOVE OUR MANAGEMENT TEAM.
Our Board of Directors has the authority, without further action by the
holders of common stock, to issue from time to time, up to 5,400,000 shares of
preferred stock in one or more classes or series, and
-21-
to fix the rights and preferences of the preferred stock. Pursuant to these
provisions, we have implemented a stockholder rights plan by which one preferred
stock purchase right is attached to each share of common stock, as a means to
deter coercive takeover tactics and to prevent an acquirer from gaining control
of us without some mechanism to secure a fair price for all of our stockholders
if an acquisition was completed. These rights will be exercisable if a person or
group acquires beneficial ownership of 20% or more of our common stock and can
be made exercisable by action of our board of directors if a person or group
commences a tender offer which would result in such person or group beneficially
owning 20% or more of our common stock. Each right will entitle the holder to
buy one one-thousandth of a share of a new series of our junior participating
preferred stock for $20. If any person or group becomes the beneficial owner of
20% or more of our common stock (with certain limited exceptions), then each
right not owned by the 20% stockholder will entitle its holder to purchase, at
the right's then current exercise price, common shares having a market value of
twice the exercise price. In addition, if after any person has become a 20%
stockholder, we are involved in a merger or other business combination
transaction with another person, each right will entitle its holder (other than
the 20% stockholder) to purchase, at the right's then current exercise price,
common shares of the acquiring company having a value of twice the right's then
current exercise price.
We are subject to provisions of Delaware corporate law which, subject to
certain exceptions, will prohibit us from engaging in any "business combination"
with a person who, together with affiliates and associates, owns 15% or more of
our common stock for a period of three years following the date that the person
came to own 15% or more of our common stock unless the business combination is
approved in a prescribed manner.
These provisions of the stockholder rights plan, our certificate of
incorporation, and of Delaware law may have the effect of delaying, deterring or
preventing a change in control of Cytogen, may discourage bids for our common
stock at a premium over market price and may adversely affect the market price,
and the voting and other rights of the holders, of our common stock. In
addition, these provisions make it more difficult to replace or remove our
current management team in the event our stockholders believe this would be in
the best interest of the Company and our stockholders.
THE LIQUIDITY OF OUR COMMON STOCK COULD BE ADVERSELY AFFECTED IF WE ARE DELISTED
FROM THE NASDAQ NATIONAL MARKET.
In the event that we are unable maintain compliance with all relevant
Nasdaq Listing Standards, our securities may be subject to delisting from the
Nasdaq National Market. If such delisting occurs, the market price and market
liquidity of our common stock may be adversely affected.
Alternatively, if faced with such delisting, we may submit an application
to transfer the listing of our common stock to the Nasdaq SmallCap Market. The
Nasdaq SmallCap Market also has a $1.00 minimum bid price requirement. On
November 3, 2004, the closing sale price of our common stock as reported by
Nasdaq was $10.26.
If our common stock is delisted by Nasdaq, our common stock would be
eligible to trade on the OTC Bulletin Board maintained by Nasdaq, another
over-the-counter quotation system, or on the pink sheets where an investor may
find it more difficult to dispose of or obtain accurate quotations as to the
market value of our common stock. In addition, we would be subject to a rule
promulgated by the Securities and Exchange Commission that, if we fail to meet
criteria set forth in such rule, imposes various practice requirements on
broker-dealers who sell securities governed by the rule to persons other than
established customers and accredited investors. Consequently, such rule may
deter broker-dealers from recommending or selling our common stock, which may
further affect the liquidity of our common stock.
-22-
Delisting from Nasdaq would make trading our common stock more difficult
for investors, potentially leading to further declines in our share price. It
would also make it more difficult for us to raise additional capital. Further,
if we are delisted, we would also incur additional costs under state blue sky
laws in connection with any sales of our securities. These requirements could
severely limit the market liquidity of our common stock and the ability of our
shareholders to sell our common stock in the secondary market.
A LARGE NUMBER OF OUR SHARES ARE ELIGIBLE FOR FUTURE SALE WHICH MAY ADVERSELY
IMPACT THE MARKET PRICE OF OUR COMMON STOCK.
A large number of shares of our common stock are already outstanding,
issuable upon exercise of options and warrants, or the achievement of certain
milestones under previously completed acquisitions and may be eligible for
resale. This availability of a significant number of additional shares of our
common stock for future sale and issuance could depress the price of our common
stock.
BECAUSE WE DO NOT INTEND TO PAY, AND HAVE NOT PAID, ANY CASH DIVIDENDS ON OUR
SHARES OF COMMON STOCK, OUR STOCKHOLDERS WILL NOT BE ABLE TO RECEIVE A RETURN ON
THEIR SHARES UNLESS THE VALUE OF OUR SHARES APPRECIATES AND THEY SELL THEM.
We have never paid or declared any cash dividends on our common stock or
other securities and intend to retain any future earnings to finance the
development and expansion of our business. We do not anticipate paying any cash
dividends on our common stock in the foreseeable future. Therefore, our
stockholders will not be able to receive a return on their shares unless the
value of our shares appreciates and they sell them.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995 and Section 21E of the
Securities Exchange Act of 1934, as amended. These forward-looking statements
regarding future events and our future results are based on current
expectations, estimates, forecasts, and projections and the beliefs and
assumptions of our management including, without limitation, our expectations
regarding results of operations, selling, general and administrative expenses,
research and development expenses and the sufficiency of our cash for future
operations. Forward-looking statements may be identified by the use of
forward-looking terminology such as "may," "will," "expect," "estimate,"
"anticipate," "continue," or similar terms, variations of such terms or the
negative of those terms. These forward-looking statements include statements
regarding our agreements with our collaborative partners, our intent to hold our
investments until maturity, additional funding of the PSMA technologies,
potential charges resulting from the closure of AxCell BioSciences, growth and
market penetration for Quadramet and ProstaScint, revenues, if any, from NMP22
BladderChek and from our joint venture with Progenics Pharmaceuticals Inc.,
increased expenses resulting from our sales force and marketing expansion,
including sales and marketing expenses for Quadramet, the sufficiency of our
capital resources, our need for additional capital and other statements included
in this prospectus that are not historical facts. Such forward-looking
statements involve a number of risks and uncertainties and investors are
cautioned not to put any undue reliance on any forward-looking statement. We
cannot guarantee that we will actually achieve the plans, intentions or
expectations disclosed in any such forward-looking statements. Factors that
could cause actual results to differ materially, include, market acceptance of
our products, the results of our clinical trials, our ability to hire and retain
employees, economic and market conditions generally, our receipt of requisite
regulatory approvals for our products and product candidates, the continued
cooperation of our marketing and other collaborative and strategic partners, our
ability to protect our intellectual property, and the other risks identified
herein under the caption "Risk Factors."
-23-
Any forward-looking statements made by us do not reflect the potential
impact of any future acquisitions, mergers, dispositions, joint ventures or
investments we may make. You should read and interpret any forward-looking
statements together with the following documents:
o our most recent Annual Report on Form 10-K;
o our most recent quarterly report of Form 10-Q;
o the risk factors contained in this prospectus under the caption "Risk
Factors"; and
o our other filings with the Securities and Exchange Commission.
Any forward-looking statement speaks only as of the date on which that
statement is made. We will not update any forward-looking statement to reflect
events or circumstances that occur after the date on which such statement is
made.
USE OF PROCEEDS
We will receive all of the net proceeds from the sale of our securities
registered under the registration statement of which this prospectus is a part.
Unless the applicable prospectus supplement states otherwise, we will
retain broad discretion in the allocation of the net proceeds of this offering.
We currently intend to use the net proceeds of this and any future issuances
for:
o expansion of our sales and marketing capabilities;
o research and development on existing or new products;
o potential product acquisitions and/or potential acquisitions of
complementary businesses; and
o other general corporate purposes, including principally working capital
and capital expenditures.
We have not determined the amount of net proceeds to be used for each of
the specific purposes indicated. The amounts and timing of the expenditures may
vary significantly depending on numerous factors, such as the progress of our
research and development efforts, technological advances and the competitive
environment for our products. Accordingly, we will have broad discretion to use
the proceeds as we see fit. Pending such uses, we intend to invest the net
proceeds in interest-bearing, investment grade securities.
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth our dollar coverage deficiency. The ratio of
earnings to fixed charges is not disclosed since it is a negative number in each
year and period shown below. Any time we offer debt securities pursuant to this
prospectus, we will provide an updated table setting forth our ratio of earnings
to fixed charges on a historical basis in the applicable prospectus supplement,
if required. Any time we offer shares of preferred stock pursuant to this
prospectus, we will provide a table setting forth our ratio of combined fixed
charges and preferred stock dividends to earnings, if required.
-24-
For the Nine
Months Ended
Year Ended December 31, September 30,
1999 2000 2001 2002 2003 2004
---- ---- ---- ---- ---- ----
(All Amounts in Thousands)
Ratio of Earnings to
Fixed Charges............... -- -- -- -- -- --
Earnings Available to
Cover Fixed Charges
(Deficiency)................ $(1,973) $(24,609) $(13,203) $(15,699) $(10,246) $(14,262)
DESCRIPTION OF DEBT SECURITIES
We may offer senior debt securities, subordinated debt securities or both.
Senior debt securities and subordinated debt securities will be issued under
separate indentures between us, as issuer, and the trustee identified in a
prospectus supplement. Further information regarding the trustee may be provided
in the prospectus supplement. The form for each type of indenture is filed as an
exhibit to the registration statement of which this prospectus is a part.
The prospectus supplement will describe the particular terms of any debt
securities we may offer and may supplement the terms summarized below. The
following summaries of the debt securities and the indentures are not complete
and may be modified by the description of particular debt securities in a
prospectus supplement. We urge you to read the indenture filed as an exhibit to
the registration statement that relates to debt securities offered in a
prospectus supplement and the description of the additional terms of the debt
securities included in the prospectus supplement.
GENERAL
The indentures provide that we may issue an unlimited principal amount of
debt securities in separate series. We may specify a maximum aggregate principal
amount for the debt securities of any series. The debt securities will have
maturities that are set forth in the prospectus supplement. Senior debt
securities will be unsecured and unsubordinated obligations and will rank
equally with all our other unsecured and unsubordinated debt. Subordinated debt
securities will be unsecured obligations and may be paid by us only if all
payments due under our senior indebtedness, including any outstanding senior
debt securities, have been made.
The indentures might not limit the amount of other debt that we may incur
and might not contain financial or similar restrictive covenants. The indentures
might not contain any provision to protect holders of debt securities against
transactions that may cause a sudden or dramatic decline in our ability to pay
our debt.
The prospectus supplement will describe the debt securities and the price
or prices at which we will offer the debt securities. The description will
include:
o the title of the debt securities;
o any limit on the aggregate principal amount of the debt securities or the
series of which they are a part;
-25-
o the person to whom any interest on a debt security of the series will be
paid;
o the date or dates on which we must repay the principal;
o the rate or rates at which the debt securities will bear interest;
o the date or dates from which interest will accrue and the dates on which we
must pay interest;
o the place or places where we must pay the principal and any premium or
interest on the debt securities;
o the terms and conditions on which we may redeem any debt security, if at
all;
o any obligation to redeem or purchase any debt securities and the terms and
conditions on which we must do so;
o the denominations in which we may issue the debt securities;
o the manner in which we will determine the amount of principal of or any
premium or interest on the debt securities;
o the currency in which we will pay the principal of and any premium or
interest on the debt securities;
o if applicable, that the debt securities are defeasible and the terms of
such defeasance;
o if applicable, the terms of any right to convert debt securities into, or
exchange debt securities for, shares of common stock or other securities or
property;
o whether we will issue the debt securities in the form of one or more global
securities and, if so, the respective depositaries for the global
securities and the terms of the global securities;
o the subordination provisions that will apply to any subordinated debt
securities;
o any addition to or change in the events of default applicable to the debt
securities and any change in the right of the trustee or the holders to
declare the principal amount of any of the debt securities due and payable;
o any addition to or change in the covenants in the indentures; and
o any other terms of the debt securities not inconsistent with the applicable
indenture.
We may sell the debt securities at a substantial discount below their
stated principal amount. We will describe U.S. federal income tax considerations
applicable to debt securities sold at an original issue discount in the
prospectus supplement. An original issue discount security is any debt security
sold for less than its face value and which provides that the holder cannot
receive the full face value if maturity is accelerated. The prospectus
supplement relating to any original issue discount securities will describe the
particular provisions relating to acceleration of the maturity upon the
occurrence of an event of default. In addition, we will describe in the
prospectus supplement U.S. federal income tax or other considerations applicable
to any debt securities that are denominated in a currency or unit other than
U.S. dollars.
-26-
CONVERSION AND EXCHANGE RIGHTS
The prospectus supplement will describe, if applicable, the terms on which
you may convert debt securities into or exchange them for common stock or other
securities or property. The conversion or exchange may be mandatory or may be at
your option. The prospectus supplement will describe how the number of shares of
common stock or other securities or property to be received upon conversion or
exchange would be calculated.
SUBORDINATION OF SUBORDINATED DEBT SECURITIES
The indebtedness underlying the subordinated debt securities may be paid by
us only if all payments due under our senior indebtedness, including any
outstanding senior debt securities, have been made. If we distribute our assets
to creditors upon any dissolution, winding-up, liquidation or reorganization or
in bankruptcy, insolvency, receivership or similar proceedings, we must first
pay all amounts due or to become due on all senior indebtedness before we pay
the principal of, or any premium or interest on, the subordinated debt
securities. In the event the subordinated debt securities are accelerated
because of an event of default, we may not make any payment on the subordinated
debt securities until we have paid all senior indebtedness or the acceleration
is rescinded. If the payment of subordinated debt securities accelerates because
of an event of default, we must promptly notify holders of senior indebtedness
of the acceleration.
If we experience a bankruptcy, dissolution or reorganization, holders of
senior indebtedness may receive more, ratably, and holders of subordinated debt
securities may receive less, ratably, than our other creditors. The indenture
for subordinated debt securities may not limit our ability to incur additional
senior indebtedness.
FORM, EXCHANGE AND TRANSFER
We will issue debt securities in the form of global securities or in fully
registered form, without coupons, in denominations of $1,000 and integral
multiples thereof. The holder of a debt security in fully registered form may
elect, subject to the terms of the applicable indenture, to exchange them for
other debt securities of the same series of any authorized denomination and of
similar terms and aggregate principal amount.
Holders of debt securities in fully registered form may present them for
exchange as provided above or for registration of transfer, duly endorsed or
with the form of transfer duly executed, at the office of the transfer agent we
designate for that purpose. We will not impose a service charge for any
registration of transfer or exchange of debt securities, but we may require a
payment sufficient to cover any tax or other governmental charge payable in
connection with the transfer or exchange. We will name the transfer agent in the
prospectus supplement. We may designate additional transfer agents or rescind
the designation of any transfer agent or approve a change in the office through
which any transfer agent acts, but we must maintain a transfer agent in each
place where we will make payment on debt securities.
If we redeem the debt securities, we will not be required to issue,
register the transfer of or exchange any debt security during a specified period
prior to mailing a notice of redemption. We are not required to register the
transfer of or exchange of any debt security selected for redemption, except the
unredeemed portion of the debt security being redeemed.
PAYMENT AND PAYING AGENTS
We will pay principal and any premium or interest on a debt security to the
person in whose name the debt security is registered at the close of business on
the regular record date for such interest.
-27-
We will pay principal and any premium or interest on the debt securities at
the office of our designated paying agent. Unless the prospectus supplement
indicates otherwise, the corporate trust office of the trustee will be the
paying agent for the debt securities.
Any other paying agents we designate for the debt securities of a
particular series will be named in the prospectus supplement. We may designate
additional paying agents, rescind the designation of any paying agent or approve
a change in the office through which any paying agent acts, but we must maintain
a paying agent in each place of payment for the debt securities.
The paying agent will return to us all money we pay to it for the payment
of the principal, premium or interest on any debt security that remains
unclaimed for a specified period. Thereafter, the holder may look only to us for
payment, as an unsecured general creditor.
CONSOLIDATION, MERGER AND SALE OF ASSETS
Under the terms of the indentures, so long as any securities remain
outstanding, we may not consolidate or enter into a share exchange with or merge
into any other person, in a transaction in which we are not the surviving
corporation, or sell, convey, transfer or lease our properties and assets
substantially as an entirety to any person, unless:
o the successor assumes our obligations under the debt securities and the
indentures; and
o we meet the other conditions described in the indentures.
EVENTS OF DEFAULT
Each of the following will constitute an event of default under each indenture
with respect to any series of debt securities:
o failure to pay the principal of or any premium on any debt security of that
series when due;
o failure to pay any interest on any debt security of that series when due,
for more than a specified number of days past the due date;
o failure to deposit any sinking fund payment with respect to debt securities
of that series when due;
o failure to perform any covenant or agreement in the indenture that
continues for a specified number of days after written notice has been
given by the trustee or the holders of a specified percentage in aggregate
principal amount of the debt securities of that series;
o certain events of bankruptcy, insolvency or reorganization; and
o any other event of default specified in the prospectus supplement.
If an event of default occurs and continues, either the trustee or holders
of a specified percentage in aggregate principal amount of the outstanding
securities of that series may declare the principal amount of the debt
securities of that series to be immediately due and payable. The holders of a
majority in aggregate principal amount of the outstanding securities of that
series may rescind and annul the acceleration if all events of default, other
than the nonpayment of accelerated principal, have been cured or waived.
-28-
Except for its duties in case of an event of default, the trustee will not
be obligated to exercise any of its rights or powers at the request or direction
of any of the holders, unless the holders have offered the trustee reasonable
indemnity. If they provide this indemnification, the holders of a majority in
aggregate principal amount of the outstanding securities of any series may
direct the time, method and place of conducting any proceeding for any remedy
available to the trustee or exercising any trust or power conferred on the
trustee with respect to the debt securities of that series.
No holder of a debt security of any series may institute any proceeding
with respect to an indenture, or for the appointment of a receiver or a trustee,
or for any other remedy, unless:
o the holder has previously given the trustee written notice of a continuing
event of default;
o the holders of a specified percentage in aggregate principal amount of the
outstanding securities of that series have made a written request upon the
trustee, and have offered reasonable indemnity to the trustee, to institute
the proceeding;
o the trustee has failed to institute the proceeding for a specified period
of time after its receipt of the notification; and
o the trustee has not received a direction inconsistent with the request
within a specified number of days from the holders of a specified
percentage in aggregate principal amount of the outstanding securities of
that series.
MODIFICATION AND WAIVER
We and the trustee may change an indenture without the consent of any holders
with respect to specific matters, including:
o to fix any ambiguity, defect or inconsistency in the indenture; and
o to change anything that does not materially adversely affect the interests
of any holder of debt securities of any series.
In addition, under an indenture, the rights of holders of a series of debt
securities may be changed by us and the trustee with the written consent of the
holders of at least a majority in aggregate principal amount of the outstanding
debt securities of that series. However, we and the trustee may only make the
following changes with the consent of the holder of any outstanding debt
securities affected:
o extending the fixed maturity of the debt securities;
o reducing the principal amount, reducing the rate of or extending the time
of payment of interest, or any premium payable upon the redemption, of the
debt securities; or
o reducing the percentage of debt securities the holders of which are
required to consent to any amendment.
The holders of a majority in principal amount of the outstanding debt
securities of any series may waive any past default under the indenture with
respect to debt securities of that series, except a default in the payment of
principal, premium or interest on any debt security of that series or in respect
of a covenant or provision of the indenture that cannot be amended without each
holder's consent.
Except in limited circumstances, we may set any day as a record date for
the purpose of determining the holders of outstanding debt securities of any
series entitled to give or take any direction,
-29-
notice, consent, waiver or other action under the indentures. In limited
circumstances, the trustee may set a record date. To be effective, the action
must be taken by holders of the requisite principal amount of such debt
securities within a specified period following the record date.
DEFEASANCE
To the extent stated in the prospectus supplement, we may elect to apply
the provisions in an indenture relating to defeasance and discharge of
indebtedness, or to defeasance of restrictive covenants, to the debt securities
of any series. The indentures provide that, upon satisfaction of the
requirements described below, we may terminate all of our obligations under the
debt securities of any series and the applicable indenture, known as legal
defeasance, other than our obligation:
o to maintain a registrar and paying agents and hold monies for payment in
trust;
o to register the transfer or exchange of the debt securities; and
o to replace mutilated, destroyed, lost or stolen debt securities.
In addition, we may terminate our obligation to comply with any restrictive
covenants applicable to debt securities of any series, known as covenant
defeasance.
We may exercise our legal defeasance option even if we have previously
exercised our covenant defeasance option. If we exercise either defeasance
option, payment of the applicable debt securities may not be accelerated because
of the occurrence of an event of default.
To exercise either defeasance option as to debt securities of any series,
we must irrevocably deposit in trust with the trustee money and/or obligations
backed by the full faith and credit of the United States that will provide money
in an amount sufficient in the written opinion of a nationally recognized firm
of independent public accountants to pay the principal of, premium, if any, and
each installment of interest on the debt securities. We may only establish this
trust if, among other things:
o no event of default shall have occurred or be continuing;
o in the case of legal defeasance, we have delivered to the trustee an
opinion of counsel to the effect that we have received from, or there has
been published by, the Internal Revenue Service a ruling or there has been
a change in law, which in the opinion of our counsel, provides that holders
of the debt securities will not recognize gain or loss for federal income
tax purposes as a result of such deposit, defeasance and discharge and will
be subject to federal income tax on the same amount, in the same manner and
at the same times as would have been the case if such deposit, defeasance
and discharge had not occurred;
o in the case of covenant defeasance, we have delivered to the trustee an
opinion of counsel to the effect that the holders of the debt securities
will not recognize gain or loss for federal income tax purposes as a result
of such deposit, defeasance and discharge and will be subject to federal
income tax on the same amount, in the same manner and at the same times as
would have been the case if such deposit, defeasance and discharge had not
occurred; and
o we satisfy other customary conditions precedent described in the applicable
indenture.
-30-
OWNERSHIP
We may treat the person in whose name a debt security is registered as the
absolute owner, whether or not such debt security may be overdue, for the
purpose of making payment and for all other purposes.
DESCRIPTION OF CAPITAL STOCK
The total number of shares of all classes of stock that we have authority
to issue is 30,400,000, consisting of 25,000,000 shares of common stock, par
value $0.01 per share, and 5,400,000 shares of preferred stock, par value
$0.01 per share. We had 15,436,501 shares of common stock, and no shares of
preferred stock, outstanding as of November 1, 2004, which number of shares: (i)
includes an aggregate of 241 shares of common stock to be issued to prior
holders of securities of CytoRad Incorporated and Cellcor, Inc., which we
acquired in 1995, upon each such holders respective exchange of such securities;
(ii) excludes 50,000 shares of common stock previously issued by us and
currently held in escrow pending release, upon certain conditions, to Advanced
Magnetics, who currently maintains voting control of such securities; and (iii)
excludes 23,833 shares previously issued by us and currently held for issuance
by the custodian of our Employee Stock Purchase Plan to the participants
thereunder, in the event they elect to purchase such shares.
In the discussion that follows, we have summarized selected provisions of
our certificate of incorporation and our bylaws relating to our capital stock.
You should read our certificate of incorporation and bylaws as currently in
effect for more details regarding the provisions we describe below and for other
provisions that may be important to you. We have filed copies of those documents
with the SEC, and they are incorporated by reference as exhibits to the
registration statement. Please read "Where You Can Find More Information."
COMMON STOCK
The holders of common stock are entitled to one vote per share on all
matters voted on by our stockholders, including the election of directors,
except as may, in the future, be provided in any resolutions adopted by our
board of directors with respect to any series of preferred stock. Except as
otherwise required by law or provided in any resolution adopted by our board of
directors with respect to any series of preferred stock, the holders of shares
of common stock exclusively possess all voting power of our stockholders.
Subject to any preferential rights of any then outstanding series of preferred
stock, the holders of common stock are entitled to those dividends as may be
declared from time to time by our board of directors from funds available for
dividends and, upon liquidation, are entitled to receive pro rata all of our
assets available for distribution to our stockholders.
PREFERRED STOCK
Our board of directors is authorized to establish one or more series of
preferred stock and to determine, with respect to any series of preferred stock,
the powers, designation, preferences and rights of each series and the
qualifications, limitations or restrictions of each series, including:
o the designation of the series;
o the number of shares of the series, which number the board of directors
may, except where otherwise provided in the preferred stock designation,
increase or decrease, but not below the number of shares of that series
then outstanding;
o whether dividends, if any, will be cumulative or noncumulative and the
dividend rate and the
-31-
preferences, if any, of the series;
o the dates on which dividends, if any, will be payable;
o the redemption rights and price or prices, if any, for shares of the
series;
o the terms and amounts of any sinking fund provided for the purchase or
redemption of shares of the series;
o the amounts payable on, and the preferences, if any, of shares of the
series in the event of any voluntary or involuntary liquidation,
dissolution or winding up of our affairs;
o whether the shares of the series will be convertible into or exchangeable
for shares of any other class or series, or any other security, of our
company or any other corporation, and, if so, the specification of that
class or series or that other security, the conversion or exchange price or
prices or rate or rates, any adjustments to those prices or rates, the date
or dates as of which such shares will be convertible or exchangeable and
all other terms and conditions of the conversion or exchange;
o restrictions on the issuance of shares of the same series, or of any other
class or series; and
o the voting rights, if any, of the holders of shares of any series.
The prospectus supplement relating to any series of preferred stock we
offer will include specific terms relating to the offering. The description of
the terms of the preferred stock to be set forth in an applicable prospectus
supplement will not be complete and will be subject to and qualified by the
certificate of designation relating to the applicable series of preferred stock.
You should read that document for provisions that may be important to you. We
will include that document as an exhibit to a filing with the SEC in connection
with an offering of preferred stock.
The authorized shares of preferred stock, as well as shares of common
stock, are available for issuance without further action by our stockholders,
unless stockholder action is required by the rules of any stock exchange or
automated quotation system on which our securities are listed or traded. If the
approval of our stockholders is not required for the issuance of shares of
preferred stock or common stock, the board of directors may determine not to
seek stockholder approval.
RIGHTS PLAN
In June 1998, we adopted a rights plan under which our board of directors
declared a dividend of one preferred stock purchase right for each outstanding
share of our common stock held of record as of the close of business on June 30,
1998. Each right initially entitles a stockholder to purchase a one
one-thousandth fraction of a share of Preferred Stock -- Series C Junior
Participating Participating Preferred Stock for $20. Each such fraction of a
share of preferred stock has terms designed to make it essentially equivalent to
one share of common stock. The rights will become exercisable only in the event
a person or group acquires 20% or more of our common stock or commences a tender
or exchange offer which, if consummated, would result in that person or group
owning 20% of our common stock. Prior to such an event, the rights will be
evidenced by and traded in tandem with the common stock.
If a person or group acquires a 20% or larger position in Cytogen, each
right (except those held by the acquiring party) will then entitle its holder to
purchase fractional shares of preferred stock having twice the value of the $20
exercise price, with each fractional preferred share valued at the market price
of the common stock. Also, if following an acquisition of 20% or more of our
common stock, Cytogen is
-32-
acquired by that person or group in a merger or other business combination
transaction, each right would then entitle its holder to purchase common stock
of the acquiring company having a value of twice exercise price. The effect will
be to entitle our stockholders to buy stock in the acquiring company at 50% of
its market price.
We may redeem the rights at $0.01 per right at any time on or prior to the
acquisition of 20% or more of our common stock by a person or group or
commencement of a tender offer for such 20% ownership. The rights expire on June
19, 2008.
OUTSTANDING WARRANTS
At November 1, 2004, we had outstanding warrants to purchase 1,940,619
shares of our common stock. These warrants expire at various times through July
2008, and have a weighted average exercise price of $11.26 per share.
SPECIAL PROVISIONS OF OUR CHARTER, BYLAWS AND DELAWARE LAW
The following charter and bylaw provisions and provisions of Delaware law
may have the effect of delaying, deterring or preventing a change of control.
AUTHORIZATION OF PREFERRED STOCK. As noted above, our board of directors,
without stockholder approval, has the authority under our certificate of
incorporation to issue preferred stock with rights superior to the rights of the
holders of our common stock. As a result, preferred stock:
o could be issued quickly and easily;
o could adversely affect the rights of holders of our common stock; and
o could be issued with terms calculated to delay or prevent a change of
control or make removal of management more difficult.
STOCKHOLDER MEETINGS AND WRITTEN CONSENT. Under our bylaws, a special meeting of
the stockholders may be called by:
o the chairman of the board, the president or by resolution of the board of
directors; or
o the president or corporate secretary upon the written request of not less
than 50% in interest of the stockholders entitled to vote.
REQUIREMENTS FOR ADVANCE NOTIFICATION OF STOCKHOLDER NOMINATIONS AND PROPOSALS.
Our bylaws establish advance notice procedures with respect to stockholder
proposals and the nomination of candidates for election as directors, other than
nominations made by the board of directors or its committees.
INDEMNIFICATION. Delaware law authorizes Delaware corporations to limit or
eliminate the personal liability of directors for monetary damages for breach of
a director's fiduciary duty of care. The duty of care requires that, when acting
on behalf of the corporation, directors must exercise an informed business
judgment based on all material information reasonably available to them. Absent
the limitations authorized by Delaware law, directors of Delaware corporations
are accountable to those corporations and their stockholders for monetary
damages for conduct constituting gross negligence in the exercise of their duty
of care. Delaware law enables Delaware corporations to limit available relief to
equitable remedies such as injunction or rescission. Our certificate of
incorporation limits the liability of our directors to us or our stockholders to
the fullest extent Delaware law permits, and no member of our board is
personally
-33-
liable for monetary damages for breach of the member's fiduciary duty as a
director, except for liability:
o for any breach of a board member's duty of loyalty to us or our
stockholders;
o for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
o for unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the Delaware General Corporation
Law; or
o for any transaction from which the member derived an improper personal
benefit.
This provision may discourage derivative litigation against our directors
and may discourage or deter our stockholders or management from bringing a
lawsuit against our directors for breach of their duty of care, even though such
an action, if successful, might otherwise have benefited us and our
stockholders. Our bylaws provide indemnification to our officers and directors
and other specified persons with respect to their conduct in various capacities.
TRANSFER AGENT OR REGISTRAR
American Stock Transfer & Trust Company is the transfer agent and registrar of
our common stock.
DESCRIPTION OF WARRANTS
We may issue warrants to purchase debt securities, preferred stock, common
stock, or units. We may issue warrants independently or together with other
securities. Warrants sold with other securities may be attached to or separate
from the other securities. We will issue each series of warrants under a
separate warrant agreement between us and a warrant agent that we will name in
the prospectus supplement. We will describe additional terms of the warrants and
the applicable warrant agreements in the applicable prospectus supplement.
GENERAL
If warrants are offered, the prospectus supplement relating to a series of
warrants will include the specific terms of the warrants, including:
o the offering price;
o the title of the warrants;
o the aggregate number of warrants offered;
o the dates or periods during which the warrants can be exercised;
o whether the warrants will be issued in individual certificates to holders
or in the form of global securities held by a depositary on behalf of
holders;
o the designation and terms of any securities with which the warrants are
issued;
o if the warrants are issued as a unit with another security, the date, if
any, on and after which the warrants and the other security will be
separately transferable;
-34-
o if the exercise price is not payable in U.S. dollars, the foreign currency,
currency unit or composite currency in which the exercise price is
denominated;
o any terms, procedures and limitations relating to the transferability,
exchange or exercise of the warrants;
o any special tax implications of the warrants or their exercise;
o any antidilution provisions of the warrants;
o any redemption or call provisions applicable to the warrants; and
o any other terms of the warrants.
TRANSFERS AND EXCHANGES
A holder will be able to exchange warrant certificates for new warrant
certificates of different denominations, or to transfer warrants, at the
corporate trust office of the warrant agent or any other office indicated in the
prospectus supplement. Prior to exercise, holders of warrants will have none of
the rights of holders of the underlying securities.
EXERCISE
Holders will be able to exercise warrants up to 5:00 P.M. New York City
time on the date set forth in the prospectus supplement as the expiration date.
After this time, unless we have extended the expiration date, the
unexercised warrants will be void.
Subject to any restrictions and additional requirements that may be set
forth in a prospectus supplement, holders of warrants may exercise them by
delivering to the warrant agent at its corporate trust office the following:
o warrant certificates properly completed; and
o payment of the exercise price.
As soon as practicable after the delivery, we will issue and deliver to the
indicated holder the securities purchasable upon exercise. If a holder does not
exercise all the warrants represented by a particular certificate, we will also
issue a new certificate for the remaining number of warrants.
NO RIGHTS OF SECURITY HOLDER PRIOR TO EXERCISE
Prior to the exercise of their warrants, holders of warrants will not have
any of the rights of holders of the securities purchasable upon the exercise of
the warrants, and will not be entitled to:
o in the case of warrants to purchase debt securities, payments of principal
of, premium, if any, or interest, if any, on the debt securities
purchasable upon exercise; or
o in the case of warrants to purchase equity securities, the right to vote or
to receive dividend payments or similar distributions on the securities
purchasable upon exercise.
-35-
ENFORCEABILITY OF RIGHTS BY HOLDERS OF WARRANTS
Each warrant agent will act solely as our agent under the relevant warrant
agreement and will not assume any obligation or relationship of agency or trust
for any warrantholder. A single bank or trust company may act as warrant agent
for more than one issue of warrants. A warrant agent will have no duty or
responsibility if we default in performing our obligations under the relevant
warrant agreement or warrant, including any duty or responsibility to initiate
any legal proceedings or to make any demand upon us.
TITLE
We and the warrant agents and any of our respective agents may treat the
registered holder of any warrant certificate as the absolute owner of the
warrants evidenced by that certificate for any purpose and as the person
entitled to exercise the rights attaching to the warrants so requested, despite
any notice to the contrary.
DESCRIPTION OF UNITS
As specified in the applicable prospectus supplement, we may issue units
consisting of one or more shares of common stock, shares of preferred stock,
warrants, debt securities or any combination of such securities. The applicable
prospectus supplement will describe:
o the securities comprising the units, including whether and under what
circumstances the securities comprising the units may be separately traded;
o the terms and conditions applicable to the units, including a description
of the terms of any applicable unit agreement governing the units; and
o a description of the provisions for the payment, settlement, transfer or
exchange of the units.
GLOBAL SECURITIES
We may issue the debt securities, warrants and units of any series in the
form of one or more fully registered global securities that will be deposited
with a depositary or with a nominee for a depositary and registered in the name
of the depositary or its nominee. In that case, one or more global securities
will be issued in a denomination or aggregate denominations equal to the portion
of the aggregate principal or face amount of outstanding registered securities
of the series to be represented by such global securities. Unless and until the
depositary exchanges a global security in whole for securities in definitive
registered form, the global security may not be transferred except as a whole by
the depositary to a nominee of the depositary or by a nominee of the depositary
to the depositary or another nominee of the depositary or by the depositary or
any of its nominees to a successor of the depositary or a nominee of such
successor.
The specific terms of the depositary arrangement with respect to any
portion of a series of securities to be represented by a global security will be
described in the prospectus supplement relating to such series. We anticipate
that the following provisions will apply to all depositary arrangements.
Ownership of beneficial interests in a global security will be limited to
persons that have accounts with the depositary for such global security known as
"participants" or persons that may hold interests through such participants.
Upon the issuance of a global security, the depositary for such global
security will credit, on its book-entry registration and transfer system, the
participants' accounts with the respective principal or face
-36-
amounts of the securities represented by the global security beneficially owned
by the participants. The accounts to be credited shall be designated by any
dealers, underwriters or agents participating in the distribution of such
securities.
Ownership of beneficial interests in such global security will be shown on,
and the transfer of such ownership interests will be effected only through,
records maintained by the depositary for such global security (with respect to
interests of participants) and on the records of participants (with respect to
interests of persons holding through participants). The laws of some states may
require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such limits and such laws may impair the ability
to own, transfer or pledge beneficial interests in global securities.
So long as the depositary for a global security, or its nominee, is the
registered owner of such global security, such depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the securities
represented by such global security for all purposes under the applicable
indenture, warrant agreement, purchase contract or unit agreement. Except as set
forth below, owners of beneficial interests in a global security will not be
entitled to have the securities represented by such global security registered
in their names, will not receive or be entitled to receive physical delivery of
such securities in definitive form and will not be considered the owners or
holders thereof under the applicable indenture, warrant agreement, purchase
contract or unit agreement. Accordingly, each person owning a beneficial
interest in a global security must rely on the procedures of the depositary for
the global security and, if such person is not a participant, on the procedures
of the participant through which such person owns its interest, to exercise any
rights of a holder under the applicable indenture, warrant agreement, purchase
contract or unit agreement. We understand that under existing industry
practices, if we request any action of holders or if an owner of a beneficial
interest in a global security desires to give or take any action which a holder
is entitled to give or take under the applicable indenture, warrant agreement,
purchase contract or unit agreement, the depositary for such global security
would authorize the participants holding the relevant beneficial interests to
give or take such action, and such participants would authorize beneficial
owners owning through such participants to give or take such action or would
otherwise act upon the instructions of beneficial owners holding through them.
Principal, premium, if any, and interest payments on debt securities, and
any payments to holders with respect to warrants, purchase contracts or units
represented by a global security registered in the name of a depositary or its
nominee will be made to such depositary or its nominee, as the case may be, as
the registered owner of such global security. None of us, the trustees, the
warrant agents, the unit agents or any of our other agents, agent of the
trustees or agent of the warrant agents or unit agents will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in such global
security or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
We expect that the depositary for any securities represented by a global
security, or its nominee, upon receipt of any payment of principal, premium,
interest or other distribution of underlying securities or commodities to
holders in respect of such global security, will immediately credit
participants' accounts in amounts proportionate to their respective beneficial
interests in such global security as shown on the records of such depositary or
its nominee. We also expect that payments by participants to owners of
beneficial interests in such global security held through such participants will
be governed by standing customer instructions and customary practices, as is now
the case with the securities held for the accounts of customers in bearer form
or registered in "street name," and will be the responsibility of such
participants.
If the depositary for any securities represented by a global security is at
any time unwilling or unable to continue as depositary or ceases to be a
clearing agency registered under the Exchange Act, and we do not appoint a
successor depositary registered as a clearing agency under the Exchange Act
within
-37-
90 days, we will issue such securities in definitive form in exchange for such
global security. In addition, we may at any time and in our sole discretion
determine not to have any of the securities of a series represented by one or
more global securities and, in such event, will issue securities of such series
in definitive form in exchange for all of the global security or securities
representing such securities. Any securities issued in definitive form in
exchange for a global security will be registered in such name or names as the
depositary shall instruct the relevant trustee, warrant agent or other relevant
agent of ours. We expect that such instructions will be based upon directions
received by the depositary from participants with respect to ownership of
beneficial interests in such global security.
PLAN OF DISTRIBUTION
We may sell our securities from time to time through underwriters, dealers
or agents or directly to purchasers, in one or more transactions at a fixed
price or prices, which may be changed, or at market prices prevailing at the
time of sale, at prices related to such prevailing market prices or at
negotiated prices. We may use these methods in any combination.
BY UNDERWRITERS
We may use an underwriter or underwriters in the offer or sale of our
securities.
o If we use an underwriter or underwriters, the offered securities will be
acquired by the underwriters for their own account pursuant to the terms of
an underwriting agreement between us and the underwriters entered into at
the time of sale.
o We will include the names of the specific managing underwriter or
underwriters, as well as any other underwriters, and the terms of the
transactions, including the compensation the underwriters and dealers will
receive, in the prospectus supplement.
o The underwriters will use this prospectus and the prospectus supplement to
sell our securities.
We may also sell securities pursuant to one or more standby agreements with
one or more underwriters in connection with the call, redemption or exchange of
a specified class or series of any of our outstanding securities. In a standby
agreement, the underwriter or underwriters would agree either:
o to purchase from us up to the number of shares of common stock that would
be issuable upon conversion or exchange of all the shares of the class or
series of our securities at an agreed price per share of common stock; or
o to purchase from us up to a specified dollar amount of offered securities
at an agreed price per offered security, which price may be fixed or may be
established by formula or other method and which may or may not relate to
market prices of our common stock or any other outstanding security.
The underwriter or underwriters would also agree, if applicable, to convert
or exchange any securities of the class or series held or purchased by the
underwriter or underwriters into or for our common stock or other security.
The underwriter or underwriters may assist in the solicitation of
conversions or exchanges by holders of the class or series of securities.
-38-
BY DEALERS
We may use a dealer to sell our securities.
o If we use a dealer, we, as principal, will sell our securities to the
dealer.
o The dealer will then resell our securities to the public at varying prices
that the dealer will determine at the time it sells our securities.
o We will include the name of the dealer and the terms of our transactions
with the dealer in the prospectus supplement.
BY AGENTS
We may designate agents to solicit offers to purchase our securities.
o We will name any agent involved in offering or selling our securities and
any commissions that we will pay to the agent in the prospectus supplement.
o Unless we indicate otherwise in the prospectus supplement, our agents will
act on a best efforts basis for the period of their appointment.
o Our agents may be deemed to be underwriters under the Securities Act of any
of our securities that they offer or sell.
BY DELAYED DELIVERY CONTRACTS
We may authorize our agents and underwriters to solicit offers by certain
institutions to purchase our securities at the public offering price under
delayed delivery contracts.
o If we use delayed delivery contracts, we will disclose that we are using
them in the prospectus supplement and will tell you when we will demand
payment and delivery of the securities under the delayed delivery
contracts.
o These delayed delivery contracts will be subject only to the conditions
that we set forth in the prospectus supplement.
o We will indicate in the prospectus supplement the commission that
underwriters and agents soliciting purchases of our securities under
delayed delivery contracts will be entitled to receive.
We may directly solicit offers to purchase our securities, and we may
directly sell our securities to institutional or other investors, including our
affiliates. We will describe the terms of our direct sales in the prospectus
supplement. We may also sell our securities upon the exercise of rights which we
may issue.
GENERAL INFORMATION
Underwriters, dealers and agents that participate in the distribution of
our securities may be underwriters as defined in the Securities Act, and any
discounts or commissions they receive and any profit they make on the resale of
the offered securities may be treated as underwriting discounts and commissions
under the Securities Act. Any underwriters or agents will be identified and
their compensation described in a prospectus supplement. We may indemnify
agents, underwriters and dealers against certain civil liabilities, including
liabilities under the Securities Act, or make contributions to payments they may
be required to make relating to those liabilities. Our agents, underwriters, and
dealers,
-39-
or their affiliates, may be customers of, engage in transactions with, or
perform services for us in the ordinary course of business.
Each series of securities offered by this prospectus may be a new issue of
securities with no established trading market. Any underwriters to whom
securities offered by this prospectus are sold by us for public offering and
sale may make a market in the securities offered by this prospectus, but the
underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. No assurance can be given as to the liquidity
of the trading market for any securities offered by this prospectus.
Representatives of the underwriters through whom our securities are sold
for public offering and sale may engage in over-allotment, stabilizing
transactions, syndicate short covering transactions and penalty bids in
accordance with Regulation M under the Exchange Act. Over-allotment involves
syndicate sales in excess of the offering size, which creates a syndicate short
position. Stabilizing transactions permit bids to purchase the offered
securities so long as the stabilizing bids do not exceed a specified maximum.
Syndicate covering transactions involve purchases of the offered securities
in the open market after the distribution has been completed in order to cover
syndicate short positions. Penalty bids permit the representative of the
underwriters to reclaim a selling concession from a syndicate member when the
offered securities originally sold by such syndicate member are purchased in a
syndicate covering transaction to cover syndicate short positions. Such
stabilizing transactions, syndicate covering transactions and penalty bids may
cause the price of the offered securities to be higher than it would otherwise
be in the absence of such transactions. These transactions may be effected on a
national securities exchange and, if commenced, may be discontinued at any time.
Underwriters, dealers and agents may be customers of, engage in transactions
with or perform services for, us and our subsidiaries in the ordinary course of
business.
LEGAL MATTERS
The validity of the shares of common stock offered hereby has been passed
upon by Morgan, Lewis & Bockius LLP, Philadelphia, Pennsylvania.
EXPERTS
The consolidated financial statements of Cytogen Corporation and
subsidiaries as of December 31, 2003 and 2002 and for the years then ended, have
been incorporated by reference herein and in the registration statement in
reliance upon the reports of KPMG LLP, independent accountants, and
PricewaterhouseCoopers LLP, an independent registered public accounting firm,
incorporated by reference herein, and upon the authority of said firms as
experts in accounting and auditing. KPMG LLP's audit report refers to its audit
of the adjustments that were applied to restate the 2001 consolidated financial
statements, as more fully described in Note 1 to the consolidated financial
statements. However, KPMG LLP was not engaged to and did not audit, review, or
apply any procedures to the 2001 consolidated financial statements other than
with respect to such adjustments.
The consolidated balance sheet of Cytogen Corporation as of December 31,
2001 and the consolidated statements of operations, stockholders' equity and
cash flows for the year then ended, have been incorporated by reference in this
prospectus, and in the registration statement of which this prospectus is a
part, from the Annual Report on Form 10-K of Cytogen Corporation. The financial
statements for the year ended December 31, 2001 have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report with
respect thereto, and are incorporated by reference herein. The Company has not
received an updated or reissued copy of such report dated February 5, 2002, and
is relying solely upon the manually-signed report of Arthur Andersen LLP
-40-
previously provided to the Company in connection with the Company's Annual
Report on Form 10-K for the year ended December 31, 2001. Arthur Andersen LLP
has not consented to the inclusion of their report in this prospectus, and we
have dispensed with the requirement to file their consent in reliance on Rule
437a promulgated under the Securities Act of 1933, as amended. Because Arthur
Andersen has not consented to the inclusion of their report in this prospectus,
you will not be able to recover against Arthur Andersen under Section 11 of the
Securities Act of 1933, as amended, for any untrue statements of a material fact
contained in the financial statements audited by Arthur Andersen or any
omissions to state a material fact required to be stated therein.
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other documents with the SEC. You may
read and copy any document we file at the SEC's public reference room at
Judiciary Plaza Building, 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549. You should call 1-800-SEC-0330 for more information on the public
reference room. Our SEC filings are also available to you on the SEC's Internet
site at http://www.sec.gov.
This prospectus is part of a registration statement that we filed with the
SEC. The registration statement contains more information than this prospectus
regarding us and our common stock, including certain exhibits and schedules. You
can obtain a copy of the registration statement from the SEC at the address
listed above or from the SEC's Internet site.
INFORMATION INCORPORATED BY REFERENCE
The SEC requires us to "incorporate" into this prospectus information that
we file with the SEC in other documents. This means that we can disclose
important information to you by referring to other documents that contain that
information. The information incorporated by reference is considered to be part
of this prospectus. Information contained in this prospectus and information
that we file with the SEC in the future and incorporate by reference in this
prospectus automatically updates and supersedes previously filed information. We
incorporate by reference the documents listed below and any future filings we
make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, prior to the sale of all the shares covered by this
prospectus.
(1) Our Annual Report on Form 10-K for the year ended December 31,
2003, as filed with the Securities and Exchange Commission on
March 15, 2004 (File No. 000-14879);
(2) Our Current Report on Form 8-K, dated April 14, 2004, as filed
with the Securities and Exchange Commission on April 14, 2004
(File No. 000-14879);
(3) Our Current Report on Form 8-K, dated April 14, 2004, as filed
with the Securities and Exchange Commission on April 15, 2004
(File No. 000-14879);
(4) Our Quarterly Report on Form 10-Q for the period ended March 31,
2004, as filed with the Securities and Exchange Commission on May
7, 2004 (File No. 000-14879);
(5) Our Current Report on Form 8-K, dated June 25, 2004, as filed
with the Securities and Exchange Commission on June 25, 2004
(File No. 000-14879);
(6) Our Quarterly Report on Form 10-Q for the period ended June 30,
2004, as filed with the Securities and Exchange Commission on
August 9, 2004 (File No. 000-14879);
(7) Our Current Report on Form 8-K, dated September 1, 2004, as filed
with the Securities and Exchange Commission on September 2, 2004
(File No. 000-14879);
-41-
(8) Our Current Report on Form 8-K, dated September 3, 2004, as filed
with the Securities and Exchange Commission on September 3, 2004
(File No. 000-14879);
(9) Our Current Report on Form 8-K, dated September 10, 2004, as
filed with the Securities and Exchange Commission on September
14, 2004 (File No. 000-14879);
(10) Our Current Report on Form 8-K, dated September 27, 2004, as
filed with the Securities and Exchange Commission on September
29, 2004 (File No. 000-14879);
(11) Our Current Report on Form 8-K, dated October 18, 2004, as filed
with the Securities and Exchange Commission on October 19, 2004
(File No. 000-14879);
(12) The description of our common stock contained in our Registration
Statement on Form 8-A, as supplemented by the disclosure set
forth in Exhibit 3.1 to our Form 10-Q Quarterly Report for the
quarter ended June 30, 2000 and Exhibit 3 to our Form 10-Q
Quarterly Report for the quarter ended June 30, 1996 (File No.
000-14879);
(13) The description of our Series C Junior Participating Preferred
Stock contained in Exhibit 1 to our Current Report on Form 8-K
filed with the Securities and Exchange Commission on June 24,
1998 (File No. 333-020015); and
(14) All of our filings pursuant to the Exchange Act after the date of
filing the initial registration statement and prior to
effectiveness of the registration statement.
You may request a copy of these documents, which will be provided to you at
no cost, by writing or telephoning us using the following contact information:
Cytogen Corporation
650 College Road East, 3rd Floor
Princeton, New Jersey 08540
Attention: Senior Vice President and General Counsel
Telephone: 609-750-8223
YOU SHOULD RELY ONLY ON THE INFORMATION INCORPORATED BY REFERENCE OR
PROVIDED IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT. WE HAVE NOT AUTHORIZED
ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM THAT CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS. THE SELLING STOCKHOLDERS ARE
OFFERING TO SELL, AND SEEKING OFFERS TO BUY, SHARES OF OUR COMMON STOCK ONLY IN
JURISDICTIONS WHERE OFFERS AND SALES ARE PERMITTED. THE INFORMATION CONTAINED IN
THIS PROSPECTUS IS ACCURATE ONLY AS OF THE DATE OF THIS PROSPECTUS, REGARDLESS
OF THE TIME OF DELIVERY OF THIS PROSPECTUS OR OF ANY SALE OF COMMON STOCK.
-42-
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses to be incurred in
connection with the preparation and filing of this Registration Statement, all
of which will be borne by Cytogen Corporation. Cytogen will incur additional
expenses in connection with any offering of securities registered hereunder. All
amounts shown are estimates except the Securities and Exchange Commission
registration fee.
Securities and Exchange Commission ........................ $ 8,869
Legal fees and expenses.................................... $ 10,000
Accounting fees and expenses............................... $ 5,000
Printing................................................... $ 10,000
Trustee services........................................... $ 10,000
Miscellaneous.............................................. $ 15,000
----------
Total Expenses........................................ $ 58,869
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Subsection (a) of Section 145 of the Delaware General Corporation Law
empowers a corporation to indemnify any person who was or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation) by reason of the fact that he or she is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or her in
connection with such action, suit or proceeding if he or she acted in good faith
and in a manner he or she 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 his or her conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he or
she is or was a director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection with the defense or settlement
of such action or suit if he or she acted in good faith and in a manner he or
she reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
of the circumstances of the case, such person is fairly and reasonably entitled
to indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
II-1
Section 145 further provides that to the extent a director or officer of a
corporation has been successful in the defense of any action, suit or proceeding
referred to in subsection (a) and (b) or in the defense of any claim, issue or
matter therein, he or she shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him or her in connection
therewith; that the indemnification provided by Section 145 shall not be deemed
exclusive of any other rights to which the indemnified party may be entitled;
and that the scope of indemnification extends to directors, officers, employees,
or agents of a constituent corporation absorbed in a consolidation or merger and
persons serving in that capacity at the request of the constituent corporation
for another. Section 145 also empowers a corporation to purchase and maintain
insurance on behalf of a director or officer of the corporation against any
liability asserted against him or her or incurred by him or her in any such
capacity or arising out of his or her status as such whether or not the
corporation would have the power to indemnify him or her against such
liabilities under Section 145.
Section 102(b)(7) of the Delaware General Corporation Law enables a
corporation in its certificate of incorporation to limit the personal liability
of members of its board of directors for violation of a director's fiduciary
duty of care. This section does not, however, limit the liability of a director
for breaching his or her duty of loyalty, failing to act in good faith, engaging
in intentional misconduct or knowingly violating a law, authorizing a payment of
a dividend or approving a stock repurchase in violation of Delaware Corporate
Law or from any transaction in which the director derived an improper personal
benefit. This section also will have no effect on claims arising under the
federal securities laws.
The Company's Certificate of Incorporation and By-Laws provide that the
Company shall indemnify officers and directors and, to the extent permitted by
the Board of Directors, employees and agents of the Company, to the full extent
permitted by and in the manner permissible under the laws of the State of
Delaware. In addition, the By-Laws permit the Board of Directors to authorize
the Company to purchase and maintain insurance against any director, officer,
employee or agent of the Company arising out of his capacity as such.
Cytogen has obtained liability insurance for the benefit of its directors
and officers which provides coverage for losses of directors and officers for
liabilities arising out of claims against such persons acting as directors or
officers of Cytogen (or any subsidiary thereof) due to any breach of duty,
neglect, error, misstatement, misleading statement, omission or act done by such
directors and officers, except as prohibited by law.
ITEM 16. EXHIBITS AND FINANCIAL SCHEDULES.
(a) Exhibits
1.01 Form of Underwriting Agreement **
4.01 Form of Senior Indenture **
4.02 Form of Subordinated Indenture **
4.03 Certificate of Designations of Preferred Stock **
4.04 Form of Preferred Stock Certificate **
4.05 Form of Warrant **
5.01 Opinion of Morgan, Lewis & Bockius LLP*
23.01 Consent of KPMG LLP
II-2
23.02 Consent of PricewaterhouseCoopers LLP
23.03 Consent of Morgan, Lewis & Bockius LLP (Included in
Exhibit 5.1)
24.01 Power of Attorney (Included on signature page)
25.01 Statement of Eligibility of Trustee on Form T-1 **
----------------------
* To be filed by amendment.
** To be filed, if necessary, by amendment or as an exhibit to be incorporated
by reference in the prospectus forming part of this registration statement.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in this Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than 20 percent
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement;
PROVIDED, HOWEVER, that paragraphs (1)(i) and (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 with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), that are
incorporated by reference in this Registration Statement.
(2) That, for the purposes 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.
II-3
The Registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Registrant's annual
report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the indemnification provisions described herein, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes to supplement to the
prospectus, after the expiration of the subscription period, to set forth the
results of the subscription offer, the transactions by the underwriters during
the subscription period, the amount of unsubscribed securities to be purchased
by the underwriters, and the terms of any subsequent reoffering thereof. If any
public offering by the underwriters is to be made on terms differing from those
set forth in the cover page of the prospectus, a post-effective amendment will
be filed to set forth the terms of such offering.
The undersigned registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the trustee to act under subsection
(a) of Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under Section 305(b)(2) of the Act.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Princeton, State of New Jersey, on November 5, 2004.
CYTOGEN CORPORATION
By: /s/ Michael D. Becker
-------------------------------------
Michael D. Becker
President and Chief Executive Officer
SIGNATURES AND POWER OF ATTORNEY
We, the undersigned officers and directors of Cytogen Corporation, hereby
severally constitute and appoint Michael D. Becker and Christopher P. Schnittker
and each of them singly, our true and lawful attorneys with full power to any of
them, and to each of them singly, to sign for us and in our names in the
capacities indicated below, the Registration Statement on Form S-3 filed
herewith and any and all pre-effective and post-effective amendments to said
Registration Statement and generally to do all such things in our name and
behalf in our capacities as officers and directors to enable Cytogen Corporation
to comply with the provisions of the Securities Act of 1933, as amended, and all
requirements of the Securities and Exchange Commission, hereby ratifying and
confirming our signatures as they may be signed by our said attorneys, or any of
them, to said Registration Statement and any and all amendments thereto.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------------------------------------------- ------------------------------------------ ---------------------------
/s/ Michael D. Becker
--------------------------------------------- President, Chief Executive Officer and November 5, 2004
Michael D. Becker Director (Principal Executive Officer)
/s/ Christopher P. Schnittker
--------------------------------------------- Senior Vice President and Chief Financial November 5, 2004
Christopher P. Schnittker Officer (Principal Financial and Accounting
Officer)
/s/ John E. Bagalay, Jr.
--------------------------------------------- Director November 5, 2004
John E. Bagalay, Jr.
/s/ Allen Bloom
--------------------------------------------- Director November 5, 2004
Allen Bloom
/s/ Stephen K. Carter
--------------------------------------------- Director November 5, 2004
Stephen K. Carter
/s/ James A. Grigsby
--------------------------------------------- Director November 5, 2004
James A. Grigsby
/s/ Robert F. Hendrickson
--------------------------------------------- Director November 5, 2004
Robert F. Hendrickson
/s/ Kevin G. Lokay
--------------------------------------------- Director November 5, 2004
Kevin G. Lokay
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
----------- ---------------------------------------------------------------
1.01 Form of Underwriting Agreement **
4.01 Form of Senior Indenture **
4.02 Form of Subordinated Indenture **
4.03 Certificate of Designations of Preferred Stock **
4.04 Form of Preferred Stock Certificate **
4.05 Form of Warrant **
5.01 Opinion of Morgan, Lewis & Bockius LLP*
23.01 Consent of KPMG LLP
23.02 Consent of PricewaterhouseCoopers LLP
23.03 Consent of Morgan, Lewis & Bockius LLP (Included in Exhibit
5.1)
24.01 Power of Attorney (Included on signature page)
25.01 Statement of Eligibility of Trustee on Form T-1 **
----------------
* To be filed by amendment.
** To be filed, if necessary, by amendment or as an exhibit to be incorporated
by reference in the prospectus forming part of this registration statement.