As Filed with the Securities and Exchange Commission on October 8, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CollaGenex Pharmaceuticals, Inc.
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(Exact Name of Registrant as Specified in Its Charter)
Delaware 52-1758016
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(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
41 University Drive
Newtown, Pennsylvania 18940
(215) 579-7388
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(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
Brian M. Gallagher, Ph.D.
President and Chief Executive Officer
CollaGenex Pharmaceuticals, Inc.
41 University Drive
Newtown, Pennsylvania 18940
(215) 579-7388
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(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
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Copy to:
David J. Sorin, Esq.
Richard S. Mattessich, Esq.
Buchanan Ingersoll Professional Corporation
College Centre
500 College Road East
Princeton, New Jersey 08540
(609) 987-6800
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Approximate date of commencement of proposed sale to the public: From time
to time after this Registration Statement becomes effective.
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If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. | |
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. |X|
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. | |
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. | |
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. | |
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CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Amount Maximum Maximum Amount Of
Title of Shares To Be Aggregate Price Aggregate Registration
To Be Registered Registered Per Share(1) Offering Price Fee
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Common Stock,
$.01 par value.... 1,839,496 $18.0625 $33,225,897 $9,237.
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c). Such price is based upon the average of the high
and low price per share of the Registrant's Common Stock as reported on the
Nasdaq National Market on October 6, 1999.
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.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this Prospectus is not complete and may be changed. The +
+Selling Shareholders may not sell their securities until the Registration +
+Statement filed with the Securities and Exchange Commission is effective. +
+This Prospectus is not an offer to sell these securities and it is not +
+soliciting an offer to buy these securities in any state where the offer or +
+sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS (Not Complete)
Dated: October 8, 1999
1,839,496 Shares
COLLAGENEX PHARMACEUTICALS, INC.
Common Stock
This Prospectus relates to the public resale, from time to time, of an
aggregate of 1,839,496 shares (the "Shares") of our Common Stock, $.01 par value
(the "Common Stock") by certain shareholders identified below in the section
entitled "The Selling Shareholders." The Shares may be acquired upon: (i) the
conversion of the Company's outstanding shares of Series D Cumulative
Convertible Preferred Stock (the "Preferred Stock") into shares of the Company's
Common Stock; and (ii) the payment of Common Stock dividends to the holders of
the Preferred Stock.
We will not receive any of the proceeds from the sale by the Selling
Shareholders of the Shares covered by this Prospectus.
We have not entered into any underwriting arrangements in connection with
the sale of Shares. The Shares may be sold from time to time by the Selling
Shareholders or by permitted pledgees, donees, transferees or other permitted
successors in interest and may be made on the Nasdaq National Market at prices
and at terms then prevailing or at prices related to the then current market
price, or in negotiated transactions.
Our Common Stock is traded on the Nasdaq National Market under the symbol
"CGPI." On October 6, 1999, the closing sale price of our Common Stock on the
Nasdaq National Market was $17.9375 per share.
Investing in the Common Stock involves a high degree of risk. See "Risk Factors"
beginning on page 4.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
Prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
October 8, 1999.
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PROSPECTUS TABLE OF CONTENTS
Page
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Special Note Regarding Forward-Looking Information........................ 2
CollaGenex Pharmaceuticals, Inc........................................... 2
Risk Factors.............................................................. 4
Uncertainty of Market Acceptance of Periostat........................ 4
Dependence on Principle Product...................................... 4
Historical Losses.................................................... 5
Ability to Grow Internally........................................... 5
Limited Marketing or Sales History; Dependence on Marketing
Partners........................................................... 5
Dependence on Patents, License and Proprietary Rights;
Enforcement of Rights.............................................. 5
Dependence on Suppliers and Manufacturers............................ 8
Uncertainty of Third Party Reimbursement and Health Care Reform...... 8
Competition and Rapid Technological Change........................... 9
Uncertainty of New Product Development or Commercialization.......... 9
Extensive Government Regulation...................................... 9
Dependence on Key Personnel.......................................... 11
Product Liability.................................................... 11
Future Capital Needs................................................. 11
Risks Associated with the Year 2000.................................. 11
Anti-Takeover Effect of Certain Charter and By-Law Provisions
and Delaware Law................................................... 13
Control by Management and Existing Shareholders...................... 13
Use of Proceeds........................................................... 13
Selling Shareholders...................................................... 13
Plan of Distribution...................................................... 16
Legal Matters............................................................. 17
Experts................................................................... 17
Information Incorporated by Reference..................................... 17
Where You Can Find More Information....................................... 18
Indemnification of Directors and Officers................................. 18
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SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
This Prospectus and the documents incorporated herein contain
forward-looking statements. For this purpose, any statements contained herein or
incorporated herein that are not statements of historical fact may be
forward-looking statements. For example, the words "may," "will," "continue,"
"believes," "expects," "anticipates," "intends," "estimates," "should" and
similar expressions are intended to identify forward-looking statements. There
are a number of important factors that could cause CollaGenex's results to
differ materially from those indicated by such forward-looking statements. These
factors include those set forth below in the section entitled "Risk Factors." In
particular, CollaGenex's business of selling, marketing and developing
pharmaceutical products is subject to a number of significant risks, including
risks relating to the implementation of CollaGenex's sales and marketing plans
for Periostat, risks inherent in research and development activities, risks
associated with conducting business in a highly regulated environment, risks
relating to CollaGenex's Year 2000 compliance and the Year 2000 compliance of
CollaGenex's vendors, suppliers, manufacturers, distributors, marketing partners
and certain other parties and uncertainty relating to clinical trials of
products under development. CollaGenex's success depends to a large degree upon
the market acceptance of Periostat by periodontists, dental practitioners, other
health care providers, patients and insurance companies. In addition, there can
be no assurance that CollaGenex's product candidates (other than the FDA's
approval of Periostat in the United States) will be approved by any regulatory
authority for marketing in any jurisdiction or, if approved, that any such
products will be successfully commercialized by CollaGenex. As a result of such
risks and others expressed from time to time in CollaGenex's filings with the
Securities and Exchange Commission (the "SEC"), CollaGenex's actual results may
differ materially from the results discussed in or implied by the
forward-looking statements contained herein.
COLLAGENEX PHARMACEUTICALS, INC.
CollaGenex Pharmaceuticals, Inc. (the "Company"), is a specialty
pharmaceutical company focused on providing innovative medical therapies to the
dental market. The Company's first product, Periostat, is a prescription
pharmaceutical capsule that was approved by the United States Food and Drug
Administration (the "FDA") in September 1998 as an adjunct to scaling and root
planing, the most prevalent therapy for periodontitis, to promote attachment
level gain and to reduce pocket depth in patients with adult periodontitis. The
Company is marketing Periostat to the dental community through its own
professional dental pharmaceutical sales force of approximately 130 sales
representatives and managers. This sales force also co-promotes Vioxx(R), a
prescription non-steroidal anti-inflammatory drug developed by Merck & Co.,
Inc., and Denavir(R), a prescription cold sore medication developed by
SmithKline Beecham. The Company is actively pursuing other prescription products
to market to the dental community.
We are a Delaware corporation. We were incorporated and began operations
in 1992 under the name CollaGenex, Inc. and changed our name to CollaGenex
Pharmaceuticals, Inc. in April 1996. Our principal executive offices are located
at 41 University Drive, Newtown, Pennsylvania 18940, and our telephone number is
(215) 579-7388.
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In this Prospectus, the terms "CollaGenex," "the Company," "we," "us" and
"our" includes CollaGenex Pharmaceuticals, Inc. and its subsidiaries.
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RISK FACTORS
In addition to the other information in this Prospectus, you should
carefully consider the following factors in evaluating whether to invest in the
Shares. The risks and uncertainties described below are not the only ones facing
our Company. Additional risks and uncertainties not presently known to us or
that we currently deem immaterial may also impair our business, financial
condition and results of operations.
If any of the following risks actually occur, our business, financial
condition or results of operations could be materially adversely affected. In
such case, the trading price of our Common Stock could decline 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 the forward-looking statements as a result of certain factors,
including the risks described below and elsewhere in this Prospectus.
UNCERTAINTY OF MARKET ACCEPTANCE OF PERIOSTAT. Our first product,
Periostat(R), is a prescription pharmaceutical capsule that was approved by the
United States Food and Drug Administration (the "FDA") in September 1998 as an
adjunct to scaling and root planing, the most prevalent therapy for adult
periodontitis, to promote attachment level gain and to reduce pocket depth in
patients with adult periodontitis. Adult periodontitis, a chronic disease
characterized by the progressive loss of attachment between the tooth and the
gums due to chronic progressive connective tissue degradation, may result in
tooth loss if untreated. Our growth and success will depend in large part on our
ability to demonstrate to dental practitioners the effectiveness of Periostat
for the treatment of periodontal disease. Further, our growth and success will
depend on acceptance of Periostat by periodontists, dental practitioners, other
health care providers, insurance companies, other third party payors and
patients. We cannot assure you that dental practitioners, who have prescribed
Periostat to their patients, will continue to prescribe Periostat in the future
or whether a significant number of additional dental practitioners will
prescribe Periostat to their patients. Even if Periostat gains broad long-term
acceptance by dental practitioners, successful sales and distribution of
Periostat will depend heavily on the availability of reimbursement from
insurance companies and other third party payors. The rejection of Periostat by
practitioners, patients or insurers would have a material adverse effect on our
business, financial condition and results of operations.
DEPENDENCE ON PRINCIPAL PRODUCT. Our future revenue and profitability
depend on our ability to successfully market and sell Periostat. Although we
plan to market complementary therapeutic products, whether developed internally
or by others, we expect that most of our revenue for the foreseeable future will
come from sales of Periostat. Our inability to gain market acceptance,
successfully commercialize or obtain adequate reimbursement coverage from
insurance companies and other third party payors for Periostat would have a
material adverse effect on our business, financial condition and results of
operations.
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HISTORICAL LOSSES. From our founding in 1992 through the commercial launch
of Periostat in November, 1998, we had no revenue from sales of our own
products. From November 1998 through June 30, 1999 aggregate product sales of
Periostat were $8.7 million. During the first six months of 1999 we experienced
a net loss of approximately $9.2 million. For 1998, we had a net loss of
approximately $11.6 million. We also had a net loss of $8.6 million in 1997 and
a net loss of $5.9 million in 1996. From inception through June 30, 1999, we
have experienced an aggregate net loss of $47.2 million. Our losses have
resulted primarily from the expenses associated with our pharmaceutical
development program, clinical trials, the regulatory approval process associated
with Periostat and sales and marketing activities relating to Periostat. We
cannot guarantee that we will ever achieve significant revenues from product
sales or profitable operations.
ABILITY TO GROW INTERNALLY. From our inception to late 1998, we operated
with a minimal number of employees. Substantially all pharmaceutical development
activities, including clinical trials, have been contracted to independent
contract research and other organizations. We have grown to 144 employees as of
June 30, 1999, up from 134 employees and 14 employees at December 31, 1998 and
December 31, 1997, respectively, due to the commercial introduction of
Periostat. While learning to train and integrate a newly established and growing
sales force, we will also need to successfully cultivate and manage our
relationships with our marketing partners and other third party service
providers. Expanding our business has placed a significant burden on the
management team and operations. Our failure to manage this growth in our
operations successfully could have a material adverse effect on our business,
financial condition and results of operations.
LIMITED MARKETING AND SALES HISTORY; DEPENDENCE ON MARKETING PARTNERS. Our
Company has a limited history of marketing, distributing and selling
pharmaceutical products in the dental market. We market and sell our products in
the United States through a direct sales force and internationally in
collaboration with marketing partners upon receipt of the requisite foreign
regulatory approvals. In January 1999, we trained a sales force of approximately
125 sales representatives and managers and began to promote Periostat to the
dental community. Further, we have entered into agreements to market Periostat
in certain countries in Europe, North Africa and Canada, and we continue to
evaluate partnering arrangements in countries outside the United States. We
cannot be certain that we will be able to continue to recruit and retain sales
and marketing personnel or that we will be able to successfully expand our sales
and marketing efforts. Furthermore, we cannot control the resources our foreign
partners devote to marketing, distribution and sales activities of Periostat nor
can we ensure that these partners will perform their contractual obligations. A
failure of our United States sales force to market Periostat or any other
product successfully would have a material adverse effect on our business,
financial condition and results of operations.
DEPENDENCE ON PATENTS, LICENSE AND PROPRIETARY RIGHTS; ENFORCEMENT OF
RIGHTS. Because of the substantial length of time and expense associated with
bringing new products through development to the marketplace, the pharmaceutical
industry places considerable importance on obtaining and maintaining patent and
trade secret protection for new technologies, products and processes. Our
success will depend in part on several factors,
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including, without limitation: our ability to obtain and maintain patent
protection for our technologies, products and processes; our ability to preserve
our trade secrets; and our ability to operate without infringing the proprietary
rights of other parties both in the United States and in foreign countries.
We depend on a license from the Research Foundation of the State
University of New York at Stony Brook ("SUNY") for all of our core technology
(the "SUNY License"). The SUNY License grants us an exclusive worldwide license
to SUNY's interests in certain patents and patent applications to make and sell
products employing tetracyclines that are designed or used to change a
biological process. Nineteen United States patents held by SUNY and ten United
States patent applications held by SUNY are licensed to us under the SUNY
License. The patents licensed from SUNY expire between 2004 and 2017. Of those
patents specifically related to Periostat, the first expires in 2004, and the
second expires by the year 2007. Of the nineteen patents, one patent has been
co-assigned to the University of Miami, Florida, one patent has been co-assigned
to the Washington University, St. Louis, and one patent has been co-assigned to
the Hospital for Joint Diseases. Of the ten patent applications, one patent
application has been co-assigned to the Hospital for Joint Diseases, one patent
application has been co-assigned to the University of Miami, Florida, one patent
application has been co-assigned to the University of Rochester, and one patent
application is co-owned by the University of Helsinki.
The primary United States patent claims methods of using conventional
tetracyclines to inhibit pathologically excessive collagenolytic activity (the
"Primary Patent"), while a related United States patent claims methods of using
tetracyclines which have no antibiotic activity (the "Secondary Patent"). SUNY
did not apply in foreign countries for patents corresponding to the Primary
Patent but has obtained patents that correspond to the Secondary Patent in
Australia, Canada and certain European countries. A patent application
corresponding to the Secondary Patent is pending in Japan. SUNY also has
obtained patents in certain European countries, Canada and Japan and has pending
patent applications in certain other foreign countries which correspond to its
United States patents relating to methods of use of tetracyclines to reduce bone
loss. Our rights under the SUNY License are subject to certain statutory rights
of the United States government resulting from federal support of research
activities at SUNY.
If we do not obtain and maintain our patent protection we may face
increased competition in the United States and in foreign countries. The SUNY
License imposes various payment and reporting obligations on us. Our failure to
comply with these requirements could result in the termination of such license.
If the SUNY License is terminated, or if we do not obtain and maintain patent
protection for our technologies, then our business, financial condition and
results of operations could be materially adversely affected.
One of the United States patents and one corresponding Japanese patent
application licensed to us under the SUNY License are owned jointly by SUNY and
a Japanese company. These patent rights, which expire in 2012, cover particular
chemically modified tetracyclines (the "Jointly Owned CMTs") that were involved
in research activities between SUNY and the Japanese company. The Japanese
company may have exclusive rights to these Jointly Owned CMTs in Asia, Australia
and New Zealand and may have a non-exclusive right to exploit these
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Jointly Owned CMTs in other territories. These Jointly Owned CMTs are not
involved in Periostat, but could in the future prove to be important for one or
more of the other potential applications of our technology. If we do incorporate
the Jointly Owned CMTs in any future product, we may not be able to market these
products in Asia, Australia and New Zealand and could experience increased
competition in other markets, including the United States, from the joint owner.
Since patent applications in the United States are maintained in secrecy
until patents issue, and since publication of discoveries in the scientific and
patent literature tend to lag behind actual discoveries by several months, we
cannot be certain that we were the first creator of inventions covered by
pending patent applications or that we were the first to file patent
applications for such inventions.
In addition, we cannot guarantee, without limitation, that patent
applications to which we hold rights will result in the issuance of patents; any
patents issued or licensed to us will be free from challenge and that if
challenged, that they would be held to be valid; any such patents will provide
commercially significant protection to our technology, products and processes;
others will not independently develop substantially equivalent proprietary
information which is not covered by patents to which we own rights or obtain
access to our know-how; or, others will not be issued patents that may prevent
the sale of one or more of our products, or require licensing and the payment of
significant fees or royalties by us to third parties in order to enable us to
conduct our business.
If any relevant claims of third-party patents are upheld as valid and
enforceable, we could be prevented from selling our products or could be
required to obtain licenses from the owners of such patents. We cannot guarantee
that such licenses would be available or, even if available, would be on
acceptable terms to us. If we fail to obtain these licenses such failure would
have a material adverse effect on our business, financial condition and results
of operations.
Due to the general availability of generic tetracyclines for use as
antibiotics, we could become involved in expensive infringement actions to
enforce and/or protect our patents. Regardless of the outcome, the defense and
prosecution of patent claims is expensive and time consuming and may distract
our management from their other activities. Although federal law prohibits the
promotion or marketing of pharmaceuticals for unauthorized uses, we cannot
guarantee that practitioners will not prescribe or patients will not obtain
generic forms of doxycycline and divide the tablets into smaller doses instead
of obtaining a prescription for Periostat.
Our success also depends upon know-how, unpatentable trade secrets, and
the skills, knowledge and experience of our scientific and technical personnel.
We require all employees to enter into confidentiality agreements that prohibit
the disclosure of confidential information to third parties and require
disclosure and assignment of rights to their ideas, developments, discoveries
and inventions. In addition, we try to get such agreements from our consultants,
advisors and research collaborators. We cannot guarantee that adequate
protection will be provided for our trade secrets, know-how or other proprietary
information if there is any
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<PAGE>
unauthorized use or disclosure. We occasionally provide information and chemical
compounds to research collaborators in academic institutions and request the
collaborators to conduct tests in order to investigate certain properties of the
compounds. We cannot guarantee that the academic institutions will not assert
intellectual property rights in the results of the tests conducted by the
research collaborators, or that the academic institutions will grant licenses
under such intellectual property rights to us on acceptable terms or at all. If
the assertion of intellectual property rights by an academic institution is
substantiated, and the academic institution does not grant intellectual property
rights to us, our business, financial condition and results of operations could
be materially adversely affected.
DEPENDENCE ON SUPPLIERS AND MANUFACTURERS. We rely on a single supplier, a
Portuguese-based company, for doxycycline, the active ingredient in Periostat.
There are relatively few alternative suppliers of doxycycline and this supplier
produces the majority of the doxycycline used in the United States. We cannot
guarantee that we will be able to procure a commercial quantity of doxycycline
from our current supplier on an ongoing basis at a competitive price or, if
necessary, that we could find a replacement supplier in a timely manner or with
favorable pricing terms. Any interruption in the supply of doxycycline would
have a material adverse effect on our business.
We rely on a single third-party contract manufacturer to produce Periostat
and we are currently working with another contract manufacturer on a tablet
formulation for Periostat. We intend to contract with additional manufacturers
for the commercial manufacture of Periostat; however, we cannot guarantee that
we will be able to consummate additional manufacturing arrangements or maintain
the terms of our current manufacturing arrangement. An inability to maintain our
arrangements with our present manufacturer could result in delays in the supply
of Periostat that would have a material adverse effect on our business,
financial condition and results of operations. In addition, we believe that it
could take up to one year to successfully transition to and integrate our
operation with a new manufacturer. Our manufacturer of Periostat and our foreign
supplier of doxycycline are subject to rigorous FDA regulatory requirements and
the failure of either entity to comply with such requirements would have a
material adverse effect on our business, financial condition and results of
operations.
UNCERTAINTY OF THIRD PARTY REIMBURSEMENT AND HEALTH CARE REFORM.
Successful commercialization of Periostat or other pharmaceutical products that
we may develop or market will depend, in part, upon the availability in both
domestic and foreign markets of reimbursement or funding from third party health
care payors such as government and private insurance plans, including dental
managed care plans. As third party payors seek to contain their own costs, they
may reduce reimbursement levels or decline reimbursement for new products. These
actions may restrict our ability to realize an appropriate return on our
pharmaceutical products. It is also uncertain what legislative proposals may be
adopted relating to health care reimbursement or what actions may be taken in
response to any health care reform proposals or legislation by federal, state or
private payors of health care products and services. In addition, in certain
foreign markets, pricing or profitability of prescription pharmaceuticals is
subject to governmental control. A reduction in reimbursement levels by third
party payors or regulations
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which effectively limit the reimbursement of our products would have a material
adverse effect on our business, financial condition and results of operations.
COMPETITION AND RAPID TECHNOLOGICAL CHANGE. Competition in the
pharmaceutical industry is intense. Many pharmaceutical companies are engaged in
research and development activities relating to disorders characterized by
connective tissue destruction and may focus such efforts on periodontal disease.
Many of these competitors have substantially greater financial, marketing,
sales, distribution and technical resources than do we and have more experience
in research and development, clinical trials, regulatory matters, manufacturing
and marketing. Our technology may be rendered obsolete or uneconomical by
technological advances or entirely different approaches developed by one or more
of our competitors. The development of successfully competing products or
commercialization of new products by our competitors could have a material
adverse effect on our business, financial condition and results of operations.
UNCERTAINTY OF NEW PRODUCT DEVELOPMENT OR COMMERCIALIZATION. We have
several potential products for non-dental applications that are in various early
stages of development that would require significant additional research and
development, clinical trials and appropriate regulatory approval before any of
these products may be commercialized. All of these proposed products are based
upon our core technology, which is licensed from SUNY. We plan to develop and
commercialize these non-dental products through collaborations and licensing
arrangements with third parties who likely will be responsible for many aspects
of pre-clinical testing and human clinical trials, the preparation and
submission of applications for regulatory approval and the manufacturing of
these products. We will, therefore, be dependent upon the expertise and
resources of third parties to develop, commercialize and manufacture new
products. We cannot guarantee the successful development of any new products
based upon our core technology by third parties.
EXTENSIVE GOVERNMENT REGULATION. We are subject to comprehensive
regulation by the FDA in the United States and by comparable authorities in
other countries. These national agencies and other federal, state, and local
authorities regulate, among other things, the research and development,
including preclinical and clinical testing, safety, effectiveness, approval,
manufacturing, labeling, advertising, promotion, export, and marketing of our
products. In the United States, the FDA regulates drug products under the
Federal Food, Drug, and Cosmetic Act, and other laws.
Drug products may not be marketed in the United States until they have
received approval from the FDA. Other than Periostat, none of our products has
been approved for marketing in the United States. The steps required before a
drug product may be approved for marketing in the United States generally
include: (i) preclinical laboratory and animal testing; (ii) the approval by the
FDA of an investigational new drug application ("IND") for human clinical
testing; (iii) human clinical trials to establish the efficacy of the drug and
any additional human clinical trials needed to establish safety; (iv) the
submission to the FDA of a New Drug Application ("NDA"); (v) FDA review of the
NDA in order to determine, among other things, whether the drug is safe and
effective for its intended use; and (vi) satisfactory completion of an
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FDA inspection of the manufacturing facility or facilities at which the product
is made to assess compliance with Good Manufacturing Practices ("GMP").
After NDA approval is obtained, an NDA holder is subject to numerous
continuing requirements. For example, quality control and manufacturing must
conform to complex and detailed GMP requirements. Also, an NDA holder is
required to report certain adverse reactions to the FDA, and to comply with
requirements concerning advertising, promotion and labeling of its products.
Both before and after approval is obtained, violations of regulatory
requirements or discovery of problems with the product may result in various
adverse consequences, including the FDA's delay in approving or refusal to
approve a product, recalls, withdrawal of an approved product from the market,
and/or the imposition of civil or criminal sanctions. Also, new government
requirements may be established that could affect drug products at any point,
both before and after approval.
The processes of obtaining drug approvals and maintaining continuing
compliance with the Federal Food, Drug, and Cosmetic Act and regulations are
time consuming and require the expenditure of substantial resources. We cannot
assure you that approvals of our compounds under development will be granted on
a timely basis, or at all, or that we will be in continuing compliance with
applicable requirements. A delay in or a failure to obtain requisite government
approvals, a failure to obtain approvals of the scope requested, or a failure to
maintain continuing compliance with applicable requirements will delay or
preclude us or our licensees or marketing partners from marketing products, or
limit the commercial use of such products, and could have a material adverse
effect on our business, financial condition and results of operations. Failure
of our foreign supplier of the active ingredient used in the manufacture of our
products or failure of our manufacturer of its finished dosage form products to
comply with GMP regulations or other FDA regulatory requirements would have a
material adverse effect on our business, financial condition and results of
operations.
The Drug Price Competition and Patent Term Restoration Act of 1984
provides for abbreviated approval requirements for generic drugs and exclusivity
protection for certain innovative products that prevents FDA approval of generic
versions for specific time periods, and patent extension for a certain period of
time. Because Periostat is being treated by the FDA as an "antibiotic," such
exclusivity protection is not available. Therefore, we must rely solely on any
patent protection we may have with respect to Periostat. Also no patent term
extension will be available for Periostat in its current form. In addition, we
will be subject to certain user fees that the FDA is authorized to collect for
reviewing NDAs and other marketing applications.
We also will be subject to a variety of foreign regulatory regimes
governing clinical trials and sales of our products. Our products have not been
approved in any foreign country. Whether or not FDA approval has been obtained,
approval of a product by the comparable regulatory authorities of foreign
countries must be obtained prior to the commencement of marketing of the product
in those countries. The approval process varies from country to country, and
other countries may also impose post-approval requirements.
- 10 -
<PAGE>
DEPENDENCE ON KEY PERSONNEL. We are highly dependent on our current
management, scientific advisors and consultants and our success will depend in
part on their continued service and our ability to identify, hire and retain
additional qualified personnel in an intensely competitive market. We face
intense competition in our recruiting activities and we cannot assure you that
we will be able to attract and/or retain qualified personnel. The failure to
attract and retain personnel could have a material adverse effect on our
business, financial condition and results of operations. We do not maintain key
person life insurance on any member of management.
PRODUCT LIABILITY. Our business may be adversely affected by potential
product liability risks inherent in the testing, manufacturing and marketing of
Periostat and other products developed by or for us. We have $10.0 million in
product liability insurance for Periostat. This insurance may not adequately
protect us against product liability claims. A failure to maintain sufficient
coverage or the failure to obtain indemnification from third parties for their
respective liabilities may expose us to product liability claims and/or recalls
that could have a material adverse effect on our business, financial condition
and results of operations.
FUTURE CAPITAL NEEDS. We have historically financed our operations through
public offerings and private equity financings. Our capital requirements depend
on numerous factors, including our ability to successfully commercialize
Periostat, competing technological and market developments, our ability to enter
into collaborative arrangements for the development, regulatory approval and
commercialization of other products, and the cost of filing, prosecuting,
defending and enforcing patent claims and other intellectual property rights. We
anticipate that we may be required to raise additional capital over a period of
several years in order to conduct our operations. Additional funding, if
necessary, may not be available on favorable terms, if at all. If adequate funds
are not available, we may be required to curtail operations significantly or to
obtain funds through arrangements with collaborative partners or others that may
require us to relinquish rights to certain of our technologies, product
candidates, products or potential markets.
RISKS ASSOCIATED WITH THE YEAR 2000.
Assessment
----------
We believe our exposure to Year 2000 problems lies primarily in two areas:
(i) our own internal operating systems; and (ii) Year 2000 compliance by third
parties with whom we have material relationships. We have completed an
assessment of our principal internal systems. However, we are continuing to
assess our Year 2000 exposure with respect to third parties. While the costs of
these assessment efforts are not expected to be material to our financial
condition or any year's results of operations, we cannot assure you that this
will be the case.
Internal Operating Systems
--------------------------
We believe that our principal internal systems are Year 2000 compliant. We
recently installed upgraded versions of our internal accounting, management and
financial reporting applications which the vendor has represented are Year 2000
compliant. Some of our non-critical applications, however, may not be Year 2000
compliant. We are currently conducting a program
- 11 -
<PAGE>
to identify and resolve any such exposure. Although the costs related to these
efforts are not expected to be material to our business, financial condition or
results of operations, we cannot assure you that this will be the case.
Third-Party Relationships
-------------------------
We are conducting a program to identify and resolve Year 2000 exposure
from third parties. We are presently conducting inquiries of our outside
vendors, suppliers, manufacturers, distributors and marketing partners to assess
their Year 2000 readiness. Any failure of third parties with whom we have
material relationships to resolve Year 2000 problems in a timely manner could
materially adversely affect our business, financial condition or results of
operations.
Risks of Our Year 2000 Issues
-----------------------------
We expect to identify and resolve all Year 2000 problems that could
materially adversely affect our business, financial condition or results of
operations. However, we believe that it is not possible to determine with
complete certainty that all Year 2000 problems affecting us have been identified
or will be corrected. Further, we cannot accurately predict how many failures
related to the Year 2000 problem will occur or the severity, duration or
financial consequences of such failures. As a result, we expect that we could
possibly suffer the following consequences:
o A significant number of operational inconveniences and
inefficiencies for us and our customers that may divert our time and
attention and financial and human resources from our ordinary
business activities; and
o A lesser number of serious system failures (whether our systems or
those of our vendors, suppliers, manufacturers, distributors and
marketing partners) that may require significant efforts by us, our
customers or third parties to prevent or alleviate material business
disruptions.
Costs
-----
Other than time spent by our own personnel, to date we have not incurred
any significant costs in identifying and remediating Year 2000 problems.
Our Contingency Plans
---------------------
We believe our plans for addressing the Year 2000 problem are adequate. We
do not believe we will incur a material financial impact from system failures,
or from the costs associated with assessing and addressing the risks of failure
arising from the Year 2000 problem. Consequently, we do not intend to create a
detailed contingency plan. In the event that we do not adequately identify and
resolve our Year 2000 issues, the absence of a detailed contingency plan may
materially adversely affect our business, financial condition and results of
operations.
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<PAGE>
ANTI-TAKEOVER EFFECT OF CERTAIN CHARTER AND BY-LAW PROVISIONS AND DELAWARE
LAW. Anti-takeover provisions of Delaware law, our Certificate of Incorporation
and our By-Laws could make it more difficult for a third party to acquire
control of us, even if such change would be beneficial to our stockholders. Our
Certificate of Incorporation provides that our board of directors may issue
preferred stock with superior rights and preferences without common stockholder
approval. The issuance of preferred stock could have the effect of delaying,
deterring or preventing a change in control. Our board of directors has also
adopted a "poison pill" rights plan that may further discourage a third party
from making a proposal to acquire us. In addition, in connection with the
issuance of our preferred stock, the rights of our common stockholders may be
limited in certain instances with respect to divided rights, rights on
liquidation, winding up and dissolution and certain other matters submitted to a
vote of our common stockholders.
CONTROL BY MANAGEMENT AND EXISTING STOCKHOLDERS. Currently, our executive
officers, directors and affiliated entities together beneficially own
approximately 55% of the outstanding shares of our Common Stock or equity
securities convertible into Common Stock. As a result, these stockholders,
acting together, or in the case of our preferred stockholders, in certain
instances, as a class, will be able to exercise control over corporate actions
requiring stockholder approval, including the election of directors. Such a
concentration of ownership may have the effect of delaying or preventing a
change in control, including transactions in which our stockholders might
otherwise receive a premium for their shares over then current market prices.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Shares offered by the Selling Shareholders set forth in this Prospectus.
SELLING SHAREHOLDERS
The individuals listed below (the "Selling Shareholders") received shares
of Preferred Stock in connection with the execution of a Stock Purchase
Agreement with the Company, dated March 19, 1999. The Preferred Stock is by its
terms convertible, in certain circumstances, into shares of Common Stock.
Holders of the Preferred Stock are also entitled to certain dividend payments to
be made in shares of Common Stock. Under the terms of the Stock Purchase
Agreement, all such shares of Common Stock to be issued to the Selling
Shareholders are to be registered with the Securities and Exchange Commission
and, with the exception of future dividend payments, are included herein.
- 13 -
<PAGE>
The following table sets forth as of August 31, 1999 certain information
with respect to the Selling Shareholders. CollaGenex cannot assure that any of
the Selling Shareholders will offer for sale or sell any or all of the Shares
offered by them pursuant to this Prospectus.
<TABLE>
<CAPTION>
Number
Beneficial Ownership of Beneficial
of Shares Ownership of
Name of Selling Shareholders Offered Shares
Selling Shareholders Prior to Offering(1) Hereby(2) After Offering (2)
----------------------------- ----------------------- --------- ------------------
Number Percent Number Percent
------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
OCM Principal Opportunities
Fund, L.P................... 1,627,950(3) 15.9(3) 1,627,950 0 *
Richard A. Horstmann.......... 705,576(4) 8.1(4) 91,976 613,600 7.1
Marquette Venture
Partners II, L.P............ 980,278(5) 11.3(5) 89,418 890,860 10.3
MVP II Affiliates Fund, L.P... 28,011(5) *(5) 2,558 25,453 *
Robert J. Easton.............. 69,585(6) *(6) 18,396 51,189 *
Pebblebrook Partners Ltd...... 9,198(7) *(7) 9,198 0 *
</TABLE>
- ----------
* Less than one percent
(1) Such number of shares held includes shares of Common Stock issued to each
such holder in payment of dividends on the Preferred Stock declared by the
Company's Board of Directors in June 1999 and distributed in October 1999.
Applicable percentage of ownership is based on 8,612,891 shares of Common
Stock outstanding as of August 31, 1999, plus any Common Stock equivalents
or convertible securities held, shares beneficially owned by each such
holder and shares of Common Stock issued by the Company in payment of
dividends on the Preferred Stock as set forth herein.
(2) Assumes that all Shares to be offered, as set forth above, are sold
pursuant to this offering and that no other shares of Common Stock are
acquired or disposed of by the Selling Shareholders prior to the
termination of this offering. Because the Selling Shareholders may sell
all, some or none of their Shares or may acquire or dispose of other
shares of Common Stock, no reliable estimate can be made of the aggregate
number of Shares that will be sold pursuant to this offering or the number
or percentage of shares of Common Stock that each Selling Shareholder will
own upon completion of this offering.
(3) Mr. Kaplan, a member of the Company's Board of Directors, is a Principal
of Oaktree Capital Management, LLC, which is the general partner of OCM
Principal Opportunities Fund, L.P. ("OCM"). Includes 1,609,091 shares of
Common Stock issuable upon the conversion of 177,000 shares of Preferred
Stock held by OCM and 18,859 shares of Common Stock issued in payment of
dividends on such Preferred Stock. Mr. Kaplan expressly disclaims
beneficial ownership of such shares, except to the extent of any indirect
pecuniary interest therein.
- 14 -
<PAGE>
(4) Mr. Horstmann is a principal of Thomson Horstmann & Bryant, Inc. and, as
such, has the power to vote or to direct the vote of and to dispose of or
direct the disposition of the shares owned by Thomson Horstmann & Bryant,
Inc. (613,600 shares of Common Stock). Mr. Horstmann expressly disclaims
beneficial ownership of such shares, except as to his proportionate
interest in Thomson Horstmann & Bryant, Inc. Also includes 90,910 shares
of Common Stock issuable upon the conversion of 10,000 shares of Preferred
Stock held by Mr. Horstmann and 1,066 shares of Common Stock issued in
payment of dividends on such Preferred Stock.
(5) Mr. Daverman, a member of the Company's Board of Directors, is President
of Marquette Management Partners, LLC, the general partner of Marquette
Venture Partners, L.P. and a general partner of MG II, L.P., the general
partner of Marquette Venture Partners II, L.P. ("Marquette") and MVP II
Affiliates Fund, L.P. ("MVP II") and, as such, has the power to vote or
direct the vote of and to dispose of or direct the disposition of the
shares owned by Marquette (which includes 88,382 shares of Common Stock
issuable upon the conversion of 9,722 shares of Preferred Stock held by
Marquette, 1,036 shares of Common Stock issued in payment of dividends on
such Preferred Stock and 890,860 shares of Common Stock otherwise held by
Marquette) and MVP II (which includes 2,528 shares of Common Stock
issuable upon the conversion of 278 shares of Preferred Stock held by MVP
II, 30 shares of Common Stock issued in payment of dividends on such
Preferred Stock and 25,453 shares of Common Stock otherwise held by MVP
II). Mr. Daverman expressly disclaims beneficial ownership of such shares,
except as to his proportionate interest in each of Marquette and MVP II.
(6) Mr. Easton is a member of the Company's Board of Directors. Includes
12,000 shares of Common Stock underlying options which are exercisable as
of August 31, 1999 or 60 days after such date. Also includes 18,182 shares
of Common Stock issuable upon the conversion of 2,000 shares Preferred
Stock held by Mr. Easton and 214 shares of Common Stock issued in payment
of dividends on such Preferred Stock. Also includes 6,400 shares of Common
Stock held as trustee for Second Easton Family Charitable Trust and 32,789
shares of Common Stock otherwise held by Mr. Easton.
(7) Includes 9,091 shares of Common Stock issuable upon the conversion of
1,000 shares of Preferred Stock held by Pebblebrook Partners Ltd. and 107
shares of Common Stock issued in payment of dividends on such Preferred
Stock.
All offering expenses are being paid by the Company except the fees and
expenses of any counsel and other advisors that the Selling Shareholders may
employ to represent them in connection with the offering and all brokerage or
underwriting discounts or commissions paid to broker-dealers in connection with
the sale of the Shares.
- 15 -
<PAGE>
PLAN OF DISTRIBUTION
The Selling Shareholders have not advised CollaGenex of any specific plan
for distribution of the Shares offered hereby, but it is anticipated that the
Shares will be sold from time to time by the Selling Shareholders or by
permitted pledgees, donees, transferees or other permitted successors in
interest. Such sales may be made in any of the following manners:
o On the Nasdaq National Market (or through the facilities of any
national securities exchange or U.S. inter-dealer quotation system
of a registered national securities association, on which the Shares
are then listed, admitted to unlisted trading privileges or included
for quotation);
o In public or privately negotiated transactions;
o In transactions involving principals or brokers;
o In a combination of such methods of sale; or
o Any other lawful methods.
Although sales of the Shares are, in general, expected to be made at
market prices prevailing at the time of sale, the Shares may also be sold at
prices related to such prevailing market prices or at negotiated prices, which
may differ considerably.
In offering the Shares covered by this Prospectus, each of the Selling
Shareholders and any broker-dealers who sell the Shares for the Selling
Shareholders may be "underwriters" within the meaning of the Securities Act, and
any profits realized by such Selling Shareholders and the compensation of such
broker-dealers may be underwriting discounts and commissions.
Sales through brokers may be made by any method of trading authorized by
any stock exchange or market on which the Shares may be listed, including block
trading in negotiated transactions. Without limiting the foregoing, such brokers
may act as dealers by purchasing any or all of the Shares covered by this
Prospectus, either as agents for others or as principals for their own accounts,
and reselling such Shares pursuant to this Prospectus. The Selling Shareholders
may effect such transactions directly, or indirectly through underwriters,
broker-dealers or agents acting on their behalf. In connection with such sales,
such broker-dealers or agents may receive compensation in the form of
commissions, concessions, allowances or discounts, any or all of which might be
in excess of customary amounts.
Each of the Selling Shareholders is acting independently of CollaGenex in
making decisions with respect to the timing, manner and size of each sale of
Shares. CollaGenex has not been advised of any definitive selling arrangement at
the date of this Prospectus between any Selling Shareholder and any
broker-dealer or agent.
To the extent required, the names of any agents, broker-dealers or
underwriters and applicable commissions, concessions, allowances or discounts,
and any other required information with respect to any particular offer of the
Shares by the Selling Shareholders, will be set forth in a Prospectus
Supplement.
- 16 -
<PAGE>
The expenses of preparing and filing this Prospectus and the related
Registration Statement with the SEC will be paid entirely by CollaGenex. Shares
of Common Stock covered by this Prospectus also may qualify to be sold pursuant
to Rule 144 under the Securities Act, rather than pursuant to this Prospectus.
The Selling Shareholders have been advised that they are subject to the
applicable provisions of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), including without limitation, Rule 10b-5 thereunder.
Neither CollaGenex nor the Selling Shareholders can estimate at the
present time the amount of commissions or discounts, if any, that will be paid
by the Selling Shareholders on account of their sales of the Shares from time to
time.
LEGAL MATTERS
The validity of the Shares of Common Stock offered hereby will be passed
upon for the Company by Buchanan Ingersoll Professional Corporation, 500 College
Road East, Princeton, New Jersey 08540.
EXPERTS
The consolidated financial statements and schedule of CollaGenex
Pharmaceuticals, Inc. as of December 31, 1998 and 1997, and for each of the
years in the three-year period ended December 31, 1998, have been incorporated
by reference herein and in the registration statement in reliance upon the
report of KPMG LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
INFORMATION INCORPORATED BY REFERENCE
The SEC allows CollaGenex to "incorporate by reference" the information
CollaGenex files with the SEC, which means that CollaGenex can disclose
important information to you by referring you to those documents. The
information incorporated by reference is an important part of this Prospectus,
and information that CollaGenex files later with the SEC will automatically
update and supersede this information. CollaGenex incorporates by reference the
documents listed below and any future filings made by CollaGenex with the SEC
under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act until the filing of
a post-effective amendment to this Prospectus which indicates that all
securities registered have been sold or which deregisters all securities then
remaining unsold:
o CollaGenex's Annual Report on Form 10-K for the year ended December
31, 1998 filed with the SEC on March 29, 1999;
o All other reports filed by CollaGenex pursuant to Section 13(a) or
15(d) of the Exchange Act since December 31, 1998; and
o The description of CollaGenex's Common Stock, $.01 par value, which
is contained in CollaGenex's Registration Statement on Form 8-A
filed pursuant to Section 12(g) of the Exchange Act in the form
declared effective by the SEC on June 20, 1996,
- 17 -
<PAGE>
including any subsequent amendments or reports filed for the purpose
of updating such description.
CollaGenex will provide to any person, including any beneficial owner of
its securities, to whom this Prospectus is delivered, a copy of any or all of
the information that has been incorporated by reference in this Prospectus but
not delivered with this Prospectus. You may make such requests at no cost to you
by writing or telephoning CollaGenex at the following address or number:
CollaGenex Pharmaceuticals, Inc.
41 University Drive
Newtown, Pennsylvania 18940
Attention: Chief Financial Officer
Telephone: (215) 579-7388
You should rely only on the information incorporated by reference or
provided in this Prospectus or any Prospectus Supplement. CollaGenex has not
authorized anyone else to provide you with different information. CollaGenex is
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 or any
Prospectus Supplement is accurate as of any date other than the date on the
front of those documents.
WHERE YOU CAN FIND MORE INFORMATION
CollaGenex files annual, quarterly and special reports, proxy statements
and other information with the SEC. CollaGenex's SEC filings are available to
the public over the Internet at the SEC's website at http://www.sec.gov. You may
also read and copy, at prescribed rates, any document CollaGenex files with the
SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the regional offices of the SEC at Seven World Trade Center,
Suite 1300, New York, New York 10048 and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. Please call the SEC at
1-800-SEC-0330 for further information on the SEC's Public Reference Room.
CollaGenex has filed with the SEC a Registration Statement on Form S-3
under the Securities Act with respect to the Shares offered hereby. This
Prospectus, which constitutes a part of that registration statement, does not
contain all the information contained in the registration statement and its
exhibits. For further information with respect to CollaGenex and the Shares, you
should consult the registration statement and its exhibits. Statements contained
in this Prospectus concerning the provisions of any documents are necessarily
summaries of those documents, and each statement is qualified in its entirety by
reference to the copy of the document filed with the SEC. The registration
statement and any of its amendments, including exhibits filed as a part of the
registration statement or an amendment to the registration statement, are
available for inspection and copying as described above.
- 18 -
<PAGE>
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Subsection (a) of Section 145 of the Delaware General Corporation Law
empowers a corporation to indemnify any person who was or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation) by reason of the fact that he or she is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or her in
connection with such action, suit or proceeding if he or she acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he or
she is or was a director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection with the defense or settlement
of such action or suit if he or she acted in good faith and in a manner he or
she reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
of the circumstances of the case, such person is fairly and reasonably entitled
to indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
Section 145 further provides that to the extent a director or officer of a
corporation has been successful in the defense of any action, suit or proceeding
referred to in subsection (a) and (b) or in the defense of any claim, issue or
matter therein, he or she shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him or her in connection
therewith; that the indemnification provided by Section 145 shall not be deemed
exclusive of any other rights to which the indemnified party may be entitled;
and that the scope of indemnification extends to directors, officers, employees,
or agents of a constituent corporation absorbed in a consolidation or merger and
persons serving in that capacity at the request of the constituent corporation
for another. Section 145 also empowers the corporation to purchase and maintain
insurance on behalf of a director or officer of the corporation against any
liability asserted against him or her or incurred by him or her in any such
capacity or arising out of his or her status as such whether or not the
corporation would have the power to indemnify him or her against such
liabilities under Section 145.
- 19 -
<PAGE>
Article IX of CollaGenex's By-laws specifies that CollaGenex shall
indemnify its directors, officers, employees and agents because he or she was or
is a director, officer, employee or agent of the Corporation or was or is
serving at the request of the Corporation as a director, officer, employee or
agent of another entity to the full extent that such right of indemnity is
permitted by the laws of the State of Delaware. This provision of the By-laws is
deemed to be a contract between CollaGenex and each director and officer who
serves in such capacity at any time while such provision and the relevant
provisions of the Delaware General Corporation Law are in effect, and any repeal
or modification thereof shall not offset any action, suit or proceeding
theretofore or thereafter brought or threatened based in whole or in part upon
any such state of facts. The affirmative vote of the holders of at least 80% of
the voting power of all outstanding shares of the capital stock of CollaGenex,
and, in certain circumstances, 66 2/3% of the voting power of all outstanding
shares of the Series D Cumulative Convertible Preferred Stock of the Company, is
required to adopt, amend or repeal such provision of the By-laws.
CollaGenex has executed indemnification agreements with each of its
officers and directors pursuant to which CollaGenex has agreed to indemnify such
parties to the full extent permitted by law, subject to certain exceptions, if
such party becomes subject to an action because such party is a director,
officer, employee, agent or fiduciary of CollaGenex.
Section 102(b)(7) of the Delaware General Corporation Law enables a
corporation in its certificate of incorporation to limit the personal liability
of members of its board of directors for violation of a director's fiduciary
duty of care. This Section does not, however, limit the liability of a director
for breaching his or her duty of loyalty, failing to act in good faith, engaging
in intentional misconduct or knowingly violating a law, or from any transaction
in which the director derived an improper personal benefit. This Section also
will have no effect on claims arising under the federal securities laws.
CollaGenex's Amended and Restated Certificate of Incorporation limits the
liability of its directors as authorized by Section 102(b)(7). The affirmative
vote of the holders of at least 75% of the voting power of all outstanding
shares of the capital stock of CollaGenex, and, in certain circumstances, 66
2/3% of the voting power of all outstanding shares of the Series D Cumulative
Convertible Preferred Stock of the Company, is required to amend such
provisions.
CollaGenex has obtained liability insurance for the benefit of its
directors and officers which provides coverage for losses of directors and
officers for liabilities arising out of claims against such persons acting as
directors or officers of CollaGenex (or any subsidiary thereof) due to any
breach of duty, neglect, error, misstatement, misleading statement, omission or
act done by such directors and officers, except as prohibited by law.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the SEC such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
- 20 -
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
SEC registration fee............................ $ 9,237.
Counsel fees and expenses*...................... $ 20,000.
Accounting fees and expenses*................... $ 5,000.
Total*....................................... $ 34,237.
==========
* Estimated
All expenses of issuance and distribution listed above will be borne by
the Company. The costs of fees and expenses of legal counsel and other advisors,
if any, that the Selling Shareholders employ in connection with the offering
will be borne by the Selling Shareholders.
Item 15. Indemnification of Directors and Officers.
Subsection (a) of Section 145 of the Delaware General Corporation Law
empowers a corporation to indemnify any person who was or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation) by reason of the fact that he or she is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or her in
connection with such action, suit or proceeding if he or she acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he or
she is or was a director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection with the defense or settlement
of such action or suit if he or she acted in good faith and in a manner he or
she reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
of the circumstances of the
II-1
<PAGE>
case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.
Section 145 further provides that to the extent a director or officer of a
corporation has been successful in the defense of any action, suit or proceeding
referred to in subsection (a) and (b) or in the defense of any claim, issue or
matter therein, he or she shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him or her in connection
therewith; that the indemnification provided by Section 145 shall not be deemed
exclusive of any other rights to which the indemnified party may be entitled;
and that the scope of indemnification extends to directors, officers, employees,
or agents of a constituent corporation absorbed in a consolidation or merger and
persons serving in that capacity at the request of the constituent corporation
for another. Section 145 also empowers the corporation to purchase and maintain
insurance on behalf of a director or officer of the corporation against any
liability asserted against him or her or incurred by him or her in any such
capacity or arising out of his or her status as such whether or not the
corporation would have the power to indemnify him or her against such
liabilities under Section 145.
Article IX of CollaGenex's By-laws specifies that CollaGenex shall
indemnify its directors, officers, employees and agents because he or she was or
is a director, officer, employee or agent of the Corporation or was or is
serving at the request of the Corporation as a director, officer, employee or
agent of another entity to the full extent that such right of indemnity is
permitted by the laws of the State of Delaware. This provision of the By-laws is
deemed to be a contract between CollaGenex and each director and officer who
serves in such capacity at any time while such provision and the relevant
provisions of the Delaware General Corporation Law are in effect, and any repeal
or modification thereof shall not offset any action, suit or proceeding
theretofore or thereafter brought or threatened based in whole or in part upon
any such state of facts. The affirmative vote of the holders of at least 80% of
the voting power of all outstanding shares of the capital stock of CollaGenex,
and, in certain circumstances, 66 2/3% of the voting power of all outstanding
shares of the Series D Cumulative Convertible Preferred Stock of the Company, is
required to adopt, amend or repeal such provision of the By-laws.
CollaGenex has executed indemnification agreements with each of its
officers and directors pursuant to which CollaGenex has agreed to indemnify such
parties to the full extent permitted by law, subject to certain exceptions, if
such party becomes subject to an action because such party is a director,
officer, employee, agent or fiduciary of CollaGenex.
Section 102(b)(7) of the Delaware General Corporation Law enables a
corporation in its certificate of incorporation to limit the personal liability
of members of its board of directors for violation of a director's fiduciary
duty of care. This Section does not, however, limit the liability of a director
for breaching his or her duty of loyalty, failing to act in good faith, engaging
in intentional misconduct or knowingly violating a law, or from any transaction
in which the director derived an improper personal benefit. This Section also
will have no effect on claims arising under the federal securities laws.
II-2
<PAGE>
CollaGenex's Amended and Restated Certificate of Incorporation limits the
liability of its directors as authorized by Section 102(b)(7). The affirmative
vote of the holders of at least 75% of the voting power of all outstanding
shares of the capital stock of CollaGenex, and, in certain circumstances, 66
2/3% of the voting power of all outstanding shares of the Series D Cumulative
Convertible Preferred Stock of the Company, is required to amend such
provisions.
CollaGenex has obtained liability insurance for the benefit of its
directors and officers which provides coverage for losses of directors and
officers for liabilities arising out of claims against such persons acting as
directors or officers of CollaGenex (or any subsidiary thereof) due to any
breach of duty, neglect, error, misstatement, misleading statement, omission or
act done by such directors and officers, except as prohibited by law.
II-3
<PAGE>
Item 16. Exhibits.
Exhibit No. Description of Exhibit
----------- ----------------------
5 Opinion of Buchanan Ingersoll Professional Corporation
as to legality of the Shares of Common Stock.
23.1 Consent of KPMG LLP.
23.2 Consent of Buchanan Ingersoll Professional Corporation
(contained in the opinion filed as Exhibit 5 to the
Registration Statement).
24 Powers of Attorney of certain officers and directors of
the Company (contained on the signature page of this
Registration Statement).
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 to include any
material information with respect to the plan of distribution not previously
disclosed in this Registration Statement or any material change to such
information in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, 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.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in 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.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by
II-4
<PAGE>
a director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Newtown, State of Pennsylvania on this 8th day of
October, 1999.
COLLAGENEX PHARMACEUTICALS, INC.
By: /s/ Brian M. Gallagher, Ph.D.
----------------------------------
Brian M. Gallagher, Ph.D.
President and Chief Executive Officer
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Brian M. Gallagher, Ph.D. and Nancy C.
Broadbent, and each of them, his true and lawful attorneys-in-fact and agents
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same with all exhibits thereto, and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Brian M. Gallagher, Ph.D. President, Chief Executive October 8, 1999
- -------------------------------- Officer and Director
Brian M. Gallagher, Ph.D. (Principal Executive Officer)
/s/ Nancy C. Broadbent Chief Financial Officer, October 8, 1999
- -------------------------------- Treasurer and Secretary
Nancy C. Broadbent (Principal Financial and
Accounting Officer)
/s/ Helmer P.K. Agersborg, Ph.D. Chairman of the Board and October 8, 1999
- -------------------------------- Director
Helmer P.K. Agersborg, Ph.D.
/s/ Peter Barnett Director October 8, 1999
- --------------------------------
Peter Barnett
/s/ Robert C. Black Director October 8, 1999
- --------------------------------
Robert C. Black
/s/ James E. Daverman Director October 8, 1999
- --------------------------------
James E. Daverman
/s/ Robert J. Easton Director October 8, 1999
- --------------------------------
Robert J. Easton
/s/ Stephen A. Kaplan Director October 8, 1999
- --------------------------------
Stephen A. Kaplan
/s/ Stephen W. Ritterbush, Ph.D. Director October 8, 1999
- --------------------------------
Stephen W. Ritterbush, Ph.D.
/s/ Terence E. Winters, Ph.D. Director October 8, 1999
- --------------------------------
Terence E. Winters, Ph.D.
II-7
<PAGE>
EXHIBIT INDEX
Exhibit No. Description of Exhibit
----------- ----------------------
5 Opinion of Buchanan Ingersoll Professional Corporation
as to legality of the Shares of Common Stock.
23.1 Consent of KPMG LLP.
23.2 Consent of Buchanan Ingersoll Professional Corporation
(contained in the opinion filed as Exhibit 5 to the
Registration Statement).
24 Powers of Attorney of certain officers and directors of
the Company (contained on the signature page of this
Registration Statement).
<PAGE>
EXHIBIT 5
BUCHANAN INGERSOLL PROFESSIONAL CORPORATION
(Incorporated in Pennsylvania)
Attorneys
500 College Road East
Princeton, New Jersey 08540
October 8, 1999
CollaGenex Pharmaceuticals, Inc.
301 South State Street
Newtown, Pennsylvania 18940
Gentlemen:
We have acted as counsel to CollaGenex Pharmaceuticals, Inc., a Delaware
corporation (the "Company"), in connection with the filing by the Company of a
Registration Statement on Form S-3 (the "Registration Statement"), under the
Securities Act of 1933, as amended, relating to the registration of an aggregate
of 1,839,496 shares (the "Shares") of the Company's common stock, $.01 par
value, all of which are to be offered by the selling shareholders (the "Selling
Shareholders") as set forth therein.
In connection with the Registration Statement, we have examined such
corporate records and documents, other documents, and such questions of law as
we have deemed necessary or appropriate for purposes of this opinion. On the
basis of such examination, it is our opinion that:
1. The issuance of the Shares issued to date in connection with the
payment of dividends to the Selling Shareholders with respect to their
respective ownership of the Company's Series D Cumulative Convertible Preferred
Stock (the "Preferred Stock"), as declared by the Company's Board of Directors
on June 29, 1999 (the "Dividend Payment"), was duly and validly authorized;
2. The Shares issued to date in connection with Dividend Payment to the
Selling Shareholders are legally issued, fully paid and non-assessable;
3. The issuance of Shares to be issued upon proper conversion of the
Preferred Stock (and in accordance with the terms of such Preferred Stock) has
been duly and validly authorized; and
4. The Shares underlying the Preferred Stock, when issued and delivered in
accordance with the terms of such Preferred Stock, will be legally issued, fully
paid and non-assessable.
We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement and to the reference to this firm under the heading
"Legal Matters" in the Registration Statement.
Very truly yours,
/s/BUCHANAN INGERSOLL PROFESSIONAL CORPORATION
/s/ William J. Thomas
---------------------------
By: William J. Thomas, Esq.
a member of the firm
<PAGE>
EXHIBIT 23.1
ACCOUNTANTS' CONSENT
The Board of Directors
CollaGenex Pharmaceuticals, Inc.:
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG LLP
------------
KPMG LLP
Princeton, New Jersey
October 7, 1999
