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PROSPECTUS
* Filed pursuant to Rule 424(b)(3) of the
Securities Act of 1933, Registration
No. 333-36673
2,626,000 SHARES
INSITE VISION INCORPORATED
COMMON STOCK
This Prospectus relates to the offer and sale by certain persons listed
herein under "Selling Stockholders" (collectively, the "Selling Stockholders")
of a maximum of 2,626,000 shares (collectively, the "Shares") of Common Stock,
par value $0.01 per share (the "Common Stock"), of InSite Vision Incorporated
(the "Company") consisting of shares of Common Stock to be issued from time to
time to the Selling Stockholders upon conversion of the Company's Series A
Convertible Preferred Stock (the "Preferred Shares").
Pursuant to Rule 416 under the Securities Act of 1933, as amended (the
"Securities Act"), this Prospectus also relates to such presently indeterminate
number of additional Shares as may be issuable upon conversion of the Preferred
Shares or as a result of stock splits, stock dividends, a premium payable on the
Preferred Shares in Common Stock and antidilution provisions (including, by
reason of any reductions in the conversion price of the Preferred Shares). All
of the Shares may be offered by the Selling Stockholders or by pledgees, donees,
transferees or other successors in interest that receive such shares as a gift,
partnership distribution or other non-sale related transfer. The Preferred
Shares and the Common Stock to be issuable upon conversion thereof have been and
will be, respectively, issued in transactions exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) thereof. See
"Selling Stockholders" and "Plan of Distribution." The Shares are being
registered by the Company pursuant to registration rights granted to the Selling
Stockholders.
The Selling Stockholders have not advised the Company of any specific plans
for the distribution of the Shares covered by this Prospectus. It is
anticipated, however, that the Shares will be offered and sold by the Selling
Stockholders from time to time in transactions on The Nasdaq National Market, in
privately negotiated transactions, or by a combination of such methods of sale,
at such fixed prices as may be negotiated from time to time, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Selling Stockholders may effect such
transactions by selling the Shares to or through broker-dealers and such
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Stockholders or the purchasers of the Shares for
whom such broker-dealers may act as agent or to whom they sell as principal or
both (which compensation to a particular broker-dealer might be in excess of
customary commissions). See "Plan of Distribution."
The Company will not receive any of the proceeds from the sale of the
Shares by the Selling Stockholders. The Company has agreed to bear substantially
all the expenses in connection with the registration and sale of the Shares
being offered by the Selling Stockholders. In addition, the Company has agreed
to indemnify the Selling Stockholders against certain liabilities, including
liabilities under the Securities Act.
The Common Stock of the Company is traded on The Nasdaq National Market
tier of The Nasdaq Stock Market under the symbol "INSV." On October 17, 1997,
the last sale price for the Common Stock as quoted on The Nasdaq National Market
was $4.50 per share.
The Selling Stockholders and any broker-dealers or agents that participate
with the Selling Stockholders in the distribution of the Shares may be deemed to
be "underwriters" within the meaning of Section 2(11) of the Securities Act, and
any commissions received by them and any profit on the resale of the Shares
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act. See "Plan of Distribution" herein for a description of
agreements by the Company to indemnify the Selling Stockholders against certain
liabilities.
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THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 6.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION 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 OCTOBER 17, 1997
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No dealer, salesperson or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus and, if given or made, such information or representations must not
be relied upon as having been authorized by the Company, any Selling
Stockholders or by any other person. This Prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any securities other than the
shares of Common Stock offered hereby, nor does it constitute an offer to sell
or a solicitation of an offer to buy any of the shares offered hereby to any
person in any jurisdiction in which such offer or solicitation would be
unlawful. Neither the delivery of this Prospectus nor any sale made hereunder
shall under any circumstances create any implication that the information
contained herein is correct as of any date subsequent to the date hereof.
AVAILABLE INFORMATION
This Prospectus, which constitutes a part of a Registration Statement on
Form S-3 (the "Registration Statement") filed by the Company with the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Securities Act"), omits certain of the information set forth in
the Registration Statement. For further information with respect to the Company
and the Common Stock offered hereby, reference is hereby made to such
Registration Statement, exhibits and schedules. Statements contained in this
Prospectus regarding the contents of any contract or other document are not
necessarily complete; with respect to each such contract or document filed as an
exhibit to the Registration Statement, reference is made to the exhibit for a
more complete description of the matter involved, and each such statement shall
be deemed qualified in its entirety by such reference. A copy of the
Registration Statement, including the exhibits and schedules thereto, may be
inspected without charge at the public reference facilities of the Commission
described below, and copies of such material may be obtained from such office
upon payment of the fees prescribed by the Commission.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information filed by the
Company with the Commission can be inspected and copied at the public reference
facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549, and the following regional offices of
the Commission: New York Regional Office, Seven World Trade Center, 13th Floor,
New York, New York 10048; and Chicago Regional Office, Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can
also be obtained from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, upon payment of prescribed rates.
Furthermore, the Commission maintains a Web site that contains reports, proxy
and information statements and other information regarding registrants that file
electronically with the Commission. Such Web site is located at
http://www.sec.gov. The Company's Common Stock is quoted on The Nasdaq National
Market tier of The Nasdaq Stock Market. Reports, proxy statements and other
information concerning the Company may be inspected at the National Association
of Securities Dealers, Inc. at 1735 K Street, N.W., Washington, D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents or portions of documents filed by the Company (File
No. 0-22332) with the Commission are hereby incorporated herein by reference:
(a) the Company's Annual Report on Form 10-K for the year ended December 31,
1996; (b) Quarterly Reports on Form 10-Q for the quarters ended March 31, 1997
and June 30, 1997; (c) Definitive Proxy Statement dated April 17, 1997, filed in
connection with the Company's 1997 Annual Meeting of Stockholders held June 2,
1997; and (d) the description of the Company's Common Stock contained in its
Registration Statement on Form 8-A, as amended, filed with the Commission on
August 27, 1993, including any amendments or reports filed for the purpose of
updating such description.
All reports and other documents subsequently filed by the Company pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the filing
of a post-effective amendment which indicates that all
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securities offered hereby have been sold or which deregisters all securities
remaining unsold, shall be deemed to be incorporated by reference herein and to
be a part hereof from the date of filing of such reports and documents. Any
statement contained in a document incorporated by reference herein shall be
deemed modified or superseded for purposes of this Prospectus to the extent that
a statement contained or incorporated by reference herein modifies or supersedes
such statement. Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request of such person, a copy of
any and all of the information that has been or may be incorporated by reference
in this Prospectus, other than exhibits to such documents (unless such exhibits
are specifically incorporated by reference into such documents). Such requests
should be directed to InSite Vision Incorporated, 965 Atlantic Avenue, Alameda,
California 94501, telephone (510) 865-8800, Attn: S. Kumar Chandrasekaran,
Ph.D., Chairman of the Board, President and Chief Executive Officer.
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THE COMPANY
The following information is qualified in its entirety by the more detailed
information and financial statements, including notes thereto, appearing
elsewhere herein or incorporated by reference in this Prospectus. This
Prospectus contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. Actual
results could differ materially from those projected in the forward-looking
statements as a result of certain of the risk factors set forth elsewhere in
this Prospectus. Investors should carefully consider the information set forth
under the heading "Risk Factors."
InSite Vision Incorporated ("InSite," "InSite Vision" or the "Company") is
developing genetically-based tools for the diagnosis and prognosis of glaucoma,
ophthalmic, and pharmaceutical products based on its proprietary DuraSite(R)
eyedrop-based drug delivery technology. In addition, the Company recently
licensed a device for the delivery of drugs to the retina.
The Company is collaborating with academic researchers to develop new
diagnostic tools for primary congenital, juvenile and primary open angle
glaucoma. Primary congenital glaucoma is an inherited eye disorder and is one of
the leading causes of blindness and visual impairment affecting infants. A
gene-based diagnostic kit may allow early detection of the disease before
considerable irreversible damage has occurred and may improve the ability to
treat it successfully. Primary open angle glaucoma usually affects people over
the age of forty. Current glaucoma tests are generally unable to detect the
disease before substantial damage to the optic nerve has occurred. Gene-based
tests may make it possible to identify patients at risk and initiate treatment
before permanent optic nerve damage and vision loss occurs.
The DuraSite delivery system is a patented eyedrop formulation comprising a
cross-linked carboxyl-containing polymer which incorporates the drug to be
delivered to the eye. The formulation is instilled in the cul-de-sac of the eye
as a small volume eyedrop. DuraSite can be customized to deliver a wide variety
of potential drug candidates with a broad range of molecular weights and other
properties. The DuraSite formulation remains in the eye for up to several hours
during which time the active drug ingredient is gradually released. DuraSite
extends the residence time of the drug due to a combination of mucoadhesion,
surface tension and viscosity. Eyedrops delivered in the DuraSite system
contrast to conventional eyedrops which typically only last in the eye a few
minutes, thus requiring delivery of a highly concentrated burst of drug and
frequent administration to sustain therapeutic levels. The increased residence
time for DuraSite is designed to permit lower concentrations of a drug to be
administered over a longer period of time, thereby minimizing the inconvenience
of frequent dosing and reducing the potential related adverse side effects.
The Company has also licensed a patented device for the controlled,
non-surgical delivery of ophthalmic drugs to the retina and other tissues in the
posterior chamber (rear) of the eye. The device has a needle with an adjustable
collar that limits its depth of penetration and is attached to a curved neck to
facilitate use. It is inserted above the eyeball and beneath the upper eyelid by
the ophthalmologist and reaches around the globe to the back of the eye. A
metering pump regulates the amount of drug to be delivered. The combination of
this device technology with polymer based drug platforms may permit long term
delivery of therapeutic agents to treat retinal disease.
The Company's executive offices are located at 965 Atlantic Avenue,
Alameda, California 94501 and its telephone number is (510) 865-8800. InSite
Vision Limited, a United Kingdom corporation, is a wholly owned subsidiary of
the Company.
InSite, InSite Vision Incorporated, the InSite Vision Incorporated logo,
InSite Vision Limited, DuraSite, AquaSite(R), MethaSite(TM), PilaSite(R),
BetaSite(R) and ToPreSite(TM) are trademarks of the Company. All other brand
names or trademarks appearing or incorporated by reference in this Prospectus
are the property of their respective holders.
RECENT DEVELOPMENTS
On July 1, 1997, the Company entered into a license agreement with the
University of Connecticut Health Center ("UCHC") pursuant to which it obtained
an exclusive, worldwide license for diagnostic purposes of a newly-discovered
gene for primary congenital glaucoma. The Company and UCHC are
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collaborating to develop a diagnostic kit for primary congenital glaucoma. The
license provides for royalties to be paid to UCHC based on the net sales of
licensed product(s), subject to minimum annual amounts.
On August 4, 1997, the Company received $1 million from the sale of common
stock to Bausch and Lomb Incorporated pursuant to the terms of a transaction
announced in 1996.
On August 19, 1997, the Company entered into a license agreement with the
University of Rochester (New York), pursuant to which it obtained an exclusive,
worldwide license to a patented device for the controlled, non-surgical delivery
of ophthalmic drugs to the retina and other tissues in the posterior chamber of
the eye. The license provides for royalties to be paid to the University of
Rochester based on net sales of the licensed products.
On August 20, 1997, the Company announced that it commenced a Phase II
Study on its ISV-120 product candidate for the prevention of recurrent pterygia,
an abnormal tissue growth across the front of the eye. The study is designed to
evaluate the safety and efficacy of a three-month course of treatment with
ISV-120 following surgical removal of the pterygia. Up to 20 patients will be
enrolled in the double-masked, placebo-controlled study and such patients will
be followed for one year following surgery.
On September 15, 1997, John L. Mattana was appointed to the Company's Board
of Directors.
The terms of the agreement relating to the shares issued in September 1997
provides for conversion of the preferred shares into the Company's common stock
at various stated discounts to the bid price quoted on the Nasdaq National
Market. These discounts will result in an increase in the net loss attributable
to common stockholders over amounts that would otherwise be reported beginning
with the Company's quarter ending September 30, 1997.
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RISK FACTORS
The shares offered hereby involve a high degree of risk. The following risk
factors should be considered carefully in addition to the other information
contained or incorporated by reference in this Prospectus before purchasing the
shares of Common Stock offered hereby. In addition to the historical information
contained herein, the discussion in this Prospectus contains certain
forward-looking statements that involve risks and uncertainties, such as
statements of the Company's plans, objectives, expectations and intentions. The
cautionary statements made in this Prospectus should be read as being applicable
to all related forward-looking statements wherever they appear in this
Prospectus. The Company's actual results could differ materially from those
discussed in this Prospectus. Factors that could cause or contribute to such
differences include those discussed below as well as those cautionary statements
and other factors set forth elsewhere herein.
EARLY STAGE OF DEVELOPMENT; TECHNOLOGICAL UNCERTAINTY
InSite is at an early stage of development. Only one product utilizing the
Company's DuraSite technology, an over-the-counter ("OTC") dry eye treatment, is
currently being marketed. Most of the potential products currently under
development by the Company will require significant additional research and
development, and preclinical and clinical testing, prior to submission to
regulatory authorities for marketing approval. The Company's potential products
are subject to the risks of failure inherent in the development of products
based on new technologies. These risks include the possibilities that the
Company's technology or any or all of its potential products will be found to be
unsafe, ineffective, or otherwise fail to receive necessary marketing clearance;
that the potential products, if safe and effective, will be difficult to
manufacture or market; that proprietary rights of third parties will preclude
the Company from marketing products; or that third parties will market superior,
equivalent or more cost-effective products. As a result, there can be no
assurance that the Company's research and development activities will result in
any commercially viable products.
FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING
The Company will require substantial additional funds to conduct the
development and testing of its potential products and to manufacture and market
any products that may be developed. The Company's future capital requirements
will depend on numerous factors, including the progress of its research and
development programs, the progress of preclinical and clinical testing, the time
and costs involved in obtaining regulatory approvals, the cost of filing,
prosecuting, defending and enforcing patent claims and other intellectual
property rights, competing technological and market developments, changes in the
Company's existing collaborative and licensing relationships, the ability of the
Company to establish corporate partnerships for the manufacture and marketing of
its potential products, and the purchase of additional capital equipment. The
Company intends to seek additional funding through public or private financings,
collaborative or other arrangements, or from other sources. There can be no
assurance that additional financing will be available from any of these sources
or, if available, that it will be available on acceptable terms. Any failure by
the Company to obtain additional funding on acceptable terms, or at all, would
have a material adverse effect on the Company's business, financial condition
and results of operations. If additional funds are raised by issuing equity
securities, significant dilution to existing stockholders may result. If
adequate funds are not otherwise available, the Company may be required to
delay, scale back or eliminate one or more of its research, discovery or
development programs, or to obtain funds through entering into arrangements with
collaborators or others that may require the Company to relinquish rights to
certain of its technologies, product candidates or products, or to cease
operations.
The Company believes that its existing cash and cash equivalents will be
sufficient to finance its working capital and capital expenditure requirements
through the third quarter of 1998.
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HISTORY OF OPERATING LOSSES; UNCERTAINTY OF FUTURE FINANCIAL RESULTS
The Company has incurred significant operating losses since its inception
in 1986 and it expects to continue to incur significant operating losses for at
least the next several years. As of June 30, 1997, the Company's accumulated
deficit was approximately $71 million. The amount of net losses and the time
required by the Company to reach profitability are uncertain. The Company's
ability to achieve profitability depends upon its ability, alone or with others,
to complete successful development of its potential products, conduct clinical
trials, obtain required regulatory approvals and successfully manufacture and
market its products. There can be no assurance that the Company will ever
achieve significant revenue or profitability.
DEPENDENCE ON THIRD PARTIES
In connection with its restructuring in November 1995, the Company elected
not to proceed with plans to establish a dedicated sales and marketing
organization. In order to successfully commercialize its product candidates, the
Company will be required to enter into arrangements with one or more companies
that will: provide for Phase III clinical testing, commercial scale-up and
manufacture of the Company's potential products; obtain or assist the Company in
other activities associated with obtaining regulatory approvals for its product
candidates; and market and sell the Company's products, if approved.
To date, the Company has entered into agreements with CIBA Vision
Ophthalmics ("Ciba Vision" ) for co-exclusive rights with the Company in the
U.S. to manufacture and market AquaSite, MethaSite, ToPreSite and ISV-205 for
certain non-glaucoma-related indications. Of these, only AquaSite, an OTC
product for which regulatory approval is not required, has been marketed.
Through the Company's agreement with CIBA Vision in May 1996, the Company
regained full U.S. marketing rights to the Company's PilaSite product candidate
for glaucoma, which was subsequently licensed on a worldwide basis to Bausch and
Lomb Incorporated ("B&L"). In exchange, CIBA Vision received royalty-bearing,
co-exclusive U.S. marketing rights to ToPreSite product candidate for ocular
inflammation/infection. CIBA Vision assumed all subsequent product development,
clinical and regulatory responsibility for ToPreSite. In addition, CIBA Vision
received royalty-bearing, co-exclusive U.S. marketing rights to the Company's
ISV-205 product candidate for certain non-glaucoma-related indications. CIBA
Vision has no obligation to fund the further development of MethaSite or
ISV-205.
In July 1996, the Company entered into agreements with B&L pursuant to
which: (i) B&L has agreed to manufacture InSite product candidates at B&L's
facility in Tampa, Florida using equipment owned by InSite; B&L and InSite have
agreed to share the cost of certain leasehold improvements in connection with
the installation and operation of the equipment; (ii) B&L will receive, for a
license fee of $500,000, an exclusive worldwide royalty-bearing license to
manufacture and market PilaSite; (iii) B&L and InSite have agreed to collaborate
to develop and sell a new DuraSite based eyedrop formulation; and (iv) B&L has
agreed to make a $2 million equity investment in the Company, $1 million of
which was received by the Company in August 1996. The remaining $1 million was
received in August 1997. In connection with this equity investment, the Company
issued an aggregate of 415,655 shares of Common Stock. The Company is currently
in the process of determining whether it will file a New Drug Application
("NDA") with the U.S. Food and Drug Administration ("FDA") for PilaSite.
There can be no assurance that, even if regulatory approvals are obtained,
the Company's products will be successfully marketed, or that the Company will
be able to conclude arrangements with other companies to support the
commercialization of such products on acceptable terms, if at all.
The Company's strategy for research, development and commercialization of
certain of its products requires the Company to enter into various arrangements
with corporate and academic collaborators, licensors, licensees and others, and
is dependent on the subsequent success of these outside parties in performing
their responsibilities. For example, the Company is dependent upon British
Biotechnology plc ("British Biotech") for the supply of batimastat and
lexipafant, the active drugs incorporated into the Company's ISV-120 and ISV-611
product candidates, respectively. British Biotech is conducting clinical testing
of lexipafant for non-ophthalmic indications, but it has discontinued clinical
testing of batimastat and informed the Company that it will no longer
manufacture the product. The Company may have no source of ongoing raw materials
for such
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product candidates and its business may be adversely affected. In addition,
there can be no assurance that the Company's collaborators will not take the
position that they are free to compete using the Company's technology without
compensating or entering into agreements with the Company, or will not pursue
alternative technologies or develop alternative products either on their own or
in collaboration with others, including the Company's competitors, as a means
for developing treatments for the diseases or disorders targeted by these
collaborative programs.
UNCERTAINTY OF PATENTS AND PROPRIETARY RIGHTS
The Company's success will depend in large part on its ability to obtain
patents, protect trade secrets and operate without infringing upon the
proprietary rights of others. A substantial number of patents in the field of
ophthalmology have been issued to pharmaceutical, biotechnology and
biopharmaceutical companies. Moreover, competitors may have filed patent
applications, may have been issued patents or may obtain additional patents and
proprietary rights relating to products or processes competitive with those of
the Company. There can be no assurance that the Company's patent applications
will be approved, that the Company will develop additional proprietary products
that are patentable, that any issued patents will provide the Company with
adequate protection for its inventions or will not be challenged by others, or
that the patents of others will not impair the ability of the Company to
commercialize its products. The patent position of firms in the pharmaceutical
industry generally is highly uncertain, involves complex legal and factual
questions, and has recently been the subject of much litigation. No consistent
policy has emerged from the U.S. Patent and Trademark Office or the courts
regarding the breadth of claims allowed or the degree of protection afforded
under pharmaceutical patents. There can be no assurance that others will not
independently develop similar products, duplicate any of the Company's products
or design around any patents of the Company.
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 the Company's
business. Some of these technologies, applications or patents may conflict with
the Company's technologies or patent applications. Such conflicts could limit
the scope of the patents, if any, that the Company may be able to obtain or
result in the denial of the Company's patent applications. In addition, if
patents that cover the Company's activities have been or are issued to other
companies, there can be no assurance that the Company would be able to obtain
licenses to these patents, at all, or at a reasonable cost, or be able to
develop or obtain alternative technology. If the Company does not obtain such
licenses, it could encounter delays or be precluded from introducing products to
the market. Litigation may be necessary to defend against or assert claims of
infringement, to enforce patents issued to the Company or to protect trade
secrets or know-how owned by the Company, and could result in substantial cost
to and diversion of effort by, and may have a material adverse effect on, the
Company. In addition, there can be no assurance that these efforts by the
Company will be successful or, even if successful, will not result in
substantial cost to the Company.
The Company's competitive position is also dependent upon unpatented trade
secrets. There can be no assurance that others will not independently develop
substantially equivalent proprietary information and techniques or otherwise
gain access to the Company's trade secrets, that such trade secrets will not be
disclosed or that the Company can effectively protect its rights to unpatented
trade secrets. To the extent that the Company or its consultants or research
collaborators use intellectual property owned by others in their work for the
Company, disputes also may arise as to the rights in related or resulting
know-how and inventions.
RISKS ASSOCIATED WITH POTENTIAL ACQUISITIONS
The Company may, at any time in the future, pursue acquisitions of
companies, product lines, technologies or businesses that its management
believes are complementary or otherwise beneficial. In the event that such an
acquisition does occur, there can be no assurance as to the effect thereof on
the Company's business, financial condition and operating results. Future
acquisitions by the Company may result in substantial dilution to the Company's
stockholders, the incurrence by the Company of additional debt and amortization
expenses related to goodwill, research and development and other intangible
assets, which could materially adversely affect the Company's business,
financial condition and results of operations. In addition, acquisitions involve
numerous risks, including difficulties in the assimilation of the employees,
operations,
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technologies and products of the acquired companies, the diversion of
management's attention from other business concerns, risks of entering markets
in which the Company has no or limited direct experience and the potential loss
of key employees of the acquired company.
NO COMMERCIAL MANUFACTURING EXPERIENCE
The Company has no experience in the manufacture of products for commercial
purposes. The Company has a pilot facility licensed by the State of California
to manufacture certain of its products for Phase I and Phase II clinical trials.
In July 1996, the Company entered into an alliance under which B&L has agreed to
manufacture Company products. If the Company should encounter delays or
difficulties in establishing and maintaining its relationship with B&L or other
qualified manufacturers to produce, package and distribute its finished
products, then clinical trials, regulatory filings, market introduction and
subsequent sales of such products would be adversely affected.
Contract manufacturers must adhere to Good Manufacturing Practices ("GMP")
regulations strictly enforced by the FDA on an ongoing basis through its
facilities inspection program. Contract manufacturing facilities must pass a
pre-approval plant inspection before the FDA will approve an NDA. Certain
material manufacturing changes that occur after approval are also subject to FDA
review and clearance or approval. There can be no assurance that the FDA or
other regulatory agencies will approve the process or the facilities by which
any of the Company's products may be manufactured. The Company's dependence on
third parties for the manufacture of products may adversely affect the Company's
ability to develop and deliver products on a timely and competitive basis.
Should the Company be required to manufacture products itself, the Company will
be subject to the regulatory requirements described above, and to similar risks
regarding delays or difficulties encountered in manufacturing any such products
and will require substantial additional capital. There can be no assurance that
the Company will be able to manufacture any such products successfully or in a
cost-effective manner. In addition, certain of the raw materials the Company
uses in formulating its DuraSite drug delivery system are available from only
one source. Any significant interruption in the supply of these raw materials
could delay the Company's clinical trials, product development or product sales
and could have a material adverse effect on the Company's business.
GOVERNMENT REGULATION AND PRODUCT APPROVAL
FDA and comparable agencies in state and local jurisdictions and in foreign
countries impose substantial requirements upon preclinical and clinical testing,
manufacturing and marketing of pharmaceutical products. Lengthy and detailed
preclinical and clinical testing, validation of manufacturing and quality
control processes, and other costly and time-consuming procedures are required.
Satisfaction of these requirements typically takes several years and the time
needed to satisfy them may vary substantially, based on the type, complexity and
novelty of the pharmaceutical product. The effect of government regulation may
be to delay or to prevent marketing of potential products for a considerable
period of time and to impose costly procedures upon the Company's activities.
There can be no assurance that the FDA or any other regulatory agency will grant
approval for any products developed by the Company on a timely basis, or at all.
Success in preclinical or early stage clinical trials does not assure success in
later stage clinical trials. Data obtained from preclinical and clinical
activities are susceptible to varying interpretations which could delay, limit
or prevent regulatory approval. If regulatory approval of a product is granted,
such approval may impose limitations on the indicated uses for which a product
may be marketed. Further, even if regulatory approval is obtained, later
discovery of previously unknown problems with a product may result in
restrictions on the product, including withdrawal of the product from the
market. Delay in obtaining or failure to obtain regulatory approvals would have
a material adverse effect on the Company's business.
The FDA's policies may change and additional government regulations may be
promulgated which could prevent or delay regulatory approval of the Company's
potential products. Moreover, increased attention to the containment of health
care costs in the U.S. could result in new government regulations which could
have a material adverse effect on the Company's business. The Company is unable
to predict the likelihood of adverse governmental regulation which might arise
from future legislative or administrative action, either in the U.S. or abroad.
See "Risk Factors -- Uncertainty of Product Pricing, Reimbursement and Related
Matters."
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COMPETITION
The Company's success depends upon developing and maintaining a competitive
position in the development of products and technologies in its areas of focus.
There are many competitors of the Company in the U.S. and abroad, including
pharmaceutical, biotechnology and other companies with varying resources and
degrees of concentration on the ophthalmic pharmaceuticals market. The Company's
competitors may have existing products or products under development which may
be technically superior to those of the Company or which may be less costly or
more acceptable to the market. Competition from such companies is intense and
expected to increase as new products enter the market and new technologies
become available. The Company's competitors, many of which have substantially
greater financial, technical, marketing and human resources than the Company,
may also succeed in developing technologies and products that are more
effective, safer, less expensive or otherwise more commercially acceptable than
any which have been or are being developed by the Company. The Company's
competitors may obtain cost advantages, patent protection or other intellectual
property rights that would block or limit the Company's ability to develop its
potential products, or may obtain regulatory approval for the commercialization
of their products more effectively or rapidly than the Company. To the extent
that the Company determines to manufacture and market its products by itself, it
will also compete with respect to manufacturing efficiency and marketing
capabilities, areas in which it has limited or no experience.
MARKETING AND SALES
The Company plans to market and sell its products through arrangements with
one or more pharmaceutical companies with expertise in the ophthalmic drug
industry. There can be no assurance that the Company will be able to enter into
such arrangements on acceptable terms, if at all. If the Company is not
successful in concluding such arrangements, it may be required to establish its
own sales and marketing organization, although the Company has no experience in
sales, marketing or distribution. There can be no assurance that the Company
will be able to build such a marketing staff or sales force, or that the
Company's sales and marketing efforts will be cost-effective or successful. To
the extent the Company has entered into or enters into co-marketing,
co-promotion or other licensing arrangements for the marketing and sale of its
products, any revenues received by the Company will be dependent on the efforts
of third parties (such as CIBA Vision and B&L), and there can be no assurance
that such efforts will be successful.
DEPENDENCE ON KEY PERSONNEL
The Company is highly dependent on Dr. Chandrasekaran and other principal
members of its scientific and management staff, the loss of whose services might
significantly delay the achievement of planned development objectives.
Furthermore, recruiting and retaining qualified personnel will be critical to
the Company's success. Competition for skilled individuals in the biotechnology
business is highly intense and there can be no assurance that the Company will
be able to continue to attract and retain personnel necessary for the
development of the Company's business. The loss of key personnel or the failure
to recruit additional personnel or to develop needed expertise could have a
material adverse effect on the Company's business, financial condition and
results of operations.
PRODUCT LIABILITY EXPOSURE; LIMITED INSURANCE COVERAGE
The Company's business exposes it to potential product liability risks
which are inherent in the development, testing, manufacturing, marketing and
sale of human therapeutic products. Product liability insurance for the
pharmaceutical industry generally is expensive. There can be no assurance that
the Company's present product liability insurance coverage is adequate. Such
existing coverage will not be adequate as the Company further develops its
products, and no assurance can be given that adequate insurance coverage against
potential claims will be available in sufficient amounts or at a reasonable
cost.
10
<PAGE> 11
UNCERTAINTY OF PRODUCT PRICING, REIMBURSEMENT AND RELATED MATTERS
The Company's business may be materially adversely affected by the
continuing efforts of governmental and third party payers to contain or reduce
the costs of health care through various means. For example, in certain foreign
markets the pricing or profitability of health care products is subject to
government control. In the U.S., there have been, and the Company expects there
will continue to be, a number of federal and state proposals to implement
similar government control. While the Company cannot predict whether any such
legislative or regulatory proposals or reforms will be adopted, the announcement
of such proposals or reforms could have a material adverse effect on the
Company's ability to raise capital or form collaborations, and the adoption of
such proposals or reforms could have a material adverse effect on the Company's
business, financial condition or results of operations.
In addition, in the U.S. and elsewhere, sales of health care products are
dependent in part on the availability of reimbursement from third party payers,
such as government and private insurance plans. Significant uncertainty exists
as to the reimbursement status of newly approved health care products, and third
party payers are increasingly challenging the prices charged for medical
products and services. If the Company succeeds in bringing one or more products
to the market, there can be no assurance that reimbursement from third party
payers will be available or will be sufficient to allow the Company to sell its
products on a competitive or profitable basis.
HAZARDOUS MATERIALS; ENVIRONMENTAL MATTERS
The Company's research, development and manufacturing processes involve the
controlled use of small amounts of radioactive and other hazardous materials.
The Company is subject to federal, state and local laws, regulations and
policies governing the use, manufacture, storage, handling and disposal of such
materials and certain waste products. Although the Company believes that its
safety procedures for handling and disposing of such materials comply with the
standards prescribed by such laws and regulations, the risk of accidental
contamination or injury from these materials cannot be completely eliminated. In
the event of such an accident, the Company could be held liable for any damages
that result, and any such liability could exceed the resources of the Company.
Moreover, the Company may be required to incur significant costs to comply with
environmental laws and regulations, especially to the extent that the Company
manufactures its own products.
CONTROL BY MANAGEMENT AND EXISTING STOCKHOLDERS
As of June 30, 1997, the Company's management and principal stockholders in
the aggregate owned beneficially approximately 17% of the Company's outstanding
shares of Common Stock. As a result, these stockholders, acting together, would
be able to effectively control most matters requiring approval by the
stockholders of the Company, including the election of a majority of the
directors and the approval or disapproval of business combinations.
VOLATILITY OF STOCK PRICE; NO DIVIDENDS
The market prices for securities of biopharmaceutical and biotechnology
companies (including the Company) have been highly volatile, and the market has
from time to time experienced significant price and volume fluctuations that are
unrelated to the operating performance of particular companies. In addition,
future announcements concerning the Company, its competitors or other
biopharmaceutical companies including the results of testing and clinical
trials, technological innovations or new therapeutic products, governmental
regulation, developments in patent or other proprietary rights, litigation or
public concern as to the safety of products developed by the Company or others
and general market conditions may have a significant effect on the market price
of the Common Stock. The Company has not paid any cash dividends on its Common
Stock and does not anticipate paying any dividends in the foreseeable future.
11
<PAGE> 12
ANTI-TAKEOVER EFFECT OF DELAWARE LAW AND CERTAIN CHARTER AND BYLAWS PROVISIONS
Certain provisions of the Company's Certificate of Incorporation and Bylaws
may have the effect of making it more difficult for a third party to acquire, or
discouraging a third party from attempting to acquire, control of the Company.
Such provisions could limit the price that certain investors might be willing to
pay in the future for shares of the Company's Common Stock. The Company's Board
of Directors has the authority to issue up to 5,000,000 shares of Preferred
Stock, 7,070 of which have been designated as Series A Convertible Preferred
Stock. Furthermore, the Company's Board of Directors has the authority to
determine the price, rights, preferences, privileges and restrictions of the
remaining unissued shares of Preferred Stock without any further vote or action
by the stockholders. The rights of the holders of Common Stock will be subject
to, and may be adversely affected by, the rights of the holders of any Preferred
Shares and of Preferred Stock that may be issued in the future. The issuance of
Preferred Stock, while providing desirable flexibility in connection with
possible acquisitions and other corporate purposes, could have the effect of
making it more difficult for a third party to acquire a majority of the
outstanding voting stock of the Company. Certain provisions of Delaware law
applicable to the Company could also delay or make more difficult a merger,
tender offer or proxy contest involving the Company, including Section 203 of
the Delaware General Corporation Law, which prohibits a Delaware corporation
from engaging in any business combination with any interested stockholder for a
period of three years unless certain conditions are met.
CONVERTIBLE SECURITIES; DILUTION; REDEMPTION
Sales of substantial amounts of the shares of Common Stock issuable upon
conversion of the Preferred Shares could adversely affect the market value of
the Common Stock, depending upon the timing of such sales, and may effect a
dilution of the book value per share of Common Stock.
As of September 29, 1997, 7,000 Preferred Shares were issued and
outstanding. The actual number of shares of Common Stock issuable upon
conversion of the Preferred Shares will equal (i) the aggregate stated value of
the Preferred Shares then being converted ($1,000 per share) plus a premium in
the amount of 6% per annum accruing from September 12, 1997 through the date of
conversion, divided by (ii) a conversion price equal to the lower of $5.04 or
the product of the average of the lowest closing bid prices for the Common Stock
for any five (5) trading days during the twenty-two (22) consecutive trading day
period immediately preceding the date of conversion multiplied by a conversion
percentage equal to (A) 90% if the conversion occurs prior to June 10, 1998, (B)
87.5% if the conversion occurs on or after June 10, 1998 and prior to September
13, 1998, (C) 85% if the conversion occurs on or after September 13, 1998 and
prior to December 7, 1998, or (D) 82.5% if the conversion occurs on or after
December 7, 1998. For a complete description of the relative rights,
preferences, privileges, powers and restrictions of the Preferred Shares, see
the Certificate attached as Exhibit 4.1 to the Registration Statement of which
this Prospectus forms a part. Depending on market conditions at the time of
conversion, the number of shares of Common Stock issuable could increase
significantly in the event of a decrease in the trading price of the Common
Stock. Purchasers of Common Stock could therefore experience substantial
dilution upon conversion of the Preferred Shares. In addition, in the event that
any holder of Preferred Shares is unable to convert any such securities into
Common Stock, any or all such holders may cause the Company to redeem any such
Preferred Shares that cannot be so converted. In the event that the Company
fails to so redeem such shares, the holders of the Preferred Shares shall have
additional remedies as set forth in the Certificate. The shares of Common Stock
into which the Preferred Shares may be converted are being registered pursuant
to this Registration Statement.
As of September 29, 1997, 3,300,000 shares of Common Stock were reserved
for issuance upon conversion of the Preferred Shares. At September 12, 1997,
there were 13,175,504 shares of Common Stock outstanding, nearly all of which
are freely-tradeable without restriction under the Securities Act unless held by
affiliates.
12
<PAGE> 13
LIMITATION OF LIABILITY AND INDEMNIFICATION
The Company's Certificate of Incorporation limits, to the maximum extent
permitted by Delaware Law, the personal liability of directors for monetary
damages for breach of their fiduciary duties as a director. The Company's Bylaws
provide that the Company shall indemnify its officers and directors and may
indemnify its employees and other agents to the fullest extent permitted by law.
The Company has entered into indemnification agreements with its officers and
directors containing provisions which are in some respects broader than the
specific indemnification provisions contained in Delaware Law. The
indemnification agreements may require the Company, among other things, to
indemnify such officers and directors against certain liabilities that may arise
by reason of their status or service as directors or officers (other than
liabilities arising from willful misconduct of a culpable nature), to advance
their expenses incurred as a result of any proceeding against them as to which
they could be indemnified, and to obtain directors' and officers' insurance, if
available on reasonable terms. Section 145 of the Delaware Law provides that a
corporation may indemnify a director, officer, employee or agent made or
threatened to be made a party to an action by reason of the fact that he was a
director, officer, employee or agent of the corporation or was serving at the
request of the corporation against expenses actually and reasonably incurred in
connection with such action if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. Delaware Law does not
permit a corporation to eliminate a director's duty of care, and the provisions
of the Company's Certificate of Incorporation have no effect on the availability
of equitable remedies, such as injunction or rescission, for a director's breach
of the duty of care.
13
<PAGE> 14
SELLING STOCKHOLDERS
The following table sets forth certain information, as of the date hereof,
with respect to the number of shares of Common Stock owned by each of the
Selling Stockholders and as adjusted to give effect to the sale of the Shares
offered hereby. The Shares are being registered to permit public secondary
trading of the Shares, and the Selling Stockholders may offer the Shares for
resale from time to time. See "Plan of Distribution."
The Shares being offered hereby by the Selling Stockholders may be
acquired, from time to time, upon the conversion of an aggregate of 7,070
Preferred Shares, 7,000 of which were acquired by certain of the Selling
Stockholders from the Company in a private placement pursuant to that certain
Securities Purchase Agreement among the Company and the Selling Stockholders
dated as of September 12, 1997 (the "Agreement"), and 70 of which may be
acquired by William Blair & Company LLC pursuant to an engagement letter, dated
as of April 1, 1997. This Prospectus covers the resale by the Selling
Stockholders of up to 2,626,000 Shares, which includes a good faith estimate of
the number of shares of Common Stock underlying the Series A Convertible
Preferred Stock. Pursuant to Rule 416 under the Securities Act, this
Registration Statement also registers such additional number of shares of the
Company's Common Stock as may become issuable as a result of any premium paid on
the Series A Convertible Preferred Stock in Common Stock, or pursuant to stock
splits, stock dividends and antidilution provisions (including, by reason of any
reduction in the floating rate conversion price mechanism, as set forth in the
Company's Certificate of Designations, Preferences and Rights of Series A
Convertible Preferred Stock (the "Certificate")).
Each Selling Stockholder that purchased Preferred Shares pursuant to the
Agreement represented to the Company that it was acquiring the Preferred Shares
for investment and with no present intention of distributing the Preferred
Shares. Pursuant to the Selling Stockholders' demand registration rights set
forth in the Registration Rights Agreement dated September 12, 1997, by and
among the Company and certain Selling Stockholders, the Company has filed with
the Commission, under the Securities Act, a Registration Statement on Form S-3,
of which this Prospectus forms a part, with respect to the resale of the Shares
from time to time on The Nasdaq National Market or in privately-negotiated
transactions and has agreed to prepare and file such amendments and supplements
to the Registration Statement as may be necessary to keep such Registration
Statement effective until the Shares are no longer required to be registered for
the sale thereof by the Selling Stockholders.
The Company has agreed to register a specified number of Shares for resale
by the Selling Stockholders. The number of Shares shown in the following table
as being offered by the Selling Stockholders does not include such presently
indeterminate number of shares of Common Stock as may be issuable upon
conversion of or otherwise with respect to the Preferred Shares in accordance
with the terms of the Certificate, but which shares are, in accordance with Rule
416 under the Securities Act, included in the Registration Statement of which
this Prospectus forms a part.
The Shares covered by this Prospectus may be offered from time to time by
the Selling Stockholders named below:
<TABLE>
<CAPTION>
OWNERSHIP
NUMBER OF SHARES NUMBER OF AFTER OFFERING(1)
OWNED SHARES -------------------
NAME AND ADDRESS OF PRIOR TO OFFERING BEING NUMBER OF
SELLING STOCKHOLDERS (1)(2) OFFERED SHARES PERCENT
- ---------------------------------------------------- ----------------- --------- --------- -------
<S> <C> <C> <C> <C>
Capital Ventures International...................... 555,555 555,555 0 0%
c/o Heights Capital Management
425 California Street
Suite 1100
San Francisco, CA 94104
Proprietary Convertible Investment Group, Inc....... 446,428 446,428 0 0%
11 Madison Avenue
New York, NY 10010
</TABLE>
14
<PAGE> 15
<TABLE>
<CAPTION>
OWNERSHIP
NUMBER OF SHARES NUMBER OF AFTER OFFERING(1)
OWNED SHARES -------------------
NAME AND ADDRESS OF PRIOR TO OFFERING BEING NUMBER OF
SELLING STOCKHOLDERS (1)(2) OFFERED SHARES PERCENT
- ---------------------------------------------------- ----------------- --------- --------- -------
<S> <C> <C> <C> <C>
Special Situations Private Equity Fund, L.P......... 327,381 327,381 0 0%
153 East 53rd Street
Fifty-First Floor
New York, NY 10022
Hull Overseas, Ltd.................................. 39,682 39,682 0 0%
Charlotte House
Charlotte Street
Nassau, Bahamas
Banque du Credit Agricole........................... 19,841 19,841 0 0%
c/o Hull Capital Corp.
152 West 57th Street
New York, NY 10019
William Blair & Company LLC(3)...................... 13,888 13,888 0 0%
222 West Adam Street
Suite 3300
Chicago, IL 60606
Total..................................... 1,402,775 1,402,775
</TABLE>
- ---------------
(1) Percentage of beneficial ownership is calculated assuming 13,175,504 shares
of Common Stock were outstanding as of September 12, 1997. Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission and generally includes voting or investment power with
respect to securities. Shares of Common Stock subject to options or warrants
currently exercisable or convertible, or exercisable or convertible within
60 days of September 12, 1997, are deemed outstanding for computing the
percentage of the person holding such option or warrant but are not deemed
outstanding for computing the percentage of any other person.
(2) Represents the pro-rata allocation of the number of shares of Common Stock
issuable upon conversion of the Preferred Shares calculated using an assumed
conversion price of $5.04 (the "Fixed Conversion Price" set forth in the
Certificate). The conversion price could fluctuate from time to time based
on changes in the closing bid price of the Common Stock as reported by The
Nasdaq Stock Market. The actual number of shares of Common Stock issuable
upon conversion of the Preferred Shares will equal (i) the aggregate stated
value of the Preferred Shares then being converted ($1,000 per share) plus a
premium in the amount of 6% per annum accruing from September 12, 1997
through the date of conversion, divided by (ii) a conversion price equal to
the lower of $5.04 or the product of the average of the lowest closing bid
prices for the Common Stock for any five (5) trading days during the
twenty-two (22) consecutive trading day period immediately preceding the
date of conversion multiplied by a conversion percentage equal to (A) 90% if
the conversion occurs prior to June 10, 1998, (B) 87.5% if the conversion
occurs on or after June 10, 1998 and prior to September 13, 1998, (C) 85% if
the conversion occurs on or after September 13, 1998 and prior to December
7, 1998, or (D) 82.5% if the conversion occurs on or after December 7, 1998.
For a complete description of the relative rights, preferences, privileges,
powers and restrictions of the Preferred Shares, see the Certificate
attached as Exhibit 4.1 to the Registration Statement of which this
Prospectus forms a part. Except under certain limited circumstances, no
holder of the Preferred Shares is entitled to convert such securities to the
extent that the shares to be received by such holder upon such conversion
would cause such holder to beneficially own more than 4.9% of the Common
Stock. Moreover, pursuant to the Rules of The Nasdaq National Market, in the
absence of stockholder approval, the aggregate number of shares of Common
Stock issuable to the holders of Preferred Shares at a discount from market
price upon conversion of the Preferred Shares which have been and may be
issued to the holders of Preferred Shares pursuant to the Agreement may not
exceed 19.99% of the outstanding Common Shares on September 12, 1997
(2,635,100 shares). In the event that any holder of Preferred Shares is
unable to convert any such securities into Common Stock due to operation of
the immediately preceding sentence, any or all such holders may cause the
Company to redeem any such Preferred Shares that cannot be so converted. In
the
15
<PAGE> 16
event that the Company fails to so redeem such shares, the holders of the
Preferred Shares shall have additional remedies as set forth in the
Certificate.
(3) Represents shares issuable upon exercise of a warrant to acquire 70
Preferred Shares issued to WB & Co. as a finder's fee in connection with the
Agreement. The exercise price equals the stated value of the Preferred
Shares, $1,000 per share, and the term of the warrant is three years.
PLAN OF DISTRIBUTION
The Shares are being offered on behalf of the Selling Stockholders, and the
Company will not receive any proceeds from the offering. The Shares may be sold
or distributed from time to time by the Selling Stockholders, or by pledgees,
donees or transferees of, or other successors in interest to, the Selling
Stockholders, directly to one or more purchasers (including pledgees) or through
brokers, dealers or underwriters who may act solely as agents or may acquire
Shares as principals, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices, at negotiated prices, or at fixed
prices, which may be changed. The distribution of the Shares may be effected in
one or more of the following methods: (i) ordinary brokers' transactions, which
may include long or short sales; (ii) transactions involving cross or block
trades or otherwise on The Nasdaq National Market; (iii) purchases by brokers,
dealers or underwriters as principal and resale by such purchasers for their own
accounts pursuant to this Prospectus; (iv) "at the market" to or through market
makers or into an existing market for the Common Shares; (v) in other ways not
involving market makers or established trading markets, including direct sales
to purchasers or sales effected through agents; (vi) through transactions in
options, swaps or other derivatives (whether exchange-listed or otherwise); or
(vii) any combination of the foregoing, or by any other legally available means.
In addition, the Selling Stockholders or their successors in interest may enter
into hedging transactions with broker-dealers who may engage in short sales of
Shares in the course of hedging the positions they assume with the Selling
Stockholders. The Selling Stockholders or their successors in interest may also
enter into option or other transactions with broker-dealers that require the
delivery by such broker-dealers of the Shares, which Shares may be resold
thereafter pursuant to this Prospectus.
Brokers, dealers, underwriters or agents participating in the distribution
of the Shares as agents may receive compensation in the form of commissions,
discounts or concessions from the Selling Stockholders and/or purchasers of the
Shares for whom such broker-dealers may act as agent, or to whom they may sell
as principal, or both (which compensation as to a particular broker-dealer may
be less than or in excess of customary commissions). The Selling Stockholders
and any broker-dealers who act in connection with the sale of Shares hereunder
may be deemed to be "Underwriters" within the meaning of the Securities Act, and
any commissions they receive and proceeds of any sale of Shares may be deemed to
be underwriting discounts and commissions under the Securities Act. Neither the
Company nor any Selling Stockholder can presently estimate the amount of such
compensation. The Company knows of no existing arrangements between any Selling
Stockholder, any other stockholder, broker, dealer, underwriter or agent
relating to the sale or distribution of the Shares.
The Company will pay substantially all of the expenses incident to the
registration, offering and sale of the Shares to the public other than
commissions or discounts of underwriters, broker-dealers or agents. The Company
has also agreed to indemnify certain of the Selling Stockholders and certain
related persons against certain liabilities, including liabilities under the
Securities Act.
LEGAL MATTERS
The legality of the securities offered hereby will be passed upon for the
Company by Brobeck, Phleger & Harrison LLP, Palo Alto, California.
16
<PAGE> 17
EXPERTS
The consolidated financial statements of the Company appearing in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996, have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
17
<PAGE> 18
======================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY TO ANY
PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL
OR TO ANY PERSON TO WHOM IT IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY OFFER OR SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE
DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
The Company........................... 4
Risk Factors.......................... 6
Selling Stockholders.................. 14
Plan of Distribution.................. 16
Legal Matters......................... 16
Experts............................... 17
</TABLE>
======================================================
======================================================
2,626,000 SHARES
INSITE VISION
INCORPORATED
COMMON STOCK
------------------------
PROSPECTUS
------------------------
OCTOBER 17, 1997
======================================================
