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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION SEPTEMBER 9, 1999
REGISTRATION NO. 333-85171
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------------
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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COLLATERAL THERAPEUTICS, INC.
(Exact name of Registrant as Specified in Its Charter)
Delaware 33-0661290
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
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11622 El Camino Real, San Diego, CA 92130 858-794-3400
(Address, Including Zip Code, And Telephone Number, Including Area Code,
Of Registrant's Principal Executive Offices)
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Jack W. Reich, Ph.D.
President and Chief Executive Officer
COLLATERAL THERAPEUTICS, INC.
11622 El Camino Real, San Diego, CA 92130 858-794-3400
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
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COPIES TO:
Faye H. Russell, Esq.
Maria P. Sendra, Esq.
BROBECK, PHLEGER & HARRISON LLP
550 West "C" Street, Suite 1300
San Diego, California 92101
(619) 234-1966
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Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this registration statement.
If only the securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box: / /
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box: /X/
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, 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: / /
----------
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, AS AMENDED, OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SEC, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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SUBJECT TO COMPLETION, DATED SEPTEMBER 9, 1999
PRELIMINARY PROSPECTUS
The information in this preliminary prospectus is not complete and
may be changed. These securities may not be sold until the registration
statement filed with the Securities and Exchange Commission is effective.
This preliminary prospectus is not an offer to sell the common stock and it
is not soliciting an offer to buy the common stock in any state where the
offer or sale is not permitted.
2,150,000 SHARES
COLLATERAL THERAPEUTICS, INC.
COMMON STOCK
This prospectus relates to the public offering, which is not being
underwritten, of 2,150,000 shares of our common stock, which is held by some
of our current stockholders.
Our common stock is traded on the Nasdaq National Market under the
symbol "CLTX." On September 7, 1999, the average of the high and low price
for the common stock was $18.00.
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THE COMMON STOCK OFFERED INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" COMMENCING ON PAGE 3 FOR A DISCUSSION OF SOME IMPORTANT RISKS YOU
SHOULD CONSIDER BEFORE BUYING ANY SHARES OF COMMON STOCK.
---------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is _____________ ___, 1999
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TABLE OF CONTENTS
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Page
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COLLATERAL THERAPEUTICS, INC................................1
RISK FACTORS................................................3
FORWARD-LOOKING STATEMENTS.................................13
WHERE YOU CAN FIND MORE INFORMATION........................13
INFORMATION INCORPORATED BY REFERENCE......................14
USE OF PROCEEDS............................................14
PLAN OF DISTRIBUTION.......................................14
SELLING STOCKHOLDERS.......................................17
LEGAL MATTERS..............................................18
EXPERTS....................................................18
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COLLATERAL THERAPEUTICS, INC.
Collateral is focused on the discovery, development and
commercialization of non-surgical gene therapy products for the treatment of
cardiovascular diseases, including:
- coronary artery disease,
- peripheral vascular disease,
- congestive heart failure, and
- heart attack.
Our non-surgical gene therapy products use technologies which include:
- our methods of gene therapy,
- therapeutic genes, and
- gene delivery vectors.
Cardiovascular disease is the leading cause of death in the U.S. In
1999, the American Heart Association reported that an estimated 58.8 million
patients in the U.S. had cardiovascular disease. The American Heart
Association also estimated in 1999 that the U.S. healthcare system spends
approximately $178.2 billion annually on the care and treatment of patients
with cardiovascular diseases.
We believe that our products under development hold the potential to
revolutionize the treatment of cardiovascular diseases. We believe that these
products could provide a new standard of care by offering patients simpler,
more cost-effective and lower-risk alternatives to currently available
treatments, such as coronary artery bypass surgery and angioplasty. Our
initial gene therapy products are designed to promote and enhance
angiogenesis, a natural biological process that results in the growth of
additional blood vessels to restore adequate levels of blood flow to
oxygen-deprived tissues. In collaboration with our partner Schering AG, in
May 1998 we began early stage testing in humans, known as a Phase 1/2 trial,
for GENERX-TM-, the first of our gene therapy products.
We have designed our initial gene therapy products for non-surgical
administration by an interventional cardiologist using our methods of gene
therapy. These methods involve a one-time intra-coronary infusion of our
product through a standard cardiac catheter, which could be administered at
the time of initial angiography, on an out-patient basis. In addition to our
products designed to promote and enhance angiogenesis, we are also actively
researching gene therapy products designed to enhance function of the heart
in patients suffering from heart failure and to stimulate heart muscle
regeneration after heart attack.
The following table describes GENERX-TM- and our other non-surgical
cardiovascular gene therapy product candidates and their development status:
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PRODUCT TECHNOLOGY MEDICAL DEVELOPMENT
CANDIDATE (DESIGNATED GENE) INDICATION STATUS
--------- ----------------- ---------- ------
GENERX-TM- Angiogenesis Stable exertional Phase 1/2
(FGF-4) angina due to
coronary artery
disease
GENEVX-TM- Angiogenesis Stable exertional Preclinical
(VEGF) angina due to
coronary artery
disease
GENVASCOR-TM- Angiogenesis Peripheral Preclinical
(FGF-4)) vascular disease
GENECOR-TM- Angiogenesis Congestive heart Preclinical
failure
CORGENIC-TM- Myocardial Congestive heart Preclinical
adrenergic failure
signaling (AC-6)
MYOCOR-TM- Heart muscle Heart attack Preclinical
regeneration
We intend to focus on research and development of products, while
leveraging our technology through the establishment of product development,
manufacturing and marketing collaborations with select pharmaceutical and
biotechnology companies. In May 1996, we entered into a strategic
collaboration with Schering AG, covering gene therapy products for the
promotion and enhancement of angiogenesis. Schering AG has made equity
investments in Collateral in connection with this collaboration agreement.
The Schering AG collaboration provides us with the financial
resources and product development support to allow us to develop particular
gene therapy products to promote and enhance angiogenesis. For other
products, we intend to select development and/or commercialization partners
after we have completed preclinical and, possibly, clinical studies for each
product. We expect that, in the event of successful commercialization of our
products, royalties on worldwide sales of such products would generate
significant revenues in the long-term.
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RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS, IN
ADDITION TO OTHER INFORMATION IN THIS REGISTRATION STATEMENT, BEFORE
PURCHASING SHARES OF OUR COMMON STOCK. EACH OF THESE RISK FACTORS COULD
ADVERSELY AFFECT OUR BUSINESS, OPERATING RESULTS AND FINANCIAL CONDITION, AS
WELL AS ADVERSELY AFFECT THE VALUE OF AN INVESTMENT IN OUR COMMON STOCK.
RISKS RELATED TO OUR BUSINESS
IF OUR POTENTIAL PRODUCTS ARE NOT SUCCESSFULLY DEVELOPED, OUR
REVENUES WILL BE REDUCED.
Our potential products are in the early stages of development.
Either we or a collaborative partner must undertake the time-consuming and
costly processes of completing development and testing for each of our
potential products. To date, only one of our potential products, GENERX-TM-,
has advanced to clinical trials, and those trials are not yet complete. Our
other potential products have not yet advanced to clinical trials, and it is
uncertain whether we or a collaborative partner will be able to complete
product development.
There are many reasons that our potential products may not advance
beyond early stage testing, including the possibility that:
- our potential products may be ineffective or toxic;
- our potential products may be too expensive to develop or
manufacture;
- others may hold or acquire proprietary rights that could
prevent us from developing our products; or
- others may develop equivalent or superior products.
Even if our potential products advance in preclinical development, we or our
partners may not succeed in carrying these potential products forward to
clinical testing. The uncertainties inherent in the development of our
potential products are especially significant in view of their early stage
nature.
IF OUR PRODUCT CANDIDATES DO NOT SUCCESSFULLY COMPLETE THE CLINICAL
TRIAL PROCESS, WE WILL NOT BE ABLE TO MARKET THEM.
For product candidates that advance to clinical testing, we cannot
be certain that we will successfully complete the clinical trials necessary
to receive regulatory product approvals. This process is lengthy and
expensive. To obtain regulatory approvals, we must demonstrate through
preclinical studies and clinical trials that our products are safe and
effective for use in at least one medical indication. Promising results in
preclinical studies and initial clinical trials do not ensure successful
results in later clinical trials, which test broader human use of our
products. Many companies in our industry have suffered significant setbacks
in advanced clinical trials, despite promising results in earlier trials.
Clinical trials may not result in a marketable product.
Many factors may adversely affect clinical trials. For example,
clinical trials are often conducted with patients who have the most advanced
stages of disease. During the course of treatment, these patients can die or
suffer other adverse conditions for reasons that may not be related to the
proposed product being tested. These reactions may adversely affect our
clinical trial results. As a result, our ability to ultimately market the
products and obtain revenues would suffer.
In addition, our ability to complete clinical trials depends on many
factors, including obtaining adequate clinical supplies and having a
sufficient rate of patient recruitment. For example, patient recruitment is a
function of many factors, including:
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- the size of the patient population,
- the proximity of patients to clinical sites, and
- the eligibility criteria for the trial.
Even if patients are successfully recruited, we cannot be sure that
they will complete the treatment process. Delays in patient enrollment or
treatment in clinical trials may result in increased costs, program delays or
both.
With respect to foreign markets, we or our partner will also be
subject to foreign regulatory requirements governing clinical trials. Even if
we complete clinical trials, we may not be able to submit a marketing
application. If we submit an application, the regulatory authorities may not
review or approve it in a timely manner, if at all.
OUR COLLABORATORS MAY CONTROL ASPECTS OF OUR CLINICAL TRIALS WHICH
COULD RESULT IN DELAYS OR OTHER OBSTACLES TO THE COMMERCIALIZATION OF THESE
PRODUCTS.
Our collaborative partners may have or acquire rights to control
aspects of our product development and clinical programs. For example,
Schering AG has rights to control the planning and implementation of product
development and clinical programs related to angiogenic gene therapy
products. As a result, we may not be able to conduct these programs in the
manner or on the time schedule we currently contemplate.
OUR PRODUCTS MAY HAVE UNACCEPTABLE SIDE EFFECTS WHICH COULD DELAY OR
PREVENT PRODUCT APPROVAL.
Possible side effects of gene therapy technologies may be serious
and life-threatening. The occurrence of any unacceptable side effects during
or after preclinical and clinical testing of our potential products could
delay approval of our products and our revenues would suffer. For example,
possible serious side effects of viral vector-based gene transfer include
viral infections resulting from contamination with replication-competent
viruses and inflammation or other injury to the heart or other parts of the
body. In addition, the development of cancer in a patient is a possible side
effect of all methods of gene transfer. Furthermore, there is a possibility
of side effects or decreased effectiveness associated with an immune response
toward any viral vector or gene used in gene therapy. The possibility of such
response may increase if there is a need to deliver the viral vector more
than once.
WE HAVE INCURRED LOSSES SINCE INCEPTION AND MAY NEVER BE PROFITABLE.
We formed Collateral in 1995 and have only a limited operating
history to review in evaluating our business and prospects. We have incurred
operating losses since our inception in 1995. As of June 30, 1999, our
accumulated deficit was approximately $11.0 million. We expect to incur
additional losses for the foreseeable future. We also expect our losses to
increase as our research and development efforts and clinical trials progress.
Our revenues to date have consisted of payments under our
collaborative arrangements and interest income. To date, we have not
generated any revenue from product sales. We do not expect to generate any
revenue from our products for a number of years, if at all. If we, alone or
with our collaborators, do not successfully develop, manufacture and
commercialize our products, we may never achieve profitability. Even if we do
achieve profitability, we cannot predict the level of such profitability.
RISKS RELATED TO PATENTS AND PROPRIETARY INFORMATION.
IF OUR PRODUCTS ARE NOT EFFECTIVELY PROTECTED BY VALID ISSUED
PATENTS OR IF WE ARE NOT OTHERWISE ABLE TO PROTECT OUR PROPRIETARY
INFORMATION IT COULD HARM OUR BUSINESS.
Our business success will depend in part on our ability and that of
our licensors to:
- obtain patent protection for our methods of gene therapy,
therapeutic genes and/or gene-delivery vectors both in the
U.S. and in foreign countries,
- defend patents once obtained,
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- maintain trade secrets and operate without infringing upon
the patents and proprietary rights of others, and
- obtain appropriate licenses to patents or proprietary rights
held by others with respect to our technology, both in the
U.S. and in foreign countries.
IF WE ARE NOT ABLE TO MAINTAIN ADEQUATE PATENT PROTECTION FOR OUR
PRODUCTS, WE MAY BE UNABLE TO PREVENT OUR COMPETITORS FROM USING OUR
TECHNOLOGY.
The patent positions of gene therapy technologies such as those
being developed by us and our collaborators involve complex legal and factual
uncertainties. As a consequence, we cannot be certain that we or our
collaborators will be able to obtain adequate patent protection for our
potential products.
We do not know whether our or our licensors' pending patent
applications will result in the issuance of patents. In addition, issued
patents may be subjected to proceedings limiting their scope, may be held
invalid or unenforceable, or may otherwise provide insufficient proprietary
protection or commercial advantage. Changes in patent laws may also adversely
affect the scope of our patent protection and our competitive situation.
Due to the significant time lag between the filing of patent
applications and the publication of such patents, we cannot be certain that
we were or our licensor was the first to file such patent applications. In
addition, a number of pharmaceutical and biotechnology companies and research
and academic institutions have developed technologies, filed patent
applications or received patents on various technologies that may be related
to our business. Some of these technologies, applications or patents may
conflict with our or our licensors' technologies or patent applications. A
conflict could limit the scope of the patents, if any, that we or our
licensors may be able to obtain or result in denial of our or our licensors'
patent applications. If patents that cover our activities are issued to other
companies, we cannot be sure that we could develop or obtain alternative
technology.
In addition, some of our products rely on patented inventions
developed using U.S. government resources. The U.S. government retains rights
in such patents, and may choose to exercise its rights.
WE MAY BE SUBJECT TO COSTLY CLAIMS AND IF WE ARE UNSUCCESSFUL IN
RESOLVING CONFLICTS REGARDING PATENT RIGHTS, WE MAY BE PREVENTED FROM
DEVELOPING OR COMMERCIALIZING OUR PRODUCTS.
Numerous patent applications and patents related to our business
could result in third party claims against us. As the biotechnology industry
expands and more patents are issued, the risk increases that our processes
and potential products may give rise to claims that they infringe on the
patents of others. Others could bring legal actions against us claiming
damages and seeking to stop clinical testing, manufacturing and marketing of
the affected product or use of the affected process. Litigation may be
necessary to enforce our proprietary rights or to determine the
enforceability, scope and validity of proprietary rights of others. If we
become involved in litigation, it could be costly and divert our efforts and
resources. In addition, if any of our competitors file patent applications in
the U.S. claiming technology also invented by us, we may need to participate
in interference proceedings held by the U.S. Patent and Trademark Office to
determine priority of invention and the right to a patent for the technology.
Like litigation, interference proceedings can be lengthy and often result in
substantial costs and diversion of resources.
If there were an adverse outcome of any litigation or interference
proceeding we could have potential liability for significant damages. In
addition, we could be required to obtain a license to continue to make or
market the affected product or use the affected process. Costs of a license
may be substantial and could include ongoing royalties. We may not be able to
obtain such a license on acceptable terms.
WE MAY NOT HAVE ADEQUATE PROTECTION FOR OUR UNPATENTED PROPRIETARY
INFORMATION WHICH COULD ADVERSELY AFFECT OUR COMPETITIVE POSITION.
We also rely on trade secrets, know-how, continuing technological
innovations and licensing opportunities to develop and maintain our
competitive position. However, others may independently develop substantially
equivalent proprietary information and techniques or otherwise gain access to
our trade secrets or disclose our technology. To protect our trade secrets,
we require confidentiality agreements upon beginning employment,
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consulting or collaboration with us. Agreements with employees also provide
that all inventions resulting from work performed by them while in our employ
will be our exclusive property. However, these agreements may not provide
meaningful protection of our trade secrets or adequate remedies in the event
of unauthorized use or disclosure of such information. Likewise, our trade
secrets or know-how may become known through other means or be independently
discovered by our competitors. Any of these events could prevent us from
developing or commercializing our products.
RISKS RELATED TO OUR RELIANCE ON COLLABORATIVE RELATIONSHIPS AND LICENSING
ARRANGEMENTS.
WE MAY NOT BE ABLE TO SUCCESSFULLY ESTABLISH AND MAINTAIN
COLLABORATIVE AND LICENSING ARRANGEMENTS WHICH COULD HINDER OR PREVENT OUR
ABILITY TO DEVELOP AND COMMERCIALIZE OUR POTENTIAL PRODUCTS.
Our strategy for the development, testing, manufacturing and
commercialization of our potential products relies on our establishing and
maintaining collaborations with corporate partners, licensors, licensees and
others. At present we have a collaboration with Schering AG in the area of
angiogenic gene therapy. We may not be able to maintain or expand this
collaboration or establish additional collaborations or licensing
arrangements necessary to develop and commercialize potential products based
on our technology. If we are successful in establishing additional
collaborations or licensing arrangements, they may not be on favorable terms.
Any failure to enter into additional collaborative or licensing arrangements
on favorable terms would adversely affect our revenues. The development
programs contemplated by the collaborations or licensing arrangements also
may not ultimately be successful.
Under our current strategy, and for the foreseeable future, we will
rely on our collaborative partners to develop and/or market our products. As
a result, we will depend on collaborators to perform the following
activities:
- fund preclinical studies,
- fund clinical development,
- obtain regulatory approval, and
- manufacture and market any successfully developed products.
IF WE ARE NOT ABLE TO CONTROL THE AMOUNT AND TIMING OF RESOURCES OUR
CURRENT AND FUTURE COLLABORATORS DEVOTE TO OUR PROGRAMS OR POTENTIAL
PRODUCTS, OUR PRODUCT DEVELOPMENT COULD BE DELAYED OR TERMINATED, WHICH WOULD
ADVERSELY AFFECT OUR REVENUES.
Our collaborators may have significant discretion over whether or
not to pursue development activities with us. We also cannot be certain that
our collaborators will not pursue alternative technologies, on their own or
with others, to develop competitive gene therapy products. If our
collaborators develop competitive products, they may withdraw support for our
programs. Our collaborative partners also may breach or terminate our
agreements or otherwise fail to conduct their collaborative activities
successfully. As a result, our product development could be delayed or
terminated, which would adversely affect our revenues. In addition, revenues
we receive from marketed products under our collaborations may depend on the
marketing and sales efforts of our collaborators.
Disputes may arise with our collaborators about who has ownership
rights to any technology developed. These disputes could have the following
results:
- delay achievement of milestones or receipt of milestone
payments,
- adversely affect collaborative research, development and
commercialization of potential products, or
- lead to litigation or arbitration.
Any of these results could be time consuming, expensive and disruptive to our
operations.
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IF SCHERING AG TERMINATES OUR COLLABORATION AGREEMENT OR DEVELOPMENT
PROGRAMS, WE MAY NOT BE ABLE TO DEVELOP OUR PRODUCTS ON COMMERCIALLY
REASONABLE TERMS, IF AT ALL.
We have entered into a research and development collaboration with
Schering AG in the field of angiogenic gene therapy. Under this agreement,
Schering AG has the following rights that could adversely affect the
development of potential products under our collaboration:
- discretion to pursue or not to pursue any development
programs with us,
- the right to terminate the agreement at any time if we
materially breach the agreement or on 60 days written notice
subject to the payment of a termination fee, and
- the right to terminate the agreement upon 90 days written
notice, without payment of a termination fee, if a competitor
of Schering AG or us acquires substantially all of our assets
or 49% or more of our voting stock.
We cannot be certain that this collaboration will continue or will be
successful.
We also intend to rely on our collaboration with Schering AG for
significant continued funding of our angiogenic gene therapy research
efforts. We cannot be certain Schering AG will continue to fund this
research, especially if they develop competitive products. If they reduce or
terminate this funding, we may have to fund clinical trials, product
development and commercialization ourselves by using additional resources or
by scaling back or terminating other research and development programs. We
also may need to seek alternative collaborations or financing sources or sell
or license rights to some of our proprietary technology that we consider
valuable to our business. If Schering AG withdraws support, we may be unable
to complete our product development programs.
IF WE NEED ADDITIONAL FUNDS AND ARE UNABLE TO RAISE THEM, WE WOULD
HAVE TO CURTAIL OR CEASE OPERATIONS.
We will need substantial additional resources to develop our
products. Our future capital requirements will depend on many factors,
including:
- the pace of scientific progress in our research and
development programs,
- the magnitude of our research and development programs,
- the scope and results of preclinical studies and clinical
trials,
- the time and costs involved in obtaining regulatory
approvals,
- the costs involved in preparing, filing, prosecuting,
maintaining and enforcing patent claims,
- the costs involved in any potential litigation,
- competing technological and market developments,
- our ability to establish additional collaborations,
- changes in existing collaborations,
- our dependence on others for development and
commercialization of our potential products,
- the cost of manufacturing, and
- the effectiveness of our commercialization activities.
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We believe that our cash and anticipated sources of funding, including
Schering AG and the net proceeds of this offering, will be adequate to satisfy
our anticipated capital needs for at least the next two years. If our plans
change, we may need to raise additional funds through new or existing
collaborations or through private or public equity or debt financings. However,
additional financing may not be available on acceptable terms or at all.
IF OUR OPERATING RESULTS FLUCTUATE SIGNIFICANTLY, IT COULD MATERIALLY
ADVERSELY AFFECT YOUR INVESTMENT AND OUR ABILITY TO RAISE ADDITIONAL CAPITAL AS
NEEDED.
We expect that our operating results will fluctuate from quarter to
quarter based on when we incur expenses and receive revenues from our
collaborative arrangements and other sources. We believe that some of these
fluctuations may be significant. The level of funding by Schering AG may vary or
they may withdraw funding altogether from one or more of our products. If
Schering AG were to withdraw funding, our revenues and our ability to develop
and commercialize our products would suffer.
WE DEPEND ON THIRD-PARTY MANUFACTURERS OR COLLABORATORS TO MANUFACTURE
OUR PRODUCTS WHICH MAY DELAY OR IMPAIR OUR ABILITY TO DEVELOP AND COMMERCIALIZE
PRODUCTS ON A TIMELY AND COMPETITIVE BASIS OR ADVERSELY AFFECT OUR POTENTIAL
FUTURE PROFITABILITY.
We do not have internal manufacturing capabilities. Our current
strategy is to establish relationships with our collaborators and others to
manufacture our products for clinical trials and commercial sales. To date, we
have established a manufacturing relationship as part of our collaboration with
Schering AG. The agreement provides that Schering AG is solely responsible for
manufacturing gene therapy products developed under our collaboration. We cannot
be certain, however, that we will be able to maintain our relationship with
Schering AG or establish relationships with other manufacturers on commercially
acceptable terms. Any failure to do so would adversely affect our potential
future profitability.
Further, our manufacturers may experience a variety of problems in
manufacturing our products, including:
- an inability to manufacture commercial quantities of our
products on a cost-effective basis,
- non-compliance with Good Manufacturing Practices mandated
by the FDA or by any foreign regulatory authority,
- manufacturing or quality control problems, or
- an inability to obtain or maintain the governmental
licenses and approvals required to manufacture our products.
We will need to rely on third parties to market, sell and distribute
our products and those third parties may not perform successfully. We do not
have internal marketing and sales capabilities and may not be able to
successfully market and sell our products. Our current strategy is to market and
sell our products through our collaborative partners. For example, our
collaboration with Schering AG provides that they will be solely responsible for
marketing and selling gene therapy products we develop together. We cannot be
certain, however, that we will be able to maintain our relationship with
Schering AG or establish relationships with other drug or healthcare companies
with distribution systems and direct sales forces on commercially acceptable
terms. If we are required to market and sell our products directly, we will need
to develop a marketing and sales force with technical expertise and distribution
capability. Creating a marketing and sales infrastructure is expensive and
time-consuming and thus could divert resources from other aspects of our
business. In addition, to the extent we enter into co-promotion or other
licensing arrangements, any revenues we receive will be dependent on the efforts
of others, and we cannot be certain that their efforts will be successful.
OUR PRODUCTS MAY NOT BE COMMERCIALLY SUCCESSFUL BECAUSE PHYSICIANS AND
PATIENTS MAY NOT ACCEPT THEM.
Our success will depend on the market acceptance of our products. The
degree of market acceptance will depend upon a number of factors, including:
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- the receipt and scope of regulatory approval,
- the establishment and demonstration in the medical
community of the safety and effectiveness of our products
and their potential advantages over other treatments, and
- reimbursement policies of government and healthcare payors.
In the past, parts of the medical community have been concerned with
the potential safety and effectiveness of gene therapy products derived from
disease-causing viruses, such as adenoviruses, which we use in our proposed gene
therapy products. Physicians, patients, payors or the medical community in
general may not accept our products as safe or may not use any product that we
may develop.
IF WE ARE NOT ABLE TO ATTRACT AND RETAIN KEY PERSONNEL AND ADVISORS, IT
MAY ADVERSELY AFFECT OUR ABILITY TO OBTAIN FINANCING OR DEVELOP OUR PRODUCTS.
Our success depends on the key members of our scientific and management
staff. The loss of one or more of these key members could impede our development
objectives. We do not have employment agreements with our scientific or
management staff. Certain key scientific staff members have entered into
scientific advisory consulting agreements with us. However, these agreements may
be terminated at any time by either party.
Our future success also depends on recruiting additional qualified
management, operations and scientific personnel. To pursue our research and
development programs, we will need to hire additional qualified scientists and
managers. There is intense competition for these qualified personnel among
numerous pharmaceutical and biotechnology companies, universities and other
research institutions. We may not be able to continue to attract and retain the
personnel necessary to develop our business. If we are not able to attract and
retain key personnel, we may not successfully develop our products or achieve
our other business objectives.
In addition, we rely on the members of our scientific advisory board to
help formulate our research and development strategy. All of our scientific
advisors are employed by others and may have commitments to, or consulting
contracts with, other entities that may limit their availability to us. Each
scientific advisor has agreed not to perform services for us that might conflict
with services the advisor performs for another entity. However, a conflict of
interest could result from these services which could impede our ability to
develop our products.
IF WE BECOME SUBJECT TO PRODUCT LIABILITY CLAIMS IN CONNECTION WITH OUR
ONGOING CLINICAL TRIALS OR FOLLOWING COMMERCIALIZATION, IT MAY RESULT IN REDUCED
DEMAND FOR OUR PRODUCTS OR DAMAGES THAT EXCEED OUR INSURANCE LIMITATIONS OR
RESOURCES.
Our business exposes us to potential product liability risks that are
inherent in the testing, manufacture and sale of human healthcare products. We
have some product liability insurance for our Phase 1/2 human clinical trial for
GENERX-TM-. As it becomes necessary, we intend to expand our insurance coverage
to include clinical trials of other products under development and the
manufacture and commercial sale of our potential products. We may be unable to
obtain additional product liability insurance on commercially acceptable terms.
Failure to obtain product liability insurance or to otherwise protect against
product liability claims could prevent or delay the commercialization of our
products. If we do not have insurance or adequate insurance, a successful
product liability claim, series of claims, or product recall could divert our
resources and result in significant expenses to us.
WE MAY INCUR SUBSTANTIAL COSTS RELATED TO OUR USE OF HAZARDOUS
MATERIALS.
We are subject to federal, state and local laws and regulations
governing the use, manufacture, storage, handling and disposal of hazardous
materials. Although we believe that our activities currently comply with these
laws and regulations, the risk of contamination or injury still exists. For
example, if an accident occurs we could be responsible for any damages and the
amount of the damages could exceed our resources. In addition, we may incur
significant costs to comply with environmental laws and regulations in the
future.
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OUR STOCK PRICE IS SUBJECT TO SIGNIFICANT FLUCTUATIONS WHICH COULD
ADVERSELY AFFECT OUR ABILITY TO RAISE ADDITIONAL CAPITAL WHICH COULD IN TURN
DELAY COMMERCIALIZATION OF OUR PRODUCTS.
The market prices and trading volumes for securities of emerging
companies in our industry have historically been highly volatile and have
experienced significant fluctuations. These fluctuations may be unrelated or
disproportionate to the operating performance of companies. Our common stock has
been publicly traded since July 1998. As of September 7, 1999, our common stock
has traded as low as $2 7/8 per share and as high as $29 7/8 per share. In
addition to factors related to the volatility of our industry and the stock
market, the market price of our common stock may be affected by announcements
regarding:
- results of research,
- development testing,
- technological innovations,
- new commercial products,
- government regulation,
- developments concerning proprietary rights,
- litigation, or
- public perception regarding the safety of our products,
- securities analysts' expectations.
Since our common stock is thinly traded, its price can also fluctuate
significantly as a result of sales of a relatively large number of shares of our
common stock or the perception that these sales could occur. Such sales also
might make it more difficult for us to sell equity securities in the future at a
price we deem appropriate.
OUR CHARTER AND BYLAWS CONTAIN PROVISIONS THAT MAY PREVENT TRANSACTIONS
THAT COULD BE BENEFICIAL TO STOCKHOLDERS.
Our charter and bylaws restrict how our stockholders can act to affect
us. For example:
- Our stockholders can only act at a duly called annual or
special meeting and they may not act by written consent;
- Special meetings can only be called by our chief executive
officer, president, or chairman of the board or by our
president or secretary at the written request of a majority
of the board of directors; and
- Stockholders also must give advance notice to the secretary
of any nominations for director or other business to be
brought by stockholders at any stockholders' meeting.
Some of these restrictions can only be amended by a super-majority vote
of members of the board and/or the stockholders. These and other provisions of
our charter and bylaws, as well as provisions of Delaware law, could prevent
changes in our management and discourage, delay or prevent a merger, tender
offer or proxy contest, even if the events could be beneficial to our
stockholders. These provisions could also limit the price that investors might
be willing to pay for our stock.
In addition, our charter authorizes our board of directors to issue
shares of undesignated preferred stock without stockholder approval on terms
that the board may determine. The issuance of preferred stock could decrease the
amount of earnings and assets available for distribution to our other
stockholders or otherwise
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adversely affect their rights and powers, including voting rights. Moreover,
the issuance of preferred stock may make it more difficult for another party
to acquire, or may discourage another party from acquiring, voting control of
us.
IF WE OR OUR SUPPLIERS FAIL TO BE YEAR 2000 COMPLIANT IT COULD
DISRUPT OUR BUSINESS ACTIVITIES, IMPEDE OUR PRODUCT DEVELOPMENT, AND GENERATE
SUBSTANTIAL EXPENSES.
The Y2K issue refers to the inability of date-sensitive computer
chips, software and systems to accept other than two-digit entries in the
date field. As a result, in the Y2K, many systems could mistake "00" for 1900
or any other incorrect year, resulting in system failures or miscalculations.
These failures or miscalculations could disrupt operations, including
manufacturing, the processing of transactions and other normal business
activities. This is a significant issue for most, if not all companies. The
ramifications cannot be predicted with any degree of certainty.
If any key information technologies or embedded microprocessor
technology systems are overlooked, our business could be materially
disrupted, for example, our operations could be disrupted to the extent that
our suppliers, collaborators, or clinical trial sites are adversely impacted
by Y2K.
In a worse case scenario, if our vendors or the suppliers of our
necessary energy, telecommunications and transportation needs fail to provide
us with (1) the materials and services which are necessary to develop our
products, (2) the electrical power and other utilities necessary to sustain
our operations, or (3) reliable means of transporting supplies to us, such
failure could interrupt our business, substantially delay progress of our
product development programs, and generate substantial expenses.
RISKS RELATED TO OUR INDUSTRY
WE FACE INTENSE COMPETITION IN OUR INDUSTRY WHICH COULD RENDER OUR
POTENTIAL PRODUCTS LESS COMPETITIVE OR OBSOLETE.
There are a number of potential gene therapy, cell therapy
treatments and angiogenic protein infusion therapies which could compete with
our potential products. Our products could also compete with drugs or other
pharmaceutical products. In addition, a number of new surgical procedures
could compete with our potential products, including:
- laser-based systems to stimulate angiogenesis in the heart,
and
- catheter-based treatments including balloon angioplasty,
atherectomy and coronary stenting.
Many of our competitors have larger research and development staffs
and substantially more financial and other resources. These competitors also
have more experience and capability in researching, developing and testing
products in clinical trials, in obtaining FDA and other regulatory approvals
and in manufacturing, marketing and distribution.
In addition, the competitive positions of other early stage
companies may be enhanced significantly through their collaborative
arrangements with large pharmaceutical companies, biotechnology companies or
academic institutions, which may be more beneficial than our collaborative
arrangements. Our competitors may succeed in developing, obtaining patent
protection for, receiving regulatory approvals for, or commercializing
products at a more rapid pace. If we are successful in commercializing our
products, we will be required to compete with respect to manufacturing
efficiency and marketing capabilities, areas in which we have no experience.
Our competitors may develop or acquire new technologies and products from
research institutions, universities or others that are available for sale
before our potential products or are more effective than our potential
products.
Any of these developments could render our potential products less
competitive or obsolete, and could delay or prevent our commercialization of
products. Further, gene therapy in general is a new and rapidly developing
technology. We expect this technology to undergo significant change in the
future. If there is rapid technological development, our current and future
products or methods may become obsolete before we can successfully
commercialize them.
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WE ARE SUBJECT TO EXTENSIVE GOVERNMENT REGULATION WHICH COULD
PREVENT OR DELAY THE COMMERCIALIZATION OF OUR PRODUCTS.
We and our collaborators are subject to extensive government
regulation. The FDA and foreign regulatory authorities require rigorous
preclinical testing, clinical trials and other product approval procedures.
Numerous regulations also govern the manufacturing, safety, labeling,
storage, record keeping, reporting and marketing of our drug products. The
requirements governing the conduct of clinical trials, product licensing,
pricing and reimbursement vary greatly from country to country. The process
of seeking these approvals and complying with applicable government
regulations is time consuming and expensive, and approvals may not be
obtained. Even if approvals are obtained for certain products, any subsequent
discovery of problems with a product, manufacturer or facility may result in
restrictions on the product or manufacturer, including withdrawal of the
product from the market.
In addition, gene therapies such as those we are developing are
relatively new and are only beginning to be tested in humans. Regulatory
authorities may require us or our partners to demonstrate that our products
are improved treatments relative to other therapies or may significantly
modify the requirements governing gene therapies, which could result in
regulatory delays or rejections. Also, even if we obtain regulatory product
approval, the approval could limit the uses for which we may market the
product which could have the effect of restricting our ability to
commercialize the product and reducing our potential revenues.
We are also subject to regulation under the Occupational Safety and
Health Act, the Environmental Protection Act, the Toxic Substances Control
Act, the Resource Conservation and Recovery Act and other present and
potential future federal, state or local laws and regulations. We or our
partners may also be subject to similar regulations in other countries.
Failure to comply with such regulatory requirements or to obtain product
approvals could impair our ability to develop and market our products and our
revenues would suffer.
IF THE COST OF OUR PRODUCTS IS NOT REIMBURSED BY THIRD PARTIES, IT
COULD HARM OUR COMMERCIAL SUCCESS.
Our commercial success will depend heavily upon whether consumers
will be reimbursed for the use of our products. Third-party payors, such as
government and private insurance plans, may not authorize or otherwise budget
reimbursement for our products. Additionally, third-party payors, including
Medicare, are increasingly challenging the prices charged for medical
products and services. We may be required to provide substantial cost-benefit
data to demonstrate that our products are cost-effective. Third-party payors
may not pay the prices set for our products or reimburse consumers for the
use of our products. Federal and state regulations also affect the
reimbursement to healthcare providers of fees and capital equipment costs in
connection with medical treatment.
HEALTHCARE REFORM MEASURES AND REIMBURSEMENT PROCEDURES MAY
ADVERSELY IMPACT THE COMMERCIALIZATION OF OUR PRODUCTS.
The efforts of governments and third-party payors to contain or
reduce the cost of healthcare will continue to affect our business and
financial condition as a biotechnology company. In the U.S., government and
other third-party payors are increasingly attempting to contain healthcare
costs by limiting both coverage and the level of reimbursement for new
products approved for marketing by the FDA. These cost containment efforts
are currently increasing in response to recent initiatives to reform
healthcare delivery. As managed care organizations continue efforts to
contain health care costs, we believe these organizations may attempt to
restrict the use of or limit coverage and reimbursements for new products
such as those being developed by us. Internationally, where national
healthcare systems are prevalent, little if any funding may be available for
new products, and cost containment and cost reduction efforts can be more
pronounced than in the U.S. These cost controls may have a material adverse
effect on our revenues and profitability and may affect our ability to raise
additional capital in a number of ways, including:
- decreasing the price we, or any of our partners or licensees,
receive for any of our products,
- preventing the recovery of development costs, which could be
substantial, and
- minimizing profit margins.
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Further, our commercialization strategy depends on our collaborators. As a
result, our ability to commercialize our products and realize royalties may
be hindered if cost control initiatives adversely affect our collaborators.
OUR MANAGEMENT AND CONTROLLING STOCKHOLDERS WHICH TOGETHER CONTROL A
LARGE PORTION OF OUR COMMON STOCK MAY CONTROL OUR OPERATIONS AND MAKE
DECISIONS WHICH YOU DO NOT CONSIDER IN YOUR BEST INTEREST.
Our present directors, executive officers and principal stockholders
and their affiliates beneficially own approximately 72.6% of our outstanding
common stock. As a result, if all or some of these stockholders were to act
together, they would be able to exercise significant influence over all
matters requiring stockholder approval, including the election of directors
and approval of significant corporate transactions. Such concentration of
ownership may also have the effect of delaying or preventing a change in our
control that may be favored by other stockholders.
FORWARD-LOOKING STATEMENTS
In addition to historical information, this prospectus may contain
forward-looking statements. These statements involve risks and uncertainties.
Our actual results could differ materially from those projected in the
forward-looking statements. Factors that could cause or contribute to such
differences include those discussed in the section entitled "Risk Factors,"
as well as those discussed elsewhere in this prospectus or in documents
incorporated by reference in this prospectus. We undertake no obligation to
update these forward-looking statements.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. You may read
and copy any document we file at the SEC's public reference rooms in
Washington, D.C., New York, New York and Chicago, Illinois. Please call the
SEC at 1-800-SEC-0330 for further information on the public reference rooms.
Our SEC filings are also available to the public on the SEC's website at
http://www.sec.gov.
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INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" the information we
file with them, which means that we can disclose important information to you
by referring you to those documents. The information incorporated by
reference is considered to be part of this prospectus, and later information
filed with the SEC will update and supersede this information. We incorporate
by reference the documents listed below and any future filings we make with
the SEC under Section 13(a), 13(c), 14, or 15(d) of the Securities Exchange
Act of 1934 until our offering is completed.
1. Our Annual Report on Form 10-K for the fiscal year ended
December 31, 1998, file no. 000-24505, including certain
information in our Definitive Proxy Statement in connection
with our 1999 Annual Meeting of Stockholders;
2. Our Quarterly Reports on Form 10-Q for the quarterly period
ended March 31, 1999 and June 30, 1999, file no. 000-24505;
and
3. The description of Collateral's common stock in its
registration statement on Form 8-A filed on June 22, 1998,
file no. 000-24505, including any amendments or reports
filed for the purpose of updating such description.
4. Our report on Form 8-K filed on August 12, 1999 including
an exhibit.
The reports and other documents that we file after the date of this
prospectus will update and supersede the information in this prospectus.
You may request a copy of these filings, at no cost, by writing or
telephoning us at:
Collateral Therapeutics, Inc.
11622 El Camino Real
San Diego, California 92130
(858) 794-3400
YOU SHOULD RELY ONLY ON THE INFORMATION PROVIDED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
DIFFERENT INFORMATION. THE SELLING STOCKHOLDERS ARE NOT AUTHORIZED TO MAKE 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 THE DOCUMENT.
Collateral Therapeutics is our registered trademark. This prospectus
also includes other trademarks owned by us.
USE OF PROCEEDS
Collateral will not receive any of the proceeds from the sale of the
shares by the selling stockholders.
PLAN OF DISTRIBUTION
Collateral is registering all 2,150,000 shares on behalf of certain
selling stockholders. We issued all of the shares to the selling stockholders in
a private placement transaction. The selling stockholders named in the table
below or pledgees, donees, transferees or other successors-in-interest selling
shares received from a named selling stockholder as a gift, partnership
distribution or other non-sale related transfer after the date of this
prospectus (collectively, the selling stockholders) may sell the shares from
time to time. The selling stockholders will act independently of us in making
decisions regarding the timing, manner and size of each sale. The sales may be
made on the Nasdaq National Market or in the over-the-counter market or
otherwise, at prices and at terms then prevailing or at prices related to the
then current market price, or in negotiated transactions. The selling
stockholders may
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<PAGE>
effect these transactions by selling the shares to or through broker-dealers.
The shares may be sold by one or more of, or a combination of, the following:
- a block trade in which the broker-dealer will attempt to
sell the shares as agent but may position and resell a
portion of the block as principal to facilitate the
transaction,
- purchases by a broker-dealer as principal and resale by
such broker-dealer for its account under this prospectus,
- an exchange distribution in accordance with the rules of
the respective exchange,
- ordinary brokerage transactions and transactions in which
the broker solicits purchasers, and
- in privately negotiated transactions.
To the extent required, this prospectus may be amended or supplemented
from time to time to describe a specific plan of distribution. In effecting
sales, broker-dealers engaged by the selling stockholders may arrange for other
broker-dealers to participate in the resales.
The selling stockholders may enter into hedging transactions with
broker-dealers in connection with distributions of the shares or otherwise. In
these transactions, broker-dealers may engage in short sales of the shares in
the course of hedging the positions they assume with selling stockholders. The
selling stockholders also may sell shares short and redeliver the shares to
close out such short positions. The selling stockholders may enter into option
or other transactions with broker-dealers which require the delivery to the
broker-dealer of the shares. The broker-dealer may then resell or otherwise
transfer such shares covered by this prospectus. The selling stockholders also
may loan or pledge the shares to a broker-dealer. The broker-dealer may sell the
shares so loaned, or upon a default the broker-dealer may sell the pledged
shares under this prospectus.
Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from selling stockholders. Broker-dealers
or agents may also receive compensation from the purchasers of the shares for
whom they act as agents or to whom they sell as principals, or both.
Compensation as to a particular broker-dealer might be in excess of customary
commissions and will be in amounts to be negotiated in connection with the sale.
Broker-dealers or agents and any other participating broker-dealers or the
selling stockholders may be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act of 1933 in connection with sales of the
shares. Accordingly, any such commission, discount or concession received by
them and any profit on the resale of the shares purchased by them may be deemed
to be underwriting discounts or commissions under the Securities Act. Because
selling stockholders may be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act, the selling stockholders will be subject to
the prospectus delivery requirements of the Securities Act. In addition, any
securities covered by this prospectus which qualify for sale in compliance with
Rule 144 promulgated under the Securities Act may be sold under Rule 144 rather
than under this prospectus. The selling stockholders have advised us that they
have not entered into any agreements, understandings or arrangements with any
underwriters or broker-dealers regarding the sale of their securities. There is
no underwriter or coordinating broker acting in connection with the proposed
sale of shares by the selling stockholders.
The shares will be sold only through registered or licensed brokers or
dealers if required under applicable state securities laws. In addition, in
certain states the shares may not be sold unless they have been registered or
qualified for sale in the applicable state or an exemption from the registration
or qualification requirement is available and is complied with.
Under applicable rules and regulations under the Securities Exchange
Act of 1934, any person engaged in the distribution of the shares may not
simultaneously engage in market making activities with respect to our common
stock for a period of two business days prior to the commencement of such
distribution. In addition, each selling stockholder will be subject to
applicable provisions of the Exchange Act and the associated rules and
regulations under the Exchange Act, including Regulation M, which provisions may
limit the timing of purchases and sales of shares of our common stock by the
selling stockholders. Collateral will make copies of this prospectus
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available to the selling stockholders and has informed them of the need to
deliver copies of this prospectus to purchasers at or prior to the time of
any sale of the shares.
Collateral will file a supplement to this prospectus, if required,
to comply with Rule 424(b) under the Securities Act, upon being notified by a
selling stockholder that any material arrangements have been entered into
with a broker-dealer for the sale of shares through a block trade, special
offering, exchange distribution or secondary distribution or a purchase by a
broker or dealer. Such supplement will disclose:
- the name of each such selling stockholder and of the
participating broker-dealer(s),
- the number of shares involved,
- the price at which such shares were sold,
- the commissions paid or discounts or concessions allowed to
such broker-dealer(s), where applicable,
- that such broker-dealer(s) did not conduct any
investigation to verify the information set out or
incorporated by reference in this prospectus, and
- other facts material to the transaction.
In addition, upon being notified by a selling stockholder that a donee
or pledgee intends to sell more than 500 shares, Collateral will file a
supplement to this prospectus.
Collateral will bear all costs, expenses and fees in connection with
the registration of the shares, other than fees and expenses, if any, of counsel
or other advisers to the selling stockholders. In addition, the selling
stockholders will bear all commissions and discounts, if any, attributable to
the sales of the shares. The selling stockholders may agree to indemnify any
broker-dealer or agent that participates in transactions involving sales of the
shares against various liabilities, including liabilities arising under the
Securities Act. The selling stockholders have agreed to indemnify Collateral,
its directors, officers who sign the Registration Statement, and control persons
against various liabilities in connection with the offering of the shares,
including liabilities arising under the Securities Act.
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SELLING STOCKHOLDERS
The following table sets forth the number of shares owned by each of
the selling stockholders. This registration statement also shall cover any
additional shares of common stock which become issuable in connection with the
shares registered for sale hereby by reason of any stock dividend, stock split,
recapitalization or other similar transaction effected without the receipt of
consideration which results in an increase in the number of Collateral's
outstanding shares of common stock. None of the selling stockholders has had a
material relationship with Collateral within the past three years other than as
a result of the ownership of the shares or other securities of Collateral. No
estimate can be given as to the amount of shares that will be held by the
selling stockholders after completion of this offering because the selling
stockholders may offer all or some of the shares they hold and because there
currently are no agreements, arrangements or understandings with respect to the
sale of any of the shares. The shares offered by this prospectus may be offered
from time to time by the selling stockholders named below.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED SHARES BENEFICIALLY
PRIOR TO THIS OFFERING OWNED AFTER THIS OFFERING
------------------------- -------------------------
NUMBER OF
PERCENT OF SHARES PERCENT OF
OUTSTANDING REGISTERED FOR OUTSTANDING
NAME OF SELLING STOCKHOLDER NUMBER SHARES SALE HEREBY NUMBER SHARES
--------------------------- -------- ----------- -------------- -------- -----------
<S> <C> <C> <C> <C> <C>
Franklin Biotechnology Discovery 63,000 * 63,000 0 *
Fund (#402)
Franklin California Growth Fund 125,000 1.0% 125,000 0 *
(#180)
Franklin Small Cap Fund (#198) 312,000 2.4% 312,000 0 *
Heritage Series Trust Aggressive 55,500 * 30,000 25,500 *
Growth
Heritage Series Trust Smallcap 110,000 * 60,000 50,000 *
Stock Fund
Howard J. Leonhardt 68,000 * 60,000 8,000 *
Invesco Funds Group, Inc. 200,000 1.6% 200,000 0 *
Jackson National LifeEagle Smallcap 60,000 * 60,000 0 *
Equity Series
Moore Global Investments Ltd. 109,500 * 109,500 0 *
Nordbanken Fonder AB 40,000 * 40,000 0 *
Remington Investments Strategies, 24,000 * 24,000 0 *
L.P.
SEB Fondforvaltning 85,000 * 85,000 0 *
SEB Private Bank Luxembourg 15,000 * 15,000 0 *
SL Holdings Ltd. 16,500 * 16,500 0 *
State of Wisconsin Investment Board 1,583,000 12.3% 750,000 833,000 6.5%
T. Rowe Price New Horizons Fund 222,000 1.7% 200,000 22,000 *
--------- --------- -------
TOTAL 3,088,500 2,150,000 938,500
========= ========= =======
</TABLE>
*Represents beneficial ownership of less than 1%.
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LEGAL MATTERS
The validity of the securities offered hereby will be passed upon by
Brobeck, Phleger & Harrison LLP, San Diego, California. Members of Brobeck,
Phleger & Harrison LLP own a total of 259,455 shares of Collateral's common
stock.
EXPERTS
The financial statements incorporated in this prospectus by reference to our
Annual Report on Form 10-K for the year ended December 31, 1998, have been
included in this prospectus in reliance on the report of Ernst & Young LLP,
independent auditors, given on the authority of that firm as experts in auditing
and accounting.
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WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE A STATEMENT THAT DIFFERS FROM WHAT IS
IN THIS PROSPECTUS. IF ANY PERSON DOES MAKE A STATEMENT THAT DIFFERS FROM WHAT
IS IN THIS PROSPECTUS, YOU SHOULD NOT RELY ON IT. THIS PROSPECTUS IS NOT AN
OFFER TO SELL, NOR IS IT AN OFFER TO BUY, THESE SECURITIES IN ANY STATE IN WHICH
THE OFFER OR SALE IS NOT PERMITTED. THE INFORMATION IN THIS PROSPECTUS IS
COMPLETE AND ACCURATE AS OF ITS DATE, BUT THE INFORMATION MAY CHANGE AFTER THAT
DATE.
2,150,000 SHARES
COLLATERAL
THERAPEUTICS, INC.
COMMON STOCK
-----------------------------
PROSPECTUS
-----------------------------
_________ __, 1999
i
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses, other than underwriting
discounts and commissions, payable by the Registrant in connection with the sale
of the common stock being registered. All the amounts shown are estimates,
except for the SEC registration fee.
SEC Registration Fee............................... $ 10,983
Printing and engraving expenses.................... 5,000
Legal fees and expenses............................ 5,000
Accounting fees and expenses....................... 10,000
Transfer Agent and Registrar Fees.................. 5,000
Miscellaneous Expenses............................. 10,000
---------
TOTAL $ 45,983
=========
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Section 145 of the Delaware General Corporation Law permits
indemnification of our officers and directors under certain conditions and
subject to certain limitations. Section 145 of the Delaware General Corporation
Law also provides that a corporation has the power to purchase and maintain
insurance on behalf of its officers and directors against any liability asserted
against such person and incurred by him or her in such capacity, or arising out
of his or her status as such, whether or not the corporation would have the
power to indemnify him or her against such liability under the provisions of
Section 145 of the Delaware General Corporation Law.
Article VII, Section 1 of our Restated Bylaws provides that we shall
indemnify our directors, officers, employees and agents to the fullest extent
not prohibited by the Delaware General Corporation Law. The rights to indemnity
thereunder continue as to a person who has ceased to be a director, officer,
employee or agent and inure to the benefit of the heirs, executors and
administrators of the person. In addition, expenses incurred by a director or
officer in defending any civil, criminal, administrative or investigative
action, suit or proceeding by reason of the fact that he or she is or was a
director or officer of Collateral(or was serving at the Collateral's request as
a director or officer of another corporation) shall be paid by Collateral in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that he or she is not entitled to be
indemnified by Collateral as authorized by the relevant section of the Delaware
General Corporation Law.
As permitted by Section 102(b)(7) of the Delaware General Corporation
Law, Article V, Section (A) of Collateral's Certificate of Incorporation
provides that a director of Collateral shall not be personally liable for
monetary damages or breach of fiduciary duty as a director, except for liability
(i) for any breach of the director's duty of loyalty to Collateral 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 or (iv) for any transaction from which the
director derived any improper personal benefit.
Collateral has directors and officers liability insurance now in effect
which insures our directors and officers.
We have entered into indemnification agreements under Delaware Law with
each of our directors and executive officers. Generally, the indemnification
agreements attempt to provide the maximum protection permitted by Delaware law
as it may be amended from time to time. Moreover, the indemnification agreements
provide for additional indemnification for certain amounts not otherwise covered
by directors and officers liability insurance. Under such additional
indemnification provisions, however, such director or executive officer will not
be indemnified for settlements not approved by us. The indemnification
agreements provide for Collateral to advance to the individual any and all
reasonable expenses (including legal fees and expenses) incurred in
investigating or
II-1
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defending any such action, suit or proceeding. Also, the individual must
repay such advances upon a final judicial decision that he or she is not
entitled to indemnification. Collateral's obligations under these
indemnification agreements shall continue during the period that such
director or officer is serving Collateral as such and shall continue for so
long thereafter as such director or officer shall be subject to any possible
claim, action, suit or proceeding. For six years after the effective time of
the acquisition of Collateral by another entity or the sale of all or
substantially all of our assets, Collateral shall cause the acquiring or
surviving corporation to indemnify such director or officer in accordance
with the terms of this indemnification agreement and use such acquiring or
surviving corporation's best efforts to provide director's and officer's
liability insurance on terms substantially similar to ours.
The underwriters of our initial public offering have agreed to
indemnify Collateral, each person, if any, who controls Collateral within the
meaning of Section 15 of the Securities Act, each director of Collateral, and
each officer of Collateral who signs this Registration Statement, with respect
to information furnished in writing by or on behalf of such underwriters
specifically for use in our S-1 Registration Statement. The selling stockholders
have agreed to indemnify us, each of our directors, each of our officers who
signed the Registration Statement and each person, if any, who controls
Collateral within the meaning of the Securities Act, with respect to (i) any
failure by such selling stockholder to comply with covenants and agreements
respecting the sale of the Shares pursuant to this Registration Statement or
(ii) the inaccuracy of any representation made by such selling stockholder in
connection therewith or (iii) with respect to written information furnished to
us by or on behalf of such selling stockholder expressly for use in this
Registration Statement and Prospectus.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS.
EXHIBIT NO. DESCRIPTION
------------- -----------
4.1 Instruments defining the rights of stockholders. Reference is
made to the Registration Statement on Form 8-A, filed June 22,
1998.
*5.1 Opinion of Brobeck, Phleger & Harrison LLP
*23.1 Consent of Ernst & Young LLP, Independent Auditors
*23.2 Consent of Brobeck, Phleger & Harrison LLP. Included in the
Opinion of Brobeck, Phleger & Harrison LLP filed as Exhibit
5.1.
*24.1 Power of Attorney. Included on page II-4 of this registration
statement.
-------------------
* Previously filed.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof;
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
II-2
<PAGE>
(4) If the registrant is a foreign private issuer, to file a
post-effective amendment to the registration statement to include any financial
statements required by Rule 3-19 of Regulation S-K at the state of any delayed
offering or throughout a continuous offering. Financial statements and
information otherwise required by Section 10(a)(3) of the Act need not be
furnished, provided that the registrant includes in the prospectus, by means of
a post-effective amendment, financial statements required pursuant to this
paragraph (4) and other information necessary to ensure that all other
information in the prospectus is at least as current as the date of those
financial statements. Notwithstanding the foregoing, with respect to
registration statements on Form F-3, a post-effective amendment need not be
filed to include financial statements and information required by Section
10(a)(3) of the Act or Rule 3-19 of this chapter if such financial statements
and information are contained in periodic reports filed with or furnished to the
Commission 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 Form
F-3.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Act, 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.
The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the Prospectus, to each person to whom the Prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the Prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the Prospectus, to deliver, or
cause to be delivered to each person to whom the Prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the Prospectus to provide such interim financial information.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer, or controlling person of the Registrant in the
successful defense of any action, suit, or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered hereunder, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
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 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Diego, California, on the 9th day of September
1999.
COLLATERAL THERAPEUTICS, INC.
By: /s/ Jack W. Reich
-------------------------------------------
Jack W. Reich
President and Chief Executive Officer
By: /s/ Christopher J. Reinhard
-------------------------------------------
Christopher J. Reinhard
Chief Operating and Chief Financial Officer
<PAGE>
POWER OF ATTORNEY
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:
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C> <C>
/s/ Jack W. Reich, Ph.D. President and Chief Executive September 9, 1999
- --------------------------------------- Officer (Principal Executive Officer)
Jack W. Reich
/s/ Christopher J. Reinhard Chief Operating and Chief Financial September 9, 1999
- --------------------------------------- Officer (Principal Financial and
Christopher J. Reinhard Accounting Officer)
* Director September 9, 1999
- ---------------------------------------
Craig S. Andrews
* Director September 9, 1999
- ---------------------------------------
Robert L. Engler
* Director, Vice President, Research September 9, 1999
- ---------------------------------------
H. Kirk Hammond, M.D.
* Director September 9, 1999
- ---------------------------------------
Charles J. Aschauer
* Director September 9, 1999
- ---------------------------------------
Ronald I. Simon, Ph.D.
* Director September 9, 1999
- ---------------------------------------
Dale A. Stringfellow, Ph.D.
* By: /s/ Jack W. Reich, Ph.D.
- ---------------------------------------
Jack W. Reich, Ph.D.
Attorney-In-Fact
</TABLE>
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
----------- -----------
4.1 Instruments defining the rights of stockholders. Reference is
made to the Registration Statement on Form 8-A, filed June 22,
1998.
*5.1 Opinion of Brobeck, Phleger & Harrison LLP
*23.1 Consent of Ernst & Young LLP, Independent Auditors
*23.2 Consent of Brobeck, Phleger & Harrison LLP. Included in the
Opinion of Brobeck, Phleger & Harrison LLP filed as Exhibit
5.1.
*24.1 Power of Attorney. Included on page II-4 of this registration
statement.
-------------------
* Previously filed.
