<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 22, 2000
REGISTRATION NO. 333-41782
SECURITIES AND EXCHANGE COMMISSION
AMENDMENT NO. 1 TO THE
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
EPIX MEDICAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 04-3030815
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
71 ROGERS STREET
CAMBRIDGE, MASSACHUSETTS 02142
TELEPHONE: (617) 250-6000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
MICHAEL D. WEBB
CHIEF EXECUTIVE OFFICER
71 ROGERS STREET
CAMBRIDGE, MASSACHUSETTS 02142
(617) 250-6000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE, INCLUDING AREA CODE, OF
AGENT OF SERVICE)
COPY TO:
WILLIAM T. WHELAN, ESQ.
MINTZ, LEVIN, COHN, FERRIS,
GLOVSKY AND POPEO, P.C.
ONE FINANCIAL CENTER
BOSTON, MASSACHUSETTS 02111
TEL: (617) 542-6000
FAX: (617) 542-2241
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 other than securities offered only in connection with dividend or interest
reinvestment plans, please 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
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED SHARE (1) PRICE (1) REGISTRATION FEE
---------- ----- ----- ----------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par
value...................... 3,000,000 $17.25(1) $51,750,000.00 $13,662(2)
--------- --------- -------------- -------
</TABLE>
(1) $17.25 per share which was the average of the high and low prices of
the common stock reported by the NASDAQ National Market on July 14, 2000 is set
forth solely for the purpose of calculating the registration fee in accordance
with Rule 457(c) of the Securities Act of 1933, as amended.
(2) This fee was paid with the initial filing of the Form S-3 filed on
July 19, 2000.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
UNDERWRITERS MAY NOT CONFIRM SALES OF THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION BECOMES
EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS
NOT SOLICITING OFFERS TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE
OFFER OR SALE IS NOT PERMITTED.
PROSPECTUS SUBJECT TO COMPLETION, DATED AUGUST 22, 2000
----------
3,000,000 SHARES
EPIX MEDICAL, INC.
COMMON STOCK
This prospectus will allow us to issue common stock over time. This means:
- We will provide a prospectus supplement each time we issue common stock;
- The prospectus supplement will inform you about the specific terms of
that offering and also may add, update or change information contained
in this document;
- You should read this document and any prospectus supplement carefully
before you invest.
Our common stock is listed on the Nasdaq National Market under the symbol
"EPIX." On August 21, 2000 the last reported sale price of our common stock on
the Nasdaq National Market was $14.50 per share.
-------------------------
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 6.
--------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 2000
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
PROSPECTUS SUMMARY........................................................ 4
THE COMPANY............................................................... 4
THE OFFERING.............................................................. 5
RISK FACTORS.............................................................. 6
FORWARD-LOOKING STATEMENTS................................................ 12
USE OF PROCEEDS........................................................... 13
DIVIDEND POLICY........................................................... 13
DILUTION.................................................................. 14
BUSINESS.................................................................. 15
PLAN OF DISTRIBUTION...................................................... 28
LEGAL MATTERS............................................................. 29
EXPERTS................................................................... 29
WHERE YOU CAN FIND MORE INFORMATION....................................... 29
INCORPORATION OF DOCUMENTS BY REFERENCE................................... 30
</TABLE>
3
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING IS ONLY A SUMMARY. WE URGE YOU TO READ THE ENTIRE
PROSPECTUS, INCLUDING THE MORE DETAILED FINANCIAL STATEMENTS, NOTES TO THE
FINANCIAL STATEMENTS AND OTHER INFORMATION INCORPORATED BY REFERENCE FROM OUR
OTHER FILINGS WITH THE SEC. INVESTING IN OUR COMMON STOCK INVOLVES RISK.
THEREFORE, CAREFULLY CONSIDER THE INFORMATION PROVIDED UNDER THE HEADING
"RISK FACTORS" BEGINNING ON PAGE SIX.
OUR BUSINESS
We are a leading developer of targeted intravascular contrast agents
intended for use with magnetic resonance imaging, known as MRI, for the
diagnosis of human disease. Our principal product under development, MS-325,
is an injectable intravascular contrast agent intended to enhance the quality
of MR images and provide physicians with a superior method for diagnosing
diseases affecting the vasculature. MS-325 is a small molecule, which
produces an MRI signal because of the presence of gadolinium, a highly
magnetically active element favored by clinicians for enhancing MR images.
This molecule is designed with our proprietary technology to bind to albumin,
the most common blood protein. In MS-325 images using standard MRI
techniques, the blood gives off a strong magnetic signal and appears bright
against the dark background of surrounding tissue. Because of its affinity
for albumin, MS-325 remains at high concentrations in the bloodstream
throughout the MRI exam and therefore provides the image acquisition time and
signal strength needed to obtain a high contrast, high resolution image of
the cardiovascular system. Like most currently available non-specific
contrast agents, MS-325 is designed to be excreted safely through the kidneys
over time.
We believe that MS-325 will simplify the diagnostic pathway for a number of
diseases and in many cases replace highly invasive and expensive X-ray
angiography, which is currently considered the definitive diagnostic exam for
assessing cardiovascular disease. We have entered into strategic alliances with
Schering Aktiengesellschaft, Mallinckrodt Inc. and Daiichi Radioisotope
Laboratories, Ltd. for the development, manufacture and commercialization of
MS-325 and other vascular contrast agents. We have also formed collaborations
with the three major MRI scanner manufacturers, General Electric Medical
Systems, Philips Medical Systems and Siemens to develop advanced imaging
techniques designed to facilitate the use of MS-325-enhanced MRI.
In June 1999, we initiated a Phase III clinical trial to determine the
efficacy of MS-325-enhanced MR angiography for the detection of aortoiliac
occlusive disease, a common peripheral vascular disease. The trial is
designed to compare the diagnostic accuracy of MS-325-enhanced MR angiography
with that of X-ray angiography. In June 1998, the Company completed a Phase
II clinical trial to test the safety and preliminary efficacy of MS-325 for
the evaluation of peripheral vascular disease in the carotid, iliac and
femoral arteries. This clinical trial favorably compared MS-325-enhanced MR
angiography to conventional X-ray angiography, the current reference
standard. We are currently conducting Phase II feasibility trials to test the
safety and preliminary efficacy of MS-325 for the evaluation of coronary
artery disease and recently completed enrollment of patients in Phase II
trials for detection of malignant breast lesions as well as female sexual
arousal dysfunction. Through our pre-clinical studies, we also intend to
determine the potential utility of MS-325-enhanced MRI for a wide variety of
applications, including myocardial perfusion imaging, low-field MR imaging,
diagnosis or monitoring of muscular dystrophy, MRI-guided stent placement,
lymphatic imaging, migraine imaging and diagnosis of diabetic angiopathy.
OUR COMPANY
We incorporated in Delaware in 1988 and commenced operations in 1992. Our
principal executive offices are located at 71 Rogers Street, Cambridge,
Massachusetts, 02142-1118 and our telephone number is (617) 250-6000. Our Web
site is located at http://www.epixmed.com. We do not intend for the information
contained in our Web site to be considered a part of this prospectus.
4
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered in this
prospectus........................... 3,000,000 shares
Common Stock outstanding after
the offering......................... 15,999,244(1)
Use of Proceeds...................... For discovery and development programs
and for other general corporate
purposes.
Nasdaq National Market
symbol............................... EPIX
</TABLE>
(1) Based on 12,999,244 shares outstanding as of July 14, 2000.
5
<PAGE>
RISK FACTORS
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF FINANCIAL RISK. IN
DECIDING WHETHER TO INVEST, YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK
FACTORS AS WELL AS OTHER INFORMATION IN THIS PROSPECTUS, INCLUDING INFORMATION
INCORPORATED BY REFERENCE FROM OTHER DOCUMENTS THAT WE FILE WITH THE SEC. IF ANY
OF THESE RISKS ACTUALLY OCCUR, OUR BUSINESS, FINANCIAL CONDITION, OPERATING
RESULTS OR CASH FLOWS COULD BE ADVERSELY AFFECTED. THIS COULD CAUSE THE TRADING
PRICE OF OUR COMMON STOCK TO DECLINE, AND YOU COULD LOSE ALL OR PART OF YOUR
INVESTMENT.
RISKS RELATING TO OUR BUSINESS AND INDUSTRY
WE ARE IN AN EARLY STAGE OF DEVELOPMENT AND HAVE NOT GENERATED REVENUES FROM
COMMERCIAL SALES OF OUR PRODUCTS.
We currently have no products for sale, and we can not guarantee that we
will ever have marketable products. All of our product candidates are in
research or development. To date, we have financed our operations through public
stock offerings, private sales of equity securities, equipment lease financings
and license payments from our strategic partners. To achieve profitable
operations, we, alone or with others, must successfully develop, obtain
regulatory approval for, introduce, market and sell products. We do not expect
to receive revenue from the sale of any of our product candidates for the next
several years. We can not assure you that we will successfully complete our
product development efforts, that we will obtain required regulatory approvals
in a timely manner, if at all, that we will be able to manufacture our product
candidates at an acceptable cost and with acceptable quality or that we can
successfully market any approved products.
WE ANTICIPATE FUTURE LOSSES AND MAY NEVER BECOME PROFITABLE.
Our future financial results are uncertain. We have experienced
significant losses since we commenced operations in 1992. Our accumulated net
losses as of December 31, 1999 were approximately $45.4 million and on March
31, 2000 they were $50.6 million. These losses have resulted primarily from
expenses associated with our research and development activities, including
preclinical and clinical trials, and general and administrative expenses. We
anticipate that our research and development expenses will increase
significantly in the future, and we expect to incur substantial losses over
at least the next several years. We may never generate revenues from the sale
of our products. Moreover, even if we generate product revenues, we may not
be able to achieve or sustain profitability.
OUR FINANCIAL RESULTS FLUCTUATE QUARTERLY, WHICH COULD NEGATIVELY AFFECT OUR
STOCK PRICE.
Our results of operations have varied and will continue to vary significantly
from quarter to quarter and depend on, among other factors:
- the timing of fees and milestone payments that we receive from
strategic partners;
- whether we form new strategic alliances;
- the timing of expenditures in connection with research and development
activities, including clinical trials;
- the timing of product introductions and associated launch, marketing and
sales activities; and
- the timing and extent of product acceptance for different indications and
geographical areas of the world.
Fluctuations in our results of operations may cause us to fail to meet
investor expectations, resulting in a decline in the trading price of our stock
price. As a result, you may lose all or part of your investment.
FOR THE FORSEEABLE FUTURE, WE WILL DEPEND ON OUR ONLY PRODUCT, MS-325, FOR
REVENUES.
MS-325 is currently our only product candidate in human clinical trials and
we can not guarantee that any of our other development projects will yield a
product candidate suitable for entry into clinical trials. As a result, our
initial revenues and profits, if any, will be derived from sales of MS-325. If
MS-325 fails to achieve regulatory approval and market acceptance, our business,
financial condition and results of operations will be materially adversely
effected.
BECAUSE DEVELOPMENT OF OUR TARGETED CONTRAST AGENTS WILL INVOLVE A LENGTHY AND
COMPLEX PROCESS, WE ARE NOT CERTAIN THAT WE WILL BE ABLE TO COMMERCIALIZE ANY OF
OUR PRODUCTS CURRENTLY IN DEVELOPMENT.
Our product candidates are currently in research and development and
will require additional research and development, extensive clinical testing
and regulatory approval prior to any commercial sales. We cannot predict if
or when we will be able to commercialize any of our products under
development. We must complete clinical trials in the United States and
demonstrate the safety and efficacy of MS-325, currently in Phase III
clinical trials, prior to obtaining Food and Drug Administration approval.
Our clinical trials may not be successful and we may not complete them in a
timely manner. We could report serious side effects as the clinical trial
proceeds. Our results from early clinical trials may not predict results that
we will obtain in large scale clinical trials, as a number of companies have
suffered significant setbacks in advanced clinical trials, even after
promising results in earlier trials. We may not conduct additional Phase II
or Phase III clinical trials for
6
<PAGE>
MS-325 and such trials, if begun, may not demonstrate any efficacy or will be
completed successfully in a timely manner, if at all. The rate of completion
of our clinical trials depends upon, among other things, the rate of patient
enrollment. Patient enrollment is a function of many factors, including the
size of the patient population, the nature of the clinical protocol under
which MS-325 will be studied, the proximity of the patient to a clinical site
and the eligibility criteria for the study. Delays in planned patient
enrollment may result in increased costs, regulatory filing delays, or both.
Furthermore, we, the FDA or other regulatory authorities may alter, suspend
or terminate clinical trials at any time. If we do not successfully complete
clinical trials, we will not have a product to market.
IF MRI MANUFACTURERS DO NOT ENHANCE THEIR HARDWARE AND SOFTWARE, WE WILL NOT BE
ABLE TO MARKET OUR CONTRAST AGENTS FOR CARDIAC INDICATIONS.
Existing MRI scanners do not have the capability to perform coronary
angiography without improvements in current MRI hardware and software. The
success of cardiac applications of MS-325 therefore depends on advancements
in MRI hardware and software. Although several leading MRI manufacturers,
academic centers and others are developing advanced hardware and software, we
do not know when, or if, these techniques will enable MS-325 to provide
clinically relevant images in the cardiac indications that we are pursuing.
If MRI manufacturers do not enhance their scanners to perform coronary
angiography, we will not be able to market MS-325 for that application and
the potential market for our products will be substantially reduced.
IF MRI TECHNOLOGY BECOMES OBSOLETE, WE WILL NOT HAVE A MARKET FOR OUR PRODUCT
CANDIDATES.
Several well-established medical imaging modalities compete with MRI,
including X-ray angiography, computer assisted tomography, nuclear medicine
and ultrasound. Other companies are actively developing the capabilities of
the competing modalities to enhance their effectiveness in cardiovascular
system imaging. If developments by others render MS-325 or our future product
candidates obsolete or non-competitive, we will not have a market for our
product candidates.
IF THE MARKET DOES NOT ACCEPT OUR TECHNOLOGY AND PRODUCTS, WE MAY NOT GENERATE
SUFFICIENT REVENUES TO ACHIEVE OR MAINTAIN PROFITABILITY.
The commercial success of MS-325 and our other products, when and if
approved for marketing by the United States Food and Drug Administration, the
FDA, and corresponding foreign agencies, depends on their acceptance by the
medical community and third-party payors as clinically useful, cost-effective
and safe. While contrast agents are currently used in an estimated 35% to 45%
of all MRI exams, there are no FDA-approved targeted vascular agents in use.
Furthermore, clinical use of MRI for vascular imaging has been limited and
use of MRI for cardiac imaging has occurred mainly in research. Market
acceptance, and thus sales of our product candidates, will depend on several
factors, including
- safety;
- price;
- ease of administration;
- effectiveness; and
- the rate of adoption of up-to-date MRI technology.
Market acceptance will also depend on our ability and that of our strategic
partners to educate the medical community and third-party payors about the
benefits of diagnostic imaging with MRI enhanced with our product candidates
compared to imaging with other modalities. Our MRI contrast agents represent
a new approach to imaging the cardiovascular system and market acceptance
both of MRI as an appropriate imaging technique for the cardiovascular system
and of our product candidates is critical to our success. If our products do
not achieve market acceptance, we may not generate sufficient revenues to
achieve or maintain profitability.
OUR COMPETITORS HAVE GREATER FINANCIAL RESOURCES, SUPERIOR PRODUCTS,
MANUFACTURING CAPABILITIES OR MARKETING EXPERTISE, AND WE MAY NOT BE ABLE TO
COMPETE WITH THEM SUCCESSFULLY.
Medical technology is subject to intense competition and rapid
technological change. We have many competitors, including pharmaceutical,
biotechnology and chemical companies, a number of which, including our
strategic partners, are actively developing and marketing products that could
compete with our product candidates. Many of these competitors have
substantially greater capital and other resources than we have and may
represent significant competition for us. These companies may succeed in
developing technologies and products that are more effective or less costly
than any of those that we may developed. In addition, these companies may be
more successful than we are in developing, manufacturing and marketing
products. Our strategic partners or customers may choose to use competing
technologies or products. As a result, we may not be able to compete
successfully in the future.
WE DEPEND ON EXCLUSIVELY LICENSED TECHNOLOGY FROM THE MASSACHUSETTS GENERAL
HOSPITAL AND IF WE LOSE THIS LICENSE, IT IS UNLIKELY WE COULD OBTAIN THIS
TECHNOLOGY ELSEWHERE.
Under the terms of a license agreement that we have with Massachusetts
General Hospital, we are the exclusive licensee to certain technology,
including patents and patent applications, which relate to our product
candidates, including MS-325. The license agreement imposes various
commercialization, sub-licensing, royalty and other obligations on us. If we
fail to comply with these and other requirements our license could convert
from exclusive to non-exclusive or terminate entirely. It is unlikely that we
would be unable to obtain this technology elsewhere. Any such event would
have a material adverse effect on our business, financial condition and
results of operations.
WE DEPEND ON OUR STRATEGIC COLLABORATORS FOR SUPPORT IN PRODUCT DEVELOPMENT AND
THE REGULATORY APPROVAL PROCESS, AND, IF WE EXPERIENCE PROBLEMS WITH OUR
COLLABORATORS, WE MAY NOT GET REGULATORY APPROVAL.
We depend on strategic collaborators for support in product development
and the regulatory approval process as well as a variety of other activities
including manufacturing, marketing and distribution of our products in the
United States and abroad, when and if the FDA and corresponding foreign
agencies approve our product candidates for marketing. To date, we have
entered into several strategic alliances, including a collaboration agreement
with Schering AG, to develop and commercialize MS-325 worldwide, excluding
Japan, and other
7
<PAGE>
MRI vascular agents worldwide, a development and license agreement with
Daiichi for the development and commercialization of MS-325 in Japan and an
agreement with Mallinckrodt, Inc. (a Delaware corporation) and Mallinckrodt,
Inc. (a New York corporation) granting Mallinckrodt rights to enter into an
agreement with Schering AG to manufacture MS-325 for clinical development and
commercial use. We may not receive milestone payments from these alliances
should MS-325 fail to meet certain performance targets in clinical trials.
Further, our receipt of revenues from strategic alliances is affected by the
level of efforts of our collaborators. Our collaborators may not devote the
resources necessary to complete development, and commence marketing, of
MS-325 in their respective territories, or they may not successfully market
MS-325. Schering AG, Mallinckrodt and Daiichi currently manufacture imaging
agents for other modalities that will compete against MS-325. Schering AG
will be responsible for setting the price of the product worldwide, except
Japan, and Daiichi will be responsible for setting the product price in
Japan. However, Schering AG or Daiichi may not set prices in a manner that
maximizes revenues for us. In addition, Daiichi may exercise its right to
terminate our agreement on short notice under certain circumstances. Our
failure to receive milestone payments, a reduction or discontinuance of
efforts by our partners, or the termination of these alliances would have a
material adverse effect on our business, financial condition and results of
operations.
We may not successfully enter into additional strategic alliances for
the development and commercialization of future product candidates. In
addition, any future alliances may not be on terms favorable to us or may not
be successful. If we are unable to enter into future strategic alliances with
capable partners on commercially reasonable terms, we may delay the
development and commercialization of future product candidates and could
possibly postpone them indefinitely.
WE DEPEND ON PATENTS AND OTHER PROPRIETARY RIGHTS, AND IF THEY FAIL TO
PROTECT OUR BUSINESS, WE MAY NOT BE ABLE TO COMPETE EFFECTIVELY.
The protection of our proprietary technologies is material to our
business prospects. We pursue a comprehensive patent program for our product
candidates in the United States and in other countries where we believe that
significant market opportunities exist. We own or have an exclusive license
to patents and patent applications on the critical aspects of our core
technology as well as many specific applications of this technology. However,
the patent positions of pharmaceutical and biopharmaceutical firms, including
us, generally include complex legal and factual questions. The issued patents
that we own or license, or any patents that we obtain in the future, may not
effectively protect our technology or provide a competitive advantage. In
addition, any of our patents, patent applications or licensed patents may be
challenged, invalidated or circumvented in the future.
Many of our competitors actively pursue patent protection for activities
and discoveries similar to our activities and discoveries. These competitors,
many of which have made substantial investments in competing technologies,
could seek to assert that our products or chemical processes infringe on
their existing patents and/or will not seek new patents that claim to cover
aspects of our technology. Furthermore, patent applications in the United
States are maintained in secrecy until patents are issued, and patent
applications in foreign countries are maintained in secrecy for a specified
period after filing. Publication of discoveries in the scientific or patent
literature tends to lag behind actual discoveries and the filing of related
patent applications. In addition, patents issued and patent applications
filed relating to pharmaceuticals are numerous. Therefore, we may not be
aware of all competitive patents, either pending or issued, that relate to
our products or processes used or those products or processes that we propose
to use. If our patents fail to protect our business, we may not be able to
compete effectively.
WE MAY INCUR SUBSTANTIAL COSTS AS A RESULT OF LITIGATION OR OTHER PROCEEDINGS
RELATING TO OUR PATENT AND OTHER INTELLECTUAL PROPERTY RIGHTS.
The pharmaceutical and biotechnology industries are characterized by
extensive litigation regarding patents and other intellectual property
rights. We intend to protect and defend our intellectual property vigorously.
We may need to bring costly and time-consuming litigation to enforce our
issued patents, to protect our trade secrets and know-how, or to determine
the enforceability, scope and validity of the proprietary rights of others.
We may have to participate in interference proceedings declared by the U.S.
Patent and Trademark Office or by foreign agencies to determine the priority
of inventions. Any litigation surrounding these issues could result in
extensive costs to us as well as be a significant distraction for management.
Such costs could have a material adverse effect on our business, financial
condition and results of operations.
We also rely upon trade secrets, technical know-how and continuing
technological innovation to develop and maintain our competitive position. We
typically require our employees, consultants and advisors to execute
confidentiality and assignment of invention agreements in connection with
their employment, consulting or advisory relationships with us. These
agreements could be breached or we may not have adequate remedies for any
breach. Furthermore, our competitors could independently develop
substantially equivalent proprietary information and techniques or otherwise
gain access to our proprietary technology, and we might not be able to
meaningfully protect our rights in unpatented proprietary technology. Several
of our management and scientific personnel were formerly associated with
other pharmaceutical and biotechnology companies and academic institutions.
In some cases, these individuals are conducting research in similar areas
with which they were involved prior to joining us. As a result, we, as well
as these individuals, could be subject to claims of violation of trade
secrets and similar claims.
Our commercial success will also depend on our ability to operate
without infringing upon the patents of others in the United States and
abroad. There are pending or issued patents, held by parties not affiliated
with us, relating to technologies we use in the development or use of certain
of our contrast agents. If any judicial or administrative proceeding upholds
any third-party patents as valid and enforceable, we could be prevented from
practicing the subject matter claimed in such patents, or would be required
to obtain licenses from the owners of each such patent, or to redesign our
products or processes to avoid infringement.
8
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EXTENSIVE GOVERNMENT REGULATION MAY DELAY OR PREVENT US FROM MARKETING
MS-325 OR OTHER PRODUCTS UNDER DEVELOPMENT.
We are subject to extensive U.S. and foreign governmental regulatory
requirements and lengthy approval processes for our product candidates. The
development and commercial use of our product candidates will be regulated by
numerous federal, state, local and foreign governmental authorities in the
U.S., including the FDA and foreign regulatory agencies abroad. The nature of
our research and development and manufacturing processes requires the use of
hazardous substances and testing on certain laboratory animals. Accordingly,
we are subject to extensive federal, state and local laws, rules, regulations
and policies governing the use, generation, manufacture, storage, air
emission, effluent discharge, handling and disposal of certain materials and
wastes, as well as the use of and care for laboratory animals. Although we
believe we are in compliance with all such laws and maintain policies and
procedures to ensure that we remain in compliance, it is possible that
accidents will happen that would expose us to legal risk and/or financial
loss. Furthermore, current laws could change and new laws could be passed
that may force us to change our policies and procedures, an event which could
impose significant costs on us.
The regulatory approval process for new MRI contrast agents, including
required preclinical studies and clinical trials, is lengthy and expensive.
Although some of our employees have experience in obtaining regulatory
approvals, we have only limited experience in filing or pursuing applications
necessary to gain regulatory approvals. Preclinical testing of our product
development candidates is subject to Good Laboratory Practices as prescribed
by the FDA and the manufacture of any products developed by us will be
subject to Good Manufacturing Practices as prescribed by the FDA. We may not
obtain the necessary FDA clearances and subsequent approvals in a timely
manner, if at all. We can not assure you as to the length of the clinical
trial period or the number of patients that will be required to be tested in
the clinical trials in order to establish the safety and efficacy of MS-325
or any of our future product candidates. We may encounter unanticipated
delays or significant costs in our efforts to secure necessary approvals. We
may not obtain regulatory approval, even after the performance of clinical
trials and the passage of time and the expenditure of such resources, for
MS-325 or any other product candidates that we develop. Our analysis of
data obtained from preclinical and clinical activities is subject to
confirmation and interpretation by regulatory authorities, which could delay,
limit or prevent FDA regulatory approval. Future United States legislative or
administrative actions also could prevent or delay regulatory approval of our
product candidates. Even if we obtain regulatory approvals, they may include
significant limitations on the indicated uses for which we may market a
product. A marketed product also is subject to continual FDA and other
regulatory agency review and regulation. Later discovery of previously
unknown problems or failure to comply with the applicable regulatory
requirements may result in restrictions on the marketing of a product or
withdrawal of the product from the market, as well as possible civil or
criminal sanctions. Further, many academic institutions and companies
conducting research and clinical trials in the MRI contrast agent field are
using a variety of approaches and technologies. If researchers obtain any
adverse results in preclinical studies or clinical trials, it could adversely
affect the regulatory environment for MRI contrast agents generally. In
addition, if we obtain marketing approval, the FDA may require post-marketing
testing and surveillance programs to monitor the product's efficacy and side
effects. Results of these post-marketing programs may prevent or limit the
further marketing of the monitored product.
We and our strategic partners are also subject to numerous and varying
foreign regulatory requirements governing the design and conduct of clinical
trials and the manufacturing and marketing of our products. The foreign
regulatory approval process may include all of the risks associated with
obtaining FDA approval set forth above, and we may not obtain foreign
regulatory approvals on a timely basis, if at all.
IF WE DO NOT RAISE ADDITIONAL FUNDS NECESSARY TO FUND OUR OPERATIONS, WE MAY
NOT BE ABLE TO IMPLEMENT OUR BUSINESS PLAN.
Since inception, we have funded our operations primarily through our public
offerings of Common Stock, private sales of equity securities, equipment lease
financings and license payments from our strategic partners. We believe that we
will need to raise substantial additional funds for research, development and
other expenses, through equity or debt financings, strategic alliances or
otherwise, prior to commercialization of any of our product candidates. Our
future liquidity and capital requirements will depend upon numerous factors,
including the following:
- the progress and scope of clinical trials;
- the timing and costs of filing future regulatory submissions;
- the timing and costs required to receive both United States and foreign
governmental approvals;
- the cost of filing, prosecuting, defending and enforcing patent claims
and other intellectual property rights;
- the extent to which our products gain market acceptance;
- the timing and costs of product introductions; the extent of our ongoing
research and development programs;
- the costs of training physicians to become proficient with the use of our
products; and
- the costs of developing marketing and distribution capabilities.
9
<PAGE>
Additional financing may not be available on terms acceptable to us, or
at all. If we cannot fund our capital requirements, it would have a material
adverse effect on our business, financial condition and results of
operations. If adequate funds are not available, we may have to curtail
operations significantly or obtain funds by entering into arrangements with
strategic partners or others that may require us to relinquish rights to
certain of our technologies, product candidates, products or potential
markets. To the extent that we raise additional capital through the sale of
equity or securities convertible into equity, the issuance of such securities
could result in dilution to our existing stockholders.
WE HAVE A LIMITED MANUFACTURING CAPABILITY AND WE INTEND TO RELY ON OUTSOURCED
MANUFACTURING TO PRODUCE MS-325.
We do not have, nor do we currently have plans to develop, full-scale
manufacturing capability for MS-325. While we do manufacture small amounts of
MS-325 for research and development efforts, we intend to rely on
Mallinckrodt as the primary manufacturer of MS-325 for Phase III clinical
trials, as well as for any future human clinical trials and commercial use.
In the event that Mallinckrodt fails to fulfill its manufacturing
responsibilities satisfactorily, Schering has the right to purchase MS-325
from a third party or to manufacture the compound itself. However, either
course of action could materially delay the manufacture and development of
MS-325. Schering may not be able to find an alternative manufacturer. In
addition, Schering may not be able to manufacture MS-325 in a timely manner.
If we experience a delay in manufacturing, it could result in a delay in the
approval or commercialization of MS-325 and have a material adverse effect on
our business, financial condition and results of operations.
IF THE SUPPLIERS FROM WHOM WE PURCHASE COMPONENTS OF MS-325 RAISE PRICES OR
REDUCE QUANTITIES, THE COST TO PRODUCE MS-325 COULD INCREASE SIGNIFICANTLY.
We currently procure the raw materials for the various components of MS-325
from a broad variety of vendors and, wherever possible, maintain relationships
with multiple vendors for each component. There are a number of components of
MS-325 for which the largest suppliers may have significant control over the
market price due to controlling market shares. If any one of our suppliers
decided to increase prices significantly or reduce quantities of components of
MS-325 available for sale to us, it could have a material adverse effect on our
ability to commercialize MS-325 and on our business, financial condition and
results of operations.
PRODUCT LIABILITY CLAIMS COULD INCREASE OUR COSTS AND ADVERSELY EFFECT OUR
RESULT OF OPERATIONS.
The clinical testing, manufacturing and marketing of our product
candidates may expose us to product liability claims, and we may experience
material product liability losses in the future. We currently have limited
product liability insurance for the use of our product candidates in clinical
research, but our coverage may not continue to be available on terms
acceptable to us or adequate for liabilities we actually incur. We do not
have product liability insurance coverage for the commercial sale of our
products but intend to obtain such coverage if and when we commercialize our
product candidates. However, we may not be able to obtain adequate additional
product liability insurance coverage on acceptable terms, if at all. A
successful claim brought against us in excess of available insurance
coverage, or any claim or product recall that results in significant adverse
publicity against us, may have a material adverse effect on our business and
results of operations.
IF WE FAIL TO GET ADEQUATE LEVELS OF REIMBURSEMENT FOR OUR PRODUCTS AFTER THEY
ARE APPROVED FROM THIRD PARTY PAYORS IN THE U.S. AND ABROAD, WE WILL NOT BE ABLE
TO COMMERCIALIZE OUR PRODUCTS.
We could be adversely affected by changes in reimbursement policies of
governmental or private healthcare payors, particularly to the extent any such
changes affect reimbursement for procedures in which our product candidates
would be used. Failure by physicians, hospitals and other users of our products
to obtain sufficient reimbursement from third-party payors for the procedures in
which our products would be used or adverse changes in governmental and private
third-party payors' policies toward reimbursement for such procedures would have
a material adverse effect on our business, financial condition and results of
operations. If we obtain the necessary foreign regulatory approvals, market
acceptance of our product candidates in international markets would be
dependent, in part, upon the availability of reimbursement within prevailing
healthcare payment systems. Reimbursement and healthcare payment systems in
international markets vary significantly by country, and include both government
sponsored health care and private insurance. We intend to seek international
reimbursement approvals, although we can not assure you that any such approvals
will be obtained in a timely manner, if at all, and failure to receive
international reimbursement approvals could have an adverse effect on market
acceptance of our products in the international markets in which such approvals
are sought.
WE DEPEND ON OUR KEY PERSONNEL, THE LOSS OF WHOM WOULD HURT OUR ABILITY TO
COMPETE.
Our future business and operating results depend in significant part
upon the continued contributions of our key technical and senior management
personnel, many of whom would be difficult to replace and some of whom
perform important functions for us beyond those functions suggested by their
respective job title or description. Our future business and operating
results also depend in significant part upon our ability to attract and
retain qualified management, operational and technical personnel. Competition
for this personnel is intense, and we may not be successful in attracting or
retaining such personnel. Although we maintain key life insurance on the
lives of some key officers, the loss of any key employee, the failure of any
key employee to perform in his or her current position, or our inability to
attract and retain skilled employees, as needed, could have a material
adverse effect on our business, financial condition and results of operations.
10
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RISKS RELATING TO THIS OFFERING
OUR STOCK PRICE IS VOLATILE. IT IS POSSIBLE THAT YOU MAY LOSE ALL OR PART OF
YOUR INVESTMENT.
The market prices of the capital stock of medical technology companies have
historically been very volatile, and the market price of the shares of our
common stock fluctuates. The market price of the shares of our common stock is
affected by:
- actual or anticipated fluctuations in our operating results;
- announcements of technological innovation or new commercial products by
us or our competitors;
- new collaborations entered into by us or our competitors;
- developments with respect to proprietary rights, including patent and
litigation matters;
- results of pre-clinical and clinical trials;
- conditions and trends in the pharmaceutical and other technology
industries;
- adoption of new accounting standards affecting such industries;
- changes in financial estimates by securities analysts; and
- general market conditions.
In addition, the stock market has from time to time experienced significant
price and volume fluctuations that have particularly affected the market prices
for the common stock of development stage companies. These broad market
fluctuations may adversely affect the market price of our common stock. In the
past, following periods of volatility in the market price of a particular
company's securities, shareholders have often brought class action securities
litigation against that company. Such litigation, if brought against us, could
result in substantial costs and a diversion of management's attention and
resources.
WE DO NOT HAVE AN EXACT PLAN FOR THE USE OF THE NET PROCEEDS OF THIS OFFERING
AND WILL THEREFORE HAVE BROAD DISCRETION AS TO THE USE OF THESE PROCEEDS, WHICH
WE MAY NOT USE EFFECTIVELY.
We may allocate the net proceeds from this offering in ways which you and
other stockholders may not approve. We have no exact plan with respect to the
use of the net proceeds of this offering and have not committed these proceeds
to any particular purpose apart from expenses of the business and general
working capital and possible future acquisitions. Accordingly, our management
will have broad discretion in applying the net proceeds of this offering and may
use the proceeds in ways with which you and our other stockholders may disagree.
We may not be able to invest these funds effectively which would adversely
affect our financial condition.
CERTAIN ANTI-TAKEOVER CLAUSES IN OUR CHARTER AND BY-LAW PROVISIONS AND IN
DELAWARE LAW MAY MAKE AN ACQUISITION OF US MORE DIFFICULT.
Our Restated Certificate of Incorporation authorizes the Board of Directors
to issue, without stockholder approval, up to 1,000,000 shares of preferred
stock with voting, conversion and other rights and preferences that could
adversely affect the voting power or other rights of the holders of Common
Stock. The issuance of Preferred Stock or of rights to purchase Preferred Stock
could be used to discourage an unsolicited acquisition proposal. In addition,
the possible issuance of Preferred Stock could discourage a proxy contest, make
more difficult the acquisition of a substantial block of our Common Stock or
limit the price that investors might be willing to pay for shares of our Common
Stock. The Restated Certificate provides for staggered terms for the members of
the Board of Directors. A staggered Board of Directors and certain provisions of
our By-laws and of Delaware law applicable to us could delay or make more
difficult a merger, tender offer or proxy contest involving us. We, for example,
are subject to Section 203 of the General Corporate Law of Delaware which,
subject to certain exceptions, restricts certain transactions and business
combinations between a corporation and a stockholder owning 15% or more of the
corporation's outstanding voting stock for a period of three years from the date
the stockholder becomes an interested stockholder. These provisions may have the
effect of delaying or preventing a change of control of us without action by the
stockholders and, therefore, could adversely affect the price of our Stock.
11
<PAGE>
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference contain
forward-looking statements within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act. These statements can be identified by
the use of forward-looking terminology such as "may," "will," "could," "expect,"
"anticipate," "estimate," "continue" or other similar words. These statements
discuss future expectations, contain projections of results of operations or of
financial condition or state trends and known uncertainties or other
forward-looking information. Examples of forward-looking statements can be found
in the discussion set forth under "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in our Annual Report on Form 10-K
for the year ended December 31, 1999 and under "Business" in the Form 10-K,
incorporated in this prospectus by reference. Such statements are based on
current expectations that involve a number of uncertainties including those set
forth in the risk factors above. When considering forward-looking statements,
you should keep in mind that the risk factors noted above and other factors
noted throughout this prospectus or incorporated by reference could cause our
actual results to differ significantly from those contained in any
forward-looking statement.
12
<PAGE>
USE OF PROCEEDS
We intend to use the net proceeds of this offering, if any, for general
corporate and business purposes, general working capital and possible future
acquisitions. However, we have no present understandings, commitments or
agreements to enter into any potential acquisitions or to make any
investments.
The amounts actually expended for each purpose may vary significantly
depending upon numerous factors, including the amount and timing of the proceeds
from this offering, progress of our research, drug discovery and development
programs, the results of preclinical and clinical studies, the timing of
regulatory approvals, technological advances, determinations as to commercial
potential of our compounds and the status of competitive products. In addition,
expenditures will also depend upon the establishment of collaborative research
arrangements with other companies and other factors.
Further, we have not determined the amounts we plan to spend on any of the
areas listed above or the timing of these expenditures. As a result, our
management will have broad discretion to allocate the net proceeds from this
offering. Pending application of the net proceeds as described above, we intend
to invest the net proceeds of the offering in short-term, investment-grade,
interest-bearing securities.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our capital stock. We
currently intend to retain earnings, if any, to support the development of our
business and do not anticipate paying cash dividends for the foreseeable future.
In addition, our current long-term debt agreement prohibits the payment of cash
dividends.
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DILUTION
The pro forma net tangible book value of the common stock, which
reflects the purchase of 1,112,075 shares of our common stock by Schering
Berlin Venture Corporation on June 20, 2000 pursuant to a stock purchase
agreement dated June 9, 2000, as of March 31, 2000 was approximately $26.1
million, or $2.03 per share. After giving effect to our sale of 3,000,000
shares of common stock in this public offering at an assumed public offering
price of $17.25 per share, and after deducting the estimated underwriting
discount and offering expenses, the adjusted pro forma net tangible book
value as of March 31, 2000 would have been $77.8 million, or $4.91 per share.
The pro forma net tangible book value per share before this offering has
been determined by dividing the pro forma net tangible book value (total
tangible assets less total liabilities) by the pro forma number of shares of
common stock outstanding as of March 31, 2000. This offering will result in
an increase in net tangible book value per share of $2.88 to existing
stockholders and dilution in net tangible book value per share of $12.34 to
new investors who purchase shares in this offering. Dilution is determined by
subtracting the pro forma net tangible book value per share after this
offering from the assumed public offering price of $17.25 per share. The
following table illustrates this dilution:
<TABLE>
<S> <C> <C>
Assumed public offering price........................ $17.25
Pro forma net tangible book value per share
as of March 31, 2000.............................. $ 2.03
Increase attributable to new investors............. 2.88
------
Pro forma net tangible book value per share after
this offering...................................... 4.91
------
Dilution in pro forma net tangible book value to
new investors....................................... $12.34
------
</TABLE>
The following table summarizes, as of March 31, 2000, on a pro forma
basis to reflect the June 9, 2000 sale of 1,112,075 shares of common stock to
Schering Berlin Venture Corporation, the differences between the total
consideration paid and the average price per share paid by the existing
stockholders and the new investors with respect to the number of shares of
common stock purchased from us based on an assumed public offering price of
$17.25 per share:
<TABLE>
<CAPTION>
SHARES TOTAL CONSIDERATION AVERAGE
----------------- ------------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
---------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
New investors.............. 3,000,000 18.94% $51,700,338 40.17% $17.23
Existing stockholders...... 12,843,488 81.06 $77,007,949 59.83% 6.00
---------- ----------- ---------- ----------- ----------
Total................. 15,843,488 100% $128,708,287 100% 8.12
---------- ----------- ---------- ----------- ----------
---------- ----------- ---------- ----------- ----------
</TABLE>
These tables assume no exercise of stock options and warrants outstanding
as of March 31, 2000.
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BUSINESS
CARDIOVASCULAR DISEASE BACKGROUND
The human cardiovascular system consists of the heart and a vast series of
arteries and veins that carry blood throughout the body. Cardiovascular disease,
a broad class of diseases affecting the heart and vasculature, is the number one
cause of death in the United States, with over 950,000 fatalities in 1998. One
out of every 2.4 deaths in the United States is attributed to cardiovascular
disease and it is estimated that over 58 million Americans suffer from some form
of this disease.
Atherosclerosis is one of the most common forms of cardiovascular disease. This
condition refers to the accumulation of fatty deposits, or plaques, in the inner
lining of blood vessels, resulting in a thickening or hardening of affected
vessels. As the disease progresses, the arteries can become weakened or
increasingly narrowed, thereby reducing blood flow to vital organs, including
the heart and brain. This condition is often characterized by the vascular
region in which it is diagnosed. Coronary artery disease, for example, refers to
disease in the coronary arteries, while peripheral vascular disease refers to
disease in the major vessels outside the coronary arteries: vessels of the head
and neck, the aorta, the renal arteries, and the large vessels of the pelvis,
legs and arms.
Recent research in cardiovascular disease has begun to highlight the pervasive,
or multi-focal nature, of this condition. Because the major risk factors tend to
affect all vascular regions, many patients have multiple clinical manifestations
of cardiovascular disease. Therefore, patients diagnosed with cardiovascular
disease in one vascular region are at high risk of having similar disease in
another vascular region. Clinicians have also begun to realize the importance of
characterizing atherosclerotic plaques once they have been identified. We
believe that the ability to characterize plaques may allow physicians to
identify those regions of cardiovascular disease which present the most
immediate threat to patients' health.
The consequences of cardiovascular disease can be extremely severe and often
include one or more of the following:
LIMB LOSS. Atherosclerotic blockages in the arteries of the pelvis and legs -
the iliac, femoral, popliteal, and tibial arteries - can lead to ischemia (lack
of oxygen) or infarction (death of tissue) in these areas. Complications from
atherosclerotic disease in these vessels include pain, limitations in mobility,
and amputation of the extremities. Each year approximately 100,000 amputations
are performed in the United States primarily due to some form of cardiovascular
disease.
AORTIC ANEURYSM. The aorta is the main blood vessel that carries blood from the
heart to the rest of the body. Degenerative changes in the vessel wall often
result in the enlargement or bulging of the lower part this vessel, known as
abdominal aortic aneurysm. Individuals with this condition are at serious risk
that the aneurysm will rupture, causing life-threatening bleeding. There are an
estimated 200,000 cases of abdominal aortic aneurysm diagnosed each year in the
United States. Because this condition can be asymptomatic for many years, many
physicians have begun to consider the merits and cost-effectiveness of routine
screening programs for this disease.
HEART ATTACK. The coronary arteries supply blood to the heart muscle
(myocardium). When these arteries are narrowed or clogged due to atherosclerotic
buildup, the result can be chest pain (angina pectoris) or heart attack
(myocardial infarction). This condition, known as coronary artery disease, is
estimated to afflict 7 million Americans. Coronary artery disease is responsible
for a significant portion of the nearly 500,000 heart attack deaths each year,
making it the number one cause of death in the United States.
HYPERTENSION. The renal arteries are the vessels which carry blood to the
kidneys. Blockage of these arteries can result in kidney failure and in addition
is estimated to account for up to ten percent of all cases of hypertension.
Hypertension, or high blood pressure, refers to the constriction of blood
vessels, which causes the heart to work harder to supply blood to the body. This
condition, which significantly elevates an individual's risk of heart attack or
stroke, afflicts approximately 50 million individuals in the United States.
Early diagnosis can be extremely helpful for patients with renovascular
hypertension because it can be treated with various revascularization
procedures; however, X-ray angiography, the current definitive diagnosis for
this condition, carries elevated risk for patients with renal impairment due to
the toxicity of the X-ray contrast dye.
ISCHEMIC STROKE. Blocked arteries in the head and neck can prevent areas of the
brain from receiving the necessary blood supply, potentially leading to ischemic
stroke. Individuals with atherosclerosis are at elevated risk of suffering such
blockages due to atherosclerotic buildup in these arteries or, more commonly,
from plaques originating in other areas which have broken off and lodged in
these vessels. Approximately 80% of the 600,000 strokes each year in the United
States are a result of atherosclerotic disease.
DIAGNOSING CARDIOVASCULAR DISEASE - THE LIMITS OF CURRENT PRACTICE
Cardiovascular disease is currently diagnosed using a number of different
imaging technologies, or modalities, including X-ray angiography, computed
tomography, ultrasound, intravascular ultrasound, nuclear medicine and magnetic
resonance imaging, or MRI. These modalities are often classified as either
"screening" or "definitive" according to their role in the diagnostic pathway.
Screening procedures are typically used early in the diagnostic evaluation to
rule out certain conditions and assist physicians in determining subsequent
diagnostic testing. These procedures tend to be relatively inexpensive and
non-invasive. Definitive diagnostic procedures, on the other hand, are relied
upon to give physicians the information required to make final diagnosis and
plan treatment. Because of the importance of this definitive information,
physicians are willing to resort to costlier, more invasive modalities.
SCREENING FOR PERIPHERAL VASCULAR DISEASE. A patient with peripheral vascular
disease may exhibit a wide range of symptoms including: leg pain; gangrene;
hypertension; stroke and transient ischemic attack, a brief episode of cerebral
ischemia usually characterized by blurred vision, slurred speech, numbness or
paralysis. The appropriate screening tests vary according to the particular
disease indication. In the work-up of peripheral
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vascular disease of the lower limb, for example, ultrasound is often performed
to confirm the location of disease once it has been detected by non-imaging
techniques. In general, traditional screening modalities for peripheral vascular
disease - most commonly ultrasound and renal nuclear exams - tend to have poor
image quality, leading to exams which are frequently inconclusive.
SCREENING FOR CORONARY ARTERY DISEASE. Typically, a patient enters the
diagnostic pathway for coronary artery disease after experiencing chest pain or
shortness of breath. If the patient cannot be ruled out for this condition after
the initial work-up that includes a physical exam, patient history,
electrocardiogram and exercise stress test, then a cardiologist will often
perform a stress echocardiogram and/or a nuclear stress perfusion study.
STRESS ECHOCARDIOGRAMS use ultrasound to measure motion of the walls of the
heart under physical or pharmacological stress. In most cases, a lack of
blood flow to a particular area of the heart will be reflected in atypical
motion of the heart wall. The test is non-invasive and costs between $300
and $900. While a normal stress echocardiogram usually eliminates the
possibility of blockages which significantly decrease blood flow, the test
is often inconclusive and provides no information on the anatomy of the
coronary arteries. We estimate that over 1.6 million stress echocardiograms
were performed in the United States in 1998.
NUCLEAR STRESS PERFUSION STUDIES, which measure the flow of blood to
cardiac tissue, can be used either as the critical diagnostic test prior to
X-ray angiography or to confirm the impact on blood flow of an intermediate
blockage identified through X-ray angiography. These tests are
non-invasive, use small quantities of radiation and cost between $600 and
$1,400. A patient is injected with a radioactive agent and then a radiation
sensitive camera is used to detect uptake of the agent in the heart muscle.
A deficiency in blood flow to particular regions of the heart is shown on
the resultant images. While the test can identify the effects of coronary
artery disease, it provides no information on the anatomy of the coronary
arteries and it cannot determine the location of blockages. We estimate
that over 3.8 million nuclear stress perfusion studies were conducted in
the United States in 1998.
DEFINITIVE DIAGNOSIS OF PLAQUE BLOCKAGES. X-ray angiography is currently
considered to be the definitive diagnostic exam for imaging arterial anatomy
in patients with suspected peripheral vascular disease or coronary artery
disease. Invented in the 1920's, an X-ray angiogram involves the insertion of
a catheter through a puncture of the femoral artery in the patient's groin.
Once the catheter is placed in the relevant artery, X-ray contrast dye is
injected into the bloodstream and an image is acquired of that vascular
region. X-ray angiography does not always provide sufficient information for
clinical decision-making, particularly in the coronary arteries: while X-ray
angiography identifies the location of arterial blockages, in many cases it
cannot conclusively determine the impact of these blockages on blood flow.
Therefore, for many blockages, additional studies must be performed to enable
the physician to make a definitive diagnosis. Based on available procedure
data, we estimate that over 4.3 million X-ray angiograms were performed in
the United States in 1998, of which approximately 2.1 million were coronary
angiograms. X-ray angiography has a number of undesirable characteristics for
a diagnostic modality including:
|X| Invasive procedure results in significant risk of serious complications
including limb loss, renal failure, and death;
|X| Exposure of patients to potentially harmful ionizing radiation;
|X| Separate exams are necessary to view both arteries and veins;
|X| Separate exams are necessary for each vascular region;
|X| Provides only 2-dimensional images;
|X| Relatively expensive ($1,000-$3,000 for peripheral angiograms,
$2,000-$6,000 for coronary angiograms);
|X| Cost and invasive nature limit patient post-procedure follow-up; and
|X| Inability to characterize plaques.
Another modality currently being investigated as a potential diagnostic tool for
imaging blood vessels is computed tomography, or CT, which is a modality
primarily used to image solid organs. Although it does not require an arterial
puncture, CT requires the use of large quantities of toxic X-ray contrast dye
and exposes patients to radiation, which limits the number of vascular regions
it can image in an exam. CT has shown limited success in imaging the coronary
arteries due to cardiac motion. A specialized form of CT, electron beam CT, is
approved in the United States for angiographic imaging but has had limited
impact on clinical practice due to the low number of electron beam CT scanners
installed and its use of toxic X-ray contrast dye and radiation. CT is also
being investigated for use in detecting calcium deposits in the coronary
arteries, which has been advocated as predictive of atherosclerotic disease in
that region. While extremely sensitive, this technique is limited by its high
level of false positives.
MRI has been established as the imaging modality of choice for a broad range of
applications, including brain tumors, knee injuries and many spinal disorders.
MRI is performed by placing a portion of the patient's body in a magnetic field
and applying safe, low-energy radio waves. The different organs and tissues in
the body respond uniquely to the electromagnetic field within the MRI scanner,
and these responses can be captured and converted into high-resolution
3-dimensional images. A contrast agent is often injected into a vein in the
patient's arm prior to an MRI exam to amplify the signal from the desired
anatomical structure. It is estimated that contrast agents are used in 35-40% of
all MRI exams.
MR scanners are characterized by the strength of the magnetic field they
generate. Typical MRI scanners - those most commonly found in hospitals -
generate a relatively strong magnetic field and therefore require significant
infrastructure for installations. Low-field scanners, whose magnetic fields are
less than one-third the strength of traditional scanners, are often found in
out-patient settings due to the decreased cost and infrastructure requirements.
The trade-off for low-field MR scanners is that a decrease in the strength of
the magnetic field results in a decrease in the MR signal detected, which
typically results in reduced resolution.
MRI has not made a significant impact on the diagnosis of cardiovascular disease
to date with the exception of certain carotid artery studies. Non-contrast agent
MRI exams of the vascular system, which image blood flow rather than anatomy,
are often ineffective when used in patients with cardiovascular disease because
of the minimal or turbulent blood flow associated with this condition. Even for
the imaging of carotid arteries, where
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<PAGE>
flow-based MRI has had some clinical impact, the lack of direct anatomic data
limits the ability of MRI to provide a quantitative measurement of stenosis
required for accurate diagnosis. MRI exams using existing non-specific contrast
agents are limited by the rapid diffusion of the agents out of the vascular
system, which reduces the time during which an image can be acquired.
Consequently, many experts believe MRI contrast agents which remain in the
bloodstream for extended periods of time will be necessary to obtain sufficient
contrast for widespread use of MRI to image the vascular system.
PLAQUE CHARACTERIZATION. Recent research suggests that plaques associated with
regions of vessel wall inflammation may be at increased risk of rupture and are
consequently more likely to present immediate risk to patients. The one modality
currently used to characterize the content and/or shape of arterial plaques is
known as intravascular ultrasound, or IVUS. An IVUS exam requires the insertion
of a relatively large catheter (i.e., larger than an X-ray angiographic
catheter) equipped with an ultrasound transducer through an arterial puncture in
the femoral artery. These procedures, which are more invasive then X-ray
angiograms, are not commonly used in the United States due to the elevated risk
of complications.
In summary, the current process for diagnosing cardiovascular disease is a
complicated pathway which typically involves subjecting patients to risky and
invasive procedures before a definitive diagnosis can be rendered. We therefore
believe that there is significant clinical need for a highly accurate,
non-invasive exam which provides more comprehensive diagnostic information about
the cardiovascular system.
OUR APPROACH TO DIAGNOSING CARDIOVASCULAR DISEASE
Our principal product under development, MS-325, is an injectable intravascular
contrast agent intended to enhance the quality of MR images and provide
physicians with a superior method for diagnosing diseases affecting the
vasculature. Unlike most currently available MRI contrast agents, which are
non-specific and therefore leak rapidly out of the bloodstream, MS-325 binds
reversibly to albumin, the most common blood protein. Because of its affinity
for albumin, MS-325 remains at high concentrations in the bloodstream throughout
the MRI exam and, consequently, provides the image acquisition time and signal
strength needed to obtain a high contrast, high resolution image of the
cardiovascular system. These images are intended to provide sufficient
anatomical detail for definitive diagnosis and surgical planning.
We believe that MS-325-enhanced MRI may facilitate several clinically valuable
diagnostic procedures:
MS-325-ENHANCED ANGIOGRAPHY
We believe that MS-325-enhanced MR angiography will be used to diagnose
cardiovascular disease and has the potential to replace a significant portion of
the estimated 4.3 million X-ray angiograms performed each year in the United
States. In particular, we believe MS-325-enhanced MR angiography has the
following advantages over conventional X-ray angiography:
SAFETY. X-ray angiography is an invasive, catheter-based procedure which
exposes patients to significant risk of serious complications due to
femoral puncture. MS-325-enhanced MR angiography, on the other hand, is a
non-invasive exam requiring only intravenous injection of MS-325.
NO IONIZING RADIATION. MR angiography with MS-325 involves only safe,
low-energy radio waves rather than potentially harmful ionizing radiation.
ARTERIAL AND VENOUS INFORMATION IN A SINGLE EXAM. MS-325-enhanced MRI
offers the ability to capture image data of both arteries and veins in a
single exam. Venographic imaging plays a crucial role in identifying veins
suitable to be harvested for use in bypass grafts as well as planning the
route for catheter-based interventional procedures. X-ray technology
requires separate exams to image arteries and veins.
WHOLE-BODY IMAGING. Whereas X-ray angiography captures data over a limited
vascular region, we expect MS-325-enhanced MR angiography to provide
clinicians with the ability to capture images of the entire vascular
system. We believe that a whole-body MR angiography exam with a single
injection of MS-325 will be particularly well suited for the diagnosis of
cardiovascular disease, given the systemic nature of this condition.
3-DIMENSIONAL IMAGES. MS-325-enhanced MR angiography captures 3-dimensional
data which can be manipulated by physicians to get the best possible view
of the vessels in question. These 3-dimensional data sets will allow
physicians to spin, rotate, zoom in and "fly through" images in order to
identify cardiovascular disease.
COST-EFFECTIVENESS. Because it will be performed outside the surgical
setting, MS-325-enhanced MR angiography is likely to be significantly less
costly than X-ray angiography. We estimate that an MRI exam with MS-325
will cost between approximately between $500 and $1,000, roughly one-third
the cost of an equivalent X-ray angiogram.
PATIENT MONITORING. After an intervention for cardiovascular disease such
as angioplasty or bypass graft, optimal patient management could include
follow-up exams, or re-looks, to determine the re-forming of blockages, or
restenosis, as well as proper functioning of grafts. Due to the risk,
discomfort and expense associated with X-ray angiography, follow-up imaging
currently is limited, which can lead to increased patient management costs
and poorer outcomes due to undiagnosed restenosis and other complications.
We estimate that there are currently over 2 million patients who have
undergone a coronary angioplasty procedure and over 2 million patients who
have undergone a coronary bypass graft who are potential candidates for a
periodic re-look. In addition, we believe that MS-325-enhanced MRI may have
potential utility to monitor the success of treatments designed to affect
the proliferation, or angiogenesis, of microvessels.
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PLAQUE CHARACTERIZATION. Angiographic images with MS-325-enhanced MRI have
demonstrated the ability to visualize the walls of arteries as well as the
interior, or lumen, of these vessels, potentially allowing precise
determination of plaque shape. We believe that MS-325-enhanced MR
angiography may allow clinicians to identify regions of inflammation in
vessel walls due to the elevated concentration of albumin in these areas.
We therefore believe that MS-325-enhenced MR angiography may potentially
help clinicians identify those plaques whose shape and proximity to vessel
wall inflammation make them more likely to pose health risks to patients.
LOW-FIELD MR ANGIOGRAPHY
We believe that the extended blood residence time of MS-325 will prove
particularly beneficial in facilitating the use of low-field MRI scanners for
diagnosing cardiovascular disease. These scanners, which account for
approximately 25% of the installed base of MRI scanners, pose several potential
advantages over traditional scanners: they are relatively inexpensive, they use
open configurations for improved patient comfort, they can be portable, they are
compatible with nearby electronic equipment, and they can enable MRI for
patients with pacemakers. However, low-field scanners do not currently provide
the resolution required for clinically useful vascular studies. Because of its
high signal at low magnetic field strengths, MS-325 may enable low-field MRI
scanners to perform high-resolution imaging of the vasculature. This would
potentially allow relatively inexpensive MRI exams to be performed in
out-patients settings, such as physician offices and free-standing imaging
centers.
INTEGRATED CARDIAC EXAM
We believe that MS-325, coupled with anticipated advances in software and
hardware for MRI equipment, will enable physicians to use MRI to perform a
non-invasive, integrated cardiac exam for the diagnosis of coronary artery
disease. Such a procedure would be designed to provide information on coronary
artery anatomy, including location of arterial blockages, as well as cardiac
perfusion and cardiac function data, in one sitting early in the diagnostic
work-up. Because the procedure is intended to provide physicians with more
comprehensive diagnostic information at an earlier stage of the diagnostic
work-up, physicians would be able to make a more informed diagnosis, and
therefore arrange for appropriate patient treatment, sooner than would otherwise
be possible, thereby potentially achieving better patient outcomes at a lower
cost. Of the estimated 6.75 million patients in the United States who enter the
diagnostic pathway for coronary artery disease each year, we believe that over
half would be candidates for such an integrated cardiac exam.
OTHER CARDIOVASCULAR APPLICATIONS
We are currently investigating the potential utility of MS-325-enhanced MRI for
a number of additional applications related to cardiovascular disease, including
myocardial perfusion imaging and MRI-guided stent placement. In addition, we
intend to initiate a preclinical study to assist physicians in identifying
healthy veins that can be harvested for bypass surgery.
BEYOND CARDIOVASCULAR MRI - ADDITIONAL APPLICATIONS
We believe MS-325-enhanced MRI will find significant clinical utility beyond the
diagnosis of cardiovascular disease. Because of its potential for
high-resolution imaging of the vasculature, for example, MS-325 is being
investigated for possible use in diagnosing several conditions involving damaged
or abnormal microvessels. In addition, as a marker of albumin, MS-325-enhanced
MRI may play a role in diagnosing conditions which result in regions of atypical
albumin concentration. We are pursuing applications for MS-325 beyond
cardiovascular disease in order to fully leverage the broad diagnostic potential
of this technology.
BREAST CANCER
Although inexpensive and widely used as a screening tool, mammography yields
inconclusive results in up to 10% of all exams. In addition, mammography fails
to detect tumors in approximately 10% of all asymptomatic women who suffer from
this disease. While MRI promises improved image quality and detection when
compared with mammography, it is not widely used today for breast cancer
diagnosis. We believe that MS-325 has potential utility as part of a
non-invasive imaging procedure that would assist physicians in identifying
breast cancer in patients who have had sub-optimal or indeterminate mammograms.
We estimate that there are currently as many as 1.9 million such mammograms
performed each year in the United States. In addition, we believe that MS-325 is
particularly well suited for imaging with the lower-field or open MRI scanners,
allowing cost-effective detection of breast cancer lesions in high-risk women
where early detection with high sensitivity imaging is required. Based on the
guidelines used by the National Cancer Institute in the Breast Cancer Prevention
Trial, more than 25 million women in the United States are characterized as
being at high risk of developing breast cancer. We also believe that
MS-325-enhanced MRI in open scanners may provide the potential for real-time
imaging of biopsies and interventions.
FEMALE SEXUAL AROUSAL DYSFUNCTION
Clinicians have begun to recognize the role of compromised vasculature in
many patients with sexual dysfunction. We have undertaken a Phase II
feasibility trial, in conjunction with Pfizer Inc., to assess the potential
utility of MS-325-enhanced MRI in diagnosing female sexual arousal
dysfunction by monitoring pelvic blood volume in women. It is estimated that
30 million or more women in the United States suffer from some form of sexual
dysfunction.
OTHER NON-CARDIOVASCULAR APPLICATIONS
Further applications currently being investigated in preclinical studies
include: detection of glioma and ocular melanoma, diagnosis/monitoring of
muscular dystrophy, lymphatic imaging, migraine imaging and diagnosis of
diabetic angiopathy.
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DEVELOPMENT PROGRAMS
MS-325
BACKGROUND
Our lead product candidate, MS-325, is a targeted intravascular contrast agent
intended for use with MRI. MS-325 is a small molecule which produces an MRI
signal by containing gadolinium, a highly magnetically active element favored by
clinicians for enhancing MR images. This molecule is designed with our
proprietary technology to bind to albumin, the most common blood protein. In
MS-325 images using standard MRI techniques, the blood gives off a strong
magnetic signal and appears bright against the dark background of surrounding
tissue. Because of its affinity for albumin, MS-325 remains at high
concentrations in the bloodstream throughout the MRI exam and therefore provides
the image acquisition time and signal strength needed to obtain a high contrast,
high resolution image of the cardiovascular system. Like most currently
available non-specific contrast agents, MS-325 is designed to excrete safely
through the kidneys over time.
LEAD INDICATION - AORTOILIAC OCCLUSIVE DISEASE
In June 1999, we initiated a Phase III clinical trial to determine the efficacy
of MS-325-enhanced MR angiography for the detection of aortoiliac occlusive
disease, a common peripheral vascular disease. Evaluation for aortoiliac
occlusive disease is a critical component of two common procedures performed on
the peripheral vascular system: abdominal aortography, particularly for the
identification of abdominal aortic aneurysm, and leg arteriography, also known
as peripheral run-off, for the detection of atherosclerosis. The trial, a
multi-center, comparative, two-arm study with a target enrollment of 600
patients, is designed to compare the diagnostic accuracy of MS-325-enhanced MR
angiography with that of X-ray angiography. This trial is expected to include up
to 50 clinical sites worldwide.
In June 1998, we completed a Phase II clinical trial to test the safety and
preliminary efficacy of MS-325 for the evaluation of peripheral vascular disease
in the carotid, iliac and femoral arteries. This Phase II trial was conducted at
seven clinical sites and involved the blinded administration of MS-325 at
several dosing levels in a total of 81 patients. In the trial, MS-325-enhanced
MR angiography was compared to conventional X-ray angiography, the current
reference standard, to determine the location and degree of plaque blockages.
The results for identification of plaque blockages, combining all doses,
indicate that MS-325 demonstrated 82% accuracy, 80% sensitivity and 82%
specificity in the peripheral vasculature relative to X-ray angiography. In this
study, MS-325 was well tolerated by patients at all dose levels, with no severe
side effects reported.
CORONARY ARTERY DISEASE
We are currently conducting a Phase II feasibility trial to test the safety and
preliminary efficacy of MS-325 for the evaluation of coronary artery disease.
This trial is being conducted at multiple sites and is expected to enroll up to
105 patients. As with the completed Phase II peripheral vascular disease trial,
MS-325-enhanced MR angiography is being compared to X-ray angiography, the
current reference standard, to determine the location and degree of plaque
blockages. Clinical use of MR angiography for imaging the coronary arteries is
particularly difficult at present due to the problem of cardiac motion which
results from both the beating of the heart and respiration. We have joined with
several leading MRI manufacturers, academic centers and other research
organizations to develop hardware and software solutions to the problem of
cardiac motion. Promising early images from this study have been obtained which
indicate that MS-325 may increase coronary vessel contrast.
BREAST CANCER
In March 2000, we completed enrollment for a 45-patient multi-center Phase II
feasibility trial designed to test the safety and preliminary efficacy of
MS-325-enhanced MRI for detecting malignant breast lesions in women with breast
abnormalities. In this trial, MS-325-enhanced MRI was evaluated on 20 patients
using low field MRIs and 25 patients using high field MRIs. Although the
analysis of the data from the complete patient group is not yet complete, data
from a sub-population of the twenty patients using low field MRIs showed marked
and persistent contrast enhancement in both benign and malignant lesions
demonstrating that MS-325 provides a strong signal enhancement of breast lesions
and enables high quality imaging at field strengths associated with open MR and
lower field magnetic resonance systems. We believe that MS-325 has potential
utility as part of a non-invasive imaging procedure that would assist physicians
in identifying breast cancer in patients who have had mammograms that do not
yield conclusive information or who are at high risk of developing breast
cancer.
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FEMALE SEXUAL AROUSAL DYSFUNCTION
In September 1998, we undertook a Phase II feasibility trial in 16 patients with
Pfizer to explore the efficacy of MS-325-enhanced MRI in the diagnosis of female
sexual arousal dysfunction. Preliminary results from this trial indicate that
MS-325-enhanced MRI is able to measure changes in pelvic blood volume during
sexual arousal. We believe that this technique may prove useful in assessing how
different diseases affect sexual response in women as well as examining the
effects of potential treatments in restoring impaired sexual response.
ADDITIONAL APPLICATIONS
We are currently conducting preclinical studies to determine the potential
utility of MS-325-enhanced MRI for a wide variety of applications. Applications
currently being investigated include: myocardial perfusion imaging, low-field MR
imaging, diagnosis/monitoring of muscular dystrophy, MRI-guided stent placement,
lymphatic imaging, migraine imaging and diagnosis of diabetic angiopathy. We
intend to initiate preclinical studies to identify veins suitable to be
harvested for use in bypass grafts as well as planning the route for
catheter-based interventional procedures and the detection of glioma and ocular
melanoma.
EP-862 PROTOTYPE CLOT IMAGING AGENT
BACKGROUND
Thromboembolic disease refers to a class of relatively common disorders
involving the formation of blood clots or, thrombi, in the veins and arteries.
The most common form of this disease, deep vein thrombosis, or DVT, is
characterized by the presence of thrombi in the deep veins of the leg and calf.
This disease afflicts approximately 2 million Americans each year. The most
severe consequences of DVT tend to occur when a thrombus dislodges from the
vessel wall to form an embolus, which can then pass to and obstruct arteries in
the lung. This condition, known as pulmonary embolism, or PE, affects an
estimated 600,000 patients each year in the United States. In addition, blood
clots in the carotid artery can lead to stroke, while clots in the coronary
arteries can result in heart attack. We estimate that blood clots are
responsible for over 400,000 deaths each year in the United States.
The current method for diagnosing DVT involves a series of venous ultrasound
exams typically followed by X-ray venography. The ultrasound procedure, while
non-invasive, is effective primarily for diagnosing DVT in the thighs. It is
ineffective for a significant portion of the patient population who may be
asymptomatic and those who have clots forming below the knee, in the pelvis and
in the vena cava. It is estimated that over 2.1 million ultrasound procedures
are performed each year in the United States to detect DVT. The X-ray
venography, which represents the current gold standard for diagnosis, requires
the injection of X-ray contrast dye into the foot and carries a significant risk
of complications, including the formation of new clots. The diagnosis of PE
presents an even greater challenge for clinicians. In fact, research suggests
that this diagnosis is missed more than 50% of the time. The primary diagnostic
technique for PE, a nuclear scan, is indeterminate in a large number of
patients. Nearly 1 million such exams were performed in the United States in
1998. In the event of an indeterminate exam, the clinician must either infer the
diagnosis from the presence/absence of DVT or must perform a pulmonary
angiogram. Pulmonary angiography is a highly invasive catheter-based procedure
which subjects the patient to significant risk of morbidity and mortality. Clots
in the carotid and coronary arteries are diagnosed in much the same way as
atherosclerotic blockages, with X-ray angiography providing definitive diagnosis
in most patients.
DEVELOPMENT PROGRAM
We are seeking to develop a targeted contrast agent that would enable MRI to
illuminate blood clots. Such a product could potentially change the diagnostic
work-up for many of the conditions associated with thromboembolic disease,
including PE and DVT. We believe that the use of this new approach could lead to
better medical outcomes due to earlier and more definitive diagnosis. Early
diagnosis is especially important for clots in the thigh, pelvis and vena cava:
because of their increased likelihood of migrating to the lungs once inside the
pulmonary vasculature, these clots can be fatal. We believe that such a contrast
agent could eliminate the need for the CT, ultrasound and nuclear medicine
studies currently used to identify thrombotic disease, and could potentially
provide a non-invasive but clinically equivalent alternative to pulmonary
angiography. We further believe that our proprietary technology platform could
enable MRI to differentiate old and new clot formation, potentially identifying
those clots that pose the most risk to patients.
EP-862, our prototype clot-imaging agent is based on a family of highly specific
peptides that bind to fibrin, the dominant protein inside clots. The selected
peptide is linked to a proprietary gadolinium group, which for the first time,
will provide a sufficiently strong signal to allow imaging of clots during MRI
exams. In November 1999, we announced that EP-862 had been shown in preclinical
testing to detect sub-millimeter blood clots in an animal model. EP-862 is being
further optimized for clot imaging before human studies are initiated.
OUR BUSINESS STRATEGY
Our objective is to become a worldwide leader in MRI contrast agents by pursuing
a strategy based on commercializing MS-325 and developing new applications for
our proprietary technology platform. Our key business objectives are to:
ESTABLISH THE SAFETY AND CLINICAL UTILITY OF MS-325 FOR MULTIPLE
CARDIOVASCULAR IMAGING INDICATIONS. In June 1999, we initiated a Phase III
clinical trial to determine the efficacy of MS-325-enhanced MR angiography
for the detection of aortoiliac occlusive disease. We continue to enroll
patients in our Phase II feasibility trial to assess the safety and
preliminary efficacy of MS-325-enhanced MR angiography for the evaluation
of coronary artery disease. In each of these clinical trials, we compared
MS-325-enhanced MR angiography to X-ray angiography, the current reference
standard for these indications. In addition, we are currently conducting
preclinical studies for such applications as myocardial perfusion imaging
and MRI-guided stent placement.
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ESTABLISH THE CLINICAL UTILITY OF MS-325 BEYOND CARDIOVASCULAR IMAGING. We
are committed to leveraging the unique diagnostic properties of MS-325
across as many clinical applications as possible. We are therefore seeking
to establish the clinical utility of MS-325-enhanced MRI in diagnosing many
conditions other than cardiovascular disease. We recently completed
enrollment for a Phase II feasibility study designed to evaluate the safety
and efficacy of MS-325-enhanced MRI in identifying malignant breast lesions
in women with breast abnormalities. We have also undertaken a Phase II
feasibility trial, in conjunction with Pfizer Inc., to assess the potential
utility of MS-325-enhanced MRI in diagnosing female sexual arousal
dysfunction by monitoring pelvic blood volume in women. We are currently
conducting preclinical studies to evaluate the potential use of
MS-325-enhanced MRI for such applications as: diagnosis/monitoring of
muscular dystrophy, lymphatic imaging, migraine imaging and diagnosis of
diabetic angiopathy.
DEVELOP EP-862 FOR THROMBOEMBOLIC DISEASE IMAGING. We are currently
developing thrombosis-specific MRI contrast agents based on its proprietary
technology platform. In November 1999, we announced that our prototype clot
imaging agent, EP-862, had been shown in preclinical testing to detect
sub-millimeter blood clots.
MAXIMIZE THE VALUE OF STRATEGIC ALLIANCES. At the end of June 2000, we had
established collaborations with Schering AG, Mallinckrodt, Daiichi, General
Electric Medical Systems, Philips Medical Systems, Siemens, and Pfizer. We
entered into these alliances, and will seek to enter into future strategic
alliances with pharmaceutical, imaging agent and MRI equipment industry
leaders, in order to obtain access to resources and infrastructure to
leverage our strengths.
STRATEGIC ALLIANCES
Our strategy includes entering into alliances with leaders in the
pharmaceutical, diagnostic imaging and MRI equipment industries to facilitate
the development, manufacture, marketing, sale and distribution of our products.
To date, we have formed strategic alliances with Schering AG, Mallinckrodt,
Daiichi, General Electric Medical Systems, Philips Medical Systems, Siemens, and
Pfizer.
CO-DEVELOPMENT, SALES & MARKETING
SCHERING AG
In June 2000, we entered into a strategic collaboration agreement pursuant
to which we granted Schering AG an exclusive license to co-develop and
market MS-325 worldwide, exclusive of Japan. Generally, both of us will
share equally in MS-325 costs and profits. Under the agreement, we will
assume responsibility for completing clinical trials and filing for Food
and Drug Administration approval in the United States and Schering AG will
lead clinical activities for the product outside the United States. In
addition, we granted Schering AG an exclusive option to develop and market
a cardiovascular MRI blood pool agent from our pipeline. In connection with
this strategic collaboration, Schering AG paid an up front fee of $10
million and made a $20 million dollar equity investment in us at $17.98 per
share. We may receive up to an additional $20 million under this agreement
in milestones. Under the agreement, we also have the option to participate
in the development and marketing of two Schering AG products currently in
clinical trials, SHU555C and Gadomer-17. Schering AG will fund the
development costs of SHU555C. We can obtain a royalty from the worldwide
sales of SHU555C through the payment of an upfront fee upon certain
conditions related to the marketing approval of SHU555C and MS-325. We also
have the exclusive rights to worldwide co-development and profit-sharing
for Gadomer-17. After completion of Schering AG-funded Phase II studies, we
may exercise this right through payment of an up-front fee and milestone
payments. We will share the development costs and profits of Gadomer-17
equally with Schering AG. Our agreement will remain in effect as long as
Schering AG is selling our products in any area to which they are entitled
to distribution. The agreement may be terminated by either party upon
thirty days notice if there is a material breach of the contract or if
either party fails to meet certain milestones. In addition, Schering AG may
terminate the agreement at any time on a region-by-region basis or in its
entirety, upon six months written notice to us; and we may terminate the
agreement with respect to development of MS-325 in the European Union at
any time after June 9, 2001 upon ninety days written notice to Schering AG,
if Schering AG has failed to meet its obligations in connection with the
regulatory approval of MS-325 in the European Union.
DAIICHI
In March 1996, we entered into a development and license agreement with
Daiichi pursuant to which we granted Daiichi an exclusive license to
develop and commercialize MS-325 in Japan. Under this arrangement, Daiichi
will assume primary responsibility for clinical development, regulatory
approval, marketing and distribution of MS-325 in Japan. We retained the
right and obligation to manufacture MS-325 for development activities and
commercial sale under the agreement. However, Daiichi may, under certain
circumstances, elect to formulate MS-325 purchased from us into a final
product. The agreement imposes certain development due diligence
obligations on both parties and marketing due diligence obligations on
Daiichi. The agreement may be terminated by Daiichi upon 30 days prior
written notice if Daiichi determines in its reasonable opinion that MS-325
lacks clinical efficacy, presents serious side effects or otherwise
exhibits unacceptable properties. In connection with this strategic
alliance, we received an up-front fee from Daiichi in the amount of $3.0
million and earned a $900,000 milestone payment in June 1997. Daiichi will
be required to make future payments to us up to an aggregate amount of $2.4
million upon the achievement of certain MS-325 development milestones.
Daiichi also made a $5.0 million equity investment in us and is required to
make royalty payments to us on net sales of MS-325 in Japan.
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MANUFACTURING
MALLINCKRODT
In June 2000, we amended our strategic collaboration with Mallinckrodt to
grant Mallinckrodt a non-exclusive, worldwide license to manufacture MS-325
for clinical development and commercial use in accordance with a
manufacturing agreement entered into in June 2000 between Mallinckrodt and
Schering AG, and to enable us to enter into the agreement with Schering AG.
In connection with this amendment, we paid Mallinckrodt an up-front fee of
$10 million and may pay up to an additional $5 million in milestones. We
will also pay Mallinckrodt a share of operating margins in the US and a
royalty on gross profits outside the US.
MRI EQUIPMENT MANUFACTURERS
To date, we have formed collaborations with the three major MRI scanner
manufacturers, General Electric Medical Systems, Philips Medical Systems and
Siemens, to develop advanced imaging techniques designed to facilitate the use
of MS-325-enhanced MRI. We believe it is extremely important to collaborate with
equipment manufacturers to develop MRI techniques capable of taking full
advantage of the unique properties of MS-325 to diagnose cardiovascular disease.
GENERAL ELECTRIC MEDICAL SYSTEMS
In January 1998, we announced the formation of a collaboration with General
Electric Medical Systems to accelerate the development of cardiovascular
MRI. In particular, the collaboration focuses on reducing the effects of
cardiac motion on MR images, providing user-friendly computer tools as a
means of visualizing arteries and veins in 3-dimensional space, and
optimizing MRI sequences for intravascular MRI contrast agents, including
MS-325. Under the terms of this non-exclusive agreement, research is
performed at several centers in addition to our facilities, including
General Electric's corporate research facility in Schenectady, NY; General
Electric Medical Research in Milwaukee, WI; the National Institute of
Health and several academic centers.
PHILIPS MEDICAL SYSTEMS
In November 1998, we agreed with Philips Medical Systems to collaborate in
advancing the development of contrast-based cardiovascular MRI
technologies. Under the terms of this non-exclusive collaboration
agreement, the companies will combine their resources to optimize imaging
technology and improve 3-dimensional visualization of arteries and veins in
patients undergoing MR angiography. Research and development is to be
carried out at several international Philips research centers, as well as
at our facilities.
SIEMENS
In September 1999, we announced a non-exclusive collaboration with Siemens
to optimize MR imaging technology and improve visualization of arteries and
veins in patients undergoing MR angiography. The collaboration will also
focus on expanding the use of MRI in diagnosing cardiovascular disease and
providing user-friendly tools for easy visualization of the cardiovascular
system in 3-dimensional space. Research and development will be carried out
at our facilities and at Siemens' Iselin, NJ facilities.
NEW APPLICATIONS
PFIZER
In September 1998, we and Pfizer entered into an exclusive agreement to
explore the potential utility of MS-325-enhanced MRI in the diagnosis of
female sexual arousal dysfunction. As part of this collaboration, we and
Pfizer undertook a Phase II feasibility trial to explore the efficacy of
MS-325-enhanced MRI in the detection and monitoring of female sexual
arousal dysfunction. Under the terms of this collaboration, Pfizer has full
responsibility for funding the trial. Pfizer currently markets Viagra(R)
for erectile dysfunction in men.
TECHNOLOGY PLATFORM
Our product candidates are small molecule chelates (soluble metal-organic
complexes) containing a magnetically active metal element, gadolinium, which
elicits a strong MRI signal. The design of these molecules derives from the
unique and highly complex intersection of chemistry, pharmacology, and
biophysics. Our compounds must be safe, excretable from the body, and display a
useful distribution pattern in the body. At the same time, these agents must
elicit the strongest possible effect on the local magnetic properties of tissue.
Our scientists specialize in discovering and patenting useful ways to combine
these two disparate areas of investigation. Specifically, we believe our ability
to design targeted MRI contrast agents is a result of our expertise in three
areas:
TARGETING
We develop metal complexes that are engineered to bind to particular proteins
and receptor molecules in the body. This binding causes increased concentration
and retention of the contrast agent in the specific tissues and fluids that
contain the targeted receptor molecules. The challenge in designing such agents
is two-fold: one must both choose the best target - the protein or cell type
that most precisely characterizes the relevant disease state - and identify a
targeting region that binds to that target without binding to other molecules in
the body. The targeting region of MS-325, for example, is designed to bind
selectively to albumin, the most common blood protein, which keeps the agent
localized within the bloodstream. For EP-862, we have used combinatorial
chemistry technology to select a family of highly specific peptides which bind
to fibrin, the dominant protein
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inside clots, without binding to fibrinogen, a similar, but far more common
protein in blood. We have considerable expertise in peptide synthesis and in
labeling the peptides with strongly enhancing clusters of gadolinium.
MRI SIGNAL GENERATION
A key part of our biophysical technology platform is receptor-induced magnetic
enhancement, or RIME. RIME was developed by Dr. Randall Lauffer, our founder and
Chief Scientific Officer, while at Massachusetts General Hospital, and is now
exclusively licensed by us under patents held by the Massachusetts General
Hospital. The binding of a RIME agent to its receptor reduces the rate at which
the agent rotates, in solution. This reduction in rotation rate leads to a
complex magnetic effect whereby the agent's signal-enhancing characteristics are
substantially increased, resulting in a stronger signal during MR scans. For
MS-325, RIME effects result in an up to 10-fold increase in signal relative to
non-specific gadolinium agents. We also have technology for the synthesis of
discrete, compact clusters of gadolinium chelates to increase the signal from a
single targeting molecule. This involves challenges in both chemistry and
biophysics to maintain the RIME effect.
IMAGE ACQUISITION AND 3-D VISUALIZATION
We have also developed significant expertise in the translation of raw MRI data
into clinically useful 3-dimensional images. MRI is the most flexible of the
major medical imaging modalities. The hardware and software of most MRI scanners
allow an enormous range of acquisition methods, and, increasingly, methods for
displaying and interpreting the resulting medical images. Through our research
and development, extensive academic collaborations and industrial partnerships,
we have built a deep understanding of the relationships between the contrast
agent biophysics, scanner engineering, and medical practice. Our expertise
allows us not only to create the best images for the agents we have already
designed, but is critical for optimizing the usefulness of future MRI agents.
COMPETITION
The healthcare industry is characterized by extensive research efforts and rapid
technological change, and there are many companies that are working to develop
products similar to ours. There are currently no FDA-approved targeted vascular
contrast agents for use with MRI. However, there are a number of non-specific
MRI agents approved for marketing in the United States and in certain foreign
markets that are likely to compete with MS-325 if approved for MR angiography.
Magnevist(R) by Schering-AG, Dotarem(R) by Guerbet, S.A., Omniscan(R) by Nycomed
Imaging ASA ("Nycomed"), ProHance(R) by Bracco S.p.A. ("Bracco") and OptiMARK(R)
by Mallinckrodt are all such products. We are aware of three competing agents
under clinical development, Nyomed's NC100150, Schering AG's Gadomer-17 and
SHU555C, that are being evaluated for use in MR angiography. We believe two
additional MRI contrast agents, Bracco's B-22956/1 and Advanced Magnetics' Code
7228 may be in preclinical testing for this indication. We are aware of no MRI
contrast agent other than EP-862 that is being developed for use in imaging
blood clots. We can not assure you that our competitors will not succeed in the
future in developing products that are more effective than any that are being
developed by us. We believe that our ability to compete within the MRI contrast
agent market is dependent on a number of factors, including the success and
timeliness with which we complete FDA trials, the breadth of applications, if
any, for which our products receive approval, and the effectiveness, cost,
safety and ease of use of our products in comparison to the products of our
competitors. Our success will also be based on physician acceptance of MRI as a
primary imaging modality for certain cardiovascular and other applications.
We have many competitors, including pharmaceutical, biotechnology and chemical
companies. A number of competitors, including two of our strategic partners, are
actively developing and marketing products that, if commercialized, would
compete with our product candidates. Many of these competitors have
substantially greater capital and other resources than we do and may represent
significant competition for us. Such companies may succeed in developing
technologies and products that are more effective or less costly than any of
those that may be developed by us, and such companies may be more successful
than us in developing, manufacturing and marketing products. Furthermore, there
are several well-established medical imaging modalities that currently compete,
and will continue to compete, with MRI, including X-ray angiography, CT, nuclear
medicine and ultrasound. Other companies are actively developing the
capabilities of the competing modalities to enhance their effectiveness in
cardiovascular system imaging. For example, we are aware of at least one
radiopharmaceutical agent, Schering AG's AcuTect, which has been approved for
imaging acute venous thrombosis. Several other nuclear medicine agents,
including Draxis Health's FibrImage and Schering AG's P748, are in clinical
testing for DVT and PE, respectively. We believe another radiopharmaceutical
under clinical development by Schering AG, P-773, is being investigated for use
in imaging atherosclerotic plaque. In addition, while no ultrasound contrast
agent has yet been approved for myocardial perfusion imaging, several of these
agents are undergoing clinical testing for this indication, including Molecular
Biosystems' Optison, DuPont's Definity, Alliance Pharmaceutical's Imagent,
Nycomed's Sonazoid, and Sonus Pharmaceuticals' Echogen. Finally, we are aware of
one ultrasound agent, ImaRx's MRX-408, under preclinical development for imaging
DVT. We cannot guarantee that we will be able to compete successfully in the
future or that developments by others will not render MS-325, EP-862 or our
future product candidates obsolete or non-competitive or that our collaborators
or customers will not choose to use competing technologies or products.
PATENTS AND PROPRIETARY RIGHTS
We consider the protection of our proprietary technologies to be material to our
business prospects. We pursue a comprehensive patent program in the United
States and in other countries where we believe that significant market
opportunities exist.
We own or have exclusively licensed patents and patent applications on the
critical aspects of our core technology as well as many specific applications of
this technology. Our patents and applications covering RIME technology consist
of the following:
- Seven U.S. patents exclusively licensed from MGH as well as their cognate
patents and applications in foreign countries.
- Two U.S. patents owned by us as well as their cognate patents and
applications in foreign countries.
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- Seven applications in prosecution on seven different subject matters
as well as their cognate patents and applications in foreign countries.
Our two U.S. patents which broadly cover RIME technology, albumin binding with
metal chelates, and liver targeting metal chelates, have been issued a patent in
Europe similar to those United States patents, and have received notice of
allowance for a similar patent application in Japan. These two United States
patents were involved in an interference proceeding with an application owned by
Mallinckrodt, but the interference was terminated in our favor. Our Japanese
patent application has been opposed by several parties. The sole issue in these
proceedings is whether the Japanese Patent Office should have granted and/or
allowed patents to us. The Japanese Patent Office has issued a final rejection
of the Japanese patent application. A Notice of Appeal was filed in the Japanese
Patent Office on May 9, 1999, but the case has not yet been assigned to an
Examiner.
In addition, third parties have sought, in an Italian court, a declaration of
non-infringement of our European patent. Those third parties seek transborder
application of a non-infringement declaration in those European countries
where our European patent is in force. The third parties also seek to
invalidate the Italian portion of the patent. The complaint was filed on
February 23, 1999 in the Court of Milan, Italy. There is no potential
liability, other than court costs, to us in this suit. This case is in the
early pretrial stage. The parties had previously sued the General Hospital
Corporation (hereinafter "the Hospital"), the assignee of the patent, in
Italy seeking to invalidate the Italian portion of the same patent. The
complaint was filed on October 20, 1998 in the Court of Milan, Italy. The
sole issue in this case is whether the Italian portion of the patent is
valid. This case was consolidated with the second Italian action, discussed
above. The same parties have also sued the Hospital in the United Kingdom
(Patents Court, London) seeking a declaration of invalidity of the UK portion
of the Hospital's patent. The appeals court in the United Kingdom has
affirmed a stay of the proceedings pending the final outcome of the
Opposition Proceedings in the European Patent Office. There is no potential
liability to us, except court and legal costs in this case. On May 9, 2000,
the European Patent Office maintained the validity of the European patent in
a slightly amended form. On May 8, 2000, we granted to Schering AG, one of
the opposing parties, a worldwide, royalty-bearing license to the European
patent. The remaining opposing parties can elect to appeal the May 9, 2000
decision. In addition, we and the Hospital have continued two patent
infringement actions in Europe. In these actions, in France and Germany, we
and the Hospital seek to enforce the European patent against the same parties
seeking non-infringement and invalidity judgments. We, together with the
Hospital, seek both injunctive relief and damages in these actions. In
Germany, the case is stayed pending a decision on jurisdiction in Italy. In
France, the case is in the early pretrial stage. These oppositions, appeals
relating thereto and the European proceedings, will likely take several years
to finally resolve.
While we believe that we will prevail in these proceedings, there can be no
assurance as to the scope of the claims that will be maintained, if any, or the
ultimate benefit, if any, of those claims to us in protecting our products.
We have exclusively licensed five additional patents in the United States. These
patents have counterpart patent applications pending in Japan and Europe. We
have also received an additional United States patent covering novel metal
chelates and have a counterpart parent application pending in Japan. Finally, we
have patent applications pending in the United States, Japan and Europe covering
various aspects of our RIME technology. We have received a patent in the United
States covering the process by which MS-325 is manufactured (U.S. Patent Number
5,919,967; granted July 6, 1999; expires June 11, 2017). Our patent protection
for MS-325 currently extends to 2006 in the United States and Europe. If the
currently pending patent applications issue, this protection will be extended
until 2015. Protection for the manufacturing process in the United States is
already extended until 2017, and will be extended until 2016 in Europe and Japan
if the currently pending patent applications issue. In addition, during 1999 and
early 2000 we filed four new patent applications for additional products and
processes involving compounds, compositions, and methods for imaging.
An issued patent grants to the owner the right to exclude others from practicing
inventions claimed therein. In the United States, a patent filed before June 8,
1995 is enforceable for 17 years from the date of issuance or 20 years from the
deemed date of filing the underlying patent applications, whichever is longer.
Patents based on applications filed from June 8, 1995 expire 20 years from the
deemed date. The General Agreement on Tariffs and Trade provides that patents
whose applications were filed on or after June 8, 1995 are effective for 20
years from filing. This new rule is generally regarded as unfavorable to
pharmaceutical companies, where the time period between patent filing and
commercialization of the patented product may be extended many years because of
the lengthy development cycle and regulatory process.
The patent positions of pharmaceutical and biopharmaceutical firms involve
complex legal and factual questions. There can be no assurance that our issued
patents, or any patents that may be issued in the future, will effectively
protect our technology or provide a competitive advantage. There can be no
assurance that any of our patents or patent applications will not be challenged,
invalidated or circumvented in the future.
Our commercial success will also depend on our ability to operate without
infringing upon the patents of others in the United States and abroad. If any
third-party patents are upheld as valid and enforceable in any judicial or
administrative proceeding, we could be prevented from practicing the subject
matter claimed in such patents, or would be required to obtain licenses from the
patent owners of each such patent, or to redesign our products or processes, to
avoid infringement. There can be no assurance that such licenses would be
available or, if available, would be available on terms acceptable to us or that
we would be successful in any attempt to redesign our products or processes to
avoid infringement. Accordingly, an adverse determination in a judicial or
administrative proceeding or failure to obtain necessary licenses could prevent
us from manufacturing and selling our products, which would have a material
adverse effect on our business, financial condition and results of operations.
There may be pending or issued patents, held by parties not affiliated with
us, relating to technologies used by us in the development or use of certain
of our product candidates. There can be no assurance that our current or
future activities will not be challenged, that additional patents will not be
issued containing claims materially constraining our proposed activities,
that we will not be required to obtain licenses from third parties, or that
we will not become involved in costly, time-consuming litigation regarding
patents in the field of contrast agents, including actions brought to
challenge or invalidate our own patent rights. At the same time, we are aware
of certain products under development by others which we believe may infringe
certain of our exclusively licensed patents. We have commenced and/or expect
to commence litigation in various European countries against other third
parties for infringing our European patent. These litigations will likely
take several years to finally resolve. We are pursuing license or
cross-license arrangements with or, if necessary and appropriate, are
continuing infringement proceedings against, these parties. In this regard,
on May 8, 2000, we granted to Schering AG a worldwide royalty-bearing license
to our patents covering Schering AG's development project, eovist injection,
an MRI contrast agent for imaging the liver. Also on May 8, 2000, Schering AG
granted us a non-exclusive royalty-bearing license to its Japanese patents,
1,932,626, 1,968,413 and its Japanese Application, WO99/16474. We have agreed
to withdraw our invalidation claim of Shering AG's Japanese patent, 1,932,626
in the Japanese Patent Office pursuant to this license agreement. While we
believe that we will prevail in these litigations, there can be no assurance
as to the outcome or the scope of any injunctive or monetary relief we may
recover. We also intend to pursue license or cross-license arrangements with
or, if necessary and appropriate, infringement proceedings against, these
parties upon their seeking final regulatory approval for the marketing and
sale of any such products.
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Many of our competitors are continuing to actively pursue patent protection for
activities and discoveries similar to ours. There can be no assurance that these
competitors, many of which have substantially greater resources than us and have
made substantial investments in competing technologies, will not in the future
seek to assert that our products or chemical processes infringe their existing
patents and/or will not seek new patents that claim to cover aspects of our
technology. Furthermore, patent applications in the United States are maintained
in secrecy until patents issue, and patent applications in foreign countries are
maintained in secrecy for a specified period after filing. Publication of
discoveries in the scientific or patent literature tends to lag behind actual
discoveries and the filing of related patent applications. In addition, patents
issued and patent applications filed relating to biopharmaceuticals are
numerous. Therefore, there can be no assurance that we are aware of all
competitive patents, either pending or issued, that relate to products or
processes used or proposed to be used by us.
We and MGH have entered into a license agreement pursuant to which MGH has
granted us an exclusive worldwide license to the patents and patent
applications, which relate to our only product candidate, MS-325. The MGH
license imposed certain due diligence obligations with respect to the
development of products covered by the license, all of which have been fulfilled
to date. The MGH license requires us to pay royalties on our net sales of
MS-325. We must also pay MGH a percentage of all royalties received from our
sublicensees. Accordingly, we will be required to make payments to MGH on
profits generated under the Schering collaboration, if any, and on royalties
received from Daiichi under our license agreement, if any. Our failure to comply
with these requirements could result in the conversion of the license from being
exclusive to non-exclusive in nature or termination of the license agreement
itself. Any such event would have a material adverse effect on our business,
financial condition and results of operations.
The pharmaceutical and biotechnology industries have been characterized by
extensive litigation regarding patents and other intellectual property rights.
Litigation may be necessary to enforce any patents issued to us and/or determine
the scope and validity of others' proprietary rights. We may have to participate
in interference proceedings declared by the United States Patent and Trademark
Office or by foreign agencies to determine the priority of inventions. Any
involvement in litigation surrounding these issues could result in extensive
costs to us as well as be a significant distraction for management. Such costs
could have a material adverse effect on our business, financial condition and
results of operations.
We also rely upon trade secrets, technical know-how, and continuing
technological innovation to develop and maintain our competitive position. We
typically require our employees, consultants, and advisors to execute
confidentiality and assignment of invention agreements in connection with their
employment, consulting or advisory relationships with us. These agreements
require disclosure and assignment to us of ideas, developments, discoveries and
inventions made by employees, consultants and advisors. There can be no
assurance, however, that these agreements will not be breached or that we will
have adequate remedies for any breach. Furthermore, no assurance can be given
that competitors will not independently develop substantially equivalent
proprietary information and techniques or otherwise gain access to our
proprietary technology, or that we can meaningfully protect our rights in
unpatented proprietary technology.
We intend to vigorously protect and defend our intellectual property. Costly and
time-consuming litigation brought by us may be necessary to enforce our issued
patents, to protect our trade secrets or know-how owned by us, or to determine
the enforceability, scope, and validity of the proprietary rights of others.
MANUFACTURING
We currently manufacture, as part of our ongoing development efforts, small
non-GMP (good manufacturing practices as promulgated by the FDA) batches of
MS-325 in our laboratories located in Cambridge, Massachusetts. MS-325 for use
in preclinical and Phase I and II clinical trials has been manufactured in
accordance with GMP by outside contractors. As part of its strategic alliance
with the Company, Mallinckrodt will serve as primary manufacturer for MS-325
thereafter worldwide except for Japan and, possibly, for Japan. If Mallinckrodt
is unable to produce MS-325 in adequate amounts and at a reasonable cost or to
comply with any applicable regulations, including GMP, it could have a material
adverse effect on our
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business, financial condition and results of operations. Furthermore, should
Mallinckrodt fail to fulfill its manufacturing responsibilities
satisfactorily, Schering AG could be forced to manufacture the compound
itself, or to find an alternative manufacturer. We can not assure you that
Schering AG would be able to find such an alternative manufacturer or
manufacture MS-325 in a timely manner. If we experience a delay in
manufacturing it could result in a delay in the approval or commercialization
of MS-325. We currently procure the raw materials for the various components
of MS-325 from a broad variety of vendors and, wherever possible, maintain
relationships with multiple vendors for each component. There are a number of
components of MS-325 for which the largest suppliers may have significant
control over the market price due to controlling market shares. If any one of
our suppliers decided to increase prices significantly or reduce quantities
of any component of MS-325 available for sale to us, it could have a material
adverse effect on our ability to commercialize MS-325 and on our business,
financial condition and results of operations. See "-Strategic Alliances."
GOVERNMENT REGULATION
The manufacture and commercial distribution of our product candidates are
subject to extensive governmental regulation in the United States and other
countries. Pharmaceuticals, including contrast-imaging agents for use with MRI,
are regulated in the United States by the FDA under the Food, Drug and Cosmetic
Act ("FD&C Act") and require FDA approval prior to commercial distribution.
Pursuant to the FD&C Act, pharmaceutical manufacturers and distributors must be
registered with the FDA and are subject to ongoing FDA regulation, including
periodic FDA inspection of their facilities and review of their operating
procedures. Noncompliance with applicable requirements can result in failure to
receive approval, withdrawal of approval, total or partial suspension of
production, fines, injunctions, civil penalties, recalls or seizure of products
and criminal prosecution, each of which would have a material adverse effect on
our business, financial conditions and results of operations.
In order to undertake clinical trials and market pharmaceutical products for
diagnostic or therapeutic use in humans, the procedures and safety standards
established by the FDA and comparable agencies in foreign countries must be
followed. In the United States, a company seeking approval to market a new
pharmaceutical must obtain FDA approval of a new drug application ("NDA").
Before an NDA may be filed, however, a certain procedure is typically followed.
This includes: (i) performance of preclinical laboratory and animal studies;
(ii) submission to the FDA of an application for an investigational new drug
application ("IND"), which must become effective before human clinical trials
may commence; (iii) completion of adequate and well-controlled human clinical
trials to establish the safety and efficacy of the pharmaceutical for its
intended use; (iv) submission to the FDA of an NDA; and (v) approval of the NDA
by the FDA prior to any commercial sale or shipment of the agent.
Preclinical studies include laboratory evaluation of product chemistry and
animal studies to assess the potential safety and efficacy of the product and
its formulation. The results of the preclinical studies and the protocol for the
proposed clinical trial are submitted to the FDA as part of an IND, and unless
the FDA objects, the IND will become effective 30 days following its receipt by
the FDA.
Clinical trials under the IND are typically conducted in three sequential
phases, but the phases may overlap. In Phase I, the initial introduction of the
pharmaceutical into humans, the pharmaceutical is tested for safety, dosage
tolerance, metabolism, distribution, excretion and clinical pharmacology in
healthy adult subjects. Phase II involves a detailed evaluation of the safety
and efficacy of the agent in a range of doses in patients with the disease or
condition being studied. Phase III clinical trials typically consist of
evaluation of safety and efficacy in a larger patient population and at more
institutions.
The process of completing clinical testing and obtaining FDA approval for a new
product is likely to take a number of years. When the study for a particular
indication as described in the IND is complete, and assuming that the results
support the safety and efficacy of the product for that indication, an NDA is
submitted to the FDA. The NDA approval process can be expensive, uncertain and
lengthy. Although the FDA is supposed to complete its review of an NDA within
180 days of the date that it is filed, the review time is often significantly
extended by the FDA, which may require more information or clarification of
information already provided in the NDA. During the review period, an FDA
advisory committee likely will be asked to review and evaluate the application
and provide recommendations to the FDA about approval of the pharmaceutical. In
addition, the FDA will inspect the facility at which the pharmaceutical is
manufactured to ensure compliance with GMP and other applicable regulations.
Failure of the third-party manufacturers to comply or come into compliance with
GMP requirements could significantly delay FDA approval of the NDA. The FDA may
grant an unconditional approval of an agent for a particular indication or may
grant approval conditioned on further post-marketing testing and/or surveillance
programs to monitor the agent's efficacy and side effects. Results of these
post-marketing programs may prevent or limit the further marketing of the agent.
In addition, further studies and a supplement to the initially approved NDA will
be required to gain approval for the use of an approved product in indications
other than those for which the NDA was approved initially.
After an NDA is approved, we would continue to be subject to pervasive and
continuing regulation by the FDA, including record keeping requirements,
reporting of adverse experience from the use of the agent and other requirements
imposed by the FDA. FDA regulations also require FDA approval of an NDA
supplement for certain changes if they affect the safety and efficacy of the
pharmaceutical, including, but not limited to, new indications for use, labeling
changes, the use of a different facility to manufacture, process or package the
product, changes in manufacturing methods or quality control systems and changes
in specifications for the product. Failure by us to receive approval of an NDA
supplement could have a material adverse effect on our business, financial
condition and results of operations.
The advertising of most FDA-regulated products is subject to FDA and Federal
Trade Commission jurisdiction, but the FDA has sole jurisdiction over
advertisements for prescription drugs. We are and may be subject to regulation
under state and Federal law regarding occupational safety, laboratory practices,
handling of chemicals, environmental protection and hazardous substance control.
We also will be subject to other present and possible future local, state,
federal and foreign regulation. Failure to comply with regulatory requirements
could have a material adverse effect on our business, financial condition and
results of operations.
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Approval and marketing of pharmaceutical products outside of the United States
are subject to regulatory requirements that vary widely from country to country.
In the European Union ("EU"), the general trend has been towards coordination of
common standards for clinical testing of new agents, leading to changes in
various requirements imposed by each EU country. The level of regulation in the
EU and other foreign jurisdictions varies widely. The time required to obtain
regulatory approval from comparable regulatory agencies in each foreign country
may be longer or shorter than that required for FDA approval. In addition, in
certain foreign markets we may be subject to governmentally mandated prices for
our products.
Our research, development and manufacturing processes require the use of
hazardous substances and testing on certain laboratory animals. As a result, we
are also subject to federal, state, and local laws, regulations and policies
governing the use, generation, manufacture, storage, air emission, effluent
discharge, handling and disposal of certain materials and waste as well as the
use of and care of laboratory animals. These laws and regulations are all
subject to change. We cannot predict what impact, if any, such changes might
have on our business, financial condition or results of operations.
REIMBURSEMENT
We expect that sales volumes and prices of our products will be dependent in
large measure on the availability of reimbursement from third-party payors and
that individuals seldom would be willing or able to pay directly for all the
costs associated with procedures which in the future may incorporate the use of
our products. Most of these third-party payors provide coverage for MRI for some
indications when it is medically necessary, but the amount that a third-party
payor will pay for MRI may not include a separate payment for a contrast imaging
agent that is used with MRI. Reimbursement rates vary depending on the procedure
performed, the third-party payor, the type of insurance plan and other factors.
Third-party payors carefully review and increasingly challenge the prices
charged for procedures and medical products. In the past few years, the amounts
paid for radiology procedures in particular have come under careful scrutiny and
have been subject to decreasing reimbursement rates. In addition, an increasing
percentage of insured individuals are receiving their medical care through MCOs
which monitor and often require preapproval of the services that a member will
receive. Many MCOs are paying their providers on a capitated basis which puts
the providers at financial risk for the services provided to their patients by
paying them a predetermined payment per member per month. The percentage of
individuals, including Medicare beneficiaries, covered by MCOs is expected to
grow in the United States over the next decade. We believe that the managed care
approach to healthcare and the growth in capitated arrangements and other
arrangements under which the providers are at financial risk for the services
that are provided to their patients will facilitate the market acceptance of our
products, as we believe that the use of our products will significantly lower
the overall costs and improve the effectiveness of managing patient populations.
We can not assure you, however, that our products will be available, will lower
costs of care for any patients or that providers will choose to utilize them
even if they do, or if reimbursement will be available.
In foreign markets, reimbursement is obtained from a variety of sources,
including governmental authorities, private health insurance plans and labor
unions. We may need to seek international reimbursement approvals, although we
can not assure you that any such approvals will be obtained in a timely manner
or at all. Failure to receive international reimbursement approvals could have a
material adverse effect on market acceptance of our product candidates in the
international markets in which such approvals are sought.
We believe that reimbursement in the future will be subject to increased
restrictions such as those described above, both in the United States and in
foreign markets. We believe that the overall escalating cost of medical products
and services has led to, and will continue to lead to, increased pressures on
the health care industry, both foreign and domestic, to reduce the cost of
products and services, including products offered by the Company. We can not
assure you, in either the United States or foreign markets, that third party
reimbursement will be available or adequate, that current reimbursement amounts
will not be decreased in the future or that future legislation, regulation, or
reimbursement policies of third-party payors will not otherwise adversely affect
the demand for our product candidates or our ability to sell our product
candidates on a profitable basis, particularly if MRI exams enhanced with our
contrast agents are more expensive than competing vascular imaging techniques
that are equally effective. The unavailability or inadequacy of third-party
payor coverage or reimbursement could have a material adverse effect on our
business, financial condition and results of operations.
Properties
We lease a total of 17,050 square feet of space at 71 Rogers Street and adjacent
locations, and 13,310 square feet at 161 First Street, all in Cambridge,
Massachusetts. The current lease at 71 Rogers Street and adjacent locations runs
until December 31, 2002, and we have an option to extend the lease for an
additional three or five years. During 1999, we extended our lease at 161 First
Street through December 31, 2002. We believe that our current facilities and
currently available space are adequate to meet our requirements for the
foreseeable future.
EMPLOYEES
As of June 30, 2000 we employed 78 persons on a full-time basis, of which 64
were involved in research and development and 14 in administration and general
management. Twenty-three of our employees hold Ph.D. or M.D. degrees. We believe
that our relations are good with all of our employees. None of our employees are
a party to a collective bargaining agreement.
LEGAL PROCEEDINGS
We are not a party to any material legal proceedings.
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PLAN OF DISTRIBUTION
We may offer the common stock:
- directly to purchasers;
- to or through underwriters;
- through dealers, agents or institutional investors; or
- through a combination of such methods.
Regardless of the method used to sell the common stock, we will provide a
prospectus supplement that will disclose:
- the identity of any underwriters, dealers, agents or investors who
purchase the common stock;
- the material terms of the distribution, including the number of shares
sold and the consideration paid;
- the amount of any compensation, discounts or commissions to be received
by the underwriters, dealers or agents;
- the terms of any indemnification provisions, including indemnification
from liabilities under the federal securities laws; and
- the nature of any transaction by an underwriter, dealer or agent during
the offering that is intended to stabilize or maintain the market price
of the common stock.
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LEGAL MATTERS
The validity of the issuance of the common stock offered in this prospectus is
being passed upon for us by Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.,
Boston, Massachusetts.
EXPERTS
The financial statements of EPIX Medical, Inc. included in EPIX Medical,
Inc.'s Annual Report (Form 10-K) for the year ended December 31, 1999, have
been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon included therein and incorporated herein by reference.
Such financial statements are incorporated herein by reference in reliance
upon such report given on the authority of such firm as experts in accounting
and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We are a public company and file annual, quarterly and special reports, proxy
statements and other information with the Securities and Exchange Commission.
You may read and copy any document we file at the SEC's Public Reference Room at
450 Fifth Street, N.W., Washington, D.C. 20549. You can request copies of these
documents by writing to the SEC and paying a fee for the copying cost. Please
call the SEC at 1-800-SEC-0330 for more information about the operation of the
public reference room. Our SEC filings are also available to the public at the
SEC's web site at "http://www.sec.gov." In addition, our stock is listed for
trading on the Nasdaq National Market. You can read and copy reports and other
information concerning us at the offices of the National Association of
Securities Dealers, Inc. located at 1735 K Street, Washington, D.C. 20006.
This prospectus is only part of a Registration Statement on Form S-3 that we
have filed with the SEC under the Securities Act of 1933 and therefore omits
certain information contained in the Registration Statement. We have also filed
exhibits and schedules with the Registration Statement that are excluded from
this prospectus, and you should refer to the applicable exhibit or schedule for
a complete description of any statement referring to any contract or other
document. You may:
- inspect a copy of the Registration Statement, including the exhibits and
schedules, without charge at the public reference room or
- obtain a copy from the SEC upon payment of the fees prescribed by the
SEC.
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INCORPORATION OF DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file with it,
which means that we can disclose important information to you by referring you
to those documents. The information incorporated by reference is considered to
be a part of this prospectus and information that we file later with the SEC
will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings made with the SEC
under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934
until the sale of all of the shares of common stock. The documents we are
incorporating by reference are:
- Our Quarterly Reports on Form 10-Q for the quarterly periods ended
March 31, 2000 and June 30, 2000;
- Our Annual Report on Form 10-K for the fiscal year ended
December 31, 1999;
- Our Form 8-K filed on June 29, 2000;
- Our Definitive Proxy Statement filed on March 31, 2000
You may request a copy of these filings at no cost by writing or telephoning our
Chief Executive Officer at the following address and phone number:
EPIX Medical, Inc.
71 Rogers Street
Cambridge, Massachusetts 02142
(617) 250-6000
This prospectus is part of a Registration Statement that we filed with the SEC.
You should rely only on the information incorporated by reference in or provided
in this prospectus and the Registration Statement. We have not authorized any
other person to provide you with different information. We are not making an
offer of these securities in any state where the offer is not permitted. You
should not assume that the information in this prospectus is accurate as of any
date other than the date on the front of this document.
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3,000,000 SHARES
EPIX MEDICAL, INC.
COMMON STOCK
PROSPECTUS
, 2000
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE
HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM
THAT CONTAINED IN THIS PROSPECTUS. WE ARE OFFERING TO SELL, AND SEEKING
OFFERS TO BUY, SHARES OF COMMON STOCK ONLY IN JURISDICTIONS WHERE OFFERS
AND SALES ARE PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS
ACCURATE ONLY AS OF THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF
DELIVERY OF THIS PROSPECTUS OR OF ANY SALE OF OUR COMMON STOCK.
NO ACTION IS BEING TAKEN IN ANY JURISDICTION OUTSIDE THE UNITED STATES TO
PERMIT A PUBLIC OFFERING OF THE COMMON STOCK OR POSSESSION OR DISTRIBUTION
OF THIS PROSPECTUS IN THAT JURISDICTION. PERSONS WHO COME INTO POSSESSION
OF THIS PROSPECTUS IN ANY JURISDICTION OUTSIDE THE UNITED STATES ARE
REQUIRED TO INFORM THEMSELVES ABOUT AND TO OBSERVE ANY RESTRICTIONS AS TO
THIS OFFERING AND THE DISTRIBUTION OF THIS PROSPECTUS APPLICABLE TO THAT
JURISDICTION.
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PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The table sets forth our estimates (other than the SEC Filing Fee) of our
expenses in connection with the issuance and distribution of the common
stock being registered. None of the following expenses are being paid by the
holders of options and warrants which may be exercised for such holder's pro
rata portion of the Shares.
<TABLE>
<CAPTION>
ITEM AMOUNT
<S> <C>
SEC registration fee.......................................... $13,662.00
Legal fees and expenses....................................... $20,000.00
Accounting fees and expenses.................................. $12,000.00
Miscellaneous fees and expenses............................... $4,000.00
---------
Total......................................................... $49,662.00
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145(a) of the General Corporation Law of the State of Delaware
provides that a Delaware corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or enterprise,
against expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no cause to believe his conduct was unlawful.
Section 145(b) provides that a Delaware corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses actually
and reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted under similar standards, except that no
indemnification may be made in respect of any claim, issue or matter as to which
such person shall have been adjudged to be liable to the corporation unless and
only to the extent that the court in which such action or suit was brought shall
determine that despite the adjudication of liability, such person is fairly and
reasonably entitled to be indemnified for such expenses which the court shall
deem proper.
Section 145 further provides that to the extent a director or officer of a
corporation has been successful in the defense of any action, suit or proceeding
referred to in subsections (a) and (b) or in the defense of any claim, issue or
matter therein, he shall be indemnified against expenses actually and reasonably
incurred by him in connection therewith; that indemnification provided for by
Section 145 shall not be deemed exclusive of any other rights to which the
indemnified party may be entitled; and that the corporation may purchase and
maintain insurance on behalf of a director or officer of the corporation against
any liability asserted against him or incurred by him in any such capacity or
arising out of his status as such whether or not the corporation would have the
power to indemnify him against such liabilities under such Section 145.
The Certificate of Incorporation, as amended, and By-laws, as amended, of
the Company provide for indemnification of the Company's directors and officers
to the fullest extent permitted by law. The By-laws also permit the Board of
Directors to authorize the Company to purchase and maintain insurance against
any liability asserted against any director, officer, employee or agent of the
Company arising out of his capacity as such. Insofar as indemnification for
liabilities under the Securities Act may be permitted to directors, officers, or
controlling persons of the Company pursuant to the Company's Certificate of
Incorporation, as amended, its By-laws, as amended, and the Delaware General
Corporation Law, the Company has been informed that in the opinion of the
Commission such indemnification is against public policy as expressed in such
Act and is therefore unenforceable.
As permitted by Section 102(b)(7) of the Delaware General Corporation Law,
the Company's Certificate of Incorporation, as amended, provides that directors
of the Company shall not be personally liable to the Company or its stockholders
for monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the Company or
its stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the Delaware General Corporation Law, relating to prohibited dividends or
distributions or the repurchase or redemption of stock or (iv) for any
transaction from which the director derives an improper personal benefit. As a
result of this provision, the Company and its stockholders may be unable to
obtain monetary damages from a director for breach of his or her duty of care.
II-1
<PAGE>
ITEM 16. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
4.1** Restated Certificate of Incorporation of the Company. (Filed as
Exhibit 4.1 to the Company's Registration Statement on Form S-8
(File No. 333-30531) and incorporated herein by reference.)
4.2** Amended and Restated By-laws of the Company. (Filed as Exhibit 4.2 to
the Company's Registration Statement on Form S-8 (File No. 333-30531)
and incorporated herein by reference.)
4.3** Specimen certificate for shares of Common Stock of the Company (Filed
as Exhibit 4.1 to the Company's Registration Statement on Form S-1
(File No. 333-17581) and incorporated herein by reference.)
5.1 Opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo,P.C., with
respect to the legality of the securities being registered.
23.1** Consent of Ernst & Young LLP.
23.2 Consent of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. (see
Exhibit 5.1)
24.1 Power of Attorney (included on signature page)
------------------------------
* To be filed by Amendment
** Previously filed
II-2
<PAGE>
ITEM 17. UNDERTAKINGS.
A. FILINGS INCORPORATING SUBSEQUENT EXCHANGE ACT DOCUMENTS BY REFERENCE
The undersigned registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the registrant's
annual report pursuant to section 13(a) or section 15(d) of the Securities
Exchange Act of 1934 (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.
B. REGISTRATION STATEMENT PERMITTED BY RULE 430A UNDER THE SECURITIES ACT OF
1933
(1) For purposes of determining any liability under the Securities Act of 1933,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus 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 thereof.
C. Rule 415 Offering.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
provided, however, that paragraphs (A)(1)(i) and (A)(1)(ii) do not apply if
the registration statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the Registrant pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
II-3
<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 on Form S-3 to be signed on its behalf by the undersigned,
thereunto duly authorized, in the Town of Cambridge, Commonwealth of
Massachusetts, on August 22, 2000.
EPIX MEDICAL, INC.
BY: /s/ MICHAEL D. WEBB
-------------------------
Michael D. Webb
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Michael D. Webb his attorney-in-fact, each with the
power of substitution, for him in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this registration statement,
(or any other registration statement for the same offering that is to be
effective upon filing pursuant to Rule 462(b) under the Securities Act) and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, hereby granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite or necessary to be done in
and about the premises, as full to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or any of them or their or his substitutes may lawfully do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
SIGNATURE TITLE DATE
---------------------------------- ------------------------- -------------
/s/ Michael D. Webb Chief Executive Officer August 22, 2000
------------------- (Principal Executive
Michael D. Webb Officer)
/s/ * Vice President of Finance August 22, 2000
-------------------------- and Administration and
Pamela E. Carey Chief Financial Officer
(Principal Financial and
Accounting Officer)
/s/ * Chairman of the Board and August 22, 2000
------------------------------ Director
Christopher F. O. Gabrieli
/s/ * Director August 22, 2000
------------------------------
Stanley T. Crooke, M.D., Ph.D.
/s/ * Director August 22, 2000
------------------------
Luke B. Evnin, Ph.D.
/s/ * Director August 22, 2000
-----------------------------
Randall B. Lauffer, Ph.D.
II-4
<PAGE>
EPIX
INDEX TO EXHIBITS FILED WITH
FORM S-3 REGISTRATION STATEMENT
EXHIBIT
NUMBER DESCRIPTION
4.1** Restated Certificate of Incorporation of the Company. (Filed as
Exhibit 4.1 to the Company's Registration Statement on Form S-8
(File No. 333-30531) and incorporated herein by reference.)
4.2** Amended and Restated By-laws of the Company. (Filed as Exhibit 4.2 to
the Company's Registration Statement on Form S-8 (File No. 333-30531)
and incorporated herein by reference.)
4.3** Specimen certificate for shares of Common Stock of the Company (Filed
as Exhibit 4.1 to the Company's Registration Statement on Form S-1
(File No. 333-17581) and incorporated herein by reference.)
5.1 Opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo,P.C., with
respect to the legality of the securities being registered.
23.1** Consent of Ernst & Young LLP.
23.2 Consent of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
(see Exhibit 5.1)
24.1 Power of Attorney (included on signature page)
------------------------------
* To be filed by Amendment
** Previously filed
