Filed
Pursuant to Rule 424(b)(3)
Registration
No. 333-137606
ALTEON
INC.
50,891,414
SHARES OF COMMON STOCK
On
July
21, 2006, in connection with our merger with HaptoGuard, Inc., we issued
37,399,065 shares of our common stock to former stockholders of HaptoGuard,
which shares consist of (i) 22,524,437 shares of common stock and (ii)
14,874,628 shares of common stock issued upon the conversion of a portion of
our
preferred stock that was transferred to HaptoGuard by Genentech, and we issued
13,492,349 shares of common stock to Genentech upon the conversion of an
additional portion of the preferred stock held by Genentech. This prospectus
relates to the resale from time to time of up to a total of 50,891,414 shares
of
our common stock acquired in connection with the merger by certain former
stockholders of HaptoGuard and by Genentech, referred to as the selling
stockholders, described in the section entitled “Selling Stockholders” on page
21 of this prospectus.
The
selling stockholders will receive all of the proceeds from the disposition
of
the shares or interests therein and will pay any and all underwriting discounts
and selling commissions relating thereto. We have agreed to pay the legal,
accounting, printing and other expenses, excluding fees and expenses of any
counsel retained by or on behalf of the selling stockholders, related to the
registration of the shares.
Our
common stock is listed on The American Stock Exchange under the symbol “ALT.”
On October 13, 2006, the last reported sale price of our common stock was
$.18 per share. Our principal executive offices are located at 6 Campus Drive,
Parsippany, New Jersey 07054, and our telephone number is
201-934-5000.
You
should consider carefully the risks that we have described in
“Risk
Factors”
beginning on page 5 before deciding whether to invest in our common
stock.
Neither
the Securities and Exchange Commission nor any state securities commission
has
approved or disapproved of these securities or passed upon the accuracy or
adequacy of this prospectus. Any representation to the contrary is a criminal
offense.
THE
DATE OF THIS PROSPECTUS IS OCTOBER 16, 2006
TABLE
OF CONTENTS
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ABOUT
THIS PROSPECTUS
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2
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OUR
BUSINESS
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3
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RISK
FACTORS
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5
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RISKS
RELATED TO OUR BUSINESS
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5
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RISKS
RELATED TO THE MERGER
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18
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RISKS
RELATED TO OWNING ALTEON’S COMMON STOCK
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19
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FORWARD-LOOKING
STATEMENTS AND CAUTIONARY STATEMENTS
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21
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USE
OF PROCEEDS
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21
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SELLING
STOCKHOLDERS
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21
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PLAN
OF DISTRIBUTION
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24
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LEGAL
MATTERS
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25
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EXPERTS
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25
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WHERE
YOU CAN FIND MORE INFORMATION
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26
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INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
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26
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ABOUT
THIS PROSPECTUSS
You
should read this prospectus and the information and documents incorporated
by
reference carefully. Such documents contain important information you should
consider when making your investment decision. See “Incorporation of Certain
Documents by Reference” on page 26. You should rely only on the information
provided in this prospectus or documents incorporated by reference into this
prospectus. We have not authorized anyone to provide you with different
information. The selling stockholders are offering to sell and seeking offers
to
buy shares of our common stock only in jurisdictions in which 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 our common stock.
In
this
prospectus, we refer to Alteon Inc. as the “Company” or “Alteon.”
OUR
BUSINESS
The
following is only a summary. We urge you to read this entire prospectus,
including the more detailed consolidated financial statements, notes to the
consolidated financial statements and other information incorporated by
reference from our other filings with the Securities and Exchange Commission.
Investing in our common stock involves risks. Therefore, please carefully
consider the information provided under the heading “Risk Factors” beginning on
page 5.
Overview
We
are a
product-based biopharmaceutical company engaged in the development of small
molecule drugs to treat and prevent cardiovascular disease in diabetic patients.
We have identified several promising product candidates that we believe
represent novel approaches to some of the largest pharmaceutical markets. We
have advanced one of these products into Phase 2 clinical trials.
Our
lead
drug candidate, alagebrium chloride or alagebrium (formerly ALT-711), is a
product of our drug discovery and development program. Alagebrium has
demonstrated potential efficacy in two clinical trials in heart failure, as
well
as in animal models of heart failure and nephropathy, among others. It has
been
tested in approximately 1,000 patients in a number of Phase 1 and Phase 2
clinical trials. Our goal is to develop alagebrium in diastolic heart failure,
or DHF.
On
July
21, 2006, we completed a merger with HaptoGuard, Inc., whereby the two companies
combined operations, including their complementary product platforms in
cardiovascular diseases, diabetes and other inflammatory diseases. The
newly-combined company has two products in Phase 2 clinical development:
| · |
ALT-2074,
formerly HaptoGuard’s licensed lead compound BXT-51072, is a glutathione
peroxidase mimetic in clinical development for reduction of mortality
in
post-myocardial infarction patients with diabetes. The compound has
demonstrated the ability to reduce infarct size by approximately
85
percent in a mouse model of heart attack called ischemia reperfusion
injury. A Phase 2 clinical study for this compound was opened for
enrollment in May, but progress has been slow by virtue of our limited
financial resources and the eruption of the conflict in the Middle
East,
as many of the sites open for patient enrollment are in northern
Israel.
The Company also owns a license to a proprietary genetic biomarker
that
has shown the potential to identify patients who are most responsive
to
ALT-2074.
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| · |
Alagebrium
chloride (formerly ALT-711), Alteon's lead compound, is an Advanced
Glycation End-product Crosslink Breaker being developed for heart
failure.
The most recent data on alagebrium, presented from two Phase 2 clinical
studies at the American Heart Association meeting in November 2005,
demonstrated the ability of alagebrium to improve overall cardiac
function, including measures of diastolic and endothelial function.
In
these studies, alagebrium also demonstrated the ability to significantly
reduce left ventricular mass. The compound has been tested in
approximately 1,000 patients, which represents a sizeable human safety
database, in a number of Phase 2 clinical studies.
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| o |
We
recently announced that the Juvenile Diabetes Research Foundation
(JDRF)
awarded a grant to one of our independent researchers, Mark Cooper,
M.D.,
Ph.D., Professor at the Baker Heart Research Institute, Melbourne,
Australia. This grant will fund a multinational Phase 2 clinical
study of
alagebrium on renal function in patients with type 1 diabetes and
microalbuminuria. Alagebrium will be tested for its ability to reverse
kidney damage caused by diabetes, and to reverse the protein excretion
which is characteristic of diabetic nephropathy. Dr. Cooper has
demonstrated promising preclinical results with alagebrium in diabetic
kidney disease. The trial is expected to be initiated in the fourth
quarter of 2006.
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Additionally,
we filed an Investigational New Drug Application (IND) with the U.S.
Food
& Drug Administration's (FDA) Division of Cardio-Renal Drug Products
for a Phase 2b clinical study of our lead A.G.E. Crosslink Breaker
compound, alagebrium, in DHF. The IND has passed the 30-day review
period
for the proposed study’s clinical protocol, and we are allowed to initiate
the study at our discretion.
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The
merger of the two companies was structured as an acquisition by Alteon. Under
the terms of the merger agreement, HaptoGuard shareholders received 37.4 million
shares of Alteon common stock (approximately 31 percent of the shares after
completion of the merger). As an additional part of the merger, a portion of
existing shares of Alteon preferred stock held by Genentech was converted into
Alteon common stock.
Key
components of the transactions completed in July 2006 between Alteon, HaptoGuard
and Genentech were as follows:
| · |
Alteon
acquired all outstanding equity of HaptoGuard. In exchange, HaptoGuard
shareholders received from Alteon $5.3 million in Alteon common stock,
or
approximately 22.5 million shares.
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| · |
Genentech
converted a portion of its existing Alteon preferred stock to Alteon
common stock. A portion of Alteon preferred stock held by Genentech,
which, when converted to Alteon common stock was equal to $3.5 million
in
Alteon common stock, was transferred to HaptoGuard shareholders.
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The
remaining Alteon preferred stock held by Genentech was cancelled.
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Genentech
will receive milestone payments and royalties on any future net sales
of
alagebrium, and received a right of first negotiation on
ALT-2074.
|
We
had
been evaluating potential pre-clinical and clinical studies in other therapeutic
indications in which alagebrium may address significant unmet needs. During
the
period ended June 30, 2006, we curtailed such studies to conserve cash. In
addition to our anticipated clinical studies in renal disease, ischemia
reperfusion injury and heart failure, we have conducted early research studies
focusing on atherosclerosis; Alzheimer's disease; photoaging of the skin; eye
diseases, including age-related macular degeneration, or AMD, and glaucoma;
and
other diabetic complications, including renal diseases.
Since
our
inception in October 1986, we have devoted substantially all of our resources
to
research, drug discovery and development programs. To date, we have not
generated any revenues from the sale of products and do not expect to generate
any such revenues for a number of years, if at all. We have incurred an
accumulated deficit of $227,847,026 as of June 30, 2006, and expect to incur
net
losses, potentially greater than losses in prior years, for a number of
years.
We
have
financed our operations through proceeds from public offerings of common stock,
private placements of common and preferred equity securities, revenue from
former collaborative relationships, reimbursement of certain of our research
and
development expenses by our collaborative partners, investment income earned
on
cash and cash equivalent balances and short-term investments and the sale of
a
portion of our New Jersey State net operating loss carryforwards and research
and development tax credit carryforwards.
We
were
incorporated in Delaware in October 1986. Our headquarters are located at 6
Campus Drive, Parsippany, New Jersey 07054. We maintain a web site at
www.alteon.com and our telephone number is (201) 934-5000. Our annual reports
on
Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form
8-K,
and all amendments to those reports, are available to you free of charge through
the “Investor Relations” section of our website as soon as reasonably
practicable after such materials have been electronically filed with, or
furnished to, the Securities and Exchange Commission (“SEC”).
RISK
FACTORS
The
following factors should be considered carefully in evaluating whether to
purchase shares of Alteon common stock. These factors should be considered
in
conjunction with any other information included or incorporated by reference
herein, including in conjunction with forward-looking statements made herein.
See “Where You Can Find More Information” on Page 26 .
Risks
Related To Our Business
If
we are unable to obtain sufficient additional funding in the near term, we
will
be forced to cease operation.
While
we
intend to pursue development of alagebrium in high potential cardiovascular
indications such as heart failure and ALT-2074 in the treatment of heart
complications, any continued development of alagebrium and ALT-2074 by us is
contingent upon additional funding or a strategic partnership.
The
Company is urgently continuing to pursue fund-raising possibilities through
the
sale of its equity securities. If the Company is unsuccessful in its efforts
to
raise additional funds through the sale of additional equity securities, Alteon
will not have the ability to continue as a going concern after the fourth
quarter of 2006.
As
of
June 30, 2006, we had working capital of $4,029,118, including $4,984,928 of
cash and cash equivalents. Our cash used in operating activities for the six
months ended June 30, 2006 was $3,051,175.
As
a
result of the merger with HaptoGuard, which closed on July 21, 2006, the Company
was required to make payment of severance and insurance costs in the amount
of
approximately $2.0 million. In addition, the Company has incurred transaction
fees and expenses of approximately $1,259,000 in connection with the merger,
which fees and expenses are currently due and payable. There
can
be no assurance that the products or technologies acquired in the merger will
result in revenues to us or any meaningful return on investment to our
stockholders.
The
amount and timing of our future capital requirements will depend on numerous
factors, including the timing
of
resuming
our
research and development programs, if
at
all, the
number and characteristics of product candidates that we pursue, the conduct
of
preclinical tests and clinical studies, the status and timelines of regulatory
submissions, the costs associated with protecting patents and other proprietary
rights, the ability to complete strategic collaborations and the availability
of
third-party funding, if any.
Selling
securities to satisfy our capital requirements may have the effect of materially
diluting the current holders of our outstanding stock. We may also seek
additional funding through corporate collaborations and other financing
vehicles. If funds are obtained through arrangements with collaborative partners
or others, we may be required to relinquish rights to our technologies or
product candidates.
We
need additional capital, but access to such capital is uncertain.
Alteon’s
current resources are insufficient both to fund its commercialization efforts
and to continue its future operations beyond the fourth quarter of 2006. As
of June 30, 2006, Alteon had cash on hand of approximately $4,984,928.
In September 2006 we closed on approximately $1.4 million in financing.
Prior to the financing, Alteon was expending approximately $450,000 in cash
per
month. Following the merger, we currently expect to spend approximately $560,000
in cash per month. Our capital needs beyond the fourth quarter of 2006 will
depend on many factors, including our research and development activities and
the success thereof, the scope of our clinical trial program, the timing of
regulatory approval for our products under development and the successful
commercialization of our products. Our needs may also depend on the magnitude
and scope of the activities, the progress and the level of success in our
clinical trials, the costs of preparing, filing, prosecuting, maintaining and
enforcing patent claims and other intellectual property rights, competing
technological and market developments, changes in or terminations of existing
collaboration and licensing arrangements, the establishment of new collaboration
and licensing arrangements and the cost of manufacturing scale-up and
development of marketing activities, if undertaken by us. We currently do not
have committed external sources of funding and may not be able to secure
additional funding on any terms or on terms that are favorable to us. If we
raise additional funds by issuing additional stock, further dilution to our
existing stockholders will result, and new investors may negotiate for rights
superior to existing stockholders. If adequate funds are not available, we
may
be required to:
| · |
delay,
reduce the scope of or eliminate one or more of our development programs;
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obtain
funds through arrangements with collaboration partners or others
that may
require us to relinquish rights to some or all of our technologies,
product candidates or products that we would otherwise seek to develop
or
commercialize ourselves;
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license
rights to technologies, product candidates or products on terms that
are
less favorable to us than might otherwise be available;
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seek
a buyer for all or a portion of our business; or
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wind
down our operations and liquidate our assets on terms that are unfavorable
to us.
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Alteon’s
ability to continue as a going concern is dependent on future financing.
J.H.
Cohn
LLP, our independent registered public accounting firm, has included an
explanatory paragraph in their report on our financial statements for the fiscal
year ended December 31, 2005, which expresses substantial doubt about our
ability to continue as a going concern. The inclusion of a going concern
explanatory paragraph in J.H. Cohn LLP’s report on our financial statements
could have a detrimental effect on our stock price and our ability to raise
additional capital.
Our
financial statements have been prepared on the basis of a going concern, which
contemplates the realization of assets and the satisfaction of liabilities
in
the normal course of business. We have not made any adjustments to the financial
statements as a result of the outcome of the uncertainty described above.
Accordingly, the value of the company in liquidation may be different from
the
values set forth in our financial statements.
Our
continued success will depend on our ability to continue to raise capital in
order to fund the development and commercialization of our products. Failure
to
raise additional capital may result in substantial adverse circumstances,
including delisting of our common stock shares from the American Stock Exchange,
which could substantially decrease the liquidity and value of such shares,
or
ultimately result in our liquidation.
Alteon
and HaptoGuard have each historically incurred operating losses and we expect
these losses to continue.
Alteon
and HaptoGuard have each historically incurred substantial operating losses
due
to their research and development activities and expect these losses to continue
after the merger for the foreseeable future. As of December 31, 2005, Alteon
and
HaptoGuard had an accumulated deficit of $222,813,445 and $2,425,258,
respectively. Alteon’s fiscal year 2005, 2004 and 2003 net losses were
$12,614,459, $13,958,646, and $14,452,418, respectively. HaptoGuard’s fiscal
year 2005 and 2004 net losses were $1,654,695 and $770,563, respectively.
Alteon’s fiscal year 2005, 2004 and 2003 net losses applicable to common
stockholders were $17,100,795, $18,093,791 and $18,243,265, respectively. If
we
are able to obtain sufficient additional funding, we expect to expend
significant amounts on research and development programs for alagebrium and
ALT-2074. Research and development activities are time consuming and expensive,
and will involve the need to engage in additional fund-raising activities,
identify appropriate strategic and collaborative partners, reach agreement
on
basic terms, and negotiate and sign definitive agreements. We are actively
seeking new financing to provide financial support for our research and
development activities. However, at this time we are not able to assess the
probability of success in our fundraising efforts or the terms, if any, under
which we may secure financial support from strategic partners or other
investors. We expect to continue to incur significant operating losses for
the
foreseeable future.
Clinical
studies required for our product candidates are time-consuming, and their
outcome is uncertain.
Before
obtaining regulatory approvals for the commercial sale of any of our products
under development, we must demonstrate through preclinical and clinical studies
that the product is safe and effective for use in each target indication.
Success in preclinical studies of a product candidate may not be predictive
of
similar results in humans during clinical trials. None of our products has
been
approved for commercialization in the United States or elsewhere. In December
2004, we announced that findings of a routine two-year rodent toxicity study
indicated that male Sprague Dawley rats exposed to high doses of alagebrium
over
their natural lifetime developed dose-related increases in liver cell
alterations and tumors, and that the liver tumor rate was slightly over the
expected background rate in this gender and species of rat. In February 2005,
based on the initial results from one of the follow-on preclinical toxicity
experiments, we voluntarily and temporarily suspended enrollment of new subjects
into each of the ongoing clinical studies pending receipt of additional
preclinical data. We withdrew our IND for the EMERALD study in February 2006
in
order to focus our resources on the development of alagebrium in cardiovascular
indications.
In
June
2005, our Phase 2b SPECTRA trial in systolic hypertension was discontinued
after
an interim analysis found that the data did not indicate a treatment effect
of
alagebrium and we have ceased development of alagebrium for this indication.
We
cannot
predict at this time when enrollment in any of our clinical studies of
alagebrium, will resume, if ever. If we are unable to resume enrollment in
our
clinical studies in alagebrium in a timely manner, or at all, our business
will
be materially adversely affected.
If
we do
not prove in clinical trials that our product candidates are safe and effective,
we will not obtain marketing approvals from the FDA and other applicable
regulatory authorities. In particular, one or more of our product candidates
may
not exhibit the expected medical benefits in humans, may cause harmful side
effects, may not be effective in treating the targeted indication or may have
other unexpected characteristics that preclude regulatory approval for any
or
all indications of use or limit commercial use if approved.
The
length of time necessary to complete clinical trials varies significantly and
is
difficult to predict. Factors that can cause delay or termination of our
clinical trials include:
| · |
slower
than expected patient enrollment due to the nature of the protocol,
the
proximity of subjects to clinical sites, the eligibility criteria
for the
study, competition with clinical trials for other drug candidates
or other
factors;
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| · |
adverse
results in preclinical safety or toxicity
studies;
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| · |
lower
than expected recruitment or retention rates of subjects in a clinical
trial;
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inadequately
trained or insufficient personnel at the study site to assist in
overseeing and monitoring clinical
trials;
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delays
in approvals from a study site’s review board, or other required
approvals;
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longer
treatment time required to demonstrate effectiveness or determine
the
appropriate product dose;
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lack
of sufficient supplies of the product
candidate;
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| · |
adverse
medical events or side effects in treated
subjects;
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| · |
lack
of effectiveness of the product candidate being tested;
and
|
Even
if
we obtain positive results from preclinical or clinical studies for a particular
product, we may not achieve the same success in future studies of that product.
Data obtained from preclinical and clinical studies are susceptible to varying
interpretations that could delay, limit or prevent regulatory approval. In
addition, we may encounter delays or rejections based upon changes in FDA policy
for drug approval during the period of product development and FDA regulatory
review of each submitted new drug application. We may encounter similar delays
in foreign countries. Moreover, regulatory approval may entail limitations
on
the indicated uses of the drug. Failure to obtain requisite governmental
approvals or failure to obtain approvals of the scope requested will delay
or
preclude our licensees or marketing partners from marketing our products or
limit the commercial use of such products and will have a material adverse
effect on our business, financial condition and results of operations.
In
addition, some or all of the clinical trials we undertake may not demonstrate
sufficient safety and efficacy to obtain the requisite regulatory approvals,
which could prevent or delay the creation of marketable products. Our product
development costs will increase if we have delays in testing or approvals,
if we
need to perform more, larger or different clinical or preclinical trials than
planned or if our trials are not successful. Delays in our clinical trials
may
harm our financial results and the commercial prospects for our products.
The
FDA regulates the development, testing, manufacture, distribution, labeling
and
promotion of pharmaceutical products in the United States pursuant to the
Federal Food, Drug, and Cosmetic Act and related regulations. We must receive
pre-market approval by the FDA prior to any commercial sale of any drug
candidates. Before receiving such approval, we must provide preclinical data
and
proof in human clinical trials of the safety and efficacy of our drug
candidates, which trials can take several years. In addition, we must show
that
we can produce any drug candidates consistently at quality levels sufficient
for
administration in humans. Pre-market approval is a lengthy and expensive
process. We may not be able to obtain FDA approval for any commercial sale
of
any drug candidate. By statute and regulation, the FDA has 180 days to
review an application for approval to market a drug candidate; however, the
FDA
frequently exceeds the 180-day time period, at times taking up to
18 months. In addition, based on its review, the FDA or other regulatory
bodies may determine that additional clinical trials or preclinical data are
required. Except for any potential licensing or marketing arrangements with
other pharmaceutical or biotechnology companies, we will not generate any
revenues in connection with any of our other drug candidates unless and until
we
obtain FDA approval to sell such products in commercial quantities for human
application.
Even
if a
clinical trial is commenced, the FDA may delay, limit, suspend or terminate
clinical trials at any time, or may delay, condition or reject approval of
any
of our product candidates, for many reasons. For example:
| · |
ongoing
preclinical or clinical study results may indicate that the product
candidate is not safe or effective;
|
| · |
the
FDA may interpret our preclinical or clinical study results to indicate
that the product candidate is not safe or effective, even if we interpret
the results differently; or
|
| · |
the
FDA may deem the processes and facilities that our collaborative
partners,
our third-party manufacturers or we propose to use in connection
with the
manufacture of the product candidate to be
unacceptable.
|
Our
success will also depend on the products and systems formerly under development
by HaptoGuard, including ALT-2074, and we cannot be sure that the efforts to
commercialize ALT-2074 will succeed.
ALT-2074,
HaptoGuard’s lead compound prior to the merger, is in development for the
treatment of heart complications in patients with diabetes. It has demonstrated
efficacy in mouse models.
ALT-2074
is still in early clinical trials and any success to date should not be seen
as
indicative of the probability of any future success. The failure to complete
clinical development and commercialize ALT-2074 for any reason or due to a
combination of reasons will have a material adverse impact on our business.
We
are
dependent on the successful outcome of clinical trials and will not be able
to
successfully develop and commercialize products if clinical trials are not
successful.
HaptoGuard
received approval from Israel’s Ministry of Health to conduct Phase II
trials in diabetic patients recovering from a recent myocardial infarction
or
acute coronary syndrome. The purpose of the study is to evaluate the biological
effects on cardiac tissue in patients treated with ALT-2074. HaptoGuard
received Institutional Review Board approval for three sites in Israel, and
the
study was opened for enrollment in May 2006. The Israel-Lebanon conflict
that occurred in July 2006 has adversely impacted our ability to recruit
patients to the study. While we are evaluating modifications to the protocol
to
simplify its management in Israel, including transferring management of the
project from a CRO to our internal team, the conflict will slow down any benefit
that can be seen from those operational modifications. Additionally, the
progress of that trial is contingent on the successful raising of additional
financing by the Company.
If
we are unable to form the successful collaborative relationships that our
business strategy requires, then our programs will suffer and we may not be
able
to develop products.
Our
strategy for developing and deriving revenues from our products depends, in
large part, upon entering into arrangements with research collaborators,
corporate partners and others. The potential market, preclinical and clinical
study results and safety profile of our product candidates may not be attractive
to potential corporate partners. A two-year toxicity study found that male
rats
exposed to high doses of alagebrium over their natural lifetime developed
dose-related increases in liver cell alterations including hepatocarcinomas,
and
that the alteration rate was slightly over the expected background rate in
this
gender and species of rat. Also, our Phase 2a EMERALD study in erectile
dysfunction, the IND for which has since been withdrawn, was placed on clinical
hold by the Reproductive and Urologic Division, which may adversely affect
our
ability to enter into research and development collaborations with respect
to
alagebrium. We face significant competition in seeking appropriate collaborators
and these collaborations are complex and time-consuming to negotiate and
document. We may not be able to negotiate collaborations on acceptable terms,
or
at all. If that were to occur, we may have to curtail the development of a
particular product candidate, reduce or delay our development program or one
or
more of our other development programs, delay our potential commercialization
or
reduce the scope of our sales or marketing activities, or increase our
expenditures and undertake development or commercialization activities at our
own expense. If we elect to increase our expenditures to fund development or
commercialization activities on our own, we may need to obtain additional
capital, which may not be available to us on acceptable terms, or at all. If
we
do not have sufficient funds, we will not be able to bring our product
candidates to market and generate product revenue.
If
we are able to form collaborative relationships, but are unable to maintain
them, our product development may be delayed and disputes over rights to
technology may result.
We
may
form collaborative relationships that, in some cases, will make us dependent
upon outside partners to conduct preclinical testing and clinical studies and
to
provide adequate funding for our development programs.
In
general, collaborations involving our product candidates pose the following
risks to us:
| · |
collaborators
may fail to adequately perform the scientific and preclinical studies
called for under our agreements with
them;
|
| · |
collaborators
have significant discretion in determining the efforts and resources
that
they will apply to these
collaborations;
|
| · |
collaborators
may not pursue further development and commercialization of our product
candidates or may elect not to continue or renew research and development
programs based on preclinical or clinical study results, changes
in their
strategic focus or available funding or external factors, such as
an
acquisition that diverts resources or creates competing
priorities;
|
| · |
collaborators
may delay clinical trials, provide insufficient funding for a clinical
program, stop a clinical study or abandon a product candidate, repeat
or
conduct new clinical trials or require a new formulation of a product
candidate for clinical testing;
|
| · |
collaborators
could independently develop, or develop with third parties, products
that
compete directly or indirectly with our products or product candidates
if
the collaborators believe that competitive products are more likely
to be
successfully developed or can be commercialized under terms that
are more
economically attractive; collaborators with marketing and distribution
rights to one or more products may not commit enough resources to
their
marketing and distribution;
|
| · |
collaborators
may not properly maintain or defend our intellectual property rights
or
may use our proprietary information in such a way as to invite litigation
that could jeopardize or invalidate our proprietary information or
expose
us to potential litigation;
|
| · |
disputes
may arise between us and the collaborators that result in the delay
or
termination of the research, development or commercialization of
our
product candidates or that result in costly litigation or arbitration
that
diverts management attention and resources;
and
|
| · |
collaborations
may be terminated and, if terminated, may result in a need for additional
capital to pursue further development of the applicable product
candidates.
|
In
addition, there have been a significant number of business combinations among
large pharmaceutical companies that have resulted in a reduced number of
potential future collaborators. If a present or future collaborator of ours
were
to be involved in a business combination, the continued pursuit and emphasis
on
our product development program could be delayed, diminished or terminated.
If
we are unable to attract and retain the key personnel on whom our success
depends, our product development, marketing and commercialization plans could
suffer.
We
depend
heavily on the principal members of our management and scientific staff to
realize our strategic goals and operating objectives. Over the past year, due
to
the reduction in our clinical trial activities, the number of our employees
has
decreased from 30 as of June 30, 2005 to 7 as of June 30, 2006. Following the
merger with HaptoGuard, we depend on Dr. Noah Berkowitz as the combined
company’s Chief Executive Officer and Dr. Malcolm MacNab as the combined
company’s Vice-President of Clinical Development. The loss of services in the
near term of any of our principal members of management and scientific staff
could impede the achievement of our development priorities. Furthermore,
recruiting and retaining qualified scientific personnel to perform research
and
development work in the future will also be critical to our success, and there
is significant competition among companies in our industry for such personnel.
We have established retention programs for our current key employees, and we
may
be required to provide additional retention and severance benefits to our
employees as we curtail operations or prepare to effect a strategic transaction
such as a sale or merger with another company. However, we cannot assure you
that we will be able to attract and retain personnel on acceptable terms given
the competition between pharmaceutical and healthcare companies, universities
and non-profit research institutions for experienced managers and scientists,
and given the recent clinical and regulatory setbacks that we have experienced.
In addition, we rely on consultants to assist us in formulating our research
and
development strategy. All of our consultants are employed by other entities
and
may have commitments to or consulting or advisory contracts with those other
entities that may limit their availability to us.
If
we do not successfully develop any products, or are unable to derive revenues
from product sales, we will never be profitable.
Virtually
all of our revenues to date have been generated from collaborative research
agreements and investment income. We have not received any revenues from product
sales. We may not realize product revenues on a timely basis, if at all, and
there can be no assurance that we will ever be profitable.
At
June
30, 2006, we had an accumulated deficit of $227,847,026. We anticipate that
we
will incur substantial, potentially greater, losses in the future as we continue
our research, development and clinical studies. We have not yet requested or
received regulatory approval for any product from the FDA or any other
regulatory body. All of our product candidates, including our lead candidate,
alagebrium, are still in research, preclinical or clinical development. We
may
not succeed in the development and marketing of any therapeutic or diagnostic
product. We do not have any product candidates other than alagebrium and
ALT-2074 in clinical development, and there can be no assurance that we will
be
able to bring any other compound into clinical development. Adverse results
of
any preclinical or clinical study could cause us to materially modify our
clinical development programs, resulting in delays and increased expenditures,
or cease development for all or part of our ongoing studies of
alagebrium.
To
achieve profitable operations, we must, alone or with others, successfully
identify, develop, introduce and market proprietary products. Such products
will
require significant additional investment, development and preclinical and
clinical testing prior to potential regulatory approval and commercialization.
The development of new pharmaceutical products is highly uncertain and
expensive
and subject
to a number of significant risks. Potential products that appear to be promising
at early stages of development may not reach the market for a number of reasons.
Potential products may be found ineffective or cause harmful side effects during
preclinical testing or clinical studies, fail to receive necessary regulatory
approvals, be difficult to manufacture on a large scale, be uneconomical, fail
to achieve market acceptance or be precluded from commercialization by
proprietary rights of third parties. We may not be able to undertake additional
clinical studies. In addition, our product development efforts may not be
successfully completed, we may not have
the
funds to complete any ongoing clinical trials, we may not obtain
regulatory approvals, and our products, if introduced, may not be successfully
marketed or achieve customer acceptance. We do not expect any of our products,
including alagebrium, to be commercially available for a number of years, if
at
all.
Failure
to remediate the material weaknesses in our internal controls and to achieve
and
maintain effective internal control in accordance with Section 404 of the
Sarbanes-Oxley Act of 2002 could have a material adverse effect on our business
and stock price.
During
the audit of our financial statements for the year ended December 31, 2005,
our
independent registered public accounting firm identified a material weakness,
as
of December 31, 2005, regarding our internal controls over the identification
of
and the accounting for non-routine transactions including certain costs related
to potential strategic transactions, severance benefits and the financial
statement recording and disclosure of stock options that we have granted to
non-employee consultants in accordance with Emerging Issues Task Force (“EITF”)
Issue No. 96-18. As defined by the Public Company Accounting Oversight Board
Auditing Standard No. 2, a material weakness is a significant control deficiency
or a combination of significant control deficiencies that results in there
being
more than a remote likelihood that a material misstatement of the annual or
interim financial statements will not be prevented or detected. This material
weakness did not result in the restatement of any previously reported financial
statements or any other related financial disclosure. Management continues
the
process of implementing remedial controls to address these matters. In addition,
the changes that would have resulted in the financial statements for the year
ended December 31, 2005, as a consequence of the material weakness, were deemed
by the Company to be immaterial but were nevertheless recorded by the Company.
On
April
22, 2005, we filed an amendment to our Annual Report on Form 10-K for the fiscal
year ended December 31, 2004 (the “10-K Amendment”), in which we reported that,
as of December 31, 2004, and as required by Section 404 of the Sarbanes-Oxley
Act of 2002, management, with the participation of our principal executive
officer and principal financial officer, had assessed the effectiveness of
our
internal control over financial reporting based on the framework established
in
Internal Control - Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (“COSO”). Management’s assessment
included an evaluation of the design of our internal control over financial
reporting and testing of the operational effectiveness of our internal control
over financial reporting. Management reviewed the results of its assessment
with
the Audit Committee of our Board of Directors, and based on this assessment,
management determined that as of December 31, 2004, there were three material
weaknesses in our internal control over financial reporting. In light of these
material weaknesses, management concluded that, as of December 31, 2004, we
did
not maintain effective internal control over financial reporting.
The
three
material weaknesses identified were in the areas of audit committee oversight
of
the internal control review process, information technology controls and process
controls, and control over cash disbursements. With respect to each of these
matters, as set forth in the Form 10-K Amendment, management has implemented
remedial measures or procedures to address these matters. However, we cannot
currently assure you that the remedial measures that are currently being
implemented will be sufficient to result in a conclusion that our internal
controls no longer contain any material weaknesses, and that our internal
controls are effective. In addition, we cannot assure you that, even if we
are
able to achieve effective internal control over financial reporting, our
internal controls will remain effective for any period of time. The failure
to
maintain effective internal control over financial reporting could have a
material adverse effect on our business and stock price.
Our
product candidates will remain subject to ongoing regulatory review even if
they
receive marketing approval. If we fail to comply with continuing regulations,
we
could lose these approvals and the sale of our products could be suspended.
Even
if
we receive regulatory approval to market a particular product candidate, the
approval could be granted with the condition that we conduct additional costly
post-approval studies or that we limit the indicated uses included in our
labeling. Moreover, the product may later cause adverse effects that limit
or
prevent its widespread use, force us to withdraw it from the market or impede
or
delay our ability to obtain regulatory approvals in additional countries. In
addition, the manufacturer of the product and its facilities will continue
to be
subject to FDA review and periodic inspections to ensure adherence to applicable
regulations. After receiving marketing approval, the manufacturing, labeling,
packaging, adverse event reporting, storage, advertising, promotion and record
keeping related to the product will remain subject to extensive regulatory
requirements. We may be slow to adapt, or we may never adapt, to changes in
existing regulatory requirements or adoption of new regulatory requirements.
If
we
fail to comply with the regulatory requirements of the FDA and other applicable
United States and foreign regulatory authorities or if previously unknown
problems with our products, manufacturers or manufacturing processes are
discovered, we could be subject to administrative or judicially imposed
sanctions, including:
| · |
restrictions
on the products, manufacturers or manufacturing
processes;
|
| · |
civil
or criminal penalties;
|
| · |
product
seizures or detentions;
|
| · |
voluntary
or mandatory product recalls and publicity
requirements;
|
| · |
suspension
or withdrawal of regulatory
approvals;
|
| · |
total
or partial suspension of production;
and
|
| · |
refusal
to approve pending applications for marketing approval of new drugs
or
supplements to approved
applications.
|
In
similar fashion to the FDA, foreign regulatory authorities require demonstration
of product quality, safety and efficacy prior to granting authorization for
product registration which allows for distribution of the product for commercial
sale. International organizations, such as the World Health Organization, and
foreign government agencies including those for the Americas, Middle East,
Europe, Asia and the Pacific, have laws, regulations and guidelines for
reporting and evaluating the data on safety, quality and efficacy of new drug
products. Although most of these laws, regulations and guidelines are very
similar, each of the individual nations reviews all of the information available
on the new drug product and makes an independent determination for product
registration. A finding of product quality, safety or efficiency in one
jurisdiction does not guarantee approval in any other jurisdiction, even if
the
other jurisdiction has similar laws, regulations and guidelines.
If
we cannot successfully form and maintain suitable arrangements with third
parties for the manufacturing of the products we may develop, our ability to
develop or deliver products may be impaired.
We
have
no experience in manufacturing products and do not have manufacturing
facilities. Consequently, we will depend on contract manufacturers for the
production of any products for development and commercial purposes. The
manufacture of our products for clinical trials and commercial purposes is
subject to current cGMP, regulations promulgated by the FDA. In the event that
we are unable to obtain or retain third-party manufacturing capabilities for
our
products, we will not be able to commercialize our products as planned. Our
reliance on third-party manufacturers will expose us to risks that could delay
or prevent the initiation or completion of our clinical trials, the submission
of applications for regulatory approvals, the approval of our products by the
FDA or the commercialization of our products or result in higher costs or lost
product revenues. In particular, contract manufacturers:
| · |
could
encounter difficulties in achieving volume production, quality control
and
quality assurance and suffer shortages of qualified personnel, which
could
result in their inability to manufacture sufficient quantities of
drugs to
meet our clinical schedules or to commercialize our product
candidates;
|
| · |
could
terminate or choose not to renew the manufacturing agreement, based
on
their own business priorities, at a time that is costly or inconvenient
for us;
|
| · |
could
fail to establish and follow FDA-mandated cGMPs, as required for
FDA
approval of our product candidates, or fail to document their adherence
to
cGMPs, either of which could lead to significant delays in the
availability of material for clinical study and delay or prevent
filing or
approval of marketing applications for our product candidates;
and
|
| · |
could
breach, or fail to perform as agreed, under the manufacturing
agreement.
|
Changing
any manufacturer that we engage for a particular product or product candidate
may be difficult, as the number of potential manufacturers is limited, and
we
will have to compete with third parties for access to those manufacturing
facilities. cGMP processes and procedures typically must be reviewed and
approved by the FDA, and changing manufacturers may require re-validation of
any
new facility for cGMP compliance, which would likely be costly and
time-consuming. We may not be able to engage replacement manufacturers on
acceptable terms quickly or at all. In addition, contract manufacturers located
in foreign countries may be subject to import limitations or bans. As a result,
if any of our contract manufacturers is unable, for whatever reason, to supply
the contracted amounts of our products that we successfully bring to market,
a
shortage would result which would have a negative impact on our revenues.
Drug
manufacturers are subject to ongoing periodic unannounced inspection by the
FDA,
the U.S. Drug Enforcement Agency and corresponding state and foreign agencies
to
ensure strict compliance with cGMPs, other government regulations and
corresponding foreign standards. While we are obligated to audit the performance
of third-party contractors, we do not have control over our third-party
manufacturers’ compliance with these regulations and standards. Failure by 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 pre-market approval of drugs,
delays, suspension or withdrawal of approvals, seizures or recalls of product,
operating restrictions and criminal prosecutions. Our dependence upon others
for
the manufacture of any products that we develop may adversely affect our profit
margin, if any, on the sale of any future products and our ability to develop
and deliver such products on a timely and competitive basis.
If
we are not able to protect the intellectual property rights that are critical
to
our success, the development and any possible sales of our product candidates
could suffer and competitors could force our products completely out of the
market.
Our
success will depend on our ability to obtain patent protection for our products,
preserve our trade secrets, prevent third parties from infringing upon our
proprietary rights and operate without infringing upon the proprietary rights
of
others, both in the United States and abroad.
The
degree of patent protection afforded to pharmaceutical inventions is uncertain
and our potential products are subject to this uncertainty. Competitors may
develop competitive products outside the protection that may be afforded by
the
claims of our patents. We are aware that other parties have been issued patents
and have filed patent applications in the United States and foreign countries
with respect to other agents that have an effect on A.G.E.s., or the formation
of A.G.E. crosslinks. In addition, although we have several patent applications
pending to protect proprietary technology and potential products, these patents
may not be issued, and the claims of any patents that do issue, may not provide
significant protection of our technology or products. In addition, we may not
enjoy any patent protection beyond the expiration dates of our currently issued
patents.
We
also
rely upon unpatented trade secrets and improvements, unpatented know-how and
continuing technological innovation to maintain, develop and expand our
competitive position, which we seek to protect, in part, by confidentiality
agreements with our corporate partners, collaborators, employees and
consultants. We also have invention or patent assignment agreements with our
employees and certain, but not all, corporate partners and consultants. Relevant
inventions may be developed by a person not bound by an invention assignment
agreement. Binding agreements may be breached, and we may not have adequate
remedies for such breach. In addition, our trade secrets may become known to
or
be independently discovered by competitors.
If
we are unable to operate our business without infringing upon intellectual
property rights of others, we may not be able to operate our business
profitably.
Our
success depends on our ability to operate without infringing upon the
proprietary rights of others. We are aware that patents have been applied for
and/or issued to third parties claiming technologies for Advanced Glycation
End-Products or glutathione peroxidase mimetics that may be similar to those
needed by us. To the extent that planned or potential products are covered
by
patents or other intellectual property rights held by third parties, we would
need a license under such patents or other intellectual property rights to
continue development and marketing of our products. Any required licenses may
not be available on acceptable terms, if at all. If we do not obtain such
licenses on reasonable terms, we may not be able to proceed with the
development, manufacture or sale of our products.
Litigation
may be necessary to defend against claims of infringement or to determine the
scope and validity of the proprietary rights of others. Litigation or
interference proceedings could result in substantial additional costs and
diversion of management focus. If we are ultimately unsuccessful in defending
against claims of infringement, we may be unable to operate profitably.
ALT-2074
and other former HaptoGuard compounds are licensed by third parties and if
we
are unable to continue licensing this technology, our future prospects may
be
materially adversely affected.
We
are a
party to various license agreements with third parties that give us exclusive
and partial exclusive rights to use specified technologies applicable to
research, development and commercialization of our products, including
alagebrium and ALT-2074. We anticipate that we will continue to license
technology from third parties in the future. To maintain the license for certain
technology related to ALT-2074 that we received from Oxis International, we
are
obligated to meet certain development and clinical trial milestones and to
make
certain payments. There can be no assurance that we will be able to meet any
milestone or make any payment required under the license with Oxis
International. In addition, if we fail to meet any milestone or make any
payment, there can be no assurance that we may be able to negotiate a compromise
with Oxis.
The
technology HaptoGuard licensed from third parties would be difficult or
impossible to replace and the loss of this technology would materially adversely
affect our business, financial condition and any future prospects.
The
effect of accounting rules relating to our equity compensation arrangements
may
have an adverse effect on our stock price, results of operations, and financial
condition.
In
December 2004, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standards (“SFAS”) No. 123 (revised 2004),
“Share-Based Payment” (“SFAS 123R”), which replaces “Accounting for Stock-Based
Compensation,” (“SFAS 123”) and supersedes Accounting Principles Board (“APB”)
Opinion No. 25, “Accounting for Stock Issued to Employees.” SFAS 123R requires
all share-based payments to employees, including grants of employee stock
options, to be recognized in the financial statements based on their fair values
effective for us on January 1, 2006. Under SFAS 123R, the pro forma disclosures
previously permitted under SFAS 123 are no longer an alternative to financial
statement recognition.
We
account for employee stock-based compensation, awards issued to non-employee
directors, and stock options issued to consultants and contractors in accordance
with SFAS 123R and Emerging Issues Task Force Issue No. 96-18, “Accounting for
Equity Instruments that are Issued to Other Than Employees for Acquiring or
in
Conjunction with Selling Goods or Services.”
We
have
adopted the new standard, SFAS 123R, effective January 1, 2006 and have selected
the Black-Scholes method of valuation for share-based compensation. We have
adopted the modified prospective transition method which requires that
compensation cost be recorded, as earned, for all unvested stock options and
restricted stock outstanding at the beginning of the first quarter of adoption
of SFAS 123R, and that such costs be recognized over the remaining service
period after the adoption date based on the options’ original estimate of fair
value.
On
December 15, 2005, the Compensation Committee of our Board of Directors approved
the acceleration of the vesting date of all previously issued, outstanding
and
unvested options, effective December 31, 2005. The acceleration and the fact
that no options were issued in the six months ended June 30, 2006, resulted
in
our incurring no compensation expense under SFAS 123R for the three and six
months ended June 30, 2006.
Prior
to
adoption of SFAS 123R, we applied the intrinsic-value method under APB Opinion
No. 25, “Accounting for Stock Issued to Employees,” and related interpretations,
under which no compensation cost (excluding those options granted below fair
market value) had been recognized. SFAS 123 established accounting and
disclosure requirements using a fair-value based method of accounting for
stock-based employee compensation plans. As permitted by SFAS 123, we elected
to
continue to apply the intrinsic-value based method of accounting described
above, and adopted only the disclosure requirements of SFAS 123, as
amended.
If
we are not able to compete successfully with other companies in the development
and marketing of cures and therapies for cardiovascular diseases, diabetes,
and
the other conditions for which we seek to develop products, we may not be able
to continue our operations.
We
are
engaged in pharmaceutical fields characterized by extensive research efforts
and
rapid technological progress. Many established pharmaceutical and biotechnology
companies with financial, technical and human resources greater than ours are
attempting to develop, or have developed, products that would be competitive
with our products. Many of these companies have extensive experience in
preclinical and human clinical studies. Other companies may succeed in
developing products that are safer, more efficacious or less costly than any
we
may develop and may also be more successful than us in production and marketing.
Rapid technological development by others may result in our products becoming
obsolete before we recover a significant portion of the research, development
or
commercialization expenses incurred with respect to those products.
Certain
technologies under development by other pharmaceutical companies could result
in
better treatments for cardiovascular disease, and diabetes and its related
complications. Several large companies have initiated or expanded research,
development and licensing efforts to build pharmaceutical franchises focusing
on
these medical conditions, and some companies already have products approved
and
available for commercial sale to treat these indications. It is possible that
one or more of these initiatives may reduce or eliminate the market for some
of
our products. In addition, other companies have initiated research in the
inhibition or crosslink breaking of A.G.E.s.
Our
ability to compete successfully against currently existing and future
alternatives to our product candidates and systems, and competitors who compete
directly with us in the small molecule drug industry will depend, in part,
on
our ability to:
| · |
attract
and retain skilled scientific and research personnel;
|
| · |
develop
technologically superior products;
|
| · |
develop
competitively priced products;
|
| · |
obtain
patent or other required regulatory approvals for our products;
|
| · |
be
early entrants to the market; and
|
manufacture,
market and sell our products, independently or through
collaborations.
We
depend on third parties for research and development activities necessary to
commercialize certain of our patents.
We
utilize the services of several scientific and technical consultants to oversee
various aspects of our protocol design, clinical trial oversight and other
research and development functions. We contract out most of our research and
development operations using third-party contract manufacturers for drug
inventory and shipping services and third-party contract research organizations
in connection with preclinical and/or clinical studies in accordance with our
designed protocols, as well as conducting research at medical and academic
centers.
Because
we rely on third parties for much our research and development work, we have
less direct control over our research and development. We face risks that these
third parties may not be appropriately responsive to our time frames and
development needs and could devote resources to other customers. In addition,
certain of these third parties may have to comply with FDA regulations or other
regulatory requirements in the conduct of this research and development work,
which they may fail to do.
If
governments and third-party payers continue their efforts to contain or decrease
the costs of healthcare, we may not be able to commercialize our products
successfully.
In
the
United States, we expect that there will continue to be federal and state
initiatives to control and/or reduce pharmaceutical expenditures. In certain
foreign markets, pricing and/or profitability of prescription pharmaceuticals
are subject to government control. In addition, increasing emphasis on managed
care in the United States will continue to put pressure on pharmaceutical
pricing. Cost control initiatives could decrease the price that we receive
for
any products for which we may receive regulatory approval to develop and sell
in
the future and could have a material adverse effect on our business, financial
condition and results of operations. Further, to the extent that cost control
initiatives have a material adverse effect on our corporate partners, our
ability to commercialize our products may be adversely affected.
Our
ability to commercialize pharmaceutical products may depend, in part, on the
extent to which reimbursement for the products will be available from government
health administration authorities, private health insurers and other third-party
payers. Significant uncertainty exists as to the reimbursement status of newly
approved healthcare products, and third-party payers, including Medicare,
frequently challenge the prices charged for medical products and services.
In
addition, third-party insurance coverage may not be available to subjects for
any products developed by us. Government and other third-party payers are
attempting to contain healthcare costs by limiting both coverage and the level
of reimbursement for new therapeutic products and by refusing in some cases
to
provide coverage for uses of approved products for disease indications for
which
the FDA has not granted labeling approval. If government and other third-party
payers for our products do not provide adequate coverage and reimbursement
levels, the market acceptance of these products would be adversely affected.
If
the users of the products that we are developing claim that our products have
harmed them, we may be subject to costly and damaging product liability
litigation, which could have a material adverse effect on our business,
financial condition and results of operations.
We
may
face exposure to product liability and other claims due to allegations that
our
products cause harm. These risks are inherent in the clinical trials for
pharmaceutical products and in the testing, and future manufacturing and
marketing of, our products. Although we currently maintain product liability
insurance, such insurance is becoming increasingly expensive, and we may not
be
able to obtain adequate insurance coverage in the future at a reasonable cost,
if at all. If we are unable to obtain product liability insurance in the future
at an acceptable cost or to otherwise protect against potential product
liability claims, we could be inhibited in the commercialization of our
products, which could have a material adverse effect on our business. The
coverage will be maintained and limits reviewed from time to time as the
combined company progresses to later stages of its clinical trials and as the
length of the trials and the number of patients enrolled in the trials changes.
We
intend
to obtain a combined coverage policy that includes tail coverage in order to
cover any claims that are made for any events that have occurred prior to the
merger. We currently have a policy covering $10 million of product liability
for
our clinical trials, for which our annual premium is approximately $219,000.
However, insurance coverage and our resources may not be sufficient to satisfy
any liability resulting from product liability claims. A successful product
liability claim or series of claims brought against us could have a material
adverse effect on our business, financial condition and results of operations.
Risks
Related to the Merger
Alteon
and HaptoGuard entered into the merger with the expectation that the merger
will
result in beneficial synergies, including:
| · |
improved
ability to raise new capital through access to new classes of investors
focused on public companies engaged in small molecule drug
development;
|
| · |
shared
expertise in developing innovative small molecule drug technologies
and
the potential for technology
collaboration;
|
| · |
a
broader pipeline of products;
|
| · |
greater
ability to attract commercial
partners;
|
| · |
larger
combined commercial opportunities;
and
|
| · |
a
broader portfolio of patents and
trademarks.
|
Achieving
these anticipated synergies and the potential benefits underlying the two
companies’ reasons for the merger will depend on a number of factors, some of
which include:
| · |
the
ability of the combined company to obtain financing to fund its continued
operations;
|
| · |
retention
of scientific staff;
|
| · |
significant
litigation, if any, adverse to Alteon and HaptoGuard, including,
particularly, product liability litigation and patent and trademark
litigation; and
|
| · |
the
ability of the combined company to continue development of Alteon
and
HaptoGuard product candidates;
|
| · |
success
of our research and development
efforts;
|
| · |
increased
capital expenditures;
|
| · |
general
market conditions
relating to small cap biotech investments;
and
|
| · |
competition
from other drug development
companies.
|
Achieving
the benefits of the merger will depend in part on the successful integration
of
Alteon and HaptoGuard in a timely and efficient manner. The integration will
require significant time and efforts from each company, including the
coordination of research, development, regulatory, manufacturing, commercial,
administrative and general functions. Integration may be difficult and
unpredictable because of possible cultural conflicts and different opinions
on
scientific and regulatory matters. Delays in successfully integrating and
managing employee benefits could lead to dissatisfaction and employee turnover.
The combination of Alteon’s and HaptoGuard’s organizations may result in greater
competition for resources and elimination of research and development programs
that might otherwise be successfully completed. If we cannot successfully
integrate our operations and personnel, we may not recognize the expected
benefits of the merger.
Even
if
the two companies are able to integrate their operations, there can be no
assurance that these anticipated synergies will be achieved. The failure to
achieve such synergies could have a material adverse effect on the business,
results of operations and financial condition of the combined
company.
Integrating
Alteon and HaptoGuard may divert management’s attention away from our core
research and development activities.
Successful
integration of our operations, products and personnel may place a significant
burden on our management and our internal resources. The diversion of
management’s attention and any difficulties encountered in the transition and
integration process could result in delays in the companies’ clinical trial
programs and could otherwise significantly harm our business, financial
condition and operating results.
We
expect
to incur significant costs integrating our operations, product candidates and
personnel, which cannot be estimated accurately at this time. These costs
include:
| · |
conversion
of information systems;
|
| · |
combining
research, development, regulatory, manufacturing and commercial teams
and
processes;
|
| · |
reorganization
of facilities; and
|
| · |
relocation
or disposition of excess equipment.
|
We
expect
that Alteon and HaptoGuard will incur aggregate direct transaction costs of
approximately $3,284,000 associated with or resulting from the merger. If the
total costs of the merger exceed our estimates or benefits of the merger do
not
exceed the total costs of the merger, the financial results of the combined
company could be adversely affected.
Risks
Related to Owning Alteon's Common Stock
We
have been notified by the American Stock Exchange ("AMEX") that we are not
in
compliance with continued listing standards, which may result in a delisting
of
our common stock if we cannot regain compliance.
On
October 13, 2006, we reported that we had received a notice from AMEX indicating
that we are below certain AMEX continuing listing standards due to (i)
sustaining losses from continuing operations and/or net losses in two out of
our
three most recent fiscal years with stockholders’ equity below $2,000,000; (ii)
sustaining losses from continuing operations and/or net losses in three out
of
our four most recent fiscal years with stockholders’ equity below $4,000,000;
and (iii) sustaining losses from continuing operations and/or net losses in
our
five most recent fiscal years with stockholders’ equity below $6,000,000, and
that, in accordance with AMEX rules, we have until April 9, 2008 to regain
compliance with the continued listing standards. We had not regained compliance
with these standards as of October 16, 2006 and cannot assure you that we will
be able to achieve compliance with these standards. AMEX has requested that
we
provide it with our plan to achieve and sustain compliance with all listing
standards by November 8, 2006 to facilitate its review of our eligibility for
continued listing. We expect to submit our plan to regain compliance to AMEX
prior to November 8, 2006. We cannot assure you that AMEX will find our
compliance plan acceptable or, if it does, that we can achieve the plan in
such
a way as to regain compliance with AMEX’s continuing listing
standards.
Our
stock price is volatile and you may not be able to resell your shares at a
profit.
We
first
publicly issued common stock on November 8, 1991 at $15.00 per share in our
initial public offering and it has been subject to fluctuations since that
time.
For example, during 2005, the closing sale price of our common stock has ranged
from a high of $1.43 per share to a low of $0.17 per share. The market price
of
our common stock could continue to fluctuate substantially due to a variety
of
factors, including:
| · |
quarterly
fluctuations in results of operations;
|
| · |
material
weaknesses in our internal control over financial
reporting;
|
| · |
the
announcement of new products or services by us or competitors;
|
| · |
sales
of common stock by existing stockholders or the perception that these
sales may occur;
|
| · |
adverse
judgments or settlements obligating the combined company to pay damages;
|
| · |
developments
concerning proprietary rights, including patents and litigation matters;
and
|
| · |
clinical
trial or regulatory developments in both the United States and foreign
countries.
|
In
addition, overall stock market volatility has often significantly affected
the
market prices of securities for reasons unrelated to a company’s operating
performance. In the past, securities class action litigation has been commenced
against companies that have experienced periods of volatility in the price
of
their stock. Securities litigation initiated against the combined company could
cause it to incur substantial costs and could lead to the diversion of
management’s attention and resources, which could have a material adverse effect
on revenue and earnings.
We
have a large number of authorized but unissued shares of common stock, which
our
Board of Directors may issue without further stockholder approval, thereby
causing dilution of your holdings of our common stock.
After
the
closing of the merger and the financing, there are approximately 180,000,000
shares of authorized but unissued shares of our common stock. Our management
will continue to have broad discretion to issue shares of our common stock
in a
range of transactions, including capital-raising transactions, mergers,
acquisitions, for anti-takeover purposes, and in other transactions, without
obtaining stockholder approval, unless stockholder approval is required for
a
particular transaction under the rules of the American Stock Exchange, Delaware
law, or other applicable laws. We currently have no specific plans to issue
shares of our common stock for any purpose other than in connection with the
merger. However, if our management determines to issue shares of our common
stock from the large pool of such authorized but unissued shares for any purpose
in the future without obtaining stockholder approval, your ownership position
would be diluted without your further ability to vote on that transaction.
The
sale of a substantial number of shares of our common stock could cause the
market price of our common stock to decline and may impair the combined
company’s ability to raise capital through additional offerings.
We
currently have outstanding warrants to purchase an aggregate of 22,581,988
shares of our common stock, including warrants to purchase 9,990,533 shares
of our common stock issued together with 9,470,333 shares of common stock
all of which such warrants and common stock were issued in connection with
a
private equity financing completed in September 2006. The shares issued in
the private placement financing, together with the shares underlying the
warrants issued in such financing, represent approximately 16% of the total
number of shares of our common stock outstanding immediately prior to the
financing.
Sales
of
these shares or shares issued in connection with the merger with
HaptoGuard in the public market, or the perception that future sales
of such shares could occur, could have the effect of lowering the market
price of our common stock below current levels and make it more difficult for
us
and our shareholders to sell our equity securities in the future.
Our
executive officers, directors and holders of more than 5% of our common stock
collectively beneficially own approximately 29.8% of the outstanding common
stock, which includes fully vested options to purchase common stock. In
addition, approximately 23,435,778 shares of common stock issuable upon exercise
of vested stock options could become available for immediate resale if such
options were exercised.
Sale
or
the availability for sale, of shares of common stock by stockholders could
cause
the market price of our common stock to decline and could impair our ability
to
raise capital through an offering of additional equity securities.
Anti-takeover
provisions may frustrate attempts to replace our current management and
discourage investors from buying our common stock.
We
have
entered into a Stockholders’ Rights Agreement pursuant to which each holder of a
share of common stock is granted a Right to purchase our Series F Preferred
Stock under certain circumstances if a person or group acquires, or commences
a
tender offer for, 20 percent of our outstanding common stock. We also have
severance obligations to certain employees in the event of termination of their
employment after or in connection with a triggering event as defined in the
Alteon Severance Plan. In addition, the Board of Directors has the
authority, without further action by the stockholders, to fix the rights and
preferences of, and issue shares of, Preferred Stock. The staggered board terms,
Fair Price Provision, Stockholders’ Rights Agreement, severance
arrangements, Preferred Stock provisions and other provisions of our charter
and
Delaware corporate law may discourage certain types of transactions involving
an
actual or potential change in control.
FORWARD-LOOKING
STATEMENTS AND CAUTIONARY STATEMENTS
Statements
in this prospectus and the documents incorporated by reference herein that
are
not statements or descriptions of historical facts are “forward-looking”
statements under Section 27A of the Securities Act of 1933, Section 21E of
the
Securities Exchange Act of 1934, and the Private Securities Litigation Reform
Act of 1995, and are subject to numerous risks and uncertainties. These
forward-looking statements and other forward-looking statements made by us
or
our representatives are based on a number of assumptions. The words “believe,”
“expect,” “anticipate,” “intend,” “estimate” or other expressions, which are
predictions of or indicate future events and trends and which do not relate
to
historical matters, identify forward-looking statements. The forward-looking
statements represent our judgments and expectations as of the date of this
prospectus. We assume no obligation to update any such forward-looking
statements. Readers are cautioned not to place undue reliance on these
forward-looking statements, as they involve risks and uncertainties, and actual
results could differ materially from those currently anticipated due to a number
of factors, including those set forth in this section and elsewhere in this
prospectus. These factors include, but are not limited to, the risks set forth
in this prospectus.
The
forward-looking statements set forth in this document represent our judgment
and
expectations as of the date of this prospectus. We assume no obligation to
update any such forward-looking statements.
USE
OF PROCEEDS
We
will
not receive any of the proceeds from the sale of the shares by the selling
stockholders.
SELLING
STOCKHOLDERS
On
July
21, 2006, in connection with our merger with HaptoGuard, Inc., we issued
37,399,065 shares of our common stock to former stockholders of HaptoGuard,
which shares consist of (i) 22,524,437 shares of common stock and (ii)
14,874,628 shares of common stock issued upon the conversion of a portion of
our
preferred stock that was transferred to HaptoGuard by Genentech, and we issued
13,492,349 shares of common stock to Genentech upon the conversion of an
additional portion of the preferred stock held by Genentech. This prospectus
relates to the resale from time to time of up to a total of 50,891,414 shares
of
our common stock acquired in connection with the merger by certain former
stockholders of HaptoGuard and by Genentech, referred to as the selling
stockholders, as described below.
Pursuant
to the terms of the merger agreement, we filed a Registration Statement on
Form
S-3, of which this prospectus constitutes a part, in order to permit the selling
stockholders to resell to the public the shares of our common stock issued
in
connection with the merger transaction.
The
following table, to our knowledge, sets forth information regarding the
beneficial ownership of our common stock by the selling stockholders as of
September 25, 2006 and the number of shares being offered hereby by each selling
stockholder. For purposes of the following description, the term “selling
stockholder” includes pledgees, donees, permitted transferees or other permitted
successors-in-interest selling shares received after the date of this prospectus
from the selling stockholders. The information is based in part on information
provided by or on behalf of the selling stockholders. Beneficial ownership
is
determined in accordance with the rules of the Securities and Exchange
Commission, and includes voting or investment power with respect to shares,
as
well as any shares as to which the selling stockholder has the right to acquire
beneficial ownership within sixty (60) days after September 25, 2006 through
the
exercise or conversion of any stock options, warrants, convertible debt or
otherwise. Unless otherwise indicated below, each selling stockholder has sole
voting and investment power with respect to its shares of common stock. The
inclusion of any shares in this table does not constitute an admission of
beneficial ownership by the selling stockholder. We will not receive any of
the
proceeds from the sale of our common stock by the selling
stockholders.
|
|
|
SHARES
|
|
|
|
|
|
SHARES
|
|
|
|
BENEFICALLY
|
|
|
|
|
|
BENEFICALLY
|
|
|
|
OWNED
BEFORE
|
|
SHARES
|
|
OWNED
AFTER
|
|
|
|
OFFERING(1)
|
|
BEING
|
|
OFFERING(2)
|
|
SELLING
STOCKHOLDER
|
|
NUMBER
|
|
PERCENT
|
|
OFFERED
|
|
NUMBER
|
|
PERCENT
|
|
|
|
|
Alex
Libin
|
|
|
200,697
|
|
|
|
*
|
|
|
|
200,697
|
|
|
|
−
|
|
|
|
*
|
|
|
Andrew
Levy
|
|
|
2,545,683
|
|
|
|
2%
|
|
|
|
2,545,683
|
|
|
|
−
|
|
|
|
*
|
|
|
Ariane
Eisman
|
|
|
380,268
|
|
|
|
*
|
|
|
|
380,268
|
|
|
|
−
|
|
|
|
*
|
|
|
David
Greenberg
|
|
|
630,259
|
|
|
|
*
|
|
|
|
630,259
|
|
|
|
−
|
|
|
|
*
|
|
|
Genentech,
Inc.
|
|
|
798,314
|
|
|
|
*
|
|
|
|
13,492,349
|
|
|
|
798,314
|
|
|
|
*
|
|
|
Ilan
Kaufthal
|
|
|
876,729
|
|
|
|
*
|
|
|
|
876,729
|
|
|
|
−
|
|
|
|
*
|
|
|
Joshua
Berkowitz(3)
|
|
|
647,864
|
|
|
|
*
|
|
|
|
647,864
|
|
|
|
−
|
|
|
|
*
|
|
|
Laura
Berkowitz(3)
|
|
|
799,267
|
|
|
|
*
|
|
|
|
799,267
|
|
|
|
−
|
|
|
|
*
|
|
|
Lawrence
Bryskin
|
|
|
119,714
|
|
|
|
*
|
|
|
|
119,714
|
|
|
|
−
|
|
|
|
*
|
|
|
Mark
Brody
|
|
|
228,865
|
|
|
|
*
|
|
|
|
228,865
|
|
|
|
−
|
|
|
|
*
|
|
|
Mark
Cohen
|
|
|
288,722
|
|
|
|
*
|
|
|
|
288,722
|
|
|
|
−
|
|
|
|
*
|
|
|
Mary
Tanner (4)
|
|
|
5,212,146
|
|
|
|
4%
|
|
|
|
5,212,146
|
|
|
|
−
|
|
|
|
*
|
|
|
Michael
Colton
|
|
|
528,150
|
|
|
|
*
|
|
|
|
528,150
|
|
|
|
−
|
|
|
|
*
|
|
|
NJTC
Venture Capital
|
|
|
1,957,676
|
|
|
|
2%
|
|
|
|
1,957,676
|
|
|
|
−
|
|
|
|
*
|
|
|
Noah
Berkowitz(3)
President
and Chief Executive Officer
|
|
|
9,506,700
|
|
|
|
7%
|
|
|
|
9,506,700
|
|
|
|
−
|
|
|
|
*
|
|
|
Noah
Berkowitz Family Trust(3)
|
|
|
6,337,800
|
|
|
|
5%
|
|
|
|
6,337,800
|
|
|
|
−
|
|
|
|
*
|
|
|
Oxis
International, Inc.
|
|
|
551,800
|
|
|
|
*
|
|
|
|
551,800
|
|
|
|
−
|
|
|
|
*
|
|
|
Platinum
Partners
|
|
|
1,228,829
|
|
|
|
1%
|
|
|
|
1,228,829
|
|
|
|
−
|
|
|
|
*
|
|
|
Seth
Berkowitz(3)
|
|
|
186,613
|
|
|
|
*
|
|
|
|
186,613
|
|
|
|
−
|
|
|
|
*
|
|
|
Seth
Farbman
|
|
|
197,176
|
|
|
|
*
|
|
|
|
197,176
|
|
|
|
−
|
|
|
|
*
|
|
|
Shai
Stern
|
|
|
704,200
|
|
|
|
*
|
|
|
|
704,200
|
|
|
|
−
|
|
|
|
*
|
|
|
Sidlog
Limited
|
|
|
1,147,846
|
|
|
|
*
|
|
|
|
1,147,846
|
|
|
|
−
|
|
|
|
*
|
|
|
Smithfield
Fiduciary LLC
|
|
|
2,679,481
|
|
|
|
2%
|
|
|
|
2,679,481
|
|
|
|
−
|
|
|
|
*
|
|
|
Steven
Farber
|
|
|
140,840
|
|
|
|
*
|
|
|
|
140,840
|
|
|
|
−
|
|
|
|
*
|
|
|
Walter
Berkowitz(3)
|
|
|
795,746
|
|
|
|
*
|
|
|
|
795,746
|
|
|
|
−
|
|
|
|
*
|
|
|
Wayne
Yetter (5)
|
|
|
306,327
|
|
|
|
*
|
|
|
|
306,327
|
|
|
|
−
|
|
|
|
*
|
|
(1) Percentages
prior to the offering are based on 137,333,514 shares of common stock that
were issued and outstanding as of September 25, 2006. We deem shares of common
stock that may be acquired by an individual or group within 60 days of September
25, 2006 pursuant to the exercise of options or warrants to be outstanding
for
the purpose of computing the percentage ownership of such individual or group,
but such shares are not deemed to be outstanding for the purpose of computing
the percentage ownership of any other individual or entity shown in the
table.
(2) We
do not
know when or in what amounts the selling stockholders may offer for sale the
shares of common stock pursuant to this offering. The selling stockholders
may
choose not to sell any of the shares offered by this prospectus. Because the
selling stockholders may offer all or some of the shares of common stock
pursuant to this offering, and because there are currently no agreements,
arrangements or undertakings with respect to the sale of any of the shares
of
common stock, we cannot estimate the number of shares of common stock that
the
selling stockholders will hold after completion of the offering. For purposes
of
this table, we have assumed that the selling stockholders will have sold all
of
the shares covered by this prospectus upon the completion of the
offering.
(3) Joshua
Berkowitz is the brother of Noah Berkowitz, who is our President and Chief
Executive Officer and a member of our Board of Directors. Laura Berkowitz is
the
sister of Noah Berkowitz. Seth Berkowitz is the brother of Noah Berkowitz.
Walter Berkowitz is the father of Noah Berkowitz. Noah Berkowitz disclaims
beneficial ownership of the shares owned by the above named family members.
In
addition, Noah Berkowitz is the trustee of the Noah Berkowitz Family Trust
(the
“Trust”) and as such has voting and investment control over the securities held
by the Trust. Mr. Berkowitz disclaims beneficial ownership of these
securities.
(4) Includes 4,331,896
shares of common stock held directly by Ms. Tanner and 880,250 shares of common
stock subject to options which were exercisable as of September 25, 2006. Ms.
Tanner is a member of our board of directors.
(5) Includes
188,960 shares of common stock held directly by Mr. Yetter and 117,367 shares
of
common stock subject to options which were exercisable as of September 25,
2006.
Mr. Yetter is a member of our board of directors.
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 stockholder” includes pledgees,
donees, transferees or other successors in interest selling shares received
after the date of this prospectus from each selling stockholder as a pledge,
gift, partnership distribution or other non-sale related transfer. The number
of
shares beneficially owned by a selling stockholder will decrease as and when
it
effects any such transfers. The plan of distribution for the selling
stockholders’ shares sold hereunder will otherwise remain unchanged, except that
the transferees, pledgees, donees or other successors will be selling
stockholders hereunder. To the extent required, we may amend and supplement
this
prospectus from time to time to describe a specific plan of
distribution.
The
selling stockholders will act independently of us in making decisions with
respect to the timing, manner and size of each sale. The selling stockholders
may make these sales at prices and under terms then prevailing or at prices
related to the then current market price. The selling stockholders may also
make
sales in negotiated transactions. The selling stockholders may offer their
shares from time to time pursuant to one or more of the following
methods:
| · |
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
| · |
one
or more block trades in which the broker-dealer will attempt to sell
the
shares as agent but may position and resell a portion of the block
as
principal to facilitate the
transaction;
|
| · |
purchases
by a broker-dealer as principal and resale by the broker-dealer for
its
account;
|
| · |
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
| · |
privately
negotiated transactions;
|
| · |
on
the American Stock Exchange (or through the facilities of any national
securities exchange or U.S. inter-dealer quotation system of a registered
national securities association, on which the shares are then listed,
admitted to unlisted trading privileges or included for
quotation);
|
| · |
through
underwriters, brokers or dealers (who may act as agents or principals)
or
directly to one or more purchasers;
|
| · |
settlement
of short sales entered into after the effective date of the registration
statement of which this prospectus is a
part;
|
| · |
broker-dealers
may agree with the selling stockholders to sell a specified number
of such
shares at a stipulated price per
share;
|
| · |
through
the writing or settlement of options or other hedging transactions,
whether through an options exchange or
otherwise;
|
| · |
a
combination of any such methods of sale;
and
|
| · |
any
other method permitted pursuant to applicable
law.
|
In
addition to the foregoing methods, the selling stockholders may offer their
shares from time to time in transactions involving principals or brokers not
otherwise contemplated above, in a combination of such methods or described
above or any other lawful methods. The selling stockholders may also transfer,
donate or assign their shares to lenders, family members and others and each
of
such persons will be deemed to be a selling stockholder for purposes of this
prospectus. The selling stockholders or their successors in interest may from
time to time pledge or grant a security interest in some or all of the shares
of
common stock, and if the selling stockholders default in the performance of
their secured obligations, the pledgees or secured parties may offer and sell
the shares of common stock from time to time under this prospectus; provided
however in the event of a pledge or then default on a secured obligation by
the
selling stockholder, in order for the shares to be sold under this registration
statement, unless permitted by law, we must distribute a prospectus supplement
and/or amendment to this registration statement amending the list of selling
stockholders to include the pledgee, secured party or other successors in
interest of the selling stockholder under this prospectus.
The
selling stockholders may also sell their shares pursuant to Rule 144 under
the
Securities Act, which permits limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions, including, among
other things, the availability of certain current public information concerning
the issuer, the resale occurring following the required holding period under
Rule 144 and the number of shares being sold during any three-month period
not
exceeding certain limitations.
Sales
through brokers may be made by any method of trading authorized by any stock
exchange or market on which the shares may be listed or quoted, including block
trading in negotiated transactions. Without limiting the foregoing, such brokers
may act as dealers by purchasing any or all of the shares covered by this
prospectus, either as agents for others or as principals for their own accounts,
and reselling such shares pursuant to this prospectus. The selling stockholders
may effect such transactions directly, or indirectly through underwriters,
broker-dealers or agents acting on their behalf. 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 (which compensation as to a
particular broker-dealer might be in excess of customary commissions for routine
market transactions).
In
offering the shares covered by this prospectus, the selling stockholders, and
any broker-dealers and any other participating 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 these sales. Any profits
realized by the selling stockholders and the compensation of such broker-dealers
may be deemed to be underwriting discounts and commissions.
We
are
required to pay all fees and expenses incident to the registration of the
shares.
We
have
agreed to indemnify the selling stockholders against certain losses, claims,
damages and liabilities, including liabilities under the Securities
Act.
LEGAL
MATTERS
The
validity of the common stock offered in this prospectus will be passed upon
for
us by Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., Boston,
Massachusetts.
EXPERTS
The
financial statements of Alteon as of December 31, 2005 and 2004, and for each
of
the years then ended, have been incorporated by reference herein in reliance
upon the report of J.H. Cohn LLP, independent registered public accounting
firm,
and upon the authority of that firm as experts in accounting and
auditing.
J.H.
Cohn
LLP has included an explanatory paragraph in its report on our financial
statements for the fiscal year ended December 31, 2005, which expresses
substantial doubt about our ability to continue as a going concern.
The
statements of operations, stockholders’ equity and cash flows of Alteon Inc. for
the year ended December 31, 2003, have been incorporated by reference herein
and
in the registration statement in reliance upon the report of KPMG LLP,
independent registered public accounting firm, incorporated by reference herein,
and upon the authority of said firm as experts in accounting and
auditing.
WHERE
YOU CAN FIND MORE INFORMATION
We
are a
public company and file annual, quarterly and special reports, proxy statements
and other information with the Securities and Exchange Commission. You may
read
and copy any document we file at the SEC’s Public Reference Room at 450 Fifth
Street, N.W., Washington, D.C. 20549. You can request copies of these documents
by writing to the SEC and paying a fee for the copying cost. Please call the
SEC
at 1-800-SEC-0330 for more information about the operation of the public
reference room. Our SEC filings are also available to the public at the SEC’s
web site at http://www.sec.gov, or at our web site at www.alteon.com. In
addition, our common stock is listed for trading on The American Stock Exchange
under the symbol “ALT.”
This
prospectus is only part of a Registration Statement on Form S-3 that we have
filed with the SEC under the Securities Act of 1933 and therefore omits certain
information contained in the Registration Statement. We have also filed exhibits
and schedules with the Registration Statement that are excluded from this
prospectus, and you should refer to the applicable exhibit or schedule for
a
complete description of any statement referring to any contract or other
document. You may:
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inspect
a copy of the Registration Statement, including the exhibits and
schedules, without charge at the public reference
room,
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obtain
a copy from the SEC upon payment of the fees prescribed by the SEC,
or
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obtain
a copy from the SEC web site.
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INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
The
SEC
allows us to “incorporate by reference” information from other documents that we
file with them, which means that we can disclose important information in this
prospectus by referring to those documents. The information incorporated by
reference is considered to be part of this prospectus, and information that
we
file later with the SEC will automatically update and supersede the information
in this prospectus. We incorporate by reference the documents listed below
and
any future filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d)
of
the Securities Exchange Act of 1934. The documents we are incorporating by
reference as of their respective dates of filing are:
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Our
Annual Report on Form 10-K for the year ended December 31, 2005,
filed on
March 30, 2006 (File No.
001-16043);
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Our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2006,
filed
on May 15, 2006 (File No.
001-16043);
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Our
Quarterly Report on Form 10-Q for the quarter ended June 30, 2006,
filed
on August 14, 2006 (File No.
001-16043);
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Our
Current Report on Form 8-K, filed on January 27, 2006 (File No.
001-16043);
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Our
Current Report on Form 8-K, filed on February 6, 2006 (File No.
001-16043);
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Our
Current Report on Form 8-K, filed on April 19, 2006 (File No.
001-16043);
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Our
Current Report on Form 8-K, filed on April 21, 2006 (File No.
001-16043);
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Our
Current Report on Form 8-K, filed on May 3, 2006 (File No.
001-16043);
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Our
Current Report on Form 8-K, filed on May 9, 2006 (File No.
001-16043);
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Our
Current Report on Form 8-K, filed on May 16, 2006 (File No.
001-16043);
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Our
Current Report on Form 8-K, filed on May 16, 2006 (except with respect
to
the items reported under Item 2.02 of such Form 8-K) (File No.
001-16043);
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Our
Current Report on Form 8-K, filed on July 10, 2006 (File No.
001-16043);
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Our
Current Report on Form 8-K, filed on July 25, 2006 (File No. 001-16043);
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Our
Current Report on Form 8-K/A, filed on September 5, 2006 (File No.
001-16043);
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Our
Current Report on Form 8-K, filed on September 19, 2006 (File No.
001-16043);
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Our
Current Report on Form 8-K, filed on October 13, 2006 (File No.
001-16043);
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The
portions of the Registrant’s Definitive Proxy Statement on Schedule 14A
that are deemed “filed” with the Commission under the Exchange Act, filed
on June 22, 2006;
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The
description of our common stock, $.01 par value, which is contained
in our
Registration Statement on Form 8-A, filed on November 1, 1991, including
any amendments or reports filed for the purpose of updating such
description; and
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The
description of the Rights under the Registrant’s Rights Agreement (which
are currently transferred with the Registrant’s Common Stock) contained in
the Registrant’s Registration Statement on Form 8-A (File No. 000-19529),
filed under the Exchange Act, filed on August 4, 1995, including
any
amendment or report filed for the purposes of updating such
description.
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You
may
request, orally or in writing, a copy of these filings, which will be provided
to you at no cost, by contacting Investor Relations c/o Nancy Regan, at our
principal executive offices, which are located at 6 Campus Drive, Parsippany,
New Jersey, 07054, (201) 934-5000.
To
the
extent that any statements contained in a document incorporated by reference
are
modified or superseded by any statements contained in this prospectus, such
statements shall not be deemed incorporated in this prospectus except as so
modified or superseded.
All
documents subsequently filed by us pursuant to Section 13(a), 13(c), 14 or
15(d)
of the Exchange Act and prior to the termination of this offering are
incorporated by reference and become a part of this prospectus from the date
such documents are filed. Any statement contained in this prospectus or in
a
document incorporated by reference is modified or superseded for purposes of
this prospectus to the extent that a statement contained in any subsequent
filed
document modifies or supersedes such statement.