REGISTRATION NO. 333-84566
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 14, 2002
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
EPIX MEDICAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 04-3030815
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
71 ROGERS STREET
CAMBRIDGE, MASSACHUSETTS 02142
TELEPHONE: (617) 250-6000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
MICHAEL D. WEBB
CHIEF EXECUTIVE OFFICER
71 ROGERS STREET
CAMBRIDGE, MASSACHUSETTS 02142
(617) 250-6000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPY TO:
WILLIAM T. WHELAN, ESQ.
MINTZ, LEVIN, COHN, FERRIS,
GLOVSKY AND POPEO, P.C.
ONE FINANCIAL CENTER
BOSTON, MASSACHUSETTS 02111
TEL: (617) 542-6000
FAX: (617) 542-2241
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practical after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933 other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
The information in this prospectus is not complete and may be changed. A
Registration Statement relating to these securities has been filed with the
Securities and Exchange Commission. No one may sell these securities nor may
offers to buy be accepted until the Registration Statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and is not soliciting an offer to buy these
securities in any state where the offer, solicitation or sale is not
permitted.
SUBJECT TO COMPLETION, DATED JUNE 14, 2002
PROSPECTUS
5,000,000 SHARES
EPIX MEDICAL, INC.
COMMON STOCK
This prospectus will allow us to issue common stock over time. This
means:
o We will provide a prospectus supplement each time we issue common
stock;
o The prospectus supplement will inform you about the specific terms of
that offering and also may add, update or change information contained
in this document;
o You should read this document and any prospectus supplement carefully
before you invest.
Our common stock is listed on the Nasdaq National Market under the
symbol "EPIX." On June 13, 2002, the last reported sale price of our common
stock on the Nasdaq National Market was $9.05 per share.
-------------------------------------------
INVESTING IN OUR SECURITIES INVOLVES RISKS.
SEE "RISK FACTORS" ON PAGE 2.
-------------------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
The Date of this Prospectus is , 2002
TABLE OF CONTENTS
Page
About This Prospectus.................................................... 1
Business ................................................................ 1
Risk Factors............................................................. 2
Cautionary Note On Forward-Looking Statements............................ 3
Use of Proceeds.......................................................... 4
Plan of Distribution..................................................... 5
Legal Matters............................................................ 6
Experts.................................................................. 6
Where You Can find More Information...................................... 6
Incorporation Of Documents By Reference.................................. 7
i
ABOUT THIS PROSPECTUS
The following is only a summary. We urge you to read the entire prospectus,
including the more detailed financial statements, notes to the financial
statements and other information incorporated by reference from our other
filings with the SEC. Investing in our common stock involves risk. Therefore,
carefully consider the information provided under the heading "Risk Factors"
beginning on page 2.
BUSINESS
We are a leading developer of targeted intravascular contrast agents, which
are substances injected into blood vessels to improve the visual images produced
by magnetic resonance imaging (MRI). MRI is a technique widely used in the
identification of a variety of diseases. It is a non-invasive procedure, that
is, a procedure accomplished without disturbing the body tissue, that provides
vibrant 3-dimensional images and enables physicians to diagnose and manage
disease. Our principal product under development, MS-325, is designed to provide
visual imaging of multiple diseases of the heart and blood vessels, commonly
known as cardiovascular diseases. These include diseases of the blood vessels
outside the heart, or peripheral vascular disease, and diseases that affect the
coronary arteries and reduce blood flow to the heart, that is, coronary artery
disease. We believe that MS-325 will significantly enhance the quality of
magnetic resonance images and provide physicians with a clinically superior,
minimally-invasive, that is, no more invasive than an injection into a vein, and
cost-effective method for diagnosing cardiovascular disease. We also believe
that MS-325 will simplify the diagnosis of a number of cardiovascular diseases
and in many cases replace highly invasive and expensive X-ray angiography, a
technique where an X-ray visible dye is injected in such a way as to make the
blood vessel visible on an X-ray. X-ray angiography is currently considered the
definitive diagnostic exam for assessing cardiovascular disease. We are
currently in Phase III clinical trials to test the safety and efficacy of MS-325
enhanced magnetic resonance angiography, that is, the minimally-invasive
imaging and determination of internal blood vessel anatomy, for the evaluation
of peripheral vascular disease. We are also investigating additional imaging
applications for MS-325, including breast cancer, female sexual arousal
dysfunction and arthritis imaging.
The use of MRI has grown steadily over the past 10 years due to reduced
cost and improved imaging capabilities, and now provides an effective method of
diagnosis for a broad range of applications. MRI manufacturers have improved
both their hardware and software, reducing the time per procedure dramatically,
while significantly enhancing image resolution. While MRI is currently used
extensively to image many organs and tissues in the body, its use in imaging the
arteries and veins has been limited. Prior attempts to employ contrast agents to
make vascular MRI more useful as a diagnostic tool, particularly for coronary
arteries, have had limited success. Unlike most currently available non-specific
MRI contrast agents, MS-325 is specifically designed to enhance the quality of
magnetic resonance images of the arteries and veins and provide physicians with
a superior method for diagnosing diseases in these vessels. MS-325 is a small
molecule, which produces an MRI signal because of the presence of gadolinium, a
magnetically active element favored by clinicians for enhancing magnetic
resonance images. This molecule is designed with our proprietary technology to
bind to albumin, the most common protein in the blood. In MS-325-enhanced images
generated with standard MRI techniques, the blood produces a strong magnetic
signal and appears bright against the dark background of surrounding tissue.
Because of its attraction to albumin, MS-325 remains at high concentrations in
the bloodstream throughout the MRI exam and therefore provides the extended
image acquisition time and signal strength required to obtain a high contrast,
high resolution image of the cardiovascular system. Like most currently
available non-specific contrast agents, MS-325 is designed to be excreted safely
through the kidneys over time.
We have entered into strategic alliances with Schering
Aktiengesellschaft or Schering AG and Tyco International Ltd., formerly
Mallinckrodt, Inc., and referred to here as Tyco/Mallinckrodt, for the
development, manufacture and commercialization of MS-325 and other vascular
contrast agents. We have also formed collaborations with the three leading
MRI scanner manufacturers, General Electric Medical Systems, Philips Medical
Systems and Siemens to develop advanced imaging techniques and tools designed
to facilitate the use of MS-325-enhanced magnetic resonance angiography.
Although we are seeking to develop a targeted contrast agent that would
enable MRI to illuminate blood clots as described in more detail below,
MS-325 is currently our only product candidate in human clinical trials. Our
initial revenues and profits will depend on the successful completion of our
Phase III clinical trials, Food and Drug Administration approval of MS-325,
the successful manufacturing of the product by our partner Tyco/Mallinckrodt
and sales by our partner Schering AG.
As noted above, we are seeking to develop a targeted contrast agent
that would enable MRI to illuminate blood clots, which we refer to as our
thrombus agent. Such a product could potentially change the method of
diagnosis for many of the conditions associated with the formation of blood
clots in the veins and arteries, known clinically as thromboembolic disease.
The most common form of this disease is deep vein thrombosis, which is
characterized by the presence of blood clots in the deep veins of the leg and
calf. The most severe consequences of deep vein thrombosis is pulmonary
embolism, which tends to occur when a blood clot dislodges from the vessel
wall to form an embolus, which can then pass to, and obstruct, arteries in
the lung. We believe that the illumination of blood clots by a targeted
contrast agent used in conjunction with MRI could lead to better medical
outcomes due to earlier and more definitive diagnosis. Early diagnosis is
especially important for clots in the thigh, pelvis and vena cava, which can
be fatal because of their increased likelihood of migrating to the lungs once
inside the pulmonary vessels. We believe that such a contrast agent could
eliminate the need for computer assisted tomography, a procedure that
requires the use of large quantities of toxic X-ray contrast dye and exposes
patients to radiation, ultrasound, and diagnostic tests that use radioactive
drugs, which are all currently used to identify thromboembolic disease. This
agent may also provide a non-invasive but clinically equivalent alternative
to pulmonary X-ray angiography, a highly invasive, catheter-based procedure
that uses dye that is toxic to the kidneys and subjects patients to
significant risk. We further believe that our proprietary technology could
enable MRI to differentiate old and new clot formation, thereby potentially
identifying those clots that pose the most risk to patients.
Our prototype clot-imaging agent is based on a family of highly specific
peptides (that is, sequences of amino acids) that bind to fibrin, the dominant
protein inside clots. The selected peptide is linked to a proprietary gadolinium
group, which, for the first time, will provide a sufficiently strong signal to
allow imaging of clots during MRI exams. In November 1999, we announced that a
prototype agent, EP-862, had been shown in pre-clinical testing to detect
sub-millimeter blood clots in an animal model. We have continued to advance this
program, identifying several improved prototype agents. We expect to continue to
apply resources to the thrombus program in the future and hope to file an
Investigational New Drug application with the Food and Drug Administration,
which, if approved, will allow us to begin human safety trials.
We incorporated in Delaware in 1988 and commenced operations in 1992. Our
principal executive offices are located at 71 Rogers Street, Cambridge,
Massachusetts 02142-1118 and our telephone number is (617) 250-6000. Our Web
site is located at http://www.epixmed.com. We do not intend for the information
contained in our Web site to be considered a part of this prospectus.
1
RISK FACTORS
An investment in our common stock involves a high degree of risk. You
should carefully consider the following risk factors, other information included
in this prospectus, any supplement to this prospectus and information in our
periodic reports filed with the SEC. If any of the following risks actually
occur, our business, financial condition or results of operations could be
materially and adversely affected, and you may lose some or all of your
investment.
Our stock price is volatile. It is possible that you may lose all or part of
your investment.
The market prices of the capital stock of medical technology companies have
historically been very volatile, and the market price of the shares of our
common stock fluctuates. The market price of our common stock is affected by:
o actual or anticipated fluctuations in our operating results;
o announcements of technological innovation or new commercial products by us
or our competitors;
o new collaborations entered into by us or our competitors;
o developments with respect to proprietary rights, including patent and
litigation matters;
o results of pre-clinical and clinical trials;
o conditions and trends in the pharmaceutical and other technology
industries;
o adoption of new accounting standards affecting such industries;
o changes in financial estimates by securities analysts; and
o general market conditions.
In addition, the stock market has from time to time experienced significant
price and volume fluctuations that have particularly affected the market prices
for the common stock of development stage companies. These broad market
fluctuations may adversely affect the market price of our common stock. In the
past, following periods of volatility in the market price of a particular
company's securities, shareholders have often brought class action securities
litigation against that company. Such litigation, if brought against us, could
result in substantial costs and a diversion of management's attention and
resources.
We may not be able to achieve or maintain profitability.
Since we commenced operations in 1992, we have incurred significant net
losses. We have never reported positive net income and we may never do so. As of
March 31, 2002, we had an accumulated deficit of approximately $96.6 million.
Certain anti-takeover clauses in our charter and by-law provisions and in
Delaware law may make an acquisition of us more difficult.
Our Restated Certificate of Incorporation authorizes the Board of Directors
to issue, without stockholder approval, up to 1,000,000 shares of preferred
stock with voting, conversion and other rights and preferences that could
adversely affect the voting power or other rights of the holders of Common
Stock. The issuance of Preferred Stock or of rights to purchase Preferred Stock
could be used to discourage an unsolicited acquisition proposal. In addition,
the possible issuance of Preferred Stock could discourage a proxy contest, make
more difficult the acquisition of a substantial block of our Common Stock or
limit the price that investors might be willing to pay for shares of our Common
Stock. The Restated Certificate provides for staggered terms for the members of
the Board of Directors. A staggered Board of Directors and certain provisions of
our By-laws and of Delaware law applicable to us could delay or make more
difficult a merger, tender offer or proxy contest involving us. We, for example,
are subject to Section 203 of the General Corporate Law of Delaware, which,
subject to certain exceptions, restricts certain transactions and business
combinations between a corporation and a stockholder owning 15% or more of the
corporation's outstanding voting stock for a period of three years from the date
the stockholder becomes an interested stockholder. These provisions may have the
effect of delaying or preventing a change of control of us without action by the
stockholders and, therefore, could adversely affect the price of our stock.
2
Because we do not plan to pay cash dividends on our common stock, holders of
shares of our common stock will not be able to receive any return unless they
sell their shares.
We have never declared cash dividends on our common stock and we do not
anticipate declaring and paying cash dividends on our common stock at any time
in the foreseeable future. The decision whether to apply legally available funds
to the payment of dividends on our common stock will be made by our board from
time to time in the exercise of its business judgment, taking into account,
among other things, results of operations and financial condition, any then
existing or proposed commitments by us for the use of available funds, and our
obligations with respect to the holders of any then outstanding indebtedness or
preferred stock.
BECAUSE OUR PRODUCT CANDIDATES ARE IN RESEARCH OR DEVELOPMENT, WE HAVE NEVER
GENERATED REVENUES FROM COMMERCIAL SALES OF OUR PRODUCTS AND WE MAY NOT DO SO IN
THE FUTURE.
We currently have no products for sale, and we cannot guarantee that we
will ever have marketable products. All of our product candidates are in
research or development and only one of our product candidates, MS-325, is in
the human clinical trial process. To date, we have financed our operations
through public stock offerings, private sales of equity securities, equipment
lease financings and license payments from our strategic partners. To achieve
profitable operations, we, alone or with others, must successfully develop,
obtain regulatory approval for, introduce, market and sell products. We do not
expect to receive revenue from the sale of any of our product candidates for the
next several years because we may not:
o successfully complete our product development efforts;
o obtain required regulatory approvals in a timely manner, if at all;
o manufacture our product candidates at an acceptable cost and with
acceptable quality; or
o successfully market any approved products.
As a result, we may never generate revenues from sales of our product candidates
and our failure to generate positive cash flow could cause our business to fail.
WE ANTICIPATE FUTURE LOSSES AND MAY NEVER BECOME PROFITABLE.
Our future financial results are uncertain. We have experienced significant
losses since we commenced operations in 1992. Our accumulated net losses as of
March 31, 2002 were approximately $96.6 million. These losses have primarily
resulted from expenses associated with our research and development activities,
including preclinical and clinical trials, and general and administrative
expenses. We anticipate that our research and development expenses will increase
significantly in the future, and we expect to incur substantial losses over at
least the next several years as we expand our research and development efforts,
pre-clinical testing and clinical trials and we implement manufacturing,
marketing and sales programs. As a result, we cannot predict when we will become
profitable, if at all, and if we do, we may not remain profitable for any
substantial period of time. If we fail to achieve profitability within the time
frame expected by investors, the market price of our common stock may decline
and consequently our business may not be sustainable.
OUR FINANCIAL RESULTS FLUCTUATE QUARTERLY, WHICH COULD NEGATIVELY AFFECT OUR
STOCK PRICE.
Our results of operations have varied and will continue to vary
significantly from quarter to quarter and depend on, among other factors:
o the timing of fees and milestone payments that we receive from our
strategic partners;
o whether we form new strategic alliances;
o the timing of expenditures in connection with our research and
development activities, including clinical trials;
o the timing of product introductions and associated launch, marketing
and sales activities; and
o the timing and extent of product acceptance for different indications
and geographical areas of the world.
Fluctuations in our results of operations may cause us to fail to meet
investor expectations, resulting in a decline in the trading price of our stock
price. As a result, you may lose all or part of your investment.
FOR THE FORSEEABLE FUTURE, WE WILL DEPEND ON OUR ONLY PRODUCT CANDIDATE IN HUMAN
CLINICAL TRIALS, MS-325, FOR REVENUES.
MS-325 is currently our only product candidate in human clinical trials and
we cannot guarantee that any of our other development projects will yield a
product candidate suitable for entry into clinical trials. As a result, our
initial revenues and profits, if any, will be derived from sales of MS-325. If
MS-325 fails to achieve regulatory approval and market acceptance, and if we do
not succeed in bringing any of our other product candidates to human clinical
trials and achieve regulatory approval and market acceptance for them, our
business will fail and as a result, you may lose all or part of your investment.
BECAUSE DEVELOPMENT OF OUR TARGETED CONTRAST AGENTS WILL INVOLVE A LENGTHY AND
COMPLEX PROCESS, WE ARE NOT CERTAIN THAT WE WILL BE ABLE TO COMMERCIALIZE ANY OF
OUR PRODUCT CANDIDATES CURRENTLY IN DEVELOPMENT; AND, IF MS-325 DOES NOT RECEIVE
APPROVAL FROM THE FOOD AND DRUG ADMINISTRATION, WE WILL HAVE NO PRODUCT TO
MARKET IN THE FORESEEABLE FUTURE.
Except for MS-325, which is currently in Phase III clinical trials, all of
our product candidates are currently in research or development and will require
additional research and development, extensive clinical testing and regulatory
approval prior to any commercial sales. We cannot predict if or when we will be
able to commercialize any of our product candidates under development. In
addition, we must complete clinical trials in the United States for, and
demonstrate the safety and efficacy of, MS-325 prior to obtaining Food and Drug
Administration approval. Our clinical trials may not be successful and we may
not complete them in a timely manner. We could report serious side effects as
the clinical trials proceed. Our results from early clinical trials may not
predict results that we will obtain in large-scale clinical trials, as a number
of companies have suffered significant setbacks in advanced clinical trials,
even after promising results in earlier trials. We may not conduct additional
Phase II or Phase III clinical trials for MS-325 and such trials, if begun, may
not demonstrate any efficacy or may not be completed successfully in a timely
manner, if at all. The rate of completion of our clinical trials depends upon,
among other things, the rate of patient enrollment. Patient enrollment is a
function of many factors, including the size of the patient population, the
nature of the clinical protocol under which MS-325 will be studied, the
proximity of the patient to a clinical site and the eligibility criteria for the
study. Delays in planned patient enrollment may result in increased costs,
regulatory filing delays, or both. Furthermore, we, the FDA or other regulatory
authorities may alter, suspend or terminate clinical trials at any time. If we
do not successfully complete clinical trials, we will not have a product to
market.
IF MRI MANUFACTURERS ARE NOT ABLE TO ENHANCE THEIR HARDWARE AND SOFTWARE, WE
WILL NOT BE ABLE TO MARKET OUR CONTRAST AGENTS FOR CARDIAC INDICATIONS.
Existing MRI scanners do not have the capability to perform coronary
angiography without improvements in current MRI hardware and software. The
success of cardiac applications of MS-325 therefore depends on advancements in
MRI hardware and software. Although several leading MRI manufacturers, academic
centers and others are developing advanced hardware and software, we do not know
when, or if, these techniques will enable MS-325 to provide clinically relevant
images in the cardiac indications that we are pursuing. If MRI manufacturers are
not able to enhance their scanners to perform coronary angiography, we will not
be able to market MS-325 for that application and the potential market for our
products will be substantially reduced.
IF MRI TECHNOLOGY BECOMES OBSOLETE, WE WILL NOT HAVE A MARKET FOR OUR PRODUCT
CANDIDATES.
Several well established medical imaging technologies compete with MRI,
including X-ray angiography, computer assisted tomography, nuclear medicine and
ultrasound. Other companies are actively developing the capabilities of these
competing technologies to enhance their effectiveness in cardiovascular system
imaging. If developments by others render MS-325 or our future product
candidates obsolete or noncompetitive, we will not have a market for our product
candidates.
IF THE MARKET DOES NOT ACCEPT OUR TECHNOLOGY AND PRODUCTS, WE MAY NOT GENERATE
SUFFICIENT REVENUES TO ACHIEVE OR MAINTAIN PROFITABILITY.
The commercial success of MS-325 and our other product candidates, when and
if approved for marketing by the United States Food and Drug Administration, the
FDA, and corresponding foreign agencies, depends on their acceptance by the
medical community and third party payors as clinically useful, cost-effective
and safe. While contrast agents are currently used in an estimated 25% to 30% of
all MRI exams, there are no FDA approved targeted vascular agents in use.
Furthermore, clinical use of MRI for vascular imaging has been limited and use
of MRI for cardiac imaging has occurred mainly in research. Market acceptance,
and thus sales of our product candidates, will depend on several factors,
including:
o safety;
o price;
o ease of administration;
o effectiveness; and
o the rate of adoption of up-to-date MRI technology.
Market acceptance will also depend on our ability and that of our strategic
partners to educate the medical community and third party payors about the
benefits of diagnostic imaging with MRI enhanced with MS-325 compared to imaging
with other technologies. MS-325 represents a new approach to imaging the
cardiovascular system, and market acceptance both of MRI as an appropriate
imaging technique for the cardiovascular system, and of MS-325, is critical to
our success. If MS-325 or any of our other products do not achieve market
acceptance, we may not generate sufficient revenues to achieve or maintain
profitability.
OUR COMPETITORS MAY HAVE GREATER FINANCIAL RESOURCES, SUPERIOR PRODUCTS OR
PRODUCT CANDIDATES, MANUFACTURING CAPABILITIES AND/OR MARKETING EXPERTISE, AND
WE MAY NOT BE ABLE TO COMPETE WITH THEM SUCCESSFULLY.
Medical technology is subject to intense competition and rapid
technological change. We have many competitors, including pharmaceutical,
biotechnology and chemical companies, a number of which, including our strategic
partners, are actively developing and marketing products that could compete with
our product candidates. Specifically, although there are no FDA-approved
targeted vascular contrast agents for use with MRI, there are a number of
non-specific MRI agents approved for marketing in the United States and certain
foreign markets that are likely to compete with MS-325 if MS-325 is approved for
Magnetic Resonance angiography or MRA. Such products include Magnevist(R) by
Schering Ag, Dotarem(R) by Guerbet, S.A., Omniscan(R) by Nycomed Imaging A.S.A.,
or Nycomed, ProHance(R) by Bracco Imaging S.p.A and Optimark(R) by
Tyco/Mallinckrodt. In addition, we are aware of six agents under clinical
development, Nycomed's NC100150, Schering AG's Gadomer-17 and SHU555C, Guerbet's
P792, Bracco's B-22956/1 and Advanced Magnetic's Code 7228, that have been, or
are being evaluated for use in MRA. Many of these competitors have substantially
greater capital and other resources than we have and may represent significant
competition for us. These companies may succeed in developing technologies and
products that are more effective or less costly than any of those that we may
develop. In addition, these companies may be more successful than we are in
developing, manufacturing and marketing products.
Moreover, there are several well-established medical imaging methods that
currently compete and will continue to compete, with MRI, including X-ray
angiography, computer assisted tomography, nuclear medicine and ultrasound, and
there are companies that are actively developing the capabilities of these
competing methods to enhance their effectiveness in cardiovascular system
imaging. We cannot guarantee that we will be able to compete successfully in the
future, or that developments by others will not render MS-325 or our future
product candidates obsolete or non-competitive, or that our collaborators or
customers will not choose to use competing technologies or products. Any
inability to compete successfully on our part will have a materially adverse
impact on our operating results.
WE DEPEND ON EXCLUSIVELY LICENSED TECHNOLOGY FROM THE MASSACHUSETTS GENERAL
HOSPITAL AND IF WE LOSE THIS LICENSE, IT IS UNLIKELY WE COULD OBTAIN THIS
TECHNOLOGY ELSEWHERE, WHICH WOULD HAVE A MATERIAL ADVERSE EFFECT ON OUR
BUSINESS.
Under the terms of a license agreement that we have with Massachusetts
General Hospital (MGH), we are the exclusive licensee to certain technology,
including patents and patent applications, which relate to our product
candidates, including MS-325. The license agreement imposes various
commercialization, sublicensing, royalty and other obligations on us. If we fail
to comply with these and other requirements our license could convert from
exclusive to nonexclusive or terminate entirely. It is unlikely that we would be
able to obtain this technology elsewhere. Any such event would mean that we
would be unlikely to produce our product candidates, including MS-325, and would
therefore have a material adverse effect on our business, financial condition
and results of operations.
WE DEPEND ON OUR STRATEGIC COLLABORATORS FOR SUPPORT IN PRODUCT DEVELOPMENT AND
THE REGULATORY APPROVAL PROCESS, AND THESE EFFORTS MAY SUFFER IF WE EXPERIENCE
PROBLEMS WITH OUR COLLABORATORS.
We depend on strategic collaborators for support in product development and
the regulatory approval process as well as a variety of other activities
including manufacturing, marketing and distribution of our products in the
United States and abroad, when, and if, the FDA and corresponding foreign
agencies approve our product candidates for marketing. To date, we have entered
into strategic alliances and collaborations with Schering AG, Tyco/Mallinckrodt,
General Electric Medical Systems, Philips Medical Systems, Siemens Medical
Systems and Pfizer. Two of our key agreements include a collaboration agreement
with Schering AG, to develop and commercialize MS-325 and other MRI vascular
agents worldwide, and an agreement with Tyco/Mallinckrodt, granting
Tyco/Mallinckrodt rights to enter into an agreement with Schering AG to
manufacture MS-325 for clinical development and commercial use. We may not
receive milestone payments from these alliances, should MS-325 fail to meet
certain performance targets in clinical trials. Further, our receipt of revenues
from strategic alliances is affected by the level of efforts of our
collaborators. Our collaborators may not devote the resources necessary to
complete development, and commence marketing, of MS-325 in their respective
territories, or they may not successfully market MS-325. Schering AG and
Tyco/Mallinckrodt currently manufacture imaging agents for other technologies
that will compete against MS-325. In addition, Schering AG will be responsible
for setting the price of the product worldwide. However, Schering AG may not set
prices in a manner that maximizes revenues for us. Our failure to receive
milestone payments, a reduction or discontinuance of efforts by our partners, or
the termination of these alliances would have a material adverse effect on our
business, financial condition and results of operations.
WE MAY NOT BE SUCCESSFUL IN ESTABLISHING ADDITIONAL STRATEGIC ALLIANCES, WHICH
COULD ADVERSELY AFFECT OUR ABILITY TO DEVELOP AND COMMERCIALIZE OUR PRODUCTS.
An important element of our business strategy includes entering into
alliances and collaborations with leaders in the pharmaceutical, diagnostic
imaging and MRI equipment industries to facilitate the development, manufacture,
marketing, sale and distribution of our products. These alliance and
collaboration agreements are complex to negotiate, costly and time-consuming to
document. We may not be successful in our efforts to establish additional
strategic alliances and the terms of any additional strategic alliances that we
do establish may not be favorable to us. Moreover, such strategic alliances may
not be successful.
THE EARLY TERMINATION OF ANY OF OUR COLLABORATIONS, INCLUDING OUR COLLABORATION
WITH SCHERING AG, COULD HARM OUR BUSINESS AND FINANCIAL CONDITION.
Our collaboration agreement with Schering AG may be terminated early under
certain circumstances, including if there is a material breach of the agreement
by either of us. In addition, we intend to seek additional collaborations with
third parties, who may negotiate provisions that allow them to terminate their
agreements with us prior to the expiration of the negotiated term under certain
circumstances. If Schering AG or any other third party collaborator were to
terminate its agreement with us or otherwise fail to perform its obligations
under our collaboration or to complete them in a timely manner, we could lose
significant revenue. If we are unable to enter into future strategic alliances
with capable partners on commercially reasonable terms, we may delay the
development and commercialization of future product candidates and could
possibly postpone them indefinitely. This would, in turn, have a material
adverse effect on our results of operations and our financial condition.
WE DEPEND ON PATENTS AND OTHER PROPRIETARY RIGHTS, AND IF THEY FAIL TO PROTECT
OUR BUSINESS, WE MAY NOT BE ABLE TO COMPETE EFFECTIVELY.
The protection of our proprietary technologies is material to our
business prospects. We pursue a comprehensive patent program for our product
candidates in the United States and in other countries where we believe that
significant market opportunities exist. We own or have an exclusive license
to patents and patent applications on the critical aspects of our core
technology as well as many specific applications of this technology.
Specifically, patents and patent applications related to our core technology
consist of two U.S. patents that are exclusively licensed to us from MGH, as
well as their cognate patents and applications in foreign countries; two U.S.
patents and their cognate patents and applications in foreign countries that
we own; eight utility applications in prosecution and six provisional patent
applications on fourteen different subject matters as well as their cognate
patents and applications in foreign countries. One of our issued patents
covers the process by which MS-325 is manufactured. Even though we hold these
patents and have made these patent applications, because the patent positions
of pharmaceutical and biopharmaceutical firms, including ours, generally
include complex legal and factual questions, our patent position remains
uncertain. For example, because patent applications in the United States with
foreign counterparts and foreign applications are maintained in secrecy until
patents are issued or published, and patent applications in foreign countries
are maintained in secrecy for a specified period after filing, we cannot be
certain that the named applicants or inventors of the subject matter covered
by our patent applications or patents, whether directly owned or licensed to
us, were the first to invent or the first to file patent applications for
such inventions. Third parties may oppose, challenge, infringe upon,
circumvent or seek to invalidate existing or future patents owned by or
licensed to us. A court or other agency with jurisdiction may find our
patents invalid, not infringed or unenforceable and we cannot be sure that
patents will be granted with respect to any of our pending patent
applications or with respect to any patent applications filed by us in the
future. Even if we have valid patents, these patents still may not provide
sufficient protection against competing products or processes. If we are
unable to successfully protect our proprietary methods and technologies, or,
if our patent applications do not result in issued patents, we may not be
able to prevent other companies from practicing our technology and, as a
result, our competitive position would be harmed.
WE MAY NEED TO INITIATE LAWSUITS TO PROTECT OR ENFORCE OUR PATENTS AND OTHER
INTELLECTUAL PROPERTY RIGHTS, WHICH COULD INCUR SUBSTANTIAL COSTS, AND WHICH
COULD RESULT IN THE FORFEITURE OF THESE RIGHTS.
We may need to bring costly and time-consuming litigation against third
parties in order to enforce our issued patents, protect our trade secrets and
know how, or to determine the enforceability, scope and validity of proprietary
rights of others. In addition to being costly and time-consuming, such lawsuits
could divert management's attention from other business concerns. These lawsuits
could also result in the invalidation or a limitation in the scope of our
patents or forfeiture of the rights associated with our patents or pending
patent applications. We may not prevail and a court may find damages or award
other remedies in favor of an opposing party in any such lawsuits. During the
course of these suits, there may be public announcements of the results of
hearings, motions and other interim proceedings or developments in the
litigation. Securities analysts or investors may perceive these announcements to
be negative, which could cause the market price of our stock to decline. In
addition, the cost of such litigation could have a material adverse effect on
our business and financial condition.
OTHER RIGHTS AND MEASURES THAT WE RELY UPON TO PROTECT OUR INTELLECTUAL PROPERTY
MAY NOT BE ADEQUATE TO PROTECT OUR PRODUCTS AND SERVICES AND COULD REDUCE OUR
ABILITY TO COMPETE IN THE MARKET.
In addition to patents, we rely on a combination of trade secrets,
copyright and trademark laws, nondisclosure agreements and other contractual
provisions and technical measures to protect our intellectual property rights.
While we require employees, collaborators, consultants and other third parties
to enter into confidentiality and/or non-disclosure agreements where
appropriate, any of the following could still occur:
o the agreements may be breached;
o we may have inadequate remedies for any breach
o proprietary information could be disclosed to our competitors; or
o others may independently develop substantially equivalent proprietary
information and techniques or otherwise gain access to our trade
secrets or disclose such technologies.
If, for any of the above reasons, our intellectual property is disclosed or
misappropriated, it would harm our ability to protect our rights and our
competitive position. Moreover, several of our management and scientific
personnel were formerly associated with other pharmaceutical and biotechnology
companies and academic institutions. In some cases, these individuals are
conducting research in similar areas with which they were involved prior to
joining us. As a result, we, as well as these individuals, could be subject to
claims of violation of trade secrets and similar claims.
OUR SUCCESS WILL DEPEND PARTLY ON OUR ABILITY TO OPERATE WITHOUT INFRINGING THE
INTELLECTUAL PROPERTY RIGHTS OF OTHERS, AND IF WE ARE UNABLE TO DO SO, WE MAY
NOT BE ABLE TO SELL OUR PRODUCTS.
Our commercial success will depend, to a significant degree, on our
ability to operate without infringing upon the patents of others in the
United States and abroad. There may be pending or issued patents, held by
parties not affiliated with us, relating to technologies we use in the
development or use of certain of our contrast agents. If any judicial or
administrative proceeding upholds any third party patents as valid and
enforceable, we could be prevented from practicing the subject matter claimed
in such patents, or would be required to obtain licenses from the owners of
each such patent, or to redesign our products or processes to avoid
infringement. If we are unable to obtain a required license on acceptable
terms, or are unable to design around any third party patent, we may be
unable to sell our products, which would have a material adverse effect on
our business.
EXTENSIVE GOVERNMENT REGULATION MAY DELAY OR PREVENT US FROM MARKETING MS-325 OR
OUR OTHER PRODUCTS UNDER DEVELOPMENT.
We are subject to extensive U.S. and foreign governmental regulatory
requirements and lengthy approval processes for our product candidates. The
development and commercial use of our product candidates will be regulated by
numerous federal, state, local and foreign governmental authorities in the U.S.,
including the FDA and foreign regulatory agencies abroad. The nature of our
research and development and manufacturing processes requires the use of
hazardous substances and testing on certain laboratory animals. Accordingly, we
are subject to extensive federal, state and local laws, rules, regulations and
policies governing the use, generation, manufacture, storage, air emission,
effluent discharge, handling and disposal of certain materials and wastes, as
well as the use of and care for laboratory animals. Although we believe we are
in compliance with all such laws and maintain policies and procedures to ensure
that we remain in compliance, if we fail to comply or if an accident occurs, we
may be exposed to legal risk and be required to pay significant penalties or be
held liable for any damages that result. Such liability could exceed our
financial resources. Furthermore, current laws could change and new laws could
be passed that may force us to change our policies and procedures, an event
which could impose significant costs on us.
The regulatory approval process for new MRI contrast agents, including
required preclinical studies and clinical trials, is lengthy and expensive.
Although some of our employees have experience in obtaining regulatory
approvals, we have only limited experience in filing or pursuing applications
necessary to gain regulatory approvals. Preclinical testing of our product
development candidates is subject to Good Laboratory Practices as prescribed by
the FDA and the manufacture of any products developed by us will be subject to
Good Manufacturing Practices as prescribed by the FDA. We may not obtain the
necessary FDA clearances and subsequent approvals in a timely manner, if at all.
We can not be sure as to the length of the clinical trial period or the number
of patients that will be required to be tested in the clinical trials in order
to establish the safety and efficacy of MS-325 or any of our future product
candidates. We may encounter unanticipated delays or significant costs in our
efforts to secure necessary approvals. We may not obtain regulatory approval,
even after the performance of clinical trials and the passage of time and the
expenditure of such resources, for MS-325 or any other product candidates that
we develop. Our analysis of data obtained from preclinical and clinical
activities is subject to confirmation and interpretation by regulatory
authorities, which could delay, limit or prevent FDA regulatory approval. Delays
in obtaining government regulatory approval could adversely affect our marketing
as well as our ability to generate significant revenues from commercial sales.
Future United States legislative or administrative actions also could
prevent or delay regulatory approval of our product candidates. Even if we
obtain regulatory approvals, they may include significant limitations on the
indicated uses for which we may market a product. A marketed product also is
subject to continual FDA and other regulatory agency review and regulation.
Later discovery of previously unknown problems or failure to comply with the
applicable regulatory requirements may result in restrictions on the marketing
of a product or withdrawal of the product from the market, as well as possible
civil or criminal sanctions. Further, many academic institutions and companies
conducting research and clinical trials in the MRI contrast agent field are
using a variety of approaches and technologies. If researchers obtain any
adverse results in preclinical studies or clinical trials, it could adversely
affect the regulatory environment for MRI contrast agents generally. In
addition, if we obtain marketing approval, the FDA may require post marketing
testing and surveillance programs to monitor the product's efficacy and side
effects. Results of these post-marketing programs may prevent or limit the
further marketing of the monitored product. If we cannot successfully market our
products, we will not generate sufficient revenues to achieve or maintain
profitability.
Our strategic partners and we are also subject to numerous and varying
foreign regulatory requirements governing the design and conduct of clinical
trials and the manufacturing and marketing of our products. The foreign
regulatory approval process may include all of the risks associated with
obtaining FDA approval set forth above, and we may not obtain foreign regulatory
approvals on a timely basis, if at all, thereby compromising our ability to
market our products abroad.
IF WE DO NOT RAISE ADDITIONAL FUNDS NECESSARY TO FUND OUR OPERATIONS, WE MAY NOT
BE ABLE TO IMPLEMENT OUR BUSINESS PLAN.
Since inception, we have funded our operations primarily through our public
offerings of common stock, private sales of equity securities, equipment lease
financings and license payments from our strategic partners. We believe that we
will need to raise substantial additional funds for research, development and
other expenses, through equity or debt financings, strategic alliances or
otherwise, prior to commercialization of any of our product candidates. Our
future liquidity and capital requirements will depend upon numerous factors,
including the following:
o the progress and scope of clinical trials;
o the timing and costs of filing future regulatory submissions;
o the timing and costs required to receive both United States and
foreign governmental approvals; o the cost of filing, prosecuting,
defending and enforcing patent claims and other intellectual property
rights;
o the extent to which our products gain market acceptance;
o the timing and costs of product introductions; the extent of our
ongoing research and development programs;
o the costs of training physicians to become proficient with the use of
our products; and
o the costs of developing marketing and distribution capabilities.
Additional financing may not be available on terms acceptable to us, or at
all. If we cannot fund our capital requirements, it would have a material
adverse effect on our business, financial condition and results of operations.
If adequate funds are not available, we may have to curtail operations
significantly or obtain funds by entering into arrangements with strategic
partners or others that may require us to relinquish rights to certain of our
technologies, product candidates, products or potential markets. To the extent
that we raise additional capital through the sale of equity or securities
convertible into equity, the issuance of such securities could result in
dilution to our existing stockholders.
WE HAVE A LIMITED MANUFACTURING CAPABILITY AND WE INTEND TO RELY ON OUTSOURCED
MANUFACTURING TO PRODUCE MS-325.
We do not have, nor do we currently have plans to develop, full-scale
manufacturing capability for MS-325. While we do manufacture small amounts of
MS-325 for research and development efforts, we intend to rely on
Tyco/Mallinckrodt as the primary manufacturer of MS-325 for Phase III clinical
trials, as well as for any future human clinical trials and commercial use. In
the event that Tyco/Mallinckrodt fails to fulfill its manufacturing
responsibilities satisfactorily, Schering AG has the right to purchase MS-325
from a third party or to manufacture the compound itself. However, either course
of action could materially delay the manufacture and development of MS-325.
Schering AG may not be able to find an alternative manufacturer. In addition,
Schering AG may not be able to manufacture MS-325 in a timely manner. If we
experience a delay in manufacturing, it could result in a delay in the approval
or commercialization of MS-325 and have a material adverse effect on our
business, financial condition and results of operations.
PRODUCT LIABILITY CLAIMS COULD INCREASE OUR COSTS AND ADVERSELY AFFECT OUR
RESULTS OF OPERATIONS.
The clinical testing, manufacturing and marketing of our product candidates
may expose us to product liability claims, and we may experience material
product liability losses in the future. We currently have limited product
liability insurance for the use of our product candidates in clinical research,
but our coverage may not continue to be available on terms acceptable to us or
adequate for liabilities we actually incur. We do not have product liability
insurance coverage for the commercial sale of our products but intend to obtain
such coverage if and when we commercialize our product candidates. However, we
may not be able to obtain adequate additional product liability insurance
coverage on acceptable terms, if at all. A successful claim brought against us
in excess of available insurance coverage, or any claim or product recall that
results in significant adverse publicity against us, may have a material adverse
effect on our business and results of operations.
IF WE FAIL TO GET ADEQUATE LEVELS OF REIMBURSEMENT FROM THIRD PARTY PAYORS FOR
OUR PRODUCT CANDIDATES AFTER THEY ARE APPROVED IN THE U.S. AND ABROAD, WE WILL
NOT BE ABLE TO COMMERCIALIZE OUR PRODUCT CANDIDATES.
We could be adversely affected by changes in reimbursement policies of
governmental or private healthcare payors, particularly to the extent any such
changes affect reimbursement for procedures in which our product candidates
would be used. Failure by physicians, hospitals and other users of our products
to obtain sufficient reimbursement from third party payors for the procedures in
which our products would be used or adverse changes in governmental and private
third party payors' policies toward reimbursement for such procedures would have
a material adverse effect on our ability to market our products and consequently
it would have an adverse effect on our business, financial condition and results
of operations. If we obtain the necessary foreign regulatory approvals, market
acceptance of our product candidates in international markets would be
dependent, in part, upon the availability of reimbursement within prevailing
healthcare payment systems. Reimbursement and healthcare payment systems in
international markets vary significantly by country, and include both government
sponsored health care and private insurance. We intend to seek international
reimbursement approvals, although we cannot assure you that any such approvals
will be obtained in a timely manner, if at all, and failure to receive
international reimbursement approvals could have an adverse effect on market
acceptance of our products in the international markets in which such approvals
are sought.
WE DEPEND ON OUR KEY PERSONNEL, THE LOSS OF WHOM WOULD HURT OUR ABILITY TO
COMPETE.
Our future business and operating results depend in significant part upon
the continued contributions of our senior management and key technical
personnel. If any such personnel were to be hired away from us by a competitor,
or if for any reason, they could not continue to work for us, we would have
difficulty hiring officers with equivalent skills in general, financial and
research management and our ability to achieve our business objectives or to
operate or compete in our industry may be seriously impaired. Although we
maintain key life insurance on the lives of some key officers, the loss of any
key employee, the failure of any key employee to perform in his or her current
position, or our inability to attract and retain skilled employees, as needed,
could have a material adverse effect on our business, financial condition and
results of operations. Our future business and operating results also depend in
significant part upon our ability to attract and retain qualified management,
operational and technical personnel. Competition for this personnel is intense,
and we may not be successful in attracting or retaining such personnel. If we
were to lose these employees to our competitors, we could spend a significant
amount of time and resources to replace them, which would impair our research
and development efforts.
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference contain
forward-looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act. These statements can be
identified by the use of forward-looking terminology such as "may," "will,"
"could," "expect," "anticipate," "estimate," "continue" or other similar
words. These statements discuss future expectations, contain projections of
results of operations or of financial condition or state trends and known
uncertainties or other forward-looking information. Examples of
forward-looking statements can be found in the discussion set forth under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business" in the Form 10-K for the year ended December 31,
2001 filed with the SEC on March 29, 2002 and incorporated in this prospectus
by reference. Such statements are based on current expectations that involve
a number of uncertainties. When considering forward-looking statements, you
should keep in mind that the risk factors noted above and other factors noted
throughout this prospectus or incorporated by reference could cause our
actual results to differ significantly from those contained in any
forward-looking statement. We do not intend to update any forward-looking
statements to conform to actual results unless required by law.
3
USE OF PROCEEDS
We intend to use the net proceeds from the sale of the common stock
offered by this prospectus, if any, for general corporate purposes including
research and development and for the acquisition of, or investment in,
companies, technologies or assets that complement our business. However, we
have no present understandings, commitments or agreements to enter into any
potential acquisitions or to make any investments.
The amounts actually expended for each purpose may vary significantly
depending upon numerous factors, including the amount and timing of the
proceeds from the sale of common stock offered by this prospectus, progress
of our research, drug discovery and development programs, the results of
pre-clinical and clinical studies, the timing of regulatory approvals,
technological advances, determinations as to commercial potential of our
compounds and the status of competitive products. In addition, expenditures
will also depend upon the establishment of collaborative research
arrangements with other companies and other factors. Pending application of
the net proceeds, we intend to invest the net proceeds of the offering in
short-term, investment-grade, interest-bearing securities. Additional
information about the use of net proceeds from the sale of common stock
offered by this propsectus may be set forth in the prospectus supplement
relative to the specific offering.
4
PLAN OF DISTRIBUTION
We may offer the common stock:
o directly to purchasers;
o to or through underwriters;
o through dealers, agents or institutional investors; or
o through a combination of such methods.
Regardless of the method used to sell the common stock, we will provide a
prospectus supplement that will disclose:
o the identity of any underwriters, dealers, agents or investors who purchase
the common stock;
o the material terms of the distribution, including the number of shares sold
and the consideration paid;
o any over-allotment options under which underwriters may purchase
additional securities from us;
o the amount of any compensation, discounts or commissions to be received by
the underwriters, dealers or agents;
o any public offering price;
o the terms of any indemnification provisions, including indemnification from
liabilities under the federal securities laws; and
o the nature of any transaction by an underwriter, dealer or agent during the
offering that is intended to stabilize or maintain the market price of the
common stock.
SALE THROUGH AGENTS
We may designate agents to solicit purchases for the period of the agent's
appointment or to sell the common stock on a continuing basis. Unless we inform
you otherwise in the applicable prospectus supplement, any agent will agree to
use its reasonable best efforts to solicit purchases for the period of the
agent's appointment.
SALE THROUGH UNDERWRITERS OR DEALERS
If underwriters are used in an offering of the common stock, we will
execute an underwriting agreement with such underwriters and will set out the
name of each underwriter and the terms of the transaction (including any
underwriting discounts and other terms constituting compensation of the
underwriters and any dealers) in a prospectus supplement. If an underwriting
syndicate is used, the managing underwriter(s) will be set forth on the cover of
a prospectus supplement. Common stock may be acquired by the underwriters for
their own accounts and may be resold from time to time in one or more
transactions, including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of sale. Any public offering
price and any discounts or concessions allowed or reallowed or paid to dealers
may be changed from time to time. We may use underwriters with whom we have a
material relationship. We will describe in the prospectus supplement that names
the underwriter the nature of any such relationship.
If dealers are used in an offering of the common stock, we will sell the
common stock to the dealers as principals. The dealers then may resell such
common stock to the public at varying prices, which they determine at the time
of resale.
COMPENSATION OF UNDERWRITERS, DEALERS AND AGENTS
Underwriters, dealers and agents that participate in the distribution of
the common stock may be underwriters as defined in the Securities Act of 1933
and any discounts or commissions they receive from us, as well as any profit on
their resale of the common stock, may be treated as underwriting discounts and
commissions under the Securities Act. We will identify in the applicable
prospectus supplement any underwriters, dealers or agents and will describe
their compensation. We may have agreements with the underwriters, dealers or
agents to indemnify them against specified civil liabilities, including
liabilities under the Securities Act. Underwriters, dealers and agents may
engage in transactions with or perform services for us in the ordinary course of
their businesses.
DIRECT SALES
We may sell the common stock directly. In that event, no underwriters or
agents would be involved. We may sell the common stock directly to institutional
investors or others who may be deemed to be underwriters within the meaning of
the Securities Act with respect to any sale of that common stock.
DELAYED DELIVERY CONTRACTS
If we so indicate in a prospectus supplement, we may authorize
underwriters, dealers or agents to solicit offers from selected types of
institutions to purchase common stock from us at the public offering price under
delayed delivery requirements. These contracts would provide for payment and
delivery on a specified date in the future. Institutions with which such
contracts may be made include commercial and savings banks, insurance companies,
pension funds, investment companies, educational and charitable institutions and
others. The contracts would be subject only to those conditions described in the
prospectus supplement. The applicable prospectus supplement relating to such
contracts will set forth the price to be paid for common stock under the
contracts, the commission payable for solicitation of the contracts and the date
or dates in the future for delivery of the common stock under the contracts.
STABILIZATION ACTIVITIES
During and after an offering through underwriters, the underwriters may
purchase and sell the common stock in the open market. These transactions may
include over-allotment and stabilizing transactions and purchases to cover
syndicate short positions created in connection with the offering. The
underwriters may also impose a penalty bid, in which selling concessions allowed
to syndicate members or other broker-dealers for the offered common stock sold
for their account may be reclaimed by the syndicate if the offered common stock
is repurchased by the syndicate in stabilizing or covering transactions. These
activities may stabilize, maintain or otherwise affect the market price of the
offered common stock, which may be higher than the price that might otherwise
prevail in the open market. If commenced, these activities may be discontinued
at any time.
PASSIVE MARKET MAKING
Any underwriters who are qualified market makers on the NASDAQ National
Market may engage in passive market making transactions in the common stock on
the Nasdaq National Market in accordance with Rule 103 of Regulation M, during
the business day prior to the pricing of the offering, before the commencement
of offers or sales of the securities. Passive market makers must comply with
applicable volume and price limitations and must be identified as passive market
makers. In general, a passive market maker must display its bid at a price not
in excess of highest independent bid for the security; if all independent bids
are lowered below the passive market maker's bid, however, the passive market
maker's bid then must be lowered when certain purchase limits are exceeded.
5
LEGAL MATTERS
The validity of the issuance of the common stock offered in this prospectus
is being passed upon for us by Mintz, Levin, Cohn, Ferris, Glovsky and Popeo,
P.C., Boston, Massachusetts.
EXPERTS
Our financial statements, appearing in our Annual Report on Form 10-K for
the year ended December 31, 2001, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such financial statements are incorporated
herein by reference in reliance upon such report given on the authority of such
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." In addition, our
stock is listed for trading on the Nasdaq National Market. You can read and copy
reports and other information concerning us at the offices of the National
Association of Securities Dealers, Inc. located at 1735 K Street, Washington,
D.C. 20006.
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:
o inspect a copy of the Registration Statement, including the
exhibits and schedules, without charge at the public reference
room, or
o obtain a copy from the SEC upon payment of the fees prescribed by
the SEC.
6
INCORPORATION OF DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file with
it, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be a part of this prospectus and information that we file later with the SEC
will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings made with the SEC
under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934
until the sale of all of the shares of common stock. The documents we are
incorporating by reference are:
o our Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 2002;
o our Annual Report on Form 10-K for the fiscal year ended
December 31, 2001;
o our Forms 8-K filed on March 18, 2002, January 25, 2002, January 16, 2002
and January 14, 2002;
o our Definitive Proxy Statement filed on April 30, 2002; and
o the description of our common stock contained in "Description of Capital
Stock" in the Registration Statement on Form S-1 filed with the SEC on
January 30, 1997 (File No. 333-17581), including any amendment or report
filed for the purpose of updating such description.
You may request a copy of these filings at no cost by writing or
telephoning our Investor Relations Officer at the following address and phone
number:
EPIX Medical, Inc.
71 Rogers Street
Cambridge, Massachusetts 02142
(617) 250-6000
This prospectus is part of a Registration Statement that we filed with the
SEC. You should rely only on the information incorporated by reference in or
provided in this prospectus and the Registration Statement. We have not
authorized any other person to provide you with different information. We are
not making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information in this prospectus is
accurate as of any date other than the date on the front of this document.
7
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The table sets forth our estimates of our expenses in connection with the
issuance and distribution of the common stock being registered.
ITEM AMOUNT
------
SEC registration fee.............................. $ 5,999.00
Legal fees and expenses........................... $ 75,000.00
Accounting fees and expenses...................... $ 75,000.00
Miscellaneous fees and expenses................... $ 10,000.00
-----------
Total............................................. $165,999.00
===========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145(a) of the General Corporation Law of the State of Delaware
provides that a Delaware corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or enterprise,
against expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no cause to believe his conduct was unlawful.
Section 145(b) provides that a Delaware corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses actually
and reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted under similar standards, except that no
indemnification may be made in respect of any claim, issue or matter as to which
such person shall have been adjudged to be liable to the corporation unless and
only to the extent that the court in which such action or suit was brought shall
determine that despite the adjudication of liability, such person is fairly and
reasonably entitled to be indemnified for such expenses which the court shall
deem proper.
Section 145 further provides that to the extent a director or officer of a
corporation has been successful in the defense of any action, suit or proceeding
referred to in subsections (a) and (b) or in the defense of any claim, issue or
matter therein, he shall be indemnified against expenses actually and reasonably
incurred by him in connection therewith; that indemnification provided for by
Section 145 shall not be deemed exclusive of any other rights to which the
indemnified party may be entitled; and that the corporation may purchase and
maintain insurance on behalf of a director or officer of the corporation against
any liability asserted against him or incurred by him in any such capacity or
arising out of his status as such whether or not the corporation would have the
power to indemnify him against such liabilities under such Section 145.
The Certificate of Incorporation, as amended, and By-laws, as amended, of
the Company provide for indemnification of the Company's directors and officers
to the fullest extent permitted by law. The By-laws also permit the Board of
Directors to authorize the Company to purchase and maintain insurance against
any liability asserted against any director, officer, employee or agent of the
Company arising out of his capacity as such. Insofar as indemnification for
liabilities under the Securities Act may be permitted to directors, officers, or
controlling persons of the Company pursuant to the Company's Certificate of
Incorporation, as amended, its By-laws, as amended, and the Delaware General
Corporation Law, the Company has been informed that in the opinion of the
Commission such indemnification is against public policy as expressed in such
Act and is therefore unenforceable.
As permitted by Section 102(b)(7) of the Delaware General Corporation Law,
the Company's Certificate of Incorporation, as amended, provides that directors
of the Company shall not be personally liable to the Company or its stockholders
for monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the Company or
its stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the Delaware General Corporation Law, relating to prohibited dividends or
distributions or the repurchase or redemption of stock or (iv) for any
transaction from which the director derives an improper personal benefit. As a
result of this provision, the Company and its stockholders may be unable to
obtain monetary damages from a director for breach of his or her duty of care.
II-1
ITEM 16. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
-----------
4.1** Restated Certificate of Incorporation of the Company. (Filed as Exhibit
4.1 to the Company's Registration Statement on Form S-8 (File No.
333-30531) and incorporated herein by reference.)
4.2** Amended and Restated By-laws of the Company. (Filed as Exhibit 4.2 to
the Company's Registration Statement on Form S-8 (File No. 333-30531)
and incorporated herein by reference.)
4.3** Specimen certificate for shares of Common Stock of the Company. (Filed
as Exhibit 4.1 to the Company's Registration Statement on Form S-1
(File No. 333-17581) and incorporated herein by reference.)
5.1** Opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., with
respect to the legality of the securities being registered.
23.1 Consent of Ernst & Young LLP.
23.2** Consent of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
(included in Exhibit 5.1).
24.1** Power of Attorney (included on signature page).
-------------------
** Previously filed
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or any decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3, Form S-8 or Form
F-3, and the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
with or furnished to the Commission by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-2
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant, the Registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
(c) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing
of the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(d) The undersigned registrant hereby undertakes to deliver or cause to
be delivered with the prospectus, to each person to whom the prospectus
is sent or given, the latest annual report to security holders that is
incorporated by reference in the prospectus and furnished pursuant to
and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the
Securities Exchange Act of 1934; and, where interim financial
information required to be presented by Article 3 of Regulation S-X are
not set forth in the prospectus, to deliver, or cause to be delivered
to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it
meets all the requirements for filing on Form S-3 and has duly caused this
Amendment No. 1 to Form S-3 Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in Cambridge, Massachusetts on
June __, 2002.
EPIX MEDICAL, INC.
BY: /s/ MICHAEL D. WEBB
----------------------------
Michael D. Webb
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 1 to Registration Satement on Form S-3 has been signed below by
the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
Chief Executive Officer June 14, 2002
/s/ MICHAEL D. WEBB (Principal Executive Officer)
-----------------------------------
Michael D. Webb
Vice President of Finance and June 14, 2002
/s/ PAMELA E. CAREY Administration and Chief Financial Officer
----------------------------------- (Principal Financial and Accounting Officer)
Pamela E. Carey
* Chairman of the Board and Director June 14, 2002
-----------------------------------
Christopher F. O. Gabrieli
* Director June 14, 2002
-----------------------------------
Stanley T. Crooke, M.D., Ph.D.
* Director June 14, 2002
-----------------------------------
Peter Wirth
* Director June 14, 2002
-----------------------------------
Randall B. Lauffer, Ph.D.
*By: /s/ Michael D. Webb
-----------------------------------
Michael D. Webb
Attorney-in-fact
INDEX TO EXHIBITS FILED WITH
FORM S-3 REGISTRATION STATEMENT
EXHIBIT
NUMBER DESCRIPTION
------- -----------
4.1** Restated Certificate of Incorporation of the Company. (Filed as Exhibit
4.1 to the Company's Registration Statement on Form S-8 (File No.
333-30531) and incorporated herein by reference.)
4.2** Amended and Restated By-laws of the Company. (Filed as Exhibit 4.2 to
the Company's Registration Statement on Form S-8 (File No. 333-30531)
and incorporated herein by reference.)
4.3** Specimen certificate for shares of Common Stock of the Company. (Filed
as Exhibit 4.1 to the Company's Registration Statement on Form S-1
(File No. 333-17581) and incorporated herein by reference.)
5.1** Opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., with
respect to the legality of the securities being registered.
23.1 Consent of Ernst & Young LLP.
23.2** Consent of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
(included in Exhibit 5.1).
24.1** Power of Attorney (included on signature page).
-------------------
** Previously filed