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As filed with the Securities and Exchange Commission on March 19, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
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CARDIMA, INC.
(Exact name of Registrant as specified in its charter)
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<S> <C>
Delaware 94-3177883
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
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47266 BENICIA STREET
FREMONT, CA 94538
(510) 354-0300
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
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Phillip C. Radlick, Ph.D.
President and Chief Executive Officer
CARDIMA, INC.
47266 Benicia Street
Fremont, CA 94538
(510) 354-0300
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies to:
Issac J. Vaughn, Esq.
Sanjiv S. Dhawan Esq.
Jason Altieri, Esq.
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, CA 94304
(415) 493-9300
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are to be 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. [_]
CALCULATION OF REGISTRATION FEE
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Proposed Maximum
Maximum Proposed Aggregate Amount of
Title of Shares to be Amount to be Offering Price Offering Registration
Registered Registered Per Share(1) Price(1) Fee
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<S> <C> <C> <C> <C>
Common Stock $0.001 par 8,604,806
value per share........ shares $2.27 $19,532,910 $5,430
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(1) Estimated solely for the purpose of computing the amount of the
registration fee based on the average of the high and low prices of the
Common Stock as reported on the Nasdaq National Market on March 17, 1999
pursuant to Rule 457(c).
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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 THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
<PAGE>
THE INFORMATION CONTAINED IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND
MAY BE CHANGED. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE
SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS PRELIMINARY PROSPECTUS IS NOT AN OFFER TO
SELL OR THE SOLICITATION OF AN OFFER TO BUY AND THERE WILL BE NO SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
SUBJECT TO COMPLETION, dated March 19, 1999
CARDIMA, INC.
8,604,806 SHARES
COMMON STOCK
This prospectus relates to 8,604,806 shares of Cardima, Inc. common stock,
$0.001 par value, which may be offered for sale by certain of our stockholders
(the "Selling Stockholders") and will not be underwritten. Of the shares being
registered under this prospectus for the Selling Stockholders, we issued (1) a
total of 7,500,000 shares (the "Shares") to several private investors in a
series of two private placement transactions, one on January 21, 1999 and the
other on February 5, 1999 (the "Private Placement"), (2) a maximum of 750,000
Shares (the "Warrant Shares") issuable upon the exercise of certain warrants
issued to Sunrise Securities, Inc. in connection with the Private Placement,
and (3) 354,806 shares issued to Sunrise Securities, Inc. in lieu of
commissions payable in connection with the Private Placement (the "Commission
Shares" collectively with the Shares and the Warrant Shares, the "Securities").
We issued all of the Securities pursuant to an exemption from the registration
requirements of the Securities Act of 1933, as amended (the "Securities Act").
All of the Securities were restricted securities until we registered them under
this prospectus.
The Selling Stockholders may sell the Shares from time to time on the over-
the-counter market in regular brokerage transactions, in transactions directly
with market makers or in certain privately negotiated transactions. We will not
receive any proceeds from the sale of the Securities by the Selling
Stockholders. We have agreed to indemnify the Selling Stockholders against
certain liabilities, including liabilities under the Securities Act. We will
pay the costs relating to registration of the Shares. See "Plan of
Distribution."
We have prepared this prospectus so that future sales of common stock by the
Selling Stockholders will not be restricted under the Securities Act. The
Selling Stockholders and any broker-dealers, agents or underwriters that
participate with the Selling Stockholders in the distribution of the Securities
may be deemed to be an "Underwriter" within the meaning of Section 2(11) of the
Securities Act. Any commissions received by them and any profit on the resale
of the Securities purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. See "Plan of Distribution".
Our common stock is quoted on the Nasdaq National Market (the "Nasdaq")
under the symbol "CRDM". On March 17, 1999, the last sale price of our common
stock on the Nasdaq was $2.31 per share.
THE SECURITIES OFFERED IN THIS PROSPECTUS INVOLVE A HIGH DEGREE OF RISK. SEE
"RISK FACTORS" BEGINNING ON PAGE 7 OF THIS PROSPECTUS FOR INFORMATION THAT YOU
SHOULD CONSIDER BEFORE PURCHASING THESE SECURITIES.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is March , 1999
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TABLE OF CONTENTS
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Where You Can Find More Information........................................ 3
Information Incorporated by Reference...................................... 3
The Company................................................................ 5
Risk Factors............................................................... 7
Indemnification of Officers and Directors.................................. 20
Issuance of Common Stock to Selling Stockholders........................... 20
Use of Proceeds............................................................ 20
Selling Stockholders....................................................... 21
Plan of Distribution....................................................... 23
Legal Matters.............................................................. 24
Experts.................................................................... 24
Additional Information..................................................... 24
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NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE SELLING STOCKHOLDERS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER
TO BUY ANY SECURITY OTHER THAN THE SHARES OF COMMON STOCK COVERED BY THIS
PROSPECTUS. THIS PROSPECTUS ALSO DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SHARES OFFERED HEREBY TO ANY PERSON
IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and in accordance with the
Exchange Act, file reports, proxy statements, and other information with the
Securities and Exchange Commission (the "Commission"). This filed material can
be inspected and copied at regional offices of the Commission located at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-
2511 and 7 World Trade Center, Suite 1300, New York, New York 10048; and at the
Public Reference Office of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of such material can be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates. The Commission also maintains a World Wide Web site
on the Internet at http://www.sec.gov that contains our reports, proxy and
information statements and other information about us and other companies that
file electronically with the Commission.
INFORMATION INCORPORATED BY REFERENCE
The Commission allows us to "incorporate by reference" the information we
file with them, which means that we can disclose important information to you
by referring you to those documents. The information incorporated by reference
is considered to be part of this prospectus, and later information filed with
the Commission will update and supersede that information. We incorporate by
reference the documents listed below and any future filings made with the SEC
under Section 13a, 13(c), 14, or 15(d) of the Securities Exchange Act of 1934
until our offering is completed.
1. Our Annual Report on Form 10-K for the year ended December 31, 1998.
2. Our Quarterly Report on Form 10-Q for the quarter ended March 31, 1998,
as amended.
3. Our Quarterly Report on Form 10-Q for the quarter ended June 30, 1998,
as amended.
4. Our Quarterly Report on Form 10-Q for the quarter ended September 30,
1998.
5. The description of our Common Stock set forth in our Registration
Statement on Form 8-A filed with the Commission on April 23, 1997,
including any amendment thereto or report filed for the purpose of
updating such description.
6. Our Current Report on Form 8-K filed December 24, 1998.
7. Our Current Report on Form 8-K filed February 2, 1999.
8. Our Current Report on Form 8-K filed February 11, 1999.
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You can request a copy of any or all of the documents incorporated by
reference, other than exhibits to the documents, by writing or telephoning us
at the following address: Cardima, Inc., 47266 Benicia Street, Fremont,
California 94538, telephone: (510)354-0300, attention Ronald E. Bourquin, Chief
Financial Officer.
The "Cardima" logo (used above and with our name) "Revelation," "Revelation
Tx," "Pathfinder," "Pathfinder mini," "Tracer," "Therastream," "Vueport"
"Venaport," "Naviport," "EP Select," and "Tx Select" are trademarks of Cardima,
Inc.. All other tradenames and trademarks appearing in this Prospectus are the
property of their respective holders.
Cardima, Inc. was incorporated in the State of Delaware in November 1992.
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SPECIAL NOTE: THE FOLLOWING DISCUSSION CONTAINS CERTAIN FORWARD-LOOKING
STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. ACTUAL RESULTS OR EVENTS MAY
DIFFER MATERIALLY FROM THOSE PROJECTED IN SUCH FORWARD-LOOKING STATEMENTS.
POTENTIAL RISKS AND UNCERTAINTIES INCLUDE THOSE FACTORS BELOW UNDER THE HEADING
"RISK FACTORS."
THE COMPANY
Since our inception, we have focused on the design, development, manufacture
and commercialization of our patented microcatheter based systems for the
diagnosis and treatment of cardiac arrhythmias.
In general, two types of arrhythmia's exist, namely bradycardias or slow
heartbeats and tachycardias, or very fast heartbeats. Bradycardia is usually
treated by implanting a pacemaker which stimulates the heart to beat more
rapidly and sustain life. Tachycardia's are more complex with treatment
requiring precise diagnostic location and subsequent destruction of the cells
producing the arrhythmia.
Tachycardia breaks down into many categories, with the most significant
being Atrial Fibrillation ("AF") and Ventricular Tachycardia ("VT"). We develop
microcatheter systems to treat these two diseases.
Our microcatheter systems are being designed to perform the dual function of
mapping (finding the site) and ablating (treating the site). This dual
functionality is being developed to address the difficulty in placing a
diagnostic catheter to map the arrhythmia, removing that catheter and placing
an ablation catheter to again find the area just mapped and then treating the
site. In addition to adding time and complexity to the procedure, having to use
two catheters increases the cost of the procedure.
Microcatheters are about one-third to one-fourth the size of the existing
technology catheters. This smaller size allows our microcatheters to access
sites within the wall of the heart using the venous system. The variable
stiffness characteristic makes accessing the veins easier for VT diagnosis and
treatment and allows them to conform to the surfaces of the heart's atrial wall
for diagnosing and treating AF.
We have also strategically focused on the development of disposable, single
use products that avoid the use of new, expensive capital equipment systems for
treatment of arrhythmias. The Cardima microcatheters are designed to adapt to
and be used with virtually any electrophysiology system and most radio
frequency generators available today.
During the period from 1993 to 1997, we developed our first products, the
Cardima Pathfinder microcatheter system, for diagnosing VT, and the Revelation
microcatheter system, for diagnosing AF. Additionally, we developed ancillary
products including guiding catheters and necessary cabling to link our products
to pre-existing electrophysiology lab equipment. We received ISO 9001 approval
for our facility and quality systems and we received CE Mark approval and
Japanese MHW approval for these first products. These approvals allow us to
sell diagnostic products in the European Union, Japan and the United States.
Our AF products.
AF is a chaotic spasming of the upper chambers (atria) of the heart that
leads to poor blood flow into the lower chambers. This poor blood flow allows
some blood to pool in the atria, which can lead to clots in the heart. These
clots are dangerous in that the clots may break loose, travel to the brain and
cause a stroke.
We developed the Revelation microcatheter to both map and ablate AF within
the chambers of the atria. The Revelation has a linear array of flexible coiled
electrodes to conform to the irregular atrial surface and create a long, thin,
linear, transmural scar to control AF. The physician can rapidly locate the
source of the AF and then, with the same microcatheter, treat the area with
radio frequency energy. For mapping, the Revelation
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microcatheter received 510(k) clearance from the United States Food and Drug
Administration ("FDA") in November 1997. For treatment, the Revelation received
a CE Mark in August of 1998, becoming the first approved microcatheter for the
treatment of AF in the European Union ("EU").
We have also developed the Revelation Tx, a modified version of the
Revelation that has temperature sensors positioned between the electrodes on
the microcatheter. The temperature sensors provide physicians with the ability
to monitor tissue temperature during the ablation process. This additional
information may increase the safety and facility of the ablation procedure. An
Investigatonal Device Exemption ("IDE") has been approved by the FDA and a
feasibility clinical trial to treat AF is presently underway in the United
States. In December 1998, CE Mark was granted to Cardima to market the
Revelation Tx in Europe for use in the treatment of AF.
Our VT products.
The key to treating VT is accessing the location of the arrhythmia causing
foci and destroying them. The VT typically results from a myocardial
infarction, or heart attack, caused by clogged coronary arteries. The
myocardial infarction kills some of the cells in the ventricular wall leading
to an improper beat emanating from the ventricles instead of the normal
conduction path from the upper chambers to the lower chambers. The muscle cells
in the walls of the ventricle that border the resultant dead muscle tissue and
live tissue sometimes cause an aberrant beat to originate from the ventricles.
This aberrant beat disrupts the rhythmic pumping of the heart and can quickly
result in very serious problems such as insufficient blood flow to the brain
leading to dizziness, fainting and death. Cardima's Pathfinder microcatheters
access the VT location using the blood vessels of the heart's wall to locate
the arrhythmia.
The Pathfinder series of microcatheters map VT by navigating veins of the
heart's wall and providing important information to the physicians concerning
the location of arrhythmia causing tissue in a faster, better and safer manner.
The Cardima Pathfinder has been used in thousands of mapping procedures and is
approved in the major markets of Europe and Japan for mapping VT. The
Therastream microcatheter product is able to both map and ablate VT. In
December 1998, we filed an IDE to begin a feasibility clinical trial of
Therastream in the United States.
Our Strategy
Our strategy is to successfully diagnose and ultimately cure patients with
AF and VT using our microcatheter systems. This strategy is being accomplished
by (i) developing state-of-the-art microcatheter systems, using unique
proprietary technology to provide disposable dual purpose microcatheters with
flexible coiled electrodes designed to interface with existing EP lab equipment
systems, (ii) proving the clinical utility of these products for the treatment
of AF and VT and, (iii) marketing these products throughout the world.
Our Operations
Our principal executive offices are located at 47266 Benicia Street,
Fremont, California 94538-7330 and our telephone number is 510/354-0300. As of
January 31, 1999, we had 76 full-time employees. Our operations are carried out
in a 44,000 square foot facility containing clean room production, research and
development, and administrative offices.
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RISK FACTORS
Investing in this company entails substantial risk. You should purchase
shares only if you can afford a complete loss. You should carefully consider
the following risk factors and other information contained in this prospectus
before deciding to invest in shares of our common stock.
This prospectus and the documents referred to in this prospectus contain
forwarding-looking statements that are based on current expectations and are
subject to substantial risks and uncertainties. You can identify these forward-
looking statements by words such as "anticipates," "expects," "intends,"
"plans" "believes," "seeks," "estimates" and similar words. You should read
statements that contain these words carefully because they: (1) discuss our
future expectations; (2) contain projections of our future results of
operations or financial condition; or (3) state other "forward-looking"
information. These statements are not guarantees of future performance. There
may be events in the future that we are not able to predict accurately or over
which we have no control. The risk factors listed in this section, as well as
any cautionary language in this prospectus, provide examples of risks,
uncertainties and events that may cause our actual results to differ materially
from the expectations we describe and may cause our stock price to fall.
You should carefully consider the risks of your investment in the "risk
factors" section below, as well as other information contained in this
prospectus, information incorporated by reference, and information which we
file with the securities and exchange commission from time to time. The
information in this prospectus is complete and accurate as of this date, but
the information may change after the date on this prospectus.
We have a history of losses. Our ability to achieve or, if achieved, sustain
profitability, is highly uncertain.
We have experienced losses since we began our operations and we expect to
experience substantial net losses for the foreseeable future. To date, sales of
our microcatheter systems have been limited. We had net losses of approximately
$16.2 million, $12.3 million and $7.8 million for the fiscal years ended 1998,
1997 and 1996, respectively. As of December 31, 1998, we had an accumulated
deficit of approximately $46.6 million. We expect to incur substantial net
operating losses for the foreseeable future as a result of research and product
development, clinical trials, manufacturing, sales, marketing and other
expenses expected to be incurred as we further develop, seek regulatory
approvals, test and distribute our products. Our limited operating history
makes accurate prediction of future operating results difficult or impossible.
There can be no assurance that we will ever generate substantial revenue or
achieve profitability on a sustained basis. Our failure to generate substantial
revenues would have a material adverse effect on our business, results of
operations and financial condition.
We will need to raise capital in the future. Future financings could have a
dilutive effect on our stockholders.
Our future capital uses and requirements will depend on numerous factors,
including:
. the progress of our clinical research and product development programs,
. the time required to obtain and the receipt of regulatory clearances and
approvals,
. the costs and timing of product development, manufacturing and sales and
marketing activities,
. the extent to which our products gain market acceptance,
. our ability to establish collaborative arrangements,
. the level of product revenues,
. the possible acquisition of new products and technologies,
. the development of commercialization activities,
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. competitive developments, and
. the cost of filing, prosecuting, and enforcing patent claims and other
intellectual property rights.
In order to commercialize our products, we will require additional capital
that may not be available on terms acceptable to us, or at all. In addition, if
unforeseen difficulties arise in the course of developing our products,
performing clinical trials, obtaining necessary regulatory clearances and
approvals or other aspects of our business, we may be required to spend
greater-than-anticipated funds. As a consequence, we will be required to raise
additional capital through public or private equity or debt financings,
collaborative relationships, bank facilities or other arrangements. There can
be no assurance that such additional capital will be available on terms
acceptable to us, or at all. Any additional equity financing is expected to be
dilutive to stockholders, and debt financing, if available, may involve
restrictive covenants. We have financed our operations to date primarily
through private sales of equity securities, proceeds from our initial public
offering in June 1997, and loan-facilities. As of February 28, 1999, cash, cash
equivalents, short-term investments and long-term restricted cash totaled $12.0
million. We believe that our existing cash, cash equivalents and short-term
investments along with cash generated from the sales of our products and from
financings, will be sufficient to fund our operating expenses, debt obligations
and capital requirements through December 31, 1999.
There can be no assurance that additional funding will be available for us
to finance our ongoing operations when needed or that adequate funds for our
operations, whether from financial markets, collaborative or other arrangements
with corporate partners or from other sources, will be available when needed,
if at all, or on terms attractive to us. Our inability to obtain sufficient
funds may require us to delay, scale back or eliminate some or all of our
research and product development programs, to limit the marketing of our
products, or to license to third parties the rights to commercialize products
or technologies that we would otherwise seek to develop and market ourselves.
This would have a material adverse effect on our business, financial condition
and results of operations.
Clinical trials are inherently unpredictable, and we have limited experience in
conducting preclinical and clinical trials.
There can be no assurance that we will be able to commence any future
clinical trials or successfully complete them once started. In addition, there
can be no assurance that we will meet our development schedule for any of our
products in development. If we are unable to commence clinical trials as
planned, complete the clinical trials or demonstrate the safety and
effectiveness of our products, our business, financial condition and results of
operations would be materially and adversely affected. Even if a product from
our research and development programs or any other therapeutic product is
successfully developed according to our plans, there can be no assurance it
will be approved by the FDA on a timely basis or at all.
In addition, we will, in a number of cases, rely on our contractual rights
to access data collected by others in phases of our clinical trials. We are
therefore dependent on the continued performance by such parties of their
contractual obligations to provide such access and cooperate with us in
completing successful filings with the FDA. There can be no assurance that the
FDA will permit our reliance on these parties. If we are unable to rely on
clinical data collected by others, we may be required to repeat clinical
trials, which could significantly delay commercialization of our products, and
require us to spend more money on our clinical trials.
Before obtaining regulatory approvals for the commercial sale of any of our
products under development, we must demonstrate through preclinical studies and
clinical trials that the product is safe and effective for the use for which we
are seeking approval. The results from preclinical studies and early clinical
trials may not allow us to predict results that will be obtained in later-stage
testing. There can be no assurance that our future clinical trials will
demonstrate the safety and effectiveness of any of our products or will result
in approval to market products. A number of companies in the biotechnology
industry have suffered significant setbacks in advanced clinical trials, even
after promising results from earlier trials.
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The rate at which we complete our clinical trials is dependent upon, among
other factors, the rate of patient enrollment. Patient enrollment depends on
many factors, including the size of the patient population, the nature of the
procedure, how close the patients resides to clinical sites and the eligibility
criteria for the study. Delays in planned patient enrollment may result in
increased costs and delays, which could have a material adverse effect on our
business.
Our stock price may be volatile.
Prior to June 1997, there was no public market for our common stock. There
can be no assurance that there will be an active trading market for our common
stock or that the market price of the common stock will not decline below its
present market price. The market prices for securities of biotechnology
companies have been, and are likely to continue to be, highly volatile. Factors
that have had, and are expected to continue to have, a significant impact on
the market price of our common stock include:
. announcements regarding the results of regulatory approval filings,
. our clinical studies or other testing,
. our technological innovations or new commercial products or those of our
competitors,
. government regulations, developments concerning proprietary rights,
. public concern as to safety of technology, and
. variations in operating results.
We do not intend to pay cash dividends on our stock.
We have never paid cash dividends on our capital stock and do not anticipate
paying cash dividends in the foreseeable future. Instead, we intend to retain
future earnings for reinvestment in our business. Our credit agreement requires
the approval of our bank to declare or pay cash dividends.
We cannot assure the safety or effectiveness of our products. We are in an
early stage of our product development.
To date, we have completed two clinical trials and have received 510(k) pre-
market clearances from the FDA with respect to our Cardima Pathfinder and
Pathfinder mini microcatheter systems for venous mapping of VT, and our
Revelation microcatheter system for mapping and pacing of the atria. We also
received FDA 510(k) clearance for the Vueport guiding catheter in July 1998. We
are seeking FDA 510(k) clearance for our Tracer mapping catheter and our
Naviport deflectable tip guiding catheter. Our inability to timely obtain
clearances for our other diagnostic products and guiding catheters under
development would have a material adverse effect on our business, financial
condition and results of operations.
We are in the early stage of developing, testing and obtaining regulatory
approval for our microcatheter systems designed for ablation of AF and VT. We
are currently developing the Revelation Tx microcatheter system for ablation of
AF and the Therastream microcatheter system for ablation of VT. We are required
to obtain an IDE from the FDA prior to conducting human clinical trials of our
microcatheter systems for ablation. We completed the mapping phase of this
feasibility study in August 1997 and the AF ablation feasibility study in
December 1998. We received approval of an IDE supplement on December 1998
allowing us to expand the AF study. We filed an IDE to begin clinical testing
of our Therastream microcatheter system for VT ablation in December 1998. We
must complete these clinical trials and a pivotal trial for both AF and VT
indications, if initiated, in order to gather data for the submission of a pre-
market approval ("PMA") application to the FDA for our ablation products. We
must receive PMA approval prior to marketing such
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products for ablation in the United States. Clinical trials of our
microcatheter systems will require substantial financial and management
resources and the completion of such trials will take several years. There can
be no assurance that:
. necessary IDEs will be granted by the FDA,
. human clinical trials, if initiated, will be completed,
. human clinical studies will validate the results of our pre-clinical
studies, or
. human clinical trials will demonstrate that our products are safe and
effective.
In addition, the clinical trials may identify significant technical or other
obstacles to be overcome prior to obtaining necessary regulatory approvals or
market acceptance. Our failure to initiate and complete clinical trials,
demonstrate product safety and clinical effectiveness, and obtain regulatory
approval for the use of our microcatheter systems for the ablation of AF or VT
would have a material adverse effect on our business, financial condition and
results of operations.
The acceptance of our products and procedures is uncertain.
Our microcatheter systems represent a novel approach to the mapping and
ablation of AF and VT. Acceptance of our products and procedures by physicians,
patients and health care payors will be necessary in order for us to be
successful. Our microcatheter systems for the mapping and ablation of AF and VT
are new technologies that must compete with more established treatments such
as:
. drugs,
. external electrical cardioversion and defibrillation,
. implantable defibrillators,
. purposeful destruction of the Atrio-Ventricular ("AV") node followed by
implantation of a pacemaker, and
. open heart surgery.
It is likely that physicians will not recommend the use of our microcatheter
systems unless they conclude, based on clinical data and other factors, that
these systems provide a safe, effective and cost-efficient alternative to
established or emerging approaches to the mapping and ablation of AF or VT.
Although we have received regulatory clearance to market the Cardima Pathfinder
and Pathfinder mini microcatheter systems for mapping VT and the Revelation
microcatheter system for mapping AF, none of the products currently being
developed by us for ablation of AF and VT has received regulatory approval in
the United States. Even if our ablation products are successfully developed and
the required regulatory approvals are obtained, there can be no assurance that
such products and the associated procedures will ultimately gain any
significant degree of market acceptance. Since our sole product focus is to
design and market microcatheter systems to map and ablate AF and VT, the
failure to successfully commercialize these systems would have a material
adverse affect on our business, financial condition and results of operations.
There are risks regarding our products and procedures designed for mapping and
ablation of AF.
We have developed our Revelation and Revelation Tx microcatheter systems for
the mapping and ablation of AF. We believe that mapping prior to ablation may
be useful in identifying different segments of the AF population, each of which
could require slightly different mapping and ablation procedures. For example,
some electrophysiologists believe most AF patients will need to be mapped and
ablated in both the left and right atria, while others believe only right
atrial intervention is warranted. Market acceptance of this product for mapping
will depend largely on a determination that there is a clinical need for
diagnostic mapping prior to ablation of AF. The Revelation Tx microcatheter is
capable of delivering RF energy in both the right and left atria to produce
lesions. In general, the use of RF energy in the left atrium has the potential
to create blood clots, which could travel through the vasculature to the brain
and may cause a stroke. Because of this risk,
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physicians may not recommend this procedure, in which event the Revelation Tx
would be unlikely to gain market acceptance. Our failure to:
. gain domestic regulatory approval for the Revelation Tx for ablation of
AF,
. demonstrate safety, clinical effectiveness and cost effectiveness,
. gain wide market acceptance, or
. successfully commercialize the Revelation Tx for the mapping and
ablation of AF
would have a material adverse effect on our business, financial condition
and results of operations.
There are risks regarding our products and procedures designed for mapping and
ablation of VT.
Our Cardima Pathfinder, Pathfinder mini, and Tracer microcatheter systems
for VT mapping are designed for use inside the vasculature of the heart wall
and to provide access to the vasculature of the heart through the venous
system. To achieve market acceptance, we will need to demonstrate the safety
and clinical and cost effectiveness of the Cardima Pathfinder, Pathfinder mini,
and Tracer microcatheter systems for VT mapping. There can be no assurance that
we will be able to demonstrate these requirements. In addition,
electrophysiologists will need to be specially trained to perform this
procedure, which may further slow market acceptance. There can be no assurance
that the Cardima Pathfinder, Pathfinder mini, or Tracer microcatheter systems
for VT mapping will ever achieve market acceptance, or, in the case of the
Tracer, be cleared for marketing by the FDA. There also can be no assurance
that these products will be successfully commercialized in the United States or
internationally. Our inability to gain wide market acceptance or successfully
commercialize the Cardima Pathfinder, Pathfiner mini, and Tracer microcatheter
systems for VT mapping would have a material adverse effect on our business,
financial condition and results of operations.
Our Therastream microcatheter system is being developed for ablation of VT
using RF energy. Using RF energy could cause damage to the arteries of the
heart and potentially lead to myocardial infarction and even death. Because of
these risks, physicians may not recommend this procedure, making it unlikely
that Therastream would gain market acceptance. Our failure to gain market
acceptance or successfully commercialize the Therastream would have a material
adverse effect on our business, financial condition and results of operations.
Our operating results may fluctuate from period to period in the future.
We believe that a quarter to quarter or annual comparison of our operating
results is not a good indication of our future performance. It is likely that
at some future time our results will be below market expectations. As a result,
our common stock price will likely fall. Our results of operations have
fluctuated significantly in the past and we expect them to vary significantly
from quarter to quarter or year to year depending upon a number of factors,
including:
. actions relating to regulatory matters,
. progress of pre-clinical and clinical trials,
. the extent to which our products gain market acceptance,
. the scale-up of manufacturing capabilities,
. the expansion of sales and marketing activities,
. competition,
. the timing of new product introductions by us or our competitors,
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. our ability to successfully market our products in the United States and
internationally, and
. general economic conditions and economic conditions specific to the
biotechnology field.
Although all of our microcatheter systems are labeled for single use only,
we are aware that some physicians are reusing these products. Reuse of our
microcatheter systems would reduce revenues from product sales and could have a
material adverse effect on our future performance and periodic operating
results. Due to such fluctuations in operating results, period to period
comparisons of our revenues and operating results are not necessarily
meaningful and should not be relied upon as indicators of likely future
performance or annual operating results.
We must obtain governmental approvals or clearances before we can sell our
products. We must continue to comply with applicable laws and regulations.
Our products are considered to be medical devices and will be subject to
extensive regulation in the United States and internationally. These
regulations are wide ranging and govern, among other things:
. product design and development,
. product testing,
. product labeling,
. product storage,
. premarket clearance and approval,
. advertising and promotion, and
. product sales and distribution.
Before we can market any of our products in the United States or Europe, we
must demonstrate that our products are safe and effective and obtain approval
or clearance from applicable governmental authorities, which cannot be
guaranteed. After approval or clearance, we will continue to be subject to
extensive regulatory requirements. Our failure to comply with applicable
regulatory requirements can result in enforcement actions by the FDA,
including, but not limited to:
. fines,
. injunctions,
. recall or seizure of products,
. withdrawal of marketing approvals or clearances,
. refusal of the FDA to grant clearances or approvals, and
. civil and criminal penalties.
In the United States, we must obtain 510(k) premarket notification clearance
("510(k)") or PMA from the FDA. Currently, the timing to receive 510(k)
clearance is approximately 120 days and PMA approval is 12 months, but timing
can be uncertain and the process may be significantly longer. We cannot
guarantee either the timing or receipt of approval or clearance.
We have received 510(k) premarket notification clearance for each of the
Cardima Pathfinder and Pathfinder mini microcatheter systems for mapping VT and
for the Revelation microcatheter system for mapping AF. We believe that our
other mapping products will be eligible for FDA 510(k) premarket notification.
We have also submitted a 510(k) premarket notification for the Naviport
deflatable tip guiding catheter. These products may require the submission of a
PMA and extensive clinical data may be requested to support either 510(k)
clearance or PMA approval.
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We will be required to seek PMA approval for our ablation products,
including the Revelation Tx and the Therastream microcatheters for ablation.
The process of obtaining PMA approval is much more expensive, lengthy and
uncertain than the 510(k) premarket notification clearance process. In order to
prepare a PMA application, we will be required to complete clinical trials to
demonstrate the safety and effectiveness of these products. We submitted an IDE
for the Revelation microcatheter system for mapping and ablation of AF in
January 1997. We completed a mapping study at Stanford University Hospital and
Massachusetts General Hospital in September 1997. In addition, we received
conditional IDE approval in January 1998 and full approval in March 1998 for a
feasibility clinical study for AF ablation using the Revelation Tx
microcatheter system. We completed a 10 patient AF ablation feasibility study
and submitted to the FDA a supplement to our IDE, requesting expansion of the
study in November 1998. We filed an additional feasibility IDE with the FDA for
the Therastream microcatheter system in December 1998. There can be no
assurance that any clinical study that we propose will be permitted by the FDA,
will be completed or, if completed, will provide data and information that
supports PMA approval. We expect that a PMA application will not be submitted
for at least one year, if at all. No assurance can be given that we will ever
be able to obtain PMA approval for any of our ablation products. Our failure to
complete clinical testing or to obtain timely PMA approval would have a
material adverse effect on our business, financial condition and results of
operations.
Regulatory agencies may limit the indications for which any of our products
are approved or cleared. Further, the FDA may restrict or withdraw approval or
clearance of a product if additional information becomes available to support
such action. Delays in the approval or clearance process, limitation of our
labeling claims or denial of our applications or notifications would cause our
business to be materially and adversely affected.
We are also required to demonstrate and maintain compliance with the Quality
System regulations ("QSR") for all of our products. The FDA enforces the QSR
through periodic inspections, including a preapproval inspection for PMA
products. The QSR relates to product testing and quality assurance, as well as
the maintenance of records and documentation. If we or any third-party
manufacturer of our products do not conform to the QSR and cannot be brought up
to such a standard, we will be required to find alternative manufacturers that
do conform.
Identifying and qualifying alternative manufacturers may be a long and
difficult process. We are also required to provide information to the FDA on
deaths or serious injuries alleged to have been associated with the use of our
medical devices, as well as product malfunctions that could contribute to death
or serious injury.
Sales of medical devices outside the United States are subject to
international regulatory requirements that vary from country to country. The
time required for approval varies from country to country and may be longer or
shorter than the time required in the United States. In order to market any of
our devices in the member countries of the EU, we are required to obtain CE
Mark certification. CE Mark certification is an international symbol of
adherence to quality assurance standards and compliance with the European
Medical Device Directives. We have received CE Mark certification to sell the
Cardima Pathfinder, Pathfinder mini, Revelation, Revelation Tx and Tracer for
mapping in the EU. We also received approval to sell the Cardima Pathfinder,
Pathfinder mini, Revelation, Revelation Tx, and Tracer in Japan and Australia,
and to sell the Cardima Pathfinder, Tracer, Vueport and Naviport in Canada. The
Company also received CE Mark certification in August 1998 and December 1998 to
sell the Revelation and Revelation Tx microcatheters, respectively, for
treatment of AF in the EU. We intend to submit data in support of additional CE
Mark applications. There can be no assurance we will be successful in obtaining
the CE Mark for these products. Failure to receive approval to affix the CE
Mark would prohibit us from selling these products in member countries of the
EU, and would require significant delays in obtaining individual country
approvals. No assurance can be given that such approvals will ever be obtained.
If these approvals are not obtained, our business, financial condition and
results of operations would be materially and adversely affected.
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We are in a highly competitive industry and are subject to risk of
technological change.
The medical device industry is characterized by rapid and significant
technological change. Accordingly, our success will depend on our ability to
respond quickly to medical discoveries and technological changes, including
changes in the capital equipment with which our microcatheter systems are
designed to be compatible. Product development involves a high degree of risk,
and there can be no assurance that our new product development efforts will
result in any commercially successful products. Our failure to respond to and
develop new technologies could have a material adverse effect on our business,
financial condition and results of operations.
In the market for cardiac mapping and ablation devices, we believe that the
primary competitive factors are safety, effectiveness, ease of use and overall
system cost. In addition, the length of time required for products to be
developed and to receive regulatory and, in some cases, reimbursement approval
are important competitive factors. Our microcatheter systems for the mapping
and ablation of AF and VT are new technologies that must compete with existing
treatments such as:
. drugs,
. external electrical cardioversion and defibrillation,
. implantable defibrillators,
. purposeful destruction of the AV node followed by implantation of a
pacemaker, and
. open heart surgery.
Several of our competitors are developing new approaches and products for
the mapping and ablation of AF and VT. These approaches include mapping systems
using contact mapping, single-point spatial mapping and non-contact, multi-site
electrical mapping technologies, and ablation systems using RF, ultrasound,
microwave, laser and cryoablation technologies. Certain companies are also
developing surgical procedures that could potentially be used by physicians to
perform the open heart surgical maze procedure for the treatment of AF in a
minimally invasive manner. If any of these new approaches or products prove to
be safe, effective and cost effective, our products could be rendered
noncompetitive or obsolete, which would have a material adverse effect on our
business, financial condition and results of operations.
Many of our competitors have an established presence in the field of
interventional cardiology and electrophysiology. These competitors include
Boston Scientific, C.R. Bard, Inc., Johnson & Johnson, through its Cordis
division, St. Jude Medical, Inc., through its Daig division, and Medtronic,
Inc. These competitors have substantially greater financial and other resources
than us, including larger research and development staffs and greater
experience and capabilities in conducting research and development activities,
testing products in clinical trials, obtaining regulatory approvals, and
manufacturing, marketing and distributing products. In addition, other
companies are developing proprietary systems for the diagnosis and treatment of
cardiac arrhythmias. These companies include Biosense, Inc. a division of
Johnson and Johnson, Cardiac Pathways, Inc. and Endocardial Solutions, Inc.
Other companies develop, market and sell alternative approaches to the
treatment of AF and VT. These companies include Guidant Corporation, Medtronic,
Inc., and Ventritex, Inc., a subsidiary of St. Jude, Inc., manufacturers of
implantable defibrillators. There can be no assurance that we will succeed in
developing and marketing technologies and products that are more safe,
clinically effective and cost-effective than the more established treatments or
the new approaches and products being developed and marketed by our
competitors. Furthermore, there can be no assurance that we will succeed in
developing new technologies and products that are available prior to our
competitors' products. Our failure to demonstrate the competitive advantages of
our products would have a material adverse effect on the our business,
financial condition and results of operations.
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Patents and proprietary rights are important to our business.
Our success will depend in part on our ability to obtain patent protection
for our products and processes, to preserve our trade secrets, trademarks,
copyrights and to operate without infringing or violating the proprietary
rights of others. Our strategy is to actively pursue patent protection in the
United States and foreign jurisdictions for technology that we believe to be
proprietary and that offers a potential competitive advantage for our products.
The patent positions of medical device companies, including ours, are uncertain
and involve complex and changing legal and factual questions. Patent
application claims either can be denied or significantly reduced before or
after the patent is issued. In addition, the United States patent laws were
recently amended to exempt physicians, other health care professionals and
affiliated entities from infringement liability for medical and surgical
procedures performed on patients. We cannot predict whether this amendment
might have a material adverse effect on our ability to protect our proprietary
methods and procedures.
We rely on certain license agreements for some of our product technology.
This licensed technology includes the technology of Target Therapeutics, Inc.,
a subsidiary of Boston Scientific Corporation, ("Target") that is the basis for
our microcatheter systems for mapping and ablation. Under the Target license
agreement, we have an exclusive license under certain issued United States
patents. The exclusive license from Target covers the diagnosis and treatment
of electrophysiological disorders in areas other than the central nervous
system. The license will terminate upon the expiration or invalidation of all
claims under the underlying patents. In addition, we have obtained a non-
exclusive license to use Target's technology, provided it has made a
substantial improvement of such technology, for the diagnosis or treatment of
diseases of the heart, other than by balloon angioplasty. The license agreement
imposes various commercialization, sublicensing, insurance, royalty, product
liability, indemnification, non-competition and other obligations on us. Our
failure to comply with certain of these requirements could result in a
termination of the license agreement. The license agreement can also be
terminated by either party upon a material breach that remains uncured for
thirty days or if either party ceases to be actively engaged in its present
business for a period of twelve months. The loss of our exclusive rights to the
Target-based microcatheter technology would have a material adverse effect on
our business, financial condition and results of operations.
We have also licensed a proprietary surface coating material used on certain
of our microcatheters. There can be no assurance that these licenses will
continue to be available us or will be available to us on reasonable terms. The
loss of or inability to maintain any of these licenses could result in delays
in commercial shipments until equivalent technology could be developed
internally or identified, licensed and integrated. These delays would have a
material adverse effect on our business, financial condition and results of
operations. Although we have not received any letters from others threatening
to enforce intellectual property rights against us, there can be no assurance
that we will not become subject to patent infringement claims or litigation,
interference proceedings in the USPTO to determine the priority of inventions,
or oppositions to patent grants in foreign countries. An adverse determination
in litigation, interference or opposition proceedings could subject us to
significant liabilities to third parties, require us to cease using such
technology, or require us to license disputed rights from third parties. There
can be no assurance that such licenses will be available, or if available, will
be on commercially reasonable terms. Under our license with Target, we are not
indemnified against claims brought by third parties alleging infringement of
patent rights. Consequently, we could bear the liability resulting from such
claims. There can be no assurance that we will have the financial resources to
protect and defend our intellectual property, as such defense is often costly
and time-consuming. Our failure to protect our patent rights, trade secrets,
know-how or other intellectual property would have a material adverse effect on
our business, financial condition and results of operations.
The validity and breadth of claims in medical technology patents are
complex. The outcome of any legal challenge to our patent claims may be highly
uncertain. There can be no assurance that any issued patent or patents based on
pending patent applications or any future patent application will exclude
competitors or provide competitive advantages to us, that any of our patents or
patents in which we have licensed rights will be held valid if later challenged
or that others will not claim rights in or ownership of the patents and other
proprietary rights held or licensed by us. There can be no assurance that
others have not developed or will not
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develop similar products, duplicate any of our products or design around any
patents issued to or licensed by us or that may be issued in the future to us.
Since patent applications in the United States are maintained in secrecy until
patents issue, we cannot be certain that others were not the first to file
applications for inventions covered by our pending patent applications, nor
can we be certain that we will not infringe any patents that may be issued to
others on such applications. We periodically review the scope of patents of
which we are aware. Although we do not believe that we are infringing patents
known to us, the question of patent infringement involves complex legal and
factual issues and there can be no assurance that any conclusion reached by us
regarding infringement will be consistent with the resolution of any such
issues by a court.
Our policy is to execute confidentiality agreements with our employees and
consultants upon the commencement of an employment or consulting relationship
with us. These agreements generally require that all confidential information
developed or made known to the individual by us during the course of the
individual's relationship with us be kept confidential and not disclosed to
third parties. These agreements also generally provide that inventions
conceived by the individual in the course of rendering services to us shall be
our exclusive property. There can be no assurance that such agreements will
not be breached, that we would have adequate remedies for any breach or that
our trade secrets will not otherwise become known to or be independently
developed by competitors.
There are risks associated with international sales of our products.
A number of risks are inherent in international transactions. International
sales may be limited or disrupted by
. the imposition of government product or currency controls,
. export license requirements,
. economic or political instability,
. domestic or international trade restrictions,
. changes in tariffs,
. exchange rate fluctuation, or
. difficulties in staffing and management.
The financial condition, expertise and performance of our international
distributors and any future international distributors could affect sales of
our products internationally and could have a material adverse effect on our
business, financial condition and results of operations. The regulation of
medical devices in a number of such jurisdictions, particularly in the EU,
continues to develop, and there can be no assurance that new laws or
regulations will not have a material adverse effect on our business, financial
condition and results of operations. Foreign regulatory agencies often
establish product standards different from those in the United States and any
inability to obtain foreign regulatory approvals on a timely basis could have
a material adverse effect on our international business and our financial
condition and results of operations. In addition, the laws of certain foreign
countries do not protect our intellectual property rights to the same extent
as do the laws of the United States. There can be no assurance that we will be
able to successfully manage a remote sales force, comply with such foreign
laws or regulations, or protect our intellectual property. There also can be
no assurance that we will be able to successfully commercialize any of our
current microcatheter products, including the Pathfinder, Pathfinder Mini,
Revelation, Revelation Tx and Tracer microcatheter systems, or any future
products in any foreign market, which could have a material adverse effect on
our business, financial condition and results of operations.
The adoption of the Euro presents uncertainties for our international
business.
In January 1999, the new "Euro" currency was introduced in certain European
countries that are part of the European Monetary Union ("EMU"). Beginning in
2003, all EMU countries are expected to be operating
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with the Euro as their single currency. A significant amount of uncertainty
exists as to the effect the Euro will have on the marketplace generally. In
particular, the participating countries' adoption of a single currency may
likely result in greater price transparency, making the EMU a more competitive
environment for our products. In addition, some of the rules and regulations
relating to the governance of the currency have not yet been defined and
finalized. As a result, companies operating in or conducting business in Europe
will need to ensure that their financial and other software systems are capable
of processing transactions and properly handling the Euro.
We are currently assessing the effect the introduction of the Euro will have
on our internal accounting systems and the potential sales of our products. We
will take appropriate corrective actions based on the results of such
assessment. We have not yet determined the costs related to addressing this
issue. This issue and its related costs could have a material adverse effect on
our business, financial condition and results of operations.
Health care providers may not receive reimbursement for procedures using our
products.
U.S. health care providers, including hospitals and physicians, that
purchase medical devices generally rely on third-party payors, principally
federal Medicare, state Medicaid and private health insurance plans, to
reimburse all or a part of the costs and fees associated with the procedures
performed using these devices. Our success will depend upon, among other
things, the ability of health care providers to obtain satisfactory
reimbursement from third-party payors for medical procedures in which our
microcatheter systems and other products are used. Third-party payors may deny
reimbursement if they determine that (1) a prescribed device has not received
appropriate regulatory clearances or approvals, (2) is not used in accordance
with cost-effective treatment methods as determined by the payor, or (3) is
experimental, unnecessary or inappropriate. If FDA clearance or approval is
received, third-party reimbursement would also depend upon decisions by the
United States Health Care Financing Administration for Medicare, as well as by
individual health maintenance organizations, private insurers and other payors.
Reimbursement systems in international markets vary significantly by country
and by region within some countries, and reimbursement approvals may be
obtained on a country-by-country basis. Many international markets have
government managed health care systems that control reimbursement for new
devices and procedures. In most markets, there are private insurance systems as
well as government managed systems. There can be no assurance that (1)
reimbursement for our products will be available domestically or
internationally, (2) if available, that such reimbursement will be available in
sufficient amounts in the United States or in international markets under
either government or private reimbursement systems, or (3) that physicians will
support and advocate reimbursement for procedures using our products. Failure
by hospitals and other users of our products to obtain reimbursement from
third-party payors or changes in government and private third-party payor
policies toward reimbursement for procedures employing our products would have
a material adverse effect on our business, financial condition and results of
operations. Moreover, we are unable to predict what additional legislation or
regulation, if any, relating to the heath care industry or third-party coverage
and reimbursement may be enacted in the future, or what effect such legislation
or regulation would have on our business.
We have limited experience in manufacturing our products.
We have only limited experience in manufacturing our microcatheter systems
and other products. We currently manufacture our microcatheter systems in
limited quantities for U.S. and international sales and for pre-clinical and
clinical trials. We have no experience manufacturing our products in the
volumes that will be necessary for us to achieve significant commercial sales.
There can be no assurance that reliable, high-volume manufacturing capacity can
be established or maintained at commercially reasonable costs. We believe that
our manufacturing capacity will be sufficient through December 1999. We expect
that, if U.S. sales for the Pathfinder and Revelation microcatheter systems
increase, or if we receive FDA clearance or approvals for other products, we
will need to expend significant capital resources and develop manufacturing
expertise to establish large-scale manufacturing capabilities. Manufacturers
often encounter difficulties in scaling up production of new products,
including problems involving production yields, quality control and assurance,
component supply shortages, shortages of qualified personnel, compliance with
governmental regulations, and
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the need for further governmental approval of new manufacturing processes. In
addition, we believe that substantial cost reductions in our manufacturing
operations will be required for us to successfully commercialize our
microcatheter systems on a profitable basis. Our inability to establish and
maintain large-scale manufacturing capabilities and product cost effectiveness
would have a material adverse effect on our business, financial condition and
results of operations.
Our manufacturing facilities are subject to periodic inspection by
regulatory authorities. Our operations must either undergo QSR compliance
inspections conducted by the FDA or receive an FDA exemption from such
compliance inspections in order for us to be permitted to produce products for
sale in the United States. Our facilities and manufacturing processes are
subject to inspections from time to time by the FDA, State of California and
TUV. We have demonstrated compliance with ISO 9001 (EN 46001) quality
standards, as well as compliance with 93/42/EEC, the Medical Device Directive.
We are in compliance with procedures to produce products for sale in Europe.
Any failure by Cardima to comply with QSR requirements or to maintain our
compliance with ISO 9001 (EN 46001) standards and 93/42/EEC, the Medical Device
Directive, will require us to take corrective actions, such as modification of
our policies and procedures. In addition, we may be required to cease all or
part of our operations for some period of time until we can demonstrate that
appropriate steps have been taken to comply with QSR or ISO 9001 (EN 46001)
standards. There can be no assurance that we will be found in compliance with
QSR by regulatory authorities, or that we will maintain compliance with ISO
9001 (EN 46001) standards in future audits. Our failure to comply with state or
FDA QSR requirements, maintain compliance with ISO 9001 (EN 46001) standards,
or develop our manufacturing capability in compliance with such standards,
would have a material adverse effect on our business, financial condition and
results of operations.
We are dependent on suppliers.
We purchase certain key components of our products, including the laminated
tubing and hydrophilic coating for certain of our microcatheters, from sole,
single or limited source suppliers. For certain of these components, there are
relatively few alternative sources of supply. Establishing additional or
replacement suppliers for any of the numerous components used in our products,
if required, may not be accomplished quickly and could involve significant
additional costs. Any supply interruption from vendors or failure to obtain
alternative vendors for any of the numerous components used to manufacture our
products would limit our ability to manufacture our products. Any such
limitation on our ability to manufacture our products would have a material
adverse effect on our business, financial condition and results of operations.
We have limited sales, marketing and distribution experience.
We have only limited experience marketing and selling our products in
commercial quantities. Expanding our marketing and sales capability to
adequately support sales in commercial quantities will require substantial
effort and require significant management and financial resources. We have
terminated several distribution arrangements in Europe. We are in the process
of hiring, training and establishing a direct sales force in certain major
European markets. Our ability to effectively operate a remote sales force will
require additional resources, time and expense which could have a material
adverse effect on our business, financial condition and results of operations.
The international nature of our business also subjects us and our employees,
representatives, agents and distributors to laws and regulations of the
international jurisdictions in which we operate or in which our products may be
sold. We are in the process of hiring a direct sales force in France and
Germany. We currently have two salesmen in Germany. There can be no assurance
that we will be able to build a European direct sales force. There also can be
no assurance that establishing such a sales force will be cost-effective or
that our European sales efforts will be successful. Sales and marketing of the
Cardima Pathfinder, Pathfinder mini, Revelation, Revelation Tx and Tracer
microcatheter systems is primarily conducted through a number of exclusive
distributors in certain European countries and Japan. We have sold only a
limited number of Pathfinder, Revelation, Revelation, Tx, and Tracer
microcatheter systems through these distributors. Because we do not have
written agreements with certain of our exclusive distributors, the terms of
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such arrangements, such as length of arrangements and minimum purchase
obligations, are uncertain. In addition, the laws in certain international
jurisdictions may make it difficult and costly for us to terminate such
distribution arrangements without specific written termination terms. There can
be no assurance that we will be able to enter into written distribution
agreements with these distributors or that these distributors will be able to
effectively market and sell our products in these markets. There also can be no
assurance that we will be able to enter into additional agreements with desired
distributors on a timely basis or at all, or that such distributors will devote
adequate resources to selling our products. Failure to establish an adequate
sales force or to establish and maintain appropriate distribution relationships
would have a material adverse effect upon our business, financial condition and
results of operations.
We are dependent upon our key personnel and will need to hire additional key
personnel in the future.
Our ability to operate successfully depends in significant part upon the
continued service of certain key scientific, technical, clinical, regulatory
and managerial personnel, and our continuing ability to attract and retain
additional highly qualified personnel in these areas. Competition for such
personnel is intense, especially in the San Francisco Bay Area. There can be no
assurance that we can retain such personnel or that we can attract or retain
other highly qualified scientific, technical, clinical, regulatory and
managerial personnel in the future, including key sales and marketing
personnel.
We are subject to the risk of product liability.
The development, manufacture and sale of our products may expose us to
product liability claims. Although we have not experienced any claims to date,
there can be no assurance that we will not experience losses due to product
liability claims in the future. We currently have general liability insurance
with coverage in the amount of $1.0 million per occurrence, subject to a $2.0
million annual limitation. We have product liability insurance with coverage in
the amount of $5.0 million per occurrence, subject to a $5.0 million annual
limitation. There can be no assurance that such coverage will continue to be
available to us on reasonable terms, if at all. In addition, there can be no
assurance that all of the activities encompassed within our business are or
will be covered under the our policies. Although our microcatheter products are
labeled for single use only, we are aware that some physicians are reusing such
products. Moreover, despite labeling of our microcatheters for diagnostic use
only, we believe that physicians are using such mapping microcatheters for
ablation. Multiple use or "off-label" use of the our microcatheters could
subject us to increased exposure to product liability claims, which could have
a material adverse effect on the our business, financial condition and results
of operations. We may require additional product liability coverage if we
significantly expand commercialization of our products. Such additional
coverage is expensive, difficult to obtain and may not be available in the
future on acceptable terms, if at all. Any claims or series of claims against
us, regardless of their merit or eventual outcome, could have a material
adverse effect on our business, financial condition and results of operations.
Our operations may be impacted by the Year 2000 issue.
Many existing computer programs use only two digits to identify a year in
the date field. These programs were designed and developed without considering
the impact of the upcoming change in the century. If not corrected, many
computer applications could fail or create erroneous results by or at the Year
2000 (the "Year 2000 Issue"). We are in the process of performing an assessment
of the potential impact of the Year 2000 Issue on our operations. We have
evaluated our financial and accounting and inventory tracking systems and
concluded that they are not materially affected by the Year 2000 Issue. The
extent, if any, of the impact of the Year 2000 Issue on the other systems and
equipment is unknown. We have performed a corporate-wide inventory of computer
applications and we have remedied any issues. Our facilities manager has
determined that there is no impact on building security and related equipment.
There can be no assurance that all third parties will address the Year 2000
Issue in a timely fashion, if at all. Any Year 2000 Issue compliance problems
encountered by us, our business partners or our customers could have a material
adverse effect on our business, operating results and financial condition.
19
<PAGE>
We have utilized only internal resources to test and replace software for
Year 2000 modifications. All of the replacement software were upgrades being
purchased for other reasons. Therefore we have not incurred any additional
costs in researching and resolving any Year 2000 issues.
We currently have no contingency plans in place in the event we do not
complete all phases of the Year 2000 program. We plan to evaluate the status of
completion in April 1999 and determine whether such a plan is necessary.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 145 of the Delaware General Corporation Law authorizes a court to
award, or a corporation's Board of Directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933, as amended (the "Securities
Act"). Our Amended and Restated Certificate of Incorporation and Bylaws provide
for indemnification of its directors, officers, employees and other agents to
the maximum extent permitted by law. In addition, we have entered into
Indemnification Agreements with our officers and directors and maintain
director and officer liability insurance. Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to directors,
officers and controlling persons of the Company, we have been advised that in
the opinion of the Commission, such indemnification is against public policy,
as stated by the Commission, and is, therefore, unenforceable.
ISSUANCE OF COMMON STOCK TO SELLING STOCKHOLDERS
On January 21, 1999 and February 5, 1999, we entered into agreements with
certain investors (collectively the "Investors"), to sell an aggregate of
7,500,000 shares of our Common Stock at a price of $2.00 per share, for an
aggregate purchase price of approximately $15,000,000. These shares were issued
to the Investors on those dates. In connection with this transaction, we also
issued to the placement agent in our Private Placement 354,806 shares of our
common stock and warrants to purchase 750,000 shares of our common stock at an
exercise price of $2.20 per share.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the Securities by the
Selling Stockholders in the offering.
20
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth the number of shares owned by each of the
Selling Stockholders. Other than Sunrise Securities, Corp. which served as
placement agent in the Private Placement, none of the Selling Stockholders has
had a material relationship with Cardima within the past three years other than
as a result of the ownership of the shares or other securities of the Cardima.
No estimate can be given as to the amount of shares that will be held by the
Selling Stockholders after completion of this offering because the Selling
Stockholders may offer all or some of the shares and because there currently
are no agreements, arrangements or understandings with respect to the sale of
any of the shares. The shares offered by this prospectus may be offered from
time to time by the Selling Stockholders named below.
<TABLE>
<CAPTION>
Number of
Number of Shares
Shares Percent of Registered
Beneficially Outstanding for Sale
Name of Selling Stockholder Owned (1) Shares Hereby
--------------------------- ------------ ----------- ----------
<S> <C> <C> <C>
Sunrise Securities, Corp................ 1,104,806(2) 6.8% 1,104,806
Ruth Low................................ 50,000 * 50,000
Porter Partners, L.P.................... 150,000 * 150,000
Talkot Crossover Fund................... 200,000 1.2% 200,000
Thomas Hutchinson....................... 12,500 * 12,500
Nicholas DiFalco........................ 12,500 * 12,500
Amy Newmark............................. 100,000 * 100,000
Pequot Healthcare Fund, L.P............. 75,000 * 75,000
Pequot Scout Fund, L.P.................. 425,000 2.6% 425,000
Mark J. Sklar........................... 5,000 * 5,000
Mitchel Sklar........................... 5,000 * 5,000
Louis F. Bantle......................... 25,000 * 25,000
Bernice Brauser......................... 50,000 * 50,000
Leonid Feldman.......................... 5,000 * 5,000
John W. Holley Grantor Trust............ 62,500 * 62,500
John W. Holley, John D. Holley Co-
trustees, Barbara Holley Art VII
Trust.................................. 25,000 * 25,000
Bruce N. Barron......................... 10,000 * 10,000
David Stone............................. 125,000 * 125,000
H. Russell Johnston..................... 50,000 * 50,000
Austost Anstalt Schaan.................. 250,000 1.5% 250,000
Balmore Funds, S.A...................... 250,000 1.5% 250,000
Branscombe Investments Ltd.............. 100,000 * 100,000
Cradock Asset Management, Inc........... 100,000 * 100,000
EDJ Limited............................. 50,000 * 50,000
Michail Shapiro......................... 7,500 * 7,500
Triple Equity Investments, Ltd.......... 75,000 * 75,000
Steve Abramow........................... 15,000 * 15,000
Scott Flamm............................. 5,000 * 7,500
David Kalatsky.......................... 7,500 * 7,500
Aries Domestic Fund, LP................. 210,000 1.3% 210,000
Aries Master Fund....................... 540,000 3.3% 540,000
Emilio Bassini.......................... 50,000 * 50,000
Brown Simpson Strategic Growth Fund,
L.P.................................... 190,000 1.2% 190,000
Brown Simpson Strategic Growth Fund,
Ltd.................................... 310,000 1.9% 310,000
Canadian Imperial Holdings, Inc......... 250,000 1.5% 250,000
Curran Partners, L.P.................... 100,000 * 100,000
Alvin H. Einbender Trust................ 50,000 * 50,000
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
Number of
Number of Shares
Shares Percent of Registered
Beneficially Outstanding for Sale
Name of Selling Stockholder Owned (1) Shares Hereby
--------------------------- ------------ ----------- ----------
<S> <C> <C> <C>
FK Investments, L.P........................ 25,000 * 25,000
Joy Henshel................................ 10,000 * 10,000
Jerry Heymann.............................. 38,000 * 38,000
Malcolm Hoenlein........................... 20,000 * 20,000
Marc L. Hurwitz............................ 50,000 * 50,000
Eli Jacobson............................... 20,000 * 20,000
Jays Twelve, LLC........................... 150,000 * 150,000
Michael G. Jesselson 12/18/80 Trust........ 150,000 * 150,000
Ronald Kaufman............................. 5,000 * 5,000
Neal Kozodoy............................... 10,000 * 10,000
Larry Miller............................... 125,000 * 125,000
Howard P. Milstein......................... 250,000 1.5% 250,000
Ohr Somayach International................. 20,000 * 20,000
Steven M. Oliveira......................... 50,000 * 50,000
Overdrive Capital Corporation.............. 50,000 * 50,000
Pharmaceutical/Medical Technology Fund,
L.P....................................... 213,000 1.3% 213,000
Radix Associates........................... 50,000 * 50,000
Richard Stone.............................. 50,000 * 50,000
Strategic Healthcare Investment Fund Ltd... 37,000 * 37,000
Joseph Telushkin........................... 12,000 * 12,000
Jeffrey Thorp.............................. 21,000 * 21,000
Elliot K. Wolk Family Limited Partnership.. 50,000 * 50,000
Yad Avraham Institute...................... 50,000 * 50,000
Jay Schottenstein.......................... 100,000 * 100,000
Edmund & Gloria Dunn J.T.C................. 50,000 * 50,000
Thomas J. Hudak............................ 50,000 * 50,000
Penn Footwear Co........................... 50,000 * 50,000
State Capital Partners..................... 250,000 1.5% 250,000
Robert L. Swisher, Jr...................... 100,000 * 100,000
Merle Kovtun............................... 12,500 * 12,500
Barbara Wilson Holley and John W. Holley
co-ttees Barbara Wilson Holley Revocable
Trust dtd 7/31/96......................... 12,500 * 12,500
James Stramondo............................ 35,000 * 35,000
Kieran Nicholson........................... 12,500 * 12,500
Target Therapeutics, Inc................... 681,000 4.2% 681,000
HA Ventures................................ 12,500 * 12,500
Morton Seelenfreund........................ 25,000 * 25,000
Mark Halper................................ 25,000 * 25,000
Alan Spiegel IRA Rollover Account.......... 1,000 * 1,000
Michael DiPasquale......................... 5,000 * 5,000
FM Multi-Strategy Investment Fund L.P...... 25,000 * 25,000
I. Michael Goodman......................... 15,000 * 15,000
Gross Foundation........................... 100,000 * 100,000
George Karfunkle........................... 100,000 * 100,000
Jeffrey Leiderman.......................... 13,000 * 13,000
Harold Levine.............................. 12,500 * 12,500
Nathan Low................................. 121,500 * 121,500
First Hand Funds........................... 250,000 1.5% 250,000
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Number of
Number of Shares
Shares Percent of Registered
Beneficially Outstanding for Sale
Name of Selling Stockholder Owned (1) Shares Hereby
--------------------------- ------------ ----------- ----------
<S> <C> <C> <C>
Bret Van Leeuwen............................ 25,000 * 25,000
Stefan Shoup................................ 12,500 * 12,500
--------- ---------
TOTAL:...................................... 8,604,806 8,604,806
</TABLE>
- --------
* Less than 1%
(1) Beneficial ownership is determined in accordance with the rules and
regulations of the Commission and generally includes voting or investment
power with respect to securities. Information with respect to beneficial
ownership is based on information as of March 10, 1999 and assumes that
there is outstanding an aggregate of 16,238,021 shares of Common Stock (not
including treasury shares). No options have been issued to the Selling
Stockholders named in this Prospectus. Except as indicated otherwise in the
footnotes below, and subject to community property laws where applicable,
the Company believes based on information furnished by the Selling
Stockholders that the persons named in the table above have sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by them.
(2) Includes warrants to purchase 750,000 shares of Common Stock which are
currently exercisable or will become exercisable within 60 days of March
10, 1999.
PLAN OF DISTRIBUTION
The Selling Stockholders may sell the Securities in whole or in part, from
time to time on the over-the-counter market at prices and on terms prevailing
at the time of any such sale. Any such sale may be made in broker's
transactions through broker-dealers acting as agents, in transactions directly
with market makers or in privately negotiated transactions where no broker or
other third party (other than the purchaser) is involved. The Selling
Stockholders will pay selling commissions or brokerage fees, if any, with
respect to the sale of the Securities in amounts customary for the type of
transaction effected. The Selling Stockholders will also pay all applicable
transfer taxes and all fees and disbursements of counsel for the Selling
Stockholders incurred in connection with the sale of shares.
The Selling Stockholders have advised us that during such time as the
Selling Stockholders may be engaged in the attempt to sell Shares registered
hereunder, that they will:
(i) not engage in any stabilization activity in connection with any of the
Company's securities;
(ii) cause to be furnished to each person to whom Securities included in
this prospectus may be offered, and to each broker-dealer, if any,
through whom Securities are offered, such copies of this prospectus,
as supplemented or amended, as may be required by such person; and
(iii) not bid for or purchase any of our securities or any rights to
acquire our securities, or attempt to induce any person to purchase
any of our securities or rights to acquire the Company's securities
other than as permitted under the Exchange Act.
The Selling Stockholders, and any other persons who participate in the sale
of the Shares, may be deemed to be "Underwriters" as defined in the Securities
Act. Any commissions paid or any discounts or concessions allowed to any such
persons, and any profits received on resale of the Securities, may be deemed to
be underwriting discounts and commissions under the Securities Act.
With regard to the Securities, we have agreed to maintain the effectiveness
of this Registration Statement until such time as the Selling Stockholders
became eligible to resell the Securities pursuant to Rule 144 of the Securities
Act.
23
<PAGE>
We have agreed to indemnify the Selling Stockholders against certain
liabilities, including liabilities under the Securities Act and the Exchange
Act.
LEGAL MATTERS
Certain legal matters with respect to the legality of the issuance of the
common stock offered hereby will be passed upon for us by Wilson Sonsini
Goodrich & Rosati, Professional Corporation, 650 Page Mill Road, Palo Alto,
California 94304.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our financial
statements included in our Annual Report (Form 10-K) for the year ended
December 31, 1998, as set forth in their report, which is incorporated in this
prospectus by reference. Our financial statements are incorporated herein by
reference in reliance on their report, given on their authority as experts in
accounting and auditing.
ADDITIONAL INFORMATION
This prospectus constitutes a part of a Registration Statement on Form S-3
(referred to, together with all amendments and exhibits, as the "Registration
Statement") filed by the Cardima with the Securities and Exchange Commission
(the "Commission") under the Securities Act. This prospectus does not contain
all of the information set forth in the Registration Statement, certain parts
of which are omitted in accordance with the rules and regulations of the
Commission. For further information with respect to Cardima and the shares of
Common Stock offered hereby, reference is hereby made to the Registration
Statement. Statements contained herein concerning the provisions of any
document are not necessarily complete, and each such statement is qualified in
its entirety by reference to the copy of such document filed with the
Commission.
24
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses payable by Cardima in
connection with the sale and distribution of the common stock being registered.
Selling commissions and brokerage fees and any applicable transfer taxes and
fees and disbursements of counsel for the Selling Stockholders are payable by
the Selling Stockholders. All amounts are estimates except the registration
fee.
<TABLE>
<CAPTION>
Amount
to be
Paid
-------
<S> <C>
Registration Fee....................................................... $ 5,430
Legal Fees and Expenses................................................ $10,000
Accounting Fees and Expenses........................................... $ 8,000
Miscellaneous.......................................................... $ 2,000
-------
Total.................................................................. $25,430
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law authorizes a court to
award, or a corporation's Board of Directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933. Article IX of the
Registrant's Amended and Restated Certificate of Incorporation and Article VII,
Section 6 of the Registrant's Bylaws provide for indemnification of its
directors, officers, employees and other agents to the maximum extent permitted
by law. In addition, the Registrant has entered into Indemnification Agreements
with its officers and directors and maintains director and officer liability
insurance.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------- ----------------------
<C> <S>
Form of Subscription Agreement by and between the Registrant and
10.1* certain investors
10.2* Form of Share Purchase Warrant issued to Sunrise Securities, Inc.
Sales Agency Agreement dated January 21, 1999 by and between the
10.3* Registrant and Sunrise Securities, Inc.
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation
23.1 Consent of Ernst & Young LLP Independent Auditors
23.2 Consent of Counsel (included in Exhibit 5.1)
24.1 Power of Attorney (see page 32)
</TABLE>
- --------
* Previously filed as an exhibit to the Registrant's Report on Form 8-K filed
with the Commission on February 2, 1999.
ITEM 17. UNDERTAKINGS
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
II-1
<PAGE>
not previously disclosed in the Registration Statement or any material
change to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act
of 1934 (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the Registration Statement shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions referred to in Item 15 above 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 of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted against the
Registrant by such director, officer or controlling person in connection with
the securities being registered hereunder, 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 of 1933 and will be governed by the final adjudication of such issue.
II-2
<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 Fremont, State of California, on the 19th day of
March 1999.
CARDIMA, INC.
By: /s/ Phillip C. Radlick
__________________________________
Phillip C. Radlick
President, Chief Executive
Officer and Director
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints,
jointly and severally, Phillip Radlick, Ph.D. and Ronald E. Bourquin, and each
of them acting individually, as his attorney-in-fact, each with full power of
substitution, for him in any and all capacities, to sign any and all amendments
to this Registration Statement (including post-effective amendments), and to
file the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming our signatures as they may be signed by our said attorney to any and
all amendments to said Registration Statement.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Phillip C. Radlick President, Chief Executive March 19th, 1999
____________________________________ Officer and Director
Phillip C. Radlick , Ph.D. (Principal Executive Officer)
/s/ Ronald E. Bourquin Vice President of Finance March 19th, 1999
____________________________________ and Chief Financial Officer
Ronald E. Bourquin (Principal Financial and
Accounting Officer)
/s/ Michael J.F. DuCros Director March 19th, 1999
____________________________________
Michael J.F. DuCros
/s/ Neville J. Jeharajah Director March 19th, 1999
____________________________________
Neville J. Jeharajah
/s/ Gabriel B. Vegh Director March 19th, 1999
____________________________________
Gabriel B. Vegh
/s/ Charles P. Waite, Jr Director March 19th, 1999
____________________________________
Charles P. Waite, Jr
</TABLE>
II-3
<PAGE>
CARDIMA, INC.
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------- ----------------------
<C> <S>
Form of Subscription Agreement by and between the Registrant and certain
10.1* investors
10.2* Form of Share Purchase Warrant issued to Sunrise Securities, Inc.
Sales Agency Agreement dated January 21, 1999 by and between the
10.3* Registrant and Sunrise Securities, Inc.
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2 Consent of Counsel (included in Exhibit 5.1)
24.1 Power of Attorney (see page 32)
</TABLE>
- --------
* Previously filed as an exhibit to the Registrant's Report on Form 8-K filed
with the Commission on February 2, 1999.
<PAGE>
EXHIBIT 5.1
OPINION OF COUNSEL
March 19, 1999
Cardima, Inc.
47266 Benicia Street
Fremont, CA 94538
Re: Cardima, Inc. (the "Company") Registration Statement on Form S-3
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-3 to be filed with the
Securities and Exchange Commission (the "Registration Statement"), in
connection with the registration under the Securities Act of 1933, as amended,
of 8,604,806 shares of the Company's Common Stock. As your counsel, we have
examined the proceedings taken in connection with the sale and issuance of the
above-referenced securities.
It is our opinion that the above-referenced securities, when issued and sold
in the manner referred to in the Registration Statement, will be legally and
validly issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement, and further consent to the use of our name wherever appearing in the
Registration Statement, including the Prospectus constituting a part thereof,
and any amendment thereto.
Very truly yours,
WILSON, SONSINI, GOODRICH & ROSATI
Professional Corporation
/s/ WILSON SONSINI GOODRICH &
ROSATI
<PAGE>
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in this
Registration Statement and related Prospectus of Cardima, Inc. for the
registration of 8,604,806 shares of its common stock and to the incorporation
by reference therein of our report dated February 3, 1999, with respect to the
financial statements of Cardima, Inc. included in its Annual Report (Form 10-K)
for the year ended December 31, 1998, filed with the Securities and Exchange
Commission.
/s/ Ernst & Young LLP
Palo Alto, California
March 19, 1999
