S-8: Initial registration statement for securities to be offered to employees pursuant to employee benefit plans
Published on August 30, 1999
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 30, 1999
Registration No. 333-__________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Cytoclonal Pharmaceutics Inc.
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(Exact name of Registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation or organization)
75-2402409
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(I.R.S. Employer Identification No.)
9000 Harry Hines Boulevard, Dallas, Texas 75235
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(Address of Principal Executive Offices) (Zip Code)
Cytoclonal Pharmaceutics Inc. 1996 Stock Option Plan
----------------------------------------------------
(Full Title of the Plan)
Arthur P. Bollon, Ph.D.
Cytoclonal Pharmaceutics Inc.
9000 Harry Hines Boulevard
Suite 621
Dallas, Texas 75235
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(Name and Address of Agent For Service)
(214) 353-2922
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(Telephone Number, Including Area Code, of Agent For Service)
Copies to:
Robert H. Cohen, Esq.
Philip Magri, Esq.
Morrison Cohen Singer & Weinstein, LLP
750 Lexington Avenue
New York, New York 10022
(212) 735-8600
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CALCULATION OF REGISTRATION FEE
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(1) Shares of common stock issuable upon the exercise of options granted
under the Cytoclonal Pharmaceutics Inc. 1996 Stock Option Plan
registered with the SEC on September 10, 1996 on registration
statement on Form S-8 (File No.:333-11691).
(2) Fee previously paid. No registration fee required pursuant to General
Instruction E to Form S-8.
(3) Shares of common stock purchasable upon the exercise of options
previously granted pursuant to Amendment No. 1 to the Cytoclonal
Pharmaceutics Inc. 1996 Stock Option Plan.
(4) In addition, pursuant to Rule 416(c) under the Securities Act of 1933,
this registration statement also covers an indeterminate amount of
interests to be offered or sold pursuant to the employee benefit plan
described herein.
(5) Calculated solely for the purpose of determining the registration fee
pursuant to Rule 457(h)(1) promulgated under the Securities Act of
1933 upon the average exercise price.
(6) Shares of common stock purchasable upon the exercise of options
available for grant pursuant to Amendment No. 1 to the Cytoclonal
Pharmaceutics Inc. 1996 Stock Option Plan.
(7) Calculated solely for the purpose of determining the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933 based upon
the average of the bid and asked price for the common stock on The
Nasdaq SmallCap Market on August 26, 1999.
ii
EXPLANATORY NOTE
On September 10, 1996, we filed a registration statement on Form S-8
(File No. 333-11691) with the Securities and Exchange Commission to register
options to purchase 750,000 shares of common stock under our 1996 Stock Option
Plan. On August 22, 1998 and October 2, 1998, our Board of Directors and
stockholders, respectively, approved Amendment No. 1 to the 1996 Stock Option
Plan to increase the number of stock options available for grant under our 1996
Stock Option Plan from 750,000 to 1,500,000.
We are filing this registration statement on Form S-8 to:
o register 750,000 shares of common stock issuable
upon the exercise of options available for grant
pursuant to Amendment No. 1 to the 1996 Stock Option
Plan; and
o file a reoffer prospectus to permit certain
"affiliates," as that term is defined in the
Securities Act of 1933, listed in the Selling
Stockholder table included in the prospectus to
resell their shares of common stock issuable upon
the exercise of options granted to them pursuant to
the 1996 Stock Option Plan.
We incorporate by reference the registration statement on Form S-8
(File No.: 333-11691) we filed with the Securities and Exchange Commission on
September 10, 1996.
iii
PROSPECTUS
CYTOCLONAL PHARMACEUTICS INC.
1,500,000 SHARES OF COMMON STOCK
This reoffer prospectus is to be used for the resale of up to
1,500,000 shares of our common stock, 603,000 of which is beneficially owned by
affiliates listed in the "Selling Stockholder" table included in this
prospectus, issuable upon the exercise of options granted or available for
grant under our 1996 Stock Option Plan.
Selling stockholders may sell their shares of common stock through
public or private transactions at current market prices, or at previously
negotiated prices. Although we will not receive any proceeds when the selling
stockholders' sell their common stock to others, we may, however, receive
proceeds when the selling stockholders exercise their options to acquire such
common stock.
Our common stock is listed on the Nasdaq SmallCap Market under the
symbol "CYPH." Our class C warrants are listed on the Nasdaq SmallCap Market
System under the symbol, "CYPHW." Our class D warrants are listed on the Nasdaq
SmallCap Market System under the symbol, "CYPHZ." Our securities are a
speculative investment and involve a high degree of risk.
SEE "RISK FACTORS" BEGINNING ON PAGE 6 OF THIS PROSPECTUS AND
"DILUTION."
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED
UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is August 30, 1999.
1
TABLE OF CONTENTS
2
WHERE YOU CAN FIND MORE INFORMATION
We are a public company. We file annual, quarterly and special
reports, proxy statements and other information with the SEC. You may read and
copy any document we file with the SEC at the SEC's public reference rooms in
Washington, D.C., New York, New York and Chicago, Illinois. Please call the SEC
at 1-800-SEC-0330 for further information on the public reference rooms. Our
SEC filings are also available to the public at the SEC's web site at
http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we
file with them, which means that we can disclose important information to you
by referring you to those documents. The information incorporated by reference
is considered to be part of this prospectus, and later information that we file
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings made
with the SEC under Section 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934 until the selling stockholders sell all of their shares of
common stock. This prospectus is part of a registration statement we filed with
the SEC.
1. Annual Report on Form 10-K for the fiscal year ended
December 31, 1998;
2. Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 1999;
3. Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1999;
4. Current Report on Form 8-K, dated June 12, 1998,
filed with the SEC on September 9, 1998;
5. Definitive proxy statement filed with the SEC on
July 15, 1999 pursuant to Regulation 14A under the
Securities Exchange Act of 1934;
6. The description of our common stock set forth in our
Registration Statement filed under Section 12 of the
Securities Exchange Act of 1934 on Form 8-A on
October 2, 1995, and any amendment or report filed
for the purpose of updating any such description;
and
7. Form S-8 (File No.: 333-11691) filed with the SEC on
September 10, 1996.
You may request a copy of these filings, at no cost, by oral
request or by writing to us at the following address:
Cytoclonal Pharmaceutics Inc.
9000 Harry Hines Boulevard
Suite 621
Dallas, Texas 75235
Attention: Daniel Shusterman, Esq.
Telephone: (214) 353-2922
You should rely only on the information incorporated by
reference or provided in this prospectus or any supplement. We have not
authorized anyone else to provide you with different information. The selling
stockholders will not make an offer of these shares of common stock in any
State where the offer is not permitted. You should not assume that the
information in this prospectus or any supplement is accurate as of any date
other than the date on the front of those documents.
3
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus.
This summary is not complete and may not contain all of the information that
you should consider before investing in the securities. You should read the
entire prospectus carefully. Unless we otherwise say so, when we discuss our
outstanding securities, we exclude all of our shares of common stock issuable
upon the exercise of currently outstanding warrants and options and the
conversion of our convertible securities.
We are a biopharmaceutical company located in Dallas, Texas. Our goal
is to develop products to identify, treat and prevent cancer and other
diseases. To date, our strategy has been to license technologies in their early
development stages from research and educational institutions and further
develop such technologies to the point where we can then sublicense them to
commercial entities. Through our research and development efforts and
agreements with other research institutions and biotechnology companies, we
have acquired and developed rights to certain proprietary technology.
At the present time, we are focusing our attention and resources on a
collaboration agreement we have with Bristol-Myers Squibb Company, Inc. for the
production of Paclitaxel. Paclitaxel is a drug which has proven to be effective
in treating refractory ovarian, breast and non-small cell lung cancer and
Kaposi's Sarcoma. In addition, Paclitaxel has shown potential in treating other
cancer indications in preliminary clinical trials. Presently, however,
Paclitaxel is made from the inner bark and needles of the slow-growing Pacific
yew tree. Our scientists are working in cooperation with Bristol-Myers Squibb
to develop a system for manufacturing Paclitaxel in commercial quantities and
at lower costs. Other areas of focus include the development of the Paclitaxel
treatment of polycystic kidney disease, a drug design program using Quantum
Core Technology(TM), a peptide to suppress breast cancer, and our Human Gene
Discovery Program. Other programs, which involve potential anti-leukemia drugs
and drugs called "anti-sense therapeutics," are being pursued at modest levels.
"Anti-sense therapeutics" are drugs designed to essentially "turn off" genes
involved in different diseases and to prevent such genes from growing or
duplicating. Such therapeutics may help us develop future products or
alternatives to our main programs if unforeseen problems develop.
ORGANIZATIONAL HISTORY
We were originally incorporated in the state of Texas in September
1991 under the name of Bio Pharmaceutics, Inc. In November 1991, we changed our
name to Cytoclonal Pharmaceutics Inc. We were then reincorporated in the state
of Delaware by merger into a wholly-owned Delaware subsidiary in January 1992.
Our executive offices are located at 9000 Harry Hines Boulevard, Suite 621,
Dallas, Texas 75235 and our telephone number is (214) 353-2922.
4
THE OFFERING
5
RISK FACTORS
You should carefully consider the following factors and other
information in this prospectus before deciding to invest in the securities we
are offering in this prospectus.
INVESTORS WILL EXPERIENCE A LOSS IN THE BOOK VALUE OF THEIR COMMON STOCK DUE TO
OUR ACCUMULATED DEFICIT.
We had an accumulated deficit of $19,744,000 as of June 30, 1999
(unaudited) and $17,832,000 as of the fiscal year ended December 31, 1998. Our
statement of operations for the fiscal year ended December 31, 1997 shows net
losses of $3,252,000, which means a loss of $.42 per share of common stock. Our
statement of operations for the fiscal year ended December 31, 1998 shows net
losses of $2,728,000, which means a loss of $.30 per share of common stock.
Investors purchasing shares of our common stock will experience a loss in the
book value of their shares due to our net losses.
BECAUSE WE CONTINUE TO EXPERIENCE LOSSES DUE TO OUR RESEARCH AND DEVELOPMENT
ACTIVITIES, WE MAY HAVE DIFFICULTY IN RAISING CAPITAL AND OUR STOCKHOLDERS
COULD EXPERIENCE A DECREASE IN THE VALUE OF THEIR INVESTMENT.
From our formation in 1991 to the date of this prospectus, we have
been experiencing substantial operating losses due to our increasing research
and development activities and general and administrative expenditures. We
expect to have additional losses in the future. Although we had revenue in 1998
from our license agreement with Bristol-Myers Squibb, it was and remains our
sole source of revenue. We cannot say with any certainty that we will have any
future revenue or, if we do have revenue, that it will be profitable. Our
failure to become profitable may make it more difficult for us to raise
additional capital on favorable terms, if at all. Such failure could have a
material adverse effect on our business.
WE WILL NEED SUBSTANTIAL FUNDS IN THE FUTURE, AND WE MAY HAVE TO ISSUE
ADDITIONAL SECURITIES TO DO SO, WHICH WILL RESULT IN DILUTION TO THE VALUE OF
OUR SECURITYHOLDERS' INVESTMENT.
Since our formation in 1991, we have relied on loans, private
financings, and our November 1995 initial public offering to allow us to
continue our operations. Our cash requirements in the future may be
significantly different from our current estimates because of changes in our
research and development programs, increased competition, advances in
technology and other factors. We cannot say with any certainty that required
financing will be available to us on favorable terms, if at all. If we decide
to raise additional money by issuing more of our securities, securityholders
will experience a dilution to the value of their securities at the time of
issuance.
WE DO NOT HAVE ANY PRODUCTS TO DATE AND RELY HEAVILY ON OUR LICENSE
AGREEMENTS-THE LOSS OF ANY OF WHICH WOULD HAVE A MATERIAL ADVERSE EFFECT ON OUR
BUSINESS AND CAUSE A DECREASE IN THE VALUE OF OUR SECURITYHOLDERS' INVESTMENT.
We have key license and collaborative agreements with several
pharmaceutical companies and research institutions, including, but not limited
to, Bristol-Myers Squibb, Enzon, the Research & Development Institute at
Montana State University, the Washington State University Research Foundation,
the University of California at Los Angeles, and the University of Texas at
Dallas. We have also entered into a joint venture agreement with Pestka
Biomedical Laboratories, Inc. In general, we have annual milestone and royalty
fee obligations under these agreements. Although we are currently compliant
under these agreements and do not foresee any future noncompliance, our
industry is extremely competitive and volatile. Generally, if we fail to
satisfy such obligations or cure any other default listed in such agreements,
the other parties may terminate them. Also, we cannot give any assurance that
the other parties to our agreements will honor their obligations, or that we
will be able to extend any of the agreements if they expire. We also cannot
give any assurance that we will be able to enter into new collaborative
agreements with existing or new partners. If we are unable to make the other
parties to our agreements honor their contractual obligations or to extend our
current agreements or if we fail to enter into any additional arrangements, we
may require additional money to
6
continue our current activities. The termination or breach of our agreements or
licenses, or our failure to enter into additional agreements and licenses may
have a material adverse effect on our business.
ALTHOUGH WE DO NOT HAVE ANY PRODUCTS TO DATE, EVEN IF WE DO HAVE THEM IN THE
FUTURE, THEY MIGHT NOT WORK OR THEY MIGHT BE TOXIC, DIFFICULT TO PRODUCE ON A
COMMERCIAL SCALE OR DISLIKED BY OUR CUSTOMERS. THIS COULD MATERIALLY ADVERSELY
AFFECT OUR BUSINESS AND CAUSE OUR SECURITYHOLDERS TO LOSE THEIR INVESTMENT.
Research and development of anti-cancer drugs is a lengthy and costly
process. We cannot say with any certainty that we will be able to develop or
produce any products or, if we do, that they will work as intended, be
non-toxic, that customers will like them or that they will be capable of being
manufactured on a large scale. Furthermore, our products will be in the
biotechnology field which has historically had a large number of unsuccessfully
developed products, or if developed, such products have been commercially,
scientifically or medically unacceptable. Any of these impediments could have a
material adverse effect on our business and cause a decrease in the value of
our securityholders' investment.
WE MIGHT NOT HAVE ENOUGH RESOURCES TO COMPETE WITH THE BIOTECHNOLOGY LEADERS,
AND INVESTORS COULD LOSE THEIR MONEY.
We have less than 20 employees in the heavily regulated, competitive
and quickly changing biotechnology industry. Most of our competitors have more
personnel, research and development experience, experience in getting
governmental approval and money than us. Our business may be materially
adversely affected if our competitors develop products before us or produce
superior products to ours.
IF COMPETITORS ARE SUCCESSFUL IN THEIR CHALLENGE OF BRISTOL-MYERS SQUIBB'S
PATENT, WE COULD BE INDIRECTLY HURT UNDER OUR LICENSE AGREEMENT WITH
BRISTOL-MYERS SQUIBB, AND OUR SECURITYHOLDERS COULD EXPERIENCE A DECREASE IN
THE VALUE OF THEIR INVESTMENT.
In June 1998, we entered into license agreement with Bristol-Myers
Squibb, an industry leader, for the development of Paclitaxel production
system. To date, this license agreement has been our sole source of revenue. In
June 1991, the National Cancer Institute entered into a collaborative research
and development agreement with Bristol- Myers Squibb to develop Paclitaxel, and
it granted Bristol-Myers Squibb the exclusive use of the Institute's clinical
data in Bristol-Myers' search for FDA approval until December 1997. This
significantly shortened the approval process and prevented any other party from
obtaining the Food & Drug Administration's approval using the Institute's data.
Although Bristol-Myers Squibb has since lost its right of exclusivity under the
agreement, it has patented its method of delivering Paclitaxel intravenously to
a patient. Such patent has in fact kept the Institute's data exclusive and has
put other companies at a competitive disadvantage by effectively preventing
them from using the data. Other companies are currently contesting the
exclusivity of this data in the courts. If such competitors are successful in
their challenge, Bristol-Myers Squibb could suffer which in turn would decrease
the value of our license agreement with them and our securityholders could
experience a decrease in the value of their investment.
WE RELY ON BROAD PATENT PROTECTION FOR OUR TECHNOLOGY BUT WE MAY NOT HAVE
ENOUGH RESOURCES TO CONDUCT OR DEFEND OURSELVES FROM LONG AND EXPENSIVE
LITIGATION CLAIMS REGARDING THE BREADTH OF PATENTS, AND OUR SECURITYHOLDERS
COULD EXPERIENCE A DECREASE IN THE VALUE OF THEIR INVESTMENT.
Our success will depend on our ability to get patent protection for
our products and processes in the United States and elsewhere. We have filed
and intend to continue to file patent applications as we need them. We cannot
say with any certainty, however, that any additional patents will issue from
any of these applications or, if patents do issue, that the claims allowed will
be sufficiently broad to protect our technology. Also, we cannot say with any
certainty that any patents issued to us or licensed by us can withstand
challenges made by others or that we will able to protect our rights. Our
business may be materially adversely affected if we are unable to obtain or
enforce patent protection.
7
To date, we have not been sued or threatened by parties claiming that
we have infringed their patents. Further, we do not believe that any of our
patents have been infringed by other parties, and, accordingly, we have not
taken any action to date. However, we are aware of patent applications and
issued patents belonging to our competitors, and we are uncertain whether any
of these, or of any patent applications which we do not know about, will
require us to alter or cease our potential products or processes. We cannot say
with any certainty that we will be able to obtain any licenses to technology
that we will require or, if obtainable, that the cost of them will be
reasonable. Our failure to obtain any necessary licenses to any technology
could substantially hurt our business. Expensive and drawn-out litigation may
also be necessary for us to assert any of our rights or to determine the scope
and validity of rights claimed by other parties. Litigation could be too
expensive for us to pursue without great cost and uncertainty as to the
outcome. Our failure to pursue litigation could result in the loss of our
rights which could substantially hurt our business.
WE ARE IN DIRECT COMPETITION WITH OTHER BIOPHARMACEUTICAL COMPANIES TO DEVELOP
AND PRODUCE ANTI-CANCER PRODUCTS. OUR BUSINESS WOULD BE MATERIALLY ADVERSELY
AFFECTED IF OUR TRADE SECRETS AND CONFIDENTIAL INFORMATION WERE DISCLOSED TO
OUR COMPETITORS, AND INVESTORS COULD EXPERIENCE A DECREASE IN THE VALUE OF
THEIR INVESTMENTS.
We also rely on trade secrets and confidential information which we
try to protect by entering into confidentiality agreements with other parties.
We cannot say with any certainty that any of the confidentiality agreements
will be honored or, if breached, we would have enough remedies to protect the
confidential information, or that our competitors will not independently learn
our trade secrets. The loss of our trade secrets would substantially hurt our
business.
WE ARE A SMALL COMPANY WITH LITTLE REVENUE, AND WE MAY NOT HAVE THE HUMAN AND
FINANCIAL RESOURCES TO WITHSTAND THE REQUIRED LENGTHY FDA TESTING AND APPROVAL
PROCESSES.
The Food & Drug Administration and other similar agencies in foreign
countries have lengthy and detailed laboratory testing and approval
requirements for therapeutic and diagnostic pharmaceutical and biological
products. It often takes companies several years and large sums of money to
satisfy these requirements, depending on the complexity and novelty of the
products. Since we are a small company within limited personnel and financial
resources, we might not be able to withstand the rigorous and time consuming
FDA approval process as compared to our larger competitors. Furthermore, since
we are in the highly competitive biopharmaceutical industry, any failure or
delay in obtaining any FDA approvals could substantially hurt our company, and
investors could lose their money. We cannot say with any certainty that the FDA
or other regulatory agencies will grant us approval for any of our products on
a timely basis, if at all.
WE HAVE LITTLE REVENUE AND MAY NOT HAVE THE FINANCIAL RESOURCES TO COMPLY WITH
OSHA, EPA AND OTHER AGENCIES' REQUIREMENTS.
We have to comply with the Occupational Safety and Health
Administration, Environmental Protection Agency, Toxic Substances Control Act,
Resource Conservation and Recovery Act and other regulatory laws. In the
future, we could also be subject to other federal, state or local regulations.
OSHA or the EPA may establish regulations which could affect our research and
development programs. We are unable to predict whether any agency will adopt
any rule which could substantially hurt our business.
OUR PRODUCTS, IF ANY, WILL BE INNOVATIVE AND MAY NOT BE COVERED BY INSURANCE
COMPANIES OR OTHER THIRD-PARTY PAYERS WHICH MAY MAKE OUR PRODUCTS LESS
MARKETABLE TO OUR CUSTOMERS AND CAUSE A DECREASE IN THE VALUE OF OUR
SECURITYHOLDERS' INVESTMENT.
8
Our success in developing our products may depend, in part, on whether
we will be reimbursed by government health administration authorities, private
health insurers and other organizations. There is significant uncertainty if
costs associated with newly-approved health care products will be reimbursed.
If adequate coverage and reimbursement levels are not provided by government
and third-party payers for uses of our products, it will make it very difficult
for us to market our products to doctors and hospitals because their patients
might not be able to pay for the products without any insurance coverage or
reimbursement. We cannot say with any certainty whether sufficient insurance
coverage will be available for us to establish and maintain price levels
sufficient to realize an appropriate return on developing new products.
Government and other third-party payers are attempting to contain health care
costs more every day by limiting both coverage and the level of reimbursement
of new therapeutic and diagnostic products approved for marketing by FDA and by
refusing, in some cases, to provide any coverage of uses of approved products
for disease indications for which FDA has not granted marketing approval. Such
refusal by insurance companies and third-party payers to reimburse the costs
of, expenses associated with, our products might have a material adverse effect
on our business.
OUR LICENSE AGREEMENT WITH BRISTOL-MYERS SQUIBB, AN INDUSTRY LEADER, HAS, TO
DATE, BEEN OUR SOLE SOURCE OF REVENUE. OUR SECURITYHOLDERS COULD EXPERIENCE A
DECREASE IN THE VALUE OF THEIR INVESTMENTS IF SUCH AGREEMENT IS TERMINATED OR
CEASES TO GENERATE REVENUE.
In June 1998, we entered into a license agreement and a research and
development agreement with Bristol- Myers Squibb. Through June 30, 1999, we
have earned $1,666,000 in revenue from the license agreement. Such agreement
has been our sole source of revenues to date. Under the license agreement, we
granted to Bristol-Myers Squibb exclusive sublicenses under our agreements with
the Research & Development Institute at Montana State University and the
Washington State University Research Foundation relating to technologies for
the production of Paclitaxel. Our license agreement with Bristol-Myers Squibb
requires them to pay us royalty and milestone payments. The term of our license
agreement with Bristol-Myers Squibb ends on the later ten (10) years from the
first commercial sale of the licensed products or such time as neither the
making, use nor sale at the time by Bristol-Myers Squibb, its affiliates or
sublicensees does not infringe any U.S. or foreign patents or patent
applications, copyrights or trademarks owned and licensed by the Research &
Development Institute and the Washington State University Research Foundation.
Bristol-Myers Squibb may terminate the license agreement upon 90 days notice.
We cannot say with any certainty that Bristol-Myers Squibb will successfully
manufacture or market the licensed property, if at all, or that we will be able
to maintain our agreements with the Research & Development Institute or the
Washington State University Research Foundation. Although we do not have any
reason to believe Bristol-Myers Squibb is unwilling to work with us under our
license agreement with them, it is a possibility that Bristol-Myers Squibb
might, in the future, decide not to utilize our technology, use other
technology they find superior or enter into a license agreement or agreements
with another party or parties, thereby decreasing their need to utilize our
technology under our license agreement with them or even cause them to
terminate the license agreement. Our loss of the license agreement with
Bristol-Myers Squibb could have a material adverse effect on our business and
stockholders could experience a decrease in the value of their investments.
WE LACK MANUFACTURING EXPERIENCE AND FACILITIES, AND IF WE HAVE TO EXPEND
RESOURCES TO BUILD FACILITIES OR IF WE FAIL TO HIRE COMPETENT OUTSIDE
MANUFACTURERS, OUR SECURITYHOLDERS COULD EXPERIENCE A DECREASE IN THE VALUE OF
THEIR INVESTMENT.
We currently do not have facilities or personnel capable of
manufacturing any products in commercial quantities. In the future, we may
establish our own manufacturing facilities to manufacture products if it
becomes economically attractive to do so. Building and operating production
facilities would require substantial additional funds and other resources and
well as interrupt our daily operations. We cannot be sure, however, whether
sufficient funds to build satisfactory manufacturing facilities would be
available on favorable terms to us, if at all. If we cannot obtain sufficient
financing, we will most likely have to retain outside manufacturers. We cannot
be sure, however, whether we will be able to retain competent manufacturers at
affordable rates, or that the manufacturers will be able to produce and deliver
our products pursuant to our instructions concerning quality, quantity and time
as well as other factors. If we
9
are unable to manufacture our products, if any, or have them manufactured by
others our business would be materially adversely affected and our
securityholders would experience a decrease in the value of their investment.
WE LACK MARKETING EXPERIENCE. IF WE FAIL TO RETAIN COMPETENT MARKETING
PERSONNEL OR OUTSIDE MARKETERS, OR IF WE HAVE INSUFFICIENT RESOURCES TO MARKET
OUR PRODUCTS, OUR SECURITYHOLDERS COULD EXPERIENCE A DECREASE IN THE VALUE OF
THEIR INVESTMENTS.
As of August 17, 1999, we had 19 employees, none of whom have any
experience in marketing pharmaceutical products. We would have to spend
significant funds and dedicate a significant amount of management resources to
develop our own sales force. We cannot say with any certainty that any funds or
resources for such purposes will be available on favorable terms, if at all.
Further, we cannot say with any certainty that, with a sales force, we would
successfully penetrate the markets for any of our products. For certain
products under development, we may seek to enter into marketing agreements with
other entities which would grant them exclusive marketing rights in return for
royalties based on sales, if any. Under some of these agreements, the other
entity may have the responsibility for all or a significant part of the
development and obtaining regulatory approval. In the event that the marketing
and development partner fails to develop a marketable product or fails to
successfully market a product, our business could be substantially hurt. The
sale of certain products outside the United States will also be dependent upon
the successful completion of arrangements with future partners, licensees or
distributors in each territory. We cannot give any assurance, however, that we
will successfully establish any additional collaborative arrangements or that,
if established, such future partners will successfully commercialize any
products, if at all.
WE ARE A SMALL COMPANY AND HEAVILY DEPEND UPON OUR OFFICERS, DIRECTORS AND
SCIENTISTS WHO ARE HIGHLY SKILLED IN BIOPHARMACOLOGY, ESPECIALLY OUR CHIEF
EXECUTIVE OFFICER AND PRESIDENT, ARTHUR P. BOLLON, PH.D. OUR BUSINESS WOULD BE
MATERIALLY ADVERSELY AFFECTED BY THE LOSS OF ANY SUCH PERSONS, AND
SECURITYHOLDERS COULD EXPERIENCE A DECREASE IN THE VALUE OF THEIR INVESTMENT.
Much of our success depends upon the continued contributions of our
executive officers, scientific and technical personnel and consultants. We are
particularly dependent upon Arthur P. Bollon, Ph.D., the Chairman of our Board
of Directors, Chief Executive Officer and President, and Daniel Shusterman, the
Vice President of Operations, Treasurer and Chief Financial Officer, Dorit
Arad, Ph.D., our Vice President of Drug Design, as well as our senior
scientists, Susan L. Berent, Ph.D., Hakim Labidi, Ph.D., Rajinder S. Sidhu,
Ph.D. and Richard M. Torczynski, Ph.D. As of August 17, 1999, we had 19
full-time employees, 15 of whom are engaged directly in research and
development activities, including 6 Ph.D.s, and 4 of whom are in executive and
administrative positions. Our employees are not governed by any collective
bargaining agreement, and we believe that our relationship with our employees
is good. We currently have an employment agreement with Dr. Bollon which
expires on November 6, 2003. Although we maintain "key person" life insurance
which provides that upon the death or incapacity of Dr. Bollon, we will receive
$2 million, Dr. Bollon's death or incapacity could substantially hurt our
business. The competition for qualified personnel is intense, and the loss of
services of certain key personnel could substantially hurt our business.
OUR SCIENTISTS WORK FOR OTHER COMPANIES AND INSTITUTIONS, AND WE MAY NOT HAVE
THE RIGHT TO THEIR INVENTIONS AND DISCOVERIES, WHICH MIGHT HAVE A MATERIAL
ADVERSE EFFECT ON OUR BUSINESS.
Our scientific collaborators and advisors are employed by companies
and institutions other than us, and some of them have consulting or other
advisory arrangements with other entities and institutions which could conflict
or compete with their obligations to us. Inventions or processes discovered by
such persons will not necessarily become our property but may remain the
property of such persons or of such persons' full-time employers. Our failure
to successfully assert our rights to any inventions or processes discovered by
our scientists might have a material adverse affect on our business.
10
IF WE CANNOT OBTAIN SATISFACTORY PRODUCT LIABILITY INSURANCE FOR OUR FUTURE
PRODUCTS, IF ANY, WE MAY NOT BE ABLE TO ENTER INTO MATERIAL AGREEMENTS WHICH
REQUIRE US TO HAVE SUCH INSURANCE, AND INVESTORS COULD, THEREFORE, EXPERIENCE A
DECREASE IN THE VALUE OF THEIR INVESTMENT.
To date, we have not had any product liability claims filed or
threatened against us. In the future, however, when and if we develop products,
our products could expose us to product liability claims. Although we intend to
obtain product liability insurance for our ongoing clinical trials, we cannot
say with any certainty that we will be able to obtain, maintain or increase our
insurance coverage in the future on terms favorable to us, if at all, or that
any claims against us will not be greater than the amount of such coverage.
Distributors of pharmaceutical and biological products often require minimum
product liability insurance coverage as a condition before they start
purchasing or accepting products for distribution. Our failure to satisfy such
insurance requirements could decrease our ability to achieve broad distribution
of our proposed products and have a material adverse effect on our business and
investors could experience a decrease in the value of their investment.
THE VALUE OF OUR SECURITYHOLDERS' INVESTMENT MAY BE SUPPRESSED BECAUSE OUR
COMPANY MAY BE A LESS ATTRACTIVE TAKEOVER CANDIDATE DUE TO THE FACT THAT A
MAJORITY OF OUR STOCK IS OWNED BY AFFILIATES.
Our current officers, directors and stockholders who own more than 5%
of our securities beneficially own or control approximately 57.0% of our
outstanding shares of common stock, which represents approximately 54.0% of our
total outstanding voting securities. Such officers, directors and principal
stockholders may, therefore, be able to elect all of our directors, to
determine the outcome of most corporate actions requiring stockholder approval,
and otherwise to control the direction of our business which may cause the
price of our common stock to be suppressed.
ALTHOUGH WE DO NOT PAY DIVIDENDS ON OUR COMMON STOCK, WE PAY ANNUAL DIVIDENDS
ON OUR SERIES A PREFERRED STOCK BY GIVING THE HOLDERS THEREOF MORE SERIES A
PREFERRED STOCK. OUR SERIES A PREFERRED STOCK IS CONVERTIBLE INTO COMMON STOCK,
AND SUCH CONVERSION WILL DILUTE THE BOOK VALUE OF THE COMMON STOCK PURCHASED IN
THIS OFFERING.
Since 1991, we have not paid any dividends on our common stock. We
intend to retain future earnings, if any, to provide funds for the operation of
our business and, accordingly, do not anticipate paying any cash dividends on
our common stock in the future. Furthermore, the terms of our outstanding
series A preferred stock do not allow for the payment of cash dividends on the
common stock unless and until all accrued and unpaid dividends on the series A
preferred stock shall have been paid or set apart for payment. Historically
speaking, we have paid dividends on our series A preferred stock with
payment-in-kind. Our series A preferred stock is convertible into an equal
number of shares of common stock. As more holders of the series A preferred
stock convert their preferred stock into common stock, investors in this
offering will experience a decline in the book value of their common stock.
WE ARE OBLIGATED TO INDEMNIFY OUR OFFICERS AND DIRECTORS, ABSENT CERTAIN
CIRCUMSTANCES, WHICH MAY REQUIRE US TO SPEND TIME AND MONEY OTHERWISE
ALLOCATED, AND CAUSE A DECREASE IN THE VALUE OF OUR SECURITYHOLDERS'
INVESTMENT.
We are incorporated under the laws of the state of Delaware. Our
certificate of incorporation includes certain provisions permitted under the
Delaware General Corporation Law, whereby our officers and directors are
indemnified by us against certain liabilities. Our certificate of incorporation
also limits, to the fullest extent permitted by Delaware General Corporate Law,
a director's liability for monetary damages for breach of fiduciary duty,
including gross negligence, except liability for breach of loyalty, acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of the law, the unlawful payment of a dividend or unlawful
stock purchase or redemption and any transaction from which the director
derives an improper personal benefit. An insurance policy, which provides for
coverage for certain liabilities of its officers and directors has been issued
to us. However, although we do not currently know of any conduct of any officer
or director which may have a material effect on our business, if such insurance
proves to be inadequate, we will have to use funds otherwise allocated to
indemnify any director. The
11
use of funds and resources, including management's time and energy, to properly
indemnify or otherwise prepare for the defense of any director might have a
material adverse effect on our business.
WE ARE RELIANT UPON THE MARKET-MAKING ACTIVITIES OF JANSSEN-MEYERS ASSOCIATES,
L.P., WHICH IS ALSO AN AFFILIATE. WITHOUT JANSSEN-MEYERS' MARKET-MAKING
ACTIVITIES, INVESTORS MAY HAVE DIFFICULTY RESELLING THEIR SECURITIES.
Messrs. Meyers and Janssen are the principals of the corporate general
partner of one of our market-makers who was also the underwriter of our initial
public offering, Janssen-Meyers Associates, L.P. If Janssen-Meyers or its
affiliates are deemed to have control of our business, regulatory requirements
of the SEC, Nasdaq and the New York Stock Exchange, Inc. could prevent them
from engaging in market-making activities relating to our securities. If
Janssen-Meyers is unable to make a market in our securities because it is
deemed to have effective voting control or if, for any other reason, it chooses
not to or is unable to make a market in our securities, there can be no
assurance that any other broker-dealers would make a market in our securities.
Without market-makers, it would be very difficult for holders of our securities
to sell their securities in the secondary market, and the market prices for
such securities would be substantially harmed. Also, we cannot give any
assurances that an active trading market for our securities be maintained
whether or not Janssen-Meyers makes a market in our securities. In the absence
of such a market, investors may be unable to liquidate their investment.
IF WE FAIL TO MEET NASDAQ'S MAINTENANCE REQUIREMENTS AND ARE DELISTED FROM
NASDAQ, INVESTORS MAY HAVE DIFFICULTY SELLING THEIR SECURITIES, WHICH WOULD
CAUSE A DECREASE IN THE VALUE OF THEIR INVESTMENT.
Our common stock, class C warrants and class D warrants are currently
quoted on the Nasdaq SmallCap Market System. Our common stock is quoted under
the symbol, "CYPH." Our class C warrants are quoted under the symbol, "CYPHW."
Our class D warrants are quoted under the symbol, "CYPHZ." Nasdaq has certain
requirements that every company must meet in order to have their securities
quoted on the Nasdaq SmallCap System. Although we currently meet Nasdaq's
criteria for continued listing, we cannot say with any certainty that we will
continue to meet such criteria.
For continued inclusion on the Nasdaq SmallCap Market System, a
company has to maintain the following:
o either:
o net tangible assets of $2 million,
o market capitalization of $35 million or
o net income of $500,000 in the most recently
completed fiscal year or in two of the last
three most recently completed fiscal years;
o a minimum bid price of $1.00 per share;
o in the case of a convertible debt security, a
principal amount outstanding of at least $5 million;
o in the case of common stock, at least 300 round lot
holders; and
o 500,000 publicly held shares having a market value
of at least $1 million.
If we are unable to meet the continued listing criteria of the Nasdaq
SmallCap Market System any time in the future due to our continued operating
losses or otherwise, and our securities are delisted, trading of our
securities, if any, would be conducted in the over-the-counter market in the
so-called "pink sheets" or, if available, the NASD's "Electronic Bulletin
Board." As a result, investors could find it more difficult to dispose of, or
to obtain accurate quotations as to the value of, our securities.
IF WE ARE DELISTED FROM NASDAQ, BROKER-DEALERS MAY BE UNWILLING TO SELL
INVESTORS' STOCK, AND INVESTORS WOULD EXPERIENCE A DECREASE IN THE VALUE OF
THEIR INVESTMENT.
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If our securities are delisted from the Nasdaq SmallCap Market System,
they may become subject to Rule 15g-9 under the Securities Exchange Act of
1934, which imposes additional sales practice requirements on broker-dealers
that sell such securities. There are exceptions to Rule 15g-9 and they include
transactions meeting the safe-harbor requirements of Rules 505 or 506 under
Regulation D of the Securities Act, and transactions in which the purchaser is
an institutional accredited investor, as defined in the Securities Act, or an
established customer, as defined in the Securities Act, of the broker-dealer.
For transactions which have to comply with the requirements of Rule 15g-9 under
the Securities Exchange Act of 1934, a broker-dealer must determine whether or
not the purchaser meets a special suitability standard, and the broker-dealer
must receive the purchaser's written consent to the transaction before the
sale. These requirements could make broker-dealers unwilling or even unable to
sell our securities which could make it more difficult for our investors to
resell their securities to other parties.
IF OUR STOCK IS DELISTED BY NASDAQ AND BECOMES A "PENNY STOCK," INVESTORS MIGHT
EXPERIENCE A DECREASE IN THE VALUE OF THEIR INVESTMENTS DUE TO THE RESTRICTIONS
ON BROKER-DEALERS IN SELLING "PENNY STOCK."
The SEC defines a "penny stock" to be any equity security that has a
market price under $5.00 per share or has an exercise price under $5.00 per
share, subject to certain exceptions. Unless exempt, the rules require the
delivery, prior to any transaction in a penny stock, of SEC material telling
the purchaser certain information about the penny stock. Purchasers must also
be told about the commissions that the broker-dealers and the registered
representatives will get and they must be told about the securities current
prices. Finally, purchasers must also be given statements every month which
have to tell the purchaser about his or her securities' recent prices and about
the limitations of the penny stock market. These penny stock restrictions will
not apply to our securities if they stay quoted on the Nasdaq SmallCap Market
System, and if they have certain price and volume information provided on a
current and continuing basis or if they meet certain minimum net tangible
assets or average revenue criteria. We cannot say with any certainty, however,
that our securities will continue to meet the Nasdaq SmallCap Market
requirements in the future and if we do not, the prices of our securities could
decrease and investors could find it difficult to sell their securities. If we
were to remain exempt from the penny-stock restrictions, we still have to
comply with Section 15(b)(6) under the Securities Exchange Act of 1934, which
gives the SEC the authority to stop any person who breaks the law when selling
penny stock from selling any more penny stock or from working with any
broker-dealer.
WE HAVE GRANTED REGISTRATION RIGHTS TO SEVERAL PARTIES HOLDING OUR COMMON STOCK
OR WHO HAVE THE RIGHT TO PURCHASE OUR COMMON STOCK. THE REGISTRATION OF SUCH
SECURITIES WILL INCREASE THE NUMBER OF FREELY TRADEABLE SHARES OF OUR COMMON
STOCK AND MAY DECREASE THE BOOK VALUE OF OUR SECURITYHOLDERS' SHARES OF OUR
COMMON STOCK.
There will be 11,895,210 registered shares of our common stock
outstanding upon the completion of this offering. All of these shares will be
freely transferrable without restriction if we continue to comply with the SEC
and certain states' registration requirements. Certain of our other outstanding
securities are not registered with the SEC, and are considered to be
"restricted securities" as that term is defined in Rule 144 under the
Securities Act and may only be sold in certain circumstances.
We have also granted certain investors demand and "piggy-back"
registration rights to have their common stock registered with the SEC. We will
have to pay for the expense of registration if one or more of these groups
exercise their demand registration rights or "piggy-back" registration rights.
The expense could be high. Also, because there would be a high number of shares
outstanding, we could find it more difficult to obtain future financing.
The sale, or availability for sale, of substantial amounts of common
stock in the public market pursuant to Rule 144 or registration could cause the
market price of the common stock and our other securities to decrease which
could hurt our ability to raise additional money through the sale of our
securities or through debt financing. Also, to the extent that outstanding
options and warrants are exercised, securityholders' ownership interest will
drop. Also, if and to the extent that we reduce the exercise price of
outstanding warrants or options, our stockholders could experience additional
dilution.
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THE VALUE OF THE SECURITYHOLDERS' INVESTMENT MAY BE SUPPRESSED BECAUSE OUR
COMPANY MAY BE A LESS ATTRACTIVE TAKEOVER CANDIDATE DUE TO THE FACT THAT OUR
BOARD OF DIRECTORS HAS THE DISCRETION TO ISSUE 10,000,000 SHARES OF PREFERRED
STOCK SUPERIOR TO OUR COMMON STOCK WITHOUT STOCKHOLDER APPROVAL.
Our certificate of incorporation authorizes our board of directors to
issue a maximum of 10,000,000 shares of preferred stock on terms which may be
determined by them without getting stockholder approval. Of these 10,000,000
shares, 4,000,000 shares have already been designated as series A preferred
stock of which 705,343 remain outstanding as of August 17, 1999. The series A
preferred stock may be converted by the holder into an equal number of shares
of common stock. Also, the terms of the series A preferred stock include
dividend and liquidation preferences which could also hurt the rights of
holders of the common stock being offered hereby. Each share of series A
preferred stock is entitled to one vote on all matters on which the common
stock has the right to vote. Holders of series A preferred stock are entitled
to vote as a separate class on any proposed adverse change in their rights,
preferences or privileges and any increase in the number of authorized shares
of series A preferred stock. Further, the terms of any additional series of
preferred stock, which may also include priority claims to assets and
dividends, as well as special voting rights, could hurt the rights of the
holders of the common stock being offered hereby. Other than the series A
preferred stock, we have not issued any other preferred stock, and we do not
plan to issue any additional preferred stock other than payment- in-kind
dividends. Investors should also know that if too much preferred stock is
outstanding, it could make it more difficult for a third party to take control
of our business or to remove our board of directors and executive officers.
Hostile bids for control of a company usually result in the market prices for a
company's securities to increase. It would also dilute or subordinate the
rights of holders of common stock and cause the market price of the common
stock to drop.
USE OF PROCEEDS
We will not receive any proceeds when the Selling Stockholders' sell
their common stock to others. However, we may receive proceeds when the Selling
Stockholders exercise their options to acquire such common stock. We intend to
use any such proceeds for research and development and other general corporate
purposes.
DETERMINATION OF OFFERING PRICE
The Selling Stockholders may sell their shares of common stock through
public or private transactions at current market prices, or at previously
negotiated prices.
14
SELLING STOCKHOLDERS
The shares of common stock to which this prospectus relates are being
registered for reoffers and resales by the Selling Stockholders who have
acquired or may acquire such common stock pursuant to the exercise of options
granted under our 1996 Stock Option Plan. The Selling Stockholders named below
may resell all, a portion or none of their shares of common stock, from time to
time.
Participants under our 1996 Stock Option Plan who are deemed to be
"affiliates" of Cytoclonal Pharmaceutics Inc. and who may acquire common stock
under our 1996 Stock Option Plan may be added to the Selling Stockholders
listed below from time to time by use of a prospectus supplement filed pursuant
to Rule 424(b) under the Securities Act. An "affiliate" is defined in Rule 405
under the Securities Act as a "person that directly, or indirectly, through one
or more intermediaries, controls or is controlled by, or is under common
control with" Cytoclonal Pharmaceutics Inc.
The table below sets forth with respect to each Selling Stockholder
who is an affiliate of Cytoclonal Pharmaceutics Inc., the number of shares of
common stock beneficially owned before and after the sale of the common stock
offered hereby, the number of shares of common stock to be sold, and the
percent of the outstanding shares of common stock owned before and after the
sale of the common stock offered hereby.
- ----------------------------
*Represents less than 1%.
(1) Unless indicated, the we assume that all persons named in the table
have sole voting and investment power with respect to all shares of
our common stock beneficially owned by them. For purposes of this
table, any security which such person has the right to acquire within
60 days after such date is deemed to be outstanding for the
15
purpose of computing the percentage ownership for such person, but is
not deemed to be outstanding for the purpose of computing the
percentage of any other person.
(2) Does not include shares of common stock that may be acquired by the
Selling Stockholders upon exercise of options which have not vested
within 60 days of this prospectus which shares, if any, will be added
to the number of shares listed by one or more supplements to this
prospectus. Furthermore, the inclusion in this prospectus of the
stated number of shares does not constitute a commitment to sell any
or all of such shares. The number of shares of common stock offered
shall be determined from time to time by each Selling Stockholder at
his or her sole discretion.
(3) Based on an aggregate of 11,895,210 shares of common stock that will
be issued and outstanding upon the completion of this offering,
consisting of 10,395,210 shares of common stock issued and outstanding
as of August 17, 1999 and the 1,500,000 shares of common stock to
which this prospectus relates.
(4) Includes 167,400 shares of common stock and options to purchase
466,000 shares of common stock. Does not include options to purchase
79,000 shares of common stock not exercisable within 60 days hereof.
(5) Includes 5,000 shares of common stock and options to purchase 63,000
shares of common stock. Does not include options to purchase 17,000
shares of common stock not exercisable within 60 days hereof.
(6) Includes options to purchase 112,000 shares of common stock. Does not
include options to purchase 17,000 shares of common stock not
exercisable within 60 days hereof.
(7) Includes options to purchase 108,000 shares of common stock. Does not
include options to purchase 17,000 shares of common stock not
exercisable within 60 days hereof.
(8) Includes 2,500 shares of common stock, options to purchase 108,000
shares of common stock and warrants to purchase 3,000 shares of common
stock. Does not include options to purchase 17,000 shares of common
stock not exercisable within 60 days hereof.
PLAN OF DISTRIBUTION
The shares of common stock to which this prospectus pertains may be
sold or transferred for value by the Selling Stockholders, or by pledgees,
donees, transferees or other successors in interest to the Selling
Stockholders, in one or more transactions on the Nasdaq SmallCap Market, in
negotiated transactions or in a combination of such methods of sale, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at prices otherwise negotiates. The Selling Stockholders may
effect such transactions by selling their shares of common stock to or through
broker-dealers, and such broker-dealers may receive compensation in the form of
underwriting discounts, concessions or commissions from the Selling
Stockholders and/or the purchasers of the shares of common stock for whom such
broker-dealers may act as agent (which compensation may be less than or in
excess of customary commissions). The Selling Stockholders and any
broker-dealers that participate in the distribution of the shares of common
stock may be deemed to be "underwriters" within the meaning of Section 2(11) of
the Securities Act, and any commissions received by them and any profit on the
resale of the shares of common stock sold by them may deemed to be underwriting
discounts and commissions under the Securities Act. The sale of the shares of
common stock by the Selling Stockholders is subject to the prospectus delivery
requirements of the Securities Act.
Upon us being notified by a Selling Stockholder that any material
arrangement has been entered into with a broker or dealer for the sale of
shares of common stock through a secondary distribution, or a purchase by a
supplemented prospectus will be filed, if required, pursuant to Rule 424(b)
under the Securities Act, disclosing (i) the
16
name of each such Selling Stockholder and the participating broker-dealers,
(ii) the number of shares of Common Stock involved, (iii) the price at which
such shares are being sold, (iv) the commissions paid or the discounts or
concessions allowed to such broker-dealers, (v) where applicable, that such
broker-dealers did not conduct any investigation to verify the information set
out or incorporated by reference in the Prospectus, as supplemented, and (vi)
other facts material to the transactions.
In addition to any such number of shares of common stock sold
hereunder, a Selling Stockholder may, at the same time, sell any shares of
common stock, including the shares of common stock to which this prospectus
pertains, owned by him or her in compliance with all of the requirements of
Rule 144 promulgated under the Securities Act, regardless of whether such
shares are covered by this prospectus.
There is no assurance that any of the Selling Stockholders will sell
any or all of the shares of common stock offered hereby.
We will pay all expenses in connection with this offering other than
commissions and discounts of underwriters, dealers or agents. All selling and
other expenses incurred by individual Selling Stockholders will be borne by
such Selling Stockholders.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for
us by Morrison Cohen Singer & Weinstein, LLP, New York, New York, a partner of
which holds options to acquire shares of common stock being registered in this
Registration Statement.
EXPERTS
The balance sheets as of December 31, 1998 and 1997 and the related
statements of operations, changes in stockholders' equity and cash flows for
each of the years in the three-year period ended December 31, 1998 included in
the Annual Report on Form 10-K for the fiscal year ended December 31, 1998
which is incorporated by reference in this prospectus have been audited by, and
are incorporated by reference herein in reliance upon the report of Richard A.
Eisner & Company, LLP, independent auditors, given on the authority of that
firm as experts in accounting and auditing.
17
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No dealer, salesperson or any other individual has been authorized to give any
information or to make any representations not contained in this prospectus
and, if given or made, such information or representations must not be relied
upon as having been authorized by us or the Selling Stockholders. This
prospectus does not constitute an offer to sell, or a solicitation to buy, any
security by any person in any jurisdiction which such offer or solicitation is
unlawful. Neither the delivery of this prospectus nor any sale made hereunder
shall, under any circumstances imply that the information in this prospectus is
correct as of any time subsequent to the date of this prospectus.
================================================================================
================================================================================
1,500,000 SHARES
CYTOCLONAL PHARMACEUTICS INC.
COMMON STOCK
-----------
PROSPECTUS
-----------
AUGUST 30, 1999
================================================================================
PART II
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
Cytoclonal Pharmaceutics Inc. incorporates by reference the documents
listed below into this Registration Statement on Form S-8. All documents
subsequently filed by Cytoclonal Pharmaceutics Inc. pursuant to Section 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act of 1934, prior to the filing
of a post-effective amendment which indicates that all securities offered have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference in this Registration Statement and to be
part thereof from the date of filing of such documents:
1. Annual Report on Form 10-K for the fiscal year ended
December 31, 1998;
2. Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 1999;
3. Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1999;
4. Current Report on Form 8-K, dated June 12, 1998,
filed with the SEC on September 9, 1998;
5. Definitive proxy statement filed with the SEC on
July 15, 1999 pursuant to Regulation 14A under the
Securities Exchange Act of 1934;
6. The description of our common stock set forth in our
Registration Statement filed under Section 12 of the
Securities Exchange Act of 1934 on Form 8-A on
October 2, 1995, and any amendment or report filed
for the purpose of updating any such description;
and
7. Form S-8 (File No.: 333-11691) filed with the SEC on
September 10, 1996.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
A partner of Morrison Cohen Singer & Weinstein, LLP, counsel to
Cytoclonal Pharmaceutics Inc. in connection with this offering holds options to
acquire shares of common stock being registered in this Registration Statement.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Certificate of Incorporation and By-Laws of the Registrant
provides that Cytoclonal Pharmaceutics Inc. shall indemnify any person to the
full extent permitted by the Delaware General Corporation Law (the "GCL").
Section 145 of the GCL, relating to indemnification, is hereby incorporated
herein by reference.
Insofar as indemnification for liabilities under the Securities Act
may be permitted to Directors, officers or controlling persons of Cytoclonal
Pharmaceutics Inc. pursuant to Cytoclonal Pharmaceutics Inc.'s By-Laws and the
Delaware General Corporation Law, Cytoclonal Pharmaceutics Inc. has been
informed that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
Cytoclonal Pharmaceutics Inc.'s Certificate of Incorporation includes
certain provisions permitted pursuant to Delaware law whereby officers and
Directors of Cytoclonal Pharmaceutics Inc. are to be indemnified against
certain liabilities. Cytoclonal Pharmaceutics Inc.'s Restated Certificate of
Incorporation also limits, to the fullest extent permitted by Delaware law, a
director's liability for monetary damages for breach of fiduciary duty,
including
II-1
gross negligence, except liability for (i) breach of the director's duty of
loyalty, (ii) acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of the law, (iii) the unlawful payment of a
dividend or unlawful stock purchase or redemption and (iv) any transaction from
which the director derives an improper personal benefit. Delaware law does not
eliminate a director's duty of care and this provision has no effect on the
availability of equitable remedies such as injunction or rescission based upon
a director's breach of the duty of care. In addition, Cytoclonal Pharmaceutics
Inc. has obtained an insurance policy providing coverage for certain
liabilities of its officers and Directors.
In accordance with Section 102(a)(7) of the GCL, the Certificate of
Incorporation of the Registrant eliminates the personal liability of directors
to Cytoclonal Pharmaceutics Inc. or its stockholders for monetary damages for
breach.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS
- -----------------------------------
* Filed previously as an exhibit to Registration Statement on Form S-8 (File
No.: 333-11691) and is incorporated by reference herein.
**Filed previously as an exhibit to Annual Report on Form 10-K (File No.:
000-26078) for the year ended December 31, 1998 and is incorporated by
reference herein.
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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-8 and has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Dallas, State of Texas,
on this 30th day of August 1999.
CYTOCLONAL PHARMACEUTICS INC.
By: /s/ Arthur P. Bollon
---------------------------------------
Name: Arthur P. Bollon, Ph.D.
Title: Chairman, President and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Arthur P. Bollon, Ph.D., with
the power of substitution, his attorney-in-fact, to sign any amendments to this
Registration Statement and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that said attorney-in-fact, or his
substitute, may do or choose to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
as amended, this registration statement has been signed below by the following
persons in the capacities and on the dates indicated:
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EXHIBIT INDEX
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