The good the bad and the ugly from the 2/4/00 S-3 reg form.
My edited version anyway:
Registration Statement on Form
S-3 (Registration No. 333-95671) (the 'Registration Statement'), under the Securities Act of 1933, as amended. The Registration Statement relates to the proposed sale by the Company of an aggregate of 3,468,343 shares of the Company's Common Stock, par value $.01 per share ('Common Stock') and 1,059,947 Class B warrants (the 'Warrants')
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We are offering and selling an aggregate of 3,468,343 shares of our common stock and 1,059,947 common stock purchase warrants. All of the securities that we are offering are issuable upon the exercise of warrants. Of the common stock offered, 1,059,947 shares are issuable upon exercise of our Class A warrants and 2,408,396 shares are issuable upon exercise of our Class B warrants. The Class A and Class B warrants were issued and sold to the public in our initial public offering in 1995.
NASDAQ MARKET SYMBOLS:
COMMON STOCK -- VION
CLASS B WARRANTS -- VIONZ
CLOSING PRICES (FEBRUARY 3, 2000):
COMMON STOCK -- $11.31
CLASS B WARRANTS -- $5.06
____________RISKS_______________________________
THE EFFICACY AND SAFETY OF OUR TAPET TECHNOLOGY IS UNCERTAIN
TAPET uses genetically altered Salmonella bacteria for delivery of genes or gene products to tumors. The use of bacteria in general, and Salmonella in particular, to deliver genes or gene products is a new technology, and existing preclinical and clinical data on the safety and efficacy of this technology are very limited. Unacceptable side effects may be discovered during preclinical and clinical testing of our potential products utilizing the TAPET technology.
Products utilizing the TAPET technology are not yet in human clinical trials, and the results of preclinical studies do not always predict safety or efficacy in humans. Possible serious side effects of TAPET include bacterial infections, particularly the risk of septic shock, a serious and often fatal result of bacterial infection of the blood.
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GRANT OF REQUEST FOR INTERFERENCE
In November of 1999, the United States Patent and Trademark Office granted our request for an Interference between a patent application we licensed from Yale University and United States patent No. 5,532,246 assigned to BioChem Pharma, Inc. Both the patent application and the BioChem Pharma patent claim the right to use of 3TC, also known as lamivudine and Epivir'TM', to treat hepatitis B virus.
An Interference is a legal proceeding that determines which party is entitled to a patent containing commonly claimed subject matter. The Patent Office has designated us as the senior party of the Interference and BioChem Pharma as the junior party. As the junior party, BioChem Pharma bears the burden of proof. Both we and BioChem Pharma, however, have an opportunity to argue our positions during the Interference proceeding. Depending upon the length of an Interference proceeding, which could be reduced by a mutually agreed upon settlement, its cost to each party could be substantial. Determinations in Interference proceedings are subject to appeal in the appropriate United States federal courts.
If we were to prevail in the Interference, we would have the right to go to court to enforce our rights in the United States. Additionally, if we were to prevail in the Interference, other parties such as BioChem Pharma might be willing to license from us the right to use 3TC in a method for treating HBV. There can be no guarantee that we would be successful in licensing these rights on acceptable terms.
We are aware that BioChem Pharma has been granted an issued U.S. patent with claims to methods of use of a compound or a group of compounds, including 3TC, for treating HBV. Under an agreement with Yale, we have rights in a patent application with claims directed to methods for the use of 3TC or a mixture containing 3TC for treating HBV. In November 1997, we requested that the U.S. Patent and Trademark Office declare an Interference between the BioChem patent and our patent application. In November 1999, our request was granted.
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We have received correspondence from F. C. Gaskin, Inc. alleging that we may be infringing certain of their patents relating to melanin-containing compositions and their use. We believe this assertion has no merit.
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WE MAY ISSUE PREFERRED STOCK ON TERMS THAT MAY DISADVANTAGE OUR COMMON STOCKHOLDERS
We currently have 498,194 shares of Class A Preferred Stock and 5,000 shares of 5% Redeemable Convertible Preferred Stock Series 1998 outstanding, and the board may issue additional preferred stock without stockholder approval. The issuance of additional shares of preferred stock by our board could decrease the amount of earnings and assets available for distribution to our common stockholders. Preferred stockholders could receive voting rights and rights to payments on liquidation or of dividends or other rights that are greater than the rights of the common stockholders.
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We are in the development stage and at September 30, 1999, we had an accumulated deficit of approximately $59.5 million. The loss applicable to common shareholders is also approximately $59.5 million. Since then, we have experienced significant losses which we expect to continue for the foreseeable future. We have incurred a substantial portion of our losses in connection with research we sponsored on several product candidates pursuant to agreements with Yale University. We continue to have substantial financial commitments to Yale pursuant to the agreements with them. We will continue to conduct significant research, development, testing and regulatory compliance activities which, together with administrative expenses, are expected to result in operating losses for at least the next several years.
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Sales of a substantial amount of common stock in the public market, or the perception that these sales may occur, could adversely affect the market price of our common stock prevailing from time to time. This could also impair our ability to raise additional capital through the sale of our equity securities.
We have approximately 18.2 million shares of common stock outstanding. All of these shares are freely tradeable except for any shares purchased by an affiliate of ours, which will be subject to the limitations of Rule 144 under the Securities Act.
There are currently options and warrants outstanding that are exercisable for an aggregate of approximately 7.6 million shares of common stock. Options and warrants to purchase approximately 6 million shares are currently
exercisable, and the remainder become exercisable at various times through 2003. |
