As filed with the Securities and Exchange Commission on October 4, 2002
Registration Statement No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CYTOGEN CORPORATION
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(Exact Name of Registrant as Specified in Its Charter)
Delaware 22-2322400
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(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
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(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
Lawrence R. Hoffman, Esq.
Vice President and Chief Financial Officer
Cytogen Corporation
650 College Road East, 3rd Floor
Princeton, New Jersey 08540
(609) 750-8205
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(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
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Copy to:
Richard S. Mattessich, Esq.
Donald L. Novajosky, Esq.
Hale and Dorr LLP
650 College Road East, 4th Floor
Princeton, New Jersey 08540
(609) 750-7600
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. [ ]
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CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Maximum Maximum
Amount Aggregate Aggregate Amount Of
To Be Price Offering Registration
Title Of Shares To Be Registered Registered Per Unit(1) Price(1) Fee
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Common stock,
$.01 par value per share.............. 1,276,994 $0.53 $676,806.82 $62.27
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(1) Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, as amended,
and based upon the average of the high and low prices on the Nasdaq
National Market on September 27, 2002.
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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),
shall determine.
The information in this prospectus is not complete and may be changed. The
selling stockholders named in this prospectus 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
jurisdiction where the offer or sale is not permitted.
Subject to completion, dated October 4, 2002
PROSPECTUS
CYTOGEN CORPORATION
1,276,994 Shares of common stock
This prospectus relates to resales of shares of our common stock, $0.01
par value per share, previously issued by Cytogen Corporation to the former
shareholders and debtholders of Prostagen, Inc. in connection with the execution
of an Addendum to Stock Exchange Agreement among Cytogen Corporation and the
Shareholders and Debtholders of Prostagen, Inc. dated May 14, 2002, and a
subsequent amendment dated August 13, 2002.
We will not receive any proceeds from the sale of the shares.
The selling stockholders identified in this prospectus, or their
pledgees, donees, transferees or other successors-in-interest, may offer the
shares from time to time through public or private transactions at prevailing
market prices, at prices related to prevailing market prices or at privately
negotiated prices.
Our common stock is traded on the Nasdaq National Market under the
symbol "CYTO." On September 27, 2002, the closing sale price of our common stock
on Nasdaq was $0.47 per share. You are urged to obtain current market quotations
for our common stock.
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Investing in our common stock involves a high degree of risk. See "Risk
Factors" commencing on page 3.
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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 October 4, 2002.
TABLE OF CONTENTS
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Prospectus Summary........................................................... 2
Cytogen Corporation.......................................................... 2
The Offering................................................................. 2
Risk Factors................................................................. 3
We Have A History Of Operating Losses And An Accumulated Deficit And
Expect To Incur Losses In The Future..................................... 3
We Are Heavily Dependent On Market Acceptance Of ProstaScint, Quadramet
And BrachySeed For Near-Term Revenues.................................... 3
Our Functional Proteomics Program Is At An Early Stage Of Development..... 4
There Is A Limited Market For Our Potential Functional Proteomics
Products................................................................. 5
The Reduced Workforce At AxCell May Not Be Able To Implement AxCell's
Business Plan............................................................ 5
We Have Experienced Fluctuating Results Of Operations..................... 5
We May Need To Raise Additional Capital Which May Not Be Available........ 6
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..................................................... 6
Our PSMA Product Development Program is Novel And, Consequently,
Inherently Risky......................................................... 7
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...................................... 8
Competition In Our Field Is Intense And Likely To Increase................ 8
We Rely Heavily On Our Collaborative Partners............................. 9
Our Business Could Be Harmed If Our Collaborative Arrangements Expire
Or Are Terminated Early.................................................. 10
The Termination Of One Or More License Agreements That Are Important
In the Manufacture Of Our Current Products And New Product Research
And Development Activities Would Harm Our Business....................... 10
We Have Limited Sales, Marketing and Distribution Capabilities For Our
Products................................................................. 10
There Are Risks Associated With The Manufacture And Supply Of Our
Products................................................................. 10
Failure Of Consumers To Obtain Adequate Reimbursement From Third-Party
Payors Could Limit Market Acceptance And Affect Pricing Of Our
Products................................................................. 11
If We Are Unable To Comply With Applicable Governmental Regulations, We
May Not Be Able To Continue Our Operations............................... 12
We Could Be Negatively Impacted By Future Interpretation Or
Implementation Of Federal And State Fraud And Abuse Laws, Including
Anti-Kickback Laws, The Federal State Law And Other Federal And State
Anti-Referral Laws....................................................... 13
We Depend On Attracting And Retaining Key Personnel....................... 14
Our Business Exposes Us To Potential Liability Claims That May Exceed
Our Financial Resources, Including Our Insurance Coverage, And May
Lead To the Curtailment Or Termination Of Our Operations................. 14
Our Business Involves Environmental Risks That May Result In Liability.... 14
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Our Intellectual Property Is Difficult To Protect......................... 14
We Cannot Be Certain That Our Security Measures Protect Our Unpatented
Proprietary Technology................................................... 15
We Are Currently Subject To Patent Litigation............................. 16
If We Make Any Acquisitions, We Will Incur A Variety Of Costs And May
Never Realize The Anticipated Benefits................................... 16
Our Stock Price Has Been And May Continue To Be Volatile, And Your
Investment In Our Stock Could Decline In Value Or Fluctuate
Significantly............................................................ 16
We Have Adopted Various Anti-Takeover Provisions Which May Affect the
Market Price Of Our Common Stock......................................... 17
The Liquidity Of Our Common Stock Could Be Adversely Affected If We Are
Delisted From The Nasdaq National Market................................. 17
A Large Number Of Our Shares Are Eligible For Future Sale Which May
Adversely Impact The Market Price Of Our Common Stock.................... 18
Because We Do Not Intend To Pay Any Cash Dividends On Our Shares Of
Common Stock, Our Stockholders Will Not Be Able To Receive A Return
On Their Shares Unless They Sell Them................................... 20
Special Note Regarding Forward-Looking Statements............................ 20
Use of Proceeds.............................................................. 21
Selling Stockholders......................................................... 21
Plan of Distribution......................................................... 23
Legal Matters................................................................ 24
Experts...................................................................... 24
Where You Can Find More Information.......................................... 25
Information Incorporated By Reference........................................ 25
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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.
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PROSPECTUS SUMMARY
This summary highlights important features of this offering and the information
included or incorporated by reference in this prospectus. This summary does not
contain all of the information that you should consider before investing in our
common stock. You should read the entire prospectus carefully, especially the
risks of investing in our common stock discussed under "Risk Factors."
CYTOGEN CORPORATION
Cytogen Corporation is a biopharmaceutical company with an established
and growing product line in prostate cancer and other areas of oncology. Our
FDA-approved products include ProstaScint(R) (a monoclonal antibody-based
imaging agent used to image the extent and spread of prostate cancer);
BrachySeed(TM) I-125 and Pd-103, (uniquely designed, next-generation radioactive
seed implants for the treatment of localized prostate cancer); and Quadramet(R)
(a therapeutic agent marketed for the relief of bone pain in prostate and other
types of cancer). We are evolving a pipeline of oncology product candidates by
developing our prostate specific membrane antigen, or PSMA technologies, which
we exclusively licensed from Memorial Sloan-Kettering Cancer Center.
AxCell Biosciences Corporation, a subsidiary of Cytogen Corporation, is
engaged in the research and development of novel biopharmaceutical products
using its portfolio of functional proteomics solutions and collection of
proprietary signal transduction pathway information. Through the systematic and
industrialized measurement of protein-to-protein interactions, AxCell is
assembling ProChart(TM), a proprietary database of signal transduction pathway
information that is relevant in a number of therapeutically important classes of
molecules including growth factors, receptors and other potential protein
therapeutics or drug targets. AxCell's database content and functional
proteomics tools are available on a non-exclusive basis to biotechnology,
pharmaceutical and academic researchers. AxCell is continuing its research
activities to further elucidate the role of novel proteins through both external
collaborations and data mining.
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, 3rd Floor, 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.
Cytogen(R), ProstaScint(R), OncoScint(R), Quadramet(R), ProChart(TM)
database and the Cytogen and AxCell Biosciences Corporation logos are our marks.
All other trademarks, servicemarks or trade names referred to in this prospectus
are the property of their respective owners.
THE OFFERING
Common Stock offered by selling
stockholders....................... 1,276,994 shares
Use of proceeds.................... Cytogen will not receive any proceeds from
the sale of shares in this offering
Nasdaq National Market symbol...... CYTO
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RISK FACTORS
Investing in our common stock involves a high degree of risk. You
should carefully consider the risks and uncertainties described below before
purchasing our common stock. The risks and uncertainties described below are not
the only ones facing our company. Additional risks and uncertainties may also
impair our business operations. 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 could fall, and you may lose
all or part of the money you paid to buy our common stock.
We Have a History of Operating Losses and an Accumulated Deficit and Expect To
Incur Losses in the Future.
We have a history of operating losses since our inception. We had a net loss of
$8.2 million for the six months ended June 30, 2002 and had a net loss of $12.1
million for the year ended December 31, 2001. The $8.2 million net loss during
the six months ended June 30, 2002 included a one-time, non-cash milestone
charge of $2.0 million related to the progress of dendritic cell prostate
cancer clinical trials at Northwest Biotherapeutics, Inc. We had a net loss of
$27.3 million for the year ended December 31, 2000 which included one-time,
non-cash charges of $13.1 million for the acquisition of product candidate
rights and $4.3 million for the cumulative effect of an accounting change
following the adoption of Securities and Exchange Commission Staff Accounting
Bulletin No. 101. We had net income of $729,000 for the year ended December 31,
1999 which included a $3.3 million non-operating gain. We had an accumulated
deficit of $348.9 million as of June 30, 2002. In order to develop and
commercialize our technologies, particularly our prostate specific membrane
antigen, or PSMA, technology, and expand our oncology 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.
Our ability to generate and sustain significant additional revenues or achieve
profitability will depend upon the factors discussed elsewhere in this "Risk
Factors" Section, as well as numerous other factors outside of our control,
including:
- development of competing products that are more effective or less costly
than ours;
- our ability to develop and commercialize our own products and
technologies; and
- our ability to achieve increased sales for our existing products and
sales for any new products.
As a result, we may never be able to generate or sustain significant additional
revenue or achieve profitability.
We Are Heavily Dependent On Market Acceptance Of ProstaScint, Quadramet and
BrachySeed For Near-Term Revenues.
We expect ProstaScint, BrachySeed and Quadramet and to account for a significant
percentage of our product-related revenues in the near future. For the six
months ended June 30, 2002, revenues from ProstaScint, BrachySeed and Quadramet
accounted for approximately 98% of our product related revenues.
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Because these products contribute the majority of our product-related revenues,
our business, financial condition and results of operations depend on their
acceptance as safe, effective and cost-efficient alternatives to other available
treatment and diagnostic protocols by the medical community, including:
- health care providers, such as hospitals and physicians; and
- third-party payors, including Medicare, Medicaid, private insurance
carriers and health maintenance organizations.
Our customers, including technologists and physicians, must successfully
complete our Partners in Excellence Program, or PIE 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 on the part of users. We cannot assure you that additional
technologists and physicians will make this commitment or otherwise accept this
product as part of their treatment practices.
Berlex Laboratories, Inc. markets Quadramet in the United States through an
agreement with us entered into in October 1998. We cannot assure you that Berlex
will be able to successfully market Quadramet or that this agreement will result
in significant revenues for us. We recently obtained marketing rights to
Quadramet in Canada, but have not yet implemented a selling program. We cannot
assure you that Quadramet can be marketed effectively in Canada, or that it will
contribute significantly to our revenues.
We cannot assure you that Quadramet will be approved for additional indications,
due to uncertainty as to efficacy or safety for other purposes, regulatory
obstacles and physician preferences for existing or competing practices.
We cannot assure you that ProstaScint, BrachySeed or Quadramet will achieve
additional market acceptance on a timely basis, or at all. If ProstaScint,
BrachySeed or Quadramet do not achieve broader market acceptance, we may not be
able to generate sufficient revenue to become profitable.
Our Functional Proteomics Program Is At An Early Stage Of Development.
We are developing a functional proteomics program through our subsidiary, AxCell
Biosciences Corporation. This technology involves new approaches to drug
research and development and remains commercially unproven. Our technology and
development focus is primarily directed toward offering an infrastructure to
companies for the development of drugs to treat a variety of complex human
diseases. There is limited understanding generally relating to the role of
proteins in diseases, and few products based on protein interaction discoveries
have been developed and commercialized. Even if our proteomics program is
successful in identifying and validating biological targets, there is no
certainty that we or our customers will be able to develop or commercialize
products to improve human health.
Our technology program for proteomics is still in the early stages of
development. We may not be able to populate our ProChart with information that
is useful to potential customers in a timely manner. Even if we complete and
develop successfully our proteomics technology, the technology may not be
accepted by, or be useful to, our potential customers.
In addition, the success of our proteomics technology will depend upon our
ability to use software tools to generate data that relates protein signaling
pathways to a variety of other bioinformatic data. Because of the complexity of
this data, we may not be able to detect and remedy any design defects or
software errors in our existing or future technologies, including databases.
-4-
We may not be successful in addressing or mitigating these risks and
uncertainties, and, if we are not, our business could be significantly and
adversely affected.
There Is A Limited Market For Our Potential Functional Proteomics Products.
Due to the specialized nature and anticipated cost of our proteomics technology
and services, there are a limited number of pharmaceutical and biotechnology
companies that are potential customers. In addition, demand for our functional
proteomics technology and services is limited because:
- our potential customers may decide to conduct in-house research rather
than subscribe to our ProChart database;
- our competitors may offer similar services at competitive prices;
- we may not be able to service satisfactorily the needs of our potential
or actual customers;
- others may publicly disclose or patent proprietary information
contained in our ProChart (including information related to protein
signaling pathways or target candidates) or relating to prostate
antigens or antibodies; and
- technological innovations may be discovered that are more advanced than
those used by or available to us.
We may not be successful in addressing or mitigating these risks and
uncertainties, and, if we are not, our business could be significantly and
adversely affected.
The Reduced Workforce At AxCell May Not Be Able To Implement AxCell's Business
Plan.
In September 2002, we announced the restructuring of our subsidiary, AxCell
Biosciences Corporation, in an effort to reduce expenses and position Cytogen
for stronger long-term growth in oncology. As a result, we reduced our staff at
AxCell by seventy-five percent, suspended certain projects at AxCell and
implemented other cost-saving measures. Although we believe that we have
retained the AxCell personnel who are key to achieving AxCell's goals and
implementing it's strategies, we cannot be certain that such reduced workforce
will be able to implement AxCell's current business plan. The further loss of
any of AxCell's personnel could have a material adverse effect on AxCell's
ability to achieve it's goals.
We Have Experienced Fluctuating Results Of Operations.
Our results of operations have fluctuated on an annual and quarterly basis and
may fluctuate significantly from period to period in the future, due to, among
other factors:
- variations in revenue from sales of and royalties from our products;
- timing of regulatory approvals and other regulatory announcements
relating to our products;
- variations in our marketing, manufacturing and distribution channels;
- timing of the acquisition and successful integration of complementary
products and technologies;
- timing of new product announcements and introductions by us and our
competitors; and
-5-
- product obsolescence resulting from new product introductions by us or
our competitors.
Many of these factors are outside our control. Due to one or more of these
factors, our results of operations may fall below the expectations of securities
analysts and investors in one or more future quarters. If this happens, the
market price of our common stock could decline.
We May Need To Raise Additional Capital Which May Not Be Available.
We have incurred negative cash flows from operations since inception. We
expended, and will need to continue to expend, substantial funds to complete our
planned product development efforts, including our proteomics and PSMA programs.
Our future capital requirements and the adequacy of our available funds depend
on many factors, including:
- successful commercialization of our products;
- acquisition of complementary products and technologies;
- magnitude, scope and results of our product development efforts;
- progress of preclinical studies and clinical trials;
- progress toward regulatory approval for our products;
- costs of filing, prosecuting, defending and enforcing patent claims and
other intellectual property rights;
- competing technological and market developments; and
- expansion of strategic alliances for the sale, marketing and distribution
of our products.
We may raise additional capital through public or private equity offerings, debt
financings or additional collaborations and licensing arrangements. Additional
financing may not be available to us when needed, or, if available, we may not
be able to obtain financing on terms favorable to us or our stockholders. If we
raise additional capital by issuing equity securities, the issuance will result
in ownership dilution to our stockholders. 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. If adequate funds are not available, we may not be able to
conduct research activities, preclinical studies, clinical trials or other
activities relating to the successful commercialization of our products on a
timely basis, if at all, with the result that our business could be
significantly and adversely affected.
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 been engaged primarily in research directed
toward the development, commercialization and marketing of products to improve
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 2001, we
launched the iodine version of BrachySeed. In May 2002, we launched the
palladium version of BrachySeed. These products have not yet achieved
significant commercial success.
-6-
Our PSMA and proteomics technologies are still in the early stages of
development. We have only recently begun to incorporate our proteomics
technology into commercialized products. We may be unable to continue to
successfully develop or commercialize these products and technologies.
Our business is therefore subject to the risks inherent in the development of an
early stage biopharmaceutical business enterprise, such as the need:
- to obtain sufficient capital to support the expenses of developing our
technology and commercializing our products;
- to ensure that our products are safe and effective;
- to obtain regulatory approval for the use and sale of our products;
- to manufacture our products in sufficient quantities and at a reasonable
cost;
- to develop a sufficient market for our products; and
- 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. If we fail to properly
address these risks and attain our business objectives, our business could be
significantly and adversely affected.
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:
- the technologies we use will not be effective;
- our product candidates will be unsafe;
- our product candidates will fail to receive the necessary regulatory
approvals;
- the product candidates will be hard to manufacture on a large scale or
will be uneconomical to market; and
- we will not successfully overcome technological challenges presented by
our potential new products.
In 1999, we entered into a joint venture with Progenics Pharmaceuticals, Inc. to
develop in vivo immunotherapeutic products utilizing PSMA. The first of these
product candidates is a therapeutic prostate cancer vaccine utilizing the PSMA
gene and a vector delivery system and the PSMA protein as a basis of immune
stimulation. We are also developing through this venture an antibody-based
immunotherapy for prostate cancer. The joint venture is owned equally by
Progenics and us. We have exclusively licensed to the joint venture certain
immunotherapeutic applications of our PSMA patent rights and know-how. Progenics
has funded the first $3 million of pre-clinical development costs of the
-7-
program. Beginning in December 2001, Cytogen and Progenics began to equally
share the costs of the Joint Venture. Since that date, we have recognized 50% of
the Joint Venture's operating results, which, during the first six months of
2002 was a loss of approximately $1.1 million. We expect our share of losses in
the PSMA Development Co. LLC to continue at even higher levels in subsequent
periods.
To our knowledge, no therapeutic cancer vaccine has been demonstrated effective
or approved for marketing. 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. We cannot assure you that any products will be
successfully developed from our PSMA technology. If we fail to develop such
products for the reasons set forth above or for any other reason, our business
could be significantly and adversely affected.
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. We
cannot assure you that the product candidates we develop, pursue or offer will
prove to be safe and effective, will receive the necessary regulatory approvals,
will not be precluded by proprietary rights of third parties or will ultimately
achieve market acceptance. These product candidates will require substantial
additional investment, laboratory development, clinical testing and regulatory
approvals prior to their commercialization. We cannot assure you that we will
not experience difficulties 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 efficacious for use in each target
indication. The results from preclinical studies and early clinical trials may
not be predictive of results that will be obtained in large-scale testing. We
cannot assure you that our clinical trials will demonstrate the safety and
efficacy of any products or will result in marketable products. A number of
companies in the biotechnology 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, as
we develop diagnostic or therapeutic products internally, we will have to make
significant investments in diagnostic or therapeutic 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 current Good Manufacturing Practices,
or cGMP, of the FDA. We also 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 could be significantly and adversely affected.
Competition In Our Field Is Intense And Likely To Increase.
We face, and will continue to face, intense competition from one or more of the
following entities:
- pharmaceutical companies;
-8-
- biotechnology companies;
- bioinformatics companies;
- diagnostic companies;
- academic and research institutions; and
- government agencies.
All of our lines of business 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.
Before we recover development expenses for our products and technologies, the
products or technologies may become obsolete as a result of technological
developments by us or others. 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.
We Rely Heavily On Our Collaborative Partners.
Our success depends in significant part upon the success of our collaborative
partners. We have entered into the following agreements for the sale, marketing,
distribution and manufacture of our products, product candidates and
technologies:
- license from The Dow Chemical Company relating to the Quadramet
technology;
- sub-license and marketing agreement with Berlex Laboratories, Inc.
relating to the Quadramet technology which we licensed from The Dow
Chemical Company;
- agreement for manufacture of Quadramet by The DuPont Pharmaceuticals
Company (formerly the radiopharmaceuticals division of The DuPont Merck
Company);
- marketing and platform development agreement with InforMax, Inc. related
to our proteomics program;
- joint venture with Progenics Pharmaceuticals for the development of
PSMA for in vivo immunotherapy for prostate and other cancers;
- licensing agreement with Molecular Staging for technology to be used in
developing in vitro diagnostic tests using PSMA and prostate specific
antigen, or PSA;
- marketing and distribution agreement with Draxis Health, Inc. and its
subsidiary, Draximage, Inc. to market and distribute BrachySeed; and
- marketing, license and supply agreements with Advanced Magnetics,
Inc. related to our oncology product line for products currently
subject to regulatory approval.
-9-
Because our collaborative partners are responsible for certain of our sales,
marketing, manufacturing and distribution activities, these activities are
outside our direct control. We cannot assure you that our partners will perform
their obligations under these agreements with us. In the event that our
collaborative partners do not successfully market and sell our products or
breach their obligations under our agreements, our products may not be
commercially successful, any success may be delayed and new product development
could be inhibited with the result that our business could be significantly and
adversely affected.
Our Business Could Be Harmed If Our Collaborative Arrangements Expire Or Are
Terminated Early.
We cannot assure you that we will be able to maintain our existing collaborative
arrangements. If they expire or are terminated, we cannot assure you that they
will be renewed or that new arrangements will be available on acceptable terms,
if at all. In addition, we cannot assure you that any new arrangements or
renewals of existing arrangements will be successful, that the parties to any
new or renewed agreements will perform adequately or that any former or
potential collaborators will not compete with us.
We cannot assure you that our existing or future collaborations will lead to the
development of product candidates or technologies with commercial potential,
that we will be able to obtain proprietary rights or licenses for proprietary
rights for our product candidates or technologies developed in connection with
these arrangements or that we will be able to ensure the confidentiality of
proprietary rights and information developed in such arrangements or prevent the
public disclosure thereof.
The Termination Of One Or More License Agreements That Are Important In The
Manufacture Of Our Current Products And New Product Research And Development
Activities Would Harm Our Business.
We are a party to license agreements under which we have rights to use
technologies owned by other companies in the manufacture of our products and in
our proprietary research, development and testing processes. We are the
exclusive licensee of certain patents and patent applications held by the
University of North Carolina at Chapel Hill covering part of the technology used
in the proteomics program and of certain patents and patent applications held by
the Memorial Sloan-Kettering Institute covering PSMA. We also depend upon the
enforceability of our license with The Dow Chemical Company with respect to
Quadramet. If the licenses were terminated, we may not be able to find suitable
alternatives to this technology on a timely basis or on reasonable terms, if at
all. The loss of the right to use these technologies that we have licensed would
significantly and adversely affect our business.
We Have Limited Sales, Marketing And Distribution Capabilities For Our Products.
We have only recently established a sales force and have limited internal sales,
marketing and distribution capabilities for our products. We depend on Berlex
Laboratories, Inc. for the sale, marketing and distribution of Quadramet in the
United States. In locations outside the United States, we have not established a
selling presence. If we are unable to establish and maintain significant sales,
marketing and distribution efforts, either internally or through arrangements
with third parties, our business may be significantly and adversely affected.
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 through
third-party manufacturers in compliance with regulatory requirements and at
costs acceptable to us. We cannot assure you that we will be able to arrange for
the manufacture of our products on commercially reasonable terms. If we are
unable to successfully arrange for the manufacture of our products and product
candidates, we will not be able to successfully commercialize our products and
our business will be significantly and adversely affected.
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ProstaScint was manufactured at a cGMP compliant manufacturing facility operated
by Purdue. We had access to Purdue's facility for continued manufacturing of the
product until January 2002. We have built our inventory of ProstaScint to meet
our product requirements in the short term. We entered into a Development and
Manufacturing Agreement with DSM in July 2000 which we intend will replace our
arrangement with Purdue with respect to ProstaScint. Notwithstanding the parties
obligations to perform under the agreement with DSM or to negotiate a supply
agreement in good faith, we cannot be certain that DSM will satisfactorily
perform its obligations thereunder or that the parties will be able to negotiate
a supply agreement on commercially reasonable terms, if at all. Our failure to
negotiate a long term supply agreement on commercially reasonable terms will
have a material adverse effect on our business, financial condition and results
of operations.
Quadramet is manufactured by DuPont pursuant to an agreement with both Berlex
and Cytogen. Some components of Quadramet, particularly Samarium153 and EDTMP,
are provided to DuPont by outside suppliers. Due to radioactive decay,
Samarium153 must be produced on a weekly basis. DuPont obtains its requirements
for Samarium153 from one supplier. Alternative sources for these components may
not be readily available. If DuPont 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 could
have a material adverse effect on our business, financial condition and results
of operations.
We rely on Draxis as the sole supplier of BrachySeed. If Draxis fails to or is
unable to timely supply BrachySeed, we could experience a material adverse
effect on our business, financial condition and results of operations.
We and our third-party manufacturers are required to adhere to United States
Food & Drug Administration 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 are 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 third-party manufacturers
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 premarket clearance or premarket 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.
Failure Of Consumers To Obtain Adequate Reimbursement From Third-Party Payors
Could Limit Market Acceptance And Affect Pricing Of Our Products.
Our business, financial condition and results of operations will continue to be
affected by the efforts of governments and other 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 implement
government control of pricing and profitability of therapeutic and diagnostic
imaging agents such as our products. In addition, an emphasis on managed care
increases possible pressure on 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.
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Sales of our products depend in part on reimbursement to the consumer from
third-party payors, including Medicare, Medicaid and private health insurance
plans. Third-party payors are increasingly challenging the prices charged for
medical products and services. We cannot assure you that our products will be
considered cost-effective and that reimbursement to consumers will continue to
be available, or will be sufficient to allow us to sell our products on a
competitive basis. Approval of our products for reimbursement by a third-party
payor may depend on a number of factors, including the payor's determination
that our products are clinically useful and cost-effective, medically necessary
and not experimental or investigational. Reimbursement is determined by each
payor individually and in specific cases. The reimbursement process can be time
consuming. If we cannot secure adequate third-party reimbursement for our
products, our business could be significantly and adversely affected.
If We Are Unable To Comply With Applicable Governmental Regulations, We May Not
Be Able To Continue Our Operations.
Any products tested, manufactured or distributed by us or on our behalf pursuant
to FDA clearances or 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 of clearances or approvals, restrictions
on or injunctions against marketing our products based on our technology, and
civil and criminal penalties. We cannot assure you that we will not be required
to incur significant costs to comply with laws and regulations in the future or
that laws or regulations will not 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 drug development and regulatory approval process is
lengthy, expensive, uncertain and subject to delays.
The regulatory risks we face also include the following:
- any compound or agent we or our collaborative partners develop must
receive regulatory agency approval before it may be marketed as a
drug in a particular country;
- 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;
- in all circumstances, approval of the use of previously unapproved
radioisotopes in certain of our products requires approval of either
the Nuclear Regulatory Commission or equivalent state regulatory
agencies. 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. We
cannot assure you that such approvals will be obtained on a timely
basis, or at all;
- data obtained from preclinical and clinical activities are susceptible
to varying interpretations which could delay, limit or prevent
regulatory agency approval; and
- delays or rejections may be encountered based upon changes in
regulatory agency policy during the period of drug development and/or
the period of review of any application for regulatory agency approval.
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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.
We cannot assure you that, even after this time and expenditure, regulatory
agency approvals will be obtained for any compound or agent developed by or in
collaboration with us. Moreover, regulatory agency approval for a drug or agent
may entail limitations on the indicated uses that could limit the potential
market for any such drug. Furthermore, if and when such approval is obtained,
the marketing, manufacture, labeling, storage 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. Failure to comply with regulatory
requirements could result in fines, suspension of regulatory approvals,
operating restrictions and criminal prosecution.
The United States Food, Drug and Cosmetics Act requires (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 manufacturing
partners do not comply with cGMP we may be subject to sanctions, including
fines, injunctions, civil penalties, recalls or seizures of products, total or
partial suspension of production, failure of the government to grant premarket
clearance or premarket approval for drugs, withdrawal of marketing approvals and
criminal prosecution.
We Could Be Negatively Impacted By Future Interpretation Or Implementation Of
Federal And State Fraud And Abuse Laws, Including Anti-Kickback Laws, The
Federal Stark Law And Other Federal And State Anti-referral Laws.
We are subject to various federal and state laws pertaining to health care fraud
and abuse, including anti-kickback laws and physician self-referral laws.
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 health care programs, including Medicare, Medicaid and
Veterans Administration health programs. 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. Health care fraud and abuse regulations are complex
and even minor, inadvertent irregularities in submissions can potentially give
rise to claims that the statute 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.
We could become subject to false claims litigation under federal statutes, which
can lead to civil money penalties, criminal fines and imprisonment, and/or
exclusion from participation in Medicare, Medicaid and other federal and state
health care programs. These false claims statutes include the False Claims Act,
which allows any person to bring suit alleging false or fraudulent Medicare or
Medicaid claims or other violations of the statute and to share in any amounts
paid by the entity to the government in fines or settlement. Such suits, known
as qui tam actions, have increased significantly in recent years and have
increased the risk that a health care company will have to defend a false claim
action, pay fines or be excluded from the Medicare program, Medicaid programs or
other federal and state health care programs as a result of an investigation
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arising out of such action. We cannot assure you that we will not become subject
to such litigation or, if we are not successful in defending against such
actions, that such actions will not have a material adverse effect on our
business, financial condition and results of operations.
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 we cannot assure
you that we will be able to retain existing personnel or attract and retain
additional highly qualified employees in the future.
We have an employee retention agreement with our President and Chief Executive
Officer, H. Joseph Reiser, Ph.D., which provides for vesting of stock options
for the purchase of shares of our common stock based on continued employment and
on the achievement of performance objectives defined by the board of directors.
We do not have similar retention agreements with its other key personnel. If we
are unable to hire and retain personnel in key positions, our business could be
significantly and adversely affected unless qualified replacements can be found.
Our Business Exposes Us To Potential 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. We cannot assure you that product
liability claims will not be asserted against us, our collaborators or our
licensees. While we currently maintain product liability insurance in amounts we
believe are adequate, we cannot assure you that such coverage will be adequate
to protect us against future product liability claims or that product liability
insurance will be available to us in the future on commercially reasonable
terms, if at all. Furthermore, we cannot assure you that we will be able to
avoid significant product liability claims and adverse publicity. If liability
claims against us exceed our financial resources we may have to curtail or
terminate our operations.
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.
Our Intellectual Property Is Difficult To Protect.
Our business and competitive positions are dependent upon our ability to protect
our proprietary technology. Because of the substantial length of time and
expense associated with 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 our technology for
diagnostic and therapeutic products and the methods for its production and use.
The patent positions of pharmaceutical, biopharmaceutical and biotechnology
companies, including us, are generally uncertain and involve complex legal and
factual questions. Our patent applications may not protect our technologies and
products because, among other things:
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- there is no guarantee that any of our pending patent applications will
result in issued patents;
- we may develop additional proprietary technologies that are not
patentable;
- there is no guarantee that any patents issued to us, our collaborators
or our licensors will provide a basis for a commercially viable product;
- there is no guarantee that any patents issued to us or our collaborators
will provide us with any competitive advantage;
- there is no guarantee that any patents issued to us or our collaborators
will not be challenged, circumvented or invalidated by third parties; and
- 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, and we cannot assure you as to the degree of
protection that will be afforded any patents we are issued or license from
others. Furthermore, we cannot assure you that others will not independently
develop similar or alternative technologies, duplicate any of our technologies,
or, if patents are issued to us, design around the patented technologies
developed by us. In addition, 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. We cannot assure you that, if challenged by others in
litigation, the patents we have been issued, or which have been assigned or have
been licensed from others will not be found invalid. We cannot assure you that
our activities would not 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:
- subject us to significant liability to third parties;
- require us to cease any related research and development activities and
product sales; or
- require us to obtain licenses from third parties.
We cannot assure you that any licenses required under any such third-party
patents or proprietary rights would be made 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 us or our competitors' pending patent applications will
result in the issuance of valid patents which may significantly and adversely
affect our business.
We Cannot Be Certain That Our Security Measures 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. We cannot assure you,
however, that these agreements will provide adequate protection for our trade
secrets, know-how or other proprietary information or prevent any unauthorized
use or disclosure.
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We Are Currently Subject To Patent Litigation.
We are a defendant in a lawsuit filed against us in the United States Federal
Court for the District of New Jersey by M. David Goldenberg and Immunomedics,
Inc. This lawsuit was filed on March 16, 2000. The litigation claims that our
ProstaScint product infringes a patent purportedly owned by Dr. Goldenberg and
licensed to Immunomedics. The patent sought to be enforced in the litigation has
now expired. As a result, the claim, even if successful, would not result in a
bar of the continued sale of ProstaScint or affect any other of our products or
technology. However, given the uncertainty associated with litigation, we cannot
give any assurance that the litigation will not result in a material expenditure
to us.
If We Make Any Acquisitions, We Will Incur A Variety Of Costs And May Never
Realize The Anticipated Benefits.
If appropriate opportunities become available, we may attempt to acquire
businesses, technologies, services or products that we believe are a strategic
fit with our business. We currently have no commitments or agreements with
respect to any acquisitions. If, however, we do undertake any transaction of
this sort, the process of integrating an acquired business, technology, service
or product may result in operating difficulties and expenditures and may absorb
significant management attention that would otherwise be available for ongoing
development of our business. Moreover, we may never realize the anticipated
benefits of any acquisition. Future acquisitions could result in potentially
dilutive issuances of equity securities, the incurrence of debt, contingent
liabilities and amortization expenses related to intangible assets. These
factors could adversely affect our results of operations and financial
condition, which could cause a decline in the market price of our common stock.
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:
- results of clinical trials;
- technological innovations or new commercial products;
- changes in governmental regulation or the status of our regulatory
approvals or applications;
- changes in earnings;
- changes in health care policies and practices;
- developments or disputes concerning proprietary rights;
- litigation or public concern as to safety of the our potential products;
and
- changes in general market conditions.
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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.
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 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.
The Liquidity Of Our Common Stock Could Be Adversely Affected If We Are Delisted
From The Nasdaq National Market.
On August 14, 2002, we announced that we had received notification from the
Nasdaq Stock Market, Inc. that our common stock had closed below the minimum
$1.00 per share requirement for the previous 30 consecutive trading days as
required under Marketplace Rule 4450(a)(5). In accordance with Marketplace Rule
4450 (e)(2), we were provided with 90 calendar days, or until November 12, 2002,
to regain compliance by having the bid price for our common stock close at $1.00
or greater for a minimum period of 10 consecutive trading days.
On September 26, 2002, we announced that our Board of Directors unanimously
approved and recommended to our stockholders a proposal that would give the
Board of Directors authority to effect a reverse stock split of our common
stock, at a ratio of up to one-for-ten at any time prior to December 31, 2002. A
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special meeting of our stockholders will be held on October 25, 2002 to consider
such recommendation. We believe the ability to effect a reverse stock split is
in the best interests of the Company and our stockholders and will help increase
the market price of our common stock above the minimum bid requirement of $1.00
per share required by Nasdaq. We cannot be certain, however, that our
stockholders will grant the Board of Directors authority to effect such reverse
stock split, or that even if such authority is granted and we do effect a
reverse stock split, that the market price per share of our common stock will
increase as we anticipate.
In the event that we are unable to regain or 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. If we are unable
to comply with the minimum bid price requirement on or before November 12, 2002,
the Nasdaq staff will provide us with written notification that our common stock
will be delisted from the Nasdaq National Market. At that time, we may appeal
Nasdaq's determination to a Listing Qualifications Panel.
Alternatively, we may submit an application to transfer the listing of our
common stock to the Nasdaq SmallCap Market. If such application is submitted and
approved, we will be afforded an additional 90-day grace period which will
extend the delisting determination until February 11, 2003. We may also be
eligible for an additional 180-day grace period which will extend the delisting
determination until August 10, 2003 provided that we meet the initial listing
criteria for the Nasdaq SmallCap Market under Marketplace Rule 4310(c)(2)(A).
The Nasdaq SmallCap Market also has a $1.00 minimum bid price requirement.
We have not yet determined whether to voluntarily transfer the listing of our
common stock to the Nasdaq SmallCap Market. If we so decide and submit the
necessary transfer application, there can be no assurance that Nasdaq will
approve our application or that if approved we will remain compliant with the
applicable continued listing requirements.
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.
Delisting from Nasdaq will 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, which
may adversely affect the market price of our common stock. As of September 24,
2002 we had 87,561,469 shares of common stock outstanding, which number of
shares: (i)
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includes an aggregate of 2,417 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 500,000 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 346,446 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. An additional
4,813,752 shares of common stock are issuable upon the exercise of outstanding
stock options and an additional 323,630 shares of common stock are issuable upon
the exercise of outstanding warrants. Substantially all of such shares subject
to outstanding options and warrants will, when issued upon exercise thereof, be
available for immediate resale in the public market pursuant to either a
currently effective registration statement under the Securities Act of 1933, as
amended, or pursuant to Rule 144 or Rule 701 promulgated thereunder. In
addition, there are 1,098,082 additional shares of common stock reserved for
future issuance under our current stock options plans, 75,699 additional shares
of common stock reserved for issuance under our 401(k) Plan and 227,518
additional shares of common stock reserved for the future issuance under our
employee bonus plan. All such reserved shares have been registered with the
Securities and Exchange Commission pursuant to currently effective Registration
Statements. In addition, there are 930,286 additional shares of common stock,
subject to certain adjustments, reserved for future issuance in connection with
the issuance of a convertible promissory note, having a seven (7) year maturity,
to ELAN Corporation, plc in August 1998.
In connection with our acquisition of Prostagen, Inc. in June 1999, we issued
2,050,000 unregistered shares of our common stock to the then stockholders of
Prostagen, which shares may be sold from time to time pursuant to Rule 144 under
the Securities Act. Such stockholders also have certain piggyback registration
rights with respect to these shares of common stock. An additional 1,276,994
shares have been issued in 2002 and another $2.0 million worth of Cytogen common
stock may be issued if certain milestones are achieved in the PSMA development
programs.
In addition, on March 28, 2000, we filed with the Securities and Exchange
Commission a shelf registration statement on Form S-3 covering six million
(6,000,000) shares of our common stock. 1,500,000 of such registered shares were
issued to Advanced Magnetics, Inc. in connection with the parties entering into
a License and Marketing Agreement in August 2000. An additional 500,000 of the
shares registered on that Form S-3 are currently being held in escrow and may be
released to Advanced Magnetics in the future in accordance with the terms of
such License and Marketing Agreement. An additional 902,601 of the shares
registered on that form S-3 were issued to Acqua Wellington North American
Equities Fund, Ltd. on September 29, 2000 in a private offering transaction. An
additional 1,276,557 of the shares registered on that Form S-3 were issued to
Acqua Wellington on February 5, 2001 pursuant to an equity financing facility
with Acqua Wellington that was subsequently terminated. An additional 1,820,000
of the shares registered on that Form S-3 were issued to the State of Wisconsin
Investment Board on June 19, 2001 in a private offering transaction. We are
contractually obligated to maintain the effectiveness of such registration
statement.
On October 25, 2001, we filed with the Securities and Exchange Commission a
shelf registration statement on Form S-3 covering ten million (10,000,000)
shares of our common stock. 2,970,665 and 4,166,700 of such registered shares
were issued to the State of Wisconsin Investment Board in private offering
transactions in each of January 2002 and June 2002, respectively.
Availability of a significant number of additional shares of our common stock
could depress the price of our common stock.
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Because We Do Not Intend to Pay Any Cash Dividends On Our Shares of Common
Stock, Our Stockholders Will Not Be Able to Receive a Return on Their Shares
Unless 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. Unless we pay dividends, our
stockholders will not be able to receive a return on their shares unless they
sell them.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus includes or incorporates forward-looking statements
within the meaning of Section 27A of the Securities Act and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements, other than
statements of historical facts, included or incorporated in this prospectus
regarding our strategy, future operations, financial position, future revenues,
projected costs, prospects, plans and objectives of management are
forward-looking statements. The words "anticipates," "believes," "estimates,"
"expects," "intends," "may," "plans," "projects," "will," "would" and similar
expressions are intended to identify forward-looking statements, although not
all forward-looking statements contain these identifying words. We cannot
guarantee that we actually will achieve the plans, intentions or expectations
disclosed in our forward-looking statements and you should not place undue
reliance on our forward-looking statements. Actual results or events could
differ materially from the plans, intentions and expectations disclosed in the
forward-looking statements we make. We have included important factors in the
cautionary statements included or incorporated in this prospectus, particularly
under the heading "Risk Factors", that we believe could cause actual results or
events to differ materially from the forward-looking statements that we make.
Our forward-looking statements do not reflect the potential impact of any future
acquisitions, mergers, dispositions, joint ventures or investments we may make.
We do not assume any obligation to update any forward-looking statements.
You should not unduly rely on forward-looking statements contained or
incorporated by reference in this prospectus. Actual results or outcomes may
differ materially from those predicted in our forward-looking statements due to
the risks and uncertainties inherent in our business, including among other
items, risks and uncertainties in:
- our ability to successfully execute our business model;
- our ability to compete successfully against direct and indirect
competitors;
- our ability to launch our proteomics program successfully;
- market acceptance of and continuing demand for our products, including
programs designed to facilitate use of the products, such as the Partners
in Excellence or PIE Program;
- the timing and results of clinical studies and regulatory approvals;
- demonstration over time of the efficacy and safety of our products;
- our ability to develop new products;
- the degree of competition from existing or new products;
- success in obtaining marketing approvals for our products in Canada and
Europe;
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- our ability to protect our intellectual property, including patents and
know-how;
- our ability to access the capital markets in the near term and in the
future to support our operations and for continued funding of existing
projects and for the pursuit of new projects;
- the ability to attract and retain personnel needed for business
operations and strategic plans;
- the decision by the majority of public and private insurance carriers on
whether to reimburse patients for our products;
- the ability to attract and maintain, and the ultimate success of,
strategic partnering arrangements, collaborations, and acquisition
candidates; and
- changing market conditions and shifts in the regulatory environment.
You should read and interpret any forward-looking statements together
with the following documents:
- our most recent Annual Report on Form 10-K;
- the risk factors contained in this prospectus under the caption "Risk
Factors"; and
- 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 not receive any proceeds from the sale of shares by the selling
stockholders.
The selling stockholders will pay any underwriting discounts and
commissions and expenses incurred by the selling stockholders for brokerage,
accounting, tax or legal services or any other expenses incurred by the selling
stockholders in disposing of the shares. We will bear all other costs, fees and
expenses incurred in effecting the registration of the shares covered by this
prospectus, including, without limitation, all registration and filing fees,
Nasdaq listing fees and fees and expenses of our counsel and our accountants.
SELLING STOCKHOLDERS
In connection with our acquisition of Prostagen, Inc. in June 1999, we
entered into a Stock Exchange Agreement with the stockholders and debtholders of
Prostagen, Inc., collectively referred to herein as the "Prostagen Partners."
Pursuant to the Stock Exchange Agreement, we became obligated to pay certain
amounts to the Prostagen Partners in both shares of our common stock and cash.
On May 14, 2002, we entered into an Addendum to the Stock Exchange
Agreement with the Prostagen Partners. Pursuant to such Addendum, our
obligations to make certain payments under the Stock Exchange Agreement have
been clarified and the shares registered hereunder have been issued in
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accordance with the Stock Exchange Agreement as clarified by such Addendum. The
Addendum was subsequently amended on August 13, 2002.
The following table sets forth, to our knowledge, certain information
about the selling stockholders as of September 6, 2002.
Beneficial ownership is determined in accordance with the rules of the
SEC, and includes voting or investment power with respect to shares. Shares of
common stock issuable under stock options that are exercisable within 60 days
after September 10, 2002 are deemed outstanding for computing the percentage
ownership of the person holding the options but are not deemed outstanding for
computing the percentage ownership of any other person. Unless otherwise
indicated below, to our knowledge, all persons named in the table have sole
voting and investment power with respect to their shares of common stock, except
to the extent authority is shared by spouses under applicable law. The inclusion
of any shares in this table does not constitute an admission of beneficial
ownership for the person named below.
Number of
Shares of Common Stock Shares of Shares of Common Stock
Name of Selling Beneficially Owned Prior to Common Stock to be Beneficially Owned
Stockholder Offering (1) Being Offered(1) After Offering (1)
------------------------------ ---------------------------- ---------------- -----------------------------
Number Percentage (2) Number Percentage (2)
----------- -------------- ----------- --------------
Misrock Holdings, L.P......... 363,498 * 363,498 0 *
C.C. Consulting A/S........... 261,718 * 261,718 0 *
Barbara G. Misrock (3)........ 618,472 * 572,872 45,600 *
Michael Ian Sherman........... 139,807 * 139,807 0 *
FoxKiser Development
Partners.................. 162,112 * 162,112 0 *
New Hope Holdings, LP (4)..... 238,159 * 58,159 180,000 *
Max Link...................... 52,344 * 52,344 0 *
Gerard Klauer Mattison &
Co., Inc. (5).............. 49,982 * 29,982 20,000 *
--------------------------
* Less than one percent.
(1) We do not know when or in what amounts a selling stockholder may offer
shares for sale. The selling stockholders might not sell any or all of
the shares offered by this prospectus. Because the selling stockholders
may offer all or some of the shares pursuant to this offering, and
because there are currently no agreements, arrangements or
understandings with respect to the sale of any of the shares, we cannot
estimate the number of the shares that will be held by the selling
stockholders after completion of the offering. However, for purposes of
this table, we have assumed that, after completion of the offering,
none of the shares covered by this prospectus will be held by the
selling stockholders.
(2) Applicable percentage ownership is based on 87,561,469 shares of
common stock outstanding as of September 24, 2002, plus any common
stock equivalent or convertible securities held or shares beneficially
owned by each such holder.
(3) Barbara G. Misrock is general partner of Misrock Holdings, L.P., and,
as such has the power to vote or direct the vote of and to dispose of
or direct the disposition of the shares owned by Misrock Holdings,
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L.P. Ms. Misrock expressly disclaims beneficial ownership of such
shares, except as to her proportionate interest in Misrock Holdings,
L.P. Includes 254,974 shares of common stock held by
Ms. Misrock in her individual capacity.
(4) Includes 180,000 shares of common stock otherwise held by New Hope
Holdings, LP.
(5) Includes 20,000 shares of common stock otherwise held by Gerard Klauer
Mattison & Co., Inc.
PLAN OF DISTRIBUTION
The shares covered by this prospectus may be offered and sold from time
to time by the selling stockholders. The term "selling stockholders" includes
donees, pledgees, transferees or other successors-in-interest selling shares
received after the date of this prospectus from a selling stockholder as a gift,
pledge, partnership distribution or other non-sale related transfer. The selling
stockholders will act independently of us in making decisions with respect to
the timing, manner and size of each sale. Such sales may be made on one or more
exchanges or in the over-the-counter market or otherwise, at prices and under
terms then prevailing or at prices related to the then current market price or
in negotiated transactions. The selling stockholders may sell their shares by
one or more of, or a combination of, the following methods:
- purchases by a broker-dealer as principal and resale by such
broker-dealer for its own account pursuant to this prospectus;
- ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
- block trades in which the broker-dealer so engaged will attempt to sell
the shares as agent but may position and resell a portion of the block
as principal to facilitate the transaction;
- an over-the-counter distribution in accordance with the rules of the
Nasdaq National Market;
- in privately negotiated transactions; and
- in options transactions.
In addition, any shares that qualify for sale pursuant to Rule 144 may
be sold under Rule 144 rather than pursuant to this prospectus.
To the extent required, this prospectus may be amended or supplemented
from time to time to describe a specific plan of distribution. In connection
with distributions of the shares or otherwise, the selling stockholders may
enter into hedging transactions with broker-dealers or other financial
institutions. In connection with such transactions, broker-dealers or other
financial institutions may engage in short sales of the common stock in the
course of hedging the positions they assume with selling stockholders. The
selling stockholders may also sell the common stock short and redeliver the
shares to close out such short positions. The selling stockholders may also
enter into option or other transactions with broker-dealers or other financial
institutions which require the delivery to such broker-dealer or other financial
institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such transaction). The selling
stockholders may also pledge shares to a broker-dealer or other financial
institution, and, upon a default, such broker-dealer or other financial
institution, may effect sales of the pledged shares pursuant to this prospectus
(as supplemented or amended to reflect such transaction).
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In effecting sales, broker-dealers or agents engaged by the selling
stockholders may arrange for other broker-dealers to participate. Broker-dealers
or agents may receive commissions, discounts or concessions from the selling
stockholders in amounts to be negotiated immediately prior to the sale.
In offering the shares covered by this prospectus, the selling
stockholders and any broker-dealers who execute sales for the selling
stockholders may be deemed to be "underwriters" within the meaning of the
Securities Act in connection with such sales. Any profits realized by the
selling stockholders and the compensation of any broker-dealer may be deemed to
be underwriting discounts and commissions.
In order to comply with the securities laws of certain states, if
applicable, the shares must be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
We have advised the selling stockholders that the anti-manipulation
rules of Regulation M under the Exchange Act may apply to sales of shares in the
market and to the activities of the selling stockholders and their affiliates.
In addition, we will make copies of this prospectus available to the selling
stockholders for the purpose of satisfying the prospectus delivery requirements
of the Securities Act. The selling stockholders may indemnify any broker-dealer
that participates in transactions involving the sale of the shares against
certain liabilities, including liabilities arising under the Securities Act.
At the time a particular offer of shares is made, if required, a
prospectus supplement will be distributed that will set forth the number of
shares being offered and the terms of the offering, including the name of any
underwriter, dealer or agent, the purchase price paid by any underwriter, any
discount, commission and other item constituting compensation, any discount,
commission or concession allowed or reallowed or paid to any dealer, and the
proposed selling price to the public.
We have agreed with the selling stockholders to keep the registration
statement of which this prospectus constitutes a part effective until such time
as all of the shares covered by this prospectus have been disposed of pursuant
to and in accordance with the registration statement.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be
passed upon by Hale and Dorr LLP, Princeton, New Jersey.
EXPERTS
The consolidated balance sheets of Cytogen Corporation as of December
31, 2001 and 2000 and the consolidated statements of operations, stockholders'
equity and cash flows for each of the years in the three-year period ended
December 31, 2001, 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. Such financial statements
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are incorporated by
reference herein. 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 Andersen has not consented to the inclusion of
their report in this prospectus, you will not be able to recover against
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 Andersen or any omissions to state a material fact required to be
stated therein.
-24-
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, 2001,
as filed with the Securities and Exchange Commission on March 28,
2002;
(2) Our Current Report on Form 8-K dated January 18, 2002, as filed with
the Securities and Exchange Commission on January 24, 2002;
(3) Our Quarterly Report on Form 10-Q for the period ended March 31, 2002,
as filed with the Securities and Exchange Commission on May 14, 2002;
(4) Our Current Report on Form 8-K dated May 20, 2002, as filed with the
Securities and Exchange Commission on May 20, 2002, as amended on Form
8-K/A dated May 20, 2002, as filed with the Securities and Exchange
Commission on May 22, 2002;
(5) Our Current Report on Form 8-K dated May 24, 2002, as filed with the
Securities and Exchange Commission on May 24, 2002;
(6) Our Current Report on Form 8-K dated May 29, 2002, as filed with the
Securities and Exchange Commission on May 31, 2002;
(7) Our Current Report on Form 8-K dated June 4, 2002, as filed with the
Securities and Exchange Commission on June 4, 2002;
(8) Our Annual Report on Form 11-K for the period ended December 31, 2001,
as filed with the Securities and Exchange Commission on June 27, 2002;
(9) Our Quarterly Report on Form 10-Q for the period ended June 30, 2002,
as filed with the Securities and Exchange Commission on August 14,
2002;
(10) Our Current Report on Form 8-K dated August 14, 2002, as filed with
the Securities and Exchange Commission on August 19, 2002;
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(11) Our Current Report on Form 8-K dated September 16, 2002, as filed with
the Securities and Exchange Commission on September 17, 2002.
(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;
(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; 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: Lawrence R. Hoffman, Esq.
Vice President and Chief Financial Officer
Telephone: 609-750-8200
You should rely on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. We are not making an
offer of these securities in any jurisdiction where the offer is not permitted.
You should not assume that the information in this prospectus or any prospectus
supplement is accurate as of any date other than the date on the front of these
documents.
-26-
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 sale and distribution of the securities being registered
hereby, all of which will be borne by Cytogen Corporation (except any
underwriting discounts and commissions and expenses incurred by the selling
stockholders for brokerage, accounting, tax or legal services or any other
expenses incurred by the selling stockholders in disposing of the shares). All
amounts shown are estimates except the Securities and Exchange Commission
registration fee.
Filing Fee - Securities and Exchange Commission ......... $ 62.27
Legal fees and expenses.................................. $ 15,000.00
Accounting fees and expenses............................. $ 5,000.00
-----------
Total Expenses..................................... $ 20,062.27
===========
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, 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.
(a) Exhibits
5.1 Opinion of Hale and Dorr LLP.
23.2 Consent of Hale and Dorr LLP (included in Exhibit 5.1).
24.1 Power of Attorney. (Included on signature page).
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:
II-2
(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% 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.
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.
II-3
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 October 4,
2002.
CYTOGEN CORPORATION
By: /s/ H. Joseph Reiser
------------------------------------------
H. Joseph Reiser
President and Chief Executive Officer
SIGNATURES AND POWER OF ATTORNEY
We, the undersigned officers and directors of Cytogen Corporation,
hereby severally constitute and appoint H. Joseph Reiser and Lawrence R. Hoffman
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/ H. Joseph Reiser President, Chief Executive Officer and October 4, 2002
----------------------------------- Director (Principal Executive Officer)
H. Joseph Reiser
/s/ Lawrence R. Hoffman Vice President and Chief Financial Officer October 4, 2002
----------------------------------- (Principal Financial and Accounting Officer)
Lawrence R. Hoffman
/s/ John E. Bagalay, Jr. Director October 4, 2002
-----------------------------------
John E. Bagalay, Jr.
/s/ Stephen K. Carter Director October 2, 2002
-----------------------------------
Stephen K. Carter
/s/ James A. Grigsby Director October 4, 2002
-----------------------------------
James A. Grigsby
/s/ Robert F. Hendrickson Director October 4, 2002
-----------------------------------
Robert F. Hendrickson
/s/ Kevin G. Lokay Director October 2, 2002
-----------------------------------
Kevin G. Lokay
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------- ----------------------------------------------------------------------
5.1 Opinion of Hale and Dorr LLP.
23.2 Consent of Hale and Dorr LLP (included in Exhibit 5.1 filed herewith).
24.1 Power of Attorney (included on signature page).