Filed pursuant to Rule
424(b)(2) under the
Securities Act of 1933, as
amended (Registration
Statement No. 333-35634)
PROSPECTUS
131,760 Shares
COLLAGENEX PHARMACEUTICALS, INC.
Common Stock
This prospectus relates to the public resale, from time to time, of an
aggregate of 131,760 shares of our common stock, $.01 par value, by certain
stockholders identified below in the section entitled "The Selling
Shareholders."
We will not receive any of the proceeds from the sale by the selling
shareholders of the shares covered by this prospectus.
Our common stock is traded on the Nasdaq National Market under the symbol
"CGPI." On July 27, 2000, the closing sale price of our common stock on the
Nasdaq National Market was $9.875 per share.
INVESTING IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 3.
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.
August 22, 2000
<PAGE>
PROSPECTUS TABLE OF CONTENTS
Page
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CollaGenex Pharmaceuticals, Inc........................................... 2
Risk Factors.............................................................. 3
If Periostat is Not Adopted Routinely by Dental Professionals or
if Managed Care Providers Do Not Continue to Reimburse
Patients, Our Sales Growth Will Suffer............................. 3
We Rely on Periostat for Most of Our Revenue......................... 3
We Anticipate Future Losses.......................................... 3
We Have a Limited Marketing and Sales History and May Not be
Able to Successfully Market Our Product Candidates................. 4
Our Competitive Position in the Marketplace Depends on Enforcing
and Successfully Defending Our Intellectual Property Rights........ 4
If We Lose Our Sole Supplier of Doxycycline or Our Current
Manufacturer of Periostat, Our Commercialization of Periostat
Will be Interrupted or Less Profitable............................. 5
We Are Subject to Extensive Government Regulations................... 5
If Our Products Cause Injuries, We May Incur Significant Expense
and Liability...................................................... 6
If We Need Additional Financing, and Financing is Unavailable,
Our Ability to Develop and Commercialize Products and Our
Operations Will be Adversely Affected.............................. 6
Delaware Law, Our Certificate of Incorporation and Our By-Laws
Contain Provisions That Could Discourage a Takeover of Our
Company............................................................ 6
Because Our Executive Officers, Directors and Affiliated
Entities Own Approximately 42% of Our Capital Stock, They
Could Control Our Actions in a Manner That Conflicts With Our
Interests and the Interests of Our Other Stockholders.............. 7
Our Stock Price is Highly Volatile, and Therefore the Value of
Your Investment May Fluctuate Significantly........................ 7
Special Note Regarding Forward-Looking Information........................ 7
Use of Proceeds........................................................... 8
Selling Shareholders...................................................... 8
Plan of Distribution...................................................... 11
Legal Matters............................................................. 12
Experts................................................................... 12
Information Incorporated by Reference..................................... 12
Where You Can Find More Information....................................... 13
Indemnification of Directors and Officers................................. 14
<PAGE>
COLLAGENEX PHARMACEUTICALS, INC.
CollaGenex Pharmaceuticals, Inc. and its subsidiaries is a specialty
pharmaceutical company focused on providing innovative medical therapies to the
dental market. In September 1998, the FDA approved our first product, Periostat,
a prescription pharmaceutical capsule to treat adult periodontitis.
Periodontitis, the leading cause of tooth loss, is a disease of the gums that is
initiated by the accumulation of bacterial plaque above and below the gum line.
The FDA approved Periostat as an adjunct to scaling and root planing, which is a
mechanical procedure that dentists use to remove bacterial plaque. We are
marketing Periostat to the dental community through our professional dental
pharmaceutical sales force of approximately 135 sales representatives and
managers. This sales force also co-promotes Vioxx, a prescription non-steroidal
anti-inflammatory drug developed by Merck & Co., Inc., and Denavir, a
prescription cold sore medication developed by SmithKline Beecham Consumer
Healthcare, L.P. We are 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.
In this prospectus, the terms "CollaGenex," "we," "us" and "our" includes
CollaGenex Pharmaceuticals, Inc. and its subsidiaries.
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RISK FACTORS
IF PERIOSTAT IS NOT ADOPTED ROUTINELY BY DENTAL PROFESSIONALS OR IF
MANAGED CARE PROVIDERS DO NOT CONTINUE TO REIMBURSE PATIENTS, OUR SALES GROWTH
WILL SUFFER.
Our growth and success depends in large part on our ability to continue to
demonstrate the safety and effectiveness of Periostat for the treatment of gum
disease to dental practitioners. Periostat is the first long-term medical
therapy for any dental disease, and dentists are not accustomed to prescribing
drugs for a minimum 90-day duration. Periostat works by suppressing certain
enzymes involved in the periodontal disease process, which is a new concept for
many dentists who believe that removing bacterial plaque is the only way to
treat this disease. Accordingly, our sales efforts are largely focused on
educating dental professionals about an entirely new approach to treating
periodontitis. Although nearly 30,000 dentists in the U.S. have written at least
one prescription for Periostat, a number of dentists have not adopted Periostat
routinely into their treatment of adult periodontitis. Other dentists have
prescribed Periostat for only a subset of their eligible patients, typically
their most advanced or refractory cases. If we are unable to initiate and/or
expand usage of Periostat by dentists, our sales growth will suffer.
Approximately 65% of the large managed care providers in the U.S. (defined
as those that cover 100,000 or more lives) reimburse their patients for
Periostat, typically requiring a modest co-payment. Our goal is to achieve
reimbursement from approximately 75% of the large managed care providers, since
the remainder have policies that do not reimburse for drugs to treat dental
conditions. Patients who are not reimbursed by managed care providers may not
accept Periostat as a treatment. In addition, we have not yet achieved
reimbursement from most of the large managed care providers in California, thus
limiting prescription and sales growth in that state.
WE RELY ON PERIOSTAT FOR MOST OF OUR REVENUE.
During 1999, Periostat accounted for 95% of our total net revenues. During
the second quarter of 2000, Periostat accounted for 85% of our total net
revenues. Although we currently derive revenues from co-promoting two other
products and from licensing fees from foreign marketing partners, our revenue
and profitability in the near future will depend on our ability to successfully
market and sell Periostat.
WE ANTICIPATE FUTURE 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. For the
quarter ended March 31, 2000, we experienced a net loss of approximately $2.4
million. During the year ended December 31, 1999, we experienced a net loss of
approximately $14.6 million. From inception through December 31, 1999, we have
experienced an aggregate net loss of $52.5 million. Our historical 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
expect to incur significant future expenses, particularly with respect to the
sales and marketing of Periostat. As a result, we anticipate losses through at
least year-end 2000.
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WE HAVE A LIMITED MARKETING AND SALES HISTORY AND MAY NOT BE ABLE TO
SUCCESSFULLY MARKET OUR PRODUCT CANDIDATES.
We have 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 necessary 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. If we
are unable to continue to recruit and retain sales and marketing personnel, we
will be unable to successfully expand our sales and marketing efforts.
Furthermore, if our foreign partners do not devote sufficient resources to
perform their contractual obligations with us, we may not achieve our foreign
sales goals.
OUR COMPETITIVE POSITION IN THE MARKETPLACE DEPENDS ON ENFORCING AND
SUCCESSFULLY DEFENDING OUR INTELLECTUAL PROPERTY RIGHTS.
In order to be competitive in the pharmaceutical industry, it is important
to establish, enforce, and successfully defend patent and trade secret
protection for our established and new technologies. We must also avoid
liability from infringing the proprietary rights of others.
Our core technology is licensed from The Research Foundation of the State
University of New York ("SUNY"), and other academic and research institutions
collaborating with SUNY (hereinafter referred to collectively as the "SUNY
License"). Under the SUNY License we have an exclusive worldwide license to
SUNY's rights in certain patents and patent applications to make and sell
products employing tetracyclines to treat certain disease conditions. The SUNY
License imposes various payment and reporting obligations on us and our failure
to comply with these requirements permits SUNY to terminate the SUNY License. If
the SUNY License is terminated, we would lose our right to exclude competitors
from commercializing similar products, and we could be excluded from marketing
the same products if SUNY licensed the underlying technology to a competitor
after terminating the SUNY License.
SUNY owns twenty-four U.S. patents and eight U.S. patent applications that
are licensed to us. The patents licensed from SUNY expire between 2004 and 2018.
Two of the patents are related to Periostat and expire in 2004 and 2007.
Technology covered by these patents becomes available to competitors as the
patents expire.
Since many of our patent rights cover new treatments using tetracyclines,
which are generally available for their known use as antibiotics, we may be
required to bring expensive infringement actions to enforce our patents and
protect our technology. Although federal law prohibits making and selling
pharmaceuticals for infringing use, competitors and/or practitioners may provide
generic forms of tetracycline for treatment(s) which infringe our patents,
rather than prescribe our Periostat product. Enforcement of patents can be
expensive and time consuming.
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Our success also depends upon know-how, unpatentable trade secrets, and
the skills, knowledge and experience of our scientific and technical personnel.
To that end, we require all of our employees and, to the extent possible, all
consultants, advisors and research collaborators, to enter into confidentiality
agreements prohibiting unauthorized disclosure and requiring assignment of
rights to their ideas, developments, discoveries and inventions. With respect to
information and chemical compounds we provide for testing to collaborators in
academic institutions, we cannot guarantee that the institutions will not assert
property rights in the results of such tests nor that a license can be
reasonably obtained from such institutions which assert such rights. Failure to
obtain the benefit of such testing could adversely affect our commercial
position and, consequently, our financial condition.
IF WE LOSE OUR SOLE SUPPLIER OF DOXYCYCLINE OR OUR CURRENT MANUFACTURER OF
PERIOSTAT, OUR COMMERCIALIZATION OF PERIOSTAT WILL BE INTERRUPTED OR LESS
PROFITABLE.
We rely on a single supplier 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. If we are unable to procure a commercial quantity of doxycycline from
our current supplier on an ongoing basis at a competitive price, or if we cannot
find a replacement supplier in a timely manner or with favorable pricing terms,
our costs may increase significantly and we may experience delays in the supply
of Periostat.
We rely on a single third-party contract manufacturer to produce
Periostat. We are currently working with another contract manufacturer on a
tablet formulation for Periostat and we intend to contract with additional
manufacturers for the commercial manufacture of Periostat. An inability to
maintain our arrangements with our present manufacturer could result in delays
in the supply of Periostat and we believe that it could take up to one year to
successfully transition to a new manufacturer.
WE ARE SUBJECT TO EXTENSIVE GOVERNMENT REGULATIONS.
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.
Both before and after approval is obtained, violations of regulatory
requirements 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.
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
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<PAGE>
product in those countries. The approval process varies from country to country,
and other countries may also impose post-approval requirements.
IF OUR PRODUCTS CAUSE INJURIES, WE MAY INCUR SIGNIFICANT EXPENSE AND
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 level of insurance may not adequately
protect us against product liability claims. Insufficient insurance coverage or
the failure to obtain indemnification from third parties for their respective
liabilities may expose us to product liability claims and/or recalls and could
cause our business, financial condition and results of operations to decline.
IF WE NEED ADDITIONAL FINANCING, AND FINANCING IS UNAVAILABLE, OUR ABILITY
TO DEVELOP AND COMMERCIALIZE PRODUCTS AND OUR OPERATIONS WILL BE ADVERSELY
AFFECTED.
We have historically financed our operations through public 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 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.
At March 31, 2000 we had cash, cash equivalents and short-term investments of
approximately $12.1 million and we anticipate that our existing working capital
will be sufficient to fund our operations through the year-end 2000.
DELAWARE LAW, OUR CERTIFICATE OF INCORPORATION AND OUR BY-LAWS CONTAIN
PROVISIONS THAT COULD DISCOURAGE A TAKEOVER OF OUR COMPANY.
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.
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BECAUSE OUR EXECUTIVE OFFICERS, DIRECTORS AND AFFILIATED ENTITIES OWN
APPROXIMATELY 42% OF OUR CAPITAL STOCK, THEY COULD CONTROL OUR ACTIONS IN A
MANNER THAT CONFLICTS WITH OUR INTERESTS AND THE INTERESTS OF OUR OTHER
STOCKHOLDERS.
Currently, our executive officers, directors and affiliated entities
together beneficially own approximately 42% 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. This 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.
OUR STOCK PRICE IS HIGHLY VOLATILE, AND THEREFORE THE VALUE OF YOUR
INVESTMENT MAY FLUCTUATE SIGNIFICANTLY.
The market price of our common stock has fluctuated and will continue to
fluctuate as a result of variations in our quarterly operating results. These
fluctuations may be exaggerated if the trading volume of our common stock is
low. In addition, the stock market in general has experienced dramatic price and
volume fluctuations from time to time. These fluctuations may or may not be
based upon any business or operating results. Our common stock may experience
similar or even more dramatic price and volume fluctuations which may continue
indefinitely.
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 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(R), risks inherent in research and development activities, risks
associated with conducting business in a highly regulated environment 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 or Denavir(R) or
Vioxx(R) 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, CollaGenex's actual results may differ
materially from the results discussed in or implied by the forward-looking
statements contained herein.
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USE OF PROCEEDS
CollaGenex 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 and entities listed below received shares of preferred
stock in connection with the execution of a stock purchase agreement with
CollaGenex, 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 dividend payments issued to the selling shareholders are to be registered
with the Securities and Exchange Commission. The registration of shares of
common stock paid as dividends to the selling shareholders for the periods July
1, 1999 through December 31, 1999 and January 1, 2000 through June 30, 2000 is
included herein.
The following table sets forth as of June 30, 2000 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 of
Beneficial Ownership of Shares Beneficial
Name of Selling Shareholders Offered Ownership of 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..... 1,744,555(3) 16.9(3) 116,605 1,627,950 15.8
Richard A. Horstmann...................... 712,165(4) 8.1(4) 6,589 705,576 8.0
Marquette Venture Partners II, L.P........ 986,683(5) 11.2(5) 6,405 980,278 11.1
MVP II Affiliates Fund, L.P. ............. 28,195(5) *(5) 184 28,011 *
Robert J. Easton.......................... 69,009(6) *(6) 1,318 67,691 *
Pebblebrook Partners Ltd.................. 9,857(7) *(7) 659 9,198 *
</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
CollaGenex's Board of Directors in December 1999 and in June 2000 that
were distributed in January 2000 and July 2000, respectively. Applicable
percentage of ownership is based on 8,678,904 shares of common stock
outstanding as of June 30, 2000, plus any common stock equivalents or
convertible securities held, shares beneficially owned by each such holder
and shares of common stock issued by CollaGenex in payment of dividends on
the preferred stock.
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(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) Stephen A. Kaplan, a member of CollaGenex'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 135,464 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.
(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 7,655 shares of common stock issued in
payment of dividends on such preferred stock.
(5) James E. Daverman, a member of CollaGenex'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, 7,441 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, 214 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 CollaGenex's Board of Directors. Includes 17,000
shares of common stock underlying options which are exercisable as of June
30, 2000 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 1,532 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 25,895 shares of
common stock otherwise held by Mr. Easton.
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(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 766
shares of common stock issued in payment of dividends on such preferred
stock.
All offering expenses are being paid by CollaGenex 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.
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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 of
1933, 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.
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The expenses of preparing and filing this prospectus and the related
registration statement with the Securities and Exchange Commission 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 of 1933,
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, 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 CollaGenex by Buchanan Ingersoll Professional Corporation, 650 College
Road East, Princeton, New Jersey 08540.
EXPERTS
The consolidated financial statements and schedule of CollaGenex
Pharmaceuticals, Inc. and subsidiaries as of December 31, 1998 and 1999, and for
each of the years in the three-year period ended December 31, 1999, 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 Securities and Exchange Commission allows CollaGenex to "incorporate
by reference" the information CollaGenex files with the Securities and Exchange
Commission, 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 Securities and Exchange Commission will
automatically update and supersede this information. CollaGenex incorporates by
reference the documents listed below and any future filings made by CollaGenex
with the Securities and Exchange Commission under Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act of 1934, as amended, 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, 1999 filed with the Securities and Exchange Commission on March
29, 2000;
o All other reports filed by CollaGenex pursuant to Section 13(a) or
15(d) of the Exchange Act of 1934, as amended, since December 31,
1999; 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)
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of the Exchange Act of 1934, as amended, in the form declared
effective by the Securities and Exchange Commission on June 20,
1996, 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 Securities and Exchange Commission. CollaGenex's
Securities and Exchange Commission filings are available to the public over the
Internet at the Securities and Exchange Commission's website at
http://www.sec.gov. You may also read and copy, at prescribed rates, any
document CollaGenex files with the Securities and Exchange Commission at the
Securities and Exchange Commission's Public Reference Room at 450 Fifth Street,
N.W., Washington, D.C. 20549 and at the regional offices of the Securities and
Exchange Commission 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 Securities and Exchange Commission at
1-800-SEC-0330 for further information on the Securities and Exchange
Commission's Public Reference Room.
CollaGenex has filed with the Securities and Exchange Commission a
Registration Statement on Form S-3 under the Securities Act of 1933 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 Securities and Exchange Commission. The registration statement and any of
its amendments, including exhibits filed as a
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part of the registration statement or an amendment to the registration
statement, are available for inspection and copying as described above.
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
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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 CollaGenex, 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 CollaGenex, 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 of 1933 may be permitted to directors, officers, and controlling persons of
CollaGenex pursuant to the foregoing provisions, or otherwise, CollaGenex 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 of
1933 and is, therefore, unenforceable.
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