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As Filed With the Securities and Exchange Commission on April 6, 2000
Registration No. 333-________
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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MICRO THERAPEUTICS, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 33-0569235
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2 GOODYEAR, IRVINE, CALIFORNIA 92618
(949) 837-3700
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(Address, including zip code, and telephone number, including area code of
registrant's principal executive offices)
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GEORGE WALLACE
PRESIDENT AND CHIEF EXECUTIVE OFFICER
MICRO THERAPEUTICS, INC.
2 GOODYEAR
IRVINE, CALIFORNIA 92618
(949) 837-3700
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(Name, address, including zip code, and telephone number,
including area code of agent for service)
COPY TO:
BRUCE FEUCHER, ESQ.
STRADLING YOCCA CARLSON & RAUTH,
A PROFESSIONAL CORPORATION
660 NEWPORT CENTER DRIVE
NEWPORT BEACH, CALIFORNIA 92660
Approximate date of commencement of proposed sale to public: From time
to time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] __________
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Proposed maximum Proposed maximum
Title of securities to Amount to offering price aggregate offering Amount of
be registered be registered per share (1) price registration fee
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<S> <C> <C> <C> <C>
Common Stock, 1,600,000 $6.69 $10,704,000 $2,825.86
$0.01 par value shares
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</TABLE>
(1) The offering price is estimated solely for the purpose of calculating
the registration fee in accordance with Rule 457(c) using the average
of the high and low price reported by the Nasdaq National Market for
the Common Stock on April 4, 2000, which was approximately $6.69 per
share.
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 Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
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PROSPECTUS Dated April 6, 2000
MICRO THERAPEUTICS, INC.
1,600,000 SHARES OF COMMON STOCK
($0.001 PAR VALUE)
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This prospectus relates to the offer and sale from time to time of up
to 1,600,000 shares of our common stock which are held by certain of our current
stockholders named in this prospectus for their own benefit or by donees,
transferees, pledgees or other successors in interest of such stockholders that
receive such shares as a gift or other non-sale related transfer. The shares of
our common stock offered pursuant to this prospectus were originally issued the
selling stockholders in connection with private placements of our shares to
those stockholders pursuant to stock purchase agreements we entered into with
each of those stockholders.
The prices at which such stockholders may sell the shares in this
offering will be determined by the prevailing market price for the shares or in
negotiated transactions. We will not receive any of the proceeds from the sale
of the shares. We will bear all expenses of registration incurred in connection
with this offering. The stockholders whose shares are being registered hereby
will bear all selling and other expenses.
Our common stock is traded on the Nasdaq National Market under the
symbol "MTIX." On April 4, 2000, the last reported sale price of our common
stock was $6.625 per share.
SEE "RISK FACTORS" BEGINNING ON PAGE 2 TO READ ABOUT THE RISKS YOU
SHOULD CONSIDER CAREFULLY BEFORE BUYING SHARES OF OUR COMMON STOCK.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT CONTAINING THIS
PROSPECTUS, WHICH HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, IS
DECLARED EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND
IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE
OFFER OR SALE IS NOT PERMITTED.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this Prospectus is April 6, 2000.
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TABLE OF CONTENTS
Page
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About Micro Therapeutics................................................... 2
Risk factors............................................................... 2
Certain factors that may affect our business and future results............ 3
Where you can find additional information.................................. 11
Use of proceeds............................................................ 12
Selling stockholders....................................................... 13
Plan of distribution....................................................... 13
Legal matters.............................................................. 14
Experts.................................................................... 14
SOME OF THE STATEMENTS CONTAINED IN THIS PROSPECTUS DISCUSS FUTURE EXPECTATIONS,
CONTAIN PROJECTIONS OF RESULTS OF OPERATIONS OR FINANCIAL CONDITION OR STATE
OTHER "FORWARD-LOOKING" INFORMATION. SUCH STATEMENTS CAN BE IDENTIFIED BY THE
USE OF "FORWARD-LOOKING" TERMINOLOGY, SUCH AS "MAY," "WILL," "EXPECT,"
"ANTICIPATE," "ESTIMATE," "CONTINUE" OR OTHER SIMILAR WORDS. THESE STATEMENTS
ARE SUBJECT TO KNOWN AND UNKNOWN RISKS AND UNCERTAINTIES AND OTHER FACTORS THAT
COULD CAUSE OUR ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY
THE STATEMENTS. FACTORS THAT MIGHT CAUSE SUCH A DIFFERENCE INCLUDE, BUT ARE NOT
LIMITED TO, THOSE DISCUSSED IN "RISK FACTORS" ON PAGE 3.
ABOUT MICRO THERAPEUTICS
Micro Therapeutics, Inc. develops, manufactures and markets minimally
invasive medical devices for the diagnosis and treatment of vascular disease. We
focus our efforts in two underserved markets: (i) the treatment of neuro
vascular disorders of the brain associated with stroke; and (ii) the treatment
of peripheral vascular disease, including blood clot therapy in hemodialysis
access grafts, arteries and veins. Our objective is to provide physicians with
new interventional treatment alternatives which improve outcomes, reduce costs,
shorten procedure times, reduce drug usage and allow access to
difficult-to-reach anatomical locations. Micro Therapeutics currently markets
more than 85 products for the treatment of peripheral vascular disease and
products for the treatment of neuro vascular disease.
More comprehensive information about us and our products is available
through our worldwide web site at www.microtherapeutics.com. The information on
our website is not incorporated by reference into this prospectus. Our executive
offices are located at 2 Goodyear, Irvine, California 92618, and our telephone
number is (949) 837-3700.
RISK FACTORS
In evaluating an investment in our common stock, you should carefully
consider the following risk factors and other information contained in or
incorporated by reference into this prospectus. Some information in this
prospectus may contain "forward looking" statements that discuss future
expectations of our financial condition and results of operations. The risk
factors noted in this section and other factors could cause our actual results
to differ materially from those contained in any forward-looking statements.
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CERTAIN FACTORS THAT MAY AFFECT OUR BUSINESS AND FUTURE RESULTS
Some of the information included herein contains forward-looking
statements. These statements can be identified by the use of forward-looking
terms such as "may," "will," "expect," "anticipate," "estimate," "continue," or
other similar words. These statements discuss future expectations, projections
or results of operations or of financial condition or state other
"forward-looking" information. When considering these forward-looking
statements, you should keep in mind the risk factors and other cautionary
statements we make. These risk factors could cause our actual results to differ
materially from those contained in any forward-looking statement. If any of the
following risks actually occur, our business could be harmed and the trading
price of our common stock could decline.
Many of our products are in developmental stages and may not
successfully come to market . We have only recently introduced a number of
products commercially. Several of our key products, particularly those relating
to the Onyx Liquid Embolic System, are in the early stage of development. In
some cases, these products either have not entered full clinical trials or have
only recently done so. Our ability to market these products will depend upon a
number of factors, including our ability to demonstrate the safety and efficacy
of our products in the clinical setting. Our products may not be found to be
safe and effective in clinical trials and may not ultimately be cleared for
marketing by U.S. or foreign regulatory authorities. Our failure to develop safe
and effective products which are approved for sale on a timely basis would have
a negative impact on our business.
Our products may not be accepted by the market. Even if we are
successful in developing additional safe and effective products that have
received marketing clearance, our new products may not gain market acceptance.
In order for our Onyx Liquid Embolic System to be accepted, we must address the
needs of potential customers. The target customers for our products are
interventional radiologists and interventional neuroradiologists. However, even
if our products are accepted by these targeted customers, this acceptance may
not translate into sales. Additionally, our market share for our existing
products may not grow, and our products which have yet to be introduced may not
be accepted in the market.
New products and technologies in the market could create additional
competition. The markets in which we compete involve rapidly changing
technologies and new product introductions and enhancements. We must enhance and
expand the utility of our products, and develop and introduce innovative new
products that gain market acceptance. New technologies, products or drug
therapies developed by others could reduce the demand for our products. We may
encounter technical problems in connection with our own product development that
could delay introduction of new products or product enhancements. While we
maintain research and development programs to continually improve our product
offerings, including adding interventional devices, our efforts may not be
successful, and other companies could develop and commercialize products based
on new technologies that are superior to our products either in performance or
cost-effectiveness.
We face intense competition from many large companies. The medical
technology industry is intensely competitive. Our products compete with other
medical devices, surgical procedures and pharmaceutical products. A number of
the companies in the medical technology industry, including manufacturers of
neuro vascular and peripheral vascular products, have substantially greater
capital resources, larger customer bases, broader product lines, greater
marketing and management resources, larger research and development staffs and
larger facilities than ours. These competitors have
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developed and may continue to develop products that are competitive with ours.
They may develop and market technologies and products that are more readily
accepted than ours. Their products could make our technology and products
obsolete or noncompetitive. Although we believe that our products may offer
certain advantages over our competitors' currently-marketed products, companies
entering the market early often obtain and maintain significant market share
relative to those entering the market later. While we have designed our products
to be cost effective and more efficient than competing technologies, we might
not be able to provide better methods or products at comparable or lower costs.
We also compete with other manufacturers of medical devices for
clinical sites to conduct human trials. If we are not able to locate such
clinical sites on a timely basis, it could hamper our ability to conduct trials
of our products, which may be necessary to obtain required regulatory clearance
or approval.
We have a short operating history, during which time we have not been
profitable. We were incorporated in 1993. To date, our business has generated
limited product sales. From our inception through December 31, 1999, we incurred
cumulative losses of approximately $41 million. We expect additional losses as
we expand our research and development, clinical, regulatory, manufacturing and
marketing efforts. We may not achieve significant sales of our products or
become profitable. We could encounter substantial delays and unexpected expenses
related to the introduction of our current and future products, or our research
and development, clinical, regulatory, manufacturing and marketing efforts. Such
delays or expenses could reduce revenues and have a negative effect on our
business.
We may need additional financing to continue operations. Our operations
to date have consumed substantial amounts of cash, and we expect that this
condition will continue at least into 2002. We believe that our anticipated cash
flow from planned operations and existing capital resources, comprising
primarily the net proceeds from the following should be adequate to satisfy our
capital requirements through 2001:
o financings preceding and including the initial public offering of our
common stock in February 1997;
o a convertible subordinated note agreement with Guidant entered into in
November 1997, including $2.5 million we received from Guidant in
exchange for debt and common stock upon the achievement of a milestone
defined in the agreement with Guidant;
o a convertible subordinated note agreement, credit agreement and
distribution agreement with Abbott entered into in August 1998 and
amended at various dates thereafter
o a convertible subordinated note agreement, credit agreement and
distribution agreement with Century entered into in September 1998;
o an option agreement with Abbott, which option was exercised by us in
November 1999;
o the sale, in March 2000, by us of 1,600,000 shares of our common stock;
and
o the interest earned on cash, cash equivalent and short-term investment
balances.
However, it is possible that we will need additional capital before the
end of 2001. Our need for additional financing will depend upon many factors,
including the extent and duration of our future operating losses, the level and
timing of future revenues and expenditures, market acceptance of new products,
the results and scope of ongoing research and development projects, competing
technologies, and market and regulatory developments.
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We currently have no other committed external sources of funds. If our
existing resources are insufficient to fund our activities, we will seek to
raise additional funds through public or private financing. However, such
additional financing may not be available on acceptable terms or at all. If we
raise additional funds by issuing equity securities, further dilution to our
existing stockholders may result. If adequate funds are not available to us, our
business may be negatively impacted.
We depend on patents and proprietary technology. Our success will
depend in part on our ability to:
o obtain and maintain patent protection for our products;
o preserve our trade secrets; and
o operate without infringing the proprietary rights of others.
The patent position of a medical device company may involve complex
legal and factual issues. As of February 21, 2000, we held twenty-nine issued
U.S. patents and one issued foreign patent, and have forty U.S. and thirty-one
foreign patent applications pending. Our issued U.S. patents cover technology
underlying the Onyx Liquid Embolic System (including both liquid embolic
implantables as well as micro catheters, access and delivery devices), carotid
and intra-cerebral stents, coatings, the Cragg MicroValve, infusion wires, and
the Cragg Thrombolytic Brush. The expiration dates of these patents range from
2009 to 2018. The pending claims cover additional aspects of liquid embolic
material, micro catheters, access and delivery devices, carotid and
intra-cerebral stent technologies, non-vascular liquid embolic products,
infusion catheters, infusion wires, and the Thrombolytic Brush. Each product
area we are pursuing is covered by at least two issued patents and, in most
instances, three pending patents. One of the patents we use is currently
licensed by us from Andrew Cragg, M.D.
There is no guarantee that issued patents will provide us significant
proprietary protection, that pending patents will be issued, or that products
incorporating the technology in issued patents or pending applications will be
free of challenge from competitors. It is possible that patents belonging to
competitors will require us to alter our technology and products, pay licensing
fees or cease to market or develop our current or future technology and
products. We also rely on trade secrets to protect our proprietary technology,
it is possible that others will independently develop or otherwise acquire
equivalent technology or that we will be unable to maintain our technology as
trade secrets. In addition, the laws of some foreign countries do not protect
our proprietary rights to the same extent as the laws of the United States. If
we fail to protect our intellectual property rights, there could be a negative
impact on our business.
There has been extensive litigation in the medical device industry
regarding patents and other intellectual property rights. It is possible that
infringement, invalidity, right to use or ownership claims could be asserted
against us in the future. Although patent and intellectual property disputes in
the medical device industry have often been settled through licensing or similar
arrangements, these arrangements can be costly and there can be no assurance
that necessary licenses would be available to us on satisfactory terms or at all
under such circumstances. 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. In addition, if we decide to litigate such
claims, it would be expensive and time consuming and could divert our
management's attention from other matters and could negatively impact our
business regardless of the outcome of the litigation.
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We have limited marketing and distribution experience. Our experience
in working with third-party distributors is limited. In November 1997, we
executed a distribution agreement with Guidant to provide for the distribution
of our neuro vascular product in Europe, and, in August 1998, Guidant agreed to
expand this distribution agreement with us to provide for the distribution of
our peripheral embolization applications of the Onyx Liquid Embolic System. We
did not enjoy meaningful revenues under this arrangement until the third quarter
of 1999, following the initial regulatory clearance in the European Union to
market the Onyx Liquid Embolic System for the treatment of brain arteriovenous
malformations or "AVMs." In August 1998, we executed a distribution agreement
with Abbott to provide for distribution of our peripheral vascular blood clot
therapy products in the United States and Canada. In September 1998, we executed
a distribution agreement with Century to provide for distribution of all our
products in Japan. We did not enjoy meaningful revenues under the agreement with
Century until the second quarter of 1999, following initial marketing clearance
for certain of our products. There is no guarantee that either Guidant, Abbott
or Century will be able to successfully market our products. Further, there is
no guarantee that Century will be successful in assisting us in obtaining
necessary regulatory approvals in Japan to commence marketing all of our
products.
Our sales force in the United States consists of three individuals
which we consider an insufficient number to successfully launch products in the
United States. There is competition for sales personnel experienced in
interventional medical device sales, and there can be no assurance that we will
be able to successfully respond to this competition and attract, motivate and
retain qualified sales personnel. We intend to market and sell our products
outside the United States principally through distributors. We believe that we
will need to continue to expand our distributor network or develop our own sales
force. Our ability to market our products in certain areas may depend on
strategic alliances with marketing partners such as Guidant, Abbott and Century.
There is no guarantee that we will be able to enter into distribution agreements
other than the agreements with Guidant, Abbott and Century on acceptable terms
or at all. Also, there can be no assurance that such agreements will be
successful in developing our marketing capabilities or that we will be able to
successfully develop a direct sales force.
We have limited manufacturing experience. Our experience in
manufacturing our products is relatively limited. We have found it necessary to
expand our manufacturing capacity in connection with our continued development
and commercialization of our products We may find it necessary to further expand
our manufacturing capacity in the future. Development and commercialization
requires additional money for facilities, tooling and equipment and for
leasehold improvements. We expect that such expansion would be achieved
utilizing the increased space in our new leased facility, improved efficiencies,
automation and acquisition of additional tooling and equipment. However, we may
not be able to obtain the required funds for expansion of our manufacturing
capacity. Improved efficiencies might not result from such an expansion. Any
delay or inability to expand our manufacturing capacity, including obtaining the
commitment of necessary capital resources could materially adversely affect our
manufacturing ability.
Obtaining approval from governmental agencies is a barrier to the sale
of our products. The development, testing, manufacturing and marketing of our
products in the United States are regulated by the U.S. Food and Drug
Administration as well as various state agencies. The Food and Drug
Administration requires governmental clearance of such products before they are
marketed. The process of obtaining Food and Drug Administration and other
required regulatory clearances is lengthy, expensive and uncertain.
Additionally, if regulatory clearance is granted, it may include significant
limitations on the indicated uses for which a product may be marketed. Failure
to comply with applicable regulatory requirements can result in, among other
things, warning letters, fines, suspensions
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of approvals, product seizures, injunctions, recalls of products, operating
restrictions and criminal prosecutions. The restriction, suspension or
revocation of regulatory approvals or any other failure to comply with
regulatory approvals or requirements would have a negative impact on our
business.
Before we could offer and sell our current products, we were required
to submit information to the Food and Drug Administration in the form of a
510(k) pre-market notification in order to substantiate label claims and to
demonstrate "substantial equivalence" of our products to a legally marketed
Class I or II medical device or a pre-amendments Class III medical device for
which the Food and Drug Administration had not called for premarket approvals.
Although we received Food and Drug Administration clearance for many of these
products, we may not be able to obtain the necessary regulatory clearance for
the manufacture and marketing of enhancements to our existing products or future
products either in the United States or in foreign markets. We have made
modifications which affect substantially all of our products covered under
510(k) clearances. We believe that these modifications do not affect the safety
or efficacy of the products and thus, under Food and Drug Administration
guidelines, do not require the submission of new 510(k) notices. However, the
Food and Drug Administration may not agree with any of our determinations that a
new 510(k) notice was not required for such changes and could require us to
submit a new 510(k) notice for any of the changes made to a device. If the Food
and Drug Administration requires us to submit a new 510(k) notice for any device
modification, we may be prohibited from marketing the modified device until the
510(k) notice is cleared by the Food and Drug Administration.
Before we can commercially market our Onyx Liquid Embolic System, we
may be required to submit one or more premarket approval applications to the
Food and Drug Administration. This generally involves a substantially longer and
less certain review process than that of a 510(k) pre-market notification. In
either event, such approvals or clearances may require human clinical testing
prior to any action by the Food and Drug Administration. Based on the
information regarding the material composition of Onyx, we believe the Onyx
Liquid Embolic System would be regulated as a device. However, the Food and Drug
Administration could at a later date determine that the Onyx Liquid Embolic
System should be regulated as a drug. Such a change could significantly delay
the commercial availability of the Onyx Liquid Embolic System and have a
material adverse effect our business. Delays in receipt of, failure to receive,
or loss of regulatory approvals or clearances to market our products would
negatively impact our ability to market these products.
In the European Union, we will be required to maintain the
certifications we have obtained which are necessary to affix the CE Mark to our
applicable products. We will have to obtain additional certifications with
respect to affixing the CE Mark to our new products, in order to sell them in
member countries of the European Union. We have received CE Mark certifications
with respect to our currently marketed peripheral blood clot therapy products,
micro catheters, guidewires, balloon systems, and the peripheral vascular and
brain AVM embolization applications of the Onyx Liquid Embolic System, the first
Onyx Liquid Embolic System applications to receive the CE Mark. We anticipate
obtaining certifications with respect to certain additional application of the
Onyx Liquid Embolic System. However, such certifications may be dependent upon
successful completion of clinical studies. These clinical studies may not be
successfully completed and we may not be able to obtain the required
certifications. Additionally, we may not be able to maintain our existing
certifications. In addition, federal, state, local and international government
regulations regarding the manufacture and sale of health care products and
diagnostic devices are subject to future change, and additional regulations may
be adopted.
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Commercial distribution and clinical trials in most foreign countries
also are subject to varying government regulations which may delay or restrict
marketing of our products.
Manufacturers of medical devices for marketing in the United States are
required to adhere to applicable regulations setting forth detailed Quality
System Requirements, which include development, testing, control and
documentation requirements. Our manufacturing processes also are subject to
stringent federal, state and local regulations governing the use, generation,
manufacture, storage, handling and disposal of certain materials and wastes.
Although we believe that we have complied in all material respects with such
laws and regulations, there are periodic inspections to ensure our compliance.
It is possible that we could be required to incur significant costs in the
future in complying with manufacturing and environmental regulations, or that we
could be required to cease operations in the event of any continued failure to
comply.
We are exposed to product liability claims. The nature of our business
exposes us to risk from product liability claims. The risk of such claims has
increased in light of a U.S. Supreme Court decision in 1996 concluding that the
Food and Drug Administration regulatory framework does not necessarily preempt
personal injury actions against medical device manufacturers. We currently
maintain product liability insurance for our products, with limits of $10
million per occurrence and an annual aggregate maximum of $10 million. However,
our insurance may not be adequate to cover future product liability claims.
Additionally, we may not be able to maintain adequate product liability
insurance at acceptable rates. Any losses that we may suffer from any liability
claims, and the effect that any product liability litigation may have upon the
reputation and marketability of our products may divert management's attention
from other matters and may have a negative effect on our business.
We are dependent on single-source suppliers and independent contract
manufacturers. We purchase some components and services used in connection with
our products from third parties. Our dependence on third-party suppliers
involves several risks, including limited control over pricing, availability,
quality and delivery schedules. Delays in delivery or services or component
shortages can cause delays in the shipment of our products. Our single-source
components are generally acquired through purchase orders placed in the ordinary
course of business, and we have no guaranteed supply arrangements with any of
our single-source suppliers. Because of our reliance on these vendors, we may
also be subject to increases in component costs. It is possible that we could
experience quality control problems, supply shortages or price increases with
respect to one or more of these components in the future. If we need to
establish additional or replacement suppliers for some of these components, our
access to the components might be delayed while we qualify such suppliers. Any
quality control problems, interruptions in supply or component price increases
with respect to one or more components could have a negative impact on our
business.
We rely on independent contract manufacturers to produce some of our
products and components. This involves several risks, including:
o inadequate capacity of the manufacturer's facilities;
o interruptions in access to certain process technologies; and
o reduced control over product quality, delivery schedules, manufacturing
yields and costs.
Independent manufacturers have possession of and in some cases hold
title to molds for certain manufactured components of our products. Shortages of
raw materials, production capacity constraints or delays by our contract
manufacturers could negatively affect our ability to meet our production
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obligations and result in increased prices for affected parts. Any such
reduction, constraint or delay may result in delays in shipments of our products
or increases in the prices of components, either of which could have a material
adverse effect on our business.
We do not have supply agreements with all of our current contract
manufacturers and we often utilize purchase orders which are subject to
acceptance by the supplier. An unanticipated loss of any of our contract
manufacturers could cause delays in our ability to deliver our products while we
identify and qualify a replacement manufacturer.
We depend upon key personnel. We significantly depend upon the
contributions, experience and expertise of our founders, certain members of our
management team and key consultants. We maintain a key-man life insurance policy
in the amount of $1 million on the life of George Wallace, our President and
Chief Executive Officer. This insurance may not be adequate to cover the risk
involved. Additionally, our success will depend upon our ability to attract and
retain additional highly qualified management, sales, technical, clinical and
consulting personnel.
We depend upon third-party reimbursement for some of our revenues. In
the United States, health care providers such as hospitals and physicians that
purchase medical devices generally rely on third-parties, principally federal
Medicare, state Medicaid and private health insurance plans, to reimburse all or
part of the cost of therapeutic and diagnostic procedures. With the
implementation of Medicare's Prospective Payment System for hospital inpatient
care (Diagnosis Related Groups or "DRGs") in the 1980s, public and private
payors began to reimburse providers on a fixed payment schedule for patients
depending on the nature and severity of the illness. Many tests and procedures
that would have been performed under cost-plus reimbursement formulas are
subject to scrutiny and must be justified in terms of their impact on patient
outcomes. As a result, there is an incentive to conduct only those tests that
will optimize cost-effective care.
Changes in reimbursement policies of governmental (both domestic and
international) or private healthcare payors could negatively impact our business
to the extent any such changes affect reimbursement for procedures in which our
products are used.
We may not be able to expand our international sales. Currently, most
of our revenues are not derived from international sales. We believe that our
future performance will be dependent in part upon our ability to increase
international sales. Although the perceived demand for certain products may be
lower outside the United States, we intend to continue to expand our
international operations and to enter additional international markets, which
will require significant management attention and financial resources. There is
no guarantee however, that we will be able to successfully expand our
international sales. Our success in international markets will depend on our
ability to establish and maintain agreements with suitable distributors, or
establish a direct sales presence.
International sales are subject to inherent risks, including unexpected
changes in regulatory requirements, fluctuating exchange rates, difficulties in
staffing and managing foreign sales and support operations, additional working
capital requirements, customs, duties, tariff regulations, export license
requirements, political and economic instability, potentially limited
intellectual property protection and difficulties with distributors. In
addition, sales and distribution of our products outside the United States are
subject to extensive foreign government regulation. We have in the past avoided
losses due to fluctuating exchange rates associated with international sales by
selling our products in U.S. dollars. However, we hope to sell products in some
markets in local currency, which would subject us to currency exchange risks.
9
<PAGE> 11
Large-scale market acceptance of our products will depend on the
availability and level of reimbursement in international markets that we target.
Reimbursement systems in international markets vary significantly by country,
and by region within some countries, and reimbursement approvals must be
obtained on a country-by-country basis. Many international markets have
government managed health care systems that govern reimbursement for new devices
and procedures. In most markets, there are private insurance systems as well as
government-managed systems. Obtaining reimbursement approvals in each country
can require 12-18 months or longer.
Provisions in our charter documents may make an acquisition of us more
difficult. Provisions of our Amended and Restated Certificate of Incorporation,
Bylaws and Delaware law could make it more difficult for a third party to
acquire us, even if doing so would be beneficial to stockholders.
Stock prices are particularly volatile in some market sectors. The
stock market sometimes experiences significant price and volume fluctuations
that are unrelated to the operating performance of particular companies. These
broad market fluctuations can cause a decrease in the price of our common stock.
The following factors may have a material adverse effect on the market price of
our common stock
o fluctuations in our results of operations;
o failure of our results of operations to meet the expectations of public
market analysts and investors;
o timing and announcements of technological innovations or new products
by us or our competitors;
o Food and Drug Administration and foreign regulatory actions;
o developments with respect to patents and proprietary rights;
o timing and announcements of developments, including clinical trials
related to our products;
o public concern as to the safety of technology and products developed by
us or others;
o changes in health care policy in the United States and internationally;
o changes in stock market analyst recommendations regarding Micro
Therapeutics; and
o the medical device industry generally.
In addition, it is likely that during a future quarterly period, our
results of operations will fail to meet the expectations of stock market
analysts and investors and, in such event, our stock price could materially
decrease.
In April 1999, we were notified by The Nasdaq-Amex Group that we did
not meet the requirements for our common stock to continue to be listed on the
Nasdaq National Market. We held discussions with the holders of our convertible
debt, submitted for Nasdaq's consideration a proposal and definitive plan for
compliance, and in support of such plan, in May 1999 we consummated agreements
with Abbott resulting in the conversion of $10 million of notes held by Abbott
into shares of our common stock. Additionally, the agreements provided us with
an option, which we exercised in November 1999, requiring Abbott to purchase $3
million of our common stock. Nasdaq informed us that it considered our actions
to be sufficient to support continued listing of our common stock on the Nasdaq
National Market. There is no guarantee, however, that we will be able to remain
in compliance with the Nasdaq National Market continued listing requirements.
Should Nasdaq determine in the future that our continued listing is not
supported, our stock price could materially decrease.
10
<PAGE> 12
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed a registration statement on Form S-3 with the SEC with
respect to the common stock offered by this prospectus. This prospectus, which
constitutes a part of the registration statement, does not contain all of the
information set forth in the registration statement or the exhibits and
schedules which are part of the registration statement. You may read and copy
any document we file at the SEC's public reference rooms in Washington D.C. We
refer you to the registration statement and the exhibits and schedules thereto
for further information with respect to us and our common stock. Please call the
SEC at 1-800-SEC-0330 for further information on the public reference room. Our
SEC filings are also available to the public from the SEC's website at
www.sec.gov.
We are subject to the information and periodic reporting requirements
of the Securities Exchange Act and, in accordance with those requirements, will
continue to file periodic reports, proxy statements and other information with
the SEC. These periodic reports, proxy statements and other information will be
available for inspection and copying at the SEC's public reference rooms and the
SEC's website referred to above.
The SEC allows us to "incorporate by reference" the information we file
with the SEC, which means that we can disclose important information to you by
referring to those documents. We incorporate by reference the documents listed
below and any additional documents filed by us with the SEC under Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until this offering of
securities is terminated. The information we incorporate by reference is an
important part of this prospectus, and any information that we file later with
the SEC will automatically update and supersede this information.
The documents we incorporate by reference are:
1. our Annual Report on Form 10-KSB for the fiscal year ended December
31, 1999;
2. the description of our capital stock contained in our Registration
Statement on Form 8-A12G, filed on June 3,1999;
11
<PAGE> 13
3. the description of our capital stock contained in our Registration
Statement on Form 8-A12G, filed on January 21, 1997; and
4. all other reports filed by us pursuant to Section 13(a) or 15(d) of
the SEC Exchange Act since December 31, 1999.
You may request a copy of these filings, at no cost, by writing or
calling us at Micro Therapeutics, 2 Goodyear, Irvine, California 92618,
telephone number (949) 837-3700, Attention: Harold A. Hurwitz.
You should rely only on the information contained in this prospectus or
any supplement and in the documents incorporated by reference above. We have not
authorized anyone else to provide you with different information. You should not
assume that the information in this prospectus or any supplement or in the
documents incorporated by reference is accurate on any date other than the date
on the front of those documents.
USE OF PROCEEDS
The proceeds from the sale of each selling stockholder's common stock
will belong to that selling stockholder. We will not receive any proceeds from
such sales.
12
<PAGE> 14
SELLING STOCKHOLDERS
In connection with the private placement of shares of common stock to
certain stockholders, we agreed to file a registration statement with the SEC to
register the shares of our common stock we issued to those stockholders for
resale by them, and to keep the registration statement effective until certain
shares registered hereunder are sold. The registration statement of which this
prospectus is a part was filed with the SEC pursuant to the stock purchase
agreements we entered into with each of the selling stockholders. The following
table sets forth: (1) the name of each of the stockholders for whom we are
registering shares under this registration statement; (2) the number of shares
of our common stock owned by each such stockholder prior to this offering, and
(3) the number of shares, and (if one percent or more) the percentage of the
total of the outstanding shares, of our common stock to be owned by each such
stockholder after this offering.
<TABLE>
<CAPTION>
Percentage of
Common Stock
Common Stock Common Stock Owned Upon
Common Stock Being Offered Owned Upon Completion
Owned Prior Pursuant to this Completion of of this
Name to the Offering Prospectus this Offering Offering
---- --------------- ---------------- ------------- -------------
<S> <C> <C> <C>
Pequot Private Equity Fund II LP (1) 800,000 800,000 13.85%
Framlington Health (2) 400,000 400,000 4.0%
Bridge & Co (3) 200,000 200,000 2.0%
Munder Health (4) 200,000 200,000 2.0%
</TABLE>
- ---------------------
(1) To our knowledge, Pequot Capital Management, Inc. is the beneficial
owner of the 800,000 shares of common stock issued to Pequot Private
Equity Fund II LP issued in connection with a Stock Purchase Agreement
that we entered into with Pequot Private Equity Fund II LP on March 10,
2000. To our knowledge, Pequot Capital Management, Inc. is the
beneficial owner of an additional 569,600 shares of common stock of
Micro Therapeutics owned prior to this offering.
(2) To our knowledge, the number of shares of common stock which
Framlington Health owned prior to this offering consists solely of
those shares of common stock issued in connection with a Stock Purchase
Agreement that we entered into with Framlington Health on March 10,
2000.
(3) To our knowledge, the number of shares of common stock which Bridge &
Co owned prior to this offering consists solely of those shares of
common stock issued in connection with a Stock Purchase Agreement that
we entered into with Bridge & Co on March 10, 2000.
(4) To our knowledge, the number of shares of common stock which Munder
Health owned prior to this offering consists solely of those shares of
common stock issued in connection with a Stock Purchase Agreement that
we entered into with Munder Health on March 10, 2000.
PLAN OF DISTRIBUTION
The shares of our common stock offered pursuant to this prospectus may
be offered and sold from time to time by the selling stockholders listed in the
preceding section, or their donees, transferees, pledgees or other successors in
interest that receive such shares as a gift or other non-sale
13
<PAGE> 15
related transfer. These selling stockholders will act independently of us in
making decisions with respect to the timing, manner and size of each sale. All
or a portion of the common stock offered by this prospectus may be offered for
sale from time to time on the Nasdaq National Market or on one or more
exchanges, or otherwise at prices and terms than obtainable, or in negotiated
transactions. The distribution of these securities may be effected in one or
more transactions that may take place on the over-the-counter market, including,
among others, ordinary brokerage transactions, privately negotiated transactions
or through sales to one or more dealers for resale of such securities as
principals, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices. Usual and customary or
specifically negotiated brokerage fees or commissions may be paid by the selling
stockholders.
We will not receive any part of the proceeds from the sale of Common
Stock. The selling stockholders and intermediaries through whom such securities
are sold may be deemed "underwriters" within the meaning of the Securities Act,
in which event commissions received by such intermediary may be deemed to be
underwriting commissions under the Securities Act. We will pay all expenses of
the registration of securities covered by this prospectus. The selling
stockholders will pay any applicable underwriters' commissions and expenses,
brokerage fees or transfer taxes.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be
passed on by Stradling Yocca Carlson & Rauth, a Professional Corporation,
Newport Beach, California.
EXPERTS
The consolidated financial statements incorporated in this prospectus
by reference to our Annual Report on Form 10-KSB for the year ended December 31,
1999, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
14
<PAGE> 16
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 14. Other Expenses of Issuance and Distribution
The following sets forth the costs and expenses, all of which shall be
borne by the Registrant, in connection with the offering of the shares of common
stock pursuant to this Registration Statement:
Securities and Exchange Commission Fee........................ $ 2,825.86
Accounting Fees and Expenses*................................. $ 3,000
Legal Fees and Expenses*...................................... $15,000
Printing Costs*............................................... $ 5,000
Miscellaneous Expenses*....................................... $ 0
----------
Total................................................ $25,825.86
==========
--------------
* Estimated
All of these costs and expenses shall be borne by the Registrant.
Item 15. Indemnification of Directors and Officers.
(a) As permitted by the Delaware law, the Registrant's restated
certificate of incorporation eliminates the liability of directors to the
Registrant or its stockholders for monetary damages for breach of fiduciary duty
as a director, except to the extent otherwise required by Delaware law. The
Registrant also carries directors and officers liability insurance.
(b) The Registrant's restated certificate of incorporation provides
that the Registrant will indemnify each person who was or is made a party to any
proceeding by reason of the fact that such person is or was its director or
officer against all expense, liability and loss reasonably incurred or suffered
by such person in connection therewith to the maximum extent authorized by
Delaware law. The Registrant's bylaws provide for a similar indemnity to its
directors and officers to the fullest extent authorized by Delaware law.
(c) The Registrant has entered into indemnification agreements with
each of its directors and officers which provide for the indemnification of its
directors and officers against any and all expenses, judgments, fines, penalties
and amounts paid in settlement, to the fullest extent permitted by law.
Item 16. Exhibits.
5.1 Opinion of Stradling Yocca Carlson & Rauth, a Professional
Corporation.
23.1 Consent of PricewaterhouseCoopers LLP, independent accountants
23.2 Consent of Stradling Yocca Carlson & Rauth, a Professional
Corporation (included in Exhibit 5.1).
24.1 Power of Attorney (included on signature page to the
registration statement at page II-4).
II-1
<PAGE> 17
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(a) (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.
(b) 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.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the 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 in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(d) (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 of 1933 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 offering thereof.
II-2
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it has met
all of the requirements for filing on Form S-3 and has caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Irvine, State of California, on the 5th day of
April, 2000.
MICRO THERAPEUTICS, INC.
By: /s/ George Wallace
-----------------------------
George Wallace, President and
Chief Executive Officer
POWER OF ATTORNEY
We, the undersigned officers and directors of Micro Therapeutics, Inc.,
do hereby constitute and appoint George Wallace, our true and lawful
attorney-in-fact and agent with full power of substitution and re-substitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement, or any related registration statement that is to be effective upon
filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and
to file the same, with exhibits thereto, and other documents in connection
therewith, with the SEC, granting unto said attorney-in-fact and agent, 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 fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agent, or his substitute, 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 date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ George Wallace
- ------------------------------ President, Chief Executive Officer and April 5, 2000
George Wallace Director
(Principal Executive Officer)
/s/ Harold A. Hurwitz
- ------------------------------ Chief Financial Officer April 5, 2000
Harold A. Hurwitz (Principal Financial Officer and
Principal Accounting Officer)
/s/ Wende Hutton
- ------------------------------ Director April 5, 2000
Wende Hutton
/s/ Dick Allen
- ------------------------------ Director April 5, 2000
Dick Allen
- ------------------------------ Director April , 2000
Kim Blickenstaff
/s/ W. James Fitzsimmons
- ------------------------------ Director April 5, 2000
W. James Fitzsimmons
</TABLE>
II-3
<PAGE> 19
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Sequential
Number Description Page Number
------ ----------- -----------
<S> <C> <C>
5.1 Opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation. --
23.1 Consent of PricewaterhouseCoopers LLP, independent accountants. --
23.2 Consent of Stradling Yocca Carlson & Rauth, a Professional
Corporation (included in the Opinion filed as Exhibit 5.1). --
24.1 Power of Attorney (included on signature page to the
registration statement at page II-4). --
</TABLE>
<PAGE> 1
EXHIBIT 5.1
[Stradling Yocca Carlson & Rauth Letterhead]
April 5, 2000
Micro Therapeutics, Inc.
2 Goodyear
Irvine, CA 92618
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
At your request, we have examined the form of Registration Statement on
Form S-3 (the "Registration Statement") being filed by Micro Therapeutics, Inc.,
a Delaware corporation (the "Company"), with the Securities and Exchange
Commission in connection with the registration under the Securities Act of 1933,
as amended, of an aggregate of 1,600,000 shares of the Company's Common Stock,
$0.001 par value (the "Common Stock"), (i) 800,000 shares of which were issued
to Pequot Private Equity Fund II LP ("Pequot") in connection with a Stock
Purchase Agreement dated March 10, 2000 between the Company and Pequot, (ii)
400,000 shares of which were issued to Framlington Health ("Framlington") in
connection with a Stock Purchase Agreement dated March 10, 2000 between the
Company and Framlington, (iii) 200,000 shares of which were issued to Bridge &
Co ("Bridge") in connection with a Stock Purchase Agreement dated March 10, 2000
between the Company and Bridge and (iv) 200,000 shares of which were issued to
Munder Health ("Munder") in connection with a Stock Purchase Agreement dated
March 10, 2000 between the Company and Munder (Pequot, Framlington, Bridge and
Munder are collectively referred to herein as the "Selling Stockholders"). The
shares of Common Stock may be offered for resale from time to time by and for
the account of the Selling Stockholders of the Company as named in the
Registration Statement.
We have reviewed the corporate actions of the Company in connection
with this matter and have examined such documents, corporate records and other
instruments as we have deemed necessary for the purposes of this opinion.
Based on the foregoing, it is our opinion that the 1,600,000 shares of
Common Stock covered by the Registration Statement have been duly authorized and
validly issued, and are fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ STRADLING YOCCA CARLSON & RAUTH
-----------------------------------
STRADLING YOCCA CARLSON & RAUTH
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated February 18, 2000, except as to Note
17 as to which the date is March 10, 2000, relating to the consolidated
financial statements, which appears in Micro Therapeutics Inc.'s Annual Report
on Form 10-KSB for the year ended December 31, 1999. We also consent to the
reference to us under the heading "Experts" in such Registration Statement.
PricewaterhouseCoopers LLP
/s/ PricewaterhouseCoopers, LLP
Orange County, California
April 5, 2000
