PROSPECTUS Filed Pursuant to
Rule 424(b)(3)
File No. 333-35082
1,650,000 Shares
Novoste Corporation
COMMON STOCK
----------
The shareholders listed in this prospectus are offering an aggregate of
1,650,000 shares of our common stock. The common stock offered by this
prospectus was sold to the selling shareholders in transactions exempt from
registration under the Securities Act. We will not receive any of the proceeds
from the sale of this common stock.
The shares of common stock being offered by the selling shareholders may
be sold from time to time in transactions on the Nasdaq National Market, in the
over-the-counter market or in negotiated transactions. The selling shareholders
directly, or through agents or dealers designated from time to time, may sell
the common stock offered by them at fixed prices, at fixed prices, at prevailing
market prices at the time of sale, at varying prices determined at the time of
sale or at negotiated prices.
Our common stock is listed on the Nasdaq National Market under the symbol
"NOVT." On May 3, 2000, the last reported sale price of the common stock on the
Nasdaq National Market was $41.5625 per share.
-----------
Investing in our common stock involves risks.
See "Risk Factors" beginning on page 7.
-----------
The Securities and Exchange Commission and state securities regulators have not
approved or disapproved these securities, or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.
-----------
May 4, 2000
<PAGE>
TABLE OF CONTENTS
Page
----
Special Note Regarding Forward-Looking Statements..............................2
Where You Can Find More Information About Us...................................3
Our Company....................................................................4
Risk Factors...................................................................7
Use Of Proceeds...............................................................17
Selling Shareholders..........................................................18
Plan Of Distribution..........................................................19
Legal Matters.................................................................19
Experts.......................................................................19
--------------------
In this prospectus, "Novoste," the "company," "we," "us," and "our" refer
to Novoste Corporation.
--------------------
Novoste(TM), Beta-Cath(TM), (beta)-Cath(TM), Beta-Rail(TM),
(beta)-Rail(TM) and the Cross Design logo are our trademarks.
--------------------
You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. We are offering to sell, and seeking offers to
buy, shares of common stock only in jurisdictions where offers and sales are
permitted. The information contained in this prospectus is accurate only as of
the date of this prospectus.
--------------------
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements under "Our Company," "Risk Factors" and elsewhere
in this prospectus constitute forward-looking statements. These statements
involve known and unknown risks, uncertainties, and other factors that may cause
our or our industry's actual results, levels of activity, performance, or
achievements to be materially different from any future results, levels of
activity, performance, or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, those listed
under "Risk Factors" and elsewhere in this prospectus.
In some cases, you can identify forward-looking statements by terminology
such as "may," "will," "should," "expects," "plans," "anticipates," "believes,"
"estimates," "predicts," "potential," or "continue" or the negative of such
terms or other comparable terminology.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance, or achievements.
Moreover, neither we nor any other person assumes responsibility for the
accuracy and completeness of such statements. We undertake no obligation to
update or revise any of the forward-looking statements, whether as a result of
new information, future events or otherwise. In light of these risks,
uncertainties and assumptions, the forward-looking events discussed herein may
not occur.
2
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION ABOUT US
We 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 with the Commission at the Public Reference Room at the
Commission, at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549. Please call 1-800-SEC-0330 for further information concerning the
Public Reference Room. The Commission also makes these documents available on
its web site at http://www.sec.gov.
We have filed with the Commission a registration statement on Form S-3
under the Securities Act of 1933, as amended, relating to the common stock
offered by this prospectus. This prospectus constitutes a part of the
registration statement but does not contain all of the information set forth in
the registration statement and its exhibits. For further information, we refer
you to the registration statement and its exhibits.
The Commission 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 another document we have filed with the Commission. The
information incorporated by reference is an important part of this prospectus
and information that we file later with the Commission will automatically update
and supersede this information. We incorporate by reference the following:
o The description of common stock contained in the Registration
Statement on Form 8-A filed with the Commission on May 15, 1996;
o The description of rights to purchase preferred shares contained in
the Registration Statement on Form 8-A filed with the Commission on
November 5, 1996;
o The amended description of rights to purchase preferred shares
contained in the Registration Statement on Form 8-A/A filed with the
Commission on August 3, 1999.
o Annual Report on Form 10-K for the fiscal year ended December 31,
1999 filed with the Commission of February 18, 2000;
o Current Report on Form 8-K filed with the Commission on March 14,
2000;
o The Proxy Statement for the Annual Meeting of Shareholders to be
held on May 11, 2000 filed with the Commission on April 7, 2000;
o Current Report on Form 8-K filed with the Commission on April 7,
2000;
o Current Report on Form 8-K filed with the Commission on April 19,
2000;
o Current Report on Form 8-K filed with the Commission on May 2, 2000;
and
o Any future filings we make with the Commission until the selling
shareholders sell all of the common stock offered by them pursuant
to the prospectus.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address or telephone number:
Novoste Corporation
3890 Steve Reynolds Blvd.
Norcross, Georgia 30093
(telephone no. 770-717-0904)
Attention: Cheryl Johnson, Vice President,
Investor Relations and Business Development
3
<PAGE>
OUR COMPANY
The Beta-Cath(TM) System
Novoste has developed the Beta-Cath System, a hand-held device designed to
deliver beta, or shallow penetration, radiation to the site of a treated
blockage in a coronary artery to reduce the likelihood of restenosis - the
renarrowing of a previously treated artery. We recently announced statistically
significant results from one of our three pivotal clinical trials of the
Beta-Cath System and submitted an initial pre-market approval application to the
FDA on April 14, 2000. In August 1998, we qualified to apply CE marking to the
Beta-Cath System, a requirement to sell our device in most of Western Europe,
and in 1999 had sales of approximately $1.8 million in Europe and certain other
countries.
Restenosis is the major limitation of percutaneous transluminal coronary
angioplasty or PTCA, a procedure used by interventional cardiologists to open
blocked coronary arteries. In 1999 physicians performed approximately 770,000
PTCA procedures in the United States and approximately 730,000 PTCA procedures
abroad. Studies have shown that 30% to 50% of patients experience restenosis
within six months after PTCA. Restenosis often requires one or more additional
revascularization procedures to reopen blocked vessels. These procedures include
repeat PTCA, which has an average cost of $20,000 in the United States, and
coronary artery bypass graft surgery, or CABG, which has an average cost of
$45,000 in the United States. It is estimated that more than $3 billion is spent
annually in the United States on revascularization procedures.
In response to the high rate of restenosis following PTCA, the placement
of coronary stents, metal implants that prop open a coronary artery, has grown
rapidly. In 1999, stents were used in approximately 75% of the PTCA procedures
performed worldwide. However, studies have shown that restenosis still occurs in
approximately 20% to 30% of the patients who receive stents. This is commonly
referred to as "in-stent" restenosis. Patients with "in-stent" restenosis often
experience recurrent restenosis and as a result are prone to multiple
revascularization procedures.
We believe that the Beta-Cath System may be effective in reducing the
incidence of restenosis following PTCA and stent placement and in treating
"in-stent" restenosis, thereby reducing the need for additional costly hospital
procedures.
Our Clinical Trials
In March 2000,we announced results from our STents and Radiation Therapy
or START Trial, our pivotal clinical trial designed to study the safety and
effectiveness of the Beta-Cath System for treating "in-stent" restenosis. The
primary endpoint of the trial was the incidence of an additional
revascularization procedure in the previously treated artery or "target vessel
revascularization" within eight months. In addition, a follow-up angiogram eight
months after the initial treatment was performed to observe the treated artery
to determine whether restenosis has recurred. We enrolled 476 patients at 50
clinical sites in North America and Europe.
The START Trial results showed the following statistically significant
results for patients with "in-stent" restenosis treated with the Beta-Cath
System when compared to patients treated with placebo:
o a 34% reduction in the rate of target vessel revascularization or
TVR;
o the rate of restenosis decreased by 66% at the stented portion of
the treated artery;
o the rate of restenosis decreased by 36% at a longer section of the
artery, beyond that treated with radiation or revascularization
methods, and
o the rate of major adverse cardiac events decreased by 31%.
Our second pivotal trial, the START 40 Trial, was designed to seek
approval for a longer radiation source train, a 40-millimeter source train,
compared to the 30-millimeter source train predominantly used in the START
4
<PAGE>
Trial. We believe this longer source train may be helpful in addressing clinical
concerns over the possibility of "geographic miss" during a vascular
brachytherapy procedure. Geographic miss is the failure to deliver the intended
radiation dose to the entire length of the balloon-injury area either due to (1)
poor alignment of the radiation source train or (2) using a radiation source
train shorter than the injury. We completed enrollment into the START 40 Trial
in October 1999 and expect to release the results from this Trial no later than
the fourth quarter of 2000.
In our third pivotal trial, the Beta-Cath System Trial, we are seeking to
determine the safety and effectiveness of the Beta-Cath System in conjunction
with either stand-alone balloon angioplasty or first-time stent placement. The
primary endpoint of this trial is TVR within eight months. This Trial also
provides for a follow-up angiogram eight months after treatment with the
Beta-Cath System to determine whether restenosis has occurred. We completed
enrollment in this trial in September 1999, having enrolled 1,456 patients at 59
clinical sites, principally in the United States. We expect to announce the
results of this trial no later than the fourth quarter of 2000.
As is typical for patients receiving stent placement, the patients in the
stent placement subgroup of the Beta-Cath System Trial received anti-platelet
therapy to prevent stent thrombosis, a condition that can lead to acute closure
of the treated artery. Before vascular brachytherapy studies were conducted,
stent thrombosis typically occurred within 30 days of treatment in a small
percentage of patients receiving stent placement. However, there were incidences
of stent thrombosis reported in the Beta-Cath System Trial, such that the
patients developed the condition later following their treatment than what is
normally observed. As a result, in November 1998, we modified the Trial protocol
for the stent placement subgroup to extend the anti-platelet therapy from two
weeks to 60 days following stent placement and to provide for additional
follow-up contact with these patients in the second, third and fourth months
after treatment. On April 27, 1999 we announced approval of our intention to
increase patient enrollment in the stent placement subgroup of the Trial by up
to 300 more patients and to extend the anti-platelet therapy to a minimum of 90
days following stent placement. These changes were made based upon a
recommendation made by the Data Safety and Monitoring Board (DSMB) at its March
1999 meeting. Based on its review of the available data set, including the
incidence of major adverse cardiac events, the DSMB proposed these changes to
ensure sufficient data to evaluate the safety and effectiveness of the Beta-Cath
System with the revised anti-platelet therapy protocol. For comparison, there
were no incidents of late thrombosis observed in the START Trial.
We submitted an application to the FDA on April 14, 2000 to obtain
approval to market the Beta-Cath System, with a 30-millimeter radiation source
train, for treating "in-stent" restenosis in coronary arteries. The FDA has
granted expedited review for breakthrough technology devices, such as vascular
brachytherapy devices whose objective is to treat "in-stent" restenosis in the
coronary arteries. Assuming positive results in the START 40 Trial, we intend to
make an additional submission to the FDA to obtain approval to market the
Beta-Cath System using a 40-millimeter radiation source train. Assuming positive
results in the Beta-Cath System Trial, we intend to make an additional
submission to the FDA to obtain approval to market the Beta-Cath System with the
objective of reducing the likelihood of restenosis following stand-alone balloon
angioplasty or first-time stent placement.
European Marketing and Distribution
In August 1998, we qualified to apply CE marking to the Beta-Cath System,
a requirement to sell our device in most of Western Europe. We have staffed an
organization in Europe, generally using a direct sales force for the larger
European markets and independent distributors for other European markets. We had
sales in selected European and several other countries of approximately $1.8
million in 1999 and $.8 million in the first quarter of 2000.
5
<PAGE>
Our Objective
Our objective is to become the leader in the development and sale of
radiation devices for the reduction of restenosis, a new treatment concept
commonly referred to as vascular brachytherapy.
--------------------
Novoste was incorporated in Florida in January 1987 and was capitalized
and commenced operations in May 1992. Our European operations are conducted
through four wholly-owned subsidiaries, Novoste SA/NV in Belgium, Novoste BV in
The Netherlands, Novoste GmbH in Germany and Novoste SAS in France. Our
executive offices are located at 3890 Steve Reynolds Boulevard, Norcross,
Georgia 30093 (telephone no. 770-717-0904).
6
<PAGE>
RISK FACTORS
You should carefully consider the risks described below before making an
investment decision. The risks described below are not the only ones facing our
company. Additional risks not presently known to us or that we currently deem
immaterial may also impair our business operations.
Our business, financial condition or results of operations could be
materially adversely affected by any of these risks. The trading price of our
common stock could decline due to any of these risks and you may lose all or
part of your investment.
This prospectus also contains forward-looking statements that involve
risks and uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including the risks faced by us described below and elsewhere in this
prospectus.
We depend on the successful development and commercialization of the Beta-Cath
System.
We have not yet successfully commercialized any product in the United
States and have only started to actively sell the Beta-Cath System in Europe,
the Middle East and certain Asian countries in 1999. We anticipate that for the
foreseeable future we will be solely dependent on the successful development and
commercialization of the Beta-Cath System. Our failure to commercialize the
Beta-Cath System would have a material adverse effect on our business, financial
condition and results of operations.
The Beta-Cath System will require regulatory approval, and may require
further development and clinical testing, before we can market it in the United
States. Our development efforts and clinical testing may not be successful. In
addition, we may be unable to:
o show the safety and effectiveness of the Beta-Cath System in
appropriate human clinical trials;
o obtain U.S. regulatory approval of the Beta-Cath System;
o manufacture the Beta-Cath System in commercial quantities at
acceptable costs;
o gain any significant degree of market acceptance of the Beta-Cath
System among physicians, patients and/or health care payors; or
o demonstrate that the Beta-Cath System is an attractive and
cost-effective alternative or complement to other procedures,
including coronary stents, competing vascular brachytherapy devices,
or other competitive technologies.
Commercialization of the Beta-Cath System in Europe is subject to certain
additional risks. Physicians in Europe are generally less receptive to and
slower to adopt new medical devices and technologies than physicians in the
United States due to various factors, including the influence of national health
care policies and reimbursement strategies of health care payors. We may never
achieve significant revenue from sales in Europe or ever achieve or sustain
profitability in our European operations. Our sales in selected European
countries and several other countries aggregated approximately $1.8 million in
1999 and $.8 million in the first quarter of 2000.
Because the Beta-Cath System is our sole near-term product focus, we could
be required to cease operations if it is not successfully developed or
commercialized.
7
<PAGE>
We have a limited operating history; we have a history of losses and we expect
future losses through at least the year 2001.
We have a limited history of operations. Since we commenced operations in
May 1992, we have been primarily engaged in developing and testing our Beta-Cath
System. We have generated only limited revenue and do not have experience in
manufacturing, marketing or selling our products in quantities necessary for
achieving profitability.
At March 31, 2000, we had accumulated a deficit of approximately $90.4
million since we commenced operations in 1992. The commercialization of the
Beta-Cath System and other new products, if any, will require substantial
additional development, clinical, regulatory, manufacturing, sales and marketing
and other expenditures. We expect our operating losses to continue through at
least 2001 as we continue to expand our product development, clinical trials and
marketing efforts. We may never:
o commercialize the Beta-Cath System or any other product in the U.S.;
o achieve commercial success in the sale of the Beta-Cath System or
any other product in any countries in which we have received the
necessary governmental approvals to market these products; or
o achieve or sustain profitability.
Clinical testing of the Beta-Cath System has not been completed, and there can
be no assurance of its safety or its effectiveness.
The safety and effectiveness of the Beta-Cath System has not yet been
determined by the FDA. We have reached the primary endpoint, eight month patient
follow-up, in one trial, and are currently conducting two additional
multi-center human clinical trials of the Beta-Cath System to further evaluate
its safety and effectiveness. We completed enrollment in the START Trial in
April 1999, having enrolled 476 patients at 50 sites, principally located in the
United States. In March 2000, we announced statistically significant results
from the START Trial. In June 1999, we initiated the START 40 Trial and
enrollment was completed in October 1999 with a total of 206 patients enrolled.
At September 30, 1999 we completed enrollment in both the stand-alone balloon
angioplasty and stent placement subgroups of the Beta-Cath System Trial and
enrolled a total of 1,456 patients at 59 clinical sites.
We recently announced results from the START Trial, which demonstrated
that beta radiation had a significant treatment effect on all clinical and
angiographic endpoints evaluated in the Trial. The START Trial results formed
the basis for the application that we submitted to the FDA on April 14, 2000 to
request approval to market the Beta-Cath System for treating "in-stent"
restenosis. Although the application has been submitted, the FDA may reject, or
delay acceptance of, our submission for "filing," may determine that the data
from the START Trial does not demonstrate the safety and effectiveness of the
Beta-Cath System or is not adequate to support our application to the FDA for
pre-market approval. The FDA could delay approval pending results from the START
40 Trial in order to assess the impact on geographic miss and pending results
from the Beta-Cath System Trial in order to assess whether the incidence of late
thrombosis has been satisfactorily resolved by extended anti-platelet therapy.
The START 40 Trial and the Beta-Cath System Trial require follow-up
examinations with patients after eight months. Various factors, including
performing follow-up examinations on patients, could delay completion of the
START 40 Trial or the Beta-Cath System Trial for an indeterminate amount of
time. The data from the START 40 Trial or the Beta-Cath System Trial, if
completed, may not demonstrate the safety and effectiveness of the Beta-Cath
System, which could delay FDA pre-market approval of the Beta-Cath System. In
particular, we cannot be sure that (1) the incidence of late thrombosis seen in
the Beta-Cath System Trial will be adequately addressed by the antiplatelet
therapy protocol modification, (2) the incidence of geographic miss, seen in our
BRIE registry trial conducted in Europe and other trials by our competitors,
will be addressed by more focused physician training and technique and the use
of longer radiation sources or (3) the doses used will provide optimal results.
If the Beta-Cath System does not prove to be safe and effective in our
clinical trials, our business, financial condition and results of operations
will be materially adversely affected. In addition, the clinical trials may
identify significant technical or other obstacles to obtaining necessary
regulatory approvals. Because vascular brachytherapy in human coronary arteries
is a relatively new treatment, the long-term effects on patients are not known
and likely will not be known for several years. As a result, even if our current
clinical trials indicate the Beta-Cath System is safe and effective over an
eight-month period, we cannot be sure that the Beta-Cath System will be safe and
effective over the long term.
8
<PAGE>
There can be no assurance that we will receive the required regulatory
approvals.
United States Pre-Market Approvals
We will not be able to commence marketing or commercial sales of the
Beta-Cath System in the United States unless we receive pre-market approval from
the FDA. Our application seeking approval to market the Beta-Cath System in the
United States to treat "in-stent" restenosis was submitted to the FDA on April
14, 2000 and is based upon the patient data generated in the START Trial. We do
not anticipate FDA approval to market the Beta-Cath System in the United States
for any indication any earlier than one year after the FDA accepts our
application for filing. The FDA could require that we submit results from our
START 40 Trial or our Beta-Cath System Trial prior to considering our initial
application for approval of our device in treating "in-stent" restenosis.
Instead of filing an additional, separate application, we may amend our initial
application relating to "in-stent" restenosis to seek pre-market approval of the
Beta-Cath System for use with the 40-millimeter radiation source train based
upon the results of the START 40 Trial or for use following a stand-alone
balloon angioplasty and stent placement based upon the results of the Beta-Cath
System Trial. If we file this type of an amendment, the FDA would restart the
statutory 180-day review period for our initial application as of the date of
the filing of the amendment. Most likely, this would cause a delay in obtaining
FDA approval. Moreover, if information from the clinical trials or from
commercial use of the device does not yield positive results, the FDA's
consideration of any application we have submitted could be adversely affected;
any such application could be refused filing for substantive review, or if
filed, could be subject to requests for substantial amounts of additional
information, or ultimately could be denied approval.
The FDA may request additional data or require that we conduct further
clinical trials, either of which could delay or preclude our receipt of
pre-market approval as well as require significant additional expenditures. Such
a delay or failure to receive pre-market approval would have a material adverse
effect on our business, financial condition and results of operations and could
result in cessation of our operations. Even if we receive marketing approval
from the FDA based on the results of the START Trial, we will be limited to
marketing the Beta-Cath System for use with patients who are being treated for
"in-stent" restenosis in a single coronary artery with a 30-millimeter radiation
source train. In order to market the Beta-Cath System with a 40-millimeter
radiation source train, we will likely be required to demonstrate to the FDA
through the START 40 Trial that the Beta-Cath System with the longer source
train is safe and effective. In order to market the Beta-Cath System for a
broader range of patients, we will seek to expand the indications for which the
Beta-Cath System can be marketed to include patients receiving stand-alone
balloon angioplasty or first-time stent placement. Even if we receive approval
based on the results of the Beta-Cath System Trial, we would be limited to
marketing the Beta-Cath System for use with patients who are being treated for
one lesion in a single coronary artery following stand-alone balloon angioplasty
or stent placement. In order to market the Beta-Cath System for use with (1)
further product design enhancements, such as varying lengths of the radiation
source train or modifications to the catheter or (2) with a broader range of
indications, we will likely be required to demonstrate to the FDA through
additional clinical trials that the Beta-Cath System is safe and effective with
such product design enhancement(s) or in treating a broader range of indications
and the FDA must approve a pre-market approval application, application
amendment or application supplement covering the product design enhancement(s)
or the broader range of indications for the device.
Foreign Pre-Market Approvals
Sales of the Beta-Cath System outside the United States are subject to
regulatory requirements that vary widely from country to country but generally
include pre-marketing governmental approval. The time required to obtain
approval for sale in foreign countries may be longer or shorter than required
for FDA approval, and the requirements for the conduct of clinical trials,
marketing authorization, pricing and reimbursement differ from those in the
United States. Moreover, the export of medical devices from the United States
must be in compliance with FDA regulations. In August 1998 we qualified to apply
CE marking to the Beta-Cath System, a requirement necessary to sell our device
in most of Western Europe. We are subject to continuing audit and reporting
requirements related to this marking. We may be delayed or precluded from
marketing the Beta-Cath System in other foreign countries. Foreign pre-market
and other regulatory approvals of the Beta-Cath System, if granted, may include
significant limitations on the indicated uses for which the device may be
marketed.
9
<PAGE>
Approvals to Use, Handle and Transfer Radioactive Materials
Our business involves the import, manufacture, transfer, use and disposal
of Strontium-90 (Strontium/Yttrium), the beta-emitting radioisotope utilized in
the Beta-Cath System's radiation source train. Accordingly, manufacture,
distribution, use and disposal of the radioactive material used in the Beta-Cath
System in the United States will be subject to federal, state and/or local laws
and regulations relating to the use and handling of radioactive materials.
Specifically, we must obtain approval from the State of Georgia Department of
Natural Resources to commercially distribute our radiation sources to licensed
recipients in the United States. In addition, we must also comply with NRC,
Georgia and United States Department of Transportation regulations on the
labeling and packaging requirements for shipment of radiation sources to
hospitals or other users of the Beta-Cath System. Further, hospitals and/or
physicians in the United States may be required to amend their radiation
licenses to hold, handle and use Strontium-90 prior to receiving and using our
Beta-Cath System.
The distribution and use of the Beta-Cath System outside the United States
is subject to radiation regulatory requirements that vary from country to
country and sometimes vary within a given country. Generally, each country has a
national regulatory agency responsible for regulating the safe practice and use
of radiation in its jurisdiction. In addition, each hospital desiring to use the
Beta-Cath System is generally required to amend its license to store, handle and
receive the Strontium-90 sources in our device. Generally, these licenses are
specific to the amount and type of radioactivity utilized. In addition,
generally the use of a radiation source by a physician, either for a diagnostic
or therapeutic application, also requires a license, which again is specific to
the isotope and the clinical application.
Obtaining any of the foregoing radiation-related approvals and licenses
can be complicated and time consuming. If we or any hospital or physician is
significantly delayed in obtaining any of the foregoing approvals or any of
those approvals are not obtained, our business, financial condition and results
of operations could be materially adversely affected.
The industry in which we participate is subject to rapid technological change
and intense competition.
Competition in the medical device industry, and specifically the markets
for cardiovascular devices, is intense and characterized by extensive research
and development efforts and rapidly advancing technology. New developments in
technology could render vascular brachytherapy generally or the Beta-Cath System
in particular noncompetitive or obsolete.
Vascular brachytherapy may compete with other treatment methods designed
to improve outcomes from coronary artery procedures that are well established in
the medical community, such as coronary stents. Stents are the predominant
treatment currently utilized to reduce the incidence of coronary restenosis
following PTCA and were used in approximately 75% of all PTCA procedures
performed worldwide in 1999. Manufacturers of stents include Johnson & Johnson,
Medtronic, Inc., Guidant Corporation and Boston Scientific Corporation. Stent
manufacturers often sell many products used in the cardiac catheterization labs,
commonly referred to as cath labs, and as discussed below, certain of these
companies are developing vascular brachytherapy devices.
Other devices under development that use vascular brachytherapy include:
o a radioactive-tipped guidewire;
o a radioactive stent; and
o a radioactive fluid-filled or coated balloon.
The radiation sources being developed by our competitors vary among gamma,
beta and x-ray. The most advanced competitive approach may be represented by the
radioactive guidewire, as we are aware that:
o Johnson & Johnson submitted a pre-market approval application to the
FDA in June 1999 for its gamma guidewire system;
10
<PAGE>
o Guidant is investigating its beta guidewire system in the pivotal
clinical trial stage in the United States; and
o Boston Scientific announced results in August 1999 from a
160-patient dose-finding study conducted in Europe with its beta
guidewire system.
Many of our competitors and potential competitors have substantially
greater capital resources than we do and also have greater resources and
expertise in the area of research and development, obtaining regulatory
approvals, manufacturing and marketing. Our competitors and potential
competitors may succeed in developing, marketing and distributing technologies
and products that are more effective than those we will develop and market or
that would render our technology and products obsolete or noncompetitive.
Additionally, many of the competitors have the capability to bundle a wide
variety of products in sales to cath labs. We may be unable to compete
effectively against such competitors and other potential competitors in terms of
manufacturing, marketing, distribution, sales and servicing.
Any product we develop that gains regulatory clearance or approval will
have to compete for market acceptance and market share. An important factor in
such competition may be the timing of market introduction of competitive
products. Accordingly, we expect the relative speed with which we can develop
products, gain regulatory approval and reimbursement acceptance and supply
commercial quantities of the product to the market to be an important
competitive factor. In addition, we believe that the primary competitive factors
for products addressing restenosis include safety, efficacy, ease of use,
reliability, suitability for use in cath labs, service and price. We also
believe that physician relationships, especially relationships with leaders in
the interventional cardiology and radiation oncology communities, are important
competitive factors. We may not be the first to market in the U.S. a radiation
system to reduce the incidence of restenosis in the coronary arteries or be able
to market such a system effectively.
Limitations on third-party reimbursement for the Beta-Cath System currently
exist and may continue.
The Beta-Cath System, where approved for commercial sale, will be sold
primarily to hospitals. Hospitals and physicians bill various third-party
payors, such as government health programs, private health insurance plans,
managed care organizations and other similar programs, for the health care
services provided to their patients.
If and when we receive FDA approval to market the Beta-Cath System in the
United States, third-party payors may not cover procedures using the Beta-Cath
System or, if covered, third-party payors may place certain restrictions on the
circumstances in which coverage will be available. In addition, payors may deny
reimbursement if they determine a product was not used in accordance with
established payor protocol regarding cost-effective treatment methods or was
used for an unapproved indication. Third-party payors are increasingly
challenging the prices charged for medical products and services and, in some
instances, have put pressure on medical device suppliers and health care
providers to lower their prices. We are unable to predict what changes
third-party health care payors will make in their reimbursement methodologies.
Third-party payors or health care providers may not consider the Beta-Cath
System cost-effective and may not reimburse for its usage or, if they do, may
reimburse at levels that adversely affect its market acceptance and our ability
to sell the Beta-Cath System on a profitable basis.
The cost of health care has risen significantly over the past decade, and
legislators, regulators, third-party payors and health care providers have made
and may continue to make proposals to curb these costs. Failure by hospitals and
physicians to obtain reimbursement from third-party payors, changes in
third-party payors' policies toward reimbursement for the Beta-Cath System or
legislative action could have a material adverse effect on our business,
financial condition and results of operations.
Reimbursement systems in international markets vary significantly by
country and by region within some countries, and reimbursement approvals must be
obtained on a country-by-country basis. Many international markets have
government managed health care systems that control reimbursement for new
devices and procedures. In most markets there are private insurance systems as
well as government managed systems. Reimbursement for our products may not be
available in international markets under either government or private
reimbursement systems.
11
<PAGE>
The market acceptance of vascular brachytherapy and the Beta-Cath System is
uncertain.
Even if we obtain regulatory approvals and reimbursement from third party
payors for the use of the Beta-Cath System, our device may not gain any
significant degree of market acceptance among physicians and patients. Vascular
brachytherapy is a new treatment method and has not been used to any significant
extent by physicians outside the context of clinical trials. We believe that
physicians' acceptance of vascular brachytherapy generally and the Beta-Cath
System in particular will be essential for our operations and we may not obtain
this acceptance. Even if we establish clinical effectiveness of the Beta-Cath
System, cardiologists, radiation oncologists and other physicians may elect not
to recommend vascular brachytherapy generally or the Beta-Cath System in
particular. Even if recommended, physicians may not utilize the Beta-Cath System
in a sufficient number of procedures to generate significant revenues or to
enable us to operate profitably. In addition, market acceptance of our device
could be hindered because using the Beta-Cath System currently requires the
participation not only of an interventional cardiologist, but also a radiation
oncologist appropriately credentialed to administer the radiation therapy.
We depend on the protection provided by our issued patent and pending patent
applications, which may be challenged.
With respect to the Beta-Cath System and components thereof, we received
United States Patent No. 5,683,345 on November 4, 1999, United States Patent No.
5,899,882 (which is jointly owned by us and Emory University) on May 4, 1999,
and United States Patent No. 6,013,020 on January 11, 2000. We also have filed a
related United States continuation application, and have several additional
United States applications pending covering aspects of our Beta-Cath System.
With respect to United States Patent Nos. 5,683,345; 5,899,882; and 6,013,020
and our other pending United States patent applications, we have filed, or will
file in due course, counterpart applications in the European Patent Office and
certain other countries.
Like other firms that engage in the development of medical devices, we
must address issues and risks relating to patents and trade secrets. United
States Patent Nos. 5,683,345; 5,899,882; and 6,013,020 may not offer any
protection to us because competitors may be able to design functionally
equivalent devices that do not infringe this patent. They may also be
reexamined, invalidated or circumvented. In addition, claims under our other
pending applications may not be allowed, or if allowed, may not offer any
protection or may be reexamined, invalidated or circumvented. Competitors may
have or obtain patents that will prevent, limit or interfere with our ability to
make, use or sell our products in either the United States or international
markets.
We received a letter from NeoCardia, L.L.C., dated July 7, 1995, in which
NeoCardia notified us that it is the exclusive licensee of United States Patent
No. 5,199,939, or the Dake patent, and requested that we confirm that our
products did not infringe the claims of the Dake patent. On August 22, 1995 our
patent counsel responded on our behalf that we did not infringe the Dake patent.
The United States Patent and Trademark Office later reexamined the Dake
patent. In the reexamination proceeding some of the patent claims were amended
and new claims were added. We have concluded, based upon advice of patent
counsel, that our Beta-Cath System would not infringe any claim of the Dake
patent as reexamined.
In May 1997 Guidant acquired NeoCardia together with the rights under the
Dake patent. We also understand that Guidant and Johnson & Johnson have entered
into a cross-licensing arrangement which includes the use of the Dake patent.
Guidant and Johnson & Johnson are attempting to develop and commercialize
products that may compete with the Beta-Cath System and both of those companies
have significantly greater capital resources than us. Guidant or, if permitted
by the cross-licensing arrangement with Guidant, Johnson & Johnson may sue for
patent infringement in an attempt to obtain damages from us and/or injunctive
relief restraining us from commercializing the Beta-Cath System in the United
States. If Guidant or Johnson & Johnson were successful in any such litigation,
we might be required to obtain a license under the Dake patent to market the
Beta-Cath System in the United States, if such license were available, or be
prohibited from selling the Beta-Cath System in the United States. Any of these
actions could have a material adverse effect on our business, financial
condition and results of operations, or could result in cessation of our
business.
12
<PAGE>
We have two versions of our delivery catheter: a "distal monorail"
catheter and an "over the wire" catheter. Certain United States patents held by
Guidant and Boston Scientific Corporation cover "rapid exchange" catheters.
Guidant has recently cross-licensed its patents to Johnson & Johnson. We are
currently investigating the feasibility of using the "distal monorail" version
of our delivery catheter in the United States without infringing the valid
patent rights of others. We may not be able to sell the "distal monorail"
version in the United States without a license of third party patent rights and
such a license may not be available to us on favorable terms or at all. If we
decide to proceed with the "distal monorail" version of our catheter in the
United States, we may be sued for patent infringement in an attempt to obtain
damages from us and/or injunctive relief restraining us from commercializing the
"distal monorail" version in the United States. If we were unsuccessful in any
such litigation, we might be required to obtain a license, if such license were
available, or be prohibited from selling the "distal monorail" version of our
catheter in the United States. Any of these events could have a material adverse
effect on our business, financial condition and results of operations, or could
result in cessation of our business.
The medical device industry has been characterized by extensive litigation
regarding patents and other intellectual property rights. Companies in the
medical device industry have employed intellectual property litigation to gain a
competitive advantage. There can be no assurance that we will not become subject
to patent-infringement claims or litigation or interference proceedings declared
by the United States Patent and Trademark Office to determine the priority of
inventions. The defense and prosecution of intellectual property suits, or
interference proceedings and related legal and administrative proceedings are
both costly and time-consuming. Litigation may be necessary to enforce our
patents, to protect our trade secrets or know-how or to determine the
enforceability, scope and validity of the proprietary rights of others. Any
litigation or interference proceedings will result in substantial expense to us
and significant diversion of effort by our technical and management personnel.
An adverse determination in litigation or interference proceedings to which we
may become a party could subject us to significant liabilities to third parties,
require us to seek licenses from third parties, require us to redesign our
products or processes to avoid infringement or prevent us from selling our
products in certain markets, if at all. Although patent and intellectual
property disputes regarding medical devices have often been settled through
licensing or similar arrangements, costs associated with such arrangements may
be substantial and could include significant ongoing royalties. Furthermore,
there can be no assurance that the necessary licenses would be available to us
on satisfactory terms, if at all, or that we could redesign our products or
processes to avoid infringement. Any adverse determination in a judicial or
administrative proceeding or failure to obtain necessary licenses could prevent
us from manufacturing and selling our products, which would have a material
adverse effect on our business, financial condition and results of operations.
We also have uncertainties with respect to the secrecy of pending patent
applications filed by others, potential loss of some of our patent and
proprietary rights relating to the Beta-Cath System in the event of our failure
to pay royalties to Emory University, and potential damages that we could suffer
through the unauthorized disclosure of information that is proprietary or
confidential to us.
Since the Beta-Cath System utilizes radioactive materials, our activities are
subject to various safety regulations.
Because our business involves the import, manufacture, distribution, use
and disposal of Strontium-90, our activities and those of our suppliers and
distributors, as well as those of the hospitals and physicians that utilize the
Beta-Cath System, must comply with extensive state and federal radiation safety
regulations in the United States and similar laws in other countries. Violations
of these regulations and laws by us or our suppliers or distributors, or any
malfunctions of our device or errors by hospitals and physicians in
administering treatment, could result in accidental contamination or injury, as
well as unexpected remedial costs and penalties. Any such violation or incident
could adversely impact the market for our device or lead to suspension of our
trials or cessation of sales of the Beta-Cath System. Regulatory enforcement
action such as civil penalties or license suspension or revocation could
likewise lead to suspension of our trials or cessation of sales. In addition,
because vascular brachytherapy in coronary arteries is a new treatment, any
similar regulatory violations or incidents involving our competitors could delay
or erode acceptance of the therapy among physicians and patients and could
reduce the likelihood of regulatory approval of vascular brachytherapy devices
generally.
13
<PAGE>
We currently depend on a single vendor to supply radioisotopes and we could be
negatively affected by the failure or delay of this vendor.
To date, we have obtained all our beta radiation isotope requirements from
a single supplier, Bebig Isotopentechnik und Umweltdiagnostik GmbH, a German
corporation. Our supply agreement with Bebig has an initial term ending in
November 2000. During the term, we have agreed not to purchase more than 30% of
our annual radioisotope requirements from any supplier other than Bebig. In view
of the technical expertise and capital investment required to manufacture the
radioactive sources and the limited number of manufacturers of Strontium 90, it
may be difficult to find an alternate source of supply. Our business, results of
operations and financial condition could be materially adversely affected by
Bebig's failure to provide us with beta isotopes on a timely basis during the
term of the agreement or by our inability to obtain an alternative source of
supply on a timely basis and on terms satisfactory to us following any
termination of the Bebig agreement. In addition, portions of the process used to
manufacture the materials may be proprietary to Bebig. Bebig has no obligation
to make any of its know-how or technology available to us or to any alternate
source of supply, except in limited circumstances.
In October 1999, we signed a development and manufacturing supply
agreement with AEA Technologies QSA GmbH for a second source of radioactive
supply and for the development of a smaller diameter radiation source. The
agreement provides for the construction of a production line, which is expected
to be finished in February 2001. The cost of the production line is estimated at
$4 million and we have agreed to pay such costs as construction progresses. The
development of the smaller diameter source may not be successfully completed,
the new production line may not be completed on time or on budget, and the
smaller diameter source may not be manufacturable in commercial quantities.
We depend on third party suppliers for substantially all of the components of
our Beta-Cath System and the failure of these suppliers to deliver in a timely
manner could affect our ability to manufacture our Beta-Cath System.
We currently rely on third party manufacturers for the supply of the
hand-held transfer device, one version of the catheter and other components of
our Beta-Cath System. The supply of these components requires a long lead time.
In addition, we could not quickly establish additional or replacement suppliers
or internal manufacturing capabilities for these components. An existing
vendor's failure to supply components in a timely manner or our inability to
obtain these components on a timely basis from another supplier could have a
material adverse effect on our ability to manufacture and therefore market the
Beta-Cath System.
We have limited sales, marketing and distribution experience which may affect
our ability to successfully commercialize the Beta-Cath System.
At present we have limited sales and marketing capability. We have staffed
an organization in Europe, generally using a direct sales force for the larger
European markets and independent distributors in other European markets. We also
utilize independent distributors in the several countries in the Far East and
the Middle East as well as in India. We intend to sell our products directly in
the United States. We may not be able to recruit and train adequate sales and
marketing personnel to successfully commercialize the Beta-Cath System in the
United States and internationally. The inability to recruit or retain suitable
international distributors could also have a material adverse effect on our
business, financial condition and results of operations. We have contracted with
CIS bio International to inventory, calibrate, test and deliver the radiation
sources and to provide related licensing assistance, customer support and
recovery services to hospitals in Europe and the Middle East and intend to
contract with one or more additional market leaders on the radioisotope business
to provide similar services in other international markets. If we are unable to
enter into and maintain such distribution agreements with suitable international
distributors on acceptable terms, our business, financial condition and results
of operations could be materially adversely affected.
We have limited manufacturing experience and may encounter difficulties in
scaling-up production.
To date, we have not yet successfully commercialized the Beta-Cath System,
and our manufacturing activities have consisted of producing small quantities of
our products for use in clinical trials and our initial product launch in Europe
and several other foreign countries. To achieve profitability, the Beta-Cath
System must be manufactured in commercial quantities in compliance with
regulatory requirements and at acceptable costs. Production in commercial
quantities will require
14
<PAGE>
us to expand our manufacturing capabilities and to hire and train additional
personnel. We have no experience in manufacturing our products in commercial
quantities. We may encounter difficulties in scaling up production, including
problems involving production yields, quality control and assurance, component
supply and shortages of qualified personnel. Difficulties encountered in
manufacturing scale up could have a material adverse effect on our business,
financial condition and results of operations. Future manufacturing
difficulties, which could have a material adverse effect on our business,
financial condition and results of operations, may occur.
We may not be able to obtain adequate funding for the development of our
business in the future.
We anticipate that our losses will continue through at least the year 2001
as we expend substantial resources to fund clinical trials in support of
regulatory approvals, continue development of the Beta-Cath System and
commercialize our product in Europe and several other foreign countries and
then, subject to FDA approval, in the United States. Our future liquidity and
capital requirements will depend upon numerous factors, including:
o the progress of our clinical research and product development
programs;
o the receipt of and the time required to obtain regulatory approvals
and clearances;
o the resources required to gain approvals;
o the resources we devote to the development, manufacture and
marketing of the Beta-Cath System;
o the resources required to hire and develop a direct sales force in
the United States and the key markets in Europe and develop
distributors in other markets;
o the resources needed to expand manufacturing capacity and facilities
requirements; and
o market acceptance and demand for the Beta-Cath System.
We may in the future seek to raise additional funds through bank
facilities, debt or equity offerings or other sources of capital. We believe
that our existing capital resources will be sufficient to fund us through the
second quarter of 2002, but that may prove insufficient. We cannot assure that
additional financing, if required, will be available on satisfactory terms, or
at all.
The use of our product exposes us to product liability claims; insurance
coverage may not be sufficient to cover such liability.
The use of the Beta-Cath System entails an inherent risk of adverse
effects which could result in product liability claims against us. We may not
have sufficient resources to satisfy any liability resulting from any such
claims. We maintain product liability insurance with coverage of an annual
aggregate maximum of $8 million. There can be no assurance that product
liability claims will not exceed the insurance coverage limits, that the
insurance will continue to be available on commercially reasonable terms or at
all, or that a product liability claim would not materially adversely affect our
business, financial condition or results of operations.
The loss of senior management or other key personnel could materially adversely
affect our business, financial condition and results of operation.
Our business and future operating results depend in significant part upon
the continued contributions of our key technical personnel and senior
management, many of whom would be difficult to replace. Joan Macdonald, Ph.D.,
resigned as our Vice President - Regulatory Affairs on May 1, 2000 to become
a part-time employee of ours reporting directly to our Chief Executive Officer
on regulatory matters. Our business and future operating results also depend in
significant part upon our ability to attract and retain a Vice President of
Regulatory Affairs, a Vice President of Sales and other qualified management,
regulatory, clinical, manufacturing, technical, marketing, sales and support
personnel for our operations. Competition for such personnel is intense, and we
may not succeed in attracting or retaining such personnel. The loss of key
employees, the failure of any key employee to perform
15
<PAGE>
adequately or our inability to attract and retain skilled employees, as needed,
could materially adversely affect our business, financial condition and results
of operations.
The issuance of preferred stock may adversely affect rights of common
shareholders or discourage a takeover.
Under our amended and restated articles of incorporation, our board of
directors has the authority to issue up to 5,000,000 shares of preferred stock
and to determine the price, rights, preferences and privileges of those shares
without any further vote or action by our shareholders. The rights of the
holders of common stock will be subject to, and may be adversely affected by,
the rights of the holders of any shares of preferred stock that may be issued in
the future.
In October 1996 our board of directors authorized 1,000,000 shares of
Series A Participating Preferred Stock in connection with its adoption of a
shareholder rights plan, under which we issued rights to purchase Series A
Participating Preferred Stock to holders of the common stock. Upon certain
triggering events, such rights become exercisable to purchase common stock (or,
in the discretion of our board of directors, Series A Participating Preferred
Stock) at a price substantially discounted from the then current market price of
the common stock. Our shareholder rights plan could generally discourage a
merger or tender offer involving our securities that is not approved by our
board of directors by increasing the cost of effecting any such transaction and,
accordingly, could have an adverse impact on shareholders who might want to vote
in favor of such merger or participate in such tender offer.
While we have no present intention to authorize any additional series of
preferred stock, such issuance, while providing desirable flexibility in
connection with possible acquisitions and other corporate purposes, could also
have the effect of making it more difficult for a third party to acquire a
majority of our outstanding voting stock. The preferred stock may have other
rights, including economic rights senior to the common stock, and, as a result,
the issuance thereof could have a material adverse effect on the market value of
the common stock.
We are subject to provisions in our charter and pursuant to state law, which
would discourage a takeover.
The amended and restated articles of incorporation provide for a
classified board of directors, the existence of which could discourage attempts
to acquire us. Furthermore, we are subject to the anti-takeover provisions of
the Florida Business Corporation Act, the application of which would also have
the effect of delaying or preventing a merger, takeover or other change of
control of the company and therefore could discourage attempts to acquire the
company.
The price of our stock is subject to volatility and fluctuations will depend on
operating results.
The market price of our common stock could decline below the price paid to
the selling shareholders. Specific factors relating to our business or broad
market fluctuations may materially adversely affect the market price of our
common stock. The trading price of our common stock could be subject to wide
fluctuations in response to quarter-to-quarter variations in operating results,
announcements of technological innovations, new products or clinical data
announced by us or our competitors, governmental regulatory action, developments
with respect to patents or proprietary rights, general conditions in the medical
device or cardiovascular device industries, changes in earnings estimates by
securities analysts, or other events or factors, many of which are beyond our
control. In addition, the stock market has experienced extreme price and volume
fluctuations, which have particularly affected the market prices of many medical
device companies and which have often been unrelated to the operating
performance of such companies. Our revenue or operating results in future
quarters may be below the expectations of securities analysts and investors. In
such an event, the price of our common stock would likely decline, perhaps
substantially. During the twelve-month period ended April 28, 2000, the closing
price of our common stock ranged from a high of $48.75 per share to a low of
$11.00 per share and ended that period at $41.00 per share.
In addition, our results of operations may fluctuate significantly from
quarter to quarter and will depend upon numerous factors, including product
development efforts, actions relating to regulatory and reimbursement
16
<PAGE>
matters, progress and costs related to clinical trials, the extent to which our
products gain market acceptance, and competition. These factors may cause the
price of our stock to fluctuate, perhaps substantially.
Our system may experience problems related to the Year 2000.
As of the date of this prospectus, our systems have operated without any
apparent Year 2000 related problems and appear to be Year 2000 compliant. We are
not aware that any of our primary vendors or systems maintained by third parties
have experienced significant Year 2000 compliance problems. However, while no
such problem has been discovered as of the date of this prospectus, Year 2000
issues may not become apparent immediately and, therefore, we may be affected in
the future. We will continue to monitor the issue and work to remediate any Year
2000 issues that may arise.
USE OF PROCEEDS
All of the shares of common stock offered pursuant to this prospectus are
being offered by the selling shareholders listed under "Selling Shareholders."
We will not receive any proceeds from sales of common stock by the selling
shareholders.
17
<PAGE>
SELLING SHAREHOLDERS
The shares of common stock being offered by the selling shareholders were
sold to the selling shareholders in two separate transactions exempt from
registration under the Securities Act. Of the 1,650,000 shares, 186,500 were
sold by various shareholders who are directors or officers (or their affiliates)
of Novoste. The remainder of the shares (1,463,500 shares) were issued by
Novoste. The shares were sold on March 31, 2000 (1,500,000 shares, including all
of the shares sold by the selling shareholders) and April 6, 2000 (150,000
shares).
We entered into two separate Registration Rights Agreements with selling
shareholders in connection with the acquisition of the stock being offered
pursuant to this prospectus.
The following table sets forth information as of May 2, 2000 with respect
to the selling shareholders and the respective number of shares of common stock
beneficially owned by each selling shareholder:
<TABLE>
<CAPTION>
Shares Owned
Shares Owned Shares Being Upon Completion
Name and Address Prior to Offering Offered Of Offering
- ------------------------------------------------------------ ----------------- ------------ ---------------
<S> <C> <C> <C>
Fidelity Contrafund ........................................ 852,700 760,500 92,200*
82 Devonshire Street, E20E
Boston, MA 02109
IDS Life Series Fund, Inc. - Equity Portfolio............... 300,000 250,000 50,000*
200 AXP Financial Center
Minneapolis, MN 55474
Variable Insurance Products Fund II:
Contrafund Portfolio........................................ 187,200 167,000 20,200*
82 Devonshire Street, E20E
Boston, MA 02109
President and Fellows of Harvard College.................... 333,600 150,000 183,600(1)
600 Atlantic Avenue
Boston, MA 02210
Fidelity Advisor Series VII:
Fidelity Adviser Health Care Fund........................... 46,500 12,500 34,000*
82 Devonshire Street, E20E
Boston, MA 02109
Essex Global High Technology Fund II (USA),
a series of Essex Qualified Purchase Funds, LLC(2)...... 3,488 3,488 --
Essex Global Life Sciences Fund
A series of Essex Specialty Pooled Funds, LP(2)......... 9,603 9,603 --
New Discovery Fund Limited(2)................................ 24,847 24,847 --
Essex High Technology Fund, LP(2)............................ 45,335 45,335 --
Essex High Technology (Bermuda) Fund, LP(2).................. 32,029 32,029 --
Essex Performance Fund, LP(2)................................ 59,251 59,251 --
Essex High Technology Offshore II Fund, LP(2)................ 26,123 26,123 --
Permal Media and Communications Fund, LTD(2)................. 109,324 109,324 --
</TABLE>
- -----------------
* Represents less than 1% of our outstanding common stock.
(1) Represents 1.2% of our outstanding common stock as of May 2, 2000.
(2) Managed by Essex Investment Mgmt. Co., LLC, 125 High Street, 29th Floor,
Boston, MA 02110.
18
<PAGE>
PLAN OF DISTRIBUTION
The selling shareholders may sell the common stock being offered by the
prospectus directly to other purchasers, or to or through dealers or agents. To
the extent required, a prospectus supplement with respect to the common stock
will set forth the terms of the offering of the common stock, including the
name(s) of any dealer or agents, the number of shares of common stock to be
sold, the price of the common stock, any underwriting discount or other items
constituting underwriters' compensation.
The common stock offered hereby may be sold from time to time directly by
the selling shareholders or, alternatively, through broker-dealers or agents.
Such common stock may be sold in one or more transactions at fixed prices, at
prevailing market prices at the time of sale, at varying prices determined at
the time of sale or at negotiated prices. Such sales may be effected in
transactions (which may involve crosses or block transactions) (1) on any
national securities exchange for quotation services on which the common stock
may be listed or quoted at the time of sale, (2) in the over-the-counter market,
(3) in transactions other than on such exchanges or services or in the
over-the-counter market, or (4) through the writing of options. In connection
with sales of the common stock, the selling shareholders may enter into hedging
transactions with broker-dealers, which may in turn engage in short sales of
such common stock in the course of hedging the positions they assume. The
selling shareholders may also sell the common stock offered hereby short and
deliver such common stock to close out such short positions, or loan or pledge
such common stock to broker-dealers that in turn may sell such securities. Some
of the common stock offered hereby also may be sold pursuant to Rule 144 under
the Securities Act.
The selling shareholders and any such brokers, dealers or agents may be
deemed "underwriters" as that term is defined by the Securities Act.
If a dealer is used in the sale of any common stock where this prospectus
is delivered, the selling shareholders may sell such common stock to the public
at varying prices to be determined by such dealer and at the time of resale. To
the extent required, the name of the dealer and the terms of the transaction
will be set forth in the related prospectus supplement.
In connection with the sale of common stock, dealers or agents may receive
compensation from the selling shareholders or from purchasers of such common
stock for whom they may act as agents in the form of discounts, concessions, or
commissions. Agents and dealers participating in the distribution of the common
stock may be deemed to be underwriters, and any compensation received by them
and any profit on the resale of common stock by them may be deemed to be
underwriting discounts or commissions under the Securities Act.
Pursuant to the Registration Rights Agreements entered into among us and
the selling shareholders, we have agreed to pay all costs and expenses
associated with the registration of the shares of common stock to be sold
pursuant to this prospectus under the Securities Act. In addition, the selling
shareholders may be entitled to indemnification against certain liabilities
pursuant to the Registration Rights Agreements.
LEGAL MATTERS
The validity of the issuance of shares of common stock offered in this
offering will be passed upon for us by Dorsey & Whitney LLP, New York, New York.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements included in our Annual report on Form 10-K for the year
ended December 31, 1999, as set forth in their report, which is incorporated by
reference in this prospectus and elsewhere in the registration statement. Our
financial statements are incorporated by reference in reliance on Ernst & Young
LLP's report, given on their authority as experts in accounting and auditing.
19
<PAGE>
1,650,000 Shares
Novoste Corporation
Common Stock
---------------
Prospectus
---------------
May 4, 2000
